1988 Legislative Session: 2nd Session, 34th Parliament
The following electronic version is for informational purposes only.
The printed version remains the official version.
FRIDAY, APRIL 29, 1988
[ Page 4157 ]
Private Members' Statements
Integrated land use. Mr. Rabbitt –– 4157
Fee increases. Mrs. Boone –– 4158
Hon. Mr. Dueck
Waste levels in forestry. Mr. Miller –– 4160
Hon. Mr. Strachan
The aging population in B.C. Mrs. Gran –– 4162
Committee of Supply: Ministry of Finance and Corporate Relations estimates. (Hon. Mr. Couvelier)
On vote 37: minister's office –– 4164
The House met at 10:06 a.m.
HON. MR. SAVAGE: It gives me a great deal of pleasure to rise in this assembly today to welcome a group from the Chinese People's Institute of Foreign Affairs. The leader of the delegation is Mr. Chai Zemin, accompanied by Mr. Song Yiseng, Ms. Zhu Manli, Mr. Pi Gang and Ms. Cui Lixin. Would this assembly please make them welcome.
MR. DE JONG: In addition to my brother, Reverend John De Jong, pastor of the Christian Reformed Church in Georgetown, Ontario, who read the prayers this morning, being here this morning, I am also very happy that my father could be here. He had the initiative and the courage back in 1947, at the age of 43, to immigrate to this country with a family of ten. Last year we had a family reunion, at which time the total number of our family and his descendants were 99, now having reached 100. My father will be celebrating his 84th birthday on Monday, and this is why he's here today with my brother, also viewing what's happening in this House of which I am part. So I am pleased to introduce my father and my brother and would ask the House to welcome them.
MR. LOENEN: In the precinct with us are some special visitors from eastern Washington state. They come to us from Coulee City, and they attend the Heartline High School. They are 13 grade 12 students under the direction and care of Mr. Peterson, their teacher. Would the House please welcome them.
Private Members' Statements
INTEGRATED LAND USE
MR. RABBITT: This morning it is a great pleasure for me to be able to address some concerns from the perspective of Yale-Lillooet.
The major perspectives with integrated land use can be put into two categories, and those two categories are basically urban and rural. Urban land use is recognized by most people as being that which aims at density, whether it be high or low; zoning, whether it be park, recreational, commercial, industrial; and the uses of such. I guess it becomes the difference between the rural and the urban perspective, and those are some of the issues which I wish to address today.
Yale-Lillooet, for example, is a rural riding and consists of many small communities. The livelihood of most people in that constituency is ranching, logging, mining or tourism. To look at the definition of "integrated," it can be used as a noun, a verb or an adjective; but the definition that we're looking at is "a composition of many parts to make whole." I explain to many people that when I'm speaking of integrated land use I'm talking about multiple use of a land base within our province, either by or for the benefit of all the people within the province.
Of course, there are many conflicts there or potentially there. In the ranching community, there's a conflict about the use of water. If many of you have been following the plight of the ranchers in my area, you'll see that we're in for a drought this year that's recognized by the industry and by government, and yet Mother Nature controls this, and there's very little we can do. But we do have an industry that is competing with fisheries, for example, and other users for that water.
We also have the mining community. A recent example of the competition that that industry is in is outside my riding in Strathcona Park. There the mining industry is, again, competing with other users. In the logging industry, we find that conflict sometimes develops with other users, such as ranching, fish and game, the wildlife community. So we have a potential all the time for conflict within the riding with the different users.
I personally believe that British Columbia should be available to all British Columbians and that we cannot afford to let any particular segment control an area within the province solely for one use. Comprehensive use has to be and should prevail. I also believe that a great opportunity at this time exists in my riding for integrated use of a major watershed: the Stein Valley. I would like to just mention again the list of potential users within that area. We have loggers, miners, ranchers, tourism, both federal and provincial fisheries, fire protection and a native interest.
I believe that the last is one of the most important. Right now the native community in Lytton have one of the greatest opportunities of our time. As we all know, opportunities are a window; they don't last forever; they come and they go. That opportunity is here and now, and I think there's the opportunity for government, industry and the native community to develop a program and an integrated use that will be a benefit to all three.
What should some of the items of that agreement be? I have some personal ideas and I'll share them with you. I believe that the road location into the Stein should protect all major native sites. Road construction should be to a high aesthetic and visual standard. I think there should be a guarantee of a minimum number of jobs for the natives in the sawmills where that timber is being manufactured. I believe that there should be a guarantee for contractor opportunities for those natives. I believe that we, as a provincial government, should assist with the construction of an access bridge to the west side of the Fraser in the community of Lytton.
Reforestation opportunities for the natives at a contractor level in planting, thinning, spacing, brushing and nursery should also be made available. Allocations of woodlot licence or quota to the Lytton band should also be a consideration. An option on buying into the Lytton lumber sawmill should be made available.
These are my ideas, not those of my government or of cabinet, and I wish at this time to commend the Minister of Forests (Hon. Mr. Parker) for working with me, with the natives and with industry to try to bring a solution within that riding.
I see that my time is drawing short, but I wonder when I read an article by Jim Hume in one of the main daily papers and it says that it's only fair to share the Stein. I wonder if, as a rural representative, I'm correct when I read this, but I'm sure I am.
MR. MILLER: I appreciate the sentiments expressed by the member on this issue of land use, going back, I suppose, to pay tribute to a former New Democratic administration that really for the first time started to deal with the very difficult issues of integrated use in a modem and progressive way, in
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setting up the Environment and Land Use Committee, bringing those line ministries together and starting to do some planning of land use.
I also think that we can only make those kinds of decisions if there is an atmosphere of trust, which is very difficult to achieve. I recall when our government set up the agricultural land reserves. There was a great deal of confrontation in the province about that, but essentially the majority of the people in this province agreed that there needed to be some protection for agricultural land. But since then we've seen a whittling away of that protection. We see the appeal process and we see decisions being made that are very doubtful in terms of appeals to cabinet.
Let's turn to the Stein. Surely one of the most, if not the most, significant issues facing British Columbia is the question of aboriginal title and of reaching some type of accord with the native people in this province. It's amazing that enlightenment suddenly dawns on some people when an issue becomes very difficult to deal with, and the realization comes to people that you can't simply go in and do want you want. You have to deal with people.
The member is now saying: "Well, we have to have native participation. We have to have protection of these heritage sites. We have to have good quality roads. We have to have a guarantee of jobs." If that government had been even half as enlightened 20 years ago as that member seems to be today, we probably wouldn't be in the position we're in today.
I read the words of the Minister of Forests and Lands, who seems to be slowly coming to the realization that there is indeed a difficult problem in terms of integrated land use and access to resources, and it's springing up all over this province: in northern British Columbia and in the Stein. There are lots of examples. I'll quote the words of the Minister of Forests, which are somewhat astounding — given the man's age and experience in this province. In response to a reporter, after a meeting on whether there would be logging on the Stein River, he said: "Quite likely, but only with the participation of the Lytton band and the Lillooet Tribal Council in the planning and implementation process." He said it's never been done before: "...it's throughout the province. People who have gone before us haven't seen fit to include native British Columbians in a number of the economic considerations of the province."
He continues; he says it was a shock for him to discover that this hadn't been taking place in British Columbia. "It's long overdue; if we don't have a dialogue, how will we ever understand each other?" I commend the minister for coming to that realization at his stage in life, but the government really has to go one step further. I don't think you can simply — and I'll refer to it as somewhat paternalistic — say: "Now we have a problem; let's do all these nice things, and we can all get along together."
There has to be a recognition and an understanding of the concept of aboriginal title. I would suggest, if the government would commit itself to dealing with that issue, that more progress can be made. You'll find that in a number of rural areas in British Columbia, people — not just native people — are quite concerned that they see the resources being exploited and used, but they do not see the benefits in their region. In the Queen Charlotte Islands, there's been concern for years that there's a tremendous value and wealth in terms of the timber resource; it all flows off the islands. The benefit for the people there is very minimal. Certainly there are employment benefits, but there are really none of the spinoff benefits. If you could really compare the value of that wealth, there should be more benefit flowing to the local people.
Similarly in the Nass River, where we've seen this exploitation of the forest resource and, quite frankly, an abuse of the forest resource, the people in the region are being left with very little of the benefits.
MR. SPEAKER: I have to inform the member his time is up under the standing orders.
MR. RABBITT: I've got more good things here, hon. member.
I was referring, at the tail end of my earlier remarks, to comments made by a reporter in the Times-Colonist on Saturday, April 23, 1988. He pointed out some of the things that British Columbia has done. I'd like to point out to this House that we have more than 15 million acres of park already set aside — park and wilderness — in British Columbia. That's seven acres for every British Columbian. This government, in the last year alone, created 17 new parks across this province — this government, this minister.
Today we've heard some opposing views as to the orderly and integrated development of an area. We hear about problems that are not really there. This is a land use base in the Stein Valley that I'm talking about. I believe that we should be working with the natives, but this is not a native problem. I believe they are part of our community. They are British Columbians and Canadians. They are part of my riding, and I will represent them as I will represent anybody else. I have made it very clear to the native community that I believe the Stein Valley should be logged, but that does not mean that it should not be logged in an orderly fashion.
The member laughs, but maybe he should get out in the bush and have a look at what loggers do, and then he will have a better understanding. Sitting in an office on a committee is only part of the answer. I hear the remnants of the Barrett barrel over there: left wings and.... What were those other parts ?
I'm here to represent and fight for the communities such as Gold Bridge, Bralorne, Lytton, Spences Bridge, Boston Bar, Alpine Valley, Yale and Hope. There are jobs and people there, and I'm going to do my best to see that they get a fair shake and that their employment opportunities aren't eroded by individuals coming from possibly your riding and telling the people in my riding how they have to live.
British Columbians have to share, and that is what we are talking about in this watershed. There's room for everybody in there. There have been thousands of acres in this province set aside for park, and some of the areas have been in that particular watershed. Both the Stein and the Cottonwood are vast areas and have commercial wood. They will not be logged.
Mr. Speaker, it's been an honour to stand here and represent my riding today.
MRS. BOONE: I was so enchanted by the member's final comments that I almost missed my opportunity to represent not just my riding, but all of the people of British Columbia. It's nice to see that the member for Yale-Lillooet (Mr. Rabbitt) finally does stand up and represent his riding.
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I've chosen this time to speak on a subject that is a concern to me, as it's a subject that people are just beginning to become aware of, and that's the impact that the fee and tax grab are going to be having on the average British Columbian. On May 1 — I guess we can call it May Day — there are going to be substantially more increases coming down on the people.
The budget of this government, the one that took place in March, reduced personal income tax by $100, it said. A reduction in personal income tax of $100, yet at the same time we have seen massive increases in the amounts that everyone is paying for services regardless of their income.
Does it not seem strange to you that this government reduces income tax, a tax that is based on the amount one earns, a progressive tax that acknowledges that not everybody in this province has the same ability to pay as everyone else, that there's a discrepancy in wages, and replaces that with a fee and a tax that does not acknowledge the discrepancy and basically says that everybody has the same ability to pay everything?
Some increases have already come into effect and are well known by everyone. The gasoline tax is one that I find hard to understand and hard to take, especially in a riding that depends on automobiles for our transportation as much as we do. The alcohol tax, the tobacco tax: I don't really have a great deal of problem with those areas. Then we get into mental health fees, alcohol and drug fees, long-term care fees, and we've dealt with these extensively in this Legislature in the past couple of weeks, both from the member for New Westminster (Ms. A. Hagen) and from other members in our caucus.
The government is quick to say that those increases are negatable because they have increased the availability of GAIN. However, I don't believe that negates the fact that there is going to be severe hardship on seniors, and that seniors are once again being hit with higher fees.
There are many increases by this government that have taken place in the last little while that nobody hears about, that nobody knows about, and that are taking people by surprise when they just go about their daily lives. In some cases they don't even know that they are being dinged a little bit more than they were in the past, because they are not aware of what the fees were in the past and they're not aware that in some cases there weren't any fees.
One that has received virtually no media coverage, probably because this is a rural issue and one that does not affect the masses in the lower mainland, is the introduction of a brand-new fee related to sewage disposal. When I talk about sewage disposal many people sort of grin and say that this is a dirty affair, and it certainly is a dirty affair when you consider the costs that are coming up. It will now cost individuals in the rural areas an initial $200 for a permit to install a sewage disposal system. As there was no fee there previously, that is a 200 percent increase, done without warning, without consultation. On top of that, if more than one inspection is required, then the applicant will have to pay another $100 per inspection. If repairs or alterations are needed in the future, applicants will be charged another $100.
All of these hundreds of dollars — not little minor charges, not a $5 fee or a $10 fee but $100 fees that are being implemented without any warning and without any consultation — are outrageously high, especially given the fact that there were no charges before. Just how happy are those rural homeowners going to be when they realize they've saved $100 in personal income tax but they are being dinged some $200 or $300 in taxes to install a sewage disposal system? They're being hit so hard at this level here. Again, that is something that does not hit at a lot of people and probably won't get a lot of media coverage because people in the masses in the urban areas here aren't aware of this, and they don't care about this thing because they have sewage disposal right at their doorstep. This is a very difficult one to justify given that there no fees there at all.
That is just one of the ways that people have been stiffed. And they have been stiffed. British Columbians will find costs to do just about everything increasing. Certificates of births, deaths and marriages have gone up 50 percent, from $10 to $15; photocopies of each of those have gone up to $15. Search of records, $10 to $15; special verification, $10 to $15; changes of registration, $10 to $15. These increases may not seem much, and you can talk about two-bitting each other to death, but they are being five-dollared to death by this government.
It may not seem a lot to you or to me or to many of the working people, but there are many of the working poor out there that are going to find the cumulative effect of all these fees a disaster to their budgets and very difficult to deal with.
The change that I find really hard to understand is a change in the Marriage Act. This is interesting: marriage licences have gone up from $20 to $35. However, if you are one who chooses not to have your marriage take place in a church, if you choose to have a civil ceremony, then you're going to have to pay a heck of a lot more than that because it's gone up from $25 to $50. So it's a substantial increase. I don't know; maybe this is a reflection of the Premier's idea that if you choose not to go into a church, if you choose not to do those things, if you have a different attitude than he has, then by gosh you're going to have to pay for it.
Also on April 1, by order-in-council....
MR. SPEAKER: i regret to inform the member her time under the standing orders is up.
HON. MR. DUECK: To begin with, I would like to say that we certainly recognize that all people have not got the same ability to pay. We recognize that in many ways where we have provisions made to in fact offset the amount paid. I reject the words used, people being "dinged" or "stiffed." I think it's unfortunate that members opposite would have to use words like that. It doesn't reflect the good of parliament when we use words like that to refer to people and what is being done in government.
The NDP government for a long time now.... It's a socialist theory that they know how to spend. We know that, from their point of view, they've always been good at spending money. They've never been good at finding revenues. We know very well that governments have no money. I know it's a cliché and it's been used in many ways at different times, but I would say very definitely that money does not grow on trees; there is not a back yard where you can rake money as leaves fall in the fall from a tree. Money comes from the people of the province; money comes from you as well as from me. It comes from every one of us, and whenever we pay out money on any services whatsoever, it must be collected from the people. This is something the socialists have never realized: that you collect money before you spend it. You cannot give more services from the cradle to the grave and never mind where the money comes from.
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But we must recognize that there are certain people in society who cannot pay. I think that is very true and we recognize that. Do you know, in the increased MSP payments, we always stress.... You've stressed it how many times in the House? Do you realize that 60,000 more British Columbians will now be subsidized under the new scheme? You say we're dinging and we're stiffing. We're recognizing that there are people who can't afford to pay, and they will get the subsidy. Also, those 60,000 more people on subsidy also do not pay the $5 supplementary benefit.
So when you're saying that this government is only hitting those who can't afford it, the poor and the unfortunate, that's not true. We've increased the level of taxable earnings to get the extra subsidy from $3,500 to $6,500. That, of course, is the 60,000. How can you possibly say that this government is only charging more? It's also recognizing the ones who can't pay.
There are 600,000 people in British Columbia who now get subsidized MSP. Sixty-five percent of all premiums are paid by employers. At any given time, 2,500 people in the province get temporary subsidy, meaning that if they didn't qualify for subsidy but in a given month have a hard time paying the MSP payment, they can apply. There were 2,500 during the year who got temporary subsidy. This government recognizes those people who can't pay. That's why we have that program. There are 110,000 who pay nothing at all because they're under the social service assistance program.
So when you say that this government stiffs and dings, it's absolutely not true. This government also has the responsibility to preserve the system we have. I do not believe that my responsibility — I'm talking about health care now — is to look after the people only today. It's also to preserve this system we have in British Columbia for my children and my grandchildren. I'm glad to know that you are a grandmother and also have to look after that individual. I think that is my responsibility. Being on the opposite side and just criticizing is easy. You can criticize and find fault with anything and everything we do, because you don't have to stand up and be responsible. But my responsibility is to preserve this system, not only for me but for my children and grandchildren.
MRS. BOONE: Had the minister been listening to the second member for Vancouver East (Mr. Clark), he certainly would have heard about responsibility with regard to budgets. At the same time you were increasing all these taxes and fees, this government went and reduced the corporate income tax and has done so consistently for years, to the extent that we now have the lowest corporate income tax in Canada — but our people are suffering.
What the minister does not understand is that it is fine. The low-income people and those being subsidized are certainly requiring those things and are being assisted, but there is a tremendous amount.... I have not, in the whole year that I have been here, been able to make you understand that there are working poor out there who do not qualify for anything. If you are making $6,501, you do not qualify for that subsidy and you are finding those things difficult. Those are the people who find it difficult to find that extra $5 or $ 10. Those are the people who are having problems.
I was going to mention this, and I hadn't even mentioned Medical Services premiums. The minister must have had a guilty conscience, knowing that they are being increased on May 1, and substantially so. It is also interesting to note that there has been absolutely no message put out there to the people indicating that they now have the ability to apply for subsidy. How are the people going to know this? There have been no ads out there. We have seen $20 million ads on TV telling people about the family, but we've seen none telling people that they can now apply for subsidy at $6,500. There have been no ads out there. We are telling you that there are other ways of doing things. There are more progressive ways of dealing with people on an income tax basis that address the differences and discrepancies in wages, which shows that not everybody has the same ability to pay. We are saying that the corporations should be paying their fair share, and fairness is something this government does not understand, has never been able to understand and will never understand. Fairness is what we're calling for in this province.
I believe the member wanted a minute on this. We'll let him get on to this.
AN HON. MEMBER: No.
MRS. BOONE: No? Okay, he can't have that.
The government is slowly eroding the purchasing power of all the citizens in this province, which is coming around and taking away the ability of individuals to go out and spend money on those private entrepreneurs of which you are so supportive. We — the people — are not able to stand up to the economy. How do you expect this economy to survive? How do you expect our economy to flourish...
HON. MR. DUECK: It's flourishing.
MRS. BOONE: ...when you are coming in and putting more of these burdens on people?
WASTE LEVELS IN FORESTRY
MR. MILLER: Indeed, it's a hard act to follow. My colleague for Prince George is very eloquent when she defends the people of this province against that government.
I want to talk today about the problem that has been around for some time but is emerging more and more in the public eye as a very serious question in terms of forest management. That's the whole issue of utilization levels, or waste levels, if you like — the amount of timber that we're taking out of the bush, what we're leaving in the bush and what we're doing with it after we get it out.
The recent report by T.M. Thomson on block 6 of TFL 3 9 in the Queen Charlotte Islands has really highlighted the issue. It can, in a sense, be used as a microcosmic look at the issue not just on the Queen Charlotte Islands but throughout British Columbia. We're familiar with the work done by foresters in the Nass Valley and the report of the ombudsman in terms of the incredible waste levels in the Nass Valley — a very rich area.
I go back to the comments of the member for Yale-Lillooet in terms of the native Indians of this province who have been in that area for centuries, and who have seen the incredible amount of waste in their forests — with no benefit. They wonder about the future of their province and their people in terms of their ability to make a living in their homeland. On the coast particularly — and this has been documented by Pearse's group at UBC — this is a growing concern, and some people feet that we are simply cutting too much wood.
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There is some good evidence to support that, and it really ties into the question of sustainability. Is there enough wood? Are we cutting too fast? Will there be a massive fall-down in a given period of time where we will see employment levels and activities decrease in the forest industry? If you look at the method with which we are harvesting, there is evidence to support that. The five-year report from the Ministry of Forests — the forests and range resource report from 1987 to 1992 — talks about the target of the ministry in terms of the annual allowable cut in this province.
I will quote the report. A major goal is to maintain an average provincial timber harvest of 75 million cubic metres per year. That's a major goal of the Ministry of Forests, arrived at through some kind of analysis — hopefully the correct analysis in terms of what we can sustain. Yet if we look at the figures in terms of what is being harvested, we see that there was an alarming, astounding 91 million cubic metres cut in 1987. Despite the fact that the target of the ministry is 75 million, we're up to 91 million.
If you go back over ten years, we've pretty well been at 75 million. We dipped down quite a bit during the very bad years –– 1981 and 1982 — but overall for that ten-year period, we have maintained a 75 million average. Now we're up to 91 million. Even more alarming, because the issue of sustainability is more significant on the coast, is the increase in the annual cut on the coast, 1986 over 1987, which was 27 percent. We moved from a cut of 26.5 million cubic metres in 1986 to almost 34 million cubic metres in 1987. So people are understandably alarmed.
When we tie that in with the results of the Thomson report, I think there's ample evidence to indicate that we have to take a much more serious look, not just a cursory look — and I believe Thomson's report is somewhat cursory in terms of examining the issue — a much more in-depth look at the whole question. I've recommended that there be an independent assessment — and I'm not calling it a royal commission — of the whole question of sustained yield and utilization on the coastal cuts.
Turning to some of the recommendations, I'm quite disappointed in the minister's response to the Thomson report. I should also say I'm disappointed in T.M. Thomson, in that they did not go to the very people who raised this issue publicly — against incredible odds, I might add — and said: "We have a serious problem on the Queen Charlotte Islands." They had to fight the Forest Service, the companies and everybody else. Nobody believed them. But they did raise it: the Council of the Haida Nation; people concerned with proper resource management; the village of Port Clements, who are concerned about their community; and others on the Queen Charlotte Islands who are close to logging, who understand logging — and they see what's going on.
So the report comes out with some very, very powerful statements in terms of our management — or if you like, mismanagement — of the forest resource. Residue volumes on that cut block on the Queen Charlotte Islands were double acceptable levels, and that's brushed aside by the term "sympathetic administration": "Well, we went through some tough times, you know, and...." We did indeed go through some tough times, and I don't categorically reject, as a question of social policy, the government making decisions to maintain employment levels. That's a legitimate goal of the government and one that's perhaps not practised enough. Nonetheless, we put in this sympathetic administration to deal with that problem, and we left it in. Even today, according to the Thomson report, there is some measure of sympathetic administration being practised by the Forests ministry in this province. That, quite frankly, is shocking, because if you look at the quantum leap in the output of the forest industry and the profitability — and I'm not against companies making profits: I think that's good, as long as they put those profits back into the operations and we have jobs for the future....
MR. SPEAKER: I regret to inform the member that his time is up under standing orders.
HON. MR. STRACHAN: I'd like to respond to the member's statement, Mr. Speaker, and point out to the assembly that this is a concern of the government. It was a concern of the Minister of Forests (Hon. Mr. Parker), and that is the reason for the actions that have been taken.
To give the House some background, an independent audit of forest management practices was undertaken on block 6 of tree-farm licence No. 39 held by Mac-Blo on the Queen Charlotte Islands. It was ordered by the Minister of Forests and Lands on February 16 this year, and it was in response to a number of allegations, which the member has indicated, of poor forest management practices on block 6. The audit report was tabled April 14. The audit found that the amount of avoidable wood residue remaining on the ground after logging exceeded acceptable standards. Based on the findings of a recent independent audit of utilization practices on block 6 of tree-farm licence No. 39, the Minister of Forests and Lands has taken the following decisive and immediate actions, and I'll list them. They are questions that the member has raised both in the House and, I will advise the Legislative Assembly, in previous comments to his Prince Rupert newspaper, speaking as Forests critic of the New Democratic Party.
The response of the ministry is as follows:
1. The Ministry of Forests and Lands will review all wood residue from timber-harvesting operations on the coast during 1987, and will adjust stumpage changes as necessary. The methodology for doing this is currently being developed.
2. The Ministry of Forests will develop an effective system for measuring and reporting wood residue on the coast, and that system will be used by the ministry and the forest industry.
3. Training of Forests and Lands staff in the practice of residue surveying and monitoring and auditing of industry performance will be improved.
4. A public discussion paper on wood utilization standards is being prepared. Based on feedback from that paper, new utilization standards will be developed and applied.
It is expected that these prompt and effective actions will significantly reduce waste volumes.
On a more general note, the ministry points out that they would like to make two points with respect to the recent audit of management practices on block 6 of tree-farm licence No. 39 and, more specifically, on the subject of wood utilization, the audit report points out that the definition of residue changes as the economic situation changes, and they're aware of that. The member has admitted earlier that to some degree, I guess, he accepts the principle of sympathetic administration. Although he wasn't in government when the policy was adopted, I'm sure he was aware of it, as it was known throughout the industry that it was Tom Waterland as minister who put that program in place, recognizing that we were in difficult economic times.
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MR. MILLER: Not any more.
HON. MR. STRACHAN: No, not any more, and that's why the changes have been announced. There were difficult economic changes, particularly on the Queen Charlotte Islands and other isolated coastal areas. The old-growth timber stands in those areas had a greater percentage of low value rotten logs, which normally make up a majority of the residue. The cost of transporting these logs to processing facilities was high, since all logs must be barged. The high cost rendered much of the low-value logs uneconomic to move.
Although markets are good now, we all know they tend to be cyclical, and as markets drop; poor-quality logs that are economically marginal in times of good markets become uneconomic. It is not possible to avoid the presence of poor quality logs when harvesting old-growth stands; however, where avoidable waste is left on the ground, it will be measured and charged for accordingly.
The second point worthy of note is that the findings of this audit should not be extrapolated to other regions of the province. In the interior of the province and, as evidenced by this audit, in other coastal areas where stand quality is higher and transportation costs are lower, wood utilization is normally not expected to be a significant problem.
The member spoke quite eloquently and with some knowledge at a University of Victoria symposium a couple of months ago. I attended, and it was attended by the Minister of Forests and other interested people. He spoke of the economic reality that we all face and are all aware of; I've used that term myself. I think that's something that we have to be concerned with at all times. There is an economic reality in British Columbia and in the western world. We have to look at markets; we have to assess those markets; we have to understand the best practices for land use — all land use, whether it be forest practices, mining practices or environmental concerns.
There is an economic reality that we have to face, and I don't think there is any question that during the tough times of the early 1980s we had to face sympathetic administration.... I see the red light is on, so I thank you for your attention.
MR. MILLER: Mr. Speaker, there is an economic reality, and that is that times are very good for the forest industry. I've said that I don't think that's bad. I think that's good, that's fine. I like to see them healthy; I like to see people employed. What I don't like to see in 1988 is sympathetic administration still being practised. It is being practised; Thomson's report makes it quite clear. Let me read a section of Thomson's report. The directive from the Ministry of Forests, dated February 4, 1987, to...indefinitely, so it can go on forever: "Cedar and cypress Y logs may be left at the roadside. All Y logs may be left in the settings or at roadside...." If that isn't sympathetic administration, I don't know what is.
The argument about decadence.... I have a simple view of it: I think waste means inefficiency. The glossing over of the coastal situation.... I've heard it so often it's starting to make me sick: "Oh, it's an old-growth forest. It's decadent. The timber's rotten." We're not talking about rotten timber when we talk about waste levels; we're talking about avoidable waste. This is timber that could be utilized in some form left in the bush. That is waste, and it's inefficient.
I'm also convinced — and I think others could bear this out — that if you go to any pulp mill in this province that makes its own chips, you'll find logs going into chippers that could be utilized to make wood. That is waste, and that's inefficient.
Now we're pushing against the limits of the first-growth or the old-growth forest on the coast. There will be a fall down. There's an argument about when that will occur, but there clearly will be. And if we continue with this massive acceleration of the cut, the very real question — it has to be answered — is what the impact of that fall down will be, and when it will occur. It seems to me, in terms of proper resource management, that if we put in place proper utilization levels, if we take usable fibre out of the woods and utilize it properly in the mills, we'll be doing ourselves a favour. It seems to me we'll slow down the rate of cut in terms of depletion of that old growth forest, and we'll get much higher value out of the fibre that we do take out. That seems to me common sense. And I don't think it's restricted to isolated areas, whether the Queen Charlotte Islands or the Nass River. I think it's a problem throughout the province, and it needs to be looked at.
Turning to some of the other topics, years ago Pearse talked in his report about the need to have a uniform system to measure waste.
MR. SPEAKER: I regret to inform the member that his time is up under standing orders.
THE AGING POPULATION IN B.C.
MRS. GRAN: This morning I would like to talk in a very positive way about a subject that I think most of us — I won't say all of us — can deal with: the aging population. I want to talk about it in a reflective way so that we, as decision-makers for the people we serve, can think a little bit about what we should be doing — and what we are doing — to serve the aging population of our province.
People aged 65 and over constitute over 12 percent of the population of British Columbia. In the next 20 years — which is when I will become a senior citizen — the senior citizen population in British Columbia will rise to 550,000, and that is going to require both government and opposition to think about how we deal with the needs and wants of those people. They will be large in numbers, wise, and they will all vote; so it will be very important for each one of us to be sensitive to their needs. I think it would be wise for all of us — government included — to deal with this situation in a planned way rather than waiting for the demands to occur, and then having to give things to one group of people which takes away from another.
I think it's fair to say that British Columbia is the most popular retirement spot in Canada, and that doubles the influx of seniors into this province. Victoria in particular is the favourite retirement spot. Knowing that we're going to face a very large constituency of senior citizens, it's incumbent upon us to think about how they will want to live, what lifestyles they will want to have, and what we can afford to provide for them.
The effects on the province? I think the first effect that we know will happen will be to the Health ministry budget. Senior citizens currently account for 47.7 percent of the total health care budget. In 20 years, if we continue with the same
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attitude and kinds of programs, I can't imagine how we'll deal with that financially.
Housing for seniors is another item that's going to require some ingenuity. Senior citizens currently have few choices on where to live. In many communities they are put into retirement areas, and psychologists are speculating that it isn't particularly good for seniors to live with only seniors. Seniors, just like anyone else, have an intellect that has to be stimulated. They can't be put into a situation where they only socialize with one another. It's important for the children of our province to be exposed to the knowledge and the wisdom of senior citizens. I, for one, am not convinced that retirement villages are the only answer to housing senior citizens. I think they should be integrated, just as I feel subsidized housing should be integrated into neighbourhoods. It's important for us to learn to live together in our communities and not be isolated in sections. That's something for all of us to think about in the communities that we serve.
The other item that the senior citizen population brings to mind is marketing trends. When you have a large population of senior citizens, you'll find that marketing trends will change dramatically. I think it's an opportunity for wise entrepreneurs to really do a service. The only way we will find that happening is if government leads the way. I hope our government will recognize that in the next 20 years marketing trends will have to change, and direction must come from government.
People become senior citizens at age 65. I don't know how or why we arrived at that number. Many people well into their seventies and eighties contribute to our community, and I have a little difficulty understanding why age 65 is when you are no longer required to contribute to this community. I think that's another item that we're going to have to address. Senior citizens have spent many years learning lessons that many of us have still to learn. They have had years and years of education, both in school and in life, and it makes me wonder why we don't use all of that knowledge, instead of retiring people and asking them to just play golf, bingo, bridge or whatever for the rest of their years.
I think that we'll find, in order to provide services for all of our citizens, that the assistance from senior citizens is going to be something that we'll have to look at. I suspect that in the near future we will not be retiring people at age 65, particularly when they're the majority in our population. Many people feel that a large population of senior citizens will be a financial drain, but I think not.
MR. SPEAKER: I regret to inform. the member her time is up under the standing orders.
MRS. BOONE: I'm happy to respond to the member for Langley. This is an area, as you say, that we all must address and we all must be very concerned about. I don't think any of us would disagree with many of the things you've said. We are an aging population; as everyone knows, I aged more rapidly this week than others — or more often, I think. It's an area that I've been trying to come to grips with, and I think there are some things that we can be doing as a government and that we can be making moves in to prepare us for that.
I have some concerns about some of the things that haven't happened, and that has to do with something that I really strongly believe in: home care and home support services, an alternative to acute care and to putting people into hospitals, which is very costly and not necessarily a nice way to go about things. The home care program is very successful. The homemaker service is very successful and very popular as well. Yet between 1982 and 1987 there's been a 5 percent drop in that budget, and there's no increase in this year's budget for homemakers or home care services.
If we as a population are going to be addressing the needs of our seniors, that is one area that I would really like to see us increase and support very strongly, so that seniors can stay at home, live in their home, be provided those services and be in their communities with all the supports that they want. As I stated earlier, I'm disturbed that that hasn't increased and that we haven't given the support that I believe should be coming to the homemaker service.
The area that you talk about — having seniors integrated in society — is one area that can help and can really cooperate with keeping people in their homes. I certainly would do everything I could to encourage any government, whether it's this administration or our next administration, to fully develop that service. The aging population is definitely a problem that we've got to deal with. It is something that we have to come to grips with and deal with in a humane and sensible way.
I really appreciate the member taking this opportunity to make her concerns known and to express her concerns to this House.
MR. CLARK: I'll use the last two minutes to comment on the member's statements, because I see the aging population and retirement communities as a tremendous opportunity in British Columbia — particularly a tremendous economic opportunity. When you look at it on a straight economic balance sheet, even looking at the consumption of health resources that seniors consume, they're net benefits.
If the government was serious about economic development in British Columbia, there are certain regions like Victoria and Penticton and others that could do tremendously well by attracting more seniors to British Columbia. If you look at Palm Springs or Florida, the number one growth industry there is in the whole area of services to seniors. It could have a tremendous economic impact in British Columbia communities that have this natural advantage. People from the prairies retire in British Columbia already. Some communities, like Nanaimo and others, are promoting in their own small way seniors to come to their communities. If we had a concerted effort on the part of the government to attract retiring seniors, it would have a tremendous economic impact in British Columbia.
In fact, if you took at the economics of it, it would even pay the government to pay for their moving costs to come here — because we get those transfer payments from the federal government, and we get the accumulated savings of those people. They don't take jobs away from our people here in British Columbia; they spend their money here, and they buy a home here. There are tremendous economic spinoffs with respect to bringing more seniors to British Columbia.
While there are downsides, in terms of the costs of health care and some of the problems that the government has, I think, foisted on seniors in terms of onerous user fees, nevertheless on balance it would be looked at as an opportunity rather than a problem. It should be looked at as something to be promoted, rather than something to be worried about. If we looked at it that way in certain communities — like Victoria and Penticton and others — we would have tremendous economic benefits. If you look at towns like
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Kamloops and others with over 20 percent unemployment, that's a new source and a new industry that we could develop very easily, using our natural amenities in British Columbia.
MRS. GRAN: Mr. Speaker, I'd like to thank the two opposition members for their comments. As I was saying, we have a habit of thinking that seniors are a financial drain, and as the previous member pointed out so well, that doesn't necessarily have to be true.
Preventive health care, which our Health minister has done a great deal of studying on, certainly is a big part of it — preventive health care for all of us, but particularly for senior citizens. The only way we are going to accomplish what needs to be accomplished for the aging population that we're anticipating is to work together — government, the business community and the academics. The universities have a great deal to offer in terms of how we deal with the aging population. Currently, in speaking with some of the professors from UVic, they are doing a lot of work in that regard. Because Victoria is such a popular spot for retirement, that university will, I'm sure, be the leading edge for the aging population in British Columbia.
We must look at the future population of seniors — not just in our own province, but globally — and make wise decisions for them and for ourselves. I feel very strongly that working together with all of our groups — the opposition, government and all of our outside groups — will provide a future for our senior citizens that we can all be proud of.
HON. MR. STRACHAN: Good comment this morning. Charles Boyer, when he turned 80, was asked how it felt to turn 80. He said: "It's fine, especially when you consider the alternative."
I call Committee of Supply, Mr. Chairman.
The House in Committee of Supply; Mr. Pelton in the chair.
ESTIMATES: MINISTRY OF
FINANCE AND CORPORATE RELATIONS
On vote 37: minister's office, $293,411.
MR., SIHOTA: Mr. Speaker, I'm going to continue with my discussion with the minister on the matter of the stock exchange. I want to deal with some specific failings. I want to emphasize that the reason I'm going through this is to demonstrate the way in which the regulatory system is failing.
Yesterday I gave the example of Technigen, and maybe the minister didn't quite understand what I was getting at, but it's not sufficient to act on a stock when it's gone from pennies to $15 and down to $1, and then to take some type of regulatory action. You have to take it while the stock is working its way up so that you can capture these people who are making the profit and break the pattern of promotion that goes on to the exchange.
As I move towards the end of my comments this morning, I'm going to be talking a bit about the kinds of things the regulators can do that they don't do now — in other words, alternatives and solutions — so that this minister, who to date doesn't recognize that there's a problem, even if he doesn't want to recognize it publicly, can listen to some of the things that can be done on the other side of the ledger and consider acknowledging them, because I want to assure him that there's a problem.
I want to start off by talking about insider reports. I think the minister can appreciate the importance of insider reports. Of course, the investor must know what the insiders are doing. There must be full, plain and true disclosure — to use the old line — of the interests of those on the inside, so that the investor is not seduced into getting involved in the stock to his or her detriment. The thesis I'm trying to build, that I was trying to build yesterday, is that inevitably what happens on the stock market in Vancouver is that the dollars go to the insiders, to the promoters, and very little money goes to either the product or the investor. I would still ask the minister to produce one piece of evidence that contradicts that statistically, because the only piece of evidence I'm aware of that the minister has in his possession is the Brown-Jefferson report, and it totally reinforces what I've been saying so far.
I want to deal quickly with one stock in particular which I think emphasizes the point, and it is an interesting stock when you consider who is involved in it. The stock I want to start talking about with respect to insider reports is called Lionheart Resources.
Lionheart is one that I brought to the attention of the minister last year. It is also one on which there has been some action by the ministry. However, no action has been taken by the ministry to date on the matter of the insider reports. In fact, I mentioned this to Mr. Hyman when he was leaving, so unless there was some action taken overnight....
This serves as an example of what happens. If I were to stand up here and make general comments about the failing of the market, that would be one thing, but I have to provide specific examples to reinforce my case. I don't want the minister to get off on a tangent and say that this is isolated, because we'll just get into the type of debate we got into yesterday.
On October 22, 1986 — a date known to all of us in this Legislature, the date of the last election — a letter was written to Mr. Harold Charles Moll. Mr. Moll is well known to those in the industry; Lionheart is a stock well known to all those in the industry. Therefore, when the individual is known for questionable actions and when the stock has been demonstrated to have been involved in questionable actions by an investigation by the SOB's office, you would think that they would monitor its affairs.
On October 22, 1986, a letter was written to Mr. Moll, which says in part: "Future breaches of section 108 may result in a cease-trading order being issued against you, as well as prosecutional action in Provincial Court." Section 108 requires the insider of a corporation to file within ten days of the end of the month all the transactions that he engages in with the securities of a particular corporation.
That was on October 22, 1986, and to put it in simple language for the minister, that letter was effectively saying: "Look, you'd better comply with the insider report provisions, because if you do not, you are going to find yourself in court." I have tracked the filing of the insider reports on that case, and in the last 15 to 16 months since October 22, 1986, the reports have been continually late — in some instances, up to two or three months late — with an explanatory note explaining that the individual was out of town. I could produce — if the minister is interested — all sorts of press releases which demonstrate the person was around and active.
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The first point is that this is an example of where the regulatory system fails. An investor is not privy to timely insider reports. If an investor doesn't know what insiders are doing with respect to, for example, dumping their shares in a particular corporation, the investor is open to being ripped off — which inevitably happens. Lionheart's record in that regard is well documented, and I'm sure the minister has access to that record.
It's also my assertion that those insider reports that were filed were false, but I'll get to that next. Given that this is a stock that the minister is well aware of, because there have been actions taken on Lionheart, and given the fact that you are well aware of the role of Mr. Moll, because he's had considerable notoriety in the past, could the minister explain why the superintendent of broker's office, in this example and several others — we can go through them all if you want to, Mr. Minister — is not enforcing its own regulations? It writes a letter to the person on October 22, 1986, and tells him to begin to file these things on time. Since then, 15 of the 16 that he's filed have been late. Could the minister explain why his officials aren't taking appropriate regulatory actions?
HON. MR. COUVELIER: The hon. member opened his monologue by making an assumption that every time a stock rises on the stock market, we should be reacting and somehow capping the rise. With the typical socialist mentality, he seems to think that government intervention should be used to prevent the natural rise and fall and ebb and flow of stock market transactions. I find this suggestion absurd. It would fly in the very face of the stock market's purpose and function.
The purpose of a stock market is to record the daily merits and otherwise of people making investment decisions. To suggest that all of a sudden, if a stock should rise, government should somehow interfere because it automatically means there must be some false misdeeds and some skullduggery resulting in this rise in price, the suggestion is ridiculous, and yet the hon. member opens his monologue with this assertion.
He's making the implication that government's failure to monitor daily rises and falls in stock market valuations is ergo ipso facto proof that we are somehow compliant and not concerned about the practices that occur on the market, and the best illustration of devious practices is that the stock would rise. My goodness! I'm astounded that someone who claims to be monitoring so effectively the operation of this very important mechanism in our financial community should start off his diatribe by suggesting that government should interfere merely because a stock rises in price. It's typical of the kind of comment we've received from the opposition when discussing the operation of the Vancouver Stock Exchange — muddled, misleading, confused and bound up in ideological hang-ups which don't do any justice to the merit of the subject we're discussing.
That's the very basis on which the market works. If the market didn't rise and fall, no one would be interested in playing the game. It's the very essence of the operation of the business.
After he got through that surprising statement, then he asked a specific question to do with the effectiveness — or otherwise — of the Securities Commission in terms of insider trading. Insider trading is, first of all, the responsibility of the VSE, and they have in place a very effective system to deal with it. As I mentioned to the hon. member yesterday, it does require due process to be followed whenever action is to be taken. Unlike a member from the opposition who has absolutely no responsibilities whatsoever to follow due process or due diligence or common courtesies or any other normal activity of a business transaction, both the Vancouver Stock Exchange and the B.C. Securities Commission are bound and limited within the constraints of law and due process and proprieties.
I am satisfied that we will continue to have instances that will require monitoring and will require policing and penalizing.
Nothing the hon. member or myself can do will guarantee that abuses will not take place. The issue purely and simply is: when they do take place, will we act? I say it again, Mr. Chairman: we have acted, the Vancouver Stock Exchange has acted, after due process has been followed. I think the litany of cases and the increasing momentum around which the enforcement exercise operates is living proof of the validity of my comment.
So I categorically refute any suggestion that the system in process is not working effectively, I think it is working effectively and it's going to work even more effectively as we continue to build the expertise and systems within the system to catch the abuse at an earlier stage. But at all times due process must be followed, Mr. Chairman. We cannot unilaterally send our investigators off on the basis of witch-hunts or street tips or unsubstantiated rumours. What we have to do is follow a very disciplined process, to document abuses and violations and bring them forward in the fullness of time as those cases are developed.
Once again I say to the hon. member: if he has any specific illustrations that we can act on. which we're not already working on. I'd be very pleased to receive them; but so far all I've heard from the hon. member is criticism and proof of ideological hang-ups and some sort of vendetta against the stock exchange and its credibility, which does a great disservice not only to that institution but also to the credibility of the B.C. financial community at large. And I deplore that kind of an approach.
MR. SIHOTA: I hope the minister's got rid of all of his venom for this morning and we can get back to dealing with the matter at hand.
It is an extreme exaggeration of what I said, an absolute hyperbole, to say that every time a stock goes up we must look at it and that's proof of something going wrong. I never said that, and I made that very clear. What I said to you — through you, Mr. Chairman, to the minister — was: look, there are certain well-known stocks that you know about, that your regulators know about; and when there's movement on those you ought to be asking some questions.
We have a situation here with Lionheart where those types of questions were being asked. There was an investigation, in this example of Lionheart, and one of the outcomes of that investigation was that insider reports were being filed.... The minister says: "Tell me something new." I'm telling you today, Mr. Minister, something new. I'm telling you that for the last 15 of the last 16 months this person has not filed his insider report, to the detriment of investors.
Your officials were well aware of this person's practices with respect to not filing his inside report on time. That is apparent from the letter of October 22, 1986, which I have now taken the liberty of sharing with you. I'm saying first of all, Mr. Minister, if you want new information, that the new
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information is that this person has violated the rule 15 out of the last 16 months. You put him down on your list of people to watch. I didn't do that. You wrote him the letter on October 22, 1986, or your ministry did. So you have new information; you're told about a violation, and then you talk about due process.
It seems to me that process ought to be that when you write a letter to Mr. Harold Moll, and you say to him. "Look, you are violating, and if you continue to violate there will be prosecutional action taken against you," and the person continues to violate for the next 15 or 16 months and you don't take any action.... I'm asking you: what kind of process is that and to what extent are your regulators doing their job? It seems to me that as the minister responsible, if you wanted to be responsible you ought to be asking the same question. You ought to be saying: "Well, this looks awful." When we write a person on October 22 and say that we'll take him to court if he continues to do what he's done in the past, and the person continues to do it and no action is taken, it seems to me that you as the minister ought to be concerned as well.
Again, I don't want to get into an argument of cheap shots, and socialism versus free enterprise, as you like to do, and I don't want to gloss over the topic by saying: "I'm confident that progress is being made." I'm asking you some very specific questions — through you, Mr. Chairman, to the minister — and the reason I'm asking those questions is that I'm trying to demonstrate to the minister that that process is not occurring, that those regulations are not being enforced. I've given you an example; I've asked you a question and I expect an answer.
The question again, Mr. Minister, is: how is it that your regulatory process can allow this type of situation, which you discover, to remain unchecked for such an inordinately long time? Have you asked this question to your officials? What types of responses have you gotten back? What types of regulatory changes are: you prepared to make in order to prevent this type of situation from arising? I don't know if the minister understands the stock market or not. There is statement of material facts that we talked about yesterday and there are insider reports, and insider reports are a pivotal aspect of the stock market game.
I want to ask the minister — no, I'll take it one step further. I want to also tell the minister, because he wants new information. It makes you wonder. These aren't street tips, Mr. Minister. I've just gone through your own public files with respect to one of the stocks I've been watching, and this is what your own public files show. It's not street tips; it's your own information. Your information also shows that if your own regulators had taken just a minute to look at the blotters at the stock exchange, you know what else they would have realized? They would have realized that the evidence shows — and this is not street tips; this is just a computer printout that you get at the end of the day — that this individual, at the beginning of August, had 45,000 shares in his insider report, which he also, by the way, filed late. He showed at the end of the month that he had 44,000, saying that he had a sale of 1,000. Yet if you take a look at the transactions — and I can tell you exactly when the transactions occurred and at what price; that isn't street tips, that's just out of the computer — they'll show that he unloaded at least 40,000 shares. Yet none of that is reflected in the insider report.
Could the minister answer the question about process and regulation, why these regulations are not being enforced, and how you can write letters telling people that you are going to take action yet you don't? That's a specific question, so don't take my comments out of context and exaggerate them to endeavour make a political point. Just deal with the issue at hand. If you don't have an answer, say you don't have an answer, but tell me you will look into it, so that we can be assured of the fact that you are fulfilling your responsibilities to the people of this province, to make sure that those regulations and statutes that you are in charge of are being enforced and regulated. I'm giving you an example here, and I want to know what happened. I've given you two pieces of new information that ought to cause you a fair bit of concern.
That's the question to the minister: how, in the instance of Lionheart — and if you want others, we can go through others — can you write this type of letter and yet your regulators take no further action, when they are aware of these abuses?
HON. MR. COUVELIER: As I've explained ad nauseam to the hon. member opposite for the last day and a half, I cannot, by virtue of my ministerial responsibilities, confirm or deny the current state of affairs relating to a specific case. Despite my repeated point that I am unable to respond to those specifics, he is suggesting I should in this public forum, and I literally am not able to. I should not. It is not in the public interest that I should abuse my information or the confidentiality of matters here. I am not in the position and should not be expected to confirm or deny what is or is not being done in individual situations.
As I said yesterday, the reason for that is quite logical and sound. In the first place, if I am to allege that an issue is being further investigated, the impact on that individual listing or those individuals can be quite dramatic in an unfair sense, in the sense that they might not be found guilty at all. Conversely, if they are found deficient in some aspect of the legislation, then my early announcement that there is further investigation in progress could well mean that the investigation itself is put at risk and that the availability of information is somehow withheld. Clearly, I'm just not in a position to deal with those specifics; I've said it again and again. Yet the hon. member continues to ask these questions when he knows full well that I do not intend to respond to them. The reason I do not intend to is that it would violate my obligations as the minister in charge.
I have said to the hon. member: if he has any questions he wants answered, if he has any information that would be useful to us, provide it to me on a confidential basis and I am prepared to move on it. But no, he proposes and prefers to deal with it in this public arena. For what good purpose I'll let hon. members decide, but I can see no value in it whatsoever, Mr. Chairman, other than to denigrate and deride the institution itself.
If the hon. member is genuinely concerned about seeing some changes in style and in operation, then he should provide me, as minister responsible, with the specifics in a forum where I can deal with it in a matter of confidence, and he and I might then move to some common ground. As long as he continues to use this public platform for the purpose of his personal vendetta, I refuse to participate. It would violate my obligations as the minister in charge, and I do not intend to violate my obligations; and nothing the hon. member may attempt to do would force me to do so.
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It would be very useful, I suspect, if the hon. member were to entertain and approach these issues in a manner which would allow us to move forward onto higher ground. Of course, he consistently has refused to do that. He consistently prefers this public arena when he knows I cannot respond to him in terms of specifics. One can only wonder why he does this hour after hour, time after time. It might be that as the attendance in the gallery immediately above you declines, he might lose some of his enthusiasm. But until that moment arrives, I suppose we must endure.
MR. SIHOTA: To the minister, who's always interested in bafflegab and fog, and taking cheap personal shots, and talking about vendettas, let's just deal with the issue. I'm not asking you to investigate the company. If it hasn't dropped, let me make the penny drop; I'll bring it down slowly for you. I'm asking you to investigate your own regulators. I'm asking you why it is that your own regulators haven't taken action on something they said they were going to take action on. I'm not revealing any trade secrets. This information is available — I got it off the files.
HON. MR. COUVELIER: If you want action, come to my private office.
MR. SIHOTA: That's great. Every time a public civil servant is not doing their job properly, the minister's attitude would be that we ought to come to his office and talk to him privately about it, instead of asking salient questions — which have a public interest value to them — in this House.
If the minister is not prepared to answer the question, it's very simple for him to say: "Look, I don't know why my people aren't doing their job, but I'll check into it and report back to the House." That's happened in the past. I can cite examples of when the minister has indicated that matters have been under investigation. He did it on American Canadian. I can cite examples when the minister has come into this House and said that reports were being prepared by his staff. He did that on International Tillex. I can go on down the list of situations when I've raised something in the House and the minister has gone out and investigated it. That happened on Starfire, and we know what regulatory action has taken place.
It torpedoes that argument of saying: "Come to me and we'll talk about it privately." These are matters that the public has a right to receive some answers on. The public has a right to know whether or not your regulators are doing their job. When the public sees this kind of a situation on file.... And believe you me, this is not an isolated incident. It's a noteworthy incident because it's a company that your people know about. It's an individual that your people know about. I'm not saying go out and investigate the company. I'm just saying, are you asking your people why they are not doing their job? For some reason that's some kind of great trade secret, so the minister is not prepared to respond. Fine, we'll move on to another one. We'll get the same broken record from the minister in terms of his attitude on these things, when he's got to realize that one of these days it's his responsibility to start asking some tough questions.
The minister says he wants new information. I will give the minister, again, new information. What amazes me is that the minister always says: "Give me new information. We know about all of the old ones. We don't know about any of the new ones." It's like saying: "We know about the car accident that happened yesterday. Tell us where the car accident is going to happen tomorrow." I gave you some examples of where the car accident is going to happen tomorrow, but what bothers me is that you haven't even investigated the first car accident that you know about. You haven't looked at the causes of that accident. You haven't looked at why your regulators failed to catch it earlier. You haven't looked at some of the manipulation that was going on. And worse still, you haven't then taken that one step further and said: "Here are the preventive things we can do." You're not doing that. That's the point we're making here.
But I'll give you a new one, because you seem to be hung up on this thing about: "Tell us new ones." There's 3-D Systems. Mr. Capozzi, by the way, is a director of that company. The company is underwritten by one of the chairmen of the Vancouver Stock Exchange. I want to know if your officials have taken a look at 3-D Systems and determined how often those insider reports have been filed on time. Here we have a situation where the chairman of the Vancouver Stock Exchange, with respect to 3-D, is promoting a company that appears to be violating the Securities Act with respect to insider trading reports.
These are pivotal reports and I want to know why it is your staff hasn't investigated that one. I'm not asking you to launch into an investigation of the company. Just ask your staff: why has that not happened? Of course, that was another deal that involved Mr. Moll. an individual who is known to your people exceptionally well. Lionheart, which owns one half of the shares of 3-D Systems, from the information that I've been able to ascertain — which again is not street tips, Mr. Minister — has sold out hundreds and thousands of its shares in 3-D Systems.
The minister should be asking: are we monitoring the matter of insider reports? Are we making sure that there is full compliance with the provisions of the Securities Act that relate to insider reports? Those are the questions that the minister should be asking. Can the minister say with confidence that his regulators are ensuring that the provisions of the Securities Act as they relate to insider reports are being complied with, in the face of the evidence of Lionheart and 3-D? Can he say that with confidence?
HON. MR. COUVELIER: The hon. member seems to believe that somehow he has sources of information which tell him exactly what we are doing in the ministry and in the commission and are better than my information. He seems to be saying — he said it, as a matter of fact — that we haven't looked into the regulators. He said we were not doing anything in that respect. May I ask how the blazes would the hon. member know whether we were or not? He leaps to the conclusion that we're not, and then he takes advantage of the fact that I cannot deal with specifics to help make his fictitious argument that we're not monitoring the situation closely.
I have said repeatedly that we are monitoring the question of insider trading; that we are working ever more closely with the Vancouver Stock Exchange officials, who have the primary responsibility for this area; and that we were further refining our practices and procedures to make sure that we do an even more effective job in the future. The hon. member seems unable to accept that statement, and he keeps making the totally false statement in this House that we haven't looked into it.
He knows full well that I cannot deal with the specifics, but he errs grossly in terms of misjudgment when he then translates that into meaning that we are not doing the job.
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MR. SIHOTA: I would ask the minister to withdraw the comment with respect to false. He is suggesting that what I have said is false. I don't think that's....
MR. CHAIRMAN: The hon. member is perfectly right. Would the minister please withdraw his comment with respect to falsehood.
HON. MR. COUVELIER: I'll have to get my book of appropriate proprieties here. I don't have it with me. The hon. member seems to be grossly inaccurate. Is that parliamentary, Mr. Chairman?
MR. CHAIRMAN: Yes.
MR. COUVELIER: Thank you. I agree to use that....
MR. MILLER: On a point of order....
MR. CHAIRMAN: Hold on for a moment, please. Hon. minister, thank you very much but would you please withdraw the previous one.
HON. MR. COUVELIER: I am happy to withdraw the earlier comment and substitute the other one.
MR. CHAIRMAN: Thank you very much.
MR. SIHOTA: Here we have a continual pattern of the minister engaging in cheap shots instead of dealing with the issue. I can stand up in this House and say to the minister, "You are not enforcing the regulations," and the minister will say exactly what he just said a second ago, that they are enforcing the regulations. How do you break that logjam, in terms of the minister saying, "Oh, we're doing it," and my saying that you're not doing it?
The way you break that logjam is to begin to deal with specifics, and I am trying to give you examples of specific situations which reinforce my position that you're not doing it. Then you say that you are not prepared to talk about specifics.
HON. MR. COUVELIER: Publicly.
MR. SIHOTA: Publicly. Now he says "publicly." Come on, Mr. Minister; these are public documents, that's what these are. They are your documents. If you understand the system, and I'm coming more and more to the conclusion that you don't, you could go down publicly and take a look at 3-D as well. Your own files would demonstrate that the insider reports aren't being filed. Your own reports, your own files, would indicate that people are being told that actions are going to be taken against them, and it's not happening. Your own files would tell you about Mr. Charles Stuart and his actions with respect, I believe, to Goldhurst Resources, where there were no insider reports being filed. In that instance you had a guy who was known to your people. Don't tell me it's not under investigation, because I can quote you from Hansard. You told me that Mr. Stuart was "under investigation," so don't play that game either. I know you forget you said that, but you did, in response to the question I asked you on American Canadian, or after that.
There you've got a situation where a person comes up with false proxies and takes over a company. There's been an issue out, I believe, since the seventies saying that he can't trade on the market. He manipulates himself into control of a particular company and then fails to file insider reports.
What I'm telling you is that if you want to say it's working and if I want to say that it's not working, it seems to me that the only way to get into that issue and resolve it one way or the other is to talk about the specifics. I'm giving you specifics, and they point to one inescapable conclusion: it's not working properly.
The minister can play ostrich and put his head in the sand, but does he realize what's happening out there on the exchange every day? Does he realize that every day people from Toronto are coming over and having these fancy lunches and inviting some of the legitimate operators to the exchange and saying: "Come, let's go to Toronto"? They're moving over. That's what's happening because of the infractions and the lax attitude of both the self-regulatory bodies and the regulatory bodies with respect to actions on the Vancouver Stock Exchange.
This shouldn't be a new problem to the minister. We've known for a long time that there are problems with the Vancouver Stock Exchange and that there's a need for action. The minister has taken some action. He's put in more staff. That's good; I applauded that. There has been a new act, and we've watched how it works. I'm giving you examples now of where it's not working. It's not simple enough to say: "We've put in a new piece of legislation and that's going to solve all of our problems." You still need the regulatory bodies and teeth behind it, so that when people violate section 108 of that act, some kind of consequence occurs under the new provisions of insider reports.
I've given you an example of a letter. I've given you an example of a chairperson of the exchange. I've given you an example of someone who has an unenviable record on the exchange, and they're all violating the insider reports. All I get is fog from the minister, when he turns around and says: "Well, we're doing a good job." You're not, Mr. Minister; that's the problem. That's why we raise these issues. We have a responsibility on this side of the House, which the minister doesn't seem to understand, to bring to the attention of the government its failings. I'm trying to fulfil that obligation by bringing these failings to the attention of the minister, who's just not prepared to deal with them.
Let me tell the minister another situation, because it involves a VSE governor. The reason I'm bringing these matters to the minister's attention is that then he will at least begin to look into the matter of what's happening on the exchange and recognize the merit behind my call yesterday for some type of examination of the exchange.
We have a governor who works on the trading floor.... I told the minister about this last year, and of course it wasn't investigated, because last year he went on the same routine: "Tell me something new" — and I did. He was working on the trading floor with one Mr. Bobby Slichter. Mr. Slichter can pick up the phone any time and ask this governor to do his trading. Mr. Slichter, if you're not aware, Mr. Minister, was found unfit to trade and in the mid-seventies had his ability to trade removed, because he was involved in stock manipulations and had some incidents with organized crime.
He appealed on three separate occasions the suspension of his trading privileges, and the court said at the end of the day: "To induce in Mr. Slichter a real concern for the public interest would be an enterprise doomed to failure." That's what the court said: "Get this guy out of here." He operates
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out of his West Van home. He trades with the chairman of the floor trade procedures committee of the Vancouver Stock Exchange. They've been involved in a number of scandals — Mr. Slichter has — notably Chopp. If the minister doesn't know, Chopp was the first company to break the hundred dollar barrier. It went from about 17 cents to $125 in one amazing year, Mr. Minister, based on a number of representations with respect to earnings and building a product that resulted in millions of dollars in investor losses.
Chopp is bankrupt in the United States. Next week, as I indicated earlier, Mr. Minister, there'll be a trial in Vancouver by a California woman who's taking action against a Vancouver brokerage firm over the loss of her disability pension in that investment. Subpoenaed to attend are Mr. Griffith, who's the chairman of the trade floor procedures committee of the exchange, and Mr. Slichter. What type of faith can the public put into a system when those involved in regulating the system are now being subpoenaed into court to provide comment on one of these schemes? This is a similar arrangement to the one that was being used in the Technigen case when Technigen went from $1 to $15.
So you have people who are prominent in the community now being subpoenaed and linked to a situation like Chopp Computer, one of the largest scandals on the Vancouver Stock Exchange, and the minister says he doesn't have any concerns. He says that progress is being made, that things are working well.
When is the minister going to realize that he's got a problem on his hands? When is the minister going to cease playing ostrich? When is the minister going to stop playing this little game that we play in the House, where he looks at the clock and says: "We've got an hour and five minutes left, and then we'll be finished with the Ministry of Finance estimates, in all likelihood, for the year, so I won't have to put up with this line of questioning for another year. Then I'll sit here for another year and act..." — the same broken record putting forward the same arguments you did last year. I'll give you some new information, as I've done this morning, as I did yesterday, and there won't be any movement at all on the part of this government.
What kind of signal, Mr. Minister, does that send to the people who want to come here and invest? You talk in glowing terms about developing links with the Pacific Rim and about a financial centre for Vancouver, and you talk in these glossy terms about all these wonderful things that are going to happen. Yet you don't even regulate what you've got in your hands right now, and it creates a negative opinion elsewhere. I gave you an example yesterday of an article that was entitled "A Little Better Than a Crapshoot," when I talked about the Exchange, and I can give you more.
No, Mr. Minister, this is no vendetta. This is just a request from an opposition member who's doing his job in trying to bring to your attention failings and to ask you to act on those failings, and asking some specific questions as to what you are doing about your regulatory scheme and whether you recognize that there are some flaws. You should recognize that there are flaws when you see me here this morning giving you evidence of someone who's a chairperson of one of the committees on the exchange being linked to a scandal — if you don't follow the market, you wouldn't know — like Chopp Computer.
As I said, I'm quickly coming to the conclusion that the minister doesn't understand what's happening. Either that, or he doesn't care, because.... I can mention Axiom, and there isn't a movement on his part at all. I can mention Chopp; there isn't a movement on his part at all. The penny doesn't drop, in terms of how negative these scandals are with respect to perpetuating the type of image the exchange has.
Mr. Minister, you can bow your head and say, "I'll listen to him," and call me all sorts of things and take cheap shots, but that's not going to stop me from continuing to raise these matters, because the motivation is not to play the type of game that you are playing. I want some action from your ministry, and as I said to you the other day in the debate on Principal Trust, if you can't stand the heat in the kitchen, get out and let somebody else be in charge of Corporate Relations, so we can get on with dealing with these problems.
I'm giving you another out: if you don't want to deal with these problems — which it seems that you don't — then set up a committee of the Legislature so that we can look at these things and report back to you on what ought to happen. A committee of the Legislature made up of your members will have a majority. That's not a bad idea. It's not going to cost the taxpayers a heck of a lot of money. You're not pulling a judge out of the system to take a look at it. You might even get some of us like myself out of this House, so that you're not being irritated, or to get rid of some of the thorns in your side. And more important, you'd serve a good public service by getting a bunch of people out there to take a look at the issue at hand. Then, if I'm wrong and you're right, you'll have something substantive to stand behind.
There are all sorts of pluses in moving towards the suggestion that I made to you yesterday, and you're not prepared to move. Then you ridicule a report that I filed to you which your government commissioned, which says that 84 percent of the time investors lose their money on it, that about 20 cents or 30 cents of every dollar ever makes it into the product. Then I give you an example of what's happening today and it's just as bad, and you don't want to move.
I want to tell the minister a few other things. The minister started off this morning by saying that whenever a stock goes under we look at it, and we automatically point to the fact that something's wrong. That's not the way it works, Mr. Minister. But there are some stocks that you know are questionable and that your regulators ought to be looking at. I want to tell you that they don't.
Let me give you a couple of examples. This is one of my favourite ones, so I'll start with this: Med-Tech. Some guy floated this great idea on the exchange. He said he had developed a nasal spray that was "clinically proven" to get rid of AIDS, that within three minutes of contact on the surface, AIDS would be eliminated. That was the marketing tool designed to get this thing onto the market. They hyped it up and promoted it to $8 to $9 on the exchange. You know how they did it? They did it through false press releases, saying that it was clinically proven; they did it through stock manipulation. First of all, someone should have caught on to the fact that this nasal spray was some kind of scam. But your regulators never caught on to that fact, and worse still, when the investors and everybody else caught on to it, your regulators took no action. There's not one bit of sanction at all by the Vancouver Stock Exchange or the superintendent of brokers. No, you don't have to watch every stock that goes up — but a nasal spray to cure AIDS? Come on, Mr. Minister, what are you people doing? You're sleeping at the switch.
I'll tell you another one: Gametek. This is another classic; it's not as funny as the last one. Here's a company that said they were going to sell arm-wrestling machines. You
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know, you put them up in bars and you can wrestle with an arm-wrestling machine. That's what Gametek said. Then they went on and said they were going to put these machines on a converted B.C. ferry. They were going to convert a B.C. ferry into a luxury cruiser and put in a duty-free shop and casinos. You know, you don't have to be smart to figure out that something must be wrong.
MR. MILLER: I think there are many questions that have not been answered, and I support the dogged persistence of the member for Esquimalt-Port Renfrew in trying to get some answers out of the Minister of Finance. So I would hope he would continue.
MR. SIHOTA: You don't have to have a degree from the Harvard Business School in economics to figure out that something must be whacko with this type of stock. It was listed at 40 cents, they hyped it up and it went up to $3. It wasn't your regulators who caught on to the scam; it was the media that revealed that these arm-wrestling machines, which the company had said had all been built and were ready to go, had not even been built. It was the media that revealed that this boat they were going to convert into a luxury cruiser was reported three months prior to that by the United States Coast Guard to have sunk off the coast of Washington. They hyped this stock, and you know who made the money? The insiders who bought it in at 40 cents, the manipulators, the scoundrels on the exchange whom you would have there, Mr. Minister — and I'll give you examples; I'll give you names of scoundrels in a minute. Those people made all the money, because as the stock went up from 40 cents — well, actually they bought it at pennies below 40 cents — they were selling out as the thing made it up to three bucks, making hundreds of thousands, perhaps even millions of dollars on it. That's an oft-repeated story.
I gave you the example yesterday of Technigen, where the guy supposedly invented these golf simulators, sold out all of his stock, drove it up to about $15, and then turned around and bought himself an $830,000 home in Vancouver, and the investors were held out to dry. In Gametek, this boat had sunk. There was no casino. The arm-wrestling machines they said had been built weren't built. Fine, Mr. Minister. You can tell me there is a sucker born every minute, but I want to know what your regulatory people did. That's the question you should be asking, Mr. Minister. You should be asking your people: "What did we do about stock manipulation on Gametek?" I'll tell you; you did nothing.
What did your people do about insider trading, with respect to Gametek? I'll tell you; you did nothing. What did they do about untimely disclosure on Gametek. I'll tell you; your people did nothing. What did they do about false news releases? They did nothing. And you wonder why your exchange has the type of laughable image it has. That's why it has it. You as the minister responsible should not be coming to me and asking me, to tell you these things in your office. Heck, you could read about them in the paper if you took a second, if you had any interest at all in what was transpiring on the exchange. If you took a second and read a little bit about it, it would seem to me that as the minister responsible, the penny would drop on your head and you would go to your people and say: "What's going on? Have we laid any charges with respect to stock manipulation or trading violations or insider trading reports or untimely disclosures or false news releases?" You haven't.
I have another case involving stock manipulation and misrepresentation of news releases and controlling of paper to rig the game with a company called Great Weighs Industries. It went up from about 50 cents to $8 by promoting these little diet wafers made out of fish oil and promoting fish-oil cosmetics and — the Premier will be happy to hear this — a non-denominational Bible game. This thing went from 50 cents to $8, under the representation that Mr. Belzberg at First City had financed the company through the VSE. When it became apparent that those reports were false, the stock in the company collapsed at 10 cents.
You don't have to have a degree from Yale to figure out that these are the stocks you should be watching, Mr. Minister. If your regulators aren't catching them on the front end, fair enough; I'll even excuse that. But I want to know why no actions were taken. These are reported incidents, Mr. Minister. If you had taken two minutes to read the Globe and Mail or the business sections of the Province or the Vancouver Sun, you would have realized that these things are happening on the stock exchange.
Admittedly, I've picked some of the funnier ones, but I told you yesterday I had 500 of them, and I think in the last couple of days I've gone through at least 20 or 30 of them. If you had taken a minute.... You should be asking your regulators if they're doing the job. How can the minister possibly say, in light of the evidence that has been presented in this House today, that his regulators are doing their job? They're not, Mr. Minister.
After having told the minister that he should now have an inquiry, now that he's had 18 hours to think about it, I'm hoping that he's prepared to change his mind. If he's not, we'll get into more evidence and try to drive the point home to you as to why it should be happening.
What about the stock in the nasal spray that would eliminate AIDS? What about the arm-wrestling machines that were never built when they were said to have been built? What about the boat that was going to be converted into a luxury cruise liner and had sunk three months prior to that off the coast of Washington, and the non-denominational Bible game, the diet wafers and the fish-oil cosmetics? Come on, Mr. Minister. You don't have to have brilliance on your side to recognize that these are the kinds of things someone ought to be looking for before they get on. If you're going to let them get on, and if you want to make a mockery of your exchange, go ahead. But then, dam it, you should regulate.
I have two questions. In light of all this evidence — and I don't just mean the three or four examples, but the evidence you've heard over the last two days — can you with full confidence say that your regulators are doing their job? Secondly, will you not now agree that it's time, Mr. Minister, to have a committee of the House take a look at the matter of the exchange?
HON. MR. COUVELIER: In the order the questions were put, the answers are yes and no.
MR. SIHOTA: That's amazing, you know, because that's the first time I've got a straight yes or no answer from the minister. So we'll continue; that's progress. Maybe it's also an indication, Mr. Chairman, that the minister is now beginning to recognize the dimension of the problem, and that he's getting a little too embarrassed to stand up and talk about the problem. I'm glad we've moved from fog into direct answers. I'm disappointed that we haven't had the minister
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recognize that his regulators couldn't conceivably be doing their job and that he doesn't want anybody to look into it. It's astonishing!
I want to tell the minister a few other things. I said yesterday and, I'll say again today that the system that we've got is open for manipulation. There are some people who are going to get into legitimate ventures and some people who are going to get involved in illegitimate ventures. It's my view that we ought to be stressing quality, not quantity, on the exchange. We ought to be stressing people getting involved in the legitimate ventures.
I'll try to give the minister again an overview here, so he can see the dimension and breadth of the problem. I've told him about brokers — Brown and Charpentier — who have been involved in all sorts of violations which the government is not investigating. I've told him about regulators. I gave the example of the chairman of the floor trade committee and another chairman of the VSE, and Mr. Mathers — Griffith and Mathers — and their linkage, in the case of Mr. Griffith with a company like Chopp, and in the case of Mr. Mathers, a company like 3-D. I've talked about the traders and their violations. I gave you the example of Richard Pomper who was involved in the Carter-Ward deal.
I've given you the example of news dissemination, of how all these false press releases invite investors to invest, when indeed it's proven later on that they are false. I've tried to demonstrate to the minister that the regulators couldn't possibly be doing the job if this type of stuff is happening.
I want to take it from another angle, because the minister doesn't seem to be impressed with the angle that I've taken to date. If your people are not prepared to take a look at some of the obvious situations on the exchange which I've mentioned in terms of nasal spray and that kind of stuff, what about looking at the people? It's amazing, Mr. Chairman, if you begin to take a look at some of the people who find themselves on the Vancouver Stock Exchange and are involved in activities on the exchange and begin to check their records....
Here I am, one opposition member, and I can research this stuff. I can go back through the newspapers. I can go through the information that is publicly available and find out what the backgrounds of these people are. If I was regulating, it would seem to me that these are people I would want to watch. Yet the regulators don't seem to be able to do either of those two things: get the information or watch. Mr. Stidham and Mr. Grey have been involved with Axiom, and Altar, involved in NCN, in Simplon and Westron, to list a number of the companies.
Mr. Stidharn was a lawyer in the United States. He spent 18 months in jail in Texas for stealing money from a client. He went to Denver and started to do deals on the VSE with Mr. Grey. He went to Alberta. The Alberta regulators were smart. They caught on to him really quickly and banned him for 20 years from operating on the Alberta exchange. You know where he is now? He's on the VSE. And the minister wonders why we have this image problem with the VSE.
Shouldn't the minister be asking: why are these people being allowed to keep trading here in British Columbia, when all sorts of actions have been taken by them? Maybe you don't have the sophistication to check into whether or not he served in jail in Texas for 18 months, but surely there must be a sharing of information with Alberta, to know that this person had been banned for 20 years in Alberta. He then shows up on the Vancouver Stock Exchange. Does that not cause any concern to the minister? Does the minister not wonder why his regulators aren't looking into it? Does he not care or think that his regulators ought to pay particular attention to the companies involving those people, to make sure that all of their actions are above-board and in keeping with the act?
As a lawyer I know that the police, when there is a known criminal in a community, pay particular attention, it seems to me, to that person's activities and goings on. You don't have to be a genius to figure out that those who have committed sin once in this regard, in terms of a crime, may well do it again. It seems to me only logical, therefore, that you may want to follow these people's activities on the exchange. That's the logical thing to do, Mr. Minister, and all I'm asking is: why aren't you asking those questions? Those aren't questions that should be asked in the confidentiality of your room; they are questions that should be asked by a minister who, seemingly, is unprepared to take a look at his exchange.
We have Bradley and Brett Salter involved in five to ten apparent stock manipulations — because the studies have been going on for the last two years. Park Resources, International Flyer and Byron Resources are some of the companies that were involved there. Don't you think their activities should be watched carefully?
We have a CA who lost — in the mid-seventies — his ability to call himself a CA. One of the most successful promoters on the exchange, Mr. Hutton, was involved in numerous companies that have failed and have reaped huge profits for insiders. It's been demonstrated by companies like Microcool, Radiation Technology, Raynet, Chopp Computers and Starfire. A former Vancouver Stock Exchange president, Mr. Scott, said: "I wouldn't let him near the exchange with a ten-foot barge pole." That's what the former president of the Vancouver Stock Exchange said about this person.
Doesn't the minister think that somehow it taints the reputation of the exchange when these people seem to get themselves involved over and over again? I gave you the examples of Microcool, Radiation Technology, Raynet, Chopp and Starfire that are involved in questionable activities on the exchange. Doesn't it stand to reason that the minister ought to be asking questions as to why and how these people are entitled to participate on the exchange? March Resources is another company. Frank Matthews, one of the main promoters of March Resources, got it up to $65 by selling heavily to U.S. investors.
There was a SEC consent judgment in the United States that concluded stock had been pushed up through false activities. It was agreed that the person would not participate in stock market matters in the United States. Despite that, the same person continued to do work on the Vancouver Stock Exchange with a company like Chopp Computers. It's interesting that Mr. Dilworth.... Remember Mr. Dilworth, Mr. Minister? I brought him to your attention a year ago. Perhaps the minister could enlighten this House as to whether or not Mr. Dilworth is still there.
He said it would have been too difficult to prove that this man should not be let back on the exchange, and if action was taken he might get off on a technicality in any event. Yet you had all this information from the United States that the man had been involved in questionable activities. We get these promoters with unenviable records who appear on the scene without any sanction or consequence — and apparently
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without any type of monitoring — to promote and hype particular stocks. The Vancouver Stock Exchange obliges them and allows them to make a living.
Is that the type of exchange the minister wants? Are those the type of people the minister wants in the exchange? Has the minister asked his regulators why we have this pattern of people coming back to the exchange, when they have been involved in these activities?
MR. LOVICK: Like flies to the honey pot.
MR. SIHOTA: Yes. "Like flies to the honey pot," as the second member for Nanaimo says.
Is the minister asking his regulators how this is occurring? Let me rephrase that question to the minister. Is the minister content to see these people coming back to the VSE over and over again?
HON. MR. COUVELIER: The hon. member had a wideranging, rambling dissertation covering many subjects, and I am not sure that I made note of all of them.
He made some comment that people were moving over as a consequence of their concern about the operating style of the Vancouver Stock Exchange. I assume the hon. member meant moving over to Ontario, because that's the issue I've seen reported in the press. I assume that was the member's meaning. If that is the case, that assumption is correct. I will remind the hon. member that the individual making those public statements is an individual who the member has ridiculed and criticized often in this House. To the extent that there is some exodus from the Vancouver financial community to Ontario, the hon. member can take some small credit for that eventuality. However, let me add that that person, who has been widely reported as moving some business to Ontario's junior market, is using as his justification the fact that he finds it tougher to do business in B. C., which suggests that we might be, as I suggested earlier, doing a more effective job. As a consequence, by virtue of becoming more effective in the regulatory side of things, traditional goalposts have been moved, and some of the longer-time players might be having a harder time adjusting to that truth.
The member suggests that I'm guilty of making some "cheap shots." My goodness, if ever I've heard some cheap shots," they've come from the hon. member with his criticisms of a variety of individuals and firms, all of which, as I said earlier, he knows full well I cannot deal with in a specific sense, because I am not in a position of confirming or denying that those individuals or firms are not being examined or investigated in some way or other.
The member repeats the offer he made yesterday that he would evidently be willing to serve on some sort of a committee of this House that I would strike to examine the question of the operating style of the Vancouver Stock Exchange. If ever we needed a better illustration of why such an initiative would be abhorrent to me, it's the diatribe that we've heard from the hon. member for the last two days. It seems to be that the hon. member is doing enough damage to the credibility of the Vancouver Stock Exchange from outside the tent without allowing him inside the tent. The last thing we would want to do would be to provide him with confidential information that had some accuracy to it. Then he really would be damaging the institution, and that would trouble me greatly. I repeat, we are making good progress in terms of improving our monitoring and regulatory practices. We have come a long way and we will continue to improve. We are actively discussing operating practices with the officials of the Vancouver Stock Exchange, and I'm comfortable with the rate of progress in that regard.
The hon. member made much mention of press releases, making outrageous claims. Of course, the member assumes all of a sudden that people have abandoned their common sense and there will be some great rush to invest in some of these more amusing illustrations that he has given us. The Vancouver Stock Exchange has over 2,200 listings. It has one of the largest listings of any exchange. Certainly it has larger listings, as I understand it, than the Ontario exchange. As a consequence, the sheer volume of material that emanates from that kind of an activity and that kind of an exchange will inevitably mean that not all outrageous claims can be caught in the net prior to their publication. I think we are doing an ever more effective job.
The member gave us some humorous illustrations of promotion schemes. While I, like all members in the House, took some pleasure from that lighter moment, nevertheless, underlying the statements by the member is the assumption that somehow he is wiser than anyone else in terms of what might or might not be successful. It reminds me of the illustration I used a year ago when he made the same kind of point, which was that the product called Jolt should not, in anyone's wildest imagination, have been successful in the marketplace. I don't speak to the value of the stock, I speak to the value of the product. Yet despite the fact that it's a high caffeine, high-sugar-content product, flying fully in the face of the modern lifestyle syndrome, which is back to natural products and less of those kinds of stimulants, that product nevertheless enjoys some market success, I understand.
The hon. member seems to believe there should be some sort of supreme authority who can sit in some ivory tower and say: "Well, this one obviously is untrue and therefore we'll can it; this one, however, might work," and so on. I don't have the confidence that the hon. member has that any bureaucrat — or any human being, for that matter — can unilaterally make these kinds of judgments. He seems to suggest that that is possible, and that we should be exercising those unilateral judgments. I suspect that were we to do so, the hon. member would be the very first one to jump up and talk about some sort of violation of human rights or violation of freedoms.
I have no trouble agreeing with the hon. member that some of the illustrations he gave were obviously less difficult to embrace and support than some others might be. That doesn't mean we should therefore unilaterally appoint some bureaucrat who could judge whether individual situations would fly.
The credibility of the system will depend upon our monitoring, our effective and hasty catching of abuses and violations and our attempt to shut down operators who are proven to be operating scams. That's the issue: "proven." I say it again: due process must be followed in all these instances, and while it's easy to get off "cheap shots," as the hon. member has done in a variety of instances here over the last two days, nevertheless the constraints upon the regulators are such that they must be able to prove any disciplinary action. They must be able to defend them even — if need be — in a court of law. As a consequence, we are forced to work under different rules than the hon. member seems constrained to work under as he makes these brave comments in the House.
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Back to where we were: I believe we're making good progress. We've come a long way in the last 12 months. We will continue to move forward aggressively in all these areas. I have no difficulty whatsoever in refuting any allegations that the system is not working effectively. It's working better than it did a year ago, and it will work even better a year from now. If I'm still in the position of speaking to that issue then, I'm quite confident that I will be able to give further illustrations of our good progress.
MR. DAVIDSON: Mr. Chairman, it's unfortunate in many respects that we have dwelt so much over the last little while on some of the unfortunate examples, and very little has been said about the positive contributions of the Vancouver Stock Exchange. Because we have dwelt on some of the glaring examples of errors within the exchange, I hope that we don't let this cloud the overall contribution the VSE makes to the financial health of the community known as the Vancouver marketplace. I think what many of us are looking for, not just in this chamber but outside in the stock marketplace itself, is some sort of notice from the ministry that Vancouver is not going to become a haven for international rejects to set up business, that we are going to crack down on those who have no place in the Vancouver Stock Exchange and that we're going to exercise more diligence in the future in who we approve to do business in this community.
It's unfortunate too that when we talk about a legislative committee, we immediately seem to feel that it is an opportunity for personal attack and political partisanship. That's not always the case. A great deal of positive contribution could come from a legislative committee that would be able to examine many aspects of the marketplace, and I refer to the possibility of changing our statement of material facts, dividing the exchange into two different areas, reorganizing some of the ministry regulators into specific areas where they don't spend their time examining statements of material facts, but go on from that point to spend their time in a much more worthwhile manner examining what happens after the statement of material facts.
I referred yesterday to a bureaucratic board that was set up to examine stock, and the minister quite properly stated that that was a group of engineers. It doesn't really matter who it is. Being an engineer gives you no more right to declare what's under the ground in a specific location than anyone else. One of the real problems we face is having a board that sits around a table to tell individuals that that specific piece of property has some merit and this particular piece of property doesn't have some merit. That's really, in essence, what you're trying to put forward in your endeavour to find out whether something is there or not.
If that's the case, I respectfully submit there would never be an Ashton, because an engineer sitting around a table would say: "There can't be any particular value to doing this in that location." I say in all sincerity that that board should be disbanded because there is no way that a group of engineers sitting around a table can pass judgment on a piece of property, whether it be moose pasture or whether it be the most worthwhile piece of property in the history of mining in North America. They simply can't do it. Otherwise, we could just go to the engineering group and say, "Should we spend money here or shouldn't we?" and we could get an answer. The fact is that the costs of doing business have risen dramatically. Lawyers' fees are increased; securities' fees are increased. The fees going through the process — the waiting — have all increased so dramatically that out of $100,000 that's raised, a significant proportion is spent before you even find out if anything exists on that particular piece of property. And that's not entirely wrong, but it's not entirely correct. No single group of people should be in a position to tell anyone else what is or is not under the ground at that location until they have expended the funds to find out if that in fact is there.
That's another aspect of why the statement of material facts is not nearly as important in the process as examining what happens to the stock after the statement of material facts. Once the market has been developed, once you have a market flowing, going from one point to another point — up and down as markets do — that's when the regulators must become more vigilant; that's when the personnel that are assigned to going over statements of material facts must reshuffle those into analyzing. And now that we're going to computer trading on the Vancouver Stock Exchange, there's a greater opportunity to follow up and check on the actual trading patterns of any particular stock.
With the greatest of respect to the minister, that is where we must be putting our emphasis. Never mind the statement of material facts so much — the i's being dotted and the t's crossed. What is happening with the trading pattern? Where is the manipulation taking place? That's where the damage is done. That's where the general public is misled and deceived and cheated out of their belief in the particular project that is taking place. If we could somehow get across to the staff that we can devise methods by which we can take the pressure off the preparation of statements of material facts and move that person over into an investigative process of some form or other, even if it be reading computer printouts from the new stock-trading patterns, that's where we'll identify those individuals who are abusing the system.
In closing, I would like to add once again that it is indeed unfortunate that so much time has been spent in this chamber dealing with the negative aspects of the Vancouver Stock Exchange, because you could do the same with the Hong Kong exchange, the New York exchange, the San Francisco exchange or any of the Pacific exchanges. You'll always find examples of abuse, just as you'll find them in any other organization. But to leave the impression that the Vancouver Stock Exchange is riddled with improprieties would be a major mistake.
The public can be assured that the Vancouver Stock Exchange is generally a safe place to invest money, provided they understand that there are risks when they invest in speculative markets. But to leave the impression that it is a series of bad deals would be a grave mistake on the part of all of us and would do grave damage to an institution that has served this province, maybe not admirably, but certainly well, over the past many years.
HON. MR. COUVELIER: I'm happy to confirm for the hon. member's comfort that we will not allow the Vancouver Stock Exchange to become a haven for the less worthy stock promotion schemes in the world, and secondly, that we will continue — to quote the member — "cracking down." As I said earlier, I think we're making some good progress.
I'm pleased, Mr. Chairman, with the level of discussions and the contributions made by members in this debate, and I think they will prove useful in the months ahead in terms of the ministry's operations.
MR. SIHOTA: Before we break for the day, I want to respond to the minister's comments. I don't want to end the
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debate without having fulfilled the other half of the obligation we have here, apart from criticizing the government, of giving them some ideas on what should be done. I told the minister at the outset I would do that, and we'll probably keep that now until Monday.
I want to deal with the comments the minister was making just prior to my departure from the House. I want to start off with his comments about Jolt Cola. The minister continues to point to Jolt Cola as: who would have thought of that? Jolt Cola represents everything that I'm telling you is a problem. The stock is now around 40 cents; I gave you the numbers yesterday.
HON. MR. COUVELIER: Not the stock; I'm talking about the product.
MR. SIHOTA: Okay, let's deal with the product. What I was telling you yesterday.... If you look at that stock and at what happened with the dollars — not with the price of the stock as it went up and down; let's put that aside — I'm telling you what happened with every dollar invested in that stock. In theory, every dollar — or the maximum amount of the dollar — ought to be going to the product. I want the minister to listen, because I don't think there should be a departure on the theory — and I am sure the minister would agree — that a maximum amount of every dollar invested should be going into the product and into making sure that the product is developed, manufactured and sold.
What happened in the case of Jolt Cola is that the money went into the hype, the promotion and to the insiders, so that very little of the money — I can't give you the exact statistics — actually went into the product. That's what the Brown Jefferson report indicated was a problem with the exchange: not enough money was getting into the product. Their comprehensive study showed — and it's the only study that's been done — about 25 to 33 percent of every dollar invested went into the product.
When you realize that the investor makes his or her money on the sales of that product, and only 25 cents or 33 cents of every dollar ever gets itself into the product, the chances of making good return for the small investor are nominal. The money is eaten up by the insiders and the promoters. That's what happened in Jolt Cola, Technigen, Tillex, Gametek and Med-Tech. It's this repeated pattern of the money not going where it ought to go that's causing us the problem.
You can put aside whether the stock goes up or down.
MR. SIHOTA: No, we're not saying that you have to have some bureaucrat with the wisdom of Solomon to be able to separate the wheat from the chaff 100 percent of the time. You do have a bureaucrat who sits there and tries to separate the wheat from the chaff in the sense of the person who looks at the statement of material facts. Fair enough. We've talked about that in the House.
My point to you, Mr. Minister, is that people want.... I don't want to stop people from participating on the market. If people want to buy a nasal spray that will get rid of AIDS, that's their prerogative. If the stock goes somewhere or doesn't go somewhere, that really is inconsequential.
What is of consequence and what ought to be of consequence to the minister is that when evidence comes forward that the thing was handled by way of stock manipulation or, in the case of other examples I gave you, through insider trading or through false news releases or whatever, after the fact — maybe you can't catch all 2,200 of the news releases that go through — when it comes to your attention that it's a scam, you've got to move on it. You're not, and as long as you don't you're going to have problems, because the type of people who get involved in scams are going to want to come here. I've indicated to you that it's very easy for them to get on.
MR. REE: Just lock the door, that's all.
MR. SIHOTA: The member says: "Just lock the door." That's not the point. The point is that there are some people who are identifiable, and I've given you examples of some of them that are, and you've got to watch them. More importantly, at the end of the day when they've done their little scheme, you certainly know then who they are and there should be deep and firm consequences. That's what's lacking.
We don't expect you to sit there and look at everyone before they get on. We expect you to do some of that, but at the same time we expect you to deal with them after the fact, and you're not doing that. You're not cleaning up that end of it. It's a shame when you write letters to people telling them that you're going to take action and you still don't do it. It's a shame when you allow these things to go up and then come back down again and fizzle, and you allow the same promoter to get back on the market and allow it to go up on a different scam and then back down again. That's what we're asking you to do, to clean up that end of it.
You can call that whatever you like. You can take shots at bureaucrats. You can call it socialist. You can call it cheap shots, whatever. But you've got that problem and that's why you've got that exodus. You don't have that exodus because of Mr. Brown.
MR. SIHOTA: Well, I'm using your language.
HON. MR. COUVELIER: There's no exodus, there's an inflow. There are more listings going on every day.
MR. SIHOTA: I'm using your language. The minister says that there are more listings going on every day, and he's correct. There have been more listings in the first quarter of this year than there were last year. I think last year was 307, and in the first quarter, if I'm not mistaken, we're around 80, so we're going to have more this year than we did last year. I'm asking the minister, if he wants to talk about listings.... We didn't get into that and I know there's some pressure to wrap up now, but we'll continue this discussion on Monday. I'm telling the minister: you can't point to the number of the listings. That's not the appropriate barometer. Don't listen to what I've got to say about that. Listen to what Rupert Bullock had to say about that when he spoke to the Rotary Club this year in Vancouver and talked about shell companies being used on the exchange. I can give you all sorts of ads — I've got them sitting here — about shell companies. He talked about how that was being used to manipulate activities on the exchange and he said that the purpose of increasing those listings was largely not to develop a product but to hype a promotion for insiders. He
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said, "We all know what it's all about," and that's when he developed the theme — one that I agree with — of quality, not quantity, on the exchange.
Mr. Minister, you don't have to pay attention to what I'm saying along that theme. Just listen to what Mr. Bullock had to say. You know Mr. Bullock's experience in this regard. He has agreed that if someone wants to commission the type of study that we did several years ago on the Brown-Jefferson thing, he would participate in it. He recognizes the same problems that I'm articulating in the House.
Don't give me these meaningless statistics about how the listings have gone up. There's a lot more to it than that. What we are saying is that there is a way you can deal with a problem. If you don't, you will get people going to Toronto.
We'll wrap it up with that today, Mr. Minister. I move the appropriate adjournment motion, and we'll continue on Monday.
MR. CHAIRMAN: Just before we proceed, the member for Maillardville-Coquitlam has asked leave to make an introduction.
MR. CASHORE: It's an honour for me to be able to introduce to the House two constituents of Mr. Speaker's constituency. Mildred and John Gillies of West Vancouver. Mildred Gillies is my sister and has therefore had a role in my upbringing and is partly responsible for the kind of person I am in this House. Please join me in welcoming them to the House.
The House resumed; Mr. Speaker in the chair.
The committee, having reported progress, was granted leave to sit again.
HON. MR. STRACHAN: My best wishes to all for a good weekend.
Hon. Mr. Strachan moved adjournment of the House.
The House adjourned at 12:47 p.m.