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The House met at 2:00 p.m.

Prayers.

Orders of the day.

HON. W.A.C. BENNETT (Minister of Finance): Mr. Speaker, I wish to move, seconded by the Attorney-General that the public accounts for the fiscal year, 1970-71 be referred to the standing committee on public accounts.

Motion approved.

Hon. Mr. Bennett presents the Attorney General's nine month report.

HON. MR. BENNETT: Mr. Speaker, I wish to present a message from His Honour, the closing estimates.

MR. SPEAKER: The Lieutenant-Governor transmits herewith estimates of sums required for the service of the province for the fiscal year ended March 31, 1973. In schedule A, sums required by Her Majesty to make good certain sums expended for the public service for the period ending March 31, 1971 and to indemnify the several officers and persons for making such expenditure and recommends the same to the legislative assembly. Dated at Government House February 3, 1972.

HON. MR. BENNETT: I move, seconded by the Honourable Attorney General, that the said message and estimates accompanying the same be referred to the committee of supply.

Motion approved.

BUDGET ADDRESS

HON. MR. BENNETT: Mr. Speaker, I have the honour to move, seconded by the Attorney General, that Mr. Speaker do now leave the chair for the House to go into committee of supply. But Mr. Speaker, I wouldn't like you to leave the chair too soon.

Speaking on this motion, Mr. Speaker, this is the 20th successive annual budget for the Social Credit administration and the 19th it has been my privilege to present as Minister of Finance.

The past two decades have been of outstanding growth for British Columbia. The province has led the nation in the rate of increase in population, labour force, capital investment, and production, all of which have presented great challenges to the provincial economy, and particularly to the provincial government. The almost doubling of provincial population during this period, with over 60 per cent being new residents mostly from other provinces, has required large investment of capital and annual operating funds by the province in government services to the people of the province.

British Columbia has been the most successful of any province in meeting the job needs of the fastest-growing labour force in Canada. The high level of capital investment throughout the province and the resulting increase in production have necessitated massive investment by the government and its Crown corporations to support the broadening industrial base.

In meeting these challenges this government has balanced the priorities of economic development and government services to people within its basic policies of financing all general and capital expenditures out of current income, low tax rates, and, at the same time, maintaining adequate cash reserves.

With each passing year the strong performance of the British Columbia economy in comparison with the other Canadian provinces substantiates the appropriateness of financial policies which have been basic to this administration since taking office on August 1, 1952.

Uniquely, the Government of British Columbia has a flexibility of action to respond quickly to the needs of the province without negatively affecting the economy.

Since my budget address of last year, events have occurred on the national and international scene to further disrupt the Canadian economy. The employment situation has worsened for an increasing number of Canadians. Also, President Nixon's programme to correct a perverse economic imbalance for the United States has international complications.

At the federal-provincial conference of the leaders of the governments of Canada and the provinces held in Ottawa in November of last year, I presented on behalf of the people of the province constructive proposals to increase employment in Canada and to ensure every Canadian a basic living income. This brief is carried as the appendix to this budget speech.

British Columbia suggested to the Prime Minister of Canada that the solution to the creation of jobs for an expanding labour force, which, incidentally, is the fastest growing in the western world, is to strengthen the Canadian economy in two ways.

First, Canada is too small and scattered in population and too large in area to exist as a closed market and still expect to maintain the high standard of living and level of government services Canadians rightfully demand. We must, therefore, be outward-looking in trading associations for our production. The most important, natural and logical market for Canada is the United States. Accordingly, British Columbia recommended to the Government of Canada to commence immediate action on establishing a common trade market with the United States to provide progressively a free trade between the two countries within 10 years. A system of quotas for some agriculture products might be required due to different seasons in the two countries.

Mr. Speaker, Canada has un-utilised labour and underutilised resources which could be developed if a larger market existed. As Premier of the province I have every confidence that Canadians could well compete in this very large common market.

Second is British Columbia's long-standing proposal for the implementation of a nationally administered guaranteed annual income for all Canadians through a negative tax. Federal government payments to any Canadian with income below a national standard would create market demand and provide the opportunity for a national standard of living.

Mr. Speaker, the Economic Council of Canada, in a publication released last fall, stated job creation to be the major challenge for the 1970's. This government early recognised this problem and acted upon it. Honourable Members will recall that during my budget address last year, just a year ago, I stated a prime goal of this government was to create more jobs within British Columbia, setting a

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minimum objective of an increase of 25,000 in the number of people gainfully employed between October 1970 and October 1971.

Mr. Speaker, I am very pleased to report to this House this minimum target was not only reached but, in fact, exceeded by nearly three times that number with 73,000 more British Columbians working in October 1971 than in October 1970. This is the important figure, Mr. Speaker. This represents an increase of 9.1 per cent, the highest rate of increase in Canada and to my knowledge, in any other country. The employment increase over this period for the rest of Canada was only 2.6 per cent.

The creation of these many more jobs not only accommodated the 57,000 increase in the province's labour force but reduced the number of persons unemployed by 16,000 even taking into account the great number of people who came to this province seeking work.

This performance is in stark contrast with every other region of Canada. I stated at the federal-provincial conference that if the rest of Canada had performed as well as the British Columbia economy in the creation of jobs, Canada would not have an unemployment problem today, at all.

The creation of more jobs is a major thrust of this government's current policy. Programmes contained in the budget proposals I present today will continue this government's determination to increase the number of jobs for those of our own residents entering the labour force and the thousands of new workers, many with families, coming into British Columbia from other regions to take up residence.

Another important contribution not to be overlooked in the British Columbia economy, is the provincial government's home-ownership assistance programme. Introduced in 1966, it is an unqualified success. To date, almost 84,000 families have received outright grants or low-interest second-mortgage loans. In the last year alone 27,000 applications were received for assistance.

The policies laid down in the 1971 budget speech have proved most effective in stimulating both the public and private sectors of the British Columbia economy. Mr. Speaker, this budget will show there is to be no let-up in the government's programme to create jobs and to increase government services to the people of the province. It is this action which has been a major factor in keeping the British Columbia economy going. It will also show very clearly the benefits to the people of British Columbia of a government continuing in office, able to plan on a long-term basis.

This past year has witnessed an important meeting on the Canadian constitution held in Victoria in June 1971, in honour of British Columbia's centenary in the Canadian Confederation and a number of equally important meetings between the governments of Canada and the provinces on income tax changes and other fiscal and economic matters.

At the constitutional conference, good progress was made, particularly providing for amending the constitution entirely within Canada. British Columbia sincerely regrets proposals were not brought to fruition at that time.

Honourable Members of this House and all citizens of the province are by now well aware of the federal government revisions of the Income Tax Act introduced at the beginning of this year. While this government strongly supported the increase in income tax exemptions for individuals, but wanted them larger because of the effects of inflation, the province vigorously opposed the new financial arrangements imposed upon the provinces by the Government of Canada. Principally, British Columbia desired retention of the tax-abatement system of calculating the federal and provincial income taxes payable, rather than the new federal plan of a tax-on-tax system.

Under the revised fiscal arrangements with Canada, the 1972 British Columbia individual income tax is 30.5 per cent of the federal individual income tax payable. This tax rate, according to federal government calculations, will raise the same amount of revenue for the province as 28 per cent abatement rate which had been in effect since 1967. I want to say this, that our rate will still be the lowest in Canada. The federal Minister of Finance at the meeting of finance ministers and treasurers held in Ottawa in November, 1971, commented as follows — here I quote the former federal Minister of Finance:

The tax base upon which the provincial taxes are calculated is slightly smaller than the existing base. To receive the same amount of revenue, provinces will need to express their new tax on the smaller base slightly above the present rates. I want to emphasise again that this would not result in a higher level of provincial taxes.

The federal Minister of Finance announced a number of budget measures on October 15, 1971. Included was a renewal of a previous job-creating programme. Whereas, under the 1970 programme, British Columbia's share was $39,800,000, this has been reduced to $21 million under the 1971 programme despite the large number of workers and their dependents who continue to come from other provinces in search of jobs. The Government of British Columbia, however, welcomes the measure and, as under the initial programme, has accepted the full allocation of money and made it all available to the municipalities.

Mr. Speaker, I would like to place in perspective for the people of British Columbia and Canada the serious restraining effect upon government and the cost to the citizens of government debt-servicing charges.

In 1952 when the people elected this Social Credit government to manage the affairs of British Columbia, provincial government debt-servicing costs, including payments for debt retirement, took 23 per cent of the government's total expenditure. That same year, Government of Canada debt-servicing costs amounted to 10.7 per cent of total expenditure, and that constituted interest charges and the cost of issuing new debt only.

Almost the entire debt of the Government of Canada is without annual debt-retirement requirements. Had British Columbia debt-servicing costs been allowed to expand at the level prevailing in 1952, a total of $330 million would not have been available for the government services to people this next year but would have had to go to pay the debt servicing. Instead, provincial government debt costs to the people of British Columbia are nil — the only province in Canada with that policy, with all provincial government revenues available for services to people and strengthening the economy, and have been that way since August 1, 1959.

To have achieved this and at the same time kept pace with the province's fast-growing needs in government services is a unique accomplishment in government finance. On the other hand Government of Canada debt costs in this year have been estimated at $2,025 million or 14.1 per cent of the total federal expenditures. This is the second largest item of budgetary expenditure for the federal government. It is approximately the combined total of the federal contribution to all the provinces for hospital, medical care programmes and its payments for national youth allowances. It is time the people of Canada awakened to the drain debt costs are upon

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the economy.

This difference in finance policy between the national and other provincial governments and the British Columbia government is characterised in a statement of Mr. Bevan made in the British House of Commons and cited in former British Labour Prime Minister Harold Wilson's recently published memoirs, "A Personal Record." And I quote:

There is one important problem facing representative parliamentary government in the whole of the world where it exists. It is being asked to solve a problem which so far it has failed to solve: that is, how to reconcile parliamentary popularity with sound economic planning.

This British Columbia Social Credit government is the only government in Canada that has dared to adopt and adhere to a policy of no debt and balanced budgets, despite severe criticism both political and from special interest groups of the provincial economy.

A government, to be responsible to the entire community, must follow policies which benefit the community as a whole over the long term. This has been the consistent policy of this government since it took office in 1952 and will continue, Mr. Speaker. Because without this approach democracy cannot stand.

Of continuing concern to the Government of British Columbia is the present federal government's policy to slow down the economically expanding regions of Canada. Dr. Solandt, chairman of the Science Council of Canada, has stated that "Ottawa should stop pouring regional subsidies indiscriminately into areas where population is dropping and where industry cannot support itself."

The federal government should also stop siphoning off taxpayers' moneys to special interest groups as it is not going to the poor people of the depressed areas who really need the help to expand our economy. The regions of Canada should develop according to the advantages they can best contribute to the nation without the need for heavy government subsidisation to the private business sector. Individual economic activity needs support but this can be much better achieved through British Columbia's proposed guaranteed annual income plan.

In reference to British Columbia's Crown corporations, Mr. Speaker, the strong demand by the provincial economy for power supplies in 1971 and the anticipated growth in demand for the next decade requires the efficient development and utilisation of our power resources. Last year sales of electricity increased 11.6 per cent, almost double the increase in 1970. The volume of gas sales increased 13.3 per cent, compared with 5.8 per cent in 1970.

Plant additions during 1971 included the placing in service of the sixth unit at the Gordon M. Shrum generating station on the Peace River, raising the plant's total capacity to 1,362,000 kilowatts. Units seven and eight will be installed this year and equipment contracts for the ninth unit have been let, with installation in 1974.

The redeveloped Jordan River plant on Vancouver Island commenced operation last December with 150,000 kilowatts of capacity. Construction of the Columbia River Mica Dam is on schedule with the dam at 630 feet, and work on the spillway, intake, and outlets well advanced. And the Hydro will now proceed to building the generating station and also the lines to bring the power into the Vancouver area.

Development of the power resources at Mica proceeds, with the first two units scheduled for operation in 1976. This site will ultimately produce over 2 million kilowatts for the use of the people of British Columbia. Completion of the

Whatshan generating station redevelopment is expected this year. The 500,000 kilowatt Kootenay Canal project is under way, with the first two generating units of 125,000 kilowatts each scheduled for operation in 1975. A sixth unit is to be installed at the Burrard thermal generating unit for service in 1974, raising the total capacity at this plant to 900,000 kilowatts.

To complement the expansion of electric generating facilities, significant extensions and reinforcements were made to the provincial electric grid during 1971. Extension of service to many remote areas of the province was facilitated by the annual rural electrification grant from the Government of British Columbia.

The provincial government-owned Pacific Great Eastern Railway, which plays a key role in the dramatic economic advances taking place in the interior and northern sectors of British Columbia, leads all other North American railroads in new line construction.

With the opening of the 250-mile line from Fort St. John to Fort Nelson on September 10, 1971, mainline track now totals 1,100 miles, 40 per cent more than the 790 miles existing as late as 1960.

In addition, work continues on the 420-mile extension from Fort St. James to Dease Lake, which will open up by 1974 the northern area between the Rocky Mountain Trench and the Pacific coastline, a region with an abundance of natural resources. To date, 70 miles of track have been laid, with an additional 60 miles graded and a further 109 miles cleared.

While many other railways on this continent are experiencing serious difficulties, the Pacific Great Eastern Railway continues to advance in all areas of its activities. Carloadings in 1971 were a record 120,000 up 13,600 from the previous record high in 1970. Operating revenues were over $38 million or $25 million more than in 1960, while the net profit after all costs including, interest and all depreciation was $989,600. The railway now employs nearly 2,500 people, almost twice the number in 1960.

The Pacific Great Eastern Railway operation, while receiving no federal assistance, is making a significant contribution to the total Canadian economy, benefitting all parts of this nation.

Major private construction currently under way along the rail-line — P.G.E. rail-line — includes pulp mills at Mackenzie and Quesnel….

Interjection by an Hon. Member.

HON. MR. BENNETT: Pardon? Not yet, Not yet. I'm glad you're anticipating it my friend…each costing $85 million and a $74 million copper-concentrate mill near Williams Lake. In 1971 two new railway industrial parks at Fort St. James and Fort Nelson were added to the three successful centres at Prince George, Mackenzie, and Fort St. John, and three more are planned. The investment generated by the new railway will provide many new jobs for our expanding labour force.

The British Columbia economy significantly outperformed the rest of Canada in 1971, following the moderated rate of growth experienced in 1970. Particularly strong were the gains in personal income, consumer spending, construction, and mineral industry.

Our population continues to increase at double the rate of the rest of Canada and now exceeds 2,200,000. Forecasts indicate a British Columbia population of 5 million by the

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end of this century.

The total value of the province's output measured by the gross provincial product, increased an estimated 11 per cent to a record of $10,300 million. Mineral production exceeded $521 million, with major gains in copper and coal shipments contributing to 7.4 per cent increase over the 1970 record level.

The forest industries showed some recovery from the levels experienced in 1970. A substantial increase in house building activity in Canada and the United States contributed to a 10 per cent lift lumber production. Factory shipments rose to $3,890 million with the most significant gains occurring in food and beverage, wood and metal fabricating industries. Another record year was posted by the tourist industry, with an estimated $1.5 billion in tourist revenues for the first time in our history.

Consumer spending, particularly on automobiles and other durables, increased retail sales over 10 per cent to $3,460 million, and was supported by a 10.1 per cent increase in the personal income to $7,800 million.

The value of private and public investment in the province in 1971 was $3,657 million, 22.3 per cent greater than in 1970, and almost three times the 7.9 per cent increase for the rest of Canada. Substantial increases occurred in every category. The 28 per cent gain in housing starts in British Columbia reflects our government's policy of homeownership assistance and modest easing in mortgage rates and increased availability of mortgage funds.

Exports continue to expand, with a record value of $2,660 million. Shipments to the United States accounted for much of this increase.

Despite present uncertainties pervading the international trade fields, the 1972 outlook is for continued economic expansion in British Columbia at a rate comparable with the 1960's. The anticipated appreciable expansion of the United States economy this year should materially benefit British Columbia.

As the Members are well aware, Mr. Speaker, in this address we deal with three fiscal years. First the fiscal year that closed on March 31, 1971. Honourable Members will have noticed that the financial statements of the Government of the Province of British Columbia for the fiscal period March 1, 1970 to March 31, 1971 contained in the abridged public accounts released early last summer and the detailed public accounts tabled on the opening day of this legislative session, are presented in revised form from previous years.

This has been brought about by this government's policy decision on the introduction of perpetual and special funds of the province. Also, general revenues and expenditures are separated into budgetary and non-budgetary transactions.

With all the fiscal resources of the Government of British Columbia continuing to be available for expenditure on government services and the development of the province, large gains were made in the accumulation of government assets, including the provincial surplus. Our total assets increased $229,600,000 to $2,434 million during the year.

Fixed assets rose by $63,272,000 up to $1,326 million, The provincial surplus, or the excess of assets over liabilities, increased by $119,600,000 over the year to $1,656 million at March 31, 1971.

Provincial government revenues in the fiscal year ended March 31, 1971, reflect the moderation that occurred in the economy during that period. The increase of $88,995,000 or 7.6 per cent over the previous year to a total of $1,258 million was down substantially from the 21.3 per cent gain the previous year. This does not include the accelerated remittance by the Government of Canada of British Columbia's personal and corporation taxes totalling $28,327,000 which was taken directly into the budgetary cash reserve account.

Total current and capital expenditures were $1,241 million up $87 million from the previous year. With a surplus of revenue over expenditure of $16,763,000 for the year and the accelerated income tax remittance just referred to, the Government of British Columbia's budgetary cash reserve increased by $45,090,000 in a year to a total of $110 million. However, the Honourable Members will recall that $15 million was appropriated from this amount on April 2, 1971 for accelerated park development.

Table No. I in the printed address, Mr. Speaker, will show the comparisons over the years of British Columbia's debt position and its increase in fixed assets.

Now we start to look, Mr. Speaker, at the present fiscal year.

The Comptroller General's report on the provincial government's income and expenditure during the period April 1 to December 31 of the current fiscal year is tabled today for the information of Members of this House and the citizens of British Columbia. Revenues reflect the broad strength prevailing in the province's economy, and the expenditures the job-creating measures undertaken by this government.

Revenues in this nine-month period on an accrual basis — and I emphasise accrual basis — are up over the same period in 1970 by $134,408,000, excluding an accelerated federal government payment of $25,601,000, phasing out the federal government's share of the technical and vocational training capital assistance programme, and total $1,044 million. Revenue is stated by the Comptroller General on an accrual basis because revenues from motor-vehicle licences and the insurance premiums are not received until the final quarter of the fiscal year.

Accrued expenditures to December 31, 1971, increased $120,443,000 to $1,008 million with $43,566,000 more spent on highways and public works and $10,368,000 more in park development to create employment, $24,381,000 more in the nine months was spent on education, $17,295,000 more into social services allowances, and $5,519,000 more into the management of our forests.

I now come to perhaps the most important part of this budget speech, Mr. Speaker — the financial proposals for the next fiscal year starting April 1.

The challenge for this government to keep British Columbia moving ahead on all fronts continues large indeed. Since my last budget address, powerful new economic and financial forces have been set in motion which have been felt around the world. British Columbia has not escaped some of their effects. It is all the more important, therefore, that British Columbia's economic and financial policies be geared to the times. Job-creating projects must receive top priority along with policies that will increase our economic base.

Mr. Speaker, the provincial government intends to inject $266,300,000 additional cash into British Columbia's economy this financial year.

This is a record amount, Mr. Speaker. This will be done within a pay-as-you-go balanced budget and with no increase in tax rates. It will be accomplished by adding $151,300,000 by way of current estimates of expenditure and $115 million by way of special funds or allocations. It is being done by the provincial government alone, and does not include expen-

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ditures of the provincial Crown corporations.

Table No. 2 gives lists showing the expenditures. The estimates of the present year and the new estimates for the next year of each department. The 1972/73 expenditure estimates total $1,451,963,000. This is $151,271,000 more than the current year and, as in past budgets of this administration, includes all capital expenditures. Mr. Speaker, this is a budget for the people by a government that cares.

SOME HON. MEMBERS: Hear, hear!

HON. MR. BENNETT: The major expenditure occurs in the field of education. A total of $441,106,000 is allocated to the Department of Education, a one-year increase of $43,082,000. This includes $16 million more for school district grants, $7,500,000 more in university operating grants, $6 million more for grants to regional colleges and technical and vocational schools, $12 million more for the school tax portion of homeowner grants, $840,000 more for teachers' superannuation, and a new item of $1 million for the payment by the provincial government of the employer's share of federal unemployment insurance on behalf of all teachers. Also in the Department of Labour, $1,390,000 more is provided for apprenticeship training.

Legislation will be introduced today increasing the maximum annual homeowner grant from $170 to $185, plus an additional $50 for home-owners aged 65 years and over, which means the province will now be paying an annual $80,670,000 in these home-owner grants — the first ever offered in the world, my friends.

The Department of Health Services and Hospital Insurance estimates of expenditure total $294,670,000, or $30,615,000 more than the current year. Payments to hospitals for patient care will now total $230 million per year. In the Department of the Provincial Secretary $15 million more, or a total of $85 million is provided as the government's contribution to the British Columbia Medical Services Plan to help our doctors and our people.

Also in this Department of the Provincial Secretary is a new item of $1,800,000, to pay the employer's share of unemployment insurance for all provincial government employees under the new federal government Unemployment Insurance Act.

The Department of Highways, including the British Columbia Ferry operations, receives an additional $21,292,000, or a total of $179,261,000. The Department of Public Works receives $7,917,000 more for a total of $37,728,000. This does not include the expenditure this year on the British Columbia building in Vancouver, which is provided under a special fund. The construction programmes of these two departments, Mr. Speaker, will create many, many additional jobs this year.

Not because we haven't got good law and order, Mr. Speaker, but because of increased salaries and so forth for the R.C.M.P., the Department of the Attorney General requires an additional $6,139,000 next year for administration of justice in the province.

1971 was census year. This means with the increased number in our municipalities they will receive $6,500,000 more for provincial municipal per capita grants in the Department of Municipal Affairs. In the Department of Finance, the power subsidy to encourage electrification in the rural areas of the province has been increased from $2 million to $3 million, and $7,500,000 has been provided for salary increases for our dedicated government employees. In the Department of Agriculture $1 million more for a total $5,500,000 has been allocated for agricultural rehabilitation and development — the ARDA programme.

Department of Recreation and Conservation appropriations are increased by $1 billion — $1 million.

AN HON. MEMBER: You got carried away.

HON. MR. BENNETT: $1 million — before Social Credit ceases to be government in British Columbia it will be a billion. (Laughter). Department of Recreation and Conservation appropriations are increased by $1,993,000 which includes $1,250,000 more for British Columbia's national park land acquisitions, and provisions for the crushing programme for old cars introduced in 1971.

In the Department of Industrial Development, Trade and Commerce $200,000 is provided for a campaign to promote the sale of British Columbia's wonderful farm products.

The decrease shown in the water resources service results from a reduction in the appropriation for the Libby Reservoir clearing which is nearer completion. However, initiation of a major provincial government programme on air pollution and an acceleration of the programme on wastedischarge elimination requires in this budget an additional $1,500,000.

I can now come to the most dynamic part of the Social Credit government's financial policy, Mr. Speaker — perpetual and special funds.

It's these funds that spell the difference between Social Credit government in British Columbia and all other governments everywhere. Mr. Speaker, the Government of British Columbia has innovated a completely new form of financial services for people. I refer to the establishment of perpetual funds. The earnings from these funds, which are over and above the ordinary annual current budgetary expenditures, provide much-needed services for our people in perpetuity.

I propose, in this budget, to add $10 million to the perpetual funds — $5 million to the Centennial Cultural Fund which increases it by 50 per cent and $5 million to the Physical Fitness and Amateur Sports Fund which also increases it by 50 per cent. The name of the Centennial Cultural Fund will also be changed to the British Columbia Cultural Fund to be more in keeping with the continuing nature of this fund. With approval of these proposals by the Legislature the Province of British Columbia perpetual funds would be as follows:

1. First Citizens' Fund — $25 million. Annual interest earnings are used for the cultural, educational, and economic advancement of British Columbian Indians. A total of $2,226,000 has been paid out already from the earnings of this fund.

2. Agricultural Aid to Developing Countries and World Disaster Fund — $5 million. Annual interest rates are used for assistance to less-fortunate people in foreign countries. A total of $488,900 has been paid out of the earnings of this fund.

3. Physical Fitness and Amateur Sports Fund — $15 million. Annual interest earnings are used to increase government support of amateur sport and activity groups. This is one of our greatest policies, especially keeping our young people busy and having healthy development of bodies and minds. A total of $1,671,900 has been already paid out from the earnings of this fund.

4. British Columbia Cultural Fund — $15 million. Annual interest earnings are used for the encouragement of com-

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munity cultural activities. A total of $2,614,800 has been paid out from the earnings of this fund. So, Mr. Speaker, you can see you're going to have a lot more money next year.

5. Drug, Alcohol, and Cigarette Education Prevention and Rehabilitation Fund — $25 million. Annual interest rates are used for the prevention of the use of alcohol, drugs, and cigarettes. This fund was set up in April 1971 and already a total of $263,600 has been paid out from the earnings of this fund.

All in all, the province will provide a total of $85 million for perpetual use — and I emphasise that word "perpetual" — perpetual use for the purposes outlined.

Mr. Speaker, these perpetual funds have a secondary function, namely, to provide long-term capital investment funds for the construction of schools and hospitals throughout the province. The $75 million allocated the funds at present are all fully invested in schools and hospitals. The perpetual funds are a part of this Social Credit government's financial policy. By using provincial government internallygenerated investment funds, the province is able to stay out of the money markets and thus retain all the interest payments within the provincial government economy.

In addition to the perpetual funds, this government has also innovated the use of special funds for other financial assistance for people. I propose in this budget to add $80 million to the special funds. With approval of these funds, these proposals, the Province of British Columbia's special funds would be as follows:

1. Provincial Major Disaster Fund — $25 million. To protect the province from financial hardship that may be caused by any major disaster. I'm pleased to advise that so far this fund hasn't necessarily been called on for very much and we still have $24,290,000 in the fund. But that's a good cash reserve to have for that purpose.

2. British Columbia Government Building Fund — $25 million. For the construction of a British Columbia government office building in the great City of Vancouver.

3. Burrard Inlet Fund — $27 million. The province's contribution toward the cost of a Burrard Inlet crossing. The fund, I'm sorry to say, still has all the money in the fund.

4. Crop Insurance Stabilisation Fund — $10 million. To assist agricultural communities against crop loss or damage. This is very important to bring some stability within our agricultural economy. Fund balance at present is $8,026,300.

5. Accelerated Park Development Fund — $15 million. These funds were provided on April 2, 1971, by the province to make jobs immediately available through an accelerated park development programme. While the fund presently shows a balance of $5,704,853 I understand this is all committed, all committed for programmes already in the works. Mr. Speaker, I am recommending an additional $10 million be taken from current or surplus revenues to continue this important make-work and create-jobs programme.

A new fund, Mr. Speaker, is No. 6. Accelerated Reforestation Fund — $10 million. I am recommending a further provincial government make-work create-jobs programme through accelerated reforestation projects. The $10 million will be provided from current or surplus revenues.

7. A new fund, a very important fund, Mr. Speaker. Green Belt Protection Fund — $25 million. The Government of British Columbia is concerned about preserving green belt areas throughout the province in perpetuity.

AN HON. MEMBER: Vote against that!

AN HON. MEMBER: Go, go, go, Bennett.…

HON. MR. BENNETT: To this end, it is necessary to augment the government-owned lands with the purchase of private lands which will be held by the Crown in the right of the province as green belt reserves in perpetuity. It is intended these lands may be utilised mainly as park land without camping, or forestry reserves, or rented for farm purposes. I am recommending $25 million be placed in this fund from the current or revenue surplus and Mr. Speaker, I'm sure all Members of the House will want the government to take very early action on this fund.

8. — A new fund, Mr. Speaker. Power-line Beautification Fund — $10 million. The Government of British Columbia wishes to encourage the placing of powerlines underground in municipal areas. I am, therefore, proposing $10 million be placed in a fund from current or surplus revenues to be used as the province's share of a jointly-financed programme for placing wiring underground. The sharing would be one-third provincial, one-third municipal, and one-third utility organisation.

No. 9. Provincial Home Acquisition Act. Since introduction of this Act in 1967, the British Columbia government has provided $105 million, not by borrowed money, straight cash — $105 million in home-ownership capital funds. To date, $34,100,000 has been approved for outright housing grants and $86,600,000 for low-interest second-mortgage loans, lower interest than first mortgage.

The provincial home-acquisition programme of outright grants and low-interest second-mortgage loans is very popular and very effective, and an original plan of which this government and the people of this province are very proud indeed.

It has not only enabled thousands of British Columbians to own homes but at the same time has produced thousands of jobs through home-building. I am, therefore, proposing the addition of a further $25 million to this fund from the current or surplus revenues. I will also introduce legislation to carry on the grants and low-interest second-mortgages indefinitely, not only on the new homes but on the old homes as well.

Interjections by Hon. Members.

HON. MR. BENNETT: Because it is only fair that people that have been renting in this province get a double chance to buy a new home. They can either buy a new home or buy an older home as they wish. My own home — used homes are very fine — is 60 years old.

MR. L.T. NIMSICK (Kootenay): Did you build it?

HON. MR. BENNETT: It was built by a man who had a great confidence in the people of British Columbia, my friend. One of the first-rate mayors of Kelowna, a man who was responsible for getting the great park, the nicest park in all of British Columbia, Frank D. Hart, and I give him credit here today.

AN HON. MEMBER: Got another question, Leo?

HON. MR. BENNETT: Mr. Speaker, I wish to announce it is now permanent Social Credit government policy in this province — not year from year but permanent Social Credit government policy in this province — to help our citizens to

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build new homes or, where renters prefer, to buy older homes and, through the annual grant to home-owners, to assist them in paying local property taxes. Permanent policy now, Mr. Speaker.

Other financial proposals, Mr. Speaker. I will introduce today the Provincial Rapid Transit Subsidisation Act.

SOME HON. MEMBERS: Go, go, go, go.

HON. MR. BENNETT: This government wishes to assist in alleviating the traffic and parking congestion in urban areas and, at the same time, cut down on air pollution in our cities.

Therefore, where any municipality in the province, any group of municipalities, or regional district operates a rapid-transit service on a nonprofit basis, the Province of British Columbia may pay one-half of any annual operating deficit, including debt charges, under this new legislation.

Now regarding Victoria and Vancouver where the Hydro operates, if the Hydro sells and the municipalities buy, that will be an arrangement between these two organisations. But if the Hydro does sell and I'd hope at a fair and good deal for the municipalities, sell them the transit but not push it — and this government will not force the municipalities to buy it — but should they buy it, this 50 — 50 per cent of any deficit when the municipalities operate will apply as well.

I'll also introduce the Queen Elizabeth British Columbia Centennial Scholarship Fund Act to create a scholarship fund commemorating Her Majesty Queen Elizabeth's visit during our 1971 centennial year.

Authority was given on September 3, 1971, to increase the Pacific Great Eastern Railway Company's capital stock by 500,000 shares, with a value of $50 million, to a total of 2,105,729 shares. I will introduce legislation for the province to purchase a further $25 million in the shares of this provincially-owned railway, to be paid from current or revenue surplus. This will enable the company to continue unabated its great railway-extension programmes to open up our resource-rich northern territory and at the same time produce jobs. The Government of British Columbia holds the entire issued shares of the railway for the citizens of the province.

Legislation will be submitted to increase the borrowing authorisation of the British Columbia Hydro and Power Authority by $500 million and of the Pacific Great Eastern Railway Company by $100 million. This will continue their expansion programmes over future years to keep pace with British Columbia's growth and to create jobs. I will also submit legislation to change the name of the Pacific Great Eastern Railway to the "British Columbia Railway Company" which is more in keeping with the purpose of this railway today.

AN HON. MEMBER: Hear, hear.…

HON. MR. BENNETT: The Government of British Columbia's decision to remain within the federal-provincial income tax collection agreement — because we don't want our people to fill our two forms — under the amended federal income tax system requires a British Columbia Income Tax Act that is compatible with the provisions of the federal Act. Amending legislation will be submitted at this session.

Legislation will be introduced at this session to amend the Succession Duty Act by increasing the basic exemption for British Columbia. Honourable Members recall that over and above the basic exemption succession duty now provides many additional exemptions such as for homes, life insurance, pensions, et cetera.

And, Mr. Speaker, in addition I will recommend the Act be changed to provide a 10-year interest-free period for succession duty payments on family-owned farms or businesses.

Honourable Members will recall the Government of Canada has withdrawn from the estate and gift tax fields, effective January 1, 1972. Previously, the province levied its own succession duty tax on 75 per cent of the field and the Government of Canada levied its estate tax on the remaining 25 per cent.

I wish to advise the House that the Government of British Columbia does not intend to levy its succession duties on the 25 per cent of the field being vacated by Canada. However, for the protection of its present succession duties, it is necessary the Province of British Columbia, along with most of the other provinces, enter into a uniform agreement with the Government of Canada to collect the gift tax. This legislation will be presented at this session.

Interjection by an Hon. Member.

HON. MR. BENNETT: Home-owners grant retroactive January 1, too.

Mr. Speaker, the infusion in a single year of a total additional $266,300,000 in cash into the British Columbia economy next year without taxation increases, and within a balanced budget, is an achievement of which all British Columbians can be proud.

SOME HON. MEMBERS: Hear, hear. Hear, hear.

HON. MR. BENNETT: This increased expenditure will greatly expand jobs and provide British Columbians with a higher quality of life. It is further proof of the dividends provided from the financial policies followed by this government since its inception.

Dealing with revenue — many of the world's economies suffered serious setbacks during the past year, resulting in high unemployment and revenue problems. While British Columbia has not been untouched, its over-all basic economy has remained strong. This is due to a large measure to the government's policy of living within its income each year and accumulating surplus funds in good times to be used in more difficult periods.

That's just the opposite of other governments, Mr. Speaker, they go in debt and borrow in good times and when bad times come they have to go further and further in debt, that's the reason why they can never get out.

Interjections by Hon. Members.

HON. MR. BENNETT: I repeat, this is due in large measure to the government's policy of living within its income each year and accumulating surplus funds in good times to be used in more difficult periods. Consequently, this government during the past year has been able to pour millions of extra dollars into fighting unemployment and maintaining the British Columbia economy.

The results have been gratifying. Our employed labour force growth rate is the highest experienced anywhere. Our economy has been maintained at a steady pace. I am able to estimate anticipated revenues for next year of $1,453 million, to completely balance these expenditures.

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Mr. Speaker, there are no increases in provincial taxation rates in this budget. Again, this year, I draw Honourable Members' attention to table No. 4 in the address showing the comparative provincial government tax rates with other provinces in Canada. British Columbia's rates remain among the very lowest.

The increase in the next fiscal year alone on current account revenue is $145,204,000. Over and above this amount, the provincial government is providing from this year's or surplus revenues another $115 million by way of special accounts. Mr. Speaker, this makes this year's total budget $1,568 million, the largest budget of expenditure for the people of British Columbia in our history.

Mr. Speaker, entirely apart from these sums, I would point out that our Crown agencies, the British Columbia Hydro and Power Authority, the Pacific Great Eastern Railway Company, the British Columbia School Districts Capital Financing Authority and the British Columbia Regional Hospital Districts Financing Authority will be spending several hundreds of millions of dollars during the coming year on capital projects.

Interjection by an Hon. Member.

HON. MR. BENNETT: All within the provincial government orbit, my friend, the only place in the world — and I wish you'd give me more interruptions. The British Columbia economy will, therefore, be very adequately serviced in the next fiscal year from the provincial government sector.

Table No. 3 in the printed address shows the comparative estimates of revenue from the different sources for 1972-1973.

Mr. Speaker, no responsible government, business, or individual can afford to neglect the serious threat of pollution upon man's environment. Since introduction of legislation in 1956, this government has, through regulations, incentives, and direct programmes, given leadership to local governments, industries, and individual citizens on the safeguarding of our spectacular environment.

Recent progressive legislation, such as the Litter Act passed in 1970, and the Environmental and Land Use Act, Ecological Reserves Act, and the All-terrain Vehicles Act, all passed in 1971, give additional force to the Pollution Control Act in maintaining the unique quality of British Columbia's natural environment. Indicative of British Columbia's impressive advances in pollution-abatement programmes is our leadership in the pulp and paper mill pollution-treatment standards, one of the most costly and difficult industrial pollution areas.

The Government of British Columbia provides a wide range of financial incentives for environmental control. For example, the annual per capita grant to municipalities for pollution control projects, subsidisation of capital costs of local government sewage-treatment plants, exemption of industrial pollution facilities from general property taxes, and accelerated depreciation allowance for industrial pollution control equipment under the Provincial income tax.

Last year the government placed in operation equipment to remove the blight of abandoned car bodies around the province. Expansion of pollution control services in the Water Resources Service and the previously announced programmes in this budget for accelerated park development, increased reforestation, establishment of green belt reserves, and assistance toward placing power-lines underground give added impetus to this important work.

The ultimate costs to society for preserving our ecology are substantial, but, by the initiating action in the 1950's the Government of British Columbia has reduced the long-run costs. And while government legislation and incentives are undoubtedly necessary, and they are, only a concerned citizenry can prevent the spoiling and destruction of our surroundings.

The breadth and magnitude of this budget makes it appropriate to review also the expenditures on a functional basis, which more clearly reveal the areas of government emphasis. An increased portion of the government's budget is devoted to creating throughout British Columbia the highest possible standards of human betterment and natural resource development.

In the coming fiscal year $1,283,995,000 or nearly 90 per cent of the total provincial revenues, will be spent on education, health and social services and provincial development. This is nearly $1 billion more than the $288,225,000 spent in a year as late as 1960.

Table No. 5 gives the details of the matter.

Provincial government investment in the wide range of educational services will take 31 per cent, or $448,671,000, of next year's total budget, and is more than the entire provincial budget in the year as late as 1963. Since 1960, provincial government education expenditures have increased seven times, a multiple of seven, while revenues have increased less than four times.

A larger portion of educational expenditure is devoted to regional colleges next year because of greatly increasing enrolments. Post-secondary assistance is 36 per cent and public schools 64 per cent of the total provincial government's education expenditure and will service will this single aspect of government service to our British Columbia citizens.

Table No. 6 gives the details for the year 1960, 1970 and this next year. From these different fields of education — 1960, $368 million; 10 years later, $1,169 million, and this next year $1,453,436,000. In 1960 we took 18 per cent of the budget, in 1970 we took 28 per cent of the budget and 1973 — next year — will take 31 per cent of the budget.

A total of $548,988,000, or 38 per cent of the budget, is devoted to fulfilling the government's objective of providing a high level of health and social services for the residents of the province. This is $59 million more than the entire provincial budget in the year as late as 1965.

Table No. 7 gives a detailed list of hospital care, social services, medical care, mental health and public health: 1960, $115 million; 1970, $183 million; this next year, $549 million for health services, social services.

The cost of maintaining excellent, comprehensive hospital services is high, especially in British Columbia — the fastest growing population in Canada. Yet general hospital care under British Columbia hospital insurance is available to all residents at the extremely low rate of $1 per day when in hospital and that is not going to be increased.

Expenditures for hospital services will reach $232,211,000 or almost five times what they were in 1960 when they amounted only to $48,994,000. $51,000,000 in hospital construction projects now under way will provide 745 acute and 1,054 extended-care beds. Construction of the first intermediate care hospital is under way in Victoria, with others soon to start in Greater Vancouver and the interior of the province.

This coming year $160 million will be spent on social services, $116 million more than the $43 million spent in

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1960. To speed the process by which people on long-term social assistance can be encouraged to become productive participants in the labour force, the Government of British Columbia initiated last fall the job opportunities programme, the first real attempt anywhere to get the long-term person on social assistance back in the labour force — the value to the individual, but mainly the value to the family, to get them back into the labour force again.

Interjection by an Hon. Member.

HON. MR. BENNETT: And that's doing good work too and I'm glad you mentioned it. Very good work. No fight at all, just eagerness to do more and more. In this government there's room for glory for all.

Interjection by an Hon. Member.

HON. MR. BENNETT: All coming from Saskatchewan and Manitoba, my friend.

AN HON. MEMBER: Calgary too?

HON. MR. BENNETT: I think they'll start to come from there too now. (Laughter).

A total of $4,500,000 is available for provincial government outright grants for elderly citizens' housing and recreation centre projects and $2 million for outright grants for the recently-initiated programme to encourage the establishment of special care.

Why do we put $2 million in that fund for this special care, for all these very fine organisations like the one we have in Burnaby, the Winch one, you and I were there the other day? Amazing thing, the people in Burnaby did very well to honour the late Mr. Winch in that respect and that was a great day, and they're going to be one of the first areas with one of these new types of home. There are going to be lots in the province. So while we put $2 million in the fund, I'm sure it will greatly exceed that expenditure during the years and we won't curtail it at all.

Interjections by Hon. Members.

HON. MR. BENNETT: Social benefits my friend, only Social Credit can give the real social benefits to the people of the country, only Social Credit.

Interjections by Hon. Members.

HON. MR. BENNETT: Another outlay of $88 million or 61.6 per cent more than was spent in 1970, the first full year of operation, will be used for financing the British Columbia comprehensive medical plan. I want to say right here, Mr. Speaker, there are a lot of people saying about frozen wages and salaries. I want to say that we have the best group of doctors anywhere in our nation here. It is not true that their earnings were frozen last year and the individual earnings on the average went up 9.9 per cent, Mr. Speaker. Over 99 per cent of British Columbia's population is now voluntarily registered in the plan, with 26 per cent of subscribers receiving the low-income premium subsidy.

To ensure the best mental health care for British Columbia, there are 24 rehabilitation centres throughout the province, another five mental health units to be added this year at Alberni, Abbotsford, Langley, Sechelt and Williams Lake. The 300-bed Glendale Hospital centre for children in Saanich was opened last fall. Notable results have been achieved in out-patient treatment and home-care programmes which free valuable bed accommodation. Mental health expenditure will reach over $46 million up $32,500,000 from the $13 million spent in 1960. The continually-increasing demands for community health services require an appropriation of $25,497,000 for public health, more than two and a half times the amount expended in the year 1960.

Basic to the development of the economy and the ability to expand government services to people is this government's judicious management of our abundant and varied resources. This next year $286,336,000 will be invested in provincial government development projects. Many jobs will be created as a result of this substantial expenditure.

Table No. 8 gives all the list and compares 1960, 1970 and 1973. I used to have 1952 and for some reason the Opposition found fault with that so I thought we needed a comparison, so we do it with 1960 and I'm sure nobody can find fault with that.

Interjections by Hon. Members.

HON. MR. BENNETT: Oh yes, we're a government that cares, we're a government that listens.

Extensions to and improvements of the provincial highways and ferries system will cost $189 million or two-thirds of provincial development outlays this next year. An additional $31 million distributed in municipal per capita grants for municipal road construction and maintenance raises the provincial government total highway expenditure to $220 million. Programmed to stimulate employment throughout the province, a broad range of projects are planned on primary and secondary highways, feeder and industrial roads, bridges and ferries.

Another area of job stimulation is the important forestry sector. I have already referred to the $10 million accelerated reforestation programme. In addition, a total of $40,086,000 is allocated in this budget for forest development programmes in contrast to $13,874,000 in 1960.

The astounding growth in the revenue from the tourist trade in recent years is unparalleled in any other major sector of our economy and has provided many, many new jobs. A total of $5,343,000 is provided for tourism, trade and industrial development throughout the province this coming year. Further, $3,546,000 in annual per capita grants is paid to municipalities to assist in tourism and industrial development.

The Government of British Columbia fully realises the important services municipalities and other local governments render our citizens. It is also recognised that not only are costs of these functions rising, but the demand for additional services is growing because of tremendous population increases.

It is noteworthy that British Columbia's gain in population between the 1966 and 1971 census was 17.2 per cent or more than 2.3 times the percentage increase for the rest of Canada. This coming year, provincial government aid in support of local administrative units will climb to $838 million which is $689 million above the $163 million allocated in the year 1960. This represents 59 per cent of the total estimated revenue of the provincial government and will amount to $377 per capita compared to $104 per capita in 1960.

Table No. 9 gives the list of all this assistance and shared

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costs.

Both the municipal per capita grants and the home-owner grant to municipalities will increase substantially in total this coming year. The 1971 federal population census will increase the $30 per capita grant in one year alone by $6,500,000 to $53,200,000. The $15 increase in the annual home-owner grant to $185 and the additional $50 grant to home owners aged 65 and over are expected to increase the amount of the grant going to municipal governments to $68,370,000 or $10,070,000 more than the present year. Combined, these two grants alone represent a provincial government expenditure of $121,570,000 or one-third more than the $90,600,000 spent in 1970.

Table No. 10, Mr. Speaker, shows how this money is allocated to the cities, the districts, the towns and the villages.

In conclusion, Mr. Speaker, the strength of the British Columbia economy has never been more evident than at present, particularly when compared with other regions of Canada. In spite of national and international fiscal and monetary and general economic troubles, British Columbia is forging ahead toward new growth on all fronts.

Continued dynamic advancement lies ahead for the Province of British Columbia as this administration implements bold and creative plans for the future, complemented with sound, positive, fiscal management principles.

The demands upon the resources of this province are many, but by optimising their use, this government has developed a healthy, vigorous economy which allows our citizens to enjoy one of the highest quality living standards in the world. The attainment of this general prosperity and well-being is not accidental. Rather, it is a result of good government planning and decision-making over the last two decades by a government continuing in office. And now we have here, Mr. Speaker, another budget for the people, providing many additional services by the government that really cares.

SOME HON. MEMBERS: Go, go, go! Go, go, go! Mr. Barrett moves adjournment of the debate. Motion approved.

FIRST READINGS

The following bills were transmitted by His Honour the Lieutenant-Governor, referred to a committee of the whole House and on the recommendation of the committee introduced, read a first time and ordered to be placed on the order paper for second reading at the next sitting after today:

Bill No. 9 intituled British Columbia Railway Act.

Bill No. 10 intituled British Columbia Railway Company Share Capital Purchase Act, 1972.

Bill No. 11 intituled An Act to Amend the Pacific Great Eastern Construction Loan Act, 1954.

Bill No. 12 intituled An Act to Amend the British Columbia Hydro and Power Authority Act, 1964.

Bill No. 13 intituled Queen Elizabeth It British Columbia Centennial Scholarship Act.

Bill No. 14 intituled An Act to Amend the Provincial Home Acquisition Act.

Bill No. 15 intituled An Act to Amend the Provincial Home-owner Grant Act.

Bill No. 16 intituled An Act to Amend the Centennial Cultural Fund Act.

Bill No. 17 intituled An Act to Amend the Revenue Surplus Appropriation Act, 1969.

Bill No. 18 intituled Green Belt Protection Fund Act.

Bill No. 19 intituled Accelerated Park Development Fund Act.

Bill No. 20 intituled Accelerated Reforestation Fund Act.

Bill No. 21 intituled Power and Telephone Line Beautification Fund Act.

Bill No. 22 intituled Provincial Rapid Transit Subsidy Act.

Bill No. 23 intituled An Act to Amend the Succession Duty Act.

Bill No. 24 intituled An Act to Amend the Income Tax Act, 1962.

Bill No. 25 intituled Gift Tax Act.

Hon. Mr. Bennett moves adjournment of the House.

Motion approved.

The House adjourned at 4:15 p.m.