[ Page 269 ]

CONTENTS

Routine proceedings

Change of Name Amendment Act, 1977 (Bill 3) Hon. Mr. McClelland.

Introduction and first reading — 269

Psychologists Act (Bill 16) Hon. Mr. McClelland.

Introduction and first reading — 269

Assessment Amendment Act, 1977 (Bill 6) Hon. Mr. Wolfe.

Introduction and first reading — 269

Oral questions

BCR settlement with M.E.L. Paving. Mr. Lauk — 269

Aid to independent schools. Mr. Gibson — 270

Capital investment from Rhodesia. Mr. Wallace — 270

Salaries of executive assistants. Mrs. Dailly — 271

Farm Income Assurance Programme payments. Mrs. Wallace — 271

Brief on Labour Code from Employers Council. Ms. Sanford — 272

Applications for new railway charters. Mr. King — 272

Funds for Conference on the Family. Mr. Wallace — 272

Possible removal of trophy licence fees. Mr. Nicolson — 272

New Westminster building development. Mr. Cocke — 272

Tabling reports

B.C. lottery branch annual report. Hon. Mrs. McCarthy — 273

Commission of Inquiry on Property Assessment and Taxation preliminary report. Hon. Mrs. McCarthy — 273

Public Service Commission annual report. Hon. Mrs. McCarthy — 273

Royal Commission on Forest Resources report. Hon. Mrs. McCarthy — 273

Budget debate

Mr. Stupich — 273

Mr. Gibson — 294

Psychologists Act (Bill 16) Hon. Mr. Williams on behalf of Hon. Mr. Wolfe.

Introduction, first reading and second reading discharged — 306

TUESDAY, JANUARY 25, 1977

The House met at 2 p.m.

Prayers.

MR. E.N. VEITCH (Burnaby-Willingdon): Mr. Speaker, seated in the gallery this afternoon are 35 adult students from the British Columbia Vocational School, together with their very capable instructors, Mr. Smith and Mr. Butler. I would like this House to bid them welcome.

MR. L. BAWTREE (Shuswap): Mr. Speaker, in the gallery today are an old friend of mine, Mrs. Marie Lopaschuk from Enderby, and her daughter Alice Verwolf, who lives in the Victoria area. I would ask the House to make them welcome.

HON. E.M. WOLFE (Minister of Finance): Mr. Speaker, seated in the gallery today is the chairman of the board of the B.C. Assessment Authority, Mr. Don Morton. I'd like to ask the members to recognize him.

MR. C.M. SHELFORD (Skeena): Mr. Speaker, I'd like the members to welcome Marge Gibson, chairperson of the Kitimat School District, and Brian Graydon, secretary-manager.

MR. G. MUSSALLEM (Dewdney): Mr. Speaker, would the members welcome a group of students accompanied by their teacher, Mr. Garry, from the Hatzic Junior Secondary School at Hatzic, B.C.

Introduction of bills.

CHANGE OF NAME AMENDMENT ACT, 1977

On a motion by Hon. R.H. McClelland, Bill 3, Change of Name Amendment Act, 1977, introduced, read a first time and ordered to be placed on orders of the day for second reading at the next sitting of the House after today.

MR. D. BARRETT (Leader of the Opposition): Does that cover the Liberals?

PSYCHOLOGISTS ACT

On a motion by Hon. Mr. McClelland, Bill 16, Psychologists Act, introduced, read a first time and ordered to be placed on orders of the day for second reading at the next sitting of the House after today.

AN HON. MEMBER: Now Dave can hang up his shingle.

ASSESSMENT AMENDMENT ACT, 1977

Hon. Mr. Wolfe presents a message from His Honour the Lieutenant-Governor: a bill intituled Assessment Amendment Act, 1977.

Bill 6 introduced, read a first time and ordered to be placed on orders of the day for second reading at the next sitting of the House after today.

Oral questions.

BCR SETTLEMENT WITH M.E.L. PAVING

MR. G.V. LAUK (Vancouver Centre): Mr. Speaker, I wonder if the Premier could indicate to me who the acting Attorney-General is today. This question can be asked either of him or the acting Attorney-General.

MR. SPEAKER: A question to the Premier.

MR. LAUK: With respect to the review ordered by the Attorney-General (Hon. Mr. Gardom) in the M.E.L. Paving case, it is traditional that when such a review is complete and it appears that principals involved — individuals involved — have made contradictory statements, then it is incumbent upon them to order a judicial inquiry. Will tradition be followed in this case?

HON. W.R. BENNETT (Premier): Mr. Speaker, I'll take the question under advisement with the Attorney-General's department and report back to the House.

MR. LAUK: Supplementary.

MR. SPEAKER: Do you wish to ask your supplementary now, hon. member, or when the Attorney-General comes back to the House with the answer to your original question?

MR. LAUK: Well, just to save time for the hon. members of this House, I would direct a further question that can be asked of the hon. Attorney-General when the Premier meets him. I am thinking particularly of public statements made by Mr. Williston, in view of the fact that Mr. Broadbent said he acted in accordance with the board's instructions in negotiating the M.E.L. contract. Mr. Williston has publicly denied this. I would ask that both gentlemen be interviewed....

MR. SPEAKER: Order, please! It's obvious that that is not a proper question.

MR. LAUK: Oh, yes it is. This is the basis of the

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contradictory statements....

MR. SPEAKER: Order, please!

MR. LAUK: You see, when statements are made all supporting each other....

MR. SPEAKER: Order, please! This is not a matter of debate before the House at the present time. I have indicated the incorrectness of the question and I believe that the member should now yield to other members who wish to occupy time in the question period.

AID TO INDEPENDENT SCHOOLS

MR. G.F. GIBSON (North Vancouver–Capilano): Mr. Speaker, I have a question for the Minister of Education. A careful reading of the estimates book doesn't disclose any specific allocation for aid to independent schools. Yet, according to some officials, it can be found in the estimates. Could the minister please tell us how much has been provided in these particular estimates?

HON. P.L. McGEER (Minister of Education): Mr. Speaker, this is a question that can be discussed in detail under the estimates of the department.

MR. GIBSON: Mr. Speaker, on a supplementary, if that's what it is, this is not a question that can be discussed then. It must be discussed now for the budget debate and we need that information for the budget debate.

I would ask the minister again: how much has been provided for independent schools, if anything, or doesn't he know?

HON. MR. McGEER: Mr. Speaker, the details of each department will be discussed in estimates. If we get into this in question period it will consume weeks.

SOME HON. MEMBERS: Oh, oh!

MR. SPEAKER: Order, please.

MR. GIBSON: Mr. Speaker, I would ask the minister to say clearly that he doesn't know.

HON. MR. McGEER: Mr. Speaker, may I say that there's no legislation permitting any moneys to be provided for independent schools, but the Legislature will have an opportunity, we hope, to debate legislation before the session has concluded.

MR. BARRETT: Is the minister intimating that there may be further estimates in the fiscal year forthcoming that are not already provided for in the budget?

HON. MR. McGEER: No.

MR. BARRETT: Supplementary, Mr. Speaker. If that is the case, and this is the budget debate as I understand it is, and as the hon. member for North Vancouver....

Interjections.

MR. BARRETT: The information for the budget debate is necessary. Is there or is there not a specific amount in the budget for the independent schools — yes or no?

MR. SPEAKER: The hon. member for Oak Bay.

MR. BARRETT: Well, no, Mr. Speaker — supplementary....

Interjections.

MR. SPEAKER: Order, please.

MR. BARRETT: Mr. Speaker, the minister has said that legislation will be forthcoming. The member says that he wants to discuss the information which has been mentioned in the budget speech. Now is it there or isn't it? That's the question: is there going to be money or isn't there?

MR. SPEAKER: Order, please. The matter can be certainly thoroughly canvassed in the minister's estimates.

MR. BARRETT: Okay, that's fine.

CAPITAL INVESTMENT FROM RHODESIA

MR. G.S. WALLACE (Oak Bay): I'd like to ask a question of the Minister of Finance. With the emphasis in the budget speech on attracting capital and investment to British Columbia, and in the light of international events, particularly the collapse of the Geneva talks, can the minister tell the House if there have been any inquiries in particular from Rhodesia as to the investment of capital from that country or the immigration of individuals bringing capital from the country?

HON. MR. WOLFE: Mr. Speaker, I'll take that question on notice.

MR. W.S. KING (Revelstoke-Slocan): He doesn't know.

MR. WALLACE: Could I ask a second question,

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Mr. Speaker? Since, as I said, the emphasis in the budget is on attracting capital, and because of some of these international events, is the minister taking any initiative in the direction I've suggested of making investment opportunities known to these countries, and, if so, what are these initiatives?

HON. MR. WOLFE: Primarily the initiatives taken are to circulate our budget as broadly as possible to other countries and financial institutions. It receives quite wide circulation.

SALARIES OF EXECUTIVE ASSISTANTS

MRS. E.E. DAILLY (Burnaby North): A question to the hon. Provincial Secretary. Could the Provincial Secretary tell us what method the government uses to determine the salaries which are paid to the ministers' executive assistants?

HON. G.M. McCARTHY (Provinicial Secretary): Mr. Speaker, this government took the same yardstick that was set as a precedent by the former NDP administration in assessing executive assistants' salaries — I believe they are the same. If I recall, I think it is $19,500.

MRS. DAILLY: A supplemental question, Mr. Speaker. If that is so, then would the hon. Provincial Secretary explain to the House why Mr. Arthur Weeks, who was an executive assistant, received $10,000 more than the others?

Interjection.

MRS. DAILLY: Well, whenever we find out what he is.

MR. SPEAKER: Order, please.

HON. MRS. McCARTHY: Mr. Speaker, in response to the hon. member's question, the gentleman whom she describes as an executive assistant was not hired as an executive assistant.

MRS. DAILLY: A supplemental, Mr. Speaker.

AN HON. MEMBER: He was a friend of the Premier's.

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

MRS. DAILLY: Could we then be informed by the Provincial Secretary just what his job classification was?

HON. MRS. McCARTHY: Mr. Speaker, he was hired as a special adviser to the Minister of Economic Development (Hon. Mr. Phillips) — under the category.

MR. LAUK: A supplementary arising from the questions asked of the Provincial Secretary. Could the Minister of Economic Development describe exactly what Mr. Weeks was specially advising the minister on — in what areas?

HON. J.R. CHABOT (Minister of Mines and Petroleum Resources): On your files. (Laughter.)

MR. LAUK: There was $10,000 extra payment. You pay a man an extra $10,000 and you call him a special adviser?

MR. SPEAKER: Order, please.

MR. LAUK: He did not have any training; he had no background except running a weekly, except working for Mr. Clancy.

MR. SPEAKER: Order, please. This is not a period of statements; it is a period of asking questions.

MR. LAUK: You paid him an extra $10,000. He was a political hack!

MR. SPEAKER: Order, please!

FARM INCOME ASSURANCE
PROGRAMME PAYMENTS

MRS. B.B. WALLACE (Cowichan-Malahat): My question, Mr. Speaker, is for the Minister of Agriculture. It relates to farm income assurance. I would like to know, Mr. Minister, how much has been paid out under the scheme for the 1976 crop year; and how much, if any, is still owing to producers. Also, I would like to know whether or not the scheme provides for specific dates when payments are to be made and, if so, whether those payments have been made on schedule. It's a four-part question.

MR. SPEAKER: Order, please. May I observe that you ask your questions and then your supplementals — not all as part of one question, hon. member.

MRS. WALLACE: Very well. Answer the first then, Mr. Minister.

HON. J.J. HEWITT (Minister of Agriculture): Mr. Speaker, I would take all the questions on notice and I could provide the answers that the hon. member wishes at a later date when I have that researched.

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BRIEF ON LABOUR CODE
FROM EMPLOYERS COUNCIL

MS. K.E. SANFORD (Comox): Mr. Speaker, a question for the Minister of Labour: Did the minister receive a representation earlier this month from the Employers Council relating to the subject of the Labour Code?

HON. L.A. WILLIAMS (Minister of Labour): Yes.

MS. SANFORD: Would the minister table in the House the brief presented to him at that time?

HON. MR. WILLIAMS: No.

MS. SANFORD: Supplemental, Mr. Speaker: I wonder if we may expect those representations to be as successful as were the former representations by the Employers Council, related to the Workers Compensation Board.

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

AN HON. MEMBER: What's the answer? (Laughter.)

MR. SPEAKER: It was a statement, hon. member, not a question.

MS. SANFORD: "May we expect" was the question. May we expect those representations to be as successful as were the former ones made by the Employers Council relating to the Workers Compensation Board?

HON. MR. WILLIAMS: Mr. Speaker, the question is speculative. I'm not aware of the success of any former representations of the Employers Council.

MR. BARRETT: We are.

APPLICATIONS FOR NEW
RAILWAY CHARTERS

MR. KING: A question, Mr. Speaker, to the Minister of Energy, Transport and Communications: could the minister advise the House whether or not any applications for new railway charters have been received in his office?

HON. J. DAVIS (Minister of Energy, Transport and Communications): Not to my knowledge, Mr. Speaker, but I'll make inquiries.

MR. KING: I would appreciate it if, when the minister investigates this question, he could advise whether or not any charters have been granted or are pending presently.

FUNDS FOR CONFERENCE
ON THE FAMILY

MR. G.S. WALLACE (Oak Bay): Mr. Speaker, to the Minister of Human Resources: At an earlier date he had declined to provide funding for a co-ordinator and secretary dealing with the Conference on the Family, and I see no reference in the estimates. I'm wondering if he can tell the House whether any ongoing discussions are taking place among departments to provide the funding that's been requested.

HON. W.N. VANDER ZALM (Minister of Human Resources): The answer is yes, it is up for consideration. However, I am awaiting a report from the conference with respect to the findings, et cetera, that took place there.

POSSIBLE REMOVAL OF
TROPHY LICENCE FEES

MR. L. NICOLSON (Nelson-Creston): To the Minister of Recreation and Conservation: In view of the fact that members of the Nelson Chamber of Commerce were giving assurances to people at the Spokane boat show that special trophy licence fees at Kootenay Lake were to be removed and that they had undertakings from the department to this effect, would the minister tell us whether or not such assurances have been given?

HON. R.S. BAWLF (Minister of Recreation and Conservation): Mr. Speaker, I thank the member for the question. I am not aware of any such assurances being given and I'll take the question as notice and look into it.

NEW WESTMINSTER BUILDING DEVELOPMENT

MR. D.G. COCKE (New Westminster): I would like to ask a question of the Minister of Economic Development. I would like to ask that minister whether or not all the announcements made by the member for Burnaby-Edmonds (Mr. Loewen) in this chamber, and the day before to the press in New Westminster, with respect to the utilization of the 8 or 10 or 12 acres, or whatever they are going to get from ICBC, on 8th Avenue are from his department and are official. Now I am talking about the hotel, the convention complex, the provincial office building, the courthouse, and all the other aspects that that member so eloquently described in this House.

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HON. D.M. PHILLIPS (Minister of Economic Development): The development in New Westminster is a cooperative venture between the board of the Insurance Corporation of British Columbia and the board of the British Columbia Development Corporation, working together to help...

MR. COCKE: To do what?

HON. MR. PHILLIPS: ...that great city and to put in one of the greatest developments there in that city that the province has ever known. It is a cooperative venture and...

MR. COCKE: Like what?

HON. MR. PHILLIPS: ...it will invite cooperation between governments, both provincial and civic, and private enterprise to go in there and develop that great....

MRS. DAILLY: What? What?

MR. COCKE: Name one thing.

HON. MR. PHILLIPS: Well, now, there we go, Mr. Speaker, I've given him the answer to his question.

Interjections.

MR. BARRETT: There they go — wanting details again! (Laughter.)

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

The following reports were tabled by Hon. Mrs. McCarthy:

The annual report of the British Columbia lottery branch.

The preliminary report of the Commission of Inquiry on Property Assessment and Taxation.

The annual report for the Public Service Commission.

The report of the Royal Commission on Forest Resources.

Orders of the day.

ON THE BUDGET

MR. D.D. STUPICH (Nanaimo): Mr. Speaker, I'd just like to thank the Premier first for waving a copy of my speech notes and making the observation that it is "good stuff." I'd like to suggest to him, Mr. Speaker, that I hope it will improve in the delivery. Perhaps he would care to stay and listen to some of it.

Before I start on the notes that the Premier has....

Interjections.

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

MR. STUPICH: We'll find out as we go along; we'll both find out about the same time, I think, Mr. Premier. I'm not too sure myself what I'm going to do until after I've done it. (Laughter.) I trust the afternoon's good humour will continue for the next 15 or 20 minutes at least, Mr. Speaker.

Before I get into consideration of the motion itself, I would like to ask the House to join me in welcoming a number of friends who have come down from Nanaimo to hear my brief remarks about the budget: along with friends, a 26-year-old daughter who is here to listen to me; and a mother whose age I would not dare say aloud, but if you were to say three and a half times the age of my daughter, you wouldn't be far wrong, and I'll be in trouble next weekend. Anyway, would you join me in welcoming them.

Now for the budget. In the second paragraph in the budget we read: "In the last 10 months much has been done by this government to restore balance to the British Columbia economy." Well, Mr. Speaker, from where they sit possibly much has been done. I can recall some of the things that were done.

I can recall, for example, that the very first thing of consequence they did was to increase ICBC premium rates by some 140 per cent. I can recall talking to a news reporter, a girl from Nanaimo, with one of the....

MR. L.B. KAHL (Esquimalt): That's an old story!

MR. STUPICH: It's old stuff? Sure it is. But very recently, just six weeks ago, I was talking to a reporter from one of the Nanaimo papers, who previously was a Social Credit supporter. She said to me that in doing her Christmas shopping she was conscious of the fact that this year in February she was going to have to lay out some two and a half times what she had to lay out previously for her ICBC premiums alone, and this was affecting her Christmas shopping that year. It's still here. It's still a factor that has done nothing to restore the balance that was in effect in the province of British Columbia prior to the election on December 11, 1975. It's still affecting consumer spending — the sales tax that went up 40 per cent.

I can recall talking to the newspaper publisher in South Peace, when he told me that were it not for the advertising he's getting from Alberta, from Grande Prairie, his newspaper would have had to shut down.

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He also told me that a friend of his told him that on a weekend shopping trip to Grande Prairie on the Alberta side of the border, this friend had noticed that some 70 per cent of the automobile licence plates were B.C. plates.

MR. LAUK: Shocking!

MR. STUPICH: He went there himself one Saturday, not to observe this, but possibly to do his own shopping. He counted the plates, and 70 per cent of them were B.C. licence plates. Not only that, Mr. Speaker, but even one of the aldermen from the city of Dawson Creek was there doing his shopping that same day.

MR. KING: Chabot shops in Calgary!

MR. STUPICH: Mr. Speaker, you can recall when we first started talking about this 7 per cent sales tax increase. As the hon. House Leader for the opposition (Mr. King) says, when the hon. member, now the hon. Minister of Mines and Petroleum Resources (Hon. Mr. Chabot), was asked where he bought his new suit, and when it was suggested to him that he avoided the 7 per cent sales tax by going across to Calgary, for the first time in my memory that hon. member was silent. His face went red but he was silent.

HON. MR. CHABOT: That's a lie! That's a lie!

MR. STUPICH: You mean it's always red? Well, that day it seemed to be redder than usual. (Laughter.)

Interjections.

MR. STUPICH: Mr. Speaker, I appreciate your listening at least.

Mr. Speaker, you've heard much about the long lines of people waiting to cross the border to shop in Washington state. It's attributed to food costs. But if you talk to some of those people who are shopping, they tell you about all the other things they are buying. Food costs haven't changed that much between Washington state and B.C. in the last one, two, three, five years. The one thing that did change was that the sales tax in B.C. went from 5 per cent to 7 per cent. It was when that happened that public attention became attracted to these long lines of people who were accumulating every weekend to do their shopping on the Washington side of the border.

Interjections.

MR. STUPICH: Some of you people maybe speak from experience. Perhaps the hon. Minister of Health (Hon. Mr. McClelland) has been one of those in that line-up on a weekend, I'm not sure. I said there was no....

AN HON. MEMBER: There's no sales tax on food.

MR. STUPICH: Exactly. That's my point, Mr. Speaker — no sales tax on food. But that increase in sales tax drove them across the border to buy other things, and while they are down there they buy food. They weren't going down there to buy food two years ago. When the sales tax was 5 per cent you didn't hear about people crossing the border by the thousands on a weekend to buy food. It's only after the sales tax was increased that you heard about that.

Remember the criticism of the former Minister of Highways (Mr. Lea), who was accused of hurting the tourist industry by saying we didn't really want them cluttering up our highways? It didn't really keep any Yankees at home. But this government, Mr. Speaker, said in a very loud voice, "Yankee stay home," when they increased the ferry rates by more than 100 per cent, with disastrous results for the economy not just on Vancouver Island but for the whole of British Columbia. I've seen advertisements and I've seen stories in American papers warning people not to travel to British Columbia for their holidays this year. "The weather was bad." The weather's been bad before. "Alternative things to do." There've been alternates before. But there were stories and advertisements warning people not to travel to B.C., focusing on increased ferry rates, focusing on higher motel rates, focusing on higher food costs. The last two things have been there before. The new factor was the more than doubling of ferry rates, and that's the thing that hurt the tourist industry in the province so much last year.

Mr. Speaker, these are just the introductory remarks before I really get going, but perhaps I'll quote from some of the people affected. For example, I said that the ICBC premium rates were hard for business. Now you might say: "That's just the opposition saying that." But you will recall others in the community have said it. You may recall that in a recent speech Mr. Woodward of Woodward's Stores said: "Higher ICBC rates and sales tax took $500 million of disposable income from consumers. Retailers could have expected 30 per cent of that total had it been available for spending. Sales in B.C. are flat." And this is June 30, 1976. I can't see an upturn, and I haven't seen Mr. Woodward saying anything about that yet; I'm quoting his most recent remarks. There are no indications that it will take place this year.

AN HON. MEMBER: Balderdash!

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MR. STUPICH: Mr. Speaker, it's not just Woodward's Stores. How about Kelly Douglas? Kelly Douglas & Co. Ltd., in a story August 21, 1976, reported a $1 million drop in net income for the 24-week period ended June 19 compared to the same period last year. They go on in this story to say: "The company said British Columbia operations were adversely affected by the general erosion of the provincial economy. Sales and profits in other areas of Canada showed some improvement." But it's because of the depressed economy only in the province of British Columbia that their profits, on the whole, declined.

AN HON. MEMBER: Shameful performance.

MR. STUPICH: There have been quotations, and people have made references to some sources that have said that things are going to improve in B.C. Well, Bill Hamilton of the Employers Council doesn't seem to have heard the same reports or, at least, he's not reading them the same way. I have one quotation from him here:

"Instead of leading the economic recovery, as forecast by the Conference Board of Canada, British Columbia will lag behind the national average, William Hamilton, president of the Employers Council of B.C. said. He said 9 per cent of B.C. businessmen surveyed expect an upturn in the economy; 75 per cent expect conditions to remain the same; 16 per cent expect things to get worse."

Mr. Speaker, earlier I made reference to the Premier himself and to his own appraisal of what his government has done. I'm not surprised that the Premier has felt that there are more things that he could be doing today rather than listening to my speech, especially as he has a copy of the speech notes. I'm disappointed that the Minister of Finance hasn't found it convenient to be here this afternoon when the official opposition is making its first speech on the budget.

MR. KING: Arrogance.

MR. STUPICH: Possibly the Minister of Finance has found something better to do, too. Possibly he would rather not be here. The real Minister of Finance is here, but I mean the titular one — the other Minister of Finance, the one who holds that title. The real minister is here, but the other one is missing. He apparently lacks the courtesy or has found something better to do or just doesn't want to listen to the questions, the concerns, the problems of the people of British Columbia, as put to him by the finance spokeman for the official opposition. I'm disappointed; I expected more of him.

AN HON. MEMBER: He was just called out in the hall, Dave, to make a few denials.

MR. STUPICH: Mr. Speaker, again, carrying on with this theme, I pointed out earlier that it's not just the official opposition that is concerned about the lack of growth in the province, but others. A newspaper story in the Province, December 22, quoted a Mrs. Judith Maxwell of the C.D. Howe Research Institute — and this is getting into the whole realm of the type of financing we do here in the province. Maxwell's proposal is that the federal and provincial governments agree upon a reduction in the provincial retail sales tax, and that Ottawa reimburse the provinces for the revenues lost. In this period when there is this recession in the economy, province-wide, country-wide, a leading economist is proposing the exact opposite of what this government proposed almost a year ago when it increased the sales tax by some 40 per cent.

Mr. Speaker, perhaps one last reference to this, here in Victoria — the heading: "The Glow Won't Last." It's very recent, Mr. Speaker — January 7, 1977. "Doldrums to return, merchants warn" — in the Victoria Times, Friday, January 7. That's not the message we got in the throne speech; that's not the message we got in the budget speech. Apparently people are drawing on different sources of information.

"Victoria merchants are basking in an afterglow of optimism, but the glow, alas, won't last. Mr. Purdy says that unfortunately there is very little to justify this optimism. Retail sales can be expected to drop as soon as the special sales end. We can expect a return to the doldrums during the last half of January and most of February. The situation is not being helped by the massive drain-off of funds by the Insurance Corporation of British Columbia."

The hon. Minister of Education (Hon. Mr. McGeer) quarrelled about that, but in January retailers are still concerned about the massive drain-off of funds in premium payments at this time of year.

Purdy said: "It could be a full year before there is significant recovery in the local economy." Yarrows Shipyards, layoffs; forest industry, back to work after the long Christmas layoff, but no sign of a market surge for B.C. lumber despite the favourable placement of the Canadian dollar at a fraction under par with the U.S. unemployment continues to be in the range of 9.5 per cent to 10 per cent. There is still evidence of an economic slowdown.

This is rather significant, Mr. Speaker, and I'll perhaps relate the significance later on. "But there is a boom," he says, "in the things designed for those people who have everything." There's still a boom in

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sales for those who have everything, according to the retail merchants in Victoria.

The second reference I'd like to make to the actual throne speech itself is the third paragraph. I don't intend to deal with every paragraph at this length, but I would like to refer to the third paragraph: "Our government have accomplished a substantial deceleration in the annual growth rate in provincial government spending." Well, that's just great, Mr. Speaker. Where is the virtue in accomplishing a reduction in expenditures if it means the estimates show $5.5 million less for services for families and children? Is that virtue, Mr. Speaker? Where is the virtue in holding down government expenditures if it means $20.4 million less for services for seniors and handicapped? One area alone of that $20.4 million, the much-heralded GAIN programme — remember that one, Mr. Speaker? — for senior citizens is less by $19.8 million. That's $19.8 million taken from the senior citizens and from the handicapped in the province. Virtue in that, Mr. Speaker? I see little virtue in that.

When the NDP was in office there was progress; the economy kept moving. During the three years for which we were responsible for the finances of the province — the three complete fiscal periods, starting with April 1, 1973, and ending with March 31, 1976 — there was a growth in assets of almost $1 billion, a $910 million growth in assets in that three-year period. We spent, but we grew. There was progress.

People talk about surpluses, perpetual funds, special funds. Mr. Speaker, the total of capital surplus, revenue surplus and special funds grew in that three-year period by $301 million. There'd be no virtue in that if everything else was falling apart, but along with that the whole conomy was moving and the employment record was better than it is today after 13 months of this Socred coalition government. In addition to that, non-budgetary expenditures — and I'll have more to say about that later as well — transfers to Crown corporations and investments in other corporations grew by $367 million in that same three-year period.

Mr. Speaker, along with all those things — along with increases in assets, along with increases in surpluses, along with increases in special funds, along with more money for the Crown corporations, transfers to them — the economy kept moving. There is virtue in keeping the economy moving and looking after the needs of the needy people in the province. That's where this government has failed so miserably.

MR. COCKE: They're bunglers!

MR. LAUK: You couldn't run a hardware store.

MR. COCKE: That's right. That's why they sent you out of Kelowna!

MR. STUPICH: Mr. Speaker, I will be speaking for some length this afternoon about several aspects of the budget. I'd like to speak about the fiscal and accounting practices of this government. We know a good deal more about those practices now than we did a year ago. A lot more information is available.

Secondly, I would like to speak about the financial activities of the government since the last session, including the preparation of the budget that is now before us.

Finally, I will discuss what I'd like to call the wider view: the government's responsibility to be concerned not just about bottom-line accounting for one column after another, but the government's wide responsibility for the economics of the province. I'm going to try to call to the attention of the treasury benches the fact that they are responsible not just for keeping a single set of books; they are responsible for the economy of the province of British Columbia.

First, Mr. Speaker, I would like to say something briefly about their decision to cancel succession duties, and that is, I think, perhaps one of the main items in this budget. There are a couple of themes, and one of them certainly is this particular item. The revenue, according to the budget speech, is said to be about $25 million a year. We believe, Mr. Speaker, that the figures are substantially higher than that for the 1976 fiscal period — something like $28 million. And in the current fiscal period only nine months have gone by and there is $32 million already. So we're talking about actually more than $25 million. It's in the neighbourhood. Perhaps a closer figure would be an average of $30 million in recent years. It's not a major source of funds, Mr. Speaker, but, nevertheless, a substantial amount when we're thinking about some of the things that might be done in our economy if we were to maintain that revenue or replace it with something else — and the government has not offered anything there.

For example, there are some 250,000 people in the province over the age of 65. There was legislation tabled today; I've just forgotten what it was now. We haven't seen the legislation on Pharmacare — at least, I haven't — but the rumours are that they are all going to be charged a minimum of $25 per year. If that is the case, that amounts to approximately $6.25 million that we're getting from those people — the elderly, the people who have been on the NDP Pharmacare programme.

We understand that the expected increases in revenue from changes in the emergency health plan will bring in a further $1.1 million. Those two items alone, Mr. Speaker, come to some $7.3 million. Now we were talking about $25 million minimum. We could have done away with both of those increases, if you like — tax increases or user-charge increases — we could have left the succession duties on, and we could have used the balance of the money to provide 2,500

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jobs at an average of $10,000 per year salary for the people of this province who desperately need and want employment. These would be useful, constructive jobs — jobs which would have helped build our communities, build our province. Instead of that, we're giving this $25 million-plus back to people who need it least.

Mr. Speaker, I've suggested that the succession duty tax, as it sat until that announcement, is levied at a very modest level. I'm going to refer here to a recent publication written by a man whose comments upon budgetary matters in B.C. have received some widespread attention, a former senior official in theDepartment of Finance, Mr. Stow, who released this weekend the first edition of The B.C. Digest of Public Affairs. We haven't always agreed with Mr. Stow. I can recall some statements that he made some 13 months ago. We haven't always agreed with Mr. Stow, and we don't agree with everything that is in this publication. Nevertheless, Mr. Speaker, we recognize his area of expertise and certainly, with respect to his comments about succession duties, I think there is something there that the government would do well to heed. We welcome — regardless of whether or not we always agree with him or will always agree with him — this new and non-partisan commentary on B.C. public finance and hope that it continues to be published. I would suggest, Mr. Speaker, that the Premier and members of the cabinet might subscribe to it to help this publication continue publishing and in the hope that perhaps they might learn something.

In any case, Mr. Speaker, in this first edition there is an article on succession duties. Mr. Stow points out that fewer than one-seventh of the 13,300 estates assessed — in 1975, that is — paid any tax at all; less than one in seven out of 13,300. Less than 2,000 paid any tax at all. Only 450 of those required direct-line inheritors to pay any tax: that is, to spouse or to child, to grandchild, and as far down as great-grandchild — that far. Only in 430 of those estates where there was direct-line inheritance was there any tax paid at all. The direct-line inheritors with estates of less than $200,000 approximately — because there were various exemptions — generally escaped taxation completely.

I'm not sure how many of us are interested in that figure of $200,000; I'm not sure how many of us are affected. Perhaps that's something to go into later. But the incidence of the tax on estates greater than the figures I've quoted is, in all cases, considerably less than the sales tax — even less than the sales tax before it was increased, but certainly less than the sales tax now. Moreover, the amount of money raised from succession duties in British Columbia, which has been approximating 0.6 per cent of our total budget, is in line with the average for the whole of Canada. I recognize that some provinces don't have it, but the larger ones do and our average is in line with the Canadian average. The Canadian Tax Foundation's Provincial and Municipal Finances for 1975 describes it as a modest tax — I might say perhaps too modest, although we weren't proposing any changes in it.

Mr. Speaker, the eyes of British Columbia were upon the government yesterday. About 100,000 British Columbians currently unemployed can't find jobs. The accusation might be made that some of them aren't looking very hard, but certainly a lot of those 100,000 are anxious to work, want to work, but can't find jobs. Many of them are finding it very difficult to make ends meet. About 0.25 million people in the province of British Columbia are past their normal working age: they find their circumstances very strained. All of these people were interested in yesterday's budget, wondering what it would do for them.

By contrast, the people in B.C. who will be receiving inheritances of more than $200,000 hardly need the help of the people of British Columbia, hardly needed the government to intercede on their behalf. We find it hard to believe that more than a small fraction of those people, if any, and in times as difficult as we are now experiencing in the province of British Columbia, would begrudge paying that tax.

Has anybody come forward and said to the government that they would prefer to see aid to the handicapped reduced — that is, any of these people with these large estates — that they would rather see ambulance charges tripled, increased charges for prescription drugs required by the elderly, jobs denied to those needing them? Have any of these people come to the government and said that they would rather see all that than pay the modest taxes that are levied on very large inheritances? I haven't heard of any of these people, Mr. Speaker. I wonder if the government has heard from any of these people. I wonder who these people might be.

I wonder if there are any in the government caucus who have put pressure on government, saying: "Look, we want this changed, because our heirs are going to suffer when we pass on our million." We've heard figures varying from eight up to 17 millionaires in the Social Credit caucus. Have any of those members come to the government and said: "Change the succession duties because it's going to hurt our heirs"? If so, I would like those people to stand up and say that those are good arguments, and that they were threatening to leave — not only were they threatening to leave but they were threatening to take their heirs out of this province — because to escape paying this tax they would not only have to remove themselves, but also they would have to remove their heirs.

Mr. Speaker, I would be very interested in having anyone on the other side of the House stand up and say that yes, he or she was threatening to leave the province unless this change in tax was made.

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MR. BARRETT: Give them some time to think it over. Stand up, fellows.

MR. STUPICH: Mr. Speaker, in an earlier discussion I quoted from people other than NDP supporters. I'm going to try once more, in pushing this argument, in putting this argument before the government, to quote from someone who, to the best of my knowledge, was never described as a supporter of the CCF or the NDP — a former Premier of the province. His name happened to be Mr. Bennett. He had this to say while defending the imposition of the succession duties and retaining succession and gift taxes, as reported in the Sun, February 17, 1967, in a story headlined: "Bennett Declares Province Won't Be Tax Haven of the Rich."

MR. KING: But he didn't need his dad's money.

MR. STUPICH: Okay, he was not a potential heir; the point has been made. But, Mr. Speaker, you remember the House at the time that that Premier said that. He went on to say: "Premier W.A.C. Bennett said Thursday that B.C. will never be a tax haven for the rich while he is around." Well, I guess he's around, but not quite close enough. Further down: "Bennett said B.C. welcomes people who come to the province to help develop resources, but the province does not want drones in the economy who reap the benefits and try to escape their share of taxes."

Mr. Speaker, I would ask those drones in the community to identify themselves — the people who want to reap the benefits and escape their share of taxes.

It is also important to point out that the things that I have been quoting, the quotations from Mr. Bennett Sr., were said in relatively prosperous times when things were going well in our economy: services were not being savagely slashed; people were not experiencing massive increases in insurance and ferry rates — auto insurance rates were going up but not as massively as the rates instituted by this government over a year ago; B.C. Hydro had not just announced what amounts to a poll tax.

Mr. Speaker, just before I came into the House, an old-age pensioner came to me. She told me that she was single, living alone in an apartment, and that she had just received her hydro bill. All she has to live on is her pension. She is finding it tough to make ends meet. She doesn't use her electricity more than she has to; she doesn't have expensive appliances. She is paying $19.50 for two months' hydro — that's before the recently announced increase, before the poll tax. That person finds it very hard to sympathize with what Mr. Bennett Sr. described as the "drones who want to reap the benefits and escape their share of tax." That person is wondering what can be done to change this, to change the government's mind. I promised that person I would do my best to change the government's mind, but I was not very confident in my ability to change their mind.

MR. COCKE: Talk to Bob Bonner. Poor little Bob! The biggest recipient of social welfare in the province, or one of them.

MR. STUPICH: There was no call, Mr. Speaker, in the B.C. Hydro budget for British Columbians to accept an increase smaller than the Canadian average; there are no ties on B.C. Hydro at all. Whatever increase they want to put in, they put in — no appeals to anyone. If they want to put on a service charge of an extra $3, go ahead and do it, fellows. Never mind the AIB; never mind what is happening to the people who have to pay these rates. Go ahead and do it, because we are going to pay off the prospective heirs of millionaires. Don't worry about what you do with your hydro rates.

I began my remarks, Mr. Speaker, on succession duties, not simply because these stand out alone as the only item in the budget, but because they typify the attitude of the government of the day. According to the same Mr. Stow whom I've been quoting, in 1975 there were 22 direct-line estates — that is, to children, grandchildren, great-grandchildren or to spouses — valued at more than $1 million. There were only 22 in the whole of the province. They paid $8.6 million on an assessed value of $28 million, so the heirs received, on the average, about $1.3 million, and paid an average of about $400,000. As I said, in some cases that goes down to the great-grandchild.

This is a modest tax, but one that would have enabled the government to continue giving some of the services that are being taken away in this budget because it is what the government calls "a time of restraint," a time when the people on the most modest incomes are urged by this government to accept less and less, but at the same time pay more and more on government-imposed charges.

While increasing the direct-user charges for everything and increasing taxes — not in this year's budget, but in last year's budget — this same government gives this year's crop of millionaires a gift of approximately $400,000 each. What will this stimulate, Mr. Speaker? That's the argument: is it going to stimulate economy?

MR. BARRETT: It'll stimulate campaign funds.

MR. COCKE: Back to the days of the robber barons.

MR. STUPICH: Perhaps, Mr. Speaker, it will stimulate the construction of second swimming pools for people who already have one, more frequent trips

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to faraway places. A number of the cabinet ministers have been to Hawaii and like it there. Perhaps these millionaires will be able to go more often to Hawaii.

I heard one story of someone who has a Mercedes Benz so they can do more shopping across the line. Is it going to stimulate the economy to do this kind of thing, Mr. Speaker? I would like to hear the arguments from the Minister of Finance as to just how that kind of gift to the rich or to the prospective heirs of the rich is going to stimulate the economy. But we will be talking more about that later. I may even get into that discussion myself.

I would like, at this point, Mr. Speaker, to turn to other matters, fiscal events and non-events that have transpired in British Columbia over the past 12 months. Just to review, we talked about this last year but at that time we did not have the advantage of the information that we now have. You'll recall February 20, 1976: the famous, or the infamous, Clarkson Gordon report and the Premier's statement accompanying it. In that report there was a lot of cautious warning about what deficits really were and explaining that the Clarkson Gordon company had not really done an audit. All they had done was accumulate and add up certain figures that were given to them by the government.

On the basis of the figures given to them and the additions that they properly did, they predicted a deficit of $541 million. A lot of money, Mr. Speaker. But less than a month later, on March 19, 1976, the budget came down. And while the Minister of Finance stuck tenaciously to his figure of $541 million — he had to — his figures showed a shrinking. You may recall me talking about that at the time. There was already apparent within the short space of probably one month of government operations a shrinking in that deficit of some $30 million. I recall saying at the time that if the deficit continued to shrink — and I invited the Minister of Finance to tell me whether or not the indications were that it would shrink further or that it would expand and I got no answer; that was just one of the questions he didn't answer....

MR. COCKE: Oh, what's thirty million bucks!

MR. STUPICH: I recall remarking that if it continued to shrink that way, then certainly there would be quite a hole made in that projected deficit of $541 million. Well, we now have the wisdom of retrospect. We now have the figures before us and it was obvious that the deficit did continue to shrink, and not just because ICBC was so busy counting all the money that it received when premiums went up by 140 per cent that it just didn't have time to cash that $181.5 million cheque.

Last year's budget predicted 1975-76 revenue of $2,919 million, and total expenditures, including non-budgeted, of $3,430 million. Those were the revised estimates presented in the budget last year, of our fiscal period: a shortfall of $510.3 million. Public accounts, Mr. Speaker, as submitted by the comptroller-general, show the actual 1975-76 budgetary expenditures of $3.112 billion, revenue $2.97 billion. It left a budgetary deficit of $140 million.

Even to achieve that budgetary deficit, Mr. Speaker, the government had to do a number of things. You may recall that last year special warrants were introduced to the extent of $84.2 million. As I can recall, I believe only $2 million of those special warrants were introduced during the life of the outgoing NDP government. A balance of over $82 million in special warrants introduced by the new government in an attempt, partially, to make that deficit for that period look as large as possible. I am sure some of these would have been necessary had we remained in office, but some of them were accounted for by a number of things.

AN HON. MEMBER: How about the $10 million that they surprised the hospitals with?

MR. STUPICH: Mr. Speaker, there's a suggestion about the $10 million they surprised the hospitals with. I seem to recall some civil servant losing his job or being demoted or shunted aside somewhere because it was the civil servant who made the mistake. He got caught. He got found out.

Interjection.

MR. STUPICH: Universities got $7 million more than they expected.

MRS. WALLACE: Beef growers.

MR. STUPICH: There were advance payments on restructure grants that surprised the cities receiving them. The hon. member for Cowichan-Malahat — beef income assurance was thrown in a couple of months earlier than what was expected. In spite of doing all these things the deficit, Mr. Speaker, was built up to a little less than $140 million.

There are other things, Mr. Speaker. Revenue was reduced below the figure that we had projected. The Minister of Economic Development (Hon. Mr. Phillips) isn't here right now and I don't know what's happening on the rail agreement. Nevertheless, a negotiated railway agreement with the federal government, and the correspondence on this has been made public previously, would have yielded $30 million in that fiscal period. Apparently this was delayed, postponed, put off, on the basis of the advice that the hon. Minister of Economic Development was getting from his staff. I understand

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there's been a change in advisers since. Perhaps that change came too late, or the government would have been $30 million better off.

They neglected to recover advances from the B.C. Harbours Board of $25 million. You recall, Mr. Speaker, that last year legislation was introduced in this House setting the ball in motion to recover that $25 million. Then the legislation was left to sit and was not proceeded with. Mr. Speaker, they neglected to recover advances from B.C. Cellulose of $16 million; from Ocean Falls of $4.5 million; the steps had been set in motion to recover $1.5 million from Panco Poultry; the minutes are available and have been made public to make it perfectly clear that BCR recognized that it was going to repay these grants of $35 million. These various items of revenue that were not recovered total $82 million.

MR. COCKE: You mean they were lying?

MR. STUPICH: That, along with the $30 million on the BCR, is $112 million which, Mr. Speaker, would have gone a long way to recovering that deficit of less than $140 million. In addition to that there were the references to non-budgetary expenditures — some $265 million. These are listed in public accounts for the fiscal year March 31, 1976, on page C11.

I think, even without reading, everyone will recall what one of these was. Remember, Mr. Speaker, the rubber cheque to ICBC for $181.5 million? I've never heard before, and I wonder whether anyone else has, of a Canadian jurisdiction issuing a bad cheque because they didn't have the legal authority to issue that cheque at the time it was issued. But, Mr. Speaker, there is no cause to be alarmed — ICBC didn't need the money and they didn't cash it, so no real harm was done. The accounts were not overdrawn.

MR. BARRETT: Just games.

MR. STUPICH: There are other items in those non-budgetary expenditures: $25.3 million for transit, and the special warrant says for capital expenditures. Now this government says in the budget that they don't believe in deficit financing for operating expenditures. On the other hand, they make the distinction in some cases — not in all cases, but in some cases — that it's okay to debt finance for capital expenditures. Yet this $25 million was charged against last year's non-budgetary expenditures in order to increase the deficit, although even the special warrant clearly identifies it as a capital expenditure.

MR. COCKE: Shame!

MR. STUPICH: Some people, perhaps, don't make that distinction, but the distinction was made in the special warrant.

Twenty million dollars to BCR: whatever you want to call it, whether it was coming back or not, certainly a capital item, Mr. Speaker — something to do with the construction of an extension of the railroad, I believe.

MR. BARRETT: A $200 million overrun.

MR. STUPICH: Pacific Northcoast Native Co-op: $3.5 million — another advance, and certainly capital — capital going into the building of that plant. A contribution to B.C. Central Credit Union: $2.5 million — a deposit — a further capital expenditure, Mr. Speaker.

If we're going to, and if this government does admit that in some cases it's all right to, finance capital in the long term, then all of those items, except for the rubber cheque, were capital items. The rubber cheque was a political item, and that's in a different category.

MR. COCKE: That's a pretty heavy political item.

MR. STUPICH: Mr. Speaker, you may recall that in December, 1975, the former Premier and I held a news conference. At that time we revised our original budget estimates and predicted that revenue for 1975-76 would come in at $2.98 billion. That was three months before the end of the fiscal year. Then some six weeks later we were presented with a budget which had revised figures in it. And one would expect — it having been prepared later and having more information to feed into the calculations — that the more recently prepared figure, the one that was printed in the budget, should be more accurate. That's what one would expect, Mr. Speaker, but it's not the way it worked out. Perhaps it's just that the former Premier and I are better at predicting, at estimating. Our estimate was out by 0.245 per cent of the actual figures, as certified by the comptroller-general. Less than a quarter of 1 per cent. But the Premier's estimate — or the estimate based on the figures that the Premier and the Minister of Finance gave to Clarkson Gordon — was out by 2.5 per cent, which is over 10 times the discrepancy, although it was based on information that was more up to date.

MR. COCKE: Oh, those holy businessmen!

MR. STUPICH: Mr. Speaker, it's no wonder they have trouble with some of their estimates.

MR. BARRETT: That's known as a fib in polite circles.

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MR. STUPICH: It's no wonder they feel it's necessary to curtail some services to people. It's no wonder people have to suffer when people like that are running the government in the province of British Columbia.

Our December estimate on budgetary expenditures was $3.06 billion. The March 19 budget predicted $3.17 billion. Once again, Mr. Speaker, and even though, as I've outlined in my remarks earlier, there is a deliberate overexpenditure at the tail-end of the year, even with that deliberate overexpenditure in some areas, our estimates were within 1.7 per cent of the final total while the estimates presented to us in the budget, and again based on later information, were out by 1.9 per cent. Mr. Speaker, they were either deliberately out or mistakenly out: I certainly wouldn't accuse them of deliberately trying to mislead the House or the people of the province, so I have to fall back and say that it's simply incompetence. There's no other way to account for it.

Later on in my remarks, as I go through them, I want to say that it's important that the Minister of Finance be more than a bookkeeper, more than a senior government minister responsible for making good predictions. It wouldn't hurt any of my arguments to concede that he can add and subtract well — whether he can or not, I could concede that and it wouldn't spoil any of my arguments — or even that he can make simple projections. My argument at this point is that even if he could do these simple sums and make these simple projections, he wouldn't know what to do with them. That's the real tragedy of the government of the province of British Columbia today. They talked about socialists being doctrinaire. Mr. Speaker, he and his government are so blinded by their doctrinaire fiscal theories they just cannot see the simple truths.

I'd like to be able to concede to him his capacity to add, to subtract, to forecast, make projections, but I can't really, Mr. Speaker, for I'd have to conclude then that he had massively erred in many of his predictions. But even at that, he was just starting — he hadn't really hit his stride. To see the real story of fiscal incompetence you have to look at this whole sordid ICBC mess that probably people are tired of hearing about. But it was a mess, Mr. Speaker, it was sordid, and it's evidence of the incompetence of this administration.

You will recall that ICBC was, on March 31, 1976, a Crown corporation so desperate for cash that it had to induce a senior Canadian government to issue an NSF cheque for $181.5 million. We were told there was no money to pay the salaries of the employees. We were told there was no money to pay claims. It was a Crown corporation that was supposed to be in such grave trouble that it had to more than double its premiums. That was followed, Mr. Speaker, by a statement by the hon. Minister of Education (Hon. Mr. McGeer), the minister responsible for ICBC...

MR. BARRETT: And university hospital.

MR. STUPICH: ...as quoted in the June 23 issue of the Province, denying that ICBC planned to lay off employees. Then on June 25, the Sun — I suppose a competing newspaper — said: "McGeer Plans Layoff." This was just two days later.

The story in the Province, June 26, said: "McGeer sees no large surplus." The same paper reported exactly one week later on July 3 that ICBC had a first-quarter profit of $9.5 million.

On September 16, the Province reported that ICBC was hiring 200 more employees to correct errors. The minister confirmed that there was an error backlog and that it might be necessary to take extra help. Then he went on to say: "But we're cutting down on the permanent staff." So we have 200 extra employees to correct the errors that the permanent staff had made, and then he was going to cut down on permanent staff.

MR. BARRETT: If it had been the NDP it would have been the headline.

MR. STUPICH: Incidentally, this story appeared just under a statement of the Premier's that: "B.C.'s image is now better in the United States." It's interesting, isn't it, how we can get a better image from all those things? All those contradictions coming so closely on each other, and he tells us that our image is better.

AN HON. MEMBER: That's what Arthur Weeks was supposed to do.

MR. STUPICH: News about ICBC must be very scarce down there.

MR. LAUK: Is that Olympia, Washington?

MR. STUPICH: I don't know how this fellow Arthur Weeks keeps getting into my speech, but....

MR. BARRETT: He kept on getting into the Premier's office.

MR. LAUK: The Premier didn't see him.

MR. STUPICH: On October 8, the Province advised us that for the six months ending August 31, ICBC had a surplus of $25.8 million. Mr. Penhall, asked if that reflected a drop in collision coverage, said: "I suppose so." The Sun of November 5 reported: "Motor-vehicle branch figures show a 4 per cent increase in the number of motor vehicle accidents

[ Page 282 ]

in B.C. and a 12 per cent increase in property damage." Both the Premier and the Minister of Education had attributed the surplus to a decline in accidents. These are contradictions, Mr. Speaker.

On November 16, ICBC vice-chairman, Ralph Gellen, reported an estimated distributable surplus of $52 million. The premium income was up 14 per cent over expectations, and total income up 40 per cent.

MR. KING: Sock it to the people!

MR. STUPICH: Part of the good news that day was that ICBC, evidently giving up on trying to teach the minister and the Premier the difference between a decrease in claims and a decrease in accidents, got a corporation official to make the announcement. He got it straight, Mr. Speaker.

On the same day the resignation of Mr. Byron Straight was announced. You will remember, Mr. Speaker, Mr. Straight warning the government in the beginning that it was setting its rates too high — higher than necessary to meet the anticipated costs of ICBC.

MR. LAUK: Shame!

MR. STUPICH: On the day that the $52 million distributable surplus was announced, Mr. Straight resigned. He couldn't take it any longer. ICBC, under this administration, is no place for someone who correctly calls attention to government overcharging, because this is a government, Mr. Speaker, that's very prone to overcharging when it comes to the poorer people of the province.

MR. LAUK: Where was that reported in the press?

MR. KING: Profit from the monopoly.

MR. STUPICH: The Province of January 11, 1977, published a letter from ICBC general manager, Norman Bortnick, apologizing for goofs. The letter reads in part:

"The service provided was very poor. Our estimator made errors. Our communication manners were abysmal, and the corporation systems and procedures were not followed."

This is the government that was going to straighten out ICBC. After a year in office, this is what the general manager has to say about the corporation under Social Credit coalition mismanagement. That's the record of ICBC. That's the ICBC that was rescued — we were told was going to be rescued. It was rescued by a rubber cheque on March 31, 1976. That particular rubber cheque, Mr. Speaker, of $181.5 million represented about 70 per cent of the $265.5 million non-budgetary expenditure reported in public accounts.

I could go on about the arbitrariness, the irrationality, of this government's accounting for fiscal 1975-76, but perhaps that point is best made and best captured by the Royal Bank's Survey of Provincial Finances, 1976-77. That publication was issued in August, 1976, but they hadn't received the good news about the deficit shrinkage of $121.8 million, a shrinkage which took place after the fiscal year in question. But the report did make a useful comment upon non-budgetary expenditures. For anybody who cares to read it, it's on page 70 of that newsletter: "In addition, the present government" — that's this Socred coalition government before us — "deemed" — deemed, Mr. Speaker; I want you to note that word — "that another $250 million on non-budgetary expenditure should be included in the budget figures." That's hardly a ringing endorsation of Bennett-Wolfean fiscal theory, Mr. Speaker. They "deemed" that another expenditure should be included — much the same language as Clarkson Gordon used.

MR. KING: Cook the books.

MR. STUPICH: In the 101 pages of that document, Mr. Speaker, that's the only case in which they feel called upon to use that kind of tentative language. Every other fiscal decision of every other jurisdiction in Canada is reported straightforwardly, as though they regarded every other decision as arising from solid principles of public financing. They reserved that particular language, that word "deemed", for one case only — that is, the government's decision to include that entire $265 million as non-budgetary expenditures in 1975-76.

The decision to inflate the budgetary deficit by $122 million, more than could be sustained six months later; the decision to issue a bum cheque for a corporation that didn't need it, that eight months later found itself with a current-year surplus in excess of $50 million; the decision not to receive certain revenues; the decision to charge items which they themselves classified as capital expenditures wholly against the current account — all of these decisions were used as justification for massive increases in taxes and direct-user charges, everything that the government could imagine it could get away with by way of increasing charges.

Mr. Speaker, I don't want to keep gnawing this old bone, but I think it's important in describing the attitude of this government. The point isn't whether these charges should be made against 1975-76, or whether the income should have been included in '75-'76 or '76-'77. If that's all there was to it, I'd be quite content to let the matter rest with what my colleagues and I said last year in this debate. The point is that all of these partisan political decisions, indefensible economic decisions, were used to justify

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a fiscal assault upon this province the like of which has never been seen in the western world. Worse, this same nonsense is being used in this second budget of the government, another viciously restrictive budget visited upon an economy that is already far too restrictive.

I recall, I believe, just about a week ago, the hon. leader of the Liberal Party (Mr. Gibson) saying that this government felt moved last year in its budget to have revenge, not revenge against the NDP government, but revenge against the people who dared to throw out of office the previous Social Credit administration, and to warn them never to do the same again. It was and it is wholly unnecessary, Mr. Speaker. The unemployment, the poverty, the ruined businesses, the slashes in services — all the sacrifices that were visited upon British Columbia in the name of that contrived deficit were wholly unnecessary.

I have a newspaper clipping that I neglected to bring into the House from my own community of Nanaimo, showing pictures of a number of businesses that have either gone out of business or moved to another location. The premises are empty. Nanaimo is the Hub City. It reflects what's happening in the whole northern part of the Island — everything north of the Malahat. That's the kind of thing that's happening on Vancouver Island.

Mr. Speaker, it was unnecessary. They have not turned the economy around, other than to have turned it down. We had maintained, even throughout the very difficult 1975.... 1975 was difficult for the whole western world. You'll remember there was no real growth in Canada as a whole, although the publications, the economic review covering 1975 put out by this present government, showed that B.C. had fared better than the rest of Canada. In spite of the fact that 1975 was difficult, we managed to maintain an AA bond rating.

Up to 1975 we had, in each year of our administration, improved our capacity to service debt — improved it by all of the standard measures. Even if there had been $400 million, which there wasn't, but even if there had been $400 million of new debt incurred in fiscal 1975-76, that would have been considerably smaller than the amount we are being asked, on behalf of B.C. Hydro, to allow it to increase its debt by in this one year — $650 million for B.C. Hydro alone.

AN HON. MEMBER: And $500 million last year.

MR. STUPICH: Five hundred million dollars last year and $650 million this year to keep one corporation going. Even if we needed $400 million to keep the economy of British Columbia going, it would have been a small price to pay to keep it going. But it wasn't necessary; the figure was much less than that. If a single Crown corporation can in one year acquire $650 million more debt, debt that is guaranteed by the people in the province of British Columbia, and can do so without any great fuss, why would the alleged need for the entire province to borrow $400 million require the adoption of fiscal measures that increased unemployment, damaged small businesses, slashed essential services and increased so many user charges upon the people of the province of British Columbia?

This year's budget, on page 3, contains a gratuitous remark about the theorists who continue to press for deficit financing. These comments are a slur upon the NDP, but not only upon the NDP; they are a slur on every jurisdiction in the western world — and I don't know what's happening in the eastern world — every jurisdiction except this one. Every other jurisdiction understands the advisability of prudent, responsible debt.

We are not advising that they borrow everything they can borrow and gobble it all up, use it all up, but prudent, responsible debt. This province has always carried debt. Every family that has a mortgage understands the advisability of prudent, responsible debt. What would we say of parents who refused their children decent housing until they could write a cheque to pay for the cost of the whole residence? Would we call them being fiscally responsible? Worse, what would we say of them if they refused to carry a mortgage while accepting debt through a device as artificial as a contingent liability? What would we say of a businessman who, irrespective of his capacity to carry a debt, refused to do so? Would that be a good businessman?

Does the Minister of Finance in his private business never borrow money? If he is in that position, I suggest he is the only car dealer in the province who is. Does he encourage all of his customers never to borrow for an automobile until they can pay for the whole cost of the automobile?

MR. BARRETT: Let's hear that again.

MR. A.B. MACDONALD (Vancouver East): Ask him.

MS. SANFORD: I don't think he's listening.

MR. BARRETT: He only sells cars to people who have cash.

MR. STUPICH: Prudent, responsible debt. Mr. Speaker, there are times when perhaps it's not prudent to go into debt to buy an automobile. But I ask again: does the Minister of Finance, in his business, advise his customers never, under any circumstance, should they borrow to buy an automobile?

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MR. KING: Evan help us!

MR. BARRETT: If you don't come with cash, don't buy at Wolfe's — is that it?

MR. KING: Beware of the big, bad Wolfe!

MR. BARRETT: Let's take out an ad to that effect.

MR. STUPICH: We have a tax in this province, Mr. Speaker, the corporation capital tax, and it is levied at the rate of one-fifth of 1 per cent of the corporate debt, including surpluses and capital shareholders' credits, and those sorts of things, and it is levied on corporations with over $100,000 of that kind of investment. Last year this corporation capital tax yielded $35 million, which means that B.C. corporations alone — not counting partnerships, not counting proprietorships, but B.C. corporations alone with that kind of debt and shareholder investments in excess of $100,000 — are carrying $17.5 billion in debt. Are all of these corporate businessmen fiscal madmen? Mr. Speaker, where is the rationale in that argument?

We've maintained a charade in B.C. for far too long. Perhaps while we were in office we should have done more to expose this charade, Mr. Speaker. For too long the government of British Columbia has pretended to be debt-free when indeed it wasn't. We maintained thereby a public climate which renders ordinary common-sense discussion of debt impossible and perpetuates a set of public policies that are ludicrous.

The government recognizes some of this. I read on page 6 a reference to B.C. Ferries — or at least I tie in a remark on page 6 as a reference to B.C. Ferries — because in talking about fiscal management and debt financing, at the top of page 6 it reads: "Over a 20-year repayment, at 10 per cent interest, the amount repaid is 2.3 times the original borrowing." Isn't that terrible, Mr. Speaker?

Do you remember what we did with B.C. Ferries? You'll remember, Mr. Speaker, that the previous, outgoing NDP administration, as a current expenditure, paid some $30 million for the construction of new ferries. You'll recall, Mr. Speaker, that in the calendar year 1976 the present administration sold those ferries, got that money and put it back into public accounts, sold them to eastern money-lenders and has contracted to lease them back over a period of 18 years — and to pay during that 18 years, instead of the $46.5 million original cost of the ferries, $83.4 million.

MR. KING: Oh, what good business sense. Is that the way you're going to run Daddy's hardware?

MR. STUPICH: Fiscal management, Mr. Speaker? And they say that's all right. But that isn't all.

MR. KING: Help the eastern financiers.

MR. STUPICH: After they have finished paying $83.4 million — 18 years — the ferries still don't belong to us; we still have to buy them back!

MR. KING: I never read that in the paper.

SOME HON. MEMBERS: Oh, oh!

MR. STUPICH: And they're guessing — although they admit that this is subject to the income tax department's rulings on this question — that the eastern money-lenders will sell them back at $11.6 million. So, in effect, ferries that we had largely paid for under the previous NDP administration out of current revenue, that cost a total of $46.5 million, because of this grand, glorious deal with no debt, no deficits...in the course of 18 years we're going to pay to buy those ferries back some $95 million — or more if the income tax so rules.

MR. BARRETT: You've got to stay awake nights figuring those ones out.

MR. STUPICH: Fiscal management.

MR. KING: Boy, what good businessmen! Now they give it away without getting anything.

MR. STUPICH: What has this set of policies done for us in the past year? I had some quotations from a number of people — I've read them already — people who are concerned about the economy in the province. Quotations also from a Professor Laudadio of UBC....

AN HON. MEMBER: UVic.

MR. STUPICH: I'm sorry, UVic, published in the Colonist, August 13, 1976.

AN HON. MEMBER: He used to support McGeer.

MR. STUPICH: Probably if he used to support McGeer he doesn't any longer.

"The recent statement by the finance minister about the health of the British Columbia economy would give substantial reason to worry — not necessarily about the economy, but certainly about Mr. Wolfe's understanding of the situation."

The whole article is a criticism of the fiscal policies of this present administration and of their estimates of revenue and expenditure.

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MR. BARRETT: He only sells cars for cash. No credit at Wolfe's. Only cars for cash; everybody else stay away. He doesn't believe in deficit financing.

MS. SANFORD: Let them walk.

MR. STUPICH: We're told, Mr. Speaker, that we can expect that for the fiscal period 1976-1977 we'll break even, or there may even be a small surplus. We're told that, Mr. Speaker, but where's the evidence? Where's the evidence for this statement that there will be a small surplus or even a break-even budget?

Mr. Speaker, you recall something that the NDP government did in an attempt to keep the people informed — the open government. You recall that in the last budget speech that we introduced — that the Minister of Finance, Mr. Barrett, introduced — we included in that budget speech the most up-to-date estimate of revenue expenditures that we could get, and put that right in the budget so that the people of the province would know what was happening on an up-to-date basis.

We were told by this government that they were going to be open and honest and revealing — they would show all. And they did come out with a first-quarter report, a first-quarter report that indicated to the people of the province that unless expenditures were heavily curtailed, or unless there was some unexpected growth in revenue, there would be a deficit or we would have to curtail expenditures. That was the first quarter. That was bad news.

Then it came to Thanksgiving, and a decision was made ahead of time that the Premier would deliver the report for the second quarter.

MR. BARRETT: $900 worth of make-up. (Laughter.)

MR. STUPICH: It was ordained, Mr. Speaker, that the second quarter would show better results than the first quarter, in spite of the fact that the economy was depressed during the summer, in spite of the fact that there were shutdowns in major industries in the province. It was ordained that it would be a better report and scheduled ahead of time and that the Premier would deliver that one since it was better. And it was ready by the 11th of the month following the end of that second quarter. On the 11th of October that speech was delivered.

What about the third quarter? Mr. Speaker, we're told that we will have a balanced budget this year, or if not a surplus. We're not given any indication as to what the revenue will be, what the expenditures will be, where there will be savings and expenditures or gains in revenues to make up for other losses. We're told none of that. In the usual type of Social Credit coalition arrogance, we're simply told that "we have ordained it will be so and therefore it will be so; there will be a balanced budget." No figures. No third-quarter report, although today is the 25th of the month and the report for the second quarter was ready by the 11th of the month.

MR. COCKE: Did the press cover that?

MR. STUPICH: Mr. Speaker, if indeed there is a slight surplus in the present fiscal period, it'll be in part because of the $31.4 million revenue from the sale of the ferries that we paid for the year before.

AN HON. MEMBER: Right on!

MR. STUPICH: In part, $28 million by recapture of special funds, which is a one-shot deal. There were some savings in the operation of the ferries — you'll recall how badly the service has deteriorated, Mr. Speaker — so some savings there.

MR. BARRETT: Bring your own sandwiches.

MR. STUPICH: In times of economic decline such as we are now experiencing, it's rather hard to see what comfort a distressed citizen can gain from a genuinely balanced budget. The real choice for such a citizen is between prudent, manageable debt on the part of his government and unmanageable debt on his own personal part. That's the choice he's offered.

MR. BARRETT: It's a sense of relief for the millionaires.

MR. STUPICH: Relief for the millionaires. Even less comfort is available when the balances are contrived for the deficits, or the deficits are contrived.

AN HON. MEMBER: Did Jim Hume cover that yet?

MR. STUPICH: This year we are being asked to approve another balanced budget, a budget which speaks of balances as though they were the simple criteria against which budgets are to be judged. In the same session, we are asked to extend the borrowing power of B.C. Hydro by $651 million. All that lies between us and a fiscal policy appropriate to the times is the silly myth that a contingent liability is not a debt.

Mr. Speaker, the budget before us is barren of any attempt to stimulate our depressed economy. Page 6 of the budget says that the province's economy needs stimulation, and with that we can agree. With that one statement in the budget we heartily agree. But where is the stimulus in the budget, Mr. Speaker?

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MR. COCKE: $28 million to the millionaires.

MR. STUPICH: As an illustration of this government's view, and an illustration that their responsibility in their minds is limited to the keeping of public accounts, I know of nothing better than the previous state-of-the-province address issued at the end of the second quarter. I refer to that again.

There are a number of interesting features in this second-quarter report, Mr. Speaker. I mentioned one of them: that is, the change of great magnitude from the first quarter, evidently reflecting the benefits available from changing the spokesman from the Minister of Finance to the Premier. It had to be better. But the feature I want to examine here, Mr. Speaker, is the contrast between the title, "state of the province," and the actual contents of that address.

There was no mention in the address of the tragic unemployment problem in the province. What does that mean, 100,000 unemployed? Is it not noteworthy of a mention in the state-of-the-province address?

There's no mention of the increasing small-business failure rate...

AN HON. MEMBER: You're all right, aren't you, Evan?

MR. STUPICH: ...now running, according to federal sources, ahead of the rate for last year.

MR. BARRETT: Well ahead.

MR. STUPICH: In the Premier's view, even this isn't worth mentioning in his state-of-the-province address. These are serious concerns; not worth mentioning in the Premier's address.

MR. BARRETT: The bankruptcy crew.

MR. STUPICH: There's a very brief mention of an increase in mineral exploration, but no mention of the rate of activity in mining proper, Mr. Speaker. I can understand that the present government managed to persuade people during the campaign, and before the campaign got rolling, that it was our legislation that was responsible. But while they persuaded voters in the Province of British Columbia, they didn't persuade everybody.

I have a photocopy here of something from Executive magazine, dated October, 1975 — certainly not an NDP publication by any stretch of the imagination. It's talking about mining trends. It's talking about exploration, claims staked, exploratory drilling. And it shows the figures for 1970, '71, '72, '73, '74. It goes on to make projections, Mr. Speaker. "Projecting the trends, there will be no drilling...." — not in British Columbia. This, of course, was put out before the election. It doesn't say British Columbia — "...no drilling in Newfoundland by 1976, none in New Brunswick by 1980, none in Ontario, Manitoba, Saskatchewan or British Columbia by 1982. By 1986, only Nova Scotia and the northern territories will be seeing any action." That's in Executive, and it's not blamed on governments. It's blamed on international market for the kind of materials that we're producing in the province of British Columbia.

Mr. Speaker, with any intelligence, any respect for the truth, from that article and subsequent information, the decline in mining activity experienced during 1975 and continuing to this day had to do not with legislation, but with the drop in world prices and in world demand. These same circumstances prevail today despite the new mining legislation, despite the promises to the mining companies, despite the promises to say to them that they will even be charged the sales tax rate for the minerals they are taking out of the ground, despite the promises in the budget yesterday that they will be getting further relief. Until there is some upturn in the international demand and price for the products there will be no increase in mining in the province of British Columbia or in other Canadian provinces.

MR. KING: That's why they dumped a loser in that portfolio.

HON. MR. CHABOT: It's tripled exploration, and you know it.

MR. STUPICH: Exploration claims staked, but not drilling, and that's what counts, Mr. Speaker.

That it goes on today is amply demonstrated by the B.C. Employers Council's figures of exports, demonstrated by Granduc's decision to further curtail production and to lay off another 80 miners — not before the election, Mr. Speaker, but in March of 1976. Four months after the election they were still curtailing production and laying off miners.

The B.C. Employers Council in their most recent statement on this, and quoted in the Province of January 5, 1977, tells it best: "B.C.'s economic growth this year will be equal to or marginally below that in Canada as a whole. Continuing low levels of consumer and business confidence are providing no buoyancy to the domestic outlook."

MR. BARRETT: Down the tube with your Calgary suit.

MR. STUPICH: "The unemployment rate in B.C. in 1977 is expected to remain about 8.5 per cent, well above the forecast of 7.4 per cent for the whole of Canada. Its actions early" — these are all

[ Page 287 ]

quotations, Mr. Speaker — "in 1976 in increasing income and sales taxes, auto insurance premiums and other user fees eroded consumer confidence and spending." That's from the B.C. Employers Council.

[Mr. Veitch in the chair.]

"B.C.'s mining industry is in a transition phase." "B.C.'s mining industry awaiting increase in world demand and prices to boost the profitability of existing operations and to stimulate the development of potential mines" — awaiting these things before there will be any stimulant to the development of potential mines.

"Estimated return on investment in metal mining was below 3 per cent in both 1975 and 1976. Copper industry spokesmen say that they cannot see even a breakpoint arriving in 1977" — the B.C. Employers Council, Mr. Speaker.

But strangely enough, although this was the third-largest industry in the province, none of this was mentioned in the Premier's state of the province address. They weren't important, Mr. Speaker — not to the Premier, apparently.

MR. G.R. LEA (Prince Rupert): Right. He was interested in getting those succession duties off.

MR. STUPICH: How about the tourist industry? The only thing the government has suggested about the plight of that industry — especially on Vancouver Island, but in the whole province — was the Provincial Secretary's (Hon. Mrs. McCarthy's) brilliant conception that we ought to smile more at tourists. (Laughter.) I have a file of clippings on the tourist industry, and I would just like to share a few of the headlines with you, Mr. Speaker.

MR. BARRETT: Smile, it will feel better.

MR. STUPICH: Wednesday, November 3, 1976 — you know, that's almost 11 months after the election: "Restaurants Going Broke Faster Than Ever." This is in the Province.

MR. BARRETT: It'll feel better if you smile.

MR. STUPICH: Again from the Province, November 5, 1976: "Tourism Drop. Fares Hit Ferry Figures."

MR. COCKE: Smile though your heart is breaking. (Laughter.)

MR. STUPICH: "Vancouver Island tourist industry officials agree that fare increases are not the sole reason, but suggests they were a greater impediment than the Ferries Service admits."

And the one to which I referred: "Let's Smile at Tourists, says Grace."

MR. BARRETT: The millionaires are smiling today.

MR. STUPICH: "Local hotels suffering financially from severe drought of tourists" — July of 1976. I recall driving down the Island the first weekend in August, and every motel I passed between Parksville and Nanaimo — where usually the "no vacancy" signs are out and they are booked ahead — had a "vacancy" sign up in the height of the tourist season. It's serious, Mr. Speaker.

MR. BARRETT: They would even have rented a room to a Socred.

MR. STUPICH: How can you smile at the tourists when they are not there to be smiled at?

Mr. Speaker, I have files on all of these — a file on the forest industry. All we learned from the quarterly reports on the forest industry was that revenues from these sectors were lower than anticipated. That's really all that was said in the quarterly reports. Does a disappointing performance of the forest industry in B.C. not warrant some comment, some analysis in what purports to be a state of the province address?

The same goes for agriculture. Once again, I have correspondence, I have newspaper stories and I have files on this. Circumstances in the agricultural industry in this province are desperate and we'll certainly have a good deal more to say about that at a later date. But, Mr. Speaker, not a single word in the Premier's state-of-the-province address.

Mr. Speaker, this all recalls the government's view that if they just balance the budget — all they have to do is make the figures come out even — by however artificial a process they achieve this balance, they will have done all for which they are responsible. Their attitude towards fundamental parts of the infrastructure of our economy is perhaps the most tragic illustration of their blindness.

Mr. Speaker, I can recall the hon. Minister of Energy, Transport and Communications (Hon. Mr. Davis) in one of his speeches, or in several of his arguments, saying that the users of the ferries should pay the difference between the cost of running those ferries and the cost of an equivalent mile of highway. Mr. Speaker, if you carry that argument a little further, then you come back to tolls on bridges: to the extent that it costs more to build a mile of bridge than it costs to build the average mile of highway, then you should charge the users of those bridges...

MR. KING: Exactly.

MR. STUPICH: ...and different bridges should

[ Page 288 ]

be charged different amounts. Mr. Speaker, why take an average for highways? Take a look at the Upper Levels Highway and just imagine, for one moment, what it cost to build a mile of that highway. Should we not be saying that since it costs more to build a mile of highway in that location, and even more for one mile than for another mile, then we should be charging the users of any particular mile of that highway whatever the difference is between the cost of that highway and the average cost of highway in the province? It's absurd, Mr. Speaker.

MR. BARRETT: And give them rebates on the cheaper roads.

MR. STUPICH: What about the bridge across the Okanagan Lake at Kelowna?

MR. COCKE: Yes!

MR. STUPICH: Put a toll booth on that, too?

AN HON. MEMBER: Not on your life, partner!

MR. KING: A pontoon bridge.

MR. STUPICH: Not on your life? And nobody would even promote that and no one would suggest it, I think, but it's the logical extension of what the hon. Minister of Energy, Transport and Communications is suggesting.

The point he's missing, Mr. Speaker, is that we're all users of all of these services, whether we use them every day or not, by virtue of the fact that we are members of the community of the province of British Columbia, and by virtue of the fact that there is something going on in all of these areas, every day, we are all, to some extent, users of the whole infrastructure. You can't fundamentally alter the financing of such an infrastructure without profoundly affecting the whole economy, and certainly that was brought very much home to the government when they more than doubled ferry rates — or at least it should have been.

MR. LAUK: Did Jack Davis know that?

MR. COCKE: No. Jack Davis hasn't come home from Ottawa yet.

MR. STUPICH: Mr. Speaker, if they had done it in ignorance that would have been one thing, but they knew better. They had a report that told them what would happen if they simply increased ferry rates by 50 per cent, and yet they went ahead and more than doubled them — in spite of that report. Mr. Speaker, as I say, if they were just simply guessing and had nothing to go on, there might be some excuse — not much, but a little bit. But when they had a report that warned them what would happen and, in spite of that, went ahead in an attempt to artificially balance the books on that one aspect of government finance, then, Mr. Speaker, there can be no excuse for them.

Let's for a moment think of a few more examples. Let's look at a multi-level department store with an escalator. Is the department store going to calculate the cost of running that escalator and then put a slot machine there for you to put coins in so that you can travel the escalator? Otherwise, the escalator isn't paying. It's the same thing, Mr. Speaker. The escalator is part of the total operation and they recover the costs of that part of their total operation in their whole business. But if you're going to operate it like the hon. Minister of Energy, Transport and Communications wants to operate our ferry system, which is a part of our total business, then you should put a slot machine, you should put a coin machine at the foot and at the head of the escalator.

MR. BARRETT: They did put slot machines on the ferries.

MR. STUPICH: Stores wouldn't carry a single item unless that very item was profitable in itself.

MR. LAUK: Did the government have the same attitude toward the CNR freight rates?

MR. STUPICH: How long would such a store remain in business, Mr. Speaker?

I want to pursue this idea of fiscal mismanagement and fiscal responsibility just a little further. Perhaps you can recall, Mr. Speaker, Can-Cel, one of the first steps that the NDP government took when we were in office, and the reason for it. We didn't go into Can-Cel because we wanted to get involved in the forest industry. We got involved in Can-Cel because the people who were going to take over Can-Cel — Weyerhaeuser — had said that they were going to close down completely the pulp mill at Prince Rupert. We recognized that if they closed down the pulp mill at Prince Rupert it would mean the loss of jobs not only for the people in Prince Rupert, but for all of the forest industry in the Pacific northwest of the province that depended upon that outlet for pulp chips. Without the pulp chip outlet, no lumber production. It would have been a disastrous blow to the whole northwest of the province to have allowed that to happen.

Mr. Speaker, we were fiscally responsible. We felt, on behalf of the people of the province of British Columbia — the Pacific northwest in particular, but only because they are a part of the total community — that we could not stand by idly and let that happen.

So we moved in, Mr. Speaker, and for the price of

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$1 and a guarantee of the bonded indebtedness that at that time totalled some $60 million we, on behalf of the people of British Columbia, acquired assets by way of sawmills and pulp mills, and timber rights that Weyerhaeuser said were worth $0.5 billion. It cost us nothing. It cost us $1 to acquire assets worth $0.5 billion, assets that have earned for the people of this province, $112.5 million in the three and a part years since we assumed ownership.

AN HON. MEMBER: Some peanut stand!

MR. STUPICH: Some peanut stand! Mr. Speaker, I say again: we didn't do that because we wanted to get involved in the forest economy, but we recognized our responsibility to the total economy, our responsibility to continue employment. We recognized that, we accepted our responsibility and we acted.

What was the first action on the part of the present administration, Mr. Speaker, that comes to mind? Normally when I ask that in conversations, I'm hit right away with the fantastic increases in ICBC premium rates. Simply because they wanted to make that one particular column of figures balance, without any consideration at all for the effect on the whole economy of taking, in unanticipated costs, $0.25 billion out of the pockets of motorists in the province of British Columbia within a period of two and a half weeks....

Mr. Speaker, we were fiscally responsible when we acted to save those jobs, to keep the economy moving, when we moved in and took over Can-Cel. The present administration was fiscally irresponsible and showed its lack of business management when it increased premiums by 140 per cent, and struck a disastrous blow to the economy in the province of British Columbia.

Mr. Speaker, another move we made: Ocean Falls, and that's been scoffed at.

AN HON. MEMBER: Hear, hear!

MR. STUPICH: Mr. Speaker, we didn't move into Ocean Falls because we wanted to take over another pulp-and-paper mill. We moved in there because jobs were going down the drain, and because under the previous Social Credit administration the plant was already being shut down, people were already laid off, and people had already moved out of the community, and the tremendous cost of the social capital of housing, schools, hospitals, swimming pools — all of these things, that social cost — would have been lost. We moved in, Mr. Speaker, and we bought it.

MR. KING: It was advertised in American papers: "Town for sale. B.C. town for sale."

AN HON. MEMBER: $10 million.

AN HON. MEMBER: Are you proud of that?

MR. STUPICH: We bought it, Mr. Speaker, for something less than $900,000, and in the first six months of the current fiscal period it made a return on that investment of 10 per cent. At that rate, projected over a whole year, it would be 20 per cent of the cost. But again, we didn't go in because we wanted to earn money with that pulp-and-paper mill. We went in because we recognized our responsibility to the economy of the province not to waste the tremendous social capital that had been invested in that community, capital that was provided by the people of British Columbia. Whether it was owned by some other company or not, it was still capital provided by the working people in the province of British Columbia.

AN HON. MEMBER: Hear, hear!

MR. STUPICH: And those assets are still in use; those houses are lived in; those hospitals are being used; and the schools are being used.

What was the second move on the part of the Social Credit government that comes to mind? To my mind, it's the sales tax increase of 40 per cent, and I've already talked about the effect that had on the economy: the economy in Dawson Creek; the economy in Golden; the economy in the lower Fraser Valley where people are moving out of the province to do their shopping — a tremendously bad effect on the economy of the province.

Fiscal management. They should have known — certainly we told them when they introduced the legislation — the effect this would have on the economy, that you just don't do things that way if you're trying to build up an economy. I quoted earlier from the C.D. Howe Institute where the recommendation is that sales tax be reduced in order to give the economy a spurt now, the spurt it needs with unemployment as high as it is.

Mr. Speaker, one that is often laughed at — another move that the NDP administration made — Panco Poultry. And it's laughed at again, Mr. Speaker, by the people who are too ill-informed to have bothered to acquire the information. We didn't move into Panco Poultry because we wanted to go into the chicken-processing business.

Mr. Speaker, we were approached by the owners of Panco Poultry and given a week in which to say whether or not we were prepared to buy this enterprise and retain employment for some 450 people who would find it extremely difficult to get any kind of employment anywhere else. They could do that kind of work but they were trained for nothing else.

[ Page 290 ]

AN HON. MEMBER: They could have bought cars at Kerster's.

MR. STUPICH: The alternative was to close down the whole operation, to dismantle the whole operation and to sell the properties off one by one.

We were told we had a week to make up our minds.

We wanted to maintain that employment. It wasn't just the employment; Panco Poultry was processing a lot of chicken in the province. It would have meant buying all of that agricultural produce from some other jurisdiction. It would have been a disastrous blow to the agricultural industry in the province.

We could have been fiscally irresponsible, just as was the previous Social Credit administration when they were allowing Ocean Falls to close down. We could have said that this is none of our business; it is private industry, free enterprise. Mr. Speaker, we were fiscally responsible, we moved in. We did not do it in a week; we said we'd have to have a month to look at it. We negotiated the price, and Panco Poultry, in the first six months of this current fiscal period, again made an income at the rate of 10 per cent, in six months, of the original cost invested.

Again, I emphasize that it wasn't to earn an income for the people of the province at the rate of 20 per cent of the cost of the investment; we were moving in there to keep the economy going. We were moving in there to maintain employment and, in that particular instance, we were moving to save agriculture.

What was the third thing that comes to mind with respect to the present administration? Something I've talked about already — ferry rates. I don't think I need to say any more about that. They knew what would be the effect of the tremendous increases they made. They knew when they increased ferry rates by more than 100 per cent that they were in effect killing off a substantial portion of the tourist industry, particularly on Vancouver Island, but also in the rest of the province. But because they wanted to make that one column of figures balance, they said: "We have no responsibility for what's happening in the province; our only concern in this instance is to make those two columns of figures balance."

Mr. Speaker, I'd like to draw your attention to page 25 of the budget and I would like to pose some questions, questions that concern me and perhaps questions that will concern you as well.

Take a look, for example, at the budget estimate for sales tax. To actually get the breakdown of the figures we should be looking at not just the budget but at estimates themselves because the figures here don't really have a breakdown of sales tax as such.

But if you look at sales tax, which is, admittedly, the best barometer of the economic health of the province of British Columbia, and if we look at the sales tax revenue projected for 1976-77, comparing it with the estimates for 1977-78, we see that the increase proposed is 4 per cent. If we look at revenue from natural resources, in particular the forest industry, we see that they project a downturn in the revenue from the forest industry — in spite of the glowing remarks in the budget about the improved economy, downturns in those two very significant areas.

Mr. Speaker, I ask you to consider three possibilities. These are very important resources of revenue. The fact that sales tax is increased by only 4 per cent could indicate that the original figure, the figure for 1976-77, is too high — the base is too high. If that is the case, substantially, then I have serious doubts as to how this government is going to balance the budget, balance the revenue and expenditure for 1976-77, especially when we know that the forest revenue is down below estimate. That's the first choice.

The second choice is that in this area where the real barometer is the government is projecting not a growth in the economy — in spite of some of the words in the budget — but in saying that revenue from sales tax will increase by only 4 per cent, they are saying that in terms of real dollars, because our population is going up about 2 per cent and inflation is carrying on at about 8 per cent, there will be negative growth in the province of British Columbia in the year ahead. That's the second choice.

There is a third choice. The third choice is that this administration, presenting this budget to us yesterday, is falling into the same pattern that the government of the previous Social Credit administration did successfully — politically, that is — for almost 20 years, a pattern of deliberately and significantly underestimating its revenue so it would suddenly find that fortuitously it had accumulated large surpluses which were available to use at election time.

Mr. Speaker, I would ask you which of those three choices you think is the correct one. But I'm not going to ask you that question because you'd have to guess — you don't have that third quarterly report. This government that was so anxious to be truthful, to tell us everything that was happening, to keep us abreast of revenue and expenditures, to carry on with its quarterly reports, the government that was going to do all that, has so far declined to present the report for the third quarter which would give us some information on which we could say whether it's likely to be choice one, choice two, or choice three. We can't guess; we don't know.

HON. P.L. McGEER (Minister of Education): It'll be out very soon.

MR. STUPICH: Mr. Speaker, I am assured by the minister responsible for ICBC — and I was told once

[ Page 291 ]

by the Premier that he thinks that minister is on the Treasury Board — that it will be out very soon.

I would remind you that today is the 25th of the month, exactly 14 days later than the report for the six months was available. Now what's holding it up that extra time? I don't know. Possibly it's because they feel it might interfere with the discussion of the budget.

Mr. Speaker, to me and to the members of this group, yesterday's budget confirmed the sorry fact that the Finance minister we now have will stoop to any depth of political partisanship in presenting the accounts of this province to the House.

Last year there was a general revulsion at the unprecedented low set by the budget speech in this chamber in its attempt to denigrate the people programmes of the New Democratic Party administration. It contained so much distortion, so much vitriol, that the Queen's Printer, for the first time in history, did not reprint the verbatim version.

It was that bad, Mr. Speaker. Once again the minister has manipulated words and figures to misinform the media in the hopes of misleading the public, only it is more shameful this time, because all the Machiavellian malevolence of the millionaire club opposite has been turned against the old, the handicapped and the helpless citizens of our province.

This budget reeks of Socred coalition callousness.

It's a cruel hoax to trumpet a $50 increase in homeowner grants for senior citizens and also quietly slash the funds for construction of homes for the elderly citizens from $10 million to $4 million. It is arrogant and revealing of priorities to boast of reducing taxes on mobile homes while virtually wiping out the Provincial Home Acquisition Act, chopping its funds from $16 million to $3 million.

It's worse than cynical to rename the Mincome programme to GAIN with such ballyhoo, and then cut it back to far below its level of two years ago, in spite of inflation. Mr. Speaker, it is emotionally sick for a government to turn G-A-I-N into an appalling $20 million 1-o-s-s for the elderly and for the handicapped in the province of British Columbia.

It is cynical to offer only $15 million for employment opportunity grants at a time of high unemployment, when contributions from government enterprises — that is, net liquor profits — are predicted to grow by at least $15 million.

It is cynical to introduce Pharmacare premiums, to continue exorbitant sales tax rates, medicare premiums, car insurance premiums and ferry rates at a time when world demand for raw materials continues its recovery, yet multinationals exploiting public resources in B.C. are expected to contribute about $77 million less to the provincial treasury.

MR. BARRETT: Shame!

MR. STUPICH: The budget talked about improvements in all these things, yet the budget forecasts $77 million less for the people of British olumbia.

SOME HON. MEMBERS: Shame! Hang your heads!

MR. STUPICH: But, Mr. Speaker, I think the most cynical passage of all is the four pages devoted to discussing this phoniness in defending the millionaire club's decision to cut its own taxes on the estates they themselves, or their heirs, expect to inherit, as well as those they will pass on.

Mr. Speaker, that cabinet is riddled with millionaires, we're told — the press has counted them — who were born to wealth, sold, or speculated their way into wealth. Every one of them stands to gain thousands of dollars from inheritances, or to pass on larger estates because of the legislation that was introduced yesterday. Every one of them now stands personally to gain, or to pass on, thousands upon housands of tax-freed wealth. For themselves and their fellow millionaires they made a windfall; for the average citizen in the province of British Columbia they preach restraint.

MR. KING: They wrote their own windfall!

AN HON. MEMBER: What hypocrisy!

MR. STUPICH: How heart-wrenching, how misleading, those four pages! But perhaps the Minister of Finance should be excused because he wasn't in this House when the New Democratic Party administration amended this legislation. We're talking now about the farm programme. Remember the comment that "now the farms could be passed on"?

Interjections.

MR. STUPICH: Gross distortion, Mr. Speaker.

MR. BARRETT: That's not a distortion; that's a falsehood.

MR. STUPICH: At the same time as he was talking about taking off the succession duty, documents were tabled that showed $28 million collected last year. During the first nine months of '76 more than $32 million were collected — in nine months only. I suppose he thought that this would go by without notice.

In another tortured paragraph the minister tried to pretend that the rationale for this action was not to save the super-rich — including himself and his colleagues — these paltry sums, but rather to save the family farms out there in British Columbia from

[ Page 292 ]

having to be sold for taxes. Well, Mr. Speaker, I guess he just wasn't here when we changed the legislation so that could be accomplished.

But that same Finance minister who yesterday condemned hypocrisy in his speech sat as a backbencher and pounded his desk in this chamber March 13, 1972, approving the populist succession duty and gift tax legislation brought in by his former leader.

MR. BARRETT: He voted for it!

MR. STUPICH: He voted for it. He thumped approval when the NDP official opposition helped the previous Social Credit government pass those bills, over the vehement objection of the Tories and especially of the Liberals who sit in that coalition government on your right, Mr. Speaker.

AN HON. MEMBER: There they are now.

MR. BARRETT: They're the ones who are wheeling and dealing.

AN HON. MEMBER: Who's calling the shot over there?

MR. BARRETT: There they are now.

MR. STUPICH: Who won the election, Mr. Speaker?

AN HON. MEMBER: Who's calling the shot?

MR. BARRETT: The old Liberal group won the election.

MR. KING: The Howe Street gang! (Laughter.)

MR. STUPICH: I quoted earlier from former Premier Bennett in this respect. I think I would just say again that he wound up his rallying cry when he was discussing this legislation at that time, to show the difference between his brand of Social Credit and the Liberals who now sit in that government and the Tories: "We're not a party of the classes; we're the party of the masses!"

AN HON. MEMBER: Ha!

MR. STUPICH: What happened to that party, Mr. Speaker?

MR. BARRETT: The masses of millionaires!

MR. STUPICH: "This," he said, referring to the Succession Duty Act, "is a fair tax." What happened to the fairness of that tax, Mr. Speaker? The former Premier of this province was loudly applauded by the present Minister of Finance, but he was opposed by the Liberals who now form a very important part of that government. Who won the election, Mr. Speaker?

AN HON. MEMBER: The Liberals!

MR. STUPICH: The recorded vote on second reading of that day shows that the present Minister of Finance, along with the NDP and Socred members, voted in favour of that succession duty.

MR. KING: What price did you demand for joining, Pat?

MR. STUPICH: The bill passed with an overwhelming majority, Mr. Speaker, of 44 to 6. That's just less than five years ago. And among the handful who were holding out — among the six who were holding out — were present members of this Legislature: the hon. Minister of Education (Hon. Mr. McGeer), the hon. Attorney-General (Hon. Mr. Gardom), the hon. Minister of Labour (Hon. Mr. Williams).

SOME HON. MEMBERS: Oh, oh!

MR. STUPICH: Mr. Speaker, how times have changed. Today we have a Liberal-dominated coalition, and the present Finance minister, who supported the succession duty as a Socred backbencher, is now being forced to be the spokesman for his opponents.

MR. BARRETT: If the backbenchers become Liberals will they make it into the cabinet? (Laughter.)

AN HON. MEMBER: You're upsetting the backbenchers.

MR. STUPICH: Nothing better measures the extent of sordid cynicism in yesterday's budget. It stands as a glaring indictment of this coalition government's pretence that it is loyal to Social Credit populist ideals. Mr. Speaker, there must be some of those people still in the Social Credit caucus. What happened to their Social Credit populist ideals?

MR. KING: Smile, though your heart is breaking!

MR. STUPICH: The budget is a contemptible grab for even more personal wealth by a handful of fat cats who have the hypocrisy to preach restraint in a province they have already bludgeoned with economic absurdities in taxation.

Mr. Speaker, the Minister of Finance, in discussing this in the media yesterday, said that there were

[ Page 293 ]

studies proving the harmful effects on our economy of the succession duty. Mr. Speaker, I challenge the minister to recall to us some of the information from some of those studies — to table that study in this Legislature.

AN HON. MEMBER: Table it! Produce, then we'll all discuss it.

MR. STUPICH: Mr. Speaker, neither my colleagues nor I have switched our colours or our tune from the position we took in 1972 on this question. For that reason alone we are proud to oppose this tragically callous and cynical budget.

AN HON. MEMBER: Hear, hear!

MR. COCKE: Where is Evan Wolfe?

AN HON. MEMBER: He's down in the treasury.

MR. STUPICH: Mr. Speaker, one last reference to the budget. The front page, the frontispiece: "This government is demonstrating its commitment to restraint by presenting a budget which calls for a restrained spending programme. Such restraint is necessary if we are to regain our competitive trading position and strengthen investor confidence in doing business in British Columbia."

Mr. Speaker, the unfortunate part of this whole budget is that this government really believes that statement. It's unfortunate for the people of British Columbia.

The government should be aware of the implications of its spending and taxing plans. This government is labouring under the assumption that, as a government, they have absolutely no responsibility for the economics of the whole community. This just isn't so, Mr. Speaker. You know that, I know that, but this government really doesn't understand that. As a British Columbian I'm disappointed. I'm unhappy. I'm concerned that we are being governed by a group so inept, a group so wrapped up in the myth that balanced budgets and prosperity go hand in hand. How old is that myth, Mr. Speaker?

This government's role seems to be to replay the visionary planning appropriate to decades, or even centuries ago. They see the road to prosperity as one paved by a determination to exploit and to export our resources — even at the cost of subsidizing that exploiting of resources; even if it means building roads and railroads to get rid of these resources. They consider that prosperity and, in the short term, it is. It's great politics for the next election but it's very poor economy when the people following are left with picking up and paying the social costs of abandoned communities, of reclaiming land that has been destroyed.

Mr. Speaker, it's a totally unsatisfactory budget; a budget prepared by a government which seems to believe that they can achieve prosperity by paying off election debts to millionaires at the expense of social programmes to the elderly and the handicapped.

MR. BARRETT: Shame!

MR. STUPICH: Mr. Speaker, it is a hypocritical budget. It talks about an upturn in the economy but projects revenue increases that indicate a downturn in terms of real dollars. It follows the old Social Credit policy of secretly planning surpluses that will be available at election time. Much has been said about deficit financing, and there is widespread misunderstanding about the necessity to remove succession duties to build our economy.

Mr. Speaker, I can recall travelling this province and opportunities I had during a discussion on the Land Commission debate some four years ago, opportunities in many parts of the province and on the media, in different ways, to present the arguments in favour of the Land Commission and for the opposition to present arguments against them. We went out into the public where members of the public and members of the press had an opportunity to enter into discussions with us in large meetings and in small meetings. I think this was good. I think that was the turning point in the misunderstanding about the Land Commission — when we had that opportunity to get out into the public and talk about these programmes.

Mr. Speaker, I think there is the same misunderstanding about deficit financing and about the removal of succession duties. I'd like to challenge the Minister of Finance to meet me out in the community to discuss these two questions where we can be questioned, where we can be held to account, where we can make our arguments, and people can ask us questions. I'd welcome that opportunity. Mr. Speaker, I believe in what we're saying about those two issues, and I'd welcome the opportunity to get out into the public with him and have him test his theories on the same groups so that the public might have this additional opportunity — an opportunity in addition to what we have here on the floor of this chamber — to discuss these issues which are extremely important.

Mr. Speaker, one thing you won't call this budget, one thing we can't call this budget, is an election budget. No quarrel about that. But we can say that probably it is a budget to prepare for a day when the people of British Columbia will be offered, with supreme Social Credit coalition arrogance and disdain for the future, an election budget. Mr. Speaker, we can't, in all conscience, support the budget that was presented to us yesterday.

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MR. G.F. GIBSON (North Vancouver–Capilano): In the short time that remains before the adjournment hour, I'll do my best to follow the hon. member for Nanaimo.

Mr. Speaker, the member for Nanaimo — the former Finance minister — challenged the current Minister of Finance to meet him out in the community on the subject matter of this budget. To me it is wrong that the minister is not even meeting here today.

MR. LAUK: He's a coward. He doesn't even like his own budget.

MR. GIBSON: To me, one of the elementary courtesies is for a minister to hear at least the principal opposition spokesmen. I think that was wrong.

MR. LAUK: Where is he?

AN HON. MEMBER: Doing the people's business.

MR. GIBSON: I would, Mr. Speaker, compliment the member for Nanaimo on his presentation. He is always well prepared and forceful and sincere in what he says. I agree with him on some things and disagree on others, but always find it worthwhile to listen carefully.

He is correct, in my opinion, on the more sombre view he takes of the economy than does the government's budget.

He then went on to discuss at some length whether there was or was not, in fact, a deficit in the final year of his government. Mr. Speaker, surely this indicates again that we must have a more agreed-upon manner of presentation on these questions of what is a deficit and what is not. Why do we not even have consistency from year to year? Why is there no Clarkson Gordon report this year, for example, which, at least, would have given us a means of comparison of the first year of this government with the last of the former?

Mr. Speaker, I believe that the results of a year of government can be prepared on a separate-agency basis or they can be prepared on a fully consolidated basis. I think they should be available in both ways. But it is unfortunate that we have to take up so much of the time of this House questioning what should be essentially bookkeeping questions.

I was particularly glad to hear the member for Nanaimo (Mr. Stupich) quoting Bill Hamilton, the chairman of the Employers Council of British Columbia, about the symptoms of our provincial economy. I have to say that I would feel more secure about the future of our province if he were quoting him as well on the solutions. But he is at least looking at the problem in the right perspective, I think.

He made an eloquent defence of his former government — Can-Cel and many of the other good things that his government did. Somehow, though, that all seems to me a bit late now. People weren't entirely satisfied, somehow, with the overall record. I hope we can look at ways and means of doing things perhaps better in the future.

As I discuss the government's budget I want to more or less follow the order the minister laid out, but first of all a couple of procedural questions. I think we have had inadequate time to study the budget. It was introduced on Monday rather than the more usual Friday so we've had something less than 24 hours to look at it. I want to publicly acknowledge and appreciate the courtesy the minister gave of advance copies to opposition spokesmen. But that's not quite good enough; we really need more time to look at it.

Secondly, I want to ask the government: what about the promise that they made to this House last year in the form of a resolution that was never acted upon, to eliminate the time limit on debate of the estimates in this House? I don't expect the opposition to agree on this one, Mr. Speaker, because they put the time limits in. But I recall so well that the present Premier went around this province while the House was sitting and while the estimates debate was on saying, "Not a dime without debate." That was one of his campaign issues. Now he's in power, he's the Premier, and we're faced in this House with the possibility that dimes will go by and millions will go by without debate if that guillotine falls on the estimates period. I want to know why that resolution hasn't been introduced again, and why it wasn't acted on last year.

Finally, I want to make a modest suggestion which would not be considered unusual in other parliamentary systems, that in future years we consider sending some of these estimates to committees so that members of this House would be able to call and hear from deputy ministers and other experts in departments, and gradually become more expert themselves because they could obtain the evidence on the details of the sums that we are voting. Those are procedural suggestions which are made with a view hopefully to improving things.

Mr. Speaker, in the introduction to the budget speech the Minister of Finance has continued....

Interjection.

MR. GIBSON: I'm sorry. Has it been introduced again? Thank you, Mr. Minister. Mr. Speaker, I withdraw what I said about that resolution not being introduced. I hope it is proceeded with; last year it was not.

Interjection.

[ Page 295 ]

AN HON. MEMBER: "If they need it," he says.

MR. GIBSON: That's not good enough. The minister said, "If they need it." It's a question of principle; it should be proceeded with. That should be taken off the rule book.

Mr. Speaker, getting into the speech itself and the introduction, the minister has continued his stonewalling of any thought of deficit financing. As the member for Nanaimo said, that is the strait jacket into which we have put the public debate of financing in this province unnecessarily, improperly. Because over the swing of the economic cycle every government has times when it must spend money to keep the economy going and it has times when it must run a surplus in order to cool the economy down. To tie your hands on that basis is, to me, an unreasonable thing for a government to do.

We did see one small change in the tune this year: the minister referred to no deficit in what he called "current operations." So maybe they're beginning to learn a little bit that capital items can be financed in a deficit way, as is only normal. When you buy a house you don't pay for it all in one year; you pay for it over the years of its usefulness; the same thing when you build a bridge or a highway.

Mr. Speaker, now that we are apparently getting a distinction by the government between the concept of current account and capital account, we must have some kind of a set of ground rules, some kind of a set of regulations, to guide the government in preparing its budget as to what is capital and what is current, because it's not easy.

In Highways it's reasonably easy: you have roads and you have maintenance of roads. But how about Education? In Education you have the capital plant — that's obvious enough; you have maintenance of that capital plant — that's obvious enough. But what about apprenticeship training? What about the money we're putting into our young people for the future? Is that capital or current? I don't suggest the answer, I suggest the question.

In Economic Development — study and research on a proposed project for the future: is that capital or current? In Forests — reforestation: capital or current? I suggest reforestation is clearly capital. All in all, in a $3.8 billion budget, there are enough complexities of this kind that I would ask the Minister of Finance to put a task force to work on this one, now that he's finally willing to make a distinction between current and capital items in his budget. Let him put a task force to work, perhaps through the agency of the new auditor-general, whenever he's chosen, to report back to this House how we should draw distinctions along these lines.

Mr. Speaker, the next concern of the Minister of Finance was concern for the general concept of debt in our nation and in our society, and I want to agree with the principle he espoused and go a little bit further. We have a tremendously serious picture in Canada as a nation when it comes to going into foreign debt. It's not a question of the federal government, which does most of their borrowing within Canada. It's a question of ourselves as a society running a foreign debt of something like $5 billion net deficit each year for the last two years, which has already contributed a continuing burden on this economy of $1 billion a year into the perpetual future until that debt is paid off.

If you speak to people in other countries, they have a little difficulty believing it all. You talk to them about our high wages and they say: "That's wonderful." Then you talk to them about our high cost of housing and food, and they say: "That's not so good." Then you talk to them about our lower productivity, and they say: "How can all these things go together?" Mr. Speaker, there's only one way they can all go together, and that is because we, as a society, are borrowing ourselves gradually into the poorhouse. We are selling our future, mortgaging our future, today for a higher standard of living than we are earning, and that is not going to last in the long run. That is why, in spite of the reasonably rosy picture placed before us by the government in the budget, I basically agree with the more sombre view of the hon. member for Nanaimo (Mr. Stupich).

I want, in passing, to note another kind of debt, which in this province is becoming more serious all the time, and that is the future burden which is going to be upon all income earners in this province as a result of changes in pensions. The detail is more clear on the federal side, but we have similar arrangements in British Columbia and we would be well advised to watch the federal experience. Because of the ravages of inflation, because of the effect of indexing on pensions, because of the relatively generous entitlements based on the last few years of work and because of the rising percentage of people in our society on pensions, we're going to have to be really careful that we really can afford it, and not get ourselves into things we can't afford.

A few months ago the federal government published details on their pension plan, and the figures were pretty shocking. Then the private analysts went to work and the figures were even more shocking when they re-presented them. Listen to this, talking about an ordinary federal pension plan: "As contributions required by government to balance our bank account work out at 14.5 per cent of pay, 20.5 per cent of compensation is needed in total to support the pensions promised...." Mr. Speaker, 20.5 per cent of current income is what is needed to support the real cost of the kind of pension plan that the federal government is getting into.

Think of that, and then recall what the Clarkson Gordon report had to say last year about certain of

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our pension funds getting out of balance, and the experience in the B.C. Hydro fund, and scratch your head a little bit and say: "Isn't this something that we should be getting a fix on here in British Columbia?" That is another survey that if the Minister of Finance hasn't already commissioned it, I would ask him to do so and, as well, report to the House. It is essential to the people who are on pension now and who will be retiring in the future that we not mislead them as to our capacity to pay as a society and that we might not make too great a discrepancy between the public sector and the private sector as to pension entitlements.

HON. MR. WILLIAMS: The private sector has that problem too.

MR. GIBSON: Of course, Mr. Minister, the private sector does have the problem as well, but one of the difficulties, here as in other areas, is that the government has been showing what you might call "cost leadership," and the private sector has had to match it — or has had to attempt to match it. So I think it is incumbent upon us to examine what we're doing first.

Mr. Speaker, moving on with the speech of the Minister of Finance, I want to say something about the overall budget numbers and ask when we are going to have some kind of an open and honest presentation in this House. Last year the minister claimed that expenditures were going up 5.4 per cent — and I have the quote here. It's at page 15 of last year's budget address. It says: "The budget I'm introducing today on behalf of the government calls for total expenditures of $3.615 billion in fiscal 1976-77. This is only a 5.4 increase over the current year's revised estimate." Clear language.

Mr. Speaker, I said at the time that those numbers were nonsense and that the actual increase, if you do it on an apples-and-apples basis, rather than comparing apples and oranges, which was what he was doing, is something like 16 per cent. Well, this year he admits it. You see it at page 6 of this year's budget, and I quote again: "For this government the increase in spending in its first budget was 12.2 per cent over the previous year's budget, and the budget I present today proposes an increase of 5.9 per cent in expenditures for the coming year." Mr. Speaker, if we couldn't trust the 5.4 per cent last year, what more reason have we to trust the 5.9 per cent this year?

AN HON. MEMBER: Hear, hear!

MR. GIBSON: Is he comparing apples and apples? The books are still being juggled, Mr. Speaker.

For example, there's been $30 million pulled out of British Columbia Ferries this year that was in there last year. That money this year is being spent by B.C. Ferries; last year it was spent out of the government's budgetary account. So, in other words, he's comparing a lower base this year with a higher base last year.

What's happening in the Ministry of Public Works? It's not entirely clear because the budget says at one point that $33 million is being charged for what they call building-occupancy costs, and yet when I add all the figures up, I get $93 million. But the fact of the matter is that there has been a large expenditure which used to be charged to the budget in the Ministry of Public Works which has somehow been moved out. How much is that in total? The figures don't gibe.

The Ministry of Finance last year estimated an interest cost on the so-called public debt that never was. They estimated a $40 million expenditure, and it's going to end up something more like $12 million this year — $28 million that never was, and yet that is being used as a base for comparison.

A $12 million expenditure in the Ministry of Transportation and Communications has been moved out of that department and into the Insurance Corporation of British Columbia. Once again, a higher base last year with a lower base this year.

When you take all of these things together, a fair comparison of the increase in the budget is something a lot closer to 8 per cent, just with those examples in the 20 hours we've had to look at this budget. It's closer to 8 per cent than to that figure of 5.9 per cent. I say, Mr. Speaker, that it's time that we really had an honest presentation of the budget numbers in this House.

Now what about restraint? The minister starts to make a great case for restraint in the British Columbia economy in his speech, but then he blows it because he tries to pretend that things are pretty rosy. People aren't going to believe the call for restraint, you know, Mr. Speaker, and I'll tell you why. They're going to say: "Listen, the minister said we had 5.1 per cent growth last year, so why do we need restraint?" They're going to say that companies are making not bad profits in 1976, so why is restraint required? They're going to say: "We finally have a somewhat declining dollar and our export industries are going to be in better shape." They're going to say that we have much lower growth in British Columbia than we've had for many years and therefore we won't have the costs. So they say: "What's all this call for restraint?"

Well, Mr. Speaker, the government simply hasn't defended the case well enough. The member for Nanaimo (Mr. Stupich) put that case better. Bill Hamilton put it better. There is a case to be made and it is this: we are living off our capital in terms of deteriorating plants and equipment in our province, which is not being replaced, and that gives an

[ Page 297 ]

artificial illusion of prosperity. But some day that equipment has to be replaced or else the jobs, particularly in the forest industry, are going to vanish.

MR. BARRETT: Crown Zellerbach.

MR. GIBSON: Crown Zellerbach — all it was was a modernization; that's not the great investment the government says it was.

We are living off debt as a society — and I made that case earlier — with respect to our foreign borrowing, and it applies exactly to British Columbia as it does to the rest of the country. Apparent prosperity and expenditure, which is based on borrowing for your standard of living, is illusory and it won't work in the long run. And our productivity is lower than our neighbour and our competitor to the south and, Mr. Speaker, it's lower than our lifestyle. We are living above our productivity, and you can't do that in the long run.

But people won't believe that kind of statement as well as they will believe numbers. And unfortunately the numbers that are easy to find and easy to understand are the numbers that say things are going pretty well. The numbers that say there is a fundamental weakness in our economy are hard to find, and the argument is a little bit complicated.

I say that the government has a duty not to paint a rosy picture in its speech, but to do its best through the budget speech, and every other means available, to show the true picture of the economy. I go further and I say that's why we've got to have an economic council of British Columbia. One of the most tragic and stupid things that government ever did was to disband the Economic Policy Analysis Institute of British Columbia because if there was ever a group that needs economic advice, it's this one. An economic council of British Columbia, if they finally have the brains to set it up, could tell that government something about productivity, it could tell them something about our competitiveness in this world and it could tell them something about natural resource economics. I might say in passing that commissioner Peter Pearse recommended that strongly in his report. It could tell them something about the economics of secondary and service industries — service industries that are starting to provide a good deal of our export in British Columbia in terms of consulting expertise around the world.

AN HON. MEMBER: Hear, hear!

MR. GIBSON: And it could tell them something too about government productivity. They make an assumption that any government expenditure is inherently unproductive. The previous government made the assumption that government expenditure tends to be productive.

I suspect the answer differs in terms of different expenditures. But what we have to have is some kind of an impartial body that can try and measure government productivity and give some advice outside of political rhetoric on this essential question to our economy.

I plead with you once again: Establish an economic council this year. Don't just be a wrecking crew. Build something, too. Mr. Speaker, the government talks about restraint without going into detail. It talks about professional fee income.

AN HON. MEMBER: Is that the brain surgeons and the neurologists?

MR. GIBSON: But they don't mention that they don't even have any yardsticks on professional fee income, let alone teeth. There is a certain amount of federal work, but what is this except empty rhetoric, if there is not something more than veiled threats in the budget speech?

AN HON. MEMBER: Where did he get his new suit?

AN HON. MEMBER: Is he practising restraint?

MR. GIBSON: Mr. Speaker, the government says very little about public service salaries. It suggests that British Columbia settlements in general have to be lower than the federal guidelines in the coming year. The test of their resolve will come in terms of public service salaries and I hope they remember what they said in the budget speech.

Then the minister reviews the British Columbia economy in 1976. A funny thing, Mr. Speaker: the good news was all external. It was initiated outside of British Columbia, be it in terms of lumber sales or mineral sales or whatever. And the government takes credit. The bad news in the economy was all domestic. It started here in British Columbia, be it the ICBC charges or the sales tax or the impact of the ferry increases or general economic mismanagement. The government dodges that and doesn't even mention it.

As the former speaker said, the Premier in his Thanksgiving speech didn't even think to mention the unemployment in the province. These things have simply got to be recognized.

They did notice some of the nice things. I like the statement that "fishing experienced buoyant conditions." Thank God! They're taking credit for floating now! The public and private investment, they said, was up 10.8 per cent. Let's analyse that for a minute. That means that after inflation it was up by nothing. And after you take account of the fact that housing starts were up considerably, the productive sector — machinery and plant and equipment —

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actually declined. That's the way you have to analyse it and that's what's happening. This has been a government that, for all its fine words, hasn't been encouraging productivity in this province.

Then it went on to mention that tourism is up 3 per cent. If you notice what's happening in inflation, that means it's down 6 per cent in real terms and that's not much of a record. Then the minister goes on to say something about this year's revenues and expenditures but he doesn't say very much. As I said before, there's no Clarkson Gordon report this year. We're given no indication of what's likely to happen by the end of the year, in terms of what the revenues and expenditures are going to be. But by the application of some of the previous years' ratios — I have taken ratios for the last three years and struck some kind of a reasonable average among them — I tried to forecast what is going to happen to the revenue and expenditure patterns for this year. And let me tell you a bit of what I see there. It's a bit of bad forecasting, that's what it is. On the social services tax I think that's going to be down something over $40 million from what they forecast. On the corporate personal succession gift tax I think that's going to be up about $40 million.

HON. MR. McGEER: Is this for this year?

MR. GIBSON: This is for this year. You didn't tell us, Mr. Minister. We have to be guessing at these things. You didn't table the piece of paper which is available to the Minister of Finance right now for the guidance of members in this House in this budget debate, so we have to guess at these things. Some open government!

Interjection.

MR. GIBSON: No, I'm not saying I'm any better. I'll be very frank that my estimates might be a mile off. I'm just saying that I have to make some guesses because you haven't seen fit to provide the information to the members of this House. I say that's not good enough and there's no way you can defend that.

Interjections.

MR. GIBSON: They have the 9-month statement. We don't have the 12-month forecast and that's what I am making now.

Interjections.

MR. SPEAKER: Hon. member, will you kindly address the Chair and continue the debate?

MR. GIBSON: Mr. Speaker, I'd be glad to. It's just that I get so gravely exercised by some of the nonsense that comes from the benches over there that a person has to be brought to....

Carrying on, Mr. Speaker, here's the shocking one. The item called "privileges, licences and natural resource taxes or royalties" was supposed to be $538 million in the forecast a year ago. It is thus far $336 million, and looks to me as though it's going to end up at around about $432 million, which will mean a shortfall of $106 million on the forecast if things keep going as they have for the first nine months. Sales and service fees down a bit probably — $3 million down perhaps; interest and exchange down maybe $2 million; looks like contributions from other governments are going to be down $24 million or $25 million, although the timing of these flows is rather hard to guess, and I'll get into that a little bit later in the federal-provincial section; contributions from government enterprises up by $49 million — apparently mostly because the ferry system stayed in the government accounts longer than the government had planned; and "miscellaneous" looks to be up about $10 million as well.

So what's the upshot of all this? It looks like the revenues on these accounts are going to be something like $78 million less than the government had forecast. Now they have also suggested their expenditures are going to be down a bit.

Do you know how they balance the budget — if, indeed, that's what they've done, Mr. Speaker? They sold some ferry boats for $48 million, which they hadn't planned to do when they started out the year, but that's what bailed them out — that $48 million. This government that's against going into debt for current account sold some ferry boats for $48 million to pay their current account. They don't make a highlight of that in the budget speech, I notice.

The social service tax take is, in my opinion, proof of a weak economy because the take from that is clearly going to be down. This is a pretty stable tax. It's pretty predictable from one year to another. The receipts so far are $487 million. The amounts over the past few years have varied from...what did we have? In 1975-1976 we had 70.1 per cent in by the first nine months. In 1974-1975 we had 71.9; 1973-1974, 71.0. Not much variation — right around that 71 per cent mark — and, on that basis, we're only going to have $685 million in on the social services tax, which is to say at least $25 million under the minister's forecast. In passing, I might say that this goes some way to explain to the hon. member for Nanaimo why the apparent forecast for this next year on the social services tax is so low.

On expenditures we have even less to go by because the ratios from year to year are less stable, but on some of the departments you can make some pretty definite guesses. The Department of Finance is going to be underspent by something in the

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neighbourhood of $40 million to $50 million, I would guess from the data we have before us, and a tremendous amount of that — almost $30 million — is due to an overestimation on interest costs which, in turn, is due to an overestimate on the kind of deficit that the government thought it was going to have to pay interest on. As so many members in this House have said, I wonder if that was deliberate.

You can say for pretty sure at this point that the Department of Human Resources is going to be underspent by something like $100 million and, Mr. Speaker, that's no $100 million clerical error. That's $100 million caused by Ebenezer Scrooge keeping the books in that department.

We could tell a lot more about the other departments if the government had had the courtesy to give us the 12-month forecast that they have at hand and that they have available. We don't have them so I have to guess.

MR. LAUK: They're a bit afraid of that.

MR. GIBSON: Mr. Speaker, the minister, at that point in his speech, went into a long dissertation on federal-provincial relations. He expressed a concern about the federal government fiddling around with the provincial tax base, and I share that concern. There's no doubt that changes should not be made without consultation, but we have to realize that the federal government is an independent tax collection enterprise and they may change the ground rules in ways that we would not like. I say to this government: if it goes too far do not be afraid to set up our own tax collection system here in British Columbia. It would not be a precedent; the province of Quebec has done it and has been able to do it reasonably economically and with good advantages for the control of their own economic destiny. If we set up our own provincial tax system, then we can set up our own incentives that apply to British Colubmia's industrial needs and British Columbia's personal needs in terms of people's own financial development. It could be, Mr. Minister, that the day will come when we will have to set up our own tax system, and I suggest, sir, that you would be derelict in your duty, through you, Mr. Speaker, if you do not now have a study going which contemplates exactly how to do such a thing.

Mr. Speaker, the minister spoke about the change in established-programme financing, and surely the minister considers that to be an improvement. Finally we have in British Columbia more flexibility, in terms of our own expenditures on health programmes in particular, and, to some extent, educational programmes, and I hope that the minister continues to press for the repatriation of tax points to British Columbia in every shared-cost programme area that's available to him.

As far as the revenue guarantee is concerned, there's something very strange in the estimates that we have in this regard. The forecast for the coming year, according to the estimates, is some $582 million from the federal government, and yet, Mr. Speaker, there's a different forecast at the end of the budget speech; a forecast which is made by the joint meeting of provincial Finance ministers which suggests that the yield to British Columbia in fiscal 1977-1978 — only with respect to the established programmes and not counting the revenue guarantee — would be $685 million. I ask the minister how he reconciles these two figures, and reconciling they need, because last year the forecast was for $650 million revenue from the federal government in this regard and yet the results to date would indicate we're going to receive something more like $620 million only — a shortfall of some $30 million.

Can we have a reconciliation there? Can we depend any more on the government's forecast of federal contributions this year than last? That's another reason why we're entitled in this House to the latest information that the minister has, and we have not been given that.

The minister later on in that section stated that the administration cost of every $100 of welfare spending in this country is $20 — which is to say a 20 per cent administration cost. That's a very disturbing figure, if it's true, Mr. Speaker. I would ask the minister to table the detailed information he has on that. If it is true, what is British Columbia going to do about that administration cost within our own bailiwick? It's too serious an item to leave on the table and just say: "Tut, tut." The government has to have some plans to do something about that.

The minister then goes on to endorse — as the Premier has before — the concept of negative income tax as the panacea for all of our social ills. I'm glad to see the Minister of Human Resources indicating some approval for that, because perhaps he in his speech will answer some of these questions. It's not good enough to simply say such and such is a good idea. You have to have some details on it. What would you establish as the poverty line as the line below which income ought to be supplemented or income assistance ought to be paid? What would you specify as the so-called reduction rate — which, in effect, is the rate at which you tax people making extra income above that poverty line. Would you make it 50 per cent? Sixty-six per cent? Seventy-five per cent? All of these have been mentioned in various literature, but it makes an enormous difference, it makes billions of dollars of difference, on the cost. Give us a number. What is your suggestion as to a minimum guarantee?

What is your suggestion as to eligibility? Would you make this guaranteed income programme available to everybody? Would you make it available

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only to those who can show a need? Would you make it available only to those who are willing to work if there is work available? Without these kinds of things, it's just rhetoric. What would be the effect on incentive of the programme you propose? And is the Government of British Columbia prepared to enter an experiment on guaranteed income with the Government of Canada as, for example, the province of Manitoba has done? Mr. Speaker, these are some of the kinds of questions we need answered, instead of just arm-waving about the value of a negative income tax.

Next, Mr. Speaker, the minister uses the negative income tax argument to suggest that traditional equalization in Canada be phased out. That's an interesting concept, but I would ask the minister how he answers these questions. Equalization, essentially, supports the governments of the poorer provinces, enabling them to charge to their citizens and their industries lower taxes than would otherwise be the case and still support decent government services. If equalization is phased out, those governments will have to charge higher taxes. This will be a disincentive to industry to locate in those regions. Won't that be a net problem for Canada? And won't there be a disincentive to mobility out of the poorer regions, where the unemployment will be even higher because of the very negative income that that minister suggests? Mr. Speaker, all I ask is that the government think through these grandiose ideas before they want to completely turn this country upside down.

It's all very nice to have theories, but give us the detail to go with them or else they aren't worth the budget paper they're printed on, by a long shot.

Now I'll go on to what the minister has to say about expenditure proposals. Under the legislation section, I appreciate the fact that a little bit more money has been provided for opposition staff. I think the government, in the end, is doing itself a favour by getting better criticism. I just wish there were more money for committees of this House to operate.

Under the Ministry of Finance we see a tremendous change in the estimate, which is basically due to the fact that the amount charged for interest last year — that $40 million — was phony baloney; and we see it's reduced to some $15 million this year — $13,875,000. We see as well that the subsidies are reduced, and, of course, that was another political football. Those are reduced by $25 million. So the reductions in the Ministry of Finance don't mean anything.

The Provincial Secretary gets 12.1 per cent more in her budget and they need the money for travel promotion.

The Attorney-General gets 25 per cent more, and it's in this category, Mr. Speaker, that we start to see this thing called "building occupancy costs," and the way it bites into the budgets of several departments.

Of the Attorney-General's increase, $16 million goes into a brand new item which is "building occupancy costs." Finally we know how much it's costing each department to live in the office space they have and other buildings they are using. The balance of the increase in the Attorney-General's department, in my opinion, is needed, especially in such areas as Crown counsel, where — and it's a shocking story that I hope will come out completely on the estimates — the reluctance to pay reasonable salaries and have reasonable staff in the Crown counsel area has led to this terrible backlog in the courts which we have been arguing about for many days.

In the Ministry of Economic Development it's up 18.5 per cent — I wish it were a good deal more. This department is still far too small. I'm glad they're finally putting together a tariff-analysis unit. This is a great step forward because the tariff is the greatest burden to British Columbia of any of the national problems we have, costing each man, woman and child in this province something in excess of $500 a year. It's a lot of money. The faster we can work to get that tariff phased out and then eliminated in this country, the better it can be done. This tariff-analysis unit is one of the most important things this government has done in this budget.

[Mr. Speaker in the chair.]

I was glad to see more money for statistics; I just hope that now they are made public. I was glad to see more money for economic and regional planning; I just hope there that the reports are made public. I come back to the coal task force policy report which we still don't have in this House.

Ministry of Environment is up a miserable 1 per cent. Actually, after building-occupancy charges and inflation, what we're spending on environmental protection in this province is down by 10 per cent when you talk about real dollars.

Agriculture — about holding even, after inflation. Energy, Transport and Communications — down 37 per cent, mostly because of the removal of the B.C. Ferries. I say that this is one of the items of book-juggling the government did to make it appear that the expenditure increase is only 5.9 per cent this year.

Mines and Petroleum Resources, I was sorry to see, Mr. Speaker, only up 3.5 per cent — a department regulating one of the two basic industries in our economy is falling back, as you can see. After building-occupancy costs and inflation its real effort has been cut about 10 per cent. This department has now pretty well been written off as a priority by this government, and I think that's sad. You know, the budget document brags about the prospectors' assistance programme being up. You know what it's up, Mr. Speaker? It's up $65,000, and that's all.

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That's way under one-half of 1 per cent of the annual exploration expenditure in this province.

Ministry of Forests — nominally up 4.4 per cent, again down after inflation. I was particularly sad to see the reforestation programme once again cut back. That is a programme — and this was so clear in the Pearse report — that should be protected from the annual axe of the Minister of Finance because it's a continuing capital programme for the benefit of this province and for the future generations. Every year they get to a bit of a budget squeeze, and what happens? Out goes reforestation.

The next category is Highways and Public Works, and this minister was really a winner, Mr. Speaker. He goes up by $61 million, according to the year-over-year comparisons which are a little hard to understand this year because some $90 million has been transferred out of that department to Crown corporations, and about $90 million added in highways, maintenance and building-occupancy charges.

HON. MR. VANDER ZALM: Jobs! Jobs!

MR. GIBSON: Well, they may be jobs, Mr. Minister, and I hope they're jobs. I'm all in favour of jobs; I'm all in favour of highways. What I'm talking about now, though, is proper accounting in this Legislature. Here's $90 million that's been whisked away. Where has it gone to? We're told in the budget that there's new building-occupancy charges of $33 million, yet $90 million has disappeared here. So here's another either error or misleading number that the Minister of Finance has given us.

Now we we get to Education, Mr. Speaker. Education — not very good: the direct grants to school districts are up by 6.8 per cent, yet the provisional budgets are up by 9.5 per cent. Even the federal guidelines on the salary settlements, if that's what they're held to, are 8 per cent, so this means either a cut in education services — which I don't think the minister would want to see — or else an increase in property taxes at the local level.

This is an increase in property taxes from a minister who, when he was on this side of the House, year after year stated what a shameful thing it was that the residential property owner had to bear this kind of burden, and that the proper thing to do was to take it off completely. During his tenure as Education minister this is the second successive year that we have seen the cost of the local burden of education go up. It looks like this year the provincial share of school operating expenses will be down to something like 42 per cent.

There's no increase in the homeowner grant for those under 65 for the second year in succession, and no increase in the tenants' grants. Mr. Speaker, apparently there's nothing in the budget for independent schools, and after the words in the opening speech, I say that this is absolutely disgraceful. To hear the minister stand in question period today and decline to tell the House whether there was anything in there for independent schools was one of the most shameful things I've seen — information denied for this debate. He knows the answer; he's playing cute. All we want to know for the budgetary debate is how much is going to be spent for independent schools. That information is being denied to us. The government knows what it is, but is playing games, Mr. Speaker. They're going to have their little surprise.

The health programme, up 11.4 per cent, appears to be more or less a hold-the-line situation after building-occupancy charges. Surely one of the greatest opportunities for cost-cutting in the provincial public service is in this area. I'd ask the minister if there is a task force at work on exactly that.

Now Human Resources, Mr. Speaker: a decline of 4.3 per cent in nominal budgeting — a decline of 4.3 per cent — but it looks like it's under budget this year anyway. Perhaps the minister will confirm this. It looks, Mr. Minister, like it's going to be $100 million under budget this year, and the minister might say that's good management, but I question whether it's proper that the money authorized by that government and submitted to this Legislature and approved by this Legislature should be underexpended by such a tremendous amount without coming back to this Legislature to get permission for it. I wonder if there have not been programmes that were not administered within the terms of reference, benefits denied to seniors or others that were improperly done, and I want an explanation from that minister before this budget debate is over as to how much he is going to come in under budget and exactly how he did it. If there is reason for applause, I'll applaud, but in the meantime it's a big, big question.

HON. MR. WOLFE: Do you want us to come back to the House to get permission to underspend?

MR. GIBSON: The minister asks the question, Mr. Speaker, across the floor: Does the opposition want the government to come back to the House for permission to underspend? Mr. Speaker, what the opposition wants, or what this member of the opposition wants, is for the government to follow its expenditure guidelines and, if it is going to make a tremendous deviation from it, then we have the right to be informed about it and the reason for it, and if you did not think you were going to spend that much to start with, you should not have asked for that much.

Interjection.

[ Page 302 ]

MR. GIBSON: You should not have asked for that much if you did not think you were going to spend it. You shouldn't have asked for that much.

Municipal Affairs, Mr. Speaker: up only 1.7 per cent, which means after building-occupancy costs they have slid back at least 5 per cent.

Municipal sharing: hardly up enough to compensate for inflation and not at all what we had hoped after listening to what the opening speech had to say about the wonderful future ahead for municipalities.

Department of Labour: up 80 per cent. I'm glad to see that because it is going to be a tough year and they're going to be busy. The new job programme for summer students sounds good, but we have heard it before.

AN HON. MEMBER: It didn't work last year.

MR. GIBSON: It didn't work last year. That's right, Madam Member.

There appears to be something happening in the Department of Labour, according to the budget, of assistance to the Indian people of British Columbia but, unfortunately, it does not seem to include any dollars. Good wishes and no dollars, which has happened year after year.

Consumer and Corporate Affairs: I have no comment other than to say that their dollars are up commensurate with their increased responsibilities.

Recreation and Conservation: I'm glad to see the return of the recreational facilities grants.

Now, Mr. Speaker, getting into the Crown corporations, we get into some real problems and some very worrisome things. British Columbia Hydro is completely out of control. We are going to be asked for authority in this Legislature later on this year to borrow an extra $615 million and we are going to have less opportunity for information on that than we have to approve $100,000 for a minister's office.

The British Columbia Railway: $140 million was borrowed this year, $203 million is projected for next year, and that is over $150 for every man, woman and child in British Columbia. Where does the Legislature get the detail on that? What are the losses going to be this year, Mr. Minister — $50 million? More? What's the government's plan on the British Columbia Railway to get those losses under control? This Legislature is entitled to that kind of information if we're asked to vote that kind of money.

Well, Mr. Speaker, those are the expenditure ideas. Then the minister gets on to revenue measures and, first of all, let's look at the overall revenues because I think, again, he has underestimated.

HON. MR. WOLFE: You said that last year too, didn't you?

MR. GIBSON: Yes, I did.

HON. MR. WOLFE: Yes, you did, and you were wrong.

MR. GIBSON: The numbers would have been correct if you'd run the economy the way any reasonable person would have run the economy in this province. They would have been correct if you'd run the economy the way any reasonable person would have run this province.

HON. MR. WOLFE: You were 14 miles out.

MR. GIBSON: No, sir. You take these numbers and you play with them. I assume 7 per cent inflation. Anything wrong with that? Are you going to do better? Let's use that number.

MR. COCKE: You were all out of whack last year.

MR. GIBSON: That's right. No, sir, had you not dealt the economy the body blow that your government dealt it, the revenues would have come through, so you certainly cannot use that as an argument, I'll guarantee you that.

HON. MR. WOLFE: You said that in the budget debate last year.

MR. GIBSON: That's what I said in the budget debate last year and I stand by it! I say you mismanaged the economy since then and your revenues should have been higher.

MR. KING: You're a Wolfe in sheep's clothing!

MR. GIBSON: So let's assume 7 per cent inflation and 5 per cent growth, which was your number. Then again, using your numbers for last year, the revenue increase should be something around 13 per cent or $450 million, and you've made a prediction closer to 6.4 per cent or $240 million. So where is the difference? You get $60 million less from the federal government and then where is the other $150 million? That, Mr. Speaker, I suggest, is the kind of fiscal dividend we would have had this year, except for government bungling.

The revenue measures that were proposed — a social services tax, elimination on mobile homes as to materials — that's very nice; the propane is very nice and overdue.

The big revenue move this year was not in dollars but in philosophy — that is, of course, the succession duty and the companion issue of gift tax. The historic stand of my party is very clear on this: it has been for the removal of these particular taxes year after year in this House. Nevertheless, I have searched my

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conscience again because of the importance of the issue, and I want to say why I take the stand I do.

I think it has to be looked at in three different ways: on the symbolic level, on the practical level, and on what I would call the equity level. On the symbolic level there are clearly two sides to the argument. There are those who say: "Contrast this year of restraint in British Columbia for everyone else but with relief for the rich. How can you justify that?" That's one argument, Mr. Speaker, and I believe personally that that's the argument that will stick in the public mind. So to a certain extent, the government is going to find the timing of this measure is unfortunate, but you would never find the timing right for this particular measure.

The other argument on the symbolic level is that this move signals to people that capital is welcome in British Columbia, that private investment is preferred to public investment, and that a person needs the incentive of the reasonable right to dispose of what they've earned in the way they deem fit. That argument, Mr. Speaker, will not carry the day in the public mind, by and large, except as it may apply to individuals. The number of people to whom that will apply is perhaps increasing but it is still way below the majority, as we can cite the figures quoted by the hon. member for Nanaimo (Mr. Stupich).

At a practical level other questions prevail. It is not a large source of revenue: $25 million to $30 million a year, well under 1 per cent of our budget. It is probably a large incentive to the flight of capital from this province, especially with five other Canadian provinces, including Alberta, having no succession duty. The minister made reference on the media to some studies he had in this regard. I share with the official opposition the wish that he should table those. It might make this debate more productive.

I think it is certainly a cause in some cases of forced sales of B.C. assets to outsiders in order to pay death dues. It is certainly a law which is difficult in enforcement, because it's just too easy to sell off assets and transfer them to other jurisdictions so that in effect it becomes, in a sense, a voluntary tax or else a tax paid by those who are trapped.

As far as equity is concerned, the capital gains tax which, as Your Honour knows, provides for deemed disposition of assets at death and capital gains tax payable at that time, was designed by the federal government to replace death duties, and it has fairly effectively done so. For example, if a person had assets, say, of $100,000 on valuation day in 1972, then they died this year and those assets were worth, say, $200,000, which would not be unusual capital appreciation, they would owe tax on $100,000 even though the real value of the asset hadn't changed at all, but simply had, appreciated through inflation. That, to me, is a pretty rough tax and quite an investment disincentive.

Interjection.

MR. GIBSON: He'd pay tax on it. He'd pay an effective 25 per cent on the increase. Mr. Speaker, that is with certain exclusions of non-productive assets such as a private home — non-productive in terms of the cash economy. I don't think things of this kind ought to be excluded.

The current succession tax we have bears unevenly depending on the form of a person's assets. We have in British Columbia, just as they have federally with the capital gains, the exclusion of a private home. One of the ways you can avoid this tax quite legally is to buy yourself a private home of any value and pass that on free of tax. So it bears unevenly depending upon the form of the asset — say, stocks as opposed to a residence — and it bears unevenly according to the location of the asset, as to whether that asset is located in British Columbia, or in Alberta, or locked away in a Swiss bank.

From the very hon. member for Nanaimo, who just spoke so very strongly against the abolition of this tax, we have one of the most important statistics in favour of its abolition: that is the fact that it bears on only one person in seven, which is to say that it is a tax which has very discriminatory application in our society, so discriminatory in application that it ought to be removed.

AN HON. MEMBER: What about graduated income tax?

MR. GIBSON: An hon. member says: "What about graduated income tax?" The graduated income tax at one level or another is paid by most of the working people in our economy. To me, a tax that is specifically designed against one segment of the population is not correct. It is not clear to me why those who have saved more in this world should have less right to dispose of it than those who have saved less.

The important question is taxation of realized income, or capital gains as they become realized into cash. That's the important time to make your taxation move, not at the time of transfer as a result of death, when in fact you have no change in money, just a nominal change in ownership. The time to go after that money is the time when the income or the capital gain is realized.

So in summary, Mr. Speaker, on this tax change it seems to me that at the symbolic level it's a loser and the government is going to lose by it, except among certain of its friends. It seems to me that at the practical level it is correct, and in respect to equity it is the right thing to do. Therefore I support it.

[ Page 304 ]

AN HON. MEMBER: They don't welcome your support.

MR. GIBSON: With respect to other measures, however, I cannot support the budget as a whole. It fails to do what so desperately needs doing in this province, and that is to encourage the creation of jobs. I will quote again from Mr. Bill Hamilton. He said this, speaking of this budget: "Indeed, the budget contains no real stimulus for investment by corporations or individuals." He is right on there. Investment is what we need in this province because from that comes jobs, and we don't have it in this budget.

There are a couple of specifics I want to recommend in a positive way to the government. One is that investment flows in part from profits. We have, in British Columbia and in Canada, a system of recording profits which in times of inflation no longer gives a true picture of what is happening. I refer here to a document put out by the Investment Dealers' Association of Canada. The data in this particular chart came from a study done by Touche, Ross and Company. What it did was compare the nominal profits in our economy over the last few years with the actual profits in our economy over the last few years with the actual profits if they were accounted for in what's called current-value accounting —  in other words, taking into account the impact of inflation, and the fact that this year it costs you more to replace a depreciated asset than it shows on your balance sheet, than it shows what it cost you. It takes into account the fact that this year it takes you more to replenish your inventory than it does when you bought it. Nevertheless, it shows on your balance sheet at that original cost, according to federal tax accounting practices. When you take all of these things into account, you get the real profit, the inflation-adjusted profit.

For Canadian corporations here are some comparisons: back in 1972, which is where they start out, they were about the same; by 1973 we had moved to the point where the nominal profit was about $6.5 billion and the inflation-adjusted profit was closer to $4 billion; in 1974 we come to the year of largest discrepancy, when the nominal profit was $9 billion and the inflation-adjusted profit was closer to $2 billion; in 1975 the comparative figures were more like $8 billion and $3 billion. But these are very, very serious discrepancies in terms of the apparent profit of companies as compared to their actual.

Mr. Speaker, no matter what the balance sheets and income statements show, investors aren't crazy. They know, to cite the famous case of British Leland Motors in the United Kingdom, that a company went into actual bankruptcy while it was showing good profits year after year on its income statement.

Things can get just that extreme. Therefore, the public appreciation of the true profit situation of companies in our economy is distorted, and in fact they appear to be higher than they actually are. The rates of return are often insufficient to justify the replenishment of plant and equipment.

Therefore, I call on our Minister of Finance to cooperate with the Ontario Treasurer, who in his last budget in November, 1976, instituted a study into exactly this. I call on our government to cooperate with that study, see to what extent the results may be extended to British Columbia, and require under our Companies Act the reporting of corporate profits in current-value accounting as well as historic accounting. I think that could be an excellent step forward for the public appreciation of the activity of the corporate sector of our economy.

Next, a definite suggestion with respect to jobs: in the long run they have to be generated in the private sector, in my opinion. A study of my proposed economic council into government productivity might find that that's a very productive place to have jobs, but I am skeptical at this moment. I think the private sector is the place where they are required. I want to suggest to the government that this can be achieved by a combination of three methods: jaw-boning, I would call it, which costs nothing; tax relief, which does cost something; and grants to encourage productive enterprise.

Mr. Speaker, I suggest the jaw-boning can be done most effectively in the forest sector. Some of the operators in the province, particularly in the interior, have gone to great lengths and expenditures to modernize mills. Others, particularly on the coast, have seen their plant and equipment get older and older by the year and less efficient. Mr. Speaker, we cannot afford, as a province, to have timber rights in the hands of inefficient operators protected by virtual monopoly positions on those tenures. Therefore, I suggest to the Minister of Forests (Hon. Mr. Waterland) and the Minister of Finance that it would be a very useful thing for them to suggest to the forest companies concerned that it is an object of public policy to have those mills modernized where that's required. It's just an item of competitive survival for our province in the world, and the forest firms most look ahead and see that. Those that don't must be encouraged to see it.

I don't suggest any confiscation of investment. I don't suggest just sticks. I suggest some carrots, too, and we can get into greater detail on this as we analyse the Pearse report and other suggestions in the Ministry of Forests estimates. But let me mention one particular tax incentive that I would like to see go into place in the forest industry and throughout the British Columbia economy in terms of productive plant and equipment, and that is the following: Eliminate the 7 per cent sales tax on plant and

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production equipment for the next two years. See how it works. I suggest that it will bring to this province a very considerable influx of investment income and it will be the trigger that starts a lot of projects going that are just about ready to go. This could make the difference. I do not believe, Mr. Speaker, that it need cost very much. I think it will cost a good deal less than it will quickly return to the economy, because many of these expenditures would not otherwise have been made in any case.

I have been unable to get, from any source, specific estimates as to costs. But I have made comparisons with the Ontario experience and my guess is that, were this done on a full plant-and-equipment basis, the cost would be from $75 million to $100 million a year. Were it done on an equipment-only basis, the cost would be from $50 million to $75 million a year. Were it done on an incremental expenditure only — that is to say, give firms credit only on the amount they spend in excess of the previous year — the amount would be a great deal less.

That is a way in which our manufacturing and fabricating industry in this province could be tangibly assisted right now, and it's a kind of positive proposal the budget speech should have contained. Different measures have to be found for the service sector of our economy, that doesn't require much in the way of plant and equipment. Export service industries are particularly important to us in this province. Many of our engineering firms, for example, are finding that their expertise is no longer sold in British Columbia because of the construction slowdown but rather all around the world. It has to be fostered. We have to find ways of assisting this through international marketing services and through some kind of a small business development bank in this province, perhaps in cooperation with the federal development bank, that provides what I would call one-stop shopping for small businesses looking to innovate and develop new ideas.

Some of the most exciting developments in the technological world have happened, and are happening, here in British Columbia. There is nowhere in this world so far ahead in terms of undersea equipment as we are here in British Columbia, and the Minister of Transport (Hon. Mr. Davis) knows that because much of that activity goes on in his riding. We simply must find ways to foster that kind of activity because it is British Columbia's future.

Mr. Speaker, the final tactic is grants-in-aid. One grant-in-aid I referred to in my reply to the opening speech, and I suggested that the government should, at the time of this enormous unemployment — 8.8 per cent, almost 9 per cent, hardly referred to in the opening speech or in the budget — do something about it. The thing that can immediately be done about it by this government is to earmark the sum of some $50 million over the next six to eight months for community and local service projects, in cooperation with local governments and community groups and in conjunction with the expenditures the federal government is making in this kind of area. This is the way to get a quick injection of jobs into the economy. It's not a long-run solution, but it does give some recognition to the fact that there are 8.8 per cent of our population unemployed.

Grants-in-aid can be considered as well to longer-range things. There is the suggestion of making British Columbia not just a potential but an actual world leader in undersea mining. We must expand our mining frontier. That would take just a few millions of dollars per annum in research from the budget of Economic Development or the Minister of Mines or whatever it might be, to ensure that, with our position on the Pacific Rim, with our technological lead in this area, with the corporate entities we have capable of carrying these things out, we wrest and secure world leadership in the field of undersea mining based here in British Columbia. Mr. Speaker, we're only talking about a grant-in-aid of a few millions of dollars a year in research to that end.

HON. MR. CHABOT: It's a jurisdictional dispute.

MR. GIBSON: Jurisdictional dispute, Mr. Minister? There's no dispute about the right to spend money; you have the right to give a research grant to anyone. No question about that.

MR. N. LEVI (Vancouver-Burrard): It'll benefit us, Jim. It'll benefit us — you think about it.

MR. GIBSON: Mr. Speaker, British Columbia needs another pulp mill. We have a supply of chips in this province, probably good enough for two pulp mills — certainly enough for one — and properly located. Why shouldn't the government look at this problem, decide where an opportune location would be, advertise for conceivable partners and say: "We are going to be an equity partner to get the show on the road on this new pulp mill for British Columbia"? I'm afraid it's going to take a long time for private industry to do it, when you look at how the costs have gone up — tripling in the last few years.

AN HON. MEMBER: That's socialism.

MR. GIBSON: That's not socialism, Mr. Member, that's common sense. That's spurring economic development.

Interjection.

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MR. GIBSON: Mr. Speaker, there was a shocking suggestion that socialism and common sense were the same thing. I would hasten to point out that I did not mean that.

Mr. Speaker, with that kind of an investment which would get a new pulp mill going in this province and provide hundreds of jobs and do a great deal to solve the surplus chip problem, the government, after it started out, could give the shares to the B.C. Development Corporation, could spin them off to the citizens of the province so you don't need to be trapped into increased government ownership — but what you have is the government getting things going — just as, for example, the federal government did in the Pan-Arctic Oil situation, which was one of the great investment moves of any government in the history of this nation.

So I call on this government to show a little initiative and imagination, not just in coal, which is important, but in the forest industry which is fundamental, and with the combination of tax incentives and grants-in-aid I have suggested, get another pulpmill going and the appurtenant jobs.

Mr. Speaker, what we need in this province is a climate of work and production, not a smothering, stand-pat feeling as reflected in this particular budget. Because of that tremendous lack of imagination, I simply cannot support it.

Mr. Wallace moves adjournment of the debate.

Motion approved.

HON. MR. WILLIAMS: Mr. Speaker, on behalf of the hon. Minister of Health (Hon. Mr. McClelland), I ask leave of the House to move that the order for introduction, first and second readings of the bill intituled Psychologists Act be discharged.

Leave granted.

Motion approved.

Hon. Mr. Williams moves adjournment of the House.

Motion approved.

The House adjourned at 5:51 p.m.