1992 Legislative Session: 1st Session, 35th 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, JUNE 11, 1992

Afternoon Sitting

Volume 4, Number 13

[ Page 2493 ]

The House met at 2:05 p.m.

G. Wilson: I'd like to introduce a constituent of mine, Mrs. McEvoy, who is from Powell River and visiting with us today. I hope the House will make her welcome.

F. Jackson: I would like to introduce to the House today a new citizen, Michael Alistair McDermott, son of Bradley Adam Murry and Gillian Clare McDermott. Michael Alistair arrived at 12:23 yesterday afternoon weighing in at seven pounds, five ounces. I would like the House to join me in making the young man welcome.

L. Krog: I have the pleasure of introducing three of my constituents to the House today. From the lovely community of French Creek, Carman and Helen Cole, good supporters of mine. Thirdly, from what is known as the shrine of the western world to those of us who we were raised near Coombs, B.C., my mother, Eileen Krog.

L. Stephens: I would like to introduce 22 grade 7 students from Credo Christian Elementary School in Langley and their principal, Mr. Roukema, to the House today. Would the House please make them welcome.

Introduction of Bills

FOREST AMENDMENT ACT, 1992

Hon. D. Miller presented a message from His Honour the Lieutenant-Governor: a bill intituled Forest Amendment Act, 1992.

Hon. D. Miller: It's my pleasure to introduce Bill 61 to the House. This bill amends the Forest Act to enable the Forest Service to improve stewardship of the province's forests. It will also enable the Forest Service to protect the financial interest of the Crown in this public resource.

The forests of British Columbia are the basis for much of the economic and environmental well-being that British Columbians enjoy. Our forest industry is and will continue to be the primary engine of our economy; equally the forests are an important element of tourism, outdoor recreation, our culture and our environment. It is very important that we plan carefully for these benefits.

We must balance the expectations for our industry, recreation and environment so that the chief forester may determine the timber-harvesting levels that best serve the public. This bill will allow the chief forester to improve these decisions.

This bill also fulfils substantial commitments made by this government in its 48-point plan and in the throne speech. This government promised that it would introduce legislation to further reduce the risk of revenue loss by inproving controls over the marking, scaling and movement of logs; to enable greater consistency and fairness in the administration of major tenures; to improve the efficiency of administering the small business and woodlot programs and to strengthen the Forest Service enforcement of reforestration obligations. This bill meets those commitments.

Bill 61 introduced, read a first time and ordered to be placed on orders of the day for second reading at the next sitting of the House after today.

COMPENSATION FAIRNESS REPEAL ACT

Hon. G. Clark presented a message from His Honour the Lieutenant-Governor: a bill intituled Compensation Fairness Repeal Act.

Hon. G. Clark: Bill 49 repeals the Compensation Fairness Act, which came into effect on January 29, 1991. The Compensation Fairness Act represented an attempt to control wages in the public sector through indirect means. It was purported that legislation was not intended to interfere with the free collective bargaining process. In looking back, it is evident that the Compensation Fairness Act did not achieve its stated objective of ensuring fairness in compensation paid to public sector employees.

It is also clear that the act has introduced distortions in the collective-bargaining process and has been an impediment to harmonious industrial relations in the province. It is our view that agreements reached between the parties should be respected. Any outside influence by legislation such as this act is an unnecessary intrusion into the free collective bargaining system. For these reasons, we believe the legislation should be repealed. I commend this bill for your consideration and urge its passage.

Bill 49, introduced, read a first time and ordered to be placed on orders of the day for second reading at the next sitting of the House after today.

Oral Questions

CONSTITUTIONAL NEGOTIATIONS

G. Wilson: Hon. Speaker, my question today is to the Premier. Will the Premier acknowledge, in light of the ludicrous proposition put forward by the Premier of Saskatchewan today on Senate reform, that it's time to say enough is enough? Will he recall the minister, and will the Premier and the leader of the official opposition go forward in tandem now to put the position of British Columbia clearly and squarely before the federal government and the negotiators -- that we will not tolerate the proposition where a reformed Senate, by weighted vote, will make British Columbians second-or third-class citizens in Canada?

Hon. M. Harcourt: I think it's that kind of tone that we've seen too much of. I think what we need to do is have the Constitutional Affairs ministers continue to work. I think there has been remarkable progress over the last few months. If you look at the areas where Canadians want to see change, where the

Constitu-

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tional ministers have been able to reach consensus -- on the question of distinct society, on the issues around self-government in principle, on the Canada clause, on the social contract -- we are making some headway.

We agree on abolishing the existing Senate. If there's going to be Senate reform, we need to have a Senate that is elected -- we agree on that -- and it has to be effective in protecting provincial jurisdictions. As well, we're looking at the issue of how it can be made equal on a regional or provincial basis. I think there has been substantial progress, and that progress is not registered in the tone or the approach of the Leader of the Opposition. I think that's unfortunate.

G. Wilson: A supplemental. I wonder if the Minister Responsible for Constitutional Affairs has kept the Premier as well informed as he has the Leader of the Opposition, because I can tell you of the frustration that has been demonstrated with respect to the lack of progress, especially on the matter of a reformed Senate. The propositions put forward today by the Premier of Saskatchewan -- which move us away from, not toward resolution -- indicate that it's time for us to say "enough is enough" on this question. Let us come to a process for final resolution.

Let us get down to the position where we can have a provincial referendum on a question that will put in place equality for all Canadians. Will the Premier commit today that he will now start to personally take charge on this matter, so that the first ministers of this country can recognize that the time has come for Canadians to be given an opportunity to vote on a package of equality?

Hon. M. Harcourt: The Leader the Opposition should demonstrate the same sort of patience and goodwill that Canadians have for this matter to come to a consensus. I think that is happening. I agree that there is some acrimony. There are some concerns around the issue of Senate reform.

I am in touch with the Minister Responsible for Constitutional Affairs. He is taking the position that your members participated in -- the legislative committee, which did a fine job. He's taking the position of British Columbians forward to this meeting of constitutional ministers. I think we should tell him to continue with the position put forward by the people of British Columbia.

[2:15]

G. Wilson: A final supplementary to the Premier. Will the Premier commit to this House today that he will personally either direct the minister...? Or will he personally intervene to make sure that the ludicrous proposition put forward by Saskatchewan is not adopted by the representatives who are negotiating on behalf of British Columbia?

Hon. M. Harcourt: Again, hon. Speaker, I want to go back to my first comment. Using words like "ludicrous" and "ridiculous" -- that sort of inflammatory language -- is part of the problem that we're seeing at the constitutional table.

There is some excuse for the constitutional members -- who are in a pressure-cooker atmosphere with each other for two or three months -- to get frustrated with each other. For the Leader of the Opposition to demonstrate this sort of petulance and truculence is unfortunate.

INITIATIVES AND RECALL PROCESS

R. Neufeld: My question is to the Premier. Last fall over 80 percent of British Columbians voted in favour of MLA recall and an initiatives process that would be binding on government. You promised you would live by the people's viewpoint; in fact, you even voted in favour of it. Your honour and your credibility are on the line at this time, Premier. Have you deceived the people, or are you simply afraid of democracy?

Hon. M. Harcourt: I'd like to say to the hon. member that I am committed to referendum and recall. The principle is one that our caucus supported when the matter was before the Legislature; we support it now.

R. Neufeld: I'm sure that the people in Kamloops would enjoy recall right about now. I don't know why you folks are so afraid of recall and a democratic process through initiatives.

The Speaker: Your question, hon. member.

R. Neufeld: What specific steps is this government prepared to take right now to give British Columbians the legal right to initiatives and recall?

Hon. M. Harcourt: The member has raised a very good point. As I have said earlier on this topic, a number of very practical questions have to be answered -- questions that I raised, by the way, when the legislation was before this Legislature. A lot of very practical issues and questions were raised then. As you will recall, the legislation was phrased in very vague and general terms. The support that we had on both sides of the Legislature should be shown again, and it will be shown through a legislative committee that will be appointed to look into such practical questions.

A press release of September 5, 1991 from the previous Premier, when she announced support for this legislation, is one that we should listen to:

"If there is a yes vote on recall...we would establish a broadly based impartial committee to undertake extensive public consultation and help develop the framework for that legislation.... If the people vote yes on initiative, the committee seeks public input and guides us in framing legislation."

I think that's good advice, and we will follow it.

The Speaker: A final supplemental, hon. member.

R. Neufeld: During the throne speech you promised to expand the committee system, Mr. Premier. We now ask that you put this to the parliamentary committee on reform and have them bring forth legislation at the next session of the House.

[ Page 2495 ]

Hon. M. Harcourt: I thought that that's exactly what I said, but I guess I will have to repeat it. There will be an expansion of the committee system. Our House Leaders have been talking about that, and I hope they're keeping you informed of those discussions. The committee will be established to look at questions such as how many citizens per petition, what percentage will be required for recall, what sorts of issues should be put forward.

I think there are some very important practical questions. We can make sure that the people of British Columbia are well served. I think the committee, although it's future policy.... I've said before that such a matter will be before a legislative committee to report back as soon as they're ready to report back to this legislature.

ABSENCE OF LABOUR MINISTER

W. Hurd: My question is for the Premier. The opposition recognizes the efforts of the government's Minister of Labour, Consumer Services and Minister Responsible for Constitutional Affairs back east. My question is: how does he expect his Labour minister to address from Ottawa the growing labour chaos in this province?

Hon. M. Harcourt: We have the Leader of the Opposition asking that our Minister Responsible for Constitutional Affairs be putting forward the position of the people of British Columbia. He is doing just that. Now one of the members of his caucus is suggesting that he should be back here intervening in the collective bargaining process. I wish they'd make up their minds.

W. Hurd: This Premier may not be aware of it, but we have an escalating pulp strike, we have Westar workers on the bricks, teachers' contracts up and ICBC in chaos. We have 35,000 employees coming up and 350 contracts.

Interjections.

The Speaker: Order!

W. Hurd: This minister has been out of the province for four days a week for the last eight weeks. Who's minding the store?

The Speaker: A point of order has been raised by the member for Columbia River-Revelstoke. Can that point of order be taken after question period?

J. Doyle: Yes.

The Speaker: Has the member stated his question?

W. Hurd: I have.

The Speaker: Does the hon. member have a final question?

W. Hurd: This is a Premier who said he didn't want to fiddle on the constitution while the economy burned. His Minister of Labour has been gone for eight weeks. Who's in charge of the government's own labour...?

Interjections.

The Speaker: Order! Would the member please take his seat. Hon. members, question period, as I recalled the previous day, is very short. If we cannot hear the questions and if we cannot hear the answer, then it does not serve the purposes of the House.

Hon. member, if you do have a question, please state it directly.

W. Hurd: My question is to the Premier: who's in charge of this government's labour bill?

Hon. M. Harcourt: I'm glad we've finally got a direct question from the member. The Minister of Labour, as you know, has appointed a very fine panel. They are highly representative of business and labour, and are specialists in the area of labour relations. They are working very actively and diligently with employers, with employees and with others who want to bring a model labour code to this province to bring about fairness in labour-management relations and to make sure that free collective bargaining works.

I would hope that the member is not disagreeing with the direction in which the minister is trying to take us, and that he is not suggesting that we fiddle with free collective bargaining and intervene unnecessarily in the free collective bargaining process.

NORTH AMERICAN

FREE TRADE AGREEMENT

D. Mitchell: I have a question for the Premier. In response to a question regarding the North American free trade agreement, the Premier said to this House, "We are at the negotiating table, and we will stay at the negotiating table," yet he has written to the Prime Minister, pleading that we should cut off talks now and take all of our marbles home.

Can the Premier tell us whether he has changed his mind about the ability of Canadian negotiators at least to discuss the agreement, or is he still convinced that if we stay at the table any longer, the government of British Columbia is going to lose all of its marbles? How can the Premier traipse around the Pacific Rim talking with billionaires from Asia when in dealing with our largest trading partner, the United States, he folds like a cheap camp stool?

Hon. M. Harcourt: I'll try and answer very succinctly, because I'll follow your very wise directions in this matter of giving succinct answers to, hopefully, succinct questions. What I will do is give the response that I gave earlier: this government has a profound disagreement with the trade policy that the North American free trade agreement is based on, which is the United States setting up a spoke and wheel approach.

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We want to see a freer trade relationship in the world, starting with a hemispheric trade deal, instead of the United States driving it with one neighbour against the other. I think that is a very wise trade policy for a hemispheric trade deal that could then expand into GATT.

We are making that known now, before the deal is initialled -- while we're sitting with the federal government, expressing our concerns in private. The hon. House Leader of the opposition wanted to have secret documents that we could not make available. I'm saying that we have to have that debate now, in public, before our national government, which negotiates treaties, signs the trade deal. We're making those profound disagreements known right now, before the deal is signed.

D. Mitchell: I have a supplementary question to the Premier. The Premier told this House recently that NAFTA was a Reagan-Bush-driven trade strategy, and that Canada was only a spoke in the wheel instead of the hub. He referred to that again today. Would the Premier not agree that if the wheels of trade are rolling in any event, we're better off driving in the truck than sitting on the road in front of the truck?

The Speaker: The hon. Premier for a brief reply.

Hon. M. Harcourt: You tell that to the lumber industry. It just got run over by a logging truck from the United States. If you think that this free trade agreement is to the benefit of the forest industry in this province, then I don't know what province you're living in, but it certainly isn't British Columbia. We're not only expressing our disagreement with the policy behind the North American free trade agreement, but we are at the table -- the minister has made it very clear -- expressing our concerns about its impact.

If the deal is initialled and it goes ahead, the North American free trade agreement could have an impact on our agricultural and textile industries and others. We are at that table. We are making sure that B.C.'s interests are taken care of.

I can tell you that we are going to expand our trade into Mexico and the other Central American and South American countries whether there is a trade deal or not.

J. Doyle: A point of order. My point of order concerns when the hon. member for Surrey-White Rock was speaking. It would be my intention to remind that member that private members' statements are Friday a.m. Also, standing order 47A(b): "Questions and answers shall be brief and precise, and stated without argument or opinion."

The Speaker: The last part of the point of order, hon. member, was certainly in order. I would remind all hon. members to review standing order 47A, perhaps on a daily, or at least a weekly, basis.

Hon. G. Clark: Thank you, hon. Speaker, an excellent point of order.

Orders of the Day

The House in Committee of Supply B; E. Barnes in the chair.

ESTIMATES: MINISTRY OF FINANCE

AND CORPORATE RELATIONS

On vote 35: minister's office, $325,213 (continued).

[2:30]

D. Mitchell: I'd like to ask the minister responsible for TRIUMF-KAON a question about the status of the project. This is a national science project, of course, and it has tremendous implications for the economy of British Columbia. We know that the KAON project at the TRIUMF centre situated at the University of British Columbia has tremendous economic benefits for British Columbia, but we're concerned about the status of the project today.

We know that there's a lot of wrangling going on between the federal and provincial governments, and we wonder whether or not that constant wrangling and quarrelling can possibly inspire the confidence that's going to be required for this project to proceed.

I wonder if the minister initially could give us a very brief status report on the KAON project, and could he express his own view as to whether or not the project is in fact going to proceed?

Hon. G. Clark: If I can begin by introducing my staff, on my left is Eric Denhoff, who is the chief negotiator for the TRIUMF-KAON project office; in fact, in charge of a little team in that regard. Next to me is my deputy minister, Michael Costello; next to him is my senior financial officer, Brian Mann; and just coming in are Mike O'Connor from B.C. Transit and Rick Krowchuck, the financial officer from B.C. Transit.

I might say that the TRIUMF question is a very good question. TRIUMF-KAON is a British Columbia project which enjoys all-party support -- one of those rare occasions. The previous minister responsible, Mr. Stan Hagen, deserves a great deal of credit for driving this onto the national agenda. I've been privileged enough to make use of that and essentially to continue on with the multi-party approach. When we had a breakfast recently to make a new offer to the federal government, Stan Hagen attended, which I was delighted about. My spokesperson opposite, the member for West Vancouver-Garibaldi, attended as well. I think that is indicative of the multipartisan support that this project has.

The reason for that is very simple: British Columbia does not get its share of funding for federal science projects. We are, as usual, underrepresented at the national centre. If we were to receive funding for the TRIUMF-KAON project office, it would only raise British Columbia's level to 8.4 percent of the national funding for science. As you know, we represent 12 percent of the population, and clearly we should be getting something more in keeping with the taxes we send to Ottawa. The TRIUMF-KAON project is of British Columbian significance, it enjoys all-party

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port and it is reasonable, and it should be provided for a province of British Columbia's stature.

We do enjoy some support at the national level in the form of Kim Campbell, the senior minister, and other members of the Conservative government who are from British Columbia, as well as members of the NDP; and certainly the lone Liberal member, John Turner, is a strong supporter of the KAON project. Having said that, you would think the logic would be that we should receive significant funding from the federal government, but unfortunately the federal Minister for Science, Mr. Winegard, is not as sympathetic to the project as the facts would indicate and should indicate.

They have been wriggling to get out of the commitment that they made before the election for a share of the capital cost by maintaining that they would not share more in the operating costs.

[R. Kasper in the chair.]

I must remind all members that every national science project in the country is fully paid for by the national government. The previous administration made an historic offer, and I think it was the first time that any provincial government said: "We will pay one-third of the capital costs of KAON, up to $300 million in provincial government funding, for a national science project." We supported that in opposition, and the government supported it. They still refused to come to the table to negotiate something satisfactory, even though we had made this historic offer.

At that breakfast a few days ago, which the member opposite and members from all parties attended, there were 1,200 British Columbians. We made yet another offer on the KAON project: that as a provincial government not only would we provide one-third of the capital cost of this project, for the first time in Canadian history, but we were also prepared to fund some of the operating costs, particularly around the provision of hydroelectric power. I won't put a number on that, because it varies. But the full cost of the electricity, when the project is up and running, could amount to up to $10 million a year.

We did not commit to providing the full operating costs, but we're prepared to negotiate. I think that sends a message to the federal government that we as a government are serious, British Columbians are serious and all parties are serious about this, and they should come to the table and be reasonable in the way that they have been with other science projects.

Everybody knows that in the last few months hundreds of millions of dollars have been given to the province of Quebec in the form of procurement contracts. There has been some $500 million for a bailout of De Havilland Aircraft in Ontario. The federal government has paid for those, and there has been nothing -- not a penny -- for British Columbia. We're not asking for something which is not right, not proper or not reasonable; we're just asking that British Columbia get a share of federal science funding more commensurate with our population.

In spite of that new offer, there has not yet been an appointment of a negotiator from the federal government. To get to the specifics of the question of where we are at today, I have talked to Mr. Winegard recently. He's concerned that the one-third of the capital costs that were committed by international partners is not as solid as it should be. Obviously I'm concerned about that as well. What I said to him was: "Appoint a negotiator. Start sitting down with British Columbia.

We're prepared to support the federal government in going around the international community to firm up the international support for TRIUMF-KAON." But I also made it clear that British Columbia is not a nation. We don't have the infrastructure; we don't have the embassies around the world. We can't do that kind of negotiations -- Minister of Science to Minister of Science -- in the national arena. We're prepared to go. I'm prepared to go. My deputy in this regard, Eric Denhoff, is prepared to travel with the federal government as part of the delegation to show we're serious, to show we're supporting it.

But the federal government has to take the lead on the international question. That's what the country's all about.

In addition, we said: "Let's talk about all of the other ramifications: about overruns and who would be responsible for that; what are the real operating costs and how we can start talking about that." We've made this generous offer -- a very generous offer -- of some of the operating costs. They have not responded, and it's a great concern.

I share the member's concern that getting into this kind of ping-pong and partisan debate on this question is not necessarily productive; nevertheless I think all British Columbians expect the province of British Columbia, their government and other members of the House to stand firm when it comes to getting our fair share from Confederation, and we have not got that in the science field.

We have got to take the tough position with the federal government for them to come to the table, because I fear, frankly, that this will be another Polar 8 agenda. There's a federal election coming.

Every time someone questions a payment to Quebec, a payment to the Ontario government, the Prime Minister, Brian Mulroney, stands up and says: "Ah yes, but we're giving all this money to KAON in British Columbia." That's his response every time in the House of Commons, and he wants to keep saying that through an election campaign, and then kill it after the election campaign; exactly what they did to British Columbia shipyard workers when it came to building the Polar 8 in North Vancouver. We're not going to allow that to happen, and so that means we have got to be tougher on them.

We have got to turn the heat up in a multi-party way, and we have got to get them to the table to talk about this very important issue.

We're inching them along with this pressure. I have talked to Mr. Winegard recently. We're hoping they'll appoint a negotiator. I have talked to Kim Campbell as well, I must tell you, and she is very supportive of this project. I have told her quite candidly that she has an obligation on the part of British Columbia not just to represent Canada in British Columbia, but also to

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represent British Columbia in the national capital in Ottawa. Sometimes I'm not sure our federal Tory MPs understand that. They're very good at taking the message from Ottawa back to British Columbia, and telling us why we should support the GST and all these other wonderful things that I would say they are foisting upon British Columbians, but they're not as effective about taking British Columbia interests and going to Ottawa and representing us in Ottawa.

I've had a fairly frank discussion with Kim Campbell. I'm satisfied she's a strong supporter of KAON. I put it to her that she has to take this seriously and drive that agenda in Ottawa. I have confidence that she will do that. At this stage, we have not seen a counteroffer from the federal government, nor have we seen an appointment of a negotiator.

D. Mitchell: Could the minister responsible for TRIUMF-KAON inform this committee how many employees are directly funded by the provincial government with responsibility for TRIUMF-KAON?

Hon. G. Clark: The only person who is directly funded by the provincial government is Eric Denhoff -- one person. We have other people on contract. They are funded through a grant that we provide to TRIUMF, which then pays contracts out to people. The amount of the grant to TRIUMF is $300,000.

D. Mitchell: Could the minister indicate whether or not in the last little while there have been any reductions in staff or contractors with responsibility for KAON?

Hon. G. Clark: This happens from time to time. These are contractors. When contracts expire, they're not automatically renewed. We review the status of the project at all times. Frankly, with the failure of the federal government to come to the table with a negotiator, we want to make sure that we're being prudent. Once they come to the table, and we need the staff resources to apply to a tough negotiation process, the government of British Columbia is prepared to do that. At this point we're putting on as much pressure as we can, but they haven't come to the table yet.

D. Mitchell: The minister indicates that employees and contractors come and go from time to time. I recognize that there have been some reductions in staff recently. In particular, some real expertise has been lost from the project recently. I wonder about the minister's comments with respect to the fact that the federal government has failed to appoint a negotiator. Perhaps some recent staff layoffs indicate a lessening of any commitment to the project on the part of the province.

Hon. G. Clark: No, absolutely not. Quite the contrary. If you attended that meeting with 1,200 British Columbians, you may have seen the ads that we ran. If you haven't seen them, I should have provided them for you. They ran in every Conservative Member of Parliament's constituency. They had a picture of British Columbia at the table and empty chairs at the other side. The headline was "Time is Running Out on TRIUMF-KAON." As I said before, Conservative government MPs from British Columbia have to carry British Columbia's message to Ottawa. On this issue, as on other issues, I fear that that's not happening. We wanted to make sure that they heard that message.

I want to tell you that we do have a budget. The budget is significant, as you can see. I think it's $800,000 in total for TRIUMF-KAON. When you think about it, that's a significant amount of money to deal with this question. We don't want to spend all the money now and then have a negotiator appointed so we'd have to draw on contingencies. We're trying to be prudent about it.

I can tell you frankly that our commitment is stronger today than it ever has been in terms of my resolve and the government's resolve to get a resolution to this problem.

[2:45]

D. Mitchell: The minister indicated that he has a great deal of concern and shares my concern for the future of the project. We're all concerned, because it's an important project. It's a national project with tremendous potential benefits for British Columbia. We don't need to debate that, because that's a point of agreement.

The wrangling between the federal and provincial governments right now, some of which has taken place in public -- media attention has been devoted to it -- certainly hasn't been constructive in terms of trying to see the project through to completion. If the wrangling is an honest attempt to get KAON on track, that's great. But I worry. I'd like to know if the minister would care to comment on whether or not, from the province's point of view, the wrangling might represent some positioning on the part of the provincial government to lay the blame on the federal government should the project not proceed. If that's the case, that would be very unfortunate.

A number of noted scientists have commented recently that some of the very best and brightest scientists we have are leaving for either Texas or Europe. In fact, the wrangling that's taking place between the federal and provincial governments right now is accelerating the brain drain from our province. That's unfortunate.

I wonder if the minister could comment on the question I've asked: whether or not this is simply an attempt to lay the blame on the federal government should the project, tragically, not proceed.

Hon. G. Clark: No, that's not the case. When you see the federal government strategy, which is to drag this out through an election campaign and pretend that their commitment is there without appointing a negotiator or anything else, it's obvious that we have to turn the heat up. We're working away sending letters and privately, quietly talking to them, and nothing's happening. That means we have to get tough on them in public and in private. The quiet, private approach of trying to work with these people to move this project along wasn't working. As I say, with an election coming, we want to make sure that.... Now is the time to bring

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them to the table. You see $3 billion annually for the Quebec space agency and you see increased funding for helicopter purchases for Ontario and Quebec -- all of this stuff happening. And the Prime Minister is repeatedly talking about TRIUMF-KAON, as if this was their big commitment to British Columbia. When you get right down to it, they're not doing anything. It's just dribbling along. We have an obligation to turn up the pressure on those politicians and make them listen to British Columbia.

While I agree with you that that is generally unfortunate, and unfortunately too common in this country, that's part of the tension that we go through in federal-provincial agreements and relations. We simply have to put the pressure on to get them to the table.

It would be very unfortunate if this project doesn't succeed. Obviously I want to make sure that if it doesn't succeed, British Columbia has done everything possible to make sure that we've come to the table. That's why these operating costs -- for the first time in Canadian history the provincial government is prepared to pay some of the operating costs for a national science lab -- prove, beyond any doubt, our commitment to this project.

D. Mitchell: Can the minister inform the committee as to why the responsibility for this national science project lies within the Minister of Finance and Corporate Relations?

Hon. G. Clark: The short answer is that the Premier gave that responsibility to me. The other answer is that it's a big dollar item. Some commitment was made very superficially just before the election campaign, and we had to turn it into a public relations gesture. Maybe that's unfair, but a press release from Kim Campbell before the election.... We wanted to turn it into a real negotiation session. We wanted to make sure that there was the expertise in the Ministry of Finance to assure ourselves of the costs so that we're better positioned to do the negotiations.

There's clearly a very close liaison in this area between the Ministry of Advanced Education and the Ministry of Finance. It is done through a project office which has its own staff and resources, but we also want to be able to draw on the expertise of the Ministry of Finance people when we get into tough negotiations.

Again, to be candid, it was a bit of a surprise for me. I just assumed that we would then get into negotiations. I didn't anticipate running into a brick wall in Ottawa, with obfuscation and continual delay. While we are engaging in a more aggressive political exercise to bring them to the table, that wasn't my original intention. We just wanted to turn it into a real tough bargaining session with the expertise required. I think that was the Premier's intention when he gave me this responsibility.

D. Mitchell: If the intent was to give the responsibility for this national science project to a minister who would take a tough, aggressive and political approach, then I worry. If that's the approach that the government wishes to take, may have picked the right guy, but they may have picked the minister who is going to be too tough, too aggressive and too political to allow this project to succeed. It's a concern that a very tough, combative stance may be exactly what is not required in order for a project that is going to require some federal-provincial diplomacy to succeed.

That diplomacy extends to the international participants in this project as well. We're looking to some international participation in order for this project to succeed.

I know that the search for funding from foreign countries has been proceeding. The federal minister, Mr. Winegard, went to a meeting at the end of May, I believe, with a number of G-7 science ministers. But he had no formal request for foreign government funding for the project, apparently because of a wrangling over the disagreement over the wording of a letter to the foreign ministers, and how British Columbia could be represented in that letter. My question for the minister is: did we lose, at that time, the opportunity to secure foreign funds for operating and capital costs, because of the federal-provincial jockeying for a negotiating position?

Hon. G. Clark: First of all, that's a smokescreen from the federal government. There have been two joint federal-provincial trips internationally to confirm science funding from international partners. The science adviser to the President of the United States, Mr. Bromley, has confirmed the $100 million commitment to this project from the United States.

What you're seeing, and what you're saying, is the kind of thing the federal government repeatedly says to pretend that the province is not doing its bit. These are international questions that have to be done by the federal government.

To go back to your earlier comment about me being tough and belligerent on this question, which I don't mind wearing.... That would be a better argument if we had not made the most generous offer of any provincial government in the history of this country on operating and capital costs on this national science project. While I may sound tough -- I am the Minister of Finance -- I've opened the door to significantly more contributions from the provincial government. That demonstrates the generosity and commitment the government has to this project. I don't think anybody can argue....

Erich Vogt and others have welcomed that participation as a generous new offer from the provincial government. I think that proves beyond any doubt that we're serious about this. I may be tough -- and I hope I am -- on these negotiations, because I think that's required. But it's also tempered by the very real fact that we want this project, and we're prepared to pay something for this project -- even beyond what the previous government committed to it.

D. Mitchell: I agree with the minister that the province's offer to contribute a portion of the operating cost, particularly in the form of a portion of the B.C. Hydro cost for the construction period and for the operating period, hopefully will be useful. But I don't believe that to date there has been any response from the federal government. I worry that it might not be enough leverage to get the federal government to

[ Page 2500 ]

appoint a negotiator and come forward with a meaningful offer.

I worry, as well, and wonder whether or not it was the case that the province did not want foreign governments to commit at all, because that would have meant the province would have been held to a financial commitment that perhaps the province can't meet. What I'm referring to there is the Peat Marwick report. The Peat Marwick report commissioned by this government -- the Peat Marwick manifesto, the infamous document -- actually referred to KAON. It referred to KAON in some quite negative terms. In fact, it recommended that we should back away from long-term, highly variable project commitments.

If I could just quote from the document very briefly -- just one sentence, Mr. Chairman -- it said: "The government should...reconsider open-ended commitments to any long-term and highly variable projects.... A further case in point is the long-term commitment that could be part of the KAON project. The problem here is not the projects so much as it is the commitments to unknown levels of cost."

I worry about this, and I'm not trying to weave some kind of conspiracy theory at all. I wonder whether or not the province is secretly undermining the project because it cannot meet the financial commitments. If that's the case, I think the province and the minister should simply confess.

Hon. G. Clark: I think that even Eric Denhoff knows more about particle physics than Peat Marwick.

It's kind of puzzling, Mr. Chairman. Members opposite accuse the government, and me in particular, of writing the Peat Marwick report, of taking everything that it has suggested, and now they are using the Peat Marwick report in an area where I've rejected their recommendations, trying to use that as an argument for the province somehow being opposed to this project.

Peat Marwick is not 100 percent correct. In this particular case, we believe that British Columbia's interest lies in pursuing this national science project. We obviously are concerned about costs, as Peat Marwick was in this regard. It's not an open, blank cheque. But we're moving to try to provide some leverage to the federal government to get this project off the ground.

I have a letter here from Bill Winegard, the minister, dated May 21, 1992, after our offer of operating costs: "I am encouraged by this movement on the part of the government of British Columbia. It will help convince foreign governments of your commitment to this project." You asked a specific question about whether foreign governments would be concerned about where we're going on this. The minister responsible has taken our offer to the science ministers at the G-7 and has talked to them on our behalf about this project.

Our concern and the wrangling at the time was that I didn't want the federal government asking foreign participants to pick up some of the operating costs. That has never been in the cards, never been on the table; none of the trips has ever talked about operating costs. Every country in the world that runs a science lab pays all of their operating costs. It looked clearly like they were trying to blame the international partners for their own failure.

That's where the wrangling was, because I felt they should be trying to nail down the capital side and that they should come clean and take responsibility for the operating side.

D. Mitchell: My concern extends beyond KAON. I worry that we might be hurting science and technology in British Columbia with this wrangling between the federal and provincial governments.

The minister mentioned earlier and here in this committee that a former minister, Mr. Stan Hagen, did a good job in keeping the project alive. Indeed, I think Mr. Hagen does deserve some real credit for keeping the project alive under very difficult circumstances. I hope that this minister will not be the minister who kills it or who is responsible for its death.

I just want to ask a question on TRIUMF itself. The KAON facility.... We all hope it goes well. We wish the minister well with his efforts. We hope that the efforts are sincere and that he can be successful. We hope that he can get the federal government to appoint a negotiator. We hope that he can encourage the project to proceed.

A final question on the TRIUMF facility itself, which is the home base for the potential KAON project. Can the minister assure the committee today that the TRIUMF facility will not be put at risk, whether or not the KAON project proceeds, and that it will not be put in a position of risk -- that it will continue, and that it will continue as a centre of science and technology in British Columbia?

Hon. G. Clark: TRIUMF is fully funded by the federal government, and we've been very aggressive in trying to ensure that it continues to be fully funded. You're absolutely right, and I agree with the sentiment, but at this point we're not accepting responsibility for a federal lab, which is fully funded and always has been by the federal government. We want to keep the pressure on to maintain that weak federal commitment to science funding in British Columbia at the very least.

Let me say, in conclusion, because the member opposite has praised Stan Hagen -- and I share those views -- that Stan Hagen did not pursue this on the national agenda by quietly meeting behind closed doors and begging the federal government for support. There was a major event about every three months where he was attacking the federal government for not coming to the table on this project. I just want to make sure there's no revisionist history here. The federal government has had a long and aggressive position on this, and I'm maintaining that tradition. I might be slightly more belligerent with the Tories. Stan Hagen probably was a Tory; he has been appointed by the federal Tories to a

[ Page 2501 ]

national board -- and I won't hold that against them. But in that respect, I think British Columbia has a long tradition that goes beyond Stan Hagen. As the member, a noted historian, knows, in British Columbia terms, we always have to fight with the federal government for every penny we receive, and I make no apologies for that, because to do otherwise is to continue to receive the short end of the stick.

[3:00]

F. Gingell: If we may, Mr. Chairman, we'll now turn to B.C. Transit, and we have a couple of questions on that particular subject. The first question I have is whether the budgeted subsidy for the year 1991-92, in the amount of $231.5 million, was sufficient to cover the operating costs for that year. Or what is the status for the year?

Hon. G. Clark: The answer is yes.

Hon. C. Gabelmann: I've just retrieved my chair for a moment to make an introduction, if members will give me permission.

Leave granted.

Hon. C. Gabelmann: I want to have the House welcome the students in the gallery this afternoon from Central Elementary School in Campbell River. They have come to watch us in action and see how the Minister of Finance does answering questions in the House this afternoon. Welcome.

F. Gingell: Can you advise us what the results are for the year ending March 31, 1992?

Hon. G. Clark: There was no deficit.

F. Gingell: Dealing with the way the contributions to British Columbia Transit are shown in our estimates and the way the financial statements of B.C. Transit are presented in both Public Accounts and in the report, one would think sometimes that we were looking at two completely unrelated documents. The government makes a contribution that is divided into operating contribution and capital contribution, but the B.C. Transit statements don't show it in that form; they show it completely differently. I've had an awful job trying to sort through the B.C.

Transit accounts, trying to find out exactly what comes where. It's a real struggle. I wonder if it would be possible in future for the estimates and the B.C. Transit accounts to be presently in exactly the same manner so the amounts can be reconciled in our minds.

Hon. G. Clark: That's generally a good idea, and I'll take it under advisement. I'm not sure which accounts are appropriate.

Can I also publicly make an offer to the opposition spokesperson on this issue that my staff are available to you, as you know. You've taken advantage of it in the Ministry of Finance, but I don't believe you have at B.C. Transit. It is a kind of weird and wonderful and complicated financing formula, which varies between capital and operating for the ALRT and for each community as well. It varies around the province. So it does get quite complicated. You may want to take advantage of one of your spare moments, hon. member. Maybe in August or something we could arrange for you to have a full and thorough briefing on the subject.

F. Gingell: I thank you for that, and I will certainly do it.

In order to get everything sorted out and on the record, perhaps it would be a good idea, Mr. Minister, if you would delineate the various forms of subsidy that B.C. Transit receives -- whether it be from the hydro tax or the gas tax -- and just indicate where they all come from and what arrangements there are for the calculation of the subsidy that is provided under vote 40.

Hon. G. Clark: I don't mind doing that, but it may get a bit complicated. Maybe I'm not answering your question, but let me try, at least in a general sense. First of all, we have funding from what's called the local share. In Vancouver in '92-93 they have operating revenue, which I assume is mostly fares, of $129.5 million. The gas tax is not really a local funding source; it's a provincial source. In a way it has been convoluted. At 3 cents per litre it raises $51 million. The hydro levy, which is a regressive tax, is $1.90 per month per residence, regardless of how big or small your house is.

It raises $13 million. Non-residential property tax, which is the only true local tax that we have in our local share, is expected to raise $26.5 million in '92-93. Interest income is $1.4 million. The total of local share funding sources is $221.4 million. The provincial share, as you know, is $204.2 million. That's in Vancouver.

The share breaks down this way: $94.8 million for bus, $101.4 million for rapid transit capital and $7.8 million for the custom handyDART program. If you would like exactly the same for Victoria and for the small communities, I have it here.

F. Gingell: No.

What causes the Vancouver bus provincial grant to be $94.8 million? Is there some agreement as to how that's arrived at?

Hon. G. Clark: It's a very complicated funding formula that drives it, but it is a formula. In Vancouver it's a 68.8 percent local share for operating and non-rapid-transit capital costs; 31.2 percent is the provincial share, and that's for operating and non-rapid-transit capital costs. Rapid transit capital costs, phase one, after the guideway grant, are 35 percent local, 65 percent provincial. Phase two of SkyTrain is 26.25 percent local and 73.75 percent provincial. Additional vehicles have the same formula, so any additional vehicle is 26.25 percent local, 73.75 percent provincial.

New rapid transit extensions. This is where we're still debating; the Whalley extension is essentially still being debated. During the election campaign the previous government said they would pay 100 percent of that even though that had never been the case before, and that is one of the sources of dispute now between

[ Page 2502 ]

the regional transit commission and the provincial government.

F. Gingell: One notes with interest that the B.C. Transit statements always come out to zero. There are subsidies made to transit that are exactly equal to their operating loss. The amount that comes from the municipalities or the local portion is the amount that is required to produce these shares that we've discussed -- or the amount that is transferred from the regional subsidy trust fund. That's not quite the right term, but there is an account that you carry called the regional transit fund. Is it the case that the hydro levy, rural taxation and gas tax go into that account, and then you transfer out an amount that is the result of the calculation? Is that the way it works?

Hon. G. Clark: Yes, that's right. That fund was carrying a surplus, and so that surplus is essentially being liquidated, as we speak, because there is a deficit in the Vancouver Regional Transit Commission.

I want to clarify something that I said earlier. During the election campaign the previous government committed to.... If you recall, phase one, phase two and additional vehicles had this formula that was roughly 70:30. The previous government said they would pay 100 percent of phase one, phase two, any additional phases -- all of SkyTrain would be 100 percent funded by the provincial government -- and that would have made up the shortfall that they currently have.

I want to leave the current formula in place until we deal with the much broader question of how we're going to pay for transit and how we're going to govern transit in British Columbia. Because of the current complicated formula and a very strange governance model I really don't think it is workable in the long run.

F. Gingell: The light is beginning to slowly come on in my mind. So this positive balance at March 31, 1991, of $22.868 million, which is the fund balance at that date.... Do I take it from what you say that during the year April 1, 1991, to March 31, 1992, the $22.8 million and the revenue that came in from the gas tax, hydro tax, etc., were not sufficient to pay the local and regional government share of these calculated...?

Hon. G. Clark: It's a bit confusing. This is March '91 year-end, and you can see that $18 million for Vancouver on page 49 -- the fund balance at the beginning of the year. That at March '92 is $1.5 million. So as you can see, what's happened is.... It's why there is a problem, which the previous government decided to fix during the election campaign by agreeing to pick up 100 percent of the capital costs of SkyTrain. My concern is that that is another band-aid for a serious problem.

If we do nothing, I believe the subsidy increase required by the provincial government over the next few years will be about 30 percent. Some of the bills from SkyTrain are only now starting to come payable, and just on that part alone, without any bus service improvement, we'll see a provincial taxpayer subsidy increase of about 30 percent.

F. Gingell: The 30 percent increase would just be the amount of the subsidy, so at that point it's just debt service, basically, for all these additional costs that will be coming in. I take it that during the year to March 31, 1992, Vancouver's share must have increased from something like $90 million, that they contributed, to something like just over $100 million. If the regional area's share went up to $100 million, surely the requirement by the province was that much greater.

Hon. G. Clark: The local share of expenditures in '91-92 was $227 million, and in '92-93 it is $250 million. The provincial share I capped, essentially. In Vancouver, it's gone from $205.6 million to $204.2 million.

F. Gingell: Could you explain to me why it has gone up for the regional district, but come down for the province? Is that a change in...?

[3:15]

Hon. G. Clark: The major reason is refinancing from 20 to 40 years. To be candid, I'm not sure I would have done that today, but at the time we were trying to grapple with this deficit problem at Transit in a tough fiscal environment, going through the budget process in a new government, and at a request of the transit commission, because it also reduced their share, I agreed to extend the amortization over 40 years. That's the principal reason.

F. Gingell: That, of course, didn't change the amount of the interest charged. That only changed the amount of the principal payment for that year. So the amount of the principal payments required under your bonding indebtedness does come into this calculation, does it? Going through the accounts, I can't see where there is a capital contribution that doesn't flow through the income statement. Do you charge depreciation up sufficient to cover the capital portion?

Hon. G. Clark: I'm not sure how it shows on the statements, but it's a 40-year sinking fund. That's generally the way we capitalize assets in B.C.

F. Gingell: The question that is under discussion with the regional transit commission or body -- which one has heard something about in the press -- is of the method by which their fund-raising sources will be enhanced for them to look after their ever-growing demand to subsidize. If I may just add to that, there was something in the paper about a proposed downtown business core and parking tax. I wonder if you would comment on those for me.

Hon. G. Clark: The real fundamental question is: who should pay for transit and who should run transit? Right now we have, in some respects, a poor system. I was going to say almost the worst of all worlds. Maybe that's overstating it, but what happens in most cities -- I think all cities in Canada, probably most cities in North America -- is that there is a local bus company, a transit authority; in most cities there is payment for that from property tax, or part of it's paid by property tax, if

[ Page 2503 ]

not all -- fares and property tax. In fact, in every city in British Columbia that has transit, except for the Victoria and Vancouver regions, local people pay property tax for transit. That's true in other cities in Canada. That is an option that the transit commission can use now.

Their position, and I have some sympathy for it, is: "We may be prepared to put in a little bit of property tax for transit, if we have control. But we don't have control; the province has control through B.C. Transit." So we have what's euphemistically called "local share" funding, and they're all provincial sources of revenue, like the gas tax. I put a challenge to them recently, and I said: "I'd like to fundamentally rethink the governing structure." I think they have a case. Should we, as a province, be running the bus company in the lower mainland, or should it be some kind of local authority?

The current system is that the transit commission sets the service levels. So they do control service to some extent. Then they just come to the government and say: "Give us more money." If I say no, then they say: "Big, bad provincial government's not providing any more money, and we have to cut routes and everything else." We need to fix that, I think.

We need to say that if you're going to set the routes and if you're going to expand service, then you have to pay -- in order to have some clear lines of accountability in our society, which I think are blurred too often in this country among federal and provincial and other levels of government. I'd like to try to change that.

The province will always be at the table, because major capital expenditures require senior government participation. It's not like the province is giving up on transit. We will always have a major role to play. We are currently paying more for transit -- as a provincial government for the lower mainland -- than any other province in Canada. Some of that is because decisions have been foisted on the local people, like SkyTrain. Some of that is also because we have this convoluted structure.

I'm very sympathetic to the notion of a parking lot tax and I'm very sympathetic to some notion of a benefit or tax which may include downtown. My view is that those are genuinely local sources of taxation. My personal view is that those options should be available to the transit commission. The government of B.C. should also be prepared, if they were to exercise some of those genuinely local.... In other words, if they were to genuinely increase their local share, then we would have to devolve more authority to the local transit authorities. That's a very complex question.

It's a kind of bargaining and discussion that we are just beginning. I think that the alternative is for us to simply pay more from the provincial government and maintain, I think, an unsatisfactory structure.

There is a third alternative, which is to abolish any pretence at regional control by regional transit commissions and take it all in-house as a provincial Crown and determine routes and fares and everything else. That's not a preferred option for me, and not really one that I think is necessarily on the table.

When you think about it, those are the kinds of options we have before us. It kind of compels you to try to move in the direction of giving more local autonomy and having those local people be accountable by having to raise a little more of their share from the local taxpayer. Perhaps rather than a residential property tax -- which I think would be problematic, and which I would feel uncomfortable about -- a kind of parking lot tax, at least at the beginning, and some other innovations would be desirable. That's my personal view. We're not going to foist it upon the region.

We want to work with the region to try to solve this problem. It is difficult because there is obviously some tension in terms of the tax base that they want to protect for there own purposes. All governments are having difficulties these days, and all taxpayers are obviously beleaguered. We all understand that. These are difficult and challenging questions.

I might tell the member that the current deficit is also an opportunity to try to deal with this problem; in other words, to try to fix the problem rather than just throw another band-aid at it. It may take a little while. I might as well say to the member opposite that -- to put him on notice -- we may have to allow the deficit to carry over for maybe a year while we try to negotiate a fundamental restructuring of transit in the province of B.C. The province has a big subsidy there. That subsidy is not in danger. As much as I would like to cut it, that's simply not in the cards. I'd like to try to restrain the growth in that subsidy by putting it on a sound governance model.

F. Gingell: For the year '92-'93 this deficit in the regional transit fund is just beginning to commence. The balance in the regional fund came down about $6 million in the past year. If things stayed at a level basis, you would expect the amount of the deficit could be as high as $20 million at the end of March '93?

Hon. G. Clark: If absolutely nothing is done -- in other words there's no fare increase -- the highest deficit that we anticipate is $29 million.

F. Gingell: When were fares on the SkyTrain or on the bus system in Vancouver last adjusted?

Hon. G. Clark: I'm just advised that it was last July, by 8 to 10 percent.

F. Gingell: In looking at the Vancouver regional transit system statistics on page 40 of the report, it shows that your revenue as percentage of operating costs has been gradually diminishing from $53.06 million for 1989-90 to $51.57 million in 1990-91.

The interesting thing is that, from a comparison point of view, this is a new way of showing it. In previous years you showed the revenue as a percentage of total costs, and this year you switched it to operating costs, which meant I wasn't able to go back very far. But can you tell us what that number is for 1991-92? Has it continued to drop even after the increases that went through in July of 1991?

Hon. G. Clark: I am advised that the fare increase for 1992-93 is about 48 percent. Actually, I think the member has hit on another problem, and that is that

[ Page 2504 ]

costs are rising faster than revenues. I'm advised that fares had not been increased for three years prior to last summer, when they went up by 8 to 10 percent. That was a bit of a bump, but they hadn't been keeping pace.

F. Gingell: So in 1992-93 that's anticipated to be 48 percent. For 1991-92, which is actually the question that I asked...?

Hon. G. Clark: Just from memory here, I think it's about 52 to 53 percent. That was the bump with the rate increase.

F. Gingell: Mr. Minister, do you have some statistics handy that would show us the cost per passenger-kilometre for SkyTrain versus buses? Do you have any of those things so we can get an idea about the costs on SkyTrain versus costs on buses?

[3:30]

Hon. G. Clark: If you include capital costs -- this is very crude -- buses are about $3 a ride and SkyTrain is about $6 a ride. If you just count operating costs, the average in the system in 1992-93 is $2.06 -- operating costs, not counting capital. That's for both, and I don't have the number for operating. I suspect the operating costs on the SkyTrain side would be very, very low; I am advised it's about $1.

F. Gingell: That is per ride? Are you able to keep track of or make a statistical calculation of the cost per ride-kilometre or passenger-kilometre?

Hon. G. Clark: We have that, and we could give it to you, but I think it would be a bit fruitless now. I've struggled with these as well.

Let me try to explain it. People don't just get on SkyTrain and go a few blocks. They go across on the SeaBus, take a bus, take the SkyTrain and transfer again. We have this debate -- I don't fully understand it yet, to be candid -- between riders and boardings. If you use boardings, you get a different number, and if you use passengers, one passenger makes several boardings. It gets very complicated -- by route and by system and by region.

We have all that information, and I'd be delighted to share it with you. I know it makes great bedtime reading -- as my wife says -- because it puts you to sleep. These are some of the things that I've just been looking at to try to familiarize myself with the system and how it works. But it is a surprise to me how complicated it can become.

F. Gingell: Perhaps I could just finish this off with the question of whether, from your perspective, you could give us some gut feelings that you have about the costs of SkyTrain versus the costs of busing. For instance, if one puts ALRT into Richmond, which I presume would diminish the requirements for bus service, are there any big cost differentials from the point of view of operating costs and capital costs, or is SkyTrain substantially less to operate and substantially greater in capital costs?

Hon. G. Clark: I think it's pretty clear that SkyTrain is an expensive system on the capital side and is significantly cheaper on the operating side. If you want my gut feeling, my sense is that buses are almost uniformly a cheaper system. Obviously buses in North America don't provide the kind of service, at least not historically, that can attract large volumes of people out of their cars. The SkyTrain system has very expensive capital costs and is very popular; it moves people very quickly. That attraction in our system or our society can be very appealing.

On the Richmond route, for example, I think there's no question. I guess I shouldn't say there's no question. My view is that SkyTrain is clearly a very expensive option, but will certainly provide better service to people than the bus system and will move people faster in the system. If your public policy goal is to simply move people out of cars and onto public transit efficiently and to promote economic development and all of those other things that rapid transit can do, then rapid transit is a compelling option. But if you're looking for the cheapest way of transporting people, I think it's still buses and probably will be for some time. Sometimes there are trade-offs.

The problem with buses is that you have road congestion and the like, and one of the appeals of any rapid transit route, and in some respects particularly one that's elevated, is that you're creating a right-of-way just for rapid transit in perpetuity. Of course, that has efficiency gains and other appeals. You have to weigh them in the balance. I think it's pretty clear that we are going to need more rapid transit routes both to the northeast quadrant -- the Coquitlams -- and at some point to Richmond.

I would be surprised if any government would say that we could service both of those communities in the long run just through buses. I think that we are going to require some major capital expenditures in those areas. That, of course, is one of the reasons that I want to try to fix this governance structure and its ballooning debt and cost to the provincial taxpayer, because no matter how you cut it, the province, almost regardless of our fiscal situation -- not regardless, but almost regardless -- is going to have to provide some major capital expenditures in transit.

Everybody who lives in the lower mainland knows that. It's absolutely required for future economic development, for sanity, for environmental reasons and all of those reasons. We want to get the governance and funding structure right in order that we embark upon those adventures with the cooperation of local communities -- where possible, of course -- and also in a way that we pay, obviously, some money; but we share that responsibility with other decision-makers.

[E. Barnes in the chair.]

F. Gingell: Could we just talk for a moment about SeaBus? Is the ridership continuing to rise the way that it's been reported in the past? What are the constraints on the growth of ridership on SeaBus, if any?

[ Page 2505 ]

Hon. G. Clark: If I can, I just have the SeaBus ridership. Let me distinguish again between boarded passengers and revenue passengers. Boarded passengers: if you take out Expo '86, in 1987 there were 3.7 million. In 1988 it was 3.8 million; in 1989, 4.1 million; in 1990, 4.3 million. Those are the statistics I have. We have a rough guess for 1992-93. It's rising at 2 to 4 percent a year. So you can see steady growth on the SeaBus ridership.

On the paying passengers, revenue passengers, people who just take the SeaBus, it is almost uniformly consistent throughout the years: about two million passengers. That comes out of that four million. So that is flat; people taking the trip across, I guess, just paying for that trip. There is a significant increase in ridership.

I think we do lose money on it, do we not? But again, that becomes more complicated as well, and I've asked B.C. Transit to try to do some of this work on disaggregating routes, which hasn't really been done. But part of the problem is: how do you define if they're losing money? The paying passengers for that route are relatively small, but it's part of a broader system. In an ideal sense, you'd like to sort of disaggregate routes and pieces to see which ones are making money and which ones are losing money, and I think a lot of that work can be done and is starting to be done; but it's not that simple.

R. Kasper: I served on the Victoria Regional Transit Commission for three years, and I'm glad to hear that the minister is looking at some possible restructuring options as far as the local autonomy of the commissions, and to end this procedure of running cap in hand to receive additional revenues. It's my understanding that the minister has not been willing to approve a gas tax option for the Victoria region. I wonder if the minister could perhaps outline what options he has looked at in replacement of a gas tax.

Hon. G. Clark: Well, first of all, there's no funding crisis in Victoria as there was in Vancouver, because their surplus account is enough to continue for another year. There's no need to move directly. When we deal with this governance question, I think, we'd like to try to deal with the broad problems of Victoria and Vancouver at the same time. The options that I have discussed here for Vancouver will also be available to the Victoria transit commission.

There is a better argument for a gas tax in Victoria, because it's not subject to the same cross-border shopping pressures that exist in Surrey and Cloverdale, for example. There is no gas tax now for transit. It's 3 cents in the lower mainland. To be candid, my view is that the gas tax is a provincial tax, not a local tax. I might be prepared to raise the gas tax in Vancouver for transit if it were to pay for the provincial share of transit.

R. Kasper: Perhaps a compromise could be sought. If there were approval for a gas tax in the greater Victoria region, that should be tied to additional service in outlying areas affected by a gas tax. It's well understood that communities outside the urban core pay the highest cost, because their areas usually have lower service and less frequent service. Those are the communities where people are more inclined to use the automobile. But if there is to be an introduction of a gas tax, it should be tied to service. Perhaps there should be a compromise sought with the Victoria Regional Transit Commission and your ministry to look at that option.

You mentioned the surplus of approximately $4 million in the Victoria Regional Transit commission. I'd like to point out to the House that because of the prudent and wise approach in delivering transit service in the Victoria region, that surplus was built up over a number of years. I hope the minister will take into account that the surplus is not depleted. It has afforded the Victoria region the ability to bring in services on an as-needed basis when the previous government was unwilling to fulfil.... I hope the minister can give some type of commitment here that he will recognize that surplus.

When the gas tax or other funding options are addressed, if that surplus account is drawn down, it could be reduced to its previous level.

Hon. G. Clark: We're entering into a phase where we're reviewing the whole question of governance and funding. I'm reluctant to give a specific commitment now, because we want to work with the local communities. I know that the member articulates very aggressively and thoughtfully the views of his constituents, and I appreciate that. He represents them well in this House, and I take that very seriously. But we do have to go through a negotiating process with the local community.

I might just remind members that at the end of 1992-93, there will still be $2.5 million in that fund's balance, so doing nothing will not liquidate the fund. Considering that it's $4.5 million at the end of this year, it will still be there. We do have some flexibility there. I am sympathetic to the notion that the surplus can be used for transit purposes.

The idea of tying the gas tax to improve service is one which I'll certainly take under advisement. Of course, the service plan is designed by the regional transit commission and not by the provincial government.

[3:45]

R. Kasper: Perhaps another area your ministry could review is the percentage of provincial funding allocated to different regional transit services. Over the years it has been a pressing concern of the greater Victoria region that they have received the smallest percentage of provincial funds, compared to smaller community services in British Columbia and the Vancouver regional service. In this review and reassessment of local control and autonomy over the delivery of transit services, I hope that there would be a little more equity brought into the system for those users within the greater Victoria area.

Our particular region, because it has not been capital-intensive and because it's a conventional service, has not always gone to the ministry and to the government for additional funds, as has been the case in the Vancouver region and the smaller communities that are starting up.

[ Page 2506 ]

My last comment is that I would hope the ministry would take that into account and try to bring some equity and fairness into the system, so that when the provincial share is doled out, it's on an equal percentage basis for all transit services within British Columbia.

Hon. G. Clark: I'd just like to thank the member for his comments, and we will certainly take them under advisement. I know the member has a keen interest in service to his community, and I know that many members obviously do advocate the interests of their community. We will take that very seriously.

W. Hurd: I have a line of questioning regarding resource revenues in the province, particularly the forest revenues that accrue to the Crown. Does the minister have available a percentage figure of revenues from stumpage and the forest industry? Does he have it broken down according to the individual resource sectors, or can he provide us with a percentage or an overall figure?

Hon. G. Clark: A very good question. I wonder if I could ask the House's indulgence as to whether or not we completed the B.C. Transit component of my estimates. If that appears to be the case.... I don't know where the opposition spokesperson is in that area. I can certainly speak, as all members know, for an hour or two while we review this question, but I would appreciate knowing, because my staff here have to get back to Vancouver.

Perhaps I will excuse B.C. Transit staff in this regard, and they may.... Do you have some transit questions? Okay.

R. Chisholm: What negotiations or consultations does B.C. Transit do with private organizations like Cascade? I've recently received complaints that they have a loss of ridership and a loss of areas to be responsible for, and at the present time they're going out of business due to this. I'm just wondering how much consultation has gone into talking to these organizations.

Hon. G. Clark: I don't mean to be flippant, but there's lots of consultation with the private bus companies. That's a tricky area, to be candid. There are many communities in British Columbia that have private carriers servicing their communities under contract to the municipality, or they're simply in a private market. B.C. Transit is gradually expanding into communities in a subsidized way, and when they do, it often displaces that private operator. What happens is that communities who have private bus services approach B.C.

Transit and they say: "Please, please, provide us your quality service." And they usually say that they'll raise their property taxes, and the provincial government provides a certain subsidy to the community so that they can get improved public transit in their communities. The consequences, unfortunately, can be devastating for the private operator of the bus company.

Sometimes we have a choice to make between improved public service to constituents at the local government's request and the private interests of the operator -- the bus company or, indeed, the workers of those bus companies. That's not an easy question to deal with. We try as much as possible to work with private contractors. In some cases the private contractors end up being the B.C. Transit contractor, so their jobs are protected and so, in some respects, are their incomes. We simply allow the local community to have some more input into that, and we use those private contractors. But that's not always possible.

[R. Kasper in the chair.]

At the margins, if I can say that, there are often disputes. I am in receipt of several right now from private bus operators who are quite concerned about the future of their businesses if a subsidized service like B.C. Transit were to compete with them. So we're sensitive to that, and we try to work with them as much as possible. But, at the end of the day, we have to improve public transit to British Columbians. That's our mandate, and that's what we want to do.

R. Chisholm: My second question is with reference to the possible use of rail lines for B.C. Transit, to augment the light rail system that we have in place now. Has this department thought along the lines of utilizing the rail lines or doing a study? There have been studies in the past. I'm wondering if they foresee that in the future.

Hon. G. Clark: Yes, there is a joint project funded by the provincial government and the Greater Vancouver Regional District. Project 2021 is the transportation planning initiative. Certainly the rail options will be reviewed in that context. I certainly think that there's great potential for that option down the road. It's probably a bit premature, but clearly, if you're looking ahead at transportation planning, it's something to take very seriously. We have provided funding to the GVRD, including this fiscal year in a tough financial environment, and they've provided some funding. That study is ongoing.

R. Chisholm: Hon. minister, how far does that 2021 plan go?

Hon. G. Clark: Till 2021.

R. Chisholm: Out as far as Chilliwack, or is it...? How far does that plan go, geographically speaking?

Hon. G. Clark: I think that it's essentially within the catchment area of the GVRD. It includes Chilliwack and Mission. It does go out a fair distance, but I think Chilliwack's probably the edge of it, because then we get into the Dewdney Alouette Regional District.

F. Gingell: I'm going back to the regional subsidies and the fund balances very briefly. I'm not wanting

[ Page 2507 ]

to get into a big discussion. We discussed Vancouver's pretty thoroughly. How about Victoria's status?

Hon. G. Clark: The number is $4.4 million, and that was in the fund at the end of the '91 fiscal year. At the end of this fiscal year it's expected that the fund will be $2.5 million. There is a problem in the Victoria transit region. It is not a problem right now, because there is a surplus in the fund, but we want to address it. They have asked for the gas tax increase. To date I have not agreed to that for a variety of concerns, one of which is that it's a provincial tax.

I did sort of address this a minute ago, but if I can, just in a general sense.... We are looking at governance and funding not just in Vancouver but obviously in Victoria as well. I'd rather fix the problem in a more fundamental way than try to provide some band-aids with the provincial funding or provincial funding sources. So we really want to work with the local communities to improve the governance and funding of transit.

F. Gingell: If I may, Mr. Minister, I'd like just to slip back to the SeaBus discussion that we were having when I sat because I thought an hon. member was going to make an introduction. It turned out not to be. Are there any constraints on the system that you see as a problem for further growth in ridership? There were discussions in your earlier annual reports of the possibility of a third vessel. There was also some discussion about a SeaBus to Port Moody. I wondered about those three items.

Hon. G. Clark: I didn't catch all of your questions. We have a current ship that carries roughly 400 passengers. We can do a refit that would allow it to carry 540 passengers. The refit is significantly less costly. Rather than build a third SeaBus, it may be more prudent to refit the existing ones to carry more passengers. We are reviewing all of those options in the capital plans of all of the Crowns and B.C. Transit as we speak. We will do a rational analysis as to what makes the most sense.

F. Gingell: As to my question of whether you had any constraints in the system, your system can be expanded with a refit, and you believe that that will probably be a better alternative than a third vessel. The other question I asked was whether there is still any consideration being given to a Port Moody run.

Hon. G. Clark: There are a couple of things. I don't want to say that I've automatically made the decision that a refit is better than a third SeaBus. I just said that that is an option, and it may well be the best option. We're going to review it as we do the capital planning. There may be other reasons for a third SeaBus -- frequency of service or the like. Obviously in terms of cost, refitting probably makes the most sense. I just don't want to give you a definitive answer on that, because we're going to review it.

On the question of ferries to Port Moody, that's one that intrigues me. We are going to be reviewing that whole northeast quadrant, because I think we need to get moving on planning for rapid transit to that quadrant very quickly. There are obviously serious concerns about relatively high-speed ferries in that harbour. There are all kinds of restrictions on it. My gut feeling is that it's not likely an option, but I don't want to foreclose on it. It has a certain appeal to me. We should review it, and we will review it as part of overall transportation planning in that region.

D. Jarvis: Going back to the refit aspect of it, without getting into too much detail -- I appreciate your concerns with it -- does your staff have any idea as to what the downtime would be to do a refit?

Hon. G. Clark: I'm advised that it's a very modest refit that would accommodate more people. It's a matter of a reconfiguration of the seats by taking out some seats to allow more standing room and the like. The estimate is for just a few weeks to do that if we were to reach that threshold. That's the kind of work we're doing as we review these capital questions.

D. Jarvis: No ropes in the water, I guess.

What would they do for the situation during the three or four weeks of downtime? Where would they get the equipment to relieve the transit problem at that point? How can you take out a set of chairs some night and then put them back the next morning?

Hon. G. Clark: You're right. If we did a refit, we would have to lease or rent a replacement boat. We may have to rent two of them. There are lots of boats around; it's not a real problem. It's not quite as convenient as the current system, because the boats are designed, obviously, for that terminal. Our staff advice is that it's a very simple project, and it's a matter of a few weeks of renting a different boat.

[4:00]

C. Tanner: The minister spoke about the subsidy in Victoria for the bus system, and I believe he said he wasn't very keen on imposing further gas taxes. Do you have some idea of what alternatives you have? Are you hoping, for example, to get rid of the Hydro fee? What does the minister have in mind? We've thought about it greatly in Victoria, and we haven't come up with another solution. Has he got something up his sleeve?

Hon. G. Clark: No, I didn't say we weren't prepared to raise the gas tax. I said that if we were to raise the gas tax, my view is that it should be for the provincial contribution -- not for the local contribution, because it's a provincial tax. It's not a local municipal tax.

There are potential big expenditures in this region, which I think the provincial government is going to review. There may be requirements for significantly enhanced provincial infrastructure spending.

It's my view that the gas tax might more appropriately be to fund those kinds of expenditures: capital expenditures on major infrastructure developments. I don't want to close the door on it, but what I said earlier

[ Page 2508 ]

I've said several times now. I don't mean this as a criticism, because you may not have been here. We really want to fix the governance and funding of transit and not have a band-aid solution.

I may come a year from now with a band-aid, because it's a very difficult one to work through with the local communities. There is a funding crisis, so to speak, in Vancouver, which is driving certain initiatives on my part. We want to work to change it. Once we deal with that, the tools that we provide -- if we do -- to Vancouver will also be available to Victoria. We hope we can develop a model that can be consistent.

I said earlier that I'm sympathetic to a parking lot tax. I'm sympathetic to some kind of benefiter tax or at least enabling the local community to do that. I'm sympathetic to applying the non-residential tax to vacant land, which doesn't happen now and in Vancouver's case would be a couple of million dollars. Those are genuinely local taxes. I would like to devolve authority to those local communities, and they would then be required to tax their tax base and have more authority and therefore be more accountable to the taxpayers generally for their actions.

Currently all the pressure is on the provincial government. They say: "You raise your taxes, and by the way, you're not giving us enough money." The local taxpayer is not sure who's paying for what. It's a convoluted government structure, and it's not a sound fiscal structure. So I'm going to try, in consultation with the various municipal people and the transit commissions, to work through a broader solution to this question. We're being driven by a crisis in Vancouver, in the funding sense. I know there's pressure from Mr.

Chairman here, privately and publicly, that we need to get on with dealing with this problem in Victoria as well. We're conscious of that. But I'm hopeful that we can provide a model which provides more local control, more local accountability and more local sources of revenue for improved transportation services.

We have to deal with the Victoria question. The pressure is not there.... There is no problem. We have a surplus in the fund, and even at the end of this year there will still be a $2.5 million surplus. So we want to work to resolve it in a much broader way, rather than just giving the gas tax to Victoria and not dealing with more fundamental problems. I don't want to take a hard line on this, because again I think there is a better argument for a gas tax in Vancouver than there is in Victoria.

F. Gingell: I was wondering, Mr. Minister, if we could now move to the environment and the use of more environmentally friendly vehicles and fuels. I notice from your annual reports that there has been quite a bit of consideration given to that subject. I would appreciate hearing what the current status is.

Hon. G. Clark: On environmental questions: we are actively reviewing natural gas as a fuel for buses. We have a few pilot projects now on natural gas. They are, I'm advised, about $50,000 more expensive, so we're looking at the calculations to see if it makes sense. Obviously it makes environmental sense, but we want to make sure that we mitigate the economic consequences.

I'm quite excited about this, and I guess the previous Minister of Energy can take credit for this, and perhaps the member for North Vancouver is familiar with this -- the Ballard fuel cell, the use of electric energy from hydrogen. You probably know that the by-product of hydrogen burning is oxygen, and in fact, in many cases.... It's water, I'm told. Well, H2O -- there's oxygen in it. It is obviously, you know, a benign fuel. I'm sure there's a long way to go, but there is the pilot project which we are continuing to fund this year, as I recall. That experiment is with B.C. Transit.

In addition, we've done a variety of other programs on environment, which you may be familiar with. One is the Go Green program, which I think is a very innovative public relations campaign, together with promoting the use of transit, ride-sharing, carpooling, biking and the like. We are looking at some travel demand management to try to deal with that, so that we can get into the business of setting up programs that reduce single-occupancy vehicles, trips at peak hours and the like. Other Canadian transit properties are using our system and looking at travel demand management.

We have now engaged in the park-and-ride lots, bike lockers, preferential parking in park-and-ride lots for car-or van-poolers, the trolley bus and the SkyTrain. The SkyTrain is 20 times more fuel-efficient than the diesel bus, and ten times more efficient in terms of moving people. So on the environmental side, B.C. Transit has sort of picked up the ball. It's obviously a natural ally, because public transit is important to the environment, but they are taking it a step further, and obviously the government of B.C. is encouraging them to do that. There is, no doubt, more to be done, and more will be done. There are some interesting innovations.

F. Gingell: I don't know what travel demand management is, and I don't have a clue what it is you're speaking of. I wonder if you could let me know what that is.

Hon. G. Clark: We've actually trained one of our employees to go into the company and work with them on carpooling and, essentially, how to get people out of their cars and onto buses. It has been modestly successful. Other transit properties are using it. We actually have staff going out and working with the larger businesses to try to encourage the use of carpooling. Carpooling sounds simple, and I guess it can be in many respects, but you get better at it. There are systems and expertise that we can provide. We're certainly doing that.

F. Gingell: I had noted the discussion about natural gas buses from your 1989-90 annual report. I was under the impression that there is a demonstration project: you actually have five buses on the road. I thought from your earlier discussion that that wasn't happening.

[ Page 2509 ]

In the bus area, B.C. Transit had a couple of embarrassing accidents this past year. I was wondering if you could advise this committee on the status of the investigations into those accidents.

Hon. G. Clark: Members will no doubt agree that it's important I put on the record that B.C. Transit has an outstanding safety record. It really does. As I recall, it has won awards nationally and internationally on traffic safety. I think we should be careful: it's not something that is prevalent in our system. The accidents were very unfortunate. I'm the minister responsible for B.C. Ferries, and they coincided with some accidents there as well.

B.C. Transit has initiated a joint Ministry of Transportation and Highways, RCMP and motor vehicle branch assessment of Highway 99 -- probably in the member's constituency -- that looks at the operation of exclusive and high-occupancy vehicle lanes on highways, because that's where the accident took place. An external consultant has also been retained to review our operation policies and training programs from a safety perspective for both incidents. We have an external consultant reviewing all our safety procedures.

Even though we have one of the best safety records, these accidents have given us pause to review them all. In addition, we have this joint assessment of high-occupancy vehicles, particularly on Highway 99, to make sure that this was indeed an accident and not something that is systemic or as a result of policies on our part.

F. Gingell: Am I to take it from what you've said that the investigations into all of the accidents have not required B.C. Transit to change any of their practices and operating procedures?

Hon. G. Clark: The preliminary investigations basically did not cause us to make any shifts other than to tighten up some of our safety procedures, but the accident at Denman caused B.C. Transit immediately to reinstitute the wheel blocks on all buses when they're stopped. That was a direct result of an internal response to deal with it. We are still doing two major investigations. We have the consultant and another investigation to review operating procedures to see if there are changes to be made, but in a preliminary sense there is nothing at all significant. That, in fact, is the most significant change we've made.

A. Cowie: I have just a few questions on rail transit only. I will limit it to that. If for whatever reason -- I was at the ombudsman meeting -- I'm duplicating anything, please just nod your head appropriately, and I will read Hansard . Up and down, not sideways.

I think we would all agree that transit planning has to be properly integrated with land use planning. I think we would get total agreement on that. In greater Vancouver and greater Victoria, where we're going to see the highest growth in the next 20 years, it's very important to set a long-term direction.

I think we would also agree that there's a short-term lack of funding. It's very important to make a decision on the lines, so that the municipalities of Burnaby, Surrey, Coquitlam and Richmond can make some long-term decisions. Vancouver, right now, is in the midst of doing a long-range community plan, and the GVRD is into a series of discussions on long-term planning for growth, including highway transportation. But I think it's very fundamental to have the decisions on the rail transit decided well in advance. I don't think we would have any disagreement on that. When are we going to have a decision on the Richmond-Vancouver line?

Hon. G. Clark: The Richmond transit advisory committee has advised that they believe they can report to the government and the board of B.C. Transit in the fall of this coming year on routes and technology on the Richmond side.

On the Coquitlam side, no announcement has been made, but obviously we're keenly interested in moving aggressively on the northeast quadrant of the lower mainland. That area is in chaos in a transportation sense. So we are going to be making some announcements fairly soon, I think, on a process to get that moving.

[4:15]

Beyond that -- the member is probably aware of this from his previous life -- the GVRD has a study called Transport 2021. We have agreed this year to continue funding. I think it's $180,000 provincially, and I did meet with the GVRD recently and discussed this question.

I absolutely agree with you that we need to get on with this. I have said here and I'll say again that we do have some short-term funding problems. We have a fiscal crisis in British Columbia and very deep problems, but we cannot let that be an excuse to not deal with these major capital expenditures. I think that would be folly. In both the Coquitlam region and the Richmond region, we pretty clearly need to get some route and hopefully technology decisions made, so that land use decisions can be made rationally. I think there may be a potential to pay for some of the transit decisions, if we look creatively at land use as well.

R. Chisholm: Hon. Chair, I would like to ask leave to make an introduction, please.

Leave granted.

R. Chisholm: Visiting with us today is a group of 20 aboriginal youths from Hull, Quebec, representing Voyageurs '92, along with their leader, Mr. Lewis. They have spent the day visiting the beautiful city of Victoria. Later this afternoon they will take a place in the gallery of our Legislature for our portion of the session. Would the House please join me in acknowledging their visit and making them most welcome.

A. Cowie: I noticed in two of Victoria's local newspapers yesterday, the

Star , and a weekly, they were dealing with growth....

An Hon. Member: The Star

[ Page 2510 ]

A. Cowie: That's what it's called. I noticed that they were dealing with B.C. Transit being ready to go on a study of LRT routes. I take it that in greater Victoria we're also getting into transit studies. They also talk about the population squeeze in Victoria. They're dealing with the same subject as the Greater Vancouver Regional District.

An Hon. Member: "Tweeds," they said, not squeeze.

A. Cowie: Tweeds? It says "squeeze" here. Anyway, they go on to say that the greatest growth in Victoria isn't in the centre but in the Saanich and Sooke areas. So you've got a different kind of problem. You've got low density before you get to the greatest growth. I'm wondering if there are any studies going on through the ministry or through B.C. Transit on this particular issue.

Hon. G. Clark: That's actually an interesting planning problem. There is a joint study being done between the CRD and the provincial government, similar to the exercise taking place in Vancouver. The LRT rights-of-way are part of that. We are protecting, I believe, the rights-of-way to those Western Communities. It's an important growth area. You're absolutely correct. It does present some real challenges, in terms of both the economics of the route and where we're going. That study is due to be completed next year. It's different from Vancouver, but it's essentially the same approach.

We need to start planning now, even if the routes aren't feasible for some time to come. It makes sense to start planning the rights-of-way so that we can plan the kind of land use development, station sites and all of those questions which have real potential to spur growth and to limit the cost to government, if we can make those purchases in advance.

A. Cowie: Would such a study include an up-Island link? After all, it's only a very short distance to Nanaimo, and there's a great deal of growth going on up the Island. Would such a study include that linkage?

Hon. G. Clark: This one is a joint Ministry of Highways, CRD and B.C. Transit study. Highways are part of the study, but only within the CRD. From B.C. Transit's point of view, we are not looking at transit links between Nanaimo and Victoria, other than through the small communities program and the like, in terms of a bus system. In a vehicular sense, we are looking at it all the time. Bob Lingwood, who's responsible for our small communities projects, is not here. In a rapid transit sense or a rail sense, it's not at the moment part of any study. I don't know if the member's suggesting it should be.

He's nodding his head, so I'll take that under advisement, as I haven't thought about it. My staff advise me that no studies are ongoing now. We'll take a look at that.

A. Cowie: Thank you for accepting that idea. After all, it's not that far over the Malahat. There's a lot of resort development as well as retirement development going on up that way. It's possible that a transit line -- a rail line -- could work all day long. You've already got a corridor.

My final question is: why is B.C. Transit under Finance? Why is it not with Transportation and Highways or Municipal Affairs, since it's so neatly linked with land use?

Hon. G. Clark: I've already answered that question, but I'll answer it again. Let me just remind members of the House that when I was given responsibility for ferries and transit, I asked the Ministry of Transportation and Highways for the FTEs, the people and personnel in the Ministry of Transportation and Highways who scrutinized the spending and policy practices of B.C. Transit. The answer was that there was no one. I did the same thing for B.C. Ferries and the answer was that there was no one.

Lest you think that because there was one minister responsible for that in the past there was, by necessity, some integration between them, I suggest to you there was not. Now I'm responsible for these, in part because they are highly subsidized Crowns, and in part, I suspect -- you can ask the Premier -- because in Vancouver we had some serious problems develop, and I am a Vancouver MLA. We wanted to move on that in a regional sense.

We're also trying to develop more coordination between the Crowns generally, through the Crown corporations secretariat, which I chair. Clearly, there is integration between the Ministry of Transportation and Highways and B.C. Transit and B.C. Ferries. Can we do better? Yes, and I think we have to. I acknowledge that, but I certainly don't think that it's required that they all be under one minister for that.

D. Symons: I would like to begin by welcoming Mr. O'Connor to the House here today. I've had the pleasure of meeting him on a few occasions and found him most helpful and informative to me on those occasions. I thank you for being here, sir.

I have a few questions. One of them deals with some concerns I had expressed to me by the taxi organizations here in Victoria. There is some concern that there seem to be some new rules they felt were coming in that were going to change the number of cars they would have to have available for transporting the disabled. I'm wondering if there is a move on the part of Transit.... Or is it downloading from the transit authority onto the private industries through this technique?

Hon. G. Clark: I'm frankly lost to know what the question is. We have increased the number of custom transit vehicles as we've improved the custom transit service in the Victoria region. Perhaps, more importantly, we've bought these kneeling buses -- which are an interesting innovation. The bus actually drops down to curb level, so the regular bus system is accessible to disabled people. It is an innovation which I think.... We're going to see how it works, and perhaps it has every potential to mean that all new buses will have that technology, so we can dramatically improve service for people who are disabled. I don't know if you have a specific question.

[ Page 2511 ]

D. Symons: I guess I shouldn't have added the last bit on there in the question. The concerns seemed to be that there were regulations coming in that would require taxi firms throughout the province to have a certain number of vehicles -- depending upon the population of the area, I guess, that would be able to handle the disabled. The concern expressed to me was to the effect that there seemed to have been some cases where more taxis would have to be of that variety than there seemed to be a need for in the community.

Hon. G. Clark: I'm sorry. It has nothing to do with my ministry or B.C. Transit. It sounds like a good idea, though.

D. Symons: The gentleman who phoned me on that issue didn't think it was a good idea. This is somewhat related in a sense. There seems also to be the possibility of a trend toward the use of minibuses and vans, and possibly having these privatized rather than through the transit union, I suppose. I believe this is not just the handyDART system, which is for the disabled, but would be for people in general.

Hon. G. Clark: B.C. Transit has hired Alan Artibise, a director of a planning school, to review the question of the use of minibuses or smaller buses, because there's some controversy around them, particularly with respect to the union. There are some regions in the lower mainland and probably elsewhere which cannot accommodate their full-size bus, such as some of the new subdivisions. In addition to that, a large-bus service is not required in some communities. The question of minibuses or smaller buses is one on which I've asked for some independent review.

Intuitively, there's a certain logic to having smaller buses on lighter routes, and a certain requirement to have smaller buses where the subdivisions don't allow the larger ones to move through. But it is a source of contention, and I wanted to make sure that the public policy decision taken by B.C. Transit was the correct one -- which is to increase the use of small buses, using contractors, and not just at the edge of the system, but within it. B.C. Transit has hired Alan Artibise to review that question, and I understand his report will be in in a couple of weeks.

D. Symons: I thank the minister for that answer. I feel that transit is extremely important. We have to do everything we can to move people out of the cars that are harming our environment. Any way that we can get people to double up or triple up in vehicles is to the betterment of the community.

In the same vein, there seem to be some problems in respect to the expansion of B.C. Transit into areas where it hasn't previously been, where there might have been bus services provided by local people or by smaller outfits. Basically, they seem to be pushed out in the process. I'm wondering if there is some way, in various communities where B.C. Transit is moving in at the request of the community, that the local transportation can somehow be incorporated into rather than excluded from the transportation expansion.

Hon. G. Clark: I've already covered this turf, but briefly, we work hard to try to incorporate the private service in with B.C. Transit. The area of some controversy now is Maple Ridge and Pitt Meadows. That new B.C. Transit service with small buses is in fact the same operator and the same bus drivers that were in the private sector for 20 years. Now they've rolled over into a B.C. Transit unit, and it's causing some controversy. In any event, where B.C. Transit expands into areas covered by the private sector, there is a natural tension. We try to work with those private companies.

But the local communities demand improved, subsidized service, and it's hard to resist that when many other communities have that kind of service. Sometimes the private operators are not happy when B.C. Transit moves to provide service in new communities, and I certainly understand that. I'm sympathetic to it. I have had many meetings with various bus companies, and we like to try to incorporate them, but it's not always possible.

[4:30]

F. Gingell: Thank you very much, Mr. Minister. I think we have completed the questions on B.C. Transit, unless there are any final words that you would like to say. We were pleased to hear that there is a planning process going on. We're also pleased to hear that this government does have a commitment to public transit, and that you intend to get people out of cars and into buses and other forms of transit. We are, of course, concerned about the manner in which this is going to be financed.

If it's convenient, I would just like to ask one question that sits off by itself somewhat. I was wondering if you would explain to us exactly what program the province has with regard to insurance risk management.

Hon. G. Clark: Not that long ago the government moved to self-insure, as did many other jurisdictions. We currently self-insure for the health sector as well. We are looking at expanding that to other publicly funded agencies. I don't know much about this area, but the staff.... As usual, I'm very impressed by the staff in that division. They have saved the taxpayers millions of dollars, and we think there is potential for even further savings if we look at other publicly funded agencies and perhaps even Crown corporations.

To be candid, we are embarked upon a review of that question over time, because the savings have been significant. I think they've been in existence for only a couple of years, having been set up by the previous administration and the previous member for Saanich. That was an innovation that seems to be proving out extremely well.

F. Gingell: You happened to mention the health sector. I wonder if that means that that just covers liability claims. Are we presently self-insuring any buildings for, say, the British Columbia Buildings Corporation, the regional hospital authorities, the universities or the school districts?

[ Page 2512 ]

Hon. G. Clark: I'm just looking at my note here. It's the self-insurance initiative of government, including schools, colleges, hospital programs, the directors' indemnity program and the master insurance program for social providers in the social program ministries. It's pretty broad right now. It is a self-insurance scheme. The funding comes from those agencies. From a narrow Ministry of Finance point of view, it's one of those self-funding special accounts.

F. Gingell: I wonder if the minister could check his briefing notes and tell us whether the British Columbia Buildings Corporation is included.

Hon. G. Clark: I'm not sure. It doesn't say that here. I know, by virtue of some of the hats I wear, that I've instructed a review of Crown corporations generally. I know the Crown corporations don't generally come under this program. BCBC is one of those almost funny kinds of Crowns. They have some expertise and do a superb job, but they are not quite as arm's-length as B.C. Hydro or others, because they are an integral part of government operations. It is possible. I suspect it's not, but I'll provide that information for you.

F. Gingell: In a quick look through Public Accounts , I don't see a provision for claims that may be outstanding. There may be some items under contingent liabilities, but that's not really what I'm asking. I can appreciate that certain claims may have got into the court system, which would be in the contingent liability area. Do you provide for outstanding claims, or do you just treat it all on a cash basis?

Hon. G. Clark: It's in Public Accounts. It's covered through a special account. There is money in and money out. There's no question about it. The special account will tell you what is in the fund. But we do pay out on a regular basis, and that is covered in the public accounts in my view. We use a private underwriting firm, which is managed privately, for those services. That may be part of the confusion -- I'm not sure.

F. Gingell: It's a subject that we can come back to later on.

Hon. G. Clark: To clarify, there's a $50,000 cutoff. So under $50,000 is handled by the private sector; over $50,000 is handled directly by the government.

F. Gingell: Instead of having the normal type of policy that we all have on our automobile or house, where we pay the first $200 or $1,000 of a claim, the province has it backwards; they have the insurance company pay the first $1,000, and it pays everything above that. That's what I thought you said.

Hon. G. Clark: There is a deductible, I believe, and I can get you that information. Claims under $50,000, after the deductible, are handled by the private sector; over $50,000, they're fully paid by the province through this special account.

F. Gingell: I presume -- and would appreciate you confirming -- that the contract for the private sector insurer is put out to public tender. I was wondering how often it is renewed and goes out to tender.

Hon. G. Clark: I'm not sure how often, but I can assure you that it's put out to tender. There is more than one underwriter, I believe. This is a big operation. I can find that information for you. I'm pretty sure that it is only about two or three years old, so there may not have been too many. I can assure you that in the Ministry of Finance in general we have a fairly ruthless and competitive bidding policy, to the point where in many of our operations we disaggregate the business as much as possible so we can have each little piece bid on.

I'd be very surprised if that's not the case in the risk management sector as well. It is a fairly new program, so I'm not sure how often segments of the business have been put to tender. I'll certainly find that out for you.

F. Gingell: I'd like to move on to the division of your ministry that deals with the management of public funds and debt. There has been quite a discussion on the borrowing policy of the government. I was wondering if you could start by perhaps giving us a little background on what the practice was in the past, what you're presently doing and what you hope to accomplish in the future.

Hon. G. Clark: There has been no fundamental change in policy. We try to diversify our borrowing portfolio in as many markets as possible. This year we have to borrow $4.5 billion. Some of that is refinancing of the B.C. Hydro debt, some of it is obviously our current account deficit of $1.8 billion, some of it is Crown corporation borrowing generally, and some of it is borrowing for our financing authorities for schools, hospitals and university construction. That's not unusual. It's not bigger than it was last year, but it's bigger than it has been for some time.

The only difference in the borrowing strategy is that the demands.... Two things are happening. First of all, all provincial governments are borrowing extensively -- B.C. certainly less per capita than most other provinces. But when you have Ontario entering the market and having to borrow $10 billion or $12 billion annually, it has a potential to crowd out other borrowers, even though our credit rating is higher, our spreads are higher, and we are strong in that regard. That's something that we have to take into consideration.

Because our borrowing program is bigger than it has been in the past, we want to ensure that we can diversify our borrowing strategy as much as possible. If you're only borrowing a few hundred million dollars or a billion dollars, then it's not obviously as essential that you tap as many markets as possible -- even though my staff has always reviewed where the best place to borrow is.

In recent years we have been borrowing, as I understand it, in the domestic market and also the Euro-Canadian market, using the Swiss Bank as the lead manager in Europe. There have been some

funda-

[ Page 2513 ]

mental changes, as I understand it. I didn't know very much about any of this six or eight months ago. There have been some changes in the international marketplace in the sense that there are now global issues; in fact, most issues are global issues.

My staff can kick me if I'm wrong on any of this stuff, but if you do a Euro-Canadian issue then obviously the Japanese and others can purchase it as well. It's not just limited to the European market, although that's where the profile is and the lead manager is. The globalization of this market has been staggering just in the last few years. So many issues are global issues.

We have to be diligent in terms of making sure that our larger borrowing requirements are now managed as prudently as they have been in the past. But our requirements are larger. We have significant competition from other provinces, in particular Ontario, which has huge borrowing requirements that are causing, in some respects, I think, all provincial governments some difficulty.

We're doing extremely well, as you know, in terms of our credit rating, our borrowing ability and the spreads we are receiving, so we borrow at less cost than any other province. That's obviously, in part, a result of our financial position and the staff work that we've done.

We have not borrowed in American dollars or other currencies for, I believe, about eight years; '83 was the last U.S. borrowing. We have just recently borrowed $500 million (U.S.) in the Euro-U.S. market, using the Deutsche Bank as the lead manager. We could have borrowed in the New York U.S. dollar market, but that requires SEC approval and several hoops; the opportunity was there.

Obviously, borrowing in foreign currencies has some dangers, but those dangers are dramatically less than at any time previously in our history, because the markets have had almost revolutionary changes. The markets have gone through changes so that everything is tradeable now. It's easier now to currency-hedge when you borrow, to limit or to eliminate, if you want to, any currency risk associated with borrowing in foreign currencies. I don't believe that has always been the case. It has certainly not always been as easy as it is today.

[4:45]

There are now markets developed for all these financial instruments. We have now borrowed $500 million in United States currency in Europe, and the interest rate is so dramatically less than the current Canadian interest rate that the currency risk is mitigated by that interest rate spread. The Canadian currency would have to drop to roughly 73 cents U.S. as the break-even line. If the Canadian dollar is higher than 73 cents, then we make money. So you can imagine that at the current 83-cent Canadian dollar we are saving the taxpayers millions of dollars in that borrowing.

If the Canadian dollar drops, and I hope it does -- there's an interesting conflict of interest -- for economic purposes, then the savings to the taxpayer diminish. However, it's our judgment that 73 cents is so low that we are in a good position. If at any time the Canadian dollar does drop dramatically and precipitously, then we simply move into the market to hedge any currency shift. It costs you some money to hedge, but at any time you can mitigate any impact.

We have to be very prudent, very careful in any foreign currency borrowings. We have not done it for eight years. We have only done $