1985 Legislative Session: 3rd Session, 33rd 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)

TUESDAY, JUNE 25, 1985

Morning Sitting

[ Page

6843 ]

CONTENTS

Tabling Documents –– 6843

Small Business Venture Capital Act (Bill 19). Report

Third reading –– 6843

Vancouver Stock Exchange Amendment Act, 1985 (Bill PR405). Report

Third reading –– 6843

British Columbia Railway Amendment Act, 1985 (Bill 15). Committee stage –– 6843

Mr. Stupich

Mr. D'Arcy

Third reading

Provincial-Municipal Partnership (Taxation Measures) Act (Bill 21). Committee stage 6844 Mr. Stupich

Critical Industries Act (Bill 31). Committee stage –– 6844

Mr. Williams

Mr. Stupich

Miscellaneous Statutes Amendment Act (No. 2), 1985 (Bill 42). Committee stage

Mr. Williams

Mr. Cocke

Mr. Macdonald

Third reading

Industrial Electricity Rate Discount Act (Bill 28). Committee stage 6848

Mr. D'Arcy

Mr. Stupich

Mr. Davis

Mr. Cocke

Third reading

Committee of Supply: Ministry of International Trade and Investment estimates. (Hon.

Mr. Phillips)

On vote 49: minister's office –– 6851

Mr. Williams

Mr. Davis

Mr. Mitchell

Appendix –– 6855

The House met at 10:04 a.m.

Prayers.

Hon. Mr. Curtis tabled the British Columbia Educational Institutions

Capital Financing Authority financial statements for the year ended

March 31, 1985, with a covering letter from the auditor-general.

Orders of the Day

HON. MR. GARDOM: Report on Bill 19.

SMALL BUSINESS VENTURE CAPITAL ACT

Bill 19 read a third time and passed.

HON. MR. GARDOM: Report on Bill PR405, Mr. Speaker.

VANCOUVER STOCK EXCHANGE

AMENDMENT ACT, 1985

AN HON. MEMBER: It's not reprinted yet, so maybe....

MR. SPEAKER: Hon. members, since it has not yet been reprinted, shall leave be granted?

Leave granted.

Bill PR405 read a third time and passed.

HON. MR. GARDOM: Committee on Bill 15, Mr. Speaker.

BRITISH COLUMBIA RAILWAY

AMENDMENT ACT, 1985

The House in committee on Bill 15; Mr. Strachan in the chair.

section 1.

MR. STUPICH: Mr. Chairman, I wonder if the Minister of

Finance can recall just how much revenue this is expected to bring in

in the first year.

HON. MR. CURTIS: I'm not sure that I could get that information immediately, but I undertake to provide it to the member later today.

MR. STUPICH: The budget indicated $12 million. That's close

enough for today's purposes. In the press release that the minister

issued along with this bill, he said that with last year's financial

restructuring, this important Crown corporation is now able to pay

these taxes, as does any other efficient business.

I noticed just recently — sort of at the same time as this bill was being discussed

— that the government made available to BCR a further $25 million in borrowing,

so it appears the railway is not really able to pay it out of cash. It's

paying this $12 million by borrowing $25 million.

HON. MR. CURTIS: Mr. Chairman, the member is not correct in

that regard. The $25 million to which he refers is a portion of an

issue undertaken by the province largely for its own purposes, and

indeed that transaction was concluded just last week. The $25 million

in question is longer-term funding replacing shorter-term liabilities

which British Columbia Railway had. They were in short-term, and it was

appropriate to move them into longer-term.

Now that I've had an additional few moments, the answer to the

member's first question is yes. The estimate is as shown on page 47 of

the budget document. Revenue to the Crown in this regard is $12 million

this year, an estimated $12.5 million in the next fiscal year and $13

million in the following year.

MR. STUPICH: Just one further comment, Mr. Chairman. The

effect of this legislation is to increase government revenue in this

fiscal year by $12 million. BCR is paying it by borrowing further money

from the Crown. Now we can't really put a handle on each dollar that is

passed over and say this dollar is going to pay taxes, this other

dollar is going for long-term financing. It is borrowing; no question

about it. It is also a fact that by this legislation, revenue in this

particular fiscal period is being increased by $12 million with no

added costs. So it is a way of inflating our revenue.

HON. MR. CURTIS: That premise would assume that the British Columbia Railway is borrowing for operating purposes, and that is not the case.

MR. D'ARCY: Mr. Chairman, I wonder if the minister can assure

the House that B.C. Rail is receiving no taxation privileges at all

relative to the privately owned railways in British Columbia. In other

words, are they paying taxes to all levels of government as though they

were privately owned?

HON. MR. CURTIS: That is the essential thrust of this

legislation, Mr. Chairman, but because it is not within the limitations

of this statute, that would not necessarily apply to income tax.

Sections 1 to 3 inclusive approved.

Title approved.

HON. MR. CURTIS: Mr. Chairman, I move the committee rise and report the bill complete without amendment.

Motion approved.

The House resumed; Mr. Speaker in the chair.

Bill 15, British Columbia Railway Amendment Act, 1985, reported complete without amendment, read a third time and passed.

HON. MR. GARDOM: Committee on Bill 21, Mr. Speaker.

[ Page 6844 ]

PROVINCIAL-MUNICIPAL PARTNERSHIP

(TAXATION MEASURES) ACT

The House in committee on Bill 21; Mr. Strachan in the chair.

section 1.

HON. MR. CURTIS: I move the amendment standing in my name on the order paper. [See appendix.]

Amendment approved.

Section 1 as amended approved.

section 2.

HON. MR. CURTIS: I move the amendment standing in my name on the order paper. (See appendix.]

Amendment approved.

section 2 as amended.

MR. STUPICH: Mr. Chairman, I note this is going to cease on

December 31, 1990, just four and a half years away. The minister is

expressing the hope that this property tax measure will create an

incentive for industries to accelerate their investment plans. It would

appear to me that there is going to be precious little time for them to

actually do the planning for major investments. If they're going to

plan to build anything of any significance, they have to have some idea

of where they're going to market the product. Then they have to plan

the facility that they're going to build, which I would think would

take a fair amount of time if it's a major investment; and then after

all that they have to build it. I would think that if we're talking

about major projects — if it isn't major, then it's not going to be

terribly effective — by the time the edifice gets built, put together,

the program is going to be over. I wonder whether the minister is

really confident that this of itself is going to encourage major

investment.

[10:15]

HON. MR. CURTIS: Mr. Chairman, a general response first, if I

may, to the hon. member for Nanaimo. This is companion legislation to

that which was introduced by my colleague the Minister of Municipal

Affairs (Hon. Mr. Ritchie), and as indicated at the time, this looks

after the other side of it.

The termination date the member has alluded to, of December 31,

1990, is, I believe and the government believes, sufficient time. One

could argue, I suppose, that it should be a little longer; but indeed,

Mr. Chairman, if I'm not reflecting on a previous vote, the speed with

which municipalities have responded to the main bill suggests that a

number of things can happen quite quickly. It's arguable, Mr. Member,

as to the appropriateness of December 31, 1990, versus 1989 or 1991.

MR. STUPICH: Again, Mr. Chairman, part of my question was

whether or not the minister has in mind major investments or relatively

small projects. I wasn't thinking of '89 or '91, but rather '95 or

something like that. If it is going to be a major investment, one

that's going to have a significant difference.... I'm not sure about

the cutoff date in the other legislation that we're not supposed to be

talking about; I don't recall what that was. This whole program,

thinking about it from the point of view of this legislation, should

have been for something like ten years, to give people time to really

get rolling on it. I'm not proposing to move an amendment or anything

else, but I just wondered whether the minister had some reason for

thinking that — I said four-and-a-half; it's actually five-and-a-half

years — there would be time to make the plans, to find the markets, to

put the whole project together and actually get it constructed and

operating, and to get any operating advantage out of this. I question

it.

Section 2 as amended approved.

HON. MR. CURTIS: Mr. Chairman, I move the second amendment standing under my name on the order paper. [See appendix. I

Section 2.1 approved.

Sections 3 and 4 approved.

Title approved.

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

Motion approved.

The House resumed; Mr. Speaker in the chair.

Bill 21, Provincial-Municipal Partnership (Taxation Measures) Act,

reported complete with amendments to be considered at the next sitting

of the House after today.

HON. MR. GARDOM: Committee on Bill 31, Mr. Speaker.

CRITICAL INDUSTRIES ACT

The House in committee on Bill 31; Mr. Strachan in the chair.

section 1.

HON. MR. CURTIS: Mr. Chairman, I move the amendment standing under my name on the order paper. [See appendix.]

Amendment approved.

Section 1 as amended approved.

Sections 2 to 4 inclusive approved.

section 5.

MR. WILLIAMS: Maybe the minister can advise us, Mr. Chairman. We only have one staff person and Mr. Phillips — that's it?

[ Page

6845 ]

HON. MR. CURTIS: It's expected that the commissioner might

have a staff of three or four. At present he has a staff of two.

Therefore there are three individuals, including the commissioner, in

the office serving this function. One is in effect an administrative

assistant; the second person is providing clerical and secretarial

services; and in the event that the commissioner finds it necessary to

engage another staff member, then that will happen. However, I'm in

fairly regular contact with the commissioner and I don't sense any need

for expansion of staff.

Sections 5 to 7 inclusive approved.

section 8.

HON. MR. CURTIS: Mr. Chairman, I move the amendment standing in my name on the order paper. [See appendix.]

Amendment approved.

Section 8 as amended approved.

Sections 9 to 19 inclusive approved.

section 20.

MR. STUPICH: We had a good discussion on this legislation

when it went through second reading, but there were some concerns

expressed about it that I've felt the minister did not deal with in his

conclusion of second reading debate. One of them was a concern of mine

that this could lead to high-grading. The message is here: look, this

is nothing but a band-aid solution; it's not intended to do anything

but get us to the point where the next election is safely out of the

way. The mining industry, knowing a particular mine is being encouraged

by the critical industries commissioner to reopen or to stay open — and

I think the legislation has that effect as well; if one is on the verge

of closing, the commissioner may help it stay open.... But the message

is there: "Look, we'll help you for two years, so get in and get

everything out; high-grade the ore body if you like; do anything at all

so that you complete it in two years." If it's a logging show, again

the message is there: you've got two years to cream the crop and get

out. I'm just concerned as to why the minister felt it was necessary to

say: "Look, we don't really plan any long-range solution to the

economic problems of the province. We're simply bringing something in

for a period of two years because it serves our political purposes to

do so." That's the inference I get from this section, and I feel that

it weakens the whole thrust of the legislation to say that at the very

beginning.

HON. MR. CURTIS: With the Chair's indulgence — and I'll only

go so far; I know the Chair will interrupt me, which is fair enough....

A number of measures this year have a fixed time. We discussed one just

a few minutes ago in another bill. A number of the tax measures were

three years.

Speaking specifically with regard to this

section and the time frame of

section

20, it is felt that a number of factors will probably come into play in the

mining and forest industries — in the critical industries — by the time we approach

the end of the two-year period. I cannot speculate, but it is possible for this

House at some future date to extend the life of the critical industries function;

that would be up to this House at that particular time, Mr. Chairman. For the

purposes of this bill and the purposes of the program, it is felt, after very

careful consideration, that a two-year function is appropriate.

MR. STUPICH: Mr. Chairman, the minister has not dealt with

the question of my concern about high-grading. It's also possible that

legislation such as this could be cancelled any day down the road, when

it was felt to be no longer necessary, but to tell people ahead of

time, "You've got two years to cut and run," I think is weakening the

whole thrust. As I say, what about this concern about high-grading? You

can't go back. If you high-grade an ore body — take out the best of the

ore — and then abandon it, you can't go back and get the poorer stuff

later on, or at least it would be very difficult. The same thing with

logging. If you simply take the best of it and then get out, it's

uneconomic to go back in after. So it's not a case of changing our

minds two years down the road and saying: "Well, we're going to do

things differently now."

I think it would have been stronger legislation to have left the

door open, as is the fact with all legislation; we can cancel it when

the need is no longer there, This will be there as long as there is any

real need in the province. We don't know whether that's one, two,

twelve or twenty-two years, but as long as there is need. If the

minister really thinks it's going to work, then why give it the death

sentence before it's even born?

Section 20 approved.

Schedule approved.

Title approved.

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

Motion approved.

The House resumed; Mr. Speaker in the chair.

Bill 31, Critical Industries Act, reported complete with amendments

to be considered at the next sitting of the House after today.

HON. MR. GARDOM: Committee on Bill 42, Mr. Speaker.

MISCELLANEOUS STATUTES

AMENDMENT ACT (NO. 2), 1985

(continued)

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

Section 32 approved.

section 33.

MR. WILLIAMS: This changes the requirement in terms of

monthly meetings of Hydro's board of directors. We have here what, in

modern decades, has been the most important economic agency in British

Columbia. Cabinet meets every week. This board now can meet on a more

irregular basis. As

[ Page 6846 ]

one who served on that board, I am satisfied that there is a need for monthly meetings.

AN HON. MEMBER: Hear, hear!

MR. WILLIAMS: Good! Well, there you are.

In terms of the kind of major changes that Hydro's currently going

through, I am still satisfied that there's a need for those regular

meetings. There are opportunities abroad in B.C. Hydro. Check the

current Financial Post ;

you'll see a string of foreign assignments in terms of Quebec Hydro and

work abroad. Some $30 million worth of project beginnings abroad in

terms of Quebec Hydro activities — the very sort of thing that could

have been happening in British Columbia if you hadn't done the royal

crash number with your new Lee Iacocca in that outfit. Yes, it is a

joke, but your minister calls him the new Lee Iacocca of B.C. Hydro.

Well, we'll wait and see. There's no evidence to date.

I'm saying that Hydro needs direction desperately. I'm not so sure

that the cabinet members on the board can give it, but the job is to

have an adequate and superior board of directors that meets regularly

and gives direction, and I have some doubts about this change.

HON. MR. ROGERS: I'd just like to address this particular

section. It is expected that the meetings will continue to be on a

monthly basis. This is the only Crown corporation where meetings were

in the statute. All of the other Crown corporations in the province are

under the

Interpretation Act. We are already having meetings on a much

more frequent basis than just monthly. The reason this is included in

this act is to make B.C. Hydro consistent with other Crown corporations.

[10:30]

Section 33 approved.

section 34.

MR. COCKE: I'm going to ask one question on 34, and it also

relates to a

section that's coming later. I notice the Insurance Act is

being amended on a matter of suspension of licence and granting licence

and appeals and all the rest of it, and it's identically worded to a

section later in this bill that deals with the Real Estate Act. I was

just wondering what has brought this about.

HON. MR. SMITH: This amendment will allow the superintendent

to suspend, cancel or refuse a licence under this act without a hearing

in those cases where he considers that any delay necessary to hold a

hearing would be prejudicial to the public interest. An applicant or a

licensee who appeals the suspension, cancellation or refusal has a

right to appeal to the Commercial Appeals Commission. They may do so

and require that the appeal be heard within 21 days after the date the

commission receives the notice of appeal. So it's a vehicle that allows

him to act immediately, I guess, in a particularly bad case to have the

licence cancelled and the agent not in business, but it allows a fairly

summary and swift certain time in which that can get before the

Commercial Appeals Commission.

To give you examples of cases where that would take place, I suppose they would

be clear cases of misappropriation of funds or fraud. It's exactly the same

provision — as you've observed, hon. member — in

section 76 under the Real

Estate Act, where again there is a provision in there that the Commercial Appeals

Commission may require the appeal to be heard within 21 days. The concern under

the Real Estate Act was that in some cases, with knowledge of conspiracy, fraud

or insolvency, those cases could result in a loss to previously uninvolved innocent

consumers if the licensee were allowed to continue to operate during that period.

I know that the Law Society exercises similar powers in cases of

misappropriation of clients' funds. They step right in and take the

files and suspend the right to practise, but they allow a speedy

process for that member of that profession to get before a tribunal. If

he is in fact innocent, he gets an early hearing. It's an extraordinary

power to be exercised in the public interest in these cases of

defalcation, fraud and insolvency. I think that's the general answer I

would give you for both those sections.

MR. COCKE: I certainly understand that. One of the reasons

that I'm asking the question is that it's not really detailed in this

particular

Section in terms of seriousness, etc. — in other words,

misappropriation of funds, fraud or any of those things.

Interjection.

MR. COCKE: Yes, I realize that. That's what I was coming to.

I was going to say that I presume that's all included in the

preliminary remarks.

I notice that the one thing you can't do is appeal the decision of

the commissioner not to grant the hearing. In other words, you can

appeal the decision, but you can't appeal the decision not to grant the

hearing.

HON. MR. SMITH: That's so, but there is still the requirement

that he must hear it within a certain amount of time. Even though there

is a privative clause there that prevents the appeal of a decision not

to hold a hearing, there would still be judicial review that would rest

on that, if he, in doing that, did so on a bad motive or exceeded his

jurisdiction or did so simply because he didn't like the person and not

on a basis of law.

MR. COCKE: He could go to the supreme court, I gather.

HON. MR. SMITH: Yes.

Sections 34 to 36 inclusive approved.

section 37.

MR. COCKE: I gather sections 37 and 38 are together, really.

You're changing the composition of the College of Physicians and

Surgeons. That's interesting. I am just wondering: the two persons who

are not elected within the college will be appointed by the

Lieutenant-Governor-in-Council. Are there any particular people we are

looking at in terms of this? Any type of person, like for instance

consumers association groups or...?

MR. MACDONALD: Karl Friedmann?

MR. COCKE: My colleague can ask that question. I just wonder if the minister could...?

[ Page

6847 ]

HON. MR. NIELSEN: Mr. Chairman, the appointees to the council

will be not representing any specific organization but rather will just

be lay members of the public, and will he representing the citizens of

British Columbia. But we are not considering someone from a specific

organization, for a number of reasons, one of which is that there are

so many organizations. So I think they will simply be lay members

appointed to represent the people of B.C.

I might add that the College of Physicians and Surgeons was most

agreeable when it was suggested that they open it up to lay members.

MR. MACDONALD: I think the college and the minister should be

congratulated for taking this step toward a recognition of the public

interest as well as the professional interest in a very important

profession in B.C. It should happen in other areas.

The only caveat I have is that you appoint these lay people, and

they do their job, but they're just two votes in a council. It is my

feeling that those people who are appointed to boards of this kind

should, within the legislation, be required then at the end of the year

to make a report upon the activities of the board on which they serve,

from the standpoint of the public interest, to say, "We fought for this

particular thing," or "We think this is wrong and should be looked at,"

or "We think that this hearing that was held should have been held in

public and not in camera," and then bring that kind of report so that

the legislators can look at it and decide whether the public interest

really was being served. Otherwise there is far too much secrecy.

There is a big debate in the province of British Columbia now about

the person of the ombudsman. Nobody ever thinks that maybe there should

be an ombudsman appointed as well to protect the public interest from

private self-seeking or from various kinds of abuses that can flow from

strong special interests.

These people are there for that kind of purpose, to protect and

stand up for the public interest. In a way they are ombudspeople. I

think they should, therefore, as part of their mandate be required to

make a public report at the end of each year, and that could be filed

in the Legislature. That kind of a system should apply in many other

professions. Otherwise there's too much secrecy and the old system goes

on pretty well as before. So it's a step forward, but I think it can go

further. I think it can go further with the approval of the college.

You know, we keep thinking that, well, if you interfere in this

profession or that, you're going to get a lot of people who are very

angry. But you'd be surprised at how many of them in these professions

are waiting for somebody to come forward and say: "The public interest

is important, and we'll be the first, and we want others to follow to

see that the public interest is respected and heard within our

profession." A lot of people are ready for that. Some will fight it —

they call themselves the radicals — but an awful lot of the professions

and the interest organizations are ready to step forward and say: "Yes,

let's be sure that the public interest — as well as our own personal

interests — is served."

Section 37 approved.

Sections 38 to 46 inclusive approved.

section 47.

MR. WILLIAMS: I would just like to make the point that the

Minister of Intergovernmental Affairs (Hon. Mr. Gardom) has put on his

running shoes with respect to this section. I note that it's a

marketing board, and he's just not available here for this decision

today.

HON. MR. SMITH: The comment is most appropriate, and I am

sure that the minister has gone to his office to bring back one of his

memorable speeches to this House, which he will be delivering shortly

upon his return.

Sections 47 to 74 inclusive approved.

section 75.

MR. STUPICH: Mr. Chairman, I wonder to what purposes this fund would be applied — the working capital fund of the Purchasing Commission.

HON. MR. CURTIS: To the hon. member for Nanaimo, we've moved

two or three sections that deal with the Purchasing Commission. The

working capital account should be viewed in the context of the expanded

role of the Purchasing Commission, as was announced earlier this year;

and indeed this is a line of credit for business operations in which

the commission operates on a recovery basis. That might include the

warehousing of inventory for sale to ministries and other public

bodies, disposal of surplus material — things along that line. So it is

strictly working capital for the function of the commission, Mr. Member.

MR. STUPICH: I think the Minister of Finance did say "for

inventory" as well. The Purchasing Commission will be actually buying

stuff into storage and then selling it out to various ministries. Is

that part of the new role?

HON. MR. CURTIS: Yes, Mr. Chairman. Indeed, I think that

that's been happening for some time, and this puts it on a more

regularized basis. They will purchase 18,000 gross of something and

will distribute it over time. The activity is not new, but the

regularizing of it is new and, I think, overdue.

MR. STUPICH: Just a further question, Mr. Chairman. The

activities, or the charges and credits to this fund, will be subject to

analysis by the Public Accounts Committee in the same way as all other

government accounts?

[10:45]

HON. MR. CURTIS: Mr. Chairman, I know of no reason why that process would not remain precisely as it has.

Sections 75 to 81 inclusive approved.

section 82.

MR. STUPICH: Mr. Chairman, I notice in

section 56 we've

granted the Okanagan Bible Institute a tax-free situation, and then in

this commencement

section we're making that retroactive, commencing at

the beginning of the 1985 taxation year. Is there any particular reason

for that?

HON. MR. SMITH: It's to cover a lease that the college had

from the school board, a current lease for which there was no

corresponding exemption. That was the purpose for

[ Page 6848 ]

that. They already had a lease with the school

board of property used for college purposes, and in order to cover that

existing lease, this

Section is sought to be made retroactive.

Section 82 approved.

Title approved.

HON. MR. SMITH: Mr. Chairman, I move the committee rise and report the bill complete without amendment.

Motion approved.

The House resumed; Mr. Speaker in the chair.

Bill 42, Miscellaneous Statutes Amendment Act (No. 2), 1985, reported complete without amendment, read a third time and passed.

HON. MR. GARDOM: I call committee on Bill 28, Mr. Speaker.

INDUSTRIAL ELECTRICITY

RATE DISCOUNT ACT

The House in committee on Bill 28; Mr. Ree in the chair.

section 1.

HON. MR. ROGERS: Mr. Chairman, I move the amendment standing in my name on the order paper. [See appendix.]

Amendment approved.

Section 1 as amended.

MR. D'ARCY: Without recanvassing discussion in second

reading, I want to further register my concern about the fact that the

provisions of this bill limit any consideration to customers using five

megawatts or more. The fact is, I find myself in the rather strange

position of actually asking that the minister have even more discretion

than he has in this bill. The bill is incredibly permissive as it is,

allowing the minister to make major decisions involving what he defines

as surplus industrial power without reference to the Utilities

Commission. But it's only for big business, only for major

manufacturers or processors, as it indicates here.

The fact is that any jobs created in the last few years, and jobs

which we all hope are going to be created, are created by smaller

manufacturers — remanufacturers, reprocessors — taking advantage in

British Columbia of the raw materials extracted and partly processed by

heavy industry, which are the major users of electricity. So if we are

going to use our electrical resources to create jobs and provide

business opportunities and employment opportunities — which I thought

was supposed to be the name of the game — we certainly should not be

limiting industrial discounts to large business, major manufacturers,

and should be giving British Columbia investors and companies an

opportunity to do what we all hope they should be doing with the

abundant raw materials and resources and human resources we have.

I want to note that I'm not one of those people who think that big is necessarily

better or small is necessarily beautiful; both can be either. But the reality

is that major heavy industry is not a job-provider in British Columbia. Indeed,

as those industries retool and become more efficient, modernize and even expand,

they usually provide fewer jobs than they did in their unmodernized state. So

for our hope for the future to get our unemployed back to work, we have to give

a competitive edge to small manufacturers, people who are going to remanufacture.

That does not mean customers that use five megawatts or more, as I am sure the

minister knows.

So I would like this

part changed, and I hope that the minister and

the government consider making electrical energy available at an

extremely competitive rate for those who are going to provide jobs, and

recycle those paycheques and provide increased opportunity for British

Columbians to buy the goods and services that our tertiary sector can

produce and is producing.

HON. MR. ROGERS: The member will recognize the fact that the

amendment has deleted the

section on five megawatts, and we have moved

it down to transmission line voltage; that's still 60 kV. Now that

still doesn't address the small operator, who you and I would both

agree is the major employer in the province, but it does set the

catalyst in place for major electrical consumers who are looking at

British Columbia as one of their target areas under this bill.

MR. STUPICH: I wasn't here for all of the discussion in

second reading, but I'm just wondering: is this the government's way to

deal with the concern of those companies that are hit with the very

high water-licence fees? Is it a way of relieving them of the necessity

of paying that significant charge indirectly? I would appreciate the

minister's comment.

HON. MR. ROGERS: No, that is not correct, Mr. Member. This

bill is designed to target for new industrial enterprises or existing

ones, but specifically new industrial enterprises which would come to

British Columbia, but which won't come under our current electrical

structure. What we have is a window of surplus power, which we would

discount to the industrial customer until such time as that surplus is

used up. Because many industrial organizations and companies say that

their first four or five years are the major hurdle to get over in

terms of operating costs, this is one way to bridge that hurdle. But it

doesn't address the subject you brought up: the standard water rate

which is based on everyone's electrical rate that's there now.

MR. STUPICH: It's not that I want to argue it. I just want a

little more clarification. The minister did say "or existing industry."

So Harmac, for example, in my own riding, might be able to get a

significant discount on its electricity cost. A large part of the cost

is made up of the very high water licence fee rates. I'm not singling

out Nanaimo or Harmac, but any other plant anywhere in the province

that is using this volume of electricity is getting a substantial

discount, and the discount might not have been necessary had it not

been for the tremendous increase in water licence fees.

HON. MR. ROGERS: I don't want to direct the committee, Mr.

Chairman, but that's really the role of the critical industries

commissioner. That's where electrical discounts fit in with his

particular sphere of endeavour. Where companies are able to convince

the commissioner of critical industries that electrical discounts are

part of what they need either to

[ Page 6849 ]

stay in business — to survive — or to restart a

business, then it's appropriate under that act, but not appropriate

under this act.

MR. DAVIS: Key words in clause 1 of this bill are "surplus

electricity." The impression one gains from the legislation and the

introduction of the bill by the minister is that this is a temporary

condition; that surpluses exist now, but under normal circumstances

there wouldn't be one. The surplus would be used up. The capacity of

the system would be geared quite closely to the demand in the province

from traditional or usual customers.

One could envisage circumstances where the utility — in this case

B.C. Hydro — purposely builds ahead of demand. Certainly that has been

the experience of the last decade. In other words, there could be a

surplus for an indefinite period depending on the policy followed by

B.C. Hydro. Surplus is defined as the capacity of the system over and

above the requirements of the customers in the area, and in respect to

removal permits — in other words, export permits approved by the

Utilities Commission. The supply also includes possible purchases from

other sources. One could well envisage circumstances under which a

surplus of a varying amount would continue for an indefinite period

into the future, so this is not necessarily legislation which deals

with the next few years. It's energy sold at the best price it could

bring, if you like, in contrast to pricing which has otherwise simply

been costs, and the rates reflect the cost. This is opportunity

pricing. It's pricing simply to dispose of a surplus. As I envisage it,

it's a surplus that will be large or small, but that will continue for

a long period.

I wonder if the minister would comment on that.

HON. MR. ROGERS: To understand how this bill works, I think

you have to understand the difference between capacity and energy,

which the member for North Vancouver–Seymour certainly does. If we ever

have a shortage of anything in British Columbia it's energy, not

capacity. That's the very nature of a hydroelectric system. Our

estimate of the length of time a surplus will last is really based on

our forecast of consumption. One has only to look back at the situation

we're in right now to realize that forecasting is eight or ten years

out — or maybe more — and it's not always accurate. But we do know that

for the short term at least we will have a surplus, I wouldn't think it

would be prudent to intentionally build a surplus into the system, but

it would be prudent to try to maximize the surplus that we have.

You mentioned purchase from other sources. There is a possibility,

because of the Aluminium Co. of Canada having a surplus in their own

particular operation, of our purchasing power from them for these very

things. The purpose of this legislation — which I guess was discussed

in second reading — is really to try to attract new industry or

expansion of existing industry.

Section 1 as amended approved.

section 2.

HON. MR. ROGERS: Mr. Chairman, I move the amendment standing in my name on the order paper. [See appendix.]

Amendment approved.

section 2 as amended.

MR. D'ARCY: In discussing

section 1, I mentioned that we on

this side did have some concern about the discretionary powers given to

the minister. I do not understand why he cannot rely on the Utilities

Commission, since so many other things involving B.C. Hydro and energy

rates in B. C. rely on it. So I'm going to move an amendment to

sections 2, 3, 4 and 6 that deletes the words

"Lieutenant-Governor-in-Council" and replaces those words wherever they

appear with the words "B.C. Utilities Commission."

I would also, in line 2 of

section 2 (2), delete the word "he" and

substitute the word "it," and in line 3 delete the word "his" and

substitute the word "its."

MR. CHAIRMAN: The member will appreciate that

section 2 (2)

no longer exists, having been deleted by the amendment that was

approved by the committee.

[11:00]

MR. D'ARCY: In that case we'll delete that amendment too.

HON. MR. ROGERS: Speaking to the amendment, the reason the government does not find the amendment acceptable....

MR. CHAIRMAN: Order, please, Mr. Minister. Are you talking about the amendment proposed by the member for Rossland–Trail?

HON. MR. ROGERS: Yes, I am. The amendment I introduced has

already been dispatched by the committee. We're now discussing the

amendment introduced by the member for Rossland–Trail.

MR. CHAIRMAN: It has not been ruled in order at the moment, Mr. Minister.

HON. MR. ROGERS: Oh, well, you go ahead and decide on that first, Mr. Chairman.

MR. CHAIRMAN: The Chair finds

Section 1 of the amendment in

order. For the reason given earlier, that

section 2(2) has been

deleted, sections 2 and 3 of the member's proposed amendment would be

out of order.

On the amendment to

section 2 as amended.

HON. MR. ROGERS: Just speaking to that particular thing, the

reason it's important that the discretion be left with the

Lieutenant-Governor-in-Council and not with the Utilities Commission is

that it is the very nature of the Utilities Commission to be

non-discriminatory. The very nature of this particular

Section is to be

discriminatory. We want to have that discretion on the assumption that

there are four, five, or maybe more applicants coming forward for

surplus power. The cabinet intends to look at those applications which

will have the most benefit for British Columbia in terms of employment.

Somebody who wants to use electricity in a way that employs a very

minimal amount of capital or number of persons is clearly not as

advantageous to us as a plant that's going to employ the people. If

we're going to offer these discounts, we want to see what else is

offered at the

[ Page 6850 ]

table. A good example of that is an electrochemical

processor, who can come in here and, for a very small amount of capital

cost and with a very small number of employees, use up an enormous

amount of surplus electricity and then turn around and export that

product. That may be worthwhile, but I would look at something that's

much more labour-intensive. The Utilities Commission by its very

structure is designed to be non-discriminatory. They must look at all

of them together. Quite frankly, we'd rather have the ones that have

the most capital and employment spinoffs for the province. So that's

why the discretion is left in the hands of the

Lieutenant-Governor-in-Council.

MR. D'ARCY: In a number of areas the

Lieutenant-Governor-in-Council already has discretion to write

regulations and standards for the Utilities Commission. If the minister

has concerns such as he related, I know of nothing in the utilities act

preventing him from writing those concerns into guidelines to the

Utilities Commission. He somehow feels that cabinet is better qualified

to make these discretionary judgments than the Utilities Commission

could be. I simply don't accept that. The Utilities Commission is

appointed by government, and it's assumed they are the experts in their

field. I have confidence in them to make these kinds of judgments with

proper public scrutiny.

HON. MR. ROGERS: You're quite correct that the commission has

the technical expertise to be able to look at the electrical side of

it. But the other sides of it affect other ministries. The Ministries

of Industry, International Trade and Investment, Forests, or

Agriculture may be very much involved with whatever project is brought

forward. The Utilities Commission hasn't got the type of technical

background to look at it. That's the reason we wanted to look at it in

cabinet. It's clearly a discriminatory thing designed to try to attract

new industry, but it's not just industry from the point of view of my

ministry or from Hydro; it's industry that we're looking at from the

point of view of the whole government.

Amendment negatived.

Section 2 as amended approved.

section 3.

HON. MR. ROGERS: I move the amendment standing in my name on the order paper. [See appendix.]

On the amendment.

MR. COCKE: I'd just like to note that we've spent more time

this morning on amendments than we've spent on sections of bills. It

strikes me that maybe the pencils should be a little sharper in the

first place.

Amendment approved.

Section 3 as amended approved.

MR. CHAIRMAN: The Chair might make a comment, in that the proposed amendment

to the bill by the member for Rossland–Trail on

section 2 made reference to

sections 2, 3, 4 and 6. By defeating the amendment in

section 2, the Chair would

rule that the proposed amendments for sections 3, 4 and 6 would also have been

defeated.

section 4.

MR. DAVIS:

Section 4 deals essentially with the term or

duration of the special discounted rate. I have a firm in my riding

which has an underutilized plant. It claims to have an export

opportunity reaching through the next few years. Were that firm to

obtain power at a relatively low rate — a rate competitive with rates

which the firm claims are being offered in Quebec and Sweden and a few

other parts of the world — the firm could then utilize this plant which

is presently idle, employ a few more people and increase its sales.

These sales are principally abroad — largely in Japan. I can see where

a firm under those circumstances can make use of a lesser rate, a

special rate, for a relatively short period of time — one, two or three

years — and perhaps an indefinite period reaching beyond three years.

That's one situation.

A different situation, as I understand it, is faced by a firm that

wishes to build a new plant requiring, oh, 10, 15 or 20 megawatts of

energy on a continuous or high-load factor basis. A group essentially

based in Japan has been making inquiries through western Canada and has

finally decided to go to Manitoba because they can get power at the

rate of the order of 15 mills from the Manitoba utility for a period of

up to 15 years. It's not a large amount of power. There is a fairly

large employment aspect, but that firm could not locate in British

Columbia on an indefinite period rate. In other words, a rate, say, of

the order of 15 mills which is being quoted by Manitoba might be struck

here, but for an indefinite period — presumably only a few years —

under this legislation. This legislation, and I just want to be clear,

is not, therefore, legislation which will attract a new plant on any

scale and certainly wouldn't attract the polysilicon type of operation

which I gather now is going to Manitoba, but which from a

transportation point of view and other points of view might logically

come here to British Columbia. In other words, this kind of rate isn't

available to attract industry on any scale which requires new plant

construction and essentially new employment.

I'd like the minister to comment.

HON. MR. ROGERS: In terms of the industrial enterprise within

his constituency that's involved, I think that

section 5 of the act

appropriately addresses the fact that we can offer rates to that

particular industrial enterprise just as soon as the municipality in

question signs an agreement with the Minister of Municipal Affairs

(Hon. Mr. Ritchie) under the Provincial-Municipal Partnership Act.

That, in fact, would be one of the easy ones to do.

As every jurisdiction that has surplus power gets into a contest

with other ones in terms of trying to attract industry, it depends very

much on the position they find themselves in. I'm not aware of the

company you're referring to that found an opportunity to go to Manitoba

as opposed to coming to British Columbia. We intend only to offer the

discounted electrical rates for the period of time that the surplus

exists. We think that should be sufficient to attract industries to the

province.

By giving it for a longer period of time.... You are being unfair to

the people who are regular customers of the utility in structuring a

permanent discriminatory rate which I am not sure would be appropriate.

I suppose every province

[ Page

6851 ]

in western Canada — in fact, every province in

Canada — is in one form or another of a contest to try to attract

industry, and certainly we will be successful in some of them, and we

won't be successful in all of them.

I don't believe that it would be appropriate to offer an indefinite

rate of 15 mills to any utility. We have examples of where that has

happened in the past, and it forms inequities within the system, and it

takes a great deal of time to correct those. I think that answers the

member's questions.

MR. DAVIS: Again focusing on the time period, a large utility

like B.C. Hydro, which typically not only has a lot of generating

plants in different locations but considerable investment in

long-distance transmission and distribution, has costs which some of

our power-intensive industries historically did not have. They went to

a particular site. They minimized their transmission investment. They

had no distribution investment. They chose an ideal site and were able

to therefore capture their costs, fix their costs, for an indefinite

period of time.

[Mr. Strachan in the chair.]

This is why historically we had some power-intensive industries,

such as Cominco's operations at Trail, the aluminum operations in

eastern Canada and B.C. The period of time was crucial, but they could

determine the period by going to the location and minimizing the

investment. Once you use B.C. Hydro as the all-embracing agent to sell

energy, you eliminate the possibility of having low-cost power

developments for power-intensive industries.

I'd like to make that point, because I don't think that opportunity is really dealt with under this legislation.

Sections 4 to 11 inclusive approved,

Title approved.

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

Motion approved.

The House resumed; Mr. Speaker in the chair.

Bill 28, Industrial Electricity Rate Discount Act, reported complete with amendments.

MR. SPEAKER: When shall the bill be read a third time?

HON. MR. ROGERS: With leave of the House, now, Mr. Speaker.

Leave granted.

Bill 28, Industrial Electricity Rate Discount Act, read a third time and passed.

[11:15]

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

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

ESTIMATES: MINISTRY OF

INTERNATIONAL TRADE AND INVESTMENT

(continued)

On vote 49: minister's office, $143,191.

MR. WILLIAMS: Looking at the minister's estimates, I see that

the budget for travel for this minister is now $1,017,815. He used to

head up a combined ministry that included small business and industry

and international trade and investment, and now with the smaller

ministry he has a bigger travel allowance.

If my memory serves me right, I think this is a threefold increase

in his travel budget. Maybe the minister can open up to us in terms of

his travel folders and brochures that he's been looking at — all those

colourful brochures that are available — and advise us just how he sees

this $1 million expended in the coming year.

HON. MR. PHILLIPS: Mr. Chairman, in answer to the member's

question, budgeted travel expenditures by MITI are higher than those of

the trade ministry division of Industry and Small Business Development

because of expanded trade mission activity, and due to a number of

special new trade and investment promotion activities. Among these

activities are British Columbia's participation in Expo 85 in Tsukuba,

Japan, and the government's plans to open several new overseas offices.

Concerning the areas of ministerial and working-level trade

missions, only 18 percent of the total budgeted trade mission

activities involves ministers' travel, while a further 16.2 percent of

trade mission expenditure involves travel by ministry officials

accompanying missions. Travel expenses for private sector involvement

in trade missions and funds for promotional aids used on these

initiatives count for over 65 percent of the total combined mission

budget. These figures illustrate that our trade mission program is

strongly focused towards the private sector.

MR. WILLIAMS: I would have more enthusiasm reading the

telephone book if I were reading my briefing notes, like that minister.

One would think he was excited about these opportunities for travel

abroad: a threefold increase. My gosh, the world's your oyster when

you've got a million dollar travel allowance, isn't it? It's nice

stuff. But I see also that you have $2,330,650 for professional

services — consulting services. Maybe the minister can check his phone

book and read his briefing notes on all the consultants that he plans

on hiring in the coming year as well.

HON. MR. PHILLIPS: Maybe I will do that. In 1984-85-86 there

was no expenditure on Expo 85. This year Expo 85 is $1,180,000. The

external director is about the same, at $510,000. There is $569,000 for

foreign offices. Trade missions are about the same: $460,000 last year,

$446,000 this year.

Interjection.

HON. MR. PHILLIPS: Yes, professional fees and services.

Investment promotion is about the same, at $12,000. The trade policy sector is about the same, at $73,000. So the

[ Page 6852 ]

increase is mainly for foreign offices and our expenditure on Expo 85.

MR. WILLIAMS: Mr. Chairman, I've looked at a report,

"Canadian Market Presence in ASEAN," which is.... The Asia Pacific

group at UBC has carried out conferences with representatives of

provincial and federal governments and major corporations interested in

trade. They held conferences last fall and again this spring at UBC, I

believe.

It's interesting to look at the modus operandi of this ministry and

then see what this group of experts have to say about how Canada and

the provinces handle themselves abroad, particularly in the Pacific

Rim. The report that came out of the studies at UBC, "Canadian Market

Presence in ASEAN: Context, Models and Components." They say: "Few

observers believe that corporate or aggregate Canadian effort in ASEAN

markets is well informed, effectively organized or appropriately

financed." I might note that a representative of your department was at

this conference: I think Mr. Clark, one of your consultants in

Vancouver.

They say we need more research; we need people who can speak several

languages. I just wonder how we stack up in that regard. The human

element is particularly important, they say, in terms of really

understanding the tight, narrow-targeted specifics in terms of product.

There's a

section that intrigued me. They talk about the kind of

approach we use in British Columbia, which is the slam-bam grand tour

for a week, or two weeks, hitting the federal government offices or

ambassadors' offices — highlights in terms of other ministers in the

countries that you're touring, and some of the private sector people.

They say this: "The clear loser in terms of physical presence is the

visitor" — i.e., they're referring to your technique as the visitor

technique. "However visible the visit," which I am sure the minister's

visits are, with the Premier in tow and whatever else.... For example,

as part of a ministerial mission or an exhibition such as Can-Thai '84

in Bangkok or Tech Trans '85 in Kuala Lumpur, "the short duration of

the visit means that cultivation and pursuit of contacts is difficult"

— by the very nature of the way you approach the problem, Mr. Minister.

"This will be a greater disadvantage with some

products — the unfamiliar, the non-standard, the easily substituted;

and in some markets, the less developed and the more alien — than in

others. Too often the bemused visitor" — I think he's referring to our

minister here — "accomplishes little on a badly prepared round that

includes the embassy, a number of probably inappropriate, if

hospitable, local government and business offices, and finally his

hotel's bar or pool."

That's the view of a range of people from the

private sector, the federal public sector and the provincial sector,

looking at your kind of visitor approach to trade promotion abroad,

particularly in the Pacific Rim. They argue that the visitor will fall

short in this capacity, so there's no question that what we've been

doing all these years is less than adequate.

(Mr. Ree in the chair.)

I guess the beginnings in terms of establishing desks abroad and

having a local agent is a means of getting away from the grand visit

approach, but it's an indication that we've had a decade of the grand

visit approach, and the experts and professionals in this field feel

that it leaves a lot to be desired. Having people that handle the

language, that have a local background and understanding of the

culture, the technologies and the approach of industry, clearly is far

superior.

So we've got a big budget for travel, a big budget for the minister

to do the grand 747 taxi route around the world, but the effective

thing is having people that are part of the culture, part of the

language — people who understand production and industry in the area

and can really produce, rather than end up at the hotel in the evening

slightly confused and bemused. That's what the people at UBC say has

been the pattern in terms of what we've been doing in British Columbia

and even in Canada.

HON. MR. WATERLAND: Mr. Chairman, I would like leave to make an introduction, if you don't mind.

Leave granted.

HON. MR. WATERLAND: Mr. Chairman, I'd like to introduce a

person who has met with me a number of times regarding China trade and

economic missions to China, This lady is now heading China Tushu Co. In

Vancouver. The very fact that she is there and dealing regularly with

the government, I think, demonstrates the success of the types of

missions that the Ministry of International Trade and Investment

sponsors.

Would the House please welcome Miss Genj from China Tushu Co.

HON. MR. PHILLIPS: Mr. Chairman, I think the report that you

are talking about was a group of people sitting down discussing really

nothing definitive, but certainly how much money we can spend and what

efforts we can take. Michael Clark, who attended that and who was

posted in Jakarta, may be going back there on secondment. That's one of

the reasons that we are interested in getting permanent staff members

who know the B.C. scene, who know and understand B.C. industry and who

can help our business people when they attend. That's the whole purpose

of the exercise.

We're not going into the ASEAN countries to put in time, because we

want to try.... I guess all areas are important, but we certainly want

to try Beijing, Hong Kong, Seoul and Japan, as you know. Hopefully we

will handle some of the ASEAN interests out of Hong Kong, but it

depends on how much money you want to spend. How high is high when it

comes to promotion offices abroad?

I realize the inadequacy of some of the things we are doing, and I

also have had some discussion with Kelleher on the inadequacy of our

trade people and how often they get to British Columbia. There are a

lot of things that can be done to improve our representation and our

trade abroad. Hey, I'm the first one to agree with you on that.

MR. WILLIAMS: I appreciate that, Mr. Chairman. Maybe the

minister could just reflect a little bit, though, on the free trade

statements that the Premier has made in the last few months. I get the

uneasy feeling when he attends the Western Premiers' Conference that

the person establishing the tune at those conferences is the Premier of

Alberta, Mr. Lougheed, and that our Premier is just a tag-along yes-man

in the situation. The benefits for free trade for Alberta are very

substantial, of course, and I think the value added in terms of

[ Page

6853 ]

petrochemical products, if they did all the

processing in Alberta, is something like a fivefold value-added

increase. If they had access to the American market unfettered, then

Alberta would indeed have improved its position tremendously because of

that increase in wealth generation in the province. I think that our

Premier comes along at these conferences, and without a lot of thought

says "Me too," and Mr. Lougheed pretty well calls the shot.

I think there are inherent assumptions with respect to free trade,

which most of us get out of school, that it's automatically going to

create all the benefits one would hope it might. And yet I wonder if

the minister or people in government have really reflected on this in

terms of just what it might represent and what the full implications of

it are. In the reading I've done on the subject, it seems to me that

among the better academics in Canada in this field are people like

Bruce Wilkinson of the University of Alberta, who has written for the

C.D. Howe Institute and others. He's not just a C.D. Howe boy; he has a

broader view of some of these questions than, I think, the people of

the C. D. Howe Institute have.

[11:30]

One of the points Wilkinson makes is that we always assume that

advantages of scale are there, sort of, across the board, in terms of

industrial operations. Wilkinson makes the point that that assumption

isn't always valid, He makes the point that 70 percent of consumer

products can, in fact, be optimally produced with markets of one

million people. So it gives you an idea that 70 percent of consumer

products can, in fact, be produced for relatively small markets. I have

this uneasy feeling that there's always that constant there that yes,

there are tremendous advantages in terms of scale. It's not true in

terms of a good many products. I'm not sure that the minister

appreciates that.

The other assumption is that if we had the cold-shower treatment —

i.e., open up Canada totally to the pressures of international

competition and remove all the trade barriers — that automatically our

industry would become more efficient and productive and be able to

compete across the board in terms of the American market and elsewhere.

But the pattern isn't that way, even in terms of our own recent history.

It's interesting, for example, to look at the question of farm

machinery, which has had free access to the United States. Yet look at

our farm machinery operations — the one that's been controlled by

Conrad Black in recent years. Which one is it? It's the old

Massey-Ferguson company. It's been on the edge of or in bankruptcy for

a period of time now, yet it has not adjusted in terms of that

cold-shower routine; in fact, it's weakened tremendously. So there's

that automatic assumption that we will rebuild, retool and requalify

ourselves in terms of farm machinery, and it just hasn't happened in

Canada.

The other side is the steel industry. We don't have a full free

trade situation there, and yet in this industry they've applied new

technology and have become more competitive. I think there's this

overlying ready assumption that if we have free trade, this will

happen; if we don't have free trade, that will happen. Yet the farm

machinery business tells us one thing in Canada and the steel industry

tells us another. So what I'm saying is it's not as simple or as

straightforward as the Premier's statements, and other statements out

of government, would suggest.

There's the assumption that we'd all be better off. Yet if we had

full free trade between Canada and the United States, where might

people locate? I'd suggest they'd probably locate in the sunbelt in the

United States. That's the big growth area in the United States, and

that's where the big new markets are.

The other example we could look at from recent history in terms of

the assumptions of the benefits of free trade is in Britain when they

joined the Common Market. Again the assumption was that the cold-shower

routine would smarten up British manufacturing and smarten up British

industry. But that hasn't been the case. The main improvements in terms

of gross national product in Britain have been around their fortuitous

finding of oil and gas in the North Sea, and the hoped-for improvement

in manufacturing and efficiency in British industry and manufacturing

simply hasn't occurred. There hasn't been that performance in terms of

manufacturing in Great Britain. So what it raises is the point that

these things are really far more complex than they appear on the

surface, and I would think that what might follow if we really pursued

a lot of these goals the Premier has been talking about is that more

and more decisions would, in fact, be made in the United States — even

more than are made now. In terms of our sovereignty, that can't be

readily afforded.

The whole question of what other trade-offs Canada would have to

deal with in terms of dealing with the Americans I don't think has been

addressed. If we had full free trade with the United States, you know,

where is our dollar relative to this, and the fluctuating Canadian

dollar and exchange rates? Again, where would an industry locate — on

which side of the border — if they had to face that question of a

fluctuating dollar? They would more likely locate in the area where it

was the American currency prevailing. So again, I don't think the

thought has gone in there, in terms of analyzing this.

The question of sectoral free trade by some sector which has now,

just in the last week, been something the Premier has talked about — is

something that again requires a fair amount of thought. I wonder if the

minister can give us any elaboration in terms of the sectoral free

trade idea that was espoused just last week by the Premier.

MR. CHAIRMAN: Order, please. There have been a couple of

conferences going on in extreme corners of the chamber. Possibly they

could be carried on outside.

HON. MR. PHILLIPS: Well, number one, I think everyone in

Canada recognizes that we can no longer live with the status quo,

because if we do we're going to lose because of the protectionist

issues that are coming up in the United States. There has been a great

deal of discussion on whether we should attack it on a sectoral basis,

and by and large the rest of the provinces in Canada, including

Ontario, have rejected that idea — that we have to go for a much

broader deal or we will in the long-term be the loser. Now when you

talk about 70 percent of the items — consumer goods — being able to be

manufactured for a population of a million people, that may be so. You

may be looking at 70 percent, but certainly not 70 percent of the value.

I think the research we have done.... And I think we have pretty

good people in our department. Dr. Barbara Johnson, who has headed up

our trade policy activities in Canada, can stack up with.... I'll stack

her up against anybody in any province in Canada; I think she has done

an excellent job.

[ Page 6854 ]

It's always easy to look back at what has happened in the past. You

can talk about the U.K., but name me an economist who could tell you

what might have happened in the U.K. had they not joined the Common

Market. Where would they be today? Canada is one of the very few

countries in the world that doesn't have access to a population of over

100 million to sell its goods and services to. Even the Scandinavian

countries that you talk about so highly have formed an association. I

think we've got to proceed in our negotiations. I think the window is

there now, and if we don't use it we'll be the losers in the long run.

MR. WILLIAMS: Well, we sure get lengthy dissertations from the minister on these subjects.

I'd just like to reinforce the point about our saying one thing and

doing another in this province. We say we're in favour of free trade,

but we have marketing boards that certainly establish lack of access,

quota systems and all the rest of it within our provincial economy. And

we had legislation just this morning that reinforced one of our

marketing boards. We say we're in favour of free trade, but we have a

timber pricing system that flies in the face of all that. And this man

over there continues to chip away at that and weaken our position

relative to the Americans. We say we're in favour of free trade, but we

have ERD agreements that are a form of subsidy, one way or another,

with respect to various industries. And this administration has been

very happy to make those ERD agreements with the federal government. We

say we're in favour free trade, but we have an internal procurement

policy that also flies in the face of all that. We say we're in favour

of free trade, but we just passed critical industries legislation in

this House that gives aid outside all the terms of free trade to

so-called critical industries in the province. We say we're in favour

of free trade, but we've created special economic zones that eliminate

taxes and a whole range of charges, again under this administration

this year. We say we're in favour of free trade, but we've just changed

the rules for Hydro pricing in British Columbia to benefit certain

industries. So there is an incredible, consistent inconsistency in

public policy on the part of this administration. They can all say what

they like about free trade, but you check the list: it's abundantly

clear that much of the policy generated within this administration

flies in the face of any kind of free trade view of the world at all.

MR. DAVIS: The hon. second member for Vancouver East has made a few points that the Chairman yesterday didn't allow me to make.

I want to focus on an area which should be of considerable interest

to the Minister of International Trade and Investment. It's the

transportation opportunity which British Columbia has, being located on

the Pacific Rim, having ports on the Pacific Ocean. Being located

relative to an incredible population across the Pacific and relative to

the growth states of the United States, including California, it has

real opportunities which relate exclusively to its location on the

surface of the earth.

First, in respect to water transport, whether we should be shipping

and pricing merely at the dockside or pricing delivered at destination

— issues like that — there are opportunities for B.C.-based industry to

pick up on some of the profitability of transport overseas as opposed

to merely digging up the resources or moving them within B.C. or Canada.

I was impressed a few years ago during an interregnum when I had

some work which related to studies being carried out by the province of

Alberta. There were literally dozens of economists working for the

government of Alberta, admittedly in the transport ministry there, who

were focusing on overseas trade and costing transportation. They were

looking at ocean transport, different ways of moving the products of

Alberta across the oceans of the world. They were much more

knowledgeable than the provincial government of British Columbia

relative to our ports and costs of handling goods in our ports as well

as transport.

A few years back I tried to get the bunker fuel tax changed, and

eventually it was reduced and made reasonable by the Minister of

Finance. But in that period at least one study produced in the Industry

and Small Business ministry said the bunker tax was fine. The bunker

tax was ridiculous, but it was said to be fine by a consultant. We

don't have the experts. We don't have the knowledge relating to ocean

transport that we should have within government in British Columbia.

After all, we're a coastal province; we should have some competence in

that area. But we leave it exclusively to the federal side. Alberta

doesn't, but we certainly do.

On the air side, Vancouver International Airport is close to, if not

at, one of the world's great crossroads: people and goods moving by air

from North America — indeed across North America — to the orient and

beyond. There's a great opportunity there, but air transport is left

almost entirely to the federal government. The federal government

decides which carrier plies which route. Invariably Air Canada, the

airline based largely in Montreal and to some extent in Winnipeg, gets

the nod — rarely, if ever, CP Air or any of the western carriers. Air

Canada is the favoured carrier. As a result, the support operations of

that airline are concentrated almost totally in the Montreal area.

[11:45]

A major industry — it is a sizeable industry at the Vancouver

International Airport — is limited because the provincial government

never is at the table when discussions are carried out with other

countries, when the decisions are being made as to which airline gets

which route. We at least can hope to get, to an increasing extent, some

of the support operations — the maintenance of aircraft and so on — in

the Vancouver area. Alberta has been very active in this area, trying

to get more international business for Wardair, Pacific Western

Airlines and so on.

So there's another area of opportunity. We've got the geography,

we're on the ocean, we're on the world's airline routes. I believe we

could do more in both those areas — shipping and air transport. I hope

the minister in his new role will focus more on those service and

transportation opportunities than the province has traditionally done

in the past.

MR. WILLIAMS: I thought the minister was going to respond to

those points. One could also reinforce the point about the ports and

changing attitudes there.

HON. MR. PHILLIPS: With regard to the transportation issue,

yes, it's sometimes frustrating, and one of the things that British

Columbia has been talking about is having representation on the board.

I realize there are opportunities in air transport in Vancouver. I

think that what has been allowed to happen at Vancouver International

Airport is similar to what happened to the Vancouver port: we're being

suckered by

[ Page 6855 ]

Seattle. There are a number of international

airlines that should be allowed to come in here. But it's a trade-off,

it's who gets whom, and it's under the Department of Transport. I

appreciate you thinking that I can solve this problem, and I'll

certainly do my level best, because it is frustrating at times.

With regard to the member's talk about free trade, there are

anomalies in every free trade agreement. You know as well as I know,

Mr. Member, that one of the most difficult areas they had to solve in

putting the European Common Market together was that of agricultural

products. The thorn that is still in the side of the countries who were

signatories to that agreement is agricultural products. Recently in

France the farmers were up in arms. The farmers in England — the dairy

farmers particularly — have not been happy with that situation. You

talk about marketing boards. We could debate this all afternoon if you

want to get into a debate on marketing boards.

If you want to get into a debate on how the United States subsidizes

its agricultural industry.... I think the agricultural industry has

been subsidized historically in practically every country — just

different methods of subsidization. One of the problems we're having

right now, of course, is the raspberry problem; and there is the hog

problem, and the potato problem coming out of Utah. I don't anticipate

that these trade problems will ever disappear, and as we work toward

the major goal of freer trade between Canada and the United States

there's certainly going to be a lot of debate and a lot of hearings and

a lot of problems that have to be solved, but I think we have to decide

that yes, we want to go this route, and then you have to deal with

these problems as they come up. It's not going to be an easy situation,

because right now in the United States they've got some real problems

in the centre belt — China, for instance, who used to import millions

of tonnes of corn from the Unites States is now a net exporter. I don't

know what will happen to Canada if China ever gets to be

self-sufficient in wheat. Those are ongoing problems that we have to

come to grips with, but I think if you take the overall idea that

Canada would be able to benefit, because we have so many natural things

going for us and we can compete.... We certainly competed in the

bilateral agreement on automobile trade, and I think we can do it in

other areas.

MR. MITCHELL: Mr. Chairman, I would like to carry on with

this worldwide trade, etc., but I have one local problem where I would

like some input from the minister. I guess it really reflects on our

international credibility. For years and years Esquimalt has been a

repairer of deep-sea ships, servicing foreign ships in the Esquimalt

graving dock. Lately your counterparts in Ottawa have indicated that

they're going to follow in the footsteps of the Social Credit here and

privatize the graving dock. Now in Esquimalt and within the shipyard

industry, Burrard Yarrows and Vanship repairs have always looked at the

graving dock as an area that they can use mutually, and they do all

compete on servicing and repairing international ships.

I was wondering if the minister, to make sure our credibility

internationally is still competitive within the repair business...that

the graving dock is either going to be preserved as a mutual graving

dock, cooperatively owned, or continue as it presently is owned by the

federal government. Historically it has been publicly owned, but to

maintain the competitiveness of the other shipyards and our

international credibility, has the minister given any thought to any

recommendations to the federal government on the graving dock?

HON. MR. PHILLIPS: I really appreciate the member's concern,

but I think this would be better under Industry and Small Business,

because you're talking about ownership of a local industry and

subsidization of a local industry. Certainly I think you should take it

up with my colleague the Minister of Industry and Small Business

Development (Hon. Mr. McClelland).

MR. MITCHELL: I understand this is a gray area, Mr. Chairman.

It is our international credibility; it's not only local ships and

local jobs. That particular facility has been there for international

use. It has been used internationally. This is just the maintaining of

it locally.

Vote 49 approved.

Vote 50: ministry operations, $7,754,283 — approved.

The House resumed; Mr. Speaker in the chair.

The committee, having reported resolutions, was granted leave to sit again.

MR. REID: I ask leave to make an introduction, Mr. Speaker.

Leave granted.

MR. REID: It's with pleasure that I introduce two lovely

couples who are in the precincts today: Tom and Cindy Coles, who are

here representing the Minister of Agriculture from the downtown city of

Chilliwack; and also my niece Kelly Van Garderen and her husband Tony,

also from sunny downtown Chilliwack.

MR. BARNES: I would like as well to introduce two friends of mine in the gallery this morning,

Leave granted.

MR. BARNES: I have two friends....

Interjection.

MR. BARNES: I have two friends today in the gallery, Mr. Member, but you're quite right: I have too many to count otherwise.

My two friends today are Jean Wolff and Sharon Ginsberg, who are

travelling in Victoria. They have just left the San Juan Islands and

are here having a little bit of a holiday. I'd like to ask the House to

make them welcome.

Hon. Mr. Gardom moved adjournment of the House.

Motion approved.

The House adjourned at 11:55 a.m.

[ Page

6856 ]

Appendix

AMENDMENTS TO BILLS

21 Hon. H. A. Curtis to move, in Committee of the Whole on Bill (No. 21) intituled Provincial-Municipal Partnership (Taxation Measures) Act to amend as follows:

SECTION 1 , in paragraph (

b) of the definition of "eligible improvements" by deleting "entered on"

and substituting "entered on or eligible to be entered on".

SECTION 2 , by deleting subsection (4) and substituting the following:

(4) Subsection (2) does not apply in respect of an eligible improvement where

(

a) the tax that would be payable in respect of that eligible

improvement if this

section were not in force is less than an amount prescribed

by the Lieutenant Governor in Council, or

(

b) the assessed value of the eligible improvement is less than

an amount prescribed by the Lieutenant Governor in Council.

SECTION 2.1 , by adding the following as

section 2.1:

Relief for vacant industrial buildings

2.1

(1) In this

section

"industrial building" means a building that is in the industrial class of improvements prescribed under

section 26 of the Assessment Act ;

"tax" means property tax payable under

Part 4 of the Education (Interim) Finance Act .

(2) Where a municipality has, pursuant to

section 4 (2) of the Provincial-Municipal Partnership Act ,

reduced the tax, as defined by that Act, that is payable in respect of

an industrial building and part of the building is leased to a person

whom the minister considers to be operating a new business, the

minister may, by order, reduce by 50% the tax, as defined by this Act,

that is payable in respect of that building.

(3) On application by a person liable to pay tax in respect of an

industrial building that is situated in a rural area, the minister may,

by order, reduce by 50% the tax payable in respect of the industrial

building where

(

a) a lease of the building or part of it was entered into during

the period of 90 days immediately preceding the order,

(

b) the term of the lease commenced during that 90 days,

(

c) not less than 50% of the floor area of the building had been

vacant and unused for at least 6 months immediately preceding the date on which

the term of the lease commenced,

(

d) the premises demised by the lease consist exclusively of

all or part of the vacant and unused floor area referred to in paragraph (c),

and

(

e) the minister considers that the lessee under the lease is

operating a new business.

(4) An order under this

section applies only in respect of the calendar year in which it is made.

(5) Where an order under this

Section is made in respect of an industrial building

after the tax for the year to which the order relates has been paid, a refund

of tax may, without an appropriation other than this section, be made from the

consolidated revenue fund in the amount required to give effect to the order.

28 The Hon. C. S. Rogers to move, in Committee of the Whole on Bill (No. 28) intituled Industrial Electricity Rate Discount Act to amend as follows:

SECTION 1 ,

(

a) in the definition of "industrial customer" by deleting "that

has a load of 5 mW or more and", and

[ Page

6857 ]

(

b) in the definition of "surplus electricity" by deleting

"and 'surplus electricity' also includes electricity that is the

subject of an order under

section 2(2)".

SECTION 2 , by deleting subsection (2).

SECTION 3 ,

(

a) in subsection (1) by adding "or expand" after "proposes

to construct", and

(

b) by deleting subsection (2).

31 The Hon. H. A. Curtis to move, in Committee of the Whole on Bill (No. 31) intituled Critical Industries Act to amend as follows:

SECTION 1 , (

a) in the

definition of "economic plan" by adding "or authorized" after

"required", and (

b) in the definition of "impost" by adding "regulated

under, or subject to control or approval under" after "payable under".

SECTION 8 , by adding the following subsections:

(5) The powers of the commissioner to approve an economic plan

include the power to approve an economic plan formulated before this

Act came into force.

(6) An agreement entered into pursuant to an economic plan approved

under subsection (5) may be made effective on and after January 1, 1985

and a provision in it that affects an impost in a manner referred to in

the definition of "economic plan" has, on and after that date, force

and effect with respect to the impost notwithstanding anything

contained in any other Act and subsection (5) and this subsection are

retroactive to the extent necessary to confer that force and effect on

and after that date.

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