1987 Legislative Session: 1st Session, 34th Parliament

HANSARD

The following electronic version is for informational purposes only.

The printed version remains the official version.

Official Report of

DEBATES OF THE LEGISLATIVE ASSEMBLY

(Hansard)

MONDAY, JULY 6, 1987

Afternoon Sitting

[ Page

2175 ]

CONTENTS

Routine Proceedings

Oral Questions

Government hiring freeze. Mrs. Boone –– 2175

Mr. Harcourt

Mr. Miller

Mr. Sihota

Ombudsman's report on WCB. Mr. Miller –– 2176

Victoria court services. Mr. G. Hanson –– 2177

Admission fees to Provincial Museum. Mr. Blencoe –– 2177

Miscellaneous Statutes Amendment Act (No. 1), 1987 (Bill 31). Committee stage.

(Hon. B.R. Smith) –– 2177

Hon. Mr. Strachan

Mr. Williams

Hon. Mrs. Johnston

Mr. Blencoe

Mr. Clark

Mr. Lovick

Mr. Sihota

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

(Hon. Mr. Couvelier)

On vote 31: minister's office –– 2188

Mr. D'Arcy

Mr. Clark

Mr. Williams

Mr. Stupich

Mr. Sihota

On the amendment

Mr. Clark

Mrs. Boone

On vote 32: ministry operations –– 2201

Mr. Williams

Ms. Edwards

Mr. Clark

Mr. Sihota

Mr. Miller

Mr. Stupich

On vote 33: compensation stabilization program –– 2214

Mr. Stupich

On vote 66: management of the public debt –– 2214

Mr. Stupich

Mr. Williams

On vote 67: contingencies (all ministries) –– 2215

Mr. Williams

Mr. Stupich

Hon. Mr. Strachan

Committee of Supply: Ministry of Forests and Lands estimates. (Hon. Mr. Parker)

On vote 34: minister's office –– 2216

Hon. Mr. Parker

Mr. Williams

Appendix –– 2218

The House met at 2:06 p.m.

Prayers.

HON. MR. REID: Mr. Speaker, it gives me a great deal of

pleasure to introduce to the House today Mr. Roger Killin, who is the

chairman of the B.C. Championships for the Physically Disabled and the

operations manager of MacMillan Bloedel Harmac Division. With him is

Dr. Jim Senini, a director of the B.C. Championships for the Physically

Disabled and the former chairman of the B.C. Summer Games in Nanaimo in

1985. The citizens of Nanaimo are hosting the Championships for the

Physically Disabled on July 9, 10, 11 and 12, with approximately 400 in

attendance. We would ask the House to make these two distinguished

volunteers welcome.

MR. BLENCOE: Mr. Speaker, I'd like the House to welcome a

number of people from the Victoria area today: Lindsay Batten, a

constituent of Victoria, and two former residents of Victoria, David

and Lee Finnis. Would the House please make them all welcome.

MR. PELTON: Mr. Speaker, in the gallery today are 20 members

of the Pathfinders and Venturers associations of Vancouver. Along with

these fine young people are their leaders, Davor Jackovack and Dennis

and Liz Lane. I would ask the House to make them very welcome.

HON. MR. PARKER: Mr. Speaker, in the House today visiting

from Smithers is a good friend and a great educator, Ian Malcomson,

with his sons Robert and Peter. Would the House make them welcome,

please.

HON, L. HANSON: Mr. Speaker, it's my pleasure today to

introduce Mr. Donald M. Coe, the president and chief executive officer

of Hiram Walker distilleries, and Mr. Robert Duddy, vice-president of

Hiram Walker distilleries, who are both from Walkerville, Ontario; Mr.

Elmer J. Cain, who is plant manager in the Winfield plant; and Mr. John

Madsen, who is the industrial relations manager in the Winfield plant.

Would the House please make them welcome.

MR. MOWAT: Mr. Speaker, it's my pleasure to introduce some

relatives of my wife and me: Jean and Frank MacNally, from Sonora,

California. Jean is a physiotherapist and Frank is a retired judge down

there. Frank happens to be in a wheelchair as well, and if you think

I'm tough as a caucus chairman, you should have appeared in front of

him as a judge in California. I'd ask the House to make the couple from

California really welcome.

Oral Questions

GOVERNMENT HIRING FREEZE

MRS. BOONE: A question to the Minister of Health. In the House last

Thursday I asked the minister if there was a hiring freeze on mental health

services. He stated: "We are not putting a freeze on positions that were

filled in the past." On the weekend we read in the newspapers that this

government has declared a freeze on hiring, replacing only those positions that

are urgent or necessary. Was the minister misleading the House last Thursday,

or was he unaware of what was going on in his ministry?

MR. SPEAKER: The question is out of order, but the minister can answer the parts that are in order.

HON. MR. DUECK: To begin with, I don't think we sat last Thursday. That was probably an error.

There are two ways of hiring psychologists. Some are by contract, of

course, and some are by salaried positions. There is always a change in

contracts. Some contracts expire. Most of those on contract work at

other institutions or hospitals, or in private practice, so that

changes from time to time. I'm saying that the overall service we are

giving, whether by contract or salaried people, is not reduced except

in cases where there is a delay, perhaps where a contract expires and

we haven't got another contract to fill that position, or we haven't

got a salaried person to fill that position. I should also tell you

that we reallocate quite often and shift them from one area, where we

feel they are more than adequately served, to another area.

I must say emphatically that I have not misled the House. There are

times when we have less. We're still working on additional funding for

this year, as was announced some time ago. For example, the $2 million

extra that we announced in alcohol and drug program for youth in your

particular area — Prince George — has increased significantly, not like

you were quoted in the paper.

I think there is a lot of confusion when it comes to the FTEs that

are by contract or by salary. You must remember that we have roughly 75

on salary, and we buy contracts constantly. The ones who have been let

go have been given the proper 60 days' notice. Not only that, they knew

at all times that they would be leaving. Very often it becomes an

issue, because they're not happy with having been relieved of their

duties. So from time to time this happens, but we are not letting up,

especially on the youth and children. There is no decrease, and we will

continue to increase, rather than decrease.

MRS. BOONE: Supplementary to the minister. I'd like to know

if there is a freeze on hiring in mental health services. I'm talking

specifically about mental health at this point. We are getting

conflicting opinions from people in the field who are telling us that

positions are in fact not being filled; that positions were approved,

they were supposed to be hiring for them, and when hiring procedures

were put into place, they were told they were not allowed to fill these

positions due to a hiring freeze. Is there a hiring freeze on positions

in mental health?

HON. MR. DUECK: In my ministry, as far as the freeze is concerned.... And I don't know whether you want to call it a freeze. We constantly....

MR. MILLER: You denied there was a freeze.

Interjections.

HON. MR. DUECK: Do you want me to answer the question?

SOME HON. MEMBERS: Answer the question.

[ Page 2176 ]

HON. MR. DUECK: I will, if you'd stop talking.

Interjections.

MRS. BOONE: Would the minister please answer the question? Is there a hiring freeze on mental health?

HON. MR. DUECK: When it comes to psychologists,

psychiatrists, any specialized people in the field, there is not a

hiring freeze. What is referred to and what is being touted now....

What we're saying, if we want to hire secretaries, for example, is that

before we go out and hire these people, who may be working in other

ministries, we will check with other ministries as to whether they have

extras, and will move them around rather than hire from the outside.

Each ministry hires its own.

But over and above that, I will tell you that at all times we are

cognizant of the fact that we don't want to load up on people where we

don't need them. We are going to be very cautious. In my ministry

alone, I could use another $100 million, I'll tell you quite frankly.

I've asked for it, but I'm not getting it. So I have to be very careful

where I put people, how I use them, how I implement them in the best

possible area, so that young people get especially looked after. I'm

doing my very best, and I do not think there are any who are not being

looked after. If there are, tell me of any specific situations, and I

will report back to you.

[2:15]

MR. HARCOURT: I'd like to ask the Minister of

Intergovernmental Relations a question about the hiring freeze and

privatization, because the Premier's principal secretary, Mr. Poole,

has been quoted as saying that the hiring freeze has been imposed so as

not to interfere with privatization plans.

I want to ask the minister whether this means that the list of

possible privatizations now includes all government departments and not

just Crown corporations, as previously stated.

HON. MR. ROGERS: I don't think it was stated that we wouldn't

look at government departments. We're having a joint look. We're

looking at Crown corporations — and there are 17 of them. We have asked

every deputy minister from every ministry to review the programs within

that ministry to see what items might be suggested — suggested only —

for privatization. Where we have a ministry that has gone through the

process of laying off clerical staff while another ministry is in the

process of hiring clerical staff, which has happened, the taxpayers are

not well served, with the severance involved in one ministry and the

review of the hiring of people in another ministry.

It seems to me that employees working for government in the ministry

where they may no longer be required should not only have the option of

applying to another ministry but that ministry should also be aware of

their availability. That's the effort that's being coordinated within

my ministry.

MR. MILLER: I have a question for the Minister of

Transportation and Highways. Can the minister confirm that there's been

a freeze imposed upon tenders for highway construction? Just as an

example, there was a project approved for Highway 16 some months ago.

There has been no activity to date. It hasn't even been advertised. The

tenders aren't out. Even if they go out tomorrow, it will now be August

before we can proceed with that kind of highway construction project.

Is there a freeze in your ministry on those kinds of capital projects?

HON. MR. MICHAEL: The answer is no.

MR. SIHOTA: I want to find out whether or not this freeze is

on clerical staff only or on other programs. A question for the

Attorney-General. Can he confirm that there has been a freeze placed on

youth programs and the hiring of new people in non-clerical positions

for youth programs within the ministry?

HON. B.R. SMITH: No freeze as such, but it's certainly true

that we're looking carefully at all new hiring to see whether it can be

done from within or whether any of the areas in which hiring is

proposed might be privatization areas. I can't imagine that this area

would be, so the answer is no.

OMBUDSMAN'S REPORT ON WCB

MR. MILLER: I have a question for the Minister of Labour

regarding the ombudsman's report on the WCB — the latest in a long line

of studies — which indicates some serious problems at the WCB.

Following this report, has the minister decided to institute a royal

commission to look at all aspects of the WCB?

HON. L. HANSON: The ombudsman's report was received in my

office on Friday, I believe, or Thursday, and I haven't had a chance to

study it in depth. The answer to that specific question is no, I do not

intend to institute a royal commission at this point. But I look at the

ombudsman's report as a report that may or may not have some good ideas

in it. When I've had an opportunity to assess the report, and discuss

it with other people and interested parties concerned with the WCB,

then, when a decision is made, we will announce it to the House.

MR. MILLER: Supplementary on the report. Some of the first

recommendations concerning workers' avenues of appeal, their

opportunities of appeal and not being cut off WCB payments while that

kind of process is ongoing can be implemented immediately, without any

changes in legislation whatsoever. Would the minister be prepared to

give assurance to the House that he is prepared to implement those

sections of the ombudsman's report, to allow a better system for those

people who are currently caught in that bureaucratic maze of appeals?

HON. L. HANSON: No, I'm not prepared to do that, quite

frankly, because, first of all, I want to look at that whole report.

There may be some practical sense in doing that, and if that's the

decision, certainly we will. But first of all, we need an opportunity

to study not only the report but also its implications. I don't take

the report as negative or interfering. I think honest and genuine

suggestions have been put forward. We will analyze those that we see as

practical and fair, and look at implementation; but certainly not until

we've had a good opportunity to study the report, and not until we've

had a good opportunity to receive input from other interested bodies.

[ Page 2177 ]

MR. MILLER: Final supplementary. I take it then that the

minister disagrees with the statement by the head of the Business

Council of B.C. that Mr. Owen should mind his own business and that he

has no business recommending changes.

HON. L. HANSON: Mr. Speaker, it's not my position to agree or

disagree with a private sector individual who has made a statement. I

haven't had an opportunity to study the report. I'm not endorsing his

statement, nor am I negative to his statement. It's a statement made by

an individual, and certainly it's his opinion. But I do say that I

think the ombudsman has prepared the report in good faith, and we will

certainly look at it and investigate it. Some things in it, quite

frankly, may not be able to be implemented; maybe none of them will.

But first of all I need an opportunity to study that report and digest

what its recommendations are.

VICTORIA COURT SERVICES

MR. G. HANSON: I have a question for the Attorney General. I

wonder if the Attorney-General would justify the eight layoffs at the

law courts here in Victoria, and I wonder if he would please advise the

House if the law courts are on the list for privatization.

HON. B.R. SMITH: I'm glad that the member asked that

question. One privatization, Mr. Speaker, that was controversial about

three or four years ago was court reporters. There was a great deal of

controversy on their privatization. I have had two delegations of court

reporters meet with me in the last six months and tell me that it's the

best thing that ever happened to their careers, their pocketbooks, and

that they're giving better service to their customers.

I would be very pleased to take that question on notice and bring a very early response back to the chamber.

ADMISSION FEES TO PROVINCIAL MUSEUM

MR. BLENCOE: ML Speaker, I have a question for the Minister

of Tourism, Recreation and Culture. Some days ago the minister shocked

this community and others — indeed it was a great shock to this

community — by saying that he was planning and will implement in the

middle of this month charges or user fees for the Provincial Museum.

This has shocked this community, and the shock goes across those of all

political persuasions. The impact on tourism and the impact on locals

cannot be minimized, and it certainly will have a great impact.

My question to the minister: now that he's had the chance to hear

the concern and the feedback, is the minister willing to reconsider

this onerous and unfair second level of taxation and leave the museum

intact?

HON. MR. REID: Mr. Speaker, the answer is no.

MR. BLENCOE: Mr. Speaker, a supplementary. The minister has

stated — which is rather a laughable defence — that the reason we have

these increases is because too many people use the museum. Thousands

and thousands of Victorians and tourists and visitors use the museum.

Is it the intention of this minister to limit the access to this

museum, and therefore limit the access of British Columbians to their

history?

HON. MR. REID: Mr. Speaker, first of all, in answer to the question, it is not the intention to limit the access.

The operations of the museum currently cost the taxpayers of the

province of British Columbia $10 million a year. There is a need for a

$3 million expansion to accommodate the current attendance, which is

1.5 million a year and growing. There is currently a maintenance

problem within the operation which needs to be looked after. We have

researched other museums in the world, and it has been indicated to us

by professional people that there is a need to provide an admission fee

to the museum in Victoria. It will be applied on July 15.

Orders of the Day

HON. MR. STRACHAN: Committee on Bill 31, Mr. Speaker.

MISCELLANEOUS STATUTES

AMENDMENT ACT (No. 1), 1987 (continued)

The House in committee on Bill 31; Mr. Pelton in the chair.

HON. MR. STRACHAN: Mr. Chairman, as the Orders of the Day

indicate. the committee on Bill 31 rose and reported progress, having

postponed sections 42, 43, 44, 45 and 47.

HON. B.R. SMITH: Before we get into those postponed sections,

Mr. Chairman, I would like to recall

section 21, which was passed. You

may recall that

section 21 was an amendment to the Family and Child

Service Act, in which an amendment was agreed to and carried by

committee, an amendment which required court approval for this sort of

information to be revealed. I have spoken to the member for

Esquimalt-Port Renfrew (Mr. Sihota), and asked him if he would consent

to leave to recall this for the purpose of discharging the

section as

amended in its entirety. In other words, what we're proposing is that

we don't change the bill this session. We'll try to bring back a better

amendment in the fall, because the court approval is going to cause

some problems, particularly with information like child abuse.

I'd like to discharge the section, with leave.

MR. CHAIRMAN: The motion, hon. members. Is that the vote on

section 21 be rescinded.

HON. B.R. SMITH: That's 21 as amended, Mr. Chairman.

MR. CHAIRMAN: Yes.

Section 21 as amended rescinded.

section 42.

MR. WILLIAMS: I would hope, Mr. Chairman, we would hear from

the minister who brought forth this amendment — the Minister of

Municipal Affairs, I believe.

HON. MRS. JOHNSTON: I apologize for my absence when the item

was introduced last week. I'm not sure exactly what it is in the way of

information that you're looking for,

[ Page 2178 ]

Mr. Member, but speaking very briefly, this

section allows water to

be supplied by a direct pipe connection at the Canadian-U.S. border.

Point Roberts will finance a five-million gallon reservoir which will

be built in Delta by the Greater Vancouver Water District, and this

reservoir will be used to balance the Point Roberts and Delta water

supplies. The Greater Vancouver Water District anticipates realization

of approximately $40,000 per annum by becoming the water supplier.

Short of that type of information, Mr. Member, if you have some specific questions, I'd be pleased to try to address them.

MR. WILLIAMS: I am sorry that the hon. minister has not

referred to Hansard , because there was a debate on this subject and the

Minister of Environment and Parks (Hon. Mr. Strachan) did yeoman

service — not completely adequate, but I'd say a little better than

what we just got.

Interjection.

MR. WILLIAMS: Yes, Mr. Savage certainly understood the intricacies more than other members in the government benches.

The problem, Madam Minister, is that this province has never agreed

to this kind of export of water in the past. No Minister of Water

Resources, no Minister of Municipal Affairs has ever recommended that

water be transferred to Point Roberts or to the United States of

America for domestic purposes. I honestly don't think that government

ministers realize what they're getting into here.

[2:30]

MR. D'ARCY: Other than the Columbia River Treaty..

MR. WILLIAMS: Well, yes. The Columbia treaty is another story

indeed; that was essentially a matter of flood control and power. This

is domestic water supply for what is essentially, as we argued, a sand

dune south of the 49th parallel and Tsawwassen in Delta municipality.

We kept getting differing stories, and you've got the original story

— it hasn't been amended — which says this is worth $40,000 a year. I

am sure that if you do some checking you might get a bigger number.

That's what happened last week. But $40,000 a year is pretzels; $40,000

a year in terms of what you're....

Interjections.

MR. WILLIAMS: I hate to go into this lecture again, but I

guess I have to, in terms of who is going to benefit. Who is it going

to benefit? It's essentially going to benefit the landholders in Point

Roberts.

AN HON. MEMBER: Bill Lewame.

MR. WILLIAMS: Yes. The former head of the GVRD is probably a modest one; he has a summer place down there.

But there are others that are substantial landowners in Point

Roberts, one of whom is George Hodgins Realty Ltd., one of the major

holders of vacant land in Point Roberts. That will t appreciate in

value dramatically as a result of getting this water supply, and

$40,000 a year is just nothing compared to the way those land values

will balloon in Point Roberts.

The Minister of Transportation and Highways (Hon. Mr. Michael)

certainly knows what happens when you service private land with public

property in the form of new highways and access. He is more than an

expert in that field, so no wonder he's talking about transferring

pretzels into gold. He might like to elaborate on that when his

estimates come up — the member with the bowed head over there.

This is the situation: the major landholder there is Mr. Hodgins.

He's been a major political player in the backrooms of Delta for

decades.

AN HON. MEMBER: Delta council.

MR. WILLIAMS: Yes.

The problem is that there are all kinds of implications. These

benefits are tremendous. There will be tremendous increases in land

values as a result of getting this water supply, and no firm assurances

that I am aware of in terms of controlling the problems that will

result from development in that little peninsula. There are likely

future pollution problems, growth problems, traffic problems. There is

a limitation on the size of the pipe, in terms of what will be

delivered at the border. But as I understand it, Point Roberts, the

American side, will actually control the reservoir. They will be

filling up that reservoir at night. Once they've got the reservoir,

they control a fair amount of the flow, in terms of the Point Roberts

development.

So it is a serious matter. You know, this is a government that

generally doesn't get very much advice — real expert advice. I don't

think you got expert advice in terms of the implications of a

trans-border transfer of water; but once we're into this we can

probably never get out of it. In terms of water being transported to

Point Roberts, can the minister assure us that we can get out of this

deal at some point down the road? Can she assure us that we are not

into some kind of longtime bargaining over time once they've got this

water? Can she assure us that she's carried out studies that indicate

that this is maximizing the return to the Crown for its assets? I think

not.

I mentioned earlier that you people on the other side probably don't

understand the dimensions of the infrastructure in terms of water

supply in greater Vancouver. You're talking about dams on the Capilano,

and Coquitlam Rivers and other major sources of supply, water mains

under Burrard Inlet and underneath the Fraser River; and so on. All

you're dickering with these people on, as I understand it, are the

water mains in Delta municipality and the reservoirs related to

Tsawwassen. That's it. They're plugging into a multimillion-dollar

system for $40,000 a year. That doesn't make any sense at all.

HON. MRS. JOHNSTON: Mr. Chairman, there appears to be some

misunderstanding of the $40,000 figure that I quoted. That is the sum

that is being equated as financial benefit as water supplier. The Point

Roberts Water District will be spending $2 million on the reservoir

that will be built n Delta.

I should mention, Mr. Chairman, in passing, that this announcement

was made in 1986 by the Minister of Environment. We should realize that

this is a good-neighbour relationship that we have with the Americans.

If you go further down the border, you will find that in the district

of Surrey water is supplied on the American side to the district of

Surrey. This is not an unusual arrangement. This is going in

[ Page

2179 ]

the opposite direction. But Surrey receives water from Blaine, and

that is what I consider a good-neighbour relationship. We are going

along with that type of arrangement. It certainly isn't a precedent

that is being set here.

MR. WILLIAMS: Well, it is a precedent, Mr. Chairman. It is a

very clear precedent. Point Roberts has been there since this country

was founded, and we have not delivered water to Point Roberts period,

pure and simple.

AN HON. MEMBER: Does that make it right?

MR. WILLIAMS: I am just saying, do you give the stuff away or

do you do some analysis in terms of alternatives? Well, the answer is

you do some analysis in terms of alternatives. I have tried to explain

to the Minister of Environment (Hon. Mr. Strachan) that there are

economic questions here that are fairly basic in terms of the kinds of

benefits you are transferring across the border to the major landowners

in Point Roberts. Some kind of pittance in the form of $40,000 per

annum and a reservoir that they would have had to build anyway doesn't

add up to much of a trade-off at all.

Interjection.

MR. WILLIAMS: No, all of this is modest improvements in one

pipe within the whole Delta system. That's it. You've got a pipe

underneath the Fraser River they pay nothing for; you've got a pipe

through Richmond they pay nothing for; a pipe through Vancouver they

pay nothing for; a pipe under Burrard Inlet they pay nothing for; a dam

at Cleveland Dam on the Capilano that they pay nothing for. And you

think you've got a hot deal at $40,000 a year, Madam Minister.

Something's wrong in terms of the capacity of your advisers.

Something's desperately wrong in terms of their competence in analyzing

these deals. It's no wonder we lose at the hands of the Americans every

single time we go to the table with them — $40,000 a year and you think

you've got a good deal. There's something desperately wrong over there.

When one major landowner is going to be the main beneficiary, and

he's a true Socred wheeler-dealer in Delta, then it raises some basic

questions.

Interjections.

MR. WILLIAMS: Nonsense. If the minister wants to respond to that, let her respond.

HON. MRS. JOHNSTON: Mr. Chairman, I don't know how I can

respond to the allegations put forward by the member of the opposition,

because I don't even know Mr. Hodgins. Whether or not he's involved

with the Social Credit Party is immaterial.

A commitment was made in 1986 by our Minister of Environment and the Governor

of the state of Washington. I believe it was a sound commitment. I believe it

was made with the interests of all British Columbians at heart. As I mentioned

earlier, the arrangement was made in the opposite direction between the state

of Washington and the district of Surrey. This is a land-locked piece of property

that cannot logically be serviced in any other way. An arrangement has been

made to service it in this way. The legislation is required in order that the

Greater Vancouver Water District be allowed to carry through with this arrangement,

and I think there's little else that can be said.

MR. WILLIAMS: There's little else that can be said in

defence, no doubt, because the minister hasn't done much of a job of

defending here at all.

What kind of assurances do we have, in terms of controlling

population growth in Point Roberts, once we give them this water? What

kind of assurances do we have in terms of the limitation of community

growth in Point Roberts?

HON. MRS. JOHNSTON: Mr. Chairman. I don't believe we can presume for one minute that we can plan the area known as Point Roberts.

MR. WILLIAMS: That's exactly the problem, Mr. Chairman. What

we're talking about are two sovereign nations here. That is precisely

the problem at hand. Once we give them domestic water, then the

population can boom in Point Roberts, and the people who own the land

will make a fortune. That's exactly what the game is that's underway.

The minister isn't even informed in terms of tentative arrangements

that were — as I understand it — formulated by the municipality of

Delta, in terms of a population limit down there. Doesn't the minister

have this, in terms of some population limit? It is smug city over

there. You're not even informed in terms of the clear details that are

available for picking up a telephone.

The municipality of Delta had the understanding that the population

was going to be limited to 4,000 persons in Delta. That's the

understanding in Delta in terms of the deal, and you're saying now that

you know nothing about that.

We get the nice smile, Madam Minister, but it isn't good enough. We

plumbed the depths of ignorance of the Minister of Environment last

week. Now we've already hit bottom with the Minister of Municipal

Affairs, and it didn't take as long.

MR. CHAIRMAN: Hon. member, your reference to the Minister of Environment was probably uncalled for. Perhaps you would retract that.

MR. WILLIAMS: Well, I don't know that there is anything to retract.

MR. CHAIRMAN: It was certainly unparliamentary, hon. member.

MR. WILLIAMS: Well, maybe I can rephrase it. I'd be glad to

do that, Mr. Chairman. I think we've plumbed the depths of the

minister's knowledge very quickly; in fact, we could have done it in

ten seconds.

The understanding in that community at the city council level is

that there's going to be a ceiling on population growth in Point

Roberts, because they don't want the pollution. They don't want

hospital problems. They don't want the highways problems through

Tsawwassen and Delta that will follow from excessive growth.

Reasonable, because if they provide the pipe, they provide the

instrument for growth in Point Roberts.

They had assurances that there was going to be a cap of 4,000

persons in that peninsula, and now you're saying,"Here we are approving

the deal," and you don't have that down. Well, that's not good enough.

They need it. At the very

[ Page

2180 ]

minimum, you've given the water away for nothing. Now you've got no

control over growth, you say. So we can get their pollution; we can get

their bloodied, their hospital problems, their drunk-driving accidents

and all the rest of it that comes out of that little peninsula. So we

deal with the problems, and a handful of landowners get all the

benefits. What kind of deal is that anyway? Do you have any more

information on limiting that growth in Point Roberts?

HON. MRS. JOHNSTON: Mr. Chairman, the number mentioned by the

member opposite with regard to a projected population has not been

brought to my attention, and the only control we would have would be

with regard to the size of the pipe and the amount of water that would

be made available. The information given to me by the corporation of

Delta is that the Greater Vancouver Water District has complete control

over the water and the supply, and that would be the limitation. But as

far as planning the community of Point Roberts as to their possible

population, there does not appear to be anything other than the amount

of water that is to be supplied to them.

[2:45]

Mr. Chairman, I think it's quite interesting that we're spending so

much time worrying about somebody making a dollar on a piece of

property in Point Roberts. I don't happen to think that that's a

terrible thing. In fact, it's common knowledge that even some members

of the party opposite have made a dollar or two on property sales.

MR. WILLIAMS: But this is very straightforward and simple,

Madam Minister, in terms of us conferring a very direct benefit,

getting very little in return and getting all of the garbage and all of

the problems as a result. That's a typical Socred deal: somebody else

makes a million; we get the garbage, we get their hospital problems, we

get future water problems and all the rest of it, and somebody else

walks off with the cash. That is a classic Social Credit government

deal. You can be as smug as you like, but down the road the people of

Delta are going to have to pick up all the pieces and deal with the

mess and the problems and the pollution.

You are directly conferring benefits as a result of this decision,

and no administration in the history of British Columbia has conferred

this kind of benefit in the past. You want to talk about other

trans-border arrangements: as far as I'm concerned, it's the same as

the deal made on the Skagit. You didn't know what you were giving away

when you allowed them to flood the Skagit. The same thing is going on

here in terms of the kinds of benefits you confer. You can sit there

and listen, and it's very clear that it's not registering.

Do you think it's any accident, Madam Minister, that no

administration in the history of British Columbia was willing to

transfer water to Point Roberts for a hundred years plus? Do you think

that's an accident? There were water pipes down there in Delta for

decades, and still every administration said no. There had to be a

reason, but nobody in your shop stopped to think about what those

reasons were. That's abundantly clear. It's just a nice little

rubber-stamp administration we've got over there; that's really the way

it's working. It's not thinking, or it's a blind eye and a wink that's

going on in terms of this particular deal.

HON. MRS. JOHNSTON: Mr. Chairman, I think it should be pointed out, in closing, that we are looking at....

SOME HON. MEMBERS: In closing?

HON. MRS. JOHNSTON: Well, I'm sure the member opposite has said just about all there is to say. He has been repeating himself.

The majority of the property owners in the Point Roberts area are

British Columbians, and they have summer cottages. Of course, you can

screw up your face any way you want, Mr. Member, but that is absolutely

the truth. They are owners of small summer cottages, and a good number

of British Columbians go down and spend a great deal of time in Point

Roberts. Are you begrudging us looking after those people who are going

down there?

Once again we are allowing the Greater Vancouver Water District to

enter into an agreement with Point Roberts for the purchase of water,

and they will pay for the amount of water they receive. It's a simple

business arrangement, and it seems to me that members opposite are more

concerned with showing their anti-American bias than they are with

allowing us to get on with the business of the day here.

MR. CHAIRMAN: The second member for Victoria.

HON. MR. STRACHAN: How about some local autonomy here? Let's hear that.

MR. BLENCOE: Mr. Chairman, I am very pleased that the House Leader remembers my speeches on local autonomy.

HON. MR. STRACHAN: I've heard it for four years now.

MR. BLENCOE: You'll probably hear it a few more times, too.

Mr. Chairman, I've been listening to this debate and the questions

being raised by our side of the House, and I think that they are very

reasonable questions and require some further investigation. It's

unfortunate that the minister wasn't here in the earlier debates. I

gather she has been thrown into this debate, but she is the minister

responsible. It's not just a simple business transaction that we're

talking about. This really is a substantial issue. Points taken about

local autonomy are well taken, but we're not just talking about local

autonomy. We're talking about a transaction between two sovereign

countries. Questions have arisen over price and over whether indeed we

are going to receive a true value for the sale of this water and the

infrastructure to be put in, and I think those are all reasonable

requests.

I think it's in the interest of both sides of the House to gather

all the information and to have the ability to try to decipher what

exactly is going on with this particular proposal.

I would like to suggest to the minister — and to make a request —

that because of the importance of this issue and the serious questions

that have been laid out before this House, there is certainly an

atmosphere of concern by the opposition that this matter be referred to

the Select Standing Committee on Economic Development, Transportation

and Municipal Affairs.

Interjection.

[ Page

2181 ]

MR. BLENCOE: The House Leader for the government immediately

says no. That's unfortunate, because we have heard from the

government's side, and particularly from the Premier, that that's

exactly what those committees are for: to deal with these kinds of

issues and to call witnesses. I think we've reached a stage now on the

very important question of selling British Columbian water south of the

border; there are a lot of implications of that. It seems to me that

rather than continuing the impasse and trying to determine who is

right, we should try to determine what is right.

Therefore I would suggest that this is an issue that should be

referred to the Select Standing Committee on Economic Development,

Transportation and Municipal Affairs. Put the issue before that

committee. Call witnesses, and let's get to the bottom of this issue

and take it out of the controversial debate that we have before us now.

Interjection.

MR. BLENCOE: The Minister of Tourism (Hon. Mr. Reid) screws

up his face and says: "What controversy?" Well, he can try that, but

there are some serious questions pending, and we want to get to the

bottom of it. The people of British Columbia are entitled to know all

the facts and have a frank discussion with witnesses in the standing

committee, so that we can take a look at this whole issue.

Would the minister give us an answer?

MR. CHAIRMAN: Just before the minister speaks, let me remind

the hon. members that this question has been referred to the Committee

of the Whole, and that under standing orders we cannot refer committee

work to a committee. Now if the Minister of Municipal Affairs would

like to comment on this, the Chair would be pleased to hear what she

has to say.

HON. MRS. JOHNSTON: Mr. Chairman, I was pleased that you

mentioned that the matter was already being dealt with by the Committee

of the Whole House, and I really think that the members of the

committee mentioned by our colleague opposite have got quite a bit on

their plate this summer, dealing with the Islands Trust legislative

review. So it would just be a stalling tactic, in my opinion, if this

were to be referred anywhere else. I would like to see us proceed right

now.

MR. BLENCOE: Mr. Chairman, how could the minister say this is

a stalling tactic? We're talking about Canadian water, Canadian rights,

and selling south of the border a very precious resource which in many

respects the Americans have been after for a long time. There have been

many proposals before the federal and provincial Houses over the years,

and it is not an issue we can treat lightly. What I am suggesting,

which the minister has dealt with — I want to be nice — in a rather

light fashion by saying I'm trying to stall.... I don't think we're

trying to stall at all. All we're trying to do is put it before a

select standing committee with the ability to call witnesses to hear

all sides of the issue and make....

Interjections.

MR. BLENCOE: I'm on the committee.

We can try to explore this issue in a fair and open and, hopefully,

honest way to find some resolution. It may very well be that once we

explore it, things will clear up. But right now there are a lot of

questions, accusations and, I think, a weak defence by the minister and

others over the last few days that need to be put to a select standing

committee for full review, and not rushed through this House. The House

Leader keeps saying to the government: "Let's do it now, and get on

with it before anybody notices what we're doing." Well, Mr. Chairman,

this is a very important issue, and I think it should be put before

that committee, and I think the Minister of Municipal Affairs, who

wants to do Municipal Affairs business differently than her

predecessor, should support such a mechanism and suggest that the

select standing committee review this.

HON. MRS. JOHNSTON: I think it's important for members in the

House to realize that regardless of the routing, water will be taken to

Point Roberts. It can either go from Blaine by way of an undersea pipe

or it can go via the Greater Vancouver Water District, through British

Columbia and through Delta. The costs are relatively comparable, but

the maintenance of the undersea pipeline is more costly, and therefore

the approach was made to enter into this agreement. Regardless of the

outcome of our discussion, there will be water going to Point Roberts.

I think it's important that it can be controlled if the water goes

through Delta; if it goes from Blaine undersea to Point Roberts,

there's no Canadian input at all, no British Columbia input on the

quantity of water. I think that that pretty well sums up the argument.

MR. BLENCOE: Whose water is it?

HON. MRS. JOHNSTON: At this point, under this agreement, it

would be the Greater Vancouver Water District's water; but if it came

from Blaine, it would be American water.

MR. CLARK: We have a number of concerns, obviously, on this

side of the House. I just have a few questions about what homework

regarding this has been done by the ministry. For example, has the

minister or the staff conducted any studies regarding the cost of water

from other sources? Has any cost-benefit analysis been done as to what

the water is worth to Point Roberts, to see whether in fact we're

getting an appropriate price for it? In other words, has any of that

technical homework been done that can tell us whether or not it makes

sense?

Has there been a socio-economic impact analysis of increases in

population and how they impact on the community of Delta? We've had a

number of concerns here about whether the population growth will impact

on services in Delta. Has there been any estimate of the increased

number of people using hospitals in Delta as a result of increased

population in Point Roberts? Have there been any estimates done of the

impact on pollution in the area as a result of an increase in

population in Point Roberts? Have there been any estimates done on the

increased growth in population as a result of an increase in

serviceable land and of providing water? Have there been any estimates

done on the increased land values in Point Roberts, so that we can see

whether a share of that shouldn't return to the taxpayers of British

Columbia?

I think I've listed seven or eight serious concerns, or technical studies that should be done before we embark on

[ Page 2182 ]

this kind of operation — before this

section passes. Have any of

those kinds of background studies been done, to allay our fear on this

side that we're not getting an appropriate price for a valuable

commodity?

HON. MRS. JOHNSTON: The water that is being supplied is being

charged for by way of volume; there's no other way you could sell water

to the Americans. Let's make it clear that if this arrangement does not

proceed, the water will be piped over from Blaine, and we will have

absolutely no control. This way, we do have control by way of the

volume of water made available.

[3:00]

MR. CLARK: Can the minister tell the House how much it would

cost Point Roberts to get their water from Blaine? Presumably they want

to buy it from British Columbia because it's cheaper. So I'd like to

know what the price difference is, so that we can see whether in fact

we've driven a hard bargain and are getting.... In other words, if

they've got to go to Blaine otherwise, what's it worth to them?

HON. MRS. JOHNSTON: Mr. Chairman, I did mention earlier that

the supply costs are pretty well comparable; they're pretty well in

line. The maintenance of the undersea line is where there would be

additional costs, if the water were to come from Blaine. Other than

that, the original capital costs are comparable.

MR. CLARK: As in any good business practice.... If the

maintenance costs for the alternative sources of supply are higher, we

should have them on the table here, so that we can see whether or not

we can't get.... In other words, if we're getting $40,000 a year, how

much is the maintenance cost for that undersea pipe? Is it more than

$40,000 a year? If it's several hundred thousand dollars a year, then

we should be, like any good business operation, driving a hard bargain

and getting somewhere close to, but not above, the price of alternative

supply, assuming that that's the only consideration at this point.

HON. MRS. JOHNSTON: There is no specific amount outlined in

my background information with regard to possible future maintenance

cost, and I imagine that that is rather difficult to determine for a

number of reasons. But the initial capital costs are comparable, and

the $40,000 figure that we have mentioned was arrived at by placing an

average on the quantity. They're charging by volume, the Greater

Vancouver Water District has determined the amount of water that would

be used, and this is what they would charge for providing that amount.

MR. CLARK: Maybe I could just deal with some of my other

questions then, aside from that one. For example, if there is an

increase in population in Point Roberts, it's fair to say that there

will be an increase in the use of services in Delta by those Americans.

If the population increases by 4,000, has the ministry done any

analysis as to the impact on the number of people who will be using

hospitals, for example, in Delta? What would be the usage of our

services in Delta as a result of the increase in population?

HON. MRS. JOHNSTON: Mr. Chairman, as I stated earlier, that is not the

argument. Water is going to be going to Point Roberts whether it comes from

British Columbia or Blaine.

MR. CLARK: With all due respect to the minister, what we're

trying to do is determine whether all of the facts have been determined

ahead of time, whether the homework has been done, so that we can see

whether in fact it makes sense for us to provide water. A cursory

examination from our point of view indicated that it's worth a heck of

a lot more than $40,000 a year; that, as you pointed out, the cost for

maintenance for the other line would be higher, and therefore we should

be getting a significant amount more for our water resource than we're

getting down there.

Interjection.

MR. CLARK: There's some improvement in the water system in

Delta, as we've pointed out, but we're still saying that we haven't got

all the evidence to say whether or not it's a good deal. It strikes us

that, given the increased service costs associated with an increased

population and the fact that it's worth a lot of money to landowners in

Point Roberts, we could drive a better bargain. What we're trying to do

is get the facts from the minister, see whether the homework has been

done to justify this deal. If it has been done, then we can proceed.

HON. MRS. JOHNSTON: I am reliably informed that the Ministry of Environment has done all this homework.

Let us make one thing very clear. We are giving the Greater

Vancouver Water District the authority to enter into this agreement. We

are not doing anything more or less. Local autonomy tells us that the

Greater Vancouver Water District has done the homework required to

arrive at the $40,000 figure for the approximate volume of water that

is to be sold, and we would not logically enter into that arrangement.

MR. CLARK: I understand that the water district would do

their homework to assure that they're getting a return on their

investment, and that's what that covers. What we're concerned about are

the other ramifications for the province, and the costs to the province

that result from an increased population base in Point Roberts, as well

as the fact that providing water to Point Roberts has the incidental

effect of escalating land values so dramatically as to seem to indicate

that we can get more money for that provincial resource than has been

arranged by the Greater Vancouver Water District. They're only

concerned about covering their capital costs and the cost of pushing

that volume through the system.

That's our concern, and that's why we're raising it here. It's not a

question of local autonomy; we understand the water district's concern

for their jurisdiction. We're saying that we would like to see the

evidence for the impact the population will have on those kinds of

provincial government services — pollution, cost of hospital service,

availability of beds in Delta — so that we can get some sense of what

the province gets out of this deal, given that historically we've

always turned it down because we haven't wanted to be in that position.

[Mr. Weisgerber in the chair.]

[ Page

2183 ]

HON. MRS. JOHNSTON: The point here should be that the Greater

Vancouver Water District considers this a $40,000 per annum financial

benefit. Short of becoming repetitious, I want once again to remind you

that the water is going to go to Point Roberts regardless. Either it

takes this route or it goes from Blaine. If it takes this route....

Are you listening, Mr. Member for Victoria?

Interjection.

HON. MRS. JOHNSTON: That's right, but the question keeps being asked.

MR. BLENCOE: Well, we don't get an answer.

HON. MRS. JOHNSTON: You have the answer, but you don't want to accept the answer.

The control of the development in any way, shape or form can take

place by entering into this agreement, because we will control the

quantity of water going into Point Roberts. If we don't enter into this

agreement and the water comes over from Blaine, we lose all control. So

you can talk about the infrastructure in the district of Delta, the

hospitals and all of the other services; we will have absolutely no say

and no control over how that would apply if the water were to come from

Blaine.

MR. CLARK: So using the premise that the minister has just

set out, which I don't accept completely, does the minister have...?

We talked earlier about a population increase of 4,000 being the

ceiling. The minister is shrugging her shoulders.

AN HON. MEMBER: She doesn't know.

MR. CLARK: The minister doesn't know that. It would be

helpful for us on this side to know when that ceiling would be reached,

how long it could take to get there, whether we can turn the tap off at

any time, what contingencies there will be in those agreements. I don't

know if the minister has any information on population growth, but

given that that's a great concern of mine, I'm wondering whether there

has been any analysis of when we would reach that 4,000 population

increase ceiling and whether there's any control there for turning the

tap off at our end. Are those kinds of considerations in the contract?

HON. MRS. JOHNSTON: The Greater Vancouver Water District

supports this move. The corporation of the district of Delta supports

this move. The majority of the members in this House support this move.

I can't understand why members opposite are having such a problem

accepting the fact that one way or another, Point Roberts is going to

be serviced with water. It is either going to come from British

Columbia and provide a $40,000 financial benefit to the Greater

Vancouver Water District, and we are going to have control over the

volume, which in the long run will control the amount of development

that can take place at the end of the pipe, or it's going to come from

Blaine and we are going to have absolutely no control over anything, in

any way, shape or form, as far as the development is concerned.

MR. MERCIER: Delta would still have to build its own reservoir.

HON. MRS. JOHNSTON: That's right. Maybe I should go over some of the numbers again.

The cost of the reservoir to be built by the Point Roberts Water

District is two million dollars. This reservoir will also service

Delta. because it will be built in Delta. This estimated expenditure

will be invested in Canada. It will be built in Canada by Canadians and

paid for by the Points Roberts Water District. So the long-term

cost-benefit to the district of Delta is considerable because of the

upgrading of the water supply in their area. The corporation of Delta

fully supports this; the Greater Vancouver Water District fully

supports it. Local autonomy tells us that we should allow this to go

ahead because it is the only way we will have any control at ail in the

amount of development that will take place in Point Roberts, because we

control the tap that supplies the water.

MR. CLARK: I want to conclude my segment of the questioning

by saying that we're not trying to filibuster; we're making an argument

that there are unanswered questions from a provincial cost-benefit

analysis. The homework hasn't been done by the minister, in our view —

at least we haven't seen it. There has been no cost-benefit analysis to

show what that water is worth to Point Roberts. We don't know — and the

minister can't tell us — how much more it will cost Blaine to supply

the water; therefore we don't know whether we are driving a bargain or

not.

We don't know what the impact of the increased population will be on

provincial services in Delta or surrounding municipalities. We don't

know how much hospital usage or those other things will go up. We on

this side of the House would like to know, before we support this

section, that it is of net benefit to the province — and not just to

the Greater Vancouver Water District — to provide a permanent export of

British Columbia water to the United States. We haven't been convinced

yet by the minister that that kind of necessary homework has been done

for us to justify supporting it.

MR. LOVICK: I know that the minister plays poker; I have witnessed that. I wonder how good a player she is, and let me tell you why.

The minister's premise throughout this discussion has been one

simple point: namely — to almost quote her — that "we know they're

going to get water anyway." If I were on the other side, that's what I

would use to bargain. I would say again and again: "The people of Point

Roberts are going to get water. We're going to get it from Blaine.

We're going to build a pipeline at God knows what cost." I would set up

that argument and put it in motion before I ever talked to the people

of Canada, because I would want the people of Canada to believe that

there was somebody else who was a competitor, and therefore the price

shouldn't be too high.

I'm worried about the minister continuing to talk about that premise

as if it's given, because I don't think it is given. For example, I

would like to see a statement from whatever the authority is in the

city of Blaine that says: "Yes, we are committed to build this supply,

to construct the pipeline, to guarantee the people of Point Roberts a

supply for X number of years and to do so at X cost." I wonder if the

minister could table that kind of document for us. Have we got that

information, or are we simply going on hearsay thus far? Could I start

with that question?

[3:15]

[ Page 2184 ]

HON. MRS. JOHNSTON: Mr. Chairman, it seems to me that we're

getting way off base on this one. The

section of the bill allows the

Greater Vancouver Water District to enter into an agreement. It is up

to them, as the local authority, to make the best possible deal they

can to benefit their members. This is what we should assume they have

done. It is not for us to tell the Greater Vancouver Water District

what type of deal they should be making; they are making the best deal

that they possibly can.

If we truly believe in local autonomy, the way we've been preaching

on both sides of the House, we should be allowing the Greater Vancouver

Regional District and the Greater Vancouver Water District to make this

deal.

MR. LOVICK: After listening to that answer, I take it, Mr.

Chairman, that the minister's answer to my question is no, or that we

don't have the information. With all due respect, Madam Minister, I

think that's a red herring.

The local autonomy issue is not something we should wrap ourselves

in like some kind of protective flag or cocoon. For heaven's sake, what

we're suggesting is a resource that does not belong only to a body of

non-elected officials called the Greater Vancouver Water District.

We're talking about a resource that belongs to all the people of this

province. We're also talking about an infrastructure that has been

built over a considerable period of time. The reason we pose the

questions about this and the reason we have the concern is that answers

have not been forthcoming. The concern we are raising is simply whether

we do know what it is we're talking about — "we" meaning the

government. We have not had any assurances yet that there are answers

to the question.

Let me give you an example — and I do so without malice, believe me.

On Friday when this debate took place, we spent about an hour and 20

minutes, and we could get no answers at all, despite the heroic

efforts of the Minister of Environment, because he simply did not know.

By what I described then as a fortuitous circumstance, we had the

arrival of another minister who quite by chance happens to be a member

of municipal government in Delta and was therefore able to answer our

questions. Today a similar thing has happened: a former mayor of

Burnaby is giving information to the minister. It does not inspire a

great deal of confidence on our side, Madam Minister, when the answers

seem to come by chance rather than by planning, preparation and

considered examination of the issue. That's why we continue to pose the

questions, and why we have not yet, frankly, been convinced that the

answers are indeed good ones.

Let me try something else for the minister, if indeed the first

questions that I posed don't deserve answers, or at least won't get

answers. The minister says to members of this Legislature that we are

going to benefit. We're doing this because Delta wants and needs a

reservoir. This way we can get the Americans to pay for a reservoir,

and we will benefit by getting a facility that we otherwise would not

have. If that had been the argument presented to us in the beginning,

perhaps we would have been more responsive and receptive to the

arguments from across the way. Unfortunately, we've had to struggle to

ferret out that information. I'm not even sure I accept the argument,

but at least I can see the logic for it. The problem, however, is that

that was a kind of throwaway, a marginal justification as opposed to

the main justification.

Fifteen minutes ago the minister gives us this justification, and I

was careful to note it. The minister says that we know — first the

premise — that the citizens of Point Roberts will get water anyway, and

therefore we, the people of Canada — the GVWD specifically — should be

doing this so that we can in fact control the development south of the

border. Let me remind the minister that the Americans have been known

to go to war for statements like that. When somebody says that they are

going to control what happens in a sovereign territory belonging to

another state, they tend to get upset. I don't think Congress would

enjoy reading or hearing that the Minister of Municipal Affairs in the

province of British Columbia, country of Canada, says that we want this

development so that we can control development in the United States.

First of all, I think the observation is facile. Frankly, I think it

overstates our power. I don't believe you can control that development

simply because you provide the water. I don't think you can turn off

the tap. But perhaps more important is the fact that I don't think the

Americans will look kindly on any agreement that proceeds from the

assumption that we can control their development — nor, by the way,

should they. I don't think the Americans should be looking to us to

determine how Point Roberts develops, because we will turn off the tap

at our pleasure. In short, we are moving into areas that are — to put

the matter charitably — grey, matters that certainly strike me as

generating more questions than answers.

I sincerely hope that the minister will respond to at least a couple of the points I've made thus far.

HON. MRS. JOHNSTON: It's obvious that I haven't made it

clear: it's not the provincial government that is entering into an

agreement with Point Roberts. We are providing the legislative means

for the Greater Vancouver Water District to enter into an agreement

that they want to enter into. That is the extent of our involvement in

this particular agreement. We have some background information which I

have attempted to provide you with in order to seek your support for

the legislation before us at this time. Certainly my ministry wouldn't

go into the Point Roberts Water District office and attempt to

negotiate an agreement for the provision of water.

The Greater Vancouver Water District is responsible for the supply

of water in the Greater Vancouver Regional District. They want to enter

into this agreement. They have asked us for the legislative permission

to do that, and we have agreed to provide them with that permission. No

more, no less. I'm not trying to evade your questions, hon. member. I'm

just saying that you're asking questions that could better be put to

the executive members of the Greater Vancouver Water District than to

us. It is no different from us giving a municipality enabling

legislation to allow them to enter into agreements or to make bylaws

that they feel are compatible with the operation of their

municipalities. We only give them the means to function, and this is

exactly what we're doing here. We're allowing the Greater Vancouver

Water District to enter into this agreement — no more, no less.

It's up to them to make the best deal that they possibly can, but I

would like to reiterate that we are not suggesting that we are going to

plan the development of the Point Roberts community. That can only be

done by the local community of Point Roberts, and we understand that.

We should be also very clear in understanding that the amount of water

that is available to Point Roberts is certainly going to go a long way

[ Page

2185 ]

in determining the amount and type of development that is going to be allowed to take place.

MR. SIHOTA: The party which I represent in the House often

gets criticized for its inability to manage and to engage in business

and economic relationships, and it strikes me that in this case it's

the other way around. If we had entered into this type of arrangement,

the Social Credit Party members would be laughing at us, because it's a

silly kind of a transaction.

Interjections.

MR. SIHOTA: Let me ask this one very basic question, then, of

the minister which may help clarify one matter, and then I want to make

some comments. Is this $40,000 a year in perpetuity, or is that amount

open for renegotiation later on?

HON. MRS. JOHNSTON: We are giving the Greater Vancouver Water

District the authority to enter into an agreement. It's up to them to

deal that they can.

MR. SIHOTA: That's a very weak response. Let me ask the

question again. What the minister is saying is: "Well, you know, we're

just going to allow these people to enter into whatever kind of deal

they want to, and if they give away the resource, then that's okay. If

they make a good deal, then that's great."

Certainly as the minister responsible, the minister exercises a level of scrutiny. She's got an obligation....

HON. MRS. JOHNSTON: Local autonomy.

MR. SIHOTA: No, it's not a case of local autonomy. Mr.

Chairman, I've been on a municipal council as well. I've served my time

on municipal council, and I know that there have been occasions when

we've had to justify our actions to the minister responsible when

agreements that we've entered into have had to have the blessing of the

ministry. It's clear in those instances that the ministry reviews the

agreements to make sure that they're in the best interests of British

Columbia.

It may well be that this agreement will serve the water district

well, may even serve the municipality well. It's a question of whether

or not it will serve the province well. But it seems to me that a

fundamental question has to be whether or not that $40,000 on an annual

basis is going to remain constant, because obviously $40,000 in today's

dollars does not have the same equivalency as $40,000 in future dollars.

It seems to me that the minister would want to ask that very basic

question, because if you don't ask that question, then ten years from

now the value in current terms is $20,000, given inflation. It may not

be $20,000 — that's a bit of an exaggeration — but over 20 years it may

well be down to $20,000. Without commenting on other aspects of the

deal which I think are bad, all of a sudden the deal starts to look

worse and worse.

I know that the minister really, quite frankly, just can't stand up

and say: "Well, we're going to leave it up to them to negotiate." It

seems to me a very basic question in all of this, because if it's

$40,000 in today's dollars in perpetuity, then that's a bad deal no

matter which way you look at it. If it's $40,000 that's open later on

or if it's based on rates charged, then it may be the deal has a

different quality to it.

I'd like to ask the minister again, now that she's had some

opportunity to consult.... It's unfortunate the member for

Burnaby-Edmonds (Mr. Mercier) didn't get up and assist on this matter.

All I want to know is: is that $40,000 in perpetuity? Yes or no.

[3:30]

HON. MRS. JOHNSTON: I can't give you the answer to that

question. It is an agreement being entered into by the Greater

Vancouver Water District and the Point Roberts Water District. It is

not an agreement being entered into by the Ministry of Municipal

Affairs of British Columbia and anybody else. The water supply in the

Greater Vancouver Regional District is under the jurisdiction of the

Greater Vancouver Water District, and they are empowered to enter into

agreements, but not outside the provincial boundaries. We are giving

them authority to enter into that agreement.

Mr. Chairman, if the members opposite really want to see a copy of

the agreement, I'm sure we would have absolutely no problem at all

asking the Greater Vancouver Water District to supply any one of them

with a copy of the agreement. But these people have been elected to

make those kinds of decisions. They are attempting to make those kinds

of decisions, but they require the legislative authority to make those

decisions and to enter into those agreements. Whether it's a good deal

or a bad deal is for them to determine. As members representing the

entire Greater Vancouver Regional District, they have obviously

determined that it's a good deal. The members of the council in the

district of Delta have determined that it's a good deal. and they want

to see the legislative authority given. They want to see this proceed,

I would suggest, for two reasons: firstly, the economic benefit —

$40,000 per annum, approximately; secondly, it is the only way they are

going to have any control over the amount of water that is going to go

into Point Roberts, and subsequently the amount of development likely

to take place because of the adequacy of the water.

MR. SIHOTA: Mr. Chairman, I cannot believe that this minister

doesn't care whether or not the deal makes economic sense. Surely the

minister must have some interest in making sure that this provincial

resource is being sold at an appropriate price. Let me make it clear

that on this side of the House, we just want to make sure that the deal

is a good one for the people of this province. It's our resource: we're

selling it over there.

I understand from what the minister said before that there's going

to be another line built, if this doesn't go through, from Blaine. We

don't have the numbers, and I'll accept the minister's explanation that

the capital cost of that is roughly equivalent and that the maintenance

cost is the factor. But it would be nice to have that information

before us, because if the maintenance cost is extraordinarily high to

run it from Blaine, which it probably would be — because as I would

take it, the line would run underwater — then clearly it may well make

it possible for us to extract a better price than the $40,000. I'll

take the minister up on this point, and I have to believe that the

minister will agree with me that it's a point worth looking at, to see

whether or not it's $40,000 in perpetuity or $40,000 on an adjustable

basis, based on rates and other things. I think we both agree that's a

valid point.

[ Page 2186 ]

Let me make this suggestion to the minister then. I'd like the

minister's suggestion that the documents should be tabled in the House

so that they can be reviewed. If that's the case, it clearly doesn't

make sense to review the documents after the fact. You know, it doesn't

make sense for us to see the documents two weeks after the deal has

been executed. We'd like to see the documents in advance of execution

so that we can be assured of at least the one very basic fact that the

minister now agrees with me is something we should be looking at.

Will the minister agree to simply stand down this

section and table

those documents, and then we'll come back to this section? If it makes

good sense, it'll pass through here unanimously; if it doesn't, we'll

hopefully get a better deal for the people of this province. We can

deal with the balance of this legislation, get it over and done with,

and this

section can come back in the form of another miscellaneous

statute in due course. I'm sure there will be others, and it's not a

big deal to come in with one statutory change in the future.

The minister is agreeable in principle to filing the documents here

in the House. Will she then agree to file them in advance of execution,

so we can review them — all of UK — and only at that time proceed with

these sections? Will she agree to that? It makes perfect sense.

Interjection.

MR. SIHOTA: Well, that's a question for the minister. Will the minister agree with that suggestion?

HON. MRS. JOHNSTON: No, I don't see any useful purpose to be

served by that. But I certainly do agree to ask the Greater Vancouver

Water District to supply the member with a copy of the agreement for

his perusal.

MR. SIHOTA: I want to assure the minister that I know how to

read commercial documents, having drafted more in the course of my

career than probably the minister has — and reviewed a lot of municipal

ones at that, too.

I opened my comments by saying that if the situation was reversed

and we were in power — which will happen in about 928 days now, or

whatever — people would be coming out with that usual line: "Well, you

can't even run a peanut stand." The fact of the matter is, how can we

possibly vote on a proposed transaction that utilizes a provincial

resource that has an effect on provincial services, when we don't know

whether or not the basic annual fee is fixed; when we don't know what

the differential is in the maintenance costs; when there seems to be a

difference of opinion as to whether or not there's going to be a cap on

population in.... I was going to say Port Renfrew, but I should say

Point Roberts; when we don't have any information with respect to the

population base? And then you're asking us to vote on something sight

unseen, on the premise: "Well, trust us."

The member for Burnaby-Edmonds (Mr. Mercier), the Minister of

Agriculture (Hon. Mr. Savage) — and I don't know about the Minister of

Municipal Affairs, but at least the municipality of Delta — have all

had an opportunity to review this proposed agreement.

Interjection.

MR. SIHOTA: It hasn't been tabled in this House. It just doesn't make sense for the minister to take the position that she has.

There's one very simple solution, and I put it out to the minister:

if the minister doesn't want to exercise her discretion in these

matters, if she doesn't want to scrutinize the agreement, if she

doesn't want to make sure that the agreement is in the best interests

of the province, then it really seems to me somewhat of a dereliction

of the responsibility of the minister to bring all the facts to this

House, to justify the fact that the agreement makes economic sense. I'm

disappointed to hear what the minister's got to say.

I have many other comments that I would prefer to make on this, but

I suspect that some of the other members have already made them. All I

can do is hope the minister reconsiders.

HON. MRS. JOHNSTON: Mr. Chairman, there is obviously a

misunderstanding of the authority that we are dealing with at the

present time. This ministry does not participate in the arrangement

between the Greater Vancouver Water District and the Point Roberts

Water District. This ministry does not participate in the type of

arrangement that the Greater Vancouver....

Interjection.

HON. MRS. JOHNSTON: Hon. member, would you like to have the information?

This ministry does not participate in the arrangements that are

entered into, the agreements, that are entered into, between the

Greater Vancouver Water District and any of their member municipalities

with regard to the rate that is being charged. The authority is with

the Greater Vancouver.... You can smirk all you want, but you don't

want to accept the fact that you're asking us to stick our nose into

somebody else's business. We are giving authority to the Greater

Vancouver Water District to enter into an arrangement which will allow

them to sell water outside of the provincial boundaries. That is where

our authority lies. The conditions of that agreement are determined by

the members of the Greater Vancouver Water District, not by the members

in this House.

MR. CLARK: The members on this side will be voting against

this section. I beg to differ very strongly with the minister. This is

our water. This is a British Columbia water resource that's being sold

to the Americans for the first time in history. The homework hasn't

been done in terms of the cost-benefit analysis, in terms of the impact

on provincial costs and services, in terms of the land values in Point

Roberts, in terms of who benefits by British Columbia water going down

to Point Roberts. The homework hasn't been done, and it hasn't been

brought forward to this House.

For the minister to say that she's going to defer, on this important

question that deals with our water — British Columbia water going to

Americans — to the Greater Vancouver Water District, that what's good

for them is good for us, is wrong. It is quite simply wrong. It is our

responsibility in this chamber to deal with these transactions of our

water resources. It's never been done in history. Millionaires will be

made by this legislation, for a $40,000-a-year return to the public for

this massive infrastructure and waterworks. So

[ Page

2187 ]

members on this side of the House will be voting against this section.

Section 42 approved on the following division:

[3:45]

YEAS — 28

Brummet

Rogers

L. Hanson

Reid

Dueck

Richmond

Michael

Parker

Pelton

Loenen

De Jong

Rabbitt

Strachan

B.R. Smith

Couvelier

Johnston

R. Fraser

Jansen

Chalmers

Mowat

Bruce

Serwa

Vant

Campbell

Long

Messmer

Jacobsen

S.D. Smith

NAYS — 16

G. Hanson

Rose

Harcourt

Stupich

Boone

D'Arcy

Blencoe

Guno

Lovick

Williams

Sihota

Miller

A. Hagen

Jones

Clark

Edwards

Sections 43 to 45 inclusive approved.

section 47.

HON. MR. STRACHAN: I am anticipating the concern that I think

will be expressed by the first member for Vancouver East (Mr.

Williams), because he expressed it last Tuesday, and quite

legitimately: the minister is not here. However, we would like to

proceed with this bill today. I can give the committee complete

assurance that this item will be fully canvassed during the estimates

of the minister. I do recognize that concern, but I would like to

proceed on this side. The Attorney-General can speak to it as well, but

I can assure the committee that we can canvass this to some degree — I

don't see anything that would offend the rules at all — during the

estimates of the minister.

HON. B.R. SMITH: I'll do my best to explain the Industrial

Development Incentive Act provisions, if there's any further

explanation needed. I can give some explanation for the Cominco

agreement, and why it is necessary to have this financing. I think we'd

like to proceed with this today. It can be explored further, as the

House Leader said, in the estimates of the minister.

MR. WILLIAMS: I wonder when the madam member from Shaughnessy

Heights might deign to attend the Legislative Assembly. The minister

does not appear before this assembly much any more; she really doesn't.

It's almost universal that she's not here for question period. I mean,

the Marie Antoinette of British Columbia shouldn't be concerned about a

mere $60 million, but seriously, it's not very satisfactory.

We appreciate what the House Leader is saying: these matters can be canvassed

during the minister's estimates. But huge amounts go through this ministry

in terms of industrial development funding. There isn't reporting. There

is no system for reviewing Crown corporations in this Legislature, as there

is in other legislatures in this country. The B.C. Development Corporation is

drowning in an ocean of red ink. That minister has not reported in terms of

cleaning up the monstrous mess at BCDC. She has brought in a whole smokescreen

around the B.C. Enterprise Corporation, which doesn't exist; and yet they

meet and carry out business without legislative authority.

Interjection.

MR. WILLIAMS: She truly is the queen bee, the Marie Antoinette of British Columbia. You may say, "Tut, tut, tut," but that's the reality.

HON. MR. STRACHAN: A point of order, Mr. Chairman. The

section we're dealing with has to do with the borrowing increase; it

has nothing to do with the minister's attendance. The member can make

those comments during the minister's estimates, which will be coming to

Committee of Supply before the House adjourns for this summer, but

right now the debate is quite irrelevant, doesn't make any sense at all

and is totally out of order.

MR. WILLIAMS: It is $60 million, that we're talking about here, in addition to the $50 million.

MR. CHAIRMAN: Apart from the comments on relevancy, the personal comments about the minister are probably out of order.

MR. WILLIAMS: I certainly want to make those comments when

they're in order, and I would be more than happy to do so if the member

from Shaughnessy ever lets us know when she's going to bother coming to

Victoria and this shabby chamber here.

At the very least, the representatives of the Crown — the members of

the government — should be able to report on the $60 million and

provide the background. We were advised at our last meeting that the

bulk of this funding was for Cominco, relative to arrangements with

respect to modernization of that plant. What assurances do we have that

full employment will now be maintained in that operation as a result of

the expenditure of these funds?

HON. B.R. SMITH: I'll do my best to go over it. Of that $60

million, $5 million will meet the provincial commitment, which will

eventually rise to $62.5 million under the federal — provincial

industrial development subagreement. The $55 million is then added to

complement the agreement by the province to purchase the Cominco

preferred shares, as announced by the Premier in August 1987. The

province is purchasing shares to assist Cominco in financing the

modernization of the smelter, and this amount is matched by a similar

contribution from the federal government. Although the province will

not receive voting rights by buying preferred shares, it will

participate in the profitability of the project, as Cominco will repay

the investment with interest on the basis of the performance-of-metals

price.

As I think the member knows, this smelter modernization is a major

one — in fact, the first major one there in many years. It will cost

$171 million for the first phase and $89

[ Page 2188 ]

mill i on for the second phase. As a result of that modernization, the

output capacity of the smelter will increase to 160,000 tonnes per year

from the current level of 136,000 tonnes. The modernization will see

the replacement of worn-out equipment with an efficient plant to ensure

that Cominco is competitive in the world lead market, and the project

will provide safer and cleaner working conditions for Cominco

employees. If this provincial investment and matching federal

investment were not made, the modernization project would not proceed.

It's as simple as that.

The smelter now employs 1,000 people directly in Trail, and there is

every belief in that community that without a modernization of this

kind, the continued operation of the smelter in that location would not

have been viable. I toured Cominco during the leadership campaign a

year ago and talked to a number of the officials in the plant, and they

confirmed that without this program, that smelter was probably doomed.

With this program it is not only saved. but is world competitive. There

are similar spinoffs in the work that's being done in Kimberley. A

shutdown of the lead smelter would of course have resulted in the early

closure of the Sullivan mine in Kimberley, which provides employment

for 1,000 British Columbians. There are more than 40 other small mines

that send their metal concentrates to the Trail smelters, so at least

2,000 direct jobs are affected by this project.

The modernization project is a vital one. The project is going to

employ about 300 people in construction in the next three years. It

also has environmental benefits: it will make the lead smelter a

low-cost operation, but will also ensure that the environmental

standards for air and water emissions are met by the plant. I know that

the members opposite do support that project — I'm sure they do — and I

regret that I wasn't able to provide some of that information the other

day.

Section 47 approved.

Title approved.

HON. B.R. SMITH: Mr. Chairman, I move the committee rise and report the bill complete with amendments.

Motion approved.

The House resumed; Mr. Pelton in the chair.

Bill 31, Miscellaneous Statutes Amendment Act (No. 1), 1987,

reported complete with amendments to be considered at the next sitting

of the House after today.

HON. MR. STRACHAN: Committee of Supply, Mr. Speaker.

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

ESTIMATES: MINISTRY OF

FINANCE AND CORPORATE RELATIONS

(continued)

On vote 31: minister's office, $283,435.

HON. MR. COUVELIER: Mr. Chairman, during our debate last week a number

of comments were made by members of the opposition and by me that in the interim

have given me some concern. Because of that, I felt it appropriate to put on

the record prior to continuing the debate today a few comments dealing generally

with the operation of the securities industry in British Columbia and its relevance

to the wav business is conducted by securities industry participants around

the world.

[4:00]

In reading the verbatim transcript of our debate, it's clear that it

is appropriate and necessary that we channel specific inquiries through

proper channels rather than through the floor of the House. I make this

comment because it seems self-evident that all of us have a

responsibility to represent not only our constituents' interests but

also the province's interests, and that we recognize that comments made

from the floor of the House could have the effect of prejudicing

legitimate business people in the securities marketplace; could have

the effect of imposing an unfair consequence upon the public investors

who participate in public offerings on the Vancouver Stock Exchange;

could result in misuse of House privileges; and could, quite clearly,

act to frustrate the enforcement process and the rule of law.

[Mr. Pelton in the chair.]

Loose charges, or innuendoes of improper criminal activities by VSE

participants or of inaction by VSE or Securities Commission staff, are

a product of lack of appreciation of how the system works — the entire

financing process — and furthermore are a product of a misunderstanding

of what has been done and is currently being done in the enforcement

and public protection area.

It's evident when looking at the Hansard record that we seem to be

dealing with exceptions rather than the rule, and I want to talk a

little bit about the rule to put it on the record. I want to talk about

some of the steps we're presently taking to improve the efficiency of

the system.

First of all, I think it's important to recognize that the primary

goal of the Securities Commission in British Columbia is to create an

efficient international venture capital market in B.C. One key element

of that is investor confidence, and we believe that investor confidence

comes from consistent enforcement of the rules, so that the risk

associated with playing the market lies in the business venture and not

in any transgression of the rules of its operation.

I realize that those are brave words. People before me have said

them, and successors will similarly express them. Let's talk for a

little bit about what those words mean. First of all, we should

understand that we're dealing with a venture capital market as opposed

to a mature capital market, as I would describe the Toronto Stock

Exchange, the London Stock Exchange, or any of the major exchanges in

the world. The Vancouver Stock Exchange deals with start-up companies.

They have no track record and, as a consequence, investors who play

that market must understand that there is an unusually high degree of

risk associated with any venture there. People should understand that

the VSE is no different than any other normal business relationship,

and it will have its share of failures. We on the government side

believe that that is a right and, unfortunately, a permanent

consequence of business decisions made. It is not the role of

government, nor should it be, to ensure that there shall be no business

failures.

Furthermore, we on the government side don't believe there is any stigma associated with failure. We believe that

[ Page

2189 ]

the entrepreneurial spirit must be allowed to realize its potential,

and in that process there will be some winners and some losers. For

example, it has been discussed here that somehow or other delisting by

the Vancouver Stock Exchange might be understood as or might be a

reflection of improper conduct.

In fact that may be true, but equally true is the fact that

delisting could be just the normal consequence of a firm becoming

dormant. Indeed, during the debates last week, a member's statements

about suspected wrongdoing included the name of an individual who was a

director of a firm which was delisted, and it was suggested that there

was somehow some reprehensible kind of conduct associated with that.

In fact, that particular reference, Mr. Chairman, dealt with a firm

that had become dormant. That is quite a common occurrence on any stock

exchange, but most particularly on the Vancouver Stock Exchange. The

Vancouver Stock Exchange deals with thinly capitalized firms in a

highly competitive market with individuals with different degrees of

experience and ability. So it is natural and, I think, inevitable that

there would be some failures in that process.

Success in a new business is to some extent dependent on promotion,

to some extent dependent on luck — the breaks of the game — and

certainly to a large extent dependent on the abilities of the

individuals involved. Those are subjective factors, and the marketplace

must be free to judge them. The marketplace must be unfettered so that

every individual has an opportunity to maximize the opportunities

before them,

The Vancouver Stock Exchange also has thin share floats — until

they're successful and refinanced, that is — so it's inevitable that

there should be wide price fluctuations. This apparently has led some

observers to conclude that the market is controlled by small groups.

While that might sometimes be true, it is mostly due to the fact that

there are thin share offerings out on the marketplace and, as a

consequence, price changes tend to be wider-ranging than in a more

mature market.

We suggest that there is nothing wrong with price fluctuations

themselves. That's a normal consequence of the marketplace. The purpose

of the VSE is to raise venture capital, not to create unnecessary

hurdles or restrictions or to try to second-guess competent business

people at every step of the way. One only has to think about some

imaginative ideas that a normal, rational person would not have

invested in — for example, the hula hoop sensation.

Millions of dollars were created by the originators of that concept.

None of us in this room, I suspect, would have dared invest a penny in

such a venture. We've got a current example on the Vancouver Stock

Exchange, they tell me — something called Jolt Cola. Similarly, who

would have imagined that a drink product would have been able to

capture such a reasonable market share when it runs so counter to

current social thinking regarding sugar and other ingredients in this

product?

Nevertheless it has carved out a market niche and is making for

those individuals who had the initiative to undertake it a little bit

of money in the process. The point here is to illustrate that it is

useful to raise money for untested business ventures, and who of us in

this room would have the wisdom of Solomon to be able to predict the

winners from the losers prior to the marketplace doing that for them?

The Securities Commission has seven key functions. First of all, it develops

policy; secondly, it vets disclosure documents — that is, prospectuses, statement

of material fact, rights offerings, etc.; it grants exemptions and makes other

discretionary orders; it registers investment industry participants — brokers,

dealers, salesmen, etc.; it provides a central system for informational filings,

as required by law, for use by the stock exchange, by the Securities Commission

and by the general public.

It also ensures compliance with and enforces the various acts and

regulations and policies. and it has the obligation to hold hearings —

a quasi-judicial function — on issues that are brought before it.

Talking specifically to some of these in the area of policy, policy is

arrived at through discussions and liaison with the investment

industry, with the professional community and with the stock exchange

itself, all of whom have a common goal of creating a reputable

financial market.

Policies deal with emerging and recurring problems, and at the

moment we in the Securities Commission are administering 33 local

policies, 13 uniform act policies or provincial policies and 35

national policies. All of these provide guidelines on issues ranging

from conflicts of interest for underwriters to mutual fund investment

restrictions. Compliance with policies is a prerequisite for prospectus

receipts, orders or registrations, and for listings.

Dealing with the question of vetting disclosure documents, it should

be recognized that all public financings in British Columbia must be

based on full, true and plain disclosure of all material facts.

Responsibility for vetting is allocated between the Securities

Commission and the VSE. The Securities Commission vets all the

prospectuses, national filings and local initial public offerings, and

the VSE vets all statements of material facts and rights offerings

which are used for further public financing. VSE also vets the private

share placements by listed companies. Reviews by these vetting agencies

cover the business, the promoters, the directors and officers, the past

history, future prospects and the like.

There are new powers in the Securities Act regulations which require

the superintendent of brokers to prohibit a public financing from

proceeding when certain unacceptable factors are present. Both of these

reviewing procedures screen out many companies or transactions that

have the makings of becoming abusive. For example, of the 323

prospectuses filed in fiscal 1986-87, 76 were withdrawn, mostly for

failure to meet the regulatory requirements. I submit that this is

successful preventive enforcement. It doesn't make any headlines, but

it does, I think, effectively indicate to the trade that we are serious

about the standards we set.

Between financings, neither the Securities Commission nor the VSE is

set up to constantly monitor or vet companies' disclosure documents.

Press releases and shareholder communications are abundant. Shareholder

communications are not seen until they are distributed. As a matter of

fact, we will be having a hearing with the Securities Commission

shortly on a situation dealing with that latter subject.

We have to assume that these statements and issuances by the firms

are true. We generally respond only to complaints that we might receive

relative to them. You should understand that every one of these public

statements by the member firms have a disclaimer associated with them

which quite clearly sets out that the Vancouver Stock Exchange does

neither endorse nor comment upon the validity of the material contained

in the press release. You should also understand that material changes

must be announced; that's part of the regulations.

Lastly on this point, you should understand that no other provincial commission acts any differently than we do. In

[ Page 2190 ]

other words, the marketplace is free to make those kinds of comments

without prior vetting by the various provincial securities commissions.

Dealing with the question of registration of participants, the

jurisdiction in large

part is delegated to self-regulatory

organizations, either the IDA — the Investment Dealers' Association —

or the Vancouver Stock Exchange itself Individuals must take courses

and they must qualify by examination in order to pass those standards.

These organizations have comprehensive rules on behaviour, and you

should know that since January 1, 1986, 38 out of the 2,000-odd

salesmen and four out of the 48 firms in the province dealing with the

VSE were disciplined in some manner. Discipline might consist of

penalties, including reprimands or even permanent suspension by the

VSE. I think the members should understand that these matters are dealt

with in the area of formal hearings, which are themselves no small

matter. The consequences or results of these hearings are all

published, so the impact on those so judged can be quite significant in

terms of their earnings potential and future credibility.

The most effective way we have to deal with problems is the informal

meetings at the superintendent of brokers office. Usually these

informal meetings deal with the question of errors in judgment and

inexperience, but not intentional wrongdoing. Generally speaking, this

kind of informal process has proven to be a successful preventive

measure. Once again, it doesn't make any headlines, nor is it an issue

which we accumulate statistics on, but of itself I think it ensures

that the marketplace understands that we're in the business of

enforcement and we're serious about it.

[4:15]

Dealing with the question of a central information system, you

should know that there is a large data base which is used by the

public, the VSE and the Securities Commission. It includes reports on

insider trading, material change reports, quarterly status reports,

financial statements, press releases, shareholder communications....

MR. CHAIRMAN: Hon. minister, I'm sorry to interrupt, but your time under standing orders has elapsed.

MR. D'ARCY: I was so enjoying this informative political

harangue by the first member for Saanich and the Islands. I know all of

the government back bench really want to hear another few weeks of his

discussion on this, so I hope that you see fit to allow him to proceed,

Mr. Chairman.

MR. CHAIRMAN: The Minister of Finance continues.

HON. MR. COUVELIER: Well, that was an unexpected concession,

and I do appreciate it. I take your time up because I believe, in view

of the Hansard record of last week, that this kind of information

should be in the record. I think it will enable the loyal opposition

members to become more useful in their criticisms. Most importantly,

that handful of people who read Hansard might better understand how the

investment business is enforced and operated in B.C. I think it's

necessary.

I was talking about the large data base, and I was listing the kind of information

accumulated in this data bank. I made the point that there is a mountain of

information which is accumulated and available to all who are interested. We

have found that these materials provide an important tool for investigations

into improper market activity. There are hundreds of cease-trade orders issued

by the Securities Commission. As a matter of fact, there were 476 issued last

year, and in addition, the VSE issued hundreds more. Admittedly, the VSE cease-trades

might be for only a matter of hours, until their concerns were satisfied on

a specific issue. But you should at least understand that it is a daily monitoring

process, and it does seem to work, with some embarrassing exceptions.

The documents, as I mentioned earlier, must be presumed to be true

and accurate. It is not and should not be believed to be a universal

early warning system. In this respect, I ask you to think of the

analogy of drunk drivers in B.C. We do not, as a matter of course, have

policemen outside every bar or tavern or public gathering place to give

people breathalyzer tests. The system, in order to work and to be

affordable, has to rely on the assumption that most people are

innocent, and that we will move only when we have cause to move or to

be concerned.

The Securities Commission also holds hearings. You should know that

there were ten held last year. These are formal quasi-judicial

determinations of rights, infractions and impositions of penalties.

These hearings, we think, are important for communicating standards of

acceptable behavior.

Dealing with the question of enforcement, you should know that we

have some specific enforcement powers. We can issue investigation

orders, and these orders grant very broad investigative powers to the

authorities. We can freeze orders for property funds. We can compel

audits and we can appoint experts. We can issue cease-trade orders

against specific persons or securities. We can remove rights of persons

to use statutory exemptions. That, you should know, is no small tool;

it's a very important tool. We can apply to the Supreme Court for a

compliance order or for an appointment of a receiver. We can recommend

prosecution for offences committed under the Securities Act or the

Criminal Code. In addition, there are several remedies for

misrepresentations in prospectuses or statements of material fact, for

trading on the basis of undisclosed material facts or changes, and for

premature disclosure of takeover bids to a select group.

The investigative services for the Securities Commission are

provided by our corporate investigations branch, which is separate from

but part of the total ministry responsibility. They provide services to

the Ministry of Finance in the area of insurance and trust companies

and real estate companies. You should know that at the moment the

investigations branch has a securities caseload of about 300 active

files; about 35 of them might be categorized as major. These cases

range from consumer complaints to claim-jumping to criminal fraud. You

should know that we have 12 investigative personnel, approximately

eight of whom are dealing with securities matters at any one time. You

should also know that about half of our serious cases are worked on in

conjunction with the Royal Canadian Mounted Police, commercial crime

section, and the market manipulation section.

You should also know that about half of those cases are worked on by

the Crown counsel. This branch provides all services, except legal

ones, for hearings and trials. We think that they have done some yeoman

work in the past, particularly the investigative work done on Beaufort

Resources in 1986, which, as you know, resulted in seven-year sentences

for two individuals. Currently there are a number of significant

prosecutions and hearings pending on matters

[ Page

2191 ]

ranging from market manipulation, wash-trading and highsailing, to filing false disclosure documents.

Prosecutions will be undertaken only where evidence available will

hold up in a court of law. Where there is insufficient evidence, notice

will be given to offenders with demands to cease and file information

for use and other key functions.

The number of directors suspended is a simplistic criterion to use

for judgment. To the specific question put to me last week, I can tell

you that there has been no director suspended through this process.

With the new act and the new management regime, I do believe we will

see some changes in that Past practice, but you'll have to give me the

courtesy of time to prove the accuracy of that comment.

When looking at directors, I think you also have to understand that

the VSE has its own criteria, and that our most effective process in

dealing with unsuitable directors is to seek voluntary withdrawals.

This is something we do as a matter of course, and it is effective.

Lastly, on that point, we should recognize that it is possible for

anybody who wishes to manipulate the marketplace to play a very

significant role in the manipulation just by using nominees. That's no

different than any other criminal activity. So being a director per se

does not necessarily mean very much in this respect.

The VSE has its own rules and regulations, and they are active in

enforcing them. All of their investigators are senior experienced

personnel with specialized enforcement training. The results of

investigations of well-founded complaints are communicated to the

president of the exchange, who may then direct that disciplinary

proceedings be instituted. Penalties have been levied, ranging from

reprimands to fines and suspensions, and disciplinary proceedings are

made public by notices to members. You should know that five of those

proceedings took place last week alone. It is not an uncommon

occurrence, and those public notices receive wide distribution.

Interjections.

HON. MR. COUVELIER: I realize that in the minds of many this

may be an unnecessary exercise. I can only repeat again that I think

the record has to show this information. It may be the only time that I

can get it on the record.

I think it's important to recognize that no law or procedure can

prevent fraud. It is easy to punish after it happens; it is enormously

difficult to anticipate. In any event, is it appropriate to take away

people's rights to carry on business before any illegal action occurs?

It's even harder if factors indicate it might be the case, but there's

no hard evidence to justify it. The rule of law does not permit us to

suspend rights merely on suspicion or allegations. Many abusive

transactions start out normally and go bad after initial regulatory

standards are met. Those are very difficult to deal with later.

The problem with enforcement is that it's very time-consuming.

Formal hearings are expensive and difficult, but they are, as I say,

effective. I could give you some examples of difficulties other senior

exchanges have experienced, but I'll spare you that. If you're curious,

I have the information available.

I think the key issue here is: what steps has this government, which

was put in place last November, taken to deal with the opportunity we

have to elevate the profile and the standard of conduct of the

Vancouver Stock Exchange? I think it's important that you should know

that we have increased the budget and applied more resources to the

superintendent of brokers office. I think it's important for you to

understand that we have provided what I believe to be, and am proud to

say, is stability of leadership in the senior positions. With the new

act, and with more aggressive enforcement of it in dealing with

prospectuses and unacceptable management practices or promoters, I

think the job will considerably change from past practice.

We intend to have closer liaison with the other regulatory agencies,

the IDA and the VSE, and we intend to make that a very key part of our

enforcement practice. There is an increased level of continuous

disclosure reviews by all of those parties, and you can expect an

increase in the number of formal hearings held as a consequence of

these staff changes and discussions that have been going on for the

last five months. You can expect an increase in emphasis on due

diligence investigation, and a review by the underwriters, brokers and

professionals themselves. In other words, we intend to enforce more

checking at the front end, and these self-regulating organizations have

agreed to accept increased responsibility in that respect. We will have

increased emphasis on formal enforcement against unacceptable

directors, officers and promoters, and the offenders who are associated.

In conclusion, Mr. Chairman, we are taking a number of initiatives

to ensure that there are some changes from past. practice. I have to

say again that the floor of this House is not the place for examination

of the behaviour of specific companies, because obviously we on the

government side can't comment on active investigations. Premature

comment here may alert offenders to possible investigations that could

result in destruction of evidence, going underground and covering

trails.

Discussion here also compromises an important principle, which is

the independence of the VSE. We do not want it to be a tool of

government, per se. We want it to be a self-regulating organization,

and we want it to assume more responsibility in that respect. Comments

in the House may be based on inaccurate, false or one-sided information,

MR. WILLIAMS: On which side?

HON. MR. COUVELIER: Sometimes it works on either side, but

more probably it would originate on your side because of the policing

authority that's vested in me by virtue of the title I hold. As a

consequence of that, hon. member, I suggest to you that we do have the

facility here to consistently and uniformly monitor the operations. By

virtue of the statutory requirements, I suspect I have more flexibility

than you might have in that respect.

A comment here in the House could be extremely prejudicial to

innocent companies and individuals who can't defend themselves, and

also to public investors if, as a consequence, stock prices are

influenced unfairly or improperly. Frankly, discussion here on this

floor dealing with specific companies accomplishes no purpose that

disclosure and full, frank exchange between us privately wouldn't.

Last May I invited anybody across the floor who had a specific

interest in specific companies to work with me to see if we could

satisfy those concerns in a responsible, private, confidential way such

that the reputation of the Vancouver Stock Exchange was not adversely

affected and such that the concern of the member would be appropriately

addressed. I make the offer again. The Vancouver Stock Exchange is a

[ Page 2192 ]

very key element in our economic diversity ambitions, and it is

critical for all of us in British Columbia to ensure that to the

maximum extent possible we allow that growth to take place. However,

recognizing the very necessary and important need to have some

confidence on the other side of the House, I extend the invitation to

work with me in any specific cases that cause concern.

[4:30]

I stand before you committed to provide you with the kind of

information you might need to satisfy yourselves that we are doing all

that might be done. In the absence of that satisfaction, I pledge to

you that if you can offer further advice or counsel as to how more

effective policing might be done, we will give it very serious

consideration.

Thank you for your patience, Mr. Chairman. I thought it important to get those words on the record.

MR. CLARK: We want to thank the Minister of Finance for his

lengthy discussion of the Vancouver Stock Exchange — excruciating

detail, I must say. I want to follow up on your last remarks, because

my mind wandered a little bit there. I'm trying to get the sense of the

bottom line of what you're saying. It strikes me that you said we

shouldn't be raising this in, the House and that you were doing

everything you could to clean up the act of the Vancouver Stock

Exchange.

I don't want to put words in your mouth. I've raised in this House —

with the member for Esquimalt-Port Renfrew (Mr. Sihota), who will be

talking at a later date on your estimates — a series of companies and

issues and concerns about the stock exchange. He talks about dealing

with it privately. I wonder if the minister would be prepared to refer

the whole question of the appropriate monitoring of the Vancouver Stock

Exchange to an all-party committee or to a smaller committee of this

House or to a standing committee, where we could have that kind of

detailed analysis.

In a sense you're saying that you're doing everything, and that we

shouldn't raise it publicly, but privately. We want to be convinced

that there is that effective monitoring in place. What about some other

mechanism to review the operations of the Vancouver Stock Exchange, not

for any vendetta or witch-hunt or anything like that but simply to

ensure that there are fair and clear ground rules and effective

enforcement of the regulations? That might be an appropriate response

to the kind of criticisms that our side has been raising in the House

and that you take offence to in terms of your response today.

HON. MR. COUVELIER: That is an interesting thought. One of

the reasons that I went into so much detail was to impress upon you the

diversity of players in the enforcement process. Surely you had to get

some impression with the IDA, the VSE, the RCMP, the A-G, our own

investigations branch — there are many players. To give you a quick

answer, my reaction would be that I'm not yet convinced that that is

necessary. I'm willing to concede that it might be in the future.

What I said was that I consider it inappropriate to deal with

specific firms on the floor here. It's entirely appropriate that you

should be critical of practices in a generic or general sense, and I

understand that; I don't have any difficulty with it. All I'm referring

to in terms of the private discussions would be on specific firms, so

that we can tell you what we're doing. If you've got any further

thoughts, we could deal with them. It may be, in the fullness of time,

that in order to satisfy all concerns, some sort of larger committee

may be necessary. But at the moment I've got lots of players involved

in that game, and my problem seems to be to coordinate them as

effectively as we can.

MR. WILLIAMS: Mr. Chairman, it isn't quite good enough to

just say: "Trust us. It's all fine. Just trust us." That simply isn't

good enough, given the track record. If you're serious — and we accept

that you are — about the need to build up this institution in a more

satisfactory way, well and good. But, you know, we can't just trust

you. There isn't a good track record here. That just is inarguable.

There are tremendous amounts of funds involved here, and elements of

public trust that are serious indeed, as the minister suggests — so

serious that there should be joint participation in terms of

monitoring, in terms of people on this side of House, along with the

minister and maybe others on that side of the House. That is a

reasonable minimum, in terms of being satisfied.

Mr. Minister, you can't expect just a generic debate, because what

happens isn't generic. It often is a specific company. It often is a

specific player. And it is unsatisfactory, all too many times. This is

not Ontario. It is not modem in the same manner. You have not put in

staff there on a scale like they have, or with the qualifications they

have. It just hasn't happened. With all the best will in the world —

you know, moving in one of your bureaucrats from the Ministry of

Finance — it has to be an incredibly fast, steep learning curve for a

traditional bureaucrat thrown into that melange on Howe Street, and

you've done that. So it simply isn't good enough. To expect that the

opposition will sit silent when there are these problems there, and

when they're serious, and when funds are at stake that people have put

in there in good faith.... You just can't expect that. You simply

cannot. When other jurisdictions lower the boom on some of these

specific outfits — not generic outfits; specific outfits — and we're

asleep at the switch, as has happened again in recent months.... Too

much of it goes on. It is not acceptable.

I think if you really want to avoid having this stuff on your head,

then you should be opting for this reasonable solution. That's been put

to you. It's been put to you before the debate today. I for one can't

understand why you didn't grab the opportunity. You get up here and

wring your hands, and say: "I don't like you saying these things in the

Legislature. You can affect the value of stock" — and all the rest of

it. Well, you know, there is an option. The other member for Vancouver

East (Mr. Clark) and the member for Esquimalt-Port Renfrew (Mr. Sihota)

have put those to you in the past. So I think it's on your head, Mr.

Minister, and nobody else's. If something happens that you're unhappy

with in the Legislature, it's on your head. The opportunity for a

bipartisan approach has been offered. So don't you come crying around

this chamber, when it's on your head down the road, because it sure

looks like that's the way it's going to be.

If I were in your position, I'd want to share that responsibility; I

really, genuinely would. Because the Premier has given you a load of

things to deal with that's excessive. I don't think, in fact, that it's

possible to do an adequate job, given the range of duties that you have

as minister. When you think of the stock exchange alone, I honestly

don't see the capacity there; I really don't. And that's with lots of

experience and lots of ability. I just don't think it's there.

So I think the offering of some kind of joint review of this exchange.... If you're serious about this being some new

[ Page

2193 ]

cornerstone in terms of the economy of British

Columbia — which I

think is really stretching it — fine, well and good. That's all the

more reason to ask the opposition to participate. They have some

extremely able people that would be more than willing and happy to

contribute and to review, and not in a partisan way but in a

province-building way. That's a real opportunity for you, Mr. Minister,

and I'd jump at the chance, given what Howe Street is in British

Columbia, what the history of Howe Street is in British Columbia, and

what the history is of the players and their closeness to this

administration in questionable ways. There are terrible

conflict-of-interest problems when you have one of the major players

there

collecting funds for your political party.

Interjection.

MR. WILLIAMS: You can do your "tsk, tsk," Madam Minister;

that's the reality. The reality is that the main fund gatherer is still

the main player in that exchange — no question about that. All the more

reason for you wanting to be seen as Caesar's wife in these

circumstances. All the more reason to ask the opposition to participate.

You've been given your opportunity, Mr. Minister, and it looks like

you're turning it down. That being the case, it is indeed on your head,

in terms of future problems with this operation. It's all too clear

that this area has not been well governed or well administered. Too

often there has been a blind eye; too often there has been a wink and a

nudge in terms of how that street operates. It's simply unacceptable,

unsatisfactory. If you're making the attempt to clean it up, you should

be asking people on this side to participate with you, to see that it's

done in an even-handed way and so that you don't have these problems

that you perceive down the road in terms of what might be said in this

Legislature. But don't expect us to remain silent in the future. We're

watching more carefully than we ever have in terms of what goes on on

Howe Street, what the linkages are and what they're up to. You can

expect continued debate on that subject.

HON. MR. COUVELIER: Mr. Chairman, I just can't let that pass.

First of all, it's clear from the comments I've heard from the last

speaker that the opposition party wants to inject politics into the

operation of the VSE — the one thing we should try to avoid. It seems

to me that it's important for us to understand that the VSE, to realize

its full potential, must be kept out of the political arena to the

extent possible.

It has been suggested that it's on our head — the consequences of

failure to pick you up on an offer that we have some mass meetings on

the subject. The reverse is true, hon. member. The consequences for

inappropriate, inaccurate information being expressed by some members

on your side are on your head. What I'm trying to do is save you from

the political consequences of your pursuit of false, misleading and

inaccurate information and at the same time avoid blackening the

reputation of a very important arm of the B.C. financial community.

It has been suggested by the last speaker th