[ Page 737 ]

CONTENTS

Routine proceedings

Motor-vehicle Act Amendment Act, 1976 (Bill 32) Second reading.

Hon. Mr. Gardom — 737

Freedom of Information Act (Bill 33) Second reading.

Hon. Mr. Gardom — 737

Change of Name Act Amendment Act, 1976 (Bill 34) Second reading.

Hon. Mr. Fraser — 737

Public Works Fair Employment Act Repeal Act (Bill 35) . Second reading.

Mr. Gibson — 737

British Columbia Deficit Repayment Act, 1975-1976 (Bill 3) .

Committee stage.

On section 1.

Mr. Cocke — 737

Mr. Stupich — 738

Hon. Mrs. McCarthy — 740

Mr. Lea — 741

Mr. Skelly — 743

Mr. King — 743

Mr. Lauk — 743

Mr. Skelly — 744

Hon. Mr. Wolfe — 744

Mr. King — 745

Hon. Mr. Davis — 746

Mr. Lauk — 747

Mr. King — 749

Hon. Mr. Phillips — 749

Mr. Gibson — 750

Hon. Mr. Wolfe — 751

Mr. Skelly — 751

Mr. Lauk — 752

Mr. Lea — 752

Mr. Stupich — 753

On section 2.

Mr. Gibson — 754

Hon. Mr. Wolfe — 754

Division on the title — 754

Division of third reading — 754

Social Services Tax Amendment Act, 1976 (Bill 11) Second reading.

Hon Mr. Wolfe — 754

Mr. Stupich — 755

Mr. Barber 7S7

Mr. Levi — 758

Ms. Sanford — 759

Mr. Macdonald — 761

Mr. King — 762

Royal assent to Bill 3 — 763

The House met at 8 p.m.

Orders of the day.

ON THE BUDGET

(continued debate)

Mr. Loewen moves adjournment of the debate.

Motion approved.

MR. D.G. COCKE (New Westminster): Mr. Speaker, on a point of order, was there any business done between the time the member stood up and moved the adjournment?

MR. SPEAKER: The House adjourned the debate. The member was in his place. I presume it was his prerogative to either continue with the remaining minutes which he had left or move a motion, which the House approved.

MR. G.F. GIBSON (North Vancouver-Capilano): A point of order, Mr. Speaker. It seems to me today being Thursday and private members' day and, if we are to follow the order paper, the hon. Provincial Secretary should ask leave.

HON. W.R. BENNETT (Premier): How do you know it's Thursday? You haven't been here today.

MR. GIBSON: I've been watching all day what day it is.

HON. MR. BENNETT: Playing hooky.

MR. GIBSON: Doing more good than you fellows.

MR. SPEAKER: Shall leave be granted?

Leave not granted.

Motion approved.

HON. G.M. McCARTHY (Provincial Secretary): Public bills in the hands of private members. Second reading of Bill 32, Mr. Speaker.

MOTOR-VEHICLE ACT
AMENDMENT ACT, 1976

Hon. Mr. Gardom moves adjournment of the debate.

Motion approved.

HON. MRS. McCARTHY: Second reading of Bill 33, Mr. Speaker.

FREEDOM OF INFORMATION ACT

Hon. Mr. Gardom moves adjournment of the debate.

Motion approved.

HON. MRS. McCARTHY: Second reading of Bill 34, Mr. Speaker.

CHANGE OF NAME ACT
AMENDMENT ACT, 1976

Hon. Mr. Fraser moves adjournment of the debate on behalf of Hon. Mr. McClelland.

Motion approved.

HON. MRS. McCARTHY: Second reading of Bill 35, Mr. Speaker.

PUBLIC WORKS FAIR
EMPLOYMENT ACT REPEAL ACT

Mr. Gibson moves adjournment of the debate on behalf of Mr. Wallace.

Motion approved.

HON. MRS. McCARTHY: Committee on Bill 3, Mr. Speaker.

BRITISH COLUMBIA DEFICIT
REPAYMENT ACT, 1975-1976

(continued)

The House in committee on Bill 3; Mr. Schroeder in the chair,

On section 1.

MR. COCKE: Mr. Chairman, the member for Vancouver–Point Grey, or at least the Attorney-General of the province (Hon. Mr. Gardom), asked a very strange question from a person who has moved around like Tweedle and Twaddle and all sorts of things.

Mr. Chairman, I stand on section 1 of Bill....

HON. MR. BENNETT: To filibuster.

MR. COCKE: Mr. Chairman, did you hear that? Did you hear the hon. Premier of this province speak in terms of filibustering — representing the group that talked for hours, upon hours, upon hours on Bill 42

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in the last parliament of this province? That was really something, Mr. Chairman. Instead of a bill that has been proven, not only before this House...and I'm talking now about section 1. Borrowing power for $400 million....

Interjections.

MR. CHAIRMAN: Hon. Members, let's start the evening in fine fashion. Let's give more attention to the member for New Westminster.

MR. COCKE: Yes, Mr. Chairman. We started the evening in fine fashion when we moved from an adjournment of debate to an adjournment of debate. That was the most interesting 20 seconds I've spent in my life, and I admire the Provincial Secretary....

MR. CHAIRMAN: Order, please.

MR. COCKE: Yes, Mr. Chairman — back to section 1. What we talked about in terms of section 1 was we showed that the government, in order to justify the borrowing of this $400 million, has had to involve Crown corporations: the British Columbia Railway and B.C. Hydro. They've had to move around. I use some terms.... I'm going to have to check the list, Mr. Chairman, as to whether or not they are unparliamentary. Therefore I won't use them tonight. But they moved around among those ministers, on a spending spree, from the time that they were appointed.

HON. H.A. CURTIS (Minister of Municipal Affairs): Nonsense!

MR. COCKE: Oh, there chirps the Minister of Municipal Affairs. Oh, don't we miss our tiger. But, Mr. Chairman, nonsense or no nonsense, there has been no one stand up on the side of the government. Nobody stood up and justified the $7.5 million. No one stood up on the side of the government and justified the $7.5 million.

MR. CHAIRMAN: Order, please. Mr. Member, this area has been well canvassed. Let me just remind the hon. member for New Westminster about standing order 43, which warns against repetition and using arguments that have already been canvassed by others.

MR. COCKE: Mr. Chairman, in the last parliament we had hundreds of hours of repetition.

MR. CHAIRMAN: Order, please. We are on section 1.

MR. COCKE: Mr. Chairman, getting back to section 1, there is leeway given by fair chairmen such as yourself — and we have a great confidence in you — for asking if the government has any further evidence that there's any justification for having acknowledged a letter that was set aside by our Minister of Education in 1975, and found somewhere in the files by the new Minister of Education, requesting an amount of something like $ 10 million plus, and then suddenly granting a somewhat smaller amount — but not for 1975-1976, Mr. Chairman; for 1976-77.

We talked in terms of all the other areas. The member for Ranaimo (Mr. Stupich) has shown the difference between some kind of reporting and.... Talking in terms of a report, I won't even mention the name because I'm sure that you'll call it repetitious. It's a report that has been put before certain members of the public and certainly all the members of this House, a report that put certain priorities on financing in front of the people. But it wasn't the auditors or the accountants that determined those priorities, Mr. Chairman. It was the government of this day.

So, Mr. Chairman, we would ask the Minister of Finance if he would kindly justify the $400 million that he's asking to borrow in section 1. If it were so important to that minister and this government, why did they not bring this clause forward, along with the remainder of the bill, Mr. Chairman, sometime before 48 hours previous to March 31? Just that one question.

MR. CHAIRMAN: Shall section I pass?

SOME HON. MEMBERS: Filibuster!

MR. D.D. STUPICH (Nanaimo): Mr. Chairman, I'm inclined to agree with the remarks from across the way. There is, indeed, a filibuster on this bill. It is a filibuster that has been very successfully handled by the Minister of Finance.

He is determined not to accept any of the choices I have repeatedly offered him, Mr. Chairman — the choice of either answering the questions, telling us he doesn't know the answers, or simply standing up and saying that he prefers not to answer that question.

Yesterday evening, the hon. second member for Victoria (Mr. Barber) totalled the list at 53 by that time, and there have been several asked since that time. None of them has the Minister of Finance attempted to answer in any way. Mr. Chairman, it leads one to wonder....

Interjection.

MR. G.R. LEA (Prince Rupert): You have attempted, but you haven't answered any.

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MR. CHAIRMAN: Order, please. Order!

MR. STUPICH: It leads one to wonder just why the Minister of Finance is filibustering this legislation in the way he is. I think there's a very good reason....

HON. MR. BENNETT: You don't care about the province.

MR. STUPICH: I think there's a very good reason, Mr. Chairman, for filibustering this legislation the way he is. We have introduced not just speaking evidence, but documentary evidence to the effect that the government has deliberately spent money in 1975-76 so they would not have to spend that money in 1976-77, and thereby create a large deficit in the first year and a smaller one in the second.

Interjections.

MR. CHAIRMAN: Order, please, Mr. Member....

MR. STUPICH: This is a new point, Mr. Chairman.

MR. CHAIRMAN: I ask you to move to a new point, because the one you are on has been canvassed.

MR. STUPICH: This is one more example of the way in which he is trying to reduce the expenditures below those listed in the budget speech — below those in estimates. He is working now, Mr. Chairman, on the $40 million provision for interest, because every day that he delays passage of this legislation he is saving himself almost $110,000 in interest. At the rate of $40 million a year, it works out to $109,589 a day. I'm quite satisfied, Mr. Chairman, that that is the reason the Minister of Finance is trying to delay passage of this bill, and yet lay the blame on us. He's delaying it by determining....

Interjections.

MR. STUPICH: Mr. Chairman, this business of files is a bit amusing, too.

MR. CHAIRMAN: Hon. member, on section 1, please.

MR. STUPICH: Yes. Well, you've got to stop those people then.

Files — when I walked into my office on September 18, 1972, I was met by a row of empty filing cabinets.

MR. CHAIRMAN: Order, please, Mr. Member.

MR. STUPICH: I wasn't concerned about that.

MR. COCKE: I had a Province paper sitting on my desk.

MR. CHAIRMAN: Can we move to the business at hand? We are on section 1.

MR. STUPICH: Well, Mr. Chairman, I am trying to find some reason why the Minister of Finance is declining to answer questions. I have come to the conclusion that he is trying to delay passage of this bill as long as he can so he will save money in this year and thereby increase the surplus that he expects to have by March 31, 1977.

He implied in some of his speeches — the Premier, of course, has done more of this — to lay the blame on the previous administration, in spite of the fact that we read in one of the early parts of the budget: "Unfortunately, in recent times a combination of world-wide events, inflation, low world demand for our principal export products...." These are the things that made things bad for the province in this period when they say it was our administration that caused the province to be in some financial difficulties.

They say in this next paragraph, Mr. Chairman: "Despite declining revenues, the government's spending programmes continued unchecked." Then in another part of the programme they point out that the government did start restricting expenditures, and restricted them more than they should have. The Premier made much of this during the campaign. At the same time as he was charging us with misadministration — spending too much money — he was going around saying we weren't spending enough money. So obviously, Mr. Chairman...

MR. CHAIRMAN: Order, please.

MR. STUPICH: ...all this business about the interest.... You know, you're holding it up deliberately; you're not passing it...

MR. CHAIRMAN: Order!

MR. STUPICH: ...so you can save $767,123 a week...

MR. CHAIRMAN: Hon. member, order, please!

MR. STUPICH: ...in interest charges. It works out to....

[Mr. Chairman rises.]

MR. CHAIRMAN: Mr. Member, I must insist that you move to material that has not already been covered. You are now reading from the budget speech, which obviously has been covered in this

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House before, so I insist that you move to new material.

[Mr. Chairman resumes his seat.]

MR. STUPICH: Mr. Chairman, actually we haven't covered the budget speech yet. We have not yet voted on the budget speech; we are still in the process of discussing that. Perhaps if we had disposed of the budget speech and then were dealing with legislation, your argument that all this material was covered might be more sound than it is now. Certainly, to the best of my knowledge, no one has been talking about the Minister of Finance wanting to save $767,123 a week. We have gone a week already so we have saved the people — he has saved them, deliberately, I expect — saved them, saved us, saved the taxpayers three-quarters of a million dollars in interest charges. The longer he delays it, the more he'll save.

Mr. Chairman, I don't quarrel with that; I think it's a good idea. I think we should delay passage of this bill. I think we should save the taxpayers more money than we already have by holding up passage of this bill even longer.

We read in the same budget speech, when we were talking about ICBC, that the general taxpayers should not be called upon to subsidize the operations of this Crown corporation. I couldn't agree more, Mr. Chairman. Yet almost half of this $400 million is being raised to lend money to ICBC, money on which...

MR. CHAIRMAN: Mr. Member, that point has also been well covered.

MR. STUPICH: ...you and I will be paying interest at the rate of $109,589 a day.

Now $53,000 of that amount, on the basis of $189 million out of $400 million — $53,000 of that $109,000 will be going to pay interest on money that has been loaned to ICBC, money that, as we have already agreed, Mr. Chairman, need not be loaned to them at all. So that's money down the drain as far as the taxpayers are concerned, to the extent that this interest is incurred to lend money to ICBC — a needless government expense. The longer the bill is held up, the more we save. The longer it should be held up...and I commend the Minister of Finance for holding it up as long as he has.

Mr. Chairman, he could have brought this discussion to an end at any time by doing as I suggested — answering the questions, saying he doesn't know the answers or simply declining to answer. Mr. Chairman, I'd like the Minister of Finance to stand up now and tell us how much longer he would like to hold up passage of this legislation.

HON. MRS. McCARTHY: Mr. Chairman, reference has been made by the previous speaker about saving money. I would like to address my remarks to this because....

MR. CHAIRMAN: As long as it's on section 1.

HON. MRS. McCARTHY: On section 1 he is making a statement that perhaps by the holding up of this bill we will, indeed, save money. He is even accusing the Finance Minister of a plot afoot.

I would like to draw the hon. member's attention to an order-in-council. By the way, there have been references to orders-in-council in this House in the past few days in reference to this bill before us — the spending of money. I think the charges have been that unless it is urgent public business special warrants should not be brought forward.

I'd like to address the House to an urgent public business that was done under the former administration, but strangely enough, it was dated December 17, 1975....

SOME HON. MEMBERS: Oh, oh!

MR. CHAIRMAN: Order, please.

HON. MRS. McCARTHY: As the members have so well pointed out....

MR. CHAIRMAN: Order, please. Would the hon. Provincial Secretary show how this leads to the deficit?

HON. MRS. McCARTHY: Yes, I'd be very pleased to, because Mr. Chairman, it is in the amount of $134,126.98.

HON, MR. PHILLIPS: Shame!

HON. MRS. McCARTHY: It has reference to a special warrant that was drawn under the then Minister of Lands, Forests and Water Resources....

Interjections.

MR. CHAIRMAN: Proceed, please.

HON. MRS. McCARTHY: Mr. Chairman, I'm pleased to be able to relate this to the meaning of clause 1, because it is because of this $134,000, along with the other $134,000 many times over, that we are greeted with a deficit bill before this House tonight.

The amount is $134,126.98 and it covers a requisition that was given in August. I think the hon. minister at that time must have known much more than, perhaps, even some of the people who are now sitting in the House on that side, because it has

[ Page 741 ]

reference to printing and mailing of 885,000 copies of Land magazine...

SOME HON. MEMBERS: Oh, ho!

HON. MRS. McCARTHY: ...and 885,000 postcards for Land magazine, none of which had Treasury Board approval, none of which had any legislative approval, but were given to the comptroller on December 17, 1975, after the date of the election, to be paid for through the special-warrant process. Very urgent public business, Mr. Chairman — by the meaning of the opposite side as they were accusing this side of urgent public business, the use and misuse of special warrants.

I say to you that this particular amount of money is just one of many, many amounts of money that we had found when we took office.

HON. MR. BENNETT: Tried to push them through after you lost, too!

HON. MRS. McCARTHY: Rushing through...that one minister who had at that time been given, if you like, Mr. Chairman, the approval and the commendation of the members and the people who live in Vancouver East, and two months after this warrant was requested by him, he rejected the people of Vancouver East and quit his post.

MR. LEA: Mr. Chairman...

HON. MR. PHILLIPS: Now we'll hear it all!

MR. LEA: ...we have gone through a number of hours trying to get some answers from the Minister of Finance on rather simple questions.

Interjections.

MR. LEA: I didn't want to touch on that, but there seems to be a great cry from the other side of the House for me to speak on the same subject as the Provincial Secretary, Mr. Chairman. I guess if she was in order, then also I would be in order, because as she related this to section 1, so will 1, because she was referring to the fact that we had mentioned that there should be some urgency in order to have special warrants passed. I would suggest that there was special urgency in that case, because the magazine she referred to was called This Land. It dealt with the resources of this province and the environmental issues in this province. I would suggest that looking at the record of this new government, and a statement by Robert Bonner on what they think of the environment....

Interjections.

MR. CHAIRMAN: Order, please.

MR. LEA: There was great urgency to get a message to the people of this province before this crew came in and cancelled every magazine that mentioned resource management and mentioned the environment. That was the urgency, because we knew that once you were in office the environmental issues would be buried as far as you could get them.

The manager of a Crown corporation has already said, Mr. Chairman, that environmental issues will come after economics. The Minister of Consumer Services (Hon. Mr. Mair) in his speech the other day — what did he say? He said that if it comes to the environment, and if it comes to economics, economics must win every time.

You said it during your speech, and I'll quote it back to you before this session is over, Mr. Minister. I'll quote it back to you, because that's what you said. So there was urgency.

MR. CHAIRMAN: Order, please. Would the member please address the Chair?

Interjections.

MR. CHAIRMAN: Hon. members, I would like to encourage a little more attendance in the House, particularly on the government side, I might add. The member is clearly in order in replying to an issue raised just before he rose, and I think that we owe him the courtesy of at least listening until he has completed his statement.

MR. LEA: Thank you, Mr. Chairman. It is indeed gratifying to see a Chairman who can be as fair as you are being within all the debates in this House.

I think, Mr. Chairman, I have pointed out the urgency of that special warrant. (Laughter.) Statements were made by the person who is responsible for B.C. Hydro...

MR. G.V. LAUK (Vancouver Centre): What are you laughing at?

MR. LEA: ...saying that when we talk about environment it must take second place to supplying an ongoing and ever-increasing need for hydro and that we shouldn't conserve in this province, that we should use hydro as quickly and as much as possible. He said that when it comes to people or moose, the moose must lose out.

So I think that there was some urgency in trying to get a message across to the people of this province that the environment is important and that the management of our resources is important, because the attitude of this government since taking office would prove that they are not going to let the people

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of this province know that they believe the environment is important or that good management of the resources is important. There was an urgency.

MR. CHAIRMAN: Order, please, Mr. Member. Will you please relate your remarks to section 1?

MR. LEA: Mr. Chairman, the Minister of Finance has said over and over again during consideration of this bill on section 1 that he's answered questions in the committee. It is obvious to me that he has not even made an attempt to answer any question that has been put to him. I have put a number of questions to him. One question that I know he has not answered is: why was the $26 million that's in the B.C. Petroleum Corp. not transferred to consolidated revenues in the fiscal year 1975-1976? There has been no answer.

MR. CHAIRMAN: That has been well canvassed, Mr. Member.

MR. LEA: But there's been no answer. It's been well canvassed, and I will admit that, but there is no answer from that minister, Mr. Chairman.

Interjections.

MR. LEA: Another specific item that I have mentioned is $30 million that could have been brought into consolidated revenues in 1975-1976 if this government had decided to sign a very good arrangement that has been made with Ottawa in terms of the rail agreement between this province and Ottawa. All they have said so far is that they will not sign it because it isn't any good, but the Minister of Finance has given not one reason — not one reason — nor has the Premier.

The last time I raised this, Mr. Chairman, the Premier got up and went into a great tirade but never once — never once.... He got up on the pretext of telling me why they were not signing that agreement...

MR. LAUK: He hasn't read it.

MR. LEA: ...but didn't mention it once. The Minister of Finance has not said why that is not a good agreement. It should be signed. It should have been signed. That would have meant $30 million into consolidated revenue for 1975-76...

MR. D.M. PHILLIPS (Minister of Economic Development): Don't be so ridiculous!

MR. LEA: ...but they made a political decision not to sign. I guarantee you, Mr. Chairman, as soon as this bill goes through the House and we are out of this session they will sign that agreement, and not one word will have been changed.

HON. MR. PHILLIPS: Are you going to stake your seat on it?

MR. LEA: Not one word will have been changed.

Interjections.

MR. LEA: Then tell us what's wrong with the agreement. Tell us what's wrong with the agreement. Not once have you told us what's wrong with the agreement. It's a political decision. Why aren't you transferring the $26 million from the B.C. Petroleum Corp. and why are you not signing that agreement? Tell us what's wrong with it. You haven't answered those two questions. You haven't answered any other question. We're going to get those answers, or just say that you don't know, because that's probably what the truth is.

Interjections.

MR. CHAIRMAN: The Minister of Consumer Services on a point of order.

HON. K.R. MAIR (Minister of Consumer Affairs): Mr. Chairman, it has been suggested by the member for Prince Rupert that I alleged, and I presume it was yesterday, that when it came to a question of conservation or economic development, economic development ought to take first place. With your leave, Mr. Chairman, in light of the hour spent by the opposition, I would like 10 seconds to read from the Blues:

"it is crucial then, Mr. Speaker, to my constituency that great care be taken when encouraging industries not to upset the delicate balance of nature. More and more resource industry in my area is anxious to cooperate with conservation-minded people. A cynic might argue that this is because government has forced industry to act in this way. However, the cause is not important, it is the effect. The fact is that government has an important role to play in ensuring that our resource industries handle their affairs in a manner compatible with the surroundings in which they operate."

Mr. Chairman, I think I am entitled to an apology.

Interjections.

MR. CHAIRMAN: Thank you. Order, please.

SOME HON. MEMBERS: Apologize, apologize!

AN HON. MEMBER: Being NDP means never

[ Page 743 ]

having to say you're sorry.

MR. LEA: It means never having to say you're a Tory. (Laughter.)

MR. R.E. SKELLY (Alberni): Mr. Chairman, of the 56 questions that were asked of the Minister of Finance, of which 53 weren't answered....

MR. R.L. LOEWEN (Burnaby-Edmonds): Fifty-seven.

MR. SKELLY: Fifty-seven, was it? There was one that was answered on April 5 in response to questions from several members on this side of the House as to whether the Minister of Finance had received an advance copy of the Clarkson, Gordon report, or a draft copy of the Clarkson, Gordon report. The minister at that time replied: "I would like to assure the House, Mr. Chairman, with regard to the Clarkson, Gordon report that I received the only copy of this report and that no change was made in any figures supplied by this report." I would like to ask the Minister of Finance, Mr. Chairman: in what stage of preparation was the report that he received? He says he didn't change any figures. I'm asking: at what stage of preparation was that report that he received, and when did he receive it?

Mr. Chairman, he said no change was made in any figures in the report. Did the Minister of Finance change any of the wording or the body of the report? Would the minister answer that question? This is an important question, Mr. Chairman, because the Minister of Finance says that no changes were made in any of the figures. That's understandable, because in the first section of the report it says the figures were supplied by the Minister of Finance or by people employed by him. I can't imagine him changing figures that he supplied himself, but I wonder if there were any changes made in the body of the Clarkson, Gordon report, or if the minister received any incomplete drafts.

MR. W.S. KING (Leader of the Opposition): Mr. Chairman, I just would like to persuade the Minister of Finance, perhaps, that he could help the opposition by giving us an answer to this fairly simple question. What we're interested in learning is whether we understood his previous answer correctly where he said nothing had been changed. But the real question is: did he receive a preview of the report before it was completed in final form? Was the final draft the only copy he received on its completion? It's a very simple question. I wonder if he could cooperate by giving us that information.

MR. CHAIRMAN: May I remind the House, while the Leader of the Opposition is taking his chair, that the procedure of the House is that we can ask questions of the minister. We cannot insist upon an answer. The minister may choose to answer when he wishes — altogether, one at a time, or not at all — and I think that all members are aware of it.

MR. KING: Mr. Chairman, I hope the Chair wasn't inferring that I was trying to force answers from the minister. I was just appealing to him in good conscience and a spirit of cooperation.

MR. LAUK: Mr. Chairman, I wonder whether the Minister of Finance understands the member for Alberni's (Mr. Skelly's) question. The Minister of Finance answered the question earlier that he received the only copy, and he led this House to believe that that was a final copy from Clarkson, Gordon. I think the minister should confirm that that was a final copy from Clarkson, Gordon and that it was released in that form unchanged. Could the minister please inform the committee so we can pursue either some other issue or pass this section?

Interjection.

MR. LAUK: Mr. Chairman, I've made very clear what the question is.

Interjection.

MR. LAUK: Then, Mr. Chairman, I charge that the minister took an incomplete draft, changed it and released it.

HON. E.M. WOLFE (Minister of Finance): Point of order, Mr. Chairman. I categorically deny that statement. It is completely misleading and I ask the member to withdraw it.

MR. CHAIRMAN: Would the member withdraw?

HON. MR. WOLFE: Categorically withdraw.

MR. LAUK: Did you receive an incomplete draft of that report?

MR. CHAIRMAN: You will address the Chair, please. Would you withdraw the statement?

MR. LAUK: Mr. Chairman, I'm suggesting to you that he received an incomplete draft of that report. Is he willing to admit that?

HON. MR. WOLFE: Mr. Chairman, on the point of order, the member categorically stated that I received the report, altered the figures and sent it back. That is absolutely false.

[ Page 744 ]

MR. LAUK: I said you altered the report.

HON. MR. WOLFE: He said I altered the figures of the report and sent it back.

MR. LAUK: Altered the report.

MR. CHAIRMAN: Order, please. Mr. Member for Vancouver Centre, would you please withdraw the remark that he received and altered... ?

AN HON. MEMBER: Withdraw.

MR. CHAIRMAN: Would you please withdraw?

MR. LAUK: Mr. Chairman, I will withdraw the remark only if the minister tells me....

AN HON. MEMBER: No, he'll withdraw.

AN HON. MEMBER: Withdraw.

MR. CHAIRMAN: Sorry, Mr. Member, but it has nothing to do with the minister. Will you withdraw?

MR. LAUK: I understand that, but you must hear....

Interjections.

MR. LAUK: Mr. Chairman, what I'm trying to say is this....

MR. CHAIRMAN: Mr. Member, this is not debatable. I ask you to withdraw, and will you please be seated?

Would you withdraw the remark that the minister received and altered...

AN HON. MEMBER: The report.

MR. CHAIRMAN: ...the report?

MR. LAUK: Okay.

MR. CHAIRMAN: You withdraw it? Thank you very much. The member for Vancouver Centre has the floor.

MR. LAUK: I'll defer to the member for Alberni (Mr. Skelly) .

MR. SKELLY: Mr. Chairman, do we understand the Minister of Finance (Hon. Mr. Wolfe) to say that the report that he first received from Clarkson, Gorson is the report that was published on February 18, 1976? Is that what the Minister of Finance is saying? Is that what the Minister of Finance asked the member for Vancouver Centre (Mr. Lauk) to withdraw?

MR. CHAIRMAN: The member must either finish his speech or take his seat.

MR. SKELLY: Oh, well, permit me to finish the speech.

Mr. Chairman, in The Vancouver Sun on February 11, 1976, the Minister of Finance did say that he received an incomplete report from Clarkson, Gordon, the very thing he asked the member for Vancouver Centre to withdraw. Let me quote from an article in The Vancouver Sun of February 11, 1976: "Finance minister Evan Wolfe said today that he had seen an incomplete draft of the Clarkson, Gordon report."

SOME HON. MEMBERS: Oh, oh!

MR. C. D'ARCY (Rossland-Trail): Are you lying to the House?

MR. CHAIRMAN: Order! Order, please.

MR. SKELLY: What we're asking, Mr. Chairman, is: in what way was that document incomplete? Now the Minister of Finance said it was not incomplete as to figures — we're willing to take his word as to that, as an hon. member — but we would like to know how the government changed the wording of the report. Did they send it back to Clarkson, Gordon to order Clarkson, Gordon to change the wording of the report? Is the government willing to change the incomplete report that they received on February 10, and just what was the state of the report that the Minister of Finance received on that day?

HON. MR. WOLFE: Mr. Chairman, I think we all recognize what the opposition are attempting to do here, and have been doing repeatedly over the last two or three days. It is to throw some kind of a cloud over an independent report prepared by a reputable firm of chartered accountants. I think the public of this province recognize what they are trying to do. This firm prepared that in an independent, responsible way, and they're not going to fool the public of this province by continuing to twist that effort around, because this is an independent report put forward to show the people of this province the financial condition following on the three years of their operations.

MR. CHAIRMAN: While all members are seated, may I recite again for all members that Mr. Speaker or the Chairman, after having called the attention of the House or of the committee to the conduct of a member who persists in irrelevance or tedious

[ Page 745 ]

repetition either of his own argument or of the arguments used by the other members in debate, may direct him to discontinue his speech, and if the member still continues to speak, Mr. Speaker shall name him or, if in committee, the Chairman shall report him to the House.

These are the rules that bind this House, and I must insist on closer observance of this standing order because the debate in the House, in the opinion of the Chair, will deteriorate unless I insist upon either new argument or else discontinuance of speech.

MR. KING: Mr. Chairman, I appreciate your admonition regarding repetitive dialogue, but on the other hand I think the Chairman would recognize that it is a rule, at least a custom of parliament, that ministers must be accountable, particularly in the case of large sums of money, and in good conscience and as a matter of custom, ministers are required under our British parliamentary system to reveal to the House information that they have pertaining to the business before the House.

Now we're seeking some pretty simple answers here, Mr. Chairman, and the minister refuses to clarify a partial answer that he has given, simply saying: "I answered that before!" and continues to remain silent, and the only time he rises is to attack the opposition. I don't think that's conducive to the good business of this House, getting the people's business on a reasonable level.

HON. MR. PHILLIPS: Oh, don't be so pious and pompous.

MR. KING: I'll ignore the Minister of Agriculture (Hon. Mr. Phillips) because he has nothing worthwhile to contribute to this debate or any other, Mr. Chairman.

HON. MR. PHILLIPS: You've got less!

MR. CHAIRMAN: Order, please. We're on section 1.

MR. KING: Yes, Mr. Chairman, and I would point out that the minister has indicated to the House that he had not received.... At least the inference was contained in his rather vague answer, rather vague, that he had not seen a draft copy of the Clarkson, Gordon report.

Am I correct in that understanding, Mr. Chairman, through you to the Minister of Finance? Am I correct in taking from his answer in the House the other day that he did not see a draft copy of the Clarkson, Gordon report?

He can nod his head, Mr. Chairman. Rather than that, he chooses to ignore us. Now that appears to be the intent of his answer in this House. When we find a statement made by that minister outside of the House clearly and unequivocally stating...and I quote from the Sun of the date mentioned: "Finance Minister Evan Wolfe said today he has seen an incomplete draft of the Clarkson, Gordon report." Now, Mr. Chairman, this is a serious matter.

MR. CHAIRMAN: Hon. Member, this subject has been well canvassed, The minister does have your question. Do you have another question or another subject?

MR. KING: Mr. Chairman, I think there's a more important issue at the root of this thing, The important issue is whether or not the minister gave erroneous information to the paper in his interview, or erroneous information to this House.

HON. L.A. WILLIAMS (Minister of Labour): Sit down! You haven't contributed anything to this debate since the House started.

MR. KING: Well, look at the turncoat there.

MR. CHAIRMAN: Order, please.

MR. KING: Mr. Chairman, he's coming on and trying to demonstrate his allegiance to his new-found coalition friends.

AN HON. MEMBER: What garbage!

MR. KING: Well, you should know all about garbage, Mr. Minister; you've rolled in it for years.

MR. CHAIRMAN: Order, please. Would the. .. ?

MR. KING: The dove-tailed dandy that's going to bring some respectability to that poor crew over there.

HON. MR. WILLIAMS: Let the member for Nanaimo (Mr. Stupich) speak.

MR. CHAIRMAN: Order, please. Would the hon. Leader of the Opposition address the Chair? Would he confine his remarks to section 1, or I will have to ask him to discontinue his speech.

MR. KING: Yes, Mr. Chairman, gladly.

HON. MR. PHILLIPS: Either that or tell us why Bob Williams resigned.

MR. KING: Oh, Bob Williams will be back; he's simply on a sabbatical.

Interjections.

[ Page 746 ]

MR. CHAIRMAN: Order, please. Section 1, please, Mr. Member.

MR. KING: Yes, Mr. Chairman. But with all these interjections, I think you would grant me the same kind of latitude you've granted the ministers over there, and some of them have had considerable.

In the most reasonable and persuasive tone that I can muster, I simply asked the Minister of Finance to explain the inconsistencies, the conflict between the statement he is quoted as making in The Vancouver Sun and the statement he made in this House, because this is a serious matter. It's a serious matter not only pertaining to this bill, but it's a serious matter pertaining to the customs, the dignity of this House, and the minister as well. I'm sure he would want to clear up and misunderstanding. Could we have your cooperation to that extent?

HON. J. DAVIS (Minister of Transport and Communications): Mr. Chairman, the hon. member for Prince Rupert (Mr. Lea) asked an important question: why the government had not signed the Northwestern Rail agreement, and why it hadn't, as a result of signing the agreement, taken in $30 million from Ottawa. In other words, the income side of the provincial accounts in the immediate past year would have looked $30 million better. He asked: Why not?

Now I have had several memoranda from staff in the Department of Transport and Communications, memoranda which were available to the previous government, memoranda which itemized why the agreement was a bad agreement, why the agreement should not be signed — at least in the form that it was presented to British Columbia in the famous Lang telegram of October 29.

I want to read out the five reasons:

(1) British Columbia would bear the risk of inflation. Ottawa would not have to go on the hook for any possible delays at inflated prices and costs;

(2) The B.C. Railway would lose much of its bargaining power with the CNR;

(3) The CNR would have running rights from Prince George up over the BCR line;

(4) No certain date of completion for the federal or CNR link;

(5) British Columbia would have to solve the northern native problem for the federal government as to where the CNR was to run.

Now I'll detail the five points in somewhat greater depth.

AN HON. MEMBER: You'll sell out for a mess of pottage.

MR. CHAIRMAN: Order, please. Order!

HON. MR. DAVIS: British Columbia, in order to....

Interjections.

MR. CHAIRMAN: Order, please. Mr. Minister, I'll recognize you again so that Hansard will recognize your voice. The Minister of Transport and Communications has the floor.

HON. MR. DAVIS: The first main objection: British Columbia to bear the risk of inflation; Ottawa was to contribute a fixed sum only. It was to be good for a $117.5 million and no more, regardless of what year — 1985, 1995, 2005. B.C.'s share could be larger, would be larger, depending on delays and the rate of inflation. It could be much larger if there were delays and if inflation continued through the period when these new rail lines were being built northward to the Yukon.

Second, the B.C. Railway to lose bargaining power with the CNR. No forest products, coal or other mineral products originating north and east of Prince George could be carried westward on the new B.C. Rail line. They had to go on the CNR all the way to Prince Rupert. This would have effectively prevented the BCR from using its own line as an alternate route for bargaining or other purposes when negotiating with the CNR for better rates.

Third, the CNR would have running rights from Prince George north over BCR lines. According to the Lang telegram, the CNR would be able to use B.C. Rail trackage from Prince George to Fort St. James, north and westward to connection. Thus it could postpone the building of its own link northward from Terrace and still serve the north.

Fourth, no certain date for completion of the CNR trackage. There was no certain date. This was a new development that had previously been date-certain for the completion of the so-called Meziadin line north from Terrace to connection. In other words, the federal railway could postpone its financial commitment, perhaps indefinitely.

Finally, British Columbia to solve the northern native problem. Last October 29, the Lang telegram required the British Columbia government "to acquire and ensure the quiet enjoyment of all lands required for the right-of-way of the CNR's proposed Meziadin line" — that's from Terrace north to connection — "and as this runs through territory in which there is disputed Indian land claims, British Columbia, not the federal government, would have to deal with this issue." This, added to the provincial skepticism about the CNR proceeding with the Meziadin line, compounded the problem.

No doubt the previous government swallowed hard; certainly Premier Barrett must have done when he received that telegram. But he ignored the advice of the British Columbia Railway and his own staff

[ Page 747 ]

and he announced that there was an agreement with Ottawa. In other words, he agreed completely with the Lang telegram which had introduced a number of new features into what had previously been regarded by staff on both the federal and provincial levels as a reasonable agreement.

HON. MR. WOLFE: He must have been pretty desperate, eh?

HON. MR. DAVIS: Mr. Lang, as a new Finance minister, had changed the rules unilaterally. Mr. Lang had changed the agreement which had been developing over a period of several years unilaterally and in numerous important ways. He had, in effect, put the gun to the former Premier's head. His telegram arrived on the eve of an election. The former Premier said it was fine and the government should proceed with it.

Now the hon. member for Prince Rupert (Mr. Lea) is telling us that his government, had it continued to be in office, would have signed that agreement in the precise form of the Otto Lang telegram and would have accepted the $30 million in the fiscal year in question. I suggest, Mr. Chairman, that this would have been to accept a very small — considering the whole issue — settlement for the short run, selling out the northern half of the province for the long run.

MR. LAUK: Mr. Chairman, it is obvious that the Minister of Transport and Communications was not too attentive during the campaign when this announcement of this rail agreement had been made. The rail agreement that was released during the campaign....

HON. MR. PHILLIPS: We'll never know; you stole all the files.

MR. CHAIRMAN: Order!

AN HON. MEMBER: At least he left the briefcase.

MR. LAUK: Just a minute. Mr. Chairman, I want that minister to withdraw and apologize. That's twice in one day. I categorically deny that I removed any departmental files from his office; they were personal ministerial files. I want that minister to withdraw or pay the consequences.

Interjections.

MR. CHAIRMAN: Order, please!

MR. LAUK: Stand up, you pompous ass, and apologize!

Interjections.

HON. MR. PHILLIPS: You're a liar!

MR. CHAIRMAN: Order, please! I would ask the minister to withdraw the statement that the hon. member stole the files. I find that offensive. Would the hon. minister please withdraw the phrase "stole the files"?

HON. MR. PHILLIPS: Mr. Chairman, I'll withdraw the statement that he stole the files. He removed them from my office!

MR. CHAIRMAN: Thank you. The hon. member for Vancouver Centre.

Interjections.

MR. CHAIRMAN: Shall section 1 pass?

MR. LAUK: Did you recognize me, Mr. Chairman?

MR. CHAIRMAN: Yes, I did, but you were not proceeding.

MR. LAUK: I cannot proceed with that horse's... (Laughter.)

MR. CHAIRMAN: Order!

MR. LAUK: ...friend interrupting my remarks.

MR. CHAIRMAN: Order, please! Please proceed.

MR. LAUK: I would never lose my temper with the hon. minister, even though he stoops to such tactics.

HON. MR. PHILLIPS: It's pretty low stooping to take files.

MR. LAUK: It's pretty low when you have to attack a member of this House through public servants....

MR. CHAIRMAN: Order, please!

MR. LAUK: Pretty chicken.

Interjections.

MR. CHAIRMAN: Order, please!

MR. LAUK: Withdraw.

SOME HON. MEMBERS: Withdraw!

HON. P.L. McGEER (Minister of Education): This is becoming a circus.

[ Page 748 ]

MR. CHAIRMAN: Will the member for South Peace River withdraw the statement that the member lied?

HON. MR. PHILLIPS: I withdraw, Mr. Chairman. The public realize what he did.

MR. LAUK: Mr. Chairman, that's not unconditional.

MR. CHAIRMAN: Just before the member continues, I will read for the Minister, who has been a long-standing member of this House, one of the beginner's rules out of Standing Orders, standing order 17:

"(1) When Mr. Speaker is putting a question, no member shall walk out of or cross the House, or make any noise or disturbance

"(2) When a member is speaking, no member shall pass between him and the Chair, nor interrupt him, except to raise a point of order."

I know that the Minister of Agriculture will pay strict attention to this standing order this evening. The member for Vancouver Centre has the floor.

MR. LAUK: When the press release and the press conference took place in Terrace with respect to the Northwestern Rail Agreement, it was not the Otto Lang telegram that was incorporated in the release, although several of the terms and a large part of the agreement were incorporated. If the Minister of Transport and Communications was aware of that fact, he would not have raised some of the points that he's raised this evening.

The primary line in the northeast had been agreed to as being the BCR, and increased revenue to that railway would occur because of originating rights on the CNR line through to Prince Rupert to the great port that was to be developed to create jobs for the northeast, to develop the promise made by our administration and the previous Social Credit administration to create economic development in that area.

HON. MR. WILLIAMS: Date of the release.

MR. LAUK: Date of the release? Oh, that was in Terrace. I can't recall.

Interjections.

MR. CHAIRMAN: Please address the Chair. Members, please do not interrupt the speaker.

MR. LAUK: Mr. Chairman, the Minister of Labour asked the question. I think it was in late November.

Interjections.

MR. LEA: Oh, go back to the Union Club.

MR. CHAIRMAN: Order, please.

MR. LAUK: Mr. Chairman, there had been communication with the hon. Minister of Transport, federal.

Interjections.

MR. CHAIRMAN: The member for Vancouver Centre has the floor, Please continue.

MR. LAUK: You know, you're doing a very admirable job, considering what's going on in this House, Mr. Chairman. I've never seen the House in such disarray and the government so much out of control.

So the first point, going on, we communicated with the hon. minister, Otto Lang. He sent a telegram, and we sent a letter back to the Premier.

HON. MR. WILLIAMS: Sent a what?

MR. LAUK: A letter back to Otto Lang, and that was published as well.

MR. CHAIRMAN: Would the member please address the Chair?

MR. LAUK: I am, Mr. Chairman.

Now the primary line in the northeast would have been the BCR, and the originating traffic would have increased revenue to the BCR.

Second point: no certain date was mentioned in the telegram, but before signature, a certain date must be established. That was clear; that was absolutely clear. So the critique that the minister has just given is a bit premature, in my view.

Insofar as Indian land claims are concerned, it was a clear understanding between the provincial and federal governments that it was a mutual responsibility insofar as carrying out of the terms of this agreement were concerned — a mutual responsibility. It's absolutely absurd for the Minister of Transport now to suggest that it was an entire responsibility of the provincial government under the terms of this agreement.

But they have escaped the real benefits of this agreement that the hon. member for Prince Rupert (Mr. Lea) is trying to bring about. The jobs, the income and the revenues to government that can flow from this agreement would have brought about a dream of many years for the northwest and the northeast of this province — the northeast that the Minister of Agriculture (Hon. Mr. Phillips) is supposed to represent. He's delaying this agreement. I fear that Ottawa will pull out of this agreement and

[ Page 749 ]

this province will lose a great opportunity for development in the north of this province.

I find it very sad that because of political vengeance and pique on the part of that government they refuse to sign this agreement. If they're not satisfied with some of these points, for heaven's sake sit down and negotiate them now, quickly. I am convinced that Ottawa is receptive to some of the points that haven't been decided, like a certain date for construction. It's only in terms of civil servants deciding when that will be, and no other consideration is standing in the way. Indian land claims? You know how complex they are — a programme has to be established flowing from this agreement. But sign the agreement and make it a mutual responsibility.

Interjections.

MR. CHAIRMAN: Order, please.

HON. MR. WILLIAMS: He said on December 10 that you were misleading.

MR. LAUK: No, he did not; that is false. No, he was....

MR. CHAIRMAN: Hon. member, please address the Chair.

MR. LAUK: Mr. Chairman, what the Minister of Labour referred to....

MR. CHAIRMAN: Please do not be so easily detracted.

MR. LAUK: I'm giving a rejoinder — he's the only one that can be.

The minister was referring on December 10, 1975 to a totally different thing. He was misinformed by his own press gallery in Ottawa, and that was cleared up in a subsequent edition of the same newspaper, if you will check that out.

MR. KING: I am rather appalled by the statements from the Minister of Transport and Communications (Hon. Mr. Davis) that British Columbia would suffer so harshly at the hands of a federal minister, one of his former colleagues in the federal cabinet. As I recall it, Mr. Chairman, the Minister of Transport and Communications had been a member of that federal cabinet up until the last election and he is standing here using as his justification for not signing the rail agreement the fact that one of his former colleagues in that federal Liberal cabinet was going to foist on the province an agreement that was invidious to the interests of this province, and I am...

Interjections.

MR. KING: ...moving back to section 1 of Bill 3, Mr. Chairman, but....

MR. CHAIRMAN: Because you are one step removed.

MR. KING: Well, I am responding to the statement made by the minister and I just want to say to his colleagues in the present cabinet that you want to remember that, because perhaps there is an object lesson here. You know, if he's prepared to turn on his former colleagues, look out.

I would like to rephrase the question that I put to the Minister of Finance earlier, because that's really the issue we are dealing with. If we want to talk about the rail agreement we can get into the Ashcroft-Clinton connection, and certainly as a railroader I am prepared to indulge in a major debate on that.

But, really, we're talking about Bill 3, the authorization for which the government is asking to borrow up to $400 million.

Some answers to some very fundamental questions we have been asking are certainly necessary before we can consider passage of this bill. I want to ask the Minister of Finance again — perhaps his emotions have cooled down somewhat now — and I wonder if he is prepared to clarify for us the conflict which I indicated existed and which the member for Alberni (Mr. Skelly) indicated existed, between the statement that the Minister of Finance had made to The Vancouver Sun where he indicated he had viewed an incomplete copy of the Clarkson, Gordon report and his answer in this House which indicated he had only seen one copy, presumably the final copy of the Clarkson, Gordon report, and I ask him if he would get up and clarify that situation for us. It would assuage much of the concern of the official opposition, Mr. Chairman.

HON. MR. PHILLIPS: Mr. Chairman, we are discussing the fact this evening that we have to plunge the province of British Columbia into debt after 20 years of good fiscal management, and it would appear to me that those who are now in opposition and who created this situation are suffering from...

MR. J.R. CHABOT (Columbia River): Hallucinations.

HON. MR. PHILLIPS: ...well, hallucinations. They are suffering from the fact that they really created this situation and they don't want to live with it. There are two items, Mr. Chairman, that I would like to relate to the debate going before the House this evening on Bill 3, section 1. One of those seems

[ Page 750 ]

to be that the provincial government should have picked up a sum of $55 million from the federal government by signing the now-infamous rail agreement with the federal government.

I would just like to point out for the House record, that the action to sign this agreement was taken unilaterally by the so-called experts who were then in government. When advised by officials in the British Columbia Railway that the railway itself could not live with this agreement, even though the provincial government might pick up $55 million immediate cash, the officials of the railway were instructed to destroy that correspondence outlining the reasons why the railway could not live with the agreement.

SOME HON. MEMBERS: Oh, oh, oh!

HON. MR. PHILLIPS: I would like to point out further the fact that it has been stated in the discussion on section (1) of Bill 3 that the government should have received a payment of $35 million back from the railroad which was offered to them, Mr. Chairman, in the form of a groan — not a loan, not a grant, but a groan. That is a type of sloppy bookkeeping that we witnessed by the previous Minister of Finance, the fellow who is running over there in the place of the fellow who resigned, some fellow by the name of Williams. Yes, Mr. Chairman.

But I want to tell the House that it would be impossible to retrieve that groan from the BCR. No. 1 is that $15 million of that groan was given prior to the last fiscal year. The previous government and the previous retroactive financial experts that were then on this side of the House did not retrieve that $15 million — and the other $20 million, Mr. Chairman, that we should have brought back was to have been brought back once a certain bill passed through this Legislature granting the British Columbia Railway certain borrowing powers.

But, Mr. Chairman, I want to inform the House that in the long months from the passage of that bill allowing the British Columbia Railway to go into the market and borrow that money, from the passage of that bill sometime last June until the end of their horrible reign — pardon me for saying that — they made no movement whatsoever to return that money to the coffers.

AN HON. MEMBER: They were broke.

HON. MR. PHILLIPS: Nor did they in their financial review, Mr. Chairman, which was published in September, 1975, when they were discussing the finances of the Crown corporations of this province, even mention the fact that that loan would ever be repaid or that it was owing from the British Columbia

Railway.

I want to tell you that it saddens my heart when I listen to the member for Nanaimo (Mr. Stupich) say that we should have picked up that $20 million, in view of the fact that on the British Columbia Railway records there are clear legal papers advising both the railway and the government that it would be impossible under the legal terminology of the Companies Act and the Railways Act for that particular $20 million to be returned to the government, because of the manner in which it was made, Mr. Chairman.

I do want to set the record straight that it grieves my heart to see all of these instant financial experts twisting the facts when we have to plunge this province into debt to pay for their completely irresponsible fiscal management of the affairs of this province — for the record, Mr. Chairman.

MR. GIBSON: Mr. Chairman, I've listened to the questions that have been asked of the Minister of Finance with respect to the Clarkson, Gordon report and I have to say that in my mind there are two questions unresolved. The minister suggested to the House that they are all resolved, but perhaps I can outline the deficiencies that I see.

The first: we do not as yet have a categorical statement as to whether a draft report was or was not received in advance of the final report.

Secondly: we do not have a categorical statement as to whether or not, if a draft report was received, it was changed.

We do have a categorical statement — and I'm quoting more or less accurately, I think — that no figure was changed. We do not have a statement that no element in the text was changed. We do not have a statement that the category in which various figures might have been placed — particularly as between one fiscal year and another — we have no categorical statement that those were not changed. Mr. Chairman, I think it's a reasonable question to ask the minister.

There's no particular imputation of one kind or another in asking those questions. We're simply seeking to arrive at the fact — to ascertain to what extent the firm of Clarkson, Gordon was guided by the government in the preparation of that report. We know, certainly, that they were guided to a certain extent. The decision to — no, don't shake your head, Mr. Minister — pay off the ICBC debt in the last fiscal year was clearly an instruction to Clarkson, Gordon, and Clarkson, Gordon so indicate in their report.

Interjections.

MR. LAUK: Did they tell you to transfer the moneys?

MR. SKELLY: It's on page 9.

[ Page 751 ]

MR. GIBSON: It says that right in the report, Mr. Minister, so there's no question but what they were guided or instructed to some extent....

Interjections.

MR. GIBSON: I find it very curious that the minister is so touchy on this question.

MR. CHAIRMAN: Mr. Member, I have given you some latitude to see whether or not there wouldn't be a different side to the question, but the questions you have asked have been asked and they have been very well canvassed. I am sure the minister has the question and he will answer it according to his discretion.

MR. GIBSON: Well, I just want to make this point, Mr. Chairman: the minister keeps saying across the floor of this House, without standing up to do so, that these questions have been answered. These questions have not been answered, and they are important questions.

Interjections.

HON. MR. WOLFE: Mr. Chairman, as you've said very accurately, we have canvassed this matter over and over and over. The important question in clause 1 is the amount of the authority to borrow, and it is proposed to borrow up to $400 million. So as the Clarkson, Gordon report bears on clause 1, it has been used to determine the amount required, or the estimated amount of the deficit, and any attempts to discredit this report, I say, should fall on deaf ears because they're simply not valid. This firm respects its own integrity, its own independence in producing this information, and any attempts to try to discredit that I don't think are worth the time of day.

In any event, we've already emphasized — and this member may have been out of the House when these matters were dealt with; I dare say he was — that the deficit could very well have been estimated by Clarkson, Gordon to be somewhat in excess of $400 million had they included other matters which you might logically assume yourself, Mr. Member, might have included: $52 million for the producers' gas tax, $60 or $70 million for the B.C. Medical Plan, and so on. But the important thing is whether we'll need an amount up to $400 million, which may or may not be used, but you, yourself, would not suggest that a lower amount should be authorized if, in fact, we might need more.

AN HON. MEMBER: Hear, hear!

MR. SKELLY: Mr. Chairman, we're being told that in suggesting that Clarkson, Gordon took guidance from the government we are....

MR. CHAIRMAN: Mr. Member, with all respect, this has been covered.

MR. SKELLY: In response to what the Minister of Finance has just said, Mr. Chairman, we are being told that, in suggesting that Clarkson, Gordon took guidance from the government, we are impugning the reputation of an auditing firm. We are doing no such thing. In fact, Clarkson, Gordon says in the first page of the report, almost as an apology: "You requested us to co-ordinate the production of certain unaudited financial information...that you had requested from the deputy minister of Finance...you have indicated that the report will be a public document...."

MR. CHAIRMAN: Mr. Member, please. Mr. Member, this was covered....

MR. SKELLY: That's the guidance....

MR. CHAIRMAN: Mr. Member, please. This was covered by the member now standing on his feet — last evening, as I recall.

MR. SKELLY: And covered a very few seconds ago by the Minister of Finance.

MR. CHAIRMAN: Would you please move to another point?

MR. SKELLY: But there are certain things that the Minister of Finance hasn't covered, or he's done it in such a way as to confuse the House, Mr. Chairman.

Now obviously there are other people who have some doubts about the answers that were given by the Minister of Finance. On April 5 he said he received the only copy of the Clarkson, Gordon report. On February 11 he said he did know if Bennett had seen it or not. That was in The Vancouver Sun....

MR. CHAIRMAN: Mr. Member, this has been covered. Would you please move to another subject?

MR. SKELLY: I'm asking the Minister of Finance, Mr. Chairman, if that was the only copy or if the Premier also had a copy of the report....

MR. CHAIRMAN: Mr. Member, this has been covered, and I must insist that you move to another subject, or I must recognize another member.

MR. SKELLY: I'll move on to another point, Mr. Chairman. The minister admitted that he received an incomplete copy, and I'm asking the minister if that

[ Page 752 ]

copy was returned to Clarkson, Gordon with further instructions, because instructions were given on page 1 and page 9 and page 33. There's no suggestion in the Clarkson, Gordon report, by Clarkson, Gordon themselves, that it's an independent report, Mr. Chairman.

I'm asking if the incomplete report, which the minister admits he received on February 11, was sent back to Clarkson, Gordon with instructions to change it to inflate the deficit, and to make it more of an attack on the previous NDP government. The minister hasn't answered that question, nor has he answered the question as to who else had seen the incomplete draft document. He said he didn't know if — to quote his words in the Sun — Bennett had seen it. Yet on April 5 he said he had seen the only copy.

So there are some inconsistencies in what the minister has been telling this House. I don't see any inconsistency on this list. So there is some inconsistency in the information that the minister is giving this House, and we would like to have the minister clear up that inconsistency and, if there was an incomplete draft, possibly he could make that draft available to the House — table that in the House. If it was sent back to Clarkson, Gordon for instructions to inflate the deficit, or to create a further attack on the NDP, perhaps we should see the instructions that were sent along with that draft.

MR. CHAIRMAN: Thank you, Mr. Member, this has been canvassed.

MR. LAUK: Mr. Chairman, you know the Minister of Finance has raised an interesting point, when he spoke just a moment ago. He said that the Clarkson, Gordon report could have used a larger figure. My question to the minister is: why didn't they, if they could have? What kind of judgment or decision did they make, independently of the minister's guidance?

MR. CHAIRMAN: Mr. Member, we appreciate the question, but it has been asked before. This has been canvassed.

MR. LAUK: No, no. Mr. Chairman, with respect, you're incorrect. That question was never asked. You see, the minister has just said that it could have been a higher figure. My question is: why wasn't it a higher figure? My suggestion to the Minister is because he told him that $541 million was just fine. Because it could have been lower and it could have been higher.

HON. MR. WOLFE: Withdraw! Withdraw!

MR. LAUK: I will not! You tell us why....

MR. CHAIRMAN: Order! Please address the Chair.

MR. LAUK: Mr. Chairman, the minister should tell us why the Clarkson, Gordon report was not higher if it could have been higher. Why? Was the professional judgment? Nonsense! It was political guidance — and you know it!

HON. MR. WOLFE: You're misleading the House.

MR. LAUK: I'm not trying to mislead the House, Mr. Minister of Finance. All I want is the answer. Everyone in this province, Mr. Chairman, wants the Minister of Finance to give us the answers. Every letter and telephone call I've received in the last three days has said: "Evan, come clean!"

MR. CHAIRMAN: Order! Order, please, Mr. Member.

MR. LAUK: Come clean, Evan!

MR. CHAIRMAN: Order, please. Hon. members, I must remind you again — it seems that the hon. members forget so soon — that we, as members of this House, have every right to ask questions. We have every right to ask them until they become repetitious. We have every right to expect an answer...

AN HON. MEMBER: Hear, hear!

MR. CHAIRMAN: ...but we cannot insist upon an answer.

MR. LEA: I have one final remark to make, and by that I'm not admitting that we've had any answers. I just see the futility of carrying on when a minister will not get up and answer any question at all.

MR. LAUK: Otiose minister!

MR. LEA: Now we've had question after question after question, and we've received no answers. There have been no answers to like or dislike. There have been no answers.

The reason, Mr. Chairman, that there has been some persistence by members on this side to find out whether or not the Clarkson, Gordon report had been changed or hadn't been changed, had been doctored or not doctored, and the reason for the insistence to the Minister of Finance is that we've had another experience with that minister. He didn't even know that a report coming from his office — in other words the budget speech — had been changed. He admitted he didn't even know whether it had been changed.

Now how can we sit here, or stand here, and take the minister's word that this one has not been changed or altered when another very important report that came to this House was altered? It should

[ Page 753 ]

be his business. He didn't know. He admits he didn't know. Now we've another report, and he's not saying anything again so I guess he's admitting he doesn't know.

MR. CHAIRMAN: Mr. Member, with all respect, he has this question.

MR. LEA: I know! I know! We only wish we had some answers. I've never seen anything like this. I suppose we will, over the next three or four years, see lots more.

Interjections.

MR. LEA: You may think it's smart; I think it's awful.

MR. STUPICH: Mr. Chairman, I do have something different that I want to go into, but just for a moment I would like to canvass this possibility that the Minister of Finance raised, where he said that the figure could have been different.

MR. CHAIRMAN: Hon. member, this has been canvassed. Perhaps you could go to your second point.

MR. STUPICH: Mr. Chairman, the hon. Provincial Secretary (Hon. Mrs. McCarthy) — and this is one of the reasons I would like to do the other point first — this evening took part in this debate. She attributed part of the reason for this legislation that is before us now to the fact that the outgoing administration had rushed to spend money on special warrants during the time between election day and the day on which we handed over the control of the government to the new administration.

Well, Mr. Chairman, she read from a special warrant that was approved, I believe she said on December 16, in the amount of $845,000 for the publication of Land magazine. Mr. Chairman, if there was such a special warrant on that date, it was something that was properly recommended by the Environment and Land Use Committee of cabinet to cabinet. It was held up for some time while there was discussion as to just what vote it should be charged against, because we did not want to increase the expenditures we were controlling at the time. We were very careful to keep those expenditures within the existing votes. That was the reason for holding it up.

But the point I want to make right now, Mr. Chairman, is that I do not recall, and the records that I have from the office of the Deputy Provincial Secretary do not indicate, that in any way there was such a special warrant passed between the time of the election and the time that this new administration took office.

Mr. Chairman, there were orders-in-council approved at a cabinet meeting, and they were dated December 16. One was for a teacher's pension which simply reinstated a teacher. Another one was for B.C. Hydro and Power Authority which arranged for borrowing of $100 million — very necessary borrowing at the time — and it was one that was discussed with the incoming administration. Another was for pipelines, another for public service, dealing with expenses on transfer regulations. Railways.

Mr. Chairman, there was another cabinet meeting after that date under the old administration, on December 19, when we dealt with a number of community resource boards. All we did in those cases was to transfer duties; in some cases we cancelled the community resource boards. I see the hon. Provincial Secretary has returned, Mr. Chairman. I don't know whether I have her ear or not, but at this second cabinet meeting most of the orders-in-council were to do with community resource boards.

Then there was one under the Criminal Code dealing with custodial arrangements. Unfortunately the hon. Provincial Secretary...I must have had her ear because she left. Another one was on ecological reserves, establishing one. Others were: under the public service, canceling the appointment of Martin L. Levinson as a special consultant to the Minister of Labour; under the Public Service Act canceling the appointment of 37 people who had been appointed; under the University Endowment Lands administration setting aside 1,066 acres as a park to be named in honour of Dr. Frank Buck; and the last one, under the Department of Public Works, providing for some 70 acres of land that were purchased for the village of Lillooet.

Mr. Chairman, that's the complete list of the orders-in-council that were passed by the outgoing administration in the time between election day and the day the new administration took office.

I think the Hon. Provincial Secretary is mistaken, or the records that have been made available to us from the office of the Provincial Secretary are incomplete. I'm just sorry that she isn't here to explain what she meant by those remarks. So the point of this, Mr. Chairman, is to deny that the outgoing administration contributed in any way at all to this deficit by passing special warrants in the time between election day and the time the new administration took office.

I'd just like to say very briefly, Mr. Chairman — and I know I'm transgressing on your good nature — that if anyone suggests that in any way at all the Clarkson, Gordon report would have been changed in any matter of principle, and still signed by Clarkson, Gordon, I would not want to be associated with that suggestion.

But any possibility that the report might be

[ Page 754 ]

changed with respect to matters of principal is quite a different matter, because they do say they had accepted the advice of government. Now the Minister of Finance has been very careful to say that he changed no figures. He has been very careful not to say that he did not ask for some other changes in the report — perhaps the addition of new material. The transfer of $175 million to ICBC could very well have been added after. I recall to you, Mr. Chairman — I think this has not been said yet — that the report was promised one week before it was actually delivered by the Premier, which apparently we can only assume, in view of the minister's reluctance to comment on these questions, was to allow for additional time to rewrite it.

Now that we have the hon. Provincial Secretary with us, Mr. Chairman, I wonder if she could elaborate further on this order-in-council that is purported to have been passed by the outgoing administration after election day.

section 1 approved.

On section 2.

MR. GIBSON: Mr. Chairman, I just want a short assurance from the minister that this relates to how the borrowings are to be undertaken. I would like an assurance from the minister that, on every occasion, the identity of any purchaser of B.C. securities will be disclosed.

MR. CHAIRMAN: Shall section 2 pass?

MR. GIBSON: Just let me repeat that question to make sure the minister understood it: that if we sell any British Columbia securities or enter into debt, the identity of the lender will, in every case, be disclosed of any borrowing under this Act.

HON. MR. WOLFE: Mr. Chairman, I think we can give that assurance.

Sections 2 to 7 inclusive approved.

Preamble approved.

Title approved on the following division:

YEAS — 29

NAYS — 16

Mr. Stupich requests the division to be recorded in the Journals of the House.

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

Motion approved.

The House resumed; Mr. Speaker in the chair.

Bill 3, British Columbia Deficit Repayment Act, 1975-1976, reported complete without amendment, read a third time and passed on the following division:

YEAS — 30

NAYS — 16

HON. MRS. McCARTHY: Second reading of Bill 11, Mr. Speaker.

SOCIAL SERVICES TAX
AMENDMENT ACT, 1976

HON. MR. WOLFE: Very briefly, Mr. Speaker, in

[ Page 755 ]

the budget speech I announced that tax increases were necessary to raise the revenue needed to carry on the government's services and programmes in the coming year. This bill provides for the increase in the social services tax from 5 to 7 per cent. The increase was effective at midnight, March 26, and applies to all purchases of goods after that time and to purchases which had not been delivered prior to that time.

However, it should be explained that if a purchase of specific property was made prior to midnight, March 26, for a firm price, or if materials were purchased for carrying out a real property firm price contract prior to midnight, March 26, provision is made for a refund of 2 per cent.

Mr. Speaker, the estimated yield from this tax increase is some $200 million, all of which is to be placed in the consolidated revenue fund of the province.

One argument that one hears against the use of sales tax is that it is regressive, but I should point out that this argument is materially reduced when applied to the social services tax in this province because of the exemptions which are allowed. These include food, drugs, children's clothing and footwear, used clothing and footwear, school supplies and reading materials.

Mr. Speaker, a common argument today, insofar as the new social services tax increase is concerned, is that the government should, in fact, have chosen to increase income taxes a proportionate amount instead of increasing the sales taxes. I think we should point out that the decision, in any event, to increase sales taxes was made with great reluctance and, in fact, because of what was a substantial shortfall in our budget for 1976-77.

Now a one-point increase in the sales tax is the equivalent of $100 million in our potential revenues, and we thought it necessary to increase the sales tax by two points in anticipation of creating additional revenues of $200 million. An equivalent increase in the income tax rates would have required an increase of some 8 to 10 points in the income tax for the province. The previous income tax rate was 30.5; it is our opinion that an equivalent increase in income tax to equate with the necessary increase in sales tax would have required increasing income tax to some 40.5 points.

The present sales tax rates in other provinces, I think, will compare favorably to British Columbia. For instance, in the province of Ontario, 7 per cent; in the province of Quebec, 8 per cent; and our new rate, of course, is 7 per cent.

MR. KING: Alberta is zero.

HON. MR. WOLFE: Alberta is 5 per cent, and all of the Maritimes have a higher rate of sales tax. There are only two provinces remaining which have a lower rate of sales tax. I'm sorry, I stand corrected. Alberta is zero.

AN HON. MEMBER: Any lower than that and you have to give money back.

HON. MR. WOLFE: Mr. Speaker, as we all know, this is the first increase in sales tax since 1954, at which time it was increased from 3 to 5 per cent. I would just like to quote once again from page 31 of the budget speech with regard to this increase:

"The estimated yield from this tax increase is $200 million, of which approximately $110 million will likely be paid by individual consumers and $90 million by the business sector, "

As I have said, generous exemptions will continue on most basic family consumables as to food, children's clothing, footwear, drugs, school supplies and reading materials, so the tax increase will, in fact, not bear heavily on low- and medium-income families.

Mr. Speaker, I move second reading.

MR. STUPICH: Well, Mr. Speaker, I expect that the government is going to be able to get this legislation through perhaps a little more quickly than they did the previous bill, but not so quickly as to say "aye" without any discussion at all.

As the minister pointed out in his remarks, and I think in part by saying what he did about the regressive nature of the tax, or the fact that it used to be more regressive than it is right now, he was admitting that the sales tax still is a regressive tax. There can be no argument about that. It is true that it is not as regressive now as it was when it was first instituted in the province of British Columbia. Several changes were made, and changes have been made over the years to try to make it less regressive, but we are still working with legislation that does impose a regressive tax. There can be no question about that.

Figures from Manitoba that I don't have to hand at the moment, but where a study was done where the sales tax rate is the same rate as is proposed here for the province of British Columbia and where the exemptions are similar, would indicate that for a family of four with a salary of $10,000, roughly 1.5 per cent of the income is being paid out on this tax, whereas when you get up into the $20,000 range it's down to about a third of what it was. The more you raise, the lower the proportion of your income that is paid in this sales tax method.

I'm concerned that the minister's main justification for doing it this way would seem to be that he needs the money and it's the easiest way to get it. He is not even trying to say that this is the best way to get it, but simply that it is the easiest.

Now we were faced with the same problems, Mr.

[ Page 756 ]

Speaker. We had problems of raising money but we chose alternative methods. From one course of action alone we raised a similar amount of money when the economy of the province was not as large as it is now, and that is the natural gas plan that we embarked upon. You will recall that our natural gas was being sold to the Americans at something like 30 cents per thousand cubic feet, lower than we were paying here in the province when we came into office.

It is now being sold at a rate of $1.60 per 1,000 cubic feet, and the result of that change in policy, that one change in policy with respect to that one resource alone, did improve the revenue of the province by $200 million and likely more in this coming period.

The budget figures would indicate that it will be higher than $200 million this year. So I would suggest that, instead of looking for the easy way out, Mr. Speaker, the minister might well have put some of his attention to other ways of raising money, ways that were followed by the previous administration. I do have the figures now from the province of Manitoba, the study that was done in Winnipeg. They show the ones I was talking about, the largest between $6,000 and $7,000 annual income. The percentage of the income that is paid out in tax is 1.6 and when you get up to an income of $20,000 to $25,000, you are paying only 1 per cent of your income out in sales tax. So the higher your income, the lower the proportion of your income that is being paid out in this tax.

So as I say, Mr. Speaker, I think the minister should have been more imaginative, should have looked for alternative sources of revenue which might not have been so easy, but would have been more appropriate, would have been fairer as opposed to the one which in his remarks, by saying that it is not as regressive as it used to be, he was admitting is ingressive.

So far as resources apart from natural gas, Mr. Speaker, there is the fact that the minister apparently has paid no attention to the possibilities of increasing the revenue from coal, and I believe I made a point of this when I spoke during the budget debate, when I pointed out that all we are collecting from the gross value of coal that is being exported from this province to create jobs and economic opportunities in other countries, all we are collecting from that gross value, is 4.5 per cent. Yet our own citizens are being asked to pay 7 per cent on everything they buy. Surely it would not....

Perhaps it would be a little more difficult to persuade the people selling this coal that they should pay at least 7 per cent, if not a good deal more than that. But, Mr. Speaker, I think it would have been more equitable to have levied a greater royalty on this depleting resource that is being exported from our province. In the budget speech we speak optimistically about the possibilities of increasing coal production. No figures are given, but the possibilities about coal production from the Peace River area and about increasing the possibilities of coal export from the Kootenay area are mentioned with no suggestion at all anywhere that the government intends to get any more money from this. Indeed, there is some question as to whether they intend to continue collecting royalties of any kind on any minerals, and that question has still to be answered.

Mr. Speaker, I find it curious that a government that was supported so much by business during the election campaign and that still stands up and says that they are the government in favour of business because they believe that what is good for General Bullmoose is good for British Columbia — government that has that attitude — is standing up and saying that almost half of this money will be collected by business.

Mr. Speaker, another of our sister Canadian provinces is trying to deal with the problems — and again this is something that I mentioned earlier in the debate — the question of dealing with inflation and dealing with unemployment, two sides of the same coin. Now apparently this government did not get that message, Perhaps the Minister of Finance for Canada did not repeat those remarks in the hearing of the present Minister of Finance for British Columbia. But if that is the case, then I think he should read something of the proceedings at earlier conferences and be persuaded that he can't fight one without fighting the other. If he tries to fight either one without fighting the other, then he's fighting a losing battle on both, or either, depending on which one he's concentrating his attention on.

Even with business, it would be more fair to tax them on the basis of their income, their profits, than it would be to increase the sales tax on them. Mr. Speaker, there might have been a case for imposing an additional sales tax or luxury tax, if you like, on some articles. But there can't really be a case made for what the Minister of Finance himself admitted is a regressive tax. He's mentioned the difficulty of raising more money from income tax. But, Mr. Speaker, if that is the proper way to go, if that is the most progressive of all taxes — and indeed it is — and if it can be made more progressive by taking steps such as we're taking in the province of Saskatchewan, where it is applied as a surtax, well, it might be more difficult to do it that way, more difficult to calculate it that way. Nevertheless, Mr. Speaker, I think the Minister of Finance would not stand up and argue that it would be unfair. The people who are making the highest incomes are the ones who find it easiest to pay these taxes. And yet the figures are quoted which show that it's not only easier for them to pay this particular tax, but they are paying a smaller

[ Page 757 ]

proportion of their income in the form of the sales tax.

Mr. Speaker, the only argument that the Minister of Finance has given in favour of this legislation is that it's easy. I suggest that the government, if it really intends to do a job of governing for the people of British Columbia, had better quit fighting the battles of the last election campaign, had better stop looking for easy ways out for problems that face them as a government and face the citizens of this province.

They'd better start looking at ways of dealing with problems that will be fairer to the citizens of our province, all of the citizens of our province, rather than persisting in fighting old election battles, rather than persisting in trying to find easy ways out for problems. Because looking for the easy way, Mr. Speaker, is not going to be the just way, is not going to be the way that is going to be acceptable, and is not going to be a way that is good in the long run for the people of the province. We can't support this legislation, Mr. Speaker.

MR. N. LEVI (Vancouver-Burrard): Mr. Speaker...

Interjections. (Laughter.)

MR. C. BARBER (Victoria): If you're in a hurry, Norman, I'll defer.

MR. SPEAKER: Does the hon. second member for Victoria wish to defer to the second member for Vancouver-Burrard?

MR. BARBER: No, apparently I can continue.

This vote, like most of the others in the House is, of course, a foregone conclusion. I will simply agree with the remarks of the hon. member for Nanaimo (Mr. Stupich) and the hon. Minister of Finance (Hon. Mr. Wolfe), both of whom have stated that this kind of tax is, of course, regressive. I regret that it should be increased. I would presume that the government increased this tax with some hesitation, because it's clearly a very unpopular increase. Knowing that it's going to be carried through upon midnight of the day the Minister made the announcement, I have two very practical suggestions I should like to make.

The first is a repeat of a suggestion made earlier today by the hon. member for Burnaby-Edmonds (Mr. Loewen) who asked, and I join him in asking it, that when this bill is passed, as inevitably it will be, the Premier or the Minister of Finance state to the people of British Columbia that this sales tax increase shall be removed at the earliest possible opportunity, when the Minister of Finance or the Premier determine that the moneys they believe are required now are no longer required. It would make it a great deal easier for the people of British Columbia to comprehend this increase if you would make the commitment asked for by a member of your own back bench, and which I put to you in equal seriousness. It would make it a lot clearer that there was, in fact, a light at the end of the tunnel and that this increase from 5 per cent to 7 per cent was not going to go on in perpetuity,

Interjection.

MR. BARBER: No, I would ask you to guarantee that the need for these moneys that you wish to raise, having been raised, should then result in a reduction to the original 5 per cent. I would ask the Premier, and support the member for Burnaby-Edmonds who made that request, to make that commitment on behalf of his government.

My second suggestion, Mr. Speaker, is based on a piece of correspondence and a number of phone calls I've received since this increase was decreed by the Minister of Finance. I'm informed that the social services tax is payable on mobile homes. I would like, if I may, to read into the record one of several letters that deals with this matter and to ask that one of the exemptions permitted under the Social Services Tax Act be extended to include mobile homes. If I may read to you, Sir, a letter I received:

"Dear Sir: There are many people who are forced into modest homes due to low income positions. These homes are in many cases mobile, or travel trailers purchased with the express purpose of providing a home. Persons capable of buying real estate for a home are exempt from the social services tax. Those forced into mobile homes are being taxed and, indeed, penalized for their inability to spend, or to finance, big-money purchases.

"The Social Services Tax Act in concept is to exempt the necessary items in life and to tax the amenities. This further points out the inequity. The distinction is any home that you move, including brick, frame, prefab, mobile or travel trailer, becomes tangible personal property and is taxable even to the extent that if your land should be expropriated and you choose to move your house, you are liable again for social services tax.

"There are many of us here" — in this case Seymour Street in my riding — "and elsewhere who feel we have purchased homes, a permanent residence however modest, and have been subject to sales tax on one of the basic needs of life — a place to live."

I put to you again very seriously, Mr. Premier and Mr. Minister of Finance, that your government has repeatedly stated that you intend to make available to private citizens throughout British

[ Page 758 ]

Columbia the opportunity to own their own homes. I would point out that many of these private citizens have chosen, and increasingly are choosing, to purchase mobile private homes, and further point out the inequity that compels them to pay a social services tax on that kind of housing that is not paid by other citizens on more standard forms of housing.

That's my second positive suggestion to yourself, Mr. Premier, through you, Mr. Speaker, and to the Minister of Finance: exempt mobile homes from the social services tax and increase the opportunity for persons of modest means to do what you yourself — as a point of political philosophy and as a statement and a promise you made in the campaign — have indicated should be done, which is to allow these citizens to purchase their own homes.

It was difficult enough when the social services tax was at 5 per cent. You have made it more difficult by increasing it to 7 per cent. I ask that you remove that tax altogether to aid persons of modest or low incomes who, of no necessarily free choice of their own but simply because of financial necessity, are required to purchase a mobile home in order to have a home at all.

I think that's a reasonable request, Mr. Speaker. I make it again, through you to the Premier and the Minister of Finance, and will make it repeatedly during the course of this Legislature. I do not understand why citizens in mobile homes should have to pay a social services tax. It doesn't make sense. It is not consistent. I hope very much that in the face of an increased 7 per cent, where the inequity has become even more dramatically apparent, that your government will move to remove that tax altogether from those citizens who have chosen to buy mobile homes.

MR. LEVI: Mr. Speaker, I'm glad that the Minister of Consumer Services is in the House, as I just want to....

HON. MR. MAIR: Congratulate me.

MR. LEVI: No, on the contrary. I don't want to congratulate you; I want to refer to a speech that you made up in Kamloops in which you said, if I might quote.... It was reported on March 29, so I guess you made it on the 28th.

Interjection.

MR. LEVI: Why don't you keep quiet? Let's just carry on very nicely. The ministers and I are going to have a little three-way do — the two ministers and myself.

I'm just going to quote it. I don't want you to deny it; I just want you later on to get up and speak on it.

"It is a budget of restraint coupled with increases in health, education and human resources. The principal complaint against the budget will likely be from those concerned about the increase in sales tax to 7 per cent."

You remember that, don't you? Well, maybe he doesn't.

"Mr. Mair said that the increase could not be helped. He agreed that the increase does hit the poor harder, but he says: 'It is minimal, because a person with $10,000 a year income only spends an average of $1,800 on taxable items. When you take 2 per cent of $1,800, it's a very small amount.' "

I don't know, through you, Mr. Speaker, whether that minister is aware that about 50 per cent of the people in this province earn well below or have incomes well below $ 10,000 a year. So I think that if you want to deal with the people at $10,000 and suggest that 2 per cent on the $1,800 isn't very much, then you're going to have trouble convincing the — people that are living on about $6,000 a year that they are really being hit where it hurts.

The minister himself in introducing the bill said that it was regressive. This is probably one of the more thorny problems that legislators have to deal with in terms of taxation. But the big question is that the government over there, from the point of view of the Minister of Consumer Services, thinks that poor people make $ 10,000 a year.

If we can accept that the low-income people in this province make $6,500 and below, which is more accurate than the $ 10,000, then I want to then go to the senior citizens, Now we have in place, until some new legislation comes down, a programme called Mincome, but that only applies to the people over the age of 65, because the Premier has evidently instructed the cabinet that we have to differentiate between the handicapped and the people 60 to 64. They are not to receive the cost-of-living increase at all. Those people are going to be more hurt than the people over the age of 65, who are going to get hurt anyway. But what we have is the government on the one hand introducing a 7 per cent sales tax and then splitting the low-income people into different categories; those over 65 will be able to get the cost-of-living increase and those 60 to 64 will not receive it and neither will the handicapped.

Now, Mr. Minister of Finance, that's something that you have to look at because you were reported as saying that you thought that the 60-to-64 programme and the handicapped programme was a temporary measure. Your colleague, the Minister of Human Resources (Hon. Mr. Vander Zalm), doesn't agree that it's a temporary measure. the important thing is that two groups of people — the handicapped and the 60-to-64 people — have lost income. They will lose even more income as a result of your 7 per

[ Page 759 ]

cent sales tax. That, for those people at a level of $6,500 a year, is a very serious problem.

Then we have another group of people. In the budget speech there is reference to young people wanting to get going. Now it's very nice for people on that side of the House to think in terms of young people getting going, because that's millionaires' row and that's okay. But most people out there have a real tough time just getting it together in terms of basic money to purchase housing and basic money to purchase furniture.

Interjection.

MR. LEVI: That hits them where it hurts. Just keep quiet — you'll be on the budget soon anyway. Don't be so twitchy; you've got to learn not to be so twitchy in this House.

Interjection.

MR. LEVI: Oh, it's the millionaires that represent the people — that's what it is. Don't be so twitchy about the millionaires — I don't have anything against millionaires.

AN HON. MEMBER: Neither do I.

MR. LEVI: No, not at all, The only thing is that they're not affected by the 7 per cent. Lawyers aren't generally affected by the 7 per cent; I'm sure the Minister of Labour isn't going to be too affected by the 7 per cent.

HON. MR. WILLIAMS: Yes, I am.

MR. LEVI: You are? That's quite true — you've just taken a pay cut. Yes, you probably will be affected by the 7 per cent.

The important thing is that the people who are going to be hurt most by this legislation are the people who are the low-income people, particularly the low-income working people, who are a significant group in our province, the people on fixed incomes and those young people who are trying to start out in life.

There has to be a better way for the government to raise revenue — particularly from this group. There has to be an attempt on the part of the government to look at alternative ways of raising revenue so the people in these three categories I've described are excluded from that in order that they can have an advantage so they can maintain the income they have.

What we have, as a result of a number of tax increases that are going to take place in this province over the next few weeks, and as is reported in an article in the Times, is that the average family of four in this province is going to need to have another $ 500 in order to stand still — that is, to be where they were prior to the taxation measures being brought in.

So you can't, on the one hand, talk about your concerns about regressive taxation, then go ahead and bring in the various tax measures, and not give some expectation or some hope for those people out there that they can, in fact, get some kind of relief from this. Again, they are the low-income people, and they are being hurt; they are particularly being hurt.

We have heard from the business people — the small business people — that they feel this will have an effect on them. You've got to remember that this is on top of the kind of loss of income they suffered as a result of the dramatic increases in the ICBC rates.

When I was recently in Williams Lake there was a report from three of the businessmen there that because of the high rates of ICBC and the loss of ready, disposable income to people, the people who were suffering most were the small businessmen. Now we have the small businessman being hit again because of an increase of 40 per cent in the sales tax.

You can't on the one hand, campaign in an election that you are going to maintain your Mincome rates as they are, and improve on them, and that you're going to do things for the small businessman, and then come out with this kind of taxation which hits at those two groups in a very hard way.

I think it's necessary for all of us in this debate, to be able to suggest in very strong terms to the Minister of Finance that he has to look at alternative measures, particularly for the low-income people, for the people on fixed incomes and for the young people who are starting out. These are the kind of things; if you want to have some kind of progressive measure in relation to taxation, you must think about those people. It is a question of: if we have to tax the people — the so-called "have" people — then let's organize the system in such a way that that can happen. But let's leave alone those three categories of people, because they're going to suffer in a very harsh way as a result of this.

MS. K. SANFORD (Comox): Mr. Speaker, I was confused for a moment; I thought the Minister was about to get up and answer a question — not realizing that he was getting up in order....

MR. SPEAKER: Hon. member, if the minister gets up, he closes the debate.

MS. SANFORD: I was so surprised to see him get up in order to answer a question, that I immediately took my seat to allow him to do so.

AN HON. MEMBER: You suddenly got excited.

MS. SANFORD: I sure did.

[ Page 760 ]

MR. KING: He's never answered a question before.

MS. SANFORD: Mr. Speaker, I would like to make a few remarks, too, about this very regressive tax. You know, it's unfortunate that the government has chosen this way to raise money — even though it is probably the easiest way possible for them to raise it — because it does place a very heavy burden on the poor, whether they are working or not.

The sales tax is a cynical tax; cynical because even when government recognizes that it is not fair, they continue to levy it simply because it is so easy to raise money in that way. It was a very simple way to fund the B.C. Hospital Insurance Scheme almost 30 years ago. Even though BCHIS was eventually to find funds elsewhere, it was such a simple way to continue to raise money that the governments that followed kept it and profited by it.

The minister spoke earlier about the generous exemptions that are available under the legislation as it now stands — food, clothing for kids and some reading materials and so on. But, Mr. Speaker, there are many, many other things which are necessities for the people in the low-income bracket, and for people who are on fixed incomes. The second member for Victoria (Mr. Barber) raised the question of mobile homes, and rightly so. But there are so many other items that are necessities in this day and age.

What about a stove for a family? If they have an old stove that breaks down, what are they to do? They have to get another one. Mr. Speaker, they now have to pay 7 per cent sales tax on it, an increase of 40 per cent.

What about their own clothes? Sure, the kids' clothes are exempt, but they have to have clothes. There is no exemption there.

In rural areas such as my own an automobile is a necessity. People who are in low-income brackets find that they purchase a second-hand automobile, which may not last them that long. They then are forced into a position of having to buy another one, and again the 7 per cent sales tax applies.

I would like the minister to consider removing the sales tax from far more of the essential items if the government insists on raising this particular tax by 40 per cent.

It's disturbing to me also, Mr. Speaker, that the Minister of Finance himself, in a statement in the Victoria Times, I believe it was, on Saturday, March 27, said he considered this a fair tax — a 40 per cent increase in the sales tax. The headline itself says: "Sales Tax Boost Fair One — Wolfe." "Finance minister Evan Wolfe said Friday the reason the provincial government increased the sales tax is because it is a fair tax and brings in more revenue than other taxes."

Mr. Minister, it is not a fair tax. It is not fair to the people in the low-income and fixed-income brackets, and I would like to point out why it is not fair.

There was a study done in Manitoba which is a measure of the regressivity of the sales tax. This was based on 1972 family expenditures, and it points out here that if a family has an annual income of under $4,000, the percentage of income paid to tax is 1.282. If they're in the $4,000 to $5,000 income bracket, the percentage of income paid as tax is 1.361. In the $5,000 to $6,000 income bracket the percentage of income paid is 1.64.

Now if you move down the chart which was prepared for this study you go to the income bracket of between $20,000 and $25,000 annual income and the percentage paid through this kind of tax is 1.098, which means that people that are in the income category of $5,000 to $6,000 per annum are paying 50 per cent more of their income than they are at the higher level of $20,000 to $25,000 per year income.

It is regressive, and I think that this study carried out in Manitoba points that out very clearly, so I'm alarmed when I see the minister quoted in the paper as saying that is a fair tax. It does not apply equally, that's very obvious.

The minister also said in the same article in the Victoria Times of March 27 that the primary consideration is the revenue the tax brings in. That was the primary consideration in introducing a 40 per cent increase in sales tax.

Mr. Chairman, it is not good enough that governments bring in taxes and raise taxes, put on regressive taxes on the people of this province with the primary consideration being that it's an easy way to raise money. They have got to find alternate ways, or they have got to increase the exemptions so that the people in the low-income bracket are not going to be as hard hit as they obviously are,

The sales tax is a tax of expedience, and since it is there, since people are used to paying it, since the collection of it is inexpensive — and I'm sure that that was also a consideration in bringing it in — why should we not keep it? Almost every government of conscience has asked itself this question.

The expedience of this tax has become more evident during inflation, for the sales tax is a government's COLA clause. We've heard a lot about COLA clauses, and a sales tax is the government's COLA clause, because as costs rise, as consumer spending goes up as a result of inflation, the government's treasury is tied into that spiral through the sales tax.

I point this out, Mr. Speaker, because I recognize how tempting it is for any government, and particularly this government, to seek additional revenue through this regressive and cynical tax. I say particularly this government because this government promised itself to produce a surplus next year in order to simply say that it did it. I suspect that they

[ Page 761 ]

will be successful in this political and unnecessary goal.

There will be a surplus at the expense of the working people of British Columbia who will have to bear the heaviest part of that burden in sales tax and, of course, in the personal income tax which has also been applied.

The increase in sales tax, in my view, is going to work against this government too, because by the stroke of the pen the government has taken a considerable slice out of every worker's last pay increase.

For example, after months of bargaining and confrontation, the forest industry unions now have a settlement with their employers, a settlement within the bounds of the federal anti-inflation programme. But now that they have settled, the Government of British Columbia, unilaterally and without any bargaining, has taken away a part of that additional spending power of the workers in that industry.

There may be few complaints now as shoppers pay 2 cents more on the dollar on each purchase, but the government is going to feel the complaints the next time those contracts are up. We're going to hear about this when the negotiations that are going to be taking place around the province in almost every industry come up again. They have abided; they have accepted the federal anti-inflation guidelines, and they've abided by them. Then, unilaterally, money is taken out of their pockets by this government through this particular increase in sales tax.

The increase in the sales tax, small though it may seem, is a major cut in the spending power of all working people, and it will be reflected in the collective bargaining throughout the province for the next five years. Indeed, this sales tax may be the straw that breaks the back of the anti-inflation programme, a programme that arbitrarily places control on wages and salaries, but only seeks voluntary conformance by those who set prices and those who levy taxes.

It's unfortunate — it's tragic, Mr. Speaker — that the workers of the province are being asked to live within those federal government guidelines; that this government has said, yes, we must support those guidelines., and at the same time puts on a 40 per cent increase in sales tax applied to the working people of the province who have no opportunity whatsoever to bargain as far as their own salaries and their own spending power is concerned. This is an inflationary tax, Mr. Speaker. It is regressive; it's cynical and one which I certainly cannot support.

MR. A.B. MACDONALD (Vancouver East): Well, Mr. Speaker, I certainly wouldn't want to get up after the minister because he'd be closing the debate, and he wouldn't be able to explain to the House on second reading, as I'm sure he's about to do in closing the debate, how the information on this tax leaked out of the budget prior to its presentation to this House. Now that's resolution 6, which will be reached by this House. But this is legislation that is all dripping backward; it's effective back to midnight. Not only did it get known before it came out, but it was imposed retroactively — retroactive taxation upon the citizens of the province of British Columbia — before there was any lawful jurisdiction or authority to impose that tax.

Interjection.

MR. MACDONALD: No, the former Premier Bennett didn't do that. We wouldn't do that. We don't have the power at the moment to do any such egregious thing, nor would we. But I point out, Mr. Speaker....

HON. MR. PHILLIPS: A which thing?

MR. MACDONALD: Egregious — outside of the cattle, eh? Ex gregis; out of the cattle, out of the herd. (Laughter.)

When the sales tax was imposed in 1948, in the golden days of the coalition, it was to become effective on the consumers and stores of British Columbia upon assent, and that assent was given later — on April 28, 1948.

When it was amended to raise the sales tax from 3 per cent to 5 per cent, in the year 1954, the Legislature passed legislation saying that this Act comes into force on April 1, 1954 — prospective legislation. But this government, in high, contumelious disregard of the rights of the citizens, imposes retroactive taxation, notifies the businesses and stores that the new tax is imposed when this Legislature has not acted, and imposed that tax, and the Lieutenant-Governor hasn't approved it. Retroactive taxation should not be permitted. It is not permitted in most jurisdictions of the world although I wouldn't rule out some of the places. I was thinking of Zambia and one or two other places where this has occurred.

In all seriousness, Mr. Speaker, what this government has done is require storekeepers to assess a 7 per cent sales tax on their customers from March 26,1976, up to the present time without any lawful authority.

AN HON. MEMBER: Right on.

MR. MACDONALD: It is retroactive taxation, and that's not the way for government to be, so greedy or so arrogant in its imposition of heavy, additional tax burdens on the people of this province. I think that that measure and the steps that have already been taken in high disregard of the Legislature and high

[ Page 762 ]

disregard of the law, in terms of retroactive taxation, should never again be repeated in this province. And you know, people should really be entitled to a refund for what they've paid in the intervening period until this Act is assented to by the Lieutenant-Governor. They won't get it because you will pass the law retroactively. But I say that is bad law and governmental arrogance.

Interjection.

MR. KING: Mr. Speaker, there are a number of points I would like to make about the bill that we are considering at this point, Bill 11. I think the previous speakers, as well as the minister himself, have categorized the bill as a regressive approach to taxation in this province, and I certainly subscribe to that view. It is indeed an approach that certainly cuts heavily on those who can least afford it. I note that the minister in his introduction of the bill pointed out that it would have required an increase in the income tax of some 10 points, I believe he said, to provide through the income tax route the approximate same return to the government coffers as is being yielded by the 2 per cent increase in the sales tax. But I want to say, Mr. Speaker, to the minister that, while I am conscious of the relatively high income tax that is being imposed on people in moderate-wage categories in the province from the federal source and the provincial, it is eminently a more fair way of applying the tax to earn the revenue the government has determined it requires.

It seems to me, though, that certainly the method of taxation was not the only method that the minister might have looked to when he sought to generate $200 million worth of additional revenue for the province. Some previous speakers have indicated that there were other sources available.

The source of coal royalties, the source of increased royalties from natural gas, but the coal area particularly, I would suggest, is one that would have lent itself very well to the government's need at this particular time to generate additional revenue. Because it has been pointed out in debates earlier on that, although there was a significant increase in coal royalties over the last three years, indeed an increase from 10 cents per ton export to $1.50 per ton. despite that very, very significant increase in royalty payments, which is the only return the people of this province receive on a non-renewable resource, the production of coal and the export of coal in this province have accelerated extremely significantly.

I believe that the member for Kootenay (Mr. Haddad) should be interested in this area because it's his whole region of the province that is the main supply area for the export coal. I point out that despite the increase from 10 cents a ton royalty in 1972 to $1.50....

Before the end of the NDP tenure in this province, we had seen an increase to $1.50 a ton. Production increased, the export of coal increased and, indeed, the profits of Kaiser Resources and the other companies in the Crowsnest in the southeast area of the province attained an all-time high in this province — 300 per cent increase in profits. Now surely no one can argue that those poor, struggling little free-enterprise operations were suffering unduly under the $1.50 a ton royalty.

Surely the government was aware, Mr. Speaker, that there are plans for bringing into production large new coal reserves in the southeast corner of British Columbia. The Fording River production of CP Rail and Cominco is just now coming into its own, and long-term contracts have been signed for a dramatic increase in the export tonnage of coal from this province.

So surely here was a very significant area that lent itself to the generation of the kind of revenue this province needed. Surely the people of this province and the government, as the representatives of the people, have a responsibility to not only ensure that this non-renewable resource provides a significant source of funds to provide for the social needs of the province — the social programmes — rather than taking the route which they have of loading all that debt on the backs of the people and, incidentally, on the backs of those people who are least able to afford it.

I suggest that this is something that the government should reconsider. They should have a look at the contracts which have been signed by CP Rail and Cominco. The increased contracts — the phased-in increase in coal export — should have been signed by Fording River, Kaiser Resources and so on with an escalating clause for increased prices. The companies are not going to suffer — not at all. Their profit increase over the last year amply demonstrates that point. So I find it extremely curious, Mr. Speaker, that the government of the day chose the route of applying this regressive sales tax increase to the people of the province who are least able to afford it.

Having said that, and having pointed out that in my view there were other areas that should have been tapped as the most appropriate revenue-generating sources in the province, I would point out that income tax certainly would have been preferable.

Again, if we chose to increase the sales tax, it has been pointed out already what other provinces have done with respect to the application of sales tax — how they have provided for a phased-in application so that those on lower income might recover, through application to income tax, a share of the sales tax which they pay out.

I have here a book I'd just like to quote from very briefly, Mr. Speaker. It's The Economics of Public

[ Page 763 ]

Finance. There are a number of writers in it who provide essays. One is an author by the name of Dick Netzer. He is talking about state and local finance and inter-government fiscal relations in the U.S.A. He makes this point, Mr. Speaker.

"However, the implication is that consumer sales taxes can be regressive among income groups, which is, in fact, often the case. But it need not be so. The regressivity of the conventional retail sales tax can be moderated in one of two ways. In six of the 44 states with sales taxes, per capita refundable credits against individual income taxes are allowed for sales taxes paid, in effect making the first few hundred dollars of taxable consumption expenditure exempt from the sales tax. These credits can convert the sales tax to a proportional or even mildly progressive tax."

I would suggest that had the government felt obliged to go the way of increased sales tax, they should have looked at a way of moderating and militating against the heavy impact on the low-income groups.

Interjections.

MR. SPEAKER: Order, please! The Hon. Leader of the Opposition has the floor.

MR. KING: I hope that those vocal ministers over there will take their place in this debate if they have so much to say about it. I would like to hear their position — how they defend loading this additional burden on those who are least able to afford it in a time of high inflation. They are feeding the fires of inflation and placing it on the backs of those least able to afford it. And here they are chattering away with complete insensitivity, Mr. Speaker. No wonder we have a sad state in this province for the people who are poor, those who are on fixed income, low-income workers without trade union representation — and 60 per cent of the working people in this province are in that category: No wonder days are bleak for them with an attitude like we have here tonight.

I would point out the exemptions that are talked about in this paragraph are an equitable approach, and one that should have been considered by the government if they chose to go the route of a sales tax increase, because as it stands, the tax cuts equally whether one is earning $1 million a year or $5,000. One's basic needs are the same — the consumable commodities which sustain all people are required in equal volume — and it therefore bears no relationship or no sensitivity to those who are least able to afford the tax, Mr. Speaker.

Mr. King moves adjournment of the debate.

Motion approved.

MR. SPEAKER: Hon. members, the House will be at ease for about five minutes. The Administrator will be here to give assent to a bill that was passed earlier this evening.

The House took recess at 10:46 p.m.

The House resumed at 10: 58 p.m.

MR. SPEAKER: His Honour the Administrator is about to enter the chamber. Would all members rise?

His Honour the Administrator, entered the chamber and took his place in the chair.

CLERK:

British Columbia Deficit Repayment Act, 1975-1976.

In Her Majesty's name, His Honour the Administrator doth assent to this bill.

His Honour the Administrator retired from the chamber.

MR. KING: Mr. Speaker, I would ask the House leader what the order of business is for tomorrow. I think it's her turn,

HON. MRS. McCARTHY: I'm pleased to inform the opposition leader that we will be going into the budget debate in the morning and other government business.

Hon. Mrs. McCarthy moves adjournment of the House.

Motion approved.

The House adjourned at 11:02 p.m.