[ Page 873 ]

CONTENTS

Routine proceedings

Budget debate (continued)

Hon. Mr. McGeer — 873

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

On the amendment to delay second reading.

Ms. Sanford — 876

Mr. Stupich — 879

Mr. King — 881

Division on amendment — 883

Mr. Nicolson — 883

Mrs. Wallace — 888

Mr. Cocke — 889

Mr. Skelly — 892

Mr. D'Arcy — 896

APRIL 12, 1976

The House met at 8 p.m.

Orders of the day.

ON THE BUDGET
(continued debate)

HON. P.L. McGEER (Minister of Education): Mr. Speaker, I haven't had an opportunity so far this session to speak in a formal debate, and I must say it looks from the turnout as if this steamroller opposition over there is beginning to wear some of the members down a little bit, but I want to assure you that I won't detain the House long.

I would like to join with all the other members and compliment you on your elevation to the post of Speaker. Members always do that, Mr. Speaker. They like to keep in good with the Chair — just so you won't be fooled by all these compliments.

Interjections.

HON. MR. McGEER: Yes, that's right, Mr. Speaker. You'll have no difficulty with me. I want to give you categorical reassurance on that score, and members who've been in the House for many years know that, with one single regrettable exception, that's been the case.

I want to say that I can't praise too highly the Minister of Finance (Hon. Mr. Wolfe) and the budget that he's brought down. Mr. Speaker, it makes it completely unnecessary for me to continue with the tradition that I started for some years in this House, which is to bring down Liberal budgets, because this has all those beat. It's returning to fiscal sanity for the first time for years and years in this province. That's why I support without reservation every version, the family version, the original version, because it all tells the same story and the facts and figures are there, and that's what counts, Mr. Speaker.

I won't delay the House at all by giving a report on the affairs of our insurance corporation. I did speak briefly about the somewhat uneven history of that venture into enterprise on the part of the NDP, but I want to assure all members that the corporation is in excellent financial shape. Mr. Minister of Finance and I, we were very pleased to be able to loan some money back to the government the other day.

We have, Mr. Speaker, a superb board of directors at ICBC now, and I can assure you that the operations of that company are going to be a source of continuing satisfaction to all the people of the province.

It has, Mr. Speaker, delayed somewhat the amount of attention I would like to have given to the Department of Education, but I want to say....

MR. R.E. SKELLY (Alberni): Thank heavens!

HON. MR. McGEER: Thank heavens, says the member for Alberni (Mr. Skelly) Well, you may not....

Interjection.

HON. MR. McGEER: The teachers are relieved to hear that.

Well, I want to give some reassurance to the teachers this evening, and I'll be doing that, Mr. Member, but I want to say that before the year is past we intend to inspect our educational system from kindergarten to its most advanced stages.

But I must honestly confess, hon. members, that just as with ICBC, the major initial problems that we faced in education were similar in nature: runaway costs. The budget estimates for the Department of Education, as hon. members will realize, went from $553 million in 1975 to $754 million in 1976, an increase of 36 per cent, Mr. Speaker, in a single year.

Now obviously such increases cannot be sustained in the face of declining revenues from the resource industries, the general constraints that we face nationally in Canada and in British Columbia, and in the face of a school population which is not growing in this province. This is why we have had to limit the increases and the total amount of money available to education to something just beyond the guidelines, plus the growth in the system.

Yet, Mr. Speaker, these restraints, if you can call increases of that kind restraints, have brought protests. Some of them have been extreme.

Interjection.

HON. MR. McGEER: Yes, Mr. Speaker, there have been increases in taxes, sales taxes, which I am pleased the hon. member voted for, increases in income tax, simply because the costs have outstripped the ability of the system to support it at the same tax levels. It's that simple. The local taxpayer, quite honestly, Mr. Member, has to participate in that, too. We regret it. We regret all increases in taxes, but these are the facts of life, and surely the member for North Vancouver-Capilano (Mr. Gibson) has been around long enough to know some of the facts of life.

I want to make it clear this evening to all British Columbia teachers that contrary to some of the statements made by officers of their own association — I am speaking now to the teachers of British Columbia — their jobs are not now in jeopardy, nor will they be in the future.

Our Department of Education has done a fair study, Mr. Speaker, and it indicates that every teacher in British Columbia now teaching will have a place in

[ Page 874 ]

the classroom next September. Moreover, because of the normal attrition in the teacher force, which amounts to about 10 per cent a year — 2,700 teachers — all those graduating from university departments of education and wishing teaching assignments will also have an opportunity. The only qualification that we have to add, particularly to those who have graduated recently, is that they must be prepared to take appointments in those locations in the province where growth has occurred and not expect that there will be additional assignments in areas where the school population is declining.

Mr. Speaker, for several years there has been aggressive recruiting of teachers from outside the province of British Columbia. This is because the numbers of teachers in this province over the past three years have increased by 21 per cent; from 22,000 to 27,400, and the number of teaching administrators has increased by 27 per cent, from 1,785 to 2,264, while the school population in this time has increased only 2 per cent. As a consequence we have been recruiting from outside British Columbia new teachers in the thousands. It's been easy for us to do because it's common knowledge that teachers' salaries in British Columbia are among the highest in the country. We should be proud of that and we are proud of it.

AN HON. MEMBER: In the world.

HON. MR. McGEER: Perhaps the world. But certainly the teachers in British Columbia are well supported compared with their fellows in others parts of Canada.

It would continue to be easy for us under those circumstances to recruit from other areas and deprive them in order to supply ourselves, but we believe that we should strive for reasonable self-sufficiency in the matter of teachers from within our own province. Therefore this year we are going to take steps to ensure that our graduates will get first choice in new teaching assignments. But I want to say once again, in light of statements made by the B.C. Teachers Federation to our teachers in British Columbia, that there will continue to be jobs for them, and that despite our interest in having the numbers of teachers levelled off in British Columbia, taking the most pessimistic view from the teachers' point of view, we will still have to be recruiting substantial numbers from outside our own province.

MR. GIBSON: Is that a government guarantee?

HON. MR. McGEER: With this qualification. We traditionally have, Mr. Member, an oversupply of teachers in the metropolitan areas and an undersupply in the smaller communities in British Columbia, some of them experiencing growth. So once again we will have to urge the teachers to serve in the interior and the north of our province.

Last year, despite the admonitions of the former Minister of Education (Mrs. Dailly) — and I am sorry that she isn't here this evening — that there should be a pause in the numbers of new teachers being recruited in the province, there were still over 4,000 new teachers hired, with a net increase in the system of over 2,000 new teachers.

I'm sure that with a reasonable approach on the part of our school boards throughout the province, we can make substantial savings in our school costs without limiting the opportunities for our teachers and without limiting in any way the quality of the education we offer. It's a reasonable, in our view, position to take. We're not by any means undertaking the sorts of things that we've been accused of by some special-interest groups fully related to the public by the media.

I do want to compliment the B.C. Teachers Federation on the survey they conducted throughout British Columbia on the attitude of parents as to what's going on in the schoolroom today, particularly on the matter of examinations and evaluation of the school programmes. The indications of that study were that the parents of British Columbia favoured examinations and wanted a more careful evaluation of classroom progress.

Accordingly, Mr. Speaker, the Department of Education is emphasizing the development of the core curriculum and, in addition to that, is expanding the assessment programme to determine whether that core curriculum is in fact being communicated to the students.

This is not something that was started by the present government; it was started under the former government, the former Minister of Education. It's an excellent programme and I compliment her for it. I merely say that we are expanding it and intensifying our efforts. We have no intention of infringing on classroom autonomy or using the data for any other purpose than to determine, in a general way, whether the core curriculum we set out for every student and for every district in British Columbia is in fact being mastered by our students.

But at the same time we are encouraging standard achievement testing to be taken on an optional basis by school districts. We want to see more of it. We're not saying that that is part of our standard programme, but we think it's what the public wants, we think it brings intellectual discipline into the schoolroom, and that we'll receive positive results for undertaking such a programme.

Interjection.

HON. MR. McGEER: Well, Mr. Member, the question is asked about value schools. The kinds of

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things I've suggested today, the core curriculum, the assessment of the core curriculum, the encouragement of standard-achievement testing, the communication of these results will, Mr. Member, introduce values into every school in British Columbia.

MR. D.G. COCKE (New Westminster): What about the value schools per se?

HON. MR. McGEER: Well, you can speak all you like about value schools, but what we're concentrating on, I think, Mr. Member, is to try and get back to some of the traditional values, if you like, which have not been emphasized in recent years, but which we believe will bring a particular new value to all the schools in the province.

Just a word about independent schools, because this is something which our party campaigned on in the last election, and which as soon, Mr. Member, as it is financially possible to do so, we will commence to support. As you realize, there is not money in the budget to do that job this year. We hope there will be next year. In the meantime we are trying to develop, in consultation with the independent schools, appropriate methods of accountability.

I want to thank the member for Esquimalt (Mr. Kahl) and some of the other members of our party for helping out the Department of Education — taking on particular assignments. The member for Esquimalt has given some very valuable advice on English instruction in the classroom. I look forward to more of that kind of help from the individual MLAs in the future.

We're looking, Mr. Speaker, at the community colleges in our province, which hon. members know at the present time are the most rapidly growing group of educational institutions in our province. We want to study the interface of the colleges with the universities in our province.

We're working on an Act for the colleges, which will not be ready in time for this session which is moving along at such a breakneck pace but we'll try and have it ready for the next time we gather together.

MR. WALLACE: You wouldn't make a living as a comedian, McGeer.

AN HON. MEMBER: Order!

HON. MR. McGEER: Well, the hon. member is not satisfied with the speed of the session, but he can contribute mightily to that if he wishes, Mr. Speaker.

HON. W. R. BENNETT (Premier): He reads copies of his old speeches. (Laughter.)

HON. MR. McGEER: We are, Mr. Speaker, hopefully reaching a solution on a very difficult problem that faces this government as it faced the former government, namely in Notre Dame University. I think that the former Minister of Education (Mrs. Dailly) has shown a great deal of restraint and responsibility, realizing that this difficult situation existed and not climbing in with statements which were really not substantiated by fact.

I did lay before the members of this House a report prepared on the Notre Dame University and its problems. Hon. members have seen the report and I think when they had a chance to read it, recognized the very difficult dilemma that faced the government, the dilemma being, Mr. Speaker, that here was an institution that had been supported by government but without the accountability that normally follows the support of public institutions. NDU rapidly became completely dependent upon government support, and yet the offerings that it had for its students were such that the population declined so that 44 per cent of all the classes at Notre Dame University had five students or less.

I don't intend, Mr. Speaker, to review that report. I only tell you that it is our hope that Notre Dame University can be brought into line, both academically and financially, with the public institutions of our province. If this can be done, much will depend on Notre Dame itself and its willingness to live by public standards. If it can voluntarily manage to do this, then there will be no problem as far as this government is concerned in making equivalent funds available through the universities council to that educational enterprise.

We feel no obligation, Mr. Speaker, to fund a private institution at a time when there is financial restraint on all our public institutions at a level which is far richer than our public institutions are accustomed to, and in fact will be able to become accustomed to for many years in the future.

Interjection.

HON. MR. McGEER: Well, Mr. Member, the difficulty, as you realize, is that some of the courses at Notre Dame were costing out higher than $20,000 per student-year, and this is just a little beyond what the public purse should be expected to support.

Interjection.

HON. MR. McGEER: Mr. Member, I don't want to go through every single detail in the report, but I don't think that any objective person scrutinizing the costs of that operation would come forward and say that it was an economical venture in the same way that our public universities are.

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1 want to say, Mr. Speaker, that all across North America there is a phenomenon going on which is comparable to that experienced by Notre Dame University. That is that liberal arts colleges which do not have a strong component in their teaching programme of introducing the so-called saleable skills are finding the demand for what they have to offer is failing off sharply. Liberal arts colleges are closing. We have a number of universities in Ontario that, quite frankly, are in trouble because of this particular difficulty. The starting salaries for today's college graduates do not show a significant spread, if a spread exists at all, between what would be available to a young person with a practical trade to offer.

I would like to give one particular example from right here in British Columbia. We have a shortage of power engineers in the province. If we expand the educational opportunities in this area, it's possible to take a youngster with grade 12 education, give him 10 months of training at a technical school, and have him graduate to a job paying between $16,000 and $18,000 a year.

Needless to say, programmes of that kind have very long waiting lists to get into them and, as some of the members of my department have suggested, where there's a heavy demand like this, of course, the unions would prefer that there be one man available for every two jobs, whereas the employers in many cases would like to have two men available for every job that's going. We think what we should be doing in British Columbia is trying to match our educational opportunities as closely as possible with the demands of the job market. Accordingly, Mr. Speaker, we will have no hesitation in slashing through any amount of red tape in order to expand all those educational enterprises that lead to practical skills. I

Something like 10,000 work permits were issued in British Columbia last year for people to come into the province to work because there were not existing skills in British Columbia at a time when we had 100,000 people unemployed because they lacked skills. Now the gap in there is the educational enterprise, and clearly it's not only a good social investment; it's a good economic investment to use the educational enterprise to close that gap. We're going to have some action in these areas in the months ahead, just like we're going to have some action in every aspect of the educational enterprise in British Columbia.

This is a difficult year financially for all our government programmes, but because of the budget brought down by the Minister of Finance (Hon. Mr. Wolfe), because of the sound fiscal policies being followed by Social Credit, the future in education and all other activities is going to get better and better. That's why I intend to support this budget.

Hon. Mr. McClelland moves adjournment of the debate.

Motion approved.

MR. L. NICOLSON (Nelson-Creston): Point of order, Mr. Speaker. Could you install a rearview mirror so you could see this side of the House?

Interjection.

AN HON. MEMBER: There's nobody there.

MR. SPEAKER: Hon. member, if you'll care to refer to the list of people who have spoken, and those who have still to take their place in this debate, you'll find there are four on the opposition side of the House still to take their place in this debate, and 10 on the government side, which means if we're going to treat those remaining with some equality, so that the government and the opposition end this debate on the same day, we're going to have to have at least two speakers from the government side for each one from the opposition.

Interjections.

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

SOCIAL SERVICES TAX
AMENDMENT ACT, 1976
(continued)

On the amendment.

MS. K. SANFORD (Comox): Mr. Speaker, I've been sitting on the edge of my seat all day...

SOME HON. MEMBERS: Oh, oh!

MS. SANFORD: ...expecting that the debate on Bill 11 would continue.

AN HON. MEMBER: We noticed.

MS. SANFORD: Oh, you did notice. Well, after all, what else could I expect? We were kept here all Friday afternoon, called back first thing Monday morning 10 o'clock, for a special sitting. I was sure that the first thing that was on the agenda today was continued discussion on the amendment on Bill 11.

Interjections.

AN HON. MEMBER: Get in your own seat.

MR. SPEAKER: Order, please.

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MS. SANFORD: He should be in his own seat, if he's going to yell across the floor.

MR. SPEAKER: Order, please. The hon. member for Comox has the floor.

Interjection.

MR. SPEAKER: On the amendment to Bill 11.

Interjection.

MS. SANFORD: This amendment, Mr. Speaker, calls for the hoist of Bill 11 for a period of six months. We heard from the Minister of Education (Hon. Mr. McGeer) the other day when he was speaking on this amendment. He felt that the amendment that had been offered by the leader of the Liberal Party (Mr. Gibson) was frivolous and that it is irresponsible of the opposition to offer an amendment suggesting to the government that they hoist this bill for a period of six months.

I pointed out, Mr. Speaker, the other day that I feel that it is irresponsible of the government to bring in a bill which increases the sales tax by 2 cents because it is such an unfair, regressive tax. It is irresponsible of them.

The Minister of Finance himself indicated in the press that he felt this was a fair tax. I hope that by the time everyone has finished speaking on the amendment and then on second reading, he will realize that it is not a fair tax. I am sure he will realize it by then, Mr. Speaker.

Many of the people in this province in the low-income and the fixed-income bracket are going to be seriously hurt by this particular addition to the sales tax. In fact, to a lot of them, Mr. Speaker, it is going to be a crippling blow financially. I am disturbed by it. It is a brutal way to treat people in this province.

One of the things that I pointed out the other day, too, Mr. Speaker — I just got started late Friday afternoon on speaking on this amendment — was that the Minister of Environment (Hon. Mr. Nielsen), during his speech on the budget, made a reference in his speech which I think bears directly on the topic under discussion tonight. I would like to quote again what that minister said: "I would like to point out to any member of this House, but most particularly to those in opposition, that no member of this assembly has a monopoly on the desire to help those in genuine need." He also said that "no one member of this House can claim to have greater compassion for those in our society who are less fortunate than others." Mr. Speaker, I don't think the Minister of Environment talks to the Minister of Finance, because the actions of the Minister of Finance in bringing in this 2-cent increase in sales tax indicate very clearly that what the Minister of Environment is saying doesn't hold water. What does he mean by "help those in genuine need"? What does he mean by "to have compassion for those in our society who are less fortunate than others"? If they are going to bring in a 40 per cent increase in sales tax, they are not showing the concern that the Minister of Environment indicated in his speech during the budget.

The other aspect of this that worries me is another statement by the Minister of Finance, who indicated that one of the major considerations for bringing in this tax was that the money was easy to collect. Where is the compassion for people that they are talking about over there time after time in their speeches? Their actions belie their words, Mr. Speaker.

I would like to suggest some alternatives at this time, and I hope the Minister of Finance is listening to this. It has already been suggested by several members — the member for Alberni (Mr. Skelly) for one — that what the government could do at this time instead of applying that 2 per cent tax is to recall the cheque from ICBC. There is $181 million there that ICBC doesn't need at this time. They're not going to cash that cheque until October anyway, so let's give it back to the government. The government then can use that money instead of increasing the sales tax by 2 cents, which supposedly, is going to bring in around $200 million. Then in October they can see what the state of finances is like. That's why we are over here are asking that this bill be hoisted for a period of six months.

Another thing they could consider, Mr. Speaker, is to arrange for a greater return from the sale of natural gas. When you see what the last government was able to do in order to get additional funds into the treasury on behalf of the people of the province through that natural resource, I am sure the Minister of Finance could work out a system whereby he could collect even more money for treasury. Why not? Natural gas is a valuable commodity. If we're going to ship it down to the United States, let's get an even greater return for that product which belongs to all the people of the province.

What about coal? You notice the difference in royalties that we were able to obtain — from 10 or 25 cents a ton right up to $1.50 a ton. Why not consider that avenue, Mr. Minister of Finance? I am sure that you could bring in more money to the treasury and then do away with this bill entirely.

I wonder if the Minister of Finance has considered that there's a presidential election this year. Now presidential elections in the United States usually have a major influence on the U.S. economy and then, magically, an influence on our economy. Maybe we'll see a great upsurge in construction in the U.S.; then, as a result, we will sell far more of our timber than they are now anticipating. Then we'll have a

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greater return than anticipated at this time through stumpage rates. Maybe the economy all over North America will take an upswing this year. There'll be more jobs, more income tax into the coffers.

Maybe, Mr. Minister of Finance, the price of minerals will go up. It's indicated today in a report to the MLAs, issued by the Mining Association of British Columbia, that the price of copper has gone up 10 cents a pound very recently. Perhaps the price of minerals will go up again and we'll be able to bring money in through the royalties which, at least at this time, still exist in this province.

The Minister of Labour (Hon. Mr. Williams) made reference the other day to mining. He tried to tell us that day that the mining companies were in deep trouble because of the royalty legislation — Bill 31, the Mineral Royalties Act — that the NDP had introduced. We don't buy that argument on this side of the House, Mr. Speaker.

I would like to make reference to a report to the shareholders, put out by Bethlehem Copper, October, November and December, 1975. Just look at what has happened as far as some of these mining companies are concerned. The facts are, Mr. Speaker, that the world price of copper dropped from 91 cents a pound in 1974 down to a low of 57 cents a pound in 1975. Therefore the concentrate revenue, and this is Bethlehem's report, fell from $40 million in 1974 down to $25 million in 1975. Their costs during that period of time remained fairly constant — $25 million in 1974 and $23 million in 1975.

Therefore, Mr. Speaker, through you to the Minister of Finance, the pre-tax earnings from $15 million in 1974 to $2 million in 1975 are more than wholly accounted for by the decline in the world price. That's where the companies got into trouble. B.C.'s royalties in 1974 were $1 million; a negligible factor in relation to the decline in earnings in Bethlehem's report. They're a negligible factor in the overall decline in revenue, and that's very clearly shown right here in their own report.

If the royalties were removed entirely, the rise in net earnings to $3.3 million still leaves Bethlehem in a poor position in 1975 re the 1974 comparative figure of $10.7 million.

Now I got rather tired of hearing the Minister of Labour, during his speech on the amendment to this bill, talk about mineral royalties and the adverse effect these have had on the mining industry. Let me tell you...look at some of these reports yourself.

MR. C. BARBER (Victoria): Even the mining industry has said it.

MS. SANFORD: Even the mining industry tells you that it has had a bad year because of the price of ore. Royalties should simply be regarded as a cost of doing business and should not even be listed in the taxation sector.

Most businesses — for those in the back bench who like to make a lot of noise whenever the words "mineral royalties" are mentioned — have to pay for the raw material they use. But you people seem to think the ore should be given away and that the mining companies should not be required to pay for the material they use — namely, the ore that belongs to all the people of this province.

There are signs already that there is an upturn in the economy. We just saw here the price of copper going up 10 cents a pound. That information was made available to us today by the mining company.

HON. G.B. GARDOM (Attorney-General): Do you think it's a good thing that copper went up?

MS. SANFORD: That there is an upturn in the economy?

HON. MR. GARDOM: No, that the price of copper went up.

MS. SANFORD: I think it's a good thing, yes.

I'm requesting that the government consider waiting another six months to see what transpires during that period of time.

Nineteen seventy-five was a tough year for the mining companies — and we've heard that often enough — but it was also a tough year for the forest industry. Some changes were made in MacMillan Bloedel's management just recently, but I've not heard that company, because of their financial woes last year, come to the government and ask them to give them the trees just for the asking. They're not asking for the trees free of charge, and yet the concepts of stumpage and royalties are very similar. MacMillan Bloedel have done very well in this province over the years.

MR. SPEAKER: Hon. Member, may I interrupt you just briefly to suggest that the amendment that we're now debating is to hoist a taxation bill, which would increase sales tax, for six months. Would you please relate your remarks to the reasons for hoisting the bill for six months?

MS. SANFORD: I think, Mr. Speaker, that there's a very direct relationship between what's going to happen in the economy this year and the reasons that we would like to advance to the government for hoisting this bill for a period of six months. I might also add, Mr. Speaker, that I would hope that you would give me the same leeway that was offered to the Minister of Labour (Hon. Mr. Williams), who spent some time talking about mining and mineral royalties the other day when he was speaking on the amendment to this bill.

[ Page 879 ]

HON. D.M. PHILLIPS (Minister of Agriculture): On the budget.

MS. SANFORD: If you were in your seat and read the Blues, then you would know.

MR. SPEAKER: The hon. member for Comox has the floor, as long as you relate your remarks to the amendment that's before us.

MS. SANFORD: What I'm saying, Mr. Speaker, is that the attempt by the Minister of Labour the other day, when discussing this amendment, to blame the mineral royalties for the problems within the mining industry does not hold water. His arguments leak like a sieve. I'm trying to compare that with what is happening in the forest industry, which also experienced a difficult year, and I'm also trying to point out that stumpage rates and mineral royalties are very similar concepts. I think that this government would be well advised at this time, in view of the fact that the price of copper is going up, to keep the mineral royalty legislation and to do away with this 2 cents that they are suggesting should be added onto the sales tax.

Mr. Speaker, I would also like to remind the government, in case they have forgotten, of some of the expenses that they won't be facing this year that they would normally otherwise face. For instance, there were over $10 million paid out in February and March to the beef growers under the Farm Income Assurance Act. Now that money would normally not have been due until sometime in this fiscal year, so there are $10 million that they will not be paying.

There are also $7.5 million that have gone to the universities. This was paid out by the Minister of Education (Hon. Mr. McGeer) following a special warrant that was issued. That was paid out in the last fiscal year, Mr. Speaker, and it was money that was not needed then. It may have been needed this year, but they won't have to pay that out at this time.

They also will no longer have to make the quarterly payments to the municipalities that were recently amalgamated, because those were suddenly paid out, much to the surprise of the municipalities, before the end of the fiscal year.

Mr. Speaker, I suggest that the budget will probably show a surplus, and I suggest also that ICBC will likely show a surplus. Byron Straight, the actuary who was hired by the government, has stated publicly that the premium rates charged are too high.

With the presidential election coming up this year, the economy will probably improve. I suggest to the government that they hoist this bill for six months and in the meantime, if the government finds things don't improve, then they will have had time to find fairer ways of raising the money that they need.

I would like to reiterate to the Minister of Finance before I sit down, Mr. Speaker, that contrary to his press statement of Saturday, March 27, the sales tax is not a fair tax. Don't increase it!

MR. D.D. STUPICH (Nanaimo): Mr. Speaker, I believe that perhaps the main argument made in support of the amendment, and it is a good amendment, has been that the government should wait for the next six months to see what happens and whether it does prove to be necessary to increase provincial revenues by this amount and, possibly, even in this way.

But I think perhaps to some extent the stronger argument that has been advanced is that the government might well use this six months to examine what would be the effect upon the economy of raising this amount of money in this manner to examine whether, indeed, this amount of money would actually be raised in this manner, and to look at the whole question of taxation to see whether or not, if this amount of money is needed, this is the best way of doing it or whether we should look for some other alternative.

I have a book — it's available in the library — the Economics of Public Finance, a collection of essays on public finance. It is American, but I think some of the ideas included in the essays in this book are worth passing on.

AN HON. MEMBER: If it took you six months to go to the library, you should have gone while you were government.

MR. STUPICH: Well, Mr. Speaker, if I had been in the habit, as Minister of Agriculture, of paying as little attention to my department as does the present Minister of Agriculture (Hon. Mr. Phillips), I would have had lots of time to go to the library.

However, to get back to the quotations from the first essay in this book by Alan S. Blinder and Robert M. Solo, talking about the concern....

AN HON. MEMBER: What kind of socialists are they?

MR. STUPICH: Well, Mr. Speaker, they aren't socialists; that's really the point of this. They're anything but; they are quite conservative financiers. Yet I think that even....

Interjection.

MR. STUPICH: Well, no, not him.

But I think some of the cabinet members on the opposite side of the House might find reading such as this to be interesting, Mr. Speaker — might even find it not only interesting, but also educational.

I would like to quote briefly from this book. The

[ Page 880 ]

first quotation is from the work of the committee for economic development, suggesting that simply increasing the rate of a tax does not necessarily mean that a proportional amount of revenue will come in. The committee for economic development recognizes that low levels of output were bound to cause budgetary deficits, and that it would be folly to try to balance a budget by raising tax rates, as was done, Mr. Speaker, in Hoover's time, when apparently they had the idea that all they had to do to get twice as much money was to double the tax rate, regardless of what effect it had on the economy.

HON. MR. PHILLIPS: You should know!

MR. STUPICH: It recommended that tax rates be set instead so as to yield a balanced budget or perhaps a small surplus at full employment.

Mr. Speaker, the member opposite keeps tempting me to move away from the text I'm quoting from. He says that we should know. Mr. Speaker, we did look for alternative methods of finding revenue, and it's one of the reasons we think there should be a six-month period during which this government might look at alternative methods.

I would remind that member, through you, Mr. Speaker, that whereas the previous administration was getting something like $5 million a year from natural gas production in this province, we increased that in the short period of three years up to something in excess of $200 million a year.

I would remind the member, through you, Mr. Speaker, that out of coal royalties, where they had been accustomed to raising $0.5 million a year, we increased that up to $15 million a year — again, in the short space of three years — and coal production is still increasing. So we did look for alternatives, Mr. Speaker.

The reason for supporting this amendment is that we do ask the government to leave this on the table for six months to give them time to consider the possible harmful effects of this kind of legislation on the economy, and give them time to consider alternative ways of raising this kind of money.

Another quotation from this book — and this is something that we are concerned about too, because we are supposed to be in an inflation-fighting programme: "The clearest example of an inflationary tax hike is probably an increase in excise taxes." Now they do say excise taxes here, but certainly it's even more appropriate with respect to the sales tax. "Any such increase represents a decline in consumers' real income, but this is only one, if an important, impact."

A similar argument can be made with respect to corporate income tax — I don't want to get too far into that one — but again they're pointing out their concern about possibly killing the goose that lays the golden egg, and the fact that this is passed on directly:

"This tax can be viewed as a selective excise tax on the use of capital, but not labour, as a factor of production. Unless there is no forward shifting at all, part of this tax" — but if we were talking about sales tax rather than excise tax, we would have to say all of it — "will be paid by the consumers of the output of the corporate sector when they are confronted by higher prices. When this notion is combined with the uncertain effect of the corporate tax on investment spending, it begins to look like a very strange anti-inflation device indeed."

Of course, increasing the sales tax, as I pointed out, is even more in that category.

Mr. Speaker, many other Canadian jurisdictions have embarked on studies of taxes. B.C. has not done that, although we are currently doing a study of property tax. But it would seem to me that now, with the government feeling there is a need for a lot more money, is perhaps a time when we should take advantage of this six-month hoist proposed in this amendment to do something beyond a study of property taxation.

There have been royal commissions in other provinces. Manitoba had a law commission on local government organization and finance. Saskatchewan had a royal commission on taxation. The royal commission on taxation — the Carter report, Mr. Speaker; I'm sure everyone will remember it by that name. Ontario had a committee on taxation. All of these jurisdictions were concerned about raising government money, true, but concerned also about the effect of any tax changes, and concerned about trying to raise the money equitably. The Ontario committee on taxation, for example, in a quotation states:

"The basic rule of equity in taxation is the principle of treatment of equals, and since all taxes are ultimately paid by individuals the principle of equal treatment of equals is always a relevant consideration and its application should look beyond the entity on which any tax is first imposed to the individuals on whom the burden of the tax finally rests."

That is our concern here, Mr. Speaker. We should be looking beyond the mere fact of trying to raise another $200 million and looking at the effect on the people who will be paying this burden of tax and looking to see whether there isn't some way of raising this amount of money, if indeed the six-month period suggested in this amendment — is required or that amount of money is required.

The Carter report, you will remember, Mr. Speaker, came out squarely in favour of recommending that the principle — the only principle — that would be applied would be that of ability to

[ Page 881 ]

pay. Earlier today we did discuss other legislation, and it was related to ability to pay. For that reason, although we felt it wasn't going far enough in that direction, we did support it. As the hon. member for New Westminster (Mr. Cocke) has just said, the Carter commission report could best be summed up in the phrase: "a buck is a buck." Certainly we as a party supported that approach at that time, and would like to see even the provincial government, if not moving in that direction — I was going to say more quickly than it has shown any evidence of so doing, but perhaps I had better not say that part because I see very little evidence that it is — but doing some kind of a study to see whether or not we shouldn't be moving in that direction, even provincially.

I recognize we don't have the same opportunities as does the federal government to lead the way, but I think the provincial government might well be doing some kind of a study, perhaps even a royal commission. We are concerned about problems of tax sharing between the provincial government and municipalities. We are concerned about property taxation. As I've said before, there is a commission studying that now, but perhaps we need something more than all that. Perhaps this six-month period, this hoist recommended in this amendment, would give B.C. the opportunity to do a real study on what are the taxation principles which should be employed in the province of British Columbia, how best we might apply taxation principles to the people of our province so that the development of the province will continue, so that the people will be protected, and so that the government's right to raise money will also be....

AN HON. MEMBER: Why didn't you do that three years ago?

MR. STUPICH: Well, Mr. Speaker, the member opposite again is encouraging me to drag on my remarks longer than I would otherwise. He said: "Why didn't we do that three years ago?" Mr. Speaker, that's a good question. Why didn't we do that three years ago? I think, looking back now, we should have done it three years ago. That's why I wouldn't want them to fall into the same trap as we did. We did so many things. For three years we were extremely busy as a government; we accomplished a lot. We were trying to make up for 20 years of neglect on the part of the Social Credit administration. We tried very hard to do 20 years work in three years, and we went a long way toward accomplishing it.

One of the things that we didn't get done was the suggested study, the study that I am now suggesting, on taxation in the province of British Columbia. Now that the question has been asked, Mr. Speaker, by the hon. Attorney-General (Hon. Mr. Gardom) why didn't we do it three years ago, I think this is the time, Mr. Speaker, for me to ask him, through you, why he does not propose to the government of which he is a member that it be done now, so that three years from now somebody will not be saying to him: "Well, why didn't you propose three years ago that this kind of task be undertaken?"

Certainly three years ago the need for it wasn't as evident as it is today; he'll grant me that. But there is evident need now. Government expenditures are increasing and government revenue must also increase, Mr. Speaker, if we are to continue to provide the kind of government services for which — we built up an expectation, and every programme for which there is popular support and a popular need. We did not bring in, Mr. Speaker, any programmes for which there was not a genuine need in this province, and there are other programmes which should be brought in as well. All the more reason, Mr. Speaker, to develop some kind of a study, to come up with some kind of a programme, so that we will have a rational way of raising the kind of government finance that is needed to support the government programmes that are needed in the province of British Columbia.

I urge, Mr. Speaker, that the government do give some positive consideration to supporting this amendment to give them the time to do the kind of job that, as the hon. Attorney-General said to me: "Why didn't we do it three years ago?" The opportunity is there now, Mr. Speaker, for them to do it now, so that somebody will not be saying to him three years from now: "Why didn't you do it three years ago?" If you don't do it now, Mr. Attorney-General, through you, Mr. Speaker, that question will be asked of you three years from now: "Why did you not propose that this kind of a study be undertaken three years ago?"

Interjection.

MR. STUPICH: Why aren't you proposing it now? It was verified. The Carter report did.

Interjections.

MR. W.S. KING (Leader of the Opposition): Mr. Speaker, I certainly want to indicate my support for the amendment. I'm glad to see that I am being applauded by the government benches for the first time this session. I am sure the people of British Columbia will applaud me and applaud the government if they also support the amendment that is before the House at this time, Mr. Speaker.

I think the opposition has done an adequate job of demonstrating that there were alternative methods available to the government in terms of raising the revenues that are needed this session. I think also we

[ Page 882 ]

have done an adequate job of pointing out the hardship that is placed on those people who are least able to afford the kind of burden imposed on them by this bill. I think it is reasonable in terms of the revelations that have been brought forward in this House to suggest that it would be a good move to interrupt implementation of this bill — indeed, to delay it for six months — so that the government might have some more reasonable indicator — the indicator of experience — in terms of what the revenues are going to be like in the current year.

I was impressed by the suggestion put forward by the member for Comox (Ms. Sanford). I think the government will recognize that in an election year in the United States — our main customer — there usually is an upturn. I think politicians understand why in election years the economy traditionally is primed.

HON. MR. GARDOM: It didn't happen to you. (Laughter.)

MR. KING: Home building starts and so on.

HON. MR. GARDOM: You're not speaking from experience, Bill.

MR. SPEAKER: Order, please.

MR. KING: No, we....

MR. SPEAKER: Order!

MR. KING: That's true, Mr. Speaker. We are not speaking from experience because we introduced our programmes over the course of our tenure rather than attempting to buy the people's votes with their own money. That was a new and refreshing approach and one that the people will have to get used to over a period of time. I'm sure they will.

But the point is that we can look for an upturn, by all the indicators, I believe, in the domestic economy of the United States where our main market resides. We can look then, I think, to increased exports of our forest products which certainly are the prime and main contributor to the wealth of this province. It just seems to me that it would be a good thing to endorse and support the amendment put forward by the hon. leader of the Liberal Party so that on the basis of some real experience over the next few months we would be in a better position to gauge and assess and project the revenues of this province.

There has been a note of some concern, not only in this House but among the business community of the province and among the writers and the various newspapers — the writers on business and economic affairs — that already the kind of revenue projected in the budget is underestimated. Therefore I think it becomes of greater concern that those measures taken by the government or proferred by them to generate increased revenue this year should be reviewed.

I think it was the former Social Credit leader who was famous for his second look. I see some of the newcomers looking at me intently. Perhaps if they swallow hard and bolster their new-found allegiance they also can adopt a similar strategy that in this instance, in my view, Mr. Speaker, would be of tremendous benefit and tremendous comfort to the low-income earners in the province of British Columbia.

HON. K.R. MAIR (Minister of Consumer Services): We just learn to sleep with our eyes open.

MR. KING: Well, I could tell you that there are a number of reasons for that phenomenon, you know. I might be able to give you some advice in that regard on another occasion, my friend.

But in any event, Mr. Speaker, of all the measures the government has introduced — of all the bills they have introduced this session — this is the one that certainly concerns me most. I am confident that it is the one that generates the most havoc with the people who are really the least able to afford it.

Taken along with the other activities of the government up to this point, which have generally been to raise the costs of living in the province of British Columbia through increased automobile insurance rates, the promise of stiff increase on ferry rates, transit rates, the cost of natural gas, home-heating fuels, higher rentals, I think that it's just too much to put forward a case for extracting from those same sources — from the people who are suffering most from those increased costs — yet another burden, that of providing $2 million additional revenue this year. I think the government should seriously consider taking a second reading on their approach — taking a famous second look — reconsidering their actions.

That doesn't hurt too much in political terms, but I can assure the House, Mr. Speaker, that in terms of the impact on literally thousands of British Columbians who are having a very, very difficult time right now, to say nothing of the 109,000 people in this province who are unemployed at the moment, this is going to be a stiff blow, one that they will not recover from in a period of six months and one that they are going to find extremely burdensome to bear.

I think that it's really imperative, if the government is to demonstrate, as they have indicated, that they are a government concerned with people and a government that is flexible and sensitive to the needs of the people of this province, that they should take a serious second look. I certainly think, under those circumstances, that they could demonstrate

[ Page 883 ]

that they are indeed a government of the people by reconsidering this bill and supporting the amendment. It means that they would be in a position to review it six months down the road, and, indeed, if additional revenue were needed then it could always be reactivated. I don't think that's too late.

We've already suggested that there are other methods of generating additional revenue, and I certainly once again want to re-emphasize the possibilities of increasing the royalty payments. I know that that is very difficult for the cabinet to think about, but obviously it wouldn't be too much of a burden on the mining companies who are exploiting our coal resources at the moment. They've certainly achieved their highest profits in years — record profits — in the extraction of coal in British Columbia, and I think the total increase in royalty payments now could make up for any interim loss of revenue by delaying the passage of this bill by six months.

So with that appeal, and with the commitment of this government to serve the people's needs in the province, to represent not the large corporations but the average people in the province — and unfortunately there are more people in this province who are under $10,000 in wages than there are in the category of most corporate representatives — I think they can demonstrate that adequately tonight and they can show some sensitivity. They can put partisanship aside and support the amendment to this bill, which we certainly do, Mr. Speaker.

MR. SPEAKER: The question is that Bill 11 be amended as follows: delete the word "now" and substitute "six months hence."

Amendment negatived on the following division:

YEAS — 15

NAYS — 30

Division ordered to be recorded in the Journals of the House.

MR. L. NICOLSON (Nelson-Creston): We are now back on the principle of Bill 11, an Act to increase probably the most regressive form of taxation in use in North America and other parts of the world. It's interesting to look back, as I am sure the government is rather reluctant to do, at the list of Socred promises that were compiled in The Vancouver Sun in an editorial on page 4 of Tuesday, December 16, 1975. No. 2 on that list of pledges was: "we are to place an anti-inflation freeze on taxes." Because, Mr. Speaker, as you know, the anti-inflation measures of the federal government had been announced by the time that we were in the provincial election. In fact, the government of the day had taken a position on the federal government's intentions, and we had taken some interim measures in terms of freezing prices.

The opposition mostly endorsed that position, but they went one better. They said they would place an anti-inflation freeze on taxes. By that, Mr. Speaker, I would anticipate that an anti-inflation freeze on taxes means that if somebody paid $315 for school tax last year, that's what they'd pay this year. That's what a freeze on taxes is. A freeze, Mr. Speaker, a Social Credit promise to place an anti-inflation freeze on taxes, would certainly include at least keeping the rate of social service tax, of sales tax, at the 5 per cent level. It could do no less.

So, Mr. Speaker, during that election we had candidates going around saying that there would be an anti-inflation freeze on taxes if they were elected, if the Social Credit government was elected. Yet those candidates who said that prior to the election now stand corrupted by their statements.

AN HON. MEMBER: Order!

Interjections.

MR. NICOLSON: Not only did they say that, but they said they would remove the 5 per cent provincial sales tax on building materials.

Interjections.

AN HON. MEMBER: He said "corrupted."

MR. NICOLSON: I said candidates that said that during the election campaign stand corrupted.

Interjections.

MR. NICOLSON: They stand corrupted by the actions of this government. If you said that during the campaign, Mr. Minister...you couldn't have said it because you're an hon. member. You're the Hon.

[ Page 884 ]

Minister of Health (Hon. Mr. McClelland), so you couldn't have been one of the ones who was going around saying that if you were elected you'd place an anti-inflation freeze on taxes, unless it was for that short little period during which we were neither MLAs nor anything else.

[Deputy Speaker in the chair.]

MR. NICOLSON: But people were going around and they were saying that if the Social Credit government was elected.... And this, Mr. Speaker, was one of the items judged very important by The Vancouver Sun and placed No. 2 on the list, No. 2 to the change in the Mineral Royalties Act — removal of those mineral royalties and the proposal to tax profits of mining companies. This was judged as No. 2 in importance in terms of the frequency, I suppose, with which it was repeated by the candidates of the Social Credit Party.

Now one can only assume, Mr. Speaker, that since those successful candidates are hon. members — and we know that hon. members are always truthful — the successful ones, I guess we must assume, were not the ones who said this. The rest of them, or some of the rest of them, must have been dishonourable, because somebody was saying this with a great deal of frequency and repetition. It was said with so much feeling that a great number of the people of this province were misled by candidates of the Social Credit Party.

SOME HON. MEMBERS: Order, order!

Interjections.

MR. NICOLSON: Well, was that your party policy, Mr. Minister of Consumer Services (Hon. Mr. Mair)?

DEPUTY SPEAKER: Order, please.

MR. NICOLSON: Was that your policy?

Interjections.

MR. NICOLSON: You said your policy was an anti-inflation freeze on taxes, including sales tax.

DEPUTY SPEAKER: Order, please! Mr. Member, would you please address the Chair?

MR. NICOLSON: Yes, Mr. Speaker, and I'm glad that you're calling the Minister of Consumer Services to order. He's a very unruly member.

As I said, in addition to that, they went one better. They said they would remove the 5 per cent sales tax on building materials. Nowhere in this Act is there any intention spelled out to remove the provincial sales tax on building materials, 5 per cent or 7 per cent.

Interjection.

MR. NICOLSON: Well, Mr. Member, through you, Mr. Speaker, I didn't promise that. Things which we promised I think we did quite well in fulfilling, but certainly we didn't go out and promise an anti-inflation freeze on taxes. You know, the other day, Mr. Speaker, the Premier pointed out that the anti-inflation programme, he thought, might run up to the next 18 months, I believe. He felt that that's how long British Columbia could commit itself to go along with the federal government.

HON. MR. FRASER: He didn't promise a $500 million debt.

MR. NICOLSON: At the same time, this is just one of the examples. This 40 per cent increase in sales tax is just one of the examples of the way in which they are going contrary to the Anti-Inflation Board and the fight on inflation. Forty per cent increase on all of these commodities and there are no new exemptions, Mr. Speaker, no new exemptions on building materials, no new exemptions on farm products Mr. Speaker, you know there are some exemptions under the Social Service Tax Act if a farmer needs a scythe or a sickle to go out and harvest his hundreds of acres of wheat, maybe a section....

Interjection.

MR. SPEAKER: Order, please!

MR. NICOLSON: Well, that's a good question to you, Mr. Speaker, from the Minister of Labour (Hon. Mr. Williams) . He is asking what kind of a farmer goes out today and harvests his section of wheat with a scythe or a sickle. But, you know, I guess if he does, it's tax exempt for sales tax. It's exempted. But if he wants to use modern equipment...modern farmers wanting to use....

Interjections.

MR. SPEAKER: Order, please.

MR. NICOLSON: Things that are exempt are things like com binders, harrow carts, hay and grain slings, milk cans, scythes and irons, cream cans, cream separators, hay presses. Hay presses are exempt, scuffiers are exempt, sickles are exempt.

HON. MR. MAIR: What about butter churns?

[ Page 885 ]

MR. NICOLSON: I think maybe butter chums are exempt too. (Laughter.) They would fit in with the rest of these items which I've just outlined, Mr. Speaker. But if a farmer is interested in buying modern farm machinery, then they're not exempt.

AN HON. MEMBER: Yes, they are.

MR. NICOLSON: Things like auxiliary generating equipment for farms are not exempt.

HON. MR. PHILLIPS: What type of harvest would you bring in with that?

MR. NICOLSON: Well, you make light of that. Of course, maybe if the Minister of Agriculture wasn't a newcomer up in the Peace River country, if he had roots that go back as far as my wife's family in the Peace River country, he might remember a day when auxiliary power-generating equipment was quite important to people, and it still is, Mr. Member. Dairy detergents are very vital, Mr. Speaker, and you'd know that coming from Chilliwack, Mr. Deputy Speaker. Drain tiles, fence posts, greenhouse equipment is not exempt.

HON. MR. PHILLIPS: You're filibustering.

MR. NICOLSON: Growth inhibitors are not exempt, Mr. Minister. Growth regulators are not exempt. Feeding fuel for greenhouses is not exempt. I say that's wrong, because we're not just growing flowers and tulip bulbs and such things in greenhouses today. We're growing tomatoes, vegetables — bringing fresh vegetables to people of the province through an industry that's been revived somewhat and could continue to flourish if certain concessions were made in terms of tax. But rather than making these concessions we're becoming punitive. We're increasing that level of tax from 5 to 7 per cent, so it's not even getting better; it's getting worse.

Hot caps which can be used to encourage the early growth, which have to be used, Mr. Speaker, if you're going to compete with Washington and Oregon and California in terms of getting things to early market when the market prices are the highest.... Hot tents and things like peat pots that are used for transplanting and planting bands which save a lot of the problems of thinning, make for a more efficient operation, sanitizers, spreader stickers — you can't forget about spreader stickers — and steel pipe cattle guards are not exempt. Electricity used in irrigation is not exempt. Stock drop sprays: now if you don't have stock drop sprays you know where you are; you're in real trouble. Tank cleaners, Mr. Speaker — you can't run a modern operation without tank cleaners.

Interjection.

MR. NICOLSON: Mr. Speaker appreciates that. He's from Chilliwack. He should probably be the Minister of Agriculture, but.... Veterinary drugs — quite seriously, Mr. Speaker, other areas are not exempted.

A thing was brought to my attention about the Doctor Endicott Home. One of the service clubs in Creston makes an annual point of contributing about $1,000 to $3,000 to the Doctor Endicott Home for the handicapped, and yet many of these items that they purchase and donate to the Endicott Home, these also do not come under exemptions. So that again is a disappointment to all....

Interjection.

MR. NICOLSON: Through you, Mr. Speaker, to that Minister of Agriculture (Hon. Mr. Phillips), we did take the sales tax off certain textbooks and youths' clothing, and we made measures....

Interjection.

MR. NICOLSON: When I was a backbencher I had a resolution on the order paper, and the government saw the wisdom of some of those recommendations and acted upon that at the next session of the Legislature. I'm proud of that, and I hope that this government will take some of these things and treat them seriously.

Mr. Speaker, while the Minister of Agriculture, for instance, tends to treat this in a jocular manner, I hope that deep down, under that tough hide of his, he has a heart and that he's listening, and that maybe he's going to go to the Minister of Finance and tell him: "All kidding aside, the member did have a point and we really should do something, and it would help me to regain my stature among the agriculture community which has suffered so drastically in the first four months of my office."

AN HON. MEMBER: He's beyond redemption!

MR. NICOLSON: Yes, I agree, he's beyond redemption, Mr. Member — but maybe not. Let's be optimistic. He might not be quite beyond hope.

DEPUTY SPEAKER: Order, please. You're on Bill 11.

Interjections.

DEPUTY SPEAKER: Hon. Members, shall we just give the gentleman a little more attention until he finishes his speech?

[ Page 886 ]

MR. NICOLSON: That's right, Mr. Speaker.

I heard today from the Minister of Municipal Affairs and Housing (Hon. Mr. Curtis) that he's going to have a task force on mobile homes. We already have had a task force on mobile homes — the Ardane commission — and the support for that from all sectors was really heartening. Of course, one of the recommendations of the Ardane commission is the removal of the provincial sales tax on the sale particularly of used mobile homes, with the hope that this is one of the first opportunities for the government to act upon the recommendations of the Ardane commission. They use an omnibus bill in the case of other tax measures; it wouldn't even be considered an omnibus bill if — they were to put some exemptions in here at the same time as they're increasing the rate by 40 per cent.

Interjection.

MR. NICOLSON: Mr. Speaker, I'd like you to put a mark on the wall. I believe that's about the 207th time that that remark has been used in the Legislature in the last four years.

The minister says that they have to increase their revenues. You know, it's rather interesting to go back and look at the amount of money collected by the sales tax when it was first introduced and to look at how it's grown. Even in the last 10 years, Mr. Speaker, the sales tax has continued to grow each year over the preceding one.

Going back to 1967, sort of looking at a 10-year period, sales tax raised $154,134,763, according to the final financial review from public accounts. If we look at that, and we look at the percentage of the total budget that that represented in that year, Mr. Speaker, that was 21 per cent of the total revenues collected. The next year again 21 per cent was collected, but the amount collected rose by 6 per cent; it went up to $164 million. In 1969 the percentage of the total budget that was collected decreased. Only 18 per cent of the total provincial budget was collected through sales tax, but still the dollar amount increased, and it increased up to almost $176 million.

So each year, because of the economic level of activity in the province and because of inflation the revenue from sales tax continued to grow. In 1970, it took a rather large increase; based on the level of 1967 it was 133 per cent of what it had just been those three years previous. So almost $206 million were collected.

In 1971 the amount of the total provincial revenue collected was down to 16 per cent. So the percentage of total revenue collected was less, but the amount again rose up to $208 million.

The next year the percentage of the total provincial revenue was still down at 16.5 per cent, as compared to 21 per cent when we started this comparison back in 1967. But again it rose, rose rather dramatically to $244 million — almost $245 million.

In 1973 it again rose by a rather large amount; it rose up to $275 million. Yet it was only 16 per cent of the total revenues collected.

Then the next year it took a most dramatic increase — from $275 million up to $340 million. That much increase in that year, still it was collecting 16 per cent of the total revenues.

By 1974 we passed the amount — doubled the amount that was being collected in 1967. By 1974 we were collecting 2.2 times as much as was being collected in 1967 without increasing the rate, and in fact, Mr. Speaker, while allowing more exemptions from the sales tax in terms of certain textbooks, used clothing and other matters.

Then between 1974 and 1975, another dramatically large increase, and without increasing the rate — $399 million; almost $400 million. But the total percentage of the provincial revenues dropped down to 15 per cent. So from 1967 to 1975 we had dropped the percentage of the provincial revenue being collected by this most regressive form of tax from 21 to 15 per cent. I say that is an achievement; it is one that the previous government could be pleased about because they brought it down considerably. Then under our government we brought it down some more — down to 15 per cent.

Then the next year, again it was only 15 per cent of total provincial revenues in 1976 — at least it is estimated to be so from the estimates. We'll know how close that is when public accounts are out. We know that they changed $44 million in one month — between the Clarkson, Gordon report and the estimates in the House.

Now we're up, by the end of 1976, to 3.1 times the amount being collected in 1966-1967. In fact, in about 10 years the amount collected, without any increase in the rate, had tripled. It wasn't necessary to change the rate in order to get increased returns. It was possible to collect other revenues for other programmes, to collect from the natural gas that was going south of the border. So it wasn't necessary to increase the sales tax to 5.5 per cent or to 6 per cent or to 7 per cent.

Now it is estimated, and I think this might be a conservative estimate.... It could be a Liberal estimate; it could be a Social Credit estimate — I don't know, Mr. Speaker.

MR. A.B. MACDONALD (Vancouver East): They're mostly Liberals, though.

MR. NICOLSON: They're mostly Liberals up in this end. I know a few members are paying their back dues to the Liberal Party; they hope that will be a

[ Page 887 ]

route into the cabinet, but....

DEPUTY SPEAKER: Bill 11, please.

MR. NICOLSON: Yes, Mr. Speaker. I don't know if that is sales tax exempt, back dues in the Liberal Party.

Anyhow, Mr. Speaker, this year in one year.... I traced that through natural growth from the year 1967 until 1972. It took about five years for the sales tax to go up just 50 per cent. Then it took from 1967 until 1975 for it to go up 150 per cent of the 1967 level.

HON. MR. PHILLIPS: Did anybody ever tell you you're boring the House? You cleared out the galleries; you cleared out your own party.

MR. NICOLSON: Mr. Speaker, does that sound familiar? Yes, I used to sit over there; I remember someone else who sometimes cleaned this House out.

DEPUTY SPEAKER: Order, please.

Interjections.

DEPUTY SPEAKER: Order, please.

MR. NICOLSON: Mr. Speaker, the Minister of Agriculture seems to take this very lightly. He says....

DEPUTY SPEAKER: Hon. member, let's not interrupt the gentleman; he has the floor.

MR. NICOLSON: Yes, I'm just about getting to the end of my remarks, and I feel we should wrap this up in about another 30 minutes, Mr. Speaker.

It took from 1967 to 1975 for the sales tax to bring in 150 per cent of what it was bringing in 1967. That was 1975; that wasn't very long ago. That was so recent, I believe the Attorney-General (Hon. Mr. Gardom) was still a Liberal. It was within recent history, although not such recent history that he was a member of the Social Credit Party.

Next year, during this fiscal year, it's anticipated that that same amount of increase that took from 1967 to 1975 will be brought in by this most regressive form of tax. According to government estimates, which I fear are perhaps even a little bit low, it will bring in some 20 per cent of provincial revenues, and that's in spite of what the Premier said in his prologue to the Clarkson, Gordon report. He said: "The financial review discloses an alarming trend. Personal income taxes are the fastest growing revenue source; the 5 per cent sales tax is next."

Now that really wasn't correct, Mr. Speaker. Actually, between March 31, 1972, and March 31, 1975, the combined annual revenue of personal income tax and the 5 per cent sales tax increased from $512 million to $920 million, which was quite an increase of 80 per cent. Those were those good years which we had. In the same period, the combined revenues from corporation tax, lands and forests, minerals, petroleum energy and natural gas increased from $224 million to $628 million, an increase of 180 per cent, so that the type of taxation which falls on the individual, such as the 5 per cent sales tax, combined with personal income tax, raised 80 per cent, while the increase in the taxation from natural resources increased 180 per cent.

At that time I made a prediction, and it was printed in the Nelson Daily News, that I was afraid that by this statement, which was not correct, the Premier was paving the way for an increase in personal income tax and sales tax in the upcoming budget. I regret that that was borne out. That's exactly what happened.

HON. MR. PHILLIPS: I made a prediction you'd lose the election and you did.

MR. NICOLSON: I didn't lose my riding, Mr. Member.

HON. MR. MAIR: By the skin of your teeth.

MR. NICOLSON: Yes, I squeaked through with 56 per cent.

So we've had this sort of predetermination that the burden of taxation was to fall upon individuals. The Minister of Labour (Hon. Mr. Williams), I think, pointed out the reason why, from placing the responsibility of raising 15 per cent of our revenue from this type of regressive tax, we're going back up to 20, and I think more like 21 or 23 per cent. The Minister of Labour, I think, pointed out the reason why. He's the one who brought up in this debate, as you'll recall, the mining companies. It was certainly interesting the length of time that was spent in opposing the Mineral Royalties Act — the unfailing effort and devotion to protecting the interests of the private mining companies, the foreign companies. Yet now we're standing here and we're talking about a tax that is clearly going to fall upon the people of this province. It's not going to be borne in any great measure by foreign companies, such as royalties on coal, the bulk of which is exported from this province. It's going to be borne by average people; it's going to be borne by pensioners, and while we've increased the homeowner grant to pensioners by $50, that's going to be more than wiped out by this increase.

It's the one form of taxation that I think in our heart of hearts every one of us would oppose. If this were a free vote, Mr. Speaker, we would all stand in

[ Page 888 ]

opposition to this. You know, it's very easy to talk about fiscal responsibility when you seem to be willing to raise taxes just willy-nilly. There's been very little research done into this, I think. What are the expected economic impacts? How will this affect distribution centres throughout the province — perhaps communities such as Smithers and Nelson, as opposed to resource-based centres such as Trail, Kitimat and so on? Have these questions been asked?

I find it hard to believe that we could take such a large step in terms of taxation. It's almost an unprecedented step in British Columbia since the time in which sales tax was first introduced. The history of sales tax is one where the former Premier (Hon. W.A.C. Bennett) of that 20-year administration of Social Credit.... When he was a Conservative he felt so strongly about the first introduction, which I believe was 3 per cent, that he crossed the floor.

Then in a rather astute move it was raised to 5 per cent because if there's anything people didn't like, it was the hospital co-insurance, preferring certainly, to pay slowly as the year went by rather than facing those hospital co-insurance payments.

I recall that. I was a very young person at that time — perhaps the first time I had become interested in the political scene. I watched those early days of Social Credit. I identify that with that early minority and I identify that early group with what they did in terms of doing away with hospital co-insurance and bringing in the sales tax.

Interjection.

MR. NICOLSON: But we know that even they felt that that was, perhaps, the lesser of two evils. They didn't endorse the concept of a 5 per cent sales tax, but they saw it as a preferable move to the hospital co-insurance.

But now we are raising the tax to 7 per cent when there are other areas that could be used. We have seen that the government is determined to use a little bit of sleight-of-hand in terms of moving expenditures, sliding them past the fiscal year deadline of March 31-April 1.

We want the people of British Columbia to know where the opposition stands: we want them to know that we don't think this is necessary. Sure, we could have brought in many social programmes, I suppose. We could have used a Robin Hood budget — robbed from the poor and maybe handed it back to the poor, and tried to convince them that what we were doing was a great thing for them. But this tax falls upon everyone. The pensioners who are going to get a little bit more in the homeowner grant, they aren't going to be any farther ahead; they're going to fall farther behind on this one. Everybody is going to fall farther behind in this one, Mr. Speaker. I think it's interesting to look at those same figures in the more easy-to-grasp manner that I gave — those dollar figures are sometimes hard to grasp. But in terms of an index, a growth index such as we have in the cost of living — where we index a certain year as one and then we take that up — well, 1967 is year one....

DEPUTY SPEAKER: Hon. Member, pardon me for interrupting. It is my duty to inform you that you have two minutes left.

MR. NICOLSON: Yes, I'm very quick at seeing the green light there, Mr. Speaker.

So if we have a growth index which is one in the year 1967, it goes up slowly — 1.06, 1.14; another rise of eight points, 1.33; a fairly large rise of 19 points, but followed by a rise of three points in the next year, up to 1.36. In 1972, 1.59; in 1973, 1.79; in 1974, 2.20; 1975, 2.59 — which means that it's more than two and a half times what it was in 1967 by 1975. But by 1977 it's anticipated that we will be collecting at an index of 4.61 — that's 4.61 times as much as was collected in 1967. In the short space of 10 years we have taken this type of taxation too far. It's a backward step. Over a period of years we've collected a decreasing proportion of general revenues.

Mr. Speaker, I will not support this bill.

MRS. B.B. WALLACE (Cowichan-Malahat): After the great length to which the member for Nelson-Creston was dealing with the problems of the agricultural workers and the payment of the sales tax, I don't need to involve myself in the farmers' position.

MR. NICOLSON: You might give it a slightly different....

MRS. WALLACE: Well, I think really he did an excellent job in pointing out that the farm industry in this province is faced with having to pay sales tax on a great many items that are very essential to their production of the foodstuffs for this province, and not only is it incorrect that they should be included in any sales tax, but it's a double difficulty for them to now be faced with a 2 per cent increase. So I really do not want to deal with that agricultural aspect of it tonight, but I do want to talk about a different aspect, Mr. Speaker.

When the minister introduced the bill in the first instance, he intimated himself that it was, more or less, a regressive form of taxation, but he really didn't know what other method to take.

HON. E.M. WOLFE (Minister of Finance): I didn't say that.

MRS. WALLACE: Well, I'm sorry. That's the way I understood you, Mr. Minister. Whether you think

[ Page 889 ]

it's regressive or not, I certainly think it's regressive.

DEPUTY SPEAKER: Please address the Chair.

MRS. WALLACE: You did, Mr. Minister, through you, Mr. Speaker, list some items that were exempted. Now I want to talk tonight about some other items that are not exempted. I think as I look around this House today and other days that there are probably not too many people who actually go out and do the day-to-day household shopping who sit in this House as members of this Legislative Assembly. I happen to be one of the people who do this sort of thing, Mr. Speaker, and I'm very much aware of some of the items which are very essential to our day-to-day existence which are subject to the sales tax. Some of the larger items have been mentioned, things like.... I think the member for Comox (Ms. Sanford), in the early stages of this debate, talked about stoves and fridges and washers and dryers, which are very essential items, Mr. Speaker, very much a part and parcel of our daily living and all subject to tax.

But I want to deal with the smaller day-to-day items really, Mr. Speaker. I want to talk about things like adult clothing, shoes, soap, laundry soap, toilet soap, shampoo, razors, scissors, hair clippers. Those things are all subject to sales tax, Mr. Speaker, and those things we have had some discussion about lately. The Minister of Human Resources (Hon. Mr. Vander Zalm) has indicated those things are very essential, In fact, he has even indicated that people who don't use those things may have economic pressure applied and have their social assistance removed, if they not use things like soap and proper clothing and shoes, and if they don't have their hair properly groomed. Those things are all subject to sales tax, Mr. Speaker, and now we're going to increase that by 40 per cent.

Another item that every housewife is quite aware of the fact that you pay tax on is cleaning supplies, all sorts of cleaning supplies. If you're going to keep a clean home you pay tax on those items. If you buy towels, bed linen, dishes, cutlery, utensils, all those items are subject to sales tax.

I would suggest, Mr. Speaker — the members here would agree with me — that it's not difficult in this day to go out and spend $40 on things like bed linen or towels or utensils — essential items, Mr. Speaker. I had occasion recently to go and buy those sorts of things, and my bill amounted to $37.80. Now at 7 per cent sales tax on that amount the tax would have been $2.65. That figure rang a bit of a bell with me, because if I were on Mincome and in receipt of $265 a month, that one purchase would have represented 1 per cent of my income. On the other hand, if I had an income of say $1,325 a month, which you would agree is a very reasonable sort of income, it would have represented only 0.2 per cent of my monthly income. I suggest, Mr. Speaker, that that is a very unfair tax that requires one person to pay out 1 per cent of their income for a small routine purchase of household essentials and on the other hand requires a person with a larger, more normal, more average income to pay only 0.2 per cent of that monthly income. I suggest that that points out very much the reason why the people on this side of the House are so opposed to this tax, because it does put such a heavy load on the person with the low income, people who really just cannot afford to pay any more.

It has been estimated that the increases in taxes, which include this increase in the sales tax, will result in an extra expenditure to the average household of some $500 to $600. That amounts to some $50 a month, Mr. Speaker. I suggest that a family that has an income of $500 a month.... You are talking about eroding that income to the tune of 10 per cent. On the other hand, a family that has an income of some $1,200 or $1,300 a month, you're only talking about 3 or 4 per cent. When you get up to $2,000 a month, it's only 2 per cent.

I suggest that the 5 per cent tax was bad enough, Mr. Speaker, but to increase it by 40 per cent is a very unfair way to tax people. The people who are least able to afford it will be proportionately paying a far greater share of their income towards this tax. If we must have a sales tax at all, and if we must increase this sales tax, then, Mr. Speaker, I would urge the government to take steps to remove some of the essential day-to-day items from the taxable list.

Mr. Speaker, if this bill were to exclude those items needed from day-to-day essentials like household items, like appliances and stoves and fridges and washers and dryers — if they were excluded so people who wished to build their own homes would not be faced with a sales tax; if cars — I'm not suggesting luxury cars, but economy cars — if cars were excluded from the sales tax, Mr. Speaker, then I would suggest that if those sort of items were excluded and this became a luxury tax, then I might be persuaded to support it. But standing as it is, with these day-to-day essentials included, forcing people to pay a higher proportionate share — those people who are just now getting by — then I just cannot see my way to supporting the bill.

It is an unfair tax, Mr. Speaker, it is regressive. I would suggest that its need has not been proven. We went into that at some length when we were discussing the amendment and I will not repeat that now. But I suggest that the need has not been proven. I am opposed to the tax, Mr. Speaker, and to the bill.

MR. D.G. COCKE (New Westminster): Mr. Speaker, I am glad you didn't say: "The minister yields." The minister hasn't got the right to speak

[ Page 890 ]

until all those who are representing an opposing view have their opportunity in court.

Mr. Speaker, speaking to Bill 11 and its principle, if, in fact, it has a principle, I would suggest in starting out that it is all very well and good to say that exemptions make it less regressive. I would go on to say to you: tell that to the poor; tell that to the unemployed; tell that....

Interjection.

MR. COCKE: That insulting jackboot kind of phrase is not becoming of any parliamentarian.

DEPUTY SPEAKER: Order, please.

MR. G.V. LAUK (Vancouver Centre): He thinks it's funny.

DEPUTY SPEAKER: Order, please. The member for New Westminster has the floor.

MR. COCKE: Mr. Speaker, go on telling that to people on fixed incomes.

We heard a very interesting speech this morning, and I made a note or two of what a minister of the Crown had to say. The Minister of Labour (Hon. Mr. Williams) said: "Ours will be a thrift-save government, one which will permit us to do a job but which will leave in the hands of the individual...." Now listen to this carefully.

Interjection.

MR. COCKE: If you know anything about rules, get to your seat if you want to do some harping.

DEPUTY SPEAKER: Order, please.

MR. COCKE: Mr. Speaker, this is what the Minister of Labour said: "...one that will leave in the hands of the individual the maximum amount of what he or she earns so that they can enjoy the standard of living which they wish to make for themselves." Isn't that interesting? The same day, Mr. Speaker, we're discussing again Bill 11, a bill that says to the people of British Columbia: we will leave less in your hands of your earning power than we would heretofore — a good deal less for those who can afford it the least.

It's an easy way to raise money, however, backbenchers. It is the easy way. Sales tax is a cinch, Mr. Speaker. If the Minister of Labour feels that income tax is just as easy, then why don't you announce a change of heart and take a look at the whole indexing of income tax as a substitute, at least in part?

I can't allude to the fact that we've lost the vote on the hoist, but I will suggest, Mr. Speaker, that maybe the minister could look at other alternatives. I suggest that this successfully cuts the living standards of everyone, but most of all it cuts the living standards of those who are locked into low incomes.

We've heard the phrases, "let them sell their cars" and "let them do this" and "let them do that", but I think it is time, Mr. Speaker, that this government recognized that those are people they're talking to. I think the past government showed some courage. We showed a way that we could tax resources to produce income. Yes, we sure did. We increased the royalty on coal from 10 cents a ton to $1, and it should be $2 or $2.50.

Interjection.

MR. COCKE: That's right. And, Mr. Speaker, during that same period we increased an almost zero income from natural gas to over $150 million per year.

Interjection.

MR. COCKE: Mr. Speaker, I'm not sure what that person down on the end is talking about, but if he doesn't understand $150 million a year plus, then really he doesn't understand much.

MR. H.J. LLOYD (Fort George): Another year and they would have killed the golden goose altogether!

SOME HON. MEMBERS: Oh, oh!

MR. COCKE: Kill the golden goose, he said. Mr. Speaker, I just don't understand that kind of talk. Drivel! Absolute drivel! Louisiana gas was selling for $1.65 or $2 when B.C. gas was selling for 32 cents. What a bunch of drivel! Mr. Speaker, that's the kind of short-term philosophy they have. Give it away! Give away that $850 million of water for energy sources.

You know, speaking of that water, I heard it said one time it was worth something in the order of $60 billion....

DEPUTY SPEAKER: Hon. Member, order, please. I must draw the debate back to Bill 11.

MR. COCKE: Oh, I see. Mr. Speaker, I suggest that there are other ways of doing business, and I suspect one way is that the government is probably doing a little fast dance on underestimating. But fast action and hasty decisions are often wrong. This was a fast action, a bill brought in very quickly, a bill brought in in response to a government whose direction was to try to indicate that the province is in terrible shape.

[ Page 891 ]

How many different things do they have to do to so-called prove they're right, get the province going?

Mr. Speaker, this won't get the province going, increasing the sales tax. I have to smile when I think in terms of the fact that unemployment was reducing until after the election — yes, for three successive months, if you want to read anything about history, and that only goes back three months.

MR. L.B. KAHL (Esquimalt): For three years?

MR. COCKE: For three successive.... Well, for three years it wandered about, just like everywhere else in Canada.

Mr. Speaker, for the three successive months the unemployment went down and now it's up to an all-time high of 109,000. Ridiculous! But mind you, they are saving students in Esquimalt a good deal of trouble, but other than that, I'm not too sure that this government is accomplishing all the things that they would like to do.

This government is turning back the clock with a $200 million holdup. I don't think that any of us should have trouble understanding. If we do, then we've never been in a position where we have any kind of income problem at all.

Oh, this government was going to be so efficient. So efficient, they said. They told the voters out there how efficient they were going to be. If they were going to be so darned efficient, how come they had to come in and raise the taxes and cut services, Mr. Speaker?

HON. MR. PHILLIPS: To clean up your mess!

MR. COCKE: Oh, don't give us that "clean up your mess" stuff. There's no bigger messer in the country than the Minister of Agriculture and Economic Development (Hon. Mr. Phillips), really and truly. You know if I was the Minister of Agriculture and the Minister of Economic Development in this province, Mr. Speaker, I would hang my head in shame, supporting a bill such as this.

Interjection.

DEPUTY SPEAKER: Order, please.

MR. COCKE: This is the leather-lunged individual who stood in this House for 34 hours on a bill that he now supports, Mr. Speaker. Let's see what he does to it, however, during his tenure.

DEPUTY SPEAKER: Back to Bill 11.

MR. COCKE: Yes Mr. Speaker. Oh, they were going to be so efficient. I just ask again: is that a sign of efficiency — increasing taxes all over the place, in every area that they can possibly squeeze, and cutting services? Oh, Mr. Speaker, they accused us of plunging them into debt. The fact of the matter is that they plunged us into massive debt and at the same time, going along with this efficiency, they are also plunging the people into debt or greater poverty through their new taxing system — $500 for a family for a year in this province.

Interjection.

MR. COCKE: Why don't you go out and have a cup of coffee, Mr. Minister, and just think about it? Mr. Speaker, they say they subscribe to the prices and wage controls, the Ottawa substitute for a planned economy. How come they're so totally uncontrolled and unco-ordinated in that regard?

Mr. Speaker, I'd just like to bring to your attention, in case you've overlooked it, an article in The Vancouver Sun, March 27, by Paul St. Pierre. He's talking in terms of this new sales tax bill. He says:

"True, sales taxes are not good for us — they take proportionately more from the poor man than from the rich man, unlike the income tax which is graduated. True, Mr. Wolfe says he's taken $200 million of this $267 million of extra tax money by increasing the sales tax by only $31 million, by increasing the more equitable income tax. True, that although Finance ministers say sales tax exemptions on food, children's clothing, school books and drugs are so generous that tax increases will not bear heavily on low- or even medium-income families, we all know that it will. Even low-income families buy clothes, automobiles, electric kettles and a few items that are not included in the generous exemption list."

He goes on to say that it's easy to collect.

But he also continues, and later in the article he says: "It was opposed by a government Conservative MLA named W.A.C. Bennett. He broke party ranks to vote against it some years ago."

Let's go back in history just for a second. W.A.C. Bennett, on original imposition of sales tax — what did he say? "Yes, this is a budget of an accountant." Interesting? "Yes, this is the budget of an accountant" — that is a budget of private business, and not for people.

MR. SKELLY: Who said that?

MR. COCKE: W.A.C. Bennett, in 1948. He said: "Yes, since John Hart left the government, there's little heart left in it." I wonder if we can make that same kind of an analogy: since W.A.C. Bennett left that poor old gang, there's little heart left in it.

I'd like to go on just to quote another couple of

[ Page 892 ]

words from that eminent B.C. politician: "At the same time, this will be a brick around the government's neck. Don't tell me B.C. Is going to model its policy on Quebec." Oh, oh! This is really an indictment on the present administration. "This is certainly a case of people asking for bread and getting a stone." Eloquent chap in his day, and he made some very good points.

Mr. Speaker, I think probably the best one can do is just take a look at two families. And let's not use the totally under-privileged family. Let's think in terms of two families, one with an income of $10,000, and one at income of $25,000. My colleagues have said that the incidence is one and a half times as high on the low income vis-a-vis the high income. I'm not sure if it's not even worse.

Let's take this statistic and illustrate. The Minister of Finance makes much of the fact that there are exemptions for food and children's clothing and real estate, et cetera. The richer family spends at least twice as much on these items as the poor and therefore profits twice as much. The exception is real estate, and there, I suggest, Mr. Speaker, it's even much higher because the higher-income family spends a good deal more than twice as much as the low-income family on real estate. So there is a tremendous exemption on real estate, a tremendous exemption for the well-to-do.

Mr. Speaker, I think this is the most scandalous aspect of the whole thing, that the richer family is the family that can afford to save, and that is where the real exemption is — the family that can afford to save out of their income. The poorer family is forbidden that exemption in our society today.

Let's face it, we're all screaming the blues about inflation and what it's doing to the underdog. Don't forget that the family that can save has a total exemption from that standpoint, but the family that spends all of its income trying to survive gets none of the exemptions that the wealthy get. When in 1948 W.A.C. Bennett said that it's an accountants' budget, I suggest to you how right he was then, and how right he would be now if he made that same suggestion in this House.

Mr. Speaker, this government has displayed an absolute, utter insensitivity to the problems of the poor.

HON. MR. WOLFE: Absolute utter?

MR. COCKE: An absolute utter — and'we'll see that in Hansard tomorrow. It has shown it cannot sympathize with them, and it can't even imagine their problems. Mr. Speaker, on that basis how can anyone endorse or support Bill 11?

MR. SKELLY: Mr. Speaker, I also stand in opposition to this bill which raises the already regressive tax by 40 per cent. Certainly I can understand that in, troubled economic times such as these all governments caught up in that scramble to obtain income to cover programmes will do almost anything they can to generate additional revenues, but I cannot condone the irresponsible and unconscionable move on the part of this government to increase its revenues by eroding the already overtaxed earnings of the poor.

There seems to be an attitude on the part of Social Credit that social programmes are responsible for the financial woes of government. In fact, on page 6 of this budget speech, just after protesting that they have compassion for the elderly and the sick and the underprivileged and the handicapped and the unemployables, they suggested that New York was on the verge of bankruptcy because of social programmes beyond its ability to fund.

Interjection.

MR. SKELLY: On page 6 of your own budget speech. It's a little simplistic — and I see the Minister of Health (Hon. Mr. McClelland) agrees.

DEPUTY SPEAKER: Hon. Member, are you on Bill 11?

MR. SKELLY: I am relating this to Bill 11, Mr. Speaker, because Bill 11 is an attack on the poor, and an attack on the incomes of the poor. I'm relating it to the budget speech, which, in general, is an attack on the incomes of those lower- and middle-income groups.

They are a little simplistic in their approach to the social programmes and their effect on the economic woes which government face, considering that some of the problems New York faces are police and fire protection, garbage collection and education, not simply social welfare programmes. They noted that Britain's economy was devastated by its social welfare schemes.

As a consequence the government has already taken steps to cut back on social programmes, particularly those that benefit poor and low-income groups. We've already been told that more rigid qualifications will be required of those applying for Mincome and handicapped assistance programmes, and we've been told that legal aid services will be cut back. Within days of taking office the Socreds cut back on government services to women, and it's worthwhile to note, Mr. Speaker, that the vast majority of families below the poverty line in this country — almost 70 per cent — are single-parent families headed by women. We're told that BCHIS co-insurance fees are to be raised 400 per cent for acute care and 700 per cent for extended care, and that medicare for all age groups will be increased by

[ Page 893 ]

50 per cent.

When the BCHIS fee increase was announced, the hospital administrator in Port Alberni said that he appreciated people's concern about paying $4 per day, but the average hospital stay is only seven days, which adds up to $28. People, he said, would spend that kind of money for a dinner for two. Certainly some people might spend that kind of money on a dinner for two, and in fact for some of the millionaires on the bench opposite $28 to $35 wouldn't be that much to spend on a quick lunch when they're negotiating with their Cadillac dealer, who could then write the cost off on his income tax, but for a single-parent family with two children on social assistance that is receiving $320 per month basic social assistance, a seven-day stay in hospital is 10 per cent of that family's income. But if not the child but the parent goes to hospital, and day care and child-care expenses have to be covered, then the result is almost a total loss of that family's income.

Interjection.

MR. SKELLY: The gallery emptied when you came in, Mr. Premier.

I understand that the Minister of Health favours adjustments to relieve the burden of the BCHIS co-insurance increase on the poor, but what about Medicare premium increases?

lnterjection.

MR. SKELLY: What about this $50 minimum payment under the homeowner grant tax relief programme? What about that? Will there be an appeal for poor people on that regressive measure as well? Mr. Speaker, every taxation proposal we are being asked to approve during this legislative session, with only one exception, works more harshly on low-income earners than against the wealthy. You can be certain that this opposition, to every last member, will speak against regressive taxation such as we are being asked to approve under Bill 11, just as the present Premier's father did back in 1948 when he called the Social Services Tax Act a disgrace to any government — a disgrace to any government. He said that it's an unfair tax falling heaviest on large families least able to bear it.

MR. KING: How many children did he have?

MR. SKELLY: He called on the government to withdraw its budget and bring in a new one without the inconsidered, unfair and retrograde sales tax.

MR. KING: Is he the youngest?

MR. SKELLY: In fact, he suggested a capital gains tax.

AN HON. MEMBER: Good thing.

MR. SKELLY: Or as he called it, an unearned increment tax. But that prospect would frighten the members of the party opposite because it would dip into the pickets of their major supporters — the real estate promoters and speculators who poured money into the Social Credit coffers during the last election campaign, and, in fact, it would amount to a tax on Social Credit campaign funds.

[Mr. Speaker in the chair.]

MR. SKELLY: In the light of...

Interjections.

AN HON. MEMBER: Just the little people think for you here.

MR. SKELLY: ...W.A.C.'s comments back in 1948 I wonder what he would think of his son today. But then, they all change, Mr. Speaker. I understand that that same member, who spoke so harshly against the Social Services Tax Act in 1948, raised it from 2 to 5 per cent in 1953. They all change, Mr. Speaker.

Interjections.

MR. SKELLY: Party labels and political principles, they're all taken a little more lightly on that side.

AN HON. MEMBER: They don't understand that word.

AN HON. MEMBER: They're always wrong.

MR. SKELLY: But to give them....

Interjections.

MR. SKELLY: I was just going to say some nice things about you. I stayed up until 1:30 in the morning thinking of some nice things to say about you.

HON. MR. PHILLIPS: You're always wrong.

MR. SKELLY: But to give them their due, Mr. Speaker, the Social Credit did take some steps to make the sales tax a little less regressive. They removed it from meals, children's clothing and other essential items, and they do deserve some credit for that.

But there's no doubt that the sales tax is still an

[ Page 894 ]

extremely regressive tax measure. It still hits the poor more than the wealthy. Although the Finance minister says he has evidence to the contrary, he didn't provide this evidence in his introductory remarks to the bill, nor did he provide it during the amendments. Possibly he should have revealed this information to his own Minister of Transport (Hon. Mr. Davis) who told the North Vancouver city council...

Interjection.

MR. SKELLY: ...back on March 13 that sales tax bears more heavily on people in lower-income brackets while those with the higher incomes make their contribution through the income tax.

There are countless studies carried out in Canada that bear out the contention of the present Premier's father and the present Minister of Transport's remarks. One of those studies is The Real Poverty Report published by Mel Hurtig back in 1971, and I would like to quote a few passages from that report.

AN HON. MEMBER: Is he Liberal?

MR. SKELLY:

"The poor in Canada, those with incomes before government transfer payments of $2,000 or less, pay on the average an overwhelming 57 per cent of their income in taxation, while people with incomes over $10,000 per year pay only 38 per cent of their income in taxation. The whole tax system is regressive; that is, it taxes lower incomes more than higher ones."

The report cites the Carter Royal Commission on taxation, page 144:

"The combined effect of sales tax, corporate income tax, property tax and the present personal income tax and base is such that low-income individuals and families pay a higher tax than is equitable when compared to middle- and upper-income individuals and families. Sales taxes and corporate income taxes are inequitable."

And again, according to The Real Poverty Report:

"More than one-half of the taxes in Canada were completely regressive in 1961 — that is, taxes which are not based on ability to pay and hit the poor with more impact than they hit the rich."

MR. SKELLY: It's a good year but it's increased between 1961 and the present day. A great part of the balance is made up from taxes which are regressive in parts such as corporate income taxes which we are also increasing this year, Mr. Speaker, and provincial and local business taxes which are partly passed on to consumers, again without regard to ability to pay. These partly regressive taxes accounted for one-fifth of the total levies in Canada 15 years ago, and the proportion is probably higher now.

So fully 70 per cent, Mr. Speaker, of our taxes in 1961 were regressive: they bore harder on the poor and low-income people than they did on the wealthy. The majority of the poor in our society are not on welfare. They work, and they work hard. Fully two-thirds of those below the poverty line are in family units whose major source of income is either wages, salaries or income from self-employment.

So when I talk about the poor and low-income people in British Columbia, those who will be hardest hit by this regressive tax measure, I'm not talking about those free riders who are mentioned in the budget but about people who work and work hard, and yet still remain below the poverty level. They amount to almost 15 per cent of the population in this province, and their families include 19 per cent of the children in this province — 116,000 children. These are the people who will suffer most from this regressive taxation.

Let me just read a short passage from the report of the federal government's National Council on Welfare, called "Poor Kids," Mr. Speaker, that was published in March, 1975:

"Canadians like to believe that ours is a society in which all children are born with equal chance to rise as far as their abilities will carry them.

"Though they begin their lives in very desperate circumstances, we comfort ourselves with the belief that success is as obtainable for the child of humblest origins as for the most affluent. The facts, however, are otherwise.

"To be born poor in Canada does not make it a certainty that you will live and die poor, but it makes it very likely.

"To be born poor is to face a lesser likelihood that you will finish high school, lesser that you will attend university.

"To be born poor is to face a greater likelihood that you will be judged a juvenile delinquent in adolescence and, if so, a greater likelihood that you will be sent to a correctional institution.

"To be born poor is to have the deck stacked against you at birth, to find life an uphill struggle ever after, and to be born poor is unfair to kids."

Of the 6.76 million kids under the age of 16 in Canada at the time of the 1971 census, 1.66 million were poor. This report — referring to the March, 1975, report of the federal government — is about poor kids. It is about the lives they are living today and the prospects for years that lie ahead of them. It is about growing up without as much food as other

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kids get, without the toys, the clothes and the outings that other kids.

"It is important that we, as Canadians, understand the effects of the present inequitable distribution of national income on those who suffer the misfortune of being born to those families living below the poverty line. It is important that we understand as well that the thousand cruelties that poverty visits on the children of the poor can be ended. Children need not grow up in poverty in Canada, because there need not be poverty in Canada.

This final quote from that report:

"The tax system and the income securities system together determine the patterns of income redistribution in this country. The changes that are made in these systems will affect the lives of every one of Canada's poor kids.

"New programmes that are adequate to raise Canada's poverty families out of poverty will transform the future of these poor kids; inadequate programmes will leave them facing the grim prospects that mark the landscapes of their lives today."

That outlines the situations which these children face, and a situation which will be made worse, Mr. Speaker, by regressive taxes such as the one we are expected to pass here under Bill 11. It emphasizes the importance that tax and income redistribution programmes have in changing the situation those children will face.

Mr. Speaker, by passing this bill we are condemning those families — those poor families and those poor kids — by draining an additional $200 million of their purchasing power from them. But, Mr. Speaker, we should ask ourselves; why is this the case? If so, who is benefiting from this large fiscal transfer?

I think it would be enlightening for some members to read some information by Michael Bradfield, an assistant professor of economics at Dalhousie University, who specializes in the effect of regressive taxation on the poor. I would just like to quote a report by Michael Bradfield in a magazine called Canada Welfare, July/August, 1974:

"If you are poor in Canada, chances are that your situation is not going to improve much in the next few years, "

especially under a regime that would pass a bill like this, Mr. Speaker.

"The reason — because there is a growing campaign, led by various vested interest, to use the poor as a scapegoat, blaming them for Canada's economic problems. If successful, the campaign will create antagonism against the poor, especially the near poor and the middle class, and will lead to a loss of political support for the poor. This will mean a loss of enthusiasm for attempts to change the economic and taxation systems in any meaningful way. This backlash protects the rich and turns the average Canadian against the poor by perpetuating a set of prejudices and myths such as: the poor are a burden on the rest of society; because of the burden of the poor, the middle class bears a crushing tax load; transfer payments — that is, assistance to the poor — are the cause of rising prices and taxes; people are poor because they don't or won't work; and lastly, we are solving the problem of poverty through economic growth with the fruits of that growth going disproportionately to the poor.

"One of the most recent shots" — and I am still quoting from Michael Bradfield's article — "fired in the war against the poor is the statement by the Canadian Chamber of Commerce in their annual brief to the federal government. In the press conference following the presentation, the chamber's president cited government assistance as a primary source of rising prices and taxes and feared the erosion of the historic generosity of the middle-income group: 'The chamber of commerce therefore recommends that the government cut back the rate of increase on its social assistance spending.' The concern about the generosity of the middle class implies that they carry the burden of assistance to the poor, and there is no evidence of this.

"For instance, in 1969, 25 per cent of Canadian families had incomes below $4,000 a year. This bottom quarter received $1.9 billion in assistance from the government; at the same time, this group paid almost the same amount in taxes. The difference between the amount they received and the amount they paid in taxes amounts to 0.2 per cent of all government expenditures. Clearly, the middle class is not carrying the poor on its back; the poor are paying for almost every dollar of the assistance they receive. So much for the myth that the poor are a burden.

"If the middle class is overtaxed, it's not because of the poor but because of the avoidance of tax by the rich and by big corporations."

Don't forget, it's primarily the wealthy in Canada and elsewhere who own the big corporations.

In another article by Michael Bradford that was in the Victoria Times of April 2, 1976 that's worth quoting, Mr. Speaker, he points out the increase in profits for these corporations that are owned by the wealthy in our society: "Between 1971 and 1974 the increase in profits for those corporations is equal to

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the total purchasing power of the poor in Canada." Simply the increase in profits for those corporations in three years is equal to the total purchasing power of the poor. So it's perfectly clear, Mr. Speaker, that the regressive tax system and social security have been designed and operated over the years to enrich those who have and to impoverish those who don't have.

This fact is borne out by Statistics Canada. According to figures released by Statistics Canada in 1957, the lowest fifth of the income earners in this country received only 4.2 per cent of the gross national product; the highest fifth received 41.4 per cent. The last year for which figures are available shows that the lowest fifth in 1971 received less than they received in 1957. They received only 3.6 per cent of the total production of this country while the highest fifth received 43 per cent.

The same fiscal transfer is going to take place in this province as a result of the regressive tax increase proposed by Bill 11. This tax is going to take $200 million from low- and middle-income families and small business people and turn it over to those real free riders in societies, the huge, multinational resource corporations.

AN HON. MEMBER: Hogwash!

MR. SKELLY: When the government speaks of these corporations they talk in terms of incentives and encouragement, but that means only one thing to those large corporations, Mr. Speaker: more corporate welfare and less expenses. That appears to be precisely what this government is planning to do for these corporations. If UBC economist John Halliwell is correct, changes in mining tax legislation in this province from a royalty-based mining tax legislation to an income-based programme will result in a 60 per cent drop in direct revenues to the Crown from mining. If the same type of legislation is applied to other resource industries including forestry, coal and natural gas, then it's pretty obvious why this increase in social services tax is required. It's a direct subsidy of the rich by the poor.

Still, Mr. Speaker, there is no guarantee that the additional profits received by mining companies will go into new exploration or development, just as the huge profits derived by oil companies from recent price increases didn't go in whole to develop new oil reserves but to subsidize takeovers of existing corporations without creating a single new job.

To summarize, Mr. Speaker, I feel that this bill and other regressive tax measures proposed and implemented by the government will destroy every attempt, provincial and federal, over the last few years which attempted to improve the purchasing power of low-income groups in a time of crippling inflation and recession. And I feel the government ignored reasonable alternatives, alternatives that have been proposed in other provinces and in other countries and, in fact, even proposed by the present Premier's father (Hon. W.A.C. Bennett) and the present Minister of Transport (Hon. Mr. Davis), alternatives that could have improved the purchasing power of low- and middle-income groups and stimulated local economies and small business.

Finally, on the principle, I cannot support any tax measure which is designed to rob from those in our society who have very little in order to subsidize the wealthy.

MR. C. D'ARCY (Rossland-Trail): I, too, must rise and indicate my opposition to this bill. As has been said earlier by many speakers, and by myself when discussing the amendment, there is absolutely no doubt in my mind that this tax increase is not needed at this time. There has been absolutely no evidence presented, nor has the government attempted to show any evidence that this was needed. Indeed, the evidence that we've seen in this House presented by members from all three parties on this side has been entirely the other way around.

Mr. Speaker, I would like to talk about an aspect of sales tax which I don't believe has been canvassed in this House, and I don't believe...certainly not recently and possibly never before. That is the fact that not only in this tax increase, but on the sales tax in general, I believe there is an area of exemption which should be considered. It's been most unfortunate that it has not been considered — by not just this government but by the last three preceding governments — ever since we had a sales tax initiated in this province in 1948.

I'm speaking, Mr. Speaker, about taxes on equipment and goods which are absolutely necessary for life itself for those who are afflicted through no fault of their own, and chronically ill — the chronically ill who in many cases are quite young. They may be people in their 20s, they may be people such as myself in their 30s, or older people. These are people who require artificial limbs, equipment for the blind, braille equipment, wheelchairs, cancer bandages, and indeed all appurtenances and equipment that we think might be, necessary for people who are chronically ill.

I suppose somebody may well ask.... The Minister of Health (Hon. Mr. McClelland) may well ask: "Well, where will it all end? How do you define what is necessary?" I would suggest that I would leave that to his judgment. I would let the minister decide what is absolutely essential for the chronically ill.

I suspect, Mr. Speaker, that the sales tax raised by sales of equipment such as I'm describing comes to less than $1 million in any one year in this province. It's a very small amount of money for what is going

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to be raised just by this sales tax increase, let alone by the sales tax in general or for the entire revenue of the province.

You know, Mr. Speaker, we ask people in British Columbia to help themselves. We ask people to put out a great deal of help at the local level. We expect service clubs to contribute to people in their community who are afflicted this way. We expect private societies....

HON. MR. WOLFE: It's exempt now.

MR. D'ARCY: I suggest that they are not.

AN HON. MEMBER: Well, you're probably wrong as usual.

MR. D'ARCY: I suggest that there are people in my riding who are paying for these things and paying sales tax on them.

Interjection.

MR. SPEAKER: Hon. members, we are in the process of debating the principle, not the bill section by section.

Mr. D'Arcy moves adjournment of the debate.

Motion approved.

Hon. Mrs. McCarthy moves adjournment of the House.

Motion approved.

The House adjourned at 11 p.m.