June 16, 1975 ALBERTA HANSARD 711 LEGISLATIVE ASSEMBLY OF ALBERTA Title: Monday, June 16, 1975 2:30 p.m. [The House met at 2:30 p.m.] PRAYERS [Mr. Speaker in the Chair] head: INTRODUCTION OF BILLS Bill Pr. 5

An Act to Provide for The Extension of Time for Filing a Statement of Claim By Hector Couture Beyond The Period Allowed By The Limitation of Actions Act MRS. CHICHAK: Mr. Speaker, I beg leave to introduce a private bill, being

An Act to Provide for The Extension of Time for Filing a Statement of Claim By Hector Couture Beyond The Period Allowed By The Limitation of Actions Act. [Leave being granted, Bill Pr. 5 was introduced and read a first time.] head: INTRODUCTION OF VISITORS MR . SCHMID: Mr. Speaker, I have the honor to introduce to you, and through you to the members of this Assembly, His Excellency Thadim Thorn-Leeson, Ambassador of The Netherlands to Canada. Accompanying him is Mr. Thadema-Wielandt, Consul of The Netherlands to Alberta. Mr.

Speaker, the more than 59,000 Albertans of Dutch origin have been and are some of the richest resources of pioneering spirit, cultural contribution, and economic development in this province, preparing and sharing the future of this country with all Albertans. I would ask His Excellency and the Consul to rise and be recognized by this Assembly. MR. HARLE: Mr. Speaker, it's indeed a pleasure for me to introduce to you, and to the members of the Assembly, a group of 35 students from the Big Valley Teen Achievement club in Big Valley in my constituency. They are accompanied by Mr. Arnold Eyensbergen and Mr.

Val Koenig. They are in the members gallery, and I would ask that they please rise and be recognized by the Assembly. MISS HUNLEY: Mr. Speaker, on behalf of my colleague, the MLA for Innisfail, Mr. Doan, I have the privilege today to introduce to you, and through you to the members of the Assembly, a group of grades 10 and 11 students from Delburne school. They are accompanied by their principal, Mr. Reckseidler. I would ask them to stand and be recognized by the Assembly.

712 ALBERTA HANSARD June 16, 1975 head: TABLING RETURNS AND REPORTS MR . KOZIAK: Mr. Speaker, I am pleased to table the reply to Question 143, placed on the Order Paper by the hon. Member for Drumheller. head: ORAL QUESTION PERIOD M an agement Advisory Institute MR. CLARK: Mr. Speaker, the first question is to the Minister of Advanced Education and Manpower. It's regarding the management advisory institute being established at the University of Alberta.

Is the department aware of the approval given by the Board of Governors of the University of Alberta to allow a large portion of the staff of the Faculty of Business Administration to enter into consulting business on a part-time basis through this management advisory institute funded by the federal government? DR. HOHOL: Mr. Speaker, my understanding of the arrangement is somewhat different. I should like to address myself to that carefully, and feel I could probably do it most effectively through a question on the Order Paper. MR. CLARK: Mr. Speaker, a supplementary question to the minister.

Has the minister or his department been contacted by representatives of private consulting firms, primarily in Edmonton, in light of some of their concerns regarding the establishment of this management advisory institute at the U of A? DR. HOHOL: I have not personally, Mr. Speaker, and would have to establish with members of the department whether that was the case. MR. CLARK: Mr. Speaker, a further supplementary question to the minister.

Is it the intention of the department or the minister to discuss the formation of this institute, financed by the federal government, with the Board of Governors of the university? DR. HOHOL: I’d have to refer to my initial response, Mr. Speaker, and say that when I've had an opportunity to look at the situation -- because I do understand it somewhat differently -- I would then be able to respond more accurately. MR. CLARK: Mr. Speaker, one more supplementary question.

Has the minister or his department had discussions with the Board of Governors of the University of Alberta regarding the possible effect on the faculty this management advisory institute would have, having regard for the fact that members of the faculty will be able to be away from the faculty for up to 20 per cent of their time? What effect will this have on the educational opportunities for students in the faculty? DR. HOHOL: No, we have not. This was a determination by the Board of Governors of the University of Alberta in a contractual arrangement with the federal government.

My information probably dates back to Wednesday of last week, but I'll certainly follow up the hon. member's questions. Hospitals Labor Dispute MR. CLARK: Mr. Speaker, a second question to the Minister of Hospitals. Has the minister been involved in sitting down with the two groups at the University Hospital in Edmonton and the Foothills Hospital in Calgary over the weekend? MR. MINIELY: Mr. Speaker, no. I've received reports on the situation at both the University Hospital and the Foothills Hospital, but I have not sat down with the two groups in question. MR. R. SPEAKER: Mr.

Speaker, supplementary to the minister. Could the minister advise the capacity at which the University and Foothills hospitals are working today? Is it full capacity? MR. MINIELY: Yes, Mr. Speaker. The situation at the Foothills Hospital at 10 o'clock this morning had stabilized. It is about the same as last week. Of the staff, 190 are still not obeying the court order to report for work. The patient occupancy is 60 per cent.

June 16, 1 975 ALBERTA HANSARD 713 The nurses and student nurses are filling in for the people who are not reporting for work. In the case of the University Hospital they closed down Emergency, but emergencies are handled by other hospitals in the city. About 261 people are defying the court order. Again, in the University Hospital, the nurses and student nurses are filling in for the people who are not reporting for work. MR. R. SPEAKER: Mr. Speaker, supplementary to the minister.

In light of the concern of the CSA with regard to a strike clause and the right to strike, is any consideration being given by the minister to amend legislation, say this session or next, with regard to giving them the right to strike? MR. MINIELY: Mr. Speaker, in light of the current situation where the boards have received an injunction and employees are in defiance of that injunction, I think that question is not relevant to the current status. MR. NOTLEY: Mr. Speaker, a supplementary question to the hon. minister. It's a follow-up to one I posed on Friday.

Has he had an opportunity to discuss the clarification of legislation respecting public servants with the task force officials studying the question? MR. CRAWFORD: Mr. Speaker, the minister who would primarily report to the House in respect of the task force is the minister for personnel, the Provincial Treasurer, but I think the same information is available to me. Basically, the task force is working, and has been since it was formed not long ago, with the concurrence of both the Civil Service Association and the government.

I don't think it's possible to indicate just when that task force should complete its work. It would be fair to indicate that its work is considerable and would therefore take a considerable length of time. MR. NOTLEY: Mr. Speaker, a supplementary question to the hon. Minister of Labour. Has the government received a report yet from the mediator, outlining the major obstacles to an agreement? If so, could the minister advise the Assembly what obstacles remain? MR. CRAWFORD: Mr.

Speaker, I think the hon. member's question relates directly to the attempt to have a mediator assist the four hospitals acting jointly through the Alberta Hospital Association, and the dealings that group is having with the Civil Service Association. Hon. members will remember I did report to the House previously that the mediator felt he could not assist the parties to reach an accommodation and had therefore withdrawn. No formal report has been provided me, as minister, by the mediator. MR. NOTLEY: Supplementary question to the hon. minister.

Has any branch or agency of the government investigated the claim by the CSA that women's rights, particularly the disparity between the wages of nursing orderlies and nursing aides, constitute one of the major obstacles to an agreement? MR. CRAWFORD: Mr. Speaker, I think that could be made the subject of discussions at the bargaining table, quite apart from any other more legal types of questions all hon. members know have been referred to the Human Rights Commission, and subsequently to the courts. My answer to the hon. member is: I do not see that as one of the principal obstacles. MR. CLARK: Mr.

Speaker, a supplementary question to the Minister of Hospitals and Medical Care. Have there been discussions between the government, perhaps the minister's office or the Attorney General's office, and the Foothills board in Calgary regarding further legal action? MR. MINIELY: Mr. Speaker, as I think I indicated last week, the legislation now in place in Alberta is The Crown Agencies Employee Relations Act, which has hon. acted upon by the Foothills Hospital board and the University Hospital board.

Both boards have obtained injunctions and are pursuing full legal action under the current laws of the Province of Alberta. MR. CLARK: Mr. Speaker, supplementary question to the minister. Have there been discussions between the minister and officials of the Foothills or the University hospitals regarding the contempt of court charges which, supposedly, are to be laid? MR. MINIELY: Mr. Speaker, in these situations, of course, I'm in touch daily with the hospital on more than that matter.

It's my interest to determine daily how the hospital is operating, to ensure it is operating satisfactorily, and that other hospitals in the two cities, as I indicated earlier, are able to handle whatever the Foothills or the University are not handling.

714 ALBERTA HANSARD June 16, 1975 MR. CLARK: Mr. Speaker, a supplementary question to the minister. Has the minister discussed with officials of the two hospitals the possibility of contempt of court charges being laid? MR. MINIELY: Mr. Speaker, the Foothills Hospital board has indicated to me they intend to proceed on the injunction. That is their decision. Yes, they have indicated to me they intend doing so. MR. CLARK: One further supplementary, Mr. Speaker, to the minister. Was the minister in a position to indicate to the Foothills board whether the government supported that action? MR. MINIELY: Mr.

Speaker, I don't think it's relevant in our system whether the province supports it. That's a decision of the boards of the hospitals. MR. CLARK: Could the minister indicate whether he supports it? MR. MINIELY: Mr. Speaker, that's a matter for the laws and the courts of Alberta. MR. CLARK: Yes or no? Regional Air Service MR. MANDEVILLE: Mr. Speaker, my question is to the hon. Deputy Premier, the Minister of Transportation. In keeping with the government's regional decentralization policy, has any consideration been given to providing air line service to our smaller centres in the province? DR. HORNER: Mr.

Speaker, that's one of the matters under consideration at the present time; it is relative to the growth and development of the so-called third-level carriers in Alberta. We are hopeful the new policy announced in Ottawa today will speed up implementation of a third-level policy so we can move ahead in Alberta. MR. MANDEVILLE: Supplementary question, Mr. Speaker. Will there be any changes in the present program to assist airports in our smaller areas? DR. HORNER: Mr. Speaker, in direct response, we're working closely with the federal ministry of transport in relation to airport standards.

We would hope an integration of the construction program with that of the highways department will, in fact, speed it up and improve our ability to provide the necessary airports if we're going to expand our third-level services. Federal Transportation Policy MR. NOTLEY: Mr. Speaker, I'd like to direct this question to the hon. Minister of Transportation and ask whether he has had an opportunity to review the policy announced in Ottawa, and whether he sees progress being made by the policy announced today by Mr. Marchand. DR. HORNER: Yes, Mr.

Speaker, the provincial ministers of transportation had a meeting with Mr. Marchand on Friday. He reviewed with us the policy announced today. We as a province, and indeed most provincial governments, feel that policy is a major step forward. While I think everyone will await the specifics with a great deal of interest, we believe the programs and initiatives started at WEOC have been carried forward.

We're extremely hopeful that the decision of the federal government to make some major changes in the National Transportation Act, which will more readily look after regional problems, and indeed will look after a great many things heretofore left to chance, will be a major improvement in transportation policy in Canada. In fact, I'm hopeful Mr. Marchand will have an opportunity to bring forward those specifics over the coming months. MR. NOTLEY: Mr. Speaker, further supplementary question to the hon. minister.

Can the minister advise the Assembly of the format and the timetable for discussions on what most Westerners would consider one of the more crucial issues, the freight rate question? DR. HORNER: Mr. Speaker, those have been ongoing. As the hon. member is probably aware, a federal-provincial committee of officials and ministers has been working in regard to that. I think one of the major initial responses of the new national transportation policy will be to allow the federal ministry of transport a more direct role in dealing with some of the anomalies we've been putting forward over the last several years.

As to when we might see the timetable, I think it depends on the progress the minister can make in getting his policy and legislative changes through the House of Commons.

June 16, 1975 ALBERTA HANSARD 715 MR. NOTLEY: A further supplementary question, Mr. Speaker. Can the minister advise whether the Crowsnest rates were discussed at the Friday meeting, what the consensus was, and what the position of the federal government was with respect to the continuation of the Crow rates? DR. HORNER: The question of the Crow rates was not discussed specifically, except in the sense that statutory rates would remain. We look on that as a very cornerstone of what we have been talking about to the federal government.

I do believe, though, that the question of the entire freight rate proposition is one -- in fact, in Mr. Marchand's statement today, he made direct reference to the question of rapeseed, meal, and oil. We're very heartened by that direct reference in that one specific instance in which we might be able to move forward quickly. MR. NOTLEY: Mr. Speaker, a further supplementary question to the hon. minister. Is the question of grouping rates for towns and cities in a general area a commitment from the government, or is it a matter which will be subject to ongoing discussion? DR. HORNER: Mr.

Speaker, one of the other points Mr. Marchand made in our discussion and in his statement today, was that he would want to have discussions with the provinces in the immediate future with regard to the question of grouping of rates, which is so important to our general policy in this province. MR. CLARK: Mr. Speaker, a supplementary question to the minister. Could the minister report to the Assembly on the question of rail line abandonment? In light of Mr. Marchand's announcement from Ottawa today, where does that stand? DR. HORNER: One of the continuing anomalies in the federal government structure, Mr.

Speaker, is the fact that we would hope Mr. Marchand would be given total direction of the federal transportation policy. In that regard, we would like to see the rail line abandonment program come under the ministry of transport. It is pretty logical that if, in fact, certain lines have to be abandoned, other forms of transportation have to be at least looked at to serve those particular areas. It would seem to me the new policy as outlined can only be served if they're vitally concerned with regard to the rail line abandonment program as well. MR. CLARK: Mr.

Speaker, I appreciate the minister's answer, but could the minister indicate to the House whether the question of rail line abandonment was discussed specifically, and where it stands right now, given the problems we all know about at Ottawa? DR. HORNER: Well, Mr. Speaker, the situation is that the Canadian Transport Commission and various other federal agencies have announced a number of studies. My honorable friend, I'm sure, is aware that Mr. Justice Hall is going to do a review starting -- my information now is -- in late fall. Mr. Snavely is doing a review in regard to costing.

In addition, a group of ex-railway people has been hired to review the present physical status of all the lines in the B and C categories. Its report is supposed to be in by this fall. Those are the three federal initiatives in that area. In addition to that, Mr. Speaker, because we have a pretty great stake in the social and economic activities within our province with regard to rail line abandonment, we are in the process of surveying in depth the impact in relation to Alberta communities.

That kind of information will be available to those communities, and we will assist them in any way we can to ensure their transportation needs are met. MR. NOTLEY: Mr. Speaker, a supplementary question for clarification. Will that involve expenditures of funds or grants to the communities that might want to make representation to the Hall Commission? While I'm on my feet, was there any discussion at the transportation ministers' meeting concerning possible federal sharing of funding for communities which may be affected by the reassessment of rail lines? DR.

HORNER: If I could answer the latter part of the question first, Mr. Speaker, I think it's been taken for granted over a great number of years, ever since the question of rail line abandonment came to the fore, that the federal government had a responsibility in relation to the transportation needs of those communities which may be hit, in fact, by rail line abandonment. The question of whether we might provide financial assistance for communities to appear is, I think, premature at the moment, Mr. Speaker.

We are assessing in depth all the communities affected, the various modes of transportation available to them, indeed whether some rationalization in certain selected areas might, in fact, be a boon to certain communities in the area. So I think all these matters are under consideration. We are really doing a great deal of work, both at our level and the federal level, to try to finalize some sort of reasonable approach to rail line abandonment. MR. NOTLEY: Mr. Speaker, a further supplementary question to the hon. minister.

At the meeting on Friday, was there any discussion about possible federal funding or sharing of

716 ALBERTA HANSARD June 16, 1975 road construction costs, which will inevitably increase as a result of railroad rationalization? Was there any discussion of federal participation with the province in picking up the additional costs that will be incurred as a result by the province? DR. HORNER: There was no specific mention of that at this particular meeting. In previous discussions, the federal government, I think, accepted the fact that they will indeed have to share. As the hon. member appreciates, out of WEOC came a sharing concept with regard to stengthening and improving our highways in certain areas.

The other major area in which sharing was considered is the question of improved access from southern Canada to the North. Personally, I'm very hopeful we'll have a major sharing program with the federal government, over and above the present DREE agreement we have signed. Slave Lake Hospital MR. R. SPEAKER: Mr. Speaker, my question is to the Minister of Hospitals and Medical Care. Has he met with a citizens' committee from Slave Lake to discuss the matter of a public inquiry into the operation of their hospital? MR. MINIELY: Mr.

Speaker, I met with a group of citizens from Slave Lake along with the MLA for Slave Lake, the hon. Mr. Shaben. They indicated they would like some assistance from the province. The subject of our discussions was the problems of the hospital and, specifically, whether there were ways in which we could assist them. They were exploring various avenues, one of which was the question of an inquiry. I indicated to them that there are perhaps other ways we could take a look at the problems in the hospital, but I haven't made a decision at the present time as to which route we will take. MR. R .

SPEAKER: A supplementary to the minister. Are the problems financial or administrative at this point in time? MR. MINIELY: Mr. Speaker, to give my views as to what the problems are would be premature at this stage. The group of citizens presented to me the fact that they felt there were problems and would like the assistance of my office and the Hospital Services Commission to identify those problems. As I indicated earlier, Mr. Speaker, I have not been able to decide what the problems are, if any, and what can be done about them. MR. R . SPEAKER: Mr. Speaker, a supplementary to the minister.

Did he give the committee a target date as to when he would make a decision or give a point of view? MR. MINIELY: Mr. Speaker, I indicated to the committee it was my hope that within a month of meeting with them we could provide some course of assistance, at least in terms of identifying whether there were any problems and perhaps what improvements could be made. Oil Industry MR. CLARK: Mr.

Speaker, I would like to direct a question to the Minister of Energy and ask if the government has a study by a private consulting firm dealing with the health of the petroleum industry, especially the small Alberta- and Canadian-based companies. Is the government at this time having a study like this undertaken, and what is the time line on it? MR. GETTY: Mr. Speaker, the hon. member would have to develop his question in more detail for me to appreciate exactly what kind of study he is getting at. AN HON. MEMBER: There are so many going on. MR. CLARK: Mr. Speaker, a supplementary question.

Has the Department of Business Development engaged Foster and associates to do a study on the health of the petroleum industry in Calgary, especially the small companies? MR. GETTY: Mr. Speaker, I would have imagined he would direct that question to the hon. Minister of Business Development and Tourism, when he's in the House. I do recall the hon. member talking to me about starting that some time ago, Mr. Speaker, in order that the Alberta Opportunity Company may be able to assess applications or proposals coming to them.

I think it would probably be best, though, for the hon. member to wait until the minister responsible is back in the House. MR. CLARK: Perhaps I could address a supplementary question to the minister responsible for Calgary, in light of the comments the Premier made on Friday in the estimates. Could the minister indicate to the House how far along this study by Foster and associates is? When does the government expect a final report, and could it be tabled in the Assembly?

June 16, 1975 ALBERTA HANSARD 717 MR. McCRAE: Mr. Speaker, I can only reiterate I think that question might more properly be asked of the minister involved. MR. CLARK: Mr. Speaker, a supplementary question to the minister responsible for Calgary. Could the minister confirm that such a study is being undertaken by Foster and associates? MR. McCRAE: Mr. Speaker, I can only reiterate I think he should ask the Minister of Business Development and Tourism tomorrow when he's back. Environment -- Common Standards MR. NOTLEY: Mr. Speaker, I'd like to direct this question to the hon.

Minister of Environment and ask if he can advise the House the reason for his refusal to sign the draft accord of federal and provincial environment ministers last week. MR. RUSSELL: Mr. Speaker, the decision was reached by the federal minister and the 10 provincial ministers at our meetings Thursday and Friday in Edmonton. Some provinces are ready to sign, some are not, and some wish further amendments to the accord. The agreement reached was that all provinces would wait until the fall meeting in October to give the federal government that much longer to try to reach a common accord.

If a common agreement has not been reached at that time, those provinces which are ready to sign will sign. MR. NOTLEY: Mr. Speaker, a further supplementary question. Is the hon. minister in a position today to advise the Assembly what the obstacles are to Alberta’s signing, or the amendments which Alberta would try to achieve in the accord before signing? MR. RUSSELL: Yes, Mr. Speaker. We have only two outstanding points of concern. One deals with terminology. It's very minor, and we don't expect any difficulty in reaching agreement on that. The other, I believe, refers to

Article 14, and involves some aspects of constitutional law. We are more concerned about that one. MR. NOTLEY: Mr. Speaker, a further supplementary question for clarification. Does the Government of Alberta have any opposition in principle to joint federal-provincial environmental standards and reciprocal procedures? MR. RUSSELL: Not at all, Mr. Speaker. I think the record will show that Alberta probably was very vigorous and took one of the leading roles as a provincial government in attempting to get this accord signed. I know my predecessor, the Hon. Mr.

Yurko, hoped that the Alberta-Canada accord would be signed early this year. As I say, we've reached the point really where we have just this one issue we're still concerned with. MR. NOTLEY: Mr. Speaker, a further supplementary question. Is the hon. minister able to summarize the substance of Alberta's objections? He described the problem, but I would like to have it summarized in understandable language so we know, in fact, what the objections of the Government of Alberta are. MR. RUSSELL: Well, Mr.

Speaker, the principle involved is the responsibility, duty, or right of each level of government to enforce each other's legislation in areas of jurisdiction within the other's boundaries. In the case of Alberta, I can point it out by an example. The Alberta Department of Environment would want to have the rights spelled out in the accord, for instance, to deal with pollution infractions in the area of the national parks, primarily the responsibility of the federal government.

We have two townsites within national parks with unsatisfactory sewage disposal systems, and we would want the right to comment and enforce orders in those cases. That's the nature of the problem. Student Travel Grants MR. R . SPEAKER: Mr. Speaker, a question to the Minister of Government Services and Culture. Will the minister be announcing a new program with regard to travel grants for students travelling across Canada, visiting various parts of Canada in the summer? MR. SCHMID: Mr.

Speaker, this responsibility more appropriately falls within the Department of Recreation, Parks and Wildlife, since the youth branch is in that department. However, I could inform the hon. member that under the Discover Canada program there may possibly be some funds available, if budget permits, to help these students travel across Canada, if it is not a grant for the transportation of bands and/or similar groups of people.

718 ALBERTA HANSARD June 16, 1975 MR. R. SPEAKER: Mr. Speaker, a supplementary to the Minister of Recreation, Parks and Wildlife. Is the minister going to announce a new program of travel grants for the summer? MR. ADAIR: Not at the present time, Mr. Speaker. We are going to study the operational programs in effect and take a look at them first. Foothills Hospital Labor Dispute MR. NOTLEY: Mr. Speaker, I would like to direct this question to the hon. Minister of Hospitals and Medical Care, really to clarify something raised before.

Is the minister in a position to advise whether any negotiations are taking place between the CSA and the Foothills hospital board as of today? MR. CRAWFORD: Mr. Speaker, I would think not. My understanding of the position is that the parties have embarked upon a course which resulted in the court proceedings earlier described. It would be unusual if negotiations were being carried on at the same time. MR. NOTLEY: Mr. Speaker, a further supplementary question. Has there been any effort by the government to resume negotiations between the hospital board and the CSA on a face-to- face basis? MR. CRAWFORD: Mr.

Speaker, I think the answer to that is similar to answers I have given on previous occasions in the House. The position of the labor relations branch of the Department of Labour is very, very consistent. Officials are available to attempt to assist the parties on any occasion, whether it be a formal mediation or an occasion when one or the other of the parties thinks something is to be gained by the parties beginning to meet again.

In the present circumstances, I say again, my understanding of the board's position, in view of the fact that action which is illegal and in contempt of court has occurred, is that they would not be approaching us at the present time. I have had no notice through my officials as of today of any such approach via the Foothills board for that sort of assistance. Management Advisory Institute (continued) MR. CLARK: Mr. Speaker, I would like to direct a question to the Minister of Advanced Education and Manpower.

Has the minister met with officials of the University of Alberta regarding the management advisory institute? DR. HOHOL: I have not, Mr. Speaker. I thought I had indicated that. In any case, I have not. MR. CLARK: A supplementary question, Mr. Speaker, to the minister. Has a meeting been arranged between officials of the minister's department and the University of Alberta or the faculty of business? DR. HOHOL: Not to my knowledge, Mr. Speaker. ORDERS OF THE DAY MR.

SPEAKER: May the Members Services Committee have leave of the Assembly, under Standing Order 49, to hold a brief meeting, notwithstanding that the Assembly may be meeting or in committee? HON. MEMBERS: Agreed. [Mr. Speaker left the Chair.] ******************************

June 16, 1975 ALBERTA HANSARD 719 head: COMMITTEE OF SUPPLY [D r. McCrimmon in the Chair] MR. CHAIRMAN: The Committee of Supply will come to order. Department of Energy and Natural Resources MR. GETTY: Mr. Chairman, perhaps a few remarks would be helpful.

I’m sure hon. members of the committee believe that consideration of these estimates and how the new Department of Energy and Natural Resources operates will be important to the future development of our province, since much of the way in which the province does develop in the future will be reflected in the manner in which the government, the Legislature, and the people of the province handle their natural resources. I might also say, Mr.

Chairman, it will be a matter of guiding the development of these resources, because it is certainly our intention that the actual development essentially be as much as possible through the private sector in the resource industries. Some of the major responsibilities the department is now involved in, Mr.

Chairman, are the disposition and supervision of natural resource leases; the general management of the development of those leases; collection of royalties, rentals, and dues on leases that are let; and attempting, as the government has over the past several years, to strike the adequate balance between a royalty share as owners of resources and sufficient incentive to the explorer and developer so they will continue to carry on exploration and development. I think it’s fair to say, Mr. Chairman, that judgment is probably the most difficult to make.

It’s also a judgment that can be changed so much, as we have seen over the past 18 months, by factors that are beyond our control, either national or international.

Another matter the department is commencing to investigate and study a great deal more is the percentage mix of energy we will be using in the future: what amounts of oil and gas should be used for fuel, feedstock; how coal should be used; how they should be dovetailed with the growing trends to nuclear energy; the amount of hydro-electric energy that should be used; and keeping abreast of the technological breakthroughs which may be coming on such things as solar or thermal energy.

As well, we have a particular challenge before us in the department right now, and that is the fact that we are putting together what have essentially been two separate departments: a large part of the previous Department of Lands and Forests and the previous Department of Mines and Minerals. I think it would be wise for all members of the House to make sure adequate attention is placed on renewable as well as energy resources. Certainly, I must admit that from my personal involvement in the past, it's something I must continually remind myself to do.

It’s probably also a reflection that several members of the House should be reminding themselves of this, as well. I point out that in the question period some of my honorable colleagues on both sides of the House tend to refer to the department as the Department of Energy, when it's really the Department of Energy and Natural Resources. The renewable resources are no less important. As a matter of fact, as greater realization comes to people in Canada and other parts of the world as to the depleting nature of non-renewable resources, greater attention must be placed on renewable resources. Mr.

Chairman, as I mentioned, bringing together the two separate originating departments will be a challenge. We are right in the midst of it now. I am also trying to upgrade my knowledge of the renewable resource section. I will be the first to admit that, with other matters claiming my attention, I have not been able to spend the amount of time I would like. However, that is something that will need to be worked on in the coming years.

I'm sure that if we can tackle it with the same enthusiasm I've experienced so far from the personnel that now make up the Department of Energy and Natural Resources, we should be able to solve the problems. MR. CLARK: Mr. Chairman, I'd like to direct a question to the Minister of Energy and Natural Resources. I got the message. Might I ask the minister if he would give us some indication of the approach his department will be using in assessing the report of the Environment Conservation Authority on the eastern slopes, [since] the lands branch is presently lodged in that department?

Also, would the minister be in a position to indicate to the House the kind of consideration that has been going on in the course of the summer, or perhaps the fall, on the question of where the lands branch is going to end up? I raise that question because I, and I'm sure the government has too, have had people and organizations come to me expressing a real concern about the present disposition of the lands branch. A large number of people are concerned here. I think it would be helpful, for those people who are following the discussion, to have some indication of the approach the government is going to use.

Frankly, should people who have this kind of concern be lodging it with the minister right now? What overall approach is the government going to use?

720 ALBERTA HANSARD June 16, 1975 MR. GETTY: I guess there were two questions, Mr. Chairman. One was the question of the Environment Conservation Authority report regarding the eastern slopes. The report has been the subject of fairly intensive assessment by the government. That assessment is being led by an interdepartmental committee made up of representatives of various departments. As of now, that committee has basically two functions. One is to assess those projects which were held up while the Environment Conservation Authority hearings were taking place.

Those projects, held up because it did not seem wise to allow any to go ahead while the hearings were on, can now go ahead. They've either received a green light from the Conservation Authority and other departments of government, or their impact on the slopes is really not of a nature which would cause any concern environmentally.

The second part of that interdepartmental committee study is to judge how to allow the necessary multiple use of the slopes -- recreational, transportation, forest management, resource development -- how they can be best handled, keeping in mind the existing laws we have in the province which govern many of these things, and keeping in mind the recommendations of the Conservation Authority. I don't, in any way, want to give an indication that the resolution of those conflicting pressures will be easy, but the problem is that judgments have to be made and governments must make them.

We must make them as soon as possible in order that the citizens will get the greatest possible benefit from the eastern slopes, MR. CLARK: Who is getting [inaudible]? MR. GETTY: The chairman of that interdepartmental committee is a representative of the Department of Energy and Natural Resources, and the vice-chairman is from the Department of Environment. The second question was the disposition of the public lands division of the government.

I think it's fair to say the reason the Premier mentioned it has not been lodged permanently in the Department of Energy and Natural Resources is because of the kinds of concerns which have been expressed since the creation of the department, and I think have always been expressed. The need [is] to guarantee the multiple-use aspect of public lands in the province and to make sure they are handled in an impartial way and not subject, for instance, to the pressures of development of energy resources or other resources, keeping in mind that the land is probably one of our greatest natural resources.

We have a task force headed by the project management group which the Premier mentioned earlier when dealing with the Executive Council estimates. The project management group, which is under the Deputy Minister of the Executive Council, Mr. Hobbs, has gathered together organizational assistance from the Department of Agriculture, the Department of Energy and Natural Resources, the Department of Municipal Affairs, the Department of Environment -- I may have missed a department -- the Department of Recreation, Parks and Wildlife.

They will make a recommendation to the cabinet committee on Economic Planning and Resource Development. The cabinet committee obviously will then have to deal with that recommendation. I would suggest those who wish an input into that decision should express their views -- many are coming in right now -- to their MLAs. I think that would probably be an adequate way to ensure they are brought to the attention of the government. MR. CLARK: Mr. Chairman, one further question to the minister.

Is the minister in a position, and would he feel it appropriate, to indicate to us who the chairman is from the Department of Energy and Natural Resources on the study doing the assessment of the eastern slopes? MR. GETTY: It's Mr. Wyldman. MR. NOTLEY: Mr. Chairman, while we're on Appropriation 2301 , I suppose it would be an appropriate time to raise questions of a general nature. I'd like to do that.

First of all, while recognizing that the department is the Department of Energy and Natural Resources, I'm sure the minister will be the first to agree that the major controversy in the last few months has surrounded the energy portion. Although I do want to say something a little on in the question period when we get to the lumber industry, I'd like to go back to the government's favorite proposition, that is, the Syncrude deal. The minister has a slight advantage over the rest of us in the House, because he's had a chance to read the Loram report. Unfortunately, the rest of us haven't had a chance to do that.

As a consequence, in order to try to find out where things stand on construction costs, it's been necessary to glean bits and pieces from the other reports. Of course, the Harries report does contain some information. Looking through it very carefully, one can arrive at a labor cost, and one can arrive at the total number of man-hours.

My question first of all -- I think the minister can probably answer this without breaching any confidentiality agreement with Syncrude -- is why, in the Harries report, is there a very substantial increase in the number of man-hours required to build the Syncrude plant from the first application presented to the ERCB and the Harries report, an escalation from about 12 million man-hours in January of 1974 to 32.9 million man-hours in the Harries report of 1975? Now I can appreciate, Mr. Minister, that there are all sorts of reasons the labor rate would go up.

I can appreciate there would be many arguments as to why interest rates, the costs of services, or the costs of materials would go up. But I find it a little difficult to understand why the number of man-hours should dramatically

June 16, 1975 ALBERTA HANSARD 721 change between the first application and the Harries report. Either the Harries report is wrong, which could be the case, or there has been a rather dramatic increase which I think should be explained. MR. GETTY: Mr. Chairman, I don't have the Loram report with me. I do recall the discussion on it. There were several factors. One basic factor has been that the productivity per man-hour has been lower than estimated. It has not been anywhere near as high as they had hoped. It obviously is a function of, in many cases, breaking new ground with the project.

They had to make an estimate of the amount of productivity that could be attained on a project like Syncrude in a spot in Alberta like Fort McMurray. In any event, it has turned out they were much too optimistic, as I recall, in the anticipated productivity of the labor force. The other is they have just found there are many more things to do, remembering that this project has virtually no precedent in Canada and North America. They are learning new techniques constantly. There has been a need, as they progressed further and further into the project, to reassess their projections consistently.

It's possible that should the productivity per man-hour increase, it will have a dramatic effect on the cost of the project. However, the kind of thing which causes that to happen is almost the generation of a team approach, a kind of, let's do this in the national interest and all get behind this project because it's important. Quite often that can have a dramatic increase in man-hour productivity. I must agree with the hon. member that it has accelerated and has been disappointing to the project participants. MR. NOTLEY: Mr. Chairman, just a question to follow that up. I appreciate there may be some argument.

I can certainly understand that because Syncrude is such a large project, i t . probably wouldn't be accurate to take the man-hour figures from GCCS and, considering the larger size of Syncrude, to extend those figures holus-bolus. There certainly are additional factors. What troubles me, though, is the minister's answer. I can see there may be a drop in output per man-hour, but there's an enormous drop between the original application and the Harries report. That can only lead me to conclude there was serious miscalculation somewhere.

If that miscalculation was on the part of Bechtel, I wonder to what extent that project is under control. If that kind of miscalculation can take place on the engineering function of man-hours, what could happen in the years ahead? This, of course, relates to a question the Leader of the Opposition raised, I believe on Thursday, about the mechanism we have for monitoring the pace, staging, reporting, and supervision of the entire construction process. Mr. Chairman, I would ask the minister to respond, but before he does I want to take another question that fits into this as well.

I want to deal again with the Harries report, because we have gone over both of them in some detail. I'm the first to confess there could be inaccuracies, because I'm just going on the basis of the Harries report. I wish I was going on the basis of the Loram report, but unfortunately we don't have that information. Mr. Minister, taking the amount estimated in the Harries report for labor costs and computing the number of man-hours cited in the report, we get the rather interesting figure of $33.43 an hour average labor cost.

Now I know the operating engineers are asking an increase; I know the plumbers are asking for an increase; and I know labor rates are going up. But I wonder what inflation factor the Harries people are using to come up with that kind of figure. Just to put this in perspective for you: if you look at the Harries report, you'll find the total labor cost projection is something over $1.2 billion or thereabouts, rounding off the figures, plus the number of man-hours. You divide one into the other and you get a man-hour rate.

Admittedly, that's going to take in the total number of man- hours, including some of the top supervision people making a lot of money. But an average, Mr. Minister, of $33.43 an hour is a trifle high by any yardstick. As a matter of fact, one would expect all sorts of people to go North to seek their fortune. I want to cite another example, and that's on the pipeline. Again, I'm citing information from the Harries report: the number of man-hours and the cost estimates. It's our understanding this pipeline is to be built in one year.

Now if we take the number of jobs cited in the Harries report and the labor cost, we come up with the incredible figure of $117,000 per employee for the year the pipeline is to be built. Mr. Minister, I really think we have to have some explanation why these costs are so high. You made a very plausible answer, but it would be plausible if we were dealing with a 15 or 20 or 30 per cent factor.

When we're dealing with a huge increase in the number of man-hours to build a plant, labor rates which are clearly beyond prevailing rates, and construction costs for labor which just can't possibly be accurate, all I can do is say that either the report is wrong or there is some very serious inconsistency which the public has to have resolved. MR. GETTY: Mr. Chairman, I'm certain my background and the hon. member's would not allow us to get into a particularly advantageous debate on the details that go into an assessment like the Harries report.

To second-guess a competent engineering group which has prepared a report for us with the information and the oversimplistic style of attempting to rationalize that information would not, I think, be particularly helpful. I think, though, the hon. member could well isolate several key questions for which I'd be

722 ALBERTA HANSARD June 16, 1975 happy to get the details, rather than he and I trying to debate the level of Hu Harries & Associates’ competency in putting together these facts. Far better to get the key questions the hon. member would like answered. Assuming they can be answered within the confidentiality bounds under which the government operates, we'll certainly get them for him. MR. NOTLEY: Mr. Chairman, I appreciate that answer.

Just to state the questions I think should be answered, I would like, first of all, the rate of inflation being projected in the Loram report, the statistics, what the construction estimates are based on -- a 10 per cent rate of inflation, 20 per cent, 15 per cent. I think that is important. I would like to have whatever information we can obtain from the Loram report without breaking the agreement -- which I think we should break; however, that's neither here nor there. That's an argument we fought out last week.

In any event, without breaching that agreement, [I would like] all the information dealing with hourly rates and labor costs. If the minister could, I would like him to resolve the discrepancy, or what appears to be the discrepancy, between some of the statistics cited in the Harries report. If there are logical explanations as to why these differences exist, I'm going to be satisfied. I have to tell you quite frankly, Mr. Minister, that when some people from the Harries firm attempted to explain them during the course of the election campaign, they didn't even go one smidgen of the way toward answering them.

They're not unreasonable questions. The people of Alberta are going to wonder at labor rates of $33.43 an hour. They're going to wonder at these things, and I don't raise them to make a few Brownie points. I raise them because I think they have to be answered. I'm sure that the Loram report would at least be able to put them in context, because obviously the Harries people had to have access to some of the information in the Loram report in order to get their raw statistics. I would like that information. In addition, Mr.

Chairman, dealing specifically with the pipeline, I’d like the minister, if he would before this Assembly is over, to table the breakdown of labor costs on the pipeline: what wage rates they are going to be looking at, what rate of inflation they're calculating, and what, in fact, the total labor bill would be. MR. GETTY: I can only reiterate, Mr.

Chairman, that it will be information which the government judges can be provided, considering the confidential nature necessary in some of these assessments and remembering that, in the event that labor negotiations are to be carried out, it may well be something that will have to be dealt with generally and not in specifics. MR. NOTLEY: Mr. Chairman, I'd like to ask the minister a few questions about the power plant. Is the minister in a position to advise the committee what the reasons are for the very substantial increase in the cost of building the power plant?

It seems to me we should separate the Mildred Lake plant, which is itself a vast project, from the construction of a power plant which, while related to the Syncrude venture, would as I understand it be a somewhat simpler procedure. There has been a very substantial increase in the construction costs. I would ask the minister if he can, again without breaching the agreement, advise us what the reasons are for a very substantial hike in the estimated costs from the time the first application was made to the ERCB to the most recent figures? MR. GETTY: I think the simplest way, Mr.

Chairman, is for the hon. member to consider that the power plant is not a separate feature of the total project, but is basically a power plant that can only be built for this project. It is almost impossible to tell where the one starts and the other ends. It cannot be compared, as I know the hon. member has tried to do in other opportunities, to the generation of power by a standard power plant, for instance at Sundance. They are not comparable in that respect. This is a completely different kind of power plant, generating steam as well as power. It's unique to the Syncrude project.

Virtually one of the most difficult things, which the legal people are working at in attempting to draw up the various necessary agreements, is seeing where the actual power function ends and where the main plant, as we're attempting to distinguish it, begins. So it is virtually one total project and has been caught up in the costs, just as the total project has.

I really urge the hon. member to accept the advice of those who happen to have no reason to tell us anything but the best information, as the Loram people did, who are a respected Canadian engineering firm with obviously no particular love for the Canadian Bechtel group, a major competitor, who have looked into these matters and, as we've been able to provide to the House, given us the information that [the costs] are not unduly increased, nor were they incorrectly estimated in the beginning. MR. KIDD: Mr. Chairman, listening to the hon. Member for Spirit River-Fairview makes me wish to ask the minister . . .

AN HON. MEMBER: You're better off if you don't listen. MR. KIDD: . . . to confirm that one of the major strengths of the Syncrude project is that it has on the board representatives of the most competent and successful major oil companies in the world, which are spending their own money. AN HON. MEMBER: Agreed.

June 16, 1975 ALBERTA HANSARD 723 MR. NOTLEY: As the minister well knows from his days in opposition, it is not the job of the opposition to be reassured by glowing statements of the government. It's the job of the opposition to question. That's precisely what I intend to do. Mr. Chairman, I would like the minister, if he would, to advise the committee what the government proposes to do in terms of a power rate which will be charged to the Syncrude operation. Has that been arrived at yet, and how will it be worked out? Will we use the $320 million to start with?

The interest rate will have to be returned on that, and the operating costs over and above. What guidelines does the government have at this juncture to determine power rates? Will it be using the same general format as the private sector, Alberta Power and Calgary Power, or has any agreement been arranged yet? MR. GETTY: Mr. Chairman, the pipeline and power plant are being provided to the project through the Alberta Energy Company. It is negotiating a cost-of-service contract which is, to the best of my knowledge, not yet completed.

Presumably the board of directors and management of the Alberta Energy Company will strike the best possible arrangement they can. The management of Syncrude, made up, as my honorable colleague from Banff has pointed out, of competitive successful corporations, will strike the best possible arrangement for the project. MR. NOTLEY: A supplementary question to the minister. Do you have any idea when this rate structure will, in fact, be struck? Negotiations presumably are taking place at the present time. From time to time do you meet with the president of the Alberta Energy Company?

Are you in any position to advise at what stage negotiations concerning the rate structure are at the present time? MR. GETTY: I can only say they are intensive negotiations and they are hoping to have them completed this summer. MR. NOTLEY: Mr. Chairman, I would like to ask the minister a question or two on the contract between the Syncrude consortium and Canadian Bechtel. In the question period the other day, when the Leader of the Opposition raised questions about the Bechtel contract, the minister indicated there was going to be some reassessment . . . Not reassessment.

I'm trying to recall the exact words used. The inference I received anyway was that there was to be an effort to try to renegotiate the cost-plus factor. Is that in fact taking place, and are you in a position to report what is being done? MR. GETTY: Mr. Chairman, I think all participants in the Winnipeg discussions arrived at the conclusion that some type of incentive arrangement should be built into the contract between the participants in the Syncrude project and Canadian Bechtel, other than the existing contract which is, I believe, that 2 per cent of the total project would be the fee to Canadian Bechtel.

An assessment of that has been and is being carried out, with a view to arriving at an incentive arrangement. That has not been completed yet. The hon. member will appreciate that it hasn't really been that long since the Winnipeg meeting, and that there’s a great deal of money involved. Therefore all participants are moving carefully in establishing the incentive arrangement, but that is the intent. MR. NOTLEY: Mr. Chairman, could the minister advise just what the legal status of this would be?

I presume that when the Syncrude consortium was first established and Canadian Bechtel became the prime contractor, at that point in time, right or wrong, the consortium agreed to a sharing of the cost. Mr. Chairman, what I am asking, really, is to what extent can you modify this without the consent of Bechtel? Suppose Bechtel simply says, well look, gentlemen, you people made a mistake and we now have this on a percentage of the total cost, and we don't intend to change it. Is there any legal recourse where in fact an agreement has presumably already been made between the consortium and the prime contractor?

What role would the governments have, coming in after that agreement has been made? Or, in fact, are we going to be starting from square one on this kind of important factor? While the minister is answering that, I would also like him to respond to what would happen in case a new incentive agreement were arranged, a fixed-price contract? Would the expenditures to date by Bechtel be on the basis of the original agreement, and then after a point in time it would be a fixed-price contract? Where do things sit on this matter now? MR.

GETTY: As for the legal potential for changing the existing agreement, I can only say that the participants and Bechtel are discussing the matter. Probably if the participants were to try to negotiate something totally unreasonable, there might be a legal confrontation. However, we have to leave that as a hypothetical situation. The hon. member then suggested one type of arrangement or alternative. Again, whether they would follow that method is hypothetical. Since it is under assessment and negotiation, I am afraid, Mr. Chairman, I just can't provide him with the information. MR. NOTLEY: Mr.

Chairman, I would like to ask the minister to expand on an answer he gave in the question period last week about the mechanism to monitor the ongoing construction costs. I realise the question period is a time when it's not possible to expand in any detail. But I would like him to advise us just what mechanism the government now has in place to keep an ongoing eye on the construction costs, phase by phase by phase, stage by

724 ALBERTA HANSARD June 16, 1975 stage. I'm not talking about the accounting manual -- I realize that's a different thing but the ongoing construction costs, so that we don't find a Bechtel estimate of $1 billion suddenly mushrooming to $2 billion, $4 billion. MR. GETTY: Mr. Chairman, the participants receive a total project budget which they must approve. That budget is scrutinized by each of the participants, now 6 participants, and has been scrutinized over the past months. The participants receive an annual budget as to that portion of the total project to be completed in the coming 12 months.

That is scrutinized in great detail and then approved, or altered and then approved. Then the participants receive a monthly assessment of the amount that has been accomplished in the month, what it has cost, whether it's on target, and how much it may be over and under the previous approval. So they have a monthly assessment of how the costs are running. My latest information from the material which was tabled in the House is that they are basically on target. MR. NOTLEY: A supplementary question to the minister. You talk about the monthly assessment and scrutinizing by each of the participants.

Who does that scrutinizing for the Government of Alberta? I realise we have Mr. Chambers on the board of directors, but is there any task force? Who in the government does the ongoing scrutinizing? MR. GETTY: Sorry, Mr. Chairman. I forgot to mention the creation, in the Department of Energy and Natural Resources, of the Syncrude task force or secretariat. I prefer to use the word "task force". It is headed by Mr. Tom Vants, who has transferred into the department from the previous office of program co-ordination. Mr.

Vants is the assistant deputy minister in charge of the Syncrude project in the Department of Energy and Natural Resources. MR. NOTLEY: Mr. Chairman, I'd like the minister to bring us up to date on where things now stand in terms of employment opportunities for native Albertans on the Syncrude project. I believe a task force or committee was set up with the two major native organizations in the province. I'm just wondering to what extent there are going to be opportunities in the construction phase for native Albertans.

While he's answering that, I'd also like him to comment on a resolution which received support from both sides of the House, introduced by the former Member for Lac La Biche- McMurray, concerning air transportation to some of the native communities for people working on the Syncrude project. MR. GETTY: The latest information I have, Mr.

Chairman, is that the Syncrude management is continuing, as it has from well back in the planning process, to be a leader in Alberta in providing as full as possible an opportunity for the native people of our province who wish to and are qualified to participate in employment opportunities on the project. I don't carry daily statistics with me. However, I am satisfied they are doing everything possible to provide employment opportunities there. I recall the resolution that was passed in the House. Unfortunately -- or fortunately -- it was not a responsibility in which I was involved.

It fell within the responsibility of the Department of Manpower and Labour. I recall the hon. minister of that department going into it in some detail in a prior session of the House, perhaps in estimates, perhaps on some other occasion, that had looked into it and were continuing to explore the possibilities. However, from current information, I do not see it operating anywhere right now. MR. NOTLEY: Could the minister advise us where things presently stand on the accounting manual, when it will be concluded, and whether it will be presented to the Legislature for debate and discussion? MR.

GETTY: The accounting manual is essentially being prepared by the Provincial Treasurer's department with the assistance of the Auditor. It also contains certain matters which require considerable negotiation between the participants, the Provincial Treasurer's office, and the Auditor. I would say the accounting manual is probably 80 per cent completed. However, as you get to the final stages of something like that, you tend to come upon the more difficult matters to negotiate and resolve. It would be very difficult for me to say when they might be resolved.

Obviously, it will be before the project start-up, but I frankly couldn't guess at a completion date. As for debating it in the House, it would certainly be made available to the House. Any hon. member can create a debate out of many opportunities there are in the House. MR. CLARK: Mr. Chairman, I'd like to ask the minister if he would outline to us the procedure now being used on the costs that are being incurred at Syncrude. Does the minister recall the other day in question period when I explored this area? Really what I'd like to know is the procedure involved on the question of construction costs right now.

For the moment, let's assume a rather sizable expenditure comes along that the Provincial Auditor doesn't feel is justified. What's the procedure, and who are the people involved? Can the minister give us some indication of who is involved in this ongoing monitoring, which could be pretty expensive to Albertans?

June 16, 1975 ALBERTA HANSARD 725 MR. GETTY: The hon. member, Mr. Chairman, is now talking about two separate cost monitoring matters. One, as I explained to the hon. Member for Spirit River-Fairview, is the project cost itself, which is approved as a total project under a great deal of scrutiny, because it is important to all six participants. Then there are the annual estimated project costs, which again are scrutinized very carefully. A monthly assessment of how much has been accomplished, what it has cost, and whether it's over or under the estimate is going on constantly.

The hon. member mentioned something about the Auditor approving a cost. Now he has switched to the accounting manual. The accounting manual will provide that only approved costs can go into the royalty formula. That accounting manual, as I mentioned, is about 80 per cent completed. However, as I also pointed out, the most difficult factors to resolve are at the end. There was a full week's meeting last week in Calgary. The participants and the government separated into a legal group and an accounting group. One was working on the accounting manual and one on the agreement itself.

They've made considerable progress, but it's certainly not completed yet. MR. CLARK: The minister talked about the monthly assessment. I'm referring here to the building cost of the plant from now until it's in operation. Who is doing that assessing or monitoring as far as the Alberta government is concerned? Is that the responsibility of Mr. Vants and his group? Is the Provincial Auditor involved in that area at all? MR. GETTY: They may have discussions with the Provincial Auditor. However, it's not his responsibility at this stage. MR. CLARK: Would the minister just confirm that Mr.

Vants and his group are the group which is doing the . . . MR. GETTY: Yes, as I pointed out to the hon. Member for Spirit River-Fairview, within the Department of Energy and Natural Resources there is a task force headed by Mr. Vants, the assistant deputy minister within the department, who has transferred from the previous office of program co-ordination. It is his responsibility to report through the deputy minister to myself on the current building costs of the project. MR. NOTLEY: Mr.

Chairman, I wonder if the minister could perhaps advise us as to what the route would be if -- suppose we have a series of these monthly reports, and the first three months are all fine, everybody's happy. But along comes the month of June, and our officials find what they believe to be some very serious discrepancies, but the other parties to the agreement are not concerned. Do we have any veto power, or do we just simply have to go along with what, in the view of our representatives, would be a serious error in terms of the construction pace? MR. GETTY: As participants, Mr. Chairman, we have 10 per cent.

We do not have a veto power. I don't anticipate the unlikely situation that five other participants would like to spend more money than is necessary, and we would not. However, I would draw to the hon. member's attention the matter I discussed previously with the Leader of the Opposition. In the end result, as it relates at least to the royalty situation, costs would have to be approved as legitimate. MR. NOTLEY: Mr. Chairman, several other questions. Just to follow up the question, if I may, for a second. I presume that relates to the plant, where we have 10 per cent investment. But surely, Mr.

Minister, as it relates to the power plant, which is going to be built at the same time, we would clearly have 100 per cent authority, would we not? Or the Alberta Energy Company? MR. GETTY: That's the responsibility of the Alberta Energy Company, Mr. Chairman. The Alberta Energy Company is monitoring their costs very stringently. I am sure their management and board of directors are making sure of that. The hon. member should know that on a cost-of-service basis, both the pipeline and the power plant, there are no benefits in having them higher, because the participants will only pay their cost of service.

Certainly they will want to have those costs as low as possible, and the Alberta Energy Company will obviously also want that. MR. NOTLEY: I would certainly say both the Alberta Energy Company and the Government of Alberta would want to keep the costs of the power plant down, because no matter how you cut it, that's going to affect the income which eventually flows back to us. If the company has to pay more for its power as a result of the power plant being $500 million instead of $300 million, that's going to mean less money available for the profit- sharing arrangement with the province.

So we, as the ultimate beneficiaries of the 50 per cent profit-sharing arrangement, clearly have a responsibility to make sure the power plant cost is kept down -- not just the Alberta Energy Company, but indeed the Government of the Province of Alberta. It will eventually affect the total amount coming to the province. I wanted to ask the minister, Mr. Chairman, if he'd advise the committee whether the cabinet or the government has determined the conditions of profitability necessary for Alberta to exercise its 20 per cent option?

726 ALBERTA HANSARD June 16, 1975 MR. GETTY: No, Mr. Chairman. The condition will be first exercised by the Alberta Energy Company. It's so far in the future and, as the hon. member knows, under such dramatically changing conditions in the energy picture -- and in the oil sands picture -- that it would merely be guessing, I suppose, to try to decide what judgment factors would be exercised at that time. MR. NOTLEY: Mr. Chairman, I'd like to ask the minister to advise us what the government has decided, as of now, with respect to the interest rate on the $200 million loan.

The minister will recall when the Premier announced the Syncrude deal last February, he indicated the interest rate had not been finalized. It would be, as nearly as possible, the competitive rate. I wonder if the government is in a position to give us additional information on the interest rate and the conditions leading to a final interest rate determination? MR. GETTY: I am not certain, Mr. Chairman, whether or not that has been finally resolved. There obviously was negotiation between the Provincial Treasurer's department and the two participants borrowing the dollars.

Those negotiations were based on a variety of factors. One was the amount and quality of collateral put up for the loan. Second were the convertibility factors. As the hon. member appreciates, convertibility is a factor which tends to lower an interest rate. The other is the changing cost of long- and short-term money, which is taking place daily. [When] the negotiations are finished, and it has been in the hands of the Provincial Treasurer, I'd certainly draw your question to his attention and have him respond. MR. NOTLEY: Fair enough, Mr. Chairman.

Has the government made any decision with respect to its share of the crude oil? Will all the crude be marketed through the Alberta Petroleum Marketing Commission? What about the province's 10 per cent share of crude oil? Will we allow that to be sold to the major participants and then get that amount of money, or would we, in fact, be taking the oil in kind as authorized by the 1973 legislation? MR. GETTY: Mr. Chairman, the government now has that right under all conventional leases, and has not felt it necessary to take oil in kind. However, I wouldn't want to prejudge that decision.

At any given time, the government may find that in the best interests of Albertans it should be done. The provision is there. MR. NOTLEY: Mr. Chairman, I have just two or three other questions in relation to the oil sands. I have some questions under the general question of technology, but I'll bring that under the appropriate appropriation. I'd like to know if the minister is in a position to bring the committee up to date on the Shell application and whether the government feels it can go ahead. He's been quoted in the press as saying certain things.

I'd like to see those things said in the Legislature so we could discuss them. MR. GETTY: I'm not sure what I was quoted on, Mr. Chairman. The hon. member is now talking about the Shell synthetic crude project. Shell representatives have been talking to me and officials in the department about both their mining project and an in situ project they are working on. I have left it with them, after a pretty detailed discussion regarding their plans. They are to provide me with the

summary of their position as they see it right now, in light of current energy matters, and they are to outline those things they feel need to be resolved before the project can commence. Obviously, a major part would be the commercial terms which the government will want to attach as conditions to any approval. The hon. member will recall that when the Syncrude project was approved by the Executive Council, it carried conditions as well. So I'm neither optimistic nor pessimistic about the Shell project. Two other projects have also been recommended by the Conservation Board.

It's too early for me to say which would go next, if anything, and what shape commercial terms with the Shell project would take. MR. NOTLEY: Mr. Chairman, has the government updated its position on the number of plants it foresees in the oil sands region? Last summer, we had one general projection. The Minister of the Environment made a speech about a certain number of plants by the year 2000, if I recall. Where do we stand on this matter now? Or is it very much up in the air, depending on the commercial terms or the uncertainties of the market place?

Are you in a position to tell us whether we'll have 2 plants or 22 by the year 2000? MR. GETTY: No, I couldn't be definitive, Mr. Chairman. I could only say it's my feeling it's important to Alberta and to Canada that there be progress in the development of the Alberta oil sands, that it be in that percentage -- 10 per cent or so -- which can be covered by mining, and that there be considerable progress in that major portion which is too deep to be surface mined. Certainly I, and the government I believe, will do everything possible to cause that progress to move as quickly as possible. MR. CLARK: Mr.

Chairman, I wanted to ask the minister this question, really just following along; given, for the moment let's say, more stable circumstances or a more stable climate as far as Ottawa is concerned.

June 16, 1975 ALBERTA HANSARD 727 It seems to me I recall the minister saying, in his capacity as Minister of Federal and Intergovernmental Affairs, that the Alberta government had some concerns about a number of plants being under construction at the same time. I think we can appreciate that.

On the other hand, I left that discussion in the Assembly, I believe it was a year ago, with the very definite feeling that the pace of development, as far as the Alberta government was concerned, might well be in the vicinity of one or two plants being under construction at the same time; recognizing it's about a five- to seven-year venture from the time they say yes and the construction goes ahead, until they're really on full stream. Is that still the ballpark scheme of things or pace of development as the government sees it? MR.

GETTY: Yes, I think it's fair to say that would be something we would like to aim at. In other words, as major equipment and a major part of the labor force phased out of the existing project, there would be a project on the drawing boards prepared to go ahead. The talent and the equipment could effectively be transferred to the next project. Whether there would be two starting together might be very difficult to see. However, with technological advances, it could be possible.

The more probable would be to have a project ready so there can be an effective convertibility of labor and equipment from one to the other, and so the personnel and contractors don't move and become occupied at another project, either in Alberta or in other parts of Canada, then have problems bringing them back to a third or a fourth plant. MR. CLARK: Can the minister give us any indication of the government's thinking on the mining technique GCOS and Syncrude are using, vis-a-vis the in situ method Shell is trying in the Bonnyville area, from the standpoint of Alberta's look to the future?

It seems to me there is a real advantage if the Shell plant, or another in situ kind of venture, goes ahead quickly because of some of the problems in the economics at Fort McMurray, which we may learn more about in the future. Does the government have any kind of priority in these areas? If I recall the Home Oil application, it's in the tar sands area too, not in the Bonnyville area. Also, have you had any discussions yet with Syncrude with regard to second and third plants on their existing lease? As I recall their existing lease, there is room for about three more plants.

As a result of the agreement that was signed, the federal government would have a piece of the action. The parties would remain basically the same. MR. GETTY: There were several questions there, Mr. Chairman. MR. CLARK: Three. MR. GETTY: In terms of an in situ project, my discussion with the new chairman of the Alberta Oil Sands Technology and Research Authority is that we should do everything possible to start to push the breakthrough that's necessary on an in situ process. As the hon. member will probably recall, he is taking his new position this summer.

He has, I think, a feeling for the urgent nature that I expressed to him. We have told him that whatever resources are necessary from the government, from this Legislature, he need only show us the justification, and the resources will be there. I can only tell the hon. member that we believe the existing experimental work has to go further into a fullfledged research operation in the field. The Oil Sands Technology Authority will move that as fast as they possibly can. The hon. member asked about further plants on Syncrude's leases. Mr.

Chairman, while there is capacity for further plants, I'd say that Syncrude, as a group, have their hands full getting this plant on stream, working out all the bugs and 'debottlenecking' it, before they start to consider a further plant. MR. CLARK: Could the minister just comment on the Home Oil situation. MR. GETTY: The Home project they've had approved? The Home project, which is recommended by the Energy Resources Conservation Board, is also before the Executive Council, with one slight difference from the Shell and Petrofina project.

That is, the Home group will be going back to the Conservation Board this fall to present an updated financial arrangement. My discussions with the chairman of the Energy Resources Conservation Board are that I should consider their recommendation in temporary abeyance until the completion of Home's presentation to the board later this year. MR. NOTLEY: Mr. Chairman, this is moving from the oil sands into the area of oil prices, but it is connected in a sense.

The Syncrude project, as I understand it from the Premier's announcement, is predicated on the international price, although that can be defined, I suppose, in many ways. The question I'd like the minister to respond to is one that came up during the February debate in the question period: how is the government going to deal with the problem of blending price? This is assuming that by the year Syncrude goes on stream, oil prices in Canada will still be slightly lower than the international price. As I understand it, the commitment has been made to the Syncrude consortium that they will have the world price.

Has there been any discussion, subsequent to the signing of the agreement in Winnipeg with the federal authorities, as to how there would, in fact, be

728 ALBERTA HANSARD June 16, 1975 a blending of the higher oil sands price with what, at that point, might still be somewhat less than the world price for conventional crude oil? MR. GETTY: There has been discussion, Mr. Chairman, but no resolution. There are too many assumptions in energy pricing these days that it's not wise to make in the current state of flux and change, to be able to work out any final resolution of that matter. MR. NOTLEY: Mr. Chairman, I'd like to move from oil sands and oil pricing to the whole question of natural gas pricing and petrochemicals in Alberta. I'm wondering if the minister would perhaps give us a

summary of the government's position on petrochemical development at this stage. There are a number of specific questions I'd like him to touch on in dealing with this subject. First of all, there is the problem, it seems to me, which arises when the price of natural gas goes up. As I see it, that would make a petrochemical industry on a world scale less competitive in Alberta than would otherwise be the case with cheap natural gas. Mr. Minister, if we are in fact going to move to a world-scale petrochemical industry, to what extent are we going to shield the price of natural gas delivered to that industry?

Row are we going to pay for it? Obviously, we're going to have a lower price. Does that mean we are looking at taking off the shielding or the cushioning of natural gas to consumers or to the rural gas co-ops in the Province of Alberta? What is the judgmental decision in determining what balance we arrive at in order to move into world-scale petrochemicals, given present pricing conditions? Two years ago when we were looking at -- I remember the Energy Resources Conservation Board report, in 1972, talked about a huge increase from a field price of 14 or 15 cents up to, maybe, 27 cents.

Now we're looking at a field price way beyond that. It seems to me that has very important implications for the viability of a world scale petrochemical industry in the Province of Alberta. I'd also like the minister, in outlining the government's position, to advise us where government stands vis-a-vis assistance to companies moving into the field.

That would involve: possible equity participation by the Alberta Energy Company; capital financing; possible relocation grants, subsidies, or assistance of one kind or another to encourage an industry to settle in Red Deer or some other area, as opposed to Fort Saskatchewan. I'd like him to advise us just where the government stands with respect to that kind of assistance. But I think, Mr. Chairman, the major point is really the question of natural gas pricing, its new higher price, and the impact that has on the viability of a petrochemical industry in this province. MR. GETTY: Mr.

Chairman, I can't say a great deal on the matter of the natural gas price, because it would draw me into a more detailed discussion on the current oil and gas pricing negotiations than is possible. I agree with the hon. member's contention, though, that higher natural gas prices, and natural gas moving quickly to commodity value, will be an important factor in any petrochemical development based on natural gas within the province. It will have to be dealt with by the government, the Executive Council, and the companies, to determine whether they are able to compete on a world scale plant.

However, I can't get into natural gas pricing at this time except on that general basis. There was a question about government support for plants, and the Alberta Energy Company participation or equity financing. I only have to say, Mr. Chairman, that there are no approved petrochemical plants now. It would only be hypothetical for me to try to speculate, and perhaps place on the Energy Resources Conservation Board, who which is going to be hearing applications -- an undue consideration for them to have to take into account whether we now debate plants which have not been approved. MR. CLARK: Mr.

Chairman, just two questions. The first one deals with the Energy Resources Conservation Board hearings coming up this week in Red Deer on the possible location of a petrochemical venture in that area. Do I take the minister's most recent comment that he really is in no position to make comments on the hearings coming up in Red Deer this week, and some indication of what the government has in mind as far as petrochemical development in the Red Deer/central Alberta area is concerned. MR. GETTY: Well, Mr. Chairman, as I pointed out to the hon.

Member for Spirit River- Fairview, I wouldn't want us to get into a discussion that will in any way flavor or cause problems for the Energy Resources Conservation Board, which is going to be hearing an application on petrochemical developments, and which may well turn them down. MR. CLARK: Mr. Chairman, I appreciate the comments the minister makes, but when the company has already gone to some length to acquire land in the area, it would seem perhaps the government could be a little more definitive than the minister has just been.

We've tried on more than one occasion in the House to get some indication of -- not specifically in regard to this plant, or that plant, or this application, or another application -- but what, in fact, does the government have in mind as far as the whole Red Deer area, and the Red Deer River, is concerned [in terms of] petrochemical development? Could the minister have another try at it? MR. NOTLEY: A little less like Mackenzie King.

June 16, 1975 ALBERTA HANSARD 729 MR. GETTY: He’s talking about a matter not within my responsibility. He's talking about the location of plants which would be controlled under environmental acts, for one thing, and municipal and planning acts. I would only say, the government’s general policy is that industrial development be dispersed throughout the province as much as possible and not centralized in certain areas. The clustering impact of plants is not desirable. The government will encourage industrial development spread throughout the province.

Other than that, it's very difficult for me to project whether there are problems with the Red Deer River, because I'm sure, under The Clean Air Act and The Clean Water Act, the Minister of Environment will make sure adequate environmental protection is afforded before any project can go ahead. MR. CLARK: Perhaps I might just ask one more question in this area. Assuming the environmental problems can be handled, and assuming the City of Red Deer and the surrounding municipalities want the area, I guess the real question comes back to the minister's department and the Energy Resources Conservation Board.

The nub is: is the government prepared to make the feedstock available? What's the price? It seems pretty obvious to me the government can direct the placing of the development. I'm not quarrelling at all with your stated intention. I believe the former Minister of the Environment, in a meeting in Red Deer about a year and a half ago, indicated that the government sees the Red Deer area as an area where there could well be considerable petrochemical development. Is this what the government sees in the area if the environmental problems can be ironed out? I talked to the mayor of the City of Red Deer on Saturday.

He is wildly enthusiastic. He can't wait for the minister to make some utterances. I told the mayor I'd try to get the minister to make some utterances today. Seriously, is that the government's general attitude now, given those constraints? MR. GETTY: Well, Mr. Chairman, there hasn't been a plant approved that the government can direct anywhere. That's the real crux of our discussion. Until there is, the government obviously is in no position to say where a plant should go. There are going to be hearings before the Energy Resources Conservation Board. You then have two cases.

They will be either approved or turned down. If they are turned down, we have nothing to talk about. If they are approved, they will be before the Executive Council, and the Executive Council will approve them subject to conditions. I can't prejudge those conditions. MR. CLARK: Can I just ask this: given the present attitude of the Executive Council, and the fact that in the end the Executive Council decides the question of feedstock and price, I take it that the present Executive Council is favorably inclined towards a rather reasonably large-sized petrochemical development in the Red Deer area.

Is that a fair assessment of the government's attitude? MR. GETTY: I guess generally, if all other things were equal and could be worked out, and the company had property there -- labor force, infrastructure and everything -- yes. MR. CLARK: The second matter I would like to ask the minister to comment on, Mr. Chairman, deals with the Energy Resources Conservation Board report today which, for the fifth year in a row, indicated there was a reduction in the known reserves in Alberta.

The board said in its assessment that proven reserves declined in '74 -- as I said for the fifth consecutive year -- and it goes on to say that within 10 years crude oil production will be at half its current level within the province.

Recognizing that for five years we have had a lessening each year in the proven reserves, first I would like some indication of the government's attitude about this, and secondly -- as we've repeatedly heard it said, both inside and outside the House -- in addition to the possiblity for gas discoveries in the eastern slopes, if there are going to be large, new oil findings in Alberta those might well be the areas in which they will take place. What's the government's attitude to extensive drilling in the eastern slopes, or what is their present policy? MR. GETTY: Mr.

Chairman, dealing with the Energy Resources Conservation Board report, they have confirmed a regrettable trend, that is, the decline in the finding rate and therefore a decline in conventional reserves. That only accentuates my earlier comments about the high priority the government feels the Alberta oil sands holds in this province for Alberta and for Canada. I have expressed the urgency to the incoming chairman of the Oil Sands Technology and Research Authority regarding a breakthough in the in situ process. I would also have to draw the attention of the hon.

Leader of the Opposition to the government's ALPEP program, which was obviously designed to increase activity, exploration and development in the province. So we are doing those things that we can to have the trend reversed, er move in different energy areas so the interests of Albertans and Canadians are protected. What was the second question? MR. CLARK: Whether there are any new major finds in the eastern slopes. MR. GETTY: Mr. Chairman, exploration programs are now under way in parts of the eastern slopes. I can only say that it would be the government's intention to allow exploration

730 ALBERTA HANSARD June 16, 1975 where it can be handled without permanent damage that would not be in the best interests of Albertans. I would have to leave it on that kind of general basis. MR. NOTLEY: Mr. Chairman, I would like to come back briefly to the petrochemical industry. I had to smile a little when I saw the minister take almost a Mackenzie King-like stance for a while in terms of dealing with us. You know, on the one hand, and on the other hand if necessary, a petrochemical industry, and but not necessarily a petrochemical industry, was the way that I . . . MR. CLARK: At least it's maybe. MR.

NOTLEY: Yes, at least it’s maybe. I must confess it’s rather different from what we heard during the election campaign. Mr. Minister, I would like you to comment on a couple of points. I understand the terms of formal cabinet consideration is obviously not going to take place until you get a go ahead from the ERCB. However, surely your department is now carrying on discussions with participants of potential developers of the petrochemical industry in the Province of Alberta.

That being the case, it would be interesting to know whether the government has developed any guidelines at all with respect to those things I mentioned: equity participation, possible debenture or debt capital, relocation costs. The other point is also with respect to the petrochemical industry. I would like to know whether the government has any studies in its possession that look forward to the next 5 or 10 years. Are we going to have marketing problems?

Are those marketing problems going to be serious enough that some additional assistance, which has been described as front-end costs, may have to be considered in order to make it possible for a petrochemical industry, based in this province, to break into the world markets? It is my understanding that we are going to have to rely to a certain extent on export markets, especially in the first years, in order to make the industry feasible at all. MR. GETTY: Mr.

Chairman, for the information of the hon. member, the discussions that go on with the proposed petrochemical plant operators are through the Department of Business Development and Tourism, not the Department of Energy and Natural Resources. I am certain that my colleague discusses with them their intentions for the future. However, I obviously have a peripheral involvement through the reporting responsiblity of the Energy Resources Conservation Board, through my participation on a variety of cabinet committees, and also in the cabinet itself.

But the discussions going on are through the Department of Business Development and Tourism. As to what I prefer to call the commercial terms, I don't think it is possible to deal with them in any overall broad brush. Should plants be approved, they will be tailored to the individual circumstances at the time they are approved. MR. NOTLEY: To follow that up. Has your department assessed the market situation? That was the second question I asked. MR. GETTY: Again, Mr. Chairman, that is through the Department of Business Development and Tourism. They do assess the markets. MR. NOTLEY: Mr.

Chairman, just before we pass into the body of the appropriations, I would like to ask the minister a few questions with respect to the ALPEP program announced, I believe, on December 10, 1974. In looking over the six proposals in the ALPEP announcement, I can certainly support the refund of provincial income tax on royalties. I think in this House, regardless of where we sit, there certainly was general opposition to Ottawa's decision on that score. I can also appreciate the rebate on royalties up to $1 million. I think this is a good proposal and will help the smaller companies.

The $1 million ceiling is an excellent one, because it seems to me, in looking at the drilling statistics, it's the smaller companies rather than the larger ones that do the bulk of the drilling. What I find a little difficult to understand, however, is the decision, in effect, to reduce the royalty -- increase the price at which the surcharge is applied, which is another way of reducing the royalty -- and the question of natural gas changes, plus the reduction of royalties in the future above $6.50 a barrel. We don't know what that reduction is at the moment, because the new price hasn't come into effect.

I assume it would be reducing the surcharge from 65 per cent to 50 per cent, but that's just speculation on my part. What I'm really raising, Mr. Minister, is that it seems to me that at least three of these proposals are going to benefit, in a very large way, the major companies which are not drilling. It seems to me that if you were going to design a petroleum drilling incentive program, the emphasis should have been almost totally on getting money into the hands of the smaller companies which are, in fact, doing the drilling.

At least over the last 5 or 10 years they have, historically, done the drilling in this province, rather than some of the major companies. To illustrate what I mean, Mr. Chairman, I just note the shareholders' report of Gulf Oil. They say quite frankly that the ALPEP program isn't going to make any difference to them in terms of their investment decisions in the Province of Alberta. They're going to gain -- I hesitate to use the word "windfall", but they're certainly going to pay less to the Province of Alberta as a result of some of the proposals in the ALPEP scheme.

June 16, 1975 ALBERTA HANSARD 731 I'd like the minister perhaps to go over each of the six proposals in the ALPEP scheme and advise us why the government chose to introduce each one of the policies. Two or three of them are fairly self-evident and relate clearly to the smaller companies. But I'd like to know why we have undertaken actions which, in a sense, represent the broad brush the minister is always talking about in terms of some of our criticism on this side.

It seems to me that a reduction of the royalty across the board is in fact a broad brush that's going to benefit a concern like Imperial Oil, which produces 20 per cent of the oil in this province. Consequently it is going to have a very substantial saving in royalties it would otherwise be paying to the province. On the other hand, that kind of reduction to a smaller company just getting started wouldn't be anything like as important. So I'd like the minister to go over the ALPEP program and outline the reasoning for each of the proposals. MR. GETTY: Mr.

Chairman, I think the hon. member should recall the comments I made when we were entering into consideration of these estimates. One of the most difficult judgment decisions a government has to make is to try to strike the balance between a fair return to the owners of a resource who are selling that resource, and a return to those who have taken considerable risk and have been successful, and now have the resource to sell. In the government's judgment, it was trying to strike this balance.

It was trying to strike this balance, as I pointed out, in face of external factors, either national or international, which can throw that balance out very easily. The government has to make a judgment, and you will never hear anybody who is always satisfied. Some will say it's too high, others will say it's too low. Nevertheless, the government has the responsibility to reach that decision. We reached a decision; then, in the course of monitoring the decision, whether or not we were at the right balance in our minds, we felt adjustments had to be made.

We haven't given up that the larger companies will do future exploring within this province. Whether they have additional funds will also, perhaps, be reflected in their investment in other ways within the province, either in oil sands or in situ plants, or in industrial developments like petrochemicals. I don't think there's anything out of context in the six amendments the government made to that balance of royalty and incentive.

I don't think it's helpful to go into them individually, except to say that they are part of a package which was trying to strike the balance and to provide a fair return to the people of Alberta, and still leave sufficient incentive for drillers, developers, and explorers. I should point out too, as the hon. member pointed out himself, it is not a broad brush. While some of it does go to all companies, there are certainly parts aimed directly at smaller companies. Part of the program, of course, is the drilling incentive system which is aimed directly at drillers.

So I think it's just a judgment decision a government must take, Mr. Chairman. MR. NOTLEY: Mr. Chairman, let me back up a minute and ask the minister if he can expand upon a question I raised in the House last week about the monitoring mechanism the government uses, in terms of seeing that the ALPEP plan, in fact, is being translated into action in the Province of Alberta. Which division of his department would be in charge of keeping an eye on it? Just what are the ground rules for monitoring it? MR. GETTY: Mr. Chairman, it's the economic planning part of the department. There is a variety of ways.

Obviously, the elected representatives are one way of finding out the health of the industry. They represent people who work in the industry. They represent people who own interests in the industry. We have our meetings with industry. As I pointed out last week in the question period, the plan was announced in December 1974. We require further time to get any historical trend. It's difficult to say what portion of Alberta's existing oil and gas investments is a result of the plan, but it is clear that by far the majority of oil and gas exploration and development now going on in Canada is going on in Alberta. MR.

CLARK: Mr. Chairman, in question period today, the minister indicated he'd had some discussions with his colleague in Business Development with regard to a rather ongoing assessment of the state of the industry, primarily in Calgary as I recall. I was rather heartened to hear that because, hopefully, that's perhaps a bit of an advent to the government being of some assistance to some Alberta companies, albeit likely very small and which produce a very small portion of the oil produced each day in Alberta.

Nevertheless they're Alberta investors who basically raise their own money, as I understand it, here in Alberta. Some of them, I think, are in a very difficult situation now because of the freeze on their product. Traditional financial institutions just don't find themselves in a position to be of assistance to them. Is the minister in a position to indicate what kind of time frame the government is looking at before it can be of some assistance in this area? Has he more information on the ongoing studies? Can he be of any assistance there? MR. GETTY: I pointed out to the hon. member, Mr.

Chairman, a variety of things had been happening within the very recent past. We are currently engaged in oil and gas price negotiations, and there is a federal budget coming up a week from today. In addition to that, we have currently going on within the department, in conjunction with the National Energy Board, a method of flowing back the export charge on natural gas to producers within the province. The ALPEP program has only been in effect, basically, for a very few months. Therefore it was and is very difficult for us to determine where the correct

732 ALBERTA HANSARD June 16, 1975 course lies for the government to provide assistance, should additional assistance be necessary. I acknowledge that the normal securities and equity markets have not been a source within the last 18 months or so, and that, to some extent, the tanks are more cautious with lending funds to small companies who may have very few wells to put up as collateral. Nevertheless, I think we will have to go along for a longer period of time.

We'll have to get by the oil and gas pricing negotiations, work out the natural gas export flowback, hear the federal budget, assess the historical trend of the ALPEP program, and then determine whether there is a legitimate course for the government. There have always been some companies in the oil and gas business which are unable to raise funds. Sometimes that is because they are inefficient. Sometimes it's because they're unable to sell their prospects or their ability to those who would like to provide funds.

So the government is going to have to try to make sure there is a legitimate need and then develop a program to fit that need. MR. CLARK: Mr. Chairman, just to follow up on the hon. minister's comments. The particular people who have drawn this matter to my attention, anyway, are not in the gas business at all but are strictly in the oil business. I recognize the comments the minister has made as far as the federal budget is concerned, and the pricing venture.

But in recognizing that they are, I'm sure, a very, very small portion of any future production of the Province of Alberta -- on one hand we're moving along with the Alberta Energy Company and trying to encourage Albertans to invest in the province, and so on -- it seems to me that the government could be prepared to consider these kinds of situations somewhat more quickly. If, after it has considered it, it doesn't think it can be of assistance through some sort of loans -- my gosh, we've guaranteed loans for virtually everything else.

I'm not advocating that we guarantee loans here, but I'm advocating a very serious look at the problems involved. When I hear the minister relate all the things we're going to have to wait for -- some of these companies aren't going to be around if we wait that long. Appropriation 2301 agreed to: $88,900 Appropriation 2302 MR. NOTLEY: There's quite a drop in fees and commissions, a rather surprising drop. Can the minister advise what the reasons are? MR. GETTY: Mr.

Chairman, the drop is basically three things: the termination of the Suffield evaluation program which was in the previous estimates, $800,000; and the transfer of two grants: the sulphur research grant, $300,000, and the energy institute grant, $125,000, which have been transferred to Appropriation 2311. Appropriation 2302 agreed to: $328, 100 Agreed to: Appropriation 2303 $1,146,100 Appropriation 2310 $1,187,900 Appropriation 2311 $3,891,050 Appropriation 2312 $1,311,900 Appropriation 2321 $1,110,260 Appropriation 2322 $6,000 Appropriation 2323 $1,903,220 Appropriation 2324 $560,390 Appropriation 2331 MR.

COOKSON: Mr. Chairman, I’d like to ask the minister a question on Appropriation 2331. I had a concern expressed by a constituent, that there didn't seem to be any proper procedure for application for job opportunities. It's quite a substantial expenditure. I wonder if the minister would comment on what procedure is used by this particular branch of the department in order to obtain help, qualified or otherwise, to operate as forestry lookouts, et cetera, during the summer. Is any particular procedure followed throughout the province in advertising these positions? MR. GETTY: Mr.

Chairman, I'm not completely familiar with all the operations the personnel division of the department would follow. However, I should point out to the hon. member that under Vote 2343 there is a junior forest rangers program for young people, which operates during the summer. There is also a Forest Technology School which the department operates; students who have taken a NAIT course are then trained and become, I understand, valuable applicants for jobs within the department. Other than that, Mr. Chairman, the hon. member would have to allow me to check into whether normal hiring arrangements are followed here.

When I say "normal", when there is an opening in the classification, it is advertised in the paper and applicants are

June 16, 1975 ALBERTA HANSARD 733 assessed through the personnel administration office of the Minister of Manpower. Then the top applicants are referred to the department involved and it is able to select that one who best suits its needs. If the hon. member is having any specific problems with somebody looking for employment with the department, I would be happy to look into it.

Appropriation 2331 agreed to: $7,785,000 Agreed to: Appropriation 2332 $1,236,370 Appropriation 2333 $331,220 Appropriation 2334 $2,340,430 Appropriation 2335 $740,840 Appropriation 2336 $4,211,340 Appropriation 2337 $214,000 Appropriation 2338 $536,100 MR. CLARK: [Inaudible] the minister's new-found interest in this area. I just want him to assure us that he's going to continue -- what is it, the beaver, that the department uses in their forest program? Are you going to keep it in operation? MR. GETTY: Mr. Chairman, as of right now Bertie Beaver is still in operation. MR.

CLARK: The beaver is safer than the petrochemical industry in Red Deer. Agreed to: Appropriation 2339 $3,756,150 Appropriation 2341 $682,060 Appropriation 2342 $588,770 Appropriation 2343 $100,050 MR. NOTLEY: Just before we pass on to the next section, I realize the lumber inventory program comes under the Department of Business Development and Tourism -- we discussed that the other day -- but I would like the minister to report on the state of the lumber industry in Alberta. It was in an extremely depressed state last fall.

Canfor, the major operator in the Peace River country, laid off quite a number of workers at all their sites. The inventory program was announced. I'd like the minister to report on where things stand now. I'd also like him to advise the committee whether the government gave any consideration either to negotiating or to legislative measures if necessary to force the pulp companies to pay a higher price for chips.

In my discussions with one of the senior people working for Canfor, his suggestion was that that would make a rather significant difference to the cash flow of the Canfor operation in Grande Prairie, Hines Creek, and other communities. MR. GETTY: Mr. Chairman, I was just looking for an assessment which I was reading recently, regarding the state of the lumber industry. I'm unable to put my hands on it right now. But I think I should be able to . . . Here it is. The industry, essentially, is recovering somewhat by a strengthening of prices.

However, the recent improvement doesn't appear to be caused by a solid growth in demand, as was the basis on which it previously relied for its health. It's caused chiefly by a curtailment in supply, due to the closure of some inefficient and high-cost mills. Demand is still very spotty. I think it's fair to say, though, that the lumber industry assistance program managed to keep many of the companies operating throughout the winter and spring months.

It's difficult to say who might otherwise not have worked, but in the assessment provided to me the companies which the department feels have obtained funds under the assistance program have been able to keep 998 employees who might otherwise have been unemployed. While it's always difficult to say whether that is a fact, or whether they might have been out of work or have been working without the program, I think, in the best opinion of the department, it is a positive feature of the lumber assistance program. The hon. member mentioned another matter on which I have not been up to date.

I would have to check into it as to the price of chips, and advise him at another time. MR. NOTLEY: Mr. Chairman, have there been discussions since you've taken over, Mr. Minister, with other provinces, and perhaps with the federal government, to see if there's any role which Ottawa, together with the provinces, can play to stabilize the lumber industry in this country? MR. GETTY: Mr. Chairman, I haven't had discussions with the federal government on that issue, nor was I party to any in my previous responsibility.

I do know, though, that probably the most significant matter which does involve the federal and provincial governments will be a re-strengthening of the housing industry which will provide the basic health the industry needs.

734 ALBERTA HANSARD June 16, 1975 MR. NOTLEY: Mr. Chairman, [inaudible] his answer to my first question indicated there wasn't any improvement in demand. I take it from your information that the American housing market, which has been traditionally the largest market, is still lagging. The question I would ask the minister to respond to is with respect to the Alberta Export Agency, which again comes under the Minister of Business Development and Tourism.

My question is: has that agency in the last year, to your knowledge, given any consideration to its role in looking for additional markets that are traditional lumber markets? MR. GETTY: Mr. Chairman, I haven't discussed that matter with my colleague, so I'm unable to answer factually. I would only say one thing, though, about the traditional markets.

That is, with the attention various levels of government are now focussing on the housing industry as such, and from talking to those in the construction industry and in the department, it's my estimation that we will see a tremendous increase in that industry within the next 12 months. Appropriation 2351 MR. MANDEVILLE: I'd just like to make a recommendation to the minister on this particular vote. I would like to see a portion of the public land management division transferred to the Department of Agriculture. I'm thinking of those portions which relate to agriculture.

For example, in 1974 there were 8 million acres of leased land permits, 2 million acres of homestead permits. There are other areas as well under this vote which come under agriculture. There are homestead sales, farm sales, cultivation leases, and many other small areas I'd like to see transferred to the Department of Agriculture. I think they could be administered from that department much more easily than they could from the Department of Energy and Natural Resources.

I think there's a portion of this which deals with the minister's department -- our mineral surface leases, sand and gravel permits, pipeline installation permits -- and I think they should be left there. However, I would like the government to take a good look at transferring a portion of this to the Department of Agriculture. With the experience we've sometimes had in getting information from this department, I don't know if our ranchers would really accept this reneging on getting the information out.

I'm looking at the welfare of the minister when I'm suggesting that he take the ranchers' part or the agricultural part and put it into the Department of Agriculture. AN HON. MEMBER: Hear, hear. MR. GETTY: Mr. Chairman, I will certainly take the hon. member's advice into future considerations, and I know the government will. His comments have been expressed to me by other members of the House and certainly will be given serious consideration. The view that the government will have to follow is that the multi-use aspect of land is honored.

Those who are as concerned about its use for recreation, for the protection of the watersheds, the forestry resource development, wilderness enjoyment and, of course, the important one the hon. member discusses, in agriculture. I think he’s made a point that will be given serious consideration. I take it as good advice when he advises me that if there are people upset with what's going on, better that they tackle my colleague the Minister of Agriculture than myself. MR. HORSMAN: Mr.

Chairman, I'd like to add a word or two on the subject of agricultural leases, as it affects southeastern Alberta generally, and ask the minister, if he does retain this particular portion of his portfolio, to consider a revision of the fees now charged for assignments of grazing leases. There is a fair amount of difference between the way it's handled by the department and the special areas. In the special areas a set rate per acre is charged on the assignment of a grazing lease.

In the lands division of the former Department of Lands and Forests it is based on one-half of the consideration for the transfer of the lease or one-half of the annual rental, whichever is greater. Of course, the consideration is always the greater, and in many cases it almost amounts to expropriation. I suggest that in many cases it's far, far too high. I think the department can also save a lot of money by keeping its inspectors involved in something other than running around doing these appraisals on grazing leases.

I have felt for many years that this is very inequitable and unjust, and I think the department should take a fresh look at the question of assignment fees and how they are assessed. On many occasions the assignment of grazing leases has held up the sale of ranches for months, while inspection reports were awaited. They have a document called Form 22. I don't know if the minister is familiar with it, but it's just a joke. Every lawyer, or anyone handling a transaction, goes to the bottom of the form and works backward to arrive at the consideration for the assignment of the grazing lease. I can assure you, Mr.

Minister, that nobody buying a ranch with a grazing lease involved ever figures it out the way Form 22 makes them. I suggest this be thoroughly considered and reviewed. MR. GETTY: Mr. Chairman, I certainly welcome the hon. member's advice. I've had these matters referred to me on a superficial nature and am unable to look behind them to see

June 16, 1975 ALBERTA HANSARD 735 how they may have developed in the past and why they exist. Certainly, I intend to do that, and I look forward to going into it in more detail at another time with the hon. member and others. MR. NOTLEY: Mr. Chairman, I agree with the Member for Bow Valley, who suggests this should be transferred to the Department of Agriculture. I'd like to ask the minister whether the government is at this time giving any consideration to reassessing its policy with respect to homestead sales? Of course, as the minister is aware, we no longer have the old free homestead concept.

There is now a system of setting a price for homesteads. A number of people in my constituency have made representation to me and made it clear they feel this kind of policy is going to inhibit development of those areas that have agricultural potential. I think we have to be very careful, Mr. Minister, not to open up areas that are marginal. I think we all know of examples, districts that were opened up especially after World War II, where the land simply would never be suitable agricultural terrain.

Where the land does have potential agricultural value, I wonder whether the government has given any consideration to reassessing its policy toward homestead sales? While I'm on my feet, and I don't raise this simply to drag out your estimates, Mr. Minister, or to raise a facetious point, I would ask you what the government plans to do [about the] wagon train which is creeping closer and closer to Alberta every day? They may, in fact, make it. It seems to me that if they do, the position the government has taken so far is going to leave the matter uncertain, to say the least.

I would like to know just where that matter stands at the moment. MR. GETTY: Mr. Chairman, we are reviewing the homestead act and the various policies that are followed under that act. As for the wagon train, Mr. Chairman, I thought the hon. member got an excellent reply from the hon. Premier the other day in the House. I'm sure he wouldn't want me to alter the Premier's position on it, since it seemed to capture the government's feelings very well. MR. NOTLEY: Mr. Chairman, I know that the hon. Premier in a very nice way said they would be welcomed to Alberta. However, what is your department going to do?

What is the lands branch going to do after the Premier makes the welcoming speech and the problem is handed over to you? You're on stage, what comes next? MR. GETTY: They will naturally have to observe the laws of the Province of Alberta. Within those laws, we will be very hospitable. Appropriation 2351 agreed to: $3,136,270 Appropriation 2361 MR. NOTLEY: Mr. Chairman, on 2361. A number of times during the question period we raised the question of bringing natural gas under the Petroleum Marketing Commission. The estimates are an opportunity, perhaps, to go into this in a little more depth.

I'd like the minister to lead off the discussion by giving us the government's view at this particular juncture. MR. GETTY: Mr. Chairman, the government is considering a variety of alternatives as to how to put a natural gas marketing scheme into effect. I think it's fair to say that our present thinking is to have it administered through the same people as the Alberta Petroleum Marketing Commission. However, there would have to be separate legislation. I should advise the hon. members, and I think I've been remiss in not pointing this out, Mr.

Chairman, that we have in the Speaker's gallery today -- we could perhaps recognize him -- the previous Minister of Mines and Minerals, Bill Dickie . . . [applause] . . . who, of course, for some three and a half years managed one of the most difficult portfolios during a difficult period of time for the government. Mr. Dickie has acquired a great d