1987 Legislative Session: 1st 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)

THURSDAY, JULY 9, 1987

Morning Sitting

[ Page

2317 ]

CONTENTS

Routine Proceedings

Miscellaneous Statutes Amendment Act (No. 2), 1987 (Bill 42). Committee stage.

(Hon. B.R. Smith) –– 2317

Hon. Mr. Strachan

Mr. Sihota

Mr. Jansen

Mr. Lovick

Committee of Supply: Ministry of Agriculture and Fisheries estimates.

(Hon. Mr. Savage)

On vote 7: minister's office –– 2320

Hon. Mr. Savage

Mr. Rose

Mr. Peterson

Mr. Chalmers

The House met at 10:08 a.m.

Prayers.

Orders of the Day

HON. MR. STRACHAN: Mr. Speaker, committee on Bill 42.

MISCELLANEOUS STATUTES

AMENDMENT ACT (No. 2), 1987

(continued)

The House in committee on Bill 42; Mr. Pelton in the chair.

HON. MR. STRACHAN: Last night the committee on Bill 42 rose

having postponed sections 82 to 98 inclusive. The Minister of Economic

Development (Hon. Mrs. McCarthy) is with the Premier this morning on an

economic development council, and representing the government in

discussion on sections 82 to 98 will be the member for Chilliwack (Mr.

Jansen).

Section 82.

MR. SIHOTA: It certainly is a matter of some regret on my

part that the Minister of Economic Development is not here. I

appreciate that she was here last night and I wasn't, and accordingly I

won't go into any details. I didn't realize she was here last night

until a minute ago, so that changes the tenor of my comments a bit. But

I understand that the parliamentary secretary is here to look after

this matter.

I have several concerns about the Small Business Venture Capital Act

and the changes proposed in Bill 42. and instead of being long-winded

about it I would start off by just wanting to ask a question on

section

82. Would the member responsible give me an explanation of the intent

section 82?

MR. JANSEN: Mr. Chairman, there are essentially two changes

section 82. The first change is the removal of the non-arm's-length

classification as far as associated companies are concerned, relating

to nieces and nephews having ownership. The other change is that

in-laws not residing in the same residence are also not deemed to be

associates. That's the intent of

section 82.

MR. SIHOTA: A question again to the member: is that with respect to the company in which the venture capital corporation will be investing?

MR. JANSEN: Mr. Chairman, yes, that is in respect to what is

called the ESB — the business that the VCC would be the target

company.... In other words, the investing company.

MR. SIHOTA: If I can just take it one step further. I take it that what

is being said with respect to the affiliate sections here and relatives is that

it is possible for a VCC to invest in a company or to provide funding for a

company where the principals of the company — as opposed to the VCC — are related

to the principals of the VCC, in the sense that they are nephews and nieces.

Am I correct in that understanding'?

MR. JANSEN: Yes, Mr. Chairman, that is correct. There could

be that relationship, although there are other sections in the act that

would preclude any actions that were not following the spirit and

intent of the legislation.

MR. SIHOTA: I take it that that applies to

section 82 (l)

(a). With respect to what I read as 82(2) and 82(6) of that section,

could the member explain the intent of those two sections?

MR. JANSEN: Mr. Chairman, talking about subsection (6).... Is

that the question? I think he was talking about 82(l)(a), which deals

with the definition of "associate," and subsection (6), which is more

technical and talks about the vote carrying.... I'm not sure what his

question is, whether he's talking about the exercise of control, as

subsection (6) does, or he's talking about the relationship as far as

associates are concerned. Maybe he can clarify that.

[10:15]

MR. SIHOTA: Maybe I'll be more to the point, Mr. Chairman.

What I'm trying to find out is what the impact of those changes is. Am

I correct in assuming that the purpose of those changes is to allow the

shareholders of a VCC to be closer to the target company?

MR. JANSEN: Yes, Mr. Chairman, that is the intention. It

simply broadens the small business's eligibility for an investment from

the venture capital corporation.

MR. LOVICK: I think both my colleague and I, Mr. Chairman,

are struggling a little with, in more precise terms, what the intent of

this is. The explanatory note tells us that the intent of

section 82 is

to strengthen the relevant provisions. The predicament is that as I

read the appropriate clauses listed in 82, and for that matter in other

sections as well, I see, if anything, the converse, the opposite, a

loosening of.

Let me just illustrate that. For example, in subsection (b)(ii) the

old legislation used to say that it is a question of fact about what

the relevant facts are, including, for example, the existence of an

option, warrant or right described in the other subsections. Now of

course, what it says is "account shall be taken of." It seems to me

there's a tremendous and significant difference between the two.

I mention that particular example, Mr. Chairman, simply asking for

information. What does it mean when we talk about strengthening the

relevant provisions? I think both my colleague and I are asking for

edification on that point.

MR. JANSEN: Mr. Chairman, there are two thrusts. First of

all, there are situations in which — although the act specifically

makes mention of a certain relationship — the spirit and intent of the

legislation, which is to encourage the formation of eligible small

businesses, are still followed. In which case the administrator would

exercise discretion. There is a broadening of the legislation in one

aspect, and it has a more restrictive transfer capability in the

legislation in another part. It is certainly broadening the legislation

in reference to the relationship in the definition of "associates," and

the strengthening, transfer and restrictive part of it would

[ Page 2318 ]

be dealt with in subsection (6), where we talk about transfer rights and voting abilities.

MR. SIHOTA: Perhaps the member could either comfort me or

cause me greater concern by answering the next question, which will

probably determine how I feel about this section.

It seems to me — and I would like the member to correct me if I'm

wrong on this — that it is possible for a VCC under this

section to

have a significant controlling interest in the target company. I see

the member nodding as if to say I'm wrong in that assumption. I feel

comforted by that.

Would the member agree with me in principle that it would not be

appropriate for the VCC to acquire controlling interest in any target

company?

MR. JANSEN: The legislation enables the venture capital

corporation.... It comes further in the legislation; we're jumping

ahead a little bit. We're talking about controlling interest there, and

we've changed it to reflect what the Income Tax Act indeed provides.

It's now 50 percent or more. That is the controlling interest.

MR. LOVICK: Just another quick question about

section 82 –– I

want to ask about the two new sections that have been added — the

brand-new ones; namely, subsections (9) and (10). My specific question

concerns subsection (10). I would like to ask what the rationale for

that is. Why do we give the administrator that extra discretionary

power? We say: "Any calculation or determination under this Act or

regulations may be based on projections that the administrator

considers to be reasonable." I don't think that's a very tight

definition, with all due respect, and also I don't understand what the

rationale for it is; and I would ask therefor.

MR. JANSEN: The intent of this legislation is to assist and

to enable new companies to be developed, new eligible small businesses.

Where there are startups, there will be no historical data being

provided, because of the nature of the company being started. So the

administrator then has to rely on pro forma data; in other words, data

that has been prepared on the basis of the best estimates. In those

cases, then, there isn't historical data, and the information being

supplied is of a pro forma nature and, as such, has to be taken in that

context.

MR. SIHOTA: I think it's important at this point that I let

the member opposite know where it is I'm coming from and where I think

everybody on this side of the House is coming from. That may indeed

colour the balance of the debate on this, Mr. Chairman, but I'll be

very brief in dealing with that.

I think there is a general acceptance on this side of the House that

venture capital corporations are a good thing and that the vehicle for

investment that's being set up under this legislation is also a good

thing. There is also a recognition on this side of the House that

perhaps in the past the rules and regulations have been too rigid, have

prevented appropriate investments from happening and have prevented us

from seeing the growth of VCCs as an appropriate investment tool and an

alternative to traditional sources of equity financing.

On that I think we will all agree. The tension in this debate, as it goes on

in the forthcoming sections, will be with respect to the extent to which you

relax the rules to bring about the flexibility we all agree is needed. That's

where our concern is: are we moving too far, are we swinging the pendulum too

far over, to allow too much flexibility and to allow for perhaps too much of

a nexus between the venture capital corporation and the target company? In my

view, the further you move away from arm's-length relationships between

the VCC and the target company, the more likely it is that factors other than

good, sound business principles will play a role in investment policies with

respect to the VCC. I don't think anybody wants to see that. That's

our concern with respect to this section.

We're quite prepared to let it go as it is proposed here in

section

82 at this time to see how it works out, but I do that with a degree of

nervousness, and that should be made clear. I would hope everybody else

does as well. There is a potential problem there. We've seen in the

past in other areas, particularly from my perspective of jurisprudence

but also in business relationships that are not truly arm's length,

that people have a very clever way of working around nephews and nieces

to be able to secure other tax advantages or to achieve equity

financing. But we'll agree to this and we'll proceed to the forthcoming

sections.

Sections 82 and 83 approved.

section 84.

MR. SIHOTA: I take it, if I'm correct in this.... I don't

have any problem with this $100,000 to $50,000 reduction, although I

share the same nervousness as I did before because you're allowing for

a little less equity.

Am I correct in saying the intent of subsection (4) is to allow the

venture capital corporation a period of six months to build up its

equity to the $50,000 level, if indeed it floats below that par line?

Is that the intent of subsection (4) ?

Okay, I'll say it again. I take it that the intent is to maintain an

equity of $50,000 –– I take it that if it slips before that, the

purpose of subsection (4) is to allow it to float back up to $50,000

over a six-month period. Is that

interpretation correct?

MR. JANSEN: Mr. Chairman, the legislation requires that an

initial investment can be made of $25,000, and that within 12 months

the investment of the equity position of the venture capital

corporation be increased to $100,000. Recognizing that the intent is to

help as much as possible small businesses, we've reduced that

requirement of achieving $100,000 within 12 months down to $50,000 in

12 months. So it's $25,000 going to $50,000.

Section 84 approved.

MR. CHAIRMAN: Just before proceeding, hon. members, the

second member for Okanagan South has indicated he would like leave to

make an introduction. Shall leave be granted?

Leave granted.

MR. CHALMERS: Mr. Chairman, in the gallery today we have a

gentleman who has had a very distinguished career in civic

administration, starting some years ago in Prince Rupert, and he is now

the city administrator for the city of Kelowna. I'd like the members

here to help me make Stewart Fleming welcome.

[ Page

2319 ]

section 85.

MR. LOVICK: Mr. Chairman, when I was doing some examination

of this bill last night, I had occasion to refer to the record in

Hansard of the original debate when the venture capital corporation was

first set up. I read with interest a number of statements offered by

way of justification for the venture capital corporation. For the

record, I just want to draw members' attention to the fact that it

seems that the rationale has done a rather significant turnabout.

section 85, for example, what we perceive is that clearly there

is a loosening of relationships; there's no question of that. To

illustrate that point, let me just try this out on the member opposite.

The minister responsible for the venture capital corporation

legislation at that time, Mr. McClelland, stated in Hansard, May 31,

1985, as follows:

"I want to emphasize that in addition to" — the other

test for small business — "the VCC-funded firm must be located and

primarily operating in British Columbia. This will require that 75

percent of the wages and salaries of both the qualifying small business

and its affiliates be paid to employees who normally report to work at

operations located in this province."

I am wondering — and my question is this — whether the impact of

section 85 is effectively to make that rationale, that argument,

obsolete or no longer operative.

MR. JANSEN: The answer is no, that's not the intent. The

intent is to assist as much as possible venture capital corporations

and eligible small businesses to benefit from the program. What

section

85 does is take away what is in any case a technicality. For example,

where there is a blood relationship and the ownership of a company

could have less than 1 percent — effectively having no say whatsoever

in a company business — it was precluded in the past from having the

benefits of that program. What we're saying here is that where there

isn't a business relationship such as what I've indicated, that company

can still benefit from the program. We've had, in fact, a specific case

where two brothers were involved in companies. One had a less than 1

percent ownership, and because of that situation — he had no business

relationships between the eligible small business — he was precluded

from attracting the benefits of this program. So that's what that does.

All these suggestions included in this legislation are a result of

what we studied in the other provinces and found to be the weaknesses,

and what the investment community has told us, and what the Institute

of Chartered Accountants have told us, and what the firm of Woods

Gordon has told us. What you're seeing here is not a loose thing, and

not a lesser control, but an assist to enable the companies to take

advantage of that; that's what this does.

Section 85 specifically talks

about enabling assistance from this program, with the spirit and intent

of the program still being followed.

[10:30]

Sections 85 and 86 approved.

section 87.

MR. SIHOTA: I guess this is the one

section that does cause me a fair

bit of concern, because I think, as I read it, it allows for the VCC to take

a controlling interest in the business. Am I correct in that reading of

section

87?

MR. JANSEN: No. This allows the equal partner scenario, where

partners can now have equal shares in the business. It won't enable the

controlling interest that the member is referring to.

MR. SIHOTA: Is that an equal interest in the VCC and the business?

MR. JANSEN: Mr. Chairman, what would happen is that the

venture capital corporation would enjoy an equal voting relationship in

the eligible small business, as other outside third parties would have.

So in other words, there would be an equal voting relationship. The

venture capital corporation could have 50 percent, and its outside

investor could also have 50 percent.

MR. LOVICK: Mr. Chairman,

section 87, as my colleague from

Esquimalt-Port Renfrew points out, causes some concern. We're not,

however, going to try to make this into some kind of half-hour debate.

We nevertheless want to pose a couple of questions, as we have thus

far, and to get some assurances, I guess.

Let me refer again to the passage from Hansard that I quoted from

before; namely May 31, 1985. I'll pose the question before I read this.

Is it the case that this statement made by the minister in 1985 no

longer obtains, given

section 87? The minister said: "In addition, a

VCC is not allowed to acquire a controlling interest in any of the

small business investments. That restriction is designed to ensure that

the VCCs fulfil the spirit and the intent of the act, and that the

control of the company remains with the original shareholders and with

those who had the ideas and the energy to put the company together."

The question is whether

section 87 makes that statement still alive

and well, or whether that too is no longer operable. I think I mean

operative, Mr. Chairman; I'm struggling with that.

MR. JANSEN: Yes. Mr. Chairman, that statement is still alive

and well. What you have to remember when you're dealing with

section 87

is that you also have to relate to

section 82, which talks about the de

facto controlling interest of an eligible small business. That is still

the case. It is not our intention that the VCC should exercise control,

and the statement made at that time is still applicable now.

Sections 87 to 90 inclusive approved.

section 91.

MR. SIHOTA: In keeping with the comments made by the second

member for Nanaimo (Mr. Lovick), I have a lot of problems with this one

because I believe that the minister, when he originally introduced this

legislation in May 1985, was bang-on when he said:

"A small business is defined as a firm which, together with

its affiliates, has fewer than 75 employees. Once the investment has been made,

the company will be allowed to expand to a total of 150 employees. That limit

should ensure the company remain a true small business. If you go beyond that,

[ Page 2320 ]

you lose your small business status, and presumably you've

been successful enough that you can carry your own equity from then on."

As I read this section, it takes away the figures of two years and

the 150 employees, and I don't think that's in keeping with the

original intent of the legislation. I honestly believe that that

restriction should be there. I'm sure that I'm correct in that

assumption; if I'm wrong, I'm sure the member will correct me.

I really think that at that point you begin to lose the intent and

spirit of the act and the purpose of these VCCs as investment vehicles.

I don't want to get into a debate on it. I would prefer that this

section be given a second look and be stood and dealt with later on,

Mr. Chairman, because I really do believe that the member would agree

with me that it is a far departure from the original intent of the

legislation. I would suggest that this

section be postponed or stood

down, because I think it violates that intent.

MR. JANSEN: The requirements still are that the VCCs invest

in small businesses. But it acts as a great disincentive to the

business community to suggest that once that investment has become

successful and the company grows, you immediately divest. So we're

saying essentially that the message or the signal to the business

community is that if the investment works well and is a success, then

you must divest.

We're suggesting here that the VCC would enjoy the profits and then

turn around and have those profits available for reinvestment in other

small businesses. The business community has requested this change by

suggesting that, indeed, the winners — the ones that are really

successful.... Why are you asking us to disinvest in that particular

situation?

MR. SIHOTA: It reminds me of a debate that we will have in

the future with respect to privatization. Why sell off all those

private corporations in the hands of the province that are profitable

and are making money for the province? Same analogy. I hope the member

will remember that when we get to that situation.

Section 91 to 98 inclusive approved.

Title approved.

HON. MR. STRACHAN: Mr. Chairman, I move the committee rise and report the bill complete with amendment.

Motion approved.

The House resumed; Mr. Pelton in the chair.

Bill 42, Miscellaneous Statutes Amendment Act (No. 2), 1987,

reported complete with amendments to be considered at the next sitting

of the House after today.

HON. MR. STRACHAN: Mr. Speaker, I call Committee of Supply.

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

ESTIMATES: MINISTRY OF

AGRICULTURE AND FISHERIES

(continued)

On vote 7: minister's office, $241,948.

HON. MR. SAVAGE: It is indeed a pleasure to rise before the

hon. members of this assembly and do the estimates for the fiscal year

1987-88. Let me say at the outset that I'm pleased to be here on behalf

of the Ministry of Agriculture and Fisheries to deal with the spending

estimates for that fiscal year. I'd like, if I may, to give a brief

overview of the agriculture and food industry, particularly the climate

in which it operates within this province.

[Mr. Pelton in the chair.]

B.C.'s agriculture and fisheries industry is in fact our food

industry. I think it's too often taken for granted that we don't define

what the portfolio really does. It is the basis of the food production

unit for the people of British Columbia. I can say for a fact that it

has been one of the solid performers in recent years in influencing our

provincial economy.

We've had steadily increasing economic activity. We have created

many direct and indirect jobs. We have been producing food at

relatively stable prices in what I believe to be some of the most

efficient farmers' and fisheries' operations in this country and, for

that matter, in a lot of places around the world. We have been

contributing beyond British Columbia. We are now exporting

ever-increasing amounts of food products grown in B.C.

If I may delve somewhat into industry indicators, farm cash receipts

for the second consecutive year have just gone over the billion-dollar

mark, and we are forecasting that they will pass the billion-dollar

mark again in the year 1987. The record high realized net income in

1986 — which was $214 million — could and probably will increase during

1987. Part of that is due to the $8.2 million brought into the

provincial farmers' hands via the deficiency payments made by the

federal government.

For the fifth straight year the primary industry has increased

direct employment. We directly employ in this province for the

portfolio between 31,000 and 32,000 people. And when you swell that up

over the entire sector — both direct and indirect jobs — it amounts to

170,000 people.

The fisheries sector, specifically aquaculture, had sales in 1986 of

$6.8 million, as compared to sales in 1985 of $3.9 million. The wild

fish stocks have a landed value of $382 million. That's a 55 percent

increase in the aquaculture sector over 1985.

I believe the agriculture and fisheries food sector is a great

example of the contribution and the benefits that accrue through

economic diversification. That diversity gives great stability to the

sector and has in fact led to very consistent growth.

[10:45]

I must say, however, that even though the industry has grown quite

steadily, it has not been without some problems. As many of you have

read in papers or heard on the newscasts, a good many of our farmers

have felt severe financial stress. A good example, if I may, is to

refer to the grain sector, where today's prices, backed off in

real-dollar terms, are back to prices equivalent to the Depression

years. I believe, looking at grain price forecasts, that a number of

our grain producers will face severe financial stress for two or three

years to come. If we have recovering grain prices, there is such a

great debt load being borne by a number of our grain producers,

specifically in the Peace River sector, that it will take many years of

savings to bring them out of debt.

[ Page 2321 ]

In my judgment, and I think it's been talked about on a worldwide

basis most recently, until we convince the other trading countries to

discontinue the trade wars and subsidies that are prevalent in some of

our major producing areas, we will not come to grips with the fact of

the low prices that exist today. It is far from being a natural market

price. We feel that until those particular subsidies are dealt with, it

is actually encouraging, by the payment of subsidies, excess

production. Those subsidies, in fact, have been paid on a production

basis.

On the ministry's budget, a lot has been said about the fact that

the budget has come down somewhat from the 1985-86 and 1986-87 fiscal

years, but a number of things have caused that to happen. There have

been better market conditions in a number of commodities. Another

contributing factor for the reduction of the budget is the fact that a

number of the input costs have also been reduced, and we've also seen

quite a reduction in interest rate costs.

There are more and more federal-provincial initiatives being

undertaken. In our budget, the major drop in the 1987-88 fiscal year

was the termination of the partial interest reimbursement program. That

amounted to a reduction of $8.52 million. We felt that the program was

becoming ineffective as interest rates dropped. The farmers' distress

problems are more from cash flow, because of the prevailing prices. We

feet that instead of the partial interest reimbursement program, more

emphasis has to be placed on the agricultural land development

assistance program; that's a 15-year low-interest loan that allows

farmers to borrow up to $50,000.

We are also taking extensive efforts to cooperate with the federal government

on developing national programs that will be substantially the same across this

country. In other words, we are trying to reduce the number of provinces having

specialty programs that allow one to be more competitive than the other or to

be at a complete disadvantage to another.

The farm income insurance program, which stabilizes the difference

between the costs of operating in the marketplace and the actual return

from the marketplace, will be reduced approximately $6.4 million in

1987-88; that's when it's paid out. That is because of the stability

that has occurred in the marketplace, strengthening prices in some of

the commodities. The actual demand on that program will be reduced. It

is also seen that if we can get a consensus with the provinces across

Canada on a national agricultural strategy, which is being proposed, we

will see participation by producers, provinces and the federal

government to stabilize incomes.

If I could touch on a few initiatives that I feel have borne fruit in

1986 and that we look forward to carrying on in 1987, in the marketing

sector, as many of you may well recall, we had Food Pacific '86. That

was launched to promote what we have in B.C. and also what some of the

other provinces have. The overall impact of that show was a

contribution to the Canadian economy of some $122 million. Sales

stemming from that show brought in net value to Canadian companies

worth more than $45 million, and in excess of $30 million specifically

to B.C. companies. We are planning Food Pacific '88, which will be even

bigger and better.

Another program that our ministry launched was "The Great Taste of B.C."

where we jointly encouraged restaurants to come onside supporting products grown

and produced in British Columbia. That program has proven to be very successful

and well accepted. The basic message to the restaurateurs was to support the

use of B.C. products on their menus whenever possible.

Another program that launched in February was "Best Buy British

Columbia" with the concurrence of the different chain stores — the food

retail system — their cooperation and participation in labeling and

advertising the value of B.C. products and home-grown B.C. produce

during specific periods of different months. They could label them on

their store shelves and identify them in their flyers.

We've gone through a couple of other very key things. One that I

might like to refer to is the testing of cold tolerance of kiwi fruit

on Vancouver Island. Believe it or not, we're trying to get into the

kiwi fruit industry.

The greenhouse assistance program has been very successful. In doing

some of the research we found that we had productivity increases,

particularly in cucumbers, of up to 20 percent; and in tomatoes, on

some varieties, through research, we've had productivity increases of

up to 60 percent.

We are pushing very hard to increase sales to other countries — not

only Asia Pacific but also with our trading partners to the south — of

our B.C.-produced products.

We have a large value-added production base in this province,

through the processing companies, distilling systems, etc., and we are

dealing extensively with specialty products in value-adding.

The ministry's food industry development program which began in 1985

is a program that provides financial assistance for projects aimed at

developing new or expanded markets. We are introducing and improving

our food processing technology capabilities. To date $1.4 million has

been expended on those projects. There are a total of 69 underway.

If I may refer to aquaculture for a moment, aquaculture has been a

growing industry, part of the agriculture and fisheries sector, and at

this stage is still continuing to grow, I'd like to refer to some

numbers, if I may. In 1984 we had 10 operating farms; by the end of

1986 we had 69 and by the end of this calendar year, we will have

approximately 125 operating salmon farms. The value of that aquaculture

production, as I referred to earlier, was $6.8 million. We feel we have

a potential by the year 2000 to exceed $150 million in salmon and

aquaculture-related industry for the province of B.C.

There is one other item I'd like to touch on, Mr. Chairman, and that

is the national agricultural strategy that I referred to earlier. It's

very important to recognize that we in B.C. played a major role in

promoting the development of a national agricultural strategy. We felt

that it was very important to have all the provinces cooperate with the

federal government in designing a strategy for the future of

agriculture in this country

Mr. Chairman, I thank you very much for the opportunity to give some opening remarks.

MR. ROSE: I'd like to thank the minister for his overview and

congratulate him on his appointment. It's the first time he's had to

defend his estimates. This is the first time I've had a chance to

attack them.

HON. MR. BRUMMET: You wouldn't do that.

MR. ROSE: I wouldn't do it frontally. I might do it snidely here and there.

[ Page 2322 ]

I think, though, that the minister enjoys wide respect among the

people of the agricultural community — at least he did, and I hope he

continues to do so. I've certainly enjoyed our relationship, as I

enjoyed his deputy and the freedom and the openness with which he

addressed and briefed our resource committee of caucus, before the

session started. So I thank Mr. MacEachern for that.

I suppose it's my hope that we on both sides of the House could work

to enhance agriculture and its health and its continued growth and

importance. Policies don't always do that. I hope that we can continue

to support the family farm, so that those units, which I think are very

close to the heart of the minister, continue to be a major part of our

system, and that we don't develop an agriculture based on the corporate

farm — or that conditions are such that the only farms that can survive

in the future are those backed by huge financial, vertically integrated

companies, and millionaires are the only ones who can afford to be in

the business. We don't want, either, the kind of marginal fanning that

so many people are forced to undertake today. Most of the farmers — I

would say "most" without hesitation — work off the farm, and are

really part-time farmers, and unless you're lucky enough to enjoy the

luxury of some marketing or supply management program you have a very

difficult time earning a living, and there are some implications for

that.

I don't mind the minister boasting about his accomplishments, and

the initiatives through the various things — Food Pacific, various

kinds of import substitutions that he has,"taste B.C.".... . I wonder,

though, about the implications for "buy B.C." and "taste B.C." and

import substitutions when we're faced with the spectre of free trade —

whether those things will be as effective if we have free trade in

agriculture. I'll get to that in a little while.

The trouble with a debate such as this in the middle of July is that

we all feel the pressure that we can only hit the high spots, and

that's all I intend to do. I know the Provincial Secretary (Hon. Mr.

Veitch) would be delighted if I would move on to another high spot.

[Applause.]

I notice that Mr. Rabbitt — Thumper — is at it again.

I'm not sure how a federal program is going to work out, because

it's so varied. We talk about western agriculture, but what we really

mean is prairie agriculture, and we talk about mixed farming — whatever

is left of that — and we're talking about British Columbia, the little

bit that we have here, plus some in the Maritimes and the large bunch

of it really in Ontario and Quebec.

Despite the fact that we've made some progress, we can't hide the

fact that we haven't had a bill in agriculture since the Bee Act of

1977. That was the last biggie we had. We haven't had a piece of

legislation dealing with agriculture since then, and that comes from an

impeccable source: the Ministry of Agriculture itself. So we got stung

with the Bee Act in 1977, and ten years later we haven't had another

legislative initiative. That's performance.

HON. MR. VEITCH: That was a honey, too.

MR. ROSE: That was no honey. That was a honeymoon.

I don't think we can hide the fact, either, Mr. Chairman, that B.C.

agriculture is in trouble. Let me give you a little overview.

[11:00]

B.C. probably has more financial stress associated with its farmers

than any other province in Canada. It is attested to by a written

question which was supplied to me in the last couple of days. I'll get

into the details on that in the next section.

There were 5 percent fewer farms in '86 than there were in '81. Most

serious losses were small operations with sales below $10,000. Over

1,300 small farmers disappeared. That doesn't sound to me like a

healthy

industry — '81 to '85. I admit quite readily that those were severe

days in terms of massive high interest rates and all kinds of other

problems with oil prices, input costs of various kinds — squeezed a lot

of people out. That's the lunacy of the federal restraint program and

tight money policies, and tying our interest rates to the United

States, so that the unemployed can be soldiers fighting inflation. The

unemployed, instead of being considered welfare bums, should have hero

medals pasted on them, because they are a million and a half people

fighting the battle against inflation. The central argument has been

that the more unemployed you have the easier it is to control inflation.

The lunacy of tying our interest rates to those of the United States

has caused a good deal of trouble. It had nothing to do with the

province, and it certainly was beyond the control of the farmers, just

as they cannot as individual farmers fight the subsidies of

governments, whether you're talking about the U.S. government or the

EEC. The minister is aware that in Britain, just one country of the

EEC, the agricultural production was approximately two and a half

billion pounds sterling in '85. They got out of it, in products, one

and a quarter billion pounds sterling. So subsidies are there, and they

got half of what they paid for the produce.

Our farmers cannot fight against that. If the U.S. is subsidizing

grain for 2.65 and the EEC for 3.13, there's no way we can get away

with an 85 cent subsidy on our wheat. We just can't do that. So what do

we do? Do we join the subsidy war? Do we join the support war? Because

agriculture is probably, in B.C. and Canada and practically the world,

the most subsidized industry there is. And I don't know how it produces

so many free-enterprisers, because most of them are in the public

trough up to their ears — no, snouts. Anyway, there's no way that

that's possible.

There are some other things, if we want to continue the doom and

gloom. There's an 11 percent drop in the individual ownership of farms

in that same period I'm talking about, '81 to '86, and a dramatic

growth in partnerships, corporations and other forms of ownership: 31

percent, now 49 percent. Pretty soon over half our farms will be owned

by partnerships or corporations, and they won't be family farms at all.

So the programs vitally needed to preserve these family farms, if

indeed we don't think that this farming is a sunset industry.... And we

may feel that way; we just don't want to say it. You know: "Goodbye,

fellas, goodbye. Peasants, get lost." On the one hand we're going to

have a bunch of rich farmers, corporately led, probably paying rotten

wages and probably having rotten safety records — and I don't want to

get into that part of it — and on the other hand we're going to have a

bunch of peasants. That is something we need to address, if we mean

what we say. If we don't mean what we say, it doesn't make very much

difference.

Young people are driven off the land; 33 percent under 35 have left

the farm in British Columbia since 1981. And they are a rapidly ageing

group. Some of them are almost as old as I am; the average age of a

farmer in British Columbia is 55. Again, the group is ageing because

the average young person is leaving the farm. It's the same as the

average schoolteacher

[ Page 2323 ]

— I notice the Minister of Education (Hon. Mr. Brummet) there. The

average schoolteacher is gaining in salary, because there are no young

schoolteachers hired, and as they go up on the increment rate, their

age and their cost increases. My God, we couldn't afford what the

minister would cost if he threatened to go back to teaching; we could

hardly afford to hire him. It's cheaper, really, to have him here as a

minister. Of course, he couldn't do as much damage. Well, maybe he

could to fragile young minds, but he couldn't do nearly as much damage.

The minister said: "We're criticized, you know, because our budget

has dropped." The minister has not defended his budget. He may say that

input costs have gone down and interest rates have dropped. We can all

rationalize, and we all do this, so the minister, like all humans, is

going to put his best foot and face forward. But let's look at the

facts. In 1975, the budget for Agriculture, which even then was a

teeny, weeny ministry, was 1.6 of the provincial budget; in '83, 1.04;

and now about 0.97 percent, even if you include aquaculture. In

1987-'88 it's 0.6 percent of the budget, $58 million. In 1975 it was

$51.2 million, and that was 1.6 percent of the budget. But do you know

what the dollars would be worth in 1975 dollars? They'd be worth $118

million. Your department hasn't even kept up to inflation.

So you can't sit there and feel smug about this — and I know the

minister hasn't got a smug bone in his body — because facts are facts,

sir. The picture is not a pleasant one. It may be for some, as long as

we don't have free trade. If we have free trade, goodbye, you

egg-producers and all you chicken-pluckers out there in the Fraser

Valley — phsst, gone. Goodbye, all you dairymen. All you have you owe

to udders, but you're gone. You'll be swamped in an ocean of surplus

milk from the good old U.S. of A.

Interjection.

MR. ROSE: You should; that would be a nice change for you.

I guess what we're saying is that the agriculture industry is not

reflected in government priorities. Agriculture is not a government

priority, and there's no way that you can convince me otherwise.

Free trade — marketing boards, goodbye; no more supply management.

How is it that we're going to have free trade with the United States in

certain commodities? We know that they're not on the table — they say.

But if you look at some of the leaked documents from the United States,

you'll find that they really are a very serious concern, in the wine

industry particularly.

We don't even have free trade between provinces in eggs, poultry,

milk or beer. How, if we can't even do it in our own country, can we

have our industries survive and not go under? If there was non-board

grain available to all the chicken feeders in the Prairies, it's

doubtful that we'd have industry even in the Fraser Valley. I don't say

it would be impossible, but it certainly wouldn't rank very high in the

pecking order. That's a real problem, and I don't have the faith that

our government has in this business of free trade with the United

States. I think it's integration with the United States; I think it's

sovereignty-association — but that'll be another time. We just turned

it down for Quebec with Canada, but we're going to try it out with the

United States; that's more lunacy, in my view.

Anyway, the government has already started an assault on the support

programs. Eliminating the partial interest reimbursement program,

cutting the farm income insurance program by $3.2 million, 10

percent.... I don't see how the minister can stand up and beat his

chest, gloat and boast in his modest way about what he's doing in face

of these things. People say you can't solve anything by throwing money

at it, but the facts are that since 1975 the budget has been cut in

half in real dollars. That's a fact, and I don't think anyone can

quarrel with that fact.

I would like now, if the minister would like to make any comments, to move on to some of the other little items that I have.

HON. MR. SAVAGE: Mr. Chairman, to the hon. opposition House

Leader, the reduction in the farm income insurance numbers that you

just referred to is the result of improved market conditions in the

beef sector and in two or three other sectors, which will reduce the

claims to the provincial government on the dollars in the budget. Those

are our best estimates, looking at market returns, as to what the draw

will be on farm income insurance.

On the partial interest reimbursement program that you referred to

that we have cancelled, the problem with the program, unless it was

changed substantially, was that it was not targeting the needy. I

believe, with the programs that we have dealt with, that we are looking

at the people in the greatest need, identifying that need, and dealing

with it directly — not whether it's an ongoing program.

MR. ROSE: What you're saying is that you didn't anticipate

having such a payout, because there would be greater income and

therefore the fund wouldn't be called upon for so much money. Isn't

that what you're saying? But there are probably other areas that might

need more money; I don't know.

There have been enhanced programs in some of the things that we are

exporting. We export certain things that don't grow very well other

places. Blueberries are one example, and so are raspberries — the

Canadian banana. They don't grow elsewhere, so we've done very well in

those, and I think we should. I think we should be specializing in

things that we do well in and that others don't; I don't quarrel with

that part of it at all.

First of all, I want to thank the minister and his staff for

answering certain kinds of questions that I put to him about stress. I

asked him a question — and he answered it very ably — about how many

British Columbia farmers had gross sales of more than $25,000 in 1986.

The estimates for other years seem to be.... I'll read them. This will

show you the health of the industry: 5,000 estimated in 1984;

1985, 5,500; 1986, 5,600; and 1987 — we don't know, but it appears to be

roughly keeping up with inflation. It's certainly not getting any

better.

But I asked some other questions. "For the farmers identified in

question 1, how many, and what portion, had the following

characteristics in that year? Less than 30 percent equity. Debt

payments or living expenses exceeding 60 percent of gross income." This

is the business of having to work off the farm. "Ratio of debt payments

and living expenses of assets more than 25 percent or a debt to gross

income exceeding 2.3." These have to do with stress measurements. I

asked for a number of other things as well.

[ Page 2324 ]

I was also concerned a little about the research capabilities of the

ministry, because to those questions I got no answers. The information

is not available. I asked about that information a few months ago, and

I was looking at a paper by George Brinkman at the University of

Guelph. The ministry does not have the data to rebut the charge that

the level of financial stress was increasing sharply, but it's all in

Brinkman's paper.

I don't know whether you have access to the libraries over there or

not, but you should have a research capability and you don't. You don't

have a decent research capability to get economic research to answer

questions. If you don't have it, I think you should be developing a

research arm within your industry. I'm talking about economic and

financial research. It's just not good enough, when there are published

figures, which I have and can table, to tell me that the information

isn't available.

HON. MR. BRUMMET: You asked the wrong questions.

MR. ROSE: Did you read the question? They had the answers to all the other questions.

HON. MR. BRUMMET: Yes, but you asked the wrong questions, the ones that didn't have the answers.

MR. ROSE: Moving right along now.... Look, I'm an expert in asking the wrong questions. I make it a specialty.

Interjections.

MR. ROSE: No, it wasn't a long-winded question. There's the

rabbit pack again. They sit down there in the comer nibbling on

Canadian lettuce, and then thump their desks from time to time and

wiggle their noses. They turn up their noses at my questions.

I wanted to ask the minister a question. What has he done? He made

some remarks to the sheep-herders of Cobble Hill about changing the

proposed tax exemption which was to rise from $1,600 gross sales to

$5,000. I wonder if the minister could report on his progress on that

with the Minister of Finance (Hon. Mr. Couvelier), because people found

that excessive. I think the argument can be made that many of these

people, who are in fact part-time farmers, put in far more than they

take out. They have to develop, they have an expectation of profit, but

it takes a while to achieve that.

[11:15]

But they do serve another purpose: they preserve rural land. If you

tax them off these small holdings.... As I said the other day, these

people are not out shooting grouse on Sunday morning or riding to the

hounds in their hunting pinks; they work off the farms in logging and

all kinds of things and put far more into the farm than they take out.

The proposal in the budget was to increase this exemption from $1600 —

and it used to be one cow per acre — to $5,000. What has the minister

to report on any progress to relieve some of that stress?

HON. MR. SAVAGE: The discussions are continuing and a

decision will be made shortly about the qualification of income levels

on land that is designated within the ALR. I have made presentations

with the help of some of my colleagues and have attended a couple of

meetings relative to taxation levels, and let me assure you it is my

position that it should not be up at $5,000. We are reviewing it, and

in my judgment I feel it is not too far off where it is.

MR. ROSE: I am delighted to hear that, but in that case I

would like to ask the minister to comment on this Country Life

article

of June 26 on page 20. Savage is quoted here: ".... that through

discussions with the federation over the past two to three years. I

remember Harvey Schroeder" — so do I, parenthetically — "coming over

when I was president of the federation and asking for a level to be up

to $10,000 to qualify." Here's the minister speaking: "I think it

should be $5,000. I think that's a fair definition of what's really a

farmer."

The minister now says it's too high, but on June 20, not a month

ago, published in this estimable journal called Country Life, he says

flatly he thinks $5,000 is a good figure. So I'd like to know if he's

had a conversion on the road to Cobble Hill, or some other destination.

HON. MR. SAVAGE: To the hon. opposition House Leader, let me

assure you that there are two different criteria we're talking about.

One is assessment; the other is eligibility for provincial programs.

The $5,000 I referred to was a requisition from the Hon. Harvey

Schroeder, when he was the minister, to up the qualifying level for

provincial programs to $10,000. When I was president of the Federation

of Agriculture, we suggested that it was too high a figure, that it

should be down in the $5,000 range. We still suggest that, but it's not

anything to do with the assessment on farmland.

MR. PETERSON: First, I would like to personally congratulate

our Minister of Agriculture and Fisheries for what I think is a

tremendous job he is doing. He has that open-door policy. I'm well

aware that he meets with anybody and really strives hard to solve what

are pretty heavy-duty problems in the agricultural industry, but things

are looking better.

I just would like to take this opportunity during the minister's

estimates to point out some alarming facts in terms of an

article I

read in a dairy publication called Butter-Fat. The

article was called

"The Border Drain," and maybe I could just take a moment to quote from

it:

"The lure of cheap American milk, along with cheap

eggs and cheap gas, has made border-hopping a regular part of many

British Columbians' lives. Each day tens of thousands of dollars' worth

of dairy products are purchased by Canadians in the United States, then

brought back across the border for consumption at home in Canada.

"In most cases, those who buy the goods have no other

business to attend to in the U.S.... and although any dairy products

brought into this country are legally subject to a 17.5 percent import

duty, the sheer weight of numbers makes the enforcement of that duty

exceedingly difficult, which spells serious trouble for the province's

dairy producers and also a lot of other marketers.

"As much as $198,000 slips through the hands of B.C. dairy

farmers every day" — that's every day. "On an annual basis this

amounts to a whopping $72 million" — out of our economy.

The U.S. dairy industry is subsidized at a rate of about 35 percent through

transfer payments. It's pretty tough for our dairy farmers to compete with

Uncle Sam's treasury.

[ Page

2325 ]

British Columbians enjoy a pretty good life in this province. We

have excellent health and education facilities. We have a very good

standard of living. Individuals who choose to make these purchases

south of the border probably don't realize it, but they are in fact

contributing to a reduction in B.C.'s standard of living. I would ask

that they consider this before they make their next trip south of the

border. Those big dollars taken out of our economy cost us a lot for

the minor savings that they're personally realizing. I just wonder if

the minister would choose to comment on what I think is a very alarming

and increasing problem.

HON. MR. SAVAGE: I would be delighted to comment on the

statements that were made. Certainly in discussions with the federal

government and the federal minister we are very concerned. It's not

unique to B.C. It's not unique strictly to agriculture either. But it

is alarming, in my judgment, where we see a number of our Canadian

people who are very accessible to U.S. points of entry proceeding south

to make their purchases, and so on. The part that is disturbing is that

we don't seem to have the officers responsible at the borders to

collect duties that are in place. We're trying to encourage the federal

government to implement and address the problem of the officers

collecting the appropriate duties for the product that is crossing the

border.

A good example, if I may, is the amount of milk that comes across at, I believe,

five border crossing points. If you added it up for a total year, it amounts

to $75 million. The utilization of that U.S. fluid milk is taking away from

the capability of MSQ of the province of British Columbia. The MSQ sector is

derived on the 65:35 formula. And if that food and milk is taken from the United

States, it does not help the capability of an industry to establish for producing

cheese, specialty cheeses, yoghurts, etc., because the fluid being used is from

the U.S. Before we can achieve the MSQ share for industrial production, we have

to use the fluid sector. So we are being deprived of very nearly 1 percent of

the amount of MSQ we could have accumulated if that milk were purchased in B.C.

MR. ROSE: I was going to comment on this as well. Has the

minister suggested some sort of duty on U.S. milk? Seventeen percent is

the difference in the subsidy that we give milk, which is about 10

percent, quoting from the same article; I'm sure I saw the same

article

as the member for Langley. The U.S. is about 65 percent. So U.S.

customers pay 65 percent of the true cost, while our customers pay 90

percent.

I want to know whether or not the minister thinks it would be

helpful if the two sides of this House could work together on seeking

some redress from the federal government. If they're pelting headlong

for a free-trade arrangement, we don't have a very good bargaining chip

here. And that's the problem, because they'll drown us in that milk.

I've heard this story before: if we had a level playing field, we could

compete. There will be no level playing-field. There's not going to be the

same price for labour, the same price for workers' compensation, land, water

or hydro; and that's the only way we can compete. We're dead in the

water unless we can do something to protect ourselves, or decide we don't

need the industries. Now if we decided that, then that's a simple problem.

We don't need the beer industry either, because one Milwaukee brewery could

flood all of Canada with beer — and I'm not going to do the sadder but wiser

routine.

We have certain provincial policies. and we'll get to it when we

talk about free trade in wine and beer. But the Americans obviously

want it, and we're going to have a difficult time.

Perhaps the minister might comment to say, look, if the U.S. reduced

their own subsidies, or we made certain that we had tough, thoroughly

investigated duties.... Those officers know who's buying milk; they do

it daily or weekly down in Blaine, Aldergrove, Sumas, Douglas, and

Point Roberts — well, they'll be drinking water now.

I wonder if the minister could comment on the two things. Does he

think that enforcing the duty, greater enforcement, attempting to get

the subsidy reduced or at least equalized to our own so we can

compete.... There's one place we can compete well. Might there not be

an effective sort of bipartisan approach to John Wise and the feds?

HON. MR. SAVAGE: Mr. Chairman, I think the hon. member

opposite asks very good questions. It's something we've been dealing

with very extensively. If we are to realize the importance this

industry plays to the economy of the province of B.C., I'm sure the

federal minister has to recognize on the same basis as the other

provincial ministers the extent agriculture plays in the economy of

Canada. It's very prudent that we understand the number of issues that

are going to have to be addressed relative to bilateral trade.

There are a number of things. As the hon. member referred to,

there's common subsidy practices, programs that are in Canada: Canada

Pension, certainly B.C. workers' compensation, the hourly wage rates

that will allow either our processors, our farmers or our delivery

system to compete equally with the U.S. Unless all of the programs are

identified fairly on each side of the border, then we are going to be

hurt. We cannot just carte blanche say we're going to open up for free

trade, because, as the hon. member said, we will lose that battle.

There is no way the Canadian producer, in light of the acts and

programs exist in the United States, can compete. We do not have the

funds available in this country to match U.S. programs.

MR. ROSE: Well, I'm tempted to go into the free-trade stuff

now, as a result of that, because it does offer a bit of a springboard,

but there are two or three other things I wanted to talk about, and one

of the major ones is the agricultural land reserve. We've had the

latest example of a complete capitulation out in Richmond, with 150

acres exempted from the agricultural land reserve and signed by the

minister.

[11:30]

This is only one example of an appalling story going into the past

for about ten years, and probably into the future, unless people really

get angry and outraged. I sometimes wish I had the powers of outrage of

the first member for Vancouver East (Mr. Williams). However, I don't

want to develop severe chest pains, and even though I feel deeply about

it, I'm not at the same time prepared to fulminate to the extent that

sometimes, I think, would be more effective.

Here's the story. In 1975 there were 4,700,000 hectares in the

reserve; and today, in round numbers, there are 4,600,000. There is a

loss of 30,000 hectares over 11 years. Everyone knows how scarce a

commodity farmland is in British Columbia; it amounts to about 4

percent. Most of it is in areas which are seasonally disadvantaged.

[ Page 2326 ]

I look at the Agricultural Land Commission, and I look at the

inclusions and the exclusions. The exclusions, by and large, are in the

Okanagan Valley, the Comox Valley, the Fraser Valley and places in the

lower Island. Those are the places where people like to live, and they

are the development areas.

I think everyone knows — if they don't, they should — that the

Agricultural Land Reserve was brought in because roundheeled pushovers

— that's not a rare bird, those are older persons — on councils

couldn't withstand the blandishments of developers. That's why we have

it. That's why we took it out of local control. So what happens now?

Some wiseacre comes along with either a political connection or some

scheme that's going to bedazzle a local council into millions of

assessment riches, and he gets it on approval.

So it goes to the Land Commission; they turn it down — in the case

of Richmond — four times. It's in the Richmond plan as agriculture

land. There's no recreational need for it, according to any assessment,

in Richmond. Yet plunked right in the middle of farmland is an

exclusion for a golf course and a spot zoning for a clubhouse. Next

thing, there will be a driving range and then a parking lot, and then

maybe some houses around it to make it viable.

AN HON. MEMBER: A bar.

MR. ROSE: Well, that would be nice on the nineteenth hole, and maybe a couple of highrises around there.

So what happens? There has never been a case when a golf course has returned to agricultural land — it's gone.

I'd like to know why the minister.... What are the criteria for this

sort of thing? Look what happened to the appeal. Let the House know

what the score is on this. If there is to be an exclusion from the

agricultural land reserve.... And maybe there should be, and there

should be additions too — I don't think we quarrel with that — for good

and sufficient reasons. But most of the reasons aren't very good.

He comes from Sardis — strictly from hunger, up in Sardis.

There are a couple of other examples of that. There may be some good

reasons. That's not one of them, in my own view. It doesn't matter what

my view is, particularly. The point is: if you want to get out of the

agricultural land reserve because it was slapped onto you and maybe

there were some mistakes made and there are some reasons to get out of

it, you go to the Agricultural Land Commission for a review. That was

done four times in the Richmond case. When it wasn't granted....

I see the member for Chilliwack (Mr. Jansen) is getting poised on

the balls of his feet. You'd just better rest your feet and anything

else you might want to rest, for I'm not finished. Do you want to make

an introduction, or do you want to get some more land out of the land

reserve?

It's turned down by the land reserve, then they go to the council,

and you deal with the roundheel pushovers. The roundheel pushovers say:

"We can appeal to cabinet." Then they go up to cabinet. In the case of

Richmond, guess who the members are on the council. The second member

for Richmond (Mr. Loenen). And guess who else is in the cabinet. Who is

he? Big VZ. And he, along with the Minister of Agriculture — who is

supposed to be protecting farmland — signs the order, ignoring the

advice of the Land Commission completely. All right?

Here's what has happened here: cabinet, by individual appeals. What

you can't get by the front door, you get by the back door. And here's

the record — a sorry record. Appeals to cabinet by individuals were

established in 1978, and use made of this provision has changed

dramatically. In three years — '80, '81 and '82, 23 percent of the

appeals were granted, while in '83, '84 and '85, 74 percent were

granted. About 70 percent of all exclusions were prime farmland. If the

minister is going to be a trustee of that prime farmland, then he has

got to show me the rest of British Columbians, because I'm from

Missouri and so are they, and they resent this.

This land in Richmond — for those of you who don't know — was

surrounded by agricultural land on three sides and across the road was

more agricultural land. It was in the plan of Richmond. So there have

to be reasons. There has to be a good reason, or else people get very

suspicious. Now I'm a very trusting person, but I get suspicious when

things like this happen.

What guidelines were used to come to that decision? Maybe if we had

some guidelines and these were published, it wouldn't be just, sort of,

you get palimony. It would be something that you could defend publicly,

and I don't think that's the case. Why don't you publish the criteria?

Why is it just done by order-in-council in the dead of night,

furtively, behind closed doors? And when the dirty deed is done, then,

and only then, do you publish.

This is not a very good record for the minister. I would just love

to hear his explanation for joining forces with the roundheeled

pushovers on councils.

MR. CHAIRMAN: Just before I recognize the Minister of

Agriculture, the second member for Langley has asked for permission to

make an introduction.

Leave granted.

MR. PETERSON: Mr. Chairman, in the members' gallery is a very

good friend, a lawyer who lives and practises in Langley, and his

family. I wish the House to join me in welcoming Mr. Peter Minten and

his family to the chamber.

MR. CHALMERS: It's no secret that the Okanagan area has been

world-famous for its grape-growing and wine-making for many years. We

in that area have some severe concerns, as some of the members opposite

also have, about free trade. We recognize the importance of free trade

to western Canada and see a lot of benefits, but we have some concerns.

The grape industry is about a $150 million industry. It provides

some 600 jobs directly in British Columbia — 300 of which are in the

grape-growing area, 300 in the winemaking — and, I'm told, some 2,200

seasonal jobs. Also, in the Okanagan it is very significant from the

standpoint of tourism. That's something that is extremely difficult to

measure but nonetheless is very important.

Of course the growers are concerned about their future after a

free-trade agreement with the United States. I think they're looking

for some assurances that, first of all, the government is fully aware

of the industry and its unique problems; and, secondly, that we as

government are prepared to help wherever possible to ensure that some

sort of orderly phase-in period is provided. Because it's a federal

jurisdiction and in the federal hands, we just want to know that the

[ Page

2327 ]

ministry is going to be there to help them in every way possible.

HON. MR. SAVAGE: I think the member for Okanagan makes a key

point relative to an industry that plays a very important role, to the

extent of approximately $145 million in the economy of the Okanagan in

British Columbia.

Let me say that under the Wine Equities Act in the U.S. there is continued

pressure put on Canada to allow, in the beverage sector, freer trade and the

importation of California or U.S. wines. But I think it goes without saying

that it is my responsibility to defend what the industry means in the way of

jobs, as the hon. member recognized, and the value of that industry. We're

not just talking about the producers; we're talking about the wineries.

I have taken the opportunity to meet with the wineries and with the grape-growers

and have put their concerns forward to the government of British Columbia. I

think, hon. member, you're well aware of that. I believe it is a very key

industry, a good industry for the province of B.C., and we should do everything

we possibly can to maintain that industry in British Columbia; and I make that

commitment to you.

If I may now respond to the hon. member opposite, the House Leader,

relative to the questions on the ALR, the particular application that

was referred to in Richmond is not an exclusion, as I recollect it;

it's a conditional use. If you're worried about the golf courses being

on land.... There's the odd time when fairways are plugged with trees,

etc., and sand traps are laid; but it does not prevent, in the event

that we need that land base for food production, those trees being

lifted and the sand hauled away, and we still have the farmland left.

That's the only way that I think we should be looking at.... And I

think I've been as good a defender of the ALR as anybody. I value the

family farm contribution to this province, and I will continue to do my

utmost to secure the maintenance of the family farm in British

Columbia, and for that matter in Canada.

MR. ROSE: I'm relieved to hear that. I know the minister is

interested in maintaining the family farm. I hope he's equally

interested in maintaining Colony Farm, because there's another

razzle-dazzle development scheme about a racetrack, and some veterinary

services where the forensic clinic is at present, and other scams to

spot-zone as they've done in Richmond.

What we want on this side of the House — and what the residents in

that area really want — is to have that land leased out on a long-term

basis under your ministry. Because B.C. won't lease it; they haven't so

far. It's worth about $6,000 an acre, and there are 600 acres. There's

$3 million there, if you got the full price for it. But in 20 years,

with rent at $250 an acre, you get the same amount of money, and we

preserve that farmland and don't cover it with horse manure from the

racetrack. That's all the scheme is: it's designed to spot-zone the

grandstand, which is not compatible, just the same as the golf course

clubhouse is not compatible with the land use, so you spot-zone it. But

what you do is raise the expectations of every landowner surrounding

the main property, because you've gone commercial. Don't take my word

for it. Take the word of the Land Commission. This is what the Land

Commission said: "A golf course represents an irreversible loss of

agricultural lands, given the capital costs involved." I know, you

could go in in wartime, and dig it up and plant lettuce and have

Victory Gardens. But you know that that's nonsense.

And everybody else knows that it's nonsense. The draft plan for Richmond

says it's "agricultural." I think it's a crime that this

stuff goes on.

What's Terra Nova's future? It's before ELUC, too. Does ELUC join

the rest of the roundheel pushovers on councils? The back door? After

this turn-down by everybody in sight, what's going to happen to Terra

Nova? Can you tell us? No, it's before cabinet. In the dead of night it

will be changed, and they'll say: "Well, I'm sorry. There were good and

sufficient reasons for it."

Two things: will the minister publish the criteria? What are the

criteria that would move a council to grant an appeal when it's turned

down by the Land Commission four times? I don't object to appeals to

cabinet. That's not the objection. I think there should be an appeal —

maybe from dumb decisions by the Agricultural Land Commission. It

doesn't matter if you're a murderer; you have the right of appeal. But

when the cabinet is increasingly granting these appeals — and I gave

the House the figures a little while ago — one of two things must be

wrong: either the Land Commission is ineffective and should be beefed

up, because they don't have the proper intelligence to operate, or else

the cabinet holds their decisions in contempt and doesn't give a damn

about them. Then get rid of them; they're no good to us then.

[11:45]

Will the minister publish the criteria for exclusions by cabinet?

And will he show us and provide the House with the designated criteria

and the reasons, not just past.... That's the only way the skeptics

among us can be reassured.

HON. MR. SAVAGE: To the hon. opposition House Leader,

certainly I can say that the number of appeals that have come to the

government before I was the Minister of Agriculture.... Those appeals

were in the process before I had any say on whether they did come

forward. They were agreed to by previous ministers. They had to be

dealt with, yes.

Interjection.

HON. MR. SAVAGE: Yes, the Richmond one which you referred to.

I signed the thing after, but it had to come forward because it was

agreed to by a previous minister, to come forward to ELUC. It wasn't

agreed to by me. That was the process, and that's allowed under the act

if you read the sections in the act.

On the issue of publishing, the act clearly states — and the act is

public — what processes are allowed to come forward for appeals. If I'm

not mistaken, approximately 93 percent of all applications that come

forward to the Agricultural Land Commission are dealt with by them. Now

relative to the criteria by which those decisions are made, under the

act, if I recollect it properly, the decisions are made on the basis of

soil capabilities. It has nothing to do with the economics of the

particular farming operation. The Land Commission's decision is made on

the soil capabilities. That's their qualifying criterion. That's how

they pass the decisions on through. They then give reports to the

minister, who in turn will take them to ELUC to evaluate the decisions

and how the process is followed through. When it gets to ELUC, that's a

decision they have to follow on the basis of the recommendations of the

Provincial Agricultural Land Commission.

[ Page 2328 ]

MR. ROSE: I hope the minister doesn't quarrel with that,

because if we get into economics, then divide it up completely, four or

five houses to an acre, because you can make eight times the amount

that way than you can on farmland. That decision caused the hiking of

the prices and the economic disviability of every one of those

surrounding parcels. So you created a tremendous value for the golf

course and the guy that owns the golf course — the May family, I think.

You made the others uneconomic to farm because the land prices are too

high. One of our problems in Canada is that our best land is around our

best cities. Compared to the United States, where serviced land is $500

an acre, ours is worth $6,000 to $10,000. That's what's wrong with the

grape industry here in Canada compared to the United States, even in

Washington.

But the land criterion is the only criterion, in my view; it's not

the economics of it at all. The economics are terrible, because the

best thing to do is to plow your farm up and put houses all over it.

It's just like another Spetifore amendment.

I guess I've expressed myself on that one with, I hope, sufficient vehemence.

Let me talk a little bit about free trade, if I may. There are other

things I want to talk about, but I promised the minister I wouldn't be

at this more than three hours, and I know he's prepared for that, and

it's nice to have him here. I wish we weren't pressed for time, so we

could tiptoe through the tulips for longer perhaps. It's an

agricultural term.

Interjection.

MR. ROSE: No, I'm going to carry on, unless I'm carried away — bodily.

Here's the leaked document from the United States that I referred to

earlier. It said that agriculture is not a topic of free trade. Here's

a staff briefing by the American Bill Merkin, deputy U.S. negotiator

for U.S.-Canada trade delegations. It's a brief to the Congressional

staff on the progress of negotiations towards the bilateral Canada-U.S.

trade agreement. The following

summary provides highlights of Mr.

Merkin's presentation. It's in a plain brown envelope. It's not

pornographic, but it's very threatening.

It says here: "Canadians are pushing strongly for a trade dispute

tribunal that would require binding arbitration." I think that a lot of

people, the carrot people, the lumber people, the hog-producers, all

the people who export from the United States are not concerned so much

about tariff barriers; it's the non-tariff barriers that bother them —

the phony non-tariff barriers. In the case of softwood, it was the

power to countervail.

But look what it says here. The U.S. administration has problems

with this kind of process. They don't want a dispute-settling

mechanism. If they don't want a dispute-setting mechanism, it means

that we let down our barriers to trade, and they keep theirs. Look what

it says here about agriculture a little further down. "The issue is on

the table, but not much progress has been made." This is under the

heading "Agriculture." "The administration will address Canadian dairy

and poultry quotas and discriminatory practices of the Canadian Wheat

Board." That's good news, isn't it? The important issue for agriculture

in the talks is to try to develop a unified stand on agriculture

subsidies and global agricultural policies so that the U.S. and Canada

can increase negotiation power in what amounts to the GATT talks in

Uruguay. Beer and wine: Merkin's gut feeling.... It's interesting that

he would use the term "gut feeling," as it applies to beer, anyway.

Wine is less of a problem than beer. I don't know why. I guess because

there are fewer of us, and we don't have the same problems

interprovincially.

"Beer must be brewed in the province if it's to be sold there without

the high taxes assessed on imports. This provincial restriction has led to ubiquitous

small breweries in each province." So the only way we can have the American

kind of heaven in the beer industries is to get rid of the jobs — like 400 in

Newfoundland — in a brewery. We'll do it all in Milwaukee, and we'll

have one giant brewery to serve B.C., Alberta, the west coast, and right down

to California. I don't know if that's good for us; I don't really

know. I think it sounds fine on paper. There may be jobs elsewhere, but I know

400 brewery workers in Newfoundland would be mad if they lost their jobs, because

they're kind of short of jobs there anyway.

So this is really the crucial thing, and I'm not particularly

relieved. I hope the whole thing goes down the tube, in spite of what

they said about our federal party in this morning's paper, as if

they've done some sort of shift. What they're essentially saying is:

"Carry on with the talks. Let's see what you've got." But the thing is

dead in the water, because I don't think the U.S. Congress is going to

give up these things. Unless we get a dispute-settling mechanism, we

are not going to have it anyway.

I had hoped to complete this business about the impact of free trade

on things generally; I may come back to it. I'd like to say a word,

though, about the wine industry in the southern Okanagan, because

that's high on the U.S. priority list, and it really alarms.... It's

$150 million and 6,000 jobs at peak periods, according to the grape and

wine people that I've talked to. But at the same time that that's

threatened.... And it is on the table — the wine industry. Some

suggestions about a 15-year phase-out are laughable. I mean, the

climate's not going to change in 15 years, and that's why we can't grow

those varieties. The land prices are not going to change. We're not

going to get taxes and subsidies, and pesticide standards of that kind

aren't going to change in 15 years.

They're gone. Your friends in the Okanagan are down the tube.

They're going to be trampled upon; they've been crushed with the bare

feet of the United States.

At the same time that we're doing this, I've got a couple of little

news releases here. "For immediate release," all over B.C., June 16:

"Inkameep Vineyards will be able to bring currently unproductive land

into production due to an irrigation project that has received" $60,000

in federal funding. The wine industry is suffering from a terminal

illness, and we're going to give them $60,000 more to put in more

grapes. Come on! Something's got to be funny about that one.

Here's another one: Okanagan Falls. "A South Okanagan plan to

increase vineyard production through improved irrigation has received

$13,764 funding assistance under the federal-provincial agriculture

agreement." I have no objection to those things; they're terrific. That

Inkameep, I believe, is on a native Indian reserve. I don't know what

the O.K. Falls one is. But it doesn't seem to make much sense to me. I

can't reconcile the fact that we're putting money like that — maybe

$70,000 or $90,000 or whatever it is — into these two projects when the

Minister of Economic Development says it's high on the priority list,

it's going to go, but maybe we can give them a 15-year phase-out period.

[ Page 2329 ]

I don't understand that, and maybe the minister could think about

that while he enjoys a nice lunch, and when we come back we can talk a

little bit more about that if he'd like to. He should try some Canadian

beer and, to be a good, loyal citizen, have at least a litre of wine,

and we can have a more enjoyable time here this afternoon. Okanagan

wine if at all possible.

The House resumed; Mr. Speaker in the chair.

The committee, having reported progress, was granted leave to sit again.

Hon. Mr. Strachan moved adjournment of the House.

Motion approved.

The House adjourned at 11:56 a.m.

[ Return to Legislative Assembly Home Page ]

Copyright 1987, 2001, 2008: Hansard Services, Victoria, British Columbia, Canada