LEGISLATIVE ASSEMBLY OF ALBERTA Title: Thursday, June 1, 1972 2:30 p.m. [The House met at 2:30 pm.] PRAYERS [Mr. Speaker in the Chair.] head: INTRODUCTION OF BILLS Bill No. 107 The Public Lands Amendment Act. 1972, No. 2 DR. WARRACK: Mr. Speaker, I beg leave to introduce a bill, Bill No. 107, being The Public Lands Amendment Act No. 2. This is The Public Lands Amendment Act dealing with the principle of citizenship regarding public lands in the Province of Alberta. The principles involved would be two. The first, Mr.

Speaker, is that this would be a clarification of intent and practice on the part of the Government of Alberta respecting the sale of Crown Alberta public lands to only Canadians -- and I emphasize this restriction referring only to not being a Canadian, rather than anything to do with being a citizen of the country of Canada but not a citizen of Alberta. This deals with the Canadian dimension and does not separate Alberta from other provinces. So that would be to restrict the sale of public land in Alberta to only Canadians. That is the first principle.

The second would be to take into account the possibility that lands could be purchased from the Crown by a Canadian and in turn sold or resold to a non-Canadian. That second principle that would be established by the nature of this Public Lands Act Citizenship Amendment would be to place a caveat on that land, Mr. Speaker, so that the land could not be resold to anyone other than a Canadian. It is the intent of the government in introducing this bill to request that the Legislative Committee on Foreign Ownership, chaired by the hon.

Member for Edmonton Strathcona Julian Koziak, examine this bill and examine it in the terms of reference of foreign ownership, which is the responsibility of that committee. Therefore, Mr. Speaker, this bill will be requested to be referred to that committee for their examination. [Leave being granted, Bill No. 107 was read a first time.] head: INTRODUCTION OF VISITORS MR. SCHMID: Mr. Speaker, I would like to introduce to you and through you to the hon. members of this Assembly, with great pleasure, Mr.

Grettir Leo Johannson, Honourary Consul-General of Iceland, a country from which a great number of our most distinguished pioneers came. Would Mr. Johannson please stand and be recognized? Alternate page number, consecutive for the 17th Legislature, 1st Session: page 3955

59-2 ALBERTA HANSARD June 1st 1972 MR. ADAIR: Mr. Speaker, it is with a great deal of pleasure that I introduce to you two groups from the Peace River country and from my home town of Peace River, a group of 88 students from the Springfield Grade VI class, along with their teachers, Mr. Hoffman, Mr. Petrovic, Miss Gray, Mrs. Huber, Mrs. Pahl, Mrs. Cooper, Mrs. Rovan, and Mrs. Skip. This group is in both the members' gallery and the public gallery and I would ask that they stand and be recognized.

The second group is a group from the Grade V class of the Glenmary School in Peace River, 27 students accompanied by their teacher Mrs. Erna McGillvary and her husband Grant and their principal, Mr. Paul Crough, and drivers, Mr. and Mrs. Earl Ball. I would ask that they too stand and be recognized at this time. head: FILING RETURNS AND TABLING REPORTS MR. RUSSELL: Mr. Speaker, I'd like to table the report of a special volunteer committee that was appointed in 1970, being the report of the Committee on Uniform Building Standards for Alberta.

This committee was a group of volunteer provincial and municipal personnel who are involved in the administration of our various building acts. The attempt of the report was to review the feasibility of a uniform building standard for Alberta. If we are able to institute the recommendations, I suggest it will be a very giant step forward for Alberta in the building industry and the financial institutions relating to that industry. The committee, as I say, was a volunteer one and has been working very hard lately to get it in and table it by this session. DR. WARRACK: Mr. Speaker, I would like to table two items.

I am pleased to table the answer to Notice of Return Motion No. 208. Secondly, in response to a question during the Lands and Forests estimates by the hon. Member for Wainwright, I would like to table now the appropriations, in detail, on new construction on airstrips for the 1972-73 fiscal year as requested. MR. HYNDMAN: Mr. Speaker, I wish to table Return No. 203, ordered by this Assembly. MR. CRAWFORD: Mr. Speaker, I'd like to table two reports. One is a

summary report, 1971, of the Alberta Department of Health and Social Development. The other one is the annual report of the Department of Health, including the Vital Statistics Division, 1970. MR. GETTY: Mr. Speaker, I wish to table a Return which has been requested by the Assembly. head: ORAL QUESTION PERIOD MR. SPEAKER: The hon. Member for Sedgewick-Coronation, followed by the hon. Member for Hanna-Oyen. Alternate page number, consecutive for the 17th Legislature, 1st Session: page 3956

June 1st 1972 ALBERTA HANSARD 59-3 Non-Smoker's Day MR. SORENSON: Mr. Speaker, I'd like to direct my question to the hon. Minister of Health and Social Development. Is the minister aware that federal Health Minister, John Munro, has informally decreed that today is to be known as 'Be Kind to Non-Smokers Day'? This was reported in today's Albertan. By the way, there were only two articles in today's edition concerning health and smoking -- only two. My question is, how seriously does our minister view the whole area of smoking, and is the government conducting or participating in any research in this matter? MR.

CRAWFORD: Mr. Speaker, that's the type of question that's difficult to be very specific in replying to. I might say, therefore, that for me to come up with anything other than a smoke-screen for an answer to your question probably would be pretty difficult. I don't think it will enlighten the House at all if I expose them to my personal views on the subject, so I won't do that. We have no particular program, in answer to the hon. member's question, in any sense that is directly related to smoking. I'm not particularly impressed by the programs that other governments come up with from time to time.

I think one of the things that is often commented upon is that a lot of the people who advise against it -- this is in the medical profession and elsewhere -- are smokers themselves. We are dealing with an area where a large measure of personal choice is always going to be involved, and quite honestly, unless I thought I could do some good, which I don't, I wouldn't be heavily involved in that area. Fluoridation MR. FRENCH: Mr. Speaker, I have a question for the hon. Minister of Health and Social Development.

In view of my question yesterday, is the minister now in a position to answer my inquiry of yesterday, with respect to the supplying of fluoride supplements to the health units? MR. CRAWFORD: Yes, Mr. Speaker. I want to thank the hon. members who have brought to my attention the concern that was shown in some constituencies, when the decision of the department was made known, to cease providing fluorides by way of tablets and drops for various health units.

The reasoning behind the decision when made was that all communities, of course, have for some time had the local option if they wished, to fluoridate their water supplies. It was felt that although in an expenditure sense the program was admittedly not at great cost to government, as a matter of principle, being a matter of local decision, it might just as well be left there. However, once the decision was communicated to some local health boards, it was pointed out to me -- something that hadn't occurred to me -- that some of the municipalities, of course, don't have municipal water supplies.

The water is supplied on a rather tenuous basis by local contractors or by people using their own wells, and this sort of thing. On that basis my present proposal -- and this is the answer to the question, and is, in fact, the decision -- is that the program as it previously existed will be terminated, but, rather than doing it this year, it will be terminated on the basis that one year's notice is given as of the beginning of this budget year, so that communities can make the necessary adjustment, and those that have their own Alternate page number, consecutive for the 17th Legislature, 1st Session: page 3957

59-4 ALBERTA HANSARD June 1st 1972 municipal water supplies will be able to go ahead and make such provision as their citizens may think is best, for fluorides or not. The second part of the decision is that special account will be taken of those who don't have a municipal water supply, so that even in future years the communities in that position will have a program of support from the department. MR. FRENCH: Supplementary question, Mr. Speaker.

Do I understand the hon. minister correctly in saying that in these areas which depend on a system of wells, which is, in effect, the type of water system you have on the farms, that the program will not be discontinued, but will be on a continuing basis? MR. CRAWFORD: Yes, that is correct, Mr. Speaker. MR. SPEAKER: The hon. Member for Calgary Mountain View, followed by the hon. Member for Olds-Didsbury. AGT Rates MR. LUDWIG: Mr. Speaker, I would like to direct a question to the hon. Minister of Telephones.

I would like to preface my question with a couple of references to Hansard, April 13, 1972, on a reply to the hon. member, Mr. Ghitter. The hon. Minister of Telephones spoke about the rather buoyant situation of income of AGT, in reply to a question I asked on Friday, May 5, 1972 -- and I would like to bring this to the hon. minister's attention -- MR. SPEAKER: Does the hon. member have a question about it or is he just bringing it to the -- MR. LUDWIG: I have a question, Mr. Speaker, but I feel it is necessary for me to lay the groundwork for this question.

I asked the hon. minister on May 5th, "Is there any consideration being given by AGT to increasing rates to subscribers or for increasing rates for services performed by AGT within the next year or two?" I am going to -- unless the hon. minister wants me to read these -- I will skip two questions and I will read the last part of his reply. He said, "so that, in fact, there would be no rate increase considered for the year 1972." In light of this would the hon. minister explain the recent announcement in the press that there will be an increase in service charges of approximately 40 per cent by AGT? MR. WERRY: Mr.

Speaker, I wish the hon. member had continued and read the - - Alternate page number, consecutive for the 17th Legislature, 1st Session: page 3958

June 1st 1972 ALBERTA HANSARD 59-5 MR. LUDWIG: I will do that, Mr. Speaker, if I may, but I didn't want to read too long. I will read the whole background if he wishes me to. MR. WERRY: I will give you the gist of the information. There are two parts to AGT rate structures. There is what is called the 'regulated' and the 'unregulated'. The 'regulated' refers to those services which AGT has to apply to the Public Utilities Board for rate increase, and when we speak of rate increases we speak of those that normally a utility company has to go to and apply for before the Public Utilities Board.

In answer to the hon. member's question, I was speaking specifically about those regulated rates and not about the unregulated. The question that he is referring to, of course, is the fact that there will be an adjustment to the service charges on installation and termination charges for installation of new telephones and extensions, and this is brought about because of the increase in costs. I would like to provide the hon. members with some information and background on this.

All of the rates and charges that AGT do have are constantly under review, and an interesting set of statistics is that for the year ending April 30, 1972, main sets and extensions, there were, 51,500 main sets and extensions that were installed in homes and in businesses in Alberta. The outward movement or removals were 41,000, so in fact, in order to get a 10,000 phone increase, 51,000 phones had to be installed and 41,000 had to be removed.

In analyzing the costs of putting in new telephones, it was found that the average cost of installing a new telephone was in the neighbourhood of $17.50, so that for every telephone installed in the past year there was a substantial loss that had to be passed on to the subscribers in other forms of services. So in order to bring the installation fees into a more equitable position with the cost of that service, the adjustments to the service charges were made effective June 1st. I might add, Mr. Speaker, that the first announcement of this did appear in the Edmonton Journal on Friday, May 12th. MR.

DIXON: I have a supplementary to the minister, Mr. Speaker. It has to do with future rates. Has the Alberta Government Telephones and Edmonton Telephones committee arrived at a tentative settlement of the boundary dispute in the City of Edmonton? MR. WERRY: Mr. Speaker, as the member indicates, both sides do have a negotiating committee that has been meeting since January 12th every Thursday night. Tonight being no exception, we will meet again.

We are resolving a number of points, and in agreement with the city, in order not to mar or to jeopardize any of the negotations that have been completed to date, both sides have agreed that there will be no announcement until there is a full settlement of all of the outstanding disputes. I can only report progress and in the very near future I would expect that there will be a settlement and it will be made public at that time. MR. ASHTON: Supplementary, Mr. Speaker, to the hon. Minister of Telephones and Utilities.

I understand, according to a local radio station news report, that AGT will be reducing its interprovincial long-distance Alternate page number, consecutive for the 17th Legislature, 1st Session: page 3959

59-6 ALBERTA HANSARD June 1st 1972 rate by as much as 60 per cent, and I was wondering if this is a correct story? MR. WERRY: Mr. Speaker, thank you. I would like to clarify at this time that apparently one or two radio stations are carrying this announcement regarding the Trans-Canada Telephone system, which is the eight member network of telephone companies across Canada that make up the long-distance haulage across Canada. According to the release they are meeting on June 19th and will confirm a long distance rate increase which will, in some cases, decrease inter- provincial rates by 60 per cent.

First of all, Mr. Speaker, there is no meeting on June 19th by the Trans-Canada Telephone System, and secondly, there is very definitely no committal to reducing inter-provincial long distance rates. The subject, of course, does come up in their meetings from time to time and a committee is looking at it, but there is definitely no foundation to this story, Mr. Speaker. MR. LUDWIG: Mr. Speaker, a supplementary question.

In view of the fact that the hon. minister on May 5th in this House had stated that AGT's long-distance revenue was 17 per cent higher than had been estimated for the current year -- that included the months of January, February and March and is holding true in April -- also "our operating expenses had decreased by 4 or 5 per cent," how does he justify any type of an increase in services in view of that condition, notwithstanding his answer? MR. SPEAKER: The hon. member is inviting debate.

Especially when the House is short of time, the value of the rules against long questions and also long answers, I think, become apparent and perhaps this topic should have been put on the Order Paper. MR. LUDWIG: Mr. Speaker, the hon. minister’s statement was very misleading and I wanted it clarified before the House was adjourned. MR. SPEAKER: The hon. member is debating. The hon. Member for Olds-Didsbury, followed by the hon. Member for Wainwright. Village Lake Louise MR. CLARK: Mr. Speaker, I would like to direct a question to the hon. Minister of Federal and Intergovernmental Affairs.

In light of the statement made yesterday in the House of Commons by Mr. Chretien that the federal government will be making a decision on the Village Lake Louise Project, he said he hoped to make an announcement by the end of June. Does the government of the Province of Alberta anticipate making any further representation to the federal government? MR. GETTY: Mr. Speaker, no, we do not anticipate making any further representations to the federal government. Alternate page number, consecutive for the 17th Legislature, 1st Session: page 3960

June 1st 1972 ALBERTA HANSARD 59-7 MR. CLARK: Mr. Speaker, in light of Mr. Chretien's comment yesterday in the House of Commons, when he was commenting on the letter from the Minister of Federal and Intergovernmental Affairs in Alberta, he said: "They are both for it and against it." Wouldn't the minister feel it advisable that they should have another attempt at (1) making a decision, and (2) letting Ottawa know what they think about it? MR. GETTY: Mr.

Speaker, in anticipation of the question which I was sure one of the hon. members would raise, I thought I would once again repeat what has been said in the letter twice. Once it is underlined, another time it isn't, but in both cases, Mr. Speaker, I think it is pretty evident of the government's decision. "As a result of this study our government has concluded that until the existing deficiencies are solved we cannot specifically support the Village Lake Louise Limited proposal." Then again, Mr. Speaker, after presenting the reasons and considering the various problems involved, where we say: "In

summary, the Alberta government is not, at this time, prepared to support the specific proposal of Village Lake Louise Limited." MR. SPEAKER: The hon. Member for Wainwright, followed by the hon. Member for Edmonton-Ottewell. Alberta Hog Marketing Board MR. RUSTE: Mr. Speaker, I would like to direct a question to the hon. Minister of Agriculture. I understand that another election has been authorized by the Marketing Council to elect a director for District 4 of the Alberta Hog Marketing Board. Can the hon. minister inform the members of the Assembly when this election will be held? DR. HORNER: No, Mr.

Speaker, because I have asked the Marketing Council to re-assess the situation in regard to the need for an election in a particular district. As a matter of fact, Mr. Speaker, if they use the logic that they have used in regard to District 4 to carry it logically forward, then they should have suggested completely new elections in every area. MR. RUSTE: A supplementary question to the hon. minister, Mr. Speaker. Did the Marketing Council in fact authorize such re-election -- shall we say -- or is another election being held? DR.

HORNER: The Marketing Council has made certain recommendations to me, and I have asked them to re-assess the situation. Alternate page number, consecutive for the 17th Legislature, 1st Session: page 3961

59-8 ALBERTA HANSARD June 1st 1972 MR. SPEAKER: The hon. Member for Edmonton Ottewell's question appears to have been answered. The hon. Member for Vermilion-Viking, followed by the hon. Member for Little Bow. Rabies Control MR. COOPER: Mr. Speaker, my question is for the hon. Minister of Agriculture. Have we a shared-cost program with the federal Department of Agriculture for reimbursement for losses of livestock from rabies? DR. HORNER: I am not aware of that at the moment, Mr. Speaker, but I will inquire and let the hon. member know. MR.

COOPER: I understand that Saskatchewan, Manitoba, and the eastern provinces have such a program and I was just wondering whether we did. MR. SPEAKER: The hon. Member for Little Bow, followed by the hon. Member for Calgary Mountain View. Conservative Handbook MR. R. SPEAKER: Mr. Speaker, a question to the Premier. Some time ago I asked if you would consider tabling the Conservative handbook which was passed out to the civil servants just after you came into government. Has the hon. Premier made a decision on that matter to this date? MR. LOUGHEED: Mr.

Speaker, I thought I had answered that by saying that we had made the decision that it was not a government document. MR. SPEAKER: The hon. Member for Calgary Mountain View followed by the hon. Member for Calgary Millican. MR. LUDWIG: Mr. Speaker, I had already asked my question. MR. SPEAKER: The hon. Member for Calgary Millican followed by the hon. Member for Edmonton Kingsway. School Taxes MR. DIXON: Mr. Speaker, I would like to direct a question to the hon. the Premier regarding Bill No. 103, sponsored by the hon. Member for Calgary North Hill.

My question is, the Catholic School Trustees have been making representation that no changes be made in the present way the taxes are collected for school purposes, and I Alternate page number, consecutive for the 17th Legislature, 1st Session: page 3962

June 1st 1972 ALBERTA HANSARD 59-9 wondered if your government had been giving any consideration to amending the bill, and leaving the present system of tax collection as it is? MR. LOUGHEED: Mr. Speaker, I will refer that question to the hon. Minister of Municipal Affairs. MR. RUSSELL: As a matter of fact, Mr. Speaker, this technique had been discussed in some detail with various school trustee organizations and we got quite a wide variety of opinion. The Alberta School Trustees' Association, in their annual meeting with Cabinet, did issue a press statement via their president's office -- Mr.

Gunderson -- saying that they would support the idea, but I recognize that there are differences of opinion among elected school trustees, and why there would be those differences. I don't think the fact that the legislation is permissive, or that it must be instituted by the municipality, has been gotten across very well, but hopefully when the legislation is passed, that message will come through a little better. MR. DIXON: A supplementary. Then there is going to be no change as far as the government is concerned, under the present bill? MR. RUSSELL: We are not anticipating a change at this time, Mr.

Speaker, because, as I say, there has been a wide variety of reaction to this. It has been discussed with the trustee organizations. We would like to try it at least one year to see if it is going to work. If there are difficulties, then we can re-assess it. I think it would be rather unfair to condemn the legislation -- it has been carefully thought out -- before it has been given one year to operate. MR. SPEAKER: The hon. Member for Edmonton Kingsway, followed by the hon. Member for Wainwright. DR. PAPROSKI: Thank you Mr. Speaker. My question has been answered. MR. SPEAKER: The hon.

Member for Wainwright, followed by the hon. Member for Spirit River-Fairview. MR. RUSTE: I would like to direct a question to the hon. Minister of Culture, Youth and Recreation. Has the hon. minister given any consideration to the establishment of -- and, I suppose for the want of a better word or term -- historic sites or markers, to recognize the sites of the little old schoolhouses in our province? MR. SCHMID: Mr. Speaker, this subject right now is under a public hearing, and a public hearing is being held today, in fact, in Edmonton.

Public hearings were also being held in Lethbridge and Calgary regarding historical and archeological sites in our Province of Alberta. I thank the hon. member for bringing the old schoolhouse Alternate page number, consecutive for the 17th Legislature, 1st Session: page 3963

59-10 ALBERTA HANSARD June 1st 1972 sites to my attention, and maybe we should look into that also. As soon as the report from the committee is in, we assure you that we will do our best, as I said before, so that Alberta will have the best site protection legislation in North America. MR. RUSTE: Supplementary question to the hon. minister. Does he feel then that these form an important part of our culture, history, and heritage? MR. SCHMID: I'm quite sure that they form an important part, Mr.

Speaker, since all of us sitting here have at one time or the other pressed hard wood benches, like those in the schoolhouses, whether in the Province of Alberta or otherwise. MR. SPEAKER: The hon. Member for Spirit River-Fairview followed by the hon. Member for Olds-Didsbury. Department of Agriculture MR. NOTLEY: Mr. Speaker, I'd like to direct this question to the hon. Minister of Agriculture. In the light of the findings and the recommendations of the Tradition and Transition Committee tabled several days ago, is the government planning any major overhaul of agricultural extension in the Province of Alberta?

DR. HORNER: Mr. Speaker, we're in the process, and hopefully have nearly completed, a major overhaul of the Department of Agriculture. In concurrence with that overhaul, of course, the question of extension is of major importance -- major importance in the fields of marketing, and in the fields of the provision of credit services, particularly to our farmers. Interestingly enough, Mr. Speaker, I just have the figures from the first two months of 1972 and gross farm income in Alberta is up 17 per cent. Senior Citizens On School Boards MR. CLARK: Mr.

Speaker, I'd like to direct a question, or follow up a question I had yesterday for the hon. Minister of Municipal Affairs, asking if he has had an opportunity to check out that question of citizens over 65 years of age being eligible to be members of school boards? MR. RUSSELL: Yes, I did check it with my Deputy Minister this morning, Mr. Speaker, and he was unable to find any reason in existing legislation why your constituent would think that way. I told him that I'd try and get further details and report back, so maybe we could get together on it. MR. SPEAKER: The hon. Member for Wainwright.

Alternate page number, consecutive for the 17th Legislature, 1st Session: page 3964

June 1st 1972 ALBERTA HANSARD 59-11 Agriculture Increases MR. RUSTE: Mr. Speaker, to the hon. Minister of Agriculture. I believe he referred to a 17 per cent increase. Could he give us a breakdown of that in livestock versus grains? Percentage increase and income? DR. HORNER: I can give a general breakdown, Mr. Speaker. There was an increase in the amount in wheat, a decrease in the amount in barley, an increase generally, of course, in the question of livestock returns. MR. RUSTE: A supplementary. That would reflect then to the increased movement of grains to export positions? DR.

HORNER: It reflects the increased movement of grains export positions. It also reflects the increased movement of grains through the livestock market in the Province of Alberta. MR. SPEAKER: The hon. Member for Calgary Millican followed by the hon. Member for Spirit River-Fairview. Nursing Home Wages MR. DIXON: Mr. Speaker, I'd like to direct a question to the hon. Minister of Health and Social Development.

My question is, owing to the fact that the government at the present time is contemplating studies on the minimum wage in Alberta -- and every indication shows that they will be going up -- I wondered if your department is looking at the contracts of nursing homes and auxiliary hospitals with an idea of raising the present contract amount? MR. CRAWFORD: Mr. Speaker, if I'm not mistaken, the nursing home contracts have been recently announced as a small increase of 50 cents per patient a day, and nothing has changed in respect to auxiliary hospitals. Rural Oral Fluoride Program MR. NOTLEY: Mr.

Speaker, I'd like to direct a question to the hon. Minister of Health and Social Development as well. On Monday of this week I asked you about the rural oral fluoride program, Mr. Minister, and you mentioned that you would be looking into it and making a report to the Legislature -- this was raised yesterday. My question to you is, are you in a position today to report on the status of the rural oral fluoride program? MR. CRAWFORD: Mr. Speaker, my presumption would have to be that the hon. member was out during the first few minutes of the Question Period. The matter was raised by the hon.

Member for Hanna-Oyen, and I explained that the communities are being given a year's notice rather Alternate page number, consecutive for the 17th Legislature, 1st Session: page 3965

59-12 ALBERTA HANSARD June 1st 1972 than cancellation in regard to that program. Secondly, that for ones without municipal water supplies, support would continue on a longer term. MR. SCHMID: Mr. Speaker, I have some additional information for the hon. Member for Sedgewick-Coronation, in fact I think it is good news for him. In reply to his many questions regarding the Iron Creek meteorite, also known as the Manitou Stone, it is being returned to Alberta after an absence of about 100 years on a permanent loan basis by the Victoria College, University of Toronto. The meteorite was removed near Iron Creek.

For some time it has been on display in the museum at the Victoria College, University of Toronto before being moved to the Royal Ontario Museum where it is now shown. The 386 pound meteorite, the largest ever found in Canada, will be on display at the Provincial Museum and Archives here in Edmonton as soon as possible. I would publicly like to thank the Board of Regents of the Victoria College for their co-operation. MR. SORENSON: Mr. Speaker, may I just say a word? I am, of course, very proud and very happy -- I think I have just popped a couple of buttons on my shirt. White Stag MR. PEACOCK: Mr.

Speaker, in answer to the oral question presented in this House to the hon. Premier at the earlier part of the session regarding the sale of the White Stag Company, I would like to report the following: that we met Mr. Marcovitch and we were informed by Mr. Marcovitch that there was no intent of closing out his White Stag operation in Edmonton. The introduction of American capital into Mr. Marcovitch's plant was necessitated by reasons of working capital. Mr. Marcovitch has operated under license to White Stag in the United States, and therefore the sale was influenced by this association.

I might further point out that in the course of conversation with Mr. Marcovitch, he did point out a very serious problem that we are facing in the garment industry in Alberta, and that is the training of experienced personnel. We, in our department, are attempting now to co-operate with the labour problem in co-ordination with Mr. Foster and Dr. Hohol's department. MR. KING: In view of the very high level of tension which is running through the Legislature this afternoon, I wonder if the Premier could advise the House whether or not the hon.

Member for Olds-Didsbury has indeed received a Writ of Dissolution from the Lieutenant Governor in anticipation of an early election? head: QUESTIONS 211. Mr. Taylor asked the government the following question: The following information is requested in regard to the following rivers, as of December 31, 1971:

(1) The Bow River from Ghost Lake to the Carseland Bridge,

(2) The Jumpingpound River from the Forest Reserve Boundary to the confluence with the Bow River, Alternate page number, consecutive for the 17th Legislature, 1st Session: page 3966

June 1st 1972 ALBERTA HANSARD 59-13

(3) The Highwood River from the Forest Reserve Boundary to the confluence with the Bow River, and

(4) The Sheep River from the Forest Reserve Boundary to the confluence with the Highwood River -- (

A) The number of road allowances, (

B) The number of road allowances open, (

C) The number of road allowances leased, (

D) The number of road allowances closed illegally, (

E) The number of road allowances not now open that it is feasible to open. MR. PEACOCK: Mr. Speaker, I move that this be made a Motion for Return. MR. SPEAKER: It has been moved by the hon. Minister of Highways and Transport, seconded by the hon. Minister of Advanced Education, that Question No. 211 become an Order for a Return. Do you all agree? HON. MEMBERS: Agreed. head: MOTIONS FOR RETURN CLERK: Motions for a Return, Question No. 207, standing in the name of Mr. Clark. MR. CLARK: Mr. Speaker, I have already been discussing the nature of this return with the hon. Minister of Advanced Education.

We have worked out a mutual arrangement, so there will be no need for the return to proceed. MR. SPEAKER: Have the hon. Member for Olds-Didsbury and the hon. Member for Macleod leave to withdraw Motion No. 207? HON. MEMBERS: Agreed. head: GOVERNMENT MOTIONS 1. Hon. Mr. Hyndman proposed the following motion to the Assembly, seconded by Hon. Mr. Miniely:

Be it resolved that, the interim report of the Special Committee established to review The Election Act be now received and concurred in. MR. HYNDMAN: Mr. Speaker, hon. members will recall that the chairman of that committee reported asking leave to bring in the report this fall rather than now because the committee required more time to spend on The Election Act. [The motion was carried on a voice vote.] Alternate page number, consecutive for the 17th Legislature, 1st Session: page 3967

59-14 ALBERTA HANSARD June 1st 1972 MR. HYNDMAN: Mr. Speaker, I move you do now leave the Chair and the Assembly resolve itself into Committee of the Whole to study Bill No. 99 on the Order Paper, The Legislative Assembly Amendment Act, 1972. MR. SPEAKER: Having heard the motion by the hon. Government House Leader do you all agree? HON. MEMBERS: Agreed. [Mr. Speaker left the Chair at 3:11 p. m.]* head: COMMITTEE OF THE WHOLE [Mr. Diachuk in the Chair.] MR. CHAIRMAN: The Committee of the Whole Assembly will come to order. Bill No. 99 The Legislative Assembly Amendment Act, 1972 [ Sections 1 to 6 were agreed to without debate.]

Section 7 MR. RUSTE: Mr. Chairman, there is just one point in here. In the dividing of it into 12 months and payments per month, this is going to leave a void some place in the authorization for payments before the budget is brought down in the spring of 1973. Do you have any comments on that? This provides for 12 months? MR. MINIELY: Yes, that's correct. Basically there will be some acceleration, but we're really talking about an immateriality, as far as the budget is concerned. [Section 7, the title and the

preamble, were agreed to.] DR. HORNER: Mr. Chairman, I move that the bill be reported. [The motion was carried without debate.] MR. HYNDMAN: Mr. Chairman, I move the committee rise and report. [The motion was carried without debate.] * * * [Mr. Speaker resumed the Chair at 3:16 p.m.] Alternate page number, consecutive for the 17th Legislature, 1st Session: page 3968

June 1st 1972 ALBERTA HANSARD 59-15 MR. DIACHUK: Mr. Speaker, the Committee of the Whole Assembly has had under consideration the following bill, Bill No. 99, and begs to report same. MR. SPEAKER: Is it the wish of the Assembly to receive the report? HON. MEMBERS: Agreed. MR. HYNDMAN: Mr. Speaker, I would now like to ask the leave of the House to move directly to third reading of this bill, notwithstanding Rule 59, which requires that no bill be given two readings on one day. HON. MEMBERS: Agreed. MR. SPEAKER: I take it the hon.

Government House Leader has the unanimous agreement of the House for the request he just made? HON. MEMBERS: Agreed. DR. HORNER: Mr. Speaker, I move, seconded by the hon. Minister of Federal and Intergovernmental Affairs, that Bill No. 99 be read a third time. [The motion was carried without debate.] MR. HYNDMAN: Mr. Speaker, the hon. the Lieutenant Governor will now attend upon the Assembly regarding Bill No. 99. [The Lieutenant Governor entered the Assembly and took his seat on the Throne.] MR.

SPEAKER: May it please Your Honour, the Legislative Assembly of the Province of Alberta has, at its present sittings thereof, passed a bill to which, in the name and on behalf of the said Legislative Assembly, I respectfully request Your Honour's assent.

ASSISTANT CLERK: The title of the bill to which your Honour's assent is prayed is The Legislative Assembly Amendment Act, 1972. [The Lieutenant Governor nodded his approval.] His honour, the Honourable Lieutenant Governor doth assent to this bill. [The Lieutenant Governor left the House.] Alternate page number, consecutive for the 17th Legislature, 1st Session: page 3969

59-16 ALBERTA HANSARD June 1st 1972 head: GOVERNMENT BILLS AND ORDERS (Second Reading) Bill No. 54 The Mines and Minerals Amendment Act, 1972 MR. DICKIE: Mr. Speaker, I move, seconded by the hon. Minister of Lands and Forests, that Bill No. 54 The Mines and Minerals Amendment Act, 1972, be now read a second time. Mr. Speaker, there are two basic principles involved in this bill. The first deals with the question of a ten-year lease. It gives the hon. minister the right to notify people who have a ten- year lease that one year after receiving that, they can either drill or else pay an additional fee.

The second principle deals with removal of the statutory provisions dealing with a ceiling on royalty provisions. Mr. Speaker, dealing with the first principle involved in this bill, one of the first concerns we observed when we started reviewing the question of the leases was one of the criticisms of industry, that there should be a greater turnover of acreage. Certainly this is true, I would say, of companies that might be described as other than the majors. They were concerned that there should be a quicker turnover.

This, to their minds was one of the real incentives that the government could grant, and in considering how this turnover could proceed faster, one of the steps that was taken was to consider what had previously been done. The previous administration had used a similar principle back in 1962, when they considered the 21-year leases, and implemented the same type of provision, the minister giving notice either to drill or pay. So that is the reason for that provision in the bill, as an incentive to drilling and to encourage a turnover of acreage. I thought, Mr.

Speaker, just to give the hon. members some idea of the turnover of acreage in the province at the present time, I might just highlight for the hon. members, going back to 1967 and reading from 1967-71 the total acreage surrendered or cancelled and then the total acreage that was sold.

Total Acreage Total Acres Sold Year Surrendered and Cancelled and Bonus Received 1967 6 million 8 million 1968 7 million 6 million 1969 4 million 6 million 1970 8 million 5 million 1971 7 million 11 million So hon. members will realize that during that period of time the acreage surrendered varied from 6 million to 8 million and acreages that were sold or leased for bonuses were between 6 million and 11 million. So it is hoped with the proposed amendment in that respect that this will encourage the turnover of acreage, and certainly again that this provision gives the minister that kind of discretion.

If it was brought to the attention of the minister that there was acreage that was a ten year lease, five years had elapsed, and it was in a good area and wasn't being developed for some unknown reason or legitimate reason, the minister could then act on it to assure that that acreage would either turn over or at least bring additional revenue to the Crown. Alternate page number, consecutive for the 17th Legislature, 1st Session: page 3970

June 1st 1972 ALBERTA HANSARD 59-17 Is dealing with the second aspect concerning the removal of the statutory provisions dealing with the maximum royalty, some concern has been expressed here, and I might deal with that aspect and the removing of the statutory provision, because I think all hon. members will appreciate that as it stands at the present time, with the limitations in the leases, any new leases that are granted by the Crown must contain the maximum royalty provisions.

I would first like to draw to the hon. members' attention, the review of royalty provisions that was prepared by our department and submitted to all hon. members. On page 2 of that review the first paragraph is the part that I would like to read.

"The current royalty rates on petroleum and natural gas produced from Crown minerals came into force on April 1, 1962, and continued in force for a period of ten years and thereafter until changed by the Lieutenant Governor in Council." Now that came specifically from the regulations that were passed at that time, and so there is no misunderstanding in anyone's mind, I would like to read the applicable part of the regulations that were passed in 1962.

Clause No. 7: "These regulations come into force on the 1st day of April, 1962, and shall continue in force for a period of ten years, and thereafter until changed by the Lieutenant Govenor in Council." The point I wanted to make absolutely clear, Mr. Speaker, was that this was a ten-year commitment by regulation as to the question of the amount of royalty, and royalties are set out in the regulation. So what we are faced with today is the question of what are we going to do by way of royalty provisions in new leases that will be executed by the Crown.

As the hon. members are aware, we are presently considering various proposals, and you will recall that when the government's tentative position paper was considered, and we had the hearings, the question of the period of time needed to get some stability was considered, that is, whether this period of ten years between reviews or five years should be considered. It might now be considered that in the future we should not write that maximum royalty provision right in the leases, but what could be done is to pass new regulations which are in any case due to come into force and effect after April 1st.

The new regulations would contain a similar provision that they go for either one year, three years, five years, or ten years; after that a decision has to made. Also in those regulations would be contained a provision dealing with the question of the maximum royalty. If that is done in that way then there is no necessity of containing in the actual act the statutory maximum provision that had previously been inserted in the act. MR.

HENDERSON: I don't intend to re-thresh all the straw that went through the hopper in the process of the hearings, but nonetheless my very serious concern over the direction in which this government has set itself in this particular matter, and I think the very serious consequences in total for the people of Alberta, prompts me to deal with the particular question of removing the royalty ceiling from the statute.

I think it was fairly demonstrated before the committee that a substantial portion of the labour force of Alberta is involved in the drilling, exploration and development of oil and gas resources in the province, notwithstanding a shift in investment within the industry to parts of Canada other than Alberta. But certainly one cannot take lightly -- and I think we do so at considerable peril -- the suggestion of removal of the maximum royalty rate from the statute. I'm not talking about what the figure should be, but the principle. Alternate page number, consecutive for the 17th Legislature, 1st Session: page 3971

59-18 ALBERTA HANSARD June 1st 1972 One should not take lightly the serious consequences that could result from that. I agree whole-heartedly that it's a matter of judgment of all members at this time as to just how serious these consequences would be. But very clearly, Mr. Speaker, I have to suggest that simply framing some sort of policy in regulation, as the minister has proposed, is simply not adequate because it doesn't insure an opportunity for full and complete public examination of the changes in policy that could be made by Executive Council in this matter before the change is made.

I have to suggest that to change it, so that this matter can be dealt with by regulation in itself, largely makes a mockery of the whole exercise we went through in holding public hearings. While I have some very definite opinions as to the usefulness of the hearings so far as the subject matter that the hearings directed themselves towards, nonetheless the hearings certainly did bring before the members of the Assembly the critical nature of this question of investor confidence in Alberta. I think, Mr.

Speaker, there's a tendency for the average man, and I presume many of the members of this Legislature are such, to think in terms of investor confidence as someone investing a dollar in a sure thing and making a tremendous killing out of the resources of the province. If that was simply the case we were talking about I wouldn't be on my feet.

But when one realizes, for example, that in the Drilling Association brief that was presented to the committee, they pointed out something like a 25 per cent decline in man years of employment within the industry within the last couple of years as a result of decline of development work within the Province of Alberta, (the decline of employment opportunity is something in the order of 4,500 -- if I recall the figure -- somewhere between there and 5,000 man years), and when one realizes that that represented a 25 per cent decline, one appreciates that there are something like 15,000 job opportunities still in effect in the Province of Alberta in the drilling part of the industry alone.

According to my latest recollection of the number of people per family, the statistical figure, I believe, is something like 3.8. So it's not beyond the realms of imagination to say that a complete turn-off of exploration and development in Alberta as a result of a decline of investor confidence would directly affect the livelihood -- the bread on the table -- of 60,000 people, which only represents one small portion of the industry in total.

I think it increases our peril -- the suggestion that we should treat lightly the importance of a maximum royalty in the statute as it relates to maintaining investor confidence. I think without any stretch of the imagination it can be suggested that somewhere between 70,000 and 100,000 jobs that are tied up in the exploration of oil and gas, largely within the Province of Alberta. So it is not beyond the realm of probability to talk about 300,000 to 400,000 people, whose bread comes from this particular industry. It isn't a matter of huge profits for a few people from development of our resources.

We are talking bread-and- butter issues for a sizeable percentage of the people of this province. Were it not such an important issue, Mr. Speaker, I would be quite confident to sit back, and not raise my voice, let the government go ahead with their proposal, watch the consequences, and have the privilege of saying, "I told you so," and possibly gain some incidental political benefits as well. But the price is too high as far as the people of the Province of Alberta are concerned. I have to suggest, Mr.

Speaker, that the suggestion of simply leaving the question of maximum royalty to a matter of regulation which is subject to a decision by a handful of some 22 people who are citizens of the Province of Alberta, I really don't think is good enough so far as investor confidence is concerned. I am certainly Alternate page number, consecutive for the 17th Legislature, 1st Session: page 3972

June 1st 1972 ALBERTA HANSARD 59-19 very firmly of the opinion that the manner in which the government has handled this entire issue -- and I don't intend to belabour it -- has already had a serious effect which is going to show up in the months ahead on investor confidence in the Province of Alberta.

I don't think the suggestion that it simply be left to regulation, subject to the decision of 20 men and two women, is going to be adequate to undo the damage that has been done so far as investor confidence is concerned, in light of some of the other proposals that the government has presented in its position paper. Because I think it was suggested very clearly, Mr. Speaker, that the government has been extremely naive insofar as how to approach this problem and appreciate what the business of investment economics is all about.

It is axiomatic that a party or company which is going to embark on a program to invest $100 million or $200 million, sizeable amounts of money, in a risky business of looking for oil and developing it, if they do find it, certainly has to have a yardstick to measure their investments by.

In spite of all the popularity of belabouring the question of profits within large companies, and the social justice in putting more of those profits into the public treasury, it is nonetheless a fact that a firm commitment, as firm as it can be -- and 'as firm as it can be' means in statute, decided by the elected representatives of all the people of this province, all the members of this Assembly. It is absolutely essential insofar as providing a yardstick that is as firm as it can be. It couldn't be any firmer than that.

I think it is accepted by all concerned, that in the final analysis this Legislature has the right to alter unilaterally that commitment, and I have no quarrel with those who suggest that we do have the authority. But to undermine this question of investor confidence, to remove from the industry the parameters that it must have on which to base its economic studies relative to return on the investment, in the form of removing the royalty commitment from the statute, and the absence of a firm commitment relative to the period of time to which that royalty applies, there is no question, Mr.

Speaker, that it will have highly detrimental effects upon the relative position of Alberta so far as attraction of the investment dollar within the oil and gas business. Consider the suggestion that the government has put forward itself, -- under Bill No. 95 -- relative to the proposed tax, at the upper limit equalling a royalty increase of approximately 50 per cent.

When that is added to the fact that Alberta already has the highest oil and gas royalty rates in Canada, and a new tax of that magnitude is added to it, without any commitment from this Legislature -- not from the Executive Council, but from this Legislature -- as to what the maximum royalty is going to be, and the period to which it applies, I can only suggest to those who casually dismiss the significance of this action that they are certainly substantially lacking in knowledge about the ground rules by which industry measures the relative merits of investment in oil and gas in Alberta as opposed to investment opportunities elsewhere in Canada.

While I certainly go on record as supporting the proposition that we have a responsibility to see that we get the maximum possible return for the people of this province from the development of our oil and gas resources, to take action that will substantially undermine, if not destroy, investor confidence in this critical area, I suggest would be a short-term gain at a long-term loss.

I certainly would ask the government, in its wisdom, to consider seriously amending the bill when we get into committee with a view to not removing the 16 2/3 per cent maximum at this point in time, because in my view, to do it will simply add to the damage that has already been done so far as investment climate is concerned, and to withhold action on that particular matter until they have examined Alternate page number, consecutive for the 17th Legislature, 1st Session: page 3973

59-20 ALBERTA HANSARD June 1st 1972 the question in total and arrived at what their total revised policy position is going to be. And if, Mr. Speaker, it can't wait to re- examine the matter of maximum royalty, whatever the figure is, until the fall session, and it's that critical to the people of the Province of Alberta, let's see the Legislature called into session for two or three days in midsummer, or one day, or whatever would be necessary to deal with the question. But, Mr.

Speaker, to take it out of the act, and to leave it out of the act, and simply to say that placing it in regulations is going to be the equivalent so far as the investor is concerned and the impact on a stop or reduction of investment in oil and gas exploration industry in the Province of Alberta, simply, I think, is not going to be good enough.

I urge the government to err on the side of caution in this matter, because even if their strategy is to take it out now with a view to trying to improve their bargaining position with industry and to put it back in the fall, I suggest that that too, is going to have its consequences, because when politicians start playing games on a matter as important as this, that in itself has negative effects on the entire business. So, Mr.

Speaker, I would leave it at this point by simply urging the government to consider, when we get into committee, amending the bill so far as changing the maximum royalty figure that is in the act now is concerned, until they have made up their minds firmly, specifically, as to what their overall policy position is going to be.

And I suggest that this will, I think, demonstrate to the people of the Province of Alberta, to the industry, and to the members of the Legislature, that the government is not going to act hastily on this matter, that it has clearly thought it out, and that whatever action it has taken, is believed to be in the best interests of the people of the province. At this point, I conclude by saying, Mr. Speaker, I do not think that in principle, removing the maximum from the statutes is in the best long-term interests of the people of the province.

And I'm not talking now about what the maximum figure should be -- that's another argument -- whether it's 20 or 25 per cent. But simply seeing it proclaimed in regulation, I just do not believe is going to be good enough. There is going to be very little expense (or none) with the change in The Legislative Assembly Act to call the House back into session for a couple of days in midsummer, if they feel it's critical and we can't wait until October to resolve the figure finally.

So, once again, for about the third time, I urge the government to consider seriously the implication of what this action means for several thousands of men, women, and children and the people of this province if the predictions and statements that we heard during the committee should bear fruit in the form of a substantial reduction or a complete cessation of further investment in oil and gas exploration development in the Province of Alberta. MR. NOTLEY: Mr.

Speaker, I propose to vote for this particular bill on second reading, but as the hon. members are already aware, I certainly don't subscribe to the government's tentative position paper. I, however, debated that paper when the estimates of the Department of Mines and Minerals were discussed, so I don't intend, this afternoon, to go over the arguments that I advanced at that time.

Suffice it to say that it is my view that we should not make a final decision on oil policy until such time as we are in a position to look at the total energy picture, until such time as we have the report of the Energy Resources Conservation Board hearings on natural gas pricing, because it is my view that it is only when we look at the total picture that we can come up with a policy that makes sense for the energy resource development of our province. Alternate page number, consecutive for the 17th Legislature, 1st Session: page 3974

June 1st 1972 ALBERTA HANSARD 59-21 There are three points, however, that I would like to make in discussing the principle of this particular bill. The first point is that despite all the provisions we have made in the past to guarantee stability in this province, the fact of the matter is that there is virtually a hemorrhage of capital leaving the Province of Alberta.

If we look at the figures for the last four years, the statistics that were quoted from Oilweek but were cited by a number of the organizations, chiefly the Alberta Teachers' Association, you see a frightening change that has taken place in the last number of years. In 1968, the oil companies took $75 million more out of the province than they put into it. In 1969, this rose to approximately $120 million, in 1970, to $281 million, in 1971, to $389 million, and the estimate for next year is a staggering $654 million. In short, it is quite clear, Mr.

Speaker, that notwithstanding the royalty ceilings, notwithstanding all the efforts that have been made to provide stability in this province, the oil industry is using the money made in Alberta to finance plays elsewhere in Canada. One of the things we must grapple with is to find ways and means of ensuring that the industry invests in this province the money that they make in the Province of Alberta. The two principles in this bill -- number one, lifting the ceilings, and number two, the more rapid turnover of lands -- are principles that I can support.

I do not believe that simply lifting the ceilings on the present royalty arrangements is going to jeopardize investor confidence in the Province of Alberta. I suggest that when we are dealing with particularly the major oil companies, we are dealing with corporations that examine their investment decisions on a pretty pragmatic basis. They are the first people to recognize, notwithstanding efforts made to impose royalty ceilings in a statutory sense, that there are many, many ways that a government can use to get around those ceilings.

With all due respect, the tentative position paper is an effort to do just that. It is an effort to raise more money for the people of Alberta without going over the 16 2/3 ceiling. There are other options that the government analyzed in the tentative position paper -- a net profit tax for example, or some of the other options that it considered. The fact of the matter is that there is no way that you can guarantee stability for the industry, and I rather doubt that the pragmatic people who lead the oil industry in this province really, when you come right down to it, expect those kinds of iron-clad guarantees.

I was rather impressed with the submission made by the first small independent oilman on Tuesday morning, who said that, quite frankly, he didn't think it would make much difference even if we lifted the ceilings on the leases that are already in effect. He felt that the money markets would react to such a decision pragmatically, and that it would not, in any way, shape, form, or injure his ability to raise capital elsewhere, especially in New York.

The second principle of this bill, the more rapid turnover of land, coupled with drilling incentives -- although that is not as it is worded in the bill -- is something that I can support too. I was very impressed in listening to the Canadian Association of Oilwell Drilling Contractors. I was rather impressed with the research that went into that brief, and with the proposals that they made to the Legislature -- proposals which, incidentally, Mr. Speaker, go somewhat farther than the changes that we are making in this act.

If the members will recall, the Oilwell Drilling Contractors Association suggested that after two years the minister could give notice, and that would be going somewhat farther than we are today. But to the extent, Mr. Speaker, that we are making a start, to the extent that a minimum position, as I see it, is to provide for the more rapid turnover of lands, as the bill suggests, and to lift the ceilings, I'm prepared to support it. But I do not Alternate page number, consecutive for the 17th Legislature, 1st Session: page 3975

59-22 ALBERTA HANSARD June 1st 1972 think that the government's tentative position paper is sound. I do not believe it goes far enough. Again, in conclusion, I reiterate my point that the government, before making a decision on oil, should analyze the entire energy picture, extend the present agreements for one year, but take that time to look at the total picture -- natural gas, tar sands development and oil -- and come up with a policy that relates to energy resources in total in this province. MR. ZANDER: Mr. Speaker, in my constituency approximately 50 per cent of the people are engaged in the oil industry.

First of all, I would say that I had some fears about taking off the ceiling of royalties and placing it in regulations. However, after listening to the hon. Member for Wetaskiwin-Leduc say that his fears are more profound than mine, £ would say that I have every confidence in the Executive Council of this government and that it will not discourage the oil industry out of the province to any great extent. In fact, I believe the incentives program for new drilling programs in the province will increase confidence, rather than defer or probably kill the drilling industry. Mr.

Speaker, it seems to begin with whether it is in regulations or whether it is in the act. Ah act can be repealed by any government if it feels it should do so. Certainly, when the hon. member on the opposite side said that he has no confidence, I can understand why he feels that he has no confidence, because he feels that 'they' are the only government that any group of people can have any confidence in. But the people of Alberta, on August 30th, have given this confidence to the government. I think the people in the backbenches here have an Executive Council in which we have every confidence.

I believe that the industry in this province has as much confidence as the people of Alberta had on August 30th. MR. SPEAKER: May the hon. minister close the debate? HON. MEMBERS: Agreed. MR. DICKIE: Mr. Speaker, in rising to close the debate, I'd like to make one or two observations, particularly from some of the remarks made by the hon. Member for Wetaskiwin-Leduc. First, I have some difficulty following his line of argument. I wasn't sure whether he was on the right bill or not for a while, and when he did get to the point, I really took it that he was advancing two arguments.

The first was that as a member of this Legislature, he felt that this question of royalties should be set by the Legislature and not by regulation, which would be an Order in Council. night I suggest to the hon. member that what happened in 1951, what happened in 1961 in the reviews, was done behind closed doors and not on the floor of the Legislature. MR. HENDERSON: Oh, yes, it was in the Legislature. MR. DICKIE: Now, Mr.

Speaker, what happened this year for the first time was that the government treated this with such importance and significance that they did have a public hearing, and following the public hearing presented a tentative position paper that was well researched. The results of the hearings will be assessed and Alternate page number, consecutive for the 17th Legislature, 1st Session: page 3976

June 1st 1972 ALBERTA HANSARD 59-23 evaluated, then will be submitted to the Cabinet of 22 and then to a government caucus of 48 for final decision. In that respect, Mr. Speaker, I would like to suggest that the arguments he has advanced cannot be supported. The other one that he deals with is the question of whether it is in the act or the regulations. Might I point out that the reason I specifically read the regulations is that it was the regulations that set a ten-year period. Nothing was said in the act about a ten- year period.

We all appreciate that the act can be changed from year to year without any difficulty. But if there was a ten-year commitment to the investors it was done by regulation by the previous administration. So when the hon. member advanced the question today of investor confidence and suggested that the investors want to know a period of time, we suggest to him that it was set forth in our position paper. It did refer to a period of years, and we invited comment on what that period of time should be. When the final decision is made as to the amount of royalty in the leases, that decision will be made.

It will be implemented and could be implemented in the same way as existing regulations are, so there is a period of time to give that stability. With all due respect to the arguments advanced by the hon. member, I suggest to him that those arguments cannot be supported in advance of his contention that they should appear in the way they have in the past by a provision in the act. That act can be changed from time to time. I agree with him when he suggests that for investor confidence there needs to be that period of time, that they would like to know what the royalty provision is going to be.

We have suggested in our tentative position paper the percentage 19 to 23. That percentage will be defined. The investors will know for what period of time they have that royalty provision when they take the lease. From that point of view the question of investor confidence is going to be answered, if those are the requirements they have asked for and wish to set forth. To say that we cannot do it by regulation -- it has been done previously. It has been accepted by regulations. So I think we have to accept that. Mr.

Speaker, in dealing with one other aspect which was an interesting observation, certainly, that the drilling contractors raised, whether two years were sufficient, we had a number of discussions on the question of five years. Again, this is a debatable point, the same as whether the parameters we have set on the royalties themselves are between 19 and 23 per cent. That is a debatable point; that is a decision that has to be made. Again, we took into consideration, before submitting this bill for second reading, the contention of the Drillers Association of the two years.

We would like to suggest that the five-year is perhaps a more acceptable term. We would like to advance with that and see how that works out initially. One other question that hasn't been dealt with in the question of financing, is that with the need for the maximum royalty provision for the financing of certain oil and gas reserves. That caused us some concern, but, Mr. Speaker, in talking with financing authorities and realizing how some of these different types of transactions are financed, one has to realize the maximum royalty provision does not apply after the first term.

In other words, after the ten-year term it doesn't apply on the renewed leases. So you don't have a maximum royalty provision on people who have gone for financing after the ten-year term. We made inquiries and asked if this was a question of how did this affect any of the financing. There was no effect, because they do finance on that basis. In other words, the ten-year maximum royalty provision Alternate page number, consecutive for the 17th Legislature, 1st Session: page 3977

59-24 ALBERTA HANSARD June 1st 1972 only applied for the first term. Again, I mention that and emphasize it because that sometimes is overlooked in the course of the debate. Thank you, Mr. Speaker. [A recorded vote being called for, the House divided as follows: For the motion: Messrs. Adair French Notley Anderson Getty Paproski Appleby Gruenwald Peacock Ashton Harle Purdy Batiuk Hohol Russell Benoit Horner Ruste Chambers Hunley, Miss Schmid Chichak, Mrs. Hyndman Sorenson Clark Jamison Speaker, R.

Cookson King Strom Cooper Koziak Stromberg Copithorne Lee Taylor Crawford Lougheed Topolnisky Diachuk Ludwig Trynchy Dickie Mandeville Warrack Doan McCrimmon Werry Dowling Miller, D. Wilson Farran Miller, J. Young Fluker Miniely Zander Foster Moore Against the motion: Messrs. Barton Dixon Henderson Buckwell Drain Totals: Ayes - 59 Noes - 5 [Mr. Speaker declared the motion carried, and Bill No. 54 was read a second time.] Bill No. 80 The Gas Resources Preservation Amendment Act, 1972 MR. DICKIE: Mr. Speaker, I move, seconded by the hon.

Minister of Lands and Forests, that Bill No. 80, The Gas Resources Preservation Amendment Act, 1972, be now read a second time. Mr. Speaker, the basic principle involved in this is a matter of clarifying the question of the definition of gas and specifically as this relates to ethane -- that is, whether ethane is considered a gas or not. In order to remove all doubt, ethane is clearly defined as being a gas by virtue of the act. That's important, dealing with question of export.

There's also another important point to be clarified and that is the powers of the Lieutenant Governor in Council where an order of the Energy Resources Conservation Board requires authorization or approval by the Lieutenant Governor in Council. The Lieutenant Governor in Council is clearly defined in the act so that there is no question that the Lieutenant Governor in Council can attach conditions to any order that is granted. MR. DIXON: Mr. Speaker, I would just like to make one or two remarks on this bill, more or less in the line of a question.

As we look into the future of the gas industry and the insistence on the purchaser of exported gas to have the gas as sweet and as clean as possible, and, because of environmental controls we are going to have a lot of by- Alternate page number, consecutive for the 17th Legislature, 1st Session: page 3978

June 1st 1972 ALBERTA HANSARD 59-25 products which may turn around to be a surplus, as our sulphur is at present. I'm wondering if the Department of Mines and Minerals has given any consideration to research into the future of the by- products that are going to be surplus as our gas export increases? MR. DICKIE: Mr. Speaker, certainly I think the interest in the cracking of the by-products from gas over the last little while has really mounted.

One of the projects we are engaged in at the present time is to determine what is the whole value of these by-products and whether these by-products can be put to use in the Province of Alberta before export, or whether they should be developed elsewhere. If they are, are we getting a substantial enough value for our returns for the people of Alberta if we permit their exportation? [The motion was carried without dissent, and Bill No. 80 was read a second time.] Bill No. 95 The Mineral Taxation Act, 1972 MR. DICKIE: Mr. Speaker, I move, seconded by the hon.

Minister of Lands and Forests, that Bill No. 95, The Mineral Taxation Act, 1972, be now read a second time. Mr. Speaker, in speaking to this bill and realizing that we are presently towards the end of the adjournment of this session of the Legislature, I think the hon. members will look back in years to come at this sitting of the Legislature and try to recall some of the real highlights of the Legislature. Certainly I think that all hon. members will have to place high on their list of priorities the Natural Resources Revenue hearing.

It was a three-day hearing; I think it set out initially to make sure that the public of Alberta were given an opportunity to present their views on this vital question. It gave industry the same opportunity to present their case to the people of Alberta. So from that point of view it served a very, very useful purpose. However, one of the purposes that I think is sometimes overlooked and I think is worthy of mention today, is what it did for the members of the Alberta Legislature.

Most of the members in this Legislature are new - - it's the first year they have had any experience -- and some of them are completely unfamiliar with oil and gas matters. I certainly think, in the three-day hearing that we did have, some of the major problems confronting the petroleum industry in the Province of Alberta were brought to their attention. Different points of view were expressed, but they did obtain an appreciation of those points of view. I want, as an example, to mention the question of price.

Certainly, when we got into the question of crude oil and the question of price, I think the hon. members would realize just how important the end price is in what is received for that crude oil. When they are looking back over it and trying to figure out what is a fair and reasonable return to the people of Alberta, they have to look at the end price. When they look at costs, they have to see what the end price is in relation to judging that. From that point of view, we have to realize how important price is.

At the same time, when we did get into those discussions, hon. members will recall the difficulty of trying to talk about the price in the Chicago market and Puget Sound, and even the experts have little differences of view as to how the price was determined and how the price was set. When you think of that difficulty on the question of crude oil, then I ask you also to think about how much more difficult it is on the question of natural gas -- and there again I Alternate page number, consecutive for the 17th Legislature, 1st Session: page 3979

59-26 ALBERTA HANSARD June 1st 1972 would ask you also to reflect back on one of the major decisions of this sitting, the field price hearing of natural gas. This was the problem that was confronting the government, the question of price of natural gas. The hon. members just had a touch of it, for three days, as to some of the problems and the complications involved in it. Then, when the decision was made to conduct this field price hearing on natural gas, with a view to making sure that some of the major problems and some of the complications involved in the question of price were brought forth.

From that point of view, Mr. Speaker, I think a public hearing of the nature that we had certainly was beneficial to all hon. members of this Legislature. As they spend further years in this Legislature, they will think back to some of the arguments that were advanced.

They will think back to some of the thoughts that were expressed during those hearings, because you are not going to be able to escape the questions involved in the petroleum industry, when you realize it presently consists of 27 per cent to 28 per cent of our revenue -- it has gone as high as 44 per cent of our revenue and our budget -- so this is a vital concern to all hon. members. I think the first year was an ideal time to get the basic background necessary to look at the problems ahead in the petroleum industry. Mr.

Speaker, when I think of our natural resources revenue hearing, I have to get excited about it, because I think the hearings were very effective. I think they were well held. The atmosphere was well created. They were well-run. I would like, at this time, to pay public tribute to the hon. Member for Ponoka, Dr. McCrimmon, for the way he chaired the meeting, for the way he organized the hearing, and I would ask you all to endorse that. Certainly it set a precedent that is going to be hard to follow for public hearings in the future.

If we do that I think, as members of the Legislature, we ourselves benefit a great deal, but also the public instills a type of confidence in us for having a hearing of that nature to express both points of view. Now, Mr. Speaker, I think it is foremost for perhaps all hon. members -- where do we go from here? As the minister, I think it is my responsibility to assess and evaluate with the expertise that we have available, all the submissions that have been made. We are presently doing that.

Following that examination and consideration of all the points of view, we will be making a recommendation to the Cabinet of 22 -- from there, to a government of 48 -- and they will have to make the decision as to what procedures they will follow, not only for future leases, but also for the existing provisions. The target date for that decision has been set as July 30th. It was interesting to note, during those hearings, that questions were raised about the timing and so forth, and I think the view expressed by the industry is that they would like to have a decision as quickly as possible.

This was our intention. We didn't wish to have it set out like the tax reform, where it was set over for a long period of time. Companies and organizations were unable to formulate their plans. It places the administration in a difficult position. Even the question of granting leases from now on - - we have to make these decisions from day to day. We have to make them quickly. We have to come to a conclusion. I can assure all hon. members that will come due after it is thoroughly researched and every point of view has been examined, and what is in the best interests of the people of the Province of Alberta.

Every point of view has been examined and what is in the best interests of the people of the Province of Alberta. Mr. Speaker, having mentioned that, I think the hon. members would like to know what the position is in respect to industry. I'd like to assure all hon. members that the doors of my office and of my colleagues are always open and we will sit down with any representatives of industry -- a small company, or a large company -- at any time to hear their views now that they have had a chance to Alternate page number, consecutive for the 17th Legislature, 1st Session: page 3980

June 1st 1972 ALBERTA HANSARD 59-27 analyze the briefs submitted from various organizations. I know those are being done and carried on. We'll certainly welcome sitting down with them, meeting and talking to them from time to time to make sure that we do have a good spirit of co-operation between industry and government which we will endeavour to carry on at all times. Mr.

Speaker, it's not my intention at this time, not having had the opportunity over the last five days to review even briefly the briefs that were submitted, so I think at this time all I have to touch on is the question of the bill that is presently being submitted to the members. The principle involved here is a question of taxation. The bill is a taxation on the mineral rights of owners and those that have the right to work, win and recover the same.

And that's the important principle you're asking to be approved today because it does deal with the question that was set forth in our tentative position paper on the basis of the alternatives that were considered. We'd ask that you consider this, that you are giving us authority to proceed with the implementation of that act so that we can have enabling legislation when we're sitting down on July 30th. When we do make the decision -- the decision is there for industry to know about, they will have the provisions of the act there -- there can't be any doubt about actually what the act says or may say.

There will be a provision in the act that hon. members will be asked to consider, that that act come into force and effect by proclamation so that we would be in a position, if the decision is made at that time, to implement the provisions of that act in total or in part. When I mention that, Mr. Speaker, I think one should also realize that as set forth in the tentative position paper, that this act as it is designed taxes all minerals.

It's initially intended to start with the question of crude oil reserves, and then of course it's taxed on those who own the crude oil reserves and those who have the right to recover, work and win the crude oil reserves. That would be the initial stage, but the act is very flexible in that it can exempt certain minerals, or it can exempt certain parts of minerals.

So with that flexibility, the government is in a position to work within the scope of the tentative position paper and is also flexible for changes that might be advanced from time to time as the assessment and valuation proves it would be highly desirable. I would ask hon. members, when they are considering the government's tentative position paper, not to forget that this act deals with the question of taxation, but also tied in with that tentative position paper was an exploratory drilling incentive system.

Certainly in that area I think the public hearings brought forth many suggestions as to how that position might be improved to get more drilling in Alberta. I think it was clear from the positions that were given that the question of drilling is important in Alberta. The decline of drilling has been of concern to all those that have investigated the petroleum industry, so how do we get more drilling in Alberta? What is the effect of having more drilling in Alberta? The multiplier effect there, Mr.

Speaker, I'd like to suggest to hon. members, is great enough to include every industry that is relying on it and the labour force that is involved. So the whole question of drilling aspect incentives has to be considered. Here again, from both sides of the House, before a final decision is made, if any hon. member in today's debate or later, has an idea or two that they would like to advance or some aspect of the public hearings that appeal to them they should tell us. For instance, the tax of $37 million on the roadway, that might appeal to them. How about the drilling fund suggestion in one of the briefs?

If any of those aspects appeal to the hon. members, I would like to get their research on it, ask questions on it. I'd encourage them Alternate page number, consecutive for the 17th Legislature, 1st Session: page 3981

59-28 ALBERTA HANSARD June 1st 1972 all not to hesitate one moment, but come to us and say, "I'd like to get this researched, I'd like comments on this," and we'd be glad to accommodate them on that. So with those preliminary remarks, Mr. Speaker, I'm prepared to welcome the observations of the hon. members. MR. STROMBERG: Mr. Speaker, in accordance with Rule No. 9 of the Rules, Orders, and Forms of proceedings of the Legislative Assembly of Alberta, and regarding Bill No. 95, I wish to advise the House that I have an interest in a freehold title and I will be abstaining from discussing or voting on this bill.

MR. SPEAKER: Refrain from voting? HON. MEMBERS: Agreed. MR. COPITHORNE: Mr. Speaker, I find myself in a similar position and I would also refrain from voting. MR. DIXON: Well I am not in that fortunate position. However, I am concerned about the freehold owners, in particular, farmers or private individuals that own the land.

For clarification of principle, I wonder if the hon. minister in his closing remarks would assure the House that where private owners -- when they signed up with an oil company, usually at $1 per acre per year -- have added onto that lease, in some cases the freehold owner of that property would be liable for taxes and levies while it was a non-producing lease.

I wondered if the government had taken into consideration this question, because it may put some people who have assigned their freehold land in a position where they could be paying more than their fair share towards the assessment and the money that the government is hoping to obtain from this area. This was the one point that I was concerned with as far as the principle of the bill is concerned. MR. CHAMBERS: I find it necessary to make a few remarks on this bill. We have had the hearings and I am sure that we all found them most informative.

We heard the oil industry present its case and we heard the other side. I think there is certainly no point in rehashing what was said. It is now up to the minister and to the Executive Council to make their decision. Let us hope, for the sake of Alberta, that their decision is a wise and a just one. As a member who has worked for the past 20 years in the oil business, I can say without hesitation that I am proud of the achievement of this industry in Alberta.

We only need to compare Alberta today with Alberta before 1947 to recognize the fantastic benefits that have accrued to Albertans as a result of our oil developments. Alberta's population has doubled during that period and I think this certainly contrasts with Saskatchewan's population which has remained fairly stable. We can look at dynamic towns such as Drayton Valley, Devon, Leduc, Rimbey, swan Hills, Fox Creek, Valleyview, Lloydminister, Edson, to name but a few -- even Edmonton and Calgary -- that owe most of their growth and prosperity to oil development.

We can look at the S3.5 billion that has gone directly Alternate page number, consecutive for the 17th Legislature, 1st Session: page 3982

June 1st 1972 ALBERTA HANSARD 59-29 into the Alberta treasury during that period, as well as the $12.8 billion that the industry has spent in the province. We should also consider the more than 200,000 Alberta jobs that depend upon the health of the petroleum industry. One aspect that the industry has probably not excelled in is public relations. Many people not associated with the industry tend to overlook the indirect benefits that accrue to them from the oil business and feel that oil companies are some strange breed of cat compared to other business, and that they make fantastic profits.

I think one thing that these hearings did accomplish was to show that the average rate of return was appreciably lower than that achieved by most other industries in this province. However, what it all boils down to is what is a fair share for the people of Alberta of the revenue derived from this Alberta natural resource? The industry contends that the people are receiving a fair share now and I personally tend to support this view.

However, the future fair share which the people of Alberta should receive is something that the Minister of Mines and Minerals, the Premier and the Cabinet will have to decide, and I can only urge that they review all aspects and that if they find it necessary to impose additional tax, that the amount be lower rather than higher when the range is considered. I would also urge that the impact of any increased tax which the minister might feel that he has to impose be offset by significant exploration incentives.

The Canadian Association of Oilwell Drilling Contractors, in their fine brief, clearly illustrated that the oil development business in Alberta is labour intensive, Mr. Cairns to the contrary. Not just the direct $100 million payroll, but all the associated services, manufacturing, and supply businesses which are generated, all of which have a tremendously beneficial effect to the Alberta economy, both rural as well as urban, because the drilling is done in the rural areas, of course.

All of this underlines the necessity of keeping a healthy drilling business, not only from the standpoint that this is how the reserves would be discovered, but also because so many jobs are affected. I personally think that the drilling incentive plan outlined in the position paper is not strong enough. It is certainly not potent enough to offset the effects of a significant tax increase. The proposed plan rewards only those who are successful. It does nothing for the unfortunate fellow who, in attempting to discover new reserves, drills only dry holes.

Some form of drilling cost-credit against incremental tax increase would seem to be, in my view, a more effective incentive. Obviously, one of the key points to be considered, when looking at the imposition of an increased tax, is whether or not such tax can be passed directly on to the purchaser or consumer -- in other words, whether or not the market for Alberta crude can absorb the price increase up to 25 cents per barrel. This is a subject that I hope the minister will consider carefully, in consultation with the industry. Mr.

Speaker, a seemingly popular view is that we are in a real seller's market with respect to our crude. I'd like to ask, is this true? While, it is true that the OPEC states are gradually boosting crude prices, I suspect that the increases are more than offset by the rapidly decreasing tanker rates. During the past year, ocean shipping charges have plummetted, due to a glut of recently constructed large capacity tankers. Trade journals indicate that many more are in the process of being built.

A Japanese paper that I received recently points out that the keel of the world's largest tanker was laid on April the 3rd at the IHI ship yard. This particular ship yard has two more of the same size on order. The report in the May 29th issue of Oil Week indicates that orders for 16 super tankers have been received by Swedish ship yards. I understand that the price of shipping oil from Indonesia to Puget Sound has Alternate page number, consecutive for the 17th Legislature, 1st Session: page 3983

59-30 ALBERTA HANSARD June 1st 1972 dropped from $1 to 40 cents a barrel during the past year. I believe that right now Arabian oil could be delivered to Chicago via the Cap line from Louisiana at a considerably lower price than we can presently supply Canadian crude. We know that the significant Canadian market east of the Ottawa Valley line utilizes Venezuela oil at an appreciably lower price that the price of Canadian crude delivered immediately west of that line. Meanwhile, huge new oil discoveries in Indonesia and in the English Channel all add to world oil reserves.

Reserves discovered in the past two years in the North Sea alone already surpass those discovered in Alberta during the past 25 years. What I'm saying here is that I don't think we're exactly in a seller's market. We have to watch costs and sell hard in order to be competitive with this product. Mr. Speaker, there seems to be a developing trend in Ottawa which disturbs me very much. We all know the disastrous effect of the curtailment of gas exports last year. There is obviously no incentive to invest large sums of money exploring for gas that you have no assurance of selling.

In the May 27th issue of Finacial Post, I uncovered an

article headed up, 'Why Energy Exports Don't Matter As Much,' in which reference was made to recent speeches by the federal Energy Minister to Calgary oilmen in March, and by his deputy, Mr. Austin, at a recent conference board panel on resources in Vancouver. The implications therein are what concern me since the theme seems to be that we are short of oil, and we may have to conserve it for Canadians. This is absolute nonsense in my view. We in Alberta have the world's biggest known oil reserve, our Athabasca tar sands, some 500 billion barrels.

Canada's vast areas -- the Northwest Territories, the Mackenzie delta, the Arctic, the offshore -- all have excellent potential for the discovery of very large reserves. Obviously, to develop the tar sands and to explore in our frontier areas will take huge sums of capital. People will only invest these sums if there is a strong, growing export market where we can sell this product. To me, it seems pretty stupid to hoard our own 2,000 years' supply of a product which may one day become obsolete. After all, oil is really only motor fuel and heating oil insofar as any significant market is concerned.

These products have to compete in the future with coal, with electricity, with nuclear energy and with solar energy. There could also be competition with our tar sands from the Colorado oil shales which could prove, with advancing technology, to have an even bigger reserve than our tar sands. Accordingly, I expect that the hon. Minister of Federal and Intergovernmental Affairs will do everything necessary to straighten out the thinking of the federal government, to get them on the correct course -- that is, expanding our oil export market as rapidly and as much as possible. Mr.

Speaker, in conclusion I would say in all honesty that I have serious concern over this position paper and this bill. If the position paper were not a position paper -- in other words, if this were a clear statement of government policy -- I would have to vote against the bill as a matter of personal principle.

However, it is only a position paper, and the government states clearly on page 41, "The government is not firmly committed to this tentative plan, and is prepared to make adjustments, or even consider a completely different alternative." Since this is only a position paper I must have confidence in the hon. minister; confidence that he will sit down with this important industry, and develop a plan which will create the right business climate, which is acceptable to both the industry and to the people of Alberta. Alternate page number, consecutive for the 17th Legislature, 1st Session: page 3984

June 1st 1972 ALBERTA HANSARD 59-31 Since I do have complete confidence in the hon. minister and in the hon. Premier, and indeed, in the entire Executive Council, I am content to leave this most important decision in their hands. I will hereby use this occasion to demonstrate this confidence by voting for this bill. Thank you. MR. GHITTER: Mr. Speaker, I would like to address some comments with respect to this particular bill for a number of reasons.

The basic one is that my particular constituency is one that probably has more oil employees in it than any other constituency in this province, its prosperity is so very closely related to the many buildings that outline downtown Calgary, that are directly related to the oil industry and the people they employ. I would firstly say, Mr. Minister, that to all of us the hearings were indeed very instructive. Certainly from my personal point of view, as one who represents somewhat an oil constituency, it was indeed a fascinating experience and an exercise that I think was indeed worthwhile.

I certainly commend the thought of the public hearings before this Assembly. It was indeed significant because of the tremendous decision that has to be made in this area, and it was significant because it allowed industry to come before us, and in that I think it assists all of us from the point of view of education in the many problems we have to face in this area. Furthermore, Mr. Minister, I certainly sympathize with the nature of your decision, because I feel that you have been somewhat boxed-in as far as the flexibility that you have with respect to this decision.

Anyone who has looked at the constitutionality problems that you have faced, in the event that you wish to receive further funds from the industry as to where you can go, I would suggest that from a legalistic constitutional approach you indeed have some tremendous problems that had to be looked at. Really you had no choice, if the truth be known, but to look at the form of taxation that is in front of you, other than accepting a very repugnant point of view and that would be the one of really repealing prior obligations of a government, which is indeed unwise.

I think the government should adhere to the privity of contract principle, for if we don't, how can we expect our citizens to do so? So I think you are limited from the point of view of where you could move, and I support your bill in principle, Mr. Minister, because I know and feel that the citizens of the Province of Alberta are entitled over the long run, to a better share of the potential oil revenue. It is very important that they do and I think that the only approach you could conceivably take is the one that has been taken. I would caution you, Mr.

Minister, that I am not totally convinced that the administrative problems you will face, from the point of view of this type of taxation on reserves, will not be expensive, because I think it will be expensive from the point of view of the government to administer this plan, and I think it will be expensive from the point of view of industry. But, nevertheless, I think it is a step that has to be taken forward. I think it is a step that is a necessity because from the point of view of the hearings, I came out convinced that a considerable portion of this increase can be passed on to the consumer.

I only need look in terms of the brief submitted by Husky Oil and the suggestions of Imperial Oil at their presentation in Ontario where they suggested, as a price-setter, we are in a new era that we would be receiving additional sources of revenue from the point of view of the sale of crude.

I feel that although the oil industry was unable to answer this I came away with the conclusion that there will be in the next few years a substantial increase in the price of our crude, and with the feeling that there was scope from the point of view of an Alternate page number, consecutive for the 17th Legislature, 1st Session: page 3985

59-32 ALBERTA HANSARD June 1st 1972 increase that could be passed on to the consumer. It is on that basis that I come to the conclusion that the industry can afford to pay more. But in conclusion, Mr. Minister, I could caution you, because I am very concerned with the employment situation and the impact that this could have upon a vital industry in this province. I would only add my caution, although I support the bill in principle, that in your judgment, when you talk in terms of $50 million to $90 million, that I only hope you would be much closer to the $50 million than the $90 million.

When you make that very important decision, I would also hope that this impact would be able to be phased-in from the point of view that it will not hit the industry initially to the extent you might wish it to hit the industry, and that by being phased-in they can make their long-range budgetary adjustments like any other business. I know you are committed to the incentive approach, and I know that there were some excellent recommendations made at our hearings related to these incentives. And I certainly hope that your incentives -- and I would echo the opinion of the hon.

Member for Edmonton Calder -- would be far more substantial than your incentives that were set forth in the tentative position paper. And lastly, Mr. Minister, I would hope, in your meetings with the industry, that those in the industry that may wish, on a bilateral basis, to amend their lease agreements with the government -- that something could be done from that point of view so that those who wish to maintain a royalty position could do so at whatever royalty you could reasonably set to maintain the balance required.

That in itself would avoid a tremendous amount of administrative costs, both from the point of view of the industry and this government. And so with those general remarks, Mr. Minister, I am pleased to support your bill in principle. MR. SPEAKER: The hon. Member for Calgary Mountain View followed by the hon. Member for Edmonton Jasper Place. MR. LUDWIG: Mr. Speaker, I would just like to make a few brief comments and I'd start with the hon. member who spoke last.

He certainly raised some valid points, and I sum up his remarks as telling his very much beloved minister, "I support entirely what you do but not too much." You said, oh yes, a good thing, but be careful, don't go too far, and the question is how far can we go? There isn't a clue in the whole House as to how much revenue the minister will take or intends to take, or what he is in fact going to get in the way of revenue from this whole exercise. I was impressed by the remarks of the hon. member, Mr. Chambers -- he certainly has a good background.

And he also expressed grave concern as to whether we know exactly which way we are going. And then he summed up by saying, but notwithstanding those fears, and the fact that we really haven't got all the facts too straight, that he is going to support the minister. It reminds me of an American joke, he says; "Damn our principles, let's stick to our politics." That's the way you can sum up some of these remarks, but I'm sure that all the hon. members opposite are not of one mind; this is a controversial issue. I was rather pleased to see our hon.

Minister of Mines and Minerals come back with so much exuberance, and he keeps telling everybody that his door is open. Sure it's open, but we need an open mind in this issue. He says that the hearings were so tremendous, such a tremendously successful hearing that it is one of the highlights of the last 36 years of legislature in this province. I would like to ask him to answer, when he speaks, that since they were so Alternate page number, consecutive for the 17th Legislature, 1st Session: page 3986

June 1st 1972 ALBERTA HANSARD 59-33 informative and so well done, well received, did the representations in any way change his mind as to what he had determined before? If he could be specific I would appreciate it as I believe that is a fair question. One of the things that concerns me is that I'm like most members here, we know that we need more money, and we would like to get it somewhere. The government has chosen one path the line of least resistence, or at least the least criticism from the public, to see what you can get from the oil industry.

Actually there is nothing wrong with seeking more revenue, but I'm of the opinion that it is not going to satisfy or in any way begin to take care of the very ambitious programs that this government has. The taxpayer, before he rejoices that some of the big companies will have to pay more, must be seriously concerned that the axe may well fall on him in the near future. I'm sure that the hon.

Provincial Treasurer might say that I'm wrong, and I'd like to hear him say that there will not be any more taxing -- we are doing all right, we'll take it from those who have it, the big companies, and we will be happy for a number of years to come. But I do think that our Premier is rather ambitious in many programs. He hasn't even started spending in some of things he proclaimed. This is going to hurt the people of Alberta, it is going to hurt the taxpayer.

I also believe that it behooves every member here, and particular the opposition, to bear in mind that the paramount purpose why you are here is that taxpayer concern is important, and you can't just solve the problems of this province by seeking how to get some fairly easy money, particularly from a popular source, because that isn't an end to all things at all. Whether they get $50 million, $75 million or $90 million -- and there's no reason to say that if they implement this tax that they won't get more -- is it going to satisfy the ambitious programs of this government? I say it isn't.

I say that the municipalities already have an outstretched hand for more money. I'm not saying they are going to get it. The ATA was here to tell you that you sort of cramped their style in education, you have thrown them for a loss, but the day of reckoning is around the corner and they are going to need more money. I'm not at all convinced that because there is lull in university attendance, or a slow-down in enrolment, that we can count on it.

I believe that with the colleges and other systems feeding more students into our universities that within the next three, four or five years we had better be alert to the fact that we may well be short of university space. A slow-down for a year or two is not an indication of what will happen in the future. So with just those few remarks, Mr.

Speaker, I think that this government ought to be cautioned that the way to solve our economic problems in this province is to try to listen to the taxpayer, who may have said more in the last election than meets the eye, that the government had better pull themselves together and cut some of their wild promises and some of their spending, because the day of reckoning is not too far down the line.

I suppose some hon. members may disagree with me, but the spending program of the Conservative government is certainly ambitious, is certainly growing, and some very outstanding business people have warned you that maybe that is what you had better do. The Chamber of Commerce, which is representative of a cross

section of business, has warned the government that perhaps you had better look at your spending rather than seek more revenue, and particularly at a time when the government, in contradiction to what it is doing now, is very seriously going to pump money into the economy of the province to try -- and I say 'try' advisedly -- to bolster industry and create jobs. I think that if the hon. minister's mind is open, as he said his door is, he must listen to some of the businesses who Alternate page number, consecutive for the 17th Legislature, 1st Session: page 3987

59-34 ALBERTA HANSARD June 1st 1972 tell him that we might create some unemployment. It doesn't solve the problem of employment at all if you create unemployment in one sector, even two or three thousand, and then spend millions of dollars to create employment elsewhere. These are some of the concerns that I have, but the main one is that the taxpayer -- the average homeowner, the average worker -- is going to find, too soon, and much to his disappointment, that before this government is through he is going to be dinged for a pretty hefty increase in taxes, regardless of what level. MR. YOUNG: Mr.

Speaker, I would like to speak rather briefly on this matter. First of all, to say that I think all members here recognize the significance and the contribution of the oil industry to Alberta. This came through very clearly in the hearings. I believe that the hearings themselves are a demonstration that there has been no precedent before in Alberta, of the concern and the significance that this government holds for the oil industry to our economy. Mr. Speaker, those hearings demonstrated several things to me. The first one is that we have every reason to be confident of the future of the oil industry in Alberta.

We heard a few pessimistic statements. We heard statements about the huge oil plays being outside of Alberta now, and for the moment this is probably correct. I say 'for the moment,' because people who make statements of that order have neglected to consider the tar sands.

However, we also heard some very optimistic statements from some of the companies and some of the representatives of the industry, about the amount of oil which may yet be found -- found possibly in smaller pockets, but found nevertheless in this province -- and that properly husbanded and properly stimulated, could provide a very excellent economic base for our economy. I have a few questions arising out of those hearings. In view of some of the comments that have been made, I should like to mention a couple of those questions.

I think, for instance, that some of the statistics given to us should be examined extremely carefully. I suppose I am suggesting that this should apply to the statistics on both of the extremes that were presented to us. One of the concerns which I had throughout those hearings was to determine what might be equitable with respect to the industry. I found that extremely difficult, because from an investor's point of view, one has to look at the return that has been achieved and that can be anticipated to be achieved, with the investment already made.

It has been indicated to us that this is a very high-risk industry and, indeed, that is the case. It is perhaps more high risk, relatively speaking, for small companies than large. However, from an investor's point of view I think we would have to look at the return on investment and the best procedure for doing that would be on a discounted cash flow basis. Some of the statistics that were presented to us were very far off the mark here. We had in one submission a suggestion that past investment should be considered at the nominal rate of 10 per cent.

In fact, if one is going to use a discounted cash flow basis, one should use the cost that was incurred in the borrowing of the funds for that original investment. Having checked the interest rates for the bond issues of some of the oil companies back at the early stages of investment in Alberta, an interest rate in one case of less than 3 per cent, quite frequently of 5 per cent or less, would be much closer so that in fact, the suggestion -- the wild suggestion -- of a $ 5 billion shortfall in revenue to expenditure is wildly exaggerated, with due respect to the industry.

I'm not sure what that shortfall would be, but however we would calculate it I think the truer figure Alternate page number, consecutive for the 17th Legislature, 1st Session: page 3988

June 1st 1972 ALBERTA HANSARD 59-35 would be much less than a billion dollars at this point in time. And there are many millions of barrels of oil already located in place, so that from that point of view the industry looks forward only to the expenditure necessary to put those barrels of oil into a pipeline. The locating has been completed.

And to properly consider the return that should have occurred or can be anticipated on the investment already made, one would have to consider the income which might be attributable, again, on a present value basis for that future flow of income, and I think that would show us a very different picture. Some comments were made with respect to the discrimination which may be directed by this government toward the oil industry.

I think these are not valid -- not valid in any respect -- almost any kind of system of taxation that one wishes to impose, discriminates between some of us and some others of us, and that is as it should be, given the different nature of the kinds of businesses, and the kinds of income flows that we have in our economy. So I suggest that while this was bandied around, it shouldn't be taken seriously. Perhaps less seriously should be taken some of the highly irrelevant comments which we have just heard from the hon. Member for Calgary Mountain View.

And I say this with respect to some of the predictions of wild expenditure on the part of this government and the improper -- perhaps that's making too strong a statement out of his suggestions -- but the anticipated wasteful expenditures of that money. I think we have very clearly demonstrated that this government will not proceed in that manner. We have shown a great deal of caution with respect to educational expenditures, we are showing them in many other directions.

We have shown as a government a great concern for equitable treatment of our citizens, we have shown a concern for the economy of this province, a concern which to this point had not been adequately shown, and I think that is a good basis on which to begin to build investor confidence, if indeed we have to begin to build it. Which leads me to my next point. Much was said about investor confidence. And I think with respect to the oil industry we need to keep two things in mind. One, that the industry is really a composite of many different types of companies.

Some of those companies are in a vastly different position than others, and any tax which is imposed, I am sure, will be prepared with that in mind. There is just no question that the drilling industry is a very labour intensive industry; it's a very localized industry, it's less likely to flee -- the independent drillers are less likely to flee this province than the very major oil companies. The same can be said with respect to the smaller oil companies, and I would have hoped during the hearings to have been able to obtain more information on the structure of the industry.

I am still hopeful and will take the hon. minister up on the invitation that he issued to be supplied with additional information. With respect to the last part of the investor confidence issue in the oil industry, I detected throughout the hearings from some of the companies and some of the representatives of the industry that they would like to have an additional opportunity to discuss their problems with the government. I am sure that this will be provided to them.

I hope, in view of the hearings and their attendance at the hearings, that they will now be able to come back and appreciate much more completely the position of the government, the position of the various facets of the industry, and the position and the attitude of the citizens of this province. I think with that appreciation we would not only hope that they will come back, but indeed I would invite them to come back and to come back with a positive approach. My final point relates to my attitude toward what the industry might be able to bear.

In prefacing my comment on that, I would like to point out to the hon. members that while we may talk about an increase of the magnitude of 50 per cent, if you will, in rates, in Alternate page number, consecutive for the 17th Legislature, 1st Session: page 3989

59-36 ALBERTA HANSARD June 1st 1972 fact almost a half of that will be deductible for most oil companies from the revenue which would otherwise go to the federal government. So that the net impact of taxation by the province upon the oil companies, if it is properly and constructively done as I am sure it will be done, will be somewhat less significant to the net profit position of those companies than some of the percentages which were bandied around. The other concern that I have arises out of the nature of the market picture for the industry and the likelihood of price changes.

If I had my "druthers", I would "druther" see a sliding tax, one that could be adjusted periodically. Perhaps that would be something that could be left with the minister to consider, a tax which might be an increase over what it is now for the first two or three years and then another staged increase in another two years. Because from all that we can understand of the anticipated price increases, they will continue from year to year. The oil industry itself suggested that this will happen. And if that would happen it does improve the ability of the industry and the profitability of the industry.

We should share in that profitability. In short, I would like to see some kind of a staged tax, if that can be arranged, to at the same time maintain investor confidence. That implies a stability in the tax structure. My last comment is that from what I observed of the hearings, I hope the minister will tend toward the high side of the range. MR. HENDERSON: Mr. Speaker, I feel it is in order to offer a few comments on this particular bill. Particularly, we should just put in perspective what it is we are discussing today.

I think it is generally agreed by all hon. members of this House that it is in order that an increase in government revenue should be forthcoming from the industry. What we are discussing, I think, are the ways and means of achieving that return from the industry, one that will be the least objectionable, and it is axiomatic that any increase will be objected to by the industry. So we are talking about what is least objectionable and what is in the long-term, in the overall question of future development and so on and so forth, in the best interest of the people of the Province of Alberta.

In that regard, the industry itself has stated that it is anticipating an increase in royalty or some sort of an increase in revenue that would be forthcoming from the industry into government coffers. So I think on the basic objective, there is pretty general unanimity. When we get down to the details I think is when we come to somewhat of a parting of the ways. A number of members opposite have spoken expressing their reservations about the position paper of the government, but then they are prepared to vote for the bill because of confidence in the individual men involved. Mr.

Speaker, in expressing that confidence, they presumably are judging on the basis of information that they have privy to which the public is not, and the members of this Legislature are not. We in the Opposition, and I think the people of Alberta, are forced to judge on the basis of what the government does, and not what it says it's going to do. In this regard, Mr. Speaker, I see a very severe fundamental contradiction between the action of the government on Bills 54 and 95, and the position paper. I think one of the things we are not debating this afternoon is the position paper.

The Premier and the minister seated opposite have stated that it's a tentative position paper. But that's not what we're talking about, Mr. Speaker. What we're talking about is no longer tentative. We're talking about elements of the position paper which are framed in legislation and statutes and are before this House today. I'm forced to judge, as a Alternate page number, consecutive for the 17th Legislature, 1st Session: page 3990

June 1st 1972 ALBERTA HANSARD 59-37 member of this Assembly on this side of the House with the responsibilities we have in Opposition, by the government's actions. We have debated two bills that are very pertinent to this exercise this afternoon. If one looks at the bills they aren't tentative. They come into effect on assent -- not even by proclamation, but assent. I have to suggest to the members that the position of the government has gone way beyond the tentative stage. It has now reached the point of action.

The only thing that's left, once these bills are passed, is basically the matter of regulations to deal with the question of how they set up the assessment structure, the ground rules for judging how much the reserves are, how much discount they are going to apply for the reserves that aren't going to be produced for some years hence, and so on. So I find, Mr. Speaker, that I can't, with any confidence, accept the suggestions that the government has an open mind on the subject. If they had, we wouldn't be debating these bills today.

In fact, I am forced to judge, as a member of this Assembly, that this government has made up its mind. I read into the position paper, before the bills came in, that it had made up its mind. One of the conclusions that they apparently arrived at was that there was no further need for oil exploration development in Alberta. Most of it had been found. The industry was going to go downhill anyhow. So let's make hay while the sun shines -- get as much out of the royalty, get as much out of the industry as we can get while we still are producing oil in Alberta.

If one proceeds on the original hypothesis that the gravy days are over, I would think the second conclusion is a logical one from the standpoint that Alberta citizens own 85 per cent of the mineral rights in the Province of Alberta. The so-called drilling incentives that were included in the position paper aren't really relative or particularly of any incentive to small or large developers. I think this was pretty unanimously stated by all the people who appeared before the committee and are involved in the business. So Mr.

Speaker, we're not talking about open doors of Cabinet Ministers where anybody, including members on this side of the House, members on that side of the House, members of industry, can go in and debate about it. Because after it's been debated, the bills have been assented to, I think the debate is somewhat academic. So all I see that the government is talking about considering, once these bills are through, is how much the load should be. This clearly is a responsibility that the government has, and in their wisdom will have to arrive at. I have no quarrel with that.

It's a matter of judgment, and it's a matter of judgment that they received a mandate from the people of the province to exercise. So we expect that they will exercise that judgment. But let's not stand here and talk about a position paper that we're debating, because we're not. We're debating statutes that become policies of this government, so far as the people of the Province of Alberta are concerned.

So I come back to this point: I am forced to judge where I should stand on these bills, notwithstanding general agreement on the basic objective of increasing return from publicly owned resources, specifically the oil and gas industry, and transfer of additional funds from the industry into the public coffers -- but I am forced to judge on what I see that the government has done, what its action is, not by expressions of confidence that the government is going to backpeddle sometime down the road on the statutes they have before the House. Maybe they are; maybe that is part of their tactical manoeuvre.

I don't know. If it is, I disagree