1990 Legislative Session: 4th

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)

TUESDAY, JULY 24, 1990

Afternoon Sitting

[ Page 11347 ]

CONTENTS

Routine Proceedings

An Act to Protect Parks and Wilderness

Areas (Bill M236). Mr. Cashore

Introduction and first reading –– 11347

Community Reforestation Act (Bill M237).

Mr. Miller

Introduction and first reading –– 11348

Incremental Silviculture Act (Bill M238).

Mr. Miller

Introduction and first reading –– 11348

An Act to Establish an Environment and

Land Use Secretariat (Bill M239).

Mr. Zirnhelt

Introduction and first reading –– 11348

Public Sector Collective Bargaining

Disclosure Act (Bill 79).

Hon. Mr. Couvelier

Introduction and first reading –– 11348

Oral Questions

B.C. Rail line reopening costs. Mr. Miller

–– 11349

Softwood lumber agreement. Mr. Rabbitt –– 11350

Surgery waiting-lists. Mr. Perry 11350

Ethics advisory committee report. Mr.

Perry –– 11350

AIDS advisory committee reports. Mr. Perry

–– 11350

Highway safety. Mr. Peterson –– 11351

Points of Privilege

Takla-Sustut forest licence. Hon. Mr.

Speaker –– 11351

Taped conversations of Attorney-General.

Mr. Chalmers –– 11352

Taped conversations of Attorney-General.

Mr. Long –– 11352

Mr. Lovick

Mr. Rose

Committee of Supply: Ministry of Energy,

Mines and Petroleum Resources estimates. (Hon. Mr. Davis)

On vote 21: minister's office –– 11353

Ms. Edwards

Mr. Miller

Miscellaneous Statutes Amendment Act (No.

2), 1990 (Bill 67).

Hon. Mr. Fraser

Introduction and first reading –– 11378

Statutory Appeals Procedure Act (Bill 69).

Hon. Mr. Fraser

Introduction and first reading –– 11378

Attorney General Statutes Amendment Act

(No. 2), 1990 (Bill 76).

Hon. Mr. Fraser

Introduction and first reading –– 11379

Electoral Districts Act (Bill 3).

Committee stage. (Hon. Mr. Dirks) –– 11379

Mr. Vant

Mr. Zirnhelt

Mr. Kempf

Mr. Loenen

Mr. Mowat

Third reading

Vancouver Charter Amendment Act (No. 1),

1990 (Bill PR402).

Second reading. (Mr. Mowat) –– 11383

Mr. Mowat

Mr. Perry

Mr. Mowat

Vancouver Charter Amendment Act (No. 1),

1990 (Bill PR402).

Committee stage. (Mr. Mowat) –– 11383

Third reading

Vancouver Charter Amendment Act (No. 2),

1990 (Bill PR404).

Second reading. (Mr. Mowat) –– 11384

Mr. Mowat

Mr. Jones

Ms. Cull

Ms. Marzari

Mr. Mowat

Vancouver Charter Amendment Act (No. 2),

1990 (Bill PR404).

Committee stage. (Mr. Mowat) –– 11385

Mr. Perry

Third reading

Seventh-day Adventist Church (British

Columbia Conference) Act

(Bill PR403). Second reading. (Mr.

Crandall) –– 11386

Mr. Crandall

Seventh-day Adventist Church (British

Columbia Conference) Act

(Bill PR403). Committee stage. (Mr.

Crandall) –– 11386

Third reading

Municipalities Enabling and Validating

Act, 1990 (Bill 34).

Committee stage. (Hon. L. Hanson) –– 11387

Third reading

Municipal Affairs, Recreation and Culture

Statutes Amendment Act, 1990

(Bill 71). Committee stage. (Hon. L.

Hanson) –– 11387

Mr. Blencoe

Third reading

Assessment and Property Tax Reform Act

(No. 2), 1990 (Bill 78).

Committee stage. (Hon. L. Hanson) –– 11388

Third reading

Municipal Amendment Act, 1990 (Bill 50).

Second reading.

(Hon. L. Hanson) –– 11389

Hon. L. Hanson

Mr. Blencoe

Hon. L. Hanson

Range Amendment Act, 1990 (Bill 74).

Committee stage.

(Hon. Mr. Richmond) –– 11392

Mr. Zirnhelt

Mr. Miller

Third reading

Education Statutes Amendment Act, 1990

(Bill 41). Committee stage.

(Hon. Mr. Brummet) –– 11392

Third reading

Property Purchase Tax Amendment Act (No.

2), 1990 (Bill 70).

Committee stage. (Hon. Mr. Couvelier) –– 11393

Third reading

Carmanah Pacific Part Act (Bill 28).

Committee stage.

(Hon. Mr. Richmond) –– 11393

Mr. Miller

Third reading

Referendum Act (Bill 55). Second reading.

(Hon. Mr. Dirks) –– 11394

Hon. Mr. Dirks

Mr. Rose

Mr. Perry

Hon. Mr. Dirks

Senatorial Selection Act (Bill 65). Second

reading. (Hon. Mr. Dirks) –– 11396

Hon. Mr. Dirks

Mr. Rose

Mr. Miller

Hon. Mr. Dirks

Committee of Supply: Ministry of Health

estimates. (Hon. J. Jansen)

On vote 38: minister's office –– 11399

Hon. J. Jansen Mr. Perry

Appendix –– 11407

The House met at 2:03 p.m.

HON. MR. VEITCH : It's my pleasure to

introduce some very important young people who are in the members'

gallery today. I'd like to introduce Mr. Robin Dhir, Mr. Mark Pettie,

Ms. Meena Dhir and Ranji Katyal. Robin is the president of the Young

Socreds for Burnaby and the director of provincial high schools for the

provincial Young Socreds. I'd ask the House to bid them welcome.

MS. EDWARDS : I'd like to introduce today

the manager of environmental and government affairs for Chevron Canada,

Bill Strachan, who's visiting here from Vancouver, and with him is a

visitor from Great Britain, Guy Wareing, who is the manager of public

affairs for Gulf Oil in that country. I would ask the House to help me

make them welcome.

HON. MR. VANDER ZALM : It is my great

pleasure to introduce to the House today the very fine Madderom family.

They are visiting with all of us all the way from my native country,

Holland.

Many years ago the Madderoms, like my family, emigrated to

Canada and settled in Bradner, British Columbia. Their father, Mr. Cor

Madderom, worked with my father in the bulb business. The Madderom

family returned to the Netherlands in 1955, and the children grew up

there with relations and others. They have kept contact, and you may be

interested to know that Mr. Piet Madderom, one of our guests, is the

chairman of Worldcontact, an association of family and friends of

immigrants, with over 50,000 members in the Netherlands.

The sons and daughters of Mr. and Mrs. Cor Madderom are

visiting in the Legislature today, and I would ask that you extend a

warm welcome to Piet, Wim, Nelly and Adrie Madderom.

I also have the pleasure of introducing in the gallery today

three Richmond residents and good friends: Jim McPhail, accompanied by

his sons Terry and Gary McPhail. The McPhail family owns and operates a

variety of businesses, and through this have contributed significantly

to the development of our beautiful constituency and municipality of

Richmond. Currently Terry is president of the Richmond Chamber of

Commerce and president of the Social Credit riding association for

Richmond-Steveston, and I would ask the House to welcome the McPhails.

MR. CLARK : I have a number of introductions

today. First, I'd like to introduce two Victoria residents who were

wined and dined by members of the press gallery this afternoon: Heather

Tasker-Brown and Shawna Jamison. As well, visiting the gallery from the

constituency of Richmond is Margaret Weymer. Two other individuals —

Mike Collins and Joe Leclair — are here trying to meet with

Ministry of Labour officials regarding a very difficult labour dispute

in Burnaby. I'd ask the House to make these five individuals welcome.

HON. MR. STRACHAN : In the precincts today

are two representatives of the North Central Municipal Association.

Would the House please welcome Aid. Steve Wallace from Quesnel and Aid.

Colin Kinsley from Prince George.

MR. MILLER : I would like to add my welcome

to Mr. Strachan from Chevron and to make members aware — who

might not be aware — that Chevron has done a great deal in

terms of sponsoring the delivery of arts to many of the small

communities in British Columbia — particularly the ballet,

which Mr. Strachan has a passion for. I don't, but on behalf of those

small communities, I'd like to extend my welcome.

MR. SPEAKER : The Chair will take the

liberty of welcoming him as well, because we both work for the same

charity.

HON. MRS. JOHNSTON : Mr. Speaker, visiting

us in the precincts today are 30 ESL students from Kwantlen College in

Surrey. I would ask the House to make them all welcome.

MR. RABBITT : Mr. Speaker, it's my privilege

today to introduce three people from my riding. From the little

community I was born in we have the mayor of Princeton, Gloria Stout,

Ald. Ron Goodwin, and the administrator, Rob Grivel. Would the House

please give them a warm welcome.

Introduction of Bills

AN ACT TO PROTECT

PARKS AND WILDERNESS AREAS

Mr. Cashore presented a bill intituled

An Act to Protect Parks

and Wilderness Areas.

MR. CASHORE : Mr. Speaker, the purpose of

this bill is to give legislative protection to B.C. parks, wildlife

areas and ecological reserves and to complete the province's system of

parks and wilderness by expanding it to include 12 percent of the

province's land area as recommended by the Brundtland report.

Nothing in the act is to be construed as prejudicing any

present or future claim of aboriginal title to affected lands. The bill

also establishes an advisory group for the purpose of selecting

additional park sites and making recommendations with respect to the

elimination of all mineral exploration and timber cutting in parks and

recreation areas. The advisory group is also charged with developing a

procedure for the payment of fair compensation to affected parties and

workers.

Bill M236 introduced, read a first time and ordered to be

placed on orders of the day for second reading at the next sitting of

the House after today.

[ Page 11348 ]

COMMUNITY REFORESTATION ACT

Mr. Miller presented a bill intituled Community Reforestation

Act.

MR. MILLER : I know the government is

anxious to listen to this. These are good ideas, and they're short on

them.

This bill requires all reforestation, which is the

responsibility of the provincial government, to be undertaken by

community-based reforestation projects unless otherwise directed by the

district manager.

Under the current Forest Act this program would include the

areas in the province currently harvested under the small business

program, areas harvested before the fall of 1987 and areas of NSR land

harvested before that time.

If only the small business area is taken into consideration,

it could involve over 30,000 hectares of basic silvicultural work and

employ hundreds of people in each district of the province. The

district manager in each forest district is required to set up a

program to carry out community reforestation in the district.

The overall goals guiding each program will be reforesting

harvested areas to acceptable standards, employing and training young

and unemployed people, encouraging incremental silviculture and

maintaining or enhancing the quantity and quality of the forest

resource of the province.

Bill M237 introduced, read a first time and ordered to be

placed on orders of the day for second reading at the next sitting of

the House after today.

INCREMENTAL SILVICULTURE ACT

Mr. Miller presented a bill intituled Incremental Silviculture

Act.

MR. MILLER : This bill sets out a new

program for intensive silviculture on land where the province has

responsibility for reforestation. It recognizes that increased levels

of silviculture are essential to maintaining economic security for

forest communities while preserving the forest environment in unique

wilderness areas.

The bill requires district managers in the province to develop

plans for the incremental silviculture treatment of all eligible land

in the district. The broad goals of these plans are to reduce the loss

of productive forests due to the growth of non-commercial species of

trees, to improve the quality and quantity of wood available for

harvest from these lands and to improve the province's ability to plan

and carry out incremental silviculture programs. The bill requires that

plans be available for public viewing, and it allows any member of the

public to make written comments before a plan is submitted to the

regional manager.

Plans developed under this act will be renewed every five

years, and part of that renewal process will include an evaluation of

the results of the previous plan.

Bill M238 introduced, read a first time and ordered to be

placed on orders of the day for second reading at the next sitting of

the House after today.

AN ACT TO ESTABLISH AN ENVIRONMENT

AND LAND USE SECRETARIAT

Mr. Zirnhelt presented a bill intituled

An Act to Establish an

Environment and Land Use Secretariat.

MR. ZIRNHELT : The purpose of this bill is

to create a secretariat whose main function will be to provide support

to the cabinet with respect to resolving the conflicts over the use of

a diminishing land and resource base. In recent years this conflict has

been heightened by previous patterns of waste and over extraction in

B.C.'s resource industry and by the increasing pace of urban

development.

This bill is necessary in that the province currently lacks a

comprehensive and well-coordinated approach to the issue of environment

and land use conflict. The establishment of a secretariat will greatly

assist the resolution of these conflicts and will ensure that

environment and land use decisions are given serious treatment at the

highest level of government.

Bill M239 introduced, read a first time and ordered to be

placed on orders of the day for second reading at the next sitting of

the House after today.

PUBLIC SECTOR COLLECTIVE

BARGAINING DISCLOSURE ACT

Hon. Mr. Couvelier presented a message from His Honour the

Administrator: a bill intituled Public Sector Collective Bargaining

Disclosure Act.

[2:15]

HON. MR. COUVELIER : This act will introduce

a new concept of openness in public sector negotiations. It embodies

the democratic concept that the public has the right to know about

public sector collective bargaining — the right to know what

both sides of the bargaining table are proposing. In the end it is the

public which ultimately pays and suffers the effects of job action in

our public service. It is our intention to ensure that at the beginning

of negotiations and, most importantly, before any job action occurs in

the public sector the public should be aware of the issues in dispute

so they can make informed decisions about matters discussed at the

bargaining table and the consequences of a potential strike or lockout.

This act will provide a framework that allows the public, who are

always an affected party in public sector bargaining disputes, access

to full information about the issues — the employer and

employee positions on these issues as well as the financial impact.

Simply put, the premise of the legislation is that the public has a

right to know

[ Page 11349 ]

about public sector bargaining issues

that will ultimately impact them as citizens and as taxpayers.

It is also important, Mr. Speaker, to ensure, when we

encourage the sunshine in to public sector bargaining, that we do not

interfere with the collective bargaining process or dispute resolution

mechanisms already in place in our labour legislation. This is

accomplished with this bill. We intend that the process of collective

bargaining continues in a successful manner with a minimum of

interference from government, but that does not mean that the public

should be insulated from the facts that affect them directly. We

believe that the collective bargaining process in British Columbia can

be improved with openness and information to the taxpayers, and we

commend this bill for the House's consideration.

Bill 79 introduced, read a first time and ordered to be placed

on orders of the day for second reading at the next sitting of the

House after today.

Oral Questions

B.C. RAIL LINE REOPENING COSTS

MR. MILLER : I have a question to the

Minister of Transportation and Highways. In May of this year you issued

a press release stating agreement had been reached to reopen 315

kilometres of B.C. Rail line north of Fort St. James. You quoted a

figure of $25 million, to be financed over 20 years. Is this figure

still accurate?

HON. MRS. JOHNSTON : To the best of my

knowledge, it's still accurate.

MR. MILLER : Further to the minister, B.C.

Rail have conducted a thorough review cost-estimate of this line. I

have a letter from Mac Norris, the former chairman, confirming that the

cost in 1987 dollars is $42 million. Could the minister advise just

who's telling the truth here? Which is correct, $25 million or $42

million?

Interjections.

MR. MILLER : Mr. Speaker, there is a clear

discrepancy. The well-respected former chairman of B.C. Rail says it's

$42 million. The minister has an obligation to clarify this matter.

HON. MRS. JOHNSTON : Mr. Speaker, I resent

being asked who's telling the truth. But to further the information and

make it available to the House, I would suggest that the question

should be referred to my colleague the Minister of Forests (Hon. Mr.

Richmond).

MR. MILLER : Mr. Speaker, if the press

release was issued by the Minister of Transportation, presumably she

has responsibility for the issue.

HON. MRS. JOHNSTON : Mr. Speaker, I'll take

it on notice.

MR. MILLER : To the Minister of Forests, Mr.

Speaker. Two branches within your ministry identified the $25 million

cost as being totally unrealistic and too low. You're also attached to

the press release announcing the $25 million. Are you confident of the

figures, given that your ministry has questioned them?

HON. MR. RICHMOND : Mr. Speaker, the

reopening of this rail line will be of tremendous importance to the

people of that area — to the community of Fort St. James and

to the natives in the Takla area — and it is for this reason

that cabinet made the decision to award forest licences in that area to

enable that rail line to be reopened. I would suggest that, given the

press we've seen lately from the member for Prince Rupert, he is

against the reopening of this rail line.

Furthermore, Mr. Speaker, whatever the cost, it will be borne

by the forest companies who have been issued those licences. We have

been reassured by B.C. Rail that there will be absolutely no subsidy

and no cost to the taxpayers of British Columbia. So the issuing of

those forest licences was the correct decision made by this government

for all the right reasons. I would put it to that member: if he is so

against it, why doesn't he get up and say so?

MR. MILLER : The issue, Mr. Minister, is

telling the truth about the true costs. There's a scandal brewing on

this issue, and there's a cover-up.

To the Minister of Forests. I would ask him to explain why the

government is providing a massive subsidy to private companies to

access Crown timber.

HON. MR. RICHMOND : Mr. Speaker, I would ask

this House and that member: is there a scandal brewing just because

that member and Vaughn Palmer say so? Or does the truth have anything

to do with this?

When the deal is finalized and all the contracts have been

signed, the costs will be known to the taxpayers of British Columbia.

What will also be known is the fact that industry is going to pay the

costs, not the taxpayers, as implied by that member.

MR. MILLER : Mr. Speaker, it's interesting

that the minister says the costs will be known and the press release

says the costs are going to be $25 million. It is now apparent that the

bidding process for the Takla-Sustut was a rigged game. Given that as a

first start, is the minister prepared to refund to those western

applicants the significant amount of money they expended in putting

together applications for a forest licence of which you had

predetermined who was going to get it?

HON. MR. RICHMOND : On a point of order, Mr.

Speaker. I submit to you that the member's language is unparliamentary.

"Rigged game" should be withdrawn, and he should apologize to this

House.

[ Page 11350 ]

MR. SPEAKER : I must deal with the matter of

unparliamentary language. The Chair has some difficulty with

determining whether this language was unparliamentary. If the member

was imputing an improper motive, I would ask him to rise and withdraw.

MR. MILLER : Certainly, Mr. Speaker, if I

was perceived as doing that, I would withdraw.

HON. MR. RICHMOND : Mr. Speaker, to answer

the remainder of the member's question: this decision was one that

governments are elected to make, and that doesn't come easy when we sit

in the cabinet room and look at bids on various forest licences. I can

assure this member, this House and the people of British Columbia that

every aspect of these bids was taken into account, because we knew of

the importance to the Hazelton area, the Smithers area, the

Takla-Sustut and Prince George. It was a decision that cabinet debated

and discussed for hours in order to make the best decision for all the

people of British Columbia.

SOFTWOOD LUMBER AGREEMENT

MR. RABBITT : My question is to the Minister

of International Business and Immigration. Recent reports indicate that

the Canadian government is now considering negotiating U.S. withdrawal

of the softwood lumber agreement memorandum of understanding. This

agreement has worked much hardship on the interior lumber mills of

British Columbia. Is the minister prepared, in conjunction with the

Minister of Forests, to offer British Columbia's assistance and

cooperation to the federal government in this very important initiative?

HON. MR. VEITCH : Mr. Speaker, there's no

doubt that stringent application of the softwood MOU has worked a

hardship on the interior softwood lumber producers. I've informed my

counterparts in Ottawa that the British Columbia government will work

hand in hand with the federal government to eliminate the MOU or at

least provide the flexibility required to help the interior producers,

their employees and the families that depend upon them.

SURGERY WAITING-LISTS

MR. PERRY : Mr. Speaker, I have a question

to the Minister of Health. The question has some urgency, given the

imminence of the minister's estimates debate before this House. On

April 26 I asked the minister for a copy of the Dr. Keon report on

open-heart surgery in B.C., and I was assured I would receive it.

On June 5 I asked again in this Legislature for that report,

and I was assured I had received it. On June 19 I asked again, and I

was assured I would be briefed on it. None of those have come to pass,

and I would like to ask the minister whether he is now prepared to

table it so I might have at least a few minutes to study it before the

estimates debate.

HON. J. JANSEN : The commitment I made was

not in terms of giving a briefing. The commitment I made was in terms

of having a briefing note prepared for the hon. member. I indicated in

my response to him that the report is somewhat complicated and lengthy

and two years out of date, and I thought it fair that I give him some

background information to assist him in his review. That process is

ongoing, and when it is completed, I assure him I will give him that

report.

ETHICS ADVISORY COMMITTEE REPORT

MR. PERRY : A supplementary. Although the

answer was rather insulting, I am sure it was highly parliamentary. I

will simply ask whether, in view of the Premier's answer to the Leader

of the Opposition yesterday, the minister might be willing to table a

report, albeit an out-of-date one, from the provincial ethics advisory

commission on the abortion review which the previous Minister of Health

informed me last year had cost the taxpayers $8,000, or, failing that,

whether he would be willing to release the reports of the AIDS advisory

committee so that we could review them during the estimates debate.

HON. J. JANSEN : First of all, I am pleased

this member has suddenly shown an interest in this report. In my term

as Health minister this is the first time he has asked for that report.

I guess it was prompted by recent media coverage, and he is reacting to

that. Yes, I would be pleased to give him a copy of the report. If he

wants it later on, he can come and pick it up from me.

AIDS ADVISORY COMMITTEE REPORTS

MR. PERRY : This is a step in the right

direction. I did ask for that report last year. Would the minister then

be willing to table the reports of the AIDS advisory committee?

HON. J. JANSEN : I am not quite sure what

the member is talking about. We have in place an AIDS strategy report.

I am waiting with some anticipation for his contribution, because I

want to prepare this report to outline a strategy for British Columbia

in terms of dealing with AIDS. I'm not sure what other report he was

referring to. If he wants to give me some more clarification, I would

be pleased to look at that request as well.

MR. PERRY : Further supplementary, to

clarify for the benefit of the House. If memory serves me

correctly — I won't swear to it — I also requested

last year in this Legislature ongoing reports of the Provincial

Advisory Committee on AIDS, so I'd be happy to review those.

In March a lack of funding threatened Victoria's highly

successful needle exchange program. The

[ Page 11351 ]

Treasury Board approved the Health

ministry's application to approach the federal government for cost

shared funds. According to the CRD health officer, Ottawa has agreed to

pay its share. Why have no provincial funds been delivered to this very

important public health program to date?

HON. J. JANSEN : I guess what the member

wants to do is start the debates of the Health ministry prior to the

actual debate starting. We are meeting with the federal government to

determine the participation the federal government will have in terms

of this very successful program. I would be pleased to talk at length

about how we're dealing with this, what additional funds are going into

this program and what our commitment is to it. It's a tripartite

commitment — from the regional districts and from the cities

in some cases, from the provincial government and from the federal

government. We cover different aspects of the program, the federal

government carries out different aspects of the program, and the CRD

and the city of Vancouver carry out their contributions to this very

successful program. In fact, it's the model for North America.

[2:30]

MR. PERRY : Supplementary. I was more

interested in a concise, accurate response rather than a lengthy one.

I wonder if the Minister of Health can confirm whether or not

the application by the Capital Regional District has been held up in

the Premier's office pending his personal moral approval.

HIGHWAY SAFETY

MR. PETERSON : My question is to the

Minister of Transportation and Highways. My constituents are very

concerned about safety on our highways. In view of today's....

Interjections.

MR. PETERSON : Quit laughing. It's serious.

In view of today's revelations that CP Rail documents show

bonus payments to truckers for carrying overweight loads and avoiding

government weigh scales, has the minister decided, in cooperation with

the Solicitor-General (Hon. Mr. Fraser), to launch a full investigation

to determine how widespread this practice is and what steps need to be

taken to eradicate this abuse?

HON. MRS. JOHNSTON : This morning I was made

aware of the concern that has been identified. The matter does fall

under the jurisdiction of the Solicitor-General, as you correctly

pointed out. It's my intention, on his return, to have the matter

investigated and to determine what steps, if any, we should be taking.

Thank you for the question.

Point of Privilege

TAKLA-SUSTUT FOREST LICENCE

MR. SPEAKER : Hon. members, on Monday last

the hon. member for Prince Rupert (Mr. Miller) rose on a point of

privilege with respect to what he characterized as "misstatements of

fact" made by the Minister of Forests in the presentation of a bill in

1988. 1 have reviewed the material filed, which included a copy of Hansard and a copy

of the correspondence from the ombudsman to the mayor of Hazelton. In

addition, the member for Skeena (Hon. Mr. Parker), who was the Minister

of Forests at the time of the alleged misstatements, made a statement

of denial in the House later in the day.

My review of the Hansard

transcripts and the minister's statements leads me to conclude that

this matter involves a difference of opinion between two hon. members

as to facts. As has been ruled on numerous occasions, such a dispute

ought not to form the basis for a complaint of a breach of privilege.

HON. MR. RICHMOND : On a point of order, Mr.

Speaker, I thank you very much for the clarification and for your

ruling. It would be appropriate at this time if we made time available

for the member for Prince Rupert to apologize to the member for Skeena.

MR. SPEAKER : It is not normal, when the

Chair has finished dealing with a matter of privilege that has been

raised in the past, that there be any other intervening business. The

Chair has made a decision. If members wish to ask leave to make a

statement, that is always appropriate.

MR. ROSE : I'd like to rise on a point of

order to answer the government House Leader's point of order and demand

for an apology. If the situation was ruled not a matter of privilege

but a dispute over facts, then it imputes no motives on behalf of my

friend from Prince Rupert. Therefore an apology is not only not

customary, but isn't required.

HON. MR. RICHMOND : Mr. Speaker, the

opposition House Leader may say that no motive was imputed, but I

submit to you that the member said that the former minister

deliberately misled this House, and that is one of the most serious

charges a member can make against another member. It's extremely

serious. I know I need not tell you that there is hardly a more serious

charge that a member can make. The headlines it received, thanks to

people who believed it, are never going to be erased from the public's

mind, and I think that that member, in all decency, owes an apology to

the other member.

MR. MILLER : Mr. Speaker, if anybody is owed

an apology, it's the constituents in Skeena. As the person who was

present at debating the bill at that time, I honestly brought forward

the facts as I believed them to be true, and I respect your ruling.

[ Page 11352 ]

Point of Privilege

TAPED CONVERSATIONS

OF ATTORNEY-GENERAL

MR. CHALMERS : Mr. Speaker, I rise on a

matter of privilege with respect to the serious allegations made

against me by the Leader of the Opposition. I am tabling herewith two

affidavits which will be forwarded to the RCMP with regard to the

comments referred to by the Leader of the Opposition.

The facts of my matter of privilege are that on July 12, in

company with the member for Mackenzie (Mr. Long), the first member for

Nanaimo (Mr. Lovick) stated in a conversation at the St. John's

airport: "We have known about the taping for months." He went on to

say: "I am the chairman of our P&P committee of caucus, so I

knew all about them." And once again, he said: "We have known about

them for months." Mr. Speaker, these statements were made not once but

twice in that specific conversation. Therefore in view of this

information and in view of the fact that the Leader of the Opposition

has called me a liar, I demand a full and complete apology.

MR. SPEAKER : Before I deal with the first

member for Nanaimo, I must ask the member to advise the Chair if he is

prepared to move a substantive motion on the matter.

MR. CHALMERS : Yes, Mr. Speaker, it has been

tabled with the other documents.

MR. SPEAKER : Thank you very much, hon.

member.

Point of Privilege

TAPED CONVERSATIONS

OF ATTORNEY-GENERAL

MR. LONG : Mr. Speaker, I rise on a matter

of privilege. With respect to the remarks made on the television news

last night by the opposition leader in front of 500,000 British

Columbians that I was lying, I demand an apology from the Leader of the

Opposition.

AN HON. MEMBER : He's never here.

MR. LONG : He's never here. Well, that has

nothing to do with it.

The point is, Mr. Speaker, he....

Interjections.

MR. SPEAKER : Order, please. Hon. members,

let's just briefly review the process. If a member rises and wishes to

bring forward a matter of privilege, he states the matter briefly and

tables the information that the Chair may wish to have. If there is

written information that the Chair should consider before deciding

whether or not a prima facie case exists, then that information should

be tabled, and then the Chair should be advised that the member is

prepared to move the motion. There is no debate.

It would be a courtesy to the Chair if during the time that

the member is briefly stating the facts we could have silence in the

chamber.

Would the member please continue.

MR. LONG : Mr. Speaker, I feel that with the

accusation made against me by the opposition leader, he owes me an

apology. I feel he misled the people of British Columbia, and he

deliberately misled this House, in those accusations against me. I

demand an apology.

MR. LOVICK : Mr. Speaker, insofar as I am

named in the member for Okanagan's motion of privilege, I assume I have

a right to offer a brief comment.

MR. SPEAKER : Please continue.

MR. LOVICK : Mr. Speaker, my comments will

be very brief. I am offended bitterly to hear a suggestion that I made

two separate statements on a particular night that are remembered

verbatim by people sitting in a bar. Frankly, Mr. Speaker, I think that

defines and defies credibility. All I will say....

Interjections.

MR. SPEAKER : Order, please. Hon. members,

there can only be one member standing at a time. I'd ask the second

member for Okanagan South (Mr. Chalmers) to take his seat.

Interjections.

MR. SPEAKER : Order, please. Hon. members,

this is not a debatable issue. There is no debate on this issue. But I

will hear what the first member for Nanaimo has to say. I ask the

member to continue.

MR. LOVICK : Mr. Speaker, to make the point

as briefly and succinctly as I may, I deny emphatically that I made the

statements I am alleged to have made by the members opposite.

MR. SPEAKER : Hon. member, that concludes

the matter. The Chair will take the information which will be available

in Hansard

and bring a decision back to the House at the earliest opportunity.

MR. ROSE : I would just like to reserve the

right of the Leader of the Opposition to reply to this charge the next

time he is here — at the earliest appropriate moment.

MR. SPEAKER : The Chair has established the

practice for some time that if a member is not present when such

matters are made, we will deal with it when the member is first here

after that.

[ Page 11353 ]

Orders of the Day

HON. MR. RICHMOND : Mr. Speaker, I call

Committee of Supply.

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

ESTIMATES: MINISTRY OF ENERGY,

MINES AND PETROLEUM RESOURCES

On vote 21: minister's office, $308,757 (continued).

MS. EDWARDS : I would like to offer my

apologies to the minister for not having been here earlier today when

he began his estimates and made his statement. I had no idea the

minister would be coming in to begin this long and onerous task we have

in front of us. I have read his comments in Hansard , and I will

proceed as quickly as I can.

I assume the minister will be joined by some members of his

staff. I thought I would tell him that I will be dealing first of all

with petroleum resources issues. After we deal with things that relate

to natural gas, I will want to talk about electrical energy issues and

then move on to mining issues. If it makes any difference to the people

who are with the minister, that will give them an idea of how I want to

proceed.

Mr. Chairman, I want to talk to the minister first of all

about his policy paper entitled "The British Columbia Natural Gas

Removal Policy." This paper was released in May of this year, and it is

the policy the ministry is proposing for dealing with natural gas. As

the minister knows, it takes away a large part of the requirement for

proving security of supply to any of the producers who want to sell gas

or export it. This paper has been described to me as a recipe for

disaster by some of the more informed observers and participants in the

natural gas industry in this province. It has been called absolutely

outrageous in the way it treats security-of-supply tests.

In Alberta, by the way, there is less security of supply

required than in B.C., and the minister says that that's the direction

he wants to go in. He wants to allow the producers to be able to sell

their gasoline without proving a secure supply. In Alberta there was 29

years of supply in 1983. Right now there are only 19 years of supply

proven, and next year it's likely to be 16 years. In B.C., which has a

100 percent requirement for proof of supply, there is a 23-year supply

proven now.

[2:45]

The expectation by informed observers is that the declining

trend will definitely be there and that there will not be that kind of

supply security because of the withdrawal of the requirements. The

whole test could be described as going, going, gone. In B.C. it's

going, in Alberta it's going, and in Canada it's gone. It's a very

tenuous situation. In about three to four years, I am advised, we in

Canada may not be able to meet our production levels.

If there is any need to cut back on export sales, it will hurt

our industry considerably more than it will hurt.... I will clarify

this. If there is an emergency and we say, "Look, there isn't enough

supply on the basis of there being an emergency; we're going to reduce

the number of export sales that are going to be allowed" —

that kind of thing, which has to be equal to what is done on the

American side of the border because of the free trade

agreement — the industry on our side of the border will be

hurt considerably more than the industry on the other side of the

border.

If we had kept the B.C. Petroleum Corporation, we could have

kept the border-price test. We should have kept the border-price test,

which is another issue. No longer is the border-price test going to be

kept, according to this policy paper. As it is, we are already selling

gas to the United States at prices lower than we're selling it for

within Canada. With the disappearance of the border-price test, it will

regularly be less, because we are not going to require the same royalty

for export sales as for domestic sales.

The whole process is going to be market-driven. That's in the

paper regularly. It's a phrase the minister uses, and that's what he

has been trying to achieve. Well, if you look at where the market is,

you know that it is in the U.S. What that means is that it is going to

be U.S.-driven. The question to the minister is: why in the world would

we benefit the export market at a cost to the domestic market? That

seems to be the whole tenor of this report.

I would like to talk a bit about the risks involved with this

proposal that has been put forward by the ministry. The risks involved

have been described in two spots in this paper. I'd like to read the

two statements, which seem to be directly contradictory. I'm sure the

minister doesn't want to leave the impression of a contradiction, so

I'm sure he'll be able to explain this for me.

On page 5 of the report it says: "Contracts provide the best

means of supply production." Producers, exporters and transmission

companies say that contracts provide the best means of supply

protection. Interestingly, that compares with the statement on page 9,

which says that "the ministry recognizes that buyers face greater risks

with development contracts than with contracts fully backed by

established reserves."

The whole issue is very clearly laid out in the paper. What

happens is that we become well aware of what the minister has done. The

minister saw a conflict. He saw that the conflict was between

producers, exporters and transmission companies and the consumers and

the utilities, basically — the core market people. That has

been very clear, because he says that the mandatory surplus test, which

was adopted in 1987, was a compromise between the two highly polarized

positions. Local distribution utilities had argued for retention of the

tests, while producers, exporters and transmission companies had

favoured its elimination. So it's very clear where the conflict is;

there is a huge polarization, a clear difference of opinion. The

residential and core-market consumers are pitted against the producers

and the transmission people. The ministry sees this, and it

[ Page 11354 ]

is put into the paper. The minister

chooses — without any input from the consumers — to

go with the position favoured by the producers, the exporters and the

transmission line people.

The only protection the residential core-market consumers have

is that they are still regulated. While the other sales of gas are not

to be regulated, the utilities and private purchases will be regulated.

The Utilities Commission may well tell the utility that they can't pass

on enough of the costs, that they have to get a contract to buy the gas

and that they have to provide a long-term supply to their consumers.

But they may not be able to do that.

This is not anything near a level playing-field. It is very

uneven ground, and it gives the opportunity for friends and insiders to

get special treatment. The same polarized views continue to exist

today, and the minister makes that very clear. In the paper on page 5

it says: "The same polarized views continue to exist today." So it is

not an attempt in this paper to deal with the conflict — to

deal with the contradiction and the polarization. The minister has

simply chosen one side of the issue and has gone ahead with that.

Consumers will also have to put up with all kinds of very

loose requirements. It is interesting to go through the paper and look

at what is going to be required in order to get energy removal

certificates. It suggests that a conditional ERC may be

granted where dedicated lands are considered by the ministry

to have sufficient potential within a reasonable time-frame." What is

"sufficient, " and what is "reasonable"? Later you move on to a further

spot — on page 10 of the paper — where it says you

can have a certificate for longer than the 15 years if the ministry is

persuaded that it is required. What is it that is going to make this

persuasion? It is extremely loose. It is not clear to anybody who wants

to make an application. On the next page it says: "...if the applicant

is able to provide justification." What is that justification? To top

it all off, the paper goes ahead and says that the ministry has not yet

even decided how it's going to monitor short-term withdrawals. It's so

loose that it makes it extremely difficult to know what is going to

come out of this policy.

We have an interesting statement on the situation when the

ministry begins managing B.C.'s gas reserves instead of requiring the

companies to prove that they have secure reserves so that they can

remove as much gas as they have in reserve. It suggests that the

province will manage British Columbia's gas reserves, and then the

paper says: "in return." I wonder if the minister will be able to

explain to me what the trade-off is here. In return for what? The

government is taking over the task of managing the supply and seeing

that there is security of supply. In return for doing this for the

industry, the ministry will give the industry access to the ministry's

inventory. Maybe they should have access to the inventory, but what is

the return? Is there a trade-off there? What is the paper trying to say

in this case?

One of the more interesting parts of this is about who is

taking the risks on this. We are talking about the security of supply.

When the province begins to manage the reserves in the province, the

security of supply is basically in a 15-year basket, except for.... I

would like the minister to explain to me the exceptions. He talks about

short-term energy removal certificates. Now there is some question

about the length of a short-term ERC. Is it for less than two years, as

it says in the paper? Or is it, as described in the seminar on this

paper that I attended, for less than five years?

However, there is going to be no requirement at all, no

reserve dedication required at all for short-term ERCs. Then it says in

the paper right there on page 13: "Gas removals from British Columbia

are predominantly short-term."

Does that mean that nearly all of the gas transactions that

happen are not going to have any requirement for reserve dedication? It

seems to me that the largest part of what's going to happen will have

no requirement whatsoever. Even though the minister says that we're

going to require a 50 percent dedication, in fact most of the

transactions will not have any requirement attached to them whatsoever.

There is another risk that will have to be borne by somebody

or other. It would seem to me that we need the answer to the question

of what happens when the capacity to move gas — in other

words, the pipeline capacity — is built or allowed to be

built, and then it's not used because contracts such as these

short-term contracts are not used.

Who is going to be paying for the unused capacity? It seems to

me that the answer usually is the utility, who regularly is going to

have to use a certain part of that pipeline. If all of the pipeline

isn't used, who is going to assure that the pipeline company gets its

return? I'd like an answer to that from the minister, because I think

he would like to answer that one for the people of British Columbia.

What I was most shocked about with this whole paper —

at the very beginning of it — was that the minister chose to

announce this policy through his deputy minister in the province of

Alberta at a Calgary meeting. I'd like to ask the minister why he chose

to ignore any courtesy to the people of British Columbia by announcing

this policy in Alberta.

If, when you read this paper, you wonder who was going to be

favoured in it.... As I say, I think the minister made it very clear

that this policy was very much made for the producers, the transmission

companies and the exporters. It says that the monthly reporting, which

is to be replaced by the ministry gathering and disseminating

information, was made not because that's a better way to do it, but

because it saves the burden of reporting to the industry.

Is that really the reason that it was changed? I'd like to

know that. And I'd like to know one other thing right now. I would like

the minister to define for me the goal. The goal of the policy is said

to promote sustainable development of the industry. Well, sustaining

the development of the industry is a very good phrase, I'm sure,

because it may be

[ Page 11355 ]

confused by the public to mean what is

supposed to be represented by the term "sustainable development, "

which is usually used in terms of the environment. It means to sustain

the environment, or development which allows the sustenance of the

environment.

In this case, the paper says the goal of the policy is to

promote the sustainable development of the industry. I would like the

minister to define that partly in the context of that statement in his

paper and also in a statement made by the Premier who leads his

government. The understanding by the Premier as to what sustainable

development is may have something to do with this paper talking about

sustainable development, when it really is applied only to the industry.

[3:00]

The Premier was quoted at a mining gathering in May 1990 to

say: "The real solution to mine closures is mine openings, and that's

sustainable development." Does the minister agree with that statement?

Is that your definition of sustainable development: when you close a

mine, you open another one? That may well sustain the industry, but it

doesn't sustain the environment. I would like the minister to define

for me in some clearer terms what he means by the goal of the policy,

which is to sustain the development of the industry. Is that what he

meant, or did he mean he would like to have development and sustain the

environment? I would like the minister to respond to some of those

questions.

HON. MR. DAVIS : Mr. Chairman, the hon.

member raises a number of questions; I'll try to answer them to the

best of my ability. I'll try to deal also in simplistic terms, because

there are certain broad generalizations which are possible. While this

is a complex industry, one can certainly cut through the complexity in

many areas by making some categorical statements.

One of the essentials — indeed from an economic point

of view the main essential — of our policy is that the

delivered price of natural gas to the consumer is market-driven.

The hon. member is trying to turn this upside down and say

that our policy favours the producer and the transporter. What does

market-driven mean? Market-driven means that the consumer —

the end buyer, the user — has the principal say. This is much

more likely to happen when energy is in abundant supply. There is

considerable competition around the world, oil prices are down, coal

prices are down, and so on. For the last three or four years the

consumer has been king. The consumer has called the shot. The utilities

directly selling to the consumer, be they in this country or elsewhere,

are the ones which have called the shot. There's an excess of

production and supply, the pipelines are running less than full, and so

on. The producer and the transporter, compared to some other times of

shortage, are really in difficulties.

It's the consumer who's calling the shot. It's the end-use

utility — for example, in British Columbia, B.C.

Gas —

which is in the driver's seat, so let's remember that this is not a

situation which is highly favourable to the supply end, the producer

and those big, bad oil companies, to use the hon. member's kind of

terminology. It's not all in their favour. Currently it tends to be the

other way around. The consumer end is calling the shot. The end-user is

in the driver's seat.

The hon. member, like most people in the New Democratic Party,

takes a static and always very pessimistic view of things when it comes

to resources. They don't have any concept of a dynamic approach to

resources; it's always a snapshot. You look at the snapshot, and you

immediately become alarmed.

I like to refer not to one but to a host of commissions which

have been established in this country and elsewhere to look at the

supply of resources. Invariably those commissions taking the snapshot

approach have ended up in alarm. There's only so much gas proven,

there's only so much iron ore proven and there's only so much oil

proven.

There was a presidential commission in the 1860s —

that's a long time ago — and the question put to that

commission essentially was: when will we run out of oil for the lamps

of the United States? The commission reported back after several years

of deliberation that the proven reserves of oil in the United States at

current rates of consumption would last ten years. That's an NDP

approach. The NDP has no idea of the dynamics of an industry. Industry

will have just about as much proven as it needs to meet current

production levels, and won't prove up any more unless there's some law,

some edict which requires them to prove up 15 or 20 years supply. We

have an incredible resource of natural gas in this country; a large one

in B.C., but fantastic particularly in the Arctic territories.

We only have 30 years of proven supply today, and we're not

likely to have much more than that proven up because there's no

economics in it. You can't sell any more than a relatively short-term

amount like 25 years maximum in contracts, so why would the industry

have proven up beyond any possible doubt the ability to produce more

gas until the market develops, their contract is possible and contracts

come to be signed? Then they'll put down a few more holes and not only

find but establish with absolute certainty that the supply is there.

We've got a lot of natural gas in north-eastern British

Columbia, and the fact that there have been fairly strong markets for

some years has given the industry enough money to prove up 30 years of

supply. In other words, if they didn't put another hole down up there,

the industry could run for 30 years full bore at current rates of

production without needing any other sources.

Who says that there isn't more energy there, that there isn't

more gas there because of, essentially, long-term market prospects? We

have a drilling program going on up there which is close to, if not as

intensive as, it's ever been.

The industry was drilling for gas with great enthusiasm in the

late seventies. With a drop in the

[ Page 11356 ]

world price of oil, the industry

pulled back. Lately it's begun to explore more actively again. But it's

gambling, in part at least, that it will be able to sell some of this

production, not just in B.C. and in eastern Canada but also into the

United States.

To the extent that the market is slow in development and to

the extent that the price for natural gas in the marketplace stays way

down as it is now, that interest is limited. It's surprising that we

have all the activity in B.C. that we do, especially since it's fallen

back dramatically in Alberta. It's simply that the B.C. climate's a bit

better from the point of view of geology, and also our policies at the

provincial level are more market-oriented, if you like, than those of

Alberta.

They think they have a better chance of selling more gas in

the shorter middle-term, or they simply wouldn't be looking at

prospects in the B.C. Peace River area with the current intensity and

enthusiasm.

The hon. member talks as if a different-minded regime and a

different attitude on the part of the provincial government would

produce security. I would like to remind the hon. member that in the

last NDP year, we did begin to run out of natural gas, if only because

the industry ceased to drill. They ran into a water-flooding problem

which they hadn't encountered in the Peace River area before. That's

all history. The industry knows how to deal with that today, but it

didn't then. Production had to be cut back especially on the export

market side.

We are unlikely to face that ever again, partly because the

industry knows more about that kind of problem, but mostly because the

proven supplies are much greater now than they were and the market has

given signals that in another five, ten or 20 years, B.C. Gas will find

an outlet. The small producer especially has trouble raising money. The

only way, it can raise money is to sell some of its proven supply.

Small companies — as well as large — are

interested in a relatively dynamic approach to marketing. Ours is

dynamic. We're saying to the producer that you don't have to have every

last cubic foot proven up, but you must have enough wells drilled and

enough information on reservoir size and so on to give our government

geologists confidence that you will be able to deliver the full amount

identified in the contract, and that you will be able to honour those

contracts throughout their lifetime.

There is a risk of some order there, but a minimal one,

especially if you look at the totality of the reserve position in the

province and the prospects for future discoveries. We're covered many

times over if you look at the total picture. It's just

that some producers, especially the small ones, will

appreciate not having to have every cubic foot they are likely to

deliver over a 15-, 20- or 25-year period proven up today before they

get their energy removal certificate to remove gas for consumption in

B.C., Ontario and the U.S. Pacific Northwest or California.

We've been a little more — to put it this

way — considerate as far as the small producer is concerned.

It doesn't have to have every cubic foot proven up today, but the

geological and other information has to point with considerable

certainty towards them having not only enough gas, but considerably

more gas potentially there than is indicated as deliverable under the

contracts.

The hon. member has said that our policy somehow favours

exports. The policy is market driven and market oriented. The test we

apply, in addition to making sure there's enough gas there to want to

reach a contract, is that the price the producer receives at the

source — effectively, at the well — is the same

regardless of destination.

There is no preference given for gas going south as opposed to

gas going east. The price must be the market-determined price. There's

a going price. The average of recent contracts will be published every

month. Unless the price entered in a new contract is directly

comparable with — equal or higher to — the going

market price, the energy removal certificate will not be forthcoming.

It doesn't matter what the destination is — domestic or

foreign. The price received by the producer cannot be discriminatory or

preferential in any way. It has to be a market-determined price. It has

to be, if you like, a level playing-field as far as pricing is

concerned.

The hon. member has said that we've given up on the border

price. It's comfortable to think that every proposal and every contract

would be judged by some hypothetical price at the border and that all

prices at the border had to be 100 percent or maybe 105 percent of the

price for gas sold nearby in Canada. In other words, as the gas crosses

the border, it's priced at the price for sale right there in Canada.

Therefore for every mile it goes beyond that, it's priced higher than

Canadian gas being sold in the United States.

Our approach now is to have the same price, regardless of

destination, in the field. The farther away you get from the field the

higher the price because of transportation charges. Automatically a

U.S. buyer — south of the 49th parallel — will pay more than

any buyer In British Columbia because of distance and pipeline tariffs.

They are higher the further you go.

That is the essential, natural, ingrained protection that

Canadians — certainly British Columbians — have in

respect to natural gas pricing. Prices are best near the field, at the

field. Prices rise as you move away from the source. Prices will be

better in Prince George — delivered in Prince

George —

than in Vancouver; and prices in Seattle, certainly in San Francisco,

will be much higher than prices here in British Columbia. So it follows

automatically, from the general pricing approach we're taking, that

there is a delivered-price differential, not at the wellhead but

certainly as one moves out to markets. The price rises; the delivered

price will be higher. Those close to the source will pay less than

those at a distance. That's some comfort to industries locating in the

Prince George area or, better still, Fort St. John, as opposed to

industry locating in the lower mainland, and certainly as opposed to

industry locating anywhere in the U.S. west coast states.

[ Page 11357 ]

So much for this business of favouring foreigners. Why would

any government in its right mind even contemplate for a moment a policy

which favours foreigners? It doesn't make sense, and clearly the

pricing mechanism we have in place automatically protects....

[3:15]

MR. CHAIRMAN : I'm sorry, Mr. Minister, but

time has expired under standing orders — unless one of your

colleagues would like to intercede.

HON. MRS. GRAN : Mr. Chairman, I'm finding

the remarks by the minister extremely interesting, and would be happy

to hear more.

HON. MR. DAVIS : Thank you, Madam Member.

Thank you, Mr. Chairman.

I'll wrap up in a couple of moments, but the hon. member did

ask some two dozen questions, and I'm trying to answer them in a

general way all at once.

We're putting more emphasis on contracts. The producer must

honour his contract to produce and deliver. The contract is sacred.

It's sacred insofar as a sale, for example, to B.C. Gas is

concerned — the gas going to consumers in British

Columbia — or to a utility in the United States. But the

commitment does not extend beyond the life or volume named in the

contract. The commitment is over once the volume of gas named in the

contract has been delivered and the number of years — if

there's a duration element in it — has expired. Incidentally,

short-term sales are less than two years, and that's the great majority

of current sales; but firm long-term sales could be of the order of 15

years or even 20 or 25 years.

Of course, we look at the longer-term sales, which generally

are to utilities, with much greater care and scrutiny than the

short-term ones, which tend to be more on a spot basis. They are

generally entered into by industries which think they can take

advantage of producers while the market is soft; and they don't halve

to worry too much about the longer term, hoping that prices will stay

down. I would like to repeat what I've said to industry often: they had

better take the long view of things, especially if they are a Canadian

industry. They should sign up gas well into the future because some day

gas will not be the bargain that it is today; and it may go up in price

more or less in line with the cost of living and not keep dropping as

it has done in recent years.

Utilization of pipeline capacity. More and more on this

continent pipelines are being regulated as common carriers. They no

longer own the gas in the line. They simply carry for a customer, and

they are allowed to charge fees at rates approved by commissions. The

rates in British Columbia are set by the National Energy Board on

Westcoast's large-diameter pipe and by the Utilities Commission in

respect to the shorter, smaller lines reaching out to individual

municipalities.

They are allowed a rate of return on their total investment,

and the worry, especially on the part of the user, but also the

producer, is that they are allowed to install too much pipe or too many

compressor stations, that they "gold-plate" their facilities unduly,

and that being allowed a rate of return on that big investment, they

are able to charge a price that's higher than would more properly be in

place. It's up to commissions, it's up to interveners at the hearings,

to ensure that the pipeline companies and the distributors don't get

away with gold-plating. That's the main reason why they're regulated,

the main reason why governments step in and say: "You're a monopoly.

You have to be watched. You must not be allowed to install unnecessary

facilities. Because you're a monopoly, you can't be allowed to charge

any old price. You are only allowed a certain return on your

investment — no more, no less."

The hon. member is right if she is saying that the pipeline

companies have an incentive to overbill. They do recover their costs

even if the line is not fully utilized, and that's something the

producers don't like — certainly the consumer doesn't like it.

It's therefore a matter which public bodies like our regulatory

commissions and the National Energy Board have to watch with great

care. There is concern there. It's covered by "regulation."

Finally, sustainable development. We all know that certain

resources are in some measure finite. We tend to talk about water power

as if it's available indefinitely — and it is, certainly in

comparison to other sources of energy. To that extent, hydroelectric

developments and related energy-using industries are sustainable. As

long as development occurs in a manner that's compatible with good

environmental practice, it is indeed a sustainable, highly desirable

event, both from an economic and a biological, or environmental, point

of view. So hydro is fine from the sustainable development vantage

point.

Resources like coal, while they are finite in an economic

sense, exist in incredible quantities. We hardly use any coal in this

province. We do export 12 million or 14 million tonnes a year,

principally for metallurgical purposes in Japan and the Orient

generally, but we don't use much of it. There's an awful lot of it in

British Columbia, and we don't have to be too concerned about whether

that export business can be sustained, at least from a quantitative

point of view. Competition is so keen from oil and natural gas, etc.,

that it's difficult to cover all the costs of coal-mining and coal

transportation. The problem in that industry is essentially costs,

economics; it's certainly not sustainability in the sense that

environmentalists think of.

Oil and gas are in between. Gas is more available in the

earth's crust than oil. Even if you include tar sands, oil shales and

so on around the world, gas is still more plentiful. One reason it's

more plentiful is that it's not only derived in part from oilfields or

oil sources, but it's also generated by the rotting of vegetable

materials of all kinds. We've all seen gas bubbling in swamps; it's

rotting material at the bottom of the pond. That is natural gas. Nature

is forever producing natural gas, and it's being found in incredible

places and at great depth. There is a big resource there. At some point

it begins to run out. I

[ Page 11358 ]

suggest that time is centuries away,

not years or months. When there are signs that gas is becoming scare,

because you have to reach further north or go deeper for it, then you

simply go over to the conclusions of that presidential commission of

the 1960s which said we'll have to switch to natural gas made from

coal. Coal is much more abundant.

We've got gas in its so-called natural form. We've got gas

that can be made from oil, gas that can be made from coal and even gas

that can be made from recently harvested crops. There really isn't a

supply problem; it's a cost problem. It's cheap; it's cheap today. It's

very low-priced in the market. It's the cheapest fuel available not

only on this continent but generally around the world. Gas costs half

as much to deliver for space-heating purposes in the lower mainland as

electricity, less than half as much as oil, and it is tending to go

down compared to those other commodities.

The consumer is in good shape. The consumer is paying a much

lower real price for gas than ever before. The consumer is well

protected by our system. It's the producer who we want to keep

reasonably active, proving up some additional supplies. The industry is

healthy but constrained by a market that is very selective and insists

on very low prices. So I really can't feel too sorry for the consumer.

The consumer is really in the driver's seat today, and I think for

quite some years it will continue to be the case.

MS. EDWARDS : I noticed the minister accuses

my party, the New Democrats, of taking snapshots and then deciding that

the snapshots show the whole picture. Then the minister proceeds to

tell me what is in his snapshot: that the consumer is currently king

That doesn't last forever, Mr. Chairman. However, that's the basis on

which the minister went ahead with his paper.

His snapshot says that right now the consumer is king; right

now we don't need the security of supply. However, I notice in his

paper he says the ministry recognizes that buyers face greater risks

with development contracts than with contracts fully backed by

established reserves. The minister has simply made his choice. He laid

out the two sides — the polarized choice — and he has

chosen the side which gives the greater risk to the buyer, to the

utility, to the residential and core-market consumer. The minister has

made that very clear in his remarks.

I would, though, like some more specific answers I will ask

some short questions that I am sure the minister won't have any trouble

answering in as short a way.

First of all, why did he announce this White Paper in Alberta?

HON. MR. DAVIS : I think it is fairly

obvious that the producers — certainly the head offices of the

producers, and this includes virtually all of the little

people — are in Calgary. Sure, we released it in Calgary; we

released it simultaneously in Vancouver and elsewhere. But the people

who were immediately able to grasp its significance.... Again, it was a

paper asking questions as much as defining policy with great finality.

The people we expect to hear from are principally headquartered in

Calgary; they are for all of western Canada. We could have had a

meeting in Vancouver and then gone to Calgary the next day. The

Vancouver meeting wouldn't have been at all well attended.

I guess the hon. member is saying: "Why didn't you play

politics and pretend that the industry is headquartered in Vancouver?"

It isn't. It is headquartered in Calgary.

MS. EDWARDS : So again what the minister

tells me is that he was speaking with the producers, the exporters and

the transmission line headquarters. He wasn't talking to the consumer.

He wasn't talking to the people in B.C. who are going to do this, and

he didn't ask the producers in Alberta to come to Vancouver to hear

what he had to say. My suggestion that the minister, in this paper,

very much looks to the point of view of the producer and the exporter

is supported by what the minister has said.

My next question is: why would the minister continue to make a

preference for the export customers? He says he doesn't do that. He

says that it is market-driven and therefore there is no price

preference. But he does recognize that because of the transmission

differences, not the price of gas at the plant where it is produced....

Interjection.

MS. EDWARDS : That's right. But he says by

the time it gets further away from where it is produced it is going to

cost more, and because of that he gives a special preference in

royalties to the foreign buyer. Why does the minister do that?

[3:30]

HON. MR. DAVIS : The hon. member has grasped

the essentials of pricing along the route. She has, however, somehow

invented an idea that we will be charging a different royalty depending

on where the gas goes. That's not true at all. The royalty is the same

for everyone. It's 15 percent of the gross value of sales. It isn't 15

percent plus 1 percent for Canadians and 15 plus 10 percent for

exporters, or vice versa. It is 15 percent for all producers. Where is

the preference in that?

I think she is confused by the fact that we do have a

fail-safe — if I can put it that way — clause, which

really we copied from Alberta when Alberta was concerned about being

raided by distributors and buyers in Ontario, and some of its weaker,

smaller producers, in order to get cash, were selling at lower prices

than the going price. We first will ensure that they don't sell at less

than the going price. But there is a formula there which says that if

prices generally are declining — and I am talking about the

going price in western Canada — we still won't accept for

royalty purposes a price that is less than 90 percent of

[ Page 11359 ]

the recently established price. But I

don't think we will ever get to that situation.

Alberta allows 20 percent. Eighty percent of the going price

paid by everybody in Alberta is the minimum price that they will

recognize for royalty purposes. That applies to sales in Canada as well

as the U.S. If our 90 percent formula is ever triggered, it will apply

wherever the gas is going. It isn't just focused on the Americans.

The way we are administering, I can't see us approving a

removal certificate involving a price which is materially different

from the current going price in the area. We simply have a clause that

covers the possibility that prices generally are trending down so fast

that a 90 percent formula would be triggered. It would be triggered

regardless of where the gas was going. The provincial treasury has that

additional comfort level. It will never be employed.

MS. EDWARDS : The minister is correct. I was

sloppy in the way I put that. What I have to say is that when the

minister allows a royalty to be paid on a price that is 90 percent of

the going price, that going price is what the utility consumer pays.

They are going to pay that anyway. They are never going to get the

opportunity to have that lower going price — at least very

infrequently or very disproportionately. It's the residential utility

consumer — the core-market consumer — who is going to

pay the royalty on 100 percent of the regular price.

They've got long contracts, I presume. Utilities are still

going to be required to have at least 15-year contracts. The commission

will be directed to ensure they have assured long-term supply. They

will therefore be paying the higher price. They will be paying the

price that will show up on that monthly price citation.

It's the other people who then will be able to pay a royalty

on a price that is at 90 percent of that royalty floor. As I understand

it, that's the way it is. It gives a better opportunity to the major

buyers who are outside the utilities, and those are the export

people — the people who buy from outside the country.

Could the minister clarify for me the statement in the paper

about short-term energy removal certificates? Is that the major amount

of sales? What are the proportions of short-term energy removal

certificates to longer-term? The minister says that short-term means

two years or less. As I say, there are other people in the ministry who

have interpreted that a little differently. But at any rate, long-term,

I presume, is five years — maybe more than two

years —

up to that 15-year mark and also beyond the 15-year mark which the

paper is going to allow the minister to have judgment on.

HON. MR. DAVIS : The short-term, according

to our definition, is any contract that's two years or less. Long-term

is anything over two years. The hon. member is right. Utilities

generally are required to buy firm and for a reasonably long period, or

the regulatory bodies aren't satisfied.

The hon. member seems to think that somehow American importers

are favoured over Canadian core-market suppliers. In British Columbia,

there's really one substantial Canadian core-market supplier, and

that's B.C. Gas. Last year B.C. Gas-and this matter comes up

annually — was able to get a much bigger price reduction in

the field than anyone else. This was purely market forces. B.C. Gas is

by far the biggest buyer in the Peace River area of British Columbia.

So if size counts for anything — and it does some; certainly

large volumes and economics of scale and so on — then B.C. Gas

is the price-setter, not outfits that come in from the U.S. and buy a

few months at a time or industries in B.C. that buy short-term, like

pulp mills.

There's no reason why B.C. Gas, wanting to maximize its

profits, would pay more for gas than it has to. It's going to try and

drive as hard a bargain with the producers as anyone else. The history

of the last couple of years is that B.C. Gas has been the one outfit

that's been able to drive the field price down. There's nothing on the

record that indicates that outfits in the United States are —

disproportionately, anyway — getting gas at prices which are

not the recent average price.

B.C. Gas must now buy according to dictates of policy from

this ministry, which are reflected in policy put into effect by the

Utilities Commission. B.C. Gas must have at least 15 years firm supply

on hand, in the sense that it's fully contracted from reliable

producers, with good geology and covering today's current rate of

consumption for that 15-year period. It must have that gas. It buys

additional gas which it can sell to some industries that claim they can

shop around and do in fact shop around. If B.C. Gas is able to offer

them gas for a somewhat more attractive price, B.C. Gas does so. But

the contracts vary from a matter of months to a few years.

[Mr. De Jong in the chair.]

Most of the big industries in the province now — the

forest products firms; certainly Cominco in Trail — buy in the

field; they shop around among producers and they pay the processing and

transportation tariffs to their plants. They prefer to do that because

they think that maybe they can get better prices that way. They don't

go through B.C. Gas, in other words. B.C. Gas buys more gas than simply

its core-market requirement. The price varies depending on the volume

of the sale and certainly the load factor. In other words, is it a

large amount for a short time in the winter and a small amount the rest

of the year? What are its characteristics?

The Utilities Commission's job in respect to gas —

probably its biggest single job — is to make sure that (

a) the

gas is in fact here and (

b) B.C. Gas, the monopoly utility that it

governs, has bargained long, hard and effectively on behalf of the

consumer to cover the core market.

[ Page 11360 ]

MS. EDWARDS : I wonder if the minister could

tell me what proportion of the British Columbia supply of gas is bought

by B.C. Gas.

HON. MR. DAVIS : I'm advised that B.C. Gas

buys roughly half, plus or minus 1 percent, of all the gas sold by

producers in the B.C. Peace River area. Clearly, it's by far the

biggest buyer. There are miscellaneous other buyers: industry in the

province buying directly from the field; a couple of smaller utilities

distributing gas here, buying in the field; then of course a mix of

utilities and industries on the U.S. side; and now, beginning to be

significant, industries and utilities in eastern Canada.

MS. EDWARDS : I have one more question in

this area. The minister is usually very good about answering questions

filed on the order paper, and he didn't answer my question on the order

paper. I wonder if he could assure me that it will be answered.

HON. MR. DAVIS : Mr. Chairman, certainly it

will be answered. I'm told we have the answer right here; we could send

it over. If the hon. member could paraphrase it simply, maybe I can

just answer it off the top. I don't know.

MS. EDWARDS : It's a fairly long question,

and that's why I had it written. It's not long but it's complex. It's

question No. 6, and it has to do with the prices of export gas and so

on. I would like to have that information, but I don't want to take any

more time right now, because we're not getting very far. I have many

other things to canvass. I had hoped I'd be able to get the answer to

those questions.

I want to talk about the minister's response to the proposals

on greenhouse gases. This is an international affair. In April of this

year the federal and provincial energy ministers had a meeting and

categorically rejected any plan to reduce carbon dioxide emissions. It

had been proposed that they reduce them by 20 percent over the next 15

years, or various things. I'm not suggesting to the minister that there

should have been any particular formula, because there are various ones

that have been suggested. However, I do know that the energy ministers

rejected it and that you rejected it for the province of British

Columbia because you felt we shouldn't do that.

I would like to quote something that you said. As you know, we

go to a number of meetings commonly. You talk; I listen. What you said,

Mr. Minister, on December 7, 1989, at the Globe '90 conference of the

Institute of Energy, was that we might do a 20 percent carbon dioxide

reduction by the year 2005; if we do, it will be for sheer political

effect. The context in which you put that statement, Mr. Minister, was

that we have a nearly 100 percent good environment in B.C., and

whatever carbon dioxide we produce, our forests eat. That may or may

not be true, but your attitude on carbon dioxide reduction was

obviously not one of great enthusiasm or to say: "Let's get at it and

let's do it fast."

I believe the minister has changed his attitude, and the

ministry has certainly come out with at least a plan to get a strategy,

if we can put it that way, after a report came out from Energy, Mines

and Resources Canada about the emissions of carbon dioxide in this

province. The minister, I believe, got into a bit of a scramble with

somebody over which industry produced the most carbon dioxide. He made

it quite clear at the time that the forest industry in this province is

the greatest producer of carbon dioxide.

All of that aside, there is a lot of carbon dioxide produced

in natural gas — 12 million metric tons a year. We have that

from natural gas. Gasoline, diesel fuel, oil — all of these

produce carbon dioxide.

The announcement of the search for a strategy was made on June

29 of this year. It promises consultation. There are some interesting

anomalies there; I'm not sure whether they are anomalies. We talk about

beehive burners, but one of the proposals is the use of waste wood. I

also am a supporter of the use of waste wood at mills to create energy,

but I'm not sure that it does much for the carbon dioxide effect.

If we don't change our ways, the announcement said, there will

be a 17 percent increase in the amount of carbon dioxide released in

British Columbia by the year 2005. And there will be no increase in the

number of sinks in the province.

[3:45]

I wonder if the minister could tell me a little bit more about

what he plans and how he promises consultation on this particular

strategy that the ministry is developing and that, I presume, the

government is developing with the Ministry of Environment and the

Ministry of Forests. What is going to happen with the consultation?

What is going to be the process by which you will consult with the

people of the province? What is going to be the result of that

consultation? How will the people know that they've been listened to?

And what time-frame does the minister see for coming up with a strategy

to deal with a promise, I hope, to reduce the amount of CO 2

emission in

British Columbia by the year 2005?

HON. MR. DAVIS : One of the great

difficulties in this problem of carbon dioxide emissions — at

least it's a perceived problem by 50 percent of the world's scientists;

the other 50 percent don't agree — is that we don't altogether

know what we're talking about.

Our first step was to generate some hard numbers on carbon

dioxide generation in the province. We now have the numbers industry by

industry. It's not surprising that the forest industry is the biggest

producer of carbon dioxide, because it's by far the biggest industry in

the province. In Alberta, on the other hand, by far the biggest

generator is those coal-fired power plants. We don't happen to use coal

or other fuel much to generate electricity, so in that area we haven't

been a major producer. The forest industry is big simply because the

power industry isn't, so the forest industry looks more the villain.

The forest industry has several subgroups. They all involve

processing wood and in some measure burning wood wastes to generate

steam and electric-

[ Page 11361 ]

ity. There the main improvements will

be in efficiency — to the extent that a tonne of wood will

produce more electricity than it has in the past. That tonne will

produce less carbon dioxide for each them or kilowatt-hour of energy

that comes out. The main hope for improvement is really efficiency in

use. It's possible with full recycling and a fully integrated operation

in a fairly modern pulp mill to go from efficiencies of 40 percent to

efficiencies of 60 percent. That is a material improvement, but it will

only occur as plants are modernized and as we continue to insist on

efficient use of the wood wastes as fuel.

With beehive burners, carbon dioxide is simply generated to no

useful effect. You can take the same waste wood and produce useful

electricity that you're not having to produce in some other way. So it

results in a net saving. Of course it does clean up a local

environment. So it has two advantages: improvement of the environment

and more efficient use of potential fuel. If you'd left that sawdust or

bark on the ground, it would eventually rot out and generate roughly

the same amount of carbon dioxide as if it was burned.

It isn't as if man is the only source of carbon dioxide; we

accelerate the process by having industries which hasten the

deterioration of wood, for example, into its components. We now have

some numbers on British Columbia. We have less room for economies

because hydro is still quite important in our total scheme of things,

and it doesn't generate CO 2 . We're less of an offender, if I can put it

that way, than some other provinces — certainly other jurisdictions —

for that reason.

We must make every effort to be efficient both from an

economic point of view and from the point of view of generating carbon

dioxide if there's any possibility — let alone a real possibility — of

the carbon dioxide causing global warming. The member is asking when

and how to consult. We're trying at least to get some numbers to

describe the situation better in British Columbia and then deal with

it. This subject will come up time and again when applications are made

to build a new power plant, pulp mill, etc. There will eventually be a

heading, if you like, or a

chapter dealing with global warming or the CO 2 formulas insofar as they apply to that particular development. The

better developments or improvements will be those which generate less CO 2 .

It's a difficult area mostly because we know little about it

so far. But clearly there are some things we can do, essentially in the

area of improving efficiency, which will reduce CO 2 generation in the

province.

MS. EDWARDS : The minister says we have

little room for economies in this place, but if he looks again at the

figures provided by his ministry, B.C. provides 11 percent of the

Canadian total of CO 2 generation. That's more than our share, Mr.

Minister.

I might say that according to a different report, we're either

the second-worst in the country or the third-worst; we're the

second-worst after Alberta, with its coal-fired electricity plants, of

course. But Alberta is the highest generator, and some people say

Ontario is next; some people say we're next. We certainly have a large

generation of carbon dioxide.

What consultation does the minister propose? I hope it's not

just what comes up when projects are proposed which will generate

carbon dioxide and people object to it. Surely there will be some

process of consulting on this strategy for the management of carbon

dioxide emissions.

HON. MR. DAVIS : It's an important topic,

and I'm sure there will be opportunities for discussion. The hon.

member is inferring that there is some great wisdom out there that can

suddenly be mobilized and that we're not tapping. If the public is

really concerned, it's going to buy smaller cars and drive fewer miles.

It's as simple as that. How does the NDP intend to deal with that?

That's doing something about carbon dioxide emissions.

It covers a lot of areas where in order to really make a dent

in the numbers over and above better efficiencies in plants and

industry, our society as a whole is going to have to discipline itself.

As for B.C. being — I think the hon. member said — the

second-worst offender in this area, has she any idea what Quebec's

numbers are? Quebec hasn't published any. I suggest that just on the

population basis, if we generate 11 percent of the carbon dioxide,

we're better than the average because we have 12 percent of the

population. I suggest that Quebec, Ontario and Alberta are "worse" than

we are. But we all have to do something about this.

I hope that before too long we'll have some real evidence that

there's a danger of the earth's temperature rising. There seem to be

just about as many scientists who think it's going to fall and that

we're going to be in for an ice age. Twenty years ago, when I was

Minister of the Environment for Canada, one of the first things we did

was to retain the world's authority on the subject: Professor Hare, who

was at the University of Toronto. Dr. Hare spent a year and a half

studying it all and couldn't make up his mind which way the world's

temperature was going.

There was concern then, and there's concern now. However, we

certainly have an interest in improving the efficiency with which we

use carbonaceous materials to generate energy. We'll go at the

efficiency in industry, but the real offender tends to be the

individual. We'll have to get at that if we really want to do something

about our numbers in B.C.

MS. EDWARDS : I asked the minister to talk

about how bad or good we are, I'm simply dealing in amounts, and in

British Columbia we emit 30 metric tons of carbon dioxide per year per

person. The national average is 15 metric tons per year per person

across the country, and certainly in amount and volume — according to

this, and I didn't track it down — we are second to Alberta. So I say

that the problem is serious. I don't want to argue this with the

minister, because I think we both recognize it's a serious problem. But

I want the minister to recognize

[ Page 11362 ]

that I have some concerns that he doesn't recognize how

serious it is, because of his statement.

I also would like to quote from the news release that came out

on June 29, 1990, which says that the government is going to take

action; they're taking the lead in a strategy to reduce carbon dioxide.

It says the Ministry of Environment will consult with the public,

industry and key government ministries. Does that mean that the

Ministry of Energy is not going to — only the Ministry of Environment?

The release for the three ministries, announcing this strategy, said

that the Ministry of Environment will consult with the public. I assume

that meant the Ministry of Energy as well. The minister has not talked

about what he's going to do with consultation.

I would also like to ask the minister here, because this may

fit in.... In the ministry's business plan for 1990-91, it says: "We

will release a comprehensive energy policy statement soon." I presume

that's sometime during this year. Can the minister tell me when that's

coming out? It will deal with the basic tenets of the policy: energy

efficiency, clean energy, energy security, and energy and the economy.

It describes what you're going to see when you see this comprehensive

energy policy statement. Is that coming out soon?

HON. MR. DAVIS : We'll be releasing that

paper around the end of August or early September. I don't think it

will cast a great deal of light on the carbon dioxide problem or the

global warming challenge that mankind faces. That one is going to take

a while.

just back to the numbers for a moment. We generate, say, 11

percent of all the carbon dioxide generated in Canada. The forest

industry is responsible for 41, 12 or so percent of the 11. Because the

forest industry is roughly in balance, 4 or 414 percent is consumed by

our forests. If you talk generation of CO 2 only, we're 11 percent; if

you talk net contribution, because our forests eat carbon dioxide, then

we're more like 8 percent.

You have to know more about this subject than simply the

numbers that have been produced so far. In Canada it seems that the

Department of Energy is the lead ministry, at least at the national

level. This comes about mostly because Energy, Mines is supposed to

have all the numbers on power plants and automobile efficiencies, and

so on. It's true with us; we're the lead ministry. But clearly

Environment has considerable concern — I'm talking about our Environment

ministry — and Forests does, simply because forestry is such a large

industry in the province. Certain other industries do. I'm sure

municipalities are concerned.

But if Professor Hare could look at all the world literature

and so on and not really make up his mind over 18 months, I'm not sure

that going to the public soon and asking the public what it thinks is

going to be all that helpful. Once we have a better handle on the CO 2 inputs, outputs and flows in this province, we'll be able to throw the

issue out there and hope that some bright ideas come along.

MS. EDWARDS : There are some bright ideas

that have come already, as the minister may know. He may have read Law

Reform for Sustainable Development in British Columbia, a book that

came out. It has a total of 23 recommendations in its

chapter on global

warming and atmospheric change that it suggested for adoption through

energy conservation. Very few of them have taken place in British

Columbia. I would commend the minister to that particular consideration

which has been given by the public — that is the public; that's who

they are. They have some ideas. They've done some work on it, and

that's what they came up with.

I would like to ask the minister if he would elaborate for me

on the extension of gas services throughout B.C. and assistance for the

extension of natural gas service, which was announced in the throne

speech and, I believe, in the budget speech. There's nothing that I

know of which has come out to describe that.

[4:00]

HON. MR. DAVIS : Extension of natural gas

service, like the extension of power services into thin areas or rural

areas of the province, tends to be expensive. The utilities — B.C. Gas,

B.C. Hydro — have formulas. They'll take their pipe and power lines a

certain distance down the road, but it depends on how many homes,

factories or whatever are out there and how many miles have to be

covered, and so on. At some point, which is established by their

formulas, they cut off. They're not prepared to spend any more money

than the amount allowed for in the formula.

The province, in the past and again beginning this year, has

voted a certain sum of money - this year it will be $4 million — for

extensions. It's really topping up the moneys that B.C. Gas and B.C.

Hydro will make available for several dozen extensions, if possible

this year. What our staff has done, in cooperation with those

utilities, is to rate the proposals in economic order as to which makes

the most sense and which the least, and we'll be doing some $4 million

worth of work. In other words, these extensions are subsidized to a

total of $4 million over and beyond where the utilities would normally

go. It's a topping up process. It uses information supplied both by our

ministry and by the utilities, and is decided on economic merit, let's

call it: which serves the most people or serves an area with a new

industry coming in, and so on, more effectively than another area that

might otherwise get the money?

I hope we can continue this policy for some years. My

impression is that were we to continue it for five, six, seven or eight

years, we'd probably cover all of the remaining small centres of

population which have any kind of claim to that service. There are a

few that don't have natural gas. Revelstoke is an example. They will

get gas in that five- to eight-year period. It's roughly a $20 million

to $30 million challenge, and we are facing it by topping up the

utility formulas for serving those areas, using economics as our test

as to who gets what first.

[ Page 11363 ]

MS. EDWARDS : I have a personal interest in

this, because I've moved into an area where we don't have natural gas

anymore, and it makes a major problem and expense in heating my house.

But I don't know that the criteria are very clear to me yet.

Revelstoke, I know, has a much higher population than the centre in

which I live or the centres in my riding which have been making a great

case that they should have natural gas. I talk regularly to B.C. Gas

about this, but I don't know what the criteria are to get access to

this subsidization.

HON. MR. DAVIS : Mr. Chairman, the member

should perhaps talk to John Allan or Peter Ostergaard with our

ministry. The criteria are fairly straightforward. It's a bit complex.

As I say, we do rely on the utility for quite a few of the numbers, but

they can give the hon. member some idea of where that particular

community in which she lives stands in what appears to be the pecking

order of things from an economic point of view.

MS. EDWARDS : Mr. Minister, I now want to

deal with some public involvement issues that come up and seem to

always bring us back to the issue of where the people were when this

was being talked about or when we were talking about it.

I preface my remarks by a quotation from Mr. Bell, who is the

chair of B.C. Hydro, as you know. He said at the third annual

Electrical Energy Forum in Prince George that he is not happy with the

adversarial nature of the public hearing process. This leads me to

hope, of course, that we're going to have some different methods tried

and some that will allow the public even greater say and greater

involvement in some of the decisions that are made.

The first instance that comes to mind where the public needed

more involvement and didn't have it is the issue of B.C. Hydro's recent

application to the B.C. Utilities Commission for service rate

increases, including increases in the reconnection charge — that was

raised from $10 to $64 immediately — and increases in account charges

and service connection charges. Now these will increase, and they will

continue to increase. Past practice of the commission has been to hold

public hearings into service charge increases, but in this case the

Utilities Commission issued an order approving the changes after

consulting only with the Canadian Home Builders' Association and the

Urban Development Institute.

Section 4 of the Utilities Commission Act — and I've written

the minister about this, so he knows my position, but just to clarify

it for the House — states that the commission may fix rates after a

hearing, and

section 101 of the act allows the

Lieutenant-Governor-in-Council to order a public hearing when it's in

the public interest.

The first question is: does the minister agree that public

involvement and input is an important part of evaluating and dealing

with these applications before the Utilities Commission?

HON. MR. DAVIS : Mr. Chairman, I certainly

agree with the member that the public must have every opportunity to

intervene in matters of this kind. I was surprised myself to suddenly

see B.C. Hydro's announcement that it received the approval of the

commission in this area. At least, the consumer advocates who

interpreted Hydro's release and the commission's release have

interpreted it wrongly and rather mischievously.

A reconnection. If you've had a connection and for some reason

it's been discontinued but all the hardware is there, it will cost you

$10 to get reconnected. That's not a big deal. The cost goes up from $5

to $10. These charges haven't been changed for 20 years.

The review dealt not just with connecting brand-new homes or

existing homes, or new industry or existing industry, but also with

extensions of some length. For example, who pays for a transformer on a

pole if a transformer is needed? The new arrangement will be that Hydro

pays for all those expensive items. The developer, or the person

building a new home or industry, won't face those big, lumpy charges

any longer but will have to pay $25 instead of $10, which has been the

case for 20 years. They have scheduled increases year by year

thereafter to cover the cost of the connection. Remember, this is a

brand-new connection; it's a brand-new home; it's a brand-new factory.

It's the first connection. It's the meter, the wires down to the meter

and so on.

There's good and bad in this from a consumer point of view.

The big, lumpy items-poles, transformers and so on — Hydro is going to

pay for right up front and then collect it through the power bill. But

the actual connection charge is rising. It's rising this year according

to this ruling — from $10 where it's been for 20 years — to $25.

Hydro's contention is that people should know what these costs

are and should pay the costs — no more, no less. I must say that this

was an order of magnitude change across an area of considerable

interest to the public. I'm surprised it didn't also require or involve

a public hearing.

MS. EDWARDS : I don't know where you are

getting your figures, but I do know that the charge for a reconnection

has changed from $10 to $64. We were alerted to this when we had

welfare people come into our office. That was an immediate jump, and

they came in. As you may or may not know from your constituency

office — but certainly from my constituency office — welfare recipients

frequently have problems paying their Hydro. They have problems for any

number of reasons that I don't want to go into, but they are probably

the most frequent payers of reconnection charges of anybody in this

province.

For a fee to go from $10 to $64 is a matter for considerable

alarm. However, you and I may agree that people should pay the cost of

the installation, but we don't know what the people feel, and we don't

know what case has been made. I'm happy to hear that the minister says

he was surprised there wasn't a public hearing. I wonder if the

minister is

[ Page 11364 ]

going to ask the Lieutenant-Governor-in-Council to direct a

public hearing and the Utilities Commission to hold its decision until

such time as the public hearing has been held.

HON. MR. DAVIS : The commission has an

application to reconsider on its books right now. I'm taking this under

consideration — I'll put it that way.

The hon. member refers to a charge being raised from $10 to

$64. This is the charge for people who haven't paid their bills for a

long time. It's not a reconnection — simply connecting up again; in

other words, just throwing a switch somewhere. Essentially that's all

that's involved once the house or the plant is built, the meter is in

place and so on. It's a charge levied against people who are habitual

non-payers of bills. Those who administer our welfare services will

have to contend with that as a cost and try to deal with it accordingly.

MS. EDWARDS : I'm well aware that the

Minister of Energy may not feel that it's his responsibility to deal

with the problems of welfare recipients, but if his constituency office

is anything like mine, he will deal with it fairly frequently. I would

like to suggest that even if the appeal to the commission is accepted

and it retracts the order, it does not need to have a public hearing

under the act. In this case a public hearing should be held. I would

ask the minister whether he agrees with me that a public hearing should

be held, in which case he must recommend to the

Lieutenant-Governor-in-Council to so direct — unless the commission

makes some decision.

HON. MR. DAVIS : I haven't taken this up in

cabinet yet, so let's say it's under consideration.

MS. EDWARDS : Mr. Chairman, I would like to

go to another presentation that has been made to me about issues of

public involvement. The minister has also received this one, so he

knows about it. It comes from the clerk of the village of Harrison Hot

Springs.

Through their work through the UBCM, the UBCM has forwarded

the resolution directly to you as Minister of Energy, Mines and

Petroleum Resources and requested appropriate amendments to the

legislation to ensure that land use priorities established by local

government are recognized. This one deals more with allowing the

staking of mineral claims. The resolution says:

"Therefore

be it resolved that the UBCM

petition the provincial government for changes to the Mineral Act which

would establish an approval process during the filing of mineral claims

and which would require approval from a municipal council or regional

district board where such claim areas fall within the jurisdictions of

the municipality or regional district or greater board."

There have been any number of problems, as the minister knows.

The business of being able to stake a claim almost anywhere in this

province creates its own little flurry of activity around it,

consistently across this province.

[4:15]

Recently a Mr. Musgrave has made a fuss about a mineral claim

and what is going to happen to his property near Gold River. In that

case again, a municipal government might have something to say. It may

well be that there is no municipal government there; it may be a

regional government. It might well have worked better for that case had

a regional government had the opportunity to work there. The Union of

B.C. Municipalities suggests that where a claim falls partly within the

boundaries over which a municipal or regional government has some

jurisdiction, there should be some requirement that they be Involved.

Has the minister considered this resolution? If so, would he tell us

what his consideration has brought forth?

HON. MR. DAVIS : The staff tell me that

there has been one meeting between our staff and the people at Harrison

Hot Springs, and they are trying to understand what the issue really

is. Hopefully we will come to a resolution of it.

MS. EDWARDS : I believe that a resolution

would involve something broader than simply a resolution of the

Harrison Hot Springs problem, which deals with whether or not the hotel

can expand. It's not the only one there; there are a number of them.

Has the minister considered anything broader than simply dealing with a

single issue?

HON. MR. DAVIS : I know nothing about this

particular issue; my assistant deputy minister does. The member asks:

"Has the ministry considered anything broader?" Currently we have

underway a joint ministerial — or multiministerial — task force looking

at gravel pits and how best to administer them from a zoning point of

view, from the point of view of rehabilitation, to have a really

understandable process where everyone — including the local

municipalities, regional districts and Municipal Affairs — has their

input.

It's an untidy situation which has existed for many years.

Ontario has made an attempt to tidy theirs up, and we are pursuing what

they have done. But it will be into next year before we have

recommendations in that area. I am mentioning it only to indicate that

we are quite prepared to work with other ministries and the

municipalities in trying to improve, streamline, smooth out and make

more sense out of the process of allowing a certain mineral development

to proceed or, alternatively, to make sure it conforms in every way

with local zoning requirements.

MS. EDWARDS : Mr. Minister, the issue of

environmental premiums in this province was announced by the Premier

during a by-election last fall; however, the premiums themselves had no

guidelines. As I understand it, the guidelines were only put together

and finally taken to Treasury Board last week. Have we finally got some

guidelines for environmental dividends? If we don't have the final word

yet, is there going to be any public involvement in discussing the

guidelines for those premiums?

[ Page 11365 ]

HON. MR. DAVIS : The environmental premium

is defined. It will really only apply to certain forest products

operations and possibly one or two mineral developments where there has

been a chronic situation — such as beehive burners which are likely to

continue indefinitely unless there is some incentive provided to clean

up beehive burners or have some disposal process or procedure which has

been going on for a long time.

The general policy of the province is to have the polluter

pay. The industry must clean up, at its cost. If it's proposing a new

development, it pays all of the costs of meeting the environmental

standards. But falling in between that and no policy at all there are a

few situations such as waste wood from sawmills.

Looking around North America, it seemed that there were a few

jurisdictions — several states certainly — that have a policy of an

allowance of less than, and not more than, 15 percent on price. In this

case the price of power generated using that waste wood would be

credited to that development. Whether or not the Williams Lake

development will require the 15 percent is yet to be established.

That's the most they could hope for, and it would be in the higher

price paid by B.C. Hydro. B.C. Hydro, in turn, would collect that money

from the province — very nominally, I'll say — through reducing its

dividend payment to the province by a corresponding amount in the year

in which those expenses were incurred. It's a subsidy of up to 15

percent in situations where requiring the industry to pay all the costs

just doesn't work.

There's no way that the beehive-burner situation in Williams

Lake — there are similar ones in Quesnel and elsewhere — will occur

unless there's some assistance. In Williams Lake it's not clear that

there's assistance needed; maybe they can produce the power at the low

competitive rate anyway. If they can, they won't get assistance. The

maximum assistance is 15 percent. It is paid by the taxpayer, not by

the user of power in the province.

MS. EDWARDS : The question, of course, is:

which came first, the chicken or the egg? Did the announcement come

first and then the decision, or did the premiums come first? What are

the guidelines? When are they going to be made public so that the

people who want to go for projects know whether or not they are going

to be eligible for an environmental premium when they apply for an

independent power project certificate, an energy certificate, as

independent power producers? When are the guidelines going to be made

public so that it is open to everybody, not just the Williams Lake

project?

HON. MR. DAVIS : There are only two projects

about to get underway in the province. There will be others. Companies

or consortia which are interested in an independent power project or a

co-generation project already know about this. We haven't produced a

pamphlet for general distribution, but certainly anyone with any

interest in competing or responding to B.C. Hydro's call for

expressions of interest knows what the situation is now. They know it's

a maximum of 15 percent and that it only applies in respect of a few

situations, such as the cluster of beehive burners at Williams Lake. I

could perhaps name half a dozen other locations around the province,

including the East Kootenay, where an untidy environmental situation

can be addressed through the utilization of wood waste, generally where

there are several sawmills producing useful electricity and steam.

MS. EDWARDS : "Untidy environmental

situation" is not how I've had it described to me. I've had the

guidelines described as meant to deal with two situations: the

possibility of the generation of energy from wood waste and the

generation of energy from garbage, from solid waste. Those were the

only two, until you stood up and said it would possibly be for mineral

developments too. Could the minister elaborate? What I've been told is

that unless the proponent suggests that he will clean up an existing

environmental problem, the premium will not be available. In other

words, it is not adequate to simply be "an untidy environmental

situation." You cannot simply go in and say: "Look, I have a marvellous

environmentally friendly project." You have to go in and say: "There is

a mess here. If I get a premium of up to 15 percent" — why that number

was decided upon I'm not sure, but the minister may know — "I can clean

up this environmental problem with my project." Is that the case?

That's how I've had it described to me. Or is it in fact a little

sludgier on the edges than that? Is it soft and pliable?

I might say to the minister that it's all very well to say

that everybody who responds to the request for proposals that Hydro

puts out knows about it. But that's not public. Let's make it public;

let's lay out the criteria and let everybody know what it's going to be

offered for. We the taxpayers are paying for it, so we the taxpayers

should know what is being paid for.

HON. MR. DAVIS : I mentioned two projects

that are about to get underway. One is the big Port Mellon

redevelopment. It doesn't qualify. It's really low-cost power. There's

no need for any kind of support to make that project come off. The only

one that's qualified to date is the Williams Lake development, which

utilizes exclusively wood wastes from sawmills.

Fording Coal applied because they are using waste coal. The

answer is: "No way. You created the waste coal pile; it's your

problem." It's not there for a candidate to receive that kind of

support, nor would Westar's possible development utilizing coal wastes

and so on. The project, in each of those cases, would have to be

economical and stand on its own feet with no help from government under

the heading "environmental premium." The only two areas where this will

work is wood wastes from around sawmills, and the other is possibly

garbage disposal situations, although the economics of producing power

from garbage are so bad that it doesn't look as if we have any real

projects offered at this moment.

[ Page 11366 ]

MS. EDWARDS : Perhaps this is the time to

ask you about independent power producers and when they make proposals.

I presume we are going to have more and more independent power

producers tying into the grid and so on. Did the minister say that

there will be no requirement for them to have public hearings before

they go to their projects? I presume they wouldn't qualify for a major

project review process, but some of those projects may create a great

deal of controversy in a community. I don't know where the minister is

on that. Would the minister inform me as to the state of it as far as

assuring that the people in a region where an independent power project

is proposed would have the opportunity to hear what's going on, to give

some input and to have their feelings heard?

HON. MR. DAVIS : Mr. Chairman, I can say

categorically that any power development project of any size or impact

locally — let alone province wide — will go through a public review

process. It may be a process instituted by the ministry, but more

likely the Utilities Commission will review the project in the full

public view.

Certainly a sizeable production of power — if it's for sale to

B.C. Hydro or for export — will have to go through all stages. Before

that is a real project, the company or companies involved will have to

produce sales contracts for the output of the plant covering the life

of the plant, and will have to produce reasonable estimates of costs to

show that there is an element of profitability. In other words, they

are not likely to come back on the treasury at any point to honour

their commitments.

The environmental side, which often is significant in cases

like this, will have to be covered very thoroughly and provincial

standards met in all cases. The hearings will be held in the area where

the development is proposed to occur.

[4:30]

MS. EDWARDS : B.C. Hydro's 1990 plan talks

about work proceeding on Peace Site C environmental and socioeconomic

studies, a joint provincial and federal hearing being required and work

going ahead to see how that kind of joint hearing can be held. Can the

minister comment on where we are right now as far as deciding how we

will have joint hearings? Perhaps the best example is Site C with the

environmental appeal and review process of the federal government along

with the provincial requirements.

HON. MR. DAVIS : Site C. It wouldn't have

occurred to people concerned about the environment in the province ten

years ago that Site C is on a river that flows into another province,

and there are concerns. Fisheries was certainly one then, but there are

other concerns like the issuance of a licence to put work in navigable

water and so on. They all involve the federal side.

Unless there's a process in place — procedure, hearings, etc.

in sequence — the federal government will institute its own hearings. As

was the case with the Vancouver Island pipeline, there were federal

concerns. The federal government through its various departments had

observers there throughout, and they advised us continuously as to what

their standards and concerns were and we — or the Utilities Commission,

or certainly the company — were able to convince them that their

concerns would indeed be met and more than covered. That's really how

we're hoping developments like a new power project will be covered,

that there won't have to be hearings provincial and hearings federal,

but there would be one set of hearings where the federal government was

involved to a greater or lesser extent.

In Site C it will be concerned to quite an extent. We

obviously want to avoid any repetition of the Oldman River situation in

Alberta or the Rafferty dam problem in Saskatchewan, where there was a

federal requirement in law that was simply ignored. Because it was

ignored, the project was suddenly called to a halt when the federal

process had not been honoured.

MS. EDWARDS : There's an announcement of an

agreement with the United States. The announcement came on July 11 that

the Columbia River coordination agreement has been signed between B.C.

Hydro and the Bonneville Power Administration. This agreement works

around the Columbia River Treaty and works with non-treaty storage.

The employees of B.C. Hydro were told before such time this

agreement was sought that there would be a process of public

consultation and ongoing opportunities for residents to exchange views

with Hydro, which will in turn permit B.C. Hydro to identify and

address possible impacts and concerns. There was a promise that the

public consultation process program is currently in its initial stages.

B.C. Hydro is providing copies of the environmental impact assessment

to local and regional governments, as well as relevant provincial

agencies, as a first step in public consultation.

All of this came out I believe in May sometime — it was

certainly before June. It was shortly before the announcement that the

agreement had been signed. All of the investigations that I did

indicated there had been no public consultation. I asked for the

environmental impact assessment, which I did not receive, as far as I

know. I don't know whether regional governments and so on got it.

As far as I know, there were no public meetings. I'd like to

know what the minister sees as a public consultation process around

this very important agreement which will have major effect and impact

on the people of Revelstoke in particular, but also on the tourism, the

recreation and the forest and fishery resources for both the Mica Dam

and the Revelstoke Dam.

HON. MR. DAVIS : We recently passed an

order-in-council which declared that project — I'll call it a project — a

regulated one, which means that the B.C. Utilities Commission has to

look at it from various

[ Page 11367 ]

points of view, including environmental concerns. So there

will be hearings and there will be due process.

I don't think I'm telling any secrets by saying that B.C.

Hydro is not accustomed to this kind o