1977 Legislative Session: 2nd Session, 31st Parliament

HANSARD

The following electronic version is for informational purposes only.

The printed version remains the official version.

Official Report of

DEBATES OF THE LEGISLATIVE ASSEMBLY

(Hansard)

WEDNESDAY, MARCH 23, 1977

Afternoon Sitting

[ Page

2171 ]

CONTENTS

Statement

Future of Railwest plant. Hon. Mr. Bennett –– 2171

Mr. King –– 2172

Mr. Gibson –– 2172

Mr. Wallace –– 2172

Routine proceedings

Oral questions

Import of Alberta oil. Mr. Macdonald –– 2173

Directorships held by Robert Bonner. Mr. King –– 2175

Ferry fares. Mr. Wallace –– 2175

Tabling documents

Government aircraft passenger log for 1976. Hon. Mrs. McCarthy ––

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

On vote 116.

Mr. Macdonald –– 2177

Hon. Mr. Chabot –– 2178

Mr. Gibson –– 2180

Hon. Mr. Chabot –– 2182

Mr. Macdonald –– 2184

Hon. Mr. Chabot –– 2184

Mr. Nicolson –– 2186

Hon. Mr. Chabot –– 2187

Division on the motion that the committee rise and report progress ––

On vote 116.

Mr. Wallace –– 2188

Hon. Mr. Chabot –– 2191

Mr. Gibson –– 2194

Hon. Mr. Chabot –– 2197

Mr. Lea –– 2198

Mr. King –– 2201

Hon. Mr. Chabot –– 2203

Appendix –– 2206

The House met at 2 p.m.

Prayers.

FUTURE OF RAILWEST PLANT

HON. W.R. BENNETT (Premier) : Mr. Speaker, not necessarily in the gallery but in the precincts today, is a group of Railwest workers, led by Mr. Stan

Horodyski, business agent for one of the shopcraft unions, who requested a meeting with the Premier yesterday by wire. By leave, in welcoming them here, as I'm sure all members do, I'd ask leave to make a short statement.

Leave granted.

HON. MR. BENNETT : Mr. Speaker, I received a telegram yesterday from Mr. Horodyski concerning the Railwest, a wire requesting a meeting with me, as the Premier of the province. I responded immediately, not only by wire but by telephone, to suggest that we would be prepared to meet with the delegation out of our very real concern for the

Railwest plant, the jobs of the employees and the community of Squamish. It is of concern to the government now, as it was when we attempted to get the federal government to, in fact, give this province and this plant - the only plant of its kind in western

Yesterday, as I say, we responded to the meeting.

have had a preliminary meeting with Mr. Horodyski, and at the conclusion of

question period, we will have a meeting with representatives of the group. After

that meeting, I will meet with the group at large in front of the Legislature.

It's too large a group to discuss the very real problems of this plant and

their jobs in the confines of an office. But it's because of our sincere

concern that these jobs continue and that this plant has some opportunity to

maintain itself in British Columbia - and indeed, in the west as it's the

only facility of its kind in the west - that we're holding these meetings,

and that the Minister of Economic Development (Hon. Mr. Phillips) has just returned

an additional order f cars which were announced yesterday, the attempt being

to get an order for ballast cars, which we Already can produce out of the Railwest

plant without new designing and without any delay.

Interjection.

Interjection.

[ Page 2172 ]

management of the BCR and Railwest.

MR. W.S. KING (Revelstoke-Slocan) : Mr. Speaker, I would like to make a few points in response to the Premier's statement.

First of all I'm surprised the Premier is giving the report rather than the Minister of Economic Development (Hon. Mr. Phillips) who, as the Premier noted, made a trip to Japan and a trip to Ottawa recently in abortive attempts, apparently, to find some business for railway and other industries in B.C. No results have been produced to the benefit of B.C. industry and Workers as yet. I am concerned that the province of British Columbia became involved in discussion on the federal railcar contracts at a very late point, when the bids, I believe, had been received from competing firms such as Hawker Siddeley and the Canadian Rail Co.

I would hope that rather than the government of the province of British Columbia attempting to shrug off all responsibility to the federal government, something more aggressive and positive would be done by this government now. Unless, Mr. Speaker, action is taken immediately, 260 Railwest employees are going to be laid off in the town of Squamish.

I want to suggest, Mr. Speaker, as a matter for consideration by the government, that a contract should be awarded for the construction of B.C. Rail rolling stock and efforts - aggressive efforts - should be instituted by the government to come up with some lease offers to foreign carriers both in Canada and the U.S., on an interim basis, until the rolling stock can be permanently used by B.C. Rail.

We have over the years, Mr. Speaker, been squeezed by both CN and CP in terms of adequate supply of rolling stock on the BCR. Surely this lull in the economy would be a fine opportunity to build up the inventory of rolling stock on BCR and to try and sell some short-term lease agreements for our own B.C. Rail equipment to foreign railways. It's not good enough to sit back and wait for the federal government to bail us out.

Mr. Speaker, I'm pleased to hear that the Premier has condescended to come out of his dry office and meet with that large delegation of people who have been standing in the rain in front of the buildings. I'm pleased that he's doing that. They are concerned with the security of families and children. Many of them have special skills, and unless something is done very quickly they'll be uprooted from the community, and from this province, and British Columbia will be the net loser as well as the people suffering great hardship.

MR. G.F. GIBSON (North Vancouver-Capilano) : Mr. Speaker, I'm glad

the Premier made a statement on this. He took a little shot at me in so doing,

but I don't mind that. I just want the good of Railwest to come out of it.

There are 265 jobs at stake here and 15 per cent of the livelihood of a community.

I want to tell him I'll criticize Ottawa when that's proper, and I'll

support them when that's proper. In this case, the federal government offered

a $5,000-per-car subsidy. The Premier can say all he likes about the fact that

B.C. didn't put any limit on it; they didn't put any value on it either.

He should immediately have matched that and said: "We'll put $5,000

out of this province per car." That would have matched the price and that

would have got it down to the $36,000 figure that the eastern producers were

coming to.

HON. MR. BENNETT : You're wrong!

MR. GIBSON : This idea of a subsidy with no limit is nonsense, because $46,000 minus $10,000 equals $36,000, Mr. Premier, on a 300-car order. That's what you should have been going after.

HON. MR. BENNETT : You're wrong.

MR. GIBSON : Mr. Speaker, the Premier now talks about an order for ballast cars. I certainly hope that comes through. I'm disappointed the Minister of Economic Development (Hon. Mr. Phillips) didn't have something to say when he got back. They'd just better find a way out of this, because even bottom-line economics doesn't mean writing off a whole plant and a whole community.

MR. G.S. WALLACE (Oak Bay) : Mr. Speaker, I'm glad that - albeit a little late in the game, as the Premier himself admitted - the government is seriously concerned with preserving the jobs and with finding markets for the cars that are to be produced. I also want to appreciate the answers which the Minister of Economic Development placed on the order paper in answer to my question 46, where even at that time he gave a firm commitment to preserve the jobs.

One little thing that puzzles me is the degree to which we failed to try to obtain orders outside of Canada. It would seem to me that if we have this problem in getting bids with the CNR and CPR, there are other railways outside of Canada that need cars. I'm just wondering why there hasn't been a more aggressive approach taken to try to find markets elsewhere than in British Columbia. The Premier emphasized that all the cars that have been built are for the use of BCR and the BCR has no use for additional cars.

Since we apparently are failing in our appeals to the federal government. . .

. Interjections.

[ Page 2173 ]

MR. SPEAKER : Order, please. The hon. member for Oak Bay has the floor.

MR. WALLACE : I was under the impression I was making a statement....

AN HON. MEMBER : Hear, hear!

MR. WALLACE : But it certainly isn't a laughing matter. The Premier knows that and we all know that, and I hope that even if it is impossible to maintain this plant the Premier will very shortly come up with some options and alternatives so that all these 263 workers don't suddenly have to be uprooted and try to find a use for their skills elsewhere.

I agree with the member for Revelstoke-Slocan that an answer just must be found. I think that whatever subsidy the government might have to provide to obtain the goal of keeping these skilled workers employed in this area would be well justified.1 It's just a further reflection of the kind of mixed economy we live in these days when it isn't a situation where it's either all public or all private; there has to be a blend. I hope that the first thing the government will do is try to spread the net a bit wider in looking for contracts.

MR. L.B. KAHL (Esquimalt) : Seated in the gallery today is Mrs. Lorna Stewart. Mrs. Stewart is from Cloverdale in the constituency of Langley. She's visiting the Legislature for her first time. Her son Gordon is the intern in the Social Credit caucus and I would like the House to bid her welcome, please.

HON. S. BAWLF (Minister of Recreation and Conservation) : Seated in the gallery today is a group of 20 citizens of Victoria, visiting from the James Bay New Horizons Centre. I would ask the members to make them welcome.

Also, Mr. Speaker, seated in the gallery is a group of 23 students from St. Michael's University School. These students are the members of the school's debating team, which recently won the provincial school debating championships. They're escorted by Mr. G. Salvadore and Rev. Terry Davies. They gave up an examination in the theory of knowledge to be present here today and I would suggest we make them welcome as well.

MR. D.F. LOCKSTEAD (Mackenzie) : We have with us in the gallery today chief councillor Delbert Gaerin, along with eight representatives from the Musqueam Indian band. I ask the House to join me in welcoming them.

MR. E.N. VEITCH (Burnaby-Willingdon) : Seated in the gallery this afternoon from the great municipality of Burnaby is Mrs. Norma Maclean, her son Ian and four of his friends from Marlborough School, Michael Katlan, Michael Chu, Randy de Gryp and Arvin Dale. I would ask the House to bid them welcome.

MR. J.J. KEMPF (Omineca) : With us in the gallery today are two individuals who are very active and very interested in the forest industry of the province of British Columbia - Mr. Sam Ketchum, president of West Fraser Timber Company Limited, and Mr Denny Moore, vice-president of Pacific Inland Resources. I would like to ask the House to make them welcome.

HON. G.M. McCARTHY (Provincial Secretary) : I would ask the House to welcome a very nice young lady and her friends from the great constituency of Vancouver-Little Mountain, Miss Juliana Maria Luz.

MR. G. HADDAD (Kootenay) : It gives me great pleasure to introduce to the House Mr. Harry McCuag from the city of Cranbrook and, of course, the great constituency of Kootenay. I would like to mention that Mr. McCuag is the president of the ABC Family restaurants throughout British Columbia. I would ask the House to make him welcome.

Oral questions.

IMPORT OF ALBERTA OIL

MR. A.B. MACDONALD (Vancouver East) : This is a question to the Premier. In view of the cabinet decision last week to reject the proposal to use Alberta gas to meet B.C.'s export obligations, thereby depleting B.C.'s resources of energy to meet the needs of the United States, facing the risk of pro rata curtailment of supplies to B.C. industries and threatening the existence of a petrochemical industry in this province, will this disastrous decision of the cabinet be reversed?

HON. MR. BENNETT : The member for Vancouver East is wrong again. The province of British Columbia hasn't declined any offer of Alberta gas. What they have declined is the first terms offered which would have affected B.C.'s own exploration programme. In fact, British Columbia has been most co-operative in trying to meet the shortfall.

I do suggest that further to that we have invited to a meeting in British Columbia on Monday at 9 a.m., representatives from Pan-Alberta who wish to sell the gas; Westcoast Transmission, who wish to carry the gas; the utility in Washington state which wishes to receive the gas; members of Governor Ray's staff, with whom I have been in contact in a discussion

[ Page 2174 ]

with Governor Ray; a member of the National Energy Board; the chairman of the B.C. Energy Board; the president of the B.C. Petroleum Corporation; the Minister of Energy, Transport and Communications (Hon. Mr. Davis) ; the Minister of Economic Development (Hon. Mr. Phillips) ; the Minister of Mines and Petroleum Resources (Hon. Mr. Chabot) ; and the Minister of Energy from the government of Alberta, Don Getty. I hope I haven't left anyone out. That is to resolve what has been our first attempt to bring a major convention to British Columbia. (Laughter.)

As the member may or may not know, this will be an attempt, with all parties concerned, to deal with the problem and end the speculation and misinformation put out by some parties which only have their own special interests to serve. As the government of British Columbia we are responsible for husbanding B.C.'s natural resources and also maintaining our contract commitments to the west coast and involving ourselves within the framework of the Canadian energy policy.

British Columbia has, because of the situation developed by some of the parties - who will be at the meeting - in misinterpreting the positions of others, (not only British Columbia's) , called this very important meeting. It will give people such as the former Attorney-General, now the member for Vancouver East (Mr. Macdonald) since the last election and a former member of the B.C. Energy Commission, a chance to deal with the facts and not with how they would like to see the situation.

MR. A.B. MACDONALD (Vancouver East) : Nevertheless, in view of that decision of last week, I asked the Premier the supplementary question: is he not aware that the National Energy Board is prepared to move in and transfer export permit sales to Alberta through Kingsgate, thereby reducing our 809 export permit, which would cost us for every $ 100 million lost about $ 194,000 a day, if you don't reverse this decision?

HON. MR. BENNETT : Mr. Speaker, perhaps the member didn't hear me. The decision that British Columbia has made would make sure we maintain our export commitment with the available gas we have, and shortfall would be picked up by Alberta Gas, thus protecting B.C.'s resources, protecting the contract commitments that have been made, and using the carrier that runs through British Columbia. It's unfortunate that many

interpretations - some of them incorrect - have been placed upon the B.C. position. That is why we are having a meeting of such magnitude. When it's completed we'll make sure you're among the first to know, because I know you want the people to know the truth.

MR. MACDONALD : I ask the Premier if the reluctance - and there's obviously been a reluctance, if not a firm decision, which I hope will be reversed -to use Alberta gas for this export obligation does not stem from the fact that you want to save the Grizzly Valley pipeline at all costs. Is that behind it?

Interjection.

MR. MACDONALD : No?

MR. G.F. GIBSON (North Vancouver-Capilano) : On a supplementary, Mr. Speaker: As the Premier knows, there are great consequences for international relations and the Alcan pipeline on this thing. The Monday meeting he suggests may be too late. Is he aware that there is a Telex from Pan-Alberta this morning, with copies sent to the immediate world, giving a new offer of a five-year contract at an 85 per cent load factor, with that offer good only until 4 o'clock on Friday afternoon?

HON. MR. BENNETT : Mr. Speaker, I am glad the member for North Vancouver-Capilano brought that up. We just received the wire and we don't take ultimatums from the province of Alberta on gas, on airlines or anything else, but we do deal in a very open and responsible way in negotiating and discussing a position.

I was surprised at the arbitrary nature of the telegram but I don't want to respond in kind. We're in contact with the government of Alberta and I'm sure the meeting we proposed on Monday, which has been accepted by other parties, will go on. I hope the government of Alberta and their agency, Pan-Alberta, will be at the meeting.

MR. GIBSON : A supplementary, Mr. Speaker: as the Premier knows, the other option, which was a 12-year contract at a 54 per cent load factor - all of these being for 200 million feet a day - was still left open. It's highly desirable that British Columbia should have these two choices. Will the Premier take steps to make certain that these are not foreclosed before the Monday meeting?

HON. MR. BENNETT : Mr. Speaker, I wish to assure the member that those two options, and any others . . . it may be far more favourable that no options are closed in a meeting. What I'm saying is that the two options which were offered by Alberta, and are being dictated by them, may not be in the best interests of British Columbia. As such, I would expect the member for North Vancouver-Capilano to support the British Columbia position and not be a spokesman in this House for the government of Alberta.

[ Page 2175 ]

SOME HON. MEMBERS : Hear, hear!

MR. SPEAKER : I would suggest it is a final supplementary.

MR. GIBSON : A final supplementary, Mr. Speaker, because now we're getting somewhere. The Premier said: "Will you support the British Columbia position?" I'd ask him: what is the British Columbia position?

Interjections.

MR. GIBSON : There's no answer. How do we support it?

DIRECTORSHIPS HELD BY

ROBERT BONNER

MR. KING : Mr. Speaker, this is a question to the Minister of Transport: is the minister aware of the fact that Mr. Bonner, the chairman of B.C. Hydro, continues to hold directorships in private corporations Is that acceptable to the minister?

HON. J. DAVIS (Minister of Energy, Transport and Communications) : Yes, Mr. Speaker.

MR. KING : Mr. Speaker, a supplementary: is that yes to both questions - you are aware and that is acceptable? Is that correct? Thank you.

FERRY FARES

MR. WALLACE : This question is to the Premier, Mr. Speaker. The Premier is in such good form today I thought we should just continue. In view of the Premier's persuasive powers over Mr. Graeme Roberts to remain a member of the board of the B.C. Ferry Corporation, and in view of Mr. Roberts' very strong conviction that ferry fares should be rolled back, can the minister tell the House with regard to yesterday's discussions with Mr. Roberts whether he was given an assurance that if he did maintain his position as a director ferry fares would be rolled back?

HON. MR. BENNETT : Mr. Speaker, I want to correct two things.

Mr. Roberts is not the type of British Columbian who needs to be negotiated into his responsibility. We discussed the opportunity he had to deal for British Columbia and a better ferry service - both as it serves the passengers and as it will accommodate the people who work within the service - and that he could do a better job as a director than with his alternate suggestion of working outside. Mr. Roberts, in discussion, agreed with that and is prepared to stay and continue the ideal type of work he has initiated

- that has been riding the routes, talking with the staff on the ferries from the engine room on up and dealing with the passengers in an attempt to come to solutions. As such, no promises.... What the member for Oak Bay suggests I may have done would have been improper. So I say both for Mr. Roberts and myself that he wouldn't ask and I wouldn't offer such a thing.

MR. SPEAKER : Would the hon. Premier please refrain from making a rather lengthy reply to what was a very short question?

HON. MR. BENNETT : Yes, Mr. Speaker. (Laughter.)

MR. WALLACE : Mr. Speaker, I would like as briefly as I can, since time is limited, to ask a supplementary of the Minister of Energy on the same question. Can the minister, as a member of the board, tell the House what measure of priority the board is giving. . . ?

Interjection.

MR. WALLACE : Well, I can ask the Premier if you're fussy. What measure of priority is the board giving to the crucial issue of reducing ferry fares at a time when, as Mr. Roberts stated, we have ships running half full?

AN HON. MEMBER : Hear, hear!

HON. MR. DAVIS : All matters of major importance to the B.C. Ferry Corporation and the travelling public are being discussed by the board of

[ Page 2176 ]

directors. In fact, the directors made a recommendation at their last monthly meeting relating to fares. As hon. members know, interim midweek rate reductions were introduced as a result of recommendations of the board of directors.

MR. WALLACE : Mr. Speaker, since both the Premier and the Minister of Energy in recent days and weeks have mentioned repeatedly the subsidy forthcoming from Ottawa, could they tell us if and when that ever will be forthcoming?

HON. MR. BENNETT : You might speak to the member sitting next to you (Mr. Gibson) ....

MR. WALLACE : He's got nothing to do with it.

HON. MR. BENNETT : He's carried many other messages from Ottawa. I'd be interested in learning; I don't mind if I have to learn it through him. I'm hopeful that they'll recognize their responsibility. I would hope that it's imminent because proposals have been before both governments.

MR. SPEAKER : You're getting quite a way beyond the supplemental, hon. member.

MR. D.G. COCKE (New Westminster) : Mr. Speaker, on a point of order, I used a stop watch today just to check this out. I certainly want to go along with what you said, Mr. Speaker, on this question of political speeches. The first one was two minutes and 53 seconds. The second one was two minutes and 25 seconds. The third one was two minutes flat.

Mr. Speaker, it's a lovely thing, but the very thing that I'm standing here and talking about....

HON. K.R. MAIR (Minister of Consumer and Corporate Affairs) : How long was Macdonald's question?

MR. COCKE : His question was 25 seconds long. That's what I wanted

to bring up to you there, Mr. Member. Twenty-five seconds long - it's really

unfair and not accommodating the House. We should have a special period for

him to put forward his political ideas and then we can use the question period

where we get the 15 minutes, Mr. Speaker.

MR. LOCKSTEAD : On a point of order, Mr. Speaker, I too want to be on record that I'm extremely disturbed over the Premier's continued abuse of question period. I wish you'd talk to him.

MR. SPEAKER : It would seem to me, hon. members, that the two previous speakers, who have just raised points of order which were anything but points of order, with respect to question period, are abusing the House just as much as any other member might have been abusing the House.

I suggest to you that those people who ask questions and make political statements while they're doing it are just as much in error as the people who answer questions and make a political speech while they're doing it.

If it's the desire of this House that we vet every question before it is ever asked, I'd take that into consideration and make sure that the Clerks look at every question before they ever come on to the floor of the House, but that is not part of the procedure of this House. The questions are in oral question period. All I can do is try to exercise an even-handed approach to both sides of the House in question period, both in asking the questions and answering them, and bring it to the attention of both sides when I feel that they are abusing the rules of question period.

MR. KING : A point of order, Mr. Speaker. The member for New Westminster simply outlined to the Chair and to the House what he considered to be the abuse of question period by the inordinately long time that the Premier took to answer simple questions.

The official opposition simply asks on a point of order, which is a valid one, that Mr. Speaker admonish cabinet members to respect the confines of question period and to answer with reasonable and short-term answers.

Hon. Mrs. McCarthy files the government aircraft passenger log for the calendar year 1976.

Orders of the day,

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

ESTIMATES: MINISTRY OF

MINES AND PETROLEUM RESOURCES

(continued)

On vote 116: minister's office, $86,016-

[ Page 2177 ]

continued.

MR. MACDONALD : Mr. Chairman, I have a couple of questions to the Minister of Mines and Petroleum Resources (Hon. Mr. Chabot) , who also happens to have been a director of the B.C. Petroleum Corporation since last October.

It arises out of what came up in question period, because notwithstanding the Premier's answer, there's really only one reason why a major summit is being called in the city of Victoria on Monday next, including a representative from the National Energy Board. Why, if there hadn't been a disastrous decision taken by the government, are you having that big summit meeting?

There's no doubt at all that people as capable as Mr. Ed Phillips, the president of Westcoast Transmission, would not make public statements deploring the attitude and the unbusiness like conduct of affairs by that government, Mr. Chairman, if, in fact, he had not received a most unfavourable decision in terms of the conservation and protection of B.C. resources - natural gas - in the last few days.

My information, I think, is totally confirmed by his statement, namely that an appeal was made to two ministers - the Minister of Mines and Petroleum Resources, the Minister of Energy, Transportation and Communications (Hon. Mr. Davis) - to allow the Alberta gas to be used to meet this American export obligation. It was rejected, and then that appeal was launched to the full cabinet. I wasn't able to be there, Mr. Chairman ...

HON. MR. CHABOT : Neither was 1.

MR.MACDONALD : ... and the minister was not able to be there, either. Did you miss that meeting, Mr Minister?

Interjection.

MR. MACDONALD : When the appeal was heard in cabinet and again the position was reaffirmed that the Alberta gas would not be used, but that instead, to protect the producers in the north, our own gas reserves would be depleted to meet the export obligation.

Mr. Ed Phillips makes it pretty plain that he has a very substantial disagreement with the so-called businesslike qualities of this government. I'd like to read what he says in the Province this morning: "We have been advised in a very determined way by the NEB that they will take action within the next day or so." That's what I referred to because they're threatening to reduce the 809 million cubic feet of export permits per day from Huntingdon in Sumas, take 100 million Or 200 million cubic feet per day off that and give it to the province of Alberta.

The consequences of that action - the federal government moving in in a very determined way - would be a loss to the province of British Columbia of.... If it was 100 million we lost, it would be a loss of $194,000 per day to the public treasury. If it was 200 million cubic feet that we lost by action of the National Energy Board, concerned about the refusal of this government to allow Alberta gas to go into the northwest pipeline system, it would be twice that amount.

Mr. Phillips goes on to say: "If we are not able to resolve the difference

of opinion with the B.C. government. . . ." Mt. John G. MacMillian, who

is a very entertaining gentleman, who says that he's an open democratic

and a little bit theatrical. . . . It's true, sometimes. Once he offered

to give me a writ.

But he is a very influential gentleman of the Northwest Pipeline Corporation in the United States. He went to Washington with Pierre Elliot Trudeau and Jimmy Carter and had dinner with them. He had his own photographer there and managed to get a photograph of himself standing between the Prime Minister of Canada and the President of the United States. Not everybody can do that, but John MacMillian did, so you've got to listen to what he says. He's a friend of Jimmy Carter's, the President of the United States,

He's threatening the province of British Columbia, and that's part of the reason, too, for this summit meeting in which the B.C. government will have to back down from the disastrous stand that they have taken in the last few days.

Mr. MacMillian says:

"T he gas had been offered by Pan-Alberta . . . "

I think that particular offer is for a 12-year term, 200 million cubic feet

per day at a 52 per cent load factor, and that offer had the support and approval

of the province of Alberta and the National Energy Board, but not of the province

of British Columbia.

" 'We further understand that West Coast is not receiving

the support of the B.C. government to acquire this new uncommitted gas.- That's

the fact that's causing the meeting to take place on Monday, because the

situation is such that the National Energy Board is determined to move in on

B.C., although we've had a very great autonomy in the field of natural gas

in the last few years.

Mr. MacMillian goes on: "Under these circumstances, it is unthinkable

that the B.C. government is not supporting this proposal." Now do you say

he's wrong, Mr. Minister? I say that proposal was rejected by the B.C. government

with very serious consequences in terms of our supplies of natural gas.

[ Page 2178 ]

MR. GIBSON : Right on!

MR. MACDONALD : In other words, what the B.C. government wants is to have maximum exploration drilling and production of natural gas on the Peace River at this time, to make as much money as possible out of it, to try to set up some kind of a heritage fund, and to make a political show and burn supplies of natural gas, which would be far more valuable in the ground in the future for, among other things, a petrochemical feed stock.

That's why I mentioned the petrochemical thing, because the idea of shipping out our reserves of natural gas to the Americans by rejecting the Alberta offer is simply going to mean that B.C. will be short. It's going to mean that the government will apply the policy as stated by the Premier. I'd like to ask the minister specifically on this. If there is to be a curtailment -as I understand the policy of the Social Credit government; it wasn't our policy - the shortage will be shared pro rata.

In other words, by reversing the policy of the NDP government, in the event of a curtailment, B.C.'s residential and industrial needs will not come first. And that will be one of the consequences of this agreement.

Mr. Chairman, the idea of just shipping off our reserves in this profligate way is wasteful in terms of conservation and in terms of the richness of the province, because the gas will be far more valuable left in the ground, rather than shipped out helter-skelter at the high natural gas field prices that now prevail to meet the energy needs of the United States of America.

I would suggest that one of the factors involved in the refusal of the government to accept the Pan-Alberta offer was that they want to create a shortage in British Columbia to make the Grizzly pipeline more viable - the Grizzly pipeline, which was announced on August 11, when the reserves were not there and which set off a speculative wave of profit-taking in natural gas shares that we read about in the paper in the inquiry every day.

I'm not going into who is involved and who bought and sold at this time, but there is no doubt that the premature announcement on August I I is the cause of the present Grizzly inquiry that is going on before Mr. Justice Kirke Smith.

Mr. Chairman, B.C. is ready for a major petrochemical industry. We do have the reserves for the feed stock, and we would have no trouble, in my submission, in getting the co-operation of, say, Japanese or even British Petroleum capital to go on a joint venture - a public-private operation - and develop a petrochemical industry in this province. And when that is in the likelihood with good business sense being applied, to deplete B.C.'s natural gas reserves by refusing the Alberta offer is nothing short of shocking.

Mr. Chairman, I would like to point out, too, that the argument that was advanced in favour of the B.C. position of a few days ago - namely that we have to leave an incentive to our own producers in the north to produce all of the existing reserves that they can possibly lay their hands on at the present time - is a false argument. Exploration and drilling in the Peace River country at the present time is in good shape. We don't need additional incentives to apply to the principal companies that are operating there which are, of course, Pacific Pete and Westcoast Petroleum Limited. So I hope, Mr.

Chairman, that the minister will announce that he is not going to turn his back upon an offer which would enable us, at the same time, to meet the needs of the United States with Alberta gas, not our own gas, and which would conserve our own natural gas resources in this province. Because there are, as the member for North Vancouver-Capilano (Mr.

Gibson) says, international relations involved, and if this summit meeting on Monday next doesn't reverse the decision which I have referred to, then I don't think there is any doubt that the National Energy Board will step in and we will have lost our relative autonomy - well, very complete autonomy - and the spirit of co-operation we've had with the national government and with the United States of America in the last few years.

HON. J.R. CHABOT (Minister of Mines and Petroleum Resources) : In response to some of the questions posed by the member for Vancouver East, who suggested that we establish a petrochemical industry in British Columbia, I have to believe that his suggestion is premature and that the development of such an industry at this time in British Columbia would be tantamount to building another Swan Valley food industry.

SOME HON. MEMBERS : Ohhh!

HON. MR. CHABOT : The member for Vancouver East suggests that the British Columbia government is in the throes of participating with the export licence in any curtailment of shortfall or of ability to supply. That is a fabrication or figment of his imagination. Now there has been....

MR. MACDONALD : Say that again.

MR. G.R. LEA (Prince Rupert) : Run through that again.

MR. MACDONALD : I couldn't believe my ears.

AN HON. MEMBER : No one else can either.

HON. MR. CHABOT : There's no refusal on the part of British Columbia to fulfill its contractual arrangement on the shortfall of the export licence

[ Page 2179 ]

which, in 1976, amounted to, on an average, 222 million cubic feet per day. That was the shortfall on the 809 million cubic feet export licence. It is complete misunderstanding, in my opinion, as to the British Columbia position on the gas coming from Alberta and tapping into the Westcoast Transmission system. It is a misunderstanding because I was discussing our position just a couple of days ago with the representatives of the Independent Petroleum Association and they said that there was a complete misunderstanding in the province of Alberta about our position.

MR. MACDONALD : Why would he say that? Why would Mr. Phillips say that this morning?

HON. MR. CHABOT : Our position is that we should enter into . . . Are you the spokesman for Westcoast Transmission? I always thought it was the member for North Vancouver-Capilano (Mr. Gibson) who was the spokesman for Westcoast Transmission.

Interjection.

HON. MR. CHABOT : Well, we're suggesting, on the short term, that we would be prepared to accept from the province of Alberta the fulfilment of our shortfall on this contract in order to maintain our contractual responsibilities in filling our contract to the Pacific northwest, but not at the expense of British Columbians being able to maintain the low price of natural gas in British Columbia through the benefits we derive, and will derive between now and 1989 on filling our contract responsibilities. We believe that this is most important. The dollars that will flow from here make it possible for us to maintain the low cost of natural gas in British Columbia.

The negotiations which the member has suggested have taken place have not really been negotiations. They have arrived in our offices more in the form of an ultimatum than negotiations. We've suggested that there should be some form of agreement between the province of Alberta, which has a glut of natural gas at this time, and British Columbia, which has a shortfall in meeting its commitments. However, we think that the terms under which the proposal was put to us are really not acceptable to British Columbia.

At the outset, the proposal that was put to the government here was that we allow 175 million cubic feet a day, filling the shortfall on the contract to 1989 at an 85 per cent load factor. The British Columbia producers are faced with a 72 per cent load factor. We think that gas coming from Alberta should be on the same basis as that which we apply to our B.C. producers.

So there has been an adjustment here and there on the load factor. There has been a downturn on the load factor. The second proposal was put that the load factor be 72 per cent. The latest proposal came to me just about 15 minutes before it was announced by the member for North Vancouver-Capilano (Mr. Gibson) - I received a telegram. The next ultimatum has arrived on my desk which deals with a five-year contract of 200 million cubic feet a day, take or pay, at an 85 per cent load factor. This is the way the negotiations have taken place. We've been given a variety of ultimatums, and I think there has been a misunderstanding of the B.C. position.

We are prepared to commit the shortfall to Pan-Alberta or TransCanada - in other words, to Alberta Gas - for a three-year period.

Then in the event that our optimism isn't fulfilled, if there was a shortfall beyond that period of time, we would be prepared to accept, through the Westcoast system, any inability of British Columbia to fulfil its contractual arrangements until 1989 by Alberta Gas. We think that is in the best interest of the Pacific northwest. It assures an adequate supply to the Pacific northwest by fulfilling our contractual responsibilities. It ensures that British Columbia will continue to have ambitious exploration programmes.

It will ensure that, because of the dollar return on the export price, we will be able to deliver natural gas to British Columbia residents and British Columbia industry at attractive prices.

MR. MACDONALD : This minister, Mr. Chairman, must be a very hard guy to negotiate with because you make him a proposal and he says' "I've got another ultimatum." How many ultimatums have you received?

MR. KING : He gets one from the Premier every day.

MR. MACDONALD : What the minister has just said is that he favours building.... What's the capital expenditure likely to be of joining up the Alberta system with the Westcoast system - $20 million?

Interjections.

MR. MACDONALD : Well, okay, I'm glad the government's estimates are a little closer now than they were on the Grizzly pipeline. It's either $20 million or $40 million. You're going to spend that money for a three-year period? For a three-year period, it's $20 or $40 million. The thing is ridiculous on the face of it, because that has to be amortized in over three years? Come on! What kind of business is that? Then if Westcoast lays out the money and builds the connection, they have to put it on to the service charges, and they're paid by the consumers of B.C.

Interjections.

[ Page 2180 ]

MR. MACDONALD : What kind of economics is going on over there?

But the minister, Mr. Chairman, confirmed what I said - that his position is to protect the B.C. producers. He used the words: "An ambitious exploration programme." Well, that's the very point I'm making. You don't need an ambitious exploration programme to locate and find and ship out the last of the natural gas of British Columbia. You can leave it in the ground where it will be far more valuable for the future of British Columbia. You could leave it in the ground where it will be far more valuable for the future, either as a petrochemical feedstock or even as a fuel, although fuel is a far less economical way of using our natural gas. So forget some of the producers.

Surely in the back in the minister's mind must be that Grizzly Valley pipeline, eh? With the reserve figures that bounced up and down depending on what company sent them in, not coming from the Ministry of Petroleum Resources at all.... You can't have the Grizzly Valley line and make it viable if you already have a lot of gas being produced in the Peace River country. If the Alberta gas comes in or gas comes from the Northwest Territories - frontier gas - into British Columbia, it makes the economic viability of the Grizzly Valley pipeline all the less.

The government has stuck out its neck on the Grizzly Valley pipeline proposition for political reasons, and that's part of the reason that they've rejected, in a most unbusiness like way, the plan to conserve our natural gas by allowing Alberta gas to flow south.

MR. GIBSON : Mr. Chairman, as I listened to the Minister of Mines and Petroleum Resources, I could hardly believe my ears, because I have seldom heard such an incredible misunderstanding and unbusinesslike appreciation of the interest of British Columbia as during that five-minute talk. Just thank God it wasn't a 1 0-minute talk, or it would have been worse! (Laughter.)

It's an absolute disgrace, Mr. Chairman, that the negotiating situation here has been allowed to deteriorate to the point where it endangers British Columbia customers as to the continuity of their gas supply and where it endangers the international relationships of this province and this nation with the United States.

Let me mention a few of the minister's quotes before 1 get in to what I wanted to say. He said that the suggestion for a petrochemical industry in this province is "premature." There'll never be more natural gas in the province than there is right now, but he says it's premature. If it's premature, that must mean that it's impossible. But it is not correct that it's impossible. We can process British Columbia gas in this province into higher labour and capital input values for the benefit of this province if we are able to find some other way of fulfilling our moral obligation to supply our U.S. customers.

He said that "we're willing to make accommodations for the U.S. customer" - and I'm quoting him again - "but not at the price of not being able to maintain low-cost natural gas to British Columbians." What absolute nonsense! The cost of natural gas to British Columbians has nothing to do with the cost of gas to Americans, and the minister knows it. There are entirely different price scales.

Then he said: "There should have been genuine negotiations." Mr. Chairman, the negotiations have been going on for a year now. They were first announced on the public record at the shareholders' meeting of Westcoast Transmission in April, 1976. They are documented in hearings before the federal power commission down in the United States. British Columbia Petroleum Corporation has been intimately involved throughout the whole piece. And the minister calls this kind of thing an ultimatum!

After talking for one year, after the government refusing and refusing and refusing to give its reactions, and then finally, at the very last moment, just when it's the right time to jeopardize international relations, coming along and saying: "Well, this isn't acceptable. . . ."

MR. KING : He doesn't understand.

MR. GIBSON : He doesn't understand, Mr. Member. That's right.

Now he quoted us some figures. It was originally 175 million with an 85 per cent load factor, and then it went to 200 million. And then he's incorrect - it wasn't a 72 per cent load factor, it was a 52 per cent load factor.

HON. MR. CHABOT : No, the second proposal was 72 per cent.

MR. GIBSON : Well, the next one was 52 per cent, and that is one of the most favourable proposals in terms of a load factor that's ever been made in a gas contract. As he says, it's far more favourable than British Columbia producers get from their own government. Therefore it seems to me that that should have been seriously looked at, particularly when it was for 12 years, which would have guaranteed our continuing gas supply in this province.

The minister talks about a three-year period. That's what he wants. Do you know what a three-year period is going to do, Mr. Chairman? It's going to mean that after three years, B.C. Hydro is going to have to cut back customers. That's what it means, because you are not going to expand the sources of supply in British Columbia that much in that time. But you are going to be faced with a legal situation, and the legal situation is this. The basis on

[ Page 2181 ]

which we are cutting back our U.S. customer and fully supplying British Columbia needs - as we should be - is by invoking the force majeure clause in the contract, which says that: "Circumstances beyond our control restricted the supply of gas, so we're sorry, American customer, we can't give you the whole amount."

But, if evidence can be brought before court, and it certainly can be in this case, that British Columbia could have made other arrangements to transit gas through to the U.S. customers and refused to do so, then that force majeure excuse is gone.

Then our U.S. customer will be able to take us into court and say that: "British Columbians wilfully refused to fulfill their contract with us and therefore we ask you, Your Honour, to cut them back pro rata with us in the United States." They would stand a good chance of succeeding and, thereby, the right of British Columbians to their own natural gas on a preferential basis would have been jeopardized and thrown away by this government after three years.

I think a three-year contract is a bit of madness, Mr. Chairman. I think we should be trying to enter into the kind of contract that gives some security to our customers in British Columbia.

MR. MACDONALD : It should be 12 years - up to 1989.

MR. GIBSON : You have to have some incentive for drilling in British Columbia. But I want to tell you that that incentive exists when you forecast the shortfalls, even after this.

Mr. Chairman, let me tell you a little bit about the numbers behind all this.

The commitment to the American customers: 809 million cubic feet a day. The

provision to British Columbia customers runs around 300 million cubic feet a

day in the summer and around 600 million on a peak day in the winter. That is

being supplied - just barely, but it's being supplied. The Americans, however,

are not being supplied. They are being shorted by an average of 250 million

cubic feet on the average winter day and up to 400 million cubic feet on a cold

winter day. They are being shorted, in other words, by a full half of the contract

there. So this extra 200 million cubic feet on a 52 per cent load factor is

roughly.... Well, 100 million cubic feet is all we have to take. So there is

plenty of room for expansion for British Columbia gas exploration within the

foreseeable future, including that 120-year contract range. It's a very

advantageous contract.

If we find more gas than that in British Columbia - and I pray that we do - then we have exactly that basis for the petrochemical industry that we need.

Mr. Chairman, the minister is talking nonsense. We have unlimited use for natural gas in this province and we have unlimited incentive for exploration companies to continue to drill.

If the minister should question my words on this, let him look at the report of his own British Columbia Energy Corporation for the year ending December 31,1976, and tabled, I think, on February 27,1977. 1 direct his attention to page 4:

"In spite of the expected high forecast levels of exploration activity, the domestic gas utilities are expected to continue to face contractual limitations in the supplies that may be available to them to meet load growth."

Doesn't he read his own reports? On page 5, it says:

"The commission has been concerned about the supply limitations and has conducted a number of meetings to discuss appropriate ways of meeting the impending shortfall."

The words and the music are all there, but the minister doesn't hear either one. It's not a question of British Columbia gas possibly being locked in, Mr. Chairman. There are all kinds of uses for anything that we can find.

With that history and that background, what else do you draw out of this? There are few things more important to British Columbia and to Canada than a good relationship with our neighbour to the south -not a relationship of being soft, but a relationship of fair dealing that's fair for both sides.

Let me tell you where those kinds of things are reflected. We're trying to bring some moral pressure on the Americans to say: "Why don't you cool it on the Trident base?" We're trying to bring some moral or legal pressure on them and say: "For goodness' sake, don't flood the Skagit Valley." This government is involved in those negotiations right now. Can it be that it doesn't have the sensitivity to understand the impact that that kind of action, which they are engaged in now, has on those negotiations? Does it forget the days back in the mid-60s, when a protectionist-minded U.S.

Congress was going to put a "Buy American" mark on every stick of lumber shipped out of British Columbia, which would have cut our sales by half to the United States? Fortunately, we had a good enough relationship then for the Prime Minister to call up the then President and say: "Will you please stop it?" And it was stopped. We are interdependent and we should treat each other fairly.

If you think those are the only kinds of international considerations, let me draw to the minister's attention the importance of getting the Alcan pipeline through British Columbia. It's worth at least $40 million a year in hard cash to this province. The Minister of Finance (Hon. Mr. Wolfe) ought to look up at that one. It's worth at least $40 million in government revenue, quite apart from the tremendous outfall it would have in other useful ways to British Columbia in an environmentally sound

[ Page 2182 ]

project.

The minister and the government, after a year of negotiations in good faith, are, at the last minute, saying no. They're trying to get that extra pound of flesh and rejecting a good contract with one of the most favourable load factors ever adopted anywhere. The net result of that kind of shortsighted, next-year, bottom-line activity, has been that the Alcan pipeline is going to be seriously jeopardized by this.

When one partner in that consortium - Northwest - starts talking about suing the other company -Westcoast - what are the Americans to think about that? You know what Gas Arctic is going to say with their Mackenzie route and you know what El Paso is going to say with their Alaska route. They are going to say: "You can't trust those British Columbians; you better not dare put a pipeline through that outfit."

This minister and this government have absolutely blackened the reputation and the reliability of this province on the international scene. I don't know what they could have done that's more serious. They have done that when they have been fully posted on the results of the negotiations all year long, and they've waited until the very last minute.

Mr. Chairman, these aren't the only results. If this 200 million cubic feet of gas doesn't transit British Columbia en route to Washington state, we lose a direct $5 million a year in terms of revenue to the Crown from British Columbia Petroleum Corporation revenues.

If, as the hon. first member for Vancouver East (Mr. Macdonald) suggests, this should lead to the National Energy Board transferring the export credit from British Columbia to Alberta, then you can kiss goodbye the Premier's dream of a natural gas heritage fund out of this province. Do you realize what kind of high stakes you're playing for in bungling about? You may not care about international relations, but the national government and the National Energy Board have to.

AN HON. MEMBER : He's out of his depth.

MR. GIBSON : He's out of his depth. That's exactly right, Mr. Member.

I want to tell you, Mr. Chairman, that one of British Columbia's most precious assets is gas in the ground. This minister is jeopardizing our options as to what we can do with it. He's jeopardizing the future of a petrochemical industry in this province.

By insisting on a three-year contract, he is making it very likely that British Columbia Hydro customers and Inland Natural Gas customers in the interior three years from now are going to be faced with cutbacks on cold winter days, just as the Americans were faced with cutbacks on cold winter days this year, because of the short-sightedness of this minister in refusing to secure a guaranteed supply of gas until the time we can be reasonably certain that our own exploration crews will have done the same thing for British Columbia.

MR. LEA : Why?

MR. GIBSON : Why? Because these guys are willing to take a gamble with the gas supplies of British Columbia. They're willing to gamble that they're going to find so much gas so quickly that they'll be able to squeeze those extra revenue dollars out a little faster to help their budget a little faster. The gas is just as good if it's delayed by a couple of years, but it won't be in any case because that demand is there. That's the point I'm making.

They're doing this whole thing because of a completely wrong analysis of what the situation is in business terms and because of, I would say, a thoroughly irresponsible lack of appreciation of what British Columbia has to lose on the international scene.

If we want to ask the Americans not to bring tankers into Cherry Point - and I surely hope we do - then what do you say to the people who say: "Well, did you play ball with us when it wouldn't have cost you anything and it would have profited you and we needed it?" What do you say at that stage? What do you say to people who are so irresponsible that a whole year's negotiations can go on without any indication being given and then finally, at the very last minute before the contracts are scheduled to lapse that started the negotiations in the first place - though they're much smaller than what we're talking about now - they say no?

Mr. Chairman, I'm against ultimatums too, but I'll tell you something. If you want people to deal fairly with you, you have got to deal fairly with them. I say that this minister and this government - and the Premier's been in charge of it, it's my impression -have bungled this, bungled it irresponsibly and to the detriment of all British Columbians. I just hope that there's some possibility that this meeting on Monday will pull our chestnuts out of the fire. If it doesn't, then that minister and that Premier will go down in the memory of this province, I'll tell you, but not quite in the way they expected.

HON. MR. CHABOT : Mr. Chairman, it's always refreshing to see that member for North Vancouver-Capilano stand up here and huff and puff and speak on behalf of the large pipeline companies of British Columbia. He completely misinterprets when he speaks here of the British Columbia position. He stands up here and he suggests that we're not prepared to fulfil our contract responsibilities on the exports licence. That is a bunch of rubbish and you know it. That's not our position at all. You're

[ Page 2183 ]

completely misinterpreting our position. That's why there's so much misunderstanding about the B.C. position on the export of natural gas.

As I indicated to you just a few moments ago, two or three days ago I met with the Independent Petroleum Association of Canada, with representatives coming from Alberta. I explained our position to them and they indicated they could live with that position, that it was a reasonable position.

MR. LEA : What is it?

HON. MR. CHABOT : Do you want me to repeat it again? It was a reasonable position. It wasn't the position which was understood in the province of Alberta. They say it's one which the gas producers of Alberta can live with, it's one which is in the best interest of the gas industry in Alberta at this time, and also one which will maintain a keen interest in exploration in British Columbia.

For that member to suggest that we're not playing ball, to use his words, and that we're attempting to disrupt a good relationship to the United States is erroneous, and is nothing but sheer trouble-making on his part. We are prepared to meet our contract responsibilities. We've indicated that, and that's what his formula which we're putting forward at this meeting on Monday will do. It will indicate that British Columbia's prepared to meet its contract responsibilities and also protect the further exploration for natural gas in British Columbia.

You have to recognize the tie-in with Pan-Alberta, which incidentally is an arm of government. It's 50 per cent owned by Alberta Gas Trunk Line and 50 per cent owned by Alberta Energy Company, which is a Crown corporation of the Alberta government. Pan-Alberta, which is a fledgling, struggling little arm of Alberta Energy and Alberta Gas Trunk Line is attempting to make itself look respectable. It needs some contracts, and this is one they're trying to develop. The tie-in will allow the filling of the shortfall of Alberta Gas. The figures range, depending on who you're talking to, I guess, between $20 million and $40 million.

You have to remember as well that in British Columbia we have commitments of $200 million for pipelines at this time which we have to live with too. We have to respect the contract obligations we have to our producers here in British Columbia. There's a 72 per cent load factor which we have to respect. We would hope that the tie-in of a contract with the Alberta gas producers or Pan Alberta wouldn't cost the B.C. Petroleum Corporation money in the long run because we're optimistic with the volumes of gas that will be established in British Columbia and that will be tied in in British Columbia, in the next four to five years.

MR. GIBSON : What are you going to do - send it back to Alberta?

HON. MR. CHABOT : We've invited the chairman of the National Energy Board to meet with us on Monday morning. He'll be there, I hope. What we're suggesting is that after this agreement has been resolved - hopefully the misunderstanding will be resolved on Monday - we're prepared and we hope that the National Energy Board will be prepared to hold a hearing during the course of the three-year agreement and at that time determine where the gas to fill any shortfall that might exist beyond that three-year period should be assigned for a further period of time.

I think that's a responsible position we're taking. We think the National Energy Board should be prepared to determine where the gas should come from in the ensuing period - that is, during the three years until the expiry in 1989. We think that this position we're taking is one which is greatly misunderstood and one which we hope will be clarified on Monday, clarified in the best interest of all British Columbians.

MR. MACDONALD : It's got to be changed, never mind clarified.

MR. GIBSON : Mr. Chairman, just a quick follow-up. I simply have to talk to the minister about this three-year thing, as he doesn't understand. He doesn't understand that any other jurisdiction in this world that could glom on to a 12-year gas supply instead of a three-year gas supply would jump at it, particularly when it's with a 52 per cent load factor.

HON. MR. CHABOT : We'll give them 72.

MR. GIBSON : It gives the most incredible flexibility. Fifty-two per cent is the finest deal you could ask for.

Mr. Chairman, this in no way is going to be any lack of incentive to British Columbia producers, because I'll tell you that even with this there's going to be a shortfall in British Columbia and a shortfall in the northwestern U.S. Every cubic foot of natural gas we can find in this province can either be disposed of internally with normal domestic demands or through a petrochemical industry, which I hope and pray for, or through short-term sales to the United States. There's no question about gas being locked in; there's no question of lack of incentive.

Mr. Chairman, when I hear this minister talking in an injured way about how they've been treated when ~hey've been privy to the results of the negotiations all along and just at the very last moment chosen to pull the plug, and then finally when I hear him talk about a three-year contract, when the net result of

[ Page 2184 ]

that is very likely to be that British Columbia customers are going to go short of gas after three years for some period of time or else buy from Alberta at even higher costs, then I say that minister does not understand at all.

MR. MACDONALD : Mr. Chairman, the minister says we're going to meet our export obligations to the United States, the 809 million cubic feet per day, but in fact you are not meeting it. We've had a mild winter, and even with a mild winter you can't meet it, and in the average winter it could be a shortfall in January or February of 400 million cubic feet per day. You know, with that, your brave statements that you can meet it when you're not, and turning down the supplementary source of gas that is available from Alberta which would save our own resources in this province for our own benefit, I think is very false economy in resource management.

I want to ask the minister a couple of questions, though, and one is: the minister mentioned 200 miles of pipeline to which you're committed; did I understand you correctly?

HON. MR. CHABOT : Two hundred million dollars.

MR. MACDONALD : Two hundred million dollars - does that include the Grizzly pipeline?

HON. MR. CHABOT : Yes.

MR. MACDONALD : And you're committed to that now?

HON. MR. CHABOT : The National Energy Board will determine that.

MR. CHAIRMAN : Hon. members, in the interest of orderly debate, I think that in committee there is opportunity for each member to make his point known, and so that Hansard might have the record, I would suggest that we do them one at a time.

MR. MACDONALD : Mr. Chairman, does the National Energy Board have that jurisdiction? It's a tie-in line, eh? I know that it ties into the west coast system, but it does seem to me to be a B.C. line. I just wonder if you're going to try and duck behind the NEB for that one.

But I've got a couple of specific questions, Mr. Chairman. Would the minister give us the natural gas reserves in the Grizzly Valley-Sukunka area as developed by the Department of Petroleum Resources? That's the government department that monitors the testing of wells as they come on stream, eh? And they have the up-to-date figures. I'd like them for last August 11, and I'd like those figures for today. Have you got them there?

Interjection.

MR. MACDONALD : Not Quasar's figures, not Cheyenne's figures, not Westcoast's figures, but the official Department of Petroleum Resources figures. I'd like you to spread those on the record as of August 11 and as of today, and perhaps you might also at the same time tell us what the latest BP drillings have disclosed in terms of reserves as monitored by the department.

The second thing I'd like the minister to tell us about is the $2 million August 11 advance to Quasar Petroleum. Is there a contract, and would the minister table the contract and tell us how that $2 million was to be spent?

HON. MR. CHABOT : Well, I don't have in my back pocket the reserve figures, and of course the application for the pipeline construction in the Grizzly Valley is an application before the National Energy Board. Of course, they'll determine there whether the availability or deliverability of gas is sufficient to justify a pipeline - justify their approval of a pipeline. So that's where that will be determined. The Grizzly Valley-Sukunka reserves are a subject of an inquiry, I understand, and I think those figures will unfold in due course at the inquiry.

The other question was the Quasar contract.

MR. MACDONALD : Yes, whatever happened? -$2 million went out the window.

HON. MR. CHABOT : What was the suggestion on that one?

MR. MACDONALD : Well, Mr. Chairman, let me first say about the reserve figures.... Does the minister say now that he's come on stream with his estimates that after all the controversy about the reserves in the Grizzly Valley, and as to whether those reserves were squared with the BCPC's figures and the government figures and the puffed-up figures of the company, that he's not prepared now to tell the House what the official Department of Petroleum Resources reserve figures are? You know, I find that incredible if it's true, because this is a matter of controversy.

As for the minister's suggestion that this is something before the inquiry, I have to tell him that he's totally wrong in that, that Mr. Justice Kirke Smith - and I think quite rightly - has decided that he's investigating insider trading in stocks as a result of leaked information, confidential information. He has rejected evidence about the reserves. So, Mr. Chairman, that is not coming up at the inquiry. It is information which belongs to the members of this Legislature. We want the government figures. We

[ Page 2185 ]

don't want the figures that have been in the press and these estimates and guesstimates that have been behind a very highly speculative promotion.

Now in terms of the August 11,1976, advance to Quasar, I would Eke an explanation of how the money was being spent. Was it covered by a letter, a contract? Just there do we sit on that? I think the minister ought to give a very full explanation of why $2 million of public money was advanced at that time to Quasar Petroleum.

HON. MR. CHABOT : In reply to the member for Vancouver-East - the advance to Quasar Petroleum Limited - the purpose of the advance was a contribution towards payment of the costs of a programme of remedial work in evaluation of six wells, as set out by the agreement dated August 9,1976, subsequently amended by correspondence.

Security - a mortgage of undivided quarter of the right and interests of the developer in the related property.

Payment procedure - All costs to be substantiated by third-party invoices. Payment to be made by BCPC within 15 days of the receipt of such invoices, provided that the costs are those as are defined under the agreement.

Terms of repayment: BCPC - it's not an outright grant, as the member was suggesting; it's an advance - to receive an amount equal to 25 per cent of the monthly production calculated at the current premium price payable for gas until the total advances made by BCPC have been recovered, together with interest at the rate of one percentage point greater than the minimum rate charged by the Bank of Canada.

So it's not a grant-, it's an advance. It's recoverable on the delivery of gas. Plus interest, that's right.

Details of advances on October 4,1976: $298,080.63 was advanced. On November 5. 1976, $520,144.49. November 19,1976, $856,976.05. December 13,1976, $238,798.83. That's a total amount advanced to Quasar Petroleum Ltd. of $1,914, 000. Now let's just see how it compares with some of the advances made during the years of the socialist regime in the province of British Columbia.

Advances to Atkinson Petroleum ~

(1972) Ltd., APL Oil and Gas Ltd., and Sunlight Oil Co. Ltd. It's not something new, as you suggested.

MR. MACDONALD : I know. I started it.

HON. MR. CHABOT : You're suggesting it was something new.

MR. MACDONALD : No, no. I've suggested that publicizing it to the investors was something new.

MR. CHAIRMAN : Order, please, hon. members.

HON. MR. CHABOT : And the purpose of the advances to the companies just mentioned - the drilling, completion, flow line and related costs of six wells, as detailed in the agreement dated March 24,1975, and December 4,1975. Securities, mortgage on the right and interest to the developers and the related properties.

Payment procedures: all costs to be substantiated by third-party invoices. Payment to be made by BCPC within 15 days of receipt of such invoices, provided the costs are those as are defined under the agreement.

Terms of repayment: slight difference. Under the agreement, dated March 24,1975, BCPC to withhold half of the payment for the monthly production calculated at 35 cents ...

MR. MACDONALD : It was on flowing gas.

HON. MR. CHABOT : ... per MCF until all advances made under this agreement have been recovered. BCPC to withhold half of the payment for the monthly production at the current premium price payable for gas until all advances made under the agreement dated December 4,1975, have been recovered.

Now just moment. I think there's quite a difference here in terms of repayment. Where's your interest for your advance? You advanced to the firms that I just mentioned $517,654.37. 1 don't see any interest.

MR. MACDONALD : Well, the money was held back from payment.

Interjection.

HON. MR. CHABOT : Second advances, brought forward, $1,400, 000. Further advances, $2,547, 000 - loaned to these companies with a repayment

schedule that doesn't indicate any interest to be paid.

MR. MACDONALD : Will you table those documents?

HON. MR. CHABOT : Will I table those documents? Sure.

Two million with no interest. First advance made on March 25,1975; balance outstanding under agreement dated December 4,1975, at February 28,1977, $1,352, 000. That's one of the advances under BCPC, under a socialist regime, that doesn't suggest that the oil companies or the natural gas companies in British Columbia have to pay interest. And they suggest that there's some wrongdoing as far as the advances to Quasar, which are similar, with the exception that we ensured that interest would be paid for the loan of the money to an oil company or a gas

[ Page 2186 ]

company in British Columbia.

Oh, there was another too. Advances to Coseka Resources Ltd.

AN HON. MEMBER : Who made that?

MR. MACDONALD : We did. Resource incentive development.

AN HON. MEMBER : It was only the taxpayer's money.

MR. MACDONALD : It was secured.

HON. MR. CHABOT : Security mortgage on the right and interest of the developer in the property. Payment procedure: all costs to be substantiated by third-party invoices. Payments to be made by BCPC within 15 days of the receipt of such invoices, provided the costs are those that are defined under the agreement.

Terms of repayment: BCPC to receive each month an amount per MCF calculated at the current premium price payable for gas, equal to the great of (1) the raw gas delivered from one-quarter of the total volume of gas produced in the month from the above wells and (2) the volume of raw gas sufficient to produce 500 MCF of residue gas per day.

D e t ails of advances: $178,000 outstanding February 28,1977; $110,993.41, with no interest indicated again.

I suggest that the agreement that was made - the advances made - to Quasar were in order. They were necessary, and they protected the public interest by ensuring that interest was attached to those advances.

MR. MACDONALD : Mr. Chairman, the advances referred to earlier by the minister were secured by flowing gas, existing gas,

whereas your advance to Quasar.... You know, I don't say that it shouldn't have been made necessarily, but it's on gas that may come in if the reserves are adequate to support a pipeline and they can be brought 89 miles to connect into the pipeline system. So it was a very speculative advance.

But the distinction I make, Mr. Chairman, is this. I can remember sitting on the board of directors of BCPC when these other advances came up. I was kind of anxious as the politician on the board - I was only one out of four - to broadcast them, but I quickly realized, if my colleagues didn't tell me, that when you broadcast that you're affecting the stock market. The difference with this Quasar advance - although I'm glad we got some information as to the progress payments that were made under it - is that the Minister of Economic Development gets up on a stump on August I I and says:

"The B.C. Petroleum Corporation and Quasar Petroleum Limited

have reached an agreement which will see the British Columbia Petroleum Corporation

advance Quasar $2 million for the purpose of testing and re-completion work

on Quasar's existing Grizzly Valley wells to ensure deliverability."

Now. that's what started the Grizzly scandal because you didn't have the sense, Mr. Chairman, that an announcement of that kind triggers activity by speculators in the stock market, not just friends of government, but other people who are now telling the judge that they.... They have to tell the judge that they made literally hundreds of thousands of dollars as a result of this kind of announcement. And that's the businesslike government, is it, that not only doesn't keep a confidence, but broadcasts it from a speech on the stump by the Minister of Economic Development.

Mr. Chairman, I would repeat my question about the reserves. I'd like the minister to give us the petroleum reserves on Grizzly Valley. The figures are there. Would the minister give us those figures? He says he hasn't got them in his back pocket but he has assistance there; he can get them.

MR. L. NICOLSON (Nelson-Creston) : Mr. Chairman, I would have hoped the minister.... I was quite enjoying this exchange in this debate here; I was quite interested in it.

MR. MACDONALD : Would you table the documents?

HON. MR. CHABOT : Not unless you want to pass all the votes.

MR. CHAIRMAN : Order, please, hon. members. The member for Nelson-Creston (Mr. Nicolson) has the floor.

MR. NICOLSON : Mr. Chairman, I don't really want to change the subject - I think this is a fascinating subject here - but I would like to ask the minister to give some indication of his philosophies as to reclamation. We see more and more, particularly in the part of the country that we come from, the advent of strip mining. It's a fairly new field. I'd like to know how many people we have in the field supervising reclamation, what areas they are designated to, what areas they cover and how the companies are keeping up in terms of the programmes and their undertakings for reclamation.

Because some of these companies have been now operating for a few years. I think of Kaiser Coal, Fording, Similkameen Mining and other operations in the province in terms of strip mining. I would like to have some report from the minister as to the kind of progress that is taking place.

[ Page

2187 ]

I note the minister is taking down notes very furiously, Mr. Chairman. That's encouraging. That kind of makes a little thrill run right through my stomach to see that I'll be responded to on this very quickly. So without further ado, I think I'll sit down, bide my time and listen to the answers.

HON. MR. CHABOT : Just in response, we have a total staff of 16 dealing with reclamation at this time and 11 district inspectors in offices which are scattered throughout British Columbia. We have two special reclamation officers; we have three who are located here in Victoria, the capital city. We are anticipating increasing our staffing on reclamation by one this year. We deal with all soil disturbances related to mining, including gravel pits.

AN HON. MEMBER : Gravel pits! Oh, that reminded me! I forgot about that.

HON. MR. CHABOT : Oh, you weren't going to bring that one up!

However, I think that there is a very responsible attitude on the part of the staff of my ministry vis-a-vis reclamation. I think that there is a growing awareness on the part of industry on the need for reclamation and the protection of the environment. I was very pleased last week to have the opportunity to travel to Vernon just for a few hours to present the first award for excellence in reclamation, which was presented to Kaiser Resources. I haven't had the opportunity myself for the last few years to go to Kaiser's operation,

AN HON. MEMBER : It's still there.

HON. MR. CHABOT : However, it has been related to me by directors of the East Kootenay regional district who have had the opportunity to examine their operations that they're doing a first-class job. They were most impressed.

I know that the member for Prince Rupert (Mr. Lea) has had the occasion in the last couple of months to go to the east Kootenay. I'm sure that he would concur with me that there is a more responsible attitude today on the part of industry regarding the need for reclamation, and that the guidelines we've established and the kind of inspections and the kind of attitudes that are being projected by the staff of my ministry are ensuring that the environment of British Columbia is well protected.

MR. MACDONALD : Mr. Chairman, I am ready to yield to the member for Prince

Rupert, but there are a couple of little details here. One is the tabling of

the documents, which the minister can ask leave of the Committee to table. Am

I not right in that, Mr. Chairman?

MR. CHAIRMAN : May I just interrupt? It is not possible to table documents in committee. However, leave can be granted when the House resumes.

MR. MACDONALD : Yes.

HON. MR. CHABOT : Read the Blues!

MR. MACDONALD : Is the minister going to hide them in his pocket? Is he going to send them across the House to the opposition so that we can have a look at that? Because the minister, Mr. Chairman, has made a pretty serious charge. He said we were very profligate with our advances and we didn't get interest and so forth. So I'd rather like to see what the price structure was as well on the advances we made. Some of them, I think, were at 35 cents per 1,000 cubic feet, which, for deliverability of gas.... You know, that's a factor of benefit to the public. Quasar, I suppose, will come in at the new gas price -if and when they sell their gas to BCPC - which is now 85 cents.

So perhaps the minister.... Would you write me a letter or what? We're debating documents that the minister quotes from and I don't receive, so I'm going to be sitting here expecting a letter.

The other point I want to make is that the petroleum department's reserve figures on Sukunka and Grizzly should be made available by the minister. I've never seen anything, Mr. Chairman, in terms of hiding information. You've got volume II of the coal report, for example. It's banned in Boston, so far as that minister is concerned; it's censored material. The reserve figures belong to the public of the province of British Columbia; they're public figures. They should be produced to the committee. I'm sure the minister will, and not at 6 o'clock, but now. Would you send me those documents you undertook to table?

HON. MR. CHABOT : Mr. Chairman, the member for Vancouver East seems to change his position from time to time. He has suggested that I table the documents in the House and now he's suggesting that ...

MR. MACDONALD : Send them over!

HON. MR. CHABOT : ... I send the documents over to him. I don't know whether he wants to secretly look at them or whether he wants them to be out there in full public view. He'd better make up his mind what his position is - whether he wants to have the only right to examine documents which are filtered back to the minister.

I suggest that you were told by the Chairman of the Committee here of the procedure to which I must

[ Page 2188 ]

adhere in how these documents are going to be tabled. The Chairman has suggested that the only procedure which I can follow is for the documents to be tabled at the adjournment of the House. I suggested to you a little earlier that I'm prepared to table these documents and outline the financial advances by BCPC to various oil companies in northeastern British Columbia. I'm prepared to do so, but I'm prepared to do so when it's right and in accordance with the rules of this House.

MR. MACDONALD : Mr. Chairman, why make a difficulty about a thing like that? I'm sure the minister could make available the information we're debating and that would be fair. So I have no choice than to move the committee rise, report progress and ask leave to sit again.

HON. MR. CHABOT : Cheap shot!

MR. MACDONALD : Well, what else can we do?

HON. MR. CHABOT : Cheap shot!

Motion negative on the following division:

YEAS - 18

Wallace, G.S.

Gibson

Nicolson

Lea

Cocke

Dailly

Stupich

King

Macdonald

Levi

Sanford

Skelly

D'Arcy

Lockstead

Brown

Barber

Wallace, B.B.

Barnes

NAYS - 28

McCarthy

Phillips

Bennett

Wolfe

McGeer

Chabot

Curtis

Fraser

Calder

Shelford

Jordan

Bawtree

Waterland

Davis

Williams

Mair

Bawlf

Vander Zalm

Haddad

Kahl

Kempf

Kerster

Lloyd

Rogers

Mussallem

Loewen

Veitch

Strongman

On vote 116: minister's office, $86,016.

MR. WALLACE : I just want to ask one or two general questions. I am very interested in the minister's statement that issued out of a speech he made in Toronto where he said that the mining industry in British Columbia had been turned around. That was the phrase he was quoted as using, but, apparently there were others, including geological engineer, Mr. Stevenson, who said he hadn't noticed any appreciable change in mining activity. He said that little actual development was going on. In fact, he thought that most mining men would be interested in going back to Ontario because of the lack of real mining activity in British Columbia.

The crucial response of this minister, Mr. Chairman, was - and I quote from The Vancouver Sun of March 9, this year:

"Mr. Chabot admitted that some development is apparently being held off because people fear a return of the NDP to power in British Columbia. He said, 'We need positive commitments to mining right now.' He appealed to the mining industry to show faith." It's very interesting that on an earlier occasion, when the minister had been addressing the annual meeting of the B.C. and Yukon Chamber of Mines.

"He told the mining industry that they could wait three years until the next election to see who wins, but the result would be 'no expansion, no jobs and the economy slumps.'

" 'The voter, ' he said, 'would conclude that there must be something wrong with free enterprise.' He went on to say, 'The mining industry in this province has a responsibility to show faith and trust in the intelligence of our people by developing our ore bodies and by creating employment for the unemployed, who will respond by giving an indication of faith in our political system. Failure to accept this approach will bring on the reversal.' "

I just wonder of the minister could tell us what's happened since that statement of his in January, that one of the main reasons that mining industry in British Columbia is not showing any great splurge of activity is related a fear of return of the NDP.

One of the basic reasons that this government was elected in December 1975, was the majority of voters accepting this party's promise and placing confidence in that promise - that the automatic return of a free-enterprise "government" would suddenly restore investor confidence in the mining industry. It would lead to the reduction or abolition of royalties -which had been touted as the overwhelming reason that the mining industry was in trouble in British Columbia - and everything in the mining industry would just be lovely.

Now we have various people in the industry, including such people as Mr. Stevenson and Mr. Sheldon, who is the retiring president of the B.C.-Yukon Chamber of Mines, making it plain that although there's more exploration going on, in general terms there's very little upsurge in overall activity in the mining industry.

It was my thought that this government, by loudly espousing a free-enterprise approach at the last election, had convinced the voters that, indeed, there would be just a tremendous resurgence of interest,

[ Page 2189 ]

activity and investment in the mining industry, if the British Columbia voter was just smart enough to re-elect a free-enterprise government.

I just feel that that quite clearly hasn't happened. I wonder if the minister can give us some of his thoughts: First of all, why isn't it happening? If the real. issue was to give the investor confidence in a non-socialist regime in Victoria, investors have that non-socialist regime in place right now. It has been in place for over a year. Not only that, but the regime has, as promised, modified the royalties on copper and other minerals. Even then, we have people in the mining industry saying that there hasn't really been much of an upsurge in activity.

If I could just quote from the Western Miner of February of this year. I say this in a non-partisan way, Mr. Chairman, to the minister. This is an editorial, Mr. Chairman:

"A factor contributing to the adverse situation is a climate of uncertainty brought about by federal and provincial government wrangling and a royalty and tax structure which is count er-productive fails to redirect reinvestment to needed high-risk development, and imposes burdens unrelated to the industry's ability to pay.

"Perhaps the most urgent prerequisite for rational tax and royalty policies is a prompt settlement of federal-provincial conflict over resource revenues. Both the federal and provincial governments have particular responsibilities in the design and implementation of resource policies in Canada. The areas of jurisdiction differ, but each level of government must recognize that in carrying out its responsibilities, it cannot act in isolation, but must have due regard for the interests of the others."

I know we're not telling the minister of the House anything new. The federal government, for example, taking unilateral action in disallowing royalties as a cost of doing business is a simple example of how the provincial industry can suffer or uncertainty can be created, as stated in that editorial.

So I would like to say that really the political stripe of the government in British Columbia, whether it's NDP or Social Credit or whatever, I think has been vastly exaggerated in relation to the success or lack of success of the mining industry. Sure, you can reduce royalties and you can make certain adjustments.

But I think that kind of writer in that editorial really hits the nail on the head when he says that there is uncertainty because federal and provincial governments are busy fighting with each other to try and determine just how much revenue they can extract from these industries, with each one tending to act in isolation from the other.

I would like to know where this government is at in negotiations with the federal government to try and bring about a greater measure of certainty as to the application of federal and provincial taxation and to what degree we are close to producing some stable, fair agreement so that the investor will know just exactly where he is at.

One of the other statements that the minister made - and this is just a straightforward question, Mr. Chairman - was that he wanted to restore incentives in the mining industry. While he didn't spell out the incentives on this occasion - he was addressing the annual meeting of the B.C. and Yukon chamber of mines - he said that the government would continue to examine the rights of mineral claim-owners in provincial parks. I recall that the former Social Credit government showed a fair disregard for the damage that's caused by mining in parks, and I just wonder if I could ask the minister a simple question.

What did he mean by "examining the rights of mineral claim-owners in provincial parks, " when, in the other breath, he was talking about incentives? Do I detect that the minister was suggesting that it might become easier for claims to be mined in provincial parks and that the overall policy of the government was to make it easier for mining to take place in provincial parks?

I know that there are many people concerned about conservation who would be very disturbed if that is the case. This gives the minister a clear opportunity to deny it if I'm wrong.

I just want to ask in passing, Mr. Chairman, about the government's policy towards the development of uranium resources. I notice that in the mining journals, in particular the Northern Miner and other publications, there is a tremendous reawakening of interest in uranium. I gather that the price of uranium on international markets has risen considerably and that it presents itself as possibly a very lucrative mineral that we should start developing. I gather there is a tremendous amount of exploration going on, particularly in the Kelowna area.

According to the Northern Miner on March 3 of this year, close to 100,000 square miles are to be sampled geochemically during 1977 under a federal-provincial uranium reconnaissance programme.

I realize that Atomic Energy of Canada has a great deal to do with the overall supervision of uranium exploration and development. Could I ask the minister to what degree we can be assured that it isn't just the dollar value of the uranium we're concerned about, but the safety of the miners who will one day mine that uranium and have a higher chance of developing cancer and other physical problems, complaints and diseases? I think it is all very well that this province should try and develop the natural resources that exist in the ground, but the price at which we develop them, and particularly the human price, is something that I think we should shout loud

[ Page 2190 ]

and clear about very early in the game. I realize that we're only at the point of very preliminary exploration for uranium deposits in British Columbia. c But if there were a sudden rich find of uranium and we received federal permission through Atomic Energy of Canada to develop that deposit, I want to t know that we have some strong, clear policy well ahead of time to ensure that the miners who will be exposed to the very substantial risks in uranium i mining will be given the fullest possible protection by legislation and regulations.

We already know that over the years, Mr. Chairman, the history in the asbestos

industry is absolutely devastating and a shocking indictment of the way large

corporations can develop natural resources or can manufacture from resources

with very little concern for the health and longevity of the workmen. Now that

we've learned a sad and serious lesson from asbestos, I hope that in the

uranium industry we're not about to repeat that very tragic lesson whereby

workers are subjected to conditions which statistically have been shown beyond

all doubt to greatly increase the risk of developing certain cancers. It's

very obvious that all the work that is being done on uranium exploration means

that this government, and indeed the government of the day, should try to develop

this resource, but I hope it will not be done without the closest consideration

of the men who will make the development possible and who will be subjected

to these health risks and health hazards.

I want to ask a little bit about coal, Mr. Chairman.

I'm just a very interested layman in these matters and I don't profess

to know very much about all the complicated arithmetic of the coal industry

which has been raised in this House already under Economic Development. I am

really puzzled, and I don't want anyone to misunderstand my comment because

I'm t talking just as an interested British Columbian who wants to see our

resources developed intelligently and i with a good return on our money. It

seems to me that the Progressive Conservative government in Alberta has introduced

in the last year a sliding royalty on coal which makes the NDP look pretty pale

and anemic when it comes to trying to get a return on your natural resources

when you sell them.

The NDP had $1.5 0-a-ton royalty on coal and they provided enabling legislation

to put it up to $2.50 a ton. We then hear cries and screams from all over that,

of course, how can you sell the coal if You Put a up the royalties? Well, Mr.

Chairman, it's very interesting that last June in Alberta the Progressive

Conservative government, under Peter the Red - some of these policies might

earn him just a little bit of a pink shade - was taking in $900,000 in royalties

from coal. They have introduced a sliding scale which starts at 5 per cent and

may go as high as 50 per cent, depending on the degree of profitability of each

v particular coal source. Apparently the average will work out somewhere between

12 per cent and 22 per cent, according to The Financial Post of June, 1976.

At any rate, the Progressive Conservative government of Alberta, with this much-increased

royalty, expects to take in $23 million in royalties in the next fiscal year

compared to $900,000.

First of all, I want to know if there was any immediate evidence to indicate that potential coal buyers, whether in Ontario or elsewhere, made any overtures to our government in light of the fact that t made British Columbia coal, at $1.50-a-ton royalty, a much more attractive buying proposition. The Alberta government obviously took the position that hey felt they could sell the coal with increased royalties and that there wouldn't be any particular change of policy by buyers. Mr. Edgar Kaiser Jr., whom I have quoted already in this House, made a statement in June.

He said: "A policy for coal can serve a useful purpose, but there is a lack of knowledge in government as to the value of coal." He aid, in reference to Alberta's plan to replace the existing royalty of 10 cents a ton by a complicated formula: "That will send royalties on some high-grade coal to as much as $9 a ton." He said that some governments don't know the value of coal.

I am suggesting that maybe Alberta knows very well what the value of coal is. At the coal conference n Toronto - I can't remember exactly when it took place - a statement was made by one of the leaders n the coal industry that by early 1980, Canada's coal needs will be five times what they are at the present time. It would seem to me that maybe Alberta has a very clear picture of what the value of coal is.

Of course the real question is the use of that coal and where it can be sold. I gather that Alberta coal is one of the sources that Ontario Hydro uses in its thermal plants for generating electricity. It's quite obvious from statements by Ontario Hydro, and indeed by the Ontario government, that they wish to diversify the sources from which they buy coal which, at the moment, in large measure, are coal mines in the United States. I find the interesting discovery is that Canadians own many of these coal mines in the United States.

This is the opposite of what we are always hearing about American ownership of Canadian industry. Ontario is not so dumb - they own the coal mines in Tennessee and Pennsylvania and buy the coal in the United States and ship it up to Ontario Hydro. Here we are with all kinds of coal in western Canada but the problem is hat by the time we get our western coal to Ontario it's more expensive than the coal they get from Pennsylvania and Tennessee.

Now on the other hand, taking a longer and more global look at the situation, Ontario realizes that coal, wherever it is at the moment, will become a more valuable commodity in the next 5, 10, 15 years. They

[ Page 2191 ]

realize that it might make a lot of sense not to put all their eggs in one basket, if you'll pardon the mixed metaphor, Mr. Chairman, or not to put all their coal in the same bucket, and to "go west, young man, " and look for coal in the west.

I just wonder if the minister could tell us what initiatives he's taken in attempts to sell British Columbia coal in Ontario for thermal use in generating electricity. I have the figure here in relation to, I think, 1976. We increased the number of tons we sold by something like half a million tons, so it is clear that we are selling more coal to eastern Canada, but it's still a very small amount of their total consumption. I just wonder if we have any figures at hand as to how much better we're likely to do in the next year.

I would also like in that regard to have the minister tell us what the transportation costs are which seem to be the major obstacle which makes Pennsylvania coal more attractive to Ontario Hydro than British Columbia coal. We're always talking in this House about the west being discriminated against by Ottawa because it's more expensive to ship coal from B.C. to Ontario than it would be to ship it from Ontario to B.C. I'd like to know where we're at in getting better freight rates.

It would also seem that if we can increase our coal sales to Ontario, we would presumably need coal cars to convey the coal by rail. We've already talked this afternoon about the fact that Railwest, that manufactures freightcars - perhaps of a different kind - is finding it difficult to obtain contracts and to stay in production. So again, could I ask the minister this: if we were able to increase our sale of coal to eastern Canada by an appreciable amount, to what extent could we realistically manufacture the additional coal cars that would be needed to carry out that transportation?

One of the other interesting things I discovered in researching this whole issue, Mr. Chairman, and this is a kind of a staggering thought - is that it's cheaper.... At least, let me quote: Dominion Foundries and Steel Ltd. wanted coal shipped from western Canada. They discovered that it's cheaper to send the coal by rail 686 miles to Vancouver and then by freighter 8,800 miles through the Panama Canal to get to eastern Canada. One of the other routes that's being developed, I understand, is to ship it by rail to Thunder Bay and then to have it shipped by the Great Lakes to Hamilton, Ontario.

But it would seem from the experts and the reading that's been done that transportation costs are a vital factor, no matter which of these two methods of transportation were used. I wonder if the minister could at least give me answers to some of these questions.

The last thing I wanted to ask - and it might be more properly directed to

the Minister of Energy (Hon. Mr. Davis) later on - is that I understand the

Hat Creek coal could have a particular use because of it's high content

of alumina in the ash. There's 27 per cent to 33 per cent alumina content

in the ash. Since alumina is one of the key ingredients in making aluminum....

Normally, I gather we get it from Guiana or somewhere in the form of bauxite.

The B.C. Research Council has put forward the possibility that the ash produced

at the Hat Creek coal plant could produce 445,000 tons of alumina a year, which

would make it possible to manufacture at least three-quarters of the aluminum

that British Columbia is producing at the present time.

Now I know that's looking down the road a little bit, but we're always talking in the House about how we can create jobs and how we can develop a wider range of occupations to deal with the unemployment situation.

I just think that in this whole business of coal - manufacture of railcars, the development of alumina from the ash and all these other projects - it would seem to me that on a long-term basis that holds out far more hope for creating jobs that remain jobs and that are not just a passing whim, as we discussed in the Ministry of Highways the other day, where someone gets casual work for a few months and then they're out of work again come November. I think these various points that I've raised are worthy of consideration as a long-term form of creating new employment.

I wonder if the minister would, care to comment.

HON. MR. CHABOT : Just in response, may', - 2 the advantage would be more conversant with Hat Creek coal and its relationship to alumina.... It also has a source of pozzalan, which is used in cement manufacturing - certain selective types of cement. It's a fascinating situation, an alternate industry to be established in the province. Nevertheless, the Minister of Energy is a director of B.C. Hydro so I'm sure he'd be more familiar with any by-products that might be developed from the mining of coal at Hat Creek.

The next question that was put by the member for Oak Bay (Mr. Wallace) -was the question of thermal coal to Ontario for Ontario Hydro. British Columbia is shipping thermal coal to Ontario at this time for Ontario. I'm not sure how much they're shipping at this time. What they've shipped is small volumes. I understand their contract for this coming year is in the vicinity of one million tons to Ontario Hydro.

One of the real problems with the movement of thermal coal from British Columbia to Ontario is the tremendous transportation cost. I understand that the cost of the thermal coal once it reached Ontario is 50 per cent more than the coal they get from, say, Pennsylvania. So that's one of the real problems we have in shipping thermal coal to Ontario Hydro,

The first question that was put ...

[ Page 2192 ]

Interjection.

HON. MR. CHABOT : Well, that's something that would have to be examined. Our projections, I believe, if I remember correctly....

Well, it might depend whether it's just before an election or just after.

Our projections, if I remember correctly, having examined the figures of possibilities of the sale of thermal coal to Ontario Hydro, range in the near future to something up to six million tons of coal from British Columbia.

The first question you put was the one which Mr. Stevenson, of W.G. Stevenson and Associates Ltd. of Vancouver.... You indicated you disagreed with me on my speech in Toronto. Since the

article appeared in The Vancouver Sun, he has written me a letter. I'm not going to read it all. I'm just going to read certain parts which indicate that there really was no conflict in the points of view between Mr. Stevenson and myself.

He starts off in his letter dated March 16:

"I'd like to add my congratulations to the many others you have received for the very important address you delivered to the prospectors and developers in Toronto on March 7." He goes on:

"I do not believe the statement would differ substantially from yours, though the report as printed does."

In other words, there's no real disagreement in the amount of development that is taking place in British Columbia between Mr. Stevenson and myself. He's emphasizing that there isn't too much being done by small mining companies, that it's mostly being done by large Canadian or American or foreign mining companies in British Columbia - the financing, which is another problem.

Nevertheless, there is increased activity, and if you have increased exploration and development activity you eventually get additional mining activity.

[Mr. Rogers in the chair.]

There's evidence that there's a change of attitude in British Columbia, and it's reflected. The downturn in mining activity in British Columbia was clearly reflected in the number of mineral claims that were staked, say, in 1973,1974,1975. It escalated very dramatically in those years down from.... I don't have the figures here, but if my memory serves me correctly, there were about 72,000 mineral claims staked in 1972. It went right downhill, and in 1975 there were 11,000 mineral claims staked. There were more claims being staked in the Yukon at that time than in British Columbia. It has slowly built up again.

In 1976 there were 28,000 mineral claims staked, so there is evidence that there is some interest in the mining scene in British Columbia.

I can readily understand the apprehension that has existed in British Columbia after this industry having been under siege or under attack for three and a half years. It takes some time to dispel this kind of uncertainty that's in the minds of people about what might happen on the political scene in the province, but I do detect some change of attitude. There's a slight change of attitude; there's a more optimistic point of view developing. It has taken some time for this change of attitude to develop, Mr.

Chairman, but I do detect it from some of the conversations I'd had with people who are interested in the mining industry. I see investor confidence slowly coming back to British Columbia. We see some activity and some proposed mines on the horizon, which speaks well for future growth in British Columbia.

Interjection.

MR. CHAIRMAN : Order, please.

HON. MR. CHABOT : Certainly there is a taxation problem, and investor confidence is hurt by a variety of developments in Canada. I'm sure that if one was to try to attract foreign investment to any part of Canada right now, the first thing that would come to mind is that we have a province called Quebec in Canada. The kind of statements emanating from that province at this time certainly makes it difficult to attract investor confidence and investment dollars.

I should say also that we have the Saskatchewan government's proposed takeover of the potash industry; that will also reflect their ability to attract investors confidence. Overall, these things have to be taken into consideration. It's not always the policies and the good intentions of one particular government that relate themselves to investment funds flowing; the overall picture of one country has a great relationship in its ability to attract funds.

I don't see any major conflict between British Columbia and the national government as far as metal taxation is concerned. I think that it would be in the best interest of all of Canada if we were able to establish an equal cost-sharing formula across this country for the development of our mineral resources that would be similar in each and every province and would return a fair share to the people who extract these non-renewable resources. Nevertheless, that's very difficult when you have political parties of various philosophical persuasions or you have different governments with different aspirations.

But I would think that it would be in our best interest in the development of our resources if we could have a unified tax-sharing formula between the national government and the provincial governments.

[ Page 2193 ]

The member mentioned uranium as well. We do have a potential uranium mine north of Kamloops -the Birch Island property which is in the process of being examined by Rexspar. We're concerned with the safety of the environment and of the workers in the development of this ore body. Because uranium is a new thing to British Columbia, we have sent three officials from my ministry to Elliot Lake to examine what is taking place there as far as the uranium mining, waste disposal and safety measures that are being pursued there.

We want to ensure that a high level of safety is undertaken, both for the miners and the public and for the protection of the environment as well. The Atomic Energy Commission has a large role to play and has jurisdiction over all uranium production in Canada. The Pollution Control Board would be an active participant in setting down guidelines as far as the mining of this particular substance is concerned.

Our first responsibility, and we'll ensure that it is as far as the Ministry of Mines is concerned, is to ensure that the disposal and the usage of this material will ensure safety for the workers and the public and that there will be adequate protection of the environment.

MR. WALLACE : Parks?

MR. CHAIRMAN : Kindly address the chair.

HON. MR. CHABOT : The member talks about mining and parks and provincial parks. That's a question which has been examined. It's a question we have in British Columbia - certain Crown-granted mineral claims within class-A provincial parks. It becomes a question of the government establishing a policy as to whether it's in the best interest of the environment or of British Columbia as to whether there should be a quitclaim - in other words the buy-out of an existing mineral claim - or the allowing of that particular ore body to be mined under very stringent environmental guidelines.

It's something that the government is examining at this time. There has been no policy position taken on Crown-granted mineral claims within class-A parks. It's something I would think that the government would be addressing itself -to in the not too distant future.

MR. GIBSON : Thank you, Mr. Chairman. I want to start out by saying that, as a result of the tumultuous beginning to the debate today, I overlooked what certainly should be a normal courtesy, and that is to wish this minister well in his new portfolio. He is a professional politician, Mr. Chairman, and a good one, and that is one of the finest things I can say. I wish him very well in his job and I would express as well my regards towards his capable deputy.

Mr. Chairman, I just want to start out with my annual plea for some attention to undersea mining by the government of this province. Hopefully, that would be led by the Ministry of Mines and Petroleum Resources. We have everything here that we need to make a start on that. You could even use some of the ferry system, Mr. Member - the ones that are surplus now. But we really do have everything we need. We have the great corporations that can mobilize the expertise and the capital.

We have the smaller service corporations that can provide the undersea diving and communications capabilities and all of the things that are being developed, particularly around the North Shore of Vancouver Harbour, to make these things technologically possible. We have our situation on the Pacific Ocean, which gives us access to the most attractive known undersea deposits and we have - in academic terms - some of Canada's experts in this field at the University of British Columbia and the B.C. Research Council.

What is needed is some way of putting everything together and for the government to show leadership in that area, first of all by saying, "This is something we want British Columbia to do." That's the first thing that has to be said. Secondly, they must say: "We are willing to put a few hundreds of thousands of dollars or a couple of million dollars behind some definite, concrete development initiative in this direction." There's no time to be lost, Mr. Chairman; let not anyone think that this is simply a blue-Sky proposition.

Let me read a quote from The Vancouver Sun of yesterday, dateline San Diego: "A closely guarded attempt to mine volumes of manganese from the ocean bottom begins this weekend." I question whether they really mean manganese, It's the manganese nodules, which are probably being mined for their nickel and copper content, and cobalt to a certain extent, but in any event that's what the report says. "The recovery spot is 1,100 miles southwest of San Diego. A converted ore carrier with a huge open well like that of an oil drilling ship will do the work for a Gloucester Point, Virginia, firm." Then, Mr.

Chairman, they go on to name the firm. It says that it's the operating arm of Ocean Mining Associates, a joint venture of U.S. Steel Corporation and Union Miniere of Belgium.

Mr. Chairman, these are not small players in the world game. This is a serious attempt to start the development of undersea mining, and British Columbia must not be left behind. All others have access to the Pacific Ocean deposits too. There is currently no international law. It's going to be a case of who gets there first with the capability. It would be a terrible shame if our mining community in the province of British Columbia was left behind for lack of government initiative to say, first of all, let us do it, and, secondly, put a few bucks into making it be a

[ Page 2194 ]

reality. I make that as a very positive suggestion to the minister.

Now I want to move on to another question on which perhaps we will perhaps have less agreement. That relates to the most controversial aspect of the minister's portfolio, which of course is coal. The government is taking a very monocular viewpoint on coal development in the province.

MR. LEA : Not avuncular.

MR. GIBSON : Certainly not avuncular.

AN HON. MEMBER : Gordon, what does that mean?

MR. GIBSON : They need a talk-to by a Dutch uncle, I'll tell you that.

MR. CHAIRMAN : Order, please. The member for North Vancouver-Capilano has the floor.

MR. GIBSON : Thank you, Mr. Chairman, but I don't really mind the interjections. They're delightful. But they are monocular on this northeast coal approach. Somehow the Premier - it can't be this minister because he just got into the job - or the Minister of Economic Development or somebody like that has the idea fixed in their mind that this is going to be the economic development future of British Columbia. I'm so worried, because if you put all of your economic development eggs in that one basket, what happens if it doesn't work? What happens if the economics just aren't there?

I'm concerned that this government would even sell out the southeastern coal mining communities if necessary in order to try and make something go in the northeast that isn't really economic.

I know that must be a real concern to this minister who represents a constituency in southeastern British Columbia. So I hope that he will have a particular concern for what artificially forced northeast coal development, which in its wake cuts off economic southeast coal development and the thousands of jobs that might be projected there, will do to his area.

Mr. Chairman, we know about the cost factors on northeast coal. As the numbers are moving around, we're more and more getting confirmation of the fact that the -cost - I'm not talking about the necessary price, but the actual cost of getting this stuff out of the ground and to tidewater in a volume of around 10 million tons - is something like $60 a ton. Therefore we're talking of a market price of something like $70 a ton plus before it's going to work.

HON. MR. CHABOT : Where do you get those figures?

MR. GIBSON : I get those figures from a lot of research, Mr. Minister. Incidentally, you have access, through you, Mr. Chairman, to so much research that the people of British Columbia should have - $3 million worth of research, cost-shared, almost all done. Why isn't it made available to the people?

HON. MR. CHABOT : Where do you get that information?

MR. GIBSON : I get that information from the Minister of Economic Development, Mr. Minister.

MR. LEA : Why isn't it available to the Ministry of Mines?

MR. GIBSON : I wonder if the Ministry of Mines is being kept in the dark. I don't see how that minister could fail to grapple with some of the serious issues if he was really being kept in the picture by the Premier and by the Minister of Economic Development.

MR. CHAIRMAN : Hon. member, perhaps you could address the Chair.

MR. GIBSON : Well I said "he, " which is third person. I was addressing the Chair.

What is the Chair's address?

Mr. Chairman, in any event, if the minister thinks those cost factors are wrong, I invite him to stand up and give us what he considers to be the correct cost factors, but I've enumerated them in earlier debates and that's what the total is. I would welcome hearing from him otherwise. But what I'm more concerned about even than that right now is the question of markets, because what the market is is going to determine how good your price is going to be. If the market is oversupplied, prices are going to be weak, and if it's undersupplied, maybe you can get the price up to that $70 plus per ton that you've got to have to meet your costs and pay some taxes and some profits.

Now the one report that has been released is the report of the Coal Task Force, dated February, 1976. They made a projection - and I assume it's this projection which has given rise to so much optimism within the government - that the potential demand for metallurgical coal from British Columbia will grow from the current nine million annual tons to 35 million annual tons by 1995. Well and good - that was stated in the

summary. Now let's get a little bit into the fine print and see how this was to happen.

First of all, most of the increase was to come from an expansion of the market in Japan. A certain amount was to come about from an expansion of the Japanese market and a small amount - I think about eight million tons - was to come out of the OECD European market. But most of it was to come from the Japanese market, to which Canada currently,

[ Page 2195 ]

according to the minister's figures, which I would dispute a little bit, supplies 12 million tons. The suggestion is we would supply about 26 million tons by 1995.

The minister, incidentally, yesterday, I think, in debate did use that figure of 12 million tons, But I think, Mr. Minister, last year we only exported about

7.9 million - if I recall the figures of the department correctly. There's something wrong there. Things aren't going quite as well as they should.

Interjection.

MR. CHAIRMAN : Order, please. Would the Minister of Mines kindly wait

until the question is over? Would t h e member for North Vancouver-Capilano

please continue uninterrupted?

MR. GIBSON : Mr. Chairman, I wish you would be kinder to this neophyte minister. He is doing his best, and I thank him for that. I appreciate these little comments he makes.

Now we turn to page 89, where we learn a little bit more about how this projection as to sales volume was found. I want to read this out to the House. They say:

" Other potential exporters of metallurgical coking coal are China, Poland, the U.S.S.R. and

South Africa. China has immense resources of coal but has not participated to any extent in international trading to date. It has been assumed that China will not undertake a major role in international coking coal trade during the projection period."

Well, my goodness, Mr. Chairman. China will not undertake a major

part in coking coal trade by 1995?

With all of the need for foreign exchange in hard currencies that China is increasingly having year after year, and when it's one of the large coking coal depository countries in the world, and when they're engaged in a good deal of bilateral trade with Japan, they won't enter the market until 1995? 1 think that's a very dangerous assumption.

Then later on in the same paragraph they say:

"The Soviet Union will supply quantities of coal to Japan in the early 1980s from Siberia, but is not expected to become a major international trader in the market areas considered to 1995."

That's another very, very questionable assumption.

The Soviet Union needs hard currencies as well. This is one way of getting hard currencies