[ Page 2331 ]
Presenting Reports –– 2331
GAIN rates. Mr. Cashore –– 2331
Cost of promotional dinner. Mr. Barnes –– 2332
Royal Columbian Hospital. Ms. A. Hagen –– 2333
McLeod Lake Indian band. Mrs. Boone –– 2333
Haidas in South Moresby. Mr. Miller –– 2333
Committee of Supply: Ministry of Agriculture and Fisheries estimates.
(Hon. Mr. Savage)
On vote 7: minister's office –– 2334
Committee of Supply: Ministry of Municipal Affairs estimates. (Hon. Mrs. Johnston)
On vote 48: minister's office –– 2341
Ms. A. Hagen
On vote 49: ministry operations –– 2357
On vote 50: municipal revenue-sharing –– 2357
On vote 51: transit services –– 2358
Municipal Amendment Act (No. 2), 1987 (Bill 44). Committee stage.
(Hon. Mrs. Johnston) –– 2359
Local Election Reform Act, 1987 (Bill 45). Committee stage. (Hon. Mrs. Johnston) –– 2359
Committee of Supply: Ministry of Energy, Mines and Petroleum Resources estimates.
(Hon. Mr. Davis)
On vote 24: minister's office –– 2361
Hon. Mr. Davis
Mr. G. Hanson
On vote 26: British Columbia Utilities Commission –– 2385
Appendix –– 2386
The House met at 2:06 p.m.
MR. ROSE: I'm pleased today to welcome back a former colleague and 14-year veteran, our old friend Don Lockstead from Mackenzie. He's somewhat changed since he was here. He was telling me he has made great progress; when he was young he had three vices, but today he said: "I quit one, one quit me, and I still smoke." We're very pleased about his remarkable longevity, and I wouldn't be surprised if he darkened one of these doors again sometime. So I wish him well.
MR. LONG: I'd also like to welcome Don here today. because over the last 15 years he has probably been one of the most popular citizens in the whole riding of Mackenzie. I think he did a terrific job in the past, and I'll probably be meeting him in the future, it seems. So I'd like everybody to make him feel really good and welcome here.
HON. MR. STRACHAN: I'd just like to echo that and associate myself with the remarks of the opposition House Leader and the member for Mackenzie in welcoming Don Lockstead back — a true friend of this Legislative Assembly and a true friend of democracy. Good to see you, Don.
HON. MR. DAVIS: Mr. Speaker, in your gallery today we have three wonderful people from the North Shore in Vancouver: Dudley Kiel, Tom Mason and Betty Waters. Dudley Kiel and Tom Mason are prominent businessmen in the Vancouver area. Betty Waters is my constituency assistant in North Vancouver-Seymour. Would the House please welcome them.
MR. CLARK: Mr. Speaker, in your gallery today are two visitors from Ottawa. The first is Rob Sutherland, an active worker for the New Democrats in Ontario. The second is a constituent of mine, my Member of Parliament — for a little while yet at least. I can't quite see him there. I'd like the House to welcome Ian Waddell.
MR. PELTON: On your behalf, Mr. Speaker, I would like to ask the House to extend a very warm welcome to Peter and Karen Ashby from West Vancouver.
MR. CASHORE: I would like to ask the House to join me in extending a warm welcome to Mr. Bob Sullivan of Terrace. Mr. Sullivan is an educator in Terrace and a longtime friend of our family.
HON. MR. REID: Mr. Speaker, in your gallery today is a person I'd like to recognize. He's a former administrator of Delta, transferred into Kelowna, and a very good friend of mine, Mr. Stewart Fleming.
MR. MILLER: In the House today is my wife Gayle Ballard, who has come to see why we take so long to conduct the business of the province. And from the safety of the floor of this chamber, I have to advise my wife that I may be working on Saturday.
HON. B.R. SMITH: I too would like to welcome Don Lockstead. He knows why we sit here so long in the summer.
He used to like those drives back to his riding on the weekends so much he just couldn't wait to get down here. We miss you, Don. You were elected in 1972 — one of the most reasonable and friendly members that ever sat in this chamber.
I would like to introduce Dr. Anne Autor of Vancouver, who is a research scientist at St. Paul's Hospital and the University of British Columbia, and who also is a member of the Law Foundation and was the chairman of the compensation advisory committee for judges. I would ask the House to make her welcome.
HON. MR. BRUMMET: Visiting in the gallery today is Jim Randall, vice-president of Inland Natural Gas. He has come to see how decisions are made in this boardroom. So I would like the House to make him welcome.
MR. RABBITT: Today I have two young friends that are guests in the House, in the gallery. They are David and Shane Greenlees. Their mother was a neighbour of mine for years in the beautiful Nicola valley, where she grew up. They are visiting from the northern community of Mackenzie. I would ask the House to give them a warm welcome.
Mr. Crandall, Chairman of the Select Standing Committee on Standing Orders, Private Bills and Members' Services, presented a report, which was read as follows and received:
"Mr. Speaker, the Select Standing Committee on Standing Orders, Private Bills and Members' Services begs leave to report as follows:
"That the preamble of Bill PR401, An Act to Amend the Vancouver Charter, has been proved and the committee recommends that the bill as amended in committee proceed to second reading; that the fees paid by the applicants for proposed private bills, intituled Society of Management Accountants of British Columbia, and An Act respecting Columbia Bible Institute, during the 1986 session, be refunded, as the Legislative Assembly was dissolved before the bills could proceed through all stages.
"All of which is respectfully submitted."
MR. CRANDALL: By leave, I move that the rules be suspended and the report adopted.
MR. CASHORE: My question is to the Minister of Labour, who has the responsibility for human rights. Has the minister been advised that the GAIN regulations illegally discriminate against young people under age 26, and has he advised the Minister of Social Services (Hon. Mr. Richmond) that immediate action is needed in view of the July 6 decision of the Human Rights Council?
HON. L. HANSON: I believe I would call on the Attorney-General to reply to that.
[ Page 2332 ]
HON. B.R. SMITH: The ruling that was handed down by the B.C. Human Rights Council in the case of John Boyles is a ruling, I'm instructed, that applies to the old Human Rights Act and affects payments that should have been made during the period April 1 to September 14, 1984. It does not place any obligation on the ministry to compensate the recipients of income assistance adversely affected by the differential in any future period, nor is it a decision under the new human rights legislation, which was not in existence at that time.
I might say that I don't think we will be appealing this decision because there is a case on this very issue squarely before the Supreme Court. That case is in the process of being argued now. It would be my view that we should await the decision of the Supreme Court. If the Supreme Court of British Columbia decides that the regulation on 26-year-olds violates the Charter of Rights and Freedoms, then the government will respond by changing the policy. But I don't think the process is appeals, appeals, appeals.
I think we should leave this decision aside because it is something that happened in the past under old legislation. We should await this case which is currently before the courts. It's not going to be long; we're going to have a decision very shortly. We should look at that decision and do whatever the Supreme Court tells us to do.
MR. CASHORE: A supplementary question to the Minister of Labour. Discrimination in 1984 is discrimination in 1987. I would remind the Attorney-General the decision that was brought down by the Human Rights Council was pursuant to the Human Rights Act which is presently in force. This has the effect of a class action, which is stated very clearly within the judgment that was rendered.
My question to the Minister of Labour is this: notwithstanding court actions, but given this decision, which is a very clear decision and must be adhered to in terms of its spirit and intent, has the minister decided to give an undertaking that the government will immediately accept the decision of the Human Rights Council and act upon it, rather than changing the law to make illegal discrimination legal? Is the minister prepared to give me that undertaking in fairness at this time?
HON. L. HANSON: Mr. Speaker, in simple terms, I'm not prepared to give that undertaking at this time.
COST OF PROMOTIONAL DINNER
MR. BARNES: Mr. Speaker, a question to the Provincial Secretary. This weekend the government gave a large party for the opening of the new Vancouver Trade and Convention Centre to some 2,000 guests who were wined and dined and entertained to the tune of $500-plus per plate. That amount of money has been estimated to be sufficient to feed people who are going to the food banks on a weekly basis, for six months.
I think the party — though well-intentioned in terms of promoting the trade and convention centre — is quite an extravagant and lavish way to spend taxpayers' money, in light of the fact that there are literally thousands of people in this province without food, clothing and shelter. How does the government justify spending this amount of money for a one-night party?
HON. MR. VEITCH: Unfortunately the jurisdiction for that particular event falls within the purview of another minister, and I think you ought to direct it to the Minister of Economic Development (Hon. Mrs. McCarthy), when that person is present.
MR. WILLIAMS: To the Provincial Secretary, Mr. Speaker. Could he advise us what guidelines he uses and his protocol people use with respect to expenses for dinners? Would a $500-a-plate dinner for 2,000 people costing $1 million meet the Provincial Secretary's guidelines?
HON. MR. VEITCH: Mr. Speaker, the first hon. member for Vancouver East is not hearing very well. The responsibility for that meal and for that evening falls within the jurisdiction of the hon. Minister of Economic Development, and if you wish, I'll take it on notice for her.
MR. WILLIAMS: Mr. Speaker, maybe I could make it simpler and clearer. Has the Provincial Secretary ever approved dinners at $500 or $512 a plate for anything under his jurisdiction, since he handles most entertainment and most protocol matters for the government? What are the restrictions on spending per dinner in British Columbia under your jurisdiction?
HON. MR. VEITCH: Mr. Speaker, this is a very pressing and urgent question: has the Provincial Secretary at any time in the past ever paid $500 per dinner? Now I understand that this is really relevant to question period. The answer is no, I have not.
MR. WILLIAMS: Mr. Speaker, the question is: what is the outer limit? What is the stratospheric limit? Does it equal the member for Shaughnessy's Marie Antoinette taste? How close does it come to the member for Shaughnessy, and is the Provincial Secretary prepared to spend equal funds for the Vancouver food bank, which would feed many, many thousands of citizens for six months?
HON. B.R. SMITH: On a point of order, Mr. Speaker. It has always been courtesy in this chamber to address questions to ministers who are here — she was here yesterday — and not to address them obliquely to other ministers to embarrass people in their absence who can't speak in their own defence. If she was here, that member would learn that much of that event was donated by private enterprise and wasn't paid for by the taxpayers.
MR. ROSE: Mr. Speaker, it's really very rare that points of order are raised during question period. We have agreed that this not be so, and we don't do this in the normal way. We can understand it's sometimes necessary, but when a point of order is used to smuggle an argument into debate during question period, it is a clear abuse of the rules, and it's a spiked-helmet contempt of the House.
MR. SPEAKER: In view of the point of order, there will be two minutes added to question period.
MR. WILLIAMS: To the Attorney-General, Mr. Speaker. Can the Attorney-General give this House assurance that those who contributed $750,000 to that dinner
[ Page 2333 ]
will receive no contracts from government, especially with respect to the convention centre?
HON. B.R. SMITH: I'm happy to answer that objective, non-argumentative question and to say that those people will receive, from all over the world, offers of people to come to conventions in Vancouver in the next ten years. That's what they'll receive.
ROYAL COLUMBIAN HOSPITAL
MS. A. HAGEN: My question is to the Minister of Health. The psychiatric day centre of the Royal Columbian Hospital is slated to close as of September 1 along with the palliative care unit. As the minister well knows, the New Westminster area is a major centre for mental health care.
Will the minister assure the House that this essential program will not close until the same services — that is, a well-staffed psychiatric day service — are available, so that patients will not back up the already over-stressed emergency and psychiatric services of our hospitals?
HON. MR. DUECK: Referring to the closure of the psychiatric ward and the other issue in regard to palliative care, it's now being looked at by my ministry. We do not expect anyone to be let out of the hospital without another place to go. I believe I discussed this with the hon. member just a day or so ago. I am going to look into that very closely and find alternative places to put these people, and it should be done in an orderly fashion.
MS. A. HAGEN: A supplementary to the minister. The hospital clearly says that these programs keep people out of the emergency ward and move them more quickly out of psych wards. Could the minister give us some indication of his plans for community services for mental health? If the option is in fact to have these services available in the community, can he now assure us that these services will be maintained so that they are fully adequate and accessible to the mental health clients in this particular region?
HON. MR. DUECK: Mr. Speaker, normally hospitals get in touch with us when they have a change in policy or when they change their programming. In this case, they went to the news before they contacted me. It's very unfortunate that this happens, but it does happen from time to time; therefore it becomes an issue even before I have a chance to look at it. I can assure you that this will be looked at very, very carefully, and that we are always concerned with giving patients the best care.
I should also mention that not all hospitals can do everything for all people. So we are looking into ways of perhaps defining which hospital does what service and what program. This is what's going to be looked at in the very near future. As a matter of fact, my senior people are in contact with the hospital now.
McLEOD LAKE INDIAN BAND
MRS. BOONE: A question to the Minister of Intergovernmental Relations. The McLeod Lake band has cut the access road to the reserve, and therefore to Carp Lake Provincial Park, to try to get action leading to a settlement on Treaty 8, which I have spoken to you about. Will the minister agree to meet with the McLeod Lake band in order to get negotiations underway as soon as possible and help avoid any sort of dangerous confrontation, such as happened yesterday?
HON. MR. ROGERS: Mr. Speaker, I thank the member for the question. Treaty 8, signed urgently and most recently in 1899, is between the government of Canada and the McLeod Lake Indian band. The McLeod Lake Indian band was first negotiated with by the government of Canada in 1892, according to the information that I have. In that process, they were included in Treaty 8. The McKenna-McBride commission of 1893 met with the McLeod Lake Indian band. When the federal government, through whatever ministry they used in 1899.... Unfortunately, Alex Macdonald isn't around, because he used to be able to remind us who was the minister responsible at the time.
AN HON. MEMBER: Jack Davis?
HON. MR. ROGERS: Watch that!
However, within Treaty 8, in 1961 the federal government negotiated a quitclaim settlement with the Fort Nelson Indian band, and they are included in Treaty 8. The federal government purchased land from the province of British Columbia and did the settlement with the Fort Nelson Indian band, which is included in the same area. We have made that same offer to the federal government: that we would make land available for them to settle with the McLeod Lake Indian band.
That's not going to solve the immediate problem of the blockade of the road, a problem that's being dealt with by the Minister of Environment and Parks as well as by staff within my ministry. However, your question was.... I know you're being coached, so do you want me to wait until your coach is finished?
HON. MR. ROGERS: How do you know she wants to hear the answer to the question?
Anyway, the answer is that if they want to meet with me, I'll be pleased to meet with them.
MRS. BOONE: Then why have you not answered their phone calls? I understand that they have phoned you every other day since they first put up the blockade on Carp Lake. You haven't received a phone call yet? Can you assure me, please, that you will phone them today and talk to the McLeod Lake Indian band?
HON. MR. ROGERS: They must be phoning you to tell you that they're phoning me, but they're not phoning me. I'll give them a call this afternoon.
HAIDAS IN SOUTH MORESBY
MR. MILLER: A question to the Minister of Intergovernmental Relations, whose previous statements on white trash are only too well known. Could the minister explain his recent statements concerning the Haida Indians? He has made suggestions that they could be living exhibits in a South Moresby park.
[ Page 2334 ]
HON. MR. ROGERS: One shouldn't say anything around here with tongue in cheek, but I'm afraid I have the habit of doing that, and occasionally these things come back. But I'll explain this.
When I met with the Haida Indians, some of them said to me that South Moresby is the traditional area where they used to live, and when the smallpox came through the Queen Charlotte Islands in the early part of this century, many of them moved, or were moved by the federal government, to settlements on the northern island and in and around Skidegate. Some of them have expressed to me that they would like to move back to South Moresby. That was part of the discussion that we have had. If in their negotiations with the federal government and their negotiations.... When they were discussing the matter with the provincial government, they said: "It's part of our claims, it's part of the place we used to live, and some of us would like to go back and re-establish residence there."
If my remarks were misconstrued, or if I even said something that would mislead people into thinking that I expected the Haidas to be some kind of living exhibit in a park, that's not what I meant to say at all. But what I did mean to say — and what I will clarify right now — is that some of the Haida people would like to live in the Moresby area. That's the statement they have made to me. And if they would like to live in the Moresby area, that's a negotiation they are now going to have with the new landowner, which effective Saturday is the federal government.
MR. MILLER: Given the track record, I don't think "tongue in cheek" is acceptable. Given the incredible boorishness and condescending attitude inherent in that kind of statement, would the minister agree to do two things: first of all, apologize without qualification; secondly, advise the Premier that he's not capable of carrying his portfolio, and offer his resignation?
MR. SPEAKER: Order, please. The question is argumentative and really wasn't a question.
Orders of the Day
HON. MR. STRACHAN: Committee of Supply, Mr. Speaker.
The House in Committee of Supply; Mrs. Gran in the chair.
ESTIMATES: MINISTRY OF
AGRICULTURE AND FISHERIES
On vote 7: minister's office, $241, 948.
MR. ROSE: I have a couple of questions having to do with the estimates book. Maybe it will give your staff an opportunity to get here.
The question concerns an item on page 39. About a third of the way down the page, there is an item called "Farm Products Industry Improvement." Below it is "Livestock Protection," of some $20,000. Have you got it? Page 39, under "Special Accounts," item number 3 is "Farm Products Industry Improvement," and there is a zero amount.
Then we get over to the details on page 48, under the heading of "Farm Products Industry Improvement," where there is a disbursement of $10 million, and I wondered why the item appears there in the detail and didn't appear in the summary. I'd like to know what item that disbursement is for.
HON. MR. SAVAGE: That disbursement is proposed for Farmco.
MR. ROSE: Last night we were told we were doing an item in miscellaneous statutes for $10 million for the same destination, for the ethanol plant. Is that not the case? Didn't you tell us last night that the Farm Product Industry Act has run down to $200,000? That's its present sitting position. The $10 million we're asking about here is enabling legislation.
What I want to know is whether the $10 million is the same $10 million you told us about last night, or is the total that you're giving to the farmers for the ethanol plant.... You know, where you launder the money; you give it to the farmers and they in turn give it to the plant. They never actually touch the money. It's a kind of new rural Mafia for laundering money. Is it $10 million? Is this the same $10 million that was in the Miscellaneous Statutes Amendment Act last night, and why are you asking for it twice? That's the question.
HON. MR. SAVAGE: It is being put in the budget, but we need the enabling legislation that was put forward last night to have it put in there, because the industry act was drawn down.
MR. ROSE: The minister is telling us, then, that it is not a new $10 million, so the total isn't $20 million; it's the same $10 million. That's fine.
I now have a number of questions dealing with free trade. Is it the position of the B.C. government that under any free trade agreement with the U.S., marketing boards and supply management will be maintained? Is that the position?
HON. MR. SAVAGE: Yes.
MR. ROSE: Has the minister got any studies to determine what impact this possible free trade will have on the food-products processing industry? Because the core of free trade is to remove tariffs on everything, including food products. How can our food processors continue to compete with low U.S. prices on often-subsidized items such as chicken and chicken pies and that sort of thing?
HON. MR. SAVAGE: Well, it's not only that — if I may, Madam Chairman, address the hon. member — it's also packaging standards and a number of things that we're very concerned about. If in free-trade discussions we open all those standards and health regulations, etc., to be equivocated on each side of the border, then we are in fact going to lose. We know that. So we are cognizant of the fact, and we are dealing with the federal government on the basis that we want that standard and also the industry to survive in B.C. It is a source of many jobs for the province.
MR. ROSE: If we do get a free-trade deal, and that's by no means a certainty, and the idea is to phase in over a 15-year period, can the minister tell us what his position would be on that in terms of the survival of the commodity marketing
[ Page 2335 ]
board and supply management boards? Also, if the marketing boards disappear, what impact will that have on the agricultural land reserve?
HON. MR. SAVAGE: I know what the hon. member is getting at. There is no doubt in my mind that it would put pressure on the agricultural land reserve, because if agriculture can't survive in the competitive marketplace and it's placed at an unfair disadvantage.... And I qualify that statement by saying "unfair"; you have to address fair competition. I think Canadian and also B.C. agriculture, given fair competition, can compete, but until it's addressed on that basis, the pressure would eventually fall back. If the industry falls down, the pressures would be on the ALR as well.
MR. ROSE: Do I take it, then, that the minister is not only opposed to including agriculture in any free-trade package right now — those things that are already not part of free trade, such as beef, grain and a few other things like that, and raspberries and blueberries — but is opposed even to the 15-year phase-in? The idea is that there is supposed to be a complete reciprocal arrangement within 15 years. Is he opposed to the long term as well?
HON. MR. SAVAGE: Madam Chairman, to the hon. opposition House Leader: not precisely to the whole long-term implications, because I believe that by addressing it on a fair basis, we can be competitive. So on the 15-year time-frame, that's the time-frame that gives us the opportunity to be in that sphere. But if in the time-frame of that, there's unfair competition.... There again, you get into a number of acts that exist in the United States, and unless those can be fairly addressed, I don't see how we can compete fairly. The 15 years won't make any difference.
MR. ROSE: I'm not sure that I understand what the minister said precisely. He's opposed to it, but if we could compete fairly, he's in favour of it. We know that the climate is not going to change. Would the minister agree, though, that over the phase-in period there would have to be a change in labour standards vis-à-vis the two countries? He's already said packaging standards vis-à-vis the two countries. There are pesticide standards, energy and fuel costs, hydro costs, water costs and all this other stuff.
Does the minister think that the Americans will be changing to our standards or that we'll have to change to theirs?
HON. MR. SAVAGE: I don't think you can say you would change one standard to the other. You have to quantify on the basis of what is fair on each side. What will work? That's what we have to bring to the bilateral trade discussions. Put it on the table; let's address it.
In our conference two weeks ago in Regina between the ministers of agriculture — and I can use only that one particular area — and the state secretaries of agriculture, there was very real concern about how we could fairly address what project or particular act gives advantages, say, to the U.S. as opposed to Canadian agriculture. I think it's going to be a long drawn-out proposal to try to resolve those differences. I don't think we'll do it in the time-frame that is allotted in this round.
MR. ROSE: I'm not talking only about this round. I don't think you'll do it either. The phase-in period is supposed to be 15 years to complete free trade.
What I'm asking the minister is this: with U.S. agriculture being seasonally advantaged, with different standards and cheap labour — often much of it illegal immigrants — isn't it likely that, with their having 20 times the size of our production and maybe more, because of various things we needn't go into now, we will be forced to move to their standards, rather than vice versa, in order to have that level playing-field? Isn't that really what amounts to agricultural integration with the United States?
HON. MR. SAVAGE: I think it's a good question the hon. member asks. It would not be my intention to give in to lower the standards to which we've become accustomed. I think we have become accustomed to a standard in this country, and if we are supplying the necessary ingredients for a healthy diet in the way of food through our ministry, whether it's Fisheries or Agriculture, to say that we should give in to competitive forces from below the border.... I do not entirely agree, and I have defended that position.
MR. ROSE: If we did have free trade, that would envision the removal of all tariffs. Would that, then, in the minister's view, since he supports free trade except for agriculture and a few other things....? Does he really think that means the removal of all customs? Could I go down to Blaine from Sumas or Mission, or from White Rock to Blaine and buy all my food products down there? Is that what he means by free trade? Who is this free trade for? Is it for the citizen or the industries?
HON. MR. SAVAGE: I hope free trade is identified as to how it relates to the public as a whole, both in the U.S. and in Canada, not whether it's industry or specific to one sector. I think we have to identify the fair trade. Your question relative to crossing the border.... I would certainly think there would still be customs. I don't see how there couldn't be customs in place.
The other thing is on tariffs, etc. Seasonal tariffs, I would hope, and would be defending on the basis of production in Canada being to a large extent seasonal.... Consequently those seasonal tariffs have to be in place, because the commodities shipped in from the U.S., on many occasions through the winter, are much higher than we are able to produce them for here. We still can't produce them and be competitive. But on the same basis, when we're in production in the summer months in Canada, their prices are substantially lower, causing very low returns for many of the agricultural products that are sold to wholesalers and eventually through to the consumer, because they've made their money during winter production.
MR. ROSE: If the minister is in favour of free trade.... I know he's not obtuse. He's very open, and these are questions that I have in my own mind quarrelled with myself about. If we have free trade, I don't see why I can't go down to Blaine and buy my groceries. We already heard the second member for Langley (Mr. Peterson) give us the figures from Butter Fat, the dairyland magazine, and how serious that is. So is the minister in favour of citizen free trade?
[ Page 2336 ]
MR. ROSE: The minister says he's opposed to free trade. This is not really on agriculture, but it's the same thing: could I go down, then, and buy a car? That's free trade. We have sectoral free trade now in autos, but it certainly doesn't mean that I can go down and buy a car in Seattle. I can't. They are $300 to $500 cheaper down there, but I can't do that.
We want to have free trade, but we don't want the people to have part of the advantage of free trade, because I can't go down to Blaine and buy a quart of milk. So I think there are a lot of questions in there that need to be answered.
HON. MR. SAVAGE: I don't disagree with what you're saying. I think where we can provide an environment for freer and competitive trade, that's fair enough. But I don't see how Canada and the U.S. can come to grips with saying that there will be complete free trade. I do not see that happening.
MR. ROSE: The U.S. has already said that they reject the idea of dispute-settling mechanism. A lot of people, even in the agricultural sector, want a freer trade because they can't stand the hassles, whether it's the carrot producers in the Maritimes or the potato producers or the wheat producers or the hog producers or any of these people. They can't stand the hassle of non-tariff barriers. If the U.S. is not willing to give up those things, then I don't think there's anything in it for us.
Let's look at the wine industry. The parliamentary secretary sitting over there — I'm not sure whether he's the first or second member for Central Fraser Valley, but there he sits — argued one Friday morning that all agriculture should be exempt from free-trade talks. Is that the position of the government?
HON. MR. SAVAGE: I do not believe that all things should be free trade, because a number of the agriculture items exchange across borders with the same applicable duty on both sides of the border. It's administrative things, applying a duty in grains, as an example. They're offsetting duties either way, so they are technically free trade.
Some of the beef sector is the same way. Those things could continue. What I would think they would do is take the administrative work out of it, instead of adding — for instance on one particular grain — three cents a bushel, either way. That technically would make it free.
MR. ROSE: I think the minister would also agree that a number of other things, such as apples and soft fruits, are particularly vulnerable. For instance, the U.S. can write off cherry orchards as tax breaks; doctors and lawyers do this over eight years. We can't do that. So do you expect the Americans to change that? That's your seasonal tariff; that's how it clicks in and protects us.
Actually it comes down to you really don't want free trade at all. It just sounds good; you know, everything is free. What representations has the minister made to our own economic development committee — which deals with the problems in free trade — on the various agricultural sectors, especially the wine industry?
HON. MR. SAVAGE: I think we're crushing grapes. Incidentally, on three occasions I've taken the opportunity to defend the value of the grape industry of the province of B.C. and specifically, as I said this morning, the Okanagan Valley. It is a valued part of the Okanagan economic development. It's in its infancy, really. The grape industry has gone through an awful lot of transformation, as you can well appreciate, because they went heavily into red grapes and have now swung largely into white and are trying many European varieties. A number of the programs you referred to this morning about grants relate to transferring to varieties.
The Okanagan Valley is doing its best to change over and be competitive not only in the type of grapes but also the quality. The quality of Okanagan wines has substantially increased. In fact, they are winning a number of worldwide awards. In the 15 years, that may not necessarily be enough time to phase it in.
The other concern I have is that if we don't phase in, then that $140 million industry goes somewhere else. My position has always been to defend it and keep it in Canada. If it's got a potential of making a good economic generator to the province and the country, we should try to keep it.
MR. ROSE: Yes, I'm not sure that with the best will in the world, in view of the unlevel playing-field, that may be possible, even with the best efforts we can muster.
Is the minister then saying that he supports the idea of the wine being part of the free-trade talks? It's not a supply management board. Or is he opposed to it? It's part of the processing industry as well, and according to the grape growers and the wine industry especially — I'm not talking about the big ones; I'm talking about the estate wineries — they say they're dead in the water. I just want to get an idea of how the minister feels about this, because currently they are part of the free-trade talks.
HON. MR. SAVAGE: I can tell you, Madam Chairman, I have categorically stood behind the grape growers and said I was opposed to opening it up on wines. I feel we should keep the wine industry. It's a great contributor to the Okanagan, as I've already said.
MR. ROSE: One of the difficulties with farmers right across British Columbia and Canada is that the subsidies make up part of their income. The figure I have is roughly 12 percent. The U.S. figure is roughly 50 percent. In the EEC it's about 70 percent. Is the minister not concerned that Canadian farmers, with the best will in the world, cannot compete with input costs being what they are and with all the rest of the costs of production — land costs and fuel costs? If he is concerned about their inability to compete — because it's not on a level playing-field; it's a craggy playing-field, full of ditches and troughs and valleys in which you could disappear — the alternative is to either increase subsidies here or try to convince other people not to. Again, I think the matter is subject to a lot of long-term negotiations through GATT and other things. What is the minister prepared to do in the meantime? I read the figures this morning, and the number of people leaving the farms is deplorable — and to me no programs to keep them on or help younger people in the industry.
HON. MR. SAVAGE: Madam Chairman, on the issue of the subsidies that exist around the world — and I think the hon. member has mentioned some numbers — I'm well aware of those numbers and have been arguing for the 12 years that I've been involved in agriculture that when we get
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into the subsidy wars, we are destroying a natural marketplace. It's never been more evident than it is presently in the grain prices. The subsidy wars have rewarded and encouraged excess production. Treasuries in the EEC and the United States far exceed Canada, Argentina, Australia and New Zealand. We cannot win the subsidy war. I have taken the opportunity, along with the same ministers in the other nine provinces in this country, to say that we must address the discussion relative to world subsidies next week.
We are also, I might inform the hon. member, going to discuss multilateral, bilateral GATT agreements. That's one of the top priority items for discussion in the first ministers' conference on agriculture next week.
MR. ROSE: Is the minister opposed to subsidies?
HON. MR. SAVAGE: I shouldn't say I'm opposed to subsidies; I'm opposed to the extent that may have got to where countries cannot compete one with the other. If it's a minor adjustment stage of a subsidy to correct something that's different between provinces or a difference between countries, that's fair enough, but they are totally out of hand. We even have the same situation between the different provinces. The rates of support of the agriculture sector vary substantially from one province to another.
MR. ROSE: If I understand the minister correctly, when he says little subsidies, that's like saying small sins are okay, but big sins aren't. That's really what he's saying. It's like being a little bit pregnant. Once you get on the subsidy road, what is too much? Marketing boards and supply management and farm income insurance are all examples of subsidies. What you seem to be objecting to is that some countries are more lavish in their subsidies, making it difficult for our farmers. Is that the case?
HON. MR. SAVAGE: Madam Chairman, I don't think you should confine those statements to agriculture. A number of programs — and you can call them tax havens, tax retreats or tax breaks — are a form of subsidy to some extent. They don't just exist in agriculture; they're in every sector. Those are the types of things that get out of hand and when they enter into competition between countries, get distorted so badly that one country is not going to be able to stay in the business.
MR. ROSE: So subsidies are okay as long as they don't get out of hand? When they get out of hand, it means that we can't keep up. For instance, my friend from the Fraser Valley will know that you can probably buy eggs for half the price across in Sumas than we do, say, in Abbotsford. Is that a subsidy....?
MR. WILLIAMS: Or milk.
MR. ROSE: Or milk or whatever. We have a studied, deliberate, if you like, scarcity — or at least supply management. I have no objection to that. I have trouble when it's argued that somehow we're after a marketplace economy when we know that's a pile of nonsense. It exists nowhere in the world, and our farmers can't be faced with a market economy, or any other segment of our society, when everybody else in the developed world is doing that. As a result, we all have had a higher standard of living. But I think what's good for the goose is good for the gander.
I'll leave that now. I don't think there's much more point to be made, but the point is that we get a lot of doubletalk. We believe in free enterprise, yet we believe in supply management. We don't think big subsidies are good, but little subsidies are good. We think there should be a marketplace economy and that the world should operate as if it was God ordained and God-given and if you'd just get the hell out of the way, everything would work fine. Everything we've got in our society, from hospitalization to unemployment insurance to workers' compensation and all the rest of it, is to protect people from the vagaries — the brutality, if you like — of the market system. I haven't got a great deal of faith that by leaving this to the market system it's going to be enough.
We have to decide as a nation whether we want to become a sovereignty-associated state with the United States in all things, or whether we want to develop what we can on our own internally. Economies with far lower populations than our own do far better than we do, because they use a partnership between the state, the workers and the government, and they plan. I can name you those places — and it ain't done on the free market economy.
I've got a little question here, which may be considered a minor one, but some people wanted me to ask it, so I'll do it. Apparently there was a cannery closed down in Summerland. It was bought by the Pattison megalopoly in '84 and closed in '86; 100 jobs were lost. The facility was bought with the help of a $42,000 agri-food grant by your ministry — agri-food development between Canada and B.C.
None of the previous workers were hired. So it appears to me.... It has been opened up by Beaven's Orchard Cannery. They bought it out with the help of the ministry. What steps did the ministry take to give the former workers rights to their former jobs? Here is a clear example of successor rights that were violated, and I'd like to know what the ministry has done about that.
HON. MR. SAVAGE: Madam Chairman, I don't have the details of that particular transfer from one ownership to another, on successorship or whatever, but if you would like to have the answer, I can bring it back to you.
MR. ROSE: I can understand how the minister may not have every little item at his fingertips, but it's quite a serious one to the people who lost their jobs. Naturally it's more serious to them than anyone else. What I'd like the minister to do is give me an undertaking to have the policy directive that when, through the use of public funds, an assistance is given to take over or assist in the sale or purchase of a facility involving food and food products, the policy will be that the people who have been working there will have the first chance at new jobs. Otherwise there are no successor rights.
Supposing you have a union such as the cannery workers or whatever in that plant, and you don't like the union. So you sell the plant to somebody else — in this case with public funds of $42,000 — and then the people hire non-union workers at perhaps half the wages. Well, I don't think that's tolerable. I don't think low wages help any of us. It doesn't help the local community, because there isn't the money to spend. It doesn't help anything. It might help in the export or something, but if we get into that bag, where we're trying to compete with Taiwan and Korea, we'll never get anywhere.
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I have a few other small items I'd like to deal with, and I'm waiting for my colleague to come in, who'd like to do some aquaculture discussions.
I mentioned this morning, Madam Chairman, that the 1986 census reveals that the average age of a Manitoba farmer is 28 and the average B.C. farmer is between 50 and 55.
[Mr. Weisgerber in the chair.]
I wonder: are there any policy initiatives contemplated? I know it's asking for what's going on in the future, and sometimes this is considered not in order. But as I mentioned this morning, there has been no act since the Bee Act of 1977. There has hardly been a torrent of legislation pummelling this chamber from the Ministry of Agriculture in the last ten years, in spite of the fact that there have been some extremely serious problems.
Is there any plan to prevent farm foreclosures? If you write these down.... I've got a series of them, and I'll read them very slowly. That's one.
What is the status of right-to-farm legislation, farmers' rights, having to do with intensive agriculture and the problem that's caused by that in urbanizing, if not urban, areas?
What programs do you have to encourage young farmers to stay on the land? Are there any programs to support part-time farmers, and have them, instead of having to work off the farm, be able to receive enough income from their farming operations to make a living? There are programs in other provinces like that. I'm trying to find the precise reference for it, but the minister was talking about that this morning — a national policy. I don't know whether he wants to bring down everybody else to our level or to bring us up to their level, in terms of the things I'm talking about.
Facilitate the transfer of farm property from retiring farmers.... A lot of farmers can't retire, because that's their pension — their farm — and they have to charge their family, often their sons. There are programs in Alberta and Manitoba to facilitate these transfers, often in the family. Does the government have any policies in these areas? Is it something he'd be prepared to work on with us on this side of the House? Maybe the minister could encourage the select standing committee to do some travelling around, to junket around B.C. in our free time, as if we didn't have enough to do — not that I need any more trips with standing committees.
We'd like the minister to consider this. His colleagues have a lot of respect for him; we on this side of the House do too. We didn't like much what he did yesterday — the ethanol plant — but we won't rub that in too much.
Brinkman — I quoted him this morning too — found higher levels of financial stress in B.C. agriculture than in any other part of Canada. Two thousand farmers left the land in the last five years. If the farmers are leaving the land, that puts pressure on it for subdivision as well. "If we can't make any money on it, why not chop it up and sell it?" I heard that this morning from the member from central Okanagan. If you can't make a living on the farm and you're stuck with it, and now you won't even let me sell it for another purpose.... So you've frozen me into poverty in perpetuity. That's a serious problem; I wouldn't minimize it at all.
Just let me read about some of these programs in Manitoba. I mentioned Alberta and Manitoba. We've got a young farmers' rebate program. It provides farmers under 40 years of age with a 4 percent rebate on the last $50,000 of their principal, for a long-term ten-year or five-year period. Available in Manitoba is a part-time farmer program. They can obtain loans for both capital and operating. There's a farm start program, again in Alberta and Manitoba; a beginning farmer program; a loan guarantee program in Alberta; in Manitoba, a farm development guarantee program; a Family Farm Protection Act; farm foreclosure.... So these things are all in existence, but they aren't in existence here.
MR. ROSE: What the hell's the point in trying to keep people on the land if they can't sell it anyway?
But there are programs the minister talked about which are marketing programs. The problems are not production anymore; they're finance and marketing. Would the minister agree with that? I wonder if he would care to ruminate a little bit about some of the things he might be interested in doing to solve or at least ameliorate some of these very serious problems.
HON. MR. SAVAGE: I thank the hon. opposition House Leader. You can call it "ruminate." I'm not going to get indigestion on it.
HON. MR. SAVAGE: I said I hope I don't get indigestion on it, if we're going to ruminate here.
MR. ROSE: Have you got four stomachs?
HON. MR. SAVAGE: I hope not. I might look like it.
Let me assure you, Mr. Member, that we're well aware of the number of foreclosures. Not only are there foreclosures, we're also aware of a number of farmers who don't even go through the process; they quitclaim, or they turn the keys in. A lot of those aren't even a matter of record. They've left the land.
For a good example, in the Peace River district of this province in excess of 100,000 acres will likely not be in production this year because the farmers have left the land. It's a substantial figure, yet we know there is stockpile after stockpile of grain in surplus. In Canada we're short of No. 1 wheat, but that may be eliminated this year with a good crop. We're short on the specialty areas where there is a market, and yet there are excessive stocks in Canada of some of the feed grain sectors.
You talk about part-time farmers: how do they make a living? On a number of occasions we've had discussions on part-time farmers: the level at which they farm, what they've got themselves involved in, what criteria could be plugged in to make them eligible for provincial programs. The previous guidelines were that if they earned more than $50,000 off the farm, they would not be eligible to qualify for interest reimbursement or for a number of other farm programs.
You asked a question on right-to-farm legislation. That's one piece of legislation you will probably see very shortly — not in this session, but probably in the fall session or in the spring. We are working very diligently on that one. Bill 62, as you will recollect.... I believe the hon. member previously from Central Fraser Valley brought in Bill 62 with a number of recommendations relative to setbacks, intensive agriculture, etc. The agricultural protection act that we're
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working on — or, as you call it, right-to-farm legislation — is being drafted to make sure that all those guidelines can be adhered to, between the responsibility of the agricultural community and also the responsibilities of the urban community expanding into the farm area.
Retiring farmers who wish to get out of the business — maybe transfer the farm to their son — can, under the federal Income Tax Act, transfer without capital gain to a family member. There is a provision in the act. If a young farmer wants to start today, there's a number of programs that we've put in.... I won't take credit for them, but the ministry, through consultation with the industry, has implemented programs where, when a person decides to stop farming, his allotment for a right to a market is held back at 10 percent for the provision of a young farmer or a new farmer starting up.
HON. MR. SAVAGE: In supply management systems, or whatever. We are now holding back 10 percent for a provision for the startup people to have a chance to get into the business. Those programs were implemented very recently and after thorough discussion with the industry and with ministry staff.
MR. ROSE: Referring to the earlier comment about a national program, I don't know how that will work. The provinces vary. I know that the Peace River farmers' union wants feed freight assistance from the Peace River to Vancouver Island — I mentioned some of this last night — and I don't know if that has been accomplished. They're concerned about hay imports from the U.S. I think the minister and I discussed this once before and decided that it was probably the conversion of the barley price that determined the hay price down there. But it's not much help to know that. Being able to name it doesn't necessarily solve the problem. There's a fertilizer rebate in Alberta: $50 a tonne for nitrogen and $25 for phosphates. We don't have that. They're asking for a forage seed-down program; I don't think these exist as well. There are tax removal and rebates for farm fuel — you talked about an ethanol plant. Anyway, in Alberta it's 52 percent lower than B.C. in terms of the cost.
I'll leave that, but those are programs that might be helpful, other than, say, your ethanol plant. Your ethanol plant may or may not be financially viable; it may be pie in the sky. A million bucks a job is a big-ticket item. That's like a Candu reactor or a tar sands plant. That's what they cost: a million bucks a job. That seems to be a tremendous input, and there are probably things that could be done more effectively and cheaply. They won't be as flashy. You won't be able to point to them and touch them and say: "You know. we built this."
I won't repeat the rather spirited debate of last night over ethyl alcohol — part of it stimulated by it, I think. I’d just like to leave you on a kind of global note. The western Premiers in their last meeting recommended Canada reduce that stockpile you just talked about by feeding the hungry people of the world. The act says you can buy, transport, dispose of products. Your budget has been cut in half in five years in real dollars, so I wonder if the minister would ever consider that sort of thing. Would you support a resolution, perhaps, to the standing committee so we can have a look at this and make certain kinds of recommendations? The population five or ten years ago was at three billion. It's approaching six billion now, so whether we've got surpluses or not, certainly the world isn't going to have any for very much longer.
This is an urgent and ongoing problem, and I think, despite the gripes we have, we are the luckiest people in the world when you really come right down to it. I mean, we have our little interpersonal problems. I want to leave this on a rather high note before I turn it over to the high flyer from Prince Rupert over there. It really is a very serious thing. We have substantial problems. We have gaps enlarging between the affluent in our society and the destitute. That's not to say we're without problems, but compared to many places, we're living in heaven here. We just want to make it a little more heavenly by helping some of the others who perhaps are not as fortunate.
HON. MR. SAVAGE: With regard to the comments about the concerns that the farmers in the Peace River had for some of the programs, I have visited there three times since January and consulted with the group you mentioned and a grain producers' group up there. I am planning to go up there very shortly to meet with the chamber of commerce to see what ideas we can put forward to improve the agricultural situation in the Peace River in conjunction with the other groups.
On a number of occasions requests have come forward to our ministry as to how we could help. I mentioned last night the special grains program we're working on for the Peace River, and that's outside of the budget that we have here. That's a special appropriation that I felt was addressing a direct need, where there was extreme hurt from the marketplace. We're doing the best we can to try and get the best result for the dollars we have to work with.
As for the $50-an-acre plow-down program, we've been looking at that one. We don't think we can touch the fertilizer rebate program that Alberta has.
The second thing is that the grain program that existed and the fuel rebate — just taking those two in Alberta, our neighbouring province — amounted to $338 million. Fuel to the farming community in Alberta was at 9.7 cents a litre. That's what farmers in Alberta were paying for fuel.
In the new budget that has come down in Alberta, they have upped fuel, I believe, 5.1 cents a litre. They have reduced the grain payment from $21 to $13 effective July 1. So they have had to come to grips with overexpenditures in trying to keep their farmers in operation as well.
The real crux of the problem lies with the federal government coming to grips with an overall policy for the country, and that's the position we're taking forward next week — how important it is to address it on a national basis rather than each province two-bitting one another, trying to upstage one another in a program.
MR. MILLER: I just briefly want to ask the minister about an issue of some concern in my constituency and of some concern as well to the southern B.C. coast, and that is the whole situation with regard to the unfair trade practices charge or allegation that was put forward by some dozen U.S. fish processors who basically charged that there is an unfair practice because Canada prohibits the export of some species of salmon and herring without those species first being processed in Canada. Of course, the United States does not have similar provisions.
[ Page 2340 ]
As I understand it, that charge, if you like, has been referred to GATT for some kind of resolution. But the potential impact in British Columbia could be quite severe. There are thousands of shoreworkers' jobs in British Columbia, and I'm quite cognizant — very aware — of the economic benefit of those jobs to my community of Prince Rupert.
I should add that because Alaska does not have the processing capacity to deal with the huge salmon harvest taken there, Prince Rupert processes a fairly large chunk of the Alaska pink run, creating lots and lots of jobs. I'd like to know from this minister what this government has done in terms of filing statements of defence or position papers, or allying themselves with the Canadian government and trying to do all they can to protect the shoreworkers' jobs in the province of British Columbia.
HON. MR. SAVAGE: Mr. Chairman, I can assure you that we have submitted our case as to the value of the processing sector in not only the wild fishing stock but in aquaculture that could also benefit the processing sector. We have made that statement to the Ministry of Economic Development, which in turn has related it to the federal government. We are following up very closely on those statements and comments.
We've asked for review on the follow-up material that will be put forward to see that the proper material is sent to the federal government. We feel, as you have stated, that it's very important to keep those onshore jobs and the processing industry surviving in Canada, and specifically on the west coast.
MR. JANSEN: Mr. Chairman, may I have leave to make an introduction?
MR. JANSEN: Mr. Chairman, I'd like to introduce to this House some friends from Chilliwack: Tsako and Louise Czander, with their two children, Trichelle and Tiffanny. Would you please make them welcome.
MR. MILLER: Without belabouring the point, and hopefully taking just a few minutes, is it possible for the B.C. government to actually take a position in terms of discussions at GATT? Or do you really have to rely on sending forward a position paper to the federal government?
You know, it's a long way from here to eastern Canada, and the people who may be carrying that case forward.... It would seem to me, given the importance of the issue in terms of the kinds of jobs produced on the B.C. coast, that we should actually have somebody on the ground. Let's not just send a paper; let's send a paper in somebody's hand who is prepared to fight and argue quite vociferously and quite strongly, so that B.C.'s position is well represented.
We saw what happened on the east coast with the referral to the world court of fishing-ground disputes on Georges Bank. The next thing you know, those jobs can slip away pretty quick. Is the minister prepared to send somebody representing the B.C. government to be on the ground at those GATT deliberations, to make sure our position is put forward properly?
HON. MR. SAVAGE: Mr. Chairman, I'm quite prepared to send a person to represent us, and we are very vociferously presenting our case to the Ministry of Economic Development, who in turn is relating it to Ottawa. We are also relaying it to Ottawa.
As you well recognize, it is a federal jurisdiction. But I'm very willing to make sure that we have a person strongly arguing our case for the west coast fishery.
MR. SERWA: Mr. Chairman, I would just like to take a few minutes and address, through you, my comments to the minister. First of all, I would like to say to the opposition House Leader how entertaining it is to listen to him trying to make political hay on an agricultural issue.
As one who comes from Okanagan South, I would like to state the importance of agriculture to the economic health of all of the Okanagan, and of my constituency in particular. I come from an area that is not protected by commodity supply marketing organizations, therefore my perspective is substantially different from the bulk of the agricultural supply areas in the lower mainland.
We're faced with a problem at the moment with the Washington State herd reduction plan. A surplus of hay is being sent across into Canada and sold to markets that are normally supplied by hay-growers in the Okanagan as well as in the Kamloops area. It's very difficult to compete, as the cost landed here is below our cost of production. I'm concerned about horticulture, tree fruits, apples and soft fruits.
I substantiate the remarks of the second member for Okanagan South (Mr. Chalmers) with his concern about the grapes and the wine industry in the Okanagan. I would like to inform the minister that our input costs in horticultural areas have not declined. Land costs are high, water costs are high and increasing, labour costs are high, energy and fuel costs are increasing, spray material costs are increasing, and packing charges are increasing. We are caught in an area where we have to really recognize that agriculture is the shock absorber in an inflationary economy. We are virtually in a dual economy in Canada, in my view, and when we talk subsidies to agriculture, I perceive agriculture as one area that is not really subsidized. What we are doing with agriculture is asking it to absorb high, inflated input costs on a local market, and then telling the producer to sell his product at the world price.
I don't know what the answer is. They have tried various programs in the States. Parity was one, where they endeavoured to maintain a purchase value or price of a commodity parallel to inflation. We are concerned very much about the impact of free trade on agriculture, as you are, and you are well aware of our concerns there.
We can't simply legislate farmers to stay on the land. The opposition House Leader has made his point about the ALR and lamenting the loss of lands. Our problem is not the shortage of land; our problem really, as far as price structure goes, is the ability to oversupply an available market. We have this situation which exists, and I would just like to say that it has to be addressed. We have to look at innovative marketing, perhaps, rather than stress the emphasis on volume production, on quality production. It will continue to be a very large portion of our economy. As the populations increase in the Okanagan, I can see a better opportunity for agriculture, as is the case in the lower mainland where we can sell directly from the producer to the consumer without the higher transportation costs.
Agriculture is, and will remain, a very important part of the economy of British Columbia, and as a member of your committee I would like to have the opportunity to endeavour
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to explore a system whereby we can work together to encourage the viability of the agricultural sector. It is exceedingly difficult, because I have people in my constituency who have owned places outright and are now living on second and third mortgages.
MR. ROSE: I did forget one very important riding consideration. I touched on it earlier. I want to know the minister's reaction to the proposal I have on the order paper as a resolution. In order to preserve farmland, and Colony Farm in my riding, some 600 acres there.... It's not being sold at $6,000 an acre. That's probably what it's worth, but it hasn't been sold for two years. It's degenerating. People want it preserved as farmland, and there have been some recent what I think to be absurd proposals. They were sort of just scams and schemes and development things.
The proposal I was making was to have it transferred to agriculture so it could be leased — it's now under BCBC — in smaller parcels. It's two large 300-acre parcels. I worked it out on the map the other day at $5,000 or $6,000 an acre, and it's worth about $3 million. But if it were leased in smaller parcels on a long-term lease, a 20-year lease, say, for blueberries, or if a syndicate of a number of growers could take it over, would the ministry be interested in having that land transferred for the purpose of the lease program under the agricultural land reserve, as we do with Minnikhada farm, which is also in Penticton, and is the estate of.... Former Lieutenant-Governor Hamber, I believe, originally owned Minnikhada farm, along the Pitt River.
So I'd like to know whether the minister would be interested in that proposal. There is also the possibility that BCBC could lease it, but now they're under orders to sell it. Well, I doubt if it will be sold as a viable farm. They lost the milk quota; that was privatized in '83. What I'm afraid of is that we're going to have like what we had with the 150-acre golf course right in the middle of Richmond. That's what's going to happen to this.
I've talked about the farm before, and I won't go into the arguments pro and con, or all the interesting things I could talk about there. It's very important to the community that this be preserved. And if it could be preserved for agriculture, for leasing of a commodity which is doing very well on a long-term.... At 20 years and $250 an acre, as I mentioned this morning, you'll get your $3 million back and we'll have preserved 600 acres of the best farmland; or if not the best, virtually the best — among the best, anyway — in the lower mainland. It would be an island of serenity in a chaotic sea of urban life, if that isn't too poetic.
I wonder if the minister would be interested in a proposal such as that, and what would he be prepared to do about it?
HON. MR. SAVAGE: The answer is yes. I can tell you unequivocally that I've had a couple of pretty fair agricultural proposals for that farm.
Vote 7 approved.
Vote 8: ministry operations, $61,447,939 — approved.
HON. MR. STRACHAN: I'll say hello, through Hansard, to our good friend Garde Gardom, who will be reading the Blues in a week or two, or Hansard.
Vote 9: Milk Board, $367,973 — approved.
Vote 10: Provincial Agricultural Land Commission, $1,142,802 — approved.
Vote 11: agri-food regional development subsidiary agreement, $8,130,000 — approved.
The House resumed; Mr. Pelton in the chair.
The committee, having reported resolutions, was granted leave to sit again.
HON. MR. STRACHAN: Mr. Speaker, I call Committee of Supply.
The House in Committee of Supply; Mr. Weisgerber in the chair.
ESTIMATES: MINISTRY OF MUNICIPAL AFFAIRS
On vote 48: minister's office, $235, 919.
MS. SMALLWOOD: I'd like to start off this afternoon by talking about B.C. Transit. I know the minister is aware that I have done some work previously with citizens' groups in the lower mainland around some of the concerns about public transit and the effects of the transit decisions made over the past year or so. I'm particularly interested in some of the policy decisions the ministry has made in the recent past and the direction it's going in turning over the transit commission to the municipalities and in creating a transit authority.
I wonder if the minister could start by talking a little bit about those plans, about her intentions and also about the progress of the transit funding formula.
HON. MRS. JOHNSTON: In response to the member, probably the very most I can tell you is that it is actively being worked on at this very time. We have a deadline of April 1, 1988, and we will have no problem in achieving that deadline.
MS. SMALLWOOD: That was in regard to the transit authority. Does that also pertain to the funding formula? Can the minister give us any information? My concern with regard to the funding formula specifically is in regard to the current formula and what we saw late last fall, with the Hydro levy being paid down by some additional moneys that were found in increased ridership during the Expo period. Can the minister indicate to us how long the money in that paydown will last, and whether or not we will see an increase in the Hydro levy back to the $5.30 before the new funding formula is prepared in April of next year?
HON. MRS. JOHNSTON: I doubt very much if there would be any alterations during this fiscal year in the level of fee charged. It is my hope that we will be in a position, in cooperation with the transit commissions, to announce a new funding formula before this fall, although our deadline is to have the new authority and funding formula in place for April 1 .
You do realize, of course, that decisions with regard to how the local share is raised are made by the transit authorities, not by the minister or the ministry.
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MS. SMALLWOOD: I'm assuming that the minister is referring to the transit commissions and to the transit commission that is now in place in the GVRD. Can the minister tell us about the time-lines for those negotiations? I understand that.... I'm trying to get at what the minister meant by that. Is she saying that there may be a change to the transit levy, and that that would be a decision of the transit commission?
HON. MRS. JOHNSTON: The funding formula is made up by percentage figures, and at this time there is a surplus in the Vancouver transit system. It appears very unlikely that there would be any increase in either the Hydro or the transit levy, because of the surplus that is available, but those decisions are made by the local commission, not by the ministry.
MS. SMALLWOOD: Many of the citizens who have been involved with the decisions around SkyTrain and public transit in the lower mainland have been concerned about accessibility to information and to the decision-making process itself. I understand that part of the accountability process will be addressed when the transit commission becomes an authority. I realize that this is a future decision, but has the minister given any consideration to how that body can be more accountable to the actual ridership and to the people who pay the bills?
HON. MRS. JOHNSTON: The transit commissions are made up of locally elected representatives. I'm talking of the commissions, not the board of B.C. Transit. In the Vancouver area particularly, they're made up of mayors who represent the various communities involved in the Vancouver Regional Transit Commission. Surely, through the locally elected representatives — in this case, with one exception, they happen to be mayors — there should be availability for public input.
As far as further means of access by the public, no, I haven't really given any thought to that. I felt comfortable with the fact that there was already an available route for the citizens at large to take through their locally elected mayors.
MS. SMALLWOOD: In the last while, in particular with some of the bus changes that have taken place, people in the lower mainland have seen some local councils, through their representatives, engage in representing their communities by trying to ensure that those bus routes are maintained or that new bus routes serve that community. However, that hasn't been universal. There have been other municipalities that ran their local.... When the constituents have raised complaints, the mayors or their representatives have referred them to the commission, rather than using their office and the council as representatives. So there has not been a direct link with all municipalities to the local level.
Would the minister consider, through legislation that governs the commissions, some sort of instruction to the representatives that would open those channels of communication with their local municipalities and the constituents affected by the bus-route changes?
HON. MRS. JOHNSTON: Well, Mr. Chairman, I really think that those avenues are open. They may not always accommodate the requests made by the local residents. I can assure the member opposite that I haven't been overly impressed with some of the changes that have been made to the routing, and I have asked Mayor Don Ross of Surrey, who is the chairman of the Vancouver Regional Transit Commission, to pay special notice when changes are being made and to ensure that any affected local residents have an opportunity to speak on those changes. But I really think that the avenue is there for public input, and certainly the fact that we hear from the public when changes are not to their liking would suggest that they are taking advantage of that opening and that avenue.
MS. SMALLWOOD: Like many other ministries in your government, what you are saying is that the people affected have the right to appeal, that they have the right to have something to say about it after the fact. You're acknowledging the fact that they are not included in the actual decision-making process and that that process is one that excludes the ridership. I would submit to you that the only input that people have after the fact is appearing at the commission — I will agree, in a public forum — but it is not a two-way street. Information is not provided, and most of the decisions made by the commission are made behind closed doors, with the exclusion of the public.
As I've pointed out to the minister, I think if you care to look at it, you can identify the municipalities that have been actively involved with their constituents to influence the decisions — again, after the fact — and actively involved trying to represent their local ridership on the bus routes. The point is that there are major municipalities that have totally relinquished that possibility or that involvement. The only thing I can deduce from what the minister is saying is that if the local municipalities don't like their representatives, they should change them. If the minister is appointing the representatives, what avenues do the local citizenry have to change that representative? Are the representatives to the commissions appointed by region, or what is the rationale?
HON. MRS. JOHNSTON: Mr. Chairman, to the member, they are appointed not by region but by area to ensure that all areas within the service area are covered with elected representation. But the commission meetings are open to the public, with the exception of property and personnel matters and litigations. So those types of discussions are certainly open. The commission meetings are not closed. Those I have attended have had members of the general public in attendance as well. So there is an opportunity for input.
But I think we have to accept that some of the decisions for service and route changes are made as a result of experience with utilization of the service. And if you have a service that regularly only has two or three people on a bus, you are going to have to look very seriously at how long you're going to continue that service. But, Mr. Chairman, let me assure the member that as minister responsible for transit, my idea of a transit system is one that truly serves the needs of the people in the area, and if we aren't serving the needs of the people in the area, we aren't providing a good transit system. So that's certainly a goal I have set, and staff at transit are very well aware of that goal.
MS. SMALLWOOD: I'm pleased to hear that that is the priority for the minister. It's one that I would certainly share with her. I do, however, have some concerns about the recent bus changes, as she also has expressed them. I have concerns
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not only about the level of service that is offered to communities such as the ones that both the minister and I represent, but also about the overall impact of ridership on the whole system. I would point out to the minister that when the outlying communities were undergoing route changes, several people that contacted my constituency office were quite frustrated when they talked to the administrators responsible for those changes. They were told: "No one likes changes, and you'll get used to it." It wasn't an open sort of discussion about the needs of that ridership.
Some of the changes were not changes that reflected the underutilization of particular buses or particular routes. I believe that the commission and the people responsible readily admitted that it was a centralization of the services, that it was a way of ensuring ridership on the actual SkyTrain route. It was a centralization of bus services to SkyTrain which does not acknowledge the overall needs for public transportation in the whole of the lower mainland. I think that what we're seeing by the reduction in ridership is the fact that that system is being designed to deal with the huge costs incurred by it as the number one priority, and not the priority, as the minister suggests, being one of serving the needs of public transit in the lower mainland.
Now I understand that the SkyTrain, ALRT, was designed and originally projected to carry 12 to 15 percent of the total passengers for the lower mainland. At this time the figures I have are that it is carrying 23,000 passengers per day, which is approximately 7.6 percent, which is quite a bit lower than the projected target for the overall ridership in the lower mainland. With these kinds of decreasing numbers and failure to meet the projected percentage, how does the minister hope to be able to cover the costs incurred by the system? Does she see the need for an increase in the actual fare charges for the SkyTrain and for the bus service?
HON. MRS. JOHNSTON: I'm having a bit of a problem accepting the statement with regard to the reduction of ridership. There is no question that we have a reduction of ridership as compared to last year. But then we didn't expect the ridership in 1987 to be what it was in 1986. I can also fully confirm the statement made with regard to emphasis being placed on utilization of the SkyTrain facility. There is an awful lot of taxpayers' money invested in SkyTrain, and there is no question at all that we are attempting to take full advantage of SkyTrain because of the type of service it is and because it is such an acceptable service. There's no question at all that we've directed a lot of the bus routes right to the SkyTrain stations. The ridership, as I understand it, is as should be expected if we compare it with the Expo year, which was excessive.
MS. SMALLWOOD: The point I was making about reduction in ridership did not relate to the numbers as they were influenced by Expo. The point that I was making was that the original projection for the percentage of ridership for the whole of the lower mainland was that 12 percent to 15 percent of the total ridership in the lower mainland would use SkyTrain.
What we are seeing now is that the percentage of the total ridership is 7.6 percent for SkyTrain, which is considerably less than the original projected ridership for that system. The point that is of relevance here is that the payment of this huge cost that was incurred by putting this system in place rode on those numbers.
It was projected that you would need 12 percent to 15 percent of the total ridership to be able to deal with this cost. While we're seeing half of the projected ridership, my question was: would the minister see an increase in the cost to that 7.6 percent to be able to make up the difference? Where will we make up the difference in the cost?
HON. MRS. JOHNSTON: I have quite a collection of numbers in front of me, and I don't have the 12 percent figure. According to the numbers that we have, we're looking at something in excess of 9 percent ridership on SkyTrain, and I think it's certainly worthy of note that this is a fully integrated system between the bus, the SeaBus, SkyTrain and handyDART. I don't think you can really zero in on one facet of the operation.
I'm just not sure where the 12 percent has come from, because I don't have that figure here.
MS. SMALLWOOD: The 12 percent was provided in the initial discussions between the province, B.C. Transit and the GVRD when the system was first talked about. When the minister says this is a fully integrated system and that we can't talk about SkyTrain in isolation, and then at the same time admits to the House that, yes, the buses are being centralized because this is a major expenditure of public money, that is a contradiction.
What the minister and the transit commission are doing is treating the SkyTrain as a special entity. It is centralizing all of the services to SkyTrain and ignoring the integral needs of other components of the lower mainland transit system. What we have seen by this centralization of transit system, I would suggest to the minister, has been a reduction in ridership. To support that statement, I would direct the minister to look at the last go-round of actual fare increases and some of the comments of the planners of the transit system, where they said that this increase at the fare box would reduce the ridership from the outlying communities by 1 percent.
One percent of the ridership at that time meant that there would be a reduction of 1,500 riders per day. Every decision — the fare increases, the centralization of buses to that service — has its cost, and those costs are reflected in a reduction of ridership. Rather than encouraging riders, encouraging the use of public transit to pay for the cost of this system, there have been policy decisions since Expo that have actually caused a reduction in ridership and a reduction in the use of public transit in the lower mainland.
Those were your own figures, and those are your own officials that have made those comments. Perhaps the minister could tell us — if, indeed, her priority is public transit and the support of a transit system — why she is allowing her officials and the transit commission to make decisions that, by their own calculations, reduce the ridership.
HON. MRS. JOHNSTON: The latest report that was brought forward by the transit officials regarding the SkyTrain popularity is certainly worthy of note. We have a release here dated July 7, and, Mr. Chairman, I think that the numbers are worth reading into the record.
The commencement of SkyTrain service in January 1986 introduced substantial changes to the transit system in Vancouver's lower mainland. In order to determine the impact of SkyTrain on the travelling habits of lower mainland commuters and to solicit public attitudes towards SkyTrain, a survey of SkyTrain riders was undertaken during the week of
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March 23 to 27, 1987. SkyTrain riders responded well to the survey. A total of 4,015 questionnaires were returned of the 12,535 distributed at SkyTrain stations, and the following highlights some of the results from the survey.
SkyTrain has attracted a substantial number of new riders. A total of 44 percent of SkyTrain riders either did not use transit or did not make their trip prior to SkyTrain. This suggests that the system may have increased transit ridership in the SkyTrain corridor by as much as 70 percent or 80 percent. More than 50 percent of the riders who previously made their trip by car believe SkyTrain has reduced their travel time. More than 19 percent of all SkyTrain riders previously made their trip by car.
There are a substantial number of facts that were derived from the questionnaire that was distributed, all indicating a very substantial increase in new ridership and acceptance of the service. I would be very pleased to provide the member with a copy of this report at a very early time, Mr. Chairman.
MS. SMALLWOOD: I look forward to perusing the report. However, I would point out to the minister that this is an attitudinal report, and that what we're talking about here is numbers. We're talking about numbers that will affect the cost-sharing formula for this system, and we're talking about actual numbers and actual policy decisions that have been made by this government since Expo, which have, by their own admission, reduced the number of riders on that system.
I want further to point out an additional policy decision that has been made since, and I'll go back a considerable time. I'll go back to September '83 and compare it with actual annual service hours. We'll take a look at what has happened from '83 to June '87. This is the number of service hours provided by the transit system, by the bus system in, I believe, the lower mainland. It also deals with the substantial increase that took place during the months when Expo caused an additional pressure on the service.
I would point out that since September '83 there has been a net decrease in the annual service hours, and that net decrease is 142,386 hours. That is quite phenomenal when you consider that between the months of September '86 and April '87 there was an increase; and between September '83 and January '87 that's predominantly the only block where there was an increase in the hours of service. This increase in service hours during Expo never even made up for the previous decreases in that time.
We have an increase in the population in the lower mainland. We clearly should have an increase in the ridership. We should have an increase in service if the objective was one of providing a public transit system to serve the needs of the public and to encourage people not to use their automobiles. Can the minister explain to the House why there is a policy decision that has caused a net decrease in hours of service to the public through the transit system?
HON. MRS. JOHNSTON: I don't know whether it can be referred to as a policy decision. I would suggest that it would be a service decision based on experience and on requirements of the service. It's as simple as that. We will not continue to operate on routes that are not being utilized to the level that it is expected they should be utilized. We also must realize that with SkyTrain we are providing a faster service, so this could in turn result in a reduction of hours. But it's not a policy decision to reduce hours; it's certainly a service decision.
MS. SMALLWOOD: I would suggest to the minister that a study of the service offered would indicate that the service has been cut back as much as the hours have been cut back. The point that I made earlier was that the routes that have been eliminated — not all; surely some, but not all — were cut back because those routes weren't used. But it was the number one priority of centralizing it to the SkyTrain.
What we saw, and what we are seeing now with the route changes in the last couple of months, is people who had relied on the public transit system reverting to using their cars, because the service provided in the lower mainland since Expo has not even fulfilled the levels prior to Expo. We are seeing such significant changes because of the costs of this very expensive system that we are now forcing people back to their cars.
The minister suggests that the system is faster. What we are clearly seeing in my community, and the minister knows the community well.... We have people living over on the east side of Surrey who once took a bus through the Port Mann to downtown Vancouver. With that system now eliminated, we're seeing an additional 40 minutes; it's taking them over two hours to get to and from work, using the SkyTrain. They're having to revert to their cars, because two hours is clearly unacceptable.
Those are policy decisions, Madam Minister, and if the minister does not see that that is part of her responsibility of making sure that this transit system works, then I suggest that the transit system will not work until we have a new and different administration. I know that there are several other members and many other issues that need to be dealt with in regard to the transit system, so I'll give those members an opportunity to also question the minister.
MS. A. HAGEN: I will phrase my questions and comments together and ask the minister then to respond. They all deal with the matter of custom transit, which is one of the mandates of B.C. Transit.
The first question I would like to pose to the minister is to ask for figures that identify the dollars in the B.C. transit system designated for custom transit, and to ask what increase in those dollars there is over the previous year.
The second question I want to ask has to do with expansion of custom transit services. They are presently firmly established in the lower mainland, but I know from my discussions with the minister and with a number of communities throughout the province, particularly as this service pertains to older people and to disabled people, there are communities that have done needs studies according to the terms established by the ministry, and all of the spadework for the implementation of services has in fact been accomplished.
I would like to ask the minister if she is able to advise us which communities will have custom transit services added in this fiscal year, and if she can give us any indication of what her plans are for the further expansion of this service into other communities.
I have one other issue that's a constituency issue. Perhaps what I'll do is ask the minister, through you, Mr. Chair, if she would care to respond to those questions. Or would she like me to continue with my third question and then respond to all of them together?
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AN HON. MEMBER: Do all three.
MS. A. HAGEN: I'll perhaps continue with the third matter. Some time ago I raised in the House a matter regarding the policy of ridership for custom transit, and the minister has indicated that that matter is under review. The issue was ridership for developmentally delayed preschool children in the greater Vancouver area, who in many instances have been transported to their schools through the custom transit system. I'd like to acknowledge that the authority has in fact indicated that those children presently being carried by that service will continue to be transported. But there is still the issue of ongoing policy, which is determined in part by the local authority; it is also mandated under the transit act, which defines those people who should be covered.
I've given some considerable thought to this issue, and I've had some discussion with custom transit operators in our area, and there certainly is a consensus among the operators that the policy should be as flexible as possible. In other words, local operators — who very often, as is the case in a good decentralized system, are able to maximize services if the policy option is available to them — are prepared to consider their options in transporting these children. Given the increasing productivity of custom transit operators, I think we can in fact very often rely on them to accommodate the needs of these children. I'd like to ask the minister how that policy development regarding the preschool children is coming along, and whether she and the transit authority would give consideration to having a policy that allows considerable latitude to the locally contracted operator so that we don't cut off options for these children to be transported to these programs in the most cost-effective way.
HON. MRS. JOHNSTON: On the first question to do with custom transit, I can tell you that in the Vancouver regional transit system estimates for custom transit service, we are looking at a budget of $5,468,376, which is a decrease of $98,000 from '86-87. In the Victoria regional transit system, we're looking at $930,181, which is an increase of $28, 983. In the small community systems, we're looking at $1,884,147, which is an increase of $214,732. The small communities and paired transit systems: we operate in Abbotsford-Matsqui, Alberni-Clayoquot, Kamloops-Kelowna, Maple Ridge-Penticton, Prince George-Prince Rupert and Vernon. Those will continue, but decisions with regard to new systems have not been made at this time.
On the transportation for special needs children, I think it's important that the policy as originally designed be read into the record. It was originally designed to transport handicapped people to and from work and post-secondary education; to transport handicapped adults and children to medical appointments; and to transport adults to key social events. In some areas operators have included a few — the figure given me is 15 — handicapped children for preschool trips as a daily commitment. This was not the original intention, but it appears that it has worked well in some of the areas, and B.C. Transit is currently reviewing the policy concerning the busing of handicapped children. I think it will all come down to dollars and cents, and there is currently no budget for a major change in the HandyDART system.
MS. A. HAGEN: Thank you, Madam Minister, for the information.
On the matter of small communities and new systems, the minister has indicated that no decisions have been made for any additional services to be implemented this year. In the dollar figures that I've noted, though, she does indicate a fairly significant increase in the budget for those small communities, given reductions in the GVRD and a very modest increase in Victoria. Would the minister be able to comment about whether there are some budget amounts that would allow some new services to be implemented in this fiscal year, even though specific decisions about what communities would receive those services have not been made yet?
HON. MRS. JOHNSTON: Mr. Chairman, it appears that Cowichan Valley and Prince Rupert are both new services and will subsequently amount to an increase in the budget, because there was nothing shown for them in 1986-87.
MS. A. HAGEN: Just one final comment to emphasize the point I have been making around the latitude available to local operators in providing service to meet the needs of the community.
I appreciate the minister's comment that the children who have been carried seem to have been integrated into the system. The point I was making in encouraging the minister and the Transit Authority to consider allowing some flexibility, recognizing that none of the custom transit services can in fact meet all the needs of the community.... I think community members and operators recognize that. But a policy that allows for community decision-making and community latitude, given that the productivity, particularly of this system, has been very significantly increased by the cooperation between the operators and the authorities.... I just want to emphasize again that I hope the minister will do her best to allow that kind of latitude, which is consistent with the way these services have operated to the benefit of the communities in which they exist.
[Mrs. Gran in the chair.]
HON. MRS. JOHNSTON: Madam Chairman, I'm well aware of the valuable work the member has done in the community in this particular area. Let me assure the member that the copy of Hansard will be forwarded to the commission, in order that they may attempt to address your concerns.
MR. CASHORE: Madam Chairman, I feel that the minister has been doing her best to answer the questions being asked here today. I find the answers not all that satisfactory. I don't blame the minister for that, because I believe that in inheriting this portfolio, she has inherited a dog's breakfast. I think we could take a look at that by looking at the recent history of transit.
Saner voices from all parts of the political spectrum and the planning sector have been calling for a comprehensive transit plan for the lower mainland for many years. What we've had has been planning that has been subject to the vagaries of political concern. This has put this minister into an intolerable position, in terms of trying to administer this situation.
All we have to do is look at the reality of SkyTrain. I don't think anybody is questioning the reality of having rapid transit; it's needed and it's socially responsible. But when we look at the way it was planned, it was fast-tracking to deal with the megaproject of Expo. Now that that fast-tracking has
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gone by the boards and the political planning in terms of where it was actually located has taken place, we're left with trying to pick up the pieces.
We're left with trying to pay the costs, and all the people in British Columbia have to deal with that. All the people in the lower mainland have to try to deal with the kinds of problems that the member for Surrey-Guildford-Whalley (Ms. Smallwood) has been pointing out.
The fact that there would be decisions made — such as fare box increases — and that officials from within the transit bureaucracy would be saying they knew that by doing so, that was going to reduce ridership....
The Minister of Highways (Hon. Mr. Michael) was sitting here a few moments ago, and every opportunity he had, he would say, "aye, aye," wanting this to come to an end. I think he wanted it to come to an end because he knows that the kinds of political decision-making that have created problems within transit are also causing problems for the highways system. So we have the problems on the Barnet Highway. We have the problems of people on the 401 freeway trying to get into Vancouver, and we have a system that's resulting in fewer people using the system and more people going back to their cars.
Clearly the fast-tracking prior to Expo has got off the track. This minister is left trying to make some semblance of sanity out of the situation, and I really do congratulate her for doing the very best she can, given the circumstances. But it really is a mess.
For instance, the mayors of the district have for a long time been asking to sit down and take a look at the possibility of commuter rail along the North Shore adjacent to Burrard Inlet and up into the Maple Ridge area. All the people involved were willing to sit down and negotiate on that and take a look at it. The mayors were willing to do that. The CPR was willing to do that. My colleague the MLA for Coquitlam-Port Moody (Mr. Rose) was willing to do that. The Members of Parliament in the area were willing to do that.
Who wasn't willing? The one person who wasn't willing was the person who at that time had responsibility for transit. That person, who helped to create the mess, is now the Minister of Economic Development (Hon. Mrs. McCarthy). She wasn't willing to sit down. Why? Because she wanted to be able to rationalize all the dollars to go under the political decision for the process that we now have, instead of sitting down with those very sane minds that cross all parts of the political spectrum. I never thought that I'd see myself during an election campaign trying to defend the CPR. But during the campaign the Premier of this province blamed the CPR for not being willing to sit down and negotiate on commuter rail. It was the person who is now the Minister of Economic Development who refused to sit down and negotiate on the possibility of commuter rail.
On the point of commuter rail, I would like to ask the minister: is she willing to instruct her officials to sit down with the people who are involved in the various councils and the CPR, and look at the possibility of commuter rail to help deal with the problems we have in transit?
HON. MRS. JOHNSTON: I am pleased to tell the member that I have asked my transit staff to pull the reports that had been done and update them in a very preliminary way in order that I can be better acquainted with the original proposal for commuter rail. I would be pleased to share the report with you, hon. member, but I can assure you that in discussions I had this very day with the mayor of Coquitlam, we were in complete agreement that commuter rail would really not solve too many problems in that area.
For a service dealing with the railway, we're looking at two trips each way a day, with an expenditure in the neighbourhood of $45 million, in order to bring that about. If we want to have five trips a day, we're looking at an expenditure in excess of $60 million — in 1986 dollars. Well, it's really hardly worth it. We would still be on railroad property. We would own nothing. We would have put out an awful lot of the taxpayers' money for very little service.
So can I assure you at this very time that in your area we will be asking the newly formed authority to give the improvement to transit service a very high priority, as we have been doing at transit at this particular time. The fact that there are no tracks running out to Coquitlam at this time certainly shouldn't suggest that the transit officials have not been working on the problem. But there appears to be more than just a servicing problem. In speaking to the mayor this morning, I determined that even if we were in a position to give Coquitlam-Port Moody 50 more buses, the road system is unable to accommodate a speed-up in the service because of the population growth in the area.
So commuter rail is not the answer, and I would be pleased to share that report with you. I have no question at all that you will agree with the decision made by my predecessor that that was not the way to go. We are seriously looking at improvements to the transit service in Coquitlam, and there's little doubt in my mind that we will be talking about a SkyTrain to Coquitlam before too long.
MR. CASHORE: That is reassuring. I do not wish to get into a discussion with the minister at this time with regard to whether or not the minister and I agree that there should be commuter rail. I was trying to make the point that it's very important, when planning needs to be done, that all participants be available to sit down and look at the possibilities, and that the possibilities were not looked at when they should have been looked at. I still think it would be worthwhile, notwithstanding the points that have just been made, that that discussion take place, so that in the mind's eye of the public it can be seen that this has been studied properly, and that now we can understand why that is the decision that is being made.
W.A.C. Bennett, I believe, at the time of the building of the Deas Island Tunnel — there was quite a bit of opposition at that time to the decision that he'd made — made the statement that it was a triumph of imagination over the cold, hard facts of engineering.
AN HON. MEMBER: That was Gaglardi.
MR. CASHORE: Well, maybe it was Gaglardi. I think it was Mr. Bennett, but we won't get into that.
MR. S.D. SMITH: What did the NDP say about that tunnel? They said it was a tunnel to nowhere and they wouldn't build it.
MR. CASHORE: Well, I don't know if the second member for Kamloops is wanting to build a tunnel up to Kamloops or not, but I think that given the way that planning is going with this government right now, the tunnel to Kamloops
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might very well be put ahead of some of the very urgent needs that need to be dealt with right away.
MR. CASHORE: The minister said that the people who are appointed to the regional transit commission are appointed not on the basis of region but on the basis of area. I would ask the minister to name the areas and to name the members of the commission who represent those areas.
HON. MRS. JOHNSTON: Prior to reading off the list of names that we have of members serving on our transit commission, I think we should make it very clear to the hon. member that there's absolutely no question at all but that we have by far the very best integrated transit system in North America.
AN HON. MEMBER: And Canadian-made.
HON. MRS. JOHNSTON: And Canadian-made; that's very important. But if you spent any time during the Expo season using our transit system, and if you took the opportunity to talk to any of the tourists using the system, you would have been absolutely convinced, and you would feel the same way that those involved with the transit system feel: that we do have the best system in North America, without question.
Now on the Vancouver Regional Transit Commission we have Mayor Don Ross of Surrey; we have Mayor Gil Blair of Richmond; we have Mayor Gordon Campbell of the city of Vancouver, along with Alderman Phillip Owen; we have Mayor Donald Lanskail from West Vancouver; we have Mayor David Driscoll of Port Moody; and we have Mayor Thomas Baker of New Westminster.
The Victoria Regional Transit Commission is made up of Alderman Frank Carson of Victoria, Alderman Coell of Victoria, Mayor Howard Sturrock of Saanich, Mayor Hill of Esquimalt, Director R. Nestman of Sooke, Mayor Gretchin Brewin of Victoria and Mayor Norma Sealey of Sidney.
MR. CASHORE: I would certainly take exception to the statement that we have the best integrated transit system in North America. I would like to hear chapter and verse cited on that. Anyone who has travelled on the system in Toronto would say that it's vastly superior. We have people who are travelling from Coquitlam trying to get into Vancouver, but because of the location of SkyTrain and the way it's set up now in order to rationalize the political planning that has been done, they have to travel in a direction parallel to where they want to go in order to get over to the SkyTrain. The service has deteriorated.
The member for Vancouver South may think that's quite funny, but it's not funny to people in Coquitlam and the area out there who find that the service has deteriorated. I can't think of any responsible public official or politician who would advocate that, yet that is what has happened. Statistics have been given by the member for Surrey-Guildford Whalley (Ms. Smallwood) showing that the ridership has decreased.
We also have the situation that this regional transit commission is taking the flak for the political mistakes that have been made by this government, and those people have been put in an impossible figurehead situation. Until we have a comprehensive transit plan for the region that takes planning seriously, we're going to continue to have the type of divide-and-conquer thing where we find different municipalities in conflict with each other. It's a conflict that's created by the inadequacy of the planning that's done, by the political interference of this Social Credit government in terms of transit matters in the lower mainland.
I think this is a very serious situation. I just want to say that with regard to the number of times I have appeared before the regional transit commission and have had to deal with the bizarre situation of the regional transit levy, which I believe the minister should assure us, since it's an unfair levy, that she would remove altogether from the hydro bill.... We've heard from students who have to deal with these increases at the fare box, knowing that the maximum student loan is limited. Yet some students have to pay over $800 during an eight-month term.
MR. CASHORE: Again the member for Vancouver South doesn't seem to care about students, because perhaps he didn't have to worry about transit when he was trying to get an education.
This government says that young people should get out there and make it for themselves, and even in the transit system, roadblocks are being put in their way to make this very difficult for them. I'll leave it at that.
MADAM CHAIRMAN: The hon. member for Esquimalt-Port Renfrew.
MR. SIHOTA: I want to thank the member for Vancouver South for that applause. I appreciate that.
MR. SIHOTA: You will get some bright thought now, as you usually do, from Esquimalt-Port Renfrew.
MR. SIHOTA: I didn't hear what the Provincial Secretary (Hon. Mr. Veitch) had to say, but I'm sure it was complimentary, as he usually is.
I want to move to more traditional municipal matters, to take us away from Toronto and bring us to an area of the province that's not too far from the steps of the Legislature: the Western Community. For the benefit of the minister — and she probably knows — the Western Community is that portion of my riding that is west of the municipality of Esquimalt.
The minister probably is aware of the fact that for some time now, or until very recently, that has been the largest unincorporated urbanized area in the province. I believe it still is — or it's very close to it, if it's not. We've recently seen the incorporation of the municipalities of Colwood and Metchosin in that region, and I think it's fair to say that both the municipalities have had their share of growing pains.
I think it's also fair to say that they're doing remarkably well and that, talking to the municipal representatives on
[ Page 2348 ]
those councils, the relationship and communication between the ministry and those municipalities and the unincorporated areas of Langford, View Royal and Sooke have been very good. I must applaud the minister and her staff for that, because that's a universal statement that I've been getting when I meet with those officials.
MR. BLENCOE: However....
MR. SIHOTA: However, I want to very quickly canvass what I view as the emerging municipal issues in that growing area, because I know that they are going to be issues that will occupy the mind of the minister, I hope, and the officials in time to come.
If I were to crystal-ball it a bit, I would think that, particularly in Langford and Colwood, we are going to be seeing in the next few years major problems and a major push to have the area sewered properly. Right now the entire Langford-Colwood region is serviced by septic tanks, and we've had phenomenal growth in the area.
We also have a very significant amount of bedrock in the area, and we're now beginning to find that the septic tanks just aren't doing the job. We're beginning to see development higher up, particularly in areas such as Triangle Mountain. The runoff going down the mountain and then hitting the homes at the foot of the mountain, which is going to accumulate the water, then goes down the drainage dikes and tends to smell up the whole neighbourhood to the point that it is the number one municipal problem that I and the regional directors and the municipal councils have in the area right now, to the point where prior to being elected as a member of the Legislature I was engaged in a couple of lawsuits against the Capital Regional District for improper enforcement of regulations dealing with septic tanks — cases that are still headed towards the courts and that, of course, have an effect on municipal liability and all that kind of stuff, if one looks at it. And they're scheduled to be in court next year.
Today — if I can bring it right up to date — we have a decision being made by the Capital Regional District not to construct a 75-unit intermediate-care facility in a particular site in the Western Community because of problems with effluent and septic tanks and sewering. And that's unfortunate, because the Minister of Health (Hon. Mr. Dueck) and I have been working together very much, trying to bring about the construction of that facility. Fortunately we've identified another site that will work, but if that hadn't happened, we would have been short of that much-needed facility as well in the Langford-Colwood area.
If I look down the road, it seems to me that we're going to have to have greater contribution and commitment from the province with respect to the provision of sewers in the Western Community. I view that as part of an overall municipal infrastructure program, and I'm sure every other MLA will say the same. But I truly mean this, given the unusual nature of the Western Community — its unprecedented size, its rate of growth and its currently unincorporated status. I cannot think of another region in the province that would benefit more from a comprehensive municipal infrastructure program. That aside, I know there are provincial programs for the assistance of municipalities to encourage them to get into proper sewage programs. I'm wondering if the minister could tell me what the criteria are for funding sewer programs.
HON. MRS. JOHNSTON: There are a number of ways in which the program is approached. Generally, I guess the bad news is that it's on a 75-25 percent sharing, with the province picking up 25 percent. In rare, very serious circumstances generally pertaining to smaller communities that have a very, very low tax base, we've been able to go as high as 50 percent, and that is a new program we introduced this year.
But if the information that my deputy recalls is accurate, we're looking at a sizeable amount of money for the services in that area. I would hope that we may be successful in bringing about the introduction of the federal-provincial local infrastructure program. There is a ministers' conference in August, which I understand has this very high on the priority list. If we are able to convince the federal government that they should be participating in these types of programs, the chances for putting together assistance for your community will be far greater. But it's a substantial amount of money. And it appears, if what you've said is correct, that it's a situation that can't be ignored.
[Mr. R. Fraser in the chair.]
MR. SIHOTA: Mr. Chairman, it's a great pleasure to see you in the chair — so you can't heckle. [Laughter.]
There is no doubt that this will become the emerging issue in the Western Community; it's already a horrendous problem. We have people right now who are buying homes and after six or eight months discover that their septic fields aren't working. We have developers who aren't properly building septic tanks to CRD standards. We have regulations that aren't being enforced. We have court cases going on with respect to the problems with effluent running off from other areas into neighbourhoods. We have the diminishment of property values.
We now have the introduction of an additional property tax of about 22 percent on unincorporated areas, pursuant to the budget, so the people living in unincorporated areas are going to be paying tax rates equivalent to those of municipally incorporated areas but not receiving the same services. Of course, they were willing to do that in the past, but now, with the introduction of the budget measures, that's also a factor.
Because of the quantum of money that's involved in bringing about a comprehensive sewer type of a program in the Western Community, particularly in Colwood and Langford, the tax bill for the average residential taxpayer — I haven't calculated it — is going to skyrocket incredibly, which makes it politically difficult, if not impossible, for municipalities to move in that direction, because they know that the whole issue is going to boomerang back at them when residents get hit with those property taxes. It is a problem unique in the province, I would submit, in that area, simply because of the unprecedented level of urbanization in the Western Community that has gone on without incorporation. We can see areas such as View Royal moving in that direction without much difficulty, because it's a compact enough municipality, but Langford and Colwood are a different story.
I agree with the minister when she says that the federal-municipal-local program is certainly a step in the right direction, and I hope as much as everybody else does that that works out. In the Western Community we not only have a sewer problem; we have Bilston Creek, which is stopping development in the Western Community because of annual flooding. They've had to have a moratorium on development
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around that whole creek, which is a natural area for development. I know the minister's assistant knows all about the problems.
We have Sooke, where we can't get clean water for half the year — that's a bit of an exaggeration; for a quarter to a third of the year — because all of the water from the Sooke Lake area is being diverted into the city of Victoria, and the water for Sooke is coming from the existing creek, and there's no pipe that runs through there that allows clean water to run along Charters creek and into the main Sooke stream. Then we have the need to upgrade the whole Sooke water system program as it is, because the people who are involved in the fire department will tell you, and it is universally accepted, that there's not enough pressure in the current water system in Sooke to deal with fires.
So we have all of that, and my mind speaks, of course, for the establishment of an appropriate municipal and construction program. I'm not criticizing the government by saying that it is not doing enough, but what I am saying is that that 75-25 formula is of help and not of help, if you know what I mean. The 25 percent contribution is certainly not significant enough to offset the phenomenal impact that a proper sewering program will have on residential property taxes — or all property taxes, for that matter. So there has to be a recognition with respect to these communities, on the part of the ministry, to provide for greater assistance than the 75-25. I know my colleague from Victoria, the critic, will talk about an increase of that 75-25 formula right across the province, and I would concur with those comments. That may have to wait until we form the next government, but in the interim....
AN HON. MEMBER: We can't wait.
MR. SIHOTA: I'm not sure if the people of the Western Community are prepared to wait three years either, but they may have to.
I am quite prepared to sit down with the minister, because I think, in part, I can be criticized for not discussing this privately and getting together all the municipal officials and coming to the minister, but we'll get around to that. I want to put the minister on notice of that problem, and I want to urge the minister to begin to look at the provision of additional funds for that area of the province. If you don't, you will have an incredible problem on your hands. I send that out as a warning. I trust the minister is prepared to give some special consideration to the Western Community.
SOME HON. MEMBERS: Hear, hear!
HON. MRS. JOHNSTON: How could I argue with any of the points that you've made, hon. member? I don't disagree with any of the statements, and certainly it's a matter of funding. I would rather the 25-75 be 75-25, as it was a few years back. It allowed a good number of municipalities to do the works that were required in their communities.
You specifically mention the Western Community. I can assure you the Western Community is not alone, as far as having this type of problem. You can travel throughout the province and come across a lot of smaller communities that have similar problems. That is why we provided for flexibility in our formula this year that allowed us to go up to 50 percent. But it comes right down to the bottom line, and it's the amount of money that is provided that we try to share with communities across the province that is giving us the problem. You know, if we had an unlimited supply of money, there would be no problem.
But you obviously have a serious situation in your community. I believe, Mr. Member, that it would be a good idea for us to sit down and determine how it can best be addressed. There are a number of ways that we could address that problem, and I would be pleased to sit down and talk them over with you.
MR. CHAIRMAN: Shall vote 48....? The member for Esquimalt-Port Renfrew.
MR. SIHOTA: Mr. Chairman, I said all sorts of nice things about you last time, and here you are anxious to pass this vote.
MR. BLENCOE: But we all make mistakes.
MR. SIHOTA: We all make mistakes, as the member for Victoria says.
I want to thank the minister for those comments. I think you have begun to take a look at something better than what I call the Rutland formula for 50 percent, because I think we have to move on that.
MR. BLENCOE: What riding is that in?
MR. SIHOTA: Not mine; it isn't in my riding. Last time I looked, Rutland wasn't part of Esquimalt.
So I want to thank the minister for those comments, and I appreciate that there is a tension in the sense that various municipalities are competing for those funds.
I want to end by asking again the same question I opened with: what are the criteria for the allocation of those funds? How do you decide between competing municipalities?
HON. MRS. JOHNSTON: The number one concern is health. That's where it starts.
MR. ROSE: I would like to ask a question of the minister for which she's had no warning at all. It's not a skill-testing question.
It has to do with the inability, because of a court case, of the Assessment Authority to tax dry kilns. These huge structures are worth millions. We're continuously, over the past few years, adding to the load placed on the property taxes of the homeowner. The machinery and industrial tax base — at least for educational purposes — has been taken from the local boards, but that's an aside.
I don't know whether the minister was aware that these things are no longer taxable as a result of a court case in 1979. The reason they're not taxable is that Justice Meredith ruled that the board had misapplied the definition of a "machine" and a "building." He says that essentially, although these kilns really look like buildings — they're made of wood, and they're quite tall and expensive — they're really machinery. The reason they're machinery is that they pass the test as to whether or not they are removable, whether they could be removed without serious injury to the freehold. I guess a castle which was moved from downtown Vancouver out to Richmond would then be considered machinery on the basis
[ Page 2350 ]
of that definition. I guess I could move my house without serious injury to my freehold.
So we are losing thousands of dollars of assessment because of this wrinkle. I wanted to know if the minister would take it on notice, or if her deputy was aware of this problem. What legislative means was being contemplated? Because this is a rat hole; this is a loophole. These mills have won the golden loophole award. There's nothing that the local assessment authority can do to try to capture this money, because of some oversight or some dumb move that would take a building and say it's not a building.
HON. MRS. JOHNSTON: Before I respond, I would like to recognize my deputy minister, Chris Woodward, who has assured me he will look into the situation. Hon. member, we were not aware of that specific problem. I would suggest that it is an item that should be discussed between my ministry and the Minister of Finance (Hon. Mr. Couvelier).
MR. ROSE: I know the minister will be anxious to have this problem solved immediately, but I wonder if she could assure the House that this bill, which will correct this little fault, won't come down this summer.
AN HON. MEMBER: Do you want it?
MR. ROSE: Not that fast.
MR. BLENCOE: We will now continue with the official components of the Municipal Affairs debate. We will take it until about 10 o'clock tonight. I joke — 10 o'clock tomorrow.
When I concluded the start of these estimates, I talked in a general philosophical sense about the future of local government and where it should be going. I suspect the minister will not wish to respond to that, or she hasn't indicated that she wishes to, but I would hope that those remarks will be looked at and thought about, and that we can in the next few years start to approach the future of local governments — starting at base one, I hope, and doing some fundamental analysis of the relationships between provincial and municipal government.
I wish in the next few hours today to spend some time on some issues specific to local government, and I will proceed logically, but not alphabetically.
First, the member for Esquimalt-Port Renfrew (Mr. Sihota) was talking about sewer and water grants to local governments, and I think I might as well start there, with the S's. The minister made an announcement on April 23, 1987 — somewhat of a grand announcement — talking about the marvellous things and the amount of money she was going to give to local government for sewer and water systems, and saying that British Columbia has one of the finest municipal infrastructures in Canada, and that these grants will improve and maintain it at peak levels. Well, with all respect to the minister, there's a lot of flower here, but I have to tell you that we aren't at peak level in British Columbia. We have some real problems.
Over the last few years the cutbacks in support for local government and the change in the formula for sewer grants have created real concern for local government. My friend from Esquimalt-Port Renfrew talked about his area. I could, but I won't, because of the time of the year we are in now in this Legislature and in the debates. But I could give the minister all sorts of evidence, and I think she knows the evidence of local municipalities that are in trouble and requiring crisis assistance, in many respects, for sewer and water systems.
I would point out that this announcement saying that $6.8 million will be spent on sewer and water systems actually showed a reduction over 1986-87. In 1986-87 we had approximately $6.9 million, and the minister, despite her grand announcement of all this money for the best system in Canada, reduced the amount of money for sewer and water grants. I just have to put it on record that unless this government starts to tackle the problem of sewer and water and underground services in our municipalities, we're going to have nothing but trouble.
Every year I remind this government that they only have to look south of the border, where senior government has abandoned maintaining its infrastructure, and at the literally billions of dollars that are now having to be spent in the United States to maintain, upgrade and build anew those services, because the governments of the day said they would put it off and put it off and do what this government has been doing over the last few years: cut back that essential kind of support for local government.
I have said many times in this House that local government has to have a far higher priority in the scale of things in terms of support by the provincial government. It always seems to be the last ministry to get major funding increases. Quite frankly, when I see where other money is going — and we had it in question period today, where we saw the squandering of close to $1 million on parties in Vancouver — I can't believe the priorities of this government. Local government and their needs must achieve a higher priority.
It has been documented that without that support and without those communities being healthy in terms of their basic infrastructure, economic growth won't continue. We won't get it. The member for Esquimalt-Port Renfrew talks about his community; what's happening is that he can't get any growth in his community because of the lack of services or expansion of sewer and water systems. We've got to turn our attention to these issues. I know it's boring stuff, Mr. Chairman; no one wants to talk about sewers and water and underground services. But without those things being maintained and expanded, our communities won't grow and economic development won't happen, because the captains of industry.... They do; they take a look to see what the longevity is of those systems. If they see they're not being maintained, industry stays away. That's one of the major criteria. You can take a look at all the studies that are done.
So I really have to say to the minister, and maybe she will respond, that I really wish you — through you, Mr. Chairman — would fight harder for your ministry. Because an announcement like this, when you're actually cutting the amount of money for sewer and water systems.... We have been calling for major expansion of municipal infrastructure programs. The job creation that can be generated by it, and also the follow-up for economic development by expanding areas in industrial development — that sort of thing can happen — is clearly there; it has been seen in other jurisdictions.
So I really wish I could have some evidence that through your stewardship of this ministry we're going to see you fight a little harder for these essential ingredients for local government. You've cut the support for sewer and water systems.
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We've got to have a return to the formula that was in place for a number of years, where 75 percent of the expansion for sewer and water systems was paid by the provincial government and 25 percent was paid by the local government. Overnight that formula was altered to 25 percent from the province and 75 percent from the municipality.
What has happened is that local governments, because their sources of revenue are being cut — all sorts of provincial cutbacks and financial limitations have been placed on them — are not doing the things they have to do. Every year I bring this issue up. I'm just saying to the new minister and to the government that it's at your peril that you don't ensure that those basic ingredients of local government are maintained not only for the actual municipality, in terms of those services, but for the municipality's ability to attract growth and investment and economic opportunities. Every study, every captain of industry, will tell you that those ingredients are essential for growth, and I hope you fight a little harder in the future, Madam Minister.
HON. MRS. JOHNSTON: Again, I can't argue with your comments, and I'm very pleased to hear them. I can assure you that I place a very great importance on this particular ministry and the services that it is expected to provide. I would like to clarify one point, though. The $6 million to $7 million that has been provided in the program for capital grants certainly has a multiplier of four, so we're looking at $24 million in capital being spent in the province. You should also look further in the budget, and you'll realize that approximately $105 million is spent on debt charges by the province on recently installed sewer and water programs in the communities. So we're looking at a total of approximately $110 million.
Further to that, you will recall that there was an increase of $5 million in our unconditional grant program up to $100 million, and the requests for those types of grants from the local communities — for increases in that area whereby they are permitted to utilize the money in any way they see fit — continue to increase. It comes down to the bottom line again, but I'm pleased to assure you that I agree with you. If there was more money, I would be very pleased to see a better cost-sharing formula, and would be delighted to have further funds to advance to the municipalities. I think it's very important that we provide them with as much assistance as we can.
MR. BLENCOE: I'll leave this grant system in a minute, but the minister refers, I assume, to the unconditional component that you're increasing. I would point out to the minister — and I have the figures in front of me — that the 1987 figures have just reached the 1982 levels. This government has cut back so dramatically that we're back to '82 levels. I'd also point out that in 1981, $162 million was given unconditionally, and we're only now back up to $100 million unconditionally. You're back at '82 levels.
I don't believe that this government really supports local government. I think it's basically rhetoric. Something has got to be done about it, because their services are in deep trouble.
I want to move to the issue of resource towns, or one-industry towns, and their assessment problems. What is the minister doing about that? The minister knows what the issue is. I don't have to go into detail; as you know, there have been all sorts of assessment rollbacks. Some communities, like Powell River and Kitimat and Sparwood, have really seen a dramatic cut in assessments for major industrial properties, and there are many others. It's ongoing, and many appeals are still pending.
I indicated to the former minister that some emergency program or something is needed to deal with this. I don't completely accept the principle that because the private sector of those industrial properties can get their properties reduced in such a dramatic way, they should automatically abandon the communities that they have extracted resources from and extracted people's work and usefulness in their working lives for many years. Suddenly, because of the real estate market, they can virtually abandon many communities. Frankly, what it is doing is putting many communities in bankruptcy. I know many of them would give their communities up for a dollar, because they can't continue to afford to maintain them.
I believe that those corporations that are getting massive rollbacks have some responsibilities to those communities, and I think there should be some statement by the provincial government that they are prepared to deal with this. People's lives are at stake; whole towns are at stake. I think many members on both sides of the House know about this issue, and we can't sit back and say that that's a fact of life and that's the way assessments go and that's what happened to real estate when we're dealing with people's lives.
I've asked for nearly two years for some kind of program. I've suggested some ways to deal with it. Perhaps the minister can tell us what she is doing about it.
HON. MRS. JOHNSTON: I would like to clarify the statement made by the member opposite with regard to the reduction in revenue-sharing. Revenue-sharing is exactly what it says: revenue-sharing. When the revenue is down, we have less revenue to share. I believe the hon. member understands that. It should be made very clear that the province is obviously on an upturn, and the revenue will continue to increase.
You realize that there are many factors that make up the total amount of money that is in our revenue-sharing fund. One of them, of course, is the sales tax. The fact that we had a 1 percent reduction in sales tax this year is going to very dramatically affect the portion given to Municipal Affairs for revenue-sharing. Whenever we reduce in one area, we have to realize that there are going to be ripple effects in others.
The problems faced by one-industry towns are of great concern to this ministry. I can assure you that there aren't any in bankruptcy at this particular time, but there are several that we have had to aid financially because of the problems they were facing. The situation is serious in several communities, and it's an ongoing matter of discussion in this ministry. We have come forward with financial aid for some communities that would not otherwise get by. I don't know what you mean by a "program," hon. member. I think that situations that arise in these one-industry towns are all so individual that we couldn't really have a general program that would respond to the needs of these communities. I believe they have to be handled on an individual basis, and that is the way the ministry is handling them.
MR. BLENCOE: Mr. Chairman, it's my understanding that a fiscal safety program was promised for the communities threatened by shutdown. The Premier even addressed this during the campaign. We certainly haven't seen any major statements or program to deal with these communities
[ Page 2352 ]
and the people who live there and their livelihoods. Does the minister think it is totally fair that these corporations that are so far being allowed to get major reductions in their assessment, and therefore major reductions in their taxes? Or should those corporations, during these difficult times, pay their share to help those communities in trouble?
HON. MRS. JOHNSTON: In our legislation we have attempted to address that problem by way of the variable tax rate that is now given to the regional districts. This allows the communities to make up, by way of their tax rate, any losses that may be incurred because of a reduction in the assessment. But we have also, with the new formula that has been produced regarding the distribution of the revenue-sharing dollars, attempted to address the problems in some of these smaller communities that have falling assessment rates. As well as some of the direct financial assistance that we have been giving, the new formula is an attempt to assist. But the variable tax rate is supposed to go at least a small way toward helping out.
MR. BLENCOE: I know the minister means well and is trying to defend her position and her government, but the variable mill rate is just a tinkering with a system. That's all it is.
Let me get back to the point that one day this whole.... The issue that I'm talking about this afternoon in terms of resource towns brings home again the issue that I was talking about yesterday: that we've got to start looking at the whole fiscal security system for local government. We can't continue like this. These communities cannot be part of the boom and bust. You've got lives and families at stake. Unless this government addresses the things I talked about yesterday in terms of looking at formulas that can address these issues, and a sharing by local government of the progressive tax systems.... When local government sees the sort of thing that they've been seeing in the last few weeks by the Minister of Economic Development, where money can be spent by the provincial government, you've got to wonder what the priorities are.
I think the priorities have to change. We've been talking about these kinds of financial problems with local government for a long time. It's time we started to say that tinkering here, or moving the rate 10 or 15 percent in terms of how much industry pays or whatever, is not going to solve the problem. We have to take a look at the fundamental fiscal problems of local government. I wish the minister and this government would address that issue. I've said that our party would participate in the standing committee — any kind of constructive mechanism so that we can start to look at this kind of issue on a long-term basis. Unfortunately, the government continues trying to put it under the carpet and say that maybe it will go away and the economy will pick up again. But it will always come back, and we have to start to tackle it.
Let me move to another issue, one I've discovered in the auditor-general's report, March 1987.
MR. BLENCOE: Yes, I understand, but I would like to get some explanation.
There are overpayments of sewerage assistance and water facility grants. Not only are we not giving enough sewerage and water facility grants in this province — there is a great shortfall, and cutbacks — but the auditor-general reports that:
"...inadequate claims verification was found to have resulted in grant overpayments amounting to $468,000 in the Ministry of Municipal Affairs. Our regular audit review of grants paid in the 1986 fiscal year disclosed one overpayment of $203,000. Subsequent reviews in conjunction with ministry personnel found nine smaller overpayments, totalling $62,000. A further check of grants paid in previous years disclosed an additional $203,000 in payment errors."
I wonder if the minister can tell this House exactly what happened, what has been done. The auditor-general says some things are in the works, but perhaps the minister can explain some of these things. When local government sees that sort of thing happening, they have to wonder why they're not getting sewer and water grants.
HON. MRS. JOHNSTON: The matter was discussed, of course, at the public accounts committee, and inasmuch as it was a very complex situation and an awful lot of money and transactions were involved, it was determined that in some cases the procedure wasn't properly handled. The procedure has been tightened up, has been corrected and adjusted, and is now being carried out to the satisfaction of the auditor-general.
I would like to speak on the so-called suggestion that we are sort of tinkering with the municipalities, Mr. Chairman. It seems to me that, reading between the lines of what the member opposite is bringing forward, the suggestion is being made that we become — as a senior level of government — far more involved in the day-to-day operation of the local communities than what we are attempting to do.
We are attempting to decentralize. We are attempting to allow them full autonomy to deal with their own problems and to plan their own communities. Short of having a truck we can shovel money out of every time we go through a community, I don't think we can address the operations of the municipalities much better than we are. It would be great if we had more money, but as to becoming more involved in how the local communities handle their affairs, I hope that as long as I'm in this ministry, we will continue on the decentralization theme, rather than become so embroiled in the local day-to-day operation that nothing is ever accomplished, and the costs are going to skyrocket.
MR. BLENCOE: It's obvious the minister, either on purpose or just naively, missed the whole intention of my presentation yesterday. What I was saying to the minister was that if you're going to carry out decentralization in a proper way, with real devolution of power, you have to look at the ability of local government to pay for that devolution of power. I don't know if you can grasp that. Otherwise local government will continue to be strapped to pay for the services they currently have, never mind other kinds of things they wish to take on under decentralization.
Local government is very apprehensive at the moment, despite the one or two executive members of the UBCM who are encouraged. I can tell you, at the grassroot level — the local level — there is concern about the current discussions of decentralization without discussing the fiscal framework that will pay for those decentralization discussions.
On the contrary, Mr. Chairman, it's this side of the House that has spent a lot of time, certainly in the last few years,
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looking at how this province can govern itself based on the regions of this province. They have some differences that they wish to put forward in a real sense at all levels of government. But I will leave that issue for another day.
I want to ask the minister to go back to the auditor-general’s report, because I think it's very important. I hope we're not going to find any other slips, but $468,000 was a problem. It says here that written policies and procedures are currently in draft form, but these have not been formally adopted. I'm wondering if those written policies are now available.
HON. MRS. JOHNSTON: They are available, Mr. Chairman.
MR. BLENCOE: Mr. Chairman, I'm just wondering if I could get copies of those policies to see how they work and what exactly has been tightened up. I'll leave that. I just wanted to bring that up because when our side of the House sees such overpayment — $468,000 — we obviously have to ask some questions. I recognize that it looks like the money has been recovered, and things are in place to deal with it.
Mr. Chairman, I want to move on to another topic that has been around for many years: the whole question of business development areas. I know my community has been talking about the request for legislation or some mechanism that would allow business improvement areas. It needs an amendment to the Municipal Act to provide enabling legislation for these areas to be proclaimed. Are we going to see that very soon?
HON. MRS. JOHNSTON: Of course, this does presume on what may be coming at a later date, but I would think that about the middle of August I should be ready to bring that forward.
I'm just being facetious. I support that idea, and we're looking at it very seriously.
MR. BLENCOE: I'll look forward to seeing that, then.
There are a couple of other things I want to talk about. Maybe the minister could give me an update on the Partners in Enterprise program, how many jobs have been created, how many industries have come to town and the great success that was supposed to come from Partners in Enterprise. Can we have a report?
HON. MRS. JOHNSTON: I don't have it with me, but we would be pleased to provide you with a copy of the report updated, hon. member.
MR. BLENCOE: I'm very surprised. If this program was such a great success, the minister would have it right there. I noticed in her introduction that there was no mention of the Partners in Enterprise program. Just as we expected, it is just a PR number prior to an election; but I will look forward to the report.
We have to say again that programs that require local government to forgo taxes are no solution to municipal government problems; we need to take a look at programs where the funding and the financing is up front. We knew, although we supported it, that this program would not be the success that the government said it would be.
Basically, unless other systems are healthy, industry will not come to a community. One of the things I already talked about is the infrastructure programs and infrastructure in municipalities. But other things have to be in place, and in the last few years under the Social Credit administration so many other things have been hurt in this province that that's the basic reason investment won't come. Any tax giveaway is not going to do it for you. You can have all the grandiose announcements and glitz and glamour, but it isn't going to work, and one day this government is going to recognize that.
I'd like also to ask about regional planning. As we all know, Mr. Chairman, a few years ago the regional planning component was cancelled in an arbitrary way. I won't go into the background or the details. The former minister talked about or had some plan. I forget how he addressed it, but he was going to replace regional planning by computer planning or something. I forget what he called it.
Given that we've had a few years of vacuum with no regional planning in the province of British Columbia, I still happen to believe, and I think other people believe, that there is a need, particularly in urban areas which are contiguous municipalities, for regional planning. I'm wondering if the minister can tell us what's happening in that area and how regions in some of these critical areas are discussing major issues and planning for them jointly.
HON. MRS. JOHNSTON: The regional planning proposition is available to the members of a regional district on an optional basis. They have a choice; it's not something that ultimately they must belong to. I had hoped it would be ready for this session, but we will shortly be preparing legislation for incorporating changes to the regional district function, and that will be one of the items that will be looked at very seriously.
MR. BLENCOE: I could spend a lot of time on regional planning, but I will leave it there; the minister says that some things are being looked at. I will be pleased to learn about them and discuss them at another time with her.
A longtime irritation for local government has been the cost of policing. I know it is shared partially with the Attorney-General (Hon. B.R. Smith), but obviously the minister as the Minister of Municipal Affairs does deal with this and hears about this issue. In many communities it's having a dramatic effect on their ability to budget adequately and deal with their financial problems. It seems that one of these days we have to take a look at greater provincial support for policing costs in the province of British Columbia.
I'm not going to go into the half-hour speech about how we could fund policing, but I'm wondering if the minister, in conjunction with the Attorney-General, is looking at this ongoing problem, because it's mounting. Costs are increasing, and many municipalities are just finding it a real problem. Has the minister any comments on that?
HON. MRS. JOHNSTON: Yes, Mr. Chairman. There is a policing task force working in cooperation with the decentralization committee, and I would expect that when their findings are made known to us, the Attorney-General and our ministry will attempt to address them.
MR. BLENCOE: I just wonder if the minister would go on the record in recognizing that policing is an issue we have to deal with, and that she would hope we could find some
[ Page 2354 ]
funding formula for some of these communities that are facing horrendous policing costs.
HON. MRS. JOHNSTON: Mr. Chairman, I don't think I'm in a position to make a commitment, other than to agree that it is a problem in a lot of smaller communities.
MR. BLENCOE: Mr. Chairman, I spent a lot of time on the ability of local government to pay for their services. I'm not going to go on and repeat them.
It's on the order paper, and I know I shouldn't be referring to it, but I have suggested — again, work for the select standing committee — that this year — and the minister will have heard about it — many municipalities have to raise their taxes quite dramatically in some communities. I think there are a number of reasons for that, but I have suggested that there should be an all-party review of that property tax problem. I have a motion on the order paper.
I'm wondering if the minister will agree that very soon there should be some work done on taking a look at some of these property tax problems that are faced by local government, and that all of us on both sides of the House have to try to come up with some answers other than fighting over revenue-sharing and those sorts of things.
HON. MRS. JOHNSTON: Mr. Chairman, I really haven't given that specific matter any thought, and I would be pleased to talk to the hon. member and listen to his suggestions. But I can't honestly say that I have a position on that, because it seems to me that if we move along the way we have been, in an attempt to work very closely with the communities, we're staying very much ahead of the problems that most of them are having.
If there are some specifics you feel we should be addressing that we aren't, I would be pleased to discuss them with you.
MR. BLENCOE: Could the minister tell me and the House whether your staff is looking into alternatives to real property tax? Is there any review of other jurisdictions and how they are trying to tackle the funding for local government? I refer to the United Kingdom study that has just been completed, "Paying for Local Government."
MR. WILLIAMS: They had a poll tax, a head tax. Not Margaret Thatcher?
MR. BLENCOE: No, this is a different report. Is there any work being done in that area?
HON. MRS. JOHNSTON: I am advised by the staff that they are constantly searching for ways of alleviating some of the financial problems in the various communities, but it's not a specific....
MR. WILLIAMS: What a treadmill that must be.
HON. MRS. JOHNSTON: I could respond to that, hon. member, but maybe I'd better not.
The matter is certainly one that has the attention of the ministry.
MR. BLENCOE: It should go on record that the latest announcement by Mrs. Thatcher certainly wouldn't get much support on this side of the House. The study that I'm referring to do was basically an analysis of the problem of the rates in the U.K. It was done in January 1986, and I think it's a fairly good analysis of some of the problems they face and issues they are trying to grapple with.
MR. WILLIAMS: The real potential of property tax.
MR. BLENCOE: We'll discuss that later, Mr. Member.
I want to talk about elections at the local level. I know we've had a dramatic change — not dramatic, but some change — with a bill that's about to receive committee reading later on today, I hope.
MR. BLENCOE: I'm not going to talk about that, Mr. Member. I'm going to ask about some other issues in municipal elections.
I'm glad to see that the Minister of Energy (Hon. Mr. Davis) has finally got some energy. I haven't heard him speak in this House in five months. Perhaps he'll get up and give us some of his renditions of the good old days and how he's doing in Energy, but I suspect we might hear from him very soon when he does his estimates. He'll have to present his ideas to this House then.
Let's go back to municipal elections. The minister has changed.... We've gone to a three-year tem. But I wonder if the minister has given some consideration.... I would like to suggest today that we need to take a more in-depth look at how municipal elections are conducted. One of the things of concern to me and I think of general concern to the electorate is that we have no controls on spending for municipal elections — absolutely none. It's wide open, with no controls, no disclosure, no public statement about who is supporting various candidates. I would like to see some discussion, and I'd like to see some conflict-of-interest legislation that goes beyond what we have now, to require a candidate for office to....
MR. CHAIRMAN: Mr. Member, I think it would be reasonable of me to suggest that the Committee of Supply is not the place to discuss this subject. Legislation in general is not the business of the Committee of Supply.
MR. BLENCOE: Mr. Chairman, I'm not talking about legislation; I'm talking about the problems of elections.
MR. CHAIRMAN: I was reminding you, and I'm glad you're taking heed.
MR. BLENCOE: I don't suspect we'll get legislation on this issue anyway from this government. But I am saying that for a long time there has been some concern that when people run for local office there are no limits to spending, for mayor or alderman or regional district, and that....
MR. CHAIRMAN: Mr. Member, sit down for one second. Kindly take your seat. With every respect, the Chair reminds the member that matters requiring legislation are not in order when discussing estimates.
MR. BLENCOE: Mr. Chairman, it seems to me that if I can't ask a question about how municipal elections are run, to
[ Page 2355 ]
the minister responsible in that area — and it's in the Municipal Act — we've got a problem. There's no problem with that. Has the minister reviewed or considered or looked at the question of putting limits on spending at the local level, and disclosure requirements for who donates to campaigns?
HON. MRS. JOHNSTON: Before I respond to that, I wonder if we could obtain a copy of this green report that you have from Britain, which you have been exhibiting for the past few days. It's interesting to know that you have a Conservative Party document that you're supporting, and it would be interesting for us to look at it.
I can assure the member that it is the ministry's intention to look at all aspects of municipal elections, and of course we have started with the legislation before the House today. But the subject suggested by the member never crossed my mind.
MR. BLENCOE: I want to leave that by saying I believe it is time we started to take a look at such disclosures. I know this government likes to have everything wide open, and the public don't have the right to know who is supporting certain candidates. I'd like to remind this government that at the federal level we have all sorts of requirements. The public has a right to know, particularly for local government, because we know that the issues local governments deal with, particularly in land use and zoning, where there's a lot to be made and a lot to be gained.... When people run for office, I think it would be very useful to know exactly who is supporting whom and how much is being spent. We need to take a look at spending limits.
MR. CHAIRMAN: Mr. Member, once again....
MR. BLENCOE: I will leave that issue for the time being and move to something else.
I want to ask the minister again about municipal elections. Something has come up from new Canadians and Canadians who don't always have a strong grasp of the English language. It's a little different in municipal elections. You often have so many candidates running that many people cannot identify them by name, because their knowledge of the language is limited. In provincial elections, of course, it's a little different, where people can recognize the party labels or the letters. I am wondering, Mr. Chairman, if the minister has had any complaints about this kind of problem.
MR. CHAIRMAN: Mr. Member, you are once again talking about a matter that requires legislation, which is out of order when you talk about a minister's estimates. That comes under a different category.
MR. BLENCOE: Mr. Chairman, I ask the minister a direct question: has she had any information passed to her about new Canadians voting in municipal elections? They sometimes have problems. Has this been reviewed by staff?
HON. MRS. JOHNSTON: I have had one piece of correspondence from one of your colleagues, and it has not been reviewed by staff.
MR. BLENCOE: I think it's something that should be looked at. I really do, because at the municipal level we're always talking about encouraging citizens to vote. When you have so many citizens running at municipal elections, it often is very difficult indeed for people, especially if their knowledge of the language is limited, to know exactly who is running. And there are jurisdictions that....
MR. CHAIRMAN: Mr. Member, just let me read from Sir Erskine May, where it says that "the administrative action of a department is open to debate, but the necessity for legislation in matters involving legislation cannot be discussed in the Committee of Supply." That is where we are.
MR. BLENCOE: Sorry, Mr. Chairman, I heard part of your reading, but I understand my colleague from Burnaby wishes to ask a question.
MR. JONES: I'd like to ask the minister about freedom of information at the municipal level. It is my understanding that when the current Premier was in that portfolio as Minister of Municipal Affairs, he was very strongly in favour of freedom of information as it applied to the municipal level; in particular, restricting the kinds of things that could be dealt with at in-camera meetings. I'm not exactly sure what transpired historically with that initiative of the then Minister of Municipal Affairs.
MR. CHAIRMAN: Mr. Member, I will read again for everyone the section from May, which says: "The administrative action of a department is open to debate, but the necessity for legislation in matters involving legislation cannot be discussed in the Committee of Supply."
The second member for Victoria, with a point of order.
MR. BLENCOE: Mr. Chairman, all the various things I've been talking about — revenue-sharing, the additions and numerous things I've tried to address — may require legislation. I've never had this kind of ruling before, and I can't believe that you'd get so picky about these kinds of issues.
MR. CHAIRMAN: Pardon me, Mr. Member. The Chair has allowed a certain amount of latitude, but there are times when members should be advised of the rules of the House.
The second member for Burnaby North on a point of order.
MR. JONES: Mr. Chairman, I'm a little disappointed that such narrow interpretations of the rules are being applied in this House.
MR. CHAIRMAN: I didn't write the rules; I'm just reading them to you. You should be learning them.
MR. JONES: Well, I think the Chair should be learning and not debating from the chair, and learning that there have been liberal interpretations....
MR. CHAIRMAN: Pardon me, Mr. Member. Take your place.
We're in Committee of Supply. I was advising the House of the rules, and I expect every member would wish to adhere to them. That's all the Chair was recommending and suggesting.
On a point of order, the first member for Victoria.
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MR. G. HANSON: Mr. Chairman, I have been listening to the rulings from the Chair for the last few minutes. The member is trying to canvass the estimates of the Minister of Municipal Affairs. He's not abusing his position, and I think you're being unduly restrictive. We're trying to expedite and get some answers from the minister, and I think the Chair is interfering. I would, with all due respect, ask the Chair to allow the member to proceed in the due process.
MR. CHAIRMAN: The member is entitled to canvass a minister's estimates.
MR. JONES: I may be a rookie in this House, but I have sat through a number of estimates. It seems to me that the operant behaviour in this House has been that if a minister chooses to respond to questions put by another member, then the Chair doesn't interfere. If the minister wants to answer or refuses to answer, I think she should be given that opportunity and shouldn't be interfered with from the Chair.
So I'll put my question again, and if the minister chooses not to answer it or if the Chair again wishes to interrupt debate in this House, I guess we'll carry on this way.
It's my understanding that in 1982 or 1983 the then Minister of Municipal Affairs, the now Premier, was interested in introducing freedom-of-information legislation at the municipal level.
MR. CHAIRMAN: I have advised the House on at least two occasions of the rules of the House. Why don't you canvass the action of the ministry involved, instead of talking about legislation? That is what we're doing in Committee of Supply.
MR. JONES: Can the minister advise this House if she is aware of any studies that have been done, particularly in the period 1982-83, to do with freedom of information and the things that can be discussed in camera by municipal councils in this province?
HON. MRS. JOHNSTON: No, I'm not aware of any.
MR. BLENCOE: It's ironic that when we start talking about conflict of interest and ensuring that the public has some scrutiny over local elections and who was spending money on local elections and who was supporting certain candidates, we get these weird rulings from the Chair.
I ask the minister again, through you, Mr. Chairman: are you doing any studies, or is your staff making any reports on the situation that exists in local government, that there are no cost controls or disclosures for candidates?
HON. MRS. JOHNSTON: The answer is no.
MR. BLENCOE: That's unfortunate, Mr. Chairman. We suggest that we're going to have to take a look at that. We think there's a requirement for that to happen. At the moment in this province, when you run for local election, it's totally wide-open. The spending is wide-open, and there is no requirement for a candidate.... By the way, I should indicate that this is our provincial policy as well, and we think it should happen municipally. When the candidates run, there should be ceilings set.
MR. CHAIRMAN: Mr. Member, you're talking legislation again.
MR. BLENCOE: And there should be disclosures....
MR. CHAIRMAN: Administrative action is what we're talking about, and that's what you should be talking about. You may resume.
MR. BLENCOE: Thank you, Mr. Chairman. I'll move on to another topic. Maybe we'll move on to another Chairman.
I want to talk a little bit about the Islands Trust. I know we're going to review the Islands Trust this summer, but I want to do this in the estimates. Our side of the House thinks that the review is extremely important. I think we should take a longer period of time to do this review and not rush it, as we feel we are being rushed at this point in time. There is no rush. It needs a lot of study, and there is a lot of concern that a lot of people will not be available for the hearings.
I want to bring this up now, because we haven't been getting any satisfactory answers on this issue. Will we get more time to do this review? Will you ensure that there is maximum participation by the members of this Legislature during this review?
HON. MRS. JOHNSTON: Mr. Chairman, the matter was referred by this House to the select standing committee. I certainly think it would be inappropriate for the Minister of Municipal Affairs to attempt to overturn that process.
MR. BLENCOE: Mr. Chairman, I am not asking the minister obviously to overturn the process, but I also indicate the minister did set the terms of reference for the time-line or the date, and it is certainly within her ability to discuss that with the majority on that committee. I really don't feel we should be rushing this review, which I get the feeling we're doing. I think there needs to be some slowdown in that process. However, I will leave that there and those remarks are on record.
I want to very quickly ask the minister about the Provincial Capital Commission. I have to say that the Provincial Capital Commission has done some good work in this community. I thanked the minister at the time and I thank her again now for inviting me to a meeting of the commission to discuss a number of issues. However, there are some issues in the public domain that I think we need to review this afternoon.
One of the concerns we on this side of the House have had for many, many years is how the commission does its business, and it continues to do all its business in private. It's doing important public business in private. My position is quite clear on this. The minister so far has had a hands-off approach, but I would remind the minister, as she knows, that this commission is a provincial statute. It is set up by the provincial government. Given the Premier's request for open government at all levels, or certainly at levels that this government has any influence upon — and the commission is one of them — I wonder if the minister has given any thought to looking at requesting or suggesting, or making it a requirement, that the commission start to do its business in public, particularly when it's dealing with sensitive public issues in greater Victoria.
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HON. MRS. JOHNSTON: The member did mention that we both had an opportunity to meet with members of the commission, and I am very satisfied with the way they operate. The largest percentage of their discussions revolves around property and personnel. I suggest, Mr. Chairman, that when the member opposite was an alderman in Victoria he would undoubtedly have agreed to discussing those types of matters in closed meetings. This is exactly what the Capital Commission is doing.
MR. BLENCOE: I have tried to be as nice as I could during these estimates, but the minister is aware that the issues we displayed at the council in camera were personnel and land matters. The commission is dealing with a lot more other issues than that, and making decisions like another ten-year extension for the wax museum without any discussion in the public forum as to how that building could be utilized in other ways than as a wax museum. The public has to find out through the back door how that decision was made.
I think there's something really wrong with that commission. You know and I know, Mr. Chairman, that the owner of that wax museum is a well-known friend of this government, and unbeknown to this community he gets a ten-year extension without any public discussion. It's totally unacceptable, and it's time that that commission started to do business in public. I recognize when you are purchasing public land or dealing with personnel issues, you may have to be in camera. But when that commission is dealing with public business and with public buildings in the public domain, it should be doing business in public.
HON. MRS. JOHNSTON: I am absolutely amazed at the statement that has just been uttered by the member opposite. He sat at the meeting with the Capital Commission members. He heard the entire background and the discussion that took place surrounding the wax museum and the possible lease extension, and he then comes out with the statement he has just uttered, which he knows to be completely less than honest. I ask the member to withdraw the statement.
MR. BLENCOE: Obviously the minister is.... I have made no promise not to discuss the wax museum. It is in the public domain. An agreement has been made, or an offer has been made to Mr. Lane, for an extension of that wax museum. And my understanding today is that that offer is going to stand, by the way. Again, the commission has not gone public, has not discussed that issue with the community. I'm not stating anything I did not state in that meeting, and I refuse to be caught up at the fact that I agreed to meet quietly and discuss these issues, not to talk about this issue publicly. I refuse to have that happen.
HON. MRS. JOHNSTON: Mr. Chairman, I'd like to clarify this statement. I did not state that the member opposite had broken a confidence. What I said was that the statement he made, which was a result of the meeting he attended, was inaccurate.
MR. BLENCOE: The minister is trying to cover up the issue by semantics. The issue is that this commission does its business in private. It is dealing with public issues and public land and public dollars — considerable dollars and amounts of land. It is time that it started to do its business in public. I am asking the minister to go on record. Does she agree with the commission doing its business in private, when many of the issues could be dealt with in public?
HON. MRS. JOHNSTON: I am satisfied with the way the commission operates.
Vote 48 approved.
[Mrs. Gran in the chair.]
On vote 49: ministry operations, $26,379,686.
MR. BLENCOE: I just want to ask some questions about the administration and support services under the operating costs of the ministry. I wonder if the minister could outline the reasons why the operating costs are going up over $200,000, and I'm wondering if the minister could let me know how much the building on Fort Street that houses most of Municipal Affairs actually costs the taxpayer in lease fees.
HON. MRS. JOHNSTON: I have to apologize to the member. I was not listening to the first part. Could you please repeat the question?
MR. BLENCOE: I'm taking a look at vote 49, administration and support services. Under that is operating costs. There is a $200,000 increase there. I would also like to have some answers on the building on Fort Street which houses most of the Municipal Affairs staff. The reason I ask is that some years ago my understanding was that there was some consideration of moving the Municipal Affairs staff to another building which would not have cost quite so much. It's a lovely building, and I know staff are happy there. I'm just wondering if there has since been any discussion about moving. How much does that building cost to lease?
HON. MRS. JOHNSTON: It appears that there are a lot of different items that are covered in the $200,000, and we would be pleased to get that breakdown for the member. We are paying $2.5 million for all the buildings that we occupy, and at this time that number is in excess of 50.
MR. BLENCOE: That's 50 buildings across the province? But you don't have a breakdown of the Fort Street lease.
HON. MRS. JOHNSTON: We'll get that for you.
Vote 49 approved.
On vote 50: municipal revenue-sharing, $231,000,000.
MR. BLENCOE: I just have one question. The revenue-sharing stabilization account was $3.9 million last year; this year it's $250,000. Is there a brief explanation?
HON. MRS. JOHNSTON: We have a goal for the stabilization budget, and that is the sum required to bring it up to a level determined to be acceptable — somewhere in the $30 million bracket.
MR. BLENCOE: I'm not quite sure that that is a clear answer.
[ Page 2358 ]
HON. MRS. JOHNSTON: A reserve. This has gone in to bring it up to an acceptable level.
MR. BLENCOE: A reserve.
Madam Chairman, I've got one other question under the downtown revitalization program. It looks like we're phasing out that program, unless the money has gone elsewhere. By my figures, last year there was a $900,000 expenditure; this year it is only a $250,000 expenditure. That's a very exciting program; it has been a very well-received one. I would hope those funds are going to show up elsewhere or there will be a topping up in future years.
HON. MRS. JOHNSTON: I support the program as well. The program was initially brought about in 1980 by our now Premier. The funds have run out. They have all gone to local government, and we are working to secure funding to replace this particular program, because it is such an important one in the province.
MR. BLENCOE: I notice the total account balance at the end of the fiscal year will be nil. I would hope that this program has been successful. Heritage revitalization is the sort of thing that is essential to my community and others. I would hope this fund and this program will come back, in a bigger and better way, if we can.
I would like to end my estimates by stating that I really feel there has to be a greater emphasis on local government, and although there have been some minor improvements in funding and programs, I think they have got to gain a higher priority with the entire government. I would hope the minister and others would go to bat a lot harder and seek greater support for local government. Over the last five years, it has really been hit hard, and despite what the minister says in trying to defend the cutbacks, the programs, the revenue-sharing and all those sorts of things, there are other ways to give support to local governments other than through revenue-sharing.
When local governments see how some of the provincial money is spent and some of the programs they do get involved in, and local governments cannot even afford to pave a street, put in a sewer or expand their industrial park because of lack of support, which therefore hurts economic development.... The future of this province very much relies on the health of local government, and I think there has got to be better support and a bigger fight by those on that side, and certainly on this side, for those who believe in it. Otherwise, if that community level isn't healthy, those programs are not supported and those systems aren't in place, this province will not expand as we wish it to, and the growth won't happen.
MR. BLENCOE: I ignore some of the.... If some of those members over there had brains, they'd be dangerous, Madam Chairman. I leave it there.
Vote 50 approved.
On vote 51: transit services, $158, 635,000.
MR. WILLIAMS: I'm sorry I wasn't here earlier. I missed the explanation about the great run in Surrey in terms of
SkyTrain. I presume you've responded by saying that Coquitlam is very high priority and will be forthwith, in terms of future planning and construction — quite soon.
I think the points made by Mayor Sekora are valid. The returns are clearly higher in terms of routing to Coquitlam. The huge areas of provincial lands that are being opened up in Coquitlam are unequalled in the lower mainland. There's the Westwood Plateau and, of course, the Riverview area. It's very, very significant. It makes all the sense in the world to integrate your planning for change and relate all those activities on the provincial lands that are being opened up. Mayor Sekora makes a very valid point in terms of servicing his community.
HON. MRS. JOHNSTON: I agree. Mayor Sekora does make a very valid point, and I can assure you that Coquitlam is a very high priority in terms of improvement to transit.
MR. WILLIAMS: Maybe the minister could explain what "very high priority" means, since announcements have been made many times over. I happened to go down last weekend to have a look at north Surrey, which I haven't looked at for some time, I have to admit. I went down to the intersection of the King George and the Fraser highways and was flabbergasted at how much bush there still is down there across from Surrey Place. It was a great big empty intersection. It's bush out through Green Timbers and so on. That's obviously going to change dramatically, to the benefit of some property owners. That's another question.
The point is that these huge public lands in Coquitlam are being opened up, and servicing is being extended to the most significant integrated residential developments in the entire province of British Columbia. It makes all the sense in the world to start tying in improved transportation systems to those public lands that are being opened up. Is that the very highest priority, now that you've made this decision to extend on your side of the river first?
HON. MRS. JOHNSTON: I think we should make it very clear that the decision to extend into Whalley is not a recent decision. The announcement was made in 1984 by the then-Premier and minister responsible, prior to my being elevated to cabinet. But I can assure the member that Coquitlam is not being ignored. There were studies done; there were two routes that were recommended for consideration. We have received considerable correspondence from residents of Burnaby who apparently object to both routes and have suggested a third route. So there is a lot of homework to do before any announcement for extension of SkyTrain into Coquitlam can be made. But it is actively being worked on, and the growth in Coquitlam is very much known to everyone involved in transit. We don't have an argument there at all. There will have to be improvements to the transit system, but I don't think we can wait until SkyTrain goes into Coquitlam.
You did miss the discussion, hon. member, as you did suggest, because I referred to a discussion I had with Mayor Sekora earlier today on that very subject. It's not something that can wait, because planning is a lengthy process prior to turning the first sod. We will be looking at improvements to the existing transit system in order to address the problems that are evident there. I have asked Mayor Ross, the chairman of the Transit Commission, to look at that particular situation. We will be addressing it in whatever way we can, but I would hope that we would be able to look at an announcement for a
[ Page 2359 ]
SkyTrain extension to Coquitlam in the not too distant future, once the new authority has been set up.
Vote 51 approved.
HON. MR. STRACHAN: I move the committee rise, report resolutions and ask leave to sit again.
The House resumed; Mr. Speaker in the chair.
The committee, having reported resolutions, was granted leave to sit again.
HON. MR. STRACHAN: Committee on Bill 44, Mr. Speaker.
MUNICIPAL AMENDMENT ACT (No. 2), 1987
The House in committee on Bill 44; Mrs. Gran in the chair.
Sections 1 to 29 inclusive approved.
On section 30.
HON. MRS. JOHNSTON: I move the amendment standing in my name on the order paper. [See appendix.]
Section 30 as amended approved.
HON. MRS. JOHNSTON: I move the committee rise and report the bill complete with amendment.
The House resumed; Mr. Speaker in the chair.
Bill 44, Municipal Amendment Act (No. 2), 1987, reported complete with amendment.
MR. SPEAKER: When shall the bill be read a third time?
HON. MR. STRACHAN: With leave now, Mr. Speaker.
Bill 44, Municipal Amendment Act (No. 2), 1987, read a third time and passed.
HON. MR. STRACHAN: Mr. Speaker, I call committee on Bill 45.
LOCAL ELECTION REFORM ACT, 1987
The House in committee on Bill 45; Mrs. Gran in the chair.
Sections 1 to 13 inclusive approved.
On section 14.
HON. MRS. JOHNSTON: I move the amendment standing in my name on the order paper. [See appendix.]
Section 14 as amended approved.
On section 15.
HON. MRS. JOHNSTON: I move the amendment standing in my name on the order paper. [See appendix.]
Section 15 as amended approved.
Section 16 approved.
On section 17.
HON. MRS. JOHNSTON: I move the amendment standing in my name on the order paper. [See appendix.]
Section 17 as amended approved.
Section 18 approved.
On section 19.
HON. MRS. JOHNSTON: I move the amendment standing in my name on the order paper. [See appendix.]
Section 19 as amended approved.
Sections 20 to 22 inclusive approved.
On section 23.
HON. MRS. JOHNSTON: I move the amendment standing in my name on the order paper. [See appendix.]
Section 23 as amended approved.
On section 24.
HON. MRS. JOHNSTON: I move the amendment standing in my name on the order paper. [See appendix.]
Section 24 as amended approved.
Sections 25 to 28 inclusive approved.
HON. MRS. JOHNSTON: I move the amendment standing in my name on the order paper. [See appendix.]
[ Page 2360 ]
Section 28.1 approved.
Sections 29 to 34 inclusive approved.
HON. MRS. JOHNSTON: I move the amendment standing in my name on the order paper. [See appendix.]
Section 35 negatived.
Section 36 approved.
Section 37 negatived.
On section 38.
HON. MRS. JOHNSTON: I move the amendment standing in my name on the order paper. [See appendix.]
On the amendment.
MR. WILLIAMS: It's an inquiry around this general area involving the city charter and these related changes. There is still a bill to come before the House from the select committee that will again have an impact in terms of the ward system and then relate to this.
Section 38 as amended approved.
Section 39 approved.
On section 40.
MR. BLENCOE: My question is similar to that of the first member for Vancouver East. Although I know that there is a private member's bill pending, this section could have been permissive by stating that a ward system, if it came up, could be put in here. You're going to need an amendment for this. I'm wondering why the minister would not put that in here at this time.
HON. MRS. JOHNSTON: We were just attempting to address the situation as it stands today. If the other legislation goes through and the Vancouver council is successful in their planned program, then we would have absolutely no problem at all in addressing their needs at that time.
MR. BLENCOE: It doesn't seem to make much sense when you could take care of the ward system right now by making this section permissive, either elected at large or by ward system. That could be very easily done, and I don't know why the minister hasn't seen fit to do it — unless she has some negative feeling about the ward system.
MR. CLARK: We have a private member's bill that's going to deal with the question, but it seems that this is another hoop then. If the private member's bill passes and there is a plebiscite that achieves more than 60 percent, in accordance with the private member's bill, there will still have to be an amendment to this section of the act in order to accommodate the wishes of Vancouver. Is that correct?
HON. MRS. JOHNSTON: Apparently this is a proclamation section. If the private member's bill goes through, then this section would not have to be proclaimed.
Sections 40 to 43 inclusive approved.
HON. MRS. JOHNSTON: I move the amendment standing in my name on the order paper. [See appendix.]
Section 43.1 approved.
On section 44.
HON. MRS. JOHNSTON: I move the amendment standing in my name on the order paper. [See appendix.]
Section 44 as amended approved.
On section 45.
HON. MRS. JOHNSTON: I move the amendment standing in my name on the order paper. [See appendix.]
Section 45 as amended approved.
HON. MRS. JOHNSTON: I move the amendment standing in my name on the order paper. [See appendix.]
Section 45.1 approved.
On section 46.
HON. MRS. JOHNSTON: I move the amendment standing in my name on the order paper. [See appendix.]
On the amendment.
MR. BLENCOE: I just can't let it go by that here we have a major piece of legislation with umpteen amendments.... I don't know why this happened, but it seems to me it's becoming a bit of a tradition. I would hope that in the future we can see the legislation in proper form.
AN HON. MEMBER: So does the legislative committee.
MR. BLENCOE: I'll bet it does. I think it's unfortunate. We've had this in the past, and we seem to be getting it a lot this particular session with this government. So I'm hoping we can get things right from now on and not have umpteen amendments so we have to go back and look at square one again.
Section 46 as amended approved.
[ Page 2361 ]
HON. MRS. JOHNSTON: Mr. Chairman, I move the committee rise and report the bill complete with many amendments.
The House resumed; Mr. Speaker in the chair.
Bill 45, Local Election Reform Act, 1987, reported complete with amendments.
MR. SPEAKER: When shall the bill be considered as reported?
HON. MR. STRACHAN: With leave of the House now, Mr. Speaker.
Bill 45, Local Election Reform Act, 1987, read a third time and passed.
HON. MR. STRACHAN: Mr. Speaker, I call Committee of Supply.
The House in Committee of Supply; Mrs. Gran in the chair.
ESTIMATES: MINISTRY OF ENERGY,
MINES AND PETROLEUM RESOURCES
On vote 24: minister's office, $235,549.
HON. MR. DAVIS: Madam Member, it's a pleasure to see you in the chair at this interesting hour.
My remarks will be limited. The estimates of this department are modest as compared to some of those which have appeared before the House. Also, the estimates of the Ministry of Energy, Mines and Petroleum Resources show a small decline from $35 million in the last fiscal year to $33 million in the current year. This ministry's total budget amounts to about 1 percent of that of Health, for example. The expenditure side also is small relative to the income side. The income from energy in its various forms — from royalties, from other production taxes and from the water rental fee — amounts to some $850 million. So on balance this ministry generates income and generates a substantial economic rent for the province.
There are still problems. There are a number of problems in the industry, not the least of which relate to the overcapacity which exists in the province. We still have some 20 percent to 25 percent excess capacity in power generation and transmission in the province. The main gas pipeline crossing the province is currently operating at less than 50 percent of capacity. Our gas industry at the production end, the field end, could increase its output substantially if the market was to develop in the next short while. We have a great ability to produce more coal in this province, so essentially our supply situation is good. The market side is the problem. And prices, because generally they are low around the world, present the principal challenge to the energy side of things in British Columbia.
Much the same applies to metals and non-metallic minerals other than the fuels. There is a world surplus. Prices, generally speaking, are low. It is only in the precious-metals field — gold particularly, and to a lesser extent silver and platinum — that prices are at a level which is encouraging more exploration and development in the province. So essentially that is where the aggressive activity is and where the new jobs are in this particular resource sector.
B.C. Hydro is currently increasing its sales of electricity markedly. Over the next few years we should see a large part of its surplus capacity taken up by new industry. We have several new pulp mill developments which will require additional energy in 1989 and 1990, and others pending. Sales are up this year by 5 percent or 6 percent, which is a marked improvement over the 1 percent or 2 percent annual increase of recent years.
On the gas side, we are in the process of winding down the B.C. Petroleum Corporation. It used to be the principal vehicle for collecting the economic rent from that industry. Latterly, revenues to the government are collected, as formerly, through land sales, but also through a royalty charged as natural gas is produced.
The Petroleum Corporation has a number of obligations which must be honoured. It administers some 600 contracts, all of which must be respected. That is the principal problem, other than if its activities were to be transferred to some private sector marketing organization.
There are various responsibilities in addition to the gas purchase contracts which the B.C. Petroleum Corporation has. They relate to byproduct production such as sulphur and natural gas liquids. That business has to be privatized in a suitable way which honours all past agreements. We have one or two problem situations including that of the Ocelot chemical plant, which for a time was unable to pay its gas bill, but now is back paying the B.C. Petroleum Corporation and hence the government, on a current and ongoing basis.
At the request of the Premier and myself, the mining industry prepared a report on problems as the industry saw them and on solutions which they recommended to the provincial government. They frankly admitted that their main difficulty was world markets and a lack of volume of markets, certainly a lack of price. But they also pointed out that metal mining — hardrock mining generally in this province — is heavily taxed, and they asked for tax relief in various forms.
It's interesting to note first that the level of overall taxation on mining in British Columbia is one of the highest — perhaps the highest — in Canada. The principal reason for that has been the continuing increase — and over the last 15 years, dramatic increase — in the sales taxes, the property taxes and the water rental fees that industry pays. The bulk of the metal-mining side is not really profitable at the present time, so the royalty-type taxes they're paying are modest. The income-type taxes they're paying are very small, but the tax bill to the municipal level of government and to the province in the form of sales taxes, water rental fees, etc., is considerable. Indeed it's many times the profit taxes that industry pays.
They're asking for some relief in that direction, and of course the recent White Paper introduced by the federal Minister of Finance raises other questions related to taxation. As I understand the federal paper, some of the concessions which were allowed to mining federally will be phased out, and this has an impact also on provincial modes of taxation. All provinces across Canada will have to respond or adjust to
[ Page 2362 ]
the proposed changes — the likely changes — in federal taxation.
I think, Madam Chairman, I've touched a number of bases, perhaps most of them. There will undoubtedly be questions on the matters I've raised and others, and I'll do my best to answer them.
MR. CLARK: Madam Chairman, I will be — as the opposition House Leader likes to be — parsimonious in my use of the language; in other words, brief as I can. I don't plan to make any long speeches, but I'd like to canvass all the areas that the minister has touched upon.
Before I begin, I'll ask a couple of questions on Agrifuels, seeing as we've had some discussion of this yesterday. Of course we went through the depths or the vast scale of the subsidy to this small industry up there, and the two-cent-a litre cut in gasohol, which amounts to a $9 million-a-year subsidy — admittedly maximum — $10 million to the farmers, $23 million loan guarantee, and a number of other things. So it's an enormous subsidy to an industry that's going to create 54 jobs and deal with the farmers. I wonder, though, just looking at some of the numbers on the plant, whether there's also the potential for a B.C. Hydro electricity discount to this new operation.
HON. MR. DAVIS: The company in question has not requested, nor is it likely to receive, a power discount.
Electricity is not, however, a major cost of production, so that is not an important consideration.
This particular project — the gasohol plant for Dawson Creek — is still in the planning stage. It isn't a fact yet. It has been considered and looked at in various ways. The main reason that this project was considered by the Alberta government for a while, and is continuing to be considered by the B.C. government, is that the federal government has a tax credit arrangement which it is prepared to approve in selected areas of Canada: areas of high unemployment, areas where incomes are low. They're limited to some parts of the Maritimes and a few locations in western Canada and Quebec. Were a firm to secure a tax credit, it has to sell this tax credit to some company that's making a profit greater than the tax credit, and that company, at a price, will buy the tax credit. That's federal policy. It's a reduction in revenue to the federal government.
In the case of a $100 million plant, for example, the 50 percent rate would allow a $50 million tax credit. The company would endeavour to sell the tax credit and would get some number like $47 million or $48 million or $49 million. In effect, that's a federal grant. But it doesn't occur at the beginning; it only occurs after the plant is in being. That's the main reason why there's a particular interest. That kind of grant isn't available to a pulp and paper mill; it isn't available to a lot of industries. It's available, however, to unique industries, unique opportunities, new and different activities, and presumably the gasohol development in the Peace River qualifies under those federal rules. There have been various proposals as to how to finance a plant, but always the tax credit aspect has been very much present.
MR. CLARK: Knowing the minister's often repeated comments on rationality versus politics in terms of planning, would the minister agree that any project predicated on significant tax breaks in addition to massive subsidies by the provincial government.... In other words, what happened to the marketplace, to free enterprise, which this minister and this government talk about repeatedly at great lengths? Would the minister agree that this level of subsidy indicates that the profitability of this plant in a pure free enterprise situation would be unlikely?
HON. MR. DAVIS: The extent of provincial subsidy is limited. I've been talking about the federal subsidy. If the hon. member is asking me whether the operation is likely to be economic, I'd have to say it's economic if, as and when the price of oil continues at the present level, certainly, or rises somewhat. Many gasohol plants around the world are shut down today, and roughly half the capacity in the United States is shut down. That capacity, however, was created when oil prices rose and essentially reflects the obvious fact that liquid fuels can be made from vegetable matter. That's essentially what Brazil did. Because it didn't have its own indigenous oil resources, it decided it would ferment sugar and make alcohol and run its automobiles on alcohol. In the United States when the world price of oil went up, it became economic to convert corn and other sugar-containing vegetable matter into alcohol.
It's obviously physically possible to convert grain grown in the Peace River area into alcohol, and alcohol blended with gasoline has very desirable anti-knock characteristics. A number of states in the United States either eliminated or much reduced their retail sales tax in order to encourage that kind of blending and encourage the development of this alternative fuel.
To return to the question, much depends on whether the world oil price rises. I think most people, unduly pessimistically perhaps, think the oil price is eventually going to rise, and therefore gasohol-type plants sooner or later will be economic.
MR. CLARK: Sooner or later they might be economic. I think your own ministry forecast is that in the mid-1990s the price might rise somewhat.
I'd like to thank the minister for the information that half of the capacity of the American ethanol plants is underutilized. I mean, it's phenomenal that we're building one when everybody else is closing theirs.
The minister mentioned that electricity is not a major component. Is electricity the prime energy used in converting grain to alcohol, or is it natural gas, or what is it?
HON. MR. DAVIS: A cheap fuel is needed and natural gas is readily available up there and relatively cheap, so it's the natural fuel to use in a plant of that kind.
MR. CLARK: I assume that they will be eligible for the $1.03 per gigajoule large industrial consumer wholesale price, the floor having been negotiated by BCPC and announced by you November 1, 1986. The price will be at or near $1 per gigajoule.
HON. MR. DAVIS: The price will probably be in that order of magnitude, but industries currently can negotiate their own supply in the field. If they can find a producer that offers a very low price, they may contract with that supplier.
MR. WILLIAMS: I'm just intrigued at half of these plants being closed in the United States of America, or at
[ Page 2363 ]
least operating at 50 percent production. What can one say? Ha, ha! I just can't help but bust up, Madam Chairman, over the economic madness involved in this exercise.
It's all relative, of course, as the minister suggests. B.C. Hydro is only able to get rid of 75 percent of its productive capacity, so that's 25 percent of how much.... What's the capital asset of B.C. Hydro — $14 billion or something like that?
MR. WILLIAMS: Nine, ten? Okay, that's $2.5 billion. What's the interest on $2.5 billion, etc.? It represents monumental economic waste. So this is all energy, and now the government is going into another energy project where half of America's production is sitting idle.
How could this plant compete, then, against the incremental production of other plants that are there, which would be happy to increase production? What would its competitive status be relative to those places that already have sunk capital, etc., and where you're really only talking about a return on operating?
HON. MR. DAVIS: The easiest answer is: the same way as a similar plant operates in NDP Manitoba. Grain is converted into gasohol in Manitoba, and Manitoba, like a number of states in the U.S., charges a reduced sales tax to encourage blending of gasohol with gasolines. We're not talking about volumes here, which are large compared to the volume of gasoline; we're talking about a few percent. But nevertheless in Manitoba, as in many parts of the central United States, preferences are given for a local motor fuel product produced from a local resource which is surplus, like grain or corn.
This plant, which is not 100 percent certain in this province, were it to operate here would take advantage of any tax preference that locally produced fuels would receive. Some part of that may be sold — and indeed, the earlier impression I had was that a large part of the output initially would be sold — in Alaska, which has a preferential tax but no indigenous gasohol production. Again, I'm only talking about the broad economics of this matter.
Grain produced in the Peace River area sometimes fails to meet our high export standards, because it's wet or otherwise not up to Wheat Board standards. That doesn't matter insofar as gasohol production is concerned. Waste grain or grain that isn't quality grain for export could be used, because it contains the sugars necessary to produce the alcohol. We're talking about something essentially like a still. It simply takes vegetable matter, and by heating it up it can be, under some circumstances, converted into alcohol. Alcohol burns in internal combustion engines, as Brazil has shown quite well.
MR. CLARK: The Mohawk plant in Manitoba, however, was built by the private sector — by Mohawk Oil — with no government assistance or support. There is 2-cents-a-litre gas, but that's only one element of the subsidy this plant is asking for and apparently was given yesterday by this government to try to get this thing off the ground. I might say, incidentally, that the president of the company was shocked and surprised that there was a 2-cent-a-litre reduction, because he didn't ask for it, and he has been quoted again. I must say that, in talking to the president today, he indicated that they start the sod-turning on August 17. We're moving along here, even though the government maintains it's not at all confirmed.
I think I'll move into natural gas if I can, because I want to spend a little time on deregulation of natural gas. Deregulation has been the Holy Grail of the right wing all across Canada and the U.S. in terms of solving the economic problems of the 1980s in the energy sector. Deregulation has been the key buzzword and the whole direction of energy policy in Canada recently. It came to natural gas in the form of the November 1, 1986, announcement and agreement by the three western provinces and the federal government.
I just want to touch briefly on the last 15 years in which we've conducted marketing of natural gas, so we can have some common base to discuss this. From 1974 to 1986, B.C. Petroleum Corporation marketed the gas, and it earned for the province of British Columbia $1.791 billion in revenue for the public of B.C., who are, of course. the owners of the resource. The minister would agree with that. It was tremendously successful. But prior to BCPC.... I've been trying to determine the original rationale for creating it, in looking at the minister's decision to eliminate BCPC or to phase it out, to see whether some of those things still exist. They're kind of interesting. So prior to BCPC, what was the situation?
I'm looking at just a few theses, so I'm not an expert on this. Six essential features of the gas industry prevail.
The first was long-term contracts signed between Westcoast Transmission and domestic buyers. They weren't susceptible to market pressure, so we had long-term contracts entered into it at low prices.
The second was long-term export contracts — very low prices and, of course, 77 percent of the gas produced in B.C. is exported. So they were locked in.
The third was Westcoast Transmission's monopoly position, so their dealing with the producers was a problem at that time.
The fourth was that Westcoast was owned by an American company, which was also a major supplier of gas at that time, so there was some conflict in terms of pricing.
The fifth was that long-term price supply contracts meant low price-returns to the public, so the public sector was getting a low price.
The sixth was low returns for the gas producers.
[Mr. De Jong in the chair.]
Those were the factors. Then in 1973 we had this price explosion. It was clear that the producers were getting a low return and the public was getting a low return. There was a tremendous explosion in the price, and the monopoly position of Westcoast enabled them to get significant profits. So it was in the interest of the public, the industry and the economy to deal with it. BCPC was formed, and there was an elbow joint, essentially — the nationalization of that — which enabled them to break a number of contracts, and the pricing was determined by government order-in-council. It's kind of interesting, because some of those problems that spawned BCPC, the ministers and others have talked about going back to, in terms of dealing with supply and entering long-term contracts at low prices.
I suspect that if we follow the deregulated vision in terms of supply, potentially we return to some of those six conditions, in terms of people being locked into long-term supply
[ Page 2364 ]
at low price: future energy escalation, and then the producer getting a low return; the public getting a low return, which then again causes the need for government intervention in the interest of the public, the producers and the economy. We'll maybe get back to that a little bit. But it is interesting that those six points that prevailed at that time have every likelihood — at least four of them — of being repeated. That causes me a great deal of concern.
The export price, of course, was controlled by the National Energy Board, and there were two tests: the price test, in terms of selling to the Americans cheaper than to the Canadians; and the supply test — a 25-year supply for domestic consumption before you could export. Again, 70 percent of B.C.'s production is exported, so that export price is critical in terms of public revenue from our resource. So with the price drops in the eighties, industry put pressure on government essentially to eliminate the price test, because the price test meant that we couldn't sell to compete with oil in the United States. I think that's essentially what happened. So the government agreed in '85.
I think there are three major implications of the deregulation of natural gas, all of which have serious problems, and this is what I'd like to canvass with you now. The first — it's very important — is that the floor price is no longer the Toronto wholesale price; it's regionally determined. In British Columbia we have differential wholesale prices: one for residential, one for small industry, one for large industry. So B.C. residents, our consumers, average householders, pay 75 percent more for gas than American buyers, and 75 percent more than large industry.
Secondly, the B.C. cabinet no longer determines natural gas prices. The prices are set between the buyers and sellers, but the industry can extract lower prices because of market power, because of alternative sources of supply, like oil. So that means that homeowners can't readily switch between oil and gas, and therefore there's a real problem in terms of the potential price to homeowners, which we could see and are seeing in differential prices.
The third is that the rent collection function of BCPC is phased out. We now have the lowest royalty system in Canada — lower than Alberta at least. Maybe the minister can correct me if it's lower anywhere else; I don't believe it is for natural gas. It's lower than Alberta. Of course we're now also looking at phasing out the supply test.
That's the background. I think the minister would generally agree. If he could correct me on some of that.... I think that's essentially where we're heading.
Under deregulation we now have a system of price discrimination. The old system: wholesale price the same for industry, the same for everybody; price of the gas, the same gas in the ground.... There is no other cost-based determination or differences in price that can be justified. It's the same gas in the ground. We now have a situation where average British Columbians pay 70 percent more than large industry, and that wasn't the case under BCPC before at the wholesale level. So the prices are, I guess, $1.75 for residential and commercial; $1.50 for small industry; $1.03.
To begin a series of questions in this vein, would the minister explain why these wholesale price differences for different end users were adopted, given that the end use of the thing should have nothing to do with the market for the same gas?
HON. MR. DAVIS: Regulation worked well when prices were rising. Certainly regulation worked well for the consumer, because it put a brake on price increases. When the price of oil began to drop, and certainly when it dropped dramatically, changes had to take place. Prices had to change all the way from the consumer end, where competition with oil was direct and immediate, right through to the pipeline systems and back to the source. One of the characteristics of the present market situation is that producers are competing one with another to try and sell additional gas at a price which will get them the contract, get them the volume. The term is "gas on gas" competition, and that's widespread at the moment.
Were the oil price to continue to rise, especially if quotas were introduced on imports into the United States, suddenly the situation would be reversed, and the good news would flow back through not only the oil industry to producers but to the gas producers.
One of the features of deregulation is that users — I'm talking first about user industries — can shop around. They can now go to the field, and if they can find a producer that's prepared to accept a low price, they can take advantage of that low price. We have a number of users — I'll take for example pulp mill companies in Prince George — which are currently shopping for and indeed buying gas in recent years, anyway, at record low prices in the field. With deregulation, the transporter must carry, so the transporter can only get a fee for transportation. As a result the large end-users that have this ability to go to the field and get low prices can have a low price for a substantial volume at the mill. So the big reductions in price in recent months — the last year or two — have been large industries which have this ability to go to the field and buy a large amount of energy and have it transported at a controlled or regulated price by a transporter.
The residential consumer — or core market, as it's sometimes called — doesn't have that ability. They might band together in large numbers, and hopefully the distribution utility will act as some kind of agent for them, but they don't have the individual ability to do that. So they're slower into this process of taking advantage of an industry which must cut its prices in order to compete for reduced oil prices.
There is another characteristic of the industry — it has been there all along but now needs to be better defined — and it's the short-term buyers who buy on a spot basis or buy a year or two at a time, or even a month or two at a time. These are big industries that can switch readily to oil or hog fuel and so on. They don't need to contract long terms, at least they're confident they don't have to — and they can take advantage of these short-term price weaknesses.
On the other hand, the homeowner, who has a gas furnace and nothing else, is in large measure captive, and their investment in furnaces or whatever is conditional on a long-term and guaranteed supply. So they buy a long-term contract. Your core market — the dependent or more vulnerable people on the downtrend of prices — pay higher prices, because they have to buy long-term. Our utilities — B.C. Hydro, Inland — must protect homeowners, small business and so on, with 15 or more years of supply, so they must buy long-term.
Big industry has that flexibility, but has the choice of being able to switch to other fuels. I think big industry, therefore, is in a better position, when prices generally are going down, to take advantage of that general development, but on the other hand they are the laggers in terms of being
[ Page 2365 ]
able to take advantage of a situation where gas becomes relatively short in supply and prices rise. They're gambling that prices will stay low, and they're buying short-term. That's the main reason why prices to big industry — not little industry — have dropped quite dramatically and why the drops are slow to occur in the case of residential, commercial and small industrial users.
MR. CLARK: Can the minister explain this, however? This price discrimination in British Columbia, unlike in some areas — and we'll get to that later — was announced by the Minister of Energy; these are prices determined by the government, not on the basis of the competitive market. The wholesale price announced by BCPC jointly with the minister is $1.75, $1.15 and $1.03. Now we get to that. In response to my question in the House on March 17 this year regarding different gas prices for different end uses, the minister stated that the three groups receive rates which reflect the cost of service. Cost of service — no more, no less.
With your response in mind, I put to you the observations of one of Canada's leading authorities on regulated industry, Prof. Michael Trebilcock of the University of Toronto law school — whom the minister is aware of — who testified on this question at the Ontario Energy Board hearings, at the Manitoba public utilities commission hearings and at the Energy Resources Conservation Board. He's the leading authority in Canada. He examined discriminatory pricing and discovered a very important point. He argues: "The cost of a unit of gas of a given quality must surely be the same, whoever the end user is. Any justified cost differentials must reside in the local costs of transporting the gas to different classes of end users."
So price differentiation of natural gas can only be justified by differing local transportation costs. That's the decision of the Ontario Energy Board, the decision of the Manitoba public utilities commission and the opinion of the leading experts in the field, like Dr. Michael Trebilcock. Why does the minister then announce that BCPC at the wholesale level has decided — the government has decided, not on a market-tested basis; this is the government's pricing practices — to have three differential prices for end users? We're not talking about transportation costs; we're talking about the wholesale price of gas.
HON. MR. DAVIS: Mr. Chairman, the hon. member insists that I, the minister, decide the price now. That's not true at all. The price used to be decided by the cabinet of the day, the government. It was an order-in-council which told the Petroleum Corporation, which was the sole buyer in the field, what price it should pay for all gas produced in British Columbia.
Last year and again this year, as we move towards a deregulated situation, there is a negotiated price eventually agreed upon by all suppliers and the Petroleum Corporation. That's not something a minister, a politician, decrees. It's a price which is negotiated in a large forum, if you like. It's a market which is somewhat contrived, but it's a market nevertheless. When the Petroleum Corporation perhaps becomes some private marketing group, that process will continue. But it is not a price, I repeat, that is set by the minister or by the government.
Now dividing the market into two segments: first, big industry — it negotiates its own price. That's not something to which I referred when I said there were price categories.
HON. MR. DAVIS: The $1.03 was negotiated by the Petroleum Corporation with the industry for wholesale delivery. But the core market price is set by the B.C. Utilities Commission after a series of hearings. Those prices are based on cost.
The big industry people — that's a market; at least they negotiate it. That price can be anything. It really relates often to their best alternatives. The small users, on the other hand, in the core market, because they are vulnerable, because they don't have their own bargaining ability, are protected by the regulatory process of the Utilities Commission.
The Utilities Commission has three categories, and those three categories are served essentially at prices determined by cost, and not in other ways.
MR. CLARK: Again, let me put it this way. First of all, the Utilities Commission looks at the differences in the cost of service, not at the differences in the wholesale price that were announced by BCPC as negotiated. Would the minister agree that in a deregulated marketplace, wholesale prices also should come under the purview of the Utilities Commission? That is the case in other jurisdictions in Canada. Would the minister agree that the differential wholesale prices could be reviewed, and in fact should be reviewed, by the B.C. Utilities Commission to see if in fact price discrimination, as I have indicated, has taken place?
HON. MR. DAVIS: Again, the Utilities Commission is concerned with the core market, which is the bulk of the gas that's moving. But it's not concerned with the large producer that buys in the field. The member said that elsewhere in Canada the utilities commissions determine all the prices, wholesale or otherwise. They do not; they don't determine the price of a large industry which is big enough to buy in Alberta on its own.
Essentially the commissions — and they talk to each other; they read many of the same textbooks; they've developed not only a terminology of their own, but a way of developing and allocating costs — endeavour to allocate costs to each broad category of consumer on the basis of actual experience of expenditures, and so on. As best they can, they try and price each therm of energy the same.
Now someone typically requiring a great deal more distribution locally pays a higher price than someone who takes energy on a wholesale basis right next to the main pipeline. But again, that's a cost calculation, and the costs which are taken into account are actual experienced costs. Inland Natural Gas, for example, has to show the bills it's paid — for whatever purpose, be it buying pipe or paying an operator — and it is that information which is used in order to construct the rates within the core market.
MR. CLARK: I understand that, Mr. Minister, but what I'm saying is that the possibility exists for price discrimination at the wholesale level, given the fact that the residential consumer is captive somewhat, as the minister has indicated. Given the fact that the bargaining power of the residential consumers is not as high, there is nothing preventing the
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wholesale price from rising dramatically for residential consumers because of the nature of the industry.
All the Utilities Commission can look at in terms of the fairness of the system is the cost of distribution. Our Utilities Commission, I would argue, has done a very good job in terms of regulating or looking at the cost of service between different user groups and trying to adjudicate, in a fair way, to ensure that no one is getting ripped off. But in the last ten years, BCPC looked after the consumers' interest, through the cabinet or through the government, by regulating the price. In a deregulated environment the potential exists — and we're seeing the beginning of it — for the residential consumer to suffer a dramatic rise in price by virtue of the fact that he doesn't have market power, that he's captive and can't get alternatives.
Other jurisdictions have used the leverage of the utilities commissions, which look at rates, to reach back — if I can use that term — and look at how the pricing was determined at the wholesale level, to see whether or not the differences in the costs of any user groups are justified. In other jurisdictions the utilities commissions have found that they haven't been justified. Maybe they can be in some other way, but it seems to me that our Utilities Commission has taken the view that they cannot look backwards past the wholesale rate. They have to take that rate as a given, and then they can look at all the other costs associated with the utility in terms of delivering that gas. But they can't look at the price announced by the minister and BCPC as a new, negotiated differential price between user groups. They've taken the view that they can't look at that.
I'm suggesting that at the very least in a deregulated marketplace, which we're moving towards but aren't at yet, the Utilities Commission should be empowered, if they don't have the power already, to review those arrangements that are now going to be made between producers and utilities, to ensure that the utilities are bargaining in the best interests of the residential group. Would the minister consider empowering the Utilities Commission to do that, because it doesn't appear they're empowered to do it yet?
HON. MR. DAVIS: Mr. Chairman, I think inevitably that will be the situation within a couple of years. The Utilities Commission must be concerned about the price that, for example, Inland is paying for gas it buys in the field. But as long as the BCPC is there with its 600 contracts and so on, and as long as gas consumption is rising rapidly, we the government are really preventing Inland from going through BCPC to the field. But sooner or later BCPC is going to simply be a market. The utility, be it B.C. Hydro or Inland Natural Gas or Pacific Northern Gas, will have to have contracted 15 or 20 or 25 years' supply, but they will contract it in the field. Hopefully field prices will still be low, or they can find weak producers who will sell at low prices. Those contracts will be subject to review by the Utilities Commission. The Utilities Commission's task grows as the Petroleum Corporation becomes merely part of the.... Call it the private sector.
MR. CLARK: I appreciate that answer, but I'd still disagree strongly and argue that at the current rate we have right now, we have the worst of both worlds, because....
HON. MR. DAVIS: All the core market users.
MR. CLARK: All the core market users have the worst of both worlds; the minister is agreeing with me. In other words, the residential consumers in British Columbia do not have access to a deregulated marketplace. It's determined by the B.C. Petroleum Corporation, and they don't have access to a deregulated marketplace. Only the core group in British Columbia does, and they're getting shafted by BCPC and it can't be reviewed by the Utilities Commission. That's in fact the case.
HON. MR. DAVIS: Mr. Macgregor, the assistant deputy minister who is here with me, reminds me that the core market consumer is still paying a price for fuel far below the competitive oil and other commodities.
To go back to the point you're making, I said — and I'll repeat — that the core market customer who is dependent on someone else to do the buying for him or her and needs a supply on a long-term contract is slow to be able to take advantage of price declines and must always be protected over a long period. So they buy long-term. But as long as costs are going down, those costs will be passed through. It may take the regulatory bodies a little while to pass them through, but Westcoast Transmission's cost went down mostly because the interest rates it was paying on its long-term borrowing dropped, and all that had to be passed on. The National Energy Board insisted on roughly a 25 percent drop in its tariff, for example.
So the core market (1) is protected, (2) gets its energy on a cost-only basis and (3) may be slow to reap the benefits of price declines, but I will argue that it will be in a much better position if prices rise relative to other users. Within the core market, the wholesale user and the retail user, etc., pay costs. And the retail user causes additional costs and therefore pays somewhat more per therm. That allocation of price differences within the core market is something that the Utilities Commission keeps worrying about developing, and hopefully every user within the core market will be treated equitably. This will include the actual price at the field — hopefully a lower one — the reduced transportation cost to Westcoast Transmission and, with refinancing and so on, the reduced distribution costs of the distributors like Hydro and Inland.
MR. CLARK: The minister keeps referring to the fact that these are short-term contracts for industry and long-term for residential, but the contract negotiated by BCPC to sell gas to utilities.... It's all firm gas; $1.03, $1.50, $1.75. Those aren't short-term, spot, interruptible negotiated prices. Those are all firm power, firm gas sales. So although the minister is saying that the core market needs long-term security of supply, the fact is that the price negotiated by BCPC, which can't be reviewed by the Utilities Commission but has been determined jointly and announced by the minister and BCPC to be sold to the utilities, is a discriminatory pricing structure that has no cost base. That is not interruptible versus firm gas; it's all firm gas. The minister confirmed that that's the case. We're not talking long-term, short-term contracts. We're talking about the contracts announced by BCPC and the Minister of Energy on November 1, 1986, and there is a differential pricing structure.
HON. MR. DAVIS: I have said, and I'll repeat, that the B.C. Utilities Commission must and will review the purchasing agreements entered into by the utilities. They currently are essentially buying from Westcoast Transmission, which
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in turn is supplied by the B.C. Petroleum Corporation. If the B.C. Petroleum Corp. doesn't do a good job, there's a problem, but that's transitional and it will certainly be behind us — if in fact it's a problem — within the next 18 months.
MR. CLARK: The minister will agree with me that residential core consumers currently have the worst of both worlds. They have a regulated price that can't be reviewed. They can't have access to that cheaper gas in the field, and it can't be reviewed by the Utilities Commission currently. Will you confirm that, please?
HON. MR. DAVIS: That's true, Mr. Chairman. The Utilities Commission doesn't currently have that power. It will, hopefully next year, as a result of necessary changes in legislation.
I think what the hon. member is talking about are really three prices negotiated by the B.C. Petroleum Corporation with producers. The only difference between those three prices is load factor. They're all the same price except that one category takes all its gas in the wintertime, another category takes it more evenly around the year, and the third takes it — I'm oversimplifying it — uniformly around the year. So the only reason for difference in price is merely the nature of the take from the supplier.
MR. CLARK: Well, that's the first time I've heard that explanation, and it's not the explanation that we heard in Ontario or Manitoba through their hearings.
It seems to me that the minister is saying that the Utilities Commission can review that. That's precisely the kind of thing that should be reviewed by the Utilities Commission and should be allowed to be reviewed now, it seems to me, by the Utilities Commission during these 18 months.
I appreciate that after there is no BCPC they will be reviewing the utilities' ability to negotiate a good price, but now they can't negotiate a good price, because BCPC, a creature of this government, is arbitrarily setting the prices; or they're negotiating the price with the producer, but they're negotiating a price that is discriminatory and can't be reviewed by the Utilities Commission. So we're in this nether world between regulation and deregulation, and only in British Columbia can it not be reviewed.
The minister might take comfort in the fact that the residential consumer is paying less than for oil, but on a relative basis, for the last 12 years in this province everybody has paid the same wholesale price for the gas that we own. With BCPC there are three different rates that can't be justified on any cost basis — that has been the case elsewhere in Canada — and it's beyond the purview of the Utilities Commission because it's established by government, and they can't review it.
HON. MR. DAVIS: What the hon. member is really saying is that he has little or no faith in the employees of a Crown corporation — the B.C. Petroleum Corporation — to negotiate prices which are in the public interest. It's still a Crown corporation. It may not be performing that role much longer. With the introduction of the royalty system, with different prices available in the field, it is now in a position to shop around and buy least-price gas. Mr. Macgregor gave me the numbers for last year: residential, $1.75, load factor 25 percent; small industrial, $1.50, load factor 60 percent; large industrial, $1.03, load factor 90 percent. But those prices, when you adjust them for load factor, become a single price. You can question whether the B.C. Petroleum Corporation drove a hard enough bargain with producers, and that's what the Utilities Commission will do in the future.
MR. CLARK: Not now.
HON. MR. DAVIS: It doesn't have the power now. The Petroleum Corporation — a Crown corporation — still exists. When it disappears, I agree that there is a need for the Utilities Commission to have that additional opportunity to scrutinize price at the source.
MR. WILLIAMS: In the opening statements, Mr. Minister, you raised questions around opportunities in terms of privatization. I wonder if you might elaborate on those. There was some reference, for example, to BCPC or some elements of their operation — I think the sulphur situation.
HON. MR. DAVIS: The disappearance — call it privatization — of the B.C. Petroleum Corporation will, I think, make the circumstances more understandable. As the member on the other side said, at least the Utilities Commission will be able to scrutinize the price. The level of royalty struck collects substantially the same amount of revenue for the government from the gas industry as was formerly taken in the difference between the purchase price decided by government in the field and the sales prices either to Westcoast or on the export market.
Privatization of the B.C. Petroleum Corporation as it stands right now doesn't mean much either way in terms of revenue to the government. It will mean, however, that the marketing of byproduct sulphur will be undertaken more directly by private companies; similarly the marketing of liquid petroleum gases and so on. That doesn't seem to present much of a problem, because the marketing is really done by private groups anyway. They're contracted by the B.C. Petroleum Corporation, so they will be doing directly what the Petroleum Corporation now has them do indirectly.
Our problem, frankly — and it's really a structural one — is that of somehow transferring from one entity 600 contracts with all the producers in the field to one or several entities, without breaking any of those contracts. TransCanada had a similar problem when prices generally were reduced — gas moving to eastern Canada — and to my surprise, this was done in one afternoon in a large convention hall with all the producers present and TransCanada's purchasers there driving a bargain. It amazes me that that could happen, no single party later saying that a contract was abridged or their rights were given up. But we have been examining the various ways in which the Petroleum Corporation can be dissolved.
As the hon. member knows, the Petroleum Corporation was set up to do a number of things — conceivably even to look for gas, but certainly to refine oil and so on. I think its principal role in recent years has been that of extracting economic rent from the gas industry. It is paid a price in the field which government decided. It has sold the gas at a higher price, and the difference has been allocated to the treasury.
Incidentally, in the best year, those revenues were in the order of $500 million. Now they're in the order of $100 million. That is really a reflection of two things: the big drop in world oil prices and competitive fuels, especially in the adjoining areas of the United States; and a lesser volume of
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exports, which is due in part to Alberta gas going into markets formerly supplied from the Peace River area in B.C.
MR. CLARK: The minister said at one point that the regulation of gas prices was fine when the price was rising, but it didn't work well when the price was dropping. That may well be the case. The fact is that most predictions from the energy institute in Grenoble, France — the most prestigious — are that by the mid-1990s, it will rise again, and there's going to be a need for regulation again in the public interest. There's going to be a need for capturing that rent for the public treasury — or some of it — because we own the gas. There's going to be a need to protect consumers in British Columbia, who own the gas, from unwarranted price rises.
Does the minister contemplate, in this new regime that we're entering into, some regulation in terms of safeguards should the price rise again dramatically as a result of exogenous shocks with respect to oil, or simply as a result of supplies going down, as most predict, in the 1990s?
HON. MR. DAVIS: Our utilities — now that there's no longer a Petroleum Corporation in existence — must have under contract a long-term supply of gas. They will be contracting this energy shortly, and hopefully they will be contracting it before there's any general rise in fuel prices.
But the regulatory regime will always require that the utilities protecting or looking after the core markets — they're monopolies; they're regulated to cost — must have under contract long-term supplies. Those contracts will be the principal means of protecting the homeowner from exceptional rises in price. The laggards in this process, if oil prices are going to rise, are the ones who are going to be hurt. Our utilities must be into that market soon and effectively.
But there will always be a price test, I'm sure, that comparable sales — that's in quantity and load factor — will always be priced less in this province than outside the province. I'm assured that this will continue to be the federal requirement imposed on the National Energy Board as well. We do have some odd-looking price quotations currently.
You have some U.S. industries — large users, for example — that have oil alternatives buying on a very short-term basis and shopping around in the Peace River area of B.C. or in Alberta and getting some exceptionally low prices. But those prices, as low as they may be, cannot be lower than deliveries of comparable quantity and load factor in Canada and, in our case, in British Columbia.
I'm convinced that within a relatively few years the United States will decide that it doesn't want to become more than 50 percent dependent on foreign oil. Some such trigger point will cause the United States to establish quotas or a tariff on oil, and the moment that happens, all prices will rise not only in the U.S. but in Canada as well, and gas will become a much more popular fuel. The demand for gas will rise and gas prices will rise. I would certainly want our utilities to be ahead of that and to have bought their long-term supplies well before that price turnaround occurs.
MR. CLARK: I appreciate that, but when the price does rise again, there are three groups we are concerned about: the producers, because we're a producing province; the consumers, who I'm quite concerned about, given a deregulated environment; and the owners of the resource.
We're emasculating the ability to collect the rent. We're changing the regime dramatically. The minister said: "When the price was rising, the regime worked well." For the state, there was $1.7 billion in revenue.
Now when the price is dropping, we need a deregulated environment. But the minister is saying he predicts that by the mid-1990s the price is going to go up again. So we haven't got much assurance, unless we're going to rush into a whole new regime. We're not planning. The market is going to prevail, but when the price rises, the consumers are going to be concerned. Does the minister really expect that if there is an exogenous shock like we had in '74 with dramatic price increases, we're not going to have to deal with them as public policymakers? Does he not expect that the Crown, the owner of the resource, should get a large share of any rent windfall that comes as a result of that? Of course it does. We had a system in place that would have dealt with that. We're moving into a system that's not going to deal with that, and producers are going to benefit as a result of the windfall, in my view.
HON. MR. DAVIS: Our royalty system is price-sensitive. As the price rises, the royalty rises and the yield rises. Were there to be a repeat of the circumstances of the 1970s, I can't imagine source areas not adjusting their tax systems in such a way as to take reasonable advantage of whatever economic rent occurred. Hon. members opposite know very well what happened in the seventies. Alberta had its way of collecting the economic rent and British Columbia had a different method, but both collected substantial economic rents. So a rise in price is bound to be good news not only for producers but for source provinces like British Columbia and Alberta.
MR. CLARK: Given that we're exporting 70 percent, does it make sense to be allowing the industry, through this deregulated marketplace, incredible fire-sale prices for export? Before the price test we had one wholesale price for everybody, and they couldn't export to the U.S. lower than that. Now we have three different prices, and you can export to American industry at 75 percent less than British Columbia homeowners pay for gas.
Given that the minister and most experts have predicted a price rise in the mid-1990s, and given that we're going to have to change the regime again to accommodate that price rise, it seems to me that that is a serious error. I think selling our gas cheaper to Americans than to ourselves, seeing as we're the owners of the resource, is an ethical question. I think there is also serious concern for public policy when we're exporting at these incredibly low prices.
Alberta, the guru of the free marketplace in gas, is moving to require energy removal permits for gas. They're concerned about utilities getting such low prices for gas, such low revenues for the Alberta government. They're moving to put in a floor. They're moving to regulate at the lower end, even though they've been arguing deregulation and so have the producers. Has the minister considered any such equivalent in terms of a floor price such as the Alberta government has moved to?
HON. MR. DAVIS: First, Mr. Chairman, as a matter of fact, in volume terms 30 percent of our gas is being exported, not 70 percent. The member asks: is British Columbia considering a floor price for export? The answer is no. The
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producers who are willing to sell their proven production and don't have contracts with BCPC are anxious to get prices above a certain level; below that they won't sell, and we're leaving it essentially to them. But there is always the test that, in effect, prevents any American buyer from having a better price deal than is available to users in this province, and that's a test which is not only applied by ourselves but is a requirement under law — the legislation establishing and governing the operations of the National Energy Board.
MR. CLARK: That's correct, but the minister would agree that we now have three different prices. So American industry can buy cheaper than British Columbia homeowners. Is that correct?
HON. MR. DAVIS: The member asks if buyers in the U.S. pay a lower price for the same kind of service as similar customers in British Columbia. The answer is no. By law it's impossible. In fact it doesn't happen.
MR. CLARK: I didn't ask that, and the minister knows that. I said American industry, large industrial consumers, can purchase British Columbia gas cheaper than British Columbia homeowners can.
HON. MR. DAVIS: Let's compare apples with apples and oranges with oranges. The large industry in the United States that the member was talking about can never buy its gas at a lower price than a similar large industry in British Columbia.
MR. CLARK: That's probably as clear as we're going to get. American industry, American small businesses, can purchase gas cheaper than British Columbia homeowners and commercial users at the wholesale level. That has never been allowed, I think, in the history of British Columbia. From 1974 to 1986 that was never allowed. It is this government and this minister that have allowed that to take place. It certainly hasn't taken place in the last 13 years in British Columbia, and probably not in history. But we now have a regime that allows American industry, American small industrial users, to purchase B.C. gas — that we own — cheaper than British Columbia homeowners can purchase it. This side of the House does not agree with that.
HON. MR. DAVIS: Mr. Chairman, the hon. member keeps making a statement as if it's a matter of fact, and it isn't. There is no way that a residential consumer using B.C. gas in the United States can get that gas more cheaply than a residential consumer in B.C. The hon. member has attended some hearings; if this is a fact, why do interveners across Canada not make that claim? They don't make that claim, so why is he making it here in the House?
MR. CLARK: We were just about to wrap this up. You know darned well that that differential price is not beyond the purview of the Utilities Commission. There is now no test in terms of export. I can't even tell what the price is trading for. If an American private industry comes up here and negotiates directly with a British Columbia producer of gas, that market transaction is a private market transaction, and I cannot find out what the price is. All we have....
HON. MR. DAVIS: We know what it is.
MR. CLARK: Oh, is it public information? Is the minister prepared to share those transaction prices with me?
HON. MR. DAVIS: The government knows the price in all instances where gas leaves British Columbia. Firstly, there is an energy-removal certificate, and one of the requirements in obtaining a certificate is declaration as to price. Secondly, a good part of the output is contracted by the B.C. Petroleum Corporation, in any case. It's another government body that certainly knows what the price is.
MR. CLARK: Is the minister prepared to share with me those prices? In other words, from time to time can I review the price that we're selling British Columbia gas to the Americans for?
HON. MR. DAVIS: The assistant deputy minister says yes, but not individual transactions. I'm sure the member will say that that isn't good enough. That information has to be supplied to the National Energy Board, and the National Energy Board, which is the final authority on prices — especially in nearby areas across the border — has to pass, or not, on those individual contracts. The hon. member is right that there are individual contracts signed. The B.C. government knows, the Canadian government knows and the National Energy Board knows, but because those are private market transactions, there is a degree of confidentiality.
I want to assure the member that in no case is B.C. gas sold under similar conditions at a lower price in the U.S. than it is available for in Canada. If the hon. member ever hears of an instance of that kind, we'd certainly be the first to move in on the situation.
MR. CLARK: As long as the individual players aren't identifiable, it seems to me that the prices could be public information. If the minister gives me that undertaking, I appreciate that. However, I would say that in my view the wholesale price should be the same for everybody, regardless of who the end user is. Therefore there are cases of American industry getting gas cheaper than B.C. residential consumers.
I want to ask the minister briefly about the provincial government's position with respect to FERC Order No. 256 and how that has impacted on British Columbia.
HON. MR. DAVIS: The hon. member refers to the FERC decision; that's the Federal Energy Regulatory Commission in the United States. It endeavoured to press a particular pricing regime not only on Canadian exporters but on a large number of American suppliers. That FERC decision has been thrown out by the courts in the United States. The rationale in the U.S. was to try to price gas in a simple way so that people could understand it; have one simple price, not a combined price — demand charge and commodity charge — and require all transporters and distributors to be common carriers. The policy in the United States is to try to make all the monopoly groups — transporters, distributors — common carriers.
So the FERC regulations were aimed more at that than at Canada, but as it applied to Canada it meant the tearing up of certain contracts. It didn't affect the west coast much, if at all; but it certainly affected movements eastward. As I said, that decision was thrown out, so FERC is back at square one.
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So far Westcoast isn't really affected; nor, more importantly, are our producers.
MR. WILLIAMS: This is not my field. I haven't done the homework in this area that I have done in others.
MR. WILLIAMS: I'm running out of energy, as many people in the House may be.
At any rate, the 600 contracts you refer to with respect to BCPC and the question of how those are reallocated: what process do you see relative to that? And what about the relationship to some of these core buyers, as you term them, such as B.C. Hydro and so on, in terms of that as an opportunity for them?
HON. MR. DAVIS: The simplest answer — or simplest resolution of that particular dilemma — would be for a single marketing corporation to come along and buy those contracts and administer them. Those contracts require two parties. Some contracts run for a few years, even a few months; others run for ten or 15 years. Most of these contracts are indexed, so it isn't a fixed price, but there are definite contracts. The producers who are restive with that marketing agency would break away and either sell directly to the market or go through some other group. There are several groups selling gas out of Alberta; perhaps we will see a similar number of marketing groups in British Columbia, or maybe just one.
As I say, the simple answer would be to sell those contracts to an entity which would hopefully do as good a job as a marketing group for those producers.
MR. WILLIAMS: One would wonder how many buyers there are in circumstances like this in terms of these values. As I say, it's not an area that I'm familiar with, but with a limited number of buyers one would wonder about getting an adequate price in those circumstances. Again, it seems to me to beg the question about B.C. Hydro's gas distribution company, say in the lower mainland, which as far as I can recall has never played a role in the field as a buyer. This could be a unique opportunity for that utility to entertain these acquisitions and then provide some kind of new security for their consumers. That has not been the case because of the nature of the beast.
It would seem to me that in a sense that's what Manitoba is currently doing. They have not had a publicly owned distribution system in Winnipeg or the urban areas and are looking at active acquisitions in the field in Alberta so that it can be passed through to their consumers in Winnipeg. I guess it's fair to comment that these are somewhat comparable, and this may indeed be a unique opportunity for B.C. Hydro.
HON. MR. DAVIS: In most jurisdictions — and this applies certainly in Alberta — the major utilities do buy in the field themselves. They have their own purchasing people, their own purchasing policies, but of course this would mean an extension of the overview of the Utilities Commission. The hon. member is quite right. Almost all the utilities would do their own buying. Some large companies may be confident about their selling, especially in the United States; others may want to band together and sell through some particular group.
MR. WILLIAMS: Again, I haven't checked. The tradition is for the Minister of Energy to be on the board of B.C. Hydro. I don't know if the minister is on the board. It seems to beg the question, in terms of this great opportunity for this public utility in British Columbia to become active in the field and size up these significant opportunities that may be there. Is that being reviewed?
HON. MR. DAVIS: Mr. Chairman, the hon. member is essentially right. There have been a number of discussions over the last seven or eight months, and I think all parties, including the utilities, are abundantly aware of the new circumstances that will evolve and the new opportunities that are there.
MR. WILLIAMS: So these may be significant assets that could affect the value of the B.C. Hydro gas division, for example. That being the case, one would, I hope, be rather cautious in terms of considering privatizing the B.C. Hydro gas division at this stage of the game, when it really might be significantly more valuable down the road. The minister nods positively, so that's encouraging.
MR. WILLIAMS: Well, I thought it was a fairly positive, thoughtful nod.
It does raise that fundamental question around the gas division, which has been consistently profitable for B.C. Hydro. It's been some time since I looked at it, but it's just been the real breadwinner in that corporation since it began distributing gas, other than for some minor operations here on the Island.
Has Hydro carried out studies itself in terms of privatizing the gas division and the implications for the corporation, since, as you've indicated, 25 percent of its plant is in excess in the electric division? That's $2.5 billion times 10 percent per annum. That's certainly a lot of money going down the drain or not over the dam. It seems to me they'd be in a lot of trouble without the gas division, and hydro rates would have to up dramatically in British Columbia to meet their debt payments and their operating costs.
These studies would be fascinating. Maybe the minister could share some of that knowledge with us.
HON. MR. DAVIS: Mr. Chairman, I'm not aware of any studies in depth as to privatization of any of the arms of B.C. Hydro. The hon. member knows, I think, that when the Utilities Commission looks at Hydro, it has to endeavour to separate costs, functions and so on between gas on the one hand and electricity on the other. So there's a fair bit of information in the public arena as to what investments in Hydro are related purely to gas, what are related to hydroelectricity and what indeed are related to B.C. Hydro rail. So there are numbers, but to my knowledge no specific studies aimed at privatization have been carried out by B.C. Hydro.
The hon. member referred to water going over the dam and down the drain. I'm not quite sure what he meant by that, but he was pointing to the fact that B.C. Hydro is, or was, certainly overbuilt in respect to dams and major transmission. That has its good side. We don't have to make major investments for quite a few years yet, and for that reason our costs are not going to continue to rise. Because our rates are now lower than Ontario's and are among the lower rates in
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Canada, we can hope that our rate comparisons look even better in the next few years.
I'm not trying to say that overbuilding is a good idea, but I do think that it would be preferable if we had some very long-term view of things and did build in a more regular, planned fashion so we could keep our construction industry reasonably busy and keep the engineers and others in the province who have recently had to leave to try to find jobs elsewhere.
Our circumstances of overbuilding are fairly general across the electric utility industry in the western world. Thank heavens we're not in the position of the power utilities immediately to the south of us, who built or tried to build several very large nuclear-powered complexes. For one reason or another, they're not able to complete them and the investment in those facilities is a multiple of their investment in going-concern sources — hydro, conventional thermal. Slowly that investment is now working into the rate base in the northwest, and power rates which used to be much lower than ours in Washington and Oregon are now rapidly escalating, and for the first time in history our rates will be lower than theirs. That differential will move steadily in our favour for another decade or two, mostly because of the decisions they made to go nuclear. They were then unable to complete that program.
MR. G. HANSON: I would like to direct a few questions to the minister with respect to electricity for Vancouver Island. Recently we had the announcement of the program outlined for discounted rates of surplus electricity to come through to Vancouver Island. I think the minister is aware that the reception of the announcement of that program by the media and by the citizens of Vancouver Island was not as enthusiastic as might have been expected.
I guess the background, as the minister knows as well as anyone in this House, is that the people of Vancouver Island have contributed as taxpayers to this capacity that we have in the province — the dams, the transmission lines and so on — and have always had the prospect before them of a natural gas pipeline, which generally surfaces prior to a provincial election. Certainly that's been pointed out to me by my colleague the first member for Nanaimo (Mr. Stupich), who has quite a bit of service in this House. The people of Vancouver Island look forward to something to alleviate the high space-heating cost that they endure here.
I have the numbers here. On average, I think that a person on Vancouver Island in an older home built prior to 1976 spends about $500 to $600 a year more in heating their home on oil and so on, and that doesn't cover the cost of heating water, etc. I'm always surprised when I visit my relatives and friends in the lower mainland and see their natural gas heating bills and I notice that the furnace is on and the windows are open and so on. That just doesn't happen on the Island. Heating costs are high; they're a major factor. When you're in older houses that are not properly insulated, it is a very large cost factor.
The program was announced, and we know that we've got the Cheekye-Dunsmuir transmission lines in place. I gather line number two seems to be virtually moth-balled. I have quotes here that indicate that the capacity is about 10 percent or something of that nature. On previous occasions when we debated Energy estimates in this House, the minister indicated that when the Cheekye-Dunsmuir line was planned, space-heating needs of Vancouver Island were part of that idea to justify those costs.
My first question is on the interruptible nature of the power. I've read the Blues, and I know what the minister said before about our getting a discount price because it's not firm power. The fact of the matter is that we do need that energy, and we have the surplus energy in the province. The minister also indicated that there would be more announcements from Hydro.
So the first disadvantage of the program is that the power is interruptible, even though it's not interruptible very frequently — as the minister has said, perhaps once every ten years or whatever. It's almost as if why bother? Why not make it firm rather than interruptible on a possibly ten-year or six-year basis or whatever?
Because we don't have the natural gas. Secondly, the provision that you must have the backup heating system in place in order to take advantage of the program is another disadvantage — to have that other installed system as a backup. It seems to me that this whole program could be simplified. The power could be made available to us on a firm basis, a discounted basis, apportioned in a way that a certain factor of it would be for space-heating, to remove the necessity to have the alternative backup heating system that most individuals on the Island are not going to be able to take advantage of on that basis. I'd like to start my questioning by asking the minister if he could respond to those points.
HON. MR. DAVIS: B.C. Hydro operates on a provincewide basis, and its rates are regulated by the Utilities Commission on a provincewide basis. When it introduces a new rate or new rate category, the new rate applies provincewide. I think many people living on Vancouver Island would like to see a different rate schedule for Vancouver Island, and I don't blame them for that.
When I was in opposition I was arguing that because we have, for whatever reason. a very substantial transmission line from the mainland to Vancouver Island — a transmission line for carrying electricity — something should be done to make electricity available at a lower price for space-heating, pending the arrival of natural gas some day. As an intermediate step, Hydro has introduced this interruptible rate.
To go back a bit, when I argued that Hydro should strike a special rate, the counter-argument from the minister of the day was: "Sooner or later your surplus will be used up, and then you will have to price up at the level that will pay for new dams and new transmission lines and so on." Interruptible pricing is simply pricing to get rid of occasional surpluses which occur from time to time. The Utilities Commission will accept the idea of interruptible sales.
B.C. Hydro's system is preponderantly a hydroelectric system. Its firm sales are only those amounts of energy which it can absolutely guarantee that it can deliver in dry years as well as in wet years. So in wet years it has a capability of delivering more energy. Hydro has never sold that additional energy, other than to the Americans. Now, with this interruptible scheme, we're selling this additional energy — which isn't necessarily there all the time, but is there quite predictably four years out of five — at a discount rate everywhere in the province. It is not a rate exclusive to Vancouver Island. Because it's interruptible, the end user must have another way of heating — space-heating, water heating — when the electricity is cut off. Typically, older homes, homes in outlying areas, currently fuelled with oil or with propane or — an
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announcement is coming out in the next few days — with wood can switch to those old-fashioned sources of energy as a backup. But they must have the capability to heat their homes in the event that this interruptible energy is in fact being interrupted.
The hon. member is disappointed. I know many people on Vancouver Island are disappointed that this rate does not apply to homes that are totally electric. The installations were cheaper in the first place, but Hydro obviously can't interrupt electricity to homes which are all-electric; it's as simple as that.
The interruptible rate does allow for natural gas to arrive at some point in time, and it will become the backup fuel. If the price is low enough, it will become the principal fuel, as it is in Vancouver. The main reason the gas pipeline has been built to Vancouver Island, I believe, is partly economic and partly political. I know the hon. members across the way will laugh, but let me try to explain what I mean. The people on Vancouver Island expect the same power rates and gas prices on Vancouver Island as on the mainland. If you have the same gas prices on Vancouver Island as on the mainland, there's nobody to pay for a pipeline in between. So that's why we look to Ottawa for a couple of hundred million dollars to pay for a pipeline to give us gas prices on the Island which are the same as in Vancouver. That's politics and it's economics. But I think these are among the hard facts of life. Meanwhile we've introduced an interruptible electric rate which will help out people in older homes still on oil and still on propane.
MR. G. HANSON: There are a couple of points that were raised by the minister's response. I gather the capacity of the Cheekye-Dunsmuir is 2,400 megawatts, which is more than enough to meet the needs of Vancouver Island energy consumption until the year 2010. We have the surplus capacity, and we have the surplus that's being spilled over the dams, etc. The main obstacle to the program, really.... If the minister is correct and the interruptions would occur only approximately once every ten years up until 2010, we can live with that. But the problem has been the disincentive into the program by the initial capital outlay of having to get into the alternate backup system.
The minister is advising us now that other alternate systems that were excluded from the program before, like piped-in propane or wood and so on, are going to be allowed. Is that correct?
HON. MR. DAVIS: The initial announcement included oil and propane as adequate backup. Wood will now be included as an adequate backup, with one proviso: that the wood-using stove, furnace or whatever has a capability to heat the home. But that's the only qualification.
This is prairie-wide; it's not just aimed at Vancouver Island. The people in Revelstoke don't have natural gas. Because they have a gigantic dam within sight of the city, they can't understand why they don't have similar rates to those that the people on Vancouver Island would like. They are taking advantage of this new interruptible rate.
But the conversion cost in many instances need not be $2,500; that's the ceiling on the grant that is available from Hydro. If a home is presently heated with oil, I am sure that a baseboard heating system could be installed, especially if it is a relatively small home, for a small figure, a few hundred dollars.
That is the obstacle, but it's not a major one, hopefully. It will allow a lot of people who, for the investment of several hundred dollars, can then get their heat energy at half the price.
MR. CHAIRMAN: Shall vote 24 pass? So ordered.
MR. CHAIRMAN: Oh, I'm sorry. First member for Victoria.
MR. G. HANSON: We need kind of a rotating platform right in front of us here, I think. That's what we really do need.
Well, I want to congratulate the minister, because the old Hydro press releases dating back to May 22 excluded wood. I am pleased, because we have surplus wood on this island. There is no better use for some of the so-called weed species that are available that could create employment. It certainly would aid in silviculture programs to do proper thinning of species that are suitable for home heating. There are many airtight stoves and good heating devices that are constructed and designed on this island, as elsewhere in the province. So I think that it's a commendable move on the minister's part. We certainly support that.
We will continue pressing for firm power, but in the meantime you have essentially removed one of the major obstacles in participating in the program, which is the backup system. So proper airtight stoves, coded through the safety regulations.... I can see that after a few of the appropriate press releases, we could generate some employment on this island. I really think that that's a major move, and we certainly support that. We will be watching it very carefully. When will the wood be granted as a source? Is it now, or is Hydro making an announcement shortly?
HON. MR. DAVIS: Hydro cleared the press release today. Hopefully we can amend and improve programs. That was an important step, especially in outlying areas.
The hon. member is referring to job creation: the several hundred dollar conversion or addition of baseboard heaters or, in more complex cases, installation of a proper oil furnace. All mean local employment. By and large, those jobs are filled by people locally; the skills exist, the designs exist, and so on. It's only in instances where there is no crawlspace, or this or that, that it is difficult to make the necessary adaptations. But usually the electric installation is quite cheap.
MR. G. HANSON: Just a few final remarks. I know the minister is aware of the studies that indicate that the best way to create more energy is really to conserve the wasteful practices that we presently have in place. Because a lot of the housing stock on Vancouver Island is older, it really needs to be properly retrofitted with.... Glazing windows takes a long time to recover that amount of cost, but it's certainly worth doing. Proper insulation and alternate wood backup is an excellent generator of local employment. I think we could stimulate the economy somewhat by the fact that people could save those extra few hundred dollars a year which they could put into retrofitting their homes.
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I would like the minister to consider a program in conjunction with the changes that he has made to the discounted electricity rates, allowing wood as a backup and so on — a program to allow proper retrofitting. Seattle City Light and other electrical firms actually make those grants available. They make low-cost, low-interest loans available to citizens, because they realize that in the long term that utility can benefit by allowing people to bring their accommodation up to proper conservation standards. It makes sense for the utility and not just the individuals involved. I'd like the minister to consider some program that would allow people on Vancouver Island and in other areas where this program will be available to upgrade their housing stock in order to be more energy efficient.
HON. MR. DAVIS: I agree with the hon. member. I certainly agree that energy conserved is the least-cost energy. Hydro has had programs. Hydro will have further programs. I might comment, however, that in Canada we are way ahead of the Americans. We in British Columbia, largely as a result of federal programs for insulation and so on, are much further down the road in conservation than the Americans. It's only because of the sudden and rapid increase in their power rates down there that the economics of insulation is beginning to make sense.
MR. G. HANSON: It doesn't take a great deal of imagination to conceive of a number of economic spinoffs that could be promoted by the government in terms of, for example, asking BCDC or the so-called Enterprise Corporation to look at allowing grants to woodlot owners that could be structured in such a fashion as to make firewood a real industry. We do have some entrepreneurs who are exporting kiln-dried alder and firewood into the United States markets. I think there is great potential for us. We've tended to be sloppy with our energy on the Island because we have been deluded into thinking we've got such an abundance of hydroelectric power and other forms of energy. I think we could really put on our thinking caps and develop some good local enterprise around the kinds of programs that you're developing here in the discount energy field.
MR. WILLIAMS: To go back to BCPC and the contracts that it has with respect to byproduct sulphur, there was a contract of some length — a decade or something like that. I think the contract began when the byproduct was less valuable. It's my understanding that that has carried on for some time, and it has actually become incredibly profitable to the holders of the contract. I think it's an American outfit, if my memory serves me right.
HON. MR. DAVIS: The company that is currently doing the marketing for the B.C. Petroleum Corporation is Petrosul. They get a commission. I agree that it's profitable, but much of the profit is spinning off into the Petroleum Corporation.
I have a few general comments about the Petroleum Corporation and the assets it has. One asset is pre-bought gas. It has pre-bought some $50 million worth of gas. If the marketing function was sold off, there is an asset. There is another asset with something of a question mark beside it. Ocelot didn't pay for its gas for a couple of years, because of market and other difficulties. As a result of some excellent bargaining by one of our public servants, the B.C. Petroleum Corporation has the first mortgage on the plant, which is worth around $50 million. So there is some $100 million worth of assets there, leaving aside any good will or any other aspects were the Petroleum Corporation to be wound up.
MR. WILLIAMS: There are significant assets. The Petrosul thing.... From memory, I think the profit has been extraordinary — maybe $7 million, $8 million or $10 million a year or more.
HON. MR. DAVIS: Obviously that has to be included in any evaluation of value.
MR. WILLIAMS: The contract presumably terminates before too long.
HON. MR. DAVIS: I think the contract with Petrosul has another several years to run.
MR. WILLIAMS: There was at least one good public servant who did the bargaining with Ocelot, and there was one poor public servant who didn't do such a good job on Petrosul. Clearly, these are still significant assets — $50 million in pre-bought gas, $600 million in contracts, the first mortgage on Ocelot, the sulphur byproduct values of the system. These are very significant assets. There aren't many buyers, it seems to me, when you talk about these kinds of assets.
As the second member for Vancouver East just said, you anticipate the triggering of an acceleration in oil prices down the road. That seems reasonable in terms of American public policy relative to the Middle East. That being the case, these assets of ours down the road are going to have very significant values beyond what we perceive today. The sale of these assets doesn't make any sense in terms of public policy, does it? Why should we hold a fire sale?
HON. MR. DAVIS: Mr. Chairman, the hon. member has almost convinced me that we shouldn't wind up the B.C. Petroleum Corporation. If there are some elements of any of these public corporations that are highly profitable and don't yield a reasonable price, why would we sell them?
MR. WILLIAMS: It's encouraging to hear the minister say that, Mr. Chairman. The minister has significant economic training, unlike some of his colleagues. He's not going into the agrifuel business, and that's reassuring. At least with that hand on the tiller in this area, it's somewhat reassuring to hear the comments you've made. Indeed, why would we sell them on a fire-sale basis, if only for some ideological reason that can't stand some sound tests?
MR. CLARK: We may explore that sulphur thing at some other date. I think I want to move on to electric power planning and see how we're doing here. I think I'm going to call this segment of the estimates "The triumph of politics over rationality." The minister might agree that in this game we're participating in there is very often tension between what might be a politically attractive proposition and what might rationally be the best way to go.
We can debate this a bit, and the minister might take me up on this challenge, but it seems to me that we're not moving in terms of the overall scheme of planning for electric power
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generation in British Columbia. We're not moving in a particularly rational way, but rather in an extremely political way. Therefore I'm arguing that there's been a triumph of politics over rationality.
For example, we have the minister announcing that we have a 25 percent surplus in the B.C. Hydro system currently. So we've been overbuilding. But in the last year the minister announced a quite significant thermal power plant in the Kootenays, although we haven't heard any more on that. He's announced a small thermal plant as well, which uses waste coal to generate electricity. He's announced new transmission lines up from Washington, even though they're awash in electrical power as well — certainly in California and in the Bonneville power situation.
We've got Site C dam. We've got a gas pipeline to the Island announced, even though we know we need several hundred million dollars in free money from the federal government to make any of these. I'm not arguing that in each individual case.... For example, the waste coal plant — that may well make some economic sense. But again, having said that, we've got this huge surplus already.
Let me deal first of all with Site C, because we have, I think.... If the minister would say that what we're going to do.... We've got all this surplus, so we want to export it. So all these new projects are for some export market, even though the price is significantly depressed and there is a surplus down there.
The question I want to deal with, given that we're going to export electricity, is: what's the best way to generate it? The minister has talked, and we've listed a number of supply side options, but there has been no discussion of any demands or options. There has been not a bad study done by an environmental group — the minister has probably seen it — the Peace River environmental society. From time to time — and I think members know that, certainly members on this side — I haven't always leaned toward environmental solutions, but it seems to me that in this case we have the happy coincidence of environmental solutions also being the most rational ones.
The conservation strategy pursued in the United States by law required utilities to pursue conservation strategies first, or at least to incorporate them in their modeling for future electric power. They compute, for example, that the costs of conservation, or purchased conservation, would be 56 percent of the cost of Site C. They can produce, per kilowatt-hour, 3 to 29.5 mills. That's roughly the weighted average. The weighted average is actually 18.3 mills, whereas Bonneville has just sold their major firm power export to California at 37 mills.
So conservation appears from a cursory examination to be the most cost-effective way in which to produce more electricity in British Columbia, even though I would argue that we could probably make a firm sale to California just using some of the surplus we already have, recognizing that to meet further demand, ten years down the road when we may potentially need it, conservation would be the best alternative.
[Mrs. Gran in the chair.]
From a rational planning point of view, we want to weigh all the alternatives — the thermal plant, Site C — to determine what's the most cost-effective. Most of the utilities in the United States incorporate least-cost pricing in the model with which they produce electricity. We don't do that in British Columbia.
Has the minister considered incorporating in the energy projection model that we use in the Ministry of Energy — B.C. Hydro uses a somewhat modified one — a least-cost pricing model; or, in other words, including conservation as part of the modeling, so that we're not just looking at the supply side but also at the demand-side options?
HON. MR. DAVIS: The simple answer is yes. I'm repeating myself. I agree that conservation can yield the least-cost energy. I think Hydro otherwise has always — they would argue — endeavoured to develop the least-cost project as the next in. But I would certainly include — and perhaps that's a somewhat different course or manner of planning in Hydro — the conservation opportunities.
The member had me announcing a number of new power plants. As I see it, we have a surplus of some 25 percent, which if our load were to grow at 5 or 6 percent a year would still last us five or six years. We can't sell that surplus in the United States on a firm basis; it's ours. We only sell it on a very short-term basis, a month or two or three at a time. That will always be the case.
British Columbia, unlike a number of other provinces, has never sold electricity long-term in the United States, so we don't have a history of being a big exporter of power. But because we have a hydro system and have wet years as well as dry years, we do have surpluses, and we've from time to time sold the surplus. But you cannot sell that long-term, and because you can't sell it long-term, you can't sell it for a good price. You can only sell on a spot basis, and then if they're really hard up, as they were off and on a few years ago, they'll pay a high price for it.
The price of export electricity has gone all the way from 8 mills to nearly 40 mills, I think. That's the swing of the kind of price that Hydro has been able to get, and this last year it has been selling in the order of a 10- to 20-mill range. That wouldn't finance a major power project. The price has to be a multiple of that, and the energy has to be committed long-term.
As to our own power needs, we have a 25 percent surplus, which we can use up. We have conservation, which may moderate the rate at which that's used up. So we have a five- to ten-year period ahead of us in which we're adequately supplied. As alternatives thereafter, we have several opportunities. We have several power sites in British Columbia which can be developed at relatively low cost. We also have the downstream benefits from the Columbia River Treaty, which will begin to flow back to us at zero cost around the year 2000. That's another resource we have.
What I'm saying is: with a policy which puts some emphasis on increased conservation, which looks around the province for least-cost opportunities and which takes into account the downstream benefits, which are zero cost, we should be able to hold our present power rate structure for a long time. We're not going to be building very much, but we'll have a better and better price structure relative to other provinces and especially relative to adjoining areas of the United States.
A coal-fired plant in the Kootenays — it's a great idea. It would provide employment, but it could only go if it were based on a long-term sale in the United States. The price alternatives in the United States would have to be examined.
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If a private corporation were to do this, its shareholders' necks would be out. My personal opinion is that waste coal in the Kootenays, which is already mined above ground, is relatively cheap and could be burned. There are environmental concerns to be addressed, and the optimum location of a plant and so on, but those are possibilities.
MR. CLARK: What concerns me, though, is the propensity, for political purposes, to consistently make announcements when there doesn't seem to be any coherent energy strategy. There are all kinds of projects that are being announced.
Let me put it this way. Let's assume that 25 percent surplus is only for domestic use — and that's going to protect us for some time — and conservation. Let's assume that we want to export firm power to the United States, and we want to do something to generate that firm power for export. If we could build a dam or a thermal plant that could pay for itself and make a profit, then one could argue that we should sell it. However, even though that dam or that thermal plant may be able to pay for itself if we get an extremely high price for export and all the mitigating factors, it may still be that conservation would be a cheaper way of generating the same amount of electricity, and therefore even though the dam or thermal plant will make money, we could make more money by using purchased conservation as a strategy.
In other words, it's not simply a matter of predicting which supply project would be the least inexpensive, but what is the least inexpensive for the taxpayer as a whole. Most analyses that I have seen — not nuts-and-berries environmentalist analyses, but hard economic analyses — demonstrate time and time again that purchased conservation, particularly in a province like British Columbia where we haven't practised intensive conservation, could generate power significantly cheaper than any of the proposed projects. Yet we have not seen a commitment on the part of the government to analyze that option in any great detail.
So would the minister agree, therefore, that prior to allowing an export contract to be signed, even if it were to recover the costs and make a profit and deal with mitigation of environmental effects of a dam or thermal plant, a conservation strategy or the cost of purchased conservation would be analyzed and compared to the cost of the project before allowing such a project to be built, private sector or public sector?
HON. MR. DAVIS: Madam Chairman, simply put, we are looking at demand management. Hydro is looking at it as one of several elements in its forward planning. The hon. member is saying it would be cheaper to insulate more — for example, install more efficient electric motors as opposed to old motors, and so on — and that the cost of those conversions, those insulation programs, may well be less than building more dams and more transmission lines. Hydro is certainly looking hard at that. I think Hydro would be the instrument to use, not government. If prices of energy were to rise dramatically, then people would begin to do more of those things, but when prices are low, the public generally isn't going to impose that kind of discipline on itself.
MR. CLARK: I appreciate the assurance of the minister. First of all, let me put it this way. There are models around to predict future demand for electricity in British Columbia, and there are models around to predict demand elsewhere. The most sophisticated modeling has been happening in the United States by utilities, required by law.
I don't know if the minister is aware of Manitoba; he may not be. But as someone who worked as a consultant for the Department of Energy and Mines in Manitoba prior to being elected, I can assure you that the government is spending a significant amount of money and resources to develop more sophisticated computer modeling techniques to predict energy demand under various scenarios. I understand that in B.C. Hydro that has not been the case.
I'm asking the minister to give an undertaking to instruct B.C. Hydro or the Ministry of Energy to look towards incorporating those kinds of much more sophisticated energy forecasting than we've seen. I appreciate that energy forecasting has actually come a significant way in British Columbia. We were previously doing this kind of very simplistic....
The assistant deputy is shaking his head. We were exposed during the Site C hearings to quite a simplistic model for predicting the future demand for electricity, and it was quite embarrassing. Prof. Irving Fox and others I studied under did a marvellous job of exposing that. As a result, Hydro has somewhat upgraded their modeling techniques, but they still only look at supply. They haven't done the kind of real disaggregated analysis by an industrial group of what would happen if serious conservation strategies were pursued. I'm asking the minister to give me an undertaking it's not, I don't think, revolutionary — to instruct B.C. Hydro to move in that direction. Then we begin to look at electricity planning in a more rational way.
For example, I am not inherently opposed to long-term electricity exports from British Columbia, but I'm concerned that we won't do the most cost-effective means of generating the electricity so that we can export it. I'm concerned that politics would say that it makes more sense politically to build a dam, even though economics would say it makes more sense to pursue a conservation strategy. If the minister would indicate that that technical capability will be upgraded, then I could be more reassured that we'd be moving in a direction of more rational planning, so that before we build a thermal plant and the Site C plant, even if they make sense, other alternatives that might make more sense would be considered by the government.
HON. MR. DAVIS: Madam Chairman, good news. B.C. Hydro has already begun a program of demand management. I have no hesitation in encouraging the utility to pursue the kind of approach that the hon. member favours.
I'm interested in his comment that he worked for a while in Manitoba. If that's so and if he agrees with energy policy there, he has to agree with large-scale export of electricity. I assume from what he says that Manitobans are insulating their houses like crazy in order to export more power to the United States. That's really, in a glib way, what is happening.
But I'll repeat — and I'm agreeing with him — that demand management can yield lower-cost energy than going out and building a big new plant, especially one in a remote corner of the province or in a difficult area.
MR. CLARK: Let me say that I'm reassured that the minister is going in that direction.
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I'm just seeking advice from my colleague. I was under the impression that the conservation branch of B.C. Hydro was actually eliminated a year ago. Is that correct?
HON. MR. DAVIS: Part of the marketing force for Hydro was eliminated. The hon. member would perhaps agree that to the extent they were simply marketing kilowatt hours aggressively, that isn't demand management. But both the ministry and the utility have in recent months been very actively discussing demand management.
MR. CLARK: Just briefly, I have some questions on the Utilities Commission which could come under a later vote, but maybe we'll pursue them here.
The minister indicated that the responsibilities of the Utilities Commission are going to increase dramatically. Having had some experience with the Utilities Commission, at least recently, it is very evident that they are currently understaffed. Given the increasing responsibilities as a result of deregulation and the increasing technical nature of their deliberations, has the minister decided to increase the number of vice-chairmen of the Utilities Commission and deal with that? I notice that the budget doesn't allow any increase in the Utilities Commission budget — or marginal, if any. It seems to me that there needs to be some significant move in that direction, if not now then very soon. I seriously think now.
HON. MR. DAVIS: First, the job to be done by the Utilities Commission will be a larger one in the future in one area particularly: assessing the purchase contracts of the utilities — gas in the field, for example. There is a need for more staff, better staff. A few of the people with the Petroleum Corporation — the reservoir engineers and so on — may be transferred to the Utilities Commission. However, I alone don't decide on the scale of the budget; the Minister of Finance, Treasury Board and so on have had a say. The argument is to try to get along with the dollars that you've got. Secondly, if the Utilities Commission is covering more areas, then require the applicant to pay. For example, Inland is paying most of the bills for the current hearing on Inland's gas rates.
So there are ways of funding the Utilities Commission other than increasing the government grant itself. But I still would argue that the government grant should also be increased.
MR. CLARK: I want to touch briefly on West Kootenay Power and Light. One might argue that this incredible delay in the decision is in part because of the understaffing or the lack of adequate resources available to the Utilities Commission. One can't help but wonder what's taking the commission so long to come up with their final decision, unless they're seriously understaffed. I'm sure the Inland hearings and others are doing the same.
We debated West Kootenay Power and Light in the House, and I don't intend to go through the debate today. I think the minister's position is clear, and I think my position and our position on this side of the House is clear. But I am concerned about the decision that does come down: that the minister might take some steps in terms of safeguarding the consumers in the region. It goes above and beyond what the commission may or may not come down with. Let me give you an example. If the Utilities Commission allows the sale, has the minister considered any contingency plans in terms of undertakings by the government to safeguard the number of jobs in Trail?
HON. MR. DAVIS: I certainly had hoped that the decision would have come down before now. One of the difficulties is that Barry Sullivan, who is the single commissioner now for education, has been able to devote relatively few hours to the writing of the final decision. I don't know what the Utilities Commission is going to tell us — what it's going to rule — but regardless of its ruling, my expectation is that we will have to further define the role of the commission. We must be absolutely certain that the commission is putting the interests of the consumer — regardless of whether it's B.C. Hydro or West Kootenay Light and Power — ahead of everything else.
There may be some qualifications, conditions to an approval, or conditions attached to a turndown, coming from the commission itself, as to improvements in the legislation — setting up the commission and setting the ground rules for its operations. I'm not sure that this government can also ensure that employees will all be protected. I assume that that operation is already so thin down there that a new owner, if they have any plans to sell more power or modernize, is going to be employing more people rather than less.
MR. CLARK: I'll put the minister on notice that the decision regarding the sale of West Kootenay Power and Light to the American company rests on the definition of the public interest. The Utilities Commission is adjudicating what they determine to be the public interest using a six-fold test.
It's my view that the final arbitrator of the public interest is the chamber. I feel very strongly that it's for the politicians to decide what the public interest is, and it should not be relegated very lightly even to bodies such as the Utilities Commission, because they look at it in a technical narrow sense.
There are broader public policy considerations in the sale of a monopoly electric power utility to an American company, in terms of the use of electric power for economic development purposes and otherwise, that say to me that it must be controlled locally and preferably by the public sector, preferably by a local public operation.
Therefore, if the Utilities Commission allows a sale on the narrow technical point of view, I will be coming to the minister and to this House for a legislative intervention to prohibit the sale. I've introduced a private member's bill. We feel very strongly about that, and we'll be pursuing it more vigorously at that time, if they allow the sale.
I am concerned about the Utilities Commission, because they've been almost defining those political questions — the public interest question — on their own in the absence of direction from the government in many respects. In other jurisdictions — Manitoba as an example, with respect to natural gas pricing — those questions were referred to the Utilities Commission with specific terms of reference to adjudicate based on the parameters of the public interest defined by government.
In this case, we have a very important case for 60,000 consumers, and members on this side of the House and on the other side of the House have indicated their concern. Yet the
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government has not seen fit to direct the Utilities Commission in any way other than a normal transfer of licence. So we feel strongly about that.
MS. EDWARDS: Madam Chairman, I'd like to ask the minister.... He'll be surprised that I'm not talking about coal, but he may not be surprised that I want to ask him about the proposed gas well — the Chevron Mansfield well — about which a public meeting was held recently.
At the public meeting, the Elk Valley Health and Safety Protection Committee led the discussion, and the public information that they put to you was unanimous, as I understand it. It was that the group was extremely concerned about the health and safety of the community if in fact that well were drilled.
As I understand it, Dr. Vern Millard has been appointed a liaison officer to work with the company on the evacuation plan. That is going to go ahead, and if I'm wrong, perhaps you can correct me. But as I understand it, there is a liaison person, and I thought it was Dr. Millard who was to work with them. I wonder if you would elaborate on how that is going to work. Perhaps I can explain a number of things, and you can tell me what's about to happen.
With that in mind, I also wanted to know.... That group put to you the situation vis-à-vis Dr. W.C. Hulbert's research going on at the University of Alberta. Dr. Hulbert is expecting by the end of September to have data on some special and new tests being done relative to the effect of hydrogen sulphide inhalation on allergic and other sensitive individuals. He's going to research on exposure to lesser quantities of this, perhaps on longer terms and in varying amounts; research that has not been done before, but research that would be important to a community anticipating the possibility of this kind of thing happening — where it's certainly not a probability, but a possibility.
I would like to hear the minister answer as to whether he expects that he will wait for that information before granting any permit. Could he explain what his expectations are of Dr. Millard and the liaison work that he will be doing, presumably between Chevron and the government and, I hope, the residents of Sparwood, on this issue?
HON. MR. DAVIS: Madam Chairman, Dr. Millard's assignment essentially is to make more information available to all concerned, particularly to members of the community in the area. It is not that of a negotiator or middleman, in the sense of trying to work out agreements, but simply to make all parties better informed about the possibilities.
I have no information which indicates to me that Chevron is going to proceed with the well. I really don't expect them to be doing anything or committing any money or equipment before the fall. I haven't had a report recently from Dr. Durie, who's been up there backward and forward. He is a senior official in the ministry who's normally stationed here in Victoria. I'm expecting sometime later this summer a report and a recommendation one way or another. That recommendation will be based in large part on experience elsewhere, principally in areas of Alberta. I realize it is a relatively confined area; it's a valley situation as opposed to a plains situation, and so on. All these factors have to be taken into account.
I can only say that, firstly, we're endeavouring to get as much information out to all parties as possible; and secondly, I can assure the member that the well won't proceed if our technical or other people have any reservations whatsoever as to the safety of the people who live in that valley.
MADAM CHAIRMAN: The Minister of Forests would like leave to make an introduction.
HON. MR. PARKER: Madam Chairman, I would like to introduce to you, and through you to the House tonight, my son Mike and his friend Kannin Oseitutu, who are down attending basketball camp at the University of Victoria and just dropped in to see what I'm up to this evening. Would the House make them welcome.
MS. EDWARDS: Madam Chair, may I have leave to make an introduction?
MS. EDWARDS: I'd like to introduce my son as well. I don't know if this is called getting even, Mr. Minister, but my son is here, home from the sea, with his wife: Rob Edwards and his wife Pam, with their friends Jamie and Lorna Tutte, and Brenda and Tannes Gentner. I wish the House would make them welcome.
I'm not through talking about gas wells yet, Mr. Minister, because I think the procedure that happened in response to the proposal of Chevron.... As far as I know, its application to drill has not yet been withdrawn, so I assume that the next move is up to the ministry.
I think that the information that came in at these hearings indicated that there seems to be a dreadful lack of ability by the government to respond to the concerns of people in an area where a gas well is proposed and they're worried about it.
The participation of a number of other people.... And certainly the news that came from the Alberta people since the Lodgepole incident and the sour-gas blowout.... The Alberta people have made their requirements far more stringent and in fact have introduced requirements that make it far more.... I don't mean to say difficult, but there are many more things for a company to go through when they are going to drill a well. In fact, there is a requirement now, as I understand it from Dr. Millard, that any company that wants to drill a well.... If the residents of that area want to, they can demand a public hearing. That is one of the requirements. In this case it's very clear that the people needed to have some say in what was happening.
I would like to know if the minister has given some consideration to revising — if that's the best word — or expanding the regulations that surround what happens when a company makes application to drill a well that could have sour gas in it.
HON. MR. DAVIS: Madam Chairman, this ministry can apply any one of a large number of conditions to the drilling of a well or the opening up of a mine and so on. I would add that we take our lead in many of these matters from Alberta. They have much more activity, and they have much more experience. Any new developments on the Alberta side when it comes to conservation and safety, we almost automatically
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endeavour to adopt. New developments there should be good news to the people here.
We can and may hold hearings. We haven't got all the information we need to make that decision yet. The hon. member can be assured that we are concerned, and we are certainly aware of the fact that that is a unique environment, and that the confined nature of the valley requires that we be doubly careful and very conscientious in securing the future of the people there, if indeed this development goes ahead.
MS. EDWARDS: Mr. Minister, Dr. Millard agreed in this case with a Dr. Baylis. I'm not sure who he is. He has a lot of initials after his name, and he was in a public health position in a regulatory body in Alberta. He sent a letter in answer to this committee. He had reviewed the evacuation plan that was there and said that he thought it was not adequate and would not pass in Alberta. Dr. Millard agreed with him.
I think this points out the fact that we need some more stringent requirements of companies so they cannot simply put in an evacuation plan like this and send it through to the ministry and let it go back without the examination of the people who should be concerned. I don't think the whole issue would have come to light had those people not formed their committee and had they not insisted on a public meeting. They went through quite a few public manoeuvres to get that meeting, as you well know, Mr. Minister. What I want to hear is whether you are considering making those kinds of regulations so that people who are concerned will be able to have the kind of public hearing they want to have so they can have input.
The experience in Alberta where they've had this happen is that even where they allow public hearings, very infrequently do the people want to have a public hearing. It seems to me that the regulation should be there and should allow the people who would suffer if there were an accident, or whose health may suffer even if there is not an accident, to have the right to have input when the application is made for the permit to drill.
HON. MR. DAVIS: Madam Chairman, it seems to me that Dr. Millard is certainly doing his job. He is supposed to liaise with the residents of the area to let them know what protection is available in other jurisdictions and what best can be done, assuming a development were to take place. We will have regulations at least as stringent as those in Alberta. If the circumstances warrant, if Chevron is interested in proceeding, we will have hearings.
MS. EDWARDS: This leads me, of course, to the next public issue in the Elk Valley, which also went on in the recent past. That is the concern of the Elkford protection group which was considerably concerned about the threat of dumping spoil over the edge of the west slope of the Greenhills Range. Again, we had a group of citizens who wanted input, and eventually had input. I want to say to the minister that I do believe they were heard. They did have their letters brought in. They had people talk to them. In the end, they were very suspicious about the fact that when they met with the minister, that was fine, but the day that the mining company met with the minister the letter went out saying that the dump could be made. Probably there would have been considerably less concern had this process been a public process.
I wonder if the minister has given any thought to allowing a kind of public process where these kinds of permits are sought by mining companies to change the terms of the permits under which they are mining.
HON. MR. DAVIS: We do on occasion have public hearings. There has to be a considerable demand and the issue has to be many-sided. My understanding of the situation is that the company was intending — certainly wanted — to engage in a much more extensive operation along the ridge that can be seen from Elkford. As a result of discussions not only with the government but also with the community, they finally decided to cut back their plan substantially. It is a very much modified development which is going to take place; indeed, that is all that will take place. All parties were heard more than once. I'm surprised that the hon. member is saying that the day after the company representatives were here we made our announcement. The company came down several times. The decision is not a decision that only the minister makes; it is a decision of cabinet as a whole. That was some time after the company officials appeared here to see me.
MS. EDWARDS: As I say, I think the point is that if these processes were a bit more public, the concern of the people in the communities would be far less. They would feel much more comfortable with the kind of responses made in the back-and-forth discussion. I'm trying to encourage the minister to see that people in these communities want their input. They want it to be public; they want the company to be able to make their case publicly; they want to be able to make their case publicly; and they would like to know that the ministry is able to respond on a public basis.
I think everybody understands that there are some parts of that process that could not be made public, but I think that these two incidents in the Elk Valley in recent months have indicated very clearly that there is a very strong need to have a method whereby the public can come involved. That's the case I want to put to the minister. If we're going to have stronger regulation on sour gas wells, I would be pleased. I would be even more pleased if the minister were able to assure me that there would be public hearings. But if he says they'll match Alberta's, then perhaps they will be there.
I know that the mayor of Elkford and the Elkford protection group has requested the minister's assistance in being made aware of the stage 3 requirements for Greenhills. I expect the minister will likely respond to that very soon, so I won't go further into that.
I would like very much to ask the minister, however, if he could report to the House on the current situation vis-à-vis the committee that the Deputy Prime Minister of Canada put together and which the province of British Columbia was participating in for measures by which we could sell more western Canadian coal to the east, Ontario in particular. I know that there were to be some recommendations and there was action ongoing. I wonder if the minister could tell us what is happening.
HON. MR. DAVIS: Our representative on that high-level committee — Ottawa, Ontario and other provinces, including Alberta — is Assistant Deputy Minister Macgregor, who is sitting beside me. He tells me they had a meeting within the last few days. They are meeting with many concerned parties, including the unions in the Kootenays and with Ontario Hydro. I haven't personally seen a finished report from them, but I assume they're working hard on it.
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MS. EDWARDS: I understood there were to be some recommendations, and I understood they were to be made public a little while ago. In fact, those recommendations were to have something to do with technological research and some specific directions that were to be taken by the various provinces, and they would probably give us an idea of what specifically could be done to assist in the process that is going ahead that I'm very happy, and I know you're very happy, to know about.
HON. MR. DAVIS: Mr. Macgregor tells me that recommendations will be forthcoming, but they haven't completed their work yet and they haven't framed those recommendations. There has been a recent sale of coal to eastern Canada, and there will be from time to time sales without special measures being taken either by the government of Canada or the provinces.
When we really know what the problems are in increasing the movement of coal across Canada and, indeed, to the Chicago area of the United States, I am sure policies will be developed to address them.
MS. EDWARDS: I wish you could tell me if there is a time-frame on this. The other thing I understood was that there were to be some proposals for research and work that could be done at the production end and on the transportation end — but the production end is one of the areas that I'm particularly interested in. Will there be some recommendations in that area? Will there be some studies announced? Can you give us any of those details, or is it not to come until later?
HON. MR. DAVIS: There are a series of studies underway, some of which may take some months to complete, but I am sure that coal-cleaning — reducing the waste that otherwise has to be carried long distances — is one of them. I am sure there will be pressure on us to reduce our royalties. There will be a variety of considerations, and each of those will be addressed.
On the transportation front, the alternative of shipping through the United States or the consequences of the new federal Transportation Act — which will tend to bring down Canadian rates in competition with U.S. transcontinental rates — have to be assessed. I also am sure that the provinces across which this coal moves will be under pressure to eliminate their sales taxes on diesel oil and so on.
There are a whole series of considerations at the producing end and in the transportation area, and I am sure at the consuming end there will be considerations also as to whether more coal-based power will be produced in Ontario by an alteration in Ontario's longer-term planning.
MS. EDWARDS: If the minister can tell me any kind of time-frame, I would appreciate it.
I have one other question: is there any more news on the coal thermal plant that the minister has talked about, and what are his plans in that regard?
HON. MR. DAVIS: Regarding coal movements across Canada to an eastern Canadian and U.S. Midwest market, I gather that it's expected that the report from the technical level will be finished, say, in September or October, and the report will be to the political level — essentially to the
Premiers and Prime Minister — and the political solutions, if they are called for, will have to be formulated thereafter.
The hon. member asks about a possible thermal plant, and I stress the word "possible" because no one has announced one, but there is some interest in the private sector to build one. It will only be built if there is an export market for electricity, and that export market has to be sufficiently remunerative. The price has to be high enough and the term of years of sale long enough to finance the plant. It would have to be stand-alone self-financing; in other words, the price would have to be right. I'm talking about an export sale.
The advantages of the plant are, obviously, employment during the construction phase and afterwards in the operations. I suspect that the most economic operation would be one using Westar's waste coal, but that remains to be seen. There are others offering coal for sale.
The principal competition is Alberta. Alberta has lower cost thermal coal than we do, but they have to mine it. If we can use waste coal that's already mined, maybe we have some advantage over Alberta. And the power plant would be closer to the U.S. border; the transmission costs would be lower.
Western Washington Water Power, based in Spokane, is interested in a possible purchase. They're interested in building a transmission line. They've already announced they're going to build a high-voltage transmission line up to the border near Trail; firm up that transmission capacity, in any case.
So some aspects of this development seem to be favourable. I've never announced that there would be a project. I think we must investigate its economics, and if there is the possibility of a project like that going ahead, we're upgrading waste coal. We're upgrading it to the highest form of energy — namely electricity — and we're selling electricity outside the country. But that would not intercept in any way Hydro's role of supplying customers in Canada. It wouldn't have a Canadian market; it would have to find its market, and its financing based on that market, elsewhere.
MR. GUNO: I want to focus briefly on the northwest part of the province. As we have indicated on a number of occasions, one of the biggest drawbacks to real economic development in that area is the lack of energy source. The minister has indicated in the past that there is a consideration to extend the Nass River grid into that area. Will the minister update the House as to the progress of that development?
HON. MR. DAVIS: There are scattered needs, and indeed urgent needs, in the northwestern corner of the province. Individually they are not really large; at the present time they are not large enough to justify a major high-voltage transmission line extension northward.
I suppose if we were doing the job for all time, we'd run a line right up the Stewart-Cassiar connector as far as Cassiar. We would certainly be delivering energy to Stewart. I'm told by B.C. Hydro that the public subsidy — that's the way they put it — required to extend Hydro's grid from Aiyansh on up into Stewart is of the order of $25 million. So Hydro has put a price-tag on that. The community of Stewart would like to be on the Hydro grid and pay Hydro rates, rather than pay for expensive power generated from diesel fuel. They would like that extension to be built by Hydro as soon as possible. One alternative — I doubt if it's satisfactory to the town of Stewart — is for the Westmin mining company to harness a hydro
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source nearby, generate their own energy and sell their surplus to Stewart. That wouldn't look after any appreciable growth requirements in the Stewart area.
There has been some talk about a coal development proceeding at Mount Klappan. I wouldn't bet on it; it's a possibility. The company which has been advancing that project, Gulf Canada Resources, has indicated their preference for a power plant burning waste coal. The alternative obviously is for a Hydro line extension in there. That's another possibility. There are several mining developments, principally gold, through that area which collectively could provide a stimulus to help the economics of building or extending the grid further north. The Cassiar mining company has said that unless they get a low-cost source of power, possibly some help in their municipal financing, they won't go ahead with the McDame deposit when the life of the present mine runs out in a few years. So there's another opportunity perhaps, certainly a problem situation that has to be solved.
We are looking at all those needs. Hopefully we can come up with a stage development which will look after them in a reasonable way, but in the short term I think what is required is a public subsidy. Hydro's usual extension policy won't meet these needs. Hopefully there is some low growth there, some significant industries going into the Stewart area and so on. If that were to occur, then the economics of the extension would be much better than they appear to be right now.
MR. GUNO: I appreciate the minister's response, but I think it gets down to a question of the chicken and the egg. We will never be able, in the northwest at least, to realize that economic potential unless that kind of infrastructure is in place. I think that's the point that many of the people up there want to emphasize. As you point out, Westmin is developing Stewart as a potential port of great import. Right now we're exporting a hell of a lot of logs through there, yet we don't have the energy source to justify a manufacturing mill. If you take all those together, I think there is justification for extending that grid.
HON. MR. DAVIS: Madam Chairman, I agree with the hon. member. Unfortunately, when significant numbers of dollars are involved, more than one minister is consulted and the decision is more a matter of consensus than one dictated by the Minister of Energy.
MR. GUNO: I want to focus now on the mining aspect of it. I was interested to hear the brief and rather cursory remarks of the minister relating to this very important industry. It has been publicized as being the second most important for British Columbia, yet, as the minister himself has pointed out, it represents — at least in the expenditure of this government — a very insignificant amount. What I want to focus on — I think it's the same approach as that of my colleague the second member for Vancouver East (Mr. Clark) — is not so much on supply but on demand. I just want to canvass the minister's reaction to these challenges to the underlying assumptions about the industry.
One is that the eighties have seen a severe downturn in the mining industry, not just in B.C., but in all of Canada and much of the world. This government, due to its blind faith in the free market, continues to treat the B.C. mining industry as though, given enough time, it will return to the pre-recession levels. Unfortunately, there is overwhelming evidence to indicate that the downturn is not cyclical but structural. I would like to outline what we on this side of the House see as some of the possible remedies to this downturn, and indeed to try to challenge some of the underlying assumptions about this industry.
One of the most important ones we ought to realize is that the traditional markets for metal products will never again achieve the levels we had up until the 1970s. Why is this so? I think the metal markets now face a real threat of product substitution brought on by tremendous technical input by the space age, recycling and flatter global growth rates. In addition, I think the minister ought to realize that the established metal-producing countries like Canada are now facing tremendous competition from Third World countries.
It is our opinion, on this side of the House, that industry and government alike need to come to terms with this altered nature of the world metal situation and to develop new and innovative policies to contract these changed market realities. I want first to canvass the minister's reactions to these remarks, and then my colleagues will be asking more specific questions on it.
HON. MR. DAVIS: Madam Chairman, there's no doubt that substitutes have impacted heavily on the total demand for metals around the word. The inventories of metal-mines around the world, however, have been declining, and there have been quite a few go out of business, so if we can continue to be more efficient suppliers of metal, it may be that we can obtain a somewhat larger share of what admittedly is a relatively flat market.
Across the Pacific, of course, there are growing populations of people whose standard of living is rising, and if they begin to use materials in anything like the quantity we consume, at some point there will be a resurgence in demand. I agree that the short- and middle-term outlook is for relatively flat markets. Prices certainly haven't shown much indication of increasing significantly, so the mining industry is faced — and has been faced for the last few years — with a need to tighten its belt. What it has done is produce roughly the same tonnages of metals and other minerals in this province with an employed labour force which is roughly 60 percent of what it was in 1980. It is more efficient. Whether it will be able to continue to mine very low-grade ores in the future, though, is one of the bigger questions. I agree that the outlook is not all that optimistic, but I don't think it is as bad as the hon. member is tending to paint it.
MR. GUNO: Madam Chairman, it's not a pessimistic picture that I'm trying to portray but rather, I think, a more realistic approach by our government in terms of trying to deal with what is the reality today. I'm trying to say — and I think you acknowledge it — that we're no longer talking about a metals market but we're talking about a materials market. In that sense, I think that this government has a greater role in market research, in terms of trying to anticipate not only the existing customers but potential customers and also potential usages of our resource in a more sophisticated manner.
MR. WILLIAMS: I don't want to change the subject dramatically, Madam Chairman, but I certainly wouldn't
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want the vote to go through, either. The whole northeast coal project certainly deserves a headstone....
MR. WILLIAMS:.... or something at this stage of the game. I wish I'd collected all of the letters to the editor that the minister wrote when he was not a minister.
MR. WILLIAMS: I'm sure that the member for Yale Lillooet (Mr. Rabbitt) will want to discuss this shortly, along with many other important matters.
It does seem reasonable to ask for some kind of updating, because the consortium of some 50 banks has been huddling over this question for some time. I think there were some extensions in terms of negotiations — and that's fairly soon, if my memory serves me right — and much hinges on this. If Quintette were to close — if these things could not be resolved — then all we have is Teck operating there, and there's a whole domino reaction in terms of B.C. Rail and all of the rest of the exercise. Maybe the minister could bring us up to date.
HON. MR. DAVIS: Madam Chairman, if I was making a bet with the hon. member, I would bet that Quintette will still be operating this time next year, but that is by no means assured. Among the facts of life are these. Firstly, the world demand for iron and steel has not only levelled off but it has dropped significantly. As a result, the requirement for metallurgical coal has fallen. It has fallen more because lower grade coals and so on are beginning to be used to a greater extent. So the market is a smaller market — I'm talking worldwide. Really, we're players in a worldwide market. Our coal-mines are large and essentially efficient; our transportation system is very efficient.
However, some of our costs are exceptional. Our exceptional costs include moving large volumes of coal by rail from, essentially, the Rocky Mountain chain to the coast over comparatively difficult terrain. Our cost of mining metallurgical coal is also higher than in, for example, Australia, which is one of — if not our principal — competitors. Australia can mine coal at a lower cost than we can. Its coal seams are closer to the surface. Its coal-mines are closer to tidewater. And in the last couple of years the Australian dollar has fallen. All their prices are quoted in U.S. dollars. They therefore have not suffered a price decline, at least in the eyes of their own producers, such as Quintette, Teck and our southeastern producers have.
MR. WILLIAMS: We should be joint marketers.
HON. MR. DAVIS: The hon. member says we should be joint marketers. We've been exploring that possibility. We'll continue to explore it. There are several reasons why it will be difficult to get the Australians, for example, to really play ball in a Canadian-Australian-American, etc., cartel. Their costs are lower than ours, they are convinced they can get a larger share of the market anyway, and they would rather go on their own and play on their own than play with us. But there have been some learned papers written on the subject, and they've advocated the ganging-up approach to try to deal with the Japanese and the Koreans from strength rather than weakness.
MR. WILLIAMS: A sophisticated market.
HON. MR. DAVIS: But the market is less in quantity. The world price has fallen from the order of $ (Can.) 100 a tonne to the order of $ (Can.) 60 a tonne. Unfortunately our costs, at least from the northeast. delivered to Prince Rupert are higher than that.
The Japanese had a big hand in getting the northeast development underway. There's a body of opinion that holds that the Japanese will not wind up any particularly large area of supply, because they take the long view. If they help to bring it in, they'll want to keep it there, if only to have more competitors out there in the long run.
I don't know whether Quintette will negotiate a price which is more than its actual operating cost in the next three months. There's been a second extension from July I to October 1. But the price has to be of the order of $80 (Can) a tonne or more in order for that operation to continue, and it may be that the Japanese are prepared to pay that price to keep Quintette operating. Certainly there's an obligation, in our view, on Japan — and it's really the Japanese steel industry, not the Japanese government — to keep that operation going. It has to be kept going on a substantial scale, or the economics simply aren't there.
So it's really whether we are going to continue the same kind of operation, at least in volume. Or is it going to be closed down, and the Japanese will really have the final word? But at least I would bet that they, in the last analysis, having driven as hard a bargain as they can, will keep the mine operating.
MR. WILLIAMS: The member for Atlin (Mr. Guno), I think, has significant things to follow up on. I just have one point. I think what the minister is suggesting may well be the case. But say the scenario were different, and it would appear that they would be closing. Would it not be reasonable, if that seemed inevitable, for the province to insist on the overall volume from the province remaining constant, so that those benefits, while they may not be tied directly in the northeast, would remain within the provincial sphere?
Significant gains could be made because of the lower costs of the southeast. That could begin the repayment in the form of a kind of rent, if you will. to the province in terms of dealing with some of the costs that were there. In fact, there might be some kind of interesting sharing arrangement that would be more beneficial for everyone.
HON. MR. DAVIS: That is a possibility, but I certainly hope it isn't something we have to consider. We're not at this moment going to do anything which indicates other than that we expect the Japanese to honour their commitments. We're not even going to think about pooling our production from all mines, ex Quintette. We're certainly not going to eliminate our royalty or cut our rail rates more, and so on. We're in a bargaining stance, and as I said, we have to back the company up. Whether they're making a lot of money or a little, we have to back them up.
HON. MR. DAVIS: Well, I'm hopeful.
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MR. GUNO: I was rather interested in the minister's comment about the prospect of Klappan mine. He said: — I wouldn't bet on it." Is it his opinion that the government just sits on the sidelines and crosses its fingers and hopes that it works? I think the government should take a more active role, and I want to canvass the minister's response on this.
We should first of all realize that we can do a lot in terms of research directed to lowering the production cost, and I think there has been some work done on that. Secondly, the government should have a greater role in terms of involving itself with downstream product research, particularly working with potential customers such as Korea, which Klappan at least is trying to get a contract with. Thirdly, intensive research into new metal-based materials involving new alloys.... We have to provide incentives not only to the industry but to the academic world, in terms of looking into this so that we're more competitive in that area. Lastly, research in specialty metals. We have to get into sophisticated market research before we can reach the full potential that is required.
What is the minister's response to that?
HON. MR. DAVIS: I agree with the hon. member. There are certainly opportunities, and we do need to diversify. Klappan coal is still a relatively raw material, but very few countries produce anthracite coal. We don't produce any in Canada at all, so it would be a new product. To that extent, it would mean some diversification. The Klappan development is contingent, upon other things, on public investment in at least a road and possibly powerline extensions and so on, and unless that's a very large and likely-to-be very profitable development, I'm sure the government will look very hard at any contribution that it may be called upon to make in that direction.
In the present climate, there is certainly no reason why we would engage in what I would call another northeast coal experiment. That did at least help open up a substantial area of the province. The Klappan coal development would not be developing a new area to the same extent.
MR. RABBITT: I've been listening quite diligently to the opposition's cross-examination of the estimates here, but there is one thing that they have not entered into discussion on, and that is the item under 28, which is that we're in the third year of funding on a five-year, $10 million program.
MR. CLARK: On a point of order, we are at vote 25, I believe. Vote 28 comes up later.
MADAM CHAIRMAN: Hon. members, I think we're on vote 24. Did the member for Yale-Lillooet wish to continue? Are you speaking on vote 24?
MR. RABBITT: I wish to ask the minister if the results of that program have been evaluated to date, and if you could give an indication as to the success or the failure of that program.
HON. MR. DAVIS: The answer is yes. Yesterday, I think it was, I received a large document analyzing the FAME program and its contributions and failings. On balance it has been successful. It certainly stimulated developments in several parts of the province which wouldn't otherwise have proceeded.
So yes, we do have a document; yes, it can be made public; yes, on balance it's favourable to the so-called FAME program.
MR. GUNO: One of the harsh realities about the mining industry is that mines inevitably shut down, sometimes permanently, sometimes temporarily. I think government has a responsibility to address some of the hardships attendant on those realities. The economic loss when a mine closes is not just to the mining company, but to the community. I wonder if the minister would include, as part of their policy in terms of trying to deal with these kinds of problems.... to direct toward lessening the losses that accompany these closures. We on this side of the House believe that mining companies have a large role to play in these kinds of circumstances, both by allowing a kind of time-frame in mine closures that enables an orderly and planned transition period, and by taking an active role in assisting the employees to relocate and to find other employment. In the north this is a particularly important problem.
Government also has a role to play in terms of mine closures, a role that I think has been neglected by this government. On this side of the House we're in favour of establishing a community stabilization fund, which must accomplish two goals. First, it would be used to provide economic assistance in times of temporary mine closures. Secondly, it would be used to provide skill upgrading of dislocated workers and to ensure in other ways the transition of workers displaced when mines are shut down permanently. I just want to canvass the minister's reaction to this kind of innovative way of dealing with these kinds of realities that mineworkers face.
HON. MR. DAVIS: A lot of thought has gone into reducing, if not eliminating, these problems of shutdowns and permanent closures. I think there is now general agreement across the country that provincial governments — particularly in the north or outlying areas of the province — should decide on a limited number of communities and require the mining companies to move their people longer distances, if necessary, to have a few well-equipped, well-established communities which can serve a whole area.
Mines can come and go in the outlying areas, but the single community overall will have a degree of stability and permanence. Recent improvements in transportation can partially, at least, overcome the problem of ghost towns, of communities depending on a particular ore body or, indeed, on developments in technology which can almost overnight wipe out the livelihood of the people living there; in other words, a few well-located, well-equipped communities supported by a measure of long-term planning, which can serve large regions, rather than scattered towns with short lives.
HON. MR. DAVIS: There have been a number of task forces and a number of studies, and they all tend to reach the same conclusion.
[ Page 2383 ]
MS. SMALLWOOD: I'm in the unfortunate situation of trying to deal with the issue of uranium mining in the seven minutes left tonight.
I'd like to ask the minister if there have been any amendments to the regulations on uranium mining. In particular, when I was doing a bit of a crash course, learning what those regulations meant, I came across a specific claim up by the Williston Reservoir, a claim that after investigation indicated that the levels of thorium there were above the regulated amounts.
I'd like the minister to tell the House what has happened to that claim since our investigation and whether it has fallen under the guidelines of the regulations and become a designated area.
HON. MR. DAVIS: I'm aware of the occurrence, the discoveries by Cominco close to the Williston Reservoir. Yes, there are some locations near what Cominco regards as a possible ore body which do contain not unusual concentrations of thorium, but some thorium. And yes, we are aware of that situation; yes, consideration is being given to further refinements to the regulations. But dealing with that specific situation, it is my understanding that were there to be mining, it would not occur in an area covering that particular deposit, which has shown one or two samples on the edge of being of concern, or at least coming up close to the Canada health standards. In some we're aware of the situation. We're learning as we go along. We are improving our regulations. We do intend to refine them as time goes by.
MS. SMALLWOOD: Minister, the find at the Aley claim is higher than your regulations allow. According to your regulations, the grade of ore — the level at which the find falls, under the regulations — is 0.05. At the Aley claim, they have agreed that the find there is at 0.07, which puts it above your regulations, and according to your own regulations, it must now become a designated area. The exploration in that site, according to your regulations, must cease. There must be baseline surveys that must be published in the provincial publication, and then there must be regulations put in place for further exploration and/or mining at a later date.
But for any explorations to continue at that site — any work at all — there are specific things that have to be dealt with, according to your own regulations. My questions to you in regard to that particular claim are: is it now a designated area? Are they conducting the baseline survey? Is it going to be published?
HON. MR. DAVIS: If Cominco is interested in continuing any work up there, it may shortly be designated, and if it is designated, then there will certainly be baseline studies.
MS. SMALLWOOD: The minister has said that if Cominco wants to do work, and if it is designated, then there will be baseline surveys. Cominco has asked for work permits up there, and part of the process of identifying the thoriurn content at that site was through their request for a work permit to continue exploration on that site.
The point, Mr. Minister, is that they have an ongoing exploration project there. The ministry is aware that the amounts are above their regulations, and I put the question back to the minister. There are no ifs about this. It's above your own regulations, and they want to continue to work. They've made application. What's happening there?
HON. MR. DAVIS: The hon. member asks what's happening. I'm told that our engineers and Cominco's people are meeting right now. If Cominco decides to walk away from the area, so be it. But if there's any intention to proceed, they'll have to go through all of the procedures which follow designation.
MS. SMALLWOOD: I think that is a really unfortunate example of what is happening in this province with the mining industry and the regulations that have been put in place to deal with this sensitive issue of radioactive ore that is in close proximity to other mineral finds in the province. I believe the ministry has genuinely tried to grapple with the problem. From some of the work that I've been doing, I'm beginning to understand the magnitude of the problem in the province. We have other significant mineral possibilities that are in close proximity to either radioactive thorium or uranium.
What these regulations have done. In essence, is pointed out to the mining companies how they can get to work and how they don't have to worry about those minerals that are bothersome. What I have found, by looking at the regulations — and I have pointed it out to the minister on other occasions — is that what they do is spot-zone the province, rather than try to grapple with the much broader problem. The regulations only zone the areas where existing uranium claims take place.
The Ministry of Mines certainly knows that there are areas in this province that are not staked and that do have uranium. The ministry is aware that there are significant problems there, and & message to mining companies has been: don't assay for uranium or thorium, because if you find it, you've got problems. So when they're looking for other minerals.... And the minister said, when he brought in the regulations, that this was a signal to the mining companies that B.C. was open for business: "Come in and look for your other minerals, but for heaven's sake don't assay for uranium or thorium, because if you do, then this is what you're going to have to contend with. You're going to have to contend with our regulations that make you do a baseline survey, to let the people of this province know how significant that problem is."
The minister has said that he has undertaken some work to look at changing those regulations. Can the minister tell us what sorts of changes he's talking about and what sorts of areas he's looking at?
HON. MR. DAVIS: One of the interesting observations I can make is that had we not lifted the moratorium and introduced our regulations, we would never have known about this Cominco situation up on the Williston Reservoir. It is a rolling situation. Where there is any indication of radioactivity above a certain level, there will be designation. Baseline surveys will have to be made; all the precautions will have to be taken. The moratorium merely said that in areas where there has been seen by the industry a possibility of a uranium mine developing, no uranium mining can take place. But it was totally silent about discoveries of radioactive material elsewhere in the province.
So at least we now have a system in place which will enable us to deal with discoveries and, indeed, require action
[ Page 2384 ]
to be taken in areas outside those which were under moratorium.
MS. SMALLWOOD: It was not your regulations that actually identified this specific area. It was a citizens' group that has been lobbying against uranium mining and doing its homework. It wasn't the homework of the Ministry of Mines that identified it. It was brought to their attention, and the ministry was forced to look into it. They avoided dealing with that situation for many years, because it existed for many years and would still exist if it hadn't been brought to the attention of the Ministry of Mines.
There is nothing in mines legislation that empowers the inspector of mines to go into an exploration or mining site to get a full assay of what exists at that site. The mining legislation says that the companies "shall" give information, but there are no penalties. If they don't assay, for instance, for uranium or thorium, there are no penalties. There's nothing to make those companies share the information if they have it, or do the assays.
From talking to several different sources in the Ministry of Mines, what became blatantly obvious was that the information that you have at hand is information on economic values in the mines; in particular, in some of the older mines the only information that you have deals specifically with the economic mineral being mined. There's nothing to do with the other materials that are present. At some of the molybdenum mines, you have no information about the content of other radioactive materials. What we found out in the estimates of the Ministry of Environment was that they have no ability themselves, on-site, to be able to know what's in the tailing ponds — to know what is being extracted from the mines in addition to the economic minerals.
So what is happening with the Mines ministry, because there's no penalty and no ability to extract that information, is that you have, in essence, by lifting the moratorium on uranium mining and by putting in place regulations that have such a massive loophole in them that you can drive a mining truck through it.... That is what is happening in this province. This particular claim in Williston, where we have found that there are radioactive materials that are in excess — of your specific regulations, is only one example.
I can see that the minister is consulting with the deputy. Perhaps the minister would like to make some reference to the changes that he sees coming forth, and if indeed he sees putting some teeth in the mines legislation that would enable his ministers and the administrators of that law to actually get some concrete information to be able to enforce his regulations....
HON. MR. DAVIS: Madam Chairman, the current practice is that if there is any reason, any suspicion, any information, any advice to the effect that there is radioactivity in the area of a mine, or indeed around a particular exploration, then our inspection people go in with a Geiger counter and other equipment and determine the extent of the radioactivity. They are now much more concerned about that kind of check or investigation than they were before the moratorium was lifted.
There's a problem here, but it's not confined to the mining industry. Whenever Highways drives an open cut through a side hill, there's a similar disturbance; there's a similar opportunity to do a check. We'll follow up whenever we have any indication whatsoever of radioactivity in the mines and mining areas, but I can assure the hon. member that there are many other opportunities for checking for radioactivity, including radon in homes and so on. It's a big problem, but at least in the mining industry we're addressing it.
MS. SMALLWOOD: First of all, I think it's quite regrettable that we are trying to deal with an issue of this seriousness at ten after ten on a July summer evening. For as much as other members....
AN HON. MEMBER: There's no uranium exploration, and there are no uranium mines in B.C., so what are you talking about?
MS. SMALLWOOD: I'd like to suggest to the member that he has a little to learn about the situation of uranium in this province. And I would also like to....
MS. SMALLWOOD: Well, you know, if we hadn't had to spend two months on two pieces of legislation, we wouldn't have to be dealing with the people's business at ten after ten on a July evening. That was not our agenda.
MADAM CHAIRMAN: Hon. member, would you please speak to the vote.
MS. SMALLWOOD: I would be pleased to speak to the vote, and I would ask the Chair to try to restrict some of the discussion in the House when we are dealing with this business.
MADAM CHAIRMAN: Hon. member, the Chair will decide when it's time to call for order in the House. Would the member please continue with her comments.
MS. SMALLWOOD: Mr. Minister, we have already identified the fact that the legislation for the Ministry of Mines does not have enough teeth in it to enforce the ability of the mines inspector to identify the ore that is present in exploration and mining in this province. It is a situation where the mining companies have the ability to withhold the information. While the minister says that there are investigations going on on radon in mines, I'd like him to explain to us how many investigations are underway and whether or not the ministry is, with those investigations, able to identify sources by analyzing the ore in those mines once they've identified a radon problem.
The minister has also suggested that there are other areas of significant concern with regard to radioactivity and uranium, and he made a reference to both the highways and radon in basements. I think it's particularly interesting in regard to the.... And I saw the minister's letter to the editor in the Province in regard to the federal study that was done on radon in the basements of homes.
If the minister looked closely at the study that was published in the Globe and Mail, they identified specific areas of concern. It's ironic that the specific areas of concern are in uranium-rich areas of this province. If the minister himself has identified that there are some areas in this province that have more significant concentrations of uranium, can he — and this is a second question — explain to this House why he
[ Page 2385 ]
decided with his regulations to merely spot-zone those areas instead of, for instance, identifying a geological area and zoning it; identifying uranium-rich areas and working with other ministries — Health or Highways — or other industrial activities in those areas to identify ways of controlling the contaminants entering the environment?
HON. MR. DAVIS: The assistant deputy minister tells me that geochemical information has been collected over a considerable period of time. More of it is being collected now that does identify extensive geological areas, formations which tend to be more uranium- and thorium-prone than other areas. That information is being developed in British Columbia. I personally have seen maps showing areas which tend to be more uranium-prone than others, and our regulations will, as time progresses, take that information into account. It certainly is being shared with the Health and Environment ministries.
I might add that the zeal of the hon. member is certainly to be admired, but I have to state that we're the only province in Canada that's pursuing this matter in any depth and in a reasonably scientific and organized manner. Other provinces of Canada are simply ignoring the problem altogether.
MS. SMALLWOOD: I'd like to acknowledge the fact that the ministry is trying to grapple with the problem. I'd like to support you in the work that you're doing, in particular if you are now identifying specific areas of concern broader than site-specific and claims. I think the point is well taken that this province is and can well be on the cutting edge of grappling with this significant problem.
I think it's also relevant to look at the kinds of deposits, the geological areas that you're doing some work on now, to realize perhaps how significant the problem is in B.C. In comparison with other provinces, even though they may very well be further along in developing uranium claims and may have a more significant site-specific problem than we have here in this province.
I'm pleased that the minister has indicated that he is seriously looking at broadening the scope of the regulations, because I think I would like to encourage other mineral exploration and mining in the province. But for those exploration sites to be successful, we have to be assured that the regulations are in place and that they understand the rules. The regulations can't be such that they're outlining the loopholes for the exploration to fall through.
The minister has indicated that he is sharing the information with other ministries, like Health. Would the minister consider actually forritalizing that process with the other ministries? Can we look forward to a more concrete process of dealing with the problem of uranium in this province? All too often, when we're talking about the uranium problem, it comes down to the issue of whether or not we will mine uranium. We have a much more significant problem in this province than that ultimate question. I think the government has already acknowledged that they do not support nuclear power and sees the wisdom of leaving the uranium in the ground. That has been an ongoing dispute in this province.
But we have other things, and I think the minister acknowledges the importance of dealing with this problem in a more significant way. Can the minister tell me if there is an ongoing process of consultation?
HON. MR. DAVIS: Madam Chairman, there is and there will be an ongoing process. We will be learning as we go along. Of course we don't have enough information as yet. The hon. member is probably aware that uranium is the fifth or sixth most abundant substance in the earth's crust. It's everywhere. It's not as abundant as silicon, aluminum or iron, but it's spread thinly all throughout the earth's crust. There are concentrations in some places, and exceptional concentrations are being mined.
But it isn't a matter of identifying a relatively small number of situations in British Columbia. It's provincewide, it's nationwide, it's global. Concentrations above a certain amount are hazardous; concentrations below those amounts are not. Obviously there's a background of uranium there that the human animal evolved in. So it's a matter of degree, and it's very dispersed, extensive. It can't be solved overnight by a few regulations. We'll simply have to learn as we go along. Hopefully we'll be on the leading edge, as the hon. member suggests.
MS. SMALLWOOD: I'm sorry the minister just said, what he said actually, because I was very encouraged by your initial comments. The minister makes the comment that uranium is dispersed throughout the province and is a mineral that is as prevalent as perhaps silicon.
If the minister looked at the maps, he would recognize that there are areas that are richer than others. There are areas that are not covered specifically by your regulations. There are activities in this province, including the mining of other minerals, that expose the environment to uranium, and to a lethal extent. There were studies done during the Bates inquiry that identified wells with dissolved uranium in them at rates of 113 parts per billion, and toxic levels are 20 parts per billion.
These are areas that are not subject to your regulations. If a company went in and staked a claim looking for another mineral and never assayed for uranium, we would never know it was there. The ministry does not have regulations to govern such a situation. It is only when a citizens' group begins to respond to an increased level of leukemia among the children and ask questions about it that people find out there is a problem. There is obviously a massive hole here.
I was encouraged to hear that the minister said that he was doing the kinds of studies that are necessary to begin to regulate other industrial activities in these uranium-rich areas. But the ministry will have to do it in conjunction with other sites and with other ministries. I'm looking for some kind of commitment from the minister — beyond the commitment that we will learn as we go — to undergo some kind of comprehensive study with other ministries to identify the extent of the problem and begin to grapple with it. Quite frankly, Mr. Minister, if you don't do it. then the citizens' groups will, and the number of people who have been affected by your negligence will be on your conscience.
Vote 24 approved.
Vote 25: ministry operations, $23, 203, 101 — approved.
On vote 26: British Columbia Utilities Commission, $1, 407, 430.
MR. CLARK: I have a brief question on this vote. Before that I might just check with the Minister of Intergovernmental
[ Page 2386 ]
Relations (Hon. Mr. Rogers), because we were on vote 24, and I think we just passed 25, and now we're on 26. I don't believe we passed vote 24.
HON. MR. ROGERS: I think the record will show that in fact 24 is what we passed when the member for Surrey Guildford-Whalley sat down. I called 25 and 26, and now we're on the next one.
MADAM CHAIRMAN: That's correct, Mr. Minister.
HON. MR. ROGERS: Yes, we almost got to 27.
MR. CLARK: I just have one brief question on the B.C. Utilities Commission. Very recently the provincial government disallowed awarding costs to interveners at the Utilities Commission. I think that's a serious error in terms of the quality of the decisions that can come out as a result of not having an interplay of competition between public interest advocacy interveners and others. I know it has caused serious problems in terms of getting quality debate on the question. We only really have one now — the Law Foundation-funded public interest advocacy centre. There have been cases where the industrial applicant for a rate or design hearing, etc., has volunteered to pay the costs of interveners, and I understand that has not really been acceptable to the Utilities Commission in terms of costs that they can apply a rate increase to. So even if the government is not prepared to pay the cost for interveners, it may at the very least allow industrial applicants to pay the costs and have that applied to the rate base. Do you understand? Would the minister consider that?
HON. MR. DAVIS: Madam Chairman, certainly I'll consider it. I would assume, however, that it would be a government decision, rather than a one-minister-at-a-time decision. We should have the same policy across all the ministries.
MR. CLARK: So the minister is saying that this is a policy across the board with government in terms of the Ministry of Environment not paying the costs of interveners, so there's a concern that Energy would be the only one? Is that...?
MR. CLARK: It's very small in terms of cost to government, but it means a lot in terms of public interest groups effectively representing different sectors of the public in interventions. It seems a very small matter, and I think, quite frankly, a bit small-minded on the part of the government to stop that practice, so I'd hope the minister would reconsider.
Vote 26 approved.
Vote 27: Fort Nelson Indian band mineral revenue-sharing agreement, $800,000 — approved.
Vote 28: mineral development and exploration incentives, $7, 300,000 — approved.
The committee, having reported resolutions, was granted leave to sit again.
Hon. Mr. Strachan moved adjournment of the House.
The House adjourned at 10:25 p.m.
AMENDMENTS TO BILLS
44 The Hon. R. M. Johnston to move, in Committee of the Whole on Bill (No. 44) intituled Municipal Amendment Act (No. 2), 1987 to amend as follows:
SECTION 30, by adding the following section:
30. This Act comes into force by regulation of the Lieutenant Governor in Council.
45 The Hon. R. M. Johnston to move, in Committee of the Whole on Bill (No. 45) intituled Local Election Reform Act to amend as follows:
SECTION 14, by deleting paragraph (b) and substituting the following:
(b) by adding the following subsection:
(4) The term of office of a trustee elected at a general local election commences on December I immediately following the election and, unless terminated earlier by resignation or otherwise, expires on November 30 in the year when the next general local election of school trustees occurs.
SECTION 15, by deleting section 15 and substituting the following:
15. Section 23 (3) is repealed and the following substituted:
(3) The term of office of a trustee elected or appointed under this section expires, unless terminated earlier by resignation or otherwise, on November 30 in the year when a general local election of school trustees is next held.
[ Page 2387 ]
SECTION 17, by deleting section 17 and substituting the following:
17. Section 25 is repealed and the following substituted:
General local election
25. An election of all trustees to be known as a general local election shall be held on the third Saturday of November, 1990 and on the third Saturday of November in every third year after that.
SECTION 19, in the proposed section 30 by deleting "held on the same day and".
SECTION 23, by deleting section 23 and substituting the following:
23. Section 35 is amended
(a) in paragraph (b) by adding ", subject to paragraph (d), " before "appoint",
(b) by repealing paragraph (d) and substituting the following:
(d) if the election is an election held as required by section 25, any nominations shall be held on the last Monday of October and any polling shall, except for any advance polling, be held on the third Saturday of November; , and
(c) in paragraph (f) by striking out "shall conform with the Vancouver Charter." and substituting "shall be an election at large conducted in the same manner as an election at large under the Vancouver Charter."
SECTION 24, by deleting section 24 and substituting the following:
24. Section 36 is amended
(a) by striking out "an annual meeting" and "the annual meeting" wherever they occur and substituting in each case respectively "a meeting" and "the meeting", and
(b) in paragraph (a) by striking out "not earlier than October 1 and not later than November 14" and substituting "on the third Saturday of November".
SECTION 28.1, by adding the following section:
28.1 Section 46 is repealed and the following substituted:
Meeting of representatives
46. The representatives elected by meetings of electors referred to in section 41 shall meet on the third Saturday of November following the meetings of electors at a place determined by the board of the school district.
SECTION 35, by deleting section 35.
SECTION 37, by deleting section 37.
SECTION 38, by deleting "Section 40 is repealed" and substituting "Section 40 of the Vancouver Charter, S.B.C. 1953, c. 55, is repealed".
SECTION 43.1, by adding the following heading and section: