2007 Legislative Session: Third Session, 38th 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, APRIL 17, 2007

Afternoon Sitting

Volume 18, Number 2

CONTENTS

Routine Proceedings

Page

Introductions by Members

Tributes

B.C. Hockey League

champions Nanaimo-Parksville Clippers

R. Cantelon

Introductions by Members

Introduction and First

Reading of Bills

Human Rights Code Amendment Act

(No. 2), 2007 (Bill M213)

Chouhan

Statements (Standing Order

25 B )

Vandalism at Beth Tikvah

Synagogue

J. Yap

Land Commission legislation

Gentner

North Shore Credit Union legacy

fund

Whittred

Mountain biking on Sunshine Coast

Simons

Central Mountain Air

MacKay

George Mussallem

Sather

Oral Questions

Management of Vancouver Trade and

Convention Centre expansion project

Macdonald

Hon. S.

Hagen

Fleming

H. Bains

J. Kwan

Karagianis

Columbia National Investments

development plans on Sunshine Coast

Simons

Hon. I.

Chong

Interior Health Authority layoff

notices to nurses

Conroy

Hon. G.

Abbott

Log export approvals for Western

Forest Products

Simpson

Hon. R.

Coleman

Petitions

C. Wyse

G. Coons

N. Simons

Committee of Supply

Estimates: Ministry of Forests

and Range and Minister Responsible for Housing (continued)

Simpson

Hon. R.

Coleman

Proceedings in the Douglas Fir Room

Committee of Supply

Estimates: Ministry of Education

and Minister Responsible for Early Learning and Literacy

(continued)

Trevena

Hon. S.

Bond

Cubberley

Hammell

H. Bains

Sather

Farnworth

Horgan

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TUESDAY, APRIL 17, 2007

The House met at 1:33 p.m.

[Mr. Speaker in the chair.]

Introductions by Members

C. Puchmayr: I have three guests in the crowd today from COPE Local 378: Lori Mayhew, David Black and Mike Bruce. Please make them extremely welcome.

Hon. M. de Jong: Earlier today in the rotunda, members may know we had the opportunity to celebrate the signing of four historic agreements with the Blueberry River First Nations. Those are agreements involving protocols around resource development and partnership participation between government and the Blueberry First Nations.

Joining us today in the Legislature are representatives from the Blueberry River First Nations: Chief Norman Yahey; Councillor Marvin Yahey; Councillor Sherri Dominic; Councillor Joe Apsassin; Daniel Talbot; Howard Southwell, the chief negotiator for the Blueberry River First Nations; his wife and member of the Blueberry First Nations, Frances Wolf.

Songhees elder Joan Morris provided a traditional greeting and prayer. She is with us today as well as David Price, vice-president of western Canada operations of the Canadian Association of Petroleum Producers, and Paul Jenkins, executive director of the Oil and Gas Commission.

I hope members on both sides of the House will make all of these representatives welcome.

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J. Horgan: Joining us in the gallery today are two representatives from COPE Local 378. They're two friends of mine. I'd like the House to welcome Gwenne Farrell and Lori Winstanley.

Hon. J. van Dongen: It's my pleasure today to introduce some special visitors from Australia led by the hon. David Hawker, who is the Speaker of the Australia House of Representatives. Accompanying him are Sen. Kay Patterson and Sen. Anne McEwen and also Members of Parliament Michael Hatton and Trish Draper.

I met with the Speaker and a number of people in his delegation this morning and had a very interesting conversation comparing Canada and Australia. I would ask the House to please make them very welcome.

Hon. G. Campbell: Today in the House we also have special visitors from Southeast Asia. Visiting Victoria for the first time are diplomatic representatives of the Association of Southeast Asian Nations. With us are His Excellency Dennis Ignatius, the high commissioner for Malaysia; His Excellency Snonshart Devahousten, the ambassador for Thailand; Her Excellency Magdalene Teo, high commissioner for Brunei Darussalam; His Excellency Jose Briantes, ambassador for the Philippines; His Excellency Djoko Hardono, the ambassador for the Republic of Indonesia. We also have Vancouver-based Consul General Chin Kwok Foo of Singapore.

I had the opportunity to meet with them today, and we're looking forward to building mutual and beneficial associations between the ASEAN countries and British Columbia and Canada. I hope that the Legislature will join me in making them feel welcome.

R. Austin: I have four visitors in the Legislature today. The first are Suzanne Ewen and her daughter Luci. Luci is a Gonzales Cooperative Preschool attendee along with my legislative assistant's son Cameron Mears. Suzanne and Luci are joined by her grandparents Alex and Valerie Carley. Alex and Valerie are recently retired, newly married and on their first visit here from Toronto. I ask the House to please make them welcome.

Hon. G. Hogg: We have the pleasure of having four delightful and interesting people from Surrey–White Rock with us today, making their first visit to the Legislature. Would the House please join me in making Lawrence and Sharon Hamilton and Carol and Bill Morrow most welcome.

D. Chudnovsky: One of the very best high schools in the province is John Oliver Secondary School. It's at the corner of 41st Avenue and Fraser Street in what is the best constituency in the province, Vancouver-Kensington. Some 150 of the students from JO are here today with their teachers visiting the Legislature. Some of them are in the gallery, and others are visiting the museum. Could you please make them welcome.

I. Black: I have five guests in the galleries today. First of all, I would like to welcome two of them who are constituents. Mr. Richard Leem as well as a very well-known community leader in our community and attorney Michael Hwang are with us from northern Coquitlam.

They are joined by three associates from Korea who are visiting Victoria for the first time: Hyun-Seok Gee, Hyuk Choi and Sung Eun Oh. They are with an organization called Woongjin. They're exploring areas of common interest with respect to education and business investment. Would the House please make them feel most welcome.

Tributes

B.C. HOCKEY LEAGUE CHAMPIONS

NANAIMO-PARKSVILLE CLIPPERS

R. Cantelon: A small indulgence. Not with us, though, are the Nanaimo Clippers, who last night won the B.C. Junior Hockey League Championship.

[1340]

Introductions by Members

Hon. G. Hogg: I can't let the member for Malahat–Juan de Fuca be the only one to introduce a resident of the riding of Surrey–White Rock. I'd also like to add

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my congratulations and welcome Gwenne Farrell, who is here from Surrey–White Rock. I want the whole House to also recognize her.

Introduction and

First Reading of Bills

HUMAN RIGHTS CODE

AMENDMENT ACT (No. 2), 2007

R. Chouhan presented a bill intituled Human Rights Code Amendment Act (No. 2), 2007.

R. Chouhan: I move introduction of the Human Rights Code Amendment Act (No. 2), 2007, for first reading.

Motion approved.

R. Chouhan: I am pleased to introduce the Human Rights Code Amendment Act, 2007. In 2002, among various other budget and system cuts, this government passed legislation abolishing our Human Rights Commission. The commission had performed various functions, including human rights research, education, monitoring, investigation and dispute resolution. The results have been dramatic.

(1) British Columbia currently stands as the only province in Canada without a commission.

(2) Our human rights system does not accord with international norms and principles, and it flouts our international legal obligations.

(3) Human rights education, research and monitoring are no longer carried out effectively in this province and are clearly not priorities for the current government.

(4) Victims of human rights abuses are isolated and powerless without the assistance of the commission, and matters of systemic discrimination and harassment are not being addressed.

This bill will restore the B.C. Human Rights Commission. The new and improved commission will rebuild a human rights culture in this province through research, education and outreach. It will revive the public purpose of our human rights legislation by carrying out public interest investigations and litigation, and it will respond to the needs and concerns of British Columbians by providing information and assistance regarding human rights disputes.

Our human rights will not protect themselves. Our commitment to diversity and human dignity must be nourished to be fulfilled. Equality and freedom from discrimination cannot be achieved without active public participation. British Columbia needs a human rights commission.

I therefore move that this bill, the Human Rights Code Amendment Act, 2007, be placed on the orders of the day for second reading at the next sitting after today.

Bill M213, Human Rights Code Amendment Act (No. 2), 2007, introduced, read a first time and ordered to be placed on orders of the day for second reading at the next sitting of the House after today.

Statements

(Standing Order 25

B) VANDALISM AT BETH TIKVAH SYNAGOGUE

J. Yap: Yesterday in this House we marked Yom Ha-Shoah and honoured the memory of Holocaust survivors.

Today I rise to denounce the recent vandalism at the Beth Tikvah Synagogue in my riding in the city of Richmond. This crime of hatred has deeply affected everyone in my community. Personally, I'm shocked. I know that I can speak for everyone in this House, on both sides, in condemning this cowardly act. I would like to offer our sympathy to members of the synagogue.

One of the steadfast principles of our society is tolerance and acceptance of cultures from around the world. British Columbians take great pride in our multicultural mosaic. This is what makes our province a great place. In the face of these acts of hatred, we as a society must be vigilant in exposing prejudice and intolerance because they are not the true sentiments of British Columbians.

As a government we have a responsibility as well, through various programs such as the B.C. Anti-Racism and Multiculturalism Program. The province is working hard to ensure that everyone, regardless of their culture, has the right to live in strong, safe communities without racism and other forms of hate activity.

[1345]

It is my sincere wish that this cowardly crime never rears itself again. British Columbia thrives on the synergy from the diverse cultures that make their home here. I know that we can all agree in condemning this act of vandalism against Beth Tikvah Synagogue.

LAND COMMISSION LEGISLATION

G. Gentner: Today marks a very significant anniversary in B.C.'s political and cultural history. On April 17, 1973, after several amendments, the NDP government passed the Land Commission Act. The bill was more than just a shift in policy, for it was the beginning of an era of fundamental reorganization in the way we think as a society.

Today the bill is more important than ever, because how we manage and maintain our farmland will not only show what we as a society and province hold dear — the importance of local produce — but how genuine our obligation is in the fight against climate change.

During the postwar years, rapid housing and industrial expansion in British Columbia communities prompted concern about the loss of valuable farmland. Prior to 1972 about 5,000 hectares of arable B.C. soil were lost yearly to non-farming purposes. By 1973 some of the most productive land in the province had been lost to residential and urban development.

Only 5 percent of the province's land mass is arable, and less than 1 percent possesses a productivity rating of class one.

The act brought to a halt the subdivision of agricultural land in the province. Though it received a storm of criticism, the pending storm with its removal will

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be severe. On this day and every day, I ask all British Columbians to embody the spirit of the ALR and to put human subsistence ahead of greed, ahead of private interest, ahead of any excuse and stakeholder, for it will define us as a species, a society, a province and a civilization.

NORTH SHORE CREDIT UNION

LEGACY FUND

K. Whittred: It's not often that any of us get an opportunity to attend an event as exciting as one I attended last week. The North Shore Credit Union, since its inception in 1941, has always believed in being part of and serving its community. That value of serving community was alive and well on April 11 when the North Shore Credit Union awarded a $1 million legacy fund to a North Shore organization. This one-time million-dollar grant is the largest single donation ever made by the credit union.

The three short-listed finalists for the million-dollar award were North Shore Hospice, North Vancouver Outdoor School and West Coast Alternatives Society. In judging the finalists, the trustees were looking for a meaningful community project that demonstrated the physical, environmental and financial wellness of the local communities served by the credit union.

In my view — and I work closely with all of those organizations — all finalists were worthy of this fund. I was very pleased, however, that following the opening of the envelope and the drum roll, it was North Vancouver Outdoor School that won the award.

The North Vancouver Outdoor School has been operating since 1969. It is recognized internationally for its hands-on natural and cultural history learning. The environmental learning centre is expected to be completed by late 2009 and will be operated by the North Vancouver school district to provide outdoor environmental and cultural education to more than 10,000 students, teachers and adults each year.

Again, congratulations to all the finalists and to the North Shore Credit Union for the fantastic work they do in my community.

MOUNTAIN BIKING ON SUNSHINE COAST

N. Simons: The Sunshine Coast is fast becoming the mountain biking destination of choice, and not just for British Columbians who make day trips from the lower mainland. It's also known far and wide in the mountain biking community as a prime visitor destination because of its beautiful scenery, the variety of trails, and the excellent bike shops and services available to riders.

This world-class reputation didn't happen without the vision and leadership of individuals and businesses on the Sunshine Coast. In 1990 elementary school teacher Doug Detwiller developed the Sprockids program to introduce bicycling to youngsters in elementary school. Besides giving them the skills to ride safely and to maintain their bikes, they participate in trail-building and team events where every single child not only participates but participates equally.

This school program leaves a lasting impression on participants and their families. It creates lifelong cyclists and environmentally conscious citizens. It promotes good mental and physical health, brings together children and youth of different ages, and strengthens family ties. Most importantly, it builds school cohesion, well known as the most effective tool in preventing school bullying. It's no wonder that the Canadian Cycling Association enthusiastically endorses the program.

[1350]

Something else that sets the Sunshine Coast apart from other places in B.C. is that it's home to the only post-secondary program in North America for young people who want to make mountain biking a part of their career. This one-of-a-kind program is coordinated by Caroline Depatie and is supported by individuals and industry professionals. It attracts young people interested in the tourism industry, event management and communications, and provides the necessary skills to promote the mountain biking industry.

Should I slow down? The energy that one gets from mountain biking is evident in this two-minute statement.

This Saturday I'll have the pleasure of witnessing the unveiling of a new teaching trail specifically built for beginners. Of course, Doug Detwiller and the Sprockids have been involved right from the beginning. With Sprockids, the mountain bike certificate program and our vast network of trails and remarkably sunny weather, the Sunshine Coast should be considered the mountain biking capital of British Columbia.

CENTRAL MOUNTAIN AIR

D. MacKay: In April of 1987 four people from Smithers started a small airline. Like most new businesses, they started out small. After all, there were only four people involved, and it was and is a completely privately held company.

Like many other airlines throughout the world, this small company experienced the dramatic increases in fuel costs and of course the fallout following 9/11, when air travel was reduced in great numbers. Some airlines sought court protection from creditors, and some did not survive.

I'm pleased to report that the airlines from Smithers suffered through those hard times. However, unlike many others in the airline industry, they did not cut services but continued to grow, and this month are celebrating their 20th anniversary.

Today they operate 15 aircraft and employ 298 people. I would be remiss if I did not say what great corporate citizens they are. Northern Thunderbird airlines, an associate company with another 12 aircraft and 60 employees, completes this company's portfolio.

Central Mountain Air services 18 destinations throughout Alberta and British Columbia 20 years later. They continue to participate in the provincial travel assistance program for medical travel for persons having to travel for health care, and have since the 1990s. The associate company, Northern Thunderbird airlines, provides services to the mining industry, for-

[ Page 6778 ]

estry, medevac, mail, guide-outfitting and the oil and gas industry, to name a few.

I would ask members of this House to join me in saying congratulations to Doug, Lindsay, Patty and all of the other great employees who made and continue to make Central Mountain airlines what it is today — a great success story.

GEORGE MUSSALLEM

M. Sather: George Mussallem served four terms in this Legislative Assembly as a Social Credit MLA for the constituency of Dewdney from 1966 to 1972 and then again from 1975 to 1983. George served as government Whip and Chair of Public Accounts, along with serving on various committees and representing British Columbia in a variety of capacities within the province and across Canada.

George took over the family business and operated Mussallem Chevrolet Cadillac for over 30 years before being elected. The business was open for 88 years. George followed his father into both business and public life. George's father Solomon served on Maple Ridge council for 23 years — 21 years as mayor.

George retired from public life in May 1983 and continued to serve the community as a member of the GVRD advisory commission for parks, director of Douglas College Foundation, Maple Ridge economic advisory committee, Maple Ridge Foundation and the nominating committee for the Maple Ridge hospital board.

George was also a founding member of the convocation for Simon Fraser University. George was involved with the Boy Scouts, having started the movement in Maple Ridge and Pitt Meadows in 1947, and served as a Sunday school superintendent for St. Andrews United Church. An avid pilot, having attained his licence in 1929, George was flying his own plane well into his late 70s.

On April 10, 2007, George Mussallem passed away in Ridge Meadows Hospital. He was 99 years old. George is predeceased by his first wife Elizabeth and survived by his three children — Robert, Anne and David — and his second wife Grace, along with his siblings, grandchildren and great-grandchildren.

[1355]

George Mussallem served his community and the constituents of British Columbia well. I know that everyone in this House sends their condolences to the Mussallem family for their loss.

Oral Questions

MANAGEMENT OF VANCOUVER

TRADE AND CONVENTION CENTRE

EXPANSION PROJECT

N. Macdonald: There's a clear reason that the cost of the Vancouver Convention Centre expansion project has doubled — a lackadaisical attitude by a succession of B.C. Liberal ministers, best represented by this minister's indifference to a project 100 percent over budget, and mismanagement by a board made up entirely of the Premier's friends and financial backers.

Let's look at one contract: the Pace Group — a major Liberal donor in the range of $60,000, as the minister would say. Managing director Norman Stowe is a close friend of the Liberal Party. He even worked on this minister's own election campaign. They received over $500,000 in contracts from the Vancouver Convention Centre Expansion Project board and delivered 16 press releases, as far as I can see. That's $33,000 per release.

How can the minister defend such blatant partisan rewards when he cannot even tell us what the final cost of this project will be?

Hon. S. Hagen: We are not afraid to disclose that the costs have gone up for the convention centre. We've been very public; we've been very transparent. The reason the costs have gone up is that the cost of steel and the cost of concrete have gone up dramatically. Also, this project is being built in the tightest labour climate that this province has ever had. We have the lowest unemployment rate that we've ever had.

Interjections.

Mr. Speaker: Members. Members. The member has a supplemental.

N. Macdonald: Let's look at this. The Premier has set up a government communications office of over 200 people. They have a massive budget. One would think that they could turn out a press release or set up a backstop — whatever is needed for this project's communications. But instead this board of B.C. Liberals decides to spend half a million dollars to hire a B.C. Liberal friend and donor to write press releases, and all of this is paid for by B.C. taxpayers. Is it any wonder that this is 100 percent over budget?

The question is: can the minister justify wasting taxpayers' money in this way?

Hon. S. Hagen: What a punctilious attitude. I can tell this House that when that party was in government in the dismal, dark decade of the '90s, that government did more business with the Pace Group than this government ever has.

Interjections.

Mr. Speaker: Members. Members. The member has a further supplemental.

N. Macdonald: The minister has been in charge of this file for almost a year. He still has no clue of what the real costs of this project will be. When asked yesterday about the cost, he could not say clearly. When he was asked about Ken Dobell and the VCCEP and whether they would be held accountable, he said that they would not be held accountable for what's gone on.

Taxpayers deserve clear answers about the cost. The minister does not know the final cost at this time. When is he going to tell this House and the public how

[ Page 6779 ]

much that project is actually going to cost? Give us a date.

[1400]

Interjections.

Mr. Speaker: Members. Members.

Hon. S. Hagen: This expanded convention centre will put us in the leading-edge place in the world. This will be a world-class convention centre. They've already booked 50 conventions, 27 of which would not be coming to Vancouver without the expansion.

So my question is: why is the NDP against all these jobs that are being created there? Why are they against the 7,000 construction jobs?

Interjections.

Mr. Speaker: Member for Nelson-Creston, please apologize.

C. Evans: Oh yeah, I apologize…

Interjections.

C. Evans: …standing up, sir.

Mr. Speaker: Minister, continue.

Hon. S. Hagen: Well, the message is important enough to repeat. Why is the NDP against the 7,000 construction jobs that are on that site today from seven different provinces? Why is the NDP against the 6,000 jobs that will be created to run the expanded Trade and Convention Centre? Why are they against new business coming to this province? Why are they so negative, destructive and pessimistic?

R. Fleming: I wish the minister was a little more concerned about the world-class cost overruns occurring in British Columbia today. The minister had overnight to pin down a final cost. He hasn't done that. Perhaps he's done better at getting answers about the Auditor General's review.

Yesterday the minister was completely unaware that an audit of the project's governance structure and financial management was well underway. Ken Dobell is paying the Auditor General $60,000 for this review.

If the minister isn't able to explain why the project is $400 million over budget or if we've hit bottom yet, can he tell this House why he's paying $60,000 for an audit that he's not even going to use to guide his decisions?

Hon. S. Hagen: As everyone in this House knows, the Auditor General is performing audits on that particular project every three months. The audit that the member is referring to is an audit that was requested by the board of VCCEP to do a more in-depth audit. We are waiting for that audit.

The Auditor General, as you probably know, is independent of government. I don't tell him when to bring his report out. When his report comes out, we will examine his report, and we will deal with it.

Mr. Speaker: Member has a supplemental.

R. Fleming: Yes, I do. The contract for the audit is in this minister's portfolio. It's available on the website. He'd know, if he has read it, that the draft deliverable for the report is March 30. Yet the minister has no idea there are recommendations pending on the governance structure of this corporation or on the cost overruns of the project.

Mr. Ken Dobell, the Premier's special adviser, has presided over $400 million of overrun spending, and climbing. The minister has been in charge of this file since mid-2006. It's now April 2007, and he keeps saying, "I don't know," when he's asked about the project's runaway costs or why its board changes. Perhaps the real answer is: "Ken told me to."

If Mr. Dobell has neglected to inform the minister about the existence….

Interjections.

Mr. Speaker: Members.

R. Fleming: I'll come to my point. If Mr. Dobell has neglected to inform the minister about the existence of the pending audit, how can he have confidence in him? The minister has admitted he hasn't been fully briefed about the context of these changes. Can he assure this House and taxpayers that the board changes will be put on hold until the minister obtains the final report and has the benefit of reviewing it himself?

[1405]

Hon. S. Hagen: Let me say this slowly so that you'll understand it. The report from the Auditor General has not yet been received.

H. Bains: Listening to this minister, it's clear that he doesn't know his file. The friends of the Premier are making all the decisions, and no one is being held accountable for this.

In the 2004 service plan, Ken Dobell sets the budget at $535 million — $40 million over the original budget — and states: "I am accountable for delivering on the service plan." In the 2005 service plan, Mr. Dobell raised the budget to $565 million and again said: "I am accountable."

Mr. Speaker, you know what? He said exactly the same thing in 2006, and the budget ballooned to $800 million-plus. If Ken Dobell is so accountable for the skyrocketing overruns, why didn't the minister fire him?

Hon. S. Hagen: Mr. Speaker, we are in favour of the expanded Trade and Convention Centre. That side is not. We are in favour of the 50 new conventions coming to the province. That side is not.

We are in favour of the $850 million worth of new economic activity generated by that. That side is not.

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We are in favour of the 7,000 construction jobs on that site. Obviously, that side is not.

Mr. Speaker: The member has a supplemental.

H. Bains: We are not in favour of the massive cost overrun created by their friends. We are in favour of responsibility and accountability, and they are not.

The minister can't tell us how much the convention centre expansion will cost. All we know is that it's in the range of $800 million. That's double the original price, and the minister is keeping the person in charge of the boondoggle on the board.

The public wants accountability. By the Premier's own standards, Mr. Dobell should be fired. The minister chose to stand on the side of the Premier's friends instead of the B.C. taxpayers.

Why didn't he do the right thing on behalf of British Columbians and fire the four board members that he kept, including Mr. Dobell?

Interjections.

Mr. Speaker: Members.

Hon. S. Hagen: You know, 22 years ago the leader of the NDP said, "I'm against Expo 86" — 22 years ago.

Interjections.

Mr. Speaker: Members. Members. It's a great example for the Speaker from Australia.

Hon. S. Hagen: Mr. Speaker, 22 years ago the leader of the NDP said: "What happens if we throw a party and nobody comes?" Well, 22 million people came to Expo.

Interjections.

Mr. Speaker: It's going to be a short question period.

[1410]

Interjections.

Mr. Speaker: Members.

Hon. S. Hagen: Mr. Speaker, it's as simple as this. They're against the project; we're in favour of it.

J. Kwan: In 2004 the Trade and Convention Centre expansion project was budgeted at $535 million. Today, in 2007, it is in the range of $800 million. How is this for accountability for you, Mr. Speaker? The Trade and Convention Centre project is on fire with cost overruns, and the guy responsible for the cost overruns tries to get off the hook for his failures by offloading his responsibilities to a new governance structure.

Why is this minister acting as a puppet for the Premier by protecting Mr. Ken Dobell, the Premier's friend and insider?

Hon. S. Hagen: As I said previously, we're less than two years away from opening the doors of this brand-new world-class facility. It was a natural progression to merge the boards of PavCo. PavCo does the marketing for B.C. Place and for the existing convention centre, with the new expanded convention centre, to make sure that we're ready to compete with the world to get conventions and business here to B.C.

Mr. Speaker: The member has a supplemental.

J. Kwan: Yes, and with a world-class overrun. Let's be clear.

Interjections.

Mr. Speaker: Members.

J. Kwan: By the Premier's own standard….

Interjections.

Mr. Speaker: Members on both sides.

Continue.

J. Kwan: Let's be clear. By the Premier's own standard, Mr. Ken Dobell should have been fired, yet this minister refuses to do so. Is indulging in hypocrisy easier than standing up to the Premier's orders?

Hon. S. Hagen: NDP stands for negative, destructive and pessimistic. I am amazed that the NDP can't bring themselves to say: "We're in favour of this world-class project. We're in favour of bringing new business to British Columbia. We're in favour of new jobs in British Columbia. We're in favour of doubling tourism in British Columbia."

M. Karagianis: It's quite apparent here that Mr. Dobell is actually the Premier's secret minister on all of these boards and many others. He oversaw this conference project with its massive cost overruns and no end in sight, a range that is yet to be defined by this government. He merged boards at this point to cover up for his own mismanagement. He's also the Premier's special adviser and special chief insider.

My question: is compromising his own integrity easier than standing up to the Premier and firing his friend off of these boards?

Hon. S. Hagen: As I've said, this is a natural progression to merge the boards of PavCo and the Trade and Convention Centre. We did that because PavCo brings with them the marketing expertise. We need to market this new facility to make sure we attract even more than the conventions that are already booked.

[1415]

I can't imagine why the other side is against bringing all this new economic activity to the province. Why are you against the jobs? Why are you against the $850 million in economic activity?

[ Page 6781 ]

Mr. Speaker: The member has a supplemental.

M. Karagianis: Yesterday we heard that the reason the boards were merged was because they needed construction advice. Now we hear that they in fact need marketing advice. In fact, the merge of the boards was done before we hear the Auditor's report. The minister confessed yesterday that he didn't even know the report was coming.

Again, this is clearly around the Premier's minister on the inside, Mr. Dobell. Will the minister stand up and say that Mr. Dobell will take the fall for the mismanagement and overruns in this project, and fire him today?

Hon. S. Hagen: There we have another grassy-knoll conspiracy theory from the NDP with absolutely no basis and no foundation. We merged the boards to make the boards better. Yes, we brought construction expertise on. We brought marketing expertise on, and that's to market the new trade and convention centre in the best possible way for the benefit of the people of British Columbia.

Interjections.

Mr. Speaker: Members.

COLUMBIA NATIONAL INVESTMENTS

DEVELOPMENT PLANS ON SUNSHINE COAST

N. Simons: And now for something completely different. I have a question. Ten months ago Columbia National Investments, a large development company with ties to the Liberals, bought over 3,000 acres of land on the Sunshine Coast. Three weeks ago this government passed legislation — controversial legislation, Bill 11 — amending the Local Government Act, which gives cabinet the power to create regions and resort communities out of nowhere.

Last week Columbia National announced their plans to plunk an instant community right in the constituency of Powell River–Sunshine Coast. Then yesterday the minister met with regional district representatives, who are clearly, obviously and well-deserved to be concerned.

What assurances can the Minister of Agriculture and Lands give us and give local communities that the local interests won't be subjugated to the interests of Columbia National?

Hon. I. Chong: First of all, let me say how very proud we are on this side of the House to pass legislation that would allow us to double tourism by the year 2015 by having resorts all around the province.

It's quite clear from the rhetoric I heard from members opposite during the debate that they don't want to see tourism potential around the province. They don't want to see resorts being built. They don't want investments. They don't want jobs. The difference is: we do.

Mr. Speaker: The member has a supplemental.

N. Simons: Is it a supplemental? I can't really remember it. That had nothing to do with the first question I asked. I'll try again.

Mr. Speaker, this has nothing to do with doubling tourism. We're all interested in bringing people to British Columbia. We're all interested in that. I mean, we're not going to change the dates at which point we're going to double the tourism — and we are interested in increasing tourism — but the question is about regional government authority.

Interjections.

Mr. Speaker: Members.

N. Simons: I didn't hear the minister address that. How is the minister going to guarantee the community of Sunshine Coast that its local government — the interests of the local government, the duly elected representatives and their interests — won't be put on second fiddle? Excuse me, to all of the second fiddlers. As a musician I point that out.

Instead of perhaps going back 25 years or talking about issues I'm not raising, will the government give some assurances, some guarantee that it will not use legislation to override the interests of the local government?

[1420]

Interjections.

Mr. Speaker: Members.

Hon. I. Chong: Local governments have received more dollars for infrastructure, more dollars for community and more dollars for regional districts. That's how we're supporting our local governments.

INTERIOR HEALTH AUTHORITY

LAYOFF NOTICES TO NURSES

K. Conroy: Last week a report was released that pointed to a looming shortfall in the number of health professionals in our province, including the nursing profession. So imagine my surprise when also last week the Interior Health Authority announced that due to inadequate funding, they were going to have to lay off 11 nurses from the Kootenay-Boundary Regional Hospital.

Can the Minister of Health explain why he is forcing health authorities to lay off nurses at the very time when they need to retain them the most?

Hon. G. Abbott: The member is absolutely incorrect. No nurses will be laid off. That is entirely clear. The Interior Health Authority is doing a reorganization, pursuant to the recommendations that were contained in the Albo report. The nurses will be deployed in different roles, but there are no layoffs.

The member shouldn't be surprised. She was part of a government that in the 1990s….

Interjections.

Hon. G. Abbott: Oh, I'm sorry. You're right. She might have only been sympathetic to that government

[ Page 6782 ]

of the 1990s that saw the number of nursing graduates in this province reduced from over 900 in 1993 to just over 500 five years later.

Interjections.

Mr. Speaker: Members.

Member has a supplemental.

K. Conroy: Well, I don't think those nurses would find much humour in the minister's response. In fact, let's quote from the memo that was sent to them. The 11 RNs were given their displacement notice on April 1. If that's not a layoff, I don't know what it is. These are 11 nurses who've had ten to 28 years' experience. We're talking skilled nurses working in the OR, working all over the hospital.

They're skilled, valuable nurses. They were laid off. Are they going to be given other jobs? Potentially. Casual jobs they've been offered. Have they been given any kinds of security? No. Are people going to be displaced? Yes.

Nurses are going to be displaced when we can least afford it. This is a reality in this hospital, because it's millions of dollars in deficit. They need to cut, and where are they cutting? They're cutting nurses.

When is this minister going to intervene and stop this terrible situation of laying off nurses?

Hon. G. Abbott: I know sometimes the facts can get in the way of a really good question. I'll try not to let them get in the way of a really good answer, because I have the facts here.

Of the affected staff, four nurses are full-time, and seven are part-time. Every one of these nurses will be offered a position with an equivalent number of hours to what they had in their current job. Interior Health advises that no nurse will be forced into a casual position as a result of this change.

Again, to the point about health human resources. Imagine the hypocrisy of this group across the House that talks about a nursing shortage, when we saw over the course of that dark and dismal decade, the 1990s, a 32-percent reduction in the number of nurses that were being educated in this province.

[1425]

LOG EXPORT APPROVALS FOR

WESTERN FOREST PRODUCTS

B. Simpson: Over the last little while we've been canvassing the issue of the critical log shortage on the coast and the fact that many jobs are being lost or threatened with being lost as a result of that log shortage. We've shown that the minister continues to approve log exports despite the fact that we have that log shortage. However, there's another reason that we have that log shortage, and that is the monopoly that this minister has allowed Western Forest Products to have, particularly over Vancouver Island.

My question to the minister is this. Why did the minister not exercise his legislative authority and prevent Western Forest Products from obtaining that monopoly?

Hon. R. Coleman: First of all, let's be clear. There have been 700,000 cubic metres less in log exports from British Columbia in the first quarter of 2007 than there were in 2006. The other side of this thing is the fact that the members opposite always seem to think that they should decide how a company should be run. So why don't we go back in a little bit of history and remember the half a billion dollars you blew down the tube on Skeena Cellulose, with no results?

The fact of the matter is that you've got to let the forest industry compete. You've got to let it build a future. You're going to let it build a future, because you know what? You never gave it an opportunity to, and we're going to.

[End of question period.]

Petitions

C. Wyse: I have some petitions to present. First petition: 188 signatures seeking a request to reconsider the decision to close the residential care facility of Deni House in Williams Lake.

An additional petition: 37 signatures requesting the restoration of adequate funding for child care resource and referral centres.

G. Coons: I have a petition from 77 residents on the north coast, in addition to the over 500 already, who request raising the minimum wage to $10 an hour and abolishing the $6 training wage.

N. Simons: I have a petition signed by 1,620 people in the Powell River region asking that the government provide long-term care facilities so that seniors can remain in Powell River without having to go far away from family and friends.

Orders of the Day

Hon. M. de Jong: I call Committee of Supply. For the information of members, in this chamber we will be discussing the estimates of the Ministry of Forests, and in Committee A the estimates of the Ministry of Education will continue.

[1430]

Committee of Supply

ESTIMATES: MINISTRY OF FORESTS

AND RANGE AND MINISTER

RESPONSIBLE FOR HOUSING

(continued)

The House in Committee of Supply (Section B); S. Hammell in the chair.

The committee met at 2:31 p.m.

On Vote 33: ministry operations, $489,876,000 (continued).

[ Page 6783 ]

B. Simpson: For the minister and his staff, what I will likely spend the afternoon on is the revitalization strategy and various aspects of it and how it's working out. Because I note that one of the minister's staff members here is the financial whiz, I'll do some stuff around some of the finances for that while she is here.

But let me start. I need to clarify something with respect to an announcement that was made by the minister with respect to the Langley multicentre and $15 million that was put to that. Is that $15 million coming from the Ministry of Forests and Range budget?

Hon. R. Coleman: No, it is not.

B. Simpson: The rationale given around that was that it was in order to showcase beetle wood and so on. Where is a program like that, and how do other communities apply for it?

Hon. R. Coleman: The multiplex in Langley was actually a project brought forward by that community, like any other project, to government. When it was brought to me at the time as a local MLA, I basically said no. My comment back to them was: "I'm the Minister of Forests. We don't have a major wood project in British Columbia, so if you want anybody to advocate within grant programs or stuff within government for a project like this, I would like to see it built of wood."

It's no grant from this particular ministry. It comes through Economic Development, and if you have any questions with regards to that particular side of it, I would suggest you save those for the Minister of Economic Development.

B. Simpson: Let's just move, then, into the costs of the Revitalization Act, if I could. It's my understanding that we should now be finished with all of the clawbacks for all of the non-TFL areas, according to the act. That should have happened. According to the act, it's three years after March 31, 2003, which would have made it March 31 of this year.

With that, the first question is: was all of that clawback compensation completed?

Hon. R. Coleman: The coast is completed, and there are a few outstanding claims with some companies in the interior.

[1435]

B. Simpson: I need clarification, because the Forestry Revitalization Act stipulates that orders under that section, with the exception of TFLs…. TFLs were given five years, but orders under all other licences were supposed to be completed by March 31, 2006. So under what legal authority is the minister acting, then, if it's not completed?

Hon. R. Coleman: All the legal taking is complete. So all the legal taking of the takeback is complete. There is still some work being done in operating areas with regards to that taking which is allowed to be done, but the legal taking is complete.

B. Simpson: I committed to go to the finances, so let's go to the finances. How much have we paid out for that clawback to date?

Hon. R. Coleman: In March 2003 the Forestry Revitalization Act was passed to revitalize and diversify the forest sector by reallocating 20 percent, as the member knows, of the harvesting rates. We continue to work with the licensees to identify specific areas to be returned to the Crown. We've done the takeback. That's complete, but we do have some operating areas we're working on.

On the financial side, there was $250 million set aside to compensate licensees for returning their logging rights to the Crown. To date, $203 million has been paid to tenure holders, representing about 85 percent of the takeback volume.

Negotiations with 11 remaining tenure holders, representing about 15 percent of the takeback volume and associated ongoing infrastructure, are pending. That is allowed to continue to go on because it's a financial negotiation. The takeback is complete, but the financial negotiation can go on for a while. We've actually only been recently engaged by some people wanting to talk about it with regards to their financial compensation.

B. Simpson: What is the estimated total that the clawback will then cost the taxpayers of British Columbia?

Hon. R. Coleman: Our estimate is that this won't go over $250 million, which was the original amount.

B. Simpson: I believe the original amount was actually $200 million, according to the Forest Act, not $250 million. So that's an increase of $50 million.

I'm not sure where the authority comes for that, because the act actually stipulates to pay not more than $200 million. Where is the authority to the minister to pay the additional $50 million, if that's what it turns out to be?

[1440]

Hon. R. Coleman: The member is correct. The original amount was $200 million. Additional authority for the $50 million was sought and requested and then given to us by Treasury Board.

B. Simpson: I'm confused, because the act stipulates that in the 2002-2003 fiscal year the minister is authorized to pay not more than $200 million out of the consolidated revenue fund. Why stipulate an amount in legislation when you've now gone to Treasury Board and just got whatever you need, which I assume could be over another $50 million? It could be $60 million or whatever, depending on how it turns out. Why two different ways of accessing the funds?

My understanding is that the original $200 million was put in there to give some certainty to what the process was going to be, to let taxpayers know how much this was going to cost. Quite frankly, I wasn't aware there were additional funds here. I'm sure most

[ Page 6784 ]

British Columbians wouldn't be either. Why the difference?

Hon. R. Coleman: For the member, just so I don't get it wrong, what I will do is…. We believe that the additional $50 million was provided for in year 2, which would have been somewhere around 2004-2005. I don't have in front of me whether that was done by supplementary estimate or access to contingencies or presented to Treasury Board or whether there had to be any amendment to legislation, but I'll get that information for the member.

B. Simpson: With that in mind, where can I go on the ministry's website to get an actual list of which companies have been compensated, how much, and how much they had to give up for that compensation?

Hon. R. Coleman: It's not posted on the website; that's why you can't find it on the website. But each one of these would have had a public announcement around it, so we'll provide the member with a list of the companies.

B. Simpson: I appreciate the offer, and I look forward to it. The real issue, though, is that it's very difficult for the public to go through all of that. I think one place under the forest revitalization webpage to roll this up would be helpful.

The $250 million estimate — what will that come out to on a per-cubic-metre basis?

[1445]

Hon. R. Coleman: It's about $26 to $30 a cubic metre, which includes the tenure area plus the improvements of roads, bridges, etc.

B. Simpson: Because we have a bill before us, I won't talk about the improvements piece. It's in the bill, so we'll canvass that aspect of it, but I know that it's a problem. I'll leave that.

Are there additional costs? Did the Ministry of Forests and Range have to put a team together to negotiate this? Were there additional legal costs? Were there things that were incurred to the taxpayer as a result of having to negotiate these clawback arrangements?

Hon. R. Coleman: We have a small team that works on giving general direction. We have small teams in each area of the province that help with identifying the areas, and two people on a part-time basis who do the negotiation. There was never anything added to the operating budget of the ministry for that. We manage that within the budget of the ministry.

B. Simpson: I just want to be clear on the clawback. We're going to come back to the implications of this shortly. When the Forestry Revitalization Act was passed, I recall debating an amendment to this to take the list of companies out of the act and put it into regulations so that you could change it whenever you wanted to. But it's an interesting exercise in history in going through the list and seeing the companies that no longer exist.

When a company ceased to exist as it was bought up — Weldwood, for example, being bought up by West Fraser or Canfor buying up Slocan, etc. — did the compensation, if it was not done with the previous company, carry over? Did the new company get compensation for the entire land base that they held at that time?

Hon. R. Coleman: The answer is yes. For instance, when Canfor took over Slocan, it was a share takeover. They would have assumed assets and liabilities of the company they were taking over, including if there was something booked of value with regard to takeback, or whatever the case may be.

Whether they accomplished the amount that might have been booked at value at the sale I don't know, but certainly we didn't extinguish the 20-percent takeback because it was part of what we were doing across the sector.

[1450]

B. Simpson: The reason I'm asking the question is because if the Forest Act had been left the way it was, there would have been an automatic 5-percent takeback in most of those circumstances.

As a consequence, we were paying more than we should have, then, because we would have gotten 5 percent back free, gratis. So that's a question as to how this was structured, given that it really accelerated corporate concentration.

One other question I have on this. The minister has indicated that the clawback has occurred. The compensation is still being worked out. In the cases where the clawback has occurred, are there licensees still operating in operating areas that have not been clarified as to who's getting those operating areas, whether it's B.C. Timber Sales or woodlots or first nations? Has that all been clarified now?

Hon. G. Hogg: I seek leave to make an introduction.

Leave granted.

Introductions by Members

Hon. G. Hogg: We are joined in the gallery today by 24 excited students, who are interested and intrigued with government; a number of parents; and teachers Lorraine Whitmarsh and Tanya Freiter from the wonderful school in south Surrey that has gained great fame through basketball, education and community involvement. Would you please welcome these great students from White Rock Christian Academy.

Debate Continued

Hon. R. Coleman: Yeah, there are a few companies. Some of the licensees are actually operating in some of the operating areas as we've tried to identify the areas for the other uses of the wood.

[ Page 6785 ]

We have found, quite frankly, that as we've tried to negotiate this…. As you know, there's a changing landscape out there, particularly in the interior. We're trying to get our licensees…. We will push a licensee to an area where we think it's operationally more important at this point in time, while we're trying to negotiate, and see if there's another area we can negotiate on after because of the beetle.

We don't have that level of operational detail here today with regards to that, but it does happen.

B. Simpson: Just so I'm clear, a company could effectively have its clawback determined and be compensated, but it would not have an impact directly on their operations. They're still able to operate and still able to have the same cut levels that they had prior to being paid.

[1455]

Hon. R. Coleman: In 2003 the cut level dropped by 20 percent. The AAC corporately was reduced by 20 percent. Even if they haven't identified the area, they're still down by the 20 percent of their AAC, and that hasn't changed.

B. Simpson: In the case of licensees that have operations throughout a broad area — for example, Canfor at one point had coastal operations and interior operations — could they shift their clawback around? Could they make the determination of where they wanted their clawback taken from?

Hon. R. Coleman: The companies didn't make the determination; we made the determination. It was based on trying to establish enough areas and variety to deal with the market pricing system. There were instances where, in the best interests of certain things like first nations, it was allowed that from one area to another we would allow for some of that, but it was on a very minimal level. It was really more geared to being able to have something for the first nations in those particular areas as much as anything.

B. Simpson: I hear it's B.C. Timber Sales that gets first kick at the can in most cases and causes quite significant grief for people who are looking for the woodlots that haven't appeared yet or the community forests that haven't appeared yet or areas where first nations haven't gotten it yet.

Between the licensees and B.C. Timber Sales, everybody is not getting any kind of opportunity to get a good profile out on the land base. So I dispute the minister's comment in that case.

I'll again be curious when we look at Bill 18, because there's an explicit right being given to the district manager to address this issue of licensees operating in areas that are not financially beneficial to the Crown.

Let's go on, then, to other costs associated with revitalization. There was also the forestry revitalization trust. In the original act, $75 million was put into the forestry revitalization trust. What was the total balance that the trust ultimately got?

Hon. R. Coleman: We have 127 FROs with first nations across the province out of 180-some that are possible. We've actually done a pretty good job of finding fibre for first nations. Basically, the legislation, which we'll debate…. The comment the member made about not being financially beneficial is really to push people away from any green wood, to give the regional manager the ability to push them towards the pine wood and leave the green wood for later.

[1500]

The B.C. Forestry Revitalization Trust was initially set up with $75 million and subsequently increased to $133 million — an extra $50 million from government and $8 million from the investment income of the first $75 million, I guess it was. It's governed by a trustee who's advised by a board drawn from major licensees, contractors, organized labour and government. To date, a total of $85.6 million has been paid to 760 impacted workers and 198 contractors.

B. Simpson: Sorry, I was writing. That last one: how much paid out to how many workers, if you would please, Minister?

Hon. R. Coleman: To date, a total of $85.6 million has been paid out. That went to 760 impacted workers and 198 contractors.

B. Simpson: When does the minister believe that this trust will wrap up, and how many impacted workers is the estimated total?

Hon. R. Coleman: It's estimated that the total amount of the budget that will be used for the total impact of payments to workers is about $46 million, and about $72 million to contractors, for a total of about $118 million.

B. Simpson: Thank you for that breakdown again. Any estimate on the number of workers that that will be paid out to and the final numbers on workers or contractors impacted?

Hon. R. Coleman: I do have an estimated number of employees at 940. I don't have anything above the 198 estimated contractors. That's what I have in front of me.

B. Simpson: Has the ministry engaged with any other ministries to track these workers post-payout? Where do they go? What happens to the contractors? What happened to the workers?

Hon. R. Coleman: No, we don't have a tracking of that. We do know some of them are probably still back working in the industry, and we don't know what they decided to do. Some may have wrapped up their businesses and retired. Other people may have taken the payout because they were close to retirement, and some may be back working. We do not have a tracking of that.

[1505]

[ Page 6786 ]

B. Simpson: When does the minister expect the revitalization trust work to be wrapped up?

Hon. R. Coleman: At this stage we don't have a definitive date.

B. Simpson: One of the contentions around the revitalization trust — and we've debated it in this House — is that maybe the wrong group was targeted, that maybe there should have been a target there for the sawmill workers.

That's why I asked the question about where these workers went. If a number of these workers remained in the logging industry, didn't we pay them out for a job that they didn't lose?

Hon. R. Coleman: They were losing their job, or they were losing their contract, and that's why they were paid out. There was nothing that said: "Now you can't go back to work somewhere else." It's like anybody else that actually gets severed from a particular job. If they go seek out another form of employment or employment within the industry and are lucky enough to accomplish that, I guess that's for them. These people were going to be losing their jobs as a result of what we were doing, and the compensation payments were made to them.

B. Simpson: I guess the contention, though, that was never understood with the Forestry Revitalization Trust was that the cut wasn't disappearing. It was still supposed to be there, but people knew the rationalization that would occur would probably result in mills being rationalized, and that's where the job loss would come. Again, that's why we've raised a number of times that the real people who got hurt in this were the people working in the mills who lost their jobs, yet there was no revitalization trust for them.

I want to clarify one thing back to the land base, and my apologies for skipping back on that. Are there cases where a company has been compensated and then got an annual allowable cut uplift for whatever reason?

Hon. R. Coleman: It is theoretically possible, but there's none that we know of.

B. Simpson: I believe TFL 16, if I'm not mistaken…. There's a TFL that was under DFAM that got a substantial raise in their annual allowable cut. I think it's in the order of magnitude of 60-odd percent, if I'm not mistaken. That was one that was owned by Canfor. My understanding is that they were compensated for a clawback on that. I would suggest that the minister may want to look at that.

What about beetle uplifts, where companies got an uplift as a result of the beetle after a clawback had been compensated?

Hon. R. Coleman: It could happen in the case of a TFL with regards to pine beetle if the chief forester made, obviously, an increase in the annual allowable cut, particularly to deal with something like pine beetle. It would be a temporary lift because the lift obviously goes up, and the chief forester makes that determination.

B. Simpson: The minister talked about AACs coming up and down. On the coast haven't we reduced some annual allowable cuts on tree farm licences subsequent to the clawback and payout?

[1510]

Hon. R. Coleman: While I'm waiting for my staff member to get here, there may have been reductions in the AAC on the coast for a number of reasons. One of them could have been as simple as a protected area was developed or another park or, in some cases, where the EBM is on the central and midcoast areas with regards to land use planning and some of the stuff that comes out of land use planning.

All of those things — as the member knows — can have a significant impact on what the ability actually is of the working area of the forest to really be able to function. It is one of the pressures that forestry is finding, particularly in areas of B.C. like the Sea to Sky corridor up through Squamish, where there's more and more population, and they want to see less and less logging and forestry.

Same thing with the areas like the Sunshine Coast, where it becomes more and more difficult — even the Fraser Valley, the upper end, into the area from Hope up through Yale. Those are all areas that I recognize are administered under a whole bunch of other pressures with regards to the ability to have annual allowable cuts.

Sometimes those annual allowable cuts may exist, and the reality is that because of spotted owl or other environmental issues or protected areas they can't be achieved. The chief forester has to take that into account.

If the member wants to just repeat the portion of his question about the specific TFL number, we may have the information available now.

B. Simpson: I don't have the luxury of having staff whip stuff into me, unfortunately. My recollection is that it is in the Clearwater area. It was formally a Slocan TFL, taken over by Canfor.

It should be easy to find, because it was a DFAM. It was one of the few defined forest area management projects where a rationale was made for a substantive increase in the annual allowable cut. As far as I understand, it was post-clawback-in-compensation.

While staff have a discussion, the point that the minister is making is that we've always adjusted annual allowable cuts up and down. Chief foresters made determinations. My point is that in locations, particularly on the coast, we have reduced annual allowable cuts without compensation.

We've got a situation in the interior where we've done a clawback, and in a number of cases we then went and gave an increase in annual allowable cut while we paid for the clawback in annual allowable cut. On the coast we've done a clawback, paid people

[ Page 6787 ]

for the clawback and then reduced their AAC without compensation.

My question to the minister is this: how much would we have gotten back if we had just not done the 20-percent clawback, we had allowed the consolidation to occur, and we had accrued the land base back through the 5-percent takeback? Based on the consolidation that's occurred, how much would we have got back?

[1515]

Hon. R. Coleman: Joining me now is Henry Benskin, RPF, deputy chief forester. Henry has some understanding of these TFLs — more understanding than any of us ever will, that's for sure — and their cut. TFL 37 on the coast did go down slightly. There was one in the interior that may have gone up slightly. That's the recollection, rather than getting back to specifics when we could get that from a computer at the office.

At the same time, we're not in a position to speculate on the 5-percent question the member is asking. We are not in a position to give him an answer today on that or speculate in any way whatsoever.

B. Simpson: I guess one could sit and do the calculation to find out what we would have gotten back. The government, at the time that they did all of this, knew that they were driving consolidation. They knew that it was going to happen. It was an explicit intent in the Forest Act changes over tenure and cut control and partitioning of tenure and ministerial oversight of tenure.

It strikes me that that ought to have been part of the deliberations so that we didn't have to pay out a quarter of a million dollars for clawback. Again, we're looking at $133 million for the workers that have lost their jobs as a result of that program. That's why I ask the question: could we have done this in a different way that didn't cost taxpayers as much?

Let me ask one more question on the finances on this before we get into the revitalization act itself., I believe the minister mentioned the $166 million for first nations forest range agreements. The minister stated something about the fact that we must be okay, because FROs and FRAs would have given volume. Well, that volume isn't coming out. That volume still has to be determined. They have to come and ask. The Ministry of Forests and the district have to go and actually find the volume. That's why I'm pointing out the problem with B.C. Timber Sales and the licences still operating. That volume is sometimes very difficult, if not impossible, to find.

The fact that they're given the right to come and ask for volume doesn't mean we've found that volume for them. But in giving those FRAs and FROs, which we'll explore in more detail later on, who bore the cost of that $166-odd million? Where did that money come from?

[1520]

Hon. R. Coleman: First of all, we don't sign an FRO unless we feel that the wood is in the area that we can identify. We do that with the first nations in consultation as we come into the agreement. As we do that, after we sign the FRO, we find the operating area, because sometimes they want an area with other traditional values outside of just forestry.

So we work through that with each first nation as we come through it, but we are comfortable with the fact that we have the wood available. We have to identify it and obviously work with the other licensees in the area and the first nations, to identify the better operating areas for them.

The annual budget for 2007-2008, which is a revenue-sharing of the FROs, is $49 million. I used the round figure of $50 million earlier. That's in the operating budget of the ministry, and that's the same as it was in '06-07.

In '05-06 it was $39 million, and in '04-05 it was $29 million. It depends on how many more FROs we got. They're five-year incremental agreements. They get paid a quarterly payment for five years as part of the capacity-building, so that's why it's cash flow over a number of fiscal years.

B. Simpson: I want to be clear that this is out of the Ministry of Forests and Range budget. You have the line allocation for it, and the ministry is bearing the cost and their cost of operation.

Hon. R. Coleman: Yeah, it's in the operating budget of the ministry. It's a line item in the ministry for this particular purpose, and we carry it within our budget.

B. Simpson: Given those calculations then, $250 million or thereabouts for the clawback and $133 million — although if you take $8 million off of that, let's call it $125 million — and $166 million for first nations. Half a billion dollars for the revitalization strategy.

Are there other costs associated with the revitalization strategy that the taxpayers had to bear?

Hon. R. Coleman: Those are the three significant cost items. There might be some operational costs here or there, but nothing that would be identified.

I do want to be clear about one thing. Government was moving towards capacity-building for first nations and looking at opportunities, like forest and range opportunities, before the Forestry Revitalization Act.

I don't think the member intends for the discussion to be that the Forestry Revitalization Act shouldn't have been there for first nations or that first nations shouldn't be allowed to participate in the forest sector. Whatever cost that is with building capacity, new relationship, giving first nations opportunities, it needed to be done whether this Forestry Revitalization Act had ever been done or not. The fact of the matter is that the forest and range opportunities are something to help build capacity and build opportunity for first nations.

The member is right about a couple of things. One is that I personally as a minister have said to first nations forest council and the rest of them that I'd like to see more of the wood move. Some of that may have to do with how we manage to price it in the future to make it more economically viable for first nations and what we can do with that.

[ Page 6788 ]

That work is ongoing, because I certainly would like to see growth in the participation of the first nations that have FROs in the actual on-the-ground management of the forest and moving the fibre. I think it's important that we get to the next step and get further than we have to date.

B. Simpson: I wasn't calling into question the need to do capacity-building with first nations. It's an explicit statement in the Forestry Revitalization Act that this would be part of the Forestry Revitalization Act. I'm trying to determine the costs of the forestry revitalization strategy. This was an explicit statement of costs, and that's all I'm trying to do.

[1525]

With respect to FRAs and FROs and capacity-building, I'm not sure if the minister has read the Auditor General's report on treaties, which says they get in the way and that they're not very good for ongoing treaty negotiations. They actually may get in the way of treaty negotiations. We have circumstances where it has unfairly impacted first nations who either have treaty processes in the works or don't qualify for one. I want to put that on the record that there's a difference of opinion that the Auditor General has about how good these Forests and Range FROs are. I will explore in more detail the volume issue associated with that shortly.

The reason for trying to understand the cost is that this was a massive undertaking. I don't dispute the language of the day and the rhetoric since then — that this was a significant rewriting of the Forest Act, of the way that we do business on the land base, going from a prescriptive Forest Practices Code to the so-called results-based Forest and Range Practices Act. However, it was also a massive change movement and a massive change initiative.

At the same time that this act got put in place, the Ministry of Forests and Range also had a number of people taken out. I know from my experience that it's a recipe for disaster when you do those two initiatives at the same time — a massive change initiative and a massive downsizing of your capacity to engage in that change.

I want to read something from the heartlands economic strategy, the forestry revitalization plan. The previous minister, Minister de Jong at the time, in his introductory comments says:

"The manner in which our forest industry and our province developed often unintentionally limited opportunities for new participants in the sector, constraining entrepreneurism and discouraging innovation.

"The solution is clear. We must open up the forest sector to new opportunities, new participants and new ideas. We must update forestry regulations. We must undertake comprehensive change with a singular purpose: to revitalize British Columbia's forest sector.

"By doing so, we will reinvigorate the economic foundation of the province and thereby ultimately improve the quality of life for every British Columbian."

Did we achieve that goal?

The Chair: Member, just to remind you that you refer to the member through his constituency, rather than the name.

B. Simpson: My apologies.

Hon. R. Coleman: I think today, if you look at the periodicals and different reports — whether they come from the Canadian Council of Forest Ministers or different publications — that British Columbia is actually leading the way in forest policy in this country. I do believe that in the interior of B.C. we have today one of most competitive forest sectors in the world. They probably have the best operations and technologies of anybody they compete with.

As the member knows, that's not the case for the coast. The coast is facing a bunch of significant challenges, not the least of which are aging plants and access to fibre, like the member mentioned earlier. Some of the stresses on the land base and issues in and around that we're trying to address, as the member knows, in the near future.

Did it accomplish its goals? I think it's a work in progress. I think it did accomplish a lot of its goals, and it has more to accomplish. That's why we continue to work on it — for us to be able to make the changes, if necessary, as we go along and learn from doing this. I think you learn by doing; you don't learn by sitting back and doing nothing.

[1530]

B. Simpson: As someone who worked in the interior and knows the interior very well, I would challenge the minister's contention that it's competitive in the global marketplace. There are a lot of factors involved there.

Yes, they are very good sawmillers — no question. They have the latest and the greatest technology — no question. But the only year that they made significant money was the year that they got the most substantive beetle uplifts and had two-bit wood. The year after that, when the market in the U.S. was still hot, they started losing money. They started finding it very difficult to make money.

My question wasn't around whether or not we should have sat still or what we should have done. My question is: has the ministry or the minister done a substantive evaluation of the revitalization strategy — all of its components?

It had very explicit, stated, intended outcomes. Has that been evaluated against the fact that we are now four years into it and half a billion dollars of taxpayers' money have gone into it? Is the ministry or the minister's office doing a point-for-point analysis of whether or not we've made the changes that we were hoping to make?

[H. Bloy in the chair.]

Hon. R. Coleman: We benchmark annually. We feel there are areas of the forest sector that we have no control over as a jurisdiction, which are the U.S. dollar and markets — that sort of thing — because they're international.

The B.C. interior does better than any other area of Canada. It beats out a number of areas around the

[ Page 6789 ]

world. The B.C. coast and interior are also ahead of a number of other jurisdictions. We have done things like global log cost variables — delivered log costs, global delivered log costs.

The ministry's responsibility is to have an environment that people can compete within. I think the significant change was trying to get to where we'd have a market pricing system so that people could establish the pricing of logs versus the old stumpage system that, as the member knows, was quite complicated and oftentimes under attack in some way or another.

We benchmark annually. From the Forests Ministry's perspective, which is the job that we're talking about here, and from the budget that is deployed in this ministry because we're in the estimates debate, we're having successes in our benchmarks and in our annual analysis, and we'll continue. We monitor that annually, and we'll continue to do so and adapt in the future.

[1535]

The one thing you can't do — I know the member knows this — in this industry is stay static. If you stay static in this industry, you don't react quickly enough to markets and opportunities. We have to, as a ministry, be pretty progressive, which I think my staff are. My senior management, and actually my managers across B.C., are probably some of the best in the world. They benchmark. They watch it. They feed into the ministry and the minister, and we watch how our operations are.

B. Simpson: My question was more as a change initiative to the internal metrics, not the external metrics and not the benchmarking against elsewhere. There were explicit, intended outcomes in the Forestry Revitalization Act.

As an example, in the heartlands economic strategy it talks about 27 mills having closed permanently and 13,000 forest workers having lost their jobs in B.C. since 1997. How many mills have closed, and how many people have lost their jobs since 2001?

Hon. R. Coleman: I do know that during the last five years of the former government and the first five years of this government, there were more mill closures under the former government. I do know that. I'll try and get the member the list of those. I do know they were awful close, though, in numbers. I mean, let's be fair there.

The one thing that is an interesting fact and figure, which we do have for the member with regards to forest revitalization, is that employment in the forest sector in 2006 actually increased by 2.4 percent to 81,600 people. That's reversing the trend that had been experienced for years in the forest sector, particularly even in the previous three years. There had been a drop in numbers of people in the forest sector, and the trend reversed on the number of people employed in the forest sector.

B. Simpson: I think that's called mountain pine beetle salvage and private land logging, so I'm not quite sure how helpful that number is.

Again, what I'm hearing the minister say is that we haven't been tracking. Is that right? We haven't been tracking the number of mills closed and the number of jobs lost since the revitalization strategy was put in place.

[1540]

Hon. R. Coleman: We can probably get the member the list of mills that have closed in the last 15 years. We can probably produce that list. We can't do it right now, but we probably could. We do know that a number have been closed for various reasons. As the member well knows, sometimes mills close because they change what they're doing, because they're underfinanced or because of markets.

We also know that in 2006, West Fraser had started up its new $110 million supermill in Quesnel — during the fourth quarter of 2006. TallOil is investing $110 million to create 640 jobs from forest licences awarded to the company to manufacture industrial pellets for the European bioenergy market. Ainsworth Lumber is to invest by 2009 with regard to an oriented strand board plant. Western Forest Products announced it would invest $13 million in its Cowichan Bay sawmill and in November 2006 announced that it would be investing $2 million in Saltair near Ladysmith.

At the same time, in fairness, they closed the New Westminster mill to open Saltair, so one closed and one opened. There have been other investments made.

I don't know whether it's too early to just give the member all the numbers. I mean, we can do an assessment. We know how the industry is year to year, but I don't know that you can today make the decision that the Forestry Revitalization Act has been a total success or not a total success. I do think that it's changed the landscape and stabilized the environment.

People know there's a market pricing system, people know what the takeback did, and people know that first nations now have opportunities. It's set a pretty good direction that we will work with as we go forward.

B. Simpson: I will deal with the Ainsworth and TallOil claims later on, because those claims are questionable. Western Forest Products is again doing some of their adjusting. There were other mills that were closed, whether it was Cascadia or whoever. That's not the point I'm making. The point I'm making is: what is the government internally benchmarking as the success or failure of a half-billion dollar project and as substantive change?

Let's go into it a little bit deeper. There's an unstated intent of the forest revitalization strategy, the act, the changes and so on — to prevent a softwood lumber agreement. If we changed the tenures, if we made our public tenure holding more like private, if we did the market pricing system, if we freed up mills from appurtenancy requirements, if we took the ministerial oversight away from tenure changes and everything else, there was an unstated intent — although there's some explicit documents to that effect — that this was an attempt to avoid a softwood

[ Page 6790 ]

lumber agreement. Does the minister agree with that contention?

Hon. R. Coleman: Well, I guess the member is reading something between the lines that I'm not reading. The fact of the matter is that we did the Forest and Range Practices Act for domestic purposes, to change how we operate internally in British Columbia. There was no stated purpose that we would avoid a softwood lumber agreement.

I mean, how could you possibly even think that? How could you even say that in an environment where there's been 30 years of litigation with regard to this? Maybe one of the purposes was to reposition us better with regard to softwood, which I think was accomplished, but certainly there is no stated purpose at any time that the changes we're making were going to bring a removal of any softwood arrangement with the United States of America.

B. Simpson: Mr. Chair, let me challenge that. We had Mr. Aldonas up here looking at what we were doing here, with the express purpose of finding out if these Forest Act changes would allow us to avoid another softwood lumber agreement.

[1545]

My question to the minister is: were we not in negotiations with the United States, and were we not conferring with United States members of their trade group, the Council of Forest Industries and the B.C. Lumber Trade Council to attempt through the forest revitalization strategy to avoid a softwood lumber agreement?

Hon. R. Coleman: Well, we brought Mr. Aldonas up here. We explained to him what we're doing to show him so that when he was at any table in the United States with regards to discussions in and around softwood and duties…. At that time there were duties and there were arguments legally back and forth on softwood. But if the member thinks that Mr. Aldonas could possibly come up to Canada, see what we were doing — by the way, the right thing with regards to forest practices and the right thing with regards to moving to market pricing and the right thing for our domestic purposes to stabilize the future of our industry….

If he thinks that he could go back to the United States and deal with the softwood lumber lobby in the United States, which is a very strong political group in itself, in the southeastern part of the United States particularly — who, quite frankly, at any time will never, ever agree that British Columbia or Canada can have free access to their marketplace in forestry….

The reason for that is because there are inefficient operators, but there are also land barons down in the southeastern part of the United States who grow trees and want to keep the value of the tree up — to the detriment of their marketplace, quite frankly. But they actually do have the ability to push on any negotiation side where that situation can occur.

The reality for us was that we made these changes for domestic purposes, certainly with some optimism that it might mitigate a future negotiation that we may have with the United States. But I don't think that anytime anybody thought there wouldn't be any form of softwood lumber agreement having to be achieved if you're going to stabilize the market access to the U.S.

B. Simpson: So the minister is contending that the removal of appurtenance, the removal of tenure oversights, the attempt to claw back — and he states explicitly to get back to 50 percent free logs into the market — the removal of cut control, the market pricing system — all of that was not recommended to us as a way to avoid, not mitigate; a way to be excluded from a future softwood lumber agreement after the old agreement died in 2001. That between 2001 and 2003 there was not a back-and-forth with parties around how we avoid another softwood lumber agreement.

That the wrap-up of all of these — the breaking of the social contract, the freeing up of tenures, the market pricing system, the clawback — was not an attempt not to mitigate but to avoid a softwood lumber agreement….

Hon. R. Coleman: The changes we made referred to our own domestic purposes. Certainly, there were back-and-forth discussions. As I understand it now, that was five or six years ago. I wasn't in on those discussions — whether it would buy us any peace or buy us anything with the U.S.

[1550]

There certainly was, obviously, the U.S. Trade Representative back-and-forth, and discussions with the federal government would have taken place at that time. We would keep them apprised of whatever changes we would make in our forest sector. We were trying, obviously — I would surmise — to mitigate some of the concerns the U.S. had with regards to the punitive duties they were putting on our product after the expiry of the previous agreement.

I don't think that it would avoid a softwood lumber agreement, but it may get us to the table to get one that we thought might be fair or acceptable to our industry and to our country — as one of the players in the country perhaps.

Certainly, we made these decisions back in 2001, 2002, 2003, because we had reports from people like Peter Pearse and recommendations from people across the country and experts in forestry that said: "You need to change the dynamic of your forest sector going forward." So we made a lot of those changes because of that type of work that was done in and outside of government, as I would understand it. But we didn't make the decisions and make these changes solely for the purposes of something to do with the U.S. and softwood.

B. Simpson: I won't belabour that point, but let's take the minister's own language. It was an attempt to mitigate. Did it?

Hon. R. Coleman: I have learned one thing as a minister. It's a long road when it comes to softwood, but I believe that, yes, it did accomplish a number of things.

[ Page 6791 ]

First of all, we were continuing to win on certain areas with regards to litigation, which I think brought the U.S. to realize that a lot of the changes that we made were defensible. We have our market pricing system recognized in the softwood lumber agreement, which we would have never had before. It has brought us closer to being able to start some discussions with regards to logs for lumber, with regards to some of the issues on the coast, on private logs, as the member is aware.

More importantly, I think it's a body of work that leads us down the road to — whether it's four or seven years when this agreement expires…. It protects us against future countervaillance with regards to it, because I think that people are seeing the system working for a period of time and the changes in place, and it gives us a stronger case going forward. That's the advice I get from people that are way more trained in trade law than I am and ever will be, quite frankly.

I think that a lot of the things we did actually have had positive results with regards to that piece of the file.

B. Simpson: In what way was B.C. treated differently than the rest of Canada? If we had done all these changes, we had created the kind of pain that we've created in many coastal communities, the clawback and all of the change that occurred…. The minister said part of the intent was to mitigate a future softwood lumber agreement. What kind of a better deal did B.C. get than the rest of Canada?

[1555]

Hon. R. Coleman: First of all, as I said, the MPS system is recognized in the softwood lumber agreement. Now, that's very significant. Nobody else has an MPS system across this country that has a system recognized within softwood.

More importantly, it's going to help us deal. It will have a huge impact on our softwood exports in the future and our whole milling and everything in the interior as we see the decline in the value of the mountain pine beetle, simply because the market pricing system will reflect that. That allows for not having an argument over whether we set artificial stumpage or not, with regards to the declining value of that particular stuff.

The other issue in and around softwood was that the rest of this country, I think, wanted to go for a quota system that would see a lower tax but wouldn't allow for an identification of market share. It was to their benefit to do that, because they were actually seeing declining markets,

whereas our market share was going up in the U.S. So we protected our market share in the agreement — plus 10 percent, plus a 1-percent surge.

Those two things were probably different than anything else. But I have to remind the member that the deal is actually a U.S.-Canada softwood lumber deal. It's not a B.C.-U.S. softwood lumber deal. It is an agreement for a country. The federal government certainly knew at that time — and the previous one too — and will balance off based on whatever issues are in front of them with regards to these things too. That's why it is a very difficult, dynamic file — quite frankly.

B. Simpson: Did recognition of our market pricing system result in a lower border tax for British Columbia?

Hon. R. Coleman: The member knows directly that it did not — right? Fine, I'll accept the question in the spirit that it's given. However, the tax — whatever it is at the border at any given time — is based on what price people are being paid on a market pricing system for wood. So if the wood price goes down, the tax goes down.

It doesn't go down by a percentage. It stays at the same percentage of value, but if the value goes down, it's a percentage of a lower value. That's where the biggest advantage of an MPS system and a tax that's tied to it is — on the value side. When you see the price come down at the border, then it has an effect, because that's how we calculate what they pay us in stumpage.

I said that wrong. They pay us lower stumpage — right? — which brings the first-mill price down, which should give them an advantage on what hits the border. They're still tied to the U.S. composite price, but the market pricing system will bring down the price that they're paying for the raw fibre simply because if the price comes down, that's where the benefit comes in.

B. Simpson: Wow. Bottom line — basically, we didn't really get a mitigation on the deal. We got the same deal as everybody else. Yes, we got an adjustment on quota. But you know, one could argue that B.C. could have done that anyway.

The minister's comments with respect to "it's a Canada-U.S. deal" fly in the face of comments that the minister was making last year about being the big dog. "I'm driving the bus. B.C. is the biggest player in the industry." The whole works.

Because I challenged the minister in the House, the minister said that B.C. was driving the bus and making sure it was a deal that was good for B.C.

If we were driving the bus and the intent of the revitalization strategy was to get some mitigation on a future deal — if not to avoid the deal, as I contend that it is — then the answer to my question is: we didn't get much of a deal. We got the same as everybody else. We're getting a 15-percent border tax and, when we go into surge, 22.5 percent.

The minister has raised interesting comments. First, on the market pricing system: what is the U.S. scrutiny of our market pricing system?

[1600]

Hon. R. Coleman: Quite frankly, in forests in this country British Columbia is the big dog on the block. We ship more to the United States than most jurisdictions combined. The fact of the matter is that when we were doing the softwood negotiations, if our companies had not agreed to the framework agreement — and told me that they agreed to the framework agreement — we would never have said to the federal

[ Page 6792 ]

government that we were in favour of the framework agreement. We would never have gone there, because it was a negotiation.

They were engaged nationally, across the country, with other lumber trade councils like the Canadian lumber trade council, which was also out here at the time. They actually were very much a big part of the decision to go forward, and if they hadn't said so, we wouldn't have.

Just so the member knows, we have an obligation under

article 17 of the softwood lumber agreement, which means that we provide information to Canada, because again, I'm reminding the member that it's a Canadian-U.S. softwood lumber agreement. In that particular agreement between the two countries, we provide information with regards to changes that would be made, but MPS is grandfathered in the agreement. Our market pricing system was protected in the softwood lumber agreement, and it was done very much because that was a position we were not prepared to move off of.

[K. Whittred in the chair.]

On the clarification to the member — just on the other thing, the convoluted answer I gave earlier, which I will try and improve on — there are two systems that came out of softwood. A jurisdiction can go on either one of the two systems. They can choose to either go to a quota system, which was option B, or to a non-quota system, which was option A, based on market share. Most of the rest of the country, with the exception of Alberta, went with option B, and we went with option A, like Alberta did.

The companies discussed that decision with us as we came through. They agreed to the structure of those two opportunities. The reason those two were there was because, quite frankly, a couple of the jurisdictions in this country I don't think have a very big vision for the future of their forest sector.

They think a quota is just fine, because they'll just ship to the border, by quarter, a certain amount of volume. They actually are probably seeing that they've been overharvesting for too long, and their annual allowable cuts are going to come down. Their mills are not efficient enough to compete.

Under the quota system, you can take a smaller tax, but you get less volume. When you're dealing with an issue like we are with mountain pine beetle, we felt it was important to go the other way. That's why the two options were there.

And no, because it's a national tax, hon. Member, we didn't get any different percentage of tax at the border than anybody else. It's based on the U.S. composite price at the particular time. It could be anywhere from zero percent to 15 percent. If there is a surge under the one system…. Under both systems, actually, the tax goes up by 50 percent if there is a surge in either one of the two systems.

The market pricing system grandfathered. The important aspect of that was that we knew very clearly in our minds as we came through this negotiation that if we grandfathered MPS, which was the system that was acceptable in the agreement to price our wood, and if we saw a price come down, then the price would come down without argument with the United States. We would be able to point to our market pricing system and say: "These are the bids. This is why it's down by whatever — $1 or $2 or 50 cents — a cubic metre. Because the market pricing system has dictated that."

[1605]

That was a very important nuance, I think, particularly for the interior of B.C. But it's also a nuance in some other areas that will emerge over the next number of years as we see how forest health gets affected, maybe in the southern interior down through Merritt into the Okanagan — hopefully, not over to the Kootenays, but you never know. What we're going to have to look at, at some point in time, which is an area that we don't export to the United States…. We don't have any lumber manufacturing like the northwest. How we're going to look at that….

We felt very strongly — and so did the companies in this negotiation — that the MPS needed to be protected, and that's why it was.

B. Simpson: I'm not sure what the minister is referring to about forest health problems making their way into the Kootenays. They're already there. I just came from there. They're dealing with mountain pine beetle and various other pests. That's already happening.

Question to the minister: is the minister saying that if we get a significant downward trend in the market pricing system, we are absolved from any potential arbitration under countervail in the softwood lumber agreement?

Hon. R. Coleman: We think so. However, we never know what the other party in an agreement is going to do. We have certainly, by grandfathering it, had greater protection and recognition for our pricing system, and we're in a way better defensible position than we ever were in the past.

B. Simpson: Would that include adjustments to the actual formula? So leaving the formula as it is, as it was negotiated and as it was explained to the U.S., we start to get a bit of a downward trend. I hear the minister saying that hopefully — fingers crossed, legs crossed — they don't take us to arbitration on that. But what if we want to adjust the formula because the formula, we believe, needs to be adjusted? Is that subject to countervail?

Hon. R. Coleman: I caution the member saying that I say: "Cross my legs. Cross my fingers." I have no doubt that we've made the right deal here and that we have the right language in this agreement.

I do know the history of litigation, though, and I do know the history of agreements. At times there can be reasons for people to ask questions about it. Frankly, that's why the agreement is there. It's much better for us if at some point we go and have a discussion rather than somebody heading off to court and starting one more legal action again, as was happening in the past.

[1610]

[ Page 6793 ]

We think, quite frankly, that the language in the agreement gives us the ability to change the market pricing system to be more…. If we think it makes it more statistically accurate or gives it more predictive capability of the model, which the U.S. would welcome, we inform them if we do that.

Obviously, we haven't done it yet, but if over time we do come across a more statistically predictive capability, then we would inform them, and they can ask for an explanation. They can take us to consultation, but my advice is that the language in the act allows us to do that. It was put in there specifically for that.

B. Simpson: The language of the act is an interesting statement because, as the minister is well aware, a lot of people are saying the language of this act — the deal — is so loose and so nebulous in many areas that it's going to be very difficult to interpret, and we're going to be in all kinds of arbitration disputes with the U.S. So I'll look forward to seeing what happens as we try to adjust our market pricing system, and I hope that we're not in arbitration.

A couple of quick things before I get into some substantive issues with softwood lumber. The minister mentioned the lumber produced from private logs. Have we convened that table to have that discussion?

Hon. R. Coleman: We have spoken to the federal government about it. They have had conversations with the USTR. They are setting up the chairs. They actually have set up the chairs, and then they will sit down and work out a date when those meetings can start taking place.

B. Simpson: What's the time frame for that? Because as the minister is fully aware, we're going to have difficulties resolving the private log export issue unless we address the issue of tax on lumber from those private logs. Does the minister have a sense of the time frame for a resolution to that issue that was left hanging in the deal?

Hon. R. Coleman: I don't have a definitive time line. It's the federal government that's dealing with that, and they will. We do know that it's one of the priorities, given the communication that went on around softwood from the U.S. Trade Representative back to Canada.

I never thought at any time that what we have to do on the log export issue — as we move forward, which we're going to do shortly — would be driven by waiting for that to take place. Because it was something that we couldn't get done in the agreement. I felt that it would take some time to get the agreement working and settled down before they would actually engage on that particular subject, and then whether they truly want to engage will be an interesting subject in itself.

[1615]

We will deal with log exports. What we need to do with them in those decisions in the ensuing weeks from now…. We won't be tied to the time line with regards to this because I think it's a discussion that takes place between the two countries.

B. Simpson: There were a number of people at the time who were echoing what I hear in the minister's words. That is that once we got the deal, there was no opportunity for us to get resolution on the lumber from private logs. We'll see if that remains to hang out there, particularly since the whole deal has now been brought into question.

Another tidy-up question: does the minister know what happened to the billion dollars we left behind? Is that reported out to Canada?

Hon. R. Coleman: Let's be clear. I did not say and never have said that I thought we could never get the logs-for-lumber deal done. I thought it would take some time and some work. We had to have people recognize the United States, as we build a working relationship for the first time in a long time, and that maybe people could be trusted to accomplish things.

Canada received all the dollars back and then, under the agreement, dispersed money back to the United States. Approximately $500 million went to the coalition, which was part of the agreement and agreed to by the parties on both sides of the border. Some $450 million has basically been dispersed to foundations for joint Canada-U.S. wood promotion and some charitable purposes — things like Katrina and that sort of stuff. Then some money has been retained to set up the dispute resolution office for both countries.

B. Simpson: Is there a more detailed reporting of that given to Canada and through Canada to the provinces, particularly on the $450 million that came on the table late to leave for charitable purposes? What is the reporting mechanism for how the Americans ended up using that money?

Hon. R. Coleman: The way this worked is that the foundations have received the money. Canada has reported to us what those foundations were and how much. We can get the member a list of that — in the United States. As I understand it, the reason it took a little longer to disperse the money than some people thought it might is because the U.S. was actually doing a due diligence on, basically, the qualifications of the recipients and the background of the foundations that would be flowing it to recipients, so that it was going to the purposes it was intended to go to.

B. Simpson: I would appreciate it. We'll keep a list, like we normally do, of things that we will follow up on.

[1620]

The minister mentioned the language of the deal. Are there questions about the application of the deal that are causing a dispute between ourselves and Canada or between Canada and the United States?

[ Page 6794 ]

Hon. R. Coleman: The member may know that on Thursday of this week the federal Minister of Trade and the U.S. Trade Representative are meeting with regards to the calculation of the surge. There's been no mediation or dispute requested. It's just strictly a conversation as to how that was done — how Canada calculated that in, I think, the month of January, which is the first time we've had that sort of conversation take place.

I will obviously be kept apprised of what those discussions are by the minister as they come through, but we're not at the table dealing with it. It's federal government to federal government.

B. Simpson: That's what my information says — that we are now in the dispute around surge and that it may result in a countervail action against us, depending on what the discussions are. But what level of assistance is provided by the provincial government for mills, particularly independent smaller mills, etc., to make sense out of all of this? Does the province have anybody providing assistance to smaller operators to make sense out of what the implications of this deal are for their business?

Hon. R. Coleman: First of all, I want to correct the member on his language, because we don't go to countervail anymore. This agreement allows us…. If the U.S., after discussions, wanted to go to mediation, they could, but not to countervail. Countervail is when somebody just puts a countervail duty on a product at the border, and that's what we eliminated by doing softwood — not getting into that.

We brought the federal government out to explain it to our various companies in B.C. way back at the beginning. Our regional staff have contact numbers for any company that needs one-to-one visits with regards to any of the issues in and around softwood, and they can make those calls to our regional staff, or they can call my ADM, Associate Deputy Minister Bob Friesen, at any time. He has staff that are available to deal with it.

[1625]

We have regular contact, also, through any association meetings. We have staff at them. We've operated seminars and workshops for people, and we'll continue to do that. So if anybody has any issues, they can…. To be honest with you, in talking to folks at the different meetings I've been at recently, they're pretty complimentary about the access to staff and information. There is also a website, so they can go to that as well.

If somebody has a particular one-on-one difficulty that you come across, I would suggest that they contact the ADM's office, and he will ensure that they have someone who is a resource to help them with their questions.

B. Simpson: I guess the struggle I have is that a lot of the independents…. I'm happy to hear that there are resources there, but a lot of the associations are struggling to try and figure out how to make sense of this. Particularly, now we've added….

I guess there is an irony. The softwood lumber agreement was supposed to add certainty. And here you have, particularly, a smaller operator — I'll talk about reman in a second and some of the things they are having to live with — who doesn't know from one month to the next what his costs are going to be, because he has got to wait for the calculation to occur, and then he has to look back to the next month for his cost to be fully realized.

Now with a potential — even the nature of it being potential doesn't matter — dispute over the calculation of surge that may take 12 to 18 months to resolve…. All the while that individual is operating, not knowing what last month's charges are going to be and looking forward and not knowing that if there is a finding against Canada, he may end up having to pay retroactive taxes for anywhere between a 12- and 18-month period.

When you have those independents who have been hurt as a result of them having to give up tenure because of this deal, as a result of the botch that occurred on taxing the independents…. I'll get into that in a second.

We've got a letter from Revenue Canada that states explicitly that there was an oversight in the deal on how the tax was categorized for independent remanufacturers. We have not added certainty. We've added uncertainty into the marketplace in a way that these individuals are really struggling to stay afloat. That's why I raised the questions about how much help these folks are getting to understand that.

Also, is it possible that if we get into a situation where we are going to have this surge tax retroactively applied….? If we are going to have mills that are going to have to deal with the implications of that, do we have the capabilities of assisting those operators to float them, whether it's loan guarantees or whatever, to get over the hump?

[1630]

Hon. R. Coleman: I know the member is totally opposed to the softwood lumber deal. I know he wants to find every negative opportunity to criticize it. I know he doesn't want to admit that there's anything good that came out of it — which is fine; I accept it. Also, it drives his questions, which is, obviously, going to be the case. I have no problem with that either; I accept it.

We're at the information-exchange stage in one month of surge, in the early stages. We haven't gone to arbitration. We haven't had a ruling against anybody. If there's a company that has a concern, that wants to know how they could calculate and figure out how to manage this for a single month — versus when we used to get changes in duties that could come from anywhere, jump up as high as 27 percent and move all over the map, as the uncertainty was prior to softwood — they can contact the ADM's office, and we'll work with individual companies.

At the same time, I'm not going to preconclude what the…. Even if it goes to mediation, it may be settled in the conversation that takes place in Ottawa on Thursday that nothing more needs to be done. That's the agreement. It doesn't take us to litigation, mediation and arbitration immediately. It allows us to try

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and manage, through cooperation, the calculations of things that should work for this agreement, so I'm not going to prejudge that.

I will tell the member that if he knows someone who has a question, he can certainly contact my office, the deputy's office, the ADM's office or the regional office, and we will have people who will work them through their concerns.

B. Simpson: It always interests me when the minister seems surprised that the opposition is standing in opposition. That's my job. We've had that discussion in this House before.

However, in this case, the minister is correct. This deal is a silly deal, it was an unnecessary deal, and it has done nothing for the industry. It has not brought certainty; it has brought uncertainty. As we're seeing, for many individuals it's starting to fall apart.

Let me raise the question here again, going back to the independent remanufacturers. This is a letter dated March 19, 2007, from Canada Customs and Revenue Agency. It has to do with the calculation of the export charge on the export price for secondary wood products as defined under the trade deal, and the issue is the difference between independent remanufacturers and dependent remanufacturers.

On secondary products, it says: "The calculation of the tax may indeed be lower than the first-mill value that the independent remanufacturers must use, which of course results in a lower export charge." So there's a preferential treatment based on the definition of whether you are non-dependent or dependent.

The letter states categorically: "It seems clear that this matter was not foreseen by government or industry when preferential treatment for independent remanufacturers was negotiated under the softwood lumber agreement." Basically, it says we can't do anything about this, and they're going to have to live with it.

Has the minister been apprised of this issue? If so, what are we going to do to help out the folks that have been hurt by this deal, by an unfair circumstance in the tax allocation, or the tax accorded to their products, between whether you're a non-independent remanufacturer or dependent remanufacturer?

[1635]

Hon. R. Coleman: Yeah, we are aware of the Canada Revenue Agency letter. I haven't had an opportunity to have a discussion with David Emerson with regards to it. On that particular side there is no question that when the CRA rules, the CRA rules, federally. Canada Revenue Agency is not one that usually negotiates — at least if you're being audited or anything like that — that I know.

I think that our operators are…. Some of them have begun to adjust to this particular ruling and will. It really comes down to the fact that they want to have on a lower-grade product something below the first-mill price and on a higher-grade product a different price. In actual fact, they get caught in the first-mill price of the average, and I think that's what the

interpretation is from the CRA. So we will work with industry to see if we can find solutions to that.

B. Simpson: Just a question on this, then, because it seems that other things are coming up: how to calculate surge, whether the taxing has been thought through and are there language issues and what people are calling "loose ends" in the deal.

Who provided oversight for British Columbia during the negotiations and signed-off on behalf of British Columbia that we were comfortable with the deal in its final form?

Hon. R. Coleman: We have a legal counsel on both sides of the border. We have a variety of staff that provided technical input.

[1640]

This was obviously all given to the federal government because they're the ones that were writing the agreement and sharing the drafts with us in British Columbia. As well as legal counsel for the various…. The B.C. Lumber Trade Council, I believe, had somebody that was looking at various aspects of the language, as well, as we came through this. So it was a collaborative effort by about six or seven levels of government, through their staff and legal counsels, plus the federal government and legal counsel in Washington.

It went through a pretty big scrub, I guess, as we came through the agreement down to the legal agreement that was signed by the…. I think the first draft was initialled by the minister, and then the final draft was signed by the two heads of state from the two countries. That's where that would have gone.

I do believe that this agreement, frankly, has great management opportunities to build relationships between the two countries, rather than people running off and having legal action every time someone blinks. I think that that's what the spirit of the agreement is. That's what we'll have to work through over the next number of years.

B. Simpson: I guess we'll see how much of that $50 million we've set aside for arbitrations speaks to that question of how far we're going to run. This time we're not going to run in North America; we're going to run over to London. So I'm not sure how much we've made progress on that.

The question of oversight, though…. Mr. Dobell has a contract in the Premier's office that explicitly states that he was involved in the softwood lumber agreement. What role did he play in signing off on the final deal?

Hon. R. Coleman: He didn't sign off on the deal. That's not his role. He was a facilitator of discussion between the various members of industry around the table as we came through that process and also provided advice on certain issues with regards to the deal to me as a minister, as one of the people that was involved in some of the discussions.

The signoff on the deal was…. It's a Canada-U.S. trade agreement, so we don't sign off on the trade agreement. The two countries sign off on it.

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Mr. Dobell did some very good work with my staff and with people across the country, in a good working relationship that had been established over many years with regards to Canada-U.S. relationships through his role in various roles in government. He was a participant in the discussions and gave feedback on those discussions, whether it was with the B.C. Lumber Trade Council or with the conference calls that were taking place during the move up to the framework agreement or through some of the discussions with regards to coming down to the document itself.

B. Simpson: Is the minister suggesting, in what he just said there, that if B.C. didn't want this deal, we couldn't have stopped it?

The minister keeps saying it's a Canada-U.S. deal, but it's my understanding from other comments the minister has made in past history that if B.C. said they didn't like it we would have stopped the deal cold in its tracks because we are the largest player. So we must have had some influence, and we must have had some ability to influence the outcomes. I'm not quite sure why the minister keeps referring back to that it's a Canada-U.S. deal when we are a signatory to the deal in some capacity.

Was Mr. Dobell engaged through the Premier's office, flying back and forth and going out to Ottawa and doing any negotiations on our behalf?

[1645]

Hon. R. Coleman: There wasn't a bunch of flying back and forth from anywhere taking place, because the room that was set up to basically discuss the stuff going into the framework agreement was set up in Vancouver. Mr. Dobell and some of our technical staff had gone to the U.S. to work with the federal people with regards to some technical aspects and to relay conversations and interests of British Columbia back to that table — if you want to describe it as a people.

The member's previous comment was correct. I believe that if B.C. had decided that it did not want to sign on to the framework agreement, that the federal government would probably not have proceeded. But the reality is that we did, and we did because we had every major company in British Columbia and a list of companies from all over B.C. — small, medium and large, and I talked to them all personally — that clearly indicated that they wanted the deal to get done and they supported the framework agreement as it stood.

We moved forward, and so that's it from that standpoint. From the other standpoint, commissioner Dobell is a very capable individual who had a very good understanding of the entire softwood lumber issue because of his involvement over many years with folks involved in the industry and the legal community with regards to softwood and also because of his previous roles within government and the relationship that he had with people in the United States.

He had an understanding of the players, I guess, and at least on some personal level knew them, and was able to articulate with our staff and our technical staff the concerns of British Columbia as we came through the discussion of the framework agreement.

It wasn't, as the member describes, flying back and forth to Ottawa or something. It was actually work being done on a very collaborative basis. Mr. Dobell was part of that team of people, including people in my ministry who stayed up and worked very, very long hours and people in our law firm in Washington and our other legal counsel in Canada that provided us with advice with regards to the discussions. Also, all of those people had a relationship with people at the federal level, who had legal counsel and people in drafting.

The first step was the framework agreement. After the framework agreement, then the writing of the actual softwood lumber agreement took place, and that moved into very much the technical, legal, drafting and conversations back and forth and discussions with regards to that, which were handled by legal counsel on both sides.

B. Simpson: Is the minister saying that West Fraser mills agreed to the deal?

Hon. R. Coleman: I'm not going to get into individual conversations with individual companies or CEOs. I will tell the member this: that I canvassed the industry. There were some that perhaps were not as supportive of the deal but were also saying: "Maybe you should get it done." Others were highly supportive. For the most part, that would be the majority of the industry that were highly supportive of that.

I did a very good job of canvassing the industry prior to taking anything forward to cabinet and caucus with regards to the framework agreement, prior to the Premier announcing to the Prime Minister that we would proceed as one of the participants in the