1988 Legislative Session: 2nd Session, 34th 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)

MONDAY, JUNE 27, 1988

Afternoon Sitting

[ Page

5401 ]

CONTENTS

Routine Proceedings

Oral Questions

Assistance for Okanagan grape growers. Mr. Barlee –– 5401

Mr. Rose

PCB dump in Victoria inner harbour. Mr. G. Hanson –– 5402

School Canadiana. Mr. Harcourt –– 5402

B.C. Hydro contracting-out. Mr. Clark –– 5402

Residential community calling plan. Ms. A. Hagen –– 5403

Matsqui dump. Hon. Mr. Dueck –– 5403

Environmental Appeal Board. Hon. Mr. Strachan –– 5404

Ministerial Statement

Medical research funding. Hon. Mr. Dueck –– 5403

Mrs. Boone

Hydro and Power Authority Privatization Act (Bill 45). Second reading

Mr. Sihota –– 5404

Hon. Mr. Davis –– 5407

Utilities Commission Amendment Act, 1988 (Bill 46). Second reading

Hon. Mr. Davis –– 5408

Mr. Clark –– 5408

Ms. Edwards –– 5410

Hon. Mr. Davis –– 5411

Mineral Tenure Amendment Act, 1988 (Bill 58). Second reading

Hon. Mr. Davis –– 5412

Mr. Guno –– 5412

Hon. Mr. Davis –– 5412

Miscellaneous Statutes Amendment Act (No. 1), 1988 (Bill 36). Committee stage.

(Hon. B.R. Smith) –– 5412

Hon. Mr. Hagen

Mr. Sihota

Mr. Lovick

Hon. Mr. Davis

Mr. Rose

Miscellaneous Statutes Amendment Act (No. 2), 1988 (Bill 52). Committee stage.

(Hon. B.R. Smith) –– 5415

Mr. Blencoe

Hon. Mr. Couvelier

Ms. Edwards

Mr. Sihota

Ms. A. Hagen

Hon. Mr. Dueck

Mr. Jones

Hon. Mr. Brummet

Hon. Mrs. Johnston

Hon. Mr. Reid

Hon. Mr. Strachan

Mr. Rose

Hon. Mr. Veitch

Mr. Lovick

Hon. Mr. Davis

Mr. Gabelmann

Mr. Clark

Hon. L. Hanson

Family Relations Amendment Act, 1988 (Bill 48). Committee stage.

(Hon. B.R. Smith) –– 5434

Income Tax Amendment Act (No. 2), 1988 (Bill 62). Second reading.

(Hon. Mr. Couvelier)

Hon. Mr. Strachan –– 5434

Municipalities Enabling and Validating Amendment Act (No. 2), 1988 (Bill 54).

Second reading

Hon. Mrs. Johnston –– 5435

Mr. Blencoe –– 5435

Mr. Rabbitt –– 5436

Hon. Mrs. Johnston –– 5436

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

(Hon. Mr. Davis) –– 5436

Hon. Mr. Davis

Mr. Guno

Mr. Clark

Mr. Barlee

Hon. Mr. Strachan

Ms. Edwards

Mr. Lovick

Mr. Sihota

Mr. Gablemann

Hydro and Power Authority Privatization Act (Bill 45). Committee stage.

(Hon. Mr. Davis) –– 5460

Mr. Clark

Mr. Lovick

Utilities Commission Amendment Act, 1988 (Bill 46). Committee stage.

(Hon. Mr. Davis) –– 5472

Mr. Clark

Appendix –– 5473

The House met at 2: 10 p.m.

Prayers.

HON. MRS. JOHNSTON :

I was delighted to see in our galleries today a former member of our

Social Credit caucus staff, a staff member who had been with us for

quite some time and who served as my secretary when I came over in

1983. I would ask the House to please give Marcelle Adams a very warm

welcome.

MR. VANT : On behalf of the first member for

Cariboo (Mr. A. Fraser) and myself, there are a number of visitors from

the great Cariboo constituency whom I would like to introduce to the

House, First of all, we have two very distinguished gentlemen from the

city of Williams Lake. It's a very important city in our constituency;

about one-sixth of the population lives there. It's a noteworthy city.

It's the home of the famous Williams Lake Stampede. It gives me

pleasure to introduce His Worship Mayor Ray Woods and Alderman Hugo

Stahl, the chairman of that city's economic development committee.

Also

today we have Jan and Ann Wittebrood of Quesnel and Gordon and Isobel

Sostad of Hanceville in the Chilcotin. I know we'll want to give them a

warm welcome as well.

MR. BRUCE : Mr. Speaker, in

your gallery today is the wife of one of our Legislative interns,

Martyn Brown: his wife Linda Brown from Shawnigan Lake, here today to

view the proceedings — and making sure that Martyn is doing something

that is reasonable and respectable. Would you please make her feel

welcome.

MR. PELTON : If I may, hon. members, I have

two introductions I'd like to make today. First of all, in the gallery

we have the leader of the provincial Liberal Party, Mr. Gordon Wilson,

and with him is Mr. Kevin Wickham, who is Mr. Wilson's press secretary.

Mr. Wilson resides in the constituency of Mackenzie, and his press

secretary is from Vancouver. Could they be welcomed, please.

Also,

in the members' gallery today we have three visitors from Holland: Els

Geus, Bertie Hurwitz and Bertie's son Martin Hurwitz. These three

people are visiting with Mrs. Sheri Tromp, who is in the gallery with

them. I would ask you to make them all welcome, please.

MR. REE :

We have in the west gallery today Mr. Bill Caulfield from North

Vancouver, executive director of the Certified General Accountants'

Association of British Columbia. I think he's here to watch the

proceedings this afternoon. Would you all please welcome him.

MR. RABBITT :

It's a great pleasure for me to introduce a couple of colleagues from

the heart of the interior. With us today are the chairman of the

Thompson-Nicola Regional District and his administrator. I would ask

the House to give Jack Lapin and Eric Shishido a very warm welcome.

Oral Questions

ASSISTANCE FOR OKANAGAN GRAPE GROWERS

MR. BARLEE : A question to the Minister of Agriculture. Last

December — approximately six months ago — the government announced

it would act immediately to cushion the impact of the Mulroney trade

deal on Okanagan grape growers, and the government made a similar

promise during the Boundary-Similkameen by-election. Will the minister

tell the House why the government has not kept its promise and

introduced measures to help grape growers, who will be hurt by the

Mulroney trade deal?

[2:15]

HON. MR. SAVAGE :

We have made some commitments to the Okanagan grape growers, but

they're subject to agreement between the provincial and federal

governments. The federal government is still consistently working on a

pattern of special aid towards not only British Columbia grape

producers, but grape producers all across the country. It's gone to

three different committees of Treasury; it's been to cabinet once

already and is going back one or two more times.

We will

not make an announcement other than what we have made through the

Minister of Labour and Consumer Affairs relative to the support we have

promised in the way of the pricing guarantee — the same price as

last year for a wine produced this year. Beyond that, the federal

government is expected to make some sort of announcement within the

next week or two relative to the federal aid that will be forthcoming,

and it will relate not only to British Columbia but also, as I

understand it, to Ontario and Nova Scotia.

MR. ROSE :

We're very interested in the long anecdote about how difficult it is to

work with the feds and how lethargic they are in this matter. I wonder

what the province is prepared to do. Is the minister prepared to tell

the House what our share of the bargain will be?

HON. MR. SAVAGE :

To my hon. critic, I'm not prepared to list the details. because, as

I've said many times in this House, delicate negotiations are going on

with the federal government, and that would tip our hand.

MR. ROSE : I notice the Premier tipped the hand during the by-election, but I don't suppose you want to do it in here.

wonder if I could ask a related question of the Minister of

Agriculture. We've learned over recent weeks that as many as 160

Okanagan orchardists are really in tough shape –– 3,800 acres have been

asked to be removed from the agricultural land reserve because people

can't make a living. Two years after their crop has gone to the

packing-house, they get a bill from the packing-house: in other words,

they were paid too much in the initial payment. I wonder if the

minister could tell the House what action is planned, both short-term

and long-term, to make a secure living for those people in those

orchards before all British Columbians lose that very valuable farmland

for future generations.

HON. MR. SAVAGE : To my hon.

critic, on the issue of the orchards, as you well recognize, we

announced a program for Red Delicious apples. We also announced a

program for the farm income insurance advance, which we are now

processing, where we have said we will advance the producers 2 cents

per pound instead of waiting until the completion of the crop year. As

you know, in doing the program for the Red Delicious, before the money

can go out, we have to see all the packing-house slips that come in for

the amount of product shipped. That's required under financial

administration. I'd also like to say that the tripartite program

[ Page

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from the federal government has been announced — at, I believe, 1 cent per pound.

there is some help coming. I think the frustration being exhibited by

the producers is that when they go to their financial institutions to

secure an operating loan, they are having trouble getting that

security. We have announced — and the banks are well aware, as far as I understand —

that we will be advancing the 2 cents per pound on the FII program.

Subsequent to the Red Delicious program getting the total shipment

figures in, we will be addressing that one as well.

MR. ROSE :

I don't like to criticize somebody who is trying to do something that I

want them to do in the first place, but the amount is not enough. Ten

years ago the people were getting 25 cents a pound. The 2 cents on top

of the 5 cents is inadequate, and the minister knows it. That's a

statement.

PCB DUMP IN VICTORIA INNER HARBOUR

MR. G. HANSON :

I have a question to the Minister of the Environment respecting the PCB

dump presently being tested in Victoria. It is becoming increasingly

clear that there are various sources of information coming forward that

need to be brought to bear on this important matter. It is obvious now

that the provincial Minister of Environment, the federal Minister of

Health, the local city officials, the municipal health officials and

Hydro and their consultants should be brought together in an emergency

team to coordinate this cleanup, which could be more broad-based than

initially thought. My question is: will the minister establish an

emergency team bringing these parties together to clean up this

hazardous waste?

HON. MR. STRACHAN : To the member: that type of problem — management —

is normally coordinated by the waste management branch of the Ministry

of Environment and Parks, and I see no reason why it isn't taking place

in this case. If it isn't, I will investigate it and get back to the

House with a further and fuller answer.

MR. G. HANSON :

It is certainly within the power of the Minister of Environment —

as the minister responsible for environmental health and safety in the

province —

to ensure that the emergency team is established. Would he also

undertake to this House to compile a complete inventory of hazardous

waste in the province, particularly the illegal dumps that are rumoured

to be present in various locations in British Columbia'?

HON. MR. STRACHAN :

The tracking and identification is going on every day using, among

other things, aerial photographs, old city records and any evidence we

can gather.

Members must appreciate that in dealing with

PCBs, for example, which may have been deposited anywhere in the 1950s

or 1960s, they were not identified at that point. They were not deemed

to be hazardous. As a matter of fact, they were deemed to be necessary.

Insurance companies demanded, in many cases, that capacitors and

transformers have this type of oil in them, so identification of PCBs

was not required or warranted. Not until 1979 were PCBs deemed to be

unsafe and, in some cases, hazardous to health.

The

information we have is sketchy, but we are compiling through aerial

photographs, city records and old B.C. Electric records — any

records that we can find — a complete and comprehensive sketch of

what the province looks like in terms of storage of that type of

hazardous material.

MR. G. HANSON :

It's obvious that there needs to be a body that informs citizens and

former employees who now realize the hazard that they were dealing

with. In the past this particular substance was regarded as safe and

now is, of course, extremely hazardous and carcinogenic. That's all the

more reason to establish a body, not necessarily a technical team but

something that can hear evidence as well from informed citizens and may

assist the province in cleaning this up.

As a site for a

hazardous waste facility is imminent, would the minister not agree that

he should have an accurate figure of how much is buried throughout B.C.

and where it is buried?

HON. MR. STRACHAN : The

member is absolutely right; we should do that. As a matter of fact, the

amendments to our Environment Management Act, which your party was

opposed to, Mr. Member, were passed last spring, and that will enable

us to do that type of category and inventory.

SCHOOL CANADIANA

MR. HARCOURT :

I have a question to the Minister of Advanced Education. On Friday,

School Canadiana was forced to close its doors, an unfortunate victim

of unfair cutbacks by this government. Could the minister tell the

House where the 40 students from School Canadiana are going to take

their ESL courses today?

HON. S. HAGEN : I do

appreciate the question; it's a very important issue. I can assure the

hon. member opposite that I have been assured by the board of governors

of Vancouver Community College that they will not only be able to offer

the programs to those students but in fact will offer it to more

students than they did last year. As well, they are carrying out

meetings with the ethnic groups in and around the city of Vancouver to

make sure that their problems are being addressed.

MR. HARCOURT :

A supplementary. The minister has said that over the last few weeks,

but the president admitted that it was closing down the ESL program

because of a shortage of funds. The truth is that because of the

government's cutbacks in post-secondary education, 40 Chinese Canadian

students are today being denied ESL training. Is the minister prepared

to admit that a mistake has been made and restore funding to the

Vancouver Community College to reopen the School Canadiana?

HON. S. HAGEN :

I can assure the hon. member that I don't think the board of governors

made a mistake. They're not shutting down the ESL program. They shut

down the School Canadiana, which was a method of delivering that

program. The program will continue to be delivered through other

resources.

B.C. HYDRO CONTRACTING-OUT

MR. CLARK :

A question to the Minister of Energy. As part of the privatization

initiative, B.C. Hydro is contracting out more and more services. We

had a dispute today, as the

[ Page

5403 ]

minister should know. One of those services, as well, is flag persons. ABC

of Business has received three flag-person contracts from Hydro: Burnaby, Quesnel

and Kamloops. The contract price is $8.47 per hour to $8.97 per hour, but once

again, the women working there make only $5 to $5.50 an hour, and I have some

pay stubs to show that. The contractor is pocketing $3 per hour, 40 percent

of the contract price. Does the minister think that this is fair, and has he

decided to investigate this particular contract?

HON. MR. DAVIS :

I'm sure this matter will be resolved in the normal way between Hydro,

as the employer, and the employees' representatives or trade union. If

they cannot get together, of course, they can refer the dispute to the

Labour Relations Board.

MR. CLARK : A supplementary

to the Minister of Energy. A trade union? These are poverty wages

through contracting out of B.C. Hydro. This company has several

complaints outstanding before the employment standards branch for

failure to pay even those poverty wages that they were supposed to be

paying. If the government persists in contracting out, will you, as the

minister responsible, agree to some minimum standards to stop this

blatant exploitation of workers that's going on more and more now in

this province?

HON. MR. DAVIS : B.C. Hydro has not

engaged substantially in contracting out services. It has carried out a

few developments which might be described as privatization in order to

provide better service at lower cost, but I'm sure that Hydro is not

intent on employing people at rates which are substandard, as the hon.

member describes them. That's not the intention of the board or of the

management of Hydro.

RESIDENTIAL COMMUNITY CALLING PLAN

MS. A. HAGEN :

A question to the Minister of Labour and Consumer Services. Mr.

Speaker, last week B.C. Tel applied to the CRTC for approval in

principle of the residential community calling plan. This plan would

drastically reduce free calling zones for consumers in the lower

mainland. I'd like to ask the minister if he could inform the House of

the government's position on this matter of consumer interest — if, indeed, the government has a position.

[2:30]

HON. L. HANSON : I'm sure the member is aware that the granting of that is a federal responsibility.

The

question of whether it would be to the betterment of the citizens as

far as having a larger telephone bill and no long distance charges for

within those areas is a question that is being addressed by the local

governments at this point, and I see no reason for the provincial

government to interfere.

MATSQUI DUMP

HON. MR. DUECK : I would like to answer a question I took on notice last

week. The question was raised by the opposition House Leader in respect of rehabilitation

and cleanup of a landfill site in Matsqui. On April 21, 1984, Anica Contracting

applied for and obtained a waste management permit from the Ministry of Environment

and Parks to establish a landfill. Selected demolition and construction material

and debris for land-clearing was to be deposited.

The

site soon became too small, and the owner applied for an amendment. The

application was rejected at that time and two charges were laid. The

first charge was for contravention of the permit, and the second was

for discharge without a permit. The operator was found guilty on both

charges and fined accordingly.

At the same time he was

ordered by the water management branch of the Ministry of Environment

and Parks to remove the debris he deposited in a creek going through

his property, and he complied: this material was apparently removed. He

has subsequently applied for an amendment to the permit to expand the

landfill site. This request has been rejected, and apparently he's

appealing it.

Anica Contracting Ltd. has voluntarily ceased

operation of this landfill site and the Ministry of Environment has

advised Anica Contracting Ltd. that they must meet the standards

established by the Agricultural Land Commission and that hopefully the

commission is currently formulating a plan that will meet the concerns

about cleanup and reclamation of this property, and will ensure that

leachate will not be emanating from this particular site.

Mr. Speaker, I would like leave to make a ministerial statement.

Ministerial Statement

MEDICAL RESEARCH FUNDING

Recently

my colleague the Provincial Secretary (Hon. Mr. Veitch) awarded the

B.C. Health Care Research Foundation $4.5 million from the Lottery

Fund. I rise today as president of the British Columbia Health Care

Research Foundation to inform the House that, based on recommendations

of the scientific advisory committee of the B.C. Health Care Research

Foundation, $2.28 million of lottery funds has been allocated for

medical research projects in British Columbia. This brings to almost

$36 million the total of lottery money directed to medical research

projects since the program began almost ten years ago. These funds have

kept B.C. researchers on the leading edge of medical research in many

different fields.

There are 79 projects receiving funds

from this latest allocation. I would like to mention just two of the

more interesting ones. A grant of $40,000 was awarded to Dr. Robert

Meloche of the department of surgery at UBC. Dr. Meloche is studying a

way of improving the acceptance rate of pancreas transplants, which may

ultimately lead to a reasonably safe and simple treatment for diabetes.

Although these are only the first tentative steps in finding what could

amount to a permanent cure for this widespread disease, we are happy to

be in on the ground floor of this exciting research.

Another

research project with very exciting possibilities will be carried out

by Dr. Korbelik of the Cancer Control Agency of B.C., who will receive

a grant of $22,000. Dr. Korbelik is investigating the properties of

certain light sensitive chemicals that are accumulated by cancer cells.

The objective is to develop a way of labelling these cells, which could

then be easily identified, thereby providing an early detection

screening method for those at high risk of lung cancer. At present,

lung cancers cannot usually be detected until they are too advanced to

be treated successfully.

I would only add that these lottery funds allocated by the B.C. Health Care Research Foundation represent the second-

[ Page 5404 ]

largest source of funding for health care research in the province, second only to the Medical Research Council of Canada.

MRS. BOONE :

I rise on one of my rare occasions to compliment the government and to

thank the government for putting this money into the research. We, of

course, require as much research as possible in our health care system.

We do have a lot of problems. We've made some tremendous gains in the

past years. This money will go a long way toward research in helping us

find answers to many of the medical problems we have out there.

do have some fine doctors and physicians in this province, and my only

fear is, that we may lose some of them in the next little while. I

certainly hope that this money will keep them here to do their

research. I thank the minister for his statement, and I thank the

government for putting this money into the research.

ENVIRONMENTAL APPEAL BOARD

HON. MR. STRACHAN :

I rise to answer a question taken on notice, Mr. Speaker. The other day

the hon. member for Surrey-Guildford-Whalley (Ms. Smallwood) asked me a

question with respect the Environmental Appeal Board. She ended the

question with: "Why has the minister chosen to put financial barriers

in the way of citizens' rights to appeal?" She asked further: "Is it

now the government's policy that ordinary men and women of this

province must unfairly pay thousands of dollars in order to get an oral

hearing before the Environmental Appeal Board?" I took those questions

on notice.

Let me now give the Legislative Assembly the

answer to her question. The question, as I've already indicated, dealt

with a letter by the chairman of the Environmental Appeal Board, Mr.

Frank Hillier, to the Islands Protection Society. He did request that

they, in order to have a full oral hearing, deposit certain sums of

money to him. His reasoning is this: the Islands Protection Society has

never produced any evidence at any of the appeal hearings to show that

the herbicide applications under appeal would cause an unreasonable or

adverse effect to mankind and/or the environment. As a matter of fact,

the Islands Protection Society, in testimony given on a variety of

dates — and I have the dates available for members who wish them —

has indicated that they are opposed to herbicides and the use of

herbicides on philosophical grounds only. Philosophical argument is

very difficult for the Environmental Appeal Board to hear; they are in

place to hear technical argument.

The Islands Protection

Society has further shown contempt for the Environmental Appeal Board.

After applying for appeal on pesticide use permits — the numbers are given in Mr. Hillier's letter here —

they failed to present any evidence to support their case. The Islands

Protection Society never had the good manners to notify the board of

their intentions not to appeal or to show up.

We have

calculated that the Islands Protection Society.... Over the last two

years the board has spent over $50,000 on the seven oral appeal

hearings and three written submissions that they've had. With the other

departments of government and the Supreme Court, the estimate is that

the Islands Protection Society and their philosophical — not technical —

arguments opposed to herbicides has cost the people of British Columbia

in excess of $100,000. Mr. Hillier can document that. Therefore Mr.

Hillier has said — and I agree totally — that if the Islands

Protection Society wishes to have a full hearing on the Queen Charlotte

Islands, they will have to deposit $12,000 with the board to undertake

the expenses of this type of hearing: $4,850 for the three-man board

and recording secretary; the Queen Charlotte travel board, $3,650; and

the cost for Miss Taylor and Dr. Kobylnyk, which the board has

guaranteed, is another $3,000. They have an alternative, which is an

oral hearing in Vancouver. That would be $6,800 in total, again just to

protect the taxpayer. And they have a third alternative: a hearing by

written submission, for which the board would not require a deposit.

Therefore,

to put the whole thing in a nutshell, the evidence that I have, which

is public evidence, indicates that the Islands Protection Society has

lost all credibility. This is sad, because they had a role to play and

they have really abused it, to the extent that the concerns are

toothless, unfounded and quite laughable; and the expense to the Crown,

the taxpayer of British Columbia, has been considerable. Therefore, if

there are to be any further oral hearings by the Environmental Appeal

Board with respect to the Islands Protection Society, that society will

have to come up with some serious, sound deposit money before the

hearing will take place.

Orders of the Day

HON. MR. STRACHAN : I call adjourned debate on second reading of Bill 45.

HYDRO AND POWER AUTHORITY

PRIVATIZATION ACT

(continued)

MR. SIHOTA :

To pick up the debate where it was left, the first member from

Vancouver East (Mr. Williams) is not here right now, so I want to talk

about certain aspects of this legislation, the principles accompanying

it, which really only came to my attention very early this afternoon.

Really, during the course of a rather lengthy debate with respect to

this bill, there has been, as I understand it, no discussion with

respect to the matters I intend to raise today. These matters cause me

grave concern and will undoubtedly be matters of debate at the next

stage of deliberations, when the minister can tell us whether or not

our

interpretation of the sections involved are accurate.

Buried

halfway through this 26- or 27-page bill on page 12 is division 4,

which talks about transfers of employees. As I said earlier, I think

many of my colleagues overlooked that

section when they were speaking

on this legislation, and I must confess that I did as well. However, on

a second review of the legislation, I must say that the provisions and

principles that flow from division 4 are, quite frankly, somewhat

contemptuous of the legal process.

The provisions are

designed to get around what is now known as the Verrin decision. The

Verrin decision, which I will go into in some depth in a few minutes,

was a decision that said to the provincial government: if you want

to privatize, you have the prerogative to do that, of course; but you

can't trade off your employees like we trade hockey players and say

that they most go to the new company. The government has an obligation

to fulfil its requirement under the collective agreement and to

maintain those people in the government workforce.

[ Page 5405 ]

[Mr. Pelton in the chair.]

The

consequence of that is extraordinary to the provincial government's

privatization initiatives. There really are two pillars that support

the government's privatization initiatives. On one hand there is the

matter of the sale of the provincial assets — our assets — which

brings in some cash flow to the government which it can then allocate

for whatever purposes it wants. We already know from the BS fund and

the privatization fund what the intention there is. One of the pillars

supporting the privatization plan is this quantum of cash that would

come into the hands of the provincial government.

The

second pillar, supposedly, for the government was that it would reduce

the size of the government workforce. By privatizing, it would allow

people to go off into the private sector and work with the companies

that succeeded in securing the contracts to provide the services which

were originally provided by the public service and which are now

intended to be provided by the private sector. That second pillar was

taken away by the Verrin decision.

The Verrin decision

effectively said: no, you must maintain the employees that you've got

within the auspices of government; they must remain within the public

sector. That really crumbled one of the two foundations of the

Premier's privatization initiatives. Since this is sort of the

centerpiece of legislation, as it deals with the privatization of

Hydro, we were looking with some interest to see how the government

would deal with the situation.

[2:45]

Interestingly,

when the Supreme Court came down with the Verrin decision on January

18, 1988, the government was, of course, upset and indicated right away

that it intended to appeal. The appeal of the Verrin decision was heard

in May. I don't have the exact date here, but it was heard in May, at

which point the government said, "Look, we're not happy with the

decision," went to the Court of Appeal, and several justices of the

Court of Appeal heard the arguments for both sides. To date there has

been no determination of the Verrin decision, no decision one way or

another by the Court of Appeal as to whether it intends to overturn the

Supreme Court of British Columbia decision.

have a

situation where the government loses a court case, which undercuts one

of the pillars of its privatization initiative. It then appeals that

court case, the appeal is heard, and before any decision comes down

from the Court of Appeal, we have in Bill 45, buried halfway through,

two sections that deal with that decision. Very simply, those two

sections say this: once the transfer of the assets of B.C. Hydro —

whatever portions of Hydro the government wants to sell —

is completed, those employees "cease to be employees of the

authority...and become employees of the intermediary company...." The

government is saying by virtue of these two sections — and it is a

fundamental departure from the law in this province: "Now government

employees are going to be traded like hockey players." When a

government decides to sell off a portion of Hydro, along with that go

the employees. I don't want to get into the issue of whether the

certification passes or not, because that's a matter for determination

under the Labour Code in front of the Industrial Relations Council.

That's not necessarily the issue here, although I'm sure the minister

will allude to it during the course of his discussion.

What

is of issue here is what the court had to say in Verrin, and I want to

quote it. "One of the most fundamental rights we possess as free people

is to choose the employer for whom we will work. The importance of this

is self-evident; most working people occupy at least half their waking

hours in their employment. A law which requires a person to be

contractually bound to an employer not of his choosing is directly

contrary to this basic freedom of choice."

That's what the

court had to say on January 18, 1988. It talked about the basic freedom

and right of people to decide to whom they want to contract their

labour and that they can't be sold off as was the case in the old

master-servant law that we used to have in this province. In fact, just

the other day, in keeping with that, the Attorney-General introduced

the Law Reform Amendment Act, which I talked about in this House, which

eliminated the right of a master to claim for loss of the services of

his servant, and that was the end of master-servant law in this

province.

Now we see in this legislation an effective

reintroduction of that master-servant relationship: the servant remains

a servant and is passed off to the new master. The courts found that to

be contemptible and a violation of the basic freedom of choice accorded

to people in this society, yet the government has now chosen to

reintroduce, buried in this legislation, one of the attributes of

master-servant law and to say that if the master doesn't want to be the

master any longer, you still have to be the servant of the new master.

Not

only is it contemptible to the freedom of choice that the court talked

about in the Verrin decision; not only is it an affront to the very

basic freedom found in that legislation, but above that, it is also

contemptible and an affront to the process of law when we have the

government on one hand appealing the decision, and on the other, not

having the dignity to wait for the court to make its decision, but

instead, circumventing the court by introducing this

section in Bill 45.

I want

to quote a little more, to put this in the perspective of what we are

talking about. I want to emphasize that this is not a new piece of

legal reasoning that comes because we now have a Charter of Rights in

this province. No. Far from that. It is a piece of legal reasoning

which has been with us since the turn of the century. Effectively, what

the government wishes to achieve by putting this provision in the

legislation is to take us back to the turn of the century.

MR. ROSE : Which century?

MR. SIHOTA : To the nineteenth century, if not further.

MR. CLARK : Eighteenth.

MR. SIHOTA : Eighteenth century, if you want to take a look at master-servant

law. As far back as the turn of the century — I'll try to find the actual

date of the case that I'm going to be talking about; it was in the early

1900s — a case called Nokes v. Doncaster Amalgamated Collieries Ltd., where

the Lords in England said: "It will be readily conceded that the result

contended for by the respondents in this case would be at complex variance with

a fundamental principle of our common law, the principle, namely, that a free

citizen, in the exercise of his freedom, is entitled to choose the employer

whom he promises to serve, so that the right to his services cannot be transferred

from one employer to another without his assent." Here is a principle

of law which has predated the Charter, which was embraced by the Verrin decision

in 1988, which has survived since the turn of the century, and this

[ Page 5406 ]

government wishes to reverse all that through the provision contained in sections 22 and 23 of this legislation.

fact, in the Nokes decision, Lord Atkin said this: "I had fancied that

ingrained in the personal status of a citizen under our laws was the

right to choose for himself whom he would serve and that this right of

choice constituted the main difference between a servant and a serf."

That's what the courts had to say in 1940 when that decision was

considered. It was based on common law within our British jurisprudence

which has been embraced by one Commonwealth jurisdiction after another,

and which has been supported by the Verrin decision. This government

has chosen to turn back that clock by saying in its legislation that on

the transfer date set, the employees cease to be employees of the

authority and become the employees of a new company.

Do you know what the court had to say in the Verrin decision? It said:

"In my view, the taking away of this individual freedom should not be inferred

from a statute unless no other reasonable construction of that statute is possible.

As was said by Middleton" — who was a justice of the appellate division

of the Ontario Supreme Court in a 1928 case — "'...if the Legislature

really intended a consequence so grave, one would expect the language used to

be incapable of any other construction."'

Here

we have it. We have here language that of course is not capable of any

other construction, which on the face of it says that we are now going

to start trading off employees like we trade off hockey players,

without their consent or assent, without respect for the provisions of

the labour code, Bill 19, which this government introduced, and without

respect to the Verrin decision.

I see the Attorney-General

(Hon. B.R. Smith) is in the House, and I don't know to what extent he

counselled the government with respect to the provision of this

section. I trust he didn't, because the consequences, to use the

court's word, are grave. They represent a fundamental departure from

the law as it has stood to date in this country, this province and this

Commonwealth.

No law, no statute, no principle of common

law, no charter of rights will stand in the way of this government's

ideological fervour to achieve its privatization goals. That's what

this

section says. "We don't care what the law is. We don't care what

the courts say. We don't care what the principles that have governed

this type of society are all about. We want to proceed with a piece of

privatization." What's really astonishing when you look at this piece

of legislation is that they really don't even know what they want to

proceed with. Because of the ideological, right-wing, radical fervour

of this Premier, we're now seeing the government saying: "We're not

even going to wait until the Court of Appeal comes down with its

decision."

The arguments the government, I'm sure, will put

forward in support of this piece of legislation, this section, are not

going to be new, because a lot of what one would expect the government

to have raised was raised during the course of the Verrin case. For

example, I'm going to quote from the decision again, on page 15 where

the judge says:

"Counsel for the government

submitted that an employee involved in the transfer of a business has

an option: either he becomes an employee of the new owner, or he can

quit. I do not accept this as a real choice. Quitting means both loss

of job and loss of rights under the collective agreement. Seniority

rights are gone, severance pay has gone, and so has the job that

provides support for the worker and the worker's family."

It's

not as simple as saying that if you've been playing second base for the

Montreal Expos for 15 years and they trade you to the New York Yankees

and you don't want to play for the Yankees, you can just quit. That

might be true in sports, but it's not true in the reality of the

workplace out there, and the court said that very clearly in the Verrin

decision.

It went on from that, and I want to quote again

what the court decision had to say: "Counsel for the government argued

that an

interpretation of

section 53" — which, by the way, is the

section that dealt with successor rights —

"that would allow the employees to say yes or no to being bound by a

contract to work for the purchaser would interfere with the owner's

right to sell his business." I want to pause there just to point out

what the government was saying in court. They were saying: "Look. We're

entitled as employers to sell our business. Anybody is entitled to sell

their business, and if the employees don't go with the business, then

what's the value in selling the business?" And the court went on to

say — and I quote: "It was argued that the right to sell would be

hollow unless the purchaser was assured of getting the employees to

operate the business. There is, I think, an unspoken premise to this

argument. It is the assumption that at common law, apart from

section

53, employees could be obliged, without their consent, to work for the

purchaser of a business. That premise, in my opinion, is not

correct...." And he cites Nokes v. Doncaster, which is a case I just

referred to. "It follows that interpreting

section 53 as preserving the

employee's right to choose the employer whom he will serve is no more

an impediment on the owner's right to sell its business than it was at

common law."

What the court is saying there, Mr. Speaker,

is that that was an impediment all along. That was always a risk that

the prospective purchaser had to contemplate when deciding to acquire a

particular business. And that was taken into account during the course

of negotiations as part of the price for the transfer of the collective

agreement. But this government is not prepared to do that. It's not

prepared to take the same risks that apply to the private sector. It's

not prepared to embrace the same risks that everybody else has to put

up with when they sell their business. No, it wants to eliminate the

risks altogether.

That's

not the way it has been. That's

not what the law has been. That's not what the law has said in the

past. Back in March — and I don't have the quote here from the

Premier, but I recollect it because it was said in this House —

I asked the Premier whether or not the government intended to live up

to the Verrin decision, and I'll quote him: "Mr. Speaker, this

government always obeys the law."

[3:00]

MR. REE : Hear, hear!

MR. SIHOTA :

The member says "hear, hear!" I think the member has been deaf to the

comments that I have been making during the course of this debate.

its own volition, the government has chosen to ignore the law and to

substitute for it its own law. It has chosen to say that the law as it

stood on January 18, 1988, the law from which the government appealed

to the Court of Appeal in May, the law which has served this country

since the turn of the century and served the Commonwealth before that,

will

[ Page 5407 ]

now

be substituted for the law of the Premier. It's not surprising when you

consider all of those dictatorial aspects that flood to mind when

dealing with this government — about having its own way, about

doing its own thing, about not paying any attention to what other

people have to say, about all the falsities that flowed from promises

of open government, all the falsities that flowed from the so-called

fresh start; the breach of faith that British Columbians face and

feel.... That's why we have the second member for Boundary-Similkameen

(Mr. Barlee) here, because people in this province felt that breach of

faith; recognized the fact that this was a government that imposed its

own agenda on the people of British Columbia. And here we have a

manifestation of the imposition of that agenda in the form of these

provisions which are tucked away ever so carefully into the provisions

of Bill 45.

We on this side of the House say that's not

right. We say it's not right that the government would on one hand try

to show its respect for the law by arguing these things in front of the

Supreme Court, arguing them again in the Court of Appeal, and then on

the other hand, before any decisions are made, turn around and

substitute its own laws. We say that's not right.

But more

importantly than that, Mr. Speaker, we say that it is not right that

employers can tell employees where to go. We on this side of the House

say that as a society we have come a long way from the relationship of

master-servant. We have set up in this country and in this province a

form of collective bargaining. We in this province and in this country

have set up a system of rights and freedoms that accrue to people,

rights and freedoms that are not designed to be abused but are there as

shields to protect people when that protection is deemed necessary. We

on this side of the House say that that type of protection is necessary

now. It's necessary now because this government is now proceeding in a

direction which is not consistent with our democratic traditions and

the freedoms that come with those traditions. We say....

MR. PETERSON : What a bunch of baloney! That's not true.

MR. SIHOTA :

Well, okay. I'm quite prepared to argue this with the second member for

Langley (Mr. Peterson). If the second member for Langley....

MR. PETERSON : Hysteria — the whole works again. Just irrational.

MR. SIHOTA :

I want the second member for Langley to listen to this. I want him to

listen to what the court had to say. Again, I'll put it on the record:

"One of the...fundamental rights we possess as free people is to choose

the employer for whom we will work. The importance of this is

self-evident. Most working people occupy at least half their waking

hours in their employment. A law which requires a person to be

contractually bound to an employer not of his choosing is directly

contrary to this basic freedom of choice."

Those are not my words, Mr. Second Member. Those are not the words of some

academic writing about the Charter of Rights. Those are the words of a judge

of this province who, when looking at the government's privatization initiatives

in the Verrin decision, uttered those words which became the foundation of the

decision. I'm saying that when the government says in its bill: "On

the transfer date set by an order under subsection (1), the transferred employees

identified in the order cease to be employees of the authority...."

The

government is recognizing what the court had to say in Verrin, and now

it's substituting its own law for it. It's not a scare tactic from our

side. It's a request that this government do what the Premier said he

would do, which is to obey and respect the law, instead of substituting

its own will and agenda on the people of British Columbia.

It's

not a scare tactic. Sure. it's scary to those employees working for the

gas division in Victoria. It's scary to them, and it ought to be. It

ought to be scary to the people in this province who see how

government, through the imposition of these types of provisions,

proceeds to force its own will on top of existing law.

the second member for Langley thinks somehow that is worthy of

applause, I would be shocked if he says that. If he hasn't heard, I'll

quote what Lord Atkin had to say in a turn of the century decision. I

quote again because he didn't hear this earlier on: "I had fancied that

ingrained in the personal status of a citizen under our laws was a

right to choose for himself whom he would serve, and that this right of

choice constituted the main difference between a servant and a serf."

Again,

those aren't my words. Those aren't the words of some academic. Those

were the words of one of the lords of the House of Lords in Britain

when they were looking at a case identical to this situation. where a

company chose to sell off or spin off one of its components to another

party. The courts have held since the turn of the century that you

can't do that. Now we have this

section in Bill 45.

I've

indicated that I find that unacceptable, and that all of us on this

side of the House find it unacceptable. It is one of the reasons why we

will be voting against this legislation. We intend to ask some fairly

pointed questions to the minister as we get into committee stage on

this legislation with respect to this section. It flies in the face of

what the Premier had to say when he assured me in this House that the

government would respect the law as it relates to Verrin and not try to

do an end run around it.

I say in

summary — because I see my time is up —

that this is not only contemptible to the process of law that we have

established in this province, but more importantly, it is the taking

away of the rights of individual workers with little thought on the

part of the government — that's obvious. We just find that objectionable.

DEPUTY SPEAKER : Hon. members are advised that pursuant to standing order 42, the minister closes debate.

HON. MR. DAVIS :

Mr. Speaker. I simply want to cover a few points in closing second

reading debate. Essentially they are that Bill 45 provides the

Lieutenant-Governor- in-Council with wide powers to make orders or

regulations relating to the privatization of only the mainland gas

operation, Victoria Gas, rail, and the research and development

business of B.C. Hydro.

It also identifies many areas where

the Lieutenant-Governor-in-Council is to make such orders or

regulations as will allow Hydro to: (1) transfer assets to a subsidiary

or intermediary company in which the government, Hydro or both are to

be the only shareholders, without being in breach of the Utilities

Commission Act or the Gas Utility Act; (2) transfer listed employees to

a subsidiary or intermediary company; (3) transfer assets and employees

from an intermediary to a

[ Page 5408 ]

private

sector owner or successor company while maintaining their pay,

seniority, fringe benefits, etc.; (4) place employees not transferred

but impacted by the transfer of assets and employees in other jobs in

Hydro; and (5) accept transferred employees back into Hydro vacancies,

if they are successful applicants, within 12 months of the transfer

date. In other words, the employees — or at least, the majority of employees —

do have a choice. They are not automatically and inevitably transferred

into the private sector as a result of this privatization, as the hon.

member opposite was endeavouring to infer.

The hon. member

says that he and his party are not endeavouring in engage in scare

tactics. I think the main scare tactic employed during this debate was

employed by members of the opposition. The scare tactic was that all of

B.C. Hydro was for sale, including the massive electric division, which

is 94 percent of the total operation. Proof that this is not the case

exists in the legislation itself, where there is no reference

whatsoever to electricity, the electric division, power plants, power

transmission lines, power distribution and so on.

It's

interesting that the hon. second member for Vancouver East (Mr. Clark),

who has been the recipient of all the papers issued to the companies

that expressed interest in privatization, and all the papers

subsequently issued to the short listed companies, made no reference to

the fact that there was no indication that the electric division was to

be privatized. But as I recall, he was at a two-day conference the week

previous to his submission to this House that the electric division was

for sale, in which the chairman and chief executive officer of Hydro

repeatedly talked about its expansion plans under its present public

ownership guise; and I repeatedly stated what the continuing and

ongoing role of the electric division was. Yet he came into this House

a few days later, having heard what had been said in public in front of

all of the senior staff of Hydro and all of the private sector people

who may or may not have been interested in any private operations on

the electricity side, and stated that this bill is an ill-disguised

attempt to sell our water to the United States, to sell off power dams,

to sell off everything, to use his words, "but the wires" — whatever that means.

I'd say that the scare tactics are confined almost exclusively to the

opposition side, and I wish they'd focus on what really is in the

legislation, get down to the issues and pass this bill. I now move

second reading.

[3:15]

Motion approved on the following division:

YEAS - 30

Brummet

Savage

L. Hanson

Reid

Dueck

Richmond

Parker

Michael

Pelton

Loenen

De Jong

Rabbitt

Long

McCarthy

S. Hagen

Strachan

B.R. Smith

Couvelier

Davis

Johnston

Weisgerber

Chalmers

Mowat

Ree

Bruce

Vant

Peterson

Huberts

Davidson

S.D. Smith

NAYS - 18

G. Hanson

Barnes

Marzari

Rose

Harcourt

Boone

Gabelmann

Blencoe

Edwards

Barlee

Guno

Smallwood

Lovick

Sihota

A. Hagen

Jones

Cashore

Clark

HON. MR. STRACHAN : Mr. Speaker, I ask leave to refer Bill 45 to a Committee

of the Whole House later today.

Leave granted.

Bill 45, Hydro and Power Authority

Privatization Act, read a second time and referred to a Committee of

the Whole House for consideration later today.

HON. MR. STRACHAN : Second reading of Bill 46, Mr. Speaker.

UTILITIES COMMISSION AMENDMENT ACT, 1988

HON. MR. DAVIS :

Bill 46 increases the powers of the British Columbia Utilities

Commission. Its principal function is to regulate the activities of

monopolies, particularly those incorporated provincially which produce,

transport and sell energy; more particularly those in the electricity

supply business and in the production and transportation of natural gas.

The

definition of regulated projects has expanded to include high-voltage

transmission lines, which were previously excluded. It requires in

future that an energy project certificate be required both to construct

and to operate a regulated project. Two certificates are required at

different stages in the development of a new project: one for

construction, another for operation.

It states clearly, as

a result of these amendments, which persons are excluded from

regulation. The exclusion is now clearly limited to persons who produce

power primarily for their own purposes. Otherwise, if electricity

and/or gas is sold to any number of customers, the operation is

automatically regulated.

It provides not only for the

wheeling of natural gas by B.C. Hydro or other owners and operators of

large-diameter gas pipelines, but also for the wheeling or

transportation of electricity in high-voltage lines by B.C. Hydro,

Inland Natural Gas and others engaged in that line of activity.

Finally,

it requires that anyone who is buying energy from a second party for

transmission and redistribution to a number of customers in the

province must not only file a copy of the purchase contract with the

commission but also have that supply contract approved by the

commission.

In other words, the powers of the Utilities

Commission, which is responsible for the regulation of energy

monopolies, are expanded in particular areas, from the construction of

new projects through to the purchase of energy from other suppliers and

the commissioning of plant. I move that the bill now be read a second

time.

MR. CLARK : I won't be too long on this bill. I see the second member for Kamloops (Mr. S.D. Smith) is appreciative of that.

[ Page 5409 ]

want to talk a little bit about some of the things that are to be

commended in the bill, but also about some of the concerns I have.

There are many things to commend in this bill. It promotes cogeneration

and small projects. We on this side of the House have long believed

that there is tremendous potential particularly in cogeneration. Pulp

mills, for example, and other industrial companies can generate surplus

power, and Hydro has always been the block in terms of buying back that

power. If we did that and promoted it in a significant way, we could

create significant amounts of energy. That, of course, delays the need

for megaprojects and the costly overbuilding by B.C. Hydro that we've

seen in the past. Megaprojects in the order of $3 billion or $4 billion

are incredibly expensive; the interest on those projects is very

expensive for the taxpayer of British Columbia. It makes more sense to

have a multiplicity of small private power production, using surplus

power generated in the industrial process itself.

So we

support the thrust of this bill. We also support the move towards small

hydro projects, run-of-the-river projects that we've seen sprout up

around the province which are very environmentally sensitive and which

can create at least small amounts of power and feed back into the

system again to delay major power projects. It does make sense, and I

know B.C. Hydro's moving to try to eliminate or reduce the need for

diesel-generating facilities. Any time we can substitute a more

efficient use of power through private generation for those expensive

forms of energy, it makes sense.

I want to talk briefly

about some of the problems I have. The problem really is not in this

bill but with the energy policy which seems to be coming together with

the government and how this bill fits in with that energy policy.

the wrap-up of that bill, the minister said — and he's quite

correct —

that the government has not mentioned selling off the hydroelectric

system, except in the Thorne Ernst and Whinney report and a few other

privatization reports; but it has not publicly discussed that option.

The problem I have, and that I had when I debated this bill — and

I think the minister, to some extent, agreed with me —

is that it enabled the privatization of certain assets of B.C. Hydro,

including hydroelectric dams. I'm fully aware that there would no doubt

be some other mechanisms required, but it seems to me that it paved the

way for some of that component to be privatized. I still think that may

be the case, and we'll be discussing that more in committee stage later

this evening.

When you look at selling the existing assets

of B.C. Hydro privately and then through this bill allowing or

requiring Hydro to wield that power, it causes me some concern. But

more importantly now, perhaps, because of the amendment the minister

has moved — I hope he might agree to further amendments later on —

I have some concerns with respect to the export agency. We will also be

discussing that in estimates, but I'd like the minister to maybe

respond in wrapping up debate on this later on this afternoon, because

it seems to me that this bill we have before us with respect to private

power generation paves the way for large-scale exports of power through

B.C. Hydro.

When the minister discussed exporting

electricity from British Columbia, he first talked about using private

sector power generation — a free and deregulated marketplace. I

understand some of the logic of that, because what it says is that a

private company is risking its own private capital, and it has to go

down to the United States and market the power itself. Hydro would then

be required to wield that power down to the United States. I have many

concerns about that type of policy, but I understand it. I won't

discuss those concerns now, because the minister has already moved to

deal with some obvious ones.

[3:30]

The

minister has stated that the government is going to create a monopoly

power export company, probably a subsidiary of B.C. Hydro. At first

blush I agree with that. It's the one-window approach. It means that

Hydro, which has the marketing expertise, will in fact buy and sell all

power in British Columbia, whether domestically or through the export

agency. The problem is that I can see potentially the worst of all

worlds with this bill: that is, government intervention essentially to

subsidize power exports. The minister has stated in the past that he's

concerned about that. but I see nothing in the bill that really comes

to grips with that problem.

Here's what I see happening.

Let's get some hypothetical numbers. Say B.C. Hydro's average cost of

power is 3.5 cents per kilowatt-hour. New thermal generation facilities

that the minister has touted repeatedly and the government has talked

about....

Just to digress a minute, the minister talked

about a conference on energy conservation that I attended. The evidence

was quite clear in the United States that thermal power is the most

expensive source of new generating facilities possible, particularly

coal-fired thermal power. I see the member for Prince George South

(Hon. Mr. Strachan) here; they've just talked about wood waste. There

are some interesting possibilities there, and I can support the

government's move in that direction. I think there are some really

interesting possibilities there. This bill helps facilitate those kinds

of projects, so I appreciate that.

But I think that with

respect to coal, certainly the numbers in the United States are quite

enormous. It's very expensive power. What I see happening, and what I

fear will happen with the government, is.... If we take the average

cost of power — say it's 3.5 cents a kilowatt-hour — and then

say that the new thermal plant can produce power for 10 cents a

kilowatt-hour, and say that the market in the United States — say California —

is 6 cents a kilowatt-hour.... What I see happening under a deregulated

environment is....You'd say to the private thermal company: "You

produce the power. If you can produce it competitively and sell it in

the United States, go to it." Hydro would have to wield that power;

that's a fully deregulated marketplace. So you'd have to produce it at

something less than 6 cents an hour to be able to sell it in the United

States.

What I see happening with this new one-window approach and this bill is Hydro

buying that power at 10 cents or whatever a kilowatt hour and feeding it in

to its average cost — that would raise our average cost marginally from, say,

3.5 cents to 3.6 cents — and then selling it to the United States at 7 cents

and claiming a profit. The minister knows that would be a hidden subsidy from

British Columbia for export, because instead of using marginal cost and selling

it, trying to be competitive at the margin and allowing that to be exported,

there would be tremendous pressure to blend the price and sell it at average

cost. I would have a great deal of concern about that, and I know that the minister

has in the past talked about some concern with that.

What I see happening with energy policy in British Columbia.... Because

Hydro will now be buying all private power and then selling essentially through

the subsidiary

[ Page 5410 ]

otherwise to the United States, and the power is then backed up by the

entire B.C. Hydro system, Hydro will be costing that power not at the

margin, but at average cost. What that means — and this is what I'm completely opposed to —

is that it would be a subsidy by domestic consumers essentially for air

conditioners in California, to be a bit glib about it. With this bill,

with power export companies and with B.C. Hydro's initiatives, I can

see quite a significant increase of private power generation coming

on-stream if Hydro buys that power and then blends it with the cheap

Hydro electricity that we have today. I don't want that to happen. I

think there's some real problems with that. I fear there will be

tremendous political pressure to do that.

In the United

States, where they have promoted cogeneration and private power,

alternative sources of power, they've had some problems. In California,

for example, the California energy commission required the utilities to

buy all co-generated power. Subsequently they paid extremely high

prices for that power, but then blended it in and made it an average

price. It has caused a great deal of economic inefficiency in

California.

I think there is a tremendous potential in

British Columbia for cogeneration, but if the government is going to

pay fully avoided or marginal costs for that power, that will generate

a lot of activity in the private sector. If it's trying to wield that

power in the United States, I don't think it will be competitive in the

California market, at least at this point, unless it's blended with our

cheap hydroelectricity. That's why I think this bill, although it has

many things to commend it, also paves the way for, not an explosion,

but a significant degree of private sector power just for export, using

essentially a hidden subsidy through the public sector hydroelectric

dams. That's where I have a great deal of concern, and I can see that

coming in terms of where the policy is moving.

When I look

at this bill in isolation, I see a great deal to commend it, but when I

look at it in tandem with the other kinds of moves the government is

making, I think there's some cause for concern. Although I think the

minister has said in the past that he's against that, I have some

concern that that won't be the case in the future, given the way the

policy is developing in British Columbia. We can maybe get into that

more in estimates; I'll leave it now with respect to this bill.

MS. EDWARDS :

I want to begin by talking about what I see as a good aspect of this

particular bill and to echo the remarks of the second member for

Vancouver East, who has applauded the bill's encouragement of small

power production and cogeneration. Private power generation can be

highly cost-effective, and the province is now into the legislation

that will allow small private power generators to sell their power into

a grid and therefore be able to produce very small amounts, to have a

more efficient operation of the power that they have been doing for

other reasons, or even to be able to get into small power generation,

which can be highly environmentally acceptable — far more

acceptable than some of the megaprojects — and which is also

broadly based.

I have been reading a publication called The Private Power Option for Canada .

The minister will know what that publication is. Of course, one of the

companies that sponsored that report is from my own riding: McDonald

Ranch and Lumber Ltd. of Grasmere. I can use that company as an example

of why I'm applauding this part of the bill because it was used within

the report. This operator, the McDonalds, had already done a minor

hydro-generation plant and wanted to do another one and had Energy,

Mines and Petroleum Resources come in and do a study for the next small

dam that they wanted to do on the creek on their property. The

government study told them that in order to produce 400 kilowatts of

power, it would cost them $870,000. The Mcdonalds are the type of

people who (

a) can't afford $870,000 and (

b) don't believe that's

probably the way it is, so they went out and used refurbished material,

local labour and engineering and produced in 1984 the same plant for

$90,000.

That's the kind of thing that can happen with

small power generators, and we should be encouraging it as much as we

can. We have some examples from the U.S. that show that it is a good

idea. In 1986 U.S. private power producers had financed or contracted

for 16,000 megawatts of new electric generating capacity since the

changes in policy in the U.S. I think that's very good and I am pleased

that we are following it up.

As for the whole of Canada — and I don't have anything particularly for B.C.; perhaps the minister does —

in the next five years the report predicts that private power could

generate more than $5 billion worth of investment and create 50,000

regionally dispersed jobs, which is not so bad. It's a lot of

investment; it's a fairly expensive job generator, but it's better than

some of the megaprojects that we have seen.

However, I also

wanted to mention some of the problems that I see with this

legislation, and because my colleague has mentioned the possibilities

under this bill for the exporting of power, I won't touch on that

again. But I think there are a couple of things that need to be

mentioned. The fact is that this bill allows a considerable amount of

discretion, particularly to the minister,

whereas in fact the small

power producers have asked for firm, clear and understandable standards

for everyone who produces power on a small scale. Under this bill there

is a whole lot of discretion allowed and many of the small power

producers can be exempted or dealt with individually.

think that since we are dealing with a policy which is going to

encourage a considerable amount of small power producers to be

generating electricity, there will be far more than the minister's

office is going to be able to deal with on an individual basis. I

suggest that means that there is going to have to be some very clear

and understandable — accessible, if you like — standards laid

out, and I am not sure why this bill doesn't do that. So in principle I

am against the discretionary nature of the bill. It should have laid

out how some of the standards are going to be dealt with.

Another

of the problems I see with this bill is the fees. The minister was

talking about the commission being able to...there are new rules for

the commission generating its own expenses. In doing so, the commission

has almost carte blanche to decide who pays what amount of fees. An

amount can be set for different persons for different situations. The

fees can be different and exemptions can be decided on the same basis.

But strangely enough, even with all of this and this talk about what is

in the public interest — which is a key phrase in the legislation — we still end up with no funding for interveners.

Frequently

the public interest requires that we have groups of people who

represent broad bases of interest within a community and who should be

able to come to these hearings and be funded in order to do the

research that allows

[ Page 5411 ]

them

to make proper presentations to this commission. I object very strongly

to the fact that that is not allowed in this particular bill, even

though there is a considerable amount of discretion about the

fee-setting otherwise. I urge the minister to look at that aspect of

it, and I would certainly urge him most strongly to recognize that if

the public interest is of such great importance, then he should allow

the funding that would permit interveners to have that support and make

an intelligent presentation.

[3:45]

HON. MR. DAVIS :

First, I would like to address a concern expressed by the member from

Vancouver East about the export of electricity. British Columbia to

date has never exported electricity on a long-term basis. It has for

several decades exported surplus capacity when there was a market in

the United States, or indeed when B.C. Hydro and before it B.C.

Electric has a surplus. There are occasions when the Americans don't

need any power at all, but in recent years they've taken modest amounts

in some years and very large amounts in others.

An argument

has been made for always having some excess capacity in British

Columbia because the excess or the surplus could be sold on a

short-term basis if our own needs didn't rise as rapidly as had been

forecast. It's been more a fail-safe system of selling short term.

There's been a lot of talk, particularly in the last decade, of

long-term sales in the United States. The opportunity still hasn't

really arisen for long-term sales to be made. It will arise, I am

reasonably confident, in the 1990s or certainly after the year 2000.

Unlike

the situation in eastern Canada and in the Midwest, the price of

electricity immediately south of British Columbia has in general been

less than the average price in British Columbia. It's very difficult to

export into an area where the price is less than your average cost.

Those circumstances are changing; average cost in the U.S. Pacific

Northwest today is roughly comparable, roughly equal to B.C. Hydro's

average cost and is rising rapidly. If ever they begin to pay off the

cost of incomplete nuclear power plants in the northwest, the rates in

the U.S. will be well above ours, and then the opportunity genuinely

does exist, at least on a price basis.

Naturally, utilities

in the United States build their own capacity if they can, so there's

not necessarily a market in California. Generally speaking, new power

plants use oil or natural gas. The nuclear alternative now seems to

have been precluded. Power from those sources is more expensive,

certainly, than average costs in Canada. So long-term, there should be

an opportunity to export.

The

export opportunity, I think,

however, should be as much as possible separated from the service to

British Columbians. The service in B.C. — largely provided by B.C.

Hydro, but also to a lesser extent by West Kootenay Power and

others —

is a monopoly-type service and must be regulated, and rates, generally

speaking, are equal to average cost. In no way should we include in

average costs new plants, which may be more expensive, particularly if

they are built substantially to serve an export market. An export

agency, I think, is desirable. It will begin its life this summer as a

subsidiary of B.C. Hydro, simply because Hydro has the personnel and

the expertise to do that kind of work without adding unduly to

personnel.

In the longer term, I think that agency should

not be seen as a child or a part of Hydro. It should deal with

long-term export opportunities. The reason for creating an

agency — a single marketing desk, if I can describe it that

way —

is merely to drive a good bargain in the U.S.A. and not have competing

B.C. or Canadian projects vying with each other on the U.S. side of the

line. We sell from strength, in other words.

That agency

would first have to have obtained firm markets of firm contractual

commitment to an income flow, and then would turn around and call for

tenders in British Columbia. There will be a variety of expressions of

interest. I suppose the majority would be private. It's conceivable

that Hydro itself might put forward a project which is seen to be

surplus for at least several decades to B.C.'s own needs. but is put

forward as a non-regulated project — certainly not regulated in

its service to British Columbians, but simply a project which can make

a profit.

This

single-desk agency would have to see a larger income from sales than

the costs on the Canadian side. In other words, that operation would

have to be profitable.

MR. CLARK : The margin cost?

HON. MR. DAVIS :

There would have to be a distinct difference between the income side

and the cost side. There would have to be a margin which was the profit

from the export sale, and the totality of that operation would be

external to any regulated service to British Columbians.

Manitoba

Hydro and Hydro-Quebec have engaged in export operations. However, they

have not distinguished between plants established for internal use of

power and export operations, and I think that distinction is important.

Long-term export sale, if and when it occurs, should be in the private

sector, but certainly not in the area of regulation aimed at protecting

British Columbians as consumers. Clearly the utility serving British

Columbians must always have access to the least-cost sites.

Along

the lines of the comments from the member from the Kootenays, yes,

Hydro is overbuilt. Yes. Hydro can buy surplus energy from pulp mills

and sawmills with wood waste, which can generate admittedly modest

amounts of energy at relatively low cost. It will give priority to

cogeneration and also to demand management, which creates excess

capacity simply by reducing the amount of power that existing users use

and by using better equipment or better procedures.

Finally,

Hydro's largest single source of new power, at least for the next

decade, are cooperative arrangements with Alcan, whose costs are about

a third of Hydro's, and with Transalta in Alberta, whose costs are

lower than ours, believe it or not, and whose thermal power plants will

tend to complement our hydro facilities. We have an ability to store

energy; they do not. So cooperative arrangements with Alberta, was

private power in B.C. and with the big Bonneville Power Administration

in the United States can create a lot of capacity at virtually no cost

to British Columbia consumers. Those savings must show up in reduced

rates or rates at present levels for several decades, hopefully, and

will not only benefit B.C. consumers but encourage industrial

development activity here.

the regulated segment will be

the monopolistic activities in the province. Non-regulated presumably

relates to either servicing a new industry — not an existing one

but a new industry in the province — or the export market. But

again, I don't expect to see the export market emerge for a couple of

years at the earliest.

[ Page 5412 ]

Back

to the bill. The final clause deals with the ability of the commission

to recover its costs from those who call on the commission's services.

In other words, if Inland Natural Gas wants to increase its rates, it

will have to pay for all the costs involved in the rate hearings. This

doesn't impact very heavily on small producers, because the system,

which is laid out and will be implemented in July or August, is on a

permit basis. Hydro will pay 85 percent of the cost of the operations

of the Utilities Commission simply because it handles 85 percent of the

energy. Units of energy will determine the tax or the bill paid by the

regulated concerns, and if a small hydro development comes on line

selling to Hydro or otherwise, it will pay a fraction of 1 percent of

the cost of operating the commission, because its output is so small

compared to the total amount of energy falling under the Utilities

Commission's jurisdiction.

I know that hon. members will

want more information. That will undoubtedly be, forthcoming when we

get to the clause-by-clause stage. Mr. Speaker, I move second reading.

Motion approved on division.

HON. MR. STRACHAN : Mr. Speaker, I ask leave to refer Bill 46 to a Committee of the Whole House to be considered later today.

Leave granted.

Bill

46, Utilities Commission Amendment Act, 1988, read a second time and

referred to a Committee of the Whole House for consideration later

today.

HON. MR. STRACHAN : Mr. Speaker, I call second reading of Bill 58.

MINERAL TENURE AMENDMENT ACT, 1988

HON. MR. DAVIS :

Mr. Speaker, the Mineral Tenure Amendment Act, Bill 58, tidies up some

oversights, some drafting problems which we had with the extensive

legislation passed earlier this year — that is, at the tail-end of

the last sitting of the Legislature. I'll run quickly through these

changes. They are specific; they don't impact on the general tenor of

the bill. Among other things, they simply clarify

definitions; expand

provisions for resolving disputes — that is, mediation —

concerning title for minerals; ensure that existing regulations

establishing a mineral reserve also apply to placer minerals; clarify

provisions for bringing other than metals under the Mineral Tenure Act;

and otherwise clarify that mineral substances are subject to the Mining

Tax Act.

I'd call it a housekeeping bill, but since it

relates to one piece of legislation and runs to several pages, it's

dealt with as a separate bill currently.

MR. GUNO :

In looking at this bill, we agree that there is really nothing

contentious here, that it is indeed a housekeeping bill which clarifies

some of the points in Bill 66. We do have some questions, however, that

will come up in committee stage.

MR. SPEAKER : Pursuant to standing orders, I advise the House that the minister closes debate.

HON. MR. DAVIS : Mr. Speaker, I move second reading of the bill.

Motion approved.

HON. MR. DAVIS : Mr. Speaker, I ask leave to refer Bill 58 to a Committee of the Whole House to be considered later today.

Leave granted.

Bill

58, Mineral Tenure Amendment Act, 1988, read a second time and referred

to a Committee of the Whole House for consideration later today.

[4:00]

HON. MR. STRACHAN : Committee on Bill 36, Mr. Speaker.

MISCELLANEOUS STATUTES

AMENDMENT ACT (No. 1), 1988

The House in committee on Bill 36; Mr. Pelton in the chair.

HON. MR. STRACHAN :

Mr. Chairman, with the committee's indulgence, first of all, I'll point

out a couple of items. Committee members will recall that on Friday we

had sort of a selective agenda in terms of dealing with this bill, and

passed sections indicated on our Orders of the Day .

We will be returning now to

section 1 of the bill. I think it's

appropriate — again, with the committee's indulgence — that

we wait until all the appropriate ministers are here. I'm advised that,

even as I speak, they are rushing to the assembly.

section 1.

HON. S. HAGEN :

Mr. Chairman, as a result of recent developments in the ongoing

discussions taking place between the recognized accounting groups, I

wish to withdraw the amendments to the Accountants (Management) Act in

section 1 of the Miscellaneous Statutes Amendment Act (No. 1), 1988.

This will allow those discussions to continue, and we will await the

outcome before proceeding further.

MR. CHAIRMAN : Shall

section 1 pass?

SOME HON. MEMBERS : No.

MR. SIHOTA :

I'm not going to let that pass without comment. If the minister wants

to make that comment, that's great. I take it that it's being stood

down. Have we already voted on it?

MR. CHAIRMAN : Yes, we voted on it.

MR. SIHOTA : I thought we couldn't vote until we spoke on it.

MR. CHAIRMAN : I called the vote. Go ahead and speak, hon. member.

MR. SIHOTA :

I'm glad to know the government is going to vote against this section.

I'm glad to see that the members opposite have finally come to their

senses on this matter. I'm sure that Mr. Caulfield, who is up there,

will appreciate this,

[ Page 5413 ]

well as Mary Pattison, the president of the Certified General

Accountants' Association of B.C. We look forward to the termination of

whatever discussions are taking place, so that there can be some

resolution outside the floor of this chamber on this matter. It's the

type of matter that I really don't think ought to be here in this

fashion.

In our view, more than anything else.... I think I

should put this on the record. I know there were a lot of concerns

expressed by the certified general accountants with respect to process,

the absence of consultation and the way in which all of this came up. I

trust now that, with the government's action being what it is, there

will be greater heed paid to the need to consult and allow for a

process to work itself out, so that all of these representative groups

are happy with whatever the eventual result is.

From a

process point of view, I think this is the proper thing to do. We're

pleased to see the government has now acquiesced to the concerns

expressed by us and by the accountants.

Section 1 negatived.

Section 2 approved.

Section 4 approved.

Sections 7 to 13 inclusive approved.

Sections 16 and 17 approved.

section 22.

MR. LOVICK :

My first query is: where is the Minister of Transportation and Highways

(Hon. Mr. Rogers)? I have a number of specific questions about this,

and I understand the Minister of Energy is going to ride herd on this

one. Is that the case?

MR. CHAIRMAN : That's correct.

MR. LOVICK :

Okay. I might start with just a simple question. I note that this

proposed amendment is justified on the basis of providing increased

flexibility to the ministry to utilize other contracting processes. We

ought to bear in mind that in this entire

section of the bill and in

the existing legislation we are talking about scrapping the process of

public tendering for contracts, which in itself is obviously an

aberration. Here we're talking about further flexibility in that

process.

My first question to the minister is: whose

initiative was this? Who is requesting this kind of change? Who is

asking for more flexibility? Where did this come from?

HON. MR. DAVIS :

The request for action essentially comes from within the ministry

itself. My understanding is that this amendment does not do away with

the call-for-tenders approach. It adds an option and permits the

minister, under certain circumstances, to do what other ministers are

already able to do under their legislation; that is, in an emergency or

when time is short, to make an intelligent decision, accepting what

staff recommends as the efficient solution to obtaining a contractor to

do a particular job.

The notes I have here say this

amendment adds a third exception. Public tender is not required in the

instance, "...where the minister determines that an alternative

contracting process will result in competitively established costs for

the performance of such work." The amendment further stipulates that in

such cases the name of the contractor is to be made available to the

public on request.

The purpose of this amendment is to

permit the use of more flexible request-for-proposals processes so that

the ministry can negotiate its contracts. The public tender process

precludes negotiations. For example, any changes in contract terms

after the call for tenders require a new call for tenders. This ability

to negotiate will reduce costs and allow contractors to present

innovative ways to do the job. So it is another route in addition to

the existing tender route. It provides flexibility and, in my reading

of it, allows the minister, on advice from officials, to choose a

contractor who may not necessarily have submitted the lowest bid but

who offers the greatest value for the money involved.

MR. LOVICK :

Well. I appreciate that lengthy and detailed response from the

minister. It's certainly good to get that information. I wonder,

however, if the focus is indeed supposed to be on an emergency

provision, which the minister led off with in his explanation. why we

don't stipulate and specify that in the legislation. Certainly, as you

know, the amendment to the legislation says nothing about particular

causes, Rather, it simply says: "...where the minister determines that

an alternative contracting process will result...." In other words,

there isn't that kind of specificity.

I began by asking

about where this proposed change came from, because my information is

that both the B.C. Construction Association and the British Columbia

Road Builders' Association have registered their concerns about this

particular measure. suggesting that they have not been consulted, that

they did not ask for it, and that they have some serious questions

about it. I wonder if the minister would care to respond to those two

points.

HON. MR. DAVIS : I would say, as a general

rule, that tenders would be called. I did say that this process would

be the exception rather than the rule. I do recall the minister saying

that other ministers have this opportunity — so why not

Transportation and Highways? An example might be useful. It's common,

I'm told by ministry officials, to be confronted with road

reconstruction over soft soils, They would need to relocate underground

utilities while accommodating high traffic volumes. Circumstances may

dictate that the road construction contract proceed before the design

of the utility relocations is complete. To subsequently tender for the

utility relocations would result in the second contractor working in

the same tight area as the road construction contractor. Work

coordination would be difficult and accommodation of traffic would be

likely to suffer.

In preference, the Ministry of

Transportation and Highways would request the road construction

contractor to make a proposal to carry out the utility relocations. If

acceptable, the one contractor could achieve work efficiencies,

reducing costs and construction time as well as minimizing disruption

to traffic. That is one example, I assume, of where this third option

might be called into effect.

MR. LOVICK : Again, I

appreciate the answer. It seems to me, however, that once again we're

confronted on the floor of the chamber with explanations that, at least

on the face of

[ Page 5414 ]

it,

seem to make some sense. The question, however, surely asserts itself:

why haven't we had that explanation in advance? Why hasn't that kind

of explanation been given to the interest groups most specifically and

directly affected by the measure — namely, those two associations I

referred to? Further, why have we not been somewhat more specific in

the particular measure that's before us? The amendment obviously allows

considerably more than that. It doesn't specify, and thus we have these

concerns, Mr. Minister — and I'm sure you can appreciate why that is

the case.

The proposal seems, on the face of it, to

represent a fairly radical and significant departure from the norm,

which is a process that, I might add, has served us rather well. I

recall, for example, that in all of MacKay's hearings and deliberations

there was never any argument with this particular: the old-fashioned

lump-sum price tender method of contracting. That didn't, as I recall

at least, come out.

Again, then, our concern is simply that

giving up the unit price tender system, or at least creating yet

another category where we can deviate from the unit price tender

system, is perhaps fraught with some peril, and may indeed cost us more

money. As I say, Mr. Minister, I think we aren't comfortable with this,

primarily because it appears to be the case that the legislation is

written in such a way that much more might be allowed than is actually

intended. I'm wondering if you'd care to respond.

HON. MR. DAVIS :

Further to the notes I have here, Transportation and Highways is the

only ministry having the rigid inflexibility requiring all works to go

to public tender. I want to emphasize, however, that the bulk of the

work will continue to go to public tender. This is simply to

accommodate certain circumstances.

The new process will

allow the ministry to negotiate with interested contractors, thus

improving efficiency and, in many instances, reducing costs. Most

importantly, it allows the bidder to present innovative ways of doing

the job. This will allow contractors to submit new concepts, leading to

improved construction methods.

The current public tender

process does not assure that best public value is obtained. If it's

believed that the low bid does not represent best value, the only

option at present is to reject all bids and retender. The new option

provides the ability to negotiate improvements in the contract.

The

new option modernizes the ministry's way of doing business. The

amendment stipulates that competitive value must be demonstrated. The

value of the contract and the name of the bidding contractor will be

publicly available on request. Adequate checks and balances will remain

in place. The initiative is designed to obtain the best long-term value

for the taxpayer.

MR. ROSE : I'd like to ask the

minister a question about this particular clause because he made much

of the case for flexibility, and his argument seemed to me to hang on

not just flexibility but also emergency. I wonder if he's aware of

section 49 — "Tenders" — of the Ministry of Transportation and Highways

Act. It says: "....(

a) in case of pressing emergency where delay

would be injurious to the public interest...." The provision for

emergency is already there, so I don't think the addition of a clause

(

c) is justified, despite what the minister had to say. I'm aware that

he's perhaps acting on behalf of someone else.

The other

thing is that some of us aren't really relieved very much by the

after-the-fact business of

section 4: "Yes, we'll give you this

contract, but we'll provide you with the details, upon request, after

the work is already done." That sounds a little bit like closing the

barn door — to coin a phrase — after the horse has escaped.

[4:15]

I think that to make it clear would be redundant. I would like to propose

the addition of the words "in cases of emergency." If there are other

cases, then I would like the minister to elucidate on what they might

be. Otherwise, I'd be prepared to move an amendment which will end up,

I freely admit, looking very much like

section (

a) when we're dealing

with

section (c).

HON. MR. DAVIS : I did indeed make

some reference to emergencies, or saving time — whatever. However, as

the hon. member says, that's probably already covered in the

legislation. So I don't think an amendment along those lines is really

pertinent. In the notes that I reviewed, there was also reference to

the ability to continue to negotiate with tendering companies to try

and improve their bid or make their bid more approximate the actual

public need under the circumstances at the time. Maybe "emergency"

isn't so much the word; it's more the expedient way of getting better

value for dollars spent by the public.

MR. ROSE : Two

things occur to me here. The first one would be that you get bids or

tenders and you're not satisfied with them, so you go back and try to

wring the boys out a little further. That sounds like part of the aim

here.

The other possibility would be to stand the clause

until the minister responsible is back, to see why he really wants

this. It doesn't appear to have been justified on any great basis,

because clauses (

a) and (

b) seem to give the minister all kinds of

freedom, except perhaps to renegotiate tenders. I don't know why he

wouldn't have that anyway. I would propose, if the minister agrees,

that we stand the clause until the real minister shows up here to give

us a little bit more information about why this thing is desperately

needed.

HON. MR. DAVIS : I can only repeat that the

minister said that all the other ministers have a clause like this, and

he wants one. I'm sure it came to his attention as a result of

recommendations from the ministry staff, who are concerned about doing

the job quickly and at least cost to the public.

MR. ROSE :

I would request that the clause be stood until we can get an adequate

explanation from the ministry staff. I see no reason why the House

couldn't have that kind of explanation from the staff or from the

minister, so we can have a little bit more information than we have now.

MR. CHAIRMAN :

If we can get agreement from both sides, standing order 84(2) provides

for postponement of a clause such as this. Are we agreed?

SOME HON. MEMBERS : Agreed.

Sections 26 to 28 inclusive approved.

Section 34 approved.

The House resumed; Mr. Speaker in the chair.

The committee, having reported progress, was granted leave to sit again.

[ Page 5415 ]

HON. MR. STRACHAN : Committee on Bill 52.

MISCELLANEOUS STATUTES

AMENDMENT ACT (No. 2), 1988

The House in committee on Bill 52; Mr. Rabbitt in the chair.

section 1.

MR. BLENCOE : I wonder if the minister could give me some background

section 1. From what I can gather, it has to do with storage tanks becoming

an assessable improvement. As we get into the details of the particular sections

of the Miscellaneous Statutes Amendment Act (No. 2), I wonder if the minister

could start by giving some explanation of this section.

HON. MR. COUVELIER :

I will. This amendment amends the definition of storage tanks. It's

designed to deal with an existing ambiguity in the definition of this

component of the tax base without imposing an additional tax burden on

owners of large tanks.

In the past, storage tanks have been

assessable and taxable, and process tanks have been exempt. This

distinction has become unclear and has led to lengthy legal disputes

about whether a particular tank is a storage tank or a process tank. In

order to clarify the situation, the government introduced amendments in

late '87 that changed the basis for distinguishing between taxable and

non-taxable tanks from storage process to size. The new rule made all

tanks with a capacity of more than 4,500 litres taxable. Since that

time, concerns have been expressed about the 4,500 litre figure. The

question is therefore being re-examined. This amendment reinstates the

previous storage process distinction for 1988 and provides for future

capacity base distinctions to be set by regulation.

Section 1 approved.

section 2.

MR. BLENCOE :

You can imagine that these assessment changes and new formula are

somewhat complicated. I've been trying to grapple with how this new

formula and assessment works, and at the best of times it is difficult

and complex. I don't profess to be an expert, and I'm sure the Minister

of Finance doesn't profess to be an expert.

I know there

have been some objections to Bill 67. I suspect that was the reason why

we didn't see the phase-in of the new formula, which many communities

had hoped to see. We support the new formula. There are some problems

with it. My understanding is that some portions of industry have not

been happy with Bill 67. I'm wondering if the minister could let the

House know of the discussions he has been having with industry and of

their concerns. Are we seeing some of these amendments as a result of

the lobby by industry to make changes?

HON. MR. COUVELIER : No, Mr. Chairman.

MS. EDWARDS :

You indicated to the municipal authorities from my area who are

impacted rather heavily by the fact that you are not going to have this

bill in place right away that they had better make representations

right away, and that if they did, you would be listening. I understand

they did: we all did, and you were not listening the way they thought

you had meant you were going to be listening. Would you please

elaborate on what your time-frame currently is? It is a matter of

considerable importance to these communities who are sitting waiting

for this new law to be put into effect.

HON. MR. COUVELIER :

The earlier question that I answered no to implied that we were being

whipped around by lobbyists for industry. The fact of the matter is

that both industry and municipalities were troubled by the imposition

of these rules in order to hit this taxation year. The problem was — as

I explained when I told the House many months ago that we would freeze

the initiation this year — that industry would have been compelled to

launch blanket appeals, because they would not have had the time to

look through the detailed assessment manuals in order to give

themselves comfort. That same criticism, to some extent, was made to us

by some municipalities, so it wasn't just an industry concern; it was a

concern expressed by all those people impacted by the change.

the suggestion that we have not listened, I would like to assure the

House that the reverse is true. By virtue of the representations made

to us, we agreed that we would give everyone more time to study the

detailed manuals. All of these assessment issues — as the hon. member

for Victoria said — are complicated, and we have in practice over the

years developed manuals so that the assessors and the people impacted

by the decisions have reference materials to set the rules, the

guidelines. By virtue of changing the approach we took on assessment

matters.... We had to rewrite all the manuals. It was a massive

task, a huge task, probably the largest task in a bureaucratic sense

that the ministry has ever undertaken. So I am pleased that the process

has gone as well as it has, and I am indebted to the staff for doing

the thorough job they have done on it.

Coming back to the

point made by the member for Victoria, may I just take the opportunity

of introducing to the House the assessment commissioner, Mr. Tom

Johnstone, who is available at any time to assist members in dealing

with the intricacies of their particular concerns. With that general

comment, I am happy, with Mr. Johnstone's assistance, to get into some

of the specifics. But the House should be assured that we have delayed

the implementation this year so that everyone affected feels

comfortable with the new manuals and the new rules.

MR. BLENCOE :

I appreciate the minister's comments and recognize that changes are

difficult, but I don't think they take as long as the minister says

they do. I don't think we need this long to study what basically, when

it comes down to it.... You know, we've got the experts and the

technical advisers. Local government certainly understands the new

formula and welcomed it and expected it to be brought in fairly fast. I

recognize that there may be a period of study, but I don't think it

requires virtually two years of delay before we get this. There are

communities — as my good colleague from the Kootenays said — that are

crying out for this legislation, and the minister has heard from them.

I suspect that what has happened, Mr. Chairman, is that the minister to

some degree is probably being whipsawed. I know that: I understand

that. But I suspect that industry has been successful in getting a

delay. A few months ago the minister

[ Page 5416 ]

suggested

that we should have a uniform industrial tax rate. I suspect that that

had something to do with an appeasing thought for industry in the

province. Who knows?

[4:30]

I would hope that we don't see any more delay. I find it unfortunate. I

think we could have had it before 1988, quite frankly. I know it may

have meant burning some midnight oil, but we've got the people

available to make the information available, and industry is quite

capable of understanding. Indeed, I think industry has understood that

we do have a fair system. They have taken a look at it, and that fair

system may impact on them somewhat. They are obviously looking to lobby

government to go the other way. I hope that's not entirely the case.

Can

the minister assure this House that for sure we are not going to have

any further delay after 1988? There might be some other situations that

arise: "Well, we'll put it off for another year or two."

HON. MR. COUVELIER :

I am delighted to give the House and the hon. member that comfort. This

will be in place in September of this year to be applicable to the next

taxation year.

Sections 2 to 4 inclusive approved.

section 5.

MR. BLENCOE :

Section (a), I believe, is housekeeping.

Section (b), the way I and

those who have done some very good research for this side of the House

see it, restricts the ability of the assessment appeal board to vary

assessments that are appealed on the cost-less-depreciation aspect of

the assessment. The board may now only apply the act to vary the

classification of property or the valuation of improvements that have

been returned to the assessment rolls as a result of Bill 67.

Am I correct that the board is not allowed to vary the costless-appreciation findings of the assessor?

HON. MR. COUVELIER : The only thing the board will hear this year is the classification issue.

MR. BLENCOE : Just this year?

HON. MR. COUVELIER : That's right.

MR. BLENCOE : What happens in subsequent years?

HON. MR. COUVELIER : This will be implemented then, so they will be able to hear all issues.

MR. BLENCOE :

Let's see if we can just get this on the record. Subsection (c) — I

used to have fun with this when I was chairman of finance for the city,

and I can see we're still having fun with this stuff — states that if a

person appeals assessments sent down in March 1988 and any

supplementary roll issued in order to replace any assessable

improvements that had been removed from the rolls, then whatever ruling

the board makes on the first appeal shall apply to both appeals. Am I

correct in that assessment, so to speak?

HON. MR. COUVELIER : That is correct.

Section 5 approved.

section 6.

MR. BLENCOE :

If an appeal — let me get this right — was launched before March 30,

1988, and no new appeal has been launched after the Assessment

Amendment Act was passed, then the board shall complete its decision on

that appeal. Correct?

HON. MR. COUVELIER : That's correct.

MR. BLENCOE :

That means then that if the appeal was launched before March '88 and an

appeal has been launched under the Assessment Amendment Act, then the

board shall merge both appeals. Is that what's going to happen? Those

appeals are going to be put together and there will be a decision for

both. Is that the intention of this?

HON. MR. COUVELIER : That's correct.

Section 6 approved.

section 7.

MR. SIHOTA : I just want the Attorney-General to tell us what the intention here is.

HON. B.R. SMITH :

I guess these amendments to the Commercial Arbitration Act could be

characterized in a general sense as trying to make commercial

arbitration more attractive and less inclined to be picked at by legal

application to the courts. We're doing this based on experience.

can deal with specific amendments if the hon. member wants. I'm not

sure which ones he wants, but looking at 7(a), for instance, that's a

lawyer's amendment. The act, when we passed it originally, was supposed

to codify the existing common law grounds for setting aside an

arbitration award, not expand them; but it was argued and put forward

that because we had said in the original act that such and such words

constitute misconduct — "and includes" — that may have actually

expanded the grounds for judicial review. To clarify that we hadn't

intended to expand the grounds for judicial review, we propose 7(a).

We did not want to expand the grounds for judicial review whatsoever.

We wanted to make arbitration less judicially intrusive and more

attractive to businessmen or to parties in a non-commercial transaction

who wanted to decide matters before a tribunal — even decide that that

tribunal could make errors in law. We think the amendment will have the

effect of clarifying that the grounds for setting aside an award have

not been expanded beyond those presently available at common law. At

the same time, we haven't taken away common-law grounds. So if you have

an error that's so fundamental that it goes to the jurisdiction of the

tribunal, then of course you can go to the court; or if you have a

fundamental denial of natural justice, of course you can go to the

court. We're not trying to take that away.

Section 7 approved.

section 8.

MR. SIHOTA :

Am I correct in that the intent here is to rewrite

section 2(

l) with

respect to its application and to provide a clearer definition of

situations in which the act

[ Page 5417 ]

applies?

What you've really done is to add 8 (c), which talks about "any other

arbitration agreement," and make it as wide as possible.

HON. B.R. SMITH :

Yes. The act was always intended to apply to all domestic arbitration,

in the non-matrimonial sense — I mean, domestic arbitration broadly;

that is, exempting labour and matrimonial matters. Most arbitrations do

arise out of commercial matters, but there are some noncommercial

matters that are not labour and not matrimonial. We just wanted to be

clear that you could arbitrate something other than a commercial

agreement; that it was something that could also be arbitrated, and it

wasn't labour and wasn't matrimonial. That's all we're doing:

clarifying that you can arbitrate more than a commercial agreement.

Another kind of agreement could be arbitrated too.

Sections 8 to 10 inclusive approved.

section 11.

MR. SIHOTA :

I may be lost a bit here. Just to get clarification from the Attorney,

is this the

section that takes away the Judicial Review Procedure Act,

or is that coming up later on? That's okay; I found it. Go ahead.

HON. B.R. SMITH :

Are you content with that? Do you see what we're doing there? We're

trying to make sure there isn't an expanded power on the part of the

court to stay legal proceedings in the place of an arbitration

agreement. We're enacting some of those sections in the International

Commercial Arbitration Act, which contains the court's power to stay

legal proceedings. But we're not departing from the original premise

that I set out earlier; that is, to try and make arbitration more

certain.

Sections 11 to 15 inclusive approved.

section 16.

MR. SIHOTA :

This is the one I was thinking of earlier on. I'm sorry I got all of

these numbers mixed up. I'm just wondering why you decided to put in

31.1 here to prevent an application under the Judicial Review

Procedure Act. I'm not too sure what the policy reasoning for that is.

I'd appreciate an explanation from the minister.

HON. B.R. SMITH :

This

section simply clarifies that a judicial review of domestic

arbitration proceedings is allowed only to the extent provided in this

act. So the full ambit of the Judicial Review Procedure Act is excluded

from arbitration, except insofar as it's consistent with this act. I

think you would have to do that. You would not attract arbitration if

it was expressly on the provisions of the Judicial Review Procedure

Act, although many of the procedures in here are similar. You could not

treat all consensual arbitrations on the same basis as you would an

award of a statutory tribunal, or of a court or an inferior court,

because if you do that, you're not going to get those cases out of the

courts and attracted to commercial arbitration, as you and I have both

said in our public utterances we support.

I think this act

does contain a very good regime of common-law protections, so that

we're just not allowing somebody to make some fundamental error in an

arbitration that goes to the whole root of it or to deny someone

natural justice. But we're not putting arbitration, as such, under the

Judicial Review Procedure Act.

MR. SIHOTA : Okay, but

you've left in the current

section 31, which seems to allow for appeals

on questions of law where either there's agreement or the court gives

leave for appeal. It seems that that's what you were trying to achieve

in 31(2) of the existing act, because 31(2) says that if it's of

public importance, if it affects a class of people or if it's so

important that judicial intervention is justified, the courts may grant

a leave to appeal.

I can see the government trying, on the

front end, to do what the Attorney-General says it wants to do: to try

to attract more arbitrations away from the courts and into an

arbitrational system. That's why I didn't have a lot of concerns about

the provisions which expanded jurisdiction. If on the front end you

want to increase the number of people who will utilize this system,

you've done that by dealing with the jurisdictional issue.

don't know why you want to limit the opportunities to go to court on a

Judicial Review Procedure Act application. Granted, it would add life

to the application or the matter under arbitration, but on the other

hand, it would provide people with some very basic rights in terms of

appeal. Let's face it. There are some bad arbitration awards. You're

really limited under 31(1), which is why I suspect people wanted to go

under the Judicial Review Procedure Act, and which is why, I suspect,

you've now eliminated that. I think you've opened up the funnel on the

front end, but on the back end you've really narrowed it, and I don't

see the public policy for that.

If I were going to

arbitration, I'd want to know that I could get in, which is what the

legislation tries to do, but I'd also want to make sure that there were

fair rights of appeal. I think you're unduly limiting those rights, and

from that point of view, it would be an argument to dissuade you from

utilizing the system instead of persuading you to use it. There has to

be fairness on both ends — jurisdiction to get in, but an avenue open

to appeal that's broader than what you've got now under 31(1), one

which would be captured under the Judicial Review Procedure Act but

which can't upset the decision; it can simply order, effectively, that

the matter be reconsidered.

[4:45]

HON. B.R. SMITH :

I think you're maybe missing the whole thrust, which is that this is

not a proceeding that was ever intended to be under the Judicial Review

Procedure Act. It is not like a ruling of the Human Rights Commission;

it is not like a ruling of a statutory tribunal or an inferior court.

It is something that parties, being high, wide, handsome and 21 and at

arm's length, have decided: "We want to resolve our disputes as

businessmen in a tribunal, maybe with other businessmen, maybe with one

non-businessman as chairman. And we're quite happy to give up some of

the rights that we would ordinarily have to appeal and some of the

rights we'd have under the Judicial Review Procedure Act."

It's all expressed in the old act in 30(3), which says: "Except as

provided in

section 31, the court shall not set aside or remit an award on the

grounds of an error of fact or law on the fact of the award." When I practised

arbitration law, for years we used to try and set them aside on error of law

on the face of the award. That was the main ground. It was

[ Page 5418 ]

rich business for our profession to go in there and make those arguments.

But

we're trying to get stuff out of the courts. We're trying, hon. member,

to get those things resolved in arbitration with commercial people

resolving their own disputes, not to have a cottage industry for our

profession, but to have safeguards in there. There should be

safeguards — and there are — that you can appeal and get

leave granted to appeal

where it's an important matter that justifies the intervention of the

court and where points of law are important.

We're not

trying to close out the courts; we're trying to narrow the ambit, which

is again done by agreement, because you only get to arbitration because

you agree to be in arbitration. We're not talking about statutory

arbitration which takes you to the successor in title of the labour

board; we're talking about commercial consensual arbitration. I think

you support that.

MR. SIHOTA : Oh, I have no problem

with setting up a regime to allow people to bypass the courts and go to

commercial arbitration; obviously I support that. That's not an issue.

Nor is the issue whether lawyers are going to get rich from the system.

If a matter should appropriately go to appeal, then it should go to

appeal; if it shouldn't, it shouldn't. I don't think it's fair to say

that we don't want to set up a system that will make lawyers more

affluent. I think that diverts from the intent here.

I will

grant that the Attorney-General obviously practised in this area a lot

more than I did. I did a lot of commercial litigation, to be honest

with you, as opposed to arbitration. It seems to me that if, as a

commercial litigator, I was looking at the option of arbitration, I

would have no problem with that if it was more expeditious, which in

many ways it is, and if the jurisdiction was broad, which now you've

done. But I would have a problem if I knew that I could not appeal an

error of fact on the record, if I could only appeal if the matter was

of such import that it raised a general point of law or a point of

importance.

I think you're putting the courts in a tough

position under

section 31.1. There will be situations — I'm sure the

Attorney-General is aware of them, because I see them all the time —

where the statutory provision just doesn't fit the facts or the law,

but where fairness, which often guides judges, demands that something

be done. I can see a court bending over backwards trying to get

something to fit into 31(2)(

b) or 31(2)(

c) when it really ought not

to be there. But because they realize there's an error that goes to

fact — which almost goes to jurisdiction, but doesn't - and warrants a

rehearing, they are now going to try to fit it into 31(2). You're

going to get all sorts of contorted decisions that really should not

fall into 31(2), but because you've tied the courts hands too much,

they're going to fit it into 31(2).

So (a), it's going to

be a misuse of 31(2) or 31(1), or all of 31; and (b), you will have

taken away from them the normal right, the Judicial Review Procedure

Act — and if it's legitimate, you should have that option. If you

don't, it seems to me it's a factor that mitigates against going to one

of those arbitration processes. I don't even think it's necessarily six

of one and half a dozen of the other. I think you should allow that

option. I don't know how often it's being abused or not.

The

other thing is, I don't know if anyone is raising this in front of the

Hughes commission, but it may make more sense to wait and see what the

Hughes commission says in its report instead of trying to second-guess

what it may say on this type of matter.

HON. B.R. SMITH :

The principle was all set out in the Commercial Arbitration Act that we

passed in the 1986 session. That act makes it very clear that a court

will set aside for arbitral error, but that was not intended to be as

broad as the provisions of the Judicial Review Procedure Act. If there

is an arbitral error that shows there's been a failure to observe the

rules of natural justice, or the arbitrator has exceeded his powers, or

he's been biased or corrupt or guilty of fraudulent conduct, the court

has a direct mandate to set that aside. But there's no mandate to set

aside anything for error of law on the face of the award. The parties

agree to that.

When I went around to consider bringing in

this Commercial Arbitration Act, I heard not only from businessmen in

this province, but businessmen all over the Pacific Rim, who said: "If

you want us to do arbitration business in British Columbia, Mr. Smith,

and have arbitrations, we have got to have a system that lends itself

to certainty and not endless applications to the court." All we're

doing in this little amendment is to clarify that we never intended to

treat it as a statutory tribunal, because there just might be somebody

in our profession, whether for good fee or otherwise, who might argue —

or who has apparently raised the question — that maybe the Judicial

Review Procedure Act hasn't been ousted by this act. It was always

intended that it would. It was always intended that the grounds would

be narrower for commercial arbitration. Otherwise, we might as well

shut down that shop in Vancouver. We won't be open for business. People

aren't going to come there.

MR. SIHOTA : You say

they're not coming now? Maybe they're not. I haven't asked. I remember

asking last year in terms of how many people went to the thing, but I

suspect people are coming now.

I think this will be my last shot at it. I think we've both carved out different positions on this thing.

AN HON. MEMBER : It's the minister's last shot for awhile too.

MR. SIHOTA :

I won't say that. I'm sure the minister will be Attorney-General well

after the cabinet shuffle. I'm the only one who's betting on that, so I

hope I'm proven right. I stand to make a lot of money on that.

HON. MR. SAVAGE : Are you gambling?

MR. SIHOTA :

You call that gambling? Do you see this gentleman here, the second

member for Boundary-Similkameen (Mr. Barlee)? It was 52.9 percent; I

was only 0.2 percent off. If you want me to guess your futures, I'll be

happy to do that for a small fee.

There may be a couple of

cases out there where people have misused the Judicial Review Procedure

Act. I would venture to say there aren't that many cases where the

Judicial Review Procedure Act has come into play under the Commercial

Arbitration Act. That being the case, I would rather have the safety of

the Judicial Review Procedure Act than eliminate it on the fear that

these things will go on and on forever. I don't think that's happened

all that much. I don't think there are a lot of JRPA applications under

this. You may get one or two that are illegitimate, but I'd rather have

the safety for one that's legitimate, instead