1982 Legislative Session: 4th Session, 32nd Parliament

Hansard

The following electronic version is for informational purposes only.

The printed version remains the official version.

Official Report of

DEBATES OF THE LEGISLATIVE ASSEMBLY

( Hansard )

TUESDAY, JUNE 15, 1982

Morning Sitting

[ Page

8189 ]

CONTENTS

Routine Proceedings

Committee of Supply: Ministry of Forests estimates. (Hon. Mr. Waterland)

On vote 42: minister's office (continued) 8189

Mr. Lockstead

Mr. Passarell

Mrs. Wallace

Mr. Gabelmann

Mr. Levi

Mr. King

TUESDAY, JUNE 15, 1982

The House met at 9:30 a.m.

Orders of the Day

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

ESTIMATES: MINISTRY OF FORESTS

(continued)

On vote 42, minister's office, $170,140.

MR. LOCKSTEAD:

Mr. Chairman, I know the minister made notes of the few questions I

posed to him before we adjourned regarding his estimates and the

administration of his portfolio. I have a few more questions to pose to

the minister this morning. It's a nice quiet morning, the galleries are

empty and we can be very relaxed.

Last night I mentioned the

economic plight of many communities in British Columbia because of the

severe downturn in the forest industry and the effect that that is

having not only on the jobs and workers in all of these communities but

also on the business sector in these communities. What is the minister

doing? What is the government doing? I know that the minister said to

my colleague earlier in this debate that he's met with the industry.

That's not a good enough answer, Mr. Chairman.

MR. CHAIRMAN:

There appears to be an awful lot of conversation, hon. members. The

member for Mackenzie has the floor, and I wonder if he could speak

uninterrupted.

MR. LOCKSTEAD: In his rely I would

like the minister to tell us exactly what he, the ministry and the

government are doing to stimulate the lumber industry in British

Columbia. This is part of his responsibility as Minister of Forests and

a leading member of cabinet. Forestry is B.C.'s number one industry, so

I'm sure the minister has a very strong voice in cabinet when he speaks.

mentioned last night the matter of the government failing to keep its

promise in terms of relocating a new industry in the community of Ocean

Falls. Two years ago the government promised this province that within

six months there would be a new operation underway in that community.

Nothing has happened there. I wonder if the minister has spoken to his

colleagues in cabinet, particularly the Minister of Energy (Hon. Mr.

McClelland), and asked that Minister of Energy why they have not

appointed utilities commissioners to choose a route for the natural gas

line to Vancouver Island. I just thought I'd put this in there, The

minister might wish to discuss this matter with his colleagues.

Concerning the matter of the small business program that he announced a few

years ago, I'd like to know also.... I suppose all MLAs in British Columbia,

but certainly those from rural areas, receive inquiries from their constituents

who want to get into the small business program one way or another. I know the

markets are depressed and it's difficult now. We know that that ministry

has stalled for a couple of years on this program. I'd like to know from

the minister whether that program is underway now, how many applications they

have received and how many have been approved, if any. That's a pretty straightforward

question: I'm sure the minister can answer that.

know that many coastal MLAs have received inquiries and representations

from small, independent logging companies regarding the amount of

quota. Basically the problem is that under the quota system the smaller

independent loggers must log a certain amount of timber over a

five-year period or lose the quota, but they do not have the markets,

so they can't sell their products — it's as simple as that. I'm

thinking of companies like Jackson Brothers on theSun shine Coast; I

won't give you all the names of the companies in my riding. I have a

great deal of correspondence from these small independents. They are

deeply concerned about losing their quota, or portions of it, because

of poor market conditions. I would like to know whether the ministry is

prepared to reduce the quotas of the small independents during this

severe downturn in the lumber industry, so that they won't lose the

total quota which they are compelled. at the present time, to harvest.

I could tell you from experience.... I know one small independent who

has approximately half a million board feet of raw logs tied up in the

Fraser River so that they won't rot — it will keep the bugs out — and

there is simply no market for those logs at the present time. There is

deep concern. That operation had 11 people working. The two owners, who

are partners in that little operation, are merely monkey-wrenching

their equipment at the present time; they're not putting a log in. And

11 employees are sitting at home, or doing whatever they do, but

they're out of work.

I was also going to discuss with the

minister the reforestation program. I heard the minister's response

yesterday to my colleague from Shuswap-Revelstoke in this regard, but I

don't think it answered the question. When we have literally thousands

of qualified people out of work in the lumber industry, why are we not

preparing sites for reforestation at the present time? Why are we not

going into a massive tree-planting project throughout British Columbia

to catch up on the backlog of hundreds of thousands, if not millions.

of acres that have been neglected over the years? That's a program that

could possibly employ a lot of people and pay very handsome dividends

in the future.

Last but not least. Is the minister and the

government involved in any kind of aggressive marketing program around

the world? Has the government taken direct action in this regard? I

know that some of the major forest industries have representatives in

European and eastern nations, but is the government involved in any

way? If they are, what are you doing to compete with other producers of

forest products, countries like Norway, Sweden and the United States?

What is the government doing in this regard? We don't see any tangible

evidence that the government is doing anything, but if I'm wrong, the

minister will get up and tell us so. He will explain to this House what

the government is doing to aggressively market our forest products

abroad.

With that. I will sit down and perhaps the minister will respond.

HON. MR. WATERLAND:

Mr. Chairman. going back to the member's initial remarks of yesterday,

he asked questions about what the government is doing regarding jobs in

the industry. I went to considerable length in responding to the member

for Shuswap-Revelstoke (Mr. King). and rather than repeat I will refer

the member to the Blues. He can read that himself, and if he has any

further questions I am sure he will bring them forward.

[ Page 8190 ]

The member talked about Ocean Falls and said something about a promise made

two years ago that a flitch plant would be established there. I don't believe

any promise was made. We in the Ministry of Forests agreed to make timber available

under a special experimental licence, with the hopes that means could be found

of using some of that wood at Ocean Falls. At the present time it's difficult

to market even high grade, high-quality logs and forest products in British Columbia.

Economic times are making it necessary for B.C. Cellulose Company at Ocean Falls

to defer some of their plans. However, they are still working on ways of utilizing

that material, especially the low-grade cedar in the area.

asked about unallocated timber remaining in that part of the province.

Unallocated timber can be acquired either through incentive

allocations, such as we have done with B.C. Cellulose Company, or

through competition. A lot of the remaining timber has been reserved

for the small business program, to give an opportunity for the small

entrepreneur to have direct access to Crown timber.

The

member asked about log exports. We have always had a policy in this

province, and it continues, that logs shall not be exported in an

unmanufactured state if they are needed in British Columbia. We have a

log export advisory committee which has representatives from various

sectors of the industry, including organized forestry labour. Only

after advertising for sale in British Columbia, and being assured that

there is no need for them here, are logs given approval for export.

The

member asked about comparative figures in the last couple of years –– I

can advise that during 1981 approximately 300,000 cunits of logs were

exported from British Columbia. In the first four months of this year

that figure is about 120,000 cunits. It is running at about the same

rate, perhaps slightly higher, than last year. All exports are subject

to the export advisory committee procedure.

The member

started talking about the natural gas commissioner; I am afraid he is

going to have to refer that to the minister responsible, because that

does not fall within my area of responsibility.

Regarding

the small business program, the member says we have stalled on this

program over the last couple of years. In fact, Mr. Chairman, over the

last couple of years we have been pursuing our small business program

in attempts to sort out some of the administrative difficulties we are

having with it. I can advise the member that right now there are over

5,000 people registered in both category one and category two of the

small business program. Since the program started, we have had about

900 sales approved in the small business program –– 600 and some in

category one, which is the logger category, and almost 300 in category

two, which is the small manufacturing category. It has not been until

recently, when our allocation plan was finalized, that the district

managers knew exactly what volumes they would have available for the

small business program. That is in place now. I believe that in most of

the coastal areas, where the member's riding is, in the order of 12 to

15 percent of the allowable cut will be reserved for the small business

program. My intention and that of the ministry is that now that we know

what wood is available, we will put forward schedules of sales so that

the small operators can see in advance what sales will be coming up,

and thereby perhaps get away from some of the panic bidding that has

taken place, when they are not sure what is coming up in the near

future.

From the government's point of view, I can not offer

markets for those loggers who are having difficulty selling their logs.

They have to assess market potential as they bid on the sales. If their

logs are not needed in British Columbia, they, like everyone else, have

the opportunity of requesting an export permit for them. We do not try

to encourage the export of logs. During times like we have now it can

be argued that if you allow the export of logs, at least you are

keeping some of the loggers employed. That may be true, but they still

require the process of the export advisory committee.

The

member says: "Why don't you prepare sites for reforestation and

undertake a massive tree-planting program during this period of market

problems in the industry?" I will advise the member that we do have a

massive tree-planting program in British Columbia, and it is expanding

year by year. Last year we planted in the order of 90 million seedlings

in British Columbia. This year our nurseries will be putting out very

close to 100 million. Seedling production is not something you can

instantly turn on and double your seedling production. It takes a

number of years to put a seedling nursery into production. Expansions

are underway at the present time. That is why our actual planting of

seedlings is increasing year by year at a tremendous rate.

are preparing sites for reforestation. Some will be prepared under our

employment-bridging assistance program. However, there is not much

sense in preparing sites for which you may not have seedlings next

year, and you would probably be faced with the problem of sites

brushing in again and you're having to reprepare them. We will prepare

sites as needed for seedlings as they become available.

The

member talked about what we are doing in marketing efforts in other

countries. The Ministry of Industry and Small Business Development has

been very aggressive over the last five or six years in working with

people in my industry — me and others — in attempting to expand foreign

markets. The member may have read in the newspaper these last few days

that the Minister of Industry and Small Business Development (Hon. Mr.

Phillips) has expanded his contribution to the cooperative overseas

market development program so that we can continue to aggressively

pursue these markets. I was in China last fall with a group of

industrial people for the purpose of establishing a liaison with that

country in the hopes of expanding markets there. Since that time — I

think it is a direct effect of our trip — there have been increased

sales to China. There is currently an industrial mission in China

working on market potentials, and we have had two visit from Chinese

delegates here. I think we have established a good dialogue with the

Chinese people, and there is some tremendous market potential in that

country.

I mentioned yesterday that the percentage of our

forest products sold in the United States has decreased rather markedly

over the last six or seven years — by about 10 percentage points. This

demonstrates that we are expanding our markets into other areas.

The

member asked what we were doing to compete in world marketplaces. We

are doing everything we possibly can to keep our industry

cost-competitive. I think it is the responsibility of all sectors —

government, industry and labour — to make sure that we don't impose

costs upon our industry that will make it impossible for them to

compete in world marketplaces. We are all in that ship together. We all

have to pull together and make sure that we do keep our industry

cost-competitive.

[ Page

8191 ]

I believe that covers the areas discussed by the member for Mackenzie.

MR. LOCKSTEAD:

I appreciate the minister's answers. I'm not sure I heard the response

I wanted to hear, but the minister did answer most of my questions, I

think.

In the matter of seedling production, it is our

understanding that you actually have more seedlings than sites prepared

this year. I don't know if that's true or not. We've been told that.

Site preparation is a very important part of reforestation. Perhaps the

minister can explain that, if he hasn't already.

The final

question I have for the minister at this time is: can the minister

assure this House that the application for a TFL by Scott Paper, which

I'm not necessarily opposed to.... I've checked with Fisheries and the

environmental people. I've read the briefs for and against that

particular application. That company employs almost 600 people, I

believe, directly for their specialty product. They do require a

certain type of wood. I'm not opposed to the company having that. Can

the minister assure this House that the return to the people of this

province under that TFL will at least be equal to the return received

by the people of this province under other TFL licences? I've heard

some criticism. Whether that criticism is valid or not is almost

impossible for me to say. I've discussed the matter with Scott Paper.

They've been very open with me. I've discussed it with other people in

the Forest Service and people involved with environment and fisheries.

The one question I have for the minister on that particular application

is: will the return to the people of the province be equal to the

return from other TFLs issued under similar circumstances on the coast

of British Columbia'?

HON. MR. WATERLAND: I can tell

the member that we are currently addressing the massive volumes of

information that were prepared and put together as a result of the

tree-farm licence hearings held in Vancouver, I believe, in March.

The

numbers we have developed indicate that for the utilization of broad

leaf species such as cottonwood by a company like Scott Paper the

return to the government is higher if you consider all of the tax

revenues that flow from it. I'm not speaking just in terms of stumpage,

because stumpage revenue is lower because it's a lower-value species.

However, if you consider stumpage plus the personal and corporate

income tax of Scott Paper, and make a comparison between that, the

direct stumpage and the corporate and personal income tax received for

an equal volume of coniferous species, you will find that in the

cottonwood. as used by Scott Paper, the total revenue flow to the

government per cubic metre is in the order of $31 per cubic metre. The

same comparison for a coniferous species is in the order of $21.

There

appears to be a substantial increased benefit. However, there is a

limited market for that type of product, and you must also consider the

fact that Scott takes the product to the final retail level. The value

added is substantial. Therefore the employment created is about seven

to one. It requires about seven man-days of work per cubic metre of

cottonwood, versus one for the normal coniferous species and the

products we produce from them. There are very substantial benefits. I

will be announcing the result of our deliberations on that application

probably in the very near future.

MR. PASSARELL: I have about eight questions for the minister. The first

one concerns the timber sale up in northern British Columbia. I have some questions

on the order paper which we can't deal with in committee stage, so I have

to go around that a bit, but I would appreciate the minister answering those

questions. The question I have concerning the sale up around the Kaska Dene

area is: what is Cattermole doing with this timber? Are they processing

it in British Columbia, or are they taking it up into the Yukon? We'll

have to stay away from there so I'm not ruled out of order in dealing with

questions on the order paper.

The

second question I have concerns B.C. Timber and the road access from

Nass camp to Terrace. That's a forestry road which approximately 700

people use. Does B.C. Timber, through the ministry, have any idea of

any kind of new...?

Interjection.

MR. PASSARELL: No, I'm not out of order for talking about questions on the order paper. You're jealous.

MR. CHAIRMAN:

Seriously, hon. member, you are not in order. One cannot discuss

legislation that could be on the order paper, but a question is quite

in order as long as it deals with the administrative actions of the

minister.

MR. PASSARELL: Is anything happening with

the road improvement for the 700 Nishga people who use that road? I was

wondering if the minister would know of that.

On the

questions concerning B.C. Timber, can the minister explain why the

Kaska Dene people were not consulted regarding the timber sale to

Cattermole Timber in northern British Columbia? From discussions I've

held with the Kaska Dene, they were told they had approximately three

weeks to be notified of the sale. I m wondering why the Ministry of

Forests hadn't contacted the Kaska Dene prior to the sale of thousands

of acres of timber in their territorial land.

The third

question I have for the minister concerns Silver Grizzly, which is also

in my riding, and I'm wondering why in this stage of tough economic

times we're allowing raw logs to be exported out of this province at

ever-increasing rates. Why hasn't Silver Grizzly been using the

facilities in Terrace or Prince Rupert for processing of their logs

instead of helicopter-logging in the north of that area and sending the

raw logs overseas?

The fourth question is the silviculture

program. I notice from the budget that it's down by approximately 1,200

percent. Last year it was S24,395,863: this year in the budget it's

only S2,054,521. I'm wondering why there is such a cut in this

important silviculture program. The minister earlier this morning

mentioned that last year there were 90 million seedlings, this year 100

million seedlings. Where are these seedlings coming from? Are they

coming 100 percent from British Columbia or Canada or are we importing

seedlings from the United States?

The fifth question is the

harvesting program. Last year it was $51,116,904; this year it's been

cut back by a little under $10 million to $41,346,306. Why has the

harvesting program been cut by approximately $10 million?

Fire

protection program: $15,844,382 last year was cut in half to $7,539,881

this year, Why has the fire protection program been cut approximately

by half?

The range program was also cut by approximately 15

percent from $4,660,150 to this year's figure of $3,495,079. Why has

the range program been cut?

[ Page 8192 ]

The

seventh question to the minister is concerning Bell-Irving. There was a

timber sale this year up at the Bell-Irving, and I'm wondering if the

minister can state what's happening. Are logs being processed through

the port of Stewart? Where are these logs going'?

The last

question I have to the minister is on the fire site rehabilitation,

which was cut in half. Last year it was $120,881, this year $64,294.

I'm wondering why this important program has been cut almost in half,

when it looks like we're going to be in for a record number of forest

fires this year. I'm just wondering why we've taken the rehabilitation

sites and cut them in half under these estimates.

Those were about nine or ten questions, Mr. Chairman, and I would appreciate the minister's response.

HON. MR. WATERLAND:

Mr. Chairman, first of all I'll go into the numbers the member has

quoted. I'm afraid he was misinterpreting the figures in the blue book.

He was looking at figures that do not include

section 88 and fund

allocations. If he looks on page 128 he will see that protection, for

example, last year was $17 million, this year it's $21 million — an

actual increase. The silvicultural program has stayed about the same;

last year it was $52,399,000 and this year it's $52,438,000. So if he

compares those figures he will see that in the area of silviculture,

protection and so on, there is no reduction. Some of the work in

intensive silviculture has been levelled off, but as I pointed out

yesterday, more than what was levelled off will be made up by our

employment bridging assistance program.

Seedlings. The

numbers I quoted are all seedlings produced in British Columbia. We did

look into the possibility of buying some seedlings out of Oregon and

southern Washington state which were not required there. However those

seedlings would not have survived in British Columbia. They were not

from the same provenance that our seedlings would have to be from in

order to survive in the province, so we couldn't make use of them.

The

member talked about Cattermole Timber. Cattermole is taking some wood

from northern British Columbia — I believe it is from the general

Cassiar area — and manufacturing it at Watson Lake. At the same time we

have an agreement with them whereby they will bring wood from the Yukon

and Northwest Territories down into the Fort Nelson area for

manufacturing. It happens to be where the plants are and it seems like

a pretty good tradeoff.

The member has some questions on the

order paper, and he repeated them to some extent here. Regarding the

Kaska Dene band I can only advise that they have been advised in the

normal route — through advertising in papers, by notices posted in post

offices and so on — of the sales that will be taking place in what they

claim to be their traditional lands. I don't treat any group of people

any differently than others in providing them with information. For

example, the timber sale he was speaking of was advertised in April

1982 in the Gazette and it

was posted in newspapers in the area. The sale was not finalized until

June, so they had a couple of months to be involved in that. The Kaska

Dene council are treated in the same manner as others. The information

is as available to them as it is to anyone else. If they have a

particular interest, I suggest they take a particular effort to find

out when these sales are coming up and where.

I believe that covers the questions asked by the member.

MR. PASSARELL: I gave the minister nine questions. Maybe the minister, through his staff, can peruse the Blues and come back with the answers.

Concerning

the seedlings and the silviculture program, it still says "$24,395,000

down to $2 million." I respect the minister's statements with regard to

the 1,200 percent cut and how it is made up in other programs. I would

appreciate his responses to the other seven or eight questions I posed

to him concerning Silver Grizzly and some of the other cuts in the

harvesting program and the fire site rehabilitation program.

HON. MR. WATERLAND:

I did neglect the question regarding Silver Grizzly. Silver Grizzly has

been pioneering in helicopter logging techniques, and we have been

cooperating with them in order to acquire cost data on this type of

logging. Helicopter logging can add to our allowable cut by bringing

areas into production which were not otherwise accessible. We did grant

Silver Grizzly an export permit for the simple reason that the cost of

helicopter logging is so high that local manufacturers could not afford

to manufacture those logs and still allow the helicopter logging to go

on. I believe, though, that helicopter logging costs are coming down

because of the gained experience that has resulted from our working

with them and allowing them exports. Silver Grizzly still has to go

through the normal process of export approval before they can export

logs. They have been a pretty aggressive company in experimenting with

helicopter logging. We have all gained a lot from their

experimentation, and future permits for export will have to be dealt

with in the same manner. Timber sale will be coming up in the not too

distant future in that area. I believe Silver Grizzly is interested in

bidding on that sale. I have indicated that they would be interested in

establishing a sawmill in the area if they are successful. They will

have to go the normal competitive route before acquiring that kind of

timber.

MRS. WALLACE: I have three rather basic

questions for the minister. Unlike the questions of my colleague for

Atlin, they are not specific. They are more or less general and

relative to the policy of his ministry and his responsibilities,

although they do relate to specific areas within my own constituency

generally.

A few years back the minister brought in new

forest legislation. At that time he indicated to us that we now had a

Forest Act that was going to allow much more control over our forest

resource and a minister who was going to really take control of the

forest industry and ensure that there was a just return to the people

of British Columbia from our forest industry. I submit to you that that

has not happened. I Would be the first to recognize the economic

problems that the forest industry is facing at this time, with the

downturn in the market and the general economic recession in which we

find ourselves. But I would also suggest, Mr. Chairman, that this

minister has done little or nothing to ease the burden of that downturn

on the people of British Columbia — on the workers involved in the

forest industry and on the taxpayers generally.

We know that

the five-year Forest and Range Resource Fund, which came in with such

great fanfare, and which the minister would try and have us believe is

still intact, is not intact. Those moneys and that five-year plan have

been completely removed, and the minister's words at the time he

brought that in should certainly still be very true — should be more

true in this time of unemployment when we could be

[ Page 8193 ]

using our workforce to carry out the objective. He said, and I'm quoting from Hansard :

order to assure a continuation of funding over the years — and

especially during those parts of the year which, for the reasons set

down long before, are the transition period between fiscal years in

government — we are making a provision in this bill...that we would

have the 146 million for over five years.

He went on to say that all silviculture techniques

we use are not things that we can start and stop year by year. There

must be assurance that funding will continue through the years and will

actually, in our case, increase through the years.

Then he went on to say:

The government has made a commitment in accepting the five year

management program. This bill before us today is a part of that commitment,

a part that will assure that this funding will not be intermittent, but will

be continuous and will give the Forests ministry, in cooperation with the private

sector, an opportunity....

Those points are still valid, but unfortunately the minister's fund is no long intact. It's completely removed.

That's

just one example of the fact that this government goes willy-nilly as

far as forestry is concerned. The minister is great at signing his name

to fine-sounding letters, and making fine-sounding statements at

various meetings, some of which I've attended with him.

One

point that I wanted to refer to is the forerunner of what's been

happening in our forest industry, and that is the situation at

Honeymoon Bay, where Western Forest Industries was taken over by ITT

and then eventually became Western Forest Products, a consortium of

Rayonier, B.C. Forest Products and Doman. It was interesting when that

first takeover was in the works that the minister wrote to the

representative of the workers at the plant and said:

have just now returned to my office, and by this letter will confirm

statements made to you at our meeting in Lake Cowichan. I made it, as a

condition of my approval of the ITT takeover, that the new owners must

make every effort to continue employment in the wood-manufacturing

plant at Honeymoon Bay. I have, since our meeting, discussed this

matter with the directors of Western Forest Products and have

reiterated the takeover condition to them. As a result of my

discussions I have the sincere feeling they are making every effort to

fulfill this commitment.

"In discussions with

them a proposal was presented which, if carried through,. will resolve

the problem of wood supply at Honeymoon Bay. The ministry will be

pursuing the proposal with Western Forest Products, and I feel

confident that the details can be worked out in the near future. As a

result of my discussions with Western Forest Product's directors. I am

even more confident now than during my meeting with you that the

wood-supply problem can be resolved."

Those are the things

he said. We all know what happened. They were fine-sounding words. but

a few months later there were headlines like: "357 Jobs Vanish With the

Mill." There was three days' notice and four days' notice. Some were

told on Wednesday, I believe, that the mill was going to be down on

Friday — people who had been there for 30 years and more. He built up

false hopes by those kinds of remarks.

What did he actually do? I sat with him in a meeting at Lake

Cowichan with the village council. sometime after the mill went down,

in an attempt to try to resolve some of the problems that had occurred.

One of the major concerns was the fact that the company owned the

property where an industrial site was proposed and they were tying this

in with the settlement of the townsite. The minister at that time

indicated that he thought the company really should separate those two

issues, and he promised to write a letter. He did write a letter, but

that letter was quite different in its tone than the firm sort of

commitments he made at that meeting. His letter to the company, when it

finally came, was very long and very vague in its demands.

It's also interesting to notice that when this particular

takeover was in the works — it took place in October 1981 — it wasn't

until April of this year that B.C. Forest Products finally applied to

FIRA, after the fact, to see whether they could legally take over the

company. Where was the minister when all this was going on? Did he not

make any representations? Was he not concerned about the possibilities

there? Was he not concerned about that mill? The regional district is

now trying to negotiate with Western Forest Products. I sat in on a

meeting months ago, when the regional district actually made an offer

to Western Forest Products. There was no response at all — dragging

their heels. I suggest to you, Mr. Chairman. that the real purpose of

that takeover was to get their hands on the good supply of timber that

will be ready in ten years; and the intent from the word go was to

close down the mill at Western Forest Products. I think the minister

sat by and let that happen.

Now we have the Chemainus

situation. Here we have another takeover, Mr. Chairman. The Premier was

very adamant when CPR was going to take over MacMillan Bloedel; he said

that B.C. was not for sale. And CPR did not take over MacMillan

Bloedel. But when Noranda came along. It seemed to be a different

story. We have Noranda taking over MacMillan Bloedel. The history there

is very interesting indeed. Over 500 employees have been put out of

work. Of course, that particular mill is an old mill — we know that.

But MacMillan Bloedel had announced a $500 million expansion program,

part of which was to go into the Chemainus mill. The announcement was

made that they were going to upgrade that mill. In fact, they had put

in a new sorter — the kind that can be moved easily. Incidentally, it's

all-steel frame, set in cement. This all began three years ago, and

they publicly announced that the Chemainus mill upgrading was included;

in fact, they put in some landfill so that this could go ahead. Now

that the mill is down. some MacMillan Bloedel representatives are

saying quite frankly and openly that the money slated for Chemainus is

being spent in Alabama. Where was the minister when all this was going

on? What was he doing'?

I have a letter here from his

deputy, which indicates that when Noranda took over he made some

conditions. He said that Noranda will not seek to elect a majority of

the members on the board, that Noranda will dispose of its shares in

B.C. Forest Products. and that M&B's capital expenditure program

will not be detrimentally influenced by Noranda. I wonder if the

minister has even inquired whether Noranda had any influence on those

decisions not to invest in Chemainus.

It seems to me that

not only MacMillan Bloedel, Noranda and B.C. Forest Products but also

the various other forest companies in this province are perhaps using

this economic downturn in the forest industry to get their own houses

in order. I wonder if any studies have ever been undertaken by this

ministry to establish whether or not they have an overcapacity in

milling facilities in British Columbia. Have any rational studies been

made to see whether or not this is the

[ Page 8194 ]

case?

Has any attempt been made to sit down with the major logging

corporations in this province and work out a rational plan, if that's

the case, to ensure a flowthrough of jobs and the utilization of the

forest resource?

The Chemainus closure is very similar to

the Western Forest Products closure, but it's different inasmuch as

MacMillan Bloedel do have a timber supply. It's interesting to note

that the logs that would have normally gone into that mill are still

being harvested, dumped into Chemainus Bay, and transported to White

Pine on the mainland, or to Alberni. I wonder why that is, Mr.

Chairman. Something was mentioned yesterday about sympathetic stumpage.

Has it anything to do with the fact that some forms of tenure give a

lower return to the Crown, a lesser stumpage, than other forms of

tenure? Is that why it's happening? Is this an attempt to get various

members of the workforce arguing with each other — the old divide and

rule philosophy? Is that part of it? Has the minister ever inquired or

looked into whether or not that is part of it? He says he has great

powers under the Forest Act. Has he ever tried using any of them, Mr.

Chairman? It seems to me that there's a great game of chess going on

with our forest resource, and the workers of this province are pawns in

the game. Never was that exemplified more than in the case at Chemainus

mill. We were down at Christmastime; we didn't know when we were going

to open. We were down again just after Christmas. We came back, and a

few weeks after we were back we got notice that we were going down

again indefinitely. How long is indefinite?

Has the minister

ever attempted to get an assurance from the manager of MacMillan

Bloedel that that mill will reopen? If that mill stays closed for 18

months, the people who work there will lose a tremendous amount in

severance pay. Their contract specifies that after 18 months the

Employment Standards Act applies. The contract, if in fact there is a

closure of a mill, grants one week's severance pay per year of

employment. The Employment Standards Act sets a maximum of eight years.

There are at that mill, Mr. Chairman, I believe 175 employees who have

25 years and more of service; of those, half have over 30 years of

service. Is it a game of chess, and are the employees pawns in this

game? Has the minister checked into it? Has he made any effort to gain

an assurance that that mill will operate within that 18 months'? If he

hasn't done that, will he now proceed to do so? Because believe me,

there is a tremendous number of very concerned workers.

you have worked in a mill for 30 years, you are probably 50 years of

age or more. What chance in today's economic picture does anyone 50

years of age have to procure employment anywhere else? In addition to

that, you've established your home, raised your family and you probably

have grandchildren. It's an impossible situation for those workers, Mr.

Chairman. I have seen or heard nothing that this minister has done. I

have letters to him, but I don't have any responses. I have a letter

here from the president of the local union urging him.... He's not

unaware of this, because this letter is dated May 11. He explains the

situation relative to the severance pay. He says:

"You

must understand why this is so important to us. Firstly, there are many

junior employees who are trying to raise a family and provide for them

during these difficult times. These people are faced with a proposition

of not knowing when to expect a possible return to work; therefore they

do not know whether to pack up and leave the area in hopes of finding

employment elsewhere or to wait it out here.

"Secondly, there are many workers who are over 50 years

of age and have more than 30 years' seniority. As you know, these workers

have little chance of finding employment due to their age factor. They still

have some 15 years to work for a full pension and ten years until they are eligible

for early retirement. These people face a very bleak outlook of uncertainty."

"Thirdly, there's a large group in the middle who are trying to make house

payments...." and so on.

Have

you done anything to ensure that that mill opens, even if for a short

period of time, to at least keep the flow so those people have some

degree of security relative to unemployment insurance, to their

pensions and to their homes? I haven't seen it happen. Instead, we hear

much talk about the so-called employment-bridging assistance program. I

don't think the Minister of Forests has had much to do with that

either. If the Minister of Forests had anything to do with it, I don't

think he'd be calling it by a name like that and I don't think he'd be

calling the workers involved in it participants. It seems to me that

it's something dreamed up by someone who knows very little about the

forest industry.

We've heard lots of talk. We've had the

head of Manpower come out and say: "We've got six applications." We've

heard another representative of the federal and provincial governments

say that they're going to make 2,000 jobs. We've heard nothing else:

Nothing seems to happen. Are there any programs underway? Are there any

programs proposed for Vancouver Island? Have these applications been

approved? Are they going to take place on Crown land, or are they going

to be done on company land? All I have seen is a draft dated, I think,

May 13 and called "Program Guidelines to Companies." I don't know if

this is the current thing that's being used or not.

haven't talked much to the trade union movement about this, because

they don't seem to know anything about it at all. They haven't even

heard anything about it. I think they did sit in on a couple of

meetings, but got very little information. When I talked to company

representatives about this, do you know what they told me, Mr.

Chairman? They say that it won't work. They say that what the

government is asking them to do is break their contract with the

unions. That's their concept of this program. If it's working anywhere,

I'd like to know about it — how many people are employed and what

they're doing with it. I'd like to know what the plans are for

Vancouver Island — when they're going to get underway, where they're

going to be and who's going to be employed.

Are mill workers

going to be employed? I hear that they're not, that this is only

available to loggers and forest workers. I hear that mill workers would

not be eligible for this because of the safety problem. If they were

eligible, there would have to be quite a training program, because mill

workers are not used to climbing around the sides of mountains, using

chainsaws and all the things that go with site preparation. Neither do

they have the equipment. Perhaps they don't have safety shoes. They may

have safety shoes, but they certainly don't have rain gear, and they

may not have a lot of other equipment. It's been estimated to me that

the cost of outfitting themselves to do this job would be something

like $200. With the amount that they get extra, over and above their

unemployment insurance, it would take several weeks to make up the

extra costs involved. So there would

[ Page 8195 ]

have

to be some assurance that the program was going to be long enough to

make it worth their while to get that equipment and to train to do the

job. If it's just a two-week program, or even a four-week program, that

isn't going to be the case.

The other thing is that I

understand this does not apply as a credit to unemployment insurance,

unless you're completely out of unemployment insurance credits — then

you can earn a few weeks.

The whole thing seems like a

bureaucratic nightmare that's costing the taxpayers a mint of money for

a lot of public relations and no action. I certainly haven't seen any

action. If there is some action, I'd like to know where it is and how

many people are actually working under this program,

HON. MR. WATERLAND:

It amazes me how negative the member for Cowichan-Malahat can be about

a very sincere effort to assist those who are currently unemployed in

the forest sector. I would suggest, if the member is as interested as

she claims to be, that she could very easily get the current

information that is in wide distribution around the province now,

answering the questions she has proposed here today. We have put

together rather substantial packages of information after having worked

through the administrative procedures that must be followed in order to

get the program into place. If the member had been in the House

yesterday, she would have heard me advise the House that we are

currently in the process of approving several projects. In fact we have

approved some eight or ten projects. but they cannot get underway until

the master agreement is signed in Ottawa. That agreement was signed

several weeks ago by our Minister of Labour (Hon. Mr. Heinrich) and

myself, and it was then sent to Ottawa. All the procedures — the ways

of implementing the program and the agreements that have to be signed

between sponsoring companies and participants — are in place. It's

simply a matter now of CEIC selecting employees to take

part in the

programs.

Safety aspects are a very important part of the

program. If there are people involved who are unfamiliar with the type

of work that has to be done, we are insisting that a training program

and proper supervision be provided so that we don't have people

unnecessarily subjected to hazards. The program is open on a voluntary

basis to anyone who is unemployed. They don't necessarily have to be in

the forest sectors, but it's directed to those people who are employed

in the forest sector — mill workers, loggers, pulpmill workers or

anyone who voluntarily wishes to take

part in the program. The program

will be available to be put into place on any managed forest land. I

went into this yesterday. One of the problems we have on Vancouver

Island is that a great deal of forest land is incorporated into

tree-farm licences, both private and Crown land, and there are other

great tracts of privately owned land. In order to make the program as

broad in area as possible. we're including any land that has a history

of forest management. We're not suggesting that someone with a private

40 acres can take advantage of this program to enhance his 40 acres

when it has not been managed in the past. But any land that has been

managed either in a taxation tree farm or in any tree farm itself or

even land that is outside of taxation tree farms or tree-farm licences

that has been managed and has a history of management is eligible.

The

member went into considerable debate regarding the Chemainus mill. I

suppose she would include other plants of MacMillan Bloedel that are

currently in the shutdown state. I have to agree with the member

wholeheartedly that the uncertainty is very difficult for employees to

deal with, and it is equally difficult for the company to deal with,

When they say "an indefinite shutdown," such as they have said at

Chemainus sawmill, that's just what they mean. They don't know when

markets will be recovering sufficiently to allow them to go back to

work at that plant. But I have had very lengthy discussions with senior

people in MacMillan Bloedel and they advised me that "indefinite" means

just that. They don't know. They would very much like to be able to

advise their employees when they can reopen. but they don't know what

the market situation is and none of us do. All we know right now is

that it's very depressed, prices are low and volume movements are very

low. It's a difficult thing to deal with, but I'm afraid, Madam Member,

that I have no instant magical answers, nor does anyone else. We are

taking considerable effort and administrative moves within the ministry

to try to keep as many people employed as possible by our sympathetic

administration policy. We're trying to hold back on any cost

impositions that we could through normal procedures impose upon

operators. because we realize the very difficult economic times they're

going through right now.

[Mr. Davidson in the chair.]

The

member talked to a considerable extent about the Honeymoon Bay

situation. When the transfer was taking place I did ask and the company

agreed that they would make every effort to keep that operation going.

I had many hours of discussion with them and they did many hours of

planning themselves — the three companies involved in Western Forest

Products. I am convinced that they did make sincere efforts to keep

that plant going. but it is an old, obsolete plant with a very limited

timber supply. The only way that plant could have been kept going would

be if we were to somehow take timber allocations away from someone

elsewhere was also using them and creating employment and direct them

there. We had no legislative authority to do that: there is no

uncommitted wood available for that program. As the member we'll knows,

there is a considerable loss in allowable cut brought upon us by the

west coast park proposal; we have to recognize that. I am convinced now

that there was really no practical way of keeping that plant going.

It's a very sad situation. I did attend, as the member mentioned, a

meeting at Cowichan Lake. I had followup discussions with the companies

and the Ministry of Municipal Affairs. and they have, as a result of

the discussions, placed a senior person to oversee what is going on

there. I recognize that the regional district made some kind of offer

to purchase the assets. I don't think that it is appropriate for the

regional district or a level of government to get involved in the

purchase of a townsite. In any event, if they do and if the company

wishes to sell it to them, they would have to do so based on a

realistic price, because it is an asset of the company.

have not followed up recently on what progress has been made in

resolving the administrative problems of the regional district. the

Ministry of Municipal Affairs and the company insofar as the Honeymoon

Bay townsite is concerned, but I assume that is going along. I

understand from the meeting at Cowichan Lake that everyone agreed it

would take some time before all the problems could be finally resolved.

I don't really know where that is right now.

Western Forest Products, like most companies in the province, is having a difficult economic time. They were

[ Page 8196 ]

losing

a substantial amount of money by attempting to maintain the Honeymoon

Bay operation. In fact, right now they're probably losing very

substantial amounts of money on all of the operations that they

acquired from ITT-Rayonier. However, I'm sure they will get through

these difficult times as well. I think if we had insisted that they

continue to run that operation, perhaps we couldn't say that today. We

have to recognize the difficult times we're in. I do meet with

representatives of corporations and individuals involved in the

industry, with people in labour, to try to find ways of getting around

some of the difficulties we're having. I'm as involved in it as anyone

else, and I'm making every effort to help get through these times.

The

member mentioned something about "sympathetic stumpage." I don't know

what she means by that. Our sympathetic administration does relieve as

many of the higher costs as we can from the industry. By doing that,

they're able to carry on longer. I think everybody involved —

government, the industry itself — has pared costs as much as they can.

Unfortunately, a lot of this is through a lessening in the number of

people employed. But at least we're looking after and helping those who

are still employed. Many of the companies, as the member knows, have

decreased their staffing levels on the salary side by very substantial

amounts. Those people too are now unemployed; and it's difficult for

them as well.

I went into the employment bridging assistance

program with the member, and also with the member for

Shuswap-Revelstoke (Mr. King). As soon as the federal government signs

the master agreement, we can complete the formal approval by the

western director of CEIC and programs will get underway. Eight or ten

of them are approved, and we have several dozen additional applications

before us. I expect the program to be underway shortly. In many parts

of the province we couldn't have been underway much sooner because of

weather conditions, breakup in the interior, snow conditions and so on.

I hope it will be signed in Ottawa, perhaps today, so that we can get

on with putting people to work in that program.

MRS. WALLACE: I thank the minister for his answers. I have just a couple of quick questions.

I'm

somewhat surprised to hear him passing judgment on what a regional

district should or should not do. Surely that's a little outside of his

purview if a regional district decides they want to do it. Is he

opposed then to North Cowichan forest? That's an outstanding example of

local government involved in forestry. The minister did the official

opening. There's an example of local government involved in a forestry

project. It's a planned and managed forest utilized by the people who

live in the area as parks and recreation at one point, and then later

harvested. There's a whole educational process going on there, and a

real job is being done by local government in forest management. What's

so wrong with a regional district doing exactly the same thing?

Anyway,

that is completely beside the point. The problem is that the regional

district made an offer, and Western Forest Products has not even

replied. The regional district has looked at ways and means of carrying

out their offer, but they can't do anything until and unless Western

Forest Products replies, and there's been no response. That's the

problem that's facing them at this time; that's part of the whole

tie-up. The thing is held back just that much more.

Regarding

the Western Forest Products closure, I know it's an outdated mill and I

know it would be costly to upgrade it, but the minister didn't answer

my general question about mill capacity in the province. Western Forest

Products closed their mill down in October 1981. We have an

announcement from B.C. Forest Products, one of the three in that

consortium, that they are going to build a new mill in conjunction with

their Crofton operation in 1983. Surely, if the same company is closing

one mill down and building another, there should be some correlation,

some flow and some assurance that the one mill stays open until the

other mill is operative, so those people living in that vicinity have a

continuing job. I submit, Mr. Chairman, that that's a responsibility of

that minister, and that's a responsibility he has failed to carry out.

MR. GABELMANN:

I want to make a few general comments, most of which relate to

constituency matters. The first thing I want to say is that I often

have occasion to deal with people in the minister's new structured

offices in both Campbell River and Port McNeill in my riding. I want to

say very clearly at the outset that I have had nothing but excellent

cooperation from what I think is a very professional and very

well-trained staff in both cases. I can't comment on any other offices

because I don't deal with them, but I do know that in both Port McNeill

and in Campbell River the people I have to deal with on an almost

weekly basis are really very cooperative and very good. Their problem

is that there aren't enough of them and they're run off their feet. The

shortages of personnel will, I think, come to haunt us in future years

— if not in burnout with some of the existing staff, then certainly in

terms of properly managed operations that will have an effect years

down the road. I did want to say at the outset that there are some very

good people there, and the public of B.C. is well served by them.

The

minister will understand that geographically, at least, I represent

half of Vancouver Island. Almost all of that is forest land, and most

of that is in various TFLs, but there are some public forests as well.

The one I just want to mention briefly is the Sayward forest, which has

been for years and still is in very real need of some major work in

terms of thinning, spacing particularly, and fertilization, The forest

is getting older and it's still in pretty desperate shape. The kind of

money that needs to be spent in there to make sure that that can be a

productive source of fibre in 30 or 40 years is not being done at the

level that is required. I think we're shortchanging future generations

if we don't spend that kind of money today.

In that context

I think it's nothing short of disastrous that the five-year plan, which

was announced with the kind of commitments that were contained in it,

is not being maintained, is not being kept. We tend to do this in

society in so many areas. We try to save some dollars today. We do this

in social services in the same way. We end up saving some dollars this

year, but at a phenomenal cost in 5, 10, 15 — and in forestry's case

sometimes 60, 70, 80 — years down the road. I really wonder if we

aren't shortchanging our children and grandchildren in this respect. I

wonder whether or not we're serving our responsibility properly when we

make the kinds of cutbacks that we do in so many government programs.

The five-year plan cutback is as good an example as any.

have a sense that the government doesn't take its full share of

responsibility in terms of marketing and developing new markets.

Obviously the Pacific market is one that is now

[ Page 8197 ]

beginning

to develop. I know that some of the companies in my constituency have

opened a few markets in that area. One of the problems they have is

with quality. Even with modern planers and planing mills they are often

not able to meet the high quality demands, particularly with the

Japanese market. I don't have a sense that there is very much work

being done jointly between the government and the companies to upgrade

that. I don't have a sense that there are some very vigorous attempts

being made by the government to develop markets. I know the minister

has travelled, and I know that there have been various delegations from

the ministry to China and to other places in the east. There's not a

sense.... Maybe it's happening, but if it is, the workers in the

industry don't seem to feel that it's happening. I don't have a sense

that it's happening in the kind of vigorous way that is required. We've

been so dependent on the American market, and what's happened this year

in this province should really have been predictable. We put all of our

eggs in the American basket, and now we're suffering the consequences.

It was predictable, and we didn't take the steps that should have been

taken before to diversify the markets. I'm not confident that those

steps are now being taken in a vigorous enough way.

I wonder

what the minister's reaction is to the idea of establishing an agency

similar to the Agricultural Land Commission for forest land. I think he

and I would share the view that forest land needs to be preserved. We

need to understand which of it is the best. We need to make some

decisions about how we prevent the continued alienation of that land.

It never ceases to amaze me that we pick one corridor for a highway,

another corridor for a pipeline, and yet a third corridor for a hydro

powerline. Usually those corridors, because they're cheap, go along the

bottom land and the best land. I don't understand why we don't count

the costs of doing that and understand that even though the initial

costs of establishing those swaths through the bush might be higher if

we went into some of the upper land or poor timber, it would, in fact,

be a cheaper cost for society in the long term by preserving the good

forest land. Perhaps we do need some kind of commission or agency that

will protect and preserve forest farmland over the years.

One

of the difficulties I have in my riding in making the argument for the

preservation of forest land with foresters, Forest Service people and

various people who are really quite concerned about forestry is that

people who are not directly involved in it look around them and say

that everything in northern Vancouver Island is already controlled by

the big forest companies. That's a reality. There's a perception

problem there. It appears to people that everything is already

controlled by the forest industry, whether it's the government or the

companies, and they ask why they should worry about a few more acres

here or there. That's a general problem of perception that the minister

has. I cite a current example that the minister may well be aware of.

The Forest Service is attempting to take over from the lands branch the

responsibility of Malcolm Island in terms of setting up a managed

provincial forest on part of that island. They are meeting intense

opposition from the residents, probably almost totally unanimously,

who, I think, quite strangely, would prefer to be managed by the lands

branch rather than Forests. If I had my choice, I'd pick Forests, not

Lands, in terms of how the two operate. You can at least deal with

Forests, but you can't deal with Lands.

There is virtually

unanimous opposition on the island to the attempts by the Forest

Service to take over the management of part of the land on that island,

which is good productive land. You have to ask yourself why all these

people are so opposed to it, because from a public policy point of view

it makes sense that those forest lands be cleaned up and replanted

anywhere that is needed, and that whatever else is required be done to

upgrade those lands so they become productive forest land. Most of the

people who live on the island either work in or around the forest

industry, or have great connection with it, yet they're opposed to what

the ministry is doing. I think the minister should ask himself why that

is. I think it's because he has allowed the big companies to be so

dominant, particularly on the northern part of the island, that the

public doesn't trust anything the companies do. Of course the

government is lumped in with the companies because the government has

given those companies the massive powers they have over almost all of

the land that exists up there. To go back to the first point on that

issue. It may well be time to establish some kind of forest land

reserve in this province that has sonic of the powers that the ALR has.

The

minister and I have had discussions about the contractor clause in the

past, and I've raised the issue that when the 50 percent clause was

provided in the Forest Act my initial reaction was that that was a good

idea. I was supportive of it. I didn't understand then some things that

I understand now. Every tree-farm licence is different, and various

parts within each tree-farm licence have some differences that militate

against an absolute kind of proposal like a 50 percent clause. It so

happens in my constituency that the Tahsis Co. TFL should probably be

sitting at between 70 percent and 80 percent contractor, as it does.

That's probably an appropriate division between the contractor and the

company operations. But in various parts of their TFL it should be

required that it be 100 percent company-operated. I cite the case of

Zeballos, Tahsis and Gold River. I don't understand why we have a

policy that allows for the destruction, or possible destruction, of

communities by allowing contractors to operate camps within a few miles

outside the town itself.

When reductions occur in logging,

as they have this year — particularly in Zeballos, where there will be

permanent reductions because of the limited log supply — the reductions

are carried out on a so-called even-handed basis. But that means that

people with eight months' experience in the contract camps lose their

jobs and seniority, and those who have as much as eight or ten years'

seniority in the company operation also lose their jobs. That's not

even-handed. It means that the community suffers. It means that the

people with seniority can lose their jobs. I would argue for a much

more flexible application of the contract clause. It should be decided

upon TFL by TFL, within a general philosophical framework that says we

want to split it up and share it. But there should be sonic

flexibility, so that the minister can say, "Okay, in this part of your

TFL you should be 80 percent to 100 percent contractor, but in this

other part of your TFL you should be 100 percent compam operation," to

help preserve communities and allow them to continue to exist. It's a

lot better for loggers to live in their own homes in an established

community than for them to have to commute to logging camps. That's the

kind of future economic and social direction that I personally would

like to embark upon.

I think it's a much healthier situation

that people who work in logging camps in and around Zeballos should

live in Zeballos when possible. They shouldn't be travelling every

[ Page 8198 ]

week

from Courtenay or Campbell River. It's disruptive to family life and

it's expensive to society. It means that the community of Zeballos is

faced with being uneconomic. That is not directly as a result of the

contractor clause, but a different way of handling that clause would

allow us to make sure that these communities had some long-term

viability. Obviously I'm also concerned about the whole seniority

thing. It strikes me as being strange that in bad times we're able to

lay off people with many years' experience but keep people on who have

had only a few months' experience. That's also an effect of this clause.

Another

thing that is happening that I'm sure the minister is aware of — and I

would be interested in his reaction — is that some of the contractors

are becoming as big as the big, bad companies were in the first place.

It's pretty expensive to operate.... It costs a million dollars to buy

a piece of equipment these days. The little guys go out of business in

bad times, but the big guys get bigger and bigger, certainly in my

area. We aren't very far away, particularly in these economic times,

from seeing some of these contractors grow almost as big as these big,

bad multinationals with the TFLs. It's a little strange that the

original intention of the contractor clause, as I understood it, was to

allow some of the little guys to get a piece of the action. It doesn't

really work. It might work if we had continued good times. But many of

the really little guys are being driven out of the business. When you

talk about a million or more dollars for equipment at today's interests

rates, how many months are they going to be able to keep those machines

in operation? It's just not feasible. That's a very real thing that's

happening, and we'll have to deal with it one of these days.

The

Minister of Forests has responsibility for conducting multi-use studies

— for example, the Tahsish study currently underway. I think it leads

to some strange situations. The Minister of Forests and his ministry

are responsible for conducting, staffing, organizing and running those

particular studies. We're talking about conflict between logging and

wildlife and recreation and a variety of multi-use conflicts, where one

of the participants is organizing and running the study — even though

independent chairpeople are appointed and community people are

participating in the study. Wouldn't it be far better if a more

independent agency, such as the Environment and Land Use Committee,

were in fact the administrative body running these studies into

conflict situations?

From informal discussions with people

in the Forest Service, I think there is a fair amount of agreement

between people on the minister's staff, particularly at lower levels,

who share the feeling that it's inappropriate. It would be the same if

we were doing a study on the Tahsish and said to the Parks Branch...or

to be even more absurd, to the people in the ecological reserve branch

of the Ministry of Lands, Parks and Housing: "You will do the study

here; you will organize it, and your staff will be the support staff

for it. We're going to decide whether the place should be set aside as

an ecological reserve in a park, or in a partially logged situation, or

whether the wildlife potential is going to be maintained by a different

kind of logging program." It would be absurd to have the ecological

reserve branch run that study. It is just as absurd to have the Forest

Service run it, in my judgment.

There are some problems with

that. The whole public process is hampered by the fact that staff of

the big companies can get to the meetings. They are paid to do it. But

the public representatives have to take time off work and often travel

a great distance at great personal expense to participate on their

side, so there's a real imbalance between the powers of those people

who represent the big companies and those who represent the public

interests. They are varied and not always the same. I think that is

something that should be dealt with. Frankly I don't want the minister

to deal with it. I want him to shift the responsibility for that whole

program away from his ministry and into an agency like ELUC. It doesn't

necessarily have to be ELUC, but it seems to me that that's the most

logical place for it to be.

I wonder if the minister would

comment, even if only briefly, on Western Forest Products' pulpmill in

Port Alice. There is still concern in the community that the company

could shut the thing down for good, forever. It's my understanding from

discussions with people who were involved at the time that it was

pretty clear there was a commitment that that pulpmill would be kept

going. I don't want to mislead the minister; there's been no indication

recently that they will be shutting it down permanently, but there is a

great deal of anxiety on the part of people who live in the community

and work in the mill about the prospect of that mill being closed at

some point, particularly given Western Forest Products' current

financial situation, which is not as short-term as many of the other

companies.

Log salvage is an issue that I don't know very

much about. I'm confused by it, and am further confused when I ask

people involved in salvaging what their view of it is and then talk to

people in the ministry and in the business on the upper end about what

their view of the problems and the solutions is. I get two totally

different perspectives. I thought I would just relate what.... I've

made some notes of various letters, phone calls, and things that have

been said to me in public meetings about log salvage, from a public

point of view — not the salvagers' or the Gulf Log Salvage

Cooperative's, point of view, or the ministry's point of view; just the

public's point of view. Boaters and fishermen say there is an immense

amount of pulpwood drifting in and around the northern Georgia Strait

and up into the Johnson Strait. There are quite a number of sawlogs

floating around and not being collected. There is a concern about

whether or not the salvagers are getting enough money with the new

procedures. There is some concern about the current method of piling

these logs along the beaches and just leaving them there. I know there

are some in front of our house in Campbell River, and they sit there

for months on end, right on the beach. Maybe it's not a bad thing; I

don't know. I do know that the public is concerned about the way in

which the whole log salvage program operates. There seems to be too

much stuff in the water. There doesn't seem to be enough responsibility

on the companies who put the stuff in the water in the first place to

make sure it gets cleaned up. As I say, it's not a subject that I have

a great deal of familiarity with: in fact, not much at all, and I'm

quite candid about that.

The final thing I wanted to raise

with the minister — it's partly a Highways' problem, possibly a Forests

problem — is the road between Tahsis and Woss. The minister was in

Tahsis a few weeks ago at their loggers' sports day. I'm sorry I wasn't

able to be there, but he would have heard from people there about their

desire to build a road from Tahsis out through Woss to the Island

Highway, rather than having to go through Gold River on the existing

logging road. The minister, I understand, had a meeting with the mayor

of Tahsis just last week in which a relatively detailed proposal, from

their point of view, was presented concerning the timber values

[ Page 8199 ]

that

would be opened up northeast of Tahsis if that road were to be

constructed. We're talking, basically, about 12 miles, and there's an

estimate there, in today's dollars, of something just over $4 million,

with a class 3 logging road standard. I wonder what the minister's

reaction is to doing that through

section 88, as opposed to a Highways

ministry program to build, as they would, a very different kind of

road, probably at a cost of $35 million — whether or not this isn't an

appropriate avenue to develop a road like that through

section 88 if,

in fact, the kind of timber values that are claimed to be there are

there and would be opened up. I'd be interested to know. Even though I

suspect this is at a relatively preliminary stage. I'd be interested in

the minister's reactions at this point.

HON. MR. WATERLAND:

Mr. Chairman. I thank the member for North Island for what is obviously

some rather thoughtful discussion on the forest industry and things

pertaining to his constituency. I'll start at the beginning. I

appreciate his comments on the cooperation he has received from

ministry staff. I really think that our decentralized reorganization

has made that type of dialogue much more possible. I'm getting similar

comments from many parts of the province, although we do have problems

in some areas and are not getting such glory reports from those areas.

The road from Tahsis to Woss. As the member mentioned, I was up in Tahsis a

month or so ago and had a meeting with the mayor — I believe it was last week

or a week before. He put forward his suggestion on that rather short road of

11 to 12 miles as opposed to the 42 miles that it is now from Tahsis out to

Gold River. I have asked my ministry staff to look into just how soon we could

do that and also to have some discussions with the Ministry of Highways to see

if there is perhaps a way that we could share some responsibility there. Strictly

from a forest-harvesting point of view, it would be hard to justify, but I think

we have to consider the feeling of isolation that people in towns like that have.

Despite the fact that they do have a road they didn't have a few years ago,

it's quite a long road with some severe grades on it. I went over it in the

springtime when it was in relatively good condition, but I'm sure that in

the wintertime that road is much more difficult to travel. I have a great deal

of sympathy for them because I spent a great part of my life living in relatively

isolated communities in B.C. and know the feeling they have. So I've asked

my ministry if they will look at how we could perhaps modify some of the harvesting

patterns in the area with the cooperation of the licensees and get that road

built at an earlier time than it might otherwise happen. I would think that

during the current economic times and with the limited or negative cash flow

that is being experienced by communities, it wouldn't happen this year,

I mentioned this to the mayor when I talked to him. I said we'll have a

very close look at it and see if we can do something, particularly with some

cooperation from the Highways ministry. They could travel over 12 miles of road

which would have less severe grades than the existing road and, of course, it

would be much shorter. Then they would be on the North Island Highway. This

would, I think, do a lot to relieve their feeling of isolation.

The

Sayward forest is probably the most current of any of our forest areas

on the level of forest management is how advanced it is. We were having

tremendous cooperation from other ministries and particularly the

Ministry of Environment in managing wildlife habitat in that area as

well. We have had to delay our fertilization plan for the area for a

year. A delay of fertilization for a year is not a serious thing,

although I very much would like to have had it done this year. But we

will carry on with our management plans there, and that is an

exceptionally good growing site and can contribute a lot to our

allowable cut.

The member mentioned marketing and what he

perceives as a lack of aggressiveness by the provincial government and

the industry in searching out new markets. Perhaps the member wasn't in

the House when I talked about COMDP, our cooperative overseas market

development program, which the Minister of Industry and Small Business

development has increased his funding to this year. He and I have

worked rather hard at trying to develop additional markets. I mentioned

I was in China this fall, and already some very positive things are

flowing from that trip — some increased market activity and a very good

dialogue in terms of exchanging technical information between the

companies. I think we're establishing a dialogue with them that will

serve us well in future markets. Over the last six or seven years we

have changed our market concentration from the United States rather

substantially: I think we have further to go. Six or seven years ago we

were selling in the order of, I believe, 62 percent of our manufactured

lumber products in the United States. That is now down to just over 50

percent, so we have diversified our market some what. We are continuing

an aggressive program in cooperation with the industry in trying to do

that, because we have been too dependent on one market area. However,

in saying that, I don't think we should ignore that North American

market, because it is closest to us and I think will always be a very

important area for the selling of not only our lumber but our plywood,

pulp and paper as well.

We have, in addition, to work with

COMDP. Via my ministry I have been funding Forintek. which was formerly

the Western Forest Products lab. A lot of their research is into

standards, especially in foreign countries, so that we can manufacture

to those standards and thereby increase our market penetration.

The

member talked about an agricultural land type of concept for forest

land. I think what we have right now in provincial forest designations

is as far as we have to go in protecting forest land. Land is

designated as a provincial forest only after detailed discussion by

various land management groups within the government to assure us that

it is the best use of that land. For land to be removed from a

provincial forest it has to pass a test. This makes it necessary to

demonstrate that the land is being removed for a higher economic or

social benefit to the province. That test is made and if the land is

being removed for a better use — either economically or socially — it

can be removed by order-in-council. There are very many legitimate

demands on the forest land base — agricultural, residential and

wilderness — which we have to accommodate.

The business

about multiple corridors for pipelines. powerlines. highways and so on

is a serious problem. and I agree with the member that we should try to

do more to coordinate a corridor concept. If you look at a stretch of

powerline, for example, there is a tremendous amount of forest removed

from production. That is why any major development like that is now

required to be processed under our linear development guidelines under

the Ministry of Environment.

[Mr Richmond in the chair.]

[ Page 8200 ]

The

contractor clause ties in very closely with the Nimpkish Camp problem.

A contractor clause does say that a minimum of 50 percent shall be

harvested by contractors. We do have the authority, when deemed

advisable, to change that. They can go anything over 50 percent they

wish, but if there is a need — because of community stability,

seniority problems because of people working with the companies — that

can be varied. I do have a contractor clause advisory committee,

established a couple of years ago, which has representatives from the

IWA, major licensees, integrated companies, small companies and logging

groups. Members are suggested by the Truck Loggers Association, for

example, to which most coastal loggers belong. If there is a need, they

judge whether it is a real need or not. They are the people who should

know best, because they are involved in it. They are associated with

the communities and so on. Quite often we do vary that requirement by

order-in-council. We do have that flexibility, and it is used.

recognize the problems of community stability. I also recognize the

social problems that develop because of the camp syndrome. I think it

is much better to have people live at home with their families rather

than in isolated camps, even if they have to commute a fair distance.

It can't always be that way, because commuting would be too

time-consuming and too expensive at times. But camps are also

expensive, and they are becoming more expensive all the time. I think

you will see a trend towards more commuting and fewer camps in the

forest harvesting area.

The member mentioned contractors

getting quite big. In coastal logging particularly, although it is

small business as far as the forest sector is concerned, in comparison

to most businesses even a small contractor is a pretty big businessman.

It doesn't take many pieces of equipment to add up to $1 million, and

it is quite a large business. Being a big contractor does not

necessarily guarantee survival, because usually the big contractors

have some pretty big liabilities as well. I think most of the companies

are pretty good at helping contractors in financing. In many cases

right now companies are actually carrying contractors with guarantees

to banks and so on to make sure that the proper array of contractors is

around, because they are quite essential to the major companies.

The

Tahsis study. We have various methods of getting public input and

involvement of people concerned with the use of various land areas. At

times there is a separate agency which is the lead agency in doing the

studies. At other times we feel it more appropriate that we should be

the lead agency. Our total philosophy in my ministry is not how not to

use the land but how to integrate the use of the land in such a way as

to recognize other resource values. Many times when we do such studies,

even though we are the lead agencies, we do take areas out when it

really makes more sense to keep them in a pristine setting rather than

to harvest them. Our legislation requires us to consult and cooperate

with other agencies of the Crown and with the general public in

determining the best use of forest lands.

The Port Alice

pulpmill. I have had meetings with the council from Port Alice and with

Western Forest Products. I have been assured that they have absolutely

no plans or thoughts of any permanent closure of that operation. I have

passed that information back to the council, and I am sure that the

company is in constant dialogue with the people and the council of Port

Alice. They are suffering market problems now, and I understand that

their operation is up and down depending upon markets for their

sulphite pulp. They fully plan to continue on with that mill. I think

the sulphite-pulp business is coming to an end, but their plan is to

convert that to a Kraft mill when their markets disappear or get to a

point where they can't afford to keep it running as a sulphite mill.

guess log salvage is not as pertinent to the North Island area as it is

to the Gulf and Howe Sound areas. We changed the log salvage

regulations about a year ago. We had very extensive discussions via

White Paper and meetings with log salvagers before these changes were

made. When the changes were announced, I had a meeting in Vancouver

with log salvagers. There were questions asked at the time which we

subsequently answered. Since that meeting I've heard nothing from them,

so I can assume that they're not unhappy with the changes that we made.

One

of the effects of the changes was to make it more profitable to them to

salvage the low-grade logs. In the past they would go after the

higher-grade logs, and the lower grade ones would be floating around as

a hazard to boaters. Our regulation change has made it more attractive

for them to salvage these lower-grade logs. We're also working with the

Fraser River debris control committee, which is a cooperative thing

among the Canadian government, the provincial government and the

industry. We have a fin boom up in the Fraser River near Laidlaw which

traps a lot of the debris coming down that river before it ever gets to

the salt water. When driving past there about a week ago I noticed a

tremendous amount of wood in behind the fin which has been taken out. A

lot of it is being chipped and used, and some of it is being burned.

I think that covers most of the areas discussed by the member. I thank him for his very thoughtful comments.

MR. LEVI:

I want to ask the minister to deal with two points. One relates to the

statement he made when he was making his opening remarks about the

long-term prospects for the forest industry. The other one is: will he

tell us what the role of the government was in respect to the ITC

hearings in Portland, Oregon and Washington? What did the government,

along with the Council of Forest Industries, do in relation to that?

Yesterday

the minister said that the long-term prospects for the forest industry

in British Columbia are relatively good. As the minister knows, the

Fraser Mills are in my riding. At the moment, they're not operating. I

had a chance to talk to some of the people who are usually there on the

weekend. The average guy who works in the mill, or even in the forest

industry, as I understand it, is not quite sure what's down the road in

terms of the industry. When the minister says that the long-term

prospects are relatively good, he really doesn't put any flesh on that

statement, and it does fly a little bit in the face of the reality of

the situation, for instance, in the United States.

The

industry is 25 percent of all our workforce. It's almost like we are a

single-industry province, not discounting the mining industry, but in

terms of the size and the number of employees and the spinoff effects

as well. Our industry does go up and down relative to the U.S. economy,

particularly because we constantly look at the housing market in the

United States. In fact, everybody feels that if things pick up down

there they'll pick up up here. That is a major question in terms of

what is happening both in the industry and the government in respect to

some future planning.

[ Page 8201 ]

We're

going through a period now which is, according to the economists and

political observers, the worst possible period since the Depression of

the thirties. There were some lessons that we learned from the thirties

probably more so in the United States than here. They did public works

programs and made a great effort to put a lot of people to work. They

also did an enormous amount of development of resources with things

like TVA and that kind of thing. What they did do was a lot of planning

and a lot of public discussion as to what was going on. The only time

we've ever come close to doing that in this province was when the

Second World War was on, and this Legislature in 1943 set up a post-war

reconstruction planning commission. They had a lot of work on it. The

former Premier of this province, W.A.C. Bennett, was on it. He was a

great advocate of that kind of thing.

What kind of

discussions go on between the industry and government? What vehicle is

there for the government to be able to say this is what we're going to

do as we gradually get out of this economic depression — not what we as

the government will do, but rather what we will do in conjunction with

the forest industry, because it's the major industry, and how we'll go

about doing it.

Some of the things that are happening in the

United States indicate to me that we're not going to be able to go back

to the old rules. We are not going to be able to be that dependent on

the United States as a major importer of our forest products. We know

that in respect to what's been happening with our exports already. Our

exports have actually been dropping in the United States. However,

they've been picking up in some areas — in Japan to some extent.

However, that is still the major market. We have not done particularly

well in terms of the development of overseas markets. We know that the

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

Phillips), along with the IDSA people, has done a market study for

upgrading B.C. lumber products in Japan and other selected countries in

the Orient. The move is to look at the Far East. The minister said he

was in China last year.

What I'm saying to the minister is

that surely it's time to have some discussions here, both in this House

and making use of the forestry committee, in terms of where we can go

with the industry. What kind of planning can go on? When the minister

says, as he said yesterday, that the long-term prospects are relatively

good, I might draw his attention to a statement made by Mr. Knudsen

last October. He was talking about the state of his own company, but he

did say we're now in the process of taking a very hard look at every

single operation. The eighties are going to be a hell of a lot tougher

than the seventies. That seems to be the general theme of the major

spokespeople for the industry. Peter Bentley made similar remarks.

People we meet in the Council of Forest Industries are also saying

that. If this industry, which is the major industry in the province,

does not make use of a reasonable vehicle by which we can take the

public along with us, if the minister along with some of the people in

the industry, and hopefully the standing committee on forestry. don't

come forward and talk about it.... We haven't had that happen in this

province for a long time — almost ten years — and we need to do that,

because what people need to understand is that economic aberrations

aren't necessarily going to spell total doom for us and that there are

some plans. That's what we have not had.

The minister, in

response to what is happening to the industry, has come up with a

phrase. He says: "We're using a sympathetic administrative process."

What occurred to me when he was saying this was: if you're sympathetic

now, why aren’t you sympathetic when the industry is operating and why

don't you tighten the thing up? What you've mainly done is say: we’re

leaving them more money so their cashflow problem isn't as difficult as

it is at the moment. Well, the cash-flow problem is always a problem

with those people, but the main thing is what the minister has avoided

— he has avoided it — the major strategy.

Now some of the

Wall Street people have been looking at that industry. I have in mind a

man called Milman, who is with Rothschild. one of the big banking

houses in the United States which has an interest in our industry. He

makes an observation. "Milman said a major reason for the projected

declines in housing starts is because of a revolution in the U.S.

mortgage demands. which will have profound effects for years to come."

That's an examination of what's going on in the United States housing

market, for which we supply a large amount of the product. He's from

one of the major banking houses, and he says that things aren't going

to get any easier. they are going to get a little tougher, which makes

it very important for us to look at alternative strategies.

Now

it's not just that we have to go out and look for other markets. That's

a major thing. and that's being done. I recall at the recent COFI

dinner asking one of the leaders of the industry: "What would happen if

there was a major concentration by the government in terms of

developing our own housing market in British Columbia?" To my surprise

he said: "Well, that would only take up another 8 percent of what we

manufacture and produce in this province." I was some" hat surprised by

the very small amount of product that would be used by that. So we

really have locked ourselves in — we export or we die.

One

would hope that as a result of the study taking place we're going to be

looking at alternative manufacturing processes. Earlier this year,

under the chairmanship of our critic, the member for Shuswap-Revelstoke

(Mr. King), we did have some hearings in Vancouver, and we did hear

from the Greenpeace people and, of course, the fellow that presented

the brief, Bob Nixon, who is a professional member of the Canadian

Institute of Forestry and the American foresters. He made some

observations which I would like to bring to the minister's attention.

He was talking about what kind of work goes on by the ministry. He has

a

section in his brief, "Forest Planning," in which he says:

"The

key to a prosperous industry is sound forest planning. It's not an

accident that the province continues to lack credible forest planning

legislation. The Ministry of Forests Act does not give the Forest

Service a clear mandate to assist the economic implications of either

existing or proposed forest policy. Witness the recent hearing held by

the United States International Trade Commission concerning B.C. lumber

export prices. I can cite any number of forest economic policy

discussion papers which inform the people of Washington and Oregon on a

wide range of options. benefits and consequences of alternative forest

policy proposals. In British Columbia comparatively nothing is

published about the forest policy. I submit that this reality exists

because our decadent industry fears the consequence to its special

status were it otherwise."

Leaving aside the rhetoric for a

minute, what he is saying in some respect is that usually the only time

we ever discuss the forest industry is when there is a crisis. Either

there is a

[ Page 8202 ]

strike

and somebody gets up and tells us what impact that industry will have

on the economy, or we are in this particular situation today which is a

straight economic problem. Then we begin to examine a little bit closer

some of the shortcomings of what really is a lack, in my opinion, of

sound planning in respect to the industry. I am not talking about the

minister's department only, but the industry. To my knowledge there is

no planning vehicle. The government does not have an economic planning

vehicle anyway; they have a subcommittee of cabinet. The main thing is

that in terms of this industry surely the time has come for this kind

of candid, public, straightforward, discussion. I am not looking so

much at a commission of the Pearse nature, which dealt with the

technicalities of the industry, although albeit you dealt with one area

which is still of a major concern. He talked about corporate

concentration; it has to be a major concern. The thing is that we need

such a vehicle, because, as Nixon points out, when it came to looking

at what the hearings were in the United States, they had it all down.

They had a complete understanding of what was going on. On the basis of

that they were able to make some decisions, albeit the people who

started the hearings didn't make their case as clear as they had hoped.

There are other diplomatic implications of that.

I ask the

minister to enlarge on the statement that he made in respect to his

view of how the industry is, and back it up with something which gives

him that kind of certitude.

I want to refer him to a

statement and I wonder if the minister would comment about corporate

concentration. Last year we discussed in this House the impact of the

Noranda takeover of MacMillan Bloedel. They spent almost $700 million

to do that. I don't know what they're talking about in the boardroom

these days, but I'm sure that that $700 million might have been better

used than it was. I'm thinking about what the director of operations

for the B.C. Forest Service said on May 1. "Al MacPherson, director of

operations for the B.C. Forest Service, deals with companies in trouble

and has a chance to look at the books in most of the companies in the

industry." Then the

article goes on to describe what takes place when

they look at the cash-flow problems. However, he does have a statement

which perhaps the minister is aware of. "We'll see some concentration

in the industry — like it or not. Certainly there is going to be some

consolidation." I'm now quoting from Don Currie of Balfour Guthrie.

"The big get bigger. Ten years ago someone said the forest industry

would eventually be in the hands of 10 or 12 people." Now if there was

ever an opportunity for a move for greater corporate concentration in

the forest industry, it's now and a little later, as the economy

improves. There are obviously the giants who are prepared to move in

and do that.

We've had some discussions in this House about

corporate concentration. I have never been very enamoured of the

minister's point of view about that, because for some time they talk

about not wanting any corporate concentration people outside — that was

with CP; and then of course Noranda came in, and Noranda is almost a

citizen of this province because their operation is in the north. But

the concern I have is — and I think it's observed by Mr. MacPherson and

then agreed to by Mr. Currie of Balfour, Guthrie — that we are likely

to see a greater corporate concentration in this province. Now all of

that goes together with what I started to say: that the minister should

tell us about the planning, the discussions with the industry and this

major concern that we could wind up, once we get out of this depression

that we have, with a larger and larger portion of the industry in fewer

and fewer hands, and that's indicated both from your own official and

also from a senior official in the forest industry.

I would

like to hear the minister's views on that. It is a very serious

question. We have said many times over here, as Pearse pointed out in

his report, that the concentration of a large amount of the industry in

a few hands puts any government in a very difficult position,

particularly if it doesn't have an updated economic blueprint about

where the province is going. We have no indication from the minister,

in respect to the forest industry, that there is such a blueprint. I

don't want him to dot the i's and cross the t's, but to give us some

kind of direction and understanding of what they are doing and whether

they are prepared to bring the public into their confidence. I say

again that we have a vehicle right in this chamber. There is no reason

why we can't use the standing committee on forestry to do that kind of

thing. I would appreciate it if I could get some response from the

minister.

HON. MR. WATERLAND: I will just go through

the points raised by the member for Maillardville-Coquitlam. He started

off with the recently concluded ITC hearings in the United States. I

realize that the report has been issued, and I think British Columbia

was exonerated in that report. We had been accused of subsidizing

stumpage and thereby giving an unfair advantage to our industry. The

report did not conclude that at all. It did conclude that we have a

different form of stumpage here but it was not necessarily an unfair

advantage to our industry. It also pointed out the very large

difference in the methods of determining stumpage, the difference in

cost factors related to our country and theirs.

Our ministry

was involved through the Council of Forest Industries. We, as a

ministry or provincial government, did not directly make presentations

to the committee, although we did have observers at it. We did work

very closely with the Council of Forest Industries in putting together

the technical information. We did have people from that commission here

discussing technical matters with our staff in order that they fully

understood the very nature of our stumpage appraisal system. I think

one of the results is that you are going to see the Americans moving

towards the type of stumpage system that we have rather than the other

way around, because they have recognized that their bidding process

makes it very difficult during economic recessions for their industry

to carry on with the high prices bid for logs during more buoyant times.

What's

down the road for our forest industry? I said that the future is bright

for our industry, and indeed it is. We have a very large part of North

America's softwood fibre supply, and it's up to us to make sure we can

present that supply into needed markets and products. Quite a bit goes

on continuously in the form of market and silvicultural research in

British Columbia. A couple of years ago we set up, as was required by

the Forest Act, the Forest Research Council, whose job it is to

coordinate and monitor the research taking place in various sectors and

areas of British Columbia, and in those parts of the world with which

we deal.

Some very innovative things are being done. These

innovative things are usually started off by the smaller companies.

That has traditionally been the way it's happened in British Columbia.

For example, the member perhaps read some time ago about Yellow Lake

Sawmills Ltd. of Penticton — I believe that's where they're located —

and their penetration into European markets with lodgepole pine to

Scandinavian specifications. They found a market niche. I'm sure that

type

[ Page 8203 ]

thing will be adapted by other companies in the industry. A little

company in my riding, Andrew Wood Products Ltd. of Merritt, was the

first company to use the green-lumber finger-jointing process, which

upgrades forest products substantially. They are now dealing with

housing companies in Japan, sawing to very exceptional Japanese

specifications and selling products that our industry would not

otherwise have sold. They are moving along quite well, in spite of the

recession we're having right now in British Columbia. That's one of the

reasons I insisted on having our small business program: so that these

small, innovative companies can have access to Crown timber to carry on

this type of thing.

That gets us into the problem of

concentration within the forest sector. I think Mr. MacPherson said

that traditionally, during a downturn of markets, you see a tendency

towards concentration. He didn't say it was going to happen: in fact,

it's not happening now. I think one of the reasons it's not happening

is the length of this downturn and the policies we have established

regarding concentration. Another is that large companies quite frankly

don't have the cash to go out and acquire other companies. They're

hurting very badly. I agree that there are probably some very

interesting discussions taking place in the boardroom of Noranda right

now, given the large amount of money they spent a year ago acquiring an

interest in MacMillan Bloedel.

Mr. Knudsen said the eighties

will be tougher. Fifteen months ago he was saying there was nothing but

brightness down the road. It's amazing how a philosophy changes as you

go into and come out of recessions. I guess that's what is referred to

as the lumberman's mentality. When things are good, they feel they're

going to stay good forever: when they're bad, they think they're never

going to get good again. We do go through these cycles. We will come

out of it. and our forest products will be in demand. Our industry has

to continue — as it has in the recent years — to adapt to the

marketplace. These things are changing all the time. Housing demand in

the United States is not being fulfilled now: and a backlog of need for

housing is occurring there. You may see a change in the form of housing

as costs continue to go up. You may see a tendency towards smaller

homes and more multiple-dwelling units. The demand is there. It is a

pent-up demand which I think will explode once interest rates get into

an area where people can afford to make a commitment to buying a home.

guess Mr. Nixon of Greenpeace will never agree with what we do in

forestry in British Columbia. It is strange that he says we have no

vehicle for good forest planning in this province and yet the Forest

Act we now have as our administrative tool has been hailed throughout

the world — not just in North America but throughout all forest

jurisdictions — as being very progressive forest management

legislation. It does not get into the industrial side. The nature of

the industry is more in keeping with the Ministry of Industry and Small

Business than directly with my industry, although we cooperate and

consult at great depth in this subject area, as we have very extensive

dialogue with the industry.

The member mentioned the varying

reports he receives from economists. I guess that's always been the

case. Economists are always pointing in different directions. I get

reports from one economist saying that in three months we are going to

start having an upturn, and another one says three years. Others say it

will never get back to the way it was. I don't know which of them are

right. I think the problem economists are having these days is that the

decisions as to what will happen in the future are largely political

decisions to be made primarily in Washington. The fiscal and monetary

policy of that country is what will determine when our recovery begins.

It will begin, and I don't think economists are any better equipped to

determine what those political decisions are than we politicians are.

We might even be better equipped.

The member mentioned that

there is only discussion about the state of the industry. the future of

it and so on when there is an economic crisis at hand. Perhaps that is

when the member and the general public notice the discussion taking

place, but discussion is taking place on an ongoing basis. It is the

type of thing that never gets great bold headlines in the newspapers

except during recessionary times, but there is always public discussion

and planning, primarily in the industry side. If the member were to

read some of the trade journals of the forest sector, he would see that

this type of discussion on new equipment. new methods of harvesting,

new products and innovative technology is taking place all the time. A

good example is a trip I made to Tillamook. Oregon, a few months ago.

Several forestry companies in British Columbia are funding some

research and the construction of a prototype harvesting machine. It's

called a cyclo-crane. It's a combination of fixed wing and rotary power

with a lighter-than-air vehicle. If it works, as they seem to think it

will. It could revolutionize the harvesting of timber in British

Columbia. There's an awful long way to go in developing it into a

workable tool, but that type of thing is taking place all the time.

in British Columbia are as advanced as anyone in helicopter logging

techniques as adapted to our terrain. The steep slopes in British

Columbia are probably some of the most difficult logging terrain

anywhere in the world for harvesting. We are actually world leaders in

that type of technology.

I support the suggestion of

referring to the environment and resources committee some discussion as

to the future of the industry. I think it would develop a better

awareness on the part of the people of British Columbia of where we

are, where we're going, probably just in the form of disseminating

information and ideas and thoughts that are presently before us. I

think it would be a good exercise. It would be time-consuming. but I

think well worth while.

I believe that covers most of the points raised by the member, Mr. Chairman.

MR. KING:

Mr. Chairman. I'm pleased to hear the minister say that he supports the

proposition of referring business to the committee on environment and

resources. When it was raised yesterday in the Legislature, his

colleague, the acting Minister of Intergovernmental Affairs, was not

prepared to accept that recommendation. So I hope the Minister of

Forests will prevail on his colleague, either the House Leader or the

Minister of Intergovernmental Affairs, to actually refer some

worthwhile work to the select standing committee. I think it is a good

time, and I certainly agree with the minister that dialogue in that

area would be very useful.

I would like to question the minister. In the few minutes that are left before

adjournment, with respect to the estimate contained in this year's budget

for an increase in revenue of some 23 percent flowing from the forest industry.

The minister has suggested to my colleague, the member for Maillardville-Coquitlam

(Mr. Levi), that Cal Knudsen was a bit of an agent of doom and gloom for predicting

a protracted period of difficulty for the forest industry. That would seem to

infer

[ Page 8204 ]

that the minister feels

that we are getting back on our feet. Indeed, the minister made a

statement last spring indicating that the slump in the forest economy

had bottomed out. That comment was met with a good deal of derision

from most areas of the industry, which had witnessed no signs of a

bottoming out of the slumping market. The minister seems to feel that

his guess is better than the economists', and that indeed we are on the

road to recovery. If that is the case, is the minister projecting that

we will in fact meet the 23 percent increase in revenue projected in

this year's budget by his colleague, the Minister of Finance (Hon. Mr.

Curtis)? I'd like his reaction.

HON. MR. WATERLAND: Revenue projections, which were made by the Ministry

of Finance in cooperation and consultation with our ministry, were made a number

of months ago. These projections can change almost on a daily basis. We are

now only two and a half months into our fiscal year. The projections as to when

the turnaround will start are all over the block, as I mentioned a few moments

ago. Things can happen very quickly. The Patterson bill, for example, in the

United States, could be approved, as could the Lugar bill; I understand they

have gone through their two lower Houses already. If they are approved, they

could add 400,000 or 500,000 housing starts in the United States in this fiscal

year. If that were to happen, yes, we could very well meet projections. If it

doesn't happen, perhaps we won't.

The

Minister of Finance will be revising his estimates as the year goes

along. What they are right now would, I think, perhaps be better

addressed to that minister. At the time of the original estimate of

revenue, I think it was very realistic. Whether or not it has changed

now, I don't know; it could very well have. But with these other

factors that could change things down the road, perhaps it will change

again. It's a moving target that we're shooting at.

MR. KING:

The minister is shooting at a moving target. He admits that his

prognostications are highly flexible and change from month to month.

Indeed, I would suggest to the minister that even if the bill in the

U.S. House that he referred to does pass and there are increased

appropriations for homebuilding, we face about a six- to eight-month

lag before benefit from any economic stimulus in their market ripples

through and affects demand in this country. I appreciate that estimates

change, but it seems that the minister is the only one who is looking

for any major turnaround this year. I guess we could say: "There he

goes, God bless him. He's the only man in step." He certainly doesn't

have a great deal of support in the industry or from any knowledgeable

commentator on what's happening in the forest industry.

It's

interesting that the Interior Lumber Manufacturers Association issued a

press release on June 7, "Profits and Taxes Study — ILMA Companies

(1976-1981)," which said:

"Financial losses for B.C.'s southern interior forest

industry are becoming more severe all the time, a recently completed study confirms.

A survey of the financial condition of member companies of the Interior Lumber

Manufacturers Association was conducted by Price Waterhouse and Co., chartered

accountants. 'The results of this survey clearly demonstrate that poor lumber

markets, which started in late 1979, are getting progressively worse,'

ILMA manager A.D. Macdonald said. For example, combined sales of companies declined

from $480 million in 1980 to $442 million in 1981. At the same time net losses

increased alarmingly from $9 million in 1980 to $32 million in 1981, an increase

in loss of 350 percent. The survey shows that for the first three months only

of 1982 the same companies suffered a staggering net loss of $15.6 million,

which is double the comparable loss in 1981. 'Those conditions which made

the last two years so disastrous for the industry are continuing in 1982,'

Macdonald said. 'Demand for our products is very low. Lumber prices are

16 percent lower than they were last year at this time." A continuing low level

of home-construction activity in North America, caused mainly by continuing

high interest rates on mortgage funds, has severely depressed markets for lumber

and other building materials."

All

the comments from the industry today paint a pretty bleak picture. I

think the minister has to do more than display an optimistic front when

he addresses problems in the forest industry. I think he has to do more

than cast some backhanded aspersions on spokespeople, such as Calvert

Knudsen, who express identical concern about where the industry is

heading. I appreciate that the minister has a duty to try to bring some

psychological hope but, as I pointed out yesterday, he has done

precious little in terms of any firm action to try to mitigate the

effects of the very deep recession in the forest industry. I don't

think it behooves him to take potshots at those who are realistic

enough to tell it as it is to the public. I have great difficulty

understanding how the minister can even suggest that the budgetary

projection of a 23 percent interest flowing from the forest resource

this year is going to be met even if the house-building market were to

pick up now. That being the case, I think the province is facing some

very difficult shortfalls of revenue for the next budgetary year. I

think the minister and his colleagues should be devoting some attention

and thought — and discussion in the Legislature, perhaps — to how that

shortfall is going to be met, and whether it is going to mean further

brutal cutbacks in human services to people or whether the government

has any alternative plan which might ameliorate this major loss of

revenue to the Crown.

Mr. Chairman, since the hour is here, I would move the committee rise, report progress and ask leave to sit leave again.

Motion approved.

The House resumed; Mr. Speaker in the chair.

The committee, having reported progress, was granted leave to sit again.

Hon. Mr. Williams moved adjournment of the House.

Motion approved.

The House adjourned at 11:59 a.m.

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