1974 Legislative Session: 4th Session, 30th Parliament

HANSARD

The following electronic version is for informational purposes

only.

The printed version remains the official version.

Official Report of

DEBATES OF THE LEGISLATIVE ASSEMBLY

(Hansard)

TUESDAY, NOVEMBER 19, 1974

Afternoon Sitting

[ Page

4819 ]

CONTENTS

Afternoon sitting Routine proceedings Oral questions Resignation of BCR comptroller.

Mr. Bennett — 4819

Mining programme advertisement. Mr. Gibson — 4819

Return to B.C. of private insurance companies.

Mr. Wallace — 4820

Ferry staff negotiations. Mr. Lockstead — 4820

Deliveries and warranties on Flyer buses. Mrs. Jordan — 4820

Sale of parity bonds. Hon. Mr. Stupich replies — 4821

Approval of — Wheeler,, and Dealers" publication.

Mr. L.A. Williams — 4822

Timber Products Stabilization Act (Bill 171). Second

reading.

Hon. R.A. Williams — 4822

Mr. Bennett — 4828

Mr. Gibson — 4831

Mr. Rolston — 4838

Mr. Fraser — 4839

Mr. Dent — 4844

Mr. L.A. Williams — 4844

Mr. Wallace — 4846

The House met at 2 p.m.

Prayers.

Mr. G.S. Wallace (Oak Bay): I'd like the House to

welcome a class of Grade 10 students from Glenlyon School in

Oak Bay, accompanied by yet another Mr. Bennett — no relation to

the Leader of the Official Opposition — Mr. David Bennett, their

teacher.

Introduction of bills.

Oral questions.

RESIGNATION OF BCR COMPTROLLER

Mr. W.R. Bennett (Leader of the Opposition): In the

absence of the Minister Without Portfolio (Hon. Mr. Nunweiler)

I direct my question to the Minister of Labour as a director of

B.C. Rail.

Yesterday I asked the question which the new Minister took

as notice regarding the resignation of the auditors from B.C.

Rail. My question today is, if that Minister is prepared to

comment: are you aware that on Saturday, September 7, Mr.

Robert Miller, Comptroller of the railway, also resigned for

personal reasons? If so, why, and why an unusual resignation of

a comptroller on a Saturday?

Hon. W.S. King (Minister Of Labour): Mr. Speaker,

as the leader of the Liberal Party (Mr. D.A. Anderson) would

say: "I find the question curious." The Leader of the

Opposition asked the question: "Why the resignation?" Then he

proceeded to answer his own question by saying that "the cause

was personal reasons."

Now yesterday, Mr. Speaker, he came to conclusions which

apparently were subsequently proved to be incorrect, and I can

only refer him to his own answer.

Mr. Speaker: May I point out to you, Hon. Members,

that question period is not a time for expressions of opinion

or inferences or imputations or arguments or opinions?

Mr. Bennett: Then rather than give an opinion that

they were personal reasons, I will ask the Minister if he, as a

director for the B.C. Rail, will comment on the resignation of

the comptroller to this House.

Hon. Mr. King: Mr. Speaker, the Member asked if I was aware of the resignation.

The answer is yes. I have no other comments to make. As he himself explained,

the reasons were given as personal, which does not require any further comment

by me.

Interjections.

MINING PROGRAMME FULL-PAGE AD

Mr. G.F. Gibson (North Vancouver-Capilano): Mr.

Speaker, a question to the Minister of Mines. Now that the

Minister has embarked on another series of full-page propaganda

paid for by the public of British Columbia, and in view of the

fact that the prospectors assistance programme advertising was

estimated to cost something like $150,000 to $200,000, could

the Minister tell us under what estimate or vote he's finding

this money?

Hon. L.T. Nimsick (Minister Of Mines): I don't know

what he's really asking. I just can't figure it out.

Mr. Gibson: I'm asking the Minister, Mr. Speaker,

where his legislative authority is for this propaganda

campaign.

Hon. MR. Nimsick: Well, there's advertising allowed

in the Mines department, I hope…(Laughter.)

An Hon. Member: He'll need it.

Hon. MR. Nimsick: …to answer the propaganda that

was put out in regard to this. This is just an explanation of

some of the legislation….

An Hon. Member: To let the public know.

Hon. MR. Nimsick: …to keep the public informed;

that's all it is.

Mr. Gibson: On a supplementary then, Mr. Speaker,

will the Minister provide funds to the opposition to rebut some

of the spurious arguments he's used?

Mr. Speaker: I've just finished pointing out to you

the rules in question period. It obviously only reached a

certain distance down the row.

Mr. J.R. Chabot (Columbia River): Supplementary to

the full-page ad. On October 10 – 11 of this year, Hart Horn,

the former executive assistant to the Minister of Mines,

delivered a speech to a Minister of Mines conference. The

message contained in this ad is Hart Horn's speech in Moncton.

I'm wondering if this is new government policy — to advertise,

to publish through full-page ads, the speeches of party

hacks.

[ Page 4820 ]

Some Hon. Members: Oh, oh!

Hon. Mr. Nimsick: Mr. Speaker, in reply to that, the

information that's in the ad, a lot of that was in…. I'll

admit that maybe it was in a speech. I've spoken many times

too, and I use the same material. We're proud of the material

and we're willing to let everybody know what's in it.

Mr. Chabot: A supplementary question. Will this same

ad appear in the weeklies in the province? If so, would you

correct the name down below? Could you put Hart Horn down below

instead of your name, Mr. Minister?

Interjections.

Mr. Chabot: What will be the cost? What is the budget

for this advertising of Hart Horn's speeches?

Mr. Speaker: Are you referring to the future costs in

the weeklies, or in the past?

Mr. Chabot: No, we know what this one cost — approximately $10,000 for the four coast dailies. We are

wondering what you are budgeting. The Minister must have some

amount budgeted, Mr. Speaker, on the question of advertising.

He must have some money budgeted.

Interjections.

Mr. Speaker: Yes, I think it's true that we have

already got that in the estimates; therefore it's public

knowledge the Hon. Member is asking for, I think.

Are you saying that it's different?

Mr. Chabot: I'm saying that this is specific. They

must have come to some conclusion as to what the cost of this

ad would be across the province. Could the Minister of Mines

elaborate on that, what the anticipated cost will be on this

publishing of Hart Horn's speeches?

Hon. MR. Nimsick: If you place that question on the

order paper next spring, I'll answer it.

RETURN TO BRITISH COLUMBIA

OF PRIVATE INSURANCE COMPANIES

Mr. Wallace: Mr. Speaker, a question for the Minister

of Transport and Communications. Is ICBC or the department, or

anyone on behalf of the department, currently involved in

discussions with any private insurance company to sound out the

insurance companies to see if they are willing to come back

into the automobile business in British Columbia?

Hon. R.M. Strachan (Minister Of Transport And

Communications): To the best of my knowledge, and a pretty

fair knowledge, no one I know of is approaching the private

insurance industry in New York or Hartford or Toronto or London

or Australia, or anywhere else, asking them if they want to

come back into the automobile business in the Province of

British Columbia.

Now there may be people in the opposition who are sounding

them out about coming back in as part of their future-election

and their past-election promises.

Mr. Wallace: A supplementary, Mr. Speaker. Could I

just ask for clarification? Has any private insurer or

representative requested discussions with the provincial

government on the basis that they might come back into the

automobile insurance business in B.C.?

Hon. Mr. Strachan: No, I have received no

communication of any kind from any private insurers to that

effect.

FERRY STAFF NEGOTIATIONS

Mr. D.F. Lockstead (Mackenzie): I address my question

to the Hon. Provincial Secretary. Since my constituency is

almost completely dependent on the B.C. Ferries for

communications, could the Minister advise this House on the

negotiations which are presently taking place with the licensed

personnel?

Interjection.

Mr. Speaker: Would the Hon. Member for Columbia River

(Mr. Chabot) wish to answer? (Laughter)

Hon. E. Hall (Provincial Secretary): Mr. Speaker, I'd

be in a position to answer more questions about labour matters

than that Minister ever could do when he was Minister of

Labour, I'll tell you that. (Laughter.) And he knows that.

Meetings and talks about the negotiations commenced

yesterday. They are still going on. Talks and discussions

flowing from yesterday's meetings are still going on today and

I don't think it would be appropriate if I comment any further

on that. We should all wish the parties well in their

negotiations today.

DELIVERIES AND WARRANTIES

ON FLYER BUSES

Mrs. P.J. Jordan (North Okanagan): Mr. Speaker, I'd

like to address my question to the Hon. Minister of Municipal

Affairs. In view of the fact that

[ Page 4821 ]

British Columbia Hydro and other B.C. government interested

agencies purchased a rather large number of buses without

tender from Flyer Coach Industries Limited, and that Flyer

Industries, that socialist experiment in the private business

world is now virtually defunct, would the Minister now tell the

House how many buses of the original orders have been delivered

and how many buses are still on order and have not been

delivered?

Hon. J.G. Lorimer (Minister Of Municipal Affairs):

Well, first of all, your question has a faulty basis. Tenders

were put out for all buses. At the present time, none that were

supposed to have come by the fall of this year have been

delivered. There are 50 coaches ordered, and 50 electric buses

and 50 transit buses.

Mrs. Jordan: Am I to understand from the Minister's

reply that none of these Flyer Industries buses have been

delivered?

Mr. Speaker: I think the question has already been

answered.

Mrs. Jordan: I'm just clarifying his answer. I don't

understand….

Mr. Speaker: Well, I think it's certainly clear to

everyone else that he said that none have been delivered.

Mrs. Jordan: Not one Flyer Industry bus is in

operation or is in British Columbia or has been…?

Hon. Mr. Lorimer: I think you are referring to the

last order placed, I presume. All of the other ones have been

delivered.

Mrs. Jordan: No. I said the original order.

Hon. Mr. Lorimer: All have been delivered.

Mrs. Jordan: Then what is the Minister doing about

the warranties and the servicing of these buses in view of the

fact that the company has not been operating for the last three

months and is not likely to open again? I assume that the buses

carried warranties. What are you doing? Is the Minister

prepared to ask or has the Minister asked the Manitoba

government and the Flyer Industries to post each bond …

Mr. Speaker: How many questions do you wish

answered?

Mrs. Jordan: …in lieu of these warranty

services?

Hon. Mr. Lorimer: I don't know which question you

want answered. If it's in regard to the closing of the factory,

it's because of a labour dispute, as you probably know. My

understanding is that the labour dispute will be settled very

shortly.

Mrs. Jordan: …obviously you don't want to talk

about the subject. What are you doing about the warranties that

came with these buses? What assurance have you that they will

be honoured?

Hon. Mr. Lorimer: The same assurance that I have from

any other company that gives a warranty: that they will carry

on with the warranty, I presume.

SALE OF PARITY BONDS

Mr. Speaker: The Hon. Minister of Agriculture. Do you

wish to reply to a previous question? I think we've carried

this pretty far. Could we go on to other business now?

Hon. D.D. Stupich (Minister Of Agriculture): Mr.

Speaker, notice was taken of a question asked by the Hon.

Member for Columbia River (Mr. Chabot) about the sale of parity

bonds and about the sale of $100 million worth of bonds to the

U.S.A.

With respect to the parity bonds, these went on the market

at a time when the interest rate was calculated to be about

9.5. It was a government decision to offer them at 8.5 to see

how the market would respond.

In answer to the second part of your question about the

extent to which pension funds have picked these up, the total

issue of $25 million was picked up by small investors in the

community. You'll recall also that this is a demand loan, in

effect. This has to be paid out at any time, which is one

reason that it bears the lower rate of interest.

With respect to the $100 million, it went on the market at a

later date — that was negotiated in American funds and the

payback is in American funds at an interest rate of 10.25 — at a

time when the market was calculated to be between 10.5 and

10.75.

It went on the market as a test to see whether or not our

financial standing is as high as it ever was. By getting it at

10.5 we were very pleased to be able to negotiate that rate on

a 25-year loan — quite a different situation from the demand

loan.

Mr. Chabot: Since the new issue of Canada savings

bonds at 9.75, how many of these parity bonds have been turned

in to the government?

I don't want to get into a debate on the thing, but I know

for a fact that Nova Scotia Hydro and Ontario Hydro have

floated substantial long-term bond issues at interest rates

substantially lower than what the

[ Page 4822 ]

B.C. government was able to get in Boston.

Hon. Mr. Stupich: I'm sure the Hon. Member will

realize that rates change from day to day, and it's as

conditions change. At the time when we negotiated that, it was

generally recognized as an exceptionally good rate. With

respect to the parity bonds and the way in which these are

cashed and sold from time to time, I'm sure the Member would

not expect me to have that information at my fingertips. I'll

get it if you like.

APPROVAL OF

"WHEELERS AND DEALERS"

Mr. L.A. Williams (West Vancouver–Howe Sound): To the

Minister of Transport and Communications. I wonder if the

Minister vetted the comic book, "Wheelers and Dealers, "

which is being distributed to the young people of this

province, before its publication?

Hon. Mr. Strachan: No, I didn't.

Mr. L.A. Williams: Has the Minister received a copy

of the publication and has he read it?

Hon. Mr. Strachan: I have received a copy of it. I

haven't read every single word of it, no.

Mr. L.A. Williams: Well, Mr. Speaker, has the

Minister read a portion which is obviously a slander on repair shops, referring to them as "sleazy pit stops?" Do

you approve of that publication going into the hands of

children?

Some Hon. Members: Oh, oh!

Mr. Speaker: I don't know whether that's rhetorical

or not.

Orders of the day.

Hon. E. Hall (Provincial Secretary): Public bills and

orders. Second reading of Bill 17 1.

TIMBER PRODUCTS STABILIZATION ACT

Hon. R.A. Williams (Minister Of Lands, Forests And Water Resources): Mr. Speaker,

the bill that is receiving second reading this afternoon is certainly one of

the most important before this session, this long session of the Legislature.

The Timber Products Stabilization Act proposes methods for dealing with a crisis

in the basic industry of this province, one I suspect that would not in fact

be grappled with by the Members on the opposition side of the House in any kind

of adequate way, recognizing the economic realities and the complexities of

both the sawmill and the pulp mill economies of this province.

We face a major decline in the lumber market in this

province and in the world since March of this year. The reasons

for the decline can probably mainly be tied to the development

of housing in the United States. A halving in the construction

programme of the Americans has wreaked havoc for our basic

industry in British Columbia. So the problems of British

Columbia have roots in the politics of the United States. It's

clear that until the Americans start building houses again,

many of our problems in this industry will not be resolved.

This bill is a move toward resolving some of the basic

problems that we face in the foreseeable future in an area that

we ourselves in the province can deal with.

It's ironic and fortunate, Mr. Speaker, that there has not

been a concomitant decline in the pulp and paper market along

with the lumber market. We have, in fact, a volatile lumber

market that seems to be tied to American political cycles as

much as any business cycle in the United States and a pulp

economy that relates to a much different business cycle indeed.

We're fortunate. The pulp sector of the economy of British

Columbia has never been as healthy as it is today and has been

in the past year or year and a half.

For the integrated companies, Mr. Speaker, the problems have

not been so severe. You need only to look at the profit

pictures even in the latest quarterly reports, for MacMillan

Bloedel, for any of the major companies, indeed for Can-Cel, to

see that the integrated companies are doing well and continue

to do well.

They do have these problems in the lumber market but they

have the advantages of their unique position in the local

market in terms of raw materials and their whole integration.

The integrated companies have this distinct advantage of having

a pulp sector and a sawmill sector, with the pulp sector doing

extremely well.

To date, these companies in the pulp sector had a very

special advantage indeed. They have had an extremely low cost

of raw material for pulp, particularly in the form of wood

chips. And that's very important indeed.

In times of high lumber markets for the independent sector

of the industry this didn't matter as much. The fact that the

residuals, the chips, were being received at the pulp mills at

low prices wasn't a major concern for the independent sawmill

sector, particularly in the better lumber markets, because they

could well survive with the better lumber prices. But now the

situation for the independents is critical.

The nature of the industry is unique in a sense. The pulp

sector, especially in the interior, has a locational

quasi-monopoly advantage in relation to

[ Page

4823 ]

independent sawmills of the interior. And the former

government strengthened the quasi-monopoly position of these

pulp mills by regulatory and administrative means. We see it in

the form of pulp harvesting agreements and the like — a range of

other regulations in relation of cutting permits that continue

to give a special advantage to the pulp sector of the economy

at the expense, I suggest, of the independent sector.

The independent sawmills face a very special problem,

because frequently they have only one buyer for the residuals,

the chips, they are selling. It's what's generally known as an

oligopoly in which there are many sellers and generally only

one or a very few buyers. So it's not a free market at all, Mr.

Speaker. It is not a free market situation at all. A free

market with many buyers and many sellers is not the situation

we face in the forest industry of British Columbia today.

As a result of policies of the past and of the natural

aspect of the industry, the independent sector is in jeopardy

today as it has never been before. It's really like Tommy

Douglas said: "This kind of market is really not the kind of

market of equals," which Members of the opposition so

frequently want to refer to — the markets of the old. It's not a

market of equals, of many free buyers and many free sellers.

It's like Tommy Douglas said about the chickens and the

elephant: "'Each man for himself,' as he danced among the

chickens." It's that kind of free market that we have in the

pulp and sawmill sector of the Province of British Columbia.

Only the elephants win in that kind of dance, there's no

question about that.

It's clear that the rules have to be changed.

Let's look at the history under the old rules in this

province, Mr. Speaker. What about our indigenous, independent

sawmilling part of the woods industry of British Columbia? What

in fact has been the history? — especially under the years of

Social Credit, the so-called champions of free enterprise.

Let's look at the numbers. The number of operating sawmills

in British Columbia in 1956, for starters — that was the year

that Mr. Sommers left office — the numbers then: 2,435 sawmills

in British Columbia; 2,255 the next year; 2,010 the next year;

2,005 in the next year; 1,938 in 1960; 1,700-odd, 1,600-odd in

1962; 1,500 in '63; 1,400-odd in 1964; 1,191 in 1965; 1,016 in

1966. In 1967 there were 931 sawmills in the province. In 1968

there were 902; in 1969, 974; in 1970, 881. And in 1971, the

last year of the Social Credit administration, there were 627

sawmills in the province. In 1972 it dropped to 603, and in

1973, 810. With the change of government the decline ended.

We faced a cycle in the market throughout the decade. Two decades of Social

Credit; a continuous cycle in the market. But consistently through those years,

a decline in the independent sector, a buildup of the multinationals, and a

decline in the independent, indigenous, basic industry of this province.

There it is: in 1952, when Social Credit came in, 2,223

sawmills in the province; in 1971, 627. And it picked up after

the new government came to British Columbia.

The history is clear. The history of the last government is

clear; it was a move to integration, to consolidation, to

regional monopoly by multinational corporations at the expense

of the genuine private sector in the province.

We are determined to see that the independent sector in the

sawmill industry survives, unlike the last government. We are

convinced, Mr. Speaker, that the local ownership does in fact

make a great difference in terms of attitude and values.

It's easier to make decisions in Toronto, or San Francisco,

or Tokyo, or New York that have immense social consequences in

British Columbia — just looking at the balance sheet. You don't

have to look at the people who work in those mills on the main

street of the local towns; you don't have to face them in

Giscome, as you do today, when you know there will not be jobs

for them there next month.

It's easy for the big, integrated companies to make those

decisions in Toronto. It is not easy for the independent owner

here in British Columbia to make that kind of decision. It is

not easy either for the public owner in British Columbia to

make that kind of decision.

Look at the figures. Have there been lay-offs in Can-Cel

sawmills? Has the ledger been the No. I factor in Can-Cel? The

answer is no! There have been no lay-offs in Canadian Cellulose

mills.

Have there been lay-offs at Kootenay Forest Products,

despite high costs, despite losses in Nelson? The answer is no!

The owner is an owner with conscience, unlike some of the

owners in some of the sectors of the industry in the

province.

Giscome is a classic example. Giscome-east at Eagle Lake, to

the east of Prince George, was to have been closed next summer,

but as a phasing operation as part of expansion at Houston, so

that the people used to sawmilling, workers for 25 years at

Giscome, in that small community, could at least have the

opportunity of moving to Houston and remaining in the industry

they know, In fact, the decision was made in Toronto — "close Giscome." That's where the decision was made. And that kind of

decision would not be made even in Vancouver by many, but the

distance makes the difference.

Let's remember who that owner is — Northwood Mills, Noranda — with a classic history in Quebec. It's worth a book. What's

happened with them? They've been expanding in United States;

they've been moving their capital into a major expansion in

the

[ Page 4824 ]

United States and elsewhere, like so many of the

multinationals.

We believe that the independents operate with greater

conscience and concern regarding their employees here at

home.

We regard the locally owned sawmills as an important part of

the fabric of our society in British Columbia. In an age of

bigness we regard this sector as an important economic and

social balance wheel in the communities of this province. So

it's an important economic and social balance wheel for the

province as a whole.

It might be worthwhile to review some of the steps we've

taken to date in terms of improving the situation

administratively in areas of our direct control; for example,

in areas of stumpage. We've helped both the integrated and the

independent producers in recent months by our steps so far in

stumpage.

For example: the three-month average market-value system was

replaced by a one-month average market-value system in the

interior, effective September 1. The lumber price collection

was expedited to cut the time lag by a month. Normally we would

have had April, May, June figures, for example, reflecting in

the fall. And that's not the case. Using the one-month AMVs has

led to substantial decreases in stumpage rates in the interior.

By this month an estimated 90 per cent of the volume appraised

under the new appraisal system will be on the minimum

rates.

We've also changed the base of our cost-trend factors in the

industry from five years, which was the pattern under the

former government, to two years, which has lead to increases of

from 6 to 9 per cent for logging costs, and from 6.5 to 9.5 per

cent for milling costs in the trend. We are currently doing

additional work in this area as well.

We have also introduced updated milling costs, effective

November 1, and have been continuously updating our logging

cost allowances. There is further work going on in this

area.

We have also undertaken studies of lumber recovery factors,

and expect to be able to introduce refinements in the small-log

category and for dry-belt fir, white and yellow pine in the

near future. That's most important, particularly in the central

interior of the province.

In addition, there will be further announcements later this

week regarding additional steps in the stumpage sector and in

Forestry administration policies as well that will be

beneficial for the entire industry.

But the critical question at this stage, Mr. Speaker, really

is chip price — the price received for the residuals after the

production of lumber. This is a critical question mainly in the

interior and the north of the province.

It is worthwhile noting a range of prices as of November 1 as

checked by the Forest Service in the interior of the province. There

have been some modifications since then, but I think the base level

established then is probably comparable on a ratio basis at this time.

Crestbrook, in the interior, for group A spruce, balsam and

pine, was $12.25 to $16 per BDU. Fir and pine was .$9 to $16

BDU, and cedar, $7.14. Weyerhaeuser was $14 for cedar and $16

for other species, and that has since changed. Cariboo: spruce,

pine and balsam were $11 to $19. Prince George Pulp was $17 to

$17.50. Northwood was $18.50 to $25. B.C. Forest Products was

$18.12 to $30. Eurocan was $19. Can-Cel was $19.25 for hemlock,

balsam and cedar, and $17.25 in the northern district. That

gives us an idea of the range.

There have been, as I said, some changes since then, Mr.

Speaker, but that is the basic pattern, and with special

prices, of course, for second chips and special agreements.

There are a number of those now, many of them — especially with

Weyerhaeuser.

But the real question, Mr. Speaker, is: would a free market

situation produce different prices? There can be no question;

the answer is yes. The real question is: can the pulp mills

afford to pay more? The answer again is clearly yes, they can

afford to pay more. The answer, in fact, should be a resounding

yes from this whole Legislature at this stage in our history.

It's clear, from some statements from the opposition so far,

that that won't be the case. The so-called champions of free

enterprise will abandon, I am sure, by the stands they take in

this debate, the indigenous industrialists of this province in

this vote.

We should look, just say, for example, Mr. Speaker, at pulp

prices over the last couple of years. If we look at the

incredible acceleration of pulp prices over the last two years,

it will become abundantly clear that the pulp mills can indeed

afford to pay more, much, much more, for the basic raw material

that goes into the production of pulp.

Let's look at the price for bleached kraft since 1968. In

1968 the price for bleached kraft was $133 a ton in January. It

hung at $125, $130 until July, 1969. In 1970 it was $145; July,

1970, $145. In January 1071, $145; July, 1971, $150; January,

1972, $154; July, 1972, $160; January, 1973, $164. So it was

clear that it was hanging around the $150 level throughout that

period.

But in July of 1973 the price was $210 a ton. In January,

1974, the price was $235 a ton, and in July of 1974, this year,

the price was $325 to $330 a ton; and currently it is $330 to

$340 a ton.

So, Mr. Speaker, between January, 1968, and January, 1973,

there were increments from $133 to $164. But the major change,

January, 1973, to January, 1974, was from $164 a ton to $235 a

ton. That was a $70-a-ton increase in that year, a 42 per

[ Page 4825 ]

cent increase in that one year alone.

From January, 1974, to the present the figure per ton for

bleached kraft went from $235 to $340 — a $100-a-ton increase

in one year alone in this industry. That's another 43 per cent

increase.

So the difference in less than two years was from $164 a ton

to $340 a ton. In less than two years that is an increase of

$170 a ton; that is 100 per cent in less than two years.

Now surely, Mr. Speaker, it has to be abundantly clear just

from that information alone that these mills can afford to pay

far, far more for their raw material than they presently

do.

But just to be sure that what seems so obvious to us was in

fact, the case, we brought in independent researchers to look

at the question, These were brought in many months ago — last

winter, in fact. The people we asked to look at the question

were the management people at the British Columbia Research Council on the university campus.

Those people carried out a study, initially in two volumes,

dealing with the interior and the coast. Those were dated

December, 1973. In addition we asked them to review the whole

material earlier this fall, and a further revision of chip

value calculations by the B.C. Research Council was complete in

October of 1974. So there has been an ongoing review and

analysis by the Research Council staff over the past year, with

a full updating.

Well, the council staff looked at a range of questions that

are relevant. They looked at the value of the mills' end

products. They looked at the operating costs of mills. They

looked at the cost of capital investment. They looked at wood

consumption per unit of end product. They looked at the

before-tax rate of return on capital investment. Mathematical

formulas using detailed information were developed information

were developed to determine the amount a mill, in fact, could

pay for chips.

The volume on the interior mills uses comparative dollar

values available for wood. It notes that the interior mills by

and large, while not identical, are more homogeneous than the

coast, and all mills except…. I don't think that detail is

of concern.

The main point regarding this — and I'll table the reports

with the House, Mr. Speaker — is that they established a

conservative evaluation of ability to pay on the part of the

pulp mill sector. Their conclusion was that $60 per bone-dry

unit, f.o.b. the pulp mill, for chips in the immediate future

could be paid by the pulp industry of the province; $60 per BDU

was in fact what the industry could pay.

They also relate varying rates of return on capital in relation to the kind

of chip prices that might be faced. In the interior, if chip prices were in

the $74 to $93 range, there would be a 13 per cent return on capital. If chip

prices were in the $69 to $89 range, there would be a 16 per cent return on

capital. If prices for chips were in the $60 to $80 range there would be a 20

per cent return on capital. These are very significant rates of return indeed.

Historically the coast mills have paid more than interior

mills. There are differences, and there is a freer market on

the coast. But in answer to the basic question that was put to

the staff on the Research Council on October, 1974: "What can

pulp mills afford to pay for wood chips?" the answer was: "In

the immediate short term most pulp mills in the province can

afford to pay at least $60 per bone-dry unit, f.o.b. the pulp

mills, for wood chips." They state themselves:

"This estimate is considered conservative, since it is

somewhat lower than the price that could be afforded by the

least profitable mill when a 20 per cent before-tax rate of

return is allowed on the total capital investment."

That's the kind of conclusion by the staff of the Research

Council. The conclusion, and they deemed it a conservative

conclusion in favour of the pulp mills in its conservatism, was

that their ability to pay was $60, using the least profitable

mill and allowing a 20 per cent rate of return on capital in

that case.

Mr. L.A. Williams (West Vancouver–Howe Sound): That's

before taxes?

Hon. R.A. Williams: Yes, that's correct.

What in fact is being paid? Well, we've covered the range.

It's clear. Basically the pattern is around the $20 level in

the interior of the province. So there is a huge gap between

the ability to pay, even with significant rates of return on

capital, and what, in fact, is being paid to the independent

sector of the industry, and using the least efficient mills, in

fact, to come up with the figures.

We had hoped, Mr. Speaker, that there would be a quick

response from the pulp industry in this period of crisis for

the independent sawmill sector. Some have agreed to higher

prices, particularly for supplemental chips for utility-grade

lumber that in fact, is now being put into chips. That's an

improvement, but only a marginal improvement, for the

independent sector. There has not been a basic move by the pulp

industry in the base price for residual chips. We expected

that, in fact, there would be movement over this past month or

two in that area, and it's unfortunate that the movement has

not materialized.

In this situation, Mr. Speaker, with the facts as they are,

I suggest that no government could idly stand by watching the

severe decline of the independent sawmillers while the pulp

mills have never been fatter. The moves by the pulp mills in

British Columbia unfortunately have been too little and too

late.

[ Page 4826 ]

It's cleat that a floor price must be established for this

basic commodity, Mr. Speaker. Some 60 per cent of the material

going into the pulp mills of the Interior; in fact, comes from

the independent sawmilling sector of the industry. We're

determined, Mr. Speaker, to see that the independents get a

better price. This bill is the means of seeing to it — that the

independent sector, in fact, gets a better price.

But the bill, Mr. Speaker, also has fundamental meaning in

terms of forest management throughout the province, and it's

one that is profound. We are great wasters — we are great

wasters — profligate wasters of this basic wealth of this

province, Mr. Speaker, and we presently have an economic

structure that, in fact, because of the oligopoly, because of

the price system, encourages that waste. The low prices paid

for woodchips around the province makes it "uneconomic" to move

material from the forest floor, because chips, at the prices

that have been paid to date, are so much cheaper than moving

the material that remains on the forest floor.

The pulp mills can get low-priced — unreasonably low-priced

chips — from the independent sawmills. They're not inclined to

move the material that's remaining on the forest floor because

of the gross distortions that have resulted from a non-free

market.

So we have in the province this tremendous slash and

slash-burning problem, prevalent throughout the province. Much

of the material that goes up in smoke in slash-burning and

waste, in fact, could be used by the pulp mills. If the price

for chips were increased, then the "economics" of the whole

situation would be radically reversed.

Interjections.

Hon. R.A. Williams: I thought you should have the

benefit of the real thing in the Legislature.

Clearly, there are these profound implications. Outside of

the economics, of the independence and the survival of the

independence, there are profound implications in terms of

better forest management by raising the price of chips in the

province.

Mr. D.E. Lewis (Shuswap): Hear, hear!

Hon. R.A. Williams: The need to move in this

direction was clearly shown in an

article that was reported in

yesterday's Province in the business section, page 24:

"The World Shortage of Wood: Is That Next?" It's again done by

researchers on the campus of UBC at the Federal Forest Products

Research Lab, with J.L. Kieze and J.V. Hatten of the federal

service on the campus.

They predicted that there would be an annual shortfall of 260 million cubic

yards in the world's wood supply by the end of the century. They pointed out

in their study that the requirement for chips for the pulp industry offers industry

the means of increasing production by attempting greater utilization:

"'Instead of just taking out tree trunks, forest companies

could chip branches and crowns which are presently discarded

and oftentimes burned', said Hatten. 'Besides recovering tops

and branches, forest companies should remove and salvage dead

and diseased trees and undesirable species, such as alder, for

chips,' Hatten suggested."

We're proceeding in that particular area in the province

now.

"Just by raking the tops, branches and foliage of

merchantable trees, companies could recover 30 per cent more

bio-mass in softwood plantations, and 35 per cent more material

in hardwood stands."

So, clearly, we are losing on a considerable scale

throughout the province by our present methods, by our present

administrative means, and by a considerably distorted market

that, in fact, is preventing the collection of material that

should be put to economic use throughout the province.

Just to give an example of the considerable value that we

have in this forest resource. The world energy demands — just if

we considered wood, Mr. Speaker — 10 per cent of the annual

growth of wood on the planet would meet all of the world's

energy needs today. It's abundantly clear that waste in this

area is one of the most critical wastes on the planet.

The move, through this statute, Mr. Speaker, will enable us

to move toward better utilization of the forests of British

Columbia, more than anything we've done, in fact, in recent

years, because the economic incentives will be there at

last.

This bill, Mr. Speaker, is a good reflection of the

recommendations of the forest task force, which was chaired by

Dr. Peter Pearse, of the University of British Columbia. The

task force, after extremely careful examination, found the

present system wanting. The task force concluded there was not

evidence that we have as open or as free a market as we should

have in this industry. They concluded this in particular with

respect to the lower coast and the operations of the log market

on the lower coast.

This is extremely critical, the question of the adequacy of

the log market on the lower coast. The chip question in the

interior is critical, but the question of the log market on the

lower coast is critical because the Crown's revenues rest in

the richest forests of this province on that market system that

prevails on the lower coast. That is the means for determining

the revenue to the people of British Columbia from the best

trees of the province.

It's critical because it's the basis for stumpage charges in

the richest forests of the province. Any flaws in the system,

any inadequacies of that kind of

[ Page 4827 ]

market, automatically divert legitimate public revenue from

the public sector basically to the multi-national

corporation.

It's also desirable, Mr. Speaker, to have a freer market on

the lower coast from the independent sawmiller's point of view,

again the remaining unintegrated sector of the lower coast of

British Columbia.

Ironically, there's not the availability of logs or material

on the lower coast for the independent sawmiller. Even in times

such as this, with a bad lumber market, there is, in fact, not

the availability of logs for independent sawmillers that are

willing to produce when the majors are shutting down. We have

that kind of distortion again, by a flawed market system.

The whole question is dealt with very clearly in the report

of the task force on forest policy, and I hope that most

Members of the House have read the second major report of the

task force.

Appendix C deals entirely with the Vancouver log-market

question, and I think some of the points made by Dr. Pearse and

his colleagues are worth putting on the record. They state:

"Prior to the end of World War II, the few large integrated

firms with sawmills or pulp mills depended largely on their own

logging operations for raw material supply, but the industry

was dominated by a large number of independent logging

enterprises which sold their logs to log buyers, through

brokers, to un-integrated sawmilling firms. By the early '50s,

there were well over 1,000 such enterprises on the coast, most

of which, including some of the largest, disposed of their logs

in this way. In such a market, the price was clearly a good

indication of the value of the logs being traded.

" However, by the end of that decade, the forest service

carried out a survey in 1961 and it showed that the fraction of

the coastal harvest that was not tied to any integrated

converting enterprise, through tenure arrangements or

contractual commitments of some kind, had shrunk to

approximately 9 per cent of some kind, had shrunk to

approximately 9 per cent of the total.

"Today, some 200 independent logging firms remain on the

coast, but most of them are small and they account now for less

than 5 per cent of the total harvest."

That's the pattern of the last couple of decades under the

former government.

They cite further:

"There has been a concomitant change in the market process

itself. Only a few small independent log brokers and buyers remain of the several

dozen that played a central role in the industry a few decades ago. They have

been replaced by dealers representing the integrated companies, The transactions

that now dominate the log market are not those between independent sellers and

buyers, but rather trades between the large integrated companies." They state

further:

"These reciprocal sale or swap arrangements so dominate the

log market today that it is generally acknowledged that

significant volumes of timber cannot be acquired by buyers who

have nothing to trade."

So the independent mills on this island are not able to

enter into that market at all, or are on a very limited scale.

Few milling firms without linked logging operations are able to

independent buyers is particularly acute in periods of strong

demand.

It's true, Mr. Speaker, but it's even true now in periods of

low demand. It's the classic quasi-monopoly situation. They

state further in the task force report:

"These tendencies toward integration and decline in log

marketing are self-aggravated. Vertical integration supported

by tenure policies diminishes dependence upon the open market

for wood supplies, and as the market becomes narrower, it fails

to be a reliable source of supply to independent millers who

are then also forced to integrate into logging.

"Such trends raise serious questions about the continuing

effectiveness of the log market, both as a mechanism for

efficiently allocating timber to its highest use an ' d for

generating prices that accurately reflect log value.

In

summary, the task force concludes:

"Having considered the number of participants in the market,

the lack of independence of their roles as buyers and sellers,

the restrictions on access to a market that some purchasers

face, and a non-homogeneity of the material in the categories

for which prices are reported, we're led to the conclusion that

the Vancouver log market fails to meet several of the criteria

for freely competitive markets. In particular, it appears that

the reported prices will fall short of the full value of the

timber in conversion, and that this downward bias will be most

pronounced in periods of strong markets and for log rates in

the strongest demand."

So even in times like this there is not the availability of

material on the lower coast for the independent. We are

determined again that the independents on the lower coast of

British Columbia should not face the kind of pattern that they

faced through the previous two decades of government in this

province.

[ Page 4828 ]

The purposes of this bill, Mr. Speaker, are to see that the

independent sector of our basic industry, both in the interior,

through fair prices for chip material, and on the coast, by a

more competitive log market with ease of access for independent

operators, will in fact be the pattern — and to see that there

is a fair return received by the Crown for the trees that we

all own.

What would the opposition do, Mr. Speaker, for the

independents in the interior or the coast? The opposition

suggests that we should dip into current revenues and work on

some kind of right-wing welfare scheme for companies. Or would

they face the giants of the industry, as this government is

prepared to do? Would they look at the incredible profits that

are being reaped in the pulp sector with Northwood, Canfor,

Weldwood, Weyerhaeuser, and even Can-Cel? Would they look at

the raw material prices they're paid? Would they look at the

unfair chip prices being received by the independents? In so

doing, would they have the courage to do the right thing to

intervene and help those in this distorted market who, in fact,

are weaker? I think not.

We have at the moment, Mr. Speaker, an independent sector in

the woods industry of this province that is struggling to

survive. It's a sector that by and large does not feel it can

speak out against the views of the major pulp companies. What

we have is a situation where there are official meetings

between government and the organization representing the wood

industry, organizations that include the pulp sector — groups

like the ILMA, the CLMA and others — but then in addition we get

plaintive requests from the independents for separate meetings

with government. We get plaintive wires or confidential

requests for action in this sector, and there are many of

those.

We only have to look at our past history, Mr. Speaker, to

see the decline of the independent sawmillers in this province,

both in the interior and on the coast. That's a decline that

can and should be reversed. This bill is a major beginning in

that process.

The pattern, in terms of responsibility close at home, is

now all too clear now that we're in the low part of the lumber

market. A good case in point might be Northwood Mill and how

Northwood Mill has maintained employment in the mills they

control in the interior of the province. Now you all remember

Northwood, sure, because they've embarked on a massive

television advertising campaign that is unequalled in the wood

sector. It even outdoes MacMillan Bloedel and their production

of Heidi of a year or two ago.

There was an hour-long, prime time, 7 p.m. to 8 p.m. programme on CTV a while

back prepared by Northwood, out of Toronto. It was beautiful colour stuff. But

now we get it through the prime time period in little shots of minute commercials.

You know how it ends? They say: "Remember, this is Northwood." They say: "We

care, because we live here." That's the slogan. "We care because we live here."

Mr. G.S. Wallace (Oak Bay): You deserve a break

today.

Hon. R.A. Williams: But they live in Toronto, and

they make the decisions in Toronto, and the decisions are

different than the decisions made at home.

Let's look at what Northwood in the interior has done in the

past month. Let's look at Okanagan Falls in the Socred

heartland. Okanagan Falls on October 11 — at the big new mill at

Okanagan Falls, two shifts, 190 men, 242 cunits per shift — closed down. No shifts operating at all in Okanagan Falls.

Still in the heartland: Penticton, the old mill in

Penticton, two-shift basis, 75 men, 110 cunits; it was shut

down October 11 — no shifts at all. Princeton mill, the old mill

at Princeton — 35 employees, 109 cunits — shut down October 11.

The new sawmill at Princeton — 125 men, normal cut, 204 cunits — shut down October 11.

Mr. W.R. Bennett (Leader. Of The Opposition): Are you

taking the responsibility, or are you blaming it on the

MLA?

Hon. R.A. Williams: Eagle Lake up in the Prince

George area was closed completely November 30. That involved

two shifts, 150 men, 200,000 board feet.

Clearly the "We live here, we care" slogan on television

rings a little hollow in relation to the facts.

It's different in the independent sector, we maintain, Mr.

Speaker. We know most of them live here and most of them do

care about the people they work with daily.

This bill, Mr. Speaker, will assure their survival, and I

challenge the opposition to support it.

Mr. W.R. Bennett (Leader of the Opposition): For a

long time there I was wondering if the Minister was going to

speak on the bill at all. I heard him make reference to wood

chips and continue his vendetta against the major companies,

but I never heard any discussion of the major part of the bill

that talks about the new marketing board, or Forest Marketing

Board. There was very little discussion of it except the

continuing hatred against the big companies, and the fact that

he was bringing in this bill to protect the independents, those

independent operators.

He gave some very interesting statistics to indicate why

sawmills, in his conclusions, had declined in this province,

and why they had increased since he'd become forest Minister.

But he left out some very

[ Page 4829 ]

interesting facts, and he left out one very interesting

year, which was 1974.

I was surprised that he mentioned the unemployment that was

in a part of the industry, because it's something we've been

talking about all summer — not just the last month, when this

Minister finally seems to have become interested. The fact that

we have 31 per cent unemployment in the Cariboo forest district

and in the Kootenays, and that this unemployment is spreading

and increasing and is affecting all of British Columbia….

Today we have over 70,000 unemployed in this province, the only

province in Canada where the unemployment is increasing — the

only place.

Rather than try and blame it on the Americans…. I heard

him say that the Americans stopped buying our wood, as though

all of a sudden there was some gigantic plot to embarrass us.

Well, everyone that's been involved in British Columbia is

aware of the cyclical nature of this industry.

Everybody knows. This Minister has been a part of

government; he's been able to watch the industry. We've had

dips and we've had peaks before, but it's always been the

responsibility of the Minister in the Forest Service, not

necessarily with big-stick legislation, but with negotiation

within the industry and directly with how government

participates to bring aid and continue and to guarantee the

continuation of those facilities to maintain employment….

You don't need legislation to get out and lead the

discussion on increasing wood chip prices.

The Minister talked about saving the independent. In fact

the Premier, as he had one foot on the airplane for his

extended trip to China, Hawaii and points south, challenged the

opposition about this legislation, and said that it was to save

the independents, and challenged them to oppose it.

I don't know where he's been when we…well, I do know

where he's been when we've been talking about the independents,

because last year when we were concerned about chip prices. I

think he was off campaigning in the Maritimes.

Then the Premier took a trip to Japan to play rugby. Then he

went to St. Louis to get an honorary degree, and then he

holidayed in California during the summer while he was

recovering from the results of the federal election. Now he's

in China. But if he'd stayed in British Columbia long enough to

know, and if that woods Minister had been listening, he'd know

that this problem of wood chips and the problems of the

independent in the interior has been of major concern to myself

and this party.

We called long ago for action by the Minister, not just wait till the eleventh

hour of the eleventh month when unemployment is rampant in this province, but

take action — action that he is empowered and, in fact, has the responsibility

to take, not now but earlier this year when the problem was apparent, when the

people of this province first expressed their concern.

The people who are employed in the industry made the problem

obvious, yet this Minister acts now — acts in a very

unsatisfactory manner; acts in a manner that really won't deal

with the problem of wood chips.

You know, he went and took a lot of pains to talk about the

problem being related to the stumpage formula that was created

by the former administration. He talked a lot about the decline

of sawmills in this province.

Well, let's take a look, because this Minister always talks

about: "integration of the industry; full utilization; no

waste." The very decline in sawmills was the approach of the

Forest Service of this province in encouraging mills for better

utilization.

[Mr. Liden in the chair.]

The old, rough mills in the bush with the bull-edger blade

that used to create about 25 per cent sawdust are, thank

goodness, no longer part of the forest economy in this

province. There were a number of mills…and those mills were

constructed in my own home town. There were many of them in the

Okanagan area. These mills were not efficient. They were

single-family mills; they could not meet the standards of

utilization that this province wanted, that the Forest Service

wanted, that all parties wanted in the better utilization of

our resources.

Is that to be the fault of a government, that this Minister

will say: "Shame on you for bringing efficiency to the industry

and doing away with the inefficient mills that were butchering

the woods."? A most unrealistic and very, very obvious snow-job

to keep us from discussing the real intent of the bill.

The Minister then goes on to say that there was a dramatic

decrease in mills. Now you notice he went to 1971, and said

that was the last year of the former government. Well, I'm not

here to protect them, but I am here to give that extra year

that they stayed, because I was under the impression that they

stayed until '72.

The acceleration of sawmill construction from '71 to '72,

'73 to '74 was because of the close utilization policy that was

brought in throughout the province in conjunction with the pulp

harvesting and the expansion of pulp mills in the interior of

this province. It was to get better usage of our products. It

was to develop more use that these pulp mills that were created

in the interior at all. They did increase the sawmilling

capacity; they attracted sawmills. They came together; they

were compatible. It developed unemployment. It developed

utilization of our resources. It was good for British

Columbia.

Those mills, pulp mills and sawmills, were brought

[ Page 4830 ]

into this province at a time when the world pulp market and

newsprint market was not at an all-time low. But the buoyant

market that is apparent today — a market that's been created

because of a global situation.

This province didn't create the market for newsprint and

pulp that is here now, but the people of the province can take

pride that there was a government which did, at one time, have

the foresight to create the expansion so that this economy and

our people could take advantage of this market situation.

If we'd had the negative policies of that Minister, and the

attacks on all capital and all business, we would have the

declining economy then that we have today in this province

under your stewardship Mr. Minister.

Everybody knows and understands the stumpage formula in this

province, that the difficulty with wood chips started in 1973

with the change of the stumpage formula in this province. The

close-utilization policy encouraged the construction of pulp

mills and sawmills in the interior and increased them from '71

to 173. It had encouraged capital, and they developed a formula

for chips and a formula for close utilization.

The chip price and the close utilization went together. This

was part of an integrated economic formula that gave guarantee

of supply to the pulp mill because the mill had, in fact, a

subsidy on the 55-cent wood from the government to encourage

them to come in a time when the market was bad, to supply these

pulp mills, they, in fact, could compete and exist in the

interior of British Columbia.

But this all changed in '73 when the Minister doubled the

rate of the stumpage, went to final appraisal, and the small

interior mills — these independents that this Minister has

suddenly discovered and is championing — were penalized by his

policy. It was only then that the wood chips became a major

factor in the economics of the independent mills, and of all

mills in the province.

You changed the rules; you changed the game. And when the

economy changed, you didn't have the foresight to move in

advance of that change. You have created this problem. You've

authored this problem, Mr. Minister, and today you must hang

your head in shame because you are the wrong person to pretend

to be the champion of the independent in this province.

You bring in a bill that says you are championing the

independent. Who can be independent when you take away their

very independence?

They'll no longer be independents, Mr. Speaker, when they feel the full effect

of the new board — the board that this Minister is setting up with his commitment

to take over through the backdoor when he couldn't take over through the front

door in British Columbia. They'll know that if they fall for the snow-job that

this is just a bill to help them six months down the road they'll realize what

the miners realized, what other sectors…what the insurance agents realized

in this province, that this isn't Santa Claus. This is Mr. Take-over speaking

and this is the start of their commitment of bringing about a complete state-controlled

forest industry in this province.

Make no bones about it, this isn't a harmless little chip

bill. Clause (2) might deal with chips, but what about the

other nine pages of granting the board and the cabinet and the

Minister extreme policies. Is that going to save the

independents? Is that going to guarantee their independence,

Mr. Speaker?

An Hon. Member: Takes them right into limbo.

Mr. Bennett: That's right.

Mr. Speaker, we didn't need a chip board. We didn't need to

develop nine pages of legislation five months late. We didn't

need to extend the suffering of the independent sawmills so

that the Minister could use their plight to bring in his other

legislation while the industry was suffering, because we had

those traditional forms of the Forest Service — a service that

British Columbians can be proud of.

Who could have taken the initiative in negotiating?

Government has more of a commitment not just to wield the big

stick, not just to use the authority of legislation giving the

cabinet and boards complete power.

This Minister knows that the newsprint market has changed.

The very change in the pulp market between 1966 and now is

tremendous. The pricing, the economics of the industry, are

different. Today the industry is healthy.

As I pointed out earlier, we could have achieved a higher

price for chips. We don't need him to wait five months beyond

the time it takes to meet the needs of the independents. If you

weren't listening before, Mr. Minister, I'll tell you, why

didn't you do something about it five months ago? The industry

itself has doubled the price it's paid for chips. And you are

right; that's not good enough. These independents, because of

the formula, need more money for chips. But it is not through

your actions that anything has happened.

The very fact that they've stopped negotiating under threat

of this legislation is the reason that many contracts haven't

increased. In fact, one of the first offenders, right up until

September, was Can-Cel — that company you are so proud of — that

made its profit because it had until that time the lowest

price. If they had paid last year what they are trying for now,

they would not be making a profit. If they had paid last year

the rates they pay for chips today, they would not have made a

profit.

I notice that they have finally signed a new

[ Page 4831 ]

contract for $47.50 for roundwood. Well after the rest of

the pulp mills moved up their price for chips to their

suppliers; the last to act, the last to react, the last to have

a conscience was the company that this Minister talks about and

is so proud of — the company that everybody suspects was one of

the major reasons why no action was taken on chips before in an

attempt to help subsidize and make that company look good so

the Minister could sneer across the floor that Can-Cel made

money.

Why didn't you take action earlier?

As I said, the real intent of this bill is not chips. That

was the excuse the government has used to bring in all of the

excessive powers contained within the other eight pages of this

bill. This bill was the excuse the Minister was waiting for;

this is why he delayed for five months. This is why he didn't

assume his responsibility of Minister to do anything earlier

for the independents of this province.

This is why he did nothing to solve unemployment long before

it got out of hand in the province. If there are people

unemployed in the forest industry today, let them come to you

and let them place the responsibility where it belongs, on the

shoulders of this Minister.

Accept your responsibility for your inaction over this last

year. When the economy of the forest industry was pointed out,

that there was going to be difficulty with markets, when the

first discussion of chips was brought up in this House during

estimates earlier this year, I didn't hear the defence of the

independents then or the fact that they needed help with their

chips. We didn't hear any solutions then when the trouble was

developing.

But now that they are on their knees, now that the

independent can go on no longer financially, the Minister,

under the guise of riding in on his horse as the saviour of the

industry, uses their plight that he helped to create as an

excuse to bring in a bill with powers excessive to the needs of

any government.

An Hon. Member: Right on!

Interjections.

An Hon. Member: Why did you change it then? Let's not

have that gobbledygook.

Mr. Bennett: This explanatory note on the back of

this bill that says this is a wood chip bill is the biggest

political lie attached to a bill I've ever seen in this

province or in any province. If you want to take over the industry, Mr. Minister, come

clean with the people of British Columbia. If you want, Mr.

Minister, to bring in your radical, left-wing socialism that

you were committed to back in the 1930s, tell the people of the

province.

An Hon. Member: Your eyes in the back of your head

are bigger than the ones in the front of your head. Quit

looking back.

Mr. Bennett: Here is the Minister bringing in

an Act

that practices deceit because this Act isn't what it is

purported to be. It is a deceitful Act. It's

an Act that has no

relation to solving the problems for the independent sawmills

in this province. It is

an Act to bring to this government and

to this Minister powers they couldn't ask for under any other

set of circumstances. And any government and any Minister that

would allow the situation to deteriorate, both in unemployment

and the economy, so they could use it as a guise to bring in

their authoritarian legislation has no place as government in

this province or in any province.

This Minister and this government do not have the mandate to

seek these excessive powers. These excessive powers threaten

our Legislature; they take powers from us. They threaten our

economic base — and it has been as witness of that today with

the release from Cariboo Pulp — and they destroy confidence in

investment in this province. These policies and these actions

will ruin this province.

At one time in all of B.C., whether you were a socialist

from Vancouver East or an enterpriser from the Cariboo, one

thing you had was a confidence in the future of this province.

At that time I never heard anyone ever suggest that the future

of British Columbia was in doubt. But today, after two and a

half years of this government, and today with the results of

the presentation of, the bill by this Minister, we have heard

and are hearing of people taking capital out of the

province.

Not just corporate but individual citizens for the first

time are questioning the very future of our province, bragging

about taking out capital, bragging about leaving — something I

thought I would never hear in British Columbia. And yet this

Minister sits there and smirks while unemployment rises and

while the economic fabric deteriorates.

I ask this Minister to withdraw this bill. Bring back some

confidence to British Columbia. It is bad for British

Columbia.

Interjection.

Mr. G.F. Gibson (North Vancouver-Capilano): You stand

up and I'll make it three.

Mr. Speaker, this is the big bill of the session, without

any question.

Interjection.

Mr. Gibson: That was the little Bill just speaking. I

was referring to the Act in front of me. (Laughter.)

[ Page 4832 ]

We had

an Act introduced to ruin the rental housing economy

of this province and then another Act introduced to give all

power to the Minister of Agriculture (Hon. Mr. Stupich), but

this is the big one.

When I see that Minister of Lands, Forests and Water

Resources (Hon. R.A. Williams) stand up there, Mr. Speaker, and

show such solicitude for the independent businessmen in British

Columbia — for the "indigenous industrialists," he called

them — when I see that man who wants nothing more than to take

over the forest industry cry those kind of crocodile tears, it

makes me just a little bit sick.

This is a thoroughly deceitful bill, Mr. Speaker. It is a

far more vicious bill than Bill 31. I wish the Minister of

Mines and Petroleum Resources (Hon. Mr. Nimsick) was here

because he at least had the honesty to bring before this House

a bill that said what it was going to do. He brought forward a

bill that said, "I'm going to hit you over the head and take

all your money." That was very simple. But this is a bill, Mr.

Speaker, that masquerades as being one thing and is, in fact,

another.

It is deceitful in the timing of its introduction. It is far

too late and it is introduced too late in this session. It is a

bill of such consequence. I believe this bill was draughted two

months ago, Mr. Minister. Why wasn't it introduced on the first

day of this session? It should have been for this House to give

it study.

And then why are we having the kind of rush to give it

passage without, again, time for the proper study? Why is the

situation a smokescreen of a non-issue?

We all agree, Mr. Minister, that the companies should pay

more for chips. There is no question about that. It's a phony

issue; it's a smokescreen. You can get around that one easily

in other ways, and I'll tell you just how in a few minutes.

It's a pure smokescreen. That's

Part I of the bill. It's a

non-issue.

Part II of the bill, Mr. Speaker, is jobs for the boys.

Section 4(7): jobs for the boys.

Part III of the bill is the takeover legislation for the

forest industry of the Province of British Columbia.

Let's start with

Part I that the Minister spent almost all

of his time on. Yet it is really only one part of the bill and

not the most important one. That's chips. The Minister didn't

give us any indication of how large the chip market is in

British Columbia or what the interior market is. But if there

are around 6 million tons of pulp produced there must be around

something like 12 million bone dry units of chips, I would

think. No, 12 million volumetric, maybe; 9 million bone dry. So

he's obviously talking about an important injection into the

sawmill economy of this province.

If the price of chips can be raised $10 a unit, for example, in the interior

— and let's say that that's about half of it — then we're talking about around

$50 million a year. If it can be $20, then it's $100 million a year, and so

on. This is a very important issue.

The Minister spent all of his time, or almost all of his

time, talking about the interior market for chips. He didn't

discuss the coastal market, which is a very different market.

It has freedom of movement of the chip product. It has low-cost

water transport. It has at least seven major buyers, and it has

around 60 sellers.

Mr. Lewis: It has competition.

Mr. Gibson: : As the Hon. Member for Shuswap says — he

put it better than I could: "It has competition." That coast

market has competition. The Minister applauded that. That's a

wonderful thing — competition. We're for competition.

The interior market is entirely different, because there is

directed movement of chips. The Minister directs the movement

of chips; those old pulp-harvesting licences he referred to

direct the movement of chips. I question whether that's

necessary, Mr. Minister. It would make a good debate for the

estimates perhaps.

There's a high cost of transporting the chips and a high

cost of transporting the pulp product that comes out of it. And

there's a monopoly buyer situation. That's the worse part of

all.

Mr. R.T. Cummings (Vancouver–Little Mountain): Money

talks. Tell them that money talks.

Mr. Gibson: That was a good speech too, Mr. Member

for Vancouver–Little Mountain. You stand up and give it again.

I'll be proud of you.

What has brought us to the present situation we're in, and

who has been most instrumental in doing it? Mr. Speaker,

Can-Cel has been most instrumental in doing it — the company

controlled by the Minister of Lands, Forests and Water

Resources.

What has been the leading company in the interior of this

province in Castlegar in paying the lowest prices for chips

anywhere in this province? What has been the company that a few

weeks ago suddenly raised their prices so that the Minister

could come to this debate with ostensibly clean hands and say:

"Look, Can-Cel is paying more than the rest of the

province."?

But what in fact has been the worst one? It has been

Can-Cel. The Minister has orchestrated this thing so that there

have been cries of pain from the independent producers because

of the outrageously low prices that his company was paying

them. Then he comes before this House and says: "Look, they

forced me into bringing this bill to you. We just have

[ Page 4833 ]

to have it for the sake of the little man."

Such solicitude! Look at Can-Cel. Look at what Can-Cel did

to Rim Forest Products. You can strike one mill off your list

of new mills in British Columbia, Mr. Minister. Such

solicitude!

The other pulp mills in this province, many of them, were

even afraid to raise their own prices of chips for fear of

attracting the government's wrath, because the government

wanted to keep those chip prices low so that their pet Can-Cel

would look good. It's just that simple. You manufactured a

crisis and then brought in this legislation to supposedly help

the independents.

Mr. Minister, through you, Mr. Speaker, I'll tell you what

the solution is. You agree that there is a reasonably

competitive market on the coast. Tie your interior prices to

the coastal market with due allowance for the transportation

index. It's a simple solution, You don't need this bill to do that, Mr. Minister. No

sirree, you don't need this bill at all. You just need a simple

little bill; and I'll help you draft it if you like. It would

be a lot better than this one.

So that's the chip-screen, or the smoke-screen.

Now let's get on to the main problem of this bill and the

problem that's facing this Legislature in this province. It is

the unemployment in the forest industry that this bill is not

coping with — and that the marketing suggestion proposed in this

bill is not going to cope with. There are something like 14,000

people out of work today in British Columbia, and the Minister

admits himself that this bill isn't going to cope with it.

Here's a quote from an

article in the Province of

October 29, quoting the Minister:

"Williams admitted that the government-controlled

Canadian Cellulose Company Limited is as much to blame for the

low prices as any other firm in the interior. Like the private

companies it is paying less for its chips than the sawmills

deserve to receive for them.

" 'But,' he said, 'Can-Cel isn't in the welfare business. So it is playing by the rules of the game laid

down by private industry, and playing very successfully

too."'

Good for you, Mr. Minister. How about Rim Forest Products?

You told us earlier on in this debate that Can-Cel was in the

welfare business. You told us about the men that Can-Cel hasn't

laid off. Of course it hasn't laid people off; it's in the pulp

business, and the pulp business is making money. And you gave

us the prices, so don't compare apples and oranges.

So the problem is unemployment.

The Minister made a proper point in suggesting that governments have to stop

using residential construction as an economic lever, particularly the United

States government. We have no control over that. But it does such damage to

their economy as well as ours that we have to hope that governments are going

to start seeing sense in this regard.

U.S. housing starts are down from something like an annual

rate of 2.2 million a year ago to 1.4 million now. And of our

total shipments, something like 2 billion board feet out of 4.2

billion board feet in 1973 went to the continental United

States. So there's the impact of the U.S. market on our lumber

economy. The need that we have to grapple with in this House is

to try and somehow stabilize the lumber industry in times of

that kind.

This bill, Mr. Speaker, is entitled the Timber Products

Stabilization Act. But it's not apparent what it's going to do

for stabilization, which is the need. Maybe the Minister will

enlighten us on this when he closes second reading. But I don't

think he will. He spoke for 40 minutes before and didn't

enlighten us very much.

Even out the cycle — that's what's got to be done. The way

we're coping with instability in the industry now is through

unemployment insurance. It's a lot better than nothing. It

maintains incomes. But it's an unproductive way of maintaining

incomes, and we have to find better ways of doing it than

that.

Interjection.

Mr. Gibson: The Minister says: "This is a better

way." But what's a better way? Nothing in this bill that I can

see, Mr. Minister.

There are various things you can look at. I can look, for

example, at the possibility of having an inventory-accumulation

plan. Probably the Minister has looked at that too. There are a

lot of difficulties in it, as nearly as I can see — the

possibility of a huge inventory overhanging the market on a

long-term basis, depressing the returns to British Columbians

of their resources to even lower levels than they otherwise

would have been. So there are problems there, but there are

things that can be done.

The needs are as follows: there has to be a boost in the

chip price, no question about it. I suggested the way to do

that.

The appraisal system, which is a tremendously complicated

subject, has to be reformed to cover real costs. The Minister

gave some welcome indications that that is being worked on. I

hope it's worked on quickly, because it's hard to open a mill

once it's closed down. A lot of these close-downs could have

been avoided had this kind of programme been undertaken six

months ago.

Mr. Minister, there has to be a relaxation of the logging

guidelines in tough times — not in ways that will adversely

affect the environment, but rather in ways which will allow

lower cost logging in tough times, lower cost road access.

Problems of waste removal that the Minister mentioned are

considerable.

[ Page 4834 ]

But these things have got to be traded off sometimes with

keeping up employment. The government can't just have a

single-minded concentration on its forestries or its revenue.

It has to be concerned with jobs. They're better to have a

percentage of something than 100 per cent of nothing.

The government should be looking right now very seriously at

a major publicly funded programme of rehabilitation of the

so-called NSR, or not sufficiently restocked, land. There are

something like 10 million acres of that land in British

Columbia. To understand the employment impact that could have,

you have to realize that we only log about 0.5 million acres a

year. That could provide a tremendous amount of work to the

very type of man and equipment that have been idled by this

current downturn in the market — those 14,000 people.

Road building, at a time of depressed markets like this, is

something that companies, if they have to do it themselves,

would like to cut out. But this is exactly the time when road

building should not only be sustained, but should be increased — once again, to give employment to the very men and equipment

that are idled by the shutdown of the logging shows.

The way to do this, Mr. Minister, is to change the current

system around. Rather than booking your road building costs on

a ledger basis, and crediting them against stumpage payments,

the thing that needs to be done is for the government to

advance the cash for the building of those roads, and then

accumulate it back through the full stumpage payments later on

out of production.

That's the only way the companies or the government acting

itself can afford to maintain employment in road building in

1974. It has to be maintained, and it has to be increased,

because that's our basic problem — those 14,000 unemployed

people. The Minister has to do minor things, but terribly

important, like speeding up the approval of cutting permits to

allow for more flexibility of logging of different species in

lower-cost areas.

Interjection.

Mr. Gibson: The Minister says, "We need more

biologists too," and I guess we do. We need a lot more

people.

Interjection.

Mr. Gibson: But we particularly need action from the

Minister to help the logging firms cut their costs during a

time like this so that we can remain competitive on world

markets and maintain our employment. That's the whole

issue.

In tough times the government has to take some of the risks and help the industry.

In good times the government creams a lot right off the top. That should be

the quid pro quo. But, unfortunately, this is a government concerned with revenue

for its own coffers and for its own Crown corporations, not for jobs for British

Columbians.

Mr. Rolston: Take a look at

section 7.

Mr. Gibson: Take a look at subsection 7 of

section

4 which is jobs for the boys. That's a different thing. I'm

talking about jobs for British Columbians in the forest

industry.

The Minister of Finance has $250 million in his budget for

stumpage revenue this year. He isn't going to get it, but he

just wants every last million that he can squeeze out

irrespective of what this will do to the jobs in British

Columbia.

Now, having given those suggestions, I want to move on to

the next portion, which shall be very brief but very important.

That is subsection 7 of

section 4, which says:

"A director who is a Member of the Legislative Assembly may,

notwithstanding the Constitution Act…."

Isn't that quite

a phrase, Mr. Speaker? It kinds of rolls off the tongue.

"…notwithstanding the Constitution Act, accept payments

made to him under subsection (6), and is not thereby ineligible

as a Member of the Legislative Assembly and is not

disqualified to sit and vote as such."

That's a disgusting, venal provision in this bill, Mr.

Speaker. It's jobs for the boys, for those NDP backbenchers who

couldn't quite make the cabinet. The government wants to give

them a little reward to keep them in line. It's bad, bad

practice. It's the kind of thing that has gone on in Ontario

for many years and resulted in a lot of corruption and a lot of

exposé articles there. It's the kind of thing we should not

consider importing into British Columbia, not for one

minute.

An Hon. Member: They have a much bigger backing.

Mr. D.A. Anderson (Victoria): Are you promising an

amendment?

Mr. Gibson: There better be an amendment to that;

it's a disgusting section.

An Hon. Member: Don't you trust the backbenchers?

Mr. Gibson: The amendment had better provide that no

Member of the Legislative Assembly can sit there. The only

acceptable amendment to that subsection 1s its complete

deletion. If there's going to be an amendment to it, why is it

in there in the first

[ Page 4835 ]

place?

This whole bill has the evidence of being very carefully

calculated and very carefully draughted. I can't believe this

section there is a mistake, Mr. Minister.

So that's jobs for the boys.

Now we come to the next section, which is the important

section of the bill: the takeover and forest-industry-control

sections of the bill.

Interjections.

Mr. Gibson: I don't know, Mr. Speaker, if the

Minister is laughing or if he's chortling. I think he's

chortling because he's thinking of the takeover of the lumber

industry, and he enjoys the thought. He enjoys being in charge

of Can-Cel, and MacMillan Bloedel will be even better. Buy

maybe he'll pick up some small companies en route. MacMillan

Bloedel, I would think, would be particularly enjoyable to him

because of the CPR ownership.

Interjection.

Mr. Gibson: That's right. He might go for poor little

companies first, I would ask you to name the names, Mr. Minister.

The forest industry has been controlled for years on the raw

material side and has been controlled very tightly. It's the

kind of thing which has led to exactly that kind of

concentration in the industry and the kind of bigness in the

integrated firms that the Minister so much deplored in his

opening remarks.

There's a tremendous control on the raw material side. It

has forced the little man out over the years; it led to

corruption of a very serious nature. It's the kind of absolute

power of which Lord Acton said "corrupts absolutely." Now the

Minister is proposing to add to that kind of power because

that's what this does.

He's now moving to control the market side as well. In

section 7:

"Without limiting the generality of

section 6(1), the

objects of the board are and it has the power to improve the

performance of markets for forest products, and to encourage

the utilization of timber, in the province." I don't know if he's going to control the markets outside of

the province. There's a comma in an interesting place there

that we can deal with when we get to that specific clause. But

clearly, inside-the-province markets are available to be

controlled under this bill because we find that the

Lieutenant-Governor-in-Council has certain powers under this

bill to make rules and regulations.

It's a very simple little clause; it says: "The

Lieutenant-Governor-in-Council may make regulations." "May make

regulations," Mr. Speaker.

Any kind of regulations, I suppose. They may make

regulations about you, Mr. Speaker, under this Act, I don't

know. (Laughter.)

[Mr. Speaker in the chair.]

I'm against that kind of control, Mr. Speaker, because it

leads to economic inefficiency in an industry in a world that

is becoming increasingly competitive in the wood sector.

The Minister read out some figures earlier on about the

foreseeable shortfall in wood products by the year 2000. I

suggest to the Minister that that is unlikely to occur because

many nations of the world are moving very quickly to remedy

that deficit. Unfortunately, they start with natural resources

in some ways much less expensive than those of British

Columbia.

The fibre may not be as good; the wood may not be as good.

But it grows much more quickly; the reproductive cycle is a lot

quicker. We have to look to countries like New Zealand and

Brazil as being the sources of significant competition to our

industry in years to come, not to mention the southern United

States and the increasing development of those timber

stands.

This poses a real problem for British Columbia. We're going

to have to stay efficient and on top of it to stay even. An

industry that is owned or completely controlled as to market by

the government isn't going to be able to do that.

The other philosophical reason I'm against this kind of

control is the decline of independence of people who gain their

living from this economic sector. In a state where everyone is

subject to the arbitrary turn of the economic screws by the

government, no one can be free. And that's exactly the kind of

machine that's being designed here. It is attacking the basis

of our freedom by making all the citizens subject to the

government. I suggest that those who have any doubt about this

long-term objective might look at a paper on resources which

was prepared for the 1971 NDP policy convention, I think, and

attributed to the current Minister of Lands, Forests and Water

Resources, setting out in extensive and adequate terms his

philosophy in this regard.

Now, Mr. Speaker, how will these controls and takeovers

work? The Minister said to us, "Well, now, this is really just

the Pearse report. Nothing more than that; just the Pearse

report."

I'd like to read something on the log marketing section,

just in passing, that the Minister didn't read. The final

conclusion on page 185:

"Our analyses of log marketing and of the log price data

presently used in coastal appraisals, summarized in this

appendix, lead us to three general conclusions.

[ Page 4836 ]

"First, the data available on log transactions are

inadequate to provide conclusive measures of the deviation of

reported log prices from their true value in

manufacturing."

The Minister didn't note the uncertainty of conclusions like

that.

"Second, log prices are sufficiently sensitive to register

fluctuations in the value of products recoverable from

them.

"And third, notwithstanding both of these other conclusions,

there are strong grounds for suspecting that log prices

generally underestimate the value of timber transactions, and

as such provide an unreliable base for estimating the value of

standing timber."

But the Minister didn't indicate the uncertainty that was

tacked to those conclusions.

Now the Minister says: "Dr. Pearse concluded that a board

was needed." At page 134 of his report he summarizes the

functions of this board:

"

(1) Purchasing, sorting, transporting and reselling logs,

chips and other intermediate forest products for the purpose of

enhancing competition in markets and increasing product values,

and maintaining facilities for these activities.

"

(2) Co-ordinating and administering provincial controls

governing the export of forest products.

"

(3) Acting as a clearing house for the marketing of

intermediate forest products and stimulating competition by

advertising and other measures that will enhance market

information and participation in the markets.

"

(4) Assisting the Forest Service in such matters as

compilation of market statistics and revision of log grading

procedures.

"

(5) Advising the Minister on matters relating to marketing

and export controls, including chip direction policies, chip

prices and export charges."

He also suggested that directors be appointed for fixed

terms rather than at pleasure, as provided in this Act.

Now, none of these proposals in the Pearse report are

coercive, none of them at all. They are what I would call

voluntary kinds of proposals; intervention in the market but

not marketing control.

The unfortunate thing about this bill is that it gives powers for any kind

of control whatsoever. It gives the powers for the complete setup of a marketing

board. So what can happen is that companies can be squeezed at the bottom, at

the raw material supply, and squeezed on the top, on the market side, or squeezed

somewhere in the middle by a, let's call it a log marketing board, through which

all persons cutting logs would have to invoice them before having them sent

on to conversion, thereby taking a lot of the profit right out of the middle.

In other words, the marketing powers in this bill would make

it possible to squeeze the companies to any degree the Minister

might wish to do. The board might have the power to direct the

sale of lumber — when, to whom, and at what price. The board

might have the power to put a cash squeeze on any company by

fiddling around with its marketing requirements.

When this is read in conjunction with

section 15(3):

"The board may, upon acquiring shares, debentures, or other securities of a company, appoint such

persons as it considers advisable to be the representative of

the board at any meeting of the company, or any meeting of the

directors of the company…. ."

It makes it very clear that the

concept of this bill includes the possibility of squeezing a

company down in a cash position to a point where it has to

accept sale and virtually confiscatory prices to the

government or face bankruptcy as an alternative.

This technique, I suggest, is not unknown to this

government. This is the sort of thing that happened to Rim Forest Products. I suggest that it's not unknown to this

Minister to have the concept of squeezing companies down to the

value he thinks they should be at before acquiring them.

I quote once again from that policy piece:

"The acquisition of privately owned corporations in the

resource fields prior to major resource tax changes would be a

mistake because the market value of those companies would be

grossly inflated because of the wide range of tax holidays they

presently enjoy. Any acquisition of those corporations prior to

a substantial tax change would be a misallocation of public

funds."

Mr. Speaker, that's a Minister giving a blueprint for how

you take over companies in the resource field, and then telling

us that that's not the intention of this bill. That's what this

bill is all about.

There are miscellaneous venal provisions that the Minister

didn't draw attention to. There's a

section dealing with

disclosure, which is meaningless, especially with a Minister

who still isn't willing to tell us anything about Ocean Falls,

who still isn't prepared to table the contract they have with

Gottesman, who's declined to table the feasibility study that

was received back in March. Are we to believe that we're going

to get any disclosure out of this Minister?

There's no legislative control of borrowings in this bill.

The full faith and credit of the province can be charged upon

by this agency, with no provision for review by this

Legislature.

The timber board would be exempt from the Companies Act. Why

would it be exempt from the

[ Page 4837 ]

Companies Act? Those disclosure provisions and other

controls on directors are written into the Companies Act

because it's thought necessary in the conduct of private

business. To how much higher a standard should public business

be held accountable?

There's an interesting item,

section 8(3)(b), which notes

that the forest products board may advise the

Lieutenant-Governor-in-Council on what conditions and payment

of charges forest products should be exported from the

province.

Now, this has been quite a small item, up to now, in the

revenue of the province, the so-called timber tax. Does the

Minister have in mind here, by this section, something much

more substantial, something on lumber like an export tax on

oil? Is that what he has in mind? If that is what he has in

mind, will he suggest to us what opinions he has as to the

constitutionality? We don't know what's in his mind on this

point, so I'll defer further comment on that until we get to

that

section and we can properly ask the Minister questions on

it, but I hope he will be thinking on that because it's an

important point.

Another nasty little

section is

section 20(2). I think your

Honour might be interested in this

section because it provides

that: "In the absence of an appropriation therefore subsection

(1) also applies on the fiscal year of the Government ending on

March 31, 1976."

Mr. Speaker, that says "in the absence of any appropriation"

of this Legislature. The basic power of this Legislature and

every British democratic Legislature over governments from the

days of Magna Carta has been the power of the purse and the

power to review expenditures. Here this government proposes to

remove that power for an entire year by this subsection.

Another cute little provision is the size of the board.

Mr. Speaker: Excuse me, Hon. Member. I hope that you

will deal more in general terms with your opposition, if you're

expressing that, to the bill rather than deal with specific

sections.

Mr. Gibson: Certainly, Mr. Speaker. Indeed, I'm at

the end of my list of particular nasty little provisions.

The board of directors can be as few as three, and a quorum

is two, so the Minister and his Deputy, let's say, just for

example, could completely control this board.

This is a bill that almost defies belief and defies the

finding of words to grapple with it. It is a bill of a Minister

who wants to destroy a system. It is a bill of a Minister who

thinks he makes himself stand taller by tearing others

down.

This pretense of being for the independent is nonsense. This is a bill which

will more completely and more surely and more rapidly complete the destruction

of the independent operators in this province than any other legislation I could

contemplate.

Mr. Lewis: How can you say a thing like that?

Mr. Gibson: I can say it, Mr. Member, because it's

true. Mr. Member, did you know that there is fear in this

province?

Did you know, Mr. Minister, that there are people who are

afraid to come and see you and tell you what they think about

your legislation and about how you administer your department

because they're afraid of what's going to happen to them?

They're even afraid to come over here to Victoria and see you.

They're afraid to be seen in that delegation.

An Hon. Member: Some of them are afraid to cross the

border.

Interjection.

Mr. Gibson: : The Minister says, "nonsense." I know

of cases, because the independent operators in this province

know just how ruthless this Minister and this government is

prepared to be with them.

An Hon. Member: Name them and he'll get even.

Mr. Gibson: That's right. If we name them, he'll get

them.

The operators know that the Minister has the power to set

stumpages, to cancel licences which he passed in that last

forest Act without any appeal, to assign quotas. He's got the

power to nudge British Columbia Railway to have high

chip-carrying prices. He's got the power to direct Can-Cel.

He's got the power to take over other businesses. He's got the

power to refuse the assignment of cutting permits.

Hon. R.A. Williams: Most of that was Social Credit

legislation.

Mr. D.A. Anderson: That doesn't make it any

better.

Mr. Gibson: Mr. Speaker, the Minister said that most

of it is Social Credit legislation. This party fought the

Social Credit legislation, too, when that came in. A lot of it

is bad legislation, Mr. Minister, and I hope you'll change it,

but instead, you're going in the other direction.

This government has no mandate to change the basic economic

fabric of this province. It was elected with only 40 per cent

of the votes in this province in the last election. It couldn't

get 30 per cent today, not

[ Page 4838 ]

30 per cent. No way.

You have no mandate to make these kind of basic social

changes. You are a caretaker government, and you should resign

right now, which would, among other things, have the effect of

withdrawing this very bad bill.

Hon. W.L. Hartley (Minister of Public Works): You're

an undertaker.

Mr. P.C. Rolston (Dewdney): As I listened to the

Member for North Vancouver–Capilano (Mr. Gibson) about the

anxiety that he claims the independents have to meet the

Minister, I couldn't help but think of the anxiety the Minister

might have had to meet some of the independents who have come

over quite regularly during my 28 months as an MLA for Dewdney

riding, a riding with 20 mills — one very large one, one middle

size, and 18 smaller mills. I can remember several times the

Minister coming to my office to meet these very small truck

loggers, small mill operators, and in behind the door there

would be some of these people to meet him.

Maybe the anxiety was on his part, as these people were very

desperate to get tenure. They still don't have tenure, but I

think there is a greater hope that they will have some tenure.

Indeed, Mr. Speaker, I can only think of three companies in my

riding but, by George, they have the tenure. Of the three,

there is really only one large one that's milling in my riding

and using the logs from the forests in my riding to produce the

jobs that the Member for North Vancouver–Capilano (Mr. Gibson)

is so anxious they are leaving. I think basic to this bill is

the whole stabilization of the wood chip thing, but also the

hope that I have, and I think I have a reasonable hope, that

there will be a greater sense of tenure, I can think of many

mills that have operated for many, many years.

The Minister met a chap who really pioneered the cedar

business. In Mission we like to boast that "we shake the world," and there's a fellow who 35 years ago, developed a

market, in the United States mainly, and somewhat of a market

locally for shakes. He developed the equipment that never under

Social Credit had a chance of tenure — never under Social Credit

had even the slightest chance of some kind of stability in that

industry. Here we have a chance to give some stability. These

people, even in the cedar business — the shingle business — do

chip as much residual as they can. They put it into barges, and

in some cases they even truck it, Mr. Speaker, down to the six

or seven large, vertically-integrated wood products companies

to be mixed in various ways to produce pulp.

In fact, the vice president of one of the medium sized companies told me two

weeks ago — that they were so desperate, the price was so desperate, even at

the Fraser River — and at least with the price on the coast there's somewhat

of a free market; it's certainly better than the Interior — but this company

was so desperate that they were getting permits from the cabinet to export their

chips down to Everett, Washington. Now that is no situation that I am happy

about. We don't want to see that raw material leaving the province.

I am most anxious…. I think long before I was even in the

campaign in 1972 I was anxious that there be stability, in my

case, for the 20 indigenous mills. But I'm sure there are many,

many hundreds of other mills where the people do have a sense

of hope that they can have, first of all, tenure; and secondly,

once they get tenure or even if they have very little tenure,

that they can get some kind of a guarantee of a decent price

for the residual.

I am told, Mr. Speaker, that right now they're lucky if they

get 10 per cent of their revenue from the residual. We are told

that it should be 30 per cent. There's no reason why it

couldn't be 30 per cent. This would tie them over when, as the

vice president of Canadian Forest Products told us in the

Canadian Forest Products magazine, about three weeks ago

we're in a very difficult patch in the world lumber markets and

there should be a chance for a much better return to these

small companies.

It's my hope that this can be taken quite on face value,

that

section 2 of the Act can be a chance where there can be

possibly even a domestic and a world price for chips; that a

formula can be worked out to determine the prices and prescribe

various ways of getting a much better return; that as we move

on to

section 7, in a very general way debating the bill, that

the board can improve the performance of the markets in the

forest industry. I think that can be taken at face value, that

there is a great deal that needs to be done, certainly in the

chip…. But I think in many other parts of the diversified

lumber, plywood, press board, and pulp and paper and craft

industry, we must see as a government that there is a maximum

kind of return, that there is a reasonable hope for people who

invest in mills. It must be remembered that this government is

requiring much higher pollution control standards; that by the

end of this year most of the beehive burners that we used to

know in the Fraser Valley must have high. heat equipment on

them — and we're talking a minimum of $35,000 per unit. We have

to guarantee that there is a much fairer return to these

people, that $60 for a bone-dried unit is a reasonable price to

drive at.

I have been told, by talking over the last few weeks — and

especially on the last weekend with some of the small operators

in my riding, I've heard of their desperation to get a

reasonable price, to pay the towing. I've heard of the

desperation these people have to really continue in sawmilling

at all. In the old days, Mr. Speaker, the return in sawmilling

was

[ Page 4839 ]

substantially better than the return for simply putting logs

in the water. There was often a $50 incentive to mill, $50 from

lumber including what you could get from selling hog and

selling chips. Today, there isn't that kind of distinction

between the prices of logs that you can put in the water and

milling those logs.

Indeed, Mr. Speaker, I'm sure you realize that sometimes,

where there might be only a $10 difference between the price

that that mill operator, let's say in Wannock, or Mission or

Maple Ridge, would have to pay for the log, including stumpage

of course and towing, to the finished product…. Of course,

these people have had long-term commitments, and often these

commitments were at a much cheaper lumber price. There were

times when they were just barely breaking even. So this is a

real anxiety that I have.

I would like to see that there's a much greater return in

the residual. I would like to think, Mr. Speaker, that it isn't

necessary for the Minister to drop stumpage rates without a lot

of testing, a lot of worrying this through, because during a

year of difficult lumber markets, arbitrarily to drop stumpage

prices as the Member for North Vancouver–Capilano (Mr. Gibson)

suggests, we might regret that kind of knee-jerk reaction.

I agree with the Member for North Vancouver–Capilano that

maybe there should be a better write-off, mind you, on the

roads, and certainly much more of the main rock work on main

haul roads should be encouraged. There should be some way, and

I don't know if it's through simply advancing money, but

certainly if we fear a whole year of bad lumber prices, maybe

we can spend a year in getting the roads built which we know,

Mr. Speaker, must be built. Engineers know three years in

advance where their settings will be, and they certainly know

where the haul roads and the little feeder roads will be. They

can order the equipment.

It's fair to give credit where credit's due, and last night

the Minister of Finance in Ottawa (Hon. Mr. Turner) said there

would be a much better write-off on this equipment. That's

encouraging, and maybe we can see that that is translated into

employment programmes and incentive programmes to see the

small, and the medium and larger companies, getting more done

in road building. In my riding, I've made speeches before about

the need for better roads. Of course, the fact is the roads are

opening up into recreation and many other things.

Mr. Speaker, the Premier has said very emphatically that we are entering into

a world shortage on many raw materials — presumably the price of $340 per ton

for bleach kraft reflects a world shortage there. From all the newspapers that

flood this building, I don't see newsprint demand decreasing. We seem to be

saturated with print. It seems we could economize there. But there is still

going to be tremendous demand.

We need to get that return as a government, and we certainly

need to see that the small — especially the small — and the

larger companies get a better return.

I would like to be very critical of the Leader of the

Opposition (Mr. Bennett) when he seems to condone the 55 per

cent unit price that the Crown received for the interior chips.

I think that might have been passable in the first few years

but it certainly wasn't passable. It was long overdue that this

government change that most unrealistic assessment.

I would certainly appeal to the Minister, when we're talking

in general terms…. It's not just chips. I read here that

it's to, "improve the performance of markets for the forest

products, and to encourage the utilization of timber, in the

province." That's pretty general and sweeping in the sense of

encouraging the industry. A great deal needs to be done to see

that he small people, who are desperate, get raw material.

It is a fact that historically there were nearly blackmail

tactics in the past to get raw material to keep mills going.

Certain people who had quota were very, very influential and

were given this quota. This often caused great anxiety among

the independents.

I think there are many truck-loggers, many small mill

operators who really are, I think, breathing a sigh of relief.

Maybe they won't be so vocal and demonstrative in showing this

hope, but I believe they see in this government on face value

that this is simply to encourage the growth of the industry

and, of course, employment.

The Member for North Vancouver-Capilano (Mr. Gibson) ought

to remind the House that 55 per cent of the manufacturing in

this country is in Ontario. That's a much higher percentage

than the population; 55 per cent of the population is certainly

not in Ontario. With that kind of diversity, of course

unemployment is going to be less there. Our government, the New

Democratic government, is encouraging employment, not just the

warehousing but encouraging employment, employment in

manufacturing.

How many times have I gone to that Member for Economic

Development? We need to have employment; we need to have

manufacturing and high labour-intensive industries. I believe

that this is coming; I believe that this bill, in general

terms, is an incentive in that way.

I strongly support it, and I know all Members will.

Mr. A.V. Fraser (Cariboo): Mr. Speaker, I would like

to say a few words on Bill 171. I consider it the most

important bill at this session — maybe since this government

took office in October, 1972. It's important for other reasons

than I'm getting the hand for, as far as I'm concerned.

The Minister of Lands, Forests and Water

[ Page 4840 ]

Resources who has this bill is really the boss of this

administration, and this bill certainly points that out. It's

my opinion and has been for some time, Mr. Speaker, that when

this Minister says to the Premier of this province (Hon. Mr.

Barrett): "You had better jump," all the Premier says

is, "Please tell me how high." In other words, if we had a

replacement for the Premier today, this man who is the Minister

of Lands, Forests and Water Resources now, with this bill,

would certainly be Premier of British Columbia.

I would like to also point out something that I didn't think

I'd see happen during the NDP regime. Anyway, a large

article

in The Province newspaper this morning shows they're

really starting to believe that maybe some of the takeover

bills. are, in fact, just this. They point out that Bill 171

could well be justified by crying wolf about it because, in

fact, it will certainly have full control and probably take

over great sections of the forest industry.

Interjection.

Mr. Fraser: Mr. Speaker, I hear "Cluck, cluck" from

the other end of the House. At least I never even had to leave

this House because of an issue that was before it. I've never

declined or put my running shoes on for a vote that has been

taken in this House. I can't say the same for some Members who

are here now.

This Bill 171 certainly confirms the authority of this

Minister that he has in this government. And, of course, the

other disturbing thing, Mr. Minister, is the fact that the

forest economy which is affected by this legislation represents

over 50 per cent of the economy of British Columbia. We all

fully realize, I think, its very importance, its high

importance, here.

This Minister, in my opinion ever since he has been a

Minister, wants to defy and has no respect for this

Legislature. It is where all public business should be

conducted. Right at this moment there are 28 questions on the

order paper that have been asked back to February by this

Minister and he has the big percentage of zero in replying to

questions which have been asked by various Members of this

House. So he absolutely defies this Legislature in any way he

can see fit.

I'd like to make a few comments on this bill itself, Mr.

Speaker. It actually breaks down to two parts.

First, it would control all the prices, contracts and

arrangements relating to the sale of wood chips. That's one

section. It would retroactively void wood chip sale contracts

which are in conflict with the Act. In other words, it would

destroy any contracts that exist and completely control the

wood chips.

That is one

section of this bill. But the other part which I notice the prior

speaker didn't refer to too much is, in my opinion, a far more important

section

of this bill. It creates a Crown agency, I believe, called the B.C. Forest Products

Board which would have all the powers of a profit-making company, and possibly

more. It would have vague and uncertain powers to "improve the performance of

markets for forest products, and to encourage the utilization of timber…."

It also could act as a royal commission of inquiry under the

Public Inquiries Act. This would require the disclosures of all

documents, papers, financial statements, et cetera, of any

person in the industry, whether related to forest resources or

markets. Hence, the Minister can direct the corporation to

inquire into the affairs and finances of public and private

companies and individuals.

The general uncertainty created by the retroactivity of this

bill; the regulation of wood chips, prices and contracts; the

scope of the term "wood chips;" the right of inquiry; the

evident purpose of creating a corporation with these broad

objects and powers must all create an uncertain financial

climate for the private sector in the Province of British

Columbia.

There are problems and certainly differences between the

coast forest industry and the interior. A great deal of my

remarks will relate to the interior, which I think is under

more debate in the province today than the coast industry.

Certainly it is in more difficulties it would appear to me.

I would like to go back a way. When the Minister spoke

earlier, he referred to the fact of the expansion of the pulp

industry. I'm well aware of what happened when close

utilization was established as a policy by the prior

administration. This was to conserve wood that at that time

was going up in smoke through burners or being left on the

forest ground. Encouragement was put in to have an expansion of

the forest industry of the interior into the pulp sector.

I might say, Mr. Speaker, prior to the 1960s, there was no

pulp industry in the interior of British Columbia. It all

existed on the Gulf of Georgia and the lower coast here.

Nothing existed in any part north of that

section of the

Province of British Columbia.

So with the expansion taking place, at least seven pulp

mills were established in the interior. One was established at

Kitimat, three at Prince George, one at Mackenzie, one at

Quesnel and one at Kamloops. Over $600 million was invested by

this pulp industry and approximately 5,000 new jobs were

created to develop the pulp industry in the interior. The last

mill in this process went on stream, I believe, in November or

December, 1972.

The idea behind close utilization was to make more use of

the forest product and, as I said earlier, the waste. Now

almost all these mills in the interior operate from waste of

the sawmill industry. The sawmill industry had to change.

[ Page 4841 ]

The Minister referred to the decline in the forest industry.

Well, with the policy of close utilization, certainly things

had to change. We couldn't have the 2,000 or so, as the

Minister mentioned, cut-and-get-out operators that we had

because there was far too much waste. Close utilization brought

that to a halt and there was amalgamation and phasing out of a

lot of mills all over British Columbia because of this

policy.

But something the Minister didn't mention when he spoke was

that after all this consolidating and so on was done, until we

had the recent slump, there was more jobs created by the forest

industry than we ever had under the small operators.

But today, really we haven't got a small sawmill operator, I

don't think we even have a small logger, Mr. Speaker, as such.

It's I think a nice political phrase, but in fact I don't know

how anybody could be a "small logger" today when a bulldozer

costs $100,000 that he requires for logging. I don't really

think you can refer to them as small. But in any case, with the

advent of the pulp industry in the interior, the sawmills all

had to build new and modern units that would get more out of

the wood and also put barker chippers on to develop a chip

supply for the pulp companies, as well as hog fuel. That hasn't

been mentioned here; I'll have something to say about that

shortly.

The other observation that has been made, we've talked about

the terrific prices of the pulp market today. It is quite true

that they've doubled in price in a short period of time on the

world markets, but I would like to point out, Mr. Speaker, that

the pulp mills that went into the interior didn't make any

money from 1965, they practically operated at a loss until

about 12 months ago. Some of them are only experiencing their

first profit on operation since they invested, and on the

average, each one invested $75 million or $80 million.

But during 1974, Mr. Speaker, the lumber and plywood market

collapsed. As the Minister said, the cause of that is a world

or probably the U.S. — certainly the U.S. market mainly. But not

only the U.S. market as the Minister reported earlier, every

phase of the world market for lumber and plywood for the first

time in many, many years, all collapsed at once.

They couldn't ship to Japan, there was no market there, no

market in Europe and so on. So we have the sudden decline in

the lumber and plywood market. It certainly has worked a severe

hardship, and is working a severe hardship on all the sawmill

operations probably throughout British Columbia, in the area

that I'm acquainted with, certainly all over the interior of

British Columbia.

I might say that throughout the interior some mills have closed entirely, some

of them are on 50 per cent operation and some of them are on 70 per cent operation.

But we have high unemployment in the industry in the interior and the total

in B.C. is probably at about 15,000 people. I don't know how many are indirectly

affected, but thousands more, and it would appear that this is going to continue.

I might make an observation here on the part of this bill

that refers to price of chips. I'm very skeptical, Mr. Speaker,

that the mills particularly that are closed down, that any

increase in the chip price will encourage them to open up. I

might say on the price of chips, they averaged we'll say $10 up

till 12 months ago. The Minister indicates that they aren't

much higher than that now. It's my information that chips now

average from $25 to $40. You know, that's not what the Minister

stated. I think he said around $20. Yes, the supplementary

part

is some $40 odd, so I think if you average that with the lower

price, you find a higher price.

I might say again that on this subject of wood chips, Mr.

Speaker, that I am sure that the wood chip price would have

advanced further by now if the industry had have known what the

government was going to do through the Minister on the price of

stumpage on these chips. If he had signified in any way, like

he did in some material, that he would relax the price of

stumpage as it applied to chip materials, I think you'd have

found the pulp industry would have advanced higher prices long

ago for chips.

But what I think they were afraid of, and I think everyone

was afraid of, is as they advanced the price of chips for the

sawmill operators at least 80 cents of every advanced dollar

would be taken back in the form of stumpage by the government

and in that way would not help in any way the sawmill operator

create any new jobs and so we have the impasse that we have

arrived at today.

This bill provides for a board of directors for this new

Crown corporation, and again of course it will be friends of

this government that are appointed there. I think, Mr. Speaker,

I should announce now we're pretty sure who the new chairman

will be, it will be Frank Howard, the defeated NDP MP from

Skeena.

Interjection.

Mr. Fraser: No, we never said that and I'd like to

point out to the Minister also that there's another MP that is

available and was just recently defeated in my area of

Cariboo-Chilcotin. I refer to Harry Olaussen, the defeated NDP

MP for Cariboo-Chilcotin. That would help the employment in the

Cariboo by getting him employed. This is what we're faced with

again, I said earlier that this new board, over and above the

authority