1984 Legislative Session: 2nd Session, 33rd Parliament

HANSARD

The following electronic version is for informational purposes only.

The printed version remains the official version.

Official Report of

DEBATES OF THE LEGISLATIVE ASSEMBLY

(Hansard)

FRIDAY, MARCH 9, 1984

Morning Sitting

[ Page

3737 ]

CONTENTS

Ministerial statement: B.C. Systems Corporation data. Hon. Mr. Curtis –– 3737

Mr. Hanson

Routine Proceedings

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

(Hon. Mr. Rogers)

On vote 20: minister's office –– 3738

Mr. Lauk

Mr. Lockstead

Mr. Nicolson

Mr. Passarell

Mrs. Wallace

British Columbia Transit Amendment Act, 1984 (Bill 10). Committee stage. (Hon. Mrs. McCarthy)

Third reading –– 3755

FRIDAY, MARCH 9, 1984

The House met at 10:04 a.m.

Prayers.

HON. MR. NIELSEN: Mr. Speaker, today marks the last day at

work for Mrs. Pat Fish, who has been a faithful member of the

Sergeant-at-Arms staff for the last eight years during ten long

sessions. I would like the members to wish Mrs. Fish a happy birthday

and a long and successful retirement.

HON. MR. RITCHIE: I would like the house to extend a warm

welcome to a group of visitors to our city: the governors and

federation board members of the Soroptimists International of the

Americas. We have with us Dorothy Molin from Oregon; Dr. Liz Blanchard

and Petty Zimmerman from California; Mary Helen Madden and Joan

Mintz-Ulmer from Philadelphia; from Tennessee, Millie Gramer; from

Alaska, Marsha Holomon; from Panama, Gail Dawson; from Japan, Eiko

Yuasa; and the president-elect, Joyce Blake, from Calgary. With these

guests is my executive-assistant, Christine Haley, who is the

Soroptimists International board member for western Canada. Would you

please welcome these ladies.

B.C. SYSTEMS CORPORATION DATA

HON. MR. CURTIS: Mr. Speaker, I wish to make a ministerial statement.

Yesterday afternoon in question period the first member for

Victoria, who is not in the House at the moment, alleged that a

computerized address label from within the data bank of British

Columbia Systems Corporation had "fallen into the hands of the Social

Credit Party." He further suggested that this label, which was part of

the Ministry of Industry and Small Business Development mailing in

April of 1983, was also used on a fund-raising letter sent by the

British Columbia Social Credit Party over the signature of the former

party president, Mr. Bernie Smith. In a fit of piety, Mr. Speaker, the

member asked how such a breach of security from a databank in B.C.

Systems Corporation could "fall into the hands of the Social Credit

Party." In a supplemental question the member said that his informant

is extremely concerned that his label, with an incorrect address and a

computerized number from a government codified bank, has turned up in

the hands of a political party. The member added, toward the end of the

questions, that I had not satisfied the House with respect to a breach

of security surrounding this matter. Mr. Speaker, I hope now to satisfy

that member and this House.

The member's allegations attack the professional reputation of

employees of a Crown corporation, B.C. Systems Corporation, in a manner

which I find irresponsible.

Mr. Speaker, a minimum of research, which I would expect any member

of this House to undertake or request, would quickly reveal the facts

of this matter, which are, as I understand them, the following. The

number code on the address label in question shows that it is part of a

Dun & Bradstreet mailing list.

This list, Mr. Speaker, is available to any legitimate business firm, organization

or society. I am informed by the Ministry of Industry and Small Business Development

that they have routinely used such lists to distribute ministry publications,

such as "Talking Business," mailing them to key members of the financial

and business communities. They have taken that list and have added other names

mainly international — to provide a larger list.

It appears that the British Columbia Social Credit Party, wishing to

address a message to similar individuals, purchased this list on its

own, independent of any government involvement whatsoever. So, Mr.

Speaker, simply put, at least two organizations, the Ministry of

Industry and Small Business Development and the British Columbia Social

Credit Party, along with, I would think, countless other organizations

regularly and routinely purchase mailing lists. That fact should come

as no surprise to any hon. member, including the one who raised the

matter yesterday.

Further, Mr. Speaker, some members of the Legislative press gallery,

to their credit, yesterday went to some trouble to check the veracity

of the allegations and apparently found them to be without foundation.

Other news outlet representatives did not. I hope — indeed, I believe I

am entitled to expect — that those who published the allegations

yesterday and today will now give equal prominence to the facts as I

have stated them this morning and as I earnestly believe them to be.

Because of the seriousness of the charge yesterday I believe I have

every right to request that this correction occur today.

MR. HANSON: Mr. Speaker, at the same time as that particular

event occurred — the letter from Mr. Smith — as you will recall from

the press coverage, a number of government employees and managers

received similar kinds of letters from the Social Credit Party. People

who were managers in government, people who were individual citizens,

even staff members of the New Democratic Party caucus, received

solicitations for funds. The question arises: where do those names come

from? How does the Social Credit Party get control of those kinds of

lists?

When I raised that question yesterday, it was raised in good faith....

Interjections.

MR. SPEAKER: Order, please. Hon. members, the ministerial

statement was made and the member has the right to respond in a way

that also can be heard.

MR. HANSON: Mr. Speaker, the question of security surrounding

the sale of B.C. Systems Corporation is a legitimate and valid one of

concern to all citizens of this province. That minister has not

satisfied this House that the security arrangements, having that kind

of control of public information in the hands of a private

corporation...that the citizens of this province would have confidence

in that matter.

I would like to hear from that minister how government employees'

names appeared on Socred mailing lists for solicitation of funds. It

was covered in May of last year, when government employees felt

intimidated and were quoted in the press as saving that they had

concern that their future with this government might depend on their

volunteering money to the Social Credit Party. If that minister feels

that that weak response to that question is going to satisfy this

House, he is sorely mistaken.

It is a matter of public record that public funds were used for

private political purposes in advancing the cause of Social Credit in

the use of massive advertising, and that minister has never responded

to the questions on the order paper. I'm

[ Page 3738 ]

saying that there's a cloud that hangs over that

government which requires a forthright response to legitimate concerns

raised by constituents through their MLAs in this House.

[10:15]

Interjections.

MR. SPEAKER: Order, please, hon. members. While the rules

that govern this House are somewhat non-existent regarding both

ministerial statements and responses to ministerial statements,

nonetheless there is some necessity on a member when replying to a

ministerial statement to stay within the confines of the subject matter

covered, and I would commend that to all members in future.

The second member for Victoria (Mr. Blencoe) has advised the Chair that he wishes to raise a matter under standing order 35.

MR. BLENCOE: Mr. Speaker, I ask leave to move adjournment of

the House under standing order 35 to debate a definite matter of urgent

public importance. The matter concerns the critical level of

unemployment in British Columbia.

Unemployment in British Columbia has jumped once again as a direct

result of this government's lack of action or concern for the critical

employment situation throughout British Columbia. Vancouver Island is

now experiencing an official unemployment rate of 19.3 percent, and we

know that the real rate is even higher than that, Mr. Speaker. Victoria

has the dubious distinction of being the city with the second highest

unemployment rate in the nation, with the rate for February jumping to

17.6 percent, up from 16.2 percent.

The southern interior of the province is staggering under an unemployment rate of 22.6 percent. Since these figures....

MR. SPEAKER: Order, please. Hon. member, we must not enter

into debate when we are canvassing a 35. We must constrain our remarks

and briefly state the matter. With all due respect, hon. member,

clearly you are now entering into debate on the issue.

MR. BLENCOE: I'm just trying to justify the reasons for the

section 35, Mr. Speaker.

Since these figures don't include the people who have stopped

looking for employment, have only worked for a few hours or desire

full-time work, it's clear that the real rate of unemployment in the

province of British Columbia is far higher than the figures indicated

by Stats Canada. People all over the province are hurting from this

government's lack of direction. Clearly there is no recovery in the

province of British Columbia, and that's the reason I have a motion

under

section 35, if you will permit me to put it forward.

MR. SPEAKER: Thank you, hon. member. The Chair will undertake to bring a response back to the House at the earliest opportunity.

HON. MR. McGEER: Mr. Speaker, I don't know whether this will

be comparable in nature to some 45 or so motions that have been brought

forward, each of them turning out in the long run to be an abuse of the

rules of the House. Mr. Speaker, we need to bring down a decision in

this House that will clarify whether or not abuse of the rules of the

House is taking place, or whether a legitimate matter of urgent public

importance...

MR. SPEAKER: Order, please.

HON. MR. McGEER: ...is being placed before the House, because the time and valuable interests of the House....

[Mr. Speaker rose.]

MR. SPEAKER: Order, please.

[Mr. Speaker resumed his seat.]

MR. SPEAKER: Hon. members, the Chair was engaged in reading a

matter that had been forwarded to the Chair, and I cannot recall

whether the Minister of Universities, Science and Communications stated

for which purpose he sought the floor. Would the minister please advise

the Chair as to the method by which the Chair allowed the member to

gain the floor.

HON. MR. McGEER: Mr. Speaker, I was seeking a clarification

of a ruling that Your Honour would bring down, which would be to deal

not just with this specific instance but with the general abuse...

MR. SPEAKER: Order, hon. member. Thank you.

HON. MR. McGEER: ...of a series of this matters which this member feels is an abuse of the House...

MR. SPEAKER: Order, please. Order!

HON. MR. McGEER: ...itself.

MR. HOWARD: On a point of order, it just seems to me, Mr.

Speaker, that of all people in this House who need clarification, it's

surely the Minister of Science. I hope you give it to him.

MR. SPEAKER: Hon. member, the Chair will undertake to

possibly enlarge a little on the 35 that has been presented and will

bring that back as well.

Orders of the Day

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

ESTIMATES: MINISTRY OF ENERGY,

MINES AND PETROLEUM RESOURCES

(continued)

On vote 20: minister's office, $151,016.

MR. LAUK: Yesterday when we left off, I think we had just

heard a stirring speech from Placer Jack, and I wonder if the minister

would care for a few moments to respond to the hon. member's inquiry,

is the minister going to introduce an amendment?

Interjection.

MR. LAUK: That could be fatal.

[ Page

3739 ]

Mr. Chairman, energy is a portfolio that has to be watched very carefully,

one reason being that hydro is, I believe, part of the responsibility of this

minister. The B.C. Hydro sale of surplus electricity to the United States is

a very important issue with us — not only with the New Democratic Party opposition

but with a lot of British Columbians. Therefore we watch and monitor most every

public communication of the minister to decipher what policy the government

has today and what policy it may have in the future.

With that in mind, we are disturbed to hear that the government may

be embarked on a program of hydroelectric development designed for the

purpose of exporting power. The minister has confirmed that to some

extent in a communication between himself and the B.C. Wildlife

Association; but it comes as a point of concern to us, and I think to

all British Columbians, that the Minister of Energy has stated at least

an initial intention on the part of the government to seriously

consider hydroelectric development and construction at great capital

cost — and at great environmental cost, which we all have to face in

terms of hydroelectric development — for the exclusive or

near-exclusive purpose of the export of that energy to the United

States. Although the New Democratic Party supports the idea of selling

excess or surplus electricity, we do not think that that is a blanket

support from the opposition for the government's move. We want to

qualify it very seriously with this government. We will fight quite

vigorously any move this government makes to embark upon a program of

developing electrical energy in this province through great capital

investment for the purpose of supplying that power, which in effect

exports jobs, to the United States. If that's the purpose of the

government, we charge that the government is betraying the heritage of

this province — that this government has deliberately embarked upon a

course of permanently placing future generations of British Columbians

in a most subservient position to the United States economically.

The committee may recall that some years ago certain key American

politicians suggested a North American power grid, if you like: a

continental energy plan, which patriotic Canadians quickly identified

as an attempt to undermine Canadian sovereignty, as an attempt to

harness and enslave the massive energy resources of Canada to be put to

the sole purpose of serving, at cheap cost, the massive industrial

machine in the United States — providing jobs, wealth and income to

Americans and providing very little or nothing to Canadians except

future generations of being drawers of water; in this case, water for

electrical use. That must be avoided at all costs. Certainly the export

of surplus power to the United States at these times is a responsible

move. But we oppose any move of this government to participate by using

taxpayers' money or the capital of Hydro to participate in any kind of

north-south power grid supplying a permanent supply of power to the

United States, which indeed exports Canadian jobs in the long run.

Interjection.

MR. LAUK: Mr. Chairman, obviously the minister of economic development,

by his cross-comment when he says that I don't agree with the governments

of Manitoba and Quebec, does not quite grasp the point that I'm trying to

make. The export of surplus power may be of short-term benefit to Canada and

particularly in this case to British Columbia. I say "may," and I'll

deal with the deal that's been made by the government in a moment and point

out some weaknesses. But the idea of a permanent link or encapturing of our

power resource for United States industry is anathema to everything we've

dreamed of in this country. This government shouldn't be so foolish, for

short-term gain, as to make those long-term commitments to the United States.

It would be a serious and terrible mistake. Our unemployment rates are going

up; in the United States they're going down. In Canada we should be most

aware of our responsibility to the current generation of working people and

the next generation of working people. This short-term, fast-buck type of mentality

has to stop. Responsible sales on an interim basis is one thing. Long-term commitment

and sale of electrical power to the United States is a sap's game, a fool's

paradise, and it will lead us into a permanent economic stagnation here in British

Columbia. It is not very clever and it is not very imaginative.

I hope it's a hint, and maybe the minister will confirm it was just

thinking aloud, and nothing in the way of government policy that we

will have a long-term commitment. I'm talking about capital investment

jointly with United States users of our power or unilaterally to

develop hydroelectric projects and transmission lines for the sole

purpose of the permanent export of our power. Otherwise this minister

will go down in history and in infamy as the minister who tolled the

death-knell....

Interjection,

MR. LAUK: Well, I hope so, to the Minister of Agriculture and

Food (Hon. Mr. Schroeder), who says that what I'm saying is an

exaggeration. I pray so. This is not a partisan political issue. But

this minister will go down in infamy if he is the one who introduces

that short-sighted policy for the province of British Columbia and its

electrical energy.

[10:30]

The second point I want to make is about the contract with the

United States for the export of hydroelectric energy. It is clear that

the price we're negotiating is very low; to say it's competitive is an

understatement. When you look at the projected amount of energy that we

are going to sell at the prices being negotiated, it is interesting to

point out that if this kind of outflow at those prices to the United

States occurs over a year or so, it won't even meet the yearly interest

charge on the Revelstoke Dam. You can pick any major electrical project

under Hydro, and the interest rates won't be met by the sale of this

energy. Those costs are very low. We're selling it pretty cheap; maybe

we had to price it low to get a commitment from those customers in

order to sell this energy in the next little while. I can understand

that kind of a market penetration strategy, but at the same time I am

concerned that the price is quite low. Correct me if I'm wrong, but I

think it's less than a third of what is being charged for power in the

Seattle and northwest areas of the United States. That's pretty cheap

power.

British Columbians have paid a lot for that power, and they're

paying a lot of interest on the projects that generate that power.

Through generations the people of this province have paid a lot for

hydroelectric development in terms of their environment and lifestyle.

Who accounts for those costs? If we're going to sell power, let's not

give it away. I understand that we have to be competitive, and I even

understand a market penetration strategy of being very competitive. But

it leaves off from the word competition and goes into....There is a question of competence when you sell power at a

[ Page 3740 ]

very low price, when that low price may not be necessary to capture the market.

On those two points I question seriously whether the minister is

administering this part of his ministry as competently as I know he

can. I bring those to his attention and ask him to consider my remarks.

The other point that I want to make.... The member for Prince Rupert

(Mr. Lea) has asked me, in his absence, to raise the issue of northeast

coal development. I've touched upon this subject before. I am concerned

that we have concentrated very heavily on what Ron Basford calls an

ironclad contract, and to a great extent ignored the practice and

custom of Japanese importers of our coal over many years. Roberts Bank

had an ironclad contract 20 years ago. When the Japanese steel mills

have stockpiled coal, we know how they don't pick up that coal.

Interjection.

MR. LAUK: The Phantom Maru is correct. They're famous. "The

last word we heard from Tokyo," says Roberts Bank, "is that the Phantom

Maru is in the Bering Strait, just rounding Saturn." In other words,

these ships never reach their destination, according to the expected

times of arrival and the expected times for picking up the coal that

this "ironclad" contract says. If they don't pick up that coal, they

don't pay for it. They know that.

To say "ironclad" in the coal business is nonsense. The fact is that

if we were the only producer, or even major producer, of metallurgical

coal for Japan, ironclad would have more meaning than it really does.

But Australia and, to some extent, China are supplanting us as the

major supplier of coal. It is interesting that the United States is

levelling off too. It seems to us that they lost a lot of the market

through inefficiencies, and that we gained. But now we're falling off

the edge of the earth, and it seems to me that the government has a

role to play.

I am very critical of high ministerial travel allowances, but if

they're going to be there, I would be very keen to see this minister,

who is articulate, eloquent and knowledgeable, find out what is

happening to our export markets in Japan. Our percentage share of the

metallurgical coal supply to Japan has dropped drastically in the last

two years. Australia's is soaring. Even the trickle of metallurgical

coal from China has increased quite remarkably, and they haven't

completed transportation lines into their major coalfields to supply

Japan. Major contracts have been signed with Japan.

We're too parochial, it seems to me, in dealing with the northeast

coal project. This is what happens when you have such a political and

emotional investment in a project such as the northeast. First, the

southeast and northeast depend greatly upon whether or not the steel

mills of Japan are working and working at capacity. Second, they depend

greatly on a competitive price. It doesn't matter what kind of

so-called ironclad contract we have with Nippon Kokan; they will buy

coal from Australia at lower rates; the coal from Australia is at a

much lower cost per tonne than it is from British Columbia. We've got

to be crazy to ask people to expect to believe that the Japanese

steelmaker is going to buy our coal at premium rates when he has

lower-cost coal of comparable quality from Australia. Has the minister

considered this critical situation? Has he developed a policy to save

the falling coal sales to Japan, or to increase our sales there? If so,

what is it?

Lastly, I'm asking the minister to not attack only the federal

government's subsidies of Nova Scotia and other coal suppliers. I would

ask the minister to also consider, when he is attacking the subsidies

of the federal government to the Maritimes to supply coal to Japan, the

fact that Denison Mines is hiring Nova Scotian miners in its mines. It

seems to me that with the very heavy unemployment rate in British

Columbia.... I know we're all Canadians, but I think we should consider

why, with one of the highest unemployment rates in Canada, we can't

hire British Columbian miners. And if there aren't any, why not? Is it

because they closed the mining school in Rossland? Maybe not, maybe so.

Is it because the vocational component of our education system has

failed? What about training? What about apprenticeship? What about all

of this — giving opportunities to British Columbians to take jobs in

our projects so heavily subsidized by the public purse? What answer can

he give this House with respect to Denison's bold move to hire 150

miners from Nova Scotia? I know they're good miners, and I know they're

fine Canadian citizens. But after all, it was over a billion dollars of

British Columbia tax money that went into that project, not Nova Scotia

tax money. I would like to know that some of our young people can get

job opportunities up there in the mines — permanent jobs.

Interjection.

MR. LAUK: My friend from Nelson-Creston (Mr. Nicolson) says

it costs a million dollars a job. That's really capital-intensive.

Surely to goodness we can supply those jobs to British Columbians who

have helped to pay that. Those are the initial points that I wish to

raise with the Minister of Energy, Mines and Petroleum Resources, Mr.

Chairman.

HON. MR. ROGERS: B.C. Hydro — if I could start off with the

way you went through your list.... If the member will appreciate the

time lag in building a major hydroelectric project in this province,

then he will appreciate that at the time the Revelstoke project, which

is the one that is on stream right now, was announced there were people

saying that if we didn't complete this one and start Site C instantly

and also look at two or three others, the lights would be going out in

British Columbia. I don't think there was anybody who forecast quite

the downturn in electrical load....

MR. NICOLSON: I did. I put it in writing. I put out graphs — a whole monograph.

HON. MR. ROGERS: You can speak a little later on if you like. I was quite quiet actually when he was speaking.

Anyway, lots of experts and other people.... I suppose that in a

previous portfolio I might have even been critical of this operation on

occasion. However, we now find ourselves with surplus electrical energy

for the first time. What do we do with it? We can spill it over the top

of the spillway until such time as our domestic load grows to the point

where we can use it, which is not very productive. We've already done

the environmental damage while this particular dam was being built. So

what do we do with the rest of the power? Well, we can export it, we

can spill it, or we can try to give it away.

[ Page 3741 ]

Our neighbours to the south have a surplus of power. They are bound

by legislation under the Bonneville Power Administration which

prohibits them from exporting some of their surplus. We aren't quite so

hidebound as they are; in fact, Bonneville could have easily taken that

market from California that we have captured had they been allowed to

do so. It's a seller's market for electricity right now.

Arizona has brought on a very large major coal-fired generating

plant in the Flagstaff area, which is producing electricity that they

are trying to market into New Mexico and Texas. But guess which market

they look to most favourably? They look to California, which at the

present time is in the enviable position of being in a buyer's market,

although not by their own design. PG&E and the other utilities in

California are very much aware of the fact that they are burning fossil

fuels to generate electricity. They have a long-term problem which is

much more severe than we're able to handle — or even want to handle —

on a short-term basis. So we're going into a competitive market with

California. It costs money to wheel power the distance that we have to

wheel it, between the border and our California markets; therefore our

price can't be the same as someone who can deliver that power to the

Los Angeles city gate. Nonetheless, we sold that power at 22 mills.

That's revenue that comes directly to the province.

We do not have a policy of building for export. The Premier

enunciated that recently, and I enunciated that recently. If that were

to be a government policy, it is something that at present is not even

advocated by the province. In fact, this whole matter of exporting

surplus electricity is based on the fact that power companies

can't...you can't stop a project as big as Revelstoke, or as big as any

of the major power generation projects that we have in the province,

just because the load disappears. Once you've made that commitment,

you're into that position. In the past we've been able to export some

of the power on a very short-term basis. British Columbia always wants

to be in the position of being self-sufficient in electricity, although

not very long ago there was some suggestion that we'd be importing

electricity from Alberta.

There are anomalies in the United States. There are areas such as

Seattle City Light and Tacoma City Light — that have power dams that

were built in the FDR era, back at the height of the Great Depression,

with extremely low-cost power. They service only the downtown areas of

these municipalities. The growth has all been in the urban areas, which

are serviced by other utilities, so you have pockets of very cheap

electricity in the United States. Those anomalies do exist. We have a

postage-stamp rate in British Columbia, so that that doesn't exist.

While there are places where the rates are very low, people who have

power from Puget Power or from many of the other power utilities in the

States are facing horrendous increases in power. So it does vary all

over the place.

We don't plan to build for export; that's not a government project

right now. But I do plan to maximize every single possible dollar that

we can out of the dams that we have built. If it means that we export

power at a competitive price — it's not even a market-clearing price,

but a competitive price with the other utilities — then we're going to

do that. We own this utility, and the maximum amount of return we can

get for the shareholders, the smaller the rate increases that Hydro has

to ask for when it next goes for a rate increase.

[10:45]

I think that answers your question on hydro. I am concerned about

the production of coal in Cape Breton Island, where one miner produces

4.5 tonnes of coal per day versus the 30 to 35 tonnes per day produced

by a miner in British Columbia. I'm also concerned that there are

subsidies for the asbestos mines in Labrador.

whereas the people in

Cassiar who produce asbestos aren't in that privileged position. If you

consider the fact that miners in Cassiar are paying federal income

taxes, some of which go towards literally employing somebody else to

produce the same product with a subsidy, this must be of concern to

them. It's not a major factor, but it is a factor. It means that Nova

Scotia coal has been able to go, at $50 and $52 dollars a tonne, into a

market which has been considerably higher than that for both steaming

coal and metallurgical coal from British Columbia.

All of the coal-exporting areas of British Columbia now export coal

to 42 different countries. We go through the Pacific as far as Karachi

in Pakistan, and through the Atlantic as far as Alexandria in Egypt. So

Japan is not our only market, but you're right that it is our major

market. We have had coal from British Columbia getting into northern

Europe as far as Denmark, and there's a great possibility of our being

able to export coal into Belgium. But you're quite right; the majority

of our coal....

MR. LAUK: Does it go by mail?

HON. MR. ROGERS: No, it doesn't, actually. In fact, the one

big market where we have a potential is India. Their difficulty is that

they can't take ships larger than 25,000 tonnes, because of their

limited port capacity. We can compete with Poland in exporting coal

into Pakistan, and we do. As a matter of fact, four to five major

vessels a year deliver coal there. So the market isn't that

insignificant. In fact, the more we can diversify our markets the

better off we are. We are competing quite convincingly in South and

Latin America in coal exports.

How do I as the minister view the problems with our exports to

Japan? I think price negotiations have to be company-to-company. I

don't believe that's the role for the minister to be involved in. I

think our role is to monitor the fact that when coal shipments are made

from British Columbia, one particular area isn't favoured over another

area, or one particular mine isn't necessarily held up to ransom over

another one. There are Australian producers that have lower costs of

production. but not all Australian producers have lower costs of

production: many have higher costs of production than we have in

British Columbia, but some — especially the BHP property that was

formerly the Utah property — do have a lower cost of production than

some of the British Columbia mines. But coal is different. Different

coals have different steaming capacities and different metallurgical

capacities, and therefore there is a requirement for different

qualities of coal.

The one thing that I think would be in the best interests of the

Japanese buyers to do is to see that the reduction in their steel

production. which is now, I believe, down to 105,000,000 tonnes a

year.... If it were to be the case that the corresponding reduction in

their requirements for coal is shared among the various coal producers

— Australia, the United States, the People's Republic of China and

British Columbia — on a more or less equal basis, which I suspect is

what's in their best interest and probably in our best interest,

[ Page 3742 ]

then we will have survival in the industry. The

industry can make up their own minds about what their costs of

production are and what they're prepared to sell their coal for. I

don't believe that's a role that I want to get involved in. Price

negotiations are going on at the present time in Tokyo with each of the

British Columbia producers, all of which are very big companies. I

believe they each go over for a week at a time to deal with the various

steel companies involved.

I believe that answers the questions you put forward.

MR. LOCKSTEAD: Because we did many estimates less than a

month ago, I think we're pretty much aware of the state of the mining

industry. I am going to confine my remarks at this point to mining;

other aspects of the minister's portfolio we'll deal with later,

presumably. I intend to take a more positive approach. I think that we

on this side of the House, and people who have any interest at all in

the mining and petroleum industries, are all pretty well aware of the

state of the mining industry, with mine closures, unemployment and this

kind of thing; I feel it would be redundant to quote those figures over

again and again, as we tend to do sometimes in this House. The industry

monitors itself quite well in terms of what is happening in the

industry, and all of the members of this House receive publications

from the industry and occasionally from the ministry.

While saying that I was going to keep my remarks a bit more positive

this time, there is a certain publication that hasn't come before this

House since 1979 — I see the minister smiling — and the minister is

bound by

section 21 of his own act to produce an annual report every

year. The minister did tell me while we were going through his

estimates in a mini form a few weeks ago.... My first question to the

minister, since he hasn't complied with his own act, is: is he now

going to resign? No? I guess not. I think you should, but if you did,

who would we get, Mr. Chairman? Maybe we'd get you, Mr. Chairman. Okay,

the minister is not going to resign, so I guess we should proceed then,

shouldn't we?

There are many problems in the mining industry — and I'm really

saying that for the record and not for the minister's edification; he

is very familiar with the problems in the industry. It's quite evident

to some of us, and certainly to me, that the government really has no

long-term — and not even a short-term — strategy to alleviate what is a

pretty bad situation in the mining industry in British Columbia today.

So I've prepared a bit of a statement — it's quite short — and put

forward a very positive suggestion to the minister and given some

reasons for my proposal. It shouldn't take too long.

The mining industry is an important element of British Columbia's

economy, accounting for about 5 percent of gross provincial product

directly and 8 percent when indirect effects are included. It is of

particular importance to several regional centres of the province: the

Kootenays, northern British Columbia, and the list goes on. The

industry, however, has a number of characteristics which have created

economic problems. It is highly capital-intensive, requiring over half

a million dollars of capital investment to create one direct job in the

industry. It is expected that a trend toward lower direct labour

requirements will continue. As a direct consequence of this capital

intensity, the industry tends to be controlled by large, externally

based corporations rather than by British Columbians. Mining

developments are increasingly located in remote areas, making the

provision of new roads, railways, power lines and townsites a highly

expensive proposition for the citizens of this province.

Finally, mining has been highly cyclical, especially during the

1970s. The current recession is a dramatic instance of a recurrent

pattern of boom and bust which has created unacceptable levels of

economic and social dislocation. I believe a mining policy in the 1980s

must accomplish two broad goals. Firstly, it must ensure that the

mining workforce and the communities dependent on it are protected as

much as possible against unstable conditions of the industry. Secondly,

ways must be found to maintain the viability of mining and to increase

its contribution to the provincial economy. To alleviate the

devastating pattern of community shutdowns during the inevitable bottom

of the market cycle, the provincial government should investigate

concrete ways of maintaining production. Mr. Chairman, I want to tell

you that I am putting these forward at this point as suggestions, not

as policy either on my part or my party's. I don't think any of these

suggestions should be dismissed lightly.

One would be to offer loans to mining companies to cover the real

operating losses for a specified period, thereby maintaining provincial

production facilities in good condition for the inevitable market

upturn. I would like to suggest to you, Mr. Chairman, that this is not

a new or radical idea. Some countries in the world do utilize and

practise this type of economic...to flatten out economic impact of the

industry.

Such a program would involve an initial outlay of public funds but

would decrease unemployment and welfare payments — as well as avoiding

the large costs of starting mines when economic conditions improve.

Another option deserving careful study is perhaps stockpiling minerals

during periods of low demand and selling them when prices improve. This

is another tactic that has been used somewhat successfully by several

northern European countries that we could name. I am sure the minister

is much more familiar with the process than I, because he deals with it

every day. I am putting these suggestions forward in the hope that the

minister will consider them seriously.

To improve the stability and liveability of mining-dependent

communities, a mining stabilization fund should perhaps be established.

Once again I am putting this forward as an idea. It may not be a good

idea, I don't know, but it should be considered. Its role would be to

provide alternative productive employment where temporary mine

shutdowns cannot be prevented, to relocate workers and protect

homeowners' equity when mines must close permanently and to ensure the

provision of a better quality of life in isolated mining communities.

[Mr. Pelton in the chair.]

There are a number of ways such a scheme could be funded, but those

who bear the costs of industry and stability should have first claims

on the revenue it generates. Disbursements from the fund would be made

by a stabilization board containing representatives from industry,

labour and affected communities.

Another way in which the needs of the mining-dependent regions can

be ensured is through the negotiation of general planning agreements

between industry and the provincial government. Such agreements could

establish site-specific safety and environmental standards, established

levels of

[ Page 3743 ]

procurement from domestic industries, require local

recruitment and training of workers and establish levels of government

infrastructure and participation. In a situation where new mines are

becoming increasingly remote, requiring high levels of government

support for new facilities, development decisions should be undertaken,

in my view, jointly by representatives of all of British Columbia.

To maintain and improve the contribution of mining to the British

Columbia economy, a number of new policy initiatives, in my view, are

required. One of the most important is to increase the level of

mining-based manufacturing in British Columbia. That's probably one of

the most important points I'm making throughout this whole

presentation. The trend of deindustrialization which has seen the share

of the mining industry rise from 50 percent to 75 percent in Canada

between 1965 and 1980 must be reversed. In the situation where fierce

international competition is forcing mines to replace workers with

machines, the only way to maintain employment is to manufacture the

machines here in British Columbia. Secondary industry is what we're

talking about job-related activities.

[11:00]

If I may stop there for just a moment, Mr. Chairman, it is my firm

belief that we have the technology here in British Columbia to

manufacture the type of equipment that is and will be required around

the world. We're having a difficult time, and I think the minister did

mention this aspect as part of the problem we're facing here today. We

have countries like Chile, Zaire — which I think you mentioned — that

have a higher quality of ore than we have in British Columbia. It may

be of some interest — I know the minister knows this, but I know a lot

of people don't — that we in British Columbia many years ago pioneered

the processing of low-grade ore, particularly copper ore, less than 0.5

percent in some cases.

A related area of concern is the need to ensure a higher degree of

technological innovation in mining and, equally important, to ensure

that British Columbians participate in its development. It is not

enough, in my view, to talk in terms of high-tech as a new industry. We

must be particularly concerned with the development of new technology

in our traditional industries like mining or else our ability to

compete and maintain employment in this rapidly changing market will be

eroded. If such technology is developed and implemented from abroad,

all British Columbians will be the losers.

The general planning agreement mentioned above is one way of

ensuring higher levels of both manufacturing and technological

development. Additionally the provincial government could create an

agency to promote domestic development and use of new technology in its

traditional resource industries, fund research in our own centres of

higher learning and investigate in detail the barriers to developing

new resource-based manufacturing in the province.

Having made that statement, I am now going to request through you,

Mr. Chairman, that the government and the minister seriously consider

setting up a royal commission on mining in British Columbia, for some

of the reasons that I've outlined above and a few more reasons I'm

going to put forward very shortly. We have not had a royal commission

on the mining industry for some time, and the non-solutions being put

forward by the present government, I think, are band-aid.

When the minister gets up to reply, he is going to reply about the

world markets and world prices and competition from abroad. But I think

the reasons for requesting a royal commission into the mining industry

go far beyond just that problem, which is a major problem that we all,

hopefully, more or less understand. For example, Mr. Chairman, I have

reams of material here which I get from the mining industry and the

ministry, and we have estimates and revenues, income, output,

expenditure but as I go through those documents, it's very difficult

for me to know if we are receiving a fair return for the people of the

province from the mining industry. Maybe we are. Perhaps some of the

complaints of some of the large mining companies are valid. Maybe they

feel they are being overtaxed in some cases, but maybe they're not. The

point I'm making is that we don't seem to know; that information is not

available. I think a royal commission could make some of these

determinations. The mining industry is complaining a great deal about

certain controls placed upon the industry. Perhaps a royal commission

could.... This would give these companies, their owners and operators

an opportunity to take their proposals and problems to the commission,

and the commission staff could evaluate the mining industry.

In my view, the people who work in the mines have many genuine

concerns. I receive from the various unions involved in the mining

industry in British Columbia a great deal of information regarding

their concerns over health safety standards in certain aspects of the

mining industry, relating to everything from silicosis pensions and WCB

involvement — or lack thereof — to gaps in the current mining industry

regulations in British Columbia. In my view, a royal commission could

address itself to some of these problems.

Mr. Chairman, before I take my seat I would like to put forward

other points on this one matter that I have been discussing. I have

already mentioned the possibility of looking at a stockpiling program,

which may or may not have merit. But in my view, a royal commission

could look at these aspects of the mining industry. What we're really

talking about is a stabilization program.

There is a great deal of genuine public concern — maybe not always

rightfully so — about the environmental impact of mining operations in

some areas. In my view, that is another aspect that the royal

commission could seriously consider. When a mining company wishes to

develop a new mine, there is a process which it should follow. We are

always assured that when a certain mine — and I'm not going to start

naming them, but their names appear in the newspaper from time to time

when there's a spill.... The fact is that we are always assured that

there will be no environmental impact of a mine locating in a certain

valley bottom, mountain or whatever, and the next thing we know there

is a spill, and there is a severe environmental impact, with people's

health being possibly involved in terms of drinking water, fish kills,

and on and on. In my view, a royal commission could address itself to

looking at the environmental impact of these situations, and perhaps

put forward recommendations for future mining development.

I want to make it very clear at this point that I'm not opposed to

mining development in our province. In fact, our economic well-being in

this province is to a large extent dependent on the mining industry.

There is a way of doing things, and a royal commission could address

itself to many of these problems, which would be in the best interests

of the mining industry and of the public of British Columbia. If we

[ Page 3744 ]

can receive a fair-share return on that resource —

which belongs to all of the people of this province — program cutbacks

in social services, health, education and so on could possibly be

alleviated or avoided. I think the government has a responsibility in

this matter, and at this time I request, in a positive way, that the

minister and the government seriously consider appointing a royal

commission to look into the mining industry here in British Columbia.

While I'm on this part of my presentation, Mr. Chairman, I want to

make one other comment. People in our party do understand that mining

is a high-risk, capital-intensive venture. As a rule of thumb — and I

think the minister has used this figure himself before — it usually

takes about five years between the moment a decision is made to develop

a mine after exploration and the time that mine actually goes into

operation. There are a number of agencies that the mining developers

must go through in order to bring that mine into production.

I want to make it clear that it is not the intention of our party —

certainly not mine — to discourage exploration and the development of

mining in British Columbia. We understand very well that high-risk

capital has to be attracted to the province in order to develop these

properties.

This brings me to my last question on this phase of my presentation.

During the course of the throne speech, Mr. Chairman, there was a

paragraph relating to some deregulation in the mining industry. I

wonder if the minister could explain exactly what he has in mind in

that regard. Does it mean that the developers of a proposed property

will simply go to one agency rather than going through seven, eight,

nine or ten, as they are now forced to do? It includes lands,

environment, water quality, and on and on, and the federal government

is often involved. Perhaps the minister could explain what His Honour

meant in that one single paragraph in the throne speech about new

regulations in the mining industry.

Certainly I have a number of other questions to the minister, but

I'm going to take my seat at this point, Mr. Chairman. We have two

other people who wish to say a few words in this regard.

HON. MR. ROGERS: Mr. Member, I do stand on my statement about

when the annual report will be down. It actually is at the printers.

There are only two people in the ministry involved in the printing of

these documents. There's been quite a collection of documents put

forward and tabled, and you're aware of them. I do actually have a

collection of them here that have been done in the last two years. I

can assure you that our annual report is at the printers.

I take your comments as suggestions for what we can do about

stabilizing the mining community — not as policy of the opposition. In

discussion with me, the mining companies seem almost somewhat disposed

to the idea that communities grow when mines come, and then the

communities die afterwards. Of course, the problem is the pain that

goes through a community. Last year my colleague the Minister of Human

Resources (Hon. Mrs. McCarthy), through the employment development

fund, did some bridging for some communities that were involved in

shutting down. It's my hope that world markets bring back life to these

communities.

You mentioned stockpiling, which is rather interesting. If we had

stockpiled molybdenum, we would be really wondering whether the world

steel industry is going to switch off vanadium and back to molybdenum.

I'm now understanding that the Soviets are importing molybdenum after

all. That is where vanadium came from, so maybe they've been exporting

their vanadium for the high-quality stainless steel and now find they

have to import moly. There's a possibility that the price of moly is

starting to move up a little bit, and it could come back. But we could

end up stockpiling a metal, the use of which is dropping, such as

copper. Half the copper in the world is buried underground and belongs

to the American Telephone and Telegraph Company. Now it's broken down

into little bits. With the change in fibre optics and all those things,

we don't know if the market for copper will ever return. Domestic

plumbing uses, smaller automobiles, lighter cables, better

electronics.... A modern television set has almost no copper in it at

all compared to the copper that was in one as little as ten years ago.

And that's the market that they trust.

We talked about coal. Lead is not doing well, because the automobile

again is the major use of lead, although with the latest spurt in the

American automobile manufacturing, we may see some increase in lead

use. Zinc is improving, and zinc prices are firming nicely. We are now

starting to see some improvement there. Of course our small pet mineral

— jade — is looking better all the time. There's greater exploration

and interest in it, but it is not very substantial.

You talked about a royal commission. We have had an advisory

commission of the industry in the last two years looking at a whole

host of things we do — geology, titles, economics and safety

inspection. In the case of safety inspection, the employees and unions

were well represented on that. We wanted from the industry — not at the

royal commission level but at an advisory commission level — critical

and constructive suggestions as to things that could be done. As a

result of that, the Price, Waterhouse study was done, and we are now

going into computerization for titles, so it will take a lot less time

to search a title and to get a title inspected.

[11:15]

You talked about the high risk and the difference between the

decision to open and the time that you actually do open. Why don't you

go even one step further and decide how long it is between the day you

borrow the first dollar and the day you pay back that borrowed dollar

with the interest? That's what makes the whole business risky, and I

guess it's what makes it exciting and makes people take that challenge.

People come along in the mining industry, I look at them, and I've

learned not to judge them by their cover. Those who look the least

likely to succeed are often the ones who are the most successful. I

want to give anybody who comes along and wants to go through our

process all the encouragement, even if they're not successful. The

economic spinoff of an unsuccessful operation.... After all, only one

claim in 10,000 actually develops into a mine. How many of those mines

pay dividends? That's the full equation. After all, that's the decision

you make when you decide to take your risk capital and invest it.

Interjection.

HON. MR. ROGERS: Yes, His Honour did speak about shortening things up.

About seven years ago, coal- and metal-mining guidelines were put in

place so that we did have a one window approach. We think there are

several places where we can streamline that. I thought some of the

agencies that we would send a particular proposal to didn't see the

urgency

[ Page 3745 ]

that we saw in our ministry for making decisions.

We are now thinking of saying: "If we don't hear back from you within

60 days, we'll assume you approve this particular project." After all,

the investment of capital that a mining company has put out is ticking

away. That interest that's referred to is ticking away all the time. If

it's sitting on somebody's desk because they're too busy to make a

decision or haven't got around to making a decision, we're going to

have to know if they've got a problem or not. So we want to simplify

that process. There is an enormous cross-referencing process that goes

ahead. It's not fair to do that. As a matter of fact, a revised

schedule has recently been approved by ELUC. It's going to encompass

all of the environmental standards, all of the heritage standards and

all of the other things we want to do. But we want to impress upon the

people who have the ability to slow these things down, or to indicate

what the mitigation is, that what we need quickly is a decision,

because, of course, of the time that's involved.

You did talk briefly about other countries and what their production

is. There are three or four standard things that they don't do that we

do. Most of them have no environmental standards at all. Worker safety

is not something that's even included in the case. We are by far the

most efficient from a manpower point of view. There's nobody who comes

any.... Well, there are a couple in the United States, in some eight

cases, that come as close as we do. But by and large the Canadian

miners are extremely efficient people in terms of their production.

Sometimes they're prepared to even sacrifice the national currency for

the sake of their mining endeavours. You know, mining is very important

in British Columbia. We think it's probably — from my perspective — the

number two industry in the province statistically. But there are other

ministers who disagree with that. We're competing in the big world out

there, and we're competing with people who don't use the same

standards. I wouldn't propose that we should lower our health, safety

or environmental standards. I don't think you would, either. So we have

to compete with them on an efficiency basis. In the long run, the

greatest things we have going for us are our reliability as suppliers

and our ingenuity in production.

MR. NICOLSON: Mr. Chairman, in his remarks to the second

member for Vancouver Centre (Mr. Lank), the minister said that no one

foresaw several years ago that we would have a surplus. I think that we

should learn some lessons from this. What I did in January 1978 was

take a look at what the B.C. Hydro performance had been. Several things

came out of that, one of which was that the people in B.C. Hydro,

including its chairman, Robert Bonner, accepted the principle of what

we in mathematics call geometric growth — that is, a growth that

doubles predictably every ten years, every twelve.... At the time they

were using 12.5 years. They were saying that the demand for electrical

energy was going to double every 12 years. If you do that it goes up

and up and up. Of course, it eventually becomes absolutely impossible.

There are many mathematical analogies to explain what geometric

growth is. Probably the most popular one is a fictitious story about

the person who discovered the game of chess. He went to this Persian

king and the Persian king wanted to reward him. So he said: "Well, all

I want is a chessboard full of grain, but I want it filled in the

following way. I want one grain on the first square and two on the

second square, four on the third square, eight on the fourth square,

etc. for the 64 squares." Well, by the time you get up to the

sixty-fourth square. there would not be enough grain, even in the world

today to cover that, because if you double something 64 times, you get

up to an enormous number. That was the trouble with geometric growth.

What I discovered from a very unsophisticated — I might say, clumsy

— analysis of B.C. Hydro, though, was that it was not growing

geometrically; it was growing what we would call in mathematics

"arithmetically": in other words, it was growing by almost equal

increments each year; it grew as a straight-line graph, not as a curve.

If that's what it had done over the decade from 1967 to 1977, during a

period of remarkable economic growth, then it would seem to an

unsophisticated person that that might be the trend for the future. If

that were the trend for the future, it would predict that Hydro's

projections were way off. I suggested that there should be an inquiry.

I said that an inquiry might show room for a ten-year moratorium on

B.C. Hydro growth. But I would expect more sophisticated persons than I

to conduct such an inquiry.

It got blown a little bit out of proportion, but I don't mind the

nice headlines: — "NDP Urges Inquiry, Ten-Year Pause in Hydro Projects."

If you read the monograph, that isn't exactly what I said. In fact, I

said: "I would not argue that my analysis alone justifies a quick

cessation of all B.C. Hydro thermal and electric projects, but the

evidence presented certainly justifies an immediate calling of a public

inquiry into their electrical utility operations." The chairman of the

board, Mr. Bonner, slammed the moratorium. "It would take you from

brown-out to black-out," Bonner said. Then he said that he would not

admit that Hydro was building unnecessary or premature projects, but

said that for 15 to 20 years we re going to have to do certain things,

so we might as well do them ahead of time, thus providing needed

employment and allowing the sale of surplus power on a short-term basis

to the United States to earn income to help repay U.S. borrowings.

What has happened? The minister knows that even if we manage to sell

all of the output of the Revelstoke dam, which we can now say is

surplus.... We've even had statements come out of B.C. Hydro that

there's enough extra power for a ten-year moratorium — they used the

term, not I, three months ago. If you were to sell all of that power

proposed, it wouldn't pay the interest charges.

It also concerns me that we have record unemployment now and we

should now be building the Revelstoke project, not back in 1977-79, in

which time we were in a very major boom and other things were

happening. If we were building it today, we might even see a 10 percent

or 20 percent saving in constant dollar terms — probably 10 percent. We

would have more competitive bidding and a more competitive situation

even in the labour force, and we would experience the kind of thing

being experienced in other sectors of the construction industry right

now.

I would suggest to the minister that B.C. Hydro needs a new

direction. It needs a new chairman; it needs a person who would take

the conserver attitude into account. I could even, I think, name a

name, but I wouldn't embarrass that particular person by placing them

into what might be construed as a political controversy. But I could

think of the name of an excellent person well within the knowledge of

the minister. B.C. Hydro certainly needs a new direction. It needs new

leadership from the top. It needs someone who understands the

difference between geometric and arithmetic

[ Page 3746 ]

growth. When I see how much better our economy

could be today if we had delayed that decision, if that construction

project were going ahead today and if there had been more time to

properly harvest some of the forest fibre behind there, and when we

look, too, at the jobs that we lose.... When we flood valleys, we are

losing employment opportunities in the forest industry. So I would ask

the minister if he would agree that Hydro needs some change in

direction and something more oriented toward looking at energy

alternatives, or simply looking at scheduling in a more imaginative way

and challenging what I think is a rather discredited system of

projecting hydro energy needs.

I would also ask the minister what his reaction would be toward

having an immediate task force to look at the alternative to exporting

this power. Obviously we don't want to spill it over the dam. I suppose

if you could sell it for a quarter of the interest costs, it's better

than spilling it over the dam, if it is truly on a very fixed-term

contract and we do not put ourselves in this position again. But I

would like to have the minister's reaction to an immediate task force

to look at ways of utilizing that surplus energy here in British

Columbia.

I talk about such things as getting ahead with an Alcan smelter, and

not waiting for whether or not they go ahead with Kemano 2 at this

particular time, but prebuilding a smelter. I would ask about railway

electrification throughout British Columbia. In fact, is it too late to

change some of the design specifications of the new CPR tunnel? It

would be different; there would be less need for ventilation if they

were to electrify. This has been proposed before. I think that there

could be tremendous ramifications in terms of national energy

objectives, of replacing non-renewable petroleum resources with

electrical energy, and creating employment in British Columbia right

now by getting our idled construction industry back into gear and

building when I think costs could be very advantageous.

So I would ask the minister's response to those two things: the idea

of a task force for alternative uses, other than exporting to the

United States, where I'm afraid we are simply going to stimulate

employment and jobs down there, and the proposal for British Columbians

to build a transmission line through the States, which I find just

mind-boggling when we are in the state we're in today.

HON. MR. ROGERS: A lot of things have happened since 1978,

Mr. Member. At that time the Energy Commission did the forecasting on

behalf of the government; now it is done in-house by our ministry.

[11:30]

MR. NICOLSON: They were lower than B.C. Hydro.

HON. MR. ROGERS: Yes, we were lower — we sure were. The

ministry forecast, I guess, was part of the reason that when the Site C

hearings were undertaken it became fairly evident that perhaps the

urgency for Site C wasn't as obvious as was being made out. In fact, at

the start of the Site C hearing there were people who said, if you

remember, in the Peace River country: "Stop the hearings; building the

dam." Now, while they'd like the employment in the area, they

appreciate that there isn't the demand for it.

I think there are two compounded problems. One is that no one

predicted the depth of the recession. Secondly, no one predicted the

effectiveness of conservation in everything from more efficient

household appliances to just people turning off lights. It's been

staggering, partly price-related but partly conservation-mood-related.

On Vancouver Island, on occasion, before the Checkye-Dunsmuir line was

completed, Hydro asked people to conserve power during certain times of

the day. The public response was much greater than they had anticipated

because of the public's awareness of conservation and what the problems

were.

[Mr. Strachan in the chair.]

I think that with the scrutiny we put Hydro through at the Utilities

Commission and their own internal awareness of what the problem is

now.... I sit on the board along with my colleagues the Minister of

Finance (Hon. Mr. Curtis) and the Minister of Universities and Science,

(Hon. Mr. McGeer), and we closely question them on their forecasts.

They are spending more staff time and putting more work into trying

to be more accurate in their forecasts. It is a problem that didn't

just happen to B.C. Hydro. If it had just been B.C. Hydro that had made

this mistake, then I think we'd have to look for a bogeyman here, but

we don't. In Washington state they had the same problem in spades,

except that they chose to build the wrong kind of power station and

therefore got a more complicated problem. Even with everything they've

got, they don't have a surplus with all their shut-down nuclear power

plants. In California, which is our market for surplus power, they were

shut down by all sorts of protest groups that didn't want the Diablo

Canyon or any of the others and a lot of engineering problems that

turned out to be nightmares.

I think we are on the right track now. I think Hydro is going to go

through a pause in its construction. The length of time that the pause

is there will depend very much on when the load-growth starts to come

back. We are not going to build for export. However, predicting when

unemployment is the worst.... I can tell you, in 1978 there were

unemployed people. It's hard to tell. You're right about construction

costs. Lord knows construction costs now are probably lower, and you're

getting a better quality of workforce. You are getting fewer green

people, everyone's working a little harder on the job site — we don't

want to say why they are working a little harder — and things are

coming in under cost. So now is the time to go ahead and do those

things, but you don't want to do it unless you have a reason — which

brings me to Alcan. I think there is a possibility of us selling

surplus power to Alcan in the short term, but I don't think Alcan would

be prepared — in fact, I know they're not — to make the commitment to

build the smelter to use the electricity unless they know for sure that

they have the permission, or that they have everything cleared away, to

complete the Kemano completion. They're not going to risk being

subservient to Hydro for the next 50 years of the life of the plant and

find out later, after they've spent the hundreds of millions they would

have to to build their plants, that they wouldn't do it. What is

probably more likely is that when Alcan goes through the Utilities

Commission process and gets their approval, they could then say: "Fine,

we will do a power swap with Hydro." While we have surplus power, they

would buy it from B.C. Hydro and then later commit to make up that

power from their own particular project, which might give us better

flexibility, because the price differential would not make the Alcan

project attractive.

I agree with you on electrification. I won't divulge any secrets, but I'm the one who insisted on electrification of the

[ Page 3747 ]

Tumbler Ridge line. I'm a great electric railway

fan for a whole bunch of other unrelated reasons. Whether or not the

CPR or CNR see the wisdom of electrifying their lines, the first one

that they should electrify is probably the line from Cranbrook to

Golden. That's the steepest grade they have, and they've looked at it

and decided not to do so. But the first North American line that's

going to be anywhere is the Anzac–Tumbler Ridge line, which will be a

big success. There are a lot of reasons for electrifying the lines.

There are health reasons for the crew on the tail-end of the train in

the tunnels, the reliability factor, putting energy back into the

system and much less of a break-down problem.

There are a whole bunch of advantages, but remember General Motors

has been building diesel locomotives since 1945 in a big way, and

railway people don't tend to be all that flexible. You can have a nice

argument with Ian Sinclair — well, he's not there anymore. I'm not so

sure that that mental flexibility is there. I would like to see it

there. I think that's something we could do.

My colleague the Minister of Universities, Science and

Communications would tell you that he thinks we should have a

nationwide grid running across the railway system so that as the clock

moves westward we could move electricity that way. Perhaps that's

something we should look at, because our grid tends to be north-south

between the producing and consuming areas of the province. It requires

a commitment by the railroads, and I think the BCR demonstration may

lead to a much more successful look at that by the utilities. They had

to go to Britain to get the technology; there aren't any in North

America. You know how forward-thinking and progressive the railways are

when it comes to changing something. Most of them would still rather be

shovelling coal into a steam locomotive if they had their choice in

terms of the romance of the railways. I believe that answers the

member's question.

MR. NICOLSON: Could I just ask the minister one other thing. Since he's

taken such a personal interest in the BCR use of electrification, and of course

it has meant that they haven't had to put up quite as much money in ventilation,

has the problem of the ozone been discussed in that matter?

HON. MR. ROGERS: Not that I can tell you specifically. The

biggest problem we were interested in was ventilation in the tunnels.

There's natural ventilation at this time of the year because of the

temperature differential. In cold weather the wind just whistles

through the tunnel, and they have an icing problem. But that won't be

the problem in the summertime when it gets quite warm in that part of

the world. I'm not really so interested in just the tunnel aspect of

it. I'm interested in it from electrification of the mainline of the

railway, because of the reliability and a whole bunch of other factors

that come into play. I could look into that specific question for you.

MR. PASSARELL: Mr. Chairman, I have a number of questions for

the minister. I know we just finished his last year's estimates not too

long ago, and I wonder if it is proper to use the same speech as I did

for last year's estimates?

The first question I'd like to discuss is placer and the amount of

staking that went on in the last year, particularly in the fall, and in

this year already. An idea that I stated to the minister in his last

estimates was the need for a gold rush in this province — some kind of

encouragement. I know you can't really go out and start giving away

free placer claims to individuals, but there is a need — particularly

in the north, where we're finding our major mines have closed down —

for small placer operations for gold. I share some of the minister's

concerns and hopes with the price of gold, and I hope that it continues

to rise. We have two excellent gold mines in the far north, the

Erickson Gold Mining Corp. and Scottie Gold Mines Ltd,, which are

performing well. But once again, as with all minerals, it's tied into

the world price, and one of the things that engineers have told me is

the need of keeping gold over $400 for a profit, and hopefully the

price will stay at that.

The second concern I have is the mines in the north. I know that

when you have something like GrandDuc close down, it is very difficult

for the government to step in and say they're going to continue the

mine in operation even though the company, Esso, can't make a profit on

it. A concern that I have is that when the main source of employment

falters in these mining towns, the workers are trapped, in a sense. For

instance, if Granduc closes down in Stewart, and you have a mortgage on

your home and your children are in school, what happens when the only

source of income in the area, per se...? You could still try Scottie

Gold, but Scottie Gold is much smaller than Granduc. What can you do

for individuals trapped in a company town? Let's take a hypothetical

case — and I don't think it will be that hypothetical — of something

like Cassiar. I think the minister and I share the same kinds of

concerns when we see what the federal government does with asbestos in

the east and what someone like Brinco has to do without any subsidies

from the federal government. What happens to a company town — we're

finding fewer and fewer company towns in this province — if Cassiar

falters, runs out of asbestos and finds it unprofitable to go

underground for the ore body, as it will have to do in the next ten

years? What happens when a town like Cassiar closes? That's just an

idea. Maybe the minister has some suggestions. I think we agree on

subsidies in the asbestos field, as the federal government provides in

the east. It's difficult for Brinco to be in competition.

The third is the use of garbage as a source of power, which we

discussed in the earlier estimates. Particularly on the mainland we're

finding more and more problems in the storing of garbage. Some other

countries — particularly Scandinavian and some eastern European

countries — are using garbage as a source of power. In this country we

find some area to dump it, and when that gets full we just get a Cat in

there and cover it up. Perhaps we could encourage private industry to

use garbage as a source of power in this province.

The fourth issue is hydro development. After last year's estimates

I've been able to squash that rumour about the Stephen Rogers Dam on

the Stikine. I've told them that won't be the name of it, because it'll

be so far down the road. That's something the minister and I have

discussed, Mr. Chairman; there's no problem on that.

The need for small hydro development in this province is something I

think we have to take a further look at, instead of building big,

particularly when you look at the debt that B.C. Hydro has. The use of

small streams for power generation.... I'll use the example of the

community that I live in, Atlin, where B.C. Hydro has a diesel plant.

It's very expensive to bring diesel into the small community of Atlin

by trucking it in from Whitehorse, but we have a major stream, Pine

Creek, that could be used for hydro development. I don't know the

degrees of the fall on Pine Creek, but

[ Page 3748 ]

engineers who have been in the area have said it

would be a perfect stream for small hydro development. The community of

Atlin could keep the diesel plant out and generate its own power for

the entire community from a small megawatt dam on Pine Creek.

The fifth issue I'd like to address to the minister is the

moratorium on uranium, which will soon be expiring. Will the government

extend the moratorium on uranium in this province? I think that's

something we have to address. Uranium mining and development in this

province was a major issue four years ago. If the minister is still the

minister in charge, will the uranium moratorium continue?

Those are five questions for the minister.

HON. MR. ROGERS: You'd like a gold rush, but you really don't

want the fools and the dreamers flooding into downtown Atlin wanting to

know where the Four Seasons Hotel is. I think you'd like to see a

little more enthusiasm among the professionals: the few people that

have that strange ability it takes to be a gold bug, where you work a

14-hour day — longer in the summertime — and seem to live with

mosquitoes and not let it bother you. You do it all for the fact that

you know you're actually working on the mother lode but just haven't

found it yet. That's what you need; you don't really need a bunch of

people from the city with soft hands and soft shoes who want to go up

and make the easy money in Atlin. They learned the hard way in the

Yukon. It's a great historic site now, but there was a lot of pain and

suffering and I don't think your community really wants that kind of

thing. What we would like to see, though, is a little more enthusiasm

or a little more investment capital, because it's capital that's

required to take the risk — and it is a risk.

[11:45]

You mentioned Granduc. As you may know, I've taken the staking

reserve off the Granduc, the reserve that had been placed right at the

base of the mountain. As you also probably know, somebody with a Cat

who was pushing a little rock around one day exposed a vein of gold,

and we may in fact have another gold-mine not very far from Scottie

gold-mine. That has been staked, and offers some hope for that

particular area.

The Cabinet Committee on Economic Development did quite an extensive

study of the northwest to try to find out what we could do to encourage

the place. Of course, the Mt. Klappan anthracite project is probably

the most exciting potential there now. There is some potential, of

course, for private power development on More Creek, depending very

much on what the demand is. But I'm going to warn you that Hydro is

going to continue to complete the stream surveys they've done on the

Stikine — you asked me about that earlier. I've checked with Hydro, and

they want to have that detailed information, so that when they reopen

the file, all of the work they've done so far isn't for naught because

they haven't got the complete information.

Using landfill or garbage for power, I guess, really transcends into

my former ministry, and I'll speak from expertise that I have from that

ministry. Most of the places in the world that have built incinerators

to burn garbage and collect power have them shut down right now. The

cost is too high; it's about $40 a tonne to incinerate garbage and it's

about $8 to $9 a tonne to landfill it. When the garbage from Buckingham

Palace is landfilled — which we found out in England when we went to

see some of their operations.... What you really discover is that

unless there is an absolutely critical period when they can't find any

place to landfill...only then do they incinerate, and almost never do

they try to recover the power from it, because of the inconsistency of

the feedstock. There just is too much variation in the temperature of

the steam.

Small hydro power. There are several of us who are enthusiasts about

it. But one of the things we run into on the engineering side of it is

that the highest demand for small hydro comes generally at the time of

lowest stream flow. In the case of Atlin, I don't mind having a look at

that one. I think the difficulty is that much of the year you could

probably have a small hydro project running when you have a decent

flow, but at the height of winter when the flow is lowest is also when

the demand is greatest.

Your last question: the uranium moratorium is a policy decision that

will be addressed by government at the time that moratorium expires. I

have no particular thoughts on it one way or the other, except to

suggest that perhaps the world market for the product is so soft that I

doubt very much there would be much exploration even if the moratorium

was lifted.

MR. PASSARELL: Regarding the Four Seasons Motel in Atlin, I think it's more of a one-season motel at this stage of the game.

Looking at the hardships when it comes to placer development, there

was an interesting

article in yesterday's paper about prospectors being

a dying breed — I don't know if the minister was able to see that

article. It went on about prospectors being almost a dying breed of

entrepreneur in this country; fewer and fewer are able to go out and do

it. I agree with you to a certain extent about bringing the "city

folks" up to Atlin, trying to get their hands a little dirty and

picking up nuggets that are just floating down the stream.

Something I forgot to bring out earlier was the northwest

development. I think that's an encouragement to people up in the far

north regarding the three sites we are looking at. The budget speech

and particularly the throne speech with regard to northwest development

talked about the infrastructure the government will have to proceed

within the three areas. If we look at a recent

article in the Times-Colonist

by that illustrious columnist Jim Hume, who wrote about the three

areas.... They are very isolated areas. It would be difficult to make

it a profitable operation, being that far back into the bush with no

access to Highway 37 or even access to the oceans. While the minerals

are there, it's going to be difficult for private industry to put in

their own infrastructure to bring it to market. There will have to be

encouragement — public enterprise — by the government to bring these

resources to the marketplaces in the south. I'd like to know whether

the minister has any positive direction on whether the government is

going to be using any public enterprise this summer or next year or in

the foreseeable future for infrastructure in those three areas that

were pointed out in the northwest development report.

In regard to Pine Creek, I agree with the minister that the flow

levels in winter are down. It comes out of Surprise Lake. But my

suggestion is that we use the diesel plant there — the structure is

there — and use the underground turbines that the Swedish have come up

with. Use a project like that for summer, fall and spring during the

run-off, and then you could switch back to diesel in winter. Maybe it

would save the government, and particularly Hydro, some money by having

a two-phase project with the turbines on Pine Creek, and then in winter when the flow regulations are down, turn it over to

[ Page 3749 ]

diesel. Those are the further questions that I had for the minister.

HON. MR. ROGERS: No particular plans to spend money on the

Mt. Klappan project until we get a little further development by the

companies that own the claims, and what they're prepared to put into

it. Very long range is the Windy Craggy copper cobalt project, which is

in your riding but I think almost totally surrounded by Alaska. It's

probably the most remote spot in the province and would probably come

out through Alaska in the very long term.

One of the problems with running a joint small hydro and diesel is

that you end up getting two disciplines and staff. You've got to have a

whole bunch of dam people come in and construct a dam and run the

maintenance on that, and then at a certain time of the year when your

flow drops off, switch over. The question is what's the most

cost-effective method of doing it, and to date it's to run small

diesel. With the price of diesel fuel escalating, as it is doing, these

things become more attractive.

MR. LOCKSTEAD: Mr. Chairman, I know we have people who wish

to question the minister, but I do have two or three more questions

dealing with the mining portion of the minister's responsibilities and

a few questions on the petroleum side.

I want to ask the minister about the cuts under vote 21, the

resource management program. This falls almost exclusively on the

energy resources division, whose budget this year falls from $6.5

million to $2.3 million. The major victim is the conservation and

renewable branch, which has been eliminated. The branch was responsible

for grants to industry for energy saving, the administration of CREDA

grants to industry and business, the energy bus program and energy

audits of business and the energy conservation demonstration houses.

With the elimination of the branch, there is no consumer focus left in

the ministry. I would assume that some programs will be kept going by

the federal government acting alone in this regard.

I must question the minister on the impact of the cut on other

energy resource activities such as project reviews. energy forecasts

and strategic studies. Is the B.C. energy supply and requirement

forecast, which is a useful reference and counterpart to B.C. Hydro

studies, to be continued? Elimination of the conservation and

renewable branch explains about $2.5 million of the $4.2 million cut,

but the ministry people are not letting us know how the rest is being

saved. Perhaps the minister could answer that question for us.

Mr. Chairman, I don't want to dwell on this — I think other speakers

may mention it — but I do want to get it on record, in terms of B.C.

Hydro, that I am very dismayed that the Crown corporations reporting

committee has been emasculated and is not functioning — no budget

allowed for that committee. That committee afforded all members of this

House and the public of British Columbia the opportunity to look into

the various activities of Crown corporations and, in terms of this

portfolio, of B.C. Hydro. Now we really have no effective watch-dog

agency able to look independently at the activities of that large Crown

corporation, which many of us feel is literally out of control.

Interjection.

MR. LOCKSTEAD: I'm just saying this for the record and in

passing. It makes it difficult for many of us. I'm going to be

discussing the termination of the committee itself under another

estimate, but what I'm saying is that it makes it much more difficult,

when we're attempting to do estimates in this House, now that the

valuable information relating to B.C. Hydro is not available to members

of this House.

In terms of the petroleum side of his responsibilities, I want to

ask the minister.... I know the minister mentioned this question in

passing yesterday in terms of the proposed natural gasline to Vancouver

Island. It seems to me that we discuss the proposed natural gas line to

Vancouver Island five, six or ten times a year in this House, but it is

of vital importance to people on Vancouver Island. Certainly it is of

great interest to my constituents in Powell River; in fact, there is a

delegation here this morning. I met with them briefly, and I believe

the minister met with them as well. However. I don't think that

particular delegation is of my political persuasion. I've got that

feeling, since once of the people in the delegation ran against me as

the Social Credit candidate in the last election. However, that's

beside the point. No. we're good friends, and I frequent Mr. Price's

business establishment. They have very good meals in his resort

restaurant.

I ask the minister: are the Utilities Commission hearings into the

proposed natural gas line on time? When will that report be in? When

does the minister expect or hope that that report from the Utilities

Commission will be in, which will be presented to cabinet and

presumably considered by cabinet? We know very well that sometimes

these reports get to cabinet and sit there a long time. I hope that

doesn't happen in this case, because a number of major petroleum

companies in British Columbia — including B.C. Hydro — have spent a

great deal of money preparing briefs, doing on-site work and all these

kinds of things. A decision in that regard should be made as soon as

possible. But more than that — and I know the minister is very much

aware of this — the fact is that the federal government will not make

any commitment to a subsidy for that proposed pipeline until the report

of the Utilities Commission is in and cabinet has made some kind of

decision on the recommendations — one way or the other. Until that has

been done in British Columbia, the federal government — it may be a

different federal government by the time the report is in and a report

comes in from cabinet, but I can assure you.... Well, we don't know

that. It depends on the timing of the federal election. Whether it's a

Conservative or Liberal government federally.... Hopefully it will

be an NDP government, but I think it is going to be a pretty tough

uphill fight.

AN HON. MEMBER: It's 13 and dropping.

[12:00]

MR. LOCKSTEAD: Oh, that's great. I thought that it was 11. I

think we should gain a few more federal seats in British Columbia and

across Canada, but it's going to be a tough fight.

Back to reality, Mr. Chairman. Where was I? We were talking about

the federal government. It's understandable that no federal minister of

energy will make a commitment one way or the other in terms of a subsidy

for a proposed natural gas line to Vancouver Island until the

provincial government has made a decision. I don't think I'm saying

anything that the minister doesn't already know anyway

[ Page 3750 ]

I have another question for the minister while I have the floor. I

don't want to be too much longer. My question deals with the

elimination of the offshore administration branch; we note the last

employee was laid off March 15, 1984. Joint federal-provincial hearings

on the issue of lifting the moratorium will be held under the auspices

of the Ministry of Environment. In my view, the branch certainly had a

role to play in securing the provincial interest in ownership and

control of offshore resources if the development is contemplated. In

response to that statement — or question, if there's a question in

there somewhere — I suppose I'm going to hear about the recent supreme

court decision concerning the offshore ruling relating to the Hibernia

oilfield off Newfoundland. I understand Premier Peckford is having

conniption fits at this point in time over that ruling. I presume the

ruling would apply to British Columbia as well as being a landmark

decision that applies on the east coast of Canada. It is a supreme

court decision which may or may not be appealed. I don't know if it is

appealable, quite frankly, but the same circumstances would apply in

British Columbia. I suspect offshore drilling and exploration will

proceed at some point in British Columbia, as I think the oil companies

have very powerful lobbies. One day they will decide they want to

continue offshore gas exploration on the coast of British Columbia and,

as usual, they will get their way. In any event, the minister may wish

to present his views on that matter.

Last but not least, the budget of the Utilities Commission has been

progressively cut from $2.54 million in 1982-83 to $1.54 million this

year. I guess $700,000 has been made up by awarding costs against

applicants. Part of the saving will be realized by a streamlined review

process, as for Kemano 2. However, the cutback in a commission of this

nature distresses me. The commission, which allows people from all

walks of life, whatever their concerns, whether they be industrial,

economic, environmental.... The work of that commission could be

seriously hindered by cutbacks in its budget. In the long term, I don't

see that there would be any real saving to the population of British

Columbia. I know the minister is not going to do anything to restore

funding just because I got up here and said that, but I just want to

express my personal concerns in that regard. I think I'll leave it at

that for the time being, Mr. Chairman. Perhaps the minister may have a

remark or two.

HON. MR. ROGERS: In the budget review this year, of course,

every ministry had to go through the process of choosing those things

we like to have and those things we need to have. When our turn came to

reduce, one of the areas we decided to reduce was in the area of our

resource management programs.

The $2.5 million figure you alluded to was part of the transfer of

the federal government's contribution to the B.C. Rail electrification

for the Anzac–Tumbler Ridge line, and as a result of that, of course,

that figure is no longer there.

One of the things we observe is that the private sector is very much

involved in the energy conservation business, both at the private level

and the commercial-industrial level. Therefore we didn't particularly

want to abandon this program, but if you're in the position that you

have to do that, at least that's one of the things that can be done.

The annual energy forecast will be done by the ministry and will be

out later on this year. The B.C. Utilities Commission, of course, will

continue to examine all the various rates.

You talked about the Vancouver Island natural gas pipeline and its

report to cabinet. I can assure you, Mr. Member, that the minute

cabinet gets this document, they will examine it very quickly. I can't

think of a better time than this particular time in our federal history

to have a reconfirmation of that commitment. In that regard, the

chairman of the Utilities Commission and I have talked at length, and I

believe that a recommendation, at least to the on-Island portion, may

be coming forward in a short period of time. I would hope that the

moneys that are required and the recommendation from that commission

are here before the federal election. I think, perhaps, it would be a

nice idea if it were here before the Liberals decide who the next

leader is going to be. It would certainly be nice to see a bunch of

enthusiastic federal cabinet ministers come out here all confirming the

commitment which their previous illustrious leader made. It'll still

require quite a substantial federal government subsidy; there's no

question about that. Robin Abercrombie admitted that in his report.

You can't look at this project strictly from a hard dollars point of

view, because of the net benefits to Canada of getting off oil and

having our national energy program incorporated including Vancouver

Island as part of the national energy program. Remember, Nova Scotia

and New Brunswick were offered natural gas pipelines as part of the

Canadian system, and the Premier of Nova Scotia said: "No, thank you."

He wanted to reverse the gas from Sable Island. We have not said "No,

thank you," and Vancouver Island is the last major market in this

country that should be serviced. If the national energy program means

anything, it means that British Columbia be treated the same way as the

trans-Quebec and Maritime and other pipelines have been done. I hope

they remember that in Ottawa, whoever is government.

You asked about the offshore case. The Strait of Georgia case is

currently before the Supreme Court. The Hibernia case, which came down

yesterday, I think, is quite different. I had the opportunity, with my

colleague the Minister of Labour (Hon. Mr. McClelland), to visit the

Ocean Ranger before her fatal sinking, and therefore we went off the

Grand Bank to where the Hibernia is, and that is a considerable

distance offshore. It's not quite the same thing. I would hope that the

two cases are viewed differently.

You mentioned the cut in the budget for the Utilities Commission.

Yes, their budget has been cut, but their cost recoveries have also

increased. People who, for example, want licences to broadcast

television.... I don't think that's the taxpayers' problem to pay

for that. Cost recovery should be there.

MRS. WALLACE: I will be dealing specifically with B.C. Hydro.

I have a variety of items I want to raise, some of which are connected

and some of which are not; some of them have been touched on but are

items on which I want to go into a little more depth.

One of those items that has been discussed to some degree is the

proposed export of power. A January issue of the Province had an

article which indicated that B.C. Hydro had signed a contract with the

Los Angeles Department of Water and Power for firm export of power. It

would appear that this is a binding contract and yet I'm sure it must

be subject to the approval of the National Energy Board. The way the

article is written and the comments we have been hearing indicate to me

that both the B.C. Hydro people — Robert Bonner — and the government

consider this as just one unnecessary step and

[ Page 3751 ]

will really not change things, that this is a fait accompli. This

power sale is going ahead and the National Energy Board will not come

down with a decision to the contrary.

That concerns me, because I think the purpose of those boards is to

deal with all aspects and to hear all interveners, and to make a

decision on a very unbiased general approach. It's not something where

a contract is already signed and Hydro is already saying: "We're going

to get a $200 million return from this and $15 million will go into the

government's coffers as water licence money. If we hadn't done this,

consumers would have had a four cent per kilowatt hour increase." It's

all decided that this is what we're going to do before those hearings

even begin, which is the end of this month.

I want it to be understood very clearly that neither I nor my

colleagues have any objection to the sale of surplus power on a

short-term or interruptible basis. That's not the issue here. The issue

is that while Hydro has — I assume — agreed to a three-year contract,

their application is for six years. We know that Hydro has overbuilt

for four years. It's been pretty well established that Hydro's

estimates have been too high and that they've overbuilt for a period of

four years. But here we have an application that really isn't for three

years; it's for six years. The chairman of Hydro has been quoted in the

press as saying that he would like to pursue this option. He's saying

it would be "damn good business" for B.C. to pay part of the cost of a

new transmission line from the border to southern California in order

to gain assured access to markets there. That worries me. He also says

15- or 20-year commitments for contracts for firm power sales.

I'm even more concerned when I get hold of a letter which indicates

that this minister has indicated that government policy has actually

changed and that he intends to consider building electrical generating

projects to serve the export market, I understood the minister to say

earlier during his estimates that he did not believe in building for

export. But it's my information that he has indicated to certain groups

around this province that there is a change in government policy and he

does intend to build for export. I have some very grave concerns about

that.

[12:15]

I wonder just how closely the minister has really considered telling

Alcan, for example, that hydro power will be available from B.C. Hydro.

I'm not about to prejudge what will happen to the fishery industry if

Alcan is allowed to go ahead with its projects as proposed for Kemano 2

regarding those two rivers up there, but I know that a lot of questions

were being raised by federal fisheries, local residents and others. Why

risk it when we have all this excess power? Why don't we simply say to

Alcan: "This is cheaper power than you can buy anywhere else, even if

it costs you a little bit more than it would to dam those fishery

rivers. You will be competitive; you can be competitive, and if you're

not interested, we'll get somebody who is." Sure, we want the industry

up there. We want the smelter; we want a lot more things up there. But

I think this minister has it in his power to ensure that we have the

best of both worlds in this instance. I'm not really convinced that he

is doing all he could do to ensure that that happens. He's talked about

his commitment to electrical railway systems, and certainly what's

happened in the Anzac tunnel is great. If it was his idea, I

congratulate him for insisting that that happen. He says that maybe we

can't convince CPR and maybe we can't convince CNR. What about BCR? The

Minister of Energy is just as responsible for job creation in this

province as is the Minister of Labour or the Minister of Industry and

Small Business Development, and he has a great opportunity here to

create some jobs in British Columbia.

If he were to electrify the B.C. Rail, and if he could persuade CPR

and CNR to do so — and electrifying those lines could be done on an

economic basis — think of the jobs that would result in the

construction of transmission lines. Do you know where the towers are

built for those transmission lines, Mr. Minister? They are built in

British Columbia. That's right. That's jobs for British Columbians. You

mention General Motors — the electric motors are built in Canada. He

knows these things. But is he doing anything to ensure we are getting

those kinds of jobs here in British Columbia? We would then have a

railway that could operate more cheaply on a renewable resource that is

our own, and we would provide all kinds of construction jobs in the

meantime. Now I don't see that minister taking any initiative in those

directions, and certainly that's of concern to me.

The minister has indicated that it is a buyers' market for the sale

of this power. Yes, it's a buyers' market, but the closest competitor

that I can find was an offer — I believe it was from Bonneville — for

5.6 cents a kilowatt hour. I don't think we negotiated a good deal in

the first place; in effect, the return from that power is not even

going to begin to pay the costs of the interest on the construction of

the Revelstoke Dam.

If, in fact, we were to export all the power that dam could produce

— 7,200,000 kilowatt hours at 2.4 cents a kilowatt hour Canadian — the

shortfall of revenue to cover only the interest charges would be $90.8

million a year. Sure, we are getting some minor returns, but I think if

it does one thing more than anything else, it points out just how great

is the cost of this overbill in which Hydro has involved itself. The

old energy commission tried to tell them. A lot of people on this side

of the House tried to tell the government benches. The minister said

nobody knew; there were a lot of people who knew that Hydro's exports

were too high. I don't really blame Hydro. It had its terms of

reference; they were very simple — to provide an ample supply of

electricity. Hydro takes its direction from government. I blame the

ministers who sit on those cabinet benches for not giving Hydro a

slightly different term of reference and for allowing them to continue

to escalate their forecast figures and, as a result, to escalate and

self-perpetuate and expand their own operation. Because that's what it

was: it was a self-fulfilling promise. Now we have an overbill that

will last us for four years. We had, just a couple of days ago, a

layoff of some 17 long-term, high-paid officials in the construction

section. Sure, that's tough, but it is a direct result of not planning

properly in the beginning.

I've been talking about jobs in British Columbia. The other side of

the coin to the sorts of things I've been talking about is the export

of power at such a cheap rate — because it is, in no uncertain terms,

the export of jobs, If California can get power at a rate lower than

that for our own customers in B.C., which is what's happening, then

that provides unfair competition as far as any industrial development

here in British Columbia.

HON. MR. ROGERS: But they can't. We're selling it to B.C. industry cheaper than we're exporting it to California.

[ Page 3752 ]

MRS. WALLACE: Not according to my figures. If I'm wrong on that, I'd like the minister to correct me.

I've always been interested in alternative power, and that's been

touched on briefly; but I am concerned about.... I'm moving on to a

different subject. Do you want to answer that particular part right now?

HON. MR. ROGERS: The member asked about Hydro's export of

power. You're quite right, they haven't got the permits from either the

federal government or the provincial government. However, the

particular export of power to Los Angeles Water and Power falls within

the guidelines set down by the National Energy Board. They still have

to go through the hearings; they're aware of that and the customers are

aware of that. They also have to get a provincial energy removal

certificate and they're aware of that as well.

[Mr. Pelton in the chair.]

So nobody in California is labouring under the delusion that this

thing is done and dusted; it is not. They have to go through that

process. However, the National Energy Board guidelines are fairly

clear. They will go through the process, there will be people there

objecting and people asking questions, and I'm sure they will go

through it. If that sale is not successful, then we're stuck with a

surplus of power for which there aren't other markets. B.C. Hydro put

out an incentive rate, lower than the rate we're exporting it for, for

new industry or anybody who would bring on a new electrical load. Only

one customer in the province — in Campbell River — took advantage of

that particular situation. I think it's a good idea to go out and do

that. I think it's a good idea for Hydro to call on some of its

customers, which is something they don't do very often, to find out

what they can do about increasing the electrical loads.

I don't agree with you about the export of jobs. I don't really

think the short-term export of power to California is necessarily going

to mean loss of industrial jobs to British Columbia, because we don't

have it here. Alcan will not build a smelter unless they are assured of

a long-term supply of electrical energy. That's what they tell me. I

can go to them and say, "You're going to buy power from B.C. Hydro,"

and they'll say to me: "Fine; we're not going to build a smelter." It's

as simple as that. They have lots of other opportunities. We are in a

competitive world. The province of Quebec is making it extremely

attractive for Alcan to build their next smelter in Quebec where they

have lots of surplus electricity. We have to be competitive here, and

we have to look at the market that way. I think there is flexibility

for B.C. Hydro and Alcan to come up with a power swap.

You mentioned the electrification of the railway. We have a

demonstration now of the first one actually in operation, which is the

BCR one. Remember that in that particular case the incentive for them

to electrify that railway was the tunnel ventilation problem; the BCR

doesn't have other tunnels of any significant length, although there

are a few short ones. The CPR and CNR would electrify the railways the

minute they thought it was economical to do so. That's the only

encouragement they have. I talk with the people at the CPR and they

tell me that they don't choose to do it because it's not economical; if

we choose to subsidize them they'll look at it. I don't think we want

to do that. I think we want them to choose to do that.

You asked if the ministers give Hydro any direction. As a matter of

fact, twice in the last three years, as a result of input from this

ministry, Hydro has reduced their forecast. But they are scheduled to

have a surplus till 1990, and for that reason we're trying to do the

best we can to maximize the provincial benefit from that surplus. As I

stated earlier when you weren't in the House, it is not my intention,

nor is it the intention of the government, to build for export. Like

any other policy, government can examine it. It is not examining it

now, to my knowledge, and I don't think they will examine it.

Quite frankly, I don't think there's a market for it. I think we've

captured what market there is for surplus power, so to that extent I

don't think there's great viability in it. Instruction will continue to

come from the cabinet to Hydro on their policy directions. This

particular change for export of power was started by my predecessor,

now the Attorney-General (Hon. Mr. Smith), when he had the portfolio.

They were aware of the surplus that was starting then and has carried

on during the time I've been responsible for Hydro. I think, though,

that the whole export-of-power business will be gone within a four- or

five-year period, on two very simple things. One will be a recovery in

the economy whereby the demand will rise, and the second will be just a

straight, regular growth in electrical demand as fossil fuels such as

oil, in areas where electricity and oil compete, become more expensive.

MRS. WALLACE: I was in the House and I did mention perhaps

you were out at that point, Mr. Minister — that I had understood you to

say that it was not your policy to build for export. I am somewhat

concerned because people are telling me that they have had information

from you to the effect that it is the government policy to build for

export. I'm also concerned about Bonner's remarks about the

transmission line and preparing for 15- to 20-year exports. I'm also

concerned about the six years. I think we get into these things and

it's very hard to get out of them. Of course, I am not familiar with

the actual terms of the contract that has been signed, but I would hope

that it's very firm, that as far as the three years go, that's it, and

there's no commitment to carry on past that. The six-year thing does

bother me, because it seems that we have started with three, are up to

six, and by the time we're through with this thing it may be the 16 or

20 years that Robert Bonner is talking about.

You have allayed my fears slightly, Mr. Minister, but certainly not

entirely. I still have a great many concerns that by committing

ourselves to firm power sales for a period even as long as six years,

we may well find ourselves started down a road from which there is no

return. We will become the builders of dams and the storers of water

for the producers of jobs in the southern States, rather than in

British Columbia. I think that is a valid argument and one that

certainly appears to a lot of economists to hold water.

MR. LAUK: We trust you; it's just your successors we're worried about.

MRS. WALLACE: Well, I'm not even sure I go that far, Mr. Member.

I had started to mention alternate energy, and as you know — we

talked about this when you were in a different portfolio — I certainly

do believe that Hydro could be putting a greater share of its emphasis

on alternate energy, and in a little different way.

[ Page 3753 ]

[12:30]

I was rather concerned about the tidal experiment that you were

trying in the Queen Charlottes. There was a press release that went out

back in October 1983 relative to this tidal power feasibility study in

the Queen Charlottes. Now that's a pretty expensive type of study. It

is highly engineered, debt-intensive, the same way as a lot of hydro

installations are debt-intensive. It is not particularly

environmentally oriented. Now tidal power in some instances, I think,

would and could be a valuable asset. But I'm wondering, basically, what

the status of this Queen Charlottes experiment is at the present time,

what the cost has been and what the results are, What have you come up

with? Have you found out anything about that? What has it cost you?

Where is it at, at this point?

HON. MR. ROGERS: Well, you've got me there, Madam Member. It

has never been discussed with me. I know Hydro has been looking at some

wind farms, and we have had some private proposals on that. We have had

private energy proposals from people in the United States who are

involved in those processes. I'm not aware that Hydro is doing this

particular work. I will investigate it for the member.

MRS. WALLACE: Thank you very much, Mr. Minister. I'll send

you a copy of this. It's my only copy, but I'll send it across to you.

It's from B.C. Hydro public affairs. Perhaps at some later date you can

give me a response.

While we're talking about alternative power, you did discuss garbage

incineration briefly with the member for Atlin. Some little time ago, a

year ago maybe, your ministry.... I'm not sure whether that was

when you were minister; I think it was probably under the previous

Minister of Energy. There was a report about some preliminary work that

had been done jointly between your ministry and local government in

Victoria relative to utilizing waste for energy production. The study

indicated that in ten years the capital investment in that particular

operation would have been totally recouped and any energy that had been

generated from that source subsequent to the ten years would have been

pure gravy. The result of that was that the government ordered further

study. That again was about last summer, I would say, and I'm wondering

what the status of that study is.

HON. MR. ROGERS: I think that question would better be

addressed under the estimates of my colleague the Minister of

Environment, because they are the lead agency in dealing with this

particular matter. Our expertise on it has only to do with the small

energy part of it. The reason for that study was solid waste disposal,

not energy recovery. Perhaps it would be more appropriately addressed

at a later time in committee when we're dealing with the other

minister's estimates.

MRS. WALLACE: I believe it was the Minister of Energy who

issued the release. So perhaps you would check that out a bit more,

too. And certainly it was for power production, because it was going to

be self-capitalizing within a period of ten years.

A report came into my hands some time ago entitled: "B.C. Hydro: Time for a Change." It doesn't have an author, actually.

HON. MR. ROGERS: I've got a copy.

MRS. WALLACE: Okay. On page 7 it talks about regional

electrical utilities. The idea seems to be of putting anything below

230 kV up for bid to private companies. I go back long enough in the

power business to remember the days of the old Nanaimo Utilities, long

before we even had the Power Commission; and then, of course, I remember the merger between

the B.C. Electric and the Power Commission. That bothered me a bit,

because certainly we would have the same situation there as we had in

those days where the lucrative markets in the densely populated areas

and the highly industrialized areas would be able to sell power for far

less than you're selling it to the Americans probably, and in the

outlying regions it would be prohibitive. I see you saying, "No, no, no," and I hope that means that you're not considering that.

HON. MR. ROGERS: I normally don't even comment on unsigned

documents. While all of us have a certain level of frustration with

B.C. Hydro. I don't think that is anything like a solution to the

problem. There are a whole host of opportunities in dealing with the

corporation, but by splitting it up into small marketing agencies for

various regions you lose all the advantages that the company has

internally with engineering and distribution. That's really not where

the problem lies, in my opinion.

MRS. WALLACE: People are asking me how long I'm going to be,

and I really can’t say exactly. But I'm getting through this pile,

let's put it that way.

The next item I wanted to raise dealt with PCBs. Some of the Hydro

employees came through with a method of nullifying PCBs. Of course,

Hydro are the big polluters with PCBs, because they're used in

transformers. I saw this little

article in a Hydro newsletter that I

get, that the employees had come up with a solution to this and they were

going to work on it and try to perfect it. But I haven't seen any more

about it, and I am curious as to what has happened with that. It would

be a tremendous breakthrough for Hydro and for all of us if in fact

PCBs could be treated in such a way rather than having to burn them or

transport them long distances, which is hazardous.

[Mr. Strachan in the chair.]

HON. MR. ROGERS: I recall seeing that when I was Minister of

Environment. I haven't seen it as Minister of Energy, Mines and

Petroleum Resources. I will check for the member, and virtually take

that question as notice and bring the answer back. I haven't seen

anything else on it at all.

MRS. WALLACE: I thank the minister. It has been a while, and

if that process has failed, then we should know. If it can be

successful, that's great, and we should know about that. It would be

nice to know what the status is.

I spoke a little earlier about the 17 people who had been laid off.

Last year there was something like a 13 or 14 percent reduction of

Hydro staff under the restraint program. I raised this earlier on in a

different venue and in a different session of this Legislature. It

seems to me that some of the highest-paid officials in B.C. Hydro are

continuing to get increases. When I raised it before, I quoted from

figures over a period of years, and I think it was the Minister of

Finance (Hon. Mr. Curtis) who promised to look into it. But of course

we have heard nothing more. So I'm going to raise it again. The years I

have

[ Page 3754 ]

go back to 1981, 1982 and 1983. For example, in 1983 several people

received fairly substantial percentage increases, which seemed to be

above the guidelines for other people. The vice-president of gas

operations — and I will use the titles rather than the names, because

unfortunately I know a lot of these people from the days that I worked

at Hydro — received a 5.2 percent increase for 1982-83 over 1981-82.

The executive vice-president of engineering received a 7 3/4 percent

increase. The vice-president and general counsel received a 6.6 percent

increase. The vice-president of general corporate services received an

increase of 8.3 percent, which in fact brought him to $125,000.04 in a

year, plus some $15,000 expenses, Mr. Minister. The manager of internal

audit received a 5.6 percent increase. The manager of stations projects

received a 6.9 percent increase, and the manager of properties received

a 9.3 percent increase. Those are large salaries. Probably about the

lowest salary we're talking about was increased to $68,000 a year —

that was the lowest — to the maximum to $125,000, plus expenses. I've

only picked out those above 5 percent, which seem to me to be the

maximum cutoff for ordinary folk. This was only up to 1982-83. I don't

have figures beyond that. I wonder if the minister can tell me w