1988 Legislative Session: 2nd Session, 34th Parliament

HANSARD

The following electronic version is for informational purposes only.

The printed version remains the official version.

Official Report of

DEBATES OF THE LEGISLATIVE ASSEMBLY

(Hansard)

FRIDAY, APRIL 29, 1988

Morning Sitting

[ Page

4157 ]

CONTENTS

Routine Proceedings

Private Members' Statements

Integrated land use. Mr. Rabbitt –– 4157

Mr. Miller

Fee increases. Mrs. Boone –– 4158

Hon. Mr. Dueck

Waste levels in forestry. Mr. Miller –– 4160

Hon. Mr. Strachan

The aging population in B.C. Mrs. Gran –– 4162

Mrs. Boone

Mr. Clark

Committee of Supply: Ministry of Finance and Corporate Relations estimates.

(Hon. Mr. Couvelier)

On vote 37: minister's office –– 4164

Mr. Sihota

Mr. Miller

Mr. Davidson

The House met at 10:06 a.m.

Prayers.

HON. MR. SAVAGE :

It gives me a great deal of pleasure to rise in this assembly today to

welcome a group from the Chinese People's Institute of Foreign Affairs.

The leader of the delegation is Mr. Chai Zemin, accompanied by Mr. Song

Yiseng, Ms. Zhu Manli, Mr. Pi Gang and Ms. Cui Lixin. Would this

assembly please make them welcome.

MR. DE JONG : In

addition to my brother, Reverend John De Jong, pastor of the Christian

Reformed Church in Georgetown, Ontario, who read the prayers this

morning, being here this morning, I am also very happy that my father

could be here. He had the initiative and the courage back in 1947, at

the age of 43, to immigrate to this country with a family of ten. Last

year we had a family reunion, at which time the total number of our

family and his descendants were 99, now having reached 100. My father

will be celebrating his 84th birthday on Monday, and this is why he's

here today with my brother, also viewing what's happening in this House

of which I am part. So I am pleased to introduce my father and my

brother and would ask the House to welcome them.

MR. LOENEN :

In the precinct with us are some special visitors from eastern

Washington state. They come to us from Coulee City, and they attend the

Heartline High School. They are 13 grade 12 students under the

direction and care of Mr. Peterson, their teacher. Would the House

please welcome them.

Private Members' Statements

INTEGRATED LAND USE

MR. RABBITT : This morning it is a great pleasure for me to be able to address some concerns from the perspective of Yale-Lillooet.

The

major perspectives with integrated land use can be put into two

categories, and those two categories are basically urban and rural.

Urban land use is recognized by most people as being that which aims at

density, whether it be high or low; zoning, whether it be park,

recreational, commercial, industrial; and the uses of such. I guess it

becomes the difference between the rural and the urban perspective, and

those are some of the issues which I wish to address today.

Yale-Lillooet,

for example, is a rural riding and consists of many small communities.

The livelihood of most people in that constituency is ranching,

logging, mining or tourism. To look at the definition of "integrated,"

it can be used as a noun, a verb or an adjective; but the definition

that we're looking at is "a composition of many parts to make whole." I

explain to many people that when I'm speaking of integrated land use

I'm talking about multiple use of a land base within our province,

either by or for the benefit of all the people within the province.

Of course, there are many conflicts there or potentially there. In the ranching

community, there's a conflict about the use of water. If many of you have

been following the plight of the ranchers in my area, you'll see that we're

in for a drought this year that's recognized by the industry and by government,

and yet Mother Nature controls this, and there's very little we can do.

But we do have an industry that is competing with fisheries, for example, and

other users for that water.

also have the mining community. A recent example of the competition

that that industry is in is outside my riding in Strathcona Park. There

the mining industry is, again, competing with other users. In the

logging industry, we find that conflict sometimes develops with other

users, such as ranching, fish and game, the wildlife community. So we

have a potential all the time for conflict within the riding with the

different users.

I personally believe that British Columbia

should be available to all British Columbians and that we cannot afford

to let any particular segment control an area within the province

solely for one use. Comprehensive use has to be and should prevail. I

also believe that a great opportunity at this time exists in my riding

for integrated use of a major watershed: the Stein Valley. I would like

to just mention again the list of potential users within that area. We

have loggers, miners, ranchers, tourism, both federal and provincial

fisheries, fire protection and a native interest.

I believe

that the last is one of the most important. Right now the native

community in Lytton have one of the greatest opportunities of our time.

As we all know, opportunities are a window; they don't last forever;

they come and they go. That opportunity is here and now, and I think

there's the opportunity for government, industry and the native

community to develop a program and an integrated use that will be a

benefit to all three.

[10:15]

What

should some of the items of that agreement be? I have some personal

ideas and I'll share them with you. I believe that the road location

into the Stein should protect all major native sites. Road construction

should be to a high aesthetic and visual standard. I think there should

be a guarantee of a minimum number of jobs for the natives in the

sawmills where that timber is being manufactured. I believe that there

should be a guarantee for contractor opportunities for those natives. I

believe that we, as a provincial government, should assist with the

construction of an access bridge to the west side of the Fraser in the

community of Lytton.

Reforestation opportunities for the

natives at a contractor level in planting, thinning, spacing, brushing

and nursery should also be made available. Allocations of woodlot

licence or quota to the Lytton band should also be a consideration. An

option on buying into the Lytton lumber sawmill should be made

available.

These are my ideas, not those of my government

or of cabinet, and I wish at this time to commend the Minister of

Forests (Hon. Mr. Parker) for working with me, with the natives and

with industry to try to bring a solution within that riding.

see that my time is drawing short, but I wonder when I read an

article

by Jim Hume in one of the main daily papers and it says that it's only

fair to share the Stein. I wonder if, as a rural representative, I'm

correct when I read this, but I'm sure I am.

MR. MILLER :

I appreciate the sentiments expressed by the member on this issue of

land use, going back, I suppose, to pay tribute to a former New

Democratic administration that really for the first time started to

deal with the very difficult issues of integrated use in a modem and

progressive way, in

[ Page 4158 ]

setting

up the Environment and Land Use Committee, bringing those line

ministries together and starting to do some planning of land use.

also think that we can only make those kinds of decisions if there is

an atmosphere of trust, which is very difficult to achieve. I recall

when our government set up the agricultural land reserves. There was a

great deal of confrontation in the province about that, but essentially

the majority of the people in this province agreed that there needed to

be some protection for agricultural land. But since then we've seen a

whittling away of that protection. We see the appeal process and we see

decisions being made that are very doubtful in terms of appeals to

cabinet.

Let's turn to the Stein. Surely one of the most,

if not the most, significant issues facing British Columbia is the

question of aboriginal title and of reaching some type of accord with

the native people in this province. It's amazing that enlightenment

suddenly dawns on some people when an issue becomes very difficult to

deal with, and the realization comes to people that you can't simply go

in and do want you want. You have to deal with people.

The

member is now saying: "Well, we have to have native participation. We

have to have protection of these heritage sites. We have to have good

quality roads. We have to have a guarantee of jobs." If that government

had been even half as enlightened 20 years ago as that member seems to

be today, we probably wouldn't be in the position we're in today.

read the words of the Minister of Forests and Lands, who seems to be

slowly coming to the realization that there is indeed a difficult

problem in terms of integrated land use and access to resources, and

it's springing up all over this province: in northern British Columbia

and in the Stein. There are lots of examples. I'll quote the words of

the Minister of Forests, which are somewhat astounding — given the

man's age and experience in this province. In response to a reporter,

after a meeting on whether there would be logging on the Stein River,

he said: "Quite likely, but only with the participation of the Lytton

band and the Lillooet Tribal Council in the planning and implementation

process." He said it's never been done before: "...it's throughout the

province. People who have gone before us haven't seen fit to include

native British Columbians in a number of the economic considerations of

the province."

He continues; he says it was a shock for him

to discover that this hadn't been taking place in British Columbia.

"It's long overdue; if we don't have a dialogue, how will we ever

understand each other?" I commend the minister for coming to that

realization at his stage in life, but the government really has to go

one step further. I don't think you can simply — and I'll refer to it as somewhat paternalistic — say: "Now we have a problem; let's do all these nice things, and we can all get along together."

There

has to be a recognition and an understanding of the concept of

aboriginal title. I would suggest, if the government would

commit itself to dealing with that issue, that more progress can

be made. You'll find that in a number of rural areas in British

Columbia, people — not just native people — are quite concerned that

they see the resources being exploited and used, but they do not see

the benefits in their region. In the Queen Charlotte Islands, there's

been concern for years that there's a tremendous value and wealth in

terms of the timber resource; it all flows off the islands. The benefit

for the people there is very minimal. Certainly there are employment

benefits, but there are really none of the spinoff benefits. If you

could really compare the value of that wealth, there should be more

benefit flowing to the local people.

Similarly in the Nass

River, where we've seen this exploitation of the forest resource and,

quite frankly, an abuse of the forest resource, the people in the

region are being left with very little of the benefits.

MR. SPEAKER : I have to inform the member his time is up under the standing orders.

MR. RABBITT : I've got more good things here, hon. member.

I was referring, at the tail end of my earlier remarks, to comments made by a reporter in the Times-Colonist

on Saturday, April 23, 1988. He pointed out some of the things that

British Columbia has done. I'd like to point out to this House that we

have more than 15 million acres of park already set aside — park and wilderness — in

British Columbia. That's seven acres for every British Columbian. This

government, in the last year alone, created 17 new parks across this

province — this government, this minister.

Today we've

heard some opposing views as to the orderly and integrated development

of an area. We hear about problems that are not really there. This is a

land use base in the Stein Valley that I'm talking about. I believe

that we should be working with the natives, but this is not a native

problem. I believe they are part of our community. They are British

Columbians and Canadians. They are part of my riding, and I will

represent them as I will represent anybody else. I have made it very

clear to the native community that I believe the Stein Valley should be

logged, but that does not mean that it should not be logged in an

orderly fashion.

The member laughs, but maybe he should get

out in the bush and have a look at what loggers do, and then he will

have a better understanding. Sitting in an office on a committee is

only part of the answer. I hear the remnants of the Barrett barrel over

there: left wings and.... What were those other parts ?

I'm

here to represent and fight for the communities such as Gold Bridge,

Bralorne, Lytton, Spences Bridge, Boston Bar, Alpine Valley, Yale and

Hope. There are jobs and people there, and I'm going to do my best to

see that they get a fair shake and that their employment opportunities

aren't eroded by individuals coming from possibly your riding and

telling the people in my riding how they have to live.

British

Columbians have to share, and that is what we are talking about in this

watershed. There's room for everybody in there. There have been

thousands of acres in this province set aside for park, and some of the

areas have been in that particular watershed. Both the Stein and the

Cottonwood are vast areas and have commercial wood. They will not be

logged.

Mr. Speaker, it's been an honour to stand here and represent my riding today.

FEE INCREASES

MRS. BOONE :

I was so enchanted by the member's final comments that I almost missed

my opportunity to represent not just my riding, but all of the people

of British Columbia. It's nice to see that the member for Yale-Lillooet

(Mr. Rabbitt) finally does stand up and represent his riding.

[ Page

4159 ]

I've chosen this time to speak on a subject that is a concern to me, as

it's a subject that people are just beginning to become aware of, and that's

the impact that the fee and tax grab are going to be having on the average British

Columbian. On May 1 — I guess we can call it May Day — there are going to be

substantially more increases coming down on the people.

The

budget of this government, the one that took place in March, reduced

personal income tax by $100, it said. A reduction in personal income

tax of $100, yet at the same time we have seen massive increases in the

amounts that everyone is paying for services regardless of their income.

Does

it not seem strange to you that this government reduces income tax, a

tax that is based on the amount one earns, a progressive tax that

acknowledges that not everybody in this province has the same ability

to pay as everyone else, that there's a discrepancy in wages, and

replaces that with a fee and a tax that does not acknowledge the

discrepancy and basically says that everybody has the same ability to

pay everything?

Some increases have already come into effect and are well known by everyone.

The gasoline tax is one that I find hard to understand and hard to take, especially

in a riding that depends on automobiles for our transportation as much as we

do. The alcohol tax, the tobacco tax: I don't really have a great deal of

problem with those areas. Then we get into mental health fees, alcohol and drug

fees, long-term care fees, and we've dealt with these extensively in this

Legislature in the past couple of weeks, both from the member for New Westminster

(Ms. A. Hagen) and from other members in our caucus.

The

government is quick to say that those increases are negatable because

they have increased the availability of GAIN. However, I don't believe

that negates the fact that there is going to be severe hardship on

seniors, and that seniors are once again being hit with higher fees.

There

are many increases by this government that have taken place in the last

little while that nobody hears about, that nobody knows about, and that

are taking people by surprise when they just go about their daily

lives. In some cases they don't even know that they are being dinged a

little bit more than they were in the past, because they are not aware

of what the fees were in the past and they're not aware that in some

cases there weren't any fees.

One that has received

virtually no media coverage, probably because this is a rural issue and

one that does not affect the masses in the lower mainland, is the

introduction of a brand-new fee related to sewage disposal. When I talk

about sewage disposal many people sort of grin and say that this is a

dirty affair, and it certainly is a dirty affair when you consider the

costs that are coming up. It will now cost individuals in the rural

areas an initial $200 for a permit to install a sewage disposal system.

As there was no fee there previously, that is a 200 percent increase,

done without warning, without consultation. On top of that, if more

than one inspection is required, then the applicant will have to pay

another $100 per inspection. If repairs or alterations are needed in

the future, applicants will be charged another $100.

[10:30]

All of these hundreds of dollars — not little minor charges, not a $5 fee or

a $10 fee but $100 fees that are being implemented without any warning and without

any consultation — are outrageously high, especially given the fact that there

were no charges before. Just how happy are those rural homeowners going to be

when they realize they've saved $100 in personal income tax but they are

being dinged some $200 or $300 in taxes to install a sewage disposal system?

They're being hit so hard at this level here. Again, that is something that

does not hit at a lot of people and probably won't get a lot of media coverage

because people in the masses in the urban areas here aren't aware of this,

and they don't care about this thing because they have sewage disposal right

at their doorstep. This is a very difficult one to justify given that there

no fees there at all.

That

is just one of the ways that people have been stiffed. And they have

been stiffed. British Columbians will find costs to do just about

everything increasing. Certificates of births, deaths and marriages

have gone up 50 percent, from $10 to $15; photocopies of each of those

have gone up to $15. Search of records, $10 to $15; special

verification, $10 to $15; changes of registration, $10 to $15. These

increases may not seem much, and you can talk about two-bitting each

other to death, but they are being five-dollared to death by this

government.

It may not seem a lot to you or to me or to

many of the working people, but there are many of the working poor out

there that are going to find the cumulative effect of all these fees a

disaster to their budgets and very difficult to deal with.

The

change that I find really hard to understand is a change in the

Marriage Act. This is interesting: marriage licences have gone up from

$20 to $35. However, if you are one who chooses not to have your

marriage take place in a church, if you choose to have a civil

ceremony, then you're going to have to pay a heck of a lot more than

that because it's gone up from $25 to $50. So it's a substantial

increase. I don't know; maybe this is a reflection of the Premier's

idea that if you choose not to go into a church, if you choose not to

do those things, if you have a different attitude than he has, then by

gosh you're going to have to pay for it.

Also on April 1, by order-in-council....

MR. SPEAKER : i regret to inform the member her time under the standing orders is up.

HON. MR. DUECK :

To begin with, I would like to say that we certainly recognize that all

people have not got the same ability to pay. We recognize that in many

ways where we have provisions made to in fact offset the amount paid. I

reject the words used, people being "dinged" or "stiffed." I think it's

unfortunate that members opposite would have to use words like that. It

doesn't reflect the good of parliament when we use words like that to

refer to people and what is being done in government.

The

NDP government for a long time now.... It's a socialist theory that

they know how to spend. We know that, from their point of view, they've

always been good at spending money. They've never been good at finding

revenues. We know very well that governments have no money. I know it's

a clich and it's been used in many ways at different times, but I

would say very definitely that money does not grow on trees; there is

not a back yard where you can rake money as leaves fall in the fall

from a tree. Money comes from the people of the province; money comes

from you as well as from me. It comes from every one of us, and

whenever we pay out money on any services whatsoever, it must be

collected from the people. This is something the socialists have never

realized: that you collect money before you spend it. You cannot give

more services from the cradle to the grave and never mind where the

money comes from.

[ Page 4160 ]

But

we must recognize that there are certain people in society who cannot

pay. I think that is very true and we recognize that. Do you know, in

the increased MSP payments, we always stress.... You've stressed it how

many times in the House? Do you realize that 60,000 more British

Columbians will now be subsidized under the new scheme? You say we're

dinging and we're stiffing. We're recognizing that there are people who

can't afford to pay, and they will get the subsidy. Also, those 60,000

more people on subsidy also do not pay the $5 supplementary benefit.

when you're saying that this government is only hitting those who can't

afford it, the poor and the unfortunate, that's not true. We've

increased the level of taxable earnings to get the extra subsidy from

$3,500 to $6,500. That, of course, is the 60,000. How can you possibly

say that this government is only charging more? It's also recognizing

the ones who can't pay.

There are 600,000 people in British

Columbia who now get subsidized MSP. Sixty-five percent of all premiums

are paid by employers. At any given time, 2,500 people in the province

get temporary subsidy, meaning that if they didn't qualify for subsidy

but in a given month have a hard time paying the MSP payment, they can

apply. There were 2,500 during the year who got temporary subsidy. This

government recognizes those people who can't pay. That's why we have

that program. There are 110,000 who pay nothing at all because they're

under the social service assistance program.

So when you

say that this government stiffs and dings, it's absolutely not true.

This government also has the responsibility to preserve the system we

have. I do not believe that my responsibility — I'm talking about health care now — is

to look after the people only today. It's also to preserve this system

we have in British Columbia for my children and my grandchildren. I'm

glad to know that you are a grandmother and also have to look after

that individual. I think that is my responsibility. Being on the

opposite side and just criticizing is easy. You can criticize and find

fault with anything and everything we do, because you don't have to

stand up and be responsible. But my responsibility is to preserve this

system, not only for me but for my children and grandchildren.

MRS. BOONE :

Had the minister been listening to the second member for Vancouver East

(Mr. Clark), he certainly would have heard about responsibility with

regard to budgets. At the same time you were increasing all these taxes

and fees, this government went and reduced the corporate income tax and

has done so consistently for years, to the extent that we now have the

lowest corporate income tax in Canada — but our people are suffering.

What

the minister does not understand is that it is fine. The low-income

people and those being subsidized are certainly requiring those things

and are being assisted, but there is a tremendous amount.... I have

not, in the whole year that I have been here, been able to make you

understand that there are working poor out there who do not qualify for

anything. If you are making $6,501, you do not qualify for that subsidy

and you are finding those things difficult. Those are the people who

find it difficult to find that extra $5 or $ 10. Those are the people

who are having problems.

I was going to mention this, and I

hadn't even mentioned Medical Services premiums. The minister must have

had a guilty conscience, knowing that they are being increased on May

1, and substantially so. It is also interesting to note that there has

been absolutely no message put out there to the people indicating that

they now have the ability to apply for subsidy. How are the people

going to know this? There have been no ads out there. We have seen $20

million ads on TV telling people about the family, but we've seen none

telling people that they can now apply for subsidy at $6,500. There

have been no ads out there. We are telling you that there are other

ways of doing things. There are more progressive ways of dealing with

people on an income tax basis that address the differences and

discrepancies in wages, which shows that not everybody has the same

ability to pay. We are saying that the corporations should be paying

their fair share, and fairness is something this government does not

understand, has never been able to understand and will never

understand. Fairness is what we're calling for in this province.

I believe the member wanted a minute on this. We'll let him get on to this.

AN HON. MEMBER : No.

MRS. BOONE : No? Okay, he can't have that.

The

government is slowly eroding the purchasing power of all the citizens

in this province, which is coming around and taking away the ability of

individuals to go out and spend money on those private entrepreneurs of

which you are so supportive. We — the people — are not able to stand up to the economy. How do you expect this economy to survive? How do you expect our economy to flourish...

HON. MR. DUECK : It's flourishing.

MRS. BOONE : ...when you are coming in and putting more of these burdens on people?

WASTE LEVELS IN FORESTRY

MR. MILLER :

Indeed, it's a hard act to follow. My colleague for Prince George is

very eloquent when she defends the people of this province against that

government.

I want to talk today about the problem that has

been around for some time but is emerging more and more in the public

eye as a very serious question in terms of forest management. That's

the whole issue of utilization levels, or waste levels, if you like — the

amount of timber that we're taking out of the bush, what we're leaving

in the bush and what we're doing with it after we get it out.

The

recent report by T.M. Thomson on block 6 of TFL 3 9 in the Queen

Charlotte Islands has really highlighted the issue. It can, in a sense,

be used as a microcosmic look at the issue not just on the Queen

Charlotte Islands but throughout British Columbia. We're familiar with

the work done by foresters in the Nass Valley and the report of the

ombudsman in terms of the incredible waste levels in the Nass Valley — a very rich area.

go back to the comments of the member for Yale-Lillooet in terms of the

native Indians of this province who have been in that area for

centuries, and who have seen the incredible amount of waste in their

forests — with no benefit. They wonder about the future of their

province and their people in terms of their ability to make a living in

their homeland. On the coast particularly — and this has been documented by Pearse's group at UBC — this is a growing concern, and some people feet that we are simply cutting too much wood.

[10:45]

[ Page 4161 ]

There

is some good evidence to support that, and it really ties into the

question of sustainability. Is there enough wood? Are we cutting too

fast? Will there be a massive fall-down in a given period of time where

we will see employment levels and activities decrease in the forest

industry? If you look at the method with which we are harvesting, there

is evidence to support that. The five-year report from the Ministry of

Forests — the forests and range resource report from 1987 to 1992 — talks about the target of the ministry in terms of the annual allowable cut in this province.

will quote the report. A major goal is to maintain an average

provincial timber harvest of 75 million cubic metres per year. That's a

major goal of the Ministry of Forests, arrived at through some kind of

analysis — hopefully the correct analysis in terms of what we can

sustain. Yet if we look at the figures in terms of what is being

harvested, we see that there was an alarming, astounding 91 million

cubic metres cut in 1987. Despite the fact that the target of the

ministry is 75 million, we're up to 91 million.

If you go

back over ten years, we've pretty well been at 75 million. We dipped

down quite a bit during the very bad years –– 1981 and 1982 — but

overall for that ten-year period, we have maintained a 75 million

average. Now we're up to 91 million. Even more alarming, because the

issue of sustainability is more significant on the coast, is the

increase in the annual cut on the coast, 1986 over 1987, which was 27

percent. We moved from a cut of 26.5 million cubic metres in 1986 to

almost 34 million cubic metres in 1987. So people are understandably

alarmed.

When we tie that in with the results of the

Thomson report, I think there's ample evidence to indicate that we have

to take a much more serious look, not just a cursory look — and I believe Thomson's report is somewhat cursory in terms of examining the issue — a much more in-depth look at the whole question. I've recommended that there be an independent assessment — and I'm not calling it a royal commission — of the whole question of sustained yield and utilization on the coastal cuts.

Turning

to some of the recommendations, I'm quite disappointed in the

minister's response to the Thomson report. I should also say I'm

disappointed in T.M. Thomson, in that they did not go to the very

people who raised this issue publicly — against incredible odds, I might add — and

said: "We have a serious problem on the Queen Charlotte Islands." They

had to fight the Forest Service, the companies and everybody else.

Nobody believed them. But they did raise it: the Council of the Haida

Nation; people concerned with proper resource management; the village

of Port Clements, who are concerned about their community; and others

on the Queen Charlotte Islands who are close to logging, who understand

logging — and they see what's going on.

So the report comes out with some very, very powerful statements in terms of our management — or if you like, mismanagement — of

the forest resource. Residue volumes on that cut block on the Queen

Charlotte Islands were double acceptable levels, and that's brushed

aside by the term "sympathetic administration": "Well, we went through

some tough times, you know, and...." We did indeed go through some

tough times, and I don't categorically reject, as a question of social

policy, the government making decisions to maintain employment levels.

That's a legitimate goal of the government and one that's perhaps not

practised enough. Nonetheless, we put in this sympathetic

administration to deal with that problem, and we left it in. Even

today, according to the Thomson report, there is some measure of

sympathetic administration being practised by the Forests ministry in

this province. That, quite frankly, is shocking, because if you look at

the quantum leap in the output of the forest industry and the

profitability — and I'm not against companies making profits: I think

that's good, as long as they put those profits back into the operations

and we have jobs for the future....

MR. SPEAKER : I regret to inform the member that his time is up under standing orders.

HON. MR. STRACHAN :

I'd like to respond to the member's statement, Mr. Speaker, and point

out to the assembly that this is a concern of the government. It was a

concern of the Minister of Forests (Hon. Mr. Parker), and that is the

reason for the actions that have been taken.

To give the

House some background, an independent audit of forest management

practices was undertaken on block 6 of tree-farm licence No. 39 held by

Mac-Blo on the Queen Charlotte Islands. It was ordered by the Minister

of Forests and Lands on February 16 this year, and it was in response

to a number of allegations, which the member has indicated, of poor

forest management practices on block 6. The audit report was tabled

April 14. The audit found that the amount of avoidable wood residue

remaining on the ground after logging exceeded acceptable standards.

Based on the findings of a recent independent audit of utilization

practices on block 6 of tree-farm licence No. 39, the Minister of

Forests and Lands has taken the following decisive and immediate

actions, and I'll list them. They are questions that the member has

raised both in the House and, I will advise the Legislative Assembly,

in previous comments to his Prince Rupert newspaper, speaking as

Forests critic of the New Democratic Party.

The response of the ministry is as follows:

The Ministry of Forests and Lands will review all wood residue from

timber-harvesting operations on the coast during 1987, and will adjust

stumpage changes as necessary. The methodology for doing this is

currently being developed.

2. The Ministry of Forests will

develop an effective system for measuring and reporting wood residue on

the coast, and that system will be used by the ministry and the forest

industry.

3. Training of Forests and Lands staff in the

practice of residue surveying and monitoring and auditing of industry

performance will be improved.

4. A public discussion paper

on wood utilization standards is being prepared. Based on feedback from

that paper, new utilization standards will be developed and applied.

It is expected that these prompt and effective actions will significantly reduce waste volumes.

a more general note, the ministry points out that they would like to

make two points with respect to the recent audit of management

practices on block 6 of tree-farm licence No. 39 and, more

specifically, on the subject of wood utilization, the audit report

points out that the definition of residue changes as the economic

situation changes, and they're aware of that. The member has admitted

earlier that to some degree, I guess, he accepts the principle of

sympathetic administration. Although he wasn't in government when the

policy was adopted, I'm sure he was aware of it, as it was known

throughout the industry that it was Tom Waterland as minister who put

that program in place, recognizing that we were in difficult economic

times.

[ Page 4162 ]

MR. MILLER : Not any more.

HON. MR. STRACHAN :

No, not any more, and that's why the changes have been announced. There

were difficult economic changes, particularly on the Queen Charlotte

Islands and other isolated coastal areas. The old-growth timber stands

in those areas had a greater percentage of low value rotten logs, which

normally make up a majority of the residue. The cost of transporting

these logs to processing facilities was high, since all logs must be

barged. The high cost rendered much of the low-value logs uneconomic to

move.

Although markets are good now, we all know they tend

to be cyclical, and as markets drop; poor-quality logs that are

economically marginal in times of good markets become uneconomic. It is

not possible to avoid the presence of poor quality logs when harvesting

old-growth stands; however, where avoidable waste is left on the

ground, it will be measured and charged for accordingly.

The

second point worthy of note is that the findings of this audit should

not be extrapolated to other regions of the province. In the interior

of the province and, as evidenced by this audit, in other coastal areas

where stand quality is higher and transportation costs are lower, wood

utilization is normally not expected to be a significant problem.

The

member spoke quite eloquently and with some knowledge at a University

of Victoria symposium a couple of months ago. I attended, and it was

attended by the Minister of Forests and other interested people. He

spoke of the economic reality that we all face and are all aware of;

I've used that term myself. I think that's something that we have to be

concerned with at all times. There is an economic reality in British

Columbia and in the western world. We have to look at markets; we have

to assess those markets; we have to understand the best practices for

land use — all land use, whether it be forest practices, mining practices or environmental concerns.

There

is an economic reality that we have to face, and I don't think there is

any question that during the tough times of the early 1980s we had to

face sympathetic administration.... I see the red light is on, so I

thank you for your attention.

MR. MILLER : Mr. Speaker, there is an economic reality, and

that is that times are very good for the forest industry. I've said

that I don't think that's bad. I think that's good, that's fine. I like

to see them healthy; I like to see people employed. What I don't like

to see in 1988 is sympathetic administration still being practised. It

is being practised; Thomson's report makes it quite clear. Let me read

a

section of Thomson's report. The directive from the Ministry of

Forests, dated February 4, 1987, to...indefinitely, so it can go on

forever: "Cedar and cypress Y logs may be left at the roadside. All Y

logs may be left in the settings or at roadside...." If that isn't

sympathetic administration, I don't know what is.

The argument about decadence.... I have a

simple view of it: I think waste means inefficiency. The glossing over

of the coastal situation.... I've heard it so often it's starting to

make me sick: "Oh, it's an old-growth forest. It's decadent. The

timber's rotten." We're not talking about rotten timber when we talk

about waste levels; we're talking about avoidable waste. This is timber

that could be utilized in some form left in the bush. That is waste,

and it's inefficient.

I'm also convinced — and I think others could bear this out — that

if you go to any pulp mill in this province that makes its own chips,

you'll find logs going into chippers that could be utilized to make

wood. That is waste, and that's inefficient.

Now we're

pushing against the limits of the first-growth or the old-growth forest

on the coast. There will be a fall down. There's an argument about when

that will occur, but there clearly will be. And if we continue with

this massive acceleration of the cut, the very real question — it has to be answered — is

what the impact of that fall down will be, and when it will occur. It

seems to me, in terms of proper resource management, that if we put in

place proper utilization levels, if we take usable fibre out of the

woods and utilize it properly in the mills, we'll be doing ourselves a

favour. It seems to me we'll slow down the rate of cut in terms of

depletion of that old growth forest, and we'll get much higher value

out of the fibre that we do take out. That seems to me common sense.

And I don't think it's restricted to isolated areas, whether the Queen

Charlotte Islands or the Nass River. I think it's a problem throughout

the province, and it needs to be looked at.

Turning to some

of the other topics, years ago Pearse talked in his report about the

need to have a uniform system to measure waste.

MR. SPEAKER : I regret to inform the member that his time is up under standing orders.

THE AGING POPULATION IN B.C.

MRS. GRAN : This morning I would like to talk in a very positive way about a subject that I think most of us — I won't say all of us — can

deal with: the aging population. I want to talk about it in a

reflective way so that we, as decision-makers for the people we serve,

can think a little bit about what we should be doing — and what we are doing — to serve the aging population of our province.

People aged 65 and over constitute over 12 percent of the population of British Columbia. In the next 20 years — which is when I will become a senior citizen — the

senior citizen population in British Columbia will rise to 550,000, and

that is going to require both government and opposition to think about

how we deal with the needs and wants of those people. They will be

large in numbers, wise, and they will all vote; so it will be very

important for each one of us to be sensitive to their needs. I think it

would be wise for all of us — government included — to deal with this

situation in a planned way rather than waiting for the demands to

occur, and then having to give things to one group of people which

takes away from another.

[11:00]

I think it's fair to say that British Columbia is the most popular

retirement spot in Canada, and that doubles the influx of seniors into

this province. Victoria in particular is the favourite retirement spot.

Knowing that we're going to face a very large constituency of senior

citizens, it's incumbent upon us to think about how they will want to

live, what lifestyles they will want to have, and what we can afford to

provide for them.

The effects on the province? I think

the first effect that we know will happen will be to the Health

ministry budget. Senior citizens currently account for 47.7 percent of

the total health care budget. In 20 years, if we continue with the same

[ Page 4163 ]

attitude and kinds of programs, I can't imagine how we'll deal with that financially.

Housing

for seniors is another item that's going to require some ingenuity.

Senior citizens currently have few choices on where to live. In many

communities they are put into retirement areas, and psychologists are

speculating that it isn't particularly good for seniors to live with

only seniors. Seniors, just like anyone else, have an intellect that

has to be stimulated. They can't be put into a situation where they

only socialize with one another. It's important for the children of our

province to be exposed to the knowledge and the wisdom of senior

citizens. I, for one, am not convinced that retirement villages are the

only answer to housing senior citizens. I think they should be

integrated, just as I feel subsidized housing should be integrated into

neighbourhoods. It's important for us to learn to live together in our

communities and not be isolated in sections. That's something for all

of us to think about in the communities that we serve.

The

other item that the senior citizen population brings to mind is

marketing trends. When you have a large population of senior citizens,

you'll find that marketing trends will change dramatically. I think

it's an opportunity for wise entrepreneurs to really do a service. The

only way we will find that happening is if government leads the way. I

hope our government will recognize that in the next 20 years marketing

trends will have to change, and direction must come from government.

People

become senior citizens at age 65. I don't know how or why we arrived at

that number. Many people well into their seventies and eighties

contribute to our community, and I have a little difficulty

understanding why age 65 is when you are no longer required to

contribute to this community. I think that's another item that we're

going to have to address. Senior citizens have spent many years

learning lessons that many of us have still to learn. They have had

years and years of education, both in school and in life, and it makes

me wonder why we don't use all of that knowledge, instead of retiring

people and asking them to just play golf, bingo, bridge or whatever for

the rest of their years.

I think that we'll find, in order

to provide services for all of our citizens, that the assistance from

senior citizens is going to be something that we'll have to look at. I

suspect that in the near future we will not be retiring people at age

65, particularly when they're the majority in our population. Many

people feel that a large population of senior citizens will be a

financial drain, but I think not.

MR. SPEAKER : I regret to inform. the member her time is up under the standing orders.

MRS. BOONE :

I'm happy to respond to the member for Langley. This is an area, as you

say, that we all must address and we all must be very concerned about.

I don't think any of us would disagree with many of the things you've

said. We are an aging population; as everyone knows, I aged more

rapidly this week than others — or more often, I think. It's an area

that I've been trying to come to grips with, and I think there are some

things that we can be doing as a government and that we can be making

moves in to prepare us for that.

I have some concerns about

some of the things that haven't happened, and that has to do with

something that I really strongly believe in: home care and home support

services, an alternative to acute care and to putting people into

hospitals, which is very costly and not necessarily a nice way to go

about things. The home care program is very successful. The homemaker

service is very successful and very popular as well. Yet between 1982

and 1987 there's been a 5 percent drop in that budget, and there's no

increase in this year's budget for homemakers or home care services.

we as a population are going to be addressing the needs of our seniors,

that is one area that I would really like to see us increase and

support very strongly, so that seniors can stay at home, live in their

home, be provided those services and be in their communities with all

the supports that they want. As I stated earlier, I'm disturbed that

that hasn't increased and that we haven't given the support that I

believe should be coming to the homemaker service.

The area that you talk about — having seniors integrated in society — is

one area that can help and can really cooperate with keeping people in

their homes. I certainly would do everything I could to encourage any

government, whether it's this administration or our next

administration, to fully develop that service. The aging population is

definitely a problem that we've got to deal with. It is something that

we have to come to grips with and deal with in a humane and sensible

way.

I really appreciate the member taking this opportunity to make her concerns known and to express her concerns to this House.

MR. CLARK :

I'll use the last two minutes to comment on the member's statements,

because I see the aging population and retirement communities as a

tremendous opportunity in British Columbia — particularly a tremendous

economic opportunity. When you look at it on a straight economic

balance sheet, even looking at the consumption of health resources that

seniors consume, they're net benefits.

If the government

was serious about economic development in British Columbia, there are

certain regions like Victoria and Penticton and others that could do

tremendously well by attracting more seniors to British Columbia. If

you look at Palm Springs or Florida, the number one growth industry

there is in the whole area of services to seniors. It could have a

tremendous economic impact in British Columbia communities that have

this natural advantage. People from the prairies retire in British

Columbia already. Some communities, like Nanaimo and others, are

promoting in their own small way seniors to come to their communities.

If we had a concerted effort on the part of the government to attract

retiring seniors, it would have a tremendous economic impact in British

Columbia.

In fact, if you took at the economics of it, it would even pay the government to pay for their moving costs to come here — because

we get those transfer payments from the federal government, and we get

the accumulated savings of those people. They don't take jobs away from

our people here in British Columbia; they spend their money here, and

they buy a home here. There are tremendous economic spinoffs with

respect to bringing more seniors to British Columbia.

While

there are downsides, in terms of the costs of health care and some of

the problems that the government has, I think, foisted on seniors in

terms of onerous user fees, nevertheless on balance it would be looked

at as an opportunity rather than a problem. It should be looked at as

something to be promoted, rather than something to be worried about. If

we looked at it that way in certain communities — like Victoria and Penticton and others — we would have tremendous economic benefits. If you look at towns like

[ Page 4164 ]

Kamloops

and others with over 20 percent unemployment, that's a new source and a

new industry that we could develop very easily, using our natural

amenities in British Columbia.

MRS. GRAN : Mr.

Speaker, I'd like to thank the two opposition members for their

comments. As I was saying, we have a habit of thinking that seniors are

a financial drain, and as the previous member pointed out so well, that

doesn't necessarily have to be true.

Preventive health care, which our Health minister has done a great deal of studying on, certainly is a big part of it — preventive

health care for all of us, but particularly for senior citizens. The

only way we are going to accomplish what needs to be accomplished for

the aging population that we're anticipating is to work together — government,

the business community and the academics. The universities have a great

deal to offer in terms of how we deal with the aging population.

Currently, in speaking with some of the professors from UVic, they are

doing a lot of work in that regard. Because Victoria is such a popular

spot for retirement, that university will, I'm sure, be the leading

edge for the aging population in British Columbia.

We must look at the future population of seniors — not just in our own province, but globally — and make wise decisions for them and for ourselves. I feel very strongly that working together with all of our groups — the opposition, government and all of our outside groups — will provide a future for our senior citizens that we can all be proud of.

HON. MR. STRACHAN :

Good comment this morning. Charles Boyer, when he turned 80, was asked

how it felt to turn 80. He said: "It's fine, especially when you

consider the alternative."

I call Committee of Supply, Mr. Chairman.

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

ESTIMATES: MINISTRY OF

FINANCE AND CORPORATE RELATIONS

(continued)

On vote 37: minister's office, $293,411.

MR., SIHOTA :

Mr. Speaker, I'm going to continue with my discussion with the minister

on the matter of the stock exchange. I want to deal with some specific

failings. I want to emphasize that the reason I'm going through this is

to demonstrate the way in which the regulatory system is failing.

Yesterday

I gave the example of Technigen, and maybe the minister didn't quite

understand what I was getting at, but it's not sufficient to act on a

stock when it's gone from pennies to $15 and down to $1, and then to

take some type of regulatory action. You have to take it while the

stock is working its way up so that you can capture these people who

are making the profit and break the pattern of promotion that goes on

to the exchange.

As I move towards the end of my comments

this morning, I'm going to be talking a bit about the kinds of things

the regulators can do that they don't do now — in other words, alternatives and solutions —

so that this minister, who to date doesn't recognize that there's a

problem, even if he doesn't want to recognize it publicly, can listen

to some of the things that can be done on the other side of the ledger

and consider acknowledging them, because I want to assure him that

there's a problem.

[11:15]

I want

to start off by talking about insider reports. I think the minister can

appreciate the importance of insider reports. Of course, the investor

must know what the insiders are doing. There must be full, plain and

true disclosure — to use the old line — of the interests of those on

the inside, so that the investor is not seduced into getting involved

in the stock to his or her detriment. The thesis I'm trying to build,

that I was trying to build yesterday, is that inevitably what happens

on the stock market in Vancouver is that the dollars go to the

insiders, to the promoters, and very little money goes to either the

product or the investor. I would still ask the minister to produce one

piece of evidence that contradicts that statistically, because the only

piece of evidence I'm aware of that the minister has in his possession

is the Brown-Jefferson report, and it totally reinforces what I've been

saying so far.

I want to deal quickly with one stock in

particular which I think emphasizes the point, and it is an interesting

stock when you consider who is involved in it. The stock I want to

start talking about with respect to insider reports is called Lionheart

Resources.

Lionheart is one that I brought to the attention

of the minister last year. It is also one on which there has been some

action by the ministry. However, no action has been taken by the

ministry to date on the matter of the insider reports. In fact, I

mentioned this to Mr. Hyman when he was leaving, so unless there was

some action taken overnight....

This serves as an example

of what happens. If I were to stand up here and make general comments

about the failing of the market, that would be one thing, but I have to

provide specific examples to reinforce my case. I don't want the

minister to get off on a tangent and say that this is isolated, because

we'll just get into the type of debate we got into yesterday.

On October 22, 1986 — a date known to all of us in this Legislature, the date of the last election — a

letter was written to Mr. Harold Charles Moll. Mr. Moll is well known

to those in the industry; Lionheart is a stock well known to all those

in the industry. Therefore, when the individual is known for

questionable actions and when the stock has been demonstrated to have

been involved in questionable actions by an investigation by the SOB's

office, you would think that they would monitor its affairs.

October 22, 1986, a letter was written to Mr. Moll, which says in part:

"Future breaches of

section 108 may result in a cease-trading order

being issued against you, as well as prosecutional action in Provincial

Court."

Section 108 requires the insider of a corporation to file

within ten days of the end of the month all the transactions that he

engages in with the securities of a particular corporation.

That

was on October 22, 1986, and to put it in simple language for the

minister, that letter was effectively saying: "Look, you'd better

comply with the insider report provisions, because if you do not, you

are going to find yourself in court." I have tracked the filing of the

insider reports on that case, and in the last 15 to 16 months since

October 22, 1986, the reports have been continually late — in some instances, up to two or three months late — with an explanatory note explaining that the individual was out of town. I could produce — if the minister is interested — all sorts of press releases which demonstrate the person was around and active.

[ Page 4165 ]

The

first point is that this is an example of where the regulatory system

fails. An investor is not privy to timely insider reports. If an

investor doesn't know what insiders are doing with respect to, for

example, dumping their shares in a particular corporation, the investor

is open to being ripped off — which inevitably happens. Lionheart's

record in that regard is well documented, and I'm sure the minister has

access to that record.

It's also my assertion that those

insider reports that were filed were false, but I'll get to that next.

Given that this is a stock that the minister is well aware of, because

there have been actions taken on Lionheart, and given the fact that you

are well aware of the role of Mr. Moll, because he's had considerable

notoriety in the past, could the minister explain why the

superintendent of broker's office, in this example and several others — we can go through them all if you want to, Mr. Minister — is

not enforcing its own regulations? It writes a letter to the person on

October 22, 1986, and tells him to begin to file these things on time.

Since then, 15 of the 16 that he's filed have been late. Could the

minister explain why his officials aren't taking appropriate regulatory

actions?

HON. MR. COUVELIER : The hon. member opened

his monologue by making an assumption that every time a stock rises on

the stock market, we should be reacting and somehow capping the rise.

With the typical socialist mentality, he seems to think that government

intervention should be used to prevent the natural rise and fall and

ebb and flow of stock market transactions. I find this suggestion

absurd. It would fly in the very face of the stock market's purpose and

function.

The purpose of a stock market is to record the

daily merits and otherwise of people making investment decisions. To

suggest that all of a sudden, if a stock should rise, government should

somehow interfere because it automatically means there must be some

false misdeeds and some skullduggery resulting in this rise in price,

the suggestion is ridiculous, and yet the hon. member opens his

monologue with this assertion.

He's making the implication

that government's failure to monitor daily rises and falls in stock

market valuations is ergo ipso facto proof that we are somehow

compliant and not concerned about the practices that occur on the

market, and the best illustration of devious practices is that the

stock would rise. My goodness! I'm astounded that someone who claims to

be monitoring so effectively the operation of this very important

mechanism in our financial community should start off his diatribe by

suggesting that government should interfere merely because a stock

rises in price. It's typical of the kind of comment we've received from

the opposition when discussing the operation of the Vancouver Stock

Exchange — muddled, misleading, confused and bound up in ideological

hang-ups which don't do any justice to the merit of the subject we're

discussing.

That's the very basis on which the market

works. If the market didn't rise and fall, no one would be interested

in playing the game. It's the very essence of the operation of the

business.

After he got through that surprising statement, then he asked a specific question to do with the effectiveness — or otherwise — of

the Securities Commission in terms of insider trading. Insider trading

is, first of all, the responsibility of the VSE, and they have in place

a very effective system to deal with it. As I mentioned to the hon.

member yesterday, it does require due process to be followed whenever

action is to be taken. Unlike a member from the opposition who has

absolutely no responsibilities whatsoever to follow due process or due

diligence or common courtesies or any other normal activity of a

business transaction, both the Vancouver Stock Exchange and the B.C.

Securities Commission are bound and limited within the constraints of

law and due process and proprieties.

I am satisfied that we will continue to have instances that will require monitoring and will require policing and penalizing.

Nothing

the hon. member or myself can do will guarantee that abuses will not

take place. The issue purely and simply is: when they do take place,

will we act? I say it again, Mr. Chairman: we have acted, the Vancouver

Stock Exchange has acted, after due process has been followed. I think

the litany of cases and the increasing momentum around which the

enforcement exercise operates is living proof of the validity of my

comment.

So I categorically refute any suggestion that the

system in process is not working effectively, I think it is working

effectively and it's going to work even more effectively as we continue

to build the expertise and systems within the system to catch the abuse

at an earlier stage. But at all times due process must be followed, Mr.

Chairman. We cannot unilaterally send our investigators off on the

basis of witch-hunts or street tips or unsubstantiated rumours. What we

have to do is follow a very disciplined process, to document abuses and

violations and bring them forward in the fullness of time as those

cases are developed.

Once again I say to the hon. member:

if he has any specific illustrations that we can act on. which we're

not already working on. I'd be very pleased to receive them; but so far

all I've heard from the hon. member is criticism and proof of

ideological hang-ups and some sort of vendetta against the stock

exchange and its credibility, which does a great disservice not only to

that institution but also to the credibility of the B.C. financial

community at large. And I deplore that kind of an approach.

MR. SIHOTA : I hope the minister's got rid of all of his venom for this morning and we can get back to dealing with the matter at hand.

is an extreme exaggeration of what I said, an absolute hyperbole, to

say that every time a stock goes up we must look at it and that's proof

of something going wrong. I never said that, and I made that very

clear. What I said to you — through you, Mr. Chairman, to the minister —

was: look, there are certain well-known stocks that you know about,

that your regulators know about; and when there's movement on those you

ought to be asking some questions.

We have a situation here

with Lionheart where those types of questions were being asked. There

was an investigation, in this example of Lionheart, and one of the

outcomes of that investigation was that insider reports were being

filed.... The minister says: "Tell me something new." I'm telling you

today, Mr. Minister, something new. I'm telling you that for the last

15 of the last 16 months this person has not filed his insider report,

to the detriment of investors.

Your officials were well

aware of this person's practices with respect to not filing his inside

report on time. That is apparent from the letter of October 22, 1986,

which I have now taken the liberty of sharing with you. I'm saying

first of all, Mr. Minister, if you want new information, that the new

[ Page 4166 ]

information

is that this person has violated the rule 15 out of the last 16 months.

You put him down on your list of people to watch. I didn't do that. You

wrote him the letter on October 22, 1986, or your ministry did. So you

have new information; you're told about a violation, and then you talk

about due process.

It seems to me that process ought to be

that when you write a letter to Mr. Harold Moll, and you say to him.

"Look, you are violating, and if you continue to violate there will be

prosecutional action taken against you," and the person continues to

violate for the next 15 or 16 months and you don't take any action....

I'm asking you: what kind of process is that and to what extent are

your regulators doing their job? It seems to me that as the minister

responsible, if you wanted to be responsible you ought to be asking the

same question. You ought to be saying: "Well, this looks awful." When

we write a person on October 22 and say that we'll take him to court if

he continues to do what he's done in the past, and the person continues

to do it and no action is taken, it seems to me that you as the

minister ought to be concerned as well.

[11:30]

Again,

I don't want to get into an argument of cheap shots, and socialism

versus free enterprise, as you like to do, and I don't want to gloss

over the topic by saying: "I'm confident that progress is being made."

I'm asking you some very specific questions — through you, Mr. Chairman, to the minister — and

the reason I'm asking those questions is that I'm trying to demonstrate

to the minister that that process is not occurring, that those

regulations are not being enforced. I've given you an example; I've

asked you a question and I expect an answer.

The question

again, Mr. Minister, is: how is it that your regulatory process can

allow this type of situation, which you discover, to remain unchecked

for such an inordinately long time? Have you asked this question to

your officials? What types of responses have you gotten back? What

types of regulatory changes are: you prepared to make in order to

prevent this type of situation from arising? I don't know if the

minister understands the stock market or not. There is statement of

material facts that we talked about yesterday and there are insider

reports, and insider reports are a pivotal aspect of the stock market

game.

I want to ask the minister — no, I'll take it one

step further. I want to also tell the minister, because he wants new

information. It makes you wonder. These aren't street tips, Mr.

Minister. I've just gone through your own public files with respect to

one of the stocks I've been watching, and this is what your own public

files show. It's not street tips; it's your own information. Your

information also shows that if your own regulators had taken just a

minute to look at the blotters at the stock exchange, you know what

else they would have realized? They would have realized that the

evidence shows — and this is not street tips; this is just a computer printout that you get at the end of the day — that

this individual, at the beginning of August, had 45,000 shares in his

insider report, which he also, by the way, filed late. He showed at the

end of the month that he had 44,000, saying that he had a sale of

1,000. Yet if you take a look at the transactions — and I can tell you

exactly when the transactions occurred and at what price; that isn't

street tips, that's just out of the computer — they'll show that he unloaded at least 40,000 shares. Yet none of that is reflected in the insider report.

Could

the minister answer the question about process and regulation, why

these regulations are not being enforced, and how you can write letters

telling people that you are going to take action yet you don't? That's

a specific question, so don't take my comments out of context and

exaggerate them to endeavour make a political point. Just deal with the

issue at hand. If you don't have an answer, say you don't have an

answer, but tell me you will look into it, so that we can be assured of

the fact that you are fulfilling your responsibilities to the people of

this province, to make sure that those regulations and statutes that

you are in charge of are being enforced and regulated. I'm giving you

an example here, and I want to know what happened. I've given you two

pieces of new information that ought to cause you a fair bit of concern.

That's the question to the minister: how, in the instance of Lionheart — and if you want others, we can go through others — can you write this type of letter and yet your regulators take no further action, when they are aware of these abuses?

HON. MR. COUVELIER :

As I've explained ad nauseam to the hon. member opposite for the last

day and a half, I cannot, by virtue of my ministerial responsibilities,

confirm or deny the current state of affairs relating to a specific

case. Despite my repeated point that I am unable to respond to those

specifics, he is suggesting I should in this public forum, and I

literally am not able to. I should not. It is not in the public

interest that I should abuse my information or the confidentiality of

matters here. I am not in the position and should not be expected to

confirm or deny what is or is not being done in individual situations.

I said yesterday, the reason for that is quite logical and sound. In

the first place, if I am to allege that an issue is being further

investigated, the impact on that individual listing or those

individuals can be quite dramatic in an unfair sense, in the sense that

they might not be found guilty at all. Conversely, if they are found

deficient in some aspect of the legislation, then my early announcement

that there is further investigation in progress could well mean that

the investigation itself is put at risk and that the availability of

information is somehow withheld. Clearly, I'm just not in a position to

deal with those specifics; I've said it again and again. Yet the hon.

member continues to ask these questions when he knows full well that I

do not intend to respond to them. The reason I do not intend to is that

it would violate my obligations as the minister in charge.

have said to the hon. member: if he has any questions he wants

answered, if he has any information that would be useful to us, provide

it to me on a confidential basis and I am prepared to move on it. But

no, he proposes and prefers to deal with it in this public arena. For

what good purpose I'll let hon. members decide, but I can see no value

in it whatsoever, Mr. Chairman, other than to denigrate and deride the

institution itself.

If the hon. member is genuinely

concerned about seeing some changes in style and in operation, then he

should provide me, as minister responsible, with the specifics in a

forum where I can deal with it in a matter of confidence, and he and I

might then move to some common ground. As long as he continues to use

this public platform for the purpose of his personal vendetta, I refuse

to participate. It would violate my obligations as the minister in

charge, and I do not intend to violate my obligations; and nothing the

hon. member may attempt to do would force me to do so.

[ Page 4167 ]

would be very useful, I suspect, if the hon. member were to entertain

and approach these issues in a manner which would allow us to move

forward onto higher ground. Of course, he consistently has refused to

do that. He consistently prefers this public arena when he knows I

cannot respond to him in terms of specifics. One can only wonder why he

does this hour after hour, time after time. It might be that as the

attendance in the gallery immediately above you declines, he might lose

some of his enthusiasm. But until that moment arrives, I suppose we

must endure.

MR. SIHOTA : To the minister, who's

always interested in bafflegab and fog, and taking cheap personal

shots, and talking about vendettas, let's just deal with the issue. I'm

not asking you to investigate the company. If it hasn't dropped, let me

make the penny drop; I'll bring it down slowly for you. I'm asking you

to investigate your own regulators. I'm asking you why it is that your

own regulators haven't taken action on something they said they were

going to take action on. I'm not revealing any trade secrets. This

information is available — I got it off the files.

HON. MR. COUVELIER : If you want action, come to my private office.

MR. SIHOTA :

That's great. Every time a public civil servant is not doing their job

properly, the minister's attitude would be that we ought to come to his

office and talk to him privately about it, instead of asking salient

questions — which have a public interest value to them — in this House.

the minister is not prepared to answer the question, it's very simple

for him to say: "Look, I don't know why my people aren't doing their

job, but I'll check into it and report back to the House." That's

happened in the past. I can cite examples of when the minister has

indicated that matters have been under investigation. He did it on

American Canadian. I can cite examples when the minister has come into

this House and said that reports were being prepared by his staff. He

did that on International Tillex. I can go on down the list of

situations when I've raised something in the House and the minister has

gone out and investigated it. That happened on Starfire, and we know

what regulatory action has taken place.

It torpedoes that

argument of saying: "Come to me and we'll talk about it privately."

These are matters that the public has a right to receive some answers

on. The public has a right to know whether or not your regulators are

doing their job. When the public sees this kind of a situation on

file.... And believe you me, this is not an isolated incident. It's a

noteworthy incident because it's a company that your people know about.

It's an individual that your people know about. I'm not saying go out

and investigate the company. I'm just saying, are you asking your

people why they are not doing their job? For some reason that's some

kind of great trade secret, so the minister is not prepared to respond.

Fine, we'll move on to another one. We'll get the same broken record

from the minister in terms of his attitude on these things, when he's

got to realize that one of these days it's his responsibility to start

asking some tough questions.

The minister says he wants new

information. I will give the minister, again, new information. What

amazes me is that the minister always says: "Give me new information.

We know about all of the old ones. We don't know about any of the new

ones." It's like saying: "We know about the car accident that happened

yesterday. Tell us where the car accident is going to happen tomorrow."

I gave you some examples of where the car accident is going to

happen tomorrow, but what bothers me is that you haven't even

investigated the first car accident that you know about. You haven't

looked at the causes of that accident. You haven't looked at why your

regulators failed to catch it earlier. You haven't looked at some of

the manipulation that was going on. And worse still, you haven't then

taken that one step further and said: "Here are the preventive things

we can do." You're not doing that. That's the point we're making here.

But

I'll give you a new one, because you seem to be hung up on this thing

about: "Tell us new ones." There's 3-D Systems. Mr. Capozzi, by the

way, is a director of that company. The company is underwritten by one

of the chairmen of the Vancouver Stock Exchange. I want to know if your

officials have taken a look at 3-D Systems and determined how often

those insider reports have been filed on time. Here we have a situation

where the chairman of the Vancouver Stock Exchange, with respect to

3-D, is promoting a company that appears to be violating the Securities

Act with respect to insider trading reports.

These are

pivotal reports and I want to know why it is your staff hasn't

investigated that one. I'm not asking you to launch into an

investigation of the company. Just ask your staff: why has that not

happened? Of course, that was another deal that involved Mr. Moll. an

individual who is known to your people exceptionally well. Lionheart,

which owns one half of the shares of 3-D Systems, from the information

that I've been able to ascertain — which again is not street tips, Mr. Minister — has sold out hundreds and thousands of its shares in 3-D Systems.

The minister should be asking: are we monitoring the matter of

insider reports? Are we making sure that there is full compliance with

the provisions of the Securities Act that relate to insider reports?

Those are the questions that the minister should be asking. Can the

minister say with confidence that his regulators are ensuring that the

provisions of the Securities Act as they relate to insider reports are

being complied with, in the face of the evidence of Lionheart and 3-D?

Can he say that with confidence?

HON. MR. COUVELIER :

The hon. member seems to believe that somehow he has sources of

information which tell him exactly what we are doing in the ministry

and in the commission and are better than my information. He seems to

be saying — he said it, as a matter of fact — that we haven't looked

into the regulators. He said we were not doing anything in that

respect. May I ask how the blazes would the hon. member know whether we

were or not? He leaps to the conclusion that we're not, and then he

takes advantage of the fact that I cannot deal with specifics to help

make his fictitious argument that we're not monitoring the situation

closely.

I have said repeatedly that we are monitoring the

question of insider trading; that we are working ever more closely with

the Vancouver Stock Exchange officials, who have the primary

responsibility for this area; and that we were further refining our

practices and procedures to make sure that we do an even more effective

job in the future. The hon. member seems unable to accept that

statement, and he keeps making the totally false statement in this

House that we haven't looked into it.

He knows full well

that I cannot deal with the specifics, but he errs grossly in terms of

misjudgment when he then translates that into meaning that we are not

doing the job.

[ Page 4168 ]

MR. SIHOTA :

I would ask the minister to withdraw the comment with respect to false.

He is suggesting that what I have said is false. I don't think

that's....

MR. CHAIRMAN : The hon. member is perfectly right. Would the minister please withdraw his comment with respect to falsehood.

HON. MR. COUVELIER :

I'll have to get my book of appropriate proprieties here. I don't have

it with me. The hon. member seems to be grossly inaccurate. Is that

parliamentary, Mr. Chairman?

MR. CHAIRMAN : Yes.

MR. COUVELIER : Thank you. I agree to use that....

MR. MILLER : On a point of order....

MR. CHAIRMAN : Hold on for a moment, please. Hon. minister, thank you very much but would you please withdraw the previous one.

HON. MR. COUVELIER : I am happy to withdraw the earlier comment and substitute the other one.

MR. CHAIRMAN : Thank you very much.

MR. SIHOTA :

Here we have a continual pattern of the minister engaging in cheap

shots instead of dealing with the issue. I can stand up in this House

and say to the minister, "You are not enforcing the regulations," and

the minister will say exactly what he just said a second ago, that they

are enforcing the regulations. How do you break that logjam, in terms

of the minister saying, "Oh, we're doing it," and my saying that you're

not doing it?

The way you break that logjam is to begin to

deal with specifics, and I am trying to give you examples of specific

situations which reinforce my position that you're not doing it. Then

you say that you are not prepared to talk about specifics.

[11:45]

HON. MR. COUVELIER : Publicly.

MR. SIHOTA :

Publicly. Now he says "publicly." Come on, Mr. Minister; these are

public documents, that's what these are. They are your documents. If

you understand the system, and I'm coming more and more to the

conclusion that you don't, you could go down publicly and take a look

at 3-D as well. Your own files would demonstrate that the insider

reports aren't being filed. Your own reports, your own files, would

indicate that people are being told that actions are going to be taken

against them, and it's not happening. Your own files would tell you

about Mr. Charles Stuart and his actions with respect, I believe, to

Goldhurst Resources, where there were no insider reports being filed.

In that instance you had a guy who was known to your people. Don't tell

me it's not under investigation, because I can quote you from Hansard .

You told me that Mr. Stuart was "under investigation," so don't play

that game either. I know you forget you said that, but you did, in

response to the question I asked you on American Canadian, or after

that.

There you've got a situation where a person comes up

with false proxies and takes over a company. There's been an issue out,

I believe, since the seventies saying that he can't trade on the

market. He manipulates himself into control of a particular company and

then fails to file insider reports.

What I'm telling you is

that if you want to say it's working and if I want to say that it's not

working, it seems to me that the only way to get into that issue and

resolve it one way or the other is to talk about the specifics. I'm

giving you specifics, and they point to one inescapable conclusion:

it's not working properly.

The minister can play ostrich

and put his head in the sand, but does he realize what's happening out

there on the exchange every day? Does he realize that every day people

from Toronto are coming over and having these fancy lunches and

inviting some of the legitimate operators to the exchange and saying:

"Come, let's go to Toronto"? They're moving over. That's what's

happening because of the infractions and the lax attitude of both the

self-regulatory bodies and the regulatory bodies with respect to

actions on the Vancouver Stock Exchange.

This shouldn't be

a new problem to the minister. We've known for a long time that there

are problems with the Vancouver Stock Exchange and that there's a need

for action. The minister has taken some action. He's put in more staff.

That's good; I applauded that. There has been a new act, and we've

watched how it works. I'm giving you examples now of where it's not

working. It's not simple enough to say: "We've put in a new piece of

legislation and that's going to solve all of our problems." You still

need the regulatory bodies and teeth behind it, so that when people

violate

section 108 of that act, some kind of consequence occurs under

the new provisions of insider reports.

I've given you an

example of a letter. I've given you an example of a chairperson of the

exchange. I've given you an example of someone who has an unenviable

record on the exchange, and they're all violating the insider reports.

All I get is fog from the minister, when he turns around and says:

"Well, we're doing a good job." You're not, Mr. Minister; that's the

problem. That's why we raise these issues. We have a responsibility on

this side of the House, which the minister doesn't seem to understand,

to bring to the attention of the government its failings. I'm trying to

fulfil that obligation by bringing these failings to the attention of

the minister, who's just not prepared to deal with them.

Let

me tell the minister another situation, because it involves a VSE

governor. The reason I'm bringing these matters to the minister's

attention is that then he will at least begin to look into the matter

of what's happening on the exchange and recognize the merit behind my

call yesterday for some type of examination of the exchange.

have a governor who works on the trading floor.... I told the minister

about this last year, and of course it wasn't investigated, because

last year he went on the same routine: "Tell me something new" — and I

did. He was working on the trading floor with one Mr. Bobby Slichter.

Mr. Slichter can pick up the phone any time and ask this governor to do

his trading. Mr. Slichter, if you're not aware, Mr. Minister, was found

unfit to trade and in the mid-seventies had his ability to trade

removed, because he was involved in stock manipulations and had some

incidents with organized crime.

He appealed on three

separate occasions the suspension of his trading privileges, and the

court said at the end of the day: "To induce in Mr. Slichter a real

concern for the public interest would be an enterprise doomed to

failure." That's what the court said: "Get this guy out of here." He

operates

[ Page 4169 ]

out

of his West Van home. He trades with the chairman of the floor trade

procedures committee of the Vancouver Stock Exchange. They've been

involved in a number of scandals — Mr. Slichter has — notably Chopp.

If the minister doesn't know, Chopp was the first company to break the

hundred dollar barrier. It went from about 17 cents to $125 in one

amazing year, Mr. Minister, based on a number of representations with

respect to earnings and building a product that resulted in millions of

dollars in investor losses.

Chopp is bankrupt in the United

States. Next week, as I indicated earlier, Mr. Minister, there'll be a

trial in Vancouver by a California woman who's taking action against a

Vancouver brokerage firm over the loss of her disability pension in

that investment. Subpoenaed to attend are Mr. Griffith, who's the

chairman of the trade floor procedures committee of the exchange, and

Mr. Slichter. What type of faith can the public put into a system when

those involved in regulating the system are now being subpoenaed into

court to provide comment on one of these schemes? This is a similar

arrangement to the one that was being used in the Technigen case when

Technigen went from $1 to $15.

So you have people who are

prominent in the community now being subpoenaed and linked to a

situation like Chopp Computer, one of the largest scandals on the

Vancouver Stock Exchange, and the minister says he doesn't have any

concerns. He says that progress is being made, that things are working

well.

When is the minister going to realize that he's got a

problem on his hands? When is the minister going to cease playing

ostrich? When is the minister going to stop playing this little game

that we play in the House, where he looks at the clock and says: "We've

got an hour and five minutes left, and then we'll be finished with the

Ministry of Finance estimates, in all likelihood, for the year, so I

won't have to put up with this line of questioning for another year.

Then I'll sit here for another year and act..." — the same broken

record putting forward the same arguments you did last year. I'll give

you some new information, as I've done this morning, as I did

yesterday, and there won't be any movement at all on the part of this

government.

What kind of signal, Mr. Minister, does that

send to the people who want to come here and invest? You talk in

glowing terms about developing links with the Pacific Rim and about a

financial centre for Vancouver, and you talk in these glossy terms

about all these wonderful things that are going to happen. Yet you

don't even regulate what you've got in your hands right now, and it

creates a negative opinion elsewhere. I gave you an example yesterday

of an

article that was entitled "A Little Better Than a Crapshoot,"

when I talked about the Exchange, and I can give you more.

No,

Mr. Minister, this is no vendetta. This is just a request from an

opposition member who's doing his job in trying to bring to your

attention failings and to ask you to act on those failings, and asking

some specific questions as to what you are doing about your regulatory

scheme and whether you recognize that there are some flaws. You should

recognize that there are flaws when you see me here this morning giving

you evidence of someone who's a chairperson of one of the committees on

the exchange being linked to a scandal — if you don't follow the market, you wouldn't know — like Chopp Computer.

I said, I'm quickly coming to the conclusion that the minister doesn't

understand what's happening. Either that, or he doesn't care,

because.... I can mention Axiom, and there isn't a movement on his part

at all. I can mention Chopp; there isn't a movement on his part at all.

The penny doesn't drop, in terms of how negative these scandals are

with respect to perpetuating the type of image the exchange has.

Mr.

Minister, you can bow your head and say, "I'll listen to him," and call

me all sorts of things and take cheap shots, but that's not going to

stop me from continuing to raise these matters, because the motivation

is not to play the type of game that you are playing. I want some

action from your ministry, and as I said to you the other day in the

debate on Principal Trust, if you can't stand the heat in the kitchen,

get out and let somebody else be in charge of Corporate Relations, so

we can get on with dealing with these problems.

I'm giving you another out: if you don't want to deal with these problems — which it seems that you don't — then

set up a committee of the Legislature so that we can look at these

things and report back to you on what ought to happen. A committee of

the Legislature made up of your members will have a majority. That's

not a bad idea. It's not going to cost the taxpayers a heck of a lot of

money. You're not pulling a judge out of the system to take a look at

it. You might even get some of us like myself out of this House, so

that you're not being irritated, or to get rid of some of the thorns in

your side. And more important, you'd serve a good public service by

getting a bunch of people out there to take a look at the issue at

hand. Then, if I'm wrong and you're right, you'll have something

substantive to stand behind.

There are all sorts of pluses

in moving towards the suggestion that I made to you yesterday, and

you're not prepared to move. Then you ridicule a report that I filed to

you which your government commissioned, which says that 84 percent of

the time investors lose their money on it, that about 20 cents or 30

cents of every dollar ever makes it into the product. Then I give you

an example of what's happening today and it's just as bad, and you

don't want to move.

I want to tell the minister a few other

things. The minister started off this morning by saying that whenever a

stock goes under we look at it, and we automatically point to the fact

that something's wrong. That's not the way it works, Mr. Minister. But

there are some stocks that you know are questionable and that your

regulators ought to be looking at. I want to tell you that they don't.

Let

me give you a couple of examples. This is one of my favourite ones, so

I'll start with this: Med-Tech. Some guy floated this great idea on the

exchange. He said he had developed a nasal spray that was "clinically

proven" to get rid of AIDS, that within three minutes of contact on the

surface, AIDS would be eliminated. That was the marketing tool designed

to get this thing onto the market. They hyped it up and promoted it to

$8 to $9 on the exchange. You know how they did it? They did it through

false press releases, saying that it was clinically proven; they did it

through stock manipulation. First of all, someone should have caught on

to the fact that this nasal spray was some kind of scam. But your

regulators never caught on to that fact, and worse still, when the

investors and everybody else caught on to it, your regulators took no

action. There's not one bit of sanction at all by the Vancouver Stock

Exchange or the superintendent of brokers. No, you don't have to watch

every stock that goes up — but a nasal spray to cure AIDS? Come on, Mr. Minister, what are you people doing? You're sleeping at the switch.

I'll

tell you another one: Gametek. This is another classic; it's not as

funny as the last one. Here's a company that said they were going to

sell arm-wrestling machines. You

[ Page 4170 ]

know,

you put them up in bars and you can wrestle with an arm-wrestling

machine. That's what Gametek said. Then they went on and said they were

going to put these machines on a converted B.C. ferry. They were going

to convert a B.C. ferry into a luxury cruiser and put in a duty-free

shop and casinos. You know, you don't have to be smart to figure out

that something must be wrong.

[12:00]

MR. MILLER :

I think there are many questions that have not been answered, and I

support the dogged persistence of the member for Esquimalt-Port Renfrew

in trying to get some answers out of the Minister of Finance. So I

would hope he would continue.

MR. SIHOTA : You don't

have to have a degree from the Harvard Business School in economics to

figure out that something must be whacko with this type of stock. It

was listed at 40 cents, they hyped it up and it went up to $3. It

wasn't your regulators who caught on to the scam; it was the media that

revealed that these arm-wrestling machines, which the company had said

had all been built and were ready to go, had not even been built. It

was the media that revealed that this boat they were going to convert

into a luxury cruiser was reported three months prior to that by the

United States Coast Guard to have sunk off the coast of Washington.

They hyped this stock, and you know who made the money? The insiders

who bought it in at 40 cents, the manipulators, the scoundrels on the

exchange whom you would have there, Mr. Minister — and I'll give you

examples; I'll give you names of scoundrels in a minute. Those people

made all the money, because as the stock went up from 40 cents — well, actually they bought it at pennies below 40 cents — they

were selling out as the thing made it up to three bucks, making

hundreds of thousands, perhaps even millions of dollars on it. That's

an oft-repeated story.

I gave you the example

yesterday of Technigen, where the guy supposedly invented these golf

simulators, sold out all of his stock, drove it up to about $15, and

then turned around and bought himself an $830,000 home in Vancouver,

and the investors were held out to dry. In Gametek, this boat had sunk.

There was no casino. The arm-wrestling machines they said had been

built weren't built. Fine, Mr. Minister. You can tell me there is a

sucker born every minute, but I want to know what your regulatory

people did. That's the question you should be asking, Mr. Minister. You

should be asking your people: "What did we do about stock manipulation

on Gametek?" I'll tell you; you did nothing.

What did your

people do about insider trading, with respect to Gametek? I'll tell

you; you did nothing. What did they do about untimely disclosure on

Gametek. I'll tell you; your people did nothing. What did they do about

false news releases? They did nothing. And you wonder why your exchange

has the type of laughable image it has. That's why it has it. You as

the minister responsible should not be coming to me and asking me, to

tell you these things in your office. Heck, you could read about them

in the paper if you took a second, if you had any interest at all in

what was transpiring on the exchange. If you took a second and read a

little bit about it, it would seem to me that as the minister

responsible, the penny would drop on your head and you would go to your

people and say: "What's going on? Have we laid any charges with respect

to stock manipulation or trading violations or insider trading reports

or untimely disclosures or false news releases?" You haven't.

I have

another case involving stock manipulation and misrepresentation of news

releases and controlling of paper to rig the game with a company called

Great Weighs Industries. It went up from about 50 cents to $8 by

promoting these little diet wafers made out of fish oil and promoting

fish-oil cosmetics and — the Premier will be happy to hear this — a

non-denominational Bible game. This thing went from 50 cents to $8,

under the representation that Mr. Belzberg at First City had financed

the company through the VSE. When it became apparent that those reports

were false, the stock in the company collapsed at 10 cents.

You

don't have to have a degree from Yale to figure out that these are the

stocks you should be watching, Mr. Minister. If your regulators aren't

catching them on the front end, fair enough; I'll even excuse that. But

I want to know why no actions were taken. These are reported incidents,

Mr. Minister. If you had taken two minutes to read the Globe and Mail or the business sections of the Province or the Vancouver Sun , you would have realized that these things are happening on the stock exchange.

Admittedly,

I've picked some of the funnier ones, but I told you yesterday I had

500 of them, and I think in the last couple of days I've gone through

at least 20 or 30 of them. If you had taken a minute.... You should be

asking your regulators if they're doing the job. How can the minister

possibly say, in light of the evidence that has been presented in this

House today, that his regulators are doing their job? They're not, Mr.

Minister.

After having told the minister that he should now

have an inquiry, now that he's had 18 hours to think about it, I'm

hoping that he's prepared to change his mind. If he's not, we'll get

into more evidence and try to drive the point home to you as to why it

should be happening.

What about the stock in the nasal

spray that would eliminate AIDS? What about the arm-wrestling machines

that were never built when they were said to have been built? What

about the boat that was going to be converted into a luxury cruise

liner and had sunk three months prior to that off the coast of

Washington, and the non-denominational Bible game, the diet wafers and

the fish-oil cosmetics? Come on, Mr. Minister. You don't have to have

brilliance on your side to recognize that these are the kinds of things

someone ought to be looking for before they get on. If you're going to

let them get on, and if you want to make a mockery of your exchange, go

ahead. But then, dam it, you should regulate.

I have two questions. In light of all this evidence — and I don't just mean the three or four examples, but the evidence you've heard over the last two days — can

you with full confidence say that your regulators are doing their job?

Secondly, will you not now agree that it's time, Mr. Minister, to have

a committee of the House take a look at the matter of the exchange?

HON. MR. COUVELIER : In the order the questions were put, the answers are yes and no.

MR. SIHOTA :

That's amazing, you know, because that's the first time I've got a

straight yes or no answer from the minister. So we'll continue; that's

progress. Maybe it's also an indication, Mr. Chairman, that the

minister is now beginning to recognize the dimension of the problem,

and that he's getting a little too embarrassed to stand up and talk

about the problem. I'm glad we've moved from fog into direct answers.

I'm disappointed that we haven't had the minister

[ Page 4171 ]

recognize

that his regulators couldn't conceivably be doing their job and that he

doesn't want anybody to look into it. It's astonishing!

want to tell the minister a few other things. I said yesterday and,

I'll say again today that the system that we've got is open for

manipulation. There are some people who are going to get into

legitimate ventures and some people who are going to get involved in

illegitimate ventures. It's my view that we ought to be stressing

quality, not quantity, on the exchange. We ought to be stressing people

getting involved in the legitimate ventures.

I'll try to

give the minister again an overview here, so he can see the dimension

and breadth of the problem. I've told him about brokers — Brown and Charpentier — who

have been involved in all sorts of violations which the government is

not investigating. I've told him about regulators. I gave the example

of the chairman of the floor trade committee and another chairman of

the VSE, and Mr. Mathers — Griffith and Mathers — and their linkage, in

the case of Mr. Griffith with a company like Chopp, and in the case of

Mr. Mathers, a company like 3-D. I've talked about the traders and

their violations. I gave you the example of Richard Pomper who was

involved in the Carter-Ward deal.

I've given you the

example of news dissemination, of how all these false press releases

invite investors to invest, when indeed it's proven later on that they

are false. I've tried to demonstrate to the minister that the

regulators couldn't possibly be doing the job if this type of stuff is

happening.

I want to take it from another angle, because

the minister doesn't seem to be impressed with the angle that I've

taken to date. If your people are not prepared to take a look at some

of the obvious situations on the exchange which I've mentioned in terms

of nasal spray and that kind of stuff, what about looking at the

people? It's amazing, Mr. Chairman, if you begin to take a look at some

of the people who find themselves on the Vancouver Stock Exchange and

are involved in activities on the exchange and begin to check their

records....

Here I am, one opposition member, and I can

research this stuff. I can go back through the newspapers. I can go

through the information that is publicly available and find out what

the backgrounds of these people are. If I was regulating, it would seem

to me that these are people I would want to watch. Yet the regulators

don't seem to be able to do either of those two things: get the

information or watch. Mr. Stidham and Mr. Grey have been involved with

Axiom, and Altar, involved in NCN, in Simplon and Westron, to list a

number of the companies.

Mr. Stidharn was a lawyer in the

United States. He spent 18 months in jail in Texas for stealing money

from a client. He went to Denver and started to do deals on the VSE

with Mr. Grey. He went to Alberta. The Alberta regulators were smart.

They caught on to him really quickly and banned him for 20 years from

operating on the Alberta exchange. You know where he is now? He's on

the VSE. And the minister wonders why we have this image problem with

the VSE.

Shouldn't the minister be asking: why are these

people being allowed to keep trading here in British Columbia, when all

sorts of actions have been taken by them? Maybe you don't have the

sophistication to check into whether or not he served in jail in Texas

for 18 months, but surely there must be a sharing of information with

Alberta, to know that this person had been banned for 20 years in

Alberta. He then shows up on the Vancouver Stock Exchange. Does that

not cause any concern to the minister? Does the minister not wonder why

his regulators aren't looking into it? Does he not care or think that

his regulators ought to pay particular attention to the companies

involving those people, to make sure that all of their actions are

above-board and in keeping with the act?

As a lawyer I know

that the police, when there is a known criminal in a community, pay

particular attention, it seems to me, to that person's activities and

goings on. You don't have to be a genius to figure out that those who

have committed sin once in this regard, in terms of a crime, may well

do it again. It seems to me only logical, therefore, that you may want

to follow these people's activities on the exchange. That's the logical

thing to do, Mr. Minister, and all I'm asking is: why aren't you asking

those questions? Those aren't questions that should be asked in the

confidentiality of your room; they are questions that should be asked

by a minister who, seemingly, is unprepared to take a look at his

exchange.

We have Bradley and Brett Salter involved in five to ten apparent stock manipulations — because

the studies have been going on for the last two years. Park Resources,

International Flyer and Byron Resources are some of the companies that

were involved there. Don't you think their activities should be watched

carefully?

We have a CA who lost — in the mid-seventies — his

ability to call himself a CA. One of the most successful promoters on

the exchange, Mr. Hutton, was involved in numerous companies that have

failed and have reaped huge profits for insiders. It's been

demonstrated by companies like Microcool, Radiation Technology, Raynet,

Chopp Computers and Starfire. A former Vancouver Stock Exchange

president, Mr. Scott, said: "I wouldn't let him near the exchange with

a ten-foot barge pole." That's what the former president of the

Vancouver Stock Exchange said about this person.

[12:15]

Doesn't

the minister think that somehow it taints the reputation of the

exchange when these people seem to get themselves involved over and

over again? I gave you the examples of Microcool, Radiation Technology,

Raynet, Chopp and Starfire that are involved in questionable activities

on the exchange. Doesn't it stand to reason that the minister ought to

be asking questions as to why and how these people are entitled to

participate on the exchange? March Resources is another company. Frank

Matthews, one of the main promoters of March Resources, got it up to

$65 by selling heavily to U.S. investors.

There was a SEC

consent judgment in the United States that concluded stock had been

pushed up through false activities. It was agreed that the person would

not participate in stock market matters in the United States. Despite

that, the same person continued to do work on the Vancouver Stock

Exchange with a company like Chopp Computers. It's interesting that Mr.

Dilworth.... Remember Mr. Dilworth, Mr. Minister? I brought him to your

attention a year ago. Perhaps the minister could enlighten this House

as to whether or not Mr. Dilworth is still there.

He said

it would have been too difficult to prove that this man should not be

let back on the exchange, and if action was taken he might get off on a

technicality in any event. Yet you had all this information from the

United States that the man had been involved in questionable

activities. We get these promoters with unenviable records who appear

on the scene without any sanction or consequence — and apparently

[ Page 4172 ]

without any type of monitoring — to promote and hype particular stocks. The Vancouver Stock Exchange obliges them and allows them to make a living.

that the type of exchange the minister wants? Are those the type of

people the minister wants in the exchange? Has the minister asked his

regulators why we have this pattern of people coming back to the

exchange, when they have been involved in these activities?

MR. LOVICK : Like flies to the honey pot.

MR. SIHOTA : Yes. "Like flies to the honey pot," as the second member for Nanaimo says.

the minister asking his regulators how this is occurring? Let me

rephrase that question to the minister. Is the minister content to see

these people coming back to the VSE over and over again?

HON. MR. COUVELIER :

The hon. member had a wideranging, rambling dissertation covering many

subjects, and I am not sure that I made note of all of them.

made some comment that people were moving over as a consequence of

their concern about the operating style of the Vancouver Stock

Exchange. I assume the hon. member meant moving over to Ontario,

because that's the issue I've seen reported in the press. I assume that

was the member's meaning. If that is the case, that assumption is

correct. I will remind the hon. member that the individual making those

public statements is an individual who the member has ridiculed and

criticized often in this House. To the extent that there is some exodus

from the Vancouver financial community to Ontario, the hon. member can

take some small credit for that eventuality. However, let me add that

that person, who has been widely reported as moving some business to

Ontario's junior market, is using as his justification the fact that he

finds it tougher to do business in B. C., which suggests that we might

be, as I suggested earlier, doing a more effective job. As a

consequence, by virtue of becoming more effective in the regulatory

side of things, traditional goalposts have been moved, and some of the

longer-time players might be having a harder time adjusting to that

truth.

The member suggests that I'm guilty of making some

"cheap shots." My goodness, if ever I've heard some cheap shots,"

they've come from the hon. member with his criticisms of a variety of

individuals and firms, all of which, as I said earlier, he knows full

well I cannot deal with in a specific sense, because I am not in a

position of confirming or denying that those individuals or firms are

not being examined or investigated in some way or other.

The

member repeats the offer he made yesterday that he would evidently be

willing to serve on some sort of a committee of this House that I would

strike to examine the question of the operating style of the Vancouver

Stock Exchange. If ever we needed a better illustration of why such an

initiative would be abhorrent to me, it's the diatribe that we've heard

from the hon. member for the last two days. It seems to be that the

hon. member is doing enough damage to the credibility of the Vancouver

Stock Exchange from outside the tent without allowing him inside the

tent. The last thing we would want to do would be to provide him with

confidential information that had some accuracy to it. Then he really

would be damaging the institution, and that would trouble me greatly. I

repeat, we are making good progress in terms of improving our

monitoring and regulatory practices. We have come a long way and we

will continue to improve. We are actively discussing operating

practices with the officials of the Vancouver Stock Exchange, and I'm

comfortable with the rate of progress in that regard.

The

hon. member made much mention of press releases, making outrageous

claims. Of course, the member assumes all of a sudden that people have

abandoned their common sense and there will be some great rush to

invest in some of these more amusing illustrations that he has given

us. The Vancouver Stock Exchange has over 2,200 listings. It has one of

the largest listings of any exchange. Certainly it has larger listings,

as I understand it, than the Ontario exchange. As a consequence, the

sheer volume of material that emanates from that kind of an activity

and that kind of an exchange will inevitably mean that not all

outrageous claims can be caught in the net prior to their publication.

I think we are doing an ever more effective job.

The member

gave us some humorous illustrations of promotion schemes. While I, like

all members in the House, took some pleasure from that lighter moment,

nevertheless, underlying the statements by the member is the assumption

that somehow he is wiser than anyone else in terms of what might or

might not be successful. It reminds me of the illustration I used a

year ago when he made the same kind of point, which was that the

product called Jolt should not, in anyone's wildest imagination, have

been successful in the marketplace. I don't speak to the value of the

stock, I speak to the value of the product. Yet despite the fact that

it's a high caffeine, high-sugar-content product, flying fully in the

face of the modern lifestyle syndrome, which is back to natural

products and less of those kinds of stimulants, that product

nevertheless enjoys some market success, I understand.

The

hon. member seems to believe there should be some sort of supreme

authority who can sit in some ivory tower and say: "Well, this one

obviously is untrue and therefore we'll can it; this one, however,

might work," and so on. I don't have the confidence that the hon.

member has that any bureaucrat — or any human being, for that matter — can

unilaterally make these kinds of judgments. He seems to suggest that

that is possible, and that we should be exercising those unilateral

judgments. I suspect that were we to do so, the hon. member would be

the very first one to jump up and talk about some sort of violation of

human rights or violation of freedoms.

I have no trouble

agreeing with the hon. member that some of the illustrations he gave

were obviously less difficult to embrace and support than some others

might be. That doesn't mean we should therefore unilaterally appoint

some bureaucrat who could judge whether individual situations would fly.

The

credibility of the system will depend upon our monitoring, our

effective and hasty catching of abuses and violations and our attempt

to shut down operators who are proven to be operating scams. That's the

issue: "proven." I say it again: due process must be followed in all

these instances, and while it's easy to get off "cheap shots," as the

hon. member has done in a variety of instances here over the last two

days, nevertheless the constraints upon the regulators are such that

they must be able to prove any disciplinary action. They must be able

to defend them even — if need be — in a court of law. As a consequence,

we are forced to work under different rules than the hon. member seems

constrained to work under as he makes these brave comments in the House.

[ Page 4173 ]

Back

to where we were: I believe we're making good progress. We've come a

long way in the last 12 months. We will continue to move forward

aggressively in all these areas. I have no difficulty whatsoever in

refuting any allegations that the system is not working effectively.

It's working better than it did a year ago, and it will work even

better a year from now. If I'm still in the position of speaking to

that issue then, I'm quite confident that I will be able to give

further illustrations of our good progress.

MR. DAVIDSON :

Mr. Chairman, it's unfortunate in many respects that we have dwelt so

much over the last little while on some of the unfortunate examples,

and very little has been said about the positive contributions of the

Vancouver Stock Exchange. Because we have dwelt on some of the glaring

examples of errors within the exchange, I hope that we don't let this

cloud the overall contribution the VSE makes to the financial health of

the community known as the Vancouver marketplace. I think what many of

us are looking for, not just in this chamber but outside in the stock

marketplace itself, is some sort of notice from the ministry that

Vancouver is not going to become a haven for international rejects to

set up business, that we are going to crack down on those who have no

place in the Vancouver Stock Exchange and that we're going to exercise

more diligence in the future in who we approve to do business in this

community.

[12:30]

It's unfortunate too that when we talk about a legislative

committee, we immediately seem to feel that it is an opportunity for

personal attack and political partisanship. That's not always the case.

A great deal of positive contribution could come from a legislative

committee that would be able to examine many aspects of the

marketplace, and I refer to the possibility of changing our statement

of material facts, dividing the exchange into two different areas,

reorganizing some of the ministry regulators into specific areas where

they don't spend their time examining statements of material facts, but

go on from that point to spend their time in a much more worthwhile

manner examining what happens after the statement of material facts.

referred yesterday to a bureaucratic board that was set up to examine

stock, and the minister quite properly stated that that was a group of

engineers. It doesn't really matter who it is. Being an engineer gives

you no more right to declare what's under the ground in a specific

location than anyone else. One of the real problems we face is having a

board that sits around a table to tell individuals that that specific

piece of property has some merit and this particular piece of property

doesn't have some merit. That's really, in essence, what you're trying

to put forward in your endeavour to find out whether something is there

or not.

If that's the case, I respectfully submit there

would never be an Ashton, because an engineer sitting around a table

would say: "There can't be any particular value to doing this in that

location." I say in all sincerity that that board should be disbanded

because there is no way that a group of engineers sitting around a

table can pass judgment on a piece of property, whether it be moose

pasture or whether it be the most worthwhile piece of property in the

history of mining in North America. They simply can't do it. Otherwise,

we could just go to the engineering group and say, "Should we spend

money here or shouldn't we?" and we could get an answer. The fact is

that the costs of doing business have risen dramatically. Lawyers' fees

are increased; securities' fees are increased. The fees going through

the process — the waiting — have all increased so dramatically that out

of $100,000 that's raised, a significant proportion is spent before you

even find out if anything exists on that particular piece of property.

And that's not entirely wrong, but it's not entirely correct. No single

group of people should be in a position to tell anyone else what is or

is not under the ground at that location until they have expended the

funds to find out if that in fact is there.

That's another

aspect of why the statement of material facts is not nearly as

important in the process as examining what happens to the stock after

the statement of material facts. Once the market has been developed,

once you have a market flowing, going from one point to another point — up and down as markets do — that's

when the regulators must become more vigilant; that's when the

personnel that are assigned to going over statements of material facts

must reshuffle those into analyzing. And now that we're going to

computer trading on the Vancouver Stock Exchange, there's a greater

opportunity to follow up and check on the actual trading patterns of

any particular stock.

With the greatest of respect to the

minister, that is where we must be putting our emphasis. Never mind the

statement of material facts so much — the i's being dotted and the t's

crossed. What is happening with the trading pattern? Where is the

manipulation taking place? That's where the damage is done. That's

where the general public is misled and deceived and cheated out of

their belief in the particular project that is taking place. If we

could somehow get across to the staff that we can devise methods by

which we can take the pressure off the preparation of statements of

material facts and move that person over into an investigative process

of some form or other, even if it be reading computer printouts from

the new stock-trading patterns, that's where we'll identify those

individuals who are abusing the system.

In closing, I would

like to add once again that it is indeed unfortunate that so much time

has been spent in this chamber dealing with the negative aspects of the

Vancouver Stock Exchange, because you could do the same with the Hong

Kong exchange, the New York exchange, the San Francisco exchange or any

of the Pacific exchanges. You'll always find examples of abuse, just as

you'll find them in any other organization. But to leave the impression

that the Vancouver Stock Exchange is riddled with improprieties would

be a major mistake.

The public can be assured that the

Vancouver Stock Exchange is generally a safe place to invest money,

provided they understand that there are risks when they invest in

speculative markets. But to leave the impres