1998/99 Legislative Session: 3rd Session, 36th 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)

MONDAY, JANUARY 25, 1999

Afternoon

Volume 13, Number 11

[ Page 11243 ]

The House met at 2:07 p.m.

Prayers.

G. Campbell: It gives me great pleasure to introduce the High Commissioner for Britain today, Sir Anthony Goodenough. Sir Anthony, welcome.

Hon. J. MacPhail: I'd like to join the Leader of the Official Opposition in welcoming here today Sir Anthony Goodenough, the British High Commissioner. He's meeting with various members of the government and opposition. He's joined by Mr. Ian Kydd, who has been the British consul general in Vancouver since March of 1998. I would like to make him welcome as well.

P. Calendino: I used to have a professor who started his lesson by saying "unaccustomed as I am . . . . " I don't do this very often, but I am very pleased today to rise and introduce four very good friends and very longtime supporters not just of myself but of the NDP Party and its policies and principles. They are here to visit the Leonardo exhibition and are contributing to a tourism boom in Victoria. In the members' gallery is Mr. Peter Borzillo, a past first vice-president of the Marine Workers and Boilermakers Industrial Union and a proud supporter of the catamaran ferry project.

He's proud because it is a project that, according to him, has revived the shipbuilding industry in B.C. With him is his father Cosimo, his fiancée Chandra Beiko and his sister Carmelina, who sits on my executive. Would the House please make them welcome.

D. Symons: I'd like to make a congratulatory type of introduction. Shelley Leonhardt, the executive director of the Richmond Chamber of Commerce, has been invited to participate in the prestigious International Visitor Program as a guest of the U.S. government. She joins an elite group of individuals from many countries, including heads of state, government officials and dignitaries who have been so honoured. I would ask people in this House to congratulate Shelley in her efforts on behalf of Richmond and British Columbia.

Hon. C. Evans: I waited until the last in the hope that they would actually show up. A parent likes their family to show up on time. Now, at the last minute, I see that my son Philip Evans and my son-in-law, Chris Kennedy, have joined us. It's about time, and will the House please make them welcome.

Oral Questions

FAST FERRY PROGRAM COST OVERRUNS

F. Gingell: Hon. Speaker, someone who has taken graduate studies at the London School of Economics should surely understand that a project over two years late and tendered on an open-ended, cost-plus basis doesn't have a chance of coming in on budget. My question is to the minister who qualifies and is responsible for authorizing expenditures of taxpayers' money in this province. When was the first time the Minister of Finance became aware that the Premier's fast ferry project was going to exceed the Treasury Board cap?

Hon. J. MacPhail: That evidence is not in. We're accumulating that data right now. There's an independent audit going on, as well as a new CEO gathering information. There has been some comment about what could be . . . . When all of the data is in -- all of the information -- Treasury Board will be examining it and enforcing the rules.

The Speaker: First supplementary, member for Delta South.

F. Gingell: The budget process for the year 1999-2000 should have had B.C. Ferries start budget discussions with the Ministry of Finance and Treasury Board sometime in the fall of 1998. As we're all aware, a significant component of B.C. Ferry's budget is the fast ferries project. My question to the Minister of Finance is: when did B.C. Ferries make a budget submission to her for the coming fiscal year?

Hon. D. Miller: Hon. Speaker, quite apart from the issues around fast ferries, we have been engaged in an exercise involving the stakeholders in the areas where the ferries provide services -- the Gulf Islands and others -- in trying to come to grips with, really, two significant questions. One is the decision made in 1990 to have ferries assume all of the responsibility for servicing their capital requirements, and the other is the issue of the operating losses that B.C. Ferries has been incurring over the last four years.

I received a report from the Coastal Council on December 16. The council makes recommendations, which we are currently examining, but fundamentally the question, I guess, is a re-examination of that 1990 decision and what is an appropriate level of debt for the Crown to assume . . .

Interjections.

The Speaker: Order, members.

Hon. D. Miller: . . . what is an appropriate level of debt for the ferry system . . .

Interjections.

The Speaker: Order, members. Minister . . . .

Hon. D. Miller: . . . to assume, and what is an appropriate subsidy . . .

The Speaker: Minister, finish up, please.

Hon. D. Miller: . . . to the B.C. Ferry system.

G. Farrell-Collins: I think the public knows that that was another example of a total non-answer to a question that has been asked by a member of the opposition with regard to this fast ferry project.

My question is for the Minister of Finance. The fact that this project was over budget has been known by apparently everybody in the province of British Columbia but ministers of the Crown. Can the Minister of Finance tell us whether or not, with all the rumours and all the speculation that has been out there about the fast ferry project over the last two years and with her desire to balance the budget, she ever once wrote a letter or a request or a memo to anyone at B.C. Ferries asking them to confirm the costs of the fast ferry project?

[2:15]

[ Page 11244 ]

Hon. J. MacPhail: Hon. Speaker, I am not going to stand here and in any way speculate on what has happened -- whether to defend or to deny. What I will do, though, is offer this.

Interjections.

The Speaker: Members . . . .

Hon. J. MacPhail: I will offer what has occurred to date, and that is that there is in place a system of regular reporting on the fast ferries, which took place up until very recently and then stopped. I will offer that the budget process is an ongoing exercise and has not been completed, by any means. The timing that the opposition speculates upon is not right. And I will offer this: after all of the information is gathered up by the new CEO of B.C. Ferry Corporation, and the audit that is being done, we will deal with this and apply and enforce all of the rules.

The Speaker: First supplementary, member for Vancouver-Little Mountain.

G. Farrell-Collins: This is a different type of question to the minister. We're not asking what the B.C. Ferry Corporation did; what we're asking is what the ministers of the Crown did, when everyone else in British Columbia knew these projects were over budget.

Can the Minister of Finance tell us whether or not, in the preparation for last year's budget or this year's budget -- in her desire to finally hit a target -- she ever once wrote a letter or a memo or anything to the minister, to the Premier or to her officials in Finance, asking whether or not this project was in fact on budget?

Hon. J. MacPhail: I did answer the question, but I'll repeat it, hon. Speaker. There was a letter of approval that was sent, in terms of the costs that were going to be allowed to be incurred around the fast ferry project. Then there was a requirement in place that B.C. Ferries would report on the cost of the fast ferry project on a regular basis -- quarterly -- and that occurred until very recently.

G. Plant: The fast ferry project was two years overdue on a cost-plus contract basis, and experts from all over industry were saying that this project was over budget. The minister responsible for B.C. Ferries says that he didn't know and that he didn't even have any reason to know. The question, though, is whether he actually knew that he should care to know. So my question to the minister responsible for B.C. Ferries is this: can he tell us if there are any minutes from B.C. Ferry board meetings showing that he ever once asked anything about the fast ferry budget?

Hon. D. Miller: I'm not quite clear on the question. Perhaps the member might rephrase it.

Interjections.

The Speaker: Order, members.

G. Plant: I get it . . . .

Interjections.

The Speaker: Order, members.

G. Plant: It used to be: hear no questions, see no questions, care about no questions, hide from questions. Finally, when a little bit of information comes out in a way that he can't deny it anymore, then it's: run from questions, hide from questions . . . . The minister would have us believe, even now, that he was blissfully ignorant that the fast ferry project was going to be almost $200 million over budget. So he obviously doesn't know anything about the minutes of B.C. Ferries board meetings. Can he tell us: did he or his ministry ever make any submissions to Treasury Board, saying anything about cost overruns on the B.C. Ferries fast ferry project?

Hon. D. Miller: When I learned of this increase in the cost, I made that issue public. We held a press conference only a week ago -- it seems longer, hon. Speaker. During that press conference I was very clear in saying that I had been engaged in discussions with Ferries as recently as the beginning of December and that we were using, for discussion purposes, a cost of $86 million. I was informed on January 7 that that cost was "over $100 million." At the press conference, Mr. Munro, the chair of CFI, indicated . . . .

Interjections.

Hon. D. Miller: Well, I can only try, hon. Speaker.

Interjections.

The Speaker: Hon. members, come to order.

C. Clark: Well, hon. Speaker, ignorance is bliss, unless you're the poor taxpayer that gets stuck with the bill for these NDP messes. Even the chairman of B.C. Ferries now says that he knew the project would never come in on budget -- ever. The Minister of Finance has told us that the government was getting audits about what was happening in the fast ferry project, and then they stopped coming. If the minister was never curious enough to ask anybody about what was going on with the budget or to check out on those rumours and find out what was happening . . . . Did he even inquire why the audits stopped coming?

Hon. D. Miller: Just to continue my last response, at the . . . .

Interjections.

Hon. D. Miller: I think it goes to the opposition's question. I'm just trying to be as fulsome as I can.

The chair of CFI stated at the press conference that the board of CFI . . . .

Interjection.

Hon. D. Miller: Hon. Speaker, there's a member yelling out: "Just tell the truth." I am telling the truth. If anybody wants to get up and say I'm not, then perhaps the rules of the House would prevail.

Interjections.

The Speaker: Hon. members will come to order.

[ Page 11245 ]

Hon. D. Miller: Mr. Munro indicated that the board of CFI was informed verbally at the November meeting that the costs "might exceed $90 million." At that stage, the chair of the board of B.C. Ferries, in conjunction with the chair of CFI, demanded a full audit be presented to them. The results of that audit were reported to me on January 14, and they indicated that the cost, according to that report, had arrived at a figure of $113 million for the first vessel and that there may be associated costs of an additional $30 million. I said at that press conference that I had no confidence in those numbers.

We have appointed people who have been very forthcoming and will produce a full report on what went wrong, why they weren't reported and what the real costs are.

The Speaker: First supplementary, member for Port Moody-Burnaby Mountain.

C. Clark: We knew there was something going wrong four years ago. The public knew there was something going wrong four years ago. The media knew. Every expert in the industry knew there was something going wrong. This minister and this government would have us believe that not one of them asked a single question about what was going wrong.

Now the Minister of Finance stands up today and says: "We used to get audits, but suddenly, mysteriously, they stopped coming." Will the Minister of Finance today stand up and explain, if those audits suddenly stopped coming, why she never once inquired why they stopped coming, and even further, why she never bothered to inquire why the audits that she did have must have revealed that this project was going to be very badly over budget?

Hon. D. Miller: We have been, I think, very consistent. We rely as ministers on people to provide information to us. The information has proven to be incorrect. We have now taken steps to find out why that was and what the accurate information was. When we get that, we will make that information public.

M. de Jong: One of the introductions that was made was the British High Commissioner. You know, there is a tradition which extends from that institution that ministers who are incapable of doing the job they're charged with doing would resign.

The minister says: "I didn't know." The Finance minister says: "I didn't know." Everyone knew -- the press, the opposition, the people working on the project. Everyone knew. This minister would have us believe that he didn't even bother to ask. People aren't interested in what this minister has to say anymore. They're not interested in what the Finance minister has to say anymore. They want to know what the Premier has to say about a project that he launched at the outset. So, Madam Speaker, let the Premier stand in this House today and let him tell British Columbians how he squandered millions upon millions of their dollars.

Hon. D. Miller: I do believe in ministerial accountability. As I've said, for almost the last three years on this project I have been the minister responsible. I have the full responsibility for it.

Interjections.

The Speaker: Members, it's hard and very difficult . . . . Members will come to order.

Hon. D. Miller: I was not given accurate information. I have now taken steps to get to the bottom of that. Why wasn't that information forthcoming? What is the accurate information? When we have that information, we will make that information public.

The Speaker: The bell ends question period.

Reports from Committees

J. Smallwood: I have the honour to present the first report of the Special Committee on the Multilateral Agreement on Investment. I move that the report be taken as read and received.

Motion approved.

Petitions

G. Campbell: I'd like to present this petition from over 3,000 citizens from across British Columbia, who request that the ratification of the Nis g a'a treaty be withheld until such time as the treaty has been approved in principle by the people of B.C. through a provincewide referendum.

Orders of the Day

Hon. J. MacPhail: I call Committee of the Whole to debate . . . . Before I do that, I must ask leave of the House to permit the Select Standing Committee on Forests, Energy, Mines and Petroleum Resources to sit this afternoon while the House is in session.

Leave granted.

Hon. J. MacPhail: I call Committee of the Whole to debate Bill 51.

NIS G A'A FINAL AGREEMENT ACT

(continued)

The House in committee on Bill 51; W. Hartley in the chair.

On the schedule,

chapter 3 (continued).

[2:30]

G. Wilson: Thank you to the official opposition critic for allowing me to continue on, on a line where we actually adjourned last week -- the question on the

chapter on lands.

The point that I was raising last week . . . . I've subsequently had a chance to speak with legal counsel and try to understand a little bit more clearly how this matter of land is to be dealt with in terms of jurisdiction and title. I make some distinction between those two. The point I was making is: it's my understanding that the way the land is going to work is that it will be fee simple but that the allodial title or radical title -- which I think are now being used interchangeably -- is going to rest with the province. If that's the case, then as fee simple land, the provincial Torrens system applies with respect to registration and so on.

What becomes a little bit problematic -- and this is where I'd like to get some clarification for the record -- is the extent

[ Page 11246 ]

to which the Nis g a'a will be able to buy, sell and trade their lands; the extent to which they'll be able to use their lands as collateral in a conventional mortgage system, where they'll be able to put it up for mortgage; and the right that the mortgage holder will have, in the event that there is default on payment, to foreclose on that land and therefore dispose of that land. The concern that's been expressed . . . . I guess I'll go right to the heart of it: the understanding I have is that the Nis g a'a will hold jurisdiction on that land no matter what happens.

So even though it's fee simple -- unlike myself, who holds fee simple land . . . . If I put it up for collateral to get a mortgage, and if I default on the mortgage, the person who holds the mortgage can foreclose if they choose and can either take possession of the land or dispose of the land to recover the amount of the mortgage. But once that happens, my title is gone, because they've now foreclosed, and they can do whatever they want with that land.

But in this case, if the Nis g a'a use their land for collateral to raise money and they default on whatever their scheduled payments are, the mortgage holder can foreclose -- they can even dispose of it, sell that land to somebody else -- but it always remains Nis g a'a land with respect to jurisdiction. So it's not pulled out of the whole; the whole doesn't diminish. That's my understanding of it. Of course, the example that comes to mind is Alaska. We know what happened in Alaska: huge amounts of land were disposed of and lost.

I wonder if the minister might, first of all, tell me if I'm on the right track with that. Then if I am, there are some questions that will follow.

Hon. D. Lovick: The member is quite correct in what he says.

G. Wilson: So the concern, then, comes with respect to the extent to which the Nis g a'a can in fact mortgage themselves using the land as collateral.

Now, within their constitution, I understand, there are fairly specific and somewhat restrictive provisions in terms of the amount of land that can be put up for mortgage. The concern is that, assuming that a lender . . . . I guess there's a bit of an assumption here, because obviously if you're a lender coming in to lend money on the basis of an assigned value for the Nis g a'a land . . . .

If the lender, for whatever reason, is required to foreclose on that land and the debt is not honoured, what recourse will that lender have against either the federal or the provincial government in order to recover that amount, given that they can never take the land from the Nis g a'a? Therefore, ultimately, the person who owes the money will still have jurisdiction on that land. What recourse, if any, do they have to be able to pick up the tab from either the federal or the provincial government in light of a default?

Hon. D. Lovick: There is no recourse for the lender against Canada or British Columbia.

G. Wilson: Okay. To be clear on this, then . . . . This is a concern that has been expressed by a number of people. Ultimately, moneys could be borrowed and security could be put up by way of land. If foreclosure occurs, they can dispose of the land to another buyer. But who's going to buy land that's already encumbered? If the Nis g a'a can't make money on it and it's already encumbered, who's going to pick that up? Nobody is going to want to buy it. Who pays the bill?

Two questions flow from that. What value can be placed against a Nis g a'a parcel in that event? In a sense, there's no recourse outside of taking the Nis g a'a to court. I assume that you could get a court assignment against the debt, but if they don't have any money to pay it, I don't know where you're going to get the money from. That's the first question: what value is going to be assigned against this?

Second, where in the agreement, specifically, is British Columbia? I think it will ultimately be British Columbia, because the federal government will wash their hands of it. They will have already made the transfer, and this will no longer be

section 91 land. Where is the protection that provides British Columbia be saved harmless from some eventual recourse on that question?

Hon. D. Lovick: This brief pause in proceedings is attributable to the fact that the lands expert is sitting with the Minister of Environment, Lands and Parks, and will answer the question after some consultation. We'll be with you in a moment.

Hon. C. McGregor: I've been given to understand by our experts here that the lands could be seized or disposed of if they were registered in the land titles office. In fact, this can best be described as a commercial decision between the bank and the Nis g a'a.

G. Wilson: I know that. But you see, there are two parts of this that are a little bit concerning. I would think that they are equally as concerning to the Nis g a'a as they are to everybody else.

The first is that it appears that if we read these sections . . . . I don't mean to jump any further than

section 7, but I think you have to look at them in conjunction. If, for example, any parcel of Nis g a'a land or any interest in Nis g a'a land finally escheats to the Crown, the Crown is obliged to give it back to the Nis g a'a. That is different than for the rest of us, because if you have land and you die, and if you have no will and there is nobody else who's ready to pick up, and it escheats to the Crown, then it stays with the Crown. But here, it doesn't; it goes back to the Nis g a'a.

Similarly, if they put it up as collateral and money is lent on the basis of it, and they default on the payment . . . . Even though you can foreclose on it, the only . . . . You can't sell it outside of Nis g a'a ownership, because the jurisdiction, essentially, will always rest with the Nis g a'a, even though the title may change. So its value is greatly diminished. I'm having a hard time figuring out, under the system the way it reads here, why anybody would lend money on the basis of that land. That land . . . .

Interjection.

G. Wilson: How would that person recover their money? That's the question. I can't see why anybody would want to lend money. Yet there has to be a way for it to work, I would think.

Hon. C. McGregor: I don't want to imply that perhaps the member is confused, if he's not, but let me try to give an answer in response to a remark he made. It was that it can never be sold to anyone except for a Nis g a'a person. That is simply incorrect. The sale of those properties can go to any

[ Page 11247 ]

non-Nis g a'a person. It is only the underlying allodial title that remains. That land is then subject to Nis g a'a law, but it is not always subject to Nis g a'a ownership. It would depend on who purchased that land.

G. Wilson: Let me try to come back and be much more specific. My understanding is this . . . . Maybe if we get the ground rules straight, at least we'll not both be confused; even though we may not both be right, at least we won't be confused. My understanding is that the allodial title rests with the province. That's a given. That title can change, but the jurisdiction over the land cannot.

[2:45]

If I could use an analogy, it's very much like buying land in the city of Victoria. If you buy land that is within the city or municipal boundaries, all of the land use rights and rules and regulations will apply. In that sense, I don't have any problem so far with what's here. Where I become more concerned is when the Nis g a'a Lisims government or any of the village governments raises money by putting up the land as collateral. If they should default -- and we all hope they won't; we all hope the economies are going to do well . . . .

But if they should default, and the mortgage holder decides to exercise their right to foreclose and forecloses, they are going to be foreclosing on land that the very people they have just defaulted on are going to still have the right to make governance on. In other words, they'll still regulate and govern it. So how does the person recover their money? That's the question.

Hon. U. Dosanjh: I think it's pretty basic. Here is how it generally works. If you see it as a good deal, you lend money on a parcel of Nis g a'a land, and you foreclose if the Nis g a'a end or some other end of the bargain isn't kept up. Once you foreclose, you become in control and have possession of that, and you're able to then convey it to somebody else. If I can use simple language, the residual title still remains with the Nis g a'a. The Nis g a'a are owners of the land. That does not mean that if you have foreclosed on it you can't convey it to Y, if you are X and you have it.

The question you will ask is: what would be the value of it? But that's a commercial interest, and people who would lend money would first determine that in their own mind and would take the necessary risks. Anyone who buys it from them, once it's foreclosed, would also take those attendant risks. I don't think that's a legal question.

G. Wilson: Well, let me just have one more go at this. I would agree that there's a commercial interest and certainly that there's a risk. But the concern that's been expressed and what I heard from the Minister of Aboriginal Affairs, which will give us some comfort -- maybe we can actually look at the language in the agreement -- is that if there is a default and the person that forecloses cannot find any other way to dispose of the land to recover their money, what recourse will that lender have, save and except to presumably take the Nis g a'a Lisims government to court to get a payment

schedule to have that money paid back? Is that the only recourse? Presumably there is no recourse, if there is insolvency, for them to come against either the province or the federal government. That's what I'm coming to.

Hon. U. Dosanjh: There's no recourse against the provincial or the federal government. My colleague said that earlier. The recourse is against the Nis g a'a at that point.

Let me just clarify again. I think I may have misstated my position. Once the Nis g a'a alienate fee simple land to someone else, the Nis g a'a no longer have title to that parcel. The residual remains with the Crown in the right of the province, but it's still part of the Nis g a'a lands governed by Nis g a'a laws and the like.

G. Wilson: Okay. I think I'm clear on it, but I'd like the record to be clear on it. Let me just try and wrap it up. The title can transfer; the jurisdiction remains. The jurisdiction will never transfer; the allodial title remains. Anybody who chooses to lend money on the basis of that is going to know before going in there that if they choose to lend money on it, their right to be able to foreclose and sell will be limited by the market value determined as a result of the jurisdiction that applies to it. In other words, they can't simply pull it out of the land as a whole.

The base of land that is governed by the Nis g a'a cannot be diminished by mortgage foreclosure. Is that correct? That's the basic point I'm trying to get at.

Hon. U. Dosanjh: Correct.

G. Plant: Let me see if I understand this last point properly, because I think it's an important question. There are a number of things that can happen in terms of ownership of Nis g a'a lands. To some extent, that may turn on whether they are lands that the Nis g a'a choose to put into the Torrens system as to opposed to lands with which they don't wish to do that. The lands which are Nis g a'a lands could be sold or transferred. In some circumstances, they could be mortgaged; they may be foreclosed upon.

But in all of those circumstances, whatever the outcome, those lands will always remain Nis g a'a lands -- that is, capital-N Nis g a'a and capital-L Lands, as that term is used in the treaty. Is that correct?

Hon. U. Dosanjh: Correct.

J. Weisgerber: To follow this very interesting argument . . . . If the Nis g a'a decide at some point in the future -- perhaps as a result of some overlap activities that we talked about last week -- that they will dispose of some of the Nis g a'a lands in order to purchase additional lands, perhaps more attractive lands that they are more desirous of having . . . . If I follow the debate correctly, the underlying title would follow the new Nis g a'a lands that were purchased. They would become Nis g a'a lands in the sense of this agreement, so we would expand the amount of Nis g a'a land. However, if lands were sold off in exchange, they too would remain Nis g a'a lands. Is that correct?

What I'm asking is: can the Nis g a'a expand the size of their Nis g a'a lands? Can they change the configuration of their Nis g a'a lands? But there is no way to subtract any lands that are disposed of from that equation. Or can the Nis g a'a add lands -- capital-N, capital-L? When they dispose of lands, are they hindered from providing free and simple title, without the encumbrance of Nis g a'a lands, to lands that they might voluntarily choose to dispose of?

Hon. C. McGregor:

Section 11 in the "Lands"

chapter makes clear that there must be owner consent in Canada and British Columbia. The Nis g a'a nation can then agree that land can be added to Nis g a'a lands if additional lands are purchased. Those are the conditions under which they could be added to Nis g a'a lands.

[ Page 11248 ]

J. Weisgerber: Well, let's assume that in a burst of generosity, British Columbia and Canada decided that they would allow that to happen. I'm being a bit facetious, because I can't imagine this government or the one we have in Ottawa ever having the courage to say no. So I'm assuming that anytime the Nis g a'a want to add lands, they can count on consent from the other parties. But when that happens, they become Nis g a'a Lands -- capital-N, capital-L. I don't dispute that; I don't question that.

But surely, if they can add lands, then they must be able, by some similar mechanism, to free existing Nis g a'a lands from any connection and dismiss the underlying or allodial title from those lands. If they want to put a piece of land on the block, to sell it to raise money and maximize their returns, can they simply say, "These will no longer be Nis g a'a lands," and put them up for sale fee simple?

Hon. U. Dosanjh: As I said, yes, they can alienate a parcel of land within the Nis g a'a boundaries. It would still remain Nis g a'a land -- capital-N, capital-L -- for jurisdictional purposes. In other words, they can, if Canada, British Columbia and the owner consent, expand by adding another parcel or parcels, but they cannot diminish the land base; they can't decrease the land base they have now. That's a decision that they have made and that we have agreed to. Their fear, obviously, is that they may not have a land base, and they want to make sure that they are able to retain that land base for economic and other development purposes.

J. Weisgerber: So once this agreement passes the two parliaments and lands are designated as Nis g a'a lands, there is no act of any government in Canada that can change that designation. There is no act of the Nis g a'a government, no act of the federal government, no act of the provincial government . . . . Although it's not been said, I gather that even with the will of all three governments, failing a change in legislation, there would be no way to remove the underlying Nis g a'a title from these described Nis g a'a lands.

Hon. U. Dosanjh: All three parties -- the Nis g a'a, the province, the federal government -- can agree for a certain portion of Nis g a'a lands to be non-Nis g a'a. Obviously they would have to make amendments, but that's the only eventuality in which that could be done.

J. Weisgerber: I want to examine, then, two more possibilities, if I may. It seems to me that the rationale that we've heard through this debate -- through a decade of debate -- is, number one, that aboriginal people need a larger land base and the resources that are on and under that land in order for them to build an economy. I don't think anybody has -- I at this point don't have -- any argument with that part of the equation.

The second has been that this notion of the Indian Act -- and the title residing in the federal government -- has been the major constraint to any value-added activity on the land. There is not capital available, because of the lack of title and the lack of lenders to realize on their equity or loans. We've heard that this is going to be corrected with Nis g a'a.

I wonder if someone can tell me whether or not any of the parties, particularly the provincial government, have done any studies to identify lenders who would be prepared to enter into agreements on this under this structure. Has the province sat down and identified three of the major banks in Canada that say: "We'll have no trouble with this encumbrance of title"? How was the decision made, given that one of the primary motivations is economic development?

What studies did the province do to determine that they would achieve what we are led to believe they wanted to achieve by making sure that the Nis g a'a government had fee simple title to their lands and could encumber them? Who would be willing to . . .

An Hon. Member: Lend them any money.

J. Weisgerber: . . . lend the money under the constraints that we're now debating?

Hon. U. Dosanjh: I will not speak on behalf of the commercial interests. Let them speak for themselves. But I am certain that, given more certainty in terms of the land situation, there will be commercial institutions that would express interest in dealing with the Nis g a'a. The Nis g a'a, obviously, after 25 years of negotiations have come to believe that within the confines of this treaty there is the basis for them to engage in economic development. If they didn't, they wouldn't have signed this.

I think it's important for us to recognize that this is something for them to consider; it is something for us to consider as well. We believe that this treaty, in the way it's been framed, provides the basis for development -- including economic development. If you have the ability to alienate a parcel of land fee simple, and it can pass from the hands of A to the hands of B and C and D and so on and so forth without Nis g a'a ever saying, "It must come back to us legally," you can sell it to somebody else. The only difference is that this parcel of land remains Nis g a'a land for jurisdictional purposes -- for Nis g a'a law and other issues.

Interjection.

Hon. U. Dosanjh: Exactly.

Interjection.

Hon. U. Dosanjh: If they have the ability to levy taxes.

I think that's a simple distinction I can make for the hon. member. I think that the hon. member is still probably confused between it being Nis g a'a land for jurisdictional purposes and the ability of anyone who owns a parcel of land to raise funds. It is my humble opinion that within the context of the framework that exists here, people who go and buy parcels of Nis g a'a land from Nis g a'a -- if Nis g a'a is prepared to sell those parcels -- would be able to raise requisite financing.

[3:00]

J. Weisgerber: I'm not going to start debating who's confused and who isn't and who understands this and who doesn't; I don't think that's relevant.

What I hear the minister saying, though, is that because the Nis g a'a signed this agreement and because the Nis g a'a in their stated goals want economic development, ergo they must have studied this issue with respect to economic development. Surely if I were in Ottawa or in the Nass Valley, I could argue that the province wants to see economic development on Nis g a'a lands. The province signed this deal; ergo the province must have done studies that satisfy itself that money can be raised by this mechanism.

[ Page 11249 ]

To simply say, "It's the problem of the lenders and the problem of the Nis g a'a; we've done no examination; we have no evidence to suggest it will work . . . . " It is like the answers we've got on every other contentious issue. When we talk about overlaps, they say: "Gee, we never bothered to check the boundaries. We don't know who had a competing claim, but we wish they'd settle them." And now we're told: "We think this is how they will raise money, but there are no studies to suggest . . . . "

I want to try one more time, Mr. Chairman. Will one of the ministers advise me whether their ministry has contacted lending institutions or associations of lending institutions to examine the workability of this structure with respect to raising capital for economic development?

Hon. D. Lovick: I can't confirm that there have been any studies of the kind that the member refers to.

J. Weisgerber: Let me just finish with this thought in mind. We have a Nis g a'a corporation that starts an enterprise. They raise equity or mortgage funds, and the enterprise fails. The lender realizes on their security and sells the business in the middle of the Nis g a'a lands to a non-Nis g a'a. Would that new owner have reason to expect that his presence is going to be welcome?

The point I'm making is that I think there is going to be a lot of animosity around the failure of the tribal enterprise. To then think that a lender could repossess and resell this land, still subject to the rules and taxation of the government from which it was foreclosed, in my mind begs credibility.

I think that a lender -- at least the lenders who are trying to do business today in the interior of British Columbia and who routinely walk away from businesses that don't have this kind of encumbrance, saying, "We don't think there is enough value or that we can be sure enough about the value of properties to make investment decisions . . . . " I don't think that those same people are going to feel comfortable making investments or loans where there are greater encumbrances than there are on the sawmill down the road or the mining enterprise or the value-added mill.

Those businesses, if the ministers aren't aware, are tremendously handicapped today. Small rural-based businesses are tremendously handicapped when it comes to raising capital from major institutions in British Columbia. To think that enterprises on these lands, with greater encumbrances, are somehow going to find the road an easy one simply underestimates the difficulties of raising money in a community like the Nass Valley, even given total access to land that might be chatteled as a result of an economic enterprise.

I don't know. I don't think I'm going to get an answer. I will close by saying only that I think this is, once again, an indication of how poorly thought out many of the provisions of this agreement are.

Hon. D. Lovick: Mr. Chairman, for the record, I simply want to clarify a couple of points, if I might. One is that we have evidence that there are indeed expressions of interest in the Nass by banks, which have obviously examined the terms of the treaty. Commercial lenders are looking at it.

The second point, perhaps more importantly, is to simply summarize what the intent of paragraphs 4 and 5 actually is. I too have struggled with this. But in reviewing them, I think we can summarize them this way: the Nis g a'a nation can dispose of the whole of its estate. Moreover, the Nis g a'a nation can dispose of a lesser estate -- what's also called a life estate, in technical terms. Further, they can create as well as dispose of interests in Nis g a'a lands -- particular interests.

However -- and here's the point -- notwithstanding any one of those dispositions, Nis g a'a lands will always be Nis g a'a lands; that's the crucial point -- i.e., subject to Nis g a'a government jurisdiction regardless of ownership. The analogy, then, is something like, I guess, a municipal government. A private individual buys land in the municipality. That land may change ownership 15 or 20 times, but it will always be subject to the control of the municipal government. That's the analogy that I think we're missing that will perhaps clarify matters for us.

G. Campbell: I'm trying to get my head around this whole issue of the land quantity and how it's valued, etc. So I'd like to ask the minister a few questions with regard to that. The government policy they have enunciated through their various policy papers, through their web site, etc., is that overall, the total land held by first nations after treaty settlements are completed in British Columbia will be less than 5 percent of the province's land base.

So as we build up this understanding of how the government has developed this policy, this template, I just wonder if the minister could answer this question: given that the 95 percent of British Columbians who are not aboriginal privately own 5 percent of the lands of the provincial land base, how was the policy arrived at that aboriginal communities, who have 5 percent of the population, would get 5 percent of the land base? Where was the policy rationale that determined that 5 percent?

Hon. D. Lovick: The principle has been around for a few years. I don't believe that it was ever formally attached to a percentage and a hard cap, as it were. What was said from the beginning was that at the end of the day, at the end of settling treaties in the province, the total amount of land affected would be roughly comparable to the proportion of the population of aboriginal persons -- i.e., if 5.2 percent of British Columbian are first nations people, then the total land quantum could be somewhere in the area of 5.2 percent. That's where that figure came from, because I think it is roughly 5 percent. I hope that clarifies.

G. Campbell: I guess what I'd like to know is why the government thinks that's fair. If 95 percent of the people, who are non-aboriginal, privately own 5 percent of the land, why would we then say: "Well, you're aboriginal, and therefore you'll get 5 percent of the land"? It seems to me that there's got to be more than simply . . . . Say the aboriginal community was actually 3 percent of the population. Would we then say it's going to be 3 percent of the land? That's not much of a policy base to build future treaty negotiations on.

It's going to take some time to negotiate treaties; I think everyone has accepted that. What if there is a sudden increase in the population of aboriginal communities, so that they for some reason become 7 percent? Does that mean 7 percent of the land?

There has to be . . . . It seems to me that the government should or would have had at one point or another a policy debate on how they were allocating that. These are the government's words, not mine. The government's words are that the total treaty settlements completed in British Columbia for

[ Page 11250 ]

first nations will be less than 5 percent of the province's land base. When you make that kind of statement, I would assume that there's some thought and some policy direction that went into it.

Hon. D. Lovick: I'm sorry; I thought I had explained. I said that the figure of 5 percent was used merely as an indicator -- a guesstimate, if you will -- of roughly what the percentage of aboriginal people in the province is. It could be a little over 5 percent; it could be a little less. We were guided not by the percentage figure but rather by the concept that, proportional to their numbers, this would be the land quantum. That's a principle that the Leader of the Opposition may not like or may not agree with. But that's the principle by which we operated.

G. Campbell: I guess the problem then becomes that you negotiate with the Nis g a'a, and the amount of land that generally appears to be pulled out of thin air . . . . According to the government, again, the Nis g a'a negotiation is equivalent to 10 percent of what the Nis g a'a asked for -- their traditional territories, as the Nis g a'a tried to define them. If you ask the Gitanyow, they will tell us that it is 20 percent. The reason this is important is that we're talking about establishing a framework for treaties which is going to be applied to 50 to 60 additional treaties across the province.

So it's important for aboriginal communities as well as non-aboriginal communities to understand how this is going to work.

My question to the minister is this: why would any rural first nation accept anything less than 10 percent of their claim area? Why would they accept 5 percent, when the government's own record suggests the Nis g a'a are getting 10 percent. Again, if you ask the Gitanyow, they will tell you that the Nis g a'a are getting 20 percent of their traditional land claim.

So my question to the minister is: why do we believe that this is a basis that we can move forward from for negotiations with other rural aboriginal communities, and why don't you think that they are simply going to continue to escalate their demands and, in doing that, escalate the percentage of land that is taken from the provincial Crown?

Hon. D. Lovick: I don't know whether or not the Leader of the Opposition is being deliberately obtuse, but I've explained this twice. Let me try once more.

I have said that we're not talking about a particular specific percentage. Rather, we're talking about a principle. I don't know how I can enunciate it more than that. The Nis g a'a, to correct him, got about 8 percent of their so-called traditional territory. Moreover, the amount of land, in comparison with the amount of cash, will vary from treaty to treaty. Contrary again to what others want to say, there is not such a thing as one template for all treaties in this province.

The result of that, of course, will be that in certain cases, we will probably see relatively smaller amounts of land and, in some cases, conceivably greater. At the end of the day, however -- and here again is the principle I've now enunciated three times -- the total amount of land will be roughly commensurate with, comparable to, the population of first nations people in the province.

G. Campbell: I can assure you, hon. Chair, that I am not trying to be obtuse; I'm trying to understand the undertakings from the government to the people of the province of British Columbia and how this can actually be executed. How can we implement this?

This is the Ministry of Aboriginal Affairs' own document. It says: "Overall, the total land held by first nations after treaty settlements are completed in British Columbia will be less than 5 percent of the province's land base." We then have a situation where we have this sort of floating negotiation that takes place with each aboriginal community. An aboriginal community will come forward and say: "Here are our traditional lands that we believe should be included as our lands" -- Nis g a'a lands or another community's lands. Now, according to the government, what we've heard is that the Nis g a'a claim takes 10 percent of that land base.

Interjection.

G. Campbell: Heavens! I'm repeating what the government said, and it turns out it was wrong. Say it's 8 percent -- okay? The Gitanyow point out that according to their calculations, the Nis g a'a are receiving 20 percent of their traditional base. Given that we're going to have a number of negotiations take place across the province, why does the minister responsible have any confidence whatsoever that he will be able to meet this guarantee that his document suggests?

[3:15]

The way this has been structured, it almost begs aboriginal communities to ask for more and more land as part of their negotiations. Why would any community accept less than -- to use the minister's figure of this afternoon -- 8 percent of what their traditional claims were? Just so the minister doesn't think this is being obscure, we all know that the entire province is under claim. When the entire province is under claim, and the aboriginal communities are saying, "We won't accept less than 8 percent," how can the minister say to the public or to the House that we will not settle for more than 5 percent?

Hon. D. Lovick: We canvassed this matter for some hours earlier in the debate last week. I appreciate that the Leader of the Opposition wasn't here, but I thought that there were a couple of people speaking for his side of the House who had indeed raised these questions. I felt we'd answered these questions. Frankly, I don't see a great deal gained by simply going over old ground again. I've said what the principle is; I've said this is what we're working on the assumption of.

I would also emphasize that we're not here to talk about treaty No. 27, which may occur five or seven or ten years from now; we're here to debate this treaty, this land quantum, this set of arrangements as spelled out in the agreement.

G. Campbell: I'm sorry the minister isn't interested in debating what this template is. I was sitting in the House and the Premier said to us quite clearly that this treaty will help define future rights. He said quite clearly: "This treaty does define our policy." The Premier was very explicit about this, and it is important that we understand this.

The issue here for the minister is whether this government has thought about any of these things, because the evidence to date is that they have not. The evidence to date is that they have not considered these things. They put out public statements and say: "Just take us at our word." The fact of the matter is that there is no justification for that. There is no policy basis that says this is going to happen. The minister says it's based on population. Does it float with population? Does it shrink with population? Of course it won't. The issue

[ Page 11251 ]

for the minister, again, is just to say: why would we do this? Why would we set up a negotiating framework, a negotiating position, that suggests to aboriginal communities: "Ask for as much as you can, and you may get 8 percent"?

Let me ask the minister in another way. What would compel the minister to say to an aboriginal community: "Sorry, the Nis g a'a got 8 percent, but you're different; I'm only going to give you 5 percent of your claim"? What would compel you to do that?

Hon. D. Lovick: I thank the member for his question. In fact, it's the right question to ask, so let me explain.

What I said earlier, the member will perhaps recall, was that settlements will vary -- based on some kind of sliding or floating scale -- between the amount of land and the amount of cash. At the end of the day, of course, those two are supposed to be roughly equal -- i.e., the land will be valued at X, and the cash is supposed to also be X. The problem and the complexity of it, however, is when you look at the land, because in some cases, land values will be hugely more than they will in others.

A thousand hectares in Nis g a'a territory, in the Nass Valley, has considerably less value than a thousand hectares in downtown Vancouver or Coquitlam. Obviously, then, the adjustment will be made accordingly. In some instances, there may be very little land and a larger amount of cash, and in other instances, the opposite.

Here's to the specific question the member raised. The principle at the end of the day -- what we're committed to achieving at the end of the day, rather -- is equitable treatment among first nations. That doesn't mean they all get the same amount of land. It's obviously going to be based on their circumstances: where they live, the value of the land, the population, and so forth. But a treatment of equity between first nations -- that's the principle. At the end of the day, whatever the value of the Nis g a'a treaty is when we tote all that up, we think comparable value ought to be built into treaties with other first nations. That's what we're working towards achieving here.

G. Campbell: So from that answer, then, I would assume that the minister thinks it's absolutely critical that we all understand how the values for the land were arrived at.

Hon. D. Lovick: Yes.

G. Campbell: Then maybe we can pursue that. The government's documents suggest that the ascribed land value for the Nis g a'a lands is $106,660,000. Will the minister confirm that as the ascribed land value today?

Hon. D. Lovick: The principal means of adjudicating the value of Nis g a'a land was the timber values.

G. Campbell: Before we get into that, could the minister confirm for me that the ascribed land value is $106,660,000?

Hon. D. Lovick: That's correct.

G. Campbell: The minister has said that the primary driver of that value was the timber values -- is that correct?

Hon. D. Lovick: That's true.

G. Campbell: So will the minister inform us how the timber values were arrived at, as we move forward to evaluate this land? Was the land ever cruised?

Hon. D. Lovick: As somebody who once spent some time dragging a chain in a timber cruise and who knows what that's about, I can answer that question. A part of the land was cruised, sufficient to extrapolate for the rest. That, indeed, is the way all cruising happens.

G. Campbell: Given the answer that a part of the land was cruised, my question to the minister is: what part of the land was cruised -- what percentage, and where was it?

Hon. D. Lovick: I don't have that specific detail with me, but we will get it for the member as quickly as we can.

G. Campbell: Can I ask the minister if . . . ? Normally, when we're dealing with a Crown resource like timber, we have standard market procedures for evaluating the value of the resource -- the public value of the resource before it is, effectively, disposed of. Have we followed exactly the same processes in evaluating the Nis g a'a timber resource that we would have for other public lands with timber resources on them?

Hon. D. Lovick: I'm not sure I heard the member's question absolutely clearly, so I want to be careful about how I answer. If he is asking if what we did in Nis g a'a lands is essentially the same practice that we use for evaluating other forestry lands . . . . If that's the question, I believe the answer is yes. We found out what that value was. That's also, of course, how we calculated the forgone revenue of $36 million.

G. Campbell: Can the minister tell me if there was any effort to value recreational lands, recreational opportunities, etc.? Was that included in that, or would that be additional? And what percentage of the value would be attributed to recreational activities that may take place on those lands?

Hon. D. Lovick: My understanding is that we did not evaluate on the basis of recreational opportunity or use.

G. Campbell: So does that mean that there was no value attributed to recreational opportunity, with regard to the $106 million?

Hon. D. Lovick: The member is correct.

G. Campbell: Can the minister explain what the public policy basis is for saying: "We won't include, as a value of the land base that we're using as part of our agreement here . . . "? Why would we not include the market value of recreational opportunities?

Hon. D. Lovick: I think the explanation is simply that what we achieved in the treaty was guaranteed access for the public on lands -- i.e., lands that might be used for recreational purposes. We therefore achieved that value, in effect; therefore we didn't need to valuate it.

G. Campbell: Currently the Crown has a major asset in terms of mineral resources; that's the case on the Nis g a'a lands as well. Can the minister tell us the potential mineral values? How were they calculated? Was there any examination of that? Again, were the potential mineral values left out of the evaluation of the land?

Hon. D. Lovick: Our understanding is that there is relatively little mineral value on those lands and, we felt, not sufficient to justify any more elaborate valuation or study.

[ Page 11252 ]

G. Campbell: Could the minister inform the House as to how they know that they are of relatively little value? Again, were there geological surveys done? Were they told by the private mining industry that there was no interest in mining in that site or that land base?

Hon. D. Lovick: Yes, indeed, we made use of a geological survey and the rather elaborate database they have, and also dealt, of course, with the Ministry of Energy and Mines.

G. Campbell: My question to the minister is: would the minister be willing to make those studies available to the House, so that we can peruse them and, hopefully, come to the same conclusion -- at least see what the facts were upon which this was based -- and not attribute any mineral value to this land cost?

Hon. D. Lovick: I understand that it's not a case of there being particular studies; rather, it's the data which that particular ministry has. Moreover, I am advised that we also had consultations with private mining and mineral industry persons.

G. Campbell: Maybe the simplest way to deal with this would be to ask the minister this question: if I had come to him and asked to buy -- I couldn't have bought the 1,992 square kilometres; it would have been 1,930 -- the 1,930 square kilometres, would he have been willing to sell it to me as an individual British Columbian, as a private sector British Columbian, for $106 million? Is that how the government would have pursued that?

Hon. D. Lovick: I fail to see the point of the question.

G. Campbell: That's the trouble with dealing with this government: they don't understand how the market works. The question is: if someone from the private sector came to you and said, "I would like to buy 1,930 square kilometres of land in this location, exactly here," would this government have sold those lands? Would they have followed exactly the same procedures in arriving at an evaluation of $106 million?

Hon. D. Lovick: The hypothesis is preposterous, and therefore I can't respond. What we're talking about is the deal -- the arrangement we made with the Nis g a'a -- with our partner, Canada. That's what's on the table -- not to talk about some hypothetical circumstance about selling to some other buyer.

G. Campbell: The issue here, and this is from the minister himself . . . . The valuation we put on this land is critical. It's critical not just to what the cost of this is; it's critical to the cost-sharing formula; it's critical to the people of British Columbia. The issue is: how was the valuation arrived at? On what basis did we get a valuation of $106,660,000 for this 1,930 square kilometres of additional Crown land? How was that valuation arrived at?

[3:30]

We have been told so far today that recreational values weren't included and that there were no attributed values for potential mineral values. There was a sort of partial cruising of the forest resource that was done; we don't know exactly how that was done. The issue for the people of B.C. is: how was the valuation made? That valuation process, I would assume, is going to be used in the future in different situations. More importantly, it's going to have a major impact on the province's cost-sharing with the federal government.

Hon. D. Lovick: We are confident that the valuation, the process we went through, is accurate and appropriate. Let me, if I might, explain the difficulty to the member. The reason one uses only the trees, essentially, as the basis for adjudicating the value of the property -- which I said earlier -- is because that's the only part of the land base, frankly, that has a clearly recognizable market value. The rest of the property wasn't for sale. I don't think anybody was interested in buying that property -- 1,900 square kilometres in the Nass Valley.

Therefore what you do is find what is responsive to a marketplace and a market system evaluation. You use the tree value, then -- the forest land value -- and you extrapolate from there to produce the total value of the property in question. We think that's appropriate. I don't think there is another method that instantly comes to mind.

G. Campbell: I want to try and see if I can get this straight from the minister. What he's saying is that the $106 million value, which he has agreed is the value today, is done solely on the basis of the forest resource.

Hon. D. Lovick: That is the indicator for evaluating that particular land base.

G. Campbell: I guess what I'm trying to understand here . . . . I'm not trying to be confusing, but I would like to understand. At some point, someone somewhere sat down and said: "Here's 1,930 square kilometres of land; let's see what we'd value that at. We won't value the mineral resource, because we really don't know what it is. We've done some preliminary stuff for the ministry, and we're not going to value that.

We're not going to value the recreational resource, because it looks like people are going to able to get there, so we won't value that." I assume from the minister's comments that we're not valuing the water resource, because, of course, we know that water is not worth anything.

Is what happened . . . ? Does the minister simply . . . ? I mean, I would be interested in seeing the working documents that got us to $106.66 million, because that clearly is going to be critical as we move ahead. My concern is, particularly with regard to the timber -- but we'll get a chance to deal with that more in regard to the forest resource . . . .

When you look at the timber resource and you think of a partial valuation, and you look at what annual allowable cuts are and how they may or may not have been dealt with beforehand, it really does in fact, I think, undermine the confidence we have that this number is a fair market value for the people of British Columbia -- however you determine that market value. Certainly for most British Columbians, there are more components in the market value of a piece of land than simply the forest resource.

Hon. D. Lovick: We are confident that the price we assigned to that land base is accurate and fair and does indeed represent the market value.

G. Campbell: Let me just move away from that briefly. The valuation that we attribute to the land works in lockstep, if you want, with our cash contribution as a province. As we

[ Page 11253 ]

move forward, I would like the minister to just take a moment to inform me about how he believes the cost-sharing formula will work when you put the land valuation, as well as any cash contributions, into that formula.

Hon. D. Lovick: Mr. Chairman, I understand that we are opening the door to some material that is potentially very, very technical. So I'll try to simply say this. I am sure that the Leader of the Opposition is familiar with the fact that we negotiated a cost-sharing memorandum of understanding with the federal government in 1993, which has indeed been public since 1993. When talking about the land valuation, we used, I gather, a number of different indices based on different land types throughout the province. Clearly the Nis g a'a lands, then, were plugged into that particular paradigm in order to yield the values that we did present.

G. Campbell: Let me ask the minister if this is a correct characterization. Our total contribution to these treaty settlements comes from a combination of land and cash that is included in an overall formula. Is that correct?

Hon. D. Lovick: That is correct.

G. Campbell: Within the overall formula, there is a percentage that the province of British Columbia is going to contribute that is kind of a fixed percentage. Is that correct?

Hon. D. Lovick: There's a range, actually. I believe it goes from 10 to 25 percent, rather than a fixed chunk.

G. Campbell: Does that not establish for all of us the importance of establishing the full market value of any piece of land that's included as part of a settlement? The full market value would be a means of carrying out an evaluation that would be equivalent to . . . outside of the treaty settlement arrangement, so that we know what the real attributable value of that land is. Will it in fact benefit us in terms of cash contributions, which we may need to contribute as part of the formula?

Hon. D. Lovick: Mr. Chairman, I apologize. I thought I had explained this before, but if I haven't, let me try again.

We have an elaborate system of indices based on particular land values, and that depends on where they are in the province, the kinds of things that grow there, access . . . . There are a number of different variables that would produce the values that are assigned. One of the reasons one needs to use that particular model is because the market doesn't always work, quite frankly, when you're dealing with something like 1,900 square kilometres in the Nass Valley. What's the valuation? What do you value?

A market only exists if you have sellers and buyers ready to put their positions on the table, and at that point, I don't think there was anybody who was prepared to leap into the fray and say: "Yeah, I'd like to buy 1,900 square kilometres in the Nass Valley." It didn't come on the market. Therefore to say that a market value is the only necessary mechanism to use for valuation I think is not being mindful of the realities that we are dealing with when we are talking about raw land in an area such as that -- and, also, that magnitude of land.

So the method we use -- those indices, as I say, and the particular one in this instance, of forestry -- we think is the right one and, indeed, the more appropriate.

M. de Jong: Let me carry on from where the minister left off. I'm not clear on what those indices are. I heard a lot of talk about forests. I hear the minister now saying that there were other factors, other variables, at play. I haven't heard what those are. I've heard what wasn't included. I'd like to hear more about what was in terms of assigning a prescribed value to these lands.

Hon. D. Lovick: Let me clarify, in case I have unwittingly misled. The indices, for the most part, deal with different kinds of forest land. I'm sorry; I think my remarks led to the conclusion that there are 15 other kinds of uses that might have been calculated. No, forest land is the basis for different valuations -- I guess everything from scrub pine to beautiful coastal-zone hemlock or something.

M. de Jong: Here's one of the difficulties that I am having in following along this exchange. We're dealing with a lot of land here, and we're dealing with a pretty unique circumstance in terms of its location; much of it is very isolated. I understand all of that. I understand that as far as anticipated economic activity is concerned, the largest component of that would be related to the forestry sector. So I think I understand the importance that everyone is attaching to the valuation process as it relates to forestry and pricing the trees that are there.

But there are other lands here. There are category B lands. There are Nis g a'a private lands that are going to be part of this larger collection of lands, and I'm given to understand that it is contemplated that those lands would lend themselves to some manner of development. That might be in the ecotourism business, or it might be in something else, but presumably those lands have a different value.

Presumably, insofar as some of the lands up around Kincolith are concerned and oceanfront access and the kind of development that might take place around some of those sites, it is fair to have expected that a different value would be assigned. I've heard nothing about that. I've heard nothing about how government took those values into account -- those presumably increased values as compared to what might have been assigned to areas more exclusively within the purview of a traditional forestry economy.

Hon. D. Lovick: The member is referring, I believe, to the 250 hectares -- category B, I guess . . . . My understanding is that those lands were valued at a higher value in order to accommodate that they were perhaps different from the others.

M. de Jong: Good. That's helpful, because insofar as those lands in particular are concerned, I think it's fair to ask the question: if I'd wanted to buy those lands from the Crown, how much would I have paid? Presumably that amount would be the same as the amount that has been assigned to them for the purposes of valuating, costing, this treaty. So what value was assigned to those lands, and on what basis was that value calculated?

Hon. D. Lovick: I'm going to ask the member if he would be patient, and I will try to get some more of that detailed information for him. I don't have it here.

M. de Jong: It may be a matter that falls more properly within the purview of the minister responsible for lands, but I

[ Page 11254 ]

think the point is an important one. To this point -- and the minister can correct me if I'm misstating this -- I have been left with the impression that the calculation in its simplest form took place as follows: take the $106.6 million and divide by the number of hectares involved -- most of that related to forestry lands -- and you can come up with a value.

What I've always suspected and what I think I'm hearing now is: "No, no. We recognize that some of those lands -- category B lands, the private lands -- obviously have a higher value by virtue of what can happen on those lands." The distinguishing characteristic, as well, is that access to those private lands is restricted, and that is presumably a significant feature in coming up with a value that is relevant to those lands.

[3:45]

I am interested in pursuing this, as I think other members are. When the minister says he is obtaining an answer, I don't know if that means he's going to provide us with an indication of what those 250-some-odd hectares of land were valued at. I don't know what level of detail he believes he is going to be in a position to offer to us during the course of this debate.

Hon. D. Lovick: I want to make clear that I don't believe that category B lands were evaluated on the basis of what they might be used for, as the member said, or on an issue of access. Rather, I think what the MOU of 1993 actually says is something about higher-valued forest lands. That was the heading, if you will, they used to capture the fact that some lands obviously would have different values than others.

G. Plant: My recollection, in the context of these fee simple lands, is that it was understood that these lands were valued or had some value to the Nis g a'a, in the context of these negotiations, because they represented the potential for development or use for purposes entirely unrelated to simply timber-harvesting activities.

When you look in appendix D-6, the list of the category B lands, and you look at the maps, as I'm sure the minister has, a lot of these are waterfront properties. There's a place on Meziadin Lake that looks like it's well over 100 kilometres away from Nis g a'a lands, presumably on or near Highway 37. There are a bunch of parcels on the Portland Canal and, again, places far away from Nis g a'a lands. When I was looking at the map a moment ago, I saw a place called the Meziadin Junction fee simple site, which looks like it's a parcel of land right at the intersection of the Stewart-Cassiar Highway and another road.

Earlier, the minister said that essentially, as I understood it, forest values were the basis upon which the $106.66 million figure was arrived at. But I will want to know, in due course, what value is ascribed by the government to the fee simple sites in these category B lands. Presumably they are part of the $106.66 million, so I assume that the minister also has to put that on the list of information yet to come.

Then I'm also interested -- as obviously my colleague from Matsqui and I'm sure other members are -- in how the government ascribed those values to that land. In his last answer, the minister talked about higher-value forest lands or something like that, and I'm just wondering if the minister is able, with the information he does have available to him, to explain what that means and whether that is a process evaluation that would apply, for example, to a property like the Meziadin Junction fee simple site.

Hon. D. Lovick: I think the terminology, to correct the record, was "exceptional value" forest lands. It's based, I gather, entirely on the quality of fibre. If you're looking at old growth or some wonderful big cedar -- or not so much cedar, but fir -- that obviously has a greater value than second-growth small spruce or something.

In addition, I want to emphasize that my understanding is -- again, the memorandum of agreement will show this, I hope -- that we used that forest evaluation because it's doable. It's a mechanism that's available. It's understood; it works. Having said that, though, one also needs to acknowledge that when the member is talking about places like those two fee simple properties around Meziadin Lake, obviously those have tourism value. That's what we're all thinking in terms of future development. One of the central purposes of establishing the treaty, as we know, is to provide economic opportunities.

Clearly that's why those properties are singled out as providing opportunities that the Nis g a'a perceive will help them to grow a better economic future.

G. Plant: I don't think the point of my question was to question the wisdom of having chosen to create or transfer these fee simple sites. It's more a question of trying to figure out, as the Leader of the Opposition was doing when he began this discussion . . . . In big-picture terms, is the $106 million the right figure? How did the government get there?

Of course, we began with the minister indicating that the $106 million figure was essentially a forest values calculation. Now, looking at these fee simple sites, the question arises: is that the only basis upon which these sites were valued? Or did the government try and value these sites in some other way?

I would think -- recognizing that the government itself admits that this is part of the creation of economic development and tourism for the Nis g a'a, as opposed to forestry -- that it would be foolish to value those fee simple sites simply on the same basis that you might value a valley filled with second-growth hemlock. So can the minister at least indicate what the process was by which the government assigned a value to the category B fee simple sites?

Hon. D. Lovick: I made a commitment some minutes ago to get that information. I certainly will, as soon as I can, and share it with the member.

J. Weisgerber: I was just hoping to jump into this for a moment.

My interest in pursuing this is not to try and determine whether the Nis g a'a got land that was worth more or less than $106 million. I think that here the real interest is with British Columbia and their cost-sharing agreement with Ottawa. So -- for people who are listening and watching this -- my concern is that British Columbia is getting credit for the full value of the land that makes up this settlement, because I think this formula of land and cash . . . .

I agree with the minister that an overall value is going to evolve out of this process. As we move into more urban areas, more diversified areas, clearly a formula based on stumpage values isn't going to work very well provincewide. I think there has to be a much more comprehensive approach to valuing the lands.

I'm interested and have always been interested in how the government calculates the forgone tax revenues on land. It's pretty easy to decide what you, as a province or as one

[ Page 11255 ]

individual, could sell to another individual or corporation. There's a market price that establishes a value for land. I don't think it matters much whether it's 1,900 square kilometres or whether it's 20 hectares or perhaps even a downtown Vancouver building lot. There is a market price, and it's reasonably easy to establish.

But once that price is established, if the buyer were to say to the province, which happened to be the vendor: "Gee, I'd like you to work out a price that would free me and my successors in perpetuity from taxation on this property. Having established the market price, would you go back and calculate for me the premium that I would have to pay up front on this property to free it in perpetuity from provincial taxes . . . ? " It seems to me that it's an entirely logical hypothesis for the province to use with the federal government in establishing the value of the land that it has transferred.

Not just the value of the trees, not necessarily even the value of the subsurface rights or the speculative land values, but what as British Columbians, as an entity, are we giving up in terms of taxation and the ability to tax? We can't collect stumpage anymore; we can't tax the land. We're going to be talking about urban lands, agricultural lands, etc.

Is there any mechanism? Has the province attempted to apply a mechanism to calculate the value in perpetuity of forgone taxation on a particular parcel of land?

Hon. D. Lovick: The forgone revenue that the member alludes to, I think, is best captured in terms of stumpage -- our version of tax, if you will, on that land. We've calculated that as $36 million, I believe, in terms of the Nis g a'a land.

J. Weisgerber: But surely we're talking about land over a long, long period of time. We're not talking about land for a century; we're not talking about land for the next harvest of a timber crop. We're essentially talking about land in perpetuity. There's a lot of talk, for example, about the price that the United States paid Russia when it bought Alaska. People laughed about the ridiculously low price that the U.S. paid Russia for Alaska and the fact that there turned out to be oil and all the other resources there. I would argue that there was nothing wrong with the price; that was a market price.

But what Russia didn't calculate was the fact that it was giving up forever any rights to tax or to otherwise benefit from future revenues flowing from those lands. And that's essentially what we're doing with this land.

In my opinion, this is not a simple retail transaction of land; this is the sale of an asset along with taxation privileges on it. I'm not sure that we have many examples of sales of land with taxing authority. This is not to try and minimize the amount of land we're transferring to the Nis g a'a. This is to say to Ottawa: "Give us full value for this resource that we are contributing to these settlements. You, Ottawa, get to write a cheque one day -- or over ten years -- but it's a very finite, very definite value."

My fear is that our resource -- the land contributions here -- is seriously undervalued. I don't believe this issue of taxation has been addressed either in the memorandum of understanding and the cost-sharing agreement or in the calculation of the value of the land in this particular exercise.

Hon. D. Lovick: I appreciate the member's comments. I think, though, we need to recognize that in economic theory it's not a simple matter of saying: "If you give cash, it's a one-off, and land is forever" -- albeit that's an attractive construct on the surface. The point is that when you take X amount of cash out of one use and you devote it to something else, there's an opportunity cost built in, in economic terms.

So you can argue that the federal government has taken that swack of cash but also their ability to earn interest on that amount of money or use it for other purposes, and that's the opportunity they lost by putting up the cash. In other words, it goes both ways. I don't think it's as one-sided as the member wants to suggest.

[4:00]

The other point I would just touch on is that I think the answer to the question . . . . The best I can do in terms of answering the member's question is to talk about the whole concept of own-source revenue. Built into this agreement there are incentives for the Nis g a'a to harvest and to use their lands in order . . . . That will, in turn, decrease the amount of money that other governments are paying to the Nis g a'a people. That then becomes the other answer: what we gave up, we get back insofar as their demands on the public purse will decrease over time as a result of their using the resources.

J. Weisgerber: I'm going to try to boil this down as simply as I can. If I go to buy something and I offer up a $20 bill in exchange, and I say to the merchant: "Just a minute. There's some opportunity value attached to this. If I didn't spend my $20 with you, I could put it in the bank and earn 10 percent interest. So I'm really giving you $22, and I expect a little more change back . . . . " A dollar is a dollar is a dollar. That's the simplest and easiest way to calculate . . . .

The federal government has, I think, boxed us in. They've settled their thing in cash for a very understandable amount. They even get to print the stuff. If you want to argue the value of a dollar, I would argue that a dollar coming out of Ottawa perhaps has less value than one coming from anywhere else, because it's a subjective thing.

Interjections.

J. Weisgerber: Everybody says: "Lets not go down that road." But if we're going to start . . . .

Let's try not to be apologists for the federal government, but let's . . . . I think it deserves serious consideration. Is $106 million a fair price for that land, given that the province will continue to service it in exactly the same way? Graders will continue to go up and down the Nis g a'a Highway. It's not as if they're going to abandon their obligations to service the land and the people who live on it. But forevermore the province won't collect direct taxes, royalties, stumpage or other revenues. I really believe that that should have been a point of negotiation and should be a point of evaluation.

I'm trying to raise the amount of the value to reflect the true value of British Columbia's contribution, to the benefit of British Columbians. That might mean that the federal government pays a greater share, and we would have an even greater benefit by virtue of those dollars flowing from Ottawa that the current government likes to calculate as part of a cost-benefit analysis. I'm suggesting to you that our contributions are seriously undervalued because of the taxation element. I don't believe that's been considered.

[H. Giesbrecht in the chair.]

[ Page 11256 ]

G. Plant: I want -- just for a moment, I suppose -- to lend my support to the remarks of the member for Peace River South. I've been watching this debate, this discussion, for a long time; in fact, it's no secret that for some of those years I was actually involved in it more actively as a lawyer attempting to litigate aboriginal rights and title issues. One of the things that I think has always characterized the discussion around treaty-making in British Columbia is the sense that cash is somehow worth more than land, particularly when you're talking about land in remote parts of British Columbia.

As the member for Peace River South has pointed out, the way this does work -- for my purposes, in terms of its importance -- is, fundamentally, in the context of the cost-sharing arrangements. If the land that British Columbia is contributing is worth a heck of a lot more than $106.66 million, then who knows? The cost-sharing formula may actually work out in such a way that British Columbia should really get a cheque from Ottawa, in addition to the cheque which Ottawa is going to have to write in order to make the capital transfer payments. That is how the cost-sharing process works.

Instead, I think the way the province has approached it is to accept this kind of unrevealed or unexplained hypothesis that cash is worth more than land. The province can afford to give away land -- especially Crown land -- without it really amounting to much.

To add fuel to the concern, if you will, it certainly is beginning -- at least, beginning in the context of the discussion we're having this afternoon -- to look as though the province has exceeded the overall thrust of this by saying: "Well, the only value in this land that counts for our purposes, the only value in the 1,930 kilometres plus fee simple lands . . . . The only value that we're prepared to go to the trouble of even undertaking a modest form of analysis to determine is the value for forest purposes."

The incompleteness of that analysis is, from my perspective, just further evidence of the fact that the province is a willing participant, at the expense of all British Columbia taxpayers, in a kind of not-so-subtle propaganda campaign that says the only cost of treaty-making that counts or needs to be discussed is cash costs. I'm further bolstered in that when I look at the government's brochure, "Your Guide to the Nis g a'a Treaty," and the big headline: "A Cost Shared by All Canadians." There the talk is about cash. There's no suggestion up front that the province is making this enormous contribution in terms of Nis g a'a lands.

Those are really just remarks I want to add, because I think in fact that in terms of how we as a province approach treaty-making, there are big-picture questions here. That is really part of the reason why we are asking these questions here this afternoon: to see if we can put some flesh on the bones of those big-picture concerns. I know that my colleague the Leader of the Opposition has some questions at some point. But if the minister wants to reply to my remarks, I'm sure he'll do that.

Hon. D. Lovick: Very briefly, we believe that we have indeed put an accurate and real valuation in terms of the province's contribution.

I might just -- because I promised earlier that I would give a little more information -- flesh out a few things, if I can. We estimate that the financial cost to the province of transferring Crown land, besides the $106 million or $107 million, also includes approximately $36 million in forgone revenues, plus up to $25 million in third-party compensation. We attributed that value to the land, as the member knows, for federal cost-sharing purposes. It's not meant to be an absolutely precise measure. Rather, it was something we use.

We say that simply because, as I said before, for one, there wasn't a market. It wasn't the case that somebody was saying: "I'd really like to buy that piece of property. Let me have first dibs on it." Second, as well, because it doesn't then . . . . Given that there isn't an instant market value that one can cash in the chips on instantly, therefore it doesn't represent an ongoing cost to the province. You can argue later that you have decreased your asset by getting rid of that land. But in terms of valuation, we don't notice, if you like, that the $106 million was spent, simply because, as I say, nobody was offering to buy it at this point. So I hope that's some clarification.

Again, I think I've already explained the matter of how that cost-sharing agreement works -- namely, that the more land the province contributes to treaties, the smaller the provincial share of the cash will be in treaty settlements. The $107 million, then, is a cost-sharing credit from Canada to B.C. that obviously then reduces our payments for treaties by some $107 million.

G. Plant: I think I followed the logic of what the minister was saying in that last answer. But it doesn't answer the question we left outstanding earlier about the process by which the figure of $106 million was determined, recognizing this . . . . We began with the minister's indication that the way that number was arrived at was by some process of extrapolation of forest values, which involved using indices of different categories of forest lands, conducting some amount of actual on-the-ground work and then doing some extrapolations.

Then, I think, we established that there was no value built in in terms of potential forgone recreational values or water or mineral resources. But then we identified the category B fee simple lands. I think we had agreed that there was more than forest land at stake when we were talking about those lands. So what I want to know is: could the minister say what part of the $106.66 million is attributable to the category B fee simple lands and how those values were arrived at?

Hon. D. Lovick: I have a little information to respond to that question. I'm not sure it's everything the member wants. We'll pursue the record and make sure that I get him as much detail as I possibly can.

The concept that we deal with is called a representative hectare. I'm not sure if the members opposite are familiar with that; I don't think I was before this moment. Land is defined in terms of representative hectares, which notionally represents the typical mix of rural land across all the Crown land in British Columbia. It's important to note, apparently, that the size of a representative hectare will vary across the province, simply because there will be mountaintops and relatively unproductive land as well as highly productive land such as old-growth forest. Again, the calculus is a little difficult to nail down with any great certainty.

I'm told that we talked about an average value. As well, the value was one that we negotiated with the federal government. Moreover, apparently those values were backed up by some appraisals completed in 1993. So that will give some background to the question.

G. Plant: That is progress down a road in some direction, I'm sure. The question I'm about to ask is one of those won-

[ Page 11257 ]

derful questions that will make perfect sense from my perspective and that may reveal that I don't understand how the government has approached this.

It would be possible to take the 1,930 hectares of Nis g a'a lands and undertake an analysis, on the basis of representative hectares and all of that stuff, to come up with a figure for that parcel; then to take each of the 15 parcels of category B fee simple lands, which are, as we agreed on earlier, scattered all over the Nass area, and to do a different analysis for those parcels, recognizing that the whole reason that we're creating these parcels is to facilitate particular socioeconomic and cultural activities in a broader area of British Columbia than simply the Nis g a'a lands and to give the Nis g a'a folks an opportunity to exploit those opportunities.

Maybe they'll construct a fish camp on Meziadin Lake, or whatever. It would be possible to conduct an analysis of the value of those parcels individually on the basis of what they might be worth, or what a free and willing purchaser in an open market -- or whatever the phrase is -- would pay for them. You'd then have two numbers, and you'd add them together and get $106.66 million.

Another way of doing it would be to ignore those differences and treat all the lands more or less as the same, and to conduct this analysis in respect of all the lands -- that is, to conduct it in a generalized, non-specific way -- and come up with a global figure. Which of those two approaches was taken? If it wasn't one of those and it was a third, what was it?

[4:15]

Hon. D. Lovick: The approach taken was very much -- to use the member's phrase -- the general way, rather than specific appraisals.

G. Plant: So there wasn't really any difference between the category B fee simple lands and the core parcel of Nis g a'a lands in terms of the provincial government's approach to valuing them for the purposes of the cost-sharing negotiations?

Hon. D. Lovick: We did not do the specific appraisals. Again, to make the point, the nature of a general system is, obviously, one that we like to think would take something of each value, and therefore there would be some kind of compromise between specifying and averaging.

G. Plant: I don't want to leap to a conclusion, but it does seem hard to me to make sense of that approach. I can understand, although I might not agree with, the desire to come up with an approach that works for the core parcel of 1,930 square kilometres. But to treat these little isolated bits of fee simple lands, which had been pulled out, really, of the great mass of what I assume is largely unowned, unoccupied Crown land -- except for it perhaps being subject to forest tenures -- and say that we'll still apply that general approach to those little bits of special land . . . .

It's land that is so special that the Nis g a'a have said they want to own it in fee simple and were prepared to make the concession that it not be held under the same jurisdictional arrangements as Nis g a'a lands. I mean, it just seems to me not to make a whole lot of sense to say that you used the same valuation process for the whole bit. Yet I understand that is, in effect, what the government did.

Let me ask the minister, who will have an opportunity to correct me if I'm wrong in what I just said: what kinds of appraisals were done in 1993, which he referred to earlier?

Hon. D. Lovick: I understand that the appraisals -- to the member's direct question -- were done for the cost-sharing agreement, rather than being Nis g a'a-specific; that's the first point.

Second, if I may, I just want to put this in some context. We're talking about 250 hectares of arguably more valuable land, but we need to set it against the fact of 190,000 hectares. I don't think it's a case of saying: "Aha! You didn't value, because there are 250 hectares there." When you put that in terms of scale and try and do something that accommodates the value of all the land across more than 190,000 hectares, then I don't think the worry about 250 hectares -- perhaps not getting every nickel assigned to them that might be -- is as momentous or as significant as one might otherwise think.

G. Plant: Just for the record, I want to make it clear that I haven't for a moment conceded the adequacy of the process in respect of the 190,000 hectares at all. If that's the answer to the . . . . The minister says: "Well, it was an awfully big parcel of land, so we decided to treat it all the same." I mean, we can deal with that; I suppose one might find a political argument there about whether that was adequate.

But it seems to me that it's going to be hard to explain it to people who might ask me the question: "Well, the Nis g a'a have sat down and have looked at this area of northwestern British Columbia which the government has said is not going to be included in the parcel of Nis g a'a lands. It's many hundreds of thousands of hectares, I would think.

They have gone out of their way to select particular parcels for their own purposes, and the Crown is saying that it's not going to go to the trouble of figuring out what those parcels of land are worth." Someone might suggest that the reason the government didn't do that is because it really didn't care enough -- because it wasn't actually asserting its position very aggressively at the cost-sharing table -- and that this was not a negotiation that it was conducting for the purpose of defending a number for the citizens of British Columbia, but rather it was a negotiation to arrive at some kind of agreement with the federal government.

Let me ask this question: is this basic rural land figure that was talked about in the 1993 appraisals that formed the basis of the cost-sharing agreement something that the province did in order to establish a benchmark for all treaty negotiations across British Columbia, or was it a process limited only to Nis g a'a?

Hon. D. Lovick: The former is true -- yes.

G. Plant: I can never keep track of formers and latters. I should never give options. It sounds to me . . . . The former would have been: it's a process that the government says it intends to follow in treaty-making all across British Columbia. Is that correct?

Hon. D. Lovick: That is correct.

G. Campbell: The issue that we're dealing with here . . . . I know we're dealing with it at some length, but the reason that it's so critical -- I guess I have to confirm with the minister that he believes that it's critical also -- is that as part of this cost-sharing arrangement, the higher the value we attribute to our land contribution, the lower our cash contribution. I think the minister would agree with that.

[ Page 11258 ]

Hon. D. Lovick: That's correct.

G. Campbell: So that's why this issue becomes very critical. I'm sure the minister is aware that some people believe that this land has been valued far below what the real value of the land would be. Whether the minister calls it market value or not, the value for the resource has, for some reason, intentionally or unintentionally, been undermined or reduced.

I have to go back to my earlier question to the minister: if in fact this is so critical to the province's and the provincial taxpayers' contribution to this -- this isn't about the costs of the overall Nis g a'a agreement; it's about the cost of the Nis g a'a agreement for the provincial taxpayer -- would it not be critical for us to be sure that we have ascertained the full value of the forest resource, the water resource and the other resources so that we can attribute the largest possible value to our land contribution, so that we minimize our cash contribution, so that we get a larger contribution back from the federal purse?

Hon. U. Dosanjh: I think the Minister of Aboriginal Affairs has answered those questions exhaustively. The opposition leader is simply going over old ground -- no pun intended. He is going over old territory, and I think we should move on. But I'd be happy to answer any new questions the hon. member might have.

G. Campbell: The reason I'm coming back to this, hon. Chair, is that we had a different answer from the Minister of Aboriginal Affairs this afternoon than we had from the Minister of Forests in this House in the last session. I believe that this is a critical item. Again, I would ask the Attorney General: is it not true that the value that we attribute to our land base will help reduce British Columbian taxpayers' overall cash costs?

Hon. U. Dosanjh: True -- and, I think, that was the very question, two questions ago, that the hon. Minister of Aboriginal Affairs answered.

G. Campbell: Well, I asked the question, and actually he got up and left. I'm sure he didn't leave; I'm sure he's still there in spirit.

We hear from the Minister of Forests that in fact this was not an attributed market value. These are the Minister of Forests' own words. This was not a market value for the forest resource; this was a "negotiated value." So rather than it being a market value -- where you get the fair market value for the forests, where we can attribute that fair market value for the forestry resource to our land cost so that we reduce our cash costs -- there has been a deliberate government decision to undermine the fair market value of the forests. We reduce the value of our land, so we increase our cash contribution.

I'd like the Attorney General to explain why that makes sense in terms of the British Columbian taxpayer.

Hon. U. Dosanjh: It is true that the value attached, attributed to the forest resource, was the negotiated value.

M. de Jong: I just want to pursue a matter relating to the issue of land value before the opposition leader moves off that subject. Here we are dealing with . . . . I will differentiate between all of the lands and those lands upon which developments of one sort or another are being contemplated. I think it can be fairly said that British Columbians would expect that their negotiators -- that is, the government of British Columbia -- in going to the table, would seek the maximum possible return for the disposition of Crown lands.

Now, in this case I recognize that it's not what we would normally expect. We're not selling the land per se. So the government doesn't get a cheque that it can hold up and say: "All right, we sold this Crown land, and we got X number of dollars." In this case, that value is presented almost as a credit against the provincial government's obligation. But I think there is an expectation that the government, on behalf of the people of British Columbia, would try to maximize that credit.

[4:30]

When we deal with those . . . . I will strictly refer to those Nis g a'a private lands of approximately 250 hectares. The Aboriginal Affairs minister is unable to provide any information beyond, I think, that he said we value those lands higher than other forestry, other lands in the area. It concerns me that we wouldn't have any more specific information than simply that we assigned a higher value. There are recreation and tourism interests involved here which might value some of that land in a particular way. There is a market value that can be assigned to some of those lands.

I've heard nothing during the course of the afternoon to indicate that an attempt was made by government to determine what that market value for those lands was or is.

Hon. U. Dosanjh: I believe the Minister of Aboriginal Affairs indicated that he will come back with more specific information that wasn't available to him right here. I'll rest with that answer, and then we'll move on.

M. de Jong: I rather suspect that, as we've seen in the past, that information won't be terribly specific; it won't add to our understanding. Perhaps that's speculative on my part. If I take the example of the controversy that arose around the disposition of the Expo lands and the arguments we heard about how the manner in which those lands were sold resulted in a loss to British Columbia taxpayers . . . . In this context, we are talking about the manner in which lands have been valued.

Why, at this stage, armed with the very scanty information we have about how these lands were valued, would the Attorney General have us believe that his government should be immune from the kind of criticism that members of his party lobbed at another government for the manner in which particular lands might have been sold or transferred -- other Crown lands? What's the difference there? Why is one a more . . . ?

Interjections.

M. de Jong: I just note a flurry of activity on the government benches.

I wonder, hon. Chair, through you to the Premier -- who is now in a position to answer some of these questions -- why we should have any more confidence in the valuation process that is taking place here than in the valuation process that a former government applied to significant lands in an urban setting -- the Expo lands -- when members of the Premier's party were very critical -- extremely critical.

Interjection.

M. de Jong: Yes, as my friend points out, that was the surface lands.

[ Page 11259 ]

Hon. G. Clark: I'm at a disadvantage, not having heard all the hours of discussion on land values. I'm not sure how much has been canvassed, and I'm reluctant to delay matters by this.

But let me be clear. As you know, the negotiation of the land value, in essence, is a negotiated value with the federal government in particular. The province's contribution to treaties is largely in its contribution of Crown land. That's the significant part of our settlement as opposed to the cash contribution, which is from the federal government. Clearly it's in the province's interest to have a large value attached to the land. However, we have to have a good public policy explanation to convince the federal government of the value of the land.

I'm not sure if that's what the member is referring to. There is a transfer of provincial Crown land, and then there are forgone revenues off the land. Forgone revenues, I think -- and I hope the members agree -- is a pretty straightforward exercise based on the forgone revenue stream. You have to make some assumptions -- which are open to debate, I suppose -- but I think the auditor or others would see them as prudent and measures. The land question is a bit more challenging, simply because there is not the kind of large market test for such land in a place like the Nass Valley.

In fact, one could argue that it would be extremely hard to sell land outside New Aiyansh. How much is the Nis g a'a Memorial Lava Bed Park worth to somebody if you try to sell it on the private market?

We have valuation analyses that take place, and we have negotiations with the federal government in an attempt to come up with what is a reasonable price, or market price, for the land, which goes into the cost-sharing arrangement. I think I can say categorically that the value we have ascribed to the land is more than fair in terms of any kind of reasonable market test for that land.

M. de Jong: We've tried to be fair in terms of how we pursued this, because assigning a value to this amount of land is undoubtedly a complicated and difficult task. But I want to say to the Premier that I have tried, for the purposes of this part of the discussion, to distinguish the majority of the land, which carries with it some restrictions insofar as being the new landowner . . . . There is guaranteed access, for example, which, if you were simply buying the land outright, isn't something you would have to contend with, and it presumably lessens the value of that land.

Therefore I understand, to some extent, the emphasis on forestry lands. But there is a portion of these lands, Nis g a'a private lands -- and we did talk briefly about this -- that lends itself to development. It might be ecotourism; it might the establishment of fishing lodge facilities -- all of these things that are site-specific. There are sites that contemplate that.

I guess, at the end of the day, the question that begs asking is: of the $106 million, how much of that value relates to those private lands that don't contemplate any restricted uses, and what process did the government follow in assigning value to those specific lands?

Hon. G. Clark: I'm just trying to get a sense of what's been canvassed. I gather there's been some undertaking to try to give you a bit more of a breakdown of some of it. My understanding of it is that because it was a negotiated value, there wasn't as much distinction as the member alludes to with respect to this parcel or that parcel. The value of the land is, in total, viewed as $107 million. The only arguments that I've seen mounted that the land value could be higher is if you liquidated the forest lands and got a reasonably high rate of return for your subsequent investment. Then your assumptions change with respect to the value in total.

The value of those modest, relatively small fee simple properties obviously depends on the market, which is very hard to simulate, actually, because you're dealing with . . . .

I don't know if, with respect, the member's been there. You've been there; the member is nodding. That's better than his leader. He's actually been there, which is an improvement. So he will know that the opportunities for economic development are limited at the moment. If one can be farsighted and look ahead many, many years, one can see that there is potential for spectacular opportunities down the road, as wilderness and other areas become more valuable. I think that's a reasonable assumption.

But for the purposes of economics -- and you discount over time -- if something is worth a lot of money 50 years from now, it's not worth very much today in any valuation. That is, in a sense, what we find ourselves with, with some of the Nis g a'a lands. They are not worth a lot on the market today, but it may well be -- the Nis g a'a would argue this, and I would, as well -- that at some future date there could well be some spectacular values associated with that land.

But for the purposes of negotiating treaties, one has to take a current kind of valuation and discount rates that are acceptable to value them, and that's what we've done.

M. de Jong: The difficulty, at this stage of the game, is that we're really being asked to rate or review the value assignment process in a vacuum. I mean, the Premier alludes to some of the difficulties that exist in trying to assign these values. A fair question, I think, to ask the Premier is . . . .

But for these negotiations, if I were to come to the agency now charged with responsibility for the administration of Crown lands and say to them, "Look, there is a parcel of land out around Kincolith that I want to purchase, that I want to establish some manner of ecotourism operation around," that land has value. That site -- a rather spectacular site, in fact -- has some value. The Crown has chosen to take some of those parcels, lump them together and offer them for sale and is very vague on the value it assigns to those private holdings.

I remember not so long ago when the Premier sat over on this side of the House and the question was Crown lands in Vancouver -- by urban standards, a large chunk of Crown lands -- that his party said the government of the day had horribly undervalued. I can't even make that allegation, because the government won't share with us the process -- if there was one -- by which they came to a value. They won't share that information, so I'm even precluded from criticizing the extent to which it realistically reflects the actual value of those lands.

What is the difference? What is the difference when this government transfers a significant amount of Crown land that is going to be used for a range of purposes, for development, saying, "Well, you'll have to accept at face value that this assignment of a value represents a realistic figure," and the criticism that the Premier's party levied not so long ago when they said that the taxpayers of British Columbia had been bilked by virtue of how the previous Social Credit government valued and ultimately transferred Crown lands around False Creek?

I don't know what the difference is, except that this is land that is way up north and the transferees are aboriginal peoples, and the other land was in Vancouver and a

[ Page 11260 ]

lot more people were aware of it, a lot more people saw it, and a lot more people were aware that there was an intrinsic value attached to that land.

[4:45]

I can get back to the question, absent the

preamble. Why should I have any more faith in the Premier's presumed assignment of value here, when there's absolutely no documentation, no process supporting his contention that it represents a realistic assignment of value? It is a function of negotiation.

Let me perhaps phrase the question this way. When the Premier -- the government -- went to the federal government and said, "$106 million is our assignment of value," you must have had some evidence. You must have had some documentation. The government must have said: "This is how we have come to that figure." We don't even have that at this point. All we have is: "Well, we negotiated an amount."

Hon. G. Clark: Again, I'm at a bit of a loss, because I've come in late to this discussion. But maybe I can try to answer this way. There was a study done in 1993 for the treaty process by, I believe, Public Works Canada and B.C. Lands, which tried, rather than to always do assessments of each particular hectare in each . . . .

Interjection.

Hon. G. Clark: I've been doing that to you. I'm not being critical; I just want to make sure that I don't have to answer again.

The value done for cost-sharing purposes . . . . There was a major assessment done of land value in the province of British Columbia. What was decided was that rather than do individual assessments all the time for each treaty, assessments would be done of what's called representative hectares -- the value of a representative hectare. The value of that representative hectare varies across the province, based on whether it's mountaintops or highly productive old-growth forest. There was an implicit value attached to a representative hectare.

This was done both to avoid entering into cost-sharing negotiations with the federal government every time and, secondly, to avoid detailed assessment work being done each time. Sorry -- the size varies, not the value.

In other words, we try to ascribe a value and change the size, based on whether it fits those broad criteria. So this cost-sharing agreement with respect to land is based on a number of assumptions, which include particularly things like stumpage revenue, etc., and forgone revenue. We feel that we negotiated with the federal government an advantageous agreement, if you will -- a fair agreement, to put it another way.

The reason I say that is that each time we look at the current price of lumber, for example, or the Asian problem with respect to lumber, that impacts on the value of that forest land -- negatively and positively. So we tried to find an agreement with the federal government which would allow us to negotiate a land value that is constant over time and which we could apply to all treaties as they move forward.

That's why I say to my friend across the way, through you, hon. Chair . . . . That's why it's not each individual parcel which is subject to appraisal, but rather a negotiated amount based on this previous cost-sharing agreement, which I am advised, I think, that you'll be getting some information on. So there's an overall agreement with respect to . . . .

Interjection.

Hon. G. Clark: And the negotiations of this are such that anybody looking at the Nis g a'a agreement must, I think, agree that the value ascribed is quite large and advantageous to the province.

M. de Jong: Well, I think I understand the employment of the term "representative hectare" as a unit that might be useful insofar as negotiating the broad cost-sharing arrangements with the federal government. I think the Premier has taken me far enough through this exercise for me to understand that. But I think we're now at the point where, as part of this debate, we want to assess the accuracy of the figure that has been assigned. We want to ascertain to what extent the actual values, as they relate to this very major negotiation, match with that theoretical representative hectare.

Just as the Premier said that there are differences around the province, there are significant differences within the Nis g a'a lands themselves. What we have not heard through the course of this debate is information which would allow us -- but more importantly, I guess, British Columbians -- to draw that comparison and to render that assessment. I think the Premier understands the distinction I'm drawing.

Hon. G. Clark: The challenge is this: what if we did an appraisal -- a detailed appraisal, as the member suggests -- and it came in lower than $107 million? Then we would clearly have a problem with respect to our cost-sharing arrangements with the federal government. We'd have to put in more cash. So the point . . . .

Interjection.

Hon. G. Clark: Yes, the reverse works. True; that's correct. What I'm saying to you is that if you look at any analysis which we have done, and which we will provide for you, I am confident that this negotiated amount of $107 million is both a good deal for British Columbia and a very key one in terms of setting a pattern and precedent for other negotiations. It's a negotiated number. It's important in terms of our allocation of the costs associated with the treaty. Again, as I say, it's based on the representative-hectare question, which we negotiated with the federal government.

I think, as I said, we'd provide for you the details of how we arrived at that. We are not and do not want to be in a position on each treaty of having to look at this question of appraisal. The fact is that we are in a negotiated settlement and are using the representative-hectare model to limit the direct financial costs for the provincial government.

M. de Jong: A couple of things. First of all, as the Premier is fond of reminding people, this isn't just another treaty. This is the first one, the Premier has pointed out, to which subsequent treaty negotiations are going to look for the assignment of values. It seems to me that rather than leaving this out there without any manner of confirmation . . . .

The Premier asks: "What if we did a detailed appraisal and found out the truth?" Uh-oh. The Premier asks: "What if we did a detailed appraisal, and it came in lower?" I mean, that's a rather astounding statement for the Premier to make. "What if we did a detailed appraisal and found out the truth?" It's kind of like asking: "What if we actually asked someone at the Ferry Corporation, and they told us?"

[ Page 11261 ]

That's not good enough; that's not good enough at this stage of the game with this treaty and all that it implies in terms of its precedential value for nothing more than the assignment of values and monetary and land entitlements down the road. Yeah, maybe it would come in lower. But it might have come in a lot higher. What the Premier is saying by virtue of his answer is that he doesn't want to know. He'd rather we never knew. I guess that's an approach. But quite frankly -- and I'll suggest this to the Premier -- that's an irresponsible approach.

That's an irresponsible approach when we're dealing with the first one, and so much hinges on how it is resolved in terms of the assignment of those values.

I have to ask what the Premier's reaction would have been in another day if he had asked that question, and whoever it was -- Minister McCarthy or whoever -- had said: "We didn't want to do an appraisal, because we didn't really want to know what the land was worth. So just accept this at face value. That's the best we could do." I think I know what his reaction would have been. It wouldn't have been to simply sit back and say: "Well, I guess we'll just accept that and move on." I think that's a rather astounding statement. If the Premier wants to address it, I'm not . . . . I can't believe he would want that statement to remain on the record.

Hon. G. Clark: Again, the issue is one which depends on the discount rate that you use. Straight economics is really simple. The forgone forestry revenue in our cost-sharing arrangement is discounted at 7 percent. Many private companies would use a higher discount rate, which would lower the value. So the $36 million in forgone revenue is a number which meets any private sector test, because a higher discount rate would significantly reduce the value. That's the key value on these lands, the forestry lands. Then there's third-party compensation, which is roughly $25 million; we know that. That's part of the valuation. Then there is the non-forest-related value.

I'm suggesting to you that the representative-hectare analysis we did for the whole province, which is roughly $1,200 per representative hectare, is not only prudent but it gives us complete comfort, and it should give citizens complete comfort, that the $107 million valuation is at least a fair valuation, if not a generous one, of the land. We will give you the evidence with respect to, if you will, the 1993 valuation we used for the province.

G. Campbell: I think the Premier will agree that this is a serious matter, and I think that in view of the government's performance in the past couple of years, it has actually increased. My colleague from Matsqui has pointed out the concerns with regard to establishing values.

I'd like to start with this question to the Premier: who was it, within the cabinet, who was watching the development of this valuation as we went forward? Who w