November 17, 1975 ALBERTA HANSARD 1097 LEGISLATIVE ASSEMBLY OF ALBERTA Title: Monday, November 17, 1975 2:30 p.m. [The House met at 2:30 p.m.] PRAYERS [Mr. Speaker in the Chair] head: INTRODUCTION OF BILLS Bill 55 The Livestock Brand Inspection Amendment Act, 1975 MR. MILLER: Mr. Speaker, I beg leave to introduce Bill No. 55, being The Livestock Brand Amendment Act. The purpose of this bill is to reword sections that cannot be enforced at the present time. [Leave granted; Bill 55 introduced and read a first time] Bill 61 The Companies Amendment Act, 1975 MR. HARLE: Mr.

Speaker, I beg leave to introduce a bill, being Bill No. 61, The Companies Amendment Act, 1975. The main purpose of the bill, Mr. Speaker, is to require Alberta companies to have, by July 1 , 1976, at least half of their board of directors resident A l b e r t a n s , and that no business of companies be transacted at meetings of the board unless a majority of the directors present at such meetings are resident Albertans.

The remaining purposes of the bill are to improve the service to the public by the companies branch and the legislation it administers. [Leave granted; Bill 61 introduced and read a first time] Bill 57 The Trust Companies Amendment Act, 1975 MR. ASHTON: Mr. Speaker, I beg leave to introduce a bill, Bill No. 57, The Trust Companies Amendment Act, 1975. This is an important and substantial bill, Mr.

S p e a k e r , the purpose of which is to enhance the protection of the Alberta public, and to allow for the expansion of Alberta trust companies. [Leave granted; Bill 57 introduced and read a first time] Bill 64 The Mental Health Amendment Act, 1975 DR. BACKUS: Mr. Speaker, I beg leave to introduce a bill, being Bill No. 64, The Mental Health Amendment Act, 1975. This bill makes several amendments that clarify the intention of The Mental Health Act.

It also introduces recommendations of the provincial Mental Health Advisory C o u n c i l concerning appeal procedures, enables formal patients to have leaves of absence under supervision, and a very important amendment, enables the public trustee to cancel certificates of incapacity where the person so certified cannot be found. [Leave granted; Bill 64 introduced and read a first time] MR. HYNDMAN: Mr.

Speaker, I move that the following bills be placed on the Order Paper under Government Bills and Orders: No. 55, The Livestock Brand Inspection Amendment Act; No. 57, The Trust Companies Amendment Act; No. 64, The Mental Health Amendment Act, 1975. [Motion carried] head: INTRODUCTION OF V ISITORS MR . LOUGHEED: Mr. Speaker, I'm very pleased, through you to the members of the Legislative Assembly, to make a very i m p o r t a n t introduction today. He have, sitting in your gallery, Mr.

Speaker, a citizen who has assumed very important r e s p o n s i b i l i t y for the whole province as the new mayor of the capital city of Edmonton. I know all of us in the Legislature, p a r t i c u l a r l y the 16 members of the Legislative Assembly from Edmonton, wish him well in his new responsibilities. I know we, on behalf of the government, are looking f o r w a r d in many different areas and many different fronts, to having the opportunity to work with him and with the committees of city council. We recognize the onerous nature of the responsibility he has accepted. I'm sure we wish him well.

I'd like to welcome to this Legislative Assembly the Mayor of the City of Edmonton, Mr. Terry Cavanagh. DR. HOHOL: Mr. Speaker, I'm pleased to introduce the seventh grade class from Steele Heights Junior High School in the constituency of Edmonton Belmont, 59 s t u d e n t s accompanied by a classroom teacher, Mr. Dale Smith. They are seated in the members gallery. I should like them to rise and be recognized by this Assembly.

1098 ALBERTA HANSARD November 17, 1975 head: TABLING RETURNS AND REPORTS MR . HARLE: Mr. Speaker, I wish to table a background paper prepared by the Institute of Law Research and Reform at the University of Alberta, entitled Residential T e n a n c i e s Project,

Part 1, Rent Control and Security of Tenure, together with the w o r k i n g papers to be used in preparation of studies in the project. MR. RUSSELL: Mr. Speaker, I wish to file copies of reports received from the Environment Conservation Authority. The first report deals with hearings into r e s i d e n t i a l development in the Leduc/ International Airport area. The second one deals with the Carseland Cominco fertilizer project. head: ORAL QUESTION PERIOD RCMP Fiscal Support MR. CLARK: Mr.

Speaker, I'd like to direct the first question to the Solicitor General and ask if he would indicate to the L e g i s l a t u r e the reason the federal government has unwisely made the decision to cut back fiscal support as far as the Royal Canadian Mounted Police is concerned in the Province of Alberta. Perhaps the question should go to the Minister of Federal and I n t e r g o v e r n m e n t a l Affairs. MR. FARRAN: Well, Mr. Speaker, I think it might be premature to say that the federal government has made a decision. It has given the eight contracting provinces a proposition, and has asked for response.

The argument used for reduction of fiscal support is that this is a benefit the eight contracting provinces have, and the two non-contracting provinces of Ontario and Quebec do not have. MR. CLARK: A supplementary question to the minister. At what time and in what manner will the Province of Alberta be responding to the federal government's move? MR. FARRAN: Mr. Speaker, when we have f u l l y digested the implications of the federal proposition and consulted with our c o l l e a g u e s in the other three western provinces. MR. CLARK: Mr.

Speaker, might I ask the minister if he's had an opportunity to do any initial digesting. In fact, does the government have a position at this time, or an initial response to the federal activity? MR. FARRAN: Well, Mr. Speaker, it's no secret that the initial reponse is alarm in that it's a reduction of fiscal support for law enforcement bodies at a time when the crime rate is extremely high. MR. PURDY: Mr. Speaker, may I ask a s u p p l e m e n t a r y .

In view of the announcement by the justice minister of the federal g o v e r n m e n t and the request for an additional 125 RCMP constables, which has been met with an apparent response that now we will get only 40, is the minister prepared to amend The Police Act to allow municipalities under 1,500 population, including counties and municipal districts, to establish their own police forces? MR. FARRAN: Not at this time, Mr. Speaker. MR. TAYLOR: A supplementary to the hon. minister.

Has the department made any assessment of the cost of initiating a provincial police force as compared to what the total cost of engaging the RCMP will now be? MR. FARRAN: Mr. Speaker, sir, that would be a step that the Province of Alberta will be very reluctant indeed to take, inasmuch as the RCMP is so closely intertwined with our birth and our history in Alberta; and is also, of course, an extremely fine police force. MR. TAYLOR: One further supplementary.

Does the hon. minister think the federal government is absolutely sincere in this, or is it simply flying a kite to see if it can get more money out of Alberta? MR. FARRAN: Well, Mr. Speaker, that's an opinion. It is true that in meetings in Victoria in May, the proposition was 60 per cent provincial and 40 per cent federal instead of the existing 50-50 contract. They have retreated a small amount from that position in that they are now p r o p o s i n g 56 per cent provincial and 44 per cent federal, spread over 5 years. MR. TAYLOR: One further supplementary.

Did the federal government leave any room for further arbitration or further discussion on the matter? MR. FARRAN: I didn't hear the question, Mr. Speaker. Would you mind repeating it? MR. TAYLOR: Yes. My question to the hon. minister is, did the federal government leave any room for further discussion or arbitration on the matter? MR. FARRAN: Mr. Speaker, they asked for a response from the four western provinces. We have also been in touch with the four maritime provinces involved. The mere fact they have asked for a response means that the door is not yet closed.

I might add that, at the time of the negotiation of the existing contract, there was no agreement for two years, and the contract that p r e v a i l e d at that time carried on for two years over the expiry date.

November 17, 1975 ALBERTA HANSARD 1099 Coal/Power Development MR. CLARK: Mr. Speaker, I'd like to direct my second question to either the Minister of Energy and Natural Resources or the Minister of Environment and ask if they could indicate to the Assembly whether an application has come forward to either the government or the Energy Resources C o n s e r v a t i o n Board regarding development in the Dodds-Round Hill area, as far as coal is concerned. MR. GETTY: Mr. Speaker, I have not been advised of an application being made to the Energy Resources Conservation Board.

However, I know that, in the development of future power for utilities within the p r o v i n c e , certain companies have been d i s c u s s i n g the matter of generation of power from coal reserves and their plans in the future, with my colleague, the hon. Minister of Utilities and Telephones. I would pass that question to him. DR. WARRACK: Yes, Mr. Speaker. As of the present moment, an application has not been filed with the Energy Resources C o n s e r v a t i o n Board.

However, the work in p r e p a r a t i o n for filing an application has been going on throughout the summer months and, as I understand it, is ready for filing very shortly. MR. CLARK: A supplementary question, Mr. Speaker, to the Minister of Utilities.

Is there any reason the application is being held back, in light of legislation that will be presented before the House in the course of this session that would change the procedure that proponents of this p r o j e c t would find themselves under as far as the Public Utilities Board, Energy Resources Conservation Board, or any other government agency is concerned? DR. WARRACK: Two parts to that question, really, Mr. Speaker. First of all, the application is not being held back in any way that I'm aware of other than the fullest possible preparation to file the application.

Secondly, the question, as I understand it, is whether any change in legislation that would affect the present procedure is proposed for this sitting of the Legislature. The answer to that q u e s t i o n is, no. MR. NOTLEY: Mr. Speaker, a supplementary question, this time to the hon. Premier. Could the Premier advise, in light of the concern about the Dodds-Round Hill project, whether the government will impose a m o r a t o r i u m on the matter, at least until we have the final report of the Land Use Forum? MR. LOUGHEED: Mr. Speaker, I would think not.

I think the considerations involved are quite different, but it may be the process of timing would be such that the ultimate decision would not be made until the members have available the Land Use Forum recommendations. MR. NOTLEY: A further supplementary q u e s t i o n to the hon. Premier. In light of some of the discussion that took place last year when this matter was first raised, and the announcement of the Dunvegan dam study, would the government consider a moratorium until such time as we have the findings of the current Dunvegan study completed and made public? MR. LOUGHEED: Mr.

Speaker, I don't think we would consider a moratorium in the sense in which the hon. member raises the m a t t e r . We feel it should proceed in the normal way, with an application to the Energy Resources Conservation Board. It should be assessing it from a technical point of view, and providing a r e c o m m e n d a t i o n to the Executive Council. At that stage, we would be evaluating what a l t e r n a t i v e s may be available in the province and what the circumstances are.

But I wouldn't see any change of policy on our part to in any way dissuade any application to the Energy Resources Conservation Board at this time. MR. NOTLEY: Mr. Speaker, a further s u p p l e m e n t a r y question either to the hon. P r e m i e r or to the minister. Does the government have any statistics as to projections of future power requirements which would examine the question either as one, or the other, or both going ahead simultaneously? DR. WARRACK: Mr.

Speaker, considerable analysis is done by way of planning for electric power in the future through the Electric Utility Planning Council, that involves all those participants in this industry in Alberta. This work was initiated, as a matter of fact, at the suggestion of my predecessor, Mr. Farran, and going forward from then. Much of the kind of analysis the hon. member is r e f e r r i n g to is a part of the undertaking of the Electric Utility Planning Council.

One item that might be of interest to the member: as important and major as the possibility of a hydro site at Dunvegan might be, it is not in the same magnitude of power supply capability as the project at Camrose-Ryley, brought up earlier today. MR. NOTLEY: Mr. Speaker, a final s u p p l e m e n t a r y question to the hon. minister. What provisions will there be at this point in time for formal public hearings into the Dodds-Round Hill project so that people in the area can formally make their input known? DR. WARRACK: Mr.

Speaker, the hon. member may be aware that those provisions presently exist within the normal procedures of the Energy Resources Conservation Board. MR. NOTLEY: Mr. Speaker, a supplementary question for clarification. In view of the present procedures which allow the ERCB the latitude of holding or not holding h e a r i n g s , will the government insist that f o r m a l public hearings be held as a condition of consideration of this project?

1100 ALBERTA HANSARD November 17, 1975 DR. WARRACK: Mr. Speaker, my observation has been, throughout the time of r e s p o n s i b i l i t y — not only now but prior to my present responsibility — in the instances where a proposed project is of major m a g n i t u d e , hearings have in fact been involved as a matter of judgment by the Energy Resources Conservation Board. I doubt that anyone would suggest the particular project we are discussing at the moment is anything other than major.

So I would be quite confident that the judgment of the Energy Resources Conservation Board on this matter would be that it would indeed have hearings. Gas Co-op Prices MR. R. SPEAKER: Mr. Speaker, my question is to the Minister of Utilities and T e l e p h o n e s . In the rural gas position paper of 1973, the government was hopeful that gas available to rural co-ops would be around 50 cents per MCF. I was wondering what the present average cost, or the range of costs to the consumer are at the present time. DR. WARRACK: Mr.

Speaker, I'm not really sure it's fair to say it was the hope of the government that the price of natural gas would not go beyond 50 cents. As a matter of fact, it seems to me that the province has benefited very greatly from Alberta's efforts to get fair commodity value for the resources owned by the people of this province. So with respect to the success the government has had in that, I think it's understandable that the prices to the user in Alberta, despite the natural gas rebate plan, would be somewhat higher than the figures used early in the calculations. MR. R. SPEAKER: Mr.

Speaker, certainly in my question I made no inference regarding the good or the bad of the 50 cents. But at the present time, could the minister indicate if the price has increased over $1 per MCF on the average across the province? Are we looking at that kind of . . . DR. WARRACK: The actual calculations are quite variable. If the member is asking me if some are presently substantially beyond $1, the answer is clearly yes.

The reason it's clearly yes is that a certain p e r c e n t a g e of the capital cost in the instance of many of the co-ops is amortized in the gas rate, and the more they decide to amortize the capital cost in the gas rate, of course, the higher the gas rate is. Secondly, areas where there is a r e l a t i v e l y h i g h figure per MCF are those with municipally owned utilities, where they've chosen not to have an initial high capital outlay but to keep that low, and by keeping it low having a very high percentage of the total cost amortized in the gas rate.

So for those two particular reasons, there are some instances where the MCF price of gas available under the rural gas program is substantially over $1 . MR. R. SPEAKER: Mr. Speaker, a further supplementary to the minister. Is there a government policy to limit the amount of capital cost amortized in the gas rate, or is that totally up to the local rural gas co-op? DR. WARRACK: Mr. Speaker, it's not totally up to the rural gas co-op, for the reason that the guaranteed loans are only made on a basis that economic viability of r e p a y m e n t is possible by the gas rate charged.

In other words, the amount of the gas rate has to be high enough to repay the loans that are guaranteed loans, and therefore within the responsibility of the public Treasury of Alberta. MR. NOTLEY: Mr. Speaker, a supplementary question to the hon. minister. When will the government finalize and announce the extent of shelter under the two-price s y s t e m for the forthcoming year? There's been some speculation, but when will we get the official figures? DR. WARRACK: Mr.

Speaker, if the hon. member has been watching this important area closely, he will know that the dates involved are the dates of the fiscal year of the provincial government. The reason is that this is such a major part of the budgetary priority, which is a part of our budgeting process, that the effective date is April 1 through March 31, the same as the fiscal year. Under the natural gas rebate plan the primary thing involved in determining the level of the support bench mark for the coming fiscal year will be related to budget priorities that we, as a government, see in Alberta. MR.

NOTLEY: Supplementary question, f o l l o w i n g from the minister's answer. Can the minister advise the House when, in fact, we can anticipate an announcement? Obviously, it has to be some time before April 1 , but does he have any target date so that the consumers of Alberta will have some idea? DR. WARRACK: Well certainly, the hon. member can anticipate what he wishes. In any case, it would be part of the budget process, and would be applicable on the first of April, 1976. MR. NOTLEY: Mr. Speaker, a further s u p p l e m e n t a r y question for clarification.

From the minister's answer, can the Assembly conclude that the announcement of the shelter price will not be made until such time as the 1976-77 budget is brought down in this House? DR. WARRACK: The hon. member could c o n c l u d e that if he wishes. Basically, the point is, when the matter is determined as to the substance of the policy involved, and the timing is also decided, then we will make the announcement. MR. SPEAKER: Might this be the final s u p p l e m e n t a r y by the hon. member, followed by a further supplementary by the hon. Leader of the Opposition.

November 17, 1975 ALBERTA HANSARD 1101 MR. NOTLEY: Mr. Speaker, are discussions taking place at the present time, both with the association of rural gas co-ops and the privately-owned utilities in the Province of Alberta, concerning the shielding or the two-price system next year? DR. WARRACK: Yes, there are indeed. As a matter of fact, it's not the association, but the Federation of Gas Co-ops. It's having its meeting in the latter part of this week. I'll be part of the program involved with respect to the important areas, one of which, of course, is the future price of natural gas. Gas Transmission Lines MR.

CLARK: Mr. Speaker, a further s u p p l e m e n t a r y q u e s t i o n to the minister, relating to the matter raised by the Member for Little Bow. I'd like to ask the minister what government agency is doing the safety checking as far as the main transmission lines are concerned? Is it the ERCB? DR. WARRACK: Late in the days of the most recent sitting, we passed The Pipeline Act about June 25, as I recall. That extended additional authority to the Energy Resources Conservation Board with respect to safety considerations involved.

I recall a number of members of the L e g i s l a t u r e expressed concern about that, and therefore favored the legislation agreed to in this House in June. MR. CLARK: Mr. Speaker, a further s u p p l e m e n t a r y to the minister on the same q u e s t i o n . Has the ERCB had an opportunity to report to the minister with regard to its findings on the various pipelines it has investigated since that legislation came into effect? DR. WARRACK: Not at the present time, Mr. Speaker. The machinery is being geared up in order to carry forward the additional provisions in that new legislation. MR.

CLARK: One further supplementary to the minister. At this time, then, with the ERCB machinery not being geared up, to use the minister's term, where does r e s p o n s i b i l i t y lie for checking to see that the lines laid in fact meet provincial standards? Whose responsibility is that? DR. WARRACK: First of all, it's important to say that I did not say the machinery was not set up. I said it was in the process of being set up, and it would be a joint responsibility, as would be practical, between the Energy Resources Conservation Board and the staff of the Department of Utilities and Telephones.

Planning Act MR. KUSHNER: Mr. Speaker, I'd like to direct this question to the Minister of Municipal Affairs. Over the weekend, I had some inquiries in regard to The Planning Act. The cities of Calgary and Edmonton have been giving quite a bit of input. I'm wondering if the minister is in a position at this time to relate to this Assembly when he is proposing this act come before the House. MR. JOHNSTON: Mr. Speaker, the act will not be brought before the House this fall. As to the introductory date, I am hopeful it will be spring, 1976. Nursing Home Fees MR. NOTLEY: Mr.

Speaker, I'd like to direct this question to the hon. Minister of Hospitals and Medical Care and ask whether he can tell the Assembly if it is true that user fees for residents of n u r s i n g homes will increase from $3 to $4 a day as of January 1 , a 33.3 per cent increase. MR. MINIELY: Mr. Speaker, yes, it is true that is the case. I would point out to the hon. member that will still leave our nursing home charges to the patient among the lowest in Canada. It's the first time they have been increased in the last four to five years. MR. NOTLEY: Mr. Speaker, a supplementary question to the hon. minister.

In light of the probable introduction of rent review legislation in the Province of Alberta, will the government reconsider its funding of nursing homes, so any increase to the resident of a nursing home will be no greater than the amount allowed under p r o p o s e d rent review legislation? MR. MINIELY: Mr. Speaker, I think the hon. member is discussing two different matters. Interest Rates MR. TAYLOR: Mr. Speaker, my question is to the hon. Provincial Treasurer.

Because interest rates are an important item in rising prices, has the government made any representations to the Canadian government in regard to holding interest rate increases to the same percentage as it's holding wages and prices? MR. LEITCH: Mr. Speaker, we have not made any formal representations to the federal government on that point. It was mentioned in the documents that were before the finance ministers at their meeting some weeks ago in Ottawa.

As I recall, the federal position with respect to interest rates was that it was not putting the ceiling on them, because they are, to some extent, governed by the interest rate the lending institution has to pay for the funds it obtains to lend. But — again I'm speaking from memory — my memory is there would be the cost limitation on the increases in prices by lending institutions

1102 ALBERTA HANSARD November 17, 1975 that fell within the federal guidelines, dealing with number of employees and so on. I would also mention to the House that these matters are the subject of ongoing discussions. I anticipate there will be further discussions about interest rates in meetings between representatives of the federal government and representatives of the provinces. MR. TAYLOR: Supplementary to the hon. P r o v i n c i a l Treasurer.

In the discussions with the Minister of Finance and the provincial treasurers, was any concern expressed to the Canadian government, or any interest expressed by the provincial treasurers, to putting some type of lid on the interest rates as set by the Bank of Canada, which doesn't completely come under the category you just, so properly, outlined? MR. LEITCH: Mr. Speaker, I think perhaps the hon. member is touching, although not directly, on the question of the money supply within the nation, which is always, of course, a very important aspect of any inflation question.

It was mentioned in that indirect sense during those d i s c u s s i o n s . Again, speaking from memory, it's my memory the Minister of Finance indicated an intention on the part of the federal government to permit the money supply only to increase at the same rate as the economy increases in real growth terms. Condominium Conversion MR. MANDEVILLE: Mr. Speaker, my question is to either the hon. Premier or the hon. Minister of Consumer and Corporate Affairs. Will the legislation involving housing, mentioned by the Premier, deal with c o n v e r s i o n of apartment buildings to condominiums? MR. HARLE: Mr.

Speaker, we have that under consideration. MR. MANDEVILLE: Supplementary question. Does the government have a contingency plan to be followed should there be an increased number of owners attempting to convert apartment buildings to condominiums, in relation to the suggested rent control legislation? MR. HARLE: Mr. Speaker, perhaps the member could elaborate on what he means by c o n t i n g e n c y plans. It's a matter that is usually governed by legislation. Presumably c o n t i n g e n c y plans relate to something else. MR.

MANDEVILLE: In many of the cities at the present time, there are apartment buildings that are being considered to be converted to condominiums. I was wondering if the government was taking any steps to stop this at the present time. MR. HARLE: Mr. Speaker, we're awaiting the condominium study report which should be in, in approximately the next two weeks. Municipal Spending DR. BUCK: Mr. Speaker, my apologies to you and to the members of the House, but even dentists have to get their teeth fixed and dentists are always late, even for dentists, and that's why I'm late, Mr. Speaker. My question is to the hon.

Minister of Municipal Affairs. Mr. Speaker, the m i n i s t e r made a statement at the municipal convention that there would be certain penalties levied if municipalities did not follow the provincial guidelines. Can the minister indicate to us when this l e g i s l a t i o n will be coming in and what those penalties will be? MR. JOHNSTON: Mr. Speaker, the hon. M e m b e r for Clover Bar is referring to a

section of a speech I made at the Alberta Urban Municipalities Association in which I was merely looking for suggestions with respect to how we could handle the e x t e n s i v e increase in deficits across this p r o v i n c e . As the opposition has already i n d i c a t e d , there is a strong awareness of the New York crisis. We are attempting to [take] steps here which will preclude that possibility in Alberta. As to specific legislation, there is no legislation planned for this fall. We are merely considering it as a policy position. DR. BUCK: Mr.

Speaker, is the minister indicating there is no guideline for p e n a l t i e s that will be levied in municipalities? MR. JOHNSTON: There is no legislation to levy penalties at this time, Mr. Speaker. Auto Insurance MR. R. SPEAKER: Mr. Speaker, my question is to the Minister of Consumer and C o r p o r a t e Affairs. How many insurance companies in Alberta have discontinued writing auto insurance in the past few months? AN HON. MEMBER: Fewer than British Columbia. MR. HARLE: Mr. Speaker, I haven't any information other than that tabled in the last session of the Legislature. MR. R . SPEAKER: Mr.

Speaker, a s u p p l e m e n t a r y to the minister. Have any insurance companies in Alberta made a presentation to the government with regard to compensation or subsidization of losses in the last few months? MR. HARLE: I'm a little unsure, Mr. S p e a k e r , as to what the hon. member is r e f e r r i n g . Perhaps he could elaborate. MR. R. SPEAKER: Mr. Speaker, it was my understanding that insurance companies in Alberta discontinued writing some auto insurance because of financial losses or potential losses. I was asking the minister

November 17, 1975 ALBERTA HANSARD 1103 er if any of the companies have made presentations to the government with regard to that. MR. HARLE: Not that I am aware of, Mr. Speaker. MR. NOTLEY: Mr. Speaker, a supplementary question to the hon. minister. Is the minister or the government still receiving complaints from Alberta residents that insurance companies which do renew car insurance are forcing their clients to take out package insurance in other fields — fire and casualty — with them? MR. HARLE: Some companies, Mr. Speaker, I understand are still using that practice.

However, since some comments were made in this Assembly, I understand this has been reduced, and the number of complaints we're getting in the area of automobile insurance has been reducing. MR. NOTLEY: Mr. Speaker, a further s u p p l e m e n t a r y question. Has any specific action been undertaken by the government, by the department as such, and have any d i s c u s s i o n s been held by officials of the d e p a r t m e n t with officials of the companies c a r r y i n g on this practice? MR. HARLE: Mr.

Speaker, we have pretty well indicated to the industry that we would like to see the practice d i s c o n t i n u e d . However, there are some companies because of the financial situation and the claims on their policies, it's i m p o r t a n t that these insurance companies remain financially capable of undertaking the risks that they take when they write insurance. It's a balance, I think, between making sure the companies will meet their obligations and trying to discourage this practice. MR. CLARK: Mr. Speaker, a supplementary question to the minister, on this question of automobile insurance.

Has the minister had discussions with representatives of the automobile insurance people concerning the large awards that have been made for p e r s o n a l injuries, especially awards made in Alberta in the last year? MR. HARLE: Mr. Speaker, it is of course the claims made on insurance policies that dictate the premiums. Perhaps the hon. Leader of the Opposition could elaborate on what he has in mind, because it is obvious that the courts establish the dollar value of the large claims, and these of course become part of the actuarial risks that have to be taken into account in order to establish premiums. MR.

CLARK: A further supplementary q u e s t i o n , Mr. Speaker, to the minister. To put the matter this way: is the minister giving consideration to legislation which would place a limit on the size of claims individuals could acquire through a court of law in this province for personal injuries in insured automobile accidents? MR. HARLE: Well, Mr. Speaker, it's i n t e r e s t i n g the member should take that approach. We have not so far. MR. CLARK: A further supplementary, Mr. Speaker, to the minister. I wouldn't want to misunderstand his answer.

No r e p r e s e n t a t i o n has been made along that line by the insurance industry to the minister — is that a fair assessment of the minister's answer? MR. HARLE: I have not, Mr. Speaker, seen any representations in that regard. MR. CLARK: A further supplementary. Would the minister be prepared to check with the insurance people in his department and report back if there is some different information? MR. HARLE: Yes, Mr. Speaker. AEC Investors MR. LITTLE: Mr. Speaker, I would address my question to the hon. Minister of Energy and Natural Resources.

I have the p r e l i m i n a r y prospectus of the Alberta Energy Company in front of me, and the first page contains the usual warning of the s p e c u l a t i v e nature of the securities. Page 22, Eligibility for Investment, indicates under ( a ) , "Insurers incorporated under the laws of Alberta may invest funds pursuant to

Section 94(2). . . of The Alberta Insurance Act". Mr. Minister, it was my understanding that speculative shares were not normally eligible for investment by insurance funds, and they were required to have a long history of dividend paying. Could you explain [this] to the House? MR. GETTY: Mr. Speaker, when The Alberta Energy Company Act proceeded through this House, there was provision within that act that insurance companies and trust c o m p a n i e s could invest in the Alberta Energy Company. That matter was specifically debated in the House. It is true, Mr.

Speaker, that on the prospectus — and all prospective purchasers should consider that these are not guaranteed in any way as to their price, but it was felt that insurance companies and trust companies should have the freedom to purchase shares in the Alberta Energy Company. It's strictly a matter of their choice. MR. LITTLE: A supplementary, Mr. Minister. Does this indicate then that The Alberta Energy Company Act supersedes the federal legislation regarding the investments of insurance companies? MR. GETTY: No, Mr. Speaker, it does not supersede federal legislation. It refers to provincial legislation.

1104 ALBERTA HANSARD November 17, 1975 Cancer Services, Calgary MR. GHITTER: Mr. Speaker, my question is to the Minister of Hospitals. I wonder if the provincial government is considering the creation of a fully integrated cancer clinic in the city of Calgary. MR. MINIELY: Mr. Speaker, yes, we do have that under consideration. It's in the stage of various planning at the present time. As the hon. member may know, o v e r a l l cancer services in Alberta come under a Provincial Cancer Hospitals Board, which covers cancer services within the total province.

This board is now in the process of doing some planning for a facility in Calgary similar to what we have in Edmonton at the present time. MR. GHITTER: A supplementary, Mr. Speaker. I wonder if the hon. minister could advise as to the location contemplated for this clinic? MR. MINIELY: Well, Mr. Speaker, I can't be totally specific, except to say I believe it's the Provincial Cancer Hospitals Board which has responsibility for the decision regarding site.

In the case of cancer services, its view is that there is great advantage to being tied in with the u n i v e r s i t y and with the Foothills Hospital c o m p l e x site. My recollection is the site would be in that area. MR. GHITTER: A supplementary, Mr. Speaker. I'm wondering if the hon. minister has considered utilization of Col. Belcher Hospital, which is presently underutilized and is centrally located for such services, in hopes an agreement could be entered into with the federal government, from the point of view of use of that underused facility. MR. MINIELY: Well, Mr.

Speaker, the hon. member certainly makes an excellent point. We have the potential use of Col. Belcher Hospital, because the federal government has indicated its desire to sell it to the provincial government. What we are doing, though, in reply to the hon. member, Mr. Speaker, is to assess, if you like, the most suitable use of the facility. The facility is built in a way that does suit, for instance, auxiliary care, or longer term care needs in the future of Calgary. But first of all, we have to decide whether we require the facility. We haven't made that decision yet.

If we do decide we should acquire the facility, we will have to decide what is the best use for it. There are different alternatives for the use of the facility. MR. GHITTER: One final supplementary, if I may, Mr. Speaker, to the hon. minister. Have negotiations been commenced with the federal government with respect to the Belcher Hospital, or is that something to be considered in the future? MR. MINIELY: Well, I think, Mr. Speaker, one could only say in reply to that q u e s t i o n , negotiation has commenced to the degree that the federal government has indicated it would like to sell to us.

But we haven't made a decision whether we'd like to buy. MR. GHITTER: One further supplementary. Is the minister aware that in the Province of Ontario, for example, the selling price for taking over Rochdale hospital was $1, a price I think we can afford? MR. MINIELY: Well, Mr. Speaker, knowing the hon. Member for Calgary Buffalo, I'm sure he knows that sometimes the capital cost of a hospital facility is a very small part of the total cost. Gas Transmission Lines (continued) MR. CLARK: Mr. Speaker, I’d like to direct a question to the Minister of Utilities and Telephones again.

It centres on this q u e s t i o n of responsibility for the safety of rural gas transmission lines and branch lines. Would the minister indicate to the House if that responsibility rests with the ERCB, the way things are right now? DR. WARRACK: My present understanding is that this responsibility is shared. H o w e v e r , with the hon. member raising the question, and obviously having concerns in the area, I think I'd like to check it out in some detail, and report. MR. CLARK: Mr. Speaker, a further s u p p l e m e n t a r y to the minister while he's doing the checking out.

Would he indicate to the House whether he or his officials in the department have had concern expressed, either by officials of the ERCB or of other government agencies, about the manner in which some of the main transmission lines and branch lines have been laid? DR. WARRACK: From a safety standpoint? MR. CLARK: From a safety standpoint, yes. DR. WARRACK: Well, yes, there's really no question about that, Mr. Speaker. As a matter of fact, that was much of the impetus and argument in favor of The P i p e l i n e Act itself. There is no question that the answer is, yes.

If there are further concerns with the implementation of it, I'd certainly want to check and see that it's being done thoroughly. Urban Environment Program MR. KUSHNER: Mr. Speaker, I don't know for sure to which minister to direct this question. It's been brought to my a t t e n t i o n over the weekend that an urban c o m m i s s i o n on environment was holding meetings in the city of Calgary, probably in Edmonton as well. It has some sort of incentive or grant program for industry to move out of the city to the outskirts. I wonder if

November 17, 1975 ALBERTA HANSARD 1105 whatever minister it lies on could inform the House, in fact, if that is really happening. MR. RUSSELL: Mr. Speaker, I'll take a guess that probably I should try to answer that question, whatever it is about. The Department of Environment has had a program under way for two or three years, whereby it will support the relocation of o b j e c t i o n a b l e industry to locations outside urban municipal boundaries. City Packers in the city of Lethbridge was the first such one. To date, it's been the only one.

There's been a very substantial number of applications from industry for c o n s i d e r a t i o n under the program, and the Department of Environment is considering guidelines and principles that should apply. I'm not aware of any commission or advisory group such as the hon. Minister refers to. Oil Spill MR. RUSSELL: Mr. Speaker, while I'm on my feet, perhaps I could give some details to the hon. Member for Spirit River-Fairview with respect to an oil pipeline leak he asked about on Friday. I think he referred to it as a leak into the Pipestone Creek.

There was a leak in the Peace River pipeline, near Valleyview, into a small creek called Higgins Creek, which flows into the Little Smoky River. Metering would indicate that about 5,460 barrels of oil spilled, and 5,100 barrels was collected prior to the burning of the residue that was left. The leak occurred as a result of two corrosion leaks in the pipeline. Urban Environment Program (continued) MR. KUSHNER: A supplementary question to the minister, if I may.

Is it a correct statement that the minister is in fact not aware that meetings of that type are held with industry or business people in the city of Calgary, giving grants to encourage people to move to the outskirts of the city? MR. RUSSELL: Mr. Speaker, I've indicated the policy, the program, and budgetary support of the Department of Environment. It may very well be that meetings are taking place at the local level throughout municipalities with respect to using the program. Cemetery Program MR. TAYLOR: Mr. Speaker, my question is to the hon. Minister of Culture.

Is the government planning to make the cemetery program a continuing program? MR. SCHMID: Mr. Speaker, the cemetery p r o g r a m which was funded last year is extended to October 31, 1976, since some of the cemeteries were unable to obtain their plagues. However, presently, a c o n t i n u a t i o n is included in the budget for next year, which of course would first have to find approval by caucus, cabinet, and s u b s e q u e n t l y the Legislature. MR. NOTLEY: Subject to the 11 per cent? Cow-Calf Operators MR. NOTLEY: Mr. Speaker, I'd like to direct this question to the hon.

Minister of Agriculture, and ask whether he is able to report to the Legislature on his meeting with officials of the National Farmers Union on Friday, concerning the present predicament of cow-calf operators in the Province of Alberta. MR. MOORE: Mr. Speaker, yes, I would be able to report on the extent of the meeting and the various things that were discussed at it. MR. NOTLEY: Mr. Speaker, a supplementary question.

Can the minister advise the Assembly whether the Government of Alberta is reconsidering its position, in terms of making cash assistance, as opposed to loan assistance, available to cow-calf operators? MR. MOORE: Mr. Speaker, I've had that matter under consideration, of course, in addition to a number of other matters that have been raised by various groups t h r o u g h o u t the province in recent days. Indeed, part of the considerations that went into the program of re-announcing the cow-calf advance at 7 per cent interest were as a result of meetings with livestock groups and farmers throughout Alberta. Mr.

Speaker, I could elaborate e x t e n s i v e l y on the meeting I had Friday a f t e r n o o n with officials of the National Farmers Union. They put forward to me a proposal that was identical, I think, in most respects, to one put forward to this g o v e r n m e n t on November 8, 1974. There are certainly a number of areas in which we have acted very positively in terms of assistance to the beef industry. I can't possibly, during the question period, go into all of those.

I did indicate, however, to officials of the union that we have been doing everything we possibly could to bring about an adequate stabilization program on a national basis under the auspices of Bill C-50, which is a federal piece of legislation requiring that certain named commodities, of which beef is one, will be subject to a stabilization program equal to 90 per cent of the p r e v i o u s average five-year price, with a cost of production figure enrolled in there.

In addition to that, there are p r o v i s i o n under that legislation for provinces, where they can agree on a product that's produced nationally, to provide some level of top-loading. I told the members of the National Farmers Union on Friday, and I say

1106 ALBERTA HANSARD November 17, 1975 again, this province is willing to consider discussions that might lead to top-loading. But before we can get involved in that, surely they recognize as well that we must have the introduction of the program at a national level. MR. NOTLEY: Mr. Speaker, a supplementary question. Pursuant to discussions in q u e s t i o n period last week, has there been any further discussion with federal officials on whether Ottawa plans to move on a stabilization plan? Can the minister report any further discussions on that matter? MR. MOORE: Well, Mr.

Speaker, there may have been some at the departmental level. Personally, I have not discussed the matter with the federal Minister of Agriculture, largely because my understanding is that he is out of Canada at the moment attending a United Nations meeting in Europe. So I haven't been in contact with the hon. Mr. Whelan. DR. BUCK: Supplementary to the minister, Mr. Speaker. It's in the same vein. Has the minister been made aware of the p e t i t i o n being circulated in northern Alberta, where the farmers will be asking for a moratorium on their debts until farm prices rise so that they can pay them?

Has this been brought to his attention, or has the petition been formally presented to the minister? MR. MOORE: Yes, it has, Mr. Speaker. As a matter of fact, at 1 o'clock this afternoon I had a very interesting meeting with a gentleman by the name of Mr. Kendricks, who is supposedly heading the group which is providing the move to a debt moratorium situation.

I said to him after a very brief explanation — we didn't have that much time — that it was somewhat unclear to me even yet how such a debt moratorium would work, and how it might affect the ability of farmers across this province to borrow money from traditional lending sources. He asked me quite frankly if I would support the idea, and I said until I knew more about the details of his idea, how it might affect credit to farmers, and how it might affect our lending i n s t i t u t i o n s , I was certainly in no position to wholeheartedly endorse his proposal. DR. BUCK: Supplementary, Mr.

Speaker, to the minister. Has the minister or anybody in his department studied the system used in Saskatchewan, where they did have a moratorium very similar to this one? MR. MOORE: Yes. I think, though, Mr. Speaker, I would have to say from my knowledge of the proposal being put forward here, that it is considerably different from the moratorium in Saskatchewan during the course of 1971.

I would have to say, yes, I know that the department and the then Minister of Agriculture, together with a good number of Members of the Legislative Assembly, did have an opportunity to see what happened during the course of that debt moratorium. It's very simply a matter, in my view at least, that when you apply a debt moratorium to lending institutions on a broad scale, you immediately create a situation where credit to the agricultural industry dries up very fast.

If you look at the amount of credit required by the agricultural industry, and by farmers across this province, we would want to be very careful about doing anything that might, in any way, interrupt the flow of credit used generally by farmers. MR. COOKSON: A supplementary. Mr. Speaker. I think we'd all like a moratorium on our debts. But I'd like to ask the minister whether his department is doing any m o n i t o r i n g of the cow population in this province, because I think in the long term if we drop below a certain level we will have a problem.

Is your department doing any monitoring on the population and the possible long-term effect it might have? MR. MOORE: Yes, Mr. Speaker, we are, i n d e e d not only in Alberta, but in Canada, the United States, and other countries. It's our information that the female cattle population in both the United States and Canada has stopped the spiral which it was accustomed to during the period from p e r h a p s 1972-75. Indeed, U.S. cattle n u m b e r s , in terms of breeding cows and heifers retained, appear to be down over the last couple of quarters of this year.

I would have to say that, with respect to the Province of Alberta, it is very difficult to have accurate figures from week to week, particularly during the fall season when a lot of cattle are going to market. I hope, however, that through the course of the early part of next year we'll be in a better position to judge what depletion, if any, there's been of the cow breeding herd in Alberta. We certainly know there will be some, or at least the growth will be stopped. I think we would view with alarm a situation where a great number of herds were disposed of.

My information presently - - I'm not sure how accurate it is -- is that that is not the case today, although some people are going out of business. Indeed, many people are retaining heifers and replacing their older cows with new heifers. We hope the population generally will be maintained at or near the level it was in 1974.

November 17, 1975 ALBERTA HANSARD 1107 ORDERS OF THE DAY head: GOVERNMENT BILLS AND ORDERS (S econd Reading) Bill 60 The Alberta Energy Company Amendment Act, 1975 MR. GETTY: Mr. Speaker, I beg leave to move second reading of Bill No. 60, The Alberta Energy Company Amendment Act, 1975. Mr. Speaker, this is a relatively straightforward bill, which requests two amendments to The Alberta Energy Company Act.

Hon. members will recall, when we introduced The Alberta Energy Company Act and the House approved it, there was some discussion of the principle that the A l b e r t a government would always hold 50 per cent of the shares of the company, so that ownership and control would never reside outside the Province of Alberta. At the same time, we made the point that we did not want to have the Alberta government, through its agents, hold in excess of 50 per cent of the shares; therefore, the bill contained a provision that agents of the government would not hold shares.

Now, there has been the need to clarify that the term agent does not apply to members of the Executive Council, who are Members of the Legislative A s s e m b l y . This bill, therefore, provides that that matter is clarified. Also, Mr. Speaker, because it is hoped that members of the Legislature will in fact be shareholders of the Alberta Energy Company, we have provided a

section of the amendment to the act which makes it clear that Members of the Legislative Assembly should feel free to participate fully in debate or voting upon matters having to do with the Alberta Energy Company, without feeling restricted because they in fact hold shares of the company. Those are the two principles contained in this bill, Mr. Speaker. I'd ask the members to support it at this time. MR. CLARK: Mr. Speaker, in taking

part in the debate on second reading, I’d say at the outset that there's no question this legislation is going to go through. But I think it's important, once again, we r e c o g n i z e that simply approving this l e g i s l a t i o n doesn't really negate the fact that members of the Legislature who acquire shares in the Alberta Energy Company are in fact going to be dealing with matters that affect their own particular financial situation. We're already involved in the Alberta Energy Company to the tune of $75 million.

The Energy Company has worked on an a r r a n g e m e n t with the government, so that gas in the Suffield area is now owned by the Energy Company. Now the people are being asked, in fact, to buy portions of that back, as far as acquiring shares in the Energy Company is concerned. We've seen the transaction very recently as far as steel Alberta is concerned. If the Energy Company takes up its option, and the government takes up its option as far as Syncrude is concerned, it's my understanding we could be involved there to the tune of $6 to $7 to $8 million. We're looking at a situation, Mr.

Speaker, as I see it anyway, where members of the L e g i s l a t u r e are saying, we can acquire shares in the Alberta Energy Company, fully r e c o g n i z i n g that decisions we make here are very definitely going to impinge on how s u c c e s s f u l the Alberta Energy Company is, or how successful it isn't. I suppose this is as good a time as any to say I don't plan to acquire shares in the Alberta Energy Company, not that I wouldn't like to perhaps have the o p p o r t u n i t y .

But it seems to me when you become involved, as members of the Legislature, in this business of establishing laws for the people of the province, there are some things you have to forego. I would like to have thought members of the Legislature could, on this occasion, have resisted the opportunity, and perhaps the temptation as far as this is concerned. I know there are those who will say that if cabinet ministers and MLAs weren't investing in the Alberta Energy Company, that would, in fact, be an indication of lack of confidence in the Energy Company.

I don't think many people would have consi dered that reasoning for a very long period of time. It seems to me, as I said earlier, when one becomes a member of the Legislature, there are some things a person has to forego, in the interest not only of how it is, but perhaps more important, how it appears to the public. I would urge members of the Legislature to consider once again what we're doing here, and not make an exemption for the Alberta Energy Company. Goodness knows, we've made enough exemptions for the A l b e r t a Energy Company already.

So I would urge members to reconsider second reading of the bill before us. MR. NOTLEY: Mr. Speaker, in dealing with Bill No. 60 before the Legislature at this time, it seems to me there are several observations that should be made. The first, of course, is the point the hon. Leader of the Opposition has already p r e s e n t e d to the House; in my view it's a valid concern at a time when we have increasing numbers of what you might call joint venture operations, in which g o v e r n m e n t and business go together in a c o o p e r a t i v e venture.

Whether this is facilitated through the organization known as the Alberta Energy Company, or whether it is joint venture as such, it seems to me you really run into a rather serious and dubious area when m e m b e r s of the Legislature, who are in a position to set the guidelines, to d e t e r m i n e the overall policy of the province, at least as to the framework of policy which will guide the company, are in a position to profit as shareholders from the

1108 ALBERTA HANSARD November 17, 1975 d e c i s i o n s made. It seems to me you have at best, Mr. Speaker, an obscuring of the public interest. No one is going to suggest that members of this Legislature are looking into this particular venture from that kind of fast- buck vantage point. I’m not making an allegation. I'm suggesting to the minister that we're getting into a very definite shade of gray area, where it is extremely difficult to distinguish between what may well be public interest on one hand, and private interest as individual shareholders in a company on the other. So, Mr.

S p e a k e r , I believe the concern which the Leader of the Opposition raised not only relates to the Alberta Energy Company, but in my view, goes somewhat beyond that. It's something we have to examine when we look at the whole approach of joint ventures, whether in this province or anywhere else in Canada. The second observation I'd like to make with respect to this bill, Mr. Speaker, is the suggestion that MLAs can take out shares, and by so doing, have some influence as shareholders in the activities of the company.

We had a rather i n t e r e s t i n g example the other day of the hon. minister's response, when I raised q u e s t i o n s concerning whether certain officials of the Alberta Energy Company had obtained interest-free loans in order to acquire shares in the AEC. At that time, the minister simply said it wasn't his r e s p o n s i b i l i t y to advise the Legislature on this matter; this was really the concern of a company separate from the Legislature, and he did not feel obliged to answer to this House whether that practice was occurring.

Then he added the comment that individual members can, of course, acquire their own share, go to the annual shareholders' m e e t i n g , and ask these questions. Well, Mr. Speaker, with all due respect to the minister, the practice of shareholders' meetings being an example of citizen democracy, is a little far-fetched. If he wants an illustration of how q u e s t i o n s can skilfully be avoided, I'd just ask him to look at the records of the annual meeting of PWA.

Several r e p r e s e n t a t i v e s — one representing the party I happen to be associated with, and one representing himself as an active barb in the flesh of the government — went out to B.C. to take

part in the annual meeting of Pacific Western Airlines. [They] found it rather difficult, to put it mildly, to obtain the kind of information which, I think, the public needs to know — votes of something like 3 million to 2 on certain motions, for example. So the suggestion, Mr. Speaker, that we're going to be able to keep an eye on what's going on in the Alberta Energy Company just by a few of us taking out shares is, in my judgment, far-fetched, to put it mildly. I would simply say, in commenting on the principle of this bill, Mr.

Speaker, what I said when the Alberta Energy Company was created in the first place. If we're going to commit large sums of public money to this institution, there must be ongoing accountability to the Legislative Assembly. Whether we want to call it a company, or a Crown corporation — and the government has deliberately set it up as a company — even so in my view they should not try to evade ongoing accountability to this Assembly.

Questions can be posed on the business decisions of the company, on the practices of the board of directors, so that we have a knowledge, as citizens of Alberta, w h e t h e r shares are acquired by us as individuals or not, a knowledge of what is going on. Keep in mind, under the terms of this act 50 per cent of the capital will be coming in, in any event, as money voted by this Legislative Assembly. For those reasons, Mr. Speaker, I feel we would be ill-advised to pass Bill 60 as it stands. I would hope members of the Assembly will reconsider their position on it, and that this bill will, in fact, be defeated.

MR. TAYLOR: Mr. Speaker, I would like to say a word or two on the bill, and I support it. First of all, in regard to the first amendment: I believe the government has been wise in holding the public i n t e r e s t to 50 per cent of the voting in the company. I think giving the citizens of Alberta the first chance to buy into this company is one of the best things ever done in the name of free enterprise in this province. Something similar was done a few years ago in connection with Alberta Trunk. This was well received by the people of the province.

Thousands of people were unable to get shares at that time, and the b e n e f i t s came to the people able to buy shares. I'm sorry to see the hon. Member for Spirit River-Fairview leave, because I wanted to make some comments on what he was just saying. I'm going to make them a n y w a y , but I would feel much better if he had stayed to listen. When we talk about the difficulties of shareholders' meetings, and outline all the things that are wrong about them, I'm wondering how the hon. member would feel if they are compared with a government monopoly, such as Saskatchewan where they're buying out an industry.

How many people there will have a chance to go to a meeting to discuss this matter? This is simply thrust on the people of S a s k a t c h e w a n . They have no choice in it at all, and they have no choice at any shareholders' meeting. Certainly, it's a tremendous improvement over what a socialist situation would do, where the government simply takes over the industry, and then tells the people it's good for them. Here, there's nothing forcing any member to buy into this company. We have a free will. We can buy, or we don't have to buy. All this amendment is doing is making it legal.

To say that this is a conflict of interest is just as ridiculous as the accusation, back in 1955, that because MLAs had money in the treasury branch, there was a conflict of interest. At that time, in order to avoid any confusion, I withdrew any money I had in the treasury branch, and put it in a chartered bank. It is almost a ridiculous situation where a member of the Legislature could not put his money in the

November 17, 1975 ALBERTA HANSARD 1109 treasury branch without being accused of trying to unduly influence the policy of the treasury branch. It just didn't make sense. That was legalized by the next Legislature, where a member could put his money in the treasury branch, or borrow from the treasury branch. And properly so. I don't know of any case where a member had that much influence because he was one in thousands. He simply wanted to make use of the treasury branch because it was in accordance with his thinking, and the money was being used in the province for the development of the province.

Now for us to say that there's a conflict of interest, that we won't be able to speak objectively, or the way we want to, on this Alberta Energy Company if we buy some shares, is as ridiculous as the accusation by the Liberal leader back in 1955. I thought it was ridiculous then, and I think it's ridiculous now. Because if that was the case, why do we ever talk about AGT? We're given free telephone passes in AGT. We can call any place in the province. Does that stop any member in this Legislature from criticizing AGT if something goes wrong? Not at all. Not a bit.

In connection with PWA, I understand there might be an hon. member in the House who owns a share in PWA. I'm not looking at the hon. Member for Spirit River- Fairview, but he's sitting next to me. If so, has that stopped him from criticizing the takeover of PWA in this Legislature? Not a bit. I think he's been more vocal on that than on anything else, even though it fits right into socialist policy. He's still being vocal. There's no putting a zipper on s o m e b o d y ' s lips because he happens to be one of, I hope, several hundred thousand who happen to have shares in a company.

The very thought of that, to me, is nauseating and ridiculous. If we're going to carry that argument to its proper conclusion, we couldn't speak about many things in this province, because every member is a r e c i p i e n t of some benefits from some department of government, as a citizen of this p r o v i n c e , and as a citizen of the country. But it still doesn't stop us from c r i t i c i z i n g , or looking at something objectively, saying it's right or wrong, and taking the proper stand and voting accordingly.

I think this move is going to be one of the greatest steps that's ever been taken in this province towards keeping Alberta free enterprise. I think that's really what it is. If people put their money into something, they have an interest in it, and that's what free enterprise is all about: the investment of money, taking a risk, taking a chance, hoping it will develop. Now the government has never gone out and said there's no risk in the Alberta Energy Company; just the contrary. I think there is some risk.

But I think it's a tremendous investment, a tremendous o p p o r t u n i t y for the people of Alberta to put their money where they've wanted to put their money for many, many years, in the development of their own province and their own country. Surely we don't have to wait forever for people from Europe, the Arab countries, or the U.S.A. to come in to develop our industries. This is an e x c e l l e n t move for 'mid-people' -- to give the opportunity to people to invest their m o n e y , little as it might be, but to invest whatever money they have in the development of their own country.

If we are going to stand up and denounce foreign ownership, how can we denounce foreign ownership and the thrust of the chance to buy into a company like this with the same breath? If we do that, we're speaking with a forked tongue. You can't be hot and cold in regard to this matter. I think this is an excellent opportunity for the people of Alberta to show whether they really believe in free e n t e r p r i s e or otherwise. I intend to buy some shares in this company, and it won't stop me for one minute from criticizing the company if I choose to do so.

If the people of my constituency direct me to take a stand against any aspect of the Alberta Energy Company, the fact that I'm a s h a r e h o l d e r , one teeny-weeny-weeny-weeny s h a r e h o l d e r , is not going to stop me from being the voice of the people who sent me here to speak. MR. SPEAKER: May the hon. minister close the debate? HON. MEMBERS: Agreed. MR. GETTY: Mr. Speaker, I must say to the hon. Member for Drumheller that I a p p r e c i a t e d the views he expressed very much.

He has managed to capture in his comments the spirit and intent of the Alberta Energy Company, and I am pleased to hear that he will be participating also as a shareholder. I must say, Mr. Speaker, that I c o n t i n u e to be disappointed with the negative views that have been expressed by the Leader of the Opposition and the Member for Spirit River-Fairview on this new concept of the Alberta Energy Company.

It's c e r t a i n l y one that, if they notice, Albertans are supporting very strongly, and I'm p a r t i c u l a r l y disappointed that the Leader of the Opposition is not going to participate as a shareholder. I think it would be an excellent opportunity for him to appreciate the workings of that company, the various risks and, I trust, profits that they will be participating in in the development of our province. He should also, I hope — I would ask him, Mr. Speaker, to reconsider his d e c i s i o n not to participate.

As he points out, his reason is that decisions we make within this House may, in fact, in some way increase the potential of the Energy C o m p a n y to be successful. Therefore, should he be a shareholder, he would be benefiting himself, I gather would be the point. But surely, Mr. Speaker, that is true of many, many companies which participate within this province. There are many companies in which the hon. member could hold shares that are very active within the province, and we make decisions within this L e g i s l a t u r e that can benefit them a great deal.

1110 ALBERTA HANSARD November 17, 1975 or, in some cases, harm them. Members are not restricted from participating in those companies. I would wonder why, then, they would prevent themselves from participating in the very company that is created by

an act of this Legislature, and is going to have such a vital part of the future development of our province. I would urge him to reconsider that decision. As for the Member for Spirit River- Fairview, I'm surprised and disappointed also that he would be prejudging an annual meeting of the Alberta Energy Company. I think that’s extremely unfair to the m a n a g e m e n t and directors of the Alberta Energy Company. He has absolutely no knowledge as to how those meetings would be held.

As a matter of fact, I understand the president of the Energy Company has already met with him to provide him with all the information he would like to have, and has offered to provide him with any additional information any time he felt he would like to have it. So I think, Mr. Speaker, to raise a conjecture that it will be d i f f i c u l t to get information, the hon. member is being extremely unfair and unrealistic, in light of the discussions he has had with the president of the Alberta Energy Company. So, Mr.

Speaker, I am asking members of the House not to be negative on this matter at all, but rather for the hon. Member for Spirit River-Fairview and the Leader of the Opposition to switch their views, and to pay a great deal of attention to the views expressed by the Member for Drumheller, and not have me convince them, but let his words convince them. I trust the members of the House will in general support this bill. [Motion carried; Bill 60 read a second time] Bill 52 The Natural Gas Pricing Agreement Act MR. GETTY: Mr. Speaker, I beg leave to move second reading of Bill 52, The Natural Gas Pricing Agreement Act.

Mr. Speaker, hon. members will recall that one of the first policy statements of the government regarding energy matters had to do with our view that there must be a strong effort to increase the prices for which Alberta sold depleting natural resources, and that in previous sessions the government moved with the Alberta Petroleum Marketing Commission to place the pricing of oil within the control of this Legislature, and within control of the government. We've been generally very successful in increasing the value we receive for our oil and natural gas.

However, we have had the situation where oil is controlled, but natural gas is not. There was the p o t e n t i a l for natural gas, since it is a very valuable fuel and energy source, increasing faster than many Canadians could adjust to. Therefore, recognizing that we do not want these prices to increase faster than other parts of Canada and the Canadian economy can absorb them, the government has been discussing with the federal government ways and means to phase in the increases.

We have made the important breakthrough in principle that natural gas, coal, and oil, certainly natural gas and oil at this time, should be priced in parity. While through our phasing proposal natural gas will be priced at 85 per cent parity with oil, we do have a commitment from the federal government that in 3 to 5 years we will phase natural gas into full 100 per cent parity with oil. In order to manage this price increase and phasing-in, and to do one additional very important thing, it was necessary to come up with the l e g i s l a t i o n that you see before you today, Bill 52.

The other important principle I referred to is the principle of flowing back to Albertans and producers in Alberta the export differential, which occurs at the United States border when natural gas is exported from the province. We felt this was an extremely important principle. As members know, in the case of oil there is an export tax at the border to the United States. That export differential flows back to eastern Canada to subsidize lower prices in that part of Canada which imports oil for its needs.

All members know that the Province of Alberta objected to that matter very strongly when it was imposed in Canada. We felt it was extremely important that with the export d i f f e r e n t i a l on natural gas, those funds should flow back to the province, to the producers of the natural gas, and through our royalty system, to the people of Alberta who own that depleting resource. This bill p r o v i d e s for that flowback. It's an important part of the bill. That basically covers the principles contained in this bill, Mr. Speaker.

There is one other matter that I should draw to the House's attention, and that is the matter of the potential for extracting ethane from the natural gas flow. The hon. members are aware of our moves in d e v e l o p i n g a petrochemical industry within the province. It is important to ensure that there will be efficient extraction of ethane within our province, since it is such a valuable commodity in the p e t r o c h e m i c a l industry which we are developing within this province. Mr. Speaker, I'd welcome the views of the members on The Natural Gas Pricing Agreement Act.

It is an important bill, and should they have any questions or comments they would like to raise. I'll try to deal with them when I close debate on the bill. MR. CLARK: Mr. Speaker, in taking

part in the second reading of Bill 52, I don't think I'm going to disappoint the minister so much this time. I find myself in a position where I can support the basic principles involved in Bill 52. I find myself in a rather unique s i t u a t i o n also, Mr. Speaker, because I did a considerable amount of work on Bill 52 over the weekend. I caught the PWA flight from

November 17, 1975 ALBERTA HANSARD 1111 Calgary to Edmonton this morning at 7:30, and somehow my baggage ended up in Lethbridge. [laughter] I'm very disappointed that the Minister of Transportation left the House just a few minutes ago. I was going to relate my sad experience to him. However, it's supposed to be arriving here, or should have arrived here not very long ago. MR. GETTY: A government air line. . . MR. CLARK: A government air line, you're right. Now to get on to the matter of the bill itself. He find ourselves in a position where we support the basic principles involved in the bill.

There are four questions I would like to ask the minister. Perhaps he'd be able to comment on them in the course of concluding the debate. Is the government giving serious c o n s i d e r a t i o n to setting up another mechanism to administer the natural gas pricing a g r e e m e n t or, in fact, will it be the Alberta Petroleum Marketing Commission? Secondly, I'd like to ask the minister if they've given some consideration to the problem of people or companies in the United States which made front-end funds available to encourage drilling exploration some years back.

What provision is there in the legislation for those firms which provided exploration funds several years ago to, in fact, now recoup a portion of those funds, whether as interest charges or interest arrangements? I'd like to ask the minister the government's view in that particular area. Thirdly, I' d like to ask the minister a question on the flowback as it relates to some sort of system of rewarding those companies in Alberta which will in fact take that flowback money and re-invest it here in Alberta as far as exploration is concerned, primarily in the gas industry.

It is my understanding that n o r t h w e s t e r n Alberta likely has the greatest p o t e n t i a l for additional wells in the future. Is the government, in the course of d e v e l o p i n g the regulations for Bill 52, giving some consideration — you would almost say reward system I guess — to those companies which invest more in the province? I know there may be some problems in going that route, as far as Bill 52 is concerned, and is presently set out.

But I'd be very interested in the minister elaborating in the area of what portion of this money he expects to see go back into exploration here in the province. Mr. Speaker, at this time, those are the comments I'd like to make in dealing with the principle of Bill 52. MR. NOTLEY: In taking

part in this debate, I'm not going to disappoint the minister. He's going to be able to get up and tear a strip off somebody when he concludes d e b a t e , so I wouldn't want him to feel that there was unanimity in the House on this question. I would say however, Mr. Speaker just beginning my remarks — I do agree with one part of the principle of the bill, the phasing in of natural gas prices over the next several years.

I feel this is probably a worth-while step, and marks an era of perhaps a little more conciliation, as opposed to the confrontation which occurred between the fall of 1973, and certainly right up until June of this year. Mr. Speaker, in dealing with some of the concerns that I would express about Bill 52, first of all let me just go back, as the minister did, to the export tax which was levied in September 1973. At that time, of course, the government of this province took a very strong stand in opposition to the export tax. I stood alone at that time in saying that the principle of an export tax was a valid one.

I felt that the proceeds should come to the producing provinces — which, I might add, was the official position of the party I happen to lead — something which was lost in much of the ensuing debate. But in any event, Mr.

Speaker, the argument I p r e s e n t e d at that time was that the export tax offered an opportunity to obtain in the American market essentially what American refiners were paying for offshore and American crude; and that the windfall, over and above extra costs which could be d o c u m e n t e d in terms of exploration and p r o d u c t i o n , should accrue to the people who own the resource, namely the people of Alberta. That is sort of the vantage point of my concern about the present bill. Clearly, the first thing we have to look at, Mr.

Speaker, on the question-mark side, is the financial implications for the companies and the province. There is no doubt that increasing the price of natural gas is going to yield substantial additional funds to the Treasury. At the same time, Mr. Speaker, as I look over the provisions of this bill, there will be a very, very healthy increase to the producing oil companies. First of all, as I read Sections 7 and 8 of the act, we're going to see quite a substantial increase in the basic wellhead price of natural gas.

We're going to look at a border price of approximately 85 cents, and then, less the transmission charges, I think 72 cents at the wellhead would be an approximate estimate of the price. The wellhead price, according to the figures I've received at the present time, is somewhere in the neighborhood of 45 cents per MCF. So there is going to be a very s u b s t a n t i a l increase in the basic wellhead price for all natural gas produced in the P r o v i n c e of Alberta.

If you take half of that as a royalty rate to the province, a p p r o x i m a t e l y $270 million more will accrue to the industry by increasing the basic w e l l h e a d price of natural gas. Add to that the 50 per cent of the export differential — I've seen one set of figures at $150 million for the producers, and another set, quoted in The Globe and Mail from the National Energy Board, which would yield $230 million. Whether it's $150 million or $230 million, that's considerable additional money from the rebate of the export differential revenues which will go back to

1112 ALBERTA HANSARD November 17, 1975 the producers. So we're looking at an increase of approximately $500 million to the producing oil companies. Now, Mr. Speaker, in my view, in order to judge this question of whether the producing companies deserve that kind of increase, we have to ask ourselves: what are the obvious reasons for Canadians, and Albertans in particular, to justify turning over that kind of increase to the industry? The argument we receive over and over again is that we have to explore for new finds of oil and natural gas. And that's a pretty plausible argument. But, Mr.

Speaker, what troubles me is that when one looks at the statistics - - and I've cited statistics before, but I'm quoting from the July 21 edition of Oilweek - - one does not see any evidence at all that increased revenues to the industry are, in fact, finding their way back in the form of additional exploration in the prairie provinces or in the Northwest Territories. Mr. Speaker, let's look at the s t a t i s t i c s . In 1973, the gross production revenues from crude oil, natural gas, s u l p h u r gas liquids, totalled $3,044 million. Of that $3,044 million, Mr.

Speaker, i n d u s t r y expenditures — and I cite the p r o v i n c e s of Alberta, Saskatchewan, Manitoba, British Columbia, and the Northwest T e r r i t o r i e s — amounted to $516 million, or 17 per cent of gross revenue. But in 1974, that dropped sharply, dropped, as a matter of fact, to 12 per cent. And in 1975, while the gross revenues had risen from $3,044 million to almost $7 billion — in other words, more than twice the revenue — the exploration budget of the industry has dropped from $516 million to $510 million; in percentage terms, Mr. Speaker, a very drastic drop from 17 per cent to 7.4 per cent.

One can look at the projections for this year, and you find a modest increase in exploration projected for Alberta, some $6 million. On the other hand, there was an equally modest increase for British Columbia of $6 million in exploration. That information is contained in the February 17 edition of Oilweek. Mr.

Speaker, the point I'm trying to make is that if this large amount of money, substantially in addition to the amount which the government first calculated when they announced their royalty structure in April, 1974 — members will recall at that time the differential royalty, the s u r c h a r g e royalty was going to be 65 per cent. Admittedly this was before federal taxation measures were brought in, but we have subsequently seen a retreat by the federal government in their initial proposals. We're looking at a 65 per cent additional royalty that has been dropped to 50 per cent. The point I'm trying to make, Mr.

Speaker, is that for us to be able to justify this additional revenue to the industry, it seems to me there has to be some concrete evidence that a large part of that additional money is in actual fact being ploughed back by the industry into additional exploration in this province and elsewhere in Canada. I don't argue the fact that hon. m e m b e r s would be able to cite the books of certain companies who are doing that. No question about that. But I think if you look at the pattern as a whole — of all the companies in the industry — you will find, Mr.

Speaker, that while the revenue has gone up very substantially, more than twice, the amount of exploration has a c t u a l l y dropped. That's why, Mr. Speaker, I believe the proposal the Premier of Saskatchewan made at the energy conference in 1975, shortly after the people of Alberta went to the polls — in the month of April, I believe — of a national energy security fund is well worth looking at. If we don't want to do this as a country, perhaps we should be looking at some variation of this scheme for the province, so that if additional funds are to go back to the industry, we have a right, Mr.

Speaker, to insist that those surplus funds are actually invested in exploration, in finding new sources of oil and gas in the Province of Alberta. Now, I'm sure that all sorts of people, in the course of the debate, will stand and say, oh, we can't possibly do this, because this would offend the principle of free enterprise, and everything else. Mr. Speaker, I remind members what the Premier said the other day in his initial speech. He admitted that, in his view — and he'd come to this conclusion reluctantly — the Province of Alberta had to embark upon a program of wage restraints.

He then went on to make the point that if we're going to have wage controls in Alberta, we have to have rent controls. Well, Mr. Speaker, if we can accept the proposition of controlling the right to bargain for more money for workers, if we can accept the proposition of controlling rents, it equally seems to me we have an obligation to ensure that if there are additional funds flowing to the industry, from this bill, those funds actually end up in additional exploration, which we can clearly identify as extra funds which would not otherwise have been invested. I should point out, Mr.

Speaker, that these figures I've cited are even more depressing when you keep in mind that this particular Oilweek I'm citing is in July, some seven months after the ALPEP plan was announced, and the reason the government of this province announced the ALPEP plan was to modify the impact of federal taxation measures. Mr. Speaker, I'm saying to the Assembly that I need more concrete evidence than I've seen to date that windfall revenues to the industry are going to show up in actual statistics, in terms of a d d i t i o n a l footage drilled in this province. Mr.

Speaker, I think the second major question that has to be asked, when one reviews the legislation, is to ponder the impact on consumers in Alberta, because quite obviously, if you are going to increase the price of natural gas, there will certainly be more royalty income, and what have you. But we also know that this is going to increase the price of natural gas for consumers. Now, I would like the minister to answer a specific question in the legislation

November 17, 1975 ALBERTA HANSARD 1113 itself — if he would care to take a look at

Section 7(2) of the bill, on page 4. Read that

section and contrast it with

Section 12(5) ( b ) . In closing debate, Mr. Speaker, I would like the minister to clarify what the exact position is with respect to domestically consumed natural gas in the Province of Alberta as a result of this bill.

Section 7 — just to outline my

interpretation of it — is very clear. It says that as long as there is a federal- provincial agreement in effect, natural gas used in Alberta will be the border price, the 85 cents less the 12 or 13 cents, so we're looking at the 72 cent figure. As I read

Section 12, it seems to me that what that says is — I'm sorry, I misled you here. It's

Section 12(3), and it's Clause ( b). It seems to me that

section says, Mr. Minister, that the c o n t r a c t price, if it's lower than 72 cents — say it's 45 or 50 cents; it's an arbitrated price subject to the old Arbitration Act that we passed in 1973 — that price would prevail or the lesser of the border price or the contract price. I think it is very important that we get it straight in understanding what, in fact, consumers in Alberta are going to be looking at. Will we be looking at the border price? Because the impact, Mr.

Speaker, will be quite direct on consumer prices in Alberta, whether the price of natural gas is going to go up by 25 or 30 cents per MCF or not. That will have an effect on what the Minister of Utilities has to consider in terms of the rebate plan. I would just simply say, Mr. Speaker, that according to the statistics I've been able to uncover, Alberta consumes a p p r o x i m a t e l y 350 billion cubic feet of natural gas a year, and an increase of 28 cents would mean approximately $150 million more in consumer cost to the people of Alberta. Well, Mr.

Speaker, for institutions in Alberta — school boards, hospital boards, local levels of government that would, now have to live within the 11 per cent g u i d e l i n e s imposed by this government as far as their grants are concerned — the prospect of that kind of natural gas increase during 1976 or 1977 is going to be rather i n h i b i t i n g , to put it mildly. Mr. Speaker, I don't think there's any doubt that the price of natural gas has to rise. I'm sure all members, wherever they sit in the House, accept that proposition.

I also would laud the government for a c k n o w l e d g i n g that this has to be phased in, in co-operation with the rest of the c o u n t r y . Where I do differ, however, is that in my view we're going to provide very substantial windfalls to the industry, without sufficient guarantees that that additional money will find its way into concrete exploration and development a c t i v i t y in this province. I would simply conclude my remarks, Mr.

Speaker, by saying that the proposal for an energy security fund, which was advanced and discussed and which several other p r o v i n c e s found attractive at the National Energy Conference in Ottawa in April of this year, made sense to me at that time.

But when we are now looking at a situation where we are insisting that Canadian w o r k e r s , landlords, and other parts of the economy have to follow pretty strict g u i d e l i n e s , it seems to me not unreasonable to say to the industry; if you're going to enjoy additional revenues as a result of higher prices, those revenues have to be re-invested in the country to find more gas and oil. MR. PLANCHE; Mr. Speaker, I'm delighted to have the opportunity to make a remark or two on Bill 52.

My constituents, n a t u r a l l y , are very pleased with this development, and I'm sure that both exploration and in-field drilling will indicate their a c c e p t a n c e of this with gusto. I don't know whether the remarks I'm about to make are in context with this particular stage of second reading, but I'd like to ask the minister, if I may, whether these rebates will apply to the Saskatchewan power production in southeastern A l b e r t a .

There is considerable concern that exports to Saskatchewan from Alberta might well be sharply curtailed, or at least not expanded any further, so that Saskatchewan would be in a position where it would have to drill for its own gas rather than sitting on reserves, waiting for the market to become more favorable. I'd also like to ask the minister, if I may, whether the mechanics are in place, or how he would propose to handle the problem of rebating the Alberta producers who have implemented their ability to produce by using British Columbia gas.

Perhaps he could indicate a response to that when he closes, or at some later date if it's more appropriate. I'd like to close by saying that I am certainly very strongly in favor of Bill 52. MR. HORSMAN: Mr. Speaker, if I may ask the minister to clarify a point of some concern to the people in southeastern Alberta. Representing, as I do, the gas city, named many years ago because of its supply of natural gas, it is of great concern to us.

Needless to say, people in my part of this province are greatly concerned that the natural gas is being sold at far below its real value, and we're pleased to see we will be receiving a fair value, particularly for that great resource which is being sent out of this province. You know Medicine Hat was described by Rudyard Kipling as the city "with all hell for a basement". Of course, when he did that he was not referring to the morals of the people who live there . . . AN HON. MEMBER: Are you sure? MR. HORSMAN: ... or their MLA back in 1910.

At one time the street lights in M e d i c i n e Hat were lit by natural gas, and they were never turned off, because it was more expensive to turn them on and off than it was to burn that natural gas day and night. At one time as well, when visiting d i g n i t a r i e s came to Medicine Hat, the e n t e r t a i n m e n t

1114 ALBERTA HANSARD November 17, 1975 provided was to flare a natural gas well for the spectacular sight it provided. I'm not being critical of my predecessors in Medicine Hat, but I think it d e m o n s t r a t e s how little value really was placed on this natural resource. Therefore, it's a great concern of mine that we preserve it, and get a fair price for that which we sell. One thing that concerns me, Mr.

S p e a k e r — I hope the minister can answer this — relates to what will happen to producers who have long-term gas supply contracts, where they're required to sell at anywhere from 10 to 20 cents per 1,000 cubic feet. Will these producers who receive benefits under the flowback provisions under

Section 14 of this act and the regulations being made under the act, be required to comply strictly with the terms of their existing gas sale contracts in order to qualify for such flowback benefits? I would suggest, Mr. Speaker, that this is a matter of very great concern to the people of my part of the province, particularly in regard to the city of Medicine Hat, which is a major producer of natural gas in its own right, and a purchaser under gas sale contracts with other individual suppliers.

I know there are producers in our part of the province who are receiving so little from the long-term contracts that they are refusing to introduce any new exploration or supply systems because they just can't afford to do it. Now, if they receive from this flowback provision anything in the neighborhood of perhaps — and using this only as an estimate — 20 cents per 1,000 cubic feet, that will put them in a much better economic position to carry on that exploration. I'm sure the temptation must be very great to companies under these long-term contracts to abandon the contracts if they possibly can.

I would hope that flowback provisions and flowback benefits will only be allowed to those companies which comply with the terms of their contracts with the primary purchasers. I would appreciate a clarification of that particular point. DR. BUCK: Mr. Speaker, I would just like to make a comment or two on this bill. First of all, I would like to say, Mr. Speaker, the longer I stay in this b u s i n e s s , the more cynical I become about experts. So I want to question the m i n i s t e r on the reserves which we have in this province. I certainly agree that we're going to find more natural gas.

I do not believe my friend, who is politically to the left but sits to my right, is so concerned about these windfall profits. I think g o v e r n m e n t s are treating private industry more and more harshly all the time. They're almost bringing them to the position where they can't afford to go out and make a dollar. I think governments are becoming so involved in the private sector of the economy that the private sector is almost starting to say, we know we're going to be raped, let's not fight too strongly.

But getting back to the cynicism about experts, 15 years ago we were told that we would have crude reserves that would last for 20, 25 to 30 years. Now we're finding out that within 8 to 10 years our known crude reserves will be used up. So, Mr. Speaker, I would like to ask the hon. minister, do we have this so- called 30-year rolling reserve of natural gas? Some of the reports seem to be conflicting, some of the reports of the National Energy Board seem to be c o n f l i c t i n g , that maybe we don't have this 30-year rolling reserve.

So I think it's only fair to the people of this province that we as legislators, as a Legislature, and the hon. members opposite as a government, reassure us without any doubt that we have these reserves. Because if we do not, I think we have to look very closely at what we're doing for the export market. I don't want to sound parochial, but I feel that because the product is here there should be an Alberta-first policy. I think we have a responsibility to the people in this province first.

If we're going to build this petrochemical empire that his majesty — I mean the Premier — speaks of, we have to have the reserves. An area, Mr. Minister and Mr. S p e a k e r , we should look at is, let's not be in too big a hurry to send everything down the pipeline from the Suffield Block.

I think we should look at areas around the major centres, that includes Medicine Hat and Calgary, where part of a known proven reserve as large as the Suffield Block should be frozen so we can say to the people of this province, we have sufficient reserves in that block to power the i n d u s t r i e s and homes in Medicine Hat, L e t h b r i d g e , and Calgary for 50 years. Let's not get in such a big hurry to ship it down the pipeline. We could also project this throughout the rest of the province, that we have areas we freeze for future generations. Mr.

Speaker, these are the few areas of concern to me, so I would be pleased if the minister can reassure me that the reserves are there and will remain there. Thank you, Mr. Speaker. MR. SPEAKER: May the hon. minister c o n c l u d e the debate? HON. MEMBERS: Agreed. MR. GETTY: Mr. Speaker, I want to thank the hon. members who've participated in the debate on this bill today. I made some notes as quickly as I could while they were talking. I hope I can cover the matters they asked about.

If I miss any, I'll certainly take the opportunity to discuss them with the hon. members, either in the House at another time, in committee, or outside the House at their convenience. The first question the hon. Leader of the Opposition raised was: what mechanism might be used for administering the pricing of natural gas within the province? He asked me whether it would be the Alberta Petroleum Marketing Commission, or the D e p a r t m e n t of Energy and Natural Resources, or perhaps even another agency. I have to tell him at this time that

November 17, 1975 ALBERTA HANSARD 1115 while we have a task force presently o p e r a t i n g within the province, headed by the chairman of the Alberta Petroleum Marketing Commission, working out with industry the most efficient way of administering the natural gas pricing agreement bill, we have not made a decision yet as to whether the actual administration will be within the Alberta Petroleum Marketing Commission or the department.

He would like it to be in the place where it is most efficient, causes the least amount of upset within the normal marketing processes in the natural gas industry, and will cost the taxpayers of Alberta the least amount of money. One of the reasons we have not made our decision yet is that we are presently undergoing a review of the various energy decision bodies within the province, under the supervision of the Chief Deputy M i n i s t e r , Dr. Govier.

I’ll want to see how the potential restructuring of energy matters within the province is recommended, and then see whether it would be best for the natural gas pricing agency to stay in the department, or within the Petroleum M a r k e t i n g Commission, or some separate body. I must say that decision has not been made; however, there is a task force working right now on setting up the means of handling it.

The Leader of the Opposition also asked me about the potential to allow interest charges on exploration funds, which were advanced in the past to producers to find more natural gas reserves in the province; how might those interest charges be allowed to be recovered by the companies. We now have a provision in the bill for a cost of service to the pipeline companies.

H o w e v e r , if it appears that cost of service definition is not broad enough to catch the payment of those interest charges I referred to, and which he raised in his question, it will be our intention to bring in an amendment at committee stage which will allow the interest charges to be covered in the cost of service definition. That has been the way it’s been handled traditionally with these companies. He would not want to change that return on their money, which was very important money in finding reserves in our province. The third point the hon.

Leader of the Opposition raised was whether there would be some way of rewarding those companies in Alberta which would take the funds and plough them back — I imagine he meant into exploration or development within the p r o v i n c e . He do not contemplate using the bill in that way. There is the Alberta i n c e n t i v e program now, which we know is working very well in the province. There is f e d e r a l legislation which encourages companies to spend as much of their revenues as possible in Canada, or they will be highly taxed.

Those two factors are the best way to encourage companies to drill in our province and in Canada. But I'd like to draw the attention of the hon. Leader of the Opposition to the fact that we are providing in this bill that the export differential funds flow back to all companies, whether they are in fact selling natural gas to export markets, or selling it within Alberta. That was a matter we had considerable discussion about with the federal government. It appeared for a time there was going to be the necessity, or the desire on their part, to have the funds go only to those companies who sell gas to export.

He felt it would be far better if the export differential funds flowed to all producers within the province, and therefore provided greater cash flow to them to find additional reserves within our province and to supply Alberta users. The Leader of the Opposition mentioned four questions. I got three but missed the fourth, if there was one. I’d welcome him to raise it again at another time. The Member for Spirit River-Fairview mentioned that he felt there was a greater degree of conciliatory attitude now, with regard to the federal government, shown in this bill. Perhaps he's right in that regard.

He are on a more co-operative basis with them, though it’s because we feel they now appreciate some of the a r g u m e n t s we've made in the past. I would draw his attention to the fact that, I believe because Alberta took such a strong stand with regard to the export tax on oil, there is not one now on natural gas. This bill clearly evidences that those funds are returning to the people of Alberta and the producers in Alberta. He also mentioned that it appears this could be a windfall to producers, but then used the term, it's a healthy infusion of funds to the industry.

I prefer to think of it as a healthy infusion of funds to industry. The funds will, in greatest proportion, find their way into exploration and development in Alberta and Canada. As I pointed out, there is federal tax l e g i s l a t i o n which provides great incentive to companies to spend as much of their revenue as possible in exploration and development, to reduce their taxes. He asked me about the impact on A l b e r t a n s , and referred to two parts of the bill. I could see where he might have misunderstood the two sections of the bill he referred to.

To make it clear, without referring directly to the bill — although I think if he reads it again he'll see this is what is accomplished — if a company wants to sell natural gas in Alberta at a higher price than the export price, the provisions he referred to, of

Section 7 on page 4 , prevent it from doing that. In other words, to sell gas in Alberta, you must sell it at the Alberta border price less costs back to the wellhead. You must sell it no higher than the Alberta border price less costs back to the wellhead. Therefore, under

Section 7, it prevents anyone charging higher in Alberta than outside Alberta, should they have a c o n t r a c t purporting to do that. The other

section he referred to, on page 7, provides that should a company have a contract price less than the Alberta field price, calculated as it is in

Section 12, the lower price is in effect. It's a relatively complicated way to say that if there are lower prices within the province, this bill will not upset those prices. If

1116 ALBERTA HANSARD November 17, 1975 there was intent to charge higher than the export price within the province, this bill would prevent that. The hon. Member for Calgary Glenmore asked about the natural gas exported into Saskatchewan. I would only say, that gas will be caught just like any other gas exported from our province. It will have to be sold at the Alberta border price. Therefore, they will be selling that gas in Saskatchewan — the border price works out to 85 cents — then it will be 85 cents, plus the transmission cost to whatever part of Saskatchewan it’s being used.

It will no longer go out at a very low price. I missed his other question. It had to do with B.C. I didn’t get it, and I'll talk to him about it later. The Member for Medicine Hat-Redcliff asked me whether producers with long-term contracts at low prices would be required to stick to their contracts and commitments because of this bill. This bill is not intended to be used as a lever in that regard. That would be a contract between two people. I expect the courts would cause a company to live up to its contract.

I only add this: because we've insisted that producers who will sell natural gas for domestic markets will get a part of the export differential, then they will have additional funds they would not otherwise have had, and will, in fact, have a deemed wellhead price of their existing wellhead price plus the flowback. If they had a 20 cent wellhead price in Alberta, selling to the city of Medicine Hat, they would also get, perhaps, another 20 to 25 cents. They would have an effective wellhead price of 40 to 45 cents an MCF. I'd have to look into the special circumstances with regard to the supply to Medicine Hat.

It's not our intent at this stage to use the bill in that way as a lever on companies. Mr. Speaker, the member from Fort Saskatchewan raised the question of Alberta reserves and whether our 30-year supply is factual and solid. I must say I am firmly convinced that is a safe 30-year supply. It has been reassessed and confirmed again in a recent report from the Energy Resources Conservation Board. He should be careful not to make the mistake of c o n f u s i n g Alberta reserves for the future with Canadian reserves for the future.

There should be no question in his mind that Alberta's reserves are protected on a 30- year supply, plus some additional amounts that are still available. He made the point that we should not be in a hurry to send reserves down the pipeline to eastern Canada. I would sure point out to him that the pressures have been the other way. It has certainly not been the policy of our government to be in a hurry to export additional gas out of Alberta. As a matter of fact, since we have come into office there have been no additional exports.

All the exports that are going out of the province, except for one very small amount, were approved prior to this government coming into administration. He have not been in a hurry. We have considerable pressures from other parts of Canada requesting that additional reserves leave the province, and we’ve been r e l u c t a n t to make that commitment until we're sure they are surplus. We are satisfied of that now. The other question has always been whether they would bring fair value. I think, as I pointed out, we are making a great deal of progress in that regard. So, Mr.

Speaker, I would only say again that this is an important bill. It is a bill that provides a significant increase in natural gas prices to users of Alberta natural gas outside of our p r o v i n c e . It does reflect a co-operative a t t i t u d e between Alberta and the federal g o v e r n m e n t . As was pointed cut, it runs until June 30, 1976. Then presumably two things would happen: either we will enter into a new agreement which will be based on an increased price for oil and, since natural gas is being priced in parity with oil, we should have a new natural gas pricing agreement.

If we do not, it would be possible we will have to establish another way to price Alberta natural gas. It's hoped we will have additional legislation to present to the House to take care of that circumstance. Mr. Speaker, I would urge all members to support this legislation. [Motion carried; Bill 52 read a second time] Bill 48 The Coal Conservation Amendment Act, 1975 MR. GETTY: Mr. Speaker, the members have heard enough from me today, perhaps, so I will try to keep my comments on this bill as brief as possible. Therefore, Mr.

Speaker, I'm pleased to move second reading of Bill No. 48, The Coal Conservation Amendment Act, 1975. The essential part of this bill, Mr. Speaker, is a recognition of the tremendous new awareness that our coal reserves will play in the future, and the increased interest that many people, many companies, are having in Alberta's coal reserves. I believe coal is really the energy source of the future, and we will have placed before us many unique and interesting ways in which that coal can be developed and used, both within our province and outside.

The principle in this bill is to s t r e n g t h e n provincial control of the development of our coal resources, through the Energy Resources Conservation Board, and through the industrial development permit principle which we have introduced in the matter of natural gas and oil within the province. We are now introducing that principle with regard to coal. I think it's timely that we do s t r e n g t h e n our control over the development of coal.

Members may have recently seen some publicity regarding the prospects for coal gasification in Alberta, a report which was put out by the Energy Resources C o n s e r v a t i o n Board in September. If they haven't seen that report, I think they should avail themselves of an opportunity to read it.

November 17, 1975 ALBERTA HANSARD 1117 It was kind of a surprise to me how quickly the technology has moved in the area of coal, in this case coal gasification. While I tended to think of coal g a s i f i c a t i o n as being some time in the future thinking of 10, 15 years — in fact, this report makes it clear that coal g a s i f i c a t i o n , as one use for our coal reserves, is here right now. I'm sure it will be a matter which we will be dealing with in the future as a government and as a Legislature. So, Mr. Speaker, I ask the members of the House to support Bill No. 48. MR. CLARK: Mr.

Speaker, in commenting on second reading of Bill No. 48, might I say that I think this legislation is basically appropriate at the time, at least the principle of the industrial development permits is. Really, it is a follow-up to what the government established, I believe about two years ago, when in fact the move was made by the then Minister of Industry in the direction of industrial development permits. So I have no qualms about that particular move. I do have three areas of concern I'd like the minister to comment on, in the course of concluding the debate.

I'd like to ask the minister, why have power plants been made exempt under

Section 21.1(2) (a)? The

section says: "for the operation of a power plant as defined in The Hydro and Electric Energy Act". I'd be interested in hearing the government's reasoning in that particular area. The second area of some concern deals with the question of: "The Board may hold. . . hearing[s] with respect to an application under this section". Now I think I can recognize why that doesn't say, the board shall hold hearings, because there can be, I suspect, minor amendments, minor changes to permits, and that doesn't concern me.

But I would feel much more comfortable about Subsection (4), when it talks about the board holding hearings, if it were to say, the board shall hold hearings unless otherwise directed by E x e c u t i v e Council, or something like that. Then, clearly, the decision not to hold the hearing would be the responsibility of the elected representatives, rather than the Energy Resources Conservation Board. As I say, I don't think I'm unduly concerned about minor adjustments or minor changes in permits.

But when it comes to a matter of a new industrial development permit, it just seems to me that it's good, common, ordinary sense that the board shall hold hearings under those particular circumstances. While we're talking about the hearings, I would like to point out to the minister that, during the spring session when h e a r i n g s were held in Red Deer about the petrochemical developments there, the g o v e r n m e n t viewed the hearings by the Energy Resources Conservation Board as, in fact, public hearings on that occasion.

I think many people — at least some people would have liked to have had those public h e a r i n g s held by the Environment Conservation Authority. I say this primarily for one reason: the hearings conducted by the Energy Resources Conservation Board don't lend themselves, because of the technicality and procedure used, to the kind of broad public input the ECA does. I want to be very clear I'm not being critical of the Energy Resources Conservation Board.

But, because of the technical approach that they must take, I think it's really almost impossible for individual citizens, whether or not they support what's going on, first of all to really understand what's going on, because of all the background papers which have been submitted to the board p r e v i o u s l y .

While I didn't attend those meetings in Red Deer, from talking to some people who supported the proposition in Red Deer, but who attended the hearings, this was their particular view also — that surely we'd have some better mechanism for the broad general question than the hearings which were held at Red Deer by the Energy Resources Conservation Board. One other concern I have deals really with the question really of the guidelines that the board is given, by means of legislation in coming to a decision. If I interpret

Section 27.1(5) properly, it says: The Board shall not grant a permit under this

section unless it is of the opinion it is in the public interest to do so having regard to, among other considerations,. . . the e f f i c i e n t use. . . and then (

b) says: "the present and future availability of coal". I would urge the government to include a third

section in there, which would deal with the question of the environment. I know that some members will say, under ( 5 ) that can be dealt with, the best public interest. But it does seem to me, if we're going to use the Energy Resources Conservation Board as the only mechanism for hearings here — and I get that rather uncomfortable feeling — then we had best be saying to them, in addition to efficiency and a v a i l a b i l i t y , you had better look at that p a r t i c u l a r aspect too.

In trying perhaps to anticipate the argument the minister might use, the minister may well come back and say, but industry pays for a portion of the cost of the operation of the board, and in fact the board is primarily concerned with conservation as it relates to the good usage of our resources and long-term a v a i l a b i l i t y -- and I would agree.

But if we're going to use the board in the manner that it was used at Red Deer and likely is going to be used in these industrial d e v e l o p m e n t permits, especially as they relate to coal, then I would urge the government to consider putting a third term of reference there, and spelling that term of reference out, centring around the environment. I'd just make one other comment there. I would genuinely hope, when we look at this legislation, this isn't an indication that the government is quietly going to move away from using the Environment

1118 ALBERTA HANSARD November 17, 1975 Conservation Authority as an excellent means for public input, and move more in the direction of the ERCB being used as the only agency which would, in fact, hold hearings on matters such as major coal developments.

The last comment I’d like to make doesn't really relate to the bill itself, but I'd like to ask the minister if he could give us some indication, when we're looking at a revision in the question of coal royalties — I know that's come up several times — could we have an updated report as to what the government's thinking is in that particular area, and perhaps some sort of a time frame? MR. STROMBERG: In relation to this bill, Mr.

Speaker, I'd like to mention to the minister that in his remarks regarding coal gasification, presently the Energy C o n s e r v a t i o n Board and the Alberta Research C o u n c i l are conducting tests on coal g a s i f i c a t i o n at the Manalta coal field at F o r e s t b u r g , in my constituency. They have worked reasonably successfully up to this point. A number of pipes have been injected into the coal seam, both water and air have been used to fracture the coal, and they have got circulation through. This coming spring they hope to set a controlled fire to bring out the methane gas.

What I would like to point out to the minister is that those experiments now are stopped due to funding. Something [ i n a u d i b l e ] as important as the promise and the prospect of using methane gas to fire the boilers at these terminal plants. I think this is the type of experiment that should go ahead almost full blast, because it could be the answer for the deep seams in the eastern slopes that they are unable to reach by strip mining. It certainly could be the answer for the Dodds-Round Hill proposed power project. MR. TAYLOR: Mr.

Speaker, coal has never really been appreciated enough as a source of energy. Alberta has vast supplies of oil, gas, hydro, and coal; and most c o u n t r i e s would be happy if they had one of those sources of energy. Possibly because we have so many sources of energy, coal has been relegated to a secondary position for many, many years. Coal was unable to compete with gas, oil, propane, or water power. The very nature of coal mining makes it more difficult to produce.

Until more modern methods are found — possibly burning the coal underground and harnessing the energy, if that is ever fully realized — coal will always be relegated to a secondary position, unless it is given a boost and some recognition that it is an important source of energy. We can't u n d e r e s t i m a t e the importance of it. If the Arabs have done anything, they have made us realize how important coal is. If we come to the place in our experience where we run out of gas and oil, coal will then, of course, come conspicuously forward as one of the alternatives.

So I want to commend the government for bringing in the bill, and for placing it in the same category as other sources of energy, putting it under the Energy Resources Conservation Board, and setting out the fact that coal is not going to be wasted any more. I was very happy to see that clause among the sections the board would have to consider: "the efficient use without waste of coal", because for many, many years in this province coal has been wasted in a very, very conspicuous way.

Thousands of tons, maybe millions, but certainly thousands and hundreds of t h o u s a n d s of tons of good coal have been burned in slag piles, doing absolutely no good, because there was a very small slice of bone on the side. I remember as a youngster being chased away from the bone piles many, many times. We went there to get our coal supply by cutting off the small slice of bone. For years, from Grade 2 to Grade 12, I don't think we ever bought a ton of coal in our home, nor did many mining homes in the Drumheller valley. You went to the bone pile.

Some of the companies even took the negative attitude that while they couldn't sell it, they'd much rather see it go up in smoke than have the people carry it away in their wagons. I hope that idea of waste is gone, because coal is being recognized today as too valuable a source of energy to be burned up uselessly in bone piles. So I'm happy to see that the board now is going to have some control over this, and it can look after "the efficient use without waste of coal". I'd also like to deal for a moment or so with the amendment to license or permit.

The act does say that the permit or licence must be in the public interest — and I like that clause. But it doesn't appear to say, as I read the bill, that any amendment must also be in the public interest. Now perhaps it goes without saying that the amendment would have to be in the public interest. But I'd feel a lot better if the act definitely said that any amendment that came to the original licence would also be in the public interest.

I like that public interest thing, because if we listen to the extreme c o n s e r v a t i o n i s t s , or the extreme e n v i r o n m e n t a l i s t s , we wouldn't mine one ton of coal in this province. It's just absolutely impossible to mine coal without some p o l l u t i o n . I agree with the attitude, at least as reported, of the Minister of Environment that these things have to be kept to tolerable minimum. We don't want to destroy any more property or pollute the air any more than necessary, but if we're going to mine coal, let's be realistic.

There's going to be some destruction of some parts of the environment. You just can't get away from it. Anybody who has ever lived in a mining camp will know that. I certainly don't want to condone u s e l e s s destruction or useless pollu