[ Page 95 ]

CONTENTS

Routine proceedings

New Members Assistance Act (Bill M 201). Mr. Rogers.

Introduction and first reading –– 96

Oral questions.

Heroin treatment. Mr. Cocke  –– 96

Hospital funding. Mr. Barber –– 96

Parimutuel Incentive Grant. Hon. Mr. Gardom replies  –– 97

Social Services Tax Amendment Act, t979 (Bill 3). Second reading.

Hon. Mr. Wolfe –– 98

Mr. Stupich –– 98

Mr. Mussallem –– 100

Mr. Macdonald –– 102

Mr. Brummet –– 102

Mr. Cocke –– 103

Mr. Mitchell –– 103

Mr. Leggatt –– 104

Mr. Skelly –– 104

Hon. Mr. Wolfe –– 105

Income Tax Amendment Act, 1979 (Bill 4). Second reading.

Hon. Mr. Wolfe –– 105

Mr. Stupich –– 106

Mr. Howard –– 107

Mr. Strachan –– 109

Mr. Levi –– 109

Hon. Mr. Wolfe –– 110

Corporation Capital Tax Amendment Act, 1979 (Bill 5). Second reading.

Hon. Mr. Wolfe –– 111

Mr. Stupich –– 111

Hon. Mr. Wolfe –– 111

Pari Mutual Betting Tax Amendment Act, 1979 (Bill 6). Second reading.

Hon. Mr. Wolfe –– 111

Mrs. Wallace –– 111

Mr. Ritchie –– 113

Hon, Mr. Wolfe 113

Revenue Surplus of 1977-1978 Appropriation Act, 1979 (Bill 7), Second reading.

Hon, Mr. Wolfe –– 114

Mr. Lea –– 114

Mrs. Jordan –– 116

Mr. Leggatt –– 118

Mr. Ritchie –– 119

Mr. Howard –– 119

WEDNESDAY, JUNE 13, 1979

The House met at 2 p.m.

Prayers.

MR. KING: Mr. Speaker, I would like to introduce a group of school children, the grade 7 class from Falkland Elementary School. They are here visiting in the parliamentary precinct today, along with their teacher, Mr. Halady, and some parent chaperons, Gayle Carson, Lise Harrison and Mel Stratton. I would ask the House to extend a warm welcome to all of them.

HON. MR. VANDER ZALM: One of the finest schools in the whole of the lower mainland is the Queen Elizabeth Senior Secondary School, and we have pleasure in having good representation from the school here today, with 15 students visiting, and Mr. Hodgson, their teacher. I would ask the House to welcome the students from the Queen Elizabeth Senior Secondary School of Surrey.

MR. STUPICH: Mr. Speaker, it used to be the policy of the House for members to impose introductions when they had groups of school children, such as the two members preceding me have done. In recent years we have abused that, I think, by introducing individual constituents from time to time. But occasionally there is a very special individual constituent. In this instance I would like to introduce the very lovely Laura Mottishaw, Miss Ladysmith for 1978-79.

MRS. JORDAN: Mr. Speaker, the guests whom I have the honour to introduce are probably not competitive in terms of beauty with the hon. member for Nanaimo's guest, but they certainly offer a lot to British Columbia in service. I am pleased to ask the House to welcome Mr. Roger Watts, a brilliant young lawyer from Vernon, and Mr. David Parsons from Kelowna, who is on the regional college board and is also chairman of the campus building committee for the North Okanagan campus. I ask the House to give them a warm welcome.

MR. MACDONALD: I would like to introduce a very distinguished parliamentarian, a former Clerk of the House, an expert on parliamentary procedure, and a fairly good tennis player, Mr. George MacMinn. Stand up, George.

HON. MR. HEWITT: I would like to introduce two constituents, very close and dear friends, Dave and Jean Battison from Penticton. I would ask the House to welcome them.

MR. REE: I would like to introduce 55 grade 11 students we have from Carson Graham Senior Secondary in North Vancouver-Capilano. They are visiting our capital today, and are enjoying its beauty and its weather. They are under the guidance of Mr. A. MacKinnon, one of their teachers. I would ask this House to welcome them.

MR. ROGERS: The constituency secretary for Vancouver South, a very hard-working person, is Barbara Duggan. We thought we would let her come over tonight and see what really goes on here. I would ask the House to make her welcome.

MR. HYNDMAN: I should like to introduce Mr. Peter Hebb. Mr. Hebb is an elected member of the Vancouver School Board. Of more relevance to these buildings, he is the principal of the George F. Laidler Co., which specializes in fine oak furniture, much of which adorns the offices of this building. In making Mr. Hebb welcome, would members please note he has probably had as much experience in cabinet making as the Premier and the opposition leader combined.

HON. MR. PHILLIPS: Mr. Speaker, it's not too often that I can rise in this Legislature and welcome a group of visiting students from the mighty South Peace River constituency. So today it gives me a great deal of pleasure to welcome to Victoria a group of 40 students and their teacher from the Grandview Elementary School. I hope the House will give them a very warm welcome.

HON. MR. GARDOM: I'm very pleased to introduce to the assembly this afternoon four outstanding young citizens who have expressed their individual concern and desire to help save lives, increase public awareness and develop public attitudes in the province concerning the great misery, damages and dangers that can result from drinking and driving. These two young ladies and two young men, Mr. Speaker, have each been awarded a $500 scholarship for their entries in a competition which was held under the Counterattack program. I would say without qualification that the creativity developed by each of them in their submissions to attempt to educate people to the frightening problem of drinking drivers was very imaginative. It was contemporary and realistic.

First of all I would like the hon. members to welcome Mr. Jeffrey Sutherland, a graduate of Shawnigan Lake School. His project was a very excellent questionnaire survey among his fellow students to determine areas wherein teenagers lack knowledge about drinking-driving.

Secondly, please welcome Miss Gloria Macarenko from Prince Rupert Senior Secondary School. Gloria's now employed at a Prince Rupert radio station. She has produced a number of taped interviews with local authorities about their attitudes to drinking and driving.

AN HON. MEMBER: And was Miss Prince Rupert.

HON. MR. GARDOM: And was Miss Prince Rupert, indeed, sir.

Miss Pearl Leaney, of Carson Graham Secondary School in North Vancouver wrote an essay entitled "The Third World War," its theme being the automobile in alliance with alcohol versus man, and man will lose.

Lastly, Mr. Speaker, Mr. Mark Heine, of Stelly's Secondary School in Saanich, created a poster which we've exhibited on the front page of Lifeline. It says: "One More for the Road." We have a skeletal hand and a cocktail. and it certainly does tell all.

Hon. members, I'd very much like you to join with me in this rather lengthy introduction. I think it is necessary and certainly fitting to express our greatest congratulations to these young people for a job excellently done.

[ Page 96 ]

Before sitting down, Mr. Speaker, I'd like the members also to welcome Mr. Ron Boyle, the director of Counterattack, and his associates Mr. Hugh Earle and Ms. Patty Manudca.

Introduction of Bills

NEW MEMBERS ASSISTANCE ACT

On a motion by Mr. Rogers, Bill M 201, New Members Assistance 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.

Oral Questions

HEROIN TREATMENT

MR. COCKE: Mr. Speaker, I would like to ask a question of the Attorney-General. Dr. J. Ekstedt called the heroin treatment program an infringement on human rights, a creation of a social dilemma, and not the best solution. Dr. Ekstedt is the senior policy adviser in the Attorney-General's ministry and former commissioner of corrections. Will the Attorney-General be advising his colleagues, especially the Minister of Health, that they are on the wrong track with the heroin treatment program?

HON. MR. GARDOM: It's easy to respond to a question like that in the negative, but I'm not going to just say "no" in response. I would like to mention a couple of other items, hon. member. The Heroin Treatment Act was certainly amply debated in this House. Government policy is well known and I can assure you, sir, that government policy is not altered. We're attempting to help, save and cure people of this very terrible addiction. I have not had the opportunity of having a discussion with Dr. Ekstedt but I am informed that his remarks to a great extent were summarizing a seminar at which he was present. He may well have expressed some personal opinions and I can assure you, sir, that in a democratic society people have the right to express their personal opinions.

MR. COCKE: In view of the throne speech and the government's stated priority for human rights, is it not subverting its direction with the program?

HON. MR. GARDOM: No, and I would also commend the hon. member and all members of the House that there is at present before the Supreme Court of British Columbia a reference concerning this case. It is under adjudication and deliberation. I think it would be inappropriate to start discussing the program in detail because those matters are now before the court sub judice.

HOSPITAL FUNDING

MR. BARBER: I want at the outset to indicate that no one on this side of the House is making charges regarding the administration of the Juan de Fuca Hospitals. I'm asking questions only, and I want that clearly understood by everyone.

In regard to the Glengarry Hospital has the minister requested and/or received by this date a report concerning certain complaints made recently by the staff at that hospital?

HON. MR. McCLELLAND: No, Mr. Speaker.

MR. BARBER: On a supplementary, have you requested such a report of your own ministry concerning allegations of inadequate operations and staffing at the Glengarry Hospital?

HON. MR. McCLELLAND: Mr. Speaker, I haven't requested any formal report. The operation of hospitals within the system is a matter for continual discussion among myself and members of my staff, and it will continue to be so.

MR. BARBER: On a further supplementary, will you commission such a report, Mr. Minister, on these operations at the hospital? If you do so, will you agree to make that report public?

MR. SPEAKER: The question is not in order. It anticipates the action of a minister.

MR. HANSON: I have a question for the Minister of Health. As you know, Mr. Jack Howard is the administrator responsible for Glengarry Hospital, and Mr. Howard has been quoted as saying that his hospital has difficulty getting supplies and that the cutbacks imposed by the government have resulted in a reduction of staff of six or seven at the moment. My question is: does the minister question or doubt the veracity of Mr. Howard's statements?

HON. MR. McCLELLAND: Mr. Speaker, of course not. If there is any doubting of the veracity of people who are operating our community facilities, it does not come from this side of the House but may in fact be coming from other members.

Mr. Speaker, I just want to make it very plain again that there have been no cutbacks to hospitals and there are no cutbacks intended. There will be an increase to the Juan de Fuca group of hospitals in terms of the amount of budget they will be receiving this year over last year, and there has been an increase over every year that this government has been in office. I expect that that attention to the needs of the health care facilities in this province will continue; certainly it will continue for as long as this government is in office.

MR. SPEAKER: I would remind the House that perhaps answers to questions should not go beyond the scope of the question itself.

MR. HANSON: On a supplementary question, Mr. Speaker, if the minister does not challenge the veracity of Mr. Howard's statements, then would he please at long last abandon the 5 percent ceiling that has been so destructive in the health care system of B.C.?

HON. MR. McCLELLAND: Mr. Speaker, I don't know where that member has been, but he obviously hasn't been in British Columbia because there is no 5 percent ceiling and there never has been.

SOME HON. MEMBERS: Oh, oh!

[ Page 97 ]

HON. MR. McCLELLAND: At the present time, if the member for Victoria would check the budget, he will see that there is an allocation made available from surplus appropriations of $25 million. We'll have the opportunity to discuss that in full during the debate of that bill — perhaps this afternoon, for all I know — which allows the hospitals to have a further 2.5 percent on top of their budgets over last year, to deal with some of the questions which they've put forward to me, particularly those two most difficult questions of increased staff wages and the increased cost of supplies and services which are non-salary items. That extra 2.5 percent, Mr. Speaker, is the result of negotiations with the hospitals over quite a lengthy period of time. So that has already been done, and I would be very happy to take part in the debate of that bill.

I just want to say that in the comments the member made in asking the question of me, he made reference to a public official saying that it would be difficult to live within certain budget restrictions. Yes, it's difficult, Mr. Speaker, to manage at the best of times. It's difficult for you and I to live within our budget restrictions, but we do have to do it, and that's the mark of a good manager. That must be done.

MR. HANSON: On a supplementary, Mr. Speaker, again to the minister, do you not feel that a reduction of six or seven employees in a service as small as Glengarry Hospital is a very high reduction?

HON. MR. McCLELLAND: I don't know what kind of an opinion I can give about that.

MR. SPEAKER: The question suggests its own answer.

MR. COCKE: I am motivated, Mr. Speaker, to ask the Minister of Health a question. I would just like to remind him of November 19 last when he sent around a memorandum to all hospitals on 5 percent. What's he talking about? Another thing too, Mr. Speaker — it is a cutback if he doesn't match inflation.

The question relates to the Health Sciences Association charge that they have difficulty reconciling the minister's claim of $100 million annual capital expansion for hospitals and the staff cutbacks in the major hospitals. Those major hospitals are the Royal Columbian, Lions Gate, Burnaby General, Shaughnessy, et cetera, just to name a few. Can the minister explain his high priority for fanfare against, on the other hand, his lack of concern for the ill people in this province?

HON. MR. McCLELLAND: Mr. Speaker, I would, under normal circumstances, have asked that you ask that that be withdrawn. That's the kind of statement that shouldn't be allowed in this House. Nevertheless, considering where it came from, I wouldn't dignify it by asking for that withdrawal.

I don't know what you call fanfare. But, if you call fanfare the building of a new hospital in Victoria after having had it under discussion for 20 years, if you call fanfare the building of a new children's hospital after having it under discussion for 20 years, if you call the complete redevelopment of Royal Jubilee Hospital in Victoria a fanfare if you call fanfare the $60 million redevelopment of Vancouver General Hospital after having talked about it for 20 years, if you call the $20 million redevelopment of St. Paul's Hospital fanfare, if you call the new hospital in Delta fanfare, if you call the new hospital in Coquitlam fanfare, if you call the complete redevelopment of the hospital in Kamloops fanfare, if you call the complete redevelopment of the hospital in Prince George fanfare, then I'm guilty of fanfare.

MR. COCKE: I would like all those who applauded to phone back home and find out what's actually happening with those proposed constructions.

Interjections.

MR. SPEAKER: Order, please. Hon. members, we are in question period, lest it has escaped your notice.

MR. COCKE: Since the minister has been the object of the ire of almost every health body in the province, including BCMA, RNABC, HEU, Health Sciences Association....

Interjections.

MR. SPEAKER. Order, please, hon. members. The question is on the way.

MR. COCKE: The Attorney-General (Hon. Mr. Gardom) is very upset about Ekstedt. I don't blame him for that.

Will he begin listening to those groups who have the best information for him and who are best informed of the needs of the people in this province? The minister obviously hasn't got that.

Since the minister decided not to answer that question I just want to ask him one more. The minister has a 25 to 1 ratio in his newest heroin treatment program, as of April 14 — 25 staff to one patient. If he can afford that for heroin treatment, why isn't he doing something about our hospital service in this province?

MR. SPEAKER: Order, please. That's a rhetorical question.

PARIMUTUEL INCENTIVE GRANT

HON. MR. GARDOM: Mr. Speaker, the hon. member for Cowichan-Malahat (Mrs. Wallace) asked me a question yesterday, and I have received the answer. Her question dealt with the pari-mutual incentive grant. If you have a pencil handy, Madam Member, the total amount of the grant was $510,537.44. Cheques to qualified breeders of brood mares have gone out for the breeders. Cheques for breeders of stallions are being processed and mailed. The breakdown of the fund is as follows: brood mare breeders whose horses raced at Exhibition Park, $365,415.53, and at Sandown, $12,885.10; stallion breeders whose horses raced at Exhibition Park, $92,168.06, and at Sandown, $2,507.10. That is a total of $472,875.79. There was also interest accrual of $37,661.65. This was paid to two societies in grants: the Quarter Horse Society of B.C., $858.74; and the B.C. Thoroughbred Society, $36,802.91.

I have some additional information for you. A new program of awards is being made to standard breeders, and to the end of May of this year, the following amounts had

[ Page 98 ]

been paid: Sandown, $22,420.69, to standard breeders who race there; to those who raced at Cloverdale, $119,061.53; Lower Fraser Valley Exhibition, $742. The total payment is $142,224.22. I apologize to all of the hon. members for reading this lengthy answer in question period, but I would like to emphasize the point that this is the type of question best placed on the order paper and responded to on the order paper.

Orders of the Day

HON. MR. GARDOM: Public bills and orders. Second reading of Bill 3, Mr. Speaker.

SOCIAL SERVICES TAX
AMENDMENT ACT, 1979

HON. MR. WOLFE: Mr. Speaker, my recent budget stated that tax reductions were to be proposed which would provide the most effective stimulus to the British Columbia economy. This proposed amendment to reduce the rate of tax from 5 percent to 4 percent certainly fits within that objective. The reductions in tax will significantly reduce the cost of living for all British Columbians. It will provide the average family in the province with tax savings of some $70 a year. The $70 saving will assist business, as it will result in increased consumer demand. The reduction will also lower the cost of doing business in the province by reducing by 1 percent the cost of all taxable purchases used in operating that business. Generally, Mr. Speaker, the reduction in tax will benefit all residents of the province by exerting downward pressure upon inflationary forces.

In addition to this, exemption from this tax is being proposed for vitamins, dietary supplements, diabetic and ostomy supplies. Vitamins and dietary supplements would include tangible personal property sold in liquid, powered, granular, tablet, capsule, lozenge or pill form, when sold as dietary supplements or adjuncts for human consumption. Diabetic supplies are syringes, needles and diabetic testing materials purchased by or on behalf of a diabetic for his own use. Ostomy supplies are equipment and supplies of a specialized nature, purchased by or on behalf of a person requiring such specialized items for his own use. The exemption would include pads, cement, gaskets, tubing and supplies specially produced for use with ostomy equipment. The exemption would not include products such as skin creams, deodorants, cleaning material, et cetera, which, by their general nature, may be used for other purposes.

The loss in revenue from the tax reduction and additional exemptions is estimated at $133,250,000 for the 1979-80 year. The proposed changes are effective midnight April 2, 1979.

In addition, an amendment is proposed to allow refunds of tax paid in error to be made upon the minister's approval of the commissioner's certificate. This is to avoid the present cumbersome procedure of an order under the Revenue Act. The procedure is the same as provisions now in the Corporation Capital Tax Act, the Logging Tax Act, the Mining Tax Act, the Insurance Premiums Tax Act and the Taxation Act.

Also, as provided in other provinces with sales tax legislation and in the federal sales tax and income tax Acts, a three-year time period in which to make an application for a refund is proposed. This will mean refunds of tax erroneously paid will have to be applied for within three years of the payment of the tax.

Hon. members should note that with the change in the rate of the tax to 4 percent, this will be the lowest rate of this tax in British Columbia since 1954. It will also be the lowest of any province in Canada with such a tax.

This amendment to the sales tax Act tells the story of the responsible and careful management of public funds of this administration. It really summarizes that story in the effect and results of that administration.

I move second reading.

MR. STUPICH: The Minister of Finance, introducing second reading, talked about a couple of sections of the bill about which there can be little argument or discussion. The one giving him the authority to remit sales tax paid in error without having to go to cabinet makes sense. The one removing from sales tax certain items also makes sense. It's very hard for anyone to make a case for opposing a government bill to reduce taxation.

I suppose one could start by saying that the title itself is in error, although we're not discussing the title. But I think we can agree it should really be called the Act to Effect the Re-election of the Social Credit Government, the bill to try to persuade people that the government that has instituted such repressive tax legislation, tax policies and user-rate policies over its three years in office that it didn't deserve to be re-elected was now coming to the people and saying: "Look, we changed our mind. We've changed our arguments. We now think it would be a good idea to roll back taxes. Will you please re-elect us and we'll change our attitude toward taxes in the future?"

As the hon. Attorney-General indicated, it did, and with a substantially reduced majority; but it did work. It's one of the things that did work — all the more reason, I think, for changing the name of the legislation.

I would like to refer to Hansard in second reading of this legislation and to some of the remarks of the Minister of Finance when he was telling us why the tax had to be increased from 5 up to 7 percent. I'm reading from Hansard, April 8, 1976, page 755. The Minister of Finance said: "I announce that tax increases were necessary to raise the revenue needed to carry on the government services and programs in the coming year." There is plenty of evidence before us right now that the government has found it necessary to reduce the level of government services in order to proceed with this particular plank in its election program. Evidence has been introduced in question period over and over again about cutbacks in government services.

A constituent of mine who works for the school board in Nanaimo said she was certainly going to be pleased every time she spent a dollar to know that she was saving a penny and that the cost of that was that four people in her department would be unemployed starting July 1. One of the ways in which the government has saved money has been to cut back on its level of support for school boards and to insist that school boards stay within a 5 percent increase in their budget. Isn't that great? This person could save one penny on the dollar at the expense of knowing that four of the people would no longer be working with her when this policy came into effect.

There has been some casual mention occasionally of hospitals, and the Minister of Health (Hon. Mr. McClelland) will deny there has been any cutback, and he's right.

[ Page 99 ]

There hasn't been a cutback. But I think the Minister of Health would also agree that if we take into account the extra $25 million that this government was obliged to throw into the pot because of the reaction from the community, the total for hospital grants in the budget before us is $674,178,588 — a very impressive total for hospital grants.

But let's look at the figure two years ago. Two years ago it was $615,621,231. Over a period of two years, in spite of all the salary increases in two years — increases, I suppose, in the neighbourhood of 16 percent — in spite of the increases in their hydro bills in. that same period, which must have exceeded 20 percent, in spite of the increase in cost of all the supplies that they buy, many of which come from outside of Canada and cost a good deal more because of the devaluation of the Canadian dollar, to say nothing of the increase in prices, and in spite of the fact that the minister talks about increasing the number of hospital beds that are out there waiting to get these grants per beds, there has been an increase in the amount of money available for hospital grants of only 9 percent in two years — 4.5 percent per year on the average.

In order to find the money to put out this one particular election plank, the government has been obliged to severely cut back on the level of services in hospitals, and there have been reports of staff cutbacks. The minister will again deny that there have been any cutbacks that he's imposed. Well, of course he hasn't. He's simply said: "You have to get along with less money." Bum the hospital down and you can get along with less money. Shut the hospital down and it won't cost you nearly as much. You can do anything you want as long as you don't hire people to service patients in the hospital. Great stuff, Mr. Speaker, all necessary in order to support this particular election plank.

School boards, hospitals and municipalities have all been obliged to live within this mythical 5 percent that the government claims it is living within. We know that — and we'll come to that later on — if we take into account the 5 per cent increase in estimates and add to that the $240 million that will be spent through revenue appropriation bills and add to that, as I've said before, the $200 million average overrun that this government experiences, we're looking not at an increase of 5 percent, not even of 12.5 percent, but an increase closer to 20 percent by the end of the year. As I've said before, by the end of the fiscal year 1979-80 this government will have spent $5 billion, which is significantly more than it spent last year, much more than the 5 percent increase. Nevertheless, the hospitals have to live within 5 percent, the school boards have to, and many other government services that I intend to detail later on in this debate are going to have to live within the 5 percent, that imaginary figure that the government claims it is living within.

When I look at some of the items that the government has cut back on, Mr. Speaker, I wonder at the wisdom of advancing this particular reduction in tax, other than as an election gimmick; and, of course, that makes me wonder just how long it's going to last. I notice, with respect to one of the changes, the minister has said it's a permanent reduction. I've just forgotten which one it is. With respect to the sales tax he's not given any indication of permanency. In any case, looking at the latest information that we have available — and that is the comptroller-general's report, interim financial statements for the ten months ended January 31, 1979 — and looking at some of the departments that are being.... Well, they're not even spending the money that was allotted to them.

I will speak at greater length about some of them, but at the moment I'd like to talk about health. I've already mentioned the cutback in hospital programs. They're obviously going to be underspent in The Medical Services Commission, where obviously pressure has been put on the department to cut back on spending, because in nine months they had spent $173 million out of a $212 million allotment.

Human Resources — $64 million for administration and community service voted by the Legislature and only $46 million spent in ten months. Obviously they cut back on community services so that they could save money for their election program. Services to families and children — $71.7 million voted by the Legislature and only $48 million spent in ten months. They obviously cut back there, scrounging money from that branch in order to finance their election program. Community projects — $27 million voted and $19 million spent in ten months. GAIN program — there was never a program that was more inappropriately named than that one. They changed the name from Mincome to GAIN and then started chiseling on the people that were in receipt of that program — $278 million voted by the Legislature and in ten months they've spent only $254 million, because they were able to cut back as the federal government made more money available. Those are the kinds of cuts they made in people programs, Mr. Speaker.

But they were not just made in people programs. Look at some of the other programs where they have cut back. This is also one that I'll mention later on — reforestation. The minister spoke yesterday about money spent on reforestation — $19.8 million voted. but only $14.8 million spent. This is the same amount as was voted the previous year. We don't know how much was spent, but in ten months — and reforestation is not done to any great extent in February and March — in four months they were $5 million short of the amount provided for reforestation. Surely that's a program that should go ahead if they were really going to do something other than try to chisel more money for their election program. That inventory program is so important in determining how much shall be cut and where it shall be cut.

There's $6.3 million voted by the Legislature. The Minister of Forests wanted to go ahead with that. He asked for and got $6.3 million, but some reason or other he spent little more than half of that: $3.5 million in the first ten months. Those are important programs for the development of our economy. The minister talks about how this is going to help the economy.

There's one area where they have gone overboard, and again it's part of the election program: $157 million voted for highway construction. This is one area where they really went over: over $200 was million spent in the first ten months. We'll have to wait and see how much will be spent in the next two months.

Another program that should be supported, because it is doing something for the future, they have chiseled money out of so that they can have it for an election program: in excess of $2 million was voted for the Salmonid Enhancement Program, but less than $1 million was spent in ten months. They paid lip service to the program but not dollars.

[ Page 100 ]

Recreation facilities grants — and there's a provision in a later bill — amounted to $7 million voted by the Legislature. We like the program; after all, the NDP started it. But $7 million wasn't nearly enough — $3.6 million was spent in the first ten months.

Obviously they've been chiseling money out of every branch and out of every program that they possibly could to come up with the kind of election program they hoped would get them re-elected. One of the ways in which they have proceeded with that program was to cut back on sales tax revenue. That meant they had to cut back on all kinds of other excellent programs.

From the kind of cutbacks that I've detailed — and other members may speak about other cutbacks of which they are personally aware — it's obvious that the government needed that revenue to maintain the current level of expenditure, the current level of services and programs, but decided not to do it because they thought it would be better campaigning not to do it.

The minister tells us today how important this is going to be for the economy and how good it is going to be for the economy. Well, in 1976 he didn't feel that way. He said: "One argument that one hears against the use of the sales tax is that it is regressive. But I should point out that this argument is materially reduced when applied to the social services tax in this province because of the exemptions which are allowed." There have been more allowed since, as well as the ones proposed today. He also said: "These include food, drugs, children's clothing and footwear, used clothing and footwear, school supplies and reading materials."

In a speech at an earlier date, he mentioned that there's no tax on children's clothing or footwear, no tax on drugs — some drugs — no tax on rent or mortgage payments, no tax on school supplies and reading materials, no tax on any service, such as repairs, insurance or labour charges, no tax on holiday travel or airline tickets, no tax on cablevision. So he didn't think it was all that bad a tax at all. Yet today he's telling us that this reduction of 1 point is going to have such a tremendous effect on the economy that it's necessary at this time. I agree that it is important to do something for the economy, but I question whether this is the best thing that could have been done.

This is something that I will ask about in committee stage, but I'll just raise the question now so the minister has been forewarned. Speaking on March 13, he said: "Our Treasury Board gave lots of encouragement to our research staff to raise their sights, and after exhaustive analysis were persuaded..." to go ahead with this tax increase. I'm going to ask the minister during committee stage whether Treasury Board was asked to do that same kind of exhaustive analysis and research into the effects of the reduction in the sales tax from 5 percent to 4 percent.

The minister said today that it's going to save the average person about $70. What the minister didn't really dwell on is that it's going to save some other people in the community, or some other taxpayers in the community, a lot of money as well. If the total reduction is $133 million, then it seems likely — and I do have a question on the order paper that I will be able to speak more definitively about later on — that on the basis of the figures that the minister gave us on April 8, 1976, the business sector will be saving something like $63 million out of that $133 million. I think that must be substantially more than this particular party opposite got from the commercial sector during the campaign.

Perhaps this was one of the promises they made to some of those people. You made all kinds of plans for expansion in the economy. "Re-elect us and we'll drop the sales tax by 1 point." I don't know that that happened, but I have said from the beginning that this was an election bill. I'm wondering whether in raising finances from the business sector they discussed with the business sector the possibility of their expansion happening at the same time as the sales tax was going to be reduced by 1 point. Again, I'm wondering just how long this 1 point reduction is going to last.

I've been quoting the minister. I'm now going to quote from my own remarks, because I suspect that if I don't, someone else will. Everything I said about the sales tax at that time about increasing it by 2 points I still believe. I still believe it was a very bad economic move — smart politics maybe, but a very bad economic move to increase the sales tax in 1976 by 2 points. I still believe that it was done entirely for political reasons; I still believe that it was done contrary to the advice that that minister got from the experts in his own ministry. But in spite of all that we have to go along with the government in reducing the sales tax from 5 percent to 4 percent.

There is another point that I used in my presentation in April 1976, and I'm going to use it again. I quote from my own speech:

Figures from Manitoba that I don't have to hand at the moment, but where a study was done where the sales tax rate is the same as is proposed here for the province of British Columbia" — at that time we were going up from 5 percent to 7 percent — "and where the exemptions are similar, would indicate that for a family of four with a salary of $10,000, roughly 1.5 percent of the income is paid out in tax, whereas when you get up to the $20,000 range, you raise the proportion of your income that is paid in this sales tax method of paying taxes.

Because the tax does work a hardship on low-income people, we're going to support the reduction from 5 percent to 4 percent; we're going to support it. We're very concerned that the government has done this as a way of financing its attempt to get re-elected. There can be no other explanation for them doing it at the time in view of the arguments advanced by the Minister of Finance when he proposed the increase by 2 percent just three years ago. In view of the evidence of the cutbacks in government services and expenditures in very important programs, just five or six of which I mentioned, we feel that the tax does bear more heavily on the low-income people. Reduction is one way of getting some relief — not enough compared to the high-income people — for the people who have been suffering the very rapid increase in the cost of living, the very high inflation rate in the province of British Columbia that this government has aided and abetted rather than opposed. Because it's one way of getting some relief for those people, we will vote for this legislation as much as we're opposed to the cutbacks that are being imposed due to this reduction in revenue.

MR. MUSSALLEM: Mr. Speaker, I have the honour to address you, sir, and to marvel at the remarks of the member for Nanaimo. Without doubt he's a man of figures, a chartered accountant in his own right, and a man of ability. But what happens to him when he gets behind a microphone in this House I do not understand. Talking to

[ Page 101 ]

him in the halls he is a man of logic and knowledge, but coming into this House he speaks out of both sides of his mouth at the same time. I can't understand that. He says you should not reduce the taxes at this time but that it's a good thing to reduce them. Now that's talking out of both sides of the mouth at the same time.

I cannot help but remember a time a short while ago — just a mere three years ago — when this government found it necessary to increase the social services tax by an additional 2 percent. How that same party on my right hollered and howled: "What you're doing to the poor people!" What we were doing to the poor people at that time was paying the debts that were incurred by them. I'm not, at this time, attempting a fight or to blame the previous administration, but why bring it up? Why make it necessary for me to draw to their attention the facts? Through three years of total incompetence debts piled up on debts, and it was necessary for us to pay those bills. We had to borrow $261 million outside the government to pay their debts, and we're paying $26 million in interest today.

I say to my honourable friend that we are reducing for every family in British Columbia an additional $70. Would he not commend the government on that? Would he not say that is the right direction to go? Would he not say this is a proper way of government? No, he doesn't say that. He says we did it just before the election. Is he implying we should wait till the election is over? He suggests also that our numbers in government were reduced because we did certain things in government, and the people said to us we almost threw you out. But you notice the people did not throw us out; they put us back. That is the anomaly of government when you have a big majority. The people say: "They're too strong; you have too many people."  Then it is the reaction of the democratic system that our numbers are reduced a little. That happened; it's proper, and it's good government. But do you hear this? No, you hear nothing about it. You merely hear my honourable friend say it's not the right time to take it off. I say to him today the right time to take off taxes is at any time you can get them off, and we are doing just exactly that. We will continue to do that. He said the minister didn't have to take a little thing like vitamins off. But I respect him for it. Vitamins are a great help to people who do not eat a square meal every day, and there are millions, especially in the cities, who need vitamins. They are very important to their lifestyles. The minister took the tax off. It's a great idea, and I commend him for what he's doing.

[Mr. Rogers in the chair.]

These things are good government. It is the policy of the NDP to kick everything in the face, and to stay there and stand up and say: "We're going to support the bill." If he's going to support the bill why doesn't he sit down and say nothing? We recognize the doubletalk. It doesn't mean a thing; it doesn't do him credit, and it's a waste of the time of this House. To add insult to injury, my friend says we cut back in health. Where? Pray, tell me where.

MR. COCKE: In Maple Ridge.

MR. MUSSALLEM: No cutback in Maple Ridge; none whatever.

MR. COCKE: Fourteen beds.

MR. MUSSALLEM: Fourteen beds? None whatever. That is where they lie. I'll tell my hon. friend they laid off three or four people, but I got wind of the fact that the board was contemplating the hiring of an assistant administrator for Maple Ridge Hospital. I took it on myself — I should not have done it — and I said: "I've no business in your hospital, and do not listen to what I'm telling you because I've no authority. But let me tell you, Mr. Chairman of the hospital board, if you hire an assistant administrator before you put back those people that you fired, you're going to hear from me." I have the right to do that; I'm an MLA. I said to him: "I want those ordinary people hired back." I said: "I want no brass up there; I want people in jobs." I'm just telling you that; you brought it up, or I'd never have said it. This party is for the little people.

MR. COCKE: How many beds did they close?

MR. MUSSALLEM: They did not close any beds.

MR. COCKE: Fourteen.

MR. MUSSALLEM: My friend there is talking through his hat, if he had a hat; but it's coming out of the top of his head in steam. The fact is that at this time of the year all hospitals reduce their beds. They reduce the beds by 12. Now it wasn't necessary. The government is still paying them....

Interjection.

MR. MUSSALLEM: Keep quiet. The government is still paying for the full complement of beds, but that is a 106-bed hospital. They had 115 beds because they utilized the halls, and it was brought down to 103 beds. But even then at the greatest occupancy during that time that our friend refers to, only the highest habitation of the hospital was 87 beds. They didn't close the beds at all, but they did fire three people, and that maybe out of necessity. The Minister of Health (Hon. Mr. McClelland) wasn't in favour of it; neither was I, but I'd nothing to do with it. But I did tell them: "Don't you ever hire an assistant administrator until you've hired back these people."I think that was a fair statement.

Cut back on hospitals? Swallow those words. We've cut back on no hospitals. There never has been a better hospital system than now. When the NDP were in office they did not develop a single bed. They continued to build the hospital at New Westminster, which we had started in our previous administration. Not a single bed was added to their entire regime.

We are building hospitals. We're doing today the St. Paul's Hospital, Vancouver General and the Children's Hospital. We are for people. But you people say that we're not for hospitals. What trash! What rubbish!

DEPUTY SPEAKER: Order, please. This is second reading of Bill 3, the Social Services Tax Amendment Act. The debate would appear to be more in line with the estimates of the minister. Perhaps you could find a way of getting it in order.

MR. MUSSALLEM: Thank you. I bow to your wishes, but I do not know of any other word for "rubbish" except "rubbish."

[ Page 102 ]

Have we cut back on community services? I do not know the community services in all British Columbia, but I know of them in my constituency. In my constituency in Maple Ridge, Mission and Pitt Meadows they were increased by more than 10 percent.

Why do we in this chamber talk out of both sides of our mouths at the same time? Again, what a great project; what a great thing the minister did with GAIN. The only province that looks after its people is British Columbia. Yet we're complaining about GAIN. This opposition should take note of what they're doing. This opposition should say, "Yes, gentlemen, you have a good bill, we support it," instead of talking out of both sides of their mouth at the same time, especially by intelligent men. That's what I can't understand. Let us get together and support good legislation. Let us not talk just for the sake of talking.

MR. MACDONALD: This bill is one of the budgetary measures brought in to accompany the budget that the minister brought down last week, to reduce the sales tax from 5 percent to 4 percent. It somehow makes the hon. members think that perhaps it is an election budget. But the minister is offering us a paradox today; and the member for Dewdney who's just taken his place missed the whole point of what was said by the hon. member for Nanaimo (Mr. Stupich). The paradox the minister offers us is this: in 1976 he said that increasing the sales tax by 2 percentage points would not depress the economy. In 1979, the same minister says that reducing the sales tax by 1 percent will stimulate the economy.

I wonder whether this is the kind of financial wizardry that we ought to be expecting in the Minister of Finance. There's something wrong when the minister offers us that kind of paradox.

The Legislature wasn't called into session this year, Mr. Speaker, until late in March, and then the first budget was introduced on April 2, and the election was called on April 3 at 6 o'clock in the evening. The minister then sent out instructions to all of the retailers and businesses of the province of British Columbia that the sales tax should be immediately reduced to 4 percent. He was acting contrary to law.

Now I know this is a retroactive bill. Sometimes you do have retroactive fiscal legislation, but it should be avoided wherever possible and used only in extreme circumstances, and not for circumstances where an election is to be called, not for circumstances where the government, distrusting and almost having a contempt for parliamentary procedures in this province, fails to call the Legislature in January, the traditional month, when this bill could have been introduced and passed so that there would be no reason for the law to be broken over a period from April 2 to the time this bill finally becomes law.

With this retroactive legislation, purely for political purposes, the Minister of Finance has, for the past two months, been engaged in illegal activity. He was enjoined by the statutes of this province to collect 5 percent into the public treasury. Instead of that, with no statutory authority whatsoever, except when this bill is finally passed, he collected only the 4 percent. Now that's bad finance; it's bad for democracy.

HON. MR. WOLFE: How would you do it?

MR. MACDONALD: I would do it by calling.... If you wanted to make this reduction effective April 1, I would have called the Legislature well before that period of time. I would have passed the legislation and had the budget debated. I would not wrap up fiscal policy and bad law in terms of political opportunities for the government when calling an election. You know, I really think there has been contempt shown in this. Over the last three or four years we have seen a contempt for the parliamentary process and fiscal control in this province of British Columbia. I say the traditional time to call parliament has got to be long weeks, and maybe a month and a half, prior to the introduction of the budget and the end of the fiscal year. So we have brought in this section 4 with retroactive tax legislation to legalize what the Minister of Finance has been doing illegally ever since April 2.

I think this is supposed to be a government of businessmen, sound people who took over from the previous administration, but when I look at the kind of paradoxical arguments residing in that Minister of Finance, and when I look at the increasing necessity for this government, this makeshift-policy government, to fall back on retroactive tax legislation, I say that there is harm being done to the democratic and parliamentary process in the province of British Columbia.

MR. BRUMMET: Mr. Speaker,  I think you will recognize that being a new member I am entirely confused at this point. I did hear the member for Nanaimo (Mr. Stupich) get up and say this is a wonderful move, or words to that effect, and that he can't speak against it, and then he spent considerable time speaking against it, as I interpreted it. Or perhaps he was not speaking against it, but I did hear another fine example of statistical wizardry which left me thoroughly confused because he seems to be able to pick little examples.... If it doesn't work out of this budget or out of this bill, then, it seems to me, he takes previous ones and creates some sort of an illusion that something is wrong throughout.

We've seen any number of examples here in this debate of taking an isolated example, and I suspect that their research department, Mr. Speaker, must be very busy looking for isolated examples. Then they take these isolated examples and try, by some sort of illusion or statistical wizardry, to imply that this is some sort of government policy or standard procedure.

I know I come recently and, perhaps, am more familiar with the school system where, time and again, one, two or very few pupils misbehaved or did something wrong. Some critics would like to make that example into an issue by saying that all teenagers are horrible monsters because of a couple. Those are the kind of illusions that bothered me at that point and are bothering me again here. As the member for Dewdney (Mr. Mussallem) mentioned, we seem to have two points of view expressed at the same time.

The second member for Vancouver East (Mr. Macdonald), I believe, mentioned that the Minister of Finance had, in the budget of 1976, mentioned that the increase in tax won't depress the economy. We have here a budget, and budgets over the last two or three years, that absolutely prove that he was correct. It did not depress the economy. It seemed to stimulate the economy so that surpluses were accumulated through increased revenues; this government then was able to create more services for people.

[ Page 103 ]

Somewhere, I am sure, in a province this large, Mr. Speaker, or an economy this great, there must be some cutbacks somewhere. I know in the election campaign it was interjected into our riding that there were cutbacks in hospital operations and so on. I took the liberty of checking with the Fort St. John hospital administration and found that there were no cutbacks. As a matter of fact the increase, I think, was something in the nature of 47.8 percent in operating expenditures in three years. Rather than looking at an isolated example, I checked with the Fort Nelson situation, and there apparently were no cutbacks — many improvements, but no cutbacks — and an increase in their operating costs of something in the neighbourhood of 58 percent. So I am not quite sure where these figures on cutbacks come from.

I'd also like to question the business of what is wrong with the financial policies of this government. It seems to be implied by the opposition that something was wrong in applying the principles of good management, in getting onto a cash basis. To me, with my simple school arithmetic, it used to work out to something like this: if you built a project for $100 million, if you paid cash for it, you got the project for $100 million. But if you borrowed that money and amortized it over a period of time, generally, with present interest rates, you paid back more than double over a period of time, so the same facility then cost over $200 million. Now I'm not an accountant, but my simple school arithmetic used to tell me this, and I am not so sure that it works any more after hearing some of the comments here.

So I think that in any situation where debt becomes a problem, in any family situation where they get themselves into a bad situation, either a counselor or a social worker will approach them and suggest that they tighten their belts, that they cut back somewhat, that they get on to a cash basis, and that that will get them better results in the long run and certainly improve their standard of living. Here we are being counseled by the opposition not to apply these same principles of good management to government.

However, not to prolong this, Mr. Speaker, I think that the people will certainly recognize this illusion that is being created. They will recognize the truth, and as they get more benefits from good financial management, as they appreciate it.... And certainly anybody that I've talked to appreciated the cut from 5 percent to 4 percent. They did not like the 7 percent, but they know that when an ill is there it takes surgery. So they did accept that, and now they are very happy that the cure was that effective and is continuing to be effective. So I'm certainly hoping that the people will be able to tell the difference between good management and facts as compared to illusions.

MR. COCKE: Mr. Speaker, I think I can do no better in describing the former speaker's situation than he described it himself. He described himself as entirely confused; he described himself twice as entirely confused. He should know; he is an expert on that particular area. One area in which he isn't an expert, Mr. Speaker, is obviously numbers. I don't know how a person walks up the ladder — or climbs — to be a principal of a school and does not understand that playing politics with a taxing process is not good business, and therefore the opposition should bring out that particular argument. If the member found some of his school students doing the same, I am sure that he would resort to any kind of punishment that was at his disposal.

However, this entirely confused member has come into the House, given us a marvelous speech in terms of how we should be marching onward and upward with these great financial wizards, these managers of our economy who practically broke the province so that it would be irreparable. Talk about stimulation, Mr. Speaker. The only thing they've done is stimulate their own coffers. But they've wrecked the economy of our province.

Furthermore that member was talking about the borrowing of $100 million, and obviously he was referring to the Minister of Health's (Hon. Mr. McClelland's) suggestion that there was $100 million being spent a year on hospitals. And he said that he would be reluctant to borrow that money. After all, you'd have to pay $200 million back. Isn't that right, Mr. Member?

The fact is that it is all borrowed money, every nickel of it, borrowed on behalf of the government and on behalf of the municipalities that share the loan and also share the repayment. So I guess, Mr. Speaker, the Minister of Health is costing us a couple of hundred million dollars. Will that member therefore rethink the party that he's joined?

MR. BRUMMET: No way.

MR. COCKE: Of course not. You're still entirely confused and I expect you will be three or four years from now.

I would like to say to the member for Dewdney (Mr. Mussallem) that hospital buildings are not the point that we're discussing here. We are discussing the cutbacks in hospital services and the cutbacks in community services. They're very real; and if they're not in his constituency, they are in mine and virtually every other constituency in the province.

MR. MITCHELL: I agree one hundred percent with the member for Nanaimo (Mr. Stupich) in his intellectual analysis of the budget. But there is one part of this budget that, when I read it, turned me back to 1951. When I read section 1(2) the ghost of the man who was sitting beside me at that time, Mr. Tom Uphill, literally jumped up in his seat and asked why we were continuing this punitive action, something that went out in the days of prohibition, why we still charge exorbitantly for liquor, and why we should still have the enormous markup on liquor. Why do we continue this 7 percent on the liquor industry today?

I say this: if you cannot see your way clear to taking the 7 percent and putting liquor in the same category as any other product, you can remember that beer is the workingman's beverage. I ask you, Mr. Minister — through you, Mr. Speaker — that at least we bring beer, the workingman's drink, down into the same category as any other product we have in British Columbia.

I can see no need for the continuation of it. I say, as a policeman, that I realize the dangers and abuse of alcohol in the family, in the community and in the driving public. But also, Mr. Speaker, I cannot see how we can continue this attitude that liquor is something evil in itself. It is the abuse of liquor. Let us recognize liquor for what it is, not as something that we continue to gouge the public for, as another method of increasing revenue. The markup by the Liquor Board, as I said before, is enormous. And I ask you, Mr. Minister — through you, Mr. Speaker — that that section be taken out, and if not, that you see your way clear

[ Page 104 ]

to removing the workingman's beverage — beer — from this section.

DEPUTY SPEAKER: Just before recognizing the next member standing, I would like to point out to the member that you may also wish to bring this up in committee stage because the line of debate you followed is in order in committee and I would allow it in the House in general.

MR. LEGGATT: I would just like to briefly support the point that was made by the member for Vancouver East (Mr. Macdonald) earlier concerning the effect on the parliamentary process this procedure has had in announcing a budget in the House, making it effective in terms of the amount that is collected out there through all of the trades people and all of the people paying sales tax in the hopes that that government might be returned to make the legislation effective.

Now the point the hon. member for Vancouver East was making and the one I wish to support is that that's an extremely destructive process in terms of the parliamentary tradition of most of the Legislatures in the Commonwealth.

Imagine what the Minister of Finance would have said had the last Prime Minister of Canada announced that all manufacturers' tax would be eliminated in the event that the federal government was returned, and said, "We'll make it effective as of today so you don't have to pay any manufacturers' tax," and subsequently a different government was elected, a Conservative government which said: "That is not our policy, and therefore all of you people who failed to pay that tax during the election period are now going to have to pay that tax." That would be bad management, that would be chaos and that would be irresponsible, and I think the Minister of Finance would have been one of the first to say it was irresponsible.

Yet the principle, Mr. Speaker, is exactly the same. It attempts to tie the hands completely of any subsequent government and bribe the electorate, in effect, during that campaign to give them a kind of no option. Now it seems to me that if this government wants to continue to argue that it's the responsible, efficient people who know how to run the affairs of this province, they'd better have a look at what they did in this last election: announcing a sales tax reduction which took the risk of being defeated in a subsequent parliament and which would have left business in chaos all over this province. No small businessman would have known where he stood.

It seems to me that principle is one that, whichever government runs this province in the future, they should re-examine as a bad principle of government.

MR. SKELLY: I will be very brief. I just would like to propose a few constructive comments to the minister. I support in general, as well as the rest of my caucus, the reduction in sales tax. We have suffered for too long under the previous Social Credit government increases of up to 7 percent. This is a welcome relief, although it brings the average sales tax over their period of office down to a little more than 5 percent and possibly closer to 6 percent. So it is, I would say, a move in the right direction.

But I think it is open to criticism on a political basis because of the way that the tax has been reduced. You increased it to 7, just obviously picking a figure out of the air. You didn't have to justify it based on paying off debts, because you created new debt-creating companies such as the B.C. Buildings Corporation, which in the last two or three years has increased the debt guaranteed by the province to something like an additional $161 million. You've been creating debt at a greater rate than any previous government in the province. So that increase in sales tax wasn't required to pay off any debts that had been incurred under a previous government. It was simply to punish the people in a political way for electing an NDP government between 1972 and 1975. We feel that it is a justifiable criticism that lowering the sales tax to 4 percent is done on a political basis as well in order to show or attempt to demonstrate that you're better financial managers, which, of course, you aren't, as Erma Morrison will point out to you if you ever read her statements.

But I question — and I'm doing this in a constructive way, Mr. Minister — why the government does not use taxes such as the sales tax to influence policy directions and influence the direction of the economy and the province. Now you do it in some ways. I welcome, in spite of what the member for Dewdney (Mr. Mussallem) says, the deletion of tax from vitamins, dietary supplements and diabetic and ostomy supplies. We welcome that, and that is the way of influencing policy in the direction that the government intends to go.

But I wonder why there are no sales tax reductions or elimination altogether of taxes on building materials in order to stimulate a sector of the economy which has been suffering for the past two or three years under Social Credit government. The real problem there is that building permits are down, construction activity is down and a large part of the construction labour force in the province of British Columbia is out of work.

I'm wondering why the minister, instead of doing a blanket reduction across the board, doesn't direct tax reductions in order to accomplish certain desirable economic and social ends, such as putting a construction work force to work in the province of British Columbia by reducing taxation on building materials and building supplies.

I was interested in an article in the paper this morning where Farmer Construction Co. was buying a firm in Seattle, and in the reasons president Wayne Farmer gave to justify the purchase: "President Wayne Farmer said his construction company wanted to expand in a fast-growing economy, and that meant Alberta or Washington state. The Seattle purchase was favoured because it was closer to Victoria."

The implication in his statement is that our economy is not growing fast enough to sustain the requirements of Farmer Construction Co., and the unemployment in the construction labour force is another indicator of that. So why did the minister not follow up on these problems and create specific tax reductions which would have encouraged that sector of the economy?

I've asked the minister before about reducing sales tax on alternative energy systems such as solar systems, solar panels, that type of thing, and also on energy-conservation systems. Now the federal government has recognized the need to do this and to encourage consumers of energy equipment and alternative energy equipment to direct their expenses in ways that aren't as costly to the government and to the public as the massive centralized Hydro type of delivery of energy. Why has the minister chosen to reduce

[ Page 105 ]

sales tax in a general way, rather than to do it in specific ways which encourage the development of the economy along the lines which reflect government policy and also the needs of the province?

DEPUTY SPEAKER: The Minister of Finance closes the debate.

HON. MR. WOLFE: As is the traditional case, we have here a bill that we can all agree on. Nevertheless, we always find in agreeing with it exceptions made to what the government has done in one area or another.

MR. SKELLY: Constructive.

HON. MR. WOLFE: Not all constructive, Mr. Member. I think I could just cover two or three of the points which have been raised. This is a bill which, after all, is a constructive effort by the government to affect the most number of people in British Columbia with a tax reduction — as I said earlier, to pass on the benefits of what this administration has attempted to do.

Two members across the way referred to the fact that this legislation is retroactive, that it was injected previous to election, that this was an abuse of the parliamentary process. Let me just deal with those points. I'd ask any member to refer to a previous tax change, either indirect sales tax federally or sales tax provincially, which was not effective the night a budget was introduced. In the history of British Columbia, I'm advised, this is certainly the case. Would the members who criticized this advocate a pre-announcement that a tax is going to be effectively reduced 30 days from now, or 60 days from now'? I certainly wouldn't agree with such a policy. It would throw your economy into complete disruption. You'd have a tremendous escalation in one period of time and then a depression following. So I don't agree with the suggestion that a budget change of this nature should not be effective the night that it's introduced.

Now suggestion two, Mr. Speaker. Criticism was made about the fact that this budget change was made in advance of an election. This throws the economy into disruption. They don't know what's going to happen. What I say to this is that it makes clear what this government's intentions are, given election. I think that's putting our record and our policies out in front where they should be, not held in abeyance until after. I think the mere fact that this point has been raised, Mr. Speaker, raises the serious question: had the NDP been returned to office as government in this province, would they have increased this tax which we reduced on April 2? It sort of sounds to me that they would have raised the tax. They show a lot of concern. They are saying that if they had reached office, this would have been unfair because they would have had to stay with it. So in any event, I think we should ask ourselves that question. Would they have raised the tax after an election period?

Now the member for Nanaimo (Mr. Stupich) went through his usual litany of problems associated with sales tax. We didn't need to raise the tax three years ago. Need I say more than the fact that we would have had substantial debt? We estimate that had the tax increases not been invoked at that period of time, the alternative was some direct debt of over $1 billion. The opposition members laugh at this, They seem to have a great appetite for debt. That's one of the basic differences between our philosophy and theirs in terms of public administration.

We're not in favour of increasing public debt. There was no alternative to those sales tax increases. They know, despite their prattling across the way. that we would have had a direct debt of over $1 billion today — not $261 million — had those tax increases, which were fundamentally necessary, not been invoked.

He also referred to the restrictions in our budget, accompanying the sales tax decrease, in the areas of hospitals. If the member will examine the budget, the estimates for the coming year, he will see that the appropriation for hospitals, taking into consideration the $25 million allocated to hospital stabilization of their budgets, increases the amount allocated to hospitals by 11 percent, a substantial increase over previous periods of time in terms of the money which is being allocated to hospitals. So although we are making substantial tax cuts, this has been done also with due attention to the social service needs, with special attention to health.

I think he also referred to the fact we had not indicated whether such a tax decrease from 5 percent to 4 percent was permanent. I refer the member once again to the budget speech, on page 46, where clearly we indicate that this tax change is permanent.

The member for Nanaimo seems to complain about the fact that there are indicated over expenditure. but in the ten-month report he read off a list of ministries which were underspent. I wish he would make up his mind. He doesn't seem to like overruns or over expenditure — they invented the word — yet he complains about under-expenditures in certain ministries. We don't believe in spending money where it's not fundamentally required. In terms of the Health ministry, which is one of those he mentioned, I think you'll find that the expenditures in that ministry, come the end of the 12-month period, will be at least equal to the original budgeted amount.

I said earlier this is a bill on which we'll all agree, I'm sure. I don't think much more needs to be added, except to say that this is the most direct way, in sales tax, whereby we can pass on the benefits to every person in this province. Therefore I'm happy to move second reading of Bill 3.

[Mr. Speaker in the chair.]

Motion approved unanimously on a division.

Bill 3, Social Services Tax Amendment Act, 1979, read a second time and referred to a Committee of the Whole House for consideration at the next sitting of the House after today.

HON. MR. GARDOM: Second reading of Bill 4, Mr. Speaker.

INCOME TAX AMENDMENT ACT, 1979

HON. MR. WOLFF: Hon. members will recall that. as announced in my budget speech, there are a number of important changes proposed to the Income Tax Act this year. The first such change is the proposal to reduce the rate of personal income tax from 46 to 44 percent effective July 1, 1979. Hon. members will note the change in the legislation is to a rate of 45 percent for the full 1979 year,

[ Page 106 ]

which is equivalent to a rate of 44 percent for one half the year. The change in rate is expressed as an applicable annual rate, as required by the tax collection agreement covering the collection of the provincial income tax by the federal government. The proposed 44 percent British Columbia rate means that the province will have the second lowest personal income tax rate in Canada. It will mean a tax saving for all British Columbians who pay personal income tax.

The second change is to the annual allowable renter's tax credit effective January 1, 1979. In the past this tax credit was $100 for renters with no taxable income, and $100 less percent of their taxable income for those with taxable incomes up to $10,000. It is proposed to increase the amount of the credit by $50 to $150 and to increase the 1 percent to 1.5 percent, so that renters with no taxable income will receive a $150 tax credit, and those with taxable incomes up to $10,000 will receive $150 less 1.5 percent of their taxable income.

Mr. Speaker, in addition to the sharing of the present dividend tax credit with the federal government, the third change is the proposed 5 percent dividend tax credit for British Columbians receiving dividends from any public corporation whose head office and central management are located in the province. This measure will encourage investment in such British Columbia companies and thereby encourage companies to locate and stay in the province. This amendment is to be effective on proclamation, as it requires federal agreement to administer.

The fourth change will allow an income tax credit for contributions to candidates and recognized political parties in the provincial field. The provisions for the proposed credit are similar to those of the federal government and the provinces of Alberta and Ontario. The credit available from April 2, 1979, will be 75 percent of the amount donated up to $100; then, if the amount donated exceeds $100, $75 plus 50 percent of the amount donated exceeding $100 up to $550; and if the amount donated exceeds $550, $300 plus 33-1/3 percent of the amount donated exceeding $550 to a maximum credit available of $500. To obtain the tax credit it will be necessary for the contribution to have been by cash, or a negotiable instrument such as a cheque. The contributor must file a receipt for the contribution with his income tax return. The receipt will be required to have been issued by an official of a recognized political party, or by the agent of a candidate. It must be numbered to show the name of the party or candidate, the date of issue, the name of the person making the contribution, the amount of the contribution and the signature of an official of the recognized political party or agent of the candidate.

The fifth change to be effective January 1, 1979, will reduce substantially the income tax payable for an estimated 65,000 individuals whose income is just over $1,715, the present exemption for taxable incomes. Where the taxable income of an individual does not exceed $2,730 for the 1979 taxation year, or an amount prescribed for a subsequent year, the tax payable by an individual shall not exceed the tax payable under the federal Act. In 1979 taxable incomes up to $1,770 will pay no tax. Using the 1978 tax rates for incomes between $1,770 and $2,730 the amendment will mean an individual with $1,775 taxable income will pay $10 instead of the $96.70 now payable; $2,045 taxable income will pay $56 instead of $117.80 now payable, and $2,445 taxable income will pay $124 instead of $149.10 now payable.

The cost of these proposed amendments is estimated to be $65.5 million. In addition, there are five minor amendments requested by the federal government. These are proposed as it is a condition of the agreement under which the federal government administers our Income Tax Act that the regular provisions of our Act be compatible with theirs. The first federally requested amendment deletes the exclusion of the Northwest Territories from the definition of "province." This is necessary as the Northwest Territories now imposes its own income tax and so is in the same position and will be accorded the same treatment under the Income Tax Act as other provinces which levy an income tax.

The second federally requested amendment amends the section on foreign tax credit allowed. This is to ensure the credit is not inappropriately increased due to its base being incorrectly affected by the 1978 federal sales tax reduction program.

The third amendment requested by the federal government ensures that the same foreign non-business income tax deduction allowed individuals also applies to corporations.

These first three federally requested changes have effect from January 1, 1978.

The fourth federally requested amendment aligns the provincial Income Tax Act with a change made to the federal Act. This adds payments from registered retirement income funds to the list of kinds of income from which the payer shall deduct and remit tax. This amendment is to be effective from June 30, 1978.

The last amendment requested by the federal government changes the present requirement that an official of Revenue Canada swearing an affidavit regarding a notice being sent for information has charge of the appropriate records. This change is needed as regional taxation centres are being set up, and the records will be there rather than at the district offices where the information requests are being sworn. This amendment is to have effect from January 1, 1979.

Mr. Speaker, I move second reading.

MR. STUPICH: Mr. Speaker, although it's second reading, the minister has gone through the bill section by section, and it would be very difficult to deal with it otherwise, due to the nature of the bill. It's a tax reduction — and really, in general that's all you can say without being specific — and therefore everybody should support tax reduction, which is returning to the people some of the additional taxes that this government levied against them in 1976.

I'll work backwards through it, since the minister worked forward, not dealing with the sections from section 6 to section 9 inclusive. There can be little argument about those.

The hon. member for Skeena (Mr. Howard) is in his seat, and I think I'll leave a discussion of the general principles of this legislation, as they refer to section 5, to that particular member.

Although, as I said, we support the general principle of reducing taxes, when we realize that this bill, as the minister has said, is going to cost the treasury something like $68.5 million and start to think for a moment just what that might have done for hospital care, what it might have

[ Page 107 ]

done for the elderly citizens in the province and what it might have done for the Pharmacare program, what it might even have done for reforestation.... With some of those things, one wonders at the specific changes that are being recommended.

For example, Mr. Speaker, section 4 talks about the dividend tax credit. There already is a dividend tax credit federally. This brings in another credit to those who earn the money, not by the sweat of their brow or any other productive way, but rather by simply sitting back and receiving return from investment. Yet they are getting special treatment. It would seem to me that it should be the other way around, if anything. If anybody is going to get special treatment it should be those who work for their money, rather than those who simply sit back and collect it. So I can't, myself, agree with section 4. That would give special treatment to those who already have special treatment.

Section 3 is returning to the low-income people, in particular, more of the money that this government has taken away from them, and there can be little argument about that, although there is some question about the calculations. I think I heard the minister say that this would provide that a person who has a taxable income of $10,000 would take 1.5 percent of $150 and would get the balance as a credit. As I work it out, Mr. Speaker, that works out to exactly nil. I'm not sure what he was doing with that particular calculation. He's right: $150 minus 1.5 percent of $10,000 is nil.

HON. MR. WOLFE: That's right.

MR. STUPICH: So that's the credit he gets. Now why he threw that in I don't know.

HON. MR. WOLFE: Just to explain it.

MR. STUPICH: In section 2 we have the reduction in the personal income tax again. It was this particular administration that in 1976 increased the personal income tax by 2 points. They are now proposing to reduce it. I could make the same arguments that I did in 1976 against the increase in the income tax at that particular point in time. I think there is one other argument that I could make in this respect, and that is that while it is going to help the low-income people, because they are getting their reduction of 2 points in their income tax, the people who don't really need that kind of help at this time when our hospitals are suffering due to lack of funds will get that same kind of assistance. On those grounds I find it very difficult to support this particular tax reduction.

I would far rather, Mr. Speaker, that the government had done something such as was done in the province of Saskatchewan by the NDP administration, and in the province of Manitoba by the NDP administration: reduced the tax for the low-income earners and increased income tax for the high-income earners. That would have leveled things out, and that is the principle that I would like to have seen if you were making changes in the personal rate of income tax.

However, Mr. Speaker, as I've said, it's tax reduction it's returning to people some of the money that this government has taken away from them. We will support it.

MR. HOWARD: Mr. Speaker, one of the principal points in the bill that I would like to mention and refer to in some detail is the 5 percent proposal for a credit on tax payable from income received as dividends from companies whose head office and central management is in the province. In order to understand what the implication of this is, I need to make some reference to the federal dividend tax credit system that is in existence now and has been in existence for quite a long period of time, except with respect to a percentage change of it. At the moment, under the federal Income Tax Act — I am sure many hon. members know this, having worked out their own income tax returns or having included such income in their tax returns — a person is required to elevate his or her dividend income by 50 percent and include that elevated amount, or 150 percent of the amount of the dividend income, as income under the federal tax law. In other words, if a person had, say, $100 of dividend income, they'd increase that by 50 percent and include $150 in the income for tax purposes. Then, on the other side of the ledger, when it comes time to take the dividend tax credit, they are allowed to deduct 25 percent of the $150 which they declares income from their tax payable. The example $100 grossing it up to $150 for income purposes, reducing the tax by 25 percent of the $150, means that the person deducts from their tax $37.50 on the credit side when filling out the income tax form.

lf we take an example in this particular year of somebody in the position of having $21,000 or $12,000 of taxable income means, then that person, if they had $100 in income from dividends, would pay a combined federal and provincial tax of something in the neighbourhood of $6.50 on $100 of actual income, which is a 6 percent tax load, compared with the normal taxation level of somebody in a $22,000 bracket of a combined position of about 40 percent. Instead of paying 40 percent tax on income received from dividends, the individual pays a 6 percent tax as a result of the federal dividend tax credit.

If we now take what I think to be the force of this bill, a person is now proposed to be able to take a 5 percent credit towards provincial tax payable, if I understand what the bill says. The minister nods, indicating that that's accurate. That being the case, taking the $150 position again as the grossed-up amount the person has to put in his income, it gives him an additional credit of $7.50 at the provincial level, or 5 percent of $150. He was already required to pay only 6.5 percent or $6.50 or thereabouts on the $100 income to start with. Now he's going to get a 5 percent provincial credit on top of that, which is $7.50, and the province is now going to pay him a little bit extra in addition to the $100 he received in dividends. He pays no tax on it, and under this proposal he gets a handout in addition to that. That's the force of what this particular proposal is all about.

Under the federal structure, for that amount of taxable income up to $18,000 a year, the dividend tax credit at the federal level is at the break-even point. In other words, basically speaking, no matter what amount of dividends the individual receives, he gets to keep 100 percent of it: no tax whatever up to the $18,000 level. Now they are going to add a 5 percent credit on top of that, meaning that the people in B.C. are going to dig into their pockets and provide these people who have dividend income with a credit, with a bonus. I think that is not a very sensible way to approach it.

[ Page 108 ]

The minister has indicated that this proposal of the 5 percent tax credit will help investment in B.C., as I understood him to say. It will attract people to invest money in British Columbia. The force of what he is saying is that people will put money into British Columbia, and that will help to develop companies. It will provide them with equity to expand their operation or get started in business, and so on. I think that is patently misleading.

The attraction here is to invest money in companies that are already paying dividends, but companies that are already paying dividends are companies that are well established and have an earning and income record, not new companies being started, not the so-called risk ventures, not the so-called mining companies that are out to float loans or to receive equity money to develop a mining property. They don't pay dividends. There is no attraction in this for people to invest money in those ventures. There is only an attraction to put money into things like B.C. Telephone that are already in existence. There's no attraction under this to put money into things like the B.C. Resources Investment Corporation, which is not paying a dividend and which doesn't plan to pay a dividend until somewhat close to the next provincial election, so that that can be dragged out as being an asset on the ledger side of things as far as the government is concerned.

I think it's patently misleading for the minister to leave the impression that by having this tax credit here it will help investment in B.C. It may help and it may attract people to go to the stock market and buy shares of companies that are already paying dividends, but that doesn't add anything at all to the companies' cash flow themselves.

It's merely a transaction in shares that already are out there on the market, and the money just changes hands between two other individuals and has nothing whatever to do with the particular company itself.

The minister also said the other reason was that this will help companies to locate in B.C., as I understood what he said. If that is so, why is it so? Why would a company want to locate in British Columbia? Because the shareholders of that company are to receive a 5 percent credit against their provincial tax payable. There is no attraction to the company on the surface of it, except what it will do — and I think this is probably what was in the back of the minister's mind. What it will do is permit the taxpayers in British Columbia to subsidize corporations, because corporations within which people will be attracted to invest money won't have to pay out so much in dividends. Why? Because the individual will get a tax credit. What he doesn't get in dividends he might reasonably expect to earn from a company; he'll get it as a gift from the taxpayers. He's going to get $7.50 on top of the $100 he's already going to get tax-free. The people of B.C. are going to dig into their pockets on this 5 percent credit on a $100 dividend and give him another $7.50. A company that will look at that and say: "Why should we have to pay out extra dividends to our shareholders when they're going to get the dividends by way of a tax credit?" If what the minister means by attracting companies to locate in B.C. is that taxpayers here are going to give them a subsidy to locate here so that they can keep more retained earnings in their pockets and not pay them out in dividends, then I think that's a pretty poor way to go about it. I doubt very much that I could find any element of support for the dividend tax credit that's available here. It means nothing further than a subsidy from one group of taxpayers in British Columbia, namely those in the lower income brackets who don't have the money to invest in shares, who don't have the funds to invest in corporations, and who don't have the money to buy shares in order to earn dividends. It will be a subsidy from a group who can least afford it to a group who can afford it.

For a long time I've tried to understand Social Credit monetary theory and perhaps this is the best explanation we've had of it so far. But on that basis alone, I couldn't myself give any endorsement to that particular provision. When it gets into committee perhaps we can deal with it in a bit more detail, and perhaps the minister will have an opportunity to show where the reasoning behind this is really correct.

There's another feature about it, and without transgressing the rules I would point out that even if it does become law it all rests on what a particular section of the federal Income Tax Act says. I think that's poor legislating. I think it's a rather loose way to draft legislation to say that this provincial Legislature is going to pass a law which depends on the vagaries of what the federal parliament may do with respect to the Income Tax Act. If you're going to do something, do it directly. Don't hinge it upon what may or may not be in a particular section of the federal Income Tax Act at any given time in the future.

I also want to object very briefly to the provisions of the bill that relate to a tax credit provision for contributions to candidates and political parties, not on the basis that we are opposed to that concept, because even though Social Credit had no direct members in the Parliament of Canada when the federal legislation was passed, we all know that it did pass unanimously, and it's in place at the federal level. But the reason for objecting to it in this fashion is that this is piecemeal and touches upon only one aspect of election expenses, touches upon only one part of the whole question of funding political parties and candidates. The minister would be well advised to leave out that section 5, have the Legislature appoint or refer to one of our committees the whole subject matter of election expenses and come back with a proposal that will encompass the broad range of electoral reform at the financial level, including such things as a full disclosure, as is required in other jurisdictions.

There should be a full disclosure of sources of income, a limitation upon the amount of money that can be expended in the conduct of an election in order to put some sense and some balance in place with respect to the quantity and the intensity of propagandizing that goes on. It would also save candidates — and I'm sure there are some of them on the opposite side as well who have difficulty from time to time wondering about whether or not they're going to have enough money to get through the election campaign. To include within an all-embracing piece of legislation that question of a limitation of expenditures, such as takes place in other jurisdictions, works wonders to preserve and to develop the concept of democracy at election time.

We should include within such a piece of legislation the aspect — because there is a limitation of expenditures — of having the public purse assist in the financing of electoral campaigns, in order to place an equitability in it, because we know — and I'm sure the general public does — that at election time the most insidious aspect of electoral campaigning is funds that are contributed which, are not disclosed. We know that one who has a secret source of income — and it's secret now because it's not required to be

[ Page 109 ]

disclosed under our electoral law — is more likely to be beholden to that source of funds than is otherwise the case. And I know that many hon. members in their purity will say: "Oh, no, that doesn't apply to me; I don't know where my money comes from" — or whatever their excuse is. But we know in our hearts that where your treasure lies, there lies your heart also. And the necessity of having a full range of disclosure of source of income, a limitation upon expenditures, assistance toward the cost of election campaigns from public funds, as is done in other jurisdictions, and a full range of developing law on that kind of basis is more appropriate to what we should be trying to do in this province than this simple piece of legislation here.

As much as we endorse the concept of what's contained within a tax credit for contributions to political parties, as much as that is a valuable factor, so long as the other parts of that package are left in abeyance and are not dealt with, then this Legislature should not pass this particular piece. It should be a whole package, and the only way to accomplish that, I submit, is to refer the subject matter — or a drafted piece of legislation, if you so desire — to a committee of the House representing all parties and all interests and people in this province so we can come back into the Legislature at a subsequent session with something decent and something honourable, not piecemeal.

MR. STRACHAN: Mr. Speaker, the member for Nanaimo (Mr. Stupich) once again endorsed the bill, endorsed our policy and once again — with the repetition we've been hearing for the past couple of sessions — presented the same old argument with respect to services. Interestingly one of the items was reforestation. With the greatest sincerity, respect and empathy, I would suggest once again a trip to the ophthalmologist. We have, in fact, presented in our budget quite a handsome item with respect to reforestation.

Again we hear the item about the school budgets being slashed. Mr. Speaker, I would humbly submit to the member for Nanaimo that he in fact read the Public Schools Act; it's obvious to me that he has not. It would take an amendment to the Public Schools Act to change any process of school board budgeting. Local school boards — the locally elected people of any school district — do in fact set their own budget. And I would submit to you, sir, and to the hon. member for Nanaimo that some knowledge of the Public Schools Act would enlighten him in that area.

The member for Nanaimo, Mr. Speaker, spoke to the fact that this bill does not in fact do that much for the poor. I would submit again, and particularly to someone who is supposedly credentialed in the field of accounting, that any bill that is based on a percentage of your income does. In fact, tax the wealthier people more highly than the poorer people, because that's the way percentages work.

This bill speaks very well for B.C.; it speaks very well for the development that we're trying to encourage in this wonderful province. I was amazed when I heard the member for Skeena (Mr. Howard), an area that is quite dependent upon equity capital investment in the mining industry — there has been much money invested in that area to the benefit of his constituents — speak against that. I wonder if the constituents in Skeena are aware of his feeling that we should not, in fact, encourage investment, particularly in the resource area of his constituency.

The member for Skeena, sir, would seem to have little faith in investment capital. People will invest in new companies, and that's been demonstrated time and time again to many of us living in the north. I found it hard to accept the fact that this would not encourage location in B.C. Obviously, Mr. Speaker. any bill such as that which does, in fact, encourage the growth of British Columbia companies is going to encourage other companies to invest in our great province.

With respect to the comments made on the election portion of this bill, the member spoke of ''insidious forms and secret sources of money" for elections. I'm sure he knows more about these insidious forms and secret sources than I do, because I'm not aware of any of them. If he is, then I would question how he found out about these. I personally did not have any advantage of secret sources or insidious forms of help from anybody. I also didn't have the advantage of the B.C. Federation of Labour or the BCTF campaigning on my behalf.

MR. LEVI: I just wanted to say a couple of things in respect to what the previous member has stated, Mr. Speaker, on the issue of secret campaign funds. He puts a lot of emphasis on the word "secret." We don't really have in this country, to any great extent, the kind of disclosure that is needed to understand where funds come from.

I would tell the member, Mr. Speaker, that last year I raised in this House a matter which dealt with the disbursement of money by a very large company in this province, MacMillan Bloedel, who were forced to disclose, under the provisions of the Securities Exchange Commission in the United States, because they were seeking to raise, funds there, that they in fact paid out $3.5 million — this is an admission which is now contained in their form 10K declaration — in unauthorized payments to what is referred to as "offshore countries." They were quick to say in their press release that this wasn't done in Canada.

I think it should be understood that there are a number of things which take place with very large companies in respect to making money available in unauthorized ways. The member should be aware that in the United States there are, every day, charges being laid, court cases being carried on, where bribes and unauthorized payments.... I think one has to say that to refer to them as "unauthorized payments" is somewhat of a pleasant euphemism for bribes.

It is the practice of large corporations to do this. It has been for some time. It has been the practice of large corporations, and even some small corporations, to make money available in elections. There is now provision in the federal legislation that this kind of information has to be revealed.

If we are going to have, in fact, a retroactive fulfillment of a campaign promise that you can get similar financial benefits if you make political contributions, as is now available to those political parties that qualify under the federal Act, as is envisioned in this Act, then we must be very frank with the people of this province and talk very seriously about the issues of disclosure. The history of this province in the time I have been in the House.... And many other members, going up to 20 years, can recall the debate with the Social Credit government in the Al Williamson case, and where did the money come from, and Einar Gunderson's secret funds.

[ Page 110 ]

I would remind our friends across the way who are new — and I'm very impressed with some of them — that I think that what's important is that they should go to the library and get out some of the books that are available. We have all too few books on the history of politics in British Columbia, but go get, by all means, Paddy Sherman's book. It's called Bennett. You can get Dr. Pat's book, Politics in Paradise. Parenthetically one could say that it's not quite the same paradise he had in mind. And you could get other books which do make mention of the fact that for years it has been the practice, unfortunately, in this province for secret arrangements to be made for campaign contributions. It's long overdue, Mr. Speaker, in this province that we have full disclosure in an open and frank way.

Just in closing, to the previous member who spoke, this party has been on record for many years that we are quite prepared to make our books in our party available for public scrutiny if the government is prepared to do the same thing. That has been on the record for a number of years, and we have yet to get some agreement about this.

There is the member for North Okanagan (Mrs. Jordan), who has sat in this House for 113 years, and she knows what I am talking about. She knows what I am talking about when we talk about unauthorized payments and secret payments. So it is only my intent, Mr. Speaker, to get up this afternoon to disabuse the member for Prince George South that all is not pleasant in British Columbia when it comes to the problem of where the campaign funds come from.

There are some very serious questions to be asked. If that minister wants to be forthright and frank with the public, he would do something about the question of full disclosure — not just a rather cynical attempt to fulfill a political promise.

MR. SPEAKER: The minister closes the debate.

HON. MR. WOLFE: Mr. Speaker, the last member who spoke can't resist trotting out the old red herrings and allegations and suspicions of what goes on. I would suggest that what he refers to as a political promise, and he well knows it, was of benefit to all political candidates who ran in this province, and probably more so to the opposition candidates who ran than with to the government. I think they should stand up and thank this government for introducing such an amendment as this. I think this is clearly indicated with the type of campaign we saw them run in the recent election. There was far more advertising than we ever saw the NDP run in previous history, Mr. Speaker. Furthermore, despite all of these allegations being made, which is typical of the members opposite, I want to remind them that we have a commission report which has been tabled in this House which deals with a great many of these matters. We are simply moving very expeditiously to provide an opportunity for some tax benefit in terms of the very expensive matter of running political campaigns. So we shall just ignore what the member said, because we are so used to it.

I know that we will deal more in detail with some of these sections in committee, but I respect the comments of the member for Skeena (Mr. Howard), who has done a lot of study of the matter of dividend tax credit. I welcome his observations there. I didn't follow some of them, but I am prepared to certainly look at them. I just want to remind him of two or three things. The 5 percent dividend tax credit, he intimates, would not be attractive to new enterprise. It would only be of benefit to a person who would invest in B.C. Telephone or long-standing existing public corporations. I would disagree with this. I think it would have equal incentive to enterprise locating in British Columbia. We are trying to get away from the branch-plant economy, the concentration of such industrial power in other parts of this country, and that has been the accent of this government in national meetings of several descriptions. So I think that to all types of enterprises this incentive should encourage dividend payment, should encourage an accent on dividend payments within the province. After all, our Premier has stated on several occasions that there is too much of a concentration, not on invested capital investment, but on loan capital. We are trying to attract more interest in individuals in this province investing, by way of equity, which is demonstrated by the resource corporation enterprise, and so on. So I think that I would disagree with your concern there. This would in fact encourage dividend payments within the province. I might say that the very same amendment that we have introduced here in terms of the dividend tax credit has been also introduced in the province of Quebec in their last budget.

You would ask why companies would locate in British Columbia. Why would they have any incentive to locate in British Columbia resulting from this? Well, the mere fact that there is an incentive for them to pay dividends in this province should increase the value of their shares. This is of interest to any enterprise to locate where their enterprise becomes more valuable.

You were concerned, I think, about the fact that we depend on federal legislation and the federal government cooperating in such a venture. I think it is obvious that it requires agreement under the tax collection agreement, which has been the avenue used on many previous occasions for provincial ventures. I say that we must use, as we do now, their collective tax form to incorporate the tax deduction on the face of it. It is quite a common procedure to introduce a measure of this kind, subject to that agreement being consummate. I can say that they have some concern over it in terms of the provincial aspects of it, and we are still under negotiations on that matter.

Aside from one or two detailed amendments to this bill, I think there is basic support for the reduction in this rate as evidenced in this bill. As I have said in the previous legislation covering the sales tax regulation, this has been made possible by the fact that we have been able to provide responsible management to public funds in this province. Therefore I'm very happy to move second reading.

Motion approved unanimously on a division.

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

Bill 4, Income Tax Amendment Act, 1979, read a second time and referred to a Committee of the Whole House for consideration at the next sitting of the House after today.

HON. MR. GARDOM: Second reading of Bill 5, Corporation Capital Tax Amendment Act, 1979.

[ Page 111 ]

CORPORATION CAPITAL TAX
AMENDMENT ACT, 1979

HON. MR. WOLFE: The government fully recognizes the benefits to the province from the existence of small business. Our policy, therefore, is to encourage such business so that they are able to provide these benefits. In line with this policy, the exemption last year below which companies pay no tax was raised from $100,000 to $500,000.

This year it is proposed to raise the $500,000 exemption to $1 million. The notch provision, which applied to companies whose capital was between $500,000 and $600,000, is to be raised to between $1 million and $1,250,000. This proposed scale will mean, for example, tax of $197.50 for companies with $1,010,000 taxable capital. The tax will rise about $240 for each additional $25,000 taxable capital to $2,356 for companies with $1,240,000 taxable capital.

The increased exemption and notch provision is estimated to cost $4 million for a full year. It will be effective April 1, 1979. This new exemption will mean an additional 300 companies will not be liable to the tax.

Mr. Speaker, I am happy to move second reading of Bill 5.

MR. STUPICH: Mr. Speaker, once again it's a tax reduction and we're going to support it — but with this word of advice, maybe. We're asking the minister, now that the election is over and there is no need to come up with hasty legislation in an attempt to win votes, if he would have his department analyze and look into the definition of taxable capital.

It's unfortunate that included in capital right now is a lot of financing that really isn't part of capital. I look on capital as being the shareholder equity part of the balance sheet and, perhaps, even some long-term financing. But there is some really short-term financing that is now included in the definition of capital and is taxed. I would think that, rather than having exemptions across the board, we should start looking at the definition of taxable capital and make some changes there that would also benefit, in particular, small industries or small corporations, and not have any particular effect on the large businesses.

It's legislation that has been amended with almost monotonous regularity, and yet each time that we increase the exemption we're fortunate that more money comes in. So it's a good kind of legislation — you can keep on reducing it and still generate more money as time goes on. But I would like the minister to undertake to look into the possibility of changing the definition of taxable capital.

HON. MR. WOLFE: The member for Nanaimo raised a point about the definition of taxable capital. I can only say this to that question, as this is a matter which receives a lot of comment and attention by people who are involved and have to pay this tax: it is a sizeable consideration in terms of the basis of computing the assessment for capital. Our present estimated revenue from this tax in the coming year is some $42 million. Were we to exempt capital based on inventories on which there was short-term borrowing, it would probably affect that revenue by about 50 percent.

I quite recognize the point you have made; we are looking at it. In this bill we have made a substantial ill decrease in the impact of this tax on 300 small companies, which is, we feel, the important area to draw attention to. This makes 16,000 companies in the last year and a half.

I might also point out — and the member is aware of it, Mr. Speaker — that the former government, meaning the NDP government, introduced the bill which incorporated this method of assessing capital, including inventories taxable, and in effect taxed small business as well.

What we have proposed today, Mr. Speaker, with the introduction of this further amendment is largely a tax on larger business. Once again I move second reading of Bill 5.

Motion approved unanimously on a division.

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

Bill 5, Corporation Capital Tax Amendment Act, 1979, read a second time and referred to a Committee of the Whole House for consideration at the next sitting of the House after today.

HON. MR. GARDOM: Second reading of Bill 6, Mr. Speaker.

PARI MUTUAL BETTING TAX
AMENDMENT ACT, 1979

HON. MR. WOLFE: Hon. members are aware that the tax reductions and revenue measures proposed in my budget for the 1979-80 year were those which would be the most helpful to the British Columbia economy. Last year the parimutual betting tax for provincial revenue purposes was reduced one-half of 1 percent, which will be used to provide a breeders' incentive fund to improve the quality of horses being raced. This will improve the quality of racing itself, but it is not accomplished in only a one-year period. The industry is having a difficult time and does employ a large number of people in the province.

Therefore in accordance with a policy stated in the budget speech, and to encourage this industry, a further reduction in the rate of tax is proposed. This would reduce the tax for provincial revenue purposes from the present rate of 6.5 percent to 5.5 percent. This change will mean that persons betting at the tracks who pick the winning horses will receive larger winnings. This is because the total amount of the bets to be distributed to the winners will be reduced by only 5.5 percent tax, not 6.5 percent as in the past. The rate change will result in an annual loss of revenue to the government of an estimated $1.3 million. The proposed amendment is to be effective from midnight April 2, 1979.

Mr. Speaker, I move second reading.

MRS. WALLACE: I'm somewhat surprised to hear the minister's remarks as he introduces this particular bill. I can't really believe that he lacks the knowledge, as is apparently the case, about what has been happening with parimutual betting. For example, he has said, and the budget says, that this is the second decrease. He has led us to believe that this is the second time that the total tax has been reduced. That is just not true. This bill will be the first time since 1971 or 1972 that the total take out has been

[ Page 112 ]

reduced. It will not be legally effective until this bill is passed, even though we are again involved in retroactive legislation.

[Mr. Rogers in the chair.]

I think the minister should be very relieved to learn that we in the opposition are going to support this. I hate to think what would happen should the bill be defeated after that reduction having been made since April 2.

The statement that this is going to result in a reduction in income to the government again indicates the minister's lack of knowledge. Certainly in every other jurisdiction where the total take out has been reduced and the purses have been increased, and certainly in 1972 when that happened here in British Columbia, the increases were in fact phenomenal.

In 1972 we reduced the tax rate here in British Columbia. In that year alone, the average handle increased by 38.7 percent, the attendance increased by 24.3 percent; after three years the daily average handle had increased 116 percent and the attendance 38 percent. Certainly to get up and indicate that this particular bill is going to reduce income shows me that the minister is not familiar with the particular piece of legislation he's dealing with.

I would also like to point out to you that what the minister has said today is incorporated in the budget speech and is quite evidently an incorrect statement. To say, in the first place, that this is the second reduction.... It is not the second reduction; this is the first.

HON. MR. WOLFE: It is so.

MRS. WALLACE: No, Mr. Minister. What you did last time was to return to the horse breeder a portion of what the province was taking out already. It did not reduce the tax. This is the first reduction in the tax. To say in the budget that it reduced the tax is incorrect.

The other statement in the budget indicates that this makes British Columbia's parimutual rate the second lowest in Canada. That too is not true. In the Maritimes the rate is 3.5 percent to 4.25 percent; in Manitoba it's 5 percent; in Saskatchewan there is none; and in Alberta it's 2.5 percent. Certainly it would appear that the statement that we're the second lowest province is also somewhat misleading, to say the least.

I'm concerned that the government has come part way in bringing into effect a program that has been requested for years and years by the horse breeders, the Jockey Club, the race track association, and many of the people interested in thoroughbred racing. The government has failed to see that the whole package that that industry was requesting was the package that was required to make this thing viable — both from the point of view of the racing industry and from the point of view of returns to the province — because halfway measures are not going to accomplish that.

While this is some step in the right direction and for that reason we are prepared to support it — it certainly isn't a sufficient move that will provide the complete kind of benefits that should be going to the racing industry and that would provide for an ample return to the province as a result of that change. And that, I think, is historically proven in every jurisdiction where they have taken steps to reduce the take and where they have allowed Sunday racing, which was something else that the people involved in the racing industry were asking for.

HON. MR. WOLFE: Are you advocating that?

MRS. WALLACE: I would have no objection to Sunday racing. It certainly would have to be done in consent and in conjunction with the city of Vancouver and the PNE association, but it's something that should be looked at. Every other sport is allowed to take place on Sunday: we go to ball games, we go to hockey games, we go to football games. Racing is a form of sport, so it seems to me that there is a bit of a penalty placed against those people who enjoy racing. Certainly it's taking a lot of money out of B.C., because the people who are following those races are going south of the border to do their betting, to place their bets and to watch the horses. They're going south of the border on Sundays, and it's something that we should be looking at, Mr. Minister.

I would just like to read briefly from one of the many letters.... Well, this one is addressed to you, Mr. Minister, but there are many, many letters that have come to all MLAs regarding pari-mutual betting. This letter reads in part — the person writing is from Surrey, incidentally — as follows:

"I was shocked and disappointed to hear over the news today that while you may do something for the industry in your next budget, you would not consider reducing the government's take out from 6.5 to 3.5. There is no way this industry can survive unless you implement a complete program. The breeders are in desperate need of additional moneys. After all, this money is the money that we in the industry generate."

And that should be clear to you in the cabinet, that money is generated by the racing industry.

"The thoroughbred racing industry employs up to 3,000, many with limited skills to say the least, and without these jobs a good number would be collecting unemployment benefits or be on the welfare rolls." So this is a large employer of people, Mr. Speaker, and it is threatened.

The costs involved have been skyrocketing. It costs something like $6,000 a year to keep a horse at the track for a year. It costs something like $4,500 to bring a thoroughbred racer to the three-year-old level, and yet those same race horses are selling at something like $3,000. So the industry is in trouble, and I don't think we need kid ourselves into believing that they are simply making idle threats when they talk about the possibility of not racing at Exhibition Park any more and closing down that track. They are very concerned.

This is a partial step, and it may help. It may keep the industry alive, but it certainly isn't the total answer, because it's the total picture, the total request, the further reduction by another 1 percent of that parimutual tax, and allowing longer hours, more racing.... Those are the things that the racing people, the people in the industry, have been requesting. They have done thorough studies of it and now this government is doing another study.

A study is not really what's required. The study has been done. At least we assume the government is doing a study. That's what they've said they're going to do, but

[ Page 113 ]

where is that study? Who is doing it? What kind of participation is being allowed to the people in the industry? I have heard of no one in the industry who's been asked to participate in that study; I'm concerned that this particular bill and that particular study were simply a sop to the racing industry before the election.

The very retroactive nature of the bill, and that's something that I'm entirely opposed to, the retroactive nature.... Sure, when you bring a bill in or a tax reduction at budget time, I know the drill as well as the minister, but you don't have an election in the meantime and have things going ahead, being collected without any legislative authority. And that's what this bill has done. As I mentioned earlier, it's just a good thing that we can be sure that this bill is going to pass the Legislature or we'd be in a sorry state as far that industry and that particular amount of tax that hasn't been collected is concerned.

Another thing, I asked the Attorney-General about the breeders' incentive. He's replied at great length today. He told me more about the breeders' incentive than I'd asked for. I just wanted to know if it had been paid. Instead we had half the question period taken up with the details of that. But it must have been paid at the eleventh hour. I think those cheques must have been rushed out of this building sometime before midnight last night. My contacts with the racing industry indicate that very few of those payments had been made, and certainly none of the stallion payments.

MRS. JORDAN: Did they give you a hot tip?

MRS. WALLACE: Yes, they gave me a hot tip, Madam Member.

Now we're told they're all out; and I suggest that's a kind of an eleventh hour step. That thing has been sitting there for a year, and still the payments haven't been met. It's obvious this government is not aware of the needs of the horse-breeding industry, of the racing industry here in British Columbia.

It could well be that there will be no return to the government for this. Maybe the minister's right when he says it's going to cost money, because unless you make purses competitive with purses south of the border, and unless you get those horses up to a standard where our racing is competitive with south of the border, where you have the quality of horses and the type of racing that makes it interesting for racing fans to attend; unless you do that, what the minister has indicated will happen. It will be a loss to the provincial treasury. That should never be with this kind of legislation. This should be the kind of legislation that brings in more revenue to the provincial treasury. That's what's happened in every other jurisdiction where it's been done, and where it's been done on the basis that has been studied and requested by the industry.

While we support the bill, because it is at least a step, it certainly is too little, and it's too late.

MR. RITCHIE: Irrespective of what the member for Cowichan-Malahat (Mrs. Wallace) has said, there was a reduction in this tax last year by 0.5 percent. That reduction totaled, I believe, $510,537.44. That was broken down as follows: to the brood mare breeders whose horses raced at Exhibition Park — $365,415.53; at Sandown — $12,885.10; and to the stallion breeders whose horses raced at Exhibition Park — $92,168.06; at Sandown — $2,507.10, for a total of $472,875.79. Then, of course, the interest total of $37,661.65 was paid out in grants to the Quarter Horse Society of British Columbia....

DEPUTY SPEAKER: Hon. member, order, please. I'm looking at Bill 6, which is the bill we're on right now. And going between the sections in it, it seems to me there's a striking out of 6.5 percent and substituting 5.5 percent. There are two sections to the bill and the substance of the bill is the reduction of the Parimutual Betting Tax Amendment Act, 1979. So debate in second reading should be on broad terms but within the relevance and the scope of the context of this bill that we have before us now.

MR. RITCHIE: I must apologize. I thought I was doing exactly that, because the member for Cowichan-Malahat didn't seem to know there had been a tax reduction last year. I thought I would point out again that there was, and how that money was spent. But I think possibly I've got that message across, and I'd like to very quickly add that use of the funds was on the recommendation of the Racing Commission.

To get onto broader meanings of the whole thing, this tax reduction is designed to further and encourage and improve the horse-breeding industry in B.C. I hope you're happy about that. We're going to improve the performance of our horse racing, and increase the economy of our province by attracting more visitors. I'm not so sure you're so happy about that.

We are fortunate to have ideal conditions in British Columbia for the development of the greatest race horse industry in Canada. Of course, we all know that the spin-off benefits are substantial. I am very happy indeed that the opposition will support this bill.

HON. MR. WOLFE: We have heard comment from across the House from the member for Cowichan-Malahat that we did not reduce the tax last year. I think we're really arguing semantics here. The rate of tax previous to last year was 7 per cent, and was reduced at that time to 6.5 percent.

At the same time a new 0.5 percent was added on for a breeders' incentive fund. I guess you could say we are all right in this argument. The same degree of take out was maintained, but an extra 0.5 percent was allocated to a breeders' incentive fund, and the provincial tax on parimutuals was reduced from 7 percent to 6.5 percent. In this bill we have a further reduction of 1 percent from 6.5 percent to 5.5 percent. I would refer the member to the comments on the budget speech on page 45. She made reference to the fact that it was erroneous and misleading to be calling this the second-lowest rate in Canada. There is much argument and discussion whether it is the second lowest, or what it is, but members should really refer to the tax tables on page 48 in the budget speech. In there we have the gross tax for parimutuals in all provinces across Canada. You will see very clearly that the gross rate for the province of British Columbia is the second lowest in Canada. There are other exemptions and deductions, which vary with every province, so it is a very complicated comparison to try and make. The net tax of 5.5 percent, I think, would rate as among one of the lowest in Canada.

Once again, we have reference to the fact that the tax was effective earlier than when the bill was discussed. The member, in showing her concern over that, would be

[ Page 114 ]

preventing the industry from enjoying the reduced tax during the current meets which are underway this summer. It was doubly necessary, in other words, to have those measures effective immediately, on April 2, in order for the upcoming season to enjoy the difference in the tax rates.

I might remind members of a thing which is often forgotten in the province of British Columbia. We have no amusement tax on the tracks. In many other provinces you do have amusement tax at the gate. We have no such thing in British Columbia at the tracks. Also, the other member referred to the breeders' incentive fund and how it was used during the year. I want to mention two other things: the argument over whether a reduction in the tax creates additional handle, and whether provincial incomes suffer by virtue of a reduction in tax. I am sure horse owners believe that handle increases with the decrease in tax, and therefore government revenues don't suffer in the process. Members should observe that even with the reduction in the pari-mutual tax, we've estimated increased revenue. The reduction of $1.3 million in our revenues referred to in my comments earlier is the effect, we estimate, of this tax reduction on that total estimate.

Mr. Speaker, I move second reading of the bill.

Motion approved.

Bill 6, Pari Mutual Betting Tax Amendment Act, 1979, read a second time and referred to a Committee of the Whole House for consideration at the next sitting of the House after today.

HON. MR. GARDOM: Mr. Speaker, second reading of Bill 7.

REVENUE SURPLUS OF 1977-1978
APPROPRIATION ACT, 1979

HON. MR. WOLFE: This bill is proposed to dedicate the 1977-1978 revenue surplus funds, which are available due to buoyant revenues generated by the policies of this government and the careful spending of those revenues. The funds to be spent are in addition to the amounts in the estimates, and are to be used to pay the first installment of the 1975-1976 fiscal year debt, the increase of $100 in the provincial homeowner grant, and projects and facilities which will create jobs and be of future benefit to British Columbians.

Specifically, the $140,488,978 revenue surplus from the 1977-1978 fiscal year is proposed to be spent as follows: first, $26.1 million is to pay the first installment of 10 to be made on the $261,447,790 debt which arose from the 1975 fiscal year deficit; second, $55 million is to raise by $100 the provincial homeowner grant paid — the basic annual grant will be raised from $280 to $380 — and for senior citizens or persons receiving the handicapped or war veteran's allowance from $480 to $580; third, $25,388,978 is for an accelerated highway construction program to be administered by the Minister of Transportation, Communications and Highways (Hon. Mr. Fraser) ; fourth, $14 million is for reconstruction of the Fort Nelson extension, to be paid to the British Columbia Railway Company; fifth, $10 million is for an intensified forest management program to be administered by the Minister of Forests (Hon. Mr. Waterland) ; sixth, $5 million is for an accelerated job- experience program for young people, to be administered by the Minister of Labour (Hon. Mr. Williams); lastly, $5 million is for an accelerated recreational facilities program to be administered by the Provincial Secretary and Minister of Government Services (Hon. Mr. Curtis).

The latter five programs mentioned, Mr. Speaker, will create an estimated 8,000 direct jobs in 1979. In addition, the programs will assist transportation, resource and community projects which will contribute long-term benefits to the people of this province.

Mr. Speaker, I move second reading of Bill 7.

MR. LEA: First of all I should say that we are going to support this legislation, because if there's any foolish place to have your money these days it's in the bank. To have your money in the bank during these inflationary times at bank-rate interest is the worst investment that you can make.

I think this piece of legislation more than any other piece of legislation represents probably the biggest broken promise that the Social Credit Party made in 1975, when they said that they would endeavour to have a balanced budget in this province. Over $140 million surplus for the fiscal year 1977-1978. Now is that near a balanced budget? And how many jobs does this $140 million represent, had it been left in the economy in 1977-1978? That's the question we have to ask.

The other day during the budget debate, the Minister of Finance got up and said: "You people over there are voting against our budget because we have no job-creation program." And then he went on to read a list of moneys that were going to be spent directly in the economy to create jobs. Is that what Social Credit stands for? Do they stand for creating new government jobs through direct spending of tax dollars?

The other day the member for North Peace River (Mr. Brummet) deplored this very act that the government is now asking us to do. He said that we don't want Big Brother government spending our money for us. He said that we, the citizens, want to make those decisions for ourselves — where we are going to spend the money. And I agree. This $140 million should have been left in the economy, to circulate in the economy, to create jobs in the economy, to create revenue for the government, so that we would not then today have to be discussing this kind of bill, and making these kinds of expenditures. Leaving that money in the economy in the fiscal year 1977-1978 would have generated enough jobs and given enough new revenue to the province that we wouldn't be facing this kind of legislation and having to spend this money in this way at this time.

The Minister of Economic Development (Hon. Mr. Phillips), I know, doesn't understand that because we're talking about macro-economics, and he thinks that's another thing — he's fooled quickly.

You know, Mr. Speaker, government has to be businesslike in its administration of the public purse, but to try and run government on business principles doesn't work. We never had a budget that was as far out at the end of the year as this one, never. As a matter of fact, Mr. Speaker, in any other line of endeavour, if that Minister of Finance had made the statements about a budget like he did about the 1975 budget, he would have been sued in the civil court for making the kind of libelous statements that he

[ Page 115 ]

made outside of this chamber. He would have been sued had it not been politics.

Mr. Speaker, what does this $140 million represent? It represents over taxation obviously. It represents everybody's paycheque having a little less money for spending; that's what it represents. The reason that they're a little nervous is they may be getting an inkling from the last election, the 1,979 election, that it was for these very reasons that they almost went down to defeat. The people want to make their choice of how they're going to spend their paycheque themselves. They don't want a Big Brother government taking their money into the treasury in Victoria and deciding how it's going to be spent. They want to spend that money on their own for the things that they would like to purchase and have the economy kept moving that way. And then out of that economy that's growing and becoming healthy, the government can tax and supply the kind of services that they should have been supplying in 1977-78 and in 1978-79. That's what they should have been doing.

We said: "What have we got in the budget that would create jobs?" He said: "Oh, what do we have in the budget that would create jobs? We're going to spend these direct dollars to create these direct jobs." But where's the fiscal program to create an economy that will produce jobs on its own? It's lacking; it isn't in this budget. And this bill better than any other represents — what is it? — the Social Credit fuzzy-headed economics that go into creating surpluses and hoarding people's money in the bank in Victoria, to be spent how you people in the Social Credit want to spend the money. Why don't you leave it in the pockets of the consumers? Why don't you leave it in the pockets of the people who are working for money for other people in the small business community?

How much did this $140 million hurt the economy of this province in 1977-78? The minister used an economic formula, when talking about the kind of jobs that were going to be created, of one, two, three, four and five steps in this piece of legislation. I'd like to suggest to the minister that if he used that same economic theory of job creation, that $140 million left in the economy in 1977-78 would have created somewhere, or maintained somewhere, around 10,000 jobs for that year.

What would 10,000 new jobs, or jobs that we lost that we could have maintained, have done to our economy? Would it have given it impetus? Would our economy have moved ahead?

Mr. Speaker, they're a little nervous on this one when we have a Minister of Finance who calls the year ending the "physical" year. We have reason to worry that he doesn't know anything else either. The "physical" year ending.... It's the physical something, all right.

Mr. Speaker, 10,000 new jobs or jobs that would have been maintained were lost in the year 1977-78 because of these moneys that were taken out of our pay-cheques and put in the bank in Victoria. That's what happened. Those jobs were lost in our economy, and that kind of impetus was lost in our economy. They ended up on the government benches, on the treasury benches, with $140 million of our money in the bank. Now they say they're going to push it out for direct job creation. Isn't that nice? Isn't it nice that government is going to take that responsibility? Isn't it nice that the Social Credit government is going to take that responsibility of not allowing the economy to work as it should, but to overtax and then create direct jobs for political purposes.

That's all that this bill is about. But we'll vote for it because it's definitely better to take the money out of the bank and put it back in the economy where it belongs, where it should have been left in the first place. It should have been left there in 1977-78. A balanced budget — $140 million over is a balanced budget that you have put in the bank for 10 percent?

HON. MR. WOLFE: Are you smiling, or is that a straight face?

MR. LEA: This is a straight face. I know the minister is wearing his own face, because if he were two-faced he'd have worn the other one.

Mr. Speaker, what we need in this province is a Minister of Finance who knows a little bit about macroeconomics. We need a government that knows a little bit about macro-economics. Maybe we have some in the back bench, maybe we do have some new blood back there that understands that a $140 million surplus is not a balanced budget, and that when you take money out of the economy and put it into the treasury in Victoria, you lose jobs. You lose business for small business people, and it's not a good thing for the economy. That's what people were angry about during this last election. That's why you didn't get the big vote, that's why you didn't get all the seats that you had before. They were angry about a government that handles their money stupidly and puts it in the bank in Victoria and takes it out of the local community where it could have been spent by people on their choices, not on your choices. That's what could have been done. Would we be facing the need for this money these days if we'd left that money out there to help build a healthy economy? I doubt it because 10,000 jobs in 1977-78 would have been worth a lot more than creating 8,000 this year. Maybe our economy would be a lot healthier than it is today had they not built up a surplus of $140 million, but rather left it out there for people to make up their own minds how they wanted to spend their money.

HON. MR. WOLFE: Terrific, terrific, fantastic.

MR. LEA: You're darned right; you're darned right, What answer do you have, Mr. Minister of Finance? What answer do you have?

HON. MR. WOLFE: God, am I impressed! I'm really impressed.

MR. LEA: Because we've got your own formula...

HON. MR. WOLFE: You just made a deficit speech.

MR. LEA:...we've got your own formula of saying these dollars will create so many jobs. Apply that same formula to the $140 million and how many jobs would have been created in 1977-78? But you'd rather have high unemployment in those years and keep a few bucks back so that the Premier can pass them out at election time. That's what you wanted, a few bucks to pass out at the expense of what? At the expense of the retail trade in every small community in this province, and at the expense of people

[ Page 116 ]

not having enough money to get along in an inflationary period. Ten thousand jobs down the tube in 1977-78. And you're proud of it? Mr. Speaker, they're proud of it. I don't think they're so proud of it. I think they made a big mistake, and they know it.

Interjection.

MR. LEA: It wasn't Jack Kelly who wrote mine. Who wrote yours?

Interjection.

MR. LEA: He must be busy these days with all your new members.

But, Mr. Speaker, this bill, more than anything else, says what's wrong with the fuzzy-minded economic thinking of a government that calls a $140 million surplus a balanced budget. That's what they call it. Now are they proud of it? Well, they seem to think they are. I wonder how proud we could have been of British Columbians had we had 10,000 less people unemployed in 1977-78.

MRS. JORDAN: Well, Mr. Speaker, it's always a pleasure to follow that other end of the Fuller brush that speaks as an economic expert from the NDP in the private business sector. After listening to him I know why he has to put his wife out to work. I must comment on the performance that we have enjoyed this afternoon from the Tweedledees and the Tweedledees of the economic back bench of the opposition party. In saying "Tweedledums" I don't want to infer anything. When I listen to this member talk about broken promises and economics, I really wonder if he's in the same province as we are. Certainly he was in the same province and the same cabinet as his former fiscal spokesman. I would like to remind that gentleman, our hon. member, that while he suggests $140 million in the bank is not right, I would suggest to you, on the basis of the performance, of the NDP, that it's better $140 million in the bank with Social Credit than $100 million-odd or 17 percent overruns down the tube in the NDP administration. I would remind you, sir, that the NDP overran its budget by 17 percent, and the surplus he is talking about is about 3 percent of a $4 billion budget, which is quite an acceptable figure in all responsible and respected accounting circles. It is in fact the mark, a mark in itself, of sound fiscal planning and sound fiscal management.

Let's look at the record of which this hon. member was so proud or so forgetful. In 1973-74 their original estimate was overrun by 21.9 percent; in 1974-75 — this was just before Tweedledee became the Minister of Finance and the then Premier was the Minister of Finance — they overran by 21.5 percent, and so on. They had a total overrun in their three years of 14 percent. Those members have the incredible audacity to stand up and criticize sound fiscal management and a surplus that is within acceptable accounting procedures of 3 percent of a $4 billion budget — and with a straight face. I wasn't sure I could see it. It's extraordinary. When the member suggested that you can't run government like business, I must respond by saying that he should know, because those were the "business" practices of the NDP government with citizens' money down the tube.

They had 17 percent overruns, $100 million clerical errors, no accounting for money down the drain, and of no benefit to the people in British Columbia.

When this hon. member talks about broken promises I would remind him that two of the biggest kept secrets in British Columbia were how the NDP government went into office with a major surplus of taxpayers' money and spent it, and how they were able to end up three years later with a major deficit which we are addressing ourselves to by way of correction in this bill.

That's the secret that's been hidden from the public, and that is the secret that both these hon. members were part of before the 1975 election.

What about the 1975 election? It was swept under the rug; it went to the people without a budget and without telling them about a major deficit they had created on top of spending the taxpayers' hard-earned "rainy day" surplus.

When one sees the evidence on the record, and listens to the debate in this House, one can't help but wonder exactly how the NDP can even be credible critics of these programs and these bills.

They talk about efforts of the government to try to make better use of hard-earned taxpayers' dollars, by asking for accountability and fiscal responsibility, not only from ourselves and our own ministers and our own public servants, but from the elected boards and other governments of this province. To stand up one minute and demand tax cuts and then stand up the next minute and criticize genuine efforts on everyone's part to make the best use of dollars is hard to imagine and hard to believe.

The taxpayers in this province are demanding, and they have a right to demand, that we, that school boards, that municipal councils, that every person who has control of their money where they don't have a say, do the very best that we can with those dollars. If we look at the world economy and we look at the impact that this will have on Canada and on British Columbia, then we must recognize that we have a responsibility to make our money go as far as we possibly can. That's the responsibility that this government is exercising. It is asking other levels of government to exercise the same responsibility. If that is wrong, then I would ask the member how we can bring accountability to the taxpayer, how we can continue to provide the services that we want to provide to the people of this province, and how we can continue to utilize those services in a way that we can afford.

The member who just sat down said: "Leave more money in the taxpayers' pockets." That's exactly what we're doing. We're not just talking about it, Mr. Member. That's certainly not what your government did when you were in office. We are practicing it, and it's working, and the taxpayers of this province know it. It's most distressing that the NDP are not accepting the responsibility that the people have put in their hands to support this type of action.

We believe that programs should be evaluated. The member talked about election commitments and meeting election commitments, and I thank him; all members on this side of the House thank him. That's exactly what we are doing: we went to the public on an open budget. They knew exactly what the financial situation was, how we had arrived there, and what we were going to do with their money with their support. That's what this bill is all about. This is the rainy-day money that sound management puts aside, just as we do in our homes, and then takes it and puts

[ Page 117 ]

it to good use. All these programs are over and above those programs for people that have been budgeted for in the full budget.

They talk about broken promises and what they intend to keep. Where was the dental care program? They had a surplus to work with where they had the money to do it.

MR. LEA: Where is it now?

MRS. JORDAN: You'll have your opportunity to vote in the next little while, Mr. Member.

Laugh as you will, Mr. Member, but where was your effort to remove school taxes from the taxpayers' property?

That was a promise made by the NDP, so unfortunately, and, as is so often the case, a promise unkept, even though you had the money to do it. We have in this bill, Mr. Member, taken the taxpayers' money, and we are returning it in a way that is designed to not only help people in British Columbia, but to create jobs.

The hon. member for Shuswap-Revelstoke (Mr. King) said:

I see nothing which directs itself to any exciting program or any aggressive program of job creation in this budget. I believe the people of British Columbia deserve better.

This was just on Tuesday, Mr. Speaker.

Now for the new boys to get up and suggest that some spending, some handing out of two-bit penny-ante surplus funds here and there, more to accommodate the political aspirations of this government in the election than to do anything real and dynamic in terms of an infusion of capital to generate the economic pot, is a bit nonsensical. Mr. Speaker, that member not only has trouble understanding economics and the budget and this bill, but he also seems to have trouble with his metaphors when he talks about economic pots.

Mr. Speaker, this bill that we're debating now, and which this side so fully supports and commends our Minister of Finance for, is a bill basically designed to use these surpluses to assist with job creation through programs which are of assistance to people. It will create 8,000 jobs this year and, including the 1978-79 surplus, will mean an addition of another 3,500 jobs. And that is not job creation?

What happened under the NDP? They had the biggest jump in unemployment, which occurred in 1974-75. Figures show that it went from 65,000 unemployed to 94,000 in just one year. Under the NDP policies 29,000 people were thrown out of work in just one year. It was the biggest jump in the history of the province of British Columbia in one year. That is NDP fiscal management and an example of the election promises that they give and how they keep them.

Mr. Speaker, in this budget, and in this bill, we are increasing jobs to the point where British Columbia's unemployment picture is 8.3 percent. That is one of the better ones in Canada, and still too high, and that is why we are still addressing ourselves to this concern.

What about new businesses? Forty thousand new businesses have been created in British Columbia since that government left office in 1976-78, creating jobs....

DEPUTY SPEAKER: Order, please, hon. member. We are through the budget speech now and onto second reading of Bill 7, which is the Revenue Surplus of 1977-1978 Appropriation Act, and we seem to be straying from the principle of the bill.

MRS. JORDAN: Thank you very much, Mr. Speaker; I'll accept your ruling very gladly. What I was trying to do was to point out that in this bill there's not only the job-creation impetus that there is in the budget, but there is extra incentive for the creation of jobs in this province for young people. We have to address ourselves to the fact that these young people need these jobs and this work experience.

In the bill, Mr. Speaker, we also see that there is some $55 million going to assist people to remain in their own homes in British Columbia. We made the commitment that we wanted to see school taxes removed from all properties in British Columbia. And we hope, as we can afford it, to remove all taxes from senior citizens' homes. As you know — and I won't transgress on the budget — we did remove all regional college taxes from homes in British Columbia. Here there is a $100 across-the-board grant to every homeowner in British Columbia. We don't take divisive action. We don't segregate people into classes and artificial pigeon-holes as the NDP like to do. We recognize that those who own their own homes have worked hard for them and should benefit from it. So the average taxpayer is going to get $380, and senior citizens' grants on their homes will go to $580 per year. I looked it up in our area, and on an average-priced home most people will not pay anything more than about 53 cents in school taxes, and on the average-priced senior citizen's home, they not only will not pay any school taxes, but that grant will assist them in paying their portion of municipal taxes. This is what we mean when we say that we are not going to see people taxed out of their homes in British Columbia.

We will outline our policies with the backup not only in policy, but also in finances. Mr. Speaker, it runs through this bill; you see that it is the result of sound management, fiscal responsibility and a dedication by the civil servants of this province to make better use of the moneys allotted to them, to cut out the waste and mismanagement and the unnecessary fat that grew under the NDP, and to assure the people the best use of their tax dollars. This is also the result of the dedication of the ministers of this province and our Minister of Finance.

It's brought about this surplus which will mean approximately 8,000 new jobs this year. It will mean an increase in the homeowner grant and educational tax relief for everyone. The S25 million allotment in the bill means highways for people and jobs for people. There's $14 million for the Fort Nelson extension, a vital transportation link in this province, to that great northern part of this province where much of our riches come from and where the people need attention. That means jobs for them.

There's $10 million for forestry improvement and management — forests for people, and jobs for people. There's $5 million extra for job experience for young people. And there is $5 million extra for recreational facilities over and above the budget provided for this program. That means a better quality of life for our citizens and more jobs.

I am very proud, as are all the members on this side of the House, to get a good laugh from the speech of the hon. member for Prince Rupert (Mr. Lea), to be very thankful that he is no longer in a position where his economic non-theories can be put into non-effect. I am happy to support this type of responsible management, this sound use

[ Page 118 ]

of taxpayers' money, and these job-creating programs that will, mean benefits for the people in British Columbia.

[Mr. Speaker in the chair.] .

MR. LEGGATT: I listened with some care to what the member for North Okanagan (Mrs. Jordan) had to say. She said during the course of her remarks that she got a laugh from what was said by the member for Prince Rupert (Mr. Lea). Surely she should have listened a little more carefully, because his principal point dealt with the question of the surplus you have accumulated over the period of your government. It dealt with the question of what would have happened had you decided to use those funds for job creation over the period each year. During that administration, your administration, you've created something like 28,000 jobs a year. The previous administration created 43,000 jobs a year, and one of the reasons they created those 43,000 jobs a year was because of their approach to the economy, which was a pretty sensible approach.

When you're talking about "rainy day" money, which is what the member for North Okanagan talked about, this is our "rainy day" money. We've saved it up, and now we're going to spend it. I tell that hon. member that it was a rainy day in '76, it was a rainy day in '77, it was a rainy day in '78 for the people of this province who could have used that money at that time. Instead, this government saved it up in some kind of artificial pigeon-hole somewhere. They saved it up, and what happened to the people of the province of British Columbia? What happened to unemployment during that period?

The hon. member has, I think, failed to answer the one significant point that is the key to this debate, and it's simply this: you've overtaxed the people of the province of British Columbia for three years and now you're giving them back their own money and taking credit as some kind of good administration. That's just nonsense.

When one looks at this bill.... And I heard the Minister of Finance continually refer to this un-matured debt of $261,447,790. They do love to keep repeating that figure as an alleged deficit of the New Democratic Party in its last year of office.

During the course of the campaign, Mr. Speaker, many of the Social Credit candidates picked up a book — they kept appearing in pictures all over the news — called The 1,200 Days — A Shattered Dream, and it's a very, very critical analysis of the New Democratic Party government during that period of time. I want to read you what those two authors — who were no friends of this party or this government — had to say about the argument of the Minister of Finance and the argument of the member for North Okanagan (Mrs. Jordan) about this alleged gigantic deficit that this government got itself elected on. Talking about the Premier at that time, Dave Barrett — and I'm quoting from page 88 — they say this:

"He was far from the financial wastrel the Socred successors claim. Indeed, he could actually have shown an overall surplus for his 1,200 days of glory if he had chosen to make full use of the accounting techniques used at times by either the elder Bennett — that is, converting debts to Crown corporations to contingent liabilities — or the younger Bennett, transferring special purpose funds to general revenue or transferring general expenditures to newly created Crown corporations. He could accordingly have deleted the following expenditures...."

And there is a great long list. In other words, he could have played the same games that the Minister of Finance continues to play.

Mr. Speaker, what we need in this place is some honesty in terms of budgeting. That's what we need in this place, instead of the continual game-playing that has been going on. Now why don't we have Erma Morrison tell us how to design a budget so that we don't need to keep fooling the people of British Columbia with this b.s. of surplus and deficit?

MR. SPEAKER: Order, please.

MR. LEGGATT: In fact, the previous administration could have shown a magnificent surplus if they wanted to play the same game as the present administration is playing.

MR. SPEAKER: Order, please. Perhaps the hon. member could use more temperate language.

MR. LEGGATT: My apologies, Mr. Speaker. I didn't realize I was being intemperate, but one does get carried away at times when one listens to a myth that is repeated over and over and over, and then the myth is carried into the legislation, as we see. It seems to me one of the reasons that this government suffered such a substantial loss in terms of its numbers was a direct result of the people of British Columbia waking up to the fact that they'd been conned in 1975. The next time we have a general election they'll realize entirely that that con won't work any more.

Let's look at this bill itself.

MR. MACDONALD: Nobody else has yet.

MR. LEGGATT: No one else has referred to it; I thought that would be unique.

MR. BRUMMET: Are you going to support the bill?

MR. LEGGATT: Yes, I'm going to support the bill, because obviously it's time to give that money back to the people of British Columbia. There's not a reason in the world why we'd want to deny them their own money, but in effect if you'll examine the record over the last three years, this government has denied them their own money. This government took their money away from them in 1975, 1976, 1977, 1978 and 1979. No, we're not going to object to them finally getting. some of their money back.

Some of the purposes, of course, are worthwhile. There could be much more done in some areas, but the basic principle behind the argument of the hon. member for Prince Rupert (Mr. Lea) is still sound. It was an argument that was accepted all over this province, and it will be accepted more and more as time goes by that this phony financing of budgeting for your surplus, and then crowing as if you were some kind of great financial wizards, is going to come to an end, because the people of British Columbia are maturing to this process at last. They're going to have the kind of fiscal responsibility with decent accounting principles which will finally, I think, bring maturity to the general operation of this place.

[ Page 119 ]

MR. RITCHIE: Mr. Speaker, I am very proud indeed to support this bill, and I would like to remind the member for Coquitlam-Moody (Mr. Leggatt) that the reason for this is because of good sound management and control over spending.

I was very proud indeed as I went around my constituency campaigning, and felt very comforted that I could assure those senior citizens that because of good management and because of control over spending they had no need to worry about their future, because conditions would continue to improve for them. I could also assure those people that our medical services would also continue to improve because of this good, sound management.

In addition to that, as I mention control over spending, the reason for this — and that member for Coquitlam-Moody wouldn't know anything about this — is because this government wasn't spending money on boo-boos like Swan Valley, or Peace River Dehy, or Panco Poultry; that's why. We were managing the funds in such a way that we'd be able to put them to good use. That's good management.

I'm very proud that we have a Minister of Finance that has done such an excellent job.

MR. HOWARD: I'm not sure whether we are embarking upon a resumption of the budget debate or an examination of the bill. But I think what has probably happened is that people are attracted by some of the contents of the bill to look at items that were more generally covered in the budget itself.

Part of the bill deals with a surplus that took place.

Interjections.

MR. HOWARD: Mr. Speaker, I'm getting messages from everyone who feels they have heard enough of me today. I'm wondering whether I could move to adjourn the debate.

Motion approved.

Hon. Mr. Gardom moved adjournment of the House.

Motion approved.

The House adjourned at 5:56 p.m.