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)

THURSDAY, MARCH 29, 1984

Morning Sitting

[ Page

4101 ]

CONTENTS

Routine Proceedings

Hydro And Power Authority Amendment Act, 1984 (Bill 13). Second reading.

Mr. D'Arcy –– 4101

Mr. Skelly –– 4101

Mr. Nicolson –– 4103

Mr. Lockstead –– 4104

Mr. Davis –– 4105

Hon. Mr. Rogers –– 4106

Division –– 4107

Committee of Supply: Ministry of Industry and Small Business Development estimates.

(Hon. Mr. Phillips)

On vote 41: minister's office –– 4107

Hon. Mr. Phillips

Mr. Lea

The House met at 10:04 a.m.

Prayers.

MR. CAMPBELL: Mr. Speaker, in the gallery today are two

people from Vernon, John and Sheila Orr. Mr. Orr is a school trustee in

School District 22 and a very prominent lawyer in Vernon. I would ask

you to make them welcome.

Orders of the Day

HON. MR. ROGERS: Mr. Speaker, I call adjourned debate on Bill 13.

HYDRO AND POWER AUTHORITY

AMENDMENT ACT, 1984

(continued)

MR. SPEAKER: The member for Rossland-Trail adjourned the debate.

MR. D'ARCY: Mr. Speaker, this is not a bill that the

opposition is happy to see. I think it's unfortunate that the Minister

of Finance (Hon. Mr. Curtis) is not here this morning.

A great deal was made in the budget speech and in the debate about

how the government was reducing debt because of the payment to the B.C.

Railway. This bill alone puts the lie to that argument by government

that they're reducing debt. This bill adds $500 million to the

indebtedness of the province of British Columbia.

Each and every year that that government has been in office they

have increased provincial debt as a percentage of the gross provincial

product. Unfortunately, in 1984 we see that our gross provincial

product is not increasing; it may even be decreasing, whether measured

in real or actual terms. Once again we find that debt increasing as a

percentage of gross provincial product, by a total amount — according

to page 50 of the budget — of nearly $2 billion, a quarter of it in

this one bill alone.

Yesterday, in opening debate on this bill, the Finance minister

said, "We have a hundred million dollars plus in redemptions of old

debt to go through in 1984," implying that part of this was to

refinance old debt. The fact is that that's not the case: Hydro has the

power under the existing legislation to refinance old debt whenever

it's redeemed. This bill says that it increases the borrowing ceiling.

It does not simply authorize Hydro to borrow $500 million; it

authorizes Hydro to borrow $500 million in excess of whatever other

borrowing powers they may have under previous legislation passed by

this chamber.

It is well known in this province that the government has a substantial surplus

of electrical generating capacity. It is also well known that the government

is attempting to export as much as possible of that surplus. Mr. Speaker, I

don't find fault with that. I sincerely hope that the government gets the

best dollar they can in the western part of North America for surplus British

Columbia electrical energy. But even if the government gets $50 million for

what may be generated by applying this $500 million largely to completing the

Revelstoke dam, and partly to Cheekye-Dunsmuir and a few other relatively minor

transmission projects, the first $50 million from those sales will just equal

the interest on this $500 million which is being borrowed here today by the

Finance minister. I suspect that a 10 percent interest rate will not be attained

— I hope it is — considering what is happening with interest rates and in the

bond markets of North America. I suspect that is going to be rather difficult,

although I wish the minister every success in getting a 10 percent interest

rate.

The fact is, as has happened with virtually all other Hydro

borrowings in this province, the ratepayers are going to make up most

of the interest on the debt. When the ratepayers and industries have to

make up the interest, it lowers the standard of living, raises the cost

of living and the cost of doing business, and impedes the ability of

our industry and our business to compete with other parts of Canada,

North America and the world. Clearly, unconscionably high interest

charges and Hydro rates have, not just in 1984 but going back to the

formation of Hydro under Social Credit, been a disincentive because of

the high costs involved to the growth and establishment in British

Columbia of a competitive industry and a diversified industrial base.

Government spokesmen may well argue that they're locked into

borrowing this extra money in order to complete projects such as

Cheekye-Dunsmuir and the Revelstoke dam. It was their premature

decisions, their mismanagement decisions, to proceed against the good

advice of a great many non-partisan and independent advisers that put

them in this situation where they must saddle industry, business,

taxpayers and ratepayers with unconscionably high debt and interest

loads.

I want to repeat, Mr. Speaker: this government is not reducing

expenditure. It is not reducing the size of the government sector as

part of the economy of British Columbia. It is not reducing debt; it is

adding to debt. Government is getting bigger; debt is getting bigger.

We saw that last year when the credit rating of British Columbia was

lowered. I would hope that this does not put us on another credit

watch. Our province cannot afford to hold another $2 billion additional

debt in fiscal 1984-85. The government is not reducing debt; it is

adding to our debt load. This is $500 million in one fell swoop, and

the opposition decries it and opposes it.

[10:15]

MR. SKELLY: I rise also in opposition to this bill, which

authorizes Hydro to borrow an additional $500 million, as the previous

speaker pointed out, over the $8,300,000,000 that they are currently

authorized to borrow under the Hydro and Power Authority Act. When we

left government in 1976, the total debt of B.C. Hydro was $2.9 billion.

According to the last annual report for 1982-83, that debt has now

increased to $6.8 billion — a 230 percent increase in the space of

seven years. That's the socialist arithmetic in the B.C. Hydro annual

report for last year, Mr. Speaker.

As I pointed out, the debt of B.C. Hydro has increased by 230

percent, electric capacity has increased by only 168 percent in the

same period of time, and the total electricity sold has increased by

156 percent. So we are borrowing more money to produce less electrical

capacity and less electricity available for sale. The cost of

electricity is increasing, year over year, and we're borrowing more and

more money to pay for higher and higher cost electricity and electrical

capacity.

It's reached the point where 40 percent — 40 cents out of every utility

bill dollar — is spent to pay the interest on that debt, and it would be an

even higher percentage if we didn't pass the cost of the water royalties

directly through to the

[ Page 4102 ]

consumers in this province; the interest charges on

Hydro utility debts would be something like 48 percent to 50 percent.

So virtually half of our utility bills are going to pay interest on

that debt. This government talks about being a pay-as-you-go

government. In fact they're running the province deeper and deeper into

debt to the point where we as utility customers are paying half of our

utility bills for interest rates on Hydro's debt.

On the other hand, B.C. is among the worst provinces in its

performance of promoting energy efficiency and energy conservation. In

addition to being one of the worst in terms of unemployment.... I

believe we're third only to West Virginia, that little Appalachian

state in the United States that's been poor since the Civil War, and to

Newfoundland in Canada, which is one of the traditional have-not

provinces. This government has reduced us, by their energy management,

to being one of the worst, in terms of unemployment third only to West

Virginia and Newfoundland.

There is another road we could take in terms of management of energy

in this province, Mr. Speaker, and I've been addressing this proposal

to numerous ministers of energy across the floor for several years.

What if we did take the other road?

Interjections.

MR. SKELLY: We're certainly on the other side on this issue.

Interjections.

MR. SKELLY: Mr. Speaker, is the word "irrelevant" unparliamentary or not?

AN HON. MEMBER: He said "irreverent."

I've been proposing to numerous ministers of energy that we take a

different tack in British Columbia — that we follow a different energy

path — and that if we did so, we wouldn't require the kind of borrowing

authority bill that we're dealing with here today. When you look at

other jurisdictions around Canada and the United States that are using

and producing energy much more efficiently than British Columbia,

perhaps that's the direction we should go. Yet this minister is

shutting down the branch in the ministry that is concerned with energy

efficiency and energy conservation.

Interjection.

MR. SKELLY: We wouldn't have to do this bill on Hydro today,

Mr. Speaker, if the minister was a little more concerned about using

energy in the province more efficiently. In fact, the minister isn't,

and as evidence he shut down the only branch in his ministry that

promotes energy efficiency.

This is a government that talks about restraint, but it never means

it. What I'm talking about today is exercising restraint in the way we

use energy, in getting more production from less energy. That's what

this government is not concerned about at all. It claims to be

concerned about restraint, and yet in terms of energy this government

is an energy spendthrift.

Look at the city of Seattle, a very few miles away from us. They

have a plan to save something like 230 megawatts, or 18 percent of the

total energy use in that city, by 1990 using energy conservation

techniques, improving the energy efficiency of its housing stock just

by changing its building code to allow new homes to be built in a more

energy efficient way.

Interjection.

MR. SKELLY: Yes, I've visited the city of Seattle. I've

talked to people in their office of energy conservation, and the

program has been very successful. It's been successful from the point

of view of senior citizens who have had their energy efficiency

improvements paid for by Seattle City Light. It's so much of an

economic advantage to that utility that they're willing to finance some

of those energy efficiency improvements themselves and do it for

nothing for senior citizens and people on low incomes.

In any case, Seattle proposes that by 1990 it's going to save 230

megawatts of power — about a quarter of the production of the Site C

dam — simply through changes in the building code and improving the

energy efficiency of their housing stock.

There are different energy circumstances, of course, in Davis,

California, but since 1973 in that community, as a result of changes in

the building code, as a result of encouraging energy efficiency

improvements and the use of energy alternatives, they already have

saved 18 percent of the total energy they used in that community. Why

not in British Columbia? Why is the minister depriving our citizens in

British Columbia of the ability to save energy, to increase their

disposable incomes, to decrease the amount of money they're spending

for energy commodities and, in particular, for electricity, one of the

higher-priced of those commodities? Why is Seattle doing it? Why is

Davis, California, doing it? Why not British Columbia? Why are our

citizens denied and deprived of this right to be assisted in

restraining their energy use when cities on the west coast of the

United States are doing the same thing? Look at the city of Portland,

Oregon, a very few miles away from us in virtually the same climatic

zone. They expect to save 35 percent of total energy consumption in

that city by 1995 by making it illegal to sell homes in that city until

certain energy efficiency improvements have been accomplished in those

homes. It has been estimated that those improvements would cost

something like $1,350 per house, and money could be lent at relatively

low rates of interest in order to update those homes and improve their

energy efficiency.

What if Hydro used the half-billion dollars it's authorized to

borrow under this bill to lend money to citizens of British Columbia to

make their homes more energy-efficient? It would result in a saving of

approximately 35 percent of energy use, and we could lend that money to

something like 370,300 homeowners in British Columbia who would thereby

be entitled to save about a third of their energy costs. Why in

Portland? Why in Seattle? Why in Davis, California? Why in numerous

other states and communities around the country? Why in Saskatchewan?

Why in other provinces in Canada? Why is British Columbia, in terms of

energy efficiency, always dead last? It's first in unemployment, first

in debt, first in energy mismanagement. Why in terms of innovation are

this minister, this government and this province always dead last,

always behind Newfoundland and all the

[ Page

4103 ]

other provinces and equal to that little community in Appalachia called West

Virginia that's been in a state of poverty since the Civil War? Why is this

government trying to reduce British Columbia, in energy efficiency as well as

in other terms, to a position of dead last? They ought to be ashamed of themselves.

[Mr. Pelton in the chair.]

Energy efficiency is one of the best investments a citizen of this

province can make. It's the best investment almost anyone can make.

Perhaps the minister could do a little bedtime reading about this

example. Scott Burns, author of Home, Inc. , has pointed out....

Interjections.

DEPUTY SPEAKER: Order, please.

MR. SKELLY: Mr. Speaker, I was talking about the value of investment in energy-efficiency devices. Scott Burns, author of Home, Inc. ,

has pointed out that since 1974 storm windows installed in a home in

the northern United States have consistently provided a better return

than triple-A rated bonds and the Dow Jones stocks. Why are we not

encouraging and allowing our citizens to invest in those energy

efficiency devices that could provide a better return to them than

investment in the stock market or in bonds? Why don't we allow our

citizens that type of return on their investments? Why don't we

encourage them to save their money and to invest it in the savings of

energy? Because it is the best return they could get.

Energy efficiency also creates jobs. We are told that the money from

this bill will be spent on completion of the Revelstoke Dam, which was

built without adequate advance planning. That dam was built to produce

an energy surplus in British Columbia, to the point where we're now

using something like 30,000 gigawatts of energy a year in British

Columbia, and we have a surplus of two-thirds of that amount that we're

trying to export to the United States at prices lower than our citizens

are paying for that energy here in British Columbia.

We could create tens of thousands of jobs if we embarked on an

energy-efficiency program in this province; if we improved the energy

efficiency of homes, businesses, schools, hospitals and other public

buildings and institutions. This government talks about restraint, and

yet they deny government institutions, school boards and hospital

boards the funds they require to improve the energy efficiency of their

buildings, which would allow more money to be spent on health,

education and social services, rather than burning it up in energy. It

would require tens of thousands of jobs in order to accomplish that

energy efficiency, and that energy would be returned and available to

the government or B.C. Hydro to sell, whether they were planning to

sell it into export or to use it for additional growth in the economy

of British Columbia.

Instead, this government has gone the energy-megaproject route. Through research

done all over Canada and the United States — in fact, all around the world —

we know that for every major energy project built, transmission or generation,

you destroy 4,000 jobs. You could be using that capital to invest in energy

efficiency, which would release the same amount of energy that we're currently

using inefficiently, and you could produce the same amount of energy with much

less money. As the Economic Council of Canada pointed out — this was back in

1973, but the relationship between the figures is very much the same — if you

invest capital in transportation and utilities here in British Columbia, it

costs $123,000 to create each job; if you invested that money in energy efficiency

it would require $6,000 in capital investment to create each job. By the very

fact that we're investing in these huge energy plants, generation and transmission

facilities, of course we're destroying thousands upon thousands of jobs

that we could be creating if we were making our business, industry, residences

and government institutions much more energy-efficient.

[10:30]

Mr. Speaker, I'm opposed to this bill because it attacks the

principle of restraint. I'm opposed to this bill because it drives the

province of British Columbia deeper and deeper in debt, with very

little possibility that the energy produced is going to be returned or

that any value from that energy is going to be returned to the citizens

of British Columbia. It creates no growth in our economy or in our

employment here in British Columbia. In fact, it's simply producing a

surplus of power which ultimately will be sold in the United States to

create jobs for Americans, outside our country and outside our

province. In fact, it's a waste of British Columbians' money. During

committee stage I will be proposing an amendment to this bill, which

will say that any sums borrowed under the authority of this act should

be applied first and foremost to finance energy-efficiency improvements

to homes, hospitals, schools and institutions, business and industry in

the province of British Columbia. I think that's the way to go. I'm not

opposed to completing energy generation and transmission facilities if

we need them. But if we're already producing a surplus of energy, if we

have serious financial and debt problems, and if we have serious

employment problems in the province of British Columbia, we should be

investing our money in areas that are going to create more energy

efficiency, more jobs, more restraint and less debt. My amendment

during committee stage would be the way to go.

I am also opposed to this bill. I hope that it will be defeated by the House.

MR. NICOLSON: I'm going to oppose this bill because of a

long-standing grievance of the people of the Kootenays and, I might

say, the people of the Peace River. In January 1978 I predicted that

B.C. Hydro was overbuilding on purpose and that the result would be the

export of firm power to the United States. This has come to fruition at

the same time that we have an exemption under order-in-council 1135,

passed in the late sixties, which exempts certain B.C. Hydro dams from

taxation. It has meant that people in the Peace River and the Kootenays

have had to pay way above and beyond what they should have been paying

for school taxes and hospital taxes. It was okay in those days, I

suppose. It was a transfer payment from the rural areas into the

metropolitan area of Vancouver and the lower mainland. But now, the

true intention of the Revelstoke Dam is being realized: that is, the

export of firm power to the United States, and California in

particular. This means that we are now making a transfer payment from

the people of the Kootenays and the Peace River country. Due to

order-in-council 1135 we have had to bear an extra burden of property

taxation, because B.C. Hydro, unlike any other part of the province,

was not

[ Page 4104 ]

paying a lick of taxation on the Duncan Dam, the

Keenleyside Dam or on the W.A.C. Bennett Dam. We've put up that

transfer payment to our fellow British Columbians, but we view a

transfer payment to the people of Los Angeles, to the people in the jet

set and such of California as the worst betrayal of British Columbia

people. It is absolutely irresponsible, and it is something that we

will not tolerate. When we see our university centre being shut down

and our rural areas being bled, this is something that we absolutely

cannot stomach, and we won't put up with it.

Interjections.

MR. LOCKSTEAD: Mr. Speaker, I wish the members would just keep it cool this morning. There's a lot of racket and noise going on.

I, too, rise briefly to oppose this bill. It is very difficult to

follow all of these excellent speakers and the points made by them. I

don't think I really want to go through all of that again, but I have

done some extensive research and made notes on this matter.

One of the items that has not been raised in the House by previous

speakers in terms of Hydro borrowing.... Part of the money that will be

borrowed under this bill will be going to pay for the interest on the

Cheekye-Dunsmuir transmission line. It is a transmission line which a

lot of people in the province, including economists who are very

familiar with the situation of energy requirements on Vancouver Island,

felt was not required. You will recall, Mr. Speaker, that we were told

in this House, when the project was first announced and made public by

B.C. Hydro, that it would cost Hydro, the taxpayers and the users $350

million. About a year and a half later we received a secret internal

memo from B.C. Hydro — I don't know how it found its way to our office

— that said: "The project is now going to cost $700 million, but don't

tell anybody about it. We don't want to get the people out there all

upset. We're going to have these public hearings." They turned out not

to be public hearings at all. They were public information meetings —

Hydro and the people. As a matter of fact, the present Minister of

Energy, Mines and Petroleum Resources (Hon. Mr. Rogers) — I think he

was the Minister of Environment for something like three weeks — came

up to Pender Harbour and got hung in effigy. So what's happening here?

HON. MR. ROGERS: It was Madeira Park. Get it right.

MR. LOCKSTEAD: Well, that's Pender Harbour.

So that's how we initiated that new Minister of Environment at that

time. I shouldn't say "we"; I mean "they." I didn't tie the knot.

In any event, it is serious stuff because what we're talking about

here is taxpayers' money. Hydro finally admitted internally, but didn't

make it public, that the project was going to cost probably $700

million, but "don't tell anybody." We know the bottom line is that the

project actually, when the final bills and accounting and public

accounts are in, will have cost in excess of $1 billion. I suggest the

project will cost $1.2 billion by the time all of the feeder lines are

in and the interest on debt is paid. That's a fait accompli; the

project is done and energy is being transmitted.

There's been another effect of this project on the residents in my riding

and on Vancouver Island. Large private companies and citizens in my riding were

led to believe that there would be a natural gas pipeline to Vancouver Island.

If that pipeline had been constructed when it should have been, it would have

saved the taxpayers and the people of this province the expense of building

the Cheekye-Dunsmuir line and the high interest rates that go with that kind

of a project. Natural gas to Vancouver Island would have certainly supplied

the major industrial users with a cleaner, cheaper form of energy. It would

have met the energy requirements of Vancouver Island for probably 30 or 40 years.

It was a major financial blunder by this present government to proceed with

that Cheekye-Dunsmuir transmission line. All the hype prior to the construction

of that line: "We have brownouts on Vancouver Island. We have this and

that, and we can't do anything else. We have to...." But the fact is it was a

self-fulfilling prophecy. Now the bottom line is that we're in a situation

where the Utilities Commission is holding hearings on several proposals to bring

natural gas to Vancouver Island.

I'm going to make this prediction. Because of the Cheekye-Dunsmuir

transmission line, which was probably not required — a lot of experts

say it was not — the Utilities Commission now are in a position where

they are going to have to say the energy requirements of Vancouver

Island have been met for the next number of years. In order for the

natural gas pipeline to proceed to Vancouver Island and have any cost

benefit at all, aside from a proposed fertilizer plant in Powell River,

this massive federal government subsidy, at the moment estimated by Dr.

Govier in the Govier report at $450 million, is going to be required.

The federal government has indicated at this point that they're not

prepared to subsidize any proposal for a natural gas line to Vancouver

Island with that large amount of money. They haven't said no, and they

won't say no. Neither will the federal Liberals or the federal Tories.

They won't say no, with a federal election in the offing. They'll say,

"We'll look at it. Maybe...." etc.But they won't say no at this point.

I happen to know, from information that I've received from Ottawa,

that on that proposed natural gas line the federal government and the

current federal Minister of Energy, Mines and Resources are very

hesitant to put a dime into the project at all. It's possible, with

hard negotiations, that they may come up with $200 million, which is

not nearly enough to subsidize that proposed natural gas line to

Vancouver Island. They may. They haven't said they will. What I'm

saying is that once again we have a bill before us to increase — aside

from what B.C. Hydro has already borrowed — money that we're already

paying interest on and that could have been better utilized in health

and education, social services which are being cut back almost every

week by this government opposite. If we can borrow for Hydro to provide

energy that is not required in British Columbia, surely if we had a

government with a conscience we could borrow to provide the required

social services for our people. But that doesn't seem to be happening.

We can borrow $500 million a year, $700 million a year or whatever for

B.C. Hydro, for B.C. Rail and these kinds of things, but we can't seem

to find any money for the social services that are required in his

province.

So once again, Mr. Speaker, I'm telling you and saying to this House

and for the record that the government has made a major blunder in

their management of the resources of this province and particularly in

their management of B.C. Hydro. I'm going to vote against this bill.

[ Page 4105 ]

[10:45]

MR. DAVIS: Mr. Speaker, I'm going to vote for the bill. I

think, like most members who vote for it, I'll vote with some

reservations. However, I cannot agree with points made by the members

of the opposition. Perhaps their concern arises largely out of

frustration. This enterprise — B.C. Hydro and Power Authority — is one

of the largest corporate entities in Canada. It's in the first six in

the nation. It's a big, socialistic enterprise. It's owned by the

people. It's operated for the benefit of the people.

I find it interesting that in each session of the Legislature the

opposition is more critical of B.C. Hydro than of any other entity in

the province, including the large private corporations. They're very

critical of a large, socialistic operation, and with some reason. It's

large. The decisions, generally speaking, are made by engineers,

accountants and lawyers in a very large corporate enterprise and the

opportunity to second-guess these people is extremely limited. The

bills are paid, and after they're paid, submissions are made, for

example, to the Utilities Commission for a rate increase. You can't

reverse the facts. The facts are there. The rate increases must occur

to cover the borrowings of B.C. Hydro. It's a massive entity, and

essentially we put our trust in the top people who are appointed by the

government and in turn those who are hired by them to run the major

divisions of B.C. Hydro.

In the main I think they made the right decisions. They are

extremely competent people. We can argue that their forecasting was too

optimistic, that they saw a rate of low growth which turned out to be a

lesser rate of low growth, and that they advocated the building of

projects which now are somewhat ahead of their time.

We must realize that B.C. Hydro, large as it is, in investing in

very substantial facilities has been at the leading edge of employment

in this province. It's been one of the main reasons why employment has

been high through the 1960s and the 1970s, indeed until very recently.

One of the reasons for a sharp increase in unemployment in this

province is the fact that B.C. Hydro is scaling down its construction

projects. Dams are nearing completion. Transmission lines have been

completed. Distribution facilities are presently adequate for a few

years to come. As a result, B.C. Hydro has laid off several thousand

people in the last 18 months, many of whom are highly trained. They are

among the most competent people anywhere in the nation, indeed in the

world, and they are among the unemployed in this province. Because B.C.

Hydro has built ahead of itself, ahead of our requirements, we now face

a hiatus which may extend for some years. Many good, competent people

in this province will be leaving it because of this slowdown in our own

internal requirement for energy.

Now I'm one of those who believe that utilities, especially

government-owned utilities like B.C. Hydro, should build for the long

term. They shouldn't try and build for the next year or two or three

only, but should take a long look ahead. Admittedly they have to scale

down their plans for future expansion. But this is a part of the world

which will have an increase in population, seeing an increase of the

order of 2 percent or even 3 percent a year for decades to come. Three

percent a year means a doubling at least every 25 years, at least of

population. With rising standards of living and people living in more

widely dispersed communities in this province, this means that we'll

need not only 2 percent or 3 percent more energy a year but perhaps 4

percent, 5 percent or 6 percent. So we must be building facilities

which sooner or later will be needed to serve the needs of the people

within the province.

While we have scaled down our estimates of future requirements, I

find no fault in the fact that for this next year or two we're

overbuilt. I have no problem whatsoever with B.C. Hydro's exporting

surplus energy for a period of time.

This debate about the export of energy, particularly water power —

electricity based on falling water — has gone on in Canada for nearly a

century. The early concern was about the export of water power from

Niagara Falls. Niagara Falls has been redeveloped three times since

that early debate. As a result of several arrangements over the years

between Canada and the United States, Canada utilizes 50 percent of all

the massive amount of water power made from the generators at

Queenston, and the United States gets 50 percent. Regardless of the

early export arrangements, Canadians ended up not only with their share

of a much enlarged amount of power, but with lower power rates because

we on the Canadian side developed our power in larger plants with

larger units, with highly competent Canadian engineers designing our

facilities.

This is what has been happening in other places across Canada,

particularly developments close to the international boundary. We don't

have to worry about exporting some surplus power into the United

States. The adjoining Pacific Northwest power grid produces 10 times as

much power as we produce in British Columbia. If we were to export all

of our production. we'd only supply 10 percent of their needs. As it

happens, we have supplied 1 percent or 2 percent at times, but we've

also received power from the United States through the inter-tie at

Blaine. On balance, we've shipped a little more power to the U.S. than

the U.S. has shipped to us. It's been an exchange situation, not a

one-way street. It's not been a situation where we exported energy and

could never get it back. Indeed, if the province were of a mind to try

to enter into long-term contracts, which would mean that we couldn't

recover exports for a period of a decade or two, we still would have to

run the gamut of the National Energy Board. We still have to adhere to

the national policy, which looks very carefully not only at provincial

requirements but at regional requirements — more than one province —

and never allows an export of an amount of energy which could

conceivably be needed in Canada, in the area of origin. So we have

numerous safeguards.

I think the only policy that makes long-term sense should be a

long-term view of energy requirements. It should be a construction

program which continues steadily and deliberately over many, many years

and provides stability in employment, particularly of engineers and

other technical people and of construction labour over the long pull.

We shouldn't be fretting about a lower rate of expenditure today. We

were borrowing increased amounts of the order of a billion dollars in

recent years; this bill talks about half a billion dollars. I imagine

next year B.C. Hydro will be back for a lesser amount still, and that's

sad because that indicates the falling off of construction and

employment and the dispersal around the rest of the world of a

competence which has existed in this province for several decades but

which is being disbanded. It's sad. Call it lack of long-term planning;

I think it could more accurately be called undue optimism in recent

years about our rate of growth in this province.

When it comes to conservation, the best way to conserve energy is to let the price rise to reflect costs. We've been

[ Page 4106 ]

remiss in this country by subsidizing the consumer,

particularly in respect to oil — and tied to oil is natural gas. Oil

and gas prices have been below world prices. We've encouraged

consumption. We should have allowed prices to rise to cover cost or

allowed them to rise to world prices. That would have done far more

than anything else to conserve energy in this province and across

Canada. So let's be critical of B.C. Hydro's management if we have

reason to think they invested money unwisely; but pass all those costs

through in the form of prices, which cover costs, and the consumer will

act wisely. I don't agree with members opposite who really are saying

that we should bring in edicts, laws of various kinds, which will

direct individual British Columbians to behave thus and so. Let's have

the most general direction of all: a price method of rationing. Let it

work.

Our costs are high in this province in any case; we've got a very

rugged terrain, great distances, scattered communities, and our costs

of hydro development have always been high. But inflation tends, over

the decade, to float those costs off. Much as mortgages on houses

become more tolerable as the years to go by, similarly do past costs —

some costs. I've glad we've developed hydro power and that we've

confined our attention primarily to hydroelectric developments. They

are developments which involve massive construction and massive

borrowings. The costs are almost totally interest rate charges. But in

the long term, those debts are paid off and we don't have high

operating costs. Long term, we've got the best type of production,

we've got clean energy in abundance in this province, and we can break

even — or come close to it — in the sale of surpluses in the short

term. But those surpluses will always be small compared to our internal

requirements, and we can recover them as we need them.

One or two others points. I personally believe that B.C. Hydro is

too big. I think B.C. Hydro really should be concentrating on power

generation, transmission and distribution. Indeed, in several

provinces, such as Ontario, Hydro concentrates purely on generation and

major transmission and does very little distribution. B.C. Hydro is

into all phases. I would confine B.C. Hydro to electric power and have

a separate public or private corporation look after the gas business,

particularly gas distribution.

I think we should also be looking very hard at rolling the B.C.

Hydro rail activity in with B.C. Rail. Make that a single corporation

and have it focus primarily on regional rail activities within British

Columbia rather than long-distance transportation, especially

long-distance across the province or, indeed, into other provinces or

to the Pacific. So a split of B.C. Hydro is, I think, desirable; I

think that should be in our longer-term planning.

A gas line for Vancouver Island. B.C. Hydro top management have

never been enthusiastic about a gas line to Vancouver Island. They're

hydro power people. They're looking after Vancouver Island very

adequately by building a major powerline across from the Sechelt

Peninsula to the Island. As one of the hon. members opposite has

suggested, it may cost eventually, when it's completed, in the order a

billion dollars. That link will look after Vancouver Island for a good

while, and it was predicated not only on more industry and more

population on the Island but mainly on space heating being carried by

Hydro on the Island. If space heating's going to be carried by

electricity on the Island, where's the market for natural gas on

Vancouver Island? Why a natural gas pipeline? That's why B.C. Hydro top

management was less than enthusiastic about a gas line to Vancouver

Island, and that's another reason why I am skeptical about it. I know

that it will require a massive subsidy — half a billion dollars

perhaps. The game is about which level of government or in what

combination the federal and provincial governments will provide that

half a billion dollars in order to allow that gas line to balance its

books in the first decade.

I think that kind of investment is inappropriate. A more logical way

of supplying communities on Vancouver Island with gas would be to bring

it in liquefied form down from Prince Rupert if, as and when a major

gasification facility was there, and we were exporting liquefied

natural gas to Asiatic — principally Japanese — markets. Those are my

main thoughts. To reiterate, I will vote for the bill. I am sorry that

construction is being curtailed on the Hydro side, that B.C. Hydro will

no longer be at the cutting edge of development in this province, at

least for the next few years, and that there are so many engineers,

accountants and especially construction personnel unemployed around

this province, because we overbuilt in the past and because, therefore,

we really have no construction program of scale for the next few years.

[11:00]

HON. MR. ROGERS: I'm not surprised at some of the comments

made by members opposite about this bill. I think there's some degree

of deja vu, except that perhaps this year, for the first time, we are

into a different situation in terms of Hydro's borrowing, because this

time they're borrowing to pay some bills for things that we didn't

previously anticipate. By that I mean the fact that they are in a

surplus position of power. I would dispute the fact made by members

opposite that Revelstoke was specifically built for export. That

certainly was not the direction of cabinet or the direction of the

board of directors at Hydro.

We have to go back, I think, to the time when the NDP were in

government, because at that time the original Revelstoke hearings were

taking place, and then they did carry on under the Water Act under this

government. At that time we had experts telling us that not only

Revelstoke was required but also Site C and Hat Creek. We had other

experts telling us that nothing was required; we didn't need to build

anything. In fact, no one had predicted the depth of the recession that

we're in right now. Obviously some people had, but the great majority

of opinion had not.

B.C. Hydro was like a company caught with excess inventory, except

that they are in a fortunate position, for the short term, of being

able to sell that inventory until such time as we need it. I anticipate

that we have a three- to five-year lag now in surplus power, and from a

social point of view it might well be the best time to be building a

power project, if we were able to build a power project now to employ

people at this time of high unemployment. However, this borrowing is a

fairly standard borrowing. In this 1984-85 fiscal year capital

expenditures for B.C. Hydro are planned as follows: $175 million for

Revelstoke, $147 million for the Cheekeye-Dunsmuir cable to Vancouver

Island, $125 million for electric and gas distribution and about $193

million worth of other things such as gas-plant works, additional

substations, studies, etc.

The member for Alberni, (Mr. Skelly), in a not unusual argument,

talked about whether or not Hydro should be in the business of

subsidizing people to convert their homes and businesses to more

efficient manners. We already have the federal government involved in

this program along with the

[ Page 4107 ]

civic governments, the utilities and industry. It's

now a commercial venture. If it's such a good investment to invest in

energy efficiency, then certainly it is an investment people are

prepared to make. I have no qualms in saying that it's something that

was interesting to do, and it was among the things that was nice for

the government to do, but not necessarily that there was need to do.

If energy efficiency is of such a bonus as the member for Alberni

claims, then I would challenge him to come with me and go out to a new

home development and look through the new home construction and see how

many of the buyers actually ask the question about energy efficiency.

It's not something that the public have taken to in any kind of degree.

The remarks made by the member from North Vancouver–Seymour (Mr. Davis)

point out that energy has been relatively cheap, and people don't

consider it anything like they do in Europe or in other jurisdictions.

I might add that in the jurisdictions immediately south of us, where

hydro rate increases are in the order of 25 to 30 percent, they are

becoming much more cognizant of the fact. We have rather modest

increases, all things considered.

The member for Nelson-Creston (Mr. Nicolson) makes the point that

Revelstoke was built just for export. I can assure him that Revelstoke

will be needed very shortly. We will probably need all the power from

that dam within four years — although maybe not; it just depends on the

rate of growth that we experience.

The member for Mackenzie (Mr. Lockstead) talked about the Vancouver

Island natural gas pipeline. I anticipate hearing from the Utilities

Commission by May 15. I think the federal government will uphold their

commitment. I will be meeting with Mr. Chretien next week — and I hope

to meet with whoever might be opposite him, in the event that he is not

the Minister of Energy in three or four months' time — to confirm that

there is a commitment by the federal government. It does make economic

sense for Canada to have natural gas on Vancouver Island as part of our

national energy program. It will mean some effort by British Columbia.

It will also mean some effort by the federal government, to treat

British Columbia in the same way they have treated the province of

Quebec and the Maritimes in the extension of the Trans-Quebec and

Maritime pipeline.

The member for North Vancouver–Seymour spoke about a few of the

things that I also think about — whether Hydro is too big and whether

or not all of the various divisions and small companies that are in

Hydro need to be there. One of the pets that I've looked at is trying

to decide really whether B.C. Hydro should be in the railway business

or whether B.C. Hydro railway should be part of the BCR. The only thing

I can say about that is that the only similarity I find between the two

is that they're both in the railway business. The B.C. Hydro railway,

which in railway terms is referred to as a terminal railway, has no

inter-tie with B.C. Rail. There seems to be very little saving to be

accomplished, if any, in turning B.C. Hydro rail assets over to B.C.

Rail. Among other things, it has some long-term contracts with the

various people it supplies. And it's a profit centre for B.C. Hydro; it

does help in terms of the profit the company does make.

I, too, grieve at the loss of some of the personnel we're going to

lose at B.C. Hydro. They have built up a pool of engineering and

construction expertise there that is known worldwide. Some of them have

worked on international projects and some of them are in Africa today.

There are some who have potential work in China, and other offers have

come in from overseas. But the majority of them have chosen to work in

British Columbia, which is the place where their work has been. Many of

them who are middle-aged, and in some cases even beyond that, are now

finding themselves in the position of having worked for many years in a

specific engineering discipline which is not in great demand. It is

going to be quite an adjustment for them, and we will lose some

personnel. The upside of that is that some of them may go to private

sector engineering companies. We may be fortunate enough that when

growth in our uses of hydroelectric power comes back in British

Columbia, we can ask B.C. Hydro to go to outside engineering firms, and

we could develop some engineering expertise which would be much more of

a civil nature.

On behalf of the Minister of Finance (Hon. Mr. Curtis) and myself,

both of whom are responsible for B.C. Hydro, I now move second reading

of Bill 13.

Motion approved on the following division:

[11:15]

YEAS — 29

Chabot

Nielsen

Gardom

Smith

Bennett

Phillips

A. Fraser

Davis

Kempf

Mowat

Campbell

R. Fraser

Johnston

Pelton

Michael

Ritchie

Richmond

Heinrich

McClelland

Schroeder

Rogers

Brummet

Waterland

Ree

Segarty

Veitch

Parks

Reid

Reynolds

NAYS — 14

Howard

Cocke

Dailly

Lea

Sanford

Gabelmann,

Blencoe

Rose

Passarell

Mitchell

Lockstead

Hanson

D'Arcy

Skelly

Division ordered to be recorded in the Journals of the House.

Bill 13. Hydro and Power Authority Amendment Act, 1984, read a

second time and referred to a Committee of the Whole House for

consideration at the next sitting of the House after today.

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

ESTIMATES: MINISTRY OF INDUSTRY

AND SMALL BUSINESS DEVELOPMENT

On vote 41: minister's office, $150,674.

HON. MR. PHILLIPS: I'm happy to present to the Legislature my

estimates for the coming year, and I'm happy to say that the ministry

will be carrying on an aggressive policy in the international

marketplace during the coming year. We recognize, as do most of the

workers in the province of British Columbia, that we live and die by

our exports. A

[ Page 4108 ]

number of industries in British Columbia are

recognizing the facts of life: that we must be competitive in the

international marketplace or we're not going to have that market. A

number of industries are recognizing that we must be reliable suppliers

in the international marketplace or we're going to lose our market.

Certainly a number of industries are recognizing that we must have a

quality product in order to compete in the international marketplace.

I want to congratulate the lumber industry and the International

Woodworkers of America, who recognize that the world is a very

competitive place. They recognize that we have a lot of competition in

that marketplace. They have been smart enough not to go around with

blinkers on and just look at the B.C. market and think we're an island

unto ourselves. They have recognized the facts of life in the

marketplace. I guess I'd have to say it's too bad that some other parts

of our lumber industry don't come to grips with the same realities of

the world. Don't say that I'm union-bashing. I'm talking about the

industry.

Interjection.

HON. MR. PHILLIPS: No, never. Certainly not. As a matter of

fact, I wouldn't because I want our workers to have long-term secure

jobs and be well paid for them. And the only way we're going to

guarantee that is to be competitive in the international marketplace.

Interjection.

HON. MR. PHILLIPS: Evidently the people of British Columbia

don't want a change in government, so you can forget about that. You

people over there have tried a number of times, as recently as less

than a year ago, and the people of British Columbia said no. I won't

tell you why; but all you have to do is look at your friend from Prince

Rupert; he can tell you better than I can. I'm not going to stand up

here and lecture to you, when you have a very brilliant person in the

member for Prince Rupert (Mr. Lea) who can do it very well. It's

certainly not for me to stand up and lecture you on your own politics.

We will be more aggressive in the international marketplace. We have

to be more aggressive. We have to go out and talk about what is

happening in British Columbia. We have to resell some of the things

that we have sold with regard to the labour situation — labour and

management — because when this is all over we will be a more reliable

competitive supplier.

The galleries are filling up. I didn't know.

Mr. Chairman, I don't want to spend a great deal of time, but I do

wish that the opposition, if they wish to criticize our international

travel budget, would do so in a responsible manner, and not just have

headlines like, "High-flying Socreds Go to Japan and Take a Bath and

Come Home Clean," because that gives an improper attitude among the

taxpayers. The taxpayers have to realize that the province of British

Columbia is not spending half as much money in the international

marketplace as it should be, and not give us the devil for spending too

much money. A truly constructive opposition would be giving us the

devil for not spending enough. They would be saying that we should open

offices in Tokyo, Hong Kong and around the world to be more aggressive.

That's what a truly responsible opposition would be saying to us, not

just taking cheap political gibes at cabinet ministers going on junkets.

I want to say just a brief word, Mr. Chairman, about that very

controversial project called northeast coal. Certainly the opposition

has tried to do a responsible job of being critical of that great

project, but with little or no success. The reason they've had little

or no success is they they find it difficult to find anything truly

negative about the project. Now I don't want to say I told you so, but

I can remember a number of years ago when we were starting the project

they said: "You're just wasting your time. You will never sell the

coal." Well, then we sold the coal. They said: "Well, you'll never be

able to put the project together. There will be tremendous, horrendous

cost overruns." And when we talked about the cost of building that

branch line for $450 million, they stood up in the Legislature and

said: "It'll cost you $900 million — a billion. You'll never do it."

I'm not one to say I told you so, Mr. Chairman; I would never be

accused of doing that. But we put that project together on budget and

on time. That in itself is a major achievement.

It has more far-reaching effects than just here in British Columbia.

I want to say at this point in history right here in this Legislature

that I'm proud of the Canadian workers, and the devotion to that

project that brought it in as a successful project. Little old British

Columbia showed the rest of the world — the entire world — that indeed

we could put a major project together. We showed them our enterprise,

our ability to cope with difficult times, and our ability to meet

deadlines. That was a tribute to the Canadian worker. I want to tell

you, Mr. Chairman, that as a British Columbian I am proud of the

thousands and thousands of workers who worked on that project under

some very difficult circumstances. Those workers out there in the port

of Prince Rupert in the middle of the winter, when the wind is blowing

and the swell is high, are out there combating nature and they're

saying: "We want this project to proceed, and we want it to proceed on

time." They were proud of the job they were doing, and they wanted to

show the rest of the world that it could be done, and indeed they did

it. Those workers who mucked in the tunnels under very extenuating

circumstances with the water dripping down on them, and the mud and the

slime, drove steadily forward and finished those tunnels in

record-breaking time. That, my friend Mr. Chairman, is a tribute to the

Canadian worker. We're proud in British Columbia of that job. There may

be some other major construction jobs that will come forward in British

Columbia, and the investors will say: "Yes, we will invest in British

Columbia because they can do it. They have proven it."

What I am saying is that not only was northeast coal a British

Columbia project, but it also showed the rest of Canada and the world

that we can indeed do it. We did it against tremendous opposition from

the opposition, who said it couldn't be done. They had no faith in this

great province or in the workers of this great province. They said:

"Well, the Japanese are going to cut back on the tonnages. They'll

never live up to the contracts." I want to tell you: so far, so good. I

don't think anything is going to change. I think the Japanese will live

up to their commitments. They said: "The bottom is falling out of the

price of coal. There are no more markets for coal." Oh my, how they

have flayed and flayed and flayed.

They tried to create a political situation in which the producers in

the southeast were against those in the northeast. I want to tell you

that it's the price of coal in the northeast

[ Page 4109 ]

that has pulled those producers in the southeast by the bootstraps and has helped them to maintain their prices.

They said: "The Japanese steel industry is going to hell in a

handbasket. They won't need the coal." I want to tell you that I got a

telex from Tokyo two days ago, and the forecast for steel production is

on the way up — an increase of six million tonnes forecast right now is

a conservative figure. But they tried to tell us that everything is

going to hell in a handbasket.

MR. BLENCOE: How about B.C. steel?

[Mr. Ree in the chair.]

HON. MR. PHILLIPS: That gentleman talks about B.C. steel.

First of all, my friend, you should get those NDP MPs down in Ottawa —

those fellows that you support — to go to the federal government and

say to the federal government: why doesn't the steel industry in

Ontario buy its coal in Canada instead of in the United States? Do

that, rather than run around the country saying that British Columbia

is shipping all its natural resources to Japan. We would love to ship

some of our natural resources to our own steel industry in Ontario, but

all your guys do is sit down there and talk airy fairy socialist

programs. Why not have a program of buying your coal at home? That's

where you should start. Tell your MPs down there in Ottawa. One of them

is sitting there next to you — he used to be down there. What did he

do? Did he ever talk about buying coal at home?

MR. BLENCOE: What happened to the Socred MPs?

[11:30]

HON. MR. PHILLIPS: We're doing very nicely, thank you very much. At least we're not going down the tube the way you did.

I want to tell you that I remember standing here last fall in my

estimates and saying: "NDP popularity in Canada is shrinking. It's gone

from 26 percent to 19 percent to 16 percent — going, going, gone." I'm

going to say right now that the NDP popularity has declined from 26

percent to 19 percent to 16 percent to 13 percent — going, going, gone.

If I stand here next year, it will have gone from 13 percent to 10

percent to 7 percent — gone. So don't talk to me about popularity. The

problem this government is having right now is that never in the

history of any government has its popularity gone up after an election.

We're less than a year away from an election and our popularity is up

25 percent of what it was last May when we had this election. If we

went to the people today we would probably win all of the seats in

British Columbia. That's because of the policies of this government.

We are working on a number of new coal-mines. Yes, there is the

opportunity out there in that competitive world to sell additional

coal. We will be aggressively pursuing that market in spite of all the

doom and gloom that has been perpetuated on us from the mouths of the

opposition.

Mr. Chairman, I don't want to talk too long in opening my estimates,

because I want to hear from the opposition what particular areas they

would like to zero in on. But I would be remiss in my responsibilities

to those great people who run the British Columbia Railway if I didn't

say a few words about the great railway. When I became responsible for

that railway in 1976, it was losing a lot of money — something like $22

million, I think. I won't go over all the years. We put in a new board

of directors, and we started telling the railway that it should run its

own affairs like a business, without any political interference. In the

days of the NDP, the Premier of the day was the president of the

railway, and every time something didn't go right with the management,

they ran over to Victoria. The railway was run from Victoria. We said:

"No, we're going to let the management run the railway. We're going to

put an independent board of directors in there, and they're going to

make the decisions." Today the British Columbia Railway is the crown

jewel of all Crown corporations, and in difficult years — last year and

the year before — it made a profit of well over S55 million in two

years. A success story indeed.

The people who work for that railway are again proud of their

railway and proud to work for it, and most of the people in the

province of British Columbia are again proud of our railway. I want to

tell you that it's one of the most modern railways you will find

anywhere in the world. In terms of communications. It’s well ahead of

our national railways. In terms of locomotive location systems, which

are manufactured and engineered right in North Vancouver in one of our

high-technology industries, it's ahead of any railway anywhere in the

world. Another breakthrough, of course, with the 50 KV electrification

of the line from the new Tumbler Ridge branch line is that we're

working on new technology which can hopefully be used someday to

electrify the railroads right across Canada. Those are just some of the

things we have to be proud of in that British Columbia Railway. And, of

course, as far as the future goes, there may be additional lines built

for the railway as we open up the northwest part of the province.

I want to talk for just a moment about the addition of new port

facilities which have been brought in in British Columbia in the last

eight or nine years. I refer of course to the new port facility at Duke

Point, which is there to serve the industry on Vancouver Island. The

infrastructure is in place, and as new industry locates here on the

Island and as the existing industries expand, the infrastructure by way

of port facilities is there. We made a commitment to the export market,

and we backed it up by ensuring that new port facilities were there and

in place. I refer also, of course, to the tremendous new port facility

at Prince Rupert: the new grain terminal, the new bulk handling

terminal. And I hope that someday there will be a new liquid petroleum

terminal there. But we're ready to face the future because the

infrastructure is in place, and Canadian National Railways will be

spending hundreds of millions of dollars upgrading their line to serve

the future workers of this province and to ensure that we are a

reliable supplier. I don't want to compare us with our friendly

neighbour, the States, but I think we are light-years ahead of them in

our transportation systems and our port facilities in order to take

advantage of that burgeoning market in the Pacific Rim.

We have some new ideas which we would like to work with Ottawa on in

establishing tax-free zones here in British Columbia. I predict that

we're going to have some difficulty, because Ottawa will say: "Well, if

we establish a tax-free zone in British Columbia, we'll have to

establish one in Alberta and one in Saskatchewan and one in Manitoba."

Not to say, of course, that they'll think they have to establish some

in Ontario and some in Quebec and.... That's the sort of negative

thinking that I'm afraid we're going to encounter in Ottawa, instead of

having them look at British Columbia and take British Columbia as part

of Canada and say: "British

[ Page 4110 ]

Columbia, because of its location on the Pacific Rim, is the area where a tax-free zone should be established."

MR. LEA: What would they accomplish?

HON. MR. PHILLIPS: The man from Prince Rupert, who is a

potential leader, says: "What would they accomplish?" Well, it's not

much wonder that you're an irrelevant force in the political scene in

British Columbia if you have to say: "What would they accomplish?"

MR. LEA: Never mind that. Tell us what they would accomplish.

HON. MR. PHILLIPS: I'll tell you what they would accomplish.

We would be able to bring to British Columbia assembly plants that

would assemble goods and services to be re-exported into.... The main

area could be the west coast of the United States. We could bring

high-technology industries here. We could have thousands and thousands

and thousands of jobs created here in British Columbia. They won't go

to Alberta, they won't go to Manitoba. This is the logical place for

them to go. If Ottawa would be bold enough to put politics aside and

look at logic and reason, then they would immediately sit down and

negotiate with us on establishing a tax-free zone here in British

Columbia. It was longer ago than I care to remember that I wired the

minister, and I haven't heard a scratch of a pin from him yet.

MR. LEA: Do you want to get me on record so that you can make a fool of me?

HON. MR. PHILLIPS: No, you can do that quite well without me assisting you.

MR. CHAIRMAN: Order, please, hon. members. The member for Prince Rupert will have his opportunity to stand in debate.

HON. MR. PHILLIPS: I get the feeling that he's itching to stand up in the Legislature.

MR. CHAIRMAN: If the minister would direct his comments to the Chair, please.

HON. MR. PHILLIPS: However, we will continue to try to sell a

reasonable argument to Ottawa on the benefits of Canada establishing

those zones here. Let me guarantee you that if we do, we will see major

assembly plants, creating thousands and thousands of jobs, established

in the province of British Columbia within a two-year period. It is

waiting to happen. It is waiting for us to do it.

We have to continue to create a climate for investment in this

province. We have to continue to work on that. Mr. Chairman, we have on

the drawing boards millions and millions of dollars waiting to be

invested in this province.

MR. LEA: I'll bet you have.

HON. MR. PHILLIPS: Yes, we have. Major projects. And they will proceed, in spite of the opposition.

Mr. Chairman, there is just one other area that I want to touch

briefly on, and that is our lumber industry. I think that we have to

change some thinking in our lumber industry in order to establish in

British Columbia a higher value added to some, not all, of our lumber.

We will remain in the dimensional lumber business for a number of years

to come, but I think we could establish in British Columbia a viable

and very competitive furniture business. I think the timing is right,

and I think it can be done.

AN HON. MEMBER: In a tax-free zone?

HON. MR. PHILLIPS: Well, that would certainly be of some assistance.

We also have to start — and we can and will — utilizing some of our

waste woods. I refer to aspen in the north and alder on Vancouver

Island. Those are some of the initiatives that we will be taking in the

coming year.

One other area we will continue working on is diversifying our

lumber markets for our standard dimensional lumber around the world. I

am pleased to tell the House today that we have made a breakthrough in

Korea. Hyundai Corp. will be putting up ten framed platform houses,

which will be the first ever to be built in Korea. Korea has a housing

crisis. The standard of living is going up every day in Korea. If we

can put this project together successfully, I think it will be the

breakthrough we have been waiting for.

It has taken four years of negotiation, selling, cajoling and

working in that market to get this breakthrough. It's not that simple

to get somebody to put up a house: you have to change your fire

standards, insurance standards, mortgage policies and civil building

codes. It takes a lot. That is the breakthrough we made in Japan a

number of years ago. Our market in Japan in growing. I am hopeful the

same thing will happen in Korea. Again, we'll ensure that our lumber

markets are diversified and that those jobs out there in the IWA will

remain — and, of course, those that are not IWA. It will ensure a

diversified, stable market for our lumber industry.

British Columbia is on the upswing. Confidence is returning. Last

year 14,000 new companies established business in B.C., an increase of

17 percent over 1982. Again this year I'm informed that it is growing.

So confidence is returning. Those are small businesses. I'm not talking

about major megaprojects. Those are small companies that have

established business in British Columbia. Confidence is returning.

Building up an atmosphere of confidence is not just solely the

responsibility of the government. That responsibility has to be shared

by labour union leaders. It has to be shared by professors at the

universities. Indeed, the building of that climate has to be shared by

the opposition. It is time the opposition recognized their

responsibility and started pointing out alternatives. If they don't

like the way we're running it, they should come up with alternatives

and get down to being an effective opposition, instead of just playing

around in the dark about everything we do and saying how bad it is.

That does not help to build the confidence needed to ensure British

Columbia's future.

[11:45]

We are looking at putting new programs together. I would like to

hear from the opposition today, their suggestions to my department as

to how we can improve on the programs, on assistance to small

businesses and the manufacturing industry. I want them to tell me today

— give me their suggestions — not just stand up and flail around at

every project this government has done. I want to hear their

constructive suggestions. I want to hear them make some statements that

will help create a climate of security for the future

[ Page 4111 ]

investors in this province. I'm challenging the

opposition today to come forward with concrete suggestions as to how we

can improve the economy of this great province.

With that, Mr. Chairman, I shall take my seat and wait with bated

breath for their constructive, positive suggestions as to how we can

improve life in British Columbia.

MR. LEA: Knowing the minister rather well, he'll probably wait with bait on his breath as opposed to bated breath.

I'd like to deal quickly before the noon hour with the suggestion

that the minister has for tax-free zones to entice high-technology

component manufacturing in the province. Since the early 1900s the

wealth in North America has basically been made from high-volume

standardized runs of goods — washing machines, cars, etc. The list goes

on. Up until recently the only thing that was exportable or

transferable was capital out of the country to Third World countries.

Technology was not, because running the high-volume standardized run of

North American goods required highly trained work forces. But with the

advent of new technology which takes only a few highly skilled people

at the top and a workforce of unskilled or semiskilled workers,

technology is also exportable now. With the capital and the technology

both being exportable, with low skills or no skills needed, those

technologies and that capital are being transferred to Third World

countries in order to create in those countries the high volume

standardized runs, paying the workforces next to nothing, with no

safety standards or environmental controls, and the Third World

countries are only too happy to get it. There's no way we can compete

with them unless we want to bring our standard of living down to the

same level they are working for in those Third World countries.

MR. PARKS: Nonsense.

MR. LEA: It's not nonsense — it's true. The high-volume

standardized runs that are remaining in North America are having new

technologies applied to manufacturing and processing, putting people

out of work in those areas. So our country is losing wealth and losing

jobs. But other economies are not doing that. They are concentrating on

what are called knowledge-intensive, value-added industries. Japan is

one of the leaders in that. As a matter of fact, when you look at how

North America stacks up to the rest of the world, we are near the

bottom of western industrialized countries. We're behind France, West

Germany, Japan and England. We're behind them all because we haven't

done the research, we haven't put the effort and the money into

education that we should in order to come up with knowledge-intensive

industries — no research, improper education funding, the wrong kind of

education. Countries like Japan are now actively searching out

countries to transfer those high-volume standardized runs to, while

keeping the value-added, knowledge-intensive industries, which is where

wealth creation is today in the world. Japan is looking for tax-free

zones, as are other countries that are much ahead of us in

knowledge-intensive and value-added industries. All we will do, if we

set up tax-free zones, is entice countries like Japan to transfer those

unskilled and semi-skilled jobs of high-volume standardized runs from

their country to our tax-free zones. That's what this government calls

high technology.

Do we really want to compete in wages with Third World countries? Do

we want to compete in environmental standards with those Third World

countries? Do we want to compete in safety factors for the work force

in the plant? Is that what we really want for our province? To go out

into the world and say: "We are proud to become a Third World

competitor?" That is what we're saying. The tax-free zones that have

been set up throughout the world have no worker safety standards, no

health standards, no environmental standards, no Workers' Compensation

Board standards, no wage standards — not even the minimum wage. Is that

who we're setting ourselves up to compete with? They usually have their

own private police forces. They are terrible! Take a look around the

world and see what you're setting up competition for. That is not what

the people in this province want. They would much rather move forward

to compete with those knowledge-intensive, value-added industries that

are being put together in those countries that have taken advantage of

new technology and used it for the benefit of their citizens. All this

government wants to do is entice the manufacture of components for

countries that are more advanced economically than we are. Are we going

out saying to these countries that are more advanced than ourselves

that we will gladly take the slurp? Are we going to be proud to compete

with these tax-free zones around the world and the Third World

countries? Is that really what we want for British Columbia, or do we

want to take a good look at how we can become a competitor with Japan,

West Germany, Sweden and silicon valley and not take the spillover from

silicon valley and say we will supply cheap workers along with health

standards that aren't up to par? We will supply all of those things to

compete for what? For dollar-an-hour jobs? We have the Minister of

Universities, Science and Communication (Hon. Mr. McGeer) saying that

yes, not only will we do that, we will change the Labour Code in this

province to make sure that we can compete with Third World countries in

terms of labour.

I'd like to ask the minister who he thinks is going to keep this

province going. It has to be the workers. The workers have to make good

money in this province so they can spend that good money in the small

businesses of this province that the minister is so proud of. We on

this side of the House would like to take a more positive approach than

the minister. What we would like to do is put the effort, the money and

the educational system in this province to work, in cooperation with

trade unions, with industry and with other public interest groups, to

try to pull ourselves out of the position we're in and into the future

— into an economy where we can compete with Japan, West Germany,

France, Sweden and those other more progressive countries in the world

that have taken the other approach and said: "We're going to go into

technology in a much different way. We're going to be the people who

invent new technologies and export those." They're called hidden

exports.

We have a perfect example in our copper mining industry, where we

have competition coming onstream internationally from places like Zaire

and Chile, who are actually selling into the world at below their own

production costs just to break even on balance of payments and pay off

banks they've borrowed into. It’s very difficult for us to compete with

Zaire and Chile in the production of copper when that's what they're

doing.

Our other problem in copper is that the usages for copper are being cut back. Again, the application of new technology

[ Page 4112 ]

is putting into place fibre optics, plastics and

other technological advances that are taking away from the uses of

copper. We've got a problem. How are we going to solve it? I believe

that we should be doing research in this province in the production of

copper that would give us more productivity in copper with more

advanced technology. I think we should be going for knowledge-intensive

industries; if we can't compete with Chile and Zaire, we should be

selling Chile and Zaire new methods for mining and smelting. We should

be in the leading edge of new technology breakthroughs so that we can

compete with countries like Japan and not take off their cast-off

high-production jobs at very low wage rates. Surely that isn't where we

want to go. Surely that is not what the government is bragging about.

Surely we want to be a competitor with the best, not to take low-paid

jobs from the best. Surely that is the way we want to go. The only way

we're going to go there is if we put time, money and effort into the

education and research that will take us into the future. It won't come

overnight, that's true.

As we go through this economic revolution, there are going to be

what economists call "severe dislocations." We call it human misery.

There are going to be workers in middle-management, offices,

manufacturing and processing who are going to be put out of work

exponentially. The measure of us as a society is how we treat those

people who are displaced through no fault of their own, as we work a

future economy that is going to take us into the lead and have us

compete with other countries who started 15 and 20 years ago. Yes, we

have to catch up. But education is going to be the biggest project that

can take us into the future. Without that we are going to remain the

hewers of wood and the drawers of water. Even worse, we are going to

become the recipients of the lowest-paid jobs in the world, competing

with the workers in the Third World countries. Our workers will suffer;

our business community will suffer; our whole general economy will

suffer.

I get a little tired, Mr. Chairman, of having the government

actually get up and brag about setting up tax-free zones to compete

with those countries at the lowest possible scale. Surely we don't want

to. Surely we want to invest in our future so that we can compete with

the best of them. Surely the people in this province want to make the

effort; I know they do. Surely the people in this province want to

cooperate in taking us into the future; they're showing that. The

minister stated in his opening address that the business community,

farmers, trade unions and non-union organizations have to compete and

work together to get through these trying times and make sure that we

don't stamp on our neighbours on the way — that we actually look at our

neighbours and help them. In the meantime, we have severe dislocations

that we must look at humanely, with common sense; we must help our

neighbours. But surely we must look toward the new economic order. We

cannot cling to the past. We must grab the future by reaching out for

it. We can only do that by investing our time, effort and cooperation

in a new economic order that will take us into a competitive field with

the best of them, and not by taking the castoffs from the best of them.

I don't believe our province wants that.

HON. MR. PHILLIPS: That was a great campaign speech, Mr.

Chairman, but the member for Prince Rupert is way out in left field.

Tune in at 2 o'clock and I'll tell you why, and I'll bring the member

up to date on what is happening in the world of high-technology

industry and in tax-free zones throughout the world. Everybody in the

gallery please come back at 2 o'clock and learn what the world is all

about. Don't listen to that utter garbage emanating from a leader of

the NDP, because he has no idea what he's talking about.

Mr. Chairman, I move the committee rise, report progress and ask

leave to sit once again this afternoon at 2 o'clock, when I will bring

you up to date on what is happening in the real world.

Motion approved.

[12:00]

The House resumed; Mr. Speaker in the chair.

The committee, having reported progress, was granted leave to sit again.

Hon. Mr. Schroeder moved adjournment of the House.

Motion approved.

The House adjourned at 12:01 p.m.

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