1994 Legislative Session: 3rd Session, 35th 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, JUNE 29, 1994

Afternoon Noon

Volume 17, Number 3

[ Page 12491 ]

The House met at 2:04 p.m.

A. Hagen: I'm happy to welcome my husband, John, to the precincts today, and I hope others will join me in that welcome.

G. Wilson: It's my pleasure to welcome to the gallery today two of my constituents from Powell River, Gladys Chavigny and Jenny Garden, who some members of this Legislature may know is the granddaughter of one of our illustrious members, my good friend from Cariboo North. May the House make them welcome, please.

D. Streifel: Around the precinct someplace today, maybe up in the gallery, is a very good friend of mine, a former colleague I worked with for years in the retail food business. As well, we were colleagues on staff with the United Food and Commercial Workers, Local 1518. Would the House please welcome Frank Pozzobon.

F. Garden: I'd like to thank my colleague from Powell River-Sunshine Coast for making the introduction of my granddaughter. Accompanying my granddaughter and her grandmother is my favourite sister-in-law from Dundee, Scotland. She's all the way over here visiting my wife, Margaret, who's her sister, and a son in Powell River. She was bragging the other night about the prowess of some famous athlete coming from Dundee to the Commonwealth Games next month. This is my favourite sister-in-law, so let's make Lexie welcome.

Introduction of Bills

DOMESTIC VIOLENCE PREVENTION ACT

L. Stephens presented a bill intituled Domestic Violence Prevention Act.

L. Stephens: Three in ten women currently or previously married in Canada have experienced at least one incident of violence at the hands of a marital partner. In British Columbia, 36 percent of married women have experienced wife assault, and 48 percent of all female homicides are committed by their partners.

This bill will afford victims of violence greater access and protection, through the use of a justice of the peace for the removal of the offender from the home rather than the victims -- the children. This is a major innovation. In addition to removal of the offender, an emergency intervention order and a victim assistance order can provide for the comfort and safety of the victim and other family members who remain in the home.

In the judicial system, the onus will be on the respondent to demonstrate why such orders should not be put in place, and the focus will be on greater protection for the victim. Provisions for the respondent to be restrained, removed and/or to attend counselling or therapy are also provided.

Bill M217 introduced, read a first time and ordered to be placed on orders of the day for second reading at the next sitting of the House after today.

Oral Questions

LABOURERS' ADVANCEMENT FUND AND NDP ELECTION CAMPAIGN

G. Farrell-Collins: The Minister of Labour has caught my eye; he knows it's coming his way.

The opposition has heard, as has the rest of the province, that the government is announcing a major $800 million plan to rebuild the ferries. In the absence of the minister of special deals and campaign fundraising, will the Minister of Labour assure us that no money from this $800 million project will find its way back into NDP election coffers in the same way that it has on the Vancouver Island Highway project? Will the minister give us that agreement?

Hon. D. Miller: Indeed, all members on this side of the House are extremely proud of that announcement that was made today. It will not only see new ferry construction but new terminal construction here in British Columbia.

I can assure the hon. member that unlike the Liberal opposition that has criticized an agreement that provides jobs for British Columbians, this government will endeavour to ensure that all of those jobs go to British Columbia workers.

The Speaker: Supplemental, hon. member.

G. Farrell-Collins: I couldn't help but notice the testiness of the NDP when that question was raised. I think it's because they have something to hide. If I can paraphrase his colleague, I'd like to issue a challenge to the Minister of Labour. If labourers' advancement fund money has ever found its way into the federal or provincial NDP election campaigns, will he resign as minister? If they haven't, I'll resign as House Leader.

Hon. D. Miller: I can only say that when the member opposite offered to resign as House Leader, I noticed his colleagues applauding enthusiastically.

G. Campbell: It's not hard to see why the minister would slough that off with an excellent retort, I might say. But the fact of the matter is that we have documents today that show that the labourers' advancement fund has, in fact, contributed to the NDP nationally, as well as to individual candidates in the amount of hundreds of dollars. We had previously asked for a guarantee from this government that no advancement funds used and formulated in the Island Highway agreement would find their way back for political purposes.

Will the minister commit today to rewrite the contract of the Island Highway to make sure that no public funds are finding their way back to the NDP through these advancement funds?

Hon. D. Miller: We on this side of the House see nothing wrong with an agreement that provides not only the much-needed construction of new highways on Vancouver Island but people on Vancouver Island with the opportunity to get those jobs -- unlike the Liberal opposition, which, if they were ever in power in this province, would scrap that agreement and see those jobs go to people who perhaps are non-British Columbians.

The Speaker: Supplemental, hon. member.

[ Page 12492 ]

G. Campbell: You can count on the fact that, should we ever form government, we will be sure that taxpayers get the best value for their investment.

The Premier said to this House and to the public: "The purpose for which the advancement funds have been allocated in the Island Highway agreement are not for political purposes." However, we know that $1,500 from the labourers' advancement fund has been contributed to the NDP. We know that hundreds of dollars have been contributed to individual NDP candidates. We are asking the minister to simply protect the taxpayer in order to be sure that their funds are not going for political purposes but are indeed going to enhance the infrastructure of the highway.

Hon. D. Miller: I can say that in my term in politics I have indeed personally received donations from working people, and it's no surprise that the Leader of the Opposition refused to disclose the corporate donors to his campaign. We on this side of the House are proud of the fact that ordinary working men and women in this province feel it's important to maintain this government and contribute to members on this side of the House.

REGISTRATION OF LOBBYISTS

R. Neufeld: My question is to the Attorney General. The federal government recently announced its registration requirements for lobbyists in Ottawa. Given the tremendous influence that certain special interest groups exercise over this government, will the Attorney General commit to implementing similar formal registration requirements for lobbyists at the provincial level?

Hon. C. Gabelmann: That's not an issue that I have under active consideration at this time.

The Speaker: Supplemental, hon. member?

R. Neufeld: Lobbying at the provincial level is not as organized as it is in Ottawa, but it is more secretive and every bit as influential. Why doesn't the government acknowledge the need for reform in this area and commit to a formal registration process for provincial lobbyists? Even if it didn't prevent lobbyists from having the inside edge with cabinet, surely a registration process would at least tell us who's on track.

[2:15]

Hon. C. Gabelmann: I think that issue needs to be considered by all members of the House; it's one that members of cabinet should consider as well. While it's not under active consideration at this time, I think it's an issue that deserves discussion.

SPOUSAL ASSAULT SENTENCING

L. Stephens: My question is also to the Attorney General.

Linda Williams was a mother of four when she was murdered during a domestic dispute in Surrey, and the terror and brutal fear suffered by Linda Williams in her own home at the hands of her husband has been trivialized by the province's judiciary. The man who killed Linda, her own husband, was sentenced to five years in prison. What is this minister doing when women such as Linda, brutally assaulted and killed by their spouses, are protected by token denunciations and atrocious sentencing?

Hon. C. Gabelmann: The member raises a general issue which I think merits the serious concern of all members of the House and all members of our society. I'm not going to make any comment about the particular sentence that was meted out in this case, other than to say that all of us consider wife-beating -- I was going to call it "spousal abuse," but what it really is is

wife-beating -- to be a serious crime. It's one that I think our society needs to treat in a way that is far more dramatic than it does at the present time. I noticed that the member introduced a private member's bill today, which I've not yet had an opportunity to review, obviously. If it's modelled on the Saskatchewan legislation, then I would say to her that I'm very interested in looking at those kinds of initiatives, because I think we have to do a lot more in this province.

The Speaker: A supplemental, hon. member.

L. Stephens: This particular case has outraged a lot of women's groups in the province. The message the ministry seems to be sending to British Columbians is that it's cheaper to kill your wife than it is to get a divorce. All members should really be ashamed of this. I'd like the minister to commit the resources of his ministry today to reversing this light sentencing.

The Speaker: Hon. member, there was no question that I could detect in that.

RESTRUCTURING OF B.C. RAILWAYS

L. Hanson: My question is to the minister responsible for B.C. Rail. When in opposition, the NDP MLAs for Vancouver Island, who included the Attorney General, published a pamphlet on the E&N Railway. Those MLAs promised that under an NDP government, B.C. Rail would assume responsibility for operating the line -- both the passenger and freight services -- and passenger and freight services would be extended to Campbell River by 1994 and then beyond, while freight service would also be branched out to Port Alberni. Is the government still intending to fulfil this promise?

Hon. J. Pement: I'd like to say that with regard to any restructuring of railways within this province, provincial interests must be met. I have talked to the federal Minister of Transport, Doug Young, about these issues -- the E&N being one and the Skeena run being another -- and I said that we have a real concern about restructuring the railroad systems and that we must be active in any dialogue with regard to restructuring.

CPR LAND GRANTS

L. Hanson: So much for that promise, I guess.

Also, the New Democrats promised that the CPR and the federal government would be required to pay British Columbia back for their continued use of our forests and lands over the past 120 years. "They must either give back the huge tract of land that runs alongside the railway or at least provide compensation." If this is still government policy, what steps has the minister taken to have it fulfilled?

Hon. J. Pement: Again, with regard to any restructuring of railways, we are not going to have any situation where we allow the federal government to off-load onto our province and our taxpayers. We want a good service, and we want to be assured of a good service. I would say to the hon. member

[ Page 12493 ]

that we will be working with the federal government to ensure that our interests are looked after.

DOWNTOWN EAST SIDE COMMUNITY BANK

F. Gingell: My question is to the Minister of Social Services. We were shocked last week to discover that the head of the Downtown Eastside Residents' Association opposes the new community bank being financed by the NDP government for their longtime friend Jim Green. DERA is the largest organization, with years of experience in this neighbourhood. DERA could be one of the biggest depositors and supporters. Could this minister explain to this House why the minister who was responsible for this bill refused to sit down and talk to this minister's constituents at DERA?

Hon. J. MacPhail: In fact, hon. member, that is not the case. A public meeting called by DERA took place. There was wide community participation. In fact, there has been a series of community meetings. DERA is a longstanding community advocacy group that is to be well respected. It's one of several that exist on the downtown east side. In fact, the consultations included members from DERA. I would say that among my constituents, who will benefit from the bank, there is wide community support for the bank.

The Speaker: Supplemental, hon. member.

F. Gingell: I will ask my supplemental question of the minister who is responsible.

In announcing this bank, the minister stated that many downtown Vancouver residents do not have access to banking services. DERA says that isn't true. Could the minister please inform this House who he thinks is in a better position to understand this problem facing downtown eastside residents -- an organization that has been working on a daily basis to help those residents for many years, or the minister sitting here in Victoria?

Hon. G. Clark: I'm delighted to see the members opposite supporting the good work that DERA does in the community, but this government listens to the people of the community, not just to individual interest groups, friends, corporations or otherwise. We had 16 public meetings, with an average of 60 to 100 residents from the community -- not members of interest groups, not people with axes to grind, but people who live in the community coming in, designing the legislation and talking to the government about their lack of treatment by banks and credit unions, and about lack of access.

I know that the members opposite said that we didn't meet with DERA. That's not correct. Not only did I have staff meet with DERA, but I met with DERA in the community, in the bank building at a public meeting. They got up and walked out and said they did not want to discuss the bank's business with members of the community. And I'm saying that we'll have no closed-door, private meetings on this or on any other question.

Interjections.

Hon. G. Clark: I've been away for a couple of weeks, hon. Speaker.

The Speaker: Yes, that's quite satisfactory. Thank you, hon. member.

LAND CLAIMS NEGOTIATIONS

G. Wilson: The process of treaty negotiations is now entering a critical stage. There are some 40 first nations that are about to enter into negotiations with this province with respect to the resolution of land claims. Will the Attorney General today commit to table in this House the legal advice his ministry has provided the government with respect to the government position on title on land under negotiation?

Hon. C. Gabelmann: No, hon. Speaker.

The Speaker: The bell terminates question period, hon. members.

Hon. G. Clark tabled the financial statements of the British Columbia Educational Institutions Capital Financing Authority, in accordance with

section 4(5) of the Educational Institution Capital Finance Act, for the year ended March 31, 1994.

Hon. D. Zirnhelt tabled the 1992-93 annual report of the Ministry of Agriculture, Fisheries and Food.

Orders of the Day

Hon. J. MacPhail: Hon. Speaker, I call Committee of Supply.

The House in Committee of Supply B; S. O'Neill in the chair.

ESTIMATES: MINISTRY OF EMPLOYMENT AND INVESTMENT

(continued)

On vote 23: minister's office, $362,400 (continued).

Hon. G. Clark: I've been away, obviously, on business for the last ten days. I'm a bit tired, and I'm on Ottawa time, but we still have lots of time to debate these estimates. The order, I'm advised -- I hope opposition members have been informed of this, and I apologize for not being able to be in discussion with them -- is that we'll at least start with B.C. Ferries, then Transit and then Hydro. I assume there's been some discussion about what will go after that, so I just put that on the record for those of you who don't know. I haven't prepared any opening statement, but maybe I'll just do a brief one in general on the minister's....

Interjections.

Hon. G. Clark: Well, it's like when you do an arbitration or anything else. You've been through them. You can reserve your right to make an opening statement at any time. I thought I'd make my opening statement now.

First of all, let me say that we're very excited by the new ministry, which was created in September of last year. The new ministry includes B.C. Ferries, B.C. Transit, B.C. Hydro, the Transportation Financing Authority, B.C. Buildings Corporation, and most of the Economic Development ministry -- although not the Small Business component -- including the regional economic agencies. It also includes science and technology, which was moved over from the Ministry of Advanced Education, and the B.C. 21 initiative.

The B.C. 21 initiative really brings all of the pieces together. All capital planning for government, whether it comes through the Ministries of Education or Health, etc.,

[ Page 12494 ]

and Crown corporation capital is filtered through the B.C. 21 initiative, which tries to ensure that we're getting rational capital planning. That will save taxpayers' money, to try to achieve other social benefits, whether it's apprenticeships, employment equity or otherwise.

I want to make it clear that on the social capital side, which is education, health care, etc., the primary objective is program needs. It's not up to this ministry or this minister to talk about whether a particular school should be built or not; that's the Minister of Education's job; and this ministry does not influence or try to interfere in the decision of the minister or the ministry in dealing with the greatest-needed areas.

It's obvious that in the area of education, for example, there's a significant capital envelope of some $500 million, the largest amounts of which are spent in Nanaimo, the Fraser Valley -- mostly Surrey, but some in Langley -- and also in the Kelowna area. That's quite obvious, because those are the principal growth areas in British Columbia.

[2:30]

What this ministry can do is try to ensure that the capital planning in the Ministries of Education and Health and in Crown corporations are meshed in a way that makes economic sense, so we're not doing courthouse and school construction and highway construction and university construction, etc., all at the same time. We want rational planning.

Our influence on the social capital side is really at the margins in terms of trying to move up or expedite projects where they make sense -- where they're needed and where there's a lack of economic activity -- and slow them down, at least marginally, in areas that may be overheated for a variety of other reasons. We haven't had a lot of overheating in British Columbia, but there are parts of British Columbia where it makes sense to do different schools at different times, and different hospitals in different areas.

Obviously, the overwhelming and number one priority is whether or not the school, hospital or justice institution is required. That's up to the line ministries. This ministry, along with Treasury Board, simply reviews them in respect of overall capital planning, keeps a lid on the total amount of capital spending, and also tries to achieve other initiatives, whether it's apprenticeships or local hire or otherwise.

[W. Hartley in the chair.]

Earlier today we announced -- I can't resist, hon. Speaker -- the largest B.C. 21 initiative to date, which is the Ferry Corporation's ten-year capital plan. I think it's the first time ever that the Ferry Corporation has engaged, first of all, in strategic planning, and secondly, in a vision for where we want to see the Ferry Corporation go. There has been some excellent work in the past -- the Ferry Corporation is a world leader -- but we have some critical times coming up. Half of our fleet is around 25 years old, so there's a big capital bulge working through the system.

If nothing were done, billions of dollars would have to be spent five to ten years from now. We wanted a rational way of dealing with that -- a way that's fiscally responsible.

At the same time, there are critical issues of transportation on the Island that have to be dealt with, like in Nanaimo, where there's tremendous congestion. There are several options. The old option would have been to build a big new facility at Departure Bay or Duke Point -- a huge new apparatus, with hundreds of millions of dollars in infrastructure requirements and bigger ships to deal with bigger loads. Instead, today we announced something which I think is far more visionary, especially when it links up to the Island Highway.

We have the Duke Point truck terminal, which is a much trimmed-down version of what could be there. We take Departure Bay, and it becomes a fast-ferry terminal, which is very modest indeed. It doesn't require the big holding capacity of terminals like Tsawwassen and Swartz Bay. We get tremendously increased service, and we get more volume through a smaller area.

So we've got high-speed, aluminum car-carrying ferries -- three of them, built in British Columbia -- going to the Horseshoe Bay-Nanaimo run to service that route. We're moving all the trucks off that route out of Departure Bay. The member from West Vancouver should be pleased with this. I haven't had a chance to talk to the mayor there, but I will be doing that. It's very exciting for the people at Departure Bay to be moving all of the trucks out of Departure Bay, save and except those going to Bowen Island and the Sunshine Coast. There will have to be some costs at Departure Bay to deal with significant growth in the....

Some Hon. Members: Horseshoe Bay.

Hon. G. Clark: What did I say?

An Hon. Member: You said Departure.

Hon. G. Clark: Oh, sorry, Horseshoe Bay.

There will have to be some investment in Horseshoe Bay because of the tremendous growth in the Sunshine Coast. That is going to put pressure on Departure Bay, but eliminating the trucks...

An Hon. Member: Horseshoe.

Hon. G. Clark: Sorry, Horseshoe Bay.

...from Horseshoe Bay will be a dramatic improvement and will eliminate much of that route 30 traffic. Also, the fast car ferries don't require the same holding capacities, so that makes Departure Bay work better.

Interjection.

Hon. G. Clark: Horseshoe Bay and Departure Bay work better, in this case.

We are also reviewing a reservation system that we might couple with the fast ferries, which will do even more to alleviate congestion at both of those ports.

Today we announced the construction of a new Queen of Prince Rupert, which will reduce the travel time from the Charlottes to Prince Rupert from six and a half to four hours. That's a conventional steel vessel. There will be significant cost savings through staff cost savings -- no overnight accommodation will be required on board -- and fuel savings, because it's a new ship with new technology. Also, because of the configuration of the new ferry, the ability to carry dangerous cargo will, we think, save money.

Further, we announced a new Queen of Sidney to go from Powell River to Comox. That ship is now one of the oldest in the fleet. It's about 34 years old, as I recall. Clearly a new vessel was needed. The member for Powell River-Sunshine Coast might be interested in this, but probably not particularly pleased. We actively explored two smaller ships, with one at both ends, and different ways of trying to accommodate some of the legitimate needs of the people of Powell River. We weren't able to do that. We are going to have a significantly faster and more modern vessel, which will save a lot of money for the Ferry Corporation and allow for a new service from Powell River to Comox.

[ Page 12495 ]

So we have two conventional ships, three high-speed aluminum ships, a new terminal at Duke Point, new facilities at Bella Bella, Departure Bay and Horseshoe Bay, and still some refit required at Swartz Bay and Tsawwassen. In addition to that, we have a ten-year plan. The bulk of what I've just mentioned is over the next three to four years, and after that we'll be

one-ship-a-year for the remaining six.

We have a vision of the corporation which marries new technology and technology transfer to our yards in British Columbia. It gets us on the cutting edge of technology with the ability to market that technology by building ships for export around the world, not just for the Ferry corporation. We have conventional replacements that are long overdue, given what I said in terms of the capital bulge coming through the system. We have a new terminal on the Island, which takes most of the growth on the Island, which is extraordinary.

When you link up Duke Point with the new $1.2 billion Island Highway, you're really getting an integrated transportation system which has a dramatic impact, will really change the shape and face of Vancouver Island, and has dramatically positive benefits for the economy.

The ferry plan is one in a series that this ministry is working on under the B.C. 21 initiative. Over the next year there should be a Transportation Financing Authority ten-year plan on where we see the vision there going. We have a ten-year plan worked on by the Transit Corporation. Of course, we've announced commuter rail under the B.C. 21 initiative. There are some other initiatives working with local communities going on with respect to transit to maintain our quality of life, again long overdue when you're looking ahead at the rapidly growing areas of the lower mainland.

We have a BCBC plan -- many of you know about the Victoria accord and others -- and are looking at rationalizing that. As well, at B.C. Hydro we have very exciting opportunities that we're exploring and will talk about later.

In the ministry itself, we're working on partnerships with the private sector on a number of interesting initiatives, some of which unfortunately I can't really mention today. We have a whole

section working on partnerships with the private sector to promote economic development. Funding in the science and technology sector has been increased some 10 percent in the last budget. Again, there are some very useful partnerships that we are trying to build. The days are gone of just giving government money to any community -- whether for science, technology or otherwise. Partnering with the private sector, with other agencies or with the federal government gives us tremendous spinoffs and benefits with science and technology.

Working in this new Ministry of Employment and Investment in all those areas -- and I haven't mentioned the investment promotion side or the trade side -- really brings together in the ministry a very exciting tool for government to lay the foundation for private sector growth. Almost everything that I have mentioned today has been on the infrastructure side. Regardless of one's politics or ideology, if you want to maintain your quality of life and promote economic development, you need efficient transportation networks, and you need government to make the kind of infrastructure investment that really lays the foundation for private sector growth and for maintaining our quality of life.

In the next year you will see transit; ferries; road, building and hydro construction; as well as private sector partnerships in science and technology, and in investment opportunities. I think that is very exciting. No other government in Canada is proceeding in this manner. We are rapidly growing. At last count, we created 268 full-time jobs a day, every day, 365 days of the year last year: 102,000 net new jobs were created in British Columbia. Nowhere in North America is job creation and economic growth taking place like it is in British Columbia.

If we want to build on that, we need to make the investments today to lay the foundation for growth in the future -- and that is what B.C.21 is all about. That's what these initiatives are all about, and I am very pleased that the Premier chose to put them together in this fashion, because it is critical to effecting the pace and pattern of development and the quality of life and economy of British Columbia.

That's my opening statement, hon. members. I hope we can proceed with a bit more discussion on the Ferry Corporation, and then we can move to the others.

I was surprised to learn when I walked in the door there was a large number of people in my office from all these different agencies. With the House's indulgence, I would appreciate it if we could go through them in some kind of order, because obviously they have other things to do than sit in my office. We will try to finish ferries and then move to transit. I apologize if any members miss any of that, because I don't think it will be easy to revisit it, given that I will send staff home after we are completed.

D. Symons: I appreciate the opening remarks, for the second time, from the minister. I guess it's the minister with his finger in everything, because he named the great number of activities he has. I suppose my one criticism -- and I have made it before -- is that I feel somehow that the minister should have the Ministry of Highways under there too, so that we have all the transportation things in one ministry. Or maybe he should cut off some of those things like ferries and transit and put them in Highways, where I think they really belong.

We do indeed call it the Ministry of Transportation and Highways, but there seems to be very little transportation left there. I appreciated those comments nevertheless.

I am also pleased that you gave us sort of an overview; I think that is great. I was not able to be at your announcement earlier today regarding the ferries. You may remember during the last election campaign that our party spoke in favour of faster and smaller ferries and more frequent service for them. The superferry was a fait accompli of the previous administration. You inherited that, and I see you are moving in that other direction more rapidly now. I suppose I can compliment you on taking that step.

I was also a little bit surprised at your very last statements where you were talking about the private sector. It seems when we deal with contracts for the Island Highway and so forth, the private sector has to be only one portion -- the private sector that is unionized. I had hoped that would not be the case in many of the other government initiatives. As for developing this new ferry technology, let's open it up to all of the private sector that would like to get involved. That is my response to your opening statements.

To get back to the ferries, where we left off, last year we were given a figure of a large increase in the operating grant that was given to B.C. Ferries. I believe somewhere around $15.8 million was the increase in the operating grant last year. That was primarily blamed on the start-up for the S-class ferries and also for the implementation of the safety recommendations that came out of the Nemetz report and other reports regarding accidents that had taken place. This year there didn't seem to be very much of a drop.

It didn't drop back to former levels; it dropped back by about $5 million, not the $15 million that it had increased. I'm wondering if the minister might tell me why there is a need

[ Page 12496 ]

to sustain that high operating grant. Can you give us some flavour as to why that's still there?

Hon. G. Clark: I apologize to members; I'm not quite following the member's comments. The operating grant, the subsidy, from the government of British Columbia has gone down every year since we've taken office, including this year. That operating subsidy has gone down to $31.4 million, so we've had a continual reduction in the three budgets for which we've been there. There is a federal subsidy, which doesn't flow directly to Ferries; it goes into general revenue.

As a result of Northland Navigation, I believe, when the previous Liberal government shut down the ferry service to the north, they transferred a $17 million subsidy to B.C. Ferries to proceed with that. I might say that I suspect that's vulnerable. It shouldn't be, but it might be vulnerable, given some of the comments made recently by the Minister of Transport. Of course, the ferries on the east coast are massively subsidized by the federal government. This subsidy to British Columbia is for dealing with the northern routes. Some variance takes place on the federal subsidy.

I don't know if that's what the member is talking about.

D. Symons: I'm sorry, I don't have my estimates for ferries here; I have the transit ones. I have a news report from last year, and the minister responsible for ferries at that time was quoted as saying: "The operating grant required for the government was $41.3 million, compared to $28.1 million last year." Then he went on to explain that it was because of those two particular issues that I mentioned. That was the $15.8 million increase I mentioned. We're down somewhat from the $41.3 million, but we're certainly not down to the $28.1 million we had in the '93 fiscal year. That was the comment there.

[2:45]

While you're responding to that, I might just ask the next question, to move it along a little faster. We've had a recent fare increase. Obviously we have larger operating grants. How much is that fare increase going to generate?

Hon. G. Clark: A 1 percent tariff increase is $2.5 million. I guess members can figure that out in terms of any future.... Then, of course, traffic growth is similar: a 1 percent increase in traffic growth generates about $15 million in revenue to the corporation, without any rate increases. So that gives you a sense of the magnitude of the issues. We've had 4 percent annual traffic growth for the last five years. These are phenomenal numbers, which have increased revenue significantly. That's part of the reason why we've been able to reduce the subsidy while not raising fares dramatically, although there has been some change in our differential fares.

With respect to the member's earlier question, I'm still not quite sure exactly what he's talking about. Let me just say that there is some increased staffing as a result of the Nemetz inquiry, and that's not a one-shot thing. There was, if you will, some one-shot capital investment, but there have been some increased staffing costs associated with that, and they're a permanent lift, if you will, in costs.

There has been an increase in staffing on the superferry. But as I say, when you add the two superferries together, which take the capacity of three other ships, you've still got a net savings in some of the costs. The big problem with the superferry is simply the winter season, and we have peak-capacity problems, which members are aware of. In defence of the superferries, though, I do want to say -- because there was an implied criticism of what we are doing -- that the superferries have worked very well; they're very successful.

The previous government commissioned the first one; this government, and myself as minister, commissioned the second one. They are very popular and extremely successful. If people can't get on a superferry, they prefer to line up and wait an hour or two for the next superferry run. So it builds the business, if you will. It is very popular and performs the service very well.

I will say also that we have not revisited that old decision. I know members would agree that those decisions were made.... The superferry was a decision made on the one route, which locks you in in some ways, though it's very popular and working well. But the advantage of the new plan, our further vision, is some redeployment in terms of the disaggregated load, if you will, the segmentation of the market.

The superferries are still working very well, and they fit nicely with what we've done on the high-speed side. As we move to high-speed ferries on the Horseshoe Bay-Departure Bay route, some of the C-class vessels that are on there now could move to route 30, which will be from Tsawwassen to Duke Point. Or we could refit them to not carry trucks at all, because the C-class are phenomenal car-carrying ferries; that's what they were originally built for. You could take out the truck level. Then you would have a very efficient, successful car-only ferry. That is a perfect future supplement for the superferries, which are superb truck-hauling ferries because they are so big.

You can see that with what we're doing, you have real cost savings, potential for redeployment of the fleet -- including now supplementing the superferries, which take everything, particularly big trucks -- and the opportunity to move some C-class vessels down there later on to take the growth in car traffic. That's a long further explanation.

One last point is to give a sense of the revenue increases for government: parking and catering, a 10 percent increase, at $2 million; traffic growth, 2.5 percent projected for 1994-95, at $5 million; and the fare increase, depending on route, about 6 percent on average, $13 million. That's the total revenue increase.

Again in anticipation of some questions on the capital plan, we've instructed the corporation that the $800 million over ten years that we announced today, some of which I mentioned, has to be self-financing, at no cost to the taxpayers, so there won't be an increase required in the subsidy. If we get the 4 percent traffic growth we've had for the last few years, and we couple that with inflation increases, it will more than pay for the capital costs of the program. Obviously there is some risk in terms of traffic.

Also, we believe that we can potentially do some premium pricing for reservations, and that we've only begun to scratch the surface of other revenue sources. This government introduced cappuccino machines. We joke about it sometimes, but it brings very significant revenue to the corporation.

Interjection.

Hon. G. Clark: Some members aren't wise to the cappuccino market, but I will say that there are other business opportunities which we're rapidly exploring. There could be business opportunities at the terminal sites. On board the vessel there could be other opportunities, from selling space or yoghurt to other kinds of things.

An Hon. Member: Casinos.

[ Page 12497 ]

Hon. G. Clark: Not casinos. I say that's been completely ruled out. We've said to the corporation that they have to get more revenue from non-tax sources, and they've done a good job of that. There's a lot more potential there without impacting on service or price to the passenger.

With the traffic volume we've got, we're in very good shape in the Ferry Corporation. Hopefully, we can reduce and eliminate the subsidy -- although I say for members that we probably would not want to eliminate the subsidy beyond the federal subsidy which we are receiving, because that could potentially put at risk the federal subsidy, unless we were to negotiate with them some way of doing that. There's a lot of cross-subsidy inside the system right now, and you would want to maintain the discrete subsidy for northern routes that the federal government provides, at least at this time, unless we were to negotiate something otherwise.

F. Gingell: I hate to go back to this question of subsidies, but I thank you for the briefing note you sent me and for the financial statements for the year ended March 31, 1994 -- which you were to table today, according to your earlier statement, but have failed to.

I just can't follow the numbers through; I've tried every which way. Could you please tell this committee, Mr. Minister, how the amount that is included in this year's estimates is determined? Every year, the amount that is given as subsidy is the amount in the estimates. I understand how you treat that within the financial statements -- though I don't agree with it

-- but I don't understand how you arrive at the original amount of the subsidy, the amount that's approved by Treasury Board and included in our estimates.

Hon. G. Clark: It predates our term of office, but let me give you my understanding of it. The Ferry Corporation has very little subsidy, and this capital bulge I talked about.... Even though there wasn't a sophisticated vision of the B.C. Ferry Corporation, everybody knew that we had serious problems. Any British Columbian knows you don't need any rational understanding to know that if you have to wait five hours for a ferry at Departure Bay, we've got a problem. So the government decided to pursue these two superferries -- initially it was one superferry.

The previous government decided to give an annual capital grant to the corporation to cover the capital costs, so there was an original link to the capital side and a link to the operating subsidy, which was a result of minor routes -- the northern route, etc. When we took office we had this $50 million, I think it was at the time. We applied.... This member could criticize us, I suppose. You may recall that in previous years I as Minister of Finance gave ministries targets that we asked them to achieve. Those targets generally start at minus 15 percent.

So we tell every ministry in government and every Crown corporation that's subsidized that they must come in with a budget that's 15 percent lower than last year, and then we work up from there. Some of them are successful in saying that that would cause horrendous damage. The Minister of Health could come in and say that that target would be catastrophic for this reason or that reason. So we would then work our way through it. The B.C. Ferry Corporation came in having achieved the target of a 15 percent reduction, and Treasury Board accepted that when I was Minister of Finance.

They've accepted it in the subsequent two years. So the corporation is challenged to reduce the subsidy by the target set by Treasury Board, and then the minister responsible for ferries will go in and explain the consequences of the cuts to the subsidy and seek ways to minimize it or to find other sources of revenue.

It's an ongoing tension that exists, and I think it's a very healthy one. The cut by Treasury Board can be larger, but generally speaking, they've been taking some variant on their original target based on proposals put forward by the corporation to deal with it. I think there used to be a bigger link between the operations. We've been determined to try to ratchet down the subsidy, and we've been doing that very successfully, I think.

F. Gingell: Yes, it's exactly 15 percent less than it was last year, so this hasn't been done in any logical way. In fact, I wish we had been told that earlier.

Included in your budget and in the vote is an amount under asset acquisitions, which I believe is the lease payments on the Quinsam and.... There were two vessels; I think it's the Quinsam and one other. The original agreement was from many years ago, and I believe that arrangement finishes in this current year. Can the minister please tell us if there's an option to purchase these vessels for a nominal sum at the expiry of the lease, on what date that happens and whether or not the B.C. Ferry Corporation, to whom that right has been transferred, intends to exercise that option?

Hon. G. Clark: The member's almost correct. There are the three C-class vessels, which I talked about a minute ago, built essentially for car ferry traffic -- the Queen of Cowichan, the Queen of Alberni and the Queen of Coquitlam, which now run on the Horseshoe Bay-Departure Bay route. They all expire this year. The number the member pointed out as the lease payment is correct. That lease expires between now and November. The cost of repatriating those ships -- buying them back -- is $8.3 million. That will be done, and it will be a prior-year adjustment -- I'm advised, anyway, -- amortized over the course of the project and debt-serviced.

F. Gingell: I imagine that you would just capitalize the $8.3 million option price and add it to the cost of the vessels.

Mr. Minister, you have included in your estimates a full year's lease payment on these three vessels, and it expires in November. So you have overbudgeted $2 million or $3 million. Would you please advise the committee if that is correct?

Hon. G. Clark: I wish it were, but there's a lease payment and then a buy-out. Essentially, we have to pay twice this year, if you will -- at least that's my advice. There's no padding there; we have to pay it out.

The corporation has no plans for further sale-leasebacks. It's largely used as a tax advantage for corporations to write down. There's some attraction, I guess, because they don't pay federal taxes. But all those loopholes have been closed. We do get approached from time to time with creative ways of exploiting the same kind of loophole -- largely in the United States -- but to date we have no plans to do any future....

F. Gingell: My reading of the financial statements -- and I can't put my finger on it immediately -- is that the right to pick up the option to purchase has been transferred from the provincial government to the B.C. Ferry Corporation, and the provincial government is responsible only for the lease payment. If the lease payments expire in November, surely you have overbudgeted the amount that's required for this by $2 million.

[3:00]

[ Page 12498 ]

Hon. G. Clark: I'm advised that there is a small discrepancy between the actual payments required and the estimates; it looks like about a 25 percent reduction. So the member is correct. I'm advised that there was a debate at the time the estimates were printed about whether it would be prior-year adjustment or we'd have to expense it, so they just left the number in. It's pretty modest in my view, and I'm sure the member would appreciate that it's a conservative number. That's good news; it's not the other way. There may be $1 million in there that's not required for the actual pay-out, but there's a final lease payment as well as a pay-out required this year before November.

F. Gingell: Mr. Minister, I would really like to encourage you to make history and amend your budget to reduce that amount to the amount that is actually going to be paid.

While you're thinking about that, I'd like to ask another question. The draft financial statement for the year ended March 31, 1994, says: "The corporation may request the province, at its expense, to exercise the option to purchase these ships." I take "at its expense" to mean the B.C. Ferry Corporation would pay, but maybe it refers to the province. I wonder if you could advise the committee if it is the province or the corporation that will pay the $8.3 million when you exercise the option.

Hon. G. Clark: It's actually the government's request, and it's the government's obligation to pay out. So in a sense it's one hand or the other. But it's the government that's obligated to buy back the leases at the prices we talked about. I guess they will use prior surpluses to pay out the leases and make a prior-year adjustment to that effect. As always with Treasury Board, they are pretty diligent about ensuring that this is a businesslike transaction. They may require the corporation to deal with this in some manner or form; that's up to Treasury Board. But the obligation is the province's.

I should tell you we have advised the province, if you will, or the treasury to proceed with the pay-out, and that's obviously in discussions with my staff and treasury.

I should advise you that Peter Mills is here, who is the treasurer of B.C. Ferry Corporation, and Admiral Martin, who is the CEO of the corporation. Peter was a Treasury Board analyst -- good training for this -- and was stolen by the Ferry Corporation about a year ago, so he understands fully the detailed relationship between Treasury Board and the corporation.

F. Gingell: It would seem, then, that in the end you've either overbudgeted by $2 million, or underbudgeted by about $6 million if the option gets exercised, because you would have to put that through in a vote, I think.

Hon. G. Clark: As I said earlier, my understanding is that there is about a million dollars of overestimation, if you will. We don't know whether there are enough surpluses in prior years to pay the lease payment down, so there's a little room there for treasury and the corporation. These are estimates. At the end of the year, if we don't need the money, then it will show up next year. It doesn't make sense to eliminate any room there, because we're not sure how the lease pay-out will work.

F. Gingell: We're moving on. During the first part of estimates debate on this subject, you talked about the major strategic planning exercise that Mr. Sommers of Deloitte was helping you with. That's not going to be completed till the end of July. Surely the issues you've dealt with this morning -- the announcement of a major shift -- would be part of that strategic plan yet to be finalized, yet to go to and be approved by Treasury Board and yet to be made a public document, as you have agreed. So why has the announcement been made now on something that clearly hasn't gone through the complete planning process?

We all know what goes wrong when you're in the middle of a strategic planning process, and you suddenly go rushing off and do something before the whole thing has been fitted into the master plan.

Hon. G. Clark: I'll accept some of the criticism, except that there are two initiatives going on simultaneously. One is the capital planning exercise, and one is the strategic planning exercise. As we talked about last time, there are some significant differences. In a strategic plan you'll be looking at labour relations, managerial structure, promotion, training, decentralization versus centralization and a whole range of issues. On the capital planning side.... In an ideal world you might stop everything, spend a year doing a plan and then implement it.

But in a business environment, with five-hour lineups at peak periods in the summer in Nanaimo and with critical capital pressure building in the corporation, we did simultaneous tracks on both planning exercises. Believe me, they're intimately linked.

The member is correct. But as he noted, obviously the strategic planning process has been taking into consideration the capital planning process in their discussions. While the strategic plan is not yet finalized, these are dynamic or living documents that are iterative, if you will. They work together. We've been spending two years on both these exercises -- a little more on the capital planning side. They both fit together, and the strategic plan now obviously takes into consideration the capital decisions the government has now made.

Maybe if you had the luxury of sort of just stopping everything -- you do your strategic plan, and then it would....

Interjection.

Hon. G. Clark: We've been doing.... Well, we're only a month away from finalizing it, but that's not to say that there hasn't been some.... It's the same people who were working together on the same products at the same time. It's simply a matter of getting on with some of the critical capital announcements while we are completing the strategic plan.

F. Gingell: At the present time, in your financial statements you are depreciating the ships over 40 years. In the discussions you have had about the ones that are wearing out and are in desperate need of being replaced -- they are about 30 years old.... You almost make them sound like artifacts to be taken out and sunk for fish to live in and divers to swim around. Is the corporation giving any thought to changing your depreciation rates?

Hon. G. Clark: As a matter of fact, we had a serious discussion on this, and it was carefully looked at by our auditors. They have determined that they still prefer the 40-year depreciation. The reason is that there are refit opportunities for these. The Queen of Prince Rupert, which I talked about earlier, is almost 30 years old. We could have done about a

$17-20 million refit and it would have probably given us another ten to 15 years. The problem is that these older vessels, while they're completely seaworthy and they work very well, have costs associated with them that the

[ Page 12499 ]

modern ones don't, particularly fuel costs and efficiency costs with respect to engines, electrical systems and the like.

So these vessels will still last for 40 years, but it makes sense to vary that over the course of your capital planning exercise. If they are all 40 years old at the same time, then you have to start earlier with some of them. Anyway, the auditors determined that a 40-year life cycle is not inappropriate. There is some revenue in selling some of the older vessels, which was not budgeted. The Queen of Prince Rupert is likely one that we may sell. Unfortunately, because of the age and the cost of refit, they don't command significant amounts of money.

I don't know what the number will be -- probably $1 million or $2 million for the Queen of Prince Rupert, if it's finally put out to pasture, if you will.

F. Gingell: The two new superferries cost a total of $295 million. Could you tell us whether the Spirit of British Columbia and the Spirit of Vancouver Island cost the same amount? Or was the first more expensive than the second, or the second more expensive than the first?

Hon. G. Clark: One was $135 million, and one was $131 million. So there were some cost savings, but not as much as I had hoped -- although over the period of construction there were some inflation and cost pressures, wage costs, etc. So there were some efficiency gains.

F. Gingell: Where did the other $30 million go? The financial statements indicate $295 million. "Construction of the Spirit of British Columbia was completed in April and its sister ship, the Spirit of Vancouver Island, completed in March '94. Assets placed into service -- $295 million."

Hon. G. Clark: I'm pretty sure I can get it for you. My staff think it may be training and start-up costs, although it sounds like capital assets. My instincts tell me it may be the capitalized interest costs during the period of construction, which may have added to the final price tag. But the actual contract price was $135 million. We'll get that information for you.

F. Gingell: Can the minister please advise the committee what the original budget was? Did they come in on budget?

Hon. G. Clark: I wasn't involved with the original. The second one, which I was involved with, came in on budget. It was about $135 million, I think. I believe the initial quote was $130 million for each ship, so they were pretty close to coming in on budget.

F. Gingell: With these two vessels, a great deal of money was spent to put into the engine room what can only be described as the very latest high-tech controls. But the fact of the matter is that on an hour-and-a-half run, the staffing required in the engine room is exactly the same as it would be if there wasn't any high-tech equipment there. In fact, I understand that you've had to increase the amount of staffing in the engine room, not just for Coast Guard safety purposes but because of the workload in the engine room on the new vessels. Can the minister explain why we went to the expense of this very expensive high-tech control equipment when there wasn't going to be any saving?

Hon. G. Clark: The vessel is dramatically larger than anything we had. The sophistication of the equipment on it and the Coast Guard requirements around a vessel of that size are significant. If the member is saying that there's an excessive amount of new technology in the engine room to service it, I would frankly have to reject that. I probably have no more expertise than the member in this area, and I know that in this industry there are a variety of critics in the field. I see the author of the superferries here, so maybe I'll have some further discussion with him.

My understanding is that the staffing requirements are decisions which are largely driven by the Coast Guard. We have had some concern about the workload. It is so large and carries so many people in the summer that it's a tough shift to work compared to other vessels. As a corporation, we obviously can't make any real apologies for that; it is good news in terms of efficiency and cost. But it is a bigger ship to manage, and the engine room is correspondingly bigger. It requires more staff and more sophisticated technology, but all of our evidence suggests that this is working extremely well. If the member has any evidence that there's anything contrary, then we'd be happy to do otherwise.

[3:15]

Just to give you some sense of the magnitude, this ship does have good air conditioning. Did we have to put air conditioning in this ship? Maybe not. Obviously we're trying to market this as more than just a utilitarian service, but something which people can be proud of and tourism.... I can tell you that the evidence that that has been successful is very significant. Similarly, if the member has been on the tour of the superferry, he'll see there is a very heavy, large garbage compactor on the ship. We didn't have to do that either.

But for the efficient handling of the garbage generated by this large vessel, the engineers and marine architects involved deemed it advisable to pursue this. It's working extremely well. All of it adds to the weight of the ship.

This is a very large vessel with a lot of state-of-the-art equipment and technology. A lot of decisions were made by a user group set up by the engineers and architects, which other engineers, architects or users can clearly second-guess. Some of that has been going on, but my view of the evidence is that this is popular and successful. The two vessels are an expensive proposition. If we did not have them today, I wouldn't want to be the minister dealing with what is already happening.

We've gone to the summer schedule; it's June, and those two superferries are at full capacity already because of this phenomenal growth -- and that's before the Commonwealth Games or anything. There's 40 percent more capacity and a corresponding increase in the crew to deal with that, as mandated by the Coast Guard.

I don't know if the member wants to get into.... If he has any evidence, maybe we could hear it. But for any detailed critique of the engine room, I will be happy to provide briefings and discuss it with him. I do have staff here, but all my evidence is that things are working very well.

F. Gingell: In this one instance, I think that my sources are just as good as yours. I believe that you spent a lot of money on making that engine room extremely high-tech when, because of the length of the run and the staffing required to run a vessel of that size, you had no savings in engine room staffing whatsoever. Some of those additional capital costs that were incurred were perhaps not needed. But the money is spent now and there's nothing you can do about it.

But it does indicate a change in B.C. Ferries' position, where they have moved from trying to build what were considered to be plain-Jane vessels. It is a relatively short run, and I don't think people go to Vancouver Island because they want to go on the vessel. I agree that they may decide to go on vessel A rather than vessel B, but the purpose of getting on the vessel is to get to the Island, not to have a boat

[ Page 12500 ]

trip. If you have indications that people are cruising in large numbers, just going back and forth, I would be most pleased to hear about that. Is it now the policy of the B.C. Ferry Corporation that the plain-Jane days are gone and that you are going to build vessels that, in the era of less-than-two-hour ferry rides, are the cream of the crop in the world?

Hon. G. Clark: First of all, let me clarify some errors the member made. This is classified by the Coast Guard not as a small-boat run, but as open water. As a result of the open-water journey, it has the highest Coast Guard standards in Canada. In the Ferry Corporation, we have the highest life-saving and Coast Guard standards anywhere in Canada. That is partly as a result of the Coast Guard and partly as a result of policy by B.C. Ferries. In the engine room the member referred to, there is one more staff person than on the other ships. It carries 40 percent more passengers; there is one more person working in the engine room.

Interjection.

Hon. G. Clark: No, these are much bigger and more sophisticated engines than we have had before. The member could say that the design of the new technology would allow us to run it with less people, and therefore there are some savings there. But because of the Coast Guard, the training and other considerations, we have chosen not to do that. I don't think it's fair to say that this is an enormous burden on the corporation because we have this state-of-the-art vessel.

On the last point, which is whether the days of plain-Jane are over, I'll say two things. First of all, this is not a cruise ship; it's still a B.C. Ferry Corporation vessel. The cost of refitting the interior to a higher quality than has been seen on, say, the Washington State ferries, is very marginal. The costs involved in the ship construction are not in nicer carpeting and nicer finish.

It is my contention -- and I guess the previous government agreed with me -- that because it is run by the government it does not mean that it has to be grey, have no carpets and have surly staff walking around wearing grey suits. We want to be cost-effective. We don't want it to be fancy, but we do think that it is a showboat -- no pun intended -- for British Columbia.

In the summer months, 70 percent of the travellers are tourists to British Columbia. It sure doesn't make sense to me to have a vessel which is dowdy and run-down. With all due respect to Washington State Ferries -- they do a good job, and I don't want to criticize them for doing it -- the two superferries and the cosmetic refit that's gone on have had enormous implications for the tourism market. Far from making it fancy, what we need -- and what I've asked the corporation to do, and I'll ask it publicly again -- is to do more with what's on board now.

For example, I'll say this publicly: there is no Victoria Line display on B.C. Ferries. We should be saying that we have a vessel that can take you down to Seattle -- given that 70 percent of the passengers are tourists. We should be marketing private hotels and charging them to market on our ferries. We're doing some of that. We have a magazine now -- many of you may have seen it -- which doesn't cost us anything. It's fully paid for by subscribers. In fact, we're trying to make some money off the magazine, which is for tourists. In other words, let's make better use of these existing ships to promote British Columbia in the tourist marketplace.

It's not a question of being fancy or being a cruise ship or anything else. Clearly, we don't want to do that. If there are too many frills, then I'm prepared to listen to that, and the new vessels won't have too many frills. We do want them to look nice, and we don't think it costs any more to do that. We do want them to serve quality food, and we have been working on that. We do want to open up the marketplace of British Columbia and to talk about what it's like in the Peace River on the B.C. Ferries.

These are visitors to British Columbia, and we should talk not just about the Island, but also about the Sunshine Coast and the interior of British Columbia. This is a spectacular province. We think we can do a good marketing job, and I know my colleague the Minister of Small Business and Tourism is keen to promote that.

It's a showcase for British Columbia, and I make no apologies for the superferry. It's very popular. Believe me, the costs are very modest in terms of making it look nicer. Most of the costs were in the construction, which would have occurred in any event.

F. Gingell: The item in the income statement that talks about salaries, wages and benefits doesn't distinguish between what we'd call administration salaries or overhead salaries or management salaries and operating costs. The general administrative expenses do not include administrative salaries. Could you please advise the committee what the administrative salaries were for 1992-93 and 1993-94 and what is budgeted for 1994-95?

Hon. G. Clark: The administrative salaries are roughly 5 percent of the overall cost. In fact, as part of the strategic planning review, we had a review of the structure of the administration. Most of our preliminary evidence is that they don't think we have enough administration for the size of the corporation. Obviously, we've rejected that advice. It's very lean in terms of administrative costs -- about 5 percent of the total payroll. In most corporations it's probably more like 9 percent, although it varies. I don't have the actual numbers here, but as a percentage of payroll it's pretty modest.

I've just had the staff research the earlier question, and uncharacteristically I was correct. It's the capitalized interest on the cost of construction.

F. Gingell: While we're on the subject of interest, I see that included in your long-term debt are some short-term loans to be refinanced at maturity. It looked as though none matured last year. I wonder when they do mature and who the money has been borrowed from.

Hon. G. Clark: We have a fiscal agency agreement with Treasury, and Treasury does all of this. We take their advice. All the borrowing for the Ferry Corporation on the advice of Treasury has been short-term borrowing in the last year to take advantage of lower interest rates. The yield curve, as you probably know, is fairly steep, so the long-term rates do not decline the way short-term rates did. As a result of the debt portfolio they are trying to manage, Treasury's advice was to pursue short-term strategy for the past year.

In a sense, it's an agency agreement, and that means that Treasury discusses the borrowing profile with the agency. Believe me, Treasury manages that asset on behalf of the province as a whole, as it should.

F. Gingell: Have any of these short-term loans been replaced with long-term financing since April 1, 1994?

Hon. G. Clark: The answer is no.

[ Page 12501 ]

F. Gingell: One last matter. Under the description of the obligations of the corporation under capital leases, specifically the Queen of the North and the Quinsam, the note in the financial statements refers to total future minimum lease payments, so one presumes that there is some future maximum lease payments. Could the minister please advise why the word "minimum" is in there?

Hon. G. Clark: I will advise you that it's conservative accounting language. I'm advised by staff that there is no maximum, but that is the language of the accountants.

F. Gingell: One last, last question. This year you changed the accounting treatment of the accumulated capital grant of $125 million and deducted it from the value of various assets. I've tried to work out exactly where it got deducted, but I wasn't able to work it out completely. There are two things. Doesn't the minister think that the most important thing for the financial statements to do is to clearly show what the costs of operating this organization are? Included in those costs must be the amortization of the real cost of the vessels, the ships, that the Ferry Corporation has and operates.

You will be reducing its costs in the future if you treat that $125 million capital grant as a reduction of the cost of the vessels, thereby reducing the amortization, the cost or the depreciation. Wouldn't it be better to show those grants as contributed capital? That's what they are; they are contributions made by the shareholders to the corporation, and they're really capital. I truly believe we will have more accurate financial reporting in the future if they're treated in that fashion.

He's all ready with the answer; I can tell.

Hon. G. Clark: I would just advise you that then we would have to pay corporate capital tax.

No, I think the member has made an interesting point, and I will take it under advisement. You heard me describe the evolution of the subsidy from the provincial government. It may be more appropriate to look at it as a capital contribution, but I say that advisedly. People on the north coast, for example, and even people on Vancouver Island will argue -- and they have argued with me vociferously -- that this should be a subsidized service, because this is the highway to their islands; it's an extension of the highway system.

It was much to my surprise, actually, when we reduced the subsidy, that not everybody on the Island thought that was a good idea. They said: "You're not giving us our due, because you're building highways elsewhere in the province, and this should be an extension of the highway."

[3:30]

Similarly, the government's contribution -- particularly the federal government's contribution, which goes to the provincial treasury as opposed to directly to the corporation -- is not a capital subsidy; it is, in fact, an identified operating subsidy for the very high cost of operating ferry services to remote regions of the province. Similarly, there is some subsidy on the other side of the system, which the province may well choose to....

I take the member's point that disaggregating so everybody can see where the subsidy is, who gets it and how much is capital and all that is important, and we've been trying to do that. If the member is saying that the financial statements or the balance sheets don't show that, then I certainly will take a look at them, because I haven't recently.

As you may know -- and this has caused a lot of consternation, which I again make no apology for; I don't see the member for Saanich North and the Islands -- we are now printing on the tickets how much subsidy each run is enjoying. Of course, people on the Gulf Islands are completing rejecting.... They don't believe that there is a subsidy. They think we are importing overhead costs from the B.C. Ferry Corporation or bureaucrats' costs or something into it. I think it's been a very useful debate; not everybody agrees with me, because it's a bit tense.

But we have to expose it, if you will -- not necessarily to eliminate it -- so that everybody can see that this run to this island is subsidized by the people of British Columbia. Then we can have a debate about whether that makes sense or not. I am prepared in this House to defend a significant subsidy to the Queen Charlottes. It's not an economic proposition. There are literally thousands of people on low income living on the Queen Charlottes, and they deserve attention by the government of British Columbia. I am prepared to defend that.

We might debate the magnitude of the subsidy, but I am prepared to defend that. It's harder to defend some of the Gulf Islands, but people are living and going to school there. It's an essential service, and one could make a defence for that.

I will just say that we have engaged in that dialogue now. We have printed on the tickets, we have questionnaires, and we have people working on it and talking about it. It's not all pleasant talk, because it highlights the issue, and a lot of people don't want to do that. I think the member agrees with me that generating and showing this, and having public debate is what public policy is all about. We shouldn't be hiding a subsidy in the books anywhere. We should be upfront about it, and then debate it.

I have one last point. I am just corrected: the federal money we receive is not a subsidy, and that's important. It's a contract we have with the federal government to provide services. Obviously they are expensive services and therefore it's not covered by the revenue received. But it's a distinction which is worth making, in the sense that with the closure of the federal Northland Navigation, they then contracted to the Ferry Corporation to provide those services, which we do. It's a fairly significant amount of revenue for a very significant service which wouldn't otherwise be provided; or if it was provided, it would be prohibitive.

F. Gingell: I would endorse your remarks. The subsidy has to be recognized. I am not trying to suggest that it should be cut down, but the Skidegate to Prince Rupert run is costing the taxpayers of British Columbia $9 million a year. This past year we got it down to $8.5 million. Only 52,000 passengers travelled on that route. You only recovered 30 percent or 40 percent of the cost in the fares. But that's what British Columbia is all about; I agree with you.

D. Mitchell: I would like to go back to the minister's opening statement about the high-speed catamaran announcement. I am quite excited by the announcement, and I would like to believe I can support this announcement. It's a bold vision. The minister's description of that in the House in his opening statements to this review of B.C. Ferries is the closest thing that I have heard to a vision for B.C. Ferries in terms of where it's going over the next multi-year period.

Normally, the accountability for Crown corporations in this estimates review doesn't go beyond a fiscal year or the year ahead, so I appreciate the minister's comments. He has painted a picture. It's a very bold picture. We don't know if we can afford it. It sounds like a very expensive proposition and, of course, most of the money is going to have to be borrowed. So there has to be some concern about that.

[ Page 12502 ]

I would like to ask some questions about the high-speed catamarans, in particular from the perspective of the Horseshoe Bay terminal in my constituency and what impact it's going to have there. The minister has made some comments about that. I have a couple of questions for clarification, and I hope the minister won't mind if I put these questions together for the sake of efficiency. There have been conflicting reports about what each of these high-speed catamarans is going to cost. Some have said $70 million; some have said $80 million. I wonder if the minister can clarify that.

He has also indicated that these high-speed catamarans are ultimately going to provide the service from Horseshoe Bay to Vancouver Island. Over what period of time will they be phased in? When will we see only high-speed catamarans operating from Horseshoe Bay to the new Nanaimo terminal?

Hon. G. Clark: First of all, with respect to borrowed money, obviously we're very concerned about that. But let me make a couple of points that I think are significant. This corporation -- my numbers might be a little out -- carried 21 million passengers a year. It's the largest ferry corporation in the world, and it's growing at 4 percent a year, or about a million passengers a year. As a result of that passenger growth and traffic and the services on board the vessels, it generates about $240 million a year in passenger revenue. That's not

tax-supported debt. There is a small subsidy relative to that revenue. Obviously the taxpayer provides a capital contribution and the government of B.C. is guaranteeing the debt. But this is not debt associated with welfare, education or health care spending; this is debt associated with a commercial corporation, if you will, with physical assets which have a value and a life. I think it's important to make that distinction. It's an investment in physical assets which will last for 40 years, and which in an expanding market....

At the moment, this is a corporation without competition in the same industry, with secure terminals, with a 4 percent passenger growth forecast and with the strongest economy in North America. In other words, it's a very impressive business proposition. We have the lowest ferry fares in the world right now. I guess that is part of the reason why we've been able to do as well as we have.

So yes, there's a concern about borrowing, but if we were to do nothing.... We have some very big cost pressures down the road which will have big impacts. We've also directed the corporation to sell financing; given the characteristics we've just mentioned, we don't think that's impossible.

First of all, the budget. We are budgeting $70 million for each 240-car catamaran. It's not a fixed budget, in the sense that we obviously have to go through the RFP and bidding processes, and then we'll have a sense of what the actual costs will be. But that's what the estimates are. We think that's a conservative number; it may be between $60 million and $80 million. Again, a superferry is $135 million, so that will give you a sense of the numbers.

Finally, I have a couple of points.... I'll just give you a sense of the timing. I wish I could be more precise, but I can't. We think it takes about 14 to 16 months to actually build the first one; we may cut it down to 12 months after we've built the first one. That's how long the construction process is. Prior to that we have to choose a technology, which we have not done yet. We'll be engaging Sandwell Engineering and some others to review the existing technology and allow people to bid on it.

Then we have to work with local naval architects and others, because, even if we choose an Australian or a European technology, we want the work to be done here. By the way, some of the superferry work was done in a joint venture with overseas designers. There would have to be some work done on that. Then we have to design it, draft it and then put out the tender documents. I would say it will be two years before we actually launch a high-speed ferry in British Columbia. Actually, it's a bit too far away for this election, so it will be a second-term announcement.

Regarding the Duke Point terminal, there will be no ferries at the moment.... Well, that's not true. There are no plans at the moment for a terminal for.... I have to be a bit careful. There's a possibility that we could go from Horseshoe Bay to Duke Point, but the high-speed ferries are not going to; they're going to go from Horseshoe Bay to Departure Bay. We will most likely eliminate truck traffic at Horseshoe Bay, except for Bowen Island-Sunshine Coast truck traffic.

After that first catamaran, the next two would probably be at six-month intervals. At one point we may have both running. Then when we get the three high-speed ones, we'll be moving the C-class out of Horseshoe Bay. It will be a high-speed terminal to the Island. It will still have a terminal to Bowen Island and a terminal to the Sunshine Coast.

Just to flesh it out a little more, the member well knows that right now the lineups are just ridiculous. Getting rid of the trucks and moving to high-speed ferries should literally eliminate the lineups. But the growth on the Sunshine Coast and Bowen Island is so significant that we have abandoned plans for.... If the member recalls, B.C. Ferries was planning an elaborate parkade superstructure -- not illegitimately, because this was a new technology and a new vision -- which would dwarf Horseshoe Bay. That's gone; it's no longer required.

But there is going to have to be some structure for parking that is more efficient and probably bigger than what's there now, even with this dramatic reduction in traffic, just because of the Sunshine Coast and Bowen Island growth.

I have one last point, just to elaborate on it a bit more. We need to disaggregate the high-speed traffic from the Sunshine Coast traffic. As you know, it's a fairly small area, relatively speaking. This is a big improvement, but there's still going to have to be some investment. If we're going to have a reservation system on a high-speed ferry to Departure Bay, then we'll need a separate area for people who have reserved to go on the

high-speed ferry and a separate holding area for people going to the Sunshine Coast.

It's a dramatic improvement, and I say that without hesitation. But there will be some investment in the Horseshoe Bay terminal. If the member has any interest in this as an MLA, we'll be engaging with the people of Horseshoe Bay and with the municipality about how they want to work on that. We know there have been some strained relations because of some of the things we've done. We hope we can work with them, because we do believe that this is a significant improvement.

[3:45]

I'm sorry, I was wrong about the total revenue to the corporation. It is $298 million a year, excluding the money from the provincial government. It's $298 million, including parking, catering and passenger payment. So the corporation receives about $300 million in non-taxed revenue. Again, if you're borrowing money for a new ship, obviously the people or agencies you're borrowing from will look at the fact that this is not a

tax-supported issue; this is essentially a commercial Crown. They will look at the corporation's ability to pay back. As you can see, that ability is obviously very substantial.

[ Page 12503 ]

D. Mitchell: The minister is obviously responsible for a large corporation; it's a big company. There's a bit of irony in the fact that a socialist is in charge of an enterprise that's engaged in monopoly capitalism, as the minister has indicated, and he spoke strongly about that. I think it's a successful company. It's a company that also needs to be somewhat more accountable to the communities in which it operates. The minister and I have exchanged views on that in the past.

[D. Lovick in the chair.]

I have a couple of specific comments about Horseshoe Bay in particular, about the changes that are going to take place there and some of the safety concerns that have been expressed. The minister indicated that he expects traffic congestion at that terminal will decrease when we bring on the fast ferries, the catamarans. Taking the truck and commercial traffic off the Vancouver Island run from Horseshoe Bay should certainly be a benefit, and that should be very useful for the community.

Just in the last 24 hours, many people in Horseshoe Bay have expressed a concern to me that these fast ferries might become so popular, they might increase automobile traffic, and we might end up having more total volume over the course of time. We don't know. I don't know if the corporation has done any projections on that. We don't know if there's going to be a net decline in the volume of traffic from this terminal, although we agree with taking off the commercial and truck traffic to Vancouver Island. I applaud that.

I have one question that I'd like to ask about the fast ferries. The minister has indicated that these are going to be new vessels. There isn't a model for them anywhere else in the world. We're not really basing these catamarans on any other vessels in the world; they're going to be the first ferries of this kind. Do we have any real appreciation of the true operating costs for these catamarans? Do we know if there's any risk associated with the B.C. Ferry Corporation investing significant amounts of money in vessels that are basically untried and unproven? Is there a risk for the province that this may not work out as we hope? What is the risk assessment on the project?

Hon. G. Clark: The ones that are operating now commercially are about 74 metres, and the ones we're looking at are about 96 metres. But essentially the technology is exactly the same; it's not a quantum leap, even though it is a stretch. Technologically, we had Sandwell Engineering do all of that work, to give us some comfort in that regard. Secondly, Stena Line is building ones that are 130 metres. That is a quantum leap, and they're going to be taking semi-trailer trucks and everything. That's massive, the size of a football field, and it's almost exactly that rectangular shape.

They claim it will fly at 50 knots. That is due to be commissioned in January, although there's a certain amount of secrecy around it. It will take 1,500 passengers and 300-plus cars -- about the size of the superferry, really.

Hon. B. Barlee: Where would they run it?

Hon. G. Clark: They are looking at running it on the Irish Sea. Anyway, that's new technology.

In other words, this is new technology, but it will be similar to.... It's not untried technology; it's technology that's working. We're not pushing the bounds of existing technology. But we want to make sure that Finnyard.... It's being built by Finnyard. They obviously want to compete for this, and they are building one now that's much bigger. So we don't want to go into this saying that we're picking this particular technology. We'll have a fairly short process to do that, with independent consultants and engineers.

Is there a risk? The answer is yes. I don't believe there's a risk that this won't be technically successful. These are working everywhere in the world; these will work, in other words. I don't believe there's a risk in building them in British Columbia -- at least, not much of a risk. We have the quality workforce and talent to do the job.

It is a different service, however, from the existing service. On the Irish Sea, for example, Stena runs an existing conventional ferry and a high-speed ferry on the exact same route. The high-speed ferry competes with air traffic, and they claim.... The same company put them on in competition with each other, and they just grew the market dramatically. They're doing well, and now they're looking at putting this huge one on there in addition to the conventional ferry.

So we don't believe there's a great deal of risk. When I say there is some, that's because you're moving into something which is only four years old and it's a different service. I want to give you some comfort. We've done an enormous amount of work on this: we've done wave simulations here; we've had experts in; we've had consulting engineers look at it. We would not be moving into this if we thought there was much risk associated with it. But it is a new venture which requires a different kind of training, different staffing and a different model of service than we've had.

I've had the privilege of riding in a couple of these. It's more like riding on an airplane than a big boat -- or ship. I apologize, Admiral. The experience is a bit more like being in a train than being in a great big ship. It's a different service, and in Europe they've been used as a higher-end service, at premium pricing and in competition with airlines. We think that's not required here, but we will be looking at that.

The member indicated concern that this will grow the business to the detriment of the people at Horseshoe Bay. I think we can give some comfort on that. First of all, let me say this: running smaller, more frequent ferries means that instead of having a huge parking lot, like Tsawwassen, with 1,000 cars parked in it, waiting for a superferry to suck 500 vehicles into the ship -- I'm exaggerating a bit.... That is a superb service that works very well, and I have no criticism of it whatsoever. What we'll be doing at Horseshoe Bay is carrying a smaller number of cars -- say, 240 cars -- with faster service.

You don't need the huge parking lot because you're going to be cleaning them out, if you will, in shorter intervals. In Europe, the fast-ferry terminals are very modest, indeed. They are not at all like our big terminals, because they're moving very fast with smaller volumes. Second, if we combine that with a reservation system, we should have the capacity to eliminate any kind of concern the people of Horseshoe Bay have. Smaller, faster ferries mean quicker turnaround and quicker cleaning out of people. If we do a reservation system, then I think we can give them some comfort that it won't be a problem.

I'm biased, but I think there's a real possibility this will be very successful and will attract more people. With the combination of more service on route 30 -- which will now be Duke Point-Tsawwassen -- and some premium pricing, over time we'll be in a position to mitigate any impact from Horseshoe Bay, if we have to.

D. Mitchell: I have just a couple of further questions on this. I appreciate the minister's answers, and I really want to believe with him that this is going to have a positive impact on Horseshoe Bay. The minister will recall that in 1992 and 1993 the experiment with all-night ferry sailings at

[ Page 12504 ]

Horseshoe Bay caused a very negative community reaction. The community is delighted that they were cancelled -- that those all-night sailings were not continued with as an experiment. As a result of that, a certain amount of ill will remains in the community.

The minister will also remember that at that time a commitment was made that any further changes that would affect the Horseshoe Bay terminal would be preceded by consultation with the community. To my knowledge, no consultation has occurred yet, although there was a general awareness that the government and the Crown corporation were going to be looking at different options. The announcement made today was really the first opportunity for people to understand what the Crown corporation had in mind.

I'd like to ask the minister whether any public opinion research was conducted prior to this announcement. I know that the B.C. Ferry Corporation does a lot of public opinion research on a whole range of issues, because I've seen much of it. Were any kind of public opinion studies done to see whether these high-speed catamarans would be acceptable, broadly speaking, in British Columbia, and whether there would be any specific reaction in specific communities where B.C. Ferries operates, such as Horseshoe Bay?

Hon. G. Clark: I'm just checking. No, we did no public opinion research on the high-speed car-carrying ferries. But I'm advised that we did do some opinion research on passenger-only ferries in 1992, two years ago. Is the member aware of that?

Interjection.

Hon. G. Clark: Oh, sorry. There are no others that I know of.

On the consultation question, I'm trying to be sensitive to that. But obviously we had a whole series of things to go through to get this vision accepted, if you will. It had to be accepted by Treasury Board and cabinet. The corporation had to work on it -- and were working hard on it. Now that we've announced it, we will be engaged in detailed consultation. It seems to me it would have been difficult to say: "We're thinking about these

high-speed things. Gee, let's talk about them." It seems to me you have to do your diligence, your homework, your engineering, your wave simulation -- all of that -- to get to a stage where we make some announcement.

But we do intend to have.... I guess in this case I had a bias in my very strong belief that this is a dramatic improvement in Horseshoe Bay. I wasn't as concerned that there would be an adverse reaction, because I really do think it's very positive. Now, though, we want to move forward, because I think we do want to have some detailed discussion with the community and the city council around the questions I've discussed. We've got a bit of time on some of them -- not on the fast ferry, but on the capital improvements required for Sunshine Coast, etc. -- to consult with them and with users of the vessel on the configuration at Horseshoe Bay. And we'll do that.

D. Mitchell: I suppose it's unfortunate that the consultation occurs after the fact in many cases. We're at the point now where the government and the Crown corporation have an opportunity, before changes are made to the terminal operation at Horseshoe Bay, to engage in some very useful and necessary dialogue with the community itself.

The reason I say that and am concerned about that is that there already have been media reports that an engineering firm apparently has been engaged and has delivered preliminary plans to modify the facility at Horseshoe Bay. Well, if that's already happened and the announcement is only 24 hours old, I think the minister can appreciate the kinds of concerns in the community that the plans are already delivered and that there hasn't been consultation yet.

The minister may be interested to know that my constituency office in West Vancouver has already been flooded with calls in the last 24 hours from people who are very concerned about whether or not there is going to be any impact and what that impact might be.

I've just been passed a note saying that the most recent call to my constituency office came from a fisherman who operates out of Horseshoe Bay. He is concerned about the public safety issue of the hundreds of small boat operators who use the Horseshoe Bay area for their activities, their livelihood and their recreation, and those who come in the summer to rent boats from the area. They don't have radios, and they don't have any real knowledge of large-boat operation. The minister has indicated that some wave simulations have been done.

There is some real concern about the wave action that's going to be caused by these high-speed ferries. I think the community needs some reassurance from the minister that not only are these issues going to be addressed, but there's going to be consultation beforehand.

I also want to ask the minister about the modifications to the Horseshoe Bay terminal itself, because it's a very difficult site. It's right in the middle of a solid granite mountain. Horseshoe Bay is not designed to be an ideal ferry terminal. If we're going to be spending.... I don't know what it is. I've heard some reports that up to $30 million is going to be spent on modifying Horseshoe Bay. Is it being modified for the long term? Is the government really saying that this is going to be the location for a ferry terminal well into the next century and that we're not going to look at alternative sites?

If that's the case, there has to be some planning to deal with parking. Horseshoe Bay as a community doesn't want to become a parking lot, and I think the minister appreciates that.

Hon. G. Clark: First of all, just to make it clear, the Ferry Corporation met with the Horseshoe Bay Business Association as recently as last week to talk about some of these questions, and we believe we're developing a better relationship.

The member referred to engineering reports. I think that was a conjecture piece. Was that by Jamie Lamb or Rosetta Cannata?

Interjection.

Hon. G. Clark: If it's in the paper it must be true, the member for Powell River-Sunshine Coast says. Well, of all people to say that.... I don't know.

[4:00]

I want to give you some comfort in that we have not commissioned engineering studies on Horseshoe Bay; but we did commission Sandwell Engineering on the feasibility of high-speed, car-carrying catamarans and the question around Horseshoe Bay. So there was some very preliminary work done by the engineering consultants about what configuration might work. For example, here are some of the questions we asked: can a catamaran come into an existing terminal? The problem with an existing dock is that steel boats have a point to them and catamarans are square. So it

[ Page 12505 ]

can come into the dock, but it's too far away from the ramp. I'm giving the scientific engineering terminology here. Can you refit the existing one to take one of these vessels? What are the options? Obviously work had to be done to see whether that is possible and what other things are possible. That's maybe what was referred to. It's not a full-blown engineering study, etc. It's about whether it's feasible. Does it make sense? What does it look like in a preliminary way?

We will be engaging with the community and with consultants on the very detailed engineering work required. We have not done that. This is a preliminary review. There are some seismic problems in the existing facility and all of that. We have had ongoing discussion.... I'm just reading this. It says "marine-side berth, not terminal configuration...." That's what the engineering company was looking at -- whether we could put a side berth in. So that's what has been done. We will be engaging in consultation and discussions with engineering about the detailed configuration. Other work has been done on the seismic upgrade questions, and all of that has been ongoing.

I just want to give you some comfort that we haven't gone ahead and planned this entire thing, and now we're going to consult. We've obviously had to do a lot of work to see whether it was feasible, technical and possible -- how we would do this and what it would look like in a very rough way. Now we move forward with intensive consultations and detailed planning and engineering around a variety of questions, not the least of which is the fast ferries, but also the questions relating to Horseshoe Bay. We think we're developing a better relationship there; we hope we are. Now we want to engage in a process that I think they will be happy with.

D. Mitchell: I have a couple of brief final questions on the Horseshoe Bay upgrade. Could the minister tell us how much is going to be expended on that and what the capital plans are for the upgrade and modifications to the Horseshoe Bay terminal? I think the minister made the commitment that there will be consultation with the community on any changes.

The major concern in the community -- and the minister may appreciate this -- is parking. Horseshoe Bay doesn't want to become a parking lot. It's a very delightful, small community that wants to work in conjunction with B.C. Ferries as much as possible. There needs to be some real bridge-building, if I can use that term, in the relationship between the corporation and the community. The parking problem really needs to be addressed, because it's not in control now. If the upgrade would address the parking problems or we could get a commitment that it would, I think that would meet some of the concerns of the community.

Hon. G. Clark: Yes, I would certainly be happy to give a commitment on behalf of the corporation for the consultation. I agree with you that parking is a concern, although the business concerns are a little different than the residents' concerns in some respects. Obviously, if you are a business operator, you want some traffic through there.

On the cost, it's a fairly big upgrade -- about $30 million in the Horseshoe Bay terminal to do the new ramps or what is required for the fast ferries, the seismic upgrade and the changes required to disaggregate the traffic for Sunshine Coast, Bowen Island and the new service to Departure Bay.

D. Mitchell: The minister referred earlier, when I asked the question about public opinion research, to the fact that there had been some studies on fast ferries connecting the Sunshine Coast and Bowen Island to the mainland. I'm aware of that, and I noted with interest that the Howe Sound fast-ferry study was conducted by Canadian Facts. The Ferry Corporation spent $12,000 or so on the study. It was a pretty positive study. I had a chance to look at it, because I accessed it through freedom of information.

Has the Crown corporation or the minister's office done any follow-up on that study? Is passenger-only fast-ferry service linking the Sunshine Coast and Bowen Island with the mainland at Horseshoe Bay still being planned? Is that being given serious consideration? Does that fit into the vision the minister outlined in his opening statements this afternoon?

Hon. G. Clark: No. Actually, I have seen the

summary of the results, so I haven't seen as much detail as the member has. There was a lot of public concern and consultation around the issue. We did the opinion research. It was kind of put to bed for awhile. The corporation has just advised me that they have dusted off the opinion survey, and they are going to take a look at some of these questions related to the new service to see if there is any relevance. I would be surprised if there isn't some further opinion research as we get closer to how to market this -- if there will be a premium charged, reservations and those kinds of questions.

My understanding is that there has been none. I don't believe the corporation has done any. The Crown corporations secretariat hasn't done any, nor has my ministry. I don't know if there are any floating around out there. I'm just a little hesitant, because I'd forgotten about the 1992 study. My advice is that there isn't any. I'm sure the member can access any through freedom of information.

I will say this, though, now that you've mentioned it: I think it obviously will be prudent, and that's what the corporation is saying. They are going to revisit the findings in the '92 study, and take to the board, over the next couple of years while these are under construction, how they look at what people want in the way of amenities and so on. It will probably require some kind of opinion research.

R. Neufeld: I have just a few brief questions to the minister. I want to touch lightly on the Port Hardy-Prince Rupert ferry. Could the minister tell me what the operating loss is on that route? And what is the makeup of the traffic that ferry carries from Port Hardy to Prince Rupert?

Hon. G. Clark: The operating loss on the Port Hardy-Prince Rupert run is $3.5 million. That's a little less -- a few thousand dollars -- than it was in 1993.

The traffic breakdown is crudely this way: in the summer you can't get on it. It's absolutely jammed -- full of RVs and tourists, among other things. In the winter it's fairly slow. There's lots of capacity, and it carries freight, essential services, like people coming down for doctor's appointments, and what might be called recreational travel by British Columbians -- recreational in the sense of coming down for Christmas holidays, meeting family, etc. So there's quite a distinct breakdown between the types of traffic in the summer months and the winter months. It's a classic problem we have at the Ferry Corporation.

We probably could -- one might argue "should" -- significantly increase the prices in the summer months, because there's clearly a demand. You can't make a reservation; it's jammed to full capacity. One obvious thing, if you were in the private sector, would be to increase the prices dramatically. The problem with that is that it really is

[ Page 12506 ]

an essential service for people on the coast in Bella Coola, Bella Bella and Prince Rupert, for example. So you not only increase the price for tourists who may be able to afford it -- and it's a beautiful, almost cruise ship experience -- but you increase it for local residents as well. We've been reluctant to do that. The price is actually very high, relative to other ferry standards, although it's not high for the trip you get. So we've been very reluctant to deal with the problem in that way. In the winter months, there may not be very many tourists.

Even though it's heavily subsidized, the actual cost of taking your car on for a working person is very expensive, even for an essential service.

So that's the breakdown and the challenge we face. How do we maximize our revenue in the peak periods in the summer, because it's a discretionary item for tourists? It's not to gouge tourists -- far from it. It's simply to charge what the market would indicate and at the same time not penalize working people or citizens of British Columbia trying to get an essential services. That's a challenge we've been trying to deal with in a variety of ways.

Could I add a little bit on the new Queen of Prince Rupert? In the summer months the Queen of Prince Rupert goes between Prince Rupert and the Queen Charlottes. It takes about six hours and sometimes longer, depending on the weather -- in fact, often longer, depending on the weather. We believe the new ship will cut that down to about four hours, although, again, the weather can be very wild there, even in the summer. So that's the summer months. The Queen of the North does the northern route and will still be in operation. It's a beautiful ship.

It will still run that service in the summer from Port Hardy to Prince Rupert. There's no change there, only we'll have a new vessel going across. In the winter months, when the Queen of the North comes out for annual refit or review, the Queen of Prince Rupert does the full leg -- the triangle from the Charlottes to Rupert, down and then back again -- once a week. The new vessel will do that, and instead of 18 hours, it will go to 12 hours in the new service to the north. Really, it's simply because it's a

brand-new ship designed for the route with new technology and new service. That's just to flesh that out. The Queen of the North will still do peak-period service. The new Queen of Prince Rupert will be the kind of workhorse that the current one is -- and it works very well; it's just an older vessel.

R. Neufeld: I appreciate what you're saying and the dilemma you face with trying to get the right ships on that route. I would agree that the tourists should probably pay a little bit more, instead of being subsidized by the province. I don't have any problem with subsidizing ferries, but I do come from a part of the province where there is, to be perfectly blunt, quite a neglect in maintaining and upgrading...

Interjection.

R. Neufeld: ...our highway system. It's not just in my constituency. The member for Cariboo North sits there and chirps at me, but I'm sure I can drive to his constituency and find a lot of people who have a problem with the highways there. In fact, I'm sure the Minister of Mines has some areas in the Kootenays that are not very good and, in fact, are in terrible shape.

Interjection.

R. Neufeld: Yes, probably can't drive.

What I'm saying is there has to be a little more fairness. When we're talking about $800 million into a ferry system that just experienced about $300 million in capital expenditure and growth, we're talking about an awful lot of money in a short period of time. I do think that the transportation needs in some other areas of the province are being neglected. What I'm really trying to say is that I don't have any problem with a good ferry system being subsidized, because it has to be; it's a continuation of the road. But on the Prince Rupert-Port Hardy run, when the minister talks about people coming down for essential services only in the winter....

Interjection.

R. Neufeld: That's what I understood. Regardless, even coming from Prince Rupert, a community that's about three times the size of Port Hardy, unless they're driving in from Port Hardy all the way down to the other end of the Island, you're talking about an almost 30-hour trip. If Prince Rupert weren't serviced by a highway already, then I could understand the subsidization, but we have a community that is serviced by a major highway, Highway 16, and we're still subsidizing a ferry to run into there. The ferry from Prince Rupert to the Queen Charlotte Islands is a different story, and I can appreciate and accept that.

To go on a little further, as I understand it, the Ferry Corporation is legally authorized to borrow up to $700 million. At the present time, I think the debt is about $471 million. How are you going to add another $800 million in total? Is it the government's intention to borrow that money through the Transportation Financing Authority? Just how are you going to borrow that money when there is a $700 million limit?

Hon. G. Clark: First of all, let me.... I have to be careful when I answer this. I agree with some of the member's remarks to this extent: we have made some significant investments in much needed infrastructure. The Island Highway is one; we believe this is another. We have announced commuter rail, which we believe is another important investment. There is the Seattle-Victoria ferry. Those are useful and important investments that help to generate jobs. I agree with the member that we have to look at other regions of the province for infrastructure investments, and not just the ones I've mentioned -- which are big ones.

Let me just say this, however. In our capital planning exercises -- which we will get to later with the B.C. 21 initiative -- we did a per capita breakdown of capital expenditures by government. By far the biggest area of government investment in infrastructure in British Columbia on a per capita basis is Prince George. In fact, it is dramatically higher than anywhere else. We're not making any apologies for that. It includes the University of Northern British Columbia, the road to UNBC, the courthouse in Prince George, the Justice Institute facility, schools that are going up and some other things.

I just want the member to know that the government is very conscious of making sure there's some regional equity. We're dealing with ferries. It's obviously a coastal issue, and we're managing an exciting new initiative. But if that's the sole extent of our transportation division, that's not good enough. I agree with the member that it isn't. We're working very diligently on a whole series of initiatives, infrastructure investments in all other areas. Obviously we're dealing with ferries right now, so it doesn't affect.... I do agree with the

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member, though, that we need to look at it. That's why, of course, the Beatton River crossing.... New roadwork in your area is critically important. Notwithstanding the Reform Party members' representations, the government is proceeding to make that investment in that member's constituency. It's not a partisan issue; it's an important part of government investment.

With respect to the debt of B.C. Ferries, right now it's $380 million; by the end of the year it will be $470 million. Obviously we're concerned about this. I did answer this, but I will just briefly answer it again. This corporation generates almost $300 million in annual non-tax revenue. This is a user-pay situation. We generate revenue from the gift shops and the bookstores and everything else. On top of that $300 million, it does receive about $30 million from the government of British Columbia. That's the pure subsidy for the variety of things we talked about. Half of that subsidy is federal; half of it's provincial, if you will.

[4:15]

When we go to the capital markets to borrow for the $800 million over ten years -- first of all, it's over ten years -- some of the $470 million will be paid off, but not very much of it. We will be borrowing on the markets and saying that we would like some money on a commercial basis to invest in assets which generate a lot of revenue. So this is not like borrowing money to pay the deficit or for welfare, education, health care or all the important things that government does. Essentially, a commercial Crown corporation is borrowing money to buy physical assets that have a value, that can be sold and that generate income.

My last point on this -- and I have to be tighter than this, or we won't finish for a week or two -- is with respect to the subsidies to the Queen of the North. In the summer months the Queen of the North makes money for British Columbia. In addition to providing an essential service, it makes money -- and it doesn't just make money for the people of Port Hardy or for the government; it makes money for all British Columbians, regardless of where they live, because it is generating enormous tourist dollars in British Columbia.

I want to make the point that one should not think that this is just for these communities. These are important infrastructure investments for the people of British Columbia, regardless of where they live.

R. Neufeld: I have one final question -- or observation, I guess. The minister can talk all he wants about the revenue that the Ferry Corporation generates, but the debt is guaranteed by the people of British Columbia. It is debt; it is a liability. We have to pay it back; there's no doubt about it. That's working from all kinds of models where we're going to have continual increased traffic, low interest rates and all those things. That's just great. When we talk about asset-based debt, it's pretty tough to sell a school. The Premier did talk about it the other day, and I didn't have a chance to remind him.

I can appreciate that's it's a little easier to sell a ferry, but it's pretty tough to a sell a school or hospital to anyone. In fact, your government did that in Cassiar, and you found out just how much money you got back out of an investment of about $4.5 million. The debt load is a concern to people in British Columbia, especially at a time when you're talking about spending $800 million on a ferry system. You're cutting out hospital beds and you're not building schools.

Interjection.

R. Neufeld: That's a fact. The members say: "Oh, come on." You're not. You're cutting out hospital beds and cutting down schools and all those types of things, and we're spending $800 million on a ferry system.

Hon. G. Clark: I won't rise to the bait on that question, but I will say that the TFA option is an option for government as well. No decision has been made on that, but because the Transportation Financing Authority is doing the integrated planning, it was intimately involved in the ferry capital plan and worked very closely with the Ferry Corporation. As I say, you can see that there are some really neat tie-ins with the Island Highway. It's possible for the Transportation Financing Authority to finance the acquisition of new ferries, but you would be required to put a surcharge on the ticket.

That's because of the act, really; the TFA must be self-financing. I have to say that a 50-cent Transportation Financing Authority charge for new capital acquisitions is an option for government either way. What we're really saying is that it will be user-pay.

D. Symons: I won't comment on your comment about a 50-cent surcharge on the ticket to pay back the Transportation Financing Authority. I think that would barely touch the interest, let alone pay off the principal of the loan in that case.

Going back to the fast ferries for a moment, you mentioned operating out of Horseshoe Bay. I would be somewhat concerned. I believe there are some problems right now with scheduling the route times when the Langdale ferry, the Bowen Island ferry and the ferry from Nanaimo are all coming in there. You're suggesting that possibly we'll run two sets of Nanaimo ferries -- a fast ferry for cars and people, and maybe another one for trucks and commercial vehicles. I'm just wondering how these fast ferries in particular would operate on a faster schedule.

You would have that vessel coming in more often than it does with the current two-hour crossing. You're going to have some problems in that terminal, I would think.

On top of that, I noticed that back in September there was a news release in which the government announced that a Horseshoe Bay upgrading was underway. You were doing some upgrading of the pedestrian facilities at the terminal. Will that upgrading be wasted, in a sense, if you have to redesign the whole area there? You have spent very close to a million dollars on some recent upgrading, and I wonder if you might answer some questions on that upgrading.

Hon. G. Clark: With respect to the last question, the million dollars was not at all wasted. It was on pedestrian safety questions, and that will obviously be valuable. Second, we have done all the modelling to make sure we can do this efficiently, and we can. Part of the investment in the terminal is to make sure that it is efficient, because it is a complex terminal to operate. So we don't think there will be a problem.

Somebody asked a question earlier -- and I think it's legitimate.... One of the reasons it's not 45 minutes to cross, even though theoretically it could be, is that the Horseshoe Bay harbour quite correctly has about a five-mile-an-hour limit, so this vessel will chug at five miles an hour out of the harbour. There are a lot of fishing boats and recreational boats. It's not until it gets into the open water that it will go to speed. So that delays the advantages to some extent at both ends; but you would have to do that anywhere, generally speaking. And the wake won't be any problem.

D. Symons: I realize that, and probably once you get past Passage Island in Howe Sound you will have to reduce

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speed, which means you will get off that planing hull, I would suspect. It will be the same thing at Entrance Island at the Nanaimo end; there will probably be areas where you won't want to be going flat out.

There is another problem. I assume these will be aluminum hulls, and aluminum is more prone to fatigue than steel or iron, so the time the ship will last could be somewhat less. Also, aluminum is much more susceptible to electrolysis. I am wondering if these factors have been taken into account. Let's say the length of service of these ships will probably be considerably less than the length of service of the current ferries. While you're at it, to save time in jumping up and down, I believe the fuel consumption of the high-speed ferries goes up considerably as your speed goes up.

I am wondering if you could give us some idea of whether these boats are going to be ecologically sound, because they are going to drink a lot more fuel.

Hon. G. Clark: It's not absolutely certain yet, but we're working on it. Preliminary estimates are that fuel costs shouldn't be any higher on a per-passenger basis. They do consume more fuel when they are operating, but the trip is shorter and they are carrying more people, relatively speaking. So there may be some there. The staffing has not been.... We have to deal with the Coast Guard on that. In Europe, the fast ferries have a lot less staff on board than the steel boats.

As the retired admiral advises me, the superstructure of the navy vessels is aluminum, even though the hull is steel. It's aluminum welded to steel, and they haven't got a problem. The life expectancy of these is shorter than the life expectancy of a steel boat, but they are still relatively new, so no one is quite certain. It may be 25 or 30 years instead of 40 years. Finally, there is no corrosion problem or otherwise. Because these have only been in operation for several years, this is a debatable question.

The answer you always get -- and I think it's a legitimate one -- is that this is exactly the same kind of technology that aircraft are made of. You can't get much more stress and fatigue than in airplane parts, and this technology is borrowed from the airline industry. At least, that's my understanding, so there is a high degree of comfort. In talking to our engineers and the people operating them, and with all the work we have done over the last couple of years, we are comfortable that while they may not be quite as long-lasting as a steel boat, the fatigue question has been adequately addressed.

One only has to look at the airline industry to see the success they have had with aluminum.

D. Symons: Because of other questions asked, my order of things has changed considerably. Whil