1988 Legislative Session: 2nd Session, 34th Parliament
The following electronic version is for informational purposes only.
The printed version remains the official version.
TUESDAY, JUNE 21, 1988
[ Page 5249 ]
Alleged use of insider information by former Energy ministry employee.
Hon. Mr. Davis –– 5249
Conflict-of-interest guidelines. Mr. Clark –– 5250
Wang Canada Ltd. Mr. Sihota –– 5250
School Canadiana. Mr. Barnes –– 5250
Environmental Appeal Board. Ms. Smallwood –– 5251
Military research. Ms. Marzari –– 5251
Brain damage hospital. Mr. Stupich –– 5251
Military research. Mr. Rose –– 5252
Audit of First Investors Corp. and Associated Investors of Canada.
Hon. Mr. Couvelier –– 5252
Tabling Documents –– 5252
Hydro and Power Authority Privatization Act (Bill 45). Second reading
Mr. S.D. Smith –– 5252
Ms. Edwards –– 5253
Mr. Michael –– 5255
Ms. Smallwood –– 5256
Mr. R. Fraser –– 5258
Mr. Stupich –– 5258
Mr. Peterson –– 5261
Mr. G. Hanson –– 5261
Mr. Weisgerber –– 5264
Mr. Lovick –– 5264
Mr. Jones –– 5268
Ms. A. Hagen –– 5271
Nursing Statutes Amendment Act, 1988 (Bill 56). Hon. Mr. Dueck
Introduction and first reading –– 5273
Liquor Control and Licensing Amendment Act, 1988 (Bill 38). Second reading
Hon. L. Hanson –– 5273
Ms. A. Hagen –– 5274
Hon. L. Hanson –– 5275
Credit Union Amendment Act (No. 2), 1988 (Bill 47). Second reading
Hon. Mr. Couvelier –– 5275
Mr. Stupich –– 5276
Mr. Sihota –– 5276
Mr. Mercier –– 5277
Hon. Mr. Couvelier –– 5277
Small Business Venture Capital Amendment Act, 1988 (Bill 5 1). Second reading
Hon. Mrs. McCarthy –– 5278
Mr. Williams –– 5279
Hon. Mrs. McCarthy –– 5279
Municipal Amendment Act, 1988 (Bill 32). Second reading
Hon. Mrs. Johnston –– 5279
Mr. Blencoe –– 5279
Hon. Mrs. Johnston –– 5280
Securities Amendment Act, 1988 (Bill 55). Hon. Mr. Couvelier
Introduction and first reading –– 5280
Municipal Finance Authority Amendment Act, 1988 (Bill 41). Second reading
Hon. Mrs. Johnston –– 5280
Mr. Blencoe –– 5281
Hon. Mrs. Johnston –– 5281
Resort Municipality of Whistler Amendment Act, 1988 (Bill 49). Second reading
Hon. Mrs. Johnston –– 5281
Mr. Blencoe –– 5281
Hon. Mrs. Johnston –– 5282
Premier's Advisory Council for Persons with Disabilities Act (Bill 42). Second reading
Hon. Mr. Veitch –– 5282
Mr. Darcy –– 5283
Mr. Lovick –– 5283
Hon. Mr. Veitch –– 5284
Pension (Miscellaneous Amendments) Act, 1988 (Bill 39). Committee stage.
(Hon. Mr. Veitch) –– 5284
Resource Investment Corporation Amendment Act, 1988 (Bill 44). Committee stage.
(Hon. Mr. Veitch) –– 5286
The House met at 2: 10 p.m.
HON. S. HAGEN: Mr. Speaker, I have several introductions this afternoon. First of all, I'm pleased that we have in the House today two relatives of my wife; they are Gordon and Elsa Bate. Gordon Bate is a lecturer with the department of library and information services at the Melbourne College of Advanced Education. I would ask the House to please make Gordon and Elsa welcome.
Secondly, Mr. Speaker, on behalf of Mr. Gerry Lindner, who is one of the commissionaires, please welcome Pat and Sylvia Mitchell, who have retired here from Ontario. Accompanying them is Sylvia Lindner. Please welcome them to the House.
MR. G. HANSON: In the gallery today is a constituent who is visiting the Legislature for the very first time. Her name is Karen Barnacle. Would the House please give her a warm welcome.
HON. MR. STRACHAN: Mr. Speaker, with us today in the visitors' gallery are three individuals who over the past 16 months have performed an outstanding service to the people and the government of the province of British Columbia. I introduce the members of the Special Waste Advisory Committee, who have recently concluded their review of the options for establishing a comprehensive special waste management system for British Columbia.
The committee members are: Dr. David Boyes, the committee chairman, who is a distinguished Vancouver physician and cancer specialist with an international reputation as a consultant and lecturer on cancer prevention and control. He's attending this afternoon with his wife Margaret. Also on the committee are Mr. Edward Jeffreys, president of Cascade Chemicals and Commodities Ltd. and a former chairman of the pesticide control board, who has a long background in the field of industrial chemicals, and Mrs. Lael Hamilton, the former director of the South Granville Ratepayers' Association of Vancouver, with a lengthy record of community service in a variety of fields.
In the course of their assignment, the Special Waste Advisory Committee reviewed an immense quantity of technical information, examined the approaches taken by many other jurisdictions both on this continent and overseas and considered proposals from a number of companies. They also communicated extensively with the public and with local government in the search for a host community for a treatment facility. It is my intention to release the committee's final report by the end of the month. I would ask the House to extend to the committee a very well-earned and cordial welcome.
MR. LOVICK: Visiting the House today is a young couple from Edmonton, Alberta, in the company of one of our Legislative interns, Mr. Ben Koning. I would ask the House to please join me in making welcome Mr. Phil Prins and Miss Ingrid Newtell.
MR. HUBERTS: In the gallery today we have 30 grade 5 students from Cordova Bay Elementary, accompanied by their teacher Mr. Quint. I'd also like to mention that one of the students is Ryan Peterson, son of the second member for Langley (Mr. Peterson). Along with my colleague the Minister of Finance (Hon. Mr. Couvelier), I ask the House to give them a warm welcome.
HON. MR. ROGERS: Visiting us from the Nechako economic development region are two persons involved in very meaningful and serious work in that particular area. I would ask you to welcome Angus Davis from Fraser Lake and Barrie Carter from Smithers.
MR. BRUCE: In the House today are two very good friends of mine: the administrator and the clerk of the municipality of North Cowichan, Mr. John Berikoff and Mr. Jim Dias. Would you please make them feel welcome.
MS. MARZARI: I'd like to introduce to the House Mr. Richard Thomas, who is undoubtedly here awaiting the passage of Bill 47, the Credit Union Amendment Act. Mr. Thomas is the director of legislative services for the B.C. Central Credit Union.
ALLEGED USE OF INSIDER INFORMATION
BY FORMER ENERGY MINISTRY EMPLOYEE
HON. MR. DAVIS: I'd like to make a ministerial statement. Yesterday, the hon. second member for Vancouver East (Mr. Clark) asked whether a former employee of my ministry used inside information in obtaining drilling licences and leases for petroleum and natural gas worth over $3 million. The government's conflict-of-interest guidelines state: "Ministers shall not, and shall ensure that officials in the department and agencies for which they are responsible do not, conduct official business...where the former public office holder has had, within the preceding six-month period, access to information not available to the general public."
I've had ministry officials review the serious allegations made by the hon. member and find that the former commissioner of petroleum titles, Mr. Wilf Quinn, did not — I repeat "not" — use any information other than that available to the general public in this province. He made use of land title descriptions and followed a process laid out in manuals by my ministry. Mr. Quinn. in doing so, followed closely the laws, guidelines and regulations established by this government.
I wish to add that prior to engaging in this activity, Mr. Quinn states he had obtained clearance for his intended actions in the private sector from a law officer of the Crown.
The use of agents to acquire petroleum and natural gas rights is common in western Canada. Mr. Quinn made sure that he acted as an agent, not a principal. He acted for a client in the public process. Mr. Quinn was not involved in determining the amount of the bid; nor could he benefit if his client turned out to be the successful bidder in cases of this kind.
So Mr. Quinn was not, to quote the hon. second member for Vancouver East. successful in obtaining two drilling licences and four leases for petroleum and natural gas rights in the province — rights worth over $3 million. The principals to the bid obtained these rights. Mr. Quinn simply received a fee for his services.
As the hon. member's question yesterday impinges unfairly on Mr. Quinn, a former public servant of fine
[ Page 5250 ]
reputation who has 17 years of service in this province, I know he will wish to withdraw any inference of wrongdoing on Mr. Quinn's part.
MR. CLARK: I find it incredible that the minister would come in here and have the audacity to say that Impugned the reputation of Mr. Quinn, when clearly it is the minister who has violated the Premier's guidelines on conflict of interest. It is the minister who is responsible under those guidelines, which say very clearly that the minister has responsibility for officials in his capacity and that it is the minister who should be held accountable.
The minister takes refuge in the fact that the individual concerned sought clearance from Crown counsel. Quite clearly, Crown counsel was wrong in this instance, and that cannot be sought as refuge.
The minister said he only acted as an agent and not on his own behalf. What does section 7(b) of the Premier's guidelines say? "Ministers shall not, and shall ensure that officials in the departments and agencies for which they are responsible do not, conduct official business with a former member acting on behalf of himself or another person or entity." He clearly acted on behalf of someone else, and that is clearly covered by the guidelines.
Finally, the minister said that he did not benefit from inside information. Does the minister expect us to believe that the chief bureaucrat responsible for the disposal of drilling rights for nine years in this province had no access to any sensitive information with respect to this, the largest gas reserve in British Columbia? Whether or not he received personal benefits in terms of the drilling rights is not significant. The fact is that he received a benefit in terms of a fee, and that's clearly covered by section 7(b) of the conflict-of interest guidelines.
MR. CLARK: A question to the Minister of Energy. The minister should now be aware, clearly, that he has violated section 7(b) of the Premier's conflict-of-interest guidelines. He knows — and he cannot couch it in the language which he has just done — that he is responsible, not Mr. Quinn. The Premier's guidelines on conflict of interest clearly say that the minister is responsible for officials in his department. What action does the minister plan to take with respect to the violation of those guidelines?
HON. MR. DAVIS: Since on the best advice I can get from law officers of the Crown, from my own ministry people, from the successor public servant to Mr. Quinn there was no wrongdoing in this case, I plan to take no action whatsoever.
MR. CLARK: A supplementary to the minister. Two of Mr. Quinn's bids — and we have no way of knowing whether he was bidding on behalf of himself or other people — were among the highest prices paid ever for natural gas rights in British Columbia. They are located in an area that contains what you have referred to, Mr. Minister, as perhaps the largest gas reserve in Canada. Do you seriously expect us to believe that Mr. Quinn learned no sensitive information in nine years as the chief bureaucrat responsible for the disposing of all Crown drilling rights in British Columbia?
HON. MR. DAVIS: The simple answer is yes. The agent in each case, and in Mr. Quinn's case, processes sealed bids. He had no knowledge as to the amount or nature of the bid, and he didn't participate in any way beneficially, whether the bid was successful or not.
MR. CLARK: A supplementary to the minister. Could the minister inform the House whether this bid was, prepared by industry — whether this area up for bid was determined in consultation with his ministry or was unsolicited from the private sector?
HON. MR. DAVIS: I can't answer immediately, and I will bring an answer to the House. First, lands are explored under permits granted by the ministry. When a discovery is made, auctions take place. This was in fact an auction. I think the process itself determines what lands are made available for bid, not individuals in the ministry.
WANG CANADA LTD.
MR. SIHOTA: A question to the Minister of Economic Development. It has come to my attention that her ministry is on the verge of announcing a 50 percent allowance to any municipality wishing to install a Wang-Nissi system solution. This will, of course, give Wang's bid a 50 percent advantage over those bids submitted by small local companies in the area. Could the minister explain how she justifies this unfair 50 percent price reduction to Wang at the expense of local small high tech companies?
HON. MRS. McCARTHY: I believe the member is referring to a system under our Purchasing Commission where we assist companies selling to export to get their first sale. It's to do with the company. I'll have to get further information. I believe it's Nissi, not Wang. It may be in joint venture with Wang, but I can find that out, and I will bring the information back to the House. As to the 50 percent, I cannot confirm that. I will have to get further information for the member.
MR. SIHOTA: The minister was prepared to make the announcement yesterday, I believe around 1:30, and I am surprised that she doesn't know the details as to which companies are involved. The minister says it's for exports. My information is that the material is for municipalities. Could the minister advise the House whether she intends to offer a similar type of program for school districts?
HON. MRS. McCARTHY: Mr. Speaker, I will be very pleased to bring the information back to the House and to include the answers to that question.
MR. BARNES: A question to the Minister of Advanced Education. On June 13 you said that School Canadiana was being closed so that Vancouver Community College could place ESL in more centres in the community to achieve greater efficiency and access for the people who need it. In fact, the college said publicly that School Canadiana is being closed in order to reduce the operating deficit. Would the minister care to correct the record and admit the school is a victim of college cutbacks and that expansion of ESL has not been the motive for this action?
[ Page 5251 ]
HON. S. HAGEN: I'd be pleased to respond to that question, As a matter of fact I've had subsequent conversations with the president of Vancouver Community College, who has assured me that they will be able to offer more and better diversified English-as-a-second-language courses because they will be able to do it more cost-effectively than was done under School Canadiana.
MR. BARNES: In light of expediency I'm going to stick to my script, but I disagree with the minister as far as that being a motive.
School Canadiana is an integral part of Vancouver's Chinatown and has roots in the Italian, Portuguese and Vietnamese communities. It is the only off-campus program to offer intensive multi-level ESL for 12.5 hours a week, 12 months a year. Having said that there would be no reduction of ESL, will the minister accept that a mistake has been made and agree to provide additional funds to Vancouver Community College to ensure that School Canadiana continues?
HON. S. HAGEN: That is a decision that was reached by the board of the Vancouver Community College, and they have assured me that they will continue to offer the excellent programs that they do in ESL.
MR. BARNES: This is to the Minister of Education. You said that the transfer of ESL to the colleges won't mean less access in our communities. However, Vancouver Community College shut down a 40-class community program because it didn't have the money to pay rent for school facilities. Are you prepared to pick up the tab for rental of school facilities for ESL programs so that there won't be a cutback when the colleges take over?
HON. MR. BRUMMET: I don't know whether the member is saying that it is essential to pay rent somewhere to keep a program going, when the schools themselves or other facilities may be available free of rent. Is it the rent that is the issue or the programs? We have said that the programs will continue and be accessible in the community. We haven't said that we are going to try and find the highest-rent facility to run them in.
ENVIRONMENTAL APPEAL BOARD
MS. SMALLWOOD: A question to the Minister of Environment and Parks. Last week the chairman of the Environmental Appeal Board sent a letter to the Islands Protection Society demanding that they pay $12,000 before the board would schedule an oral hearing for the use of pesticides. The board chairman did suggest that a hearing could be organized in distant Vancouver for $7.000. Better still, he suggested, if they sent a written submission, it wouldn't cost them anything. Is it now the government's policy that ordinary men and women of this province must unfairly pay thousands of dollars in order to get an oral hearing before the Environmental Appeal Board?
HON. MR. STRACHAN: Let me advise the House that in all cases.... This is one where in fact there is a substantial other side to the story. Rather than try, by memory, to advise the House what the other side of the story is, I will simply take that question on notice and come back as soon as I can with the appropriate and full information.
MS. SMALLWOOD: New question, Mr. Speaker, In his report for pesticide regulations this year, the ombudsman recommended that the Environmental Appeal Board, as a general rule, determine pesticide use appeals by way of oral hearings open to the public. Can the minister tell this House why he is ignoring that recommendation which ensures fair hearings for citizens of this province before that board?
HON. MR. STRACHAN: I'm stuck on the horns of a dilemma here, because that question would be more appropriately put during legislation which is currently before the House.
MS. SMALLWOOD: I can assure the minister that we will thoroughly discuss it at that time.
Another question. Why has the minister chosen to put financial barriers in the way of citizens' rights to appeal?
HON. MR. STRACHAN: The previous answer would apply.
MS. MARZARI: I have a question for the Minister of Health. As the minister knows, Vancouver Island health officials and the public have expressed dismay and opposition to the deadly bacterial experiments at the University of Victoria. The accidental release of tularaernia bacteria could cause an epidemic, I gather, on the Island, seriously threatening animals and humans. Will the minister tell the House what action he has taken to ensure that public health is protected in this situation?
HON. MR. DUECK: I will take this question as notice and bring back a report.
MS, MARZARI: This is a supplementary to the Minister of Advanced Education and Job Training, and it has to do with military research in our universities and colleges. Is it the policy of the government to encourage B.C. universities to do contract research for the United States military, such as that being considered for the University of Victoria? Will you provide the House with a complete list of contract research being done at B.C. universities for military purposes?
HON. S. HAGEN: I don't have a list with me today, but I'm sure you know the universities are autonomous, and if you wrote to each of the three presidents they would probably provide you with it.
MS. MARZARI: Let me repeat the second question, since you tried to answer — ineffectively — the third. Is it government policy to encourage B.C. universities to do contract research? We know the federal government is putting $800 million this year into military research. Do we have a policy on government research involving U.S. military contracts?
HON. S. HAGEN: It's not the policy of this government to encourage military research at the universities.
BRAIN DAMAGE HOSPITAL
MR. STUPICH: A question to the Minister of Health. In the throne speech last year there was reference to a brain damage facility that was going to be built somewhere on
[ Page 5252 ]
Vancouver Island. The last time I asked the minister about this, I think he had forgotten about it. Maybe he's had time to think about it in the meantime.
HON. MR. DUECK: I thank the hon. member for the question. We have a head injury report in hand now, and it's being reviewed. We are considering, rather than going to the location that was announced.... Perhaps other locations will be used instead. That report will come forward and we will make the announcement in a very short period of time.
MR. STUPICH: I never heard of any location being announced. I kept asking whether Nanaimo would get it, but I've never heard of any location. I wonder if the minister would tell us the ones that aren't going to be.
HON. MR. DUECK: Mr. Speaker, perhaps it was a wrong choice of words; whether a location was announced or whether there was much talk of a location may be better wording. However, the area of Vancouver Island was considered not the most appropriate, and the report that we now have in hand and are reviewing may indicate that there are perhaps other locations and not necessarily only one. Perhaps two or three locations somewhere in the province would be more appropriate.
MR. ROSE: I'd like to direct a supplementary to a series of questions asked by my colleague a minute ago about universities and military contracts. I'd like to address the question to the Minister of Advanced Education, who is reading at the moment, and I don't know if he hears me,
MR. ROSE: No, that's true, he doesn't.
I'm asking a question of the Minister of Advanced Education. Someone suggested his lips are still moving, so we knew he was reading. But I wouldn't put it that way.
Is the minister aware that as the minister responsible it's his responsibility — he doesn't have to do it — upon request of a member of this House to provide the information regarding military contracts at the three universities, which he has just declined? Is he aware that that is a customary and traditional role of a minister?
HON. S. HAGEN: Mr. Speaker, in all due respect, I did not decline; I said I didn't have the list with me, and I suggested that she might want to write the three university presidents. But in light of that, I would be pleased to request those lists on her behalf.
MR. ROSE: On a point of order, Mr. Speaker, that is not the appropriate response from the minister who is asked.... If he had said that he would provide the information later, that would be fine.
MR. SPEAKER: Order, please.
HON. MR. STRACHAN: If I could just respond to that briefly, questions can be asked in question period; they do not necessarily have to be answered.
HON. MRS. McCARTHY: Mr. Speaker, I'm very pleased today to table in the House the impact study of the free trade agreement. In doing so, I would like to recognize some people who are in the gallery: Doug Horswill, Stuart Culbertson, Joan Easton, Dennis Grimmer, Ross Curtis, Don White, James Marshall and Kim Cook, who are with the trade policy branch of my ministry and have done an outstanding job in this negotiation.
Hon. Mr. Davis tabled the 1987-88 financial statements for the British Columbia Hydro and Power Authority.
AUDIT OF FIRST INVESTORS CORP.
AND ASSOCIATED INVESTORS OF CANADA
HON. MR. COUVELIER: Mr. Speaker, two questions were put to me yesterday during question period, and I'd like to provide the answers now.
I was asked by the member for Esquimalt-Port Renfrew (Mr. Sihota), first of all, if I was aware of a January 1987 report on an audit of First Investors Corp. Ltd. and Associated Investors of Canada Ltd. by Price Waterhouse prior to the issuance of licences to the company on April 1, 1987. In response, I've been informed that an audit of the investment contract companies commissioned by the superintendent of insurance in Alberta was conducted by Price Waterhouse. The British Columbia superintendent of brokers was provided with a copy of the audit report, which is dated May 22, 1987. Thus the audit report was not in existence when the B.C. licences were issued.
Secondly, I was asked whether I was consulted prior to the issuance of licences to the companies on April 1, 1987. I have no recollection, nor among me or my staff has any record been found of any prior consultation with me on the question of issuing licences to these investment contract companies in 1987.
Orders of the Day
HON. MR. STRACHAN: Mr. Speaker, I call adjourned debate on second reading of Bill 45, in the name of the Minister of Energy, Mines and Petroleum Resources.
HYDRO AND POWER AUTHORITY
MR. S.D. SMITH: When we finished on Friday we were discussing the principle of this bill, particularly in relationship to the questions of research and development, procurement and the relationship between ownership and the regulatory power. I would like to emphasize some of the matters that were discussed at that time. When the minister has his opportunity to close debate, he may wish to address them. I think my views on the R and D division were fairly well and clearly stated, and I would commend to the minister their consideration.
[Mr. Pelton in the chair.]
I also think that in dealing with the principle of privatization and particularly the principles of privatization surrounding these entities, we might well, as a Legislature, address ourselves to the question generally of the appropriateness of
[ Page 5253 ]
having the ownership and the ultimate regulatory function repose in the same entity, the same body. When one gives consideration to owning the resource, to owning the entity of distribution and also being ultimately responsible for the regulatory function, I think that there is, and there has demonstrated to be over the past, the very real potential, if not the very reality, for conflict of interest between those two functions.
When we are addressing the concept and the principle of privatization, I think it's worthy of us as a Legislature and as legislators to give consideration to that aspect of our deliberations, because it is not simply the case that regulation and ownership may easily be dealt with by the same body or by the same organization. In that regard, I think it is the case for those who are concerned that we will not be able to deal with our public resources in the way that we might think is in the interests of the province if in fact we sell the entity that now is in the business of distributing. I think if we visit that clearly and carefully in the cold light of day, we will find that in fact, shorn of the ownership function, we may have a better opportunity to pursue our regulatory function with much more diligence than we otherwise could.
I want to revisit this whole question of procurement and community activity. The point was made in this chamber fairly forcefully that the people of this province would benefit less from a procurement policy that was undertaken by a private sector entity than they now do through a procurement policy undertaken by a public sector entity. I think any factual scrutiny of that proposition will demonstrate how fallacious it is.
If you take a look at the procurement policy and the community activity of one of the bidders, Inland Natural Gas, I am unable to find any organization in this province, public or private, which has done a more systematically outstanding job of working with local communities on a partnership basis to use the purchasing power of that large organization in order both to stimulate economic activity for the small businesses in the community as well as to take a very real and important leadership role to deal with the question of economic expansion and diversification.
They have done that without the prodding of anyone. They have done that because they have found it to be in their interest to expand and diversify the economic base in the small communities of this province where they serve the people through the distribution of their gas. I hope that the minister is able to deal with that issue of procurement when he winds up second reading debate on the principle of this bill.
Finally, in dealing with the gas division it is my view that if we look carefully at the potential for joining together the Inland system and the Hydro gas division, should they be the successful bidder, we will thereby have created a significant distribution system in this province which through its purchasing power, I have no doubt, will be able to lower the price of gas for homeowners, to individuals now in the Inland system. I think there is probably no other way that we would see that happen in the near future for homeowners in the interior of this province, and particularly we would not see it happen should the status quo prevail in terms of where the ownership of that entity rests.
Once again, Mr. Speaker, I want to stand and say that with the qualifications I put in relation to the R and D division of Hydro, I think the principles of this piece of legislation are very much worthy of our support in this chamber, particularly as we can point to the very successful regulation of a private sector natural gas distribution system which not only has served the customers enormously well for a Iona period of time in this province, but has shown an outstanding leadership capacity in terms of economic development in our communities outside of the lower mainland.
I think that role model is one that I would happily commend to all members of this House, particularly to members of the New Democratic Party who seem to be particularly concerned that if the private sector is able to do its job in the distribution of gas, somehow the public will not be as well served as it is now through the B.C. Hydro system.
MS. EDWARDS: I want to say at the beginning that there is the possibility under this bill for the purchase of privately generated power from small operators. In many cases that could be a very good thing. However, overall, I want to speak against this bill in principle and will approach it from two directions. The first is from the direction of the interests of the B.C. coal industry and the connection it has with the proposal and the principle of selling off B.C. Hydro Rail.
Coal is B.C.'s most important mineral commodity. It is one-quarter — 25 percent — of all mineral and petroleum values in the province, and that makes it a very important commodity indeed. The government has indicated by other actions that it's willing to participate in supporting that industry. They talk about research support, they enter task forces, they give tax breaks and so on, which would lead one to suppose that the coal industry should get the support of this government and of all the people in British Columbia because of its importance.
The stable mines and producers of coal in British Columbia exist in the southeast corner of British Columbia, the Elk Valley. They employ 2,500 direct employees, they have increased their productivity to the point where they are world-competitive, and that is different than the other coal producers in the province. despite the major cost factor that they face in world competition, the problem of transportation costs to tidewater.
Ninety-five percent of British Columbia's coal is exported. Nearly all of it from southeast British Columbia goes through Roberts Bank, which anticipates more than 25 million tons of coal going through that port this year. B.C. Rail controls access to Roberts Bank. At this site, the Thorne Ernst and Whinney study said that Hydro Rail provides a very good level of service and that that level of service cannot be maintained if the rail is swallowed up by a large corporation, which leads us to examine even more closely the transportation costs for coal in B.C.
Rail costs are crucial to the competitive success of the coal industry, Mr. Speaker. If Hydro Rail goes into the hands of Canadian Pacific, Canadian National or even Burlington Northern, the three companies that have indicated some interest in buying this rail company, the regulatory jurisdiction moves from the B.C. Ministry of Transportation to the Canadian Transport Commission under the federal Railway Act. The CTC sets the rates. The CTC moves with the speed of a slug and responds with the sensitivity of an armadillo.
That is what would happen. The revenue potential for actually selling the rail will drop very sharply, because under 1987 amendments to the Railway Act. the entire length of the railway — approximately 115 kilometres of straight rail: there's about that much rail also in yards, sidings and so on —
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would become basically a switching track, defined as a section of line within 30 kilometres of a competitor's rail line that bisects its own rail.
Thus the Hydro rail line, which will be designated then as a switching track, is likely to bring.... I assume that this 'is in the estimate that the minister put forward on Friday when he introduced the bill. The province is likely to get $15 million depreciated value for that piece of track. The replacement value has been calculated at $130 million, Mr. Speaker. That's for the rail yards, the rights of way, the locomotives and the cabooses. Of course, Hydro Rail does not own 'its own cars, so that's not included.
I'm not suggesting that the province would necessarily get the replacement value, but there's a huge difference between the $15 million that the minister proposes we are likely to get for B.C. Hydro Rail and the $130 million it would take to replace it by anyone who bought that rail. It's approximately a one-to-nine ratio.
What happens then is that the operating control of the piece of rail that controls the access to Roberts Bank goes into private hands and the regulatory control goes into federal hands. This, according to some of the minister's previous statements — and this minister has been in public life for a long time — goes counter to some of the statements he made previously. The minister has said that provinces should as much as possible control their own resources. I don't know if the minister means they should not regulate the way the resources go, but I think that if the province wants to have that strategic control of that important part of the most important mineral commodity of B.C., then the B.C. Hydro Rail should not be handed over into the hands of a large corporation which we are told could not provide such efficient service and which, of course, would then be regulated by the Canadian Transport Commission.
This single piece of rail can be used to exert tremendous influence on the access to Roberts Bank, both physically and financially. For that small piece of line why do we surrender control to a private rail corporation which could be foreign and which will be regulated by the Canadian Transport Commission? As I say, we're talking about a large industry in British Columbia: 2,500 direct coal employees in the Elk Valley; 25 million long tonnes of coal through the port this year; and northeast coal, the other major provincial supplier, sitting on the brink of closing or being eaten up by creditors or whatever it is. This is this province's coal resource. Why would the minister set up legislation which allows that kind of sale to happen and work against the interests of British Columbians'?
I want to go on and talk a bit about what the minister says is intended by this legislation, although it's not intended to be done until the next government has a mandate to carry out a disposal arrangement. I'm talking about the minister saying: "The electric side, particularly the water licences." I assume this is in apposition those public assets which are managed by B.C. Hydro for the generation of electricity. He said: "These are not now for sale, but they certainly could be sold under this legislation." For some reason the minister is proposing that the government needs a mandate in order to sell such important assets as water licences, and I agree that the government should have a mandate before it ever sells water licences. He didn't seek a mandate for the rest of it, but the minister seems to see that this is a matter of considerable importance.
British Columbians are seriously concerned about water rights, because water is an extremely precious resource. It's a precious resource in our country, and it's an even more precious resource in the United States where that country is water poor. We have a history that goes over decades of proposed arrangements and rallying around to save this precious rare water resource in Canada from the American needs. The Americans need water; they know now where to get it. However, British Columbia has its own problems with water shortages. We have many parts of the country that are semi-arid, and overall we need that water in this province. It is, by the way, our competitive advantage when we use it as hydro power, and I think the minister recognizes this kind of thing.
I refer to another paper the minister delivered in 1981. At that time he was talking about Hat Creek coal. He made a general statement that we should all be reminded of right now. He said: "If anyone should capture the low-cost component of any resource, it should be those who live in the province or nation in which it is located. To hand over the difference between the low cost of a resource" — I'll leave it at that; there is an omission there — "to another country is unthinkable." This legislation does not protect British Columbians against having our resources, which are our competitive edge, sold to a foreign power, and that seems to me to go directly against a principle the minister himself has put forward.
[Mr. Weisgerber in the chair.]
We in British Columbia need our water for hydro power; we need it for irrigation; we need it for recreational resources; and we need it if we're going to ever do what most of us in British Columbia who look to the future say should be done, and that is develop secondary industry. Why in the world would we sell our water licences, give away control of our water, when in fact that water can produce the competitive advantage of cheap power, which would give us the opportunity to manufacture things at a secondary level? We are giving it away to our competitors, who will manufacture secondary industry products with our cheap power. It makes no sense.
The history of the use and control of water in this province is not one of trust — not just in the province; right across the country. Perhaps you could begin with the so-called Grand Canal scheme that was proposed by a fellow named Simon Reisman, who has fame of a different kind of late. That, of course, proposed moving water from Hudson's Bay down into the United States. There were extraordinary and extensive plans for interaction of water at the Red and Selkirk River levels. There has been the McNaughton plan for the Columbia River Treaty — when the Columbia River Treaty was signed for the Libby reservoir. There was the NAWAPA Plan, which surfaces regularly, and I don't think there is any reason in the world to suppose that that has not been taken seriously.
I know at one time I saw a grade 5 text that was used in the state of Idaho. One of the rather simple sentences that was there for the elementary school students was: "One day all of the Rocky Mountain Trench will be flooded so that the United States will not have a shortage of water." That indicates the extent of penetration — the idea of sharing water and flooding our valleys so that the U.S. can have access to the water — when it goes into U.S. elementary school textbooks.
Right now I'd like to review some of the statements made and ideas put forward at the time we had a great deal of
[ Page 5255 ]
argument about the Columbia River Treaty. They talk about water and about control of water, and of course that's all related to hydroelectric power. A statement made in the Engineering and Contract Record by a man named James G. Ripley said: "The U.S. objective is to obtain the use of Canadian water for industrial and irrigation uses."
A fellow by the name of Bruce Hutchison who was writing in the Financial Post in November 1958 said: "It is a struggle of financial titans for possession of probably the world's largest hydroelectric resources and other . . . wealth." He was basically referring to British Columbia's water resources.
David Cass-Beggs, general manager of the Saskatchewan Power Corporation, said in February 1964: "One may wonder why the United States is prepared to insist on getting every last drop of Columbia River water. The reason is that their interest is not primarily for power. but for consumptive uses in the United States."
There is a very clear understanding, Mr. Speaker, that the residents of the United States would like access to our water. We examined that possibility again when UtiliCorp came into Canada and bought West Kootenay Power and Light. For the first time in Canadian history, a foreign company was allowed to buy an electric utility and have access to water rights for the operation of that utility.
Of course, the minister at that time was involved in the argument, and it's interesting to look at what the minister said at the time about the proposal for the Columbia River Treaty. There are two interesting quotations from. . . . The minister at that time was the head of a Liberal power committee. They were not in power at the time, but the party that he belonged to had a committee, and the minister headed it. He said:
"The Columbia River Treaty, as interpreted publicly by the present government, must be characterized as nothing short of a fiasco. It is inconceivable that the government of this country should ever enter...any agreement, let alone a comprehensive treaty with another country to last at least 50 years, which failed to procure any demonstrable advantage for the people of Canada. No man, no government, no party can be proud of this achievement."
He also said in February 1962 in the Vancouver Sun: "'The present Columbia treaty is not good enough. It amounts to a sellout of our Canadian resources. This embarrassing treaty must therefore be renegotiated.' There can be no doubt that the present version ties Canadians' hands...it is a poor deal for Canada. Whether Canadians are bold enough to grasp this opportunity...remains to be seen."
It was an interesting approach to the Columbia River Treaty, because in recent months the minister has again been making public statements about the treaty. What he says now, in the Trail Daily Times of March 4, 1988, is: "We have done well in economic terms, and environmentally we followed the only course that made sense...."
A minister has had conflicting ideas about access to our water resources by a foreign power — the United States. What he's doing now is introducing legislation that again allows the sale of water licences to foreign powers without any further recourse to the Legislature.
In fact, once this is passed, water licences can be sold by B.C. Hydro. They can be sold to a foreign power without any limitation. If this legislation goes ahead, we can sell water licences with a cavalier willingness that the minister demonstrates to undervalue the importance of our provincial assets and to slide through legislation which allows sale of our most precious assets: technical, intellectual, artificial and natural all rolled up into one single ball of wax.
In this case, I don't believe this is because of not knowing what the government's doing — as some of the other moves seem to be — but due to a massive arrogance. This is not a situation that the minister can reasonably defend. To put forward the legislation and say that from now on we can sell water licences is not acceptable to the people of this province, I believe. It is certainly not acceptable to the people of Kootenay constituency, and as soon as the people understand what's going on, there will be a strong message sent. I urge the minister to withdraw this legislation.
MR. MERCIER: A group of grade 7 students and the adults accompanying them are in the gallery visiting from Edmonds Elementary School in the Burnaby-Edmonds riding, and I would ask the House to make them welcome.
MR. MICHAEL: I am starting off by answering one of the concerns of the second member for Vancouver East (Mr. Clark), who made a remark in his initial address to the House about the cost of reading meters, and that if we were going to privatize the gas division of B.C. Hydro, we would have to have a meter reader for the gas division and another meter reader come down the street to read the hydro meter.
My view of that and my response to that would be: let's leave that to the private sector. I'm sure that with the gas division privatized. in a short period of time, not only will we see one meter reader looking after the hydro and gas combined on some type of a cost-sharing basis, but the private sector will lead the discussions to probably involve the municipalities and the water districts throughout this province to read all meters with one person, rather than having two, as the member suggests. for gas and hydro.
I have faith in the private sector that, with the ingenuity that's out there, they will come to grips with these types of problems and indeed, we will see them done more economically in the future than they have been in the past.
I also look at the reputation and the past performance of private utilities in the province of British Columbia and, indeed, in the other provinces in Canada. I look at Inland Gas, and I see a firm that is privately owned with first-class service, extremely good public relations, and a program that has greatly assisted the interior of the province of British Columbia — namely the Venture Inland program.
The member for Kootenay made some reference to private firms not being able to control them as well. I would submit to you, Mr. Speaker and members of the House, that the control will be by the public Utilities Commission. Whether it's private or public, any rate fee adjustments must be approved by the public Utilities Commission.
The history throughout the Dominion of Canada, if one would examine the facts, will show that private utilities, by and large, have lower rates than publicly owned facilities. Why is this? One of them certainly has to do with the availability of various write-offs. Again, with the ingenuity of the private sector and the profit motive, we will see more efficient service delivered by the gas division than what has been done up to now.
It's strange that in listening to the debate from members opposite, we don't hear any suggestions about more nationalization. They want protection for the current, but I haven't heard from any members opposite for quite some time now
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any suggestion that a private firm such as B.C. Telephone be nationalized and put under the public jurisdiction, because they know full well that it isn't popular with the people in the province of British Columbia. Indeed, a private firm such as B.C. Tel is currently doing a good job. I'm not saying in those words, Mr. Speaker, that I in the past have been 100 percent satisfied with B.C. Tel, because I certainly have not been 100 percent satisfied. I've had my differences with them, but by and large, I think it can be said that they're delivering a good service in the province of British Columbia.
There has also been some suggestion that the federal government is going to be grabbing more of the revenue pie from the natural gas division if this is turned over to the private sector. I'm not sure, Mr. Speaker, whether the members opposite are aware that currently a law exists that all federal taxes are returned to the provinces from utilities. The province, in its wisdom, can either return this money to the utility, thus the consumer, or keep it in the public purse. I'm not sure whether the members opposite were aware of that fact.
History has shown that it's easier to regulate a private firm than a giant public-owned utility. The private firm must come to the Utilities Commission and make all the submissions that are required by the Utilities Commission before any adjust merits are made to any rates.
In looking at B.C. Hydro as an example, its relationship and its ownership of the current gas division, one has only to look at the fact that the gas division makes up a very small part of the overall interest areas of B.C. Hydro; indeed, it's somewhere in the neighbourhood of 5 percent. I'm convinced, Mr. Speaker, that if and when the gas division is sold to a private sector firm, we will see the initiatives of the private sector reach out to all corners of the province of British Columbia, whether it's combined with other private sector firms or done through existing private sector firms , and we will see a greater thrust in the area of natural gas vehicles.
Hopefully, we will see a program — and I'm sure we will see more of an accelerated program with the slow-fill program — whereby homeowners who are hooked up to natural gas can have a slow-fill system in their vehicles. I'm sure that we will see more initiative in the area of taking advantage of lower rates during the off-seasons and setting up bulk storage facilities. All in all, Mr. Speaker, I am optimistic that the future bodes well for the people in the province of British Columbia once this division is sold to the private sector.
You know, Mr. Speaker, I've always been a very strong fan, an advocate, of natural gas in the province of British Columbia. It's a great resource. It's a clean resource. It's practically pollution free. It's very low cost; great for vehicles. It certainly guarantees longer engine life, less repairs and maintenance costs. And I repeat, it's a very clean resource that is in absolute abundance in the province of British Columbia. I'm convinced that with all those advantages, and turned over to the private sector, we will see great opportunities for the future, better service to the province of British Columbia, and lower costs in the long run.
MS. SMALLWOOD: I rise in opposition to this bill and, like previous speakers, would like to refer to both Bills 45 and 46 because I find it very difficult to separate the two of them in that they reflect government policy, decision and direction for energy in this province.
I think this legislation reflects a very serious mistake in a very serious direction for this province, one that we can't help but give full debate to, and hopefully raise a few alarm signals within the public as to what this government has initiated.
I want to talk about two different areas: first of all, the ability of any government to control energy policy within their jurisdiction and how important that is; and secondly, how this initiative affects the generation of energy in the province and relates to the Mulroney-Reagan deal.
First of all, the minister, I think, will recall, if he was listening to the Environment estimates, reference to a United Nations commission, the World Commission on Environment and Development, called Our Common Future. We've talked at great length in this House about the work that was done by Grp Harlem Brundtland and the importance of this report as it impacts economic development and the environment of our planet. One of the key sectors in the report is energy policy, and I'd like to bring a couple of the recommendations from that report to the minister's attention and indeed talk about some of the concerns that the report expresses.
The report emphasizes that to bring developing countries. . . . I would parallel that with this province, in that we are considerably behind some areas that are more highly industrialized, in that we will have a tremendous growth, hopefully, in the years to come in industrial development. So there is a parallel between our development here and that of the developing countries.
"To bring developing countries' energy use up to industrialized country levels by the year 2025 would require increasing present global energy use by a factor of five. The planetary ecosystem could not stand this...What they're saying, basically, is that that increase in energy use will have a very serious impact on the planet. This is primarily because of the increase where it is based on nonrenewable fossil fuels.
"Threats of global warming and acidification of the environment most probably rule out even a doubling of energy use based on the present mixes of primary sources."
We'll talk a little bit more about the generation of energy in this province and where the growth possibilities are a little later, but basically this report, a report of note, is saying that the generation of energy is a significant problem and demands the attention of governments at all levels. Governments must spend some time and energy looking at alternatives, low energy paths based on renewable resources.
The report goes on to say:
"However, achieving these levels will require a program of coordinated research, development and demonstration projects commanding funding necessary to ensure the rapid develop of renewable energy."
The substantial changes required in the present global energy mix will not be achieved by market pressures alone.... It talks about the role of government and the need for public policy in directing the energy paths and directing the need for not only the use of renewable energy sources but the direction of soft energy paths as opposed to some of the mixes that we have at present.
The report goes on to talk about the impact of energy sources on the environment: the serious probability of climatic change generated by a greenhouse effect of gases admitted
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to the atmosphere, the most important of which is carbon dioxide produced from the combustion of fossil fuels; urban industrial air pollution caused by atmospheric pollutants from combustion of fossil fuels; and acidification of the environment from the same causes.
Then it goes on to talk about the risks of nuclear reactors. I very consciously raise the issue of nuclear power in this debate because, very clearly, the legislation before us, the privatization of Hydro and Power Authority and the Utilities Commission, the introduction of the legislation that provides the opportunity for Hydro to buy the private power generation in this province, coupled with the legislation that this government has brought in in years past, the Utilities Commission. . . . There is nothing that would stop the building of a nuclear reactor in this province.
What this government is doing by introducing this legislation is putting at arm's length a policy that is extraordinarily unpopular in B.C., which very clearly would inhibit any government from introducing nuclear power. What this government is doing with this legislation is putting that decision at arm's length. Once this legislation is passed, it will be in the realm of the private sector with all of the legislative capability in place for a private firm to build a nuclear reactor. Given this minister's background and his, I think, support and comfort with the nuclear industry, we have some very serious problems as portrayed by this legislation.
What this government is basically saying is that the private sector can do it better: the private sector can not only provide energy at a cheaper rate; it can take care of the energy needs of this province. That is a tremendous leap of faith. It is dodging the responsibility that this government has, not only to future generations and to the resources of this province, but very clearly to the health and safety of many of the communities of this province as well. What the government is doing by introducing this legislation is divesting itself of a tremendous tool, which is a powerful one — excuse the pun — that would allow this government to control a very important factor in economic development in this province.
A couple a months ago — perhaps more than a couple of months ago now — I was fortunate enough to be part of a briefing session that B.C. Hydro put on for several of our members. In that briefing session, they provided us with some information as to the resource development potential in this province. I think it's particularly interesting now to look at some of that potential and some of the information Hydro provided for us at that time. This lays out the opportunities for the private sector — given this legislation — because we're no longer talking about government policy; we're talking about the opportunities for the private sector to get into a substantial money-making venture.
In the graph that was provided to us, B.C. Hydro laid out several different areas of hydro generation. In each of the areas, they identified existing generation, the viable development and uncertain development. I'll share that information with you. Very clearly, as everyone would expect, hydroelectric development in the province was the major producer with the most possibility. Thermal generation was the next and that, at this point, included coal and gas, but we'll talk a little bit about nuclear generation as well. Then there was cogeneration, forest waste, small hydro, Columbia downstream benefits, Alcan, Alberta coordination, strategic conservation and Bonneville Power Administration coordination.
At that time I took exception. . . . I want to make it very clear for the record that I feel that this legislation is bad legislation, that this government is giving up far too much, that it is essentially selling B.C. down the river, that there are very important things that can be done with B.C. Hydro, that we are not talking about accepting B.C. Hydro as it is, and that there is work to be done there too.
Back to the information provided by B.C. Hydro. When you look at the percentages of resource development potential and the average annual energy capability, Hydro provides information that shows strategic conservation as minimal, and I think the kinds of things we have seen in other administrations. . . . All this does is show the bias of Hydro at present. There are tremendous things that can be done by B.C. Hydro with leadership from this government which would bring us in line with the work done by the World Commission on Environment and Development along the lines of conservation and soft energy paths that would do well for both economic development and the environment in our province. However. the information shows — and I'll talk predominantly about hydroelectric and thermal generation — that at present the average annual energy capability of Hydro is about 50.5. With other viable development. we're looking at 54.2 — a very small. moderate increase. But then they show on this graph an incredible leap to 102.3, and the measurement is TWH. When we asked questions of the B.C. Hydro people, they said that what they were talking about is projects that wouldn't be particularly popular with the population, but just for interest's sake it shows the potential. We said: "What kinds of projects? What are you talking about that wouldn't be popular that you're showing in this graph for B.C.?" They said: "Projects like damming the Fraser River." Well, we gasped. to say the least. It just shows the growth potential there is in this province and the kinds of thoughts that go through the minds of the professionals who are looking at energy projection for the province — the potential that is there for hydro generation in this province.
The issue of thermal coal and gas. Again, the graph shows 3.9, and that is the existing. For viable development, 17.3 — a tremendous growth there for thermal generation. That is a very serious concern for this province, given the fact that substantial environmental damage is done by most thermal energy generation. Again, the uncertain development brings it to 29.2. The same question to those experts: "What are you talking about for the uncertain development?" Again. with tongue in cheek, they talked about a nuclear reactor usin2 Lost Lagoon in Stanley Park for the coolant pond. We didn't find this particularly funny, given some of the outrageous proposals that we have heard from both this government and the entrepreneurial sector. This is the kind of debate that this government is lining this province up for by bringing this legislation in.
This government is saying: "We're open for business. Bring all of your ideas forward and we'll take a look at them. We will put in place the legislation that is necessary for you to do just about anything that you want to do" — including, as I said before, legislation that is already in place that stipulates the building of nuclear reactors and sets out the building code. That is the kind of outrageous policy direction that this government has undertaken.
I stand with the rest of the members of the opposition in opposition to both Bills 45 and 46. I think they are shortsighted. I think that they do harm to the possibilities for future planning, for economic development and for the environment in this province. I think that they stand to do a great deal
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of damage to the ability of B.C. citizens to control their own resources and to control the direction of energy development in the province.
I hope that the minister, after hearing the debate that has gone before me, the well-thought-out evidence that has been put before the minister, will reconsider this legislation. It is dangerous legislation, and it should be withdrawn.
MR. R. FRASER: It never fails to dazzle me, the arguments I hear from that member on that side of the House, who has no concept of what makes the world go round, no understanding whatsoever of how things are built, no understanding of the control mechanisms that are put in place by the minister or by the government, no understanding of nuclear power, of sending of messages or what gas distribution lines are private or anything.
It's a delight for me, in fact, to listen to that member speak, because I want people to read Hansard. Listen to what she says, go out in the riding and send that speech out, because I want everybody in her riding to see it. I think they'll be completely dumbfounded by it. In fact, you should be reading the material from the member for Kamloops over there, who has a much better grip on this subject than you have, and you can learn something new.
Talking about the bill — which isn't such a bad idea either — the bill talks about gas, rail, research. It doesn't talk about hydroelectric, which you spent a great deal of your time talking about.
It's interesting the kind of message you send out over there. On the one hand you say you're for private little companies and in favour of little business and all sorts of stuff. Then you spend the rest of the debate knocking business large and small. I don't know how you can have it both ways. The obvious answer is that you can't.
The reason Social Credit people have had government of the province for so long is that they have the vision, the foresight, the planning capacity and the courage to go ahead — things that the NDP has never had, although they got elected one time.
Let's talk about the bill for a while. Let's talk about the leadership idea of this bill. Where are we going to start? Shall we start with the research division? Maybe we should start there. If we were contemplating setting that into motion and you were to think about what you might be able to do, which government corporations don't do very well, if at all, you could promote research in that lab with the people in that capacity all around the world. As an engineer who has been promoting the export of engineering capacity around the world for years and who is part of the B.C. engineering group that has in fact been providing engineering services around the world, I can assure you that there is nothing as effective as B.C. engineers around the world doing their job right. In fact, Canadian engineers have a wonderful reputation around the world for the work and the research they do, and if the research division was actually sold and set to do its job properly, it would be so valuable to this province. I have no doubt about the fact that it would grow and make a tremendous contribution to the lifestyle and quality of life that we have here. It hasn't been done thus far, because Crown corporations aren't usually in that business.
You talk about the message that is sent out. We refer occasionally to the BCTF and the messages they send out. They said to themselves: "We want more money, so how are we going to do that? The schools are bad, the schools are bad, the schools are bad." That's all people heard, so now people are saying to me: "We are going to send our children to private school." So the message that the BCTF sent out on this need-more-money thing wasn't that they needed more money; it was that the schools were bad. They have been the greatest single source of growth for the private schools in the province, and in the same way, the opposition, which claims publicly to support small businesses, doesn't do that at all. They slam them constantly. That's the message you are sending out — not the one you want, I'm sure.
Looking at the gas division, we know that it constitutes about 6 percent of the Hydro corporation. That's not a big piece; it's not even significant with respect to the Hydro people or the Hydro corporation. Then we find out that most of the distribution systems in Canada are already private. There must be some good reason for that. It probably has something to do with customer satisfaction. As the member from Kamloops said in the early part of this debate, the Inland people, for example — no preference intended or given — were doing a good job in the community, a good, motivational private-sector job that all companies can do. And I wouldn't be surprised that if and when the gas division is sold, as permitted by this legislation, whoever took it over would be interested in making sure that customers were happy, because nothing makes people react faster — those in business, anyway — than an unhappy customer, because they want to keep him happy.
The member over there who spoke previously said that we will lose control. "Oh, woe is me," she said. "We are going to lose control." The fact is: it isn't so. The government will not lose control. We provide all the regulations and will continue to do so, and the people of British Columbia will enjoy the protection of the golden share provisions mentioned by the minister in his press release. They will be pleased to know, for example — all of you in the gallery — that the employees of Hydro will be given preferential treatment. Preservation of seniority in bidding back for vacancies for up to a year. It's this government and the Social Credit people from history who have been constantly looking after the people of this province, and this is a perfect example of it.
The employees and the people of the province will be protected. What else would you want to think about if you had a distribution company in British Columbia distributing gas to all the people out there? What else would you want to have? You might want to have the chief executive officer of the company living in British Columbia, and you might want to have a big percentage of the directors living in British Columbia and having Canadian citizenship. Guess what, Mr. Speaker. As it says here, the chairman, the chief executive officer and 70 percent of the directors must be Canadian and resident in British Columbia. That's what is called looking after the people of British Columbia, looking to the future and long-term planning. That's what is termed the effective use of the resources of British Columbia. That's why the Social Credit Party has been in power in this province for so long. We have never forgotten about the people. We never will. We will never whine, and we are always prepared to be visionaries. This is a visionary bill. This is what this government does best, and that is why I support this legislation.
MR. STUPICH: If I could just comment briefly on the remarks from the first member for Vancouver South. He was talking about the gas division being relatively small and
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hardly worth being given any particular consideration; he said it's only 6 percent of the total. But I wonder, Mr. Speaker, if he realizes the total is about $10 billion. So this "only 6 percent" is $600 million, which is a lot of money in British Columbia, in whatever sphere of activity. It's still a big item.
He said that the bill talks only about gas, rail, research — nothing about hydro. Perhaps he missed the presentation by the second member for Vancouver East (Mr. Clark), who said that indeed the bill provides for the disposal of everything except the lines. I think he was exaggerating there; I think it includes everything, and the Minister of Energy agreed with the second member for Vancouver East that while he's talking now about gas, the legislation itself provides for the disposal of B.C. Hydro totally, whenever the government chooses to do so.
I would remind the House that B.C. Hydro was not a creation of the NDP government — not a creation of socialists. It was a creation of forward-thinking Premiers and governments over the history of the province of British Columbia. There was a recognition that if B.C. was ever going to compete with Ontario and Quebec, we needed a supply of economical energy — an abundant supply that would be available to anybody wanting to locate in the province. There had been some examples of private companies coming in and locating because it was available here, but they did it where they wanted, for their own particular purposes. The two examples are the Trail smelter and the Alcan plant at Kitimat. The potential was there; they developed it and they built their industry.
But for the rest of it, Premiers in British Columbia realized that if anything was going to be done so that B.C. would not be just a hewer of wood and drawer of water. . . . I know it's terribly trite to say that, but I'm going back over 50 years, Mr. Speaker, when the Premier, the leader of the Liberal government, Duff Pattullo, recognizing the importance of having energy in B.C., started trying to locate oil and gas, particularly oil, in the Peace River area. He was looking far ahead. He knew the importance of developing our own energy resources. He didn't find it, but it wasn't his fault; he did try.
that, the coalition government in 1946 recognized too that something
had to be done to provide energy in the province. So they established
the B.C. Power Commission, which came into being in 1946. Initially
their ambitions were relatively low. They were going to develop power
sites on Vancouver Island, and the first one they were looking at was
the Nanaimo River — a relatively small site. But the vision of the day.
. . . All the members of the House, with the particular support and the
urging of the CCF members, persuaded the government to look instead at
the Campbell River John Hart development, and that tremendous — for those days —
facility was provided by the B.C. Power Commission to supply an abundant supply of reasonable-cost electricity for Vancouver Island.
Public policy. B.C. Power Commission — publicly owned, publicly administered, publicly run as an expression of public policy because it was supplying a need. No NDP government, no CCF government, no Liberal or Conservative government, and no coalition or Social Credit government anywhere in Canada has ever embarked on any policy of public ownership unless it was supplying a public need of the day. That's indeed what happened with the B.C. Power Commission.
The Social Credit government of W.A.C. Bennett — again, because it was his vision of British Columbia that there should be an even larger supply of firm electrical power available — decided on the two-river policy. The largest publicly owned private sector producer of electricity was B.C. Electric. B.C. Electric wasn't prepared to suit the public purpose, to act in the public interest. They were acting, naturally enough. in the interests of their shareholders. That's what they had to do, that was their job. But from the Premier's point of view, he was serving the people of British Columbia. and the best wav to serve them was to develop a new organization, a larger organization, one that would contain the old B.C. Power Commission but would also contain B.C. Electric, and then the new B.C. Hydro, which came into being on March 30, 1962, could properly serve the interests of the people of British Columbia as the government of the day decided. That's how it all happened, Mr. Speaker; not by us, but because the job wasn't being done by the private sector.
Where is the importance of domestic control? From the point of view of supply, governments can look ahead and plan supply. If they make a mistake, it's more expensive. Yes, we have to borrow the money to provide these expensive installations at dams. Nevertheless. they make sure the power is there when the need is there.
I was reading a story in the paper just this morning, I think it was, where B.C. Hydro now has some concerns that the growth of consumption of power is exceeding their original calculations and there's some concern as to whether we're going to be able to meet the demand not too many years down the road. Mr. Speaker, we can't afford to gamble at this time by turning it over to private enterprise and hope that they're going to do the job for the people of British Columbia. B.C. Hydro must maintain control of this supply.
Other members have talked about service, and we know that B.C. Hydro gives good service. I am not talking about the other utilities. I don’t quarrel with the service of B.C. Telephone, but I must say that in my experience I get better service from B.C. Hydro whenever there is a problem than I do from B.C. Telephone.
With respect to the price, let's look at the assets of B.C. Hydro now. I mentioned earlier that there was $9.8 billion in the last annual report that I saw. The minister tabled another one today that I have yet to see. That's the book value of the assets — $9.8 billion. Presumably, if they are going to be sold they'd be worth more than that. They should be, because that's the book value.
The retained earnings, the net earnings over the 26-year history of B.C. Hydro at that point in time were just $540 million, so B.C. Hydro hasn't been charging rates for power, gas, the rail lines and everything else that would enable it to build up the kind of retained earnings that would have enabled B.C. Hydro to go to the market and borrow money for more investment. They haven't done that. They supplied the service essentially at cost. That's what they were instructed to do; that's what they've been doing over the years.
If it is going to be privatized — any portion or all of it — that's going to have to change, because without a guarantee a corporation going to the market and trying to borrow with only 5 percent net equity in the business is going to have a hard time borrowing and will certainly pay very dearly for costs which would have to be passed on to the people using the services. Other members have said this, and I have to repeat: it's going to be a lot more expensive.
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While we're talking in this instance just about turning over the gas division and we're looking at, the member said, 6 percent — that's $600 million — if the gas division is going to bear its appropriate share of the debt of B.C. Hydro currently, we are looking at a figure in excess of $550 million. As I say, how is the corporation buying that going to justify to its shareholders unless it can increase the rates very soon? Protection for three years we are told — maybe, because the cabinet can waive that.
No one in the private sector is going to borrow it unless they believe that they are going to make more money out of it. They make more money by cutting back on the service or by increasing the prices, or a combination of both. There is no other way; there is no magic to it. They have to cut back on the service or they have to increase the price. It's just that simple.
I was looking through the Blues of the part of the debate that I missed, and we've been told that there is protection in this. The question was asked: does it restrict foreign ownership. The procedure as has been outlined is that the assets move from B.C. Hydro to an intermediary company. When the buyer is found, assets are transferred to the new private owners. These are the points that are in the Blues and that are part of the legislation, part of the policy. Intermediary companies may be designated as special companies, so a particular company is designated as a special company only when cabinet wants.
The company cannot move its head office out of B.C. without cabinet approval. It doesn't give any reasons that might be accepted by cabinet, nothing at all — just if, at any time, cabinet felt so inclined, then the head office could move anywhere in the world. No individual can own in excess of 4 percent of the shares, unless cabinet agrees. The second member for Vancouver East (Mr. Clark) read a number of qualifications, protections, but in each case there was that escape clause for cabinet. Anything can be done if cabinet agrees, which seems to be the way the bill is written.
Even if it wasn't that easy to get out of it, Mr. Speaker, if we have to put so many restrictions on the company or organization buying pieces of B.C. Hydro or whatever, so many restrictions to protect the public interest, why are we selling in the first place? If we are going to spend all our time watching them, spend money having people check up on them to make sure that they are acting in the public interest and forcing them to do things that they might not want to do — that's one of the provisions, again, with cabinet approval — if we're going to all that trouble to police them, what's the point in the first place of turning it over to private ownership?
Private ownership isn't going to have very much freedom to move unless the private owners have access to cabinet members and can persuade them that the moves they're taking have to be taken for the financial survival of the organization that bought pieces of B.C. Hydro. If they can persuade them of that, they can do anything. But they have to persuade them of that first. Where is the protection for the people of British Columbia if that's the case? Where is the protection if our demand for power increases faster than the private owner calculates?
Is the government going to be having its own forecasts for energy needs? Is the government going to have its own forecast for energy needs even for export? Is the government going to be looking at things like that and saying to the private owner of the facility, whether it's gas or electricity: "You're not providing for the future sufficiently?" I see nothing in the bill to make me feel certain that there will be that kind of protection. Where is the protection for the people of British Columbia? The protection we have now, of course, is that it is a government organization; it is an organization that follows public policy; if it doesn't, it's the responsibility of the minister responsible for that organization to see that it does. The opportunities are there. B.C. Hydro can do anything the government wants it to do to make sure that it's functioning in the interests of the people of British Columbia. But once we let it get into private hands, we open the door to all kinds of pressure from those private owners to let them do what they want to do. Remember, they're always functioning in the interests of their shareholders — secondarily they're looking after the people of the province, after their customers — because they want to keep their customers happy even when they have a monopoly.
They don't want complaints; B.C. Telephone doesn't want complaints. Nevertheless, their prime motive, their prime consideration, has to be how good a job can they do for their shareholders. Where now it's an instrument of public policy, after the sale of parts of it or all of it, it will be an instrument of policies of the private owners.
Indeed, in establishing all of these rules of conduct. . . . I'm not talking about cabinet now; I'm talking about the conduct of these private organizations that are going to own pieces of B.C. Hydro. What we're saying by establishing all of these rules is: "We don't really trust you to look after public policy, to look after the public. We believe you are going to be gouging the public as much as you can. We believe you are going to be serving your own interests" — which is logical; they would. "We're going to put all kinds of roadblocks in the way and establish all kinds of rules, to give us lots to do, to keep us busy looking after you, to give you a lot of opportunities to see if you can't get around some of these rules to your own benefit."
If we have to bring in so many provisions to make sure that they serve the public interest, to make sure that they don't move the head office, to make sure that they don't sell off the shares to organizations in other parts of the world, why are we making things so difficult for ourselves? We're going to have an organization that will not serve the needs of the people in the same way, that will have to be persuaded to — it or several of them; whatever — serve the public interest. They're going to have to be watched. We're going to set up rules. We're going to have people continuously on guard to make sure they are doing the job we want them to do.
It seems so ridiculous. We have the organization now. If we're not doing a good enough job of watching it, then it's the responsibility of the minister and the cabinet. They appoint the directors. We tried privatization once before when we sold off a half a billion dollars' worth of public assets to the private sector, and the value now is something like one twelfth of what the assets were when they were transferred to BCRIC.
Transferring assets to the private sector or to public companies operating in the private sector doesn't mean that they are going to work better. It does mean that the job of Petroleum Resources is going to be much more difficult. It does mean that the consumers necessarily are not going to be as well off, because they're going to pay more or get less service — whatever. We're better off now than we would be under any proposal to sell off part of it. If the government's objective simply is to get a chunk of cash to put into the BS fund where there isn't any right now. . . . If they assign to the
[ Page 5261 ]
gas division its share of the total debt of B.C. Hydro. . . . Remember, there's only about 6 percent net equity in B.C. Hydro, and that would be the case with the gas division if it were sold separately, or any of the others.
I'm opposed to Bill 45. I haven't talked about 46, unless I have by accident. On behalf of the people of British Columbia, on behalf of the people of Canada, I've not heard of any other province that's making this kind of move. I think the governments in every other province recognize their responsibility to the people in their provinces, with respect to looking on energy distribution and production as the single most important instrument of developing public policy. The only way to do it efficiently on behalf of the people of the province is to retain it in public ownership.
MR. PETERSON: I stand and speak in favour of Bill 45. I was interested to note some of the comments from the first member for Nanaimo, particularly relative to the two-rivers policy brought in by W.A.C. Bennett, our former Premier. I was a little bit younger in those days, but if my mind serves me correctly, the opposition party was adamantly opposed to that two-rivers policy. Yet it was a policy that had a lot of vision, and the end result of it, as we see today, is that had we not gone ahead with the Columbia River Treaty and the two rivers policy, British Columbia would not have been in a position to take advantage of the strong economic gains that resulted from that decision and that vision. I just would like to remind the member of that.
I was also interested in some of the comments made by the second member for Vancouver East (Mr. Clark) when he opened up the opposition debate on this. He talked about right-of-way sharing and all the inherent difficulties with that. I don't understand that, because use of single corridors for multi-utilities seems to me the way we should be going. In fact, we have excellent examples of that in the interior, where we have our 500 kV system coming down from the Mica, two circuits, but also we have Inland Natural Gas occupying the same right-of-way; and by doing this there's a lot of economy saved on behalf of both the public sector, vis-à-vis the 500 kV rights-of-way for B.C. Hydro, and the private sector, the pipeline rights-of-way, with common right-of-way maintenance-sharing, common occupancy. Environmentally, it's certainly much better. It utilizes the full right-of-way to its potential. I don't see why he would identify that as a problem. We already have that existing in the province, and it's working very well, thank you. So I would ask that he would reconsider that thought. I thought he just probably threw that in because he had nothing else to say at the time. But I just point that out to him.
I really want to focus on the R and D facility of B.C. Hydro. I've been lucky enough to have had a lot of personal involvement with that facility. As a matter of fact, when I was employed by B.C. Hydro, I utilized that resource to enable me and my department to do a job better — and that was in the area of transmission maintenance. First of all, I cannot overstate the high degree of excellence in the science, engineering and technical workers and in the support staff there. When I used to utilize these people on projects, they solved a lot of problems in terms of corrosion protection, insulator failures, identification — and I'll go into those in a little more detail if you like — and pole-testing equipment that they developed. I used to think to myself when I used to utilize this great resource we had: what a window of opportunity! Here is B.C. Hydro....
MR. PETERSON: Hear me out. The second member for Vancouver East (Mr. Clark) says "It's crazy." There's his political ideology getting in the way of common sense again. I might almost call it pipeline vision; others would call it tunnel vision. Just hear me out.
I thought, what a window of opportunity. You know, B.C. Hydro was not the only utility that was experiencing these difficulties. There are many utilities in Canada, but — guess what — there are hundreds and hundreds more in the United States. And here is a centre of excellence. Their technical capability is the commodity that we can market across the line — and you can’t see that?
MR. PETERSON: That's my one-man cheering squad over there.
You can't see that, Mr. Member. Just stop and think about it. Do you know what's really going to help us in this? It's something the opposition doesn't agree with, again — and that's the free trade agreement. With the free trade agreement, we are going to be able to eliminate a lot of the red tape that would enable our engineers, our technologists and technicians to go over to the United States and provide them with the expertise that will bring dollars into British Columbia; will create additional jobs in British Columbia; will help to improve Canada's balance of payments with the United States. All these excellent opportunities.
I'll tell you — and I really mean this — that if I had the financial resources available to me to purchase that facility, I know that it would just do wonders in terms of the payoff to myself in the dividends by marketing that expertise that is there. Let me tell you, that is a centre of excellence. It's one of the centres of excellence in British Columbia that we have and we should be proud of, but we should take advantage of it. It's a window of opportunity. I hope, Mr. Speaker, that the minister does get a bid that will reflect its value, because there is no doubt in my mind, Mr. Member, that this will create new jobs and bring additional new wealth into British Columbia — and I don't mind that a bit.
MR. G. HANSON: It certainly is interesting to note the selective recall of the political heritage of the party in power. Unfortunately we didn't have Hansard way back when B.C. Hydro was established, but luckily we do have a provincial library here. I took the opportunity to read a number of the stories alluded to by my colleague the first member for Nanaimo (Mr. Stupich) from around August 1, 1961, when the former Premier of this province, W.A.C. Bennett, expropriated the B.C. Electric Co. Then the following year he merged the B.C. Power Corp, and the B.C. Electric Co. into B.C. Hydro.
It's interesting: the debate in this chamber has come full circle from the day he stood here. Guess what he said when B.C. was a hodgepodge of private utilities in the north, in the Kootenays and all over the place, and every small mill and lumber operation or whatever had a power company. He said: "It is government policy now that basically all electrical power and energy that supplies the public should be under public auspices." This is the political icon, the former Premier of this province.
[ Page 5262 ]
MR. LOVICK: It's the gospel.
MR. G. HANSON: It's the gospel according to the former Premier. He was right to bring private utilities under public ownership and rationalize them into the great energy corporation that we have, B.C. Hydro.
MR. CLARK: They did it with R and D too; they pulled it all together into one unit. It's efficient.
MR. G. HANSON: Exactly.
It's more difficult to quote from these early sources, because we did not have Hansard, so we have to rely on press clippings and so on. He indicated that the two remaining major power producers serving the public in the province would be taken over "when the government studies are complete over time." Do you know what they were, Mr. Speaker? They were West Kootenay Power and Light and East Kootenay Power, which this government sold across the border into the United States — out of the control of British Columbia entirely. That is the pattern that has been established. These are UtiliCorps in waiting. These are private utilities that are going to be parked for a certain time with some regulations. Then control will ultimately flow, just as a simple matter of scale, over to the United States, and we will lose the possibility of really fashioning our own economic destiny, because as the member for Nanaimo said, it is energy which is the main mechanism of public policy. It's the main device or tool with which we can fashion our own economic destiny.
Here we have the Social Credit government in power going back full circle to undo all the work W.A.C. Bennett did in 1961 right in this chamber. August 2 was the debate; August I was when he took action on B.C. Electric. He took action on B.C. Electric because B.C. was not getting its fair share of the energy dollar of this province. Full circle — they've thrown the gospel away.
It was a tumultuous time in this House. Here's one of the headlines: "Wildest Uproar in Years as New Bills Pass." There were other parties in this House at the time. The Energy minister was at one time a member of one of those early parties which are now in the provincial museum across the road or the wax museum on the other side.
I just wanted to point out the selective political recall of the members of that side of the House about their own political heritage and roots. I'll tell you, many of their political forefathers who occupied seats in this chamber would be spinning in their graves or at their lakeside cottages or wherever they happen to be today, knowing that their offshoots have come to undo all the good work they did for the people of the province over the years.
Another interesting point of this kind of legislation is that there was no mandate sought from the people of British Columbia. On October 22, 1986, when we had the election, did any citizen of this province hear the Social Credit candidates who were knocking at the door and appearing on free-time telecasts say: "If we are elected, we will sell B.C. Hydro," or "We will sell the gas division of Victoria"?
If those statements had been made, there would not be one single Social Credit member sitting in this chamber. This is legislation without a mandate. This is legislation without any political accountability. There's been a major breakdown, Mr. Speaker, in the political process in this province, and the electors of Boundary-Similkameen were the first political brushfire to occur and send the signal that this government is on its way out because of legislation like this which has no mandate from the people of this province.
We're going back to a period of time where B.C. Hydro will be fractionalized. It will be broken up into small, little private fiefdoms based on profit. Losses that are presently incurred, such as the Victoria gas division, cannot operate because of its small distribution network. It only serves 4,000 people, which was essentially a matter of B.C. Hydro policy which should have been shifted if the government really meant what it stated, that at some point in the future we would have a natural gas pipeline and a distribution system to serve the people of Vancouver Island with natural gas. Then that distribution system of the Victoria gas division should never have been capped in terms of its maximum number of sites utilized and served. It is something like 4,000, and that was a matter of public policy. It should have been expanded.
I want to address a few comments to this gas division because it is a matter of grave concern here. The Victoria gas division, which was established way back in 1860 using coal gas, went through many phases. It was incorporated then and acquired by B.C. Electric in 1905. This particular utility has an extensive history in British Columbia. The transition was carried out from coal gas to butane air, and that was completed in 1954. Then that particular system was transferred over from butane air to propane air in 1982, and on March 31, 1987, Victoria Gas supplied 3, 804 customers using propane air and it operated at a loss.
It operated at a loss — and there are various numbers in the report here — of somewhere between $5 million and $6 million. I think it states here that for the fiscal year 1987 the deficit was $6.2 million.
Now, auction block. Owner comes along. First of all, this is a kind of carrot anyway because the minister and the government argue that no one will buy it. We'll offer it up for sale anyway on the off chance that the carrot will be monopoly distribution rights for natural gas on Vancouver Island.
[Mr. Rabbitt in the chair.]
So we get a utility that operates at a loss and is going to be sold, and if an owner was to purchase it now would have to pass a $6 million deficit on to 4,000 users. Well, with a quick calculation that's a per user increase in excess of 150 percent, something in the order of $1, 500 per user per year increase, That would make it the most expensive energy probably anywhere in North America.
So the people of Greater Victoria who are on this distribution system benefit from the fact that they are on the larger B.C. Hydro distribution grid of gas and electricity. So there's a cross-subsidy. The people who live here and are served with propane air gas which heats their water and provides heating in some cases, or goes into restaurants or dry cleaners or other kinds of enterprises, is cross-subsidized with the larger distribution network, and that cross-subsidy offsets the cost for the B.C. Hydro gas subscribers here.
If it is severed off and sold, as the proposal is — and some of the bidders have indicated that they are willing to put in a bid for the whole gas package, mainland and Island. . . . However, there is another bidder that has indicated that they would just take this portion here.
There are other pieces to the puzzle. One other piece to the puzzle is that there's no pipe between the mainland and
[ Page 5263 ]
the Island. We only hear about that pipe, usually in the run up to a provincial election, sometimes in the run up to a federal election. I'm expecting any day now within the run up to the federal election we are going to hear an announcement about the possibility of a natural gas pipeline to Vancouver Island. But, you know, the people on Vancouver Island have heard that from their federal and provincial politicians in the past. I might say, Mr. Speaker, that they've adopted a rather cynical attitude about reports of the imminence of the construction of a gas pipeline from the mainland to the Island. That's not saying they wouldn't like it; they just don't believe the commitment of the politicians in power — both in Ottawa and here in Victoria — to bring that into reality.
Here we have a carrot to be offered up as the Victoria gas division, a carrot to suggest to a private operator: "You purchase the gas division; you pick up the deficit on the off chance that there will be a connecting pipeline and that we will then give you guaranteed rights to serve natural gas to the citizens of Vancouver Island at a profit." That takes us right back to before August 2, 1961, when W.A.C. Bennett rationalized the private hodgepodge of energy generators in the province of British Columbia. Full circle — right back to where we've come from.
Ray Williston, the minister at the time, said that they didn't have confidence that the private utilities would take care of the future growth of energy consumption, He said: "Using a 7 percent annual load growth — a very conservative one — it is estimated that 20 years from now, in 1982, B.C. will need approximately 8 million kilowatts." He didn't have confidence — as the first member for Nanaimo (Mr. Stupich) indicated earlier — that the private utilities could plan effectively in the public interest for future need. He was absolutely right, and that was why B.C. Hydro came about. B. C. Hydro came about because the province was not getting its share of the energy dollar from the private utilities. Portions of it were coming off and going in a federal tax. There was a large profit being made. They were inefficient in terms of their distribution systems and their grid tie-ins and so on. In terms of future need, serving the public, rationalizing the growth, the philosophical statement that W.A.C. Bennett made on August 2, 1962. . . . He said that energy serving the public should be under public auspices. They've gone all the way back.
It's very difficult to give the members of this House a history lesson on the growth of public policy around energy in this province. What we see now are radical departures in terms of looking at selling firm power into the United States on long-term contracts that take electricity away from possible use within British Columbia. We see a balkanization of our energy generation and distribution systems by breaking up B.C. Hydro and selling pieces off to the highest bidder. We see concerns about future rationalization of our energy needs and what the demand will be in the future, and all based on profit, ideology, the Fraser Institute, Margaret Thatcher, Ronald Reagan, press clippings — all tied together into Bill 45.
Here we've got a system in place that would serve the people of the province well. The other day I asked in question period if the minister would offer price protection for the people of Victoria in the event the Victoria gas division was sold off. In a very glib response he said: "No, we won't freeze prices, because they're too high." I ask for price protection. I ask him if he'll guarantee that these prices will not go any higher as a result of their energy adventurism, their misguided plans for the future of the energy service of the people of this province, who've paid and paid again in terms of borrowings for building dams and transmission facilities and so on.
I can't recall a session of this House where there wasn't a miscellaneous statutes bill brought into the House with a line item in it to increase the borrowing authority of B.C. Hydro by an additional $500 million or $250 million. Most members of this House will agree that that's been the case, and that means that the people of the province have been amortizing over time, because they believed in the long-term goal, the long-term future of the province. They believed that their energy needs were being best served by a major-scale public utility such as B.C. Hydro. The people of the province have paid the interest on those borrowings for the construction and so on, as I have mentioned, and now we get a fire sale — and I'm sure it will be — of these Crown assets to pay operating costs.
You know, Mr. Speaker. that the most foolhardy of public policies is when you sell Crown assets to pay operating expenses. It's like taking a chainsaw, cutting off your porch and feeding it into your fireplace because you need warmth, and then gradually tearing the walls down and feeding them into the fireplace. It destroys the public asset that you've got. You don't sell equity to pay operating expenses; that's a fundamental public policy. But this government is, so people will pick up these pieces at under-value, and since 1961, the public, the actual individuals, the taxpayers. have paid through the nose in the hope that this utility would serve the people of the province over the long haul for decades to come and be the economic tool to provide employment and a rational energy and environmental policy for the province. Yet what do they get after an election where this isn't even mentioned once? It wasn't in any leaflet. It wasn't in that minister's householder or leaflet that he was going to sell portions of B.C. Hydro — not once.
Don't the people of this province deserve better? Don't they deserve to be told in advance of an election what a government intends to do with the public's own property? It seems to me that it is a fundamental question in any democracy. A government goes to the people on its past record, and the next election will be on this government's record. It won't be on the possibility of lower beer prices, the possibility of destination gambling and all those weighty things that were discussed at Whistler during your convention. It will be on the cavalier and autocratic way that this government has mutilated and disarticulated the Crown assets of this province that were there to serve the public and that had been accumulated since the early sixties, no matter what party was in power, and including that three and a half years that the New Democrats were in power.
Mr. Speaker, this is a foolish bill. It does not serve the people of the province. It's a bill that really should have been put on the order paper for the last election. It should have been discussed as platform by the Social Credit Party, but that party did not have the courage. It was part of the hidden agenda for the lurch to the right, to follow the program of the Fraser Institute. Bill 45, the Hydro and Power Authority Privatization Act, will go down in history as one of the most misguided policy directions of this short-lived government, this first-term, one-timer Premier. There's a saying in this House that all members are aware of. When a person comes in, often a call of disparagement across the floor is: "You are a one-timer." This Premier is definitely going to be a one-
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timer, and I think all members of this House know it. It is bills such as this Hydro and Power Authority Privatization Act that are going to bring that about.
I am coming near the end of my time, Mr. Speaker, but I just want to say on behalf of the citizens whom I and my colleague represent here in the Victoria electoral district that this bill hurts our community. It hurts and causes anxiety to the employees. They are small in number — I believe there are around 30 employees at the gas division — but if the government were serious about bringing the natural gas pipeline to this province and had some moxie with the federal government. . . . If it could actually go to the federal government and get our share of the energy dollar of Canada and say: "We are owed that $600 million to build that pipeline. That is our part of Confederation. That is our part of Vancouver Island being a part of the province of British Columbia. . . ." But they don't have the moxie or the jam to go there and get those dollars for us. What do they do? They sell the store, piece by piece. They sell the fruit stand. Then they sell the sign shop in the back, and so on. They are not the visionaries. They are the myopics; they are the one-timers. This is a policy designed for a one-time Premier and a onetime government. Mr. Speaker, we oppose it.
DEPUTY SPEAKER: The member for Burnaby North requests leave to make an introduction.
MR. JONES: I'm very pleased that joining us in the gallery today to hear the eloquent words of the first member for Victoria on the future energy resources that these young people will have to rely on are some 20 grade 5 students from Holy Cross School in Burnaby. I know that members on both sides of this House will join me in making them very welcome.
MR. WEISGERBER: I want to spend a few minutes talking about privatization, particularly as it applies to the gas division. I've heard so many comments in the last few hours about how service is going to deteriorate when Hydro Gas is sold. I've got to reflect on the service that's now being given, as the second member for Kamloops (Mr. S.D. Smith) indicated, around most of the province by the private gas companies: Northland Utilities in South Peace River and Inland. Not only do they give good service at competitive prices, but they're good corporate citizens. I'll tell you, they're far better corporate citizens in our communities than B.C. Hydro is.
MR. WEISGERBER: No, it's because they have the opportunity to participate in the community. I don't criticize a Crown corporation for not getting involved in the community. The structure is such that it really doesn't encourage that kind of thing. But the gas companies and distributors in the province encourage participation in the community by their employees and their managers, and they make a genuine contribution.
What I really wanted to stand for today, Mr. Speaker, was to record my continued amazement at the lack of confidence in the private sector those members across the way exhibit time and time again as they stand up to speak. I'm really starting to understand why there is so much opposition to privatization.
I want to pay particular attention, and draw the attention of the members in the House and of those who read Hansard, to some of the comments of the first member for Nanaimo (Mr. Stupich) when he spoke a few minutes ago. I jotted down as close as I could exactly the words he used. He said: "A private corporation will be forced to gouge, cut corners and do everything in their power to make a profit. That's their responsibility to the shareholders." I know that the first member for Nanaimo is a private businessman in his own right, and I'm certain that the companies he's involved with don't gouge, cut comers and do everything in their power to make a profit.
So it seems to me that the only other explanation for that kind of statement by the most senior member, I guess, of those opposite. . . . The only reason he would make a statement like that is that it's an ideological one. When they have their caucus meetings they must read a little script that says: "The private sector guys are bad. They gouge. They're rip-off artists."
MR. WEISGERBER: Well, what other explanation could there be? The second member for Nanaimo (Mr. Lovick) says I'm stretching it.
Really, is it because he believes that in his own business practice? I think not, and I don't really believe that those other members across the way who are private businessmen believe that you have to gouge and cut comers in order to make a profit. Mr. Speaker, that's what we hear as the defence time and time again for Crown corporations: you can't trust the private sector. Gentlemen, that's the reason you continue to sit over there and we continue to sit over here. We believe in the private sector and we believe in the people who work for the private sector.
DEPUTY SPEAKER: The second member for Kamloops requests leave to make an introduction.
MR. S.D. SMITH: Mr. Speaker, it's my pleasure today to introduce 50 grade 5 students, their ten chaperones and their teacher, Mr. Bishop, from the Dutch Lake Elementary School in Clearwater. We don't often get an opportunity in this House to introduce students from Clearwater, because it's some distance — 78 miles north of Kamloops. It's a special pleasure for me because it's the area in which I went to school. Would the House please join me in welcoming this group.
MR. LOVICK: I am very pleased to stand and take part in this historic debate, and I want to underscore the point about historic, because it truly is. It's a historic debate not so much because of what the minister said in introducing the measure before us, but rather because of what was not said. It saddens me to make that point to begin, but I think I am on safe ground in making the point. I am referring to the simple fact that the minister's opening comments on the bill suggest that we are really here talking about four particular parts of the B.C. Hydro operation; yet when we look at the bill it
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becomes patently crystal-clear that we are indeed talking about the whole B.C. Hydro operation. That's what saddens me, and that, Mr. Speaker, is why this is a historic debate.
If we are talking about all of B.C. Hydro — as we are — we are talking about radically changing the nature of the way we do business in this province, the way we operate in this province, the kind of society and economy we have in this province. It's a historic debate; it's an important debate. We are only in the beginning of it now, but I know that the public is soon going to begin to pay attention to what's going on in this chamber. The public is soon going to begin to understand the dimensions of this problem, the implications of the measure before us, and this will become, I am sure, the major issue in British Columbia these days, as it should.
Before I start any substantive comment, I'd like to just respond, albeit very briefly, to the comments made by the member for South Peace River (Mr. Weisgerber). When the member suggests that my colleague the first member for Nanaimo, in his utterances is somehow suggesting that gouging, price-fixing or going beyond the law . . . to say that kind of thing, to make reference to that kind of thing, is somehow to show a lack of faith in the private sector or something, I am afraid that misses the point.
What we're talking about is something that is inherent in the nature of the marketplace, and every honest and legitimate free enterpriser knows that as well as I do. We're not talking about anything esoteric; we're not talking about the sinister motives of the free enterpriser or the private sector operator. We're talking, rather, about the nature of markets. The nature of markets is such that if somebody else is competing with you and can undercut your costs and put you out of business, you don't have any choice in the matter — even if you're the most decent, dignified, sincere person in the world — but to find ways of cutting costs. You will do that, of course, within the limits of the law, but at some point, rather than see your business go down the drain, rather than see your employees all suddenly cease to have gainful employment, you will find excuses and rationalizations to do things you would otherwise not do.
In case anybody opposite needs a reminder of that, let me give you two instances. I might just point out. . . .
I see somebody shaking his head across the way who clearly has difficulty accepting the proposition, so let me elucidate for ever so brief a moment.
The predicament is that, human beings being what they are, it is not always the case that everybody in the private sector is necessarily a nice person. There are some, indeed ' who want to maximize profits; there are some who provide shoddy service. I'm not even talking about that; I'm just talking about the systemic problem.
Let's look at that systemic problem and an example of it. Remember how it was not too very long ago, Mr. Speaker, that we had an absolutely outrageous, indeed obscene, development by one of the major American corporations. I'm referring to Union Carbide and what happened in Bhopal, India, where people died because the company was not living up to the environmental standards it ought to have. Those were considered an external cost that was too high; they interfered with the successful functioning of the operation. Therefore they cut back; they did not do the monitoring they ought to have done. The result was death. That's one small example, and there are thousands like it.
Our legal system — I think it's very clear if anyone examines it for just a moment — spends probably about 75 percent of its time protecting us against the failures of the marketplace. If we could count on free enterprise to work unattended and everything would be lovely, clearly we wouldn't need regulation; clearly we wouldn't need laws. However, the fact is that we do.
When my colleague the first member for Nanaimo makes reference to the problems with the private sector, I think that is precisely the context he wants to talk about. I for one, Mr. Speaker, am somewhat offended when I hear members opposite suggest that because we do not have faith in the marketplace, because we do not believe, we are therefore in opposition forever and ever. Frankly, that offends me because it certainly casts us in a light that is quite simply not borne out by the facts or by evidence.
All right, having said those few words, Mr. Speaker, I now want to turn, if I might, to the measure before us.
MR. ROSE: Have you finished your introduction?
MR. LOVICK: My colleague the House leader says, "Have you finished your introduction?" and the answer is in the affirmative: yes.
I was away when the Minister of Energy, Mines and Petroleum Resources (Hon. Mr. Davis) introduced this bill. I was also not present in the Legislature when my colleague the second member for Vancouver East (Mr. Clark) and our critic for Energy responded to the minister's opening statement.
My first source of information, then, about this particular measure was the press — the coverage in the press. Now I know, Mr. Speaker — and I see a member from the government benches sitting there smiling at this point — that the press is a dirty word, certainly from the perspective of your leader, the Premier. But I hasten to point out that I don't think the minister responsible for this measure has denied anything that the press has said — more importantly, has not denied anything or challenged anything my colleague the member for Vancouver East said in terms of saying — the fundamental point I'm making — that what this measure is about is not simply those four parts of B.C. Hydro. It's not about the Victoria gas division: it's not about the Mainland gas division; it's not about research and development; it's not about B.C. Hydro railway. Instead, it's an enabling mechanism that enables this government to dispense with, to dispose of, all of the assets of B.C. Hydro without reason, without need to come before this Legislature for any kind of approval.
That's the issue, Mr. Speaker. That's why I suggested earlier that this is an historic debate. We're talking about something much bigger than what has been suggested by the minister in his opening comments. Indeed, I notice that the minister — and I can't hold back from saying this, Mr. Speaker — began his comments by, I suggest, blatantly emphasizing that this was indeed a bill that really was focusing on just four things; four are for sale, not the rest of B.C. Hydro. said the minister. Unfortunately, in the bill itself that is not the case. It is the case, rather, that everything will be able to be sold, as I've said, without reference to the Legislature, without any kind of public scrutiny.
I'm setting this up, Mr. Speaker, because I want to suggest why some of us treat this matter in somewhat more passionate terms than might otherwise be the case. It also says in the explanatory note to the bill — talk about if not misleading, at least suggesting something different from the intention of the bill. . . . The first explanatory note for the bill says as follows: "This bill establishes the framework for the privatization
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of portions of the operation of B.C. Hydro and Power Authority, for example, the mainland and Victoria gas divisions, the rail division and the research and development division."
"For example" is the reference — and also note, that's not in the bill. That's the explanatory note. That's not part of the law. Clearly then, Mr. Speaker, my colleagues and I on this side of the House are concerned that what we are told we have before us is not what in fact we have before us.
I think it's safe to say the minister really makes an effort in his opening comments to downplay the significance of what's before us, and, Mr. Speaker, I would hasten to add to that, so it is with those other members from the government benches who have spoken. I have not heard a single member yet take on the issue of the privatization of B.C. Hydro — the whole thing — and make any effort to defend. Instead, everybody by their silence — or by his or her silence; I should be grammatically correct — seems to be accepting the fact that, "Well, we've sort of got assurances that it's only these four. We know it can be everything, but we won't worry about the fact that it's sloppy legislation, it's badly drafted."
That, Mr. Speaker, strikes me as irresponsibility on the part of those members opposite. It seems to me they ought to be sharing our concerns. They ought to be challenging the minister to amend the legislation so that if we're only talking about four parts, for heaven's sake, we say so. We spell it out. We don't take a back-door approach to legislation — which sadly seems to be the case.
I am suspicious when I look at this legislation. I am suspicious when I see the approach that the minister takes to it. I am suspicious also because having done a lot of reading now on the subject of privatization, I recognize some very familiar chords here. What I see when I look at this particular measure is a chapter directly out of Madsen Pirie, the great guru from Great Britain, whose book, interestingly enough, is titled Dismantling the State. There are chunks of the minister's opening remarks that could well have been stated directly by Madsen Pirie; I'm not sure whether the minister knows him that well, but it certainly looks as if that could be the case.
We're looking here at the Adam Smith Institute. We're looking at the Reason Foundation. We're looking at a whole bunch of individuals who, though they are called neoconservatives, represent classic liberalism: the belief that the marketplace is primary and that any interference with the marketplace is to be frowned upon. It's a very reactionary, old ideology. It's a discredited philosophy. But that's what we're dealing with here. It has been brought back.
Why I say that it causes one suspicion, beyond the obvious ideological dimension of this thing. . . . Beyond that I also want to suggest that we see another illustration of the Madsen Pirie model in action, and that's what those of us who have read Pirie and have looked at the analysis he presents call the "sugar-coated pill." You recall, I am sure, Mr. Speaker — I know you have read widely in the subject — that Madsen Pirie talks about the need to get a winner. If you want privatization to function, you've got to get one that will sell. You've got to get something that you can have a successful privatization with, and you achieve that by doing more than you need to do to allay the public's fears. Therefore you treat the employees well. You suggest to your employees that their job security will be protected, their working conditions will be protected; you promise them all of those good things.
You also make an effort to suggest that we will not alienate the resource, because we have what we call the golden-share phenomenon, which is that some kind of controlling interest will be maintained by the government, by the public, which will protect the public against the private ownership's abuse of the public trust, or some such thing. Curiously enough, this bill does all of those things that Pirie recommends such a bill should do. It's textbook privatization.
AN HON. MEMBER: You've read the bill.
MR. LOVICK: I have indeed looked at this bill. I have indeed done my homework. I want to emphasize that.
MR. LOVICK: The problem with. . . . I heard somebody in the background saying, and that person is quite correct: "Except that it doesn't really do all those things that it ostensibly claims to be doing." It doesn't provide us with such protections as golden-share, as protection against foreign ownership, and suchlike. Rather, we discover a tremendous discretionary power given to the cabinet. In fact, most of those promises designed to allay the public's fears don't really hold up very well.
The real agenda of this bill is to carry on in the tradition of Madsen Pirie and produce for us a society in which the marketplace is primary and in which the social and public good is a very distant second. It saddens me that that is the case, but it is indeed part of that classical liberal or — dressed up in modern terms — neoconservative agenda. That's the assumption: the economy is primary and the community is secondary. That's an assumption that we on this side reject.
My focus, in the little time remaining to me. . . . May I ask you, by the way, how much time I have?
DEPUTY SPEAKER: Approximately 14 minutes.
MR. LOVICK: Thank you, Mr. Speaker. My focus in what I have to say now will be on the gas division specifically. Some of my arguments will also have relevance to and perhaps obtain with regard to B.C. Rail and R and D division. But my main concerns are with the gas division, and I want to focus on that, because two conclusions, I think, can be derived from looking at this bill and what the bill has to say about those two particular things.
The first conclusion that can be derived is that this bill, this major privatization initiative, this first major illustration example of the government's economic agenda for the province does not make an effort — nor do the minister's opening comments make an effort — to explain, justify and defend the proposition of privatization. Rather, what we have here is a perfect illustration of what is often referred to as begging the question. In short, we don't have an explanation as to why we are doing what we are doing, but showing the reasons for doing what we are doing instead. That is assumed as given, and then we merely talk about the mechanics of the transfer.
The second point I wanted to refer to is the business of the ostensible defence given for privatization of the gas division in the comments offered by the minister in his opening remarks. I want to suggest that they really don't work; they don't hold up very well at all. If I might, Mr. Speaker, I'll refer to those.
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On the surface, the minister's opening comments — and I will give him this — appear to the thoughtful, well-considered and attempting to accommodate the concerns and answer the questions we have. For example — I must refer to page 12 of the Blues because I don't have the Hansard for that day — we have the minister telling us about the operations of public monopolies. He emphasizes for us, quite rightly, that public monopolies must have certain obligations. As he says: "The operation," of a public monopoly " . . . must be closely scrutinized. The rates must only reflect costs which are absolutely necessary, and there must be no exceptional or undue profit made."
Again, we can all recognize that that's good as far as it goes, and we can look at that statement and say it's nice to know that the minister understands the nature and the obligations of monopoly and the obligations to the people of governments who allow monopolies to exist and to recognize all that. But what happens is that we forget the essential question, which is: why would we take a public monopoly and consider making it private? I want to suggest that in the rest of the minister's comments, we don't get answers to that question. We don't find explanations as to why this particular public monopoly ought to be made a private monopoly.
It's pretty safe to say that even by orthodox economic analysis and even the kinds of things that members of the government apparently like to claim belief in and acceptance of, private monopolies are not considered the best of all possible worlds. They're considered to be a rather undesirable situation. The usual answer to the problem with private monopolies is that you have to regulate them. Of course, to regulate monopolies is costly and time-consuming, and also there's a very long history to demonstrate that frequently the regulators are captured by the private monopoly. In other words, they tend to see themselves as having the same interests. That, I suppose, is just the result of a regular and ongoing lobbying process.
A classic example of a private monopoly in B.C. that doesn't seem to be terribly well in the hands of the regulators would be B.C. Tel. I don't think any of us would argue for a moment that B.C. Tel is responsive to all of its consumers' concerns on a daily basis.
[Mr. Speaker in the chair]
In any event, the minister is prepared to give us this discussion of the obligations of public monopoly, but not to grapple with the fundamental question, which is why we ought to change from public to private monopoly.
The minister then turns to what he calls the test of the success of privatization efforts, and he offers three of them. The first one is to suggest that the price control mechanism must be effective. Again, that's the job obviously of the regulators. The second test is the quality of service. Again, the only test of that under a monopolistic situation will be what the regulators can do, how much muscle they have and what resources they have to respond to complaints from the public.
The third test of the privatization scenario as outlined by the minister, which I want to dwell on for just a moment, is what he calls "...an opportunity for the user to be involved in ownership." That, in essence, is what the defence of the privatization initiative is going to stand or fall on — at least the arguments as we're hearing them from the other side. I heard the second member for Langley (Mr. Peterson) make reference to. . . . I think he quoted it about four times, in great exultant tones: "What a window of opportunity!" He was moved by that; it was an almost orgiastic response. He loved that: "What a window of opportunity!" The question one wants to pose is: for whom? The mistake so many of those advocates and acolytes of privatization make is to say that what we do is suddenly produce opportunities, but they forget that the opportunities are only for a few, because the reality is that most folks do not have the sufficient disposable income or surplus income to run out and buy shares in those newly privatized companies.
I would venture to say that the experience in Great Britain demonstrates that conclusively. When Maggie Thatcher talked about the revolution and people's capitalism she misled the folks somewhat, because the great majority of those individuals who bought shares at low prices and bought into the game the same way British Columbians bought into the B.C. Resources Investment Corporation, which as we know was formally buried three nights ago, and had a rather decent burial, I might add. . . . The same thing happened there. All kinds of people who didn't have the money, didn't have the surplus cash. . . . When they got a deal offered to them to get some shares, they were very quick to sell those shares, because they needed to buy things. They are not in a position to become investors in the marketplace. They're not in a position to become capitalists, simply because they don't have capital.
The tragedy of what Thatcher has done in England is to say that because our system has done a bad job of distributing the wealth of society. . . . It didn't do very well in its first 150 years, so what we're going to do is reshuffle the cards and give people shares they other-wise couldn't buy. Inevitably what's going to happen as a result is that those same people who were given the shares, because they can't afford to have shares — they need to buy too many things — will therefore get rid of their shares, and you'll have concentrated ownership back again in very short order. It's already happened in Great Britain. Indeed, the phenomenon we see in Great Britain today — and Maggie Thatcher, that cynical person, has already tried to defend the proposition — is that we will have 55 percent of the population profiting from privatization and 45 percent suffering. But it doesn't matter, say Thatcher and her allies, because that's a majority that will enable them to stay in power. That's profoundly cynical. It seems to me it's more than that; frankly it's obscene.
That argument that what we have here is an opportunity for everybody to have a piece of the action is simply flawed; it's facile, it's false, it doesn't work. There are many people within our society who simply don't have the wherewithal to buy those shares or, if given those shares. even to keep them. They need their money.
In the little time left to me I want to look at the other great argument adduced by the minister in support of the privatization initiative in this bill. He gives us two references in his comments about privatization, both times trying to defend why this is good for us. why this is legitimate and why this is justified. But you know what happens, Mr. Speaker? Both those references are based on competition: the good old peer market in which everything works out and if somebody is making too much money somebody else will come rushing in and therefore the forces of supply and demand and competition will save us. Lovely textbook stuff. We all know about it. Indeed, it works in a lot of cases; nobody denies that.
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Contrary to what you folks on the other side think, most of us on this side understand the marketplace and recognize what it can do. The difference is that we also understand the limitations of the marketplace.
The problem with your examples to support privatization, Mr. Minister, is that you're talking about competition, and what we're discussing here is a monopoly, and by definition there isn't a competitive marketplace. The primary justification for privatization of the gas division doesn't make sense. It doesn't obtain here.
I was frankly amazed, because I know the minister certainly has some background and some knowledge of these matters, to recognize an individual who can say on one page, "Two of these operations are public monopolies," and then on the next page tell us: " . . . privatization of commercial type operations is opposed at the outset. . . . Generally speaking, after privatization and the trauma involved in change is over, it is deemed to be a success because the quality of the service is up, and competition usually helps keep the price of the product down." That's interesting if we're talking about certain things. In the case of the gas division of Hydro, we aren't talking about competition; we're talking about monopoly.
MR. SPEAKER: I regret to inform the member that his time is up.
MR. LOVICK: Mr. Speaker, my introduction was much too long, but I hope I have made at least some points that will demonstrate why we think this measure is a bad one and why we oppose it.
MR. JONES: Unlike my colleague the second member for Nanaimo, I was in the House on June 8, when this bill was introduced. I think it's probably similar in terms of significance to a bill that was introduced on August 1, 1961, with which I'm sure the minister is very familiar. That was called the Power Development Act. I don't think that in the interim we have seen legislation of this kind of historic significance tabled in this House. Anybody who knows a smattering of British Columbia history certainly understands the major impact former Premier W.A.C. Bennett had on this province's economic development, in terms of his vision for the province, in terms of the development of the Peace and Columbia Rivers, and in terms of his belief in the use of that public corporation to develop the province through public policy, harnessing electricity generation and electrification in this province to the two-river policy. Certainly one of the greatest controversies in the political history of this province was the nationalization or expropriation — or confiscation, as some people called it — of the B.C. Electric Co.
I'm sorry the minister has left the chamber, because I am curious how he felt introducing this bill, given that kind of history and given the fact that he was an economist and an engineer for the B.C. Electric Co. at that time; and that he was seconded to the Gordon commission and was a major player in proposing the idea of exporting power from this country. Not only did he serve as a federal cabinet minister, but prior to that he was parliamentary assistant to the Prime Minister who signed the Columbia River Treaty. I was very curious to see how that minister felt when at 6 o'clock the same day as a by-election in this province — not at the regular time bills are introduced in this House, but at the end of the day — this bill was snuck in....
MR. JONES: Some members opposite may disagree, but it's my view that this bill, which I think is the major energy bill since 1961, was not introduced on a day when it would receive the kind of news media coverage it should receive. It was not introduced at a time of day when the press is in attendance, as is normally the case. It was introduced through the back door, at a time when the focus of attention was not on this bill, where it should be. This is a bill of major import in this province. If there's anybody in the House who doesn't understand that, they're going to learn it in the next little while. This minister certainly has stature in this country as a major player in the development of energy policy, and I'd be interested to get the minister's response on that, because I think he's pretty straightforward in his responses.
This is clearly a historic piece of legislation, but a piece of legislation that is really a wolf in sheep's clothing. As the second member for Nanaimo pointed out, this is not as the minister purported. I heard his interview in the hallways after the bill was introduced, suggesting that it was really an innocent privatization bill, that we're only dealing with four divisions — the gas distribution divisions, B.C. Hydro Rail and the R and D division — and that there's really all kinds of protection in terms of foreign ownership and those kinds of things to make it very palatable. That's not what this bill is about. The second member for Vancouver East (Mr. Clark) may be noted for his aggressive criticisms of the government, but I think he's also noted for being on track in terms of those criticisms. That member for Vancouver East described the bill as devious, insidious, deceitful and sweeping. That's exactly what this bill is; that's what we have in this bill.
The minister, in introducing the bill, indicated that it was just those four divisions and not the rest of B.C. Hydro. He doth protest too much methinks, because he's mentioned that several times.
MR. JONES: But I said " methinks," so I blew it.
It's not what it purports to be. What the minister talks about is not what we're debating in this Legislature right now. What we're debating is Bill 45, which suggests that there are no limitations to the kind of thing that can be privatized. The minister's intentions may be such and so; he may be well-meaning. There may be limitations and safeguards, but all we have for that kind of protection is the minister's word. It would be like introducing a bill on capital punishment and saying that there are really not going to be any death sentences.
What we have in this bill is the right of the government of British Columbia to privatize any particular asset of B.C. Hydro operation. Remember, we're talking — in the words of the minister — of some $9,000 million, and I assume that's the same as $9 billion, of assets without any scrutiny beyond the point when this bill is approved. There will be no further legislative or public scrutiny of the operations to privatize any asset of B.C. Hydro.
The minister says the rates will be frozen, but that's not in the bill anywhere. We don't read that. What we have is the promise of a cabinet minister. We're told that within a couple of weeks the cabinet will change. So I don't know how valuable the word of any cabinet minister in this government is, given the proposed changes that may be made.
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We're told that we're going to see limitations of foreign ownership, but that's possible, within the bill, to be overruled by cabinet. We see these kinds of protections that the minister is using to try to make this devious, insidious, sweeping bill more palatable. But I don't think it's going to wash.
What we've seen in the past is the opportunity with the public corporation taken over from the B.C. Electric Co. as an economic development tool that has been very successful in harnessing that most precious resource that we have and in controlling the energy resources of this province. There was a reason back in 1961 for the nationalization of that company. One of the reasons was to ensure that the private company that was there would buy power. There were problems with that. There were problems with the B.C. Electric Co. buying power that was going to be generated by the province. There were problems with keeping tax revenue in British Columbia, and I understand that the minister has — in his federal capacity, I suppose — ensured that this kind of nationalization on this rationale will not take place again, because there will be rebates going back to the province, but not going to the consumers of that utility. So the price of that utility is bound to increase as a result of any privatization move.
We're talking about the history of this province and a historic moment when this bill was introduced. The history of this province has been the development of power and the development of the economy through the provision of power through public hands and through a public corporation which was nationalized — not by any socialist but by the former Premier, W.A.C. Bennett. At the same time that he spoke of the nationalization, he said he was opposed to any interference in the free enterprise economy. He saw this as a development tool and not in some sort of ideological way, as the current government sees it. He saw the value of a mix of public and private enterprise to create the best possible world for the citizens of this province.
What we see in this bill is a sweeping piece of legislation, and we are not going to have recourse to debate any aspect of privatization of that $9 billion corporation. The minister says: "Trust me. We need a broad statute that will allow us the flexibility to deal with different situations in different ways." That could mean anything. That presumes that we have a fixed minister, whose word will never change. I don't know the minister's record all that well, but my guess is that he's changed his mind several times on major energy policies. I don't know whether he's changed his mind on the export of energy . . .
MR. CLARK: He supports the Island pipeline.
MR. JONES: . . . but I understand he's changed his mind on the Vancouver Island gas pipeline and on Site C. So when the minister says, "Trust me," I have some difficulty. Given a cabinet shuffle, I don't know whether any minister will be here to trust in a couple of weeks.
The minister also says: "Trust the Premier." He says that British Columbians would have to believe the Premier that there are only plans to sell Hydro's natural gas division. We have to believe the Premier. We are asked by the Minister of Energy to believe the Premier — that same Premier who promised this province open and consultative government, who promised this province an end to confrontation, who said: "I'm going to release any public opinion polls that are commissioned by the government." There have been a number of polls taken recently, and I haven't seen any public announcement of the results. He's the Premier who said he was going to televise the proceedings of this Legislature, and he even put a date on it: it was going to be by the fall of 1987. We're told to trust the Premier on this piece of legislation — the same Premier who was going to introduce provincewide referendums on controversial issues, who was going to lower the price of beer. He was going to put a moratorium on tax increases. He was going to bring in tough conflict-of-interest guidelines. He was going to stop bailing out financially troubled businesses. He's the Premier who, going into the last election, neglected to mention a few minor items like labour legislation — Bills 19 and 20; failed to mention decentralization, the division of British Columbia into eight states; and failed to mention to the electorate the entire privatization program, of which this bill is a major part. Trust the Premier, indeed!
We have a government that's going ahead with the dismantling of major public institutions in this province and that has absolutely no mandate from the electorate to do so. I say to the government that if they want to embark on this course and change the major public policy directions that the people of this province have enjoyed for many years, then let's have an election. Let's go to the people and discuss Bill 45 and the privatization of the assets of B.C. Hydro.
Even if this bill were just a bill to discuss the B.C. Hydro gas division, it would still be a bad bill. What we have is a government bent on certain doctrinaire beliefs, and one of those beliefs, surprisingly, is creating a publicly owned monopoly at the expense of some 400,000 subscribers to the B.C. Hydro gas division.
I can understand the government believing in the marketplace and in competition, but there is not going to be a marketplace out there with a public monopoly in terms of the gas division. The business is already there; the lines are already piped into people's homes, There is not going to be any competition after the bid is approved. If the subscribers to that service don't like it, there's not going to be a competing gas company that they can go to. There is not the kind of free-wheeling competition and marketplace that members on the government side love to talk about as the be all and end-all of motivating forces in this province.
In introducing this bill the minister described them as public monopolies now; they will be private monopolies after this. He said that in the selection of the successful bidder, the principle concern has to be service to the consumer, service to the residents of the lower mainland, low rates and high quality of service. Well, I don't know how the minister proposes, even with his promise of a three-year freeze — which is just a promise — to guarantee low rates. It seems to me that the successful bidder is going to be one whose major objective is to create profit. I see a real conflict between the desire for low rates, which should be the aim of a public monopoly, and the desire for profit, which is the aim of a private monopoly.
In introducing the bill the minister also talked about regulation. He said that the operation must be closely scrutinized and the rates must only reflect costs which are absolutely necessary, and there must be no exceptional or undue profit made. The minister suggests that the B.C. Utilities Commission is the body to do that. I am no expert on regulation, but I wonder who the members of the B.C. Utilities Commission are. Where do those people come from? Do they come from consumer or labour groups or from
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the very industries that are going to be regulated? Are they not the same people who, in other instances, are being regulated, past members of those corporations? I don't know if the minister has had problems regulating B.C. Hydro; I think he has suggested in the past that he has. I don't know how he hopes to regulate them as a utilities commission if he can't regulate them as a government.
It seems to me that by giving up the gas division, at least in the lower mainland, we are losing a tremendous window on the industry, which is what I understand to be the major purpose behind the purchase of Petro-Canada. It was to give a window on the oil industry, so that the government of Canada would finally have an opportunity to closely monitor and regulate aspects of the oil industry that they did not previously have an opportunity to. What we have here is the giving up of government responsibility of a public monopoly to the B.C. Utilities Commission to regulate a private monopoly in which there is no longer any window into that industry. It is like saying: "I'm having discipline problems with my child, so I'm going to boot him out of the house, and then I'll have more control over his life." By getting rid of the B.C. Hydro gas division, I suggest that we are going to lose any major opportunity that we have to regulate that industry. The price of that service and the taxes of this government and of future governments will go up as a result of this transfer to the private sector and, clearly, service will go down.
The member for Shuswap-Revelstoke (Mr. Michael) mentioned some advantages of the private sector a little while ago in this debate and suggested that there are some things that private companies can do that public companies can't. One of them is that they have a bunch of write-offs. He is suggesting that we reduce the taxes, and that's a major source of savings of private corporations. We reduce the taxes to the province and the federal government. That's certainly a great way of developing public policy for the energy future and service to the consumers of the gas division of B.C. Hydro, suggesting that the major advantage of private corporations will be to write off taxes.
It's clear that in addition to the something like $1 million that is going to go to fees and salaries as a result of the privatization process itself, all the onerous costs of monitoring will fall to the provincial government. We will lose the opportunity of the local buying policy that B.C. Hydro now has, to the tune of some $160 million of purchases within this province annually, a policy that protects the public interest and enhances the economy of this province. I suppose that if we are privatizing this thing through the stock market, we are going to be paying brokerage fees through our service fees.
In addition to those costs to the taxpayer, there are going to be other costs to the subscribers. Clearly the successful bidder is going to want to make a profit. Fair enough. What is a reasonable profit on the investment of that corporation? It must be something like 10 percent — I would think that would be a reasonable expected return.
Not only are we going to have to pay in our subscriber fees that profit of 10 percent, but we are going to have to pay for the increased costs of borrowing power to that successful bidder. Government right now at least has a I percent advantage in the borrowing power on those assets, and I imagine that most of the borrowing for B.C. Hydro is old borrowing, and I'm sure that the rates are even much more generous than that. We are going to have to pay those increased costs of borrowing power as well as the profit margin that the successful bidder is going to make.
We are also going to have to pay the federal income tax of 15 percent, even though the minister said it is going to be rebated. It's not going to be rebated to the consumers, and the corporation is going to have to charge for that income tax. The income tax on the Vancouver and Burnaby School Boards is something like $200,000 annually.
We are also going to have to pay as subscribers for some tremendous inefficiencies that aren't there right now. With the economies of scale that B.C. Hydro has, we don't have the duplication of services with separate electric meter reading; we don't have to worry about the separate billing of the gas and electric divisions. But as I said earlier, maybe the minister isn't too worried about that, because this bill really doesn't limit the privatization to just the gas division. If it is just the gas division, the separation of those companies is going to result in some inefficiencies because of the loss of economy of scale and because of the management expertise developed by B.C. Hydro over the years. That benefit is going to be lost to the consumer.
Another major benefit, one that I think we all take for granted, is the incredible service of the gas division of B.C. Hydro in terms of providing small service repairs at no cost to the consumer. The gas division of B.C. Hydro is very concerned about the safety aspects of their operation. A call to B.C. Hydro will result in a lot of fine-tuning of the gas equipment of the homeowner. Minor repairs, I suggest, under a privatized corporation are going to cost something in the neighbourhood of $52 an hour, which is the fee charged by the B.C. Telephone Co.
The electricity rates that we enjoy now, among the lowest in Canada and on the continent, are bound to go up because something in the order of $30 million annually from the gas division is used to subsidize the electric division. Not only will taxes go up because of the increase in terms of the regulation, not only will the service to the subscribers of the gas division go up, but also the electricity rates will go up. It's for that reason that both the council and the school board in Burnaby have come out very strongly in opposition to this legislation.
In a letter of April 20 to the Premier from the mayor of Burnaby, he advises the Premier that the council and the Corporation of the District of Burnaby "wish to advise that we are opposed to the privatization of B.C. Hydro," and goes on to say:
"As you know, the public ownership of this Utility was initiated by a previous Social Credit government under the leadership of W.A.C. Bennett. Since that time the people of B.C. have benefited through the provision of valuable services and commodities at reasonable, affordable" — rates. "The regulations and policies governing the conduct of this public utility have benefited the people of this province and their communities through public hearings to receive public input, local buying policies, Hydro-supported recreational areas, etc. In our opinion, B.C. Hydro's contributions to the quality of life enjoyed in this province are attributable in part to its public ownership and resultant responsibility to the people of British Columbia.
Very truly yours,
W.J. Copeland, Mayor."
A similar letter from the secretary-treasurer of the Burnaby School Board included that the board write a letter to the
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Burnaby MLAs supporting the opposition regarding the privatization moves of the provincial government, in particular the privatization of the B.C. Hydro gas, rail and research and development sections.
In the introduction to this bill, the minister slipped into what I would describe as some doctrinaire privatization rhetoric, and I would like to respond to some of the issues raised by the minister in that discussion. The minister quoted some other provinces that are involved in privatization efforts. Specifically he mentioned Quebec and that Quebec had privatized eight Crown corporations to the tune of some $150 million.
I suggest to the minister that this single aspect of privatization that we're dealing with right now. . . . That $150 million of privatization from Quebec is only one-quarter of what the minister has been talking about, not what the bill says. If we get down to what the bill says — and we're talking about the $9 billion of B.C. Hydro — Quebec would have only privatized one-sixtieth of that amount.
The minister, however, in his discussions of privatization of Quebec did not mention that their privatization has not been quite as doctrinaire as this government's. They have tried to restrict their privatization to industrial and commercial ventures, and they have not ventured into Crown services. It's true that there have been some privatization moves in Saskatchewan and Quebec, but even Saskatchewan did not go to the extent that this province did in privatization of government highway services in terms of snow removal. The minister mentions Alberta. True, Alberta has been involved in one privatization effort, that of PWA.
The minister goes on at length and lists numerous examples from Britain. But he doesn't tell the whole story there either. He doesn't mention, for example, that when the British Telephone Co. was privatized — another monopoly that was privatized — it raised rental fees some 8.6 percent for residential users and some 9.4 percent for business telephones in Britain.
He mentions Jaguar. Of course, he does not get into the reasons that Jaguar was a public corporation in the first place: it was the inept and incompetent private management of that corporation that caused it to be nationalized by the government. Clearly it was recovery of that company under public administration that resulted in its being a successful one to privatize. I think the members opposite know that we have not taken a doctrinaire position. If we had a Jaguar company, I would not be one that would be opposing it.
I understand that I have but one minute left, and there is so much in this bill that needs to be said. We're going to need more time, and I'm sure more members are going to be raising a variety of other issues. I think it's very clear that the test is not that we don't have an efficient system now, that we don't have the lowest rates in North America, that we don't have the money staying in British Columbia and that we don't have excellent service. We have all these, and for these reasons this is a mistake on the part of the government, and they will pay for it.
MS. A. HAGEN: In the time I have available this afternoon, I want to look at three themes in connection with this bill. First of all, I want to add my voice to that of my colleagues in deploring the broad brush that this bill takes in setting up the machinery and the processes which would allow for the privatization and selling off of all of the assets of B.C. Hydro.
When we got back to Victoria early in this session, there was some discussion around the corridors about a massive privatization bill which we would face some time before the session was over. That particular rumour was around for a long time. Then as people talked back and forth, members of the government and members of the opposition, there were suggestions that, no. there wasn't in fact a huge, ominous privatization bill; rather, we were going to be looking at something that the Minister of Energy would be bringing in and that that bill would deal with the privatization of B.C. Hydro Gas and Rail and the research and development branch of that corporation.
In fact, what we have is the one and not the other. We really do have that huge bill, because of what this particular legislation provides in the way of process for this government, a process that would allow it, without any further discussion on the floor of this Legislature, to dispense with an asset that's worth nearly $10 billion. There's nothing that. . . .
MR. BARNES: On a point of order, with all respect, Mr. Speaker, I'm having difficulty hearing the member's statement on this bill, and I would appreciate it if we could bring the House to order.
MR. SPEAKER: The member brings up a very good point. I would ask other members to hold their meetings outside the chamber.
MS. A. HAGEN: Thank you, and I thank my colleague from Vancouver Centre. As I was noting, this piece of legislation — supposedly a piece of legislation that deals with one privatization initiative that was announced by this government last fall — indeed sets in motion and in place such a sweeping framework that I think all of us are still reeling, still getting in touch with the extent and the massiveness of what the government can and may do with this legislation at its disposal.
When you go through that legislation and find that much of what the minister had to say is not a part of the legislation but his interpretation of the processes that he's going to follow, we really have some of the scenario sketched out for us about what might happen as Hydro might go on the block. I recognize that the minister has stated that this would not happen until another election or another mandate. But I find myself a doubting Wilhelmina in that regard. Given the actions of government as we have seen them over the past two years of its administration, one has to doubt that there will be openness and discussion or that we will have the kind of mandate that would have the government going back to the people and getting any further direction from them. Why should they? This legislation doesn't make it necessary.
It seems to me that there's a cynicism in this. There's a denial by legislation of the very attributes on which this government has stated that it would be judged: openness, consultation and due process. This piece of legislation provides us with none of those. I can but echo the cryptic comment that we've made so often. Even the time: this major legislation was introduced with arrangements quickly organized so that the Minister of Energy could put it on the floor of this House at five to six on the evening of a critical byelection, which this government lost because people have not been happy with the way it has delivered on the mandate on which it was elected.
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Having said that, let me simply state again that I want to associate myself very strongly with the comments made by my colleagues about this being an inappropriate and very sweeping piece of legislation that we should not be forwarding at this time. It is a piece of legislation so extensive in its implications that it should not go forward at this time.
I want to spend some time looking at the specifics that the minister tells us will be a part of the privatization of a part of the B.C. Hydro system, a part which he dismisses as being a paltry 6 percent of the total assets. As many have noted, those paltry assets add up to anywhere between $400 million and $800 million, depending on how you are looking at it and what that sale price might turn out to be.
With the presentations that the minister has made to us and his comments on this bill as the debate has progressed, we have a window on the whole privatization process that we might look at if other parts of Hydro were to be privatized as well. When one looks at this in the context of the sales that are contemplated and the sales that this legislation would allow, we find that there are tremendous discretionary and arbitrary powers which go outside the public domain and the examination of the body politic, the electors and of those elected — the legislators.
There is nothing in the legislation to state what will be sold. In fact, that is the very first instance at the discretion of the government. There is nothing in the legislation to define where the proceeds of the sales will go. Indeed, that is a very major issue when you're looking at the large assets on the auction block at this particular time. Will they go to B.C. Hydro to pay down the B.C. Hydro debt? Will they go to a privatization fund which we have established in this session to be used at the discretion of government? Will they go to general revenue? And perhaps more important than those questions: who will make those decisions about the disposal of these assets? What role will the public and elected MLAs have in making those decisions? In this legislation, they have none. It is at the discretion of the cabinet, the executive council. They will make those decisions. As we go through the bill, we find that there is nothing we are dealing with in this bill that doesn't have associated with it some discretionary power on the part of the minister, or more appropriately I should say, on the part of cabinet. It seems very clear to me that if a government is in the business of dealing with the people's assets and the returns from those assets, the government should also be in the business of saying very clearly what it is about.
In all too many areas we deal with discretion, and with that discretion comes the opportunity for undue influence and for events to take place in secrecy. We've seen a lot of that already with the whole issue of the disposal of another important asset, with BCEC, and even within the government we've seen conflict between the Premier and his minister charged with the whole process of the disposal of that asset. We've seen conflict there about that process being open, clean, respectable and one that we can rely on, and on and on it has gone. So as members on this side of the House we do not have a very respected point of view in looking at what cabinet may do. Even if we were looking at another administration, even if we were looking at an administration which had earned more genuinely the trust of the electorate, I submit that the idea of so much discretion being in the hands of cabinet is something that weakens the legislation and leaves it wanting.
This afternoon I particularly wanted to take a perspective that I hope would reflect the consumer, because that's one of my critic roles and because as a group, in terms of advocacy, input and involvement, consumers are very much frozen out of the process at this time — frozen out because they do not have advocates through their elected representatives, but for a period of time too they do not have any means of advocacy before the government because the process is in fact in the hands of cabinet. There are, I think, some very damaging results of privatization that we might anticipate for the consumer. I know these have perhaps been dealt with by other speakers, but I just want to highlight those very much from the perspective of the consumer.
I believe very strongly that the potential effect of privatizing what is indeed a monopoly is likely to be higher rates. I think it's interesting that the minister — not in the bill, but in his presentation to us and his public presentations in relation to this bill — has deemed it necessary to freeze the natural gas rates for a period of three years or until 1991, depending, I guess, on when the assets are actually sold.
It seems to me that one could be pretty cynical about the reasons for that freezing. Those who are going to purchase this operation are, we hope, going to put forward a very significant investment into that particular public utility; otherwise we shouldn't be selling it. So we're looking at an investor in this province turning over or investing s6mething in the realm of — I don't know what the price is going to be, but let me use the figure again — $400 million to $800 million, depending on what that market is. That particular investor or that front for whoever the investors are is going to have to look at a return on that investment, and it seems to me that one of reasons the minister has chosen to freeze those rates at the current level that is in force is to ensure that politically there is no damage or minimal damage from this privatization; that the sale is done and people are reassured, lulled, into thinking that this is going to be just the same as the old B.C. Hydro. That, it seems to me, is something we can anticipate.
We know that the cost of doing business is inevitably going to put on the new owners pressures that don't exist with a public utility. There is a profit to be made. I've heard of returns of 10 to 15 percent, and certainly if we look at how the Utilities Commission or the CRTC looks at the returns that B.C. Telephone or others might have, 13 percent is not at all unreasonable. There are higher taxes that will have to be paid, and there's the cost of borrowing.
We know too that the B.C. natural gas system, which I think has a profit of around $30 million a year, has turned that profit over to the corporation, and that has helped to keep down electricity rates.
We have an interesting situation here where we have what I think of as twin monopolies which have some overlap in the service areas that they may be involved in, but which are essentially monopolies. At this stage of the game the natural gas monopoly has been, as a matter of public policy, used to assist in balancing the rates for the consumer between natural gas and electricity. If at this stage the natural gas rates go down once the sale is in effect, we could look at electricity rates going up. So even if there is a means by which the natural gas purchaser can accommodate his additional costs by not having that profit go to B.C. Hydro, we have the potential of B.C. Hydro rates increasing significantly.
Through all of this process, as we note, the utility is going to be under the direction of cabinet, and cabinet has the
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discretion to make all kinds of very significant decisions about the ownership of the utility: whether the 20 percent foreign ownership is going to be adhered to, where the head office is going to be, where the corporate office is going to be, and what might be involved in terms of free trade. So the cabinet has absolute discretion; the cabinet has discretion which will never be judged. For instance, after 1991, when we come back to a process that involves the Utilities Commission, nothing that the cabinet has done in the whole privatization process will be open to scrutiny. Nothing that it has done will be open to any kind of memo that it will have to bring forward. Cabinet secrecy, in fact, will be the rule; it will be in effect.
We haven't even looked at the implications of free trade and a continental energy policy, and the effect that may have on supply and pricing. We are privatizing B.C. Hydro Gas at a time when we are moving into a continental energy policy, and that particular policy may have very major implications for the availability of gas, the competition to provide it here and across our borders, and the price that the company that's going to buy it will then be able to command. It seems to me that one of the things we found about energy is that it is very volatile, and one of the things that's been good about having a national rather than a continental energy policy is that we have been able to regulate the price of our energy in the interests of our own country, and we have not necessarily been subject to the volatility of the world market. I think that has been very beneficial to our economic growth.
There is no question at all, Mr. Speaker, that the management of energy and energy resources is a key vehicle of public economic policy. What we are looking at is a bill that would leave questionable regulatory powers with the provincial government — regulatory powers that in the initial stages at least, as I have said, leave a high degree of discretion in the hands of cabinet and that do have their costs. We are selling to the private market the money-producing part of B.C. Hydro, distribution. We as a government are eventually going to be left with the cost of regulation, and we are going to sell off to the private sector first of all the natural gas division and the B.C. Hydro division and possibly the R and D division of Hydro. We're going to sell off those elements of B.C. Hydro that provide us with a clear profit, and we are going to be left with maintaining the costs that are associated with regulation.
There is no question that all of the privatization initiatives have demonstrated that in the sale of monopolies we simply put into the hands of the private sector a laissez-faire to do what they will with that particular resource which is our resource that we own. That is something we are doing not only with the small percentage of B.C. Hydro that is proposed for privatization through the vehicle of this legislation; we are opening the door for that to happen with our most significant resource.
It leaves all the people of the province alarmed at the ideological degree to which this province will go in its pursuit of its very scary, ill-advised and hasty privatization initiatives. This bill, which is presented in the latter part of this session and with such sweeping aspects to its potential use, leaves all of us very fearful of the further initiatives towards privatization. What will be left of our province with this government and with these initiatives?
It will be with great fervour that I join colleagues in voting against this bill. It's a bill that should not go forward at this time.
Mr. Speaker, I would like to move adjournment of this debate until the next sitting of the House.
Introduction of Bills
NURSING STATUTES AMENDMENT ACT, 1988
Hon. Mr. Dueck presented a message from His Honour the Lieutenant-Governor: a bill intituled Nursing Statutes Amendment Act, 1988.
HON. MR. DUECK: Mr. Speaker, the bill proposes a number of changes to the three statutes that govern the practice of nursing in British Columbia. The principal change that would be made by this bill would be the reservation of the title "nurse" to a person registered under one of the three statutes. Additional changes are proposed to the Nurses (Registered) Act in connection with increased requirements for renewal and reinstatement of membership in the association. Amendments dealing with the inquiry and disciplinary process are also contained in this bill, and I will provide more specific information on all of these items at second reading.
Bill 56 introduced, read a first time and ordered to be placed on orders of the day for second reading at the next sitting of the House after today.
HON. MR. STRACHAN: I call second reading of Bill 38.
LIQUOR CONTROL AND
LICENSING AMENDMENT ACT, 1988
HON. L. HANSON: In rising to speak to the second reading of the Liquor Control and Licensing Amendment Act, 1988, let me say that I am pleased to announce the continuation of the process that was begun almost 18 months ago. We commissioned a liquor policy review under the stewardship of my colleague from Chilliwack. This review is the first in almost 20 years, during which time many attitudes and perceptions about liquor have changed dramatically. We need legislation that reflects these changes.
[Mr. Pelton in the chair.]
The Jansen report, which spawned the legislation I am introducing here today, is the end product of exhaustive consultation with many groups impacted by the way our society deals with liquor: the hospital industry, the beverage alcohol producers, importers of alcohol, the public health and social agencies, local authorities, the law enforcement agencies, labour unions. native groups, religious groups, citizens' groups and the general public; so you can see that we have consulted with every conceivable point of view on the subject of liquor and its regulation in this province.
Since the release of the Jansen report in June 1987, we have implemented many of the recommendations it contains. For example, we have reduced the markup on low-alcohol beer, cider and coolers. We have closed off-sales in beer parlours and pubs at 11 p.m. We have required that new beer and wine stores obtain neighbourhood approval. We have
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developed a separate licence, operating standards and inspection program for beer and wine stores. We have increased existing licence fees. We have increased seating capacity for patio seating and for cabarets. We have allowed the industry to sponsor professional motor sport events.
The legislation I am presenting to you today continues the policy directions that were set out in the liquor policy review. Our aim is to minimize the social cost of alcohol and to promote moderation and responsibility in its use. Let me briefly outline the subject matter of the Liquor Control and Licensing Amendment Act.
We have provided for stronger penalties and stricter enforcement action for liquor-related violations. It will now be an offence to possess a knife, firearm or dangerous weapon in a licensed establishment. A Liquor Appeal Board will be created to hear all liquor appeals. There will be authority to limit the kinds of exotic entertainment allowed in licensed establishments. The authority to establish licensee and server training programs will be established.
We are proposing legislation that will allow us to delegate certain liquor control and licensing responsibilities to the local level of government pending the recommendations of a joint Ministry and Union of B.C. Municipalities committee report, due at the end of this month. This legislation will also provide police with clear authority to revoke special-occasion licences for violations. This legislation will allow the liquor control and licensing branch to license and regulate "you brew" or "brew it yourself" operations. This legislation will also provide a minimum penalty for the illegal sale of items containing alcohol, such as rice liquor, shoe polish and Lysol. Also contained in the legislation are some housekeeping items which have been accumulating over the years since the legislation was last updated.
I'm sure hon. members will agree that this is a good-news bill. I know that the hospitality industry in British Columbia supports this bill, as do the police, municipalities and many of the social groups. In moving second reading of the Liquor Control and Licensing Amendment Act, 1988, I hope all members on both sides of this House will give this bill their endorsement.
MS. A. HAGEN: I want to commend the minister on his comments. I think it's particularly useful that each time the minister brings forward some new discussion of liquor policy in this House, he presents it in the context of the work that has been going on over the past year and a half. On a number of occasions I have, as the minister well knows, commended that process, both the report of the government, through the member for Chilliwack and his committee, and the Ryan report on alcohol in the workplace. The ongoing discussion and committee work is, I think, an example of the process that does bring forward good legislation and improved policies. The ombudsman's report adds to that galaxy of materials that I know the minister and his officials have been using. So I want to begin my comments by again commending the process. There will be times when we look critically at some aspects of it, but the process has integrity and is one we would endorse.
In terms of the specific legislation that is now into second reading, we will be supporting it. We are pleased with the direction the legislation is taking. It does indeed complement the policy initiatives that have occurred.
Because it is an amending bill and doesn't have particular principles so much as it looks at the process of further refining legislation, I thought it might be best if I highlighted two or three areas that we hope to look at in more detail when we come to committee of the whole. This will signal some of the areas where it would be useful for us to understand a little more explicitly the direction the minister intends that we take with this legislation.
With that specifically in mind, I will first of all comment that we too are very pleased with the initiatives that go with some of the controls and penalties. We will want to raise some questions about the onus placed on, say, pub owners around the issue of knives, to understand and have on the record how they will be dealing with both the intent and the administration of those new rules and regulations. In some other areas as well we will be taking a look at how the government intends to implement some of its regulations.
One aspect of the bill that provides a good deal of fleshing out of the licensing process is section 7, which talks about various aspects of licensing from the point of view of the discretionary powers available to the general manager. There are within that relatively lengthy clause a number of exemptions that the general manager has the discretion to exercise. For instance, he can exempt a class of licensee from the food and non-alcoholic beverage requirement. He can exempt a class of licence from the requirements covering marine pubs, and he can exempt an applicant from location requirements.
My sense is that some of this is in that housekeeping area that the minister spoke about in his introductory comments, but it appears too that there may be some other potential initiatives here that again will give the ministry latitude to make changes without referring back to the Legislature. I know that in our discussions with the ministry. . . . The whole question of licensing and categories of licences and whether there might be some collapsing of those licences seems to be dealt with in part through that section. I will want to have some opportunity to canvass what is retroactive, if you like, in this section in bringing things into a legislative framework, and what is proactive and what the minister may see this legislation enabling him to do around such things as licensing.
In that regard too, that whole question of how the discretionary power ties in with regulations. . . . I'm sure that in many instances the minister and his officials feel that they're in something of a Solomon role when they're trying to sort out all the conflicting interests that are a part of liquor licensing. We've certainly seen a fair amount of that in some of the issues that have been before us during this session.
In that same context, then, the minister has noted — and we are looking with considerable interest at it — the establishment of a Liquor Appeal Board, because up until now the appeal process, except for some commercial appeals processes for enforcement, has been through the ministry to the general manager, in an informal way, to the deputy minister, and eventually to the minister. The ombudsman has also looked at that process in the fairness in licensing report that he tabled with us about a year ago.
The appeal board is, I think, a step in the right direction, but as with many of these quasi-judicial boards, it is extremely important for us to have some discussion about who sits on those boards. It's my view, Mr. Speaker, that the persons who sit on that board clearly should not — if I can use this not in a pejorative sense but in the sense of the qualifications people may be required to have — be seen to be political appointments. They need to have very clearly defined skills, because of the nature of the work that they are going to be
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doing. Because this appeal board will also be in a position to create precedents by virtue of its decisions, we want to discuss how the board is going to operate and how the minister sees it operating.
Those two clauses are particularly ones that we will want to spend some time on, in addition to looking briefly at a number of the other initiatives that the minister has noted in the bill.
In conclusion, let me say that we are pleased to see this legislation. We look forward to examining it more thoroughly in committee, and we compliment the minister on the ongoing progress of following through on the policies that have been outlined after an extensive and very well-founded community consultation process.
DEPUTY SPEAKER: Hon. members, you are advised that pursuant to standing order 42, the minister closes debate.
HON. L. HANSON: I recognize the member's concerns about the onus we are putting on the owners or managers of these licensed establishments. But I think there is a responsibility on the part of those people when they take on the ownership of a premise or operation that deals in a substance that is of high concern to society. They do have some responsibility, not only to their patrons but to the public at large, and to the police, for whom some of the things that go on within their operations. . . . I don't think the onus in the act — which, as the member has said, we will get into in much more detail in committee stage — is above and beyond what is reasonable to expect of the operators.
On the comment of the member opposite regarding the discretion of the general manager, I think we have evidence in the legislation that the committee we are establishing to appeal decisions that may be made is a recognition that the general manager has a lot of discretion, and that there should be a more arm's-length process for appealing that. That's what we are in fact doing with the appeal process we are suggesting. Again, I would agree that we will get further into it in committee stage.
I think that in general terms the legislation is good. I thank my critic opposite for her comments as to the process we have been through, and assure her that in dealing with liquor and liquor initiatives we will continue that process. I now move second reading, Mr. Speaker.
Bill 38, Liquor Control and Licensing Amendment Act, 1988, read a second time and referred to a Committee of the Whole House for consideration at the next sitting of the House after today.
HON. MR. STRACHAN: Second reading of Bill 47, Mr. Speaker.
CREDIT UNION AMENDMENT ACT (No. 2), 1988
HON. MR. COUVELIER: Bill 47 represents the first step in the implementation of a number of measures initially proposed in a credit union discussion paper released last July. The discussion paper recognized the need for legislative amendments which would assist the credit union movement to adapt to the rapid change occurring in the financial sector and to remain competitive in that environment. Its release was followed by extensive consultation with representatives of the credit union movement and other interested parties.
Bill 47 contains a number of measures affecting credit union deposit insurance. These measures are intended to enhance confidence in deposit insurance provided by the Credit Union Deposit Insurance Corporation and to contribute towards the continued strength of the credit union system.
The most significant feature of Bill 47 is that for the first time formal government backing of credit union deposit insurance is provided. This backing covers deposits up to $100,000. Currently credit union deposit insurance is effectively self-insurance provided by the credit union system. In the present system the extent to which deposits are adequately secured depends upon the financial health of CUDIC and the credit union system. Fortunately, the system is strong and healthy. That has not always been so, and may not always be so. Bill 47 commits the government to supporting the existing deposit insurance fund in the unlikely event that the fund is at some time unable to meet its obligations. If such support is ever needed, it will take the form of a guarantee of CUDIC's borrowings to repair the fund. With this strong commitment, credit union depositors can now be certain that their deposits are covered up to the deposit insurance limit.
This important initiative demonstrates the government's appreciation of the role credit unions play in the economic development of our province. It is a tribute to the strength and vibrancy of the credit union system that the government is able to take this step now. The credit union movement in our province is today enjoying notable success. In 1987, B.C. credit unions had a near record year, and 1988 promises similar performance. Bill 47 will assist credit unions in continuing that trend to the benefit of British Columbia.
I'd like to comment briefly on the principles underlying the $100,000 deposit insurance coverage limit established in this bill. A limit was necessary for two reasons: market discipline and fiscal prudence. The limit draws upon market forces to help regulate the credit unions. In order to attract deposits above the insurance limit, credit unions will have to satisfy large depositors that the credit unions are well managed. A limit is also a necessary consequence of government backing. The indeterminate limit on coverage under the current self-insurance system is not appropriate for a government-backed system. The government has a responsibility to British Columbia's taxpayers to ensure that liability is limited to some reasonable level.
At the same time, I would stress that setting the limit at $100,000 will provide more than adequate protection for the majority of depositors. For example, under deposit calculation rules, which will be implemented by regulation, a couple with two individual accounts — a joint account and two registered retirement savings plans in the same credit union — will be able to secure coverage for up to $500,000. This is well above the value of deposits of the average credit union member. Consequent upon these deposit insurance measures, Bill 47 also enhances existing provisions for the regulation of deposit insurance advertising by enabling the prescription of advertising standards for credit unions. This is intended to facilitate necessary public education about the new deposit insurance measures.
Let me turn now to the other principles contained in Bill 47: improving the public accountability of CUDIC and enhancing its ability to effectively do its job. To improve public accountability, Bill 47 revises the structure of
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CUDIC's board, enhances existing provisions to permit comprehensive inspection of CUDIC's operations, requires that CUDIC follow ministerial policy directions and provides for an annual report of CUDIC's activities to the Legislature. These changes, which bring CUDIC closer to government and more open to public scrutiny, are a direct consequence of the government's commitment to back credit union deposit insurance.
Bill 47 also includes measures which expand the means through which CUDIC can assist credit unions financially, increase CUDIC's flexibility regarding the use of information on the financial position of credit unions and allow supervisory decisions to remain in effect while under appeal. These measures were developed in close consultation with CUDIC and will assist CUDIC to continue to manage credit union deposit insurance in an effective manner.
Before concluding, I would like to speak to one of the proposals contained in the credit union discussion paper released last July: the proposal that the superintendent of financial institutions and CUDIC be amalgamated into one entity. The primary objective of that proposal was to eliminate overlap between the two agencies, both of which conduct inspections and have a regulatory role.
Given the changes being proposed in Bill 47, I expect that it will be possible to achieve our objective of a more streamlined and responsive regulatory structure with some relatively minor administrative changes to be explored over the coming months. Although there is no intention to combine these agencies at this time, I am sure that I can count on the excellent staff of both these organizations to continue to work together toward our common goals.
Mr. Speaker, I commend this legislation to the House as a significant initiative that will be of benefit to the credit union movement and the province as a whole. I move second reading.
MR. STUPICH: The opposition will support this legislation. We have a couple of points that we would like to make. I noted the minister told us about the progress of the credit unions to the present time and how well they're doing. The government couldn't be thinking of a better time to make this kind of provision available, since the likelihood of having to actually pay any money out is quite remote. If it had come in three or four years ago, there might have been more concern on the part of the Minister of Finance.
I'm wondering at the attitude of the Minister of Finance to take a much more active part in the board of CUDIC itself. The chairman of the board, as I understand it, is now going to be appointed by the minister; previously they were picked from among their own members by themselves. Certainly the credit union movement welcomes this government backing, which gives them a little better protection than is available to depositors in charter banks and trust companies. So that is a positive move.
The bill does seem to centralize power in the hands of the minister. In section 11, "the board shall, in a manner consistent with its responsibilities under this act, follow policy directions made by an order of the minister with respect to the exercise of the board's powers and functions." I'm wondering how it can be considered an independent board if the board is specifically instructed by the legislation to always do whatever the minister says. It just seems as though they're acting for the minister. Why he needs a larger board — the number has been increased from five to seven — to follow the minister's instructions is something that I just don't understand. Perhaps the minister has some explanation.
There's another point. I think I'm reading this correctly in section 10, where it raises the limitation on the length of service. Appointees to the board may not serve more than a total of six years' service. My information is that every one of the current members of the CUDIC board have been there for over six years, so it would seem to be one way of totally dumping the board and starting with a completely new one. It's the only way I can read the legislation. If the minister has any explanation of it that is different, I would be interested in hearing it.
We're pleased with this. We're pleased with the way it was developed. There was close cooperation, consultation and lots of discussion with the credit union movement beyond the couple of points that I made. Some of my colleagues may have others. The opposition is pleased to support this legislation.
MR. SIHOTA: As the first member for Nanaimo, our Finance critic, has indicated, we will be supporting this legislation. However, I thought it would be important to put some comments on the record which outline some of my thoughts on this bill, with the hope that the minister will respond in, as he often says, the fullness of time — hopefully sometime between now and the third reading stage of this bill. I think, fairly said, some of the questions I have may well relate to debate at committee stage.
I want to say that in my view the $100,000 guarantee is a legitimate, proper and very realistic move on the part of the government. I think it's recognized by all of us that the regime that was in place prior to this was not realistic under the circumstances. The move that the provincial government has taken, which would allow for security of deposits up to $100,000 and then allow further for them to be covered on the basis of accounts, so that accounts are covered to that extent, is a welcome one, and we endorse it.
There are some issues that arise from the bill which I have some concerns about. I know from my own experience as an alderman in Esquimalt, when I was chairing the finance committee in that municipality, that when we looked at the possibility of changing our accounts from one of the five major banks to a credit union, in analyzing it I think we went through the exercise that a lot of other municipalities in this province do, in that we got all our experts, treasurers and clerks to sit down and go through the pros and cons.
I think there is a reluctance on the part of municipalities and school districts to shift their funding to credit unions. I don't have any statistics to support that thought. I would think that is true, and certainly if evidence would suggest otherwise, I would be quite prepared to take a back seat to that evidence. However, if one goes through the process that we did, we chose to remain with one of the five major banks, feeling that things were just a touch more secure. This was shortly after the collapse of one of the companies based in Alberta. The name of the company escapes me, but it isn't very important at this stage of the game.
I think it's a welcome move to try to have more of the school board and municipality deposits placed in the hands of credit unions. The money is then raised and, to a large measure, invested in British Columbia, and is put towards initiatives that benefit British Columbians as a whole. I think that's a laudable goal, and one that we ought to be endeavouring to support.
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There are ways in which that can be done. Certainly the provincial government would be best served if it considered demonstrating its own real confidence. I am not saying that it doesn't have confidence; I am saying it would be a larger measure of confidence in the credit union movement if it would perhaps agree to maintain the unlimited guarantee of credit union deposits belonging to public bodies such as municipalities and school boards. I think that may be one way in which to encourage a greater level of deposits from these types of bodies to credit unions.
I know that the minister will probably respond with the competitive-advantage arguments that we've already heard, as they relate to the amount guaranteed here. That's fair enough. However, I don't think that would really apply to the type of situation I am talking about. I don't think the federal government would stand by idly if there was any threat to the solvency of any of the major banks in the country.
I think that in order to encourage municipalities and school boards to put some money into credit unions, the government should have looked at that option, and I would be interested in knowing from the Minister of Finance, first of all, whether that option was considered; secondly, if it was rejected, what were the policy reasons behind that rejection? I don't need the answer to that during the course of debate at this level, but certainly during committee stage there are other opportunities to get into it. I'd be most interested in knowing what the government's rationale is in that regard.
The other point I wish to raise in relation to this legislation is the composition of the board of directors, or board of governors — I'm sorry, I can't remember the actual wording of the group within the act. If memory serves me correctly, under the old act there was a guarantee of representatives from the credit union movement on the board of CUDIC. I note that that isn't present in this legislation. It is true that in both instances, as I recollect it, the Lieutenant-Governor-in-Council made the appointment, so it really was within the ability of government to control. There is nothing in this legislation, as I read it, to ensure that there are representatives from the credit union movement on the board. I would appreciate the minister's comments in that regard. And whether or not it's actually stated in the legislation, is the minister prepared to give us assurances that representatives from the credit unions or institutions in the province will be invited to sit on the board? After all, they have a real stake in what happens with the board and in knowing what happens with the dollars involved should there be a requirement for payment.
Those are two legitimate public policy questions that I think should be raised in addition to the argument put forward by the first member for Nanaimo (Mr. Stupich). We look forward to the minister's response to those matters.
MR. MERCIER: I appreciate the opportunity to support the proposed legislation. There are a few points that I would like to have registered with the minister. The first is that there should be stringent regulations and financial qualifications for those credit unions that come under the plan. In addition, there should be a system of inspection to ensure compliance with those regulations. There should also be a consideration of limitations on the entry of credit unions into other business activities if the minister deems such activities would have an adverse effect on deposit security. Finally — and I'm sure this is probably in hand — the minister is to ensure that assessments of credit unions will be made should the pool of funds in the plan at any time be deemed inadequate to ensure potential exposure.
To close my comments, these thoughts relate more to the operations of the credit unions themselves and are definitely related to the new feature that is going to be welcomed by these credit unions: the $100,000 limit guarantee of depositors' accounts. We have to remember that depositors in credit unions are in an investment market, and we're giving a preference treatment that is accorded only in other parts of the financial institutions relevant to banks and trust companies and similar deposits. The obligation on the credit unions is to ensure that the security of the depositors is foremost in their minds, and that that is reflected in the manner in which they conduct their business.
DEPUTY SPEAKER: Pursuant to standing order 42, the minister closes debate on second reading.
HON. MR. COUVELIER: Just to provide some further information to. the questions put so far, I'll just make brief replies. A comment was made that the minister is given power to instruct the board of CUDIC. I would just point out to the hon. member that this is enabling legislation. Events of the last few years have indicated that if the government and the general taxpayer is to have an exposure — or a risk — of many hundreds of billions of dollars, it's only appropriate that there be an opportunity to ensure that the taxpayers' interests are protected. I wouldn't anticipate that that authority would be abused or used frivolously. Certainly I would never intend to do that.
Another point was made regarding the limit of six years of service on the CUDIC board and whether the implication was therefore that we will dump all of the existing boards who have each exceeded six years of service, The answer to that is categorically no. We will stagger the appointments. The chairman has retired, as I mentioned the other day when I introduced the bill, and there will be four members who will continue on the board for varying periods of time so that we can ensure an annual turnover of board representation and also ensure continuity during this transition period, so that will be accomplished.
Another point was made regarding municipal deposits with credit unions and the suggestion was made that we might, as a government, consider ensuring to an unlimited amount any deposits made by local governments with their local credit unions. I can only advise the House and the member that that was considered. It was given serious consideration because the government is desirous of doing all it can to strengthen the credit union movement in the province. However, it was determined that we could not and should not, as we are prudent managers of public money, give an unlimited guarantee to all local government deposits in all credit unions. The fact of the matter is that some credit unions are better able than others to absorb and put to good use such deposits, and for us to give a categorical unlimited level of protection would not be in the public interest or necessarily in the interest of those specific depositors, or even those specific credit unions.
Probably if there is a lesson to be learned in the recent financial turmoil that all of the institutions have gone through over the last four or five years, it might be that a surfeit of deposits inevitably means a crisis need to get the money out. If there is a common syndrome that the industry experiences,
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that's one of the major headaches that a money manager has to face of a financial institution: making sure that the spreads are proper and he puts to good use those deposits he receives. To that question then, on balance, the government does not believe an unlimited insurance for municipal deposits would be in the public interest.
The last point made dealt with the thought that there was no protection, that the credit union movement itself would have representation on the CUDIC board, and clearly the government's intention is to ensure that is the case. It's an interesting problem however. When I came to examine that issue, specifically with the appointments of this current board that we must address, I became aware of the fact that the knowledge and background base of the credit union system and the financial industry at large is more likely to be focused in greater Vancouver. I feel strongly that there should be a geographic balance on the CUDIC board to the maximum extent that we can ensure it is. Also, because I am looking for competency here, I think it's in the public interest to do that. Were we to limit it to credit union members, the consequence would be to have a tremendous imbalance on the urban Vancouver financial community on that board, and I don't think that is desirable or in the public interest.
Therefore I can assure the House that we will ensure that there are credit union members on the CUDIC board, but I don't want to limit it to that, because I want to make very sure that we have the highest level of expertise available and also ensure that there is a good geographic balance. It may be that from time to time we might have to go into the private sector to get those desirable results.
I am pleased to hear the comments that I've heard. I think they are pretty useful, and obviously the hon. members have studied the bill seriously. I am gratified that the opposition find it a bill they can endorse, so I move second reading,
Bill 47, Credit Union Amendment Act (No. 2), 1988, read a second time and referred to a Committee of the Whole House for consideration at the next sitting of the House after today.
HON. MR. STRACHAN: Second reading of Bill 51, Mr. Speaker.
SMALL BUSINESS VENTURE
CAPITAL AMENDMENT ACT, 1988
HON. MRS. McCARTHY: I rise to speak to important amendments, the purpose of which are to enhance the original Small Business Venture Capital Act which was introduced in this House in March 1985.
The Small Business Venture Capital Act encourages the creation of investment corporations called small business venture capital corporations or VCCs. VCCs are companies managed by the private sector, dedicated to investing in expansion of small businesses in British Columbia.
As the hon. members are aware, small business is one of the keys to the future economic success of British Columbia. Small businesses will provide major technological and productive innovations in this province. Small businesses, however, continue to have difficulty obtaining equity investments to finance this expansion and innovation. Traditional debt financing is not always available, and when it is available, debt financing does not always allow for small business to react quickly to opportunities which may be presented. At the same time, there's an untapped wealth of personal savings and business expertise in the province. The small business venture capital program mobilizes the equity and the energy of the province's investors.
Recent increases in program activity have resulted in increased comment on the measures provided for in the legislation. Private sector concerns have brought out several points which are addressed in this amendment package. What we have here today is the result of commentary from our own ministry in enacting this legislation as well as of private sector input.
One provision allows a company, which is a reporting issuer as defined in the Securities Act but is not necessarily listed on the VSE, to raise up to $20 million in equity capital. The potential for private groups of investors to raise large pools of capital will now exist. This amendment could be particularly useful for the film, aquaculture and research industries.
A significant feature of the Small Business Venture Capital Act is the investment protection account, which is used to ensure that VCC funds are invested appropriately. A VCC will now be required to invest 80 percent of its equity capital, and amendments will ensure that once the VCC has reached that investment level, moneys can be fully released from the investment protection account.
Technical amendments reorganize sections of the act, bringing items of major concern to program users into individual sections. Program requirements will now be much easier to determine quickly and effectively.
A significant amendment allows the Lieutenant-Governor-in-Council more flexibility in defining what types of investment a VCC may make in a small business. This amendment recognizes the essential give and take involved in business transactions and will allow investors and small businessmen a more realistic playing-field in which to negotiate.
A final feature of the amendments is a series of technical changes which clarify user responsibilities under the program and administrative guidelines.
In summary, I've presented the hon. members with amendments that require careful consideration and discussion. The amendments recognize the maturity of the small business venture capital program. They are based upon the comments of a wide range of program users over the past three years. During our detailed deliberations, I believe hon. members will recognize the excellent administrative framework that we have provided to deal with the accelerated program usage. It will also continue that momentum for the foreseeable future.
The program has fostered a cooperative, public and private sector funding device for economic diversification and job creation. As of May 31, 1988, 78 VCCs have been registered and have raised a total of $24.2 million. Mr. Speaker, I believe the amendments deserve the strong support of all our members, and I look forward to the debate on the amendments.
DEPUTY SPEAKER: Just before we continue, hon. members, the member for Cowichan-Malahat has asked leave to make an introduction.
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MR. BRUCE: In the member's gallery with my wife are four good friends of mine, Brian Hebert, Lisa Howson, Brian Eastman and Tara Simmons. I would ask that the House look lively and make them feel welcome.
MR. WILLIAMS: I don't anticipate that there will be much debate from this side of the House. The legislation appeared initially to be fairly complicated, and that may have had some impact on how much progress has been made in this regard, but the amendments as we see them appear to be reasonable and we support the intent.
The minister might advise us whether these amendments will have implications on provincial revenues — whether there's any anticipated difference in terms of impact on provincial revenues. Beyond that, we have no comment.
DEPUTY SPEAKER: The members are advised that pursuant to standing order 42 the minister will close debate.
HON. MRS. McCARTHY: In answer to the member's question, there could be an increased tax credit which would be anywhere between $500,000 to $1 million expense to the Crown.
With that response, and with thanks to the House for their cooperation — and to the hon. member for Vancouver East — I would like to move second reading of the bill.
Bill 51, Small Business Venture Capital Amendment Act, 1988, read a second time and referred to a Committee of the Whole House for consideration at the next sitting of the House after today.
HON. MR. STRACHAN: Second reading of Bill 32, Mr. Speaker.
MUNICIPAL AMENDMENT ACT, 1988
HON. MRS. JOHNSTON: It is my pleasure and privilege to have the honour of putting forward Bill 32, the Municipal Amendment Act, 1988, for second reading. This legislation contains a variety of measures relating to residency requirements for electors, the triennial election system, property tax exemptions, approval requirements for miscellaneous items and cash in lieu of parkland adjustments.
The measure relating to elections includes amendments to eliminate the 12-month residency rule and allow referendums more often than every three years.
Miscellaneous minor amendments reduce the ministerial approval requirement before a municipality may enact a bylaw ratifying an agreement for the supply of electric power or telephone extension through an underground facility. Another amendment eliminates the requirement for council to enact a bylaw authorizing the construction of gates across highways. These amendments reduce provincial controls on local government activities.
Bill 32 also contains measures designed to prevent overcharging of developers under the cash-in-lieu-of-parkland provisions of the Municipal Act. The amendment will clarify these provisions, bringing them into line with the intent of the legislation, which was to streamline the subdivision process. Consultation with the Union of B.C. Municipalities and other interest groups has resulted in this wording, which is expected to overcome difficulties.
There are tax exemption provisions, which include a provision to enable municipal councils to grant temporary property tax exemptions to charitable or philanthropic organizations and to churches occupying rented premises. These organizations provide a valuable service to municipalities, and these amendments provide municipal councils with the authority to recognize this service.
MR. BLENCOE: I was going to say I'm the designated speaker; but we won't take that long.
We generally support the legislation before us. However, we have only had a day to be able to review this and two other pieces of legislation, so it may very well be that during committee we may have some further questions.
From what I can determine, the bill is predominantly housekeeping in terms of election procedures and bringing them into line with the changes that have been made to the Election Act. That obviously makes a lot of sense, and we don't have any problem with that at all.
I may wish to go over in committee the section referring to changes in tax exemption. It certainly widens the powers of municipal councils to grant permissive exemption from taxes to charitable organizations. In the past, councils were limited in granting such exemptions, and I know that at times that did create trouble. I can recall, being chairman of finance in the city of Victoria, that a number of times when trying to give tax exemption to a reputable, credible and deserving organization, trying to fit it into the Municipal Act was a great strain, and we had to go to great lengths to try and accommodate tax exemption. If I'm correct — and the minister can go into this in committee — what you're basically trying to do is broaden permissive tax exemptions. I presume, of course, that it's again up to local council to make the decision whether certain organizations will be tax-exempt. The only problem that may arise is that when you widen tax exemptions, you obviously let organizations in the community know that if they lobby hard and fast they can get taxes forgiven. We have to be careful with that. Local councils in the last few years — or probably always — have been looking for those valuable dollars. They can't run deficits. I know you, Mr. Speaker, have been involved in local council, and the minister herself as well as I. We are always stretched.
We have to be careful with opening Pandora's box, if you will, in terms of tax exemptions for organizations. It's a tricky one, and I hedge here a little bit — if you let it be known that you are widening it. councils are going to be lined up at the door and the pressure will be on those local councils to forgive taxes. It could create a lot of headaches for local councils, a lot of intense politics and lobbying from many organizations to broaden the tax exemption. I know, having been involved in that myself, that it becomes extremely difficult sometimes to say no when clearly, in the interests of all taxpayers, you should be saying no. I put that on the record, and I am sure local councils are aware of that.
I was interested in the section that referred to churches:
"tenant or licensee for the purpose of public worship or for the purposes of a church hall which the council considers necessary to the church."
I was interested in that, given the debate or the questions I put to the minister vis-à-vis the organization in Surrey that she is well acquainted with and has gained notoriety with in her riding. I can only conclude that that particular organization will continue to draw attention
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in terms of what they perceive to be their right to conduct business in many areas on land that many believe is not being used for church purposes in the traditional sense.
When I saw this, I wondered if it was an extension of the kind of legislation that we saw in this House some time ago for that particular organization, but I believe the minister is quite sincere in this particular section and wishes to expand the options for church organizations. Of course, I don't think that should reflect on the problems we have in Surrey with the Bible society clearly running business for profit on what they believe to be eligible for tax exemption, and the taxpayers in Surrey are having to foot the bill for that particular organization. However, I don't think this section will either detract from or add to that situation.
MR. LOENEN: You've still got it all wrong, Robin.
MR. BLENCOE: No, I haven't got it all wrong, to the member for Richmond.
MR. BLENCOE: I can always guarantee we'll find that some of the back-benchers are indeed alive and well when we bring up such issues as the one I refer to in Surrey.
There is a question that I have and will be pursuing in committee, which is the last section of this bill, dealing with developers and parkland. Previously the developer of a subdivision could either put aside parkland as required by the local government or pay the government an amount equivalent to the value of the land that should have been set aside. It was calculated on the basis of the average market value of land in the subdivision on the date of the final approval, minus the cost of design, surveying, engineering and servicing, etc.
Now if I read it correctly — and the minister may wish to correct me in committee or correct me tonight — the developer will be required to pay an amount based on the average market value of land in the subdivision on the date of the preliminary approval of the subdivision or, if no preliminary approval is given, sometime within the 90 days prior to final approval being given. It's based on the land being zoned for subdivision use, although without any services being installed. It seems that this could be construed as a break for developers, and I want the minister to comment on that.
The decision to remove cost allowance for designing and surveying is a good one, as it prevents inflation of these costs by the developer and regulatory difficulties in assessing these costs. There is no problem with that. But I'd like some answers in committee on why the change. I'd also like to know if the minister has taken a look.... Is there any potential impact on municipal coffers in this area? Again, I go back to local government having to try to recoup development costs, and I'm just wondering if there is potential financial exposure to local government.
MR. BLENCOE: Yes, I'm just letting the minister know for committee stage, Mr. Government Whip, that I'd like some of those questions answered. Overall, however, we don't have any problem with the legislation, and we'll be supporting it.
DEPUTY SPEAKER: Hon. members are advised that pursuant to standing order 42, the minister closes debate on second reading.
HON. MRS. JOHNSTON: There were some questions put, and probably we can go into them in greater depth in committee. Therefore I just want to point out that in our opinion, these amendments will further increase the autonomy and efficiency of local government. I'm happy to move that bill 32 be given second reading.
Bill 32, Municipal Amendment Act, 1988, read a second time and referred to a Committee of the Whole House for consideration at the next sitting of the House after today.
Introduction of Bills
SECURITIES AMENDMENT ACT, 1988
Hon. Mr. Couvelier presented a message from His Honour the Lieutenant-Governor: a bill intituled Securities Amendment Act, 1988.
HON. MR. COUVELIER: This is a bill intended to allow the Securities Commission and the securities industry to move forward with the times. I'll have more comments to make on second reading, but I'm pleased now to move first reading.
Bill 55 introduced, read a first time and ordered to be placed on orders of the day for second reading at the next sitting of the House after today.
HON. MR. STRACHAN: I call second reading of Bill 41, in the name of the hon. Minister of Municipal Affairs.
MUNICIPAL FINANCE AUTHORITY
AMENDMENT ACT, 1988
HON. MRS. JOHNSTON: It is once again my pleasure and privilege to have the honour of putting forward Bill 41, the Municipal Finance Authority Amendment Act, 1988, for second reading. Bill 41 contains measures to give the Municipal Finance Authority more flexibility in managing capital borrowing for B.C. municipalities and regional districts. The amendments will establish a short-term investment pool and authorize the refund and distribution of excess sinking fund money.
Recent declines in interest rates have led to the accumulation of excess money in Municipal Finance Authority sinking funds. This amendment enables the Municipal Finance Authority to declare a surplus when it is clear that the sinking fund for a particular debenture will have greater cash value at maturity than is required to cover the loan. Surpluses will be distributed on an equitable prorated basis.
Because local government revenue and expenditure cycles are not exactly synchronized, municipalities and regional districts engage in short-term investment. This bill contains provisions that will enable the Municipal Finance Authority to enter into agreements with regional districts and municipalities to invest money for the purpose of investment in pooled investment funds.
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[Mr. Weisgerber in the chair.]
These amendments are supported by the Union of B.C. Municipalities and will be welcomed by local governments.
MR. BLENCOE: Mr. Chairman, we are again going to be supporting this legislation. I have to say that this is something that's been talked about for quite some time by local government. Indeed, I've had a number of discussions with regional districts and mayors and aldermen about the issues this legislation raises, and it's very similar to some of the things that I have suggested over the years. It makes possible for Municipal Finance Authority to undertake short-term investments for regional districts and municipalities in the province, using money received for the purpose of investment in pooled investment funds. That's a very good and useful tool. I know it's a response to the request from the UBCM, as well as individual communities, for a mechanism for pooling their investment money in order to take better advantage of the markets.
I think it's a recognition that local government is becoming more sophisticated every day, by its own initiatives — not necessarily, in our estimation, by some of the initiatives of the provincial government but certainly on its own initiatives. We welcome the UBCM and we welcome local government in its development of these new ideas and showing leadership.
In my review of the legislation, which the minister didn't mention, it allows very small communities to enjoy the advantages of a large investment fund in a relatively safe environment — something that I have talked about and discussed and looked at over the years. Many smaller communities are left out of the game and can't participate on the playing-field of investment because they don't have the collateral or the equity or the ability to participate. It allows small communities to enjoy the advantage of a large investment fund, and that, I'm sure, will be welcomed by smaller communities right across this province.
I understand that there is a requirement: the trustees must present a yearly report on the funds to the Finance Authority. I believe that's correct. I also believe that these funds or investments or securities cannot be done unless they're within the guidelines or the parameters of the Financial Administration Act. I believe that's correct. So I think it's good legislation. I commend the minister for bringing it forward. I know local government will welcome it. I certainly welcome it, and I think the idea of municipalities being able to participate more actively in a pooled investment fund is exciting. We support this legislation.
DEPUTY SPEAKER: Pursuant to standing orders, please be advised that the minister closes debate.
HON. MRS. JOHNSTON: Well, I'm delighted that the opposition will be supporting the bill, because of course we know it's supported by the UBCM and will be welcomed by local government. I'm therefore pleased to move that Bill 41 be given second reading.
Bill 41, Municipal Finance Authority Amendment Act, 1988, read a second time and referred to a Committee of the Whole House for consideration at the next sitting of the House after today.
HON. MR. STRACHAN: Mr. Speaker, I call second reading of Bill 49.
RESORT MUNICIPALITY OF WHISTLER
AMENDMENT ACT, 1988
HON. MRS. JOHNSTON: I am pleased to put forward Bill 49, Resort Municipality of Whistler Amendment Act, 1988, for second reading.
Mr. Speaker, Bill 49 contains measures designed to reduce unnecessary approvals regarding the resort municipality of Whistler and clarifies municipal authority to provide and charge for facilities and services. The amendments place Whistler on a more equal footing with other municipalities, as an autonomous local government.
The Resort Municipality of Whistler Act currently requires provincial approval of all municipal bylaws or obligations to ensure that the broader interests of the province are protected. Bill 49 eliminates the special approval requirement, enabling Whistler to function in much the same manner as other municipal governments under the Municipal Act.
This bill also confirms and clarifies the authority for the resort municipality to establish rates and impost charges on development, to assist in the payment of capital works and other services. Existing works and service charge bylaws are validated, and the resort municipality has been given additional powers to meet the special demands it faces in its role as a four-season destination resort.
The amendments in Bill 49 recognize both the special role of the resort municipality and the need to put it on an equal footing with other municipalities.
MR. BLENCOE: I have to say to the minister that we are still in the process of reviewing and researching this piece of legislation. It is a substantial piece of legislation with a lot of detail and complexity to it. Quite frankly, I want to talk to some more people about it. Hopefully we'll be able to do that in committee.
At first glance, I can't see anything particularly wrong with it. On initial investigation, Mr. Speaker, it seems to remove Whistler from the requirement of having to have its bylaws approved by the inspector of municipalities before they can be enacted. It also attempts to give the municipality more power to control developments within its boundaries. We believe in local autonomy and that local councils should be able to do those things, no question. Whistler is developing and growing up. and the local council is competent to do those very things.
However, as we take a look at this, there are several more sections where the minister or the inspector either has to approve or may disapprove of a municipal act. "On one hand," it's saying, "we're giving you this power to do these things, but on the other hand we're retaining a high degree of ministerial approval or discretion to get involved in the process.
We support the role of the provincial government in those sections where it's removing itself, but we wonder why it's continuing to have a heavy role to play in areas that are not outlined in the legislation.
Section 3, the development charges section. Ws important to note, in the first two sections of this amendment, that the municipality had very broad powers to construct, acquire,
[ Page 5282 ]
operate and maintain municipal works and services. and it's clearly outlining that they're going to have those powers in those areas, Mr. Speaker. But the types of development they may deal with are very carefully spelled out, as I've said. While it has expanded in its specifics — i.e., highways are specifically mentioned — it is reduced overall, because any item not mentioned in the legislation must be approved by the minister.
It seems that the minister may also prescribe development to be carried out by the municipality. In section 9 (g) it says: "other works and services prescribed by the minister." In the committee I will ask the minister to answer that specifically. The minister may also prescribe development to be carried out by the municipality. I am not clear what the rationale is for that particular section.
So the council is given a good deal of leeway about how to apply the development charges for the projects they carry out. For example, they may be made on the value of the land, the improvements or the value of the work, or at a flat rate. The charging formula may also be on another basis approved by the minister. The bylaw specifying the charges to be imposed to pay for development must be approved by the inspector of municipalities.
MR. BLENCOE: Well, Mr. Speaker, I'm just giving the minister notice and saying that these are things we're still looking at, because we only had it yesterday.
On one hand the minister's removing herself, but on the other hand it's clear that the provincial government is still going to have a fair role to play in terms of section 3, Mr. Speaker. So I just wonder why the minister wants to remove herself — or the provincial government — from the process and allow Whistler to get on with these things, and on the other hand there are still a lot of other areas where the minister is going to have a role to play. There are many areas, for instance, where bylaws are going to be subject to the minister's approval. I wonder why the minister is continuing to have that role.
In the second-to-last section of the bill, the official community plan does not take effect until it is approved in writing by the minister — zoning bylaw, land use contracts, subdivision servicing bylaws. You've still got that authority and I'm just wondering why you require that authority. That's obviously for committee stage, Mr. Speaker.
So we have some questions about those issues and why the minister is still going to be heavily involved in Whistler. The areas where she is removing herself: that's fine; we don't have any problem with that. But I would like the minister to spell out exactly what she sees her role is going to be in the next few years in Whistler.
Otherwise, we support the legislation, Mr. Speaker.
DEPUTY SPEAKER: Hon. members, you are advised that pursuant to standing order 42, the minister closes debate on Bill 49.
HON. MRS. JOHNSTON: I am pleased to move that Bill 49 be given second reading.
Bill 49, Resort Municipality of Whistler Amendment Act, 1988, read a second time and referred to a Committee of the Whole House for consideration at the next sitting of the House after today.
HON. MR. STRACHAN: I call second reading of Bill 42, the Premier's Advisory Council for Persons with Disabilities Act, printed under the name of the hon. Provincial Secretary and Minister of Government Services.
PREMIER'S ADVISORY COUNCIL FOR
PERSONS WITH DISABILITIES ACT
HON. MR. VEITCH: Mr. Speaker, it's a singular honour to rise in second reading debate in support of Bill 42.
In 1981, the International Year of Disabled Persons, a provincially sponsored committee was established and was chaired by the hon. second member for Vancouver-Little Mountain (Mr. Mowat). He did an outstanding job at that time, and he has done an outstanding job since for disabled people not only in British Columbia but throughout Canada. As part of its mandate, that committee produced a comprehensive report containing 38 proposals related to the needs of persons with disabilities in the province. The committee cited the need to keep up the momentum generated during that special year for the disabled, and one of the proposals recommended at that time was the establishment of a permanent advisory body.
Last May, we all remember the tremendous odyssey that Rick Hansen took around the world on a wheelchair. At the end of his "Man in Motion" tour, the Premier announced the government's intention to do just that. The government is following through on that promise with this bill, which will establish a council and reinforce British Columbia's leadership in the country, in terms of dealing with the needs of disabled persons.
The council's mandate will be to advise the government on matters related to the disabled. Those areas of interest would include the prevention of disabilities in the first place; employment for individuals who have suffered disability; education and training; and equitable access to all programs as much as possible, particularly government health programs.
This bill delivers a clear message of the government's wholehearted commitment to raising public awareness about the concerns of the disabled in the province. We can be very proud of our record in British Columbia in this regard. We're leaders in this country when it comes to programs and services for disabled people; there's no question about it. Our architectural legislation is an example, as are our health programs which put British Columbia out in front in the treatment of those with disabilities.
Mr. Speaker, when Rick Hansen took his odyssey throughout the world and came back through Canada, and as he progressed west to what is really the finest part of this wonderful country, we noted that the interest in what he was doing for the disabled became more and more pronounced. When he came to British Columbia, the people poured out their hearts and opened up their pocketbooks, and the government responded in kind. British Columbia can be proud of its achievements in this area, and can look forward to even further achievements by bringing those who are disabled and who represent the disabled community into the mainstream as much as possible and by bringing them directly into the decision-making process as it affects them with regard to legislation and regulation throughout British Columbia.
[ Page 5283 ]
Passing this legislation and establishing the council will send out a signal of this Legislature's wish to provide constructive assistance for British Columbians with disabilities. I move the bill be now read a second time.
MR. D'ARCY: Mr. Speaker, I'm pleased that the government saw fit to bring in this bill, even though I know of no technical reason why it was needed, because the government has the power to do everything contained in the bill without the bill. However, it does give a higher profile to an awareness, with all of us members in this chamber as well as the public at large, of the long-standing and continuous needs of those citizens who have the misfortune to be physically disabled.
There's no time like the present, but I would note that there does seem to be a certain trendiness in terms of increasing this awareness. We can all say that perhaps it should have happened 20 or 50 years ago, but it is happening today, and I have to give the government credit for taking some initiative on raising awareness.
I do have some concerns, not about what the bill does, but rather what it does not do. For instance, as I indicated at the time the minister made his original statement on the report delivered by the second member for Vancouver-Little Mountain (Mr. Mowat), the most significant problem for disabled people in British Columbia is abject, grinding poverty and the lack of opportunity to develop, for their own benefit and for the benefit of society at large, what are in many cases great talents. If this committee, this group reporting to the Premier, is going to convince the present government or some future government that more needs to be done on a continuing basis and that there will be a return to the province in human terms as well as financial terms for that investment in the disabled, then I believe this is a great bill. That's certainly what we on this side of the House want to see.
I also have to point out one or two other points regarding the government attitude toward the disabled. People from the government side may take issue with me on certain specific points, but most of the visible advancement in recent years in opportunity and facilities for the disabled has come through the actions of municipal government — in terms of sidewalks and accesses and so on — and owners of private buildings. A large part of the thrust of the government publicity, both before and with this bill, seems to be to encourage and assist and support the disabled in their efforts to get money out of somebody else. No commitment at all, other than in terms of publicity and moral support for the disabled, is specifically laid out in this particular act. However, it does appear, at least rhetorically, that the government's heart is in the right place. I'm going to hope that the committee is sincere and that the council being set up through this legislation will make some very hard-nosed recommendations to government. I'm going to have faith that the government — future government, any government — is going to act on them in a meaningful way to the limit of the resources available.
I also have to add that perhaps the most significant thing we can do, as non-disabled members of society, is to assist those members who have the misfortune to be the disabled of society to have the same opportunities that we all have to develop our talents and have an enriched life. Convincing them — for those that need it — that they can do as well as anyone else is a very important part not only of our attitude in this House but of society's in general. To that extent we are all going to be supporting this bill.
MR. LOVICK: Just a few very brief comments to complement those offered by my colleague the member for Rossland-Trail, who I think states very clearly what concerns we on this side have, even though certainly we do support the intentions and the spirit of this particular measure.
My colleague made the point that there is a close correlation between poverty and disability, and certainly that is my experience in my own constituency. Indeed, when I first became elected I had occasion to meet with the coalition of individual disabled organizations in my community, and we talked about precisely that problem for some time. The conclusion I derived from that meeting was that disabled persons are getting to the point where they say: "We have had quite a bit of symbolism. We have had quite a few expressions of good feeling and desire on the part of governments and other agencies. Now we want to see something a little bit more concrete." I'm hoping that that is precisely what is embedded in and intended by this particular measure.
I'm a little concerned, though, because I discovered that the conclusion of this particular bill talks about findings and recommendations, and that the Premier's advisory council that will be established is authorized or instructed to report as and when advisable. I'm a little bothered by that because it is indeterminate. The sort of thing I would like to see is a much more specific direction in terms of reporting time-lines and so forth.
My other concern — and again I'll be very brief — is that efforts be made to make this committee more truly representative of that disabled community out there; in other words, some poor people, some individuals who, quite frankly, are not used to being involved in the circuit of meetings and in having the skills to be assertive and to express themselves well. There's another whole constituency out there that, sadly, we sometimes neglect and that I would dearly hope we would make an extra effort to involve in this activity.
As well, I would hope — picking up on the lead of my colleague from Rossland-Trail — that we might stretch the bounds of this committee a little too. Beyond simply making the predictable recommendations, I would hope that the committee would be encouraged by the minister, the Premier and all of us in this chamber to challenge the rest of us in two ways: for example, to do something tangible; not just judgment calls and expressions of support, but something tangible. For example, if we want to grapple with the problem of access that disabled people have in our communities, maybe we should look at something that is, dare I say, radical almost: providing credits or other incentives to construction and building firms in town so that those people can provide access and also get some benefits so they don't have to do it at full cost. Maybe there's an incentive program we can somehow do as government. That might be the kind of recommendation I see.
Another one that strikes me as a possibility is maybe something gutsy, maybe something a little braver than we are often willing to do. For example, how about something like an affirmative action program? How about something that says...? I'm not suggesting that we become hidebound by quotas; I know that affirmative action programs can sometimes be constitutional straitjackets, if you like. Rather, we should acknowledge the validity of the premise that, left to its own devices, the situation will not sort itself out; in other words, disabled people will not have an opportunity to take on important and meaningful jobs. Therefore what we — the
[ Page 5284 ]
government, this committee — recommend is that there be some specific and concrete actions to encourage those things to happen.
With those few words, then, I would say that I would also look forward to some brief discussion in committee stage. But the intention of this is wonderful and certainly admirable, and I have no difficulty supporting it. I would hope, however, that we might go a little beyond just the appearance of concern and do something a little more specific and concrete.
HON. MR. VEITCH: Thank you, hon. member for Rossland-Trail (Mr. Darcy) and the hon. second member for Nanaimo (Mr. Lovick). I appreciate the comments.
When Rick Hansen wheeled around the world, when Terry Fox tried to run across the country and unfortunately was arrested by cancer at about the Lakehead — the same cancer that eventually claimed his life — they didn't do it to raise the money, although a lot of money flowed from it, which eventually will go, in Rick Hansen's case, to working to help those afflicted with spinal cord injuries and other things, or, in the case of Terry Fox, the terrible affliction of cancer. It was to bring about an awareness that people with an affliction, a disability, could exert themselves, could do things that others of us who feel that we have most of our faculties about us and certainly most of our members, and are functional, couldn't do. Which one of us would try to walk around the world, Mr. Speaker, never mind wheel around the world? That was the awareness, and that precisely is what we are doing here today. We are working for and trying to build along with what Rick Hansen brought to the world: that tremendous vision, that light that he lit that he did not ever want to see go out; that awareness that Terry Fox tried to bring, when it finally cost him his life. We are just trying to help in our small way in this Legislature to add to that. It's an awareness.
We talk about abject poverty. These two people alone showed that.... I talked to Rick Hansen. I used to go and fly out to meet him when he was coming across British Columbia. I talked to him, and he's the most strong-headed young man I have ever met, in a delightful kind of way. I used to meet and talk with him, and he usually got what he wanted. I'm telling you that that fellow told me that when he was in that pickup truck accident near Williams Lake and they finally took him out and he got into the hospital, he thought that his life was over. Just by sheer courage and determination that young man literally picked himself up and went around the world, and has brought an awareness to people in the world that few others have ever done.
I was down in Australia, where Rick Hansen is the commissioner-general for Canada's participation at Expo 88. You can talk about many people in Canada and around the world, and some, of them may recognize the name Pierre Trudeau, but they all know the name Rick Hansen. They all know who he is and what he did. They know him throughout the world, and he's brought an awareness not only in Canada but throughout the world.
This is a promise of this government to expand upon that awareness and to do the very best that we can to allow people with disabilities to help themselves. This is an enabling bill, one that will allow them to do that. That's why we're establishing this council. Oh, yes, there will be poor people on it. Hopefully they won't be poor for too long, because they'll follow the example of Rick Hansen, Terry Fox and others and be able to help themselves. This is what it's all about in society. It's helping people help themselves, even those with very severe disabilities.
Yes, municipal governments have helped out. Yes, private building owners have done things. That's what it's all about. It's the awareness that Fox and Hansen brought. I believe that in many cases they can do not only as well as anyone else but better than most people.
The hon. second member for Nanaimo says that there's a close correlation between poverty and disability.
HON. MR. VEITCH: There is? Well, I'm not sure that there needs to be. I'm sure that they can pull themselves through this. Many times, I'm sure that government is too detailed in the legislation it brings forth. This one is purposely not too detailed. The members of the council, the people in command of this committee, will be chosen from the disabled community out there, and they'll bring forward to government the decisions and commitments that they want to bring forth. It will be up to them.
I think it's a great move forward. The hon. member for Nanaimo said that we should have a more distinct reporting time-line. I'll consider that and think about it as an amendment. Perhaps something can be done about that.
He talked about stretching the bounds for poor people. I just want to close with a little story that Patrick Reid told me. He said that he got a letter from a young fellow by the name of Rick Hansen that said: "Would you support me on an odyssey that I want to make, a trip around the world in a wheelchair?" He wrote him back a letter and said in the kindest sort of way: "This is just nonsense. Nobody can wheel around the world in a wheelchair. We know that. It just can't happen." Then late one night he heard a ring at his front door. At that time he lived in a house provided for him as commissioner-general for Expo 86. It was up a rather steep set of stairs. When he opened the door, Rick Hansen was sitting there in a wheelchair. He said: "How in the hell did you get here?" Hansen said: "The same damned way I'm going to go around the world."
You see, with courage and determination like that and with that sort of influence and that sort of a mentor to follow, all we're doing is enabling British Columbians with disabilities to enter into the mainstream, to have direct access to the chief executive officer of this province, the Premier, and I support this bill with all my heart. I move second reading.
Bill 42, Premier's Advisory Council for Persons With Disabilities Act, read a second time and referred to a Committee of the Whole House for consideration at the next sitting of the House after today.
HON. MR. STRACHAN: I call committee stage of Bill 39, in the name of the Provincial Secretary and Minister of Government Services (Hon. Mr. Veitch).
AMENDMENTS) ACT, 1988
The House in committee on Bill 39; Mr. Pelton in the chair.
[ Page 5285 ]
Sections 1 to 18 inclusive approved.
On section 19.
MR. D'ARCY: I could easily do this under commencement, I suppose, but first of all, I think this is a very important and very positive section, because it recognizes the needs of people who began working in the public service after the age of 50 and who are paying into the pension fund. I have a concern as to whether or not this would apply to people who are currently in government service. In other words, the date of the effectiveness of this.... If this should become effective the date that this bill is passed or proclaimed, or that this particular section is proclaimed, it could have a great effect, depending on when a person's sixty-fifth birthday is. So I would hope that this provision would be retroactive to January 1 of this year, or at least come into effect as soon as possible. I would point out to the committee — I'm sure the minister knows this — that the people who are particularly affected are those who achieve permanent employment in the public service past the age of 50 and are forced to retire when they hit age 65. It would be rather a tragedy if they were denied even a partial pension simply by a day or two due to the passage of this bill.
[Mr. Weisgerber in the chair.]
HON. MR. VEITCH: Anyone over 50 will be able to join the plan. It will be prospective from that time. In other words, anyone over that age will be able to buy their non-contributory portion of the time to make up their pension.
MR. D'ARCY: I'm not quite sure I understand the answer. Suppose someone were to reach age 65 today who began work when they were 51 and had been paying into superannuation for the last 14 years, and this bill is passed tomorrow. Would they be eligible for pension benefit under this section? That's the specific point I'm trying to determine.
HON. MR. VEITCH: I have a little trouble relating that question to this particular section. It may be better in the commencement part of it, hon. member. I can't relate it to this.
MR. D'ARCY: I don't mind waiting until the commencement section, which by my notes is section 71. I hope the minister would agree with me that one of the things the bill does is to make provision for those people who go into public service past the age of 50 and as of today are still ineligible for superannuation benefits even though they are paying into it. All they get when they retire is a lump sum plus a pittance of interest. I don't mind leaving it until the commencement section, providing we can get an answer on that at that point, because I think there are a large number of people.... Well, I don't know if there's a large number, but there certainly have to be some people in all the public service and Crown corporations covered under the various superannuation acts who are exactly in that situation, who are facing compulsory retirement today, tomorrow, yesterday, whenever, but who did not become permanent employees until past the age of 50.
I think this is a very important question. We'll leave it until section 71, Mr. Chairman.
Sections 19 to 62 inclusive approved.
On section 63.
HON. MR. VEITCH: I move that the bill be amended in section 63 by deleting the proposed section 15 (1.1) and substituting the following: "(1.1) Unless the board otherwise orders, no person is entitled to a superannuation allowance under section 11(1)(c) if his certificate of qualification has been suspended or cancelled for cause under section 15(g) of the School Act or section 34(1)(b) or (c) or 37 of the Teaching Profession Act."
On the amendment.
HON. MR. VEITCH: The reference was incorrect, and this corrects it. That's all this does as far as the teachers' act is concerned.
MR. LOVICK: I understand the explanation the minister just gave, but that refers to the latter part of the amendment. What about the first part? It seems to me there was also a new clause, "Unless the board otherwise orders," which isn't in the original. Is that not the case?
HON. MR. VEITCH: This deals with when a teacher's certificate is suspended or cancelled. There are times when it is suspended that they ought to be able to receive a disability pension, and this allows for that.
MR. LOVICK: So the change is really to accommodate some kind of hypothetical extenuating circumstance. Okay, good.
Section 63 as amended approved.
Sections 64 to 70 inclusive approved.
On section 71.
MR. D'ARCY: Going back to my earlier questions on section 19 regarding commencement, there are different dates for various sections that say.... As I said earlier, I think the provision for those people presently not eligible to become eligible is very significant, both for the people who are employed past the age of 50 as well as those in a ten-year situation who wish to retire before 65. I think both of those are significant changes, and it's very important to those individuals who may either be forced to retire or wish to retire — as the circumstances may be — and who wish to establish some eligibility even for a reduced pension. Obviously it would be a prorated pension relative to their years of service.
HON. MR. VEITCH: This amendment, as I said, will allow older employees to commence contributions immediately, and at retirement they could buy non-contributory service in order to extend their pension. At the present time, at a certain age, they don't contribute. This will allow them to contribute and to have the matching contributions and all that goes with them. They would be able to buy into noncontributory time. pay for that and, of course, increase the amount of pension they would have at retirement.
MR. D'ARCY: Would that mean that a provincial government employee or anyone covered under the various
[ Page 5286 ]
superannuation acts who had ten years — say he was first employed at 55 and retired compulsorily at 65 — would not only get credit for the ten years if he wished, would have an option of taking merely the ten years and getting a pension prorated on that basis, but could pay a lump sum in on retirement to increase his pension for as long as he lived, if he wished to do that? Does he have the option of either taking his pension as is or increasing it by paying in a lump sum?
HON. MR. VEITCH: If they are in employment with the government and under 65 at that time, they would have the option of purchasing the non-contributory time — that's quite correct — or not purchasing it and taking the pension as it is. In most cases, if they purchased their portion of it, the plan would also have to pay in its portion, and would certainly increase the amount of pension they would have at retirement.
MR. D'ARCY: Can the minister confirm my assessment of these changes that allow people in the situation for the first time to collect pension at all; whereas before and at present, until the passage of this bill, they can receive only what they put in plus interest on a lump-sum basis, but do not get a pension?
HON. MR. VEITCH: The answer to that is yes.
MR. D'ARCY: Can the minister in consultation with his able deputy give the committee and the people of British Columbia some indication as to when that is going to be effective for these people? As I say, those who are facing compulsory retirement because they're at their birthday.... Suppose their birthday is today or yesterday, or they are in a situation of not being able to get any pension. If their birthday was tomorrow and the bill was passed tomorrow, they would be in a situation of being able to get it, Can the minister give those individuals some indication as to when this is going to be in effect? Certainly, as far as the opposition is concerned, we would like to see this passed as soon as possible.
HON. MR. VEITCH: Yes, as soon as the Lieutenant Governor enters and takes his seat on the throne and gives royal assent.
Section 71 approved.
HON. MR. VEITCH: Mr. Chairman, I move the committee rise and report the bill complete with amendment.
The House resumed; Mr. Pelton in the chair.
Bill 39, Pension (Miscellaneous Amendments) Act, 1988, reported complete with amendment to be considered at the next sitting of the House after today.
HON. MR. STRACHAN: I call committee on Bill 44, Mr. Speaker.
RESOURCE INVESTMENT CORPORATION
AMENDMENT ACT, 1988
The House in committee on Bill 44; Mr. Weisgerber in the chair.
On section 1.
MR. LOVICK: It's very difficult for one to talk about bits and pieces of this bill, given that it is a very simple bill and the purpose is one which we discussed last time. Indeed, its purpose and function have well and truly been canvassed.
It's ironic, however, that here we are talking about interring a particular corpse, and yet we can't talk about it as we dismember it. That strikes me as curious. However, Mr. Chairman, we won't belabour the point. Perhaps I'll be forgiven a little levity and say:
BCRIC is dead.
And none but me
To mourn its passing.
BCRIC is no more,
Its race is run.
Now you're done.
Sections 1 to 10 inclusive approved.
HON. MR. VEITCH: Well, Mr. Chairman, after all that, I move the committee rise and report this bill complete without amendment.
The House resumed; Mr. Pelton in the chair.
Bill 44, Resource Investment Corporation Amendment Act, 1988, reported complete without amendment, read a third time and passed.
HON. MR. STRACHAN: At the outset, Mr. Speaker....
A little in joke there, dear friends. Let me advise the assembly that the House will sit tomorrow, pursuant to standing order 2(2). With that said, I move adjournment.
The House adjourned at 8 p.m.