[ Page 1181 ]

CONTENTS

Routine proceedings

Oral questions

Vancouver East by-election. Mr. King — 1181

Government contract to Lighthouse Communications Ltd. Mr. Gibson — 1183

Psychological testing of workers' compensation claimants. Mr. Wallace — 1184

Vancouver East by-election. Mr. Stupich — 1184

Employment of Ron Worley. Hon. Mrs. McCarthy answers — 1184

Committee of Supply: Department of Finance estimates.

On vote 61.

Mr. Gibson — 1185

Hon. Mr. Wolfe — 1189

Ms. Sanford — 1190

Hon. Mr. Wolfe — 1191

Mr.Cocke — 1191

Hon. Mr. Wolfe — 1193

Mr.Cocke — 1194

Mr. Wallace — 1195

Hon. Mr. Wolfe — 1198

Mr. Stupich — 1198

Mr. Wallace — 1198

Hon. Mr. Wolfe — 1199

Mr. Nicolson — 1199

Hon. Mr. Wolfe — 1200

Mr. Levi — 1201

Hon. Mr. Wolfe — 1202

Mrs. Dailly — 1202

Hon. Mr. Wolfe — 1202

Mr. Stupich — 1203

Hon. Mr. Wolfe — 1204

Ms. Sanford — 1205

Mr. Lea — 1205

Mr. Stupich — 1205

Mr. King — 1206

Hon. Mr. Wolfe — 1206

Mr. Gibson — 1207

Hon. Mr. Wolfe — 1207

Mr. King — 1207

Hon. Mr. Wolfe — 1208

Mr. Skelly — 1208

Mr. Hewitt — 1209

Mr. Skelly — 1209

Hon. Mr. Wolfe — 1209

Mr. Lauk — 1210

Ms. Brown — 1211

Hon. Mr. Wolfe — 1212

Mr. Skelly — 1212

Hon. Mr. Wolfe — 1213

Mr. Nicolson — 1214

Hon. Mr. Wolfe — 1214

Mr. Stupich — 1214

Vote 63 approved — 1214

On vote 64.

Mr. Wallace — 1214

Hon. Mr. Wolfe — 1214

Ms. Brown — 1215

Hon. Mr. Wolfe — 1215

Vote 64 approved — 1215

Vote 65 approved — 1215

On vote 66.

Mr. Stupich — 1215

WEDNESDAY, APRIL 28, 1976

The House met at 2 p.m.

Prayers.

MR. G.H. KERSTER (Coquitlam): A very brief introduction: in the House today is a group of students and two teachers from my constituency. They're here on a Crown Zellerbach-sponsored tour, co-ordinated by Mr. Bob Porter, manager of institutional services. The teachers are: Mrs. E. Cuthbertson and Mr. Kirk Templeton of Mary Hill Junior Secondary. The students are, and there are just a few: Shirley Coltman of Como Lake Junior Secondary, Marianne Potter of Dr. Charles Best Junior Secondary, Yvonne Dumont of George Pearkes Junior Secondary, Stuart Cox, Julie Cathy, Raymond Delebeck and Cindy Dawson of Mary Hill Junior Secondary, Robert Hargraves of Montgomery Junior Secondary, Norma Hoce of Moody Junior Secondary, and Cheryl-Lynn Otman of Sir Frederick Banting.

I ask the House to join me in making these students and their teachers welcome today.

HON. W.N. VANDER ZALM (Minister of Human Resources): Mr. Speaker, I would also ask the House to join me in welcoming a group of students from Surrey, the Frank Hurt school. They're also here on the Crown Zellerbach tour.

MR. G.F. GIBSON (North Vancouver-Capilano): In the gallery this afternoon at 4 o'clock will be 70 students from Carson Graham, and their teachers, Mr. Krawczyk and Mr. Derren. I would ask the House to make them doubly welcome.

HON. G.M. McCARTHY (Provincial Secretary): Mr. Speaker, we are very honoured today to have the wife of the Speaker of Alberta in our gallery, Mrs. Amerongen. I would ask the House to give her a very warm and hospitable welcome.

Mr. Speaker, also in our gallery today are representatives here to attend a recreational conference in Victoria for the next three days. I would ask the House to welcome Commissioner Atkinson, Commissioner Wayneborn and Commissioner Livingstone from the Vancouver Board of Parks and Public Recreation, and Mr. Marshal Smith who is our recreational director in the city of Vancouver, and very many representatives from community associations in the city of Vancouver. We welcome them all.

MR. SPEAKER: May I also add a word of welcome to the wife of the Speaker of the House in Alberta, Mrs. Amerongen, and extend to her best wishes and hope that she will take back to her husband in Alberta the respect and good wishes of the House in British Columbia.

MR. D.G. COCKE (New Westminster): Mr. Speaker, in the gallery, along with the Surrey and Coquitlam group, is a group from the New Westminster Secondary School. I'd like the House to welcome these students from the royal city; let's welcome them royally.

MR. W.G. STRONGMAN (Vancouver South): Mr. Speaker, seated in the assembly today is a long-time associate and close friend of mine. I would ask the assembly to welcome Mr. Robert McLean of West Vancouver.

MR. G. MUSSALLEM (Dewdney): Mr. Speaker, I ask the House to welcome 55 young ladies and gentlemen from our municipality of Maple Ridge, the Maple Ridge Senior Secondary School. The instructor is Mr. John Doyle. I appreciate your welcoming them.

MR. GIBSON: Mr. Speaker, I'm rising now to say that in committee last night I was asked by the Minister of Finance (Hon. Mr. Wolfe) and the Minister of Labour (Hon. Mr. Williams) to table a document which I mentioned, which shows that British Columbia ranked 10th out of 10 in per capita economic growth over the last decade. I would ask leave to do so herewith, and also mention a correction. I said it was the Financial Post — it was from the Financial Times.

Leave granted.

Oral questions.

VANCOUVER EAST BY-ELECTION

MR. W.S. KING (Leader of the Opposition): A question to the Provincial Secretary. In 1973, when the former Premier, the Hon. W.A.C. Bennett, resigned, a by-election was called expeditiously to make way for his son to enter this assembly. The current Premier has indicated that a by-election would be called in similar expeditious fashion to make way for the leader of the New Democratic Party (Mr. Barrett) in his electoral race in Vancouver East. Why has that by-election not been called to date?

HON. MRS. McCARTHY: Mr. Speaker, it is my understanding that the by-election was initiated by the former member for Vancouver East to make way for the leader of the NDP to sit in this House. That decision has yet to be made by the electorate. Mr. Speaker, in answer to the question by the acting

[ Page 1182 ]

Leader of the Opposition, I am awaiting the report. I have asked for the report and when the report from the electoral officer is in my hands, I will be making a statement at that time.

MR. KING: Mr. Speaker, to the Provincial Secretary, it was reported by the executive assistant to the provincial registrar of voters that the enumeration of the Vancouver East constituency was completed on April 7. Under the Provincial Elections Act, enumeration does continue until after the by-election is called. In light of that fact and that revelation by the provincial registrar of voters' office, what possible justification can the Provincial Secretary have now for delay other than fear of facing the leader of the NDP?

MR. SPEAKER: Order, please! The purpose of the question period is to ask questions, not make speeches, hon. Leader of the Opposition.

HON. MRS. McCARTHY: The hon. Leader of the Opposition says: "Right on!" I suggest that he will accept, then, that the Provincial Secretary can add a little to the answer to this question. First, with regard to the reference you make to the assistant to the registrar of voters, I believe I have read the same reference when it came from the media. On that basis, on Tuesday or Monday of this week I asked for the registrar of voters to give a formal report to the province which would incorporate the report which is mentioned by the Leader of the Opposition on which the Provincial Secretary will then be able to act. We on this side of the House, even though the opposition leader would like to make it a political situation, do not see that we are delaying the calling of the by-election out of fear of anyone in this province, Mr. Leader.

MR. SPEAKER: Order!

Interjection.

MR. SPEAKER: Would the hon. Leader of the Opposition please extend to other members of the House the same courtesy he would wish to have extended to himself?

Interjection.

MR. SPEAKER: I was calling her to order, hon. member. The hon. Provincial Secretary was on her feet and had the floor. Continue, hon. Provincial Secretary.

HON. MRS. McCARTHY: Mr. Speaker, I take it I may continue then in answer to the leader. As I say, we are not concerned with the suggestion that he makes, in terms of fear of anyone in this House.

MR. SPEAKER: Order, please, hon. Provincial Secretary. Will you stay with the subject matter which was put before you?

HON. MRS. McCARTHY: This has reference to the suggestion made. We are concerned that everyone has had the ability and opportunity to be registered that those same people in Vancouver East were not given before the last provincial election.

MR. SPEAKER: Order, please.

HON. MRS. McCARTHY: That has been fulfilled and the report is on its way to me.

M R. G.V. LAUK (Vancouver Centre): A supplementary question to the hon. Provincial Secretary. When giving initial instructions to the registrar of voters, did she not request that as soon as the enumeration was completed, according to law prior to the call of the by-election, a report would be immediately sent to her?

HON. MRS. McCARTHY: Mr. Speaker, as the member well knows, the statutes require the Deputy Provincial Secretary to contact the registrar of voters. My Deputy Provincial Secretary has so done and has enacted the letter of the law through the statutes as I would have expected him to do. Through him I have asked for a report, and we are awaiting the report.

MR. LAUK: Mr. Speaker, to the hon. Provincial Secretary, in accordance with the statute, no formal report is required. I would ask the Provincial Secretary….

MR. SPEAKER: Order, please. What is your question, please?

MR. LAUK: My question is: is not the Provincial Secretary playing games with the law…?

MR. SPEAKER: Order! That is out of order, as you well know.

MR. G.R. LEA (Prince Rupert): A supplemental.

MR. SPEAKER: We have had at least three supplementals on this same matter at this particular stage of the question period. Is it on the same matter, hon. member?

MR. LEA: Yes, it is.

MR. SPEAKER: I'll allow a further supplemental

[ Page 1183 ]

from the member for Prince Rupert.

MR. LEA: Mr. Speaker, the hon. Provincial Secretary said, in answering, that she thought the Leader of the Opposition was trying to enter politics into whether a by-election should be called.

MR. SPEAKER: Order, please! Have you got a question?

MR. LEA: Yes, I have.

MR. SPEAKER: Well, then, state it.

MR. LEA: I would like to ask the Provincial Secretary when it has come to pass in this province that the calling of an election isn't surrounded by politics.

MR. SPEAKER: That's not a proper question.

MR. LEA: I'd like a proper answer to that, Mr. Speaker.

MR. SPEAKER: Order, please. The hon. member for North Vancouver–Capilano (Mr. Gibson) on a different subject.

MS. R. BROWN (Vancouver-Burrard): Supplemental.

MR. SPEAKER: I have allowed all the supplementals on that that I think are necessary at this time, hon. member.

MR. LEA: How can you know until you hear the supplemental?

MS. BROWN: Point of order.

MR. SPEAKER: The hon. member for North Vancouver–Capilano has been recognized.

MS. BROWN: A point of order, Mr. Speaker.

MR. SPEAKER: The hon. member for Vancouver-Burrard on a point of order.

MS. BROWN: Mr. Speaker, is there a limit to the number of supplementals that can be asked on a question?

MR. SPEAKER: It is at the discretion of the Speaker to determine if, in fact, the subject has been well canvassed. The subject you are talking about, hon. member, has been before the House on a number of days, with a number of questions and a number of supplementals allowed. That is why I now call on the member for North Vancouver–Capilano, who wishes to enter into the question period.

MS. BROWN: Mr. Speaker, may I humbly suggest that we do not feel the subject has been fully canvassed. There are a further number of questions on this issue which we would like your permission to pursue, and we would appreciate it if you would allow us to ask supplementals until we feel that we have received the answers we are trying to get.

MR. SPEAKER: Hopefully, hon. member, we will get far enough in the question period that you can state other questions, if that is your desire.

The hon. member for North Vancouver–Capilano.

GOVERNMENT CONTRACT TO
LIGHTHOUSE COMMUNICATIONS LTD.

MR. GIBSON: Mr. Speaker, a question to the Minister of Mines (Hon. Mr. Waterland). Yesterday the minister said to the House that he gave work to Lighthouse Communications Ltd., and later was quoted by the media as saying that he engaged that firm to prepare and present to the mining industry a public relations plan for the mining industry's use. My question is: did the minister call for proposals on this work from any other firms?

HON. T.M. WATERLAND (Minister of Mines): Mr. Speaker, I did not call on Lighthouse to make a proposal for public relations to the industry. I called upon them to make a presentation as an example of what they could do. It was a very limited short-term job. I did not seek bids on the job. It was something that had to be done rather quickly because I was invited to attend this particular group called the Mining Support Group and there certainly was not sufficient time to ask for tenders for a job of this very small nature.

SOME HON. MEMBERS: Oh, oh!

MR. GIBSON: On a supplementary, the minister said yesterday that no suggestion was made to the industry group that they should use the services of Lighthouse. I would ask the minister if he doesn't feel that the engagement of that company by his department and the introduction of that company to the meeting of the mining support group by the minister does not constitute a very definite form of moral suasion against that group to employ them.

HON. MR. WATERLAND: Mr. Speaker, the answer to the question is no.

[ Page 1184 ]

PSYCHOLOGICAL TESTING OF
WORKERS' COMPENSATION CLAIMANTS

MR. G.S. WALLACE (Oak Bay): To the Minister of Labour, Mr. Speaker, with respect to members of the disability rights association presenting their claims to the Workers' Compensation Board, usually with back complaints. Is the minister aware that on an arbitrary basis certain members are subjected to psychological testing in which the applicant gives a true or false answer to many irrelevant questions such as: "I believe in the second coming of Christ; I believe women ought to have as much sexual freedom as men; sometimes at elections I vote for men about whom I know very little; if I were an artist I would like to draw flowers; I like tall women; I think Lincoln was greater than Washington."? I could go on with many other examples, Mr. Speaker, but….

This is not really a joke because the claimants apparently have their attempt to obtain workers' compensation based on the kind of answers they give to that kind of question. I was wondering if the minister was aware that the Workers' Compensation Board was using this kind of technique.

AN HON. MEMBER: How would you answer those questions?

Interjections.

MR. SPEAKER: Order, please. The hon. Minister of Labour has the floor.

HON. L.A. WILLIAMS (Minister of Labour): The member has asked a very serious question. The answer is no.

MR. WALLACE: Supplementary, Mr. Speaker. Could I have the minister's undertaking to inquire if in implementing these techniques the compensation board had any prior contact with the Human Rights Commission, since the outcome and the answering and the importance attached to these questions might well contravene the individual's human rights? I would like to know if the minister would undertake an inquiry and tell the House after the inquiry how much emphasis the board has been placing on these findings to determine whether a claimant is entitled to a pension or not.

HON. MR. WILLIAMS: Mr. Speaker, if the member would be good enough to provide me with details, I will immediately direct the attention of the Workers' Compensation Board to the matter, plus the human rights branch, and obtain the information for him. I just would assure the member, however, Mr. Speaker, that I believe that the independence of the Workers' Compensation Board should be preserved.

VANCOUVER EAST BY-ELECTION

MR. D.D. STUPICH (Nanaimo): Mr. Speaker, of the Provincial Secretary. A few minutes ago she said that she did make a request to Mr. Morton either Monday or Tuesday. I just thought — today is Wednesday. You said through your deputy. I'm not just sure what you meant. Was it a phone call or did he make a written request? Since today is only Wednesday I thought you would know whether it was yesterday or the day before.

HON. MRS. McCARTHY: Mr. Speaker, for the benefit of the member for Nanaimo, I know what day of the week it is. I have made the request; I have given my undertaking that I will let the House know when that report is received. May I, at this time, Mr. Speaker, ask leave to reply to a question from the first member for Vancouver-Burrard (Ms. Brown) ?

MR. SPEAKER: There is leave required.

HON. MRS. McCARTHY: May I answer that question?

MR. SPEAKER: Is it a question that was asked today or a former day?

EMPLOYMENT OF RON WORLEY

HON. MRS. McCARTHY: Yes, it is a question that was asked formerly. The first member for Burrard wished to know whether or not Ron Worley was employed by this government. I want to answer that question. I have canvassed the government and we have no knowledge of Mr. Worley being employed. I would like to ask the first member for Burrard why she asked the question. If I could have that answer, perhaps she has some knowledge.

Interjections.

MS. BROWN: I take that question as notice. (Laughter.)

MR. SPEAKER: Order, please! The question period is terminated by the bell.

SOME HON. MEMBERS: Oh, oh!

Presenting reports.

Hon. Mr. Mair presents the annual report of the Department of Consumer Services for 1975, which includes the annual reports of the trade practices branch and the debtors assistance division pursuant to their respective Acts.

[ Page 1185 ]

Hon. Mr. Gardom presents the report of the Department of the Attorney-General for the period ending December 31, 1975.

Orders of the day.

The House in Committee of Supply; Mr. Schroeder in the chair.

ESTIMATES: DEPARTMENT OF FINANCE

(continued)

On vote 61: minister's office, $78,246.

MR. G.F. GIBSON (North Vancouver–Capilano): Mr. Chairman, I would like to commence by reciting very briefly to the minister some of the questions I've asked earlier and to which he has given no answer. Who signed or authorized the $181 million NSF cheque to ICBC? Question No. 1.

HON. E.M. WOLFE (Minister of Finance): Nobody.

MR. GIBSON: Mr. Minister, I can't believe it when you say nobody. I'm sure that was facetious, Mr. Chairman.

AN HON. MEMBER: There was no NSF cheque.

MR. CHAIRMAN: Order, please. May I remind hon. members that only the member standing on his feet is being recorded on Hansard; therefore it is not advisable that answers be given from a seated position. The member for North Vancouver–Capilano has the floor.

MR. GIBSON: Mr. Chairman, I heard an interjection from across the way that there was no NSF cheque. Of course there was. When a cheque is issued substantially in excess of money in the bank, and when the province, 24 hours later, is required to be completely debt-free, and when the cheque is not cashed as of that time, that cheque is NSF. Let us have no more nonsense about that.

Interjections.

MR. CHAIRMAN: Order, please.

MR. GIBSON: Oh, oh! Mr. Chairman, these interjections are interesting. The Minister of Consumer Services (Hon. Mr. Mair) says, "unless there are arrangements made with the bank." Very interesting. The Minister of Consumer Services ought to read the Revenue Act. The Revenue Act says that the province must be debt-free in every way as of March 31, midnight. That includes overdrafts, Mr. Chairman.

Interjections.

MR. GIBSON: That minister gets so red in the face, Mr. Chairman, I fear for his health. I would suggest that the good doctor ahead of him swivel his seat around and attend to his choleric condition immediately.

MR. CHAIRMAN: Order, please, hon. members. We are embarking on three and a half hours of work this afternoon. I would like the House to be its orderly self, and let's start with a good beginning. The member for North Vancouver–Capilano has the floor. Mr. Member, may I remind you that we are on vote 61?

MR. GIBSON: Thank you very much, Mr. Chairman. I was just trying to very briefly go through the unanswered questions. We could have been off that one in about 10 seconds. I'd just like to remind the minister of it. But I'll take it in a few minutes, Mr. Minister; I've a few things to say.

To the second unanswered question — and the minister has had overnight to look this one up, so I can see no excuse for him not having the answer today. What is the cash position of the province, approximately? Again, within $10 million, roughly, Mr. Minister. You should know that.

You gave us the results one day once before. You said that there was $245 million in cheques outstanding against $25 million in the bank. What's the condition today? That's all I want to know. He should know that information overnight, Mr. Chairman.

Now, he gave inadequate answers as to forecasting procedures and revenue forecast — totally inadequate. The minister waffled on a question as to whether or not we will have a Clarkson Gordon type report before this Legislature next year — which we must have. And just as we reached the hour of adjournment last night, I asked him a couple of questions which I will ask again.

First of all: the attitude of this government towards the use of credit unions for the maintenance of certain cash balances. The credit union movement I believe to be a very important one in British Columbia. I think that the credit unions, taken together, form our third-largest — I suppose the word would be quasi-banking — banking system in this province. I would suggest that they should be utilized by the government of the province, at least to that degree. I would ask the minister for a statement of policy in that regard. The former government, which had some faults, also had some good things. One of the good things was that they were making greater

[ Page 1186 ]

use of the credit union movement — a locally based, locally controlled financial group in this province.

Next, I would ask the minister if he is aware of the Cragg report. Professor Cragg, at the University of British Columbia, has done a study on the effects of the 2 per cent sales tax on inflation in British Columbia, and on the consumer price index. Professor Cragg, who was a man much admired by the Social Credit Party last year when he brought in his report on rent control, I trust will be equally paid attention to this year when he finds that the effect on the consumer price index of this 2 per cent sales tax hike will be in excess of 1 per cent.

So I ask the minister this simple question: did he have a study of his own, before raising the sales tax by 2 per cent, of the effect that that rise would have on the consumer price index in British Columbia? It would, of course, be thoroughly irresponsible if he did not have such a study, given the ostensible concern of that government for inflation. I would like to know that such a study existed. I would like to know what it showed as to the probable impact of that 2 per cent sales tax hike on the consumer price index — and it certainly was in excess of 1 per cent.

Now going on to the matter of quarterly reports which the Minister has promised, and monthly reports which I say we should have; we have a former Minister of Finance in this House (Mr. Stupich) who perhaps may give us the benefit of his experience in this regard later on. My own opinion is that the figures are available to the government of this province from the comptroller-general to produce a monthly financial report — not a quarterly report, but a monthly report.

I want to tell the Minister, Mr. Chairman, that not only other provinces in this country but the national government, whose financial operations exceed ours by a factor of 10 times, is able to produce for the citizens of this country a monthly financial report which is received only about one month after the particular month concerned. That is, you get, say, the April report around the end of May or the beginning of June.

If the national government with its 10-times-larger scale of financial operations can do that, why can't British Columbia? I suggest that British Columbia can, and I suggest that it is important for the auditing function of this Legislature over the financial operations of this province that we have those monthly figures. I say that they can be produced.

Next, Mr. Chairman, I would like the Minister, if he would, to give us a little lesson in arithmetic and tell us about apples and oranges. In particular, I would like him to tell us how he gets his 5.4 per cent increase in expenditures mentioned in his budget, because, Mr. Chairman, as I read the budget, that is not a very honest figure. It is a misleading figure. It is a figure which suggests that government expenditure on a comparable basis, year-over-year, is only up 5.4 per cent when, in fact, Mr. Chairman, it is up more like 16 per cent when you make the proper comparisons.

The 5.4 per cent figure was arrived at only by adding in certain ICBC, B.C. Railway, transit bureau and B.C. Hydro operations in the past fiscal year and subtracting out certain B.C. Ferry operations in the coming fiscal year. It is absolutely not comparable, and the Minister, if he's any kind of an accountant at all — in particular if he's a good enough accountant to be Finance minister of the Province of British Columbia, which presupposes an ability to do certain simple sums — should be able to tell us how he can justify that ridiculous comparison.

The true increase in expenditure year over year, Mr. Chairman, is 16 per cent, roughly, which means that given a growth in the economy, which the Minister himself has forecast, of 14 per cent in the coming year, this government across the way, which says that government interjection into the economy should be reduced, is actually increasing that involvement in the economy in the coming year. I'd like the Minister to explain that. I don't really expect an answer, because it's inexplicable. He's compared apples and oranges, which is not a proper comparison.

HON. MR. WOLFE: You don't like my answers anyway, so keep it up. Let's have some more.

MR. GIBSON: Generally, Mr. Minister, I don't like your answers because you slide off the hard points, through you, Mr. Chairman. You get up and give us some political bafflegab…

AN HON. MEMBER: Oh, oh!

MR. GIBSON: …and do not answer the particular questions.

AN HON. MEMBER: It's true.

Interjections.

MR. CHAIRMAN: Vote 61, please.

MR. GIBSON: Thank you, Mr. Chairman. The Minister is charged with the responsibility of an entity created by legislation in this House last year called the British Columbia Savings and Trust Co. I would ask the Minister: what is the status of that entity? Does it at this time have any legal status — the B.C. Savings and Trust Co.? Does it at this time have any legal status? Has it conducted any financial operations of any kind, including payments to the one person who was given some publicity as going to be appointed to the board of directors — whether that was actually ever effected, I don't know — Mr.

[ Page 1187 ]

Eric Kierans? Most importantly, what is the plan of the government for the future of B.C. Savings and Trust?

I was very sceptical of that legislation when it passed, Mr. Chairman, but one of the more agreeable facets of it was the hope that this new financial entity based within British Columbia would be able to maintain within British Columbia some of the fiscal fees now being paid to entities such as the First Boston Corp. and so on — the usual fiscal agents of the province of British Columbia in our international borrowings. There was some hope the B.C. Savings and Trust might be able to recapture some of those amounts on future borrowings.

Interjection.

MR. GIBSON: That was the hope, Mr. Minister. That was the hope as the past government stated it. I'd like to know….

Interjection.

MR. GIBSON: I'd like to know what the intention of the government is with respect to British Columbia Savings and Trust.

Next I would like to ask the minister if he will investigate the asset holdings, in terms of investment in British Columbia, of banks and other national financial institutions, insurance companies and so on, compared to their deposits in British Columbia as far as banks are concerned…

HON. G.B. GARDOM (Attorney-General): And do what?

MR. GIBSON: …or their sources of revenue in British Columbia as far as insurance and other financial institutions are concerned.

The hon. Attorney-General says: "Why?"

HON. MR. GARDOM: Yes, and do what?

MR. GIBSON: And do what? Well, the first step to enlightened action, Mr. Attorney-General, through you, Mr. Chairman, is some knowledge. We do not have adequate knowledge of the extent to which the deposits and other forms of capital originating from British Columbia are in the event invested in British Columbia. We do know that British Columbia is capital-short. We do know that we seem to need a certain degree of foreign capital inflow into our province every year to maintain investment in the economy. If it is possible in any way to divert the savings of British Columbians in a profitable way for them towards this province, then that would be a useful thing to do.

HON. MR. GARDOM: How?

MR. GIBSON: The Attorney-General sits there saying "How?" He's in the government; let him figure it out. I'm giving him a good objective. The objective is a greater investment of the savings of British Columbians in the province of British Columbia at a profit to them. The indispensable first step in that is investigation to determine what is the status, to what extent do the banks make loans in British Columbia comparable to their deposits in British Columbia, to what extent do the insurance companies do the same kind of thing.

The most recent figures available to me — and the banks may have put out a more recent report, I don't know — is the report by the banks on the year 1974 in which they indicated that in terms of small loans there was a reasonable concurrence between lending activity and population across the country. There was a very significant omission, and that was large loans. Naturally the larger corporations are concentrated in central Canada, and to me it is very important to further follow up the commitment that was made by the national government at the Western Economic Opportunities Conference over two years ago now, I guess….

AN HON. MEMBER: Three years.

MR. GIBSON: Three years ago, the member says — to further follow that up and get more information on what are the regional financial flows in this country. The federal government tabled another report quite recently, I see, which also was inconclusive. We have to know, as far as British Columbians are concerned, how our assets are being used. Are they being exported to other parts of Canada? Once we know that, then we can turn to the rights and wrongs of the question, but first of all we need to know the information. I suggest that study to the minister.

I want next to commend to him the desirability of a study into British Columbia having and operating its own corporation tax system. This is not a new departure in Canada, as the minister will know other provinces have such a system. The reason for it is simple: to be able to give to corporations which are the major engines of our economic activity incentives to move them in one direction or another, such directions as are thought desirable in the public interest. I made this suggestion to the last government; I make it to this government.

If we were in control of our own corporation tax system in this province we would be in a position to shift incentives around in a way that might be useful to our province, because we have a very different economy than most of Canada. It is far more resource-intensive. It has less manufacturing except

[ Page 1188 ]

strictly related to resources, and those things call for different kinds of incentives in the corporate tax system. I just make that theoretical point to the minister in the hopes of putting an idea into his mind that he might explore.

I would now turn to two suggestions that I would ask him to carry to the federal government at the next Finance ministers' conference, and I make these in the full realization that changes in national taxation patterns take a long time to implement. But the suggestions have to start somewhere.

The minister will agree, I suspect, with the general proposition that there is a need for the encouragement of savings and investment as opposed to consumption in our economy at the present time. This is so because we must increase our productivity to stay competitive in this world. Our industries in British Columbia happen to be very capital-intensive, and those savings and investments are needed, if for nothing else, to have more Canadian investment in our economy and less foreign investment.

Given that, I would turn to a set of figures given by the head of the Investment Dealers' Association of Canada on March 11 of this year, in a speech in which he first of all stated that the figure that we need between this year and 1985 nationally, in constant dollars, is $500 billion in savings and investments, and in current dollars he felt close to $900 billion. These are figures that absolutely boggle the mind, they are so huge.

But coming back to the given year, 1975, he described how savings were divided in that particular year, and he divided them into four kinds: first of all savings from individuals, which amounted to $7.5 billion. And these savings, Mr. Chairman, are the most important kind of savings because they tend to find their way into the Canadian capital market and become available for investment in new productive facilities.

Secondly, savings by business — much larger, generally used to expand the enterprising question and therefore less mobile as a form of capital, and, in my opinion, less desirable. I think we ought to have measures, indeed, to increase the disposition of retained earnings back to the shareholders and thereby allow them to find their way back into the capital market, but that's by the by. That type of savings is estimated at $23 billion last year in Canada.

The next level of savings that Mr. Kniewasser describes is savings by government, which last year were not a form of savings at all, but rather so-called dis-savings — a negative figure of $4.5 billion to finance their budgetary deficits, a trend that is certainly causing me concern in the way our economy is going.

Fourthly, the remaining source of savings, savings from foreigners. Off-shore borrowing last year, Mr. Chairman, was $4 billion. To me that's a disturbing figure. There is every indication that it's going to go even higher this year when you look at the number of issues that have been floated in foreign markets just in the first quarter.

So there are some basic figures as to the level of savings in Canada, and the question I propose to the minister is: how can we encourage savings, particularly from individuals, to better finance the productive investment we are going to need in our country, and especially in our province, over this year and the years to come? If the minister wants to balance his budgets in future years without onerous taxation, he needs productive investment in British Columbia.

The plan I would advocate to him, and ask him to advocate to Ottawa, is a variation of the so-called Canadian Investment Plan which is a proposal to do in the equity field, and the general financial instrument field, what has been done in the Registered Retirement Savings Plan. In other words, it's an incentive to individuals to save by offering them deferred-tax treatment for the purchase or investment of certain investment instruments. As to eligibility, this should include, in my opinion, all resident Canadian taxpayers. There should be an individual aggregate lifetime limit, probably, and an annual limit as well, so it couldn't be taken undue advantage of any given individual. Again there would be the same general ground rules as you have for the Registered Retirement Savings Plan, with which I am sure the minister is familiar.

The qualified investments, as set out by the main proponents of the plan, would include not only equity securities, but federal, provincial and municipal securities, debentures of corporations and so on. I would be inclined to advise the minister that these things should be restricted much more than that, at least to start with, and that this particularly favourable tax treatment should be given only to new equity issues properly registered by the income tax department for such favourable tax treatment.

I would suggest to the minister that this kind of plan could enormously boost the propensity of Canadians to save, to forgo some of their current year's consumption for future advantage, which works out not only to the advantage of themselves, but to the advantage of our whole country, because I repeat again, Mr. Chairman, we are a capital-intensive economy. We must find the sources of capital; we must find ways of overcoming the incentive to spend which our continuing inflation rate is giving as it erodes the saving base of ordinary Canadians.

So I ask the minister if he will give consideration to that proposal, with which I am sure he is familiar, and carry it to the next Finance ministers' conference in Ottawa, and enlist the support of other provinces in that fight.

A second suggestion that I believe he should take

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to Ottawa is an extension of the indexing plan that is currently in the federal income tax system. Indexing, currently, is for income only. To me it is a thing greatly unfair and greatly against the incentive to save, that the capital gains tax base in our country is not indexed. It's quite possible for a person to acquire a security or an investment of some kind that appreciates in value each year only by the amount of inflation, which, if he disposes of it at the end of, say, 10 years, is worth no more to the individual than when it was purchased. Yet that individual, with our current rates of inflation, will be subject to a tremendous amount of tax — easily doubling in 10 years.

Taxation on unreal income, on income that doesn't exist at all — this is the kind of disincentive to investment, and the incentive to current consumption that is starting to undermine all of our capital markets in Canada. I suggest to the minister that even for the very narrow reason of wanting to sell his own bonds, this capital market has to be encouraged, And while capital gains tax doesn't as a rule apply to bonds, the investment market is interconnected through and through, and the total amount of money there available has a great deal to do with our own financial position in British Columbia, quite apart from the investment picture.

Mr. Chairman, there are a fair number of questions for the minister; I would just add one further one: would he be kind enough to tell us how, if at all, he has modified the Treasury Board procedures followed by the government?

Could he tell us, for example, whether all proposals to cabinet for one programme or another have to go through the Treasury Board for some kind of a cost-accounting figure in the first instance before cabinet pronounces on it?

Could he tell us how Treasury Board assesses things in terms of costs and benefits as between various programmes?

Could he tell us something about expenditure control by the Treasury Board and the release of funds to ministers, pursuant to given votes by this House, or under warrants, or however they may be authorized?

Could he tell us, finally, whether there is any provision in his new Treasury Board setup for what I would call a performance audit? We are going to have an auditor-general in British Columbia, we are told by the government — and this is a very good thing. But auditors-general customarily look at the dollars and cents rather than at whether a given programme is really giving the taxpayer value for their money.

It strikes me that a useful addition to any Treasury Board would be a body whose job is to get out among the departments and say: "Here is the programme you are asked to do," be it in terms of the delivery of health services, or human resource services, or assistance to the mining industry, whatever it is. "Here's the programme you are being asked to do. How well are you doing it? Are we getting value for our money?"

That in part is a job of this Legislature, Mr. Chairman, but we do not have, alas, the kind of staff that is required on the legislative committees, or the references to the legislative committees that are required for this kind of oversight. I would prefer to see the legislative arm strengthened. But as an adjunct to that I would ask the minister: what provisions he has made in his Treasury Board setup for what I would call a performance audit?

That's quite a list of questions for the minister, Mr. Chairman, I'll sit down now and hope for some response.

HON. MR. WOLFE: Mr. Chairman, as the member has indicated, there were quite a number of questions. I don't know whether to start in the middle or the beginning or the end. In any event, he did earlier refer to where it has been written by anyone anywhere that sales taxes were not regressive. I think the member across the way has referred to this occasionally — this is a sort of conversation that's gone back and forward periodically. I have here the Ontario Committee on Taxation report, 1967; it's just one example, page 217. I'll just quote a couple of sentences. They did a study on people with incomes ranging from $2,000 to $10,000 and it indicates the burden of Ontario retail sales tax, expressed as a percentage of family income.

The essence of the report states that the table shows that the existing Ontario retail sales tax burden in terms of family-income distribution is proportional over the first two family-income brackets, which are in effect from zero to $4,000, progressive between the second and third brackets (That's the opposite of regressive, my friend); roughly proportional from the third bracket to the sixth bracket — this is leading from about six up to 10; proportional is in the middle between regressive and proportional — and regressive to the final bracket for incomes of $ 10,000. I rest my case.

I've quoted to you from a document which is produced by a committee on taxation of some years back. I think that in any province it depends on the exemptions under sales tax as to the regressivity which might apply at a low-income bracket. Certainly B.C. has nothing to be backward about in terms of exemptions because we have full exemptions on food, children's clothing and all the matters that we discussed earlier.

Mr. Member for North Vancouver–Capilano (Mr. Gibson), you referred to sales tax and the likely impact on the cost of living. My information is that the likely figure that would be effective through April's cost of living might be some 0.6 to 0.7 points

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additional onto the existing rate which, I believe, is about 147.8. Now, this would depend on the national figures, but our study, or our computation of what the impact is, is that it would be somewhere around 0.6 to 0.7 points. I will be interested to see what the result is when the figures come out after April.

You referred to the B.C. credit unions and the degree of extent to which the government deposits with them.

We certainly are in accord with wanting to assist credit unions and support them, and my information is that at present there's some $22 million on deposit with credit unions on short-term securities. They have an opportunity to bid on all short-term offerings the government produces, and at the moment there's some $22 million on deposit with them.

He mentioned quarterly reports and this is a subject I'm equally interested in. We've indicated in the throne speech and in other ways that we do intend to introduce quarterly financial reporting. We're studying what other provinces are doing, and one document I have here is the Ontario quarterly report of September, 1975, which basically includes the year to date, comparative operations, the current year and last year, then on the other hand the budget expectations originally estimated and then revised to date, both for budgetary transactions and for non-budgetary. It also includes certain information on the cash flow of long-term debt and so on. But that's about what it does cover, and we're reviewing the possibility of adopting something along these lines.

I would not agree with you that a monthly report would be as useful because of the fluctuations. I think that really in a practical sense a quarterly report summarizes a little longer period which would be more meaningful.

Incidentally, you refer to the national government, and others have. They do produce considerable financial information, but we should remember that the national government produces supplementary budgets throughout the year, and it's a different sort of ball game for this reason.

You asked a question about B.C. Savings and Trust. I can only say that there's no change in the situation insofar as the fact there was enabling legislation set up to provide this, and I don't know of any other activity that's been taking place where the B.C. Savings and Trust is concerned.

You mentioned among other recommendations the possibility of studying with the national government that the province might collect its own income taxes and something to this effect. We're watching this, and naturally in the meetings with the federal department regarding the Fiscal Arrangements Act, which expires early next year, these are some of the matters that might affect the revisions there made and the cost-sharing arrangements. For instance, Ontario is heading in the direction — and I've stated this many times — that they want to opt out of these cost-sharing programmes and develop a change in the income tax points in lieu thereof. Considerations of that kind…. We're trying to develop our own direction as to where we want to head where the cost-sharing changes are concerned, which would effect the recommendation you make covering collecting our own income taxes.

You mentioned registered retirement savings plans, and I think you were suggesting that they should be more widened to incorporate the allowances to purchase ordinary securities of different kinds to allow more investment opportunity, encourage private investment. I don't disagree with that, Mr. Member, and you can assume that we will be taking these matters up in our discussions with Ottawa. I thank you for the suggestion.

And just lastly, you asked a general question on Treasury Board and…. Mr. Chairman, the member asked a question about Treasury Board and I wouldn't know where to start on Treasury Board. Treasury Board does occupy a great deal of our time. I think it's fair to say that we have strength in Treasury Board. It does meet regularly and we ask all members of Treasury Board to participate in the decisions of authorization of expenses that come before it. Treasury Board authorizes a monthly release of funds to each minister — this is required to be approved by Treasury Board, each member — the release of his monthly funds for expenditure as a control over whether he's staying within his estimates for the year. We have issued, I could say, several directives having to do with staff and expense control measures and, as a matter of fact, if you'd like to have a look at some of these, I can show you these if you'd like to call my office. We have under review other areas that we hope to enlarge Treasury Board into in terms of providing a more useful service than perhaps it's been able to do in the past.

MS. K.E. SANFORD (Comox): Mr. Chairman, I have a question to the Minister of Finance which relates to taxation, specifically to taxation on improvements on land which is within a tree farm licence when that tree farm licence is also within the municipal boundaries. I know that that whole section with respect to taxation on tree farm licences gets very complex, but up in the north end of the island at the village of Port McNeill there are parts of two tree farm licences which are located within the municipal boundaries, and on those two tree farm licences are improvements which could total as much as $1 million worth such as workshops and bunkhouses.

Now the Taxation Act, part 2, section 24(n) reads as follows. I would just like to read this for the benefit of the minister:

"Crown lands held under a tree farm licence

[ Page 1191 ]

by virtue of the Forest Act, or held under an agreement with the Crown under the provisions of the Forest Act, whereby such lands are subject to management by the licencee or holder thereof for the purpose of growing continuously and perpetually successive crops of forest products on a sustained-yield basis…."

That particular reference is to the list of exemptions which is contained under section 24. So what happens is that when there are improvements on a tree farm licence located within the municipal boundaries, they are not subject to taxation under the Taxation Act; they are exempted. Members of council in Port McNeill feel that there is an inequity here because businesses such as hotels and motels and grocery stores must pay taxes on the improvements on their property. They feel that the improvements on the TFL within their municipal boundaries are just as much a part of a business as are the others. Therefore they feel that there is a definite inequity that exists here. This is when it is within the municipal boundaries of the village.

Therefore they feel that improvements on tree farm licences should be taxed when they are located within municipal bounds. I agree with them. I feel that this is an inequitous situation. They feel that they are losing a source of much-needed revenue. It is also my understanding that the companies are required to pay the education tax on those improvements, although I must confess that I have not researched that.

What I would like to know of the minister is whether or not the taxation commission which has been travelling the province holding public hearings has that particular taxation exemption under consideration. Is that part of their terms of reference? If not, I am just wondering if the minister could give the House the assurance that he will look into that particular section — that is, part 2, section 24(n) — with a view to changing it so that improvements on tree farm licences located within municipal bounds are subject to taxation the same as any other business located within that municipality.

HON. MR. WOLFE: Mr. Chairman, in answer to the question, it does sound rather involved. I think in terms of being of greater assistance, perhaps if you could have the council or the organization involved write me a letter, through yourself, if you wish, I would be happy to look into it. You asked whether it is something being explored through either of the commissions. I would say that it would either come under the Pearse commission on forestry or, on the other hand, the royal commission into property taxation. I would think more likely, since it has to do with property within the municipality, it would come under the royal commission on property taxation.

MS. SANFORD: Mr. Chairman, I would just like to inform the minister that the council has made representations to both the taxation commission and the Pearse commission but they don't know what response they are going to get or whether either one of those commissions has that particular subject as part of its terms of reference. I will have them write a letter and we will see if we can get it investigated. Thank you.

MR. D.G. COCKE (New Westminster): Mr. Chairman, there are a couple of points that I would like to explore with the minister for a minute or two, not the least of which is the phenomenal increase that we see in the medicare premium and the hospital per diem. Now the medicare premium is quite straightforward. We discussed that yesterday. We know it's a 50 per cent increase over what we had previously enjoyed in this province. I had hoped eventually that we would move to a position, as many other provinces have in Canada, where it would be based on an income tax point system whereby that way you are not taxing those who can least afford it.

I recognize that there is some relief in our system, but I really think that this kind of an increase toward an objective that we know we can never achieve is really not biting the bullet. Socreds are famous for talking about biting bullets. I think, in this particular case, they did not bite the bullet. They accepted the easy way out, something that doesn't have to be really thought about a great deal. All it has to be is announced and the time given, and then you implement that plan. But I really think that the medicare increase was certainly retrograde. I would hope that the minister over the next little while….

He made a lot of quick decisions, snap decisions, that were based on, probably, impetus from other members of the cabinet. I would hope that he will start thinking about this whole question, and start looking at the way they handle medicare in progressive provinces like Manitoba and elsewhere — even that province that this government, I think, recognizes as being fairly progressive, which is a neighbour of ours, Alberta. In any event, as I recall, there are six provinces using what most people consider to be the proper direction in this respect.

The thing that concerns me, as well as that, is the whole question of per diem hospital increases. I probably said on two or three occasions during the estimates of mine in the past that we were looking at ways and means of seeing to it that where possible board and room was paid by the people who were in long-term care, which most people know today as extended care, through some kind of rate structure. I announced on a number of occasions that we were looking at $5.50 a day, but the reason we weren't going into it was because we didn't have the safeguards in place that would see to it that young

[ Page 1192 ]

people…. Young people can be victims: and be chronically ill, and under those circumstances $7 a day and $210 a month would be a serious burden on a family that's trying to support a young person in that situation.

There are also older people who would be faced with a real burden, and that would be a person who is chronically ill and is eligible and finally finds himself or herself in extended care, but has dependent people to care for. We wonder if, in fact, this government has thought of safeguards for those particular people. Will there be committees struck to see to it that people will not be injured by this situation? I think that the $7 a day is somewhat high. It is a tremendously high price to pay for just straight room and board.

If we're talking in terms of health care being a right in this province, then we should be talking in terms of the health care aspect of that particular situation being cared for out of the public purse — and shared with Ottawa. That's another thing, too. We don't gain as much as many of the people out there might think. We're saying we're going to receive an addition from the patient, but it strikes me that there will be a reduction in the Ottawa contribution in this particular area, so that sometimes I think that these hasty decisions might very well be decisions that are not all that fruitful in producing the desired results — that bottom line of black print that says all's well in the kingdom of the Socreds.

Mr. Chairman, we don't want to see suffering in this province again. We don't want to see a lack of priorities in a particular area, at least of my great interest, over the next few years. If anybody sitting on that side of the House indicates to us that there was a great deal of priority given that particular field in the years prior to 1972, I'd like him to raise his hand, because we're the laughing stock of Canada, and we can go back to that situation very, very quickly if we're not careful.

I'm not suggesting to the Minister of Finance that he or any member of that cabinet should take a position that we have to go the route that may be somewhat rough on us in the future, and that we have to condition the public to know that the increasing costs have to be cared for. But increasing costs in hospital care, increasing costs in medicare are not going to be in any way reduced — certainly not practically in any event — by the measures that so far have been brought up by this government.

I just want to know whether there is going to be a committee struck to see to it that the parents, for instance, of a child with muscular dystrophy, or a young person who has dived into a pool without water in it and suffered a spinal injury that has caused a need for extended care for the balance of his or her life, possibly, are not going to have to be made to suffer.

Mr. Chairman, while I'm still on my feet, I made mention in the House recently that I've been given to understand…and fairly reliably. I have a number of people that I can talk to from time to time around the province who shake my hand and discuss things relatively candidly.

AN HON. MEMBER: Name one.

MR. COCKE: Evan Wolfe, for instance. I can't talk in this House to him because he can't talk back to anybody, but those are the orders that he has from the Premier; that's not his fault. I know perfectly well that were he given his head he'd be standing up and he'd be answering questions just like a charger. As a matter of fact, you know what he'd be doing, Mr. Chairman? He'd be anticipating questions. He'd be jumping up in this House and telling us all about where we're going, financially, over the next few years.

Interjections.

MR. COCKE: He'll tell me where to go? Now he's even getting nasty.

Interjection.

MR. COCKE: Mr. Chairman, this is so unlike that minister. You know, really and truly, he's not that type of person at all — I know that. You can tell to look at him he's a darling; he really is.

AN HON. MEMBER: Oh, no! That's not fair.

Interjection.

MR. COCKE: That's smearing him, he says.

AN HON. MEMBER: You're talking about Evan?

MR. COCKE: You know that funny little bit of a comic in a newspaper that I saw the other day where he's dressed up with a wolf's head on him? No-o-o-o-o….

Mr. Chairman, seriously, I said in this House the other day that hospitals were advanced moneys that were unanticipated moneys prior to August 30. I got a runaround as far as the question was concerned. Then I noted that the Minister of Health (Hon. Mr. McClelland) in The Daily Colonist on April 16, after I was out of town, answered the question, and he started talking about the ways that advances are paid to hospitals. I'm not quite sure that he knows all of the ways of describing this situation, but I note here that he's saying that one of the major items in this year's advance payments was for retroactive wage increases — that was $6 million. We all know about that. That was going and that's forgiven. There's no

[ Page 1193 ]

question about that. I'm not discussing that in any way, shape or form.

Nor, for that matter, was I discussing in this House the question of year-end adjustments. The Minister of Finance has his able deputy with him and he can tell him what year-end adjustments are. In the hospital business there are always year-end adjustments. Sometimes they're met, sometimes they're not met, but I mentioned that I recognized that those funds would be paid. No question about those funds.

I'm not worried about that, but if I don't get some fairly good answers this afternoon, you will be finding questions on the order paper for every little, big and medium-sized hospital in this province, until such time as we get some answers in this respect, because my information is that there were major sums paid out of 1975-76 — major sums payable to hospitals and earmarked as follows: loans, undesignated but repayable in 1976-77. Can you understand, you backbenchers, what that would do?

Interjections.

MR. COCKE: You can understand, with the exception of the member for Omineca (Mr. Kempf), who has difficulty acclimatizing himself down here. Mr. Chairman, the rest of the members can think along this line. If any of you are business-oriented…and according to some of the information that I read during the election, 35 of your number out of 55 running were in the car business, so most of you should be able to read balance sheets and that kind of thing. But if you think in terms of a way to kind of build a set-up….

Interjection.

MR. COCKE: Let me sort of educate you a little bit. So you take it out of 1975-76, you put it into 1976-77 with the implication — and not only an implication but an order — saying that it must be paid back in 1976-77. You win both ways. You proved what you were saying in that report. My colleague from Nanaimo, what was the name of that report?

Interjection.

MR. COCKE: Some kind of a report that was put forward by a group of chartered accountants, who incidentally had nothing to do with it. They were given figures and they just did their thing, adding them up.

Interjection.

MR. COCKE: Add them up they did. But that's the charge I make, Mr. Chairman. The charge is that there were undesignated loans made to hospitals in this province. I'm not talking about year-end adjustments. Besides that, I understand that there are also adjustments made for next year too, in anticipation of certain wage increases. But you know, those wage increases, if in fact they're not going to occur until 1976-77, are not to be cared for in 75-76.

Now this is the kind of festering thing that's been going on around the province. Without any difficulty at all, we learned that the universities were suddenly plumped $7.5 million in anticipation of some increased expenses for the next year. Now we're finding the same thing cropping up in the hospital situation. It's a good way, Mr. Chairman, to cook the books in such fashion as to almost make a person believe that he's going to get away with it. Fortunately, some of us have ears and use them from time to time.

So, Mr. Chairman, with that, I'd like to hear about any kind of commitment to the people in this province that they're not going to be faced with an illness that they cannot live with in the family — long-term illness. For that matter, I'd like the Minister of Finance to justify the increase in acute care.

Sitting in the seat where the hon. member for Comox (Ms. Sanford) now sits, there was a relatively quiet member for Langley (Hon. Mr. McClelland) — that is, until he got excited, and then he would become most vociferous. He even called people names in the House, but, you know, every time I made mention of any kind of search or any kind of look at rates on hospitals, he used to stand up like a gladiator, waving his arms: "You would tax the sick!" Well, Mr. Chairman, isn't that interesting? Only a short while ago that minister, who, incidentally, doesn't make all his decisions…. The Minister of Education (Hon. Mr. McGeer) makes more announcements in health care than I've ever seen in my life from a non–Minister of Health. We probably feel that there is a little bit of direction being given.

But we noticed that minister, on February 23, making a statement that there would be no discussion, there had been no discussion, they weren't looking, Mr. Chairman, at the whole question of increasing medicare or hospital per diems. I wonder if he learned it when the Minister of Finance read the budget. Oooh! Wouldn't he have had a sinking feeling in his stomach? He would have looked at those two ministers — the Minister of Education and the Minister of Finance — and he would have said to himself: "I wonder which one of them did it to me."

Mr. Chairman, can we have a couple of answers?

HON. MR. WOLFE: Mr. Chairman, the member opposite has brought up his favourite subject, and I would simply ask in reply whether he would not advocate that any increase in medical services — rates or hospital per diem charges — were long overdue.

[ Page 1194 ]

MR. COCKE: Do you want an answer?

HON. MR. WOLFE: I'm assuming from your indications in the speech you just made that you feel it should remain as it is for some time. It's simply true to say that hospital rates at $1 a day have been the same since about 1952, at which time the cost of a hospital room was perhaps $4 or $5 a day. Today, as he well knows, the cost of the average hospital room in British Columbia is perhaps more like $75 to $100 per day. I don't think it can be argued really, Mr. Chairman, that it isn't a case that is long overdue, when some more measures of this kind were expected.

As far as the medical services plan, this had represented a substantial drain on the provincial treasury which he was aware of. Let me quote:

"This plan, at March 31, 1975, had $46 million in cash and investments which related to premiums paid in advance and estimated future claims to be made against the fund. At the end of the current year, no cash or investments would have remained."

This would have been at the end of March, 1976.

"If the plan were to be put on the same basis as last year — that is, if it were to have cash and investments on hand at March 31, 1976, sufficient to cover premiums paid in advance and estimated future claims — a transfer from the province of $51 million would have been required."

That's the section from the Clarkson Gordon report, and there's similar information provided in the budget.

Mr. Member, the decisions to increase both medicare and the per diem room charges for hospitals were not hasty decisions. They were very reluctantly made and they were made with considerable consideration.

You've also raised a question, Mr. Member, regarding payments made to certain hospitals which were intended, I believe, to cover deficits. I'm not aware of any payments which were made — as you indicate, loans undesignated. I'm not aware of any such situation. You might direct a question of this nature to the Minister of Health (Hon. Mr. McClelland) when he's back from Ottawa in a couple of days. I'm sure he'd be quite prepared to answer that question. I'm not aware that there have been moneys paid on an unanticipated basis to hospitals except to cover the intention of deficits.

MR. CHAIRMAN: Just before I recognize the member, it occurred to me during the speech of the member for New Westminster (Mr. Cocke) that some of the subject material he was covering might better be discussed under the estimates of the Minister of Health; however, I did not wish to interrupt.

MR. COCKE: Well, thank you, Mr. Chairman, and I recognize that, but, you know, the Minister of Finance is the fiscal agent for all of the area, and certainly where large transfers of moneys are made, he naturally has to involve himself. These are made by word, made by order, and we all know how that occurs.

But, Mr. Chairman, let me show you from the budget and allow me to read just a section from page 22. Listen to this for philosophy. I feel for you, Mr. Minister of Finance, through you, Mr. Chairman. But listen to this for a philosophy, and I am not sure too many of you have read it. "Another service which was turned from a profitable to a deficit operation during the short term of the New Democratic Party administration in British Columbia was the B.C. medical plan." Now when on earth does a government insured medical programme have to be or should be profitable? What the blazes are we trying to run over there, Mr. Chairman? It should not be profitable. That's the kind of wording that indicates to me who they are, Mr. Chairman.

MR. J.J. KEMPF (Omineca): We know that's your philosophy.

MR. COCKE: Well, you know, look, if I were you I would protect my loins and keep quiet because this is the kind of ridiculousness that will gain you a reputation over the next number of years. But, okay. So it's not profitable any longer. Now we are trying to make it profitable again. The minister asked me a question and I feel I should answer because I don't feel one should be asked a question in this House and not give a full answer to the question. He asked me a question instead of giving me any particularly direct answer.

No, Mr. Minister, through you, Mr. Chairman, no, I don't agree that the medicare increase is valid. I believe it should be an entirely different system. Had I agreed that that was so and had my colleagues agreed that that was so, we would have done it. But we didn't "done" it. No, sir. No. Because the direction — the impetus — must be towards the fairest way of exacting this kind of money. We know it costs money and the income tax route is by far proven in many, many other jurisdictions. I would suggest to you that probably they all will go that route and B.C., given a Socred government, will come in kicking and screaming at the tail end of everything. But anyway, no, I don't agree with that.

Secondly, what did I understand from his question about the per diem for a hospital? The one thing that we established in our minds was that the dollar a day wasn't going anywhere. There's no question about that, nor will $4 a day, Mr. Chairman. Patients are admitted to hospitals by their doctor. They don't go to hospitals just because they feel a stomach-ache,

[ Page 1195 ]

because they can't get into a hospital under those circumstances. They have to be admitted by their doctor. Okay. That being the case, there's no point in us setting up barriers. Because if we set up barriers, who do we barrier? The poor, the oppressed — we don't need the barrier there. They are already afraid to go to the doctor in the first place.

The second thing that I suggest to you is that the way to handle that — maybe eliminate it, I don't know — is get full sharing from Ottawa. But you are going to have to do the job in the end, Mr. Minister of Finance, and your colleague the Minister of Health (Hon. Mr. McClelland) is going to have to do the job in the end to curtail the increases, the excessive increases in hospital costs. You are not going to do it with $4 a day. And who do you hurt? You hurt the person who can least afford it.

When a young family person — a wife or a husband…. If the husband gets ill, oftentimes they lose their source of income temporarily. I am talking about acute care now. If the wife gets ill oftentimes they have to bring somebody into the house to look after the children. They've already enough financial problems without us giving them another that has very little return — very little return. So that's really all I'm saying.

So to the minister's questions I say, no, no, I don't agree he did it the right way. The third one, as far as extended care is concerned, he didn't give me any assurance whatsoever that there is going to be any kind of safeguard. Yes, I do agree. I agree that there has to be more money put into the system with respect to board and room. That's fair enough. They are getting paid pensions or whatever. Many of them are. But there are those who are not and those who are not should be safeguarded, and that's all I am asking in my questioning, Mr. Chairman.

MR. G.S. WALLACE (Oak Bay): Mr. Chairman, I noted your comment about relating one's remarks to finance rather than hospitals and I will do so. But a primary responsibility of the Minister of Finance is to try and bring about an equitable imposition of taxation on the individual, based on ability to pay, and if that isn't the No. 1 principle on which the minister is functioning, then indeed we are in trouble.

AN HON. MEMBER: Hear, hear.

MR. WALLACE: With that very basic initial statement I would like to make just a few comments on the whole question of financial changes which the minister has agreed to, particularly in relation to hospital services.

I am sure the minister has also received many letters — as have we — and I would like the answers to one or two of the questions. First of all, in the extended-care situation, as the minister probably knows, I already questioned the Minister of Human Resources (Hon. Mr. Vander Zalm) and discovered that all patients who qualify for Mincome were not in fact receiving it in extended-care hospitals, and yet some were. But the government philosophy behind raising the rate to $7 a day was in large measure related to the assumption that patients who had no other income other than Mincome were receiving that amount of $265 a month approximately, and were in fact living at a total cost of $30 a month. We have pointed out in earlier question period in the House that this is not happening.

The other part of the philosophy which, I am sure, motivated the government to make this very dramatic increase from $1 a day to $7 a day was the assumption that most of the patients are elderly, have no dependents or have no spouses. While it has been pointed out by others in this House that this is not so, I would like to read into the record the statistics for the extended-care situation in the greater Victoria area.

The total number of patients in the jurisdiction of the Gorge Road Hospital and the Juan de Fuca Society hospitals added up, on April 6, to a total of 619 patients. Out of that total, 92 per cent were over the age of 65. But of the number of those patients over 65, the breakdown between single status and married status shows approximately an 80-20 ratio. In other words, approximately 20 per cent of the patients over 65 in extended-care hospitals have a spouse. In many cases that wife or husband, as the case may be, has reasonable and substantial expenses even in visiting their husband or wife in the extended-care hospital, not to mention other associated costs.

So it was too simple a concept that patients in extended-care hospitals — or almost all of them — were accumulating assets. It is also correct to place on record that, yes, some patients were accumulating assets. But the terribly important point in this whole debate, I hope, will be establishing the fact that the changes in taxation were of a blanket nature which seemed to ignore the very legitimate hardship which 20 per cent of these patients would undergo if, in fact, the proposed changes of the Minister of Finance are implemented in an across-the-board or blanket fashion.

The other point that must be recorded accurately is the case of patients under the age of 65. Again, from the hospitals that I have surveyed — and I will just recall for the House that the total is 619 patients — out of that 619, 49, which is 8 per cent of the total, are under age 65. While I will not go into the details of these 49 patients, they are represented by about 15 different diagnoses. These are younger persons who, for one reason or another…. Quickly I can relate conditions such as Parkinson's disease, malignant disease, head and spinal injuries, paralytic

[ Page 1196 ]

polio, epilepsy, rheumatoid arthritis and so on. There are many others. If the minister would like, I can easily send him a copy of all of the data and the figures that I have here.

The point that must be made, Mr. Chairman, is that that first principle of taxation, which should be equitable and based on the ability to pay, is not being followed by a blanket increase in hospital charges which either is unaware of or has not taken recognition of the fact that 20 per cent of the patients not only are not accumulating assets, but will subsequently be placed under very severe hardship if this tax increase is applied to them.

Two other examples I would like to quote, Mr. Chairman, relate also to the Eric Martin Institute in Victoria where on the fifth floor we have some very seriously disabled children of varying ages — disabled both physically and quite often mentally — who are classified as extended care, and where in their case the parents of these children are now suddenly faced with the possibility of paying approximately another $180 a month.

[Mr. Veitch in the chair.]

MR. WALLACE: On the sixth floor of the Eric Martin Institute we have another programme for emotionally disturbed young people, teenagers and adolescents. Mr. Chairman, we so often hear about the importance of prevention — and I notice the Attorney-General (Hon. Mr. Gardom) is very interested because these children often come into contact with the law because of delinquent behaviour where there is an underlying emotional or psychiatric problem. So in the case of these children also or young adults, the increased charges is just one more significant difficulty imposed on a family already under great stress and strain because the parents of these young children are anxious enough to try and help the children, although in some cases the child is probably the product of a home where there is strife and disagreement between husband and wife, and there may be great disagreement as to even paying the bill. If there is dispute over financing, the few dollars extra that might be brought in by the extra charge would probably be well outweighed by the ineffectiveness of the treatment or the very fact that the child may never show up to be admitted when all the plans have been made to have the child admitted.

So all I'm really trying to emphasize is that the taxation changes in relation to the hospitals were basically sound to about 80 per cent, I suppose, if you want to try and be smart-alecky and quote figures. But in general terms, all I'm saying is, Mr. Chairman, that I hope the minister, in cooperation with particularly the other cabinet colleagues in this field, Human Resources and Health, will take a very detailed look at that substantial minority group of about 20 per cent of patients who will suffer seriously if they have to start paying $7 a day instead of $1 a day.

I have numerous letters that I could quote from, and I don't want to take a lot of the time of the House, Mr. Chairman, but letters have appeared in the press as well, and there has been, I think, a very legitimate argument made that these charges are not based on the ability to pay. We've already worn threadbare the argument that the sales tax hits hardest at people with lower incomes, and here again, as I say, these persons visiting their spouse or their son or daughter in an extended-care hospital are going to be paying increased travelling charges, increased prices for gasoline and increased sales tax on other goods just the same as you and I, Mr. Chairman.

When you add it all up, this proposal by the Minister of Finance really is unfair, and I'm sure he realizes that. He's obviously taking notes, and I would tell the minister, through you, Mr. Chairman, I discussed this with the Deputy Minister of Health, who is well aware of the problem and is also seeking to find either a programme of exemptions or some kind of other alternative allowance which will take into account the minority group who really don't fall within the general philosophy behind these tax increases.

We've had some discussion this afternoon on which is the right way to go, and I think this is the kind of argument that is basically a philosophical one and I don't propose to go into great lengths on it. But I do agree with the government that either you get rid of the $1 a day or you make it realistic in terms of the proportion contributed by the patient in relation to the total per diem cost.

Frankly, I still feel that the rate of inflation is such, and the political ramifications of this kind of budget are so far reaching, that even putting it up to $4 a day to me seems to be a very temporary finger-in-the-dike approach. I wonder if the government might not have been wiser simply to abolish the $1 a day, or any such similar figure when, as the minister mentioned, the per diem rate in the Jubilee Hospital, for example, right now is $125 a day.

As the former Minister of Health (Mr. Cocke) pointed out, the amount by which the patient contribution is raised is considered offset revenue by the federal government. In other words, if you put it up by $3, we are  simply saving the federal government $1.50 per patient per day. That leads to my next question, and it's a bit presumptuous perhaps because I think the minister may not have had the opportunity to discuss this with the federal authorities. But the federal minister, in talking about cost-sharing programmes at a convention of general practitioners in Harrison Hot Springs just two or three weeks ago, gave the first inkling that somehow

[ Page 1197 ]

or other authorities from all across Canada have finally got it through the federal minister's head that there are better ways to find the dollars to finance medical and hospital care.

In two respects he has acknowledged that unless you assist the total spectrum of care, it makes so many inequities and discriminations to pick off certain segments and cost-share that there is just a consequent abuse of the facilities that do exist. As the minister pointed out a minute ago, a lot of this we'll go into in great detail during debate on the health estimates.

As far as the dollars are concerned, I keep coming back, it seems, in debate after debate in the House to this whole area of federal-provincial cost-sharing, and I made some comments on this yesterday.

The most specific question I would like to ask the minister today is: is there any indication, either from written communication or discussion with the federal minister, as to a basic change in federal policy regarding cost-sharing of the actual specific cost of the care — that is, regardless of whether the province pays $100 a day or the patient $5 or whatever? The present system is that any patient contribution is deducted from the total cost, and the federal government shares half, approximately, of what's left, with the exception of intermediate care where nobody shares anything — the patient gets stuck with the whole bill.

This in turn leads me to my next question: is the minister, who is trying to raise dollars in a fair manner and spend them in an efficient manner, aware that much of the abuse, or the misuse, of acute-care beds relates to the fact that, for example, in Victoria any day in the week there are 100 acute beds occupied by patients who don't need acute care? The reason they are in these beds is that, first of all, there are no facilities to accommodate them in the kind of care they really need, and there's no financial assistance from the provincial government, unless they're on welfare, of the magnitude of assistance that is afforded either to acute- or extended-care patients.

While I realize this is a very big subject, and the minister may not have had an opportunity to discuss this recently with the federal government, it is very essential as to whether we will ever achieve two things: an equitable degree of assistance to all patients, regardless of their diagnosis. That's one of the real disasters in our present setup — that depending on your diagnosis and the kind of care you need, you may be very well looked after at $1 a day, or you might be sitting in some very substandard facility receiving very poor care and paying the whole bill yourself.

How we as a society can consider that as at all fair or just I don't know. I realize that both this government and the former government were trying to do something about it, but I have to repeat that the reason it's difficult to do something about it is the inequitable and unfair agreements with Ottawa about cost-sharing.

My third question is a pessimistic one, I suppose, because I don't think the federal government will change its attitude to cost-sharing. If it doesn't, does the minister feel that we are close to making that crucial decision to finance intermediate care by provincial dollars alone? This has happened in several other provinces where the provincial government, just like this government and the former government, hammered away at the ivory tower in Ottawa for years and years to try and get fair and equitable treatment for all patients who need hospital care, and they've been told that there will be no cost-sharing formula for intermediate care.

Then these provinces have said: "Well, in that case we will raise the tax dollars so there will at least be provincial government funding for these purposes."

Now, these are rather important questions, Mr. Chairman, and I'm not expecting that the minister has all the answers. But it has already been stated this afternoon by the former Minister of Health (Mr. Cocke) that some of the language in the budget, I think quite unintentionally, gives the impression that this government is indeed trying to operate and finance hospital and medicare services in the same kind of philosophy that you would run a sawmill or an industrial plant, or a business — or a peanut stand, for that matter. But somehow or other the income and the spending have to be equated one to the other. I think it was a most unfortunate choice of words to talk about having to criticize the former government for having reduced the medicare budget from a profitable position to a loss. This kind of use of the word "profitable" suggests, indeed, that the occupation of looking after sick people should turn over a dollar profit.

I personally don't feel that was the intention of the language in the budget, but since we've criticized this government as being preoccupied with black ink and that somehow or other, from an operating point of view, there must never be a dollar deficit, there must be apprehension in the minds of many people in British Columbia if the budget has conveyed that impression in relation to the government's policies on financing of hospitals and medicare.

I personally feel, and I've said this many times, that not too many years ago the cry across this country was: "You must protect the individual against catastrophic health-care costs." That was an absolutely valid statement. All I'm saying is that the pendulum appears to have swung to the other extreme inasmuch as most people seem to expect that the government revenue, that fund we call the consolidated revenue fund derived from 15 or 20 different sources, should pay the total costs, and the

[ Page 1198 ]

citizen should not directly pay any dollar cost for these services.

I suppose it is some reflection of the Conservative philosophy that it is not unreasonable for the individual receiving a benefit to pay a small fraction of the total cost at the time they receive the service. I still personally believe that that is not at all unreasonable — in fact, is a very fair system — with one particular proviso. That is that the kind of minority groups we're referred to this afternoon should be clearly recognized, and special provision should be made for these minority groups. If 80 per cent of the population can contribute a reasonable fraction of cost at the time of receiving the service, then it would seem to me that this would be a fair and equitable approach to raising the dollars for these services.

I have one or two other questions, Mr. Chairman, on another issue, and perhaps the minister would like to answer these ones first.

HON. MR. WOLFE: Mr. Chairman, I would like to draw the attention of the committee to two keen political students who are in the Speaker's gallery transfixed over this exciting debate. Their names are Margaret Demarinis and John Wolfe, who have come over for the day. I think the fact that they have stayed here for a couple of hours is something that is to their credit.

MR. WALLACE: Any relation?

HON. MR. WOLFE: Yes.

MR. R.E. SKELLY (Port Alberni): Give them some answers.

HON. MR. WOLFE: Right. To the member for Oak Bay, he dealt with certain questions which I realize he knows are in the hands of the Minister of Health, who is aware of this. I appreciate his information on the study he has made in this hospital, which I think the Minister of Health would appreciate — you know, the facts that he has indicated here.

I can only say to the matter of extended care, insofar as Finance is concerned, Mr. Chairman, and I can't really speak for the Minister of Health who is down at meetings now in Ottawa dealing with cost-sharing and other matters to do with the federal vis-a-vis the provincial finance picture…that he is not unmindful of this situation in the new extended-care rates, and has it under study.

You were asking a question relating to the increase in the per diem and how it would affect the future of our cost-sharing. You were concerned that we would only benefit from part of this increase insofar as the fact…. And you were advocating that whatever increase or per diem we charge provincially would not affect the eventual sharing of the provincial and the federal cost-sharing arrangement — that this should come after all of that. This has been the case for some years. I'm not sure that in the present restudy of the fiscal arrangements it will zero in on this problem or not. Actually, what is happening is that the Ministers of Health are discussing this question now. The matter of the cost-sharing arrangements will come under discussion at the Premiers' conference in either late May or June in Ottawa, and a latter one later in the year as well. So there are several matters of cost-sharing that are coming under those meetings.

As I said earlier, Mr. Chairman, the future direction of this province, where cost-sharing is concerned, may develop in a different direction where we — like other provinces have indicated — may want to head in the direction of opting out of these cost-sharing arrangements. I'm sure that the federal government are not entering into these discussions with a view to adding to their own share on costs incurred. So the thing is in a state of review this current year, and it's difficult to say, at this stage, what direction it's going to head in.

You were indicating, I think, that we have an accent in the budget on the fact that we will not tolerate a deficit and so on. Naturally it's true that we are trying to budget, and we feel very firmly that we do want to budget without having a deficit for the provincial accounts, but it is not so that we do not wish to have a deficit in the Health department, or a deficit in the hospitals, or a deficit in the medical-care situation.

Our particular emphasis, where finances are concerned, is on trying to balance the accounts in the provincial government for the current year.

MR. D.D. STUPICH (Nanaimo): Mr. Chairman, I will defer very shortly to the hon. member for Oak Bay (Mr. Wallace). Its just that the hon. Minister of Finance encouraged me to introduce someone in the gallery as well. Seated in what was formerly called the ladies' gallery and is now — the what?…the persons' gallery or something — the members' gallery, is another student of economics, one Kathleen Stupich, who has sat as long as the minister's guest, and we'll see who outlasts whom. I'm not speaking as between us — I'm thinking of the students.

I might ask one question while I am on my feet. I notice under the summary the last item: "less staff reduction salary savings." Later on I intend to ask the minister what portion of this reduction would be applied against vote 61, and I hope the answer will be none.

MR. WALLACE: I just have one or two brief questions. They may be seeking some kind of breach of cabinet secrecy, but when submissions are made to

[ Page 1199 ]

the Minister of Finance prior to the budget, to what degree does the minister receive the sort of ancillary information rather than just the ball-park figures to determine how fair or unfair, for example, the $7 increase in extended care is? Is the minister just given a variety of options in dollar terms, or does the minister in fact get the kind of background information that says that if you raise it from $1 to $7 you'll save the federal government $3 per patient day and that will raise X amount of dollars, but it will have the following disadvantage and will penalize 20 per cent of the people in extended-care hospitals?

I think that when a Finance minister has to draw up a budget with this very basic principle in mind that you're trying to raise money in the fairest manner and distribute the financial loan upon those who seem best able to afford it…. But do you just get ball park…? That's a poor word. I don't mean that they're approximate figures, but do you just get the absolute dollar figures and then you make the purely arithmetical calculations as to how much money you need and the area in which it should be raised? That's one question.

A second question just arises from comments that the minister made earlier on this afternoon about each member of Treasury Board being asked to contribute his or her thinking. Is there such a thing as a quorum in relation to Treasury Board meetings? If so, and there are five people on Treasury Board, how many members of Treasury Board have to be at a meeting to make some of these crucial financial decisions?

I have a last couple of quick questions, Mr. Chairman. Under this vote, I notice that the ministerial assistant's salary has been reduced from $23,710 to $17,550, a reduction of 26 per cent. Now I presume that the job has been regraded or reclassified and I would also have to assume it is a different person. Or has the same person been demoted? There are so few examples in the budget of ministers' staff having reduced salaries that this one's fascinating.

Travel expense for the minister's office is up from $7,500 to $11,500, which is an increase of 53 per cent upwards. Although I don't like to see increased expenditures, I'm hoping that this is to pay for all these extra trips that the minister's going to make to Ottawa to hammer out better cost-sharing arrangements with the federal government. I'd be very interested to know if, in fact, that increase in travel expenditure is in some way related to the anticipation of more frequent and more fruitful trips to Ottawa.

RON. MR. WOLFE: Mr. Chairman, in answer to the last question, as you state, the travel expense increase has to do with the many meetings in Ottawa which we anticipate this year. Several already have taken place.

The ministerial assistant last year was paid $23,710 and this year $ 17,550. Last year it was Peter McNelly, I believe, and he was not paid as a minister's assistant at that time, I'm advised. I don't have an executive assistant and haven't had one, but there is one provided for at the reduced figure of 10 per cent from the former I think it was $19,000 provided.

You asked about the Treasury Board quorum. I don't think there is such a thing as a Treasury Board quorum, officially. We make a real effort to have every member of Treasury Board — as you say, there are five members — see all the submissions. There is the odd occasion when maybe one member is not able to see the submissions. There's not a quorum, but I think it's fair to say that almost all members of Treasury Board see almost all the submissions.

MR. L. NICOLSON (Nelson-Creston): Mr. Chairman, earlier today the member for North Vancouver–Capilano (Mr. Gibson) talked about the concept of having done pre-studies or impact studies. Of course, Mr. Chairman, when we undertake such a thing in this province as the building of a new hydro-electric dam, we look at an impact study, we look at the economic effects, we look at other things. We look at the environmental impact, we look at the social impact, and so on. I would submit, Mr. Chairman, that changes in taxation certainly have social as well as economic ramifications.

I'm not sure if the minister did respond — I was out of the House; about the first time I've been out of the House during these estimates since they've begun — but did the minister respond to the question: was there a similar report to the Cragg report prepared prior to taking the decision to increase sales tax by 2 per cent? Were the impacts on, for instance, the cost of living, on disposable income and on retail sales, et cetera, looked at?

Also, the member for Oak Bay (Mr. Wallace) and the member for New Westminster (Mr. Cocke) have been expressing a concern which I also share. I frequently visit hospitals. There is Mount St. Francis hospital in my riding in which many people are permanently or terminally institutionalized. A great number of these people are young people — young people with families — and they have the misfortune to suffer from diseases such as multiple sclerosis.

I don't see the question answered there in terms of: was some pre-study done before these changes were proposed? I asked the Minister, through you, Mr. Chairman: how was it initiated that an increase was to take place in the per diem rate in hospitals, in chronic-care hospitals as well as in acute-care hospitals? Was it initiated? Did you give the Minister of Health (Ron. Mr. McClelland) a block fund and say: "Well, for this year you can only have so much, so you're going to have to increase your revenues"?

[ Page 1200 ]

Did you ask the Minister of Health to increase his revenues, to look at the historically low costs, or did the idea of increasing these rates originate in the Department of Finance? Specifically, were the exceptional cases such as MS patients with families taken into account? Was any consideration given to them before making this decision?

While we debate about this, and while some of these people might be confined to a bed, their minds are perfectly active. In fact they have so much time that their minds can dwell on uncertainties like this. And while there is an uncertainty in this area it creates a great hardship, so it's a sociological impact on people in this province not as fortunate as most of us — people whose years are numbered, whose minds are active but whose bodies are very slowly giving up.

Another matter which I mentioned a little bit during Bill 3 — and I'd like the Minister to make note of this — has to do with the Endicott Home in Creston. It's a home for mentally retarded children and adults. It's run by a non-profit society and it's also supported by people in the community; it's supported by groups such as the Fraternal Order of Eagles.

I have a letter from Mrs. Anita Hale. She's the chairman of the Dr. Endicott Committee of the Fraternal Order of Eagles in the B.C. Division. So the Eagles do take an interest and they have a special committee which devotes its time to the raising of funds from their 24 organizations throughout the province. She says that she's a member of the Fraternal Order of Eagles. The auxiliaries, 24 in number, of British Columbia have been donating money to the Dr. Endicott Home for the Mentally Handicapped for several years. Last year and this year they have donated between $1,000 and $3,000. Now, this money isn't given in a lump sum. She has bought: educational articles for the classrooms; skates for the children; record players; craft articles for the craft shop; T.V. for the more learnable, as they can learn from Sesame Street and the educational programmes from Spokane.

MR. CHAIRMAN: Hon. member, I really do believe that you should perhaps mention this to the Minister of Health. We are on Vote 61.

MR. NICOLSON: Oh, I'm talking about taxation, Mr. Chairman. Thank you, but I'll relate it very quickly here because the next paragraph refers to myself, as one Lorne Nicolson. This letter was sent to the commissioner of social services tax with a copy to me, but I never received any copy of any reply.

But it is, Mr. Chairman, to the commissioner of social services tax. So I am sure that it is under the purview of the minister.

"When Lorne Nicolson was here, he thought I should be exempt from the 5 per cent sales tax as all the projects are helping to educate children. As a teacher I realize that educational materials are subject to exemption."

So the person has asked the commissioner if this can be done.

"How can I go about doing this? Last year I spent over $1,000 on the project and plan to spend the same amount and more this year with the emphasis on education. We also have a gift for each child — a gift at Christmastime. Can this tax be deducted from this?"

Well, I'd like to have some opinion as to whether or not these things are educational materials. Of course, I don't think there is a prescribed curriculum, so it might not be some of the curriculum — required articles that one would find under the rules of the council of public instruction and so on.

But I would like, especially since the sales tax is now 7 per cent…. The money which is being donated by the Eagles could be stretched much farther. It is a charitable act. As it stands right now this is a tax on charity. So I would like to have the minister's opinion. It would appear to me that it is no different than when I order spectrographs, for instance, for a physics lab in L.V. Rogers Senior Secondary School. These are tax-exempt. So if it should be tax-exempt for a public school, should not educational matters such as craft articles, record players — which are also, I believe, tax-exempt if they are purchased for a regular public school…? Is there some room for interpretation? Is there a committee — a special committee — that might make a decision on this? Do you have the latitude or discretion either through committee or just through your office? So I would ask….

I would repeat the three questions: was there any kind of an impact study done prior to the institution of the 2 per cent increase in sales tax? Was the department — your department — the initiator of the increase in the per-day rate for hospitals, chronic, acute and so on, or did it originate with the Department of Health, and were there any considerations given to the exceptional cases such as MS patients? Thirdly, the Endicott Home, would these charitable donations qualify as tax-exempt and could refunds be applied for?

HON. MR. WOLFE: Mr. Chairman, with respect to the Endicott Home and the letter the member has which was addressed to the commissioner, I am not aware of it personally but I would like to see the letter. I will look into it and find out. I have a description of the exemption which applies, of course, to school supplies. I presume the problem is that there are certain educational supplies within an institution such as you referred to which are not exempt under these regulations. We can certainly have a look at that.

[ Page 1201 ]

The regulation is defined now as "school supplies when purchased by or on behalf of students for their use in courses of study given by any school, college or university or by any business, trade or vocational school." That would appear to be a definition which doesn't include the type of organization you are referring to at the moment. I can only….

AN HON. MEMBER: Can this be changed by order-in-council?

[Mr. Schroeder in the chair.]

HON. MR. WOLFE: Yes, this is a regulation under the Social Services Tax Act which could be amended by order-in-council.

You referred to studies regarding the impact of the increase in sales tax. This has come up in previous debates. I think we have said repeatedly that there was extensive study made before we came as a last measure of the package of tax changes which were made to sales taxes. Obviously they have some impact on the cost of living, as I have indicated earlier today. We wouldn't deny this nor that it is a tax measure we welcome as government. No government does. But you must look at the entire budget as a package of measures that had to be adopted, including changes in the income tax points, changes in the corporation taxes and other measures.

MR. NICOLSON: Mr. Chairman, with respect to the particular increase in terms of hospital day rates, did the increase originate with the Department of Finance or did it originate with the Department of Health? And how did that come about?

You say that there were studies. Would the minister be prepared to table some of the studies that show…to reassure us that these things were not ad hoc, that they were carefully prepared, and some consideration went into them? After all, it's been done. It's not as if we'd be hearing about proposed changes in taxation before they occurred. It's after the fact now. So could the people not judge the basis upon which this decision was made?

HON. MR. WOLFE: Mr. Chairman, the change in the per diem rate in the hospitals was, of course, researched extensively by the Department of Health, and the decision to arrive at this recommendation to cabinet to incorporate the changes that you see was reviewed by Treasury Board in a series of meetings. The Health department had extensive information to arrive at the result that you see. That's about all I can say to that question.

MR. N. LEVI (Vancouver-Burrard): I'd like to welcome the minister to the club that all ministers eventually get into, which is the club of those who go down to Ottawa to try and get more money on the cost-sharing programmes. I wish you a lot of luck on that. The deputy's well experienced on that kind of thing.

He was talking before about cost-sharing, and I realize that he was musing and not announcing government policy, that there has been, over the years, some discussion by various provincial governments about the whole question of opting out of cost-shared programmes in favour of the tax point advantages. I notice the minister nods his head. He's aware of that.

The point I wanted to make is that during the years that I went down there we often expressed the opinion that, although we go down as a province to talk about cost-sharing, we are, in fact, part of the family of Canada, and there are some very undesirable features about pushing the idea of opting out in favour of tax points in terms of the total country, because the have-not provinces are the ones that suffer very much from the fact that they have really no advantages in tax points because they don't have that kind of base.

The important thing is that in terms of the cost-shared programmes, particularly under the Canada Assistance Plan, and certainly, I think, in all of the medical programmes and the education — the universities, the post-secondary programmes — there is a minimal standard that we agree to subscribe to. Certainly we agreed to subscribe to that kind of standard, because we'd like to see at least minimal standards maintained in every province across the country. If we do have a number of governments opting out of these programmes, then I think we will find tremendous inequities across this country in terms of programmes. That, I think, would be a very unsatisfactory feature.

Now I agree that no doubt the future discussions in relation to provincial equalization payments.... That question is something that is coming up again anyway, and we on this side will be having something to say about it. Because as early as May, 1973, we did express the desire that we really would look for an improvement in the cost-shared programmes, as opposed to the opting out of these programmes in favour of tax points.

I'd like to ask the minister a couple of questions. One is in relation to a statement that he made during the budget speech, and perhaps he could tell me exactly what he had in mind when he said it. He talked about the GAIN programme, and I don't want to deal with the GAIN programme, but the paragraph reads…. Well, if I read the two paragraphs, the minister might get the input.

"Services for senior citizens and handicapped persons will cost about $187 million, and $128 million represents the British Columbia Guaranteed Available Income for

[ Page 1202 ]

Need Act. This programme is $23 million more than last year and extends benefits to qualified persons in the 55-to-59 group."

Then he goes on to say:

"These extended benefits will provide $17 million more in payments, taken at very little extra cost to the province, because the bulk of the funds will be provided through federal sharing. The previous government, in our opinion, was remiss in not taking advantage of the federal money that was available in previous years to provide for this increased benefit."

Now my question is: from what the minister has said in here, having been part of the federal-provincial discussions over the years on the improvement of payments to senior citizens and the low-income working poor, is he there referring to a programme that presently exists or one that is envisioned to exist? It is my understanding that there is no programme at the moment wherein the federal government — I just want to get the quote right — "at very little cost to the province…." Canada Assistance Plan sharing is still 50 per cent, 50 per cent, and I realize that the discussions that are going on in relation to the recently held security…. Discussions that went on for three years did suggest 70/30 per cent, with 70 per cent in favour of the federal government. I understand that may be down to 66-2/3 and 33-1/3 per cent.

Is the minister there referring to the new programme, or does he have some other programme in mind that I'm not aware of? That's one of the questions. The other one is: is the minister able to tell us in round figures the breakdown of the main items of the cost-sharing expected revenue, which is something in the order of $651 million for this new fiscal year — just approximately what the ratios are in terms of health and education and the social services?

HON. MR. WOLFE: Mr. Chairman, in answer to the last question on the breakdown of the cost-sharing, I'll have to get that for you. I don't have it here in the House.

On the first question on page 24 in the budget as to the implications of the additional extended benefits providing $17 million more in payments, I'm afraid I can't answer that question. I'll have to refer it to the Minister of Human Resources (Hon. Mr. Vander Zalm), if you wouldn't mind bringing this up under his estimates.

MR. LEVI: The point of my raising this, Mr. Chairman, is really in relation to the general tenor of the budget speech document, which we already dealt with extensively. I'm just going to suggest that that $17 million in fact makes reference to a programme that presently is not in place legislatively federally. If we're to take the Minister of National Health and Welfare's remarks of two weeks ago in Vancouver, that legislation is not likely to be in place before 1978. He doesn't expect to be able to get it into the House until next spring, as I understand it.

I will ask the Minister of Human Resources, but that could have implications, Mr. Minister of Finance, for your budget to some extent because if you are expecting to cost-share at that level on a programme that doesn't exist, you may find the province will have to carry a substantial amount of the load that you are expecting the federal government to carry, simply because the programme is not there.

MRS. E.E. DAILLY (Burnaby North): We heard this afternoon that the Minister of Finance regrets very much that he's had to raise taxes in the province of British Columbia. We've heard the Premier make the same statement. Now I've listened to this debate fairly closely for the last two days, and I must say to the Minister of Finance, through you, Mr. Chairman, that I have not heard any validation from the Minister of Finance as to why it was necessary to impose all the taxes which his government has imposed on the people of this province.

The Minister of Finance piloted through Bill 3, based on the whole concept that this province was $400 million in debt. I listened to the debate and to the questions being asked, and the Minister of Finance has still not explained to the members of this House or to the public of B.C. why $400 million was needed.

In early April an order-in-council was passed for $250 million, not $400 million. I really feel that the time has come when the Minister of Finance should once and for all level with the people in this House, explain to us in detail why $400 million was needed. Explain to us how much you expect to raise from these increased taxes, explain to us why in April an order-in-council for $250 million was passed, and also tell us in detail if you are expecting to have to put forward further orders-in-council to reach the $400 million. If you are, I think you should explain to the House in detail just what those deficits were.

HON. MR. WOLFE: Mr. Chairman, we have dealt at length on these questions, but in answer to the member's question regarding what revenues the tax increases provided and so on, I would refer her to page 31 of the budget speech. The increased tax measures cumulatively develop $267 million in the fiscal year 1976-77.

She is curious about why there is a need to have a borrowing authority for $400 million. This question has been asked by several members across the way. As we have repeatedly answered, the borrowing authority is a maximum. We have to have authority to borrow, but I would hope that we wouldn't have to borrow this amount. One must keep in mind that the

[ Page 1203 ]

anticipated deficit of $400 million is a book deficit, Mr. Chairman. It is a book deficit and not a cash deficit. One must understand that in looking at the cash position on any one day there are outstanding cheques and there are other items affecting the book accounts which would be included in a $400 million anticipated deficit for the year.

So the fact that we indicated by an order-in-council that borrowing of $240 million was required and anticipated that there will be more required does not really have a direct bearing on the authority asked for to borrow $400 million.

MRS. DAILLY: Then I understand, through you, Mr. Chairman, to the Minister of Finance, and thank you for replying to my question. Bill 3 therefore, as you say, we know was just giving authority to borrow, and therefore the province of British Columbia was not left in the disastrous financial situation which the minister pointed out during the budget speech. So we are very pleased to know that the fiscal situation in B.C. left by the NDP government was not nearly as disastrous as the Minister of Finance informed the House earlier.

HON. MR. WOLFE: Mr. Chairman, it's obvious the member puts the answer in her own terms. I do not agree with what she said. It's obvious that when a government budgets for a $3.2 billion deficit and the anticipated result of revenues is $2.9 billion, indicating an initial shortfall of at least $300 million, this does not indicate a very capable or responsible job having been done by the previous government. I do not agree with her that we have misled the people of the province in indicating an anticipated deficit of $400 million.

MR. STUPICH: Mr. Chairman, I did ask a question when the other Chairman was in the chair, and I am just going to repeat the question now and go on to a couple of others. With respect to the item in the summary that's described as "staff reduction and salary savings" in the amount of $1,362,280 for the whole department, my question with respect to vote 61 is whether or not any of this saving would come into vote 61. I certainly hope the minister is not going to try and get along with less than two of his staff, apart from his executive assistant whom he has not yet named.

I would like to question further…. The hon. member for North Vancouver–Capilano (Mr. Gibson), I believe it was, raised the question of income tax indexing and the hope that the minister would look at the possibility of some indexing system for capital gains. Well, I certainly wouldn't want to join him in that request, but my question that I would like to ask of the minister is: how much is personal income tax indexing costing provincial government revenue in the budget that is before us now? What is the effect on the budget before us, the revenue from personal income tax, of the federal government income tax indexing; that is, in the expectations for this year?

With respect to the proposal, the campaign promise — and it was repeated in the opening speech — the throne speech promised to establish an office of the auditor-general. I am wondering if this would come into vote 63, under the Department of Finance, or would it come into vote 1?

I would like to come back for a moment to this question of the difference between the $250 million and the $400 million. While it may be appropriate to talk about the difference with respect to ICBC — for example, we can talk about the differences between book deficits and cash deficits — it is not nearly so appropriate to talk about the public accounts in that same way, because there should be a very close relationship between cash deficits and book deficits as was pointed out in the Clarkson Gordon report. I quoted from this yesterday: "The government public accounts measure actual payments made, with some latitude in the month of April only." In general, they measure payments made and money received up to the end of March, with only some latitude, and certainly not the provisions for reserves that are included in ICBC and that have to be included in ICBC and in other Crown corporations. So to talk about the $400 million and the $250 million and say that the difference is accounted for by the fact that you have to consider one as a book deficit and the other as a cash deficit is not appropriate in this instance.

Mr. Chairman, the minister made reference to the actual revenue of $2.9 billion. I would remind him that that was the figure quoted in the Clarkson Gordon report, but by the time the budget speech was prepared, and using figures one month more recent, we noticed that some $30 million of the $80 million difference in budget revenue had been closed — $30 million of that gap was closed in one month; there were still two months to go — so it was not $2.9 billion. In one month it had changed to $2.93 billion. The minister has so far declined to give us any indication as to what happened in the last two months of that fiscal period.

I point out also, Mr. Chairman, that even with the grants that were made by political decision…. I'm going to leave out the grants to Hydro because I think the grants to Hydro had to be made. Hydro had to show that that the money was, if not received, certainly receivable, in order to show a break-even position for its year-end, March 31, 1976. Apart from that, looking at the grant to the transit bureau which didn't have to be made in that period, the grants to BCR which did not have to be recorded in that period, the grants to ICBC which certainly didn't have to be made in that period — and it's obvious that

[ Page 1204 ]

ICBC, as soon as it received the money, before it was even deposited, wrote a cheque giving the money back to the government or loaning it back — these grants, in total, amount to some $246 million, which is very close, Mr. Chairman, to the amount of the order-in-council, the $250 million that was required to be borrowed in order to meet just these grants without dealing at all with the matter of advance payments.

I think by his silence, at least, the minister has admitted there were advance payments to hospitals. We have not nearly begun to establish just how much — the minister has not told us, and I think he's probably not able to tell us — was paid to hospitals in advance.

The advance payments to municipalities: I regret that the hon. minister of municipalities (Hon. Mr. Curtis) is not in today, because yesterday when I was telling him that the municipalities involved in restructuring were surprised that they received money in advance of what they were informed by the previous administration they would receive…. The hon. member for Fort George (Mr. Lloyd) entered into this discussion, and he's absent as well.

Mr. Chairman, I did check with my own municipality this morning and I'm informed — and I was aware of this before — that a system of quarterly payments was arranged, and that the quarterly payment they expected to receive in September they did not receive by the time of the election. But the quarterly payments were to be paid out over a period of no less than two years, and they were warned that it might be more than two years, depending upon cash flow — but certainly no less than two years. That period of no less than two years was to expire in December of 1976, so the municipalities involved in restructuring, at least with respect to my own municipality, were surprised to get that lump sum of money prior to March 31, 1976.

So we know money was paid to the municipalities out in advance of expectations, to hospitals in advance of expectations and in advance of expectations to some farmers, at least, who received cattle income assurance payments in advance of what they expected. We just don't know how many other millions of dollars were paid out in advance in an attempt, as we have already detailed, to show the deficit for 1975-76 to be very large, larger than it would normally be, and to try to make the picture for the following period look better.

Mr. Chairman, by his silence the Minister of Finance has admitted, or is saying to us, that he doesn't know what changes were made in the original draft of the Clarkson Gordon report. Between the time he received the original draft — and he admitted to the press that he received the original draft February 10; he said it was incomplete — he had said very carefully: "No changes were made in any figure supplied." He has declined to say whether any additional figures were included or whether any figures were removed, or what changes were made in the prose. He declined to say anything about that.

Mr. Chairman, the Minister of Finance has declined to tell us who authorized a change in the printed version of the budget speech. At one time he was surprised; he was surprised when he was first informed about it. He has declined to tell us who authorized this. We can only assume that he doesn't know, or for some reason or other he prefers not to tell us. And the only option available to us in that circumstance is for us to ask someone else.

In that case, Mr. Chairman, of course, we'll have to ask the Premier these questions that the Minister of Finance has declined to answer, either because he just doesn't know the information, hasn't bothered to find out, or because he feels it is politically damaging for him to admit that he knows the answers, and that he is giving these answers to us.

Some of these questions that are left over have been asked many times in the past four weeks. I recognize that by saying that I'm admitting that we are being repetitious — perhaps not tedious, but certainly repetitious. But since we're not getting the answers from this minister, then we will have to ask them of the first minister when that opportunity comes.

Mr. Chairman, I did ask some specific questions that are asked for the first time: I think perhaps the minister might want to comment.

HON. MR. WOLFE: The member asked one question I haven't heard before and that had to do with the federal government indexing and the impact it might have had on the coming year's budget. I think the impact on last year's budget was some $20 million, and we would anticipate that this might become $25 million to $30 million in the coming year.

He brought up again, as has been done repeatedly, the matter of restructuring grants. I don't think it's fair to say that the municipalities hadn't been urging for these and did not expect them, as you continue to advocate. I'm sure if you raised this question with the Minister of Municipal Affairs (Hon. Mr. Curtis) as you've done before, he would categorically disagree with what you've said.

MR. STUPICH: Mr. Chairman, I did ask about the office of the auditor-general, whether this would be in vote .63 or vote 1, or somewhere else — maybe there's just no provision in this budget. I did ask about the staff reductions and salary savings, specifically with reference to this vote.

HON. MR. WOLFE: The figure for the staff-reduction salary savings, which is quite a

[ Page 1205 ]

mouthful, is the impact of the 15 per cent of the salary reductions, at least of the status of the staff requirements of any one department. You'll find that staff-saving reduction figure in every department — it's spread across all departments. This would be the figure applying to the Department of Finance for all of the established personnel, assuming that they have been reduced by 15 per cent in each case in numbers, under Treasury Board directive.

MR. STUPICH: The minister has still not commented on the auditor-general. It may not be in the estimates at all; we're just wondering what vote. Would it be in vote 1? Would it be, in vote 63 where the comptroller-general is located, or is there no provision in this budget? That is quite possible.

HON. MR. WOLFE: Mr. Chairman, there's nothing provided in the estimates for the auditor-general.

MR. STUPICH: I just want to leave the door open, Mr. Chairman, to coming back to this question of staff reduction and salary savings. I understand it's a combination of staff reduction and reductions of the salaries of some people. Was that the minister's reply — the combination of the number of people in some instances, and in some instances the amount of money that individuals are receiving? It's a combination of those two items — is that correct?

HON. MR. WOLFE: Mr. Chairman, it just represents a reduction in the numbers of staff, not in the salaries. Referring to page 17 in the budget, I wish to draw to the attention of hon. members the fact that in the estimates of revenue and expenditure, which I will table in the House at the close of my speech, there was a deduction from the amount to be voted shown in each department, entitled "staff reduction salary savings." This results from government policy initiated in 1975 to effect an almost general 15 per cent reduction in the permanently established public service during this period of necessary restraint.

MR. STUPICH: Just to pursue that a little more, Mr. Chairman, not so much in reference to this vote, but again to leave the door open, that staff reduction, while it was intended to be a general target, was applied selectively by the previous administration and, I'm sure, will have to be applied selectively by the present administration. So we will be looking at certain votes as we come to them, and asking questions as to whether the minister in charge of that department proposes, with respect to specific votes, that there will be a staff reduction in that vote. I won't get into the succeeding votes, but if a vote is before us calling for a staff of 10 people, for example, and if we feel that it is a particularly important vote, then we would want to be reassured, I think, that none of the 15 per cent reduction is going to affect that particular vote. It's not that I'm wanting response at this point; I'm just wanting to leave the door open to that kind of discussion when we come to individual votes.

MS. SANFORD: Mr. Chairman, the other day the Minister of Finance indicated to me in response to a question I had that it would not be his decision as to how any surplus funds would be spent — in other words, how those moneys would be allocated among the various departments — but rather that it would be a decision of the entire cabinet. I'm just wondering if, at this stage, there has been any cabinet discussion about how that money might possibly be allocated.

MR. G.R. LEA (Prince Rupert): Following up on the member for Comox, yesterday when the Minister of Finance was asked if there were to be dollars coming in that are over and above the estimates of revenue for the coming year, he said the government as a whole would decide how to spend that money if that situation arose. I take the minister's word for that, but I find it a little surprising that it's my information that the Minister of Consumer Services (Hon. Mr. Mair) has told a group in the province that if that money did come in, extra money would be spent in the mining and forestry industry, and I wonder whether the minister has been informed by his colleague that that would be the case. Could he confirm what the Minister of Consumer Services is reported to have said — whether that's accurate or not?

MR. STUPICH: Mr. Chairman, very briefly, the minister did refer to a bulky report — and I'm pleased that he did refer to it — called "Taxation in Ontario." I think perhaps he didn't have time to get to the end of the book, and I would like to just quote briefly from one of the recommendations, because it does follow the discussion that we've had in this debate.

"Recommendation 40:2. In any given period provincial policies concerning appropriate levels and composition of taxation and expenditures be consciously directed toward the objective of moderating cyclical fluctuations within the Ontario economy."

That's the recommendation and this is the result of that recommendation:

"We concur with this recommendation. While the long-term trend of the provincial net debt will be upward" — we're talking about Ontario — "it is appropriate that the trend be altered whenever this is desirable in the pursuit o f appropriate short-term counter-cyclical policies.

"Recommendation 40:2 is therefore

[ Page 1206 ]

acceptable. We note, as did the Smith committee, that its effective implementation would require a high degree of co-ordination between federal and provincial economic policies."

I'm just recommending to the minister that in reading this report of the Royal Commission on Taxation in Ontario he take some time to read the whole report.

MR. W.S. KING (Leader of the Opposition): Mr. Chairman, I just wanted to ask the minister a question with respect to funding for the student summer-employment programme. In a press release dated February 9, the Minister of Labour (Hon. Mr. Williams) announced a two-phase programme initially providing for funds for $9 million to generate employment for high school and university students during the summer holiday period.

He announced in the same press release, Mr. Chairman, that phase two of the programme would be announced and details given at a later date, in a few weeks. But he indicated that the number of jobs generated would exceed those generated last year through the expenditure of some $20 million. Since that time, the Minister of Labour in response to questions in the House has indicated that the programme stops at phase one — only $9 million is to be provided. I would like to ask the Minister of Finance what the total amount of funds were which were sought by the Department of Labour for phases one and two of the student summer employment programme.

HON. MR. WOLFE: Mr. Chairman, I believe the answer to that question would be $23 million. I could be out a little bit with that, but I believe the answer would be $23 million.

MR. KING: Mr. Chairman, perhaps the minister could tell me what portion of that $23 million was approved by Treasury Board. As I understand it, only $9 million has been approved for the programme. Am I to assume then from the minister's response that they were denied approval for the $14 million for phase two of the programme?

HON. MR. WOLFE: Mr. Chairman, the answer is no; they were not denied approval for the additional portion. In the summer employment fund there was a balance of $9 million. The balance between that and some $23 million was provided by the various departments in providing for the total programme.

MR. KING: Mr. Chairman, as I understand the response to questions asked in question period, the only student hiring through departmental auspices will be the customary summer replacement-staff hiring, for which normal allocations are made annually and which are altogether unrelated to the student summer-employment programme. Is that correct?

I'm trying to elicit from the Minister of Finance just what the total amount of funds earmarked for the student summer employment programme is in the current year. They've given two answers to the question of how students will be hired through departments. The Minister of Labour gave the answer in question period that they would be hired under code 04 as ordinary summer replacement staff. Now the Minister of Finance is telling me that $23 million has been allocated for this purpose. What's the distribution of those funds, then?

HON. MR. WOLFE: Mr. Chairman, I don't want to mislead the member or confuse him, but I just hope we're talking about the same thing here.

MR. KING: I do too.

HON. MR. WOLFE: You asked how much money was altogether asked for under the programme and I answered the question by saying I thought it was $23 million.

You've asked a number of questions of the Minister of Labour some days ago on this question. There was $9 million in the summer employment fund remaining which became part of the funds available, but the balance of it has been provided by allocations from departments under code 04.

MR. KING: Well, code 04, Mr. Chairman, has always been a normal allocation by departments on a systematic basis throughout the years for normal departmental relief hiring. What the minister is telling me then is that there are no additional funds beyond the $9 million reserve fund that remained allocated for a special student summer employment programme. Is that correct?

HON. MR. WOLFE: Mr. Chairman, it's not so that there are no additional funds. Each department was cognizant that this summer-employment programme would be co-ordinated through the Department of Labour and had to cooperate in the provision in their funds which were provided by the budget. This has all been provided through the budget, but through the various departments in providing for the total summer-employment package as co-ordinated by the Labour department.

MR. KING: Well, Mr. Chairman, on what basis were the departmental estimates approved by the Department of Finance, then? What is the total number of new jobs that will be generated through departmental hiring of summer students?

[ Page 1207 ]

HON. MR. WOLFE: Mr. Chairman, that's a very good question. I would suggest you should direct it to the Minister of Labour.

MR. KING: Well, Mr. Chairman, I have some difficulty understanding how the Finance minister would approve allocations to departments for expenditure in the current fiscal year without knowing precisely how many jobs or what programmes these funds are being appropriated for. Are they, as the Minister of Labour answered previously, simply summer-replacement jobs, or is it related to a new special programme of newly created jobs for high school students and university students?

Mr. Chairman, I'm trying hard to elicit information from the Minister of Finance. I must apologize if I'm not making myself clear, but I'm very tenacious and I'll stick with the subject until he gets the message so that he can answer me properly.

As I understand it, what the minister is saying to me is that no special allocations were made to departments other than for normal summer replacement hiring for those departments for the purposes of holidays and so on. Is that correct?

Interjection.

MR. GIBSON: Well then, if that is not correct, there must have been a special departmental programme established to create employment, and if that's the case and if these allocations were approved on the departmental basis I have difficulty understanding how the Finance department could approve them without knowing precisely how many jobs were going to be created and what the tenure and nature of the employment was to be that was being created. I'd like some information on that.

HON. MR. WOLFE: Mr. Chairman, the member is asking questions for which I do not have answers here in terms of the numbers of jobs which were before us when these matters were reviewed by the summer-employment programme. I simply cannot provide that information on the spot here, but we'd be happy to get it for you. As I suggested earlier, you've directed a number of questions to the minister who is responsible for this programme previously, and I would respectfully suggest this is where you should ask your questions. If you want to know how many jobs are created through this, we could certainly get that information. I just don't have it today.

MR. KING: I appreciate the minister's difficulty with that precise information, Mr. Chairman. But I wonder if he could at least tell me if there was a special departmental allocation made this year to departments of government, over and above normal manning of those departments, for replacement staff during the summer.

HON. MR. WOLFE: Mr. Chairman, it was a matter of consideration in every department's budget. In other words, we were aware of this programme in reviewing each department's budget as it was before us.

MR. G.V. LAUK (Vancouver Centre): Answer the question, friend.

HON. MR. WOLFE: That's what I've answered.

MR. KING: Then, I hope, Mr. Chairman, that the Minister of Finance can at least give me some indication of how many dollars we're talking about. Surely we're not so loose in the administration of governmental affairs that departments of government are able to write their own ticket with respect to staff without justifying what this money will be used for — whether it's an extension of their current staff, whether it's an expansion of staff, whether it's temporary summer replacement, whether it's a special employment programme for a short period of time. Surely there's some indication if extra dollars were budgeted and allowed to departments. Surely there's some overall estimate of how many dollars were involved in allocation to all departments of government.

HON. MR. WOLFE: I answered that question.

MR. KING: I'm sorry, I didn't understand the answer that was given to that question. I received the advice that it was $9 million in reserve. I received the advice that the Department of Labour asked for $23 million. I have no advice from the minister as to how much was approved.

I think the minister is studying hard and considering my question, Mr. Chairman, and I want to give him adequate time to collect his faculties and come up with an answer that I know he's dying to give.

It's a matter of some importance, Mr. Chairman, not only to me, but it's certainly a matter of great importance to the young people of this province who are trying to understand how they apply for employment opportunity with the government this year. There's certain conflict in press releases and advice that has emanated from the Department of Labour this year. I'm sure the Minister of Finance can now help clarify the whole situation so young people might know whether or not there is job opportunity for them this summer, and, if so, precisely how they should go about making application

As I understand it, the Department of Labour has agreed to act as the employment agency for all departments of government in the coming year. But

[ Page 1208 ]

surely it's only common sense to let the students of the province know approximately how many jobs we are talking about so there is not a false reliance by a large number of students on government employment opportunity that in fact does not exist. I know the minister will want to give this House and I know he'll want to give the young people of the province some indication of how many jobs and how many dollars are available for this purpose.

HON. MR. WOLFE: Mr. Chairman, as has been indicated through statements made by the Minister of Labour (Hon. Mr. Williams) in answers to this question previously, there's a total allocation in the programme of some $23 million, approximately. If the member would care to have a copy of the minister's statement of April 21, I'd be happy to provide one for him. The statement indicates that phase 1 of the programme estimates 4,600 students in productive core jobs, and phase 2 estimates 7,600 students at a total cost of $8 million for the second phase. So this is indicating a total of 12,200 job opportunities in British Columbia in the total phase 1 and phase 2. I think that's about the only answer I can give you at this stage. If you'd care for a copy of this, I'd be happy to give it to you.

MR. KING: I appreciate the minister's response. What I have some difficulty understanding is that in the Minister of Labour's first press release he clearly indicated that $9 million was allocated especially for the development of student summer jobs. These were relative to students working on farms and in small businesses, students pursuing career-oriented programmes and so on.

The problem with phase 2 seems to be that a change was made in the approach. In other words, the allocation is not handled through the Department of Labour but is handled through all departments of government, simply on the basis of their own usual summer replacement hiring. Now this always occurred. This always occurred in addition to the student summer-employment programme. What the government is doing now is simply estimating the total cost, as far as I can see, of ordinary government replacement hiring, which is not a special student programme. It's not new employment; it's simply relief positions for the summer. They're estimating the dollar value of that replacement hiring in terms of wages and portraying that as dollars allocated for a special student programme. I think that is misleading, Mr. Chairman.

So I can only assume from what the Minister of Labour has told us that, in actuality, all that he has earmarked for the development of student employment this summer is the paltry sum of $9 million, which was left over in reserve from the previous government's initiatives in this area.

HON. MR. WOLFE: Mr. Chairman, I can only say that that assumption is not correct, because this was a very definite programme that the Minister of Labour developed in cooperation with Treasury Board in developing the budgets of individual departments. They were all made aware of the fact that they would have to provide for this within their individual departmental budgets. I am referring now to the second phase of the programme, but it's allocated throughout the departments. There is no less than, well, the amount I indicated being provided for summer employment for the entire year.

MR. KING: Mr. Chairman, the Minister of Labour and the Minister of Finance had no problem at all designating in the press release initially $9 million for the creation of special student jobs. But they seem to have some great difficulty in explaining to me and in explaining to this House how the total amount which they claim — an amount of $14 million — has been allocated and distributed throughout the other departments of government. They seem to be singularly unable to explain to me precisely what these new jobs are going to be all about. The Minister of Labour did, in fact, say that the only student hiring through departmental auspices this year would be under vote 04, which is normal summer replacement hiring.

So what we are talking about in terms of $14 million is a normal allocation that was made very year as part of regular staffing. It has got nothing to do with the generation of new jobs whatsoever.

I can only conclude that there is going to be a net loss of approximately 10,000 student summer jobs this year. There has been a cutback of in excess of 60 per cent of funding for that special programme which was developed by the New Democratic Party government in 1972 and 1973. I think that is extremely regrettable and I think it is unfortunate that the government is trying to pass off this cutback by closing it and hiding it in what is regular replacement hiring by departments of government this year as occurs every year. I think that is very regrettable, Mr. Chairman.

MR. SKELLY: Mr. Chairman, earlier in the debate on the minister's estimates the member for Nanaimo (Mr. Stupich) questioned the Minister of Finance concerning the possible yield from taxation royalties, licences, et cetera on natural resources. He questioned him as to whether that yield was realistic considering the world-wide economic slump that took place in 1975.

In the budget on page 31 it shows a revenue increase of from $477.8 million to $538.4 million in revenues from the natural resources. I am wondering if the Minister of Finance can tell me if this revenue increase takes into account proposed changes in

[ Page 1209 ]

mineral royalties from a royalty-based to a profit-based tax on minerals. According to John Halliwell of the former copper task force, a change from a royalty-based to a profit-based tax on minerals would result in a 40 per cent reduction in revenues, at least from copper.

I'm wondering if the increase in revenues that is projected by the Minister of Finance in his budget speech is based on the premise that the Mineral Royalties Act and the Mineral Land Tax Act will remain in effect for the fiscal year 1976-77.

MR. J.J. HEWITT (Boundary-Similkameen): Mr; Chairman, I thought I would rise and give the opposition a little bit of a rest. They seem to be jumping up and down. Both the hon. member for Nanaimo (Mr. Stupich) and the hon. member for Revelstoke-Slocan (Mr. King) have commented on a number of things. One is the student employment problem and the staff reductions in the minister's estimates. I am relating this somewhat to those two points under vote 61.

I am pleased to say that members of this assembly today received a news release from the Department of Economic Development concerning the Atco plant in Penticton, which is in my riding. This Atco plant was proposed back as far as 1972. It has come to fruition in 1976. I won't relate what the delay was. I'll let the members of this assembly probably assume that for themselves, but I'd like to say that this company, Mr. Chairman, is…

MR. LAUK: You tell us. You tell us.

MR. HEWITT: …one of the leaders in Canada in mobile home sales — as a matter of fact, across the world — and its sales in 1975 were $180 million. This new plant in Penticton, for the former Minister of Labour's (Mr. King's) information, will create 150 new jobs, and also it will give an impetus for support industry in our area and I'm sure will create summer employment for some of our students in the Okanagan valley. So there is some effort, and this new move to stimulate industry will certainly assist the youth of our province. And who knows, if we can move this province ahead — this government sure can do it — then we won't have to worry about staff reductions under the minister's estimates.

MR. SKELLY: The Minister of Finance didn't answer my previous question — that is, whether the projected revenues from natural resources for the next fiscal year took into account changes in the basis of taxation on minerals. I'm wondering if the Minister of Finance is prepared to answer that question now.

Okay, another question I have then relates to succession duties. The minister shows in his revenue projections $26 million in provincial revenues for the next fiscal year from a tax that the Premier promised to do away with during the election. I'm wondering if we can expect legislation during this session to do away with that revenue — just what substitution we can expect, whether this year or over the next few fiscal years. This again is a tax that the Premier promised to do away with that yields $25 million or $26 million a year. Just what alternate source of revenue is the minister looking at to replace the Succession Duty Act which his government has promised to do away with, and has apparently postponed the promise for this present fiscal year? Is the minister prepared to answer that one?

HON. MR. WOLFE: Well, Mr. Chairman, the member asked what revenues we would hope to replace for the loss of revenue due to succession duties. I think the answer is quite obvious. If a policy of this nature were developed to remove succession duties, it would only be done in anticipation of attracting investment capital for retention in British Columbia. It's quite obvious this is the view that other provinces take that do not have succession duties. In any event, that is the only way I can answer your question.

AN HON. MEMBER: Which other provinces?

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

MR. SKELLY: Well, that answers my second question, and I'm grateful for that. But he didn't say whether the changes in revenues from natural resources are based on the existing Mineral Land Tax Act and the Mineral Royalties Act, or whether they are based on the premise that some other form of mineral taxation will be brought in during the present fiscal year — as I understand it will from the comments of the Minister of Mines and Petroleum Resources (Hon. Mr. Waterland), that substantial changes in taxation legislation for minerals will be brought in during this spring session. I am wondering just on what premise the increase in royalties is predicated.

Also, I'm wondering about coal royalties — and again this is a question that the member for Nanaimo (Mr. Stupich) brought up during the first day of debate on the Minister of Finance's estimates. The previous government had a plan to increase the coal royalties to a point where they represented 5 per cent of the per-ton value of coal produced in this province, and I'm wondering if the increase in revenue yield, again from natural resources, represents an increase in coal royalties as well…or just where the minister is going to find that revenue increase from $477.8 million to $538.4 million over the next fiscal year.

MR. CHAIRMAN: Just before the minister

[ Page 1210 ]

answers, perhaps I could give a little guidance to the committee out of the 16th edition of May. It clearly gives guidance in this wise: "The administrative action of a department is open to debate…" — this is under the general restrictions on debate on Committee of Supply — "…but the necessity for legislation cannot be discussed in Committee of Supply." If questions are being asked that perhaps involve legislation, or that would anticipate legislation, that kind of a question would be out of order.

MR. SKELLY: Well, surely, Mr. Chairman, the Minister of Finance must have been operating on some information when he projected an increase in natural resources royalty revenue. I imagine that information was provided either by economists or by members of other departments or ministers from other departments. I'm just wondering on what basis he's projecting an increase in revenues from natural resources. He didn't answer the question from the member for Nanaimo (Mr. Stupich), maybe he doesn't intend to answer the question for me, and maybe he doesn't know the answer at all, but at least he could advise me of the minister who may know the answers. Possibly he would be prepared to do that. He has told the member for Revelstoke-Slocan (Mr. King) who he can ask regarding student summer employment programmes. Perhaps he can suggest which minister had input into this revenue projection. Then I'd be prepared to ask that minister just what information he gave to the Minister of Finance in order that he could come to this revenue projection which shows an increase from $477.8 million to $538.4 million.

MR. LAUK: Well, it's unfortunate that the minister will not answer these questions. You know, whenever the back bench stands up to help the minister, it causes unnecessary delays, Mr. Chairman. That's most unfortunate. I think that the minister would be better off if he had a little chat with the back bench. Maybe we can get the Premier to do that. The member for Boundary-Similkameen (Mr. Hewitt) got up and left the unsavoury innuendo….

Interjections.

MR. LAUK: That's better than political whimsy today. He left the unsavoury innuendo…

HON. MR. MAIR: Innuendo — a new word.

MR. LAUK: …that the Atco project was delayed from 1972 to 1975 because of the NDP administration.

MR. HEWITT: I didn't say that!

MR. LAUK: That's the innuendo he left. This is the kind of inadvertent deceit….

AN HON. MEMBER: That spells jiggery-pokery. (Laughter.)

MR. LAUK: Jiggery-pokery, political chicanery and whimsy. This is the kind of inadvertent deceit, Mr. Chairman, that has characterized one or two members of the back bench.

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

MR. LAUK: Inadvertent, I said.

MR. CHAIRMAN: You are not suggesting deceit on the part of any member?

MR. LAUK; Not advertent deceit, no. I'm sure if the man knew what he was doing he wouldn't be in that party for one thing. (Laughter.)

MR. CHAIRMAN: Mr. Member, having been a member of this House for some time, and having also been a minister of the Crown, you know that we cannot accept the word "deceit." Would you please withdraw it?

MR. LAUK: I'll withdraw "deceit."

MR. CHAIRMAN: Thank you.

MR. LAUK: But, Mr. Chairman, the Atco proposal which indeed — it was 1973 when it was proposed — involved a project such as the one described recently by the new Minister of Economic Development (Hon. Mr. Phillips), that project was abandoned in 1973 because of the high engineering costs of the plant.

MR. HEWITT: I was on city council, Gary.

MR. LAUK: I was involved in the negotiations. In view of that fact, they abandoned the project for a lengthy period of time. They did make an offer repeatedly such as the one that has been outlined by the news release of the Department of Economic Development. I should point out, Mr. Chairman, that it does create jobs, and that's fine. This proposal was before the BCDC and was about to be completed just prior to the last election, so Atco didn't have any bad thoughts about the previous administration. As terrible as it may seem to. the member for Boundary-Similkameen, they didn't have any bad thoughts about us.

MR. HEWITT: I didn't say that.

MR. LAUK: But it should be pointed out that it's

[ Page 1211 ]

a little bit of a rich deal that finally Atco accepted with BCDC, and that's unfortunate. We were holding out for a better deal because the sales in 1975 for Atco were $180 million. They are not what I would call a prime candidate for BCDC loans, but I appreciate….

Interjection.

MR. LAUK: Exactly! I agree with you there that jobs are important. I don't agree with the Minister of Finance when he states that succession duties attract capital. The studies that have been made across Canada and the United States bear the point out that they don't attract capital. Sometimes in anomalous situations when, for example, all of the provinces except one, or all of the states except one, have succession duties, that one state may attract capital. But it's almost impossible to measure, and the studies that have been done in the various levels of taxation have indicated that it doesn't attract capital.

MS. R. BROWN (Vancouver-Burrard): I'm going to be very brief because I know that the minister knows the answer to the question which I'm going to ask and he's going to leap to his feet and give an answer immediately.

Mr. Minister of Finance, through you, Mr. Chairman, last year the then provincial government put aside the sum of $200,000 to be used for the funding of projects specifically affecting the lives of women in this province. Now, one of the first things that your government did, of course, when it became the government was to close down the vehicle through which this $200,000 was disbursed around the province. I am not sure just what vote that $200,000 shows up under, Mr. Minister of Finance, through you, Mr. Chairman, but I cannot find anywhere in your speech on the budget or anywhere else a similar amount of money, hopefully a larger amount of money, earmarked specifically for the continuation of the funding of some of these very worthwhile projects which were started by the previous government.

I wanted to jog your memory — probably by naming a couple of these projects. There was one which was sponsored by the Lower Mainland Correctional Centre. That project was a training programme for women in Oakalla. Now what is going to happen to that programme? Where is the continued funding? I am sure you agree with me that rehabilitation and retraining is one of the really necessary things, not just for men but for women in the penal system as well.

Something else that fund assisted was the Federation of Medical Women of Canada. They had a series of symposiums in Victoria and Vancouver, and planned to continue holding these throughout the province to educate women regarding their health problems. What is going to happen to the continued funding for those programmes? Only two cities were dealt with; there are other cities in this province as well and women live in those cities. Certainly the health problems of women is an area of major concern for them. The job being done by the Federation of Medical Women of Canada, the B.C. branch, was a very worthwhile one. Where is that $200,000? Where does it show up?

The Western Canada News Service….

Interjection.

MS. BROWN: It came out of your expenditure somewhere. But what I'm saying, Mr. Minister, is not even in your budget speech anywhere. I've read your budget speech, all editions — the first edition, the second edition, and I'm anticipating a third and fourth. But anyway, I've read all existing editions of the budget speech, and nowhere can I find any statement that assures us of the continuation of funding, of the earmarking of that $200,000, to carry on some of these very worthwhile projects.

The Western Canadian News Service, which I'm sure you use, publishes a newsletter which specifically is very useful to members of this House.

Rape Relief recently had their funding cut in half. Where is this fund which would under normal circumstances have rushed into the breach to fill the gap?

Hope Cottage Industry was a cottage industry started for handicapped women on social assistance to help them to get into the business of forming quilting teams to work in the home and raise some kind of income for themselves. You believe in the private enterprise system, you talk about it time without end. Here is a group that was being funded to be able to help themselves.

Where is that $200,000? What is it earmarked under? You're the Minister of Finance. I'm saying to you that I've read through all the editions of your budget, and nowhere is there any indication that your government has any intention of continuing to carry on the funding of these worthwhile industries.

Interjection.

MS. BROWN: Am I being interrupted by the minister from Rhodesia? I hope not.

Mr. Minister, I'm asking you: can you tell me where there is going to be a continuation of the $200,000 which inadvertently was left out of your budget statement for the continuation of these projects? That was a special fund earmarked and put aside, and which was administered by the provincial co-ordinator in the Status of Women's office. That office has been closed down; so be it. But where is

[ Page 1212 ]

that $200,000, and who else is going to be administering it?

HON. MR. WOLFE: Mr. Chairman, I can appreciate the member's interest in these various projects. I can also appreciate the fact that she's well aware of the fact that these are not within the Department of Finance. If she would do me the courtesy of providing me with a list of these, I will be happy to get her information on where these grants are provided for in the coming year's budget. It seems to me from the sounds of the description she gave of some of these grants that they would fall within the Department of Health, the Department of Human Resources, and so on. But I am sure she wouldn't expect me to know the individual allocation of these grants that she has asked for. I respect her interest in them as I might have interest in the same projects but, at the same time, she knows very well where to ask these questions.

MS. BROWN: Mr. Chairman, outside of all the departments there was a sum of $200,000 put aside and earmarked. Sure, some of these projects are health; sure, some are education; sure, they are human resources — but the one thing that they all had in common was that they addressed themselves specifically to the needs of women. The previous administration earmarked and put aside $200,000. Where is it?

HON. MR. WOLFE: Mr. Chairman, I presume the member didn't hear me. I just asked her if she would do me the courtesy of providing me with a list.

MS. BROWN: Through you, Mr. Chairman, to the minister, I would be happy to present the minister with a list, but these are not departmental grants. This is what I was trying to explain to the minister. They are not departmental grants. It was a specific and isolated sum of money of $200,000 which I can find neither in his speech — of any edition — nor anywhere else. Does it mean — this is what I want him to say — that his government has decided, Mr. Chairman, through you to the minister, not to continue funding these projects? That's all I want to find out.

HON. MR. WOLFE: Mr. Chairman, I am aware of the bogeyman the member is trying to set up here, but if she will just give me a list…. In any event, there would not have been, in any previous year or now, an allocation of this kind which would be outside the budget of a given department. I can only say that I can recognize some of the agencies that she indicated as receiving these grants, and they would fall, I am sure, within the Department of Health on grants that have already been approved.

MR. SKELLY: Mr. Chairman, I understand that the federal cabinet is considering changing federal income tax legislation to eliminate the tax-free status of Crown corporations. I wonder if the Minister of Finance, as fiscal agent for Crown corporations in the province of British Columbia, has made representations to the federal government about this in anticipation of this change in the federal income tax statutes. It could result in increased deficits for some of our Crown corporations in the province or break-even situations. I am wondering just what plan of action he has adopted in approaching the federal government, if it's been discussed at some of the federal-provincial Ministers of Finance conferences, and just what position the provincial government has taken.

The federal government usually threatens to do this in the wake of some action by NDP provincial governments, such as the takeover of 50 per cent of the potash industry by Saskatchewan recently, or some of the actions taken by the previous NDP government in the province of B.C. I wonder just what the Minister of Finance's position might be on the loss of tax-exempt status for Crown corporations in the province.

A lot of revenues for the three or four western provinces come from Crown corporations because of the low level of investment. Typically in the western provinces over the years since we entered Confederation, much economic activity has been stimulated by government intervention in the economy. To lose the tax-exempt status on those Crown corporations would work a significant hardship on the economies of the western provinces. I wonder what position the present government of the province of British Columbia is taking with regard to the elimination of tax-exempt status of Crown corporations.

I have a second question. In looking through the estimates of the Minister of Finance, I find that of a total of 970 employees in his department, there are two people designated as economists. Now maybe these are some of the people who feel that sales tax is less regressive than income tax, et cetera. I wonder who these economists are, where they are buried in the department, and whether they had any input at all into the preparation of the budget speech. I know that the minister has revealed that there were some consultants who he talked to in preparing the budget speech. There was Newell Morrison, car dealer and former member of the Legislature….

HON. MR. WOLFE: That's not true. That's not what I said.

MR. SKELLY: Well, you can answer that when your time comes, Mr. Member.

There was Dan Campbell, former Socred minister

[ Page 1213 ]

and campaign manager and political fixer, and David Brown, a political image-maker and flack-man employed by the Social Credit Party — and he's now gone to his reward as a budget consultant for the government.

I'm wondering if any economists, aside from those three, have had any input into preparation of the budget. If not the two economists, who were very similar, within the department, I wonder if the minister hired economic consultants. It seems that other provinces have managed to incorporate their political philosophies, their economic philosophies, into their budget speeches and revenue and taxation schemes, and I wonder if the Minister of Finance, in preparation of the budget, considered some alternative taxation schemes which might prove less regressive, less of a hardship on lower- and middle-income people, and provide returns at least as great as, for example, raising corporate income taxes or raising sales taxes, and some of these schemes have been incorporated into the budgets of the prairie provinces.

For example, Saskatchewan and Manitoba have implemented surtaxes on incomes over $21,000 or $24,000. They've imposed surtaxes on larger corporations that can more afford to pay those taxes. I'm wondering if the government has, in the preparation of the budget, looked into those types of revenue measures which would appear to me to be more fair in view of the imposition of Anti-Inflation Board regulations on wages and prices in the western provinces. Also the provinces such as Manitoba have adopted a form of motor-vehicle registration which penalizes those people who buy larger cars, for example, people who buy the big gas-eaters that clog our highways and use more of our energy and pollute our atmosphere, clog our ferries.

I wonder if the minister has considered measures like this which, as well as raising revenues, would also implement the policies of the government. So can the minister give me the answers to those questions: what his position is on the removal of exemption of taxes on Crown corporations, whether there was input from economists, other than political input into the budget speech, and whether he has considered other alternative sources of tax revenue other than the regressive forms of taxation that were brought in by the government in this budget speech?

HON. MR. WOLFE: Yes, Mr. Chairman, the member raises a point which has received some consideration, the tax-exempt status of Crown corporations. We are watching this and naturally we'll be very concerned if it does come up as a matter of negotiations with the federal government. It has been raised at this stage by the federal authorities, and I don't anticipate really that it will. We are certainly mindful of the situation and watching very closely.

You asked whether we considered other forms of taxation. We considered all forms of taxation, Mr. Member, and went to the extent that we thought we could logically do in fairness to the people who have to pay for this service — all the citizens of British Columbia — in adopting the tax measures which we did.

MR. SKELLY: Could the Minister of Finance just expand on some of the alternatives that he did investigate before coming down with the regressive tax measures that he did bring in — for example, sales tax increase on the corporation tax for small businesses? What other alternatives did you examine and why were these rejected? For example, increases in taxation on natural resources, or postponing some of the changes in natural resources taxation legislation which would reduce revenue from those sources. Can you give us some of the programmes that you did examine before coming down with the measure that you did come down with?

Vote 61 approved.

On vote 62: administrative and support services, $785,306.

MR. SKELLY: Mr. Chairman, this is a vote where those economists are buried. I wonder what services those two economists out of the 970 staff of the Department of Finance provide. What service do they provide and who are they?

Mr. Chairman, if the minister doesn't know, perhaps he can….

AN HON. MEMBER: No supper for you, Evan.

HON. MR. WOLFE: I wouldn't be surprised if we had more than two economists. We can get you those figures. Do you want the names of the individuals, Mr. Member?

MR. SKELLY: Well, I wonder who those people are, and what services they do provide to the Department of Finance?

HON. MR. WOLFE: They're economists for the Finance department providing necessary information that you're quite aware of.

Vote 62 approved.

On vote 63: controlling and audit branch, $2,212,468.

MR. COCKE: On a point of order, I hate to see a minister overtaxed like this. I've never in all the time I've been in the House seen a poor minister have to

[ Page 1214 ]

present his own votes. It's always been the House Leader. Now how come the House Leader has had a holiday in this regard?

MR. CHAIRMAN: We appreciate the question but it's not a point of order.

MR. NICOLSON: In the Clarkson Gordon report there's some description of the functions of Dunhill Development, and it talks also about in the housing fund. On the housing fund, it says that the balance is represented by cash and investments of $5.3 million. Is that investment the purchase price of Dunhill Development?

It's on page 21. At the very bottom it says the balance is represented by cash and investments of $5.3 million, advances and real estate development costs of $79.2 million — which I would anticipate are mostly investments in land and a proposal called "housing projects" and so on — and in the advances to Dunhill Development Corp. of $14.2 million, which are operating interim funding. Is the $5.3 million figure as investment in Dunhill Development, which I believe is a receivable to the Department of Finance through consolidated revenue?

HON. MR. WOLFE: Mr. Chairman, with respect, I'd have to get that information for you.

MR. NICOLSON: I don't want to hold this thing up, but that is approximately the price and there is a receivable, I believe, to consolidated revenue from Dunhill Development — the purchase price of Dunhill Development.

I notice that in the retained earnings in the annual report this year are $5.682 million — almost $5.7 million. In other words, the purchase price of Dunhill Development is almost realized in its two years of operation. We are creating an illusion of a deficit by adopting a certain type of accounting practices, which are the standard practices which have been in place in the province in the past. I daresay we left these retained earnings in Dunhill. This year they are almost doubled and they're still in Dunhill. There is an amount payable from Dunhill to the Crown.

As this was ended in October 31, 1975, I would ask if the Department of Finance is considering in the next four years transferring some of the funds from the retained earnings of Dunhill Development back into consolidated revenue whence the purchase price of Dunhill came. Of course, that would mean that if that were done — and I anticipate that retained earnings will continue to increase — it would help to create a surplus position, or help to increase revenues in a particular year. So is it the intention to leave it alone, to leave the retained earnings so that Dunhill can grow and prosper, or is it the intention to take these retained earnings in order to artificially puff up a surplus position in a future year, which is my concern?

HON. MR. WOLFE: With reference to Dunhill you've indicated an apparent surplus of funds. It could be that in the future, although we do require a considerable amount of working capital within Dunhill, some of these retained earnings could be expressed back into consolidated revenue.

MR. STUPICH: Mr. Chairman, this is one of the votes where I'm worried about the proposed 15 per cent reduction in staff. I wonder if the minister could tell us how many of the 121 that were approved in last year's estimates are currently on staff.

HON. MR. WOLFE: Mr. Chairman, the answer is none in this department — in the controller's department. There is no staff savings reduction within the controlling and audit branch.

MR. STUPICH: I see. What you are proposing is that there will be 144 in this….

HON. MR. WOLFE: That's correct.

Vote 63 approved.

On vote 64: data processing, $1,693,550.

MR. WALLACE: Mr. Chairman, I commented on this yesterday, that there was ever-increasing use of computer time in government. I notice that the amount allocated for the rental of data processing equipment is exactly the same as it was last year. I wonder if the minister could explain how this ties in with the ever-increasing use of computers, data banks and all the associated equipment.

HON. MR. WOLFE: Mr. Chairman, this amount is strictly, of course, the equipment involved directly in the Finance department, which is really a fairly small segment of the total data processing requirements within all government departments. This is only one section of it, which, I believe, is IBM equipment.

MR. WALLACE: Well, I just want to be more specific with the question: is the minister completely satisfied, then, with the present equipment that is being used and the degree to which it is being used? Is there no plan, as far as his department is concerned, either to expand the equipment or the associated costs in relation to data processing?

HON. MR. WOLFE: Mr. Chairman, I mentioned in the discussion here yesterday that we are doing a study of the rationalization of the computer equipment in all departments, there being a major

[ Page 1215 ]

installation which has just arrived from Honeywell at the Transport and Communications department, and involving a rental of something over $100,000 per month. We think there is an important need to co-ordinate the use of computers within all departments within one umbrella. So we are having an examination made of this prospect. We are just looking at one department here. I couldn't say that I am entirely satisfied in how it relates to other departments, but it seems to be doing a satisfactory job within the Finance department.

MR. WALLACE: Just a very quick followup, Mr. Chairman. In that case, I am interested that the minister mentioned that some new equipment has been ordered from Honeywell, because the article I quoted from yesterday, The Vancouver Sun of November 8, 1975, reported a complaint by Honeywell Inc. that they had not had a chance to bid on government orders for computer equipment. I would like just to follow up yesterday's questioning, then, by asking if it is now a fact that the government is asking for bids on computer equipment.

HON. MR. WOLFE: The answer to that last question is no at the moment because it is difficult to get bids on a firm proposal for a standard requirement of all computers. In any event, I shouldn't have you misunderstand what I said. The Honeywell equipment had arrived some time ago under a previous order. It has been here for some weeks, I understand, and is being tested. It is on the part of this installation and others that this study will be involved.

MR. WALLACE: But I'm still not quite clear on your statement that seems to conflict with the assertion I made yesterday that only IBM has been supplying equipment to this government. There are exceptions to that general statement that I made yesterday then, that some equipment has been delivered or ordered from another company other than IBM, and there is not a monopoly supplied by IBM to all government departments.

HON. MR. WOLFE: That is correct, Mr. Chairman.

MS. BROWN: I ask in curiosity, Mr. Minister, through you, Mr. Chairman: in these days of inflationary spirals and the cost of everything going up, can you explain to us how you have managed to keep your office expenses at exactly the same figure as they were last year, as well as your data processing supplies at exactly the same figure as they were last year?

HON. K.R. MAIR (Minister of Consumer Services): Sound management. That's what the election was all about.

MS. BROWN: You're ripping somebody off.

SOME HON. MEMBERS: Oh, oh!

MR. CHAIRMAN: Order, please.

Interjections.

MR. CHAIRMAN: Order, please! We'll wait for the minister to….

MS. BROWN: Undivided attention. It was as a matter of curiosity, Mr. Minister. I've been told by your back bench that it is management. But with the cost of everything going up, would you explain to us the miracle of how you have kept your office expenses at exactly the same figure as they were last year, as well as your data processing supplies at exactly the same figure as they were last year?

AN HON. MEMBER: You spent too much last year — you are in trouble with that.

HON. MR. WOLFE: Mr. Chairman, miracles will never cease, I guess. In any event, you can understand that the rental of data processing equipment is probably a multi-year contract. I haven't examined it personally, but that would explain why the rental would be the same as it would be a year ago, unless the equipment were revised.

MS. BROWN: No, no.

HON. MR. WOLFE: You're shaking your head.

MS. BROWN: Not the rental, sorry — the supplies and the expenses. Not the rental; I understand about rentals. I pay rent; I understand about rentals.

HON. MR. WOLFE: Mr. Chairman, I can only say that we have held the budget to the same figure as a year ago for supplies, and are attempting to hold it within that.

Vote 64 approved.

Vote 65: purchasing commission, $1,229,914 — approved.

On vote 66: taxation administration, $3,991,259.

MR. STUPICH: When we look at the description of the duties covered by this vote, the importance of them, I am wondering about my standard question about staff reductions. Is it proposed that any of the

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staff reduction will take place in vote 66?

HON. MR. WOLFE: Mr. Chairman, yes.

The House resumed; Mr. Speaker in the chair.

The committee, having reported resolution, was granted leave to sit again.

Hon. Mrs. McCarthy, on behalf of the Attorney-General (Hon. Mr. Gardom), presented the annual report of the corrections branch for the calendar year 1975.

Hon. Mrs. McCarthy moves adjournment of the House.

Motion approved.

The House adjourned at 5:58 p.m.