1988 Legislative Session: 2nd Session, 34th Parliament

HANSARD

The following electronic version is for informational purposes only.

The printed version remains the official version.

Official Report of

DEBATES OF THE LEGISLATIVE ASSEMBLY

(Hansard)

TUESDAY, MAY 17, 1988

Afternoon Sitting

[ Page

4511 ]

CONTENTS

Routine Proceedings

Law Reform Amendment Act, 1988 (Bill 27). Hon. B.R. Smith

Introduction and first reading –– 4511

Oral Questions

BCIT. Mr. Jones –– 4512

Sale of government vehicles. Mr. Clark –– 4512

ARDSA grant for Bevo Farms. Mr. Rose –– 4512

B.C. savings bond issue. Mr. Davidson –– 4513

Mr. Williams

Committee of Supply: Ministry of Economic Development estimates.

(Hon. Mrs. McCarthy)

On vote 19: minister's office –– 4514

Mr. Williams

Mr. S.D. Smith

Mr. Rose

Mr. Michael

Mr. Miller

Mr. Clark

Mrs. Boone

The House met at 2:07 p.m.

HON. MR. VEITCH :

I want to inform the hon. leaders of the opposition that I'm prepared

to answer all questions because I have with me my mentor, the Hon.

James Chabot. I think there's already a division, Mr. Speaker.

HON. MR. SAVAGE :

It gives me great pleasure to rise in this assembly today and introduce

the president of the B.C. Fruit Growers Association, Mr. Gerald Green,

from the great constituency of Okanagan South. Would this assembly

please make him welcome.

MR. ROSE : On behalf of the

New Democratic Party, I would like to welcome our constituency

assistants who are here meeting in Victoria on their annual visit,

probably trying to brief one another on ways to make us look as good as

they can. I'd like the House to welcome them all.

MR. PELTON :

On behalf of the second member for Dewdney (Mr. Jacobsen) and myself, I

would like to take this opportunity to introduce to the House today 30

fine young students from Meadowridge independent school in Maple Ridge.

They are here with their teacher, Mr. Hume, and they cover grades 7

through 10. I would ask the House to please make them very welcome.

MR. GUNO :

First of all, I'd like to draw to the attention of the House that there

is a desk without a blotter beside me. This has happened overnight.

any rate, I'm pleased today to acknowledge the presence of four

distinguished visitors from Atlin. We have Mr. Rod Robinson, who is the

executive director of the Nishga Tribal Council. Along with him are Mr.

Nelson Leason, who is chief of the Laklazap band, Harry Nyce, a staff

member, and also a representative on the Kitimat Stikene district,

Collier Azak. Would the House bid them welcome.

HON. MR. REID :

Would the House make a special welcome today for Mrs. S. Martin, a

teacher from Sunnyside Elementary School in sunny south Surrey. She has

with her 45 grade 5 and grade 6 students here in the precincts today.

Would the House make these people especially welcome.

While

I have the floor, I would like to recognize the former Provincial

Secretary, in relation to the Yellowhead Highway, and I wear this rose

in recognition that here today is the member closest to the Yellowhead

Highway connecting British Columbia and the Queen Charlotte Islands.

MR. BLENCOE :

Our side of the House would also like to welcome Jim Chabot back to the

Legislature. We all recall many verbal jousting battles we had with

that former member, and we also recall the many times in question

period when we tried to get the right answers. We still have questions,

Mr. Former Minister. Perhaps you would take the front bench today. On

behalf of our side of the House, it is really nice to see Jim Chabot

here today.

MR. LOENEN : Two introductions. Accompanying my wife in the member's

gallery are two members from my constituency and personal friends — people we

have known since our teens and who have worked in our campaign. I would just

like to ask the House to join me in welcoming Hans and Sylvia Verhoef.

Secondly,

a group of students from Richmond: approximately 60 grade 7 students

are visiting us today from the Walter Lee Elementary School, together

with their teacher Mr. Welton. Please make them welcome.

MRS. GRAN :

Visiting the House today and later appearing before the Select Standing

Committee on Standing Orders, Private Bills and Members' Services are

representatives of the Life Bible College of Canada from Burnaby. They

are Robert Buzza, Morag MacLeod and Debra Pope. Would the House please

welcome them.

MR. LONG : Today in the precincts we

have a teacher, Mrs. Teresa Gomm and 14 grade 7 students from the

Assumption elementary school in Powell River. I would like this House

to make them welcome.

MR. BARNES : I'm sorry I wasn't

in when former Provincial Secretary Mr. Jim Chabot was being

introduced. I just can't miss the opportunity to welcome him back and

to tell him that he would be very proud to know that the present

Provincial Secretary (Hon. Mr. Veitch), the Minister of Tourism (Hon.

Mr. Reid) and all the rest of those guys over there are carrying on in

the same tradition that he did; that we still are waiting for a policy

on multiculturalism, and I'm sure it will come sooner or later.

HON. B. R. SMITH :

Before having the honour to present a message, I cannot resist

welcoming the old master skater back to his ice. Boitano and Orser have

no equal to this individual. No one could pilot a bill through this

chamber, or introduce a bill, with more consummate skill than James

Chabot.

Introduction of Bills

LAW REFORM AMENDMENT ACT, 1988

Hon. B.R. Smith presented a message from His Honour the Lieutenant-Governor:

a bill intituled Law Reform Amendment Act, 1988.

HON. B.R. SMITH :

Mr. Speaker, this is one of the Law Reform Commission recommendations

that we are acting on. It contains provisions that will guide the

courts when determining the domicile of dependency of a minor. It will

repeal obsolete sections for remedies against the estate of a deceased

debtor, obsolete rules of law that have been around since 1920, and

will abolish the common law action dating from medieval England that a

servant has against a master.

[2:15]

The

major change in here is an amendment to the Law Property Act, which

limits personal liability under a mortgage. This is an amendment that

we have talked about in our caucus and in this chamber in the last

parliament. This will clarify the law with respect to the extent of

personal liability under a mortgage or an agreement for sale. Under

these changes, where the original borrower has sold his home and the

purchaser has assumed the mortgage, the original borrower's liability

will be extinguished unless the lender demands payment in full within

six months after the term of

[ Page 4512 ]

the

mortgage has expired. So the original borrower will be able to extend

his liability by having the lender approve the creditworthiness of a

purchaser or proposed purchaser.

These amendments represent

a significant improvement over existing laws, where we had situations

where original homeowners, believing they'd sold their home, several

owners intervening, and then there was a default and the lending

company went back on the original borrower and tried to hit him on the

covenant. So this amendment, I think, will be very well received.

Bill

27 introduced, read a first time and ordered to be placed on orders of

the day for second reading at the next sitting of the House after today.

Oral Questions

BCIT

MR. JONES :

Mr. Speaker, I have a question regarding BCIT for the Minister of

Advanced Education and Job Training. Last month, without warning, the

minister demanded a $4 million cutback, threatening over 60 positions

at that institution. Now the minister has suddenly reversed himself on

funding and has given BCIT a new mandate, which we on this side of the

House applaud. However, I would like to ask the minister: can he

explain what prompted his sudden reversal in policy?

HON. S. HAGEN :

I do appreciate the question, because today I announced a new mandate

for the B.C. Institute of Technology. Effective in 1989-90, the

institute will become the centre for advanced training in the province.

The cuts were really imposed as a reflection of four reports that had

been done at BCIT which said that BCIT was becoming more and more like

a community college. Therefore I had said to BCIT that they would be

brought under the college funding formula, because so many of their

programs were the same as ones offered in the colleges.

Upon reflection on that, however, and after more consideration of the reports —

particularly the Park report, where they suggested that there should be

the establishment of a centre for advanced technology

training.... Even though they said they did not recommend that it

should be at BCIT, I determined that BCIT was the proper place for that

facility. Therefore I was able to announce today that not only was the

funding that was cut from the budget to be reinstated, but an

additional 2 percent in funding, less the $326,000 identified by their

administration that could be cut from the administration of the

institute, was to be added to that reinstatement.

MR. JONES :

I think that response indicates the ad hoc nature of the minister's

planning process. Can the minister assure this House that this plan is

a concrete example of the government's commitment to a more

comprehensive planning process, so that post-secondary institutions

like BCIT can get off the emotional roller-coaster in terms of their

future?

HON. S. HAGEN : I can assure the hon. member

from the other side that not only is this a statement of confidence in

the institute, but it's the desire of the government to build on what

is at the institute. I had a meeting prior to the announcement this

morning with the board chairman and also the chairman of the finance

committee. I had a telephone conversation with the president of the

institution as well as with the president of the faculty association. I

can tell you that they were very pleased; they were very supportive.

I've had numerous conversations with those gentlemen over the last

three weeks. They were very appreciative of the announcement, and they

are ready to get on with the job.

SALE OF GOVERNMENT VEHICLES

MR. CLARK : A question to the Provincial Secretary — a simple one. Is the government's vehicle fleet or part of the vehicle fleet up for sale?

HON. MR. VEITCH :

Well, anything can happen in the fullness of time, hon. member. But

right at the present time we have no intention to sell any of these

vehicles, unless they become redundant to our needs, and then if you'd

like to buy a used clunker, we might have one available for you.

MR. CLARK :

Could the minister inform the House why your assistant deputy minister,

Mr. Jerry Woytack, and Mr. Lorrie Adam, director of vehicle management,

met with Mr. Weiler, the vehicle lease manager for Jim Pattison, on

Monday last?

HON. MR. VEITCH : No, I don't know why

my assistant deputy minister met with a lease manager, other than to

tell you that we do lease vehicles, as well as purchase them. We lease

many vehicles. I'll find out, and if it's significant I'll certainly

report back to the House.

MR. CLARK : Supplementary.

Mr. Speaker, on Tuesday last week Mr. Weiler appeared at the vehicle

branch in Burnaby and told people he was putting forward a proposal to

take over all of the vehicles in British Columbia. We've had no public

announcement, no mention of privatization, no public tender; yet your

ministry is meeting privately with Mr. Pattison's company. The whole

thing reeks yet again of another preferential treatment for friends of

the government. Will you undertake now to bring forward the evidence

and information that you have no intention of privatizing this branch

of government, so that the minds of the people who work there are put

at ease?

HON. MR. VEITCH : We lease vehicles from a

whole bunch of companies. We lease vehicles from Jim Pattison, from

Carters, from people here in Victoria, and we buy vehicles all over the

province. We buy hundreds and hundreds of vehicles all over the

province. I see nothing improper in the assistant deputy minister who

is responsible for these vehicles meeting with a car dealer. I think

that would be the appropriate person for him to meet with. I'll have a

look at the whole thing, and if it's significant, we'll get back. I

think you're reading too much into this.

ARDSA GRANT FOR BEVO FARMS

MR. ROSE :

I have given notice of a question to the Minister of Agriculture, and

it arises out of some questions I put yesterday. The ARDSA grant to

Bevo Farms is part of a $2.5 million package that includes $250,000 for

land acquisition. Has the minister now reviewed this application as he

promised to yesterday? Does the application make it plain

[ Page

4513 ]

that the $500,000 grant was part of a larger package, and that one of the

spinoffs of this package was the transfer of land worth $60,000 or so from

Western Lettuce to Bevo for about $250,000?

HON. MR. SAVAGE :

I have checked the ARDSA application form and gone through it in

detail. The accusation yesterday was that perhaps the $250,000 of that

$500,000 grant was designated for land purchase. Let me assure the

member opposite that is not the case, and that the application met the

guidelines in the greenhouse construction machinery application for the

one-third funding allowed under the ARDSA agreement.

As to whether the land issue was part of the grant consideration, no, it was not. Does that answer your question?

MR. ROSE :

Would the minister care to admit that two companies with the same

president and the same board of directors could — under the $2.5

million application — transfer on paper the sale of a piece of

property at $250,000 between two existing companies that are identical

except for their names — land that was worth about $60,000?

HON. MR. SAVAGE : To answer the question, I suppose they could. But in fact, by the numbers I have looked at, that is not the case.

MR. ROSE : Perhaps the minister is looking at the wrong numbers.

I would like to have a final supplementary. Bevo Farms president Jack Benne — no relation to the comedian — is also the president of Western Lettuce Now. The present payment appears to be the third one — the ARDSA grant of $500,000 —

that this company, Western Lettuce Now, has got in a very short time.

The public accounts show $4,900 and some odd in the fiscal year '86-87,

another grant in March '87 for $40,000, and now comes the one for

$500,000.

Given the Premier's well-known opposition to

grants to business, I wonder if the minister is satisfied, after

looking it over, that these applications are all for different things.

HON. MR. SAVAGE :

Yes, I am satisfied. The grant application forms, as they come in under

ARDSA, are scrutinized and gone over very thoroughly by engineering, by

my staff and the advisory board. This particular grant was to set up

our first real commercial seedling greenhouse in the province. This

particular operation will provide somewhere between four and five

million vegetable and flower seeds for our greenhouse operators within

the province. It's an initial seedling greenhouse, one that I think we

should be encouraging.

MR. ROSE : I wonder if the minister could tell the House whether or not he was aware of the two other grants and what they were for?

HON. MR. SAVAGE : I was told by my staff that there were other grants, but not given the details of them.

B.C. SAVINGS BOND ISSUE

MR. DAVIDSON : My question is to the Minister of Finance. In view of

the rather negative report carried in one of the local papers about the B.C.

bond issue, and in view of the rather glowing report carried in the national

press, could the minister throw some light on the rather confused state of the

poor British Columbian reader?

HON. MR. COUVELIER :

I take it the hon. member didn't wish me to get into a discussion about

the relative merits of the level of reporting from both national and

local papers. I assume the issue we're discussing is the B.C. savings

bond matter?

MR. DAVIDSON : That's the one.

HON. MR. COUVELIER :

I'm delighted to advise the House that the B.C. savings bond issue is

meeting our objectives. I would remind the House that when we decided

to go to a retail offering, the effect of that decision was to target

the issue to the small B.C. investor. The small B.C. investor is taking

advantage of the good interest rate and the good investment

possibilities inherent in the offering. As a consequence of that, based

on very cursory reports after one day of sale, the issue looks like it

is going very well. It might be admitted that some salesmen might be

more accustomed to answering the phone rather than making calls. By

virtue of the fact that we are spending taxpayers' money, I expect them

to earn their commissions, and as a consequence, they are expected to

make the calls.

When we set the rate, we canvassed the

market and completed an examination of about 12 houses in terms of

setting the interest rate. It was the consensus of those 12 houses that

an 8.75 percent interest rate was competitive and was a good investment

for the small investor, who was the investor we were targeting. I'm

pleased to advise the member in the House that we have a very

successful issue on our hands.

MR. DAVIDSON : Could the minister possibly answer how these similar facts could be reported so differently in two news media?

HON. MR. COUVELIER :

That's a challenging question, Mr. Speaker. I'm not sure that I can do

it justice in the time remaining, but I am willing to try.

Given

the fact that there are obviously other important questions, I will

attempt to have a private discussion with the hon. member on that very

important question that deserves serious examination.

[2:30]

MR. WILLIAMS :

With respect to the bond offering, would the Minister of Finance

confirm that the offering was prepared through Guaranty Trust — the initial work there —

and that Peter Hebb, a well-known right-wing supporter of your party,

was the main person involved in this process that doesn't look like it

is going to be as successful as the minister suggests?

HON. MR. COUVELIER :

I don't quite know if there's a question there. But let me just tell

the hon. member that it is, of course, true that people who have an

understanding of the governmental process and the financial community

coincidentally happen to be basically supporters of the Social Credit

government, and I make no apology for that. If these people, in their

wisdom and experience, decide that they choose to support one party

over another, then of course that's their choice.

[ Page 4514 ]

Dealing

with the particular question, in which I gather was the implication

that this government is somehow rewarding its friends, let me just tell

the hon. members that there are a variety of investment houses involved

in this issue. Pemberton is the lead agency, and I'm not aware of any

particular interest being expressed by myself or my staff in terms of

political affiliation. Our interest and our sole purpose here is to

serve the taxpayers of this province properly. By this issue and at 8

per cent, we are providing effective management of the public dollar.

Orders of the Day

HON. MR. STRACHAN :

Before calling Committee of Supply, Mr. Speaker, I have a couple of

requests. First of all, I would ask leave of the House to allow the

Select Standing Committee on Standing Orders, Private Bills and

Members' Services to meet today while the House is sitting, at 2:45 p.

m. The matter is the business of the Life Bible College Act.

Leave granted.

HON. MR. STRACHAN : Also, I'd like to advise the House that pursuant to standing order 2(2), the Legislative Assembly will sit tomorrow.

Committee of Supply, Mr. Speaker.

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

ESTIMATES: MINISTRY OF

ECONOMIC DEVELOPMENT

(continued)

On vote 19: minister's office, $277,394.

HON. MRS. McCARTHY : Mr. Chairman, yesterday — and reference was made to it again this morning —

the hon. member for Vancouver East asked some questions regarding

Riverview Heights–Westwood Plateau sales under the B.C. Enterprise

Corporation. In a further question, he asked about Molpar Construction

Ltd. and the agreement with BCEC in that regard.

At this

time I want to respond to that question by telling the hon. member

through you, Mr. Chairman, that all existing sales at Riverview and

Westwood were a result of proposal processes carried out by the

Ministry of Forests and Lands. That was in 1985 and 1986. The B.C.

Enterprise Corporation files, for which I have responsibility, start

with the agreements with the successful proponents. In other words, we

do not have the background information, because at that time we

inherited the successful proponents.

So I cannot provide the information that was asked of me for two reasons. First, I do not have it. Second — and Mr. Chairman, you will be apprised of this —

this kind of information which dates back to those dates has no

reference to the estimates of this minister and, more importantly, has

no reference to the time-frame in which these estimates are being

debated.

In addition — because at the present moment the question vis--vis Molnar Construction has been given to me —

I want to tell you that this agreement does date from 1985; however, it

has been an active file and is ongoing, as you know. The total price of

that agreement is $20,565,000 paid as the property is drawn down for

development — that was the agreement. As you remember, in 1985 it was a very different marketplace from today's.

date, $12,214,088 has been paid. The balance is to be paid no later

than July 3, 1990 or sooner if the property is drawn down sooner, with

that determination. You have to know, too, that in this agreement, just

as the other one that I answered through a question period question

from the same hon. member, the developer in this case is taking raw

land, providing all expenses for development and bearing all the costs

and risks related to developing and marketing the land.

MR. WILLIAMS :

The minister is saying that there are absolutely no costs being borne

by government or BCEC with respect to any expenditures whatsoever on

servicing on all of the 140-acre site?

HON. MRS. McCARTHY :

Mr. Chairman, I believe that to be true. In the next five minutes, I

can get that answered, but I'm quite sure it is true. All development,

servicing and marketing costs are borne by the development corporation.

MR. WILLIAMS : When you know, let us know, for sure. It's not....

Let's

understand who was the player here initially. Who was the Deputy

Minister of Lands when this deal was initiated? The minister knows. The

deputy minister was Robert Flitton, replaced by the former Premier,

Bill Bennett, after firing an outstanding professional who was the

Deputy Minister of Lands, Mr. Johnson. Mr. Flitton has been an active,

card-carrying member of the Social Credit Party through most of his

career. Mr. Flitton was a vice-president of the Social Credit Party in

Kamloops. Mr. Flitton was active on the executive of the Social Credit

Party in Prince George. Mr. Flitton....

HON. MRS. McCARTHY :

A point of order, Mr. Chairman. For a whole range of reasons, the

member's statements are very much out of order. First of all, he is

obviously beginning one of his personal attacks on a citizen of the

province, in this chamber where he has immunity. Secondly, he is

reflecting on a time in the ministry of Lands and Forests. . . . These

estimates are for the Ministry of Economic Development. He is also

reflecting on a time-frame which has nothing to do with either my

ministry or the timeframe of which we are reflecting on the estimates

of the Ministry of Economic Development. I would ask you to ask the

hon. member to keep his remarks in order.

MR. CHAIRMAN :

The minister makes some reasonably valid points, and I know the hon.

first member for Vancouver East is well aware of the requirements for

the debate on estimates. I would ask him to continue in that manner.

MR. WILLIAMS : We will make equally valid responses, Mr. Chairman.

[Mr. Rabbitt in the chair.]

That's

interesting. This deal is still being delivered by this minister

through this Crown corporation. Let's understand that. This deal,

hatched by Mr. Flitton, who was a Socred hack and then made deputy

minister, one of the first hacks to be made deputy minister. . . . That

has not changed; there

[ Page 4515 ]

have

been more since. But this was one of the most clear-cut cases of

patronage and a Social Credit hack becoming the deputy. You are still

administering what that hack delivered to Mr. Molnar.

The

interesting question, Madam Minister, is this. Have you checked the

file? Have you checked to see who the lawyer was for Mr. Molnar? Who

was the lawyer that hatched this sweet deal? Who was the lawyer that

bargained with Mr. Flitton?

HON. MRS. McCARTHY : Mr.

Chairman, again may I just make the point. The hon. member is asking a

question about a business deal and a government negotiation that took

place before my time. I have no idea who the legal counsel would have

been, and I have no idea who did the negotiation at the time that the

minister of lands and forests had jurisdiction over this negotiation.

I'm sorry.

Again I tell you this member is totally out of

order. We are simply in the matter of the B.C. Enterprise Corporation,

which in this past year took on the responsibilities of B.C. Place

lands and the B.C. Development Corporation, and in those

responsibilities it was in several agreements, and we have become the

collecting agent under the agreement made prior to that time in which

the B.C. Enterprise Corporation was formed. In order to assist the hon.

member, I have brought to the House the original terms, i.e. the amount

that the government was expected to get.

Again, in his

questioning he is reflecting on another ministry, but also in a

time-frame that is not conducive to the debate in this House today. I

ask you, Mr. Chairman, to please ask the hon. member to remain in order

so that we can have some constructive debate on the Ministry of

Economic Development.

MR. WILLIAMS : I can understand

why the minister is all of a sudden so fastidious and cautious, because

I wouldn't want to be tied in with this particular deal either if I

were you. Check the files, Madam Minister. Check the files and find out

who the lawyer is that pulled this deal together. You know who you'll

find. You'll find one Peter S. Hyndman as the lawyer that pulled this

deal together. Most of us remember Mr. Hyndman — he too of the

lavish tastes and spending. He's been able to carry on with those

lavish tastes and spending as a result of being the solicitor for this

deal. Your $20 million deal was pulled together by Mr. Hyndman. through

your proposal call; and proposal calls — let's get it clear — can be much looser than clear bid arrangements.

HON. MRS. McCARTHY :

On a point of order, Mr. Chairman, it's unfortunate that the hon.

member cannot act within the rules of this House. Once again, to ask me

about a negotiation and to try, through phrasing his question in such a

way that he demeans the names of people in this province and reflects

on their reputation...is totally out of order in this House. I would

ask you to bring this member.... For the third time, I ask your

cooperation.

[2:45]

It was before my time in this ministry. This ministry had no

responsibility for that particular Forests and Lands transaction, and

it is not up to this minister to be accountable in the estimates for

1988, because I have no memory of it. He had to tell me who the legal

counsel was. I had a totally different portfolio at the time. The hon.

member had to tell me who the deputy minister was at the time. I had no

knowledge of that until you brought it to the floor of this House. For

me to answer those questions in any way, to bring any light upon any of

the questions you are asking, is impossible.

Mr. Chairman, once again I ask you to bring this hon. member to order.

MR. CHAIRMAN :

Madam Minister, the point is well taken. The first member for Vancouver

East is fully aware of the rules, and I would ask him to phrase his

questions in such a way that they fall within those rules.

MR. WILLIAMS :

They do indeed. It's an interesting piece of land we're talking about

here, and the minister is responsible. The land is being sold through

the Enterprise Corporation: the deals that Mr. Hyndman hatched with Mr.

Flitton are continuing. That deal is ongoing, and you are currently

responsible for it, Madam Minister. I don't blame you for trying to

isolate yourself from it, but you're tied; you're part of the package

over there. You might fight currently with Mr. Toigo and all the rest

of it, but you're part of the package over there.

You look

at the subdivision of those lands: beautiful slopes above Riverview,

from the Lougheed Highway to the top of the hill, pulled out from the

old Riverview Hospital lands; 25 different sales, many of which you

have been participant to in the past year through your responsibility.

But the players have done extremely well out of this exercise. It's

kind of relevant, particularly when we reflect on the Expo deal as

well, to see how well a person can do when he makes a deal for a big

package of land: then he can break it up into the pieces. They do

incredibly well.

The point is that it's the same kind of

deal. You don't put up the $20 million up front; that's down the road.

That's a pretty nice deal. Meanwhile, you don't have an interest clock

ticking away, do you? Li Ka-shing doesn't have an interest clock

clicking, and Andre Molnar doesn't have an interest clock clicking.

Anybody in the private sector who goes out buying land has an interest

clock to watch, and he must pay interest on the balance that has not

been paid. Was any interest paid by Mr. Molnar on the balance? Is it

being paid on the balance, or is it a deal like Li Ka-shing's?

HON. MRS. McCARTHY :

As I mentioned earlier, in this particular transaction they cannot,

until they add value to the land, realize any profit whatsoever, so

there is an investment by the firm. The hon. member says, "Oh " and

shrugs his shoulders in his typical way. It's so true, though. He wants

to ignore that investment. It's as if we've given land over or we

continue to give land over, as is the case he's trying to make, without

any commitment at all from those who purchase it.

I have

told you the figures. We already have in the Riverview Heights

agreement, which dates back to 1985, the total price which was paid for

the property of $20,565,000, but to date the $12,214,088 has been paid

because of the drawdown of the lot.

So in 1985 — and we all have to acknowledge that 1985 and 1986 was the slow-moving time —

that agreement was a substantial agreement to make, and a very good one

to make at that time in our real estate marketplace. But there's a

protection also that the balance must be paid by July 3, 1990, two

years from now; and if it is drawn down sooner, it will all be paid up

sooner. It's an agreement in which the developer only makes money if he

develops the land and puts in the

[ Page 4516 ]

services. Under those terms of the agreement, the taxpayer who owned the land only wins.

To say it any other way is to say that the province, in this particular case, should have been in the development business —

should have put in all the services and then put all the lots up for

sale. Again, I ask you to reflect on the time that this transaction was

taken, which was in a real estate marketplace where that would not have

been the best solution at the time. Again, we're just reflecting on

what would have been the state of the marketplace and the decision at

that time.

We are the collector under the agreement. It is

being drawn down and is being collected on behalf of the people of

British Columbia in a very orderly and very good way, and I'm pleased

that it is working well.

MR. S.D. SMITH : I have some

questions that I would like to address to the minister in relation to

some issues that were raised this morning, particularly in relation to

the free trade agreement and some of the benefits that will be accruing

from that agreement to the interior of British Columbia, particularly

in the areas of value-added.

I was listening to the

discussion this morning, Mr. Chairman, with a lot of interest. There

were, quite properly, a number of requests for more information about,

I suppose, a kind of cost-benefit analysis, if you like, sector by

sector of the free trade agreement.

There was reference

made to the area of graphic art and there was reference made to the

publishing business, for instance, that I was sensitive to. This

whole business, Madam Minister, is very important to the people in the

interior. The free trade agreement, of course, is our great opportunity

for diversification of the economy and the shoring up of some of the

sectors that we're into in a kind of embryonic way because we get some

markets. But I'm very much concerned about the way information is being

disseminated on this very important matter, both from ourselves and

from Canada.

Recently in our constituency we had a mailer, a householder, go out from a democratic socialist — or socialist anyway —

a Member of Parliament, who said that there would be 600 jobs lost in

the area as a result of the free trade agreement; and he went through

those 600 jobs and listed them sector by sector. What twigged me to it

was the first member for Vancouver East (Mr. Williams), who today was

on to the same train of thought, presumably using the same erroneous

research information.

When we analyzed the 600 jobs that

were going to be lost, we found that 90 of them were alleged to be in

something called "publishing only." Of course, we decided to go through

the community to find out how many publishing only jobs there were in

Kamloops, and it turned out that in fact there are none in Kamloops; no

jobs "publishing only."

There was another sector of

combined publishing and printing; likewise we found that there were

very few of those. We found as well that in some of the areas, for

instance on the petrochemical side where it was alleged that we were

going to lose these jobs in the Kamloops area, there weren't any.

We too, like the first member for Vancouver East — who now has scampered out of the chamber —

want that kind of information. These kinds of deceits that are being

peddled by the democratic socialists in instruments like their mailers

are very hurtful to the community, which ought to be getting honest

information and honest presentations from their public officials, who

will take this important issue, look at it sector by sector and see

where the opportunities lie and where the problems will arise.

Madam Minister, in our area we have, fortunately, the Lottery Corporation headquarters and, associated with that....

Interjection.

MR. S.D. SMITH :

There are some guffaws coming from the members of the official

opposition, presumably laughing at the fact that the interior of the

province is getting the opportunity from the technology transfer

associated with the Lottery Corporation.

Associated with

that, we have a high tech printing facility that has incorporated into

North America Japanese technology that is being used here for the first

time. As a result of the free trade agreement, the tariffs on that

lottery technology and the associated printing technology will be

coming down to zero in the first year of the agreement. That, of

course, poses an enormous opportunity for us to pursue the sale of

lottery materials into the United States, which is one of the big

growth industries — some would say unfortunately — in the

U.S., with tremendous billions of dollars involved. Of course, on the

printing side the graphic arts are where the greatest amount of job

intensity is in the whole industry.

I'm wondering, because

the opposition was concerned about graphic arts this morning and

because their socialist member of parliament has sent out this

deceitful piece of information to the community . . . . He has not

corrected it, even though he sent out another mailer and even though we

had a free trade opportunities forum in Kamloops in March at which he

was invited to participate and discuss these issues. I'm wondering if

the minister can answer a couple of questions.

One, will

she be able to provide for the community information to correct the

erroneous information coming from the socialists in terms of the

publishing and printing sector in British Columbia?

Secondly,

is there anything on the agenda that she could share with us that may

be undertaken in relation to pursuing the opportunity presented to us

as a result of the tariffs on lottery and lottery-related technologies

going down to zero in the first year of that agreement?

HON. MRS. McCARTHY : Mr. Chairman, I'd like to thank the hon. member for his question.

On the whole area of printing and publishing — printed paper and publishing material going into the U. S. —

the U.S. tariffs on those goods will be eliminated within five years.

Broadly, those people who really have got excellence in those trades in

our province, let alone in our nation . . . . We probably have in our

province the most creative people in the whole of this nation in the

graphic arts area. They should be totally benefited.

terms of the printing of lottery supplies etc. in British Columbia, it

has been stated by the vice-president and general manager of Pollard

Banknote (B.C.) Ltd. that if a free trade agreement is announced, it

would give a tremendous and almost immediate boost to that company, to

the extent of his identification of about 100 more jobs in British

Columbia. They are now completely precluded from selling into the U.S.

They will have the ability, and it would open another opportunity.

[3:00]

[ Page 4517 ]

It's

unfortunate that the opposition members, in their off the-record

remarks in the House when the mention of lotteries is concerned, and

the plant for the printing of lottery tickets, supplies etc., which go

all over British Columbia and Canada from British Columbia . . . . It's

unfortunate that they haven't recognized that that is an excellent

business for Kamloops and has indeed been a very good industry for the

Kamloops area. There's no question that the region has benefited from

the jobs created.

In my response to your remarks, I can say

that it is one of the sectors that should. . .and because of the

excellence in that industry, not just the banknote industry, which has

started through the Lottery Corporation here, but because of the

centres of excellence we have in the graphic arts and publishing fields

in this province . . . .

MR. WILLIAMS : It is typical.

MR. S.D. SMITH : The first member for Vancouver East (Mr. Williams) is, as usual, moving himself towards unstuckness.

MR. WILLIAMS : I'll deal with you, Charlie, in a minute.

MR. S.D. SMITH :

I'm sure you will. Maybe you and I can get into the area of child abuse

one of these days, when you deal with me. I think that would be an

appropriate discussion.

MR. CHAIRMAN : I would ask the member to direct his remarks to the Chair.

MR. S.D. SMITH :

In any event, we in Kamloops are looking forward to the opportunity to

pursue the printing side of the lottery business, and I know that there

was some sneering and carrying on going on over here a moment ago on

what the lottery business produces. Since that printing facility has

come as a result of using our purchasing power, we are now printing

those tickets in Kamloops and selling them to Spain and Malaysia. We

have also had on probably a monthly basis now people from lottery

corporations around the world seeking to benefit from the technology we

have developed here in British Columbia. Of course, as you know, there

was a tremendously successful convention of these people in Vancouver.

The

concern I have is that we can be certain and confident in that area,

that the Ministry of Economic Development will be able to pursue areas

such as the ones involving the GTECH organization that is looking for

the opportunity to build, assemble and manufacture and sell machinery,

and looking at opportunities in relationship to the sale of

technology — the technology of managing and operating a lottery corporation —

as well as the benefits of straight printing of lottery materials into.

the United States. It's one area where we have developed excellence in

British Columbia by a decision taken to move that facility from

Winnipeg to Kamloops to benefit the people here, where there is a

growth potential of tremendous size in the U.S., as 24 states have now

moved to lotteries individually, and I take it that most of them will

be over the next number of months.

I am wondering if the

minister could give us and the people of Kamloops some assurance that

she will pursue this opportunity with some vigour, given that the

Lottery Corporation is indeed mandated through the province itself.

MR. CHAIRMAN :

Madam Minister, before I recognize you, I would like to remind all

members that personal allusions in debate are contrary to the

long-established traditions of this House and that tradition has been

established in order to keep a smooth flow of debate and keep proper

decorum within the House. Madam Minister, would you proceed.

HON. MRS. McCARTHY : I know that that was intended for all members of the House, opposition as well as government side.

The

hon. member for Kamloops is. of course, interested in ensuring that the

viability and long-term benefits that have accrued to the Kamloops

region because of that plant will be not only retained but enhanced in

the years to come. There is no question in the mind of the

vice-president of that organization — who has made public comment on that — that it will, but through a free trade agreement, it definitely will.

should remind the members in the House, because it's very important to

this province, that the entry of all areas of business into the United

States will be free and unhindered in regard to doing business,

supplying services and so on. It's of particular interest in businesses

such as the hon. member for Kamloops mentioned, but if you wish to

relate to some of the businesses in the service sector —

consulting engineering work and architectural work of which this

province has probably . . . . There really isn't any equal to those in

our province in those kinds of professional services. So it will be a

big gain for us. I can certainly assure the member that to sell into

the United States of America in that way will be a great enhancement to

the economy of this province.

MR. WILLIAMS : I'd like

to read into the record, Mr. Chairman, what the Americans are saying

about the printing industry and what the Mulroney trade deal will do to

benefit them. Instead of just all this nice positive stuff from the

minister, let's hear how the Americans view this specific sector

themselves. This is the vice-president of Printing Industries of

America appearing before the United States House Ways and Means

Committee, Mr. Benjamin Y. Cooper, who is the senior vice-president for

government affairs of PIA. He said it "...provides an enormous

opportunity for the U.S. printing industry. While no one can predict

the eventual gains from removal of tariff barriers, it is our

estimation" — of his industry, and that's after analysis — "that

an additional $500 million of business could be realized by U.S.

printers through the removal of Canadian tariffs." That is the American

industry speaking before the Congress of the United States. This was

presented February 29, 1988, and published in Print Lines , their journal, in April, 1988 — that is, just last month, He expects that they will probably realize $500 million annually as a result of the trade deal.

We,

in turn, have a Canadian association. The Canadian association

independently prepared an estimate, and their estimate of the losses

for their industry in Canada was minus $500 million (Canadian). The

Americans think theirs will be plus $500 million (U.S.).

The

conclusion that the Canadian printing industry comes to in their

submission to the federal government last year is as follows: "There is

no doubt in the mind of the Canadian Printing Industries Association

.with the United States. Equally, we have no doubt that the results of

this pact will be primarily negative within

[ Page 4518 ]

the

domestic printing and allied industries." Those are the people most

affected on each side of the border coming independently to their own

conclusions, and they both conclude that Canada will be the loser out

of the trade agreement that Mr. Mulroney has signed and which you

support. So that is abundantly clear.

If we really reflect

on it, the fact is that in Canada most of our significant printing

industries are trade union organized. That is not the case in the

United States. We have an average of 40 percent trade unionization

across the board, higher in the printing industry in this province.

That's not at all the case in the United States.

addition, if a printer in British Columbia were to go into the business

and buy new machinery, he'd pay the 6 percent sales tax on machinery.

With a new major multicolour printer, it would cost you $1 million

right now in British Columbia, and you'd pay $60,000 in sales tax on

that, which you wouldn't in Washington State, right across the border.

You

can do all the Pollyanna stuff you like, but the people that know this

particular industry best have the facts, and the facts belie what you

and the member for Kamloops say.

Insofar as the Coquitlam

lands are concerned, I can understand the minister not wanting to get

into this discussion. However, she indicated she would carry out some

checks and that within five minutes she'd know regarding the servicing

questions. Maybe she could advise us.

HON. MRS. McCARTHY :

Just to speak to the printing question which the hon. member brought

up, the U.S.A. specialties have not traditionally been our specialties

in printing. They are not equal. They are not the same. I think that we

will find niches in their market just like they plan to and have

already found niches in our marketplace. A lot of American goods do

come over with the tariffs at the present time, but the printing

industry will emerge, I think, more capable in the long run. The hon.

member and I disagree on that.

You asked a question earlier

regarding the property, and I believe the project is called River

Heights, with Molnar Construction Ltd. There are no costs whatsoever to

B.C. Enterprise Corporation. There are no costs to the government for

servicing, marketing or anything else, absolutely, as I mentioned

earlier and as I thought earlier. There are no costs borne by the

government or the taxpayers on that property.

MR. WILLIAMS :

Insofar as those costs are concerned, can the minister confirm that the

Enterprise Corporation paid the development charges with respect to

that subdivision? That's a charge to the municipality which is an

overall charge per lot prior to development. In the case of these

lands, I think it was about $1,000 a parcel.

HON. MRS. McCARTHY :

There is no way I could know that. Again, I go back to my assessment

that this is the kind of question that is out of order, because all of

that was done prior to my responsibilities and is not involved in this

year's estimates. If it were, it would be under a different minister

entirely, as this came under Lands and Forests at the time.

MR. WILLIAMS :

The minister has reported on the contract which she is responsible for

carrying out. Can the minister advise what down payment was received by

the Crown?

[3:15]

HON. MRS. McCARTHY : That goes back to another era; I cannot answer.

MR. CHAIRMAN :

I'd like to point out at this time, Madam Minister, that I'm not that

familiar with the dates of these things to know what is in order. I

will call upon you for assistance — and also on you, hon. member.

MR. WILLIAMS : The minister has now established there is no interest being paid whatsoever by this developer. Is that correct?

HON. MRS. McCARTHY : Would you please repeat the question?

MR. WILLIAMS :

I'm sorry. The minister confirms that there is no interest being paid

by the developer with respect to the lands he is still to acquire here.

HON. MRS. McCARTHY :

I think I can confirm that. I believe that's the way the structure of

that transaction was formed. When the property is sold and drawn down,

then the dollars accrue to the government.

MR. WILLIAMS :

Exactly. Unlike most transactions, there is no interest being paid on

the balance, and there's a commitment to deliver the land. But in every

other case in the private sector, you would have to pay interest while

you were preparing and anticipating with respect to the development of

the rest of the lands you are going to get. In that sense, it's an

extraordinary situation. This is a significant benefit that accrues to

the developer and his partners that does not normally accrue to anybody

else in normal market transactions in these areas.

HON. MRS. McCARTHY :

The only response I have to that is to go back to the time that

agreement was made. There wasn't a marketplace for that property at

that time. It was a slow marketplace at the time, but I'm told that the

principal figure — the $20 million figure that I mentioned earlier —

was grossed up to compensate for interest, so it was a compensation for

that. In the meantime, as the lots are being drawn down, there is a

large investment again by the private sector — the Molnar construction company — on that property. In that respect, the principal figure included a projection for interest.

MR. WILLIAMS : If you look at the pattern of sales here as recently as November '87 — for example, plan 77299, some 30 lots —

the cost per lot was $20,400. There have been some sales since then,

and they are running at the $70,000 level. It's a very significant

difference. If you check on the purchase made on October 26, 1987, the

cost per lot was $30,600, and the sales in January were at the $66,650

level — a very significant difference. It far exceeds any cost of servicing.

If you check another sale purchased September 16, 1987, the cost per lot — that's plan 75755 — was $34,000. The sale — which is not an arm's length one to the Park Lane Ventures —

was at $52,000 per lot. If you check the sales again on August 18,

1987, the sale was at $34,000 per lot, and the average price was

something like $64,000 for ten of those

[ Page 4519 ]

parcels —

an increase of some 88 percent. In each case, it's a very significant

difference that far exceeds any likely cost of servicing. There was, in

fact, not an interest clock ticking despite the minister saying that

there were some negotiations there around the question of forgone

interest in the overall price.

It's very clear that this

has been an incredibly beneficial arrangement for Mr. Molnar, and

there's no question that his solicitor, Mr. Hyndman, negotiated a very

good deal. Can the minister comment on the margins of return on those

various sales?

HON. MRS. McCARTHY : Mr. Chairman,

again we're talking oranges and apples; the hon. member is very good at

that. We went through this same debate in question period. He asked me

to get the background for the same figures he's presenting today. I

did, and I showed in my answer at that time that when the developer, no

matter what his name is.... If there are any aspersions being cast on

one of the very best developers and designers that this province has

ever known.... Andre Molnar is definitely one of the best in this

province and has developed some of the most attractive subdivisions,

townhouses and condominiums in this province. So I'm hoping that the

hon. member is not casting any aspersions on the honourable citizen who

has created many jobs for this province. I think he can attest to that

as well, because he knows a little bit about the marketplace in the

lower mainland.

The comments you are making reflect on the

price of raw land and then the selling price. You forget to tell the

House, and are trying to create the impression, that along the way all

one does is purchase the land from the government and then do a quick

flip without any costs whatsoever — all profit to the developer,

to the lucky person who is able to get that land. You know that's

erroneous. We both know that is very definitely not what Molnar

Construction and the developer of this property had to live through. In

1985, when there was a very different marketplace, they had to find

money for the development, and development is a very costly investment.

Within

the price of each lot that you quote today is a price paid out by

Molnar Construction to bring that separate lot to the marketplace. They

don't do it just lot by lot, as you know: they have to do it in a large

strip. They may sell the first part, then they may have to hold on to

the investment interest on that, and on it goes. You know that full

well, but again, as I explained in question period.... I explained all

of this to the hon. member, Mr. Chairman, because I really felt that he

wanted to know the answer. You were given the answer at that time.

You

know full well that the development business is such that if they gain,

no matter what price they purchase the property at . . . . If you want

you can argue with the past Minister of Lands and Forests, or the past

Deputy Minister of Lands and Forests, or past governments, which is not

part of this discussion today. But I've got to tell you, it doesn't

matter what price was paid for the land. The investment over that time

puts his net at a very different level than you're trying to place in

the minds of the people and on the floor of the House today, and it's

unfair.

There was an alderman in Coquitlam who said at the

time you did it before that it was grossly unfair. Ald. White said:

"These people" — meaning you and referring to your public comments in this House —

"should know better. They're attacking people who are trying to create

new development and new jobs in our area and in our community."

He finished by saying: "These are the kinds of people who should know

better." Mr. Chairman, I can't say it better than he did. The hon.

member for Vancouver East should know better, and it's unfair to leave

that implication with this House and with the people of British

Columbia.

[Mr. Pelton in the chair.]

MR. WILLIAMS :

The minister also indicated that she was going to advise the House what

the other bids were with respect to the Westwood lands, and we have not

had that information today.

HON. MRS. McCARTHY : Mr.

Chairman, I opened the debate today with a statement which was very

clear. I shall, if you like, repeat it. I said that that information is

not within my ability to give, because the information requested took

place before my time, in a different era. When I responded to your

question yesterday, I thought you were asking a question that was

within my responsibility for B.C. Enterprise Corporation as well as

responsibility for the estimates of this year. The question asked was

on neither of the criteria. Frankly, I don't have the information.

We've been through this debate several times this afternoon.

Going

back to Molnar Construction, I would like to tell you that the

municipal development costs were paid entirely by the developer. The

proposal call was advertised at the time, and 17 proposals were

received. The Molnar company was, I am told, the best of all those

received. So it seems that 17 proposals had an interest; the Molnar

group was of the most interest. Again, the development costs you asked

about were very definitely paid by the developer.

MR. WILLIAMS :

The minister, in various debates over the past several weeks, has

advised the House that there was indeed a bidding process with respect

to the Westwood lands; and she indicated yesterday that she would

provide the House with the data on who those bidders were, by some

designation , and what the amounts were that they offered. Now we're

being advised that it's information she's not privy to. Is that so?

HON. MRS. McCARTHY :

Mr. Chairman, I'm glad the hon. member sees the light. It's true: I

don't have it. We took on the agreement in that particular area. We

manage the agreement; we collect the funds. All past transactions were

done in another ministry and are not within the estimates of this House

at this time — nor this ministry even.

MR. WILLIAMS :

But why, Mr. Chairman, would the minister tell us that there was indeed

a bidding process, and that there were several bidders? Now she tells

us she can't give us the information. It doesn't fit.

HON. MRS. McCARTHY :

Mr. Chairman, there are people within the ministry who recall some of

the past developments, and are giving me the information vis--vis

municipal development costs. I have been told that a proposal call was

advertised, and someone remembers that there were a total of 17

proposals in the particular area you're focusing on. I could not,

however, have any opportunity of finding that out through my

responsibilities at the present time, through BCEC — it's not there.

[ Page 4520 ]

MR. WILLIAMS :

But we are dealing with what the minister has said, Mr. Chairman, and

the minister confirmed in this House that there was indeed a bidding

process with respect to the Westwood lands. She's been talking about

the Riverview Heights lands, but there's been no evidence....

Interjection.

MR. WILLIAMS : Oh, you're withdrawing that, are you?

HON. MRS. McCARTHY : No, I'm saying....

MR. CHAIRMAN :

Hon. member, just before we proceed, I might mention at this time that

the Chair, of course, is not privy to what the minister might have said

at any other time. But I would like to interject to remind hon. members

that there are two things that I think are really important. First of

all, we all know that there is no compulsion for the minister to answer

any of the questions put to her; and secondly, there is certainly no

requirement that any questions be answered which apply to a period

during which the minister was not in control of the particular

ministry. I believe I heard the minister saying that. However, it's up

to you, Madam Minister, if you'd like to answer the last question.

[3:30]

HON. MRS. McCARTHY :

Mr. Chairman, I'm grateful for your attempt to keep order. I just wish

to explain to the hon. member who asked the last question that in the

note that was sent to me — just to be assured and to give you the

proper information vis--vis the development costs. . . . Whoever has

written the note, and hasn't signed it, says that the proposal call

vis--vis the Riverview Heights agreement apparently received some 17

proposals, and Molnar was the best in that particular proposal call.

Other than that, I cannot give you any further information whatsoever,

because it does not come under my ministry — never did. We are

simply administering the transaction, which was started by a previous

minister and ministry, and in a previous time outside the time-frame

for our estimates.

MR. WILLIAMS : The problem I have,

Mr. Chairman, is that the minister has said that there were these many

players involved, and with respect to the other lands at Westwood....

Interjection.

MR. WILLIAMS :

Yes, you got up in question period and said that; that was the way you

dealt with it at the time: it was a full bidding process. In the last

month you have said it was a full bidding process. Then yesterday you

said you could provide bidders A, B, C and D. Today you're saying it's

outside your purview; you have no understanding whatsoever. Why on

earth did you say those things previously, Madam Minister?

HON. MRS. McCARTHY :

I'll refer to this transaction for the last time, as I don't think it's

within my purview. I think you're totally correct, and I have suggested

that it is out of order. I did my best to get the information for you.

In question period you asked specifically about Riverview and Westwood,

I believe. In all of the government's transactions the bidding process

has always been carried out under the Forests and Lands ministry in a

very businesslike and tendering manner. There's no reason why I

shouldn't share that information with you. When I have it — and today I have been given just a little information —

I don't mind sharing it with you. But you really are burdening the time

of this House with something that's absolutely outside my purview, and

I do hope that you get back to questions on the Ministry of Economic

Development.

MR. WILLIAMS : Let's at least make it clear then that the minister has said in the House, with respect to the Westwood lands — you are wont to confuse the two right now —

that there was a full and complete multi-bidding process. You have

provided no data whatsoever to the House. I've asked you to provide the

data for the House. You have said you would provide examples of bidders

A, B, C, D and E. You have not done so, and it appears that you in fact

cannot. The burden of proof is with you in terms of that full bidding

process. You have not provided us with any evidence of a full bidding

process with respect to the Westwood lands.

Interjection.

MR. WILLIAMS :

The minister is asking for help from the Chairman. So be it. I think

the record is now clear that the minister is indeed not able to provide

us with that data, and that's significant.

To go back to

the trade deal, there will be a seven-year period of negotiations with

respect to harmonizing questions between Canada and the United States.

"Harmonizing" is defined as making equal in terms of what we do in

Canada versus what they do in the United States. In the United States,

30 percent of their people have no medical coverage; 40 percent of our

people in British Columbia are in trade unions versus 15 percent there;

unemployment insurance is available for a longer period of time in

Canada than it is in the United States. The agreement tends to move

towards what is called a level playing-field between the two countries.

That means there will be pressures in Canada to decrease trade union

organization, reduce unemployment insurance benefits, and so on. Does

your department anticipate being involved in these discussions with

respect to "harmonizing" as defined in the agreement?

HON. MRS. McCARTHY :

The hon. member should understand that we have agreed to the clause on

national treatment. National treatment means that in Canada we will do

those things which we want to, which we have done in the past and will

continue to do. He mentioned health services. It's interesting that in

the trade agreement of the European Economic Community the people of

Britain haven't lost any of their health services. I think he made the

point yesterday that health services would be lost, and tried to raise

fears, and to scream the politics of fear over social services as well.

He also said what tremendous social services the Europeans have. It's

interesting that they are part of the European common marketplace and

haven't lost services in their countries through the trade deals.

National

treatment gives us what we want nationally, what we have decided upon

nationally. We will treat Canada and Canadians and those living in

Canada the same as we do at the present time, and in any enhanced

social services which we may have in the future.

[ Page 4521 ]

The

U.S.A. will do the same with their people. The same thing will happen

on that side of the border. If you take the description of harmonizing,

it's not that. It's not a harmonizing in North America; it is national

treatment in the U.S.A., it's national treatment in Canada.

Again,

I reiterate that the giving up of any of our cultural, social and

health services was not part of the deal whatsoever. This is a trade

deal between the United States and Canada.

MR. WILLIAMS :

I just make the point that you can't really compare this deal between

Canada and the United States with the European common market. The

European common market is three major players — that is, Great Britain, France and Germany —

and a whole group of smaller players, who together are very

significant. The Canadian-American deal is just that: it's a 10

percent, 90 percent arrangement. So harmonizing in the European common

market is a very different exercise from harmonizing between Canada and

the United States. The social programs in Great Britain are significant

and high, relatively, but the harmonizing in the European agreement is

to move towards the Scandinavian states, i.e. the higher levels of

northern Europe. That's a very different arrangement.

What

we're talking about is harmonizing downward in Canadian terms; I think

that's the reality. Americans will argue, for example, that our

fishermen on unemployment insurance are an unfair subsidy. They will

then argue for harmonizing downwards and not having unemployment

insurance available to our fishermen, because they perceive it as a

subsidy.

We will be going through a seven-year exercise in

this harmonizing game between the feds and the Americans. The problem

is, we threw the major cards on the table in achieving this deal in the

first place, and we will have seven years of throwing more cards on the

table as we deal with these harmonizing questions. It isn't like Europe

at all, unfortunately. I wish it were so, because then it would mean

Americans harmonizing up to Canadian levels.

I guess what I

fear and what some Canadian economists fear is that Canada will end up

being the Scotland of North America. Rather than the full, free,

independent nation we are now with our own policies determined by

ourselves at the provincial and federal levels, we will end up, more

and more, like being an appendage to the more successful part of North

America. The prospect may be Canada as Scotland in North America,

rather than Canada, the true strong north and free. That's a very

different Canada than we've known through this past century.

HON. MRS. McCARTHY :

I really want to respond to the remarks of the hon. member from

Vancouver East, because he's suggesting that there will be a

harmonizing down vis--vis the health services for those in Canada, and

that Canada will get to a lower level of health services by some

magical move in a trade agreement.

First of all, you have

to know that one of the things that the United States is constantly

doing is looking to Canada as one of the models for a universal health

care system. There have already been congressional hearings on the need

for the U.S. to adopt a universal health care system. Our nation is one

of the countries which they are looking to as a model. So if there's

going to be any harmonizing, apart from the trade deal, vis--vis

universal health care, you can believe that it's the people of the

United States who will be looking to Canada as a model and will be

harmonizing upwards in their health care system. Our health care system

is not up for grabs in the U.S.-Canada trade agreement.

addition, the hon. member made some reference to the fishermen and

their concerns over the loss of unemployment insurance. That has

already been decided. That was decided in the east coast fish dispute

in 1985. In 1985, the whole unemployment insurance concept of our

fishermen on the east coast was tested. The Americans did challenge it.

They challenged it, not under a free trade agreement but under their

own business being done with Canada at the time, and UIC was determined

to be above the current trade law. It was established by a hearing and

it was established in law at that time.

Again, it is not up

for grabs in this trade agreement. It is one of those issues that are

not on the table for any kind of change. All of those social programs

that are intact, such as health, UIC and social services, as promised,

are still intact within our country and will continue to be.

MR. ROSE :

I wonder if the hon. minister would mind telling the House what clause

in the agreement guarantees social services such as medicare,

unemployment insurance and maternity benefits.

HON. MRS. McCARTHY :

In establishing what was up for debate, the Prime Minister of the

country has said: "Our political sovereignty, our system of social

programs, our commitment to fight regional disparities, our unique

cultural identity, our special linguistic character: these are the

essence of Canada. They are not at issue in these negotiations." That's

a statement made by the Prime Minister in September 1985. There is no

need to quote that which is not up for debate. It suits the socialists

in this country to bring them into the debate because it seems to be

the only thing they can make an issue out of, but it does not appear

that they can at any time point to any place in the negotiations that

the federal administration has undertaken on behalf of Canada. Again,

it is just not within the debate on this trade deal at all.

[3:45]

MR. ROSE :

I was looking here for the exact quote from the Prime Minister during

the most recent election, where he got such a tremendous majority. It

appears to me you're quoting the same Prime Minister who said, in

effect, that anybody who enters a free trade agreement with the United

States has got to be crazy. Two or three years later, because he has no

other industrial strategy, we're in it. You ask me to take the

assurances of the Prime Minister who told us flatly he wouldn't even

touch free trade with a ten-foot pole, and that's supposed to satisfy

us that there's something in the agreement that's going to protect our

social programs. It is absolute and utter nonsense. There is no part of

the agreement at all.

Here's what he said as a hopeful at his leadership convention in 1983:

"Don't talk to me about free trade. We'd be swamped.

We have in many ways a branch-plant economy in certain important sectors. All

that would happen with that kind of concept would be the boys cranking up their

plants through the United States in bad times and shutting their entire branch

plants in Canada. It's bad enough as it is."

SOME HON. MEMBERS : Who said that?

[ Page 4522 ]

MR. ROSE :

Who said this? Well, his first name is Brian. Sometimes he's given a

prefix that rhymes with Brian, but I'm too honourable to mention that

in the House right now.

Mr. Chairman, that is no assurance

whatsoever. I think the hon. member for Vancouver East has gone through

ad nauseam the pressures that are going to result from this agreement.

Let's deal with the facts. Some of the facts really concern us. Talk

about integration with the United States or more investment here.

According to Joe Clark, 46 percent of all the profits last year went to

the United States. You want more investment to go to the United States?

This is lunacy. I thought our country was not for sale. It isn't: it's

going to be given away. It's just nonsense.

Why are we

involved in all this? It's simply ideological. They believe in the

market economy. That's what it's all about: the good old market

economy. It's really been wonderful, that market economy. It's really

helped a lot of people. We've got so much faith in the market economy

that we've got safety nets all over the place to prevent the brutality

of the market economy. That's why we've got all these things we've

built for ourselves in this country that other countries envy.

What's

all this business about free trade and giving up such things as the

generic drug stuff and the national energy program and FIRA? We've

already given away our arguments. They're gone. What did we get out of

it? I would challenge the minister to stand up in this House and tell

us what British Columbia industries, in the short run, are going to

benefit from free trade. Where are these other jobs coming from?

HON. MRS. McCARTHY :

Let me respond to the hon. member, the House Leader for the opposition.

I want to just give it as quickly as possible because there are several

areas where there is a mixed impact, a negative impact, a positive

impact and a minimal impact.

There is no impact at all on

the cultural or social services of our country. Minimal impact would

probably come in transportation, construction and advertising; and

negative impact in alcoholic beverages — everybody is clear on

that, and we have been working in this area in terms of some kind of

adjustment. There are some down sides. We have had them identified

today — we identified some of them, too — in publishing,

cable TV and broadcasting. Some of the problems vis--vis cable TV. . .

. It has a potentially negative impact in those areas. We also realize

and have talked about some of the impacts in fisheries and agriculture.

However,

there are positive impacts in very many more areas: forestry and

mining; manufacturing; electronics; enhanced telecommunications;

finance; real estate and insurance; the management consulting business;

all services in regard to architecture and engineering; computer and

data engineering; tourism. There are very many more areas where it will

have a positive effect.

When I say negative, slightly

negative or having a mixed impact, let me reiterate what I said earlier

today. In areas where there is an adjustment to be made, there is a

period of time. On the whole agreement there's ten years; in some

specifics there's 20 years. So there are adjustments that can be made

in that time-frame. I think that we in Canada are up to those

negotiations.

You also referred in your remarks to the Prime Minister and his remarks. I'm

not here to defend the Prime Minister of Canada. I'm here to serve the people

of British Columbia. In the Prime Minister's remarks addressing this free

trade agreement, he very clearly stated that social programs were not on the

table. Something that happened along the way in terms of putting these negotiations

together — and it was the first time the provincial governments across this

nation were asked to do a watching brief on this particular agreement .... We

have had consistent staff people — and I would like to pay tribute to those

in my ministry who have been there as a watching brief on behalf of British

Columbia, who have brought back the message and who have taken our message.

course, through the first ministers, the Premier of our province

dealing with the Prime Minister of Canada, they have been heard and we

have been heard. To state that people change their minds over the

years.... When the agreement was introduced for the government of

Canada at that time.... It has been consistent in those negotiations

all along that social services were not part of the negotiations, and

they never have been.

MR. ROSE : I think we all know

that these things are often not made explicit. What we're talking about

is the other pressures surrounding them. The other night we were at a

dinner sponsored by Crown Forests, and we met a man who said. . . .

Interjection.

MR. ROSE :

Yes, we were doing a freebie. We heard you were there the week before,

but they enjoyed talking to us because it was so much more interesting.

MR. MICHAEL : Not so — not me.

MR. ROSE : You weren't there.

said he could not very much longer compete in the plastic bag division

of Crown, because his competition from Tacoma was paid about $5 an hour

less than he paid.

Interjection.

MR. ROSE :

What's that got to do with it? We've had people band together

collectively over the years in this country to protect their wages from

attack. We talk about all these wonderful benefits that are going to

accrue to us because we can bang our way into the United States. We'll

bang our way all right — they'll take what they want and that's

all. If things are so wonderful down in the United States, how come

Alabama, Louisiana, Kentucky and all those other places...? They've got

complete access to the U.S. market. They've got all kinds of trees down

there, acres and acres of trees planted by such names as Zellerbach,

MacBlo and others. They've got lots of trees down there. How come

they're only paying about $2 or $3 an hour? Those are called the

right-to-work states — the right to work for less. That will affect us.

We'll

be contracting out, as we are already in our hospitals and other

institutions. One of the biggest growth industries in the United States

now — or one of the biggest in the service industry — is

cleaning. Those companies will come up here. They're already up here in

the institutional catering business, and there'll be lots more of them.

you're worried about what might happen in pulp.... Let me quote that

well-known foaming-at-the-mouth radical head of Noranda, Adam

Zimmerman. In a recent speech he had this to say about free trade:

"With respect to trade in

[ Page 4523 ]

natural

resources, U.S. trade policies in the current context of protectionism

will no doubt be directed more and more towards offsetting the

comparative advantage...." Talk about a level playing-field! When we've

got a comparative advantage like we have in woods, there'll be

offsetting and protection. I'll quote him some more: "I don't believe

that there is anything in the deal that would prevent the U.S. pulp

industry from mounting a similar attack to that of the lumber industry."

we went all through this exercise. First of all, it’s supposed to bring

us cheaper consumer products; I don't believe it. It's going to create

jobs; I don't believe that either. We're also going to be protected, so

we've got a deal so our stuff can get into the States. Adam Zimmerman

says: "That's a laugh." The minister talks about how macho we are, how

good we are and how we'll be able to punch — it sounds like R.B. Bennett — our way into the markets of the world, and blast our way.

Zimmerman

says: "Clearly the deal facilitates north south trade." He doesn't

argue about that. But Canada is built east and west, so we'll lose our

east-west trade and we'll have more north-south trade. How does that

build a better country? We don't even have free trade in agricultural

products in Canada between provinces, let alone with the United States.

goes on to say: "There seems to be a kind of mindless applause at the

fact that such a deal may allow us to be in all respects like

Americans." This is what Zimmerman said — a big corporation, one

of the biggest in Canada. You'd think he'd be jumping up and down and

clapping his hands and running around doing little dances, because the

corporations are supposed to love this deal so much. More nonsense.

Who does he quote at the end here? Rudyard Kipling. "Lesser breeds without the Law" —

wasn't that one of his unracist quotes? He says: "The marvel to which

the Canadians seemed insensible. . .was that on one side of an

imaginary line should be safety, law, honour and obedience, and on the

other, frank, brutal decivilization; and that despite this, Canada

should be impressed by any aspect whatever of the United States." He

said that about 100 years ago. I would think he was pretty astute at

that.

I would also like to turn to the little matter of who

the winners are and who the losers are and who wants this stuff. I'm

going to take a little quote here from another left-wing publication of

the Canada West Foundation. It says on page 6: "Industry positions on

free trade with the U.S. by share of western Canadian employment...."

Fifteen percent were in favour and expected export to increase in

cattle.... When I was down in Washington in the last while I went to

the U.S. Department of Agriculture. They're going to take 20 million

marginal wheat acres out of production. Guess what they're going to

grow on those lands. Grass. Guess what they're going to shove the grass

through? Animals.

[4:00]

AN HON. MEMBER : Horses.

MR. ROSE :

Not horses. So those cattlemen who are dancing in the streets about

this free trade deal better think a little bit about that as well,

because they're going to have real competition for a change.

"Cattle, oil seeds" —

it goes along further. "Four percent in favour, expect no export

increase: fishing, uranium, lumber, wood industries, steel,

agricultural...."

Moderately in favour, 6 percent: food

processing, textiles, meat packing, distilling, air and rail transport,

management consulting. It certainly wasn't truckers, I'll tell you

that. They're not interested. As far a food processing is concerned, I

think they should be rather cautiously optimistic. As a matter of fact,

they should be scared, thoroughly frightened. That's not what you

thought I was going to say, was it, Mr. Chairman?

I quote

another one of these radical foamers on the left. Here's the guy from

McCain Foods. That's one of the biggest and most flourishing food

producers, totally Canadian-owned. This is what this man has to say.

He's Archie McLean, a real left-winger. He says: "These pamphlets on

free trade are a moral fraud." He told this to the Canadian chicken

marketing delegates: 100,000 jobs would be lost in the agrifood sector

in the next 15 years under the free trade agreement. He's the closest

thing we have to a tycoon who's said anything like this, other than

Adam Zimmerman.

I respect some of these men. They've done

really well in business for themselves and their companies, and I

respect their views on this matter. Zimmerman says it's questionable;

McLean says its a rotten deal and that we'll lose what few processors

we've got left. After all, Aylmer is gone. Jolly Green Giant,

Stokely–Van Camp and Del Monte own virtually all our canning and food

production industries in this country. But that's not enough: they're

going to have more, because we chickened out. Anybody who thinks those

marketing boards are going to last very long better have another

thought. A marketing board works only if you draw a fence around

something, and you fill it with your own produce, and you keep

everybody else's out. That's how it works. The minute those dairy and

chicken products and others come across the line, you don't have any

marketing board. Just ask the grape growers; you don't have anything

left.

So they'll go because the production in the United

States is so vast that there's no way they can compete against those

economies of scale. They're shooting cows down there by the thousands

under some of their programs, and the next year they've got more cows.

I know the member for Central Fraser Valley is an expert on cows....

Anyway,

let's talk a little bit more. I've got a couple of questions to ask the

minister. Those industries in western Canada indifferent to free trade:

grains, oil, gas, coal, sulphur, newsprint, government, education,

health, blah, blah, postal, insurance.... I thought insurance was one

of the industries that was supposed to benefit, according to the

minister. Legal and accounting services, construction, marine travel,

public transit, chartered buses, taxis, wholesale and retail trade.

They employ 68 per cent of the people employed in Canada; they are

indifferent to it. Opposed to it is 7 per cent: dairy, poultry, eggs,

fruit, vegetables, publishing, remanufactured wood products, plywood,

furniture, breweries, fish products. shipbuilding, wineries, fine

papers, cultures, trucking and investment dealers — they don't like it, sorry.

Out

of the total employment in western Canada in the various industries

employing our people, 68 per cent plus 7 per cent, or 75 per cent, are

either indifferent or opposed. So where's this big groundswell for free

trade? Where's it coming from? It's certainly not coming from some of

the people that I mentioned. So I have a few questions.

By the way, for the member for Kamloops, who has gone.... He probably went to buy a few lottery tickets.

MR. CHAIRMAN : Sorry, hon. member, but your time has expired under standing orders.

[ Page 4524 ]

MR. ROSE : Maybe I could welcome an intervening speaker.

MR. BLENCOE :

Mr. Speaker, we'll allow the member to continue. We're thoroughly

enjoying his dissertation on free trade, and perhaps he would continue.

MR. CHAIRMAN : The first member for Langley has asked leave to make an introduction.

Leave granted.

MRS. GRAN :

Visiting the House today we have Mayor John Beales of Langley district

and the administrator, Jim Godfrey. Would the House please make them

welcome.

MR. ROSE : I wanted to ask the minister

whether, under free trade, it will be legal to give preferential

treatment to Canadian companies as an industrial strategy — either nationally or provincially.

HON. MRS. McCARTHY :

I'm pleased to be able to respond to the opposition House Leader. Let's

take the last question first. If they're illegal now, and if they're

not within Canada's trade relationships now, they will be non-legal

afterwards. In other words, any enhancement of those that are

established or accepted now, and that are grandfathered would not be

available after the free trade agreement.

It's interesting

that you should say that at the conclusion of your address, because you

made reference to McCain. It was interesting that this morning the hon.

member for Vancouver East took the part of the big five banks. Today

the opposition House Leader takes the part of McCain. In terms of

having any self-interest in not wanting free trade, that company

certainly would be one of the most highly subsidized companies in this

country, subsidized by the federal government and in competition with

our food processors in this province. So it's interesting that you

should take their part.

The excerpts that you gave in terms

of the Canada West agreement.... That is an old study that predated the

free trade agreement. It was a contributing document — as many documents were —

leading up to the free trade agreement. The agreement was accepted by

the Canadian government, and then there was another study that came out

which you failed to mention — which was interesting. The document

that you're quoting from predated the agreement itself by over a year.

What you really should have quoted in terms of a study was their

further document. After studying the agreement once it had been cast,

the Canada West Foundation, which you have given many quotes from

today, says this:

"The British Columbia

economy will derive significant benefits from the Canada-U.S. free

trade agreement, as over 185,000 jobs are in sectors which expect to

benefit from the agreement in terms of provincial GDP. Sectors directly

benefiting from the FTA account for 18 percent of output, compared to

only 2.4 percent in industries adversely affected by the FTA.

major forestry sector in British Columbia is highly dependent on access

for its softwood lumber, shakes and shingles, pulp and paper

industries.... More secure access to the U.S. over the long term should

facilitate investment, production and job growth of forestry-based

products, natural gas, minerals and so on.... The performance of key

sectors of the B.C. economy, primarily forestry-based but also emerging

high tech industries, will lead to important spinoff benefits for

service sectors.

"The new capital investment

from Japan, Hong Kong and other Pacific Rim countries to gain tariff

free access to the U.S. will have a major bearing on the magnitude of

economic gains for B.C. under the FTA."

In a very graphic illustration in this report, dated April 1988 — far more current than the publication that the hon. House Leader is quoting from —

it says that in British Columbia.... We talk a lot about Kelowna and

other areas in this House in terms of the free trade agreement. In the

Kelowna area, the no-effect-whatsoever is 76.8 percent; the positive

effect is 18.2 percent. There is a negative effect of 4.9 percent, and

the net effect in that area is 0.13. In British Columbia alone, in the

total area, this same corporation or association that the hon. member

is quoting says that there will be minimal effects in 83 percent of the

total British Columbia economy. There will be very positive effects in

15 percent, and the negative effects total 2 percent according to their

study.

But we don't have to look to just their study. The

hon. member was quoting Mr. Zimmerman, who we all know is chairman of

Noranda Forest Inc. He has recently made some statements in eastern

Canada about the free trade agreement, and we all know, too, that in

some parts of Ontario they have been very much against a free trade

agreement. As I said yesterday, they really are sitting in a very good

position, because they virtually have a free trade agreement in terms

of the auto pact. We're simply saying that we just want equal

treatment. They have special treatment, and we want equal treatment.

Mr. Zimmerman — you tell us —

is opposed to free trade, but I'd like to quote Mr. T.M. Apsey,

president and chief executive, officer of the Council of Forest

Industries of B.C., representing all the forest industry of British

Columbia. He says:

"Our lumber industry has

been significantly more efficient than our competitors' in the United

States. We are efficient in British Columbia. Their efforts to restrict

our access have resulted in actions that effectively penalize us for

being too efficient. Under a free trade agreement, both countries would

be free to test the limits of their comparative advantages. This should

work to our industry's and to this province's benefit."

you want to make comments about another forestry firm, we take the

comments of John Howard, senior vice-president of law and corporate

affairs in MacMillan Bloedel in this province, who says: "The removal

of tariffs is a tremendous incentive to us to produce value-added

products." If you're going to quote people, make it even. I would

prefer to quote in terms of the forestry industry; I would prefer to

quote somebody who knows this industry on the ground in British

Columbia.

There hasn't been a more efficient forest

industry anywhere than in British Columbia. We are world-competitive

right now. We've done that through a very difficult process: it was

called a very deep recession. And they have increased their

productivity in that industry and the mining industry in this province

by 50 percent — something of which we should all be proud.

[ Page 4525 ]

The

selective quoting goes back to the first member for Vancouver East (Mr.

Williams), who quoted extensively yesterday and again this morning a

Bank of Nova Scotia study regarding the Canada-U.S. free trade

agreement. It's interesting that the hon. member for Vancouver East

failed to say — and I quote this from the study: "From a Canadian

perspective, the economic benefits of a successful deal are quite

considerable."

I say again that the hon. member quoted some

very negative quotes, and I think they were selectively quoted. He was

saying yesterday that the Scotia bank risk evaluation index ranged from

a maximum risk of minus 4 to a maximum benefit of plus 4. However, the

bank's overall risk assessment of the agreement, including all sectors,

was plus 1, a positive assessment. He didn't go on to tell us that end

of it. The resource and manufacturing sectors, which are of particular

importance to British Columbia's economy, were assessed at plus 3. The

study lists three specific industries with a plus 4 rating: fertilizers

and petrochemicals and segments of the paper and mining industries.

[4:15]

Let me quote again from that same bank study that the first member for Vancouver East quoted:

"Our analysis indicates that a comprehensive trade deal,

including services and agriculture, will provide a modest benefit to the national

economy from the outset. This overall judgment is supported both by an analysis

of a broad range of industries and by macroeconomic situations.... The overall

impact of the agreement still looks to be moderately positive and a marked improvement

over the alternative of risking the firestorm that promises to follow in the

wake of the omnibus U.S. trade bill."

We don't hear anything about the trade bill, which the hon. members from

the opposite side choose to ignore.

you want to start quoting free trade analyses from our country, you can

look to those which have been provided to us by the Economic Council of

Canada. They say in very clear terms that "over the past 40 years,

Canada has seen its tariff levels drop substantially" — reading from their report —

"and yet it has enjoyed the most rapid rate of employment growth of any

OECD member country." It flies in the face of the argument that the

members of the opposition have given us.

Since 1945, as I

mentioned yesterday, our tariffs in this country have fallen from

almost 50 percent to 9 percent, and since 1945 our standard of living

has increased. Our employment has increased many fold, Mr. Chairman.

Our economic prosperity has been enhanced, and it is ensured by

liberalizing the tariffs and the trade laws. In other words, in the

province and in the nation today, the average tariff on all dutiable

goods and services and products coming into Canada has been reduced

since 1945 from 50 percent to 9 percent. In that time there has been a

great increase in our standard of living and our employment picture —

our situation in Canada; and what we strive for in a free trade

agreement is to reduce the 9 percent to zero percent. In the reduction

of that last 9 percent, we will be able to see an enhanced and ensured

liberalized trade in our nation and allow our people to respond to that

situation and to those jobs and opportunities.

Let me say that the Canadian management consultants' organization, which

also did an overview — if we want to quote those who have given very much time

to assessing this — has estimated that for us there is a new $3 billion market

in the U.S.A. through the FTA.

There

are many people that we can quote. It was interesting that the

Bank of Nova Scotia was taken so much out of context; I'm glad I have

been able to put that record straight.

MR. ROSE : I

would like the minister to note a few things that I have here. One of

them is: what U.S. trade laws have been abolished since the original

signing of the document in January? Is there not before the House now a

monstrous, big — I was going to say omnibus but I will say ominous —

trade bill that will pass the Senate; and when it passes the Senate,

what good is this bill going to do for us? What kind of

dispute-settling mechanisms do we have in place in the free trade

agreement?

When we move to free trade, which is really

economic integration with the United States, I want you to tell me

whether you think our dollar will rise or fall.

MR. BLENCOE : One question at a time. Too many questions.

MR. ROSE : Too many questions? I was playing 20 questions.

the minister aware that exchange rates and the value of the dollar are

probably more influential on trade than anything else, including free

trade? She mentioned yesterday the C.D. Howe Institute. Studies there,

empirical evidence of free trade, a 1 to 1 percent difference in the

GNP. One study — this probably was done by Canada West — said 9 percent. But the Economic Council of Canada at that time — and that was last summer in Milwaukee, in the middle of a tornado — said 1 percent. That's all the difference it made — 1 percent.

Of course we had 50 percent tariffs in the Bennett years — more Tory years — and in the Hoover years. Of course trade is enhanced by lowering tariffs —

nobody argues that, not at all. But there are a few little things that

have happened since those years too. You might remember World War II;

that made a big difference to the kind of economy we had. We threw out

all the Tories and the conservative approach, and we recovered, due to

a combination of Franklin Delano Roosevelt and probably Mackenzie King

and a few other interesting people who came along at that time.

Anyway,

there are some questions. Remember the deep recession in the forest

industry? I remember it, all right; I was here in 1983. I know you

fired about 3,000 schoolteachers and a whole flock of civil servants.

That ought to teach them to be more efficient. That's what you said

about forestry: what this country needs is lots of unemployment, and

then everybody will get efficient. That's what we want: more

unemployment, and we'll become terrifically.... This whole thing leaves

me absolutely wilted.

What's the relationship between

Canada's agricultural trade and the United States in the last four

years? Do you know? I can't play this game, because I don't have much

time — I'd like to. One billion bucks. Every year they're selling

us $1 billion more than we sell them. And I'm not just talking about

oranges and bananas, either: things that we can produce, but we can't

produce them because there is no level playing-field in

agriculture — none whatsoever. We're seasonally disadvantaged.

Their land prices and water prices and subsidies are all bottom-loaded.

The land they have is far cheaper and far more massive. Some of it's

marginal, but not as marginal as ours is.

[ Page 4526 ]

You

keep up this free trade and kill the wine industry, and you'll blacktop

the Okanagan. That's probably what you want to do anyway.

AN HON. MEMBER : Shame!

MR. ROSE : Oh, I don't think so. I think it was kind of a reasoned approach to the problem.

Well,

there are a few questions, Mr. Chairman. I've got all kinds more. Are

we going to have cheaper imports? Sure we are. Where are they going to

be made, if we're importing? Not here. Is it going to enhance our

exports? I've seen no proof of it. Most of the people don't even want

it. What programs have you got for the losers? What programs have you

got in place for the wine industry, the printers, the truckers? The

council of boat manufacturers, the Brewers' Association — that's out of it now —

the Auto Parts Manufacturers' Association, furniture manufacturers,

generic drug manufacturers, the Canadian Conference of the Arts — all these people are opposed to it.

Those are a few questions. I'll have some more later.

HON. MRS. McCARTHY :

First of all, let me correct a statement attributed to the Economic

Council of Canada. I have the latest Economic Council of Canada

bulletin, and I'll read it to you. May 1988: "Free trade should have a

modest but positive impact on economic growth and job creation in

Canada. By 1998 the trade agreement is projected to result in about

250,000 additional jobs. Real economic growth will have been boosted

2.5 percent above what it would have been without the agreement." The

hon. member who has just taken his seat said, as if it were a fact of

life, that the Economic Council of Canada had said 1 percent. He was

only out by a quotient of three.

MR. ROSE : On a

point of order, I made it perfectly clear.... I wouldn't want to

mislead the hon. minister unless I thought I could get away with it.

Nevertheless, what I did say was that I was down in Milwaukee last

summer, and that's the report I had.

HON. MRS. McCARTHY :

Also, I think in the beginning of his set of questions he mentioned the

omnibus bill in the United States. I understand that it has passed the

Senate, and there is anticipation and expectation that it will be

vetoed by the President. That's an aside to where that is at this time.

Of course, we won't know until that is done.

He talked

about dispute settlement. The dispute settlement provisions of the FTA

are superior to those of any other free trade agreement or GATT and

constitute a significant improvement over the current domestic trade

laws. One of British Columbia's key objectives in the trade

negotiations was an effective trade dispute settlement process. This

has already been achieved, in our opinion, and the FTA's dispute

settlement provisions represent an important break with the increasing

pattern of American unilateralism in determining recent trade disputes.

We have in this the establishment of a formal and effective

adjudicative mechanism for resolving trade disputes between Canada and

the U.S. It's a major achievement in international trade law. The

time-limits set out for every stage of consultation, conciliation,

arbitration and dispute adjudication will ensure that matters are dealt

with expeditiously. The ability of bi-national panels to make binding

decisions on anti-dumping, countervailing duties and safeguard cases as

well as certain other cases the permanent Canada-U.S. trade commission

designates as emergency action will provide greater certainty and

security of access to United States markets for Canadian exporters.

You

made reference to the great growth of the economy since 1945, and you

seemed to say that it was a comparison between the Depression and

coming out of the Depression. But it has clearly been attributable, in

terms of economists, to the fact that along with that we have been able

to take away the 50 percent tariffs on goods, as I say. We are really

just saying now that this is another step in the chain of removing

those barriers. We've already done so, and there was no hue and cry;

there was no loss of sovereignty. There was only an increase in

employment, productivity and our standard of living. Getting away from

that last 9 percent, which has to come through a trade agreement....

Otherwise it will not be achievable. There is no question that this is

just a step along the way. It is said by the Consumers' Association, I

believe, that each family in British Columbia will be better off in

terms of consumer goods by about $800 per year.

[4:30]

MR. MICHAEL :

It's very interesting to listen to the debate from the members

opposite. Last year we heard much reference to the tremendous programs

in the wonderful province of Manitoba — all kinds of references to

the great things that were happening there in economic development, the

great initiatives. This year, Mr. Chairman, all we hear the opposition

referring to is Adam Zimmerman. We've come a long way. I can say I'm

sincerely looking forward to next year's debate, to see where we will

be getting our quotes from the members opposite.

certainly haven't heard anything about the great province of Manitoba

and their economic development initiatives in this debate, as a result

of the tremendous election that has recently taken place, where the

party that was in power last year has sunken not to the official

opposition but indeed way down into third place, in that wonderful

province where all those great initiatives were taking place.

the members want to refer to competing south of the border, competing

with our products in the eastern part of Canada, I would ask them to do

one simple thing: go out to the exporters, the traders, and get a price

on a carload of freight to be shipped from Victoria, Vancouver or any

spot in the lower mainland. Get a price on exporting to either Toronto

or Montreal, have a good look at the price of exporting that carload of

freight, and then compare it with shipping it on the seaboard through

the many ports we have in the province to such places as Los Angeles,

San Francisco and San Diego. Then come back, have a look and compare

those two figures, and you will see why we in British Columbia will be

able to greatly expand our manufacturing and export facilities into the

southern area, particularly California and Oregon, and make some great

strides in creating economic development and jobs in the province.

I think

back to the many times over the past years, going down to the States,

looking at the cost of products down there — electrical products, refrigerators and microwaves —

and listening to people say: "Why can't we get those prices up in

British Columbia? Why can't we get the same prices in Canada that we

see on the labels in the United States?" Here we have an opportunity,

through the free trade agreement, within a ten-year period, to do just

that: to get those prices landed here in British Columbia and Canada,

and to save all

[ Page 4527 ]

that

money through lower prices, putting additional dollars into the hands

of consumers and housewives, so they can demand even more goods and

services, thus creating more jobs in British Columbia. The average

working stiff is going to be a lot better off because he is going to

have more purchasing power in his hands than he had before. He can get

those products he sees across the line and land them in British

Columbia cheaper than what he had before.

We've heard other

quotes. I would ask the members opposite, if they haven't read it to

this point, to please get the document put out by Prudential-Bache in

February 1988. If you can't get a copy from the library and you don't

have a copy in your files, contact me and I'll send you over a copy and

you can have a look at it. There are some very interesting tables in

it. It's one of the best documents I've read regarding free trade and

the tremendous strength that we in Canada have in our economic

competitive position with the United States.

I'm going to

take the liberty of reading into the record some of the quotes from

this very interesting journal. Hopefully the members opposite will pick

up a few of the points along the way. In the early pages it says:

"The United States and Canada trade more with each other

than any other two countries, with the volume and value having grown remarkably

in recent years. In 1970 bilateral trade totalled about $21 billion Canadian.

A decade later it had quadrupled to $96.8 billion Canadian. In only six years

more it soared to $173 billion Canadian. By comparison, in 1985 United States–Japan

trade totalled about $91 billion U.S., and trade between the United States and

West Germany, $29 billion. In the same year trade between the United States

and all the nations of western Europe amounted to about $136 billion."

So you can see the tremendous growth in trade between these two countries —

the largest trading partners in the entire world.

1960 Canadian exports to the United States were a paltry $3 billion.

Conversely, United States exports to Canada were $3.7 billion. They

were sending to us $700 million more than we were sending to them.

Let's go to the most recent figures of 1986. Canadian exports to the

United States, $95.7 billion; United States exports to Canada, $77.3

billion. That's a dramatic change.

Indeed, we in Canada are

showing that we are competitive. We can meet the Americans head-on. It

has long been thought that for some reason or other our Canadian

businessmen aren't quite as sharp as the Americans, that we can't stand

up to them, that we can't compete. Let me tell you, Mr. Chairman: that

is not the fact. These figures that I'm about to read prove that more

than anything that I've ever read having to do with free trade.

average, the Canadian firms in the survey anticipate even fewer

adjustment costs than the American firms and, again, report that they

can handle them. More than half of the Canadian firms estimate that

their exports to the United States would grow by between 10 percent and

20 percent after a free trade agreement. That's very indicative of the

growth that can be expected once the free trade agreement comes into

effect on January 1 next.

Canada is also the most important

single export market for United States goods. Approximately one-fifth

of all United States exports are sold to Canadians. This is very

important, Mr. Chairman: Canada buys twice as many U.S. goods as Japan.

We buy more from the United States than the total sales from Mexico,

West Germany and Britain combined. Ontario alone purchases more goods

from the United States than Japan does.

This. Mr. Chairman,

is indicative, because I'm sure that a lot of people in the country

think that Japan is the United States' greatest trading partner. This

document and these figures prove that it is just not true.

Other interesting statistics are noted on page 20 of this report. It reads:

"Professor Alan Rugman, using Statistics Canada data, reports

that in 1973 Canadian investment in the United States totalled about 10 percent

of U.S. investment in Canada, in line with the familiar 'ten-to-one ratio.'"

Now listen to this: "But by 1985 Canadian direct investment in the United

States has reached nearly 60 percent of United States investment in Canada."

That's

a very dramatic increase, a growth of six times in those few short

years. That's a tremendous growth. It shows once again our ability in

British Columbia and Canada to meet the Americans head-on. I for one am

certainly not at all afraid of a free trade agreement and meeting the

United States head-on.

Again reading from the document:

"The

stream of new foreign investment into the United States became a flood

in 1986, and Canada's investment position in the United States swelled

as well. The U.S. Commerce Department reports that Canadian ownership

in the United States in 1986 — including corporate acquisitions. joint ventures, new plants, plant expansions and real estate —

rose by U.S. $6.7 billion, versus U.S. $2.6 billion of new investment

in 1985. If this trend continues, in 1991 Canadian investment in the

United States will equal United States investment in Canada."

The

members opposite should listen to this. The population of the United

States is approximately ten times that of the Dominion of Canada, yet

our investments in the United States are nearing a match with United

States investment in Canada.

"In terms of the

number of acquisitions, Canadians rank even higher. Between 1984 and

1986, they were second only to Britain, totalling 137 transactions

compared to Britain's 216."

In the table on page 22, table

7, this document gives an illustration of foreign investment in the

United States and compares Japan with Canada. In the five years they

illustrate, it is clearly shown that Canadians are investing more in

the United States than the Japanese. To me that was remarkable. The

figures show that in a five-year period Japan invested $69.7 billion in

the United States. Canada's investment in the United States was $72.8

billion. It's more evidence of the tremendous strength of Canada, the

confidence that we have in our entrepreneurs and our business and our

corporations in meeting the Americans head-on.

"Canada's

presence in the United States is substantial and growing. Canadian

players are increasingly active in the U.S. economy. Canadian

investment comes in all shapes and sizes. Canadian firms set up in the

United States to protect established markets or to move into a bigger,

more diverse economy.

"Canadians own almost 400 United States manufacturing enterprises, second only to West Germany.

[ Page 4528 ]

Canadian companies employ 527,000 Americans, almost 20 percent

of all employment by foreign affiliates in the Untied States."

Very significant statistics, and I'm sure statistics that the members opposite don't like to hear.

Further

to that, when you look back at transportation equipment, you see that

Canadian exports into the United States marketplace increased 430

percent in the years from 1977 to 1986, nine short years. During those

same nine years, the percentage from the United States to Canada

increased 249 percent. We nearly doubled them in that area of

competition on transportation equipment. Communications and electronic

equipment: Canadian exports to United States went up 613 percent in

those same years; United States to Canada, 502 percent. We beat them by

111 percent in that field. In industrial machinery, our increase was

289 percent; their increase to us was 209 percent. Again, we beat them

by 80 percentage points. Other equipment and tools: Canadian exports

increased 659 percent; United States to Canada 248 percent. We beat

them by about 2.5 times as to their exports to us. Other consumer

goods, Canadian exports 525 percent; United States exports to Canada

230 percent. In that case, we nearly doubled their performance.

It's

indicative that the members opposite and the CLC are teaming up to try

to defeat an initiative that, in my view, has nothing but positive

results. The statistics show that we in Canada do not have to hang our

head to our American neighbours. Our business people, our

entrepreneurs, can meet them head-on. I believe that the free trade

agreement, come January 1, 1989, will show more employment, better

roads ahead and a more prosperous British Columbia.

[Mr. Rabbitt in the chair.]

HON. MRS. McCARTHY :

The publication that the hon. member has just quoted from.... Bache and

Co. is a very respected organization. Some of the figures that he has

given us today have been useful in this debate.

One of the

things that I think we have to remember, and one of the last points

made in the report which was read to us and quoted from today, is to do

with Canadian investment in our country leaving home. The reason that

Canadian investment over the years has left home in very many examples

is that they cannot jump or overcome that wall of tariffs. So they have

left Canada to go and put installations in the United States. A U.S.

trade agreement will allow them to come home or allow less of that

flight of money to go south from our province and from our nation.

[4:45]

Something that hasn't been suggested: there's no question it also

gives us an access. We had comments about the marketplace, but from

Alaska to California we're talking about a marketplace of 40 million

people. The hon. member who has just taken his place has pointed out to

us that that's quite a remarkable marketplace to add to a province of

less than three million people.

One of the things that

hasn't been suggested and we must emphasize is that in a province that

has $5.5 billion in procurement — that is, our Purchasing Commission and our government purchases $5.5 billion —

we're talking of having access to federal and state procurement that is

$140 billion. We're talking about $140 billion in federal and state

procurement opportunities added. Through the free trade agreement, we

will have access to federal and state procurement. In addition, the

Canadian investment will not leave.

I think overall

that what we can understand in our province today and have understood

very clearly since the world recession we lived through.... One of the

lessons we learned through that recession is that we have to have a

very competitive edge in this province and that we are dealing with a

world economy, and we have to have an attitudinal change as well. That

attitudinal change will be of great advantage to us in our competition

with the world.

The hon. opposition House Leader said that we won't be able to have access.

He shakes his head when I say that the procurement is on the table for it. It

is not yet negotiated, but it is on the table for negotiation and has that ability

of $140 billion. We in this province already....

MR. ROSE : We've lost on it.

HON. MRS. McCARTHY :

We haven't lost on it. It's under negotiation and will be negotiated,

and is one of the opportunities to be negotiated under the FIFA.

addition, this province will probably be far more able to take

advantage of those kinds of opportunities, plus the business

opportunities, because we have established in this province something

no other province or state has. We do have an electronic system by

which we can get those opportunities before every small hamlet,

community, business and individual in this province.

I'd

like to thank the hon. member for his remarks regarding the Bache and

Co. report, because they are very positive, as have been most of the

reports that have been done.

MR. ROSE : There are so

many things flying around here, I hardly know where to start on this.

First of all, I'd just like to give the member for Shuswap-Revelstoke

(Mr. Michael) a little update on buying a microwave. I've got a report

here dated March 12, 1988, in the Sun

under free trade. It says that if the average cost of a microwave is

$430, its duty is $27. That duty will be reduced by $2.70 per year over

the next 10 years. So that poor working stiff who wants the microwave

is going to have to wait 10 years for it.

MR. MICHAEL : That's going in the right direction.

MR. ROSE : Well, there are lots of things coming along we didn't even know.

You talked about all our exports. Guess what they are? They are largely Auto Pact and resources —

lumber, gas and electricity, and about a million barrels of oil a day

squirting down to the United States because it's largely owned by

American companies and that's where their market is and that's what

they want it for.

Sure, the average working stiff might

benefit from cheaper prices. Everybody's interested in benefiting from

cheaper prices. There are lots of cheap prices in Hong Kong. I just

came back from Bangkok; there are lots of cheap prices there, but what

kind of a standard of living have they got? They have no standard of

living.

Here's a little quote from Eric Kierans, a nice

fellow: "A glance at history shows that neither the United States nor

Canada has ever believed in laissez-faire government or in free trade

theory. If they had, all manufacturing would have taken place in Korea,

Hong Kong, Japan, etc., long since. Consumers would have found prices

cheaper, but since many would have lost their jobs, where would they

find the incomes to purchase the cheaper goods?"

[ Page 4529 ]

Both

the minister and the member talked about investment and how much

Canadian investment has gone to the United States, and isn't it

wonderful how it's growing. It's sure wonderful. I just wish more

investors would invest in Canada. That would be kind of helpful,

wouldn't it, if they invested in Canada? There are all kinds of

investments that could be made in Canada without offending anybody's

ideology.

Here's what some of the banks have done.

"Canadian

banks are owed about $28 billion Canadian by debtor countries in Latin

America and the Caribbean." They didn't invest in Canada. "Yet while

these Canadian missions are urgently hunting for investors, the

country's major commercial banks, aided and abetted by the federal

government, are pouring billions out of the country. And much of the

investment capital that has left our shores in the past 15 years will

have to be written off .... By the standards of any normal individual

citizen, that is a pattern of behaviour touched with lunacy. But it is

condoned and encouraged by the bankers, politicians and bureaucrats."

Eric Downton, "Commentary," Vancouver Sun , June 15, 1987. Shameful!

don't think this debate is about free trade at a