May 2, 1977 ALBERTA HANSARD 1091 LEGISLATIVE ASSEMBLY OF ALBERTA Title: Monday, May 2, 1977 2:30 p.m. [The House met at 2:30 p.m.] PRAYERS [Mr. Speaker in the Chair] head: INTRODUCTION OF VISITORS MR. JAMISON: Mr. Speaker, it's my privilege this afternoon to introduce to you, and through you to the members of the Assembly, Mr. Bruce Crozier, the national co-ordinator for the Kinsmen Clubs of Cana­ da. Bruce has been in Alberta this past week to charter two new clubs in the province, one in the town of Olds and one in the town of Morinville.

He's accompanied by his wife Joan, and Linda Stewart the wife of the governor of the Kinsmen Clubs of Alberta. They're seated in your gallery, Mr. Speaker, and I'd ask that they stand and be recog­ nized by the Assembly. head: INTRODUCTION OF BILLS Bill 37 The Child Welfare Amendment Act, 1977 MISS HUNLEY: Mr. Speaker, I beg leave to introduce a bill, The Child Welfare Amendment Act, 1977. The principle of this bill is to prescribe the power to confine a child by a judge or by the director of child welfare, where in the opinion of either such confine­ ment is in the child's best interests.

The authority of either is subject to a number of legal safeguards contained in the bill. This bill is in response to the growing concern that neither a judge nor the director has sufficient legal authority to require the confinement of any child in circumstances beyond those of a reasonable parent. [Leave granted; Bill 37 read a first time] Bill 34 The Hydro and Electric Energy Amendment Act, 1977 DR. WARRACK: Mr. Speaker, I beg leave to introduce Bill No. 34, The Hydro and Electric Energy Amend­ ment Act, 1977. A number of amendments are involved in Bill 34. The important principles can be grouped in three.

First of all, the contingency and emergency planning process, which sets forth infor­ mation and reporting systems on which to plan and specifies actions which can be taken by way of elec­ tric energy allocations and operations; secondly, with respect to transmission and distribution planning and operations, Bill 34 will specify the location and extent of rights of way in a more specific manner.

It will cause a mechanism for settling compensation claims when an agreement is not possible and the move­ ment of a transmission line is ordered by the board; thirdly, for electric distribution in planning emergency and operation circumstances, provisions which may require alteration of those distribution arrangements; thirdly and finally, a mechanism for handling prob­ lems for either electric or communication systems that would be caused by electrical facilities being put into place. [Leave granted; Bill 34 read a first time] head: TABLING RETURNS AND REPORTS MR. HARLE: Mr.

Speaker, I wish to to file with the Legislature Library a research paper entitled The I.B.C Variplan Proposal prepared for the Alberta Automo­ bile Insurance Board by Mr. W. A. Stevenson. As required by The Credit and Loan Agreements Act, I wish to table the annual report for the year ending December 31, 1976, prepared by the supervi­ sor of consumer credit. I wish to file with the Legislature Library the annual report for the year ending August 31, 1976, of the textile analysis service at the University of Alberta. MR. MINIELY: Mr. Speaker, I'd like to table two copies of a letter of reply to Mr.

Roberts, chairman of the Calgary General Hospital, on the general matter of the Calgary General Hospital psychiatric wing. MR. CRAWFORD: Mr. Speaker, I'd like to table docu­ ments pursuant to two statutes. One, pursuant to The Electrical Protection Act, is a copy of the Cana­ dian Electrical Code, along with the regulations under The Electrical Protection Act — two separate docu­ ments. The other, pursuant to The Pension Benefits Act, is the report of the branch for the period ending March 31, 1976. DR. WARRACK: Mr.

Speaker, I have the honor to submit the annual report of Alberta Government Tel­ ephones for the year 1976. Copies will be provided for each member of the Legislature. head: INTRODUCTION OF SPECIAL GUESTS MR. TESOLIN: Mr. Speaker, it gives me great pleas­ ure to introduce to you, and to members of this Assembly, a person who plays a vital role in cement­ ing a booming community into a stable, progressive community. I'd ask that Peter Duffy, editor of Fort McMurray Today, seated in the members gallery, stand and be recognized by this Assembly. DR. PAPROSKI: Mr.

Speaker, I'd like to introduce to you, and through you to the members of this Assem­ bly, 31 grade 9 students from the well-known school of Westmount Junior High located in the well-known, active constituency of Edmonton Kingsway. They're accompanied by their teacher Mrs. Helen Rogers. I'd like to congratulate them for taking an interest in the legislative process. They have indicated they will communicate their concerns to me. They're located

1092 ALBERTA HANSARD May 2, 1977 in the public gallery. I'd ask them to rise and be recognized by the House. MR. HANSEN: Mr. Speaker, it gives me great pleas­ ure on your behalf as the Member for Edmonton Meadowlark, to introduce to you, and through you to the House, 30 grade 10 students and their teacher from Jasper Place Composite High School. I'd ask them to rise and be recognized by the House. MR. DIACHUK: Mr. Speaker, I wish to take this oppor­ tunity to introduce a class of some 50 grade 5 stu­ dents from Newton school in my constituency, accompanied by teachers Mrs. Yewchuk and Mrs.

Dutchak and student teacher Miss Steele. They are seated in the members gallery. I'd ask that they rise and be recognized by the Assembly. head: MINISTERIAL STATEMENTS Department of Advanced Education and Manpower DR. HOHOL: Mr. Speaker, the government is in a position to make a significant announcement to the Assembly and to the people of Alberta with respect to a change in the status of four provincially adminis­ tered institutions.

Over the last two years, government has given considerable and careful consideration to the proposi­ tion that certain institutions in postsecondary educa­ tion now administered by the government through the Department of Advanced Education and Manpower are of a stature that they could be better served through public governance. Education, at whatever level, has a long and proud tradition of lay participa­ tion in the development of policy. By whatever name, a public governing authority provides the people with the capacity to participate in this development of pub­ lic policy.

The very nature of education and its devel­ opment seems to me to require this kind of structure in educational institutions. Accordingly, Mr. Speaker, based on this notion of the worth of public participation in governance, I am pleased to announce today that the four colleges now administered by government will become public colleges when the appropriate arrangements for the changeover can be made, but no later than Septem­ ber 1978. Specifically these colleges are Olds, Fair- view, Lakeland, and Keyano. I look forward to this new development, Mr.

Speak­ er, and hope it has the support of all the members of the Assembly as it has of the people of Olds, Fair­ view, Keyano, Vermilion, and surrounding communities. Thank you. head: ORAL QUESTION PERIOD Drought Contingency Plans MR. CLARK: Mr. Speaker, I would like to direct the first question to the Premier. It flows from comments made by the Premier last week in the Assembly with regard to the drought situation in southern Alberta. Is the Premier or the Deputy Premier in a position to outline to the Assembly any plans the government has to deal with the drought situation?

I ask it especially from the standpoint of the effects of water shortages on some small municipalities. MR. LOUGHEED: Mr. Speaker, the cabinet committee of rural development, which has been charged with this responsibility and is chaired by the Deputy Pre­ mier, will be meeting in a special meeting this after­ noon. At the time of Ministerial Statements tomor­ row, it may be possible that the Deputy Premier and Minister of Transportation will be able to give a report, at least of an interim nature, responding to the question from the hon. Leader of the Opposition. MR. CLARK: Mr.

Speaker, a supplementary question to the Premier. In the course of the plans the government is now considering, is shortage of water for rural communities one of the matters specifically under discussion? I raise the question quite frankly because a community like Crossfield in my own con­ stituency will shortly be facing costs of $300 a day. DR. HORNER: Yes, Mr. Speaker, that very specifically is one of our primary concerns. Quite frankly the grass fire hazard has lessened somewhat at the moment, and our attention will be focused on the provision of water to municipalities and indeed for livestock. MR.

CLARK: Mr. Speaker, a supplementary question to the Minister of Agriculture. Is the minister in a position to indicate the results of discussions going on with the federal government, flowing from the federal government's announcement, I believe last Thursday or Friday, with regard to its contingency plans for farmers in Alberta? MR. MOORE: Mr. Speaker, no I'm not. As indicated by the Premier, within the next day or two we may be able to provide more information on that subject as well. MR. MANDEVILLE: Mr. Speaker, a supplementary question to the hon. Minister of Municipal Affairs.

Has the minister had any discussions with or reports from towns and villages as a result of shortage of water in Alberta? MR. JOHNSTON: Mr. Speaker, we have not had any reports other than the one to which the hon. Leader of the Opposition is referring. But we will be discus­ sing it this afternoon. MR. PURDY: Mr. Speaker, a supplementary question to the Premier. Could the Premier advise the Assem­ bly if the drought situation prevalent in Alberta and western Canada will be discussed at the premiers' meeting coming up this week? MR. LOUGHEED: Mr. Speaker, yes it will. We will be participating in those discussions.

I might just men­ tion that the Minister of Federal and Intergovern­ mental Affairs is in Ottawa today conducting discus­ sions of a similar nature. However, we will enter those discussions in Brandon on Thursday and Friday, aware there is a regional responsibility but that we in the province of Alberta have some special circum­

May 2, 1977 ALBERTA HANSARD 1093 stances and our direct responsibilities lie within this province. Postsecondary Institutions MR. CLARK: Mr. Speaker, I would like to direct the second question to the Minister of Advanced Educa­ tion and Manpower. Is the minister in a position to indicate what plans the government has for the future governance of NAIT and SAIT, in light of the announcement today? DR.

HOHOL: We've examined the situation for all provincially administered institutions and felt the first step at this time would be to deal with those colleges that carry the name, not in that elementary or simp­ listic way but for other reasons as well. NAIT and SAIT, dealing with more specific trades — each trade having a community-based advisory council — did not appear to us at this time to warrant a board of governors, though it doesn't preclude this kind of governance in the future. MR. CLARK: Mr. Speaker, a further supplementary question to the minister.

What plan does the gov­ ernment have as far as AVCs are concerned, specifi­ cally in Calgary and Edmonton? Is it the govern­ ment's intention to keep the AVCs under the direct control of the Department of Advanced Education, or is the government looking at some alternatives as far as governance is concerned? DR. HOHOL: At the present time the AVCs would remain as provincially administered institutions. It would likely be in error to attempt to move the logis­ tics of public governance over all provincially adminis­ tered institutions at one time. At first glance it may appear to be an elementary kind of exercise.

As a matter of fact, it is not. NAIT Extension MR. CLARK: Mr. Speaker, a supplementary question to the minister. Has the minister had an opportunity to check into the concerns raised in the House, I believe last week, with regard to the possible pur­ chase of some furnishings at NAIT? DR. HOHOL: Yes I have, Mr. Speaker. At this time there has been no decision to purchase furniture from any particular supplier for the renovation of the old Simpsons-Sears store for NAIT. Any furniture purchased will be by tender through the purchasing agency of government.

Secondly, no employee of the government has gone on a trip which has been paid for by private compa­ nies in respect to the possible purchase of furniture for NAIT. By ministerial permission an employee from Alberta public housing and one from NAIT, by permission of the president, did make a trip to look at certain work stations. This was paid for by the gov­ ernment of the province of Alberta. This inspection was necessary because of the special nature of the furniture required. Thirdly, Mr.

Speaker, the only complaint I'm aware of respecting the supply of furniture for NAIT has been by one furniture manufacturer, regarding work station systems and furniture. Tenders have not yet been called. MR. CLARK: Mr. Speaker, one further question to the minister. Mr. Minister, has your department been involved in reviewing the complaints that have been lodged by your department . . . Well, let me put it this way: we raised the matter in the House last week, and the matter was raised with the minister's office some time [previously].

Is the minister in a position to indicate whether that investigation has been finalized? DR. HOHOL: Yes it has, Mr. Speaker. MR. CLARK: Mr. Speaker, what's the disposition of the matter? Is the minister going to get the various groups together? Where does it go from here? DR. HOHOL: Mr. Speaker, I have to say that the hon. Leader of the Opposition missed the point of my response to his question. The tenders have not been let. The tenders are public, and all companies are open to bid. So this is yet to be. Alberta Game Farm DR. BUCK: Mr.

Speaker, I'd like to address my ques­ tion to the Minister of Recreation, Parks and Wildlife. Can the minister indicate if there have been any applications from parties interested in buying the Alberta Game Farm? MR. ADAIR: No, Mr. Speaker. I should also point out the fact that the two interested parties that had contacted us some time during the period from February 1 were actually discouraged by Dr. Oeming from proceeding any further because of what appeared to be an actual sale of the Game Farm. As a result, there has been no contact since that time. DR. BUCK: A supplementary, Mr. Speaker, to the minister.

Is the minister considering extending the deadline for people who may be interested in pur­ chasing the Game Farm as far as support for the purchase of the land goes? MR. ADAIR: Mr. Speaker, I did give that some thought, but initially the deadline was placed there at the convenience of Dr. Oeming, who had appeared to want to resolve it as quickly as possible. At this point I think we would not consider extending it. DR. BUCK: Mr. Speaker, can the minister indicate if he's had any recent conversation or discussion with the owner, Dr. Oeming? MR.

ADAIR: No, although I could indicate I've attempted to contact him since Wednesday of last week to see just where he was with the group he indicated would be buying the farm, and I have not been able to do so. Electroconvulsive Therapy MR. TAYLOR: Mr. Speaker, my question is to the hon. Minister of Social Services and Community Health. Has her department set out guidelines in addition to

1094 ALBERTA HANSARD May 2, 1977 those of the College of Physicians and Surgeons in connection with electric shock therapy, or ECT, for patients in Alberta hospitals? MISS HUNLEY: To the best of my knowledge, we follow the instructions put out by the College of Physicians and Surgeons. I would have to check and advise the hon. member whether we have any in addition. MR. TAYLOR: Supplementary to the hon. minister. Where written permission cannot be obtained in Al­ berta hospitals, is another procedure followed before ECT is rendered? MISS HUNLEY: I'd like to check the actual procedure, Mr. Speaker.

It's been some time since I reviewed it. I feel sure, though, that they're very responsible in their attitude toward this type of treatment. MR. TAYLOR: Supplementary to the hon. minister. Over the years a large number of ECTs have been administered. Has any evaluation been made of the effects on these patients a year, two years, five years afterward? MISS HUNLEY: I believe there has been, Mr. Speaker. But once again I'd like to refresh my memory so I can clearly advise the hon. member. I know it's a matter of great interest to the College of Physicians and Surgeons, as well as to my department.

Consumer Education MR. MANDEVILLE: Mr. Speaker, my question is to the hon. Minister of Consumer and Corporate Affairs. Has any action been taken on the government task force on elementary school consumer education, which recommended that children, while in elemen­ tary school, should learn how to spend money wisely? MR. HARLE: Mr. Speaker, there has, in the sense that we did employ and share with the Department of Education the services of a person knowledgeable in this area. She spent a great deal of time going to various teachers and teachers' meetings discussing the subject. MR.

MANDEVILLE: A supplementary question to the hon. Minister of Education. Could the minister indi­ cate whether the government is considering consum­ er education in our schools? MR. KOZIAK: Mr. Speaker, I believe the proper an­ swer to that question would flow from the debate we'll be having in this spring session and during the fall of this year on the goals and objectives of education. Mental Health Advisory Councils MR. CLARK: Mr. Speaker, I'd like to direct a question to the Minister of Social Services and Community Health about the staffing of the regional mental health advisory councils.

Has some staff or money for staff now been made available for the regional mental health advisory councils? MISS HUNLEY: Mr. Speaker, we actually fund the Provincial Mental Health Advisory Council. It's been brought to our attention that the regional mental health advisory councils feel they could do a better job, had they more resources, both financial resources and research people. So they have a spe­ cial subcommittee of the provincial council looking at that. The chairmen of the regional councils have been attending the meetings of the Mental Health Advisory Council.

As a result, they are taking a look at what the needs might be, and how they can best serve the people and carry out the purpose for which they were set up. I have not had a report from the Advisory Council, although I believe it's under active consider­ ation at the present time. MR. CLARK: Mr. Speaker, a supplementary question to the minister, having regard for one of the functions of the Advisory Council in the field of co-ordination of mental health services. Is the minister in a position to indicate the rationale behind the decision made not to share Dr.

Hellon's report on the phasing down of the Alberta Hospital at Ponoka, but to make the report available to the chairman of the Provincial Mental Health Advisory Council and not to the regional councils? MISS HUNLEY: The Mental Health Advisory Council works very closely with me and advised me, and it was discussed with them for their input. Because it was only a planning document that was a long way from being accepted as either a department or a government position, we felt that working with the Provincial Mental Health Advisory Council would probably be the initial step to take.

That doesn't mean the regional mental health advisory councils can't discuss and be involved, because it's a long- range planning document, not only over the next decade but over several. MR. CLARK: Mr. Speaker, a supplementary question to the minister. Was it the decision of the minister that Dr. Hellon's report should not be made available to the regional mental health planning councils, or was it a recommendation from the Provincial Mental Health Advisory Council? MISS HUNLEY: I have to reach into my memory, Mr. Speaker, because I remember speaking with Dr. Blair about its various merits.

I'll have to take that as notice and check my correspondence. MR. CLARK: Mr. Speaker, a further supplementary question to the minister. Is the minister in a position to indicate if a permanent chairman has been named for the Provincial Mental Health Advisory Council, or is the council still operating on a temporary appoint­ ment for chairman? MISS HUNLEY: We have an acting chairman at the present time while we are actively considering the appointment of a permanent chairman. MR. CLARK: A supplementary question to the minis­ ter.

Is the minister in a position to give us some indication when either that appointment will be made permanent or a new appointment will be made?

May 2, 1977 ALBERTA HANSARD 1095 MISS HUNLEY: Part of the problem with recruitment of very capable and interested people is the time constraints they have. One candidate whom we felt might be eligible for appointment effective January 1 decided at the eleventh hour that he had taken on other assignments and consequently was not availa­ ble even though he was very interested. Since then we've interviewed a number of people. I hope to be able to make an announcement about an appointment before very long. Social Assistance MR. TAYLOR: My question is to the hon. Minister of Social Services and Community Health.

Is every ap­ plicant for social assistance visited in his or her home by a social worker before assistance is given? MISS HUNLEY: I'd like to think that's possible, Mr. Speaker, but it is not. They do a follow-up visit as fast as possible. In many cases the assistance given is emergency in nature. So it varies according to the case load the particular worker is carrying, and of course the residence of the individual. In a rural area many of them cover a large distance. Many workers in the large cities have a high case load, so it makes it somewhat difficult for them to do that.

Rather than hold up help needed on an emergency basis, they try to assess it as best they can on the spot. MR. TAYLOR: A supplementary to the hon. minister. To the extent that this is done, has the experience in Alberta been similar to that in other provinces, where a reasonable percentage of the applicants immediate­ ly withdraw their application when they find they're going to have someone visit their home? MISS HUNLEY: I don't know that I'm in any position to offer that comparison or comment on it, Mr. Speaker.

One of the things we have done, in my estimates this year, was the appointment of a special team which would look at our procedures to see that they're as good as possible, as airtight as possible, and as compassionate as reasonable, but also on a random basis to investigate those recipients to find out if there is fraud or cases of people receiving [help] when they're not qualified to do so. So they have two assignments: one reflects on the administration of the regional offices and their proce­ dures, whether they're adequate.

The second is the follow-up to find out whether anyone is figuring out a way to beat the system. MR. TAYLOR: One further supplementary to the hon. minister. Since work may be available in one area and not available where the applicant applies, is there an exchange of information between the various wel­ fare offices in regard to unemployed employables and work for them? MISS HUNLEY: We try to work very closely with the Department of Advanced Education and Manpower, as well as with the Canada Manpower offices.

As a matter of fact, in some areas we have someone from the federal Department of Manpower almost on assi­ gnment to us on a consultative basis. Bicycles MR. R. SPEAKER: Mr. Speaker, my question is to the Solicitor General. Could the minister indicate wheth­ er there will be any new regulations or legislation with regard to bicycles, specifically in urban centres? MR. FARRAN: No, Mr. Speaker. We don't contem­ plate any at the present time, although there is the possibility of some regulations pertaining to power bicycles. MR. R. SPEAKER: Mr. Speaker, a supplementary to the Minister of Transportation.

Could the minister indicate whether, when he has had consultations with the urban centres, there has been discussion with regard to establishing bicycle routes through the city or into the centre of the city, one, to encourage the use of more bicycles and, two, with the incoming mopeds, I believe they call them, causing certain concerns. DR. HORNER: As a matter of fact, Mr. Speaker, they are complementary. But I would have to get more detailed information on the question of whether we have had some detailed discussions with the cities relative to allocating bicycle routes. I'll do that.

Fort Saskatchewan Jail Library DR. BUCK: Mr. Speaker, I'd like to address my ques­ tion to the hon. Solicitor General. A short

preamble, Mr. Speaker: a senior citizen group gathered books and placed them in the library at Fort Saskatchewan. My question to the minister is: is he aware that this library was taken out of the Fort Saskatchewan Cor­ rectional Institution? MR. FARRAN: No, I'm not aware of that fact, Mr. Speaker. There was some correspondence about a year ago concerning a lady who was acting as a volunteer librarian at Fort Saskatchewan. I had un­ derstood that she was continuing in this function. This is the first I've heard that there's been a further problem. DR. BUCK: Mr.

Speaker, a further supplementary question to the minister. Would the minister check into the matter and find out if the library will be returned, if it in fact has been taken out and is going to stay out? The information I had, Mr. Minister, was that some bureaucrat said the space was required, and he took it out. Can the minister check to see if that facility will go back in the institution? MR. FARRAN: Yes, Mr. Speaker. Agriplast Ltd. MR. MANDEVILLE: Mr. Speaker, my question is to the hon. Minister of Agriculture. Could the minister indi­ cate the status of the Agriplast plant at Camrose? MR. MOORE: Mr.

Speaker, I could not do that in an up-to-date fashion. I'll check on the matter and try to report later.

1096 ALBERTA HANSARD May 2, 1977 Calgary General Hospital MR. CLARK: Mr. Speaker, I'd like to direct a question to the Minister of Hospitals and Medical Care. It really flows from a letter the minister sent to the chairman of the board of the Calgary General Hospi­ tal. Can the minister advise the House why almost eight months elapsed from August '76, when the minister first expressed his dissatisfaction with the program budget for the psychiatric wing at the Cal­ gary General, to April "77? Why did eight months elapse and no hard negotiations [to] make some deci­ sions so the facility could open on time? MR.

MINIELY: Mr. Speaker, as I indicated in a para­ graph in the letter, which perhaps I should repeat or just refer to in connection with answering that ques­ tion, the first operating budget received from the hospital was in November 1975, and at that time indicated the following figures. In 1976 the cost of the existing psychiatric and forensic program, which the Calgary General has operated for some years, was $2,091,364. The projection in the first operating budget for 1977 that the hospital provided to us was $3,893,426.

A letter was subsequently received from the hospital administrator in August 1976, increasing the operating budget to $6.6 million for a nine-month period July 1, 1977, to March 31, 1978. This, Mr. Speaker, would approximate to a $9 million operating budget annually, substantially more than double the first budget submission received from the hospital. This was in addition to the existing program costs. Now this cost was brought to my attention.

There were ongoing meetings between officials of the Hos­ pital Services Commission, the division of mental health of the Department of Social Services and Community Health, and the hospital, including the administration and the chief of psychiatry of the hos­ pital, with respect to program. It did not come to my attention as the minister until the budget was being examined in August, September, and October 1976.

At that time I expressed concern that, considering there was an existing psychiatric program, the costs had escalated substantially, and that more details and justification should be obtained from the Calgary General Hospital. Dr. Bradley subsequently signed a letter, which I examined, to the Calgary General Hospital indicating and requesting further details. Some additional details were provided by the hospital but still did not answer the fundamental question.

The fundamental question remains that the hospital has not adequately provided us with full details, explanation, and justifi­ cation for such a dramatic rise in a very short time. I would point out that in the hospital's own figures those costs more than doubled between November '75 and August '76. MR. CLARK: Mr. Speaker, a supplementary question to the minister. Once the minister was advised of the tremendous increase and the costs involved, did he either write or meet with the chairman of the board between August '76 and, really, [when] this whole matter became public?

Has the minister personally met with the board? MR. MINIELY: Yes, Mr. Speaker. As the letter says I met with the board in Calgary on April 2, 1977. That was the time when, as the minister, I personally expressed my concern to the board at what had happened to the costs. Perhaps I should refer to and read into the record, Mr. Speaker, the three specific responses I made to the board at the time I met with them on April 2 in Calgary. First . . . MR. SPEAKER: Is the hon. minister prepared to table the document? MR. MINIELY: It has been tabled, but perhaps in answer to the question of the hon.

Leader of the Opposition I should indicate what I told the board at that time. MR. SPEAKER: If it has been tabled, perhaps it's not necessary to read it out. MR. CLARK: Perhaps I might rephrase the question to the minister. Mr. Minister, between August '76 and April 2, '77, did the minister meet with the board? MR. MINIELY: Well, Mr. Speaker, I'd indicated to the Leader of the Opposition that I had instructed officials of the Hospital Services Commission to pursue fur­ ther details.

Several meetings took place between officials of the Hospital Services Commission, the Cal­ gary General Hospital administration and chief of psychiatry, the division of mental health of the De­ partment of Social Services and Community Health, and had not arrived at a satisfactory explanation for that increase. I did not meet with the board directly on the matter until April 2, 1977, in the city of Calgary. Fluoridation MR. TAYLOR: My question is to the hon. Minister of Municipal Affairs.

Has the minister or the depart­ ment received requests from municipalities for spe­ cial grants or grants for the purpose of fluoridating their water supply? MR. JOHNSTON: Mr. Speaker, I don't have that information. As far as I recall, we have not received any special requests for assistance. However, I am now preparing a request for the hon. member with respect to the number of communities that have passed plebiscites with respect to fluoridation, and I will certainly be able to add the question he has asked today to that comment. ORDERS OF THE DAY head: GOVERNMENT MOTIONS head: (Committee of Supply) [Dr.

McCrimmon in the Chair] MR. CHAIRMAN: The Committee of Supply will come to order.

May 2, 1977 ALBERTA HANSARD 1097 Department of Utilities and Telephones DR. WARRACK: Mr. Chairman, I did have questions from three members and only had time to respond to one. I have not yet had an opportunity to respond to the others. However, it might be there are other questions that someone would like to pose. If that's so, perhaps I would compile them. If not, I would proceed with responses to the questions I had. MR. CHAIRMAN: Are there any further questions to the minister? DR.

WARRACK: First of all, particularly because of the extensive and frankly very helpful comments by the Member for Bow Valley regarding a number of matters, I would like to undertake responses to those. Then, although the majority of the comments by the Member for Spirit River-Fairview were by way of follow-up from what the Member for Bow Valley said, I would add some additional comments with respect to that. At the outset I'd like to do two things. Both are things the hon. Member for Bow Valley and I talked about and agreed to at the conclusion of our discus­ sion on Friday.

First of all, in addition to the items he had mentioned and that I made notes about, the hon. member asked if I would also add some comments with respect to the methods of capital financing and amortization. I'm very pleased to do that, because the hon. Member for Stettler and Minister of Consumer and Corporate Affairs and I have been discussing that very matter. It has been raised with me from a number of quarters. So I would like to do that as a result of the conversation the member and I had.

Secondly, also something that follows from Friday's discussion and the discussion between us after the Legislature adjourned on Friday — the member and I were jointly baffled as we compared notes on one particular matter. Members will recall that the hon. Member for Bow Valley indicated having had a letter from the Bowell Gas Co-op. The letter was dated April 27 and received on Friday. He read into the record the concerns of that particular co-op with respect to gas pricing and some other comments that indicated concerns. I want to indicate, Mr.

Chairman, that on Friday I also received a letter from Bowell Gas Co-op signed by the same person, Mr. Olson, dated the same as the hon. member's letter. It is unfortu­ nate he wasn't provided with a copy of my letter along with his, and unfortunate that I wasn't provided with a copy of his letter along with mine. But if I refer to this letter, they will both be in Hansard and we can carry on with our respective responses. The letter has a rather different tone from the one referred to on Friday. It reads: Dear Dr.

Warrack: We have just received final grant moneys for the original construction program of the Bowell Gas Co-op Ltd. With this in mind, the members and directors would like to thank yourself, the staff of the Department of Utilities and Telephones, for the co-operation and attention to all matters con­ cerning our co-op during all phases of the program. The letter then goes on to extend particular thanks to one of our staff, Mr. Harding, business advisor in the Department of Utilities and Telephones. The member from Bow Valley and I agreed this had a rather dif­ ferent tone from the letter he received.

We agreed it would be worth while to put both forward for the information of the House. Turning specifically, if I might, to responses with respect to the comments — and again I emphasize, helpful — by the Member for Bow Valley. The ques­ tions of future price comparisons and of hookups by potential members, these being people who have put forward their initial deposit — in most cases $1,700, but in some instances at the decision of the local board, somewhat less — I guess the main comparison to refer to with the question of their hooking up is in fact, comparison with what.

On one hand, there is comparison with propane. That really works out at the 26 cents per gallon maximum figure presently in force in most of Alberta. That works out to over $2.35 per MCF by way of comparison. That's a pretty hefty price to compare with. Secondly, as all members know, this particular price parameter has not been reviewed for close to two years, perhaps all of two years, and is under review at the present time. As a matter of fact my understanding is that a hearing on that very matter is occurring today, May 2. That's one standard of comparison.

I guess another standard of comparison is the fact when one contemplates hooking up . . . I recall when my own parents hooked up they were in the position of basically comparing an old system based on pro­ pane as compared with the changed, modified, or if you like, reconstituted system of natural gas. The fact is, they recognized very clearly that there is a valid comparison between an old system and a new system that's involved in the dollar comparison. In all fair­ ness, the full cost of this is hardly chargeable to the rural gas program.

I would be inclined to think the comparison in terms of energy price alternatives would not be unfa­ vorable in the future with respect to natural gas. At the same time, even if there were no price or cost advantages, it seems to me the cleanliness, conven­ ience, and continuity natural gas offers are a very major positive set of characteristics for it to be compared with anything else. The hon. Member for Bow Valley also referred to an exceedingly important subject with respect to the leak experience in the rural gas systems.

I'm happy to indicate that one of the major areas of increased budget expenditure in this department's set of appro­ priations will be a considerably expanded capacity to deal with that operating problem. A number of surveys have been conducted with a view to determining just where the problems were. The preliminary results are essentially that the leaks are not so much in splits and leakages in the pipe itself, some of the old 3306 pipe excepted.

But aside from specific, relatively few, major examples related essentially to bad pipe, most of the leaks that have been determined really relate to fittings and generally to the operating housekeeping of the system itself. Now that's a preliminary kind of result, by way of pretty limited surveys which we feel should be expanded. The budget, if approved, will have the financial capacity to do that. But that would be under way. When the hon. member raised the question in the

1098 ALBERTA HANSARD May 2, 1977 question period, I indicated I'd be pleased to arrange for him a full and detailed briefing of where we are on this matter and what we're contemplating, and that we'd very much welcome input and suggestions with respect to doing it as well as we can in the future. Aside from perhaps some supplementals the hon. member might have, I think that would deal with my remarks there. Finally, I bring to the attention of members that in the budget proposed for the coming year in the Department of Utilities and Telephones, in Vote 1, Ref.

No. 1.0.3 — I'm sorry, I may have that number wrong — a substantial increase is provided to do that particular job better in the future.

In the area of insurance, aside from one or two cases which may, although I'm not sure, be involved with co-ops not protecting themselves with liability insurance that would be reasonable and, in that way, possibly not participating in the group program ar­ ranged by the Federation of Alberta Gas Co-ops, there had been some real concern — and I guess this dates back to about mid-1976, as I recall, perhaps in the latter part of the summer — that was ultimately worked out between the insurer and the Federation of Alberta Gas Co-ops, as to striking an appropriate arrangement to provide the necessary insurance.

That's my understanding on that matter. An extremely important item was raised, and it's been outstanding since the beginning of the program: that's the question of the income tax deduction for member contributions to rural gas co-ops. The hon. Member for Bow Valley mentioned this and wondered where we were on that. The short answer is: we're responding to that effort in a very aggressive manner.

Unless someone wants it, I'll not review the history of it, where it had been approved at the regional office level in Edmonton, but not so in Calgary and, when they saw the ruling from Ottawa, it was then disap­ proved and the matter has stood at that point since then, even though Unifarm, in co-operation with the Federation of Alberta Gas Co-ops and partly through financial assistance arranged between the Depart­ ment of Agriculture and the Department of Utilities and Telephones, has been pursuing this matter. As a result of the renewed effort, I think there is now some hope.

But I don't hold this out as any definitive expectation that we might be able to achieve a change in that matter. It's certainly our view in the Department of Utilities and Telephones, shared by the other departments involved in trying to follow up this matter and get a favorable ruling from the federal government, that it is a reasonable propo­ sition with merit. We've been aggressively trying to put forward the merits of the case. At the present time we do not have a flat "no" answer; consequent­ ly, we do hold some hope.

I note also that the hon. member posed this ques­ tion to me just recently, on April 22, and that some meetings have taken place since that time. So I'm hoping we'll have a favorable result in the future to report on that very important matter. The hon. member made mention — and frankly, he's right — that since the inception of the program there have been a number of administrative problems of one kind or another.

As a matter of fact, it was the recognition of that that really caused the commission­ ing of the Reid, Crowther report, the results of which were tabled in the Legislature a month, perhaps six weeks ago. In terms of dealing with the problems there, just as frankly as admitting that a number of the problems were at the provincial government level, it's also fair to say that a number of them were not. I guess it's human behavior to kind of ping-pong the problems from one to another, and this and that.

But quite frankly, there are problems at all levels to some extent, certainly in terms of the government adminis­ tration, certainly in the local co-ops — some extreme­ ly well done, some much less so. Hon. members will recall that three example cases were used by way of a kind of trial run of the ideas suggested by the Reid, Crowther reports. Meetings on their results — in terms of the local co-op opera­ tions, the government administrative operation, and suggestions for the provincial Federation of Gas Co­ ops as well — are now going forward. A number of them have already been held.

So that's been a pretty major thing. The hon. member referred to the question of transmission versus distribution. I think I heard a lawyer say one time that this is a matter that's clearly gray. I'm not sure how it can be "clearly" and "gray" at the same time. But basically it means that an area of judgment is involved. The proposition of transmis­ sion lines to bring the basic supply of gas into the franchise area is transmission; that is to say, to pro­ vide natural gas supply into the rural co-op franchise area, f.o.b. franchise if you like.

There are the cases where it's clearly transmission to bring it into the franchise area. Other instances that are largely in the purview of the local gas co-op, are clearly distri­ bution. Then there are situations where, for example, due to heavy loads in certain areas and long spans of geography that might be between those heavy loads, or between the heavy loads and the taps that serve the area, there can be a large volume of distribution within the franchise area that is still distribution.

The difficulty with the member's suggestion of cal­ ling all lines "transmission" that are metal, steel, or aluminum is the fact that some of them simply aren't. So it's a question that you wouldn't want to have your rules and regulations force the construction of the system in a way that did not make economic sense. In a number of cases it makes economic sense to construct the system with metal lines, even though they're strictly and clearly distribution.

The difficulty would be that if all metal lines are called transmis­ sion, whether or not they are, of course everyone would want to built with nothing but metal lines and the cost would be far more than necessary. So a judgment is involved there, and I can only say that we try to be as reasonable as possible. I hope no one laughs because when I say that, I really mean it.

We really try to be as reasonable as possible in the judgment involved and strike arrangements where in the apportioning of the costs distribution is a part of the responsibility of the local gas co-op, supported by the financial formula system we have which everyone is familiar with, as distinct from those that are in fact transmission.

As transmission lines, in order to pro­ vide the gas supply f.o.b. franchise area at the same price from Gas Alberta regardless of where that fran­ chise area might be, these transmission lines are paid for 100 per cent by the provincial government with no contribution from the rural gas co-op at all. I appreciated the hon. member's remarks with re­ spect to the changes we've made in the capital grants system. We addressed this matter, as the hon.

May 2, 1977 ALBERTA HANSARD 1099 member will know, about a year ago January as to whether the 50/50 system of cost sharing above $3,000 per member was a reasonable division of cost in instances where rural gas co-ops might have had to face high costs for no reason of their own, but simply geographic and other kinds of circumstances they had to face. For example, pure remoteness, which causes a lot of physical installation between users and customers, is a very real problem.

Secondly, some of the terrain both in terms of hilly terrain that might in some instance go through rela­ tively unsettled areas, and in the more northern areas. I was thinking of suggestions made to me a year and a half ago by the Member for Lesser Slave Lake where they have to deal with muskeg. It's either almost impossible to construct in the summer, or you have to do it in the winter and that's expensive. That kind of problem.

The crossing of pipelines, the cros­ sing of irrigation ditches — some of those unique cost-incurring things that just are not something the local gas co-op can deal with and have any reason to have been able to offset in their management. That was why a year ago February we made the move to go to 75/25 sharing above $3,750 per user in a system. Further to that and recognizing the continued cost increases that had taken place, though they are now abating to a considerable extent, as I announced in mid-January in Grande Prairie we felt it would be reasonable to go to a 90/10 kind of split above $4,500.

In addition, for my

part I am not persuaded that we should be into any kind of 100 per cent financial support system where someone making the decisions on expenditure isn't putting up any part of the money. It seems to me we really need to retain the cost-sharing concept. I think that's reasonable both by way of cost control and by way of the reasonable division of the expenditures necessarily involved. I'd also make the observation that for my

part I'm not very enthused about low-interest financing from the heritage fund, which was one of the points brought up by the hon. Member for Bow Valley and the Member for Spirit River-Fairview. [There are] two reasons for that, in my mind at least. One is simply this — and this will be literally music to the Provincial Treasurer's ears: I would be reluctant to undertake the kind of forward financial commitment that forces major expenditures in the future, perhaps beyond the time horizon that we can count on revenues from non-renewable sources such as oil and gas.

If we did that, whether it was from the heritage fund or somewhere else in terms of low-interest loans, it is in fact a subsidy. It is a grant because of the decrement in relation to actual market, real commercial value. Consequently, I think there would be some wisdom at this point in Alberta's history in not projecting budg­ etary expenditures into long forward time frame periods, but rather meeting them now when the revenue picture is the way it is, just reminding every­ one that in fact we are looking at a declining future revenue situation from non-renewable resources.

I guess everyone knows we are approaching 50 per cent of provincial government revenues from those sources. In terms of the heritage fund itself, I would make the proposition that the low-interest use of money from the heritage fund would be in contrast with the basic parameters and thrust of the fund. We're only putting 30 per cent of the revenue in the heritage fund; 70 per cent of it is being used here and now. Surely it's reasonable for us to meet those financial responsibilities now, without subtracting dollars from future generations of Albertans in the process.

We might want to have a good debate on that point, but that's certainly my thought on it now. Three other items with respect to the extensive and welcomed review by the Member for Bow Valley: one is the suggestion, and I know it basically comes from the proposal made by the Federation of Gas Co-ops, for a freeze on the price of natural gas for five years. I have all kinds of expenditures I'd like to see frozen, for longer than five years if possible. But I can't find any list where magic is on it.

Quite frankly, the only conceivable way that that proposition can be made is when someone makes that proposition — as the hon. Member for Spirit River-Fairview did as well — concurrent with saying what you are going to do to get the money. One suggestion is to bleed it off from the heritage fund. Another is to have a sales tax. Another is to increase the income tax. Another would be, for example, to cut — and I mean cut — major expenditure programs of the Alberta government in major program areas like highways.

I know I have some ideas on more things that should be done in my constituency, and I guess almost everyone, from a rural area at least, has. If we want to cut those out and forget them for, say, five years — or hospitals. I have a hospital that is under construction, expansion, and renovation at Tro- chu, and I think that's a proper kind of service to the people of that area. I do not think we should close that down in order to have more money available to freeze the price of natural gas. I'm not sure the Member for Bow Valley wouldn't feel that way about the Brooks hospital.

But in any case, all I'm simply saying is that there are essentially those options. The only way to pro­ pose a freeze for an extensive period of time in the price of natural gas is to tell me which of those things you would also do in order to be able to afford it. Secondly, if I might, though the hon. member didn't raise it until we were discussing it later — it's an important matter and one that my colleague, Mr. Harle, and I have discussed along with a number of other members of the Legislature — that is the ques­ tion of the time frame in which the capital amortiza­ tion is spread.

As I recall, the way the hon. Member for Bow Valley put it when we discussed it, it was the concern with the relatively short period of time, pres­ ently a 10-year period. Two things happen. One is that there is a large amount of money that has to go into the gas rate. That's the gas rate as distinct from the gas price — the gas rate, including the capital amortization cost, in addition to the cost of gas itself. That is high, if the period of time involved is short.

It really seems to me an argument can be made that the experience, even so far, with the rural gas program is such that there is physical solidarity and soundness about the rural gas systems that would allow us to look reasonably at a time frame longer than just 10 years. Secondly, one of the other aspects involved is that there is a considerable change in the position of people who take gas right away as compared with

1100 ALBERTA HANSARD May 2, 1977 those who defer. When you have a short period of capital amortization and therefore a high amount of capital amortization cost in each MCF's gas rate, again distinct from gas price, the people who defer hooking on are in a position where they actually gain something, because in the meantime some of the capital cost is paid off by those who have hooked on. I think there is an equity problem there that would also shift the thinking and balance of judgment in the direction of a longer period of time than the 10 years that's presently the case.

My colleague the minister responsible for Consumer and Corporate Affairs, Mr. Harle, and the Provincial Treasurer Mr. Leitch, and I are looking at finding a way to try to extend that period longer than the 10-year period that's presently the case. Thirdly, the hon. member asked me to indicate some idea of the present status of the program in terms of the number of people to whom gas has been provided and so on. I've secured that information.

This is effective at the end of the fiscal year, where slightly over 37,000 users now have the opportunity for natural gas who would not have that opportunity were it not for the rural gas program. I might add that in the fiscal year just completed — even though, as we all know, there has been extensive complaining and what not — just the same, we had a target of some 10,000 for the fiscal year and achieved in fact over 11,600 new users to whom natural gas was made available under the rural natural gas program. I say, quite frankly, that is a major extent of penetra­ tion and achievement.

The 37,000 I referred to would involve, figuring the number of people per household or per farm — however you want to refer to it — would be close to 150,000 people. That's a lot of people in rural Alber­ ta, and all this achieved in a comparatively short time of something like three and a half years. By way of the amount of money that's been involved in capital grants so far, the observation made by one member is essentially right. It's over $70 million, though less than $80 million. That's the basic report. I've got it in detail, pipeline miles and so forth, which I could elaborate on if desired.

But in any case it's slightly more than 37,000 new users under the program in the three and a half years — I think that's a correct calculation — it has been under way, and that's serving roughly 150,000 people in rural Alberta. A couple of comments somewhat different from those of the hon. Member for Bow Valley were made by the Member for Spirit River-Fairview, although he's not here at the present time.

Aside from the things that were the same as the Member for Bow Valley said, the member essentially made the proposi­ tion that there ought to be price discrimination in favor of rural users of natural gas or, if you like, against urban users. That's pretty easy to do when you're in a position that you're dealing with a relative­ ly small percentage of the provincial total. For example, the amount of gas I personally use would certainly be a small percentage of the provincial total, and it sure would be nice if I didn't have to pay for it.

That wouldn't have impact on the bills of the rest of the people of Alberta very much. But is that fair? The other thing that makes it easy to take that position is if you have relatively little hope of being in a position of responsibility to have to back it up. I suspect, and certainly my thought on it at the moment is that it would be very difficult to defend to all Albertans, rural and urban alike, a process by which there was that kind of price discrimination. That particular matter is a subject of debate and a welcome one here or on another occasion.

But I really think it would be difficult to defend price dis­ crimination of that nature against urban users as reasonable, appropriate, and fair. I suspect that some of the people who represent urban citizens in this Chamber are also getting concerns expressed to them on the costs of utility rates, and natural gas in particu­ lar, and might want to offer some observations with respect to any proposition that would not only have a price difference but would enlarge the price dif­ ference so it would be [even] higher for the urban areas in order to keep it lower in the rural areas, rather than equal treatment.

One of the things I was really surprised by in the observations of the Member for Spirit River-Fairview — and again it's unfortunate he's not here — is that he made some comment as to why the gas rate should be higher in the rural gas systems. He didn't seem to appreciate the distinction between the gas price for gas itself, and the gas rate for the gas plus the capital amortization involved. A major part of the reason is that they end up owning the system. In Edmonton or Calgary you do not buy any ownership of the system when you pay your gas bill.

In the typical rural gas co-op arrangement, you are buying the system, much of it in fact paid for by the provin­ cial government but having the ownership in the hands of those user members. They end up owning the system. There's no wonder there's some dif­ ference in the gas rate, though not necessarily. There may be, but not necessarily a difference in the gas price. I'm kind of disappointed to see that overlooked. It's an extremely important one. It's extremely important to distinguish between gas rate and gas price. And it's extremely important to realize what you get for the difference.

That's ownership of the system in one case, and no ownership in the other. Quite frankly, with the extent of provincial subsidy involved in the capital construction costs of the system, it really looks like a heck of a deal to get the ownership of the system for that comparatively little input by way of capital amortization in the gas rate. I believe that deals with the items mentioned by the Member for Spirit River-Fairview that were different from those of the Member for Bow Valley, with the exception that the Member for Spirit River-Fairview did pose a question or two with respect to REAs.

One of these dealt with the question of brushing. In his particular region of the province, the Alberta Power franchise area is in place. I'm informed that the two regions in question that might be thought of, as the question was posed, are experiencing a very high percentage of REAs participating in the brushing pro­ gram set up by Alberta Power.

As a matter of fact, I understand over 30 REAs have already signed up in the participatory process involved in brushing in those areas in order to have a kind of ongoing well- designed system to take care of present and future brushing requirements, rather than doing nothing for a period of time and literally being faced with urgency after that. I wanted to make that point. The question of deposit reserves was also brought

May 2, 1977 ALBERTA HANSARD 1101 up. I'm pleased to say that about a hundred — I think it's actually a few more — of the rural electric co­ operatives in Alberta have in the last year and a half increased their own self levies for deposit reserve fund purposes to provide for future requirements. Admittedly in some instances the amount of increase may not be enough to put forward a financial footing that's clearly sound into whatever their particular sys­ tem might be.

But it seems to me a rather remarka­ ble response to the initiative that had been taken and the concerns that had been expressed from a number of quarters, including the Minister of Consumer and Corporate Affairs with whom I share responsibilities in this area, and myself and our respective staffs, about the financial capacity to take care of the future in REA systems. In response to that, on a voluntary basis by way of local board decisions, about a hundred REAs have already responded by way of increasing the levy on themselves to provide more funds for their financial capacity in the future.

I think that's a major step forward, quite frankly, a very major and important step by the REAs to look out for their own requirements in the future. I think that covers the points the hon. Member for Spirit River-Fairview made. He'll no doubt have a chance to pick up in Hansard at an ensuing date the points made that were different from those made by the Member for Bow Valley. MR. TAYLOR: Mr. Chairman, I don't want to hold up the estimates, but there are two or three comments I would like to make. I believe the comments of the hon.

Member for Bow Valley quite clearly reflect the thinking of a great number of people in the co-ops. I appreciate the very excellent and courteous way in which he has presented his arguments. I'd like to add just one or two comments in regard to a few of the items. Some of them may not be questions, but I think I should voice the feelings of the people who have approached me in regard to these items. In the first place I'd like to say that in the growth of the gas co-ops, there are bound to be tremendous problems and growth problems in any scheme that big.

As a matter of fact, a few years ago there was difficulty in even getting consideration for gasification or a rural gas program in one municipal­ ity, let alone the entire province. I don't think we should underrate the gigantic problems involved. I would like to pay tribute to the former minister, the present minister, and departmental officials for the way in which they have tackled this gigantic problem. I also appreciate the attention the minister and the officials of his department have given to problems that have arisen when we brought them to their attention.

The people do appreciate that even though they get frustrated with delays, many of which are certainly not the problem of the depart­ ment but the problem of the local co-op. Neverthe­ less they do become very frustrated, and they appre­ ciate the extra efforts, the second mile, that officials of the utilities branch have gone to to try to correct them. One of the problems I have found is the mistakes not so much of the gas co-ops but of some of the consulting engineering firms.

In estimating the amount of gas and the amount of growth, they have failed to include additional customers; and not only additional customers but the additional appliances that would be used in utilizing natural gas. Conse­ quently, when a line becomes overloaded, approval can't properly be given to new customers for fear there would be an explosion, human life would be taken, or there wouldn't be enough to deal with a 20 or 30 below zero day. I have never urged the department to approve something that shouldn't properly be approved.

I think some of the consulting engineering firms should have their knuckles rapped pretty badly for their failure to include estimates of the expansion most people could foresee. This problem is going to be with us for a while, until these things have been corrected. It's going to cause frustration on the part of new applicants for service in many of our rural gas co-ops. I would like to deal with the leakage problem for a moment or two. I feel this is a serious problem, because it's not only waste but could become very dangerous.

I would like to see the department do even more than it is in tracing down leaks and the reasons for the leakages. I think every bit of natural gas we can save from wastage is all to the good, particularly when we realize that people in other parts of Canada and the world are keeping pretty chilly because they haven't got enough gas to keep them warm. The hon. minister mentioned what I consider a very excellent record of some 11,600 new users in 1976. I'm wondering if the hon. minister would clarify this as people who have signed up or people who have actually hooked up.

One of our problems today is the number of people who have signed up but have not yet hooked up. They're waiting for the price to stabi­ lize or for the economic factor to come in that they can save money by hooking up. This is creating quite a problem in our rural gas co-ops. I don't know what you can do about it. Certainly we live in a free country, and it's people's choice.

But any economic facts that would encourage these peo­ ple to hook up after they've signed up would certainly be a tremendous help to the rural gas co-ops, because they are geared to the large number of customers they anticipated would sign up and hook up. I think this may take some consideration and time to solve, but I think it's very important that we try to solve it. I too have had a number of people talk about this freeze on natural gas prices for rural customers. I think you can make a good case for a freeze for rural customers. For instance, production of food is involved.

I have a letter from a farmer who points out that his gas is used not only to heat his home but to heat his barn. It's also used for pumping water for irrigation. All these are production items; they increase his production. Because we want to increase our food supplies, we should make gas available at a more reasonable price. Although the freeze affects relatively few in the province — they say 1 to 2 per cent — I don't think it can be considered on the basis of the number it affects. I think there has to be a pretty good reason for a freeze that's going to create a different price.

I have people living in some of my towns who are much poorer than those who are asking for the freeze, who are having difficulty paying their bills now. So I really have mixed feelings in regard to the freeze.

1102 ALBERTA HANSARD May 2, 1977 Many of the people living in my urban areas are having just as difficult if not a more difficult time than those in the rural gas co-ops. They're having diffi­ culty paying their bills now. It seems to me the urban bill is already higher than many of the rural bills. While I am very sympathetic toward the suggestion of a freeze, I think there might be better ways of han­ dling this whole situation than creating first- and second-class citizens.

I personally would hate to stand up in an area where one person is using natural gas in a rural gas co-op and another is using natural gas in a town or village, and tell them one is going to be frozen and the other isn't. I think we'd immediately create tremendous problems. We can, however, help the situation a great deal by giving every possible consideration to our rural gas co-ops. I say that because for many years they did not have the opportunity of getting natural gas.

Bringing in a program that has now enabled, as the minister stated, some 37,000 users or 150,000 peo­ ple to enjoy clean heat is one of the big items to the credit of this government. This is something like 10,000 or more people a year. It appears that in another three or four years, practically the entire rural population will be using natural gas. This is too wonderful a scheme to let go sour in any way. I'm sure the government and the minister — and I know the minister is very concerned about doing everything possible to keep these gas co-ops in an economic position.

I think we can stop there in regard to the rural gas co-ops. The minister probably has a better grasp of the problems than the ordinary MLA, because he's dealing with them every day. I think the program recently brought in to finance capital has greatly improved the situation and is welcomed by our peo­ ple. As the year goes by, some other steps may be necessary particularly to encourage more people to hook up, and to deal with some of the other problems mentioned by the hon. Member for Bow Valley.

The other item I wanted to mention on natural gas is, I think, already government policy; that is, to cut down on natural gas to industry to a point where it can be cut out to the greatest possible degree, where an industry can properly use other sources of power. I don't think you can simply cut it off and say, we'll cut you off if the economics of using other sources is completely out. But I think we can properly say there are industries using natural gas today that could properly use other sources of power.

One of the things that bothers me a great deal is that the previous government persuaded the city of Edmonton to turn to natural gas and give up the use of coal. They went to considerable expense to con­ vert to natural gas. I can understand the feelings of the people of the city, particularly the city council, when we now ask them to change back to coal. If the change back to coal is required — it was a govern­ ment mistake, not a city mistake — I think there should properly be compensation for the city. I think there is a place where coal could properly be used.

In the day the conversion was made, the whole trend was to turn to natural gas because we didn't have markets for it. Today the situation is entirely different. I realize it creates for the present govern­ ment a problem that is not of its making. But I do think the city has some claim for assistance if we're going to insist they cut back or reconvert to the use of coal. Now there is just one other problem I want to deal with. This is the extended flat rate calling. This has been not only welcomed by many of the people in my constituency but there is a terrific craze for more of it.

People from various parts of the Drumheller constitu­ ency want more EFRC. They have seen the value of it in spite of the fact that some of the votes were negative a few years ago. The people have since realized the tremendous value of EFRC in having connection with their market centre. It has even gone beyond that. For instance, the people of Stand­ ard and Hussar want to connect with their major marketing centre, namely Calgary. Standard is some 40 miles away and Hussar some 60 miles away, so it means extending the flat rate calling area, doubling it or adding another 10 miles or so.

I would like to suggest to the minister that while the government doesn't have any plans, as I've been informed by the minister himself, of extending it to 40 miles in the immediate future, I would like to see the minister and his department make a check on the estimated cost to extend it 10, 20 or 30 miles. It may be that people are so anxious to have the service that they would be prepared to extend the cost.

I realize that the extension of cost isn't just one or two exchanges, and that an additional burden is placed on all AGT subscribers that would have to be considered pretty carefully, but it would give a tremendous advantage to places like Standard and Hussar who have their major marketing centre in Calgary. If that can't be done, then a connection with a place like Strathmore would be a reasonable alternative until the mileages have been extended.

As a matter of fact I have just received a petition from Hussar, signed by 85 per cent of the people of that telephone area who want EFRC to Calgary and, if not to Calgary, they would be glad to settle for Strathmore, which is almost half the way. This would certainly give them some benefits at the present time. The other area that want an extension is the Michi- chi area running from west of Delia right to Drum­ heller.

The Michichi people do most of their business in the city of Drumheller and when the extension was made from the Morrin area there was a tremendous advantage for those people and tremendous hap­ piness was created. Now the people of Michichi would like to have a similar program outlined. I imagine the hon. minister is swamped with re­ quests for EFRC.

I would like to see some real progress in this in the next couple of years, where areas with a large percentage, say over 80 per cent of the subscribers, want EFRC within the present limits, that we endeavor to carry out that program, and at the same time make a study to see what would be involved in actual dollars to extend that calling from the 30 miles to 40, 50 or 60 miles. Those are all the points I have at this time, Mr. Chairman, and I would appreciate the hon. minister's comments, particularly on EFRC. MR. MANDEVILLE: Mr. Chairman, just a few com­ ments.

First of all in regard to the letter from Bowell, I would like to say that I did get a letter from Bowell and the hon. minister got one. They were both mailed on the same day. I think in all fairness to the people from Bowell, the letter I got is a general complaint that we are getting from a lot of co-ops,

May 2, 1977 ALBERTA HANSARD 1103 and it's really on the pricing of gas. My letter indi­ cates it's the price of gas they are concerned with, and it's not only Bowell that is concerned in this area. I happened to get this letter that particular day and that's why I used it as a reference. But the concern is the increase in the price of gas and concern about further increases. I think the letter the minister got, Mr.

Chairman, indicated that they have a grant and they appreciated the co-operation they were getting from the staff and so on, which I indicated that I was pleased with as far as some of the co-ops in my constituency were concerned. So in all fairness to the writer of the two letters from Bowell, I think he was looking at it from two different aspects. I appreciate very much — one of the areas [in which] many of the co-ops have gotten in touch with me and I have also talked to the federation, increasing the time frame from 10 years to a longer period of time.

If we can do this I certainly think it will help considerably. As I mentioned in my remarks the other day, Dry Country Co-op have 400 applications that haven't hooked on. I think their concern is possibly the high capital cost but more of their concern is the pricing. Are we going to get another increase in gas or is it cheaper to use oil or propane?

I think this would certainly be a step in the right direction if we can increase this time frame, say from 10 years to 25 years, to make it more equitable for the people who are hooked on and are using gas, so they don't have to pay for all the capital as far as the installations are concerned. I mentioned one area in my remarks, Mr. Chairman, and possibly the minister could give us just a brief breakdown on the different amounts of gas. The figures I think I used were 1 per cent for gas co-ops, 3 per cent for rural gas people, and the balance for urban.

I realize it will be hard to do, but just ballpark figures, the amounts of gas used in rural versus urban Alberta. DR. WARRACK: Mr. Chairman, I certainly appreciate the remarks of the hon. Member for Drumheller with respect to the fact that the undertaking of providing a rural gas system that basically covers rural Alberta is truly an enormous one. Not only that, but as far as I know it has never been undertaken anywhere else.

One other thing I suppose accentuates observation by way of emphasis is that essentially we have embarked — with the help of members of the Legisla­ ture and certainly, as the member says, with respect to the staff not only of the Department of Utilities and Telephones, but many others involved in various re­ sponsibilities in the provincial government for example, the gas protection branch, the Department of Labour, the people in Consumer and Corporate Affairs — [on] the input with respect to pipelines and inspections by Energy Resources Conservation Board, just to name some that come to mind.

It really has been major because it's not a matter of chipping away at the program from a small beginning but really one of undertaking the province as a whole, all at once. It really has been a gigantic undertaking and I certainly would like to add to the Member for Drumheller's kind comments with respect to depart­ ment staff, some of whom are here today, particularly Mr. Jim Dodds who otherwise could have been doing what people do when they retire, missing winters, golfing, and things like that.

But instead, he accepted the challenge — realizing how badly the people of Alberta needed his help — to undertake being a Deputy Minister of Utilities and Telephones, even though this puts him into working roughly two years beyond retirement age. I would also like to mention Assistant Deputy Min­ ister Doug Brooks, Mr. Gene Tywoniuk, who handles our financial accounting in personnel, Mr. Wayne Brown of Gas Alberta, and from my own office, Mr.

Doug Hirsch, who's my special assistant, and as a matter of fact — although she's not here — the very great help that from time to time she has been able to provide, my secretary since coming into government, Mrs. Lea Roberts. I think they've done a heck of a job. Any of the things that have been a problem, I guess have more likely been mine than theirs. AN HON. MEMBER: Agreed. DR. WARRACK: You couldn't wait for that chance, eh?

I would like to report just briefly — and I don't want to drag this out too long; I have a tendency to do that, as everyone has no doubt noticed — with respect to errors by consultants, engineering consultants, and so on. Early in my time of the present responsibility of slightly more than two years, I was very concerned about this. We sat down with the professional asso­ ciation that covers the engineers in Alberta, indicated the concerns we had, and asked them for their advice and assistance.

After a preliminary look at the situa­ tion, and sharing with them the frequency and nature of complaints — as best we could put our hands on them — that have been coming to us and members of the Legislature, and inviting responses from individu­ al rural gas co-ops, the association decided there was indeed enough concern that they should take a specif­ ic look at this matter, and they did that.

As a follow- up to the meeting we had, they did extensive review within their professional association and came out with a number of recommendations that included fur­ ther review of certain firms in certain instances of rural gas co-op work where they may be contemplat­ ing future disciplinary action. But that is their deci­ sion as a professional association. For my part, I thought they were extremely helpful, responsible, and responsive to this problem that had obviously devel­ oped within their own area of responsibility.

I might say that one of the things that also came out of those discussions was the concept of having a circular letter to all co-ops and others who would be involved in the rural gas system. The first went out in April of last year, for 1976, and then a revised follow- up this year, April 1977, as a kind of package that tells in one place many of the considerations involved in undertaking the construction, operating, and main­ tenance of rural gas systems.

In any case, I particu­ larly want to indicate to the Member for Drumheller that we did that kind of follow-up and got a highly co-operative and responsive series of actions, I feel, by the professional association involved. I certainly agree wholeheartedly with what the hon. member said with respect to the leakage problems in natural gas. It's difficult to conceive of talking about energy conservation — as I did in my own budget address in the Legislature on March 16 — and have significant quantities literally being wasted, and even

1104 ALBERTA HANSARD May 2, 1977 more so, the possibilities of danger. By way of response, I simply indicate that we have considerable additional capacity budgeted in this budget, and have made those arguments in the budgeting process that we should be doing more. Given the support of members through the budget proposals, we shall. With respect to the numbers I mentioned, there is some difficulty in distinguishing between hookups, sign-ups, and things like that.

Basically, we make our compilations on the basis of information given to us by the rural gas co-ops, and the compilations are documented by us as work having been done; that is, they then receive the grants on the basis of that. In some sense, I suppose that if the gas is brought in beside someone's house, in terms of the financial capacity of the rural gas program and so forth, the job is done. The remainder is up to that individual. At the same time, I'm not sure it makes sense for an individual to include the $1,700 already put up in the decision of whether or not to hook up, because that's sunk money.

The reasoning which justifies that is basically, as the rural gas co-ops have often put it to us, the fact that because the person signed up, the system was designed including that person. So there is some distinction in the numbers there. But the extent of numbers that the local co-op has completed by way of following up the sign-ups that have occurred — when they have completed that job, they provide this information to us. That is what is compiled. I certainly agree that the hon. member basically put the heart of both sides of the argument on the price- freeze question.

The fact is that there is a priority kind of need for agriculture and food production by farmers. On the other hand, it sure is the truth that there are a lot of people, not only in smaller centres such as the hon. member and I represent in our legislative capacities, but in our cities — and you don't have to look very far to find that you've got a lot, and I mean thousands of people — who are far less well off than those asking for the freeze. You really have difficulty finding equity in that.

I certainly appreciate the comments the hon. mem­ ber made with respect to ways of finding additional help, which was really what we undertook. As a practical matter, we felt that the rural gas system would just not be something people could afford without some government help in the first place.

As the realities developed, including inflation, we felt it was reasonable, necessary, and for that matter prac­ tical, to increase the percentages of capital grant support, which — if one wants to think of it in terms of interest rate and make that comparison — is really zero interest; not only zero interest but zero repay­ ment, a kind of transaction in order to build them. As the hon. member says, we've made some changes in this. I overlooked, and I should not have, the fact that the hon.

Member for Spirit River-Fairview recognized that point as well, indicating that the changes which had been made by way of the capital financing formu­ la had indeed been very helpful to many of the co-ops. I certainly appreciate and agree with what the hon. member said with respect to coal.

I'm sure everyone watched what the President of the United States said to the nation on April 18, and to a joint session of Congress on April 20, that it's time to face reality in energy costs, prices, and future supply; and that one of those realities is the conversion from one fuel to another where it makes sense on a future supply basis and an economic basis, and literally to do it on a basis that also takes account of environmental con­ cerns.

There's just no way we should be looking at coal on any other kind of basis than the environment­ al protections by way of cooling ponds if necessary, electrostatic precipitators, and appropriate, thorough, and careful reclamation of whatever lands are dis­ turbed by way of coal. There has to be a recognition that a major future in many areas, including Alberta, is coal.

I don't really know the interaction and history with respect to the city of Edmonton and the provincial government at the time of the conversion itself, but I would think it's clearly regrettable that at this point in our history, the technological capacity to deal with coal has been gone for some time. Because it's very clear that for the city of Edmonton, through Edmonton Power, to be in a position of essentially generating its own requirements — which I understand is their preference — they need to be getting into coal, and they would now be essentially starting from scratch.

In recognition of the kinds of things the hon. member was saying, I should also point out, in case it's not clear, that the natural gas rebate plan — now, starting in this fiscal year, the natural price protection plan — does apply to Edmonton Power. And an elec­ tric rate protection is involved for the users in the city of Edmonton that really isn't involved anywhere else in the province. As a city, they have certainly made the argument to me that the hon. member refers to.

I might also say that in the initial implementation of the rebate plan there had been a different threshold for household, small business, and farm use from the use of natural gas for generating electricity. Starting last year, the fiscal year prior to this one, we removed that separate threshold and made the support price applicable to the city of Edmonton in the same manner as anyone else. There's just no doubt that extended flat rate calling, EFRC, has been welcomed. I think there's been an even better response than anticipated on the part of people.

In some instances I'm not sure we had people's attention long enough for them to fully per­ ceive that it would increase their rate. I think the hon. Leader of the Opposition will recall a brief conversation he and I had with one of his constitu­ ents in Sundre during the central Alberta tour. He said, we knew we were going to be hooked up, but what's this increased charge? I said, well gee, if it's not worth it maybe we should take it out. Right away the Member for Olds-Didsbury said, no, no, it's fine, in fact it is a bargain — and it is.

One of the problems with it being a bargain is the fact that in a financial way — let me emphasize that, in a financial way — it's a loser. Even with the additional charge, for example with Sundre hooked to Olds, continuing the example I was using, the addi­ tional revenue generated does not nearly compensate for the cost and for the revenue foregone because it's no longer long distance and there's no toll collection. There are some cost savings in that you don't have to administer relatively small bills and so forth. On balance it basically provides better service but does lose money.

We're putting that area forward as part of the phase two review of Alberta Government Telephones

May 2, 1977 ALBERTA HANSARD 1105 rates by the Public Utilities Board, because we're in a position where a considerable amount of money, some $2.7 million, was lost by AGT last year. This year, exclusive of a land transaction that turns out to have been of fairly major proportions, there was less than $1.5 million positive net income; that is, we're in the black but only by less than $1.5 million, and that's on a revenue magnitude of over $307 million. As a matter of fact, the amount of net revenue is so small that the debt/equity ratio deteriorated even further in 1976.

What I'm saying is that AGT as an operating Crown corporation is now in a difficult financial position. That being the case, coupled with the fact that EFRC does lose money in additional hookups [and] under present revenue guidelines would lose even more money, we have reached the conclusion that we need to hold off on further hookups until the rate deter­ mination matter is concluded — which would be late this year, possibly October or November. That's what we're looking at on the timing.

If the proposal that's part of the phase two rate review is approved by the Public Utilities Board, I think we would be in a position early the following year to begin looking at some of the circumstances where people can reasonably be viewed as not having equitably good telephone service compared to others. The case I think of is Carbon, in the hon. member's constituency, although close to mine. It's a situation where they had the opportunity to vote in 1973. They voted against it, so EFRC was not put in.

But it seems to me that about 1978 would be an appropriate time to reconsider, when five years have passed, and in instances where no hookups at all are available. From a policy viewpoint, that's the nature of my think­ ing on the matter of future possible EFRC hookups. If we have the financial capacity to do so, that's the kind of process I see in the future. On the additional comments made by the hon. Member for Bow Valley — he just stepped out, but the Leader of the Opposition might refer [this] to him — I simply agree with everything he said, including the matter of the letters and so forth.

My suggestions were just by way of completion. He did ask one question: what percentage of gas use is involved in the rural gas co-ops at the present time? It's 3.5. It would be projected to grow to something in the order of 5, perhaps somewhat larger, because obviously the percentage would increase as the rural gas program is constructed and people get on stream. But my understanding is that it's presently about 3.5 per cent. The figure 1 per cent was used by the Member for Spirit River-Fairview, but I think he probably found that figure in the February brief of the Federation of Alberta Gas Co-ops.

They had understood it to have been 1, and a year and a half earlier it was 1. As part of the follow-up from that meeting we had with the federation, I wrote to them to indicate that in fact the correct figure now is roughly 3.5 per cent, and it will gradually rise. MR. CLARK: That's the total production? DR. WARRACK: Not total production, no, because by far the majority of production in Alberta goes outside the province. MR. CLARK: Used in Alberta? DR. WARRACK: Yes, used in Alberta, that's my understanding. I think those were the matters that were brought forward, Mr. Chairman. MR. R. SPEAKER: Mr.

Chairman, I'd like to have more information about some questions raised in the dis­ cussion. One is with regard to Gas Alberta. I was wondering what percentage of the co-ops are using Gas Alberta as a source of gas at the present time. I'd like the minister to discuss the delivered price of gas from Gas Alberta to the co-ops. For example, I understand for the Bow River Co-op it's something around 85 or 86 cents. Included in that is a service cost I think at present somewhere in the vicinity of 17 cents, or a little less than 17 cents.

That's the third question I'd like to raise with the minister: what is that service cost made up of, and what type of serv­ ices are delivered to the local co-ops? The fourth question I'd like to raise with the minis­ ter goes back to the question of the bad pipe. I understand the minister was negotiating with some of the co-ops as to assistance or a settlement. I understand some of the co-ops were practically in a position of bankruptcy because of that fact. What were the final settlements between the government and the co-ops in difficulty because of bad pipe? DR.

WARRACK: First of all on the percentage using Gas Alberta. I guess there are two ways to look at that: the percentage of the number of co-ops or, alternately, the percentage of total gas. I'm not sure what those figures are. Let me go on to the other items in the hope someone can send me down a note with what those numbers will be. We will come back to that, and someone will send me a note with that particular data. With respect to the services provided by Gas Alber­ ta, what's involved is basically this: gas is available in raw form at the field, that is the gas production field.

What has to be accomplished is the processing of that gas, if necessary — unless it's unusually sweet, some processing is necessary so it's usable — and its transportation from where the gas is produced into the franchise area where it needs to be distributed, for example, Little Bow in the hon. member's constituency.

In that process of course all the calibration and so forth that's necessary to put it into the pipeline, to carry it, then take it out of the pipeline at properly checked pressures — in some cases water has to be removed and so forth — is done by Gas Alberta largely in the sense of making arrangements with companies in the business doing that kind of thing; for example, AGTL. I could indicate on a detailed basis that Gas Alberta purchases gas from many sources.

These include gas export companies, for example at Empress, that have export lines heading elsewhere out of the province; from gas utility companies that operate in Alberta, some very familiar to everyone — Northwestern Utili­ ties, Canadian Western Natural Gas and others such as Lloydminster Gas, Beaver River Utilities; from pri­ vate oil and gas companies where obtaining the sup­ ply might be by a direct relationship; and in some instances from individual gas wells, the well opera­

1106 ALBERTA HANSARD May 2, 1977 tion handled by some arrangement through Gas Alberta. Gas Alberta negotiates contracts with each supplier to obtain the gas at the least cost they can. Of course the cost of gas varies [between] suppliers due to a number of factors such as transportation costs, the extent of processing necessary, these kinds of opera­ tions. It also depends somewhat on the nature of the system you're taking it off.

If you're able to take it off a large nearby transmission line, that's a more economic way to get supply than off a small line nearby using a major percentage of the line's total capacity. With respect to Gas Alberta there is in fact a kind of hidden subsidy, if you like — but not hidden to those of us reviewing the budget here — in that the Gas Alberta staff, and operations within the Department of Utilities and Telephones are covered in this budget presently before us.

They are not included in Gas Alberta's per MCF calculation of charges necessary to obtain gas supplies and arrange for their delivery in the quantities and qualities to the locations within the franchise area of the rural gas co-op. So, to the extent that this is in the budget rather than in the Gas Alberta levy, some degree of subsidy is involved. Aside from those, the other costs are set up on a levy-to-recover-cost basis. The hon. member asked me exactly what they are. The exact Gas Alberta levy for the fiscal year 1977-78, committed throughout the entire 12 months of the fiscal year, is 16.94 cents.

I think the hon. member will immediately say, why would it be that? Let me explain. It had been 14 cents at a time in the past. The Gas Alberta operating fund that operates out of the Department of Treasury had been incurring a significant loss. Last year we felt we needed to increase the levy because of the loss. But we felt that, considering the other kinds of guidelines involved, we would live with only a 10 per cent increase last year even though that did not fully cover the loss involved. We anticipated a loss in the past fiscal year because of this, and we were right.

Looking to this year, we made the same nominal 10 per cent change, even though we recognize this is not likely to fully cover Gas Alberta's costs. If you take 14 cents and add 10 per cent, you get 15.4 — which it was last year. If you add exactly 10 per cent of 15.4 on top, you get 16.94, which is committed for this fiscal year, April 1, 1977 to March 31, 1978. That, added to the present 69.5 support price, which you will recall has the two components, gives the total of 86.44. That was the figure the hon. member was referring to.

One other observation I could make on this is that at the choice of the co-op, Gas Alberta will do the billing for the co-op. Some co-ops do their own bill­ ing. But if they prefer, Gas Alberta will do it for a 1.1 per MCF service charge. That service charge is unchanged from last fiscal year. I hope that handles that. On the question of bad pipe, those who were on the Public Accounts Committee last fall will recall that we had some difficulty on how far we should go in discussion of that topic because legal counsel was acting for the full group of rural gas co-ops that had bad pipe claims and problems.

Some of these also related to the Plastex bankruptcy. As I understand it, a number of these have been settled, but a number have not. Some are still in limbo. That's one obser­ vation, with respect to the bad pipe problem and the claims involved. There are two other aspects I could comment on, one that is finalized and one that is not. The one that is finalized is with respect to pipe that has already been installed, that is to say, pipe in the ground.

We reached the conclusion, certainly a generous one — though it's unfortunate there is the problem — that we would go as far as a 90/10 breakdown with the local co-op on costs of replacing pipe they feel needs to be replaced. The matter we're not settled on at the present time but hope to be in discussions that are going forward is how to handle the costs of pipe in inventory that has not been installed, but might perhaps better not be installed if there's any question about its physical condition and structure.

Back to the original question, a bit like Swami: approximately 70 per cent of the co-ops use Gas Alberta service. Agreed to: Ref. No. 1.0.1 $103,736 Ref. No. 1.0.2 $89,145 Ref. No. 1.0.3 $92,564 Ref. No. 1.0.4 $131,639 Vote 1 Total Program $417,084 Ref. No. 2.1 $32,947,811 Ref. No. 2.2 $1,274,166 Vote 2 Total Program $34,221,977 Vote 3 MR. R. SPEAKER: Earlier I listened to the minister discuss the price of gas and indicate that if the government were to come forward with a three-year plan, we'd have to saw off with other alternatives.

He listed five or six things that seemed rather relevant to all of us as legislators. In light of a number of reasons, I don't really think the comparisons were that fair. The number one reason is that the minister indi­ cated sort of offhandedly that the gas price is going to go up, that's the way it is, and Albertans have to face it. There's no other way of doing it, and we as a government are giving no guarantees. No indication there's been any kind of research as to what it would cost, projections: it was just a very generalized type of answer.

I don't think that's good enough for Albertans at the present time. No matter where we go or wherever I travel, I find people raise the question of the cost of natural gas. Even with the rebate the cost is high, and it's a concern amongst the people. I want to know from the minister whether he has really had a good look at it or whether he's just come to the conclusion that it can't be done, the price is going up; people [should] accept it, the consumer pays the bill, and that's the way it is. Maybe the minister should have a little more in-depth look and consider it just a little further at the present time. DR.

WARRACK: With the major amount of money involved, Mr. Chairman, that's certainly an important and valid comment. I [inaudible] them at the time we were working on budget estimates through depart­

May 2, 1977 ALBERTA HANSARD 1107 ment efforts to assist, look at what it would cost to consider the alternative of no change in the price of natural gas, based on looking forward to the same level of price change, namely $1.75 — $1.05 in July and 70 cents on January 1 — which was the tracking that occurred in the previous fiscal year. The result was that at least $150 million would be required. If we as a legislature are prepared to make the priority judgment and forego enough other things, it certainly is possible to spend at least $150 million on the natural gas price protection plan.

But this involves deciding not where a few dollars here and a few dollars there might come from. If we're going to hold to the kind of global budget growth that I know the hon. Leader of the Opposition certainly expressed concerns about in his remarks on this budget in the Legislature, if we're going to hold to that level of growth and not be higher, we have to find at least another $35 million, and I say at least another $35 million. You don't find that by looking only at minor programs. You have to be looking at major expendi­ ture programs to find that kind of money.

If you don't — and that's one of the alternatives for that amount of money — you need to decide what tax increases or what combination of them you prefer. I apparently gave the hon. Member for Little Bow the impression there was no choice, that's the way it had to be, and that's that. Not at all. The people of Alberta, through their representatives in this Legisla­ ture, have the choice about their priorities.

It was the balanced judgment and conclusion, as we reviewed it and made the proposal to the Legislature, that a 50 per cent increase in natural gas price protection in one year was a major amount of additional increase, the other portion to be reflected by those who would be paying the bills. That is not the only option, and I certainly didn't intend to give the hon. member or any other hon. member the impression there were no other options.

But the other options, at least by way of holding the price lower and therefore having far more money in this natural gas price protection plan appropriation, do involve making a hard choice about where that money comes from. That's a lot of dollars that can only come by dealing with a lot of major programs, no doubt on top of a lot of minor programs. That was why I made reference, for example, to highway construction and hospitals. If you're going to come up with this much more money, you have to start looking at those kinds of major expenditure appropriations.

If that's not an alternative one feels is consistent with the priorities of the public of Alberta, then you're on to other kinds of alternatives such as eroding the heritage trust fund — reminding everyone that even now only 30 per cent of the non-renewable resource revenues from oil and gas go into the fund, and we use 70 per cent for our current requirements. Alternately the money could be raised by sales tax, alternately by income tax. But with that amount of money there are difficult choices. But I do not say to this Legislature that there's no choice. Not at all. There is that choice to be made.

In the budgeting process we addressed this question and made the decision we felt was reasonable on balance, reasonable by way of taking a major portion of the increase in natural gas prices from having to be borne by the people of Alberta, with a 50 per cent increase in one year in the natural gas price protec­ tion plan, but that it was reasonable for the remaining amount to be carried forward by the users. But this proposal is a balanced judgment matter, not a closed kind of decision.

Nor would it be in another year, in the event there might be members who feel this should have such a high priority that there would be other kinds of expenditures of a major nature that they would want to see cut back or, alternately, tax increases somewhere in order to support the proposal. DR. BUCK: Mr. Chairman, I'd just like to say a word or two on the rural gas program. First of all, Mr. Minis­ ter, the chickens are just starting to come home to roost — just starting to come home.

When the rural gas program was started, this government in all good faith went ahead and did a selling job on the people who were going to enter the program. They did a good job. Everybody was quite enthused about going into the program. But as with so many programs, the government sort of went into the program blind. Surely with all the money this government spends on consultants, specialists, and experts, they should have had a better idea than they did of what was going to happen to the program.

When the debate raged here in the Legislature, we tried to tell the government, have a good look at what it's going to cost you to get the rural gas program going. I think that is a responsible position. We didn't say, don't go ahead with the program. But we did say, have a realistic look at what it's going to cost the people who are going to be hooked up, so when you do the selling job — when you ask farmers and leaders in the community to do a selling job, they really know the product they're selling.

Now these people who were leaders in their communities feel they've been sold down the river. [interjections] Come on, the Deputy Premier says. But he knows it as well as I do. If the Deputy Premier would like to read the letter sent in by some of the people in the Provost area, I think they have [made] an excellent presentation of exactly what was promised and what happened at the end of the program. They have it documented that the government promised the price of gas would stay way down here at 28 cents. But that didn't happen. That did not happen.

Who is now going to do a selling job on the people in the rural areas to get more hookups? Because when I go through my constituency and other con­ stituencies in this province I ask them, are you hooked up? Some say yes, some say no. And I ask the ones who have said no, are you going to hook up? And they say, no way. They feel this government has misled them. And I think they can be justified in feeling they've been misled. Some of the people who end up paying in the vicinity of $1.25 and $1.50 per MCF to pay not only for the gas but for the capital expenditures, feel they've really had the shaft.

When you speak to people in the business of the utility companies . . . a very good friend of mine said we are lucky this was a mild winter because [with] all the increases the hon. minister and his department have given us, they would have been marching on this Legislature [during] this session if it had been a bad winter. So the minister had better be ready. There are going to be very, very many unhappy people when we

1108 ALBERTA HANSARD May 2, 1977 get a cold winter and the prices have tripled and quadrupled. The people in Alberta who own the gas under this province feel they shouldn't have to pay $1 per MCF. It's fine for hon. members from urban areas to laugh. But it is a real concern for the rural commu­ nity, for the farmer caught in the cost/price squeeze. This is one of the major costs if he's in any kind of large operation. Ask the people in the greenhouse business.

Ask many who have gone into the green­ house business, and borrowed funds from the Alberta Opportunity Company or the Agricultural Develop­ ment Corporation, how they're making out. I have a man in my constituency who is in the greenhouse business. I asked him in February, how's your gas bill? Oh, he said, I'm sure glad it's been a warm February, the warmest on record. But, he said, al­ ready my gas bill for that month was $200. I said, what would it have been had it been a cold February? He said, $600. That's for a month. This is a little free-enterpriser who is trying to make a living.

He has to pay between $200 and $600 a month for his natural gas. MR. GHITTER: He won't be able to stay in Hawaii so long. DR. BUCK: He won't be able to stay in Hawaii. Only Conservative backbenchers, front benchers, and lawyers can afford to go to Hawaii at that rate. [inter­ jections] Not even dentists can afford to go to Hawaii. MR. NOTLEY: They're looking for places to invest the heritage fund over there. DR. BUCK: Mr. Chairman, the point I am trying to make to the minister is that rural gas co-ops are going to have more than a difficult time trying to convince other people to hook up.

So while the minister is telling us what a great favor this govern­ ment is doing us because our natural gas prices are lower than those of somebody in Toronto, that doesn't impress the man on the street, the man carrying a lunch bucket or driving a tractor. That doesn't im­ press him one bit. He's not at all impressed when the minister tries to tell the people of Alberta how much money the shelter program is costing the government. But you know, the Deputy Premier learned in Otta­ wa that you can go to deficit financing and the man on the street is not upset.

But the man on the street can understand when he's paying as much or more for his gasoline. When the man on the street is paying more for natural gas than he feels he should, he can understand that. I say to the minister and to the government: you had better not believe that professor who gave you the report yesterday which said you're going to be in power for the next 40 years. Somebody told the Social Crediters that same story back in '65.

If you had had a survey in 1965 to find out how long Social Credit was going to stay in power, I think you could have done a poll that would have indicated about the same thing that poll indicated to the PCs. MR. R. SPEAKER: Did Peter write the poll? DR. BUCK: So I say that the man on the street is getting sick and tired of this government telling him how well he's being treated by this government. When his utility rates go up 15, 16, 20 per cent, when his natural gas prices go up and up and up, when his gasoline prices go up and up and up, he starts to wonder what is going on with this government.

His licence plates went up again, and he doesn't see any improvement in the roads. As a matter of fact we're getting fewer roads built than we used to. [interjections] Come on, come on, the Deputy Premier says. AN HON. MEMBER: Are you trying to filibuster? DR. BUCK: I'm not trying to filibuster. I'm just trying to wake this government up, Mr. Chairman, . . . AN HON. MEMBER: Why would you do that? DR. BUCK: . . . to the political facts of life. MR. NOTLEY: Sort of like Paul Revere. DR. BUCK: It's fine to be arrogant. It's fine to have blind faith in these little surveys.

But I would like to take that poll conductor out to some of the areas where he'd find 70 per cent of the people are against this government. A good place to start is the rural gas co-ops. This phenomenon is escalating every day. People come to us and say, I voted for this government in '71, I voted for this government in '75, but I will never vote for it again. MR. DIACHUK: Heard that before. Change it. MR. R. SPEAKER: Yeah. You'll see how it changes. DR.

BUCK: So I say to the hon. members of the government: if you want to go blindly floating along thinking all is fine, all is well, that you've got every­ body in Alberta hoodwinked into thinking you're managing their financial affairs responsibly and the way they should be managed, just keep on sleeping. This government is losing any initiative it had after the '75 election. They are really coasting now. And the professorial Minister of Utilities and Telephones may come up here and give us the horizontal and the vertical integration . . . MR. R. SPEAKER: And the circular. DR. BUCK: . . . and the circular.

And the input and the output, and the support . . . MR. CHAIRMAN: Order please. We're on Vote 3, natural gas . . . DR. BUCK: Right! MR. CHAIRMAN: . . . price protection for Albertans. DR. BUCK: Right, Mr. Chairman. MR. CHAIRMAN: Could we keep to the subject.

May 2, 1977 ALBERTA HANSARD 1109 DR. BUCK: So when the minister gives us this song and dance story about what a great job this govern­ ment is doing for the natural gas user in this prov­ ince, I say that is not a fact, Mr. Chairman. That is not a fact. The minister had better do a better selling job than he is, to convince the people of Alberta that they shouldn't have the cheapest natural gas rates of anybody by a country mile. And when the minister gives us this big story about, well, where are we going to take the funds from, I'll tell you the first place.

They should just cut out a lot of those plushy jobs, those $20,000, $30,000 and $35,000 per year jobs that they've got the back page of the Edmonton Journal plastered with every week. That's a good place to start. And, Mr. Chairman, if we form the government, I'll tell you the first place we're going to cut out [in] the civil service is some of these plushy jobs in the $20,000 and $30,000 a year group. That's where we're going to start. And the guys with the blue cars — that's going to be another spot.

But those are the only two areas, because the civil service in this province does a good job for the people of this province. But when it goes from 19,000 to 34,000 or 36,000 — and that's not even counting the contract people, some of Miniely's . . . MR. CHAIRMAN: Could we get back to Vote 3 please, the natural gas price protection for Albertans. DR. BUCK: I am making a point . . . MR. CHAIRMAN: If you would check

Section 52 (1), you will find that once we've gone . . . DR. BUCK: You check it, Mr. Chairman, I'm busy. MR. CHAIRMAN: Sit down, please, for a moment. Once we have had the

preamble, you have an oppor­ tunity to cover the broad ground; that is, before we go into the actual votes. Once we go into the actual votes, the discussion is to stick directly to the vote in question. DR. BUCK: Thank you, Mr. Chairman. MR. CLARK: What ruling is that? DR. BUCK: Now getting back . . . Yes, well, wait a minute. MR. CHAIRMAN:

Section 52(2), I believe, (1) or (2). DR. BUCK: If the Chairman wishes to cut me off, Mr. Leader of the Opposition, that's okay. But speaking on the natural gas development program . . . MR. CHAIRMAN:

Section 52(2). DR. BUCK: Mr. Chairman, this government is not convincing the people out there in the rural gas co-ops that it is doing a good job on their behalf. The hon. minister was raised in a rural area, and he knows who has to go out and sell these programs: the leaders of your community. Many of them have resigned from the boards of directors of those co­ operatives because they just can't go out in good faith and look their neighbor in the eye and say, you know, we've been had. We've been led down the garden path.

Every time they went back and tried to sign up more people, the price would go up, and it would go up again, and it would go up again. MR. APPLEBY: Come on, Walter. MR. NOTLEY: The truth bears re-telling. DR. BUCK: You see, hon. Member for Athabasca . . . MR. APPLEBY: If you shut up, I'll shut up. DR. BUCK: We don't have the government agencies that can crank out that propaganda. We don't have that kind of budget . . . DR. HORNER: You've got a lot of research help; why don't you use them? DR. BUCK: . . . to hand out the propaganda. The hon. Deputy Premier wants to yip about research help.

The research help the taxpayer of Alberta is paying for to research some of the stuff in his department certainly wouldn't have gone blindly into building a lamb processing plant. But I'll get back to the rural gas co-ops. [interjections] Mr. Chairman, I say to the minister that this gov­ ernment had better re-evaluate its gas support pro­ gram. If it doesn't, I feel that this government has misled the people in the rural gas program. Thank you, Mr. Chairman. DR. WARRACK: I always enjoy listening to my col­ league from Clover Bar. In my non-professorial way, I'll try to reply. He's two for four.

As I say, I always appreciate what he has to say. Gosh, I don't have time to read those papers with all those big jobs, but compared with MLA incomes, they don't sound too bad. So that's one for the hon. Member for Clover Bar. One thing also, on the business of believing polls: I don't. So I agree with the hon. member there. I was not yet back in Canada in 1965 when the poll he referred to was taken. He's quite right.

When I began to talk to people in rural Alberta, they were saying something rather different from the poll he mentions, which apparently suggested Social Credit would be the party of "responsibility", as I prefer to "power". DR. BUCK: On a point of order, Mr. Chairman, will you read the appropriate

section to the minister as well — 51(2). MR. CHAIRMAN: Perhaps, Mr. Minister, if you could confine your remarks to Vote 3, and the answers to questions asked on Vote 3. DR. WARRACK: I would be pleased to do that. I had assumed that if he said it and it's in order, it must be in order for me to say the same thing. In any case, I was trying to find something to agree with him on. Mr. Chairman, aside from repeating what I said relative to gas prices and the financial priorities that essentially determine those, as I described in reference to the remarks of the Member for Little Bow, I hate to do it, but I simply disagree with the hon. member. Maybe it makes the hon. member feel

1110 ALBERTA HANSARD May 2, 1977 better in that they never did anything in this area of rural gas programs. But I think the policy thrust is right. I think the accomplishments to date in a 10- year program as originally contemplated, considering that nothing had been done for so long — to the sadness of the rural public interest, and that the people in the rural areas by way of the harnessing of their co-operative enterprise and their sense of neighbourliness — have achieved a great deal, only cata­ lyzed, not solely done by this government.

I think the people out there, in contrast to what the hon. member said, deserve a lot of credit. MR. R. SPEAKER: When we referred to this whole gas program, there's no question that the people in the local areas certainly deserve a lot of credit. No question about that. They were the force that made it possible that 37,000 connections are there today. They went out and sold this program on the front line, talked to their neighbors, talked to their friends, with the idea in mind that the government would back up what they were selling. First of all, we started with the $1,700 with regard to the program.

All of a sudden, the day after they'd sold the contract, the price was up. That was the first misleading statement. Then we started with the low gas price. Look where it's at now: 86 cents, and it started below 30 cents. That's the second thing. You tell me how long those people can talk to their neighbors and say, this government is going to follow through with a certain announcement, and that we're really going to have something happen. At the present time, maybe the best position of this government is to say they're going to increase the price of gas to the rural user, and that's the way it's going to be.

Because that's likely the most honest answer. To find any kind of commitment from this government about long-term planning, or one- or two-year planning, doesn't seem possible. If it does happen, maybe there's no credibility to it anyway. Because the guys on the front line, the local boards, really haven't found that kind of support coming forward. The minister talks about alternatives and how we can come up with this kind of money.

Very quickly, if we look at the increase in the civil service since this government came into power — and my colleague mentioned a 16,000 increase — it's increased from 19,000 to 35,000. If each of those people at the present time is earning $10,000, that's over $150 million. Maybe that's one of the places we could look at. Maybe the priority of putting people into govern­ ment who really haven't any specific function, such as the hon. Minister of Hospitals and Medical Care did . . . then we'd be able to come up with this kind of money.

I don't know where the goals and directions of this government exist at the present time. They're not the priorities of the people. The people from the grass roots are concerned about this. They're going to con­ tinue to press not only you, Mr. Minister, but the rest of people sitting in this Legislature. This will be one of the biggest issues during the next rural campaign. If the minister isn't able to answer it now, can't answer it then, I think certainly that survey discussed a little earlier won't be worth the paper it was written on. Mr.

Chairman, I just don't feel the minister is giving some attempt to look at lower gas prices. I raised the concern with regard to the service cost to the various co-ops. The minister indicated it has been increased by two consecutive 10 per cent increases. It's now at 16.94 cents. Has any consideration been given to picking up the operating cost, picking up a portion of that increase in the operating cost? Even 2 or 3 cents would certainly help the rural gas user at the present time. I haven't heard any thought or consideration of that kind.

The answer from the minister is still, we don't know how we are going to do it. The gas price is going up, that's the way it is. I think we need more answers than that. MR. CLARK: Mr.