1987 Legislative Session: 1st Session, 34th Parliament

HANSARD

The following electronic version is for informational purposes only.

The printed version remains the official version.

Official Report of

DEBATES OF THE LEGISLATIVE ASSEMBLY

(Hansard)

THURSDAY, JULY 16, 1987

Morning Sitting

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2595 ]

CONTENTS

Routine Proceedings

International Financial Business Act (Bill 50). Hon. Mr. Couvelier

Introduction and first reading –– 2595

International Financial Business (Tax Refund) Act (Bill 49). Hon. Mr. Couvelier

Introduction and first reading –– 2595

Insurance Amendment Act, 1987 (Bill 48). Hon. Mr. Couvelier

Introduction and first reading –– 2596

Tabling Documents –– 2596

Miscellaneous Statutes Amendment Act (No. 3), 1987 (Bill 55). Report ––

Third reading

British Columbia Enterprise Corporation Financial Restructuring Act (Bill 53).

Committee stage. (Hon. Mr. Couvelier) –– 2596

Mr. Stupich

Mr. Williams

Mr. Harcourt

Hon. Mrs. McCarthy

Third reading

Committee of Supply: Ministry of Economic Development estimates.

(Hon. Mrs. McCarthy)

On vote 17: minister's office –– 2602

Hon. Mrs. McCarthy

Mr. Harcourt

The House met at 10:08 a.m.

Prayers.

HON. MRS. McCARTHY: Mr. Speaker, I would like to welcome all

the people in the gallery. I understand there is a son of one of my

friends in the gallery and, specifically, I would like to welcome

alderman Helen Boyce from the city of Vancouver. We are very pleased to

have her in the gallery today, and I'd like to ask all the House to

welcome her.

Introduction of Bills

INTERNATIONAL FINANCIAL BUSINESS ACT

Hon. Mr. Couvelier presented a message from His Honour the Lieutenant-Governor:

a bill intituled International Financial Business Act.

HON. MR. COUVELIER: Mr. Speaker, Bill 50, the International

Financial Business Act, is the second part of the package of two pieces

of legislation designed to provide an environment that encourages the

conduct of international financial activity in Vancouver. As with Bill

49, this bill is being introduced at this time for discussion only, and

it will be reintroduced in revised form when the effectiveness of these

combined efforts has been demonstrated.

Taxation has been identified by both the federal and the Quebec

governments as the major factor in the creation of an international

financial centre. I agree that it is a factor; however, I suspect that

the costs imposed by taxation are substantially outweighed by the much

less direct cost of regulation.

Bill 50 is designed to create a competitive regulatory environment.

Although difficult to measure, government regulation imposes real costs

on financial institutions. These companies devote time, energy and

money to complying with the regulations, and in many cases are

precluded from pursuing profitable opportunities. For domestic

institutions, these costs of regulation are, of course, more than

offset by the benefits of public protection. International financial

centres, however, deal with non-residents who are highly sophisticated

and competent. The consumer protection afforded by a strict regulatory

environment is not needed as long as the unsophisticated cannot be

involved. It is of vital importance that the regulation of

international financial activity in Vancouver be competitive with that

imposed by other jurisdictions. A less onerous regulatory regime, in

these circumstances, is not only defensible but essential.

Bill 50 introduces a mechanism to dramatically reduce the regulatory

cost that is imposed on newly incorporated subsidiaries of financial

institutions that conduct international financial transactions

exclusively with non-residents. The regulatory regime is designed to

isolate these subsidiaries from domestic markets, but in all other

respects the free market will prevail.

The international financial businesses formed under Bill 50 will be eligible,

along with other financial institutions, for the tax incentives provided in

Bill 49. As with Bill 49, it is not clear that Bill 50 can do its job unless

complemented or validated by the federal government. Once again, I urge the

business and financial community to examine this legislation closely, and on

the basis of that examination suggest to both this government and the federal

government how this legislation or other government measures could be effectively

used to the benefit of British Columbia and Canada.

These two pieces of legislation represent an important provincial

contribution to the joint efforts of the federal and British Columbia

governments to develop an international financial centre in Vancouver.

If the private sector can demonstrate that, with the help of this or

other legislation, our objective can be achieved. I will be pleased to

introduce revised bills. For the present, the legislation is being

introduced for discussion and I am looking forward with great interest

to any and all comments on this initiative.

Mr. Speaker I move first reading of Bill 50, the International Financial Business Act.

Bill 50 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.

INTERNATIONAL FINANCIAL BUSINESS

(TAX REFUND) ACT

Hon. Mr. Couvelier presented a message from His Honour the Lieutenant-Governor:

a bill intituled International Financial Business Tax Refund Act.

HON. MR. COUVELIER: Bill 49, the International Financial

Business (Tax Refund) Act is one of the two pieces of legislation

which, when taken together, represent tangible evidence of this

government's ongoing commitment to the objective of developing

Vancouver as an international financial centre. It is the government's

intent that this legislation not be debated and passed by the

Legislature at this time, but that it will be available for public

discussion and consultation. It will be reintroduced and passed at some

future time, after an opportunity has been provided for public

discussion.

As a result of an announcement in the 1986 federal budget that

measures would be introduced to facilitate the development of Vancouver

and Montreal as international financial centres, a provincial

initiative that was already underway was diverted for almost a year in

favour of efforts to develop a federal-provincial measure.

With the tabling of a federal ways and means motion in January of

1987, followed by legislation in June, it became apparent that what had

been achieved was only a commendable first step. As a result, the

comprehensive provincial measures that I have now tabled were developed.

Bill 49 goes as far as a provincial government can to create the

type of tax regime which, I believe, is required for Vancouver to be

competitive with other international financial centres. Bill 49 also

provides some personal tax incentives which are designed to help make

Vancouver attractive enough to generate a critical mass of

participants. By and large, these tax measures will not expose the

provincial government to significant costs. Simply put, most of the

business that will enjoy the tax benefits would not, in their absence,

occur in Canada. The government would not be collecting the tax

revenues it is prepared to give up.

Bill 49 works by providing a refund of provincial income tax paid on

profits generated by financial institutions located within the Greater

Vancouver Regional District from a wide

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range of international financial activity. As noted, these

activities are limited, with a few exceptions, to dealing with

non-residents, so the refunds or tax exemptions will have little, if

any, cost in terms of forgone tax revenue.

[10:15]

Unhappily, I remain unconvinced that a provincial taxation measure

alone can be sufficiently attractive to be effective. Additional

federal tax incentives involving federal corporate income tax and

withholding tax are also required. On this point I am in complete

agreement with the spirit of recommendations in the report of the

Blenkarn committee. In spite of media reports that the Blenkam

committee opposed such tax matters, their report clearly indicated that

to be effective, the federal tax measures should be extended to

additional financial activities, just as I am proposing in Bill 49.

With the introduction of this legislation, I am challenging the

business and financial communities in British Columbia and in Canada to

become more actively involved — in fact, to take the lead role in this

initiative. With Bill 49, I believe that the provincial government has

gone as far as it can go in terms of taxation. I hope that when the

support and leadership of the private sector has been demonstrated, the

federal government can be convinced to implement tax measures which

follow this example. We must remember that the real competitive niche

to be filled is unique to Vancouver, an opportunity afforded by its

location on the west coast of North America. Either we can be Canada's

and North America's financial gateway to the Pacific Rim, or we can

allow Los Angeles, San Francisco or Seattle to take the initiative.

Mr. Speaker, I move first reading of Bill 49, the International Financial Business (Tax Refund) Act.

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.

INSURANCE AMENDMENT ACT, 1987

Hon. Mr. Couvelier presented a message from His Honour the Lieutenant-Governor:

a bill intituled Insurance Amendment Act, 1987.

HON. MR. COUVELIER: Mr. Speaker, this bill sets in place an

administrative incorporation procedure for provincial insurance

companies. The present Insurance Act does not provide for the

incorporation of insurance companies. If an insurer wished to

incorporate in British Columbia, it had to do so through a special act

of the Legislature. That procedure has been an impediment to the

establishment of insurance companies in the province.

Bill 48 is tangible evidence that the government is meeting its

commitment to promote growth in the financial sector of the province by

encouraging the development of insurance companies in British Columbia.

Mr. Speaker, this bill is not intended to be debated further at this

session. It is, as with the other two bills, intended to alert the

financial community of our desire to make some changes in this respect,

and we invite their comments and participation, as we do all British

Columbians who have an interest in the subject. I therefore move that

this bill be read a first time.

Bill 48 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.

HON. S. HAGEN: Mr. Speaker, I ask leave to make an introduction.

Leave granted.

HON. S. HAGEN: Mr. Speaker, in the precincts today we have

with us a gentleman who has worked very hard to ensure that the

University of British Columbia remains the premier university in this

country. We have with us today the chairman of the board of governors

at UBC, Mr. Bill Sauder. I'd ask you to please make him welcome.

Hon. Mr. Strachan tabled a report titled: "Annual Report to the Governments

of the United States and Canada from the Columbia River Treaty Permanent Engineering

Board."

Orders of the Day

HON. MR. STRACHAN: At the outset, Mr. Speaker, I'd ask leave to call report on Bill 55.

Leave granted.

MISCELLANEOUS STATUTES

AMENDMENT ACT (No. 3), 1987

Bill 55 read a third time and passed.

HON. MR. STRACHAN: Mr. Speaker, I call committee on Bill 53.

BRITISH COLUMBIA ENTERPRISE CORPORATION

FINANCIAL RESTRUCTURING ACT

The House in committee on Bill 53; Mr. Pelton in the chair.

section 1 approved.

section 2.

MR. STUPICH: Dealing first with

section 2(a), I raised these

questions in second reading, and both the minister and I agreed that it

would be better to deal with them in committee.

In 2(

a) all of the property and assets of the Development

Corporation and all rights are to be vested in the new company. My

question was: at what value? I know I can't talk about

section 4 right

now, but

section 4 says the value will be established by cabinet. I'm

wondering whether we know in

section 2(a), or do we have to wait until

we get to

section 4 to discuss the figure at which the assets will be

transferred?

While I'm asking that question, may I just point out that the total

liabilities of the corporation will exceed the total assets, I guess —

because I've got nothing else to go on other than a guess — by

something like $100 million. There is a deficit there, a shortfall.

HON. MR. COUVELIER: Mr. Chairman, the revised balance sheet

that follows the folding-in to the B.C. Enterprise Corporation of BCDC

and B.C. Place will show assets

[ Page

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of $518.8 million and liabilities of $220.4 million and equity of $298.4 million, for a balancing total of $518.8 million.

MR. CHAIRMAN: Just before we proceed, if it will facilitate

the debate on this bill, the Chair has no objections to the sections

being dealt with simultaneously.

MR. STUPICH: The minister, I think, has an advantage over the

opposition in that he is giving us figures now that presumably are

based on something more up to date than March 31, 1986. We have figures

for BCBC, but we don't have anything for BCDC after March 31, 1986.

To get a figure of almost $300 million equity when the best

information that we have is that there is currently a deficit of

something over $110 million — and that's a guess, I admit — means that

somewhere or other some debt of over $400 million has been written off.

In other words, the Crown is suffering a loss of something like $400

million as a result of this transaction. I'm not complaining about

that; I just want to know if that's really the way it is.

HON. MR. COUVELIER: I'm not quite sure I follow the question.

You're right, these figures are as at March 31, 1987 — not 1986. The

equity of BCDC prior to the folding-in is at a deficit or a loss

position of $102.6 million, if that helps the hon. member.

MR. STUPICH: A loss position of $102.6 million — as I recall,

B.C. Place has something like close to $9 million, so that would mean,

then, that we are talking about a combined deficit of $112 million. The

minister said that the pro forma balance sheet, if I can use that term,

shows a net equity of $298 million. We are talking about a difference

of $415 million, roughly, that has disappeared somewhere.

I think the short answer is that the Crown has accepted that loss

and is taking it into its own accounts, and the deficit for the year

1987-88 will be $400 million plus whatever the operating deficit is for

this year. The minister predicted in his budget speech that it would be

$825 million, I think. So that means that now we're looking at a

deficit for this year — so far; this may not be the end of it — of in

excess of $1.2 billion.

I'm talking about figures to give the minister a chance to consult

and catch up — because there isn't supposed to be a silence. I'm sorry,

does the minister understand my question now? We have deficits in two

corporations, we add them together, we produce a now corporation with a

net equity. There is a shortfall of $400 million.

HON. MR. COUVELIER: The member is right; I'm having some difficulty listening to four speakers simultaneously.

The B.C. Place equity prior to the fold-in is at $162 million —

positive. The net effect to arrive at the equity of $298.4 million

arises from the consequence of the restructuring of the $396 million

that was spoken of yesterday, and breaking that up into equity and

write-off.

MR. STUPICH: Mr. Chairman, now I have the answer to my question. We

have a net equity because the Crown is taking some $205 million worth of capital

in BCDC — that's where it sits, or B.C. Place, and it's been transferred

to the Crown — and we're saying that that investment in B.C. Place originally

is worth $205 million. That's an investment that has produced a loss in

every year since the company has operated. We're still saying that in spite

of this history of losses, B.C. Place is still worth $205 million to the Crown.

We're not going to write down that figure. In all honesty we should write

it off in total and take the loss of $205 million, but apparently from what

the minister is telling me, we're not going to allow for any depreciation

in that figure at all. We're saying that B.C. Place is still worth $205

million to us, even though it has an unbroken history of operating losses.

HON. MR. COUVELIER: the hon. member will remember that

yesterday I mentioned we were incorporating in B.C. Pavilion the public

facilities — the stadium and the convention centre. So that will result

in a cleaning up of the accounts and a separation so operations can be

judged more accurately in the future.

The net effect of this, of course, is to put the assets into B.C.

Enterprise Corporation, using proper accounting practices and

procedures, as described yesterday, at valuations which in our judgment

will allow them to be developed and/or sold so that there is no loss

incurred. As was expressed yesterday, it is true that we are taking out

of the system some sums of money to make sure that this fiscal period,

for which this government feels exclusively responsible, starts on a

clear, understandable basis, so that the past occurrences brought about

by economic difficulties of that time and decisions by players at that

time can be isolated from the current operations. I submit that what we

are doing here — and I hope with this questioning that you might come

to the same conclusion — is cleaning up these records, so that for once

and for all there can be a proper understanding of where we start the

new look of this new government with its new, first-time budget.

MR. STUPICH: Mr. Chairman, I think that when I asked this

question I said to the minister that I wasn't complaining about what

was happening at all; I just wanted to understand it. It would appear

that the minister is ready to agree with me right now that what we're

admitting is that these experiments, these games we've been playing,

have cost us in excess of $400 million, and we're saying let's

recognize it now, start out with a clean slate and write off that $405

million this year.

[10:30]

I think the minister is not prepared to write off the $205 million

of shares in B.C. Place. I would recommend that before the end of the

year he do consider that and write that off as well, because certainly

they're never going to be worth anything to the Crown.

It's not a case of complaining. I just want to understand it. We

have taken a bath, as the first member for Vancouver East (Mr.

Williams) just said, in excess of $400 million. We're recognizing it

now and accepting it and starting the new corporation with a clean

slate.

HON. MR. COUVELIER: One final comment, Mr. Chairman, just to

make absolutely certain that there's no confusion here. The effect of

these adjustments we've described will be reflected in the 1986-87

operating year. I trust that that's understood.

MR. STUPICH: I think my first question was whether, in

placing a value on these assets that are being transferred I will leave

that to

section 4, and ask him how he's going to value them.

[ Page 2598 ]

MR. WILLIAMS: So all of this laundering is taking place in

the 1986-87 operating year. Right? Because it's retroactive. So this is

the final action in the laundry in terms of dealing with this mountain

of debt.

HON. MR. COUVELIER: I take offence at the word "laundering."

What we're doing here, as I said earlier, is merely making sure that

from now on all interested people will be able to understand the

dealings of the government. I suspect the hon. members would agree that

by this reorganization it will be possible that we won't have to go

through this kind of confusing exchange next year.

MR. WILLIAMS: This is the most expensive laundromat in

British Columbia's history that we've got before us right now. There is

simply no doubt about it. This is laundering all the debt of those

profligate years of Social Credit. It's not Monday; it's not washday.

But it's the biggest bath we've ever seen.

I guess what you're telling us is that you just don't want to

deposit that annual report of these outfits. You want the laundry to

work so you don't ever have to deposit the real annual reports for B.C.

Place or the B.C. Development Corporation. The laundry is here. The

numbers will change; the offloading of the debt will take place.

MR. G. HANSON: Arctic Power.

MR. WILLIAMS: Yes, we'll get Mr. Clean out of this.

Really, all the gobbledegook.... It's really tough. We somehow don't

seem to train our citizens in these names and arcane words about equity

and debt and so on. It's pretty simple what's been going on. The eyes

glaze when we get into the millions and close to the billions, Madam

Minister of Economic Development. It's a tremendous advantage for an

incompetent government; it really is.

They can understand the expensive meals, and that offends them. That

was only a million. They understand that, and it offends them. But when

we get into these hundreds of millions, the eyes glaze over, and it's

beyond the ken of the average citizen. Lucky for you that it is,

because there has indeed been profligate, wasteful spending on an

incredible scale. What you're really saying here is: "We don't want you

to see the real books. We're going to make it retroactive because we

don't want you to see the details." I have to commend the minister for

some of the information he's provided us, and that has been helpful.

Nevertheless, one really wonders.

Will the minister deposit with the House what would have been the

annual report of BCDC and what would have been the annual report of

B.C. Place prior to this action in this statute?

HON. MR. COUVELIER: That was a rambling comment made by the

hon. member. The last comment was: would we introduce annual reports,

as if these changes had not occurred? I suppose the answer is no, we

would not do that. What would be the purpose? We would wind up

thoroughly confusing everybody. Admittedly, some who are less mentally

agile and less competent might have glazed eyes in dealing with this

subject, but those of us who are alert and managing the public's

business are on the balls of our feet and able to deal with these

problems in a way that is not confusing and is quite straightforward.

MR. HARCOURT: I have followed this debate with some amusement

because we have this tortuous process to pay for a stadium erected on

some of the most valuable land in the world, and here the minister is

sheepishly putting forward this convoluted, awkward, indefensible piece

of financial — I won't use the word chicanery because it's not really

that; it's just the most bizarre, obtuse, difficult way to carry out

the public's business.

I hate to give you your lines, Mr. Minister, because that's not my

function or duty — you've got staff people to do that — but you could

have said that we've just bought for $60 million some of the most

valuable land in the world, which is what I congratulated the Premier

for in 1980-81 when we purchased the land on the north side of False

Creek. For $60 million the land was purchased. It was a good purchase.

It ranked up there with Manhattan Island — $9 a square foot. Here we

have all this land which is very, very valuable, and we build a stadium

where it should have been built for $126 million.

You could have then covered the stadium, as we did, financially the

same way. The stadium was built on time, under budget — with union

labour, by the way; a very skilful union-labour contractor. You could

have said this is a wonderful accomplishment. There was $25 million put

aside for the stadium, another $25 million promised on top of that, $10

million worth of land, and then you could use it as a public facility,

$25 million a year, and had it paid for as an asset for British

Columbia. And everybody would be proud.

Then you'd have on top of that 165 acres of land that could be

redeveloped over a 15- or 20-year period, at a cost of $9 per square

foot that the people of British Columbia had paid. As a matter of fact,

the federal government threw in five pieces of land, or two of the five

pieces of land. You could then have said: now look, we've got land that

we can sell on the open market, or lease, for $300 to $400 a square

foot for the expensive commercial buildings, or for $30 to $100 a

square foot for housing. It was a good deal.

To take that sound investment by the people of British Columbia —

some people disagreed but I didn't; I thought it was a good deal for

British Columbia — and to turn it into this lump of awkward, sheepish,

convoluted accounting is astounding. That the Social Credit government,

over the last six or seven years, could turn it from a triumph into an

embarrassment....

MR. WILLIAMS: Funny-money boys.

MR. HARCOURT: Mr. Minister, it may have been your

predecessors; they're all Social Credit. Most of the people who are in

the cabinet now were in that cabinet that took this potential triumph

and turned it into this embarrassment here. I find it really quite

unusual, as somebody who comes from a business background and has run a

large organization, to see the process we've gone through here over the

last few days — to take what should have been a political triumph for

you and turn it into an embarrassment. Look at how many of your members

are away because they don't want to sit through this.

MR. WILLIAMS: They're ashamed.

MR. HARCOURT: They are ashamed, and they should be. You took

some good ideas and turned them into a political embarrassment. That

takes a lot of ineptitude to do.

[ Page

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HON. MR. COUVELIER: I'm very pleased to have the hon. Leader

of the Opposition make one of his rare attendances in the House for a

debate. He seems to be concentrating on the question of the stadium,

and I'm very pleased that he acknowledges that the construction of that

stadium was a Social Credit initiative that was highly successful and

has very desirable social consequences.

However, he totally misses the point, and had he attended the

discussions earlier he would understand that the stadium has been

isolated into a separate corporation. We are proud of the stadium and

we intend to continue it under a corporate structure called B.C.

Pavilion Corp. The issue here regarding the write-offs and having to do

with the write-downs relates more to the operations of BCDC, and

basically is attributable to industrial land holdings which, on a

falling real estate market, have to be recognized, using conservative

accounting principles, which of course this government is always

pleased to do.

HON. MRS. McCARTHY: I really didn't want the remarks of the

Leader of the Opposition to go by because, as my colleague the Minister

of Finance has said, he has completely missed the point. In this last

dissertation — one of the few from the Leader of the Opposition — we

seem to have missed the point that in the two corporations being

discussed and in the financial restructuring which this bill addresses,

there was something other than the stadium in the whole process in this

last four years.

In this last four years, in the very city which both the Leader of

the Opposition and I represent, there were thousands of jobs created.

There were some 14,000 jobs created on the B.C. Place lands and over

48,000 jobs created in the presentation of Expo 86 on those lands. He

seems to think the construction and the jobs were all wasted.

The assets left for the city of Vancouver — of which the Leader of

the Opposition was the mayor — were not just a credit to this

government. They were also a credit to the largest city in British

Columbia. There were other assets also. Let's get away from the city of

Vancouver.

We have turned the Whistler lands into an international resort, an

internationally renowned ski resort; yet another asset for British

Columbia. B.C. Development Corporation, which everyone can get very

excited about now and the hon. first member for Vancouver East (Mr.

Williams) can get all upset about the losses.... I've got to tell you,

Mr. Chairman, if it hadn't been for that corporation over those very

difficult world recession days...

MR. WILLIAMS: Are you peddling that line again? Come on!

HON. MRS. McCARTHY: ...many hundreds of people would not

have retained their jobs, and their families wouldn't have had a

paycheque. When we talk about financial restructuring here, let's talk

about some of the assets that have been of great asset to the city of

Vancouver such as great job creation; those assets are still left.

What we see in the restructuring is addressing the difficulties of a

past administration and a past financing structure which met a time in

our economic life that it was necessary to meet — unquestionably.

In taking over that responsibility, I wanted to be sure that it was restructured

so that we start off without all the encumbrances, and we are able to take that

land asset we have and ask the private sector to do what they do best: to come

to the table and develop that land to the advantage of the taxpayers of this

province and not have the taxpayers continually out of pocket by using taxpayers'

funds for development purposes which, in this transaction alone and in the redevelopment

and reorganization of these two corporations, in this year alone will save about

$150 million.

When we talk about restructuring the financial situation, let's put

the past in perspective — in job creation and in the assets that are

left to have further job creation, but that job creation being done by

the private sector in conjunction with the city of Vancouver, the

Coquitlam community, the Victoria community and putting the private

sector dollars up for development.

[10:45]

MR. HARCOURT: I want to take the words out of my mouth that

the minister placed there. I didn't say that these were wasted assets

at all. I have said from the beginning that they are valuable assets

for the people of British Columbia. I'm just saying: why don't you

treat them that way? Say what you just said throughout all this debate,

instead of this basically shovelling back onto Bill Bennett all the

evils of the last ten years of Social Credit government. That's what

you're doing. Most of you were there; you were part of those decisions.

Instead of trying to be so embarrassed in the way you're going about

this, you should have just financed it as an asset. That's what I said

earlier. It's a $126 million asset that had to be built. Empire Stadium

was falling apart, and we needed a stadium in British Columbia. Say

that. Finance it. There was $50 million to cover most of the $126

million cost. Then invest another $25 million for three years — paid

for — as an ongoing asset for the people of British Columbia. Then you

would free up the rest of the land from all those charges. The plan all

the way along has been to recycle the land after Expo, for the private

sector to come in and do what you just talked about, Madam Minister.

There's no disagreement on that. It's just that the way you're going

about it is one of the most bizarre and unusual processes I've ever

seen — that's all I'm saying.

I'm glad to see there's a continuation of what the New Democrat

government started with the opening up of Whistler in the 1970s to

become a major asset for the people of British Columbia. As somebody

who has left many broken skis on that slope up there, I agree with you:

it is a very fine asset, and it is now becoming difficult for us

domestic skiers to get on the lifts, because it is very popular. I'm

saying why don't you just treat it that way — they are assets for the

people of British Columbia that are paying dividends — instead of going

through all this gobbledegook?

The private sector is going to be utilizing the lands that the hon.

member for Vancouver East and I helped put together when we were on the

Dunhill board of directors. Again, we should just say that. Those lands

were acquired to help the development efforts of the lower mainland,

Victoria and other areas. The private sector was always expected to

come in and do that. That's what you could have said here, instead of

going through this tortuous process to dump all the bad debts and

mistakes on the past Social Credit administration — to freshen up the

very stale fresh start that's underway right now.

[ Page 2600 ]

MR. WILLIAMS: The Minister of Economic Development says:

"Well, you know, it was the difficulties of the past administration. It

wasn't me; I'm part of the great, new fresh start." Gee, she has been

here since she left parks board many decades ago. It doesn't wash.

We're doing the laundry, but that one doesn't wash. "It's the difficult

past times. It was all that terrible international recession. It had

nothing to do with me; it had nothing to do with Bill Bennett and

nothing to do with my colleagues. It's that terrible international

recession. The international recession is the reason that BCDC was

mismanaged; it's the reason that B.C. Place was mismanaged." Come on,

it doesn't wash at all.

The Minister of Finance tells us he isn't going to give us the real

annual reports for BCDC and B.C. Place, because he has this retroactive

statute that's going to launder all those numbers. Well, maybe you can

give it to us verbally, then, Mr. Minister of Finance. What were the

losses for BCDC in the last fiscal year to the end of March, prior to

bringing in this legislation? The losses for the year ending March '86

were some $87.4 million. The year before, they were around $60 million

in losses. So it's very clear that there has been an accelerating,

terrible loss situation in BCDC. The question is: how much were the

losses in this last fiscal year that we're handling here? It has

clearly been very substantial through the years. Given the asset base

of the corporation, they are extraordinary losses. No other lending

institution, even in the public sector, has those kinds of losses that

I'm aware of. It's an extraordinary level of mismanagement. It's an

extraordinary level of bad judgment in terms of those lending

activities.

There are other things on those books — or responsibilities — for

BCDC, like the Louisiana-Pacific Corp. and lending some $25 million to

that American giant for a small chipboard plant in Dawson Creek. It was

to be interest-free money — $25 million for three years — which would

be another new $10 million loss or liability. I guess that's not on the

books of the corporation. That's something the government is going to

have to directly funnel to the corporation. But maybe we have the loss

picture for the year ending the end of March.

HON. MR. COUVELIER: Mr. Chairman, the unaudited calculation —

and bear in mind that this has got to be approximate — is about $80

million for last year.

MR. WILLIAMS: I thank the minister for the figures, but this

is extraordinary: $87 million in losses for the previous fiscal year,

$60 million in losses the year before that, and then $80 million....

Interjection.

MR. WILLIAMS: I'm sorry — that was a cumulative loss. But this is a new $80 million.

MR. HEWITT: Why don't you read the financial statements for '85 and '86?

MR. WILLIAMS: Lord, this is a new $80 million.

Interjection.

MR. WILLIAMS: No, it's a new $80 million loss.

AN HON. MEMBER: Bad research.

MR. WILLIAMS: The minister brought the facts just now — an

$80 million loss under the Minister of Economic Development, the member

from Shaughnessy.

Interjection.

MR. WILLIAMS: Only seven months. Okay, it was $80 million in

the year, so the minister wants to correct this now, and that's

reasonable. I accept the minister's point. She was only responsible for

seven-twelfths of that loss.

Interjection.

MR. WILLIAMS: No, this is up to March of this year. The

Minister of Finance just gave us the figures up to March. This was the

Minister of Economic Development in March.

Interjection.

MR. WILLIAMS: You were the minister in March, you were the

minister in April, you were the minister in February, you were the

minister in January, you were the minister in December. You were the

minister responsible for most of these recent losses in this

corporation. It's part of the overall inheritance, certainly, but this

is more losses being dealt with here. Those are extraordinary losses.

The minister was kind enough to provide the opposition with

statements regarding the loans of BCDC, or sort of the basket of loans,

and notes that there was provision for losses on loans over $1 million

of $41 million plus, and for losses on loans under $1 million of $13

million plus, for a total of $53 million in this corporation. Then

there's an estimated net value of the loan portfolio of $129 million.

Those are significant provisions for losses, and I guess the question

that must be asked is: is the minister satisfied, and are his auditors

satisfied, about the provisions for losses with respect to those loans

in BCDC? That is, has there been an intensive review with respect to

the security of those loans, as would be normal in a thorough auditing

process of a lending institution? Are they satisfied that there are no

likely surprises beyond those numbers?

MR. CHAIRMAN: The Chair would appreciate if the comments could be made through the Chair, and now recognizes the Minister of Finance.

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

MR. STUPICH: Mr. Chairman, we have the accumulated deficit of

BCDC — subject to auditing, I appreciate — of $167.4 million at March

'87. What was the accumulated deficit of B.C. Place at that time? The

latest figures I have are something in the neighbourhood of $8 million.

HON. MR. COUVELIER: Approximately $85.3 million, although by virtue of surplus contributions, there still was a positive equity balance.

MR. STUPICH: I think that's the figure I was trying to arrive

at earlier. The deficit is larger for BCDC than I had anticipated. So

we've got accumulative deficits of roughly $253 million, and we end up

with a corporation with a net equity of $298 million. This means that

between capital

[ Page

2601 ]

which the province has purchased and other things that have

happened, there is some $550 million of government money in this new

corporation. To take two corporations that have accumulated deficits of

$252.7 million and end up with one with a net equity of $298 million:

that's a total of $551 million that the Crown is contributing to this

new corporation. I said earlier that it was $420 million; now we're up

to $551 million. That's not a question. It's just adding up the

figures. We realize now that the Crown has taken a bath at $551 million

rather than $420 million.

My question is on

section 2(l)(b). I'm a little puzzled by the

wording: "all of the obligations and liabilities of the development

corporation in relation to the property, assets and rights transferred

under paragraph (a)...." Does the corporation have obligations and

liabilities that are not related to the assets being transferred? I

can't imagine what they would be. I just wonder why it's worded that

way.

HON. MR. COUVELIER: There are two points there that I would

like to come back to. First, the hon. member does not recognize in his

recap — his totalling of some $500 million — the fact that there was a

contributed surplus on the books. So the numbers do not reach those

magnitudes. In other words, you're mixing apples and oranges there, I

think.

Secondly, dealing with the wording, to the best of our knowledge,

those words don't have any significance other than for the members of

the legal fraternity who like to cover off all eventualities. We don't

attach any numbers to them.

[11:00]

MR. STUPICH: As I said, I can't imagine what they would be, other than the ones that are related.

I think I'm not mixing apples with oranges when I get out to $551

million. I did say the debt, and also the share capital owned by the

government in this new corporation. While we have an account

receivable, we also have capital invested, and I submit that the total

of $551 million includes the capital investment. So we're not mixing

things up; it's just that we're talking about different things. The

Crown is still investing $551 million in this new corporation, by

capital or by loan.

MR. WILLIAMS: There's another area around BCDC: guarantees on

other loans. That's $1.6 billion in guarantees of this corporation. Has

there similarly been audits with respect to those guarantees? Do the

figures you provided us in terms of provision for losses on loans deal

with that as well?

HON. MR. COUVELIER: The question of the guarantees is

intended as a balance sheet footnote item only. It is not believed to

have any significance in numerical terms. But as I say, the auditors,

in an abundance of caution, and following conservative accounting

principles, require these kind of comments to be made. This

section

merely recognizes the feeling of the private sector auditors of the

corporation that those sorts of assurances should be made — as a

footnote.

MR. WILLIAMS: Pretty big foot, pretty big note: $1.6 billion.

And we're the guarantors. If any average citizen was a guarantor on a

loan, they would consider it as a pretty significant potential

liability.

HON. MR. COUVELIER: A point of clarification, Mr. Chairman. The hon.

member may be assuming that three zeroes are missing there. The sum is $1.6

million, not $1.6 billion.

MR. WILLIAMS: The Louisiana-Pacific exercise: is that a liability of the corporation or has that been assumed directly by government?

HON. MR. COUVELIER: It is shown, and it is on that listing that we provided the member with yesterday.

MR. WILLIAMS: Yes, I appreciate that, Mr. Chairman. The

understanding had been that the cost of that interest-free loan was to

be met by government funding directly to the corporation. That's simply

being accommodated then in this whole exercise?

[Mrs. Gran in the chair.]

HON. MR. COUVELIER: That's correct, Madam Chairman.

Sections 1 and 2 approved.

section 3.

MR. STUPICH:

Section 3 transfers all the indebtedness of the

Buildings Corporation, including any indebtedness incurred between now

and the end of this calendar year?

HON. MR. COUVELIER: No, Madam Chairman, it only transfers the $205 million investment in B.C. Place.

MR. WILLIAMS: To clarify, Madam Chairman, the potential is

there, though, if the Crown were to assume that. If there were to be a

process of privatization, for example, that opportunity is there. Is

that correct?

HON. MR. COUVELIER: Yes.

MR. WILLIAMS: So it's quite possible after this exercise by

the Minister of Intergovernmental Relations (Hon. Mr. Rogers) that this

could be one of the agencies of government — and this is a new Social

Credit Crown corporation, not one in history or from 1972-75 — that

could potentially be privatized without any of the complications of

their current debt level?

HON. MR. COUVELIER: Madam Chairman, the bill does contain a sunset clause. The member might like to recognize that.

Section 3 approved.

section 4.

MR. STUPICH:

Section 4(

a) gives the

Lieutenant-Governor-in-Council the right to establish the value of

property, assets and rights for the purpose of transferring these to

B.C. Enterprise Corporation. What guidelines is the cabinet going to

use in establishing the value of property assets and rights? There's

nothing here. It's wide open; it would seem they can do anything they

want.

[ Page 2602 ]

HON. MR. COUVELIER: The answer, Madam Chairman, would be the

audited values using appropriate accounting principles as described in

yesterday's discussions.

MR. STUPICH: Madam Chair, appropriate accounting values or

practices don't plan the circumstance, because we're, in effect,

selling assets from one company to another. At that time, it's an

excellent opportunity for the Crown to revalue the assets, perhaps on

the basis of appraisals, or whatever basis; I don't know. If it's the

intention of the minister to transfer them at book value — and I think

that's what he meant — why doesn't the bill say so, instead of saying

that the cabinet has the authority to do whatever it wants?

I know it's difficult; he's trying to listen to his adviser and

listen to me at the same time, and he keeps looking from one to the

other.

My problem is that when we're setting up, we aren't transferring the

corporation as an entity. If we were, it would be appropriate

accounting practices to retain the same values. We're selling the

assets and we're selling the liabilities to a new corporation. We can

sell them at what they're worth, either by appraisal or by the history

of revenues — which are not revenues; they're all losses; the assets

are worth very little on that basis. If it's to be done at book value

or lower book value or market, then why don't we say so, instead of

saying it's up to the cabinet to do whatever they want?

HON. MR. COUVELIER: I suppose the hon. member might like to

take issue with the legislation draftsmen, but the fact of the matter

is and I'm saying now that the principles being followed here in the

restructuring are that land and projects are recorded at the lesser of

the current market value or cost. Loans are recorded at principal

outstanding less provision for losses. Those losses have been vetted by

a private sector accounting firm to verify their authenticity and

relativity. Public facilities are recorded at cost. As I say, I don't

think there's any suggestion here that there's any manipulation of the

dollars involved. There rather is an honest attempt to bring forward

defensible figures based on sound accounting principles.

MR. STUPICH: I accept what the minister has said, and it's

now down in Hansard and related to this section, and we can look at it

again some other day if need arises.

Section 4(b): "specify indebtedness of the buildings corporation

for the purpose of

section 3(l)...." The minister said earlier that

the amount of the debt was going to be $205 million. I think he left

the door open to the possibility of including further debts that could

be allocated to this up to December 31, 1987 — I'm not sure. How is the

minister or how is cabinet going to do this?

Madam Chair, I asked a question actually which was related to two

separate subsections, and the

section that I'm dealing with, 4(b),

specifying indebtedness of the corporation for the purposes of

section

3(l), is where the minister used the figure of $205 million. I just

wanted to ask whether all 4(

b) means is $205 million. Is that the

answer?

HON. MR. COUVELIER: Yes, the figures previously dealt with

are: for

section 3(l), $62 million; for 3(2), $143 million. The

cumulative total is $205 million.

MR. STUPICH: We are just left with 4(c): "specify other

indebtedness of the buildings corporation for the purpose of 3(2)."

That figure may not be known yet, and if that's the case, so be it. If

the minister just tells me how he or cabinet is going to arrive at that

figure for 4(c).... That may be the $62 million you mentioned.

HON. MR. COUVELIER: The figure applicable to that subsection would be $143 million, which is the amount which is not assignable.

Sections 4 to 7 inclusive approved.

Title approved.

HON. MR. COUVELIER: Madam Chairman, I move that the committee rise and report the bill complete without amendment.

Motion approved.

The House resumed; Mr. Pelton in the chair.

Bill 53, British Columbia Enterprise Corporation Financial

Restructuring Act, reported complete without amendments, read a third

time and passed.

HON. MR. STRACHAN: Committee of Supply, Mr. Speaker.

The House in Committee of Supply; Mrs. Gran in the chair.

[11:15]

ESTIMATES: MINISTRY OF

ECONOMIC DEVELOPMENT

On vote 17: minister's office, $269,370.

HON. MRS. McCARTHY: First of all, I would like to say what a

privilege it is for me to be presenting the estimates for the Ministry

of Economic Development. I have with me my deputy minister, Mr. Stan

Dubas, and also Brian Dolsen from our ministry, and I can tell you that

in the short time that I've had the ministry responsibility I've had

very good cooperation and excellent teamwork from this ministry. I know

that that will continue.

As I will detail, my ministry is at the forefront of some of our

government's newest and most exciting projects, programs that reiterate

our new government's positive and successful attitude. The development

and expansion of our economic base in British Columbia is the number

one priority of this government.

May I remind members that the advocacy of the free enterprise system

was the main plank of our election platform last fall and that British

Columbians endorsed that point of view. The majority of British

Columbia voters supported the outlook that the best route to job

creation, prosperity and long-term economic strength is through

government support of a viable and enterprising private business

sector, rather than a dependency on government agencies to do

absolutely everything.

Much of the thrust of our policies and programs is directed towards freeing the entrepreneurial spirit in our

[ Page

2603 ]

province, encouraging new business, assisting new investment and

diversifying our industries into production of new products and export

goods for world markets, and these are the building blocks for the

future and of our new economy.

One of those building blocks is the Industrial Relations Reform Act,

which my colleague the hon. Minister of Labour and Consumer Services

(Hon. L. Hanson) introduced this spring. I mention this topic only to

make the point that a stable and predictable climate of labour

relations is an essential ingredient to creating a favourable

environment for foreign investment.

British Columbia as a trading province needs the confidence of its

offshore customers and investors. The reform of our labour legislation

will, in the long run, improve the chances of foreign investment here.

The new law will ensure that protracted disputes do not cause

irreparable harm to the economy.

By doing so, it promotes the public good in this province — the

greatest good for the greatest number. Sound management, employee

relations and a stable labour climate attract foreign business

interests, and then all of British Columbia benefits, including those

who condemn the measure we have taken.

My ministry's role in this strategy is to be a partner, to be a

catalyst. We do this by helping create a business climate that

encourages growth and fosters new and innovative ideas and technology,

and in essence, freeing enterprise. We're making it possible for

innovative British Columbians to put their ideas to work and to follow

the example that was given in 1986 when we invited the world, the world

came and British Columbians understood that there was a new attitude

and a new way in which to do business in British Columbia, and that was

with a positive attitude, not the negativism that is emanating from the

giggling member for Vancouver East. We believe that economic growth

flows naturally from allowing the private sector to do what it is best

equipped to do: harness venture capital and ideas, and let the market

determine success.

I see my job as Minister of Economic Development as marketing and

promoting around the world the goods and services that British Columbia

produces. It is the private sector's job to build and to produce, so

that the resulting demand will be satisfied. Madam Chairman, that way

we all will win; that way we are market-driven, with our success based

on our ability to compete with world producers and exporters. Those of

us on this side of the House do not underestimate the ability of

British Columbia firms to take on the world and win.

Today I have the opportunity to discuss a number of initiatives we

have taken to achieve these goals, and to tell you about the exciting

developments that await us in the future. Speaking of the years ahead,

let me just preface my remarks with one thought, which underlines just

how important the next few years are going to be. This fall when our

British Columbia children enter kindergarten, their parents will look

forward to their graduation from high school in the year 2000. That is

how close we are to the twenty-first century: just 13 very short years.

That's how little time we have to diversify our economy, to create

thousands of new jobs for our children and grandchildren, and to

attract investment to British Columbia which will go elsewhere unless

we can convince the international marketplace that there is a British

Columbia alternative.

I think it's important to interject a couple of statistics here.

Madam Chairman, as all members know, we have been talking about a

diversified economy for many years, and for the most part people still

think of us — and to a degree British Columbians think of themselves —

as loggers, miners or fishermen. Today let me give you some idea of

where our economy is headed and where we will be by the time that

British Columbia child graduates 13 years from now, in the year 2000.

The fastest-growing sectors of our economy are not wood, paper or

even mining. These will continue to be the backbone of our economy, but

in terms of growth they are surpassed by many of the service,

manufacturing and knowledge industries: aquaculture, growing by 59

percent; subsea industries and marine technology, growing by 50

percent; apparel, 35 percent; electronics and computer software, 26

percent; plastics, 19 percent.

Just to give you some idea of scale, I recently joined the mayor of

Toronto in opening the third annual Canadian Festival of Fashion in

Toronto. We had several British Columbia companies there, all of them

as talented, if not more so, than any of Canada's leading firms. That

one industry, the B.C. apparel industry, accounts for 4,000 jobs and

$250 million in goods and services, and is indicative of the various

nontraditional sectors of our economy that are growing by much more

than mere leaps and bounds.

Most British Columbians don't even know we have an apparel industry

or a growing electronics and software sector, or that when it comes to

subsea technology, we are the world leaders. I look forward to changing

that perception. I look forward to letting British Columbians know just

how far we've come, and also how much further we have to go in order to

say with all confidence that we truly are a diversified economy.

I have some recent evidence that this government, through our

ministry and its industrial development agreements with the federal

government, is succeeding in diversifying British Columbia's economy.

I'll give you an example, Madam Chairman. In Grand Forks, in the

Boundary-Similkameen riding, a project has been started with our help

which meets all of our prime objectives in one stroke. It creates jobs

— 100 permanent new long-term jobs — and it protects nearly 40 more. It

introduces long-term investment into British Columbia from a major

Australian resource company. It achieves technology transfer into

British Columbia of a manufacturing process which is new to the

province. It injects $11 million into the local economy for

construction and fabrication of new facilities, and it results in

production of a new line of commercial building construction products,

which are to be exported to the United States from the border town of

Grand Forks.

The project is the Bradford Enercon expansion from commercial and

industrial construction into the manufacture of insulation products.

The project is a result of a joint venture between CSR of Sydney,

Australia, and Pacific Enercon, which operates an existing plant at

Grand Forks. The project was recently awarded a $6.5 million loan under

the Canada-British Columbia industrial development subsidiary

agreement, and at a recent press conference, the Australians

acknowledged that, without our support, they may well have made their

investment elsewhere. The Bradford insulation division of CSR Ltd.

holds half the Australian insulation market and has been manufacturing

and distributing these products for more than 50 years.

[ Page 2604 ]

Using the latest technology developed in Australia and Europe, the

expanded Grand Forks plant will use copper slag residue to produce

high-value insulation products for Canadian and international markets.

The bottom line is new jobs for British Columbia in a area which has

lately felt the effects of changes in demand for forest products. The

project gives added life to that region and assists us in becoming more

diversified as a trading province.

While government helps to build a favourable climate in which to do

business, we do rely on the private sector to apply its unique

abilities to plan and implement for the future. Our goal as government

is to develop British Columbia as Canada's front door to the important

Asia-Pacific region. Our strategy is designed to build on our natural

advantages, our location on the Pacific Rim, our proximity to the

United States with its 260 million consumers, the Canada-United States

free-trade agreement — which we hope will be completed by the year's

end — and the fact that we are midway between the world's two other

major markets: Europe and Asia.

We're going to continue to build on this crossroads concept, as well

as the mature and efficient transportation network that goes with it.

The advantage of our location on the world's trade routes is being

realized by those who seek a good place to invest in the vast North

American market of more than 250 million customers. For instance, a

director of Toyota Motor Co. of Japan, Mr. Tadashi Onishi, was in

Vancouver recently to preside over the announcement of Toyota's

expansion of its automobile-wheel manufacturing plant in Delta. He

remarked that one of the considerations in deciding to expand in

British Columbia was the fact that our province is located on the

Pacific Rim and yet is so close to the United States market, where all

the increased production of the expanded plant will go.

Madam Chairman, the $26 million Toyota expansion project means about

65 additional permanent jobs at the plant, up from the 70 jobs they now

provide. The plant has already generated export revenues to Canada of

more than $16 million, and now its expansion will add to this success

story.

Our involvement, interest and support made this possible with a $3

million loan from British Columbia and another $3 million loan from

Canada, under the industrial development subsidiary agreement. These

are loans, Madam Chairman.

Projects such as this — and there are more — also build on our skilled and educated workforce.

We also have the potential to develop new industrial sectors, such

as electronics and communications, aviation and aerospace, plastics and

value-added wood products. In the electronics sector, one of our

strongest growth areas, we also recently awarded — with the federal

administration — assistance to a Richmond company to make possible the

manufacture of a component that will be a new product for British

Columbia. Solar systems Industries Ltd. will diversify its existing

solar energy operation by adding electrode deposited copper foil to its

product line. The foil is used in printed circuit boards by the

electronics industry, mainly in the United States. Thirty new jobs are

being created in two years. More exports from British Columbia will

take place, and construction and expansion activity, costing more than

$5 million, will benefit the local economy. It's another example, Madam

Chairman, of achievement of growth by innovation.

In the fields of tourism and visitor facilities, we're building on

the natural beauty of our province and the exposure afforded us by Expo

86. Along with my colleague on the Cabinet Committee on Economic

Development, the Minister of Tourism, we have a major project: the new

Vancouver Trade and Convention Centre, which we opened two weeks ago

tomorrow with 200 of the world's most influential convention buyers. To

date, the Vancouver Trade and Convention Centre has booked some 118

events worth more than $150 million through to 1995.

Just to reinforce how quickly time passes, the Vancouver Trade and

Convention Centre is working on a convention for the year 2000. Two

weeks ago, because of the official opening of the centre, we tied down

the pension benefit plans convention of some 14,000 people to come to

British Columbia and to the trade and convention centre.

In this past week, one of our volunteer people, Mr. Paul Wong of the

Lions International Club, was in Taiwan. We have a very good chance of

getting 40,000 Lions International Club members into the trade and

convention centre, in their convention which will be held a short five

years from now. It will take almost five years just to prepare for that

convention and 40,000 people, leaving dollars over at least five days

and in extended post- and pre-convention trips for many more days, in

British Columbia and British Columbia communities.

Each of these areas I have referred to are intended to provide a

positive business environment, one that lets the private sector get on

with the work for which it is not only well suited, but also well

financed. Since almost every area of activity involves both federal and

provincial jurisdiction, we're working in partnership with Ottawa to

build on the new economy.

[11:30]

One such area is to develop British Columbia and particularly the

lower mainland as Canada's gateway to the Asia Pacific region and the

exciting growing market it represents. Let me just highlight some of

the specific objectives of the Pacific Centre for Trade, Commerce and

Travel agreement, which I cosigned late last year with my federal

colleague the Hon. Pat Carney.

First let me say that Transport Minister John Crosbie's recent

announcement that the federal government has decided to follow through

on defederalization of airports is one British Columbia supports with

enthusiasm. The creation of a new British Columbia airport authority

will take a fresh approach to the Vancouver International Airport as

Canada's Pacific gateway. This is not to trade one government ownership

for another — not at all — but to make our international airport a

regional economic generator with benefits for tourism, international

business and value-added manufacturing, much like Schiphol Airport in

Amsterdam, a major gateway to all of Europe. In addition, our airport

authority will work to develop regional airport initiatives across this

province to stimulate tourism and economic development.

At ground and water levels, the Fraser River ports, the Vancouver

Harbour, the Roberts Banks Superport and its surrounding lands, the

Tsawwassen ferry terminal, the Vancouver International Airport on Lulu

Island, and of course our port in Prince Rupert, all form a major

transportation complex under various jurisdictions serving many

different functions.

[ Page 2605 ]

Our provincial government is planning to capitalize on this mature

transportation system and to find developers and entrepreneurs to work

with government to create new products, new industries and new jobs.

The establishment of a manufacturing service and light industrial

complex adjacent to the lower mainland ports is very important. We look

around the world and see a tremendous growth in the development of

manufacturing plants alongside major transportation centres. We not

only have the land for such developments; we also have a growing list

of small- and medium sized firms with expanding export potential.

Through the provision of suitable industrial sites, the establishment

of small industrial container sites and the future development of

deep-sea container facilities, we can and will open new doors to new

markets.

The third objective of the Pacific Centre agreement is the creation

of an international financial centre. I was very pleased to see that my

colleague the Minister of Finance (Hon. Mr. Couvelier), in giving his

presentation of his bill earlier today, is giving time for the

community to come forward with their ideas on the exposure bill that

was tabled in the House today.

As you know, the provincial government and B.C.'s business community

have been active for a long time in seeking ways to accelerate growth

in the international financial sector and to build on the natural

advantages of Vancouver as a commercial centre for western Canada and

the Pacific Rim. When the regulatory and legislative conditions are in

place, it is expected that there will be a significant growth in

international financial transactions and other related activities, such

as the International Commercial Arbitration Centre, the stock exchange

reciprocity with overseas exchanges and specialization in admiralty and

Asian law. These new international commercial services form an

important structural component of the new economic strategy. In all of

these areas, by honing our marketing and promotional skills, we'll be

market-driven rather than facility-driven.

This thinking also extends to my ministry's presence at the

community level throughout the province. In cities and towns throughout

British Columbia we are partners in enterprise through our business

development programs. The provincial budget presented by our Minister

of Finance placed great emphasis on the government's presence within

communities and economic development at the grassroots level.

Our challenges here are to deliver programs in a costeffective way,

to encourage decentralization and privatization and to help small

businesses lead the way. Self-reliance, creativity and the

entrepreneurial spirit, at both the individual level and community

level in partnership with local governments, are making our programs a

success. Among these activities are advocacy on land use and zoning,

where we help cut red tape and work with local government on behalf of

business. My colleague the Minister of Municipal Affairs (Hon. Mrs.

Johnston) assists in that very much. I should explain to the House,

particularly to the members of the opposition, that it is a team

effort. The Cabinet Committee on Economic Development and the newer

deputies' committee on economic development work together to make sure

that these plans are delivered to the people of our province in an

administratively effective way.

Community projects such as Venture Inland, Initiatives Northwest and

Better Buy Victoria are all regional promotional projects that are

co-sponsored with the private sector.

Then there's the working with our economic development

organizations, chambers of commerce and business associations to

implement programs at the local level. We help promote educational

seminars and conferences, and manuals to identify business

opportunities, and have them implemented locally. The theme is

educational, advocating self-help. We work with municipalities to help

them prepare their promotional and marketing efforts. If a municipality

attracts a big development, as Whistler did with plans to build a

Canadian Pacific hotel, our ministry can take some credit for helping,

along with the Minister of Tourism (Hon. Mr. Reid). With

federal-provincial cooperation and marketing advice, we help to bring

that about by providing that advice.

Another grassroots program we have is Community Organizations for

Economic Development, or COED, in which the Ministry of Economic

Development has signed partnerships with 133 of the province's 144

municipalities. Our primary objectives, of course, are job creation,

investment and healthy local communities. Municipalities have

traditionally relied on the provincial government to create local

development, but we now find that the message from those municipalities

is that municipalities themselves are better able to influence their

own future, and we agree with that. They need to be proactive rather

than reactive. They know that local regulations that impede the

establishment or expansion of private sector firms have to be removed.

We talked about that for a long time, and we are finally getting

results in that regard.

More than 90 percent of British Columbia's economic growth occurs

within municipal boundaries, and COED is an able vehicle for direct and

aggressive economic action on the part of local government. Communities

facing economic restructuring, particularly those outside the lower

mainland, see COED and the advice received from my ministry's personnel

as one of the most positive initiatives available to them.

In addition, Madam Chairman, contributions from my ministry for

full-time economic development staff and special projects work to

promote a proactive attitude in municipal governments. By providing

specific funding to municipalities, we joint-venture with them to add

local dollars and local manpower for local economic development. Even

the federal government has recognized that community-based economic

development initiatives are at the leading edge of economic recovery,

and has, among other activities, introduced its communities futures

program.

Without COED, this area of economic development would become the

exclusive preserve of the federal government, and we feel that our

program enhances theirs and theirs enhances ours. However, because of

COED's simplicity and cost-effectiveness, other jurisdictions are

studying it. The state of Washington has already copied it. It

reinforces our government's commitment to local economic development,

and it helps British Columbians and municipalities truly understand how

their economy operates or how to cope with regions who need to rethink

their local economic mix. Through education counselling and modest

financial support, the COED program is costing only $1.5 million this

financial year. Government is having a measurable impact at the

community level in spite of the small investment.

Another way in which we are making an impact is through the

application of our government's purchasing policies. Introduced in

1985, the purchasing policy uses the buying power of the province's

public sector as a lever for

[ Page 2606 ]

economic growth. In addition to determining the price and quality of

purchases, the policy focuses on the overall value given to B.C.

Because of its provincewide impact and its effect on a broad spectrum

of firms in the manufacturing and service sectors, the purchasing

policy is a most effective tool for economic development throughout our

province. The policy is being implemented at the community and the

regional level, and it's being accomplished by enlisting the support of

local governments, elected and appointed officials of municipalities

and regional districts, of hospital boards and their staff, of school

boards and college boards and their administrative people to help in

carrying out the objective of the policy.

In the same way, with a view to British Columbia's economic

development, the federal government is cooperating in identifying

greater opportunities for British Columbia firms in the field of

federal procurement. Not only are we vigorously seeking with our

federal counterparts greater opportunities for British Columbia

businesses to obtain contracts to supply federal government needs;

we're also seeking through federal agencies more and larger contracts

for British Columbia firms on the international level. An important

part of the purchasing policy's overall strategy is to seek

opportunities for substitution of British Columbia goods for ones now

imported for use in our public sector. However, our purchasing policy

does not seek to encourage this import substitution through the

provision of subsidies or grants. British Columbia firms are expected

to be competitive in price and quality with out-of-province and

offshore firms in order to gain public sector business opportunities.

It is our view that no British Columbia firm should rely 100 percent

on government contracts, and we encourage companies to pursue private

markets for any items they supply to British Columbia's public sector.

This goal of import substitution is being actively pursued by

Purchasing Commission staff through an ongoing liaison process with

government ministries, Crown corporations and other government bodies

throughout the province and, indeed, with other agencies and

organizations in B.C. which spend public money. We provide data to

local businesses on imported products now in use in the public sector,

and by this process succeed in greatly increasing awareness of the

opportunities for using B.C. products. And we've been working directly

with B.C. companies to achieve uniform standards in cost criteria for

use when bidding for public sector business.

Madam Chairman, I suggest that it is time to reinforce this impact

by increasing our presence with local service organizations and by

taking an even greater informational role. To that extent we have

already embarked on the business information role through the new

British Columbia Enterprise Centre at the B.C. Pavilion complex in

Vancouver. We opened the enterprise showcase on June 19, and it will

serve as a centre for promotion of British Columbia products,

investment and trade opportunities. It will provide a focus, along with

the Plaza of Nations, for both business and entertainment events and

programs.

My ministry has moved its Vancouver offices from Robson Square to

the B.C. Pavilion, where it will be taking a more aggressive marketing

position in our promotion of international trade and investment. The

most innovative feature of the Enterprise Centre is the International

Opportunities Network, the one-stop shopping centre for business

information and the store-front for all business in all British

Columbia.

I know, Madam Chairman, that my time is up for the introduction.

There is so much more to talk about in economic development; however, I

will look forward to presenting my other initiatives in economic

development during the debate on my estimates. Many thanks.

[11:45]

MR. HARCOURT: The minister's example of Pacific Enercon in

Grand Forks is indeed an example of where cooperation has worked. I was

through that particular plant in my visits around the province over the

last few months, and it is an example of how the slag sitting behind

Grand Forks is being utilized as a product that deals with a lot of the

safety concerns people have about asbestos. It has gone through some

serious problems over the last little while. I think the cooperation of

the municipality in terms of the residual royalties from the slag and

the new capital that has come in, plus the management there who have

struggled through the tough times, is an example of taking an unusable

substance and making it create jobs.

I also went to the Pope and Talbot mill while I was in Grand Forks,

and you could see why our forest industry is so competitive with the

United States. It's one of the most advanced, technically sophisticated

lumber mills anywhere in the world. That's an example of where we as

British Columbians are using our ingenuity, using cooperation. I think

that's a good place to start. But as the Virginia Slims ad goes, you've

got a long way to go yet. A good example of that is in Penticton, where

the Canwood plant cannot get wood. They could add another shift, but

because of the awful way we run our forests, they cannot get the supply

of wood that they require to be able to hire more people. That's an

example of where we have done some things right in this province, but

we still have a long way to go.

We're going to talk about two areas in our discussions of the

Economic Development ministry. One is the lack of an economic strategy

for this province. Lots of buzzwords, lots of beginning efforts, but

there's still the distinct lack of an economic strategy that is truly

community-based and cooperative and involves all sectors in our

province, not just business barons who are flown in from Tokyo or New

York or Toronto for a gab session with the Premier; small and

medium-sized as well as the multinational corporate leaders. Trade

union leaders aren't there. Native leaders aren't involved; municipal

leaders aren't involved in the economic advisory council; people from

the leaming institutes are not involved. It is not a genuine, broadly

based, regional economic strategy. We're still lacking that.

I think it's sad that in this area.... The New Democratic Party

caucus extended an olive branch for a fresh start at the beginning of

this legislative session. Two weeks before we came here, we said that

economic development and job creation should be our focus: how can we

work to bring about a prosperous and stable British Columbia? We said

that we were prepared to once again, in this very serious time for this

province, the most serious economic depression we've had since the

thirties.... How can we work in a bipartisan way, where possible, to

get this province going again? To show our good faith, we said well

ahead of time that we were going to put a motion forward on the throne

speech to set up a task force — not a study group — of members of this

Legislature to go and work with British Columbians, as we did in the

1940s, when the Legislature put together an all-party committee of

Liberals, Conservatives and CCFers to put together

[ Page

2607 ]

the blueprint for this province that was used in the 1950s and the

1960s by W.A.C. Bennett, who was a member of that committee and helped

modernize this province.

That was an all-party committee. We said let's do that again in this

time of trouble for British Columbia. That cooperative approach was

rejected by this negative, negative government, this government that

can only say no to positive suggestions from the opposition caucus. We

were disappointed when that happened, Madam Chairman. We took the

Premier at his suggestion that maybe we should use the existing

committees. So we suggested two committees of the House, and that was

rejected — again a negative, doubting Social Credit Party over there,

rejecting these positive suggestions from the New Democrat caucus. Then

in the budget speech we put forward a whole range of positive

suggestions to help bring about a stable and prosperous British

Columbia.

Interjections.

MR. HARCOURT: Madam Chairman, it would be very useful if some

of the hungry members who are looking for cabinet posts over here,

hungrily, would go out and have their peanut-butter sandwiches. I hear

the grumble of their stomachs from here. That's about all the sense

they're making: just stomachs grumbling, coming out of their mouths

now, grumbling mouths.

Interjections.

MADAM CHAIRMAN: Order, hon. members.

MR. HARCOURT: We will miss the first member for Vancouver

South (Mr. R. Fraser) — who pines for a cabinet post again — but go and

have your peanut-butter sandwich.

We put forward our own proposals. If we weren't going to be able to

sit down and work on this in a bipartisan and cooperative way, we said,

okay, in the budget speech and the various estimates we would put

forward what it would take to bring about a prosperous and stable

British Columbia.

We said, about forestry, that some of that windfall profit that came

back to this province should be reinvested in our forests, reinvested

in reforestation, in silviculture, in making sure the Canwood plants

have their supply of lumber so that they can get involved in the

remanufacturing business, so that we can get more value added to the

logs that we have in this province. We suggested that that be

reinvested in research and development, doing value-added activities,

import substitution — all the buzzwords that have been used by the hon.

minister — and that was turned down again by this very negative

government. We felt that that reinvestment in the forest industry could

create 25,000 to 30,000 new jobs throughout British Columbia, in the

communities where the highest unemployment took place — and that was

turned down by this government.

We suggested that in terms of tourism, which is the second major industry,

if we were to involve all areas of this province in regionally developed economic

strategies and truly build on the marketing skills that Mike Horsey, the deputy

minister, brought to this government, to finally start to do some sensible marketing

with economic development — to the point where I was prepared, as mayor of Vancouver,

because we were finally getting some decent tourism strategies out of this government,

to increase the investment of our city from $200,000 to three-quarters of a

million dollars in tourism.... Finally there were some decent business strategies

coming out of this government in tourism. We suggested a whole bunch of ways

that we could encourage, for example, the trade union leaders to help encourage

trade union conventions to come here, and suggested that we could have the Pacific

Institute of Industrial Policy inviting people here to come and meet in our

convention facilities, to talk about ways of improving our economy, of increasing

trade, of involving working people in this province. We suggested a whole bunch

of ways that we could increase tourism in a cooperative way — and then you brought

in Bill 19.

Bill 19 is one of the great tragedies of this government — an anchor

on our economy. You have rejected not only the good will and the good

faith of our caucus, in working cooperatively, but you threw away the

opportunity of the working people in this province to work

cooperatively with Bill 19. You threw away the Pacific Institute of

Industrial Policy. You threw away the enthusiastic use of union pension

funds in building and investing in British Columbia. You threw away the

involvement of trade union leaders in marketing their projects in the

Pacific Rim, into the United States, into Europe. You threw that away

with Bill 19 — again a negative, negative, nasty government.

In terms of medium-high tech, we put forward a number of

recommendations through the hon. members for Point Grey and Nanaimo

outlining ways in which we could, through the use of our post-secondary

institutions, our service sector and the private sector, expand that

area, realizing that we're not going to be Silicon Valley North or Don

Mills West. We don't have that in the cards but we do have some

splendid high-tech, medium-tech industries here building on our natural

resource skills, building on our communication and transportation

capabilities, world-class companies — MDA, MacDonald Dettwiler,

Glenayre — a whole range of industries that are out there in the

marketplace. They're spinning off new products, new ideas, new jobs.

Then there is the major development out at UBC, the expansion of the

TRIUMF facilities.

Those are ones, Mr. Minister, where we have been positive. Again

we've been working in a bipartisan way. We encourage expansion of

skilled jobs, but we think we're missing opportunities. We're missing

opportunities again. As the Virginia Slims ad says, we've got a long

way to go. We're not pushing our capabilities in education as an export

market; we're making it more difficult to bring students here. We are

not expanding our tremendous capabilities in medical services, where we

are one of the top five centres in North America, to bring people from

the Asia-Pacific area here to pay the cost plus 15 percent. We have

tremendous possibilities there that we're not exploring.

We have also the fact that we're the leaders in the world in urban

skills. A number of the members here are from local councils. We're all

proud of the fact that we do cities better than anybody else in the

world. We have a range of planners and financial people and engineers,

city managers, all over Canada and through this province, who could

sell these services in a combination of aid-trade programs to

developing countries. There will be more people by that year you

mentioned, Madam Minister — the year 2000 — living in cities for the

first time in human history rather than in the countryside.

I've worked with other mayors in this country to put together a $20

million program with CIDA to sell those services, We should take

advantage of that here in British

[ Page 2608 ]

Columbia. We do cities the best of the best in this province. We

have a program through CIDA with 14 coastal cities in China to make

those urban skills available. We have a program in Africa with Project

2000 to make those services available. There are opportunities in

Mexico City; there are opportunities in Rio de Janeiro; there are

opportunities in Lima, Peru. These countries with cities are crying out

for our expertise.

So again, I'm not being negative; I'm not being critical. I'm saying

that these are opportunities. I'm prepared, as the Leader of the

Opposition for another 898 days, to share, and we as a caucus are more

than....

Interjections.

MR. HARCOURT: Oh, I see some of them are back from their peanut-butter

sandwiches. That's good; they're back. The hon. member for Esquimalt

is going to make a magnificent Attorney-General.

So we have those opportunities in high tech.

Small business. We put forward a number of suggestions to increase

jobs in the small business sector, because we understand that 80

percent of the new jobs are being created through small business. The

ideas of entrepreneurial centres, T and M resource facilities and

incubator centres, and ways of increasing the entrepreneurial skills of

British Columbians.... It's where the jobs are going to be created

throughout British Columbia. We're supportive of those programs, and we

are prepared to put those forward in a cooperative way, as we were in

this task force that we suggested to get B.C. going again, which was

rejected.

We think government can play a strong and positive role. That's why

we put forward the suggestions that we upgrade the municipal

infrastructure program; that we upgrade highways, and that they not be

black holes that take business away from Penticton and Kamloops; and

that we integrate those in regionally based economic strategies.

So in wrapping up, there are a number of areas that we have

suggested: improving education, opportunities for women, justice for

native people, and improving labour/management relations. Those are the

kinds of things we'd like to see happen here, as the most positive part

of this Legislature, to get B.C. stable and prosperous once again.

HON. MR. STRACHAN: I move the committee rise and report progress, and ask leave to sit again.

The House resumed; Mr. Pelton in the chair.

The committee, having reported progress, was granted leave to sit again.

Hon. Mr. Strachan moved adjournment of the House.

Motion approved.

The House adjourned at 12:01 p.m.

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