1985 Legislative Session: 3rd Session, 33rd 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, JUNE 10, 1985

Afternoon Sitting

[ Page

6533 ]

CONTENTS

Oral Questions

Sewage dumpage. Mr. Lauk –– 6533

Satellite open-skies policy. Mr. Michael –– 6534

Sewage dumpage. Mr. Lauk –– 6534

Mr. Reynolds

Committee of Supply: Ministry of Energy, Mines and Petroleum Resources estimates.

(Hon. Mr. Rogers)

On vote 22: minister's office –– 6535

Mr. Lockstead

Mr. Michael

Mr. Passarell

Mr. Davis

Mrs. Wallace

Mr. Cocke

Coal Amendment Act, 1985 (Bill 51). Second reading

Hon. Mr. Rogers –– 6546

Mr. Lockstead –– 6546

Mrs. Wallace –– 6547

Mr. Williams –– 6547

Hon. Mr. Rogers –– 6548

Natural Gas Price Act (Bill 52). Second reading

Hon. Mr. Rogers –– 6548

Mr. D'Arcy –– 6549

Mr. Williams –– 6550

Mr. Lockstead –– 6551

Mr. Davis –– 6551

Mr. Macdonald –– 6552

Mr. Cocke –– 6553

Mr. Hanson –– 6553

Hon. Mr. Rogers –– 6554

Division –– 6555

An Act To Amend The Trinity Western College Act (Bill PR406). Second reading

Mr. Cocke –– 6555

Mrs. Dailly –– 6556

Mr. Veitch –– 6556

Mr. Rose –– 6557

Mrs. Johnston –– 6558

Division –– 6558

Miscellaneous Statutes Amendment Act (No –– 2), 1985 (Bill 42). Hon. Mr. Smith.

Second reading –– 6559

MONDAY, JUNE 10, 1985

The House met at 2:06 p.m.

Prayers.

[Mr. Strachan in the chair.]

HON. MR. CHABOT: We have in the members' gallery today, from

the B.C. Wildlife Federation, Mr. John Carter, president; Carmen Purdy,

past president; Greg Norton, director; Stu Reeder and John Stebbing. I

wish the House would join me in welcoming them here today.

MR. MacWILLIAM: We have some special guests in the gallery

today: my wife Arlene and our eldest daughter Laurie. Accompanying them

is a young lady and family relation from Jakobstad, Finland, or, as

they say in Finnish, Pietarsaari. Vill husen ge en varmt valkommen till

welcome.

MR. VEITCH: In the members' gallery today is my favourite school trustee from School District 41, my wife Sheila.

MRS. JOHNSTON: In your gallery this afternoon are some very

special ladies from Surrey. I would like to introduce Peggy Steacy,

Phil Reynolds, Barbara Freeman and Eileen Martin, who represent our

auxiliary in Surrey. I would ask the House to please give them a warm

welcome.

MR. REID: Mr. Speaker, it gives me pleasure to introduce four

of the other ladies who were fortunate to bring the sun from sunny

Surrey to Victoria for today. It's with great pleasure that I introduce

Rita Waenink, Rütta Pearson, Jeanne Faessler and Audrey Hadley. Would

the House please make them welcome.

DEPUTY SPEAKER: As well, hon. members, would you do me the honour of welcoming my wife Beverley, who is with us this afternoon.

Oral Questions

SEWAGE DUMPAGE

MR. LAUK: Last week I asked the Minister of Environment to

look into the question of the dumping of 40 million litres of raw

sewage into the Fraser River. Subsequently we have seen that it has

caused some alarm in and around the city of Vancouver and the greater

Vancouver district. We are told that the greater Vancouver district has

decided to dump this sewage a week earlier, they say, to lesson the

health hazard; I say it's to avoid political outflow. Has the minister

taken any action at all to look into the health hazards of this sewage

dumpage, and if so, can he report to the House?

HON. MR. PELTON: I'm advised that the health authorities of the

city of Vancouver and the municipality of Burnaby were included in discussions

prior to the issuance of the licence to discharge the effluent into the Fraser

River. I have also been advised that it is not considered that there is any

danger to health as a result of this.

MR. LAUK: Dr. Blatherwick of the city of Vancouver will be

pleased to hear that information. It is his view that there is a health

hazard, and he has taken precautions to....

Interjections.

MR. LAUK: If the Minister of Environment acted as quickly to

prevent this possibility for the tidings of the city of Vancouver as he

did a garbage dump in his riding, we'd have quick action here. Am I to

understand from the minister that he abjectly refuses to intervene in

this situation? Tomorrow is the day they're opening this flow of sewage

into the river. Does he refuse?

HON. MR. PELTON: The Minister of Environment doesn't refuse

to do anything. The permit was issued, and the dumping should take

place in a period between June 1 and June 25, I haven't been notified

when it's going to happen precisely, and certainly the time when it's

going to be dumped will take into account the flow of the Fraser River

— when it's at high water and when it's flooding, which it is doing

right now. The dilution of the effluent, I'm given to understand, could

be as high as one in 10,000 and as low as one in 4,000.

[2:15]

MR. LAUK: To the Minister of Human Resources. In her capacity as Deputy Premier....

Interjection.

MR. LAUK: Oh, sorry — acting Premier. Will the minister, as

acting Premier, advise if she has made a decision to intervene and stop

this sewage dumpage that will flow onto beaches that are largely

bordering on her constituency and will affect the children coming out

of her schools in two weeks?

HON. MRS. McCARTHY: The member for Vancouver Center is

incorrect; I am not acting Premier, and I suggest that that question be

asked of the Minister of Environment.

MR. LAUK: May that answer go to all of her constituents. I

would ask a question of the Minister of Health. Last week he undertook

to look into the question of the danger to health as a result of this

sewage dumpage. Has he done so, and is he now prepared to report to the

House?

HON. MR. NIELSEN: The immediate responsibility for the

maintenance of public health in Vancouver is with the city of Vancouver

under their medical health officer. It's the responsibility of the

Vancouver health department. I asked the chief provincial health

officer, Dr. Hugh Richards, and members of the ministry's public health

inspection units to inquire into the matter. Unlike the member for

Vancouver Centre, I will not attempt to provide an answer for one of

the medical doctors. I'd rather hear it directly from him.

Dr. Richards assures me the planned discharge does not constitute an

immediate health hazard to citizens of Vancouver. He has advised me

that medical engineering consultants of the Health ministry have

determined the expected dilution, which will take place when the

effluent is discharged at peak

[ Page 6534 ]

river flow, and the flow of river currents suggests

that Vancouver can expect no health hazard as a result of the

discharge. I heard Dr. Blatherwick on the air the other day: he said he

was not an alarmist, and I did not hear him say he expected any danger

to public health.

The chief provincial health officer, Dr. Hugh Richards, has advised

me, as I just said, that they do not suggest that Vancouver can expect

a health hazard as a result of the discharge.

MR. LAUK: Mr. Speaker, to the Minister of Health. I am

informed that the mayor of the city of Vancouver is concerned and is

consulting with his own health officials. Dr. Blatherwick has

instructed that health warning signs be placed on the beaches. Can the

Minister of Health explain whether or not this is in accordance with

Dr. Richards's views? Why put up health warning signs if there is no

danger to health?

HON. MR. NIELSEN: Mr. Speaker, I am advised the Vancouver

health department has, as a precautionary measure, posted signs at

beaches in the city suggesting to members of the public not to swim in

the water during the discharge period as a precaution. But I am assured

by my officials, who have been in contact with the Vancouver health

department, that the Vancouver health department does not consider the

discharge to constitute an immediate health hazard but is posting the

beaches only as a precautionary measure. I'm also advised that the

Vancouver health department will be testing the water daily to ensure

there is no health hazard.

I would think, Mr. Speaker, that the officers of the Vancouver

health department do frequently post notices and issue advice to the

public as a precaution, which is part of their responsibility. That is

the information we have received from the Vancouver health department

through the provincial health officer, Dr. Hugh Richards.

SATELLITE OPEN-SKY POLICY

MR. MICHAEL: Mr. Speaker, I would like to direct a question

to the Minister of Universities, Science and Technology. It has to do

with the open-sky policy of the provincial government.

There was a court case recently held in my community dealing with

Shuswap Cable Ltd. The firm was prosecuted, and I would like to hear

from the minister whether this prosecution in any way affects the

open-sky policy of the provincial government and their control over

satellite cable?

Interjections.

HON. MR. McGEER: May I answer? Is that agreeable to the

opposition? Mr. Speaker, Shuswap Cable was found guilty of

rebroadcasting and fined $1,500. They were not found guilty of showing

American satellite signals, because it was agreed by the federal

government and the defence that this did not constitute broadcasting.

It therefore is a non-broadcasting service, and the public utilities

commission of British Columbia licenses non-broadcasting services.

I might say, the heinous crime that the people of Shuswap Cable were

guilty of in this particular case was showing CBC and CTV, not American

satellite signals. Those dreadful people were showing CBC and CTV. Can

you imagine that?

They went too far distributing Canadian broadcasting signals.

DEPUTY SPEAKER: Thank you. The question has been answered.

HON. MR. McGEER: In any event, we will not take

responsibility for licensing people to distribute CBC and CTV, and

members will understand why. But American satellite signals are under

British Columbia jurisdiction.

SEWAGE DUMPAGE

MR. LAUK: The Minister of Health has admitted — and it's

public knowledge that signs will be posted as a precaution by health

officials — that health officials will be testing the waters daily, and

that the GVRD has moved ahead by one week the sewage dumpage because of

the alarm that it would arrive at the same time as swimmers on the

beach. In the light of those facts, is the minister of the view that he

should reinvestigate this matter before tomorrow's deadline and

intervene if necessary under the Health Act?

HON. MR. NIELSEN: Mr. Speaker, the member is in error in part

of his statement, which is unfortunately not that uncommon. The date of

discharge has been chosen by the engineers within the Greater Vancouver

Regional District for purposes of maximum dilution, rather than for

some nefarious reason as that member would suggest. I have confidence

in the capability of our public health officers, and particularly in

the chief provincial health officer, Dr. Hugh Richards. Dr. Richards

and the others who are responsible for the discharge of this effluent

because of the need to cut a sewer line in that area do not take their

positions lightly. They have agreed at this time that it does not

expose the citizens of the greater Vancouver area to an immediate

health hazard to discharge this amount of effluent along with the

40,000 cubic whatever it is per second discharge of the river itself,

the dilution factor being between 4,000 and 10,000 to one. They believe

it is quite safe to allow that effluent to be discharged at that, time.

These professionals are not making a decision other than that based on

their own science. I have every confidence, when Dr. Richards advises

me, that the discharge does not constitute an immediate health hazard

to the citizens of Vancouver. Further advice from the medical and

engineering consultants has determined that the expected dilution will

take place when the effluent is discharged and that Vancouver can

expect no health hazard as a result of the discharge. Dr. Richards has

no political gain in this matter.

MR. LAUK: If the minister is suggesting that I do, then he's sadly mistaken, and he doesn't know me as well as he thinks he does.

Interjections.

MR. LAUK: What's happened here is that we've abdicated health

responsibility to engineers, and the government is acquiescing to that

simply for its own timetable at Annacis Island.

DEPUTY SPEAKER: Order, please. There must be a question.

[ Page 6535 ]

MR. LAUK: It's an absolutely disgraceful display of cowardice on the part of the government.

DEPUTY SPEAKER: Order, please. One moment, hon. members. Our

standing orders advise us on page 19 — standing order 47A, "Oral

Questions" — that "questions and answers shall be brief and precise,

and stated without argument or opinion."

HON. MR. NIELSEN: Mr. Speaker, on a point of order, I would

ask the member, who is quite exercised at the moment, to withdraw his

statement that it is

an act of cowardice on the part of the government.

MR. LAUK: I didn't name any minister, and it's perfectly

permissible under the rules to describe the government as acting in a

cowardly fashion.

HON. MR. NIELSEN: May then, Mr. Speaker, I respond by saying the opposition is acting in a gutless way?

DEPUTY SPEAKER: Hon. members, imputation against a single

member is always withdrawn if the Chair so requests. Comments such as

have been made are not really appropriate; they do not indicate

parliamentary courtesy. I guess they will be allowed.

MR. REYNOLDS: A question for the Minister of Environment. In

view of the concern shown by the second member for Vancouver Centre

about the pollution of our waterways, and in view of the fact that the

city of Victoria, as well as other major municipalities on this island,

has been pumping raw sewage into the ocean here for years, can the

minister advise us if he's had any questions, ever, from the members

for Victoria about this same problem?

HON. MR. PELTON: Insofar as I can recall, Mr. Speaker, the answer is no.

Orders of the Day

The House in Committee of Supply; Mr. Ree in the chair.

ESTIMATES: MINISTRY OF ENERGY,

MINES AND PETROLEUM RESOURCES

(continued)

On vote 22: minister's office, $184,214.

MR. LOCKSTEAD: On Friday we had the opportunity of discussing

a number of matters with the minister. There are still a number of

matters that have not been discussed.

Mr. Chairman, I'm waiting for the House to quieten down, and they

will. I'm not worried about it. You don't have to say anything, but

before launching into my presentation....

MR. CHAIRMAN: May we please have order in the House.

MR. LOCKSTEAD: This portfolio is so large that over the last several

months, almost a year now since we last debated these estimates, I've accumulated

something like 18 monster files full of information. We could be here for the

rest of the session,

We're attempting basically to stick to some of the larger and more

important issues. We discussed mining and related issues last week. A

very major development that has occurred within the last six weeks or

so is the signing of the so-called western accord. I want to make sure

I have the minister's attention. I know I have.

The western accord, Mr. Chairman, deals with an agreement that was

signed finally, after a great deal of delay, between the four western

provinces and the federal government. I've had the opportunity to go

over the highlights of that agreement, and I have a number of comments

to make. I am going to be dealing with some facts and figures which I

presume are correct. Mr. Minister, the topic that we're dealing with

now, in case you did miss it, is the western accord. You got it, Mr.

Minister.

[2:30]

First of all, I want to discuss what this agreement may do and

probably has done in terms of windfall profits to the multinational

corporations and to the petroleum industry. It is our view that

windfall profits as a result of deregulation of the price of oil

mainly, though not exclusively, will accrue to the multinationals. This

is because, on balance, multinationals hold more conventional old oil

reserves and aggregate barrels than Canadian-controlled premium

companies.

We have a considerable amount of research. I know when we're talking

about old oil and new oil and these kinds of things, Mr. Chairman. It

gets rather complicated. I don't expect all the members to grasp the

significance of this, so I'll try to stick to the highlights. I have

decided to choose four of the major multinational companies and give

this House and certainly for the record what will happen as a result of

this western accord.

Gulf Oil, for example. As a result of deregulation, windfall profits

that will result for that company in 1985 alone would be an increase in

their profits of $58.9 million; Imperial Oil, $54.9 million; Shell Oil,

$43.7 million increase in profits for this one year alone; Texaco,

$76.8 million. If you look at the four largest oil companies in Canada

that are strictly Canadian, you will find that the figures.... Murphy

Oil, $0.51 million increase, which is considerably below the

multinationals; Pan-Canadian, $45.9 million; Dome Petroleum, $45.7

million; and $8.8 million for Aberford Resources.

In 1984 it was a good year for the petroleum industry in Canada, In

the first six months of 1984 the petroleum industry revenues rose by 10

percent to $31.2 billion. compared with the same period in 1983. The

four largest oil companies in Canada reported an increase in profits in

1984 over 1983: Gulf, 23.1 percent; Imperial, 60 percent; Shell, 41

percent; Texaco, 23.1 percent. In terms of millions of dollars, for

Gulf that means $218 million; Imperial, $332 million, Shell, $102

million; and Texaco, $344 million.

In other words, what we're saying by signing that agreement.... One

of the things we're saying, because I have other things to say as well,

is that that has, in fact, been a giveaway to the large multinational

oil companies. There is no guarantee that additional revenues will be

employed by he industry to help us achieve energy supply security or

that they will be reinvested to create jobs. This is one of the major

questions I want to pose to the minister. I'll stop in my presentation

right there.

[ Page 6536 ]

The federal Minister of Energy and the provincial ministers have

said on many occasions, prior to but certainly since the agreement was

ratified, that the windfall profits to the companies will in fact

produce tens of thousands of new jobs for Canadians, particularly in

the west. Well, we fail to see how. I've read the minister's press

releases. I've read the federal minister's press releases as well. I've

obtained as much information as I can. One of the reasons for this is

that between 1974 and 1980 the industry was a net capital exporter of

capital to the tune of $4.1 billion.

That's the second question. How are we going to police this export

of capital moneys accrued through the largesse of the federal and

provincial governments to these large multinational oil companies, when

they're taking those profits and sending them out of the country at a

time when our senior citizens are being de-indexed?

In addition, the record shows that Canadian-controlled companies

continue their historical performance of reinvestment of their cash

flow in petroleum-related investments at much higher rates than the

foreign-controlled firms. I have a list of figures here. But the fact

is that in Canadian-controlled companies in 1984, 76 percent of their

profits were reinvested back into Canadian companies; in 1983 it was 81

percent, and in 1982 an unbelievable 97 percent. Foreign controlled

companies over the same period of time reinvested 58 percent of their

profits back into Canadian projects in 1984; in 1983 it was 60 percent;

in 1982 it was 77 percent. There are no job-performance guarantees

attached to that agreement.

I know, Mr. Chairman, that the government across the floor and the

federal government have said: "Well, we're going to monitor the

industry. We're going to watch them very closely." How is this

monitoring to be carried out'? Even if the industries decide that they

want to utilize their capital and these windfall profits in another

way, what's to stop them? What in that agreement is to stop them?

Nothing. This is a very serious question for Canadians, Mr. Chairman.

Another very major item in that agreement. As a result of removal of

petroleum gas revenue tax, large profits will accrue to the oil

industry again, with an attendant loss of revenues to the federal

treasury. It is estimated, with the stepping down of the PGRT, the

western accord, that $5.26 billion will be lost to the federal treasury

by the end of 1989. I have a table here. I won't read this into the

record, because it's quite lengthy. But I have a table here which has

been well researched and outlines what would have been paid before the

signing of the agreement. So we have this loss to the federal treasury

of nearly $6 billion, while senior citizens' pensions are being

de-indexed, while we have lineups at food banks, and on and on.

There's no point in restating the miserable economic history of the

government opposite. But why did we sign such an accord? The net result

of all this, of course, will be higher prices at the pump, depending on

whose figures you believe. We know that starting in September the

federal government has levied an extra 2 cents a litre on....

Theoretically, gas prices at the pump are supposed to have been

reduced, but we know very well that's a short-term measure — and

shorter than we thought. In most cases gas prices at most pumps

throughout the province have not actually been reduced in any serious

or meaningful way. We know that the price of gas at the pump is going

to increase. That's what people are really concerned about and think

about.

According to the Independent Petroleum Association of Canada, as I

said before, $500 million to $600 million will flow through to the

petroleum industry next year as a result of decontrol over oil prices

alone. I haven't really discussed the natural gas situation, because

there is a bill before the House, and we can get into that bill. But in

an overall way, every time the federal government.... For example, one

of the things the agreement did was remove the federal Canadian

ownership special charge from the wholesale price of natural gas; but

the provincial government immediately moved to take over that vacated

charge. That seems to be the pattern of this government. If we take

these figures as a constant and add to them what the industry will

receive through tax breaks as a result of the reduction and eventual

elimination of the PGRT, then the industry will receive an overall

increase in profits of about $7.5 billion by the year 1989, according

to the figures I have here. I have a number of other examples listed

here as well, which I won't read into the record — they're for each

individual oil company involved. They range from Shell at 41 percent —

which is the highest; another multinational.... There's no guarantee

that those funds....

In

summary, dealing with this very complicated and massive item —

and basically dealing with jobs.... Just remember the hue and cry the

public raised a few years ago, in 1980, when it learned of the

unbelievable windfall profits made by the big oil companies in Canada.

I think, folks, people of this province, it's time to fill our lungs

again and let our feelings be known, because those times are coming

back.

Mr. Chairman, to put this all in perspective, let's say your small

business made a profit of $40,000 last year. If you had a 40 percent

increase in profits, it would raise your profit figure to $56,000.

That's an excellent increase by anyone's standards. However, the 40

percent profit increase did not satisfy the big oil companies, nor

apparently their friends — and we know who their friends are.

The western accord deregulates oil prices, thus eventually putting

Canadian oil prices on a par with world oil prices. Higher prices at

the gas pump, as I said before, will result — some estimates say a

minimum of 5 cents per litre and soon. It could be a little lower or a

little higher, depending on the world price. But I can tell you....

I see the green light is on, Mr. Chairman. I haven't quite finished.

But these policies will affect everyone in Canada and British Columbia:

the fisherman, the trucker, the salesperson, the consumer — all will

suffer from these outright gifts, in my view, to the large oil

companies. With that, I will end this portion of my presentation. I'll

wait and listen to the response from the minister.

MR. MITCHELL: May I have leave to make an introduction, Mr. Chairman?

Leave granted.

MR. MITCHELL: I would like the House to join with me in

welcoming a group of people not only from my riding but also from all

of British Columbia, and some from other parts of Canada — 30 members

of the Armed Forces who are at Naden on a course. They are down here to

see how the civilian part of Canada works and what we are doing in

British Columbia. I ask you to welcome these 30 members of the Armed

Forces in the members' gallery.

[ Page 6537 ]

HON. MR. ROGERS: I recall that in central officers' school

one of the things I was told by my instructor was that you're not

allowed to speak about politics nor attend anything about politics.

Gentlemen, there are times when I think it wasn't bad advice. However,

here we are.

I wish the member for Mackenzie could have been with me on the

weekend, because I was in about eight inches of snow at an oil rig

working in the north Peace River country, owned by a Canadian company.

They drilled all last winter. They found four wells that produced and

15 that didn't. Maybe you'd get some perspective of what this industry

has to put up with and what the risks and rewards are.

You told us how much money these oil companies made, Mr. Member, but

you didn't tell us whether that was Canada or British Columbia. When

you quoted those numbers about what the various oil companies made,

that was the Canadian figures, not British Columbia figures, and of

course the oil revenue is largely out of Alberta and, to a smaller

extent, out of Saskatchewan, British Columbia being somewhere between

25 and 30 percent self-sufficient in oil and no more than that. Just

for other interesting little statistics: the federal government took a

mere $11 billion revenue out of the oil and gas industry last year.

What you fail to understand about PGRT is that it's not a tax on

profit, it's a tax on cash flow, and as a result of that the industry

wasn't interested in drilling here. Drilling rigs that were

Canadian-owned moved south of the border. They paid the duty, went to

the United States and went to work. They're gypsies; they go to where

they can get a decent return. The western sedimentary basin had less

activity during the time that the national energy program was in place

than anytime since the discovery of Leduc. Sure, there was activity in

the offshore, in the Beaufort and in Atlantic Canada, and by Canadian

companies. They've got pit money to do it, so the great Canadian

companies in some cases putting up as little as 10 cents on the dollar

for exploration activities, in the case of one company putting up

nothing on the dollar.... If they find money, the company would do

well. I suspect the shareholders never did see much out of it.

[2:45]

One of the other interesting little aspects I would point out is

that one of the companies, Texaco, found it more lucrative to invest in

a convenience store chain than they did in oil and gas, and so they

bought a large chain of eastern Canadian midnight-till-midnight food

markets in which they felt the returns were so good.

You talk about the export of capital. I don't know what

documentation you have about the export of capital, but one of the

things we're trying to encourage in this country is the importation of

capital. If you want people to be able to import capital to invest

here, you also want them to have the knowledge that they can remove

their capital and their profits if they choose to do so.

Canadian companies are very active drilling overseas, not the least

of which is Petro-Canada, which is drilling in the South China Sea. Now

what that does for the people of Canada I'm not sure, but nonetheless

the Canadian-owned company, which your party was so vociferous in its

support of, is investing overseas.

One of the things you have to do, I guess, is go to Fort St. John.

Then you'll understand why we're so delighted with the signing of the

western accord. A city which was virtually boarded up in the middle of

this national energy program is now coming back to life as people are

moving back into the province. There is much more increase in drilling

activity. If the LNG project is successful in going ahead, you'll see

even greater activity there and that town get back to the kind of

activities that they had.

I told you on Friday. and I guess I want to repeat it, that I have

written to every major oil company drilling in British Columbia and

asked them what their views are of the western accord. Not only do they

expect to reinvest the money they're making in British Columbia: they

expect to bring more money here to invest. That's what we're interested

in — activity — and activity means employment. You asked how this would

be monitored. There is a federal agency in place, fully staffed, that

has the capacity right now, and by agreement. It's called the Petroleum

Monitoring Agency. It's an agency of the federal government, and they

re going to share that information with us.

All of us who are signatories — actually, we didn't sign it, we

initialled it; it has yet to be officially signed — of the western

accord are delighted with it. You wonder why British Columbia signed

the western accord. There is no question in my mind that it was a great

thing for British Columbia. I'm not so positive that it's absolutely

the very best thing for Ontario, and that's just a terrible thing.

They're going to get the spinoff activity, but we're going to get the

activity here because there is a return on investment which wasn't

there before. It's as simple as that. You can't expect people, if

you're going to charge them an incredible royalty and a charge on their

cash flow before they make any profits, to be interested in investing

here. They're just not.

There were a few statements made on Friday which I'd like to

correct. The member for Rossland-Trail (Mr. D'Arcy), who is still with

us today, said that Westar is operating at 60 percent of its former

production and employment levels since the advent of northeast coal.

I'd like to correct that. The company has lost some sales in Japan. but

they have picked up new markets in Europe and South America and Korea.

It is operating at 85 percent of capacity in terms of the plant

capacity. It is limited now by the capacity of the wash plant, because

of the change in the type of coal they're doing. Employment is not 60

percent of its former levels; it is now 90 percent of its former

levels. The output of the company is actually at an all-time high of

eight million tonnes. So that's just something I'd like to correct.

You made another statement about the decrease in electricity

consumption at the residential level. I have before me the figures from

1975 through to 1985. Every single year there is an increase in the

consumption of electricity at the residential level. and an increase in

the number of residential customers. In fact, the same figures apply

for all of the customers — transmission customers and everything except

for irrigation and street lighting. They had a special rate, and

because of an extra-wet year one year, a little less irrigation

expenditures than in others.

So we talk about what effect the increase in rates had on customers:

did the electricity demand go down? It did not. For the first time this

year, we have over one million electrical customers. and we're still

continuing to sign them up at about 32,000 a year. That's the rate that

I discussed this morning. We have 1,050,533 residential customers, as

of March 31. I just thought I'd bring that information to the House.

I think that will do it for now. More questions?

MR. LOCKSTEAD: Mr. Chairman, I just have a few comments to make. This government actually believes that

[ Page 6538 ]

the oil companies will pump so much of their

profits back into the Canadian economy that it will create jobs. This

has never happened in the past, and it is doubtful if we can rely on

non-Canadian multinationals to worry themselves over Canadian jobs. In

fact, industry has always been a net capital exporter, as I said

earlier. Also, the petroleum industry is a poor investment in terms of

job creation.

In fact, there is one school of thought which has been put forward

in Ottawa in terms of the western accord: that this western accord

could cost us possibly tens of thousands of jobs. I don't know if

that's correct or not. I know you will deny it, Mr. Minister — through

you, Mr. Chairman — but, well, there seems to be a double standard at

work here in this government and with the federal government in this

agreement. The federal deficit is no problem when it comes to giving

money away to the oil companies, but when it comes to helping ordinary

Canadians, both governments moan about the deficit. Provincially, our

deficit seems to climb every year

But I want to mention that another major problem, in my view, that I

see with this agreement — with the deregulation aspect of the western

accord — is the danger of pegging oil prices at the world level. That

puts Canadians at the mercy of OPEC's whims. Even though the oil prices

have dropped in the past few years, the oil market, as we have seen, is

a volatile one and can fluctuate crazily. Therefore I repeat that I

have not had a satisfactory explanation as to how many jobs and where

these so-called new jobs are going to be created as a result of this

massive giveaway, what powers.... We will see higher prices, in my

view, down the road and at the pump, and once again ordinary consumers

will be paying the bill for this massive giveaway.

Last but not least, I don't know what powers the agency you

mentioned has — the federal monitoring board. Does it have powers to

advise, to regulate, to implement or just to advise federal or

provincial cabinets?

HON. MR. ROGERS: Well, I guess the member and I are going to

have a little difficulty on philosophy here, but I don't think

corporate morality has ever known any international boundaries. I have

seen Canadian companies which I didn't think displayed the very best of

corporate morality, and I have seen multinationals and foreign

nationals that have treated their employees in an exemplary manner such

as Canadians should be proud to follow. So I'm sorry. I don't share

your view that Canadian companies are all good and foreign companies or

multinational companies are all bad. In fact, if you look at the record

in the forest industry, I think you'll find that in some cases the

nationals could learn something from the internationals. But does a

company that's headquartered in Calgary have greater morality or

greater Canadian feelings than a company that's headquartered in New

York or New Jersey or something like that? I suppose the chairman of

the board has a Canadian flag on his lapel, so he feels more about

Canada.

Interjection.

HON. MR. ROGERS: The multinationals.... Sorry Mr. Chairman, I shouldn't

allow that intervention to go ahead, but, sure, the multinationals repatriate

some of their capital. They brought the capital in here in the first place they

should be entitled to repatriate it. We want Canadians to be able to invest in

this country and overseas, and we want Americans and others to be able to come

and invest in our country.

The second thing I think that's important is.... You talk about the

world oil price. If we're to protect ourselves from the world oil price,

then we're just being ostriches. We can say: "Fine, the Canadians will

be protected from such great horrendous shocks." That meant that Canadians were

slower to adjust to the smaller automobile and to all the energy conservation

methods. And what happened? All you're doing is taking it out of one pocket

and putting it into another. You talked earlier about the old age pensioners.

Are you going to explain to an old age pensioner that the federal deficit is

greater because we protected the motorists from the reality of what world oil

prices are? Canada is not self sufficient in oil. It may be, as a result of

the western accord. We might find enough exploration activity for people to

go out and look for oil and gas; and if we find enough to become a self-sufficient

nation, we'll be much better off for it, but we're not right now. We're

self-sufficient in natural gas; we're not self-sufficient in oil. So if

the price of oil goes up — and I have every indication that it will not, but

that in fact it will continue to monitor down at least until '93 or '94;

that's a culmination in my office of all the different estimates sent by

all the different petroleum agencies, and there are hundreds of them....

Those same experts who told us that oil was going to be $80 a barrel are now

telling us it's going to be $18. On that basis, people invested in the Athabasca

tar sands and all sorts of other things — some rather large and rather white

elephants, I might tell you, in some of those operations. I don't think

it's important that the motorist should be hidden from the realities of

what the price of oil is. All you had is the federal government picking up the

subsidy or taxing you through another pocket. Why not let the motorist and the

consumer know right at the pump what the actual cost of oil is, instead of getting

involved with subsidizing them? So that's where we have a difference of

agreement. The agency that I spoke to you of has an advisory capacity role.

It advises both the federal government and the provincial governments appropriately.

MR. MICHAEL: The Minister of Energy, Mines and Petroleum

Resources is perhaps fortunate to have that portfolio in this

particular period of time. Certainly for the last year it has been —

and I see for the next few years — the most exciting ministry of all in

the province because of the things that have happened, and the things

that are on the drawing boards to happen. It's very interesting, Mr.

Chairman, to look at some of the statistics on what went on in that

ministry in 1984. As an example, gas and oil exploration was up in 1984

over 1983 by 155 percent. It's very exciting indeed to look at the

figures on coal production in British Columbia. The opposition talks

about southeast coal and the doom and gloom attitude they seem to have.

All of my figures indicate that coal production is up throughout the

entire province, including the southeast. Indeed, coal production in

British Columbia was up a whopping 78 percent in 1984 over 1983.

Looking at coal revenue, we see that an additional $365 million was

brought into this province by additional coal sales in 1984, and beyond

a doubt those figures are going to be even greater in 1985. Mr.

Chairman, it would appear that the opposition have not done their

homework or done much close examination of the effects and the

magnitude of the LNG plant proposed for Prince Rupert, and of course

the fertilizer plant that has

[ Page 6539 ]

already been announced for Annacis Island on the

lower mainland. If they had done their homework, I am sure they

wouldn't be speaking negatively, as the member for Rossland-Trail (Mr.

D'Arcy) spoke on Friday about the proposed LNG plant for Prince Rupert.

Perhaps they would be interested in looking at some volume figures.

The fertilizer plant proposed for Annacis Island is going to consume

20 billion cubic feet of natural gas a year. The LNG plant for Prince

Rupert: my research indicates that that plant will be consuming in the

neighbourhood of 140 billion cubic feet of natural gas a year. Just to

rattle off figures like this doesn't mean too much until you compare it

to the number of households that that would heat. The fertilizer plant

alone is going to utilize enough natural gas to heat 200,000 homes. The

LNG will heat the equivalent of 1.4 million homes. Adding those two

together, if that LNG plant goes ahead, those two plants would utilize

enough natural gas to heat 1.6 million homes.

[3:00]

Relating this a little bit further, Mr. Chairman, for the sake of

getting the message across to the opposition as to the enormous volume

and what this means to our province, perhaps I should read into the

record the average number of homes using natural gas as a fuel in 1983

in a variety of provinces throughout the Dominion of Canada: British

Columbia, 419,789; Alberta, 571,979; Saskatchewan, 210,817; Manitoba,

173,357; Quebec, 162,666; and New Brunswick, 286. Taking the total of

all of those provinces, there are 1,538,894 homes heated by natural

gas. That means that these two plants, if the LNG plant goes ahead —

and I'm convinced it will — will be utilizing more natural gas than all

of the homes in those entire six provinces combined. A tremendous

opportunity for the north country! I thank our lucky stars that we have

an aggressive minister and government, and that we have in this

province a government which has the faith of the private sector and the

international investors to bring those dollars into British Columbia to

create those necessary jobs.

[Mr. Veitch in the chair.]

MR. PASSARELL: A couple of questions to the minister. The

first one is an

article that was in Friday's newspaper: "French Firm To

Get Funds for Road into B.C. Gold Mine." Your government is giving $4.5

million to Serem, a French firm. This is good, because there's a

definite need to have that road; it's a very isolated area. The 130

jobs that would be generated from this new gold-mine would be of

immense value to the constitutuency of Atlin.

I'd like to know if the minister has looked to see if it would be

feasible — and how much it would cost — to run the road past Serem into

Klappan. It's not that far. We're talking 20 or 30 miles maximum. What

we could do is give an extra $2 million to run the road in, and then

Klappan would have the road all the way through to Smithers. It would

be a great idea, since we're giving the money for the project already.

Has the minister looked at the aspect of continuing this road through

into Klappan? What would the cost be? I 'm sure it wouldn't cost that

much to do. That way they would have two avenues. If I'm not mistaken,

right now it’s going to cost quite a lot of money to put that

140-kilometre road down into 37. If we could work it out through this

grant, we would be encouraging development in the area and have a road

that would be useful not just for one or two projects but for longterm

ventures of many operations into that area.

The second question I'd like to direct to the minister regards the

red codes that are put onto streams, particularly when they deal with

placer operations. I wrote a letter last year to the minister regarding

some small placer operations, which are employing one or two or three

men. Red codes are put onto these streams. and once you put a red code

onto a stream, it's very difficult for the placer operator to continue

working. In some of those areas where the red codes were put, there

haven't been fish for probably a million years. I understand why red

codes have to be put on the rivers, such as the Stikine or major

rivers. or even some of the smaller grayling rivers in the constituency

of Atlin, but around this particular area, the Surprise Lake area, it's

just not feasible. I have talked to people who have never seen a fish

in some of those streams for years. Old Bob can even talk about that.

Old Bob knows that area, and he wonders why. So I would like to see

some opening of these red codes on streams, because it does affect the

placer operator. We have to put the environment ahead of us, but I

think we go a little overboard at times when we start putting in red

codes.

I know those are pretty difficult questions, and I know I've upset

the minister with these questions that I've directed to him. He can

hardly contain himself in his seat. I thank you for the opportunity to

address these two important questions to the Minister of Energy, Mines

and Petroleum Resources.

HON. MR. ROGERS: The Serem gold corporation has a mining

claim called Lawyers property. When they first came to see me, I said:

"I'd like you to change the name of the mine before anything else

happens, because I’ve got a bad taste in my mouth." Anyway, what they

have is a well-drilled and well-delineated ore body of fairly

high-grade ore that requires an actual mining operation and milling

operation — concentrating operation — to be built on the site.

We didn't actually give them the money; it's a loan. The loan is

structured on a very fascinating type of payback. They will be

producing more bars, but it's structured on a trigger price of $385

U.S. for gold and, I believe, $7.60 U.S. for silver. Also in the

trigger price is an either/or, and we've also covered both currencies:

the Canadian currency and the American currency, So if the Canadian

dollar were to go to par or above par with the American dollar, we've

covered it so we get it that way.

Interjection.

HON. MR. ROGERS: Well, anyway, they needed the money.

So we're doing the road assessment work this summer. It may be that

we go off the end of the Omineca mining road. It may also mean that we

use the forestry road for access. This is an extension from the Omineca

mining road, but the Omineca mining road is not in the best of repair.

What may very well happen.... I'm not positive of the name of the

forest access road, but there is a forest access road that's in better

shape and is only some 15 kilometres from the Omineca mining road, The

road may be pushed through from there.

It is, however, quite a long way from Klappan. It's a lot further than I think you believe it to be. I don't know the exact

[ Page 6540 ]

distance, but we are not looking at that. However,

my ministry is currently doing a study with Gulf Canada — or Olympia

and York, Canada; I don't know if they've changed the name of the coal

outfit yet, or if they even bought the company — on which is the best

route to go from Klappan back down the BCR right-of-way, and then which

particular valley to get over to the Nass, and then go down the Nass

and into Stewart.

I had a look at it this past summer by helicopter. We went up

through, I believe, Summit Lake, a small lake up there, and looked at

both routes. Road building is a little difficult. In one particular

aspect there are a couple of bridges that have to be built, but in view

of the fact that they'll probably move a million and a half tonnes of

coal per year — rubber-tired operation, rather like Cassiar does with

asbestos — then that does seem to be the more practical route to go.

Both of those things are proceeding. The Serem deal has a lot of

catches in it. We have to have a firm commitment from them to begin

employment. They have to give us a guarantee that they'll actually

start construction, so before we advance any funds, it's all there.

Incidentally, they plan to have that as a fly in and fly out for the

crew, but they need the road access to move in materials and, of

course, fuel for that particular operation.

I was in your constituency last summer visiting a number of placer

leases. To say that your constituents are independent and colourful

would probably be correct, and I think you'd agree with that as well.

Federal fisheries, the provincial Fish and Wildlife and the water

comptroller are largely the people that make these determinations. I

suppose the ministry puts them in place.

The gold commissioner is in the gallery today, and you brought a

smile to his face, I'm sure, when you discussed the possibility of

opening up some of these areas. There is resistance to it. If there

aren't fisheries documented in these areas, then I think perhaps we

should have a look at them. But again, it's not my ministry to do it.

If you left it up to the Ministry of Mines to determine which place is

going to have placer leases.... I'd be very popular with my

constituents for opening it up. But you know that there is a more

important environmental aspect to be looked at. They have to be given

those considerations.

We have released a bunch this year, as a matter of fact. There's

been better cooperation — or, I should say, more expeditious

cooperation, I think — in the last year than there has been in previous

years, because we have released quite a number of rivers that were

previously in reserves. I could talk to you individually, if you want,

about individual one-on-one cases, or as you choose.

MR. PASSARELL: Just a few further questions on this. The minister mentioned he'd be very popular with his constituents if he opened up....

Interjection.

MR. PASSARELL: Okay, because I was wondering how many placer

operations we could get going in Vancouver South in some of their

smaller streams.

I'm glad to hear the minister talk about Klappan, because that's

going to be a major project for the far north and the Atlin

constituency, as well as the province.

When I brought forward the suggestion of the road, I thought it

might be of some value to have access on both ways, but that's okay. My

concern is that Stewart is needed as a major port, so if the road is

going to come to the 146.... I know in the

article they were talking

about the railroad. I don't know if that's feasible. It would be a

tremendous expense to run a rail line in from Klappan into Stewart, but

if we got the road upgraded into that.... Would the government be in a

financial position to give Klappan Gulf money as a loan — not as an

outright grant — for development of a road into that area?

The other aspect I'd like to talk about is what the minister

mentioned on trigger prices in regard to gold. It's a very difficult

situation, because so many different mines have different prices when

it comes to trigger prices, as the minister is aware. You could look at

something like Scottie Gold or Erickson Gold, where the trigger prices

are so much different in those areas than, let's say, the Lawyers claim

we were talking about. It's a difficult situation to know exactly what

the trigger price is in a gold placer operation.

So I certainly hope — and I know — that the minister will be doing

anything he can to encourage Klappan and to get some type of assistance

into that area to make that project get off and benefit the province of

British Columbia. Those are just basically the last ones I wanted to

ask the minister.

HON. MR. ROGERS: Of course, getting back to the Lawyers

property and Serem, anything that they ship out they fly to New York,

London or Zurich and turn that into cash right away. They wouldn't need

to use the road to Stewart. I think I'll get a map prepared for you so

you can see the difficulty. It's a great distance between the two, and

it wouldn't be a looping road, as you suggest.

The Serem is a hard-rock operation. The company is quite confident

that by the time they get this thing into production they'll do it;

they'll be able to pay back the loans and funds we've advanced them. Of

course we have first charge against the plant and equipment that's

there, but it's just the little bit of incentive they needed to do it.

In fact the economic activity that we get from this operation almost

balances the cost of building a road. Nonetheless, these industrial

operations aren't charities. You have to look at each one of them for

what you can do to encourage them without giving everything away. The

same thing applies to Klappan. We're going to do the study this year.

If they can get the contract to sell the coal, then we may advance them

the money to build the road, or to build the road as a public road and

then charge them on a per-tonne basis.

The difficulty I had with the Lawyers property in the Serem property

is simply this: that Toodoggone area has an awful lot of gold prospects

in there. What happens if, as a result of opening this road, we get

greater access and therefore great...? You have a little pressure from

the hunting side, from the resident hunter and the guide-outfitter. The

guide-outfitters have got to face this whenever there's an expansion of

road. But if there are other mines developed in that area, if further

gold-mines are to go ahead and if there is another operation to go in

there, I'm just going to have to go to the company and say, fine, we've

now got enough economic activity out of this; the province has got more

than its share of economic activity out of this; we'll either get the

new company to share its costs to the road, or we'll fold the cost to

the road because we'll have already received it in revenue. In each

particular case we're trying to deal with what we have to do to get

them here without spending too much money, and how much we can cover in

terms of them walking away. In

[ Page 6541 ]

both cases I'm convinced that, despite the fact

they're multinational companies, they're very substantial financial

organizations and will honour their commitments.

[3:15]

MR. DAVIS: I'm sure we all can applaud the government for its

efforts to bring in additional capital and new industry, and provide

additional jobs. British Columbia has two energy sources of

significance: natural gas is one and hydroelectric power is the other.

I agree that they both should be used as catalysts for developing new

industry and providing new job opportunities. Some progress — I think,

considerable progress — has been made in the natural gas area; less so

in respect to electricity.

In the case of natural gas the government now allows the private

sector to go to the field, to the source, and contract for supplies at

prices and for firms which suit both the buyer and seller. Previously

the B.C. Petroleum Corporation, a corporation set up by the NDP, was

the sole buyer. We had a situation for too many years, beginning in

1974 and continuing down to very recent times, in which a government

agency bought the energy in the form of natural gas. I've consistently

been critical of that policy. In the hydro area we are still following

the NDP approach of having a large government corporation produce —

certainly transport and market — the energy. The NDP approach was

essentially one of averaging. It was one of developing a government

monopoly which controlled the source of energy exclusively, be it hydro

power or gas, and it was the sole marketer.

Generally speaking, the approach to natural gas on this continent —

certainly in the United States and down the years in Alberta — has been

to allow the private sector to go to the source and contract supply;

and require the transporter, be it Westcoast Transmission, Trans Canada

Pipelines, Alberta Natural Gas or whomever, to carry that energy —

natural gas in this case — as as a common carrier. That has permitted

the user — a large energy-intensive user, for example, making

petrochemicals — to develop a source of supply with prices and

transportation costs which are reasonable in the eyes of the firm but,

more important, predictable over time. It has been possible to contract

sources of supply for long-term purposes. And the long-term purpose

which is of most importance is financing the industry. Unless you have

a source of energy at a price which is predictable, a reliable supply

at a known future cost, you're not likely to attract the capital

necessary to build the plant necessary to carry out the processing of

that resource.

Latterly, in respect to natural gas in British Columbia, we've

reverted to what has customarily been the North American practice, but

certainly not the NDP practice, of allowing an industry to go to the

source and buy its raw material over a long period of time at a known

cost, and of course, transport the raw material to the plant, wherever

the plant is located. Latterly we've even allowed plants to set up in

the lower mainland. As a result of this change in policy we have, for

example, a big $600 million development on Annacis Island: a

petrochemical plant making fertilizers, buying a predictable supply

from a private producer at the source, and with transportation supplied

via common carrier to the destination industry. This is now happening

in the case of Kitimat. The new plant that's going to be built there is

also going to be able to buy its gas at the source from a private

supplier and have the gas moved via common carrier to Kitimat. So the

investor in that case, and in the case of the large new petrochemical

plant on Annacis Island. knows what he's up against when it comes to

the cost of raw material — in this case gas as a source of chemicals.

We've in some measure privatized the gas industry. We've at last

given overseas investors, as well as our own investors, an opportunity

to contract for a British Columbia product — in this case natural gas —

over a sufficient number of years that they can be assured of a

reasonably economic operation. That's why we're beginning to get

investment in natural gas-using industries akin to the type that

Alberta has had in spades for many years. We've moved, I think,

significantly in that direction and with respect to natural gas; we

haven't moved at all with Hydro. Now the minister has brought in

legislation which allows Hydro — or Hydro under some instruction from

the government — to sell some incremental or some additional power for

some short period of time. That isn't going to attract new industry. It

may cause an existing industry to continue or even expand its output

using existing capacity and perhaps fulfill an export contract or two,

but it's not going to attract new capital on any large scale. It's not

going to create many more jobs.

What we had historically in British Columbia, and certainly

historically in Canada. was private enterprise finding a low-cost

source of hydro power, obtaining the development rights for that

particular power site — in effect capturing the costs; at least it knew

the costs — and owning the site and controlling the source as a

predictable source of hydroelectric energy. Cominco's vast developments

in the Trail area are based on hydropower, which Cominco developed in

the West Kootenay plants. Many of the power-intensive industries in

Ontario and certainly in Quebec and some in Manitoba have developed

that way. They were able to obtain a power site — perhaps a series of

dams in a short

section of river — and with their costs known and with

a reliable supply of energy, they then were confident they could

finance a processing plant or series of processing plants, and provide

continuous employment. And they upgraded resources. They took minerals

in concentrate forms and processed them; they took forest products and

further processed them.

That hasn't happened in British Columbia in recent years, and the

main reason it hasn't happened is that B.C. Hydro, has been inserted as

the monopoly — the sole developer of hydro power sites, certainly the

sole transporter and distributor or seller of hydroelectric energy. And

Hydro, operating on a large scale, building very large projects,

connecting them all up with expensive transmission lines — investing

heavily in distribution also — has homogenized the hydroelectric

resources of the province. The high-cost sources are mixed in with the

low-cost sources. They're all connected together with expensive links,

and the whole becomes expensive. As long as Hydro is permitted to

charge one set of rates which apply from one end of the province to the

other, and only one set of rates, those rates are going to be high

rates. There are raisins in the cake, if I can draw an analogy, but we

have not — the NDP did not certainly, and we have continued the

practice — allowed particular sites which are low cost to be developed

by a separate entity, public or private, to utilize the energy close to

that site, where the energy is relatively low in cost, for particular

developments.

Now there's an industry which we're losing to Manitoba right now —

to an NDP province — polysilicon. The Japanese need polysilicon. They

need 50 megawatts. They need energy predictably for 15 to 20 years, the

life of a plant — a

[ Page 6542 ]

plant, incidentally, that would employ several

hundred people continuously at high wages. They can get a rate and then

can get a predictable source of supply in far-off Manitoba, but they

can't from B.C. Hydro. B.C. Hydro is not able to quote what I would

call competitive rates. Manitoba is able to quote something like 15

mills per kilowatt hour. The costs in British Columbia are high. The

whole cost structure is homogenized. There is no way that Hydro can

quote a price which is an average cost.

Now it should be possible for us to sell energy at a particular site

that is close to the site — I'll draw an analogy, although it's not

altogether appropriate: sell to a polysilicon plant at Revelstoke right

next to a dam — and not charge all the costs of transmission and so on.

That way you can attract industry into the interior, into the north,

into areas where the raw materials exist.

We have a pricing structure, a corporate approach, which favours

Vancouver. It favours the big city. It gives no preference in terms of

power costs whatsoever to outlying areas. It takes unique power sites,

which may be uniquely low in cost, and just averages them into this big

total. We have, by deliberately telling the private sector that it

can't develop a particular site for a particular project, deliberately

first generalized the whole power structure and secondly made it at

least equally advantageous to go to Vancouver to set up shop.

Now the one thing we aren't offering is a predictable source of

supply over many years at a predictable price. Hydro's rates rise as

its costs rise, and its costs tend to rise with inflation — certainly

with interest rates — and therefore Hydro cannot really market the kind

of energy that the Japanese, who want a secure supply of polysilicon,

want.

It's about time that we as a government started to tell the Japanese

and other people: "Look, if you've got an industry that is power

intensive, we've got a few unique power sites in British Columbia."

They don't have to be developed by B.C. Hydro. You might even have a

subsidiary of B.C. Hydro develop them, but develop them at the uniquely

low cost of that particular site. Attract these power-intensive

industries to outlying parts of the province and give them a supply not

only at a relatively attractive cost, but for a sufficient number of

years to attract the hundreds of millions of dollars in investment

which is involved. The Aluminium Company of Canada is at Kitimat

because it has a secure source of energy supply all its own. Many

people regret the contract that the province signed with Alcan back in

the early 1950s, but the Aluminium Company of Canada knows what its

costs will be. It isn't up against a utilities commission or someone

else continually jacking its costs or prices against the new plant. So

they are inclined to build a new plant because they have their own

unique source.

If the province really wants to break out of this straitjacket, as

it did with natural gas, it has to consider allowing private developers

to develop certain unique Hydro sites, to do their own costing and have

a predictable cost of energy.

[3:30]

HON. MR. ROGERS: In November 1983 the government changed its policy

to allow private development of hydroelectric power in areas that were suitable

but outside the B.C. Hydro service area. A couple of places come to mind that

would fit that. One is a place in the far northwest called Moore Creek, which

had been looked at by a number of companies. In fact, three electric utilities

looked at it on behalf of various industrial operations. Another is the Homathko,

which Hydro looked at in the past and ruled out for some considerable time in

the future. One aluminium smelter corporation came to see me and looked at the

possibility of developing the Homathko, of building their own power grid over

to the Island and seeing what the possibilities were then of building an aluminium

smelter somewhere in the Campbell River area. In both cases they want to get

the Alcan kind of long-term security of supply.

I have great difficulty with abandoning the postage-stamp rate. You

say that it favours Vancouver. If electrical rates were actually

factored out, Prince George would have lower rates than Vancouver but

the Island would have significantly higher rates. The smaller

communities farther down the line would have considerably higher rates.

Rural rates would be much higher than urban rates. It's certainly much

easier to deliver power to a block of apartment buildings in the

downtown core than to a group of farmers or ranchers stretched out over

the countryside.

We've had the postage-stamp rate for a long time. I think it has

served us in good stead. We have the ability, if companies are so

anxious for power, for them to go ahead and build their own. Of course,

a company that is building polysilicon can contract with Alcan. Alcan

has surplus power right now, but it's difficult to see whether or not

they would have sufficient surplus power to attract a company to

Kitimat. I would have great difficulty finding out where to get on and

off, or abandon that particular aspect. We know what the blended cost

of electricity is for everybody. I don't think anybody actually would

tell you what the real cost is per household. I suppose the people in

Fort St. John or Chetwynd or Revelstoke or Shuswap would be paying the

lowest rates just because of their proximity to the generating

facility, but the accounting never has been done on that basis. It's

been done on the postage-stamp basis, which I think is what we'll stick

to. I think our policy really does accommodate a major company that

wants to have secure long-term electricity, should they want to make

that investment.

MR. DAVIS: I've stated that new capital is unlikely to come,

particularly new capital aimed at creating a power-intensive industry.

Unless the power rates are average or below average, the cost to that

operation has to be seen as reasonable in a worldwide context. More

important, of course, is the term, the length of time over which the

company can assume that this cost of energy is predictable and will be

reasonably stable. That's the magnet. That's what will attract industry.

If we're determined to homogenize all our costs and then just strike

an average, which is perhaps the easiest thing in the world to do,

rather than be selective, we'll always have very high power rates. Our

terrain is obviously very difficult in British Columbia. Dams are

expensive to build; you're normally damming a very deep valley and not

putting a small berm across an immense area, as is the case on the

plateaus in upland Quebec and so on, where the costs of dams are very

low. Our costs, especially if you include transmission over our

difficult country, are way out of line, very high. So okay, Hydro is

the monopoly corporation. Hydro is up against these difficult, physical

factors. Hydro inevitably has high average rates. There's no way, using

Hydro as the agent, you're ever going to attract power-intensive

industries to British Columbia. That's end of story. If you think that

we should be processing some of our raw materials here, you've got to

commit certain sites. They may be remote, and that

[ Page 6543 ]

takes a certain amount of political courage, but

it's the only way you're going to decentralize some of the industry in

this province, and the only way you~re going to process resources.

Now predictability includes the rate for water. Suddenly, a few

years ago, the province discovered that it could jack up water rates

and thereby progressively cut into what otherwise would be the

profitability of power-using industries. There would have to be a fixed

rate for water, also, in the contract. Otherwise the costs would run

away simply because a particular tax would be introduced. So you have

two wild cards. With B.C. Hydro, you have the Utilities Commission

reviewing rates, finally swallowing all the costs, jacking the price.

That happens annually or bi-annually. Then in addition you have the

government — which for revenue reasons may decide it needs more cash —

suddenly jacking the water rates. You're never going to get

power-intensive industries that way. Obviously Manitoba has decided on

a different course. Obviously Quebec has. They're getting

power-intensive industries; they're getting the jobs, we're not. If

we're wedded to Hydro, forget it.

MRS. WALLACE: I'm going to be changing the subject slightly. If the minister has any response, I would certainly yield.

I would like to ask this minister, as the minister responsible for

energy in British Columbia, what his position is on nuclear energy.

There has been ample evidence that the people of British Columbia and

of Canada generally are opposed to nuclear power. In fact, a Gallup

poll held just recently shows that two-thirds of Canadians are against

nuclear power. I'm wondering whether or not the minister is prepared to

give a firm commitment that as long as he is the Minister of Energy

that will not happen in British Columbia.

MR. CHAIRMAN: Hon. member, are you asking for a future policy of government?

MRS. WALLACE: I'm asking the minister a question, Mr. Chairman.

MR. CHAIRMAN: If you are asking for future policy it would be out of order.

MRS. WALLACE: This is not question period; this is estimates.

I would also like to know what his position is on the moratorium on

uranium-mining, as he is also the Minister of Mines. I believe that

that moratorium is soon to expire, and I am wondering if we will see

him introducing legislation — and now I may be treading on the rules,

Mr. Chairman — that will extend that moratorium.

I have a grave concern, not just because the general populace is

concerned but because of the difficulties that occur in the use of

nuclear in the matter of waste and waste disposal. The cost is

prohibitive; if you think Hydro is expensive — the major Hydro projects

that the member for North Vancouver–Seymour (Mr. Davis) was just

talking about — certainly nuclear is far more costly. It's costly in a

lot more ways than just dollars; it's costly in the way of hazards. the

dangers and the difficulties with disposal.

It's now been apparently proven without a doubt that there was

actually a meltdown at Three Mile Island, even though it has been

denied quite extensively. The Ontario people have had some pretty

definite and costly problems at their plant, and I would hope that the

minister would be able to advise us that we will not see nuclear power

in British Columbia, nor will we see a reopening or allowing of

uranium-mining. I would hope, too, that the minister would pressure his

colleagues to accept a bill that is presently before the House to

declare B.C. a nuclear-free zone. That is certainly a direction that

would put to ease the minds of a great many people who have concerns

for their own welfare and the welfare of their children and their

grandchildren. I don't know if the minister has ever been involved with

the Physicians for Social Responsibility, but I have attended both of

the conferences that they held at UBC. I have the papers, which were

incorporated into books, and I would certainly recommend them to that

minister as.... Well, I won't say bedtime reading, because it's a

bit....

HON. MEMBER: Heavy.

MRS. WALLACE: Yes, a bit heavy for bedtime. But I would

recommend them to him for mandatory reading. If he were to read those

documents and the papers that were presented to those two conferences,

it might influence his thinking greatly as to the advisability or the

feasibility or the survivability of nuclear arms and nuclear war.

Certainly, when we're talking nuclear, we have to bring into that the

nuclear power, because the same scientific research and the same

approach is used to make power as to make weapons. One of the areas

where Canada has been very remiss is in the export of reactors,

theoretically for power production, which can well have been used, and

have most certainly been used in some instances, I think, for the

production of nuclear weapons.

I have a couple of other minor items, but I would like the minister's comments on those two.

[Mr. Strachan in the chair]

HON. MR. ROGERS: I don't have any difficulty answering the

questions on nuclear power, but you asked about the period of time that

I'm the minister. With our present hydro surplus, that's assuming that

this government will be in power well into the next century, and that

I'll still be the Minister of Energy, Mines and Petroleum Resources. I

would hope to change portfolios in another five or ten years and go on

to something else, just because, after a while, it's a good healthy

thing to change portfolios.

Interjection.

HON. MR. ROGERS: No, you don't run out of energy.

The problem of nuclear power for British Columbia will probably be

addressed by my grandchildren or perhaps my great-grandchildren. By

that time, the whole world will have come to accept it or to to reject

it. But I think the last place in the world that's ever going to have

to face a choice of whether to go to nuclear power or whether the

lights go out is British Columbia. With our abundant geothermal

resources, our coal resources and our hydro resources, I just don't

think that it's ever going to be a problem for B.C. Therefore we can be

in a rather smug position about it.

I personally don't care for it. My personal feelings are that there

has not been sufficient training of the operators of these things. I

think there have been some problems. The

[ Page 6544 ]

American nuclear reactor system, which was designed

primarily for use by the navy — relatively small reactors and

relatively small ships.... Well, they're very large ships, but compared

to the land-based reactor, relatively small. They were just multiplied

by a factor of tens or twenties or something and made into land-based

operations, and they haven't anything like the technological

developments that the Canadian reactor, which is a more peaceful

reactor, has.

They all have waste disposal problems. The Ontario ones have had a

very good safety record, and a very good reliability record, but

they're now having difficulty getting the new one finished. It's going

to be very interesting to see what happens in the province of Ontario,

with the NDP holding the balance of power and with the decision on

whether to proceed with the nuclear power plant only weeks away.

I had a meeting with some people from Ontario Hydro the other day,

and the decision is going to go to the chairman of the board of Ontario

Hydro. I presume the government in Ontario will fall within a week.

Therefore the new government will have a choice of accepting the

recommendations of Ontario Hydro — I think after 42 years they'll be

anxious to change the chairman and the directors of Ontario Hydro — and

they're going to be faced with that problem very quickly. So your

political cousins in Ontario are going to have a very difficult time

supporting a government that's going to make a decision on whether to

proceed past where they are on their next nuclear power plant. If they

don't, they're going to have to make a major decision on building a new

coal-fired generation plant. It's called Ontario Hydro, but

hydroelectricity does not provide that much of the power in Ontario. An

enormous amount of it's coal and a lot of it is nuclear.

Nuclear power has been a benefit to British Columbia in its

unreliability in terms of our exports. The Trojan plant in Oregon goes

down periodically, and of course the WPPS, which has caused such a

nightmare in Washington state — and I wouldn't wish that fiscal

nightmare on anybody — has helped us with some of our exports as well.

[3:45]

The other thing is the proliferation of nuclear power plants around

the world. France is probably the leader in building nuclear power

plants. Even with the change of government, they don't even bother

going through the public hearing process, or they go through a public

hearing process while the plants are under construction, which must be

pretty frustrating for the interveners. France, the U.K. and the Soviet

Union are the big generators of nuclear power — and that pretty well

covers the spectrum of political ideals — and yet they're still all

going full-speed ahead on it. Acid rain seems to be something you can

solve a little easier than nuclear fallout. It seems to me that you

can't solve nuclear fallout with a scrubber on the top of your stack,

and you can solve the problem of acid rain with doing that.

Nonetheless, that's another jurisdiction.

Your question on whether or not B.C. should be a nuclear-free zone

would be best addressed to the Minister of Intergovernmental Relations

(Hon. Mr. Gardom) when his estimates come up. There are not often a lot

of questions during his estimates, and he is the man responsible.

That's a responsibility of his ministry, and it would be inappropriate

of me to comment on something that's his area of responsibility.

The uranium moratorium is not legislation; that's just a government

policy. It has less than two years to go, but long before it is expired

the government will have considered the ramifications of either

terminating it or extending it, or extending it to a point that the

next government can make a decision. But it has just under two years to

go, so a policy decision will have to be made before 1987. I think

there's ample time for cabinet and the government to consider that

before that occurs.

MRS. WALLACE: I thank the minister for his remarks. I'm sorry

that he hasn't been able to give me a firm commitment that that uranium

moratorium will be continued.

The other comment I have relates to B.C. Hydro, and we were cut off

by the clock last Friday. This has to do with staffing at B.C. Hydro.

The last figures that I have are for 1982-83, which I believe was the

last year that Mr. Olsen was employed by Hydro as the general manager

at a salary of $125,000, according to this figure.

But I understand that Mr. Olsen was taken on contract, subsequent to

his leaving the payroll. I wonder if the minister can tell me what that

contract is and for how long. My understanding is that it almost

doubled Mr. Olsen's salary, from $125,000 to $250,000 a year. I don't

know if that's correct or not. I would also like to know what fringe

benefits Mr. Olsen has. For example, does he get travel expenses,

living expenses, in addition to the figure that we've heard touted —

whatever the correct figure is — and does he have transportation? Does

he get a car provided? You know, what are the terms of that contract?

How long does it run, from when to when?

HON. MR. ROGERS: There was a board meeting at B.C. Hydro this

morning, and Mr. Olsen is still at the board meetings and still the

chief operating officer of the company. So you startled me when you

said "when he was still with the company." He's still there now. He had

35 years of service with the company, originally with the B.C. Power

Commission. and when he reached the period of time when he had maximum

contributions to the pension program — this is quite similar in private

sector companies — he had the option of retiring with full pension at,

I believe, the age of 61 or 62. He must have started when he was fairly

young.

The decision of the board of the day — and I wasn't on the board at

the time — was to offer him a contract so that he could collect his

pension, which he would be entitled to, and put him on a contract for

the remainder of the time that he is to serve. I believe they gave him

a three- or four-year contract, which would have brought him to a year

past 65. I think that's correct. I'll have to get you all the details

and, if you don't mind, I'll table them in the House or take it as a

question, because I can't give you the exact numbers off the top of my

head and we don't have someone from Hydro here today.

He is given an automobile. He operates as the president of the

company, so to all intents and purposes he is retired and operating on

a contract with us. I think that's about all I can tell you about that.

He had reached his maximum contributions to pension, therefore did not

want to contribute any further to pension and we don't require him to

make pension contributions. We have him out on contract. I can get you

all the details, and maybe if you ask more questions I can get it now.

MRS. WALLACE: Well, yes, if the minister will get me the

details as to the terms of the contract and the per annum payment, and

also the car: what kind of a car is it, and at what price. I understand

that the car that Mr. Olsen was driving has

[ Page 6545 ]

been put up for bid, and it was a very low mileage

and a relatively new car, so I'm wondering why that car was sold if in

fact he still is provided with a car. So I'd like the details on the

new car, and also what happened to the old one, why it was disposed of

if in fact he is still there and still needs a car. I would thank the

minister for bringing that information.

HON. MR. ROGERS: I'm sure it's a more elaborate car than the one I drive, but I'll find out the information for you.

MR. COCKE: I note that B.C. Hydro is laying off engineers,

and generally cutting back on their overall direction. There's no

question, they're not building dams. Nor are they needed at the moment

particularly. I've always had a tremendous interest, living on the west

coast of Canada and just this side of the mountains, in geothermal

power. As a matter of fact, years ago I talked about it, and

subsequently there was some work done in Hydro.

I'd like to ask the minister what they're doing about their

Pemberton experiment at the present time, and how far they've gone, and

when or where they'll be doing any more of that kind of work. I think

it's quite important that while at the present time we have a surplus,

there will be a day when we'll be faced with the need for alternatives.

Certainly the alternative of geothermal, in my opinion, has a

tremendous advantage over many of the other alternatives and, for that

matter, over damming up river valleys. I just wonder if the minister

has anything to say about Pemberton.

HON. MR. ROGERS: The property you refer to is near Pemberton;

it's called Meager Creek. We spent $26 million on this particular

project, putting in the test wells. You put a Christmas tree on it

rather like you have on an oil well; it's a step-down procedure. They

brought in a turbine and tried it for a while. The particular

geothermal resource we had in the province wasn't particularly

reliable. I guess there was some geological discussion about the

structure of this particular geothermal resource; and, in fact, we were

prepared to seal it up for the present time. The costs were not....

When we entered into this geothermal thing, we were looking at energy

costs going much higher than they are today. With our current surplus,

we are just taking the information that we have and holding it.

The resource, however, has some value in the intermediate term. We

have asked interested proponents who would like to either run a

hot-house operation or a hot springs operation with this particular

resource to submit proposals to us. One company is looking at doing a

greenhouse type of operation, another person a Japanese spa kind of

place. Again, of course, they all need road access, and they all want

the Ministry of Highways to build a road in to their resource if we

were to give it to them. B.C. Hydro is canvassing the ministries of

government that may have an interest, Agriculture, Tourism and Economic

Development, to see what interest they have in the resource that we

have there at the time. The rest of the equipment has been removed. And

the information is kept on file at B.C. Hydro. But at the present time

we don't need it.

MR. COCKE: Mr. Chairman, I see what's happened: there's no

need for that power at the moment. I was wondering just what the

experiment did in terms of Hydro's feeling towards geothermal power for

the future. Did that $26 million provide us with significant evidence

that it's going to be a good or a useful alternative in the future?

Were they able to experiment with the corrosion of turbines and that

sort of thing? What really came out of it?

HON. MR. ROGERS: Yes, as a matter of fact, that's one of the

things they discovered, that we did have a fairly serious problem with

corrosion. But on a more important note, the reason that geothermal

resource in the United States has become so fascinating is the

legislation the Americans have, where utilities must buy power from any

new supplier, at utilities-avoided cost. So you have some geothermal

resources and, of course, much higher power costs in the PG&E

service area, and more abundant and closer-to-population geothermal

resources. So that's the reason that it's done there.

I guess you have to put a lot of the stuff that Hydro does down to R

and D and exchange information. Utilities aren't terribly protective

about all of their information that they gather. It probably wasn't the

very best investment we made, but I think we know an awful lot more

about geothermal resources in British Columbia should the time ever

come that we're going to have to go ahead and develop them. The R and D

people have been very much involved with the engineering people, and

they have all the data that was there. I don't know that I can answer

much more than that.

MR. COCKE: The one other alternative I would like to ask the

minister about.... Hydro at one time was also experimenting with wind

power on upper Vancouver Island. How is that going?

HON. MR. ROGERS: It charges the batteries for lighthouses —

these small, remote lighthouses. The rest of it just has not.... Where

we have consistently strong winds, we don't have the population base,

or in fact any kind of load, to support it. Don Quixote, I guess, is

right in a way. There is a world full of windmills for alternate energy

sources that are placed, and not an awful lot of them have been

successful in terms of generating electricity. The Hawaiian Islands

have had a few experiments that have given some very modest returns.

And they have exorbitant power rates in the Hawaiian Islands; even

there they have abandoned them. So within our service area, with our

relatively cheap costs of hydroelectric power, it doesn't make sense.

It does make sense in some places as an alternative to diesel, but in

those areas they are relatively sheltered from wind because they are

places on the coast, for example, like Shearwater and Waglesla that

really don't have.... The whole settlement is built in a niche in the

coast somewhere where the wind doesn't blow, because that's the safest

place for the community to exist. I don't see it happening for some

time to come. It still would appear to be cheaper to run remote diesel,

even though we do run them at quite a subsidy.

Vote 22 approved.

Vote 23: resource management program, $20,970,041 — approved.

Vote 24: British Columbia Utilities Commission, $1,436,210 — approved.

Vote 25: Fort Nelson Indian band mineral revenue-sharing agreement, $3,325,000 — approved.

[ Page 6546 ]

The House resumed; Mr. Ree in the chair.

The committee, having reported resolutions, was granted leave to sit again.

HON. MR. NIELSEN: Second reading of Bill 51.

COAL AMENDMENT ACT, 1985

HON. MR. ROGERS: In moving second reading of Bill 51, Mr.

Speaker, I would perhaps remind the members that this legislation could

be called housekeeping. But I'm not really sure that's correct. I think

if I'd gone back and looked through the Journals

of the House, which I have done, and seen all of the coal legislation

that has existed since this province was the union of the Island and

the mainland.... There have been amendments to our legislation dealing

with coal, and this in 1985 follows along in that way. It is, however,

best probably described as a spring-cleaning of the Coal Act, which has

been needed for some time. The last series of amendments to the Coal

Act occurred in 1974, and then in 1978. It included, among other

things, increased work requirements, increased reporting requirements

and increased government control; in other words, I think, increased

paperwork and red tape for industry to cope with.

[4:00]

Since the time of these last amendments, conditions in the world

markets have changed. British Columbia's coal industry is under intense

competitive pressure, and the Coal Act is not meeting the province's

objectives for managing our coal resource. This legislation redesigns

the Coal Act so it can do what it's supposed to do to encourage new

development and make the province more attractive to investors.

The Coal Amendment Act contains several significant changes. In a

general way it reduces the overregulation which has been costly to both

industry and government. It removes government intervention in areas

that are most effective and leaves those to the marketplace. More

specifically, it ends the statutory work requirements, which are not

necessary for the management of our coal resources and which have been

a burden to the industry. The coal industry makes its investment

decisions on the basis of what's happening in world markets, not as a

result of the nuisance value of work required by law. In fact, the act

defines areas where a free miner may enter and explore and develop

coal. It establishes a mechanism for settling disputes between property

owners and holders of coal tenures through a mediation and arbitration

board. It also provides significant improvements in the tenure for

holders of coal leases. It ensures that all sections of the Coal Act

dealing with revenues and fees comply with Treasury Board directives,

and it opens the way to improving the return to the Crown from coal

lands and rentals.

The end result of these amendments will be to enhance the economic exploration

and development in British Columbia. To begin with, the front-end costs will

be reduced, which should be of particular benefit to the small resource companies,

Also, industry will be able to tailor its exploration expenditures to respond

to market forces and not to government requirements. This legislation, therefore,

will allow industry to operate more efficiently and more competitively, and

will also allow the government to operate more efficiently. It will increase

the returns to the province from its coal resource and, most importantly, it

will act as a signal that British Columbia welcomes investment in its coal resource.

As a closing remark in second reading, as I move second reading, I

might point out that it would take a container to ship the

documentation required from some of the companies just to Victoria. We

have neither the staff nor the requirement to read an entire

container-load of reports. We can get by quite a bit without it. I

bring the act forward now in an attempt to try to facilitate those

people that are acting as operators in the coal

section of the

province. I move second reading.

MR. LOCKSTEAD: It's quite a busy day for our interests and activities in this Legislature. Some days it goes like that, don't it?

Anyway, Mr. Speaker, we do have some questions to ask on the bill. I

might introduce.... Unfortunately, because of our activities here

today, I have just met very briefly with Mr. Dick Marshall of the Coal

Association of Canada, who is in the gallery, and I ask the House to

join me in welcoming him.

We've had the opportunity of discussing some aspects of this

proposed legislation with Mr. Marshall, and it's our understanding that

the ministry has consulted with the people associated with the industry

regarding this proposed legislation. However, I do have a few

questions, and I might add that I'm a bit dismayed that the legislation

was just introduced quite late last week. That really gave us very

little time to probe the bill in depth. Last but not least, it's the

kind of legislation that's better discussed in committee, as pertaining

to the many sections of the bill. This bill and the next one are much

the same in that sense.

I won't get into section-by-section questioning of this bill at this

point, but according to this bill, the Mediation and Arbitration Board

will settle disputes. My question is: who previously settled disputes

with regard to surface rights, and why this change?

According to this bill, a licence can be disposed of or transferred

without the minister's approval. What does the term "disposed of" mean

exactly? Why has the minister decided to allow companies to do this

without submitting any kind of documentation as to why they're doing

it, or what they plan to do with the land?

This bill also repeals a fee which had to accompany the request to

dispose of a licence. How much did the Crown collect last year from

this fee? Or any year? And what will this change mean in terms of lost

revenues?

The bill replaces the coal administrator with the chief gold

commissioner. Why this change? What does gold have to do with coal?

Nothing, as far as I can see. What happens to the coal administrator?

Another part of the bill deals with applying for a licence to

explore and develop coal. The mining company will now, according to

this bill, only have to submit an application fee and a plan describing

the location for which they want the licence. No plan of operations is

required and the application will not be published, so objections

cannot be received and dealt with. This speeds up the whole process of

granting licences to explore and develop coal. But there's a question

to be raised. The people of B.C. deserve to know what plans are being

made for the coal resources which they own. Look what happened to

northeast coal, when decisions were left entirely to private companies

and an untrustworthy government which is closely tied to big business.

They brought in two huge coal-mines at a time of declining demand for

coal. Prices and volumes have now been cut, provincial revenues have

been affected, over $700 million of taxpayers' money

[ Page 6547 ]

went into it, and they didn't even get the hole in

the right place. And I'm sure you're going to hear more about that in a

few minutes — or maybe you won't.

Mr. Speaker, this bill makes it easier for mistakes to be repeated.

In extending a licence, a portion of the act is now being repealed, so

that now no proof will be required to show that work is actually being

done in an area held under licence. I know that there has been some

discussion and some difference of opinion on that particular section,

but we'll deal with that when we get into committee stage. A licence

can now be held by a company and then automatically extended, without

anything having happened to that land.

The application procedure for a mining lease is also being changed.

Under this bill there will be no publication of the application info in

the Gazette . It's my

understanding that government publications issued from the ministry

will take care of this particular matter. That is not good enough.

Those of us who work and serve in this Legislature and have quite close

ties with many ministries, if not all of them, all get the Gazette ,

but we are not privy to many of the publications that come out of

various government agencies. Certainly people living in remote

communities and even local newspapers.... What I'm saying is that

unless these items and the government's intentions appear in the Gazette ,

we have no notification.... It's not only us but also the general

public out there — smaller communities, environmental groups which may

have a direct interest in the opening of a location of an operation or

whatever. So how will we know? What plans are being known to develop

our coal resources? In any event, there are a few questions for the

minister in second reading, and I don't know if anyone else has

anything to say. Apparently not, but perhaps the minister could respond.

MRS. WALLACE: Mr. Speaker, I don't think we should let this

bill go through just like this. Here's another example of

centralization of power in the hands of cabinet, once again putting the

decision-making power in the hands of a minister without public

hearing, without advertising — just concentrating it in the hands of

the minister. It's just one more example of how this government is

moving in their autocratic way of taking control of everything in this

province.

Certainly when you're dealing with any of our resources, you cannot

look at them in isolation. You cannot develop one resource in isolation

from all the other resources or from the impact that the resource has

on the general state of the surrounding area, be it environmental

concerns, fish and wildlife concerns or recreational concerns. You

can't just set that aside.

Here we are: no public hearings, no advertising, all in the hands of

the minister. I don't like that, Mr. Speaker, and I don't think the

people of British Columbia like that. I just can't speak strongly

enough against going in this direction, because it is just one more

time that that's what we're doing, and it exemplifies that this

government is determined to get everything under their thumb,

everything under their control — little dictators, autocratic. That's

the direction. This shouldn't go through without people recognizing

that that's what this bill is all about.

They always come in as housekeeping. I've seen that happen so many

times. This housekeeping seems to mean that what you do is just take

away the public participation, take away the powers of the Legislature,

put it all in the hands of cabinet. That's the direction we've been

seeing happening right down the road for the last.... Ever since I've

been in this House that has seemed to be the direction this government

wants to take — single-line bills with everything spelled out in

regulation under the orders of the cabinet and nothing dealt with on

the floor of this House.

Again, here's a bill that has come in — I'm not sure when it was

introduced, but I think it was probably Thursday. We've had two days to

look at it, on the pretence that it's just housekeeping, and we're

supposed to be up here debating it. That certainly hampers the ability

of all members of this Legislature to be able to deal with a piece of

legislation adequately.

I don't want to keep repeating it, but that's what the bill does. It

wipes out public hearings. It wipes out any kind of multi-use concept.

It wipes out the idea of evaluating anything except the mining

interests, and it puts it all in the hands of that minister behind

closed doors to make those decisions. I object to that very strenuously.

[Mr. Strachan in the chair.]

MR. WILLIAMS: Mr. Speaker, I think the points made by the

previous two speakers are worth considering. It does seem clear that at

the initial stages at least it’s an easier ride for the corporations. I

don't think there's any doubt about that. In terms of requiring the

delivery over a period of years, in terms of performance on the part of

the corporations, that's not there. That was spelled out fairly clearly

in the previous statute. It blows me away to see that ministerial

approval is not required with respect to the transfer of these

privileges.

What we're talking about here is a system that is going to allow

these guys to get in there and then flip the licence. That's the way it

looks to me in terms of the benefits here. There's nothing there, and

it eliminates restrictions on private royalty arrangements. Well,

that's pretty neat too.

[4:15]

It seems to me that royalties are essentially what is due the Crown

as the owner of the resource. What we're doing here.... Again, you've

spent a year with all of your various staff people working with the

industry, and you drop the bill before the Legislature and we have it

before us within a day or so. That's not a very satisfactory

arrangement.

It really does make it easier for the companies in the initial

stages. It appears to make it very easy for them to nail down the

reserves. Coal isn't, as we all understand it, like these other

minerals. We know where coal is in British Columbia. This isn't a

matter of looking for molybdenum, silver, copper or the other minerals.

These are areas that we know now. We know where our coalfields are, as

I understand it, in British Columbia.

You know, it's one thing to argue in the regular run-of-the-mill

mineral legislation that there's a finder's advantage, because they've

had to put all this effort into finding the other minerals, but in coal

that isn't the case. What we're doing here is making it easier to stake

out territories that we already know are there. It makes it less

costly, or at least lets them move the costs around so they don't have

to put the bucks down the way they did before — to nail down our

resource and then satisfy themselves when the markets are there that

they're going to get active and do something.

That's a neat kind of flexibility, but it strikes me as terribly

one-sided, i.e. benefiting the guy that's going out there and nailing

down a piece of ground. Maybe the minister can allay our fears to some

extent. I hope he can. To remove the

[ Page 6548 ]

restrictions on private royalty arrangements only

reinforces this fear that I have that these people can come in, stake

the ground, not put up very much, and end up with control of the

resource in the better market times down the road. It's a fairly neat

arrangement for the corporations. I can't blame them for wanting it.

But what kind of government do we have in terms of protecting the

public interest if they swallow that one whole?

HON. MR. ROGERS: Perhaps if I address the comments in reverse

order. To the member for Vancouver East, one of the things we're going

to do in this: when we reduce the work requirements, is also at the

same time.... There is a fee for holding a coal licence. After you've

held it a certain amount of time, the cost of holding that licence

escalates quite rapidly. In fact after five years.... The large

companies could afford to do the work requirements, especially if

they're large multinationals. They don't have any problem if the

government required them to do a certain amount of work; they'd go out

and do a certain amount of work. The people that were hurt were

actually the relatively small — when you're talking coal mining

companies, you're talking relatively small — nationals or British

Columbia companies. Really, those are the people we're trying to

assist, during that period of time when there's no call for them to be

out in the international market. Where the markets are telling them not

to spend money, to hold back, I don't see that there's a necessity to

force them to go out and do work.

The coal companies are required to file a notice of transfer with

us. In the past the minister had to give his approval. Ministerial

approval had never been refused before. The coal companies found it to

be just an unnecessary impediment and we saw no reason why we shouldn't

remove it.

The member for Mackenzie introduced Dick Marshall. I'd like to say

hello to him as well. I appreciate the fact that he came here to watch

the progress of this bill.

Mediation and arbitration never happened before. We did not have a

mediation and arbitration board. Such disputes were therefore settled

in the courts, eventually. It took a great deal of time to settle those

particular disputes.

He asked why the gold commissioner and what happened to the coal

commissioner. The position of coal commissioner is a very junior one

within the ministry. It's a clerical position. By having the gold

commissioner, while his title is gold commissioner, the position is

very greatly enhanced from that of the coal commissioner. Within the

established bureaucracy, the gold commissioner is quite a powerful

person. In fact, it gives a greater emphasis on this particular piece

of legislation.

The member for Mackenzie asked about plans which are no longer

required to be submitted. Well, as a matter of fact they are required

to be submitted under the Mines Act. That's why we're taking out that

particular section. It was a duplication of work. We require a plan

under the Mines Act and a plan under the Coal Act. We had to drop one

of them. Every mine has to put one in under the Mines Act in any event,

so we went ahead and did that.

We still require the escalating royalty under licence extension, as

I mentioned earlier, and of course a report has to be filed on all

their geological work.

The member for Cowichan-Malahat (Mrs. Wallace) brought up the fact

that there's no public involvement on the issuance of a lease. Only on

a lease for a coal-mine was there ever even a requirement for

publication. For all other mines, when they apply for the licence, if

it was a copper mine or a molybdenum mine or an asbestos mine, there

was no requirement. This was a redundancy within the legislation which

has been corrected. Of course, public hearings can take place and

should take place more appropriately under the Environment Management

Act.

I move second reading.

Motion approved.

Bill 51, Coal Amendment Act, 1985, read a second time and referred

to a Committee of the Whole House for consideration at the next sitting

of the House after today.

HON. MR. RICHMOND: I call second reading of Bill 52.

NATURAL GAS PRICE ACT

HON. MR. ROGERS: It's my day, Mr. Speaker. Since the creation

of the B.C. Petroleum Corporation in 1973, the pricing of natural gas

in the province has been set by cabinet. It has been left to cabinet to

establish both the wellhead price, which determines the producer

netback, and the wholesale price, which is the price at which natural

gas is sold to the domestic utilities such as B.C. Hydro, Inland and

PNG.

This pricing agreement has not worked efficiently. In recent years,

it has led to protracted delays in increasing wellhead and wholesale

prices to the extent that domestic gas consumers have been subsidized

out of the revenues from natural gas exports to the United States of

America. Also, under that system BCPC was the only buyer and seller of

natural gas in the province. The Petroleum Corporation bought gas from

the producers and sold it to Westcoast Transmission, which then enjoyed

another monopoly situation as the only marketer of our natural gas. As

a result of these monopolies and the lack of flexibility in domestic

and export pricing, there has been very little incentive for aggressive

marketing of our natural gas, either in this province or in the United

States.

Furthermore, British Columbia was failing to provide a significantly

high return — high level of netbacks — for the producers to keep

drilling rigs in this province. Rigs started moving to Alberta, where

the petroleum industry was getting a much better deal. Because of the

industry's and my ministry's concern about the state of our affairs, a

task force was commissioned in 1982 to look into all aspects of gas

marketing administration. That task force was led by the preeminent

expert in natural gas matters in Canada, Dr. George Govier.

The Govier study involved extensive dialogue with the petroleum

industry, with the utilities, with the major industrial users of this

province and, I might also say, with the public. Dr. Govier brought in

his report in 1983, and it was reviewed by the government in August of

that year, and then it was made public along with the government's

decision to accept most of the report's recommendations. A further

dialogue ensued with the key players. This was followed by another

cabinet review and a decision to implement several additional Govier

recommendations. The sum total of these policy decisions was the new

natural gas marketing and royalty system that restructures the entire

financial framework for this province's natural gas industry.

[ Page 6549 ]

Now we have brought forward the legislation required to implement

these decisions. The Natural Gas Price Act, together with the

consequential amendments to the Petroleum and Natural Gas Act, will

complete the job that was begun in 1982. The overriding theme of this

new marketing system is the reduction of government's regulation of the

natural gas industry, giving the private sector a chance to operate

more freely; in other words, getting market forces to prevail as much

as is practical.

How do we go about doing that? To begin with, BCPC and Westcoast

Transmission both lose their monopoly positions in buying and selling

and marketing of natural gas, while provision is made for the

protection of the Petroleum Corporation on its take-or-pay commitments

to existing gas contracts. The door is now open for direct negotiations

between gas producers and gas purchasers. In recent months, direct

sales have been authorized between producers and buyers for the western

LNG project and for the petrochemical industry in this province. Also,

some minor short-term gas contracts have been negotiated between B.C.

producers and American purchasers. The system has already begun to work.

What then becomes of the Petroleum Corporation? BCPC becomes capable

of taking an active role, along with Westcoast Transmission, in the

marketing of our natural gas both at home and in the export market.

B.C. Petroleum Corporation also continues to manage its contracts with

producers, although these contracts will be renegotiated to remove the

expensive take-or-pay commitments.

I'm advised that the producers are prepared to go along with this

process. In fact, I was involved personally in those negotiations. What

else does this legislation do? Well, it allows the implementation of a

wholesale pricing regime which brings a much needed element of

predictability to gas pricing, which will allow the province partial or

even full deregulation of gas pricing when the national and

international circumstances make it advisable. A new royalty system

will be set up under the Petroleum Natural Gas Act which will allow the

province to collect rent from all natural gas produced in B.C.

This rational and predictable royalty will be a great improvement to

an old system which depended on pricing regimes set spasmodically by

cabinet in which revenue was collected indirectly through the B.C.

Petroleum Corporation. Together these pricing regimes and royalty

systems are designed to improve the netbacks for the producers, which

is vital if we are to encourage exploration and development in our gas

fields.

The Natural Gas Price Act covers some very complex issues such as

managing the flowback to the producers from premiums on export sales.

However, principles embodied in the bill are easy to understand. We are

reducing the government's involvement in the gas industry, and letting

the market forces prevail as much as possible. We are encouraging the

private sector to become more competitive and aggressive in marketing

British Columbia's natural gas. We are giving the producers higher and

more predictable netbacks — not as great as they are in Alberta but

nonetheless closing the gap.

We are decreasing the financial risk to the B.C. Petroleum

Corporation and giving it a new role as a marketing agency, and we are

increasing gas revenues to the province through a rational,

market-responsive system of direct royalties. It's a fundamental

redesign of the way the province deals with its gas industry, and I'm

confident the system put in place by this legislation will be a potent

force in the revitalization of this industry. Mr. Speaker, with that I

move second reading.

MR. D'ARCY: Some of the ground in this bill was covered last

Friday in estimates, when we discussed the Govier report. In his

remarks the minister used some strange choices of words. The title of

this bill could well be amended to Natural Gas High Price Act for

British Columbians and Low Price Act for Competing Buyers in Other

Jurisdictions, because that's what it does.

The minister very interestingly says: "Well, the government is

getting out of regulation." The bill allows him — and the Govier report

recommends that to the government — to regulate the price up to 65

percent of petroleum. Now if petroleum does not drop over the next few

years, it's going to mean an 80 percent hike over the next five years

in the price of natural gas to domestic users. An 80 percent price hike

by government edict and the minister somehow wants to tell the House

and the province of B.C. that the government's getting out of

regulation.

[4:30]

He suggests that because Dr. Govier had some discussions with some

of the players, they all agree. Can you imagine an industry in this

province which requires for its ability to remain competitive or even

stay in business...being happy about an increase of 80 percent over

four or five years? Can you imagine a home consumer or a commercial

building consumer being happy and telling Mr. Govier and the minister

they really want an increase of 80 percent? Can you imagine a utility —

and there are, what, four or five private utilities marketing gas, as

well as B.C. Hydro, a public utility...? Can you imagine Inland Natural

Gas, Pacific Northern or Columbia, or Hydro, being happy about that

kind of a price hike to their customers? I really doubt it.

The minister said: "Oh, this is wonderful, because it's going to

give predictability." Well, it sure as heck is, Mr. Speaker. It's going

to give predictability that the price is going to go up. Everybody is

going to know that. It's predictability that the minister is going to

sell high domestically in British Columbia — another revenue grab and a

further depressant to the B.C. economy. But he's going to give

everybody the option of selling in the California, Washington and

Oregon markets — western North America, or wherever the gas can be

delivered — at whatever price our American friends are prepared to

give. It's the same idea as we see with electricity. Domestic people,

who should be able to use that precious resource to lever our economy

into a better competitive position.... Instead, the minister is

prepared to allow many sellers to virtually give it away to give other

jurisdictions a competitive edge over us in terms of their industrial

strength.

Sure, increased export sales, are going to increase government

revenue. I say "sure"; I hope increased export sales are going to

increase government revenue. But what about the revenue from the B.C.

economy? What about the revenue government gets from people in British

Columbia who are working, who are not on welfare? What about the

revenue government gets from viable British Columbia businesses and

industries employing people and paying revenue to the provincial and

federal governments? You're going to need a lot of revenue from export

sales, Mr. Minister, to make up those losses in revenue and to make

those social service

[ Page 6550 ]

payments which the government will have to make to keep people from starving to death in British Columbia.

I am disappointed that during estimates not a single one of the

seven Socred members from the southern interior or the six from the

north got up and saw fit to defend their constituents, their businesses

and their home users against this revenue grab and these price hikes

being put through by the minister. I'd love to hear them at some point

on this bill, but I doubt that I will. Not a single one will stand on

his feet in this House and defend his constituency against this kind of

revenue-grabbing by the Victoria government.

[Mr. Ree in the chair.]

The minister says that this is a wonderful bill because it has

increased the amount of drilling activity — so he says. But he cannot

give us any evidence that drilling activity wouldn't have increased

anyway, that the export markets wouldn't have increased anyway. One

thing we know for sure is that domestic markets for natural gas are

hardly likely to go up under the rate structure which the minister is

proposing through the Govier report.

Mr. Speaker, over the years there has been a large amount of revenue

from the sale of natural gas to the Crown in B.C. I don't particularly

care how that revenue is collected, but I hope that the government

continues to collect revenue, and if the price is going to go up by

what the minister wants to raise it, the revenue to the Crown had

better increase by a large amount.

However, no amount of resource revenue to the province of B.C.,

however it's collected, from whatever natural resources, is worth

depressing the economy for, putting people out of work and making

British Columbia a more expensive place to live or a more expensive

place to do business or manufacture a product. We have half a million

people in this province on UIC or welfare, and the economy needs all

the help it can get to get moving again and provide employment

opportunities for those people. The government's attitude is to

increase the prices of basic natural resources, the very natural

resources that have the potential to give us a competitive advantage

and get our economy going again.

So I'm very disappointed in this bill. I'm very disappointed that

the minister and his cabinet colleagues, after all this study — and he

and his predecessors had the Govier report long before it was released

to the public — have seen fit to bring in a bill which is only going to

depress the economy of British Columbia even more than it is and place

a hardship on all consumers of natural gas, whether they be industrial,

commercial or residential.

MR. WILLIAMS: It should be retitled — I guess we could debate

that under third reading — Natural Gas Price Act. But it guts the

corporation that has turned in tremendous revenue over more than a

decade. It guts the B.C. Petroleum Corporation in terms of its

fundamental role. The BCPC was established over a decade ago and has