1974 Legislative Session: 4th Session, 30th Parliament

HANSARD

The following electronic version is for informational purposes

only.

The printed version remains the official version.

Official Report of

DEBATES OF THE LEGISLATIVE ASSEMBLY

(Hansard)

TUESDAY, MAY 28, 1974

Night Sitting

[ Page 3485 ]

CONTENTS

Night sitting

Routine proceedings

Assessment Authority of British Columbia Act (Bill 147).

Hon. Mr. Barrett.

Introduction and first reading — 3485

British Columbia Ombudsman Act (Bill 150). Mr. Gardom.

Introduction and first reading — 3485

Mineral Royalties Act (Bill 3 1). Second reading.

Hon. Mr. Nimsick — 3485

Amendment to postpone second reading.

Mr. Bennett — 3490

Mr. Gibson — 3501

TUESDAY, MAY 28, 1974

The House met at 8:30 p.m.

Introduction of bills.

ASSESSMENT AUTHORITY OF

BRITISH COLUMBIA ACT

Hon. Mr. Barrett presents a message from His Honour the

Lieutenant-Governor: a bill intituled Assessment Authority

of British Columbia Act .

Bill 147 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.

BRITISH COLUMBIA OMBUDSMAN ACT

On a motion by Mr. Gardom, Bill 150, British Columbia

Ombudsman Act , 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.

Orders of the day.

HON. D. BARRETT (Premier): Mr. Speaker, I move that we

proceed to public bills and orders.

Motion approved.

HON. MR. BARRETT: Adjourned debate on second reading of Bill

MINERAL ROYALTIES ACT

(continued)

HON. L.T. NIMSICK (Minister of Mines and Petroleum Resources): Mr. Speaker,

first I'd like to know what's in that box over there. Are they tomatoes or eggs?

Interjections.

HON. MR. NIMSICK: Before that delightful time we had up in

the De Beck Lounge I had to adjourn the debate.

interjection.

HON. MR. NIMSICK: Well, I'm going to say a couple of words

that I didn't last time.

This was that picture of that ad that was in the paper. "Will he be the last

of a vanishing breed?" After I had spoken about it, I brought up the question

of employment in the mining industry and showed you how every year the miner

is working, in order to make his wages and in order to hold his job he's got

to dig out more of the resources out of the earth. And if this keeps up, eventually

with automation he would be a vanishing breed.

Now we come to government revenues and expenses. How much

has the province received from the depletion of these mineral

resources of the province over the previous years? Some people

talk about the immense amount of money that is spent by the

mining industry and how much money the people of British

Columbia are receiving from the mining industry, and how much

taxes they've got to pay to the country.

Now there was a meeting down in Montreal and they say there:

"The mining industry in Canada is thought to be among the most

favorably taxed in any country in the world. Frank R. Jobin, a

geologist…." This is out of The Globe and Mail , March 12,

"Frank R. Jobin, a geologist and consultant to the administrators of the United Nations development

programme, provided a most optimistic ray of light in what was

a mostly gloomy evaluation of Canada's mineral exploration

climate during a symposium at the Prospector's and Development

Association annual convention.

"Mr. Jobin, speaking to the topic, 'Canada: Is the Exploration

Environment Competitive?' had no doubt at all, despite all protestations to

the contrary, that the Canadian mining sector, like its sister extractive industry

oil and gas production, enjoys the lowest average income tax rates of all industrial

sectors of our economy.

"He contrasted Canadian average tax rates which, according to Statistics Canada in 1969, were 12 per

cent of the book profits of mining companies and 34 to 43 per

cent for all other industrial sectors to foreign taxation

practices. "Our mining industry is clearly a tax-favored industry. The profits tax treatment for mining abroad is

very uncertain and subject to drastic change, and almost

certainly is never more generous than in Canada."

So we look to British Columbia, and we know how much of this

resource has been depleted over the years. We check to see how

much revenue the Province of British Columbia has enjoyed from

the mining industry. In 1967 and 1968 with a total value of

$383 million, the direct revenue to the province — that includes

the mining tax — was $4.6 million. We expended during that year

by the department to the service of the industry $5.02

million.

We spent more in servicing the industry than we received in

direct revenue from the industry.

The same situation in 1972-1973….

[ Page 3486 ]

MR. D.E. SMITH (North Peace River): Where did you get those

figures? You don't even believe them yourself.

HON. MR. NIMSICK: You look in the annual report of the Mines

department and you'll find them if you would read it. In

1972-1973 it was $637 million in value. We had a direct revenue

of $6.5 million and we spent $6.5 million in servicing the

industry. The very argument that I just read out to you a few

minutes ago bears that out.

I haven't got the returns from the 1973-1974 figures, but

the results over the years….if you go back over the years

you will find that in many of the years we haven't taken in in

direct revenue from the mining industry as much as we have

spent in servicing the industry.

Now if you call that good business! Being MLAs, each and

every one of you, it's your job to look after the resources of

the province. We are stewards of the resources that belong to

the people of British Columbia.

Interjection.

HON. MR. NIMSICK: I'll come to that too, and I'll show how

wrong you are there also.

I want you to understand that the purpose of the royalties

is to bring to the people a share of this non-renewable

resource. One thing we must remember, if you are running a

business — and I heard some people talking about a popcorn

stand some time ago — you've got to pay for every ingredient

you put into that business. In regard to the mining industry in

British Columbia we have said over the years to the operators

that they don't have to pay anything for the product unless

they make a profit.

Interjection.

HON. MR. NIMSICK: It was never lost; it was always there.

(Laughter.)

The minerals are not lost; they are like money in the bank.

Thank God they are not that easily found because if they were,

they would have cleaned it up years ago.

You say that it costs money to find them. If we were to find

the minerals and have it all ready for production, don't think

that you would get off at 2.5 per cent or 5 per cent royalty.

You would have to pay a lot more for it. The only reason that

you can get off with a small royalty is the fact that you may

put up some money in order to develop a mine.

At present we collect the mining tax on the profit.

AN HON. MEMBER: On the profit?

HON. MR. NIMSICK: On any company that shows a profit we collect the

mining tax. But if you don't show a profit on your books we will give you the

ore for nothing. Now is that good business? That's what has been happening over

the years.

Industry doesn't do that. When a mining industry like the

Canadian Pacific have mineral properties and they want to

sublet them to someone else to develop and produce, they charge

a royalty; they charge so much for the ore that comes out of

the ground. Other companies do the same. If an individual owns

a mine and he is going to make a deal with a company to develop

it, one of the first things he talks about is how much he is

going to get out of it. Usually there is a royalty, not a share

of the profit. He gets it off the top.

MR. J.R. CHABOT (Columbia River): Just like ICBC.

HON. MR. NIMSICK: Cominco does the same thing. Cominco takes

it right off the top. I would say that if it is good enough for

these companies to collect a royalty which is a payment for the

product that comes out of the ground, then it should be good

enough for the government.

What is so morally wrong about a government asking for

payment for the product that comes out of the ground that they

own? The companies say that it is a terrible situation to

collect a royalty off the top and they are going to leave ore

in the ground, but they don't say the same thing when they do

it to some other company. They've got no worry about that at

all. That's what you call a business enterprise.

Don't forget that a royalty is a payment for the product. It

is not a tax; it is a payment for the product.

Interjections.

MR. SPEAKER: Order, please.

HON. MR. NIMSICK: We collect royalties on oil and gas; we

collect something from the timber industry.

There is the same situation in all other resources. Why

shouldn't we be paid for the ore that comes out of the

ground?

Interjection.

HON. MR. NIMSICK: I don't know whether I should answer that

question or not. It's not the same as stumpage. A portion of

the resource should go back to the people — that's what the

royalty bill is doing. It is bringing to the people a portion

of that depleted non-renewable resource.

The basic royalties we have in the bill are 2.5 per cent and

5 per cent — 2.5 per cent this year, 5 per

[ Page

3487 ]

cent next year. Now this is pretty small when you figure

that copper is worth $1 a pound, the net smelter return is

maybe 80 cents a pound. When you take 2.5 per cent of that,

that is 2 cents a pound going back to the people. When we get

to 5 per cent, 4 cents a pound will be going back to the people — 4 cents a pound out of $1 copper.

The mining industry tells me that they are satisfied with

this. They can live with 2.5 per cent this year and 5 per cent

next year. Then they say in their ads about leaving their

minerals in the ground. The only time that you might cut down

the amount that you've got reserved is when your price drops

down to the cut-off price.

When a company makes a feasibility study of a mine, they are

at the cut-off price. If it's copper, we will say that 45 cents

a pound is the cut-off price they can make a profit on. The

only time you may have to leave ore in the ground is if the

price of copper comes down around that figure.

The 2.5 per cent and 5 per cent are the only figures that

could leave a little bit more ore in the ground. But don't

think that ore is situated like a big egg, and in the middle

there is a yolk and that they can go into the middle and take

all of the good stuff. The finds they have — many times it is

practically the same average all the way through.

The incremental royalty is the one that has bothered these

people. When you take a feasibility of a mine and you come up

with a cut-off price, the companies are not thinking that the

price is going to escalate away out of sight. They are not

thinking of that at that time.

Don't forget that the price of metals is not governed by our

country; they are usually governed by the world markets. When

they rise quickly it's a bonanza for the companies that are

operating. All we're asking is that we should share in that

bonanza.

AN HON. MEMBER: What has happened to corporate income

tax?

HON. MR. NIMSICK : The people should share in the bonanza they

will be receiving.

AN HON. MEMBER: What about corporate taxes?

HON. MR. NIMSICK: At the present time copper is up around

$1.29 a pound.

AN HON. MEMBER: What about corporate taxes?

HON. MR. NIMSICK: Now, that shows how much business acumen

you've got…. Do you mean to tell me that you say to a

company, "If you don't show a profit, you should get the ore

for nothing"?

Interjections.

HON. MR. NIMSICK: And don't forget that when you take a

royalty….

AN HON. MEMBER: It's better than no employment from that

mine.

HON. MR. NIMSICK: The incremental royalty was never figured

in the original. When we set a basic price…. The mining

industry says there's too much discretionary powers for this

Minister.

SOME HON, MEMBERS: Hear, hear! Hear, hear!

HON. MR. NIMSICK: "Too much discretionary power. He can set

the basic price at any figure he wants any figure he

wants."

Interjections.

HON. MR. NIMSICK: I'd like you to name one Act that is more

detailed than this Act is in regard to prices.

We say there will be a five-year average and there will be

other conditions taken into the picture. If you haven't got any

flexibility in setting your price, then you'd be boxed in by a

figure that's set by the Legislature. This wouldn't be good

because you wouldn't have any flexibility and you'd be stymied

altogether. What better individual than the Mining Minister

whom you've got at the present time to set the price?

(Laughter.)

Interjections.

MR. SPEAKER: Order, please! Would you kindly save some of

your remarks for your own speeches.

Interjections.

HON. MR. NIMSICK: They sure don't want the government to

operate on business-like basis, I can tell that.

Interjections.

HON. MR. NIMSICK: We say that we own the resources in

British Columbia. We shouldn't be giving our extra money or

profit tax down to Ottawa; we should be keeping it here in

British Columbia. But we're not taking it as a profit tax;

we're taking it as a royalty.

AN HON. MEMBER: But you'll still get a share of the

corporate income tax.

HON. MR. NIMSICK: We're taking it as a royalty, and a

royalty is not a tax.

[ Page 3488 ]

AN HON. MEMBER: Aren't you going to discount that against

corporate income tax?

MR. SPEAKER: Order, please!

Interjections.

HON. MR. NIMSICK: In describing the effect of Bill 31 we

estimate that the smelter return for copper would average

approximately 70 cents a pound in 1974. When I brought the bill

down I figured that we may average the same price for copper as

we did last year, which is around 70 cents a pound. There are

some of the mines which made tremendous profits at that

price.

AN HON. MEMBER: It has corporate taxes on it.

HON. MR. NIMSICK: Say the average is at 70 cents a pound for

1974 as well. The net smelter returns are usually the

equivalent of the gross value under the bill, being the money

paid to producers after deducting the cost of smelting. This is

the net smelter return.

There will be an amendment to clarify that so that some of

you people can get it through your head what it means.

(Laughter.)

Interjections.

HON. MR. NIMSICK: Net value under the bill equals net

smelter returns less the cost of transporting the concentrate.

At 70 cents copper, a net smelter return of 69 cents would

result in a net value of approximately 66 cents.

At the time I brought the bill in, I took a basic price of

55 cents. If the price escalates high enough….

AN HON. MEMBER: You get more corporate taxes.

HON. MR. NIMSICK: …when the net smelter returns are, 120

per cent of 55 cents, that's 66 cents. If he net smelter

returns of …

Interjections.

HON. MR. NIMSICK: …69 cents would be 1.5 cents, we would receive

1.7 per cent and 1.5 per cent. This latter rate is made up by half the difference

between the net smelter returns and 120 per cent of the basic value. The basic

value will be set by order-in-council, calculated as near as possible to the

average of gross value received by the producers in the province as a whole

in the last five years and considering other factors such as inflation. The

combination of basic and incremental royalties would yield 3.2 cents on the

net smelter returns of approximately 70 cents per pound on a production of 460

million pounds of copper.

The companies immediately said my figures were way out.

Don't forget that only 460 million pounds of copper will be

produced under this bill because this bill only applies to

Crown-owned mineral claims. This would generate a revenue of

about $15 million in 1974 and about $22 million in 1975. Added

to this would be royalty and other minerals with a net

approximate total of $8 million.

Interjections.

HON. MR. NIMSICK: Total revenue in 1974: approximately $23

million. Total revenue in 1975: $30 million.

But metal prices are determined outside of our province and

country and the mining industry has little control over what

they receive. This is the reason why metal prices often

fluctuate without any relationship to production cost.

Sometimes the prices escalate considerably, and they did for

copper and precious metals, giving the producers the

opportunity of enjoying very high profits. It is our opinion

that the people of British Columbia should share in these

escalating prices by way of an incremental royalty rate.

Where metal prices drop and result in diminished profit, the

people in British Columbia will also receive less from this

royalty. There is provision in the bill for the reduction of up

to 1 per cent in the basic royalty. If the price goes down

below that basic price, the royalty would go down a half of 1

per cent for the first 10 per cent and the second 10 per cent.

If the price went down far enough below the basic price, we

would only be receiving 4 per cent royalty rather than 5 per

cent in future years.

Moreover, there is a provision for further reduction of 1

per cent in the basic royalty applicable when the concentrate

is shipped to a smelter in the province. That's 1 per cent they

would get for smelting it within the province.

It must not be forgotten that mineral production is a

one-shot deal. Once the ore leaves the ground it is gone

forever, not only for ourselves but for all future

generations.

MR. D.A. ANDERSON (Victoria): What about recycling?

HON. MR. NIMSICK: That's right. We always lose some on the

recycling.

While the companies advocate that we should deplete these

resources as quickly as possible, it is our opinion that they

should be produced for need by this generation. I think we're

correct in this assumption. If the price is high enough, the

industry

[ Page 3489 ]

would mine all the ore out as quickly as possible because

they want to make as much money as possible.

I'm not questioning them on this proposition because this is

the way of private business — make as much money as you can as

fast as you can and forget about it.

I've got a good indication of a mine right up near my area.

Placid Ore — it has been in operation three years; they get a

three-year tax-free period from the federal government….

AN HON. MEMBER: No more.

HON. MR. NIMSICK: But the ore is all gone; there's no more

left there. They have to close down.

MR. CHABOT: Very little to start off with.

HON. MR. NIMSICK: Well, we should have got something out of

it then, even with the little bit that was there. It is our

opinion that we should produce for need for this generation,

yet conserve as much as possible for future generations.

In the conservation of minerals, the real conservation of

course….as some people say, why leave them in the ground?

We don't say leave it in the ground. We say that we want the

wise and intelligent use of that mineral by the people and for

the people.

Our living standards today depend to a great extent on the

use of the minerals, and since these minerals are limited, we

must place a great deal of importance on them with the idea

that we and future generations may continue to enjoy the

benefits derived from their use.

The mining associations advance two basic arguments against

Bill 31: They claim that the incremental royalty rate is

prohibitive and that the entire royalty would lead to a serious

loss of ore reserves.

With regard to the incremental royalty, it was claimed that

the prevailing copper price of about $1 per pound would result

in a combined royalty of 21 cents per pound. Applied to the

total provincial production of $700 million — this is where

they got their figures — this royalty would generate about $150

million on copper alone. This is where you got your figures.

And this is exactly where….

Interjections.

HON. MR. NIMSICK: I know that you've got it ready there and

I hope I'm not stealing some of your speech. (Laughter.) In

fact, an average copper price of $1 per pound would result in a

revenue under Bill 31 of $42 million in 1974 and $51 million in

1975 and subsequent years. Not the $150 million that they were

talking about.

To this would be added $8 million in revenue from other

minerals.

The total provincial copper production would result in the

following revenue: $63 million in 1974 and $77 million in 1975.

That is for all the minerals that are mined from both

Crown-granted mineral claims, and from Crown-owned mineral

claims.

Assuming that no change is made in the basic value due to

inflation and rising labour costs, the prices would remain at

the dollars. Your net smelter return is 80 cents; net value,

alter adjust your transportation cost, will bring it down to 77

cents; basic value, that's the assumed price, of 55 cents.

Well, 120 per cent of 55 equals 66 cents, being 14 cents

less than the 80 cents which was your net smelter returns, half

of which equals seven cents, that's the 50 per cent over and

above the 120.

[Mr. Dent in the chair.]

Then 2.5 per cent of 77 cents equals 2 cents; 5 per cent of

77 cents equals 4 cents. Now if I had a blackboard, I'd write

it down so that I would be able to get it through to you

because I know it's a little difficult.

MR. G.B. GARDOM (Vancouver–Point Grey): Go through that

again.

HON. MR. NIMSICK: Two cents plus seven cents, times 460

million, equals $42 million. Four cents plus seven cents, times

460 million, equals $51 million, approximately.

MR. GARDOM: Bingo. (Laughter.)

HON. MR. NIMSICK: With respect to the loss of ore, as your

price goes up, your ore reserves go up. So when the mining

industry says that the incremental royalties are a thing they

don't like, they are defeating their own argument because the

high-priced ore reserves go up. It's when the price goes down

that the reserves go down because you've got to mine a higher

grade ore in order to take a profit.

Interjections.

HON. MR. NIMSICK: Now, so we wouldn't bankrupt anybody, we

even got a deferral scheme in the Act. If you have trouble

paying your royalties this year, you can defer the royalties

until next year or maybe the year after. But we are not going

to give it to you. You are going to have to pay royalties on

that ore you take out of the ground.

AN HON. MEMBER: And corporation tax.

HON. MR. NIMSICK: I can see the day coming

[ Page 3490 ]

when a mine gets down to the cut-off price, and rather than

close them down, let the government buy up the ore.

SOME HON. MEMBERS: Oh, oh! Oh, oh!

MR. GARDOM: There it is, right down the line — the Waffle

manifesto, you've spread it out.

HON. MR. NIMSICK: No, now wait a minute….

Interjections.

DEPUTY SPEAKER: Order!

HON. MR. NIMSICK: Just get a little order. Now, wouldn't it

be common sense, if a mine was….

MR. GARDOM: First the insurance industry, now the mining

industry.

HON. MR. NIMSICK: Now just a minute. If a mine was operating

and prices of the mineral they were producing went down in

price to where they couldn't make a profit and they were going

to close down, and they had 200 or 300 men living near the mine

that was responsible for a job, wouldn't it be better for the

government to buy the ore at a price they could carry on at,

then when the price goes up the government could sell the

ore.

We're not going into the mining business. But this is a

possibility sometime in the future; this could happen. In order

to keep a community alive and going, because you know that the

price of metals go up and down…. When Cominco shut down

their mine up here on the coast, they didn't know the price of

copper was going to go up like it did or they wouldn't have

shut it down, you see. And a mine like that could have been

kept alive until the price went up. It's only two years ago

since the price of copper was around 45 cents, and a lot of

them were crying, a lot of them were crying.

MR. CHABOT: Have you got enough money to do that?

HON. MR. NIMSICK: Well, if the people haven't got enough

money, then nobody's got enough money. The people are the

backbone of any country.

Interjections.

HON. MR. NIMSICK: I'd say store it. I remember in the Depression years

in Trail we had sheds miles long loaded with lead and zinc that the company

produced when the price was low. They stocked it and they made a fortune on

it when the price went up. Why can't we do the same thing if it was necessary?

Interjections.

HON. MR. NIMSICK: We do it in regard to the incremental

royalty. The federal government did it in the case of oil; they

put an export tax on because the price of oil in the United

States went to such a height that in order to protect the

Canadian individual, the Canadian price, and to share in the

bonanza that the oil companies were receiving, they put a tax

on that oil. Now what difference is that tax on the oil than

the incremental royalty in regard to minerals? No

difference.

Interjections.

HON. MR. NIMSICK: Mr. Speaker, I think this bill is one of

the most important bills to hit the floor of this House for a

long time. It's going to change the whole course of the mining

history in the Province of British Columbia.

AN HON. MEMBER: It will do that!

HON. MR. NIMSICK: It is going to return the management of

the mineral resources to the people. And the people are going

to decide how you are going to deplete that resource, how fast

you will do it and how much benefit they are going to receive

from it.

When you look ahead — or look back even — you will find out

how necessary these minerals are, because they are all limited.

In one decade — I want to quote from the March 2 Sun : "In one

decade, 1959 to 1968, the United States alone used more

resources than all the world's people in all the previous

history."

Perhaps you noticed in the paper that inverted pyramid of

the population increase. When you think that the population

will increase between now and the year 2000 from 3.7 billion to

7.4 billion, I believe it is, it makes you realize that if we

are going to keep the standard of living that we've got, we've

got to cherish and protect and look after the things that we've

got and the resources — not only for our benefit but for the

benefit of the rest of the world and our children as well.

I take great pleasure in moving second reading of Bill 31.

Interjections.

DEPUTY SPEAKER: Order, order! I haven't even recognized the

next speaker yet.

MR. W.R. BENNETT (Leader of the Opposition): Thank you, Mr.

Speaker.

[ Page 3491 ]

Interjections.

MR. BENNETT: First of all, Mr. Speaker, it is a pleasure to

get up and speak on Bill 31. It has been a long time coming. I

would like to say that I recognize the Minister's argument and

I believe that everybody in this House and in British Columbia

wants to see the maximum revenue from our minerals and our

resources on behalf of the people.

They also want to see the continuing development of these

important resources, because it is incumbent upon governments

to maintain that economic base of development and have an

economy such that future governments who take over from this

one will have the revenues from the resource base to continue

those social programmes B.C. has always led the nation in, and

indeed has been innovative in — such as your government has

done by inheriting a healthy economy, an economy created with

government supervising and collecting through taxation of

resources, and creating a healthy economy.

I don't believe that any one party has any more good

intentions or any more right to say that they represent a more

holy attitude on preserving the resources than any other. I

believe that we all have the same attitude and the same

concerns for our province.

I would say that our party has a history of…. In 1956 we

tried to get more money from the resource in bringing in a tax

on minerals, on 50 per cent of minerals in the ground. I would

like to say that it was unworkable. We lost the development and

that economic base for almost 10 years. It wasn't a matter of

backing out; it was a matter of government recognizing its

responsibilities in its attempt to get revenue — in recognizing

that they also have a responsibility for continuing the healthy

economic development of that resource base for the benefit of

the people.

There is no benefit to the people if there is no development

at all, if there is no money generated. You are not doing

anything for the people of today. And in saving the resource

for the people of tomorrow by leaving it in the ground, if they

continue the same policy that you have and leave it in the

ground, there will never be any benefit from minerals for

anybody. That is foolish; and this Minister has said that he

would rather leave the minerals in the ground.

Interjections.

MR. BENNETT: You certainly did. I would say too that governments in

Canada have faced different economic markets in the sale of resources and minerals.

The Minister well knows that there have been times of poor markets when indeed

mines have closed down, and times when you couldn't initiate any mining exploration

or activity. There have been incentives…and part of the cloud of this

whole debate up until today has been the mixing up of the federal tax holiday

in incentives with provincial revenues.

I think, in dealing with the provincial jurisdiction, the

Minister must admit that that three-year holiday that the

federal government has had to encourage mining — and, indeed,

was responsible for bringing many mines in in Canada — cannot

be confused with the provinces giving away their resources or

their revenues.

I would like to take a look at and compare this province and

its history with the other provinces. I take Manitoba, where we

have had an NDP government for some time. Up until just

yesterday their revenue on resources was based on profits. It

was at 15 per cent of profit, similar to B.C. B.C. collected 15

per cent of profit over $10,000.

But that government today is moving — as is Ontario; as it

is the responsibility of any government in Canada, indeed in

the world — to recognize the sudden change in world prices and

to increase government revenue. Whether those governments are

Conservative or NDP or Liberal, they are all moving in the same

direction — some with more responsibility than others in how

they are going to derive more government revenue.

Now we have seen and we have heard from that Minister that

he used to call for a royal commission. But once he has got the

power he isn't interested in anybody else's opinion. He is not

interested in technical advice. He is not interested in

experts, which this government claims. He says that now he

knows best.

I contrast this with Ontario who, in recognition of this

market, has turned out quite an intensive study. This is the

report of their advisory committee on some of the steps they

took in establishing how they would collect more money for

resources.

Manitoba, instead of counting on just the Minister's

requests over the years for some sort of increase in revenue,

based their increases on some sort of study.

But in both cases what did these governments do? Ontario has

based their returns on profits. Manitoba, the great NDP

province in the middle part of Canada…. Here's the synopsis

of their legislation brought down yesterday.

The statute law amendment Act proposes an increase in

royalties on mines that produce $50,000 or more of income a

year to 23 per cent from the present 15 per cent. This is in

Manitoba. That is an increase in the type of system we've been

advocating here, the type of system this Minister says he

disagrees with. This Minister is talking about a royalty on

base. I'm saying that other jurisdictions of all political

stripes are attacking this problem and

[ Page 3492 ]

meeting their responsibilities to their people with sound

economic research, and on the basis that they want to see the

industry continue.

Now I would question then this Minister's and his

government's motives in bringing in a tax of this type at this

time, contrasting with the type of taxes that other

jurisdictions of all political stripes have brought in and are

bringing in in Canada, because….

HON. MR. NIMSICK: They didn't ask for my advice, Billy.

MR. BENNETT: That's what I've said.

AN HON. MEMBER: It's a good thing they didn't.

MR. BENNETT: These people — and I'm referring to Ontario — have a list of experts, non-political related people from all

aspects of mining and resource development, from ecological

studies, from government, engineering. They took a broadly

based cross-section of people who would advise on a technical…and on a basis of where they want to see their province

go.

This isn't based on a seat-of-the-pants decision of a

Minister who bases his whole experience…that he comes from

a constituency that counts on mining. This isn't the Act of a

government who time after time claims that their decisions will

be based on research and study and development.

So I question the Minister's motives. What truly are the

motives of this Minister and this government? They're highly

suspect. I have to go to reports and questions that are raised

in the press by other people. I refer to a letter to the Sun of

Martin Kiernans, because it is the government's intention to

depress the industry to take it over.

Now I know we're in favour of resources, you're in favour of

resources, we believe in a commitment to the public to develop

them, but you're a socialist and I believe in private

enterprise. And if you're a socialist and you want to take over

the mines, stand up and say so. Be proud of it!

HON. W.L. HARTLEY (Minister of Public Works): You're a

corporate enterpriser.

MR. BENNETT: I'm not a corporate enterpriser.

And if you're a socialist, and if you want the government to

own and operate the mines, then say so. Don't hide behind it.

Don't pretend you're doing something else. Come out into the

open. Be proud of what you believe. But don't start out to

depress the market just to get a kick.

I'd like to read from a letter where this is seriously

questioned, because if the Minister won't come out and tell us

his true intentions, and certainly he hasn't shown any research

in developing his royalties — incidentally royalties that were leaked to the press, into

the multi-national economic corporations who leaked these this

far in advance of this bill being introduced in this House,

this 5 per cent and this 2.5 per cent…. It is a question

that was raised last January and has never been answered: how

did that information get out?

Interjections.

MR. BENNETT: Never any answers. Never any answers. I'd like

to quote from a letter to the Sun of Martin D. Kiernans, a

consulting geologist. And his letter says:

"Dear Sir: The present interest in the politics of mining in

B.C. seems to be basically related to the intentions of the

government. The recent super-royalty mining taxation must be

related directly to the purposes and policies of this

democratic socialist government. What are those policies?

"I have investigated published newspaper interviews and

statements by the Premier and various Minister to determine

their intentions., As a member of the NDP I had access to

The Democrat and various NDP annual convention

resolutions and papers.

"The most important statement of resource policy of the NDP

that I have encountered so far is a background and point paper

'Natural Resources,' attributed to Robert Williams, the present

Minister of Lands, Forests, Water Resources and what-have-you

in this government, who is now a provincial Minister. This

paper was submitted to the 1971 NDP convention. That paper was

not adopted by the party.

"As for other stated policy resolutions of the NDP itself in

conventional mining, the situation is simple. According to

The Democrat , no policy on mining has been adopted by

the party since 1961 when records began. The last 1973

provincial convention adopted no resolutions on mining.

"However, because the background paper which has been

attributed to Mr. Williams does contain some specific

statements on mining policy, it would appear that this might be

the logical source from which to define just exactly what the

government intends to do with the mining industry in British

Columbia."

And he goes on, and here is where he comes to the point. He

says:

"There's a very revealing statement in the background paper

which is clearly relevant to the Nimsick bill, Bill 31 on

mining royalties now before the Legislature. 'The acquisition

of privately owned corporations in the resource

[ Page 3493 ]

field prior to major resource tax changes would be a mistake

because the market price for those companies would be grossly inflated because

of the wide range of tax holidays they presently enjoy. Any acquisition of corporations

prior to substantial tax change would be a misallocation of public funds.

"There are a number of pertinent resolutions in this paper

listed under "Points — Natural Resources." Point D says that an

NDP government would take over and operate firms unwilling and

unable to function adequately — whatever is the government's

description of 'adequately' — under the above conditions, and

that the NDP would place major industries such as pulp, paper,

lumber, mining, manufacturing, transportation, communications

and finance under public ownership."

It goes on and on to point out specific companies, but the

final thing that I see is that this background paper was turned

down. It says:

"Motion of referral. Referral back to the committee on

natural resources, with instructions to remove from the report

paper those sections which refer to co-ownership and

co-participation of an NDP government with private firms

currently controlling forest resources and natural resources on

the ground that it is inconsistent with the policy already

established by this convention, which is total ownership."

Now if this is your intent, then share it with the House.

Share it with the people of British Columbia. Let us know if

this is the intent, and then we can argue on philosophical

grounds, but why bring in a royalty system that other

jurisdictions, some of them NDP right now, have turned down

because they've studied it in trying to meet the responsibility

to the people of their province in not only collecting resource

revenues but continuing the industry, realizing that as the

government they set the conditions? They will collect money,

not only through their profit but through their share of the

corporation tax and if they are in most provinces in….

AN HON. MEMBER: Why not be a leader and lead the way,

instead of following?

MR. BENNETT: I'm saying there is no sense being a leader

down to destruction and ruin. Be a leader for building the

economy, and you're not being that sort of leader. The very

fact that you admit and you've stated to this House you've done

no study and no research, no royal commission, and you said

that your opinion was good enough — you said it earlier and you

said it again tonight — would indicate that you're not going to

be a leader any more….

Why would the Minister bring in a bill that in other

jurisdictions has been discarded? Here we have Manitoba, here

we have Ontario — two very important mining provinces in

Canada. Ontario has had a more sophisticated mining economy and

mining market than British Columbia. They have high-grade.

they've had to establish the technology and the know-how to

mine the large, low-grade deposits that we have on what is

basically a copper industry.

These jurisdictions, indeed, are trying to extract as much

money as they can from industry, but they recognize something

this Minister fails to realize and that is that the industry

must continue, not for the sake of the major mining companies

but for the sake of the province, and for the prosperity of the

people. There'll be no tax if there is no industry. There'll be

no employment if there is no industry, Leaving the minerals in

the ground does nothing for the present generation, provides no

services. To leave that in the ground will do nothing for

people in the future.

We have seen minerals that have been in demand at certain

times in our history become obsolete, and there's no further

use for them.

HON. MR. NIMSICK: Name one!

MR. BENNETT: Tungsten.

HON. MR. NIMSICK: Tungsten's not obsolete.

MR. BENNETT: Tungsten doesn't receive anywhere near the

profitability to the people where it's mined. It would be

better to their advantage to have mined it at a time of

prosperity and received the benefits. The interest and the

accrual to the people in those areas would provide more social

benefits and more purchasing power and more for those people

than leaving that in the ground to mine it today at what may be

a marginal….and it is a marginal time for tungsten.

I disagree with this Minister's and this government's whole

argument because they basically have several points that they

talk about. First, natural resources belong to the people. This

seems to be an incontestable motherhood statement, but when you

take a look at really what resources are and what minerals are,

what belongs to the people of British Columbia is the entire

natural endowment of the province, excepting, of course, those

portions which have already been transferred into private

hands. Minerals, however, are not resources, because resources

are only those minerals which have economic value to man.

Minerals become a resource only when man has found a way of

using the mineral which gives it a potential value to man and

when man has found the means to produce the mineral to fill

that potential to

[ Page 3494 ]

man at an economic cost. Thus, while nature creates the

mineral endowment, man creates resources by finding a means

whereby the mineral can be made useful. Once it is recognized

that man creates the economic value which turns the minerals

into resources, it can no longer be meaningfully argued that

value belongs only to those who own the mineral but to those

who not only seek it out but who develop the use and who

develop the technology for use. All that the state provides is

the opportunity to create economic value.

This opportunity is worth very little to the mining industry

or to the economy of B.C. For example, if a prospector finds an

indication of minerals that is just interesting enough so that

a mining group or company is willing to investigate it further,

the most the prospector can expect to get from the company in

the short run is a down payment of a few thousand dollars and

the company's commitment to spend an agreed additional minimum

amount to try to develop the mine into an economically viable

ore body.

If fortune smiles and the property becomes a mine, the most

the prospector can hope for is 10 to 15 per cent of the profit

after the debt has been repaid unless he contributes an

important share of the ongoing costs of exploring and

developing the mine after his initial discovery.

It is important to note that the company is willing to give

the prospector that equity share because it costs the company a

good deal of money to find prospects which are worth

investigating and which offer a good chance for discovery. Such

prospects are relatively few and far between. The owners of the

minerals do not even provide the companies with an interest in

the property; all they offer is the opportunity to spend money — to go out and look for a situation in which this economic

value can be created.

Who then creates the resource? Not the province Not all the

people of the province. Resources are created not by people in

general but by specific people like technologists, the people

who work to seek out and find and develop the technology, who

create a use, who go out and create a market, mining the

resource or the mineral economically.

The other misconception is that mining companies earn an

excessive return on investment. I believe the government of

this province and of this country have the best possible

position under private enterprise. They can set the conditions,

they can set the taxation rates. As long as they encourage the

development of an industry, they participate only in the

profits and never in the losses. In normal business that's

good, but it is even better in the high-risk business of

mining. The public, through their general taxation, do not face

periods of debts when they have to absorb huge losses which the

mining industry does every day.

The government is a shareholder on behalf of the people only in the profitable

mines. The millions and millions that are lost in unfavourable ventures are

not borne by the people of British Columbia. Yet, when there are favourable

returns, we share as British Columbians and as Canadians.

If the federal government is cut off from all revenue on

taxation by the implementation of resources — I'll come to that

later — then, of course, they are going to have to seek further

ways to tax our people. The province won't be any further

ahead. When we believe in Confederation we believe in some

sharing of taxation. I believe that we should have some

cooperation rather than conflict between the senior government

and the provincial government.

"Mining companies are an excessive return on investment." I

don't think so. Take the Canada Development Corporation and

Gulf and Western Industries, both of which are highly

diversified. They are reported to require a 15 per cent

after-tax rate of return on investment because of the high

risk.

By comparison, the average profit figure for the British

Columbia mining period over the seven-year period from 1967 to

1973 was a return of slightly under 12 per cent, according to

figures prepared by a major auditing firm for the British

Columbia Mining Association. That these profits have not been

unfairly understated may be deduced from Mineral

Bulletin 118, published by the federal Department of

Energy, Mines and Resources, which shows the average rate of

return on the shareholder's investment for the entire Canadian

mineral industry over the eight years from 1962 through 1969

was only slightly over 11 per cent. For only the mining segment

of the mineral industry it was 13 per cent. These profit

levels, for the risk of the business, are not excessive.

Where there is profit, our province will benefit, through a

quasi-royalty tax on profit. Again, we will benefit from our

share of the corporate income tax.

I'll go on further in discussion to talk about mine life

which the Minister brought up. Your argument that there have

been unduly high profits in the industry is not valid, nor is

it a valid reason for the type of action you are taking now. I

do admit to all British Columbians and to all people here that

this province, as others, must move more strongly into the

taxation field because of the world high prices we face

now.

Interjection.

M R. BENNETT: The Minister has talked arguments where he said that resources

should be kept in the ground. Here I would like to refer to that.

HON. MR. NIMSICK: I said the intelligent use of them.

MR. BENNETT: Yes, you have said that. Mr.

[ Page

3495 ]

Minister, you said that in debate on your estimates.

DEPUTY SPEAKER: Order, please. Would the Hon. Member address

the Chair, please?

MR. BENNETT: Certainly, Mr. Speaker. Thank you for calling

order.

We have found through preceding discussion that the value of

resources results from the technology developed by the people

of the industry. The profits earned by the industry act as the

incentive for the development of technology and the discovery

of new ore bodies.

If you leave these minerals in the ground, you are not

providing one iota of benefit for the people of British

Columbia. If that policy is continued by succeeding

governments, if you are correct, then those minerals will never

be harvested for the benefit of the people.

I believe this is the basic premise. You may deny it now but

I have been in this House when you have stated it. I would

correct the Minister. If he wishes to withdraw the statement

now he will, but I was here when the Minister made that

statement.

Another argument that has been attributed to this Minister

and this government is that ore bodies which companies are

unwilling to develop within a reasonable time should revert to

the people.

HON. MR. NIMSICK: You're not going to get anything out of

them.

MR. BENNETT: I believe we will get benefit out of our mines.

Over and above the basic taxation that we will collect through

a taxation royalty, over and above the multiplier effect of

people servicing the people who work in mines, as Canadians and

as a country these resources help Canada solve its balance of

payments problem. They are important in our exports and in the

balancing of our trade. They are important because Canada is

not an isolated economic community.

We have certain products which we sell and there are certain

products we have to buy. The fact is these minerals you talk

about can't be left in the ground even on a no-taxation basis.

They are important to the total economy of our country and our

province. These ore bodies and these minerals are important to

the people of British Columbia.

Your party has said that minerals are a one-shot resource so

it is essential that the government act now to obtain its share

of the revenue. We have already seen that the supply of mineral

resources is not non-renewable. It can be extended

indefinitely so long as the incentive is provided to develop

the technology to turn minerals into economic resources.

The key decision to be made, therefore, is not the maximum quantity of taxes

which may be possibly collected from each unit of the resource produced. It

is very clear that the rate of taxation, through its impact on the incentives

to explore for and develop resources, directly determines the amount of mining

activity which will take place in British Columbia at any given time.

Higher tax rates discourage resource production and reduce

the amount of tax which the government is able to collect from

the industry both in the short and in the long run. On the

other hand, a tax rate which is too low will permit lots of

mining activity which may well reduce the total taxes which the

government is able to collect.

It is obvious that the level of taxation at which government

tax revenues will be the largest and will benefit the people

the most will be in the middle range of tax rates — say between

one-third and one-half of pre-tax income for the federal and

provincial governments combined.

Mr. Minister, I would like you to take a look at your taxes

again and contrast them to what Manitoba has done. Again, they

have talked about a move from 15 per cent to 23 per cent on

profits.

Interjection.

MR. BENNETT: That's right. They are the province that has

had advice from Mr. Eric Kierans, another Mr. Kierans, on how

they could take over the mining industry, but they apparently

have rejected his report and rejected his advice. After all the

consultation they did in fairness and in meeting their

commitment to their people, they've gone to the only type of

taxation that will benefit their people by continuing the

industry and maximizing the revenue.

There have been studies done by many, many people. We've had

letters to Ministers; you've probably read them, a very

complete analysis of the industry and what your taxation and

your royalty taxation will do.

I don't know, Mr. Minister, if we have to continue to read

these to you, but it's apparent that you haven't bothered to

read these analyses. They're not all from major mining

companies — they are from consultants and from engineers, they

are from people who are concerned about this province and the

continuance of the development of one of its major

resources.

Interjection.

MR. BENNETT: Have you paid any attention to them?

Interjection.

MR. BENNETT: Let's talk of an example of the effect of your

royalties. Here's an example that was

[ Page 3496 ]

included in a copy of a letter that was sent to me; it was

sent to the Minister of Industrial Development, Trade and

Commerce (Hon. Mr. Lauk). Within this highly detailed letter, a

very well written letter and a well presented series of views,

we have an example of the effect of the royalties. I'll have to

read it because it shows schedules and it shows figures that

would indicate that your new royalties in many cases, with your

royalty on base, and your new super royalties, will put them in

a deficit position with the profit and the market increasing.

So let's take it:

"The attached

schedule shows the value per ton of zinc

concentrate that would be realized by a mine located near

Houston, B.C., selling concentrates on the Japanese market.

Similar smelting charges would apply at either a Canadian or

European smelter when involved, but the freight and handling

charges would probably be lower and higher, respectively, than

those for sale to Japan.

"The average zinc price in the 1969-1973 period was

approximately 17.5 cents per pound plus any price in excess of

120 per cent of this average, i.e. 21 cents per pound, would

trigger the super royalty. At the present time, the zinc price

is approximately 36 cents a pound. The 15 cents per pound price

increase results in an increase in gross value of $156 per ton

of zinc concentrate, The increase in net value before royalties

is $79.20 per ton."

HON. MR. NIMSICK: I had that letter. If you figure it out

according to the Act, it's all wrong.

MR. BENNETT: "The distribution of the benefits from the

increased metal price would be as follows:

"Increase in net value to miner before royalties, $79.20 — less super royalty of 50 per cent of gross value, which was

$156, so that's $78, and the five per cent royalty at 5 per

cent of net value increase is $3.96, and the increase in net

value to the miner after royalties is a loss of $2.75 on the

price going from 17.5 cents to 21 cents."

I'll point out further, but you couple the detrimental

effect you're going to have on this industry, as it stands now,

with your royalties on base — an unworkable way to collect

taxation — something that would harm the industry, and

ultimately the revenue of the government and your services and

our services to people, couple with that the federal

government's move to putting taxes on this area and you have an

almost intolerable situation for this industry in British

Columbia.

Now, this has added a further dimension of uncertainly to an already faltering

industry. I'll quote further where the industry, the exploration and the interest

in investment is declining, when in all other jurisdictions, social and responsibility,

investment is increasing and so are revenues to people because their governments

are meeting this situation with responsibility.

But over and above, when I consider your wrong attempts, we

have the federal government now moving into this area in

concert with you. This creates a situation in which only the

citizens of B.C. will be the losers, because if this industry

falters, even that industry that we have developing now, if

some of it closes down, we will lose revenue and employment. It

will be a disaster. Programmes that you and I would like to see

continued, some of them that you've taken over, some of them

that you've improved upon since you became government, will no

longer be financially within the means of the people of British

Columbia.

I believe, Mr. Minister, that you have a responsibility in

assessing the situation at this time, and instead of having

conflict with the federal government, even though there's an

election on now, instead of a period of conflict, you should be

prepared to discuss with the new government that will be

elected after July 8, whether it be the government that

introduced those charges or any new government, and have a

complete re-examination of how much the governments can take

from the industry.

I believe there should be time to do this and from over the

head of the resource industry of this province, the mineral

industry, you should remove this threat of immediate

implementation of Bill 31.

I believe that we should delay this bill for six months.

Because of this, I move, seconded by the Hon. Member for

Boundary Similkameen (Mr. Richter), that the motion should be

amended by deleting the word "now" and substituting therefore

the words "six months hence".

In speaking to my motion, Mr. Speaker, it's because I

believe that it's more important to bring in a proper taxation

method with proper cooperation between both levels of

government rather than this continuing period of uncertainty

and this period of loss of investment and revenue for the

Province of British Columbia. We have the uncertainty of the

industry. It's important now more than ever, Mr. Speaker, that

this government pause in its efforts to push Bill 31 through,

that it hold this bill over for six months, that this bill in

fact then be discussed in concert with the federal government,

whoever is the new government — discuss plans for taxation on

resources, and get to that spirit of cooperation that I saw,

instead of, as the Minister has said tonight, take all the

money for British Columbia.

I would like to see the cooperation that the Premier said

when he was sharing Alberta's and Saskatchewan's oil

revenues. He went back to the Federal-Provincial conference and

he said: "We'll give

[ Page 3497 ]

you all the oil if you'll take them over and nationalize

them." The fact that B.C. had very little in oil revenue, and

it all belonged to Alberta and Saskatchewan, what a magnanimous

gesture it was. A great Canadian, and yet here we have the old

double standard. This Minister saying tonight: "No money for

Ottawa, all the money for British Columbia. No cooperation. No

consultation. Nothing." What rubbish! What a double

standard.

Interjections.

MR. BENNETT: Here we have a study done by Price-Waterhouse

on the British Columbia mining industry — effective royalty and

tax rates. This study was done taking into consideration both

the new provincial proposals and the federal proposals. And I

will read it to this House and read it into Hansard

because it clearly shows that if this government goes ahead and

if the present government in Ottawa is returned, our resource

industry, our mineral industry will be in chaos; it will

decline; there will be fewer benefits for the people of British

Columbia. In fact, this industry will die.

Let's take a look at what Price Waterhouse said, an

independently commissioned study to establish the figures on

where our resources…and where the position will be. All

studies have to be done, Mr. Minister — you're a great advocate

of studies — on some sort of basis. You have to arrive at

figures. But by your own Minister's admission, no major study

was done in arriving at these figures that he's introduced as

part of the basic royalty. No consideration for the

continuation of the industry was done, no major study at

all.

HON. MR. NIMSICK: When did I say that?.

MR. BENNETT: Not like Ontario, not like Manitoba — two other

jurisdictions showing the sophistication and responsibility of

managing their resources. They haven't resorted to revenge on

an industry that they've hated and tried to drive under with

the sole intent of trying to depress the stock to take them

over. Because that's this Minister's true intent: to take over

the industry. And it's not honest enough to state its true

intent.

MR. CHABOT: Hear, hear!

MR. BENNETT: It does so in bits and pieces, a bite at a

time. It's not being honest with this House; they're not being

honest with the people of this province.

Interjection.

MR. BENNETT: Instead of saying, "Trust us," why not trust the people to develop their own province?

Trust the communities to have self-determination such as

against your Islands Trust Act. Trust the individual.

Trust the individual to work for the benefit of their province

and claim their benefits on behalf of all people through

taxation. Trust the people; don't say, "Trust us." Trust the

people.

[Mr. Speaker in the chair.]

Mr. Speaker, back to the Price Waterhouse report that I was

discussing.

"We attach two exhibits which are prepared on an identical

basis, with the sole exception that exhibit I assumes that no

earned depletion is available where exhibit 2 assumed a maximum

earned depletion of 25 per cent. Both exhibits are concerned

with copper. We also attach an appendix which describes the

method of computing the royalties and taxes in more detail.

"The exhibit clearly shows that on the facts assumed and at

current copper prices the combined federal-provincial royalty

and tax load is so high as to reach an overall effective rate

of almost 100 per cent, even where maximum earned depletion is

available " — even where maximum earned depletion is

available!

"Where no earned depletion is available the overall

effective rate exceeds 100 per cent when copper prices reach a

point between 100 cents and $1.25 per pound, and continues to

rise the higher the price of the metal climbs.

"The exhibits, in fact, demonstrate that the lowest tax rate

applied when the metal is being sold at the threshold level

before the super royalty begins to apply, which is 120 per cent

of the basic price of 62 cents per pound, and that the overall

cost involved, including royalties and taxes in selling prices

in excess of this threshold, exceeds the sale price."

MR. A.V. FRASER (Cariboo): The Liberals and NDP are both

bandits.

MR. BENNETT: No, no.

"In fact, even if transportation, smelting and operating

costs remain fixed, as selling prices increase each price rise

of I per cent beyond the threshold amount would increase taxes

and royalties combined by 1.0475 cents."

HON. MR. NIMSICK: I had that and corrected it.

Interjections.

[ Page 3498 ]

MR. BENNETT: "Thus the industry faces the anomalous position

that increased prices mean lower profits, or increased losses."

HON. MR. BARRETT: Speak for the big companies.

MR. BENNETT: I'm not; I'm trying to speak for the economy of

this province and for the people of this province. If you're

going to administer the resources of this province by

conducting a vendetta, rather than the studies you talk about,

rather than the studies that Ontario ran, then you do so. But

just remember that the government that succeeds you will not be

able to continue to deliver the benefits to the people with the

type of economy that you inherited. They won't have the right

to innovate on those benefits as you were given; and rather

than going down in history as a benevolent Premier, you'll go

down as the biggest fiasco that ever hit British Columbia.

HON. MR. BARRETT: Did you bring in Mincome?

MR. BENNETT: The great little jokes you tell today will long

be gone when people remember David Barrett, the rugby-playing

Premier who leaves the session to go to Japan — who goes down

on his ego trip. He takes a week to go down and get a diploma

because they attacked him on the chicken and the egg. He was so

small and felt so badly he had to go down and get a diploma to

get puffed back up. Puffed back up!

Now going back to the royalties, Mr. Speaker….

AN HON. MEMBER: Doctor Spock.

HON. MR. NIMSICK: Why don't you check those figures?

HON. MR. BARRETT: His daddy wrote his notes.

MR. BENNETT: Somebody should write yours. I noticed you came

in with a written statement yesterday. I noticed the Premier

had a written statement yesterday. They don't trust him. Mr.

Williams doesn't trust him. The Hon. Minister of Lands, Forests

and Water Resources doesn't trust him to speak extemporaneously

any more because the last time he got up he announced that he

was going to put up electrical rates. That's what he did.

Interjections.

MR. BENNETT: Now I, was discussing the Price Waterhouse before some

noise developed on the other side of the House, Mr. Speaker — which has been

absent most of this session. And I was dealing with royalties and a study done

by Price Waterhouse on the….

HON. MR. BARRETT: Where will you be next week?

MR. BENNETT: I'll be in British Columbia talking to the

people of British Columbia. I will be in the constituency of

British Columbia to represent the people of British Columbia.

It's not the United States. It's not in Japan. It's not in Hong

Kong. It's in British Columbia.

Interjections.

MR. BENNETT: I'll tell you that my responsibility is to meet

with the constituents of this province and discuss their

problems with them. Some of their concerns are with Bill 31.

If this Premier won't listen, perhaps the Minister will listen,

because we're not out to save the big companies. We're out to

save the resource for the taxation benefits for the people.

If I could continue, Mr. Speaker, without the sloganeering

from across the floor, I'd like to talk about this study that

was done — an independent study by Price Waterhouse — on the

side effect of the federal legislation and the provincial

legislation on basic royalties, and why we're concerned that

this legislation should be hoisted for six months so that a

rational, consultative approach between two levels of

government recognizes that to get the revenues they seek they

must maintain the industries. They must maintain the

continuation of this industry.

Now basic royalties:

"A rate of 5 per cent on the net smelter return has been

assumed in the rate that is proposed to take effect on January

1, 1975. These are the basic presumptions in computing

royalties and taxes for exhibits 1 and 2.

"It has been assumed that the super royalty will be computed

by reference to the gross sales price. In computing this

royalty a basic value of 62 cents per pound has been used,

being the approximate average London Metal Exchange price for

the five years from 1969 to 1973.

"On introducing Bill 31 into the Legislature Mr. Nimsick,

the British Columbia Minister of Mines, indicated that the

basic value for 1974 might be 55 cents a pound. Since the

determination of the basic value for 1974 and any adjustment to

that value for 1975 and subsequent years would be wholly at the

discretion of the Minister, there is no certainty at this time

that 55 cents per pound will be the basic value for 1974 or

that any increase in sale prices during 1974 would be taken

into account

[ Page 3499 ]

by the Minister in estab lishing this basic value for 1975.

"Provincial mining taxes: (

a) processing allowance. A basic

processing allowance of 15 per cent of mining income has been

assumed which results in an effective mining tax rate of 12.75

per cent.

"(

b) Royalties deductions. If the federal budget proposals

which effectively increase federal taxable income by the amount

of any royalties paid are enacted in their present form, the

effect would be that royalties would not be deductible for

British Columbia mining tax purposes either. Therefore, the

assumed rate of 12.75 per cent has been applied to income

before royalties.

"(

c) Income taxes. Royalties. The provisions in the federal

budget combined with existing tax legislation as it may relate

to royalties could be interpreted as resulting both in the

enforced inclusion of royalties paid in income and the possible

non-deducibility of the same royalties. If this doubling up

effect does in fact result, federal and provincial income taxes

would be higher than indicated in the attached exhibits.

"Federal resource profit abatement. It has been assumed that

the 15 per cent federal resource profit abatement would be

available in respect of the increase in income accessible to

federal tax.

"Income tax: rising from the inclusion is income royalties

paid. However, it is not entirely clear from the wording of the

provisions if this result comes about. If it does not, federal

income tax payable, as detailed in the attached exhibit, would

be increased by 15 per cent of the total royalties

payable."

Now here are their examples: copper at $ 1.00 or $1.25 or

$1.50 a pound. You go to the gross sale price, you take out

smelting and transportation costs, smelter returns, operating

costs, income before royalties, mining and income taxes,

royalties; you take off the basic royalties, the super

royalties, then you have a total. Then you take off provincial

mining taxes, income taxes, federal and provincial corporate

taxes, and then we take off total royalties and taxes. The

income or loss after royalties and taxes — we have, at $1.50 a

pound, a loss of 4.3; at $1.25 we have a loss of $1.76. Indeed

as the price goes up, which should be a benefit to the economy

and an encouragement to the company or the individual or,

collectively, the industry to participate in those increases,

they in fact take a loss.

The industry then in taking a loss cannot share with its workers, the people

who work in the industry, any of the increased benefits. In fact, the extra

hands at the bargaining table are those of the federal and provincial governments.

You might have a vendetta against the mining industry, but

if they are in this loss position, there will be no money for

increased wages. Those people who try to participate on wage

level in equality with other wage groups and other workers in

this province would be penalized by this Minister.

What we are asking is that this Minister reappraise the

situation in the light of his commitment to being a good

Minister, reappraise the situation in light of the federal

government's move and proposal on federal intervention in the

taxes, reappraise the situation in light of what his sister

province of Manitoba has done just yesterday in bringing down

their tax recommendation.

I wonder if the Minister has had consultation with that

government and the officials of those departments when they

were both making proposals related to the same resources. I

wonder, Mr. Speaker, if he had consultation with Ontario, who

signalled very clearly that they had this study going and were

bringing down new proposals, or whether, as he suggests, he

just blew right in because he knew what was needed. He didn't

need a royal commission.

I ask him now to reconsider in light of the desire of other

Ministers of this government; in fact, the repeated refrain

from over there is that they believe in reports, studies,

environmental studies, consultative studies and task forces in

establishing positions to administer and run this province.

HON. MR. NIMSICK: You criticize all the other task forces,

why…?

MR. BENNETT: When did I criticize a task force? Mr. Speaker,

the Minister asked me if I criticized the task force. I don't

recollect it. I congratulated the Hon. Minister of Lands,

Forests and Water Resources (Hon. R.A. Williams) on the

environmental study that was done on the new run-of-the-river

dam that is being brought into being on the Peace River as part

of the project that was established by engineering and part of

the initial study in developing that great river for

hydro-electric purposes back in 1961. I believe in studies, but

you can't have it all ways; you can't believe in them here but

not there.

Mr. Speaker, this Minister did not present any background of

definitive material or statistics or figures on a meaningful

basis which would show that this industry and this province

could benefit from the proposals he presented to this House.

The only statements we got were the rhetoric and the

oft-repeated slogans that we have been ripped off by the giant

corporations.

HON. MR. NIMSICK: I never used that.

MR. BENNETT: I'm using a little poetic licence in

[ Page 3500 ]

saying "ripped off." I can't remember the exact

phrase you used, but in general that is what you said. It would be easy

if I was driving a train that was on two tracks. I would always get

there; someone else would make sure.

We noticed how inaccurate the Minister of Labour was

yesterday running for a fly in the softball game — he even ran

into one of his own players, Mr. Speaker. He caused us to lose

the game — a very important game, a very important game.

But back to this study, and this very important subject.

Interjections.

MR. BENNETT: No. As a matter of fact I thought it was the

Minister of Housing. He has been blind to the problems of B.C.

for so long that I thought he needed help.

Mr. Speaker, what I'm saying is: in light of the developments of the last little

while — Ontario's new proposals, Manitoba's new proposals and the federal government's

proposals — would the Minister be willing rather than stubborn, in the interests

of British Columbia, in the interests of the future economy and in the interest

of not upsetting one of our major resource industries, in hoisting the bill

for six months? Hold the bill back so we can have the type of consultant studies

not only with the federal government but with those other provinces in Canada

that, indeed, have made an extensive study in providing new taxation rates so

that their people can benefit from the new world prices on minerals.

Even without the federal proposals we have certain mining

ventures in B.C. When you talk about the average, it is easy

but there are always specific proposals that would have a

hardship worked on them with just the basic proposals of the

Minister. In fact, they would have a difficult time even under

realistic taxation levels.

Because it is the only mine in my own constituency, I refer

to the Brenda mine, and to the report to the shareholders by

the president of which I obtained a copy, May 1, 1974. In this

report the president goes through the difficulties which this

mine has experienced even under former taxation levels and

former markets. This major expenditure of a mine, if it hadn't

been financed by a large backing of Noranda, it would have had

to close or go bankrupt in 1972. It explains the

difficulties.

I might read excerpts if I could, Mr. Speaker because, indeed, here is a specific

case where you could drive the particular mine to the wall. It's just one of

many who have the same problem. Maybe it is what you intend — to create the

closure or the bankruptcy or the financial disadvantage so that indeed you could

take it over, if that is your intent. I believe, Mr. Speaker, that what we are

trying to find out tonight is whether the Minister is being financially responsible

or whether he is intending to take over the industry. Indeed, we haven't had

those answers.

I'm hoping against hope that he is concerned with the future of the province and the continuation of this resource for the

benefit of the people. I would like to tell him what would

happen to Brenda Mines, and the difficulty they are having.

MR. C. LIDEN (Delta): Did you lose your place? Who wrote

your speech?

MR. BENNETT: No. I don't want to bore you with a lot of

inter-company….

HON. MR. NIMSICK: Inter-company!

MR. BENNETT: I want to get to the relevant parts. I want to

get beyond to the fuller material. This is a report from the

address to the shareholders from the president of Brenda Mines,

excepting that the audited figures he would present in the

annual meeting to a company that must meet the audit

requirements — the reporting requirements that these figures

and his report are accurate.

Interjection.

MR. BENNETT: No, I said I only use this because it is the

only mine in my constituency. If I had another….

Interjection.

MR. BENNETT: You don't listen. I said that there is no

benefit to the people if the industry fails.

There is the type of attitude that I fear, Mr. Speaker — the

concern only for the taxing of a few of the large corporations

rather than meeting the requirement of continuing the resource

base for British Columbia.

I would like to go back. Brenda's net earning of $15.5

million in 1973 was the result of strong demand and higher

middle prices. This compares with a net loss of $1.5 million in

1972 when prices were badly depressed.

Inflation, devaluation of North American currency and

non-recurring inventory gain due to the rise in prices

throughout the year gave 1973 earnings an artificial boost. The

failure to recognize the impact of inflation on the cost of

replacing plant and equipment will distort the economic meaning

of the reported earnings.

The Minister earlier touched on the valuation of inventory,

piling it up during poor times and selling in better times, the

cost of maintaining that inventory and when to sell, and the

reported market

[ Page 3501 ]

fluctuations from year to year. You must realize

that as it costs you money to sell you must have a higher and higher

market just to stay even, because of the interest costs and the storage

costs and the inflation, the penetration against inflation, just to

maintain the penetration of that economic market. This company goes on

to state and to summarize after its long report:

"To summarize, the federal tax reform ended the three-year

exemption in 1973. The automatic depletion ends in 1976 for

1977 and forward. Depletion must be earned — $1 for each $3 of

the eligible expenditure. No deductions for provincial mining

taxes after 1976 though compensated by abatement of 15 points

of tax, but at present there is uncertainty as to whether the

provinces will pick up any of the abatement.

"The new royalties based on revenue and prices as proposed

by the British Columbia government in Bill 31, Mineral

Royalties Act, have very obvious defects, since they do not

recognize the ability-to-pay concept inherent in tax in the

province. They reduce the known economic oil reserves by

increasing the cut-off grades, thus shortening the mine's life.

They reduce return on investment, therefore deterring the

future development of resources in the province. They reduce

the ability to pay off debts to meet increased operating costs,

particularly when metal prices are at cyclical lows.

"The corollary, of course, hits the shareholder hard.

Dividends are either impossible or restricted, and the date at

which dividends could commence is deferred. It discriminates

between producing mines, as royalties give no consideration to

the cost factor of underground mines versus open pit, and

remote versus accessible location. It provides excessive

discretionary powers to the Minister which work again the

decision-making process due to uncertainties as to present and

future taxes.

"Some $62.5 million was provided to build Brenda initially,

and included financing and money to operate for the period 1968

to 1970. The total reached $77 million. The funds were used

mainly for: fixed assets, $45.5 million; pre-production

expenses, $17.5 million; financing expenses and working

capital, $12 million; cash generated from operations 1971 to

1973, $42.6 million, which was used for reduction of long-term

debts, $28.5 million; additions to fixed assets, $3.2 million;

and addition to working capital, $10.9 million.

"After six years the original investors are still waiting

for a return on their investments, despite the fact that Brenda had the benefit

of the federal three-year tax exemption — nothing to do with this province and

something that will not be continuing in this country. What is the position

today for developing an ore body with grades similar to Brenda's? Graph I shows

that with capital investment escalated 20 per cent, and imposition of the proposed

royalties, there is insufficient cash flow to return the initial investment

over the expected life of the mine. Obviously this results in a no-go decision.

"Graph 2 depicts the unrealistic low-grade mine and shows

that a royalty based on revenue alone fails to place any weight

on production costs and ore grade which directly affects the

cash flow and hence the life of the mine."

This goes on to show that mines of this nature cannot

continue under this royalty imposition and will not be brought

in in the future.

What we're concerned about here in British Columbia, Mr.

Speaker, and through this Minister, is the maintenance of this

important revenue base for employment and for revenue for

benefits. As we stated, your proposal directly against any

information that I can get either from Ontario or other

jurisdiction studies or consulting engineers on a royalty base,

is not acceptable to any government in meeting its commitment

to continue the industry, not for the sake of the companies,

but for the sake of the people.

Your responsibility, Mr. Minister, is to maintain the

industry so that we can get revenue for the people. I would

expect you to tax it to the limit that you can, which would

continue the industry, but these studies and all correspondence

that I have show that your proposals are unworkable and in fact

will destroy the industry in British Columbia.

There will be no benefit for this government, for the

people, or for Canada, which also British Columbia is a part

of. Because of your proposals, coupled with the federal

proposals, I move this motion tonight and I strongly urge its

a that this bill be hoisted for six months.

MR. G.F. GIBSON (North Vancouver-Capilano): When this bill

was first introduced in this House a couple of months ago the

day became known across the country, as the Minister knows, as

Black Tuesday. Now we are back to another Black Tuesday.

I could hardly believe my ears, Mr. Speaker, when the

Premier and House Leader stood up and moved second reading of

Bill 31, because I've been hoping against hope that in the

intervening time….

HON. MR. NIMSICK: I moved the second reading.

MR. GIBSON: Well, when he called the debate, Mr. Speaker,

because I've been hoping against hope

[ Page 3502 ]

with the many representations that have come to this House and the many wise letters of advice and

meetings with people employed in the mining industry, and the B.C. and

Yukon Chamber of Mines, and all kinds of groups associated with the

mining industry, all of the free advice the government's been getting

over the last few months….

HON. MR. NIMSICK: It was your Dad who gave me the idea.

(Laughter.)

MR. GIBSON: Mr. Speaker, the Minister said my Dad gave him

this idea. I've had a chance to talk to my Dad about this bill.

He doesn't think much of it. The Minister's gotten confused

again, as usual.

Interjection.

MR. GIBSON: I appreciated it, Mr. Premier, and I hope I

learned something. But you know, when this bill is called up

before this House you have to be kind of sad and you have to

be, if you're in the opposition, kind of frustrated, and you

have to be kind of outraged too. You have to be sad because of

what is going to happen to the mining industry in British

Columbia and the gradual decline that's going to set in. And

you have to be frustrated because it's based on a socialistic

dogma that's not going to change. That's the frustration of the

thing, no matter what kind of advice you get. They're going to

push this thing through. And you have to be outraged because,

Mr. Premier, you had a 40 per cent vote last time. You didn't

have a mandate to wreak this kind of injury on the basic

industry of British Columbia.

Interjections.

MR. GIBSON: My vote was a little bit lower than yours, Mr.

Premier, and it's going to be a little bit higher next time. In

the meantime I'm not proposing to destroy a lot of jobs in this

province.

Mr. Premier, if you want to talk about elections, call an

election on Bill 31. I challenge you to do that.

HON. MR. BARRETT: You'd never do it. Bye-bye, friend;

bye-bye, Bill.

MR. GIBSON: It would be bye-bye to a lot of people over on

that side of the House from a lot of people from around this

province.

I'm going to be pointing out, Mr. Speaker, later on in this

debate just where the jobs are around this province in the

mining industry — the jobs that the Minister didn't seem to

think very much of.

The Minister talked about a vanishing breed. Mr. Speaker, that's a caretaker

government right now. If they could see the letters coming in from around this

province they wouldn't get 33 per cent of the vote right now. They wouldn't

get their historic 33 per cent.

Interjections.

MR. GIBSON: They've done that much already. I spoke up in

that Minister's riding, Mr. Speaker, and that wasn't Howe

Street, and that wasn't Bay Street, and there was a crowd that

turned out there that didn't think very much of Bill 31, I can

tell you that. And then we got petitions down from Ashcroft,

with hundreds of signatures against the bill that that

Minister stands for.

Mr. Speaker, this bill is already, in effect, implemented

through the Mineral Land Tax Act . They've done exactly

the thing that they're asking us to debate on in this House

right now, as I mentioned in the Minister's estimates. Half of

the mining land in this province is already covered, and that's

a disgrace and it's contempt of this House to promulgate that

order-in-council before this debate took place.

Interjection.

MR. GIBSON: It's contempt of this House, Mr. Minister.

Interjections.

HON. MR. BARRETT: Was it 67 votes or 57?

MR. GIBSON: Fifty-seven, Mr. Premier. But if you had come

into the riding another day it would have been more.

We heard a speech from the Minister tonight. I could agree

with some things, Mr. Speaker. He wanted a greater return to

the citizens of British Columbia. I agree with that 100 per

cent, Mr. Speaker. I can only imagine that is because I read a

marvellous history of the Minister in the newspaper the other

night. It was a heart- warming history. The Minister started

out as a Liberal. I think maybe he has maintained some of those

sound principles over the years and he wants to do the right

thing and get a greater return for the people of British

Columbia. I'm all for that.

But I have to disagree with some of the other things that

the Minister says. He is a one-man royal commission. That's

what he told us. He said no advice is necessary on this bill.

But a lot of advice is necessary on this bill. Then he gave us

some readings from "Mineral Policy Objectives for Canada" — that's another bit of his Liberalism surfacing again.

Interjection.

MR. GIBSON: Oh, I'm sorry, Mr. Minister, but the

[ Page

3503 ]

language is the same; maybe it was a leak. Then he

gave us readings from the Hon. Member for West Vancouver–Howe Sound

(Mr. L.A. Williams), some very wise words — words for the protection of

the position of British Columbia in resource taxation. It is

tremendously important and I'm glad that the Minister quoted that in

his speech.

But then he said a lot of things. He said how did that

industry reach $1 billion? He said it reached $1 billion

because all of the other countries of the world had had their

resources depleted and raped by the miners and now they had to

come to British Columbia to get what little bit of resource

there was left in the world, and that's why the industry has

gone to $1 billion.

The Minister doesn't know what he is talking about, Mr.

Speaker. He just does not know what he is talking about. The

industry went to $1 billion last year in British Columbia

because of raised prices and because over the last generation

in this province, there has been created the most skilful and

dedicated group of mine finders and mine employees anywhere in

the world.

That's why we are able to work the lowest grade deposits in

the world in British Columbia. Let me give the Minister a few

figures about all of those depleted resources he sees in other

parts of the world. Let's just talk about copper, which is half

of our product.

We will start out with British Columbia which has proven

reserves of 3.2 billion tons averaging .44 per cent copper — the lowest in the world, Mr. Minister, as you know. But our

skilful miners are able to take out and make a profit to pay

taxes on too, and pay more taxes if you levy them the right

way.

Now let's look at some of the other parts of the world.

Southwestern USA: 6.7 billion tons averaging 0.61 per cent — not. 0.44. Mexico: 3.4 billion tons averaging 0.64. Panama: 0.9

billion tons averaging 0.7. I am working down the continent.

Columbia: I billion tons averaging 0.8. Peru: 3 billion tons

averaging 0.85. Chile: 10 billion tons averaging 0.9. Moving to

the other side of the Pacific, the Philippines: 1.7 billion

tons averaging 0.55. Western Siberia: details unknown.

Indonesia: several massive deposits being explored, all

exceeding 0.65 per cent copper. Papua and New Guinea: 1.2

billion tons averaging 0.73.

It doesn't sound to me like that means people are coming to

British Columbia because we are the last refuge in the

world.

MR. SPEAKER: Hon. Member, I haven't interrupted, but perhaps

I should to indicate that the debate must be centred around the

advisability of a six-month hoist. I'll explain it further. If

we're still here six months from now it won't matter — we can

still debate it. (Laughter.)

MR. GIBSON: Thank you, Mr. Speaker. As my colleague, the

second Member for Vancouver–Point Grey (Mr. Gardom) says, I am

indeed trying to describe why the bill is so bad that it should

be suspended six months. And indeed I'm going to have a little

bit more to say about that six-month motion towards the end of

my remarks as well.

Interjections.

MR. SPEAKER: I must point out that the idea of this debate

is not to deal with the principles of the principle motion, or

the idea of the principle motion, but to deal with the question

which is a six-month hoist — whether it should be done or

not.

MR. GIBSON: I am talking about the advisability of the bill,

Mr. Speaker, and the importance of delaying it as the amendment

suggests.

MR. SPEAKER: The latter part of it would be the area of

emphasis I would hope.

Interjections.

MR. GIBSON: Well, I don't know when we're going to get to

the main motion. I think we ought to suspend it for six months,

Mr. Minister, through you Mr. Speaker.

But I want to tell you why. Because I don't think you're

convinced yet, Mr. Minister. Are you for it? There, you see,

he's not convinced, Mr. Speaker. He's not convinced so he needs

some more convincing.

One of the things that the Minister didn't do in order to

convince us that this bill ought to be read today, this week,

this month, he didn't give us very good revenue figures. Not

very good revenue figures at all. He didn't even know the

difference in his own bill between gross value and net value.

And he implied to us that some time he might explain that to

us. But, his bill tells us what gross and net value is, and yet

he says that what the bill says is not what he means.

HON. MR. NIMSICK: I said I'd clear it up.

MR. GIBSON: Oh. No, indeed the bill is very clear in its

reading. It says what gross value means, and then it says what

net value means, net value being, briefly put, "gross value

with certain deductions taken away from it." But what did you

say that he said?

HON. MR. LEA: "That I said, that he said."

MR. SPEAKER: I'd say get on with it. (Laughter.)

MR. GIBSON: So the Minister, in the figures he

[ Page 3504 ]

was giving this House, Mr. Speaker, was using a net value to

calculate the incremental royalties when the bill says that the

gross value shall be used. And furthermore, the Minister, in

comparing the figures he was giving the House with the industry

figures, was referring only to that 420 million pounds which

are non-Crown-granted claims and not referring to the other 300

or so million pounds of production which are on Crown-granted

claims but are producing revenue for the Crown on exactly the

principles of Bill 31, on exactly the royalty and

super-royalty principles through order-in-council 1086 as has

been earlier described.

So, the Minister's figures to the House have been, I would

say, misleading.

AN HON. MEMBER: Hear, hear!

MR. GIBSON: He gave some other very fallacious arguments

which must be canvassed.

MR. SPEAKER: May I point out to the Hon. Member that

canvassing the main principle of the Minister's speech has

nothing to do with the amendment. If you are debating the main

motion, which is on second reading, then of course all this

would be relevant.

But basically, you must identify your remarks with the

advisability of, at this stage, changing the time at which the

bill will be considered. You're not really doing that, and it's

not enough to argue the main motion.

MR. GIBSON: Mr. Speaker, you'll have to pardon me if I seem

a little confused in this regard. I was following the lead of

the Leader of the Opposition (Mr. Bennett) who was talking

about absolutely anything under the sun once he had moved the

amendment…. Once he had moved the amendment, I would

presume, Mr. Premier, through you, Mr. Speaker, you should talk

to the amendment.

HON. MR. BARRETT: Point of order. Therefore, in moving that

amendment he is free to speak to the main motion put by the

Minister because that, in effect, is his one chance to speak.

But when anyone speaks subsequent to that amendment they do not

lose their place in the main debate. However, the mover does.

That explains the leeway for the Official Leader of the

Opposition.

Now, if you want a further explanation there is no one more

alerted on this kind of protocol than your own current leader.

I would suggest you consult him on the hourly basis while he is

in that position. (Laughter.)

MR. GIBSON: Mr. Speaker, I think the Leader of the Opposition is very

fortunate, indeed, to have such distinguished counsel as the Premier to plead

his case for him there. I would have thought that the precedent was set once

the amendment had been moved and from that point the kind of debate that ensued

was exactly the kind which related to the amendment.

Without really wishing to argue that further, it does seem

to me that a motion to put off the reading of the bill by six

months amounts to a motion to say that this bill has such grave

defects that it requires further consideration. Mr. Minister,

I'd be glad to vote on the motion right now if everybody would

guarantee they would vote on the motion right now. But I

believe there is a great deal of talking yet to be done before

we get off this motion.

Interjections.

MR. GIBSON: On the amendment, pardon me.

Mr. Speaker, there is a real problem of procedure here, I

think. (Laughter.)

HON. G.R. LEA (Minister of Highways): That's a Harvard man

for you.

MR. GIBSON: We have here a piece of legislation that is so

complex in its ramifications on the second major industry of

our province that it really should have been, and I hope still

might be, referred if not to the royal commission the Minister

spoke of earlier, then at least to a standing committee of this

House for the receipt of expert testimony. Since that is

clearly not the intention of the government, Mr. Speaker

Interjection.

MR. GIBSON: The Minister suggests you gave them a chance for

years for a royal commission. Mr. Minister, you didn't give

this party a chance for years. We'll get our chance in a little

while.

Given the fact that the government apparently has no

intention of providing for that kind of expert input, it seems

to me that it's incumbent upon MLAs to make more extensive

remarks in the provision of that kind of what I would call

expert testimony that should otherwise come forward in

committee. That kind of extensive remark must perforce apply as

well to the question of whether the bill should be hoisted for

six months. In other words, if it's a bill with very

questionable policy proposals in it, then that bill has to be

studied. I'm making the case that the policy proposals are very

questionable.

AN HON. MEMBER: Yours is suddenly becoming the old

party.

MR. GIBSON: I hope, Mr. Speaker, that will strike

[ Page 3505 ]

you as an acceptable line of argument.

MR. SPEAKER: May I point out to the Hon. Member that this in

effect is a dilatory motion, the purpose of which is to delay a

decision. We're debating the question of whether to delay that

decision. If one is opposed to a bill, you can debate it in the

main motion. It is as simple as that. So the real question here

is what is advisable, so far as the House is concerned, on a

dilatory motion such as this.

MR. D.A. ANDERSON: Point of order, Mr. Speaker. For this

motion to delay for six months to be properly debated, we're

going to have to know what the defects of the bill would be if

implemented now and thus in running for the next six

months.

For the amending motion for the six-month hoist to be

properly understood we're going to have to look at the effects

of putting this legislation in now as opposed to putting this

legislation in six months hence. Now the only way to do that is

to point out the defects of the legislation, and how wrong it

would be, how improper it would be and how unwise it would be

for us in the Legislature to now accept a bill which would lead

to, we think, hardship upon the people of British Columbia and

damage the mining industry within the next six months.

MR. SPEAKER: May I point out….

MR. D.A. ANDERSON: The only way to do that is to examine it

and examine its merits and defects.

MR. SPEAKER: May I advise the House the problem here is that

the Hon. Member has not been directing his argument at all to

the question of delay but really to an attack upon the bill

itself without any qualifications. Therefore, what I'm

suggesting to the Hon. Member is that he direct his mind either

to the first proposition or the second proposition. But he has

not directed himself to the second proposition at all — that

there should be reasons for delay.

MR. D.A. ANDERSON: Mr. Speaker, that's simply an absurd

suggestion. The Member has been addressing himself to the

defects in the bill, as presented by the Hon. Minister of

Mines, and how these defects work hardship upon the people of

British Columbia and damage the economy of British Columbia in

the next six months if that bill were to be implemented at the

present time. You know that.

MR. SPEAKER: I'd just point out one other thing: we all know that the

reason for a delay motion, or a six-month hoist, is to kill the bill. In other

words, there are two ways of dealing with the question. But the amendment has

been made and under the rules you direct your attention to, and your words to,

the advisability. That's the way it works. This has not happened so far, that

I have noticed, in the debate.

Interjection.

MR, SPEAKER: Well I'm not asking the Hon. Member to desist.

I would like him to get on with the advisability or otherwise

of his argument. I'm asking him to direct his attention to that

aspect.

MR. GARDOM: Point of order. He was doing just that,

notwithstanding a multitude of objections from the government

side which seems to have certainly received a welcome ear

tonight. In order for him to substantiate his reasons and

arguments, Mr. Speaker, for the six-month hoist he obviously

has to talk about the tenor of the bill. Because if it was a

good bill, how could he possibly support the six months

amendment?

MR. SPEAKER: Well, the Hon. Member who spoke is an expert in

this in that he always strayed back to the subject whenever he

got away from it, but the Hon. Member who was speaking did not.

Would the Hon. Member resume his speech and please direct it to

the advisability?

MR. GIBSON: Thank you, Mr. Speaker, I was attempting, and

shall continue to attempt, to lay a solid foundation.

Now, one of the main reasons the bill should be delayed, and this

seems to me very obvious, is the way in which the mining industry at

the moment is being ground between two millstones. It's being ground

between the millstone of Bill 31 on the one hand, which has technical

defects, which I'll talk about later, which would have the effect of a

high rate of numerative tax on the mining industry, and between the

millstones of the proposed federal government budget.

This is one of the reasons I hoped against hope that he wouldn't call the debate

on this bill. And this is why I asked the Premier in the House the other day

if he had received a telegram from the president of the British Columbia and

Yukon Chamber of Mines, Mr. E.A. Schultz, saying as follows — and this telegram,

incidentally, Mr. Speaker, was sent not only to our Premier but to the Prime

Minister of Canada:

THE BRITISH COLUMBIA AND YUKON CHAMBER OF MINES STRONGLY RECOMMENDS THAT THE

FEDERAL GOVERNMENT AND THE GOVERNMENT OF BRITISH COLUMBIA, IN COOPERATION WITH

REPRESENTATIVES OF THE MINING INDUSTRY, PROMPTLY INITIATE ACTION TO CREATE A

COMMISSION TO STUDY VARIOUS TAX PROPOSALS NOW FACING THIS INDUSTRY WITH THE

OBJECTIVE OF

[ Page 3506 ]

FORMULATING A

TAX POLICY THAT PROVIDES A FAIR DISTRIBUTION OF MINING TAX REVENUES

BETWEEN THE TWO GOVERNMENTS AND ALLOWS THE MINING INDUSTRY TO MEET

INTERNATIONAL COMPETITION. WE BELIEVE SUCH ACTION WOULD BE MOST TIMELY

AND BE IN THE BEST LONG-TERM INTERESTS OF THE PEOPLE OF BRITISH

COLUMBIA AND CANADA.

THE NEED FOR IMMEDIATE ACTION IS CLEARLY EVIDENT IN THIS PROVINCE

WHERE UNFAVOURABLE TAX LEGISLATION HAS CAUSED A SERIOUS DROP IN EXPLORATION

ACTIVITY AND NEW MINING DEVELOPMENTS.

That's the end of the telegram. Believe me, it has caused

that serious drop, Mr. Speaker. There can be just no question

about that factual statement.

Have you seen the latest record of drilling in the Province

of British Columbia? Does that Minister understand that most of

the 4,000 or 5,000 people involved in exploration in this

province are gone? Does he understand that in 1972 there were

$38 million spent in off-property exploration in this province,

in 1973 people got a bit scared and it dropped back to $28

million and in 1974 it looks like it's going to be only $14

million?

And I see the Minister's looking at me with a quizzical

expression.

Interjection.

MR. GIBSON: The Minister says it would have been worse if it

wasn't for him.

HON. MR. NIMSICK: It sure would have.

MR. GIBSON: The Minister says it would have been worse if it

wasn't for him. You know, I've got a clipping with a picture of

the Minister the other day and it was a big smile, a nice

smile, and the subtitle was: "Mining Man of the Month." That

had been struck out and written across was: "Mining Man of the

Century." Mr. Minister, you're the mining man of the century,

there's no question about it. But I don't know why you are

applauding. I don't know how anyone else could have achieved

the combination of the lowest exploration in this province for

many, many years in the time of the highest mineral prices. How

could you do that? How could he do that?

Interjection.

MR. GIBSON: That's what made you the mining man of the

century, Mr. Minister. There's no question about that.

So to get back to this squeeze, this tax warfare between governments that hasn't

been sorted out…and I guess, Mr. Speaker, it can't be sorted out for two

or three months, at least until this federal election's over. I don't know how

it can be sorted out. What's to be done? The Premier has obviously taken the

route that the best thing for him to do is to try and pre-empt the field, to

jump in and say: "We're gonna take it over and they won't dare take it back."

Mr. Speaker, God bless him, and I wish him luck because I

think that the major return from these resource revenues should

be for British Columbians. But I'm going to suggest that what

he really should do, and what the federal government really

should have done, is to get together and talk before warfare

destroys an industry.

Interjections.

HON. MR. BARRETT: Now, the Liberals have shown a record of

non-consultation.

MR. GIBSON: I asked the Premier the other day….

Interjections.

HON. MR. BARRETT: They took Peter Lougheed down the garden

path.

MR. SPEAKER: Order, please! Would you kindly get on to the

advisability of delaying the legislation?

Interjections.

MR. SPEAKER: We must get on with it.

MR. GIBSON: I asked the Premier the other day if he would

take this good advice from the president of the B.C. and Yukon

Chamber of Mines, and enter into this consultation. All he'd

have to do is pick up the telephone, Mr. Speaker.

HON. MR. BARRETT: Who's going to be the new Prime

Minister?

MR. GIBSON: You could talk to the existing Prime Minister

(Hon. Mr. Trudeau), Mr. Premier, or you could take a six-month

hoist. That would do it, because in the meantime….

HON. MR. HARTLEY: Are you going to vote Liberal federally?

(Laughter.)

MR. GIBSON: The Minister doesn't understand, Mr. Speaker,

that Bill 31, independent of what is happening in Ottawa, is a

bad bill.

AN HON. MEMBER: Oh, oh!

[ Page 3507 ]

MR. GIBSON: It came in a long time before the federal

budget. The Minister tried to imply in his remarks earlier on

that the federal budget had been the cause of Bill 31. That

wasn't the cause of Bill 31. That was introduced months ago.

Bill 31 is a bad bill. It's a bad bill simply on its own

rights, and that's why it should be hoisted, among other

reasons.

Interjection.

MR. GIBSON: One of the Ministers is jealous of my

suspenders. I'll send him a pair at a reasonable price — the

Minister of Industrial Development, Trade and Commerce (Hon.

Mr. Lauk).

HON. MR. BARRETT : The Liberals will need all the help they can

get.

MR. GIBSON: Another reason for the suspension of this bill

is the wide degree of public misunderstanding of what it's all

about, because the government hasn't been very good at getting

this on the record. They've allowed a lot of preconceptions to

creep into this.

Instead of royalties they should say: "The right to a

greater public return in time of high prices." Instead of

royalties: "The right to maximize public benefits." I think we

could find common Liberal grounds, Mr. Minister, if you said

that instead of royalties. We could find some kind of excess

profits tax. I'm not going to make any mystery out of the

solution I see that fits the answer — in times of high

prices,

And instead of misleading the public, I believe, by saying

we will leave it in the ground, you should say: "What is the

best use of resources?"

Interjection.

MR, GIBSON: Then why do you spend so much time talking about

leaving it in the ground? The same as stumpage, one of the Hon.

Members says, Mr. Speaker. And the Minister earlier on compared

it to stumpage. Of course it isn't, because stumpage relates to

costs and it relates to revenues, and in other words stumpage

is related to profits.

Interjections.

MR. GIBSON: Did the Premier say: "Leave it in the ground"?

I'm surprised and disappointed in him then.

And then, Mr. Speaker…. I gather there's a disposition to

accept a motion for adjournment, so I adjourn this debate until

the next sitting.

Motion approved.

Hon. Mr. Barrett moves adjournment of the House.

Motion approved.

The House adjourned at 10:53 p.m.

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