2003 Legislative Session: 4th Session, 37th 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)

WEDNESDAY, APRIL 2, 2003

Afternoon Sitting

Volume 13, Number 12

CONTENTS

Routine

Proceedings

Page

Introductions by Members

Statements (Standing Order 25 b )

Wine industry on Vancouver Island

B. Kerr

Forest industry in B.C.

E. Brenzinger

Offshore oil and gas industry

B. Belsey

Oral Questions

Privatization of B.C. Rail

J. MacPhail

Hon. G. Campbell

School-based education funding

W. McMahon

Hon. G. Hogg

Addiction treatment and mental health services

J. Bray

Hon. G. Cheema

Director of public prosecutions model in justice system

T. Bhullar

Hon. G. Plant

Air Canada service in B.C.

J. MacPhail

Hon. G. Campbell

Petitions

J. MacPhail

Committee of the Whole House

Hospital District Amendment Act, 2003 (Bill 25)

R. Hawes

Hon. C. Hansen

Report and Third Reading of Bills

Hospital District Amendment Act, 2003 (Bill 25)

Second Reading of Bills

Provincial Revenue Statutes Amendment Act, 2003 (Bill 30)

Hon. B. Barisoff

Comittee of Supply

Estimates: Ministry of Energy and Mines (continued)

Hon. R. Neufeld

D. MacKay

P. Bell

B. Bennett

W. McMahon

R. Harris

J. MacPhail

B. Belsey

P. Nettleton

Estimates: Ministry of Water, Land and Air Protection (continued)

J. MacPhail

Hon. J. Murray

G. Trumper

R. Lee

[ Page 5909 ]

WEDNESDAY, APRIL 2, 2003

The House

met at 2:04 p.m.

Prayers.

[1405]

Introductions by Members

Harris: It's my pleasure today to be able to introduce to the House the

members of the board of directors of the Northwest Corridor Development

Corporation. In the gallery today we have Mr. Jeff Burghardt, Mr. Tom Baldwin,

Mr. Graham Dallas, Ms. Diane Hewlett, Mr. Mike Mihaly, Mr. Mike Osborn, Mr. Bud

Powell, Mr. Ken Veldman, Mr. Graham Kedgley, Ms. Susan Clark, Mr. Mike Proctor

and Ms. Chris Morey.

The

Northwest Corridor Development Corporation is truly a public-private partnership

that brings together businesses, business people, municipal leaders and

provincial leaders from both Alberta and British Columbia — with membership in

Alaska — who are absolutely tremendous advocates of the entire Highway 16

corridor and a lot more than that. They are advocates for development in the

north across both provinces, and they're here today in Victoria to meet with

ministers and to just basically introduce themselves to our organization and do

what they can to continue to promote this province as a great place to live and

do business.

So I wish

the House to really make them feel welcome here today.

Nuraney: We have in the House today 28 students in grades 4 and 5 from

Suncrest Elementary School in Burnaby.

Make no

mistake. These are young people, a very bright group of people. I had the

opportunity to go to their classroom a few days ago, and the first question I

was asked was: "How much money do you make?" So please do not be

deceived. They are very bright. They are learning things about the governments

in Canada and in British Columbia, and they are here visiting us today.

They are

accompanied by their teachers, Joanne Hunchak and Andrew Hunchak; the parents,

Grover Wong, Terry McCue, Debbie Meehan, Sook Sihota and Janet Litke.

Please, may

I request the House to make them all welcome.

Brice: I have pleasure today in introducing Robert Boyd. Robert is a student

at Reynolds Secondary School in my riding. He's a young Liberal, very interested

in politics. He's a star on our team about to come forward in the future. I have

no doubt he will one day take his seat in this Legislature as an MLA. I ask the

House to make him welcome.

Hawes: Today in the House we have Mr. Ron Lome visiting from Seattle. He's

here to do what we hope all our American visitors do, and that's take advantage

of our lower dollar by spending an awful lot of American money here in Victoria.

Would the House please make him welcome.

Anderson: I would like the House to join me in welcoming a group of excited

students who have ventured over here from Vancouver to see the city and to sit

in the Legislature and see how we behave. I hope we will show them a good

opportunity while they're here. There are 60 grade 5 students and the adults who

are accompanying them from Sir Wilfrid Laurier Elementary School in Vancouver,

with their teachers Ms. King and Ms. Gordon. Please, let's make them welcome.

McMahon: It's a pleasure today to introduce two constituents, Norma and Buzz

Harmsworth — great friends from the great community of Invermere — who are

here with two Rotary exchange students: Renske van Andel, an exchange student

from Holland who's been sponsored by the Victoria Harbourside Rotary Club; and

Pedro Arkcoverde from Brazil, who is sponsored by the Invermere Rotary Club. I

ask the House to please make them welcome.

Statements

(Standing Order 25b)

WINE INDUSTRY ON VANCOUVER ISLAND

B. Kerr:

Just over ten years ago, the first commercial winery was opened on Vancouver

Island. The winery is located about 50 kilometres north of Victoria in the

pastoral and farming community of Glenora in the beautiful Cowichan Valley. The

soil in this area is ideal for grape-growing and has been compared to the best

of the Alsace and Chablis areas of France.

[1410]

During the

next ten years, a number of other vintners recognized the potential of the

valley and have moved into the region. There are now nine commercial wineries in

the valley cultivating a variety of wines, with more than 250 acres, with 500

acres in various levels of planning.

These

vintners, along with the vintners from Saturna, Saanich, and Saltspring, have

come together to form VIVA, the Vancouver Island Vintners Association. This is

an association of licensed wineries dedicated to producing quality wines and

ciders on Vancouver Island. Recently, VIVA set up a committee to work towards

creating the region as an appellation. In doing this, they hope that more people

will recognize the wines of the Island and visit the vineyards as part of a

culinary and wine-tasting experience.

What is

really exciting is that VIVA wishes to create a wilderness wine tour. The modern

tourist is looking for adventure as well as good food and wine, so the

combination of wine on the Island's east coast and amazing but accessible

wilderness on the west coast is sure to be a winner. This tour will take the

traveller up

[ Page 5910 ]

the west coast of Vancouver Island through Sooke to Port Renfrew, and there

the traveller will turn east to a working forest to complete their tour in the

wine country of the Cowichan Valley.

This trip

can be done in conjunction with the many events that will be sponsored by VIVA

this year, but don't wait for a festival. Every weekend of the summer the

wineries will be open for tastings, lunches and picnics. So plan to stay in B.C.

this year, come to Vancouver Island, and be sure to visit the many wineries that

will soon be creating a name for themselves and for the region.

FOREST INDUSTRY IN B.C.

Brenzinger: I want to take a moment to talk about forestry. I know Surrey

isn't in the heartlands, and it might seem odd for an urban MLA to want to talk

about forestry issues. On the map we're not shown as a forest-dependent

community, and in the strictest sense that is true, but we are all

forest-dependent in British Columbia.

The forest

sector generates more than a billion dollars in revenue. It is one of the

primary sources of money that we use to pay for schools and hospitals. Forestry

built the heartlands, but it has also built this province.

My riding

does have a forestry presence: Interfor Mackenzie Mills and Mill and Timber

Products Ltd. Both operations have shown innovation in creating products that

are in demand and building markets that want those products.

The forest

revitalization plan introduced by the Forests ministry is an exciting

opportunity to build the industry. The province, as a whole, will benefit from

opening up access to timber, to putting more wood into the hands of small

entrepreneurs through woodlots, and communities can have a greater voice through

community forests. We need to remember that in the lower mainland, the forest

sector provides 120,000 direct and indirect jobs in metro Vancouver alone.

These

reforms are designed to create opportunities. They are designed to rebuild an

industry that was in decline for the past decade. These changes ensure that we

practise forestry in a sustainable way. We know we have the people and the

product. Now we have the tools to ensure our industry can be competitive and can

thrive in the global marketplace.

OFFSHORE OIL AND GAS INDUSTRY

process to review the lifting of a moratorium that currently inhibits offshore

oil and gas exploration off our coast. As early as 1913 the first well was

drilled in the Queen Charlotte Islands, Haida Gwaii. Between 1949 and 1971,

eight wells were drilled on Graham Island, and between 1965 and 1969, Shell

Canada drilled and capped eight offshore subsurface exploratory wells.

The federal

moratorium was put in place in 1972 to prevent oil tankers from travelling

through the Dixon Entrance, Hecate Strait, Queen Charlotte Sound en route from

Alaska to Washington State.

little-known fact is that for 90 years the oil and gas industry has been

exploring around the Queen Charlotte Islands, Haida Gwaii. More significant is

the fact that offshore and onshore exploration, seismic work and exploratory

drilling were completed with very little, if any, impact to the environment —

no blowouts, no oil spills, no damage to the flora and fauna.

[1415]

The

whales, the seals, the sea lions, the salmon, the herring, the crab and the

birds continue to migrate in these waters. The shellfish and seaweed on the

beaches, as well as the marine life in the ocean, continue to provide

nourishment and income to those that harvest them.

I offer one

very important question. Why do we permit oil and gas wells off the east coast,

but we do not permit them on the west coast? With two new federal government

panels and a new UNBC panel scheduled to travel the province to review lifting

the moratorium, I would suggest that we as a province are going to need this oil

and gas just to fuel the transportation of these groups working around the

province and Ottawa to study oil and gas.

It is not

with reckless abandonment that I and the people in my riding ask to lift this

moratorium. We insist that any oil and gas exploration must take into

consideration ownership, safety and the environmental concerns. We will look

forward to participating in the process as soon as it comes to my riding.

Oral Questions

PRIVATIZATION OF B.C. RAIL

MacPhail: To wiggle out of his promise not to privatize B.C. Rail, the

Premier has said over and over that B.C. Rail is a drain on the taxpayer. In his

February infomercial, he repeated that B.C. Rail was costing taxpayers a billion

dollars in subsidies.

The facts

prove the Premier wrong. B.C. Rail's strategic plan predicts big profits for the

public railway over the next three years. Can the Premier explain why he is

breaking his promise to the people of the north and privatizing a public service

that is making a profit?

Hon. G.

Campbell: The facts on B.C. Rail are clear. Over the last 15 years the

taxpayers have subsidized B.C. Rail to the tune of $1 billion. The fact is that

customers are leaving B.C. Rail. The fact is that northern communities are

saying it's time for us to look at B.C. Rail not just as an economic engine but

as an important transportation component of an integrated transportation system

for all of North America, for British Columbia to get our products to

marketplace and for products to come to British Columbians.

B.C. Rail

will be an important part of our economic future, as we said. The B.C. Rail

right-of-way will be maintained in public hands so that we make sure that

[ Page 5911 ]

we have an integrated rail service that meets the needs of northern British

Columbia.

Mr.

Speaker: The Leader of the Opposition has a supplementary question.

MacPhail: I guess it's hard for British Columbians to actually believe the

Premier when he just spouts off what he just said, which is entirely wrong. This

past fiscal year the government booked $61 million in revenue from the

corporation. We learned from a memo obtained by the opposition that things are

going so well for B.C. Rail that big bonuses are being handed out. The memo of

this past month tells management: "The 2002 net operating income for bonus

purposes came in at an impressive $76.8 million."

Again, to

the Premier: why are bonuses being paid to B.C. Rail management for exemplary

financial performance at a company that the Premier wants to privatize because

he says it's a money-loser? Who's telling the truth here?

Hon. G.

Campbell: The facts do speak for themselves. B.C. Rail has been subsidized

by the taxpayer of British Columbia to the tune of a billion dollars over the

last three years. The facts also speak for themselves that customers have been

leaving B.C. Rail. The facts also speak for themselves that northern communities

have said it's time for a change in B.C. Rail so they can be assured of

long-term, integrated rail access to their communities and to their resources.

It's critical to their economic future.

That is the

plan the government laid out for British Columbians. It is the plan we intend to

execute in concert with people from the north, from the customers of B.C. Rail

and from B.C. Rail itself.

Mr.

Speaker: The Leader of the Opposition has a further supplementary.

MacPhail: Yes. It's interesting that the Premier goes back 15 years. It may

be that he's having to articulate mistakes made by the then Social Credit

government, of whom some now sit in his cabinet. But the fact of the matter is

that the Premier knew all of that information…

Interjections.

Mr.

Speaker: Order, please. Order. Let us hear the question.

[1420]

MacPhail: …and the Premier still made a promise to residents in the north

purely for political reasons. As soon as the election was over, he started to

spin a tale about B.C. Rail that isn't true. He wants to make a case for

privatization.

B.C. Rail

freight and passenger service has earned a profit for taxpayers every year since

1993, but in the past few months the government has been meeting with CN and CP

about B.C. Rail — corporations that have given over $50,000 to the B.C.

Liberals. In fact, we learned just today that CN gave this government $36,000

last year.

Will he

just admit that B.C. Rail does provide good value, at a profit, but that he

never intended to keep his promise to the people of the north and that he's now

just paying off his political friends?

Hon. G.

Campbell: It is the member opposite's government that had…. I quote:

"They were looking at whether they wanted to sell a big-ticket item."

It was the member opposite who sat in cabinet and said they were thinking of

selling British Columbia Railway Co. It was the member opposite whose government

said it was time to sell a symbolic asset, and B.C. Rail was one of her

government's potential sales. What this government has done….

Interjections.

Mr.

Speaker: Order, please. Order.

Interjections.

Mr.

Speaker: Order. Let us hear the answer as well.

Hon. G.

Campbell: What this government has done is exactly what we said we'd do. We

have worked with northern communities. We have listened and learned from

northern communities. We have worked with B.C. Rail. We have listened to B.C.

Rail. We have listened to customers. We have said: "How can we assure that

B.C. Rail is an important asset in the future economic development of our

province?"

That's what

this government is going to do. We are going to undo the damage of the last

government. We're going to build a new era of prosperity right across the north.

Interjections.

Mr.

Speaker: Order, please. Order.

SCHOOL-BASED EDUCATION FUNDING

McMahon: My question is to the Minister of Children and Family Development.

Earlier this week in estimates I asked the minister whether his review of

school-based programs was complete. The minister responded that he might be in a

position to announce the results shortly.

As parents

and local school boards are concerned about whether these programs will

continue, can the minister provide my constituents any assurances that

school-based programs will be preserved?

Hon. G.

Hogg: Yes, I can. Consistent with the commitment the Premier made,

school-based programs will continue. This year these programs….

Interjection.

[ Page 5912 ]

Hon. G.

Hogg: Now hear this.

Interjections.

Mr.

Speaker: Order, please.

Hon. G.

Hogg: This year these programs will be funded at over $43 million. That's

more money than has ever been put in this basket of services, which are designed

to support the socially and economically disadvantaged students of this

province. We will have the most effective, the most accountable and the most

measurable system of service delivery. We will have that by coordinating with

many of our service partners, our community partners — with teachers,

administrators, trustees, parents and community service providers — who have

come together to assist us with support and to ensure that we do have the very

best system of service delivery in all of Canada.

Mr.

Speaker: The member for Columbia River–Revelstoke has a supplementary

question.

McMahon: That is great news. I think everybody has been worried about it

over the last while.

For the

past decade the Revelstoke school district has been passed over countless times

for school-based funding. In fact, they have never received one penny. It is

clear that when it comes to school-based funding, there has been a great

inequity across the province with some school districts receiving large amounts

of funding at the expense of other districts.

Can the

minister tell us whether the new school-based funding will address these

inequities?

[1425]

Hon. G.

Hogg: We have completed the first-ever comprehensive review and

restructuring of the school-based programs. We have used the best research

available, both locally and internationally, to look at what type of model can

best ensure that those students with the greatest needs will be receiving the

allocation. We developed a socioeconomic model that provides us with the

information necessary to ensure that funding goes to those students and those

schools that have the greatest needs.

As a result

of that, three school districts that have not received a cent in the past will

be included in this model. We'll ensure that those students and those schools

who have the greatest need will receive the services they need to start

providing services to the most socially and economically disadvantaged students

in this province, so they can perform and reach their goals as all students

should have the opportunity to do.

ADDICTION TREATMENT AND

MENTAL HEALTH SERVICES

J. Bray:

My question is to the Minister of State for Mental Health. I have spoken a great

deal recently in this House about substance abuse and homelessness issues in

Victoria's downtown. Government has teamed up with the city of Victoria and the

Vancouver Island health authority on several short-term strategies, such as

funding for needle pickup and the funding for Sandy Merriman House.

community also wants leadership from the province in dealing with addictions and

mental health issues in Victoria on longer-term strategies. Can the minister

tell my constituents and those who serve in the downtown what he is doing to

provide permanent solutions for persons living with concurrent disorders?

Hon. G.

Cheema: When we formed the government, it was clear that we had two separate

systems working independently of each other: an addictions system that operated

in isolation from the health system…

Interjection.

Hon. G.

Cheema: Mr. Speaker, it seems like the member for Vancouver-Hastings is very

upset and very unhappy.

…and a

mental health system that operated independently of the addictions system. About

70 percent of the patients in the addictions system are also patients of the

mental health system. For the first time in B.C., our government brought

addictions care directly into the health care delivery system. We have also

merged mental health and addictions to serve patients more effectively. Our

restructuring is helping health authorities revitalize their service system to

provide the best evidence-based care.

Victoria is

a great example of the partnerships that are resulting from these very

significant changes. Also, both the municipality and the health authority are

working closely together to improve the system.

Interjections.

Hon. G.

Cheema: And, Mr. Speaker….

Mr.

Speaker: Thank you, Mr. Minister.

DIRECTOR OF PUBLIC PROSECUTIONS

MODEL IN JUSTICE SYSTEM

Bhullar: My question is to the Attorney General. Has he given any thought to

basing our justice system on the director of public prosecutions model?

Hon. G.

Plant: I thank the member for his question. The system that we have in

British Columbia is pretty close, functionally, to an independent or director of

public prosecutions model. Crown counsel make their decisions on a case-by-case

basis in a way that's independent from government. We have, as the member knows,

the institution of special prosecutor used to ensure that in particularly

important or po-

[ Page 5913 ]

tentially challenging cases, we appoint a special prosecutor outside the

prosecution service. The prosecution service is protected by statute by the

Crown Counsel Act from direct day-to-day operational intervention by the

government.

We're very

close to most of the features of a DPP model. I don't ever close my mind to the

idea of how you could make something work better. If the member has particular

ideas in that regard, I'd be happy to hear about them. I actually think that we

have a service in British Columbia that serves the public interest well. It

gives good value for money and ensures that we do the best we can to keep the

streets of British Columbia safe.

[1430]

AIR CANADA SERVICE IN B.C.

MacPhail: Yesterday the Minister of Finance and the Premier said that B.C.

won't be too hard-hit by Air Canada's troubles, because WestJet is filling the

breach. The Premier encouraged the federal government to do nothing.

WestJet

doesn't serve Kamloops or Nanaimo; nor does it serve Castlegar, Prince Rupert,

Dawson Creek, Williams Lake, Terrace or Cranbrook — all communities who depend

on Air Canada for service.

To the

Premier: how does doing nothing help those communities who will be hard hit

immediately when Air Canada cuts its services to those communities, as it is

speculating today?

Hon. G.

Campbell: In travelling the province, I can tell you that the current system

that we have been undergoing since Air Canada became a sole provider of major

air traffic in Canada has not met the needs of the people of British Columbia.

It has not met the needs of the small communities of British Columbia.

What is

important is that we create an environment where all communities in British

Columbia have the opportunity to be properly serviced by an economic carrier

like WestJet, certainly. I certainly do not want the federal government to do

something that will put WestJet at disadvantage, which will put at disadvantage

many, many British Columbians.

[End

of question period.]

Petitions

MacPhail: I rise to present a petition signed by over 1,500 British

Columbians, which says the selective training regime contemplated by the

province will compromise trades training and will undermine the effectiveness of

B.C.'s workforce.

Orders of the Day

Hon. G.

Collins: I call committee stage debate of Bill 25.

Committee of the Whole House

HOSPITAL DISTRICT

AMENDMENT ACT, 2003

The House

in Committee of the Whole (Section

B) on Bill 25; J. Weisbeck in the chair.

The

committee met at 2:35 p.m.

section

section 8(3).

Hawes: Minister, I wonder if you could just explain. This change does

transfer some capacity. Does this give increased power to the regional hospital

districts, or are you looking to somehow give them more power to do more than

they have been able to do before?

Hon. C.

Hansen: What this does, in effect, is maintain the powers that have been in

practice by the regional hospital districts. What we've had up until now are

provisions that allow the provincial government, in essence, to interfere, to

oversee and to direct regional hospital districts. Given that these hospital

districts are creatures of the regional government, all of the individuals who

serve on regional hospital districts — as the member knows, because I think he

previously served on a regional hospital district board…. All of those members

are drawn from elected officials of either municipal or regional governments.

In essence,

these are powers the province has not used certainly in recent history. We are

now just regularizing that so the power clearly rests 100 percent with that

hospital district board and removes the ability of the province to interfere. In

doing so, we satisfy some of the conditions set out by the auditor general to

ensure that this body is seen as an independent body as we move to generally

accepted accounting principles and the reporting requirements under those GAAP

rules in 2004-05 fiscal year.

Hawes: Has there been any consultation with hospital districts around the

province about granting them this greater autonomy?

Hon. C.

Hansen: There is a review underway right now of the broader mandates of the

regional hospital districts. That's something I announced in November, actually,

at the time of the last meeting of the Union of B.C. Municipalities annual

general meeting. I think that was very well received by the regional hospital

districts, because there are some broader unanswered questions.

That review

and that consultation are currently underway. This particular legislation is not

directly connected to that. This particular legislation is fairly narrow in

scope and is housekeeping in nature, in my view.

There has

been consultation with the UBCM. Certainly, all of the regional hospital

districts in the prov-

[ Page 5914 ]

ince were advised that we were going to be taking this particular action. It

has been well received, because it does confirm their authority, and I think it

clearly helps us live up to our new-era commitment that we're going to ensure

that local powers are properly vested with local groups without the opportunity

for provincial government interference. So, yes, there has been consultation

around this particular piece of legislation, and the feedback we have got from

the regional hospital districts has been positive.

Section 1,

section 8(3) and

section 2,

section 11 approved.

section

section 20.

Hawes: Thank you, Chair, and thank you to my colleague from Chilliwack.

Section 3

removes the requirement that the minister give approval before regional hospital

districts can borrow money or assume financial obligations. Does this in any way

put taxpayers at risk because that oversight now will be gone — the oversight

of the ministry? Is there any further risk to taxpayers without that oversight?

Hon. G.

Cheema: Can I have leave to make an introduction, please?

Leave

granted.

[1440]

Introductions by Members

Hon.

G. Cheema: I have three of my constituents visiting us today in this House.

Mr. Swarn Singh Buttar is accompanied by Mr. Gurbans Singh Sandhu, who is a

retired principal from Punjab, and his wife, Mrs. Ranjit Kaur Sandhu. Can the

House please make them very welcome.

Debate Continued

Hon.

C. Hansen: The short answer to the member's question is no, there would not

be any increased tax burden put on local taxpayers. In fact, the way this has

been practised up till now is that the request for the establishment of that

borrowing authority has really come from local governments and has simply been

rubber-stamped by the provincial government in the past year. Now we're simply

removing the rubber-stamp portion of that. There is nothing in the changes we're

doing today that would result in increased burden on local taxpayers.

Hawes: Just to clarify, then, there really has not been oversight by the

ministry. The local governments, through the hospital districts, have made

decisions, and the ministry has just simply…. It's almost meaningless, then

— the ministry's approval of the borrowing of the regional districts?

[H.

Long in the chair.]

Hon. C.

Hansen: The answer is, in essence, yes. This has just been one added level

of bureaucracy that really has not been necessary. It has been totally

redundant. Given that all the members who serve on the local hospital district

board are themselves elected officials, elected by their local communities, it

really is a case of the provincial government having the powers to interfere

with what should be local government decisions. Even though those powers have

never been exercised in the past, that power was still there. I think the fact

that we're removing it clearly puts the accountabilities where they belong, and

that's clearly with local government.

I think

this is good news in terms of setting the tone for relationships between the

provincial government and local government, which I think is a common theme

through a lot of the changes we're making vis-à-vis governance overlaps between

the provincial and municipal governments.

Hawes: I did sit for quite a number of years on a regional hospital

district, and I can tell you that it did take a long time to get approval to do

things quite often, and it was seen to be overly bureaucratic. I think some of

us felt that there was some oversight on the part of the government, because the

government of the day seemed to imply that there was. I'm taken aback a bit that

there wasn't and that this is just a rubber-stamp exercise, but I guess nothing

really should surprise me.

I know

these kind of changes, then, are going to be welcomed greatly by regional

hospital districts. I know that at the local level, autonomy is greatly, greatly

cherished. This does, it looks like to me, provide a great deal more autonomy.

It allows regional governments to get on with the job far more easily, with far

less interference, and to continue…. After all, what they're doing here in

many cases is providing 40 percent funding for capital projects for the health

authorities within their own district.

Through the

rest of the bill, is there anything in here that does anything but remove a

bunch of bureaucracy that really is not necessary? Are there any powers that are

taken from regional hospital districts in any way by this bill? Or are all of

their powers, if you will — the autonomy, I guess I would say, of regional

districts — enhanced in every

section of this bill?

Hon. C.

Hansen: To answer the member's question, this is 100 percent giving that

power back to local governments. There is nothing in this bill that is taking

powers away from the regional hospital district. It is in fact giving up power

that the provincial government could have exercised. We've never had reason to.

We think it's unnecessary. It's just part of the red tape and bureaucracy that

is there, and we're trying to streamline.

[1445]

This is

partly a deregulation initiative. It does help us achieve some of our

deregulation targets. It's in a minimal way, but I think it's good news for

local government in that it does give power to local governments, which is where

it belongs.

[ Page 5915 ]

Hawes: One last question to the minister, and I'm not sure whether you can

answer the question, minister. Local government, when it borrows money for a

term of longer than five years, is required to go to the taxpayers for assent.

There are occasions when regional hospital districts will borrow funds —

substantial amounts of funds.

I think of

the area in which I live as an example, where the regional hospital district

will be putting up a considerable amount of money towards a new hospital. Those

funds could be borrowed. If they are borrowed for a period of more than five

years, does the regional hospital district have to go to the taxpayers for

assent with the removal of the ministry's approval requirement, or can they just

proceed?

Hon. C.

Hansen: I don't have a specific answer for the member, other than to say

that what we're doing here today does not change the existing requirements.

Those requirements are really driven, I'm assuming, under the Municipal Act but

certainly fall under the authority of the municipal government legislation that

would apply in that case. There's nothing we are doing in this change that would

affect that one way or the other.

Sections

3 to 10 inclusive approved.

Title

approved.

Hon. C.

Hansen: I move that the committee rise and report the bill complete without

amendment.

Motion

approved.

The

committee rose at 2:47 p.m.

The House

resumed; Mr. Speaker in the chair.

Report and

Third Reading of Bills

Bill

25, Hospital District Amendment Act, 2003, reported complete without amendment,

read a third time and passed.

Hon. C.

Hansen: I call second reading of Bill 30.

Second Reading of Bills

PROVINCIAL REVENUE STATUTES

AMENDMENT ACT, 2003

Hon. B.

Barisoff: Bill 30, Provincial Revenue Statutes Amendment Act, 2003, proposes

a number of amendments to the taxation and revenue statutes administered by the

Minister of Provincial Revenue.

The

measures included in this bill will help to achieve our goals of fair, efficient

and equitable administration of tax and revenue statutes and collection of all

outstanding amounts owed to government. Amendments to the corporation capital

tax ensure that authorized foreign banks and domestic banks receive equivalent

tax treatment.

Amendments

to the Income Tax Act align the act with parallel provisions in the federal

Income Tax Act. Similar amendments are required each year to accommodate changes

in the federal legislation.

One of the

recommendations of the core services review was that the Mineral Tax Review

Board be replaced with a ministerial appeal process. This bill amends the

Mineral Tax Act by replacing the board with a ministerial appeal process

consistent with the ministerial appeal processes in other taxation legislation.

The

Ministry of Provincial Revenue is charged with the responsibility for collection

of all oil and gas revenues under the Petroleum and Natural Gas Act. To ensure

that the ministry has adequate statutory authority to carry out its revenue

collection duties, this act must be amended to authorize the Ministry of

Provincial Revenue to appoint a ministry employee as a royalty collector.

[1450]

The Hotel

Room Tax Act, the Motor Fuel Tax Act, the Social Service Tax Act and the Tobacco

Tax Act are amended to clarify that where the province has information that tax

liability exists, but the taxpayer disagrees with that information, it is the

taxpayer's responsibility to provide evidence to refute the existence of the tax

liability.

However, in

the interests of fairness, these statutes are also amended to allow taxpayers to

request a waiver of the six-year assessment limitation period. This will provide

the taxpayer with additional time in which to gather evidence to refute the

proposed assessment. Waiver provisions are also proposed for the Corporation

Capital Tax Act and the Logging Tax Act.

In addition

to a number of minor housekeeping amendments introduced in this bill, the appeal

provisions under the Social Service Tax Act, the Hotel Room Tax Act, the Motor

Fuel Tax Act and the Tobacco Tax Act are expanded to ensure that the taxpayer

has the right to appeal all decisions by the administrator under these statutes

and to clarify the appeal process.

The Land

Tax Deferment Act is amended to clarify situations for which existing tax

deferment agreements may continue despite partial transfer of property

ownership. The School Act is amended to explicitly require that municipalities

apply for available grants in place of school taxes. These grants are available

bodies. These amendments ensure that the province receives a school tax portion

of available grants. The School Act is also amended to repeal outdated

references and procedures.

Mr.

Speaker: The question is second reading of Bill 30.

Motion

approved.

Hon. B.

Barisoff: I move that Bill 30 be referred to a Committee of the Whole House

for consideration at the next sitting of the House after today.

[ Page 5916 ]

Bill 30,

Provincial Revenue Statutes Amendment Act, 2003, read a second time and referred

to a Committee of the Whole House for consideration at the next sitting of the

House after today.

Hon. G.

Collins: I call estimates debate for the Ministry of Energy and Mines.

Committee of Supply

The House

in Committee of Supply B; H. Long in the chair.

The

committee met at 2:52 p.m.

ESTIMATES: MINISTRY OF

ENERGY AND MINES

(continued)

On vote 20:

ministry operations, $32,390,000 (continued) .

Hon. R.

Neufeld: We left off last evening, starting on the mines portion of the

ministry. We will move through the mines portion of the ministry to the energy

portion of the ministry and then move to the Crowns — B.C. Hydro, Columbia

Basin Trust and the B.C. Utilities Commission.

I have with

me Fred Hermann, the chief inspector of mines for the province; Ross Curtis on

my right-hand side, the acting deputy minister for the Energy ministry; and Doug

Callbeck, who's with the ministry. He's the assistant deputy minister to

management services.

[1455]

MacKay: A couple of questions having to do with mining that I'd like some

clarification on. I asked a question in the House the other day having to do

with the quality of water that is extracted during the coalbed methane process,

and the concern around the quality of the water and what happens to the water

when it is extracted if, in fact, it is toxic. I wonder if I could get an answer

to what happens to that water.

Hon. R.

Neufeld: Yes, in the production of coalbed methane you have to remove the

water. First you drill the well, then you have to remove the water, and that

allows the coalbed methane to be released from the coal-bearing seams.

The process

works like this. The company will — of course, after they get all their

permits; they have to do all those kinds of things — drill a well to the coal

seam they want to go into — usually about 3,000 feet deep, or something like

that, into the earth. They will then set a surface casing, and they will cement

the surface casing on the outside so there's no way for anything to get up

outside of the casing. They will then perforate, which means that under high

pressure they will send sand and that kind of thing down in the well to

perforate the coal. Then they will put a tubing inside of the casing, and they

will pump the water off. Once the water is pumped off, then the gas will come

up.

Some of

that water — the member is correct — is toxic. Some of it is potable, and

some of it, with a bit of treatment, can be potable. So there's a process that

we have to go through. The Ministry of Water, Land and Air Protection is

responsible for it, where water is tested.

If it's

tested, they then make application if they can actually…. They may be able to

spread it on land for farmers, for irrigation. They may be able to put it into

streams. Again, that has to be a permitted thing.

If it is

toxic, what has to happen is that it has to go to a disposal well. A disposal

well will be one that's approved by the ministry, which is deep in the earth.

Usually it's a gas well that's gone dry or an oil well that's gone dry, and it's

into caverns. The water will be forced down there under pressure, all regulated

by the Oil and Gas Commission.

MacKay: It sounds like there has to be a reservoir in place before the

drilling actually starts to release the methane gas. So there's a place to put

the water as it's being extracted, prior to the gas coming up?

Hon. R.

Neufeld: Yes. Once they drill the well, that's how they test to see how much

gas is there. They'll start pumping the water off. Depending on the water and

how much is there and how long they have to pump…. Those aren't known ahead of

time until you start doing the process. Really, it's when you lift the water off

of it that it allows the natural gas to come up. But once you start pumping the

water off, the water immediately has to be tested to find out exactly what you

can do with the water.

MacKay: Given the fact that Bulkley Valley–Stikine has some huge coal

deposits, and given the recent legislation that was introduced in the House and

passed the other day declaring the owner of the resource, I wonder: has that

generated any interest in the mining sector or the petroleum sector to go out

and start looking for this product in these coal fields?

Hon. R.

Neufeld: Yes, it has. The ministry, through its titles branch, has sold

tracts of coal land around the province — in the southeast of the province, in

the Kootenays. In fact, there's a project that's been drilled there already, and

they are pumping water to test it. In the northeast there has been land sold. In

the Princeton area there has been land sold. On Vancouver Island there's been

land sold.

Basically,

that's it. But there is a lot of interest in starting to develop coalbed

methane. So it'll come more and more as we move forward.

MacKay: Given some of the native unrest that we're facing in the province in

the forest industry and, I suspect, in the mining industry, I wonder if the

minister could tell me if we're taking any steps to ensure that the development

or the exploration for minerals can

[ Page 5917 ]

take place without this unrest that we seem to be encountering in the forest

industry and — to a small degree, that I'm aware of — in the mining

industry.

[1500]

I just

wonder if the minister could explain to me what steps the ministry has taken to

resolve or minimize the impact of native unrest as people are looking for

minerals and gas.

Hon. R.

Neufeld: Yes, there's a process that the Oil and Gas Commission takes upon

itself when some company applies to drill on Crown land. If it's on private

land, there's a negotiation between the oil company and the private landholder.

If it's on Crown land, there's obviously a negotiation that has to take place

with first nations.

The

proponent, after going through all the processes to get permits to drill a well,

will have to pay — and someone may correct me here — $7,800 per well. Half

of that goes to first nations on the traditional territory of whoever it happens

to be for capacity purposes so that the first nations can actually hire the

proper people, or the people they think they need, to be able to negotiate with

the oil companies and to mitigate some of the concerns they may have on their

traditional territory.

It's a

process we've used in the northeast now for a number of years. I wouldn't say

it's absolutely perfect, but it does work relatively well. There is a

negotiation that goes on between the Oil and Gas Commission and the first nation

that would be affected, and there's also a requirement that there's a

negotiation between the proponent and the first nation to come to some

agreements around how this work is going to take place, exactly the same as it

would be if it was private land.

MacKay: I apologize to the minister. I missed part of the answer. Did I

understand the minister to say that 50 percent of the cost for the permit goes

to the natives?

Hon. R.

Neufeld: Half of the $7,800, and we're going to check that I have the number

correct — yes — that goes to…. If there's some activity happening in a

traditional territory of a first nation and there's going to be a well drilled,

the proponent has to pay the $7,800 upfront. Half of that is to manage the Oil

and Gas Commission. The other half is to negotiate with first nations and to

deal with their issues on their traditional territory.

MacKay: I'm sorry. I'm having a problem understanding that, Mr. Chair.

Again, to the minister. The other half — is that used for the treaty

negotiation process, or is it given directly to the native band? I apologize.

Hon. R.

Neufeld: No, the $7,800 has nothing to do with the treaty negotiations.

That's totally outside of what we're talking about. This is for the first

nations to be able to get the capacity — the knowledgable people needed who

know what happens with coalbed methane, with natural gas drilling, with oil well

drilling if it happened to be oil wells or other issues that they think they

should find out about before they allow any activity to take place on their

land. This is totally, completely separate from the treaty negotiations office.

This is a fee that's been negotiated with the industry, which is paid upfront to

be able to accommodate first nations so that they can actually work on these

processes.

The member

maybe should understand that this originated in the northeast. We drill just

under 1,000 wells a year — I don't know how many kilometres of seismic line

— and I'm not exactly sure how many kilometres of pipeline, but it is

significant. To be able to get the process done so we can actually consult,

because we have to consult by law with first nations, they have to have some

money to be able to finance that. They can't finance it unless it is paid that

way. Now it's paid by the proponent into the system, so they can actually hire

the correct people, so they can do the negotiations and know what's happening.

[1505]

On a first

nations traditional territory just north of Fort St. John, there might be 300 of

those wells drilled. Understandably, it takes a few people to be able to do that

work. That's what that money is meant to do.

MacKay: Thank you for the patience in responding to that question, which has

bothered me for some time. I wonder — just to go back to the mining again,

because of the proximity of mineralization in the northwest part of the province

— if we could talk for a moment about the Kemess mine and the Kemess North

mine properties.

understand there is some exploration going on further north of Kemess mine.

There has been some talk, and I believe the Ministry of Energy and Mines is the

lead agency on the Kemess mine road to hook up to Highway 37. I wonder if the

minister could bring me up to speed on where we are with that proposed highway

connection.

Hon. R.

Neufeld: Yes, the Ministry of Energy and Mines is the lead on the

Stewart-Omineca road. It's a road that, if built, would open up an awful lot

more country. It would be very beneficial to Kemess, to the logging industry,

and would actually open up some other areas in the member's constituency —

which would be good news for his constituency, I'm sure.

There have

been some initial meetings. I think the member was at the one I was at quite a

while ago. The group proposing the road were asked to come back with some more

costs and a little bit firmer figures than what they originally had. They have

come back to the ministry with those costs just recently. We're still trying to

evaluate that. Within the ministry we're working to actually bring this to

fruition.

We hope….

In fact, we don't hope. We have people going to the northwest to talk to the

first nations, to work with them and also to do further work with the proponents

on this road. There is work being done on the road. I can get some further

information for the

[ Page 5918 ]

member and give it to him in written form if he wishes. That's basically what

we know today sitting here.

The Kemess

North mine. Yes, there is another deposit north of Kemess, the original site,

that will add a fair amount of life to the mine. I'm not exactly sure how many

years, but it's significant and will actually keep a lot more people employed up

there, which would be good news for the northwest. In fact, I'm told it would

extend the life of the mine by 15 years, so that's another 15 years that Kemess

could be operating. By then maybe they'll have found another deposit that's just

as good, and it can continue to produce for quite a while into the future.

MacKay: Thank you for that response. I would like to ask a couple more

questions, and then I will give up the floor to other members who may have

questions. Going through the service plan, I noticed the notation there to

introduce flow-through shares. I just wonder if the minister could tell me if

that flow-through share project has been realizing the revenue that we had

anticipated. Is it raising funds for the mining industry?

[1510]

Hon. R.

Neufeld: Yes, there has been significant uptake on the flow-through shares.

We anticipate that in this upcoming year there will be also. The Ministry of

Finance actually would have the numbers of how much has been taken up, and we

can get that for the member so he has that information.

Last year,

actually, exploration doubled in British Columbia, up from about $20 million to

$40 million last fiscal year. The Mining Association of B.C. has said that all

indications for this year are for it to double again. That will be up to $80

million. They also tell me on a regular basis that to sustain the mining

industry moving forward, we need about $150 million spent yearly on exploration

to sustain new mines coming on stream.

So we're

getting there, maybe not as fast as we'd like to, but that's not bad to double

it last year and to look forward to doubling it this year. I also think, to be

truthful about it, the price of minerals has actually increased a bit,

especially gold. That's probably helped. In fact, not probably — it will have

helped spur some of the expenditures on exploration.

We're now

at 9 percent, I believe, of the Canadian total of exploration dollars spent —

up from 4 percent a year ago. So this last fiscal year we moved from 4 percent

to 9 percent. That's substantial. We want to get to a minimum of 15 percent of

the exploration dollars spent in Canada, spent in British Columbia.

P. Wong:

Mr. Chair, I seek leave to make an introduction.

Leave

granted.

Introductions by Members

P. Wong:

Joining us in the House today, we have 61 grades 5 and 6 students with their

teacher Ms. Baker, along with Ms. Grossey, Ms. Irving, Ms. Janes, Ms. Atwall,

Ms. Lauder and Mr. Yow, who have come over from Sir Alexander Mackenzie

Elementary School in Vancouver. Would you please join me in making them all very

welcome.

Debate Continued

MacKay: Looking at the service plans for the Ministry of Energy and Mines,

on page 17 we talk about increasing mine and exploration and development

activity and some targets that we were reaching for. I notice in the performance

target for 2003-04 that we're hoping to achieve $100 million worth of capital

investment. I know it's early in the year, but are we moving toward that target?

Again, is that something I should perhaps be asking from the Finance ministry,

or is that something you're able to respond to?

Hon. R.

Neufeld: Actually, we're working towards this year's target, which just

started yesterday — '03-04. Last year the $100 million that the member

said…. We will get the exact number for you, but it's close to the $100

million if you look at some of the projects that moved forward last year in the

mineral industry. We were close to meeting our target, even though we were in

hugely depressed markets, and that didn't help us a bit until later on in the

year when the price of gold went up.

MacKay: Again, using that as a positive indicator, looking at the service

plan and the performance target to generate increased revenues of $27.2 million,

based on the last response I got, I assume that the revenues are increasing as

well?

[1515]

Hon. R.

Neufeld: Yes, they are.

MacKay: For my own clarification, I wonder if the minister, looking at the

supplement to the estimates, could explain to me the $2.5 million we spend on

resource-revenue-sharing agreements. Where does that money go, and how is it

distributed?

Hon. R.

Neufeld: Actually, could you repeat which STOB you were under?

MacKay: Yes, that's under vote 21.

Hon. R.

Neufeld: There's a resource-revenue-sharing agreement of $2.5 million that

was negotiated many years ago with the Fort Nelson Indian band — in fact, in

the early seventies — for pools of gas that were drilled into under their

actual reserve. Also, I believe there's an agreement with the Blueberry first

nation for the same reasons.

MacKay: Is that an ongoing cost to government only while the oil is under

there, or is it ongoing even after the reserve has been depleted?

[ Page 5919 ]

Hon. R.

Neufeld: It's revenue sharing. As long as they're producing, that will be an

ongoing expense. If they quit producing and the wells are dry, then it won't be.

MacKay: My final question to the minister, again under vote 21, has to do

with dealing with the Vancouver Island natural gas pipeline agreement. I notice

a cost of $20.850 million. Again, is that an annualized cost to government?

Hon. R.

Neufeld: It's annual, and it's not always the same number. There is a

complex, long agreement that was negotiated by the last government, which puts

in place those numbers. I think, in fact, it's a lot less than the $20 million

this year because of the price of the product and all those kinds of things. If

the member wishes to review that whole contract, I can make it available to him.

MacKay: That concludes my questions as they relate to mining, but I do have

some on B.C. Hydro.

P. Bell:

I'd just like to start out on the revenue side for the Ministry of Energy and

Mines. I see an increase in the '03-04 fiscal year from $1.44 billion to $1.77

billion. I'm wondering if the minister has a breakout of how much of that comes

through minerals versus energy.

Hon. R.

Neufeld: The staff is looking for that number right now. If you want, go on

to the next question. In the book they're inclusive, so we'll break that out for

you. Minerals are probably — I'm going to make a guess here — about $50

million of that $1.7 billion.

[1520]

P. Bell:

Great. Actually, what I'd like to know is if there is an expected increase from

'02-03 to '03-04.

The next

question is a pretty generic question, I think. I'll just ask the minister to

take a few moments to compare the regulatory and taxation regimes in the

province as they stand today with some of the other jurisdictions in Canada that

we compete with. Principally, I'd be interested in hearing his thoughts on how

we compare, perhaps, to Ontario and Quebec, but he should feel free to expand to

any of the provinces. I'm just curious — again, more specifically as it

relates to mines as opposed to energy and specifically our regulatory regimes

and taxation regimes.

Hon. R.

Neufeld: Our taxation regimes are very good in the province of British

Columbia. The member will remember that when we came into office, this

government committed to reducing the corporate tax to the level of our

neighbours — from 16½ percent to 13½ percent. We've removed the tax on

machinery and equipment for the mining industry and the oil and gas industry. In

fact, in parts of the forestry industry we're increased for exemption. We also

committed, prior to the election and early on in our mandate, to remove the

corporate capital tax. That's been done. In fact, it's in total effect now, as

we speak, this last fiscal year.

Our

taxation regimes, as far as I know — in relationship to Quebec, Ontario,

Alberta, Saskatchewan and B.C. — are about the same. The difference, probably,

between…. In fact, one of the differences between us and Quebec…. I'll make

this an example. I'm not so sure about Ontario anymore. Quebec highly subsidizes

who they think they can pick as winners and losers. In this province we said

that…. What we're going to do is keep our costs as low as we possibly can and

quit having government pick winners and losers in the process. Actually, if it's

economically viable, they should be able to go out there and make a dollar.

I do know

Quebec highly subsidizes a lot of its industry — I'll use one example,

production of aluminum, although it's not in my portfolio — and just recently

gave a really low hydro rate guaranteed for quite a few years into the future

and gave some interest-free loans and some grants in the hundreds of millions of

dollars to an aluminum corporation. It's hard for us to compete against that. In

fact, we don't. We said we wouldn't do it anymore.

Our

regulations and our legislation are about the same. There will obviously be

differences, because we're a different geography from Ontario or Quebec or

Alberta. In fact, it's compared in one report that I saw lately that Alberta has

a very favourable regulation and legislation process in place for mining, but

when you look at how much mineralization there is in the province of Alberta,

it's almost that much in comparison to the mineralization in the province of

British Columbia — again, hugely different geographies across Canada. If you

look at that in its fullest form, you'll find that we have a fairly good regime.

You should

also know that through the ministry, we've reviewed for a couple of years now

our regulations and have been removing what we call the needless regulation and

the red tape. I am actually speaking to one of the members of the Legislature,

who is going to take it upon himself to work with a number of you — and I hope

this member will be one — to take our mines regulations and legislation and

actually take it as a project and say, "Look, this is what we need, and

this what we don't need," so that we get some input from people who are on

the ground, like yourself in your constituency, and people who are familiar with

the mining industry. The member from the Kootenays would probably be interested

in that. I think that's a positive thing to look forward to — that we can

actually get a little bit more red tape removed.

The targets

in the service plan are being met. In fact, we're ahead of our targets this

year. I think we've reduced across the whole ministry 15 percent of our

regulations. We're actually ahead of what our target is, and we want to continue

to be ahead of what our target is so that we can encourage the industry to come

to British Columbia and invest their money.

[1525]

I have the

breakout of the dollars for the member for '02-03. The total oil and gas….

Rather than the bonus bids and all that, I can send the member a copy of this.

It's $1.357 billion. The minerals are $65 million. I

[ Page 5920 ]

was out $15 million. Then there's also the Columbia downstream benefits that

are figured into that. That gives you a breakdown.

P. Bell:

As the minister will know, the Fraser Institute does a report annually which

ranks various jurisdictions both from a mineralization perspective and from a

regulatory perspective. I thank the minister for pointing out all the

significant, very significant, changes that have been made in our regulations.

I'm sure he

was as disappointed as I was with the lack of movement in our rankings last year

in the Fraser Institute report. I note that in the report it stated very clearly

that despite all the significant changes that were made, it didn't appear as if

industry, for whatever reason, was aware of those changes. I think the people

who actually did the report noted it was unexpected by them to see little

movement on our part.

I'm just

wondering if the minister would take a few moments to expand on his thoughts in

terms of what it's going to take to get the mining industry to recognize the

significant changes he has made in terms of the regulatory regimes and how we

are a much more friendly environment to the mining industry than governments of

the last decade or so.

Hon. R.

Neufeld: I agree with the member. I was a bit disappointed with the Fraser

Institute report. That's the report I was alluding to earlier, where we were at

the bottom of the page when it came to being overregulated, and Alberta was at

the top of the page. When you turned the next page and looked at the

mineralization, well, Alberta was at the bottom of the page and we were up at

the top. Obviously, if you don't have a lot of minerals to go after, you're not

going to have many regulations in place.

Alberta —

to be fair to Alberta — leads us in a whole bunch of areas when it comes to

industry and investment. Obviously, their investment is a lot more in the oil

and gas industry than it is in the mineral industry, although they mine an awful

lot of coal because almost all of their electricity is generated by coal.

To get the

mindset changed is — I agree with the member — a difficult process. This

last fall or summer I decided in the ministry that we should get our external

relations branch working on how we can actually get out to at least the people

in B.C. that we have made some significant changes. We've put together a group

of people that have been going to different communities — I don't know if

we've been to all of them yet; it was eight or nine communities — to explain

the benefits of mining and the benefits to the community and the region where

that mining takes place, to explain the benefits of coalbed methane, to explain

the benefits of oil and gas activity — all that kind of activity on the land

base that can actually work very well with all the other industries in the

province like tourism or forestry or any of those.

We're

trying to do that to get it out to the people who actually do the exploration,

because a lot of those people aren't aware of some of the changes we've made.

It's going to be, I believe, a difficult uphill battle, especially with the

prices staying low for mainly copper, for instance. Copper is still not up there

enough that we can open some of the mines that are closed now. Hopefully, those

prices go up.

[1530]

We also

have had a presence at the Cordilleran Roundup both years that I've been

minister and at PDAC. I didn't get to PDAC this year, but we had people from the

ministry there. We have a booth. We try to make contact with as many people as

we possibly can at both the Cordilleran Roundup and PDAC in Toronto to let them

know what's happening. Actually, it's starting to pay off a bit. Slowly, people

are starting to respond to the fact that there has been a significant change in

the province, that the government of the province enjoys investment. They

actually think if they're going to invest, they should make a profit to pay

their shareholders and are starting to move back to the province.

Again, for

instance — I'll use copper again — what I've said before is to get people to

go out and find new copper mines now…. To develop a whole copper mine is

hugely expensive, so the price has to get up a little bit, especially since the

industry can't open the ones they've already closed because of low prices. We

will continue to go out there and meet with the industry, with both the large

industry and the smaller mining industry — the small miners — and also with

the exploration industry as much as we possibly can to encourage them to develop

in the province of British Columbia. They're quite welcome here.

I think

it's probably going to take us a number of years yet before people are actually

comfortable. They want to look and see, before they invest a billion dollars in

developing a mine. Is it real? Is it going to stay this way? Is the government

going to be able to continue on into the future? I know the member and I surely

think that will continue. We're hopeful that over time, that brings more

investment to the province.

I also am,

I believe, making a trip to London in the fall to talk to the investment

community. Not all investment comes out of Vancouver or Bay Street. There's a

tremendous amount of investment that comes out of London. In fact, when I was in

the Kootenays this last week, I met with two individuals over there — small

mining companies — who said they get all their financing out of London. It

would be very good if I went to London and started telling the financiers that

things are changing in British Columbia and that we are moving forward and

trying to encourage mineral development in the province.

P. Bell:

Thank you very much. That certainly gives me reason to feel way more optimistic

in terms of our future. It's extremely important for my riding. As much as the

member for Bulkley Valley–Stikine would like to think that the Kemess mine is

in his riding, it actually is in my riding, and we'd like to see several more

just like it.

Interjection.

[ Page 5921 ]

P. Bell:

With that…. He's trying to funnel it away, but I'm okay. As long as that road

opens up more territory, I'm fine with it going ahead.

Just to

finish off with a final question, Mr. Chair. The Muskwa-Kechika area has

significant distribution and concentrations of minerals, as I understand it, and

I know that the minister has recently worked closely with the Minister of

Sustainable Resource Management to open up a large area. If memory serves me

correctly, it's on the order of 55,000 hectares. I wonder if the minister would

just expand a bit on the definition of that area, what he hopes to accomplish by

having opened that area up and how quickly we might see some forms of

exploration taking place in the Muskwa-Kechika.

Hon. R.

Neufeld: Yes, the 55,000 hectares were spread across the province of British

Columbia, not just in the Muskwa-Kechika, although some of it was there. I think

some of it may have even been in the member's riding. They were areas that had

been held by OICs for quite a number of years from land planning processes that

had taken place and that were kind of in limbo. With the Minister of Sustainable

Resource Management and my ministry, we were able to open that up, actually, to

mining, to natural resource extraction.

The

Muskwa-Kechika actually is a bit different than some of the other protected

areas. In most of it — not all of it, but in a good part of it — industrial

activity is allowed. I put a caveat on that: in some areas there are pretty

stringent rules they have to abide by to actually get into certain areas. It is

rich in mineralization, and it is rich in oil and gas. On the east side of the

slopes, the Ministry of Sustainable Resource Management and my ministry are

actively working on doing the planning that goes forward with some of the base

profit and those areas that there is high interest in for oil and gas

development.

[1535]

Those plans

are moving forward. They were plans in the Sustainable Resource Management

service plans. We'll move those forward, probably not quite as quickly as we

wanted to. That's not going to slow the industry down, but the industry has told

us where they're interested in going. What we want to do is a better job of

managing those areas where they want to go into so that we can have some main

corridors for roads instead of roading a lot of it.

Let's look

at where they want to go, because they have a pretty good idea where the oil and

gas is and where those main corridors could be built, so that everyone can use

the same kind of access. I think that's good work on the part of Sustainable

Resource Management to work towards those ends. Hopefully, we'll continue to

develop as we move forward.

Bennett: I represent, as Mr. Chair just said, the East Kootenay. We have

five coalmines in the East Kootenay, so I would like to ask just a couple of

questions of the minister about the coalmining sector.

reference to the mission statement of the ministry, it refers specifically to

fostering a competitive investment climate. We all know that the mining industry

is not an easy industry. It's subject to international market price fluctuations

and all kinds of other challenges. The coal industry in particular, I think, is

a challenging industry to be in. I just wonder if the minister could relate for

me what the ministry has done to foster a competitive investment climate for the

coal industry.

Hon. R.

Neufeld: Certainly. The coal industry is, as the member pointed out, very

important in the province. It generates over $1.5 billion to the GDP every year

of coal mined mostly the out of the southeast, not so much out of the northeast.

That will probably end in the next year or the upcoming year.

We want to

keep the coal industry active and operating in the province. To that end, we

responded to the coal industry when we were elected and reduced taxation for not

just the coal industry but the mining industry, which includes coal, and reduced

the tax on machinery and equipment, reduced the corporate tax and reduced — in

fact, eliminated — the corporate capital tax to bring our taxes in line with

other jurisdictions around us.

As the

member said, the coal industry in his constituency provides a lot of well-paying

jobs. We want to see those jobs continue and, in fact, increase into the future

as the world around us continues to need more and more energy. It doesn't matter

whether it's in coal, whether it's in natural gas or whether it's coalbed

methane or oil.

Those

fossil fuels that some folks think we don't need anymore, we'll be needing for a

long, long time into the future. I see a bright future for the coal industry in

the province, and we want to work closely with those that are in the industry so

that it can continue to expand.

Bennett: I'd like to thank the minister for that answer, and I'd like to

follow up with another question about the coal industry.

The

minister mentioned that the industry has high-paying jobs, and it does indeed.

There are about 2,300 people right now working in the Elk Valley coal industry

in my riding. The average salary, with benefits, is $79,000 a year. These are

terrific family-sustaining jobs that we need more of in British Columbia.

One of the

issues that I hear an awful lot about in the Elk Valley, when I'm there on a

regular basis, is the coal-fired power project that Fording Coal put forward.

For at least ten years they've been essentially wrestling with the former

provincial governments to find out what the rules were around air emissions and

what the provincial energy policy was with respect to using coal to generate

electricity.

I just

wonder, for the benefit of my constituents in the Elk Valley — who are very,

very keen to know where the government stands on this issue — if the minister

could enlighten us as to the prospects of that kind of project.

[1540]

Hon. R.

Neufeld: Yes, we have, in the energy plan that was put out last fall —

last November — that the

[ Page 5922 ]

government announced…. Part of that energy plan has been to develop

emission standards for the burning of coal for the generation of electricity.

I'm happy to say that through negotiations with my ministry and Water, Land and

Air Protection, we were able to come forward with some very competitive

standards for the province that actually compare very closely to our neighbours

east of us, Alberta, who burn an awful lot of coal and have a lot of experience

in it.

The other

thing is that the technology around burning coal is changing constantly. The

member, I'm sure, is aware of that also. As we move forward, clean coal

technology will become more and more part of the generation of electricity and

the burning of coal for that purpose. In fact, I'm told it won't be that long

into the future until coal can be burnt economically and with as low emissions

as natural gas has today, which is good news for the coal industry. It's a

number of years away, I'm told, but those things are happening as we speak.

We look

forward to actually having Teck Cominco or whoever put forward a proposal for a

coal-fired plant in the Elk Valley. As I understand — in fact, I've got

letters from the communities there — they support it. They want to be careful

about the environment, and so do we as a government. The member also agrees with

that. We're going to be very careful with the environment and what we do. But we

also have a fair amount of coal in the Elk Valley that can't be shipped and is

just being stored on site, which would be perfect for generation of electricity.

With our

new energy plan also — the access to transmission for those companies to be

able to sell their power — if they wanted to sell it to Hydro and if Hydro was

going to buy it in one of their calls for energy, they could do that. Or they

could actually export it, if they wish.

That

separation hasn't totally happened yet, but it will happen as we move forward in

the next legislative session. I think that looks pretty bright for the Elk

Valley and the Kootenays, with the development of coal.

Bennett: I thank the minister for that answer.

For the

benefit of my constituents in the Elk Valley and the East Kootenay and also for

those British Columbians who live in areas that have coal, and I understand that

there are many, many areas in the province that have this natural resource….

Of course we're not using it, as the minister stated, to generate electricity,

unlike our neighbours in Alberta who generate, I think, about 60 or 65 percent

or so of their electricity with coal or maybe more than that. The Americans do

the same thing.

I'm just

wondering, for all of those folks who are looking for good jobs and economic

development, whether the minister could confirm that this government has done

everything it can, from a regulatory point of view, to remove the regulatory

obstacles to going forward with this kind of project. Of course, the companies

who would take the projects forward have to deal with the realities of the

marketplace and whether there is a demand for electricity and all those kinds of

practical considerations, but I'd just like the minister to confirm that in

terms of what government can do to allow these kinds of projects to go forward,

we've done everything we can possibly do.

Hon. R.

Neufeld: Yes, we have. In fact, I'm comfortable that we've done everything

we could possibly do to put into place regulations that actually respect the

environment around us and still allow for industry to be competitive out there

and build their coal-fired plants.

To be

honest, I haven't had one letter since we released those standards — actually,

we released them in January of this year — saying those are not good

standards. In fact, I've had letters saying: "That's great. We're happy now

that at least we know what the standards are, and we can move forward from

there."

[1545]

As far as

the coal industry in your part of the world right now, with the amalgamation of

the companies, there's probably a little bit more high-level stuff going on in

how they're figuring on integrating those companies. Hopefully, in the very near

future we'll see some proposals come forward from the industry.

There's a

couple of other small things that we did for the industry, and those are the

things that always get forgotten. They just came to mind as I was sitting here

listening to your last question. Prior to us coming into government, coalmines

couldn't use aggregate on their coal lands to develop their roads. It's hard to

believe that that was actually in legislation — that they couldn't do that. We

changed that, so they can actually use that gravel to develop their own haul

roads.

We also

looked seriously at the impediments with the higher-level plans and how they

affected expansion of the coal industry, and we decided we would deal with that

also. So we've done a number of little things like that — not little, but

things for the coal industry to make it more economical for them to be able to

provide those well-paying jobs the member just spoke about.

Bennett: I just have one final question/comment. The Ministry of Energy and

Mines recently held meetings in Sparwood and Fernie to gather public opinion on

issues such as coal-fired power generation and coalbed methane development and

mining in general. I understand that those open houses were very successful;

there was a good turnout.

I actually

don't really have a question for the minister. I would like to just thank the

minister for, first of all, holding those meetings — and I know he's held

those meetings in other places in the province — because it allowed my

constituents to come out and learn about coalbed methane development and how it

can be done in an environmentally sensitive way. It also allowed them to express

their keen desire to have a coal-fired power project go forward.

Given the

minister's answers here in the House today, I'm going to be telling my

constituents that now the ball is in the court of the companies with respect to

the coal-fired power plant. So thank you very much.

[ Page 5923 ]

McMahon: I have been told by the mining industry that they are pleased with

the inspection service that is currently managed by your ministry. I'm told the

process has worked extremely well in making the mining industry the safest heavy

industry in the province. I'm also hearing some concern that the service might

be transferred to WCB. I would ask for your comments in this regard.

Hon. R.

Neufeld: Yes, the health and safety standards we have in the Ministry of

Energy and Mines are very well run. It's actually, I believe, partly funded by

industry through a tax on payroll tax. They have input into the process, both

labour and industry. We do have the safest mine activity, I believe, across

Canada. Do we not?

Interjection.

Hon. R.

Neufeld: We're tied with Ontario right now, so we're proud of that. We're

proud of the industry and the people who work in the industry and work hard to

make sure it's a safe workplace. With those health and safety standards, we know

we can move forward and actually get ahead of Ontario not just in that but in a

lot of other things.

The WCB —

I almost forgot. There is no intention for us to move all those regulations into

the Workers Compensation Board as we speak.

Harris: First of all, I appreciate the answers to a lot of the questions I

was going to ask. You've already answered them for some of the other members,

specifically in the area of what we're doing to get investment back into this

province.

But I want

to focus on one specific area: the Bowser basin. That's certainly a part of the

province that holds a lot of opportunity for quite a number of communities and

appears to be significantly rich in high mineralization, gas and oil

opportunities as well as — once we get access — some forest opportunities.

Can the

minister maybe tell me what we're doing specifically in terms of marketing that

region of the province and how you're going about that?

[1550]

Hon. R.

Neufeld: Yes, we have had some activity in the Bowser basin and at what we

call the interior basins, also just in the Cariboo. We've had some targeted

geoscience ongoing and have it ongoing now in the Bowser basin. In the Bowser

basin, as we speak, there are companies that are interested in the interior

basins' potential — Devon, a large oil and gas company, and another

one — so there is interest in those basins.

I've also

had an opportunity — or the ministry people did; I wasn't able to be there —

with some investors from China, of all places, that came to British Columbia to

talk about the energy industry. They pointed out some of the basins to them, and

they were quite astounded and, in fact, drew a circle with their fingers around

the Bowser basin and asked: "How much for that one?" They had

obviously come with a little bit of money they want to invest in Canada.

There is

significant interest in those basins. I've also met with numerous oil and gas

companies in relationship to the basins, and they have all expressed interest.

They're new basins that haven't been drilled to any extent, and so the targeted

geoscience work we want to do — and we'll have some more moving forward this

year — will help us to market those basins to the right people so that they'll

come in and invest.

Part of the

problem in doing it is because it is new, because there is no infrastructure.

When I say infrastructure, I'm talking more in relationship to the oil and gas

industry as to the pipelines and the plants and all those kinds of things that

would be needed. That's readily available in Alberta obviously, all over the

province and in northeastern B.C., so we have to look at ways we can actually

encourage the industry.

One of the

other ways we can encourage the industry is by reducing the royalty rate in

general in a certain area. It's not a subsidy, but it's an incentive for

industry to come in and do their work. We haven't done that, but we're actively

thinking about doing it so that we can get some interest into those areas. The

upfront costs to them to actually get something happening commercially would

involve a fair amount of investment.

We're

trying hard to make those things happen. I know that in the member's region, it

would be great if we could have some drilling and some mining take place in

those basins.

MacPhail: I'll continue on with coalbed methane, and I have questions, of

course, on offshore oil and gas, which I understand we have not got to yet. I'll

finish my series of questions on GSX as well, and I have a few questions on

Columbia Trust. Now, on coalbed methane, the minister has introduced

legislation, and I will be having a substantial number of questions at the

legislative level in terms of how his legislation is going to work, but the

whole issue around coalbed methane development is what I want to explore now.

understand the Minister of Energy and Mines will appear at a public meeting

tomorrow, Thursday, April 3, in Hudson's Hope. Certainly, there's been a news

release released by the concerned citizens of Hudson's Hope, which reads that

there is…. Let me just read from it:

"'There

is the perception that the meetings so far have been an attempt to put the

government and industry spin on coalbed methane development rather than an

attempt to seriously consider citizen and landowner concerns,' say the

concerned citizens of Hudson's Hope. The current thrust of the citizens' and

landowners' efforts is to push for a moratorium on any drilling until full,

detailed environmental and social impact studies can be carried out."

[1555]

They continue:

"So

far, despite continuous questioning and requests, the Ministry of Energy and

Mines and the OGC" — Oil

[ Page 5924 ]

and Gas Commission that would be — "have not been

able to provide such an examp le. The citizens and landowners,

while not opposed to all development, are demanding that a plan to do it right

be in place before startup. They assert that a moratorium is necessary to

allow the time for study and planning."

They then continue on to say, referring to the minister:

"His

recent open cabinet meeting presentation upset many residents, because it

included nothing about environmental and social concerns that surround coalbed

methane development wherever it has been done. According to Mr. Metzger"

— and Mr. Metzger is a member of the Hudson's Hope concerned citizens —

"'it was an orchestrated political performance designed to support the

government fast-track position. He will be called on to account for the

serious omissions and discrepancies.'"

Anyway,

the minister is going to attend that meeting tomorrow in Hudson's Hope. We

will get the update on…. I'm not to going to ask the minister to repeat what

answers he's giving there, but that's the citizens' concern.

Just to

carry on, there's an open letter from Larry Peterson, who's a resident of the

Peace River valley, dated March 18. It's to the Minister of Energy. It says:

"Dear Sir:

"In

recent weeks many of your constituents have become increasingly

aware of the potential for a massive coalbed methane drilling program

sponsored and encouraged by yourself as Minister of Energy and the

corresponding bureaucracy that promotes it as a very clean energy source for

the people of B.C. if it is done right, as you like to say."

I'm

not going to read the whole letter. It's actually a very good letter. He goes

on then to say:

"From

the extensive research done by some very concerned and dedicated people, it

has become abundantly clear that this type of drilling program can endanger

and have serious long-term consequences to the entire Peace River drainage

system and the precious aquifers, rivers and streams which are the lifeblood

of the entire region."

then goes on to say…. This is Larry Peterson of Peace River valley.

"We

have sadly learned from first-hand experiences of farmers and ranchers and

other residents of the Powder River basin in Wyoming and in Colorado, who have

for more than the past ten years had to deal with the tremendous impact that

coalbed methane drilling has had upon their aquifers, rivers, lakes and

streams. Their lifestyle has been forever altered, the social fabric torn —

the short-term gain derived by the state government for long-term pain when

the coalbed methane development was rushed in to provide funds to overcome the

state government deficit."

Mr.

Peterson goes on to say — sound familiar? — it was not done right:

"There,

as here, a few test holes were proposed here and there, and soon tens of

thousands of closely spaced wells were developed. When it was not done right,

they experienced the consequences. Once-pristine rivers and streams now bubble

with methane gas, salt water and heavy metal-laden runoff that kills cattle,

wildlife and fish. Vegetation dies and refuses to grow again. People's water

wells dry up or become contaminated to the point that they can light up their

kitchen tap with a match. Once valuable ranch and recreation land decreases in

value and in some cases is not even sellable."

I've

got one other letter to read into the record and then a series of questions

based on this. This letter is dated March 20 from Mrs. Terry Webster, who also

copied me on the letter:

"Dear Mr. Neufeld:

"My

husband and I are landowners in Hudson's Hope. Although our

subsurface rights have not yet been sold, we have been informed, thanks to our

own research and phone calls, that the rights are likely to be auctioned off

in April or May of this year.

"To

say that we are displeased would be the understatement of the

decade. We have spent most of our adult lives building this ranch, and just as

we are preparing to quit our jobs and farm on a full-time basis, coalbed

methane arrives and threatens to endanger our buffalo ranching operation and

our lifestyles in general.

[1600]

"The

Oil and Gas Commission continues to assure us that all drilling operation will

proceed in a safe fashion, but I am not reassured by their statements. The

March 17 issue of the Vancouver Sun criticized oil and gas drilling

firms as follows" — and she quotes from the Vancouver Sun

article. "'The oil and gas compliance review report says 38 to 44 percent

of drilling companies active in B.C.'s north failed to comply with sewage

disposal and water protection regulations according to audits in January

2002.'"

Her

letter then goes on:

"Further,

at the workshops offered by the Oil and Gas Commission on Saturday, March 8, I

listened to the presentation from the Water, Land and Air Protection

representative responsible for the draft guidelines for disposal of surface

water for coalbed methane. At first, I was greatly relieved to see stringent

guidelines. Then I heard that these guidelines are minimums and any company

that wishes to exceed them, up to ten times the listed amount, simply contacts

the Oil and Gas Commission. Of course, the Oil and Gas Commission won't have

the staff to deal with these issues, as seen by the

article referred to above.

"Why

is water protection given over to the Oil and Gas Commission

rather than to Water, Land and Air Protection, where it belongs? The answer,

of course, is to streamline the process for foreign and national oil

companies. Who stands to lose from this? The landowners, obviously."

Mrs.

Terry Webster then goes on to say:

"Water

disposal is just one issue. The extended flaring periods offered under the

experimental scheme are also of great concern to us as my husband has suffered

from asthma all his life. When you add that to 'wells at any density,' I can

see that air quality could become intolerable for us in our home.

"Next,

we add the constant disruption caused by the crews that will be drilling. I

have looked at the Alabama slides on the Internet that show typical well

sites, and I cannot imagine our ranch being converted from its present

pastoral beauty to that type of industry mess."

Those are

just some of the examples. Just before I start my questions, will the minister

be attending the Hudson's Hope meeting tomorrow?

Hon. R.

Neufeld: Yes, I will be. In fact, I will be going up to Fort St. John later

tonight, so she knows

[ Page 5925 ]

my whole itinerary. I will speak about the energy plan that we have in the

province at the Dawson Creek Chamber of Commerce. I'll be meeting with a number

of first nations over some other issues. I will have some meetings with the

public, some private meetings with some of the people from Hudson's Hope and

also a public meeting.

Before I

sit down, as far as public meetings go, I should maybe put on the record the

number of public meetings we've had in Hudson's Hope. In fact, June of last year

was the first one — talking to the folks at Hudson's Hope about the

development of petroleum and natural gas in their area, which is inclusive of

coalbed methane. We've had two public meetings in March that were attended by my

ministry, Water, Land and Air Protection and Sustainable Resource Management to

bring forward and actually try to answer the people's questions from Hudson's

Hope.

I can tell

you that I can understand why some of those people would be concerned after

listening to the environmental law society go through the province trying to

instil some fear into people. There have been mistakes made in the U.S.A in

development of coalbed methane. I don't defend that at all. That's the United

States of America.

We've had

our people to those basins to review what went wrong; why it went wrong. In

fact, at the ministry level we want to do it right also. We want to make sure

there isn't the impact on people — regardless of whether they live in Hudson's

Hope or on Vancouver Island, where there's been a well drilled; or in the East

Kootenays, where there have been about 16 wells drilled; or in the Tumbler Ridge

area, where there have been about 11 or 12 wells drilled for coalbed methane. We

don't want to see unnecessary impact on any of those people or landowners.

We've had

those meetings to bring forward the ministry's viewpoint and to listen to the

individuals who are concerned about coalbed methane development. I'm going there

to talk to them a little bit more about it and also about the benefits of

coalbed methane and the benefits that could happen in the community of Hudson's

Hope if we, in fact, move forward with this proposal.

[1605]

MacPhail: I have a series of questions that arise out of the government's

move forward on coalbed methane production. Just to put it in context for the

people who are listening, in order to get the methane out of the coalbeds, what

is done is that water pressure is applied. Basically, the methane is pushed out

along with the water, so there are water quality issues and water quantity

issues.

Well,

there's water production produced. I'm fine for the minister's staff to

correct.… I'm trying to put it in lay terms here. Feel free to stand up and

correct it. There's water production that arises out of coalbed methane

production, which has some concerns around that.

What water

quality issues and problems may arise with the produced water? I think the term

"produced water" is the technical term that arises out of the water

that results from coalbed methane production.

Hon. R.

Neufeld: The member is basically correct in the way she described it. The

difference is that water is pumped out to release the coalbed methane from the

coal seams. There is a lot of water that has to be pumped before the coalbed

methane will come to surface, and so there are obviously some issues around

disposal of water.

[J.

Weisbeck in the chair.]

Depending

on where you're at, depending on the geology, some of that water can actually be

potable. In fact, in some of the terrible basins in the U.S., some of the

communities are pretty happy, because they didn't have a source of water prior

to the drilling for coalbed methane, and now they have potable water. Some of

the water needs very little treatment, and it can be released to the environment

either by spraying it on farmland for irrigation purposes or by releasing it

into streams — those kind of things — if it's potable water.

All of that

has to be done under the regulation of the Oil and Gas Commission. You don't

just pump the water and put it wherever you want. There are those who infer that

that's what happens, but it's not in fact what happens. The Oil and Gas

Commission will permit the removal of the water, and they will test the water to

make sure it isn't toxic. If it is toxic, it has to be disposed of in a disposal

well, one that's approved of by the Oil and Gas Commission. That would be a well

that's spent — an old gas well or an oil well, where there are caverns 6,000

to 8,000 feet below surface, where you can actually pump that kind of water into

them. It's usually salt water — high in salt quantity.

It's not

very much different from the conventional natural gas industry and the oil

industry. There's an awful lot of water produced out of natural gas wells and

oil wells that is disposed of in the same way.

I'll go the

U.S. again. When they started drilling for coalbed methane, they obviously did

it a little differently than they do it today. As we move forward, we always

learn. The procedure in B.C. is that it's governed under the Petroleum and

Natural Gas Act and also under the Waste Management Act for the water and the

other things that might be involved with drilling the well.

They will

drill a well, usually about — how many feet, on average, in the Hudson's Hope

area? — 3,000 feet. They'll drill a well. It's not as large a drilling rig as

you would use in conventional natural gas or oil. They will then set casing —

that means steel tubing — from surface right down to the coalbed seam they

want to exploit. Then that casing will be cemented, not inside the casing but

outside the casing. It's cemented between the soil, the strata that it goes

through and the pipe.

Then there

is a smaller pipe put down the centre. What you do is pump the water up through

the larger casing, and through the smaller casing finally will come the coalbed

methane as you take all the water off. That seals it from the aquifers that you

would be using

[ Page 5926 ]

for domestic use — probably wells ranging from 100 feet deep, something to

that effect. They're sealed from those domestic water wells.

[1610]

Early on,

when they did it in the U.S., they didn't use casing. They didn't cement it.

They didn't do anything. They just drilled a well and pumped the water out.

Obviously, that was the wrong thing to do. That was 20 years ago. Times have

changed.

There are

places in the U.S. where, actually, communities are pretty happy about the

development of coalbed methane. We should also remember that coalbed methane is

cleaner than most natural gas. Most natural gas has high quantities of H2S,

poison gas. The coalbed methane does not have that in it and actually, with very

little treatment — in fact, no treatment in some cases — can be put right in

the pipeline for domestic or commercial use.

MacPhail: How will baseline water quality be determined?

Hon. R.

Neufeld: Baseline water quality from the well? Is that what the member is

asking?

Yes, that

will be done under regulations that are in place by Water, Land and Air

Protection, which the Oil and Gas Commission administers with someone from

Water, Land and Air Protection. That's been going on for some 40 years in

northeastern British Columbia in the drilling of conventional natural gas and

oil, so those people have the qualifications to determine what's potable water

and what's saline water.

MacPhail: Well, I am going to explore some of this in estimates for the

Ministry of Water, Land and Air Protection. It's one of these dilemmas that

British Columbians face, where the minister responsible for the economic

activity refers the public to the Ministry of Water, Land and Air Protection,

and then we find out it's actually been delegated to the Oil and Gas Commission.

understand in this concern that water quality protection is going to be the

responsibility of the Oil and Gas Commission. How will the regulations around

all of this be determined — by public consultation?

Hon. R.

Neufeld: The legislation and regulations are in place. Maybe I wasn't

explicit enough. We have wells in northeastern British Columbia that have been

producing water for 40 years that we've been disposing of, testing to find out

how you dispose of it and where you dispose of it. All those regulations are in

place. As I said, they've been around for a long time, and they're sufficient.

In fact, they're fairly stringent — probably more stringent than our

neighbours just east of us.

MacPhail: Yes, but I understand that compliance is not great by any stretch

of the imagination. The last…. Well, it may not be the last one — I'm not

sure — but the 2001 compliance audit conducted by the Oil and Gas Commission

had a fairly high non-compliance rate in this area. Is the minister aware of

that, and what's being done to improve it?

Hon. R.

Neufeld: The member has maybe not been informed correctly about that. There

were some water non-compliance issues that had nothing to do with wastewater or

produced water from wells. That had to do with working in the oil and gas

industry out in the muskeg, where water trucks — just give me a minute, and

I'll get it through — actually go to streams and load water to take to the

well, because you need water at a well to drill a well.

They did

something wrong in some cases. They pumped water out of streams that they

shouldn't have. They pumped water out of the stream to use in the drilling

process and actually affected some beaver houses. That's something that

shouldn't have happened, but it did happen, and those companies had to rectify

that.

MacPhail: Yes, I understand that, but thank you to the minister for putting

it on record. I understand the difference, but there is an issue of turning….

This is going to be almost self-regulation by the industry, and parts of the

industry have been shown to be, in other areas of resource extraction, in

non-compliance at a substantial level. The minister says it's not going to be

self-regulation. Perhaps he could put that explanation on record.

[1615]

Hon. R.

Neufeld: It's not self-regulation. There is a set of rules and regulations

that they have to live up to. They're fairly extensive as to the tests — how

many tests have to be made, how many gallons or litres or cubic metres of water

can be pumped into different wells, which wells it can be pumped into. Annual

reports and in fact monthly and probably, in some cases, daily reports have to

be made to the Oil and Gas Commission.

The Oil and

Gas Commission will monitor that, as they have in the past, and continue to

monitor it. I know they have just recently hired, I believe, another six

compliance officers at the Oil and Gas Commission to deal not specifically with

Hudson's Hope but with the industry as a whole, because as we move forward in

British Columbia, there's actually an interest in developing the oil and gas

industry in the province. It provides well-paying jobs, and there are people

that want to invest in the province. The Oil and Gas Commission, to respond to

that, had to beef up the number of people who work at the commission to be able

to do that compliance testing.

Introductions by Members

Johnston: I have the pleasure today to welcome to the gallery 80 grade 10

social studies students from the largest high school in Vancouver, Killarney

Secondary. I'm very delighted they have come here under the guidance of Ms.

Nicol, Mr. Koutsonikas, Miss

[ Page 5927 ]

Zogaris and Miss Fransblow. They're enjoying their day in Victoria. They've

had tours all around the city today and are now here to watch government in

action. Would the House please join me in welcoming this group of great kids.

Debate Continued

MacPhail: This government has been promoting coalbed methane extraction….

I guess it was this time last year we were debating this in the Legislature, and

more flexibility was given. Then the regulatory requirements were clarified, I

think, in October of last year. Now legislation is being introduced, but I'm not

discussing the legislation, Mr. Chair. What has been the increased activity in

the area of coalbed methane extraction since this government has been promoting

it for over a year?

Hon. R.

Neufeld: There are no commercial activities happening in British Columbia.

In fact, as I spoke earlier, I believe there are 16 wells that have been drilled

in southeastern British Columbia by a company called EnCana. That activity began

under the last administration, which you were a part of, that promoted the

extraction of coalbed methane. I believe at that time…. In fact, when I asked

questions about it when I was in opposition, the Minister of Energy and Mines

assured British Columbians that the Petroleum and Natural Gas Act would be

sufficient to regulate the coalbed methane industry. I concur with that. In

fact, it is too stringent in some areas.

We want to

move forward with being able to encourage people to drill in the province. In

the northeast we've had about 11 wells drilled. As we speak — that's an

interesting one — in the southeast the water, with some treatment, can be

dispersed into the streams by Water, Land and Air Protection. That's being

monitored. In the northeast it's a little bit more heavy saltwater, and they

haul the water from Tumbler Ridge all the way north of Fort St. John to a

preapproved disposal well — preapproved by the Oil and Gas Commission with

heavy compliance. Those kinds of things are happening as we speak in the

province, and there's interest in the Princeton area, as we speak, about

developing coalbed methane there also.

Maybe the

other

part I neglected to talk about earlier is the consultation process that

goes on prior to the drilling of coalbed methane and what happens in the Oil and

Gas Commission. This is a bit in response to the letters the member read into

the record. I appreciate that she did that.

[1620]

The

district of Hudson's Hope. I think there have been four land sales in the

district of Hudson's Hope dating back a number of years, 2½ years — four

different sales. The consultation that took place with the community, with the

district of Hudson's Hope, with the mayor and council varied anywhere from 14

weeks to 62 weeks with the council. Actually, in the consultation process

through the mineral titles branch, the community asked that some areas be

removed from the sale prior to the sale, and in fact, we complied with that. We

have worked closely with the community of Hudson's Hope on which parcels should

be put up for sale.

There's a

two-step process. You have to actually communicate and consult with the first

nations. That's a requirement, and we do that before the land is put up for

sale. We also communicate with the community that would be affected. In this

case, it happened to be Hudson's Hope. In other regions it could be the regional

district that you communicate with.

Those are

fairly lengthy consultations that go on — 62 weeks — before you actually

have a land sale. After that, that doesn't mean you can just go ahead. You still

have to have consultations again with first nations. That's done with the Oil

and Gas Commission and the proponent. You also have to have negotiations with

the communities that would be affected. When I spoke earlier about the meetings

in March — in fact, as far back as June of last year and into March of this

year — they are responding to those kinds of consultations. Then the proponent

has to have his or her own consultation with the communities and with first

nations.

What I'm

trying to say here is that there is an awful lot of communication with the

people that are affected in the area and with first nations. Once the proponent

has had those consultations, they may or may not be awarded a right to drill on

the land that they purchased the right to drill on. There is a pretty

significant process that has to be undertaken by the proponent, by the Oil and

Gas Commission and by the communities.

I should

also put on the record that during the 62-week consultation process with the

district of Hudson's Hope — the member read into the record that landowners

didn't know this was going to take place — the mayor and council were kind

enough to mail a letter to every landowner that was affected in the district of

Hudson's Hope, letting them know what was taking place, so they actually knew

that was happening. That was two years ago or a year and a half ago.

We think we

have done a pretty good job of consultation. As I said earlier, there are

obviously some fears out there. When people start going around the province

instilling fear in people about what happened someplace else or whatever, for

whatever reason they want to do that, it's certainly understandable why people

would want to have more information.

That's one

thing this ministry is all about and the Oil and Gas Commission is all about. We

have websites. We have everything on the website — the land sales, the areas,

where they're happening, when they're happening, all those kinds of things —

to try and consult with both aboriginal and non-aboriginal communities.

MacPhail: In the fine tradition of all previous Ministers of Energy that I

know, the minister is filibustering his own estimates. That may be the passion

he has for all of this. Certainly, previous Energy ministers

[ Page 5928 ]

that I've worked with filibustered their own estimates as well.

The

minister is quite correct. Nine experimental projects are underway, but they

were established as experimental projects. This government is going to get into

the business of coalbed methane extraction in a substantial way.

I wanted to

ask the minister…. I know that EnCana is working with Fording Coal, and of

course, they've arranged their own price cut on that. The government is now

going to become the middleman in those kinds of arrangements. What other

companies actually have expressed interest in coalbed methane extraction? As a

layperson, I know there's a huge untapped resource already available for

extraction in natural gas. What other companies have expressed interest?

[1625]

Hon. R.

Neufeld: There are quite a number of companies — EnCana, Anadarko,

Talisman, Fording Coal, now Teck Cominco — that have interest in developing

coalbed methane on their freehold land. There's Devon. There are quite a number

of companies that are very interested in the development of coalbed methane.

MacPhail: Well, I understand that there's a substantial reduction in the

royalty payments between natural gas and coalbed methane. I actually have the

details of…. I always feel the necessity to do this so that the public can

understand that royalty is a method of taxation the industry pays to the

government. The difference — paying less royalties for coalbed methane

production — is really a subsidy. In this particular case, there is a

substantial subsidy being offered to coalbed methane extraction companies from

those who might actually produce natural gas. Why is that?

Hon. R.

Neufeld: Yes, there is a difference between the royalty that would be paid

on coalbed methane as compared to conventional natural gas. There's also a time

frame that we had in the legislation that, because of the large upfront costs

before you can have a project commercialized — that means into production —

they have a royalty credit up until, I think, February 2004 of $50,000.

MacPhail: Why is there a substantial reduction in the royalties for coalbed

methane? Isn't that a subsidy?

Hon. R.

Neufeld: No it's not, because it's across the whole industry. There are

different royalty rates for different production of different oils.

The member

may not remember, but during her administration there was quite a huge reduction

in a field called the Hayfield for oil to actually encourage the development of

that oil in that region because of the cost of developing it. It's not uncommon

to do those kinds of things. It's not a subsidy; it's across the whole coalbed

methane industry.

The member

laughs, but as I said, under her administration they did a number of those kinds

of things also. Maybe it was funny then — I'm not exactly sure — but it was

to try and get some investment going in some of those areas.

There are

other things that you can do, also, to change the rate for natural gas in areas

that are high cost — maybe deep wells or maybe shale gas or anything like

that. You can actually encourage the development of it. It creates economic

activity in the province. It creates jobs — in fact, really good-paying jobs.

The member

may not have been here, but we talked about the amount of royalties that are

coming to the province. This year they're expected to be about $1.7 billion in

royalties from oil and gas. That all goes to pay for hospital care and for

schools and all those types of things. It's actually a good industry, and we

need and use those products every day in our daily lives.

MacPhail: I don't need a sales pitch. My point is this: this is a government

that said there would be no subsidies to industry. My government gave subsidies

to industry for the very reasons that this minister is now spewing off as his

own.

government gave subsidies, and this minister is standing up and saying:

"We're doing exactly the same thing." The answer is: you're right. The

minister is finally telling the truth. He's doing exactly the same thing. He's

giving subsidies to industry.

This is a

subsidy. It's a subsidy that spreads across the coalbed methane industry. It's

gas extraction. It's to promote the royalties that will be paid across the

coalbed methane industry at a lower rate than natural gas extraction. It walks

like a subsidy, smells like a subsidy and drills like a subsidy. It is a

subsidy.

[1630]

The

minister stands up and says: "Well, your government did it too. Maybe the

member didn't remember that." I do; I acknowledge it. It gave huge impetus

to the industry. In fact, thank God, in the 1990s there was such expansion of

the oil and gas industry because of targeted help to that industry directly.

Thank God, because we would be in a terrible economic situation today without

that expansion of the industry. It was targeted help from the government to the

industry. That's called a subsidy.

This

government is carrying on doing exactly the same thing, except that they say

they're not. In fact, they are. They're subsidizing the coalbed methane

extraction industry to the tune that the coalbed methane, in some circumstances,

will be paying only three-quarters of the royalties that conventional gas pays.

In some circumstances coalbed methane will only be paying half the royalties

that natural gas extraction pays. In some circumstances…. No, that's half too.

They're getting a subsidy by this government of anywhere from a half to a

quarter reduction in their royalties. That's a subsidy.

Hon. R.

Neufeld: It's not a subsidy when it's across the whole industry. There's a

significant difference. We

[ Page 5929 ]

just went through half an hour talking about coalbed methane extraction as

compared to conventional natural gas extraction. It's completely different. What

we have done is put a royalty process in place that will encourage the

development of coalbed methane across the province of British Columbia. We put

it across the whole industry.

When that

member was part of government, what they did was target different companies

doing the same work. That's different. That is pure subsidy to one company.

There is a huge difference in what we have done here, and the member may not

like it, and that's fine.

It's not a

subsidy as far as I'm concerned. She says it's a subsidy. Listen. What we ought

to do is get on with the business of creating the jobs in the province of

British Columbia, get on with creating wealth, actually make some money for the

province and put people to work so that we can continue to pay for health care

and education.

MacPhail: Well, thank God all of this wealth was created in the 1990s,

because it's the only thing that's keeping this government going now, by their

own admission. It's the only thing working. I just asked the minister to tell me

how, under his great government, coalbed methane extraction has expanded. Zero.

None. So, thank God for that awful decade of decline — that decade of decline

that greatly expanded resource extraction, oil and gas extraction. Thank God the

previous government actually did some experimental projects. This government's

achieved absolutely nothing.

The

minister tries to say: "No, it's a completely different industry. It's not

a subsidy." Boy, I'll tell you, "How many angels dance on the head of

a pin?" would be an interesting question to ask this minister. See how he

can dance his way out of that one.

The

Petroleum and Natural Gas Act regulates coalbed methane and natural gas because

they're like products. If the minister wants to change that, good. But until he

does that and goes against what the rest of the world actually defines as what

natural gas is, which includes coalbed methane extraction, it's a subsidy. The

reduction in the royalties is a subsidy — full and straight up.

I'm very

happy, actually, to use targeted tax relief for industries that do create jobs,

but it's hypocritical of this government. That would be nothing new, but to hide

their hypocrisy is pretty new. They take great comfort in their arrogant,

overwhelming majority to actually not even bother to hide their hypocrisy. In

this case, the minister is trying to hide it.

[1635]

Hon. R.

Neufeld: Again, if there was ever an arrogant government, it was the one

that just got booted out of the province of British Columbia and ended up with

two people in this House.

I will

again state for the record — and maybe the member may concur, and she may not

— that the royalty rate for coalbed methane is across the whole industry of

coalbed methane. That, in my view, is not a subsidy but is an incentive to get

the industry started, to get it working so that we can actually generate some

jobs and some activity in the province. I think that's good news for British

Columbia. I think we should look forward to that with a lot of joy. I think we

should look forward to an expanded mineral industry in the province and to

well-paying jobs and the taxes that that industry pays.

I'm really

happy to hear the member concur with me that the extraction of coalbed methane

is very important to the province. She thought it was important when she was in

government. She still thinks it's important to the province of British Columbia.

With that in mind, I think we should move forward.

MacPhail: On July 29, 2002, this minister released a news release saying:

"Fees Eliminated to Help Foster Oil and Gas Development." Fees

eliminated will be: "Pipeline plan approval, compressor or pump station

specifications approval, compressor or pump station annual inspection, farm tap

installation whether or not drawings are approved by the chief inspecting

engineer, issue of certificate under

section 2 of the Pipeline Act, Surveyor

General examination of well site plans."

Can the

minister update the Legislature on how this has been a benefit to the industry?

Hon. R.

Neufeld: Actually, again we're talking about the Oil and Gas Commission,

which is fully funded by the industry. The taxpayer of British Columbia does not

fund the Oil and Gas Commission. How it's funded is through fees from industry.

As I said

earlier, each well drilled costs so much money. Some of that's used for

consultation with first nations and operation of the business. The other portion

is given to first nations so they can build some capacity. The Oil and Gas

Commission was fully funded, in fact, in a surplus position. The small amount of

money that all those fees brought — and all the work that went with

maintaining them, with all the paperwork that goes with them — had nothing to

do with reducing how careful we are about the environment. It was just a way —

I guess, instituted maybe by the last government…. In their own way, they

thought they would be getting more money.

But we

don't get money from the Oil and Gas Commission. The Oil and Gas Commission is

fully funded internally by the industry, not by the people of British Columbia.

MacPhail: I'm getting a sense from the tone of the minister that he doesn't

like being asked questions. That was just a straight-up question. I'm not quite

sure why he has to get so antsy about it. I could actually try to do it in the

same way that the sheep do, which is praise him first about all the great work

he's doing, and maybe he'd be a little less petulant. I'm just collecting the

stuff, doing my job, Mr. Chair. So maybe he could just….

[ Page 5930 ]

What is the

update from the Oil and Gas Commission about the extra economic activity

generated by this?

Hon. R.

Neufeld: Again to the member, if she's talking about the same fees and the

reduction of those fees, it had nothing to do with encouraging the industry. It

had everything to do with uncomplicating a process that had, actually, no

bearing on what was happening at the Oil and Gas Commission. It is funded 100

percent by the industry.

The

industry fees that go into funding the Oil and Gas Commission were sufficient.

In fact, the Oil and Gas Commission has a surplus as we speak today. So there

was no need to do those kinds of small things. If there needs to be more money

going into the Oil and Gas Commission to operate it, there are simp