1987 Legislative Session: 1st Session, 34th Parliament

HANSARD

The following electronic version is for informational purposes only.

The printed version remains the official version.

Official Report of

DEBATES OF THE LEGISLATIVE ASSEMBLY

(Hansard)

WEDNESDAY, JULY 8, 1987

Afternoon Sitting

[ Page

2273 ]

CONTENTS

Routine Proceedings

Freedom of Information Act (Bill M206). Mr. Jones

Introduction and first reading –– 2273

Oral Questions

First Investors Corp. Mr. Sihota –– 2273

Newport Realty Ltd. Mr. Williams –– 2274

Mr. Sihota

Forest fire fighters. Ms. Edwards –– 2275

Mr. Miller

Mr. Williams

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

(Hon. B.R. Smith) –– 2275

Mr. Clark

Hon. Mr. Couvelier

Mr. Williams

Mr. Lovick

Hon. Mr. Savage

Mr. Weisgerber

Mr. Stupich

Mr. Rose

Mr. Guno

Mr. Cashore

Mr. Miller

Hon. Mr. Michael

Ms. Edwards

Hon. Mr. Reid

Mr. Blencoe

Hon. Mrs. Johnston

Hon. Mr. Rogers

Ms. Smallwood

Hon. Mr. Strachan

Hon. Mr. Brummet

Mr. Jones

Hon. Mr. Veitch

Hon. Mr. Parker

The House met at 2:06 p.m.

MR. BLENCOE: Mr. Speaker, we are very privileged to have in

the House today a group from James Bay New Horizons — good friends of

both members of Victoria. They are on a walking tour of the Legislature

and surrounding precincts, and they're accompanied today by Mrs. Snye.

Would the House please make our friends welcome.

HON. S. HAGEN: It's with a great deal of pleasure that I

introduce to the House today two people who are very important in my

life, because they are the parents of my wife Judy. I'd like you to

make welcome Mr. and Mrs. Jack Robins from Coquitlam.

MR. CASHORE: I'd like to introduce a very dear friend of our

family, Louise Hutchinson, who is sitting in the gallery with my wife

Sharon. It's very fitting that Louise is here today, on the day of

discussing the Municipal Affairs estimates, because she is a member of

the White Rock council. I ask you to join me in welcoming Louise.

HON. MR. PARKER: I'd like to introduce to the House today

Frans Caspers, Wim Bouwland, Greg Diemer and Susan Bordeaux. They are

students from the Netherlands who are here for a few weeks working with

the Ministry of Tourism, Recreation and Culture in conjunction with the

University of Nijenrode on a project relating to operations management.

Will the House make them welcome, please.

MR. CLARK: I'd like the House to give a warm welcome to my wife, Dale Clark, who is visiting in the gallery today.

MR. JANSEN: There are special guests here this afternoon, and

I'd like the House to make them welcome: Mike and Sue Chunys, with

their three children — Vanessa, Michael and Sara; and Fred and Anne

Lowenberger, all from Agassiz. Anne Lowenberger and Vanessa Chunys are

both winners of the essay contest in the community of Agassiz: "What it

Means to be a Canadian."

HON. MR. REID: Mr. Speaker, in the precincts today is a very

good friend of mine and a hard worker in the Social Credit Party, Mr.

Dave O'Malley. Would the House please make him welcome.

MR. HARCOURT: I have some sad news.

Interjections.

MR. HARCOURT: No, it is that in the rubber match today

between the Scrum of the Earth and the NDP caucus, the Scrum of the

Earth got lucky on a number of baskets and won 21 to 14. I'd like to

congratulate the Scrum of the Earth for their fine performance, for

once.

Introduction of Bills

FREEDOM OF INFORMATION ACT

Mr. Jones presented a bill intituled Freedom of Information Act.

MR. JONES: We've seen a number of bills introduced lately,

and I would like to move that a bill intituled Freedom of Information

Act be introduced and now read a first time,

I'm very proud to introduce this bill, which has a long heritage in

this House, having been introduced 11 years ago by Scott Wallace, and

by such eminent MLAs as Alex Macdonald and Garde Gardom, later by

Gordon Gibson, and more recently by my predecessor, Eileen Dailly. They

were called "sunshine acts" or "open-door government acts." I

understand that even five years ago, the Attorney-General at that time,

Allan William, announced that the government was studying

access-to-information legislation, and that even our current Premier

planned to introduce such legislation to apply at the municipal level

when he was Municipal Affairs minister.

Mr. Speaker, in his report to the Legislature, the ombudsman noted

that we still lack such legislation, which exists in over half the

provinces in Canada and in our federal government. Not a week has gone

by in this House when we have not seen the desire for more access to

information and concerns about lack of availability of information. The

public has a right to know. They have a right to know about information

on publicly funded institutions, about the information on which

government bases their decisions, and about the information that

government possesses on them as individuals.

This province was promised open government. British Columbia needs

such freedom of information, and I look forward to the debate on this

legislation in the House.

Bill M206 introduced, read a first time and ordered to be placed on

orders of the day for second reading at the next sitting of the House

after today.

Oral Questions

FIRST INVESTORS CORP.

MR. SIHOTA: I have a question for the Minister of Finance.

Over the last year or so there have been several business failures in

this province: Teachers' Housing Co-op, Newport.... We have First

Investors now, of the Principal Trust group. As a result of this, many

seniors and unsuspecting investors have been caught, losing their life

savings. Can the minister tell this House what steps he is taking to

protect B.C. investors, many of them seniors, from this type of

situation?

HON. MR. COUVELIER: Mr. Speaker, the difficulty, of course,

is evident to all, and we see it in the kind of tragedies that result

from the failure of some of these financial houses; that is to say that

the basic rule in making investments is always that the degree of risk

is naturally reflected in the rate of return. Invariably, whenever

entrepreneurs attempt to maximize their earning potential, they will,

in pursuit of that, frequently take greater risks and as a consequence

expose their shareholders.

The government of B.C. was actively party to the considerations

brought to the Principal Trust problem by the Alberta government, and I

think that until the Coopers and Lybrand report comes in on that issue,

it would be imprudent to make any specific comments on that matter.

MR. SIHOTA: A supplementary to the Minister of Finance. In the case of First Investors, they're covered by the

[ Page 2274 ]

Investment Contract Act, which is

an act that the

minister is responsible for. Under that act, companies such as First

Investors are not required to provide financial statements, so that

investors don't know of the situation of the company. The financial

records of Principal were given to the investors, but the financial

records of the specific company that they had the investment in are not

required under the act to be provided. Has the minister considered

bringing in the necessary legislative changes so that investors are

aware of the financial status of these companies on an ongoing basis?

[2:15]

HON. MR. COUVELIER: I don't think that that particular remedy

would have made this particular issue any easier to resolve. I believe

that the difficulty with the Principal failure, and the difficulty the

monitoring agencies had in dealing with it, reflects the complicated

corporate structure of that organization and the fact that not all

those organizations were actively in business in British Columbia. As a

consequence, the host province had the primary responsibility to

monitor that situation.

MR. SIHOTA: The minister can't talk about assessment of risk

on the part of these investors if the act doesn't require the company

to give them the information from which they can determine the risk. In

many cases the investor does not discover until after the fact that

their investments are not covered by the Canada Deposit Insurance

provisions. Has the minister considered changes to legislation to allow

depositors to withdraw their funds without penalty when they discover

that their deposits are not protected?

HON. MR. COUVELIER: If the hon. member would like a copy of

the application form used by both of those firms, I would be happy to

supply him. That form has, in very bold red print, the fact that these

dealings are not insured by the Canada Deposit Insurance Corporation.

So I don't think the allegation could be made that investors were

unaware of the degree of risk associated with their transaction.

MR. SIHOTA: Perhaps the minister should spend some time

talking to some of his constituents who are phoning me up and telling

me that. But that wasn't the question. We'll move on to something else.

Principal Trust's storefront office in Vancouver lists their group

of companies, including investors, on the window, with a notice at the

bottom saying: "Member — Canada Deposit Insurance Corporation." Does

the minister not agree that this type of misrepresentation ought to be

prevented by his ministry?

HON. MR. COUVELIER: I'm not aware of those specific details. I'm happy to take the question on notice.

MR. SIHOTA: A question then to the Minister of Labour, who is

responsible for consumer matters. I'll repeat the question. On the

windows of these companies is a representation that says they are a

member of the Canada Deposit Insurance Corporation. Does the minister

not consider that to be misleading and a misrepresentation in terms of

advertising, and will he agree to immediately bring forward changes to

remedy that situation?

HON. L. HANSON: The answer to the first part of the question

is that I would like to see the circumstances under which it is

published on the window, and I will have a member of my ministry look

at that. The answer to the second question is no.

NEWPORT REALTY LTD.

MR. WILLIAMS: Again to the minister responsible for consumer

affairs. The impact of many of these issues is predictable in terms of

a gullible public being taken in by these companies. In the case of

Newport and the Newport group of companies, where many seniors were

bilked in this province, in the provincial jurisdiction, they were

advertising at interest rates far above the market. It was totally

predictable that that company would be in trouble. When does your staff

begin to investigate these companies in such predictable situations?

HON. L. HANSON: When we start to investigate that is when we

first become knowledgeable of a practice that is questionable under the

Consumer Protection Act. I would suggest to the member opposite that we

do keep a very good investigative process in place, but not always is

everything brought to our attention. I do believe that the

investigative branch of consumer affairs does an excellent job when a

case is presented, or at least when it is brought to our attention.

MR. WILLIAMS: Further to the Minister of Consumer Services.

Newport was advertising unrealistic rates for some two years before

they got into deep trouble. The deep trouble was totally predictable.

Do your people never, ever look at the financial pages, see these

unrealistic market rates and then understand that there are going to be

problems down the line? Or do they always wait until seniors are bilked

and lose their life savings"

Answer the question.

HON. L. HANSON: I don't consider that question to be in

order, quite frankly, but certainly I assure the members opposite that

the ministry staff in consumer affairs are very aware of their

responsibilities and do pay attention to cases where there is a

requirement for an investigation under the Consumer Protection Act.

I'm not aware of the Newport situation that you were talking about,

but certainly I will have my ministry look at the signing on the door

of Principal Trust and see if it is a contravention.

MR. SIHOTA: Dealing with the Newport matter, I know the

Attorney-General (Hon. B.R. Smith) and the Minister of Finance are

certainly aware of that situation.

A question to the Minister of Finance: with respect to Newport, on

March 27 the principals were told that they were being investigated. It

wasn't until December, some five months later, that the investors found

that out. In the interim, the principals of Newport divested themselves

of everything in the company and made their profit, and the investors

were left alone. The superintendent of brokers had powers to freeze

Newport's assets back in March 1986. Could the minister explain why the

superintendent of brokers office took no action on March 27, 1986, when

it became aware of the problems with Newport?

[ Page

2275 ]

HON. MR. COUVELIER: I believe that that matter is currently

under investigation. As a consequence, it would not be proper for me to

get into any detailed discussion of it. I can tell the hon. member that

I have examined the circumstances surrounding that case, and I am

satisfied that the responsibilities delegated to the government and to

the branch were properly followed by staff members. The difficulties

associated with that in terms of our ability to respond differently

than we did are all associated with legal technicalities, which the

hon. member, by virtue of his particular profession, might well

understand.

MR. SIHOTA: I wish the minister would understand his

responsibilities when we're asking questions — not about the

investigation, but his staff.

The point is this, Mr. Speaker: the government knew about Newport

six months before it collapsed; it knew about Principal Trust — in

particular, First Investors — six months before it collapsed. Is the

government's reluctance to act to protect investors a demonstration of

their throne speech commitment to get government off the backs of

business'?

HON. MR. COUVELIER: The question is absurd. The answer is no.

FOREST FIRE FIGHTERS

MS. EDWARDS: My question is to the Minister of Forests.

Yesterday during his ministry's estimates the minister stated that he

felt that giving unemployment insurance to forest fire fighters would

result in prospective workers going into the forest and deliberately

setting fires. Is the minister willing to stand by those comments?

HON. MR. PARKER: The discussion yesterday on whether or not

UIC benefits would be extended to emergency firefighters in the

province was answered. One of our concerns is the possibility of

further incendiary fires emanating from having those kinds of benefits

extended. It's a concern that we have, and we shared it yesterday.

Emergency firefighting means exactly that. If you have a forest

fire, it is within the law of British Columbia to conscript whomever

the forest officer sees fit to get on with it, putting them to work to

put out the fire. It isn't to make an industry out of firefighting.

Anybody who is receiving UIC benefits at the time they're conscripted

has their benefits suspended while they're on the fire line. They

receive board and room and coverage by WCB in case of injury, while

they deal with the public emergency. Once the emergency is by and their

account is settled, then they are free to receive UIC again. But UIC

benefits are not extended to emergency firefighters.

MS. EDWARDS: Supplementary to the Minister of Labour.

Temporary firefighters are being denied basic workers' rights — access

to unemployment insurance is one of them — because this government

refuses to consider these workers as government workers. So they can't

get unemployment insurance, and they're not brought under the

Employment Standards Act. Has the minister decided as policy to bring

an order-in-council forward to give them those two privileges?

HON. L. HANSON: Mr. Speaker, in very simple terms, the answer is no.

That is future policy, and when cabinet decides what course we may take, it

will be announced.

MR. MILLER: Mr. Speaker, a question to the Minister of

Forests. Is the Minister of Forests suggesting that the unemployment in

this province is so bad and people are so desperate that they're

prepared to light forest fires in order to gain employment? What does

that say about his government?

HON. MR. PARKER: Certainly not, Mr. Speaker. That sort of question in this House is really alarmist and ridiculous.

The whole purpose of attacking forest fires in the province is an

emergency situation; it's a citizen's duty to help extinguish forest

fires. keep them under control and put them out. It is not an industry.

If we could have things the way we'd like to, there would never be a

forest fire in the province of British Columbia, and there would be no

such situation.

The people of British Columbia are not out to set fires, but there

is an element — and the member opposite knows there is an element

existing in every society — that is likely to do just such.... As a

matter of fact, we've had a number of incendiary fires in the central

interior of the province, and there's no point in trying to encourage

that sort of thing.

MR. WILLIAMS: Further to the Minister of Forests and Lands,

what evidence does he have and what charges has he made in regard to

unemployed people lighting fires in British Columbia, compared to

employed people lighting fires? What evidence do you have"

HON. MR. PARKER: I have never stated that unemployed people

set fires in the province of British Columbia, but that is the sort of

stuff we get from the people opposite. If the member is serious in his

question, we would happy to take that on notice and bring back a

detailed reply — or maybe flush it down the toilet.

Hon. B.R. Smith tabled an answer to a question asked Monday last.

MR. PELTON: Mr. Speaker, may I have leave to make an introduction, please?

Leave granted.

MR. PELTON: During the course of question period, I noticed

two long-standing friends come into the chamber: Nick and Mable

Andrews, who used to live in Maple Ridge and now live in Coquitlam.

Nick is an active Shriner and a long-standing member of the Lions Club.

I would ask all members to make them both very welcome.

Orders of the Day

HON. MR. STRACHAN: I call committee on Bill 42.

MISCELLANEOUS STATUTES

AMENDMENT ACT (No. 2), 1987

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

section 1.

MR. CLARK: I'd like the Minister of Finance to explain the changes for us, please.

[ Page 2276 ]

[2:30]

HON. MR. COUVELIER:

Section 1(

a) is an amendment that adds

the parcel size to the list of factors which must be considered in

valuing private forest land. This factor is being added because there

is a significant amount of market evidence that the per-acre value of

forest land — and indeed any other land — declines as parcel size

increases, and therefore this factor should be considered when

determining forest land values. The reason for the relationship between

parcel size and value is a well-established appraisal fact that, when

properties are broken up into smaller units — all other things

remaining equal — they become accessible to a larger group of potential

purchasers, thereby increasing the demand for, and subsequently the

price of, the property.

The original legislation defined forest land as either "land which

has as its highest and best use the growing or harvesting of trees," or

"land which is being managed in accordance with" an approved plan. It

required all forest land so defined to be assessed on the basis of its

timber, and it permitted forest land to be split into managed and

unmanaged categories with different tax rates applying to each.

This amendment permits the assessment commissioner to prepare

schedules of cut timber value, allowing for consideration of the

distance between the parcels of forest land and log markets in their

calculation. And it corrects an incorrect cross-reference.

The reasons for these changes are these. First, schedules of timber

value are being introduced in order to provide a consistent basis for

the valuation of this component of the property value. Provision is

being made for differing distances between parcels of forest land and

log markets in order to provide some recognition of the cost of getting

logs to market. The cross-reference change corrects an error in the

previous legislation.

MR. CLARK: I'm just trying to grasp the significance of this.

What you're essentially saying is that you want to be able to reduce

the value of land based on the size, and currently there's a sort of

uniform application, and that this in fact allows.... As trees get

logged and they're farther from markets, you can reduce the assessed

value to accommodate essentially what is perceived to be a decline in

market value of the property?

HON. MR. COUVELIER: Mr. Chairman, I think the reverse is what I intended. As a property gets smaller, its value proportionately increases.

MR. CLARK: Parcel size is one of the factors. I'm interested

in this

schedule of timber values. Does that mean that the same parcel

size in different parts of the province would not clearly result in the

same adjudication of market value, but that it can be included in the

variety of things that are looked at in terms of determining market

value?

HON. MR. COUVELIER: That's correct, Mr. Chairman. In effect,

a matrix is built of all these factors for these individual properties,

and in the process of building that matrix, the assessment staff

officer will then be able to calculate his values.

MR. CLARK: So the purpose, really, is to do the reverse of

what I originally suggested, which is that to attempt to increase

the.... It enables the Assessment Authority to increase the value of

the land more readily on the basis of smaller parcel sizes, rather than

a more homogeneous

interpretation. In other words, it disaggregates the

factors to be looked at when determining market value more thoroughly

than in the past. Is that correct?

HON. MR. COUVELIER: Yes, Mr. Chairman, that is correct. I'm

troubled by your continuing reference to "increases the value." The

object isn't necessarily to increase value. The object is to determine

fair value.

MR. WILLIAMS: I see, Mr. Chairman, that you're taking two

separate approaches between the coast and the interior, as is the case

with respect to the Forests ministry, in terms of their so-called

valuation process. Why would that be the case? The evidence is now in,

in terms of the Vancouver log market, that it is not supportable as a

free market. Why would you use the Vancouver log market as a basis for

valuation, when the best economists in the province have declared that

it is not a genuine free market and therefore does not reflect the real

value of timber?

HON. MR. COUVELIER: Mr. Chairman, I believe the hon. member

is aware that the whole issue is presently the subject of review. It is

not the purpose of the Assessment Authority to inject themselves into

that discussion. They have neither the expertise nor the specific

responsibility. Our task is to deal with factors that can be

quantified, and quite clearly the existence of a log market in

Vancouver is the instrument by which these issues are presently

quantified.

As to the accuracy of the quantification, that is a matter, as I said, which is under discussion by the line ministry involved.

MR. WILLIAMS: The pompous responses we get from the Minister

of Finance continually amaze me. He has the veneer, the pretense of

knowledge. Just a minute ago you said to the other member for Vancouver

East that you wanted fair valuation, not high valuation, which the

member was suggesting. Well, Mr. Minister, if you want fair valuation,

you won't use the Vancouver log market. Pure, simple, straightforward:

if you want fair valuation in terms of timber, you don't use a rigged

market, and that's what the Vancouver log market is.

HON. MR. COUVELIER: Sit down and let me tell you....

MR. WILLIAMS: No, you're going to have to listen to me for a

few minutes. Really, the best brains in this province and the best

economists all advise us that the Vancouver log market is a rigged

market and that it does not reflect real value. There is a market in

Puget Sound right over here, as close to this building as the Vancouver

log market, where real values are established and where there is a

genuine free market in logs. If you wanted to look at the question of

real values for logs, you would find them, and in the interior as well.

But the Vancouver log market is clearly a glaring problem that has not

been dealt with. If you're looking for fair valuation, you're not going

to use that as the base.

[ Page

2277 ]

The whole question in the interior is not clear. You talk about

prices in the interior. But what prices are you talking about? There

are independent prices, in terms of material coming into a mill, and

there are prices that are paid for Crown timber, and those prices

differ. What are you talking about in the interior?

HON. MR. COUVELIER: The interior prices are based on the price at the nearest mill, Mr. Chairman.

I found the reference to pompous responses somewhat amusing, made by

the forestry expert from the high timber country of Vancouver East. The

fact of the matter is that in dealing with the coast log market, we in

the Assessment Authority must have some basis that is quantifiable and

publicly verifiable on which to make these judgments.

I gather the hon. member might be more comfortable were the

Assessment Authority to take it upon itself to create its own pseudo

log-market figures or steal from the Americans. Are you suggesting we

should be letting the Americans dominate the B.C. assessment practices?

I can imagine the outrage we'd get from across the floor were we to

follow that example.

In any event, in answer to the last question, the interior market price is determined by the price at the nearest mill.

MR. WILLIAMS: A very scurrilous argument; it really is, and

you know better. A market is a market is a market. If there were a

genuinely free market in Howe Sound and Vancouver, it would be the same

as that market in Puget Sound. The only difference between the two

markets would be the modest difference in water transport costs between

them, if they were a genuine free market.

In economic terms, that is the reality. You can do your little dance

about Americanism versus Canadianism, and it doesn't wash. You really

should be able to do better than that in debate. The evidence is that

there is a significant difference between the Howe Sound market and the

Puget Sound market. If you're after real value, you can find it. There

is a whole range of other transactions that you could use as the base.

A further question: it's not clear in terms of this amendment

whether you're dealing with the historic taxation tree farms in this

section as well.

I guess the minister is getting some advice on this, Mr. Chairman,

in terms of the taxation tree-farms that we've had historically. For

example, MacMillan Bloedel currently are probably the largest taxation

tree-farm owners in British Columbia. MacMillan Bloedel own 300,000

acres fee simple, clear title land.

Much of the Gulf Islands, for example, are taxation tree farm lands.

Virtually all of Valdes Island and most of Galiano Island in the Gulf

Island group are taxation tree-farms wherein there are special

valuations relative to them being managed taxation tree-farms.

HON. MR. COUVELIER: These same amendments will apply to taxation tree-farms.

MR. CLARK: I just wanted to ask a couple of questions. If you

recall, the other day in estimates we talked about the industrial

assessment appeal problem that we have, and there were some suggestions

for a specialized appeal panel. Does this change mean that the

methodology used to determine the assessment is not appealable?

HON. MR. COUVELIER: The answer to the question is yes, Mr. Chairman.

MR. CLARK: I wonder if the minister has given any thought to

specialized appeal boards to deal with this very difficult question of

valuation of timberland in the province, given the complexities that

we've talked about and the first member for Vancouver East (Mr.

Williams) has touched on. Appeals can be very subjective, especially

given the geographic nature of appeal boards. Has the minister given

any thought to a specialized appeal board to deal with the valuation of

tree-farm land?

HON. MR. COUVELIER: Insofar as the dollar issues at stake

here are not significant or major, and insofar as the workload in the

respective appealing of forestry values is not large, we have not given

serious consideration to a special board specifically for that purpose.

We haven't found it necessary.

MR. WILLIAMS: Again. Mr. Chairman, this is a specialized

field. It's the industrial forest market, and there is a case for

separate appeal boards instead of the usual ones that are dealing with

Mom and Pop problems and house valuations and that sort of thing. So I

hope the minister considers that possibility.

One might assume you're planning on two levels of taxation here — between managed and unmanaged lands. Is that the intent?

HON. MR. COUVELIER: That is correct, Mr. Chairman.

MR. WILLIAMS: And presumably managed lands would pay less tax?

HON. MR. COUVELIER: That is correct, Mr. Chairman.

[2:45]

MR. WILLIAMS: What kind of method would be used to establish

qualities of management, inspection and all of the related activities,

goals of management, silvicultural practice and the whole range of

forestry issues, in determining whether one would get the lower rate?

HON. MR. COUVELIER: I just want to check. Maybe we could deal with that question when we get to

section 2. We're still on

section 1.

MR. WILLIAMS: If we're giving concessions to these people who

hold private forest land in the form of lower taxes, what happens if

they decide to use the land for something else the next year? We've

been letting them have a free ride because they employ modest forest

practices.

Let's think about MacMillan Bloedel itself. MacMillan Bloedel owns

90 percent of Galiano Island. There are incredible waterfront values on

Galiano, absolutely extraordinary. Yet because it's within a taxation

tree-farm, they're paying on the basis of tree values. They pay on the

basis of tree values year after year, decade after decade, and then one

year they decide: well, let's go into the waterfront cottage business

instead of forestry. That looks fairly lucrative right now. It might

come at a time when more people in British

[ Page 2278 ]

Columbia are better off than they are today and

could afford more waterfront cottages on Galiano Island. That day might

come. Is there no pay-back? Do they simply have the free ride for

decade after decade and then when they decide to go into the waterfront

real estate business, we don't get any of the money back'?

HON. MR. COUVELIER: I sense that the hon. member would have

the Assessment Authority, by virtue of his question, trying to prejudge

future use and taxing present property owners for what we, with the

arrogance of power, assume might be the best future use. This

government doesn't happen to assume that arrogant position. This

government does not happen to believe that people who have some

property should be burdened with high taxation because we assume that

in the fullness of time that property might be used for some different

purpose. That would be entirely contrary to the whole philosophy behind

current assessment practice, which is to base value on current values.

The hon. member may have the arrogance to believe that he can

predict with accuracy these potential future uses. I don't happen to

share that arrogance. I don't happen to think that that's a defensible

way to approach the assessment business in this province, and I

wouldn't support such an initiative.

MR. CHAIRMAN: Hon. members, just before we proceed, if the

hon. first member for Vancouver East would take his seat. The Chair has

noticed — and it's happening more and more all the time, particularly

during the course of debates on estimates — there seems to be an

increasing tendency on the part of both sides of this House to make

personal allusions in the course of answering or posing their

questions. I would just like to suggest to everyone in the kindest way

that personal remarks tend to inflame rather than to illuminate, and I

would ask all members to avoid these unnecessary personal references

from here on in. Having said that, we'll continue with

section 1.

MR. WILLIAMS: Well, now, I couldn't agree more, Mr. Chairman.

Let's use the example, Galiano Island. The minister says he doesn't

want to make all these assumptions about the future, and all that

stuff. Let's use Galiano as the example. You know, most of us see it as

we go through Active Pass. Heading to Vancouver, it's on the left or to

the north. You see that scattered along the waterfront, around the

Pass, and near Gossip Island, and that's about it. That's the bulk of

the settlement on Galiano. The rest of that Island, 90 percent of the

land, 90 percent of the shoreline, is MacMillan Bloedel.

Now there might be a little homeowner on Galiano who has a lot with,

say, 100 feet of water frontage. That's probably valued at at least

$100,000. Right next to that lot, valued by your assessment people at

$100,000, is the 90 percent or the huge tree area — not with a lot of

trees on that island, I assure you — of MacMillan Bloedel. You start

counting up the numbers of 100-foot pieces on the 90 percent of that

island, and Mr. Average Citizen who happens to own the house or the

waterfront cottage next to that tree-farm is paying on the basis of a

$100,000 evaluation, and the guy next door, which happens to be

MacMillan Bloedel, who can afford to pay taxes, certainly this year, is

paying on the basis of probably $10 for the same piece of land and the

same kind of water frontage. That's the difference. And that's today.

It's nothing to do with the future. Same kind of land, same kind of

water frontage, side by side, Mr. Minister. Your straw men fall apart

so fast, under any examination whatsoever. This is insupportable. In

the name of some tree-farm, you have that kind of difference between

Mr. and Mrs. Average Citizen and Mr. MacMillan Bloedel. It's not fair;

it's not equitable.

Okay, the rational argument on the other side, if I might try and

put it, is that the forest is a longer-term investment, and if they're

managing it, and the rate of return is not what we might see next door,

then we can accept that in the interest of some forest management. But

what's the trade-off when MacMillan Bloedel decides to go out of the

tree-farming business? They've had 30 years of cheap taxes on 90

percent of Galiano Island. You're ready to continue that into

perpetuity, presumably, from what you've said today: that they should

pay virtually no taxes on the same kind of land where the average

citizen would probably pay $7,000 or $8,000 a year. There's something

wrong there; there's really something wrong in terms of equity. There

should be some kind of reasonable trade-off. A certain amount of the

difference in taxes between the waterfront land values and the

tree-farm values should be paid back to the Crown when they decide to

change the use of the land. That's not extraordinary. That's

reasonable, that's equitable, and that's fair, relative to the average

British Columbian.

We're not asking for anything extraordinary; we're asking for

fairness. I think the average citizen in this province and the rest of

Canada is tired of the fact that they pay more taxes on any measurable

basis than the corporations do. The corporations, through the recent

decades, are paying less, less and less, and the average citizen pays

more, more and more. You're extending that into this property field as

well, and the Galiano Island example is a perfect example, arguing for

more equity. So your straw man arguments fall apart immediately, upon

any investigation.

It's becoming abundantly clear more and more, Mr. Chairman, that the

members of this cabinet don't really get fully briefed when they bring

legislation into this House. Again and again, we're getting evidence

before us that you are not fully informed on the legislation you bring

before this House. It doesn't take much investigation or much debate to

show that. This is just one more example of a minister who has too much

on his table, is not able to handle it all, is not fully briefed, and

is not adequate for the job.

HON. MR. COUVELIER: I realize we'd all like to get this over

with, but some of these outrageous remarks are so foolish and absurd

that they must be answered, if only for the record. The shallow

argument espoused by the hon. first member for Vancouver East (Mr.

Williams), if carried equally in a democratic society to all property

owners, would have the effect of a farmer who lived next to a shopping

centre — under your rationale — being assessed some sort of inflated

value merely because he happened to have a location that maybe in 20 or

30 years' time might have a higher use; or, carrying that same

argument, the reference is made constantly to MacMillan Bloedel, the

one largest forestry firm in this province. What about the

small-to-medium-sized logger who has the same kind of waterfront

property, who's in the business for his family and his children to grow

up and continue to log? What about them? Would you also propose that

they should have some sort of other category because the government of

the day happened to be paranoid enough to think that they would want to

penalize these people in some way?

[ Page

2279 ]

Whatever law is put in place must apply to everybody: the MacMillan

Bloedels, the small operators, the small farmer who happens to live

next to a shopping centre or a condominium, whomever. This government

happens to think that the assessment practices in place must be applied

fairly and without fear or favour and be applicable to all entities in

the province — corporate, private or otherwise.

MR. WILLIAMS: They should be applied fairly, equitably to

all. That's the problem. The minister doesn't seem to understand that

what he's bringing forth in this legislation is a concession to these

major landowners. The largest one in British Columbia is MacMillan

Bloedel. They have 300,000 acres in this category, with tens and tens

of miles of water frontage; tremendous waterfront values that M&B

never pays taxes on. Every other citizen in this province that owns

water frontage pays through the nose in property taxes. So that's the

point. No average citizen in British Columbia gets this kind of

concession. The point then is, what's the trade-off for the concession,

so that the average citizen gets something of a fair shake, somewhere

at the end of the road? There's something wrong if M&B can get away

with paying a couple of percent of the taxes that the guy next door in

the waterfront cottage pays. That's what this allows. That's wrong.

That's not equitable. So the question is: whenever will MacMillan

Bloedel pay? You're saying "never." And you're saying that's equitable.

I'm talking about property tax.

Interjection.

MR. WILLIAMS: You say there is a point in here where they're going to have to pay something extra? I don't see it in this legislation.

HON. MR. COUVELIER: When the use changes, Mr. Chairman, the assessment practice will change.

MR. WILLIAMS: That's the point. So it changes from a value of

$10 an acre to $150,000 an acre, and it's not until they decide that

anything triggers. Meanwhile, they've had a tax-free holiday for 40

years, while property values have been appreciating. Every other

waterfront owner had to pay every year, year after year after year.

That's simply not fair. It's inequitable. The trade-off should be some

kind of payback in terms of the difference in value, at least for the

previous decade, or something like that. That would be a most

reasonable trade-off. Is it any wonder that the average citizen gets

furious about the taxes that he pays compared to the corporations? And

you continue to feed that kind of fury that is legitimate. The average

middle-class citizen pays more than he should in the income sector, and

you're now setting it up so that he does in the property area as well.

MR. CLARK: Just a couple of questions more on this section. Having read

the industrial assessment report, it does seem to me that there are a number

of interesting suggestions in terms of valuation of industrial property, which

is hard to value. It seems to me that this is a similar area. You've indicated

that you don't think there needs to be a specialized assessment appeal board

because there aren't that many appeals. But it seems to me that the way

in which they determine the value of industrial land has some applicability

here. For example, discounted future income streams: I wonder whether that kind

of analysis should be incorporated into the valuation of timber harvesting lands

in the province.

The other question is market transactions. There is trading in this

land, and, of course, that's the normal market test for how much the

land is worth. The problem with industrial property is that a pulp mill

doesn't change hands very often, so you can't determine the value.

Well, neither does timberland trade hands very often, but it has been

trading from time to time. There is, for example, a small business

enterprise program that clearly gives a far higher value for timberland

that the Vancouver log market.

Has the minister decided to include an average of the Vancouver log

market price and the price at the mall business enterprise auction? The

auction price would be preferable, in my view, but at the least an

average. Has he looked at the trading of quota for valuation of

timberlands in the province? There is some evidence of tremendous

values paid. Or has he looked at the price that the government asked

the federal government for Moresby Island or Lyell Island? The

provincial government said this timberland is worth hundreds of

millions of dollars and negotiated with the federal government to get a

high price, because the government said it was worth a lot of money for

that land. Yet, if we looked at the taxes paid on that very same

timberland by the owners of the timber licences, I suspect they'd be

very low, and the assessed value of the land would be far lower than

the province asked the federal government to pay.

So it seems to me that there are a number of areas. It wouldn't be

too hard to come up with a better market value for this land if we

looked at the examples that I've just mentioned, rather than simply

looking at what appears to be more of a technical, narrow view of it —

not very sophisticated, in my view — and looking at a log market which

everybody admits is really undervalued.

[3:00]

MR. PELTON: The Minister of Finance?

HON. MR. COUVELIER: I didn't hear a question.

MR. CLARK: I'm being very reasonable here. I'm not being

agitated. I'm arguing that there appears to be a more sophisticated way

of valuing land. One is the true market test of how much the land

trades for — including how much the land traded for on South Moresby —

and there is another test which the report suggested, which is to

discount future income streams and try to look at future profitability

as one mechanism for evaluating land which doesn't trade very often.

Your predecessor's committee recommended we look at that for evaluating

industrial property. This might be a more appropriate mechanism for

evaluating. So there's a number of other options that seem to me to

clearly....

MR. WILLIAMS: Three was quota.

MR. CLARK: The third one was quota-trading, yes. Excuse me.

The fourth one was.... I even suggested a modest one, which might be to

take an average of the price being bid on the small business enterprise

program — the auction price — and the Vancouver log market, which is a

more realistic assessment. It is far too generous, I suspect, in terms

of evaluating land. So there are three or four other

[ Page 2280 ]

mechanisms that could be incorporated in a more sophisticated approach to evaluating. This very difficult area of evaluation.

Has the minister decided to consider any of those? Any of the above?

HON. MR. COUVELIER: I finally got a question. I found it very

interesting to hear the hon. member's opinion. It's valuable and it's

on the record; we can consider it at our leisure.

The amendments before us have been arrived at through extensive

discussion with the industry itself. I think that the member would

dearly love me to get into a discussion that might indicate our

preference in dealing with the Gordon report and its recommendations. I

certainly can't do that. That matter is under review. It's out in the

public marketplace being critiqued. I invite the member, if he has any

thoughts on that subject, to make representations to the UBCM, who in

the fullness of time are preparing a report. We will pay very close

attention to it when it's received.

MR. WILLIAMS: I'd like to thank the minister for finally

coming clean and admitting that the real consultation has been with the

industry, and that the bill we have before us is indeed what MacMillan

Bloedel is very happy with. I'll be glad to let all the other

waterfront owners around British Columbia know how you operate.

MR. CLARK: This is my last appeal to the minister to stand

this

section and the next

section pending a more thorough review and

analysis of this problem. I'd be happy to meet with any technical

people that you put on this problem to give them some other ideas as to

how to better evaluate the true market value of timberland in British

Columbia.

MR. CHAIRMAN: Shall

section 1 pass?

MR. CLARK: I've simply asked the minister a question. He

could, for the record, answer it. Will he stand this clause and the

next clause of this bill pending further scrutiny?

HON. MR. COUVELIER: No.

Section 1 approved.

section 2.

MR. WILLIAMS: Mr. Minister, maybe you could advise the House

what capabilities your assessment staff have to carry out this review

of plans and programs and investigation on-site, and all the rest of

these forestry activities that valuation people generally aren't

competent to deal with.

HON. MR. COUVELIER: The Assessment Authority works with the

forestry staff, but we do have a considerable source of expertise in

the ministry. I think that's supportable by the fact that we haven't

had that many appeals to the practices of the staff. It just hasn't

been an issue with those affected by the decisions.

MR. WILLIAMS: I think that sums it up: there can't be anything wrong;

they're not complaining about their taxes. I've already gone through

the exercise of explaining why MacMillan Bloedel wouldn't complain about

their taxes. They were hardly born yesterday.

Ministry of Forests staff was cut by 35 percent under Bill Bennett's

phony restraint program. That applied to every other department, and

you're saying that there are plenty of people around to do this work.

If you're going to go out and check to see whether forest management is

really being undertaken, even on 300,000 acres of MacMillan Bloedel you

need some staff to do that job. But it isn’t just MacMillan Bloedel.

This can include smaller private holders of managed forest lands, so

touring around this province and checking all that out is a big job.

The three states on this coast — Washington, Oregon and California —

have a significant sophisticated staff that reviews the management

practices on these lands. I wonder if you or your staff even looked at

the legislation in Washington, Oregon and California prior to

proceeding with this. Can you advise the House whether you looked at

the statutes of Oregon, Washington and California, which are comparable

geographically?

HON. MR. COUVELIER: My advice is that we did.

MR. WILLIAMS: For how long?

HON. MR. COUVELIER: I suppose we can provide the hon. member

with names and dates and times. I'm not quite sure what the purpose of

the question is, other than delay. Of what importance is that? If the

hon. member has some valid suggestions dealing with technical changes,

we would appreciate hearing them. But in the absence of that, he asked

a question and I gave the reply. It seems to me that should be suitable.

MR. WILLIAMS: Could the minister then deposit with the House,

today or tomorrow, all the material they reviewed with respect to

Washington, Oregon and California?

HON. MR. COUVELIER: I will take the matter under advisement,

Mr. Chairman. I'm not quite sure just what kind of evidence would

satisfy the hon. member.

The hon. member seems to be fascinated with the American practice.

There is one basic difference between the American practice and our own

in terms of forestry taxation, and that is the fact that the American

system doesn't include, for example, the cost of road construction. You

can't really compare apples and oranges, you have to compare apples and

apples. Admittedly, that may be a revolutionary thought for the hon.

member, but that has been the business practice for generations.

MR. WILLIAMS: This is the same minister who thinks silver

culture is the same as silviculture. He's talking about the cost of

construction of roads. He's talking about public sector lands in the

United States. He really doesn't know the difference between apples and

oranges. This is private sector land, Mr. Minister, and the road

question is not a factor in private sector land at all, in any respect,

in any way.

This is typical of the bafflegab shuffling-around that we get from this minister.

You may be unhappy about these comments, but when we get it, we're going

to name it for what it is; and that's what we get from this man. There's

this veneer in terms of some of the phraseology that would give the appearance

of knowledge, but I'll tell you, it's veneer. As soon as you put your

finger on it, it breaks. It is a veneer.

[ Page

2281 ]

I am not satisfied that you or your staff have carried out studies

with respect to practice in Washington, Oregon and California, and

that's why I'd like to see the data put in this House forthwith — today

or tomorrow. Let's see it all. If they've done the work and if you've

done the work, we'll see it. So why not do it? Just make the

commitment; deliver the goods. Mr. Chairman, I'm serious. I want the

minister to deliver the goods. I want to see that he has done the

studies he claims to have done to justify this statute, because I'm not

satisfied it has been done. I think the burden is on him to show that

it has been done. There is no evidence from what he has said in this

chamber that he does know, so let's see the written material.

MR. CLARK: Could the minister explain the purpose of these

amendments? In other words, what is

section 2 remedying that's not

currently the case?

HON. MR. COUVELIER: The amendment in

section 2 provides for

regulations governing the classification of forest land into managed

and unmanaged classifications for property tax purposes. The more

extended regulatory powers are being sought to permit the

classification of forest land on the basis of approved forest

management plans.

This route for classification is being pursued after consultation

with landowners and foresters regarding the most effective way of

identifying forest management.

MR. CLARK: So the minister is essentially saying that there

is no real technical expertise in the Assessment Authority. This is not

to give more expertise to the Assessment Authority. It's really to say

that, where there are forest management plans, they are now filed with

the Assessment Authority and become, therefore, regulated forest lands.

That's really all this does.

Does the minister agree that's what this

section does? It has

nothing to do with the technical competence of the Assessment

Authority. The Assessment Authority has no technical competence to

determine whether a land is managed or not. It simply says that, where

there is a forest management plan determined in consultation with the

Ministry of Forests, it is filed with the Assessment Authority and then

is determined to be regulated forest land for the purposes of taxation.

Did you hear that?

HON. MR. COUVELIER: Could you restate the question, please?

MR. CLARK: Okay. The question is simply this: would the

minister agree that the Assessment Authority really has no competence

to deal with the question of what is managed forest land and what isn't

managed forest land?

What this really says is that, where the Ministry of Forests and the

holder of the forest land file a forest management plan with the

Ministry of Forests, they file a copy now with the Assessment

Authority, and therefore that becomes managed forest land for the

purposes of the Assessment Authority. It has really nothing to do with

technical competence in the Assessment Authority. It has to do with

filing those plans now with the Assessment Authority for the purposes

of classifying it as managed forest land.

HON. MR. COUVELIER: The Assessment Authority does take advice from the Ministry of Forests in this respect; it

isn't something we do unilaterally. But we do react to a management

plan, and we receive comment from the Ministry of Forests as to its

characteristics and suitability.

MR. CLARK: I'm not trying to be pejorative, but the fact is

that you don't have Assessment Authority staff who go in and see how

big the trees are, valuate the species and do timber evaluation for the

purposes of market evaluation. You get a forest management plan written

by the Ministry of Forests in consultation with the owner of the land,

it is simply filed with the Assessment Authority, and those values and

determinations in the forest management plan now become, for the

purposes of assessment, managed forest land.

That's really all that happens, Is that not correct? If it's not correct, please clarify.

HON. MR. COUVELIER: From time to time, the Assessment

Authority staff will require expert assistance, and when that's needed

they will obtain it. That might come from another ministry, and in this

case, generally speaking, it comes from the Ministry of Forests. But

it's not at all uncommon, in other instances not dealing with

forest-related assessments at all, that we might use outside expertise.

That has been a common practice.

[3:15]

MR. CLARK: Can the minister then advise the House that it was

experts outside the ministry, outside the Assessment Authority, who did

the kind of comparative analysis that the first member for Vancouver

East (Mr. Williams) talked about in terms of American experiences in

this area? Was it outside consultants hired as expertise, or was it

in-house analysis done in terms of comparative analysis with American

states?

HON. MR. COUVELIER: No, I think that while we can't say

categorically, to the best of our knowledge it would have been a group

effort on the part of forestry staff and assessment authority staff,

and obviously there would have been input from people in those American

states.

MR. CLARK: Okay. So it wasn't outside consultants that did

the comparison with the Americans; it was done in-house. Having said

that, would the minister now give an undertaking to table in this House

the analysis that was done with those American states?

HON. MR. COUVELIER: Mr. Chairman, I'm not sure whether we can

quantify it to the satisfaction of the hon. members. I don't know what

relevance this has to the amendment. The point of the matter is, what

we're trying to do with the amendment is reward people who come forward

with a forestry management plan.

To bring forward some extraneous point — have we looked at what the

Americans are doing in this area? — I think is irrelevant. The point

regarding the Americans was raised on the question of the log market

and which log market we should be looking at. That's how we got started

on this American hang-up. What relevance it has to

section 2 I'm

blessed if I can figure out.

MR. CLARK: Me thinks he doth protest too much! Look, I hate to say this, but it doesn't appear from your

[ Page 2282 ]

answers that there has been any analysis done in

any comparative way with American states. The minister has stated now a

couple of times in this House that there has been an analysis done. I

don't want to call him names that are unparliamentary, so I would like

him to clarify that again. If there has been an analysis done, a

comparison with American states, would he give an undertaking to table

in this House any of the data which was accumulated in those analyses?

HON. MR. COUVELIER: I am pleased to state that if I can

quantify a suitable response, I will present it to the House. If the

hon. members are suggesting that we've sent staff members off on some

six-month visit to tour American states to determine, on this head of a

pin, which side we should dance on, the answer is categorically no.

The original question when it was put to me — and we'll took at Hansard

when it's out — was: did you consider — or words to that effect — the

American experience? Now you're putting it in the form of a study.

Clearly, I didn't send or hire consultants to prepare studies yea thick

on this relatively minute point. It has no relevance in the first

place. Why would I?

But in answer to whether we are aware of what's going on in the

American states, yes, we are. That awareness can be determined by phone

calls, exchange of letters, discussions at different levels by

different strata of bureaucrats in the system. If I'm going to have to

go through the entire system and ask each staff member which point he

discussed in this issue with his Washington state confrere or his

Oregon confrere in order to satisfy himself that we know what we're

talking about, what a monumental waste of time.

We are here to deal with a basic question: do we want to reward

businesses and firms that have a forest management plan by reducing

their assessments? That's the issue. That's what

section 2 is all

about, Mr. Chairman. I just ask, for goodness' sake, that the questions

be relevant to the amendment.

MR. CLARK: Let me make it even easier. Would the minister

table any evidence, quantifiable or otherwise, any letters or any

exchange of information that indicates that there was any discussion of

the valuation of our forest lands by looking at the American

jurisdiction and how they do it? Any evidence whatsoever — not

quantifiable, not numbers, but correspondence or any evidence that

there was that kind of even cursory analysis.

HON. MR. COUVELIER: I'm happy to consider the request, Mr. Chairman.

MR. WILLIAMS: It's hard to believe that this minister ever

That's the actual quote — "to quantify a suitable answer" regarding

your activity in terms of getting information on how the Americans deal

with this. As the other member for Vancouver East said, we'd be happy

simply to see the pages of paper. Bureaucrats are very good at filing

pages of paper.

MR. CLARK: Here it is!

MR. WILLIAMS: It's in that one little envelope; it's a telephone bill.

MR. LOVICK: It's quantifiable.

MR. WILLIAMS: Yes. That's what we've been getting out of you

over the last half hour, but "quantify a suitable answer...." It tells

you something about a mind-set, doesn't it?

I want to see the pieces of paper, the letters, the statutes from

Washington, the statutes from Oregon and the statutes from California —

the way they administer these activities. I'm saying this and I've

asked this, Mr. Minister, because I happen to have made those studies.

I happen to have corresponded with all of those American states. I

considered it a worthwhile academic exercise at one time in my career.

It is clear to me from the material you have provided us and the

statute you have put before us that there is little evidence that your

staff or you or anyone associated with you went through a similar

exercise. I have great difficulty believing that story, since I've gone

through that exercise myself. It's a significant exercise; it's a

worthwhile learning exercise, because they do the job much better than

we.

Private forest lands in the United States of America on the west

coast are extremely well managed. They are well regulated. They are

reviewed in the field. There is a fully qualified staff to carry out

the work. How could anybody who had looked at what these more

sophisticated jurisdictions to the south of us do come up with this

pittance that's before us today? I suggest to you that they couldn't

have, and that's why we think it's incumbent upon you to provide all of

that information and evidence that led you to this kind of conclusion.

We're not asking much. The one thing bureaucrats are good at is

filing paper, if nothing else, and all they've got to do is go back to

their colour-coded files and get the right piece of paper; or if

they're really sophisticated, I guess they check the computer. But

let's dig it out and let's hear exactly what backup you've got. I think

that when we find the backup you've got, we'll find that the bulk of it

was your correspondence and dialogue with MacMillan Bloedel and the

industry that you seem to think is the same as the general public.

Section 2 approved on division.

section 3.

MR. CLARK: I'd just like to ask the Attorney-General to explain the purpose of this section.

HON. B.R. SMITH: It encourages self-policing for

self-governing professional and occupational groups. For instance, if

the chiropractors or the physiotherapists, who have organizations that

have a protected name in the legislation, want to enforce that

protection, they do it by getting their own injunction. They don't come

and ask the consent of the government to do it, which seems unwieldy

and paternalistic. It's desirable to have all occupational groups and

professions that have the unique right to practise their own occupation

and profession protect their own professions, without the government

doing it for them.

MR. CLARK: Does this cover, then, the new teachers' college, in terms of their disciplining internally?

HON. B.R. SMITH: The best advice I can get is that it does not, but....

[ Page 2283 ]

Interjection.

HON. B.R. SMITH: Well, I don't think that they.... See, this

legislation is designed for those organizations to try to protect the

exclusive name, and I don't think that you have an exclusive right to

the name "teacher." I could be a teacher and not be a member of the

public school system or indeed the private school system. I might just

lecture or instruct on the side, and I could call myself "teacher." The

college couldn't stop me from using the name "teacher," but they might

be able to stop me from instructing. Also, of course, teachers in the

public system do not provide fee for service; I suppose that's a

differentiating reason. But no. If they were to request this right in

some way, of course we'd look at it, but these are all groups that want

it.

Sections 3 to 11 inclusive approved.

section 12.

MR. LOVICK: Perhaps I can start again by asking the

Attorney-General if he would share with us the rationale for

section

12, specifically 16.1(2), which says: "The Industrial Relations Act,

the Public Service Labour Relations Act and the Employment Standards

Act do not apply to inmates and young persons in respect of or due to

their participation in a work program" under the corrections system.

HON. B.R. SMITH: It simply clarifies that inmates are not a

certifiable group within the meaning of those acts. As inmates they're

not certifiable; they may be members of any union for some other work

purpose, but they're not a union for the purposes of doing correctional

work programs while in custody. I don't think it has ever been

suggested that they should be. It's clarifying that, really. It

probably is the case now.

MR. LOVICK: I appreciate the minister's answer, except that I

believe — with all due deference — that it only obtains and applies to

the first two of those statutes. The third one, the Employment

Standards Act, doesn't have anything to do with unions; it simply

governs the management and labour relationship in any workplace. Would

he care to clarify in response to that observation?

HON. B.R. SMITH: Never have inmates on these work programs

received minimum wage. They receive a stipend. The hope under this new

legislation is that they will be able, out of increased productivity

from these programs, to provide some financing for expanding the

programs for the betterment of people in the programs, even for some

maintenance for the families and payments for victims. But they've

never been subject to the minimum wage. We're not trying to regulate

them as part of the labour market. We're trying to deal with it

separately.

[3:30]

MR. LOVICK: I can accept and appreciate that argument. The

question, however, is something beyond wages: namely, employment

standards and workplace conditions. Would the minister indeed be

willing to clarify for us that the only reference intended under this

exemption from the Employment Standards Act has to do with wages?

What I'm pretty obviously leading to. Mr. Minister — I shan't be

secretive — is to ask whether there are indeed any mechanisms in place

to guarantee that the individuals working within those programs are

treated as human beings.

HON. B.R. SMITH: I guess you get into the whole area of

prisoners' rights. You obviously couldn't have some of the employment

standards applied to prisoners. It wouldn't just be minimum wage; that

would be the main one. I think, for instance, of the notice provisions,

or the right to have two years vacation with pay — hardly applicable to

somebody on an inmate program. Yes, they have the right to be treated

fairly within the system. I hope we will maybe have some review of that

legislation in the future as well. If somebody was summarily taken off

one of these programs when they were doing well, they would have a

right to grieve within the correctional system.

The Employment Standards Act has never applied to them, nor do I

think that members would suggest that it should. It's a whole separate

question as to prisoners' rights, which is what I think you're getting

at. We could maybe debate that on another occasion or in my estimates

next year or whenever you like.

MR. LOVICK: I am. Indeed, getting at precisely that, and I do

so for a very good reason, Mr. Chairman. Some years ago I worked for

the B.C. Forest Service as a firefighter, and at one time I was a

foreman of a suppression crew. I had a number of correction centre

young people assigned to my crews.

[Mrs. Gran in the chair.]

This is many years ago, I hasten to point out, but unfortunately

what I witnessed at that time was treatment afforded and accorded to

those young people that ought not to have been. Apparently their charge

hands, or whatever else they were called, were given absolute free rein

in terms of maintaining discipline and getting what was considered to

be the appropriate amount of work out of those people.

My only reason for posing this question is this: if, indeed, we are

talking about the corrections work program — if, indeed, that's what

this legislation is all about — will the minister advise me where I can

find the protections given to those inmates so they are guaranteed some

reasonable protection? It seems to me there ought to be some

protections somewhere: if not in this particular bill or in these

amendments to the Correction Act, where else? I'd like to know that, if

I might, Madam Chairman.

HON. B.R. SMITH: They are contained within the correctional

centre rules and regulations and in the manuals, but I'd be happy to

provide those to the member if he wishes.

Sections 12 to 17 inclusive approved.

section 18.

MR. CLARK: We have some real concerns about this section, and

we simply want to canvass it thoroughly with the minister. This is a

section that, if we understand it, allocates $10 million more to the

Farm Product Industry Act, which presumably is for the purposes of an

ethanol plant in Dawson

[ Page 2284 ]

Creek. Maybe we could first ask if that's the purpose of the increased allocation to the Farm Product Industry Act.

HON. MR. SAVAGE: The Farm Product Industry Act has run down

to $200,000. That's its present sitting position. The $10 million we

are asking for here is enabling legislation in the event that Agrifuels

does go ahead. That we are not sure of at this stage. What it is is a

loan to the farmers for the Farmco corporation, not to Agrifuels.

MR. CLARK: First of all, the budget speech states that there

shall be no further loans to businesses under the Farm Product Industry

Act and that, in fact, that would be wound down. Would the minister

advise the House whether the budget was in error and whether there are

now programs to be initiated under this act?

HON. MR. SAVAGE: I believe the budget statements were

prepared prior to the Agrifuels system being structured. That's why we

had to come back through this act.

MR. CLARK: The Agrifuels proposal was rejected seven times by

the B.C. Development Corporation and one time at least by the Partners

in Enterprise program, and then the Premier decided that the Ministry

of Agriculture was to lend some money. Now I have before me all of the

outstanding loans and guarantees under the Farm Product Industry Act:

$6 million in 1981 — that's all of the loans and outstanding loans and

guarantees; 1982, about $5.5 million; 1983, $4 million; 1984, $4

million.

You're saying that this act, which has a history of loaning very

small amounts to farm products corporations, is now going to be

entrusted with $10 million, which is two and a half times all the loans

and loans outstanding for a project that has been rejected by people in

the business of lending out money. So the people with expertise in

analyzing loans have rejected it, and an operation in the Ministry of

Agriculture that has no history of lending money of any amount at all

is now being asked to negotiate a loan that is tens of times larger

than any loan ever negotiated in the history of the Ministry of

Agriculture in this province.

Could the minister advise what new staff he has hired to analyze the financial feasibility of the Agrifuels project?

HON. MR. SAVAGE: I'm glad we got to the question. None.

MR. CLARK: Well, that's reassuring. Now you're asking us on

this side of the House to give your ministry $10 million more for a

project that has time and time again been rejected by those who

understand lending money. Could the minister tell the House what has

changed in the Agrifuels proposal? In other words, it was rejected by

the B.C. Development Corporation. In order for the Ministry of

Agriculture to accept this loan.... Could he inform the House of the

details of what has changed between the loan that was rejected by BCDC

and this loan?

HON. MR. SAVAGE: The change that has taken place is that the

$10 million is being allocated in the farm industry development act.

This is to cover the equity position that the farmers wish to take in

Agrifuels, so that they have voting power within that company.

MR. CLARK: The members on that side may be prepared to pay a

high price per vote, if they get them, but we on this side are not.

These are the taxpayers' dollars, and $10 million is not peanuts. It

has clearly been demonstrated by those competent in the field that this

is a bit of a scam, really.

I wonder how much they're going to lend to the meatpacking plant in

Dawson Creek, and how much they're going to pay to import all those

cattle from Alberta and elsewhere to be slaughtered here in order to

establish an industry in Prince George to maybe attempt to re-elect the

other member for Prince George.

Could the minister inform the House that the loans rejected by the

B.C. Development Corporation — you're saying now — were loans to

Agrifuels, and that this loan represents loans to farmers who are going

to own Agrifuels?

Is it not fair to say that the viability of this project, which has

been demonstrated by the B.C. Development Corporation to be not a good

risk of the taxpayers' dollars for a loan.... ? Now the farmers are

going to take the risk with taxpayers' dollars. If it wasn't viable to

lend the money to Agrifuels because the project wasn't viable, why is

it now viable to lend money to farmers to invest in an unviable

project? What has changed in the proposal?

HON. MR. SAVAGE: If the hon. member will read a number of

reports from different provinces across this country as well as the

United States, there is a strong swing to encouraging the use of grain

ethanols to phase 1n while the leaded fuels are phasing out. Both sides

of the border are looking at recommending that.

MR. CLARK: The minister still has not answered the question:

has anything changed in the proposal that was rejected by BCDC? Is it a

smaller proposition now? Is a new market analysis going to show that

they can sell the ethanol now, where they couldn't before, and that is

why BCDC...? Are there any studies or analyses done to show that this

project is now suddenly viable, even though it had been rejected for

funding eight times in the past?

HON. MR. SAVAGE: In a number of presentations made to BCDC,,

there were no contractual arrangements made or sales sought out

relative to the potential for marketing ethanol. Those particular items

have changed since a number of those proposals were taken to BCDC.

MR. WILLIAMS: Can the minister advise, then, of those markets? Are they in Alaska?

HON. MR. SAVAGE: No.

MR. WILLIAMS: Can he advise where the markets are?

HON. MR. SAVAGE: Madam Chairman, the markets are in Canada.

MR. WILLIAMS: Insofar as the lending arrangements, then, with

respect to the farmers, could the minister advise us what equity that

$10 million will give the farmers in this corporation, what percentage

of the corporation?

HON. MR. SAVAGE: I believe the equity position is 25 percent.

[ Page

2285 ]

MR. WILLIAMS: Could the minister advise the House what equity is being put up by the principals involved here for the 75 percent?

HON. MR. SAVAGE: The equity, I believe, is $43 million.

[3:45]

MR. WILLIAMS: Could the minister check that out? We're not

talking about total capital, or private sector borrowing, or public

sector borrowing, but actual equity capital put up by the private

sector people involved here.

HON. MR. SAVAGE: I don't have those figures right here, Madam Chairman.

MR. WILLIAMS: But you do have your staff here, Mr. Minister.

I'm having a little bit of trouble with this. We do know that for $10

million, which is public money we're lending to the farmers, they will

get 25 percent of the company. But we don't know what the other people

are putting up for 75 percent of the company. You have your staff here,

and you say you still don't know. I have trouble understanding that

kind of business deal.

HON. MR. SAVAGE: A number of the major proponent of the project is being sold out as tax equity.

MR. WILLIAMS: You mean there is some tax equity situation

here? Oh, tax credits. I see. Well, that even makes it more complicated

and interesting too, because that gets the federal taxpayer on the

hook. If they're tax credits, we're not really talking about real

dollars of equity being put on the barrelhead, I suspect. So then the

question is: do you have agreement with the federal government in terms

of that arrangement?

MR. WEISGERBER: For the information of members, because the

proposed ethanol plant is in my constituency, I have been very closely

involved with the Minister of Agriculture, the Minister of Finance, and

the Premier's office. The investment by Howe-Baker and the Wedge

corporation, the proponents of the project, started out at about $45

million, cash money, that they would invest. Through subsequent

negotiations, that's now up to about $60 million, cash money, up front.

There is a sale of tax credits that will be applied to any moneys that

come from the provincial government. The provincial government is last

in and first out.

In response to some of the questions raised by the second member for

Vancouver East, the deal as it finally came down is considerably

different from anything that was ever offered to BCDC — genuinely

different, genuinely better for the province, a better deal for the

province.

MR. CLARK: More provincial money.

MR. WEISGERBER: No, less provincial money with better guarantees.

It is a project that is tremendously important to the grain industry in the

Peace River country. That consideration probably was not given a great deal

of thought by BCDC, with all due respect to them and their business knowledge.

From a provincial perspective, the project had to be looked at not only as a

pure business venture but also as an alternative solution to the problems in

the grain industry. I think most members of this House and certainly the government

House Leader recognize the serious financial problems that are faced by the

grain industry. Ethanol represents a reasonable and a good solution to that.

This particular plant is well financed. There's a major equity

contribution from the proponents, and a reasonably small loan and loan

guarantee from the province.

MR. CLARK: We have heard speech after speech by the Minister

of Finance and the Premier that there will be no more subsidies to

business in this province. And we had the other day $60 million more

for the Minister of Economic Development (Hon. Mrs. McCarthy), and

today $10 million for the Minister of Agriculture. The member for South

Peace River defends this project on the basis that it's a subsidy to

farmers. Either there's a market test and this project makes sense, or

it doesn't make sense; and BCDC said it didn't make sense.

The Minister of Agriculture, who, with all due respect to the member

for South Peace River, is the minister who is asking for the $10

million.... It's his staff who have to negotiate the deal, and it's his

staff who are sitting behind him and who should know the details of

this deal and who haven't been forthcoming.... The minister has not

been forthcoming with this side of the House with the kind of

information that the opposition needs in order to support a significant

expenditure of taxpayers' dollars for a proposition that has been

rejected eight times by other agencies of the provincial government.

I have a press release dated February 6, 1987, that says: "The

Minister of Agriculture guarantees a $23 million loan to Agrifuels,

plus a $10 million loan or guarantee to farmers in the area. The

farmers will be able to take an ownership position by trading some of

their grain for shares in Agrifuels" — whatever that means. Is the

Minister of Agriculture saying that this deal is different from the

press release? By the way, it says it's a $90 million project. If $10

million is the share, then it's hardly 25 percent equity in a $90

million project, and of course a $90 million project, according to the

propaganda we've been getting, is only a quarter of the size of the

eventual output of the project.

So would the minister ask his advisers behind him if this is a $90

million project or a $40 million project? Is there a $23 million loan

guarantee to Agrifuels, as your press release stated, or is that not

the case any more? Is there a $10 million loan or loan guarantee to the

farmers, or is it a cash grant? Is there tax credit or some arrangement

with the federal ministry for sales of tax credits? Can he give us that

kind of detailed information, to justify something that has been

rejected by people with expertise in the area?

MR. MERCIER: Madam Chairman, I ask leave of the House to make an introduction while we're awaiting the answer to that burning question.

Leave granted.

MR. MERCIER: I'd like the House to welcome Mr. and Mrs. Harry

and Begonia Wearing, who are from the Burnaby-Edmonds riding. Their son

Peter was my campaign manager. Also, please welcome relatives of

theirs, Mr. and Mrs. Frank and Stella Wearing, visitors from

Merseyside, in England, the home of the Mother of Parliaments.

[ Page 2286 ]

MR. STUPICH: Madam Chairman, maybe the minister is ready now.

I don't know whether he's the right minister to answer this, but he

talked about the sale of tax credits. I wonder if he could be a little

more explicit as to just exactly what program.... It might be that the

Minister of Finance would be better able to.... I don't know.

HON. MR. SAVAGE: Madam Chairman, I would defer that question to the Minister of Finance.

HON. MR. COUVELIER: What, specifically, might I help you with?

MR. STUPICH: All kinds of things. In this particular

instance, I thought the Minister of Agriculture had some other

questions he was going to answer, but the one I was asking was.... The

Minister of Agriculture referred, with respect to this investment in

the proposed ethanol plant, to the sale of tax credits. Now I'm just

not familiar with precisely what program the Minister of Agriculture is

talking about, and I'm not sure that he is.

HON. MR. COUVELIER: Madam Chairman, a tax-assisted package

for this particular proposal will require federal approval. As far as I

know, that approval has not yet been obtained. The members will

remember that when the hon. Minister of Agriculture introduced this

section, he mentioned that it was enabling. It really is merely an

effort to provide the funds needed to make Agrifuels happen, if the

various requirements are met by the principals while we happen to be

away from this House. I think that there are a variety of issues which,

to the best of my knowledge, will have to be addressed by the

principals before this need would arise.

MR. WILLIAMS: Wouldn't a letter of comfort do, rather than legislation?

HON. MR. COUVELIER: Under the Financial Administration Act,

it is a requirement that we have the money in the budget before we

spend it. To the best of our ability we always try to do that.

MR. STUPICH: We're not sure that we had it in the budget when we agreed to give $60 million to Cominco.

Is the Minister of Finance telling us, then, that this is something

like going into the ALR scheme; that we're not sure there is a program,

either federally or provincially, that will enable us to sell tax

credits in order to build up enough equity in this plant to get it

launched? Also, in the event that that part of the package is not

available and the federal Minister of Finance says he will not support

it, will the project have to start all over again in trying to come up

with a financial plan?

HON. MR. SAVAGE: If all the contracts that are required are

not met, then there's no obligation by the provincial government to

undertake their commitment to the plan.

MR. STUPICH: Then I think I'm right in saying that when the

minister talked about sale of tax credits, he was talking about

something that is not yet in place, that has not yet had federal

approval, and that may not even have been proposed to the federal

government to this point. Does the minister know whether the

possibility of using the sale of tax credits as part of the financing

plan for the proposed ethanol plant has been put to the federal

government?

HON. MR. SAVAGE: Yes, it has been put to the federal government.

MR. WILLIAMS: It's worth reflecting on what we're seeing

before this House today. We had the spectacle of the Minister of

Agriculture huddled with the member from South Peace, two of his senior

departmental people and the Minister of Finance, and they still can't

pull together a rational answer to reasonable questions. That is

extraordinary. As the other member for Vancouver East (Mr. Clark) said,

this thing was turned down, time after time after time, by BCDC. Now,

let's understand: BCDC is generous. As the member for Vancouver-Little

Mountain (Hon. Mrs. McCarthy) — whom I'd like to welcome to the

Legislature this one day that she's managed to make it — knows, it's

swimming in a sea of red ink that she's trying to bury under B.C.

Enterprise, which she hasn't yet created but which she still operates.

So this mess was fobbed off on the Minister of Agriculture. There

looked like an easy mark in terms of some new industry that BCDC wasn't

willing to swallow.

We're not getting any answers here at all. It's very clear that the

Minister of Finance can't provide the answers. He has to get into a

scrum over there. It's very clear that the member from South Peace has

more of the details and more understanding of the deal, and he has to

whisper in your ear what the deal is. We went through the same exercise

a couple of days ago on Point Roberts; there, the Minister of

Environment (Hon. Mr. Strachan) had to rely on you whispering in his

ear. It's fascinating that you should be an expert on the Point Roberts

water supply and the member from South Peace should be an expert on the

Agrifuels deal. It's fascinating, but it's also simply irresponsible.

You are a minister of the Crown, responsible for handling

significant expenditures. What is being put before you now, and what

you're putting before the House, is some corporate deal beyond the

capability of your ministry, on a scale that your ministry has never

dealt with before. It's a deal that BCDC wouldn't touch with a ten-foot

pole, and you come in here and say you've hired nobody else, no

expertise, to deal with the project. You have the gall to do this. You

have the gall to pull your scrum together and try to fabricate the

story as you go along, or to piece it together as best you can. Really!

We have not got the answers. We do not have the answers. It's not clear

to me. You said $10 million to the farmers in terms of their equity. If

they can't pay the loan, do we go after their farm? I want an answer.

[4:00]

HON. MR. SAVAGE: Would we go after their farm? If we take the position of a first mortgage, we could go after their farm.

MR. WILLIAMS: I'm not interested in the world of ifs. This is

hard cash we're talking about here, $10 million. What's the security

backing it? Is it going to be the farmer's farm?

HON. MR. SAVAGE: I would not think so at this stage. I repeat

to you that it is enabling legislation. The very statement that the

hon. member made not too long ago about how

[ Page

2287 ]

you would tax particular use under the proposal that the Finance

minister brought forward is a very good logistic argument to come

forward and argue: sell your land outside the land reserve, to heck

with agriculture.

MR. WILLIAMS: Okay. So we do not have security in the form of

the farm, but we're asking for the signatures of the farmers. How many

farmers are involved?

HON. MR. SAVAGE: The number of farmers presently, as I

understand it, involved in the negotiating of the deal with the B.C.

grain producers and the National Farmers' Union amounts to nearly 600.

MR. ROSE: You see, the difficulty with this is not that we

don't want to help the farmers. Or it's not that they're not in trouble

in the Peace River; they are. They needed eight million bucks here a

little while ago, and they had a big struggle to get that, because

they're down the tube and they're facing competition from subsidized

agriculture all over the world. So we grant that.

But you see, what you ask us to do, if you'll pardon the

agricultural reference, is to buy a pig in a poke. We don't know what

we're granting the $10 million for. And if I can be excused another

awful pun, it goes against the grain. We have no perspective. We don't

know what you're going to do with the $10 million. We don't know how

many farmers are involved. We don't know what the share of the equity

is. We don't know what's the measure of payment. We don't know whether

they're going to be paid off at the EEC price, which is $3.13 a bushel,

or the American price of $2.65, or the Canadian subsidy of 85 cents

currently. We don't know any of this stuff.

It's another Point Roberts. It's another forestry thing where you

squander the time of the House putting forward, in the dog days of

July, pieces of legislation that you hope will slide through while

nobody's looking, and we don't have the answers. There has to be a

minister here who is able, with all due respect for the minister's

expertise in agriculture and his commitment to it.

That is not on the table here. On the table is: what do you want to

do with the ten million bucks? Let's see the plan. Why do we have to

grant it in advance? You trot in here with a decent kind of plan and a

prospectus, tell us how many farmers are involved, what their

indebtedness would be, what loan guarantees you expect, and we can buy

this sort of stuff. Ethanol is very, very trendy. We know that

conventional oil supplies are ultimately going to run out. We know that

Hibernia and the North Sea and all these other areas are up to $20 to

$30 a barrel. This would have come on stream much sooner had oil prices

been higher.

We know all those things. We know that Brazil uses ethanol entirely

and imports very little crude oil comparatively, because they've got

lots of sugar cane and all that stuff. We know all that. That's not the

argument. The argument is that the opposition, whose job it is — and

I've got to do this business about the separation of the state and the

Legislature, and control of the purse strings — is asked to buy

something about which there is very little defensible information.

That's the problem with it. The bill is not being defended properly,

and neither was the Point Roberts thing — not when the minister was

here but when it came first a week ago Tuesday. That is the problem.

The Minister of Finance (Hon. Mr. Couvelier) doesn't know about the tax credit arrangements. It may be another ALR.

In attempting to sum up, we find it important that there be

something done to help agriculture in the Peace River, in view of the

competition, because the farmers just cannot compete with their

subsidized competitors. Something has to be done. But we also know that

ethanol plants have not been remarkably successful in this country.

There was one in Manitoba, and I think it was run by Pay 'n Save or

something like that.

AN HON. MEMBER: Mohawk,

MR. ROSE: That has not been an outstanding success, and Mohawk has been able to sink a hell of a lot of money into it.

I think this is a political project on about the same level as

Westfleisch, north of Vanderhoof and Prince George. You know, it's a

figment of somebody's imagination. You back it up with ten million

bucks, and if we get enough we'll run with it. That's the part that

bothers us just a little bit.

Interjection.

MR. ROSE: The brilliant comment from the Minister of Culture

(Hon. Mr. Reid) over there.... He couldn't even be minister of

horticulture, but he is our Minister of Culture. The refined minister

of tourism and culture and library fees, and museum fleas, and all

these other things, is sitting over there making the usual kind of

comment on something from his seat, buried deeply in the back benches.

I wish he'd get up and speak and take

part in the debate instead of

waving bye-bye at me, because I'm not going any place, but you might be.

HON. MR. REID: You're gone.

MR. ROSE: No, I'm here. No, all the farmers up there are

going to be real pleased with me because I saved their farms, because

the only people that are going to compete for their farms now besides

the Ministry of Agriculture when they get into the glue is the Royal

Bank, and it's got many of them now.

MR. CLARK: The minister never answered a serious question I

asked earlier. In a February 6 press release under your name, it says:

"Twenty-three million dollar loan guaranteed to Agrifuels." Is that

still the case?

HON. MR. SAVAGE: Yes.

MR. CLARK: Well, well. This is getting hairier and hairier —

$33 million for 54 jobs. We're getting almost to the northeast coal

level, but we're not quite there yet. Is it your ministry that is

involved in the $23 million loan guarantee? Is it your little ministry,

with no more staff, that has never approved any loan more than a couple

of million dollars, that is guaranteeing a $23 million loan to

Agrifuels? Is it your ministry?

If it's not your ministry, could you please tell the House under

which authority there is a $23 million loan guarantee to Agrifuels?

This is something else.

HON. MR. SAVAGE: The $23 million is guaranteed out of our ministry, yes.

[ Page 2288 ]

MR. CLARK: You just said it wasn't. We're not talking a

couple of dollars here. With all due respect, you should know the

details of this plan, and it's clear that you don't. We're now talking

$33 million in loan guarantees from a ministry that has never in the

history of British Columbia approved more than a total of $6 million.

All of the loans and loan guarantees outstanding in the history of

British Columbia, and we've now got one project, and the minister

hasn't hired any new staff, and he hasn't been able to give any

information to this House on the details of that kind of proposal.

You're asking us to approve $10 million today in this House for a

project that has been rejected eight times by other organizations, that

has $33 million.

If I work it out — 600 farmers, $10 million — you're going to give

them, essentially, cash money, $17,000 each. That's the equivalent, if

you're not going to ask for their farms back. The total number of

dollars per job is getting to close to a million dollars. That's not

good enough, Mr. Minister. It's simply not good enough for you to ask

us to give you that kind of blank cheque without any kind of assurance.

It says here that the ethanol plant is given a July target date

because of the permafrost and the problems of construction in that

area. Could the minister tell us when they're going to stil digging the

hole for the ethanol plant in Dawson Creek?

HON. MR. SAVAGE: My last date of expected sod-turning was August 14.

MR. CLARK: The minister started out saying this is enabling

legislation. We don't have the details yet, but they're going to start

constructing the plant August 14, a month from now. They've got a month

to work out all the details for complex negotiations with real money —

our money, taxpayers' dollars, and you're going to start digging August

MR. WILLIAMS: And you still haven't heard from the feds.

MR. CLARK: That's right, and it's contingent upon some kind

of tax scam with the federal government. This is getting worse and

worse. You could give those farmers a lot of money to stay home and

just take some leisure time. They could go south every winter.

We need to know. Maybe the minister could give us some assurance. We

had in this House the Premier of the province saying in question period

that this was money for the farmers, and he said that twice. Now we

have the minister confirming in the House that there is also a $23

million loan guarantee, not to the farmers but to the company involved.

That has the appearance of misleading the House. Maybe the minister

could explain why it is that he stated time and time again at the

beginning of this debate that it was $10 million for the farmers and no

other money would be involved, and why the Premier has twice in this

House indicated that the assistance would be to the farmers, when there

is now also a $23 million loan guarantee to the company involved.

HON. MR. SAVAGE: The money guaranteed is still to the farming community for the construction of the Agrifuels plant.

MR. CLARK: Are you trying to say that giving money to a

Texas-based company that happens to be buying grain is giving aid to

the farming community?

We haven't even got into this. There is also in the budget a 2

cents-a-litre subsidy for ethanol to be produced by this plant. So now

we're getting closer to the northeast coal average, because we're now

up to $33 million in cash money for the project for 54 jobs. Can the

minister tell the House what the expected volume of sale is? How many

litres of ethanol a year in British Columbia are we going to sell out

of this plant? We can then determine the annual subsidy, which will go

on and on and on after the $33 million, if the plant of course ever

makes a go of it,

Could he tell us now, so that we can get some handle on it on this

side of the House, what the total level of subsidy is for this project

in Dawson Creek, which, by the way, was announced by the previous

member for South Peace River, who is acting as a consultant for Dawson

Creek and who helped negotiate this deal — which of course becomes

clearer and clearer all the time?

HON. MR. SAVAGE: Number one, it is not a subsidy; that was

the inference that was made. Number two, the question about how much

will be used in B.C.... Those figures can't be finalized to the exact

litre. The production capability of the plant is up to 45 million

litres a year — if that's the number you're looking for.

MR. CLARK: The company also announced that all of the first

phase of their production has been presold to Alaska. But the budget

states that there will be a 2 cents-a-litre subsidy to ethanol upon

completion of the plant. So if we complete the plant but all of that is

sold to Alaska, will we not then be subsidizing ethanol produced

somewhere else — namely, in Manitoba — or is the 2 cents-a-litre

subsidy only for ethanol that's coming out of that plant and being sold

in British Columbia?

HON. MR. SAVAGE: The subsidy is only for that which is

produced in B.C. Secondly, on the question that you asked, sir, about

how much would go to Alaska, I might tell you that the subject is in

bilateral discussions, on the duties related to ethanol sales to Alaska.

MR. WILLIAMS: Could the minister advise us whether there is a maximum number relative to that 2 cents a litre, in terms of payment per annum?

HON. MR. SAVAGE: No, it's all for the consumption of ethanol in B.C.

MR. WILLIAMS: The minister advised us that this will be

producing 45 million litres a year. If my number work is correct, at 2

cents a litre it comes to $900,000 a year — if it's all consumed in

B.C. That's a million dollars a year in addition to the $33 million.

How long might this go on? Is there a time limit on the annual amount

per litre?

[4:15]

HON. MR. SAVAGE: I'm sure the Ministry of Finance will make

the decision on how long that carries on, but we are asking that that

be carried on to support the agricultural community. We must encourage

the use of ethanol to phase out the leaded fuels.

[ Page

2289 ]

MR. WILLIAMS: But then I would ask myself the question:

what's the volume of leaded fuel sold in British Columbia? It would be

huge. Are we willing to put in 2 cents a litre no matter what the

number is?

Normal amortization of most major loans would, I guess be 20 years —

just like the average house — so is it reasonable to assume that this

would apply for 20 years? That's depending, as you say, on the Minister

of Finance and what the contract finally is — that's not clear yet. But

then we could be talking about a subsidy of a million dollars a year in

terms of the 2 cents a litre, plus the $10 million, plus the $23

million. So what we're talking about is $53 million here, over 20 years.

Interjection.

MR. WILLIAMS: Well, that's $1 million a year in terms of the litrage.

It's still not clear to me about the actual cash that the company is

putting up. We've had all this tax credit stuff. That's something else.

But the firm cash that's being put up — could you cover that again, if

you would, Mr. Minister?

HON. MR. SAVAGE: On the question of the number of litres or

gallons, or whatever you want to call it, and the use of leaded fuels,

the 2 cents a litre is paid on the gasohol — the blend of ethanol and

gasoline. The benefit of it is to the consumer.

MR. WILLIAMS: I don't want to get into that, Mr. Minister.

It's fair for you to make that comment, certainly, but I'm trying to

establish just what cash amount the company is putting up. That's still

not clear to me.

HON. MR. SAVAGE: In the capital cost of the project? Is that the question? It's very close to $60 million.

MR. WILLIAMS: So that's it then. And the total is $93 million for the total capital cost of the project?

HON. MR. SAVAGE: In that range.

MR. WILLIAMS: So for $33 million and maybe $1 million a year

from the province, the equity that the farmers are going to end up with

is 25 percent.

HON. MR. SAVAGE: That gives them shares in the company, and they may acquire more shares.

MR. WILLIAMS: It's still not clear to me, though, what's

backing up the loan to the farmers if this thing falls apart. I think

the chances are good, I'm sorry to say — or bad; whatever you will —

because this is looking more and more like a northeast coal project to

me. It really is. That was $1 million a job, northeast coal. It's on

the edge of monumental failure right now; the banks are still wrestling

with the mess. And here we are now, talking about a capital project

that, in terms of jobs, is in the same range.

If this thing goes under, what recourse do we have in terms of getting our money back?

HON. MR. SAVAGE: Madam Chairman, the government has first right to the

equity that is left or to the value of the company if it goes under. We're

the last ones in, first ones out.

MR. CLARK: I've just been looking at this, and I think our

numbers are a little low. Would the minister confirm that it's a

2-cents-a-litre subsidy for gasoline mixed with ethanol? Ethanol is

only a little percentage of gasohol. Therefore it's something more like

a 10-cents-a-litre subsidy for a litre of ethanol. Can the minister

confirm that is in fact the case?

HON. MR. SAVAGE: Madam Chairman, no, because the blend is the percentage.

MR. CLARK: Maybe you should check with your staff on this,

but it's a 2-cents-a-litre subsidy for gasohol. Therefore if the plant

produces so many million litres of ethanol, then the subsidy per litre

of ethanol is more like 10 cents a litre if we assume that it's a 20-80

blend. But if it's only 10 percent, then the subsidy is even higher.

HON. MR. SAVAGE: That's correct.

MR. CLARK: Okay. So we've got to readjust our numbers here.

I'm sorry. It's not S900,000 a year, but it's five times that. We don't

want to exaggerate: it's a subsidy of $4.5 million per year. We're

getting up there. It's almost northeast coal.

Interjections.

MR. CLARK: Per job? We're getting close; we're surpassing.

First of all, would the minister inform the House what percentage of

gasohol is ethanol, so that we can refine our calculations? This is

wild.

HON. MR. SAVAGE: I believe the blend that is being considered was about 10 percent.

MR. CLARK: Madam Chairman, just give us a second, and we'll

work these numbers out. It's $9 million a year. I'm sorry, it's ten

times — $33 million. We'd have to get the Minister of Forests to do a

discounted future income stream on what $9 million a year is worth in

net present value. But we're certainly in excess now of a million

dollars per job created, and 600 farmers.

Now that we're getting to the bottom of this, I wonder if the

minister would consider standing this

section of this bill today and

coming back to the House at some later date with more details of this

rather suspicious project. It's going to cost the taxpayers of British

Columbia a lot of money, and maybe we'd be better off paying in

perpetuity a healthy standard of living for those 600 farmers rather

than involving the government in this kind of very expensive venture

using the taxpayers' dollars.

HON. MR. SAVAGE: No.

MR. WILLIAMS: It really is mind-boggling, and I'm sure that's

shared by all members of the House, not just the opposition side. I

suspect it's mind-boggling for serious civil servants, who have to be

careful with the taxpayers' money in other departments, to hear all

this unravel. We're talking about $10 million loaned to the farmers — a

$23 million loan guarantee. Some federal tax scam, which we still don't

know

[ Page 2290 ]

the dimension of, will take more money out of the taxpayers'

pockets. Is this fellow from Texas? I mean, it sounds like a pretty

tall story from Texas to me.

Then $9 million a year in terms of the stuff coming out at the end

of the pipe.... You know, if I was a Texas wheeler-dealer and I came

into town and I saw an operation like this, I'd think I should take

these rubes for all I could get. And it sure looks to me like that's

what he's doing. "Let's go borrow from the Department of Agriculture,"

says Mr. Man from Texas. "It looks better than a bank robbery to me."

Honestly, I don't really like to ridicule this, but what can one say?

I happen to be the chairman of a seed capital program at Vancouver

City Savings. I'm chairman of the finance committee, and I monitor all

major loans and small loans to people who don't have money but have a

good idea. We met just this last week, and we approved several loans.

We put aside $1 million in profits at Vancouver City Savings to create

jobs. I've put that to the former Minister of Economic Development, and

we've written to the current Minister of Economic Development (Hon.

Mrs. McCarthy), but she's so busy with all those other things. That

kind of cheap job-creating is really not what she's interested in. So

be it.

I'd like you to know, Mr. Minister, what it costs us at Vancouver

City Savings to create a job, in terms of capital costs, in terms of

the seed capital program, the first in Canada. I just want you to know

the difference between prudent money management and foolish, profligate

money-wasting. I want you to understand the difference. It costs, in

terms of our last years of operation, something like $14,000 or $15,000

a job in capital costs. That happens to be less cost than the ideal

established by Dr. E Schumacher, looking at Third World companies, in

terms of how you can create jobs in the poorer regions of the world. He

came to the conclusion that one should only create jobs that didn't

cost more than the average wage of a working person in that society. I

think that was a profound idea, a profound concept. He had to reduce

his thinking to something very pure and clean, in terms of how one

creates jobs for the poor in poor countries. I think he came up with a

really solid answer and a really solid guideline.

We at VanCity are trying to work within that principle. We're a

richer country; we could probably talk in terms of double the average

person's wage as a reasonable capital cost, and employ all our people

readily. But, as I say, we are finding we can do it currently at under

the average person's annual wage. It's not big, but it's starting.

We're learning, and we're not losing money either.

Interjection.

MR. WILLIAMS: You're going to knock those service sector

jobs? No, it's a range of jobs: some are manufacturing, some are

service. It's a mix. You people still are not contributing to that

program. If you wanted to create jobs in British Columbia quickly,

you'd be looking at similar small seed capital programs across this

province, where you're dealing with individual ingenuity and with

people that know the value of money. But what you're talking about here

is this.... We're dealing with this extraordinary, tall story that some

Texan — or wherever he's from — has sold you at more than a million

dollars a job, with an almost endless subsidy, as the stuff comes out

of the pipe; $9 million a year for the material coming out of the pipe.

That's a lot of money, Mr. Minister. I would have expected that a

person with your kind of background would appreciate that that's a lot

of money and would want all the advice in the world before one

proceeded with it. No farmer out there goes thinking in terms of this

kind of borrowing and these kinds of schemes. They just don't think in

those terms; and they're right not to think in those terms, because

they couldn't afford it. As they can't afford it, so the people of

British Columbia cannot afford it. We can't afford this kind of

nonsense.

[4:30]

Your Premier got elected on a program of no more subsidies. He said

it all over this province — no more subsidies. "I don't think it's

healthy for the industries," he said, "and I don't think it's healthy

for the provincial economy." And he was right. But he's forgotten and

you've forgotten. No dirt fanner would consider this kind of thing, and

no reasonable, thinking person would either. Twenty-three million

dollars, plus $10 million, plus $9 million a year, and you don't have

the staff to analyze it. You don't have the staff to monitor it. You

don't have a word from the federal government. We don't know the

dimensions of the tax scam that is envisioned, and you don't have a

good record there. Your Minister of Finance (Hon. Mr. Couvelier) tried

that tax scam with the SkyTrain, and he didn't get away with it. He

blew 700,000 bucks.

You guys! It makes me think of old W.A.C. Bennett. He said: "The

trouble with you people over there is that you're Saturday-night rich

and Sunday-morning poor." And I think that's what we've got here: a

gang of folks that are Saturday-night rich, playing with the public

treasury, and the people of British Columbia are going to be

Sunday-morning poor. That's the problem. You're not dealing with your

money.

I don't know if you know, Mr. Minister, what a mess BCDC is. Your

Minister of Finance should, and his deputy should. The previous

deputies were ringing the alarm bells years ago about the sea of red

ink at the B.C. Development Corporation. And that member from

Shaughnessy Heights has still not reported to this House on that mess

that she's still trying to cover up. They learned some very expensive

lessons; that is, they made a lot of bad loans. They've made more bad

loans than Northland Bank. They've made more bad loans than Canada

Commercial Bank that went belly-up in Alberta, but they decided this

one they wouldn't touch. So they decided: let's find a hayseed that

will buy this one. And they found one. We cannot buy this nonsense. We

will not buy this nonsense.

We were told that the legislation coming before this House this week

and next week was going to be modest stuff that would be

non-controversial, easy to deal with and fast.

Interjection.

MR. WILLIAMS: Yes, indeed. We don't have that here, and there

is a lot more legislation around that is in the same category. This

kind of stuff is inexcusable. This would be laughed out of the chamber

in Newfoundland, where they have tolerated some of the biggest scams in

the history of this nation.

MR. CLARK: Bricklin was in Nova Scotia.

MR. WILLIAMS: There's Bricklin in Nova Scotia; there's Javelin in Newfoundland. This is of that dimension and of that order.

[ Page

2291 ]

But I reflect back on what I said to you about Dr. Schumacher and

the whole idea of limited capital per job. How many unemployed do we

have in British Columbia — 200,000? Two hundred thousand people are

unemployed. If we wanted to create jobs for them all, because we should

be fair, we should be equitable.... If we're going to subsidize and

create jobs, let's do it for everybody. Two hundred thousand times a

million — I don't know what that amounts to. I guess it would break the

bank in Canada.

So don't you see what you're doing for a handful of jobs in the

Peace River district? You're talking about a cost per job that is

gargantuan. It's like northeast coal. We end up, if this thing goes

belly-up, stuck with the debt — that's another $33 million — and

whatever we spent on what came out of the pipe, and we've got.... You

say: "Well, we're first there." We own an Agrifuels plant that can't

make money. I wonder what that's worth. I don't think it's worth

anything. It might be worth the land value, if you put it back into

crops, if you remove the debris on top of the land.

So, you know, you're asking us to throw $33 million on the table...

MR. CLARK: Nine million a year.

MR. WILLIAMS: ...and $9 million a year, and you don't have

the details. You have to pull in your rookie member for South Peace

River (Mr. Weisgerber) to tell you what the deal appears to be. Your

Minister of Finance can't give you the details, your staff can't give

you the details, and you say the sod is going to be turned August 14 —

and you nod your head.

We're looking for more explanations, Mr. Minister. If you can give them, we'd be more than pleased to listen.

MADAM CHAIRMAN: Could the second member for Richmond please have leave to make an introduction?

Leave granted.

MR. LOENEN: Madam Chairman, it's a great honour for me to

introduce Shirley Romas, who is the executive director of the Canadian

Mental Health Association, Richmond. She's a most energetic person,

very innovative, and has made a great contribution to our community.

Please join me in welcoming her to this House.

HON. MR. COUVELIER: Madam Chairman, it's all been

interesting, and maybe I can try to summarize what I've heard here in

responses from this side of the House. It's like we're talking to a

wall. They seem to be more interested in creating artificial arguments

than getting the facts straight. What the questioners have been told

this afternoon is that the province will have a short-term involvement

of about $33 million — key word, "short-term." There will be $23

million in loan guarantees and $10 million in direct loans. Only $5

million of the $10 million loan will be carried by the province beyond

an 18-month construction period. In other words, once the plant is

built, the provincial exposure in terms of the loan to the farmers will

be brought down.... The $10 million will be brought down to $5 million.

Now the fact of the matter is, Madam Chairman, that if you calculate

even the sales tax to be paid on the construction materials, that $5

million is covered by the tax that's going to be paid.

Interjection.

HON. MR. COUVELIER: You've been told that. It's like talking, as I said, to the wall. You don't seem to be interested in hearing about it.

Dealing with the question of the tax credits, many major capital

projects take advantage of existing federal tax legislation. There's

nothing objectionable about it, and it shouldn't be the cause of

derision or criticism. Ws a standard practice. I don't applaud the

fact, but it is a fact. I wouldn't be at all surprised, were we to get

into it, that some hon. members across the floor themselves might have

taken advantage of some of these programs.

The program that we're talking about here is the investment tax

credit program, which is applicable to geographic sectors, and the

federal government decided the Peace River was one of those. The

proponents, knowing that, decided to roll that into their financing

package. There is nothing wrong with that. It's being done by hundreds

of Canadians every business day of the year.

MR. WILLIAMS: What are the numbers in terms of tax credits?

HON. MR. COUVELIER: Dealing with the question of the farmers,

because that's an issue that has been brought out here, we will advance

the farmers $10 million. But when Agrifuels turns over ownership of the

plant to the operator, $5 million of that farmer's investment will

subsequently be paid back to us.

It's important to remember that the construction of the plant will

result in the farmers having a negotiated film contract price for their

production, something they've been missing for years and something

which we believe will stabilize the economy. It is a very necessary

requirement if the hon. opposition House Leader's ambitions regarding

farm stability are to be met.

The government suggests that this package as put together will

have.... When the plant is built, the provincial government maximum

financial exposure will be $5 million, and that will be a loan to the

farmers. All the rest of our bridge financing will be recovered from

the owner when he takes over ownership of that plant.

Obviously, Madam Chairman, we are not going to make any investment

whatsoever of taxpayers' dollars until we are satisfied that all the

requirements have been met and that the necessary investment dollars

are in place by the principals. In the absence of that, we will not

forward one red cent.

It's a matter of contractual agreement. The provincial interests are

well protected. The only question at issue here is whether the

principals will be able to complete the deal they are negotiating, but

that is not the provincial government negotiating the deal. The deal is

to be negotiated between the principals and the federal government and

other investors that the principals will bring in. If they don't meet

all those conditions, the deal will not proceed. All we're talking

about with this amendment is placing enough money in the budget so that

if the principals are able to put the deal together, we will be able to

complete the bridge financing to make it possible.

If they do succeed, the Peace River winds up with a $90 million

plant in place with a provincial investment of $5 million, which will

be retired over the subsequent seven years, from which we will have

received $5 million in sales

[ Page 2292 ]

taxes from construction materials alone, and from which the farmers

will receive a stabilized grain price for their product which they have

missed for years. The initiative is a community economic initiative

which, when built, will have minimal provincial involvement.

MR. STUPICH: I appreciate the information that we're getting

now. It's a little more solid information than we've been able to get

most of the afternoon. The $5 million is to be paid back when the plant

opens. What is the source of funding that will pay back the provincial

government $5 million on the day the plant opens? Who is putting up the

$5 million at that point?

The price of grain is going to be negotiated between the management

of the plant and the farmers. This is not going to be done until after

the plant has been built. We're probably talking about next year's

grain crop. Who is going to do the bargaining on that — the farmers on

one side and the owners of the plant on the other? What bargaining

power will the farmers have in that situation?

HON. MR. SAVAGE: Madam Chairman, if I may, the answer to the

hon. member's question is that the farmers are entering into a contract

that guarantees a minimum of 5 percent over Canadian Wheat Board

prices. It could be as high as 10 percent, and that's net of freight.

MR. STUPICH: The other question was: who is putting up the $5

million to pay off half of the loan the day the plant opens? Which

minister? Or should I look at Madam Chairman for the answer to the

question?

HON. MR. COUVELIER: As a matter o