[ Page 8581 ]

CONTENTS

Routine Proceedings

Attorney General Statutes Amendment Act, 1989 (Bill 71). Hon. S.D. Smith

Introduction and first reading –– 8581

Capital Commission Amendment Act (Bill M225). Mr. Blencoe

Introduction and first reading –– 8582

Presenting Petitions –– 8582

An Act to Protect Parks and Wilderness Areas (Bill M226). Mr. Williams

Introduction and first reading –– 8582

An Act for Better Child Care (Bill M227). Ms. Marzari

Introduction and first reading –– 8582

Oral Questions

PCB storage sites. Mr. Perry –– 8583

Pouce Coupe long-term-care facility. Mrs. Boone –– 8583

Mr. Rose

Exclusion of Spetifore lands from agricultural land reserve. Mr. Perry –– 8584

Purcell heliskiing venture. Mr. Blencoe –– 8585

Royal assent to bills –– 8586

Committee of Supply: Ministry of Forests estimates. (Hon. Mr. Parker)

On vote 27: minister's office –– 8586

Mr. Miller

Mr. Kempf

Mr. R. Fraser

Forest Amendment Act, 1989 (Bill 86). Second reading

Hon. Mr. Parker –– 8607

Mr. Miller –– 8608

Hon. Mr. Parker –– 8609

Islands Trust Act (Bill 78). Committee stage, (HON. Mrs. Johnston) –– 8609

Mr. Blencoe

Third reading

Natural Gas Price Act (Bill 54). Committee stage. (Hon. Mr. Davis) –– 8614

Ms. Edwards

Third reading

Vancouver Island Natural Gas Pipeline Act (Bill 55). Second reading

Hon. Mr. Davis –– 8621

Parole Act (Bill 53). Committee stage. (Hon. Mr. Ree) –– 8622

Mr. Guno

Mr. Sihota

Third reading

Wildlife Amendment Act, 1989 (Bill 70). Second reading

Hon. Mr. Strachan –– 8626

Ms. Edwards –– 8627

Mr. Guno –– 8628

Hon. Mr. Strachan –– 8628

Land Title Amendment Act, 1989 (Bill 61). Second reading

Hon. S.D. Smith –– 8629

Mr. Sihota –– 8630

Hon. S.D. Smith –– 8631

Offence Amendment Act, 1989 (Bill 63). Second reading

Hon. S.D. Smith –– 8631

Mr. Sihota –– 8631

Hon. S.D. Smith –– 8632

Attorney General Amendment Act, 1989 (Bill 64). Second reading

Hon. S.D. Smith –– 8632

Mr. Sihota –– 8632

Hon. S.D. Smith –– 8632

Attorney General Statutes Amendment Act, 1989 (Bill 71). Second reading

Hon. S.D. Smith –– 8632

Mr. Rose –– 8633

Social Service Tax Amendment Act (No. 2), 1989 (Bill 81). Second reading

Hon. Mr. Couvelier –– 8633

Mr. Rose –– 8634

Hon. Mr. Couvelier –– 8634

Temporary Use Tax Validation Act (Bill 82). Second reading

Hon. Mr. Couvelier –– 8635

Mr. Rose –– 8635

Hon. Mr. Couvelier –– 8635

Securities Amendment Act, 1989 (Bill 83). Second reading

Hon. Mr. Couvelier –– 8635

Mr. Rose –– 8637

Hon. Mr. Couvelier –– 8637

Electoral Boundaries Commission Act (Bill 87). Second reading

Hon. Mr. Reid –– 8638

The House met at 2:06 p.m.

Prayers.

MR. PELTON: In the gallery today, hon. members, are the guests of Mr. Speaker: Mr. and Mrs. Bob and Adele Mairs from Santa Barbara, California. Would the House please give them a warm welcome.

In your gallery today, Mr. Speaker, is a member of our outstanding research team, Sarah Weir. With Sarah is her grandmother-in-law Mrs. Patricia Madden and her mother-in-law Mrs. Patricia Weir from Chilliwack. Would you please welcome them all.

MRS. BOONE: I am pleased today to introduce a very close friend of mine — somebody who has travelled from England, arrived yesterday in Vancouver and rose early, I am sure, today to make it over to Victoria — Sam Greene, and his friend, who is also from England; I don't know his first name but I will call him Mr. Anderson. Would the House please give them greetings.

HON. S.D. SMITH: In the members' gallery today is a person who does a great deal of service for the constituents of Kamloops and who does an outstanding job on my behalf. I would like the House to please join in welcoming to this chamber my constituency assistant, Kim Petersen.

MR. ROSE: Behind the opposition is the Member of Parliament for Regina-Qu'Appelle, Mr. Simon de Jong. He is here as part of his tour because he's a federal leadership candidate. We have a number of those on the road. I think that it is only fitting that since we have — and are the only House that has, to my knowledge — two Jansens, two Hansons and two Hagens, that we ought to at least have a couple of De Jongs. So, welcome.

HON. MR. PARKER: I would ask the House to welcome today some ladies in the gallery. A special lady in my life is my wife Dawne. Another special lady in my life is my secretary, Chris Diemer; and Chris's sister-in-law Ginnie Diemer is here. She lives in Colwood and is a teacher at Norfolk House school. Would the House please make them welcome.

MRS. GRAN: Visiting Victoria today and seated in the members' gallery are eight very important people to the Social Credit Party — eight Young Socreds. I'm going to take the liberty of naming them: Ken Frost of New Westminster; Christine Hoffman, New Westminster; Elizabeth Zink, Coquitlam; Trenton Poy, Coquitlam; Neil Mancore, UBC; Nina Leeka, Coquitlam; Erin Thomas, Port Moody; and Troy Lanigan of Victoria. Would the House please make them welcome.

MR. LOENEN: I just noticed a constituent up in the public gallery. On behalf of the Premier and myself, I would like the House to welcome Rick Post.

Introduction of Bills

ATTORNEY GENERAL STATUTES
AMENDMENT ACT, 1989

Hon. S.D. Smith presented a message from His Honour the Administrator: a bill intituled Attorney General Statutes Amendment Act, 1989.

HON. S.D. SMITH: This bill contains a pot-pourri of amendments to legislation under the authority of the Attorney-General. One of the highlights is an amendment to the Estate Administration Act which is intended to safeguard inheritances that are intended for children. Unless a will otherwise provides, monetary assets of an estate that are payable to a minor shall be paid into court by the executor or the administrator to the credit of the minor.

Similarly, the Insurance Act is amended to protect a minor beneficiary's interest under an insurance policy, and it will provide the insurer with greater protection. The amendment requires that insurance proceeds payable to an infant be paid into court. Where a trustee is named, the insurance proceeds shall be paid to the trustee, with notice given to the public trustee.

The bill also contains an amendment to the Infants Act to improve the ability of the office of the public trustee to manage efficiently a minor's finances. This amendment clarifies that when money is held in trust for a child, the public trustee has the same authority to deal with money which he controls directly in his office as he does when dealing with money held in court.

The bill also amends the Expropriation Act to allow regulations that may be made to establish a procedure for expropriating private interests on unregistered Crown land where the expropriating authority has a right to expropriate.

There are several amendments to the Law and Equity Act. One minor amendment allows that where foreclosure against property is occurring, the foreclosure proceedings will be brought in a court registry near the affected property. Also, amendments to the act will enable the courts to order that damages for loss of future earning capacity or the cost of future care be made by way of periodic payments as an alternative to lump-sum awards of damages, where the court considers it to be in the plaintiff's best interest.

The bill also contains improvements to the operation of the Legal Profession Act and the Notaries Act. A new section is added to the Legal Profession Act to address an important present and future trend; namely, power for the Law Society to recognize and regulate law firms which operate in another province or country as well as in British Columbia. The phenomenon of interjurisdictional law firms will continue to grow, and this amendment will ensure

[ Page 8582 ]

that they are well regulated for the protection of British Columbians.

There are also several minor amendments to the Legal Profession Act to improve the efficiency and fairness of the administrative and disciplinary functions of the Law Society. The bill contains amendments to the Notaries Act to effect a number of changes to improve the administration of the Society of Notaries Public.

A minor amendment to the Occupiers Liability Act will clarify that where agricultural or range land is fenced and posted against trespass, the liability of an owner or occupier is limited to the duty not to create a deliberate hazard.

Mr. Speaker, I've given a description of some of the important amendments contained in this bill, and I'll be pleased to explain each amendment in greater detail during Committee of the Whole.

Bill 71 introduced, read a first time and ordered to be placed on orders of the day for second reading at the next sitting of the House after today.

CAPITAL COMMISSION AMENDMENT ACT

Mr. Blencoe presented a bill intituled Capital Commission Amendment Act.

MR. BLENCOE: Mr. Speaker, this bill is an important amendment to the provincial Capital Commission Act. Currently the Provincial Capital Commission does all its business in camera, and the general public is excluded from the decision-making process. Past decisions of the provincial Capital Commission have been made without any public scrutiny, and the Victoria community has had to accept them as faits accomplis. The operation of the provincial Capital Commission has little to do with open government, and change is essential. This amendment requires the Provincial Capital Commission to do its business in an open and democratic fashion and end the current in camera process.

[2:15]

Motion approved.

Bill M225 introduced, read a first time and ordered to be placed on orders of the day for second reading at the next sitting of the House after today.

Presenting Petitions

MS. EDWARDS: I have the honour to present a petition.

"To the hon. the Legislative Assembly of the province of British Columbia in Legislature assembled: the petition of the undersigned the Elk Valley Conservation Society of the city of Fernie, province of British Columbia, and surrounding areas states that we, the undersigned, as concerned residents of the Elk Valley call for a one-year moratorium on logging in the Elk Valley, particularly the area currently being logged between Morrissey Ridge and Coal Creek, until such time as environmental, wildlife, watershed, visual and economic impact studies can be conducted in cooperation with the communities involved.

"Your petitioners respectfully request that the hon. House direct the Ministry of Forests and the Ministry of Environment, in their role as forest managers, to take measures to control the mountain pine beetle in a fashion which will ensure that the present quality of life enjoyed in the Elk Valley will not be adversely affected. Their actions should be coordinated with the existing Elk Valley integrated forest task force and the Fernie community, and should explore alternatives to the current clearcut logging style being practised in the visually sensitive Elk Valley-Highway 3 corridor."

It is accompanied by some 1,620 signatures.

Introduction of Bills

AN ACT TO PROTECT
PARKS AND WILDERNESS AREAS

Mr. Williams presented a bill intituled An Act to Protect Parks and Wilderness Areas.

Interjection.

MR. WILLIAMS: Too many bills, yes, but not enough of the right kind; that's our problem. This bill would have as its mandate the doubling of the provincial park system in British Columbia.

I hesitate to mention that the last time the parks were doubled in British Columbia was in the period 1972 to 1975, but I am more than happy to introduce the former minister who was responsible for that doubling of park space. I would note that names like Desolation Sound, the Spatsizi Plateau, the Kwadacha Wilderness, Carp Lake, the Purcell Wilderness, Mount Assiniboine and others that we now think of — the great Naikoon Park in the Queen Charlottes — were all part of that doubling in '72 to '75, and we on this side are ready and willing to do that again.

The legislation provides for legislative protection of ecological areas in all regions, and it would see that we had parks in areas where we don't have them now. I think of the southern Chilcotin. In a world where wilderness is becoming a more and more precious commodity, and when we have a planet in peril, this is only a small beginning to right things in British Columbia.

Bill M226 introduced, read a first time and ordered to be placed on orders of the day for second reading at the next sitting of the House after today.

AN ACT FOR BETTER CHILD CARE

Ms. Marzari presented a bill intituled An Act for Better Child Care.

MS. MARZARI: Mr. Speaker, this bill speaks to many years and many thousands of people who have been involved in the child care movement in this province. It gives thanks to preschool educators, it gives thanks to the child care teachers, and it gives

[ Page 8583 ]

special reference to the family care workers of our province.

I have put together this bill with the able assistance of people in the child care movement such as Penny Coates, Mab Oleman, Peter Ashmore and Judy Pollard. These people and I, with the special assistance of Nancy Thompson, a legislative intern, have produced a bill which basically says we can build on what we've got in this province to provide safe, licensed care for children who need it.

The bill makes special reference to non-profit care, which we believe is the kind of care best suited for children, which gives them the safety and the licensing standards that they need. We also provide for those non-licensed services now which can be brought into accordance with licensing regulations.

This bill wants to see a new system of child care which recognizes the needs of parents and children in our province at a community level and in their neighbourhoods and on-the-job sites. It recognizes the need for child care in a market which is totally inadequate for parents who need it and in a society where definitions of family life are rapidly changing.

So it gives me great pleasure to bring this bill forward. I know the House will probably not be debating it this session, but it will give ample opportunity for those many thousands of people who have thought about and given careful consideration to this issue to read it during the year to come, and perhaps we'll look at it again next year.

Bill M227 introduced, read a first time and ordered to be placed on orders of the day for second reading at the next sitting of the House after today.

Oral Questions

PCB STORAGE SITES

MR. PERRY: A question for the Minister of Environment. Can the minister confirm that nearly one-quarter of the 450 PCB storage sites recently surveyed by the Environment ministry were found to be unsafe?

HON. MR. STRACHAN: After checking with ministry staff today, the correct number is 82. 1 would not use the term "unsafe." They are out of compliance, but many of the permit irregularities are conditions such as fencing not being quite high enough or barrels stacked three high when our regulations say two high. I can advise the House that all permit irregularities are currently being investigated and permit-holders are being asked to comply.

MR. PERRY: A supplementary for the minister The minister has failed to respond to repeated requests from environmental groups to provide a full list of these PCB storage sites. In view of what he's just told us — that he's got nothing to hide — has the minister decided to reverse his position and make public a full list of PCB storage sites in B.C. ?

HON. MR. STRACHAN: I'm investigating that now, and I may make the decision to release the list. However, given criminal events that occurred around the St. Basile-le-Grand fire of last year, I do have some concern. Given that there could be a dangerous element and public risk involved, I haven't completely made up my mind on that question.

MR. PERRY: A supplementary, Mr. Speaker. If the minister is concerned about criminal or terrorist activities at PCB storage sites, can he tell this House what steps he's taken to secure them from such disruption?

HON. MR. STRACHAN: Some of the permit irregularities we're concerned about now are adequate security fencing, locks, staffing and that type of remedy to ensure that we do have safe and secure storage. When I'm satisfied that all of that is in place and that there could be no risk to the public from releasing those addresses and site locations, then I may consider releasing that information. I do want to make sure that we have everything in place before we do that so that we don't draw these sites to the attention of those who may not be acting in the best interests of the people of British Columbia.

POUCE COUPE
LONG-TERM-CARE FACILITY

MRS. BOONE: A question to the Minister of State for Nechako and Northeast. A long-term-care facility in Pouce Coupe has been moved to a motel. Patients are living in intolerable conditions in that motel, and it has not even been endorsed or approved by the fire marshal. What actions have you taken as the minister of state for that area to represent the people to the Minister of Health (Hon. Mr. Dueck) and make sure they have a facility that is adequate for them?

HON. MR. WEISGERBER: My understanding of the situation in Pouce Coupe is that there is a new extended-care facility being built. There were some 20 persons who could not be housed in the hospital while the construction was going on, so the hospital board, along with the hospital board in Dawson Creek and in other communities in the Peace, investigated several possibilities, which included moving the residents to three or four different hospitals for the time the construction would be ongoing. My understanding is that it was a decision by the hospital board to rent the lower floor of a motel — not a hotel — in Pouce Coupe, which would allow the residents to move back and forth and to continue to be treated by the staff at the hospital.

MRS. BOONE: Supplementary to the minister. You have explained to me why they were moved into this facility. The facility is obviously not appropriate. it has not been approved by the fire marshal. The people have to be transported to the hospital once a week for baths. What have you done to make sure that these people are housed in a facility that is

[ Page 8584 ]

adequate? This facility is not appropriate for people to be living in, Mr. Minister.

HON. MR. WEISGERBER: Other than the fact that I've been in contact with the hospital board since they first approached us about the need for a new building, which was an extreme need, and a further visit to the facility by my executive assistant, I haven't taken any action. I have not been contacted by any citizen about concerns; the only concerns I have heard so far have been from the member. Until I get someone who is a little closer to the situation than the member for Prince George North, I don't intend to take any action.

I can assure you that the decision was made by the local hospital board, with advice from the hospital board in Dawson Creek and, I believe, with the support of the majority of the community. I am quite satisfied that the right decision was made by that board. I think the board deserves credit rather than criticism for having dealt with a very difficult situation for the overall and long-term benefit of not only Pouce Coupe but all people in the Peace River area.

MRS. BOONE: Supplementary to the minister. Mr. Minister, I will give you the name of a resident there who has a father in the thing. I don't think you can shirk your responsibility. You are doing nothing about the fact that these people are in a facility that has not been approved by the fire marshal, that is not appropriate.

MR. SPEAKER: Has the member got a question?

MRS. BOONE: Yes. Mr. Minister, would you make a commitment today that you will investigate this and review the whole procedure if I give you the name of the person involved? Will you give you that personal commitment today to the people of Pouce Coupe?

HON. MR. WEISGERBER: Perhaps I have an even better idea. Why doesn't the person who has a concern contact me, and I'll follow it up the same way I would follow up contact in my constituency office from any constituent who expresses a concern? If you would like to give your contact a call and have him contact me, I am sure we will look into the matter in an appropriate manner.

[2:30]

MR. ROSE: Mr. Speaker, supplementary. The minister seems to require some sort of authority figure to make a report on the conditions in that particular institution or its temporary location. Two months ago a male nurse who had worked there reported to me, and I subsequently reported to other authorities that the conditions in that temporary facility for the elderly and for some retarded people were simply appalling, if not disgusting.

MR. PERRY: I can't help observing that it will be interesting to see if the members opposite pound their desks as hard when the facts about this case come out.

EXCLUSION OF SPETIFORE LANDS
FROM AGRICULTURAL LAND RESERVE

MR. PERRY: My question is for the Premier. Can the Premier confirm that during its July 16, 1980, meeting to consider exclusion of the Spetifore lands from the agricultural land reserve, the Environment and Land Use Committee heard only from the developers, who were proponents of exclusion, and not from the opponents?

HON. MR. VANDER ZALM: It seems to me that we continue to hear from the members across the way how they can do things better than local government. They would love to eliminate regional districts, school boards and municipal councils. The know-it-all NDP socialists would love to take control, and this is another example of that.

However, let me answer the question directly: no, I cannot. I was not a member of the committee in 1980.

MR. PERRY: A supplementary for the Premier. The Premier, in his former role as Minister of Municipal Affairs, dealt with this issue as a member of the cabinet, and he should know the history of that decision intimately.

Let me state as a matter of fact that ELUC did not hear from the opponents before making its decision. It only heard from the proponents of exclusion: namely, the developers. In light of that biased ELUC hearing....

MR. SPEAKER: Order, please. The Attorney-General on a point of order.

HON. S.D. SMITH: Mr. Speaker, we've had the opposition House Leader get up and make a speech; now we have this member up. We haven't heard a question from either of them. I would appreciate it if question period were used for asking questions.

Interjections.

MR. PERRY: Mr. Speaker, the energy is directly proportional to the discomfort with this question. Does the Premier not feel that the biased ELUC decision to remove those valuable agricultural lands from the land reserve was erroneous and should now be reversed? That's the question.

HON. MR. VANDER ZALM: Again, for the member opposite, who has been here for several months and now, like the rest of them, seems to believe he has all the answers, this matter was dealt with by the regional district. The regional district unanimously voted to support the Delta application for the exclusion of the land and the redesignation to urban 1. It went to the park committee, and they too dealt with it. It should be pointed out that the regional district

[ Page 8585 ]

went as far as to take a tour of the lands before they made their decision. Incidentally, a certain Mr. Rankin was a member of the committee that toured the property and unanimously supported the decision of that particular board at the time.

The Delta municipal council put forth the request; the request went to a committee. I can't comment on the cabinet confidentiality of that particular committee, but I can say that local government was very involved in the process. Local government may definitely change its mind and, after many hearings, make a submission to have things changed. I would dread the day when an NDP group would take over that role from local government. All I've heard for the last number of weeks is: "We know better. We don't need local government." This government respects the decision of local government, and we will continue to respect local government.

PURCELL HELISKIING VENTURE

MR. BLENCOE: A question for the Minister of Municipal Affairs. Given the Premier's rants in defence of local government, some weeks ago I asked the minister whether she had signed a bylaw in Golden to permit a heliskiing venture that she had been holding up since April, violating local autonomy and violating what the Premier is defending in his rant today. Has the minister heard what the Premier said today, and has she signed the bylaw?

HON. MRS. JOHNSTON: Yes, I heard what the Premier has said, and those of us on this side of the House agree 100 percent with recognizing local autonomy The matter of the bylaw that you have referred to is still being considered.

MR. BLENCOE: For two weeks the Premier has defended local government. We have a bylaw that has been requested since April. Golden council has supported the bylaw; the courts have supported the bylaw; the chamber of commerce has supported the bylaw. Can the minister confirm that the only reason she hasn't signed the bylaw is that the member for Columbia River (Mr. Crandall) is opposed and has threatened to resign if you don't sign that bylaw?

Interjections.

MR. SPEAKER: Order, please. At the commencement of last Friday's sitting, the hon. member for Omineca (Mr. Kempf) rose in his place, stating he had a matter of privilege he wished to raise at the earliest opportunity and was presently getting his material in order so that the matter could be presented to the House in a formal way. Later the same day, the member stated his matter of privilege and tendered the form of motion he would propose he move, should the Chair find that the matter raised qualified as a prima facie matter of privilege.

The essence of the member's statement relates to remarks of the hon. Minister of Forests (Hon. Mr. Parker) made in Committee of Supply on July 13, 1989, at which time the minister observed that the member for Omineca has a relative working with the Forest Service and went on to state: "The young man is probably very capable but still cannot be looked upon as being representative of all the employees of the Forest Service."

The Chair notes that the member for Omineca immediately rose on a point of order, objecting to the reference, and requested a withdrawal. The Hansard report indicates clearly that the hon. minister immediately withdrew his remarks without reservation, and at that particular point the matter appeared to be at an end.

The member for Omineca has raised the same issue as a matter of privilege, having had an opportunity to review the remarks after Hansard Blues were circulated earlier on Friday.

At this point it might be useful to redefine parliamentary privilege for members, as outlined in the seventeenth edition of Sir Erskine May at page 42. Parliamentary privilege is described there as:

" . . . the sum of the particular rights enjoyed by each House collectively as a constituent part of the High Court of Parliament, and by members of each House individually, without which they could not discharge their functions....

"The privileges of Parliament are rights which are 'absolutely necessary for the due execution of its powers. They are enjoyed by individual members, because the House cannot perform its functions without unimpeded use of the services of its members; and by each House for the protection of its members and the vindication of its own authority and dignity."

Individual privileges of members of parliament may be summarized as follows: the privilege of freedom of speech, the privilege of freedom from arrest or molestation and the privilege of access to the Crown.

Having considered the definition of privilege, the Chair must ask itself whether or not the matter raised is such that immediate intervention of the House is required. I have examined the statement of the hon. member for Omineca with great care. The Chair finds it difficult to convert what is essentially a personal complaint into a prima facie matter of privilege.

However one might view the minister's remarks during the exchange in question, the minister withdrew those remarks without reservation. It is the Chair's view that that ends the matter. Accordingly, a prima facie matter of privilege has not been made out in accordance with the long-established rules as above described.

Orders of the Day

HON. MR. STRACHAN: Mr. Speaker, the information I have is that His Honour will be here at 2:40, which is imminent, so perhaps we could just have a recess and at such time you can summon the members with the division bells, as is our practice.

MR. SPEAKER: Hon. members, we will take a short recess.

[ Page 8586 ]

The House recessed at 2:39 p.m.

The House resumed at 2:51 p.m.

MR. SPEAKER: Hon. members, I am informed that His Honour the Lieutenant-Governor is in the precincts and will shortly enter the chamber.

His Honour the Lieutenant-Governor entered the chamber and took his place in the chair.

CLERK-ASSISTANT:

Municipal Amendment Act, 1989

Financial Administration Amendment Act, 1989

Health Statutes Amendment Act, 1989

British Columbia Enterprise Corporation Loan Privatization Act

Labour and Consumer Services Statutes Amendment Act, 1989

Residential Tenancy Amendment Act, 1989

Financial Institutions Act

Motor Vehicle Amendments Act, 1989

Mines Act

Mining Right of Way Act

Waste Management Amendment Act, 1989

Energy, Mines and Petroleum Resources Statutes Amendment Act, 1989

Litter Amendment Act, 1989

School Act

Independent School Act

Hospital Amendment Act, 1989

Mineral Tax Act

Indian Land Tax Cooperation Act

Income Tax Amendment Act (No. 2), 1989

CLERK OF THE HOUSE: In Her Majesty's name, His Honour the Lieutenant-Governor doth thank Her Majesty's loyal subjects, accept their benevolence and assent to these bills.

His Honour the Lieutenant-Governor retired from the chamber.

HON. MR. STRACHAN: Before calling Committee of Supply, I wonder if I could ask leave to make an introduction.

Leave granted.

HON. MR. STRACHAN: Visiting us in the gallery today is the wife of our Minister of Forests (Hon. Mr. Parker). Would the House please welcome Dawne Parker.

AN HON. MEMBER: We did.

HON. MR. STRACHAN: I understand she was introduced. I'm sorry. But we'll do it again. Dawne doesn't visit here very often, so we'll give her two in one day.

HON. MR. STRACHAN: Committee of Supply, Mr. Speaker.

The House in Committee of Supply; Mr. Pelton in the chair.

ESTIMATES: MINISTRY OF FORESTS

On vote 27: minister's office, $327,244 (continued).

MR. MILLER: On Friday I was pursuing the issue of the Fletcher Challenge cutbacks on Vancouver Island and the role of the government in terms of this major company coming from offshore, acquiring existing companies in British Columbia and subsequently — in the minister's words — rationalizing their operations.

I don't think the minister has yet responded to the issue I raised with respect to the Forest Act and the particular sections I quoted — 27, 28 and 50 — which give the minister ample power to require certain things to be done by forest companies. Why did the minister not exercise that authority and responsibility in anticipating or asking Fletcher Challenge what their future plans were and, going beyond that, requiring a certain level of investment to be made? I wonder if the minister would care to get back onto that.

HON. MR. PARKER: As we discussed on Friday, the matter of the amalgamation of the two firms was discussed by my office. To begin with, the acquisition of those two firms was handled by previous ministers. The possibility of any rationalization depended upon subsequent investigation by Fletcher Challenge after amalgamation to determine how the two firms fit together and what, if any, changes should be made. We had long discussions on that and on the rationalization at a later date.

MR. MILLER: In that response, is the minister saying that the Crown accepted that Fletcher Challenge would advise them that there would be investigations subsequent to the amalgamation but that the results would be unknown? Is that the minister's position?

HON. MR. PARKER: As we discussed last week in estimates, the rationalization was to be subsequent to determination after amalgamation, when Fletcher Challenge saw how the two corporations fit together. The discussions were on the business plan and what sort of future there would be with the two together. They said: "There is nothing we can talk about until we really have the two companies amalgamated, at which time we'll see how the two operations fit together and determine then what sort of rationalizations and changes would take place, if any." That was subject to a further discussion at a later date when they had an opportunity to investigate what changes they would make and how the corporations would fit together. And out of that arose the determination to close the Victoria sawmill.

MR. MILLER: So the agreement was that you discussed it with the company and they said: "We're

[ Page 8587 ]

going to have to do this subsequent investigation. The results of that are unknown but will be subject to further discussion at a later date." Could the minister advise when that later date was? When did Fletcher Challenge come in and advise you of the results of their subsequent investigation?

HON. MR. PARKER: I can't recall the specific date, Mr. Chairman.

MR. MILLER: Was it prior to the announcement to the employees that they would be losing their jobs?

[3:00]

HON. MR. PARKER: It was prior to, not very long prior to, and I can't recall when that date was, Mr. Chairman. The act requires a discussion with the minister about any changes to operations of conversion plants. So we would have been apprised of what their plans would be. But I do recall them saying that they wanted to offer as much notice as they could to their employees, and it seems to me that they made their announcement to their employees either late last year or early this year. I can't recall the specific date.

MR. MILLER: I think there's a point here, Mr. Chairman, that has to be explored: just how long prior? The minister seemed to indicate by his answer on Friday that really it was.... I don't know how to put time on the words "just in advance," but those were the words used by the minister. "Just in advance." In fact, quoting from the Hansard Blues of Friday, the minister said: "I was made aware of these plans about the same time that the employees were made aware of them, just in advance."

Presumably along with the minister's other statements, the minister agreed with the plans to shut those facilities down that Fletcher Challenge presented to you.

There are two questions there: the minister agreed, and, secondly, try to be a little bit more precise. I know the minister has difficulty with memory sometimes, but what is "just in advance"? Is it a day, a week, a month? Perhaps the minister could be a bit more forthcoming.

HON. MR. PARKER: A short time, Mr. Chairman.

MR. MILLER: A short time. Could the minister advise whether that was more than a week?

HON. MR. PARKER: Mr. Chairman, a short time.

MR. MILLER: Well, Mr. Chairman, here we have the minister resorting to his usual monosyllabic response. We've gone through this fairly traumatic exercise with the employees of Fletcher Challenge, over 400 suddenly put out of work, and the minister can extol the virtues of the retirement plan. I think it in some respects highlights the need for some legislation, when it comes to giving advance notice to employees about layoffs. The largesse of various forest companies is hardly something you can rely on when it comes to losing your job and finding yourself in that situation.

"A short time." When the minister was asked questions previously in this House, he indicated that it came as almost as much of a surprise to him. But now we find that in fact the company had come in and advised the minister that there would be shutdowns. The minister has confirmed that there was an agreement between Fletcher Challenge and the government, and the government approved those layoffs in those plants.

Was there any consideration on the ministry's part — on the minister's part — to doing an analysis on whether it was advisable to keep the company separate? In terms of the net benefit to British Columbia, whether jobs or whatever, was there any kind of analysis? Did you do any kind of fundamental work in terms of that other side of the coin: would we be better served if these two large forest companies were not joined together as one?

HON. MR. PARKER: As we've said before, Mr. Chairman, the mandate of this ministry is not to get involved in the day-to-day business affairs of licensees; that is best dealt with by those whose expertise lies in that field. What we did was consider the business plans and discuss them. They were reviewed by both parties; some adjustments were made. The agreement between the licenser and the licensee was that the rationalization plan was a reasonable one in view of the changing times and log supply. The placement of displaced employees was discussed at length, as well as the plan the employer had for first providing some six months' advance notice of the mill closure, when the labour contract calls for a month. Also the licensee had a very substantial plan for making sure that the employees were placed on early retirement, if they so wished, or in other employment. The last information I had was that some 80 percent had been placed, and they were working with the balance to get them placed. So it's a pretty responsible approach.

In the meantime, we see substantial investment across the province by Fletcher Challenge in a plant at Mackenzie, in refurbishment at Crofton and in work at their plants in the lower mainland.

MR. MILLER: I believe my question was whether the government had done any kind of fundamental analysis of whether it would have been preferable to keep those plants separate. Perhaps the minister could respond.

HON. MR. PARKER: We discussed their business plan and agreed.

MR. MILLER: So there was no analysis at all. It was simply accepting.... You know, a major company comes to the government and says, "Here's what we want," and here's what they get.

Is it a fact that you knew in late 1988 that they were going to shut down the Victoria plant?

[ Page 8588 ]

Is the minister refusing to answer the question, Mr. Chairman, or is he waiting for the answer?

Isn't it a fact, Mr. Minister, that you knew in late 1988 that those plants were going down?

HON. MR. PARKER: As I said earlier, I can't recall the exact date, but it was around New Year's Day of this year.

MR. KEMPF: This is an interesting debate. It's not an exchange; I guess you might call it a debate.

Does the minister not recall a letter he wrote to Mr. Donald on October 29, 1987, laying out certain stipulations for the merger?

HON. MR. PARKER: I can't recall precisely, but the merger was one thing and the subsequent rationalization was another. The member for Omineca is a bit behind on the discussion, but that shouldn't be surprising. The member for Prince Rupert was talking about rationalization subsequent to the merger.

The matter of whether or not I recall particular items of correspondence from several years ago.... I imagine we can pull the files and find them with no problem at all; but no, I don't recall precisely what was written on what date in 1987. What the member for Prince Rupert has been discussing is rationalization subsequent to amalgamation, and what the member for Omineca is talking about is the discussions prior to amalgamation.

MR. KEMPF: Call it what you like. Did the minister not write Mr. Donald on October 29, 1987, laying down one of the stipulations for the merger of those two companies: "No plant closures or substantial reduction in the operation of any timber-processing facility will result from this change of control." Does he not recall that letter?

HON. MR. PARKER: When we, the ministry, are approached by a licensee asking for permission to transfer ownership, there is a standard reply. I think it refers to section 50 of the Forest Act, if that's what the member is talking about. If he has a copy of that letter, it may help the House if he tables it. Certainly before any such ownership change can take place, licensees must get the permission of the licenser to proceed; that indeed took place. As to the specific date, I couldn't say.

MR. KEMPF: Was the minister not concerned when he received a reply from Mr. Donald to his October 29, 1987, letter, which stated: "Some rationalization will be necessary"? Was the minister not concerned then for the closure of certain plants and the layoff of employees?

HON. MR. PARKER: We're always concerned.

MR. KEMPF: If the minister was concerned, as he seems to tell this House, then why did he allow the merger, knowing perfectly well there were going to be closures of sawmills and layoffs of personnel?

HON. MR. PARKER: Sorry, Mr. Chairman. I was busy with staff. Could I have that question again, please?

MR. KEMPF: After receiving the reply dated November 2, 1987, from Mr. Donald which stated that "some rationalization will be necessary," were you not concerned enough at that point to have some trepidation about the merger?

HON. MR. PARKER: As I said before, I'm always concerned.

MR. KEMPF: In reply to Mr. Donald's letter of November 2, 1987, there was a letter of November 23, 1987, over your signature which stated, and I quote: "Your interpretation is not contrary to my understanding of our discussion." Was that discussion around shutdowns of certain plants and layoffs of employees?

HON. MR. PARKER: The discussion included my concern for employees.

MR. KEMPF: Then why did you let the merger go ahead, knowing full well from this exchange of letters that when the merger took place there was the very real possibility of a sawmill — perhaps more than one — going down and employees being laid off?

HON. MR. PARKER: Because the determination by this ministry was that the amalgamation of the two firms was in the best interests of the province as a whole.

MR. KEMPF: I don't understand. After having made it quite clear in a letter to Mr. Donald of October 29, 1987, that "no plant closures or substantial reduction in the operation of any timber-processing facility will result from this change of control," why did you go back on your own word to require that kind of a stipulation from Fletcher Challenge before allowing the merger? If it was your understanding that no substantial plant closures would take place, and they have, why haven't you taken some action, as is your power under the act, against Fletcher Challenge?

[3:15]

HON. MR. PARKER: We are talking about two separate situations. One was a determination of whether or not there would be any shutdowns at the time of amalgamation. We were told there would not be, but that subsequent to a consideration of how the two corporations operated together there might be some rationalization which could see some changes in operations. That is what they gave us notice on, that is what we agreed to, and that is what has transpired.

The whole procedure is one in which we consider the effective use of the provincial forest resource across the province, and we have to consider levels of investment and how the evolution of the industry is

[ Page 8589 ]

coming about. The Victoria mill was set up to deal with a type of timber that is no longer in the wood supply profile to any extent. The rationalization of that mill was one where the type of timber profile that we have now in the coastal region of the province is best dealt with in modern mills and in the mills that the licensee has in the lower mainland. The large wood timber supply that was there in the past to support Victoria sawmills is really no longer there in any quantity. The determination was that the resource would be best used through other plants in the southwest part of British Columbia.

The concern about the employees at Victoria sawmills was dealt with by the employer by giving substantial advance notice of what was transpiring and making a substantial effort to place all those employees in new employment if they so wished and, in some cases, in early retirement.

MR. KEMPF: Mr. Chairman, has the minister just told this House that at that time a deal was made with respect to the Mackenzie TSA, and is that why it hurt so much for the TFL rollover not to happen in Mackenzie?

MR. MILLER: Just to get back to the line of questioning in terms of when the government was aware.... I see the Premier is in the House, and that's good to see, because he was involved in this affair as well.

SOME HON. MEMBERS: Where's your leader?

MR. MILLER: Mr. Chairman, a seemingly innocuous remark about the Premier's attendance in the House has brought a chorus of catcalls. I was simply commenting on the fact that he was here and involved in this particular issue and would be interested.

The fact is that we had a major company come from offshore, buy into British Columbia, obviously because there's an attractive investment here in terms of our timber resources, and subsequently come to the government — I'm really dealing with the merger — and propose to merge two existing companies, two companies with separate licences that were granted in the promise of certain things to be done, certain processing jobs and I guess certain community stability, which is an essential issue as well. The minister is very circumspect when it comes to discussing this whole issue, as though somehow it's some private little matter that he doesn't really want to talk about too much. He seems to have that attitude about a lot of things under his jurisdiction. I suggest that's part of his problem.

Here we have this scenario, this sequence of events, finally culminating in the public's mind, in the employees' mind, in late February 1989. All of a sudden the company announces their layoff. We've managed to drag out of the minister, in a little under an hour's worth of questioning, that he was aware of that layoff two months before the company announced it. He talked about New Year's; I assume that means January 1. Maybe it was his New Year's present from Fletcher Challenge. Two months before the employees, or British Columbians, found out, the minister was aware of it, and presumably the cabinet was aware of it.

Then when the announcement is made and the uproar ensues, when Jack Munro and the IWA become excited and when the communities become excited, all of a sudden there's a meeting with the Premier and the Minister of Forests. All of a sudden the Minister of Forests says: "Now we're going to do an audit." I don't know why he didn't think an audit was necessary before the issue became public. Was it only public pressure that convinced the Premier that something had to be done in terms of damage control? Was it only damage control when the minister reversed almost every statement he'd previously made on log exports and emerged from the meeting with Mr. Munro to announce a new policy on log exports?

There we see, as much as we can drag out at least, how this whole issue was handled — in secret. The minister would still prefer not to discuss it. He can't remember dates. He gives one-word answers; he thinks he's clever. But we see the process that took place: behind closed doors the deal was made, and the minister knew at New Year's that those employees were going to be losing their jobs. He knew.

MR. KEMPF: He knew it in '87.

MR. MILLER: He might have known it before, says my colleague from Omineca. He knew. Then the feigning of surprise, the horror: we have to react, we have to respond to the public pressure; we'll order an audit, and we'll change our export regulations. That's the sorry history of this administration dealing with these major firms, which all too often feel that they can come in and use our resources so that it benefits their bottom line the most; but it surely doesn't benefit the people of this province, particularly the people who make a living in the forest industry.

You contrast that with the.... I don't think this really went far enough, either, but when Stone bought into Consolidated-Bathurst — and the regulations have been watered down substantially at the federal level — at least there was a requirement from Investment Canada that Stone invest $1 billion. Those are the kinds of discussions they have at the federal level — or at least they had in this particular instance — when a major American corporation proposes to take over into Canada. Let's sit down; let's put some things on the table. What are you getting? What do we as Canadians and British Columbians expect in return? We can clearly see that by Roger Stone's own admission: "I wouldn't have made a commitment without that negotiation with Investment Canada." At least somebody is saying we have something to offer. We're not here at the whim of companies. We have something to sell. Let's put a price on it, and let's put a good price on it.

We can see that the minister did not do that. Instead, decisions behind closed doors and then

[ Page 8590 ]

when it becomes public, a little show for the public: "Oh, yes, we really are concerned." But the minister slips up occasionally when he does put together more than a few words. He let it slip the other day that that audit was simply an appeasement. "Simply an appeasement," were the minister's words: "I had to appease the Victoria city council, so I ordered an audit."

Well, I can understand now the Premier wanting to leave.

In any event, Mr. Chairman, it's simply not good administration on the part of the ministry, and the whole issue with Fletcher Challenge has really highlighted the question of overcutting. There is a legitimate debate about that whole question of overcutting.

One would have expected that in the case of the Victoria mill the ministry itself — the minister — would have been fully apprised of what the situation was. What was evolving in terms of that different log profile? That, I think, is something that is going to have an impact at least on the coast; I'm not certain that it doesn't also have an impact on the interior, and we will get to some specifics on that.

During that announcement by Fletcher Challenge, they produced quite a few documents, in terms of what they had proposed to do, justifying their rationalization. One of those documents was a table on what they called "B.C. Coastal Log Balance (Million Cubic Metres)." In that table they highlighted the fact that the estimated sustained yield harvest on the coast of British Columbia is 26 million cubic metres, that the 1987 usage of all the consumers was 33.7 million cubic metres, and that there was a 1989 forecast usage of 36 million cubic metres, for an estimated shortfall of about 10 million cubic metres If you add that evidence — and that evidence was deduced from a Canadian forestry residual chip availability study, December, 1988, done by Reid Collins — and if you add other voices to that, and I intend to quote a few very briefly here, there emerges a pattern which clearly, in my view and that of many others, illustrates overcutting.

Mr. Donald of Fletcher Challenge, on March 2 in the Times-Colonist, commenting on the layoff, said: "'Nothing I've heard...would make me believe that we can withdraw those termination notices,' Donald said Tuesday night following the meeting. 'The fact of the matter is there is just not enough timber there to keep all our coastal mills operating, and in particular the mills such as Victoria, which relies on old growth to keep it going.'" So there is the head of Fletcher Challenge saying there is not enough timber to keep those mills, and he includes more than just the one they shut down.

When we look at a newsletter put out by Fletcher Challenge, Newsline, February 1989, Vol. 1, No. 6, the heading of the editorial — I assume it's an editorial — is "Facing Up to the Fibre Shortage." I'll just quote a few lines from this: "But the stark reality we must all grasp is we simply do not have enough fibre on the Island to run the manufacturing facilities we are currently operating." Another quote: "We have more manufacturing facilities than the forest resources available to us can support on a sustained yield basis."

I cite a few others, Mr. Chairman. Mr. Bob Sitter of Interfor, vice-president of manufacturing, in the Sun, Saturday, March 4, was commenting on the banning of exports which became a topic after Mr. Munro twisted the Minister of Forests' arm: "Bob Sitter, Interfor's vice-president of manufacturing, said Friday part of the company's problems with supply could continue in the future as the entire coastal industry confronts a possible downsizing of annual harvests."

[3:30]

HON. MRS. JOHNSTON: Does your party support the banning of log exports?

MR. MILLER: That was a clear question from the Minister of Municipal Affairs, and the answer is yes.

A further article from the Province of April 25 deals with the fact that Canadian Pacific has announced a downsizing. I quote: "Canadian Pacific Forest Products Ltd. will lay off approximately 112 company and contractor logging employees in its Gold River division at the end of its 1989 logging season. It said the layoffs are directly related to declining harvest levels and excess harvest capacity." Again dealing with the Canadian Pacific announcement, a further article from the Province of the 24th from Patrick Durrant reads: "British Columbia's next newsprint mill starts up in September" — in Gold River — "in this Vancouver Island community with a declining timber harvest looming over the woodland workforce." Further on in the article:

"Canadian Pacific Forest Products said last month the logging layoffs are directly related to declining harvest levels and excess capacity. The combined allowable annual cut of 1.7 million cubic metres for the company's tree-farm licence 19 and forest licence has started to decline and is expected to fall below 1.3 million cubic metres. But company officials acknowledge that the problem also stems from imprecise measurement of the timber resource in earlier years and the fact that second-growth plantation trees are not ready for harvest."

Article after article. Maybe I'll save a couple and let the minister respond at this point to this most serious issue, which, as we've already seen, has affected a significant number of employees in southern Vancouver Island and which many believe will affect employees on the rest of the coast. I'd like the minister to advise what his view is on the issue of overcutting, what handle his ministry has on where we might see future layoffs and what the impact of declining harvest levels is going to have on the forest industry on the coast of British Columbia.

HON. MR. PARKER: I haven't backtracked on any of my policies on log export. Log export has its place in the forest industry of British Columbia, and the changes made earlier this year provided for a levy in lieu of manufacture in the province of 100 percent of the difference between the export price and the

[ Page 8591 ]

domestic price for logs determined to be surplus. That meant that the operator did not have to warehouse the logs in salt water and have them subjected to marine bores. They could sell them if they had the opportunity. It's just that there is no profit advantage to selling into an export market. But as far as an inventory control method is concerned, that opportunity was available.

The audit on the Fletcher Challenge tree-farm licence 46 was done out of deference to public concern on whether the management and working plans had been adhered to over the years. The records that we had in the Forest Service were that indeed the aim of appeasing had been met, but we agreed to going with an independent audit to set minds at ease on what had taken place with respect to the management working plans. I have confidence in my staff when they tell me that the obligations have been met, but if outsiders have a problem, then we go to a third party, an outsider, to have a look and, in this particular instance, to do a paper audit and field audit.

As far as cut levels are concerned, in the coastal regions of British Columbia at this time, by current merchantability and operability standards, the cut is approximately 26 million cubic metres annually on lands for which the Forest Service is responsible for management, which includes the timber supply areas and tree-farm licences of the province. Whether there is capacity in excess of the provincial annual allowable cut is a decision that individual operators have to make, and if they feel they can justify making that kind of investment, then they are quite at liberty to go ahead and do precisely that.

In the province we do have some alienated lands — those held by people other than Crown provincial — and a number of operations take place on those lands. Indeed, in some years we see a very substantial harvest come from those lands. But as far as the management of the cut is concerned on lands for which the Forest Service is responsible — and management includes taking into account things like the amount of immature stocking — it impacts on the total consideration for harvest levels.

The second growth mentioned by the member for Prince Rupert will contribute to the growing stock of the particular licence or timber supply area he was talking about, as will the old growth and the younger mature; so will the recently restocked areas. When you take into account the allowable annual cut, you also take into account those areas slated for harvest and subsequent restocking. So there is a considerable amount of consideration in determining annual allowable cuts.

We should remember that over the years, as long as we've had sustainable yield management in the province, there has been provision for an allowance to move.... It can be as much as 50 percent over the annual allowable cut in any year or, conversely, 50 percent under, but it has to be balanced at the end of a five-year cut-control period to within 10 percent. If operations have cut 110 percent for the previous five years, it means that in the next five-year period they can only cut 90 percent. So it has to be balanced over the long term, and that's the way you manage, Mr. Chairman.

MR. MILLER: Just a couple of comments on Fletcher Challenge. It seems to me — not to run over all of the ground — that a government that was aware in January that this action was going to take place did nothing until it became public. Then, when it became public, in order to deflect public criticism of mismanagement, it ordered an audit. If I were a member of the public, not knowing what we know today, I suppose I might actually take some comfort from the audit; I might actually think that the government was responding to my concerns. We find out from the minister today that it's simply out of public deference...." He used that term; I suppose that's a little better than appeasement. I suggest that you have changed your policy. I suggest that your log export policy changed substantially as a result of the Fletcher Challenge decision. One could only wonder why that wasn't done when you knew about it, not simply when it became public.

With respect to the breakdown, then, would the minister advise what the level of cut is on private land in coastal British Columbia? After all, we're talking about a fairly large deficit.

HON. MR. PARKER: Once again, Mr. Chairman, I would like to remind the member for Prince Rupert to take a look at the legislation. You'll find that we are responsible for Crown provincial land, not private land.

MR. MILLER: Mr. Chairman, the fact is that I have quoted a number of sources that say we're faced with a declining log harvest that will impact on jobs and employment. It has already. We've seen a vivid example of that in the Fletcher Challenge situation. The minister's response is that it's none of his concern.

We get this curious statement again that it's not his business if industry wants to build to excess capacity. In other words, if our capacity to process wood is greater than the amount of wood available, it's none of his concern. Yet the minister is in a position to be very much concerned about it and very much involved in those decisions. Decisions are made to award licences for processing facilities and to cut Crown timber. Are you saying that there's no analysis done internally in the ministry with respect to that question; that it is simply a matter of anybody who wants to build a plant can build one? "We don't interfere; we don't become involved. If the result of that is that there may be substantial layoffs, well, again, it's none of our concern." Is that the role taken by the minister?

HON. MR. PARKER: In the evolution that takes place in any segment, there are changes, improvements, deletions. The only private land this ministry gets involved in is that dedicated within tree-farm licences. Land that is unregulated by this ministry is

[ Page 8592 ]

land outside of tree-farm licences and outside of the TSAs; they are not Crown provincial.

The determination by operators of whether they want to expand, change or establish a plant of any kind has to be reviewed with us. When it comes to dealing with supplying those types of plants from Crown sources, we get involved in the discussions. However, there is an opportunity for a segment of the wood supply in the province which comes from lands that are not regulated by the Forest Service. That opportunity becomes available, and various people in the private sector are of the opinion that they can compete successfully for that. They may or may not opt to expand their plant or establish a new plant to take advantage of that particular wood supply.

Furthermore, as technology evolves, we find plants that can effectively convert timber supplies which in the past have been considered either non-merchantable for various reasons, or even considered weed species. As technology evolves, we find that these trees can be used. When that happens, that becomes part of the timber supply; we have to rework our numbers and reconsider merchantability factors and operability factors. That is what's done.

It's a dynamic situation; it isn't a static situation. If it was a static situation, our main industry would be spars for Her Majesty's sailing ships.

[3:45]

MR. MILLER: When I look at the question of the annual cut on Crown lands, and the fact that some of them are tied in with private lands, it seems to me that you can't simply divorce one from the other and say: "We have no responsibility for one, but we do for the other."

The model that was adopted in British Columbia for the tree-farm licence system was put in place as a means of encouraging private land owners to practise good forestry practices and bring a measure of regulation to those private lands. That was the whole premise on which we based the tree-farm licence system. Now we have a minister who is saying "Those private lands have nothing to do with me; I don't care about them. The companies can do what they want." Yet the model, in terms of administration, was to bring them together with Crown lands.

Crown lands are impacted, and we'll deal with the declining harvest that's going to be available on Crown lands as well. But in the Canadian Pacific case, where they're going to have a reduction in cut from 1.7 million to 1.3 million cubic metres, certain practices have taken place on their private lands as well. For example, in 1988 they exported 75,000 cubic metres of sawlogs off their private lands. The minister is just saying: "Well, they're in that pot over there, and we're in this pot over here and never the twain shall meet."

What kind of management is that? What kind of responsibility to manage and plan activities in the forest industry is that? The idea was never that the private lands were some little fiefdom in which the company could do whatever they wanted. It was that they would be roiled in; there would be management.

I have serious doubts as to whether or not the Crown lands themselves can sustain the level of harvest. We'll deal with that, but just before we get on to that.... What about this concept of bringing together the private and the Crown lands?

HON. MR. PARKER: During this decade, 1987 was the only year that we exceeded the harvest level on regulated lands. That year the AAC was 72 million cubic metres, and the harvest was 78 million cubic metres — well within the plus or minus 50 percent in any one year, and certainly well within the 10 percent over any five-year period.

The performance in forest management in the province has been good and continues to improve, as information is gathered on utilization opportunities and in changes in operational techniques as technology grows.

The matter of log export — the member for Prince Rupert keeps harping on log export. Log export means that you sell to some country other than Canada. He is fully aware that external trade is a federal jurisdiction. I know that people with a socialist mind do not believe in private property. Everything should be regulated: you, me, our personal lives, our personal property. It's something I cannot accept and, fortunately, that most of the free world cannot accept. It's the sort of thing the major socialist states in the world are realizing and doing something about in moving towards private initiative.

The forest lands held by Canadian Pacific Forest Products, as most people in British Columbia and particularly southern Vancouver Island are aware, are some of the best-managed forest lands in North America. A number of people have worked on those lands and been part of the silvicultural crews that have improved the crops on those lands. The harvest from those lands is not handled by the Forest Service in this instance. It's not part of a tree-farm licence; it's private property. It is being managed by Canadian Pacific Forest Products as basically a tree-farm, and it's being done in a very effective manner: full regeneration, stand-tending, aerial applications of fertilization and a very thorough protection program, not just for fire but also for insects and disease. When they crop it, it's certainly their farm to crop, and it's certainly their farm to sell the produce from. They have to sell the produce according to the laws of Canada and British Columbia. Should they opt to export some of that crop, then they do it through the laws of Canada.

MR. MILLER: First of all, I think we have a minister who is himself regulated by the Premier's office, if I'm not mistaken, so he knows all about regulation.

I wonder whether he gave that lecture on socialism to the Scandinavians when he visited them recently. I wonder whether he said to the Scandinavians: "I've just come over here to tell you how much I disagree with your system." I wonder why the minister spent so much time over there looking at

[ Page 8593 ]

their system, the one he finds so disgusting and makes such foolish statements about.

I haven't yet questioned forest practices; I'm talking about the level of cut. I would have thought the minister would be able to discern the difference. Again, I don't know why the minister would not respond in terms of the issue of managing Crown Lands and private lands, which, as I pointed out, is fundamental to the establishment of the tree-farm licence system. I've quoted endlessly here — not extensively, but endlessly — in terms of my contention. I will offer a further one from Canadian Pacific's own newsletter, May 12, 1989, Volume 1, No. 5, under the heading "Demand Triggers Supply."

"Like most coastal forest companies, Canadian Pacific Forest Products Ltd. has known for some time that declining harvest levels would have an impact on our operations. With current resources, we have the ability to harvest more timber than is available: for example, at Gold River, two million cubic metres versus 1.7 million cubic metres. So we must downsize our operations to get them in line with harvest levels."

It's the whole issue of how much we're cutting. The Ministry of Forests was, after all, substantially responsible, as it should have been, for establishing AACs' — levels of cut. In theory at least they would have done it on the basis that employment levels should be maintained, if not increased. But why would the ministry plan for a decline in harvest levels leading to unemployment? Really, the ministry should give more credit to the topic and first of all discuss the private land-Crown land relationship under TFLs and then deal forthrightly with the issue of the declining harvest.

MR. R. FRASER: Just a quick question to the minister.

MR. KEMPF: What's the annual allowable cut in your riding?

MR. R. FRASER: We've got one of the best-managed sawmills in the whole province in my riding, believe it or not. You probably don't know that, but you should know it. I know it, the minister knows it, and the member for Omineca should know it, but he doesn't.

The question I want to ask the minister today is based on a bill that was submitted by the man I consider the real leader of the opposition, the first member for Vancouver East (Mr. Williams). The suggestion was that they were going to double the amount of park space in the province of British Columbia. Mr. Minister, can you tell me what effect that would have on the forestry industry?

HON. MR. PARKER: To deal with the Gold River issue first, the issue on that particular tree-farm licence is, as I recall it, a short-term matter of balancing cut. It's not a long-term situation. In the long term, the AAC of the province is a minimum of 72 million cubic metres, because of the efforts that this ministry has put into forest renewal and stand-tending and also because of the efforts that this ministry and the federal Department of Forestry have put into the forest resource development agreements in catching up on backlog NSR in the province. We will see an absolute minimum 72 million cubic metres annual allowable cut, which has been the provincial AAC for the last five years or so.

The proposal by the Valhalla wilderness group for doubling the park area in the province would have a very serious effect on the provincial cut, because a good portion of that land is productive forest land base. As we said earlier in the estimates, I think some 26 percent of the province is productive forest land base. By today's standards, 44 percent of the province is forested. Almost 50 percent of the province is either park or de facto wilderness.

The need for preservation in park of twice the area that we have today is probably not such a bad idea if you consider all of the land forms of the province and redirect away from the productive forest land base. If we start pulling from the productive forest land base, it's unquestionable that the provincial cut will go down and jobs will be lost. The statement from the member for Vancouver East about endorsing the doubling of the park area in the province is done to play to the environmentalist-preservationist crowd, and it isn't done in the best interests of the province when it's just cast out wholesale as it was today.

What you have to do, really, is take into account what the future of British Columbia should be. Should it be one of a preserve, or should it be one of a "conserve," where conservation — the wise use of resources — is the fundamental foundation for the policies for economic development and the wellbeing of the province? I would suggest that a preservation approach to this province would be one where we basically become a welfare province and whether or not people could even afford to stay here would be in question.

MR. MILLER: The minister said "short term." I believe that was his answer: that we had some short-term adjustments. Then he talked about the FRDA program, and I believe he was offering the suggestion that we could make up some of the shortfall. I suggest we're dealing in the long term. Again, I think part of the problem is that there does not seem to be an easy reference to some fairly precise numbers. That's disturbing enough.

[4:00]

I want to re-quote the Province article of April 24 by Patrick Durrant. First of all, this paragraph:

"But company officials acknowledged that the problem also stems from imprecise measurement of the timber resource in earlier years and the fact that second-growth plantation trees are not ready for harvesting. 'We are logging 100 percent old growth, and it will be 40 years down the road before we start on the second-growth timber,' says Cliff Holst, manager of the company's Western Woodlands division."

Mr. Minister, that hardly suggests short term. We've got this imbalance. In a number of statements it's agreed that there's an imbalance of 300,000 to 400,000 cubic metres. We have a statement from their

[ Page 8594 ]

woodlands division that they can't get into second growth for 40 years. That suggests to me that the imbalance is going to stay — that there won't be second-growth trees available to make up that imbalance. Would the minister comment on that?

HON. MR. PARKER: Mr. Chairman, the Province has some pretty good guys on staff. I'm not sure that the information that winds up being printed is necessarily right on. The lands which we in the Forest Service are responsible for managing are managed in a capable and forthright manner. The provincial annual allowable cut of 72 million cubic metres, as a result of efforts made in the last five years and efforts that will be continued to be made by this ministry, will remain at 72 million cubic metres at least.

[Mr. Mowat in the chair.]

There are licensees who have been harvesting second-growth timber here. As a matter of fact, tree-farm licence 2 is a second-growth tree-farm licence. So there may be some second-growth stands that certainly aren't available for harvest for some licensees in some places. But I'll say it again: the second-growth timber, the younger mature, the older immature, the seedlings, and lands that are prepared for restocking and are being restocked all contribute to the annual allowable cut. They're all part of the harvest and management system.

The provincial AAC is sustainable today at 72 million cubic metres. The efforts we're making as a government and as a ministry are such that we will see improvements in that level in the years to come. The thing that will change, of course, is the type and size of wood available for the conversion plants, because as we get into a managed forest, then it becomes second growth, third growth or fourth growth. It depends on where you are. Sweden, I guess, in many cases is into fifth growth or fifth rotation. That's the nature of a managed tree-farm, and that's what the productive forest land base in this province is.

Perhaps, Mr. Chairman, it wouldn't hurt for us to focus a little more positively on the productive forest land base of the province. Perhaps we should consider something like the agricultural land reserve, which has grown substantially in the past decade; we should have the silvicultural land reserve, so that the fibre base for this province and the well-being of this province is safeguarded from alienation by schemes such as those put forth by the first member for Vancouver East.

MR. MILLER: I don't think the minister answered my question, Mr. Chairman, in terms of planning or managing. Is that an example of planning, where you actually plan for the falldown; you plan for a loss of volume? Is that how the Forests ministry does it?

HON. MR. PARKER: As I stated, Mr. Chairman, and I'm sure you heard me.... The member opposite clearly has some sort of hearing problem. My good friend the Minister of Transportation and Highways (Hon. Mr. Vant) often thinks that there might be just a socialist short circuit in the hearing. I stated quite clearly that the annual allowable cut today is 72 million cubic metres from lands regulated under the Forest Service. There will be at least 72 million cubic metres, and we fully expect to increase that as a result of the management programs undertaken by this ministry and the dedication of this government to funding those programs and as a result of FRDA, the agreement reached between the province and the federal government to take care of backlog reforestation in the province. So our AAC will continue at 72 million cubic metres or better, and that is because of commitment and capable forest management.

MR. MILLER: Mr. Chairman, I will quote just a couple more. A Province story of Thursday, May 18, quoting Brian McCloy, the environment manager for the Council of Forest Industries of B.C. The minister said our AAC would continue. Mr. McCloy said in this article: "...less money for forest renewal would mean an even bigger reduction in timber harvests by the turn of the century than is already anticipated." There is a spokesman for COFI who is saying that there is going to be a reduction in the timber harvest. There is another article quoting Mr. Graham Lea, of all people, of the Truck Loggers' Association — he sounds familiar. Mr. Lea said in this article on February 23 in the Vancouver Sun: "...there isn't enough timber to support all the processing capacity on the coast." He said his association's review of the Canadian Pacific situation "led the forester" —  they used a forester to do it — "to conclude that there was a gap of about 400,000 cubic metres between what the mills need and what the company's timber rights can supply."

In the same article, quoting Mr. Neighbour of Fletcher Challenge:

"'There's a gap between when our second-growth is ready.... It varies between 15 and 30 years out in time.' just how much old-growth big-log timber is left? It's anybody's guess,' says Mr. Neighbour."

The story then goes on to say:

"The most recent study, released last year, concluded that old-growth timber will be depleted on Vancouver Island and the adjacent mainland within 30 years. That study said that in three areas it will be depleted within ten years. That study was released by the Canadian Forestry Service and the Forest Engineering Research Institute of Canada and looked at old growth left on the coast to estimate the coastal logging industry's equipment needs."

There we have again, I would say, reliable people in the industry: Mr. McCloy of COFI, Mr. Lea and Mr. Neighbour, all saying that we have a problem. All we get from the minister — and I'm afraid it's not that reassuring — is: "Don't worry, be happy. It will be 72 million cubic metres." That's it; we don't have a problem.

I guess those employees of Fletcher Challenge probably wouldn't be too eager to trust. How about Peter Pearse, who is well respected and conducted the last royal commission on forestry in this province?

[ Page 8595 ]

Mr. Pearse had a variety of things to say about the coastal timber shortage two years ago, and I think they probably still apply, if not more so.

In a story in the Vancouver Sun on January 14, 1987, Mr. Pearse said.... At that time he wanted an independent public inquiry into what he termed:

"'...a critical timber supply problem on the B.C. coast.' Timber supplies, the UBC professor warns, are much lower than is generally believed, and there will have to be reductions in the volume the industry is allowed to harvest. Pearse said Ministry of Forest inventories that suggest there is a 74-year supply of old-growth timber left in B.C.'s coastal regions are misleading, and the concept of 'sustained yield' is not being practised."

Fairly harsh words, Mr. Chairman.

"'In spite of the rhetoric since the 1945 Sloan report on sustained yield, we have never really been following a sustained yield policy. It is a forest conversion policy,' Pearse said."

So, Mr. Chairman, you can forgive me if I have some difficulty accepting the minister's very brief statement that there is no problem. It appears that right across the board, whether we are dealing with the Council of Forest Industries, individual forest companies, the Truck Loggers' Association or Mr. Pearse and the academic community, they are all saying essentially the same thing: that indeed we do have a problem; that there is an imbalance; that the amount of fibre simply will not be there; that we are running out, and in some areas very quickly; and that it is going to have an impact on employment in processing facilities.

I repeat: I would like to know the minister's feeling about the responsibility he has there. What about these declining log harvests and the impact they are going to have? Have you identified them? Do you know where they are going to occur? Do you know the impact, at least in today's scenario, in terms of employment or unemployment?

HON. MR. PARKER: The member for Prince Rupert cites a number of press items. The one he attributes to Mr. McCloy of the Council of Forest Industry talks about a reduction in cuts. I'll tell you, the cut levels on Crown provincial lands, which the Forest Service is responsible to manage, will support 72 million cubic metres or more, as they have over the last five years and will for the foreseeable future.

Anybody speaking for COFI would be speaking of their total cut, which includes cut or harvest from lands for which the Forest Service is not responsible. Those are unregulated lands, private lands, and we've already seen from Fletcher Challenge and Canadian Pacific Forest Products some reduction in cuts on their private lands. But where they manage those lands, they will take so much one year and less the next. Over the long run it will balance off. That's on private lands, which are not under the mandate of this ministry, by legislation.

If anybody cares to read the Blues from our debate here earlier today, I stated that indeed there is overcapacity in the province for the fibre supply from the regulated lands provided by the Forest Services; that's the 72 million cubic metres. The capacity is something in the neighbourhood of 86 million cubic metres. That has been filled to some extent by purchases from private lands, but it has also been purchased across the line in Washington State. I don't know of any industry that runs at 100 percent at all times. So it's somewhere around 90 percent or better, and at 90 percent or better the capacity in the forest industry at this time is quite supportable by harvest from regulated lands and from unregulated lands.

What's available for mature timber for harvesters or supply for mills has been reported as being "anybody's guess" by the member for Prince Rupert. As we evolve in the forest industry and develop new techniques for extraction and conversion, we find that all of a sudden we have a use for timber that previously we couldn't access or was considered non-merchantable by the standards of the day. So it's a dynamic situation, as I've said many times. It may not be highly animated, but it is dynamic, and the standards and technologies change and evolve. So what was yesterday's garbage — if you want to call it that — or yesterday's inaccessible timber is today's accessible timber or desirable wood furnish.

So that's not a bad statement: it's "anybody's guess." You try to see ahead as to what's going to evolve, what's going to develop and what sort of species, sizes and types of terrain are usable and operable. So that is an open-ended situation; there's no doubt about it.

Fortunately the industry in British Columbia has been a world leader in the development of technology not only in conversion, but in logging operations. When I talk of logging operations, I don't just mean the means of yarding, but the means of felling, building roads, water transportation such as the self-propelled log barge and so on. British Columbia has been a leader and will continue to be a leader. Not only that, they'll have the wood resource they need to continue to build on as far as leading the world in forest conversion technology and forest management technology.

[4:15]

MR. MILLER: I keep trying to get the minister to deal realistically with the issue of the falldown. He rejects the quotes I've used. Again, I think they're reasonable and balanced in terms of the cross-section they represent.

I wonder if the minister would care to comment on a statement he made in an article printed in the Western Silvicultural Newsletter in spring 1988, when he was asked.... He can say this is not correct if he likes, but under the heading of "Falldown in Allowable Annual Cut," these are the minister's words: "Finally, I was asked to comment on a question: is British Columbia facing a falldown in the allowable annual cut that could be averted with intensive silviculture? Yes, there is an anticipated falldown. In some cases intensive silviculture may be able to alleviate it, but not in all cases."

The minister's own words say there's going to be a falldown. Where is it? How much? When?

[ Page 8596 ]

HON. MR. PARKER: Intensive silviculture — the comment he refers to — is one of stand-tending. The forest renewal requirements we've instituted as of October 1, 1987, together with intensive silviculture, improved technology, improved logging techniques and equipment and the use of species such as aspen that before were considered weed species, will see a sustained level of annual allowable cut and probably an increase. I fully expect a substantial increase in annual allowable cut, because of the commitment this government has in all aspects of forest management.

MR. MILLER: Mr. Chairman, the minister's own words were that there would be a falldown in the allowable annual cut. Where? How much? When? These are legitimate questions that people want the answers to in various parts of this province. You have said it's going to happen. Where is it going to happen?

HON. MR. PARKER: There's a falldown only if we do nothing, Mr. Chairman. And to take the comment out of context isn't doing a service to this House.

MR. MILLER: Mr. Chairman, I did not take the comment out of context. I'll read more of it if the minister would like.

I would like to get some answers, as would the people of British Columbia about what their future is in forestry in various regions of this province. I've cited a number of instances where knowledgeable people in the industry have said there will be a reduction in harvest — the same volume will not be available. The minister has said it himself. We'll deal with silviculture later, but to the best of my knowledge there is virtually no intensive silviculture being practised in British Columbia. On balance, to increase the growth, I'd like to know.... Again, I don't want to get into silviculture at the present time; but I'm convinced that intensive silviculture is not being practised on the tree-farm licences. In fact, I think there's a fundamental problem there in terms of who reaps the benefit of investments.

But let's get back to the topic. Let's deal with the coast of British Columbia. Where are we going to see the next impact of this falldown?

HON. MR. PARKER: Mr. Chairman, with the commitment to forest management and the forest resource development agreement, circumstances that were reported in 1984, which said that if we did nothing this would be the case, have been offset They've been offset by forest renewal on NSR lands and on recently harvested lands; by improvements in harvesting techniques — skyline yarding and helicopter yarding, for example — by reduced losses in waterborne transport — going with towed and self-propelled barges — by improved sawmill technology and better recoveries; by biotechnological improvements in forest regeneration — improvements in growing stock, through substantial effort on the part of the Forest Service research division and private licensees — and by genetic improvement of growing stock. There are a substantial number of improvements that have taken place since five or six years ago, when an analysis of the status quo was that if we did nothing, we'd be looking at substantial setbacks, substantial reductions in AAC — or falldowns, as the member opposite refers to them.

A great number of positive steps have been taken, as I've reiterated here a number of times — and I really don't care to reiterate again; we can all read Hansard and the Blues. A substantial effort is being made by this government and the Forest Service to make sure that all falldowns are mitigated and that the AAC of the province, at 72 million cubic metres, is indeed sustained and actually improved upon.

MR. KEMPF: Most of this discussion around the sustainability of our forest stands at the level they are today has been about the coast, and I'd like to move that into the interior for a moment. The minister said last Thursday in this House that he disagreed with the W.D. Ewing report of December 1986 that the Prince George TSA was dangerously overcut. Since that time, what has been done in the Prince George TSA to increase the annual allowable cut? And while the minister is at it, could he tell me what the annual allowable cut is for the Prince George TSA, and what inventory it's based on?

HON. MR. PARKER: Mr. Chairman, I imagine that in a few minutes we can share with you the AAC level of the Prince George TSA. But what has taken place in the TSA? Well, during this decade a very substantial log salvage program took place in the Prince George TSA, where licensees were concentrated on some supply blocks that were absolutely devastated by spruce bark beetle and mountain pine beetle. That effort basically took place in the Willow River and Bowron River drainages. The area that was harvested is currently being restocked.

There are some things learned there, as a matter of fact, just by way of interest. Under the circumstances, to salvage the wood, there was a very limited time-frame and a very substantial area, so it resulted in a very substantial clearcut area. We learned that we had to make adjustments for the microclimate changes in the area, and found that some of the growing stock that had been planted in parts of that clearcut did not survive because of the changes in the microclimate. So species that do survive under those circumstances have been introduced in those areas. They are indigenous species and pioneer species such as lodgepole pine and Douglas fir.

The purpose of that rapid move to regenerate the areas was to make sure that the growing stock was established prior to brushing-in of the sites and also because most of the seed sources had been killed by a bark beetle infestation. We had to provide artificial reforestation, and that's well in hand. That growing stock contributes to the total annual allowable cut calculation of the Prince George timber supply area. That's a very substantial timber supply area. It covers from about east Fraser right through to the head of Takla Lake.

[ Page 8597 ]

I don't know if staff have the annual allowable cut levels. We can bring that in a little later, Mr. Chairman. The purpose of the Prince George timber supply area, of course, is to supply the needs of the mills in the areas of Fort St. James, Vanderhoof, Prince George and down towards Dunkley and the upper Fraser. It's something that evolved out of the rationalization from the old public sustained yield units, which at one time were based upon manufacturing centres of the day, back some 30 and 40 years ago. The TSAs were set up more than a decade ago, and they are a reflection of conversion centres in the province at the time.

Prince George TSA is one that's quite diverse, going from interior wet belt to the spruce-pine and pure pine forests of the interior plateau. So it has quite diverse growing sites, quite diverse soils. It's a little different than what we see in much of Scandinavia, which is often held up as an example of how you manage spruce and pine forests. There is more diversity there, because we do run into several other timber types. Where the Scands look at basically Norway spruce and Scotch pine, we have to look, in that Prince George timber supply area, at mountain hemlock, western red cedar, Engelmann spruce, white spruce, lodgepole pine, Douglas fir, and now aspen and, to some extent, birch. It gets quite diverse.

MR. KEMPF: I thank the minister for that lesson in history with respect to the Prince George TSA. I'll wait, though, for the AAC figure. He still didn't answer the question of what inventory and when that inventory was done that this AAC is based on. What is the inventory that it's based on? When was that last inventory done? While he's at it, with all this new technology — and I appreciate that there has been a lot of technology in the last decade or two — what now is the rotation time of, say, lodgepole pine, western white spruce or the other species that grow in that area? How much have we increased that rotation time by this technology?

[4:30]

HON. MR. PARKER: There has been a continuous forest inventory in this province now for some 40 years. The inventory system was one that in the past was based on a sustained yield unit. We have moved, as I said earlier, to timber supply areas. Often these timber supply areas are administered by one district office, and the updating of forest inventory information now lies with region and district instead of with a centralized inventory division at headquarters. So the updating of information comes basically from field staff. Our inventory division down here in Victoria has developed some systems that are of interest to a number of offshore jurisdictions which use remote sensing to keep track of natural resource developments. We are looking at that technology transfer at this time and actually getting it in place.

The SYUs that constitute the Prince George timber supply area are several. I'm sure the member from Omineca is trying to pinpoint the last time that any one of those sustained yield units was inventoried as a unit. If you go back to those surveys, I think you will find them classified as interim surveys, because everybody realized then — as we do now — that forest inventory is something you have to continually update. I would have to check in the old records as to when those particular SYUs were inventoried, because as I said, a number of sustained yield units are involved there: the Willow, the Bar N, the Longworth, the Nechako, the West Lake, the Carp, the Takla, to mention some of them. It's not the sort of thing where I have instant recall, so I can't help the member from Omineca; but if it's important and pressing and he needs to know, I'm sure we can source that for him.

MR. KEMPF: Yes, it is very important, not for me to know, but for the people who live in the communities of Fraser Lake and Vanderhoof and Fort St. James and others in that TSA. It is for the exact reason that the minister just stated that I have a real concern about that situation: I think we're robbing Peter to pay Paul, and there are going to be some great losers in this scenario. There are going to be some falldowns; of that, there's no doubt.

Whether the minister believes the Ewing report or not, it tells exactly what the problem is in the Prince George TSA. You can go as far back as the 1956 Sloan commission report and it will tell you exactly why we should never have gone to TSAs in the first place. I quote from Mr. Justice Sloan himself:

"To satisfy the essential criteria of a sustained yield unit, it must be organized regionally to produce a sustained annual yield under a single working plan, but it would be technically impractical, in an economic and social sense, to attempt to manage the forests of a whole country — or something as large as a TSA, presumably — as a sustained yield unit..."

The minister has just said how large the Prince George TSA is. Yes, it's very large, and it encompasses a number of areas and communities.

"...with the consequential result that in all probability regional areas would be seriously overcut."

That is exactly what's happening with respect to the Prince George TSA — and not simply the Prince George TSA, I would suggest, but a number of other TSAs in this province.

You don't have to be an expert. You don't have to know what the rotation periods are. You need only go out there without blinkers on, open your eyes and see what is happening. They're already fighting for timber on each other's back doorstep. That's why the whole idea of the Mackenzie TFL was ridiculous. They're logging on the Fort St. James doorstep, to the southwest out of Burns Lake.

The minister himself had to get into all kinds of trouble with respect to the Takla-Sustut timber and where it should go, merely for short-term gain and long-term pain. He had to direct the Takla-Sustut timber through the community of Fort St. James and into Prince George because of the very things that W.D. Ewing said in 1986. Talk, if you like, about all of the technologies; nothing has changed. Twenty years from now we'll have ghost towns because of the TSA

[ Page 8598 ]

system. Is Fort St. James one of the sacrificial lambs, Mr. Minister?

Again I say: you don't have to be an expert. You don't have to know how fast a tree will grow. In that part of British Columbia, you'd have to be a real expert to grow a tree in less than 80 years — an 80- to 120-year rotation depending on species. Mr. Minister, I spent 20 years in the industry as well.

We're going to have ghost towns in British Columbia because of the falldown that you will not recognize. Mr. Chairman, in last winter's operating season 200 loads of logs a day traveled through the main street of Fort St. James to places elsewhere that were 50, 60 and 120 miles down the road. How long do you think you can sustain that within the radius necessary to transport wood? Or within any radius, because they are coming in from the north and from the southwest; they've already come in from the east. What's left? Where are you going to go? They're already across Sabine Lake, taking it as far as Tahtsa Lake into Burns Lake and Houston.

You're running out of space. You're running out of province, and you're running out of timber. That is the truth of the matter. The minister can stand up here and talk about his 72 million cubic metres a year all he likes. But we've got a sustainability problem in the centre of this province. Can the minister get up today and tell the people of Fort St. James, Vanderhoof, Burns Lake, Houston, Smithers or in his own constituency of Hazelton that 25 years down the road they're going to have the kind of industry they have today in their communities?

No, Mr. Chairman, he cannot. Whatever stories he wishes to make up to feed the people of British Columbia, he cannot do that today. You don't have to be an expert to know that. You need only go out there with your eyes open and see it.

You may have some fibre left out there, but you're not going to have the kind of wood that is now being processed in the plants in those communities — not by a long shot. All you're going to have 25 years down the road on your high-technology plantations are Christmas trees. Is that where the minister is going to come up with all of those jobs that are going to be created that he spoke so highly about last Thursday and Friday? Yes, the loggers are going to be relegated to farmers, because all there's going to be left to do is plant. The harvesting will have all been done, finished and complete.

Then where will the multinational integrated companies be? They certainly won't be in Fort St. James running a sawmill; they won't be in Houston running a sawmill; they won't be in Burns Lake running a sawmill; they won't be in Vanderhoof running a sawmill. They'll be gone from this province. We'll be taking all that fibre which is left — and there will be precious little of that — into the pulp mills in Prince George.

That's what will be left of a once proud forest industry in the very centre of this province. Those are the concerns I have. I would think the second member for Cariboo (Hon. Mr. Vant), the Minister of Transportation and Highways, would have those same concerns.

They are knocking on our back doors, coming out of Blackwater. We have reached each other's doorsteps. The plentiful supply of timber that we once thought we had in British Columbia is gone. We are working on the last of it in north-central British Columbia, where, as I say once again, it takes 80 to 120 years to grow a lodgepole pine large enough to cut a 2-by-8 out of. Those are the kinds of concerns that I have for not only the people I represent but a whole lot more in the northern two-thirds of this province.

That government likes to talk a great deal about regionalization. We'll have regionalization all right. We won't even have governments in those communities to listen to, because 20 or 25 years down the road we won't have communities.

You can talk about all the high technology you like. The only high technology we have in British Columbia right now is the technology devised by multinational integrated corporations to take our money elsewhere in the world and use it there. That's the high technology the minister talks about. It sure isn't a high technology of sustained yield.

The death of those communities started when we left the old system of sustained yield units in British Columbia. We signed the death-warrant for those communities on that day. That's over ten years ago, and it is ten years worse today than it was then. We signed the death-warrant of the small resource-based communities in British Columbia when we deviated from the sustained yield unit.

[4:45]

All we are going to have in those communities 20 years from now, as far as a forest industry is concerned, is a bunch of farmers planting Christmas trees. That's pretty sad. The minister hangs his hat on 72 million cubic metres a year. Of what? Sawlog material? Anybody living in those communities can see as clear as the nose on his face when he looks in the mirror that 25 years down the road there will not be an industry as we know it today.

What is the minister going to do about that? He is the minister now. Perhaps mistakes were made in the past; but even if it looks hopeless, we shouldn't continue to make those same mistakes today. What is the minister going to do? What answer does he have for those people who live and bring up their children in those communities? That's the question I have, Mr. Chairman.

MR. CHAIRMAN: Shall the vote pass?

SOME HON. MEMBERS: Aye.

MR. MILLER: Not even the silence of the minister — the refusal of the minister to answer fundamental questions that are of concern to people in this province — will allow the vote to pass.

The minister has talked about planning. Let's deal with the Prince George TSA. First of all, perhaps the

[ Page 8599 ]

minister would advise me how many of the new TSA plans are completed?

HON. MR. PARKER: I presume the member is asking about the TSA plans. Every TSA in the province has a management and working plan. It is reviewed on a five-year basis. They are all in a state of planning from one time to another. As far as the Prince George plan is concerned, we are very close to studying the next management and working plan. The last one was about five years ago.

MR. MILLER: The minister might want to correct the information I have. As of March of this year, my office has only been able to get three completed TSA plans — Lillooet in 1988, Lakes in 1987 and Prince George in 1986. Only three of the TSAs have completed TSA plans.

HON. MR. PARKER: As far as I know, there is a management and working plan for every TSA in the province, and a number of those are actually working on their second round of planning. The province has about 34 TSAs, and every one of them has a management and working plan in various stages. Some are running out, some are being redone and some are active.

MR. MILLER: The process of TSA planning, as I understand it, is that there is indeed a new plan every five years, and in that five-year period, various things are done: the terms of reference are set; information reports are received; analysis reports, options reports and AAC rationale statements are worked on. Then, in five years, you have a plan.

Currently the only up-to-date plans — and to my information, the last time they were all done was 1981 — are three: Lillooet, as I said, Lakes and Prince George. In addition to that, only four TSAs had reached the stage of completing their analysis report. To compound matters, in trying to do some basic research on figures, I am advised that the ministry can't give me AAC figures for timber supply areas because they are programming their computer. So we've had to use volume-billed figures in order to do some of our basic research. Three complete TSA plans and only four TSAs that have reached a point of doing the analysis report — is that an example of up-to-date planning in timber supply areas?

HON. MR. PARKER: Every one of the TSAs has a working plan, and every one of those working plans is under review. You have to because it's an ongoing system; you don't sit back and wait. Every one of them has a management and working plan, and replacement plans are underway.

MR. MILLER: Could the minister advise me how many of the plans due for 1986 have been completed?

HON. MR. PARKER: My instant recall is going away. I have to ask the staff for records.

MR. MILLER: Well, we always encounter this problem: whenever the questions get to the point where there is some reluctance to answer, the hazy memory steps in. This minister constantly castigates people for not knowing enough about forestry and sets himself up as someone who does. There are only 34 TSAs, did he say? I wouldn't think it would be that hard for the minister to remember how many have plans in place that were due in 1986. I've given him a clue; I've already told him three.

If they were all complete, I assume he'd tell us that. Therefore I'll have to assume that they're not all complete, and ask the minister why there has been such a delay in completing the TSA plans in this province.

HON. MR. PARKER: For the third time, the TSAs in the province are all operating under management and working plans, and every one of those plans is in a different stage of update.

MR. KEMPF: If that is so — and I take it as the truth — could the minister then tell this House what the inventories in each of those 34 TSAs are? If there is a management and working plan in place, surely the province knows what the inventory of each TSA is. If you don't, would it not be a serious mistake to be operating on a premise that you do have a certain annual allowable cut in each of those TSAs? What's the annual allowable cut in the 34 TSAs, on a TSA basis?

MR. MILLER: It's extremely difficult. The minister keeps talking about wanting to discuss forestry on an informed basis and then refuses to answer questions in this House. He refuses to get up off his chair and answer fundamental questions, Mr. Chairman. It's shocking.

Would the minister confirm that there are only four timber supply areas — and some of these TSA plans, by the way, are almost ten years old — that have completed the analysis report? Would he also confirm that they are four that were done, really, in anticipation of the TFL rollover hearings — that policy that the minister had, which I guess he got from COFI and which has now been taken out of his hands and given to someone else to look at? There are only four TSAs that have completed their analysis report: Strathcona, where we know there was a scheduled public hearing on a TFL rollover; Mackenzie, where we know there was a scheduled hearing on a TFL rollover; Arrowsmith — we hadn't got that far yet; and North Coast. Will the minister confirm that?

MR. KEMPF: While the minister is not confirming that, would he not confirm something else for us? If the minister is telling this House that he doesn't know what the inventories are in the 34 TSAs, how then can he stand in this House and assure the people of British Columbia that 72 million cubic metres is a logical and fair and sustainable annual allowable cut for the province? If you don't know what the cut is in

[ Page 8600 ]

the TSAs, how do you know what the total annual allowable cut is for the province? How can you stand there and say that 72 million cubic metres is in fact the sustainable annual allowable cut?

We can do this all day, Mr. Chairman. Let the record show that the minister isn't about to answer questions with respect to the operation of his ministry, questions that are crucial to the very existence of whole communities — not only whole communities but whole regions, if we are hung up on the regional system. How can you do that, Mr. Minister?

MR. MILLER: If the Minister of Forests refuses to get up and debate his estimates, I think it is a sad day for British Columbia — a sad day indeed.

I'd like to deal some more with the TSAs. I have some information here that I received from the Ministry of Forests. It is dated March 1989, and it's the TSA report summary. Perhaps the minister could confirm that these figures are accurate. We will go through the province by region.

We will start with the Cariboo and the 100 Mile TSA 23. The analysis report was done in 1981 Information report: no date. Analysis report: no date It hasn't been done. Quesnel, No. 26. Analysis report: 1980. Info report: nothing, no date. Same with the analysis report: it hasn't been done. Williams Lake — there is one that's done; analysis report completed in 1988.

Moving to the Kamloops TSA, the analysis report: 1981. There has been no analysis report since. Lillooet: done in 1980, and they have an info report for 1986. Merritt: again 1982 was the last analysis report; there is no new one. Okanagan: that's one that's completed; it was done in 1988.

[5:00]

We go through these. We see that the Arrow TSA is not done; the Boundary TSA is not done; Cranbrook, 1985; Invermere not done; Kootenay Lake not done; Revelstoke not done. These are all plans done in 1980 and '81. Dawson Creek not done. There have been some changes in the boundaries of the districts and names of the districts, so there may be some.... Dawson replaces the old Peace, and Fort St. John is in that as well. Mackenzie is done, as I stated, in anticipation of the TFL rollover. Going further — Bulkley Valley, 1981 — not done to date; Cassiar not done; Kallum not done. Sorry, Kallum's got an info report in 1988.

So we have a history, Mr. Chairman, of the ministry failing to do its work and the minister refusing to stand in this House and explain why that is the case. Why are there so many gaps, Mr. Minister? Why is this work not proceeding? Is this faulty information we received from your ministry? Why aren't these plans updated to reflect current inventories and all of the other factors that go into these TSA plans?

HON. MR. PARKER: Every one of these timber supply areas in the province is operating under management and working plan, and every one of them has an updating process for the management and working plan. In every instance the member for Prince Rupert raised, there is work in process as those plans are updated. The ministry continues to work on updating. That's the way the various ones he cited as being complete have been completed: purely through a process of continuing to update and make the information current. That's the case with every timber supply area in the province.

Every one of them is working under a management and working plan, and every one of them is in the process of being updated, even those the member for Prince Rupert flags as being complete. They are complete for that particular instant in time, and they too are in the process of update. It's an ongoing process, as I have said before.

MR. MILLER: We have critical questions of log shortages, and the ministry's ability to plan has been called into question. Yet in the face of a document that shows that we have not completed new plans for timber supply areas.... For those members who are unaware of what a timber supply area is, it is in effect a TFL held by the Crown, if you like. It is an area that we designate and within which we plan in terms of the level of harvest, the inventory and all of those kinds of issues. The Crown assumes that responsibility, unlike a TFL, in which we turn over that responsibility to a private company.

I don't know if we'd be satisfied if a private company had this kind of dismal record in planning, but the fact is that since 1980-81, in the majority of timber supply areas we are operating on the old plan. In some cases there has not been a new plan produced for ten years, yet there should be one every five years. Why has that been allowed to develop?

HON. MR. PARKER: Mr. Chairman, the process of management and working plans for timber supply areas is long and involved, and it includes input from users other than just the Forest Service; that is, the licensees and all the other players. It includes the lands branch and their program for agriculture leases; Fish and Wildlife; the water management branch; range management; Municipal Affairs, in some of the requirements of some of the municipalities in the area; and watershed management. The list is substantial. Those are just some of the instances, and the planning process is long and involved. It is an ongoing process.

The options reports for most of those TSAs are close to being completed and will be shared with the public as soon as they are available, because the planning process is very much a public process. There are substantial opportunities for public input into the system.

MR. MILLER: I don't know how the minister can say, in response to the earlier discussion we had on falldown and sustained harvest, that we don't have a problem, that we can continue with the current level of harvest and that there will be no falldowns, if he's operating on plans that in most instances are ten years old. I don't know how the minister can expect

[ Page 8601 ]

anyone to have any level of confidence in what is put out by the ministry on these critical questions, if we're operating on plans that are at least ten years old. There is a developing crisis of confidence when it comes to this ministry.

With regard to the Prince George TSA plan, it appears that there will be a substantial falldown. In fact, there could be a falldown of up to 900,000 cubic metres per year in that Prince George timber supply area. Would the minister advise if that is correct? What steps are being taken to mitigate, if you like, the impact of that falldown?

HON. MR. PARKER: I can't confirm whether that's the correct figure or not. As I've stated earlier today, the changes that we made on October 1, 1987, on forest renewal obligations, and the policies we established at that time for forest renewals were for a free-to-grow state. In the commitment that this ministry has to forest renewal for areas which this ministry is responsible for regenerating and through the forest resource development agreement, there are a number of initiatives and undertakings in place to make sure we can continue to maintain the provincial level of cut of 72 million cubic metres or better.

MR. MILLER: We do allow ministers to have staff on hand to assist them in providing answers to those questions that they can't all recall themselves. Given the fact that we've had a series of non-answers from the minister today, it might be appropriate if the minister sought assistance from his office in answering these fairly basic questions about the operation of his ministry. It makes it extremely difficult to debate.

The 1986 TSA plan for Prince George says that over the next 20 years, there's an expected falldown of 12 percent from the 1988 billed volume and a falldown of 6 percent from the plan's current harvest level. In addition to that, if the railway is not reopened into the Takla-Sustut, providing access to that timber by 1991, we will have a falldown of 900,000 cubic metres. I would simply ask the minister to advise us what he's doing in terms of working on that problem.

HON. MR. PARKER: Sorry, Mr. Chairman, I was in discussion with the staff, as you probably noticed, and I'd like to hear the question again, please.

MR. MILLER: I asked the minister to comment on the 1986 TSA plan for Prince George, and the fact that it indicates a 12 percent expected falldown in the 1988 billed volume and 6 percent from the plan's current harvest level. If the Takla-Sustut is not opened up via the railway, we'll see a total of about 10 percent or 900,000 cubic metres taken away from that AAC. What is the ministry doing about that?

[Mr. Pelton in the chair.]

HON. MR. PARKER: In the Takla supply block area, there are several blocks within that area. It is accessed in part by the Leo Creek forest road and in part by the Dease Lake extension. The Dease Lake extension has not been active for some seven or eight years as a functioning railroad. A couple of years ago — 1987 — a non-renewable forest licence was offered in that area for some 400,000 cubic metres AAC. The successful tenderers were two consortiums from Prince George who offered to refurbish that railroad to an industrial railroad state. At present, they are negotiating with B.C. Rail to bring that about, at which time the Takla region of the Prince George TSA will be accessed for commercial logging operations.

The issue of falldown depends upon what sort of management undertakings are followed; and until you identify the problem, you can't really have a solution. The falldown possibility that may happen some decades in the future can be offset by the way in which we undertake forest management today. The forecasting in these TSA analyses is often the basis for longer-term forest management regimes for different parts of these timber supply areas, because each of them is unique.

As I mentioned earlier, the Prince George timber supply area has some interior wet belt areas In its southeast region, but it's an entirely different climate and terrain in the northwest. It's a very diverse TSA and it demands different management regimes within the TSA. And that analysis is ongoing, with improved operating technologies. It's not a static situation. The Prince George TSA serves a number of communities and will continue to serve those communities, including Vanderhoof and Fort St. James.

[5:15]

MR. MILLER: Mr. Chairman, I need an interpreter to figure out what that was. I think it meant nothing. I don't think the minister answered the question at all. I asked him what specifically.... The minister said: "Until the problem's identified we can't plan." In 1996 the problem was identified. The question is: what are you doing? This gobbledegook, which is exactly what it is, doesn't make any sense. If that's what you tell people out there, no wonder they're upset about you. What are you doing? You've identified the problem.

Let's move you along. You identified the problem in 1986 — and it's a serious problem, a possible 20 percent reduction in harvest in the Prince George TSA. So surely the minister would want to advise the public how the ministry is planning to meet this problem in Prince George.

HON. MR. PARKER: The member for Prince Rupert is shouting the answer to the question. He asked me what we're doing about Takla. I told him what we're doing about Takla. I don't know what his problem is. He doesn't listen. I guess it's that short circuit that a friend of mine refers to from time to time.

What are we doing? It's a matter of record. We have extensive seed orchards in the Prince George area for genetic improvement so that we can get better growing stock and harvest it in a shorter period of time. We have a research facility at Prince

[ Page 8602 ]

George and are in discussions with the federal minister on further research facilities in Prince George. We are into substantial biotechnology efforts with B.C. Research and with our own research branch here in Victoria. We have committed some $7 million or more to a centre at the University of Victoria. We are committed to further funds on the UBC campus for Forintek-FERIC to improve technologies in both harvesting and conversion.

We are refining technological transfer techniques for taking information from remote sensing and translating it to tools that we can use in resource management. We are updating the map program in concert with the Ministry of Crown Lands, in that we're developing a mapping system that works in three dimensions and is actually transferred to the user on disk. The user doesn't just sit with a planometric map, as in the old days, but with a piece of usable three-dimensional technology that he puts into his computer for analysis, such as of the visual impact of harvesting or some assessment using soils information and other geological information that our terrain mapping provides for impact on watershed management and operations within particular municipal watersheds. As a matter of fact, that technology is going to be extremely useful because we're going to be able to determine from that terrain mapping information various slopes and aspects for forest renewal from the standpoint of engineering, and especially the hydrological impacts of any road engineering. Those tools are very substantial. Those are just some of the things that come together to help us develop more meaningful management and working plans not only for TSAs but also for tree-farm licences in the province.

MR. MILLER: The minister talked about seed orchards and about better-growing stock that could grow faster. What level of intensive silviculture — and what cost — would be needed in the Prince George TSA to head off the falldown?

HON. MR. PARKER: The member for Prince Rupert asked for some detail that I'll have to call on staff to assist me with, Mr. Chairman.

MR. MILLER: The minister advises, I assume, that he's going to have to send out for the information. Have you got a fast-food order place you send out to and get a courier to run it here? This is an agonizing process, Mr. Chairman. Perhaps, as I said earlier, the minister does not have sufficient resources available to him to answer questions in the House.

What's the current situation with regard to access to the Takla-Sustut?

HON. MR. PARKER: I didn't catch the last part of that question, Mr. Chairman.

MR. MILLER: Mr. Chairman, the minister has accused me of being hard of hearing on a couple of occasions; I think about three. I would simply point out that the minister has asked me to repeat questions at a far greater level than that. But it may be a question of interpretation, I suppose. Would the minister advise us on the status of the plans for access to the Takla-Sustut block, specifically the railway?

HON. MR. PARKER: Mr. Chairman, I explained that at length a few minutes ago, following which the member for Prince Rupert went into a tirade about not replying to his question. All he has to do is refer to the Blues, and his answer sits there in spades.

MR. MILLER: Will the railway be in there by 1991?

HON. MR. PARKER: I suppose it's possible.

MR. MILLER: I suppose anything's possible. I might even get a straight answer out of this minister one of these days.

Does the minister have any expectation that the renovation, or whatever the work is that's required on the railway, will be done and that the Prince George operators can access the wood in the Talka-Sustut blocks which they need so desperately for the mills in Prince George?

HON. MR. PARKER: I would expect that that railroad should be operational within the next two years.

MR. KEMPF: On the question of that Takla-Sustut wood, would the minister please tell the House what the impact will be down the road in Fort St. James with the advent of taking that timber into the Prince George manufacturing plants?

HON. MR. PARKER: Some of the licensees in the Prince George timber supply area have conversion plants in Fort St. James and in Prince George. I would imagine that they would make sure their wood goes through the plant that's most suited to convert that particular resource. So I would expect some of it would go to Fort St. James and some of it would go to Prince George.

MR. KEMPF: Then why doesn't the stumpage appraisal for the Takla-Sustut wood take into consideration that it should be processed in Fort St. James?

HON. MR. PARKER: As the member for Omineca knows, the appraisal for timber in British Columbia is to the nearest utilization centre, and in this particular instance the nearest utilization centre is Fort St. James.

MR. KEMPF: Is the minister then telling the House that all timber from the Takla-Sustut will be charged on the basis of manufacture in Fort St. James?

HON. MR. PARKER: It's all appraised at Fort St. James.

[ Page 8603 ]

MR. KEMPF: Given the abysmal state of the entire Prince George TSA, what steps has the minister taken to assure a future timber supply for communities such as Vanderhoof, Fraser Lake and Fort St. James, as opposed to Prince George?

MR. MILLER: Mr. Chairman, it is very disconcerting not to have these answers forthcoming from the minister. I hope there would be some feeling on the part of government ministers that there is due process here. At times it gets antagonistic; nonetheless, the due process is for ministers to respond to legitimate questions. I think the minister probably brings some of the wrath on himself, in that questions are not answered, or it appears that we have to really twist his arm to get answers out of him.

There is nothing I can do about it. If you want to sit in your chair for the rest of the estimates, I suppose you are entitled to do that. It certainly has not been the conduct of other ministers — at least those I have dealt with. I am sure my colleagues would back that up. If the minister feels comfortable with that scenario, let him carry on.

In terms of that railway.... As I recall, there was about a $40 million price tag to get it back into operation. Has there been any reconsideration of that or another look at the cost of putting that railway back into operation? My information is that there is some relooking at it.

HON. MR. PARKER: That could be, Mr. Chairman. This ministry is not responsible for building railroads or for road access. If we take a look at the policy established on October 1, 1987, we will find that the licensees are responsible for access. What the licensees propose to do in this particular instance and why they awarded the 400,000 cubic metres to two Prince George consortiums.... They proposed to refurbish that road at their cost. Whatever the cost is, it is their cost.

MR. MILLER: You are involved to the extent that you grant the licence. Does the minister have a specific date in terms of when the ministry would require that railroad to be in operation?

HON. MR. PARKER: It seems to me that there is a completion date. Just what that is I'd have to check with staff.

MR. MILLER: In other words, the ministry has stipulated a completion date, which would seem to suggest that the minister's previous statement that he's not responsible really doesn't make a lot of sense. How long is the reconstruction phase to get it operational?

HON. MR. PARKER: The due date to complete the refurbishment of the railroad to industrial standards is the end of '91.

MR. MILLER: My last question, Mr. Chairman. What kind of construction phase are they looking at?

HON. MR. PARKER: I just said the date to complete the Dease Lake extension to industrial railroad standards is the end of 1991.

MR. KEMPF: Well, we'll change the subject just a bit so we can get some non-answers to some new questions.

[5.30]

Given the problem in the Prince George TSA and surrounding area, and given that 68 percent of the province's productive forest land is within a given logical radius of the community of Prince George, why was it that more consideration was not given by the Ministry of Forests and the government with respect to the building of the forestry lab, into which went $7.8 million of B.C. taxpayers' money? The announcement was made in March of this year. Why wasn't the minister pounding down doors to assure the people of that area that that lab, which possibly might have alleviated some of the very serious problems that have been highlighted here today, could have had an effect on that area if the lab had been built in Prince George?

HON. MR. PARKER: The research facility that this ministry is building on the campus of the University of Victoria will rely to a great extent on the synergism to be had by working with a well-established graduate school in an established university. The research that can take place there can impact on every comer of British Columbia. In time, we will see a university in north central British Columbia. I fully expect to see that come to fruition in the Prince George area. In due time that university will evolve to a place where it will have a substantial graduate school, and I would expect government support by way of supply of facilities, funding and staff working together with the various government ministries and certainly with the industrial sector, since it has been the very foundation of the universities in British Columbia.

We will see similar facilities in Prince George as things evolve. In the meantime, though, our Ministry of Forests has a research establishment in Prince George. I'm talking with the Minister of Forests for Canada about a larger research establishment in the Prince George area. I would expect that as the university of the north establishes itself, it will work closely with that research facility and will be able to afford — from a standpoint of provision not of fiscal concerns — to provide that university with a research facility for its grad students as it tries to build its graduate faculty.

The establishment of this research facility at the University of Victoria is entirely appropriate for the times. When time and circumstances dictate that it's appropriate to do the same thing in Prince George — and I hope one day in my hometown of Terrace — we'll certainly do that.

MR. MILLER: Getting back to the question on the construction phase of the railway to the Takla-Sustut supply blocks, which is supposed to be completed by

[ Page 8604 ]

the end of 1991, does the Minister or the Ministry of Forests have any idea of how long it will take to do the job?

HON. MR. PARKER: No, Mr. Chairman.

MR. MILLER: If that's the case, Mr. Chairman, what will they do if it's not built by the end of 1991? If you don't know how long it's going to take, are you going to wait until the end of 1991 and suddenly discover that the line is not built? Is it going to be a week before the end of 1991, and you are going to say: "Hey, the line's not built" — two months, three months, six months or a year? At what point will the light go on in the ministry if, for some reason, they can't proceed? When do you start to take action?

HON. MR. PARKER: We continue to monitor the performance of licensees on all tenures throughout the province, and if we find that people aren't operating within the terms and conditions of the contract, we deal with them appropriately. If the two consortiums in Prince George aren't underway in a reasonable period of time with the refurbishment of the rail line, we will have to take another look at what we should do with those licences.

MR. MILLER: Now all the minister has to do is have someone in his ministry inform him of what they reasonably expect the amount of time required to rebuild the line is, and then he'll know when he should start to deal with the issue. But right now, according to his own words, he has no idea whatsoever about how long it would take.

[Mrs. Gran in the chair.]

With regard to tree-farm licences, the document I received from the ministry dated June, 1989 does not list a long-range sustained yield figure for quite a number of the tree-farm licences. Are they not required to be published? Does the ministry generate those figures? Does the company generate those figures? Can the minister explain why 15 of the 32 have no LRSY figure?

HON. MR. PARKER: The AAC for TFLs is reported in the annual report of the Forest Service each year. As far as the long-range sustained yield, or LRSY, report is concerned, there's a different LRSY for each scenario that you'd care to paint. You use a number of scenarios when you're determining the management approach for a particular unit, whether it's a tree-farm licence or a TSA. Each of those scenarios has different assumptions, and you have to determine the one that best fits the time and circumstance that you're faced with.

As far as the LRSYs are concerned, that's something that's not required to be published. It's the sort of thing that comes up during the public discussion on the management and working plan. What we have to focus on is the AAC level. The LRSY figure is available for public scrutiny when the management and working plans are up for public review.

MR. MILLER: I assumed that the LRSY was important, because from that you could develop separate scenarios in terms of AAC. I didn't realize that the long-range sustained yield itself was a variable figure; I thought it was a static figure, at least in terms of volume that was available. Obviously that can change with accessibility and other factors. But LRSY is the base, is it not, and then you adjust your AACs to suit separate options?

HON. MR. PARKER: No, the LRSY is the basis of the assumptions used for a particular scenario; you get a different LRSY for each scenario.

MR. MILLER: So the document that I have, entitled "Tree-farm Licence Amending Indenture Summary to June 13, 1989," which lists the TFLs, some without LRSY — could the minister explain why some have it and some not?

HON. MR. PARKER: I'll have to ask for help from staff for that one. I can't explain it here.

MR. MILLER: I'll just go through some of these. I note there's a deputy present.

HON. MR. PARKER:Again I would implore the minister: if there is some problem with not having enough staff to answer questions.... This is about the third or fourth time we've got this answer: "I'll have to ask staff." I don't have anybody behind me here. You're the minister. I've seen some ministers with up to four or five staff. You certainly wouldn't get any argument from me for having more staff in here that could answer these questions.

First, it's extremely difficult to get answers; and secondly, every time you deal with a substantive issue and want to explore that, we're advised by the minister: "I'll have to get staff." Would the minister advise when all these answers he's going to have to consult staff about are coming in?

HON. MR. PARKER: Just for the record, the critics opposite dream up a number of questions for estimates, none of which deal with the budgetary estimates; it's a play on words. It isn't a debate; it's questions and answers.

Prior to coming into the estimates, the member for Omineca (Mr. Kempf) has his caucus research staff pull out a bunch of questions for him. Those he guards carefully and doesn't share, so we have no way of knowing what sort of questions there are going to be. We just know for sure that they're going to come out of left field. So we bring information along with us and we answer those questions that we have answers for here; and for those that we don't, we consult staff in either this building or other buildings in the capital. Sometimes we have to go to the region or even the district to get a reply.

We'll try to have those replies as quickly as possible. Each time I ask for information, I put a little

[ Page 8605 ]

notation on it, "ASAP" — as soon as possible. I will certainly table these answers during this session. Whenever I get them here during the estimates, I'll make sure they're tabled at that time. We will get them here as quickly as we can.

MR. MILLER: I wonder, Madam Chairperson, why the minister or his deputy cannot answer questions relative to a document published by their ministry. This isn't some spurious piece of nonsense; this is a piece of paper printed by your ministry. I would assume that at some kind of working level — at a senior working level — someone would have some idea of why the form, the content.... Is there a problem there, Mr. Minister?

HON. MR. PARKER: I didn't run the document off personally, so as I said earlier, my staff will give me a hand with this one so that the person who actually did run that chart off whatever data-processing unit it was run on.... Once they have been contacted, I am sure they will provide me with the information I need to share with the House.

MR. MILLER: I don't know what he came to discuss, Madam Chairperson. He said he brought various documents that he came prepared to discuss. I guess tree-farm licences weren't one of them; AACs weren't one of them; planning wasn't one of them.

With regard to the lack of LRSY figures for tree-farm licences, are they maintained by the ministry?

HON. MR. PARKER: Yes, that information is provided by the licensee to us. We would have it filed, and the LRSY runs are done by the individual licensees.

[5:45]

MR. MILLER: So the minister is saying that the licensee provides the basic information upon which the level of cut is determined.

HON. MR PARKER: On tree-farm licences, the licensees are responsible for the inventory of all natural resources on that area-based tenure, including the timber, and they are responsible for doing the analyses from which annual allowable cuts are determined. Those analyses must be done to our specifications. However, the licensee is responsible for doing the computer runs, the scenarios that generate the various LRSYs, and finally, the option that is selected by the licensee is presented to the Forest Service by way of a management and working plan. We review and discuss, with the licensee, until we're satisfied that the work is done fully to our specifications and for all intents and purposes, as near as we can determine, is done correctly and properly. Then the chief forester approves the annual allowable cut for that five-year plan. The licensee is responsible for the acquisition of all the data, all the data processing and the presentation to the chief forester. We are responsible for subsequent analysis to satisfy ourselves that the licensee has met the contractual obligations and our specifications.

MR. MILLER: Well, the fundamental point is that the licensee provides the information on the long-range sustained yield in tree-farm licences. The licensee does the management and working plans; the ministry approves, disapproves, amends or alters. Have there been any audits done on TFLs in terms of this question?

HON. MR. PARKER: Madam Chairperson, each one of these presentations to the chief forester of a management and working plan — as I said before — is analyzed. Call it what you want. If you want to call it an audit, call it an audit. It's analyzed by B.C. Forest Service personnel from the standpoint of making sure it meets the contractual obligations and the standards of the Forest Service.

MR. MILLER: I asked if you have ever audited. The licensee provides the information; you approve it. You require that information to be accurate. Have you ever done an independent audit completely outside of the process, in terms of checking that kind of information?

HON. MR. PARKER: A quick check with staff indicates that we have not — that any of us here can recall — gone to an independent audit of the preparation of the management and working plan and the subsequent AAC calculation.

Madam Chairperson, I'd just like to go back to an earlier question on the program for timber supply areas in the province, and when we can expect the next management and working plan for these TSAs: 100 Mile 89-11-30; Quesnel 89-08-30; Williams Lake 89-06-30; Kamloops — that was last year — 88-10-31; Lillooet was just completed; Merritt is 89-04-30; Okanagan 88-06-30; Arrow 90-05-31; Boundary 90-07-31; Cranbrook is 90-03-31; Golden is 88-11-30 — that was last year; Invermere 90-03-31; Kootenay Lake is 89-01-31; Revelstoke is 89-11-30; Fort Nelson is 89-1101; Mackenzie is 89-03-31 — actually, it's just done; Robson Valley is just done.

MR. MILLER: Table it.

HON. MR. PARKER: The member opposite is content with tabling the document. I'll be happy to do that, Madam Chairperson. We'll get a copy sent to you straightaway.

MR. KEMPF: I thought I would have to go to the zoo to see a trained seal.

Madam Chairman, I want to go back to....

MADAM CHAIRMAN: Hon. member, the remark that you just made — do you think it was parliamentary?

[ Page 8606 ]

MR. KEMPF: Yes I do, Madam Chairman. It was a simple remark, and it threw aspersions at no one or anybody. I just calls them the way I sees them.

I want to go back to the small operators, which I talked about last week. Particularly in the area that I serve, they are in a crisis state. Their very way of life is disappearing in communities in my constituency. I want to ask the minister some questions about the small operator program and how he conceives it as working and why it is that if the program is working so well, small loggers and sawmillers in the north central part of British Columbia are going out of business daily? How is it that even though the large integrated operations are paying somewhere in the vicinity of $4 to $6 a cubic metre in stumpage, the upset on small business enterprise sales starts as high as $21? I'm going to use an example — and in this case it's a bit lower — of $16.32 a cubic metre. In order to get the sale, this small operator had to go to a bonus bid of $11.25 a cubic metre, for a total of $27.57 a cubic metre.

Interjection.

MR. KEMPF: The Minister of Environment (Hon. Mr. Strachan) thinks it's funny; indeed, it is not funny at all. We've got a group of people out there trying to put bread and butter on the table for themselves and their families, and because of this ridiculous situation with respect to the small business people of this province, they are going broke instead. It's not a bit funny.

The bottom line is, given that which must be paid to the province in stumpage for these sales, what it costs to log and haul them, and what the return from the mill is, that we have a situation in this example where the individual is having to pay $10 a cubic metre more in costs and stumpage than he can get for the product at the mill. How is it that the minister feels such a system is working so well? How is it that he feels there is fairness out there for the individual trying to make a place for himself in the forest industry when this kind of situation exists? I would like to know what he is doing about it. Is the minister concerned for these dozens of small business operators in this province's primary resource leaving the industry because they can't make it, either because of upset prices for stumpages or because they're bid out of the business through surrogate bidding by the big operators? How is it that the minister feels this whole system is working so well when that is the case out there?

What case is the minister making for the small business people? Hour after hour we hear him in this House go to bat for the multinationals, the Fletcher Challenges of this world, but what is the minister doing to help the small business person in the forest industry of B.C. ? Is he just letting them go down the tube? What is the minister doing to assist those people because of high stumpage rates and surrogate bidding?

HON. MR. PARKER: The appraisal system that we use in the province, as compared to a value pricing system, is exactly the same system for small business sales as the one we use for cutting permits on forest licences and tree-farm licences. The higher the upset, the greater the value of the stand. That value may be because of the timber or the ground conditions or the closeness to operations or any number of those items together with others.

The important thing for people to realize is that the appraisal system for Crown timber is exactly the same. We have provided for sealed-tender bidding rather than oral-auction bidding on these sales in the last year or so, so that the small operator doesn't have to meet the fever of oral auction and get caught up in bidding situations where, in retrospect, once they have a sale awarded to them they find that they have way overstepped the economic bounds of that operation and they come seeking relief. From a sealed-tender approach each interested party has an opportunity to analyze the particular licence and determine what they feel they can afford and make that tender on a one-time basis.

If the numbers are higher than upset, then that's a result of competition. That higher number, by the way, provides a bonus, all right, to the Crown but part of that bonus is used to pay for forest renewal. Under the small business program the Forest Service is responsible for forest renewal, and that funding is met for basic silviculture through the bonus-bid process.

The member for Omineca talks about dozens of people going out of business. Well, he can make those kinds of claims because he's not accountable for anything he says; he's just a critic. The indications in the province are that there's growth in the forest industry and that there's been growth between '87 and '88 and that there will continue to be growth. The opportunities that exist now for the small business operator are more than double what they were when the member from Omineca was minister.

[6:00]

What we are doing, Madam Chair, is making sure that that small business program does exist, has opportunities for growth, is contributing to the value-added opportunities in the province. That initiative is one of this government, and it provides for high levels of employment and high levels of value-added. So it contributes to an improved gross provincial product. There are a number of things that we are doing as government, because we have to take a look at the province as a whole.

It goes without saying that some people go out of business; but then some people go into business. Those of us who have been out there have, for the most part, been through those hoops. Some of us have gone out of business and some of us have gone into business and some of us have done both. The opportunities are there. We continue to create those opportunities and, as in every system, there will be survivors and there will be non-survivors. It is our intention to make the opportunities available for everyone who cares to become part of the forest

[ Page 8607 ]

industry of British Columbia. Hopefully through their own careful husbandry and good management they will be a success. We would like to see that. I guess statistics will always show that in the natural order of things some items fail and many succeed.

MR. MILLER: I'll just throw some statistics on the table before moving adjournment, in terms of small business versus the quota-holders — the licensees. It's significant to note that the average stumpage paid on the small business side reported in the last annual report, '87-88, was $10.84 a cubic metre. We can contrast that with the average stumpage reported on tree-farm licences and forest licences at $5.89 a cubic metre. So there obviously is a significant difference, and I believe that market force is the difference.

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

The House resumed; Mr. Pelton in the chair.

The committee, having reported progress, was granted leave to sit again.

HON. MR. STRACHAN: I call second reading of Bill 86, in the name of the hon. Minister of Forests.

FOREST AMENDMENT ACT, 1989

HON. MR. PARKER: I rise to speak in support of Bill 86, the Forest Amendment Act, 1989.

These amendments to the Forest Act will ensure better revenue collection, help resolve contract disputes between timber licensees and their contractors' and give further replacement of tree-farm licences for up to two years.

This bill addresses a variety of recommendations made by the auditor-general in the Select Standing Committee on Forests and Lands. It also addresses issues raised during the course of the eight public information sessions on tree-farm licences which I chaired throughout the province.

As one component of our plan to improve revenue collection, we are increasing the Ministry of Forests control over timber marking and scaling, and specifying additional actions that constitute an offence. The ministry will be better able to seize and sell timber that has not been scaled as required. We will be able to prosecute individuals who transport timber anywhere other than the scaling station without first having the timber scales. We will be able to prosecute individuals who transfer timber marks or marine log brands without the ministry's written consent. We will be able to prosecute individuals who float timber in water without ensuring that timber marks are clearly visible. We will be able to prosecute individuals who fail to set aside timber for check-scaling when directed to do so. The use of check-scale results will also be approved more quickly, reducing delays that are costly to both industry and government.

The other component of our plan to improve revenue collection is a significant overhaul of procedures in computer systems. This bill introduces changes in the liability for stumpage and other payments, which we expect will improve cash flow to government, result in fewer bad debts and treat our industry clients more fairly.

[Mrs. Gran in the chair.]

Sellers and buyers of timber who agree to transfer from the seller to the buyer the liabilities for payments to the Crown will be required to obtain ministry approval of such an agreement. By screening out timber purchasers that the ministry is not willing to accept as liable for payments, the ministry will be able to ensure successful collection. Where transfer of liability for payments is approved, the industry will relieve sellers from ongoing liability for payments. In the past if purchasers could not or did not pay stumpage, despite agreements to do so, the ministry was forced to collect from the sellers. This occasionally resulted in an unfair double charge of stumpage to the seller. I would like to point out that no potential purchaser will be prevented from buying timber. Without an approved agreement for transfer of liability, a purchaser will, however, be responsible to ensure that the seller has completed all payments. It will be an offence to purchase timber on which payments to the Crown have not been made without an approved agreement to transfer liability for payments.

Madam Speaker, I am pleased to present legislation that responds promptly and fully to the March 29 recommendations of the Select Standing Committee on Forests and Lands. This bill will enable government to implement regulations requiring written contracts between holders of tree-farm licences or forest licences and their contractors who provide various timber harvesting services. Provisions for arbitration will also be required by regulation for the few unfortunate situations that make arbitration necessary. I wish to emphasize that we consider arbitration a process of last resort, to be used only when all other avenues, such as clearly written contracts and mediation, have been exhausted. Our aim with this legislation is to enable the large and small firms in our forest industry to operate fairly and cooperatively. This will ensure the greatest and most consistent economic benefits to themselves and the province.

This bill also addresses another matter that ensures greater economic efficiency. We are permitting company assets in the form of section 88 credits against stumpage to be transferred along with the transfer or change in ownership of a licence to which credits relate. This will enable government to speed up the elimination of the few credits still remaining while allowing firms with credits to restructure and improve their competitiveness.

Finally, this bill will allow me to defer the replacement of existing tree-farm licences for up to two years to allow time for the recently appointed Forest Resources Commission to complete its investigation into the effectiveness of this form of tenure. This deferral will make it possible in those tree-farm

[ Page 8608 ]

licences that are up for replacement over the next two years to incorporate changes that may be recommended by the commission. Due to the depth of feelings and concerns expressed at the recent public information sessions on tree-farm licences, my government feels that this deferral of replacements is necessary. Only in this way can we ensure the effectiveness and full integrity of the Forest Resources Commission.

This bill reflects the ongoing commitment of this government to secure full payment of the public's valuable timber, to encourage greater cooperation and productivity in our forest industry and to be more responsive to the public's desire for well-balanced control in the integrated management of our rich forest resources.

MR. MILLER: We will be supporting the bill, Madam Speaker. I'll just make a number of points in terms of some of the disparate sections.

On the revenue collection, we have seen some pretty gross examples, primarily in the press, of means taken to avoid paying the Crown their due This bill does address some aspects of that, but I think there are aspects that still need to be dealt with The auditor-general's report had identified the shortcomings in terms of the computerization, and we see that the ministry is moving to rectify that problem through, I believe, about an $11 million expenditure on the computerization.

We assumed significant revenue losses through failures of the scaling side not only to scale all the timber that was cut but also to ensure the billings were received by the Crown for the timber that was cut and scaled. So there are severe deficiencies in terms of the whole system.

There are ongoing articles in terms of other potential abuse areas, most notably the altering — what we refer to as trespass — of boundary lines or lines identifying a certain cut block. Certainly we'll want to look at that to see what changes are going to be proposed to shut that door in terms of escape revenue for the Crown. Nonetheless, we think it prudent that the minister follow the advice of the auditor-general, and we're pleased to see that he has done that in terms of this issue.

On section 6 we'll get into more debate on clause by clause. My first interpretation was that it was almost a formalization of a surrogate bidding which has been discussed previously in this House in that purchaser can make an agreement with a logger to be responsible for the stumpage. Of course, those silent agreements are the ones that disturb us now.

I was always under the impression that the ministry was capable of going after — essentially we're talking about log brokers — the people who front the money for independent loggers to get on the site, get their equipment there and get the harvesting underway before there's a cash flow. The ministry did have the option in the Forest Act to pursue that. I forget which section it was — section 42 or 142 or whatever.

Again, if that's not the case and this change does not formalize or entrench any more the issue of surrogate bidding, then I don't see we would have a problem with that.

On the contractor clause I was pleased, as I'm sure were all members of this House, to see the recommendations of an all-party standing committee put into practice, accepted by the government and put into a bill. I would note that there is a missing piece in that the recommendations of the standing committee were that the written contract and the system between the parties to arbitrate disputes should have applied to the subcontractors of contractors. If the minister checks — and he could check with the Chairman of the committee — he would find that is the unanimous recommendation of the committee. I had previous correspondence with the Chairman on that, and if there is any ambiguity in terms of the written recommendation, clearly the committee had decided that contractors or subcontractors — contractors of contractors; the minister knows what I mean; phase contractors — should have some means of protection as well. This section really only affords that protection in the sense that there's a written contract and the parties can jointly agree to a system of resolving disputes. It's not really intrusive in that sense; nonetheless, that kind of basic protection should be afforded the next step down the line. The minister may want to consider that prior to committee stage of the bill.

[6:15]

I suppose that I am most intrigued by the replacement of tree-farm licences. Certainly the announcement in September of 1987 that the government's policy was to expand the volume derived from tree-farm licences from its current 29 up to about 67 percent of the annual cut in the province was a clear signal to our side of the House, and to many people in British Columbia, that the final push was going to take place where the vast majority of our timber lands were going to be turned over to private corporations in the form of these renewable tenures. That galvanized a lot of people in this province into action, starting from the debate on Bill 28 last year. Although Bill 28 was not enabling, it nonetheless provided a focus for that debate.

Just watching the shifting statements and policies of the government over that period of time has been a bit of an eye-opener for me. Certainly the minister gave no sign during debate on Bill 28 that he was prepared to listen to the concerns of British Columbians with regard to that policy. At the height of the federal election, when a public hearing to consider the first application in Mackenzie was scheduled, no citizens of British Columbia thought that the government had listened to them in terms of their concerns about this TFL policy.

Again, the scheduled public hearing in February, I believe it was, in Gold River gave further cause for concern, and finally the minister puts out a release on the subject that says he is going to go out and destroy the myths and fallacies that exist with regard to the tree-farm licence tenure. Instead, I think the minister went out and faced some pretty large and passionate

[ Page 8609 ]

crowds in terms of their feeling on the issue, really right across the province.

Faced with the volume of opposition, the minister at first announced that they would consider the matter and report in June — maybe even sooner than June. We were waiting for that and, lo and behold, that is not going to take place, but a forestry advisory commission is appointed. I would note that the chairman of that commission in an interview in the weekend paper indicated he was called by the Premier's office.

Nonetheless, there is a commission in place to examine it, and I think the fact that a moratorium has been placed on renewals of existing tree-farm licences lends credibility to the commission. I certainly wish them well. I will be asking the minister further questions in estimates about the role of that commission and how it intends to function. On that I will wrap up debate. I don't know if anybody else wants to speak on this. We will pursue further questions we have under committee stage.

HON. MR. PARKER: It's interesting to note that on a bill that impacts so substantially on small business the member for Omineca (Mr. Kempf) is absent from this debate.

I move that the bill be now read a second time.

Motion approved.

Bill 86, Forest Amendment Act, 1989, 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. MR. STRACHAN: Committee on Bill 78, Mr. Speaker.

ISLANDS TRUST ACT

The House in committee on Bill 78; Mr. Pelton in the chair.

Sections 1 and 2 approved.

On section 3.

MR. BLENCOE: I don't intend to spend long on this bill this evening, but there are a number of questions I wish to ask.

Interjection.

MR. BLENCOE: My colleague from North Island (Mr. Gabelmann) knows me too well, but I'll see if I can cut it down.

The object of the trust is critical to this bill, and I am pleased to see that basically the object of the trust has not changed. However, a lot of my questions tonight are really — and we don't do this very often in the House — to see where the minister is coming from and test her a little bit in terms of commitment and sincerity to this kind of legislation, As I said in second reading, in many respects this bill is a leap of faith.

It really depends on the goodwill of the minister not to use some of the wide-open permissive areas, and, if I might, allows the minister to intrude into a number of critical decision-making areas of the trust, the trust council and the mandate, etc. So I want to see where the minister is coming from and see what this bill means to her in the long term.

[Mrs. Gran in the chair.]

The object of the trust is laid out. It does state in this section that the object is to preserve for the residents of the trust area and the province generally "in cooperation with municipalities, regional districts, improvement districts, other persons and organizations and the government of the province." Cooperation is nice to write in legislation, but I'm wondering what assurances the minister can give us, because in the past we have not always had the cooperation with other agencies like Ferries or Highways or Forests. That cooperation sometimes can be difficult to attain.

Can the minister give us assurance that she can expect that other organizations will treat the Trust with respect, that indeed cooperation will be the letter of the law, and that the Trust and its mandate will be upheld by these other agencies they have to deal with? Sometimes that respect and cooperation isn't there. Maybe the minister can comment on that.

HON. MRS. JOHNSTON: I would hope that all arms of government would cooperate with other arms or levels of government. I don't really know what assurance you want. Did you want me to write it here somewhere that we'll all cooperate? It would be my hope, and yours as well, that that cooperation should go without saying.

MR. BLENCOE: One of the issues I raised in second reading debate was the fact that this bill anticipates incorporation. I used the example of Ganges. What happens if that municipality complains that it cannot govern itself effectively within the scheme of this bill? Will it be the municipality that survives, or will the trust survive? Will it be the mandate of the trust that will survive, or will it be that new incorporated entity?

I am concerned, as a number of us are, that as we move towards incorporation, we have a breaking down of the trust area in a whole sense, and we have these small incorporated areas. What if the municipality says it cannot work within the confines of the trust and we get those two at loggerheads? Can the minister comment on that sort of situation?

HON. MRS. JOHNSTON: We cannot stop the incorporation of areas just because they are in the Islands Trust. Certainly a new municipality would want to be as autonomous as possible. On the other hand, the trust would naturally prefer to control the land use within the municipality. This bill is a

[ Page 8610 ]

compromise. Municipalities make the individual land-use decisions, but their community plan is approved by the trust. The minister would have to act as an arbitrator if it was necessary.

MR. BLENCOE: In second reading I referred to what I considered a less risky alternative than this incorporation with its potential for conflict between an incorporated area and the mandate of the trust. I am trying to be positive about this, but I also had to say in second reading that this side of the House has a special, unique relationship to the Islands Trust, and the member is quite aware of that. We brought it in, and we feel very intensely about it.

I am wondering if there is a less risky alternative that would permit the delegation to a local community of administrative powers: the power to regulate and to provide for necessary services. For instance, I referred to the concept of a local community commission, as envisioned in section 817 of the Municipal Amendment Act, Bill 19, that we just passed.

I wonder if the minister considered, for this act, the concept of a local community commission rather than an incorporation concept. It's less risky, and may indeed be a very useful tool.

HON. MRS. JOHNSTON: This bill does not preclude the creation of local community commissions, but I think we should go back to our local autonomy concept. Why don't we place more importance, on both sides of this House, on what the local residents want? Maybe a community commission could not adequately handle the responsibilities that the people living in an area would like to see brought about.

The options are there for incorporation or the commission. After all is said and done, the people living in that area are going to make that decision, and we on this side of the House believe that that's the way it should be.

Sections 3 to 7 inclusive approved.

On section 8.

MR. BLENCOE: This section, especially subsection 8 (2), Is the area where I referred again in second reading to my concern — not necessarily a negative concern — that the powers of the minister are still very much obvious in this legislation. I looked through what a trust council may do and how much it is subjected to the approval by the minister. In (a), "subject to approval by the minister" may "enter into agreements with the province and agents of the province..."; and "subject to approval by the minister, acquire and dispose of land...."

Although the minister talks about autonomy — and this clearly is the language in the legislation — I looked through this bill and it comes out at me slowly but surely that the minister's hands.... I am not saying that about this minister, Madam Chair; I am just saying that the potential for involvement of a Minister of Municipal Affairs is fairly substantial in this legislation and in this section.

1 don't want to use the word "motherly," but sometimes municipalities are looked on as the child of the provincial government. Are you not being a little overprotective? You keep talking about autonomy. I wonder if this really has a negative impact on the concept of moving towards more autonomy for the islands.

[6:30]

HON. MRS. JOHNSTON: No, I don't believe there is any reason for concern there.

MR. BLENCOE: I guess this is where the minister and I disagree somewhat. The minister and the Premier — I keep hearing daily their answers about local government: they want to ensure autonomy, and they've got the power to collect their own taxes and approve their own bylaws. Yet I see in subsection (3) of this section: "The trust council shall not, without the prior approval of the minister, incur liabilities or borrow money."

We are saying that one of the major areas of autonomy for local government is to be able to set their financial priorities and incur some liabilities — borrow money. I know that on major capital items for municipalities, borrowing goes to a referendum, and the minister has to be involved in that. But this is for daily operation. I think the minister is really overreacting: "Oh, we can't let this trust get away from us. We've got to control as many areas as possible."

Interjection.

MR. BLENCOE: "...approval of the minister...." Maybe the minister would like to comment.

HON. MRS. JOHNSTON: I don't really know what the second member for Victoria is attempting to accomplish here. When this bill was brought in — I believe it was in 1974 — by the then NDP government, if they felt so strongly about this particular section, why was it never enacted? It was not really brought into effect until the last couple of years. I can't remember the exact date, but it was since I have held the responsibility.

Certainly the Islands Trust is a regulatory body. They do not undertake capital projects, so unless there were some very extenuating circumstances, there should be no reason for them to incur liabilities or to borrow money. That is the reason this clause is in here. They are looked upon as a regulatory body, not as a capital initiative body.

MR. BLENCOE: I am not trying to go back to '74, '75 or whatever and say that you should have done this or that; we are a long way down the line. If we are going to say that we believe in autonomy, I think we have to be very careful about how many restrictions and controls we put on the trust council or the trust in terms of letting them set their own agenda. The original act was some time ago, and I think we are moving towards greater autonomy.

[ Page 8611 ]

I've been complimentary to the minister, but all I am saying is that there may still be a high degree of wanting to hang on a little too much in terms of their approval process and decision-making process in incurring liabilities or borrowing money. It may be a slight disagreement; I won't dwell upon it.

Sections 8 to 11 inclusive approved.

On section 12.

MR. BLENCOE: This is the very important part, of course: the annual budget, again subject to the minister's approval, I note. Again I refer to that. Again the minister is keeping a hand in there — subject to the minister's approval.

The critical component I see is the reference to financing, the budget and how this new council will operate. My concern, which I mentioned in second reading, is that if we starve the trust and the trust council for revenue, what may happen, of course, is that they will have to, desperately maybe, look for a new tax base and raise new taxes. This will, of course, force development that may not be in the interests of what the people want. But because they don't have the revenue, they won't have any alternative.

The reference to operating grants is very important, and I would like to know what the minister anticipates in terms of operating grants.

HON. MRS. JOHNSTON: As I understand it, there is presently a considerable contribution from the province, and there is no indication that it won't continue. I would expect that it will continue. According to the numbers here, the provincial government made a direct contribution of approximately $347,660 towards the trust staffing, consulting and travel budgets. In addition, we make indirect contributions estimated at $38,000 in the form of building rentals, financial, personnel, etc. I don't see that changing too terribly much.

MR. BLENCOE: I appreciate the minister's response; it's good to hear. I am wondering if the minister in any way sees the point I am trying to make, that revenue sources and operating grants are very critical to the islands. If they begin to be starved for funds from sources they have received them from before, they may indeed have to turn to expanding the tax base and having to accept development that clearly would not be in the interests of those islands.

I am particularly thinking of the major controversy on Galiano Island, with MacMillan Bloedel running around the island saying it's going to get its major redevelopment through despite the trust, etc., and all the other things. There is some concern that if there isn't financial support, the tax base will have to be expanded, and some of these major redevelopments, which would have an incredible impact on the islands, may have to go ahead.

I just wonder how the minister feels about that. Is she concerned about that, and is she ready to deal with it?

HON. MRS. JOHNSTON: We would be concerned about revenue and expenditure problems in any area of local government. Is the second member for Victoria suggesting that because of a possible shortage of funding the trustees would compromise their integrity and allow development that is not in the best interests of their preserve-and-protect description here? I would hope that that wouldn't be what is being suggested.

The Islands Trust has a very large tax base. In fact, it is larger than the tax base in six of our regional districts in this province. They will be in no different a position than any other local government. If they feel that they require more in the way of operating funding, they are going to have to look at their tax base.

Section 12 approved.

On section 13.

MR. BLENCOE: The pivotal and very important component of the trust mandate is the requirement for the council to adopt by bylaw a policy statement. It's clearly laid in section 13 — which again I note is subject to the minister's approval — to ensure that all bylaws are not contrary to and not at variance with their policy.

Again I go back to financing and funding. The creation of the trust policy is extremely important to the future of the trust mandate, which we refer back to whatever section the object of the trust was in, and we all know what it is. The creation of that policy is extremely important for the future.

As they develop and refine the trust policy and issues come up that are contrary to the mandate and the general direction and what we established in the trust in '74, it may require special financial support by the government to be able to maintain or build in an adequate trust policy. Is the minister prepared, if it does require special financial support, to develop, maintain, enhance and protect an adequate trust policy? Is she prepared to look at that kind of financial situation?

HON. MRS. JOHNSTON: We can't have it both ways. The Islands Trust is more autonomous and there is less ministerial or cabinet involvement than under the original 1974 Islands Trust Act, so let's get that clear.

Interjection.

HON. MRS. JOHNSTON: Under the original Islands Trust Act, the chairman and the other two general trustees were appointed by cabinet, whereas now they are elected from among the locally elected trustees. Under Bill 78 the minister is less involved in bylaw approvals than under the current act.

[ Page 8612 ]

Currently the minister's approval is required for community plans, zoning bylaws and subdivision bylaws, whereas under this bill the minister's approval is only required for community plans.

This is the same level of ministerial involvement as for regional district land use bylaws. I don't know specifically what the second member for Victoria has in mind as far as it costing money to preserve and protect the unique lifestyle or aspects of the lifestyle on the Gulf Islands or in the Islands Trust area, but certainly we are working towards a level of financial participation that would not be unusual or uncommon to other local government. We will continue to contribute hundreds of thousands of dollars, more than enough to fund the trust policy statement, but we are looking at local autonomy, and if a decision is made by the local trustees that they want to undertake some aspect of the "preserve and protect" that is going to cause them considerable financial expense, I think they are going to have to look at possibly raising a good portion of the funding by looking at their own tax base.

Sections 13 to 20 inclusive approved.

On section 21.

MR. BLENCOE: There is a component that I missed out that I think probably should have been handled in section 12, but I think I can handle it in section 21, under local trust committees.

An issue was brought to my attention today. It is something that makes a lot of sense, and I am sure the minister has heard about it. These changes raise some concerns for residents of some of the smaller islands in the gulf. It places them in the position that they could be assessed for expenditures over which they have little or no control. One of the examples that has been given to me is Piers Island. It is currently under the umbrella of Saltspring, so this has meant in the past that the residents then represented by someone — I am referring to local trust committees — whom they never get a chance to vote for, a trustee elected by ballots cast in Ganges. Voting would require going over by private boat, I am told, or a car trip to Ganges. I am told that this has been a minor irritant and annoyance thus far. But in the new act, of course, there are some substantial changes; the new act contemplates different things.

Section 12 — I know we have passed it — provides for separate expenditures by the trust council under local trust committees, which we are talking about in section 21, for both general operation and additional operations. The act then makes possible the situation in which Saltspring would become a municipality, and property owners on an island like Piers could find their property assessed to cover expenditures made by people over whom they have absolutely no control.

[6:45]

1 am wondering if the minister is aware of this and maybe could provide assurance that you will in the future look at some requests that the smaller islands either be grouped as a separate local trust area — section 21 talks about local trust committees or local trust area — or be considered part of the general trust area rather than one of the larger islands. It is obviously going to be more than a minor annoyance as we move towards incorporation.

HON. MRS. JOHNSTON: No, we have no problem with that at all, and I would expect that it would probably be one of the items we would look at upon receiving a request for incorporation. It should be noted that if Saltspring were to incorporate, it doesn't mean that the entire area would be included in the incorporation. That would be something that would certainly be looked at very seriously.

Sections 21 to 24 inclusive approved.

On section 25.

MR. BLENCOE: Just a passing comment. This is the approval requirement for bylaws on local trust committees. The bylaw adopting or amending the community plan has to be approved by the minister. Is there some particular reason why she wants that in there?

HON. MRS. JOHNSTON: I think I mentioned that earlier. It really is the same level of involvement that we might have for some of the other local government bylaws. It's a high level of approval. This is the process that is being put forward at this time.

Sections 25 to 35 inclusive approved.

On section 36.

MR. BLENCOE: The minister made reference to the original bill where certain persons were appointed by the government. I notice here that the minister may appoint up to three persons to serve at pleasure as members of the trust fund board. It's pretty wide-open: "...to serve at pleasure." I suppose they could serve as long as you see fit; there's no set period. The language perhaps is not as good as it could be, serving "at pleasure." The members of the executive committee and others who are elected don't have such a wide-open definition of how long or how they will serve. This is pretty wide-open.

HON. MRS. JOHNSTON: I don't really see a problem with this, and I have to assume that over the years if it appears to be a problem, if the minister happens to change and wants to make some adjustments to the appointments, this can happen.

Section 36 approved.

On section 37.

MR. BLENCOE: This is the section that I referred to in second reading, and the minister said no. Well, she nodded her head in the negative fashion. The

[ Page 8613 ]

Islands Trust Fund, I said, was somewhat meaningless unless the government is prepared to seed the fund with sufficient moneys or land for the board to be able to do something. The minister said she wasn't prepared to seed the trust fund board, although I do see reference here in subsection (2)(b) to: "receive grants from Canada or the province, or its ministries...." Is the minister prepared to reconsider what was so far a negative nod during second reading debate that she wasn't prepared to seed the fund? Can the trust fund board expect some funding even if it's only initially? So far it has been reported or there's a feeling that there won't be anything coming from the province.

HON. MRS. JOHNSTON: Until section 40 of this act has been followed through — that is for a trust fund plan — it would be a little premature for us to suggest any type of financial involvement. But as I indicated earlier, unless there are some extenuating circumstances, at first blush I see no reason for us to provide funding to start this out. I understand the trustees are currently working with a private landowner over the donation of some land, and private donations are available. So I don't know that this is going to really be a problem. But until we've actually seen the plan that they prepare, which is called for under section 40, it's a little difficult to determine whether it is important.

MR. BLENCOE: Then I take it from the minister's response that she wouldn't.... The initial reaction was an outright negative. The minister's response this evening is that she would consider some requests once the trust fund plan comes forward.

Interjection.

MR. BLENCOE: That's not what you said?

HON. MRS. JOHNSTON: We'll look at the plan. Don't put words in my mouth.

MR. BLENCOE: You'll look at the plan. If there's a request for some funding for seeding, is that out of the question? Or are you saying tonight that you're not prepared to entertain that at all? What if the plan includes financial considerations for the trust fund?

MADAM CHAIRMAN: Shall section 37 pass?

MR. BLENCOE: No, no. I don't want to belabour the point, but the seeding and the funding for the trust fund is quite important. If the minister is saying no, then she should say no. She wants to wait for the trust fund plan; I recognize that. But if the fund plan — and maybe I'm missing a section here and it's coming up later — included financial support or requests, would the minister just say no to it outright?

HON. MRS. JOHNSTON: Madam Chairman, the question is certainly hypothetical. We could spend all evening saying "what if" and "maybe." But section 37 (2)(b) suggests that the responsibilities include: "...receive grants from Canada or the province, or its ministries or agencies, or from any person or association...." So provision is in the act. When we see the plan, we will deal with it accordingly. The provision is there if this government chooses to make that move.

MR. BLENCOE: Madam Chairman, the minister knows I have to do my job. In the past you've had all sorts of provisions in legislation that are wonderful provisions. But if you don't carry them out, which is often the case with your government, what's the point? I want to know whether you're prepared to back up section 37 (2)(b) with some money from the trust fund as seed money; not this, "Well, the provision is there," and some ifs, maybes and buts.

Let it be known that the minister is not prepared to commit. All the wonderful provisions are in the act, but it's quite clear there's no commitment to funding.

Sections 37 to 43 inclusive approved.

On section 44.

MR. BLENCOE: This goes back to the financing. It's about costs and outlays of assessments and collection being recovered by a property value tax levied within the part of the trust area where the requisition is made, and any additional sum. Again, any indication of how much we can expect, how much the minister is prepared to help cover the costs and outlays.... The point is that if there are no substantial operating grants or outlays from the minister, it obviously means taxes will go up.

Let me refer back to the report that we did after the subcommittee toured the islands, and there was a direct reference to taxes and levies on the islands going up dramatically. That still is out there. That's the reason I tend to be dwelling on it perhaps overly in terms of the minister's concerns. There is some concern that if this organization doesn't get good support from the province.... If operating grants are substantial and the minister directs to cover costs, obviously taxes will have to go up, and it will have a dramatic impact on the islanders.

HON. MRS. JOHNSTON: Do you want to know if taxes are going up?

MR. BLENCOE: The minister may direct to cover the costs and outlays of assessments and collections. She says here: "...any additional sum." Does the minister have any idea of how much that additional sum might be?

HON. MRS. JOHNSTON: Is the second member for Victoria referring to 44(1) ?

MR. BLENCOE: Yes.

[ Page 8614 ]

HON. MRS. JOHNSTON: It's just the cost of collection, so it would be minimal. There's nothing significant in that particular section. Local taxpayers are already contributing property taxes to the trust. Assuming that the provincial contribution remains more or less constant, the amount of local taxes need only rise if the trustees make service decisions that require increased funding.

MR. BLENCOE: The obvious reference by the minister, which hopefully we'll be able to rely on, is to constant dollars and the amount the minister referred to earlier. That is critical. It will be watched very closely by the islanders and the trust as we move ahead to a substantial change in how the islands are to operate.

Sections 44 to 62 inclusive approved.

Schedule approved.

Title approved.

HON. MRS. JOHNSTON: I move that the committee rise and report the bill complete without amendment.

Motion approved.

The House resumed; Mr. Pelton in the chair.

Bill 78, Islands Trust Act, reported complete without amendment, read a third time and passed.

[7:00]

HON. MR. STRACHAN: Committee on Bill 54, Mr. Speaker.

NATURAL GAS PRICE ACT

The House in committee on Bill 54; Mrs. Gran in the chair.

Section 1 approved.

On section 2.

MS. EDWARDS: I assume section 2 is simply the opportunity for the minister to retain the function of seeing that insider pricing does not take place and cheat the government of its fair royalty. Is that correct?

HON. MR. DAVIS: No. This is the section where the Crown provincial momentarily acquires ownership of the gas to ensure provincial jurisdiction.

MS. EDWARDS: I wonder if the minister would explain subsection (3) to me: "An acquisition order may be made in respect of natural gas produced after the date the order is issued, even though the natural gas is sold under a contract that was made before the order is issued." Could he explain the circumstances that would require that?

HON. MR. DAVIS: I'm told that there is some gas under contract that may move, or may already have moved, without an acquisition order. This covers that situation.

MS. EDWARDS: Well, that brings us back, I guess, to subsection (1), where it says only: "The minister may direct, by acquisition order, the producer...to deliver the natural gas to the minister at a point in the Province." Is there any particular gas that would not be delivered to the minister for the purpose of establishing Crown rights?

HON. MR. DAVIS: Not in the future. But in the past, when the Petroleum Corporation was administering a large part of all of the gas sales, that could happen.

MS. EDWARDS: Under subsection (4) it says that an acquisition order does not preclude a producer from removing various components of the natural gas before delivering it to the minister. Is there no royalty on any other part of the natural gas? I assume that relates largely to sulphur compounds, except for the methane.

HON. MR. DAVIS: There is a royalty on all of the components of natural gas. The royalty on natural gas liquids, for example, is 20 percent, and on natural gas itself it is 15 percent. None of the components escapes paying a royalty.

MS. EDWARDS: What would happen with a component such as sulphur? What if a producer removed the sulphur, which is fairly valuable? How does that work?

HON. MR. DAVIS: Sulphur, like the natural gas liquids, is taxed at 20 percent of the value of the sale at the wellhead.

MS. EDWARDS: But that is not controlled by this legislation. Is that correct?

HON. MR. DAVIS: No. Royalty regulations are set from time to time by order-in-council.

MS. EDWARDS: This comes from my ignorance. You can set the royalty, but in this legislation I'm sure you set the royalty on the natural gas as well. But in fact this is the legislation that deals with the methane part of the natural gas. What happens to the rest of it, as far as control is concerned, so that you can collect the royalty? Is that done by some other legislation, or is it simply assumed that it will happen without legislation?

HON. MR. DAVIS: The ministry, supported by some of the staff of the B.C. Petroleum Corporation, keeps a close account of and tab on volumes produced

[ Page 8615 ]

— not only of natural gas but of these various byproducts — and knowing the volume and the value of the sale, is able to extract the royalty; the royalty being either 15 percent or 20 percent of the value of the sale, as the case may be. Most of the by-products then move into the private market, whereas the natural gas continues down the pipeline and, generally speaking, is a regulated commodity.

Section 2 approved.

On section 3.

MS. EDWARDS: This section, I assume, is the one that allows the minister to protect the government against the loss of royalty revenue which could result from insider transactions. Is that the main function of this section?

HON. MR. DAVIS: The norm will be a netback price; namely, the price paid by the buyer less certain costs — transportation and other costs. However, the minister or the ministry will be watching sales. There could be sales which weren't arm's-length sales, and where the price appearing on the contracts was less than what might be deemed to be a true current or fair market price. In those instances the minister can set what the ministry deems to be a fair market price, as opposed to the actual price charged in the case of a non-arm's-length sale.

MS. EDWARDS: The minister then takes on the function of a regulator. A function which used to be done by the Petroleum Corporation — and therefore done at arm's length from the government — is now done by the minister. Is that correct?

HON. MR. DAVIS: The Petroleum Corporation didn't concern itself with whether a sale was arm's length or not; it simply accepted the prices negotiated between buyer and seller. This is a provision which copies, if I can put it that way, an amendment or a provision introduced by the Alberta government a year or so ago. In its view, buyers — particularly from Ontario, but also from other parts of eastern Canada and the United States — were shopping around among producers in Alberta and buying gas at distressed prices. The Alberta government decided that at least for royalty purposes, they would deem a price which in their view was the fair market price, and royalties were calculated on this deemed price as opposed to the exceptionally low prices which prevailed for a relatively short period of time.

We have not done any of this sort of thing in British Columbia, and maybe we won't have to, but nevertheless this provision is here in the legislation in case sales are made at below what is deemed to be a proper market price.

MS. EDWARDS: My discussion of arm's length, Mr. Minister, was the arm's length of the regulation. In fact, if it is done by the Petroleum Corporation, it is at arm's length from direct government control.

When the Petroleum Corporation did the buying and selling under the legislation of the Petroleum Corporation, by the very function that it exercised, it had some measure of control over the prices and so on.

Now any of that function is done directly by the minister, so that if there is any regulation as we deem it — and of course the minister declares he wants deregulation — it is going to be done right in the minister's office and not by a corporation, which is at least arm's length from the minister.

HON. MR. DAVIS: Since 1985, the Petroleum Corporation has never set a price. It has acted as an intermediary between willing buyers and willing sellers and has brought them together at a price, but it has not itself dealt with prices which might be deemed to be below proper market price. It has simply acted as a kind of marketing entity and no more, no less. It has not been a regulator; it has been a facilitator, if you like, or a marketing entity.

MS. EDWARDS: I would just like to clarify, because it seems to me that what the minister is saying is not a totally accurate reflection of what the Petroleum Corporation did. The Petroleum Corporation bought and sold nearly all or most of the gas in the province, and by so doing had a very strong lever on the price of the gas.

I understand from some of the discussions of people I have talked to that one of the expectations was that the Petroleum Corporation would — because it was an aggregator as well as an administrator — control partly how the price went. As I say, although you may not have called it a regulator, it in fact had that function of being an aggregator as well as an administrator.

Now any function at all that would be regulatory remains in the minister's office, and that's what I am trying to clarify under this section. There is no regulation at all, except what the minister chooses to enforce.

HON. MR. DAVIS: Essentially I think that's true. First, the minister has not intervened in this way. I hope that we don't have to, but we've simply covered ourselves in case there was a sale — a substantial sale perhaps — at less than what the indications were was a fair market price. The member is harking back to the old regime, whereby the Petroleum Corporation was all things to all people. It was the buyer; it was the arbitrator; it was the administrator; it set prices and so on. That model disappeared some four years ago. Since 1985 the Petroleum Corporation has simply been a facilitator bringing buyers and sellers together and hoping that a deal would gel. Often the producers turned down an offer by a majority vote.

Sections 3 and 4 approved.

On section 5.

MS. EDWARDS: This one requires the furnishing of information. It seems to me that the information is

[ Page 8616 ]

going to be required to be presented to the ministry. Is that correct?

HON. MR. DAVIS: To the minister. But the minister can delegate the functions. Whether they're delegated to personnel within the industry per se or to the remnant - I'll call It - of the Petroleum Corporation which carries on the administrative functions will be a matter of choice as to which is best able to carry out that work.

[7:15]

Sections 5 and 6 approved.

On section 7.

MS. EDWARDS: This is the kind of requirement where an appeal would go, in other provinces, to a utilities commission, and in this case it goes directly to cabinet. Is that correct? When the minister cancels the permit, licence or lease, the holder of that piece of paper may appeal the minister's decision to the L-G-in-C. That is it, is it? It goes to cabinet? After that, is it appealable in any other way, after having gone to cabinet?

HON. MR. DAVIS: Madam Chairman, the appeal, as the member says, is first to cabinet. If the appellants aren't satisfied, they can go to the courts. This section is taken verbatim from the earlier Petroleum Corporation legislation, which goes back more than a decade.

Sections 7 and 8 approved.

On section 9.

MS. EDWARDS: This is the section that deals, of course, with the finding of producer support. The minister has some fairly strong powers, but he need not exercise them. What is the thinking behind creating this situation where the minister may do a number of things and where in fact this specified formula that is referred to in subsection (3)(c), for example — "...a specified formula or method for the determination of the price..." — later, as it turns out, is going to be a regulated formula? Could the minister explain what he sees there and why this kind of formula by which people can make these determinations is not included in the legislation?

HON. MR. DAVIS: This describes, if you like, the recent practice of the Petroleum Corporation. Remember that the Petroleum Corporation has been in business since the early 1970s, and until the mid-1980s was the exclusive buyer. The Petroleum Corporation still has under its wing some 600 contracts with producers. The producers are bound to the corporation by those contracts. A buyer, whether it be B.C. Gas or an industry in British Columbia or a utility outside B.C., can go directly to the field and negotiate with producers. But a number of the producers are tied up with the corporation. They can't sell more than their capability to produce and, in some instances, all their capability is tied up with the Petroleum Corporation, this marketing aggregator, if you like.

Majority voting is the process whereby nowadays the Petroleum Corporation endeavours to find out whether the producers in total, the 600 contracts, are prepared to make a sale or not. Throughout, this is done in the name of the minister, but essentially the contracting is between a buyer and the Petroleum Corporation, which has these contracts which cover 70 percent of our productive capacity in the Peace River area. The minister must, however, be satisfied that it's a reasonable price. So far we've just let the market work.

MS. EDWARDS: The small producers are the ones I want to talk about for a bit. As you point out, most of their contracts are currently tied up through the B.C. Petroleum Corporation. I guess that as long as they're in those contracts, that's one thing. If, as you hope, you privatized the marketing part of the B.C. Petroleum Corporation, then you have to have new rules, I presume, for ensuring that the producers, particularly the small producers who are not represented in the group that is proposing to buy the marketing arm of the Petroleum Corporation.... There must be some way, perhaps some new way, by which you're going to ensure that those small producers have a say in what the price is and that they agree. Would you like to respond to that?

HON. MR. DAVIS: Madam Chairman, this section essentially perpetuates the existing arrangement whereby all producers, large and small, have to agree by majority vote, and the majority vote relates not just to volume but to numbers of producers. The group to which the hon. member refers, the group which may buy the marketing function of the Petroleum Corporation, is exactly the group large and small which has the 600 contracts with the Petroleum Corporation. It took them many months to work out a formula whereby the little people, the small operators, were reasonably satisfied with the mechanism whereby they would agree or not agree to sell their gas. The volumes are set; it's the price which they negotiate, and currently those prices are negotiated once every year. They are now beginning the negotiation for another price settlement for November 1, 1989. This section really describes the mechanism which — I'll put it loosely — protects all producers large and small.

MS. EDWARDS: Is the minister telling me, then, that the process — I think "process" is the correct word — for determining a price and, for example, arriving at what we call, under subsection (3), a specified price.... I presume it would be specified by the marketer. Will the process for getting there be determined in the regulations, or simply the process for testing that it got there? How much of this is in the regulations? Regulations are not something that we discuss and get to talk about every time they're

[ Page 8617 ]

changed. Could you explain to us how those producers are going to have their say in setting specified prices, or these prices that they're going to have to prove they agreed to?

HON. MR. DAVIS: Madam Chairman, this is essentially a process for testing price. The Petroleum Corporation last year, for example, had to go back to the producers large and small several times before a price or price schedule was determined, and it was determined for only one year. It's a mechanism which developed first in Alberta, where producers large and small were selling to TransCanada Pipelines. There are several aggregators — if I can put it that way — in Alberta, but they all have this voting type of process for testing price, seeing whether it will sell or not sell, and so on. It's a negotiating procedure which may have to be visited several times before a price is settled for another 12-month period.

MS. EDWARDS: How would the minister test, if he were to have to test? I notice here he doesn't have to, but he may test. How would the minister do a test to see that the producers agree? What processes are we talking about?

HON. MR. DAVIS: Madam Chairman, the aggregator offers a price to them; they either reject it or approve it. Approval would require 51 percent of volume and ten producers. This process may wither away if the marketing entity, the Petroleum Corporation, is not successful in selling gas. If it's not successful in reaching conclusions, these companies will sell separately or sell through some other aggregator in time. Already the Petroleum Corporation has slipped to below 70 percent of the volume of gas sold out of the Peace River area; it may disappear entirely. But if asked to satisfy over a period of years, it has to satisfy producers or it simply won't have the gas to sell.

MS. EDWARDS: Could the minister tell me how many producers there are in the northeast of the province?

HON. MR. DAVIS: Large and small, 140.

MS. EDWARDS: That makes it fairly clear that the large producers could set the price, because if you only need ten producers with 51 percent of the volume, you're certainly very well able to get around the small producers. It seems, as a matter of fact, like carte blanche; it doesn't even seem to attempt.... It's almost worse than the Senate reform formulas that we've seen laid out in various places.

First of all, how does a small producer get a say in the setting of this price?

HON. MR. DAVIS: Well, Madam Chairman, I think it's a little better than the government setting the price. The fact that it has worked now for four years indicates that the producers, certainly the great majority of them, are reasonably satisfied that this is a working process. As I say, unless the Petroleum Corporation is successful in finding markets it will lose these producers, large and small, quite rapidly.

MS. EDWARDS: The minister says that all the producers are currently in the group that bid for the marketing arm of the B.C. Petroleum Corporation. That might not be so. If it is so right now, what if some other producer comes on and is not part of the group that is also marketing the gas that they are producing? If there are a number of those, does the minister see this as making any difference at all?

HON. MR. DAVIS: Except for the contractual amounts that the Petroleum Corporation has tied up, any producer can sell to anyone they want. They don't have to sell through the Petroleum Corporation. A new producer, presumably, wouldn't have to deal at all with the Petroleum Corporation — go through the voting process and so on.

This was an endeavour to move from a totally government-directed operation, as it had been in Alberta and in a different mode in B.C., to a market where a producer has some say in the price and volume they sell. I know the hon. member is now arguing the other side of the coin — give the producer a voice. This is a transitional measure.

MS. EDWARDS: I wonder if the minister would explain to me one other thing. This section very clearly looks to a privatized gas marketing system. What if the minister decides that all the rules of monopoly and oligopsony, if you like.... Certainly the federal government does not allow the kind of concentration that would occur if the marketing arm of the Petroleum Corporation were sold to a group of producers — even if they are all of the producers. I certainly wasn't aware that it was all the producers.

What if the government finds that they cannot sell that marketing section, or choose not to sell it, and in fact keep it? What is the difference then?

[7:30]

HON. MR. DAVIS: No difference. Section 9 simply puts in law what has been going on for three years and will for the next year or two at least continue under the aegis of the B.C. Petroleum Corporation. This is what happens now.

If the hon. member is asking how you privatize a monopoly, she has a good question. This has really been concerning the companies. They've been to Ottawa a number of times endeavouring to get rulings as to whether or not any combination of producers would be a monopoly under the Combines Investigation Act. It's been a concern. It's one of the reasons why it's been difficult, if not impossible, to privatize.

Cynically I might say that it's easy for the Crown to nationalize — a single act, very simple wording, and so on. It is virtually impossible to privatize a group that works together in respect of sales. While the Petroleum Corporation no longer recovers 100 percent of the sales — it's down to under 70 percent

[ Page 8618 ]

— it nevertheless uses this process, and a process akin to this would have to be used by the private entity were this gas marketing operation privatized in order that all the producers were comfortable with the process. Again it is a similar process to one followed in Alberta by the several aggregators there.

MS. EDWARDS: Out of 140 producers, Mr. Minister, I wonder if you could tell me how many of those producers are large producers — I am obviously speaking in relative terms? Are there more than half a dozen large producers, and are the rest small producers? What is the proportion there?

HON. MR. DAVIS: Petro-Canada, Mobil and Amoco account for more than 50 percent of volume produced and sold in British Columbia.

MS. EDWARDS: That seems to make the whole point, which is that those three producers can decide the price every time. I don't see that in here the minister has made any process available to the smaller producers. Perhaps he thinks it is adequate that they continue as they are — and for all I know, maybe it is — but it seems to me that for the reasons of scrutiny it is very clear that this bill sets up a system whereby the three large producers can set the price themselves.

HON. MR. DAVIS: That's not new to the marketplace. I don't know what the hon. member expects. In this case, however, there have to be ten who agree and those ten are to have 51 percent of the volume. If the Petroleum Corporation is not successful in selling gas — let's say it can't sell any more gas — none of these producers is bound to sell through it because they have no sales and they will simply sign up with the various buyers who shop around currently for their output. Hopefully this marketing entity — which shall be the only significant one in British Columbia — will be reasonably successful in continuing to market B.C.-produced gas. Its future is not assured.

MS. EDWARDS: It would seem by the logic of the marketplace that if a small producer can't afford to sell with a price that's set by the large companies, he's certainly not going to be able to outdo the price outside of the Petroleum Corporation. It seems to me that you're saying that nobody is setting the price except the three large companies, who simply have to persuade seven other small producers, and 130 could be left out. There is no protection for those small producers. In fact, the minister deciding that they have some agreement on it seems to be going around the issue and going around the facts of what's happening and what's really going on so that this whole section, which requires that the minister determine whether the producers are in favour or not, doesn't do anything for the small producer who may be priced out of the market.

HON. MR. DAVIS: The hon. member is assuming that the small producer has higher costs than the large producer. In several instances, the large producer is the higher-cost producer, so what is a reasonable price to the large producer is a good price to a small operator.

All it means is that the small operator will get the going market price in the market; that's all. It doesn't say that the small man is going to be paid less for his production.

Section 9 approved.

On section 10.

MS. EDWARDS: This follows along with the same sort of things. If there has been a breach of conditions referred to in section 9, the minister may direct, may revoke, may hold a hearing or may revoke a finding. I recognize that you don't necessarily require what the minister has to do under these circumstances; the minister shouldn't be totally held to a certain action necessarily. But this seems to be extremely broad. If I were operating under this legislation, I would want to know what the minister had in mind when he laid out legislation that gives him a very broad range and does not require very much of anything. it suggests a number of courses of action.

I don't know, but a producer appealing this kind of thing, pointing out that there has been a breach of a condition, might want to know what the minister is going to do. Could the minister respond?

HON. MR. DAVIS: This section, it seems to me, covers the unlikely situation in which a producer, or perhaps a group of producers, is saying that the procedure outlined in the previous section has not been properly followed and the determination was in some manner faulty. This provides an opportunity for the minister to review the process, to call for it to be repeated in order to ensure that there is sufficient producer support to obtain that price. It's an appeal, really.

MS. EDWARDS: It suggests that if there has been a breach of a condition, or if the minister decides that there has been a breach of a condition, he may direct the aggregator to conduct a vote of the producers. That's the kind of thing that could be required. Can the minister think of some reason why he shouldn't indicate that there should be a vote, if there has been an indication that there has been a breach?

It says: "Where the result of the votes that the prescribed minimum degree of producer support is not obtained...the minister may revoke the finding of producer support." Why would it only be "may"? If it is found that the support wasn't there, why would the minister then have a choice?

Then it says: "Where the minister has reason to believe that a finding of producer support may have been obtained by misrepresentation of any fact material to the minister in issuing the finding, the minister may hold a hearing on the matter." Now that's a

[ Page 8619 ]

possible "may." A hearing may not be the answer there, but perhaps it should be.

You go on to the next one: "Where the minister determines after a hearing...that the finding of producer support was obtained by misrepresentation...he may revoke the finding." Why should he not revoke the finding if there has been misrepresentation? This doesn't give a person who might be wanting to act, or have the minister act under this section of the legislation, enough surety that if something has gone wrong, the minister has to do something about it, or shall do something about it — or what the minister shall be required to do if facts have been misrepresented or if certain actions that were required were not carried out.

HON. MR. DAVIS: The hon. member is really arguing that this is a certain appeal or that there is only one conclusion from the appeal: the other party is guilty. If the minister "may," he will certainly hear. If the balance of evidence is against the appeal, he will not revoke. So with "may" — and this is legal terminology, I'm advised by legal counsel — at least the minister has some discretion; he's not forced absolutely to make a ruling in favour of the appellant in every case.

MS. EDWARDS: As I said, in certain situations such as subsection (3), "Where the minister has reason to believe," that's as far as it goes, which is not very conclusive. But in the previous one it says: "Where the result of the vote...is that the prescribed minimum degree" is not obtained. How in the world would the minister not revoke the finding of producer support? If the result of the vote is not what is prescribed for the minimum degree, why would he not revoke the finding of the producer support?

HON. MR. DAVIS: "May" obviously gives more flexibility than "shall." I've just been given an example: the minister would want the gas to continue to flow while a new vote was being carried out. It's to give flexibility. Naturally the power should and will be used if there's reason to believe that there isn't appropriate producer support.

MS. EDWARDS: If in a certain case the minister wanted the gas to continue to flow, then he would have in the legislation the ways by which he would require that the price by a proper determination were paid for that gas. Is there some part of the legislation that covers that?

It says here that "the minister shall serve a notice of the revocation on the aggregator" if in fact he has revoked a finding. I don't think that's unreasonable, and it gives the correct right to the aggregator, who now has to know what has happened. But if something goes wrong, the minister doesn't have to go back and do things that he has found have gone wrong. The minister may want to add something more to this section; I'm not sure. As I say, if you get yourself into a spot, if you cut the flow of gas that could create an emergency of some sort, then you set up legislation whereby the decision on the amount that's paid for that gas could be determined elsewhere. Surely the minister cannot just decide whether or not he shall revoke certain agreements and findings of producer support, because findings of producer support are something separate from flow of gas except insofar as the minister ties them together or keeps them separate.

Section 10 approved.

On section 11.

HON. MR. DAVIS: I move the amendment standing in my name on the order paper.

[Section 11., by deleting the proposed section 11(3) and substituting the following:

(3) Where money is received by the government as a penalty under this section, the minister shall

(a) pay out of the consolidated revenue fund an amount, not exceeding the money received, that the minister considers appropriate, and

(b) distribute the amount referred to in paragraph (a), in accordance with the regulations, to the producers of the netback gas in respect of which the penalty was imposed, but a person on whom the penalty is imposed is not entitled to share in the amount distributed.]

Amendment approved.

On section 11 as amended.

MS. EDWARDS: In this case, if a person moves gas without producer support, the minister may impose a penalty. Here's another "may" impose a penalty. Even if he has found the producer support that he required previously in the legislation, he may impose a penalty or not. That may be fair, but it shouldn't be going ahead. Anyway, the minister shall distribute the money collected because of this penalty, and then he may distribute the money. I believe the amendment is simply a rewording amendment. Could the minister explain how he is going to distribute this money that he collects as penalties and what the criteria will be for spreading that around?

[7:45]

I really thought the minister was going to answer me on this one, and I'm hoping he will. It seems to me we deserve an answer because there's no indication here, except that the person who has paid the penalty cannot participate and share in the distribution of that particular money later. So how is the money going to be distributed? Who is going to participate in the windfall?

HON. MR. DAVIS: The penalty presumably would apply to certain producers, not necessarily to all of them. The distribution of the penalty moneys to those who did not incur the penalty is something which under this legislation is possible, but it would be on a pro rata volume basis, I assume.

MS. EDWARDS: On a volume basis based on what volumes?

[ Page 8620 ]

HON. MR. DAVIS: On the volumes of gas flowing, a large producer flowing a large volume and a small producer flowing a small volume.

MS. EDWARDS: Because one producer has a penalty imposed, the other producers, for no reason other than that they participate in flowing gas through that pipeline, get to share the penalty that producer had to pay. Is that correct?

I know that the money is recoverable by the Crown through the courts. I gather that the Crown pays for recovering the penalty, or may pay for it, and then gives the money to the other producers. I'm not sure why the other producers would have a particular interest, or why the minister would suppose that they should have an interest, in this money. I don't know the rationale behind this section.

HON. MR. DAVIS: In the extreme, some producers may have flowed more gas than was their entitlement and others less. The penalty moneys would be redistributed to compensate those who had received less income during this period in which there was a dispute as to the legitimacy or otherwise of the whole process of voting.

MS. EDWARDS: Would those people who had more or less than they needed...? Would that calculation be related to the incident in which there was no producer agreement on the price? In other words, is there any connection between the penalty itself, what led up to it and the payback?

HON. MR. DAVIS: I would assume there is every connection.

MS. EDWARDS: Could the minister explain that to me?

I am sorry that the minister thinks I'm beyond hope on this one, I guess, but he has failed, to my mind, to connect.... He hasn't even clarified for me whether the penalty that is collected is distributed to all people in the producer pool or whether in fact it is given to the producers in the producer pool who suffered because of this sale, which did not have producer price agreement — those who benefit from it and those who had a loss because of it. If there is no connection, then I would suggest that the legislation needs revision; it needs to be amended. If there is a connection, I would appreciate the minister explaining it to me.

HON. MR. DAVIS: Those who have violated the producer support agreement pay a penalty. Those who were otherwise penalized, if you like, because they weren't able to sell as much gas during the interval in question would benefit.

I'll just read the notes I have for this section. It allows the minister to impose a penalty on a person — an aggregate or a producer — who moves netback gas without a finding of producer support. Some may sell gas jumping ahead of the actual conclusion of sale. It provides for a penalty on a producer who moves netback gas without a finding of producer support and charges the minister with distributing all or part of the penalty collected to the producers of that netback gas, except to a producer upon whom the penalty might have been imposed.

MS. EDWARDS: The Crown then does recover its revenue out of this, I assume.

HON. MR. DAVIS: The Crown gains revenue through the royalties paid on production. There is no particular revenue flowing to the Crown as a result of a dispute of this kind. I might say that we have not experienced any of these kinds of disputes in British Columbia. This section covers the possibility, however, of a dispute arising.

MS. EDWARDS: I used the wrong word. The Crown has nothing but expense. In fact, the expense of recovering the penalty and then turning over the money to the producers again, that simply becomes an expense for the Crown — no revenue.

I really would like an answer to this question, Madam Chair.

HON. MR. DAVIS: To date the B.C. Petroleum Corporation has performed this function for the minister, and may continue to do so. In its case, all of its costs are paid by producers, not by the Crown.

Section 11 as amended approved.

On section 12.

MS. EDWARDS: This one allows the minister to delegate his powers again. I would like to ask the minister how he anticipates delegating his powers in the short term and the long term. If it's how I read it, it looks as though it may allow the minister to delegate powers to the B.C. Petroleum Corporation until such time as his hoped-for privatization takes place. If that's the case, and if it doesn't take place — or if it does take place — does that mean the minister no longer delegates those particular powers to the Petroleum Corporation? Could he explain that to me?

HON. MR. DAVIS: Madam Chairman, we'll continue to have a B.C. Petroleum Corporation. It will continue to carry out the administrative, measuring and policing and other functions, particularly those of the nature we've been discussing under sections 9, 10 and 11.

The other part of the Petroleum Corporation, that's concerned solely with selling, may be privatized. But it doesn't carry out the policing functions, the administrative functions, the vetting functions and so on. It is the one to which the minister may delegate powers, functions and duties, etc.

Sections 12 and 13 approved.

[ Page 8621 ]

On section 14.

HON. MR. DAVIS: Madam Chairman, I move the amendment standing in my name on the order paper.

[Section 14., in the proposed section 14(1) by deleting "section 6" and substituting "section 5".]

Amendment approved.

Section 14 as amended approved.

On section 15.

MS. EDWARDS: This lays out the many regulations that are expected to be made, and it of course leaves you with legislation that is fairly open. Most of the real content is going to come in the regulation. Under subsection 2(c)(iv), it says the minister may authorize a person designated under subparagraph 3 to retain all or part of a levy or other charge collected by that person. Who might that person be?

HON. MR. DAVIS: The B.C. Petroleum Corporation.

MS. EDWARDS: Is that the major delegation of powers that the minister sees, or does he see some other type of delegation happening under contract with more people and different types of people? Or is it simply moving it back to the B.C. Petroleum Corporation?

HON. MR. DAVIS: I think essentially B.C. Petroleum Corporation continues, but in two modes: one is administrative — I'll call it that — and the other is marketing. The marketing element may or may not be privatized. The administrative mode will continue. Substantially all of these regulations would be administered, at least in depth, by the Petroleum Corporation, not by staff in the ministry.

Sections 15 to 21 inclusive approved.

Title approved.

HON. MR. DAVIS: Madam Chairman, I move the committee rise and report the bill complete with amendments.

Motion approved.

The House resumed; Mr. Speaker in the chair.

Bill 54, Natural Gas Price Act, reported complete with amendments.

MR. SPEAKER: When shall the bill be read a third time?

HON. MR. STRACHAN: With leave now, Mr. Speaker.

Leave granted.

Bill 54, Natural Gas Price Act, read a third time and passed on division.

HON. MR. STRACHAN: Mr. Speaker, I call second reading of Bill 55. However, I want to advise the House that by agreement the minister will be speaking only, and there may be another government member speaking to the second reading. However, I will adjourn debate on this act in its second reading stage, so members of the opposition can return to second reading debate tomorrow.

With that said, Mr. Speaker, I call second reading of Bill 55.

VANCOUVER ISLAND
NATURAL GAS PIPELINE ACT

HON. MR. DAVIS: There have been many proposals to move natural gas to Vancouver Island; the first was made in the 1950s when natural gas first arrived on the lower mainland. There have been two dozen proposals — some serious, and others not so serious — in the interval. There was a serious proposal put forward by B.C. Hydro and contested by Westcoast Transmission, which had an alternate line, in the early 1980s. Those projects were larger and much more expensive than the one presently envisaged for the Sunshine Coast and Vancouver Island. The present project, which should be completed by the late months of 1990, will cost in all phases, including conversions, some $500 million. The main transmission line itself is estimated to cost some $250 million. Firm bids are in for all but the underwater section, and the estimate in its case, which is the largest, most generous estimate available, shows that it can be built at today's prices for around $260 million.

[8:00]

This line will only happen because of federal and provincial government support, financially speaking. The main reason government support is needed for this infrastructure is that energy sells for roughly the same price in Vancouver as it does in Victoria or Nanaimo — with the exception of gas, of course. Oil prices are roughly the same in Vancouver as they are on the Island or the Sunshine Coast. Power rates are the same provincewide. Wood wastes are fairly readily transportable, and they sell for comparable prices on both sides of the Strait of Georgia. Therefore, for a competing source of energy to be priced competitively on Vancouver Island or the Sunshine Coast, government support is needed.

The federal government put many hundreds of millions of dollars into gas line extensions into central and eastern Canada. Indeed, the federal bill for the line extensions through Quebec reached roughly $1.5 billion. Governments also provided the cost of conversion. The federal support for this project, which has been negotiated, amounts to $100 million in an outright grant and $50 million in a non-interest-bearing loan which will only begin to pay out when the project is in the black. The province will put up a $25 million loan and pay for conversions

[ Page 8622 ]

of existing plant and equipment in homes, stores, factories and pulp mills.

There is a return to the province in that the value of the gas distribution network in Victoria will increase by between $10 million and $15 million if, as and when gas arrives. That's an agreement which has been negotiated, and the moneys will flow once the gas line is under construction. Also, assuming all of the gas comes from the B.C. Peace River area, the annual royalty payments to the Crown will be of the order of $15 million. So there are some offsets as far as the province is concerned.

To the consumer this has to be good news, because natural gas is not only a clean source of energy compared to oil and coal but also the price will have to be 10 to 15 percent below the price of alternative fuels initially. If the lower mainland is any example, gas will eventually be available to consumers at half the price of oil. The main reason for this is that the transportation facilities, once installed, are progressively depreciated. The supply project, the pipeline projects and distribution systems, under regulation, must pass on any of the profits they make over and above a certain level. The Vancouver Island pipeline will set up a regime under regulation whereby a unique resource is available to some 500,000 British Columbians.

I said the project will be subsidized; there's no doubt about that. The federal subsidy is significant. Incidentally, it's the first significant federal subsidy for any energy project in this province throughout its entire history, whereas a number of other provinces have enjoyed all kinds of support. Ontario had atomic energy running into many billions of dollars. Other provinces have had power transmission lines and reactors financed and so on.

MR. WILLIAMS: Give us your economic analysis.

HON. MR. DAVIS: The hon. member says: what's my economic analysis? I would say that in the fullness of time this will turn out to be good news for the region, good news for the people who live on the Sunshine Coast and Vancouver Island. It will be the same kind of good news that provincializing B.C. Hydro brought about by pushing hydro lines into many regions of the province. Typically, with infrastructure, there are substantial elements of a development which are economic, but there are others that are peripheral but provide an opportunity for development in those peripheral areas.

There are very few parts of Canada - that is, from Quebec west - that don't have natural gas service. I know this is a good opportunity for the people of Vancouver Island and the Sunshine Coast to have a really clean fuel which has no sulphur and no poisonous materials in it, which creates less of a greenhouse effect than any other fuel known to man, which will virtually terminate the movement of oil barges in the Strait of Georgia, and which will largely eliminate the acid rain which presently emanates from a number of our pulp and other mills along the route.

So I recommend this legislation to the chamber and move second reading.

HON. MR. STRACHAN: Unless there are any other speakers at this point, I will now move adjournment of this debate until the next sitting of the House.

Motion approved.

HON. MR. STRACHAN: I call committee on Bill 53.

PAROLE ACT

The House in committee on Bill 53; Mrs. Gran in the chair.

Section 1 approved.

On section 2.

MR. GUNO: I do have some questions on this section. Essentially, as I said in second reading, the bill — this section — certainly does address some of the recommendations made by the ombudsman; it also partially incorporates some of the recommendations made by him.

The one concern that we have on this side of the House is that it leaves the board appointments to the political process under the label of appointments by the Lieutenant-Governor-in-Council. If you look at section 2, it states that the board shall be composed of the number of members the Lieutenant-Governor-in-Council considers necessary, and it mentions that those persons will be selected who meet the criteria prescribed under section 15(a). While we're not at 15(a), because it refers to it, I would just like to refer to that section, which states that the Lieutenant-Governor-in-Council may make regulations, including regulations establishing the criteria for eligibility for appointment to the board.

So it does on the one hand address the need for independence of the board; at the same time it yanks it back with this kind of circuitous way of ensuring that nothing is set out by legislation but is by regulation in terms of the criteria. I was just wondering if the Solicitor-General can comment on that omission.

HON. MR. REE: The regulations are not completely finalized as such, but it is present board policy for the community-based activity of candidates for members of the board.... That's basically going to be rolled over into the regulations. As the member well knows, the regulations are a public document; it is public knowledge. Basically, in looking at candidates for membership, we have looked at their community base, their background in the community, their volunteerism and their contribution to various aspects of the community. In the last year, 24 people have been interviewed and only eight have been appointed as members of the board, because we

[ Page 8623 ]

try to get well-qualified people, people who know their community and know what's going on within the community.

MR. SIHOTA: I remember the circumstances that led up the ombudsman's report. In the past, by virtue of that experience, I think we all came to learn that many of these appointments are made not because of broad-based community experience but because of service to a political party.

I was just wondering if the Solicitor-General could tell me — I understand what he said about his regulations — how in his regulations he intends to deal with the issue of giving comfort to the public that the appointment will not be made, as it has been in the past, on the basis of service to a political party. That obviously was a variable in some of the appointments. Do you intend to deal with that in the regulations? If so, how?

HON. MR. REE: The candidates that come forward come to our attention through a number of ways: from members of the present board, from other people in the community, and we have had recommendations from MLAs, yes. But I can assure the member that there will be no regulations prohibiting a member of the NDP from being a member of the board. We will not specify that.

MR. SIHOTA: It was the opposite problem that might need remedying. You do have this problem, and you have gone out of your way. What thought have you given to the process of a legislative committee working in conjunction with the Solicitor-General and going through the appointments, vetting them and adjudicating on the appointments on the basis of those criteria that the Lieutenant-Governor-in-Council established? Would the minister be open to that type of an approach, so that an all-party committee could make some unanimous recommendations on some of these appointments? Would that not be a better or different way of doing it, and maybe more preferable than just by regulation?

HON. MR. REE: I certainly concur it would be a different way of doing it, but I don't think it's one that we're going to adopt. I don't see anything wrong with a person's, shall we say, political participation in the community precluding him from a position on the board. It's not a position that you are appointed to.

On the board of parole it's not a position of political influence. It's not a position of great remuneration. It's not a position, I think, that people strive to get. It's a position that we take very seriously. It is community-oriented people that we wish to have on the parole board, people who, as I say, know their community. I don't know how any of those members of the parole board would vote in an election.

By the way, I apologize. I should have introduced Lynn Stevenson, who is chairman of the B.C. Parole Board. She is here assisting this evening. Mrs. Stevenson interviews every applicant who comes before her, and in 99 times out of 100 I would recommend and accept her recommendations as to whether this person is suitable or not. She has had great experience. I rely on that.

[8:15]

The opposition can make what they wish of the issue, but I think we make very responsible appointments to the board. If they have a particular criticism of any one of the present 22 members, I have not heard of it from them. Some members may be Social Credit; some members may be NDP; I don't know which ones are which.

MR. SIHOTA: Well, we know one, because there was quite a discussion between the Premier and that individual. I don't want to get into the history of that situation. It's been well noted by the ombudsman.

MR. PERRY: We don't want to talk about that here. That might be....

MR. SIHOTA: No. That might be deemed to be political.

But this is a government that says it's open and runs on the platform of open government. I'm sure the government recognizes that the public — and I think this is wrong — doesn't have a lot of confidence in the parole system. I don't believe in that. I don't advocate that point of view, but there is a crisis of confidence, if I can put it that way, because of the notoriety that a few celebrated cases get and the absence of notoriety that comes from all of those successful cases, which, I guess statistically, are somewhere in the 90 percent range.

If you are looking for qualified people, if you want to live up to your labelling of open government and if you think you can answer the question without assistance from the Attorney-General (Hon. S.D. Smith), let me ask you again: why would you, given all the criteria that you've laid out, not be agreeable to vetting all of these prospective names and allowing an all-party committee to take a look at them and make some recommendations? What possible reason can you put forward to rejecting that type of an arrangement? I'd like to know why.

HON. MR. REE: I recognize that there is at times a lack of confidence in the parole board, and that's because certain members — maybe some in this House — will espouse issues that they don't have background knowledge on. A great bit of the lack of confidence of the parole board is not with respect to the provincial parole board but with respect to federal parole across Canada, which is dealing with more serious, more vicious criminals than we have in our provincial institutions. Some of it does come back onto our own members of our B.C. Board of Parole.

I indicated it would be a different solution to have an all-party member committee or the House itself resolve in committee like we are, Madam Chairman, to have unanimous approval of members of parole. I think it would be very different, very costly and very

[ Page 8624 ]

time-consuming. In addition, I don't think anything would ever be accomplished under such a system.

Interjection.

HON. MR. REE: No, I have all the confidence in the members of the opposition. That is why I can emphatically say that I don't think anything would be accomplished. When the first member for Vancouver East (Mr. Williams) was a cabinet minister, he will recall that the government at that time and the committees studied everything to death. We can't afford that sort of time and carry on with the matters that have to be attended to.

In seeking our candidates for members of the board of parole, we do look for community participation, decision-making ability and the rest of it. I don't think we could possibly get anything accomplished by having an all-party committee.

MR. GUNO: I think this section demonstrates a concern that the guts of the legislation is all by regulation. It certainly doesn't allay the concerns we have about maintaining the board's independence in safeguarding how the board's decisions are based. They are based on well-defined, objective and acceptable criteria. Subsection 7 demonstrates that further by addressing the other appointments.

In the ombudsman's report, he refers to the fact that the B.C. Parole Board members — other than the chairman — sit part-time and are paid at a daily rate. They are picked because they are concerned and respected members of the community. They are not expected to derive any livelihood or any major benefits from those roles. It is therefore recommended, he says, that during the term of appointment to the B.C. Parole Board, members neither seek nor hold any other appointment, office, employment or contract with or through the provincial government.

In some ways this bill partially incorporates this recommendation. Subsection 7 of the bill declares ineligible any person who holds any other office by appointment of the Lieutenant-Governor-in-Council. I suggest this leaves open the possibility of real or apprehended bias, should a board member be involved in or perhaps depend upon some other remunerative relationship with the government. I am wondering if the Solicitor-General has seen this loophole and would perhaps consider amending it, so that we wholly take in the recommendations of the ombudsman.

HON. MR. REE: We very seriously and thoroughly looked at that particular recommendation of the ombudsman and felt it was too broad and would limit our opportunity for capable and responsible people for members on the board. We accepted the recommendation with respect to order-in-council appointments. I am sure the member for Atlin appreciates the term "contract" within that recommendation.

There are many people out there who directly or indirectly would maybe have some benefit through a contract with the government, and who are very capable and qualified people to sit on the board. We did not wish to completely exclude them It could be a contractor building something for BCBC or anything else like that.

In our smaller communities, it would be more difficult to get responsible candidates. We do try to appoint people on the board throughout the whole province. I am not sure if the member is aware of the diverse locations represented by members on the Board of Parole.

I might indicate them to show how broadly they cover the province: two are from Victoria, one from Terrace, one from Fraser Lake, Prince George, Kelowna — the chairman is from West Vancouver — Chase, Merritt, Abbotsford, Langley, Surrey, Delta, Richmond, Maple Ridge, Coquitlam, New Westminster, Burnaby, Vancouver and North Vancouver. We appoint them from around the province. In the smaller communities, with the broad restrictions suggested by the ombudsman, it would have made it very restrictive for selecting candidates.

MR. GUNO: The Solicitor-General describes the ombudsman's recommendation in this area as being broad. I wonder if he misses the point. The board must be absolutely free from any bias or apprehended bias. If there is some other contractual relationship, wouldn't that at least open the sense that there may be this kind of obligation that would lead to awkwardness, misunderstanding and real or apparent bias? Perhaps the Solicitor-General hasn't really appreciated the need for complete and total independence. This is one of the ways the ombudsman has tried to deal with that.

HON. MR. REE: I don't know if the members there are looking under too many rocks for problems. I think the people we have appointed to the board are independent, decision-making, community-based people. I don't think any of them — I have certainly not heard of any in my tenure — have felt coerced or that sort of thing. The member may be taking from what caused the ombudsman's original inquiry.... Mr. Hankin took the responsible course of action on his behalf at the time, if he felt there was something. I think every member of the board, if put in the same position, would take a position if they felt a conflict or something. I don't see any particular problem in it and I don't foresee any arising. If it did, I don't think it would go anywhere. I think there would be someone else appointed, or someone else to take any particular case or decision.

We have, as I say, 22 members of the board at the moment. Our chairman does allocate who sits on what cases or in what area, trying to have the local person on any hearing in that area. But then who else comes in if there is any question of prejudice or discrimination or something like that.... The chairman will appoint others on a particular hearing. So I don't see any particular problem there. It's not a problem at the moment, and I don't foresee it happening.

[ Page 8625 ]

MR. GUNO: I just want to shift now to the composition of the board. Just last month I had the opportunity to be in Prince George, and I took the chance to visit the correctional centre there. I was told by the security people — the corrections officers — that the centre had something like 40 percent persons of native origin. In view of that, can the minister tell me if you have anybody on the board who is of aboriginal status — or, for that matter, any women?

[Mr. Pelton in the chair.]

HON. MR. REE: The question is a little embarrassing in a sense, because maybe we haven't got as far along as we would like to in this way. Only 10 percent of our members are representative of native peoples of the province. I'm sorry we've discriminated in that way too: both of them are women.

MR. SIHOTA: In that regard, would the minister be open to some type of policy, regulation, or indeed a statement in the bill as an amendment to make sure that it doesn't present itself as a problem in the future? Will the government make a commitment, through the legislation, that a percentage of that board shall be composed of people from the native community? Would you be averse to that type of provision in the legislation, and if so, why?

HON. MR. REE: I am not averse to competent people having any position or being appointed to any position, I would not like to go into discrimination against any particular race or creed or colour of people, or religion, by selecting certain positions only for that particular group. I would like to have, as I say, competent people appointed, and that is the policy that we are endeavouring to do. We will not discriminate against any group.

[8:30]

MR. SIHOTA: With the number of native people who must inevitably come through the process, and certainly involved in the correction system, would the minister not agree with me that government should show some sensitivity to the composition of people in the correctional system and make provision for natives? I am sure there are quite a few qualified, competent people from the native communities who would be able to fill the positions. I don't think that's going to be your problem.

I think that you would be addressing a need, and it's a need that's been recognized in other components of the judicial system. The Attorney-General's department is looking at a special program for native courts and native justice; the bar association has come out with some recommendations in that regard; there is some sensitivity now within that ministry to take a look at more native judges; and that kind of stuff.

Given the mix of the population in a correction system, why would you be averse to making provision in there to make sure that there was native representation on the board?

HON. MR. REE: Well, it's a long time since I practised law. Since then they've brought in a Bill of Rights, the Charter and all these sorts of things. I think if we were to put in legislation that any specific group is to be recognized, without covering the overall, it might be subject to a Charter challenge. In policy we do recognize the percentage very seriously, and it's a big problem.

The percentage of native people in our institutions is around 18 percent, I think, and that is why we have put native people on the Parole Board. They may not be sitting in every hearing involving a native inmate, but they are certainly there to assist all members of the Parole Board with their background and knowledge of the people of the province. We feel it's of value, but I would strenuously fight specifically allocating any particular number to any board of any sort.

I recall a group of people saying at one time that 50 percent of the Supreme Court of Canada should be women.

MR. SIHOTA: You think that's wrong?

HON. MR. REE: Maybe if they're all qualified we'd have 75 percent women. If they are competent people, I have no objections, but I would not support sexual discrimination like that.

MR. GUNO: Briefly responding to the Solicitor General’s interpretation of the Charter, in terms of addressing certain affirmative actions and trying to address some of the disparities in our justice system, I think he would do well to read Hansard. We talked to the Attorney-General (Hon. S.D. Smith) about the problems behind prison walls and how he was committed to addressing this.

I think one of the ways to do it is to look at the composition of your parole board and see if we can look for competent people, as you say. Competency is really quite a subjective term, which I think is very convenient for the establishment if they want to continue the disparities.

Aside from that, the section does not provide an upfront process in terms of establishing criteria for the whole process, including the other appointments. I don't think you've really addressed the question of whether or not you would see to expanding the other appointment recommendations made by the ombudsman.

HON. MR. REE: I think we've answered why we have not expanded the restriction of appointments. I think we have answered that the criteria will be in the regulations, which is a public document for all the world to see, including the member for Atlin. That will be there, and he can bring it forward.

The present appointment criteria are set out in the policy of the Parole Board. I'd be quite happy to send that over to him so he can look at it. This is the decision of the government, and the member, of course, can take appropriate action as he sees fit.

[ Page 8626 ]

Sections 2 to 9 inclusive approved.

On section 10.

MR. GUNO: Section 10 deals with finality of decisions and orders. This is often labeled as a privative clause, and it attempts to exclude any judicial review of the board's conduct or judicial challenge to the board's jurisdiction. I wonder, given the Charter.... The Solicitor-General himself referred to the Charter. Decisions that affect the rights of every citizen should be open to judicial review. In view of that, can the minister tell us whether such a clause can stand alongside the Charter of Rights?

HON. MR REE: I believe it would certainly stand against the Charter of Rights. Being a member of the bar, the member well knows that an application can certainly be made at any time on mandamus or similar to a court to see whether the authorities have taken the appropriate action, made the appropriate inquiries as such. Certainly if they have not, the court can order a rehearing. What this section is saying is that if they have made all reasonable inquiries, received all reasonable information, taken all reasonable steps and then made their decision, that decision is not subject to appeal.

MR. SIHOTA: Just as a matter of interest, I'd like to know what you're trying to remedy here. Were you finding that a lot of your parole decisions were being taken to the courts? If that was a problem, I'd like to know; if it wasn't a problem, that begs the question why you need the section. So I'm just wondering what you were trying to remedy by putting in this clause here.

HON. MR. REE: Basically with this whole act, including this section, we are trying to make it consistent with the National Parole Act, and the same section is within the National Parole Act. As I said, the decision is not appealable, but the process certainly is appealable. Both the member for Atlin and the member for Esquimalt-Port Renfrew as members of the bar should surely know that. At any rate, the process is always appealable.

MR. GUNO: It seems somehow inconsistent that the government in this bill will set out how the board will operate and how its members will be selected, yet at the same time will close off the ability to review how these decisions are made that affect people.

I think that's all I have to say on this bill.

HON. MR. REE: Mr. Chairman, every applicant for parole is advised, if his application is turned down, as to the reasons for the turning down of the application. If he is unhappy with it, he — or she — can appeal to the chairman or the vice-chairman of the board, who would then review it for another hearing. That is in a sense the method of appeal within the parole board itself. Also, they can always go to the ombudsman at the same time.

Sections 10 to 22 inclusive approved.

Title approved.

HON. MR. REE: Mr. Chairman, I move that the committee rise and report the bill complete without amendment.

Motion approved.

The House resumed; Mr. Speaker in the chair.

Bill 53, Parole Act, reported completed without amendment, read a third time and passed.

HON. MR. STRACHAN: Mr. Speaker, I call second reading of Bill 70.

WILDLIFE AMENDMENT ACT, 1989

HON. MR. STRACHAN: In moving and speaking to second reading, I'll be general. There are a variety of issues covered in this bill which we will deal with, of course, in greater detail when we get to the committee stage, but let me generally say that no major amendments to the Wildlife Act have been made since 1982. What we have here are a series of housekeeping amendments that correct deficiencies in current wordings, with a particular emphasis on improving enforcement. These provisions enable collection of additional revenues and upgrade provisions for proper management of inland fisheries and the growing angling guide industry.

One of the concerns we have had in the province has been the question of angling guides. These amendments contained in Bill 70 provide new provisions to set up a framework for properly regulating the angling guide industry. In particular, provisions enable regulation of the number of angling guides that may operate on some high-quality angling rivers that are becoming overcrowded, and provide for charging additional fees.

Number two — and I'm sure this will be of interest to the Legislative Assembly — is that we have amendments with respect to birds' nests. We will provided express protection for permanent nests used by eagles, falcons, osprey, herons and burrowing owls, and protect other nests only while they're empty. This will allow people to collect nests that are only used by birds for one year. The present provisions in the Wildlife Act prohibit disturbing any bird's nest at any time.

Another item — and I spoke to this briefly, and I've also talked to some of the members opposite about it — is a significant change in our legislation with respect to traplines. We will be allowing for registering a trap line by a group — trap line registration for a group of trappers. Group traplines currently exist as holdovers from earlier times and are mostly held by natives. The amendments will legitimize

[ Page 8627 ]

the existing group traplines and provide for better management of them and new group traplines through required fur management plans. The Ministry of Native Affairs has carefully considered the concept and is in favour of the amendments as written.

As I pointed out during my introductory comments, the legislation, the way it's written, is essentially colour-blind; however, it is an amendment that is sought by the native community and will offer them some unique benefits in terms of trapline management.

AN HON. MEMBER: Will it also allow us to trap Socreds?

AN HON. MEMBER: With a leghold trap?

HON. MR. STRACHAN: With a leghold trap. Sure, you can trap Socreds.

Another item that's going to draw some interest, I'm sure, is an amendment which exempts an officer from section 12 of the Firearm Act, which makes it an offence to discharge a firearm from a motor vehicle or aircraft. This will allow officers to shoot from motorized vehicles as necessary for animals that pose a threat to human safety or property or for wildlife management purposes.

[8:45]

There are further provisions empowering officers to enter private land in the performance of their duties. Since wildlife and fish inhabit private land, it may be necessary for an officer to enter private land to investigate offences.

There is also an amendment which will allow the habitat conservation fund to receive moneys from revenue derived from lands purchased by the fund and from a variety of sources which include funds and donations from organizations or governments. A House amendment, which is on the order paper now, is proposed to allow for a planned transfer of funds from the Crown land account to the fund.

That pretty well covers the comments I wanted to make in second reading to the Wildlife Amendment Act. With that said, I move second reading, and I'll take my place and listen to further debate on this bill.

MS. EDWARDS: The minister was certainly correct in saying this is a catch-all bill, because it covers many things and involves a number of changes, some of which are mildly good, some of which are mildly not so good, and most of which are movement....

Basically, one of the major concerns we have on our side of the House is that many of the sections that were in legislation previously will now be moved out of legislation and put into regulation. That can be a problem in the sense of public exposure to what's happening, when the regulations can be changed very easily. We don't like the cabinet to be able so easily to decide changes which are of very great concern to a number of ordinary citizens in their everyday activities.

Throughout the interior of this province there are many people who have a very close interaction with wildlife for various reasons: they are fishermen, hunters, photographers, hikers; they may have bears in their garbage dump. The wildlife of the province, we keep saying, is different from humans, but there is nevertheless a major interaction on many occasions.

Nothing in the act addresses the hunting of animals for various body parts, which we thought might be there — the whole business that encourages the kind of poaching that we have in order to get bear gall-bladders and things like that. There is still nothing in the act that rules against that or, for example, the killing of wolves using Compound 1080, which also kills birds. There is nothing in the bill that addresses that kind of thing.

We support the attempt to have better management. I believe that was the minister's idea in setting up the situation where we can have angling guides. Certainly that has been advocated by the fish and wildlife groups for quite some time. It should set up a situation where people who choose to come into the province to fish can have the same opportunity to get to the good spots and to have the assistance that hunters get now.

The business of traplines, and the fact that there can be more than one person operating traplines and that traplines can be operated in conjunction with each other leads to wanting plans for that — that seems to us like a good idea.

One of the problems here is that we can put in these things and we still have practically no resources for enforcement, or at least not nearly enough resources. We only have 15 new conservation officers this year. We hear absolute horror stories about areas where we can't possibly address the problems of controlling what goes on under the Wildlife Act and what shouldn't go on under the Wildlife Act, the charges that should be made, and the kind of inspection that should be there and won't be there anyway. So the changes to the legislation don't have as much effect as they would if we thought the legislation was going to be enforced.

The major shortcoming is the failure of the act to address habitat protection. The only habitat that the act protects that it didn't previously protect is some birds' nests. Also, by a switcheroo from last year, it allows for the movement of funds from a Crown fund — I've forgotten what it's called — to the habitat conservation fund, which was backwards from what you were doing last year. There is some more money there, but basically there is nothing in the act that allows wildlife managers to do a better job of managing the habitat and gives them the legislative rights they need to be able to make moves that will make a difference to the wildlife populations.

This is our general observation. The worst part of this act — and I have to mention it here — is that it basically allows the wholesale slaughter of cats. I would like to say at this point that there is a major problem here that the minister has laid out. He has discriminated nakedly against the feline group as

[ Page 8628 ]

opposed to canines. In fact, cats can now go out.... They aren't even allowed to go out in a group. Dogs can go out. Cats can go out alone and be arrested, apprehended, jailed and even killed. They don't even need to go out as dogs do. Dogs have to be caught in a group; they have to be harassing wildlife. Does a cat need to harass? No way. A cat just has to be where the wildlife is. I mean, no cats can go near wildlife. How are they going to have any fun anymore? As I say, we talk about catcalls, but there will no longer be any catcalls.

It is an absolute disgrace. It is ridiculous that we have these poor animals that, just because they are predators, are being treated this way. Pretty soon we are going to see, just as with the wolves, that they are going to be hunted from helicopters. I know that everyone's poor pussycat is going to be in real trouble. Because of this section, we may have to oppose this bill.

MR. GUNO: I don't think I am going to defend the rights of cats with the fervour that my colleague has just demonstrated, but I do want to make a few comments about this bill. I have heard the minister's reference to native trappers, and I think that's a big plus, especially in my erstwhile riding — is that how I describe it now?

MR. ROSE: You will be there forever.

MR. GUNO: Okay.

I think that's a very positive move. What I am concerned about is that in spite of the fact that it's trying to achieve a whole bunch of things, it does not have the same commitment of manpower.

I just came back from Atlin. In fact, I was in the village of Atlin, and I was talking to a couple of trappers who had just got back from trapping. They were concerned about the fact that, in spite of his best efforts, the conservation officer there simply did not have the resources to really try to enforce some of the laws we have pertaining to wildlife. One of the concerns he has is that some of the outfitters are undertaking their own wolf kill, using strychnine and, in the process, wiping out a lot of the bird population. I think that is a really serious concern in that part of British Columbia.

I think that if we are going to make this commitment, we should be able to reinforce it with the resources that it will take. For instance, there are huge areas of the province that have three conservation officers to take care of all the hunting and fishing violations. Given this situation, I think the management plans will be largely meaningless. They will be unenforceable and will lead, I think, almost to a privatization of the whole wildlife area.

One of the first principles of law I ran into when I was in law school was what is termed ferae naturae. It simply states that there are no property rights for wildlife. Yet I notice one of the sections — I know this is not clause-by-clause — almost sets the tone of this whole bill.

I just wanted to rise to acknowledge the effort to at least address the concerns of many of the native trappers in the Atlin riding. I think a major disappointment — and I guess it's consistent with this government's policy — is that it doesn't address aboriginal and treaty rights in hunting. I think that's a major flaw in this bill. That's all I really have to say on this bill, Mr. Speaker.

HON. MR. STRACHAN: I will be brief and endeavour to advise the assembly that during committee stage of the bill we can deal with some of the concerns that have been raised. With all deference to Tennyson, to felines and to cats, I will take the member for Kootenay's (Ms. Edwards's) comments under advisement and report back promptly in terms of this obvious legislative oversight. I feel really badly about what we've done here, and I will see if I can rectify it in one way or another.

With respect to the member for Atlin and the comments he's heard from trappers, the member is right. I've heard that comment too. I spoke to the president of the trappers' association last week about the unauthorized use of strychnine and other poisons to poison wolves, and the fact that it's causing that association some concern with their reputation. Also, from a technical and biological point of view, that's certainly not the type of thing we want to have happening out there. I'm aware of what the member has said, and I do appreciate his comments.

With that said, Mr. Speaker, I will take my place, and look forward to debate in committee stage. I move second reading of Bill 70.

Motion approved.

Bill 70, Wildlife Amendment Act, 1989, 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. MR. STRACHAN: We're going to be doing a series of second reading bills in the care of the hon. Attorney-General. I had asked the members opposite if we could, by leave, sooner or later advance Bill 71, which was just introduced today for second reading stage. If the members opposite wish to do so, we will do it at their convenience and their timing. You can think about when you want to do this.

MR. ROSE: We've had conversations about this, and we've no desire to impede its progress. Since the bill, as a miscellaneous amendment act, obviously has no principle, we won't debate the principle.

HON. MR. STRACHAN: If I could just respond to that before the Attorney-General takes his place, we will proceed with that second reading debate following the second reading debate of Bill 64, which occurs as item 9 on the sheet we have in front of us.

With that said, I call second reading of Bill 61.

[ Page 8629 ]

LAND TITLE AMENDMENT ACT, 1989

HON. S.D. SMITH: I'm pleased to take this opportunity to speak to the underlying policy and principles of the reforms proposed in Bill 61, entitled the Land Title Amendment Act, 1989.

This legislation provides the legal foundation for the application of new technologies which will increase the overall efficiency of the B.C. Torrens system of title registration. These efficiencies will be of significant benefit both to the government, as the custodian of the system, and to the private sector, who use and rely upon it in the conduct of land-based business transactions.

[9:00]

The fundamental reform contemplated by the bill is the introduction of standard conveyancing documents. The objective is to make them short, legally effective and understandable by any person of average intelligence having average reading skills. Legal documents, especially those used in the conveyancing field, have for too long been unnecessarily lengthy, verbose and filled with legalese that in many cases defies human comprehension. With its emphasis on plain English and technology, this bill will make the B.C. Torrens system more accessible to and understandable by those who use it.

The bill focuses on two types of frequently used conveyancing document: the deed or transfer of land and the mortgage. These represent the most frequent of real estate transactions: namely, the purchase of a home and a mortgage.

Dealing first with the deed of land, the bill provides for a compulsory one-page form with flexibility to add an additional page where circumstances require. In order to eliminate the use of legalese, the bill supplies the necessary legal validity and effect to the deed so that no specialized terms need appear on the form. This means that the deed form need only contain the names of the vendor and purchaser, a description of the land, the party and witness signatures and the like. The statute will ensure that the deed operates to transfer the land from the vendor to the purchaser.

The same principle is applied to mortgage documents. Essentially a compulsory one-page form is required with flexibility to add an additional page where circumstances require. Typically the mortgage form will contain only the names of the lender and borrower, a description of the land, particulars on the principal amount, interest rate, monthly payments, party and witness signatures and the like. As with the deed, the statute will ensure that the mortgage form operates to charge the land to security for payment of the debt.

The contractual aspects of the mortgage — the fine print usually associated with documents of this kind — will be accommodated in three ways. First, the Lieutenant-Governor-in-Council will, by regulation, enact a comprehensive set of standard mortgage terms. These will be written in plain English and may be adopted by reference to the set in a mortgage form by the parties to a specific mortgage. Second, lenders may develop their own sets of standard mortgage terms and file them in the land title office. Thereafter the lender need only refer to the set in the mortgage form in order to adopt it as part of the specific mortgage. Last, the parties may attach a complete set of specialized mortgage terms to their mortgage form and register the complete package in accordance with current practice.

We recognize that it is neither possible nor realistic to achieve or expect absolute uniformity in the area of contractual mortgage terms. However, those to be established by regulation are now being developed in consultation with the business and legal communities. It is our expectation that in addition to the use of plain English, they will find a considerable level of acceptance in business circles and set the industry standard.

Coupled with these initiatives on conveyancing forms is the elimination of unnecessary affidavits to prove age, capacity, volition and intent. These devices serve no practical purpose and only add to the complexity of real estate transactions and the piling up of paper in the system.

A new scheme of party identification and signature verification is introduced by the bill. Under the scheme, all that is necessary is a witness who is a notary, solicitor, or commissioner for taking oaths.

The statute will attribute the necessary certification so that the party identity and signature verification to execute a deed or mortgage that is duly witnessed.... In those cases where it's not possible to have the document witnessed by a solicitor, notary or commissioner, the registrar may accept other evidence proving its execution.

Mr. Speaker, I am also happy to advise this House that the bill eliminates the need to affix corporate seals to documents for land title purposes. Henceforth a corporation need only execute under seal if it wants the document to take effect as a deed. The law on deeds and seals is left to operate independently of the Land Title Act requirements.

I now turn to that part of the bill dealing with the doctrine of lis pendens. The objective here is to rationalize the common law elements of the doctrine with the B.C. Torrens system. My colleagues at the bar, both in and outside this House, will appreciate the hardship and injustice resulting from the present application of the doctrine in this province.

Specifically, I refer to the decision of the Hon. Justice Wilson in Rudland v. Romilly in which a bona fide purchaser suffered the costs and delays of court proceeding to vacate a lis pendens that had been filed in a land title office after she had applied for her title. While the doctrine had been applied correctly by the Torrens system, the fact remained that the purchaser suffered the hardship and costs of a formal court proceeding due to delays in a busy land title office.

This bill will allow purchasers to assume the risks attendant upon litigation involving the quality of the title. Formerly, the Land Title Act did not empower the registrar to permit this. The bill also codifies past judicial decisions so that the consequences of a registered lis pendens and a transfer subject to it are

[ Page 8630 ]

clearly defined. The bill also shifts the onus to the litigant party to demonstrate that a priority purchaser such as in the Rudland v. Romilly situation is not a bona fide purchaser.

These measures will diminish the risk presently associated with the closing of real estate transactions so that home-buyers, lenders and others can complete their bargains in a climate of greater certainty.

This bill also proposes other reforms of a more technical and housekeeping nature. They are as follows: the effect of a registered charge is clarified and will be consistent with the prevailing jurisprudence; essentially ownership will continue to be guaranteed under the Land Title Act; as to the nature of the rights owned by a charge-holder, the bill clarifies that they are rights created by the registered instrument supporting the charge.

Finally, the bill clarifies that registration of itself does not create an interest in land where the instrument was not, prior to registration, sufficient to create one.

Secondly, block-outline surveys will now be permitted for the establishment of Highways and Forest Service roads. This survey method is used where the surveyor-general considers it appropriate in order to preserve survey monuments where construction activities may expose them to destruction. Block-outline surveys were formerly only permitted for subdivisions.

Thirdly, explanatory plans will now be permitted for the purpose of dedicating a highway, park or public square to the Crown.

Fourthly, plans deposited in the land title office solely for the purpose of dedicating a highway, park, or public square to the Crown will not need the approval of an approving officer. No approval is required where this occurs under the Expropriation Act. This measure dispenses with the need for such approval where the dedication is effected by means other than expropriation.

Fifthly, individual purchasers will no longer be required to specify an address for service in the province when registering a transaction in the land title office. This former requirement frequently caused problems for residents in adjacent provinces and states, especially in the cases of inheritance.

Sixthly, the bill contains measures to support new technology applications. For example, computer imaging will allow title deeds to be read and retrieved at any compatible work station in the province Expert systems will support the registration process by reading and verifying standard conveyancing forms.

Seventh, the Power of Attorney Act and Property Law Act are revised to eliminate the need for a corporation to execute instruments under seal where the transfer of land is involved. The revisions also clarify the scope of authority where an attorney executes an instrument under seal on behalf of him as principal.

While this bill deals with complex legal principles, it will have the ultimate effect of rendering them more comprehensible to the average British Columbian. The use of plain language, together with the prospect of applying expert computer technologies in the land title office and the private sector, will produce a significantly better conveyancing system for the province and for its citizens.

The B.C. Torrens system is very much a part of our justice system and this bill positions us to make it more accessible to those who use and rely upon it.

Finally, Mr. Speaker, I would like to extend my appreciation to those in the legal and the financial communities who assisted me and my staff in the development of this legislation.

I recommend the principles of this bill to this House and, Mr. Speaker, I move that the bill be read a second time now.

MR. SIHOTA: There are a couple of things I want to say about this bill, which I'm sure will pass quickly through the House.

I wish the Attorney-General good luck on some of this stuff. I don't believe for a moment you're ever going to get down to a one-page mortgage filed in the land title office. We've had short-form mortgages. We've got mortgages you can buy at a stationery store that you can fill out on your own, supposedly — and it doesn't work. It doesn't work because there are a lot of vested interests when title is being conveyed. By coming down with a one-page mortgage, it's just not going to happen. I don't believe for a moment that it will.

The Attorney-General said in his opening comment that this is now going to bring on a new era of plain language as it applies to mortgages, and that people will have better access to the land title system. To get there, you have to understand the legislation. Quite frankly, the way the sections on mortgages are drafted, it's not straightforward; it's complicated. There are all sorts of questions which arise in my mind — as someone who did a lot of commercial litigation — when we're looking at these types of contractual arrangements, either to enforce them or to help somebody get out of them.

I don't think you'll ever see the day where you're going to get a one-page, plain-language mortgage registered at Land Titles, except for the simplest of residential transactions.

It's interesting that some of the financial institutions — and I don't know to what extent the Attorney-General practises in this area — actually do a good job of plain language in some of their mortgage documents. A lot of the financial institutions now are moving towards a mortgage which goes on for several pages, but has in a box in plain language describing what the intent of a particular section or clause in a mortgage is, and then has the legal language that flows afterwards. That's a reasonable compromise to the problem of plain language.

You're not going to get it in mortgages. I don't believe you're going to get it in commercial mortgages or in complex real estate transactions; you're going to get it in some cases of simple residential property. I think the Attorney-General should not try to oversell this bill as some major initiative on plain

[ Page 8631 ]

language, because I don't think it is. I don't think it ever will be.

On the matter of, the legal transfer of title.... A lot of that stuff goes on right now on one page, so that's not particularly revolutionary in terms of what's being proposed here. I have my skepticism about the ability to do that.

There are a couple of things in here that I would say are good — certainly the changes that are being made in terms of the lis pendens. It's been a vexing problem for many of us who practise in this area. I've done a handful of cases involving litigation on LPs, , and I think what's being proposed here is indeed appropriate and welcome — similarly, the provisions which deal with execution witnessing of documents, because they'll streamline documents. But those documents will still remain complex, because there are too many vested interests in a real-estate transactions to allow for something simple to go through.

It's not always in the interest of counsel who is drafting them, because they've got to protect themselves from a liability point of view. It's not always in the interests of the vendor, who has got to protect himself in terms of the security of the transaction. It's not always in the best interests of the mortgage company, which has to protect themselves in terms of the security of their investment. Because of those conflicting interests, I wish the Attorney good luck on that aspect of the bill.

Nonetheless, we'll be supporting it because it's a venture worth trying, and there are some things in here that really are worthwhile, as I indicated. As I said in my opening comments, we can expect a fairly quick approval of this legislation.

MR. SPEAKER: Pursuant to standing orders, I advise the House the minister closes debate.

HON. S.D. SMITH: Mr. Speaker, I move second reading.

Motion approved.

Bill 61, Land Title Amendment Act, 1989, read a second time and referred to a Committee of the Whole House for consideration at the next sitting of the House after today.

[9:15]

HON. MR. STRACHAN: I call second reading of Bill 63.

OFFENCE AMENDMENT ACT, 1989

HON. S.D. SMITH: I'm pleased to speak to the principle of Bill 63, the Offence Amendment Act, 1989. This bill contains an amendment which will enable the peace officer to apply for a search warrant by telephone or other means of communication in circumstances where it's impractical for the officer to appear personally before a justice of the peace. This amendment parallels provisions in the Criminal Code with similar procedural requirements and safeguards to ensure that abuses do not occur.

Another amendment to the Offence Act will allow the Crown to recover the costs associated with investigation of offences under certain provincial statutes after conviction. The Lieutenant-Governor in-Council shall prescribe by regulation those enactments respecting which costs may be recovered for an offence thereunder.

These amendments will improve law enforcement in the province. I commend this bill for consideration, and I urge that its passage be speedy.

MR. SIHOTA: I want to make a couple of comments. We'll wait until committee stage to deal with the telewarrant section, which basically parallels the Criminal Code. I have some thoughts on that and, depending on time, may deal with some court cases that have come under sections analogous to this one.

What I find of interest in this section is the matter of investigation and prosecution costs. Of course, I look forward to the attachment of enactments that will feel the brunt in the effect of this legislation. From the government's propaganda people, I suspect that we're going to see all sorts of new environmental prosecution with all environmental legislation being appended to this act so that investigation and prosecution costs can be recovered. But that presupposes that the government is going to prosecute on environmental matters, and if one looks at the track record of the government to date, there's been very little of that type of prosecution.

The problem is not going to be remedied by a provision that allows you to recover prosecution costs; that's not the problem. The problem is the ineptitude of this government in proceeding on some of these matters that should be litigated.

A class example that I brought to the Attorney-General's attention is Millstream Creek, and we're still waiting to see what's going to happen. It doesn't matter if later on under the Waste Management Act or the Pesticide Control Act — the case of stuff that's happening in Port Renfrew — you're going to recover prosecution and investigation costs. You've got to proceed in the first place. And you have an abysmal record in that regard.

The challenge to government, it seems to me, is not so much to introduce this type of provision but to proceed against people, particularly polluters who violate our environment and are not proceeded against. That's where the real challenge lies; that's what we would like to see from the Attorney-General, and that's what we'll be looking forward to. This kind of stuff is after the fact, and to that extent it's fine if you want to recover those costs and make these people pay the full brunt of your investigation and your prosecution and thereby levy a greater monetary damage on them than would otherwise be the case. It is a rather indirect way of increasing the penalty for the offence.

If you take a look at the manner of prosecution in other states and provinces, it isn't this provision that threatens people who are engaged in environmental

[ Page 8632 ]

pollution; it's the fact of prosecution that forces them to comply. That is what was lacking in the past, and that is what has to be addressed, not necessarily this kind of stuff.

MR. SPEAKER: Under standing orders, I advise the House that the minister closes debate.

HON. S.D. SMITH: These amendments will no doubt contribute to more effective enforcement of provincial statutes, and I move second reading of the bill.

Motion approved.

Bill 63, Offence Amendment Act, 1989, 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. MR. STRACHAN: I call second reading of Bill 64, Mr. Speaker.

ATTORNEY GENERAL AMENDMENT ACT, 1989

HON. S.D. SMITH: I'm pleased to speak to the principles of Bill 64.

The purpose of this bill is to allow the Attorney-General, in consultation with the Solicitor-General, to use the proceeds of crime to fight crime. Recent amendments to the Criminal Code allow the courts to order that any assets which are the direct or indirect result of enterprise crime, such as bribery, fraud, gambling or a number of other offences specified in the Criminal Code, be forfeited to the province, or that if the proceeds are not obtainable, a fine equal to the value of such proceeds be paid. That instance would contemplate a situation where the proceeds were invested outside the province and therefore not attainable by the province, but a fine of the equivalent value could be imposed. The Criminal Code amendments provide that such forfeited assets are to be disposed of as the Attorney-General directs or otherwise dealt with in accordance with the law. These forfeitures are subject to restitution claims in the compensation of victims.

This bill will enable the Attorney-General, in consultation with the Solicitor-General, to use these forfeited proceeds of crime for the purpose of law enforcement and the administration of criminal justice. The bill establishes a special account — the forfeited crime proceeds fund — in which the forfeited proceeds of crime and fines in lieu thereof will be held.

A protocol has been concluded by the Solicitor General, the Minister of Finance and Corporate Relations and the Attorney-General setting out guidelines for disposition of funds in the special account. That protocol states that disposition of funds shall be made only for the purposes set out in this bill, namely to facilitate the administration of justice and law enforcement in British Columbia; that it be for exceptional expenditures not funded in the ministry's budget or any other appropriation; that it not create a demand or expectation for future-year funding; that it not be directly returned to agencies responsible for specific investigations or prosecutions; and that it not be available for disposition until the Attorney-General certifies that all related litigation has been finalized and that no further claims are anticipated.

This bill is a most important addition to law enforcement and to the administration of criminal justice in the province of British Columbia.

MR. SIHOTA: This is a bill that we've been calling for for some time. It would therefore be inconsistent of me to speak against it. It's certainly good legislation. It's the kind of thing that should be occurring at the....

Interjection.

MR. SIHOTA: I'll resist the temptation to comment back to the Minister of Tourism (Hon. Mr. Reid).

It's the kind of thing that really should be happening, and I look forward to a nice healthy account as we increase prosecutions and recover the proceeds of criminal activity. It's overdue, and it gives all of us who would like to see strong enforcement, under the Criminal Code particularly, some hope that the proceeds of crime will go for worthwhile purposes. It's good legislation. We support it wholeheartedly and welcome it.

MR. SPEAKER: Pursuant to standing orders, I advise the House that the minister closes debate.

HON. S.D. SMITH: I move this bill now be read a second time.

Motion approved.

Bill 64, Attorney General Amendment Act, 1989, 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. MR. STRACHAN: I mentioned this earlier, Mr. Speaker, but I will now ask leave for Bill 71, Attorney General Statutes Amendment Act, 1989, to be read a second time now.

Leave granted.

ATTORNEY GENERAL STATUTES
AMENDMENT ACT, 1989

HON. S.D. SMITH: This bill is a test for those of us who like to determine how to describe the principle of a bill, dealing as it does with, among others, the Estate Administration Act, the Insurance Act, the Infants Act, the Expropriation Act, the Law and Equity Act, the Legal Profession Act, the Notaries Act and the Occupiers Liability Act. It is best dealt with at the committee stage, as no doubt it will be.

[ Page 8633 ]

I move second reading of the bill.

MR. ROSE: We agree on this side to second reading, and it will go to committee stage at the next sitting.

Motion approved.

Bill 71, Attorney General Statutes Amendment Act, 1989, 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. MR. STRACHAN: I call second reading of Bill 81.

SOCIAL SERVICE TAX
AMENDMENT ACT (No. 2), 1989

HON. MR. COUVELIER: Bill 81 amends the Social Service Tax Act to address the implications of the May 4, 1989, Supreme Court of Canada decision concerning the application of provincial sales tax to interprovincial and international aircraft operated in British Columbia.

By way of background, British Columbia's social service tax is imposed on the purchase, lease or use of tangible personal property in the province. Since the early 1960s, this tax has been applied to interprovincial and international aircraft on the basis of a formula which applies the tax on the proportion of use in British Columbia to total use in all jurisdictions. Similar formulas are used by British Columbia and all other provinces to apply provincial retail sales taxes to railway rolling-stock, trucks, buses and other interprovincial and international carriers. These formulas are not currently contained in the Social Service Tax Act. Rather, they were established by administrative practice to avoid the double taxation of equipment used in more than one jurisdiction.

Applying sales tax to interprovincial or international carriers, whether they are trucking, railway or airline companies, is fair and equitable. Interprovincial and international carriers other than airlines have paid and continue to pay the tax on their equipment on the basis of these formulas. However, the airlines ceased paying the tax in the late 1970s and early 1980s when the major Canadian airlines challenged the tax on constitutional grounds. Up to that time, the airlines had also paid on the basis of the formula. Several years of litigation subsequently took place, culminating in the May 4, 1989, Supreme Court of Canada decision.

In its decision, the court ruled in favour of the airlines because the proportional taxation arrangements were based on administrative practice with the airlines rather than on formulas contained in the legislation. The court did not address the constitutional issue.

On the basis of this decision, the court ordered British Columbia to repay to Air Canada tax they had paid during the period from July 1976 to February 1978. Canadian Airlines International is also attempting to recover tax.

The implications of this decision for British Columbia are much broader than the application of the tax to interprovincial and international aircraft operating in our province. As I have already noted, the application of the proportional taxation arrangements to railway rolling-stock, trucks, buses and other carriers operating interprovincially and internationally is also by way of administrative practice rather than codified in the legislation. Thus the taxes paid by these carriers are also subject to tax refunds.

In addition, the tax paid on equipment brought into the province for temporary use — such as equipment brought in by an Alberta contractor to complete a construction contract in British Columbia — may also be subject to refund claims because it may, according to the court, be unlawful to impose full tax on the value of such equipment.

In short, the total revenue risk to the province from refund claims arising from the Supreme Court decision could exceed $110 million. The court also stated, however — and I quote, because this is important: "It may well be that the legislature could, by properly framed legislation, impose a proportional tax of the kind the taxation authorities sought to levy here if it did not impose an undue burden on interprovincial undertakings...."

Bill 81 is the government's response to the possible course of action indicated by the court. This bill will validate the money paid as tax already collected on a proportional basis from all interprovincial and international carriers from 1983 to the present, and it will ensure that the same basis will be used for applying the tax in the future.

It will place into the Social Service Tax Act — effective 1983 — the formulas formerly applied by administrative practice. It will reduce the tax on contractors' equipment used temporarily in the province to an amount equal to one-third of the British Columbia tax otherwise payable for each year or part of each year the equipment is in the province, subject to a cap of three-thirds of the tax otherwise payable.

[9:30]

It will require interprovincial and international carriers, including airlines, to pay unpaid taxes on the basis of the formula back to 1983 and into the future. The decision to require the airlines to pay the taxes they had not paid back to 1983 was not taken lightly. However, the decision was necessary to correct an unfair situation. As noted earlier, all other interprovincial and international carriers operating in B.C. have paid the tax on their equipment based on the proportion of use in British Columbia to total use in all jurisdictions.

In addition, airlines operating solely within B.C. are subject to and have paid the tax. In order to ensure a level playing-field and tax equity among all carriers, the airlines are required under this bill to pay the tax on the use of the aircraft in B.C. during this period. However, in recognition of the court proceedings which were ongoing during this period, the government will not levy interest or penalty

[ Page 8634 ]

charges against the airlines for unpaid taxes during this period.

[Mr. Pelton in the chair.]

The government recognizes that the airlines may continue to challenge on constitutional grounds the ability of the province to impose tax on interprovincial and international aircraft operating in our province. Nevertheless, we are convinced of the correctness of our constitutional position in this matter. Therefore, in the interests of both equity and fiscal responsibility, the government is introducing legislation which is fair and will not impose an undue burden on any interprovincial or international carriers.

I move the bill now be read a second time.

MR. ROSE: This is an incredibly complicated bill. I hope that when the minister gets up to close the debate in a few short minutes, he will explain the various tax formulas that are found on page 2.

The tax equals P times BCH times R over TH. That's only one of them. Some of them are even worse. I think before we can make any kind of sensible response to this piece of tax regime.... Tax equals P times BCD times R over TD. Another one: BCD is over TD. It sounds like the B.C. Development Corporation is over Tommy Douglas; I don't think that is true. Further down here on page 3: tax equals P times BCD times R over TD.

I think that in order for the members of the Legislature to make an intelligent choice on this bill — a very complicated and sinister bill if you think of its retroactivity.... We normally don't in this House support bills that seek to capture something that was a loophole, something that was legal in '83, and initiate a tax grab going back some time. So I hope, please, that we don't have a vote tonight on this piece of legislation, because we would have some problems about it. I think it's only fair that members of this House be acquainted in detail by the minister of all these BCDs over TDs, etc., associated with this bill. They are, I think all will admit, incredibly complicated and have implications far beyond the current day.

I understand what the bill is all about. The bill is designed on the tax of equipment and other matters, such as fuel, to protect the revenue base of the province from possible impacts of some court ruling. We've already had an example of that. This is called a loophole-closing piece of legislation. If the changes weren't made, the province could be faced with a large number of applications for tax refunds, and that door is being closed here, as I understand it. But it's incredibly complicated, and it's very difficult for those of us with a sort of...

AN HON. MEMBER: A musical bent.

MR. ROSE: ... a musical bent and an adult illiteracy which knows no bounds to come to any sort of reasonable public response. We don't like retroactive taxes in general, but we like money and we like money for the province.

It's not generally desirable. This bill is necessary to prevent losses, and we understand that. But we are just waiting to be enlightened, if not dazzled, by the loquacious Minister of Finance, explaining to us the ins and outs of this interesting piece of loophole plugging.

DEPUTY SPEAKER: Pursuant to standing order 42, the minister closes debate.

HON. MR. COUVELIER: It's very interesting to hear the comments. I gather the members are going to support the bill, because we are talking about $110 million, and of course that always wakes everybody up.

In an honest attempt to explain the formula, I guess we could say that "tax" equals "level playing -field"; it's a euphemism for level playing-field. Then we could say that equals the purchase price of the aircraft.

Interjection.

MR. ROSE: On a point of order, I wonder if the Provincial Secretary (Hon. Mr. Reid) would mind stopping interrupting the Minister of Finance.

HON. MR. COUVELIER: That was an excellent point of order, Mr. Chairman. I didn't hear your ruling on it, but I must say it's pleasant to have.

Interjection.

HON. MR. COUVELIER: All right. Let's move on.

The only comment that I thought might deserve a reply in my closing remarks would be the use of the word "loophole." All of us Finance ministers right across the country are a little bit antsy about the use of such a word, and I'd like to put the members' minds at ease. This was not a loophole. It was a surprise to see the ruling come down, failing to deal with the issue raised by the lawyers in the appeal, which was a constitutional matter, and making a tangential comment about the fact that a gentlemen's agreement that had been in place for years and that wasn't in place in legislative form needed to be formalized in legislative form.

I am very pleased to move that the bill be now read a second time.

Motion approved.

Bill 81, Social Service Tax Amendment Act (No. 2), 1989, 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. MR. STRACHAN: I call second reading of Bill 82.

[ Page 8635 ]

TEMPORARY USE TAX
VALIDATION ACT

HON. MR. COUVELIER: Bill 82 is a companion statute to Bill 81, the Social Service Tax Amendment Act (No. 2), 1989. Bill 82, like Bill 81, addresses the implications of the recent Supreme Court of Canada decision concerning the application of B.C.'s social service tax to interprovincial and international carriers operating in B.C. and to contractors and others bringing equipment into the province for temporary use.

Bill 81 addresses the implications of the Supreme Court's decision for the period from 1983 to the present, and for the future. This bill addresses the implications for the period from 1960 to 1983. During that period all interprovincial and international carriers other than airlines paid tax according to formulas based on the proportion of use in B.C. to total use. The airlines paid the tax on this proportional basis from 1960 until the late 1970s and early 1980s, at which time they challenged the constitutionality of the tax and ceased payment. The application of the tax on a proportional basis was, and remains, a fair and equitable approach to the taxation of interprovincial and international carriers. However, as I noted in my comments on Bill 81, in the case brought before the Supreme Court of Canada, the court found that no tax was payable, because of the absence of the formulas in the legislation.

To ensure that revenue collected from 1960 to 1983 is not subject to refund claims as a result of the Supreme Court of Canada decision or of any other court action resulting from that decision, Bill 82 imposes the tax based on a proportional taxation of equipment used by interprovincial and international carriers in B.C. from 1960 to 1983, and offsets that tax liability with the amounts paid in that period. Bill 82 also ensures that the province will retain taxes paid by contractors on equipment brought into the province for temporary use during that period.

There should be no fiscal impact on contractors or most carriers as a result of the introduction of this bill, because they have already paid the tax during that period. With respect to airlines, a tax liability is created for those airlines which ceased paying the tax prior to 1983; however, in keeping with the six-year limitation period under the Social Service Tax Act, these airlines will not be required to remit unpaid taxes for the years between the time they ceased paying the tax and 1983.

In validating tax for the period '60 to '83, Bill 82 provides that the province not repay to Air Canada the refund of taxes ordered by the Supreme Court. This decision was not taken lightly. However, the airline's challenge was primarily based on the constitutional right of the province to tax interprovincial and international carriers. While some might argue that the Supreme Court's decision leaves the constitutional issue unresolved, we are convinced of the correctness of our constitutional position.

In addition, it would be unfair to provide relief from a tax to one carrier while all other carriers are required to pay the tax. Therefore, in the interest of equity and fiscal responsibility, the decision has been made not to pay the award to Air Canada.

To emphasize again, Bill 82 does not result in any additional sales taxes being levied on equipment used temporarily in the province or on interprovincial or international carriers operating in B.C. Rather, it protects the government's fiscal position by authorizing the retention of taxes already collected. It also provides some tax relief for those airlines which were party to the court challenge.

I move the bill now be read a second time.

MR. ROSE: As I understand it, Mr. Speaker, the government wants to protect itself from claims going back 29 years. That's really all it is attempting to do here. The part that bothers me somewhat is that some air carriers have paid the tax and others haven't, apparently because some feel they have validity in certain claims and others don't. The same retroactivity concerns expressed about the previous bill we just debated are alive and well here. At the same time, I don't believe the province should be denied revenue that was rightfully the province's because of a decision that seems to leave a number of things up in the air. No pun intended — I mean, all puns intended.

I really don't know how that affects the average air traveller, but it seemed to me that in my early years going to Ottawa — according to the information I've received from my close friends — it meant that you couldn't get a drink until the Alberta border. But I wouldn't know whether that was true or not, since I wouldn't have touched it until I got to Alberta anyway.

With the caveats I've expressed, I don't think we'll have any difficulty supporting the bill.

HON. MR. COUVELIER: I move the bill be read a second time.

Motion approved.

Bill 82, Temporary Use Tax Validation Act, 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. MR. STRACHAN: I call second reading of Bill 83, Mr. Speaker.

SECURITIES AMENDMENT ACT, 1989

HON. MR. COUVELIER: This bill, the Securities Amendment Act, provides further evidence of this government's commitment to provide a strong and effective securities regulatory system in this province. It includes amendments to the Securities Act that fall into four general categories: enforcement powers, fair trading rules, takeover and issue or bid rules and miscellaneous amendments.

Members will recall that this House passed a somewhat shorter amending bill last year at about

[ Page 8636 ]

this time, and that I then announced that a further set of amendments would be brought forward this year.

The enforcement provisions of the bill are designed to increase penalties and to provide additional powers and remedies. The maximum penalty that may be imposed by a court for an individual convicted of an offence under the act is currently a fine of $100,000 or imprisonment for five years less a day. The bill proposes to increase the maximum penalty to a fine of $1 million plus imprisonment for three years.

[9:45]

For insider trading violations, the maximum fine is increased to the greater of $1 million or triple the profit earned through the illegal trading.

Members will note that the maximum prison term is being reduced from five years to three years. This is more than offset, in our view, by the provision for both a fine and imprisonment, whereas the current law permits a fine or imprisonment, but not both. Because the new provision permits both a fine and imprisonment, the maximum prison term had to be reduced in order to avoid the requirement for a jury trial under the Charter of Rights and Freedoms. There is currently no provision under B.C. law for jury trials in respect of provincial offences.

The same section of the act is also proposed to be amended by adding a new offence for failing to file, furnish, deliver or send a required record, and by permitting the Lieutenant-Governor-in-Council to specify sections of the regulations of which contravention would be an offence.

In addition to this change to the offence section of the act, several additional administrative remedies are proposed to strengthen the Securities Commission's powers to enforce compliance with the regulatory system. Among these are new sections to permit the Securities Commission to order payment of an administrative penalty of up to $100,000; to order a registrant or issuer to cease distributing certain information to the public; to amend information before distributing it to the public or to distribute to the public information required by the commission; to order a person to comply with or cease contravening the act, the regulations, a decision of the commission or a bylaw, rule or decision of a stock exchange or self-regulatory authority; and to file a decision of the commission with the Supreme Court in order to give it the same force and effect as a judgment of the Supreme Court.

The existing power of the superintendent of brokers to obtain information from registrants is proposed to be broadened to cover securities-clearing agencies, reporting issuers and mutual fund custodians. In addition, it is proposed to place a specific statutory obligation on recognized self-regulatory organizations and stock exchanges to provide information to the commission.

The act currently contains a provision under which the commission can apply to the Supreme Court for an order that a person comply with or cease contravening the act or the regulations. The bill would specifically empower the court in connection with such an order to set aside a securities transaction, require the issuance, cancellation, purchase, disposition or exchange of a security, prohibit the voting of a security or exercise of a right attached to a security, or appoint a director.

This amendment will provide an opportunity for the commission to seek from the court remedies that go beyond the commission's regulatory powers in order to rectify certain problems created by persons who violate the regulatory requirements.

The bill also proposes to amend the limitation period under the act. Currently any proceedings under the act must begin not more than two years after the relevant facts become known to the commission. This period can be unduly constraining for a complex investigation, and in some circumstances it is difficult to establish when the limitation period started running. The proposal is to change the limitation period to six years after the occurrence of the events.

To promote greater fairness in the securities markets, the bill strengthens the prohibition on persons in a special relationship with a reporting issue trading in securities of the issuer with knowledge of material non-public information. The law against insider trading will parallel that in Ontario by extending the so-called "tipping" provision and by clarifying the defences that may be raised by a person charged with offending the section.

To deal with other forms of unfair or improper trading, the bill includes a new section to establish an express prohibition against a transaction or scheme that creates a misleading appearance of trading activity or perpetuates a fraud. In addition, there is an amendment to clarify and extend the circumstances in which a person must declare a trade as a short sale.

With respect to takeover and issuer bids, the bill proposes to repeal the existing part 11 of the act and re-enact it in a form that is uniform with the equivalent sections of the Ontario act. The Ontario legislation has also been followed in Alberta and Saskatchewan and is the uniform legislation recommended by Canadian securities administrators. Although the current provisions in our act are, with some important exceptions, substantively the same as those in Ontario, the significant differences in the structure and wording of the legislation are confusing to persons who are required to comply with both acts in the same transaction. Since this circumstance arises very frequently, we have concluded that this change can make an important contribution to the efficiency of the national regulatory system.

The remaining sections of the bill are a pot-pourri of amendments which are better dealt with in committee, so I will not go into them in any detail at this time.

One consequential amendment I should mention is a proposed amendment to the Vancouver Stock Exchange Act to increase by two the number of public governors required on the board of the exchange. The two additional governors would be selected by the Lieutenant-Governor-in-Council from

[ Page 8637 ]

persons proposed by the Law Society of British Columbia and the Institute of Chartered Accountants of British Columbia respectively. This change would increase the number of public governors of the exchange to six and the total number of independent governors to eight. It is my expectation that with this increase in their numbers, the public governors will be able to play a more active role in bringing the views of the broader community to bear on the deliberations of the various committees of the board of governors that deal with substantive matters of policy and business strategy.

In summary, Mr. Speaker, this bill encompasses major amendments to strengthen the regulatory system for the British Columbia securities industry, to help it perform its important role in our economy. With these amendments, we are clearly at the forefront in the development of securities legislation in Canada.

I move second reading of Bill 83.

MR. ROSE: I thank the minister for his excellent reading of his briefing notes and look forward to the committee stage of this bill.

Obviously this bill is a response to all the criticism surrounding the Vancouver Stock Exchange. This is a bill to sanitize the Vancouver Stock Exchange and to try to increase the integrity which the public sees in its operation. I think over the last two or three years we have seen all kinds of horror stories about it. The business about the insider trading is an interesting thing, too, since we've had some very high-level people including the ex-Premier involved in a case that deals with insider trading.

There are copies of other legislation in other jurisdictions — and the minister mentioned this — including Ontario, Saskatchewan and Alberta, and the uniformity is to be desired across Canada. I don't think there is any question about that. One thing, though: if all the provinces line up in terms of uniformity of legislation, that keeps the feds at bay and it keeps the feds from putting the finger on local operations that they may not deem entirely satisfactory. I think that's to be desired.

This party and the other party across there, the governing party, want the Vancouver Stock Exchange to be, one, successful and, two, honest. Are you going to quote that someplace?

Interjection.

MR. ROSE: Write that down. While it's not part of our heritage, it's certainly part of our culture, and we want something more than some sort of slot-machine — three cherries come up and you're a winner, but most of the time they don't; the winners are the brokers, not the investors.

Anything that's done to improve that kind of image is, I think, worthwhile. So we have no difficulty supporting that. We are trying to get over the bad reputation of the local stock exchange. It's not to anybody's advantage when an exchange in our province is criticized by publications across North America, as we've had recently. Whether it's a bad rap or not — and that can be argued — doesn't help us at all in terms of investment in this province.

So I am going to say, I suppose, that it's about time we had something like this. But I don't think this would have ever appeared before us if we hadn't had the type of horror story which has occurred and has received wide publicity not only in British Columbia but all across North America. I don't think we did this because we wanted to; I think we did this because we were forced to clean up a bad act.

I think that the idea of a consequential amendment which adds two governors to the VSE board of governors to represent the public interest is a wonderful move, depending on who those members are. If they're just going to be tame mice on there, they're not going to do anything. But if they're really independent, in spite of being appointed by government, and self-reliant, critical and tough freedom fighters on there, then I think a lot of people are going to have a lot more confidence in the board than they have now. It can change their image from a pretty rotten fixed slot-machine to an institution of secure public investment.

Interjection.

MR. ROSE: I think it has that reputation now, yes. If you want to put that out in one of your newsletters, go ahead.

DEPUTY SPEAKER: Hon. members are advised that pursuant to standing order 42, the minister closes debate.

HON. MR. COUVELIER: The hon. member suggests that this bill is somehow in response to criticisms. He repeated twice or three times, I think, that we wouldn't have seen it had we not had some criticisms. As I said in my opening remarks, the fact of the matter is that we announced well over a year ago that we intended to bring forward this year significant amendments, and we gave more than a year's advance notice. To imply that this is some sort of knee-jerk reaction is grossly unfair and inaccurate. Clearly we served notice, and we are delivering. We are a government that delivers on our promises. We don't make these promises lightly; we take them seriously. We worked hard for a year on these amendments, and I'm very proud of them.

The member suggests that this is somehow a response to "horror stories." I'd like to just point out, once again, as I have done about 1,002 times during this session, that the horror stories the member refers to were all of offences that were dealt with by the system, proving the system works, contrary to all the criticisms that by virtue of the caught perpetrators and the discerned offences and proven offences, somehow or other the system didn't work. The fact of the matter is that the reverse is true: it did work. These horror stories were issues that had been appropriately dealt with by the appropriate authorities

[ Page 8638 ]

using the proper rules of evidence and the proper legal obligations that the legislation provides.

Lastly, I'd just like to bring this to the hon. member's attention. I realize he read his notes very well there when he was giving me his reply. This is one thing that he should maybe make a note of. The suggestion was that somehow or other these slurs provided by Forbes magazine are new and unique. The fact is that in 1974, Forbes did an equally injurious article about the operations of the Vancouver Stock Exchange. The Premier of the day, suitably offended, was quoted not only in the local press but in the national press about what an unjust accusation was being made. I mention it only because nothing is new in this world, of course, but also to point out that unlike the administration of that day, this government was dedicated to bringing in some changes. We brought in the Securities Commission. The government of that day did nothing but flannel-mouth and attempt to dodge the barbs that Forbes magazine was throwing at them in those times.

This is a government that delivers, Mr. Speaker. This is a government that flags, in advance, its intentions. This is a government that can deliver. This is a government that is making significant progress in elevating the profile of the Vancouver financial community right across the whole spectrum, from the international financial centre to the stock exchange. This is a government that has, in the three years of its legislative sessions, brought forward financial institutions legislation that places us in the forefront of provincial jurisdictions. We have accomplished a major rewrite of every single major financial statute ever enacted in this province, and we've brought it forward in the short space of three years. We are ideally positioned now to capitalize on this new era that is created with the introduction of this legislation.

I look forward to the committee discussions on these bills so that I can expand on the good-news message I'm sharing with the members as a little introduction to the joys that await you when we get into committee stage. I'm pleased to move second reading of the bill.

Bill 83, Securities Amendment Act, 1989, 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. MR. STRACHAN: I call second reading of Bill 87.

ELECTORAL BOUNDARIES COMMISSION ACT

HON. MR REID: I had many articulate words that I wanted to convey to the assembly tonight, but I will just reiterate that this is an important moment in the parliamentary history of British Columbia. We have succeeded where others have tried. I am proud to be a member of this assembly as it moves to establish an equitable and balanced process for defining electoral boundaries, as committed to by the Premier.

[10:00]

I move second reading of this bill at this time.

MR. ROSE: Mr. Speaker, it was agreed earlier that we would hear from the minister and then adjourn the debate until the next sitting of the House.

[Mr. Speaker in the chair.]

HON. MR. STRACHAN: We will adjourn debate of Bill 87 until another day, so that other speakers may be allowed to take their place in second reading debate.

Hon. Mr. Strachan moved adjournment of the House.

Motion approved.

The House adjourned at 10:01 p.m.