1981 Legislative Session: 3rd Session, 32nd 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)

FRIDAY, MAY 8, 1981

Morning Sitting

[ Page

5489 ]

CONTENTS

Routine Proceedings

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

(Hon. Mr. McClelland)

On vote 65: minister's office –– 5489

Mr. D'Arcy

Mr. Davis

Mr. Skelly

Mr. Passarell

FRIDAY, MAY 8, 1981

The House met at 10 a.m.

Prayers.

HON. MR. GARDOM: I'd like all

members of the assembly to bid a special welcome to a number of grade 7

students from Burquitlam Elementary School. They are accompanied by

their teacher — my good friend and nephew

Mr. Stephen MacKenzie.

MR. LEGGATT: I'd like to join

with the House Leader in welcoming Mr. Brent Robertson from Burquitlam

Elementary School. It might be the same class, so they get two welcomes

for the price of one this morning.

HON. MR. WOLFE:

Soon to be in the gallery are the 12 students who have joined the tour

guide staff for the summer season. We expect some 100,000 visitors to

tour the buildings this summer. As every member of this House knows

from personal experience, the guides do a tremendous job. This year

about 40 tours a day — in ten languages, including sign language — will

be given by the guides. I would ask the House to join me in welcoming

Janice Dumont of Vernon, Michael Doherty of Saltspring Island, Stuart

Fyles of Victoria, Dora Nipp of Vancouver, Terry Barnett of Victoria,

Colin Stewart of Victoria, Shannon Windlow of Nanaimo, Carolyne Glover,

Sylvia Louwman, Alison Peake and Sonya Taft — all of Victoria — and

Nancy Cook from Kelowna. Would the members join me in welcoming the

guides and tour coordinator Lynn McCaughey. We offer our best wishes

for the summer tour season.

HON. MR. BENNETT: In the

precincts today is a group of elementary students from Quigley

Elementary School in my city of Kelowna, from the district of Rutland

contained within the city. They're bright and enthusiastic, and will be

visiting the Legislature after their tour. I would ask members to

welcome them in advance of their visit, and I ask all members to be on

their best behaviour to set a good example for these young students.

HON. MRS. McCARTHY:

Mr. Speaker, we've been privileged to hear from Rev. Crowie this

morning. I would like to ask the House to also welcome Rev. Crowie's

husband and son, who are in the gallery.

MRS. WALLACE:

Mr. Speaker, I just want to make a quick introduction of constituents

of mine who are visiting today, Mrs. Pat Hocker and her son, and

welcome them to the gallery.

Orders of the Day

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

ESTIMATES: MINISTRY OF ENERGY,

MINES AND PETROLEUM RESOURCES

(continued)

On vote 65: minister's office, $194,679.

HON. MR. McCLELLAND:

Mr. Chairman, I just wish to finish up the opening statements that I

began last evening. I had forgotten a couple of important items that I

wanted to bring forward regarding opportunities in the mining industry

which are available at the present time. I don't wish to go into much

more of the commentary than I did yesterday, but I thought it was

extremely important that the House and the people of British Columbia

know exactly what is happening in the mining industry and how many jobs

are being created by the booming mining activity that is happening in

British Columbia at the present time.

Mr. Chairman, so that

we won't make any mistakes, I'd just like to list some of the new mines

which are, first of all, under production at the present time or about

to go into production, and then some of the mines which will probably

come onstream in the next four or five years because of the policies of

this government. I don't want any mistakes, so I've asked my colleague

here to use this little calculator and add these numbers up for me, so

we can really see exactly what's happening. We've even got two

bookkeepers, one acting as an auditor — he's going to do it by hand,

and I have a feeling he'll beat the calculator.

Mr.

Chairman, mines which are now being prepared for production and about

to come into production in 1981-82 are: the Venus of United Keno Hill

Mines Ltd., a gold and silver mine with 45 new employees in northern

B.C.; the Kitsault Mine at Alice Arm with 500 new employees; the

Carolin mine, gold and silver, at Hope with 102 new employees; the

Baker mine, gold and silver, with 38 new employees; Summit Lake, gold

and silver, at Stewart with 65 new employees; the Vollaug mine, gold

and silver, at Cassiar with 40 new employees; Line Creek coal-mine at

Sparwood with 440 new employees; Greenhills coal-mine at Sparwood with

600 new employees; Highmont, copper and molybdenum mine, at Logan Lake

with 350 new employees; Granduc at Stewart, which happened to be closed

down and is now reopening as a result of the policies of this

government, 350 new employees; Taurus gold-mine at Cassiar with 40 new

employees; Dolly Varden silver mine at Alice Arm with 54 new employees;

Silence Lake tungsten mine at Clearwater, 14 new employees; Brusilov

magnesite mine at Canal Flats, 42 new employees; French Peak silver

mine — we don't have the number of employees for that one; Skomak

silver and gold mine at Greenwood, 18 new jobs; and Table Mountain

goldmine at Cassiar, 10 new jobs. How much have we got so far? That's

2,708 new jobs in the mining industry coming on stream this year, with

those mines being prepared. I don't want to go back in history too

much, but I think the people should know. Don't stop there, because

we're just starting.

What was happening during the NDP

years? I'd like to put out a list of mines here during the NDP years.

Granduc, Britannia, Grand Massett, Bradina, Jordan River, Reeves

Macdonald, Canex, Pinchi Lake, and Churchill Copper were the mines that

we were talking about during the NDP years. Those were the mines that

closed. Every one of them closed because of the disastrous NDP mining

policies of the seventies. How many new ones came in? There were no new

mines between 1972 and 1974. There was not one. The mines closed, jobs

were lost, money was gone and personal incomes were destroyed.

What

about those mines which have now seen that good, progressive mining

policy can allow them either to modernize their mines or to reopen old

ones which had been closed? Let's keep going. We've got 2,708 new jobs

so far. Others

[ Page 5490 ]

include

Sullivan lead and zinc at Kimberley — I haven't got an employment

figure for that one; Lornex copper molybdenum at Ashcroft, 350 new

jobs; and Highland Valley, Logan Lake, 50 new jobs. Other mines which

will be expanding and for which we don't have firm figures at the

present time are B.C. Coal at Sparwood, Boss Mountain at Logan Lake,

Fording at Elkford, and Parson at Parson, B.C., which created another

400 jobs.

What was happening between 1972 and 1975? Were there new

jobs being created? Mine spending was down from 1971 in the amount of

$271 million and was down in 1975 to $20 million. It was a disastrous

blow to the British Columbia economy.

[Mr. Strachan in the chair.]

Don't forget that you can't have mines unless you have claim staking, because you don't find....

MR. MACDONALD: They were the best three years for mining in the history of British Columbia. Read the papers.

HON. MR. McCLELLAND: Were they?

MR. CHAIRMAN:

Hon. member, one moment, please. I ask the Minister of Industry and

Small Business Development (Hon. Mr. Phillips), the Leader of the

Opposition and all other members who are interrupting to not interrupt.

The Minister of Energy, Mines and Petroleum Resources has the floor. He

will continue to speak uninterrupted.

HON. MR. McCLELLAND:

The tragedy is that the NDP actually believes that they didn't hurt the

mining industry. As I said yesterday, it doesn't really matter what the

NDP believes, because the people know; the workers in Logan Lake, in

the Highland Valley, Merritt, Ashcroft and Kamloops know. They won't

forget. They won't take the chance of losing their personal incomes and

the lifestyle to which they've become accustomed. They won't forget.

They remember what happened to the mining industry in the 1970s.

Interjections.

MR. KEMPF:

On a point of order, I'm rising under standing order 61. Mr. Chairman,

I wonder if you'd control the Leader of the Opposition. He's talking

about heroin treatment. He doesn't want to hear what happened in this

province from 1972. He doesn't want to hear about the "Yukon

development act" or about what happened to mining in this province in

those three and a half disastrous years.

Interjections.

MR. CHAIRMAN: Order, please.

MR. BARRETT: On the same point of order....

MR. CHAIRMAN:

Just one moment, please. I must rule on the other member first. He

spoke of standing order 61 — relevancy — and actually got into a debate

on that, which is out of order.

MR. BARRETT: I'd like

to know, Mr. Chairman, how a member can get up under standing order 61

and criticize another member who hasn't even got the floor. He's asking

whether or not my interjections are relevant. I thought my

interjections were out of order. If we're going to have a debate on

this and if the member is questioning whether or not my interjections

are in order, there's no question about it: I'm out of order. If he's

questioning the validity of them, there's no question about it: they're

absolutely valid. He wasted $9 million on a heroin treatment program

that had absolutely no effect whatsoever.

MR. CHAIRMAN: Order, please.

Interjections.

MR. BARRETT: Other than that, everything is okay.

[Mr. Chairman rose.]

MR. CHAIRMAN: Order, please.

[Mr. Chairman resumed his seat.]

MR. CHAIRMAN:

Will all members please come to order. I think the Chair anticipated

your point of order, hon. member, and commented on the point of order

that the member for Omineca (Mr. Kempf) raised. Now that we have the

attention of the committee, we will return to the estimates of the

Minister of Energy, Mines and Petroleum Resources, vote 65.

HON. MR. McCLELLAND:

Mr. Chairman, I just want to continue with the list of new employees

who will be gainfully employed and looking after their families with

very high personal incomes in the mining industry presently and during

the next few years. So far we're up to 3,508 new jobs created by a

buoyant mining industry in this fiscal year.

Let's move on

to the mines which are going to come onstream in the next three to four

years: first of all, Valley Copper in Logan Lake, 900 new jobs, the

largest copper mine in North America; Goldstream copper, zinc and gold

at Revelstoke, 185 new jobs; Adanac mine in Atlin, 300 new jobs;

Bullmoose coal-mine in northeastern British Columbia, 450 new jobs;

Quintette coal-mine in northeastern B.C., 1,300 new jobs; Bowron

coal-mine in central British Columbia, 600 new jobs; Sukunka coal in

Chetwynd, 1,160 new jobs; Elco in Elkford, 1,300 new jobs; Monkman

coal-mine in northeastern B.C., 800 new jobs; Babe coal-mine at Port

Clements, 267 new jobs; Kutcho copper and zinc mines in northwestern

British Columbia, 500 new jobs.

Interjections.

MR. CHAIRMAN: Order, please. Hon. members, standing orders indicate

that a member must be allowed to speak uninterrupted. Would the committee please

come to order. The minister continues.

HON. MR. McCLELLAND:

Mr. Chairman, I get some gratification from the way the debate goes.

You can always tell when the members opposite are nervous and are

ashamed of the policies they had in the past, because they attempt to

disrupt the House, they chatter back and forth, and they make rude and

snide comments. They again have the feeling that if they can somehow

get your mind off what happened between

[ Page

5491 ]

1972 and 1975, if they can get you to ignore what happened between 1972 and

1975, it will go away.

wouldn't ask the member over there to withdraw it because it's

unparliamentary language. But it's the kind of thing I was just talking

about. They have no defence, so they make personal attacks. He calls me

a phony. I wouldn't ask him to withdraw it, because coming from that

member, it doesn't make any difference.

It won't go away.

The facts are that from 1972 to 1975 major mines were closing down in

this province. The mining industry was going to the Yukon Territory and

other places. We were losing skilled people, who had developed the best

mining skills in the world right here in British Columbia. They were

going to the Yukon and all over the world to get away from British

Columbia, where there was no more work. We saw the tragedy of the

brother of one of the ministers in that government having to write a

full-page

article in the Vancouver Sun ,

in which he said in effect — and I'm paraphrasing a bit here: "I'll be

happy when the day comes that I can get back to the mining industry,

and my brother can go back to being a lawyer!'

The fact is

that under the current policies, which encourage environmentally sound

development of the mining industry, we will be creating 11,265 new

jobs; that doesn't count the mines I've mentioned for which we don't

have total job figures at this time. There will be over 11,000 new jobs

in the next five years, compared to the policies that destroyed an

industry and that destroyed the economy of this province. Those jobs

could be in jeopardy unless the policies allow the orderly development

of one of our most important industries to continue. I say to those

people who want us to forget: we won't forget; the workers won't

forget; the investors won't forget; the small businessmen of this

province won't forget.

MR. D'ARCY: I contemplated asking that the members show me the same

courtesy which they showed the minister, but I realize that — if it occurred

— that could leave the House in a total uproar.

want to touch on a number of issues, hopefully with some sort of sweet

reason. I notice the minister neither last night nor today dealt

particularly with energy and petroleum matters, so I'm going to be

making some comments in those areas. I hope that after consultation

with his staff he may be able to respond in a positive way.

want to deal briefly with the segment of the minister's responsibility

that is very healthy, as he's outlined: the mining industry. I note

that it's not the first time that the mining industry in this province

has been healthy. Some of the government's own statistics published

over the last few years indicate that in the first five years of the

present administration the value of mineral production in this province

has increased by between 110 and 115 percent. I think that's excellent

for the first five years. We don't have any definite information for

1981 as yet. That 110 to 115 percent is very nearly as much as the

value of mineral production increased in the three years from 1972 to

1975. I hope that the mining industry in this province....

Interjections.

MR. CHAIRMAN: Hon. members, permit me for a moment to cite Sir Erskine

May, who says: "Good temper and moderation are the characteristics of parliamentary

language. Parliamentary language is never more desirable than when a member

is canvassing the opinions and conduct of his opponents in debate." I would

commend that not to the member who is speaking but to other members who are

attempting to participate in debate.

MR. D'ARCY: Thank you, Mr. Chairman. In any event, I suppose the point

needs to be made that the mining investors I know of, within this province and

outside it, would be quite surprised to hear that it is the government which

is making their executive and investment decisions; because the minister talks

about all the numbers of jobs that "we," to quote him, have created.

I would be quite interested to hear anyone out there who actually thinks that

the government is making investment decisions. In fact, the mining people I

talked to tell me — to a man, and occasionally to a woman — that the sooner

this government has no capacity any more to make any decisions on anything,

the happier they will be. It's interesting that last night and again this

morning the minister seemed to love — at least in the amount of verbiage he

used — to refer to the area in the central part of the southern interior, which

has a lot of mining activity. It's most favourable to see that. He seemed

to be referring a great deal to the Kamloops and the Highland Valley area. I

can't imagine why.

It's

interesting that the other day I was speaking to some mining people who

were actually — maybe this is neither here nor there, Mr. Chairman —

from the management side. They lived in Kamloops. Their operations, of

course, were in the Highland Valley. We were talking mining and

development matters, and they said to me: "How are things going in

Kamloops?" I said: "How do I know? You live there." "No, that's not

what we mean, D’Arcy. We want to know how things are going in the

by-election. You know what we mean." I said: "I really couldn't say. I

understand from the press that it's a horse-race. Who knows?" They

said: "That's not our assessment. Our assessment is that it's a one-way

street. It's no contest." I said: "That's very interesting." And they

said: "Yeah, the issue in Kamloops is that people in our industry and

people in the neighbourhoods want to kick the government."

The

minister is talking effusively about the way people feel. I don't

pretend to have any idea what the electorate of the Kamloops area is

going to do in a by-election or in a general election. I don't pretend

to know or have any idea, and I don't want to attempt to know. I

suppose the results will show. In the event that the candidate for the

party of that government over there does not win the election — that's

possible; some people win, and some people lose.... In the event that

the candidate for the ruling Socreds is thrashed at the polls, I

suppose the minister is going to say that the mining community let him

down. I don't know what he's going to say. He pretends to know what

people are thinking in Kamloops. I certainly don't pretend to know. I

merely quote this little anecdote from people who happen to be engaged

in the mining community and who just happen to be on management's side.

The

minister spoke in great detail about what he alleged was a rash of

closures, decreased production and downturn of investment in the year

1975. If that sort of thing was going on in 1975, we can only assume

from the minister's remarks that it had nothing to do with world metal

prices or with federal and provincial government policies in Canada.

There was indeed a downturn in 1975; there's no question about it. It

struck the province of Ontario very hard, which had and has a

[ Page 5492 ]

Conservative

government. It struck the province of Alberta very hard, which had and

has a Conservative government. It struck the province of Quebec, and

indeed every mining region in Canada. If the minister can demonstrate

that the effect of the downturn in metal prices in 1975 was more severe

in B.C. than elsewhere in Canada, I'd be interested to see that sort of

demonstration. Neither he nor any of his colleagues has been able to

produce such documentation. As we know — I suppose this is true of any

government — when things are rough in a particular industry, they say

world conditions are at fault. When things are good, it's because of

the policies which they claim to have.

Mr. Chairman, I want

to talk briefly about an interest I have. I suppose it would come

initially from my own constituency, but it does affect the South

Okanagan in particular, the Similkameen area and the boundary country,

as well as the southwest Kootenays. This is what I hope will be a

governmental decision which will guarantee a supply of industrial power

to those parts of the province that I have indicated, as well as

guaranteeing a supply of utility power at reasonable rates. As we know,

after many years of discussions and negotiations and a great deal of

expenditure by both Cominco Ltd. and the government through the old

Energy Commission, a proposal was put to the government last year for

the transfer of certain power-generating facilities from Cominco Ltd.

to its wholly owned subsidiary, West Kootenay Power. Even though it had

been approved by the Energy Commission, that proposal was turned back

by the government with no reasons given. I gather that under the

minister's new Utilities Commission there are continuing negotiations.

I want to wish the minister and the government well in consummating

those negotiations so that the uncertainty regarding industrial and

utility power for commercial and residential operations that presently

rests over the southeastern part of the province is resolved.

One

of the proposals bouncing around which the minister did not mention is

Cominco's proposal for a ferrosilicon magnesium plant in Kimberley in

the riding of Columbia River. There's no question that that proposal,

along with all the other Cominco manufacturing operations in the

southern part of the province, is based on a supply of low-cost

industrial power in the same way that the existence of the aluminum

company in Kitimat is based on low-cost industrial power. The major

difference there, of course, is that Alcan is not required to provide

utility power

whereas Cominco and West Kootenay Power are.

want to briefly touch upon the Vancouver Island pipeline proposal. It

is my personal view that governments of the past — Social Credit and

New Democrat — have not pursued this proposal with the kind of vigour

which I personally believe they should have. This government has had

six years to get on with it, and now they are getting on with it. But I

have asked in the House before, and I ask again, why the minister, if

he's so sure — and he may be right — that the B.C. Hydro proposal for a

crossing is the best alternative, is so afraid to have public scrutiny

and cross-examination of that proposal by expert witnesses on

environmental, economic, energy-use and load-management grounds. I

don't believe the process would take very long. I believe that if the

minister is correct in his decision, he would be justified. At the

present time there is a cloud hanging over that decision, because it

arbitrarily gave to a Crown corporation something which was desired to

be bid on in an open field by the private sector.

I also

have criticism for the minister and government for not clearly defining

the market area that is to be served. I believe that the supply of

natural gas to all reasonably densely settled areas of the province is

a right of the people and the industries located there, and it's a

responsibility of government to supply them with this fossil fuel in

the same way that the government of B.C. supplies different parts of

the province with schools, hospitals, roads and ferry service where

needed. I believe the marketing franchise area should be clearly

defined. It should include the Howe Sound area, theSunshine Coast, the

Powell River area, the Gold River area and the northern part of

Vancouver Island. For a long time it has been the responsibility and

mandate of the government that it give its major energy to B.C. Hydro

to provide electricity to all parts of the province at a postage-stamp

rate. I believe that natural gas, whether through public agencies or

the private sector, should be supplied to all parts of the province,

and that industry, businesses and individuals with homes should not be

put at a cost-of-living or competitive disadvantage with other parts of

the province. I welcome the decision to proceed, but I would say that

the minister has been politically bananas in the way he's gone about it.

Perhaps one of the concerns the minister and the government had was not the

concern that has been speculated on in the press about the relationship of West

Coast Transmission to the federal government and Petro-Canada and the whole

issue of the federal government's heinous actions, in my view, in taxing

our supplies of natural gas both domestically and for export purposes. Maybe

this wasn't so important in the minister's decision as the press has

speculated. Perhaps the minister and his major energy arm were concerned about

opening to public scrutiny the whole issue of delivering energy to Vancouver

Island. There had been some suggestions that there could be major technical

problems with the Cheekye-Dunsmuir transmission line. There has been speculation

— not denied — that there may be severe cost over-runs. There has been speculation

that the government and its energy arm have seriously miscalculated on the basis

of load management of supplying energy to Vancouver Island. Perhaps the reason

is that if there was clear examination or public scrutiny of the arbitrary decision

to award the Vancouver Island line to B.C. Hydro it may open up a number of

other issues which the government has not done well on, and simply does not

want opened up to public scrutiny. I personally think that, when government

has made a mistake, they should be up-front about it and should level with the

public. I think that the public would respect them more. All of us — government

politicians and opposition politicians — would respect them more.

would also like to mention to the minister that the Utilities

Commission, which the minister had such great hopes for when he set it

up last year, has been bypassed on a number of these issues. The

Utilities Commission, for instance, is given the right to decide on the

details — nuts and bolts, the size of the pipe and that sort of thing —

after the major decision has been made.

We saw the same thing on the question of the water rental

increases that affected every energy user in the province. It took

place in the first quarter of this year. I realize that they weren't

strictly the domain of this particular minister. The fact is that the

people who felt those increases were the users of electrical energy

from B.C. Hydro, West Kootenay Power and Light, and Cominco Ltd. Once

again, the Utilities Commission was given the right to discuss the

application and

[ Page 5493 ]

how

these water rental increases would be passed on to consumers in this

province — whether they be industrial, residential or commercial — but

the Utilities Commission was not even asked about the decision to raise

the water rates. That was an arbitrary action of government. It was a

straight tax increase. Perhaps the minister was outvoted in cabinet on

that issue. Perhaps he thought that should have gone to the energy

commission. I will point out again, though, that having a Utilities

Commission in this province is really kind of pointless if all they get

to rule on are the little left-over nuts and bolts, after the

government itself has made all the major decisions politically.

want to express once again the objections I have, and objections that

have been expressed to me by the Employers Council and industries in

B.C., over the special pricing arrangement that the minister has made

with Ocelot Industries. We on this side welcome the kind of industrial

development that Ocelot is proposing, but we deplore the action of the

government in making a special pricing deal for one particular company

or industry that they're not prepared to make for other industries. I

would point out that the forest petrochemical manufacturing industries

in this province, taken as a whole, are far more important than what

we're likely to get from the proposals put forward by Ocelot and other

companies such as Carter Petroleum.

I don't believe in

special deals. I think that a public resource is a public resource. The

price that is available on a wholesale basis should be available to

each and every one. There should be equal opportunity all over the

province to each and every company and industry. I don't believe in

special deals regarding hydroelectric power for certain industries or

companies, depending on where they're located in the province, any more

than I believe in special taxation arrangements for individual

operations because they may or may not be special friends of the

government. That sort of thing is a relic of the last century and we

shouldn't see it in B.C. An industrial development should be justified

on the bottom line; it should be able to stand on its own two feet. We

should not be expecting the rest of the economy to subsidize that

development. This province is rich. The economy is healthy. We don't

need special deals.

I hope that the minister will talk in

his remarks about his ministry's involvement in the government's coal

development policy — assuming that the government has one and that the

Minister of Industry and Small Business Development (Hon. Mr. Phillips)

has told him about the policy. As we know, coal development in this

province is not just involving the major discussions which are taking

place concerning development in the northeastern part of the province.

Coal development involves the Crowsnest area, the Quinsam proposal near

Campbell River and, of course, the liquefaction and thermal power

proposals in the Hat Creek area. Perhaps the minister could tell us if

he is having his staff or consultants — within or without his ministry

— examine the whole question of a coal royalty policy. I'm not

suggesting here that the royalties are too high or too low. I'm simply

saying that in my discussions with other provinces, Alberta and

Saskatchewan in particular, that examination of the question of how

coal royalties should be computed and applied is an ongoing thing. It

has been my impression that the B.C. government and the ministry that

the member for Langley (Hon. Mr. McClelland) represents has been

singularly uninterested in this question.

I would like to

hear the minister's comments on whether or not he has approved,

endorsed or supported the additional motor-fuel taxes being applied to

propane, and going in before the member for Saanich (Hon. Mr. Curtis)

brought down his budget this spring. While any motor-vehicle conversion

from gasoline to propane might have cost the individual, depending on

the kind of vehicle, anywhere from $1,000 to $1,500 — or the company,

if it was a fleet operation — the fact is that a substantial saving

could be made in the cost of fuel consumption by a conversion to

propane — I'm not talking about natural gas but about propane, Mr.

Chairman. Evidently the government — or at least the Finance minister —

thought that this must have been a bit of a loophole. We had thought

that this was an encouragement — up to that point, because there was a

price advantage for the use of propane in motor vehicles — and that the

government was, in fact, encouraging people to move away from gasoline

and into a product which is manufactured partly from petroleum and

partly from natural gas. We find that the government raised the propane

motor-fuel tax to the point where it's no longer price-advantageous to

convert from gasoline. Maybe the minister wasn't even aware of this,

maybe it just happened, but I would like to hear his comments on that.

Mr.

Chairman, I'm going to be going into greater detail at a later time on

the question of real property taxation policy for the minister's energy

arm, B.C. Hydro, of which he sits on the board of directors. I realize

real property taxation, once again, comes under the Minister of

Finance. However, several years ago, when the member for North

Vancouver–Seymour (Mr. Davis) was responsible for B.C. Hydro, I raised

the question of real property taxation of Hydro installations, and he

replied in the House that he fundamentally agreed with my point of

view. The point of view I expressed, and one expressed by a great many

municipal and school board officials throughout the southeastern part

of the province — in the West Kootenays and in the Revelstoke area, as

well as in the Peace River — was that B.C. Hydro — or the government, I

should say — has an inconsistent policy as far as real property

taxation is concerned, and that is that projects built under the

two-river policy pay no property taxes at all, unlike projects which

B.C. Hydro has inherited from its predecessor, the B.C. Electric Co.

Because of some strange government decision made along the way,

projects not built by Hydro under the two-river policy pay school taxes

only, but don't pay real property taxes; on the other hand, the

government has traditionally charged private sector power producers

full taxation.

It has been my opinion and the opinion of

municipal and school board officials from the West Kootenays, the

Revelstoke–Mica Creek area and from the Peace River that there should

be a consistent policy for real property taxation for all property

owned by B.C. Hydro. It's unfair that the city of Vancouver, the city

of Victoria and all of the communities with office buildings,

substations, works depots and so forth should be receiving grants in

lieu of property taxes at the regular rate in the same way that the

provincial government pays property taxes as grants in lieu of the

regular rate, as though the property were privately owned. There is

absolutely no reason whatsoever why Hydro, as a Crown corporation owned

by all the people of the province, shouldn't do the same thing.

It's

totally inconsistent that some areas with hydroelectric or thermal

generating facilities should receive revenue from the school tax and

general-purpose taxation rate and others

[ Page 5494 ]

shouldn't.

It's totally unfair and unrealistic. So I would hope that if the

minister agrees with me, he will go to his colleagues on Treasury Board

and make that rather simple change. I believe that, as a percentage of

B.C. Hydro's operating cost, we're talking about a very small amount of

money, but that amount of money would be of great significance to the

property tax payers in certain parts of the province.

Mr.

Chairman, before relinquishing the floor, I would like to talk briefly

about the concerns I have about the proposals to develop the coal

deposits in the Hat Creek area. I'm not here to say that either the

liquefaction proposal or the thermal generation proposal should never

go ahead. I do say quite emphatically, though, that I would like this

minister, perhaps in consultation with his colleague the Environment

minister (Hon. Mr. Rogers) to be prepared to reassure the public of the

province — and not just those who live in the Ashcroft–Hat Creek–Salmon Arm–Kamloops

area, Clinton, Lillooet and so forth — that these developments are not

going to be economical and environmental disasters.

Mr.

Chairman, if you were a traffic cop, I'd say that green light was the

right thing, but you're suggesting that you want me to cool it for a

little while. I will conclude my remarks for the time being. But I want

to indicate that I live in an area which until 1945 suffered from a

great deal of environmental damage due to the lack of knowledge of the

day, in terms of a smelting operation in Trail. Since 1945 there have

been vast improvements in atmospheric control. Today we are down to

about 35 tonnes of sulphur emissions a day from about 350 tonnes in

1945. There are virtually no heavy-metal discharges. But while there's

nothing in the air to retard the natural growth of vegetation in the

Trail area today, we still have problems with soils that were

contaminated three-quarters of a century ago in some cases. That's how

long this kind of environmental damage can take to be rectified.

The

B.C. Research Council, which is not a political organization, has said

that the emissions from the thermal generating plant, let alone the

liquefaction plant, will greatly exceed those emissions which came from

the Trail operations in the bad old days.

We are dealing

with the agricultural, beef, and fish-spawning industries in the

Thompson and its tributaries and, of course, with the question of the

health of human beings. Personally I do not want to be told: "Well,

it's all right with scrubbers. There's not going to be 600 tonnes of

sulphur a day; there's only going to be 200." The fact is, that's far

too much.

I don't say that these problems can't be overcome.

I say that the minister in consultation should assure the public of

B.C. that the agricultural industry and the quality of life will not be

harmed and that the land is not going to be poisoned and people

injured. That price is simply too much to pay for energy development.

HON. MR. McCLELLAND:

So we don't get behind, I'd like to respond to some of the comments the

member made in his opening statement. I'll try to be brief and deal

with them in the order he presented them.

I'm a bit

concerned over the comments about mining. I still believe that the

members opposite don't quite understand what happened in the mining

industry in the seventies and what could happen again if the same kinds

of policies were ever reintroduced.

He said that this is not

the first time that mining has been healthy in the province. That's

true. Mining was very healthy for many years. But the period 1972-75

was one of the first times that mining was ever completely unhealthy

and about to die. The policies during that period destroyed what was

effectively a decade of growth and development in the mining industry,

so that it had to begin all over again.

The member said that

revenue was at its highest level ever. I wouldn't argue with that; the

figures show it. I think you could talk about almost any industry,

commodity or wage over a ten-year period, and because of inflationary

pressure you would see that all those things were probably at record

levels in terms of dollar amounts. But those dollar amounts don't

really tell the story. Dollar amounts, particularly in the mining

industry, are no good without new mines coming on stream. Unless those

new mines come on stream and unless prospectors get out and get new

claims and develop new finds, those revenues will not continue, because

sooner or later there'll be no mines to bring you those revenues. New

mining spending plummeting to almost nothing, claim-staking plummeting

to almost nothing, and no new mines coming on production over those

years are the sorts of thing that affect the mining industry; revenue

alone isn't enough.

The member asked me why yesterday I

talked about the Highland Valley and used it and the Kamloops area as

examples for some of the figures I quoted, particularly about jobs. I

think we produce in the Highland Valley about 5 percent of all the

copper in the world. It's a very significant area of development. Right

now there are about 2,000 employees working actively in the mines in

that little valley. There are a number of new mines coming on, which

will effectively double or maybe triple the number of workers employed

in those mines. That's why I chose one of the most important mining

areas in the province in talking about what's happening in the whole of

North America — and it has world significance as well.

The

member talked about why there was a slump in mining — if indeed it

happened — during those times. He questioned whether or not it did

happen. I only say again that it did. If it didn't happen here, or

happened here because of world prices, as the member attempted to say,

why was the Yukon booming during that same period? The Yukon, during

those three and a half years, had the greatest increases in interest

and development and work in the history of that territory, mainly

because we were closing down and investment was moving to the Yukon.

Some

people called Bill 31 "the Yukon development bill, and that's exactly

what happened. If world prices went down here, why did they go up in

the Yukon?

MR. SKELLY: For what metals?

HON. MR. McCLELLAND: He says the same thing was all over the world. How come the Yukon was a different world?

MR. SKELLY: Selective facts.

HON. MR. McCLELLAND:

I wouldn't have responded if the members didn't keep tossing things

across the floor. I don't have a selective memory about what happened

to the mining industry in this province. I could read you the names of

mines which closed down again, and ask those members

[ Page 5495 ]

opposite

if they deny those mines closed down. Can you deny that? No, you can't,

because it happened. Can you deny that those jobs were lost? Can you

deny that many of those jobs went to the Yukon Territory? You can't

deny it, Mr. Chairman, because it happened.

The member was

concerned about a guaranteed supply of power first of all for his own

constituency, and secondly for the province. We share that concern that

there be a guaranteed supply of power for both the short term and long

term for all British Columbians — industrial consumers and domestic

consumers as well. That's what we're working towards in attempting to

develop a long-term plan for the supply of electrical energy for this

province. I can tell you that it's not going to be easy to make sure

that all of the energy which could be used in this province is made

available. It gets harder and harder, as the member pointed out, to

develop energy sources, but it has to be done.

I can tell

you now as well that in terms of attempting to guarantee a secure

supply of industrial power, we have two problems: making sure that

those people who are already in business in the province have a secure

supply, and attempting to develop a supply for some other industrial

developments which may want to come to British Columbia. We have today,

over the desks of my ministry, the Ministry of Small Business

Development, and B.C. Hydro, requests for power which exceed the total

amount of electrical power being produced in the province today — 9,000

megawatts of requests for industrial power for this province.

MR. SKELLY: Publish them.

HON. MR. McCLELLAND:

Mr. Chairman, it's not my business to publish them, but I think they

will be published during the course of the B.C. Utilities Commission

hearing which will start this year into the Site C dam question. So

those figures will be made available, probably by the companies

themselves, some of whom may wish to appear, and by British Columbia

Hydro and others.

The member says why don't I give somebody

permission; I don't give anybody permission to publish these things,

but I can tell you that some of them are inquiries on a confidential

basis of companies who don't wish other companies to know their

business. That member not being a businessman, and not knowing much

about business, probably doesn't understand why an industrial concern

may not want to give out all its company plans to a rival company. That

would happen all the time.

Basically we're working for the

same things, I hope. That is a guaranteed supply of power for all our

citizens and those who come to the province. The Cominco situation

concerns the member, and I was pleased to see he wishes us well in

coming to some resolve in that situation. He's right: the B.C.

Utilities Commission is presently working very closely with Cominco and

West Kootenay Power and Light to attempt to resolve that situation in a

way which will do two things: make sure Cominco has power to secure its

industrial strategy, and that the people served by West Kootenay Power

and Light are given a guaranteed supply and a reasonable price for the

power they need to develop for their own lifestyles.

The

next item raised by the member was the Vancouver Island pipeline. I

won't go into it in too much detail right now. A little later I'm sure

there will be more questions asked about the Vancouver Island pipeline.

I was pleased to see the member say that he welcomed the decision to

provide natural gas to Vancouver Island, because it is a decision which

has been a long time in coming, and I believe it's long overdue.

The

member asked me why we're afraid of public hearings. We're not afraid

of public hearings. The member raised some questions about the economic

and environmental aspects of this pipeline. There will be a full public

hearing into all of those aspects. That public hearing will be

conducted by the British Columbia Utilities Commission and it will make

recommendations to the government which the government will consider at

that time.

I'd just like to remind the members, though, that

there were public hearings into the Vancouver Island natural gas

pipeline in 1972. A vast amount of information was given to those

hearings about the same two routes that we were considering this year:

the route from the north, coming down from Williams Lake and over to

Vancouver Island near Comox; and the southern route, which will come

from the Tsawwassen area over to a point near Ladysmith. We had

available all that 1972 public hearing testimony. Except for dollar

figures, much of it was exactly the same information which would have

been made available today. So it's not fair to say that the matter of

location has not been subjected to public scrutiny. It has been

subjected to a great deal of public scrutiny.

In making a

political decision, which I believe governments have a responsibility

to do, we took advantage of all of that evidence, plus further evidence

which has been given to us since that time. I sometimes get a little

confused about how the opposition thinks and feels about certain things

like this. I know the member wasn't here — nor was I, as a matter of

fact — in 1972, but we had the chance to supply natural gas to

Vancouver Island at that time. Public hearings were held. I think five

applicants put forward their positions at the time. Shortly after those

public hearings, the government changed and the New Democratic Party

became the government of this province. I don't know why the New

Democratic Party decided to scrap the idea for a natural gas pipeline

to Vancouver Island, but the fact is that that government had the full

opportunity at that time to make a decision based on the public

hearings which were held then. They did make a decision: to deny the

people of Vancouver Island the right to natural gas. I don't know why

they did that, but those are the facts.

I guess the member

for Rossland-Trail (Mr. D'Arcy) is speaking for the opposition when he

talks about public hearings into the location of this pipeline. I can

only assume that, since he is the opposition spokesman for Energy.

Again, there is some confusion about how the NDP feels on this matter.

During the course of those public hearings into the natural gas

pipeline, the NDP of that day — and they still have the same leader —

made some interesting comments about the public hearings. I refer you

to a headline in the Province

of Tuesday, February 22, 1972: "Dump Hearings and Give the Pipeline Job

to Hydro." Dump the hearings; don't have any public hearings. I'll just

read a couple of sentences from this: "Opposition MLAs" — that's the

NDP — "urged the government Monday to abandon the proposed public

hearings commission on a natural gas pipeline to Vancouver Island and

award the project to B.C. Hydro."

One of the people who spoke in that debate was Alex Macdonald, the NDP member for Vancouver East.

Interjection.

[ Page 5496 ]

HON. MR. McCLELLAND: He sure did. He mentioned a lot of things. What he said was: "Dump the public hearings and award the project to B.C. Hydro."

I just happen, by some strange coincidence, to have a few other newspaper clippings about that. "NDP Wants Hydro." That's a Vancouver Sun

headline, April 30, 1971. "Opposition Leader Dave Barrett called on

Premier W.A.C. Bennett today to develop a natural gas pipeline to

Vancouver Island as a public enterprise, instead of leaving it up to

private industry. He suggested that there be no public hearings." No

public hearings. "Private Bid Will Cheat Us — NDP." Mr. Barrett, Mr.

Macdonald and others had some nasty things to say about Westcoast

Transmission.

So I guess it's not much wonder that some

people would get confused about the flip-flop of the policy between now

and then, then and now, tomorrow and yesterday and the next day. The

facts are that the NDP wanted the government to award the pipeline

project to British Columbia Hydro and they didn't want public hearings

on it. But those public hearings were held — I wish to say that clearly

— and a lot of evidence was given regarding the routes for that

pipeline. I don't want to reflect on a past vote or ruling from the

Chair, but sometimes I do wish we were allowed to bring charts in here,

because I have some I'd like to show you. But darn it, I can't bring

them in. I'll have to try and get along without them.

Again

I want to re-emphasize, Mr. Chairman, that there will be full public

hearings into all of those environmental concerns, into all of the

economic concerns and into all other aspects except location for the

Vancouver Island natural gas pipeline. Those hearings will get underway

this year.

The other question from the member was that there

wasn't any clearly defined market area. I've asked the member to get

hold of the B.C. Hydro route nomination report, because the market area

is defined in there. The market area is from a landing point near

Ladysmith. The line will go north to serve Nanaimo and Campbell River.

It will come south to serve the southern tip of the Island — primarily

Victoria and the other areas here. It will also go across to Port

Alberni.

AN HON. MEMBER: Powell River?

HON. MR. McCLELLAND:

No, not at this point. Powell River is not included. I'd like to speak

about that and about the needs. The member said that we should also

have a defined area for the Howe Sound–Squamish–Powell River area.

Perhaps if I explain what the government policy is in terms of natural

gas extensions, I could answer the question that way. It is the

government's intention, as quickly as possible — we'll be presenting a

policy paper to cabinet very quickly — to have a rapid extension of

natural gas services all over British Columbia. The first extension is

to Vancouver Island. We decided to go ahead with Vancouver Island

before that policy is firmly in place, because Vancouver Island is the

last large population area in the province which is not served with

natural gas. It seemed to us an emergent situation to make sure that

natural gas got to Vancouver Island as quickly as possible.

The next step following the policy of how incentives and other things might

be created for extension of natural gas services will be to decide on a priority

basis which areas of the province should have the benefit of that extension

next. I remind the Chairman and the members that the Powell River–Sunshine Coast

area is an important area of British Columbia, but it isn't the only one

left without natural gas service. In my estimates last year the member for Shuswap-Revelstoke

(Mr. King) made a very strong plea for extension into Revelstoke. I've had

representations in this committee for extensions in the Columbia River valley

and a whole lot of other areas. What will happen is that the government will

develop priorities for the extension into all of those other areas.

I ask the members to consider whether or not it might make more sense to develop an extension into the Squamish–Sunshine

Coast area from the existing mainline rather than developing a very

expensive new 250-mile pipeline at the same time that the main

transmission line — which is almost fully looped except for about 50

miles — is very seriously under capacity. One of the concerns I have is

that if at the end of our current export contract the National Energy

Board should consider in its wisdom either not to extend that contract

or perhaps to restrict it in some way, we could find ourselves with a

lot of very expensive pipeline in the ground that is not being used. I

just ask the members to think about that a bit, Mr. Chairman.

think the member asked how important the federal government's

involvement was in the decision we made. The ownership of Westcoast

Transmission wasn't a factor at all. The National Energy Board's

involvement in setting rates in cost of service for Westcoast

Transmission was a serious consideration that we made. It's public

knowledge, and all members know about the decisions which have been

made by the National Energy Board. Frankly, in the last couple of

years, the National Energy Board has not given much concern for British

Columbia's interests in making its decisions. That's a consideration we

had to put out front as well.

The member talked about the

British Columbia Utilities Commission being bypassed in terms of the

water rental increase. The water rental increase was a government

decision made as a financial decision. I don't have the figures, but

it's been an awful long time since those water rates — perhaps 40 or 50

years — were adjusted in any way. I don't see much difference in B.C.

Hydro asking the Utilities Commission to pass on those rates than I see

in B.C. Hydro or others asking Inland Transmission or the B.C.

Utilities Commission to let them flow through the increased taxes which

were put on by the federal government. It's normal utilities practice.

It's done all the time. If the companies are to survive, especially

when a government puts on a tax over which they have no control, then

they must have the opportunity to have that flow-through done.

There's

no doubt the British Columbia Utilities Commission will have its hands

full in attempting to regulate B.C. Hydro for the first time. It's

going to take them a while to get a handle on what is a giant company,

but once they do I think the public will be much better served than

they have been in the past in terms of some greater measure of

accountability for British Columbia Hydro. They are also going to have

some very serious decisions to make in recommending major policy and

industrial development initiatives to government.

[Mr. Davidson in the chair.]

With regard to the matter of

pricing with Ocelot Industries.... I hope the member is listening to

this, because he's pretty confused about it. He says he doesn't want

any special deals with companies, but I think he does. We want

[ Page 5497 ]

some

special deals. We don't want to sell our natural gas, which will be

processed and then primarily exported out of the country, for the

domestic price which everybody else is paying right now. I invite the

member to have a look at this booklet which was put out by the ministry

called "A Pricing Policy for Industrial and Processing Applications of

British Columbia Natural Gas." It outlines a formula which will be

followed in using natural gas as a feedstock for the kind of

development that Ocelot is developing in Kitimat at the present time.

Basically, what it does is take the difference between the export price

of gas and the domestic price of gas, have a close look at what kind of

industrial benefits will be delivered to the people of the province in

terms of capital investment, jobs and further processing that might be

done, and establish a formula to reach either the level of the domestic

tax, but never lower, or some place in between. I'd like the member to

have this in case he hasn't had the opportunity.

The member

says that the Employers Council has talked to him and said: "Hey, other

industries want the same deal." I'll bet they don't, because it's a lot

higher than what they're paying for gas now. I don't think they want

that deal at all. In fact I think industry would be screwy if it was

saying: "Hey, charge us more than we're paying now." Their shareholders

would run them out of the country. I think the member should understand

that what we've done is developed a policy in which we will get full

value for our natural gas, and I think that's a policy that every

member on that side of the House would applaud.

The member

asked what the Ministry of Energy, Mines and Petroleum Resources

involvement is in coal development. We are extremely involved. We chair

the committee which develops the guideline process for any new mine

development, coal or otherwise. I sit as co-chairman of the coal

committee of government with my colleague Hon. Don Phillips. Our

ministry is involved from step one all the way through in developing

new coal mines and any other mines in the province. The member asked if

we are examining our coal royalties policy or our coal income policy.

The last level of value was set in 1978, and I think it's fair to say

that all revenue matters of government are always under review between

the Minister of Finance and the interested ministries.

With

regard to the Hat Creek question, I have no hesitation in responding to

that member's request for me to give a very strong assurance that the

environmental concerns will be addressed and that there will be no

development without full public hearings, without full opportunity for

all the public to get involved and without clear and definite proof

that the emissions which come from any development in Hat Creek will

not measurably harm the environment to which we've become accustomed. I

can give that assurance categorically.

The proposal for the

thermal station at Hat Creek is a far different proposal than was first

contemplated by British Columbia Hydro. At a cost of some $600 million

extra on the project, there are scrubbers included in that proposal

which I'm told — and which will have to be substantiated at public

hearings — will bring the level of emissions well within the guidelines

set by the pollution control branch. I suppose those public hearings

will determine if that's not enough, and then the determination will

have to be made as to whether the project goes ahead or whether more

money is spent to further lower those emission levels. That is a

decision that will be made at the time those considerations are under

consideration.

As far as the liquefaction program goes, this

summer I hope to have a report from the steering committee which is

presently looking into the very preliminary studies of liquefaction.

Unless the same kinds of conditions can be met, it's not in British

Columbia's interests to accept less than the best, and I give the

guarantee that we won't.

I think, Mr. Chairman, I have covered all the questions the member gave to me.

MR. DAVIS:

Mr. Chairman, I enjoyed the minister's remarks last night, and again

this morning, especially those relating to hard-rock mining. He was

right on in describing the way in which the metal mining industry in

this province progressively closed down, prospecting dropped to next to

nothing at all, drilling fell to one-third of what it had been a few

years earlier, marginal mines were closed and certain mining areas

closed out altogether. The period from 1972 to 1975, in other words,

was a disaster as far as have hard-rock mining in the province was

concerned. It's been reviving. It takes a long time to revive an

industry of that character. It's accelerating now, and fortunately the

remaining cloud on the horizon — possible actions on the part of the

federal government which might tend to duplicate those of the NDP in

the earlier years of the 1970s — is not likely to be forthcoming.

We've

recently had some assurances from the federal Minister of State for

Mines that there won't be any new policies aimed at conservation,

restricting risk capital or reducing the incentives to develop our

mining industry across Canada. So we don't have to worry about that

unduly.

I want to turn to energy, Mr. Chairman, and address

your attention to that. I'd like to begin by saying, as emphatically as

I can, that energy in Canada is in an unholy mess. Per person, we're

the world's greatest energy hogs; the minister has been saying that

around the province. Yet we go on subsidizing its use as if the world's

fuel resources would last forever.

We pay foreigners twice

the price for their oil that we're prepared to pay our own producers

here at home. We drive foreign capital away, when we don't have enough

savings to look after our own energy development program and our own

requirements. We're crazy when it comes to dealing with our own energy

situation. We're committing economic suicide, certainly, but it is

typical of our modern government leadership — at least in a number of

administrations in this country — that we're at least trying to be

sophisticated about it.

The fact is that we're playing

politics. We're playing short-sighted politics at that. We're looking

for votes rather than results. We're pushing consumerism when a good

dose of old-fashioned supply-side economics would do the real job for

us. We're pushing consumption when a drive towards greater

self-sufficiency would not only generate more jobs in Canada but would

work towards better conservation as well. We're especially foolish when

it comes to management. We put too much faith in government,

ministries, regulatory agencies and Crown corporations. We continue to

make policy pronouncements as if talking is everything. We're light on

planning and poor on production. Yet governments and their creatures

grow and the private sector is crushed under a load of taxes and fresh

regulations. Free enterprise is no longer free, and what used to be our

main engine of economic progress is grinding slowly to a halt.

Effectively

we have nationalization in this country on top of Canadianization. Take

the national energy plan announced by the Trudeau government last fall:

Ottawa, not the produc-

[ Page 5498 ]

ing

provinces apparently — or so the plan seems to indicate — will run the

show from now on. Taxes on the petroleum sector will go up, not down.

The depletion concept will be done away with, and large government

grants will go only to companies which are preponderantly

Canadian-owned and Canadian-controlled.

Petro-Canada, owned

outright by the federal government, will be given the inside track.

Subsidized by the nation, it will soon outrank Exxon, Shell, and Gulf

Oil combined. This is bad — at least the latest study from the EEC

certainly indicates this — from an international relations point of

view. It discriminates suddenly and substantially against foreign

capital investing in productive enterprise in this country.

Canadian

investors, of course, get a substantial break. Outsiders get the

opposite. Petro-Canada, as an instrument of federal policy, has the

right to take over 25 percent of the oil and gas found by anyone else,

essentially private enterprise, in the high arctic and offshore without

any compensation whatsoever.

This is nationalization, on top

of Canadianization. It's something which some Canadians will say is

long overdue. In other words, it has political backing in certain

quarters. What really doesn't make sense is the companion policy of

keeping the price of energy down in Canada when the cost of replacing

current consumption is double or triple that of the production which we

are now wasting by consuming it as if it were going out of style. The

politics of Ottawa's national energy plan may be understandable to

some, but the economics of that plan are awful, ridiculous, upside-down

and anti-conservationist. They encourage consumption when consumption

should be constrained. They discourage the development of new resources

when we should be exploring — developing new sources instead. They use

up existing supplies without a thought for tomorrow. They subsidize the

use of high-priced foreign oil with Canadian tax dollars when the same

dollars, applied to further exploration and development in this

country, could give us greater self-sufficiency and security overall —

not to mention jobs, larger Canadian content, greater activity, greater

employment and greater income at home.

Canada is the only

country nowadays that subsidizes the use of OPEC — Middle-Eastern —

oil. Western Europe never did. The European Economic Community

countries always paid the world price for the oil they bought from

outside. Japan, well known for its economic perspicacity, did likewise.

Countries like Australia and New Zealand pay the world price. The

United States, after some years of delay and procrastination, pays the

world price for its oil imports today. All of the western world does

now, with the single exception of Canada. If Canadians managed their

own affairs intelligently enough they could be self-sufficient in all

forms of energy, oil included. This is really consumerism at its worst.

It's short-sighted consumerism. It's buy votes today and forget

tomorrow. It's play the majority game to get elected, and tell the

people the bad news later. Certainly that's what the Trudeau

administration has done. It's pit the central provinces against

Alberta, because Albertans don't support us — that is, the federal

government now, anyway. It's political cynicism of the worst kind. It's

economic suicide for the rest of us, to boot.

When it comes

to pricing, I'm all for pricing at replacement cost. Today's barrel of

oil should be sold at a price which will provide enough revenue to put

another barrel in its place. Don't dig back into history to find out

what the barrel you're using today cost historically. Look ahead. Look

at what it will cost to find another barrel in the Beaufort Sea, off

the mouth of the MacKenzie River, from our tar sands — which are great

in quantity in Alberta — from the heavy oils which are abundant in both

Alberta and Saskatchewan, or from offshore in the Atlantic region.

That's what a replacement barrel will cost. That's the true cost to

ourselves and future generations of Canadians. The barrel which we're

using up thoughtlessly today shouldn't be priced at yesterday's costs.

It should be priced at the cost of its replacement.

course, the producer makes a profit; but as long as that profit goes

back into exploration, development, new pipelines and new processing

facilities, we're covered. We all benefit. We're looked after in 1985,

and even in the year 2000. We're being statesmanlike in economic terms

and physical terms. We're continuing to put new facilities in place,

and we are assuring ourselves of a degree of security of supply which

is largely absent from our so-called Canadian energy planning process

today.

Many of the criticisms which apply at the national

level can also be aimed at our activities here in British Columbia.

Philosophically, our government is against big government, but B.C.

Hydro is our Petro-Canada writ large. It's already much larger on our

provincial energy scene than Petro-Canada is ever likely to be at the

national level. It's got electricity. The biggest growth commodity

sector is already cornered. It's Mr. Big in the distribution of natural

gas. It will shortly be moving into coal, not only for the generation

of electricity, but perhaps for the production of liquid fuels as well.

B.C. Hydro, a totally B.C. government-owned corporation, has been given

a mandate to develop all the remaining hydroelectric sites in the

province. There's no room left, as far as I can see, for investor-owned

power companies or even for resource-processing industries to do their

own thing locally, in the B.C. interior and in the north. Big Hydro

will do it all for us. It will cover the entire province with a massive

power grid. It will charge the same average cost-based rates

everywhere. It will wipe out any local advantage insofar as unique or

distant power sources are concerned, and all this will be done on the

advice of a few people at the top in B.C. Hydro — people who don't have

to get elected and who certainly don't have to pay attention to the

workings of the everyday marketplace.

I personally believe

that B.C. Hydro's gas activities should be split off from its

electricity business. These should be administered by a separate

government agency, or, better still, by a private corporation regulated

by the B.C. Utilities Commission. Then there would be some competition

between gas and electricity — for instance in the space-heating

business. Then the same people who strike our power rates won't be

formulating our local gas rates as well. Gas and electricity would

compete for our business and we, as consumers, would have some choice,

a modicum of choice, between energy services — gas and electricity in

that case — something that 60 percent of the population of British

Columbia doesn't have now.

I went after the federal

government for its upside-down policy with regards to pricing because I

was critical of its two-tier pricing insofar as oil and gas are

concerned. I wanted the federal government to move to replacement cost

when it comes to pricing production at its source, and I wanted the

consumer to pay this higher cost not only because it will act as a

brake on consumption, but also because it will provide

[ Page

5499 ]

investment capital for the finding and harnessing

of fresh sources of supply. But we're doing the same thing in British

Columbia; we're two-pricing our natural gas. We have frozen the price

in the field, and we're spoiling our own B.C. consumers by subsidizing

the use of this non-renewable fuel to the tune of between $100 million

and $200 million a year.

We're killing the exploration and

development end of the business in the Peace River area by refusing to

give our investors a reasonable return on their capital, and we're

postponing the day when B.C. users of B.C. gas will pay the full cost

of services, which they're receiving in a heavily subsidized way today.

Our field prices have been frozen for three and a half years, ever

since the fall of 1977, when I was still Minister of Energy, Transport

and Communications. Field prices in Alberta meanwhile have continued to

rise. They've risen even though Ottawa has kept the brakes on prices in

the oil and gas industry generally. They're now at least 50 percent

higher — 50 percent better from the producer's point of view — than our

B.C. field prices; and remember that our costs tend, on average, to be

higher in northern B.C., in our northern foothills areas, than they are

in most parts of Alberta. It's no wonder that our drilling rigs are

moving out. They're moving to Alberta in some measure, but more are

going south to the United States, where that market for new gas is more

predictable and where the net profit margin in the field is now three

to five times the return in Alberta — not to mention B.C.

Back

to government involvement, Mr. Chairman. Thanks to the New Democratic

Party, we have a government-owned B.C. Petroleum Corporation. It

doesn't drill for oil and gas and it isn't in the oil-refining business

yet; but under our laws it is the only buyer of gas produced in this

province, and it is the monopoly seller of natural gas in B.C. It

follows that a petrochemical company therefore cannot do what is

commonplace in Alberta and generally true in the United States —

namely, buy natural gas direct from the producer in the field, have it

transported by a regulated utility and price it in its own production

as it sees fit. It has to go through the B.C. government and the

government-owned B.C. Petroleum Corporation instead — and remember that

the B.C. Petroleum Corporation really doesn't have a mind of its own;

it acts on instructions from Victoria. It's the government which is

making these business decisions and, being an elected body, it has to

be doubly sensitive on such issues as windfall profits, obtaining a

maximum return for the Canadian taxpayer, B.C. content and so on. These

are among the reasons why many petrochemical plants, perhaps nine out

of ten, are still being built in Alberta and why industries using large

quantities of natural gas are slow to locate in British Columbia.

There is a further matter of concern, however, and it relates to the exceptional

regulatory powers of the B.C. Utilities Commission — powers carried over from

the old Energy Act passed by the NDP. Under the present act, energy-using industries

of any size are still regulated in much the same way as public utilities traditionally

are. Big Brother is looking over their shoulders too. This is another reason

why energy is less of a magnet for industrial development in B.C. than in Alberta

and Saskatchewan. If we're really concerned about energy supply, then quantities,

duration and prices can be administered by way of B.C. Hydro, Inland Natural

Gas, Columbia Gas — regulated utilities, in other words, regulated by a utility

commission — and let the utility commission tell them what their rates to these

energy-intensive industries should be. So we don't have to regulate the energy-use

industries as well. Such duplication is unnecessary. It's regulation on

top of regulation, and that's bad.

What

really bothers me is this: we have big government getting bigger not

only in Ottawa but also, at least currently, at the provincial level.

Crown corporations are certainly taking over from the multinationals.

So at best we're replacing one kind of giantism with another. Worse

than that, we're using our Crown corporations — our Petro-Canadas and

our B.C. Hydros — to do battle for us when it comes to pitting one

level of government against another. Even private enterprise

governments are using this approach, unfortunately. They are squeezing

out the private sector, and they're giving the consumer less and less

say by doing so. I hope we can reverse this trend. But when there are

two levels of government battling over their share of the resource pie,

there doesn't seem to be much hope unless a rational resource-sharing

formula can be developed by our first ministers working with a broader

and longer-term public interest in mind.

I don't have much

more time, Mr. Chairman, so I'm going to list a number of

recommendations which I've already tried to justify in a paper which I

recently wrote, entitled "Some Further Thoughts on an Energy Policy for

British Columbia." These recommendations are essentially as follows:

Demand-growth in B.C. can be cut in half if we adopt energy

conservation measures which are in effect elsewhere. The most effective

weapon is price. Prices should at least cover replacement costs.

The B.C. government should guarantee all producers of new oil produced

in this province the going world price for their product.

B.C. should consider reverting to a percentage royalty system for the

collection of revenue at the wellhead. Patterned on established

practice in Alberta and generally in the United states, it would make

exploration and development for natural gas more predictable from a

financial point of view. Adoption of this recommendation would, of

course, mean the end to one of the major functions of our B.C.

Petroleum Corporation.

4. Power-intensive industries in remote areas should be free to produce their own energy requirements.

B.C. Hydro and B.C. Coal should be encouraged to build a medium-sized

thermal plant in the East Kootenays for the conversion of low-grade

waste coal into electricity. This power could be sold at a profit to

adjoining utilities in the United States until it was needed at home

here in British Columbia.

6. Projects involving the export

of energy, and particularly energy from renewable sources, should be

approved for construction as long as they produce fuel or power which

is clearly surplus to our provincial needs and generates revenue which

can help to reduce rates to consumers in B.C. I believe this is

presently the policy here in Victoria.

7. Free up the energy

sector. Oil should be deregulated as much as possible, certainly in the

manufacturing and distribution end of the industry. Electricity and

gas, as far as they are produced, transported and distributed by

utilities should be sold on a total-cost-recovery basis. The

electricity and gas functions of B.C. Hydro should be separated

corporately in these forms of energy and sold, insofar as possible, in

competition with one another.

8. Our tax bias, if any, should favour renewable sources of energy over non-renewable ones. In the case of pipeline

[ Page 5500 ]

companies,

right-of-way taxes should provide revenue to the province comparable to

that paid by other industries using Crown land for commercial and

industrial purposes.

9. The present B.C. Utilities

Commission Act should be amended in such a way as to remove its

high-handed powers in regard to increased seizure commission

management. Also to lift from the private energy sector the threat of

regulation, and make it easier to finance energy projects which require

certification by the commission, under the present act.

could go on at length, especially where the shortcomings and overkill

aspects of the present B.C. Utilities Commission Act are concerned.

However, I'll leave this to another time.

I'm sorry I have

to say this, but the minister hasn't seen fit to introduce legislation

which would make our present B.C. Utilities Act more acceptable to

members on both sides of the House, I believe, and certainly as far as

I'm concerned. He promised to do so last fall. I hope these important

changes won't be long in coming.

On your behalf, Mr.

Chairman, I'd like to introduce a school from your riding — 55 grade 7

students from Heath Elementary School in Delta. The two teachers

accompanying them are Mrs. Linda Waterman and Mr. Chuck Carignan.

HON. MR. McCLELLAND: I'll be brief, but I do want to respond to a few of the questions raised by the member for North Vancouver–Seymour

(Mr. Davis). Perhaps I'll start with the recommendations that he gave

at the end, because I believe they cover pretty well all of his

questions.

First of all, I can only agree wholeheartedly

with the remarks that the member made about the national energy policy,

Petro-Canada and other federal considerations. I've made a number of

speeches both inside and outside this House. Perhaps we could discuss

that further as our estimates move along. In a very brief comment, I do

believe that the national energy program, while its stated objectives

can be shared by all Canadians, will not achieve its goals. In fact, it

is bound to failure. Rather than allowing us in Canada to achieve any

measure of energy security by 1990, I believe instead that the act puts

an impediment on our opportunities to ever achieve energy security at

all.

I move on to the questions raised by the member dealing

particularly with my ministry. Firstly, on the price of natural gas, I

agree with the member that increases should have come earlier and that

we are late in getting increases to the price of natural gas at the

domestic level. The wholesale price and the field price are inevitable.

However, I have asked the B.C. Utilities Commission to hold public

hearings on this matter. I would have expected that those

recommendations from the B.C. Utilities Commission would have come to

me last fall. But again the introduction of the national energy program

created such uncertainty within the industry — both the oil and gas

industry and other industrial consumers of natural gas — that they

requested the British Columbia Utilities Commission to hold further

hearings so that they could revise their submissions. That was done. I

have that report now. I think I received it yesterday or the day

before. I have not yet had a chance to have it reviewed by my staff or

by myself, but I hope to be able to do that very quickly and make

recommendations to cabinet as a result of that report.

Certainly

the conservation measures, which the member requests in order to cut

demand growth in British Columbia, must be put in place. We must move

as quickly as we can. I agree that price would be one of those

considerations to reduce demand. It's proven all over the world now, I

guess, that a higher level of prices does cut consumption of energy,

but there are other measures which also have to go with that price in

order to ensure that it's a long-term solution and not just a demand

cut over the short term.

The matter of reverting to a

percentage royalty system for the collection of revenue is a matter

which is under steady review — the way in which we collect revenue from

the production of our oil and natural gas. I don't know whether or not

the B.C. Utilities Commission considered that matter. I know it was

considered, and evidence was given in that regard. Whether or not

they've made recommendations I won't know until I've had the chance to

review their report to me. They may have.

The matter of

power-intensive industries in remote areas being able to produce their

own energy requirements is to some degree a policy of the government at

the present time. We have a lot of small producers of energy who have

no access to B.C. Hydro energy. We're doing that now. Having listened

to other speeches that he's made in this Legislature, I think the

member would like us to expand on that to a great degree. Again, we'll

have further discussion about that. At the present time there is a

difference of opinion regarding government policy on that matter. It's

always open for review, though. I undertake to continue that review.

[Mr. Mussallem in the chair.]

The

matter of the thermal plant in the East Kootenays to take into account

the waste coals is under urgent review at the present time. I believe

that it's wasteful to have all that waste coal just sitting there and

not being utilized in some way. We have to be extremely careful that

anything we develop there is done with a great deal of care in order

that the environment is protected in terms of acid rain and other

things. They're producing waste coal from those mines at something like

a million tonnes a year. Not only is it a waste of a good and valuable

energy resource; it's also an environmental hazard in itself in that

they're running out of places to store that waste coal. There could be

some serious problems in the future if we don't find ways in which to

utilize that real resource. That's being discussed on an urgent basis

within my ministry and with B.C. Hydro at the present time. I would

have to say that the matter of exporting any power from that

development would, at the present time, be contrary to government and

B.C. Hydro policy, which is that only that power which can clearly be

shown to be surplus to our needs at the present time can be exported.

We're not exporting very much power at the present time. In fact, for

most of this past year, 1980, we weren't able to export any power,

because we were short of power ourselves. It was only in about the last

three months of the year that we were able to have a surplus which

could be exported to the United States. As I mentioned earlier in my

remarks to the member, if, in fact, we have before us inquiries for

something like 9,000 megawatts of power, we're going to have to

scramble to just keep up with the economic development in this province

ourselves, without having to export. But I don't think anyone has any

objection to export of power which can be clearly determined to be

surplus. And, of course, that can't be done without approval of the

National Energy Board, in any event.

I agree with the

member's comments about tax biases. They should favour renewable

sources of energy. We've made some moves towards that. I'm sure we'll

make more.

[ Page

5501 ]

The last question was on the matter of the Utilities Commission Act

and its amendment. I have stated in this House that I intended to

review the Utilities Commission Act, and that I would bring in an

amendment to that act to try to meet some of the concerns which have

been expressed by the member for North Vancouver–Seymour — by members

on both sides of the House, as a matter of fact. I apologize that it

will not be in this session of the Legislature, but I can guarantee the

member that my staff are actively working on amendments at the present

time. They will be making recommendations to me. Hopefully, I can have

them approved by government for our next legislative package. That's

underway. I apologize to the member that I didn't meet the timetable he

would have liked me to have met, but the work is continuing.

MR. SKELLY:

Mr. Chairman, I'd like to go back, briefly, to the minister's

introductory remarks. He talked about the condition of the mining

industry under Social Credit periods of government, as compared to the

condition of the mining industry under the NDP term of government. It

seems that he was leaving in the minds of the members some confusion as

to the health of that mining industry during those two periods of time.

Just looking back over the minister's own reports for the period

1970-1980, and also over a number of Price Waterhouse studies which are

done on a regular basis for the mining industry, I think that the

minister, whether intentionally or not — and I don't believe that he

would intentionally mislead the House — has given some information to

the House which could be interpreted as misleading. Perhaps he simply

made this information available through Hansard for circulation during the Kamloops by-election. I don't know what his motivation was.

would like to assist the House by setting the record straight, using

the minister's own figures. I recall some of the reasons that I became

involved in this occupation. I used to work for Jedway Iron Ore Co.

Ltd., up in the southern end of the Queen Charlotte Islands. The member

is right: under the Social Credit government of the day, it closed

down. At roughly the same time, the iron-ore mine in Zeballos on the

west coast of Vancouver Island, which was in my constituency, closed

down. At roughly the same time — in fact, just before I took office in

1972 — Kennedy Lake iron mine also closed down. So a series of mines in

the province closed down at roughly the same time.

MR. KEMPF: For what reason?

MR. SKELLY:

The reason is not Social Credit government and it's not any particular

domestic government problem. They probably closed down because of

conditions of international trade, international requirements for iron

ore, depressed world conditions and so on. I cannot blame Social

Credit. I cannot blame the NDP.

[Mr. Strachan in the chair.]

MR. KEMPF: Were they out of ore?

MR. SKELLY:

In some cases they were. But we have to remember that it's the price of

the ore that decides whether they continue to mine or whether they're

out of ore altogether. In most cases, if prices were high enough,

mining could have continued in those areas. So I suspect it was

probably the price of iron ore on world markets that they couldn't

meet. The NDP fell victim to the same problems.

Let me give

you an indication from the minister's own figures on the values of ores

produced in British Columbia during the period 1970-1980, to find out

just what the situation with the mining industry is.

Let me

start off with copper. In 1970 the value of copper production in

British Columbia was $124.7 million. In 1971 it went up to $131

million. In the first year of NDP government it was $209.4 million. In

the second year of NDP government it more than doubled to $582.8

million. In 1974 it declined slightly, but still had a record high of

$541.6 million — not because of the NDP government or anything we did

or neglected to do as government. It was simply because world copper

prices at the time, as a result of shortages due to conflicts in South

America — Chile in particular — and conflicts in Central Africa's

Zimbabwe and that area. Shipments of copper were difficult to export,

so there was a shortage of copper and the price rose. As a result,

British Columbia was able, under a stable government, where the copper

ore was available to international markets, to take advantage of

shortages created by conflicts elsewhere in the world. We were able to

sell a tremendous amount of copper — in fact record-high values of

copper during those two NDP years.

Now look at the facts

between 1975 and 1978. In 1975 there was a decline of $210 million in

the value of copper as world copper prices declined. The situation in

Chile, as the mining companies would like to state it, was stabilized

when General Pinochet came in and murdered many of the Democrats in

that country. It increased slightly in 1976 to $379 million. In 1977 it

was $380 million.

AN. HON. MEMBER: That's what we did wrong.

MR. SKELLY:

I think it should go on the record, Mr. Chairman, that the Minister of

Forests feels that that's what he did wrong — he didn't imprison and

assassinate democrats.

HON. MR. WATERLAND: Mr. Chairman, on a point of order, I would ask the member to withdraw that rather ridiculous statement.

MR. SKELLY: I do withdraw, Mr. Chairman.

any case, Mr. Chairman, until 1979 — four years after the NDP

government left office — the Social Credit government did not equal the

value of copper production during the two peak years of the NDP term of

office.

AN HON. MEMBER: It's not their fault.

MR. SKELLY:

No, it's not their fault this time. It's not their fault either that in

1979 they've produced $656 million worth of copper; it's simply the

advantage of world copper prices. If the price is high, that's the time

to sell. I don't fault the Social Credit government or the mining

companies involved in British Columbia for doing that. We have very

little control over copper prices throughout the world, but we should

certainly take advantage when those prices are high — as the NDP did

during the two peak years of their term of office.

Look at zinc prices. In 1970, $44. 1 million worth of zinc was produced in British Columbia. In 1972 when we took

[ Page 5502 ]

office,

$47.2 million was produced, which was increased by about 50 percent in

1973 under an NDP government when $62.6 million worth of zinc was

produced. In 1974, $59.6 million; 1975 saw record high production in

terms of the value of zinc of any year in this decade under an NDP

government — $80.6 million. It's declined almost consistently over the

years of the Social Credit administration down to 1980, the last

figures I have, where it's almost half of the peak historic record

under the NDP government. In 1980 we produced zinc to the value of

$44.6 million.

Are we saying that the Social Credit

government has killed the zinc industry? Are we saying that that's the

problem? I think we're being a little more realistic on this side and a

little more positive, as we always have been. We realize the impact

that world economic conditions and world base metal prices have on the

value of production of base metals in British Columbia.

The

minister said that the NDP scared away the mining industry and sent

them up to the Yukon and the Northwest Territories. They produce a lot

of molybdenum up in the Northwest Territories. I can hardly say it, and

most people can hardly spell it, but they produce a great deal of it up

there. In 1971, the year before we took office, the value of molybdenum

produced in British Columbia was $37 million. In the first year of our

government it went up to $43.3 million. The next year it went up to

$51.9 million. The next year, under that deadly anti-mining NDP

government, it went up again to $60.8 million. In 1975 it went up

again. While all those companies were moving out to the Yukon and the

Northwest Territories the value of molybdenum produced here in British

Columbia went up to $71.2 million. The price of molybdenum has been

rising consistently. It's at a pretty high rate right now. To their

credit, the mining companies in British Columbia, in the last year that

I have in my figures under Social Credit, were producing $296.9 million

worth of zinc. Well, congratulations, Social Credit. Congratulations,

mining companies. It's not your fault, but I hope that you take

advantage of it for the benefit of the people of British Columbia. It's

a lot of money. We're very pleased that molybdenum prices are as high

as they are. We don't blame you. We don't give you credit. We don't

give the companies credit. Thank God for those world-wide conditions.

Thank God for those high prices for molybdenum that are keeping people

working and employed here in British Columbia.

Let's look at

coal production in British Columbia. In 1971, just before the NDP

government took office, the value of coal produced in British Columbia

was $45.8 million. During the first year of NDP government it went up

to $66 million. During the second year it went up to $88 million. We're

doing okay for an anti-mining government. The next year, 1974, it

doubled to $154.6 million, even after we had raised the royalties. In

1975 it almost doubled again, to $317.1 million. That's almost a third

of a billion dollars, even though that grasping NDP government was

taking more royalties out of coal to spend on the health, education and

social assistance requirements of the people of British Columbia.

Then

what happened? Social Credit took over. In 1976 it declined to $298.7

million. What happened? What ugly things had you done to the coal

mining industry during that period? As far as I was concerned, it was

nothing that was done by Social Credit. It was nothing that was done by

the NDP. It reflects a change in world market conditions and world

industrial health. Now it's gone up again. In 1978 the value of coal

production in B.C. was $381.9 million. In 1979 it was up again to

$439.3 million. In 1980 it was up again to $467.8 million. What do I

have to say about that, Mr. Chairman? Congratulations, Social Credit.

Congratulations, coal mining companies. Congratulations, world economy.

Congratulations, OPEC, because without the change in OPEC prices, coal

certainly wouldn't be worth what it is today.

We can blame a

lot of things, but I don't think that any government here in British

Columbia, regardless of its political stripe — NDP or Social Credit,

extreme right or extreme left — is going to have much influence on the

value of ores, metals and energy commodities produced here in this

province by people in this province.

Precisely the same

thing happened with crude oil. It increased in value during the time of

the NDP government, with certain changes. In 1973 when $103.3 million

worth of oil was produced, in 1974 it went down to $94.2 million, but

it went up again in 1975 to $116.6 million. But again, the NDP

government can neither accept the credit for the increases, nor should

they always be kicked for the decreases. It was really something that

was beyond our control. This province is so dependent on world economic

conditions and on conditions established outside our boundaries that we

simply cannot take the credit or the blame and, I'm sorry to say,

Social Credit can't either, because you're bound by the same conditions

as any other dependent state in the world. Like any other

resource-dependent state in the world, you are bound just as we were

when we were in government.

There is one area that we can

take some credit for, so let's look at natural gas sales to pipeline.

In 1971, the year before we took office, natural gas was selling to the

pipeline at $31.9 million. That was the value of natural gas sold to

the pipeline. When the NDP took office, very little changed; it went up

to $41.6 million. In 1973 it was up again to $54.8 million. Then came

OPEC, the international oil embargo and the raising of prices. It would

have been silly for any government in office at that time, whether it

was an NDP government or a Social Credit government, not to jack up the

price of natural gas to represent almost an equivalent value of oil in

order to prevent a misallocation of our valuable natural gas resources.

So the NDP raised the price. We went to the National Energy Board and

said we wanted to raise the price. The Energy Board said: "Yes, but not

as much as you want." So in 1974 the value doubled to $128 million. In

1975 it almost doubled again to $214.7 million. In 1976 it went up to

$288 million — that's under Social Credit. In 1977 it went to $396.6

million, and through the years increased regularly to the 1980 rate of

production of $546.9 million. There was a consistent increase over the

years.

The NDP can take credit for one of those years,

because it moved to increase natural gas prices into export. We did not

do it for reasons we could control; we did it because OPEC forced us to

do it. We would have been wasting a precious resource and encouraging

misallocation of that precious resource if we underpriced it in the

export market. So it only made sense, and it would have made sense to

Social Credit to do the same thing. So as a member of the NDP

government of that day, I can't take that much of the credit; nor can

Social Credit take any credit for the increase in price that we have

had to date.

If you look at the figures, over the years from

1970 to 1980 there has been a continuous, consistent increase in the

value of mineral production in British Columbia. In 1971 it was $528

million total, and in 1972 — our first year of office

[ Page 5503 ]

$636.2 million total. But look at this jump: from $636.2 million during

the first partial NDP year, we jumped in 1973, the first year where we

had control over the budget of this province, to $1.1094 billion, the

greatest jump that was ever taken in mineral production in the province

of British Columbia. It went up to $1.2 billion in 1974 and to $1.3

billion in 1975. When Social Credit took over they carried on with the

increase: $1.5 billion in 1976; $1.98 billion in 1978. When you get to

1979, Mr. Chairman, we have the first decline: the total revenue went

up to $2.949 billion in 1979; in 1980 it declined to $2.928 billion.

Now

you can't blame Social Credit even for the decline, unfortunately,

because again we're dependent on conditions in the markets to which we

export these mineral resources. So for the minister to mislead this

House and the public of British Columbia, whether intentionally or

otherwise, and I believe it's otherwise.... I don't believe the

minister was politically motivated, Mr. Chairman, when he made those

statements that the mining industry was killed from 1972 to 1975, and

that now that those hostile policies have been removed, the production

in the mining industry has increased. I think he was doing it as a bit

of showmanship, something to package in Hansard and send up to Kamloops and pass around the Kamloops riding, posing as fact.

Mr. Chairman, I hope the minister will put this part of the Hansard

in the package as well — that there is another side of the story and

that, using the minister's own figures, it can be shown that the mining

industry was never killed, and that the value of mineral production has

been increasing substantially both in NDP years and in Social Credit

years. For the credit that we can take for that, congratulations NDP,

and for the credit that you can take for that, congratulations Social

Credit — but all of the people in British Columbia are going to benefit

from a healthy mining industry. I want to tell you, Mr. Chairman, that

I certainly intend to circulate my remarks in Kamloops within the next

week.

HON. MR. McCLELLAND: Mr. Chairman, I'm in

danger of agreeing with that member about something. It may be the

first time in this House that I ever have or that he's ever agreed with

me. I agree that prices go up and down. Because of what happens in the

world, in Canada and corporately, revenues have increased on a steady

basis for at least the last decade. They'll continue to increase.

Inflation bears a great part of that. World prices of metals and

conditions in the various industries which use those resources all have

a great bearing on how much revenue you get in. So do taxation policies.

The

members opposite don't understand what happens in a resource industry.

You don't have a mine until somebody finds it and develops it. There's

no ore — it's only rock — until a mining company comes along and

develops it. It isn't anything until somebody comes and finds it. The

same is true in the oil and gas industry. Unless you get out there, dig

holes and find gas, you don't have any resource. It's just there. It's

the government policies which develop the incentive to go out and find

and develop the mines that will have the long-term benefit on whether

or not you have a resource economy. What those members didn't

understand when they were government was that if you kill the

industry's exploration activities and if you stop new mines from

opening up — as that member himself said, mines close down sometimes

when they run out of oil or for some other reason — and if you don't

have new ones coming on stream, then you don't have a resource

development economy. What I've tried to say in the early parts of this

debate this year in this House is that the policies of that government

over that three-and-a-half-year period effectively stopped the

exploration industry and the opportunity for new mines to open and new

oil and gas resource opportunities to take place. I won't argue with

the figures about the increased revenues, because they're there. I've

admitted that earlier today. But those increased revenues were in

jeopardy because the exploration industry was killed. It moved

effectively to other areas, including the Yukon and other parts of the

world.

You talk about revenues coming in; they came in for a

while. But what we were seeing was a serious effect on the industry and

on the people of this province. I can remember talking about this when

I was in opposition, and showing you stacks of letters that high from

people at Jones Tent and Awning, who supply camping equipment to the

mining industry; their business was going down the drain. Small safety

equipment supply companies were going bankrupt because the mining

industry was no longer using their facilities. Helicopter companies

were going out of business because the exploration part of the mining

and oil industry was no longer healthy. Hundreds and hundreds of small

businesses employing thousands of people and representing income of

millions of dollars were lost to this province because the government

didn't understand that if you don't have a healthy exploration industry

— regardless of the fact that you can add on super royalties and bring

in new revenues — that industry will die. It takes years and years for

that industry to come back.

Those figures are there, and

they are the important ones. I wish the members opposite could

understand them. In that period we had new-mine spending plunge from

about $271 million in 1971 to $20 million in 1975; that was for the

development of new mines — the only way you are going to have a

continuous healthy mining industry. It's the little guys who go out

there, wander around the mountains and find mines. It isn't the

Norandas and the Esso Resources and the big companies that find mines;

it's the small prospectors who spend their lives in the woods and

mountains. They find the mines, and then they bring in the big

companies to develop them. Claim-staking plunged during those three

years. Miners' certificates plunged during those years.

the oil and gas industry we had 201 wells being drilled in 1971 in this

province; by 1975 it was down to 82. Last year it was back up again to

about the 400 mark, because of progressive government policies. It's

those policies that give the incentive to drill the holes to find the

gas. If you don't do that, you don't have an industry. You don't have

anything.

You can talk about revenues all you want. Let's

talk about the people who didn't have work because the companies and

the people were not exploring for new mines.

Even the value

of exploration in oil and gas suffered a disastrous tumble during

1972-75. In fact, it was hardly a factor at all. The leases for which

companies bid in order to go out and drill those wells are the same

kind of thing. Those, I'm happy to say, are booming today. The number

of certificates being issued to people to go looking for.... Miners'

certificates are booming. We can't keep up with it. We can't hire staff

fast enough to look after those people who want to go out and look for

minerals in this province.

The members opposite have got to

learn sometime that it's not the short-term revenue gain you'll get by

some smart, socialist, philosophical policies which gives the incentive

to make sure that the industry continues for a long period of

[ Page 5504 ]

time;

it's the long-term development policies which will give the investor

confidence and businesses confidence to keep investing and finding new

minerals in this province. That's what is not understood now. That's

what wasn't understood then. The fear that people like those who live

in the Highland Valley and Kamloops have is that that's the policy that

would be reinstituted, should that party ever get back into government.

Again, I say, those people won't forget. The thousands of guys in the

new jobs that have been created because of the resource development

policies of this government who are now making good money won't forget.

Those little businessmen, who I talked about going out of business,

won't forget, because they're back in business. The helicopter industry

is booming in this province, and so are many of the supply service

industries which are directly related to resource activity. They won't

forget. I don't have to circulate my speech to those people, because

they already know. I don't need to send my speeches to them.

The

member said that government policy doesn't have an effect on values.

Maybe that's right. I'm not sure about that, but I would agree with the

member, in that perhaps other external things have more effect on

values than government policies do, regardless of which party is in

power. I think that I could probably agree with that. The question is

not whether or not government policy has an effect on values. The

question is whether or not government policy affects the opportunities

for development of the industrial opportunities that are available to

you. I say to you that it sure does. Government policy which was put in

place between 1972 and 1975, particularly Bill 31 in 1974, had a

disastrous and immediate effect on the mining industry. That's what has

an effect down the road on the opportunity to provide a continuing,

buoyant economic climate. Maybe it doesn't have an effect on the values

of the product. But it sure has an effect on the industrial

opportunities which are available, and it's immediate. If it's the

wrong kind of policy, it sends almost immediate shock waves throughout

the industry.

We have an example before us today of how

government policy can effect industrial opportunities and, down the

road a bit, affect the values and revenues which come to government:

the national energy program. It's not a joke that drilling rigs are

moving out of this province right now. Drilling rigs are moving out of

western Canada. Opportunities which are there are not being realized.

You take a government policy, for instance, which concentrates on the

Canadian lands which offer investment or revenue opportunity to the

federal government — mainly the offshore lands and northern lands — and

concentrate on them to the detriment of the traditional producing areas

of Canada, which are in the conventional areas of Alberta, Saskatchewan

and British Columbia, and you have a policy initiated by a government

which immediately and drastically affects industry, and then affects

the values and revenues which come to government. That takes a little

while to be felt, but it sure doesn't take long to be felt for the

immediate effects on the industry.

Here we have a government

policy which says to us: "Most of our concentration will be in areas

which are iffy, to say the least, and certainly won't produce any new

oil or gas until the 1990s" — to the exclusion of areas which if

drilled will produce millions and trillions more cubic feet of natural

gas, and perhaps significant new amounts of oil as well, although

that's not as hopeful as natural gas. We are seeing federal policy

force us out of those traditional areas at the same time as we're

seeing the United States putting all of its efforts into getting more

oil and gas out of the traditional producing areas. We find, because of

that policy in the United States, 46,000 wells were drilled last year,

and a similar amount are about to be drilled this year.

We've

seen the United States go from a serious deficit of oil and gas — or at

least gas — in the last couple of years to a surplus today because of

the policies which put in place programs insisting and ensuring that

drilling would take place and that resources would be found. What the

members opposite don't understand is that the policies they put into

place here in B.C. during those years directly inhibited the

opportunity for that further development to take place. Those are the

differences that I see between the policies which are now in place and

those policies which were there before.

I have one final

comment. I don't think the member really meant to take credit for the

natural gas price increase he talked about. The NDP government didn't

raise the price of gas, and this government hasn't raised the price of

natural gas. The National Energy Board has the responsibility for

raising the price of natural gas.

MR. COCKE: Nonsense. Pure nonsense.

HON. MR. McCLELLAND:

The responsibility for raising natural gas prices in this country is in

the hands of the National Energy Board. At the same time that that

price increase came into place — and others have come into place since

— the same price went to Alberta and to Saskatchewan. It isn't a

British Columbian price, although the members opposite would have us

believe that it is. Sure, the government pressed for increases as we've

pressed for increases since. But don't let us think that in some magic

way the NDP raised gas prices. The same prices were increased for

Alberta and Saskatchewan at the same time.

I know we'll

never come to a meeting of the minds of this, but I say again that

we'll leave it up to the people. I think they understand what happened

during those years and what's happening today. It's quite a difference.

MR. SKELLY:

With reference to the member's comments that what we do domestically

can have some impact on the mining industry, on reflection I think now

that the NDP opposition feels that given a second opportunity we would

not go into the kind of royalty system....

MR. KEMPF: You're changing your spots, are you?

MR. SKELLY:

No, I'm afraid that's been admitted province-wide and by people who are

more expert on the issue than I am. But to say that Bill 31 royalties

had the impact that they had on the decline in the mining industry is

totally false and misleading. I'm not blaming the minister for that. I

think there is a responsibility on the part of members of the

Legislature to try to correct that. It's interesting that in the 1971

Price Waterhouse annual report, they predicted the capital expenditures

for the opening of new mines would decrease in a single year between

1971 and 1972 by some $200 million. They projected that. They said in

their statement that they felt that capital expenditures for the

opening of new mines would decrease even more in subsequent years. I

don't think anybody was not expecting a decrease in capital investment

in new mines. We certainly expected it on receipt of the Price

Waterhouse report in 1971 — a year and a half before we were even in

office.

[ Page 5505 ]

those trends were already in motion by the time the NDP government was

in office; they had been predicted by the industry itself. While the

mining industry is on the way down, and is being influenced by, for

example, low base-metal prices, surpluses of base metals around the

world and other problems, some people may take it to their political

benefit to attack the British Columbia NDP government and say it's

their fault the industry was going down, but it then becomes very

difficult to justify the fact that mines were also closing in Montana,

throughout the United States, in Mexico, South America and central

Africa, all subject to the same conditions and international world

problems. But a political party here in British Columbia saw a

political advantage to be gained because we presented Bill 31 when we

did. Maybe it was timing, but it was definitely a mistake; we admit

that.

The fact that the mineral industry declined in the

province of British Columbia between 1971 and 1975 was predicted by the

industry while your government was still in office and the first part

of the decline took place.

HON. MR. McCLELLAND: I

won't prolong this. Sure some decline was predicted, but the decline

didn't happen in some places that you didn't mention. One of them was

the Yukon, and it was because the opportunity was made available for

them.

I'd like to ask everybody who's interested in this to

go back and look at the newspaper articles of the day and see how they

read. I think you'd find that many of the things I've said have been

substantiated by what was actually happening at the time. Again, there

is no doubt that the opportunity for exploration and investment in both

the mining industry and the oil and gas industry was effectively

destroyed during that period. The figures bear it out; the activities,

unemployment and loss of income bear it out; and I don't think the

people ever want to go through that again.

MR. PASSARELL:

Mr. Chairman, there are three quotes from the minister's speech earlier

that I would like to go over: (1) "Let's talk about people"; (2) "The

long-term investment in people...."; (3) "The government's policy

affecting people — if there is a policy made by government, it will

send a shock wave through the industry." I'd like to talk about the

last quote — it's not a joke.

I want to talk about a joke

that this government has allowed to happen, and that's Amax. To

paraphrase simply what Amax is about, on January 12, 1979, the

provincial government allowed Amax — a multinational corporation based

in Connecticut — a pollution-control permit that exceeded the federal

guidelines by 8,000 times, allowing the dumping of 400,000 milligrams

of toxic mine waste per litre into the ocean. The federal limits were

25 to 50 milligrams per litre. The government's pollution-control

permit No. PE4335 has allowed 400,000 milligrams of toxic waste per

litre to be dumped into the ocean daily. It works out to approximately

12,000 tonnes of mine waste dumped into Alice Arm daily. Nothing in

this country comes close to this. Later in my speech I'll go over

exactly what this mine slurry is composed of.

I'd like to talk about what happened yesterday, to bring this House to

a bit of an understanding. The Nishga nation's tribal council and the Anglican

Church bought approximately 1,000 shares of Amax. Yesterday was the stockholders'

general meeting in New York City. The Nishga went down with 1,000 shares of

stock in Amax, out of approximately 62 million shares. They presented their

case concerning what effect this mine will have on their livelihood, families,

land and fishing industry. Surprisingly, a vote came up and the Nishga received

support from 16 million shares concerning their opposition to the Amax deal.

One of the surprising stories that came out of New York City yesterday was that

the daughter of one of the former owners of Amax stated, "My father didn't

start this company to kill people," and voted her large block of shares

with the Nishga people, opposing this government's plan of dumping 100 million

tonnes of toxic mine waste into Alice Arm.

Also yesterday, Mr. Chairman, an interesting facet of the story of Amax happened.

The exhaust pipe, which is one of the most archaic ways of disposing mine waste

into the ocean — it's probably the cheapest for the company just running

a pipeline from the mining operation into the ocean 50 metres down and letting

the mine waste dump into it — had a bit of a problem yesterday. At 5 a. m. the

pipe burst, and it wasn't for two hours that the company found out that

these toxic mine tailings were spewing across onto the beach and had wiped out

approximately 2,100 square feet of beach along Alice Arm. It took them two

hours before they finally understood what had happened. The company's official

position yesterday, from a Mr. Byron Cox, stated....

Interjection.

MR. PASSARELL:

To the member for North Peace River (Mr. Brummet): it works out to

approximately 200 square metres. Maybe 2,100 is too high for you — 200

square meters of beach is easier for you to understand.

Mr. Chairman, the official position of the company was: "We're unable

to determine how much material was spilled." Isn't this completely

crazy? Here they're putting out 12,000 tonnes of toxic mine waste into

the ocean today, they have a spill, and what does the official of the company

say? "We're unable to determine how much mine waste was dumped into

the ocean." The only thing we do know is that 200 square metres of beach

were wiped out, and that the toxic mine tailings were taken up by the ocean

and taken out into the Alice Arm chuck. It's unbelievable. The company said:

"It's the safest mode of disposal, backed by the provincial and federal

governments."

The

Nishgas stated yesterday that they won; even though they didn't defeat

the 62 million shares held by the company on the Amax issue, they

received approximately one-third of the support. They stated that it

was a moral victory for their nation and for the aboriginal people of

this country. Another important aspect of the shareholders' meeting

yesterday was that one-third of all the shareholders boycotted that

vote and would not vote against the company or the native people.

Adding on the 16 million shares that supported the Nishga and the

one-third of the shareholders who would boycott the meeting on that

vote, it definitely is a moral victory for the Nishga people against

Amax concerning their livelihoods and what's happening to their area of

Alice Arm.

It was interesting that there's a very similar

project going on in the state of Alaska. It will be on stream in

approximately one year. It's called Borax Mine. Is the minister

familiar with Borax Mine in southeastern Alaska? It will be a

molybdenum mine. It will have a very similar ocean dumping permit. The

engineers of Borax have looked at the the Alice Arm tailing disposal

and the method that is used by Amax. They have stated that that would

have been outlawed

[ Page 5506 ]

years ago in the United States. It's unbelievable that in 1979 in

British Columbi