1988 Legislative Session: 2nd 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)

TUESDAY, JUNE 21, 1988

Afternoon Sitting

[ Page

5249 ]

CONTENTS

Routine Proceedings

Ministerial Statement

Alleged use of insider information by former Energy ministry employee.

Hon. Mr. Davis –– 5249

Mr. Clark

Oral Questions

Conflict-of-interest guidelines. Mr. Clark –– 5250

Wang Canada Ltd. Mr. Sihota –– 5250

School Canadiana. Mr. Barnes –– 5250

Environmental Appeal Board. Ms. Smallwood –– 5251

Military research. Ms. Marzari –– 5251

Brain damage hospital. Mr. Stupich –– 5251

Military research. Mr. Rose –– 5252

Audit of First Investors Corp. and Associated Investors of Canada.

Hon. Mr. Couvelier –– 5252

Tabling Documents –– 5252

Hydro and Power Authority Privatization Act (Bill 45). Second reading

Mr. S.D. Smith –– 5252

Ms. Edwards –– 5253

Mr. Michael –– 5255

Ms. Smallwood –– 5256

Mr. R. Fraser –– 5258

Mr. Stupich –– 5258

Mr. Peterson –– 5261

Mr. G. Hanson –– 5261

Mr. Weisgerber –– 5264

Mr. Lovick –– 5264

Mr. Jones –– 5268

Ms. A. Hagen –– 5271

Nursing Statutes Amendment Act, 1988 (Bill 56). Hon. Mr. Dueck

Introduction and first reading –– 5273

Liquor Control and Licensing Amendment Act, 1988 (Bill 38). Second reading

Hon. L. Hanson –– 5273

Ms. A. Hagen –– 5274

Hon. L. Hanson –– 5275

Credit Union Amendment Act (No. 2), 1988 (Bill 47). Second reading

Hon. Mr. Couvelier –– 5275

Mr. Stupich –– 5276

Mr. Sihota –– 5276

Mr. Mercier –– 5277

Hon. Mr. Couvelier –– 5277

Small Business Venture Capital Amendment Act, 1988 (Bill 5 1). Second reading

Hon. Mrs. McCarthy –– 5278

Mr. Williams –– 5279

Hon. Mrs. McCarthy –– 5279

Municipal Amendment Act, 1988 (Bill 32). Second reading

Hon. Mrs. Johnston –– 5279

Mr. Blencoe –– 5279

Hon. Mrs. Johnston –– 5280

Securities Amendment Act, 1988 (Bill 55). Hon. Mr. Couvelier

Introduction and first reading –– 5280

Municipal Finance Authority Amendment Act, 1988 (Bill 41). Second reading

Hon. Mrs. Johnston –– 5280

Mr. Blencoe –– 5281

Hon. Mrs. Johnston –– 5281

Resort Municipality of Whistler Amendment Act, 1988 (Bill 49). Second reading

Hon. Mrs. Johnston –– 5281

Mr. Blencoe –– 5281

Hon. Mrs. Johnston –– 5282

Premier's Advisory Council for Persons with Disabilities Act (Bill 42). Second reading

Hon. Mr. Veitch –– 5282

Mr. Darcy –– 5283

Mr. Lovick –– 5283

Hon. Mr. Veitch –– 5284

Pension (Miscellaneous Amendments) Act, 1988 (Bill 39). Committee stage.

(Hon. Mr. Veitch) –– 5284

Mr. Darcy

Mr. Lovick

Resource Investment Corporation Amendment Act, 1988 (Bill 44). Committee stage.

(Hon. Mr. Veitch) –– 5286

Mr. Lovick

The House met at 2: 10 p.m.

HON. S. HAGEN :

Mr. Speaker, I have several introductions this afternoon. First of all,

I'm pleased that we have in the House today two relatives of my wife;

they are Gordon and Elsa Bate. Gordon Bate is a lecturer with the

department of library and information services at the Melbourne College

of Advanced Education. I would ask the House to please make Gordon and

Elsa welcome.

Secondly, Mr. Speaker, on behalf of Mr. Gerry

Lindner, who is one of the commissionaires, please welcome Pat and

Sylvia Mitchell, who have retired here from Ontario. Accompanying them

is Sylvia Lindner. Please welcome them to the House.

MR. G. HANSON :

In the gallery today is a constituent who is visiting the Legislature

for the very first time. Her name is Karen Barnacle. Would the House

please give her a warm welcome.

HON. MR. STRACHAN :

Mr. Speaker, with us today in the visitors' gallery are three

individuals who over the past 16 months have performed an outstanding

service to the people and the government of the province of British

Columbia. I introduce the members of the Special Waste Advisory

Committee, who have recently concluded their review of the options for

establishing a comprehensive special waste management system for

British Columbia.

The committee members are: Dr. David

Boyes, the committee chairman, who is a distinguished Vancouver

physician and cancer specialist with an international reputation as a

consultant and lecturer on cancer prevention and control. He's

attending this afternoon with his wife Margaret. Also on the committee

are Mr. Edward Jeffreys, president of Cascade Chemicals and Commodities

Ltd. and a former chairman of the pesticide control board, who has a

long background in the field of industrial chemicals, and Mrs. Lael

Hamilton, the former director of the South Granville Ratepayers'

Association of Vancouver, with a lengthy record of community service in

a variety of fields.

In the course of their assignment, the

Special Waste Advisory Committee reviewed an immense quantity of

technical information, examined the approaches taken by many other

jurisdictions both on this continent and overseas and considered

proposals from a number of companies. They also communicated

extensively with the public and with local government in the search for

a host community for a treatment facility. It is my intention to

release the committee's final report by the end of the month. I would

ask the House to extend to the committee a very well-earned and cordial

welcome.

MR. LOVICK : Visiting the House today is a

young couple from Edmonton, Alberta, in the company of one of our

Legislative interns, Mr. Ben Koning. I would ask the House to please

join me in making welcome Mr. Phil Prins and Miss Ingrid Newtell.

MR. HUBERTS : In the gallery today we have 30 grade 5 students from Cordova

Bay Elementary, accompanied by their teacher Mr. Quint. I'd also like to

mention that one of the students is Ryan Peterson, son of the second member

for Langley (Mr. Peterson). Along with my colleague the Minister of Finance

(Hon. Mr. Couvelier), I ask the House to give them a warm welcome.

HON. MR. ROGERS :

Visiting us from the Nechako economic development region are two

persons involved in very meaningful and serious work in that particular

area. I would ask you to welcome Angus Davis from Fraser Lake and

Barrie Carter from Smithers.

MR. BRUCE : In the House

today are two very good friends of mine: the administrator and the

clerk of the municipality of North Cowichan, Mr. John Berikoff and Mr.

Jim Dias. Would you please make them feel welcome.

MS. MARZARI :

I'd like to introduce to the House Mr. Richard Thomas, who is

undoubtedly here awaiting the passage of Bill 47, the Credit Union

Amendment Act. Mr. Thomas is the director of legislative services for

the B.C. Central Credit Union.

[2:15]

Ministerial Statement

ALLEGED USE OF INSIDER INFORMATION

BY FORMER ENERGY MINISTRY EMPLOYEE

HON. MR. DAVIS :

I'd like to make a ministerial statement. Yesterday, the hon. second

member for Vancouver East (Mr. Clark) asked whether a former employee

of my ministry used inside information in obtaining drilling licences

and leases for petroleum and natural gas worth over $3 million. The

government's conflict-of-interest guidelines state: "Ministers shall

not, and shall ensure that officials in the department and agencies for

which they are responsible do not, conduct official business...where

the former public office holder has had, within the preceding six-month

period, access to information not available to the general public."

I've

had ministry officials review the serious allegations made by the hon.

member and find that the former commissioner of petroleum titles, Mr.

Wilf Quinn, did not — I repeat "not" — use any information other than

that available to the general public in this province. He made use of

land title descriptions and followed a process laid out in manuals by

my ministry. Mr. Quinn. in doing so, followed closely the laws,

guidelines and regulations established by this government.

wish to add that prior to engaging in this activity, Mr. Quinn states

he had obtained clearance for his intended actions in the private

sector from a law officer of the Crown.

The use of agents

to acquire petroleum and natural gas rights is common in western

Canada. Mr. Quinn made sure that he acted as an agent, not a principal.

He acted for a client in the public process. Mr. Quinn was not involved

in determining the amount of the bid; nor could he benefit if his

client turned out to be the successful bidder in cases of this kind.

Mr. Quinn was not, to quote the hon. second member for Vancouver East.

successful in obtaining two drilling licences and four leases for

petroleum and natural gas rights in the province — rights worth over $3 million. The principals to the bid obtained these rights. Mr. Quinn simply received a fee for his services.

As the hon. member's question yesterday impinges unfairly on Mr. Quinn, a former public servant of fine

[ Page 5250 ]

reputation

who has 17 years of service in this province, I know he will wish to

withdraw any inference of wrongdoing on Mr. Quinn's part.

MR. CLARK :

I find it incredible that the minister would come in here and have the

audacity to say that Impugned the reputation of Mr. Quinn, when clearly

it is the minister who has violated the Premier's guidelines on

conflict of interest. It is the minister who is responsible under those

guidelines, which say very clearly that the minister has responsibility

for officials in his capacity and that it is the minister who should be

held accountable.

The minister takes refuge in the fact

that the individual concerned sought clearance from Crown counsel.

Quite clearly, Crown counsel was wrong in this instance, and that

cannot be sought as refuge.

The minister said he only acted

as an agent and not on his own behalf. What does

section 7(

b) of the

Premier's guidelines say? "Ministers shall not, and shall ensure that

officials in the departments and agencies for which they are

responsible do not, conduct official business with a former member

acting on behalf of himself or another person or entity." He clearly

acted on behalf of someone else, and that is clearly covered by the

guidelines.

Finally, the minister said that he did not

benefit from inside information. Does the minister expect us to believe

that the chief bureaucrat responsible for the disposal of drilling

rights for nine years in this province had no access to any sensitive

information with respect to this, the largest gas reserve in British

Columbia? Whether or not he received personal benefits in terms of the

drilling rights is not significant. The fact is that he received a

benefit in terms of a fee, and that's clearly covered by

section 7(

b) of the conflict-of interest guidelines.

Oral Questions

CONFLICT-OF-INTEREST GUIDELINES

MR. CLARK :

A question to the Minister of Energy. The minister should now be aware,

clearly, that he has violated

section 7(

b) of the Premier's

conflict-of-interest guidelines. He knows — and he cannot couch it in the language which he has just done — that

he is responsible, not Mr. Quinn. The Premier's guidelines on conflict

of interest clearly say that the minister is responsible for officials

in his department. What action does the minister plan to take with

respect to the violation of those guidelines?

HON. MR. DAVIS :

Since on the best advice I can get from law officers of the Crown, from

my own ministry people, from the successor public servant to Mr. Quinn

there was no wrongdoing in this case, I plan to take no action

whatsoever.

MR. CLARK : A supplementary to the minister. Two of Mr. Quinn's bids — and we have no way of knowing whether he was bidding on behalf of himself or other people — were

among the highest prices paid ever for natural gas rights in British

Columbia. They are located in an area that contains what you have

referred to, Mr. Minister, as perhaps the largest gas reserve in

Canada. Do you seriously expect us to believe that Mr. Quinn learned no

sensitive information in nine years as the chief bureaucrat responsible

for the disposing of all Crown drilling rights in British Columbia?

HON. MR. DAVIS :

The simple answer is yes. The agent in each case, and in Mr. Quinn's

case, processes sealed bids. He had no knowledge as to the amount or

nature of the bid, and he didn't participate in any way beneficially,

whether the bid was successful or not.

MR. CLARK : A supplementary to the minister. Could the minister inform the House whether this bid was, prepared by industry — whether this area up for bid was determined in consultation with his ministry or was unsolicited from the private sector?

HON. MR. DAVIS :

I can't answer immediately, and I will bring an answer to the House.

First, lands are explored under permits granted by the ministry. When a

discovery is made, auctions take place. This was in fact an auction. I

think the process itself determines what lands are made available for

bid, not individuals in the ministry.

WANG CANADA LTD.

MR. SIHOTA :

A question to the Minister of Economic Development. It has come to my

attention that her ministry is on the verge of announcing a 50 percent

allowance to any municipality wishing to install a Wang-Nissi system

solution. This will, of course, give Wang's bid a 50 percent advantage

over those bids submitted by small local companies in the area. Could

the minister explain how she justifies this unfair 50 percent price

reduction to Wang at the expense of local small high tech companies?

HON. MRS. McCARTHY :

I believe the member is referring to a system under our Purchasing

Commission where we assist companies selling to export to get their

first sale. It's to do with the company. I'll have to get further

information. I believe it's Nissi, not Wang. It may be in joint venture

with Wang, but I can find that out, and I will bring the information

back to the House. As to the 50 percent, I cannot confirm that. I will

have to get further information for the member.

MR. SIHOTA :

The minister was prepared to make the announcement yesterday, I believe

around 1:30, and I am surprised that she doesn't know the details as to

which companies are involved. The minister says it's for exports. My

information is that the material is for municipalities. Could the

minister advise the House whether she intends to offer a similar type

of program for school districts?

HON. MRS. McCARTHY : Mr. Speaker, I will be very pleased to bring the information back to the House and to include the answers to that question.

SCHOOL CANADIANA

MR. BARNES :

A question to the Minister of Advanced Education. On June 13 you said

that School Canadiana was being closed so that Vancouver Community

College could place ESL in more centres in the community to achieve

greater efficiency and access for the people who need it. In fact, the

college said publicly that School Canadiana is being closed in order to

reduce the operating deficit. Would the minister care to correct the

record and admit the school is a victim of college cutbacks and that

expansion of ESL has not been the motive for this action?

[ Page

5251 ]

HON. S. HAGEN : I'd be pleased to respond to that question, As a

matter of fact I've had subsequent conversations with the president of Vancouver

Community College, who has assured me that they will be able to offer more and

able to do it more cost-effectively than was done under School Canadiana.

MR. BARNES : In light of expediency I'm going to stick to my script, but I disagree with the minister as far as that being a motive.

School

Canadiana is an integral part of Vancouver's Chinatown and has roots in

the Italian, Portuguese and Vietnamese communities. It is the only

off-campus program to offer intensive multi-level ESL for 12.5 hours a

week, 12 months a year. Having said that there would be no reduction of

ESL, will the minister accept that a mistake has been made and agree to

provide additional funds to Vancouver Community College to ensure that

School Canadiana continues?

HON. S. HAGEN : That is a

decision that was reached by the board of the Vancouver Community

College, and they have assured me that they will continue to offer the

excellent programs that they do in ESL.

MR. BARNES :

This is to the Minister of Education. You said that the transfer of ESL

to the colleges won't mean less access in our communities. However,

Vancouver Community College shut down a 40-class community program

because it didn't have the money to pay rent for school facilities. Are

you prepared to pick up the tab for rental of school facilities for ESL

programs so that there won't be a cutback when the colleges take over?

HON. MR. BRUMMET :

I don't know whether the member is saying that it is essential to pay

rent somewhere to keep a program going, when the schools themselves or

other facilities may be available free of rent. Is it the rent that is

the issue or the programs? We have said that the programs will continue

and be accessible in the community. We haven't said that we are going

to try and find the highest-rent facility to run them in.

ENVIRONMENTAL APPEAL BOARD

MS. SMALLWOOD :

A question to the Minister of Environment and Parks. Last week the

chairman of the Environmental Appeal Board sent a letter to the Islands

Protection Society demanding that they pay $12,000 before the board

would

schedule an oral hearing for the use of pesticides. The board

chairman did suggest that a hearing could be organized in distant

Vancouver for $7.000. Better still, he suggested, if they sent a

written submission, it wouldn't cost them anything. Is it now the

government's policy that ordinary men and women of this province must

unfairly pay thousands of dollars in order to get an oral hearing

before the Environmental Appeal Board?

HON. MR. STRACHAN : Let me advise the House that in all cases....

This is one where in fact there is a substantial other side to the story. Rather

than try, by memory, to advise the House what the other side of the story is,

I will simply take that question on notice and come back as soon as I can with

the appropriate and full information.

MS. SMALLWOOD :

New question, Mr. Speaker, In his report for pesticide regulations this

year, the ombudsman recommended that the Environmental Appeal Board, as

a general rule, determine pesticide use appeals by way of oral hearings

open to the public. Can the minister tell this House why he is ignoring

that recommendation which ensures fair hearings for citizens of this

province before that board?

[2:30]

HON. MR. STRACHAN :

I'm stuck on the horns of a dilemma here, because that question would

be more appropriately put during legislation which is currently before

the House.

MS. SMALLWOOD : I can assure the minister that we will thoroughly discuss it at that time.

Another question. Why has the minister chosen to put financial barriers in the way of citizens' rights to appeal?

HON. MR. STRACHAN : The previous answer would apply.

MILITARY RESEARCH

MS. MARZARI :

I have a question for the Minister of Health. As the minister knows,

Vancouver Island health officials and the public have expressed dismay

and opposition to the deadly bacterial experiments at the University of

Victoria. The accidental release of tularaernia bacteria could cause an

epidemic, I gather, on the Island, seriously threatening animals and

humans. Will the minister tell the House what action he has taken to

ensure that public health is protected in this situation?

HON. MR. DUECK : I will take this question as notice and bring back a report.

MS, MARZARI :

This is a supplementary to the Minister of Advanced Education and Job

Training, and it has to do with military research in our universities

and colleges. Is it the policy of the government to encourage B.C.

universities to do contract research for the United States military,

such as that being considered for the University of Victoria? Will you

provide the House with a complete list of contract research being done

at B.C. universities for military purposes?

HON. S. HAGEN :

I don't have a list with me today, but I'm sure you know the

universities are autonomous, and if you wrote to each of the three

presidents they would probably provide you with it.

MS. MARZARI : Let me repeat the second question, since you tried to answer — ineffectively — the

third. Is it government policy to encourage B.C. universities to do

contract research? We know the federal government is putting $800

million this year into military research. Do we have a policy on

government research involving U.S. military contracts?

HON. S. HAGEN : It's not the policy of this government to encourage military research at the universities.

BRAIN DAMAGE HOSPITAL

MR. STUPICH :

A question to the Minister of Health. In the throne speech last year

there was reference to a brain damage facility that was going to be

built somewhere on

[ Page

5252 ]

Vancouver Island. The last time I asked the

minister about this, I think he had forgotten about it. Maybe he's had

time to think about it in the meantime.

HON. MR. DUECK :

I thank the hon. member for the question. We have a head injury report

in hand now, and it's being reviewed. We are considering, rather than

going to the location that was announced.... Perhaps other locations

will be used instead. That report will come forward and we will make

the announcement in a very short period of time.

MR. STUPICH :

I never heard of any location being announced. I kept asking whether

Nanaimo would get it, but I've never heard of any location. I wonder if

the minister would tell us the ones that aren't going to be.

HON. MR. DUECK :

Mr. Speaker, perhaps it was a wrong choice of words; whether a location

was announced or whether there was much talk of a location may be

better wording. However, the area of Vancouver Island was considered

not the most appropriate, and the report that we now have in hand and

are reviewing may indicate that there are perhaps other locations and

not necessarily only one. Perhaps two or three locations somewhere in

the province would be more appropriate.

MILITARY RESEARCH

MR. ROSE :

I'd like to direct a supplementary to a series of questions asked by my

colleague a minute ago about universities and military contracts. I'd

like to address the question to the Minister of Advanced Education, who

is reading at the moment, and I don't know if he hears me,

Interjection.

MR. ROSE : No, that's true, he doesn't.

I'm

asking a question of the Minister of Advanced Education. Someone

suggested his lips are still moving, so we knew he was reading. But I

wouldn't put it that way.

Is the minister aware that as the minister responsible it's his responsibility — he doesn't have to do it — upon

request of a member of this House to provide the information regarding

military contracts at the three universities, which he has just

declined? Is he aware that that is a customary and traditional role of

a minister?

HON. S. HAGEN : Mr. Speaker, in all due

respect, I did not decline; I said I didn't have the list with me, and

I suggested that she might want to write the three university

presidents. But in light of that, I would be pleased to request those

lists on her behalf.

MR. ROSE : On a point of order,

Mr. Speaker, that is not the appropriate response from the minister who

is asked.... If he had said that he would provide the information

later, that would be fine.

Interjections.

MR. SPEAKER : Order, please.

HON. MR. STRACHAN : If I could just respond to that briefly, questions

can be asked in question period; they do not necessarily have to be answered.

HON. MRS. McCARTHY :

Mr. Speaker, I'm very pleased today to table in the House the impact

study of the free trade agreement. In doing so, I would like to

recognize some people who are in the gallery: Doug Horswill, Stuart

Culbertson, Joan Easton, Dennis Grimmer, Ross Curtis, Don White, James

Marshall and Kim Cook, who are with the trade policy branch of my

ministry and have done an outstanding job in this negotiation.

Hon. Mr. Davis tabled the 1987-88 financial statements for the British Columbia Hydro and Power Authority.

AUDIT OF FIRST INVESTORS CORP.

AND ASSOCIATED INVESTORS OF CANADA

HON. MR. COUVELIER : Mr. Speaker, two questions were put to me yesterday during question period, and I'd like to provide the answers now.

was asked by the member for Esquimalt-Port Renfrew (Mr. Sihota), first

of all, if I was aware of a January 1987 report on an audit of First

Investors Corp. Ltd. and Associated Investors of Canada Ltd. by Price

Waterhouse prior to the issuance of licences to the company on April 1,

1987. In response, I've been informed that an audit of the investment

contract companies commissioned by the superintendent of insurance in

Alberta was conducted by Price Waterhouse. The British Columbia

superintendent of brokers was provided with a copy of the audit report,

which is dated May 22, 1987. Thus the audit report was not in existence

when the B.C. licences were issued.

Secondly, I was asked

whether I was consulted prior to the issuance of licences to the

companies on April 1, 1987. I have no recollection, nor among me or my

staff has any record been found of any prior consultation with me on

the question of issuing licences to these investment contract companies

in 1987.

Orders of the Day

HON. MR. STRACHAN :

Mr. Speaker, I call adjourned debate on second reading of Bill 45, in

the name of the Minister of Energy, Mines and Petroleum Resources.

HYDRO AND POWER AUTHORITY

PRIVATIZATION ACT

(continued)

MR. S.D. SMITH :

When we finished on Friday we were discussing the principle of this

bill, particularly in relationship to the questions of research and

development, procurement and the relationship between ownership and the

regulatory power. I would like to emphasize some of the matters that

were discussed at that time. When the minister has his opportunity to

close debate, he may wish to address them. I think my views on the R

and D division were fairly well and clearly stated, and I would commend

to the minister their consideration.

[Mr. Pelton in the chair.]

also think that in dealing with the principle of privatization and

particularly the principles of privatization surrounding these

entities, we might well, as a Legislature, address ourselves to the

question generally of the appropriateness of

[ Page

5253 ]

having the ownership and the ultimate regulatory function repose in the same

entity, the same body. When one gives consideration to owning the resource,

to owning the entity of distribution and also being ultimately responsible for

the regulatory function, I think that there is, and there has demonstrated to

be over the past, the very real potential, if not the very reality, for conflict

of interest between those two functions.

When

we are addressing the concept and the principle of privatization, I

think it's worthy of us as a Legislature and as legislators to give

consideration to that aspect of our deliberations, because it is not

simply the case that regulation and ownership may easily be dealt with

by the same body or by the same organization. In that regard, I think

it is the case for those who are concerned that we will not be able to

deal with our public resources in the way that we might think is in the

interests of the province if in fact we sell the entity that now is in

the business of distributing. I think if we visit that clearly and

carefully in the cold light of day, we will find that in fact, shorn of

the ownership function, we may have a better opportunity to pursue our

regulatory function with much more diligence than we otherwise could.

want to revisit this whole question of procurement and community

activity. The point was made in this chamber fairly forcefully that the

people of this province would benefit less from a procurement policy

that was undertaken by a private sector entity than they now do through

a procurement policy undertaken by a public sector entity. I think any

factual scrutiny of that proposition will demonstrate how fallacious it

is.

If you take a look at the procurement policy and the

community activity of one of the bidders, Inland Natural Gas, I am

unable to find any organization in this province, public or private,

which has done a more systematically outstanding job of working with

local communities on a partnership basis to use the purchasing power of

that large organization in order both to stimulate economic activity

for the small businesses in the community as well as to take a very

real and important leadership role to deal with the question of

economic expansion and diversification.

They have done that

without the prodding of anyone. They have done that because they have

found it to be in their interest to expand and diversify the economic

base in the small communities of this province where they serve the

people through the distribution of their gas. I hope that the minister

is able to deal with that issue of procurement when he winds up second

reading debate on the principle of this bill.

Finally, in

dealing with the gas division it is my view that if we look carefully

at the potential for joining together the Inland system and the Hydro

gas division, should they be the successful bidder, we will thereby

have created a significant distribution system in this province which

through its purchasing power, I have no doubt, will be able to lower

the price of gas for homeowners, to individuals now in the Inland

system. I think there is probably no other way that we would see that

happen in the near future for homeowners in the interior of this

province, and particularly we would not see it happen should the status

quo prevail in terms of where the ownership of that entity rests.

Once again, Mr. Speaker, I want to stand and say that with the qualifications

I put in relation to the R and D division of Hydro, I think the principles of

this piece of legislation are very much worthy of our support in this chamber,

particularly as we can point to the very successful regulation of a private

sector natural gas distribution system which not only has served the customers

enormously well for a Iona period of time in this province, but has shown an

outstanding leadership capacity in terms of economic development in our communities

outside of the lower mainland.

[2:45]

I think

that role model is one that I would happily commend to all members of

this House, particularly to members of the New Democratic Party who

seem to be particularly concerned that if the private sector is able to

do its job in the distribution of gas, somehow the public will not be

as well served as it is now through the B.C. Hydro system.

MS. EDWARDS :

I want to say at the beginning that there is the possibility under this

bill for the purchase of privately generated power from small

operators. In many cases that could be a very good thing. However,

overall, I want to speak against this bill in principle and will

approach it from two directions. The first is from the direction of the

interests of the B.C. coal industry and the connection it has with the

proposal and the principle of selling off B.C. Hydro Rail.

Coal is B.C.'s most important mineral commodity. It is one-quarter — 25 percent — of

all mineral and petroleum values in the province, and that makes it a

very important commodity indeed. The government has indicated by other

actions that it's willing to participate in supporting that industry.

They talk about research support, they enter task forces, they give tax

breaks and so on, which would lead one to suppose that the coal

industry should get the support of this government and of all the

people in British Columbia because of its importance.

The

stable mines and producers of coal in British Columbia exist in the

southeast corner of British Columbia, the Elk Valley. They employ 2,500

direct employees, they have increased their productivity to the point

where they are world-competitive, and that is different than the other

coal producers in the province. despite the major cost factor that they

face in world competition, the problem of transportation costs to

tidewater.

Ninety-five percent of British Columbia's coal

is exported. Nearly all of it from southeast British Columbia goes

through Roberts Bank, which anticipates more than 25 million tons of

coal going through that port this year. B.C. Rail controls access to

Roberts Bank. At this site, the Thorne Ernst and Whinney study said

that Hydro Rail provides a very good level of service and that that

level of service cannot be maintained if the rail is swallowed up by a

large corporation, which leads us to examine even more closely the

transportation costs for coal in B.C.

Rail costs are

crucial to the competitive success of the coal industry, Mr. Speaker.

If Hydro Rail goes into the hands of Canadian Pacific, Canadian

National or even Burlington Northern, the three companies that have

indicated some interest in buying this rail company, the regulatory

jurisdiction moves from the B.C. Ministry of Transportation to the

Canadian Transport Commission under the federal Railway Act. The CTC

sets the rates. The CTC moves with the speed of a slug and responds

with the sensitivity of an armadillo.

That is what would

happen. The revenue potential for actually selling the rail will drop

very sharply, because under 1987 amendments to the Railway Act. the

entire length of the railway — approximately 115 kilometres of straight rail: there's about that much rail also in yards, sidings and so on —

[ Page

5254 ]

would become basically a switching track, defined

as a

section of line within 30 kilometres of a competitor's rail line

that bisects its own rail.

Thus the Hydro rail line, which

will be designated then as a switching track, is likely to bring.... I

assume that this 'is in the estimate that the minister put forward on

Friday when he introduced the bill. The province is likely to get $15

million depreciated value for that piece of track. The replacement

value has been calculated at $130 million, Mr. Speaker. That's for the

rail yards, the rights of way, the locomotives and the cabooses. Of

course, Hydro Rail does not own 'its own cars, so that's not included.

I'm

not suggesting that the province would necessarily get the replacement

value, but there's a huge difference between the $15 million that the

minister proposes we are likely to get for B.C. Hydro Rail and the $130

million it would take to replace it by anyone who bought that rail.

It's approximately a one-to-nine ratio.

What happens then

is that the operating control of the piece of rail that controls the

access to Roberts Bank goes into private hands and the regulatory

control goes into federal hands. This, according to some of the

minister's previous statements — and this minister has been in public life for a long time — goes

counter to some of the statements he made previously. The minister has

said that provinces should as much as possible control their own

resources. I don't know if the minister means they should not regulate

the way the resources go, but I think that if the province wants to

have that strategic control of that important part of the most

important mineral commodity of B.C., then the B.C. Hydro Rail should

not be handed over into the hands of a large corporation which we are

told could not provide such efficient service and which, of course,

would then be regulated by the Canadian Transport Commission.

This

single piece of rail can be used to exert tremendous influence on the

access to Roberts Bank, both physically and financially. For that small

piece of line why do we surrender control to a private rail corporation

which could be foreign and which will be regulated by the Canadian

Transport Commission? As I say, we're talking about a large industry in

British Columbia: 2,500 direct coal employees in the Elk Valley; 25

million long tonnes of coal through the port this year; and northeast

coal, the other major provincial supplier, sitting on the brink of

closing or being eaten up by creditors or whatever it is. This is this

province's coal resource. Why would the minister set up legislation

which allows that kind of sale to happen and work against the interests

of British Columbians'?

I want to go on and talk a bit

about what the minister says is intended by this legislation, although

it's not intended to be done until the next government has a mandate to

carry out a disposal arrangement. I'm talking about the minister

saying: "The electric side, particularly the water licences." I assume

this is in apposition those public assets which are managed by B.C.

Hydro for the generation of electricity. He said: "These are not now

for sale, but they certainly could be sold under this legislation." For

some reason the minister is proposing that the government needs a

mandate in order to sell such important assets as water licences, and I

agree that the government should have a mandate before it ever sells

water licences. He didn't seek a mandate for the rest of it, but the

minister seems to see that this is a matter of considerable importance.

British

Columbians are seriously concerned about water rights, because water is

an extremely precious resource. It's a precious resource in our

country, and it's an even more precious resource in the United States

where that country is water poor. We have a history that goes over

decades of proposed arrangements and rallying around to save this

precious rare water resource in Canada from the American needs. The

Americans need water; they know now where to get it. However, British

Columbia has its own problems with water shortages. We have many parts

of the country that are semi-arid, and overall we need that water in

this province. It is, by the way, our competitive advantage when we use

it as hydro power, and I think the minister recognizes this kind of

thing.

I refer to another paper the minister delivered in

1981. At that time he was talking about Hat Creek coal. He made a

general statement that we should all be reminded of right now. He said:

"If anyone should capture the low-cost component of any resource, it

should be those who live in the province or nation in which it is

located. To hand over the difference between the low cost of a resource" — I'll leave it at that; there is an omission there — "to

another country is unthinkable." This legislation does not protect

British Columbians against having our resources, which are our

competitive edge, sold to a foreign power, and that seems to me to go

directly against a principle the minister himself has put forward.

[Mr. Weisgerber in the chair.]

in British Columbia need our water for hydro power; we need it for

irrigation; we need it for recreational resources; and we need it if

we're going to ever do what most of us in British Columbia who look to

the future say should be done, and that is develop secondary industry.

Why in the world would we sell our water licences, give away control of

our water, when in fact that water can produce the competitive

advantage of cheap power, which would give us the opportunity to

manufacture things at a secondary level? We are giving it away to our

competitors, who will manufacture secondary industry products with our

cheap power. It makes no sense.

The history of the use and control of water in this province is not one of trust — not

just in the province; right across the country. Perhaps you could begin

with the so-called Grand Canal scheme that was proposed by a fellow

named Simon Reisman, who has fame of a different kind of late. That, of

course, proposed moving water from Hudson's Bay down into the United

States. There were extraordinary and extensive plans for interaction of

water at the Red and Selkirk River levels. There has been the

McNaughton plan for the Columbia River Treaty — when the Columbia River

Treaty was signed for the Libby reservoir. There was the NAWAPA Plan,

which surfaces regularly, and I don't think there is any reason in the

world to suppose that that has not been taken seriously.

[3:00]

I know

at one time I saw a grade 5 text that was used in the state of Idaho.

One of the rather simple sentences that was there for the elementary

school students was: "One day all of the Rocky Mountain Trench will be

flooded so that the United States will not have a shortage of water."

That indicates the extent of penetration — the idea of sharing water and flooding our valleys so that the U.S. can have access to the water — when it goes into U.S. elementary school textbooks.

Right now I'd like to review some of the statements made and ideas put forward at the time we had a great deal of

[ Page

5255 ]

argument

about the Columbia River Treaty. They talk about water and about

control of water, and of course that's all related to hydroelectric

power. A statement made in the Engineering and Contract Record by a man

named James G. Ripley said: "The U.S. objective is to obtain the use of

Canadian water for industrial and irrigation uses."

fellow by the name of Bruce Hutchison who was writing in the Financial

Post in November 1958 said: "It is a struggle of financial titans for

possession of probably the world's largest hydroelectric resources and

other . . . wealth." He was basically referring to British Columbia's

water resources.

David Cass-Beggs, general manager of the

Saskatchewan Power Corporation, said in February 1964: "One may wonder

why the United States is prepared to insist on getting every last drop

of Columbia River water. The reason is that their interest is not

primarily for power. but for consumptive uses in the United States."

There

is a very clear understanding, Mr. Speaker, that the residents of the

United States would like access to our water. We examined that

possibility again when UtiliCorp came into Canada and bought West

Kootenay Power and Light. For the first time in Canadian history, a

foreign company was allowed to buy an electric utility and have access

to water rights for the operation of that utility.

course, the minister at that time was involved in the argument, and

it's interesting to look at what the minister said at the time about

the proposal for the Columbia River Treaty. There are two interesting

quotations from. . . . The minister at that time was the head of a

Liberal power committee. They were not in power at the time, but the

party that he belonged to had a committee, and the minister headed it.

He said:

"The Columbia River Treaty, as

interpreted publicly by the present government, must be characterized

as nothing short of a fiasco. It is inconceivable that the government

of this country should ever enter...any agreement, let alone a

comprehensive treaty with another country to last at least 50 years,

which failed to procure any demonstrable advantage for the people of

Canada. No man, no government, no party can be proud of this

achievement."

He also said in February 1962 in the Vancouver Sun :

"'The present Columbia treaty is not good enough. It amounts to a

sellout of our Canadian resources. This embarrassing treaty must

therefore be renegotiated.' There can be no doubt that the present

version ties Canadians' hands...it is a poor deal for Canada. Whether

Canadians are bold enough to grasp this opportunity...remains to be

seen."

It was an interesting approach to the Columbia River

Treaty, because in recent months the minister has again been making

public statements about the treaty. What he says now, in the Trail Daily Times

of March 4, 1988, is: "We have done well in economic terms, and

environmentally we followed the only course that made sense...."

A minister has had conflicting ideas about access to our water resources by a foreign power — the

United States. What he's doing now is introducing legislation that

again allows the sale of water licences to foreign powers without any

further recourse to the Legislature.

In fact, once this is passed, water licences can be sold by B.C. Hydro. They

can be sold to a foreign power without any limitation. If this legislation goes

ahead, we can sell water licences with a cavalier willingness that the minister

demonstrates to undervalue the importance of our provincial assets and to slide

through legislation which allows sale of our most precious assets: technical,

intellectual, artificial and natural all rolled up into one single ball of wax.

In this case, I don't believe this is because of not knowing what the government's doing — as some of the other moves seem to be — but

due to a massive arrogance. This is not a situation that the minister

can reasonably defend. To put forward the legislation and say that from

now on we can sell water licences is not acceptable to the people of

this province, I believe. It is certainly not acceptable to the people

of Kootenay constituency, and as soon as the people understand what's

going on, there will be a strong message sent. I urge the minister to

withdraw this legislation.

MR. MERCIER : A group of

grade 7 students and the adults accompanying them are in the gallery

visiting from Edmonds Elementary School in the Burnaby-Edmonds riding,

and I would ask the House to make them welcome.

MR. MICHAEL :

I am starting off by answering one of the concerns of the second member

for Vancouver East (Mr. Clark), who made a remark in his initial

address to the House about the cost of reading meters, and that if we

were going to privatize the gas division of B.C. Hydro, we would have

to have a meter reader for the gas division and another meter reader

come down the street to read the hydro meter.

My view of

that and my response to that would be: let's leave that to the private

sector. I'm sure that with the gas division privatized. in a short

period of time, not only will we see one meter reader looking after the

hydro and gas combined on some type of a cost-sharing basis, but the

private sector will lead the discussions to probably involve the

municipalities and the water districts throughout this province to read

all meters with one person, rather than having two, as the member

suggests. for gas and hydro.

I have faith in the private

sector that, with the ingenuity that's out there, they will come to

grips with these types of problems and indeed, we will see them done

more economically in the future than they have been in the past.

also look at the reputation and the past performance of private

utilities in the province of British Columbia and, indeed, in the other

provinces in Canada. I look at Inland Gas, and I see a firm that is

privately owned with first-class service, extremely good public

relations, and a program that has greatly assisted the interior of the

province of British Columbia — namely the Venture Inland program.

The

member for Kootenay made some reference to private firms not being able

to control them as well. I would submit to you, Mr. Speaker and members

of the House, that the control will be by the public Utilities

Commission. Whether it's private or public, any rate fee adjustments

must be approved by the public Utilities Commission.

The

history throughout the Dominion of Canada, if one would examine the

facts, will show that private utilities, by and large, have lower rates

than publicly owned facilities. Why is this? One of them certainly has

to do with the availability of various write-offs. Again, with the

ingenuity of the private sector and the profit motive, we will see more

efficient service delivered by the gas division than what has been done

up to now.

It's strange that in listening to the debate

from members opposite, we don't hear any suggestions about more

nationalization. They want protection for the current, but I haven't

heard from any members opposite for quite some time now

[ Page

5256 ]

any suggestion that a private firm such as B.C.

Telephone be nationalized and put under the public jurisdiction,

because they know full well that it isn't popular with the people in

the province of British Columbia. Indeed, a private firm such as B.C.

Tel is currently doing a good job. I'm not saying in those words, Mr.

Speaker, that I in the past have been 100 percent satisfied with B.C.

Tel, because I certainly have not been 100 percent satisfied. I've had

my differences with them, but by and large, I think it can be said that

they're delivering a good service in the province of British Columbia.

There

has also been some suggestion that the federal government is going to

be grabbing more of the revenue pie from the natural gas division if

this is turned over to the private sector. I'm not sure, Mr. Speaker,

whether the members opposite are aware that currently a law exists that

all federal taxes are returned to the provinces from utilities. The

province, in its wisdom, can either return this money to the utility,

thus the consumer, or keep it in the public purse. I'm not sure whether

the members opposite were aware of that fact.

History has

shown that it's easier to regulate a private firm than a giant

public-owned utility. The private firm must come to the Utilities

Commission and make all the submissions that are required by the

Utilities Commission before any adjust merits are made to any rates.

looking at B.C. Hydro as an example, its relationship and its ownership

of the current gas division, one has only to look at the fact that the

gas division makes up a very small part of the overall interest areas

of B.C. Hydro; indeed, it's somewhere in the neighbourhood of 5

percent. I'm convinced, Mr. Speaker, that if and when the gas division

is sold to a private sector firm, we will see the initiatives of the

private sector reach out to all corners of the province of British

Columbia, whether it's combined with other private sector firms or done

through existing private sector firms , and we will see a greater

thrust in the area of natural gas vehicles.

Hopefully, we will see a program — and I'm sure we will see more of an accelerated program with the slow-fill program — whereby

homeowners who are hooked up to natural gas can have a slow-fill system

in their vehicles. I'm sure that we will see more initiative in the

area of taking advantage of lower rates during the off-seasons and

setting up bulk storage facilities. All in all, Mr. Speaker, I am

optimistic that the future bodes well for the people in the province of

British Columbia once this division is sold to the private sector.

You

know, Mr. Speaker, I've always been a very strong fan, an advocate, of

natural gas in the province of British Columbia. It's a great resource.

It's a clean resource. It's practically pollution free. It's very low

cost; great for vehicles. It certainly guarantees longer engine life,

less repairs and maintenance costs. And I repeat, it's a very clean

resource that is in absolute abundance in the province of British

Columbia. I'm convinced that with all those advantages, and turned over

to the private sector, we will see great opportunities for the future,

better service to the province of British Columbia, and lower costs in

the long run.

[3:15]

MS. SMALLWOOD :

I rise in opposition to this bill and, like previous speakers, would

like to refer to both Bills 45 and 46 because I find it very difficult

to separate the two of them in that they reflect government policy,

decision and direction for energy in this province.

I think

this legislation reflects a very serious mistake in a very serious

direction for this province, one that we can't help but give full

debate to, and hopefully raise a few alarm signals within the public as

to what this government has initiated.

I want to talk about

two different areas: first of all, the ability of any government to

control energy policy within their jurisdiction and how important that

is; and secondly, how this initiative affects the generation of energy

in the province and relates to the Mulroney-Reagan deal.

First

of all, the minister, I think, will recall, if he was listening to the

Environment estimates, reference to a United Nations commission, the

World Commission on Environment and Development, called Our Common

Future. We've talked at great length in this House about the work that

was done by Grp Harlem Brundtland and the importance of this report as

it impacts economic development and the environment of our planet. One

of the key sectors in the report is energy policy, and I'd like to

bring a couple of the recommendations from that report to the

minister's attention and indeed talk about some of the concerns that

the report expresses.

The report emphasizes that to bring

developing countries. . . . I would parallel that with this province,

in that we are considerably behind some areas that are more highly

industrialized, in that we will have a tremendous growth, hopefully, in

the years to come in industrial development. So there is a parallel

between our development here and that of the developing countries.

"To

bring developing countries' energy use up to industrialized country

levels by the year 2025 would require increasing present global energy

use by a factor of five. The planetary ecosystem could not stand

this...What they're saying, basically, is that that increase in energy

use will have a very serious impact on the planet. This is primarily

because of the increase where it is based on nonrenewable fossil fuels.

"Threats

of global warming and acidification of the environment most probably

rule out even a doubling of energy use based on the present mixes of

primary sources."

We'll talk a little bit more about the

generation of energy in this province and where the growth

possibilities are a little later, but basically this report, a report

of note, is saying that the generation of energy is a significant

problem and demands the attention of governments at all levels.

Governments must spend some time and energy looking at alternatives,

low energy paths based on renewable resources.

The report goes on to say:

"However, achieving these levels will require a program

of coordinated research, development and demonstration projects commanding funding

necessary to ensure the rapid develop of renewable energy."

The substantial changes required in the present global energy mix will not

be achieved by market pressures alone.... It talks about the role of government

and the need for public policy in directing the energy paths and directing the

need for not only the use of renewable energy sources but the direction of soft

energy paths as opposed to some of the mixes that we have at present.

The

report goes on to talk about the impact of energy sources on the

environment: the serious probability of climatic change generated by a

greenhouse effect of gases admitted

[ Page

5257 ]

to the atmosphere, the most important of which is

carbon dioxide produced from the combustion of fossil fuels; urban

industrial air pollution caused by atmospheric pollutants from

combustion of fossil fuels; and acidification of the environment from

the same causes.

Then it goes on to talk about the risks of

nuclear reactors. I very consciously raise the issue of nuclear power

in this debate because, very clearly, the legislation before us, the

privatization of Hydro and Power Authority and the Utilities

Commission, the introduction of the legislation that provides the

opportunity for Hydro to buy the private power generation in this

province, coupled with the legislation that this government has brought

in in years past, the Utilities Commission. . . . There is nothing that

would stop the building of a nuclear reactor in this province.

What

this government is doing by introducing this legislation is putting at

arm's length a policy that is extraordinarily unpopular in B.C., which

very clearly would inhibit any government from introducing nuclear

power. What this government is doing with this legislation is putting

that decision at arm's length. Once this legislation is passed, it will

be in the realm of the private sector with all of the legislative

capability in place for a private firm to build a nuclear reactor.

Given this minister's background and his, I think, support and comfort

with the nuclear industry, we have some very serious problems as

portrayed by this legislation.

What this government is

basically saying is that the private sector can do it better: the

private sector can not only provide energy at a cheaper rate; it can

take care of the energy needs of this province. That is a tremendous

leap of faith. It is dodging the responsibility that this government

has, not only to future generations and to the resources of this

province, but very clearly to the health and safety of many of the

communities of this province as well. What the government is doing by

introducing this legislation is divesting itself of a tremendous tool,

which is a powerful one — excuse the pun — that would allow this government to control a very important factor in economic development in this province.

A couple a months ago — perhaps more than a couple of months ago now — I

was fortunate enough to be part of a briefing session that B.C. Hydro

put on for several of our members. In that briefing session, they

provided us with some information as to the resource development

potential in this province. I think it's particularly interesting now

to look at some of that potential and some of the information Hydro

provided for us at that time. This lays out the opportunities for the

private sector — given this legislation — because we're no longer

for the private sector to get into a substantial money-making venture.

the graph that was provided to us, B.C. Hydro laid out several

different areas of hydro generation. In each of the areas, they

identified existing generation, the viable development and uncertain

development. I'll share that information with you. Very clearly, as

everyone would expect, hydroelectric development in the province was

the major producer with the most possibility. Thermal generation was

the next and that, at this point, included coal and gas, but we'll talk

a little bit about nuclear generation as well. Then there was

cogeneration, forest waste, small hydro, Columbia downstream benefits,

Alcan, Alberta coordination, strategic conservation and Bonneville

Power Administration coordination.

At that time I took

exception. . . . I want to make it very clear for the record that I

feel that this legislation is bad legislation, that this government is

giving up far too much, that it is essentially selling B.C. down the

river, that there are very important things that can be done with B.C.

Hydro, that we are not talking about accepting B.C. Hydro as it is, and

that there is work to be done there too.

Back to the

information provided by B.C. Hydro. When you look at the percentages of

resource development potential and the average annual energy

capability, Hydro provides information that shows strategic

conservation as minimal, and I think the kinds of things we have seen

in other administrations. . . . All this does is show the bias of Hydro

at present. There are tremendous things that can be done by B.C. Hydro

with leadership from this government which would bring us in line with

the work done by the World Commission on Environment and Development

along the lines of conservation and soft energy paths that would do

well for both economic development and the environment in our province.

However. the information shows — and I'll talk predominantly about hydroelectric and thermal generation — that

at present the average annual energy capability of Hydro is about 50.5.

With other viable development. we're looking at 54.2 — a very small.

moderate increase. But then they show on this graph an incredible leap

to 102.3, and the measurement is TWH. When we asked questions of the

B.C. Hydro people, they said that what they were talking about is

projects that wouldn't be particularly popular with the population, but

just for interest's sake it shows the potential. We said: "What kinds

of projects? What are you talking about that wouldn't be popular that

you're showing in this graph for B.C.?" They said: "Projects like

damming the Fraser River." Well, we gasped. to say the least. It just

shows the growth potential there is in this province and the kinds of

thoughts that go through the minds of the professionals who are looking

at energy projection for the province — the potential that is there for hydro generation in this province.

The issue of thermal coal and gas. Again, the graph shows 3.9, and that is the existing. For viable development, 17.3 — a

tremendous growth there for thermal generation. That is a very serious

concern for this province, given the fact that substantial

environmental damage is done by most thermal energy generation. Again,

the uncertain development brings it to 29.2. The same question to those

experts: "What are you talking about for the uncertain development?"

Again. with tongue in cheek, they talked about a nuclear reactor usin2

Lost Lagoon in Stanley Park for the coolant pond. We didn't find this

particularly funny, given some of the outrageous proposals that we have

heard from both this government and the entrepreneurial sector. This is

the kind of debate that this government is lining this province up for

by bringing this legislation in.

[3:30]

This

government is saying: "We're open for business. Bring all of your ideas

forward and we'll take a look at them. We will put in place the

legislation that is necessary for you to do just about anything that

you want to do" — including, as I said before, legislation that is

already in place that stipulates the building of nuclear reactors and

sets out the building code. That is the kind of outrageous policy

direction that this government has undertaken.

I stand with

the rest of the members of the opposition in opposition to both Bills

45 and 46. I think they are shortsighted. I think that they do harm to

the possibilities for future planning, for economic development and for

the environment in this province. I think that they stand to do a great

deal

[ Page 5258 ]

damage to the ability of B.C. citizens to control their own resources

and to control the direction of energy development in the province.

hope that the minister, after hearing the debate that has gone before

me, the well-thought-out evidence that has been put before the

minister, will reconsider this legislation. It is dangerous

legislation, and it should be withdrawn.

MR. R. FRASER :

It never fails to dazzle me, the arguments I hear from that member on

that side of the House, who has no concept of what makes the world go

round, no understanding whatsoever of how things are built, no

understanding of the control mechanisms that are put in place by the

minister or by the government, no understanding of nuclear power, of

sending of messages or what gas distribution lines are private or

anything.

It's a delight for me, in fact, to listen to that member speak, because I want people to read Hansard .

Listen to what she says, go out in the riding and send that speech out,

because I want everybody in her riding to see it. I think they'll be

completely dumbfounded by it. In fact, you should be reading the

material from the member for Kamloops over there, who has a much better

grip on this subject than you have, and you can learn something new.

Talking about the bill — which isn't such a bad idea either — the

bill talks about gas, rail, research. It doesn't talk about

hydroelectric, which you spent a great deal of your time talking about.

It's

interesting the kind of message you send out over there. On the one

hand you say you're for private little companies and in favour of

little business and all sorts of stuff. Then you spend the rest of the

debate knocking business large and small. I don't know how you can have

it both ways. The obvious answer is that you can't.

The

reason Social Credit people have had government of the province for so

long is that they have the vision, the foresight, the planning capacity

and the courage to go ahead — things that the NDP has never had, although they got elected one time.

Let's

talk about the bill for a while. Let's talk about the leadership idea

of this bill. Where are we going to start? Shall we start with the

research division? Maybe we should start there. If we were

contemplating setting that into motion and you were to think about what

you might be able to do, which government corporations don't do very

well, if at all, you could promote research in that lab with the people

in that capacity all around the world. As an engineer who has been

promoting the export of engineering capacity around the world for years

and who is part of the B.C. engineering group that has in fact been

providing engineering services around the world, I can assure you that

there is nothing as effective as B.C. engineers around the world doing

their job right. In fact, Canadian engineers have a wonderful

reputation around the world for the work and the research they do, and

if the research division was actually sold and set to do its job

properly, it would be so valuable to this province. I have no doubt

about the fact that it would grow and make a tremendous contribution to

the lifestyle and quality of life that we have here. It hasn't been

done thus far, because Crown corporations aren't usually in that

business.

You talk about the message that is sent out. We

refer occasionally to the BCTF and the messages they send out. They

said to themselves: "We want more money, so how are we going to do

that? The schools are bad, the schools are bad, the schools are bad."

That's all people heard, so now people are saying to me: "We are going

to send our children to private school." So the message that the BCTF

sent out on this need-more-money thing wasn't that they needed more

money; it was that the schools were bad. They have been the greatest

single source of growth for the private schools in the province, and in

the same way, the opposition, which claims publicly to support small

businesses, doesn't do that at all. They slam them constantly. That's

the message you are sending out — not the one you want, I'm sure.

Looking

at the gas division, we know that it constitutes about 6 percent of the

Hydro corporation. That's not a big piece; it's not even significant

with respect to the Hydro people or the Hydro corporation. Then we find

out that most of the distribution systems in Canada are already

private. There must be some good reason for that. It probably has

something to do with customer satisfaction. As the member from Kamloops

said in the early part of this debate, the Inland people, for example — no preference intended or given — were

doing a good job in the community, a good, motivational private-sector

job that all companies can do. And I wouldn't be surprised that if and

when the gas division is sold, as permitted by this legislation,

whoever took it over would be interested in making sure that customers

were happy, because nothing makes people react faster — those in business, anyway — than an unhappy customer, because they want to keep him happy.

The

member over there who spoke previously said that we will lose control.

"Oh, woe is me," she said. "We are going to lose control." The fact is:

it isn't so. The government will not lose control. We provide all the

regulations and will continue to do so, and the people of British

Columbia will enjoy the protection of the golden share provisions

mentioned by the minister in his press release. They will be pleased to

know, for example — all of you in the gallery — that the employees of

Hydro will be given preferential treatment. Preservation of seniority

in bidding back for vacancies for up to a year. It's this government

and the Social Credit people from history who have been constantly

looking after the people of this province, and this is a perfect

example of it.

The employees and the people of the province

will be protected. What else would you want to think about if you had a

distribution company in British Columbia distributing gas to all the

people out there? What else would you want to have? You might want to

have the chief executive officer of the company living in British

Columbia, and you might want to have a big percentage of the directors

living in British Columbia and having Canadian citizenship. Guess what,

Mr. Speaker. As it says here, the chairman, the chief executive officer

and 70 percent of the directors must be Canadian and resident in

British Columbia. That's what is called looking after the people of

British Columbia, looking to the future and long-term planning. That's

what is termed the effective use of the resources of British Columbia.

That's why the Social Credit Party has been in power in this province

for so long. We have never forgotten about the people. We never will.

We will never whine, and we are always prepared to be visionaries. This

is a visionary bill. This is what this government does best, and that

is why I support this legislation.

MR. STUPICH : If I

could just comment briefly on the remarks from the first member for

Vancouver South. He was talking about the gas division being relatively

small and

[ Page 5259 ]

hardly

worth being given any particular consideration; he said it's only 6

percent of the total. But I wonder, Mr. Speaker, if he realizes the

total is about $10 billion. So this "only 6 percent" is $600 million,

which is a lot of money in British Columbia, in whatever sphere of

activity. It's still a big item.

He said that the bill talks only about gas, rail, research — nothing

about hydro. Perhaps he missed the presentation by the second member

for Vancouver East (Mr. Clark), who said that indeed the bill provides

for the disposal of everything except the lines. I think he was

exaggerating there; I think it includes everything, and the Minister of

Energy agreed with the second member for Vancouver East that while he's

talking now about gas, the legislation itself provides for the disposal

of B.C. Hydro totally, whenever the government chooses to do so.

I would remind the House that B.C. Hydro was not a creation of the NDP government — not

a creation of socialists. It was a creation of forward-thinking

Premiers and governments over the history of the province of British

Columbia. There was a recognition that if B.C. was ever going to

compete with Ontario and Quebec, we needed a supply of economical energy — an

abundant supply that would be available to anybody wanting to locate in

the province. There had been some examples of private companies coming

in and locating because it was available here, but they did it where

they wanted, for their own particular purposes. The two examples are

the Trail smelter and the Alcan plant at Kitimat. The potential was

there; they developed it and they built their industry.

But

for the rest of it, Premiers in British Columbia realized that if

anything was going to be done so that B.C. would not be just a hewer of

wood and drawer of water. . . . I know it's terribly trite to say that,

but I'm going back over 50 years, Mr. Speaker, when the Premier, the

leader of the Liberal government, Duff Pattullo, recognizing the

importance of having energy in B.C., started trying to locate oil and

gas, particularly oil, in the Peace River area. He was looking far

ahead. He knew the importance of developing our own energy resources.

He didn't find it, but it wasn't his fault; he did try.

After

that, the coalition government in 1946 recognized too that something

had to be done to provide energy in the province. So they established

the B.C. Power Commission, which came into being in 1946. Initially

their ambitions were relatively low. They were going to develop power

sites on Vancouver Island, and the first one they were looking at was

the Nanaimo River — a relatively small site. But the vision of the day.

. . . All the members of the House, with the particular support and the

urging of the CCF members, persuaded the government to look instead at

the Campbell River John Hart development, and that tremendous — for those days —

facility

was provided by the B.C. Power Commission to supply an abundant supply

of reasonable-cost electricity for Vancouver Island.

Public policy. B.C. Power Commission — publicly

owned, publicly administered, publicly run as an expression of public

policy because it was supplying a need. No NDP government, no CCF

government, no Liberal or Conservative government, and no coalition or

Social Credit government anywhere in Canada has ever embarked on any

policy of public ownership unless it was supplying a public need of the

day. That's indeed what happened with the B.C. Power Commission.

The Social Credit government of W.A.C. Bennett — again,

because it was his vision of British Columbia that there should be an

even larger supply of firm electrical power available — decided on the

two-river policy. The largest publicly owned private sector producer of

electricity was B.C. Electric. B.C. Electric wasn't prepared to suit

the public purpose, to act in the public interest. They were acting,

naturally enough. in the interests of their shareholders. That's what

they had to do, that was their job. But from the Premier's point of

view, he was serving the people of British Columbia. and the best wav

to serve them was to develop a new organization, a larger organization,

one that would contain the old B.C. Power Commission but would also

contain B.C. Electric, and then the new B.C. Hydro, which came into

being on March 30, 1962, could properly serve the interests of the

people of British Columbia as the government of the day decided. That's

how it all happened, Mr. Speaker; not by us, but because the job wasn't

being done by the private sector.

[3:45]

Where

is the importance of domestic control? From the point of view of

supply, governments can look ahead and plan supply. If they make a

mistake, it's more expensive. Yes, we have to borrow the money to

provide these expensive installations at dams. Nevertheless. they make

sure the power is there when the need is there.

I was

reading a story in the paper just this morning, I think it was, where

B.C. Hydro now has some concerns that the growth of consumption of

power is exceeding their original calculations and there's some concern

as to whether we're going to be able to meet the demand not too many

years down the road. Mr. Speaker, we can't afford to gamble at this

time by turning it over to private enterprise and hope that they're

going to do the job for the people of British Columbia. B.C. Hydro must

maintain control of this supply.

Other members have talked

about service, and we know that B.C. Hydro gives good service. I am not

talking about the other utilities. I don’t quarrel with the service of

B.C. Telephone, but I must say that in my experience I get better

service from B.C. Hydro whenever there is a problem than I do from B.C.

Telephone.

With respect to the price, let's look at the

assets of B.C. Hydro now. I mentioned earlier that there was $9.8

billion in the last annual report that I saw. The minister tabled

another one today that I have yet to see. That's the book value of the

assets — $9.8 billion. Presumably, if they are going to be sold they'd

be worth more than that. They should be, because that's the book value.

The

retained earnings, the net earnings over the 26-year history of B.C.

Hydro at that point in time were just $540 million, so B.C. Hydro

hasn't been charging rates for power, gas, the rail lines and

everything else that would enable it to build up the kind of retained

earnings that would have enabled B.C. Hydro to go to the market and

borrow money for more investment. They haven't done that. They supplied

the service essentially at cost. That's what they were instructed to

do; that's what they've been doing over the years.

If it is going to be privatized — any portion or all of it — that's

going to have to change, because without a guarantee a corporation

going to the market and trying to borrow with only 5 percent net equity

in the business is going to have a hard time borrowing and will

certainly pay very dearly for costs which would have to be passed on to

the people using the services. Other members have said this, and I have

to repeat: it's going to be a lot more expensive.

[ Page 5260 ]

While we're talking in this instance just about turning over the gas division and we're looking at, the member said, 6 percent — that's $600 million — if

the gas division is going to bear its appropriate share of the debt of

B.C. Hydro currently, we are looking at a figure in excess of $550

million. As I say, how is the corporation buying that going to justify

to its shareholders unless it can increase the rates very soon?

Protection for three years we are told — maybe, because the cabinet can waive that.

one in the private sector is going to borrow it unless they believe

that they are going to make more money out of it. They make more money

by cutting back on the service or by increasing the prices, or a

combination of both. There is no other way; there is no magic to it.

They have to cut back on the service or they have to increase the

price. It's just that simple.

I was looking through the

Blues of the part of the debate that I missed, and we've been told that

there is protection in this. The question was asked: does it restrict

foreign ownership. The procedure as has been outlined is that the

assets move from B.C. Hydro to an intermediary company. When the buyer

is found, assets are transferred to the new private owners. These are

the points that are in the Blues and that are part of the legislation,

part of the policy. Intermediary companies may be designated as special

companies, so a particular company is designated as a special company

only when cabinet wants.

The company cannot move its head

office out of B.C. without cabinet approval. It doesn't give any

reasons that might be accepted by cabinet, nothing at all — just if, at

any time, cabinet felt so inclined, then the head office could move

anywhere in the world. No individual can own in excess of 4 percent of

the shares, unless cabinet agrees. The second member for Vancouver East

(Mr. Clark) read a number of qualifications, protections, but in each

case there was that escape clause for cabinet. Anything can be done if

cabinet agrees, which seems to be the way the bill is written.

Even

if it wasn't that easy to get out of it, Mr. Speaker, if we have to put

so many restrictions on the company or organization buying pieces of

B.C. Hydro or whatever, so many restrictions to protect the public

interest, why are we selling in the first place? If we are going to

spend all our time watching them, spend money having people check up on

them to make sure that they are acting in the public interest and

forcing them to do things that they might not want to do — that's one of the provisions, again, with cabinet approval — if we're going to all that trouble to police them, what's the point in the first place of turning it over to private ownership?

Private

ownership isn't going to have very much freedom to move unless the

private owners have access to cabinet members and can persuade them

that the moves they're taking have to be taken for the financial

survival of the organization that bought pieces of B.C. Hydro. If they

can persuade them of that, they can do anything. But they have to

persuade them of that first. Where is the protection for the people of

British Columbia if that's the case? Where is the protection if our

demand for power increases faster than the private owner calculates?

the government going to be having its own forecasts for energy needs?

Is the government going to have its own forecast for energy needs even

for export? Is the government going to be looking at things like that

and saying to the private owner of the facility, whether it's gas or

electricity: "You're not providing for the future sufficiently?" I see

nothing in the bill to make me feel certain that there will be that

kind of protection. Where is the protection for the people of British

Columbia? The protection we have now, of course, is that it is a

government organization; it is an organization that follows public

policy; if it doesn't, it's the responsibility of the minister

responsible for that organization to see that it does. The

opportunities are there. B.C. Hydro can do anything the government

wants it to do to make sure that it's functioning in the interests of

the people of British Columbia. But once we let it get into private

hands, we open the door to all kinds of pressure from those private

owners to let them do what they want to do. Remember, they're always

functioning in the interests of their shareholders — secondarily they're looking after the people of the province, after their customers — because they want to keep their customers happy even when they have a monopoly.

They

don't want complaints; B.C. Telephone doesn't want complaints.

Nevertheless, their prime motive, their prime consideration, has to be

how good a job can they do for their shareholders. Where now it's an

instrument of public policy, after the sale of parts of it or all of

it, it will be an instrument of policies of the private owners.

Indeed,

in establishing all of these rules of conduct. . . . I'm not talking

about cabinet now; I'm talking about the conduct of these private

organizations that are going to own pieces of B.C. Hydro. What we're

saying by establishing all of these rules is: "We don't really trust

you to look after public policy, to look after the public. We believe

you are going to be gouging the public as much as you can. We believe

you are going to be serving your own interests" — which is logical;

they would. "We're going to put all kinds of roadblocks in the way and

establish all kinds of rules, to give us lots to do, to keep us busy

looking after you, to give you a lot of opportunities to see if you

can't get around some of these rules to your own benefit."

we have to bring in so many provisions to make sure that they serve the

public interest, to make sure that they don't move the head office, to

make sure that they don't sell off the shares to organizations in other

parts of the world, why are we making things so difficult for

ourselves? We're going to have an organization that will not serve the

needs of the people in the same way, that will have to be persuaded to — it or several of them; whatever — serve

the public interest. They're going to have to be watched. We're going

to set up rules. We're going to have people continuously on guard to

make sure they are doing the job we want them to do.

seems so ridiculous. We have the organization now. If we're not doing a

good enough job of watching it, then it's the responsibility of the

minister and the cabinet. They appoint the directors. We tried

privatization once before when we sold off a half a billion dollars'

worth of public assets to the private sector, and the value now is

something like one twelfth of what the assets were when they were

transferred to BCRIC.

Transferring assets to the private

sector or to public companies operating in the private sector doesn't

mean that they are going to work better. It does mean that the job of

Petroleum Resources is going to be much more difficult. It does mean

that the consumers necessarily are not going to be as well off, because

they're going to pay more or get less service — whatever. We're better

off now than we would be under any proposal to sell off part of it. If

the government's objective simply is to get a chunk of cash to put into

the BS fund where there isn't any right now. . . . If they assign to the

[ Page 5261 ]

gas

division its share of the total debt of B.C. Hydro. . . . Remember,

there's only about 6 percent net equity in B.C. Hydro, and that would

be the case with the gas division if it were sold separately, or any of

the others.

I'm opposed to Bill 45. I haven't talked about

46, unless I have by accident. On behalf of the people of British

Columbia, on behalf of the people of Canada, I've not heard of any

other province that's making this kind of move. I think the governments

in every other province recognize their responsibility to the people in

their provinces, with respect to looking on energy distribution and

production as the single most important instrument of developing public

policy. The only way to do it efficiently on behalf of the people of

the province is to retain it in public ownership.

MR. PETERSON :

I stand and speak in favour of Bill 45. I was interested to note some

of the comments from the first member for Nanaimo, particularly

relative to the two-rivers policy brought in by W.A.C. Bennett, our

former Premier. I was a little bit younger in those days, but if my

mind serves me correctly, the opposition party was adamantly opposed to

that two-rivers policy. Yet it was a policy that had a lot of vision,

and the end result of it, as we see today, is that had we not gone

ahead with the Columbia River Treaty and the two rivers policy, British

Columbia would not have been in a position to take advantage of the

strong economic gains that resulted from that decision and that vision.

I just would like to remind the member of that.

I was also

interested in some of the comments made by the second member for

Vancouver East (Mr. Clark) when he opened up the opposition debate on

this. He talked about right-of-way sharing and all the inherent

difficulties with that. I don't understand that, because use of single

corridors for multi-utilities seems to me the way we should be going.

In fact, we have excellent examples of that in the interior, where we

have our 500 kV system coming down from the Mica, two circuits, but

also we have Inland Natural Gas occupying the same right-of-way; and by

doing this there's a lot of economy saved on behalf of both the public

sector, vis--vis the 500 kV rights-of-way for B.C. Hydro, and the

private sector, the pipeline rights-of-way, with common right-of-way

maintenance-sharing, common occupancy. Environmentally, it's certainly

much better. It utilizes the full right-of-way to its potential. I

don't see why he would identify that as a problem. We already have that

existing in the province, and it's working very well, thank you. So I

would ask that he would reconsider that thought. I thought he just

probably threw that in because he had nothing else to say at the time.

But I just point that out to him.

I really want to focus on

the R and D facility of B.C. Hydro. I've been lucky enough to have had

a lot of personal involvement with that facility. As a matter of fact,

when I was employed by B.C. Hydro, I utilized that resource to enable

me and my department to do a job better — and that was in the area of

transmission maintenance. First of all, I cannot overstate the high

degree of excellence in the science, engineering and technical workers

and in the support staff there. When I used to utilize these people on

projects, they solved a lot of problems in terms of corrosion

protection, insulator failures, identification — and I'll go into those in a little more detail if you like — and

pole-testing equipment that they developed. I used to think to myself

when I used to utilize this great resource we had: what a window of

opportunity! Here is B.C. Hydro....

[4:00]

Interjection.

MR. PETERSON :

Hear me out. The second member for Vancouver East (Mr. Clark) says

"It's crazy." There's his political ideology getting in the way of

common sense again. I might almost call it pipeline vision; others

would call it tunnel vision. Just hear me out.

I thought,

what a window of opportunity. You know, B.C. Hydro was not the only

utility that was experiencing these difficulties. There are many

utilities in Canada, but — guess what — there are hundreds and hundreds

more in the United States. And here is a centre of excellence. Their

technical capability is the commodity that we can market across the line — and you can’t see that?

Interjection.

MR. PETERSON : That's my one-man cheering squad over there.

You

can't see that, Mr. Member. Just stop and think about it. Do you know

what's really going to help us in this? It's something the opposition

doesn't agree with, again — and that's the free trade agreement. With

the free trade agreement, we are going to be able to eliminate a lot of

the red tape that would enable our engineers, our technologists and

technicians to go over to the United States and provide them with the

expertise that will bring dollars into British Columbia; will create

additional jobs in British Columbia; will help to improve Canada's

balance of payments with the United States. All these excellent

opportunities.

I'll tell you — and I really mean this — that

if I had the financial resources available to me to purchase that

facility, I know that it would just do wonders in terms of the payoff

to myself in the dividends by marketing that expertise that is there.

Let me tell you, that is a centre of excellence. It's one of the

centres of excellence in British Columbia that we have and we should be

proud of, but we should take advantage of it. It's a window of

opportunity. I hope, Mr. Speaker, that the minister does get a bid that

will reflect its value, because there is no doubt in my mind, Mr.

Member, that this will create new jobs and bring additional new wealth

into British Columbia — and I don't mind that a bit.

MR. G. HANSON :

It certainly is interesting to note the selective recall of the

political heritage of the party in power. Unfortunately we didn't have Hansard

way back when B.C. Hydro was established, but luckily we do have a

provincial library here. I took the opportunity to read a number of the

stories alluded to by my colleague the first member for Nanaimo (Mr.

Stupich) from around August 1, 1961, when the former Premier of this

province, W.A.C. Bennett, expropriated the B.C. Electric Co. Then the

following year he merged the B.C. Power Corp, and the B.C. Electric Co.

into B.C. Hydro.

It's interesting: the debate in this

chamber has come full circle from the day he stood here. Guess what he

said when B.C. was a hodgepodge of private utilities in the north, in

the Kootenays and all over the place, and every small mill and lumber

operation or whatever had a power company. He said: "It is government

policy now that basically all electrical power and energy that supplies

the public should be under public auspices." This is the political

icon, the former Premier of this province.

[ Page 5262 ]

MR. LOVICK : It's the gospel.

MR. G. HANSON :

It's the gospel according to the former Premier. He was right to bring

private utilities under public ownership and rationalize them into the

great energy corporation that we have, B.C. Hydro.

MR. CLARK : They did it with R and D too; they pulled it all together into one unit. It's efficient.

MR. G. HANSON : Exactly.

It's more difficult to quote from these early sources, because we did not have Hansard ,

so we have to rely on press clippings and so on. He indicated that the

two remaining major power producers serving the public in the province

would be taken over "when the government studies are complete over

time." Do you know what they were, Mr. Speaker? They were West Kootenay

Power and Light and East Kootenay Power, which this government sold

across the border into the United States — out of the control of

British Columbia entirely. That is the pattern that has been

established. These are UtiliCorps in waiting. These are private

utilities that are going to be parked for a certain time with some

regulations. Then control will ultimately flow, just as a simple matter

of scale, over to the United States, and we will lose the possibility

of really fashioning our own economic destiny, because as the member

for Nanaimo said, it is energy which is the main mechanism of public

policy. It's the main device or tool with which we can fashion our own

economic destiny.

Here we have the Social Credit government

in power going back full circle to undo all the work W.A.C. Bennett did

in 1961 right in this chamber. August 2 was the debate; August I was

when he took action on B.C. Electric. He took action on B.C. Electric

because B.C. was not getting its fair share of the energy dollar of

this province. Full circle — they've thrown the gospel away.

was a tumultuous time in this House. Here's one of the headlines:

"Wildest Uproar in Years as New Bills Pass." There were other parties

in this House at the time. The Energy minister was at one time a member

of one of those early parties which are now in the provincial museum

across the road or the wax museum on the other side.

I just

wanted to point out the selective political recall of the members of

that side of the House about their own political heritage and roots.

I'll tell you, many of their political forefathers who occupied seats

in this chamber would be spinning in their graves or at their lakeside

cottages or wherever they happen to be today, knowing that their

offshoots have come to undo all the good work they did for the people

of the province over the years.

Another interesting point

of this kind of legislation is that there was no mandate sought from

the people of British Columbia. On October 22, 1986, when we had the

election, did any citizen of this province hear the Social Credit

candidates who were knocking at the door and appearing on free-time

telecasts say: "If we are elected, we will sell B.C. Hydro," or "We

will sell the gas division of Victoria"?

If those

statements had been made, there would not be one single Social Credit

member sitting in this chamber. This is legislation without a mandate.

This is legislation without any political accountability. There's been

a major breakdown, Mr. Speaker, in the political process in this

province, and the electors of Boundary-Similkameen were the first

political brushfire to occur and send the signal that this government

is on its way out because of legislation like this which has no mandate

from the people of this province.

We're going back to a

period of time where B.C. Hydro will be fractionalized. It will be

broken up into small, little private fiefdoms based on profit. Losses

that are presently incurred, such as the Victoria gas division, cannot

operate because of its small distribution network. It only serves 4,000

people, which was essentially a matter of B.C. Hydro policy which

should have been shifted if the government really meant what it stated,

that at some point in the future we would have a natural gas pipeline

and a distribution system to serve the people of Vancouver Island with

natural gas. Then that distribution system of the Victoria gas division

should never have been capped in terms of its maximum number of sites

utilized and served. It is something like 4,000, and that was a matter

of public policy. It should have been expanded.

I want to

address a few comments to this gas division because it is a matter of

grave concern here. The Victoria gas division, which was established

way back in 1860 using coal gas, went through many phases. It was

incorporated then and acquired by B.C. Electric in 1905. This

particular utility has an extensive history in British Columbia. The

transition was carried out from coal gas to butane air, and that was

completed in 1954. Then that particular system was transferred over

from butane air to propane air in 1982, and on March 31, 1987, Victoria

Gas supplied 3, 804 customers using propane air and it operated at a

loss.

It operated at a loss — and there are various numbers in the report here — of

somewhere between $5 million and $6 million. I think it states here

that for the fiscal year 1987 the deficit was $6.2 million.

Now,

auction block. Owner comes along. First of all, this is a kind of

carrot anyway because the minister and the government argue that no one

will buy it. We'll offer it up for sale anyway on the off chance that

the carrot will be monopoly distribution rights for natural gas on

Vancouver Island.

[Mr. Rabbitt in the chair.]

we get a utility that operates at a loss and is going to be sold, and

if an owner was to purchase it now would have to pass a $6 million

deficit on to 4,000 users. Well, with a quick calculation that's a per

user increase in excess of 150 percent, something in the order of $1,

500 per user per year increase, That would make it the most expensive

energy probably anywhere in North America.

So the people of

Greater Victoria who are on this distribution system benefit from the

fact that they are on the larger B.C. Hydro distribution grid of gas

and electricity. So there's a cross-subsidy. The people who live here

and are served with propane air gas which heats their water and

provides heating in some cases, or goes into restaurants or dry

cleaners or other kinds of enterprises, is cross-subsidized with the

larger distribution network, and that cross-subsidy offsets the cost

for the B.C. Hydro gas subscribers here.

[4:15]

If it is severed off and sold, as the proposal is — and some of the

bidders have indicated that they are willing to put in a bid for the

whole gas package, mainland and Island. . . . However, there is another

bidder that has indicated that they would just take this portion here.

There are other pieces to the puzzle. One other piece to the puzzle is that there's no pipe between the mainland and

[ Page 5263 ]

the

Island. We only hear about that pipe, usually in the run up to a

provincial election, sometimes in the run up to a federal election. I'm

expecting any day now within the run up to the federal election we are

going to hear an announcement about the possibility of a natural gas

pipeline to Vancouver Island. But, you know, the people on Vancouver

Island have heard that from their federal and provincial politicians in

the past. I might say, Mr. Speaker, that they've adopted a rather

cynical attitude about reports of the imminence of the construction of

a gas pipeline from the mainland to the Island. That's not saying they

wouldn't like it; they just don't believe the commitment of the

politicians in power — both in Ottawa and here in Victoria — to bring that into reality.

Here

we have a carrot to be offered up as the Victoria gas division, a

carrot to suggest to a private operator: "You purchase the gas

division; you pick up the deficit on the off chance that there will be

a connecting pipeline and that we will then give you guaranteed rights

to serve natural gas to the citizens of Vancouver Island at a profit."

That takes us right back to before August 2, 1961, when W.A.C. Bennett

rationalized the private hodgepodge of energy generators in the

province of British Columbia. Full circle — right back to where we've come from.

Ray

Williston, the minister at the time, said that they didn't have

confidence that the private utilities would take care of the future

growth of energy consumption, He said: "Using a 7 percent annual load

growth — a very conservative one — it is estimated that 20 years from now, in 1982, B.C. will need approximately 8 million kilowatts." He didn't have confidence — as the first member for Nanaimo (Mr. Stupich) indicated earlier — that

the private utilities could plan effectively in the public interest for

future need. He was absolutely right, and that was why B.C. Hydro came

about. B. C. Hydro came about because the province was not getting its

share of the energy dollar from the private utilities. Portions of it

were coming off and going in a federal tax. There was a large profit

being made. They were inefficient in terms of their distribution

systems and their grid tie-ins and so on. In terms of future need,

serving the public, rationalizing the growth, the philosophical

statement that W.A.C. Bennett made on August 2, 1962. . . . He said

that energy serving the public should be under public auspices. They've

gone all the way back.

It's very difficult to give the

members of this House a history lesson on the growth of public policy

around energy in this province. What we see now are radical departures

in terms of looking at selling firm power into the United States on

long-term contracts that take electricity away from possible use within

British Columbia. We see a balkanization of our energy generation and

distribution systems by breaking up B.C. Hydro and selling pieces off

to the highest bidder. We see concerns about future rationalization of

our energy needs and what the demand will be in the future, and all

based on profit, ideology, the Fraser Institute, Margaret Thatcher,

Ronald Reagan, press clippings — all tied together into Bill 45.

Here

we've got a system in place that would serve the people of the province

well. The other day I asked in question period if the minister would

offer price protection for the people of Victoria in the event the

Victoria gas division was sold off. In a very glib response he said:

"No, we won't freeze prices, because they're too high." I ask for price

protection. I ask him if he'll guarantee that these prices will not go

any higher as a result of their energy adventurism, their misguided

plans for the future of the energy service of the people of this

province, who've paid and paid again in terms of borrowings for

building dams and transmission facilities and so on.

can't recall a session of this House where there wasn't a miscellaneous

statutes bill brought into the House with a line item in it to increase

the borrowing authority of B.C. Hydro by an additional $500 million or

$250 million. Most members of this House will agree that that's been

the case, and that means that the people of the province have been

amortizing over time, because they believed in the long-term goal, the

long-term future of the province. They believed that their energy needs

were being best served by a major-scale public utility such as B.C.

Hydro. The people of the province have paid the interest on those

borrowings for the construction and so on, as I have mentioned, and now

we get a fire sale — and I'm sure it will be — of these Crown assets to pay operating costs.

You

know, Mr. Speaker. that the most foolhardy of public policies is when

you sell Crown assets to pay operating expenses. It's like taking a

chainsaw, cutting off your porch and feeding it into your fireplace

because you need warmth, and then gradually tearing the walls down and

feeding them into the fireplace. It destroys the public asset that

you've got. You don't sell equity to pay operating expenses; that's a

fundamental public policy. But this government is, so people will pick

up these pieces at under-value, and since 1961, the public, the actual

individuals, the taxpayers. have paid through the nose in the hope that

this utility would serve the people of the province over the long haul

for decades to come and be the economic tool to provide employment and

a rational energy and environmental policy for the province. Yet what

do they get after an election where this isn't even mentioned once? It

wasn't in any leaflet. It wasn't in that minister's householder or

leaflet that he was going to sell portions of B.C. Hydro — not once.

Don't

the people of this province deserve better? Don't they deserve to be

told in advance of an election what a government intends to do with the

public's own property? It seems to me that it is a fundamental question

in any democracy. A government goes to the people on its past record,

and the next election will be on this government's record. It won't be

on the possibility of lower beer prices, the possibility of destination

gambling and all those weighty things that were discussed at Whistler

during your convention. It will be on the cavalier and autocratic way

that this government has mutilated and disarticulated the Crown assets

of this province that were there to serve the public and that had been

accumulated since the early sixties, no matter what party was in power,

and including that three and a half years that the New Democrats were

in power.

Mr. Speaker, this is a foolish bill. It does not

serve the people of the province. It's a bill that really should have

been put on the order paper for the last election. It should have been

discussed as platform by the Social Credit Party, but that party did

not have the courage. It was part of the hidden agenda for the lurch to

the right, to follow the program of the Fraser Institute. Bill 45, the

Hydro and Power Authority Privatization Act, will go down in history as

one of the most misguided policy directions of this short-lived

government, this first-term, one-timer Premier. There's a saying in

this House that all members are aware of. When a person comes in, often

a call of disparagement across the floor is: "You are a one-timer."

This Premier is definitely going to be a one-

[ Page 5264 ]

timer,

and I think all members of this House know it. It is bills such as this

Hydro and Power Authority Privatization Act that are going to bring

that about.

I am coming near the end of my time, Mr.

Speaker, but I just want to say on behalf of the citizens whom I and my

colleague represent here in the Victoria electoral district that this

bill hurts our community. It hurts and causes anxiety to the employees.

They are small in number — I believe there are around 30 employees at the gas division — but

if the government were serious about bringing the natural gas pipeline

to this province and had some moxie with the federal government. . . .

If it could actually go to the federal government and get our share of

the energy dollar of Canada and say: "We are owed that $600 million to

build that pipeline. That is our part of Confederation. That is our

part of Vancouver Island being a part of the province of British

Columbia. . . ." But they don't have the moxie or the jam to go there

and get those dollars for us. What do they do? They sell the store,

piece by piece. They sell the fruit stand. Then they sell the sign shop

in the back, and so on. They are not the visionaries. They are the

myopics; they are the one-timers. This is a policy designed for a

one-time Premier and a onetime government. Mr. Speaker, we oppose it.

DEPUTY SPEAKER : The member for Burnaby North requests leave to make an introduction.

Leave granted.

MR. JONES :

I'm very pleased that joining us in the gallery today to hear the

eloquent words of the first member for Victoria on the future energy

resources that these young people will have to rely on are some 20

grade 5 students from Holy Cross School in Burnaby. I know that members

on both sides of this House will join me in making them very welcome.

MR. WEISGERBER :

I want to spend a few minutes talking about privatization, particularly

as it applies to the gas division. I've heard so many comments in the

last few hours about how service is going to deteriorate when Hydro Gas

is sold. I've got to reflect on the service that's now being given, as

the second member for Kamloops (Mr. S.D. Smith) indicated, around most

of the province by the private gas companies: Northland Utilities in

South Peace River and Inland. Not only do they give good service at

competitive prices, but they're good corporate citizens. I'll tell you,

they're far better corporate citizens in our communities than B.C.

Hydro is.

Interjection.

MR. WEISGERBER :

No, it's because they have the opportunity to participate in the

community. I don't criticize a Crown corporation for not getting

involved in the community. The structure is such that it really doesn't

encourage that kind of thing. But the gas companies and distributors in

the province encourage participation in the community by their

employees and their managers, and they make a genuine contribution.

[4:30]

What

I really wanted to stand for today, Mr. Speaker, was to record my

continued amazement at the lack of confidence in the private sector

those members across the way exhibit time and time again as they stand

up to speak. I'm really starting to understand why there is so much

opposition to privatization.

I want to pay particular attention, and draw the attention of the members in the House and of those who read Hansard ,

to some of the comments of the first member for Nanaimo (Mr. Stupich)

when he spoke a few minutes ago. I jotted down as close as I could

exactly the words he used. He said: "A private corporation will be

forced to gouge, cut corners and do everything in their power to make a

profit. That's their responsibility to the shareholders." I know that

the first member for Nanaimo is a private businessman in his own right,

and I'm certain that the companies he's involved with don't gouge, cut

comers and do everything in their power to make a profit.

it seems to me that the only other explanation for that kind of

statement by the most senior member, I guess, of those opposite. . . .

The only reason he would make a statement like that is that it's an

ideological one. When they have their caucus meetings they must read a

little script that says: "The private sector guys are bad. They gouge.

They're rip-off artists."

Interjections.

MR. WEISGERBER : Well, what other explanation could there be? The second member for Nanaimo (Mr. Lovick) says I'm stretching it.

Really,

is it because he believes that in his own business practice? I think

not, and I don't really believe that those other members across the way

who are private businessmen believe that you have to gouge and cut

comers in order to make a profit. Mr. Speaker, that's what we hear as

the defence time and time again for Crown corporations: you can't trust

the private sector. Gentlemen, that's the reason you continue to sit

over there and we continue to sit over here. We believe in the private

sector and we believe in the people who work for the private sector.

DEPUTY SPEAKER : The second member for Kamloops requests leave to make an introduction.

Leave granted.

MR. S.D. SMITH :

Mr. Speaker, it's my pleasure today to introduce 50 grade 5 students,

their ten chaperones and their teacher, Mr. Bishop, from the Dutch Lake

Elementary School in Clearwater. We don't often get an opportunity in

this House to introduce students from Clearwater, because it's some

distance — 78 miles north of Kamloops. It's a special pleasure for me

because it's the area in which I went to school. Would the House please

join me in welcoming this group.

MR. LOVICK : I am

very pleased to stand and take

part in this historic debate, and I want

to underscore the point about historic, because it truly is. It's a

historic debate not so much because of what the minister said in

introducing the measure before us, but rather because of what was not

said. It saddens me to make that point to begin, but I think I am on

safe ground in making the point. I am referring to the simple fact that

the minister's opening comments on the bill suggest that we are really

here talking about four particular parts of the B.C. Hydro operation;

yet when we look at the bill it

[ Page 5265 ]

becomes

patently crystal-clear that we are indeed talking about the whole B.C.

Hydro operation. That's what saddens me, and that, Mr. Speaker, is why

this is a historic debate.

If we are talking about all of B.C. Hydro — as we are — we

are talking about radically changing the nature of the way we do

business in this province, the way we operate in this province, the

kind of society and economy we have in this province. It's a historic

debate; it's an important debate. We are only in the beginning of it

now, but I know that the public is soon going to begin to pay attention

to what's going on in this chamber. The public is soon going to begin

to understand the dimensions of this problem, the implications of the

measure before us, and this will become, I am sure, the major issue in

British Columbia these days, as it should.

Before I start

any substantive comment, I'd like to just respond, albeit very briefly,

to the comments made by the member for South Peace River (Mr.

Weisgerber). When the member suggests that my colleague the first

member for Nanaimo, in his utterances is somehow suggesting that

gouging, price-fixing or going beyond the law . . . to say that kind of

thing, to make reference to that kind of thing, is somehow to show a

lack of faith in the private sector or something, I am afraid that

misses the point.

What we're talking about is something

that is inherent in the nature of the marketplace, and every honest and

legitimate free enterpriser knows that as well as I do. We're not

talking about anything esoteric; we're not talking about the sinister

motives of the free enterpriser or the private sector operator. We're

talking, rather, about the nature of markets. The nature of markets is

such that if somebody else is competing with you and can undercut your

costs and put you out of business, you don't have any choice in the

matter — even if you're the most decent, dignified, sincere person in

the world — but to find ways of cutting costs. You will do that, of

course, within the limits of the law, but at some point, rather than

see your business go down the drain, rather than see your employees all

suddenly cease to have gainful employment, you will find excuses and

rationalizations to do things you would otherwise not do.

In case anybody opposite needs a reminder of that, let me give you two instances. I might just point out. . . .

see somebody shaking his head across the way who clearly has difficulty

accepting the proposition, so let me elucidate for ever so brief a

moment.

The predicament is that, human beings being what

they are, it is not always the case that everybody in the private

sector is necessarily a nice person. There are some, indeed ' who want

to maximize profits; there are some who provide shoddy service. I'm not

even talking about that; I'm just talking about the systemic problem.

Let's

look at that systemic problem and an example of it. Remember how it was

not too very long ago, Mr. Speaker, that we had an absolutely

outrageous, indeed obscene, development by one of the major American

corporations. I'm referring to Union Carbide and what happened in

Bhopal, India, where people died because the company was not living up

to the environmental standards it ought to have. Those were considered

an external cost that was too high; they interfered with the successful

functioning of the operation. Therefore they cut back; they did not do

the monitoring they ought to have done. The result was death. That's

one small example, and there are thousands like it.

Our legal system — I think it's very clear if anyone examines it for just

a moment — spends probably about 75 percent of its time protecting us against

the failures of the marketplace. If we could count on free enterprise to work

unattended and everything would be lovely, clearly we wouldn't need regulation;

clearly we wouldn't need laws. However, the fact is that we do.

When

my colleague the first member for Nanaimo makes reference to the

problems with the private sector, I think that is precisely the context

he wants to talk about. I for one, Mr. Speaker, am somewhat offended

when I hear members opposite suggest that because we do not have faith

in the marketplace, because we do not believe, we are therefore in

opposition forever and ever. Frankly, that offends me because it

certainly casts us in a light that is quite simply not borne out by the

facts or by evidence.

All right, having said those few words, Mr. Speaker, I now want to turn, if I might, to the measure before us.

MR. ROSE : Have you finished your introduction?

MR. LOVICK : My colleague the House leader says, "Have you finished your introduction?" and the answer is in the affirmative: yes.

was away when the Minister of Energy, Mines and Petroleum Resources

(Hon. Mr. Davis) introduced this bill. I was also not present in the

Legislature when my colleague the second member for Vancouver East (Mr.

Clark) and our critic for Energy responded to the minister's opening

statement.

My first source of information, then, about this

particular measure was the press — the coverage in the press. Now I

know, Mr. Speaker — and I see a member from the government benches

sitting there smiling at this point — that the press is a dirty word,

certainly from the perspective of your leader, the Premier. But I

hasten to point out that I don't think the minister responsible for

this measure has denied anything that the press has said — more

importantly, has not denied anything or challenged anything my

colleague the member for Vancouver East said in terms of saying — the

fundamental point I'm making — that what this measure is about is not

simply those four parts of B.C. Hydro. It's not about the Victoria gas

division: it's not about the Mainland gas division; it's not about

research and development; it's not about B.C. Hydro railway. Instead,

it's an enabling mechanism that enables this government to dispense

with, to dispose of, all of the assets of B.C. Hydro without reason,

without need to come before this Legislature for any kind of approval.

That's

the issue, Mr. Speaker. That's why I suggested earlier that this is an

historic debate. We're talking about something much bigger than what

has been suggested by the minister in his opening comments. Indeed, I

notice that the minister — and I can't hold back from saying this, Mr.

Speaker — began his comments by, I suggest, blatantly emphasizing that

this was indeed a bill that really was focusing on just four things;

four are for sale, not the rest of B.C. Hydro. said the minister.

Unfortunately, in the bill itself that is not the case. It is the case,

rather, that everything will be able to be sold, as I've said, without

reference to the Legislature, without any kind of public scrutiny.

I'm

setting this up, Mr. Speaker, because I want to suggest why some of us

treat this matter in somewhat more passionate terms than might

otherwise be the case. It also says in the explanatory note to the bill

— talk about if not misleading, at least suggesting something different

from the intention of the bill. . . . The first explanatory note for

the bill says as follows: "This bill establishes the framework for the

privatization

[ Page

5266 ]

of portions of the oper