1986 Legislative Session: 4th Session, 33rd Parliament

HANSARD

The following electronic version is for informational purposes

only.

The printed version remains the official version.

Official Report of

DEBATES OF THE LEGISLATIVE ASSEMBLY

(Hansard)

MONDAY, MAY 12, 1986

Afternoon Sitting

[ Page

8149 ]

CONTENTS

Oral Questions

College transfers. Mr. Nicolson –– 8149

Westar Timber. Mr. Lea –– 8149

Mr. Howard

Inspection of motor vehicles. Mrs. Dailly –– 8150

Coquitlam reservoir. Mr. Parks –– 8150

Attendance of cabinet ministers. Mr. Williams –– 8150

Casino gambling. Mr. Hanson –– 8150

Proclamation of Financial Information Act. Mr. MacWilliam –– 8151

Power and freight rates for Louisiana-Pacific. Hon. Mr. Brummet replies –– 8151

Ministerial Statement

Expo 86. Hon. Mr. Richmond –– 8152

Committee of Supply: Ministry of Energy, Mines and Petroleum Resources estimates. (Hon. Mr. Brummet)

On vote 20: minister's office –– 8152

Mr. D'Arcy

Mr. Davis, Mr. Hanson, Mr. Skelly, Mr. Nicolson, Mr. Lockstead, Mr. Williams

MONDAY, MAY 12, 1986

The House met at 2:05 p.m.

Prayers.

HON. MR. GARDOM: Mr. Speaker, we are indeed honoured today

with the presence in your galleries of a number of distinguished

visitors from the great city of Guangzhou in the province of Guangdong.

They're all senior representatives of the Guangdong Science and

Technology Commission, led by His Excellency Vice-Governor Huang

Qing-Qu of Guangdong. Accompanying him is Mr. Lu Zhong-He, director of

the Guangdong Science and Technology Commission; Mr. Shen Yi-Li, deputy

director; Mrs. Wang Yi-Zhen, deputy director of Guangdong Energy

Technology and Economy Research Centre; Mr. Li Guo-Quan, secretary of

the Guangdong provincial office; and Mrs. Zhu Xiao-Jian, deputy

section

chief of the Guangdong Science and Technology Commission and the

interpreter. They are all here on a brief goodwill and information

exchange tour of our province.

They've already enjoyed Expo. Yesterday they visited Cominco at

Trail and the agricultural research station in Penticton, and were

hosted by my colleague the Minister of Education (Hon. Mr. Hewitt).

Earlier this morning they toured Pat Bay Fisheries, and tomorrow

they're going to be seeing Discovery Park Microtel, plus a presentation

from B.C. Transit. Mr. Speaker, this again is a very good example of

the close cooperation between our two countries, and indeed our two

provinces. I would like all members to bid them a special welcome.

Further, may I say Chung gwok loy der pung yao. Fan ying, fan ying .

MR. REYNOLDS: Mr. Speaker, in your gallery this afternoon are

Shirley and Bill Brown from Squamish, British Columbia. Shirley is the

chairman of the board of trustees of School District 48, Howe Sound. I

wish the House would make them welcome.

MR. REE: In the precincts today are 45 students, 34 of whom

are from the College St. Charles Gremer in Quebec City. They are

visiting with students from Balmoral Junior Secondary School in my

constituency. They have participated in seeing Expo and are over

enjoying the sunshine of Victoria. They are under the guidance of Mr.

E. Stephens from Balmoral school, and the students from Quebec are

under the guidance of M. and Mme. Bertrand Lavoie. I ask the House to

welcome them.

MR. REID: Mr. Speaker, it gives me a great deal of pleasure

to introduce two people from Alberta who are in your gallery. One of

them is Janet Koper, MLA for Calgary Foothills; and a special hand for

the former Whip of the Alberta Legislature, Sheila Embury. Can we make

them welcome.

Oral Questions

COLLEGE TRANSFERS

MR. NICOLSON: Mr. Speaker, a question to the Minister of

Post-Secondary Education. The universities have recently announced

limits on the number of transfer students from the colleges. I am sure

the minister realizes that whether the limit is 750 or 70,000, it has

created real, irreparable harm to the image of the colleges and to

their marketability.

What negotiations has the minister entered into on behalf of the colleges with the universities?

HON. R. FRASER: Mr. Speaker, to the member, and to everybody,

in fact: the college system was built so that those students who do not

live in the lower mainland can receive a post-secondary education.

Because of the statement of the University of British Columbia senate,

I have spoken with the president of the university and mentioned to him

the idea that we do not want to restrict access for college students

any more than we would restrict access to third and fourth year by

university students. They're trying to work on a system that will grant

every able student a good education, and the colleges should not be

worried about one statement in one newspaper article.

MR. NICOLSON: To the same minister: in view of the fact that

the story is out there, and that students are making that career choice

today, what of substance can the minister offer to the students and to

the reputation of the colleges in terms of the integrity of their

university transfer programs?

HON. R. FRASER: One statement by one member of one faculty

from one university does not impinge upon the credibility of any of the

college systems.

WESTAR TIMBER

MR. LEA: Mr. Speaker, I have a question to the parliamentary

secretary for Forestry. At the end of last week I asked the minister

whether he had any knowledge of an impending sale of the pulp mill in

Prince Rupert now owned by Westar. Over the weekend I have confirmed —

it is now a fact — that not only are the two pulp mills in Prince Rupert

up for sale, but the pulp mill in Castlegar is also up for sale. Westar

is desperately trying to sell those two pulp mills, and I'd like to ask

the parliamentary secretary whether he has any knowledge of those mills

being up for sale by Westar.

MR. MICHAEL: Mr. Speaker, in response to the member, the answer is no.

MR. LEA: Is the parliamentary secretary aware that both of

those pulp mills are becoming very quickly obsolete and that the reason

Westar is putting them up for sale is that they say they are so

debt-ridden that they have no money available to retool and update

those two pulp mills — either the one in Castlegar or the one in Prince Rupert —

and that they are desperately trying to sell, hoping that someone else

will have the money? Is the minister aware that that's the situation

with Westar: that they have no money to retool, and therefore those two

mills are in jeopardy?

[2:15]

MR. MICHAEL: Mr. Speaker, I thank the member for that information, and I assure him I will relate that information to the minister.

MR. HOWARD: I'd like to ask a supplementary question of the

minister who reports to the House for the B.C. Development Corporation.

May I ask the minister whether he

[ Page 8150 ]

can confirm that BCDC has in fact been in

discussions with Westar with respect to the relationship between Westar

and an international corporation, what were those discussions, and in

what way is BCDC working towards the event of perhaps selling the whole

thing?

MR. ROSE: Who is it?

MR. SKELLY: There's no minister responsible?

MR. HOWARD: Perhaps I could redirect that question to the Minister of Finance then.

HON. MR. CURTIS: I was just going to do that, Mr. Speaker.

On behalf of my colleague I'll take the question as notice. I will

speak to him tomorrow, I trust, and inform him of the member's question.

INSPECTION OF MOTOR VEHICLES

MRS. DAILLY: In the absence of the Minister of Highways, I'm

going to direct my question to the acting minister, who is the Minister

of Tourism.

To the Minister of Tourism: the Vancouver Police Department has

issued statistics showing that the number of injury accidents in the

first three months of this year has doubled compared with the same

period last year. Has the government decided to stop its irresponsible

opposition to motor vehicle testing in the interests of public safety?

MR. SPEAKER: Hon. member, part of the question is in order — the first part. The second

part is not in order.

HON. MR. RICHMOND: Mr. Speaker, I will be happy to take the part that is in order as notice for the minister.

MRS. DAILLY: A supplementary to the minister. It was three

years ago that the government took the health and safety of British

Columbians into its hands by closing down the safety testing program.

Three years later the lack of safety standards is starting to show in

the condition of our cars on the roads today. What is the acting

minister going to do, and when is he going to admit the truth and clean

up the number of unsafe vehicles on our roads today?

HON. MR. RICHMOND: I have already offered to take the question as notice, and I shall. I'm certain that the minister will bring an answer back.

MRS. DAILLY: The Social Credit government has attempted to

divide the people of this province on this issue. In the interior they

say that it's a lower mainland problem. Has the minister considered

what happens when unsafe vehicles from the city are run at high speeds

on our highways?

COQUITLAM RESERVOIR

MR. PARKS: Mr. Speaker, a question for the Minister of

Environment. This past weekend many of my constituents — and I would

think a great number of lower mainland residents —

were somewhat alarmed to learn that the Coquitlam water reservoir was

shut down, or at least taken off line, for the supply of water to the

greater Vancouver region because there was purportedly a showing of

radioactive material in that reservoir. Could the minister advise the

House what efforts are being taken to bring about a speedy

clarification as to the status of that particular reservoir?

HON. MR. PELTON: Mr. Speaker, I wouldn't want to be accused

of eating up the clock, but there's a little preliminary information

that maybe should be provided before I come directly to the question.

As many members might know, the federal government runs a number of testing stations across Canada — 28

in total. There is one in Vancouver and one in Whitehorse. They test on

a regular basis for fallout but, of course, since the Chernobyl

incident they have been doing it on a more extensive and intensive

basis. It's the radioactive fallout in rainwater which would affect the

watersheds and water supplies for the greater Vancouver regional water

district, of which they have three.

Extensive testing has been done, Mr. Speaker, and I do have

statistics from the tests. However, one that was taken towards the

weekend showed an increase of radioactive iodine-131, and it was on the

basis of this information that the regional district decided they

should shut down the one reservoir, and the municipalities provided

with water by that particular reservoir would be provided from the

other two. Subsequently it has been found that because there's been

ongoing testing of the water.... The word they used was that an anomaly

occurred in this particular instant; that the results of the test were

inaccurate and the amounts of radioactive iodine in that water are

practically immeasurable at this point.

I have had some complaints, mostly from some of the mayors whose

communities receive water from the GVRD. Their complaint was that they

hadn't been notified of what was happening, but other than that I think

everybody can be assured that....

MR. NICOLSON: We heard that on "Daybreak."

HON. MR. PELTON: You heard that this morning? That's good.

ATTENDANCE OF CABINET MINISTERS

MR. WILLIAMS: To the House Leader. The Minister of Industry

and Small Business Development (Hon. Mr. McClelland) on Thursday last

indicated that he would be reporting back with more answers to

questions today. The minister is not here today, and some eight or nine

ministers are not here today. Can the House Leader advise the House

when these ministers will show some respect for this Legislature?

HON. MR. GARDOM: Well, I tend to think, unlike the hon. member, they

always show respect for the Legislature.

CASINO GAMBLING

MR. HANSON: In early March, police forces indicated that they

were concerned about the lack of controls surrounding commercial casino

gambling in Vancouver, particularly in premises that serve alcohol. On

March 11 the Provincial Secretary said that she would conduct a review

of all of the commercial casino gambling operations, particularly in

downtown hotels where liquor is served. Will the minister

[ Page 8151 ]

advise whether this review has been completed in the last two months?

HON. MRS. McCARTHY: I thank the member for the question. We have been

putting together some regulations and conducting a review. There is one part

of that review that is not yet complete, and that is a report from some law

enforcement officers which we believe will be coming fairly shortly. We will

be making those new regulations and the report of the total review, for which

I have a great deal of concern, available to this House and to the public very

shortly.

MR. HANSON: A supplementary to the minister. Would the minister advise

the House who is conducting the review — who has the responsibility for

the review?

HON. MRS. McCARTHY: Officials in my ministry, with assistance from law

enforcement officers, not just in our province but in other provinces as well.

MR. HANSON: Supplementary to the minister. Is the commissioner in charge

of issuing the gambling licences involved in the review?

HON. MRS. McCARTHY: I don't believe so, Mr. Speaker, the reason being

that although we have had some suggestions from that person, that person is

being moved from his position. Therefore we are not relying on his position

to give us the material. There are other people in our ministry who will be

doing so.

MR. HANSON: A further supplementary. Would the minister advise what

position that person will be moved to and why he is being moved from his position?

HON. MRS. McCARTHY: I'd be pleased to take that question as notice,

because my staff have yet to make that announcement, and I would prefer to have

them make it.

PROCLAMATION OF

FINANCIAL INFORMATION ACT

MR. MacWILLIAM: Mr. Speaker, in the absence of the Premier,

the Attorney-General (Hon. Mr. Smith), and the Ministers of Municipal

Affairs (Hon. Mr. Ritchie), International Trade, Science and Investment

(Hon. Mr. McGeer), Highways (Hon. A. Fraser) and Labour (Hon. Mr.

Segarty), I will address my question to the Minister of Finance. More

than a year ago this Legislature passed a new Financial Information Act

to bring sunlight into the operation of Crown corporations. I think

that in his own address the minister even named it the "sunshine bill."

I wonder if the minister could advise this House why, after all the

pomp and ceremony of introducing and passing the bill, the government

has refused to proclaim this legislation.

HON. MR. CURTIS: Mr. Speaker, the member's question contains

a number of theories which are not correct. He concluded his written

question with: "Why has the government refused...?" That is an

assumption on his part and it's an incorrect assumption.

I found one or two problems associated with some of the regulations

which it was proposed I take to the executive council, and they've gone

back. That process is taking a little longer than I would like. I don't

intend that to be humorous — longer than I would have liked. But the

regulations will in fact be presented in draft form to the executive

council quite soon.

I cannot conclude the answer without observing that in the last

several years this government has undertaken incredibly important

disclosure legislation with respect to government finances.

Interjection.

HON. MR. CURTIS: The Leader of the Opposition laughs, but then he has nothing else to do these days than chuckle at questions.

The record stands for itself, starting with the appointment of an auditor-general.

Interjection.

HON. MR. CURTIS: They can laugh in their discomfiture, Mr. Speaker.

The fact is that this one particular regulation is being worked on

and refined, and I'm sure that we will have it in place quite soon.

MR. NICOLSON: Mr. Speaker, as is customary during question period, I would like to raise a point of order on something that came up.

In answering one of my questions, the Minister of Post-Secondary

Education (Hon. R. Fraser) acted upon what I would consider

misinformation, and had the effect of not intentionally misleading the

House but nevertheless leading to some misunderstanding. It is my

understanding that it was the university senate, by majority vote, that

made that decision, and that it goes to the board of governors; it was

not an individual. I say that because there is some sensitivity in this

House as to the thoroughness with which members do their work. I would

not want anything of that nature to reflect upon me, the minister or

any other member of the House.

MR. SPEAKER: While the intent of the member's statement on a

point of order can be appreciated, hon. members could see that if we

entertained this type of point of order, we would have clarification

upon clarification. I'm sure that there will be ample opportunity for

members to make such clarification at other times, without reflecting

on what has happened — for clarification — at the conclusion of question period.

POWER AND FREIGHT RATES FOR LOUISIANA-PACIFIC

HON. MR. BRUMMET: Mr. Speaker, last week I took as notice a

question from the member for Vancouver East regarding whether there

were any special concessions from B.C. Hydro regarding the

Louisiana-Pacific issue.

I have checked into that, and I have learned that there was no

discount rate provided. There's no discount on installation. There's no

transmission allowance. They are paying the ordinary distribution rate

level for large users, probably comparable to a large secondary school.

They don't qualify to receive any surplus power or any other special

rates, because

[ Page 8152 ]

they are a new industry and therefore don't qualify

for incremental sales. In effect, Mr. Speaker, there are no deals of

any kind from B.C. Hydro to Louisiana-Pacific.

[2:30]

EXPO 86

HON. MR. RICHMOND: I would like to make a brief statement, in my capacity as the minister responsible for the Crown corporation Expo 86.

During the first three days of the fair, Mr. Speaker, we had an

overwhelming response from the public, so much so that many people

approached me, expressing the desire to have season's passes and

wishing that they had purchased them instead of the three-day pass. I

subsequently took that to the board last Monday, and during the ensuing

week we have had many requests from people who would like to literally

trade in their three-day pass on a season's pass.

I am happy to report that at this morning's board meeting it was

decided that anyone who has purchased a three-day pass to Expo 86 may

turn it in to the corporation for a full refund for any unused portion

on a season's pass. I know that a lot of people will be happy with that

decision, as they intend to attend the fair many times.

I am also pleased to report to this House that, if anyone didn't see

it yesterday, we welcomed the one-millionth visitor to the fair at

about 2 o'clock yesterday afternoon. I can also report that we have

done extensive visitor surveys as people are leaving the exposition and

can report to the House that any problems or complaints have been of a

very minor nature. We have worked to correct them as quickly as

possible, but the overall reaction to Expo has been very positive and

very good.

MR. REID: Mr. Speaker, I seek leave to make an introduction.

Leave granted.

MR. REID: In the galleries today are Miss Lois McLean and 23

of her grade 4 and grade 5 students from the A.H.P. Matthew Elementary

School in Surrey. Would the House please make them welcome.

Orders of the Day

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

ESTIMATES: MINISTRY OF ENERGY,

MINES AND PETROLEUM RESOURCES

(continued)

On vote 20: minister's office, $197,228.

MR. D'ARCY: First of all, I want to wish the minister a

speedy recovery from whatever is ailing his right foot or his left

foot. He seems to be doing rather well getting around the buildings

anyway.

Interjection.

MR. D'ARCY: If there are any rabid socialists around, I don't think a Socred would be hurt by being bit.

Initially I want to talk about something which is tremendously

important in my region and also important in the minister's region.

That is the question of fair property taxation on assets owned by

British Columbia Hydro.

There was a time in this province, before the minister came in here,

when the government did not pay its fair share on property it owned.

Its tax rates were frozen at 15 mills regardless of the assessment,

regardless of the jurisdiction. But at least they were fairly unfair

around the province. They did not pay part taxes in Victoria, full

taxes in 100 Mile House and no taxes at all in Valemount.

Similarly, today we have the British Columbia Railway not paying

property taxes, but they don't pay property taxes on their right-of-way

and yards the way CP and CN do anywhere in the province. They don't

pay, say, no taxes in North Vancouver and part taxes in Quesnel and

full taxes somewhere else.

Similarly, B.C. Ferries don't pay taxes on any of their terminals anywhere.

British Columbia Hydro is the only Crown agency in the province of

British Columbia that pays full taxes or grants-in-lieu on some of its

property, partial taxes on others and on other major generating

projects none whatsoever.

Now it happens that being from the interior of the province I have

fairly strong feelings about this. I have a belief — and I hope the

minister relates to this — that

if B.C. Hydro had not been paying taxes on its property, say, in the

city of Vancouver or on its many generating projects in the Fraser

Valley or on projects even in the Bridge River–Lillooet area, this

situation would have changed years ago. But because the major projects

and the major assessments that Hydro does not pay taxes on are in the

West Kootenays, in the upper Columbia and in the Peace River, where the

minister is from, the popular opinion in this province — and

particularly the press gallery here, which doesn't pay any attention to

anything that goes on in this House or anything that goes on in the

province beyond the Pitt River, if even they get as far as the Pitt

River....

MR. ROSE: That's my riding. They get there.

MR. D'ARCY: But you wish they'd come more often. Because of

that, British Columbia Hydro and the government of B.C. have been

getting away for years without paying property taxes in an equal way

throughout the province. That is not fair. I know it's not directly

under this minister to do something about that, but since he is, in

part, responsible for B.C. Hydro, I would like him to impress upon the

Finance minister and the members of Treasury Board this terrible

inconsistency that still exists in British Columbia, particularly in

this discriminating way against the West Kootenays, the upper Columbia,

the Big Bend part of the Columbia, and the Peace River region of this

province.

In case somebody says: "Oh that's going to put rates up," we're

talking about less than I percent of Hydro revenue. In any event, the

point is that most parts of the province receive this benefit, and

every dollar that any corporate taxpayer doesn't pay we know affects

the local taxpayer where that tax isn't paid.

Now I want to talk about something else before I get into aspects of

B.C. Hydro rates, which I want to discuss before this chamber today. I

know the minister will understand this because it relates to his

riding. It's the question of power corporation tax rebates in the

federal government. B.C.

[ Page 8153 ]

Hydro does not pay income tax, but the private utilities in this province —

those retailing natural gas anywhere outside the lower mainland, and

the West Kootenay Power and Light Co., who supply power for the

southern interior — all pay income tax. For about 15 years the federal

government has been returning 90 percent of corporate income tax to the

province of origin. In B.C. It's around $10 million a year. In other

provinces, when the federal government does this, the Energy ministry

or the Finance ministry, as the case may be, rebates those dividends to

the customers. The money does not go back to the companies; it is

rebated to the customers.

Now this sounds like I'm giving the opportunity to the government to

institute something that, just to coin a phrase, we could call social

credit. We could suggest, and I am suggesting to this House today, that

in view of the fact that B.C. Hydro does not pay any corporation income

tax, it would be entirely appropriate to rebate to the customers of

private energy utilities in this province money that they pay as part

of their rates and that comes from their region directly to the

customers. Now whether the minister wants to do it through the

Utilities Commission, through the companies or directly through

government is up to the government to decide. But that money should go

back to the customers of the natural gas utilities in the interior and

in the north, and to the customers and municipal authorities who sell

and distribute power through the West Kootenay Power and Light system.

It's not money that should be left in general revenue.

I want to talk to the House today about the question of prebuilding

electrical energy generating facilities. In the last few years B.C.

Hydro should have had a windfall of about $400 million. Should have

had. I say that because B.C. Hydro has been selling about $150 million

a year more in export power than it used to average; B.C. Hydro has

saved $150 million in wages and salaries because they fired over 3,000

people; B.C. Hydro's domestic sales have also gone up by about $100

million. That's about $400 million. In addition, rate increases have

added a further $200 million. Now what's happened is that the interest

charges as a result of construction of Revelstoke and Cheekye-Dunsmuir

have required B.C. Hydro to come up with an extra $600 million that

they have had to take out of the B.C. economy. I'm not going to get

into the discussion of whether those decisions to build

Cheekye-Dunsmuir and Revelstoke should have been taken; the fact is,

they were taken. Money was borrowed in a major way, and the interest

has to be paid on that debt.

Now before the government gets into any further generation facility

construction for export or otherwise, the people of British Columbia

should have more than reasonable assurance that they're not going to

have to pay for any shortfall that comes from charges associated with

any future hydroelectric developments or developments of any other sort

in this province. In reviewing the Blues from last week I noted that

the minister, in responding to comments from the member for

Cowichan-Malahat (Mrs. Wallace), stated that the reason he wanted to

build the Site C project was because the government studies showed that

the government would get the best benefit — the people of B.C. would get

the best benefit. This was the cheapest project that could be built on

a per unit cost of hydroelectric energy. He criticized the member from

Cowichan for being, as he said, opposed to megaprojects, because he

said the smaller projects she was talking about were in fact going to

cost more, and if she could show that the smaller projects would be

more cost efficient he'd be willing to look at them.

Well, there is a smaller project. It happens to be in my own

constituency, but that's coincidental. The Keenleyside Dam built in the

1960s on the Columbia River has never been machined. Hydro's own

studies show that per kilowatt hour that dam could be machined for a

lot less money than any power from Site C. I'm suggesting to this House

here today that even though it's a much smaller amount of power,

because we have such a large amount of surplus in British Columbia at

this time, if the minister means what he says, that he is prepared to

go ahead if more electrical generation is necessary with the project

which gets the government, and hence the B.C. consumer of energy, the

most "bang for their buck" — because it's going to be borrowed dollars —

then he should be looking at all potential energy projects, not just

dismissing all projects and saying that Site C is the only one that

needs to be looked at.

I'd also like to point out that if we are to have export energy —

and again, that's a reality; it is not a question of whether the public

in B.C. wants to have projects for export, or thinks it is a good idea;

that's the way the government is going — then it makes sense to have

projects which are built at site, "site," in the case of export, being

the 49th parallel. It's nearly 800 miles from Site C to the U.S.

border. It's only 30 from Keenleyside. So when one considers line

losses, transmission costs to the U.S. border, and lord knows there's

going to be enough cost once the power gets over the border, if the

government is going to go that route they certainly should be looking

at projects near the U.S. border rather than farther away.

I want to talk to the committee about the impact of royalties on

hydroelectric power on the economy of British Columbia. I think the

House well knows that I've spoken many times about these royalties and

the effect that they have had on my own constituency. But the fact is

that my own constituency is really a microcosm, on a provincewide

basis. There has been a horrendous impact of electricity sales taxes,

electricity royalties, on the entire economy of British Columbia.

We heard again in this Legislature ringing speeches before the

minister came into the House about how bad mineral royalties were, how

there should be no mineral royalties, that they were killing the mining

industry. Mr. Chairman, the royalties on the electricity that the

mining industry in this province has to have to function — and mining

is incredibly electricity sensitive — are far more onerous in real or

actual terms than any mineral royalties that we ever saw passed by the

previous administration.

Mr. Chairman, do we have a time problem here?

[2:45]

Interjection.

MR. D'ARCY: Three minutes. Thank you.

I want the minister in his discussions with the Treasury Board to do

what he can to reduce those royalties, because he's minister of mines

as well as energy. Those royalties on electricity impact incredibly

heavily on the mining industry, and very heavily on the smelting

industry in British Columbia — even more heavily. If we are to increase

employment in B.C., if we're even to save the jobs we have now,

especially in the value-added area, especially in the area of

diversification, we cannot put taxation disincentives on those

industries.

I know the minister is going to tell this House, as he did last week: "Think of the property tax reductions which the

[ Page 8154 ]

government has done." The fact is, Mr. Chairman,

the property tax reductions which the government did recently have

scarcely restored property tax rates to what they were before the

government put them up in the late seventies and early eighties, and

there has been no reduction on electricity royalties over the same

period. But we all know that commodity prices in some areas in this

province today, especially the mining industry, are lower in real terms

than they were even in the depths of the 1930s depression. Yet in the

face of these increases, in the face of the depression that we're in,

in terms of commodity prices the government raised royalties.

I'm going to sit down, Mr. Chairman. I'm sure some other member will have comments to make.

HON. MR. BRUMMET: Regarding the property tax, I believe that

as a basic rule Hydro pays tax on property such as buildings or that

sort of thing in any municipality. It is — and has been — exempt from

paying property taxes on the massive reservoirs and generating

facilities. Not everyone may agree with that. It is, I guess, a stroke

of geography or whatever as to where the major highly expensive dams

are located, so I suppose those rivers are considered a provincial

resource. If all of these were assessed at their market value and the

tax paid to the municipality in which they, by coincidence, happen to

fall, then those municipalities would in effect be quite rich at the

expense of the other ratepayers throughout the province, because

whatever Hydro pays out it does have to take in. I don't know whether

there's any way to settle that argument. There are payments in lieu of

taxes; there are property taxes paid on all but the generating

facilities.

As far as the rebates from the federal government — corporate income

tax —

I really can't comment on that too much from an energy side in that

it's more a matter for the Ministry of Finance. I suppose it's a matter

of if you rebate in some form to users all of the taxes collected — to

project it to the ridiculous extreme — then I don't know where

government would get the revenue for all of the services that are

expected to be provided.

With respect to the prebuilding costs, I guess it's easy enough with

hindsight to project that you shouldn't have done it; that you would be

richer if you had not done it. But I think I have to go back a little

further in time and simply say that had that attitude been prevalent in

this province for the last 20 or 25 years, we would not have many of

the industries and tax-paying businesses that have been attracted by

electricity. Yes, when the projections were made, when the Revelstoke

dam and the Cheekye-Dunsmuir projects were undertaken, the best

projections from presumably the knowledgeable people indicated that

these would be required. At that time no one predicted the recession

that has hit us since 1982; the projects were well underway, and at

that point do you mothball a project in the middle or complete it with

the jobs?

There are indications now that within a short period of time the

surplus that has been generated will be utilized. If the Revelstoke

project hadn't been in place, Hydro would not have been able to export

the power that they did to get the $245 million in net revenue from

export sales over the last year. Every effort has been made to utilize

that power. Since it is in place, it doesn't make sense to shut the dam

down and run the water around it if there's any possible way to utilize

it — through aggressive export marketing and the discount sales for

incremental use to try to increase the amount of power being used, and

therefore gain some revenue from the water that flows either through or

around the turbines. So every effort has been made to recover that as

best as possible.

It's easy enough to predict that if you didn't have any of these

costs, then you would have made money. But would the rate increases

have been accepted by the B.C. Utilities Commission? Would that $400

million that the member mentioned be there from rate increases, from

all the export sales, if these projects were not in place? Projections

are made, and it's a question of also dealing with critical water

years. In other words, the capacity of a hydro system has to be

considerably in excess of the demand, because we deal with peak loads

and peak draw. And to the extent that it is possible to make use of the

short-term surplus, I think it has been done very effectively by B.C.

Hydro.

We were talking at that point about the Site C project. Yes, in

relative terms it is a.... Storage is established; it's basically a

run-of-the-river dam, reusing water that's already going, which allows

for integrated management between the three darns. So I hold my

position that in relative terms it is one of the projects that could go

ahead most economically. I did not exclude Keenleyside or Murphy Creek;

those are in the plans. But I think the member knows that Keenleyside

is about 160 megawatts, as compared to 900 to 940 from the Site C dam,

and that is in the Hydro system plan. The surplus from Revelstoke is

projected at maybe a couple of years, depending on the growth of the

economy — and there are some pretty good signs of that. So Keenleyside

and Murphy Creek are included in all of Hydro's plans. We know that

within a relatively short time, whether that be five or eight years,

we're going to need the power from the Site C project. And the idea, of

course, is to try to build it now — and we need jobs — and to get the

Americans to help us pay for it. That would be good economy. In other

words, we've done very well from the export of hydro power, and the

benefits have flowed back to the users in British Columbia. So that

concept can be carried on. If we have large amounts of firm sales and

those benefits can flow back to the people of British Columbia, which I

think they can, then it makes sense. But there's no question about it:

Keenleyside and Murphy Creek would be built concurrently or somewhere

in the same framework, depending on what the technical experts agree

on. So I wasn't saying that Site C was before Keenleyside; it's in

integrated management with that.

The water tax has long been a point of contention. As the member

knows, the government capped that to the inflation increase. I think it

realizes something in the neighbourhood of $200 million to the

province, and is a way, I suppose, of spreading a tax over the

widespread domestic market. Of course, it's also attached to export

sales, so it does help us in that respect. I'm sure there will never be

agreement on that. We've tried to take some measures to.... In the last

three-year program, announced in the budget last year, quite a bit went

to the mining industry to try to make their life easier. It is a tax —

it certainly is considered a tax. One of the things I'm concerned about

is: is the member saying in effect that we should place no value on the

water resource? If we treat water as a resource in this province and

pay no attention to it or give it no value, then I'm a little bit

concerned if that's the attitude he's reflecting in his comments. I

don't know whether he intended that.

I think I've covered most of the items that the member has dealt with; I'm sure if I haven't, the member will remind me.

[ Page 8155 ]

MR. D'ARCY: On the point of British Columbia Hydro property

taxation, I'd like to illuminate the minister a bit, in case I was not

sufficiently articulate when we first discussed this.

The minister seems to believe that because hydroelectric projects in the Peace River — the ones that he is most aware of —

do not pay property taxes, none do. What I'd like the minister and this

House to know is that all energy projects, if they were built by a

private company, pay taxes at exactly the same industrial assessment

rate as any other industrial operation. That applies to Alcan's and

Cominco's operations. It applies to those hydroelectric and thermal

generation projects that were built by Hydro's predecessor, before it

was expropriated, the British Columbia Electric Co. Those hydroelectric

projects, particularly ringing the lower mainland and the Fraser

Valley, as well as those in the Squamish, Cheekye, Bridge River,

Lillooet area, were built by British Columbia Electric, and they pay

property taxes exactly the same way as Cominco and West Kootenay Power

and Alcan do; exactly the same way that the petroleum and natural gas

industry pays property taxes. They don't get a free ride.

[3:00]

What I'm suggesting to the minister and to this House, Mr. Chairman,

is that Hydro should have a consistent property-taxation policy, and

the government should have a consistent property-taxation policy. All

Hydro-owned property should pay taxes at a consistent rate, wherever

they may be in the province; not some paying full taxes, if they're in

the lower mainland or the Bridge River area; not paying half taxes,

like Seven Mile or the Kootenay Canal; and not some paying none at all,

such as the Bennett or Mica dams. It should be consistent.

If the government wants to eliminate the Hydro property taxes, fine.

Well, it's not fine; I wouldn't like that, and I don't think anybody in

the southern interior would, but I'm sure people on the Hydro system

would. But at least they should be consistent and fair throughout the

province. That was why I used the analogy, Mr. Chairman, of B.C. Rail

and B.C. Ferries. Both of these corporations do not pay property taxes

on much of the property they own, but at least they're consistent: they

don't pay property taxes in Saltspring but not on Pender. B.C. Rail

doesn't pay property taxes in North Vancouver but not in Prince George.

They don't pay taxes anywhere, and they should, because CP and CN do.

I find myself in a situation, as a social democrat, appealing to

right-wing people across the way, saying: why don't you make the same

rules for the public sector as you do for the private sector? That's

what I'm saying to this House. The same rules that you apply to a

private utility, whether it's producing or retailing, or transporting

natural gas or electricity, should apply to the publicly owned utility,

British Columbia Hydro. You make the rules; you make them

administratively, and don't even need a legislative change here.

Answering another point the minister made, saying some municipalities would

get huge windfalls: I don't know — maybe the minister does — of any hydroelectric

project that's exempt that falls within municipal boundaries. Perhaps we'd have

some chameleon boundaries that would suddenly be redrawn. I know Keenleyside

is partly in the city of Castlegar. But the primary recipient of property taxes

would, in fact, be the provincial government, because most of these are in unorganized

territories. Sure, regional district functions, such as recreation and garbage

and planning, and so on, would benefit. But let's remember once again, the private

utilities pay taxes; the public utilities should too.

[Mr. Ree in the chair.]

On the question of the rebate, Mr. Chairman, it was federal

corporate taxes we were talking about. Once again, if B.C. Hydro paid

corporate income tax, and that money was sent back by Ottawa, I would

say that's reasonably fair. The government keeps it and spends it on

the Coquihalla highway, or however they want to do it. It goes into

general revenue. It goes to service the provincial debt, which has been

growing much faster under this government than under previous

governments — whatever general revenue wants to use it for. But the fact

is that it's only the private utilities serving the interior and the

north that pay corporate income tax federally; it's only those that pay

corporate income tax provincially too. That money comes back into the

provincial treasury, and it's not rebated to the regions from which it

originated; that's the point. In other provinces it is: it is rebated

in some form or other to the regions in which it originated.

I used the term "social credit" in its literary sense, hoping that

the minister would understand what I'm talking about, especially since

he does not come from an area where the gas utility is served by

British Columbia Hydro. In my area we're not served by B.C. Hydro in

either natural gas or electricity. So this is effectively a subsidy

from the southern interior and other parts of the interior to the

general taxpayer in the province, to the lower mainland and Vancouver

Island. It's not a big subsidy, but whenever we come across some sort

of alienation from the interior or the north, it is relatively picayune

items such as this that cause it.

I thought I made clear in speaking with the minister that I was not

here in the chamber today saying the Revelstoke Dam should not have

been built when it was built or that Cheekye-Dunsmuir should not have

been built. The fact is they were. The money was borrowed, and the

interest has to be paid. The interest charges on those two projects —

I'm not talking about paying off the principal, just the interest

charges and other operating costs, including the water tax — are around

$600 million.

Last summer it was commonly said that Revelstoke was selling $1

million a day. That's what government apologists said: $1 million a

day. Now it seems to me that should have meant export sales from

Revelstoke alone would be $365,225,000. But we all know, as the

minister said himself, that total export sales were in the

neighbourhood of between $250 million and $300 million, and we also

know that Revelstoke contributed only about $150 million of that. That

$100 million came from other generating stations in the grid.

The fact is that I am not arguing Revelstoke should not have been

built. It is a magnificent engineering feat. It is one of the most

difficult engineering projects ever undertaken in this province because

of the soil and rock conditions that were encountered there. But the

fact is that those two projects, Revelstoke and Cheekye-Dunsmuir,

between them — and Cheekye-Dunsmuir does not generate a single kilowatt

for export or any other reason — are costing the B.C. economy about

$450 million in hydro rates after the additional export sales that

Revelstoke generated.

The point of this discussion is that I don't want the government

running off and borrowing $2 billion or $3 billion, further lowering

the province's credit rating, if there is not going to be offsetting

revenue to avoid impacting on

[ Page 8156 ]

pensioner and pulp mill alike in terms of hydro

rates. That's the point that I want to get over to the minister and to

the members on the government bench. I've got to be careful with that.

I think the Social Credit caucus has sunk to three. I think we've got

you four to three, Mr. Chairman.

So that's what I want the minister to understand, and that's why I

brought up the case of Keenleyside. The minister is quite correct. I

just used that as an example. It happened to be one close to home for

me, but it is a much lower-cost project. Yes, it generates a lot less

power, but if the government is going to pell-mell go ahead and borrow

money for export purposes, let's be a little bit conservative about it — or what we used to think of as conservative.

Again I use a private sector parallel. If you had a company in the

forest industry that had a facility for making 2-by-4s, and they

couldn't sell all the 2-by-4s they were making now, and even if they

could they didn't get full value for their cost, the shareholders, I am

sure, would think they were crazy if they went out and borrowed a bunch

of money to greatly expand the capacity to make 2-by-4s. Yet that is

exactly what the government proposes to do through its energy arm, B.C.

Hydro. It is the taxpayer and the ratepayer of this province who

underwrite this kind of borrowing.

I sometimes think, when it comes to the export of energy from this

province — and I am not standing here on the principle of whether or

not the province should be exporting energy —

a succession of governments, especially this one today, have treated

energy much in the same way that some agricultural marketing board

might treat surpluses. Where the marketing board says: "We have to

maintain the price of yogurt or apples or whatever it is at a certain

rate because of the costs we face. But if we have surpluses of 10

percent, 20 percent or 30 percent, well, we'll sell that outside the

province for 10 cents on the dollar, if necessary, or 50 cents on the

dollar."

What happens is they make a subsidy to foreign economies, and that

is what happens with energy in the province of British Columbia. We

have surpluses, yes, for whatever reason, of hydroelectric power. We

end up selling it for less than what we sell it for to the hard-pressed

British Columbia consumer and the hard-pressed British Columbia economy.

I think we have to realize that: that while the government has been

selling more and more power, it has been getting less and less money in

actual terms on a unit price — only about 60 percent last year in actual

terms on the unit price of what export power was getting in the early

1980s. So even though the total revenue is up, we are selling far more

power — on a unit price, getting less for it. But the cost of building

these projects and transmitting the power has not gone down, and it is

not going down.

So I ask the government to be careful on behalf of the British

Columbia economy, because the industries in British Columbia which

provide the employment that keeps this province going are electricity

price-sensitive. They're natural gas price-sensitive. The costs of

these are largely within the minister's jurisdiction.

I want to talk to the minister again, through you, Mr. Chairman,

about something that we discussed in question period over a month ago.

We discussed the question of royalties on natural gas. One of the

minister's predecessors brought in with great fanfare a few years ago

the Govier royalty system. They said: "This is going to protect the

consumer, because we're going to tie the price of natural gas to the

price of petroleum, so relative to the price of petroleum, the customer

in British Columbia, both the residential consumer and the industrial

customer, will not get gouged." That's what the government said. But

they must have changed their minds somewhere along the way, because the

price of petroleum has been going down, as everyone knows, but there

has been no significant decrease in natural gas prices sold to the

distributing utilities in B.C. for retailing to customers — both residential customers and industrial customers.

The minister said at the time that he would get back on that issue.

I'm hoping he's had time to review that situation and tell us something

about whether or not the government still has a commitment to tying the

price of natural gas in B.C. to the price of petroleum, especially when

the price of petroleum is going down. The government really liked the

royalty system when the prices were going up. We're wondering if they

like it as much when the prices are going down.

I want to ask again if the minister has any information on when

there are going to be further decreases in the price of petroleum

products at the pump and for home heating purposes. The minister used

to say — or maybe will still say — it takes 90 days to work through the

system. Well it's been 120 days since the low-cost petroleum has been

working its way through the system — and probably more like 130 days. We

are still six cents to ten cents over and above what the retail price

of gasoline should be. We are still, in some parts of the province, 20

cents a litre Canadian over the price being charged in Washington

state, even though they buy petroleum on the same world market as our

refiners do. I know taxes are higher in Canada. I'm speaking of the

Canadian national taxes, Mr. Chairman. But 20 cents a litre? I know

British Columbia taxes are higher than state taxes, but not to that

extent. I'm wondering if the minister can tell this House whether he

has had discussions with the industry in terms of further reductions in

the price of petroleum at the pump.

I have some more material, but perhaps we could hear some responses from the minister now.

HON. MR. BRUMMET: Just to try to deal a bit more with this

Site C issue, or building, the member compares it to running more

2-by-4s through. I think he's knowledgeable enough to know that it

takes quite a few years from the time you decide to start construction

before the power actually flows from a hydroelectric project. So you

can't wait until, say, 1992 and then find out that your projections....

You know, you sat there and waited, and then to try to start to build

the dam which is going to take you.... You're going to be out of power

by the time it gets built. So there have to be best projections made of

what it's going to be five years or eight years down the road, and you

have to build to that. So obviously you can't make the comparison with

how many 2-by-4s you crank out through a sawmill. Hydro has an

obligation to meet the electricity demands in this province, so they

have quite a different, bigger role than some of the private

corporations.

[3:15]

I think the member would be aware that the private corporations,

even though they are private utilities, as few as there are, pay some

corporate income tax. They also have a lot of write-offs that Hydro

doesn't. They also don't have the obligation to have enough power to

sell when the demand increases later. All they have to worry about is

their particular operation. I think the member must be aware that

particularly

[ Page 8157 ]

Alcan — I don't know if it applies to every utility — certainly pays

a lot lower water tax, about one-twentieth of the water tax, because

most of the power is for their own use. So they have other advantages.

The member keeps making the point that you should charge, say,

property tax on a several-billion dollar investment — Revelstoke Dam —

and that the province would collect this money, a provincial as well as

municipal tax. Well, if that kind of money is being paid, it's going to

have to be reflected in rates. So the government would be in effect

collecting tax for all the resource developments in the province, and

then somehow or other giving it back to the people through rebates.

That's what you're suggesting. I have a little difficulty following

that. If you follow that to its logical conclusion, the government

should charge itself property tax on the parliament buildings — I don't

know what value you would put on it —

because that would make it fair with every other operation. There is

quite a distinction between courthouses and private sector operations,

which are basically designed not to serve the public need but the need

of that group. There is a distinction, and B.C. Hydro is a Crown

corporation. It doesn't seem to make much sense for the government to

indirectly charge itself a lot of taxes to make it fair with others. I

don't know how much further I can go on that one.

The member is also concerned about the royalties on natural gas

being tied to the price of petroleum. Yes, there's a commitment there,

and the government has been structuring the wholesale price of natural

gas and making the revisions, customarily on August I for the last

couple of years — that's not customary, but it has become a tradition. I

don't know that we can restructure that rate every week or every month,

following up and down with the price of natural gas. If the price of

oil stays down, presumably the price of natural gas goes down as well.

The member also knows that the price of natural gas to the consumer is

affected to a large extent by industrial use because the per unit cost

of transportation, which is a heavy factor, is built in. If we lose the

industrial sales, then that will feed back as price increases to

domestic consumers. You can't legislate that away without taxing them

some other way to try to support that. It's important that we keep up

industrial sales and that we hold our export sales market. The border

price for gas is not less than the price for comparable sales in

British Columbia. I guess the member could challenge me on that and say

that there are some specific spot sales below that. But whoever is

selling that must average it so that the average is still at the deemed

border price, which is based on the wholesale price to B.C. Hydro.

As for gasoline at the pumps, it's a constantly flowing thing. There

wasn't some magical date and then everything else flows from that.

Prices have been going down at the pumps, and I believe that the

wholesale price of.... Well, just to give you a comparison, the

gasoline cost at the refinery was 28 cents in early February. It has

gone down just over 13 cents at the refinery and 13.5 cents at the

pumps. So it is sort of flowing with that. How far it will go I don't

know. There has now been a sort of turnaround. Whether the prices will

keep going down.... I'm sure they've gone down quite a bit since the

beginning of April. There was another 1-cent reduction by some of the

companies just last week. So I am assuming that they will follow the

competitive market. I am sure that prices will go down if the price of

oil goes down and stays down. On the other hand, there are indications

that that may be reversed, that they may be stabilizing. Then at least

both consumers and producers — and everyone — will be able to know what

to base their prices on, if they stabilize. I think I've answered the

member's questions.

MR. D'ARCY: I'm not going to belabour the point of fair

property taxation, because it would seem that the minister is either

unable or unwilling to understand the principle. Just for his

information, though, these parliament buildings do pay property tax,

and so do courthouses in British Columbia, and that's entirely my

point. They do pay property taxes, and so do a great proportion of B.C.

Hydro's hydroelectric generating facilities around this province. They

do pay property taxes, exactly as though they were owned by a private

company.

AN HON. MEMBER: A great proportion of them?

MR. D'ARCY: A great proportion.

Interjection.

MR. D'ARCY: Yes, that's the point I'm making to the House.

AN HON. MEMBER: Which dams pay taxes?

MR. D'ARCY: The ones that British Columbia Electric built,

the ones that were privately owned before being expropriated by the

Social Credit government of this province, paid property taxes or

grants in lieu exactly as they did when they were privately owned. The

point is that there is an unfair....

MR. CHAIRMAN: Order, please. Possibly you're dealing here

under the jurisdiction of the Minister of Finance (Hon. Mr. Curtis), if

you're talking with respect to taxation, which is not within the

purview of this minister.

MR. D'ARCY: It's partly under the jurisdiction of this

minister, but I don't want to belabour the point. I make the point to

you, Mr. Chairman, because you represent one of the North Vancouver

constituencies. I don't think your municipal, school board and hospital

authorities would be very happy if B.C. Rail paid no taxes on their

railway facilities in North Vancouver but you knew that up the line

somewhere they were paying part taxes in some communities and full

taxes in others. That's the point we're making to the minister here.

Anyway, we'll leave that one. As I say, the minister is either

unable or unwilling to understand. We feel more acutely about that in

the West Kootenays, I think, because we lost so much by the decisions

made by government to develop hydroelectric power by B.C. Hydro in the

West Kootenays and the upper Columbia. We lost forest land, and that

was revenue and jobs; we lost tourism potential; we drowned favourable

mineral showings, some of which may well have developed into mines —

it's pretty hard to mine underwater; and we lost agricultural land. And

then we found out in the West Kootenays that unlike the privately owned

generating facilities that produce hydroelectric power, those owned by

B.C. Hydro were not going to pay property taxes.

Mr. Chairman, something far more important economically, far more important to the people of B.C., is the gravity

[ Page 8158 ]

tax — the water tax. The minister says Alcan, which

generates its own, only pays one-twentieth as much as everybody else.

That's a very good point. There are no bauxite mines at Kitimat or

anywhere in British Columbia. There is only one reason that there is a

smelting facility in Kitimat: low-cost hydroelectric power,

self-generated. The reason that Alcan doesn't pay a tax on gravity like

all other electricity consumers in British Columbia is that they were

smart enough back in 1948 to sign a deal with the government that

prevented the government from raising the tax on gravity — that tied it

to the retail price of aluminum. That was very sensible; it was

sensible on the part of the government of the day, and it was sensible

on the part of the Aluminum Co. of Canada.

Now, Mr. Chairman, I want to get back to the other smelting

operation in British Columbia, and that's in Trail. Exactly as with

Alcan in Kitimat, the critical industrial raw material input into that

operation in Trail is low-cost, self-generated hydroelectric power. It

is perhaps a little more obscure to the minister, because there are

mines in the province producing silver, lead, zinc, cadmium, bismuth —

perhaps 20 metals. The ore doesn't come from South America the way it

does in Kitimat. This operation supports the mining industry in British

Columbia, not owned just by Cominco but by a number of other private

companies — mines that would not be viable without that operation to

refine those ores. Mr. Chairman, their royalty on electricity should be

tied to the average selling price of their finished products exactly

the way Alcan's is in Kitimat.

I can use a parallel with the forest industry. Electricity is

important, but the single most important input is of course trees, and

the price of wood. The government for years and years — for decades — in

this province has had a variable royalty system on trees. They call it

stumpage. When the average selling price of lumber, pulp, paper and

plywood goes up, the stumpage goes up, and when the average selling

price goes down, the stumpage goes down. Same deal as Alcan has in

Kitimat. If the government of the day — and I hope it's not for too much longer —

wants the non-ferous mining industry in this province, and if they want

a refining industry and a smelting industry that is job-intensive, they

have got to recognize the principle that the key input is low-cost

hydroelectric power, not the availability of ore at site, any more than

Kitimat exists because of the availability of ore at site. The

government has to realize that. They don't. Maybe the minister does,

but a number of his colleagues on the treasury benches don't understand

that.

Mr. Chairman, I suppose we could talk about these issues

indefinitely, but I think we'll try to deal with what we hope will be

quality rather than quantity, and hope the minister has some favourable

responses. Even if he can't make commitments today on these things, at

least perhaps he will give a commitment to take these points to his

Treasury Board colleagues.

HON. MR. BRUMMET: Yes, I represent Hudson's Hope, which has a

couple of big dams in the municipality, and I know that it would be

very nice if they got huge taxes from Hydro. As minister responsible, I

also have to recognize the possible ramifications of that. As an

individual, I would love to see everything that happens in my

constituency pay taxes. As a minister, I don't quite have the same

luxury, and would like to do that. I think there's no question that

low-cost power, trying to attract industry to British Columbia, to

maintain industry, to support the mines.... Yes, I can certainly

support that.

The cost of hydro generation. The demand was growing. I'm assuming

that in all of the facilities built to increase that demand, people

tried to do it at the lowest possible cost. The borrowing is in place.

So now what we have to do is look at it, to make the best possible use

of that. I'm sure that we would love to cut the hydro rates in half,

down to a quarter. When you look at Hydro's annual report and the cost

of operations, the cost of financing, which is included in that, then

you have to wonder what other taxation you would have to put in place

to raise the money to subsidize that power.

I know some benefits would flow from the extra industries; there's

no question of that. There is a certain amount, as the member knows....

Despite all the efforts government has made, we're still needing more

money than is being raised through the present tax structure. I'm sure

that if we can find other sources of revenue to meet the spending

demands, then we could well forgo the water tax. It's one form of

taxation, as I tried to indicate to the member. It also affects export

sales in West Kootenay, Cominco — not only for their own use, but if

they don't pay the water tax, then anything they export is in effect

subsidized power going out of the country. Not everyone will agree that

it's a fair tax.

[3:30]

Perhaps it can be dealt with. Certainly we tried to take other

measures to assist Cominco. There are negotiations now underway

federally and provincially to try to keep the operation going. I'm

hoping that that will be resolved fairly soon, because I know what it

means to Kimberley; I lived there for some years. I know what it means

to Trail, to the Kootenays, to the mines, to be able to have that

smelter there: keep the mines open. It has a direct and indirect

effect, if they can't keep operating. I think the water tax is only one

portion of it.

I guess that about covers it. There are some times, like the member,

when I wish I had a magic wand to make everything good. I also have to

have some support from my colleagues, to not raise the revenue that

pays for the other services.

[Mr. Strachan in the chair.]

MR. D'ARCY: I don't want to make the minister stand too long

here, but I want to make a point very quickly. I know the government

has to have revenue; all governments do. I know they like getting it

out of resources, because it's hidden in people's bills. But, Mr.

Chairman, unemployed people don't pay taxes. Idle industry does not pay

property taxes. Idle real estate does not pay taxes. The government has

its priorities wrong. A healthy industry and a healthy employment

picture not only generates a tremendous amount of revenue for the

province, but it saves the province a lot of money in terms of social

and other costs.

So I want to impress upon the minister that it's not that the

government doesn't need revenue; it's that they've got their priorities

wrong in how to generate it, particularly when their rules are

inconsistently applied between different commodity groups and between

different parts of British Columbia. Not only does the forest industry

and Alcan have a special arrangement for it, in terms of stumpage for

the forest industry and electricity prices for Alcan, but there is a

special difficulty in terms of supporting the mining industry in B.C.

when it comes to the southeastern part of the province and the railway

industry. Because to use the minister's own analogy

[ Page 8159 ]

regarding natural gas, that if the industrial use

goes the rates for everybody else go up, I would point out that if it

were not for the mineral haul in southeastern B.C., for which C.P. Rail

takes over $80 million annually out of Trail alone — we're not talking

about shipments originating in Kimberley or anywhere else, but out of

Trail alone over $80 million —

the cost of transportation to other industries, particularly the forest

industry and to a lesser extent agriculture, would be somewhat higher.

So we're talking about a lot of spinoff besides just the mining

industry. I think probably the minister does understand that; I'll give

him credit for that. As I say, I wish some more of his colleagues did.

HON. MR. BRUMMET: Just to respond very briefly, I think the

major problem at Cominco and some of our other mining operations is not

the water tax or some of the property taxes, that sort of thing. I

think the major problem is world prices for their metals and the

decreasing demand for lead, which is a fairly big component at Cominco.

There are also other factors there: environmental concerns about lead,

substitutes for lead, and that sort of thing, which are making it very

difficult. We are trying to work on that.

As the member knows, Cominco was allowed to be for their ammonia

operation an eligible gas buyer so that they could get lower gas

prices. Electricity down to the discounts are being made available to

try to keep up the industrial use. That has worked in keeping quite a

few industries. Each one of them as they apply comes up. I know that,

as you indicated, C.P. Rail makes quite a bit of money out of hauling

the minerals to Trail. Don't they also own Cominco? So in other words,

maybe they could lower their freight rates and help Cominco as well.

We'll try to do what we can.

MR. DAVIS: Mr. Chairman, I'm rising really to make a few

remarks which again express my concern about long-term planning in the

energy area, more particularly long-term planning by Hydro. B.C. Hydro

has been for many years the largest single corporation in western

Canada, and in this province by far the largest single investor in new

facilities. When a few years ago it became obvious that the demand for

hydroelectric power was levelling off, it was necessary to cut back

substantially on its capital operations, on its new construction of

dams, on new construction of transmission lines. I don't think the

cutback, or at least part of the cutback, could have been avoided

because the consensus not only in this province but across Canada and

worldwide was that the demand for electricity would continue to rise

rapidly. That has not materialized and so there's been a marked

slowdown.

There has been a marked change also in the nature of B.C. Hydro. The

chairman recently described B.C. Hydro as increasingly an operations

oriented corporation and not one which focused substantially, let alone

primarily, on new investment, growth or development.

I'm concerned, partly because B.C. Hydro had accumulated a cadre of

professionals, engineers, construction management which was among the

best in the world, and that has in large part been dismantled. If one

could stand back and second-guess decisions made some years ago, they

would say that the rate of expansion of the system — the physical expansion —

should have been moderated earlier. They would certainly say, as I

believe now, that there should be a long-term plan which envisages

growth, growth at a slower rate certainly than in the 1960s and early

1970s, but nevertheless that the planning contemplate an expansion

which can meet our internal requirements and on occasion when surpluses

are developed. I don't mean to indicate that export should be a major

concern for the long term, but that export opportunities should be

utilized to mop up excess capacity from time to time. Ideally we have a

long-term plan. Ideally we build at a steady rate. Ideally we continue

to employ people with considerable competence, professional competence,

which in itself can be exported also through the sale of our know-how

overseas, our ability to build power dams, high voltage transmission

lines and so on.

I think we also have to decide how we're going to use our energy as

a source of employment, certainly as a guarantee of a reliable supply.

Exports come into this only incidentally. Do we use our energy as a

magnet for industry? Traditionally — and this applies mainly to central

Canada, and in oil and gas to Alberta — energy was seen as a magnet for

industry. It would attract industry. In

British Columbia our costs have been higher. By and large our costs

have been such that our rates have been among the higher rates for

power and other forms of energy in Canada. But we seemed to give up any

hope of using energy as a magnet for industry when we increased the

water tax a few years ago. We apparently decided, for tax reasons — not

industrial development reasons necessarily, but certainly for tax

revenue reasons — to add to the price of electricity directly — and

indirectly the price of other forms of energy, including gas —

by adding the water tax, a tax which is exceptional in that it is not

levied on anything like our scale elsewhere in the country.

In the late seventies, early 1980s, we really turned our back on

using electricity as a means of attracting industry. The only way we

can attract industry now using hydroelectricity, for example, is to say

that we can guarantee the physical supply, the supply over a long

period of time; but we certainly can't offer low rates. That is a

decision which has been made, and I think we must face it. It is not in

the cost price area that our energy is attractive. It is only in that

we can guarantee supplies 10, 20 years ahead because we plan ahead and

plan physical facilities which physically can meet those needs. So I

think we should talk less about using hydroelectricity as a resource

for attracting industry, at least for the short term — perhaps even for the long term —

if we are going to recognize (

a) the high costs of developing far

northern sites, for example; (

b) our high tax rates, including the

water tax which we insist on levying on power.

Looking ahead, one big question that I think must be addressed — it can only be addressed in cost and price terms —

is whether we sit back now and utilize, for example, the downstream

benefit energy owed to us by the United States beginning in the late

1990s, or whether we continue to develop sites in this country and

continue to sell that downstream energy which is our entitlement at a

really high price in the United States — use it as a device. Again,

presumably we wouldn't sell the energy for an indefinite period. We

would sell it for several decades at most. We would use that energy as

a source of income to Hydro so that we could develop other sites in

this province, could provide jobs in this province, particularly for

engineers, construction firms and so on.

Because the amount of energy involved in the downstream benefit

settlement is comparable to, I believe somewhat in excess of, the

amount of Site C, a simple question has to be answered, and I certainly

wouldn't expect the minister to try to seriously address it right now.

But it's something that should be brought out in the open as a result

of a series of

[ Page 8160 ]

hearings, say, before the Utilities Commission, as

to the likely costs of simply using up the downstream benefits which

are returned to us in time and will cost us nothing delivered back to

the border, or whether we should begin now or shortly to build a

substantial project, or perhaps more than one, in northern British

Columbia.

[3:45]

I can remember, and it's only a few short years ago, when the cost

of an additional kilowatt of hydro capacity was of the order of $1,000.

It had been $100 or $200 in the early 1950s, say $1,000 in the late

1970s. The number I've seen in the press on Site C is not $1,000 a

kilowatt or even $2,000; it's $3,000 a kilowatt. At high rates of

interest, that kind of investment is not only large but poses a big

question: what will be the delivered price of that energy?

Clearly that has to be set off against a comparable amount of energy

which can and would be returned from the United States in the late

1990s if and when we decide to bring back that energy rather than sell

it at a high price down there. I'm focusing on the downstream benefit

energy partly because it's comparable in amount to what Site C could

produce, partly because 30 years ago when I wrote the energy volume for

the Gordon commission I recommended that the treaty projects be in

large part financed that way. It took the provincial government here

another seven years to decide that that was a good idea, but it went

ahead largely on that basis. While the opposition has always been

critical of the Columbia Treaty, one of the big holes in their earlier

arguments was that they totally ignored the downstream benefits and

their value. Now they've suddenly recognized them, and they're a great

asset. Well, okay, their argument earlier was faulty to that extent.

But my main point is that we have two blocks of power, Site C and the

downstream benefits, of comparable magnitude and both conceivably

coming on at the same time. We have a major decision to make: do we

repatriate those benefits which are ours by treaty at no cost to

British Columbians, or do we go ahead with a major project in the north

of comparable size and finance it, largely if not entirely, on the

proceeds from the sale of that same downstream benefit energy?

There are several other questions that arise in my mind. Recently,

within the last comparatively few years, one of the major investments

of B.C. Hydro was a substantial transmission line, the Cheekye line,

from the mainland originating — at least the underwater

section — in the

general area of Powell River and crossing over to Vancouver Island.

That connection from the mainland to Vancouver Island has cost about $1

billion. I know that its long-term economic viability was predicated on

several things, one of the more substantial of which was the sale of

electricity for space-heating on Vancouver Island. Industrial loads,

hopefully, would develop over the years along with other uses of

electricity, but the largest single growth sale category was to be

residential spaceheating. Well, a gas line, if it's ever built to

Vancouver Island, will be predicated, particularly in the early years

and again in the later years, on residential space-heating sales. Those

standing back at a distance, and I'll even say standing back and

looking at British Columbia from Ottawa, have to say: "Look, Vancouver

Island has recently been equipped to look after its space-heating needs

as a result of a billion-dollar investment by B.C. Hydro backed by the

people of the province. Why should half a billion dollars or more be

invested in order to duplicate that facility?"

I'm concerned about the possibility of a duplication of investment.

I suppose if we can get the federal government to put up all, or nearly

all, of the half-billion dollars, that makes some sense. But in all

this — Hydro power projects, particularly gas line projects and, I might say, underwater gas line projects —

the B.C. labour and equipment content is low. In the underwater gas

line case it's negligible. There isn't much of a spinoff in job

creation in building a gas line to Vancouver Island. There isn't an

incredibly large spinoff in building large hydroelectric projects,

partly because most of the machinery used — all of the heavy machinery used in construction —

is imported, not only into the province but into Canada; also because a

large proportion of the highly trained personnel who operate that

equipment come from outside the province and leave again if there's no

other work due to an on-again-off-again overall construction program on

the part of Hydro.

The role of the Utilities Commission is important. Latterly it seems

to have pulled in its horns. It does review requests for rate

increases. It doesn't really seem to provide a forum for costing

projects — not only those yet to be built, but also projects the

economics of which should be proven before they proceed. I hope that

the Utilities Commission is brought back into that role. I note that

one of the directions of the government to the Utilities Commission was

to get Hydro up to 1.3 times interest earnings, which certainly is in

conflict with any plans to keep rates down or to build new projects — but that's for another time.

HON. MR. BRUMMET: Mr. Chairman, the member says that there

should be more long-term planning. There had been a great deal of

long-term planning, and some of that long-term planning resulted in

some of the overbuilding that Hydro is being criticized for. I know

that the rate has slowed down. It became fairly apparent that with

Revelstoke nearing completion and generating something of a surplus, it

didn't seem to make much sense to keep a large staff of design

engineers in place when there was nothing going ahead for several

years. Yes, anyone hates to lose good people, good engineers. But to

pay them until there's some indication that they're going to be needed,

just to maintain the good staff.... I guess Hydro had to make a pretty

hard decision there and go more into the operations mode, since there

seemed to be no projects for design on the table.

I can assure the member that there is long-term planning for growth

being done both by Hydro and my ministry. Through the use of computers

we try to project possible high increases, low increases and medium

increases — the demand. There is a lot of long-term planning going on.

Unfortunately every once in a while someone says that you've got to

prove what's going to happen ten years from now. You can't prove what's

going to happen ten years from now. All you can do is give the best

estimate on the best possible evidence. Of course, therein lies the

argument. Presumably some of the projects that were built.... I have to

accept the integrity of the engineers who said: "This is going to be

needed." Somebody had to say it was going to be needed.

MR. WILLIAMS: You don't need engineers today?

HON. MR. BRUMMET: We need engineers, but we can't keep on a

large staff of engineers at a time when there's nothing happening for a

couple of years. Those engineers will again be available, and I hope

will be needed.

I can also assure the member that the Columbia River downstream power he's talking about, at virtually no building

[ Page 8161 ]

cost, is part of that long-range planning of B.C.

Hydro. It wouldn't be available, through whatever form of negotiation

it takes, until 1998. We are going to need some other power before 1998

according to the lowest projections of Hydro, the ministry and others.

We have managed to utilize more through discount sales and incremental

use for reopening of mines — that sort of thing. There is power moving, and I would hope that that will encourage growth.

I wish, and I know in talking to Hydro that they wish, as is

requested of them time and again, to make good projections on how much

we're going to export and how much we're going to need ten years from

now, when everyone recognizes that they do not control the factors,

whether it's interest rates, other uses, world metal prices — whatever

it is. They cannot prove what's going to happen five, ten or 15 years

down the road. You have to plan accordingly. So there is that type of

overall planning going on, and it is being checked by the Utilities

Commission, who see their role as wanting proof, when proof is hard to

be had.

MR. HANSON: Mr. Chairman, I listened carefully to the member

for North Vancouver–Seymour (Mr. Davis), and there's a chunk of his

speech that I agree with very much. I'm just going to say it in a

different way. You know, the people on Vancouver Island, through no

fault of their own, don't have access to cheap energy, the cheap

natural gas that they have on the lower mainland and through other

parts of the province. Yet we the taxpayers of the province spent

something in the order of $1.2 billion in total for the

Cheekye-Dunsmuir line, which won't meet its installed capacity until

the year 2010. There's cheap electricity there, and I'm saying, why

can't we have it? Give us some of the juice. Give us the power.

The people on this island, it costs them an arm and a leg.... Even

for a new house that's fully insulated, it costs $500 a year more for

space-heating in a brand new house here in the city of Victoria than it

does for a brand new house of a similar type — same dimensions, same insulation etc. —

on the lower mainland. You take an older house and it's worse. It's

something like.... I can give you the numbers. I'll give them to you in

a minute when I've finished saying what I want to say now.

We've got that surplus power from Cheekye-Dunsmuir, which the good

people on this island are paying for and are going to pay for long into

the future, so what do we do? We sell it into the United States dirt

cheap, and a lot of that electricity, I believe, goes into making

aluminum beer cans, which put our people out of work in any event. Then

the liquor distribution branch buys the aluminum beer cans back and

ploughs them into the ground. We don't even recycle them. It's

wonderful economics.

I'll just give you the numbers here on a house. These are figures

supplied by B.C. Hydro. They show that for a 1,200-square-foot home

built prior to 1976, the average annual energy bill is $1,420 in the

lower mainland. A similar house on Vancouver Island, however, has an

energy bill of $2,320. That's $900 more for a house built prior to

1976. New homes, as I've stated, which are more energy-efficient and

have lower total energy bills.... But there remains a difference of

$500 between the cost of the Island compared to the mainland. A new

home in Vancouver has an average bill of $1,100. The average new home

on Vancouver Island or in my constituency of Victoria has a bill of

$1,570 — $500 more. Yet why can't we have that power? It doesn't make any sense.

[4:00]

Here we have in a throne speech that appeared in this House a couple

of months ago reference again to the natural gas pipeline. Now the B.C.

Utilities Commission says it's going to take about, I believe, $528

million of federal money to build it. My first question to the

minister: has the federal government given you the approval for the

$528 million to build the gas pipeline?

HON. MR. BRUMMET: The answer to the last question is no, but

negotiations are going on with the federal government, and hopefully

we'll get some positive results. I was trying to follow the member in

that I know that the rate structure for the lower mainland and

Vancouver Island is the same for electricity. The line capacity is

there. And then it twigged that here you don't have the natural gas on

the Island. In Vancouver, they would heat hot water and the home with

natural gas and so that same home would have a lower electricity use

because they are using natural gas. I guess what you're doing is making

the case for the Vancouver Island gas pipeline, because the electricity

is available. It is there.

The member said something about a surplus of electricity until well

after 2010, or something —

that is not correct. The capacity to the line is there, yes; it's got

plenty of capacity. We're talking about the surplus of hydro power. And

judging from some of the other comments, you don't want us to build

more expensive generating plants. But if you lower the cost of

electricity so that it replaces all other fuels — and it is not as

efficient as natural gas for heating, if you start making comparisons —

then you would create a massive demand for electricity if it became

subsidized, in effect, as compared to the other energy sources. So that

is one of the reasons. If you did have a surplus to 2010 or something

of that nature, then it might make some sense. But it does not make

sense when you only have a two- or perhaps three-year surplus that you

can count on. None of the electricity, discounting that being done to

industry, is being done for more than about three years, because we

can't count on the extra supply.

MR. HANSON: My comment to the minister basically is that the

people of British Columbia who do not presently receive the benefits of

natural gas because they are not on the network should be served first

before that power goes cheaply into the United States and doesn't

benefit our people.

[Mr. Ree in the chair.]

It is not good enough to have an election promise for a natural gas

pipeline to the Vancouver Island — for the almost 35 years that we have

been promised the natural gas —

when there is surplus electricity through the Cheekye-Dunsmuir line

which the good taxpayers of the province of British Columbia and

Vancouver Island are paying for but are not allowed to have access to.

I agree that there have to be other things going in tandem with it.

There has to be a retrofitting of homes and insulating of homes to

maximize the benefit of that power.

AN HON. MEMBER: That'd create jobs; you don't want to do that.

[ Page 8162 ]

MR. HANSON: That would create a lot of jobs on this island.

The member for North Vancouver–Seymour pointed out the labour component

of the pipeline and so on.

Now if you want to build the pipeline, and it is economically

feasible, and the federal government is going to build it, and so on

and so forth.... We've waited 35 years now. In the meantime, give the

people of Vancouver Island the juice to support their own home-heating

needs. It's not good enough to have pie-in-the-sky jam tomorrow but no

jam today. It goes on for year after year after year. The people of

this island deserve a fair shake — and the people of the interior, and

wherever else. We're talking jobs, and we're talking energy. It belongs

to the people of the province. They've paid for it, not the cheap

aluminum beer cans that are made down in the United States that put our

people out of work. We come first. Our people come first, and that's

the only way you should be approaching your responsibility.

HON. MR. BRUMMET: I take it then that we have the full

support of that member to get the gas pipeline to Vancouver Island as

soon as possible. If we made a decision today to subsidize electricity

rates, I tried to point out that it would create a greater need for

electricity-generating facilities, which would create more borrowing,

which would create the very things that one of your other members was

arguing against.

MR. HANSON: Give us the surplus.

HON. MR. BRUMMET: Yes, I know that the member is being very

parochial there, but if a decision were made today to use surplus

electricity for, in effect, oil furnace conversion or retrofitting, it

wouldn't take very long before we would have no surplus electricity

left, and the prices would then go up. So I think we have to look at it

on a little longer term — and we are looking at it, because the gas is

the most efficient one to get over here — not use your short-term

solution which would cost the people of this island a lot more in the

long run.

MR. DAVIS: Residential space heating is not, especially over

the next few years, likely to be a major consumer of power, but it can

be a significant one. The point I was trying to make is that the excess

capacity in the Cheekye line is incredibly large and could certainly

look after any significant growth in, say, conversions from oil to

electricity. It could look after it quite easily. I'm sure that on a

close calculation, looking at that load now, any prospective rates of

growth could see that the Cheekye line could accommodate it.

What I wanted to address more particularly is the long-term policy.

In electricity we have what's called the postage stamp rate: we have

the same price for power, at least power sold by B.C. Hydro, to each

category of consumer everywhere in the province. In other words, you

pay the same price for residential electricity in Vancouver as you pay

in Fort St. John, as you pay in Victoria. I am sure that the long-term

political pressures, and perhaps economic ones also but certainly

political pressures, will say: the price of natural gas to the consumer

must be the same on Vancouver Island as it is on the mainland, at least

to the residential consumer.

One great difficulty I have then is: if the price is the same on the

mainland as it is on Vancouver Island, or vice versa, what are the

economics of any investment in a pipeline connecting the two? It's a

very difficult political question, one of standardizing rates across

the province. If the rates on Vancouver Island for gas are going to be

the same as on the mainland, on the face of it there's no economics for

a pipeline; there's no way of paying for the pipeline that connects the

two. My argument really is: use the Cheekye line, for some years at

least, and in order to get apparent or political equity, why not strike

a space heating rate on Vancouver Island which provides the equivalent

in energy terms, or monthly cost terms, to the residential consumer on

Vancouver Island? In other words, electricity is sold for space heating

at a unique price on the Island, less than on the mainland but equal to

the gas rate. Therefore the user of B.C. energy, electricity, on

Vancouver Island for the next few years for space heating and the user

of gas on the mainland for space heating pay the same price; the

monthly bill is comparable. A postage stamp rate, if you like, for

energy, as opposed to gas versus electricity.

I'm not sure when the economics of a pipeline will be proven, but in

the face of a very substantial Cheekye link, and in the face of the

possibility at least of finding offshore gas, or moving liquid gas down

from Prince Rupert in concert with some export proposal for LNG to the

Orient, why not wait for those possible developments to either be

proven or disproven before building a line? The basic question, the

basic recommendation, I suppose I'm making is that in order to displace

oil on Vancouver Island in the short term, in order to give Vancouver

Islanders an equitable rate for space heating, why not strike a special

space heating rate on Vancouver Island that would apply to all

connected power customers now, which is equal in rate per energy terms

with gas in the lower mainland?

HON. MR. BRUMMET: I guess you have to look at the long term.

Then when the surplus has run out, there's no argument about the

capacity of that line to carry the electricity. There is a concern

about the continued use of that availability. If you put that rate in,

get everybody to get into space heating with electricity, and then when

that surplus runs out and you have to build another dam and you have to

bring up the cost, what happens in the long term?

As far as the exports to the United States, what is happening there

is that the power that is surplus, that is available as spot sales, is

all that's being sold at the lower prices. When we're talking about

Site C or firm contracts, then we're talking about firm prices. But

when you're on the spot-sale market, just taking for now little bits

and pieces, then you either sell at the price that somebody's going to

buy, or you don't sell at all. You say, okay, let's keep it. There is

not the demand for it here on a spot-sale basis for space heating.

MR. DAVIS: Mr. Chairman, I hear what the minister is saying.

He's saying that the commitment to supply consumers on Vancouver Island

with electricity for space heating is going to be horrendous, or at

least is going to be very large. I agree that the conversions from oil,

for example, which would take place over the next few years, would be

irrevocable — at least they'd continue to use electricity for space

heating for another 20 or 30 years. But I'm saying that the amount of

power committed in that case is relatively small, not only compared to

the Cheekye connection's capacity, but compared to our generating

surpluses, our transmission excess capacity currently. And what it can

do is buy us some time.

If there are real economics for a gas pipeline in a few years, then gas will be available to look after the conversions

[ Page 8163 ]

or the switch from oil, but in the interim (

a) we're not dealing with very large numbers, but (

b) we're talking about

equity for as many as half a million connections on Vancouver Island.

After all, the price of oil is not as high as it used to be. The cost

of conversion is significant. I don't expect that the conversions will

be wholesale over the next few years, but at least the opportunity

should be there and the price comparable to gas prices in the lower

mainland.

MR. CHAIRMAN: The Chair would draw to the attention of the

members that the white light on the Chair's table is malfunctioning.

The green and red lights are satisfactory.

MR. SKELLY: Due to a shortage of electricity I assume, Mr. Chairman.

I think I'm very pleased to see that the member for North

Vancouver–Seymour is now starting to listen to some of the arguments

that have been made by the opposition over the last several years.

Interjection.

MR. SKELLY: Some things he doesn't hear, Mr. Chairman, and

since he's been in the back bench he's found it a lot easier to hear

and to understand some of the arguments that are being made — the same

arguments we've been making for a number of years with respect to this

Vancouver Island gas pipeline project. Maybe the reason the minister

has difficulty understanding it is because it's based on a principle of

fairness.

Now some of my colleagues would argue that a postage stamp rate

across the province for hydroelectricity is a fair rate, but in fact,

as the minister should understand, because he represents or is elected

from a constituency along the Yukon boundary, he should know that the

principle should be based on degree-days. The cost of heating in the

north is very much different from the cost of heating in the south. If

we're going to apply the principle of fairness, maybe we should be

applying the principle of fairness on a different basis; not on the

basis of a postage stamp rate for electricity, but on the basis of the

cost of heating or the cost of whatever application that energy is put

to.

[4:15]

We're also not dealing here, Mr. Chairman, with a particular area

such as Vancouver Island, which has been proposed to be served over the

last 35 years by a gas pipeline. We're talking about a number of areas

in the province of British Columbia that are outside the natural gas

market. We're talking about places like Revelstoke and, as my colleague

has suggested, Nakusp and a number of places that can never, ever, ever

be served with any economic justification by natural gas.

Now an example is the west coast of my constituency. Tofino and

Ucluelet, if they build a natural gas pipeline to Vancouver Island,

will never be able to benefit from the service provided by that natural

gas pipeline. If you go up north on the north end of Vancouver Island,

you're looking at a number of communities on the west coast as well:

Port Alice, Gold River, Tahsis, Zeballos — all of those communities on

the northwest coast of Vancouver Island that could never in a million

years be economically serviced by a natural gas pipeline. So when we're

applying this principle of fairness, electricity is one of the things

you can distribute to many thousands of people in British Columbia in

many isolated communities, and you can apply the principle of fairness

there because they're capable of having that energy commodity

distributed to them. It can be done in a very short period of time. The

minister could make a decision in the House today that would

immediately benefit those people on Vancouver Island, in Nakusp, in

other parts of the province. They could see an improvement in their

economic circumstances as a result of what the minister does today in

terms of providing electricity to customers in areas outside the

natural gas market area. The benefits could be distributed today.

If you brought natural gas to Vancouver Island.... A lot of people

on Vancouver Island have oil heating. Some of them have oil space

heating; some have central furnaces that are fuelled by oil. In central

heating they would find conversion to natural gas fairly easy and

inexpensive. But a larger percentage of heating customers on Vancouver

Island use electricity. They would find conversion to natural gas very

costly — almost prohibitive. That would be a serious problem for those

people. Many would not connect themselves to the natural gas

distribution system because of the cost of converting their homes,

retrofitting their homes for central natural gas heating. On the other

hand, it requires a very low upfront capital cost to convert to

electric heating. In addition, you could leave your oil furnace or your

oil space heating intact so that you could have a hybrid system which

makes you less vulnerable to pricing changes and that kind of thing. It

would provide customers on Vancouver Island with an advantage.

In addition, by lowering the cost of electricity on Vancouver Island

for heating purposes, you are going to increase the disposable income

of citizens on Vancouver Island. They will immediately have money that

they're not paying to that huge, cash-guzzling, debt-ridden B.C. Hydro

and Power Authority. They'll be able to spend that money in their local

businesses right here on Vancouver Island, up in Revelstoke, in Nakusp,

on the west coast of British Columbia — in all of those communities

that would see some immediate benefit in the reduction of

hydroelectricity costs.

Just imagine what the advantages would be to those communities of

having the citizens in possession of more disposable income which they

could use to stimulate demand for the products and services of small

business. Imagine how the economy of British Columbia, which has been

so distorted by this government's economic policies.... Imagine how the

economic benefits could be redistributed through every region of the

province if we were able to lower the electrical energy costs of people

around the province who are outside the natural gas marketing area.

Imagine the stimulus to those communities, and the benefits that could

be distributed in those communities by increasing the disposable income

of our citizens.

As the Utilities Commission suggested — as the Site C panel of the Utilities Commission suggested —

B.C. Hydro doesn't look at the overall costs and benefits of their

project to the province as a whole. They look at it in a very narrow

and circumscribed sphere. As a result, they don't take into

consideration the costs and benefits to the whole province. In fact,

the Utilities Commission told Hydro to go back and develop a more

appropriate cost-benefit analysis before they would give them approval

to go ahead with the Site C project. That's something that you and this

government rejected, but it should have been done before you began

talking about going ahead with the Site C project.

[ Page 8164 ]

Imagine the benefits to every community around the province if,

through a change in hydroelectricity and electric pricing policies, we

created more disposable income in the hands of our citizens which they

could use to stimulate small business in their community. The benefits

would be dramatic; the employment impacts would be dramatic. The

employment impact here on Vancouver Island, which is particularly

hard-hit by this government's economic policies, would be dramatic as

well.

I think the minister has a chance here today to make a decision that

will make him a hero to the people of Vancouver Island and to those

other areas outside of the natural gas distribution area. By changing

the price of hydroelectricity for space-heating or for home-heating, he

could distribute immeasurable benefits — with almost no cost to B.C.

Hydro, because they have a surplus in the system. They have surplus

transmission because they overbuilt their transmission capability to

Vancouver Island, because they were thinking at the time that they were

going to build a nuclear power plant on the north end of Vancouver

Island. That was their proposal.

So think of the possibilities the minister has by reducing

electrical energy costs for space-heating all over the province outside

the natural gas marketing area, increasing the disposable income of

citizens, allowing those citizens to spend that money and stimulate

small business in their communities. The benefits to B.C. would be

terrific compared to some of the other proposals that the minister has

been making with respect to gas pipelines and new dams. Let's hear the

minister accept for once a positive proposal made not just by the

opposition in this Legislature but also by one of his own government

back-benchers.

HON. MR. BRUMMET: Starting out, I am delighted to hear the

Leader of the Opposition argue for fairness for the people in the

north. I presume that extends to roads, to freight subsidies, to paved

roads, to all of the things that you have here in the south. I am sure

that you would....

MR. SKELLY: You're the Minister of Energy.

HON. MR. BRUMMET: No, but I mean you talk about general

fairness, so I am sure that you would like to see all of those other

things made available to my people in the north at the same price as

they are made available to the people in the south — all the facilities

and all of the conveniences, all of that. So I am delighted that you

finally acknowledged fairness to the people in the north.

As for the extensions to communities without natural gas, a great

deal has been done under the federal-provincial programs to try to

provide gas to those....

Interjection.

HON. MR. BRUMMET: It is not going to be possible for all of them. I listened courteously to you, but I guess that is not in your lexicon, is it —

courtesy? That member mentioned about cash-guzzling Hydro, that this

huge monolith, I take it implicitly, is just taking in money and not

providing any services. Yet at the same time his argument runs for

short-term gain, it's long-term pain for the very people.... I know

that may be politically expedient to you, and it may be nice to turn

around and say, wouldn't that be great? But on the one hand you say

Hydro is too expensive because it guzzles all the cash from the people,

while on the other hand you are arguing to try to get the situation so

that by subsidy.... Where would those subsidies come from but from the

other Hydro ratepayers? It's got to come from somewhere if they are

selling electricity at less than what it costs them to produce it.

MR. COCKE: Come on! What are you selling it to California for?

HON. MR. BRUMMET: Because that is a spot sale.

Interjection.

HON. MR. BRUMMET: Yes, I am sure that you would, and once the

people have converted to electric space-heating here and then the

surplus runs out and it no longer can be treated as a spot sale, but it

has to recover what it cost to generate, that and additional power that

is going to be required, then that member will blame somebody else

again because his idea didn't work out.

So it is very nice and very politically expedient to talk about

short-term benefits which would be hurtful to those people in the long

run. Politically, economically, otherwise from a common-sense point of

view, I would not like to join that member in trying to get these

people short-term gain for long-term pain.

MR. SKELLY: In responding to my proposal and the proposal of

the member for North Vancouver–Seymour, the minister accused us in both

political parties of asking for short-term gain for long-term pain. The

minister has never presented to this House, nor has B.C. Hydro, a

strategy that would deliver that kind of energy to Vancouver Island or

to other areas of the province, to justify his position. There is a

surplus of electrical energy available in British Columbia. We're

exporting that surplus, the minister says, on spot sales to California

and other parts of the western United States. Those spot sales seem to

cover a long time, Mr. Chairman. We know that Hydro has had a policy of

building new generating capacity, which leaves a large amount of

surplus energy between dam projects so that they can sell that surplus

on spot sales to the United States.

In any case, there is a surplus of electrical energy available in

the province now. My colleague from Victoria suggested to the minister

that at the same time he provide a part of this surplus to the people

on Vancouver Island at lower rates or rates that are equal to the

heating costs on the mainland and in the natural gas marketing area.

We're not asking for any preference for the people on Vancouver Island.

We're not asking for any subsidy for the people on Vancouver Island, or

in those other areas of the province that the minister talked about —

the north and the coast and some parts of the Kootenays. We're simply

asking that their costs of heating should be equalized with the costs

of heating in the natural gas marketing area. That's all we're asking.

We're not asking for any subsidies; we're asking for some fairness

here. The minister twisted the argument around and rephrased it in his

own terms to suggest that we're talking about a subsidy. We're talking

about fairness. The member for North Vancouver–Seymour (Mr. Davis)

talked about fairness. That's all we're asking for for the people on

Vancouver Island.

[ Page 8165 ]

We're also suggesting that the minister should look at this in

larger cost-benefit terms, in terms of the amount of disposable income

that this will create in certain areas of the province that have been

extremely hard hit by this government's economic policies, and in terms

of the benefits that will accrue to all British Columbians by

increasing disposable income in certain areas of the province — the

products that will be demanded, the services that will be demanded, the

jobs that will be created, and the increased economic and employment

activity that will result from lowering those hydroelectric costs in

the areas that I described.

If the minister refuses to go along with the argument, will the

minister then agree, at least, to study the argument, to see what the

benefits are? After all, this was the Utilities Commission's criticism

of the Site C project — that Hydro did not examine the overall costs and

benefits to the people of British Columbia. They only examined those

costs and benefits in very narrow terms. Will the minister at least

agree to study the proposal?

HON. MR. BRUMMET: Mr. Chairman, I have absolutely no problem

in agreeing to studying it because I have been studying it for some

time. With respect to the comparisons among electricity, gas, oil

heating and all that, a lot of study has been going on with respect to

the Vancouver Island gas pipeline. So yes, I'm studying, I'm reading

those reports. All the studies have been done. There are ongoing

studies. So I have no problem with that.

The member seems to say: "We don't want a subsidy; we just want

lower-priced electricity." Whenever you take a higher-cost energy

source and adapt it for use in something that can be done with

lower-cost energy, then you in effect create a subsidy. You're talking

about the surplus. The surplus is very short-lived. That's why I say

short-term gain for long-term pain. If you use your short-term

philosophy, then you eliminate that surplus much more quickly and force

higher prices after people have spent money to try to get to that

point. It does not make sense, other than in your expedient political

terms, to do this.

[4:30]

MR. SKELLY: This is amazing, Mr. Chairman, that the minister

talks about political expedience. I asked the minister if he was

willing to do a study of this proposal. That's all the opposition is

asking: a study of the proposal. I don't want a list of the books

you've been reading recently. I don't want a list of the studies you've

read on the Vancouver Island gas pipeline. We've seen those studies.

What I'm asking the minister to do is to make a commitment to take a

look at the economic benefits to the whole province, and to all of the

people in the province, of making surplus energy available to Vancouver

Island, even at the same rate that he's making it available to

California.

Mr. Chairman, that's not much to ask: that the minister do a study of the proposal.

This minister talks about political expediency, and all of these kinds of things.

Demonstrate your good faith for a change, and agree to do a study. The opposition

comes into this Legislature, Mr. Chairman, year after year after year. It makes

proposals, presented in good faith to the government, proposals for the government

to study, and we see this kind of off-the-cuff, immediate rejection of good,

sound alternatives. Will the minister at least agree to study the proposal,

and to make those studies broadly available to the opposition as well?

[Mr. Strachan in the chair.]

One of the things the minister might do, if he wants to defuse

whatever political value there might be here, or political expediency,

is refer it to one of those select standing committees of the

Legislature that hasn't met for a decade, since this government came to

office. The eyes and the ears of the Legislature have been struck dumb

and deaf as a result of this government's depriving this Legislature of

the very committees that provide information to us as MLAs and allow us

to distribute information to the people of this province. Why doesn't

the minister refer this issue to a select standing committee of the

Legislature? He is the only one that has the power to do that.

We can't trust the minister when he presents information, or when he

says in the House that he's been reading studies. We want to see the

studies. We're not allowed to trust the minister, Mr. Chairman. We're

not allowed to, unless we see the studies and can judge the figures for

ourselves, and the terms of reference that these studies are based on.

What we're asking the minister to do is simply to do an open study,

a public study, of the alternative methods of providing energy to

Vancouver Island. Will the minister at least agree to refer it to a

select standing committee?

MR. CHAIRMAN : The

committee is reminded that a select standing committee would have to be

struck by the House and not by the Committee of Supply.

HON. MR. BRUMMET: Mr. Chairman, I'm somewhat appalled by the

Leader of the Opposition saying: "Will you commission a study to look

at this?" I take it you're implying: please ignore any and all studies

and public hearings that have been done to date, and commission a study

now, so that we study the thing to death and never do anything. You

must have heard that the B.C. Utilities Commission had a public hearing

— the results of which are available to that member should he wish to read them —

on the Vancouver Island pipeline issue. There was the Abercrombie

report. There has been report after report after study, and you want to

make it sound as though nothing has been studied, that nobody has

looked at all of the relative comparisons, and anything of that nature,

and that all of a sudden you have just woken up. Now you say we'd

better take a look at this: "Will the minister promise to take a look

at it," after the B.C. Utilities Commission has been looking at all of

these proposals and all of the applications from everyone. Now he wakes

up, all of a sudden, and says: "Well, study it. Please make a promise

to study it." And then he says: "Refer it to a select standing

committee." Once again, in all the time since I've been here, anytime

we have met in a committee, what did you do? Want facts? No. All I ever

saw your members use them for was political expediency. So nothing gets

accomplished.

If ever you'd come down to earth with some pragmatism and some

common sense, and abandon your political expediency, maybe something

worthwhile could come of meetings with you. But as long as all you do

is use every issue, and take out of context anything and everything,

for your political short-term purposes, then it's pretty hard to get

any sense out of you.

[ Page 8166 ]

MR. CHAIRMAN: Order! I realize that the committee is a bit

heated at this point, but perhaps we can maintain parliamentary

language and decorum and return to good parliamentary process.

MR. SKELLY: Well, it is interesting, Mr. Chairman, that the

minister is constantly distorting the question, and then answering his

own distorted question. Sometimes you get the impression that some

ministers are as thick as a fence post. I won't say that about this

minister, but you could probably string wires on him to Vancouver

Island.

Mr. Chairman, we know about the Abercrombie report. We know about

the work that the B.C. Utilities Commission has done on Vancouver

Island. We know that there has been no comparison between the

alternative sources, as between gas and electricity or as between the

proposals that have been made here by the member for North

Vancouver–Seymour as to reducing electrical energy rates on Vancouver

Island in

such a way as to provide fairness in heating costs by basing your

prices on the cost of energy rather than on the cost of a particular

energy commodity — what we felt was a good proposal by the member for

North Vancouver–Seymour.

Granted, it is a proposal that we've made before in this

Legislature, Mr. Chairman, and a proposal that we've made on a number

of occasions. But we thought that since it was made by a government

back-bencher this time, it might get a little better hearing. The

minister should not simply be rejecting out of hand alternatives that

are presented to him in the Legislature. That's one of the problems

with this Social Credit government. They reject out of hand good

information, good proposals, information that could be used to the

benefit of all citizens of British Columbia. I'll tell you, if the

minister thinks it is just being done on the basis of political

expediency, which we sometimes think was the basis for proposing a

natural gas pipeline to Vancouver Island.... But of course we wouldn't

say that, even though it has been promised for 35 years.

Mr. Chairman, all we are asking the minister — and I want to be very

clear about what we are asking here because it tends to get distorted

when it comes back —

is for a study of the proposal that has just been made in the House

today, a proposal for reducing electrical costs on Vancouver Island,

making that electrical energy available to Vancouver Island and to

other areas of the province outside the natural gas market service

area, so that we can have a reasonable basis for comparing energy

costs, so that we can determine, as members who are responsible to the

citizens of British Columbia, which energy commodity can be distributed

to those areas for the best benefit of the citizens in those areas and

for all of the people of the province of B.C. That's all we're asking.

It's not too much to ask. It's not too much to strike a select standing

committee of the Legislature to have them meet for four….

Interjection.

MR. SKELLY: No, because we don't think you'd come through

with a royal commission, Mr. Chairman. You've been embarrassed by a

number of them in the past because they have identified certain

problems with this Social Credit government. All we're asking for this

time is for the committees of this House. The committees have been

named, people have been appointed to those committees. The committees

have not met for a decade since this government came to office, and the

reason they haven't met for a decade is that this government is afraid

of the truth. They're afraid of the information that citizens of B.C.

can provide to this Legislature, because they have distorted and

corrupted this Legislative Assembly, and they have managed the news and

the information that comes out of this capital here in Victoria. That's

what you're afraid of, Mr. Minister. You're afraid of getting the facts.

HON. MR. BRUMMET: I would be delighted if the members