1985 Legislative Session: 3rd Session, 33rd Parliament

HANSARD

The following electronic version is for informational purposes only.

The printed version remains the official version.

Official Report of

DEBATES OF THE LEGISLATIVE ASSEMBLY

(Hansard)

MONDAY, JUNE 24, 1985

Afternoon Sitting

[ Page

6813 ]

CONTENTS

Ministerial Statement

Airline disasters. Hon. Mr. Gardom –– 6813

Mr. Skelly

Tabling Documents –– 6813

Court Order Enforcement Amendment Act –– 1985 (Bill 57). Hon. Mr. Smith

Introduction and first reading –– 6813

Oral Questions

School taxation. Mrs. Johnston –– 6813

Closing of hospital beds. Mr. Williams –– 6814

Expo 86. Mr. MacWilliam –– 6814

Vancouver transition house. Ms. Brown –– 6814

School taxes. Mr. Ree –– 6815

Mrs. Dailly

Meadow Lake timber licences. Mrs. Wallace –– 6815

Tabling Documents –– 6815

Workers Compensation Amendment Act, 1985 (Bill 61). Committee stage –– 6816

Mr. Cocke

Mr. Gabelmann

Division

Third reading

Special Enterprise Zone And Tax Relief Act, 1985 (Bill 49). Committee stage –– 6818

Mr. Williams

Mr. Blencoe

Mr. Davis

Third reading

Vancouver Stock Exchange Amendment Act, 1985 (Bill PR405). Second reading

Mr. Ree –– 6826

Mr. Cocke –– 6826

Vancouver Stock Exchange Amendment Act, 1985 (Bill PR405). Committee stage –– 6826

Third reading

Committee of Supply: Ministry of International Trade and Investment estimates.

(Hon. Mr. Phillips)

On vote 49: minister's office –– 6827

Mr. Cocke

Mr. Williams

Mr. Davis

Mr. Howard

Capital Expenditures Miscellaneous Amendment Act, 1985 (Bill 54). Hon. Mr. Curtis

Introduction and first reading –– 6841

Appendix –– 6841

MONDAY, JUNE 24, 1985

The House met at 2:04 p.m.

Prayers.

AIRLINE DISASTERS

HON. MR. GARDOM: Mr. Speaker, I'm sure that all members of

the Legislative Assembly of this province would associate with me in

feelings of horror, shock, consummate sadness and expressions of grief

and sorrow regarding the wanton savagery experienced by the passengers

and next of kin on Air India and those of the baggage-handlers who

serviced the Canadian Pacific Airlines flight to Japan, and indeed

their next of kin.

This murderous activity cannot pass without universal feelings of

disgust by all free men, women and children in every part of the world.

We offer our prayers and our condolences to the families and friends of

those who have been so disgracefully murdered, and pledge that the

perpetrators shall be brought to the fullest extent of justice.

MR. SKELLY: The opposition would like to thank the government

House Leader for his statement, to join in the sentiments expressed and

also to offer our prayers and condolences for those who have suffered

as a result of these terrorist acts. We would ask that our condolences

be conveyed as well as the government's on this occasion.

MR. KEMPF: In the gallery with us this afternoon, hailing

from that great little community of Telkwa, are two very near and dear

friends of mine — and a newly married couple in Victoria on their

honeymoon — Myrna and Lloyd Gething. I would ask the House to make them

very welcome.

MR. SKELLY: I would like to introduce a constituent who is in

the gallery today, Wolfgang Zimmermann from Port Alberni, and also Red

Fairhall from Sidney. These two gentlemen are members of the disabled

forestry workers' association of British Columbia. They're in the

buildings today to meet with the second member for Vancouver–Little

Mountain (Mr. Mowat), and I understand that they want to convey some

concerns to the second member about the treatment of spinal

cord-injured workers in this province.

MR. D'ARCY: In the gallery and/or precincts today on civic

and provincial government business are the mayor of Trail, Charles

Lakes, aldermen Norman Gabana, Jerry Paul and Allan Tognotti, and city

manager Ken Wiesner. I'd like the House to make them very welcome.

MR. STRACHAN: Also in the buildings today and in the

precincts from Prince George, Alderman Monica Becott. Would the House

please welcome her to Victoria today.

Hon. Mr. Rogers tabled the annual report of B.C. Hydro for 1984-85.

Introduction of Bills

COURT ORDER ENFORCEMENT

AMENDMENT ACT, 1985

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

a bill intituled Court Order Enforcement Amendment Act, 1985.

HON. MR. SMITH: Mr. Speaker, it's with pleasure I introduce

to this House the Court Order Enforcement Amendment Act. The main

purpose of this bill is to provide for the implementation of a

convention between Canada and the United Kingdom, providing for a

reciprocal recognition and enforcement of judgments in civil and

commercial matters, which was signed in Ottawa on April 24, 1984.

This convention was drafted to protect Canadian-owned assets in

Britain from being attached by litigants in countries which were

signatories to the European convention of 1968. We expect that the

government of the United Kingdom will become a party to this European

convention this coming summer, at which time, if our legislation is

introduced and soon in place, the effect will be to protect B.C.

residents who own property in the United Kingdom. Implementing

legislation has already been adopted at the federal level and by at

least five other provinces. There are some other minor amendments as

well in the bill, Mr. Speaker.

Bill 57, Court Order Enforcement Amendment Act, 1985, introduced,

read a first time and ordered to be placed on orders of the day for

second reading at the next sitting of the House after today.

Oral Questions

SCHOOL TAXATION

MRS. JOHNSTON: Mr. Speaker, I have a question for the

Minister of Finance. Over this past weekend the dailies had some very

dramatic headlines in reference to school taxation, and they certainly

don't reflect the understanding that I had when the budget was brought

down. The superintendent of schools for Burnaby stated that we were

placing the burden on homeowners in order to be generous to our

business community, and that $80 million was transferred from the

business community to homeowners.

MR. SPEAKER: And the question, hon. member?

MRS. JOHNSTON: Would the Minister of Finance please clarify exactly what happened with regard to school taxation in the last budget?

HON. MR. CURTIS: Mr. Speaker, I'm aware of some news reports

in the past few days which suggest that a shift has occurred between

residential and non-residential property taxes, grouping

non-residential under non-residential, commercial, industrial and so

on. The member would perhaps care to refer to the budget document,

where it was made clear that any shift to reduce the ratio between

residential and non-residential property taxes is at a cost to the

provincial government; it's forgone revenue, significant this year and

in the following two years. Therefore it is quite incorrect for anyone

to suggest that as a result of that change — which was

[ Page 6814 ]

announced very clearly in the budget — school property taxes have moved from one class of property to another.

Indeed, Mr. Speaker, to conclude....

MS. BROWN: What is this, a ministerial statement?

HON. MR. CURTIS: That member hasn't asked me a single question all year, Mr. Speaker.

Indeed, non-residential property taxes do not flow to the school districts but rather to consolidated revenue.

CLOSING OF HOSPITAL BEDS

MR. WILLIAMS: I have a question for the Minister of Finance,

who appears to be anxious for questions. Some 783 acute-care beds will

be closed this summer for a period of two months. It is my

understanding that the cost of an acute-care bed is $165,000. That

would represent $138 million in capital sitting idle. Can the minister

advise us if he has reviewed this, and whether it makes any kind of

sense at all to leave $138 million worth of hospital beds empty when

there is in fact a need?

[2:15]

HON. MR. CURTIS: Mr. Speaker, while I am always happy to

answer questions, I would suggest that a question along those lines

would be more appropriately directed to the Minister of Health (Hon.

Mr. Nielsen).

MR. WILLIAMS: In any other department, Mr. Speaker, would the

minister be concerned about $138 million in assets being mothballed

when there was a need?

HON. MR. CURTIS: Mr. Speaker, I again refer the member to the

Minister of Health, who I am sure would be happy to answer the question

and to check the veracity of the member's proposition.

EXPO 86

MR. MacWILLIAM: In the absence of the Minister of Tourism

(Hon. Mr. Richmond), I have a question for his parliamentary secretary

regarding the Expo conflict-of-interest guidelines. The minister

recently stated they were the most stringent to be found. Yet the

guidelines do not prohibit any business dealings between directors and

companies, and provide only for internal disclosure. Why is there no

such prohibition instituted in these guidelines?

Interjection.

MR. MacWILLIAM: Perhaps the government House Leader may wish to answer that.

Interjections.

MR. MacWILLIAM: Perhaps I could direct my question to the acting minister.

HON. MRS. McCARTHY: Mr. Speaker, I'd be very pleased to take that question as notice for the minister responsible.

MR. MacWILLIAM: A new question to the acting minister. The

Constitution Act provides very strict guidelines prohibiting MLAs from

entering into beneficial contracts with the government, yet the

conflict-of-interest guidelines for Expo 86 directors do no such thing.

Could the minister advise us as to the reasons for this inequity in the

standards of conduct for public life — public life versus the Crown

corporations?

HON. MRS. McCARTHY: The member's question implies two

standards of conduct. I would prefer to answer the direct question by

passing it on to the Minister of Tourism, who I know will bring an

answer back to the House at the earliest opportunity.

VANCOUVER TRANSITION HOUSE

MS. BROWN: My question is to the Minister of Human Resources,

and it has to do with the Vancouver Transition House, which is moving

inexorably towards its death. Last Thursday the minister gave a

commitment to the House that the services of the Vancouver Transition

House would be continued. However, we have now been told that on June

28 the Vancouver Transition House will be closed. I understand that the

YWCA has now indicated that it is willing to continue operating the

Transition House temporarily. Can the minister inform the House whether

she has decided to permit the YWCA to continue to offer this essential

service until a new contract has been awarded?

HON. MRS. McCARTHY: The commitment that I made in response to

the question last week was that the service provided by the now

Vancouver Transition House would be continued by all transition houses

to any family, child or woman in need in the province — the service

would be continued.

As a response to the second question, which was whether I would know

whether or not the Y would be willing to continue the service which

they gave notice of discontinuance of, I'm sorry, this is the first

I've heard of it, so I can't respond to that.

MS. BROWN: Mr. Speaker, Vancouver has only one transition

house, and that house is going to be closing its doors on June 28

unless the government moves very quickly. Will the minister now admit

that privatizing that house was a mistake, and that the government is

willing to restore full funding for the operation of that very

necessary resource?

HON. MRS. McCARTHY: In the question, I think, the member

implies that an error has been made by the government in taking the

only transition house in the whole province that was operated directly

by the government and making it consistent with the over 30 transition

houses which have been established in this past five years, having it

operated like all the others on a contract service monitored by the

province.

The answer to the direct question — did we make an error? — is no.

I'm quite pleased with the fact that we have been consistent all

throughout the province; the same delivery of service throughout the

province, and there is no reason in the world why Vancouver should be

any different than any other part of the province. The service is the

important thing, and the delivery of service to people in need is the

important thing. We are able to respond to a woman and a family who

[ Page

6815 ]

asks us for help in terms of transition houses

throughout the province, and we will be able to do that in the city of

Vancouver after June 28 as well.

SCHOOL TAXES

MR. REE: My question is to the Minister of Education. In

light of the comments of the Minister of Finance (Hon. Mr. Curtis) that

commercial taxes have not been laid on the homeowners, what is the

status of homeowner taxes, when school trustees are saying school taxes

in the lower mainland have gone up in the last year?

HON. MR. HEINRICH: The amount paid for school taxation is a

function of assessment. Assessment is a function of market value. I saw

the headline in the Vancouver Province yesterday and was somewhat concerned with the comments, which were attributed to a school district official.

MR. SKELLY: So we gather.

HON. MR. HEINRICH: Yes, you're quite right.

MR. SKELLY: Otherwise we wouldn't have a set-up question.

HON. MR. HEINRICH: What I'm really surprised about is that this question isn't coming from the opposition. Research hasn't read the paper.

I think it is important that we raise some of the points to explain

the increase in the Greater Vancouver Regional District area and the

school districts in that area. The budgets are down between 2.6 percent

and 9.2 percent in seven of the nine GVRD school districts, and in the

case of the other two — Surrey and Delta — the budgets are up. I think

we should recognize that the total assessed values are up between 3.9

percent and 13.5 percent in each of those school districts. It's

obviously a reflection of the healthy economy which seems to be going

on in the lower mainland. Property values are on the way up.

I think the most telling statistic of all is what the taxes are in

1985 compared to 1981. This particular comment came from Burnaby, and

I'd like to leave with the House a certain bit of information. In

School District 41 in Burnaby the net homeowner tax paid in 1981 was

$260. What do you think it is in 1985? It was $167 net, a decline of

35.8 percent. I can tell you that in each of the nine school districts

in the lower mainland, they're down from 65 to 35 percent over a period

of four years.

MR. SPEAKER: Thank you.

HON. MR. HEINRICH: Am I finished, Mr. Speaker?

MR. SPEAKER: Yes.

MS. DAILLY: A supplementary to the Minister of Education.

Would the minister tell the House what percentage of the school

taxation in Burnaby is paid by the provincial government, compared to

the amount that is paid by the local taxpayers? He can even give me

last year's figures.

HON. MR. HEINRICH: Mr. Speaker, what the member is asking me is....

You know, I'm trying to go through 75 school districts on the average. In

the case of Burnaby, I would be guessing — that's understood when you're

asking a question like this — but I would say it's probably in the area

of about 60-40. In other words, the provincial government's contribution

is, I suspect, probably around 60 percent. The homeowners' contributions

in that particular district may be around 40 percent. I'm guessing at this,

but if you would like me to....

Interjections.

HON. MR. HEINRICH: Mr. Speaker, I'll be precise. I'll take that question as notice and bring back the exact number for you.

MEADOW LAKE TIMBER LICENCES

MRS. WALLACE: My question is for the Minister of Forests. His

ministry has recently invited applications for timber sale licences at

Meadow Lake, in the 100 Mile House timber sale area, and the public

auction is to be held this Friday morning, June 28. The advertisement

stipulates that people can bid only if their operation includes

chipping facilities. Why has the minister decided to disallow bids from

small contract loggers operating in the area who are assured that they

have a sale at an existing plant in that area that has a chipper?

HON. MR. WATERLAND: Mr. Speaker, the member is referring to

one portion of the sales that we are trying to initiate in order to

attack some of the bug damage problems and inhibit the spread of the

mountain pine beetle. There are other sales running parallel to these

that are available for the small logging contractors, and they need not

have chipping facilities. What we are trying to do, Mr. Speaker, is to

make sure that every possible opportunity is taken to use this fibre,

and a great deal of utilization of fibre is in byproduct wood chips, as

the member probably well knows.

MR. SPEAKER: Hon. members, the member for Burnaby-Edmonds has informed the Chair that she has a matter under standing order 35.

MS. BROWN: Mr. Speaker, I ask leave to make a motion for the

adjournment of the House for the purpose of discussing a definite

matter of urgent public importance, namely the closing of the Vancouver

Transition House on June 28 and the fact that there will not be another

facility for battered women in Vancouver until possibly the fall.

MR. SPEAKER: Hon. member, I will take the matter under advisement and bring it back to the House at the earliest opportunity.

Hon. members, two matters. First, regarding question period, it is

customary for the opposition to have the lead-off question in question

period, and the only time that would not happen is when no member of

the opposition is standing and a member of the government is. That

would be the reason for that divergence from the ordinary course of

business.

Secondly, hon. members, a report from the ombudsman, No. 14, which I table herewith.

[ Page 6816 ]

Orders of the Day

HON. MR. GARDOM: Committee on Bill 61, Mr. Speaker.

WORKERS COMPENSATION

AMENDMENT ACT, 1985

The House in committee on Bill 61; Mr. Strachan in the chair.

Sections 1 and 2 approved.

section 3.

MR. COCKE: Mr. Chairman, in the second reading of this bill

my colleague the member for North Island (Mr. Gabelmann) and I both

took exception to this aspect of the bill,

section 3, which is that the

review boards of the Workers' Compensation Board are going to be struck

by regulations. We had a distinct understanding that it wasn't to be

regulations of this sort that would decide how they would be struck.

There are going to be single-person panels in order to get rid of the

backlog. Well, that's fine. But my understanding is that those

single-person panels were a worker's option. The minister keeps nodding

his head all the time, but the problem is that I see this as being in

law giving all the alternatives in the world to cabinet.

As long as you have the present minister who is dedicated to a

specific direction, then fair enough. But the problem is that we're

left with this piece of legislation on the statute books, and future

governments or future executive councils can do whatever they like. For

that matter, you could have in the future single-member panels for

everybody. So I feel that there's a real weakness in this section, and

I oppose the

section as it's now written.

HON. MR. SEGARTY: To the member for New Westminster, the

member is quite right. He did discuss it in second reading debate, and

I expressed to him my view that the one-member panel would be on the

request of the individual making their appeal before the review board,

and that it would be spelled out in regulation that it would be on the

consent of the individual and be for minor appeals. It's my wish, too,

to consult with the parties of interest in the area of regulation

before they're passed by cabinet and the Lieutenant-Governor-in-Council.

[2:30]

MR. GABELMANN: I have three specific problems with this

section. The first is in subsection (4), the oath. I have mixed

feelings about the whole principle of having an oath like this involved

for review boards in the first place, but I'll leave that aside. Why is

this reference in the oath itself, near the end, where it says:

"...disclose to any person any of the evidence or other matters brought

before the review board"? I'll wait for the minister to find whatever

he's looking for — briefing notes or whatever.

We're talking about the oath to be sworn by appointees under this

section. As I say, the oath is questionable in my mind in the first

place. The requirement that you swear not to disclose any evidence is

one thing, but "or other matters" is something else again. I suspect if

that

section is interpreted as it reads, not even widely, you're going

to have a great deal of difficulty getting people to agree to swear an

oath of that kind. Matters could come up in review board hearings that

may not be evidence per se, but may bring an idea forward that needs

some public airing and discussion. Why should the people on the review

board be constrained from raising those kinds of issues that they might

have picked up in the course of a hearing? That's my first concern.

The second one is the concern expressed by the member for New

Westminster (Mr. Cocke), which is the wide-open possibility for panels

to be composed of whatever number cabinet chooses as opposed to

spelling it out, as I expected it was going to be spelled out.

My third point is the contradiction, as I mentioned in second

reading, of not spelling it out in terms of the composition of panels,

but then spelling out precisely that it's not required to hold an oral

hearing. If you're not going to spell out one thing, why spell out the

other? The oral hearing issue is important. It's sufficient cause, in

my mind, to vote against this

section entirely.

This point has been made before. Most workers who are having a case

heard by a panel will not be represented by business agents, lawyers or

any other person; they will be there by themselves. Failing an

opportunity to present their view, the board may not ever have any way

of knowing what their point of view might have been. Some of these

people aren't able to communicate their thoughts in writing, and can

only do so given an opportunity in front of a board. I believe justice

is served properly if workers are given an opportunity. If they choose

to waive an oral hearing, that's another matter; but that's not how the

legislation is spelled out. The legislation gives the review board an

opportunity to proceed without going to an oral hearing, and they may

make the wrong judgment.

I'd like the minister's response on at least the first and third of those. I know he has commented on the second.

HON. MR. SEGARTY: Mr. Chairman, the oath is to protect, in a

sense, the privacy of the individual who is making a review before the

appeal panel, and it's taken verbatim from

section 24 of the Labour

Code of the province of British Columbia. It's basically the same. But

it is to protect the privacy of the individual.

With respect to the oral hearing, it actually puts in place what is

already in practice. It's up to the chairman of the current makeup of

the panels to determine whether or not an oral hearing is granted, and

that will remain the same under this act.

MR. GABELMANN: That's the way it has been since December

1984, if my memory is correct, when an order-in-council was passed

establishing that oral hearings weren't required. The way that the

boards of review worked in the past — until that order-in-council was

passed — oral hearings were allowed. Now the minister is saying that he

wants to entrench in legislation the right of the review boards to say,

on their own motion, no oral hearing will be held. I can't support

that, Mr. Chairman.

MR. COCKE: Just one more word. I share my colleague's

displeasure with this aspect of the oral hearing, but I also indicate

that the minister says regulations are adequate, and that we will be

happy to see the regulations which will give the initiative to the

worker. I worry about regulations, Mr. Chairman. If the minister will

go back to December 21,

[ Page

6817 ]

1984, we saw some very rough regulations come down

for workers' compensation. That's what cabinet can do at their whim.

That's quite unfortunate, as far as I'm concerned, and for that I'm

totally opposed to this

section of the act. I think there should be the

kind of consultation that shows that an absolute legislative process is

going to be followed, rather than a regulatory process. The regulatory

process can be changed at the whim of cabinet.

Section 3 approved on the following division:

YEAS — 22

Waterland

Brummet

Rogers

Segarty

McClelland

Heinrich

Pelton

Johnston

Kempf

R. Fraser

Chabot

McCarthy

Gardom

Smith

Curtis

Phillips

McGeer

A. Fraser

Mowat

Reid

Ree

Veitch

NAYS — 16

Dailly

Cocke

Howard

Skelly

Stupich

Sanford

Gabelmann

Williams

D'Arcy

Brown

Lockstead

MacWilliam

Barnes

Wallace

Mitchell

Blencoe

[2:45]

MR. STUPICH: Mr. Chairman, may I have leave to make an introduction?

Leave granted.

MR. STUPICH: Seated in the members' gallery are a couple from

Nanaimo who have lived very close to me geographically and politically

from the time I was born, and who also are the parents of the deputy

Provincial Secretary, Mr. and Mrs. Steve Plecas.

section 4.

MR. COCKE: There are some concerns with respect to this

amending section.

Section 4 amends the original

section 90 of the act,

and I'd like to know where subsection (2) comes from. It would almost

appear to come from either the Council of Forest Industries or the

Mining Association or maybe both. It could mean that unrepresented

workers would be up against large organizations. It's a David and

Goliath situation as far as I can see, and I just would like the

minister to give me some understanding of what's happening here.

HON. MR. SEGARTY: On that section, where at the present time

an employer of his class, the individual who would be making the appeal

against a particular class of employees, would then.... The Workers'

Compensation has to determine their premiums. The particular employer

might not be around but his class would be, and so it provides an

opportunity for the class to appear before the review panel and,

basically, present their case.

MR. COCKE: How does this fit with decision 395 of the board? That was June 1, 1985.

HON. MR. SEGARTY: I'd have to have a little bit more from the hon. member. Quite honestly, I can't remember what that was about.

Section 4 approved.

section 5.

MR. GABELMANN: I wonder if the minister would tell us what he thinks the difference is between a finding and a decision.

HON. MR. SEGARTY: If the member will excuse me for just a second. I'm trying to get a handle on that.

A finding is recognized to be subject to a decision by the commissioners.

MR. GABELMANN: Mr. Chairman, I thought the blarney was confined to Ottawa these days.

The Provincial Secretary (Hon. Mr. Chabot) suggested I should

consult a lawyer. I've consulted five, and none of them can tell me

what the difference is or suggest a reasonable explanation.

Interjection.

MR. GABELMANN: I got the advice I paid for.

It's obviously a small matter, but when you see a change like this, you wonder why.

Section 5 approved.

Sections 6 to 9 inclusive approved.

section 10.

MR. COCKE: What we're doing here is adding "by an officer of

the board or by the review board" at the end. It strikes me that this

will now read: "Notwithstanding...the board may at any time at its

discretion reopen, rehear and redetermine any matter which has been

dealt with by an officer of the board or by the review board." In other

words, what we are doing is changing something from "will" to "may,"

and that gives discretion. I'm not sure that discretion is the better

part of valour in this particular situation.

HON. MR. SEGARTY: In the consultation that I had with the

parties of interest both parties requested that change. So we are

accommodating their interests.

MR. GABELMANN: Mr. Chairman, I don't know what the parties requested from the minister.

HON. MR. SEGARTY: The parties requested the removal of

section 90(3).

MR. GABELMANN: Well, Mr. Chairman, I am concerned.... We're

talking about

section 96(2) of the act. I find it amazing that the

"parties of interest" sought to have this particular amendment made to

section 96(2), adding to

[ Page 6818 ]

the words "the board may at any time at its

discretion reopen, rehear and redetermine any matter which has been

dealt with by it," after deleting "by it," the words "by an officer of

the board or by the review board." I'd like to have the minister's

explanation again as to why it was the parties of interest wanted that

particular change.

HON. MR. SEGARTY: Mr. Chairman, we've made it discretionary.

Previously they pretty well had to review all cases, and you could have

had an appeal going on at the boards of review level and at the

commissioner level at the same time on the same case. What we have done

with this change is make it discretionary for them to review it in its

proper form.

MR. GABELMANN: As I remember the original discussion of this

point,

section 96(2) was introduced to ensure that boards of review did

not in fact establish policy on behalf of the compensation board. If a

decision established a new policy by implication, then that had to go

to the commissioners so that the commissioners could go through that

process, and if they in effect agreed, ratify the review board decision

and declare the new policy that flowed from that particular change.

But it goes further than that. Under the current administration of

the WCB, it has allowed two things to happen. One is review board

decisions to be overturned by the commissioner, and the other, more

frustratingly in some ways at the present time, is delay in the final

decision. A worker has an adjudication; it goes wrong; it then goes to

the appeal board or to the new review board and takes two years — or it

has. Then the commissioners can say: "Well, we don't like that decision

of the review board. We're worried about its implications. So we're

going to sit on it for another six months." Meanwhile the worker is

sitting without a decision made. This makes the ability for that kind

of delay even more open.... My words are wrong: it makes the

possibility of that kind of delay more easily obtained by the kind of

administration that we have at the board at the present time. I

recognize that there's one good thing about it: that is, if it doesn't

have to go for ratification....

AN HON. MEMBER: That's the whole point.

MR. GABELMANN: If that's the whole point, let's say it. But

that's not the whole point, because if you go to court and get a bad

decision, you can appeal it. The appeal decision is the decision; the

original court doesn't get a chance to review the decision of the

appeal court. Just think about it in simple terms. This process is that

an adjudicator makes a decision, you appeal it to the review boards,

the adjudicator's employer doesn't like it so he overturns the appeal

court. I recognize that that was in the legislation before, but it's

still in the legislation; it has created — and still creates — a

serious problem; not in a lot of instances, but in too many.

Why do we need this particular

section at all? If the minister is

concerned about not having to take it to the commissioners for

ratification, fair enough; let's say that. If the minister is worried

about review boards setting policy, then let's have a

section which

spells out that any implications that affect policy of the board have

to be referred to the commissioners, but let's not tie up the poor

worker or the employer who might be appealing a particular case. Let's

not tie them up in this kind of a process.

HON. MR. SEGARTY: The member talks about the supreme court.

In this sense the commissioners are the supreme court. They are the

ones who set the overall policy. The current act says that where the

board of review does not confirm the original decision, that decision

will be reconsidered by the board. What we're saying is that now it's

optional for them to reconsider, so it should speed up the process,

rather than what the member talks about.

Section 10 approved on division

Sections 11 and 12 approved.

section 13.

MR. COCKE: Can the minister give us a guess as to when this

act will come into force? I see it's going to come into force by

regulation. How soon does he plan to bring forward those regulations?

HON. MR. SEGARTY: As the hon. member just stated, it will be

brought in by regulation after I've consulted with the parties of

interest on the regulations; then I'll bring them forward to cabinet. I

hope it will be at the earliest possible time.

Section 13 approved.

Title approved.

HON. MR. SEGARTY: Mr. Chairman, I move the committee rise and report the bill complete without amendment.

Motion approved.

The House resumed; Mr. Speaker in the chair.

Bill 61, Workers Compensation Amendment Act, 1985, reported complete without amendment, read a third time and passed.

HON. MR. GARDOM: Committee on Bill 49, Mr. Speaker.

SPECIAL ENTERPRISE ZONE

AND TAX RELIEF ACT, 1985

The House in committee on Bill 49; Mr. Ree in the chair.

Sections 1 and 2 approved.

section 3.

MR. WILLIAMS:

Section 3 in this bill creating special zones

removes municipal power with respect to the area designated. That

removes all municipal requirements as we know them in this province in

terms of fire, safety, zoning and all the regulatory devices that

municipalities have built up through the years. It gives these powers

to the zone administrators.

[3:00]

The question that it raises is: can one administrator come anywhere

near meeting what municipalities have wanted through the years for

their own communities? I think not.

[ Page 6819 ]

Creating these zones automatically creates a place with different

goalposts. It also has a negative impact on adjacent lands, because

there are special benefits conferred in these zones that are not

conferred on the stuff outside the zone. In a municipality like Delta

you can have the Tilbury

section where BCDC is trying to flog its empty

land become more valuable, and the stuff outside become less valuable.

So Annacis Island and the other industrial areas of Delta and along the

Fraser River are affected.

The government hasn't begun to advise us where these zones are going

to be and how they're going to be distributed. The only thing they've

said is that there will be one in Tilbury and the BCDC lands there, and

I guess in view of the statements regarding Britannia, there's going to

be one at Britannia Beach as well. Again, maybe the minister can advise

us how many municipalities are going to be affected by this

legislation. What sort of

schedule do you have in mind? How do you

think you can equal all the work that countless municipalities have

done over the years to regulate their own areas?

HON. MR. McCLELLAND: First of all, Mr. Chairman, this

legislation doesn't overrule any laws which are in place in terms of

fire and safety. All of those applicable laws are still there. The only

difference, covered in another section, is that the services to enforce

those laws for the zones would be contracted by the zone authority from

the municipality involved.

I can't give you a timetable at this time, nor can I say with any

definition where and how many zones there may be. I believe that it

will likely work the other way around. We'll be selling the concept of

the zones to the world, and when we find out what the needs of a

successful sales program are, then we can more likely understand the

best place for the zone, because there may be a varied need by the

people who are going to establish.

I don't see that these zones are going to be in direct competition

with other industrial land in the area, because they'll be catering to

absolutely new industry of a kind which would likely never be in

British Columbia, without the kinds of incentives held here. They would

certainly not go to an established industrial area which may not have

all of the requirements that we can put into a special enterprise zone.

MR. WILLIAMS: I'm a little disturbed at the thought that, as

I suspected with the other minister we have here, you really think it's

just a matter of getting a salesman on the road; that you really think

that's the way the world works; it's just a selling job. Well, you

know, last year we were told it was pharmaceuticals and high-tech

electronic stuff and automobile parts. This year you're going on the

road to find out what it might be. But you leave the impression that

local zoning will prevail. Let's get it straight: they're gutted in

terms of local regulatory powers. If a municipality said it was a

war-weapons-free zone, for example, and decided they didn't want any

plants turning out war products in their municipality, as might well be

the case, since the city of Vancouver is now a nuclear-free zone....

Many citizens of British Columbia wouldn't want us in the business of

turning out munitions, for example. Obviously no municipality could set

those terms then, under this statute. If you want to get into the

munitions business in your special enterprise zones, you can very well

do so. So that is the case; the zoning does not prevail, and if you

want to go into the business of selling war materials, you are free to

do so within these zones. Going into that kind of business is not a

very fascinating prospect, even for the unemployed of British Columbia.

Can we have some assurance from the minister that we won't be going

into that kind business in these zones at this time?

HON. MR. McCLELLAND: Mr. Chairman, I can't remember the last

time that a representative of our government talked to a munitions

baron, nor do I know of any agenda to begin that kind of discussion.

It's not the kind of industry that we're looking at for British

Columbia, nor is it likely the kind of industry that would ever come to

British Columbia.

Yes, I think that it's very important that we do put salesmen on the

road — all kinds of salesmen — for British Columbia, but it's also

important that they have something to sell and that they have, in fact,

a full sales kit. With the special enterprise zones in place, we've got

a full sales kit, and the salesmen will have a much better opportunity

to sell all of the good things about British Columbia.

It's interesting that the member picks again today, as he did late

last week, the three areas that he seems to think are not flourishing

in British Columbia. He talks about auto parts. Last week he seemed to

have in his head the idea that all we're doing is assembling something

at the Toyota wheel manufacturing plant. It makes wheels, and it ships

those wheels back to Japan.

MR. WILLIAMS: Very impressive.

HON. MR. McCLELLAND: Right.

In pharmaceuticals we've taken a very major step. Through the Terry

Fox Foundation and with help from the British Columbia Development

Corporation, we have taken a very major first step in a very exciting

new era of pharmaceuticals.

Finally, electronics was the worst example that that member could

use, Mr. Chairman, because it is one area in this province that is

actually booming and has boomed throughout the recessionary period. I'd

like to invite the member to go on a tour of some of the new exciting

electronics businesses in the greater Vancouver area alone. Go see

Glenayre Electronics in their brand new plant in Burnaby, go see MDI in

their brand new plant in Richmond. Go see MDA with the exciting things

that they're doing in every part of the world, right out of little old

British Columbia.

So those are three of the worst areas you could have mentioned.

MR. WILLIAMS: So we don't need the zones.

HON. MR. McCLELLAND: So, Mr. Chairman, we need the zones

because what we want here is a new industrial base — a totally new

industrial base which will spread out all over the province, into our

service industries and our tourism industry, and will in fact help us

to diversify in the way that that member has been telling us we should

do.

MR. BLENCOE: Mr. Chairman, I wonder if the minister can tell

us what discussions and what consultation he had with the UBCM over

this particular proposal. Given that we have partnership with the

Minister of Municipal Affairs (Hon. Mr. Ritchie), and then we have this

particular piece of legislation, there is great confusion and indeed

concern in the

[ Page 6820 ]

local government about what this government is trying to do. It's giving mixed signals.

The UBCM has asked for full clarification. Indeed, they were wishing

you had discussed it with them beforehand. I'm wondering what he sees

in the future in terms of working with the UBCM, given that the

municipalities are going to be directly impacted.

HON. MR. McCLELLAND: Mr. Chairman, there was full discussion

in the community about special enterprise zones for months, and we

intend to work very closely with the Union of B.C. Municipalities in

the months to come, on this and on many other measures. I'm sorry that

Friday seems to be a bad day to do any business — everyone leaves early

— but I would ask that member to read Hansard and just read the correspondence from the UBCM about special enterprise zones that I read into the record on Friday.

MR. CHAIRMAN: The Chair is having some difficulty in

reconciling the questions to the minister with committee. The comments

might be more appropriate in second reading than in committee stage.

MR. BLENCOE: Mr. Chairman, I believe this

section does refer

to municipalities as being involved, and that's something I am

obviously concerned about.

AN HON. MEMBER: Where were you on Friday?

MR. BLENCOE: I was here.

MR. CHAIRMAN: The member on

section 3.

MR. BLENCOE: The minister says that he will be discussing

with UBCM. Given any further announcements or regulations with this

particular piece of legislation or others in the future, hopefully the

minister will see fit to try to work in a sort of real partnership

approach with local government. They had the partnership deal brought

down a few weeks ago, and then we have this particular package, which

obviously is of concern because it may attract the very industries

they're trying to achieve. I know

section 21 in this bill — we'll get

to that later on — tries to take care of that, but I obviously have

some concerns that the industry that's going to be attracted to inside

municipal boundaries will now go to these special enterprise zones.

This particular

section says that the cabinet will prescribe the

criteria for admission of a company to a special enterprise zone. I'm

wondering if the minister can give us some insights into what some of

those criteria will be. I believe there is great potential for abuse in

letting only certain companies into the special enterprise zone,

companies that may have some direct connection or better insights into

the government. I think that the criteria should be laid out, and there

should be some guarantees or insurance that all businesses,

particularly new ones, are going to be dealt with equally. I think it's

very important, while we're debating this legislation, that we know

that the criteria are going to be fair and non-discriminatory.

HON. MR. McCLELLAND: Of course they're going to be treated

differently than they are in other areas. The whole idea of this bill

is that they will be treated differently, and that they will be a

business which will not in any way be able to go into competition with

other businesses or industries which are already in British Columbia.

So we have to have that kind of regulatory authority to ensure that

that doesn't happen. They will be treated much differently. In fact,

the bill itself will allow us to treat some business within the zone

differently than other business within the zone. If, for instance, in

one part of the bill which allows us to bring in some support industry

for a particular industry, then in order that we protect the concept

that we don't allow unfair competition between existing industry in

British Columbia, we certainly wouldn't give the same kind of benefits

to that industry if we allowed them to set up in the zone because of

the fact that the zone is the place they can best service what will

become perhaps their major customer. So there has to be some

flexibility, or the zone won't work at all.

I'd just like to read to you from Hansard again. On page 14 of Friday morning's sitting, the letter from Mayor Couvelier, president of UBCM, says:

"We have reviewed with great interest your Bill 49,

Special Enterprise Zone and Tax Relief Act. We recognize this bill as

another key element in the government's economic strategy. Bill 49,

like the Provincial-Municipal Partnership Act and the venture capital

corporation legislation, has the potential to be an element that will

assist local communities in their recovery plans."

MR. BLENCOE: Will the minister confirm that cabinet will have complete authority over the zones?

HON. MR. McCLELLAND: The zone authority will be the

administrating body of the zones. Cabinet has, I guess, complete

authority over the regulations, and always has and always will in any

piece of legislation.

MR. BLENCOE: I wonder whether you will be allowing for

municipal input into concerns that may arise in these zones. There are

all sorts of questions about fire regulations, police regulations and

these sorts of things. Who is going to have the authority to determine

those, and who is going to cover those sorts of things?

AN HON. MEMBER: They'll be contracted.

MR. BLENCOE: Contracted?

HON. MR. McCLELLAND: Mr. Chairman, the bill is very specific

on that: the zone authority will negotiate with the municipal

government. And the negotiation implies that there will be all kinds of

discussion between the municipal government and the zone authority. And

they will come to a contractual agreement for those kinds of services,

which will be signed....

Interjection.

HON. MR. McCLELLAND: Well, it's a negotiation.

MR. BLENCOE: Maybe the minister will confirm that the bill

empowers cabinet to impose a service contract on any municipality if

the nature of this relationship cannot be settled with any particular

zone; in other words, you can impose

[ Page 6821 ]

whatever you wish. If the negotiations of a so-called consultation

process don't work, you can impose whatever you will. Is that accurate?

[3:15]

HON. MR. McCLELLAND: The member is essentially correct. As

has been pointed out by my assistant, it works for other reasons as

well. It might be that during the middle of maybe five years or four

years or three years after the zone was established and there was

operating industry within the zone, the municipality for some reason or

another decided to withdraw services, whether it be fire services or

water services or something else, and I'm sure that in order to protect

those people who are located in the zone somebody would want to have

the authority to make sure that those services were continued.

MR. BLENCOE: If this special enterprise establishes

itself.... There was discussion of a special enterprise

establishing one of these zones, which happens to be highly

controversial and greatly disliked by the adjacent municipality; for

instance.... The second member for Vancouver East (Mr. Williams)

brought up defence or munitions. Given the nature of this legislation,

there is no process for public hearings or public input into what goes

into these zones, because obviously they are outside the municipality.

What happens, for instance, if we get interest by a star wars

manufacturer? Is it the minister's intention that certain types of

industries would be acceptable or unacceptable? I'll give you a

situation: a particular defence contract — American, Canadian or

whatever — wishes to locate here and is attached to the star wars

situation. What would be the position of the minister then, if the

municipality and adjacent people want nothing to do with it, yet you've

got the power to impose whatever you want, which is not exactly

democratic?

MR. DAVIS:

Section 3 begins: "The

Lieutenant-Governor-in-Council may make regulations...." What

concerns me about this legislation is not what I understand is the

government's intent — namely, to set up selected special enterprise

zones — but the broad sweep of the legislation. The broad sweep bothers

me because I can imagine a new government with the second member for

Vancouver East as the economic czar, and he would love to have

legislation like this on the books because he could do a lot of things.

Out of hand, he wouldn't need to refer to other law existing in the

province, and I think he would perhaps agree to what I am saying. By

order-in-council a lot of things can be done under this law, and he

could create an economic zone. I don't think he would, but it could, in

area terms, cover the whole province. It could be a small zone; it

could be selective; it could give a special preference to a Crown

corporation or any other corporation. So it's really the broad scope

that bothers me. I think any reference to star wars industries and so

on is merely to drag a red herring in front of the Legislature. It's

the broader concern that I have.

Now the minister says that he as minister would really only deal

with firms or businesses which would not otherwise come to the

province. You know, a lot of industries around the world are going to

be interested in British Columbia if they can come here for ten years

corporation income tax free, not have to pay the social service tax,

and perhaps have the government instead of themselves pay their

property taxes. So the bait is considerable.

The question is: what is the new industry which otherwise wouldn't

come to B.C.? I think it will be very difficult, in advance anyway, to

describe that industry. We may well have extensions of what have been

traditional industries here offering to come. In the past it's been

very difficult to further process a number of our forest products.

Further processing, say, in the nature of manufacturing fine papers

might well come to British Columbia if they don't have to pay

corporation income tax for ten years, a social service tax, property

taxes and so on.

So to repeat, there is a considerable incentive for industries to

come which might at some point in time otherwise come to B.C. The bill

doesn't clarify what is a new business and what is not a new business.

So there is an uncertainty in the bill. There is certainly a grey area

in that respect.

While I understand and sympathize with the intention of the

government in this regard, it does bother me that in those areas —

certainly areas of taxation — the cabinet can, in effect at its whim,

decide whether or not to give "a new industry" all these breaks. Where

does this process begin and end? I think that is really my question.

And really, what is the definition of new industry as opposed to

existing industry in the province, which admittedly faces a heavy tax

load? Our taxes for larger corporations are the highest in the country,

and our property taxes are certainly steep.

Existing industry is going to look on this process with some

apprehension if another industry somewhat related were to offer to come

to B.C. in a special enterprise zone. I realize that I am asking a

difficult question or series of questions, but still, this legislation

could apply to a number of places in the province — indeed, in its

terminology, the entire province. The picture I painted to begin

with.... Imagine the hon. second member for Vancouver East (Mr.

Williams) in

charge of this bill. He could do a lot of wonderful things.

HON. MR. McCLELLAND: Mr. Chairman, I think the member

answered his own question. At the same time, he said he would like the

definition of what would be a new business; but he also said that it

probably couldn't be done in advance of having a look at the.....

And I believe that's right.

Just to skip to another

section very briefly, the criteria are

reasonably clear — in the general sense at least — in that a very

substantial declaration would have to be made by the new business that

it meets all of the eligibility criteria, the major one being, of

course, that it is producing new goods and services not now being

produced anywhere else in the province. The penalties for breaking that

declaration, or for signing a false declaration, are very severe. It's

the zone administrator who negotiates that declaration, not the cabinet

or the minister, as outlined in the legislation.

I agree with the member that it's very hard to decide in advance

what that business would be, except that we know we have to be

extremely careful that it doesn't affect other businesses.

MR. BLENCOE: I want to get back to the criteria of admission

to these enterprise zones. We don't know what the criteria are, and at

the moment the minister is not saying what is acceptable or

unacceptable. Let's look at the situation. Often certain unacceptable

industries, ones that are nuclear-related or star wars-related, or just

war-related.... When you have municipal checks and balances,

zonings, public hearings, processes in which the public can

participate....

[ Page 6822 ]

Let's face it, one of the types of industries that are going to be

attracted to these enterprise zones, because everything in terms of

regulations and checks and balances is going to be virtually absent, is

the type that creates great ethical concern and all sorts of other

things. I would like to know from the minister if it is his intention

to attract the kind of industry that has been turned away, for whatever

reasons, in other municipalities or other jurisdictions. What kinds of

industries is he going to attract? What are his criteria? Will he be

allowing war-related kinds of research and development, star wars kinds

of things, to happen? Those are the kinds of industries that often

can't get into other municipalities which have a public input process

whereby the public can say: "We want nothing to do with that kind of

industry." But here we are setting up enclaves in which the door is

going to be virtually open. Is that going to be acceptable to the

minister?

HON. MR. McCLELLAND: Mr. Chairman, this is really getting

ridiculous. I can guarantee that we're not going to go out and build

rocket bombs in Oak Bay. We're going to be trying to attract very

high-investment, job-related businesses which are probably going to be,

in some sense of the term, high-tech, I suppose. Perhaps not; not

necessarily. But what are you going to do? What would you do, for

instance, if you were an alderman in Victoria and somebody decided to

build something you didn't think was acceptable in Oak Bay? They don't

have to hold public hearings. They don't have to come crawling to you

and ask if they can build that in Oak Bay or not. It could be all kinds

of things that are unacceptable and don't come within the regional

district requirements. The same could be true of someone building

something in Surrey that Langley doesn't like. There's no requirement

for Surrey to do anything that Langley wants it to do, no matter what

kind of industry it might happen to be. Our powers are no different in

that regard than those of normal municipalities at the present time.

One of the companies I mentioned earlier, MacDonald Dettwiler and

Associates, is building earth-tracking stations for satellites. Do you

think that could be used for some war-related purpose sometime in the

future? Should we tell them not to do that anymore, when they're

leading the world in that kind of technology? One of the companies I

mentioned earlier is selling the computerized systems they now have in

police cars — the total communications network — to police stations all

over North America, including places that sometimes have riots. Should

we tell those guys not to build those communications systems anymore

because they might equip the policemen in a riot or something like that?

You know, there are some companies now under devolution schemes of

American defence contracts which are already building things in British

Columbia. Some companies are looking, trying to get some of the work on

the DEW line, which is a defence line. Should we tell that company not

to bid for that very attractive contract for British Columbia workers?

I mean, how far do you want to go? I can't tell you in advance what

we're going to have in these zones, but I can tell you that if they

work and they work for the kinds of industries we want in this

province, we're going to see thousands of new jobs for British

Columbians. I hope that that member wants the same thing for those same

British Columbians.

MR. BLENCOE: One thing the minister forgets, in referring to

Oak Bay or any municipality, is that once we finish this piece of

legislation here and these zones are created, there are going to be no

checks and balances in terms of the public having a say about an

industry. If they discover certain things about it, there's no process.

That's why we have to ask these questions, but you're being extremely

vague about the whole thing. Will you, in the criteria, permit some

sort of public involvement or some municipal say in terms of if there's

something.... If you're going to establish an industry adjacent to

a municipality that has some concerns over a particular enterprise,

will you allow some participation or consultation with that local

government if it becomes a matter of concern? I think that's all we're

asking.

[3:30]

MR. DAVIS: I simply want to pursue in a little more detail

the point I was trying to make earlier. The Lieutenant-Governor-in-

Council may make regulations in respect to taxes — particularly

corporation tax, property tax, sales tax, and so on — prescribing the

criteria for admission of a company as a company which would operate in

the special zone. What will the process be? Will the minister, for

instance, canvass the industry — certainly the industry as it exists in

the province currently — to find out whether Belkin, for example, or a

subsidiary of Domtar — certainly in the fine paper business — would

have engaged in the production of fine papers? I'm thinking of the

Britannia example. Is there at least an intention on the part of the

government to canvass the related industry to see whether any one of

the existing firms in B.C. or through the parents in Canada might,

given these same tax breaks, have gone ahead and built a plant,

employing more people in B.C.? What will be the mechanism? Will you be

talking not only to chambers of commerce but to actual industry

associations, or particular groups of firms that may have some

aspirations in the direction which this new firm, getting these breaks,

would have when it established in a special zone?

HON. MR. McCLELLAND: I must say that there's been no special enterprise zone declared for Britannia, so anybody that....

MR. WILLIAMS: There will be.

HON. MR. McCLELLAND: Well, you just mark that one and see if

it happens. There'll be lots more discussion needed yet before anything

like that would happen.

As to the matter of canvassing industry to make sure that it's not a

competing industry, we do that routinely now. For instance, if the

British Columbia Development Corporation.... We try very hard not

to make loans, for instance, to competing companies where a loan to one

company would have an adverse effect on another. So we have a mechanism

already for canvassing industries around the province to make sure that

we're not, first of all, competing; and secondly, we already do canvass

other companies when we get a new proposal to see whether or not there

is the capability here in British Columbia, with perhaps some help to

an existing British Columbia company, to do the job that the other

company is proposing to do.

I would expect that the zone approval board contained in the

legislation would also take on that role. Just as an aside, as a matter

of fact the zone approval board, depending on the nature of the zone

and what's happening there, could in fact have a representative from

the municipal council. Certainly

[ Page

6823 ]

as far as discussion goes, we're going to discuss wherever we do any

of this with the local officials. Of course we would, because the

company itself won't want to go into a hostile environment. No company

wants to do that. So if there's more than one zone, it may not be that

every zone would have the same makeup of an approval board. We may want

to be able to vary that, to allow for local participation on that board

as well.

MR. DAVIS: The minister seems to be saying — he hasn't said

it in quite these words — that there is an intention, indeed an

obligation on the government, to advertise the opportunity which may

exist in a zone. Some firm comes along with a particular series of

products and so on, and before that firm is given the special deal

which goes with the zone or zonal status, there would, in effect, be an

advertisement such that industries with similar aspirations — if I can

put it that way — would have their input. Is that really what the

minister's saying?

HON. MR. McCLELLAND: I don't think I used the word

"advertise," and I'm not so sure that would be appropriate. But again,

with the zone approval board an industry expert could be brought onto

the board during the time that the application was being pursued — or

maybe two, who have had experience, know the industry and would be able

to help the zone approval board in its deliberations, could be brought

onto the board during the time the application was being pursued. We'd

work something out, but as I say, we're not complete amateurs in this;

we've been doing this kind of thing for quite some time.

[Mr. Strachan in the chair.]

MR. WILLIAMS: Well, Mr. Chairman, it's not too reassuring.

Last week the other minister nodded his head that Britannia was going

to be a special enterprise zone. Gee, there you are; you've just got a

problem that way, have you? No, I don't think so.

Interjections.

MR. WILLIAMS: You get in all the debates. We all know that. Just toss it in the air.

You're saying there won't be a special enterprise zone at Britannia?

Interjection.

MR. WILLIAMS: Don't know, eh? Maybe; could be; who knows?

The man from Alberta, Mr. Mahood, said he liked all those

concessions he smelled. But what about the other paper operations? As

the member for North Vancouver–Seymour (Mr. Davis) says, this is a

natural step in terms of our major corporations in the paper sector and

in terms of moving on to finished papers and various specialized

products of that nature. M&B has another subsidiary on Annacis

Island, right by Tilbury; that's our only fine-paper producer in the

province. Are you saying that if there is another fine-paper producer

that will produce comparable materials, they will not be allowed to

enter into a zone? A few minutes ago you said if it was going to

compete with anybody in B.C. they wouldn't get into the zone. I didn't

see that in the legislation. I don't see that in the legislation at

all, unless it comes out in the regulations down the road.

MR. REID: Have faith.

MR. WILLIAMS: There are not the reassurances here that the

existing industry in British Columbia isn't going to get done in by

this process. You could drive a Mack truck through the

definitions any

time of the day or night, and that is likely what will happen. In terms

of getting value added onto our major industrial processes in the

province, this represents a major threat — and in terms of them doing

what they should be doing in terms of extending their processes and

increasing value added. If you're going to let these other birds come

in and take over with tax concessions what should be the normal growth

of the existing industry in the province, we've got a real problem on

our hands.

That's why we're not voting for this legislation, because it

discriminates against those who are here now, those that have hung in

through the miserable years since you've been trying to manage the

affairs of this province. Now they're going to get abused again in

terms of inviting people from abroad to compete with them with tax

advantages that our own people do not have. We're not getting the

assurance we should have and which the member for North

Vancouver–Seymour wants, which will avoid further hurt with respect to

existing industries and their future. I don't think we've got the

assurance, and the minister seems to think that inherent in the

legislation, if it's going to compete with anything that's in British

Columbia now, it won't be allowed. But I don't see that in the

legislation at all.

Section 3 approved.

section 4.

HON. MR. McCLELLAND: Mr. Chairman, I move the amendment standing under my name on the order paper. [See appendix.]

Amendment approved.

Section 4 as amended approved.

section 5.

MR. WILLIAMS: Well, again, the minister says the zone

approval board can include people from municipal councils and all the

rest, but it also says it can be one person, and one can't help but

wonder if that isn't really the intent: that it will just be a staff

person from BCDC or his department, and that will be it. So it's a

direct line from the minister, and that's it; all the discretionary

powers in the world then reside in the minister's office, and that's

it. Who do we give a tax concession to? Who gets the benefit? The

minister's in control — a neat arrangement, but not one with the checks

and balances that one expects in a proper system. It's a tremendously

powerful authority to give to one person, and the legislation allows

that. The chances of discrimination both for and against the people of

the province are there in that section.

Sections 5 and 6 approved.

[ Page 6824 ]

section 7.

MR. WILLIAMS: Again, it ties this to the Development

Corporation, and the Development Corporation has 5,000 plus acres of

land, of which only 10 percent is occupied. An ancillary side to this

whole thing is filling up BCDC lands. You've embarked on projects that

have not been successful. Ten years of projects, and most of them are

empty. It's going to be BCDC lands that are made use of in this regard.

So one can't help but think about it also simply as an internal real

estate endeavour. You've put in the services, you've spent the money,

you've made the investment, and it hasn't worked out very well. So the

answer is: give more money away. Throw money off the back of a truck.

That's the system in terms of getting new industry and filling up your

industrial estates in British Columbia.

Section 7 approved.

section 8.

MR. WILLIAMS:

Section 8 is the big hammer — so-called

municipal partnership arrangements. If the municipality doesn't agree

with the terms or if the municipality doesn't provide the services,

then the minister has the big hammer. They've got to provide the

services, and that's that. And they have to provide the services under

the terms that the cabinet determines. So that's what partnership means

in terms of this operation. It just guts the municipalities in terms of

their own authority and then requires them to deliver at the end.

Section 8 approved.

section 9.

MR. DAVIS: Mr. Chairman,

section 9 limits the company that

can successfully apply to be located in a special enterprise zone. I

gather this company must be incorporated as a British Columbia company.

It's not a federal company; it's a provincial company. I wonder,

looking at the rest of the clause, what position my son, for example,

would be in. He's set up a company. He's doing business in British

Columbia. It's a wholly-owned company. He is engaged in processing. I

note that also this company, besides being incorporated in British

Columbia, must be a company which has not previously carried on

business in British Columbia. In other words, my son would have to

incorporate a different company; he certainly couldn't use his existing

company. I wonder then if he could qualify if he were perhaps involved

in processing coal to make some new product not made in B.C. Could he

set up another company and qualify?

Finally, I see also this company must have no permanent

establishment outside the zone. What really is the corporate situation?

Is anyone with a company in British Columbia today precluded from

participating in a special economic zone by this clause?

HON. MR. McCLELLAND: Mr. Chairman, in terms of the first question, if

the person mentioned qualified under the eligibility requirements of the zone

approval board, I would imagine that they would be able to set up a company

and locate within the zone as well. But if they didn't qualify under some

of the sections in 9, they would have to either do the necessary things in order

to qualify or not get into the zone. It would be as simple as that. If in fact

they were carrying on business and had other similar businesses or offices outside

the zone, they would have to set up a separate company. No doubt about that.

I understand it is to protect our tax position, primarily, so that the taxes

wouldn't leak into other companies contained or owned and operated by that

person who wants to get into the zone.

[3:45]

MR. DAVIS: Well, then I assume that this matter will be

clarified in regulations and not left exclusively to a zone board to

decide. But still, I'm not clear. If there is any ownership link, is

the new company, assuming it's a newly incorporated provincial company,

disqualified if it has the same owner as another company doing business

in the province and has no permanent establishment outside the zone? I

don't know what the answer is.

HON. MR. McCLELLAND: The ownership doesn't make any

difference at all. It doesn't matter who owns the company. The

protection is built in there so that there can't be some kind of

interrelationship of the tax benefits, which we are giving to the

company which is within the zone. We don't want those tax benefits to

go anywhere else.

MR. WILLIAMS: That's it, you know. You can drive a truck through this thing; you really can.

Interjection.

MR. WILLIAMS: Any kind of truck. The bulk of the benefits

will be to the federal government. We've forgone all the provincial

taxes. Then the federal government picks up all the money — all the tax

money to be picked up. It's a really smart arrangement. It just

reinforces the whole idea that this thing was intended to be something

else. The feds simply abandoned you, and rightly so, and left you in

the circumstances where you thought you had to deliver something after

a year of promises, of a kind, and here we are. Two years of promises;

three years of promises — good lord! — and two federal administrations

of different political persuasions who washed their hands of it:

doesn't that tell us something? The member for North Vancouver–Seymour

(Mr. Davis) says: "Well, can an existing British Columbia company

simply form another company and they own it and slip into the zone?" It

sounds like they can.

AN HON. MEMBER: They can?

MR. WILLIAMS: Sure. It just has to be a somewhat different

product. The minister says it can't be competitive with anything in

British Columbia, but at the same time the legislation doesn't say

that. It's a murky, foggy thing. They still haven't thought it all

through. The pieces are still there to be worked on. They simply don't

know what kind of animal they've got here, other than that they've

thrown all the tax money into the pot and said: "Go for it."

The feds will continue to collect their taxes. The British Columbia

companies that have hung in, by and large, will be done in. They're

going to have to pick up the slack. We've got services that people

demand in British Columbia. Squeeze as you might, people expect a

certain level of social services in this province, fortunately. So the

demand will continue to be

[ Page

6825 ]

there. The money isn't going to come out of these outfits; the

money's going to come out of the outfits that have remained outside the

zones. So they're the ones that will get squeezed again, under this

legislation.

MR. BLENCOE: This is the very issue that many municipalities

are concerned about. I think the minister has virtually admitted that

if you change the name of the company and change the name of the

people, and you move into the zone, an existing business, it's going to

be okay.

HON. MR. McCLELLAND: Nonsense. Nobody said that.

MR. BLENCOE: So that's not okay?

HON. MR. McCLELLAND: I said that's nonsense, what you're saying.

MR. BLENCOE: So the criteria are going to be so clear that

you'll be able to stop a company from setting up a subsidiary with a

different name and moving into the zone?

HON. MR. McCLELLAND: They have to meet the eligibility requirements.

MR. BLENCOE: And what are those? We haven't even got any

eligibility requirements. We don't even have those. This is the

stupidity of this legislation.

HON. MR. McCLELLAND: Let's not have second reading debate

again. That member didn't understand. What do those two members have

against British Columbians having the opportunity to take

part in these

zones? You don't want the people to work in British Columbia. You don't

want ownership by British Columbians. Of course we're going to make the

criteria possible so that British Columbians can take advantage of this

if they have new ideas, if they can manufacture new items that are not

being made in British Columbia and likely wouldn't be made without

these opportunities for them. Of course we want British Columbians to

take advantage of all of our legislation.

MR. WILLIAMS: Pray tell, how do you know they wouldn't be

here otherwise? That's the kind of question that's automatically asked.

Of course, the proposed entrepreneur is going to say: "No, I wouldn't

have done it otherwise." Who's to say otherwise? If they can forgo

sales tax, if they can forgo property tax, if they can forgo corporate

income tax for a decade, of course they'll say: "We wouldn't have built

the company otherwise. We wouldn't go into the business otherwise." Who

in business wouldn't say that in order to get those tax concessions?

How in the world can you figure out whether they would have built here

had this not been the case? It's that kind of foggy loophole-ridden

mess that we've got here that gives us the problem.

HON. MR. McCLELLAND: Quickly, Mr. Chairman, there was a very

exhaustive study done by Coopers and Lybrand, or whatever they're

called, to look at the very things you're talking about. What would

attract some various kinds of companies? We had them in category, and

we've done the legislation to meet those criteria.

Secondly, they also looked at the tax benefits to British Columbia

and have concluded, in an exhaustive study, that the tax benefits to

British Columbia.... Certainly there will be tax benefits to

Canada. I would hope there would be; maybe they'll help bring down the

deficit you and I are helping to pay for. But in almost every instance

that we looked at in terms of different kinds of businesses, different

sizes of businesses and different needs for capitalization of the

businesses, the tax benefits to British Columbia were almost totally

comparable to the tax benefits that are being forgone. Again, these are

forgone benefits. I'm sorry that too many people in British Columbia

are still trapped by the economists' fear of forgone revenues, which

are really fictitious taxes, which would never have been here without

the businesses locating in British Columbia.

MR. DAVIS: Mr. Chairman, a question: who is the declarant? I

am referring of course to

section 9 — that an applicant shall include a

plan and also a declaration. This declaration is signed by a declarant

who "believes that the application would not without the incentives

under this Act be likely to locate in the Province" in one of these

zones. Now who qualifies as a declarant? It's not the marketplace,

clearly; it's some person. Is it a consultant or simply a bureaucrat?

Who decides whether this firm would locate only if the conditions

negotiated by the firm are in fact approved?

HON. MR. McCLELLAND: Mr. Chairman, it's the person authorized to do that by the corporation which is seeking entrance into a zone.

Sections 9 to 14 inclusive approved.

section 15.

HON. MR. McCLELLAND: Mr. Chairman, I move the amendment standing under my name on the order paper. [See appendix.]

Amendment approved.

section 15 as amended.

MR. WILLIAMS: Mr. Chairman, this changes the situation in

terms of municipal revenues with respect to the affected zones,

reducing them to a quarter of what they would have otherwise gotten. If

you shift from industrial land values to residential land values,

that's basically the sort of thing you're doing, in terms of my

understanding — unless I'm misinformed. The city of Vancouver reviewed

this legislation and concluded that the impact in the city of Vancouver

would be to reduce taxes collected for the municipality within the zone

to a quarter of what they would otherwise be.

HON. MR. McCLELLAND: Mr. Chairman, the member is forgetting

that we'll also be negotiating on contractual arrangements for the

purchase of services. We would expect to keep the municipality whole by

separating the two charges so that we know exactly what we're paying

for, so that the zone administration can conduct its business with the

zone tenant in a proper manner. But you cannot separate those two — the

actual tax burden plus the contracting of services.

[ Page 6826 ]

MR. WILLIAMS: The contracted services with respect to the

internal arrangements between BCDC or its companies, and the new

corporation, the new special....

Interjection.

MR. WILLIAMS: Oh. But the municipality currently gets 100

percent across the board with respect to a designated piece of land in

terms of property values. By changing it to residential assessments

under this legislation, you're reducing that by three-quarters — at

least, that's the impact in Vancouver. Are you suggesting that you

might contract back to the tune of that 75 percent? Presumably that's

for.... If that's the intent, then it's not as bad as it would

appear, but there's no requirement in the statute for that to be the

case; so you've got an awful lot of leeway in terms of your bargaining.

I'm glad to get that on the record for the benefit of municipalities

that are affected. If that is the intent, then municipalities should at

least feel better about this proposal, in that the intent would appear

to be to give them back that 75 percent, at least in terms of the

existing level of services remaining within the zone. If any losses are

to be incurred, then they're to be provincial, I assume.

HON. MR. McCLELLAND: Mr. Chairman, it's not our intent, nor

would we want to see municipal losses as a result of having a special

enterprise zone in their municipality. Many of the things we've already

done in terms of changing the level of taxation.... For instance,

in the budget on the 14th we were very careful to make sure that built

into the budget was a repayment to the municipalities for the loss of

those tax revenues. It's not our intent to have municipalities lose;

rather, it's our intent to have everyone in the province gain by this.

Section 15 as amended approved.

section 16.

MR. WILLIAMS: Again, Mr. Chairman, Vancouver's city manager,

in his report submitted to council last week, said this: "There is no

doubt that the powers in this act are very broad and many of those

powers are delegated to the zone administrator. One

section of the bill

gives the zone administrator really quite dictatorial powers." That's

the view of the top administrator in the city of Vancouver in terms of

the powers you're taking, the powers you're usurping and putting in the

hands of one of your appointed bureaucrats. That's not very reassuring

for the general public.

Sections 16 to 28 inclusive approved.

section 29.

HON. MR. McCLELLAND: Mr. Chairman, I move the amendment standing in

my name on the order paper. [See appendix.]

Amendment approved.

Section 29 as amended approved.

Section 30 approved.

Title approved.

HON. MR. McCLELLAND: Mr. Chairman, I move the committee rise and report the bill complete with amendment.

Motion approved.

The House resumed; Mr. Speaker in the chair.

Bill 49, Special Enterprise Zone and Tax Relief Act, reported complete with amendment.

MR. SPEAKER: When shall the bill be read a third time?

HON. MR. McCLELLAND: With leave now, Mr. Speaker.

Leave granted.

Bill 49, Special Enterprise Zone and Tax Relief Act, read a third time and passed.

[4:00]

HON. MR. GARDOM: Second reading of Bill PR405, Mr. Speaker.

VANCOUVER STOCK EXCHANGE

AMENDMENT ACT, 1985

MR. REE: There is little I can add to what I indicated to the

House at the introduction of the bill and also what was discussed in

private bills committee. I think it is a good amending bill to the

original Vancouver Stock Exchange Act. It clearly sets out that the

exchange is a non-profit organization, which will assist them,

certainly, with the federal income tax people. This bill will

facilitate the holding of meetings within the exchange, clarify the

authority of delegation of power and I think broaden the composition of

directors of the exchange.

MR. COCKE: The opposition has no objection to this bill.

MR. REE: I move second reading of Bill 405.

Motion approved.

MR. REE: With leave, Mr. Speaker, I move that the bill be referred to a Committee of the Whole House forthwith.

Leave granted.

Bill PR405, Vancouver Stock Exchange Amendment Act, 1985, read a

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

consideration forthwith.

VANCOUVER STOCK EXCHANGE

AMENDMENT ACT, 1985

The House in committee on Bill PR405; Mr. Strachan in the chair.

Sections 1 to 3 inclusive approved.

[ Page

6827 ]

section 4.

MR. REE: Mr. Chairman, I move the amendment standing under my name on the order paper. [See appendix.]

Amendment approved.

Section 4 as amended approved.

Section 5 approved.

Title approved.

MR. REE: Mr. Chairman, I move the committee rise and report the bill complete with amendment.

Motion approved.

The House resumed; Mr. Speaker in the chair.

Bill PR405, Vancouver Stock Exchange Amendment Act, 1985, reported complete with amendment.

MR. SPEAKER: When shall the bill be read a third time?

HON. MR. WATERLAND: With leave of the House now, Mr. Speaker.

Leave not granted.

DEPUTY SPEAKER: When shall the bill be considered as reported?

HON. MR. WATERLAND: At the next sitting of the House after today, Mr. Speaker.

I call Committee of Supply, Mr. Speaker.

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

ESTIMATES: MINISTRY OF

INTERNATIONAL TRADE AND INVESTMENT

(continued)

On vote 49: minister's office, $143,191.

MR. COCKE: Mr. Chairman, the new minister, a sort of worn-out, tired old minister but in a new office...

MR. CHAIRMAN: Order!

MR. COCKE: ...has been given a different obligation by this new post.

However, he's been doing the job for the last number of years. I would hope

that under the present circumstances he would be more successful than he has

been over the last several years. He's been travelling the world from one

end to the other. He probably spends more time in Tokyo than many of the nationals.

I haven't seen too much come to British Columbia as a result of the fact

that he's been doing that work. So, Mr. Chairman, if he has something to

tell us with respect to just what he has been doing and what he plans to do,

we'd all be interested in hearing. Having said that, and seeing that none

of my colleagues seem to be terribly interested in this vote 49, I'm certainly

not going to carry it very much longer.

HON. MR. PHILLIPS: In response to that devastating attack by

the member for New Westminster, I'd like to reiterate, as I have done

in the past, that trade in the Pacific Rim countries in the last ten

years has gone up enormously. Investment in British Columbia is evident

in many areas from Pacific Rim countries, e.g. Korea, which made the

first offshore investment in any mine anywhere when they invested in

the Greenhills mine. Trade with China has gone up dramatically in the

last ten years. Our trade with the ASEAN countries has increased. Trade

with Japan has more than doubled. If the acceptance that we received on

this last trip to Japan and Korea is any evidence, it will be going up

dramatically in the very near future again.

MR. WILLIAMS: I wasn't reassured earlier this afternoon when

I got the response that it was really a job of selling. That's clearly

the way this minister and the other minister see this operation in

British Columbia. It's not a matter of in-depth research; it's not a

matter of intensive work at home; it's simply a matter of selling. I

can understand this minister's having that kind of faith in selling,

just as a salesman. But this is not an automobile lot in Dawson Creek:

this is all of British Columbia, and this is the international world —

very sophisticated. It isn't just a matter of selling. I can understand

why the minister feels good about that, because he is one dandy

salesman; there's no doubt about that. He can sell a lemon when nobody

can sell a lemon. Some ability — no doubt about that. But is that what

we really want? Do we want lemons being sold? No, I don't think we do.

When you think about it, he sold northeast coal, and that's still a

slightly sour lemon. But he sold it to all these people. He sold the

northeast coal project to the Japanese; he sold it to the federal

government; he sold it to the province of British Columbia, his

colleagues; he sold it the companies; and he sold it to the banks.

That's some selling; there's no doubt about that. But in terms of the

benefits, that still remains to be seen.

The attitude of just wanting to cut a deal, the attitude of saying,

"Let's do business — any deal" — behind that is a real fear. It's okay

to think in those terms, in terms of smaller scale commodities, and

when it is a private business on your own, and when a whole provincial

economy isn't tied to its tail. But when you're selling, and you just

want to cut a deal, we've got a whole provincial economy that's tied to

it.

There's another underlying assumption, I think, in everything that

this minister does, and that's an assumption that all foreign money is

a good thing: any new money, no matter what, or any foreign money, no

matter what, is a good thing. That's just a given in the perception

there. I don't think that's quite good enough.

[Mr. Ree in the chair.]

I wonder if the minister, after all his trips to Japan, has ever

sort of pulled back and said: "How do the Japanese feel about all this?

How do they feel about foreign money in their economy? Do they make

some judgments about what's good, what's bad and what's indifferent?"

You bet your life they do. They have tariffs and protections and

quotas, and the big five traders make judgment about what they'll buy

from abroad

[ Page 6828 ]

and what they won't buy from abroad. They make those kinds of

decisions all over the place in Japan. It's a very tightly run economy

indeed. They make some decisions about what's best for them, and it

isn't a matter of all foreign money being a good thing at all in Japan.

This is clearly one of the great success stories in terms of modem

economies, but that doesn't seem to click in terms of the operations of

this minister. They have a Ministry of International Trade and

Investment that makes this look like the peanut stand it is. It's a

total economic unit that is looking at every sector of their national

economy and is working with the banks and the major industries. It is

determining strategy, licences, quotas and authorities across the line

throughout their national economy. It's a very different cat indeed.

It's not just some kind of salesman agency with a big bill for travel

expenses and a big bill for consulting fees. They have in-house

knowledge and in-house authority in terms of dealing with their own

economy, and that's not what we've got here at all.

When one sees what's happening in this provincial economy, you keep

asking yourself: "Who is running this ship?" You look down those empty

benches over there, and it's a ship of fools and there's no captain on

board.

SOME HON. MEMBERS: Order!

MR. WILLIAMS: It's right, you know. There's nobody. Who's

running this economic operation in British Columbia? The answer is:

there's nobody home. You don't pay deputies enough, anyway. In terms of

what the heck you're going to get, in terms of those slots, in terms of

the ministerial functions, in terms of competing with the kinds of

international people you have to deal with and compete with, there's no

way in the world, with your budget and your capacity in this

department, of really doing something. I just shudder at the thought of

how vulnerable we are in macro-economic planning in British Columbia.

It just isn't there.

Occasionally there's an exercise in crisis management, and that's

what we're getting today, with the Premier flying off to Washington,

D.C. I've been to Washington, D.C., and I've met with some of their

legislators and some of their cabinet people in the past. I'll tell you

that the lowliest economic or executive assistant in Washington, D.C.,

is going to be able to beat the pants off most of our administrators

here in British Columbia, I'm sorry to say. The thought of doing that

whole route in Washington and Japan just scares the pants off me in

terms of our being able to stand up to that kind of tough competition

and scrutiny that one gets abroad.

What about real targeting and the kind of backup research and staff

work? I don't think it's there. I listened to your speech on Friday,

and I actually made very careful notes. I didn't get the picture that

there was that kind of precise honing in, targeting and understanding

what we were really looking for. It was more like what the Premier said

when he went with you on that trip a couple of weeks ago. He said:

"Well, no, we didn't do that much homework. But I've got a nose for it.

I'm an old-time businessman, and I've just got a nose for these

opportunities." I'll tell you, his nose is starting to look like Joe

Louis's in terms of the provincial economy of British Columbia. That

kind of old-time attitude isn't the way we're going to have to move on

in building this provincial economy. We should ask ourselves

specifically what we want out of foreign capital, and I don't think

we're doing that.

We're really saying that we'll take anything and everything that

comes, and I don't think that's a very sensitive or sensible approach.

[4:15]

The Japanese have made it very clear that that's not their approach

in terms of what they want to do in Japan. Without any question there

are lessons to be learned from the Japanese, but there's no evidence

whatsoever that we're learning any lessons from them in terms of the

benefits we might get from our own provincial economy.

We should look at what Sweden has done. It's a very successful

economy that has been very careful about who they let own their means

of production, who they let own the land of Sweden and who they let own

the resources of Sweden. They've been very careful indeed since about

1916. It seems to me that we, with this tree-based economy in British

Columbia and a landscape similar to the Nordic countries, might well

look to these countries as models of achievement, because their

economic achievements are great compared to our own. Think about the

rules they've set in terms of establishing their own modern economies in

the Nordic countries. We never get that happening. This minister isn't

going to Sweden to learn the details on how they manage their economy.

He's busy doing his salesman job, mainly in the Pacific Rim.

I have some serious doubts about some kinds of foreign capital. I

think they're reasonable doubts. I have trouble figuring out the

benefit to British Columbia of foreigners coming in and buying downtown

Vancouver. What are the real benefits in terms of new productivity, new

enterprise and all that sort of thing when offshore people come and buy

up the land of downtown Vancouver? I don't know what those benefits

are. We're busy building an ALRT line costing $1 billion that's going

to increase the value of land in downtown Vancouver. That's why

foreigners are buying land in downtown Vancouver. They know we're going

to be foolish enough — or whatever you want — to continue.... We're

going to spend a lot of money around downtown Vancouver. We've got B.C.

Place, ALRT, Expo and all the rest of it, and there are surplus

benefits to be picked up. That's why they're going to downtown

Vancouver. What do we get out of it? I don't know what we get out of

it. I know why they're there: they're there for the surplus. Somebody

has sold....

But there you are. In terms of our urban land and our valuable

agricultural and forest land, I don't see any great economic benefit in

foreigners coming in, taking over and getting control. They're there

for the rent collection opportunities. They're there for the unearned

increment. They're there for the capital gains being produced for the

future. Many of them have reaped those surpluses and capital gains

already. I don't see that as a positive or productive aspect in terms

of genuine production in the economy, which is what should interest us

all the most — job creation and new entrepreneurial effort. I think

people from outside can help us greatly with genuinely new

entrepreneurial effort. But that's not what we're getting when they buy

a chunk of real estate in downtown Vancouver. They're just there for

the free ride, with our pumping more money into the downtown economy

and the infrastructure that we continue to spend money on.

We should spell out what we're looking for and then focus — set some

rules about where we want foreign money and foreign capital going. I

think that makes sense. Then we get the benefit of new technology,

entrepreneurial capabilities and the like. That's what we should be

looking to foreign

[ Page

6829 ]

capital for, I would suggest, not those who just want to be there

for a free ride in downtown Vancouver — I don't think that's the way to

go.

I can remember an example of a foreign takeover proposal from when I

was responsible for the Ministry of Forests many years ago. The

Marubeni Corp., one of the big five traders from Japan, had looked at a

sawmilling operation in Clearwater, up the North Thompson River from

Kamloops. It was the Swanson Lumber Co., which had been operating for

some time in Clearwater. They had a tree-farm licence, a significant

land area in terms of public resources, near Clearwater. The Forest

Service was asked for a report by the minister: "Dear Forest Service,

what do you think of this proposal? Marubeni wants to take over the

Swanson operations and the tree-farm licence." A memo came back from

the Forest Service: "We think it's okay. Yours truly...."

Well, the minister called them and said: "Why do you think it's

okay?" They said: "Well, we think it's okay because it's foreign

capital." Ten million dollars was going to be paid for the company and

tree-farm licence assets that Marubeni wanted. I said: "Will you check

out where the $10 million is coming from?" They went back and checked

it out. Do you know where the $10 million came from? I'm sure you might

be able to tell us. Where do you think? Half of it came from the

chartered banks. Our banks in British Columbia were going to pay for

the upfront money for taking over the Swanson brothers' operation in

Clearwater, the main industry in that part of British Columbia. Five

million dollars was going to come from our savings in the chartered

banks, and $5 million was going to come from the Swansons themselves,

who were going to carry on secondary financing. So the $10 million from

the Marubeni Corp. to take over our land — that is, the tree-farm

licence — and the mill in Clearwater was coming from us, from Canadians.

Do you think the Japanese would entertain such a stupid idea for one

minute? Do you think that any advanced economy in the modern world would

be so stupid as to let its own savings be applied to the takeover of

industry in its own sovereignty? What kind of sense does it make? What

kind of benefits are there in that? The Forest Service staff had to

reflect on this and conclude: "Yeah, that's right. There aren't the

benefits. It's our savings being applied to a takeover by a foreign

company. It's not bringing any new technology. The milling industry in

Japan is not an advanced industry."

That's a classic example of foreign money not really benefiting the

people of British Columbia. Yet the underlying assumption in terms of

everything you do is that it's good — that it's good no matter what it

does or where it goes. That doesn't make any sense to me at all.

I'd like to continue on, Mr. Chairman. Maybe one of my colleagues has something important to say as well.

HON. MR. PHILLIPS: Well, Mr. Chairman, that was an

interesting dissertation by the member for Vancouver East, as usual

talking airy-fairy theory and comparing that great country of Japan

with the economy of British Columbia, when there is absolutely no

comparison whatsoever.

AN HON. MEMBER: Hallelujah!

HON. MR. PHILLIPS: Hallelujah! In Japan you have a closed

economy, a very closely-knit economy. And it's hardly fair, with

respect, to compare a provincial jurisdiction with a country. Why don't

you start comparing the policies of the Canadian government in Ottawa

with that of the Japanese government? Why don't you do your comparisons

on an equal basis, so you can talk about apples and apples and oranges

and oranges? Indeed, when you start talking about research and what

ability we have, that research, I think, and that ability is fairly

well set up under the Ministry of Industry and Small Business. We've

been doing a lot of research. I have to agree with the member that not

all investment is good investment. That is part of the process.

With regard to the type of investment we want, and where we can sell

our products, we will be doing a lot more reconnaissance missions,

going out and finding out what is available and where we can take our

small business, our entrepreneurs and put them in touch with the

markets. That's part and parcel of our responsibility. With regard to

investment, we will be seeking out those areas where there is

investment money available, for what type of investment money will come.

To stand here in the Legislature, though, Mr. Chairman, and start

talking about real estate investment in downtown Vancouver as pertains

to this ministry is hardly getting down to the nuts and bolts of this

ministry. If you want Canada or downtown Vancouver to enact legislation

that prevents static investment of real estate by Hong Kong investment,

that's not up to me. That's a different situation. But just remember,

you can go to downtown Minneapolis, and some of the largest buildings

in the centre of Minneapolis are owned by Canadians. Ask me why they

went to Minneapolis. Why can you go to California, Washington and

Oregon and find Canadian real estate companies have invested and done

very well? I don't know. Why is there free flow of money between

nations and between peoples? That's hardly getting down to the nuts and

bolts of this administration.

MR. WILLIAMS: I was expecting a little more hellfire and brimstone, but there you are. We all get older.

Is the minister saying that if the city of Vancouver decides that it

really isn't in the city's benefit to have absentee foreign ownership

in downtown Vancouver, the government will entertain legislation for

the city to limit this?

HON. MR. PHILLIPS: No. What I'm saying is you've got to talk

about a national policy on whether we're going to have investment. I

suppose you could say maybe you didn't want the Grosvenor people to

invest in.... What island is it?

AN HON. MEMBER: Annacis Island.

HON. MR. PHILLIPS: In Annacis Island. Maybe you didn t want

the Grosvenor people to build a downtown building. I don't know. You're

talking about an entirely major change in our attitude towards static

investment. I think it has to be looked on in terms of Canadian

context. You're not going to discriminate in downtown Vancouver. Are

you going to discriminate in downtown Toronto? Are you going to

discriminate in downtown...? My heavens, when you really boil it

down, Canada needs development money, because it certainly isn't going

to come from eastern Canada. A lot of their investment will flow north

and south, as it typically has. If you're going to talk about the

curtailment and the flow of capital and about static investment, that's

a major problem and certainly one that we should use in a different

form rather than in this ministry's estimates, because you're talking

about a national scene.

[ Page 6830 ]

MR. WILLIAMS: Well, the ministry has this grandiose title,

Mr. Chairman: Ministry of International Trade and Investment. That's

pretty grand. I think that covers international investment in British

Columbia. A lot of that investment is in sterile real estate; it's not

productive enterprise. That's the issue. We don't gain from sterile

investments; we gain from productive investments in productive

enterprises that are turning out products, not capitalizing on real

estate gains in the city of Vancouver or elsewhere. Much of the foreign

capital that's coming into British Columbia is geared to just that. You

may very well mention the Guinness interests. It's true they developed

Annacis Island, and at an early stage. But they also developed highrise

sites like the Marine building and the Oceanic Plaza and other

buildings on West Pender and Hastings in Vancouver, and they're

flogging them right now. They sold them for $70 million, and they

probably cost them $30 million. That's a $40 million capital gain in a

relatively short period of time in terms of the new buildings, just

being flogged. That's automatically impinging on our balance of

payments, and they're running off with the money in terms of using it

elsewhere, abroad. Those are surpluses. Those are surpluses generated

in British Columbia that could be put to work for British Columbians.

That's the whole point of what I am trying to get across to this

minister: that these kinds of surpluses are best used reinvested in

British Columbia, that a community needs those surpluses in terms of

embarking on its own programs and advantages for itself.

So I gave the example of Clearwater and the Swanson Lumber Co. There

it was: it was going to be $10 million of foreign capital, it appeared

on the surface, but it wasn't. It wasn't new capital at all. It was

using Canadian savings here in Canada to fund the whole transfer. Then

what would happen? The surpluses from Clearwater timber would go to the

Marubeni Corp. in Japan.

Now it's complicated by the fact that these foreign companies can

end up playing internal pricing games. When I checked some of them out

again a decade ago, I found that they played internal pricing transfer

games and made sure that they had no profit in British Columbia. We had

pulp operations in Mackenzie and elsewhere, owned primarily by the

Japanese, who were rigging prices in terms of what they were selling

their product for, in order to avoid paying corporation income tax and

taxes in British Columbia, so that there would be an even bigger profit

abroad in Japan internally, picked up by the parent company.

Those kinds of games go on in terms of international companies, and

they need to be policed and reckoned with in terms of any kind of

program wanting foreign capital in British Columbia. But I doubt if the

minister has ever thought of that kind of question in terms of internal

price transfer arrangements in terms of these large companies. They're

doing it every day. So I have this uneasy feeling about rubes running

the show in British Columbia, and the swiftest people in the

administrations abroad dealing with them, and that's kind of disturbing.

[4:30]

[Mr. Strachan in the chair.]

The surpluses really can.... Are they the means of renewing the

provincial economy? These surpluses that foreign companies can pick up

in British Columbia are surpluses that should be reapplied in British

Columbia. Never, ever do we hear from this minister on that side of the

equation. When people put money in British Columbia, they want to take

it out as well. That's reasonable and that's understandable, but how

much do they take out and how much might have remained in British

Columbia had we had different policies? That's never reflected on by

this minister. I've never heard him give comments about that.

The greater challenge by far, here in British Columbia and in

western Canada, is mobilizing our own capital, our own savings. Does

the minister know how much of Canadian banks' assets are already

abroad? Any number? Canadian chartered banks, who could be funding much

of the rebuilding of western....

Interjection.

MR. WILLIAMS: "What do you think — I should know something

about this subject?" says the minister. You should. Forty percent of

the banks' assets in this country are abroad — 40 percent.

Interjection.

MR. CHAIRMAN: Order, please. I'll ask the minister not to interject, and perhaps the member can address the Chair.

MR. WILLIAMS: I'll tell you, in terms of Vancouver City

Savings, we've changed the rules: they end up putting the depositor's

money back into the economy of the lower mainland. That's where they

get their money. I'd like to see that apply generally across Canada,

and that 40 percent of assets....

Interjections.

MR. CHAIRMAN: Just a moment, please. I'll again ask the

minister not to interrupt and ask the second member for Vancouver East

to address the Chair and also the vote.

MR. WILLIAMS: International investment, yes. The

opportunities in terms of Canadian investment are great, and while

international investment has its place, and we have a need for it,

there are these tremendous opportunities internally. If the banks have

40 percent of their assets out of the country, between the banks and

the pension funds, we have a tremendous opportunity in terms of

building our economy with internal funds without the problems of

exchange rates, without the problems of deficits.

You know, that's really the bigger challenge. All it requires is a

taxi ride, in terms of dealing with some of these people, and it's not

a 747 that I am talking about. The minister is used to having that as a

taxi. What we really need is simple homework. It's a phrase that school

kids know — homework, work at home — and that's what we need first in

terms of rebuilding the provincial economy.

You know, the forest industry desperately needs retooling and

rebuilding. We're now a generation behind the Scandinavians. We haven't

caught up at all. There is a great need for capital to be applied in

this industry in terms of value added and the rest. That's homework;

that's work to be done at home and work that should be pursued. I think

it needs a lot more know-how than we've seen so far out of this

minister and that ministry.

When I think about the major deal that he has cut in terms of his political career, northeast coal, a few shudders go

[ Page 6831 ]

through in terms of him extending his work for the people of British

Columbia. It seems to me that the minister has never had a handle on

how the Japanese perceive some of these contracts and arrangements. I

remember the minister saying a year ago that he had a firm deal for

northeast coal; it couldn't be changed. The contract was this high; no

changes in volume, no changes in price. Got a firm contract; going to

stick by the contract; can't change the contract. But what happened?

The thing got cut in terms of volume and price.

Well, that's the situation. The minister had trouble even figuring

out what 10 percent was, if I remember correctly, and thought we were

only losing a few cents per tonne of coal because of the impact on

royalties, when we were losing a few dollars. And volumes? They've all

been impacted. The Japanese have made sure, in dealing with their major

commodity needs, that they always have an oversupply of product so that

they can play off one competitor against the other. This minister has

willingly entered that game in terms of spending a bundle of money — $3

billion in northeast coal, $700 million of provincial money — and has

assured them that their oversupply game can be played well into the

future indeed. It has impacted the southeast coal problem and area;

they've had price cuts and volume cuts as a result of this minister's

activities in the northeast.

But I'm even more worried by the attitude that's there in terms of

the Japanese. I went through a speech given on May 27 of this year —

just last month — by Takashi Imai, managing director of the Nippon

Steel Corporation, to the Canada-Japan businessmen's conference in

Calgary. He points out that indeed there is an oversupply of coal in

terms of demand and need, and there have been adjustments in price and

volume, even though the minister was blandly saying as recently as

seven months ago, or something like that — last fall — that there would

be no changes with respect to price or volume. But Mr. Imai said, in

his speech in Calgary, that there is a very big problem: "Canadian

new-project coals are much more expensive than traditional coals and

new-project coal even in the United States and Australia. A very big

problem." Then he outlines the very big problem. "It is a very heavy

burden on us," says the businessman from Japan, as if it weren't a

burden on the people of British Columbia, who threw $700 million plus

into the pot. Then the head of Nippon Steel starts waving his stick in

our direction and says: "Even new-project coals cannot be traded

forever at the price level far above the market." What does that mean?

So watch out in the future, Mr. Minister who cut a deal with the

Japanese, saying it was never going to be changed; it was always going

to be a high price, a high volume. You said it was a firm contract.

It's anything but. The payback for B.C. was based on ever-improving

vistas and scenarios in terms of prices increasing. Well, you can

forget that one in terms of what Nippon Steel is saying today.

Mr. Imai carries on on the question of price. What does he say? "The

base price must be reviewed..." So much for that contract. And how

should it be reviewed? "...so that price is adjusted to an

equitable level with traditional coals." Traditional coals. Not

new-project coal in Australia, not new-project coal in the United

States, not new-project coal in British Columbia, but traditional coal;

cheap coal available a decade ago around the world. That's what

he's talking about. He wants us in British Columbia, who built what the

Premier called "this great new transportation system," going from

nowhere to nowhere to Tumbler Ridge, to start accepting a price equal

to traditional coal prices around the world where there aren't the

costs of infrastructure that we have here in British Columbia.

That's pretty disturbing stuff. What does it mean in terms of

dollars? Well, current traditional coal prices are around $69 a tonne.

What we're getting now, after the last cutback, is around $90 a tonne

for northeast coal. What are the volumes up there? They're something

like 7.3 million tonnes annually between the two operations — or

supposed to be. That's $140 million, isn't it, or something like that?

That's the kind of cutback Mr. Imai was talking about in his speech in

Calgary. He's saying: "What I'm going for, my friend Don, is $140

million in my pocket, and what are you going to do about it?" That's

what he's saying. Boy, are we going to get fleeced! That's another $140

million reduction. What does that mean? That probably means a negative

cash flow problem for those companies. That's not paying off the banks;

that's biting into operating costs. Think of the kind of disaster we'll

have on our hands if Nippon Steel has their way.

What else does he say? This is Mr. Imai speaking in Calgary a month

ago. He said: "The imbalance" — that was on price; now he wants to talk

about volume — "in intake tonnage between traditional and new project

coals must be rectified by gradually reducing the preferential

treatment in the intake of new project coal." What does he mean by

"gradually"? He's cutting back in terms of price; now he says he wants

to cut back in terms of volume. He's leaving you out to dry. Mr. Imai

says: "I think the present distinction between the new and the

traditional coals must be thus removed within a few years." He wants to

cut down the volumes; he wants to cut down the price by 20 bucks a

tonne within a few years. What's that going to do to your project?

What's that going to do to the corporations that have invested up

there, Mr. Minister — who has wanted international money at any price?

HON. MR. PHILLIPS: Well, I expected some heavies from the

other side, but it's the usual beating around the bush and talking

about things, some that exist and some that don't. You're talking about

investment in this province in various industries. You picked one

particular aspect, where Marubeni was going to invest in Clearwater in

a mill, and some Canadian banks, which you don't seem to have a great

deal of respect for, were going to put up some money, and you talk

about keeping the money at home. I want to remind you that that

particular deal that you're talking about was a long time ago.

Interjection.

HON. MR. PHILLIPS: I'm talking about Clearwater. Don't get

the deal confused. We're talking about Clearwater. Why didn't you talk

about Crestbrook Forest Industries, who haven't taken any money out?

MR. WILLIAMS: They didn't put much in.

HON. MR. PHILLIPS: They're still putting it in. As a matter

of fact, they're spending $20 million or $50 million — I think it's $20

million — this year modernizing their plant. Why don't you talk about

some of the areas where investment brings stability, and where

investment, my friend, brings an export market? Why don't you talk

about that? I'll tell you, if you had had your way, and if the

socialists down in Ottawa had had their way, we wouldn't have any

investment, and we wouldn't have any markets. It's a two-way street.

[ Page 6832 ]

[Mr. Veitch in the chair.]

It's all very well and great for you to talk about what you've done

with the Vancouver City Savings Credit Union. If you want to go to

Ottawa and change the Bank Act so that Canadian banks can invest

somewhere else, then maybe they should change the laws and keep other

banks and all their money that's flowing into British Columbia — the

international banking system in Vancouver that's flowing in. Maybe

you'd change that same law.

You see, you pick a particular deal that fits your particular

socialist philosophy, which is one that you feel you have to own to

control. Well, thank God we don't have that society in British

Columbia. We don't have it in Canada. It would be a lot different

society than we have today, I'll tell you.

You forget that Canada is a trading nation, and that we rely more

heavily on trade than any other of the developed nations in the world,

save and except Germany. Japan, as you well know, only exports 14

percent of their gross product; the United States, about 10 percent;

Canada, 28 percent; West Germany, 32 percent. When you talk of

economics you try to set us out as an island unto ourselves, where

we're not depending on the international market.

[4:45]

I have said, time and time again, that I wish Canada had a

population of 120 million or 130 million people. Then we would have a

marketplace here in Canada that we could manufacture and sell and

generate the economy, like the States has done, like Europe has done,

like Japan has done. We don't have that. We are dependent on external

affairs. It's great to talk socialist philosophy, where you're going to

set up Canada, or British Columbia, as an entity unto themselves. You

can't do that, my friend. I don't like some of the things we have to

do, but indeed you have to live with the reality.

You talk about foreign investment. I'll tell you, the Japanese steel

industry has an investment in the northeast coal project. You like to

pick on one particular company, Quintette. Why don't you talk about the

Bullmoose project? If that project hadn't gone to British Columbia, you

would have seen those jobs go to the United States, Australia or some

other country. I guess that's what you really wanted.

You stand up over there and yack, yack, yack about jobs and

unemployment, but you stand up and talk against every single project

that we've had in this province. I don't know if you think you're going

to have a magic wand, and all of a sudden there are going to be

thousands of jobs. Where do you think the money is going to come from?

Where do you think we're going to sell the products we produce? You

can't isolate British Columbia; it's not an island unto itself. It is

dependent on external factors and always will be, until we build up

sufficient population that we can generate our own manufacturing and

have our own common market. We haven't got that.

I want to tell you that we're diversifying, and we're diversifying a

lot faster than you over there would like to give us credit for. You

say we didn't do any planning. What do you think my friend Dr. Pat

McGeer has been doing for the last few years, inviting in and building

up high-technology industries? What do you think all our policies are

about? Bringing investment here and diversifying our market. Why don't

you open your eyes and find out what's going on? You talk about

policies. My God, since the budget came down people have been beating a

path to British Columbia. Announcements are being made; things are

happening, my friend. Investment is coming, and it will come a lot

faster and bring those markets and provide those jobs.

For your own political purposes it's great to stand up and make

these speeches. I suppose you read them at your nominating meeting and

say: "See how I told those guys over there."

MR. WILLIAMS: Sure, and I get renominated.

HON. MR. PHILLIPS: Well, you were out for quite a while. I

won't talk about that right now — but maybe we should get you some

investment in that hotel you're going to build up in Nanaimo....

MR. CHAIRMAN: Please addr