1998 Legislative Session: 3rd Session, 36th 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 8, 1998

Afternoon

Volume 10, Number 13

[ Page 8421 ]

The House met at 2:04 p.m.

Prayers.

R. Thorpe: On behalf of the official opposition, it gives me great pleasure today to introduce His Excellency George Bullen, the high commissioner for the Organization of Eastern Caribbean States, and his delightful wife Margret. Will all the House please make them welcome.

S. Hawkins: In the gallery today are two very good friends of mine from Okanagan West, who are also constituents of mine: Eva Jennings and Michael Jennings. Accompanying them are Phyllis Rivers and Guri Stange. Would the House please help me make them welcome.

W. Hartley: Hon. Speaker, on your behalf I'd like the members to welcome 27 grade 11 students, with some adults and their teacher, Mrs. Albers, from Victoria High School in Victoria.

Hon. J. MacPhail: I'm pleased today to welcome Doug McClelland from the Institute of Chartered Accountants. It is with pleasure that he joins us to watch the proceedings. May we please welcome him.

Hon. D. Miller: It is my pleasure today to introduce a number of guests to the House from South Africa. They are here in British Columbia looking at policy issues related to our mining sector. The South African project, the Kwagga project, is loosely modelled on the Whitehorse Mining Initiative completed here about four years ago. Joining us are Ms. Hesphina Rukato, Mr. Grant Mitchell, Ms. Esther Englebrecht, Ms. Lorraine Mudunungu and Ms. Naseema Ebrahim. With them as well is Ms. Lois Houge, a Canadian adviser attached to the project. I would ask the House to make them most welcome.

Hon. M. Farnworth: I'd also like to take the opportunity from this side of the House to welcome His Excellency George Bullen, the newly appointed high commissioner for the Organization of Eastern Caribbean States. We will be meeting later on this afternoon to discuss issues of mutual interest, and I would ask the House to make him welcome.

G. Campbell: I'd like to introduce today a number of representatives of the Chinese media: from AM-1320, Amy Ko; from AM-1470, Agnes Wu; from Fairchild TV, Endora Fan and senior producer Kevin Ng; from TalentVision TV, Joyce Lee and cameraman Kong Kwai Man; from Ming Pao , Albert Tsui; and from Sing Tao , Carol Tong. I hope the Legislature will make them welcome.

Hon. D. Streifel: I'd like to introduce to the House two people who are extremely important to me: my best friend, my wife Linda; and my best friend's mother-in-law, my mother Edith. I bid the House make them welcome.

B. Penner: It is my pleasure today to make two introductions. First of all, a long-time friend of mine -- in fact, we've been friends since I was a teenager -- is here visiting from Chilliwack: Lisa Steinebach. Would the House please make her welcome.

In addition, a woman by the name of Anna Wong is visiting here today. She works for the Leader of the Official Opposition's office in Vancouver. Would the House please make her welcome.

Hon. C. Evans: Sharoo Modha and her younger sister Puru Dave are visiting us here today. Would the House please make them welcome.

C. Clark: Visiting us today is an employee of the Leader of the Official Opposition's office, who is also a constituent and neighbour of mine: Nancy Holman. I hope the House will make her welcome.

M. Sihota: Visiting us from India today is Mr. Bhandari, together with his wife and two children. Mr. Bhandari was here the other day as a part of the trade delegation from Punjab, and he was so captivated by the beauty of this city and this island that they decided to extend their stay and come back to Victoria for another day. Would all members please make them welcome.

Oral Questions

LOTTERY CORPORATION DOCUMENTS

AND COSTS OF FOI RELEASE

I. Chong: In a freedom-of-information request, the B.C. Liberals requested copies of all marketing strategies, analysis and reports with respect to gambling and the Asian community conducted by the B.C. Lottery Corporation since 1994. The response we got back referred to there being 6,500 pages of documents. Can the minister responsible for the B.C. Lottery Corporation tell us what marketing strategies are contained in those 6,500 pages of reports on gambling and the Asian community?

Hon. M. Farnworth: I would suggest that the hon. member read the reports when they are released by the freedom-of-information commissioner, and she will find the information she wants to find out.

The Speaker: First supplementary, the member for Oak Bay-Gordon Head.

I. Chong: From the response of the minister, it's obvious that he hasn't read the reports; otherwise, he would be able to give us that information. A very simple question to the minister: can the minister responsible for the B.C. Lottery Corporation tell us why, when we ask for marketing documents geared to a specific ethnic group, we find that there are over 6,500 pages of documents in the ministry's possession related specifically to the Asian community?

Hon. M. Farnworth: I would repeat to the hon. member: read the information. If it has been released under the Freedom of Information Act, it will be released, and the hon. member can see what the Lottery Corporation is doing. She can find out whatever information she wants and can put her own spin on it -- whatever she wants to do. It's public information. She'll read it.

G. Plant: It would be nice if the public could ask for the public's information and get it. Unfortunately, it's not that simple. We made a request for that information on November 7, 1997, and we were told two months later -- January 6 --

[ Page 8422 ]

that it would cost $5,000 to produce 6,500 pages. Just for the sake of helping the members, that's almost two months to tell us that it would cost almost a dollar a page to get this information. The taxpayers have paid for these documents once. These are the people's documents. My question to the minister is: why do the taxpayers have to pay $5,000 to get them back?

Hon. M. Farnworth: You know, if there weren't a charge . . . . Nothing in this world is for nothing. There are costs for labour, costs for paper, costs for research, costs for production. There are costs for everything. This is an opposition that time after time criticizes the government for "spending, spending, spending." Well, what we have here is an opposition saying that it should all be for free.

If they want the information, they can get the information. It's been released under freedom of information. They can take the time themselves and read the information for themselves.

The Speaker: First supplementary, the member for Richmond-Steveston.

G. Plant: Here's the situation, and I'll help the minister with some statistics. The freedom-of-information commissioner today referred us to a report that makes it clear that only 32 percent of B.C.'s responses to freedom-of-information requests are actually completed within the 30-day requirement. That's the worst rate in Canada, and the rate for over 60 days is worse -- also the worst province in Canada. Faced with those statistics, this government, including this minister, is introducing fee hikes, charging fees and cutting the expenditures it's prepared to invest in freedom-of-information requests.

My question, again to the minister, is: why is he actively taking steps to deny the public access to the documents they have paid for in the first place?

Hon. M. Farnworth: If there's a problem in getting documents out from the FOI commission, it probably has more to do with the blanket requests that come from the opposition on every topic under the sun so that they can engage in fishing expeditions at the taxpayers' expense.

[2:15]

Interjections.

The Speaker: Hon. members . . . . I recognize the member for Shuswap.

NFO, FRBC AND FOREST SECTOR JOBS

G. Abbott: Mt. Leighton Forestry Services is a first nations company located in Gold River. This company takes a lot of pride in being successful entrepreneurs, but since the creation of this government's New Forest Opportunities, they've been reduced to "unemployed labourers having to depend on the hiring hall and the government to feed our children." Can the Minister of Forests tell us why New Forest Opportunities is taking away self-supported first nations jobs and forcing first nations people onto the unemployment lines?

Hon. D. Zirnhelt: The member said it was from Golden. The New Forest agreement does not . . . .

Interjections.

Hon. D. Zirnhelt: Sorry, Gold River. First nations, if they're unemployed forest workers, have an opportunity equal to other unemployed forest workers from the IWA, or wherever, to be enrolled in these programs. Further, I would say that we are working with first nations in many cases to have exemptions for first nations projects. Where they have a track record and they are proven performers, we have taken steps to exempt them.

The Speaker: I recognize, for a supplementary, the member for Shuswap.

G. Abbott: That's the entire point here. These people were not unemployed until this meddling government came along and put them there. As a consequence of this government's bureaucratic, centralized meddling, this company now faces bankruptcy. Prior to NFO coming along, the company had pre-signed contracts. Now all the contracts have been shut down. This is a government that tells us that New Forest Opportunities is going to create jobs. To the Minister of Forests: why is it having exactly the opposite effect?

Hon. D. Zirnhelt: They may be talking about the redistribution of the jobs . . . . But if they are local unemployed forest workers, they will have equal opportunity to be employed on New Forest-funded agreements.

Interjections.

The Speaker: Minister, one moment, please. Take your seat.

Hon. members, come to order, please. Members may know the answer, but others of us don't. So I'd like to have an opportunity to hear the answer.

Hon. D. Zirnhelt: The opposition could speak to any displaced forest worker and say it's because of New Forest. New Forest has been established to employ people who have been displaced from all sectors in the forest industry. The opposition was calling for New Forest -- Forest Renewal -- funding to employ all displaced forest workers. We've brought in a system that's fair to all sectors in the forest industry.

C. Clark: Among the people that have been "redistributed" out of jobs are the people in this native community. They point out in their letter that it is young people in particular that are paying the heavy price for this minister's insistence on using NFO. They say: "Speaking of our children, how will our youth ever receive training in the forest?

They don't qualify for this program, because they're not displaced forest workers." How can the minister defend this program when youth unemployment is at record highs, when native youth are particularly hard-hit and when he tried to create a program that's supposed to be creating jobs but instead is cutting out the people who need the work the most?

Hon. D. Zirnhelt: Forest Renewal funding is not selecting out youth over anyone else; in fact, the partners of Forest Renewal have suggested that we deal with people who are displaced for whatever reason. It is not designed to bring young people into the forest industry. We have youth employment programs that they may qualify for. This morning the Premier, the Minister Responsible for Youth, announced another youth employment program that some of the first nations people will equally qualify for.

[ Page 8423 ]

The Speaker: First supplementary, the member for Port Moody-Burnaby Mountain.

C. Clark: Hon. Speaker, what this government should be doing is trying to get young people back to work, trying to break the welfare cycle on native reserves. That's what this government should be doing. They should not be redistributing young people -- young native people -- out of work in B.C.'s forests. That's what they should not be doing. The only way to break the welfare cycle on reserves is to get young people into the workforce. Will the minister shut down NFO and start trying to find programs that will get young people on reserves back to work, so that he can keep the promises he made to the native communities of British Columbia?

Hon. D. Zirnhelt: This opposition is making up some promises. I don't know what they're talking about. We have said that we would maintain . . . .

Interjections.

Hon. D. Zirnhelt: I don't know; they're getting to pointing again and thinking that they can make up promises, hon. Speaker. This opposition . . . . The Leader of the Opposition, at a conference of silviculture workers, said that he would reduce stumpage so there would be no income to Forest Renewal, and there would be no jobs funded by Forest Renewal for anyone, native or not.

We have said to the aboriginal community that the percentage of employment that they had under Forest Renewal . . . . We will have agreements whereby they will have the same proportion of jobs under New Forest and all Forest Renewal programs as they had before.

G. Farrell-Collins: Well, it appears that the IWA members in the minister's own community are so happy with Forest Renewal that at their last meeting they voted overwhelmingly to call for a full audit of the practices and procedures undertaken by Forest Renewal. Things are so bad with Forest Renewal that the minister's own friends in his own riding are calling for a full audit of the Forest Renewal B.C. program. Can the minister tell me if he intends to honour that request from friends and supporters in his own riding?

Hon. D. Zirnhelt: We have every intention of meeting with them to discuss their concerns. There have been meetings taking place already -- at least, phone calls. I was at the meeting where this resolution was discussed. So I have full knowledge of their concerns, and I addressed them in the meeting.

The Speaker: The Opposition House Leader for his supplementary.

G. Farrell-Collins: Thank you, hon. Speaker, but he didn't answer the question, did he? His own members, his own supporters in his own riding, said, "FRBC has developed into one of the most complex bureaucracies in the province of British Columbia," exactly as the opposition said it would four years ago. Forest Renewal B.C. is the most bureaucratic operation this government has yet set up, and the minister's own supporters in his own riding say so. Will the minister not just discuss, not just meet with, not just talk about, but will he stand up today and call for the audit of Forest Renewal B.C. so his own supporters in his own riding can get to the bottom of Forest Renewal B.C.?

Interjections.

The Speaker: Minister, before you begin, I think we need a little quiet on your side of the House. I recognize the Minister of Forests.

Hon. D. Zirnhelt: I'm not convinced that there's a need for an audit, for wasting money on an audit, when what we really need is the expeditious spending and delivery of . . . .

Interjections.

Hon. D. Zirnhelt: A year ago this opposition and others were criticizing Forest Renewal for the amount of money they spent on administration. That has been reduced dramatically through the creation of long-term agreements for land-based programs. So we are reducing the amount spent on administration. With respect to this particular program, it was an issue around a funding agreement for some $600,000. The vast majority of the money being spent in that region is going to the IWA workers there to train and retrain people in the forest industry. I think those people in that area understand that there's an agreement there, it's been signed, they have funds, and an audit isn't necessary.

M. de Jong: Well, using the new terminology, I think it's time the Premier redistributed this minister out of his present portfolio.

An Hon. Member: Expeditiously too.

M. de Jong: Expeditiously, as my colleague says.

Look, the IWA has got no confidence in this minister; it's got no confidence in Forest Renewal B.C. The president of Local 1-425, Brian Symms, says: "It's very easy to make an announcement on a project, but it's quite another thing to deliver funding for these projects. That's where the problem lies with FRBC -- announcements and delivery." It sounds like a job review -- a performance review -- of this Premier, hon. Speaker. My question to the minister is: after four years, why are we still hearing about the inability of Forest Renewal B.C. to deliver on-the-ground programs?

The Speaker: Mr. Premier, briefly, please.

Hon. G. Clark: Thank you, hon. Speaker.

Isn't it embarrassing . . . ?

Interjections.

The Speaker: Hon. members, no answer has yet come forth. So please, silence is required. Some order is required, please.

Interjections.

The Speaker: Order!

Hon. G. Clark: Hon. Speaker, aren't the members opposite embarrassed to be asking a question of the Minister of Forests about a meeting that he attended and for which they rely for their information on newspaper reports? The members opposite in this House consistently ask questions of which they know not what they're talking about. The mem-

[ Page 8424 ]

bers opposite opposed Forest Renewal, they opposed all the investment in the land base, and now they stand up and shed crocodile tears about this.

This program is putting thousands of people to work in the member's constituency -- thousands, hon. Speaker. I look forward to the debate in this House and in the next election, when we examine the hypocrisy of the members opposite on Forest Renewal.

Orders of the Day

Hon. J. MacPhail: In Committee A, I call Committee of Supply. For the information of the members, we'll be debating the estimates of the Ministry of Municipal Affairs. In this chamber, I call Committee of Supply. For the information of the members, we will be debating the Ministry of Forests estimates.

The House in Committee of Supply B; W. Hartley in the chair.

[2:30]

ESTIMATES: MINISTRY OF FORESTS

On vote 44: minister's office, $436,000.

Hon. D. Zirnhelt: I'm pleased to introduce the 1998-99 budget for the Ministry of Forests. Despite continued diversification in the provincial economy, the forest products industry still plays a central role in the economic well-being of British Columbia. Direct employment in the forest industry accounts for approximately 6 percent of total provincial employment. The gross domestic product directly from the forest sector accounts for approximately 7 percent of provincial GDP.

British Columbians want and expect our forests to be managed with a view to the future. They expect us to meet today's challenges without compromising the needs of future generations, and that is no small task. Declining markets abroad are testing the strength and resilience of our forest sector. At the same time, industry continues to restructure in preparation for future growth. These are critical short-term impacts. While experience indicates that our industry will recover in the long term, ministry policy and programs must recognize and deal with short-term needs as well as plan for the future.

The ministry's mandate, as outlined in the Ministry of Forests Act, is to encourage maximum productivity with the forests and range resources; to manage, protect and conserve the forest and range resources; to plan the use of the Crown's forest and range resources in consultation and cooperation with other ministries, including agencies of the Crown and the private sector; to encourage a vigorous, efficient and world-competitive timber processing industry and to assert the financial interests of the Crown in its forests and range resources systematically and equitably in the interests of all British Columbians now and in the future.

The ministry's mandate hasn't changed in recent years, but the strategies we use to carry it out have changed significantly. Not long ago, the Ministry of Forests focused mostly on what we would describe as economics: getting the timber harvested, collecting revenues, managing our ownership interest in the resource. Over the past decade, however, management of our forests has become far more complex. A wider range of interests is being expressed, and the ministry must consider these broader expectations in all our resource use decisions.

Social factors that influence land and resource use decisions include: urban expansion, which introduces new and sometimes conflicting land use options and increases pressures to preserve accessible forests for recreational, aesthetic and water supply uses; government priorities for health and education; the desire of many first nations communities for greater participation in the forest industry; increased interest in recreational activities in forests; and environmental stewardship, which includes increased emphasis on biodiversity, fish habitats and aesthetics.

Dealing with international and domestic market forces is a critical part of the sector's economics. While social factors continue to be central to all our work, we must respond to a clear need for economic restoration of our forest industry and communities.

Our response to these challenges includes action in three areas: strengthening and diversifying the forest sector through the jobs and timber accord; cutting red tape and cost to industry in the Forest Practices Code, without reducing environmental standards; and lowering stumpage fees, the week before last, to account for unforeseen -- largely Forest Practices Code-related -- logging costs since 1994. During the past year we have taken significant actions on all three fronts, and we will continue to focus on all three areas this year and into the future.

Hon. Speaker, I'd like to talk a bit about the first part of our response. The jobs and timber accord was introduced just under a year ago, and despite a major downturn in our international markets, several of the key components have already been implemented. The accord recognizes important linkages among a healthy forest economy, sustainable forestry management, stable communities and jobs. It sets priorities, actions and programs to strengthen those linkages.

Those priorities are: working with industry in order to increase cost-competitiveness; maximizing investment and employment benefits through diversification; creating new, economically viable and family-supporting jobs in the forest sector; sustaining and enhancing existing jobs; generating more value from every tree harvested; and making investments that increase the growth, yield, value and availability of timber.

The jobs and timber accord is a four-year strategy to support an industry in transition. It will take time for industry to adapt to new markets and market conditions. It will take time for the goals of the accord to be realized. We are in year one of a program which extends until December 31, 2001.

The accord identifies specific initiatives that achieve its goals: increasing the timber supply to secondary wood industries; encouraging the value-added sector by increasing the transfer of sawn fibre from major licensees; increased industry investment in improved technology and higher value-added products; investments through Forest Renewal B.C. to renew our forests; improved delivery of forest renewal programs and programs through multi-year investment agreements with forest companies; improvement of industries' access to their full allowable annual cut allocation; and the appointment of a jobs accord advocate to work closely with forest sector partners and oversee progress towards the job creation targets.

I'm pleased to report our progress on these initiatives to date. On May 25 I announced the Small Business 2000 project, which will benefit remanufacturers who often have trouble getting fibre. Through this project the ministry will sell 100 percent of the small business portion of the allowable annual cut. We will sell the undersold small business volume of

[ Page 8425 ]

2.1 million cubic metres, sell most of the small business apportionment as bid proposals, reapportion a million cubic metres within the small business program to bid proposals, and make 250,000 cubic metres available to shake and shingle operators. The annual volume available to remanufacturers will increase by 565,000 cubic metres on the coast and 1.25 million cubic metres in the interior. For the first time, shake and shingle operators will be offered a quarter of a million cubic metres. They will qualify for bidding on this under the value-added program. Previously, they were not able to do that.

This three-year program will help create 3,100 new remanufacturing jobs. Since the accord was announced in June of '97, the ministry has awarded and offered 41 small business timber sales that proponents say will trigger $21.3 million in capital investment.

The government is also making progress through Forest Renewal, which is renewing our forests and supporting workers in communities. Forest Renewal B.C.'s 1998-99 business investment plan set investments at over $500 million, clearly on target to invest the $2 billion that we said over the first five years. That includes $356 million dedicated to land-based programs, creating 5,600 jobs and, for the second year in a row, exceeding Forest Renewal's jobs and timber target of 5,000 jobs.

With respect to improving industry's access to full allowable annual cut allocations, we continue to make progress on key performance agreements with forest companies. On average, licensees have increased their on-hand permitted harvesting work from under six months to over one year. We are well on the way to meeting the jobs and timber accord target of two years for all companies that want it. The jobs accord advocate, Garry Wouters, assumed his position on April 1. His work began, and he will be releasing an annual report in the coming weeks detailing accord implementation.

Other achievements and initiatives are as follows. First, three innovative forest practices agreements have been signed with seven forest companies -- five of them in one joint project in the Kamloops region. More than 80 communities have filed expressions of interest in community forest pilot projects. Legislation regarding these pilot projects will be introduced during the session. Value-added facilitators funded by Forest Renewal B.C. are about to begin the work of boosting the wood supply to the value-added sector by 70 percent.

New Forest Opportunities Ltd. is now operating on the coast, and it will provide increased job certainty to workers on Forest Renewal B.C. projects and more economic certainty to forest-dependent communities.

I want to talk about the second major action of the government to assist the forest sector: the changes to the Forest Practices Code regulations which were introduced in April this year. The streamlined regulations make operations simpler and less costly for industry without compromising environmental standards. Legislation to amend the Forest Practices Code of British Columbia Act was introduced during the last legislative session. New regulations developed from the recommendations of industry and other stakeholders come into effect on June 15.

Changes in the regulations for operational planning, forest roads, silviculture practices and timber harvesting practices include moving towards a more results-based code that focuses on results on the ground, not on paperwork; reducing the number of plans from six to three, eliminating unnecessary reviews and uncertainty around plan approvals; ensuring that strict environmental standards are maintained for timber harvesting; and improving the enforcement of the code. These changes will lead to more professional accountability.

The shift towards monitoring for end results will place greater reliance on the professional forester's judgment and quality of work. Code-related changes will reduce industry's costs by approximately $5 a cubic metre and contribute to the government's strategy to encourage investment and stimulate the forest economy.

The week before last we implemented our third strategic response to the economic factors affecting the market. On May 28, at the Premier's economic summit in Kamloops, the Premier and I announced a significant reduction in the basic stumpage rate. Stumpage charged to the B.C. forest industry is being lowered by an average of $8.10 per cubic metre on the coast and $3.50 in the interior. The reduction took effect on June 1 and will reduce industry costs by about $600 million over the next three years. This latest stumpage reduction accounts for largely unforeseen code-related cost increases since 1994.

It follows significant price-driven reductions that have occurred since October 1997 through our regular quarterly adjustments.

In addition to reducing stumpage rates, we're modifying the way stumpage is calculated. In addition to lumber prices, pulp chip prices will now be added to the formula to make the stumpage system more market-sensitive. Senior government officials have held discussions with their Canada-U.S. softwood lumber agreement partners to ensure that the reasons for the reduction are well understood. We are confident that the reduction falls within the parameters of the Canada-U.S. softwood lumber agreement.

Combining quarterly adjustments with the reduction to the target rate we have just introduced, stumpage rates will have been cut by $9.67, or 28 percent, on the coast and $9.19, or 30 percent, in the interior. Government and industry have worked together to address this serious issue of competitiveness. Tom Stephens, who is the president and CEO of MacMillan Bloedel, said that government's aggressive action puts companies in a better competitive position and that it influenced decisions to restart operations at some of its mills. Through this stumpage reduction, government has made a significant contribution to help the forest sector return to profitability.

As a result of changes to the Forest Practices Code and stumpage reductions, we have cut industry's cost by some $14 a cubic metre. In addition, achievements under the jobs and timber accord will help stabilize B.C.'s forest economy in the short term and help it expand and diversify in the long term. They are clear, purposeful actions that address issues related to cost competitiveness and investment in B.C.'s forest economy.

All of the actions we have taken in our three priority areas -- the jobs and timber accord, changes to the Forest Practices Code and stumpage reductions -- underscore our government's commitment to improve B.C.'s forest economy. And they are the context for the budget that I'm presenting today. In the 1998-99 year, as in '97-98, the ministry will focus on resource stewardship, maintaining a healthy commercial forest industry and protecting the forest resource.

This budget is about $16.5 million, or 3 percent smaller than last year. As you will recall, the ministry's budget was reduced by 23 percent in 1997-98. In order to protect the staff and financial resources needed in our districts, a greater portion of this reduction is applied to headquarters branches. The headquarters budgets are reduced by 15 percent, in addition to a 14 percent reduction in 1997-98. The regional and district offices will absorb a 5 percent reduction.

[ Page 8426 ]

I'm pleased to note that this year's budget holds the line on fire suppression. Our province has one of the best fire suppression organizations in the world, and this is an extremely efficient organization, one that British Columbians can be, and are, extremely proud of. Our province's expertise in fire suppression will become increasingly important in the future, as the value of timber increases along with population growth in rural areas.

We've also added $5 million for funding initiatives in another high-priority area: the small business forest enterprise program. Operations within the ministry are under constant scrutiny to make sure that we are as cost-effective as we can be in making land and resource decisions, in reviewing and approving operational plans, in issuing cutting authorities, in monitoring licensee performance and in protecting our forests.

In conclusion, hon. Chair, the Ministry of Forests has accomplished a great deal in the past year and will continue to work hard to support a healthy business and investment climate in the forest sector. Producers, workers and forest communities will all benefit from lower stumpage rates, reduced operating costs and initiatives under the jobs and timber accord. The budget I'm presenting today supports these three strategic initiatives, and it will help us support our forest economy and create jobs in the same way that the government already protects the environment and creates parks and protected areas.

[2:45]

G. Abbott: I want to say, first of all, that I'm very much looking forward to these Ministry of Forests estimates. This is my first session as the opposition Forests critic, so I'm looking forward to canvassing many of the interesting issues that appear in the Ministry of Forests estimates, and I'm looking forward to learning a good deal from the Minister of Forests as we move through these estimates issues.

One of the things I want to do this year, to hopefully make our estimates an efficient and productive process, is to outline early on for the minister where we propose to go with respect to the issues we'll be canvassing in his ministry. Hopefully, we are all working towards the goal of a stronger, more viable forest industry in the province of British Columbia. I don't think there's any great mystery about the things we'll be wanting to talk about. I want to be very straightforward with the minister about where we're going on this.

Before I do that, and before the deputy critic of Forests offers his introductory comments as well, I want to say a few things about what I have learned to date -- after several months of being the Forests critic -- about the forest industry in British Columbia. Over the past several months, it certainly has been a pleasure for me to visit many parts of this province, to have a firsthand look at the forest industry and to have firsthand discussions with many people who work in the forest industry. I've learned a ton from the many people I've spoken to. It's helped me enormously in terms of understanding the complex issues that frequently face this industry and this resource.

The people I've talked to, and the places I've visited in the province, certainly speak to both the current strengths and the weaknesses in our forests. I think it's important to say at the outset that, in my view and certainly in the view of the official opposition, forests can be and should be our key industry for decades and centuries into the future. This is an industry, a resource, that has served this province well for 150 years. There's no reason, with reasonable management, why it can't continue to be the centre, the backbone, of our economy for many more years to come.

What we have here is an industry that produces at least three critical things. One is jobs. My father and my grandfather worked in the forest industry for most of their lives, and I'm certainly not an exception in that regard. I suspect that many members of this House have had parents who worked in the forest industry. If you live in the interior or on the coast of British Columbia, chances are that if you don't work in the industry, several of your friends do. It's the heart, the backbone, of our economy. It produces jobs; it produces revenues.

We only have to look at the Ministry of Finance budget for this province to see how critical our forests are to the present and future of British Columbia. Without a healthy forest industry that produces the revenues we desperately need to maintain quality health and education systems, we would be in great difficulty in this province. So revenues to government are something important that this industry and this resource produce.

New investment in this province. Regrettably, because of some onerous and regressive policies, we have not seen the level of investment in this industry in recent years that we need to see. But I think that can be turned around as well. We need that new investment, because without the new investment, of course, we won't be seeing any new jobs in British Columbia. That's a key linkage here and one that we will certainly be exploring in detail in the coming estimates.

There are lots of other positive things that can be said about out forest industry. We have a tremendous land base, and a large proportion of that land base grows trees very well. In fact, we've been learning just in recent months that our second-growth forests are growing better than had been anticipated. We've got the climate, the soils and so on that allow us to produce forests in perpetuity. That should be a tremendous advantage to this province and should provide those things -- the jobs, the investment and the revenues -- which are such a critical part of our future.

As well, we have an energetic, well-educated and well-trained workforce that is well equipped to take trees from our forests and manufacture from them products which will, hopefully, be competitive on world markets. We have a forest industry which is highly efficient and which maximizes the fibre that our forests produce, for value as well as for uses.

Regrettably, however, despite the advantages that we have in British Columbia with our forests, government has too frequently been an impediment rather than an assistant to progress in our forests. In fact, I think that when the historians a few years hence take a look at the record of this government in the 1990s, they will put into perspective the performance of this ministry and this government not just in 1998 but in a period which might well span from 1991 through to early in the next century. Perhaps not; I guess the members on the other side would know better than that.

But clearly, over the period from 1991 to the present, we have seen government policies that in my estimation have done terrible damage not only to the industry and the jobs it supports but to the economy as a whole in British Columbia. Too frequently we have seen this government view the forest industry as a fat goose that would continuously lay golden eggs in this province regardless of what abuse was levelled at it.

Further, I think -- and I don't think the hon. minister shares this view -- we have seen too frequently from the other

[ Page 8427 ]

side a view that forestry was somehow an unfortunate thing, a sunset industry that really should be replaced by film and high-tech and other things like that -- that cutting down trees really wasn't a desirable activity in this post-industrial society we live in. Well, I think that view is dead wrong. Forestry does have a viable future in British Columbia and should be encouraged to the maximum, not discouraged through regressive and regrettable policies.

As well, what we have seen in the policies of this government from '91 through to the present has been a view that while forest revenues were always welcome, there should be no particular concern paid to the cost side of the ledger -- that the industry would continue to provide those revenues regardless of whether the cost structure that was thrown onto the industry was having negative consequences or not.

Of course, what we're seeing in the current weeks and months is the reality that if you load down the forest industry in British Columbia with too many regressive taxes, too much regulatory burden and so on, the industry in fact can't compete internationally. If they can't compete internationally, they're not employing people in British Columbia. They're not cutting trees in the province to the extent that the revenue projectors anticipated. As a consequence, we see those revenues to government shrinking as well.

I suspect that is in part one of the reasons why this government has in recent weeks moved, at least to some extent, to try to address the deplorable cost side faced by the industry in British Columbia.

What we have seen since '91 -- and we're certainly going to be talking about this a good deal during these estimates -- is a virtual doubling of fibre costs in British Columbia. This doubling of fibre costs is in considerable measure a product of the very process-oriented Forest Practices Code, which this government introduced in '94, I believe it was, and it came into effect in '95. As well, we have seen a skyrocketing of stumpage rates in British Columbia since the mid-1990s. The combination of these two things has thrown the industry into a tailspin. It's put them over the edge in many cases in terms of ability to bear the cost and still produce a product.

One of the distressing things I learned at the Price Waterhouse press conference on Friday morning was that despite Bill 47 -- which we spent a good deal of time on last year -- and other purported cost-saving initiatives on the part of government, we continue to see the costs of fibre increase in the province of British Columbia in 1997. It was up substantially; I believe it was up 5 or 6 percent over 1996, as I recall from Price Waterhouse. We are still seeing an upward curve in terms of those fibre costs. That's something we have to get a handle on, or we're going to be in big trouble.

The minister and I are probably going to have somewhat different views about whether the most recent initiatives of this government are going to be sufficient to turn that around. I guess we all hope that it will. This estimates process is an important part of, hopefully, finding reality. Are we going to be able to turn around that upward-sloping cost curve we've seen as a constant feature of the forest industry in British Columbia under this government's leadership?

In addition to the problems of a very expensive code and the very expensive stumpage in British Columbia, we have the problem of excessive taxation. There were great hopes not only among the forest industry but among virtually everyone in business in British Columbia that this government would do away with the very regressive corporation capital tax on investment in the last budget. Regrettably, they have not done that, and excessive taxation in this province continues to be a problem which besets this industry, along with the other problems we've noted.

Finally, in terms of attitude problems, I think the rhetoric that has periodically emerged from the government benches -- and, in particular, from the mouth of the Premier -- is something which has gone a long way to undermining the business and investment climate in the province of British Columbia. Certainly the Premier may have attempted in recent months to try to put a new cast on some of that. But I think we all remember far too clearly the election campaign of 1996 and the very prominent business-as-enemy theme which was such a big part of that campaign.

I think that there is at this point no single magic bullet which is going to turn the forest industry around in British Columbia. There's no stroke of the pen that's going to cure all of the ills. But even I would acknowledge that some of the steps are in the right direction. We do need a made-in-B.C. stumpage policy. The changes that were announced very recently around stumpage are in the right direction. Are they enough? Well, I think that's a hugely important question that we'll want to explore in depth in our discussions here in estimates.

[3:00]

Similarly, the minister valued the changes to the code at $5 a cubic metre. I've heard a great deal of skepticism in the industry. Actually, I've heard a great deal of skepticism in the government as well, for that matter, about whether $5 a cubic metre will actually be delivered as a consequence of recent reforms to the code. Three dollars to $3.50 over the next two years seems to be pretty much the strongest verdict among people in the industry and forest workers in this province.

Indeed, there is some skepticism that the projected savings from the changes to the Forest Practices Code may be more than offset -- or at least offset -- by new initiatives under the code. So we'll be looking forward to exploring those issues as well.

None of those things . . . . I don't think, as I said, any single magic bullet is going to turn things around. The problem we have today in British Columbia, if I could put it into simple terms and think of it as a ceiling and a floor, is that we have a forest industry which is being crushed between a descending ceiling -- a world product crisis . . . . Regrettably, this is now true, I guess, of the United States as well as of Japan. Our producers are being caught between that descending ceiling of world forest product prices and a rising floor of delivered wood costs.

As everyone knows, if the floor rises too high and the ceiling sinks too low, things stop. That's regrettably what we're seeing in British Columbia today with the widespread layoffs in the forest industry. It's not only a case of not being able to get any kind of return on sales of forest products in international markets; it's that the losses from those sales are too large to bear and producers are being forced to shut down.

Some of the cost issues, hon. Chair, could be overlooked in more buoyant times, when world forest product prices were very high in Japan and high in the United States. The cost side of the equation -- which this NDP government had loaded on -- could be overlooked. With the collapse of the Japanese market, the high-cost structure quickly came home to roost.

We found ourselves at that point discovering that we had gone from being one of the leanest and most efficient producers of forest products in the world in the early 1990s to one of the most vulnerable and non-competitive producers of forest products in the late 1990s. It's a bad time to be non-competitive. What we have in the world today is a host of new players putting a lot of wood products on international markets, and it's a critical time for our industry to be competitive.

[ Page 8428 ]

Again, to paraphrase, I believe it was someone who was speaking at the Price Waterhouse press conference -- and I hope I'm fairly paraphrasing them here -- who said that Europe has gone from being a very important customer for B.C. forest products to being a very important competitor to B.C. forest products. Certainly we expect that production in the Scandinavian nations, but now we're also seeing competition out of the Baltics, out of eastern Europe and even out of western Europe.

They have become important competitors with us, and it is a bad time to be non-competitive, when we have a world in which, to use a phrase I've heard frequently in recent months, the world is awash in wood. It's a time where we need to restore the competitiveness of our forest industry if we want to retain or recover market share in Japan and elsewhere.

To conclude that point, a turnaround in our markets is not necessarily going to mean a turnaround for B.C. forest products. We have to be more competitive if we want to recover our markets in the highly competitive world we live in.

One of the problems that I should mention, as well -- and that I think we'll need to discuss today . . . . And I guess the government has implicitly acknowledged this in the recent stumpage reduction which was announced in Kamloops. What we have seen since the introduction of the so-called superstumpage to fund Forest Renewal B.C. is that too frequently that superstumpage has meant -- as the dean of forestry at UBC puts it -- the decapitalization of the forest industry in British Columbia.

Superstumpage has come to represent the difference not only between profit and loss but also between the ability and the inability to recapitalize, to reinvest in sustaining the efficiency and productivity of our forest industry.

This is a key point. If we want to remain even as competitive as we are today, we have to make those substantial investments as reinvestments in industry. We are caught at this point -- and this is most unfortunate -- in a highly destructive spiral, because in recent years there has been no prospect of a return on capital employed. We just have to look at the summaries for 1997 and 1996 by Price Waterhouse. Admittedly, '95 looks better. I suspect we're certainly looking at tough times in '98 -- probably the worst of times, actually.

Because there's no prospect of return on capital employed, we have no investment confidence. As a consequence, we have no reinvestment. As a consequence of that, we have reduced competitiveness and, again, as a consequence of that, we have no prospect of profit. All of these become a destructive swirl, which is pulling our forest industry down. Again, the government may be very proud of its record in recent weeks, but we have to look to the record from 1991 through 1998. Given that record, we can see very clearly a large part of the reason for this highly destructive spiral that we are in today.

Obviously we need to turn this around. How are we going to do this? There are some fundamental reforms that are required to restore competitiveness. I know that this is a government that likes to talk about restoring competitiveness and, indeed, to claim that they have taken all the steps necessary to do that.

The issue that was raised in question period today is a prime example of the continuation by a government that is doing things which impede the recovery of the forest industry in British Columbia, which impede the restoration of competitiveness of the forest industry rather than providing an assist to restoring competitiveness. Virtually everything this government has done has reduced the viability and competitiveness of the forest industry in British Columbia, and they haven't stopped yet.

Had this government not done what they did around New Forest Opportunities . . . . It won't be any surprise that we're going to be spending a good deal of time on this in estimates. New Forest Opportunities is a classic example, again, of where a government -- I think for ideological reasons -- is undertaking a program which, in a very direct way, is going to diminish rather than enhance the competitiveness of our forest industry in British Columbia. There are some things we need to do. We need to reduce fibre costs. We clearly need a results-based Forest Practices Code in British Columbia.

When the Minister of Forests and the Minister of Environment made their announcement about the reforms, the changes to the Forest Practices Code, they suggested -- and I hope I've got my figures right -- that they could reduce the annual cost of the Forest Practices Code from about $750 million to $400 million. The minister can correct me if I'm wrong, but I believe that was about the magnitude of the savings that they projected as a consequence of the reforms to the code. I hope that's true. I hope we do make those kinds of savings.

But the thing we have to remember is: who put a code in place in the first place that cost British Columbia and its forest companies that much money? If we're looking at $350 million a year for two or three years, that is a substantial amount that has been drained -- for apparently no good reason -- out of British Columbia's coffers. We have to be very mindful of that.

Again, the claim of the government is that they are going to be able to deliver the environmental objectives of the code for considerably less without diminishing those goals in any way. Actually, I believe that could be the case. In fact, we believe that with a results-based code, we can do even more; we can go further. We are certainly going to look forward to discussing this with the minister today, and I hope, in fact, that the minister will view our suggestions around the code as constructive.

I expect that the minister, being a tractor logger from the interior -- like I am -- might even have a practical view of this and may have to argue very forcefully with his cabinet colleagues at times about some of the issues associated with a more results-based code. I hope that some of the suggestions we can offer him in these estimates will help in that process.

The second thing we need to do to restore the forest industry -- and I'm afraid this is going to be a tough one for the government -- is to enhance the business climate here in British Columbia. We need to have an environment where there is some prospect of a return on capital employed. Until we have that, we're not going to get the new investment. We have to eliminate the regressive taxes in British Columbia. Those have become an unnecessary and foolish barrier to new investment in this province. We need to see the elimination of unnecessary regulation.

Regrettably, this government is not well suited to eliminating unnecessary regulation, and they're not well suited to getting rid of regressive taxes. Those two things have tended to be the hallmark of the government: actually adding taxes and adding regulation. They haven't been successful to date in removing them or reforming those things.

There is a profound distrust of this government not just in the business community but, I think, in every forest community. I'm afraid that it may even take the eventual resignation and defeat of this government to turn around the economy of the province and the forest industry in this province. Too often we have seen this government responding to real and substantial problems with rather smoke-and-mirrors, phony-baloney responses.

[ Page 8429 ]

I think some of the classics in this are the jobs and timber accord. The proposition -- and I guess the current Forests minister is kind of wearing this one right now -- which underlies the jobs and timber accord, that government can create or cause to be created X number of jobs -- in this case, 21,000 new forest jobs over a particular period -- is a fatuous one. In fact, it's preposterous that we can cause or force the appearance of 21,000 new forest jobs in an industry that has been and always will be a cyclical industry. It is obviously coming home to haunt the government now.

Think again. New Forest Opportunities and some of the nonsense around forcing silviculture workers in this province to . . . . Even if they have a great and ongoing silviculture job, in order to work on an FRBC-funded enhanced silviculture project, they have to join the IWA, get hired out of the hiring hall, and all that nonsense. All that does, hon. Chair, is add to the uncompetitive burden which the forest industry has to bear in trying to recover in this province.

[3:15]

In this province we simply can't afford to perpetuate this kind of approach to an industry. Clearly it's time to get away from that. It's time to get back to bread-and-butter kinds of responses to these difficult problems. Without that, we're not going to make the B.C. forest industry number one again. I hope that's what the government wants to do. That's certainly what we want to do. We want to make this forest industry in British Columbia the pride of our province and number one in the world again.

I see that I'm just beginning to test your patience from a time perspective, hon. Chair. So with that, perhaps the deputy critic would like to make his opening comments, and then I'd like to advise the minister of the flow of the estimates debate from our perspective.

J. Doyle: I seek leave to make an introduction.

Leave granted.

J. Doyle: Hon. Chairman, at your request, I'd like to introduce visitors from Washington State. In the galleries today we have Mr. D. Sander, a teacher from Wellington Elementary in Woodinville, Washington. A total of 104 grade 6 students are visiting with us today, accompanied by several adults. I'd like you to make them welcome to British Columbia.

R. Coleman: I'm pleased to enter into the estimates debate this afternoon. Of course, we will be canvassing the ministry from top to bottom in the next days and weeks to come.

The first thing I must do, though, hon. Chair, is tell you that in the past six or seven months I've been in 43 different mill operations in communities across this province. I've met with workers, owners and investors, and I've met with the people that make this industry tick. There's a couple of things we should remember about this industry. First, it is absolutely incredible how it has adjusted, through the many years that this industry has evolved, on the backs of people with initiative and brilliance in the forest industry.

Their ability to make this industry tick is what has made it such a strong economic engine for this province. The other side of it is to talk to the people that are hurting out there. Let's make no bones about the fact that there are literally thousands of people in this province who are out of work in the forest sector today. The people that support the forest sector are being affected by that as well.

What does that mean? That means that people whose lives are important to them, whose self-confidence and self-respect are being destroyed by the fact that they can't pay their bills and by the fact that many people are losing their homes and by the fact that the social fabric is affected by a downturn in the economy or in the industry to the extreme that this one is . . . . Make no mistake about it: this is an industry in crisis for a number of reasons. I think we should talk about those as we go through estimates debate to see if we can come to the solutions that are necessary to fix this problem.

The first thing people told me when I went out in the province and talked to them about the forest industry was: "No more announcements. Don't give us any more flashy ads telling us that you're going to create jobs. Don't give us any announcements that you're doing something to create profit, when it won't. Don't do anything except adjust the way you do business by reducing the size of your bureaucracy and reducing the way you apply a process-driven Forest Practices Code to the industry. Wake up and smell the roses and understand that we're an industry in crisis. What we want is medicine for the industry; we don't want glitz for the politicians."

I think it's important that we realize that. They want action; they want results. They're dealing with gruelling regulations in the Forest Practices Code -- a code that is not results-oriented, a code that is affecting the way they do business simply because they've been downloaded with process upon process upon process. They tell me that that cost is shutting down the industry and that cost is affecting jobs.

We have to look at this industry for the fact that it is an engine for this province. It has been for a hundred years, and it will continue to be into the next century because we are a resource-driven province. Without an industry that's strong and vibrant in the forest sector, we are going to be affected in health care, education, social programs and all the other fabrics of our society that we hold dear to us. Without industry, without private sector investment and without jobs, we don't have the rest of that. We don't have it.

Now let's take a look at the industry. Just take a quick look at last fall: 6,000 workers were laid off in shutdowns in 21 northern interior mills. Can you imagine shutting down 21 mills in communities where these are their primary employers? How does that affect the shoe store? How does that affect the grocery store? How does that affect the community as a whole? That's where the hurt is. It's not in this Legislature, and they don't want us to create a bunch of bumf in this building that they have to deal with. They want results because they want to go back to work.

Five thousand forest workers and their families in the coastal region were laid off last fall -- and 3,000 more southern interior millworkers and loggers. That's 14,000 people out of work, and it grew over the winter. That's thousands of people being affected by us in this province because we don't know how to make this thing work.

The government keeps pointing the finger at world lumber prices, but the truth is that a lot of these layoffs are a made-in-B.C. problem. NDP stumpage problems, NDP taxes and the NDP's massive buildup of bureaucratic red tape are all contributing to a made-in-B.C. recession in our forest industry. We have to do something about it. The government in Victoria has taken B.C.'s forest industry from being one of

[ Page 8430 ]

the most cost-effective producers of fibre in the entire world and in six years has made it the most expensive fibre produced in the world.

What does that mean? Let's take a look at our stumpage costs in 1997. In B.C. we were paying $22.70 per thousand cubic metres in 1996; Alberta was $4.50; Saskatchewan, $2.37; Manitoba, $1.20; jumping over to Ontario, it was $10; Quebec was $8.52, and it was lower throughout the rest of the country.

I came across a reman operation in my own riding the other day that brings in lumber from Quebec, shipping it across the country for the same price that you can get the same kind of lumber out of Williams Lake, in the minister's home riding, with the shipping included. That tells me that we have an endemic problem in our industry: we are not even competitive within our own province with the fibre that we get to our own mills.

According to the Northern Forest Products Association, stumpage royalties, taxes and other costs in Alberta, Ontario and Quebec are much lower than in B.C. We know that. Our stumpage rate is the highest in Canada, and we're more than twice the rate of the next-highest province. How are we supposed to compete, and how are we supposed to attract investment when we have those kinds of costs loaded down on our industry?

From 1990 to 1996 -- this is a statistic that bothers me -- government revenue from stumpage royalties and rent from forest companies grew by 187 percent. The NDP tax policies have scared off capital investment with things like the corporate capital tax during the same cycle. An increase of 187 percent . . . . Those are costs that go right to the bottom line of the industry, and those are costs that create a climate where we do not make money in the companies, we do not reinvest in the industry, and we do not -- we do not -- create jobs. We lose jobs.

Since 1990, capital investment from the very same forest companies in our province has declined by almost 50 percent. So 50 percent less money has been reinvested by the companies in this province in the last five years. As a result, this is what happens: our mills are the first to shut down, and our mills are the last to reopen. That means that our workers suffer, their families suffer, and the industry which fuels taxes to our public service shrinks. What is the government's response? It's a great big campaign scam. The big campaign scam was to tell us that we had a jobs and timber accord to create 21,000 jobs.

This industry lost $132 million last year, and it lost $290 million in 1996.

But between 1994 and 1996, we took between $1.5 billion and $2 billion from this industry, in addition to the royalties in stumpage to government, and we said: "Survive." We said: "Create jobs." We said: "Do your job, create jobs for the communities and stabilize your industry while we pick your back pocket for almost $2 billion." If there were a billion dollars left in the industry in that three- or four-year period, can you imagine what the health of our companies would be today and how stable the jobs of our workers would be, because of the ability to be competitive in a world market?

Nobody has quite figured that out, except for the fact of throwing rhetoric through a jobs and timber accord.

The effect of the NDP's policies is spilling into the overall economic performance of the province. You know, we remember when B.C. was number one in the Canadian economy, but after six years of this government, we have a province that is number ten in economic growth per capita, with record levels of youth unemployment and now widespread layoffs of forest workers. It's all the result of a lot of things that we've done to ourselves. The sad part about the $1.5 billion to $2 billion that we took out of the industry into Forest Renewal B.C . . . .

I was reading the transcripts of the minister when the bill creating Forest Renewal was introduced to this House. I also read a number of the debates of other members of the government. At the same time I read the initial goals of what was going to become FRBC. You know what? We didn't meet those goals. What we did was . . . . We did not put the money where we said we were going to put it; we moved it around to a bunch of special projects in addition to it, and we created a huge bureaucracy.

This, to me, is a fraud to the taxpayers of British Columbia: money is taken out of our companies' and our workers' pockets -- money that should be theirs if we're not going to use it for what we said we would.

There are some things that have happened around here that pale by comparison, but this one is the big one. It's not a call to a judge; it's not a $200 million bailout of Skeena Cellulose; it's not taking from innocent contractors and cutting them back to 10 cents on the dollar when we, as the Crown, take over a company; it's not calls to the Motor Carrier Commission or the Agricultural Land Commission; it's not weighting boards; and it certainly isn't a Nanaimo Commonwealth Holding Society -- all of those things that we find distasteful.

The most distasteful thing is when we set out to do something, and we take millions and millions of dollars out of the pockets of British Columbians, and we don't put them where we said we would in the beginning.

We also have a business plan, actually, that we'll get into in this session of the debates, and we'll find that that business plan has changed. Things have moved and disappeared from it in the last three years -- things that were there in the beginning that are no longer there today.

It's vital that we revitalize our forest industry. So what do we have to do? Let's give you five steps that might set you in the direction to revitalize our forest industry. The first would be to replace the bureaucracy-driven Forest Practices Code regulations with results-based regulations. We've started towards that, but sit down with a professional forester and you'll know that we can go a lot further, that we can get it done and that it's going to take the will of the ministry and the will of the bureaucracy to make it happen. There's no sense in just making the announcement; we have to get it done.

Secondly, we have to shrink Forest Renewal's bureaucracy and remove the political people from the board and get industry people on the board -- people that know business -- so we can get Forest Renewal working in the direction it should be.

Third, we should return Forest Renewal dollars to the regions that generate them. These dollars can become a potent force in increasing the productivity of the land base, restoring the environment and providing for the long-term economic stability of forest communities. Put it where it belongs: put it in the forest; put it in the resource; put it where forestry and the resource can grow and build for the next generation.

We should implement an effective forest enhancement program so we can get more timber on less land. Many studies have been done on this, and a lot of work has been done. Some companies are doing that today. If nothing else, we should be pushing that harder and getting away from short-term political ad campaigns.

Fifth, the NDP has to stop, take a deep breath and admit that the jobs and timber accord is nothing but a sham. We didn't create 21,000 jobs in the forest sector as a result of that,

[ Page 8431 ]

but we spent hundreds of thousands -- if not millions -- of dollars on advertising to tell it to people. And that's a fact. The fact of the matter is that you're not going to do it. You should admit it to the people of British Columbia and realize that today.

[3:30]

This is an industry of families. This is an industry of innovation. There are mills in this province that have been built by innovating and designing and changing equipment for efficiencies that change the market. It's an industry that we should be proud of. It's an industry that doesn't need us to stand in its way so it can't be successful.

We as British Columbians have to recognize that we as government -- this government, your government, this Legislature -- have put so many things in the way of people in this province that it's more difficult today for them to create jobs in the forest sector than it ever was. Imagine a 187 percent increase in cost at a time when inflation is 2 percent or less. Imagine somebody doing that to you -- if you went out tomorrow and found out the mortgage on your house was 35 percent interest instead of 6 percent -- and you adjust to try and pay your bills and make a decision to buy a new car or a TV.

That's what you've done to the companies. What you've done to the companies is you've made them non-competitive.

You know, the minister said a while back that the days of big profits in the forest industry are gone. Well, I say to the minister: you'd best create a climate where there's profit in the industry, so there's money to be reinvested in the industry -- so that when we reinvest money in the industry, we can create the jobs that we need for the next generation of British Columbians. We can only do that when government gets out of the way and gets moving.

My first question to the minister to start out estimates today . . . . I'd like to know what your goals are for the forest-bred industries of the province.

Hon. D. Zirnhelt: The goals for what? I'm sorry, I didn't hear what you said -- forest something.

R. Coleman: Let's just try simplifying the statement. Forest and forest-bred industries are everything that's affected by the forests of the province of British Columbia, whether it be equipment, suppliers, highway . . . . Whatever it is, if it's affected by the forest industry. What are your goals for this industry? What are your goals from here, and how are you developing those?

Hon. D. Zirnhelt: The goals we've set for the forest industry are to put more fibre in the hands of the remanners -- that wasn't happening on a volunteer basis, but we got agreement under the forest accord to do that -- and more wood from the small business program into the remanners, because we expect a lot of the jobs to be created in that sector. We expect Forest Renewal to continue to fund the forest transition -- although probably on a declining basis -- to take investment in training and in the forest into the land base, which ultimately will create more jobs on a long-term basis.

R. Coleman: My question to the minister was: what are the goals? How are you developing those goals? How are they developed within your ministry, and how do you come to the process to decide what your goals are?

Hon. D. Zirnhelt: I tried to summarize in my opening comments. If you were listening carefully, I went through everything we were doing. When we came to developing directions with respect to changes to the code, we consulted with industry. When it came to changes to the stumpage system, we consulted with industry and other stakeholders on virtually everything we did. It's fairly clear that we have to continue to steward our resources, and rhetoric from your side doesn't help.

You say "results-based code," and all you do is say: "Sit down and talk to people." The people we've been sitting down with don't have concrete ideas of what a results-based forest code would look like. You certainly have no ideas on that side of the House. You just say a more results-based code. Yes, we agree. We're moving towards that.

We have sat down with the secondary industry, the reman sector, and come up with some goals there. We have worked with Forest Renewal to come up with a value-added strategy. The point is that we have a lot of pieces in place to restore the competitiveness of the industry and to help it in the transition towards more employment. We freely admit that that will happen when we've got a restoration of the marketplace. You could reduce costs -- you could get rid of the Forest Practices Code tomorrow -- and you'd just hurt our markets.

What we don't hear from that side of the House is the benefits of the Forest Practices Code: what it's done so that we can stand up and say, particularly to the European market but increasingly to Japan and the United States, that we have a code of practice in place, and therefore the products are good ones to buy.

There's a long list of things that we can come up with, from specific items that go back to a lot of the items in the jobs and timber accord . . . . We've followed through, and I've itemized a number of things we've done. We did that in consultation with industry. Where we need agreement from industry . . . . We have said it isn't government alone that's going to create the jobs. The part government has to create has to do with FRBC, and we're on our way to doing that. We have lived up to that commitment. I can say to that member that where there is a goal needing to be established, we do it, usually in collaboration with the industry itself.

G. Abbott: First of all, I want to give the minister an idea of where we're going in estimates in this session. As I said at the outset, there are no great mysteries about the kinds of things that we're interested in here. We're interested in all of the elements that can go into making our forest industry in British Columbia more competitive again in world markets. We'll be pursuing those. We wanted to give the minister an idea, so that, in terms of deployment of staff, we don't have 40 Ministry of Forests and FRBC personnel sitting in a room adjacent so they can don their blue tights with the "S" on them to come in and assist.

What we want to start with is a range of regional, topical and current issues, and we will be canvassing the waterfront here. As part of that we will be discussing the current state of the industry, in terms of expectations around revenues and that sort of thing. We may spend a fair amount of time getting through them because there are quite a number of them, and a number of members have issues from their constituencies or regions that they want to discuss with the minister. After we have completed those regional and topical issues, we'll move to Forest Renewal B.C.

I'll let the minister know, as we near the conclusion of the issues section, that we're getting near there so that we can tee up the FRBC guys and have them in.

After discussion of FRBC, I guess we will evolve into a discussion of the jobs and timber accord and where we are in relation to the objectives that are set out in the accord. We will then want to discuss the delivered-wood costs in this

[ Page 8432 ]

province: high fibre costs, what contributes to them and what can be done about them. The Forest Practices Code will follow that. As you might expect, these things are going to kind of blend in together. We will want to spend some time on stumpage as another cost driver, specifically looking at some of the details around stumpage and what can be done to improve the system -- if, indeed, anything can, and we certainly think so. The Canada-U.S. softwood lumber agreement: where does the minister see this province going in relation to that agreement, which, I think, expires in 2001?

Presumably, we'll want to be discussing with the minister where he sees his government going in relation to the end of that agreement or the renewing of that agreement, etc.

Skeena Cellulose. We have some issues around that, appreciating that it's the responsibility of the Minister of Employment and Investment. There are some issues that are specific to that operation, now that a majority of the company is owned by the province.

Details around areas set aside for parks and protected areas, including issues involving compensation and, finally, annual allowable cut and issues associated with that . . . . We will, as I said, be beginning with a number of specific issues, and I'll give the minister an example of how this is going to work -- from my perspective, anyway. The first issue I want to canvass with the minister is the jobs accord advocate.

The general discussion of the jobs and timber accord we'll leave to itself, later in the estimates, but that is an example of the issue-specific way we will be dealing with the first portion of the estimates. Hopefully, that provides some guidance as to how we will be proceeding. If the minister has more questions, I'd be glad to answer them.

I want to begin with my first question to the minister, and that is on the jobs accord advocate. My understanding is that there is no statutory basis for the jobs accord advocate other than the jobs and timber accord itself. The advocate exists not in statute but is given life, so to speak, by the accord alone. Could the minister first confirm -- and I think it will be readily confirmed -- that this is in fact the case? Second, does the government plan to add any statutory basis to this office?

Hon. D. Zirnhelt: I'd like to thank the member for his outline of how we will proceed here. It will be helpful in making the best use of the officials' time.

With respect to the first question, there is no intent at this time to bring in a legislative mandate for the timber jobs accord advocate. The agreement between industry and government was of a voluntary nature, and we agreed that we would review progress under the accord. But it was at industry's urging that we came up with the advocate position, because they felt that somebody should advocate for the sector and for the agreement that was reached between government and industry.

G. Abbott: That is a satisfactory answer to the question and explains to me further why, for example, the model of the job protection commissioner would not have been used here. As the minister explained, the accord is of a voluntary nature; therefore to place it in statute would not be in line with that. Based on that answer, would I be correct in assuming that the appointment of Mr. Wouters as the jobs accord advocate will run with the duration of the accord? Is that correct?

Hon. D. Zirnhelt: Yes, that's the general intent, although you will remember that we agreed to review progress under the accord, particularly some provisions, after two years. The wood fibre transfer program is something he will be watching very closely. But the intent is: during the life of the accord.

G. Abbott: Has Mr. Wouters signed a contract with the Ministry of Forests, the representatives of the industry group or Forest Renewal B.C.? Or has he signed a contract with all of those? Where this is leading to is that the answer to the first question was -- it appeared, at least, from the minister's response -- that it wasn't a fixed contract and that the length of Mr. Wouters's appointment may vary upon review. Perhaps the minister could clarify that point. Is there a specific contract for a specific period which may be renewed, or is it a contract which will run for the life of the accord?

Hon. D. Zirnhelt: I will get back to the member on some of the details, but I want to point out that on each step of the way we're working out the method of operation with industry and that it is really considered a joint appointment between industry and government.

I will get back to you and bring the details on the advocate. You said you wanted to talk about the accord in some detail. We could do it then, or I could undertake to get back to you when I have the officials here who are administering that part of the accord.

[3:45]

G. Abbott: Periodically we've had discussions in this chamber about freedom of information and all that. Would I be safe in assuming that this is not a case where the opposition or anyone else will have to ascertain information around the contract via that route -- that the minister can make available to me, as the official opposition Forests critic, the contract and the details contained in it?

Hon. D. Zirnhelt: I haven't actually seen the contract. I will have to make that kind of a judgment when I see it. There are, as you know, protection-of-privacy aspects in the same legislation. We'll undertake to give as full a disclosure as we can to the member.

G. Abbott: The media have recently been reporting that the jobs accord advocate would be paid $168,000 per year, and I haven't seen anything which would suggest that that's not the case for the advocate himself. Could the minister, first of all, confirm that $168,000 is accurate and, secondly, whether there are any performance or other bonuses contained in the agreement that has been made with the advocate?

Hon. D. Zirnhelt: I don't know the latter; I will undertake to look into that. Certainly with respect to the amount, that's the amount I understand the salary to be. It is jointly funded by industry and government.

G. Abbott: Could the minister advise what budget is in place for the operation of the jobs accord advocate, exclusive of the cost of the advocate himself?

Hon. D. Zirnhelt: The budget as proposed, total and inclusive of the advocate himself, is less than $1 million. It is under review right now by the advocate, government and industry. We undertook to jointly develop the work plan, and this is something that, in my view, hasn't proceeded as quickly as I would have liked it to. On the other hand, finding someone who could do this job did take more time, and there are a lot of elements in the accord. We expect to tie up a lot of loose ends around this in the near future.

[ Page 8433 ]

G. Abbott: I am assuming that if it's somewhat less than $1 million, inclusive of the advocate, then we would likely be looking at something in the range of $700,000 to $800,000, presumably, for the office of the advocate, exclusive of the advocate -- if that's clear enough. The minister can confirm or correct me on that.

Further to that, the minister has advised that the advocate is funded jointly by industry and government. Is the office of the advocate going to be funded jointly by industry and government as well?

Hon. D. Zirnhelt: There has been agreement to share the cost of the advocate himself, but it is my information that we don't have agreement between industry and government on cost-sharing for the rest of it. We'll say that this is very much a live issue being discussed between government and industry.

G. Abbott: Could the minister advise what the division of the $168,000 salary of the advocate is between government and industry? Is it 40-60 or 50-50, or what?

Hon. D. Zirnhelt: What I can tell the member at this point is that government was proposing to pay the equivalent of a deputy minister's salary. That's as far as it's got right now. We said we wouldn't pay any more than that. I don't have that actual figure with me here.

G. Abbott: Again, I believe that a deputy minister's salary is in the range of $120,000 per year. I understand that in this case, in order to engage Mr. Wouters, they had to match the rather higher salary of a federal deputy minister to induce Mr. Wouters to take on this task. I think that's probably beside the point . . . . Just so I have it clear, the government of British Columbia is proposing to pay that portion of Mr. Wouters's salary equivalent to the salary of a deputy minister in British Columbia, which, as I say, is somewhere around $120,000, as I recall, with industry picking up the balance of, I presume, somewhere around $50,000. Is that correct?

Hon. D. Zirnhelt: We were working with a general notion of two-thirds and one-third, and it's still very much under discussion with industry. But we may have to balance a proportion over the whole budget. As I say, it is very early in setting up this office and knowing what the business plan of the office will be. But we wanted to respond to industry's desire to have an accord in place that they had confidence in, so it was very much at their urging that we picked the type of person that we did pick. For this specific part of the expenses under the advocate office, we did agree to pay approximately the equivalent of a deputy's salary. We have taken steps to do that. Our

part is on the table, if you will, and we've got a start. The advocate is in place as we work out the details of the rest of the office.

G. Abbott: Presumably the government is going to attempt to persuade the industry to pick up some share of the $700,000 to $800,000 that it will cost to operate the office, exclusive of the advocate.

Could the minister advise through what mechanism the industry's portion of the jobs accord advocate's salary will be provided? Is it through the Council of Forest Industries or some other mechanism -- to provide that funding?

Hon. D. Zirnhelt: We would expect it to be the partners to the accord, which are the major licensees, in some way, in some form of their choosing. To my knowledge, it has not been decided from which industry format, which industry organization, the dollars would flow. That is something that they are trying to work out. As you know, COFI is going through changes, and we have a council of major licensees for the purposes of negotiating and consulting on a number of things. But it is industry's choice as to what form they take to give effect to the various aspects of the accord, and this is no different.

G. Abbott: So obviously, from government's perspective at least, the industry will work out itself, internally, an appropriate mechanism for taxing its members, or whatever, to come up with the portion that it will cost them to fund the advocate and perhaps -- depending on what's concluded from the negotiations between the province and the industry -- some portion of the office of the advocate as well. Could the minister advise next who or what will be paying -- whether it's FRBC or general revenue or what -- the provincial deputy minister's portion of the jobs accord advocate's salary?

Hon. D. Zirnhelt: It will be Forest Renewal B.C.

G. Abbott: Could the minister advise whether the cost of the office of the jobs accord advocate will also be borne by Forest Renewal B.C.? Or is that from general revenue?

Hon. D. Zirnhelt: The cost would come from Forest Renewal B.C. When we went into the jobs and timber accord, we said that FRBC would be wrapped in; it would be part of what we use, part of the capacity to ensure that we achieve the objectives of the accord. FRBC has budgeted between $400,000 and $500,000 . . . . Let's say it's approximately $500,000, plus or minus, for the purposes of this office. They've provided for that. Whether that's all necessary or not, we don't know at this point. Obviously we'll try to have as lean a budget as possible to achieve the objectives.

G. Abbott: I guess that in a way, the negotiations will be interesting around the funding of the office, given that the industry is likely to argue that they are already funding Forest Renewal B.C. through stumpage. They'll probably take some exception to being hit up again for a portion of it, although I guess it just depends which pocket we're going to be pulling the money out of.

More interesting . . . . This is from the jobs and timber accord itself. It doesn't have a page number, but this is under the jobs accord advocate section. It states that the jobs accord advocate will, first, "be responsible to government and industry." Could the minister advise, firstly, how the advocate will be accountable or responsible to industry? What would be the mechanism for that?

Hon. D. Zirnhelt: There is a joint board that will govern the affairs of the advocate office. There will be two government and two industry representatives. The government representatives will be the chair of Forest Renewal and the Deputy Minister of Forests. Industry has sought to appoint someone. They already have one person in place, appointed by the FIEAC, the licensees' group that was negotiating on the accord. It will be up to industry as to how they select the other member, or whether they appoint two different ones, or whatever. Industry appoints its members to this management board.

[4:00]

[ Page 8434 ]

G. Abbott: I'm not sure I got all of that. My understanding from how the minister responded is that the advocate will be responsible to industry via a board which is in part appointed by government -- i.e., Forest Renewal B.C. -- and in part appointed by industry, through FIEAC or whatever mechanism the industry deems important. Was it two from each side on the board? Did I get that right?

Hon. D. Zirnhelt: The plan comes very much from the work the advocate has been doing with industry and government. What has been proposed is that there be a management board with a number of directors sitting on it. Industry would appoint two members and government would appoint two members. I've said whom government intends to appoint. Industry itself will find some way to do that, and it may be that COFI steps forward or it may be the council of licensees, the FIEAC group -- the Forest Industry Economic Advisory Committee.

G. Abbott: In any event, it appears that it's going to be a four-person board with equal representation from each side, presumably providing guidance to the advocate as needed.

Could the minister explain -- again, this is further to the statement in the jobs and timber accord -- through what mechanism or mechanisms the advocate will be responsible to government?

Hon. D. Zirnhelt: It will be a joint responsibility. The management board which I have to add . . . . The proposal is that the advocate would actually chair the board, and there would be the other four members on it, so it would be a five-member board. They would report out both to government and to industry. They would report out to government through the deputy, the Minister of Forests and through FRBC, which reports to me as government and to the Legislature through me. So I will get the reports from the advocate, the deputy and the chair of FRBC.

Industry will report out through whatever mechanisms they choose. In fact, we hope that the advocate will be reporting to the public very soon through his first annual report. Work has been going on by industry and government while we were waiting to select an advocate.

G. Abbott: Just so we can get a little bit more specific about this, will the advocate be responsible and accountable as an advocate who is, in large measure at least, paid by Forest Renewal B.C.? Will the advocate be accountable and responsible, along with Forest Renewal as a whole, to this Legislature's Select Standing Committee on Forests?

Hon. D. Zirnhelt: Perhaps indirectly in that the legislative standing committee reviews the business plan. Otherwise, the reporting mechanism for achievement under the goal . . . . Many of the efforts, tools and aspects of the accord come directly under the Ministry of Forests, for example. The accountability will be to the appropriate authority that can expend funds or give regulatory relief or invoke policy changes that will be beneficial to the creation of jobs. So the advocate is there to go to whatever agency and to respond to it.

The financial accountability for the dollars expended by FRBC will ultimately be where the FRBC board accounts are -- that is, the Public Accounts Committee will examine them, and they'll go to the legislative committee when they discuss the business plan.

G. Abbott: I think it is an important point and something we should be clear on right from the start, because this is a new office. There is not a plethora of detail around how and through what mechanisms the advocate will be responsible to government. I think it's important to have on the record, at this point, how that will happen.

Let's go to the Select Standing Committee on Forests, first of all. I will make the argument -- I think the minister has already agreed with it, and hopefully, that's the case . . . . I think it's important that as Forest Renewal B.C., for better or for worse, spins off companies like New Forest Opportunities or the forest worker employment agency or the jobs accord advocate, there be mechanisms whereby those spinoff boards and agencies are accountable to the Legislature through that select standing committee.

So I would like the minister to confirm that when we review the business plan for Forest Renewal B.C. in the months ahead for the coming fiscal year, the representatives from FRBC will be able to speak with authority about what the advocate is doing. Indeed, if it's wise and appropriate, the advocate himself should appear before the committee to defend his programs and expenditures through FRBC. Could the minister confirm that this is the case?

Hon. D. Zirnhelt: The form of the office has yet to be set up on a legal basis. In other words, we are moving collaboratively with industry to establish it so there is a sense of joint accountability.

With respect to the government side of it, I understand where the member is heading. I would say that the responsibility for the expenditure of Forest Renewal dollars, to the extent that they fund any subsidiary, will be accounted for in the same way as Forest Renewal dollars are accounted for. So I would expect that when the chair of Forest Renewal, or whichever officials they bring in to speak to that budget item in the select standing committee, discusses the business plan, it would be done in the same way. It will be seen as a program of FRBC.

As to accounting for industry's expenditures on that side, we haven't worked that out. So that the member knows, we have proposed, in order to have the accountability, that the Lieutenant-Governor-in-Council actually appoint all the members, although it's the intent of the management board that industry makes the nominations and in fact selects it. But the board of directors will be given its legal effect through order-in-council appointments.

G. Abbott: I'm satisfied with that response. Again, I think that if Forest Renewal is to spawn subsidiaries, it's critical that those be just as responsible to the Legislature through the select standing committee as the FRBC chair and chief executive officer are as well. I think it's a very important point.

I also want to ask . . . . Again, this is from the language of the accord itself. The jobs accord advocate will "establish accounting mechanisms to monitor job creation and assess progress towards achieving job targets." The next bullet simply repeats that in slightly different words and says: " . . . monitor ongoing employment and job creation in the forest sector." Could the minister advise, first of all . . . ? We've had some discussions in the Legislature about job creation and job loss and so on, and we've actually had those discussions at the FRBC business plan meetings as well.

Who at this point in time in the ministry, in FRBC and in the advocate's office . . . ? I guess they haven't started in the advocate's office yet. Is there anyone in government at this point in time who is doing the two things outlined in those two bullets?

Hon. D. Zirnhelt: On those items in the accord, some preparatory work was done by government. We didn't wait

[ Page 8435 ]

till we had the accord. We had some work done in our timber jobs working group. We've handed the preliminary work over to him to pick up, move on with and make recommendations on.

G. Abbott: Could the minister advise whether bullets 3 and 4 are stated in a way that positive job creation will be accounted for? Is it implicit in this? Or does it need to be stated additionally that unemployment, job losses and the monitoring of those are also a part of the role of the jobs accord advocate? Further, if indeed he is taking that on, in addition to measuring job creation, is he going to be assuming the role from the ministry around monitoring job curtailment? Is there a responsibility that's moving from the ministry to the jobs advocate here, and he'll be reporting back to the ministry? Or what will the relationship be on that end?

Hon. D. Zirnhelt: The accord deals with a layoff procedure. You know, the next

section in the accord deals with the notice that has to be given to the advocate if there's going to be a permanent layoff of more than 25 workers. So he will have the same information on the survey of job loss. We are hoping that we'll have a better handle on employment creation and employment loss through the efforts of the timber jobs advocate. So he actually will have a handle on both aspects, because we expect that the job plans that industries might create, in order to have some of the benefits under the accord, will specify where they will take out jobs and where they'll add jobs. So we'll always we looking at the net.

We are looking, as we said, to increase the number of jobs per cubic metre. That's the objective of the accord. We want to get the ratio of jobs to timber up; that's the underlying assumption. The advocate has to be able to measure progress towards that.

So to answer your question about it, no, we're not going to transfer any units of government -- or there's nothing like that implicit. Government for its own purposes needs to administer parts of the Forest Act. There are jobs implied in aspects of the Forest Act and aspects of forest licences. We have no intention to transfer the statutory obligations that we have. So it's a question of . . . . There will be a team in industry, in industry organizations and in government that will work with the accord to track progress under the accord.

G. Abbott: I don't want to dwell on this. I'm just trying to make a fairly straightforward point here. I think what everyone in this chamber needs, whether we're government or opposition -- or whether we're FRBC or the forest industry or a forest worker -- is somebody to be providing us with ongoing, reliable, accurate information around how we are doing employment-wise in the province in the forest industry.

[4:15]

What I'm saying here is that when we asked FRBC this question during the review of their business plan . . . . They are doing some work around that but are not really doing the full job. They're doing some work around the issue of job loss, just not on a sustained-enough and thorough-enough basis to really provide accurate numbers. Similarly, I know that the ministry is doing some work itself as well. Now we're going to be having a third party -- namely, the jobs accord advocate -- doing some work as well.

My point here is not a tricky one; it's a very straightforward one. Would we be better off to have one agency -- whether it's FRBC or the advocate or the ministry -- doing a very solid, thorough, reliable job of compiling and analyzing those numbers? I hope I'm making a point here -- that we seem to have some overlap in terms of people doing work around the compilation and analysis of job creation and job loss numbers.

Hon. D. Zirnhelt: I don't think the member can sustain an argument of overlap. I think that there is an appearance of a number of people working on this issue. We have no intention of having the jobs advocate take over what Statistics Canada is doing in terms of collecting the survey of employment, payroll and hours. We argued this through -- how it would best be done -- when we were talking to industry about the accord. We had a working group on that subject. We agreed that the most statistically reliable measure is the survey of employment, payroll and hours. So unless and until something better comes up, that's what we'll be using.

What the Ministry of Forests does . . . . Because we've got, you know, 3,000 people out in the field, they have a pretty good idea of whether a layoff is permanent or whatever, and they report in. The Ministry of Forests has management information. We will share that information with the advocate, so he will have a couple of sources of information upon which to base his overall reporting and accounting. But in terms of publishing an annual report, that's why it was very . . . . You know, industry drove this as much as government did. They wanted to make sure that it was a joint effort and was duly accountable to government and industry.

That function of reporting out on layoffs and job creation will be the advocate's responsibility. He will be tagged with the responsibility of dealing with the permanent layoffs. Temporary curtailments, which are cyclical, which might be seasonal and so on . . . . We don't expect him to be tracking on a day-by-day basis exactly what happens there. Through his annual report, he will examine the SEPH data and compare it and see if there's anything wrong with it. As you and I know, it doesn't have contractors in there; it's a survey of employment, payroll and hours. But there is no easy way. The contractors don't have to report out on their employment.

I think we can argue this thing to death, but because he's reporting to industry and government, there are checks and balances associated with his office.

G. Abbott: To move on, the next bullet is: "The JAA will . . . in cases where outcomes are in jeopardy, undertake reviews and propose remedial measures." This is written in the language of the 1990s -- "where outcomes are in jeopardy." In the expression "where outcomes are in jeopardy," I presume the reference is to a forest company that may be experiencing severe financial difficulties and for those reasons, may be considering a shutdown. Is that a correct reading of that section?

G. Abbott: The reason I raise the point is that the description of that portion of the responsibilities of the jobs accord

[ Page 8436 ]

advocate is strikingly similar to the job description contained in statute around the role of the job protection commissioner in situations like this. I understand that the office of the job protection commissioner is vacant at this point, regrettably, due to the most unfortunate and untimely death of the former commissioner. Is there an intention here to see the advocate essentially take on the role of the job protection commissioner? Or again, is that a misreading of the intentions here?

Hon. D. Zirnhelt: If you look at outcomes here, it has to do with whether a company might fail. If a company's going to fail in its performance, it can go to the job protection commissioner and ask for an economic plan. The advocate won't be doing economic plans, although he might see a problem -- for example, where a company has filed a jobs plan. They say that they intend to do this, and sometime into the plan economic conditions change, and they find they have a problem in achieving the job plan. It may not put the company in jeopardy, so there would be no need to go to the job protection commissioner.

The job protection commissioner is there to help restructure or to do some economic mediation, perhaps, between parties. The job protection commissioner is still there to assist in his traditional role, where the advocate here would be looking at the job plans per se. The job protection commissioner won't be examining the job plans, although there might be information in a job plan that he needs, to come up with an economic plan. We don't see any overlap at all here.

G. Abbott: I hope that's the case, as well -- given that we're working with a new position here and, presumably, that the dynamics of that position will evolve over time. We should always be cognizant of the possibility of the offices growing in a way where they could be competing forces, as opposed to complementary forces. Certainly we would want those two roles to be very much complementary forces. Hopefully, at some point in the future we will have a buoyant forest industry again, and we will not be preoccupied with the doom and gloom of threatened job loss.

It appears, at least on the surface, that there is theoretically a possibility that those two positions could compete against, rather than complement, one another. I want the minister to be cognizant of that as the role of the advocate evolves over time.

The next statement after that says: "In order to carry out his or her responsibility, the JAA will have reasonable access to the information needed." It's not clear to me what that means. Could the minister advise?

Hon. D. Zirnhelt: This means a company's specific information. He needs to have information that might not necessarily be disclosed to government, but in order to do his job, he may need a company's specific information about the status of employment and the number of employees that a company might have.

G. Abbott: Again, so I fully understand where we're going with this

section . . . . The key word in here may turn out to be "reasonable." If we -- we being the opposition, the media or private citizens -- want to find out information about some aspects of government, for example, at times that information may be made freely available to us. At other times it may require an action under the Freedom of Information Act to access portions of it, and then we might see it in a severed form.

Here we're saying: "The jobs accord advocate will have reasonable access to the information in the files of private companies." Will that be achieved through a voluntary agreement between the parties, or will it require something additional to that in order to succeed? I presume that many companies might be reluctant to share some of their business information with anyone, jobs accord advocate included. So the question is: will this particular

section be achieved through these voluntary agreements, or is some other mechanism anticipated to achieve that?

Hon. D. Zirnhelt: The advocate will have to work that out with individual firms. There is going to be information that they might want to provide which has to be kept confidential, and I expect there will be confidentiality agreements associated with that. Some firms are public; some are private. So it varies with how much is reported out publicly. We have to be cognizant and respect privacy of information with respect to firm-specific financial information.

G. Abbott: The last

section I propose to raise around the jobs accord advocate, at least at this point in time, is the final sentence: "The JAA will report annually on progress made towards the implementation of this accord." To whom would the JAA be expected to report annually? Again, will it be the Legislature via the minister or to the Select Standing Committee on Forests or both? That's assuming that there will be a good deal of interest in not only seeing the report but also having an opportunity question or analyze the report through the mechanism of Forests estimates or the review of the FRBC business plan.

Hon. D. Zirnhelt: It could be one or the other -- in all likelihood, these Ministry of Forests estimates. The reporting-out will be in a public report. I've said that. It'll be a report to the public of British Columbia. Essentially, the advocate works for the partners to the accord, which are government and industry. But the intent is that it be a public report and available. If there is a requirement to file it in the Legislature, I'll do so. At this point, I don't know if there is a requirement, but it'll be a public report -- so available.

G. Abbott: The only items we have left over from our earlier discussion are the details around the contract. The minister has undertaken to get what detail he can on that -- the duration of the contract and that kind of thing. So we'll revisit that. Hopefully, the minister will have the information when, at some point later in these estimates, we come back to the jobs and timber accord as a broader work.

I want to turn now to a different issue. Actually, I should check and make sure that none of my colleagues has questions on the advocate before I move along. It appears that they do not.

[4:30]

I'd like to talk about problems facing a particular sector in the forest industry. Actually, we'll be talking about pulp, shakes and shingles, and others. But I want to start with an issue that's close to my constituency, and actually it's close to the constituency of the minister as well. It is the problems being experienced by the plywood sector. I want to discuss for a little while some of the problems and issues facing the plywood sector and what initiatives and possibilities the minister is looking at in terms of assisting the plywood sector through a difficult period.

We know about the problems facing the forest industry generally. Depending on where you are, it could be argued that the problems with plywood are greater or lesser. Clearly the industry is losing money at a record rate in British Columbia today. In the Okanagan we have, not outright job losses . . . . Well, no, there are some outright job losses, as well, but also shift curtailments are

[ Page 8437 ]

increasingly common among the plywood producers, and we have, in the minister's own riding, some very considerable layoffs in the plywood sector.

I want to discuss a few things with the minister. One is the possibility of a product-specific stumpage system that would take into account the particular difficulties of plywood. I'll give the minister a little opportunity to think about that. And let's talk about ways in which we can restore the health and viability of the plywood sector in British Columbia. Perhaps I'll let the minister begin. As I say, I know that plywood is just as important a factor in his riding as it is in mine. We know that the plywood sector is facing difficulties in 1998. Those difficulties are not going to be easily reconciled.

How does the ministry account for those difficulties, and what initiatives is it proposing to undertake to assist in the revitalization of the plywood sector in B.C.?

Hon. D. Zirnhelt: I'd be happy to try to respond to any of the specifics the member has questions about. The plywood industry suggested that they were experiencing structural problems, not the least of which was the inability to change product and ship materials from the same logs that they manufacture into the United States, and because they are restricted by quota, they have a reduced flexibility in what they can do with the logs that they have. So the plywood industry asked that we examine this problem and try to come up with some solutions.

Government has not decided to get into product-specific stumpage at this point. We undertook to do a survey with industry, through a task force on examining the structural problems facing the industry, and I am waiting for a report. I don't have the report yet; it isn't ready. It is in draft form, I understand, and we'll examine possible solutions and assist if we can.

G. Abbott: If I can -- fairly, I hope -- summarize the minister's comments around that, a committee has been struck to look at these issues. They have been looking at the possibilities for assisting the plywood sector, and they have reported back with a draft report, which I guess is currently being examined by the ministry and which will appear at some point, presumably in a final form, in the weeks ahead. Could the minister advise whether that final report on those considerations is pending; in other words, is it something that we might reasonably expect to hear about before the conclusion of these estimates? Or are we talking about months before we see a final report on that issue?

Hon. D. Zirnhelt: We're hoping to have the recommendations and the analysis completed by the end of the month, so I wouldn't expect that we would have them in time for these estimates. It is a work in progress. I think you summarized it. I said that we're looking at the structural problems of the industry; there may or may not be things that the government can do. But the process will be, as it normally is . . . . The technical work will report out to the deputy minister, and when he is satisfied that there is an adequate report, it will be brought to my attention. I am anticipating it by the end of this month or early in July.

G. Abbott: I will look forward to seeing that. I'm not planning, actually, on taking these estimates through to the end of the month, so they may well be concluded in advance of the minister providing a report. All kidding aside, it is obviously critical to the many people who work in the plywood sector in British Columbia to move ahead on some of these issues.

Again, I hope I'm not putting words in the minister's mouth, but as I understand it, no conclusions have been formed yet around the issue of product-specific stumpage.

To give some context to my question, I was actually pleased to see the addition of pulp chips to the formulation of stumpage in British Columbia. I understand from the minister's staff that it constitutes only something like 10 percent of the determination of the formula. Nevertheless, I think it is a step in the right direction -- broadening the formula so that it takes into account more than random-length dimensional lumber. It raised the question in my mind of whether, in fairness to the plywood producers, the OSB producers and so on, the formula ought to take into account those additional products as well.

Again, I gather that they are of even less measurable size than chips. But I'm wondering whether the stumpage formula ought to better reflect the diversity of forest products that are produced in British Columbia.

Hon. D. Zirnhelt: The matter has been considered in the review. But where you begin and where you end is already a complex system. It would be very difficult to administer, but one of the problems with plywood is competition from OSB in other areas of the world. There are some major structural problems that maybe product-specific stumpages won't deal with. That's all being considered.

G. Abbott: Good. I'm pleased that it is being considered. It is interesting, when looking at the way dimensional lumber prices track over time and the way plywood tracks over time, from the perspective of whether plywood really should be tied to a stumpage system based on dimensional lumber. From the time of the graph that I have here, January 1991 through to the present, there have certainly been times when the prices of plywood and dimensional lumber were comparable. There are also -- and I think these are more numerous -- times when dimensional lumber was higher valued than plywood.

Indeed, we have come through such a period recently, from January 1996 through to the present, where -- at least until the most recent drop in the price of dimensional lumber -- there had been a big gap between the value of dimensional lumber on the American market and the value of Canadian plywood on the same market. So the argument here runs that the plywood producers are paying stumpage which reflects a higher-priced commodity, generally speaking, than what they have.

Plywood tends to track fairly steady over time. Dimensional lumber, for the most part, tracks higher, yet the stumpage system that the plywood producers are paying on is based on random-length dimensional lumber. They argue that it puts them at a structural disadvantage in relation to plywood producers in the U.S. or eastern Canada. It seems to me a reasonable argument, and I'd be interested in the minister's response to that.

Hon. D. Zirnhelt: If you take today, the analysis isn't borne out. Plywood is higher than dimensional lumber. So it's a very short period of time in which to get a trend out of it. Does this trend over the last year indicate a structural change? All of that is being looked at, and we'll have to await the report. There are huge implications for our product-specific stumpage where it would involve plywood, because it would affect competition with OSB and a number of other things. It would probably include vast implications for the softwood lumber agreement as well.

G. Abbott: Again, I don't want this point to go unnoted. It may well be that plywood, as of the last week or two or

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whatever and because of the low price of dimensional lumber, is actually a higher-value product than lumber. But I hope that the minister is conceding the general point that if we go back to 1991, about half of the time -- perhaps 40 percent of the time -- the two commodities have tracked relatively close together. For the remaining 60 percent of the time, dimensional lumber has been tracking well above the price of plywood. As a consequence, that has put British Columbia's plywood producers to some disadvantage. Would the minister acknowledge that point?

Hon. D. Zirnhelt: Well, by your own calculations, 60 percent of the time, yes. And the facts are there. Whether it constitutes a structural disadvantage or not, that is precisely what the report is acknowledging. As I said, there are huge implications from interfering in the market to get product-specific stumpage.

I trust that the member will be telling us where he's coming from with respect to that. But I can say that we're examining the structural changes. To suggest that we would further complicate the stumpage system, I think, is a big step. I'm sure that the member opposite, seeing it as intervention, would find ways to be critical of that.

The final solution that we have proposed to industry is some market-based or transaction-based system, and that may be a way to get back to a pricing system on stumpage. But we have to examine every aspect of the plywood industry.

G. Abbott: I want to assure the minister that I'm asking questions here and trying to understand the problem that's facing this industry and threatening to potentially put a couple of thousand people in British Columbia out of their jobs. It's an important issue and one that I want to understand. I do want to ensure that, to use the old cliché, people are on a level playing field. There are always winners and losers in marketplaces, but we don't want to set up the marketplace in such a way that it is theoretically impossible for someone to survive and thrive in that marketplace.

I think it's important to be clear on that -- that if, indeed, we are putting our companies at a competitive disadvantage here, we acknowledge that and come to grips with it.

[4:45]

We'll obviously be talking a good deal about the stumpage system itself later on in these estimates, but just to make a similar point . . . . One of the things I was struck by in the Price Waterhouse report of last Friday was a graph -- I believe it was on page 3 or 4 -- which showed how different stumpage systems in different provinces tracked in relation to the price of dimensional lumber on the American market as measured by StatsCan. The graph I saw . . . .

Perhaps the minister interprets it differently, but it seems to me that the way Price Waterhouse was interpreting it was that the stumpage systems in Alberta and Ontario, and I think Quebec as well, tracked very closely and quickly to changes in the value of dimensional lumber on the American market,

whereas the British Columbia stumpage system was far slower to respond -- for reasons which we'll explore later on.

Again, the important point here is that stumpage is, by its nat