1984 Legislative Session: 1st Session, 33rd 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, FEBRUARY 8, 1984

Afternoon Sitting

[ Page

3151 ]

CONTENTS

Routine Proceedings

Oral Questions

Independent Logging Association. Mr. Howard –– 3151

Closing of Bare Point thermal generation plant. Mrs. Wallace –– 3152

Northeast coal. Mr. Howard –– 3152

School district assets. Mr. Reynolds –– 3153

Mr. Rose

Hospital user fees. Hon. Mr. Nielsen replies –– 3153

Tabling Documents –– 3154

Committee of Supply: Ministry of Energy, Mines and Petroleum Resources estimates.

(Hon. Mr. Rogers)

On vote 27: minister's office –– 3154

Hon. Mr. Rogers

Mr. Lockstead

Mr. Davis

Mrs. Wallace

Mr. Rose

Mr. Passarell

Committee of Supply: Ministry of Intergovernmental Relations estimates.

(Hon. Mr. Gardom)

On vote 56: minister's office –– 3166

Hon. Mr. Gardom

Mr. Howard

Mr. Cocke

Mr. Lockstead

Division

Tabling Documents –– 3170

Committee of Supply: Ministry of Universities, Science and Communications estimates. (Hon. Mr. McGeer)

On vote 85: minister's office –– 3170

Mr. Nicolson

Tabling Documents –– 3175

Appendix –– 3176

WEDNESDAY, FEBRUARY 8, 1984

The House met at 2:03 p.m.

Prayers.

HON. MR. GARDOM: Mr. Speaker, I know it is with profound

sadness that all members learned yesterday of the death of Mr. James

Sinclair — or Jimmy Sinclair, as he was certainly known by his many

friends in this province, in this country and, indeed, throughout the

world. Throughout his very distinguished and friendly career he

performed outstanding service on behalf of his country and his fellow

citizens. I know that he will be sorely missed, Mr. Speaker, and we

would greatly appreciate it if you would convey the expression of

sympathy of the House to all members of his family and certainly his

wife.

MR. HOWARD: Mr. Speaker, both personally and on behalf of Her

Majesty's Loyal Opposition, I want to associate myself very much with

the sentiments expressed by the government House Leader. I had the

opportunity of meeting Jimmy Sinclair when I was first elected to the

House of Commons, and had the opportunity of discussing with him at

that time many issues of interest to the fisheries industry on this

coast. I came to admire his abilities and determination to preserve the

fisheries of this nation. It is with sadness that we express these

thoughts in association with the government House Leader.

MR. REYNOLDS: I'd like to second the comments by the New

Democratic Party and the government. I'd also like to say that I had

the pleasure of meeting Jimmy Sinclair a number of times when I was in

Ottawa and travelling back and forth with him on the airplane. I know

my constituents — because I've had a chance to talk to a number of them

— would like it to be on record that they all would pass on to the

family the sympathies of all the people living in the constituency of

West Vancouver–Howe Sound, which he served so well over many years. We

would thank the rest of the House for their sympathies to the family.

MR. ROSE: I'd like today to introduce two former colleagues

from the Parliament of Canada, Lyle Kristiansen, MP for Kootenay West,

and Nelson Riis, MP for Kamloops-Shuswap, both members of the real

opposition.

HON. MRS. McCARTHY: Visiting us today from Delta, Mr. Speaker, as you know, is Mr. Ernie Bexley, publisher of the Delta Optimist ,

and with him is Mr. Tony Poje. On your behalf, Mr. Speaker, and on

behalf of all of us in the House, I would like to welcome these two

gentlemen. I'd ask the House to join me in that sincere welcome.

MR. NICOLSON: Also in the precincts today are Mayor Louis Maglio of

Nelson, Mayor Chuck Lakes of Trail and Mayor Audrey Moore of Castlegar, along

with aldermen Dennis Bannert, Ross Lake, John Neville and Bill Ramsden; from

the city of Nelson, Doug Ormond; area representative of the regional district,

Dave Pearce; members of the David Thompson University Centre Support Society,

Liz Wallach, Dorothy Gomez, and Fran Horan, also of the school board; Klaus

Offermann of the Labour Council; and Jack Roddis, Stephen Lauer and Bruce Meldrum.

Of course, we'll also be joined by Mr. Lyle Kristiansen in a meeting later

today. I wish the House would bid them welcome.

HON. MR. BENNETT: In the precincts today — hopefully in the

gallery — and well known to all members of this House, particularly the

federal member from Kamloops, is Bud Smith, who will be joining my

office as of April 1. I know that the member from Kamloops particularly

has had a lot of contact with him in the last few years. I hope the

House will welcome him.

MR. REYNOLDS: Mr. Speaker, a couple of my friends are in your

gallery, but before I introduce them I'd like to wish the two federal

members the best of luck in their deliberations on whether they should

be seeking the NDP leadership provincially, rather than lose their

seats in the next federal election.

I'd like to introduce Bruce and Lynne Potvin, from the northern part of my constituency, who are sitting in your gallery.

MR. SPEAKER: Hon. members, on your behalf the Chair will

undertake the necessary messages as suggested in the earlier part of

the question period.

Oral Questions

INDEPENDENT LOGGING ASSOCIATION

MR. HOWARD: I would like to direct a question to the Premier.

Inasmuch as the Minister of Forests (Hon. Mr. Waterland) during his

estimates engaged in insulting behaviour toward members of the British

Columbia Independent Logging Association, I wonder if he would say

whether he has agreed to meet representatives of the B.C. Independent

Logging Association both to discuss their concerns about forestry

matters in the province and to extend to them an apology on behalf of

the Minister of Forests.

MR. SPEAKER: The second part of the question is in order, and the first is not.

HON. MR. BENNETT: Thank you, Mr. Speaker, because I wouldn't

want to allow the member to infer that the Minister of Forests is not

on very good terms with most of the members of the Interior Logging

Association, which both he and I are. Yes, the Minister of Forests is

prepared to meet with any of the forest associations, including the

Interior Logging Association. It's a standing offer that after meeting

with the minister, he can bring them to my office, but I will not have

a meeting in lieu of the minister nor develop policy in isolation from

the minister. Also I understand these groups have been given an

opportunity to meet with the whole Social Credit caucus, which I

attended today but which unfortunately they were unable to attend at

the last moment.

MR. HOWARD: Perhaps the Premier was too busy formulating an answer to understand what my question was.

HON. MR. BENNETT: The answer is no.

[ Page 3152 ]

CLOSING OF BARE POINT

THERMAL GENERATION PLANT

MRS. WALLACE: I have a question for the Minister of Energy,

Mines and Petroleum Resources in connection with his responsibility for

B.C. Hydro. Chemainus is a community that's still reeling under the

blow of the MacMillan Bloedel mill closure. This morning members of the

Bare Point thermal generation plant were advised that this station is

closing permanently. Why has B.C. Hydro chosen this particular time to

make this announcement, when Chemainus is in such dire straits?

[2:15]

HON. MR. ROGERS: Mr. Speaker, I don't think that Hydro's

determination on how it can best manage its system is made on anything

other than the best management intentions in terms of electrical load

demand that they forecast and that they have to supply to the province.

I wasn't aware of that particular announcement this morning; I can get

some further details for the member and bring them back.

MRS. WALLACE: Mr. Speaker, the minister tells me he's not

aware of the situation. When he's getting those details, would he be

prepared to take two other items under consideration?

First of all, does Hydro have a prospective buyer for that very

valuable piece of property? It is an oil-tank farm with all the piping

and docking facilities in place. If so, is this closure influenced at

all by the possibility of getting a major chunk of cash from a

prospective buyer for that facility?

I don't think the minister is aware of the geography there. The end

of the point is not utilized at all by the power plant, the docking

facilities or the tank farm. Would the minister be prepared to find out

whether or not Hydro has considered donating it as a marine park

facility?

HON. MR. ROGERS: Mr. Speaker, I'm not aware of any proposal

for a disposal of that real estate. That item would have been brought

to the attention of the members of the board of Hydro. I attend all

board meetings, and that particular subject has not come forward. I

will get you the further information.

There is some machinery in other parts of the province that has been

offered for sale to other power utilities, but not on Vancouver Island,

and it doesn't involve any real estate that I know of.

NORTHEAST COAL

MR. HOWARD: Mr. Speaker, I have a question to the Minister of

Finance. Inasmuch as the respected investment dealer firm of Midland

Doherty has recently released a rather extensive report projecting

losses in the neighbourhood of $1 billion in the northeast coal project

over the next few years, I wonder if the minister, because of the

government's interest in this particular project, can say whether he

has examined that report. Does he have any comments to make about it?

HON. MR. CURTIS: No, I have not read the report. I expect

that it will be available to me within a matter of a day or two or

perhaps a little more. I do know, and can tell the House, that a number

of representatives of other firms in the country have already expressed

to me their surprise and, indeed, their disappointment with respect to

the apparent contents of this report. I do not place much credence in

the report, insofar as it as been relayed to me.

MR. HOWARD: Because government coffers are involved in this

particular project, has the minister made any projections of expected

income from the surcharge on the sale of coal, and can he tell us what

those projections are?

HON. MR. CURTIS: Mr. Speaker, I think much of the material which the member has asked for is already a matter of public record.

MR. HOWARD: It is a matter of public record, Mr. Speaker, and

so confusing and contradictory that I thought if I asked the minister

that simple question, we would get a truthful answer at this time.

Interjections.

MR. SPEAKER: Hon. member, I am sure the member was not

implying in his comment that there would be any other kind of answer

given. The Chair certainly would not be able to permit the remark to go

unchallenged.

MR. HOWARD: I need to follow previous comments of Mr. Speaker in which Mr. Speaker has said he never errs.

MR. SPEAKER: Order, please. Hon. member, the Chair, in what was hopefully a very easy....

MR. HOWARD: I don't find any disagreement with what you're saying, Mr. Speaker.

MR. SPEAKER: Thank you, hon. member.

MR. HOWARD: The Minister of Industry and Small Business

Development (Hon. Mr. Phillips) has admitted in the past that sizeable

losses will be experienced on the Tumbler Ridge branch line of the

railway, even if all the contracted coal shipments are met. I wonder if

the Minister of Finance, as another question, has made any provision to

increase the subsidy to B.C. Rail to help pay the $450 million debt

that exists, insofar as that Tumbler Ridge branch line is concerned.

HON. MR. CURTIS: Mr. Speaker, without in any way suggesting

to that member that indeed his premise is correct, if it is appropriate

for me to comment on the British Columbia Railway and other Crown

corporations, I shall be doing so when this House is ready for the

1984-85 budget address and accompanying documents.

MR. HOWARD: On a supplementary, Mr. Speaker, inasmuch as in

July of this year something in the neighbourhood of $45 million to $50

million will be required by B.C. Rail to pay the interest on the

borrowings that were made last July, can the minister tell us where he

is going to acquire that money? Is that money that was purloined from

Education, for argument's sake?

HON. MR. CURTIS: Mr. Speaker, use of words such as purloined does not deserve an answer in this House.

[ Page 3153 ]

SCHOOL DISTRICT ASSETS

MR. REYNOLDS: Mr. Speaker, I have a question for the Minister

of Education. There is a group forming a private school in West and

North Vancouver, and this week they've been turned down by the North

Vancouver School Board. The school board was offered $500,000 over the

next five years for the rental of a high school that has been closed

down for over two years. The North Vancouver School Board has turned

down this group of people who want to form a private school on this

rental. I would like to ask the Minister of Education if his department

has checked into this, in view of the fact that we get so many

complaints from the school boards that they are short of money from

this government. Can the minister enlighten this House as to why that

school board would turn down this group of citizens who want to form a

private school in West and North Vancouver?

HON. MR. HEINRICH: Mr. Speaker, I can't answer today as to

why the school district did turn it down. The member's question

involved North Vancouver. As I recall, the enrolment in North Vancouver

has declined since about 1976-77 by something in the order of 4,000 to

4,500 students. One of the big problems that we have in British

Columbia, because of the increased birth rate in some areas but

primarily the decline of enrolment in others, is surplus buildings. It

seems to me that under these times of restraint a school district would

look favourably on the opportunity to generate some revenue. I can't be

any more specific than that, Mr. Speaker, but I will make the

appropriate inquiries.

MR. REYNOLDS: Just one supplementary, Mr. Speaker. This same

group that now has over 250 students signed up to start school next

year will be approaching the West Vancouver School Board for the use of

the Glenmore Elementary School, which is also empty. Could the minister

assure this House that his department can contact all school boards in

this province and make sure that any excess space in classrooms be used

for people if there is going to be revenue generated, which helps all

the citizens of this province?

HON. MR. HEINRICH: Mr. Speaker, there is a policy in

existence now to encourage school boards to dispose of surplus

inventory, whether it involves land which has been acquired and held

vacant for a number of years — thought to be used, but as a result of

certain changes within the municipality, no longer required. Now the

only hedge that you place upon that particular point is that enrolments

vary from time to time. If you look over a period of ten years,

sometimes you'll find an increase, where in fact they have been

declining. But as far as policy is concerned, a number of documents

often come to the office in which we are authorizing disposition of

school assets. But I will take note of your question and follow through.

MR. REYNOLDS: Could the minister have his staff, in checking

out this matter, assure this House in the near future that these school

boards aren't just putting blockades in front of these private citizens

who want to open up private schools in this province because they're

unhappy with the school system that they're getting within their

communities, to assure these people that their children will get the

education that they want them to get?

MR. ROSE: It's a very interesting line of questions, Mr.

Speaker, and I have a supplementary. Would the minister assure the

House that if a particular school district were to dispose of some

property or lease some buildings to some private concern, whether it's

an education system competing with the public system or not, they would

receive the benefit of the extra $500,000 and not have it subtracted

from their budgets by the minister, such as has usually been the case?

HON. MR. HEINRICH: Mr. Speaker, there is a rather complicated

sharing formula, depending on the disposition of a capital asset. It

depends primarily on the distribution of costs incurred by both the

school district and the provincial government. As a matter of fact,

upon the disposition of a particular asset, a certain portion is

retained by the school district and some is put in a capital account,

which is not spent by the provincial government and is used for the

construction of schools when required. If the member would like to

refresh his memory, he might look at the Vancouver School District,

which in fact acquired land 50 to 75 years ago, paid for the land from

funds which they had generated from their taxpayers, not the provincial

government, and they are now sitting with a substantial term deposit as

a result of two dispositions which I know of — and it's their property.

MR. ROSE: Is the minister declaring to the public that the

Vancouver School Board, or any other school board, if it's sitting on

particular assets, can use that for the benefit of the students

currently in school, or are their budgets going to be limited by fiat

from the central government, as has been the case for this year and

will be the case for the next two years?

HON. MR. HEINRICH: Mr. Speaker, those funds are used in a

number of ways. Number one, to acquire properties, if necessary. Two,

under operating accounts, and they are used to acquire equipment

required in the school system. Thirdly, if the expenditures are not

required to be made, then they are put in the bank and retained. What

the member is asking for is disposition and moving those funds right

out and throwing them into the operating account so they are totally

disbursed. What are we going to save for a rainy day?

HON. MR. NIELSEN: Mr. Speaker, with leave, I'd like to respond to a question taken as notice yesterday.

MR. SPEAKER: Leave is not required, hon. member.

HOSPITAL USER FEES

HON. MR. NIELSEN: Yesterday the member for Burnaby North

(Mrs. Dailly) asked me a question. The question was: "Is he aware that

the Nanaimo General Hospital has been forced, as a result of Social

Credit government policy, to require all hospital patients to post a

$60 deposit on admission?" I took the question as notice and contacted

the administrator of the Nanaimo General Hospital, Mr. Gordon Frith. We

provided Mr. Frith with the verbatim question of the member for Burnaby

North and asked him for a response. Mr. Frith responded:

"The statement by the hon. Eileen Dailly is completely erroneous.

The policy of the hospital is to ask patients to make a deposit on admission

equivalent to the number of days which we estimate, in accordance with the admissions

diagnosis, that would be their

[ Page 3154 ]

length of stay in hospital. For example, if we estimate a patient

will be hospital for two days we ask for $17 deposit; for four days, $34; and

for seven days, $59.50.

"This is nothing new. It has been policy for this

hospital for some 30 years to ask for deposits on admission to cover

coinsurance. It was done even for the old Nanaimo Hospital. This is

good business practice and is done to hold down an accumulation of bad

debts.

"However, there is absolutely no refusal of a

patient's admission to the hospital because they cannot pay a deposit

for whatever reason. If the patient does not make a deposit, we have to

try to collect the money at the time of discharge. If the patient does

not have the money available at the time of discharge, then we have to

resort to normal collection procedures.

"The memo which Eileen Dailly is reported to have a

copy of was a suggestion being discussed to improve the collection

procedures by asking patients who cannot make a deposit on admission to

have the moneys brought to the hospital during their stay in the

hospital. However, this has not been implemented, and we still try to

collect the money at the time of discharge from those patients who do

not make a deposit on admission. In addition, if patients require a

semi-private or a private room, an additional deposit of $12.50, or

$25, respectively, is requested for their estimated length of stay.

"This policy of asking for deposits on admission has been in effect for at least 30 years."

[2:30]

Hon. Mr. Waterland tabled the annual report of the Ministry of Forests for the fiscal year ending March 31, 1983.

HON. MR. CHABOT: Yesterday during my estimates I made a

commitment to the member for North Vancouver–Seymour (Mr. Davis) that I

would reply to a written question, and I table the answer.

MRS. DAILLY: I wish permission to table the memo.

Leave granted.

Orders of the Day

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

ESTIMATES: MINISTRY OF ENERGY,

MINES AND PETROLEUM RESOURCES

On vote 27: minister's office, $173,868.

HON. MR. ROGERS: Thank you, Mr. Chairman. This is the first

opportunity that I have had in this House to discuss the estimates of

the Ministry of Energy, Mines and Petroleum Resources. This ministry

has a vital role in stimulating the resource-based economic activity

and in generating revenue for the province. It does it with a very

modest staff, who are highly competent and very professional. The year

1983 was not a good year for the mining and petroleum industries

because of the world market conditions. Several mines were forced to

close and others to operate at reduced production. The slump in oil and

gas exploration resulted in only 76 wells being drilled during 1983,

and gas exports for 1983 are running at less than half what they were

three years ago.

In the mining sector there is some ground for optimism. British

Columbia's mineral exploration registered a dramatic 152 percent

increase in 1983, with a record 106,000 claims being staked. There is

also increased activity in coal.

The recovery in the gas industry will take considerably longer. In

the meantime, my ministry has introduced new policies to help make the

province's natural gas more attractive. Despite the chaos in the world

energy markets, we have managed to make significant improvements. A

recent decision to permit the medium-term sale of surplus electricity

by the government has resulted in a sale of electricity in the sum of

just over $200 million to the city of Los Angeles by B.C. Hydro.

We are working with the federal government on federal-provincial

matters concerning the increased agreement for pricing of oil and

natural gas. In spite of the severe economic downturn, my ministry has

continued to operate and this year will return to the treasury $260

million in revenue. We are a small ministry. We have a very important

role to play in the government. I have enjoyed this ministry so far and

would be very pleased to respond to questions put forward by members of

the opposition.

MR. LOCKSTEAD: First of all, Mr. Chairman, and for the

benefit of the minister, I think the minister may be aware that this

particular portfolio is roughly divided between three of our caucus

members. During debate on these estimates at this time we expect to be

relatively short, because we will be getting into an expanded debate

when a new budgetary session resumes.

This is a rather new portfolio for me in terms of a critic's role,

and I hope the minister will bear with me as I try to get through some

of these issues that I want to talk about today.

Energy, Mines and Petroleum Resources — and I'm not telling the

minister anything that he doesn't know — really is a vital industry to

British Columbia, particularly the mining and petroleum in terms of

revenue to the province. Yet the industry receives scant media

attention. You have to turn to the financial pages to see the reports

coming in on mines and petroleum or what mine is making money or losing

money; it's the kind of thing that rarely makes the front page of the

newspapers unless there's a large spill somewhere, or that kind of

thing. A lot of times it's negative publicity. But it is an industry

which is extremely important to the well-being of the province of

British Columbia.

I have a question that I would like to ask the minister right now,

Mr. Chairman. I realize that there has been a change in ministers over

the last couple of years, but we haven't received an annual report

since 1979. We are debating the 1983 budget in 1984 — can you believe

that? — and we haven't received an annual report since 1979. The

minister is aware that

section 21 of the Ministry of Energy, Mines and

Petroleum Resources Act states that there should be an annual report.

I'm not making a federal issue of it, but I would like to ask the

minister if he has decided to bring in an annual report prior to debate

of estimates in the new session. We can get through this debate

because, as I said, we are debating moneys that have already been

spent, but is the minister

[ Page 3155 ]

considering bringing in an annual report so we have

something to work with before we proceed into debate of his estimates

during the course of the next session? I really would appreciate it if

that could be done. I did attempt to get some information out of the

1979 report, but it was not of much value. I got more information from

other reports than from Price Waterhouse.

I see the minister wants to reply, Mr. Chairman, so I'll take my seat for a minute.

HON. MR. ROGERS: Mr. Chairman, the member mentioned that the

oil and gas industry doesn't seem to get much media attention. I think

they like it that way. I think that's their choice. I would hope that

within the next month or two we are going to have some front-page news

from the oil and gas industry, but we'll wait and see what happens.

The member is quite correct that the last annual report filed by

this ministry was for 1979. However, I'm advised by my deputy that

within the next month — and certainly in time for this next go-around,

which I think will happen after the next budget speech — you will have

all the back reports that we are missing. We have filed a number of

technical reports in the interim.

MR. LOCKSTEAD: I appreciate the minister's answer. I didn't

raise the matter of media attention as a criticism, or anything of that

nature. What I was attempting to say was that although this particular

portfolio is so vital to the revenues and interests of the province,

the public is generally unaware of what is happening in those

particular agencies. It doesn't get a great deal of public attention. I

can tell that by looking at the press gallery — at the moment people

are not exactly falling out. We'll be lucky to get a line in the press

on this whole debate. But it's extremely important.

In spite of government cutbacks, the fact is that if we didn't have

revenues from the mining and petroleum industries through various

taxation policies, our health and education systems would suffer a

great deal more than they are at the present time.

In terms of my responsibilities as a member of the opposition

dealing with mines and petroleum resources, I really don't know where

to start, I guess we'll start with mining, if that's all right with the

minister.

As the minister said during the course of his opening remarks, the

mining industry in the province — beginning in 1981 really — is

suffering. We have, I understand — I'm sure the minister will correct

me if I'm wrong — approximately 9,000 fewer people actually employed in

the industry than we had in 1981. The reason given for this — I have

notes from the Mining Association of British Columbia — is declining

world markets and that kind of thing. A number of mines in the province

have closed. I know some mines have opened, but I'm excluding the two

coal mines which were raised briefly in question period, although they

are mentioned in the reports we get on mining activities in British

Columbia. If you exclude the potential employment taking place in those

mines — coal mines, not metal mines — the state of the mining industry

in British Columbia is not good. Exploration is down, and the minister

will admit that revenues from the industry are down. As I say,

unemployment rates within the industry are very high at the present

time — people who had previously worked in the industry.

I was wondering if the minister could bring us up to date at least

on the exploration rates. I understand there were very few licences

issued within the last year or so for exploration, with the exception

of some gold-mining properties coming on stream and exploration in that

regard. That seems to be about the only bright spot in the industry in

British Columbia today.

Perhaps it's premature, but it would be appreciated if the minister

could give us a bit of information as to the outlook for the mining

industry in British Columbia. From all the information I've tried to

plough through in this regard, it does look pretty bleak.

I'm not going to blame this minister for what I'm about to say, but

I'm certainly going to blame the government. Between 1972 and 1975, Mr.

Chairman — and I know you weren’t a member at the time — particularly

starting in 1974 and 1975, our government, which in my view was a good

government, took a great deal of flak from the then-opposition Social

Credit Party and the mining industry of British Columbia suggesting

that the collapse of the mining industry at that time — because there

was a decline in the mining industry starting in 1974 and which carried

over into 1975 — was solely due to a New Democratic Party government.

Of course, that was not correct. The situation then was much the same

as it is now. It is much, much, worse now than it was at that time, but

there was a decline starting in '74. One of the reasons for that

decline was, for example, that copper prices had reached the

unprecedented level of $1.38 per pound. It may have been $1.42, but I'm

just going from memory. The Japanese customers at that time had

stockpiled and dumped huge tonnage on the world market. I believe the

price of copper at one point plummeted to 42 cents per pound. Yet it

was a situation that the New Democratic Party government had no control

over, as the present Social Credit government has no control over world

markets today.

I could easily get up here and say the decline of the mining

industry and the deep recession in the industry in British Columbia is

the sole responsibility of Social Credit. I'm not talking about that

minister particularly; there have been a number of ministers since

1975. I could get up and make those wild allegations and charges, but

I'm not going to do that. I have the July 1983 Price, Waterhouse study.

I think it's the most recent. I know the minister has it. It has been

very valuable to me in attempting to familiarize myself with activities

in the industry and the state of the industry. I'm not going to quote

extensively from it, but the fact is that if you go through this report

chapter and verse, it is quite clear that world markets are the root

cause of the decline and the deep recession of the mining industry in

British Columbia.

[2:45]

I've always resented the fact, and I haven't raised that matter in the

House before.... While we were the government, people got up on this side

of the House, some of them standing right where I am at the moment, suggesting

— and some of the people in the industry were very bad in this regard in my

view — the whole problem was the result of an NDP government in British Columbia.

Such hogwash! Nonetheless, we won't get into that.

I didn't ask too many questions but made some general statements,

and before I go into the petroleum side of the minister's portfolio,

perhaps the minister would care to make a few remarks about the

metal-mining industry in British Columbia.

HON. MR. ROGERS: Mr. Member, the one thing you have to remember about the miners is that they are fiercely

[ Page 3156 ]

independent. They don't like anybody very much,

much less governments that impose royalties. I think it was the

imposition of the royalty that really angered the independent miners.

But getting back to mineral prices, copper is today approximately 67

cents a pound. Copper is our main mineral in British Columbia in terms

of the volume. The difficulty with copper is that half the copper known

to man right now is buried in the ground and belongs to the various

telephone companies. They no longer require that. They use fibre optics

and they use computers off of satellites, so the demand for copper has

gone down very substantially. The demand for copper in housing is

diminishing with the increased use of plastics. The demand for copper

in automobiles is diminishing with lighter wiring. One of the problems

with copper is that while we always recall what the Canadian dollar

is.... The Canadian dollar is, relatively speaking, pegged to the

American dollar, and the countries that are competing with us as copper

producers are usually in currencies that have been very highly

devalued. The cost of producing copper today in both Chile and Zambia

is 45 cents a pound. So both of them are quite happy with copper pegged

at around 67 cents; that represents a good profit for them. It's the

strength of the American dollar that has really hurt the copper

industry both in the U.S. and Canada. Several things could happen to

change that. One started to happen yesterday, with the American dollar

being knocked down a little bit on world currencies. But some of the

peso countries and some of the countries in Africa that have nothing

else as their basic commodity are not really concerned about how much

they produce, as long as they convert it to hard currency to pay for

petroleum and other things.

Exploration is down for some metals, but it is up to 106,000 claims

staked. From last year that's 152 percent. There is also some pickup in

placer mining staking.

Of the metals we have that are doing well, zinc is the one that is

doing the best. The world zinc price continues to move up and do quite

positively. Lead is fair, but it's so much pegged to automobile

production. Based on what Mr. Iacocca and some of the people in Detroit

have been doing, perhaps we will see more new automobiles being

produced. That's the majority of our lead market; it goes into

automobile batteries. The newer cars are lighter, they require smaller

batteries, less steel, less rubber and less of everything. That's

really very good in terms of the petroleum side of our ministry, but

not very good in terms of the lead side.

Molybdenum is also in very poor shape. That the various molybdenum

deposits around the province aren't being processed right now is

largely a result of the world steel industry having changed to cheaper

Soviet-supplied vanadium, which makes approximately the same quality of

steel. If moly had stayed at about four bucks a pound, we could easily

have seen the world's steel industries stick with it, but when it

started to go to around $9 a pound and the various molybdenum producers

got — how shall we say? — cheeky with the steel industry, the steel

industry changed to vanadium. The Soviets do control the majority of

the vanadium. But I think that will come back now, because the market

hasn't fluctuated too much.

On other things that we produce, asbestos remains in constant rather

than fluctuating demand, and we do also mine a substantial amount of

jade. It's not a big statistic in terms of our mining, but the export

of jade from the province continues to grow slowly. I think with the

visit of Premier Zhao and some of the other people of the People's

Republic of China, perhaps we can open up that market a little further.

There are substantial quantities which could go towards solving their

uses or their demand for it. That's a nice, very small industry which

allows people to get in.

I've often asked myself and asked members of the mining industry:

"What can we do to help?" There are certain things we can do, but by

and large the world prices for metals are effected outside this

province and not internally.

Our major lead-zinc mine is still Cominco in Kimberly. There are

other properties, however, north of Noatak in northwest Alaska. Cominco

has the world's largest lead-zinc deposits at a place called Red Dog,

which is about 60 miles from tidewater. The natives in that part of

Alaska, who own the property, by the name of the Nana Corp., have

chosen Cominco, because of their record in northern British Columbia

and also in the arctic, to operate their mine. A British Columbia

company with British Columbia expertise is going to end up opening up

an even larger mine in Alaska. Some of that material will come to

British Columbia for processing, and some will go to Japan. But that's

probably ten years off, if they can meet their environmental things.

If the recession continues to deepen, I see things getting tougher;

if it improves, as the indications are, I can see the copper market

starting to tack on a few cents. I'd like to see copper get up to

around $1 a pound; that would be a little bit more realistic for a

price, and that would certainly help some of our B.C. mines. But it's

only wishful thinking on my part to change the price of copper. I can

assure you that my statements in here won't affect what is read on the

ticker-tape tomorrow in terms of those prices.

aluminum, as you know, continues to maintain its very strong

position in the world market, with the energy-conservation efforts, as

a supplement for steel, and we do continue to maintain a very large

section of that market through Alcan's production in Kitimat.

MR. LOCKSTEAD: Mr. Chairman, I appreciate the minister's

response. I suppose we could spend the rest of the afternoon just based

on the information we do have — the facts and figures in mining. But I

think we should save that kind of debate until we get into the real

debate on estimates, hopefully later this spring.

AN HON. MEMBER: Monday.

AN HON. MEMBER: A month.

MR. LOCKSTEAD: A month? Well, maybe; I hope you're right. Excuse me, just a little cross-chatter here.

I'll turn briefly, if I may, to the petroleum side of the minister's

responsibility. Rather a general question: I wonder if the minister is

aware that the federal government intends to table three pieces of

energy legislation in the near future. One bill will formalize the

Canada–Nova Scotia offshore agreement of 1982; a second will alter the

constraints placed on the Canadian ownership account to which accrue

taxpayers' dollars for takeovers in the oil and gas industry to allow

the government to use those funds for other purposes; a third will

probably alter the wording of proposed offshore exploration agreements

to reduce the liability for farmed-in oil companies. Because these

measures are imminent, perhaps the minister would care to comment if he

can on them.

I have to admit I don't know a great deal about this, but I understand there has been a moratorium in effect since 1972

[ Page 3157 ]

on offshore drilling and exploration. Both the

federal and provincial governments have separate moratoriums, as far as

I know, and apparently the federal government renews that moratorium

each year through order-in-council. What I'm getting at is the recent

report — which I don't seem to have in front of me here — indicating

the possibility that there may be a 15-times greater volume of gas and

oil off the west coast of British Columbia than previously indicated.

How they arrive at that is beyond me, but that's what they get paid to

find out. What I'd like to know is: is the provincial government

considering, and are discussions going on, for example, with the

federal government on the lifting of that moratorium to allow gas and

oil exploration off the west coast of Vancouver Island, Hecate Strait,

the south end of the Queen Charlottes and off the Queen Charlottes?

It's of some interest: some people are for it and some people are

against it, and you'll recall the environmental type of outcry we had

and the court case, the jurisdictional battle with the federal

government over who owns what, I do believe British Columbia now has

jurisdiction over the inland waters between Vancouver Island and the

mainland — the bottom. But anything above the bottom, even an inch off

the bottom, is federal in terms of fish and all kinds of things like

this. I'm not sure that we want to get into that debate here, but what

I'm asking basically is: is the moratorium going to be lifted? These

companies which still own those leases have a very strong lobby and

have certainly been discussing with the federal and provincial

governments the possibility of lifting the moratorium so that perhaps

drilling can proceed. What kinds of studies have been done in this

regard? Perhaps, with that, before I get into domestic pricing of

natural gas, the minister would care to respond.

HON. MR. ROGERS: I am aware of the three pieces of

legislation that are coming down. Of course, I'm not privy to the

information itself, and it's kind of difficult to comment on it. I

don't think it is specifically going to affect British Columbia,

because those three pieces of legislation are designed to look after

the east coast of Canada.

I'd like to talk to you about the moratorium, because the decision

on whether drilling is to be permitted between the Queen Charlotte

Islands and the mainland — essentially between Cape Scott and Cape St.

James — is in the supreme court right now. I'm advised that the

decision is imminent, and we've been advised that the decision is

imminent for some time, but until such time as the supreme court

determines whether or not the land inland of the Queen Charlotte

Islands, approximately that line between Cape Scott and Cape St.

James.... Until such time as that determination comes forward, we both

have moratoriums in place and no one wants to drill.

There are two companies that show tremendous interest in drilling

there, Petro-Canada and Chevron. Chevron has the expertise — if you

acknowledge that they have expertise in that field — and they would

like to move on it. The one thing we were able to agree on, Mr. Member,

is that when this moratorium is raised and when the decision does come

down from the supreme court, the first thing anyone will want will be

environmental hearings. We did agree that those environmental hearings

under any circumstances, regardless of who owns it, will be both

federal and provincial in nature. So with the concurrence of the

federal ministries involved under the Environment Management Act, my

colleague the Minister of Environment (Hon. Mr. Brummet) and federal

people are in the process of setting up and will be entering into

public hearings on this very subject. Until such time as that is

done.... Even if the court case did come down tomorrow, the first thing

we'd be asked to do is do environmental hearings. So I guess we're

planning a little bit ahead, assuming the court will make some

decision. That answers your questions.

[3:00]

MR. LOCKSTEAD: Yes, that more or less answers my questions in that regard, so I will continue to a couple other items.

I know that a number of Utilities Commission hearings on the

proposed natural gas line to Vancouver Island have taken place under

the chairmanship of Miss Marie Taylor. I might add that we very much

appreciated the visit of the commission and Miss Taylor to Powell

River. The commission sat for a whole week. The meetings were very well

attended. A number of briefs were presented for and against, and I know

they will be considered. We are very much appreciative that we had the

opportunity to have had an input at the local level to the Utilities

Commission. I am concerned that the timetable for the recommendations

of the commission has been set back again and again. I guess we've been

talking about this since 1972, but certainly over the last two years

we've been told that we would have a report a year ago, then in six

months, then by December, and now it's April.... My colleague says it

will be in after the next election. I doubt it. It will be another

election issue for the fifth of sixth time in my career. But we shall

see.

I do have a question. I know I can't ask questions about the

activities of the Utilities Commission, because they haven't tabled a

report. Nothing will happen until that report is tabled. I am familiar

with the remarks of the government and specifically the minister in

regard to the proposed natural gas line. It is of vital importance to

the area of Powell River because of the cost-added benefits of proposed

fertilizer plants and that kind of thing. Particularly during the

course of the last electoral campaign, we received different figures

from different people. One of the reports — I don't happen to have it

in front of me — indicated that about $450 million of federal

government subsidy would be required even if the recommendation of the

Utilities Commission was very favourable, and that energy would be

required on Vancouver Island, and that a $450 million subsidy from the

federal government would be required or the line would not proceed. The

federal government has made no clear commitment, as far as I am aware.

Perhaps one of my questions to the minister is: what kind of a

commitment do we have from the federal government in terms of a

subsidy? As recently as last week a source of mine in Ottawa suggested

that even if the federal government and the federal Minister of Energy

make a clear commitment in regard to a subsidy for the proposed natural

gas line, the top figure would be $250 million. So perhaps I'm asking

the minister what kind of liaison and discussions have gone on with the

federal government and the federal minister. I'm not clear on the

matter. I know sometimes things are said in election campaigns. People

get carried away. But there are a lot of inconsistencies and different

types of information coming through in this regard.

If I could continue a bit, perhaps I won't have to take up a great

deal more time of the House. I have some notes on the increased

domestic price of natural gas. It would appear from our calculations,

based on the reports from the ministry, that

[ Page 3158 ]

it will cost the residential consumer an average of

$35 a year more for the use of that particular resource; further, while

the federal government reduced its federal tax on that resource to

industrial use in British Columbia, the provincial government took up

the slack and intends to gain approximately $50 million by not reducing

the tax in conjunction....

Interjection.

MR. LOCKSTEAD: Twelve million? I never was very good at

arithmetic. Still, that saving was not passed on to the users of the

resource in British Columbia. Perhaps the minister would care to make a

comment.

The netbacks to gas producers is to be increased to 80 percent of

the Alberta level, according to the Govier report, and the wholesale

price of gas is to be increased from 50 percent to 65 percent of the

oil price by 1990. The retail price for consumers will jump from $4.49

in 1983 to $8.09 in 1990, according to ministry estimates. I'm asking

the minister about the impact of these steep increases on residential

consumers and the industry. The minister is very much aware that the

Council of Forest Industries has criticized these projections and

proposals, which may or may not be policy recommendations of the

government. The minister may care to comment on that aspect of the

increase in the price of the resource to the domestic and industrial

user in British Columbia.

I do have another concern, Mr. Chairman, based on these various

reports. I want to tell you that because of not having been involved in

this critic's role that long, ploughing through these horrendous

reports.... I don't know if they confuse you, Mr. Minister, but they

certainly do confuse me. It is very difficult to come up with precise

figures or a policy that may or may not be.... I get the impression,

however, that the government is not going to do away with the British

Columbia Petroleum Corporation. I think they would like to in a way,

but it is a good source of revenue for the province. I don't think the

government can afford to do away with the B.C. Petroleum Corporation at

this point. But it does seem to me that the policy announced by the

ministry six or seven months ago — I think we were in session last

summer when this policy came down — will undermine the effectiveness

and functions of the British Columbia Petroleum Corporation. We don't

have details. Will the British Columbia Petroleum Corporation be

allowed to compete in the policies as announced by the minister in

regard to competing for the resource? I may not have put that very

well. I don't know if the minister understands what I'm saying or not.

HON. MR. ROGERS: Yes.

MR. LOCKSTEAD: I'm not sure I do, quite frankly.

HON. MR. ROGERS: I get the question.

MR. LOCKSTEAD: The minister says he understands.

I'm not going to bore the House with all these pages of figures —

the price of oil and natural gas per thousand cubic feet and all of

those things. I really don't think that's necessary, Mr. Chairman, so

I'll take my place and perhaps the minister would respond.

HON. MR. ROGERS: Vancouver Island natural gas pipeline. I had

a discussion with the chairman last week just to get an idea of how

much longer she felt the hearings would take, and she felt another four

to six weeks. They are volume related delays. If you recall how much

information was put forward in Powell River, you will recall that

perhaps there was more information tabled than people had expected. My

gathering of it is that whichever route is chosen, Powell River is

going to end up being a beneficiary in both ways. It seems to me that

they have somehow finessed that.

You asked about the shortfall of money for the Vancouver Island

pipeline. When the Abercrombie report was tabled, it did say that there

was a net benefit to the province of about $700 million, if everything

was taken into consideration. It also said there is a shortfall of

about $450 million that has to be met. In 1980 when the federal

government released their national energy program, they committed to do

this as part of getting Canada onto Canadian fuel. If one wonders

whether they can spend that much money in British Columbia, they have

already spent over half a billion dollars in the province of Quebec on

the Trans-Quebec and Maritime pipeline — coincidentally into the riding

of the Minister of Energy, Mines and Resources. Those coincidences

happen in Quebec, and we run a different standard here. But if it's

good for the goose, it's good for the gander. If this is one country

and we are trying to be one country not dependent on one fuel source, I

see no reason why the federal government shouldn't live up to their

commitment to do that.

The other thing you asked about is the Govier report and some of the

adaptations of that and the fact that the federal government has

abandoned the NGGLT. The reason for that is quite simple: they have a

commitment to keep gas at the Toronto city gate at 65 percent of the

price of oil. The trouble is that the price of oil is going down and

the cost of gas is going up, and they had to abandon that area of

taxation that they had jumped into. Without changing the retail or the

wholesale price of gas to the consumer, we picked up that tax and

passed it along to the producers, who are very beleaguered and have

been producing gas in British Columbia at much less than they get for

it in Alberta and, secondly, to the Ministry of Finance, which needs

the funding. The people in the lower mainland, for example, pay

approximately 55 percent of the price of oil for their natural gas,

which compares, for example, with Toronto at between 80 and 85 percent

of the price of oil. So while I don't deny for one minute that we have

been occupying an abandoned federal tax and not passing that one on,

the moneys did go to the producer, who was not getting his fair share,

and to the Treasury Board.

In fact, for the first time, domestic gas sales in the province —

sold by BCPC, by the way — are not being subsidized against the

American export price. Alberta has always had a subsidy. Their export

volumes are dropping very substantially, and they now face pretty

drastic increases at some point along the line. Unless they want to dip

into that piggy bank, they have to come up with a subsidy for the gas

domestically. But they have a different standard. We're trying to get

65 percent of the price of oil for natural gas, which prices it

competitively, well below oil, and makes a viable return for the

industry. It's important we have a healthy gas industry. We had four

wells drilled last year. We should be looking at about 80 or 90 wells

drilled. The way you do that is to make it attractive for them to do it.

The Petroleum Corporation has 19 employees. Occasionally those 19

can't believe how much attention is paid to them, to a company that

small. It will have a role which is yet

[ Page 3159 ]

to be determined, because we've only tabled the

Govier report and haven't enunciated all the decisions we have.

Regardless of what happened to the Govier recommendations, BCPC will be

with us for a long time to come, just administering the contracts they

have. There are arguments pro and con as to what the future of the

corporation will be, its role in marketing both shut-in and regular

gas, and the expertise that it has. I suspect that you'll see the

Petroleum Corporation around for a good deal of time to come. For sure

it'll be around for at least a dozen years just looking after the

contracts it has. So the rest of the determination has yet to be made,

and we're still looking for input from the industry.

[3:15]

MR. LOCKSTEAD: All right. Well, I guess that's good news, but we shall see.

I have one or two short questions, Mr. Chairman — at this point,

anyway. Our information seems to indicate that the export price for gas

to the United States, while the current price is $4.40 per thousand

cubic feet, with an incentive rate of $3.40 per thousand cubic feet now

allowed on incremental sales.... We seem to think in our party at this

point — and you can correct me if I'm wrong, but the information I have

here is that the government and the oil industry are pressing for

further cuts.... Is it correct that the price of natural gas to the

United States is controlled by our federal government?

[Mr. Ree in the chair.]

I have one question relating to Cheekye-Dunsmuir. I know we've been

through this, Mr. Minister, you and I, on many levels and in different

portfolios for quite a number of years. But I mention again, basically

in passing and just to refresh your memory, that we were told that that

particular transmission line, when it was first made public, would be

constructed, would cost the taxpayers — i.e., the people who use B.C.

Hydro, and we're all taxpayers — about $350 million to construct. The

figure then went up sometime later — through a memo that somehow found

its way into our hands — to $700 million. But the memo said — this was

an internal Hydro document by senior management people — not to release

that figure, because they didn't want to upset the public. A question I

posed, which you were good enough to answer on the order paper last

year.... The anticipated final cost of that particular construction

job, the Cheekeye-Dunsmuir transmission line, went up to $800 million,

and that was it. But the fact is, Mr. Minister — and I wasn't being a

wild-eyed radical making wild allegations.... I still maintain that the

final cost, when the accounts are finally in, which won't be this year

but will be next year in the public accounts — I hope — will be in

excess of $1 billion, if all of the factors are taken into

consideration. I'm not making a big issue of it at this point. We've

made an issue of it before. We predicted the results of the costs of a

line that may not have been required. But the line is in place, it is

transmitting the power, and so be it — with the exception that it may

well have been a bad policy decision in another way. Since we have an

excess of natural gas in British Columbia today, it would have been

better for the domestic user and industry to get that pipeline to

Vancouver Island and use that cleaner, cheaper resource, rather than

using the excess power we now have in British Columbia. What if? I

don't know why I'm talking about all this, because it's a fait

accompli. The only reason I mention it, I guess, Mr. Chairman, is that

had the government used some foresight and constructed that natural gas

line, the expenditure of what I'm still maintaining will be $1 billion

of taxpayers' money may not have been necessary, and for starters we

could have saved that $1 billion. But the fact that the

Cheekye-Dunsmuir transmission line is now in place and operating

realistically reduces the need for the natural gas line to Vancouver

Island, and that's probably the reason I mentioned it.

MR. DAVIS: Mr. Chairman, I'd like to say a few words about

gas for Vancouver Island. My essential purpose in getting up, however,

is to request some assurance from the minister that he'll keep an open

mind about the possibility, indeed the practicality, of barging natural

gas south from Prince Rupert, should a major pipeline be built to

Prince Rupert for the export of liquefied natural gas. There is a

supposition, certainly in the remarks of the member for Mackenzie (Mr.

Lockstead), and perhaps also in the remarks of the minister, that

either the federal government or the provincial government, or both,

are so well-heeled financially that they will happily put up half a

billion dollars or more for a pipeline to Vancouver Island.

I assume that the provincial government won't move unless the

federal government puts up a large sum. The rationalization is that

because the federal government, foolishly or otherwise, has put large

sums of money into gas pipeline extension to Quebec, it's now British

Columbia's turn, and that two wrongs will make a right. I know the

federal government has made some loose commitments; indeed, they

sounded quite firm a few years ago when they were included in

statements of the Ministers of Finance at budget time.

The situation we face on Vancouver Island is that we have a good

supply of hog fuel. In other words, we have wood in a form that's

highly usable as a source of energy. Our principal industries, the

pulp-and-paper mills, are well supplied with hog fuel. Therefore they

will not be substantial users of natural gas, unless the gas is priced

at a ridiculously low level. Secondly, we have just completed a

close-to-one-billion-dollar power line to Vancouver Island, and knowing

that it was well launched in that project, B.C. Hydro has been less

than enthusiastic about being a party to the construction of a gas line

to Vancouver Island for some years. So Vancouver Island, in one sense,

is well, or at least adequately, supplied with energy. The price of

offshore oil is tending to come down, and I have to wonder about

several of the reports which were recently prepared for the government.

I know they were based on a projection of rising oil prices, not

falling oil prices, and I wonder, if current oil price projections were

used, whether the pipeline to Vancouver Island would be seen to be of

any kind of benefit at all. The minister mentioned $750 million, and I

assume that benefit is spread out over 25, 30 or 50 years; I know it is

based on an assumption of much higher oil prices than now seem to be in

prospect. I wonder, first, about the economics of the pipeline, and

secondly, I wonder whether the federal government will in fact honour a

commitment, and whether a future Conservative government in Ottawa

would honour any such commitment. I have to look cynically at the

so-called economics of the project.

A much more practical proposition, again assuming there was an

adequate gas supply at tidewater in Prince Rupert, would be to barge

natural gas down the coast. Unlike oil, natural gas evaporates if there

are any spills. It's not a pollutant the way oil is, so it doesn't

present anything like the same

[ Page 3160 ]

kind of environmental hazard that oil does. The

amounts involved would be modest, at least in the early years because

they would really only be required for the distribution systems in the

principal centres of population on, Vancouver Island — residential and

commercial loads, which would be contested by B.C. Hydro because they

have a surplus power capacity serving the Island. I would think a

careful economic analysis of the situation would say: wait and see

whether we're going to have a major pipeline to Prince Rupert, whether

in fact there's going to be a major LNG export project operating there,

and if this happens, whether the economics of barging gas down to

Vancouver Island are attractive. Certainly in the short run they are,

and that is certainly what the private sector would do if they were

faced with the challenge of supplying natural gas to Vancouver Island.

Mr. Chairman, I won't say that the current hearings before the B.C.

Utilities Commission are a waste of time — I know that many of those

who have made submissions think they are — but I would like to think

that while the commission has been precluded by government fiat from

looking at barging gas down from Prince Rupert, the ministry will keep

an open mind on the subject, because that really is the economical

thing to do.

HON. MR. ROGERS: Mr. Member, on the subject of barging

compressed or liquid natural gas from Prince Rupert, we called for

proposals and none have come have forward so far; in fact, none have

come forward during the public hearing phase. If anyone were interested

in doing it in the private sector, we would still entertain that at the

public hearing presently going on.

Interjection.

HON. MR. ROGERS: The member retorts that they are

specifically excluded. They are not specifically included. That's the

information I have, and I'll check that for you, if you like.

I would just like to talk about the Vancouver Island pipeline,

because in the Abercrombie report Robin Abercrombie does point out that

there are net benefits to both the province and the federal government,

if they were to go ahead, which is not the case in Quebec and has not

been the case in the Trans-Quebec and Maritime pipeline. So there is

some justification for it. Also, when we made calculations on the

Vancouver Island gas pipeline, they were based not on supplanting hog

fuel but on supplanting imported residual fuel oil that comes from

California — which, by the way, gets a subsidy from the federal

government because it's imported oil. It's really an industrial waste

product in California, and it's brought here by barge. That's what the

natural gas calculations were based upon, and not on supplanting hog

fuel. At today's oil price, which will not be with us forever, it is

still economical — and both federal and provincial officials agree to

continue with the natural gas pipeline.

We do not think that the world energy price will stay the same as it

is, and I think one of the overriding considerations for giving this

pipeline serious consideration is that this is a fuel which we, as

Canadians, control. We certainly don't control our internal supplies of

oil, nor do we have security in that particular regard. So if the

federal government's national energy program is to mean anything, it

can easily economically justify the completion of their portion of this

pipeline.

The member for Mackenzie (Mr. Lockstead) asked the question about

gas at $4.40, and at $3.40 we are not making any incremental sales.

None of the customers on the American side of the line are interested

in purchasing gas at the incremental level of $3.40 per MCF, so those

sales aren't continuing. The existing one-border price for Canada is

based on the Duncan-Lalonde formula — it's between Secretary Duncan and

the former Energy minister, Mr. Lalonde — based on the 65 percent of

Chicago city gate price for oil. It is unrealistic. At the present time

the federal government, British Columbia and Alberta are looking at

consideration of whether that thing should be changed. No decision has

been made.

I did table the answer on your Cheekye-Dunsmuir question. However,

you're quite right, and I think probably $800 million will even be shy.

I recall hearing numbers in the 330 or 340 range, and being a bit from

Missouri on this.... I recall you and I discussing it when I held

another portfolio. One of the things to note, though, is that the

second 500 kV line was added to that circuit from a safety point of

view in case there is a break in the line — and sometimes they are by

nature and sometimes they are not by nature, as we all know. I think

you also should remember that that's the first powerline completed from

the mainland to Vancouver Island since 1956, and I am convinced that

the circuit did need the additional load. Whether the future increased

demand is there that was there at the time the decision was made to

build that line.... I'm not sure it will materialize quite as quickly

as we once thought it would.

[3:30]

MRS. WALLACE: Mr. Chairman, I want to deal with the minister

in line with his responsibilities for B.C. Hydro. One of the first

things I would like to discuss is the question of intervener funding.

The minister and I have discussed this previously, and he has led me to

believe that there will be no intervener funding for presentations in

the Alcan-Kemano situation. I don't think we resolved any intervener

funding in relation to the hearings relative to the export of power by

B.C. Hydro. I'm wondering where the minister gets his authority. Under

the Utilities Commission's terms of reference it states quite

specifically that the costs incidental to proceedings before the

commission are in the discretion of the commission, and it may order by

whom and to whom and in what amount the costs are to be paid. How is

the minister able to come up with the statement that there will be no

funding for interveners, when this is really not his prerogative? As I

read the legislation, that is the prerogative of the Utilities

Commission, not of the minister.

HON. MR. ROGERS: The decision on intervener funding is a

policy taken by cabinet. We have decided that this will be the

situation. There may be an amendment to the Utilities Commission Act to

confirm it. However, it remains as government policy that interveners

may find their own funding from whatever sources they want; it will not

come from the government. The commission may, under

section 3,

determine to do it. It's discretionary, and they've said no.

MRS. WALLACE: Yes, it's discretionary, but under

section 133,

not

section 3. I am somewhat surprised that the minister saw fit, as of

August 10 last year, to write to the chairman of the Utilities

Commission, in effect telling him to break the law — not to abide by

the act, but to abide by

[ Page 3161 ]

cabinet decision, which has a different policy. If

the minister intends to amend legislation in the future, that's fine;

it's up to him and cabinet. But I do object to his intimidating the

commission, in effect, by saying that this is government policy,

they've talked about this and they want to discuss it further — telling

them that he's going to amend the legislation, incidentally, which

hasn't seen the light of day yet — then standing up in the House and

saying: "No, there will be no funding for interveners," when the

legislation leaves that up to the Utilities Commission. It is not in

the hands of the minister. If he's going to change government policy,

he had better change the legislation and not try to do it outside the

law, which seems to be what is happening in this instance.

While I'm talking about intervener funding, I would certainly urge

the minister to change his thinking on it. Look at the results of the

Site C hearing, where intervener funding was made available at the

discretion of the commission. If it hadn't been for the briefs

presented by people who could afford to come due to intervener funding,

we would have been hooked into a long-term, high-cost debt for power

that we do not need. The commission has indicated that those

presentations had a great influence on their decision not to allow that

Site C dam to go ahead. I would urge the minister to reconsider. We

have the same situation coming up at Alcan. We have the same situation

coming up much sooner relative to firm export of power, where some

people who are on the other side want that funding for the other side

to present so that there is a fair balance in the information that the

commission has. They don't want a kangaroo court; they want it to be a

fair hearing. I would urge the minister to reconsider his decision, and

the cabinet's decision, to change the law, and to change it before the

fact to prevent those funds being made available to interveners at

public hearings of this nature.

I have some real concerns about this. A great number of people have

done a tremendous amount of research and would like to do more, and

they had some good ideas. You talk about public consultation, that you

want consultation. If the government really wants that, it will not cut

off the opportunity to do it. That funding has to be there if you're

going to have meaningful consultation, because it is impossible for

small independent organizations and associations — even individuals —

to do the research necessary to prepare the material required to make a

formal presentation to a semi judicial hearing. It's very difficult to

do that unless you have some resources. As I pointed out, it is

important that we hear all sides before we make decisions, because not

to do that, simply to allow someone who has the money to come in and

present their side, and not make sure those other people are heard,

does not represent a fair hearing and does not give the Utilities

Commission all the information it should have to come up with a fair

decision. If the commission is forced not to provide funds for

interveners, it certainly leads to speculation that Hydro and this

cabinet have a predetermined plan to build more dams for export

purposes. It's the Columbia River Treaty all over again, or it could

well be.

I would urge the minister to reconsider his position on those particular aspects.

Firm export power: Hydro has signed an agreement before the hearings are even

held. Mind you, they've said in the small print that it's subject to

the decision of the Utilities Commission. But it seems strange to me that Hydro

is going ahead and signing an agreement when those hearings still aren't

held. Is the decision a foregone conclusion? Is that Utilities Commission so

much under the thumb of this minister that he makes the decisions for them?

Is that the kind of free, independent commission that we've established

in this province to review our energy needs? I'm extremely concerned about

that particular point, Mr. Minister. I don't know if you want to comment

on that at this point or if you want me to carry on with another issue.

HON. MR. ROGERS: Let's talk about the export of power. We're

in a position now where we can spill it or we can sell it. The treasury

needs the money. The water doesn't need to go over the top of the dam.

We have a market for it in the United States on a short-term basis.

Yes, there is a hearing under the Utilities Commission and also under

the National Energy Board. It is not our policy to build for export,

but I'm going to export everything I can that we've already built

because that's the best use of the investment on the short term, Any

revenues that we can get to this province right now, in this year; not

for spending by this ministry but for spending for the social service

ministries — any revenue we can get is vitally important. So any time

that I can facilitate those arrangements, I'm going to go ahead and do

that. That's what we intend to do. There is a hearing under the

National Energy Board. However, since other provinces in Canada are

able to export electricity on a very simple basis, I expect that we

will get an (EL) export licence, which is what we require. I think that

answers your question.

MRS. WALLACE: Mr. Chairman, we on this side of the House

certainly have no objection to selling power on an interruptible, basis

but once you start entering into three-year and six-year renewable

contracts, that's a bit different. When you have the chairman of Hydro

talking about building a transmission line to get that power down to

California, how interruptible is that? How short term is that? When you

are selling firm power for three to six years — or that's what you're

proposing — for something like 2 cents Canadian a kilowatt-hour, when

other firms are offering to provide that power and their price is

something like 5 cents interruptible, why are you taking such a low

price and why are you making it firm? Those are the kinds of questions

that we're concerned about, Mr. Chairman. You haven't answered that at

all, and you haven't given me any assurance on that point.

HON. MR. ROGERS: I'll try to answer that question. First of

all, while the sale of power is to the city of Los Angeles, the power

doesn't go to the city of Los Angeles; it goes into the Bonneville grid

at the Nevada-California border. Mr. Bonner, the chairman of Hydro, can

talk about anything he likes. There haven't been discussions at the

board level that I know of, and I've attended every board meeting of

B.C. Hydro concerning constructing any facilities in either Washington

state or in the State of Oregon to facilitate the transfer of power.

There have been some short-term spot sales of power in other areas at

different prices. We've sold power in this province for as much as 40

mills, on a short-term basis, to people who have been in a jam. Quite

frankly, it is almost electrical usury. Then we've turned around and

sold power sometimes at very, very low rates. Right now, in our

competitive market, almost everyone has surplus power. If the

Bonneville Power Administration had the legal authority in the United

States to sell that power, they would have done it. The legislative

impediment in the United States has allowed us to steal some of their

market. That's

[ Page 3162 ]

how it's happened. We have no reason to be the

first one through the gate to be able to sell that power at all, but

because of their complicated regulatory system that their federal

government imposed upon them at the time of the construction of

Bonneville, they're not allowed to sell that power and we've got it.

Bonneville, quite frankly, is quite annoyed about the whole project

because they're spilling water and we're not spilling water. It's a

three-and-a-half-year term, and in fact that three-and-a-half-year

contract is going to eat up a lot of the surplus out of Revelstoke.

I think we're doing extremely well based on what we've produced in

terms of power in this province. Compared to the nightmare that almost

every other electrical utility has, we are in very good shape. We

haven't quite got the whole thing done, but if we can do one more

export power surplus sale, on a short-term basis — three or maybe five

years, depending on the size of it — we're going to have disposed of

most of our surplus and have the revenue coming into the province.

These are not contracts that are necessarily renewable. It is going to

depend very much on the strength of our economy. If our economy starts

to pick up, we need that power and California knows we need that power.

They have a whole host of other sources of power trying to get in there

to supply that market. I'm just trying to run it the best way I can, as

if it was the family business. Assuming that this is the family

business, because we're all parts of it, this is the best way to run it

from a strictly commercial point of view.

We have tried to negotiate the best rate for power. Quite frankly, I think we're doing a good job.

MRS. WALLACE: I think I can be forgiven for being a bit

suspicious when I recognize the situation that Hydro is in where

they're facing a layoff of some 1,700 people in their engineering and

construction branches. It would be very nice if suddenly we could sell

a lot of power out of this province and have a good excuse to proceed

with more dams, more engineering, more designs and more construction so

we could sell that power. I am certainly opposed to that concept,

because I think we should be ensuring that we're providing power to

make jobs in British Columbia, not in California. There's no concern

about the sale of surplus power. If we have surplus power at this

point, fine. Interruptible, that is great. But let's not get ourselves

into the position where that becomes the excuse or the reason to build

more dams, to have more engineering studies, to have more environmental

problems and further concerns in that direction. Let's be sure that we

keep any future bills and any of the present need.... You know, why are

we even talking about allowing Kemano to go ahead in that particular

area when we have this surplus power going into the States? They're

saying they'll buy some of it from us. Why can't we provide them with

the power and make the jobs here? Why can't we have that smelter and

some secondary industry using that power here rather than exporting it?

[3:45]

I want to go on to another item, Mr. Chairman, and it has to do with

a question that I asked the minister last session relative to B.C.

Hydro's office space. How much was rented? How much was unoccupied? I

think it was August 24 that he replied to the question. He said that

B.C. Hydro was leasing something in excess of 462,000 square feet of

office space in greater Vancouver. Of that amount 58,200 square feet

were unoccupied and another nearly 28,000 square feet were subleased to

other companies, which certainly doesn't leave that much being used by

Hydro. He went on to say that the cost of the subleased space could not

be determined. There was a net cost of $160,000 on one of the sites,

with a benefit of $900 a month at one of the others. That's a pretty

big deficit on your rentals. I'm wondering whether that situation still

exists, whether you have cleaned house there at all, whether you have

gotten rid of any of that unnecessary office lease space, whether it is

now occupied or what has become of that.

HON. MR. ROGERS: I'd like to just address the export power

situation again. If you want to look at the long term, the big problem

is that even if we wanted to go ahead and build Site C right now to air

condition every house in California, we can't get the power down there

through the Oregon inter-tie. That's the weak link in the chain, and I

think we're almost at the maximum that we can push through right now.

So I think you can dismiss the fears that we're going to go ahead and

do that. That's not our intention and I've stated so publicly. However,

I'd certainly like to be able to see some increased economic activity

in British Columbia so we could get going again.

At the present time B.C. Hydro has an engineering staff that has

been building dams and transmission systems since 1956 or 1957 and

they're going through a very awkward, tough process, the kind of

process that the private sector and the government sector has gone

through, and so they have been reducing staff and will be continuing to

reduce staff. Some of the people they're losing are pretty valuable

because they have expertise that you just can't pick up off the street

or from Canada Manpower the next day when you need it again. So there's

a problem there. In the process of doing that, they naturally are going

to have some vacant office space because they're downsizing their

operations. Hydro gets ridiculously low rents offered to them for space

because they're a triple net tenant and people like to have them in

their buildings. I couldn't tell you today what the vacancy rate is,

and I can inquire for you. I will do so and bring the answer back and

table it in the House.

However, the thing changes — it's like taking a snapshot — depending

on what they have on any particular day. They have been downsizing. As

they consolidate and move various divisions down, they're going to have

space and they're going to have to let those leases run out. So I think

their engineering staff would certainly like to see a boom in the

economy so they'd pick up in the requirements. We'd all like to see

that, but if that doesn't happen, I don't see us having any reason to

go ahead and maintain those people. We will continue to have to reduce

the staff, because that's what's in the best interests of both the

company and the taxpayer.

MRS. WALLACE: I have in my hands here B.C. Hydro's annual

report for 1982-83, and there are some interesting figures that come

out of that. According to my calculations, at least 33 percent of

Hydro's expenses are interest, and 40.2 percent of its electric-service

expenses consist of interest. The total long-term debt is

approximately $7 billion. The actual annual interest expenses are in

excess of $800 million. The total debt is approximately 80 percent of

the total assets. This doesn't paint a very healthy economic picture

for any organization. That was for 1982-83. Hydro was very recently

authorized to borrow another $600 million, is it? I don't have that

figure before me at the moment.

Where are we going? We're going deeper in debt all the time. What are you proposing? I know you're thinking this

[ Page 3163 ]

sale of power is going to help. I don't know if

you're going to pay off any of the deficit or if you're only going to

be able to meet those interest costs. You're borrowing money. As I

understand it, that most recent borrowing was to pay the interest on

the Revelstoke installations. Where are you going? When are we going to

realize that these high capital cost projects and high transmission

costs — it's estimated that 90 percent of the total cost of

installation is the transmission costs — over those long distances have

to go? We have to start looking in other directions. We have to start

looking at smaller, more localized things — the sort of thing the

member for North Vancouver–Seymour (Mr. Davis) was talking about; the

sort of thing my colleague from Alberni has advocated many times in

this Legislature. When is Hydro going to start taking a serious look at

that kind of low-capital, high-labour project instead of this

tremendous expansion at high cost, where we're digging ourselves

further into debt all the time?

HON. MR. ROGERS: The financial situation at Hydro is not

dissimilar to that of Hydro-Quebec, Ontario Hydro or most other

state-owned public utilities in this country. Their debt to equity

ratio is approximately in line with the others. The horror stories in

the electric utility business, in terms of New York and the borrowing

of money, are all related to nuclear power installations. I think we

can all collectively congratulate ourselves for having the wisdom not

to entertain that in the first place. That's the one that has really

cost the money. The Washington State Public Power System and others

have gone through nightmares over funding. Any public utility that's

involved in generating and transmitting power is going to capitalize

those dams over a long period of time. The facilities that were built

15, 16 and 17 years ago and are still generating cash today, they have

been paid for, depreciated and written off, and they're still working.

The Revelstoke Dam will probably be written off over 30 or 35 years and

will be good for 100 or 150 years, when it will still be kicking out

power. When the demand for power stops growing and we can pay off our

debt, then we're going to be there. It's just an investment that you

make. It's like taking out a mortgage on a house.

In terms of choosing the next project for this province, it will

depend on two things, and one is the size of rate of growth. If we have

a large rate of growth, we might look at one of the bigger projects. If

we have a small rate of growth, we might look at one of the smaller

projects. But it also has to be based on cost-efficiency, on what is

the most effective one; not necessarily what's the best thing to do

socially but what's the best thing to do financially. That's the

guidance I have from cabinet and that I take to Hydro.

MRS. WALLACE: I want to talk about one more item. It relates

to the employees at Hydro. By way of introduction, I have in front of

me a

summary of some executive salaries. I notice that the salary of

the president in 1981-82 was $114,528 and in 1982-83 it went up to

$125,000.04 for some reason. That was an increase of 8.3 percent. The

executive vice-president's salary went up 7.75 percent. Those increases

don't make it any easier to sell an argument about good management and

certainly don't make it any easier to sell the restraint to employees

who are out for a very long time, and who are just back at work, as a

result of the attempts that were made to cut back their salaries.

I have a report in my hand. It's a B.C. Hydro report dated October 20,

1981: "A Report on the Status of Women and Minorities in B.C. Hydro and

a Review of Affirmative Action Programs in Canada." On page 20 of that

report it indicates that in B.C. females in the labour force make up 39 percent.

and males 61 percent. The employees of B.C. Hydro were only 22 percent women

and 78 percent men, very much out of line with the overall picture. That is

only the tip of the iceberg, because when you look at the types of salaries

that women receive in B.C. Hydro, as compared to the salaries that men receive,

I think you begin to realize why affirmative action is so necessary in an organization

like B.C. Hydro.

Of the women who worked for B.C. Hydro, 89.1 percent were group 7 or

below, and 67.4 percent were groups I to 5, compared with the male

employees, 79.1 percent of whom were group 8 or higher — group 7 or 8

being sort of the middle break of the salary scale. All 124 executive

payroll employees were men. There were 1,040 persons in the

supervisory group, of whom 25, or 2.4 percent, were women. It just

doesn't look good. There were 604 persons employed in the professional

group, of whom only 11 or 1.8 percent were women. There were a total of

970 professional engineers at Hydro: of these, 6 or 0.6 percent were

women. You might say that there aren't any women professional engineers

available. That's not correct, Mr. Minister. At UBC in 1980 there were

251 graduates, of whom 16 were women, and in 1981 some 16 of 306 were

women. That's a much higher percentage. Those women are available, but

they are certainly not being brought into the Hydro workforce.

The conclusions drawn on page 24 of this report say that 89. I

percent of the women in the salaried group are employed in typically

clerical, secretarial positions. In the salaried group of men 47.3

percent are in supervisory, professional or executive positions. For

salaried employees the average female salary is 50.2 percent of the

average male salary, and that excludes executive salaries. So a women

working for Hydro is only making half as much as a man. Now that may

have been acceptable back in the dark twenties or thirties, but it's

not acceptable in the 1980s, and it is not acceptable in a Crown

corporation. It is not acceptable in a day and age when the greatest

number of working women are heads of families. It's not fair or just as

far as those children are concerned. I would hope that this minister

will take some action. This report is dated 1981; it is now 1984, but I

doubt that anything has changed. I would ask the minister to make it a

top priority to review that situation at Hydro and to move fast and

firmly on an affirmative action program that will change those

statistics into something that we do not need to be ashamed of.

[4:00]

HON. MR. ROGERS: Talking about employee compensation for the

chief executive officer, yes, that seems like an awful lot of money.

It's the largest company in British Columbia and the sixth largest

company in Canada, and compared with what people in the private sector

get it's a pittance. In fact, at the executive level of Hydro their

salaries are not comparable with what people get running similar-sized

industries elsewhere, although both you and I would find that salary

range personally very acceptable, I'm sure. In general Hydro's wage

rates are higher than in the private sector — only marginally, but

between 4 and 6 percent higher than comparable jobs in the private

sector.

I share your concerns about the employment of women, but please

remember that the company has not been hiring people. There is always

some turnover, but in many cases

[ Page 3164 ]

they have been reducing the number of staff they

have in individual departments. I hope that some of the women

graduating from engineering school are graduating in those disciplines

that Hydro requires. Engineering is a complicated subject, and many of

them may not be taking those subjects that are germane to Hydro. I

personally have no quarrel whatsoever with the desire to have women in

the workplace at all levels. I think it is healthy and, as you say,

long overdue. However, I don't want to go in and fire somebody else who

may have a wife and children at home and say: "You've got to go because

we shouldn't have hired you 20 years ago; we should have hired someone

else." You don't want that either. But it has to be part of their

hiring policy when they get back into an expansion mode.

MR. ROSE: Mr. Chairman, I don't expect I will speak at great

length, and that will be to the great relief of a number of people in

the House.

I would like to ask the minister a little bit about the abolition of

his renewable energy branch and conservation branch. I believe it was

touched on a little earlier, but I have some specific questions on it.

It's of particular interest to me, since over the past four or five

years there has been considerable interest in conservation and

renewable energy. It seems to me that it is something worth fostering.

All over Canada perhaps no more than 6 percent of all the energy needs

of all the provinces is coming from the alternatives and the

renewables. The non-renewables tend to be the bulk of our energy

sources, if you rule out hydro. They are finite. They are going to come

to an end someday — oil, at least the easily accessible oil, perhaps in

as quickly as ten years. Certainly as far as the cost is concerned,

energy produced by the megaprojects — whether you are talking about tar

sands plants or nuclear energy projects or offshore oil in the Atlantic

or in the far north — is considerably more expensive, to the extent of

approximately double or triple what conventional energy is worth and

certainly what renewable energy is worth.

The cancellation of this particular branch, which includes

approximately 25 FTEs, is of more than passing interest. It seems to me

a backward step. I know that for the moment we have stability in the

energy field and that Canada is not deficient in energy. It doesn't

have its own equivalent oil production that we might need, although

that, I think, stems from past policies that were certainly not very

far-seeing. At one time we were selling approximately a million barrels

a day of crude oil to the United States, and now our imports of oil can

amount to as much as $4 billion a year. However, those are statistics

that don't have a particular meaning.

In the renewable and alternative energy field you can create a job

for approximately $50,000 a job or less. But if you go into a nuke

plant or tar sands plant or an offshore rig, the cost to create a job,

aside from the fact that you are dealing with finite resources, except

for Hydro, is approximately 20 or 30 times that much — up to $1,000,000

a job. So from the point of view of employment, and the point of view

of economics, it makes much more sense to encourage conservation so

that we don't use as much oil and renewables. We are told also that the

cheapest barrel of oil Canadians can have is the barrel of oil that we

do not use — or save.

I think it is a backwards step, and I regret it. Now that these

conservation people and renewable people have gone, the first question

is: do we have any capacity to create and foster the development of

renewable energy and energy conservation in this province? That is

question number one.

Question number two: is there going to be any effort on the part of

the ministry, if not through its own department but any kinds of

projects...? There have been many federal projects to this end, solar

and a number of others. I could list them if I took the time, but it

would be redundant. Is there any B.C. effort to create jobs in the

alternative energy field and the conservation field? Triple-glazed

windows, insulation, architectural training in how to build

energy-efficient homes, heat pumps and a whole gamut of things like

that are extremely important if you're short of energy or if you're not

willing to squander the resources we have. So that's basically the

second question.

It also has a number of social implications. As far as I'm

concerned, it's far better for us to keep a welder in the community

with his family working on such things as tripleglazed windows or

whatever than it is to send that same welder, with the family

disruption, to the far north to poke holes in the Beaufort Sea. I think

that all Canadians need to be aware of the advantages of renewable

energy, and I'm certain that there was a capacity in the minister's

department to make us more aware of that. I know the heat's off — the

OPEC nations are suffering an oil glut, and all kinds of problems are

associated with the Iranian situation, the income from oil resources in

Venezuela and the rest of it; I'm aware of that — but I would like to

know, if we no longer have a capacity within the ministry, or certainly

a reduced capacity, whether we have abandoned the whole idea. If not,

what are we prepared to do to foster this industry, if not directly by

government, at least by providing the atmosphere in which the private

sector can proceed with the benefit of government assistance of one

kind or another, including economic, but certainly the government's

ability to pass judgment on such procedures and techniques and to give

them some advertising support?

The final question is this. There are five energy centres throughout

B.C. These were opened with great fanfare about two years ago. There

was one developed in my riding, in Port Coquitlam. The member for

Dewdney (Mr. Pelton) attended, representing the government — it wasn't

his riding, but he was there anyway. There are four others throughout

B.C. These energy centres are sources of information material for

architects and consumers, paid for in a tripartite way — federal,

provincial and local. What is the future of these centres? Are they to

remain or are they to go the way of a lot of other things because of

cutbacks and slashing, even though this move on the part of the federal

and provincial governments was, I think, a very progressive and

beneficial one? If you can cut your heating costs by one-tenth, you

don't need as many high-level dams, and you might even have more

surplus to export to the United States — if that is your policy, and I

understand it is — or to the aluminum Company of Canada, if they choose

to buy it.

Those are my three questions. What steps is the minister taking to

foster the development of renewable energy and energy conservation in

B.C.? What's he doing about jobs in the industry? Is the ministry

encouraging the creation of jobs in B.C. for the things I mentioned:

insulation techniques, architectural techniques and various other kinds

of things, such as heat pumps? Or is he content to have some other

jurisdiction ship them into British Columbia? Thirdly, what is the fate

of the five energy centres in British Columbia which were opened with a

great deal of fanfare some two or three years ago and which have been

used by the public to some extent — I'm not prepared to say what extent?

[ Page 3165 ]

There's a fourth, which I didn't mention. When I was out here as a

part of the federal task force on alternative energy, I was very

impressed with what the province was doing on geothermal. I understand

that up near the Pemberton Meadows area there were some efforts to do

something on geothermal. We had a man attached to the ministry who was

an expert in geothermal. I would like to know if that has been

abandoned as well. What is the future for geothermal, in the view of

the ministry?

HON. MR. ROGERS: The geothermal work was done by B.C. Hydro

and not by the ministry. We didn't have an expert there. They did quite

a lot of work at Meager Creek, and the results of their findings are

being analyzed now.

The five energy houses. I've got to tell you that at Treasury Board

we've got to go through what you need to have and what you would like

to have. We have a very small ministry. We have some people who are

very critical to the income of this province from the point of view of

assessing gas wells and the rest of it. We are right down to a very

small staff. So when it came down to saying what we would like to have

and what we needed to have, this is one of the things we opted to say

we'd like to have but we don't need to have. I met with the

municipalities involved. I also advised the federal government. The

federal government were only too delighted to take the whole package

over themselves — and take over the credit. Maybe they weren't too

delighted; maybe Mr. Chretien just decided he'd like to do it. So the

facility remains. The taxpayers, whether it's out of their federal

pocket or their provincial pocket, still have that service, and all of

the information available to your constituents and others — architects

and anybody else — is still available. It was a nice thing to do; it

was constructive. People who were rebuilding or building houses could

go and learn a lot of stuff about it. But it wasn't absolutely

mandatory.

An awful lot of the things that we were doing are now being done by

the private sector. The educational process for heating contractors,

for insulating contractors and the rest of it is now something that's

known. I've even had some complaints from the private sector in the

alternate energy field competing with them. After all, they are paying

taxes and employing people, and that industry is healthy in many

respects. So from the point of view of what you need to do and what

business government needs to be in, the public know that, and the price

is the best determinator of whether they will do that. People are still

heating houses with less than an efficient system, and they still know

that alternate energy is available.

By the way, regarding your analogy about using a welder for making

windows, the very worst thing you can do is have a metal sash in the

window. It's better to have single-plane glass and a wooden sash than

triple-pane glass and a metal sash. Metal is the worst source of heat

loss. I've been to the house and have taken a course, and you should

definitely use wood. I'd recommend B.C. lumber, because that's the best

stuff to use. Does that answer your questions?

[4:15]

MR. ROSE: Well, I guess, Mr. Minister. I thank the minister for his

response, but there are ways of getting around the metal sash problems, of sweating

and all the rest of them — the minister will acknowledge that. Wood necessarily

requires a good deal more maintenance. Sure, it's great to use the wood

industry — the major industry of the province — but I think you will admit that

we also have an aluminum industry, and I know he wouldn't want to say anything

that would make it difficult for that industry particularly. I guess when the

minister talks about the things we need as opposed to the things that are not

mandatory, it really depends on your own philosophy. If you're really intent

on going full-bore and using all the resources on the extractive industries,

that's exactly where you're going to take it, because it's an immediate

thing. This is what we need now. Some people would be much more interested in

looking over the longer haul to the point that when the extractive industries

do not provide us with the energy we need immediately, we help people learn

that there are other ways.

Fm not sure that price is also a rationing mechanism. There are

people in my own riding who have to commute from, say, a place like

Mission to Vancouver every day. They've got an old clunker of a car,

and it doesn't matter how much you put gas up. They're probably not

going to drive much less, because the car has a certain kind of

capacity and they can't afford another one. So price is not necessarily

always the final arbiter. no matter how much it might work in some

direction. All I'm' saying is that I would hope that if the government

cannot do anything else.... I didn't ask them to compete with the

industry, I asked them to provide the kind of information and support

of one kind or another that the industry needs. I am pleased that the

energy centres are going to be perpetuated, and I think the need for

them will grow. Once we get through this session of three years of

cutbacks and we need to throw money at things to get elected again,

then we have saved all that money and we'll be able to get ready for

the next campaign.

MR. PASSARELL: I have just a quick question to the minister.

This is a problem that was brought up by a Lynne Thunderstorm from the

residents of the free-flowing Stikine; it was a letter addressed to the

minister last month regarding three cables being placed across the

Stikine by B.C. Hydro in regard to water levels. An engineer who is

involved in the project has stated publicly to the group that these

cables that they are running across the Stikine are approximately

$110,000 each. There are three to four of them, from the information I

have received. Since the entire project of Stikine-Iskut has been

placed back till the twenty-second century — or God knows when, if it

ever will be built — why spend this type of money during this restraint

program? Why spend almost $400,000 on cables that aren't really needed

on a project that has been postponed for so long? I'd like the

minister's answer to why they are putting in these cables down there,

because the project has been put on the back turner. It’s not needed.

There is no need for water levels for this year, next year or for

whenever. It would be appropriate just to tell Hydro to spend the

$400,000 somewhere else.

There was a rumour being spread that if they do build the Stikine it

was going to be called the "Stephen Rogers Dam." I have tried my

hardest to say: "No, no, that won't be the dam name."

HON. MR. ROGERS: Well, I am sure it will be named after the minister of the day, so you are quite correct.

The second thing is that they have done a whole host of survey work

on this thing, and they are just wrapping up the last of it. But having

90 percent of the information that they want, they wanted to get the

final bit of data complete before they literally pull out and,

hopefully, leave the place the way

[ Page 3166 ]

they found it. I think I can give you the assurance that that will be the extent of their activities.

Vote 27 approved.

Vote 28: resource management program, $20,353,252 — approved.

Vote 29: British Columbia Utilities Commission, $1,555,257 — approved.

Vote 30: Fort Nelson Indian Band mineral revenue-sharing agreement, $3,500,000 — approved.

ESTIMATES: MINISTRY OF

INTERGOVERNMENTAL RELATIONS

On vote 56: minister's office, $117,775.

HON. MR. GARDOM: Mr. Chairman, this is a small budget, few

personnel performing now, as before, an excellent job on behalf of all

of the citizens of our province and working long hours and doing good

deeds and indeed performing many outstanding tasks. I'd like to pay

some respects and thanks, both on my behalf and on behalf of our

administration, and certainly on behalf of the people of the province,

to our capable people within the ministry — firstly to the Deputy

Minister of Constitutional Affairs, Mr. Mel Smith, QC, who has a very

long-standing and highly respected national reputation in

constitutional matters, and his industrious staff. I should also

mention that today is Mr. Smith's birthday, and I'm sure that all

members would like to join me in conveying the best of returns to him.

I'd also like to refer to our outstanding agent-general in London,

England, Mr. Alex Hart, QC, everyone in B.C. House, Ottawa, and the

very, very capable and efficient secretariat within the confines of

these precincts: Sue Stephen, for economic development and ELUC; Miss

Debby Lovett for social services and legislation; Mr. Bert Hick, who is

secretary for planning and priorities in cabinet; and lastly but

certainly not leastly, Mr. Peter Heap, who is the senior analyst in

federal-provincial relations.

I think it is appropriate also, Mr. Chairman, to pay my respects and

reiterate my earlier thanks and extension of best wishes to those who

have changed career paths since estimates were last before this House,

and who are now involved in other pursuits: Norman Spector, who is

deputy to the Premier; Mr. Jim Matkin, who has entered the private

sector in the B.C. Employers' Council; Mr. Bob Plecas, who is now the

Deputy Provincial Secretary; Miss Ann Vice, the press secretary to the

Premier; and Mr. Don Axford, who has moved to the government of Alberta.

The estimates per se, Mr. Chairman. As you know, it is a small

ministry and a relatively small amount of money. I'm pleased to say

that within this office they're down 15 percent, in the Victoria

operation down 16 percent, Ottawa down 45 percent and London down 6

percent — the overall total being down about 15 percent, with the

complement of personnel being reduced.,

When I spoke in the last estimates, Mr. Chairman, I expressed some

views concerning routes to improvement in our country. Unfortunately

some of those have not been acted upon enough and some have not been

acted upon — regretfully — at all. I'm just going to refer to them very

much in a passing sense today because they are going to be considered,

I'm sure, in greater depth in the coming estimates, which hopefully we

will be commencing at the termination of the budget speech, by the end

of this month. But we are still being beset in our country with the

difficulties that have been encountered as a result of a dearth of

capital and an outflow of investment, primarily by virtue of federal

policies: the national energy program and FIRA and the fact that the

federal administration has still, regretfully, not seen fit to come to

effective grips with a tax system that is creating absolutely nothing

but difficulty, I'd say, for the middle class. There is no question

that the rich are essentially fireproof and, on balance, in a world

sense, those who are less fortunate are very well taken care of in our

country.

But we have a tax system that is literally a jungle. It should be

simplified. I think the flat tax approach is one that is deserving of a

great deal more attention than it has received to this point in time.

We have batteries of accountants and lawyers and tax advisers on one

hand writing tax laws, and we have batteries of lawyers, tax

accountants and tax advisers on the other hand advising people how they

can best not pay their proper and fair share of taxes. It is a far, far

too complicated system, and it requires simplification.

We are also continuing to press, and unfortunately not with the

degree of success that I would have liked to see, the concept that was

articulated by the Premier's father that equalization payments should

not be plunked into the hands of governments but should find their way

to the citizens in the recipient provinces by virtue of decreased tax

points or what have you. I do think that the late Mr. Bennett was miles

ahead of his time, and he well saw the danger of all Canadian dollars

becoming capable of provincial political manipulation.

I would like to refer to one topic this afternoon. I wish to make

some observations about what I consider to be the optimum course for

the economic wherewithal and standard of living of everyone in every

part of our country: a free trade market with the United States. It is

very interesting from a historic perspective. Going back before

Confederation we found, in 1854, a rather enlightened period in our

history. At that point a treaty provided for limited Canada-U.S. free

trade. That unfortunately came to termination in 1866, and it's too bad

that since then Canadian governments have mostly employed tariffs as

one of the main ways of furthering national economic and political

goals. This approach was initiated very shortly after Confederation in

1879 in what was known as the National Policy. It combined immigration

and transportation policies, but most particularly protective tariffs,

which were designed to foster the development of manufacturing,

principally in central Canada. There is no question that it stimulated

east-west trade within our country. But as time has certainly proven,

it was primarily at the cost and expense of the west. In the early

1930s Canadian protectionism increased markedly, primarily in response

to the swing toward protectionism throughout the whole world. In the

late 1930s there was a bit of a breakthrough, and certain tariff

reductions were produced. But it wasn't until the end of the Second

World War that a turning-point developed, resulting in GATT. From then

on the United States increasingly became Canada's most important trade

partner and source of capital.

Interjections.

[ Page 3167 ]

HON. MR. GARDOM: I am glad my colleagues are all supportive

of free trade, but I thought the historic analysis would be very

interesting and educational for them.

Interestingly enough, complete free trade with the United States was

a subject of closed-door negotiations — which is not too well-known —

between the two countries in 1948, under then Prime Minister Mackenzie

King, who had very strong support from C.D. Howe and was led by John

Deutsch, who later became the head of the Economic Council of Canada. A

25-year treaty was proposed in 1948. There was a very favourable

reception to that suggestion in Washington, D.C., but unfortunately Mr.

King had a change of heart when he sensed that his perception of his

personal political place in history was indeed chilling. The story — as

I'm sure the hon. member from Victoria well knows — is that while Mr.

King was reading Studies in Colonial Nationalism

he mused over the last

chapter and, being the soul of the empire, he

considered that in the last act of his career he could be placed in the

position of being the spearhead of furthering commercial union with the

United States, which would destroy his earlier record of Commonwealth

association. I think that for those of us who can remember the late

Mackenzie King, his record of Commonwealth association was somewhat

questionable at the best of times. I suppose anything can be looked at

in hindsight, even mysticism. But we have to recall that Mr. King came

very close to providing a better and more lasting standard of living

and increased employment for all Canadians. If he had directed his

emphasis to that course, surely it would have established a much more

significant position for him in the annals of our history.

This brings me to the mid-1980s — 1984 — and a very serious concern

about the Canadian economy as a whole and our capacity for complete

recovery in our province. The concern is the growing tendency among the

nations of the world to raise barriers against free trade by various

forms of protectionism, which unfortunately appears to be on the

increase. For a major trading country like ours this is damaging. It is

dangerous. If extended, it is potentially disastrous, let alone being

contrary to the spirit, if not always the letter, of the principles of

free trade and reduction in tariffs enshrined about four decades ago in

the general agreement.

[4:30]

Shortly stated, GATT liberalized international trade to a degree

probably unprecedented in history. There is no question that what

followed was one of the greatest periods of growth that the world has

ever seen. But in recent years the GATT consensus and the underlying

assumptions that made GATT an effective and nourishing instrument have

come under increasing pressure. As we know, today nation after nation

is resorting to subtle or not-so-subtle moves to protect their domestic

industries from foreign competition. Some manufacturing sectors have

been removed altogether from GATT. To revert to a state of frightened

economic fiefdoms, each raising higher and higher walls to keep out the

goods of other countries, would be a very sad and retrograde step, and

also could bring on and prolong the collapse that protectionism

struggles to avoid. We know that the grim lessons that we learned in

the 1930s will attest to that. Additional evidence of the tendency to

return to this more primitive global trade pattern is the rapid growth

in counter trade in its various forms, which even include pure barter.

Furthermore, there is a very big issue that must arise from

consideration of the Third World debt: Argentina, $35 billion; Brazil,

$90 billion; Mexico, $80 billion; the Philippines, $25 billion. Those

four countries themselves total $230 billion. It's absolutely

staggering. Each one of them is in pro forma if not in actual default.

I think all the members would agree that but for the IMF — the

International Monetary Fund — propping them up, those defaults, if all

acted upon at once, could produce without question another worldwide

recession, far worse than the one we're now starting to show some signs

of moving out of. The proposals of these kinds of countries to

discharge these debts — if, indeed, they ever will be able to do so —

is by increasing their exports and probably decreasing their imports

from countries such as ours. Hence Canada will have to face all the

more, in the world sense, the pressures of external competition. There

is no question that our country is facing new trade challenges and new

problems of that sort, sometimes of a type that have never been

encountered in the lifetime of the majority of our citizens. Hence the

economic uncertainties and difficulties, perhaps even the perils, that

could face a nation make the proposal I'm referring to especially

timely.

Firstly, Mr. Chairman, we all know that Canada's three largest

trading partners have economies that dwarf ours: the United States and

the European Economic Community, each about ten times as big, and

Japan, with an economy four times larger than ours, and all of them far

less dependent on trade than we are. So our greatest need is surely a

big, dependable, easily accessed market, and certainly there is no

better market and no better access to a dependable, generally

predictable market for our country than the United States. Our first

priority should be toward a complete free-trade agreement with the

United States, to be followed in due course by discussions and

negotiations to further remove trade barriers with Europe, Japan and

the fast-growing, newly industrialized countries. But we can't repeat

enough that any shrivelling of the spirit and substance of free trade

can become a very sombre threat — and an oppressant, indeed — to the

economic recovery in our country and certainly in our province.

I would reiterate, Mr. Chairman, that the surest and least

complicated route to future prosperity should lead us next door, below

the 49th parallel and across the largest and friendliest border the

world has ever known, to a partner with whose language, preferences and

requirements we are most familiar, both in approach to business,

economic philosophy and, within our own respective jurisdictions, to

the free market of goods, services and capital. We enjoy, as we all

know, generally very connected economies.

Interjection.

HON. MR. GARDOM: I am happy to see the member for Vancouver

Centre now joining us, and I'm more than pleased that he agrees with

this premise. I'm sure that he will be advocating this in his support

of his leadership candidate.

Not too long ago the federal government published a paper that was

entitled "Canadian Trade Policy for the 1980s," and it recognized the

crucial importance of access to U.S. markets for exports. Unfortunately

it rejected the concept of total free trade. Instead, it proposed

entering into selective free trade in textiles, urban mass

transportation, petrochemicals and so forth. This is not the best

solution in the long haul, but under the terms of GATT Canada could be

[ Page 3168 ]

permitted to engage in bilateral one-on-one free trade with the

United States. This has to be a must. Total free trade with the United

States is permissible and feasible, and with the necessary public and

governmental support, quite achievable. Anything less in the short run

lacks foresight; anything in the long run is purely and simply bad

economics.

To my colleague for Surrey, Canada would far more closely track an

approach to good recovery news that we're hearing from south of the

line. Unemployment, 1983: Canada — 11.9 percent, U.S. — 9.6 percent;

inflation, 1983: Canada — 5.8 percent, U.S. — 3.2 percent; deficit of

GNP, 1983: Canada — 8.0 percent, U.S. — 5.1 percent. Our GNP could only

increase; that's the only thing that could happen there.

There is an absolutely remarkable opportunity present for our

country at this point in time, and I'm delighted to see that talks have

been initiated and are now ongoing between the two countries, and I

think they should receive encouragement from every part of Canada. Our

standard of living would just take off, and we should grasp it.

At this point in time I would very much like to have a few questions from our colleagues in the House.

MR. HOWARD: Mr. Chairman, I am reluctant to ask a question. I

don