BC Politics with Hubert Beyer

INDUSTRY AND ENVIRONMENTALISTS MUST COME TO TERMS

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VICTORIA -- Sometimes it seems there's two kinds of British Columbians, those who want to save our forests and those who want to destroy them. That at least is the impression the casual observer gets from reading the newspapers and watching TV.

The defenders of our forests talk a lot about the birthright of future generations, of heritage and spirituality, all the while portraying the industry as exploiters without conscience, preoccupied only with the maximization of profit.

The industry has traditionally responded by ridiculing the environmentalists as militant dreamers who would sacrifice the province's economic viability to their weird ecological creed.

Needless to say that the silent majority of reasonable and rational people got confused by all this extremist rhetoric. History has proven again and again, however, that the rational view will eventually prevail. It just takes time for the irrational combatants run out of steam. That moment has arrived in the battle between the forest industry and the environmentalists.

The turning point came with the introduction last fall of the new Forest Act. It set the stage for bringing in line both an industry which had been used to having things its way, and an opposition which often placed emotionalism before reason.

The two most important changes in the government's forestry policy are a substantial increase in stumpage fees and shift of responsibility for reforestation from government to the private sector.

The stumpage fee is what companies pay the government for the privilege of harvesting timber. In the past, this fee has been solow that the Americans mounted a dangerous case against Canada for unfairly subsidizing the forest industry.

That problem culminated in the imposition by Canada of a 15 percent tax on itself for all softwood lumber exports to the U.S. Failure to do so would in all likelihood have resulted in a punitive import tax by the U.S., the revenue from which would have flowed into U.S. coffers.

In the case of British Columbia, this self-imposed tax was lifted December 1, 1987, after the Americans were satisfied that our new stumpage fees no longer constituted an unfair subsidy.

Based on 1986 industry sales of $9.3 billion, the new fees will put an additional $100 million a year into the provincial treasury. That will bring total provincial income from the forest industry to an estimated $680 million a year.

Equally, if not more important is the government's decision to saddle the industry with the financial responsibility for its operations. That includes not only the replanting of trees it cuts down, but responsibility for ongoing silviculture and the cost of constructing timber-harvesting roads and bridges.

But what if the government's bark turns out to be worse than its bite? That would be a damned shame, not only for us, but also for the government. The public is beginning to understand the intricacies of forest management. Any government trying to hoodwink the public would do so at its own risk.

Anyway, indications are that the Socreds have every intention of making the new policies stick.

A recent discussion paper on silviculture regulations, published by the forest ministry, makes it clear that the government will demand strict compliance with its silviculture policies from the industry. The paper not only sets out proposed regulations but promises stiff penalties for non-compliance.

Regular audits are to ensure that the industry won't try to play a fast one on the government. That means there's hope that the backlog of 1.6 million hectares of insufficiently restocked forest land will be reduced and eventually eliminated.

It won't come as a surprise to all those rational and previously confused people in the middle that neither the industry nor the environmentalists are jumping with joy over the new policies.

Industry spokesmen express fears that the fees may be too high and that the costs of replanting and silviculture could make the industry more vulnerable to the volatility of the lumber market. Environmentalists say the policies do nothing to protect the survival of our forests for the benefit of future generations.

But the battle between the extremists is already shifting away from the general debate over forest management to more specific and environmentally sensitive areas such as the proposed logging of part of the Stein River Valley.

In the end, the two sides will just have to learn to live with each other and with the compromise imposed by the government.

And learn they will.

HOW DID WE GET INTO THIS MESS?

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VICTORIA -- Happy days are here again. Government revenues are up, expenditures down; Finance Minister Mel Couvelier wants to balance the next budget, and prosperity for all British Columbians is just around the corner.

Well, not quite. True, the provincial government spent less than anticipated and took in more than expected, but we still went further into debt during the first nine months of the current fiscal year. When the budget was introduced last March, the government expected to add another $731 million to the province's total debt load by the end of December.

That's what's referred to as deficit financing. You spend more than you earn. Individuals get into a heap of trouble doing it, but governments get away with it.

When the end of December came around, the government had overspent its budget by only $369 million. In other words, the managers of our money didn't pile up the debts quite as badly as they planned to.

The finance minister must have felt a little sheepish about the whole thing, because he buried those figures on page two of the press release that accompanied the third quarterly financial report. The first page was reserved for different nuggets.

We were informed that economic growth for the nine-month period was three per cent, that unemployment was down to 10.1 per cent, that retail sales increased by 9.4 per cent and housing starts totalled 29,000, up 40 per cent from the previous year. While all these wonderful things were happening, inflation was kept at 3.1 per cent.

The debt load, however, increased. Total provincial government debt is now creeping up towards the $7 billion mark. If you roll in the Crown corporations, such as B.C. Hydro, it's closer to $14 billion. Paying the interest on direct government debt alone takes more than $500 million out of the annual budget.

If you and I were to find ourselves in such a dilemma, our banker would politely ask us what the hell happened, and no matter what the answer, he'd probably start foreclosure proceedings on our homes. Since nobody will foreclose on the Parliament Buildings, we can safely pop the same question to the government: what the hell happened? How did we get into this mess?

I've asked that question so many times that I could fill a book with the answers. Bill Bennett usually blamed it on the world recession. We have a resource-based economy, and nobody wants our resources anymore, the former premier used to lecture, as the debts kept mounting.

Well, there were some other reasons Bennett didn't really want to talk about. There was the bill for Expo; there was the cost of building the Skytrain; there was the Coquihalla Highway

boondoggle; there was B.C. Place Stadium; there was Northeast Coal. Those five mega projects contributed more than half to the total debt load.

And what have we got to show for all that money? A lovely stadium that will never make money, coal fields that constantly operate on the brink of financial disaster, a great transportation system for Vancouver that uses money for fuel, a highway, described by a colleague as the most expensive shortcut in the universe, and fading memories of hosting the world at great cost. Not the world's greatest cost-benefit ratio, I would say.

So now we look to the new Socreds for a way out. If promises count, things will improve. I'm not talking about Premier Vander Zalm's promises. All we got from him so far is the prediction that "you ain't seen nothin' yet."

The best guy to place your bets on is Couvelier. He has said he'll balance the next budget and pay back all debts within three years. I mentioned that in a previous column, you say? Damn right, I did. And I'll mention it again. It's one promise I don't intend to let the finance minister forget, because I can't see how he can possibly keep it. Then again, he may surprise us all.

The acid test will come when Couvelier brings down the 1988-89 budget sometime around March 20. If the two figures - one for total expenditures, the other for revenues -- are the same, bingo, we got a balanced budget.

If in addition to that, somewhere in the rows of expenditures, there should be a figure indicating repayment of past debts, not just interest, we can yell "bingo" again, because he will have taken the first step towards making British Columbia debt-free.

If, on the other hand, none of these things come to pass, it's time to shout "enough is enough."

IS MEL PULLING A RABBIT OUT OF A HAT?

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VICTORIA -- Ask politicians these days what a balanced budget is and they'll launch into a fairy tale that begins with "once upon a time," until you get to Mel Couvelier, finance minister of this here province of British Columbia.

A balanced budget, Couvelier says, is something we're going to have by the end of the next fiscal year. Not only that, but by the time Bill Vander Zalm's term as premier is up, a large chunk of the accumulated deficit will have been paid back. So says Mel.

I'm glad it's Couvelier and not me who's staking his job on a miracle, because nothing short if a miracle will make his prophesy come true.

British Columbia's debt, accumulated over the last few years of deficit budgeting, now stands at a little over $6 billion. The anticipated deficit for the current fiscal year is about $500 million.

True, that's considerably less than the $850 million the government was first expecting to go into the hole this year, but it's a further debt, nevertheless, which will bring the province's total deficit to $6.5 billion by the end of March.

So here's the task Couvelier has set himself: First, he wants to bring down a balanced budget for 1988-89. That means he'll have to reduce last year's expenditures or increase last year's revenues by $850 million. A combination of the two will do the same trick.

Next, he'll have to find an extra $2 billion in each of the three years during which he wants to pay back the debt we racked up. It's a job that would make my accountant consider a career change.

Still, Couvelier isn't predisposed to flights of fancy. He has a definite idea of how to make good on his word. Three things, according to the finance minister, will turn British Columbia's financial picture around: increased revenues, streamlined services and privatization.

The stage for fattening government coffers has already been set. The provincial portion of the income tax has been raised and fees for every conceivable government service have been increased.

A big chunk of the added revenue will come from the forest industry in the form of higher stumpage fees. With the introduction of the new Forest Act, forest companies will,   for the first time, have to pay more than just a pittance for the privilege of harvesting our timber.

The second budget-balancing ingredient -- streamlined government services -- is also well underway. Cuts in education and health care may not do a lot for our schools and hospitals, but they are saving money.

That leaves the last and probably most important factor in Couvelier's equation: privatization of government services and Crown corporations.

There's no doubt that the Vander Zalm government is determined to sell everything that isn't nailed down. What we've seen so far is only a paltry start. Forget about the sale of the Queen's

Printer bookstore and the soil, feed and tissue laboratory in Kelowna. That's small potatoes. What Couvelier hopes will take the government out of debt is the sale of big-ticket items such as the maintenance of our highways and bridges.

That's where a lot of money will change hands. The highways ministry's multi-million-dollar equipment inventory alone will be enough to retire a sizeable portion of the deficit. Add to that the savings in wages for ministry personnel, and you've got a winner, at least in terms of saving money.

Nor is highways maintenance the only major government function that can and will be liquidated for cash. The B.C. Steamship Company, which operates two floating casinos between Seattle and Victoria, is about to be sold. Liquor stores with fewer than 10employees are for sale.

Down the road is the possible sale of the Insurance Corporation of British Columbia, the B.C. Buildings Corporation. Hell, some Socred backbenchers are even advocating the privatization of our education system. The possibilities are limited only by the imagination of the vendor.

Increased revenues and streamlined services will only go so far in balancing the budget and reducing a $6.5 billion debt. The real salvage operation is clearly to be done by way of privatization.

Looking at it that way, Couvelier may not be as pollyannaish as he sounds in his prediction of a balanced budget next year and a paid-off debt within three years. Still, I wouldn't want to bet my job on it.