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CONTENTS

Matter of privilege

Alleged partiality in administration of justice.

Mr. Macdonald –– 1365

Routine proceedings

Oral questions.

Administration of Justice. Mr. Leggatt –– 1365

Budget address.

Hon. Mr. Curtis –– 1369

Finance Statutes Amendment Act, 1980 (Bill 2). Hon. Mr. Curtis.

Introduction and first reading –– 1379

Social Service Tax Amendment Act, 1980 (Bill 3). Hon. Mr. Curtis.

Introduction and first reading –– 1380

Corporation Capital Tax Amendment Act, 1980 (Bill 4). Hon. Mr. Curtis.

Introduction and first reading –– 1380

Special Purpose Appropriation Act, 1980 (Bill 5). Hon. Mr. Curtis.

Introduction and first reading –– 1380

Special Funds Act, 1980 (Bill 7). Hon. Mr. Curtis.

Introduction and first reading –– 1380

Crown Corporations Borrowing Authority Increase Act (Bill 9). Hon. Mr. Curtis. Introduction and first reading –– 1380

Erratum –– 1380

TUESDAY, MARCH 11, 1980

The House met at 2 p.m.

Prayers.

HON. MR. MAIR: Mr. Speaker, in the members' gallery today are two representatives of the British Columbia Health Association. I would like the House to join me in welcoming Mr. John Braddock and Mr. Gene Tomasky.

MR. BARNES: In the gallery today are employees from the regional office of the Ministry of Human Resources in my constituency, along with their supervisor, Mr. Carlos Charles, and they are: Margot Feuchuk, Pat Osborne, Sheila Taylor, Val Stefan and Lynda Mailies.

HON. MR. CURTIS: As you would expect today, sir, members of my family are present, and I would like to refer to Sheila, my wife, and one of my sons, Gary, who are in the gallery along with my mother, Helen Curtis, of Victoria. My mother indicated that she had other appointments today, and she hoped the speech wasn't too long. [Laughter.]

MR. STRACHAN: Mr. Speaker, I would like the House to welcome a friend of mine, Mr. Tom Nixon, from the Citizen newspaper in Prince George.

MR. SKELLY: Mr. Speaker, I hope the House will welcome a constituent of mine, Mr. Gordon Swann.

MR. KEMPF: Mr. Speaker, in the gallery with us today is a Mr. Bill McAloney. Bill is an alderman on the council of the town of Smithers, in the constituency of Skeena, and I would ask the House to make him welcome.

MR. MACDONALD: Mr. Speaker, I rise on a point of privilege.

MR. SPEAKER: Please state the matter, sir.

MR. MACDONALD: I wish to correct the false and misleading statement concerning myself in my capacity, I may say, as a member of this House, and my one-time deputy minister, David Vickers, which appeared in last evening's Vancouver Sun, not to mention the electronic media.

Judge Bewley of the B.C. Provincial Court, presently under a contract with the B.C. Alcohol and Drug Commission, after referring in his jejune way to an impaired driving case before him as "a petty case of its kind, barely worth the time of a busy court," went on to attribute to Mr. Vickers and myself a far more serious case of interference with justice.

His imputation that someone was protected from an evenhanded administration of justice is false and libelous. The reference is to the case of Regina v. Sanucci in 1974. In that case Crown counsel, who, I believe — but I haven't checked the records — was Al Melvin, who is now a respected county court judge, entered a stay because of insufficient evidence, with no reference to Victoria at that point. The use of such a stay in criminal justice, however Judge Bewley disagrees, was found to be proper by a supreme court justice, who I believe was Mr. Justice Anderson. When the case was brought to my attention I directed that a preliminary inquiry proceed anyway, in order that the people and the accused should each have their day in open court. On this inquiry the presiding judge found there was insufficient evidence to commit the accused to trial. No one received special attention or favours.

MR. SPEAKER: Hon. members, I will take the matter under advisement and bring to the House a report as to whether or not a matter of privilege does exist. I will reserve decision on it.

MR. MACDONALD: Mr. Speaker, in accordance with page 152, I think, of the nineteenth edition of May, I was correcting a false impression that had been conveyed about me in my conduct as a member and minister. I don't intend to move a motion or have the matter go further. I want it on the record.

MR. SPEAKER: The matter will drop?

Interjections.

MR. SPEAKER: The hon. member is still on the matter of privilege. Order, please.

MR. MACDONALD: I want it on the record, and I'm not impressed by that kind of response from the government benches.

MR. SPEAKER: Since the member gained the floor on a matter of privilege, I just assumed that perhaps a motion would be attending.

Oral Questions

ADMINISTRATION OF JUSTICE

MR. LEGGATT: Mr. Speaker, my question is directed to the Minister of Intergovernmental Relations. In answer to the second member for Vancouver East (Mr. Macdonald) yesterday, in the questions which surrounded the Rigg case, the minister — and I'm quoting from Hansard — said: "I was distressed with an error in judgment. And it was a mistake in judgment." He went on to say: ''...and it was an unfortunate error in judgment."

Would the minister now advise the House what the error in judgment was that the minister found in respect of his deputy's conduct in regard to the Rigg case?

HON. MR. GARDOM: In answer to the hon. member, I concluded that it was in not carrying on with the appeal.

MR. SPEAKER: I'm going to interrupt question period — and time will not be taken up for this. There's some concern about whether or not the cameras present in the chamber are actually operating. The answer is no; they will begin operating when the budget speech begins.

MR. LEGGATT: I want to assure you, Mr. Speaker, that the cameras have no influence on whatever is happening here today.

My question is directed to the Attorney-General; it also follows the answers that he gave yesterday to the second member for Vancouver East (Mr. Macdonald). In the cases which involved Mr. Ritchie, Wendy King and Andrew Rigg,

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has the minister in his investigation determined whether the initial intervention in those cases was from his Deputy Attorney-General, or was the intervention from the regional Crown counsel or from a representative at the local level?

HON. MR. WILLIAMS: The review of these matters, of which I advised the House on Monday, is still continuing. I'll have to take the question as notice until that review is complete.

MR. LEGGATT: I have a supplementary question.

MR. SPEAKER: A supplementary is not permitted on a question taken on notice. However, a different question is in order.

MR. LEGGATT: My question again concerns the very serious matters raised in the letter from Mr. R. Bruce Donald, which I know the minister presently has under investigation. However, I'd ask him if he could advise the House in regard to one very serious matter raised, and I'm quoting from the letter: "I believe that Mr. Vogel then did in fact discuss with Mr. Filmer the staying of a subpoena issued for John Farris, and did discuss ways of preventing John Farris from being called as a witness." Did the minister check with Mr. Filmer to determine whether the allegation in the letter made by Mr. Donald was an accurate one? In other words, can he now tell the House whether there was any intervention, in regard to which witnesses would be called in the Wendy King case, from the Attorney-General or any representative in the Attorney-General's ministry?

HON. MR. WILLIAMS: As that allegation is one of the principal ones under review, it will be dealt with when I bring a full statement to this House.

MR. LEGGATT: In the course of the investigation, would the minister determine — and perhaps he could advise the House today — what it was about those three cases which led to an intervention — if there was intervention in the Ritchie case, the King case and the Rigg case? Is there some common thread, that he is able to determine, as to why there would be intervention at the Attorney-General's level in regard to those cases?

HON. MR. WILLIAMS: Mr. Speaker, the question is based upon speculation, and the member, even coming from other places, must know that such questions are not in order.

MR. LAUK: On a supplementary question, Mr. Speaker, I restate the question. The Attorney-General has indicated that it's not in order. I understood, Mr. Speaker-correct me if I'm wrong — that that was your purview. And if Mr. Speaker is considering the Attorney-General's submission to that extent, I would add my own, to say that the question was straightforward.

Is the Attorney-General, after all of these days of controversy, stating in this House that he doesn't know the answer or that it's a question of future policy? The question was quite simple. "What is the common thread between the Wendy King case, the Ritchie case and the Rigg case?

AN HON. MEMBER: The CBC.

MR. SPEAKER: Order, please. A question which is hypothetical and a question which inquires into the future activity of a minister are not in order, but a question which asks of a minister's completed action is certainly in order. Also, a question asking an opinion is not in order. And I would suggest that this is the kind of question that the minister may choose to answer or not to answer, according to his discretion.

HON. MR. WILLIAMS: Mr. Speaker, I told the House on Monday that I was conducting a review for the purposes of bringing a full statement to this House, and that is my commitment. What the member has assumed is that there is a common thread, and the review will disclose whether or not that assumption is sustainable. At the moment I do not believe it is.

MR. LORIMER: Will the Attorney-General's review include an investigation into the Mickey Moran case?

MR. SPEAKER: This question is one which inquires into the future activity of the minister. Does the hon. Attorney General wish to answer?

HON. MR. WILLIAMS: I might say before answering the question, Mr. Speaker, that members have used the word "investigation" from time to time. They should be aware that in the Ministry of the Attorney-General investigations are undertaken by the police. However, if the member for Burnaby-Willingdon (Mr. Lorimer), saw the CBC television show last Thursday night, he will know that the Moran case was one of the cases referred to. My review is with respect to all of the allegations in that telecast.

MR. LORIMER: Is the Attorney-General at this time satisfied with the implication that a conviction could not be obtained on the charges of impaired driving and failure to take a breathalyser test in that particular case?

MR. SPEAKER: Is this a question seeking for a legal opinion?

MR. LORIMER: I'm asking for the Attorney-General's opinion — whether he's satisfied that the implications....

Can the Attorney-General assure the House that the Crown's decision to drop the charges of impaired driving and failure to take a breathalyser test were in accordance with the usual practices, and based solely on the evidence?

HON. MR. WILLIAMS: Mr. Speaker, my review of the matter has touched upon this particular aspect, and I can assure the member that the concerns he expressed are unfounded. The decision was made by qualified counsel and based upon the evidence that was available from witnesses and with no other consideration whatsoever.

MR. LORIMER: I wonder if the Attorney-General could tell me whether or not Moran, at the time of his arrest, was taken by police car from Christina Lake to Grand Forks?

HON. MR. WILLIAMS: The answer is no, Mr. Speaker. I have no knowledge of that matter.

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MR. LORIMER: I didn't hear whether the answer was no or he doesn't know.

MR. SPEAKER: The answer was no, hon. member. The Attorney-General clarifies his answer.

HON. MR. WILLIAMS: I don't wish the member to be confused. My answer is no. I can't tell him what took place because I have no knowledge of those details.

MR. LAUK: With respect to the review that the Attorney-General has announced he is conducting into these allegations, could he indicate to the House who is conducting the review? Is it the Attorney-General personally, or his staff, or what persons are involved?

HON. MR. WILLIAMS: I am conducting the review personally, with the assistance of my staff.

MR. LAUK: Does that include the assistance of the associate deputy minister in charge of criminal justice?

HON. MR. WILLIAMS: Yes.

MR. LAUK: How can the Attorney-General justify the involvement in the review of a person who was involved directly in the Donald letter to the Attorney-General?

HON. MR. WILLIAMS: Mr. Speaker, I can justify the use of Assistant Deputy Attorney-General McDiarmid. He has for 25 years been the senior officer in the Ministry of the Attorney-General with respect to criminal matters. He is a respected, experienced and skilled senior civil servant who has served this government and the previous government with honour and distinction. I would be happy to have his services in such matters at any time.

MR. LAUK: It is precisely because of the respect that we all hold for Mr. McDiarmid that he should not be placed in that position. I repeat: how can the Attorney-General justify the use of a man whose name has been mentioned in the letter, placing upon him the absolutely impossible burden of reviewing his own situation and his own case?

MR. SPEAKER: The same question was just asked.

HON. MR. WILLIAMS: Mr. Speaker, I have given the reasons for my justification, but I must say I wish the member would attend more to what is taking place in this House, because Mr. McDiarmid's conduct is not under review in any of these matters.

MR. LAUK: I would point out to the Attorney-General, as a preamble, that in the Donald letter Mr. McDiarmid was mentioned as a person meeting with Mr. Vogel and others with respect to the King case. I will ask a different question, but I point that out to the Attorney-General and ask whether he would consider that, and relieve Mr. McDiarmid of the review responsibilities upon him.

I'll ask this question: seeing that the review is not being conducted outside the Attorney-General's department — which is impugned, and which allegations must be either proved or disproved — can the Attorney-General differentiate between Mr. Vogel's involvement in these cases and the case involving Judge Govan, where the Attorney-General immediately called on a member of the judiciary?

MR. SPEAKER: I must observe that the preamble sounded more like a statement than like an adjunct to the question.

HON. MR. WILLIAMS: For that reason, Mr. Speaker, in my response I must touch upon those matters. Mr. McDiarmid was involved, as indicated in the letter from Bruce Donald, because he had been instructed by the Attorney General of the day to carry out precisely that responsibility.

MR. LAUK: To repeat the question: can the Attorney General differentiate between the Govan case, in which he immediately appointed a member of the judiciary, and this case, in which he is conducting an in-house review?

HON. MR. WILLIAMS: Yes.

MR. LAUK: Will the Attorney-General do so now?

HON. MR. WILLIAMS: I already have, Mr. Speaker.

MR. SPEAKER: Hon. members, in anticipation of the order paper for today, and anticipating that perhaps some distinguished guests might accompany us to the floor, I would declare a short recess to allow for the proper preparations; also a short recess in order for the television cameras to gain lighting levels, etc. I will ring the bells when I need your attendance.

The House took recess at 2:32 p.m.

The House resumed at 2:41 p. m.

Orders of the Day

HON. MR. CURTIS: Mr. Speaker, I move that the public accounts for the fiscal year 1978-79 be referred to the Select Standing Committee on Public Accounts and Economic Affairs.

MR. HALL: Mr. Speaker, I stand in my place to move an amendment to that motion, seconded by the member for Skeena (Mr. Howard), that the motion be amended by deleting the word "year" and substituting therefore the following: "years 1977-78 and .…" The amended motion would then read: "That the public accounts for the fiscal years 1977-78 and 1978-79 be referred to the Select Standing Committee on Public Accounts and Economic Affairs."

MR. SPEAKER: We first have to determine whether the motion is in order.

I see no reason, hon. members, why the amendment shouldn't proceed.

On the amendment.

MR. HALL: Mr. Speaker, I'll be very brief. It is my opinion, and the opinion of the party I represent, that the opportunity afforded to the public accounts committee of the first session of this current parliament was insufficient for it to do its work in examining the expenditures of the government opposite, totalling some $4 billion. The timetable was

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as follows: the session last year commenced on June 6, 1979; the select standing committee did not report to the House until July; the organizational committee which set up the leadership, shall I say — or the chairman and secretary of the public accounts committee — did not take place until July 9; as soon as possible thereafter the chairman, the second member for Surrey, called a meeting. That only left three weeks for that committee to do its work.

It has attempted to do its work in the ensuing period. Mindful of the fact that it cannot sit while the House is adjourned, it nevertheless attempted to do its work in seeking information from the government. I don't wish to enter into debate at this time on this day, which, I appreciate, is an important day for the government; but it was not able to do its work, although it attempted to do it.

I would therefore request the government to give earnest consideration to this amendment, so that the unfinished work of examining your performance, your spending practices — the details of 1977-78 — can continue with the public accounts committee, which was set up by the select standing committee, when it reports, presumably speedily, this session.

HON. MR. CURTIS: Mr. Speaker, the government cannot accept the amendment and will oppose it. It would be perhaps sufficient to say that it is unprecedented, and there are those in this House who have had far more experience than I in matters of this kind; but I believe it is a well-established precedent, Sir, that the public accounts for a particular year are referred.... While the member who has moved the amendment — and I thank him for providing me with a copy of it — has explained the fact that the committee, to paraphrase what he said, did not have an opportunity to fully explore the accounts, I am not aware that when the House approached the day for an adjournment last summer, there was any suggestion by members opposite that more time was needed to study public accounts. I think that would have been a reasonable time. Perhaps in the fullness of time, sir, a committee would have an opportunity to consider the point which has been raised; but for today, on the basis of a sudden amendment, the government is not prepared to support it.

MR. LEVI: Mr. Speaker, in refusing the motion the minister has said that it is without precedent. Well, certainly the performance last year was also without precedent: we met for only forty days. If the minister is suggesting that somehow it was really possible to review in something like two weeks what took place in respect to expenditures of $4 billion, then do we have some kind of indication that this is the way the government wants to go in terms of looking at the people's money?

We've heard constantly from this government about "not a dime without debate, we're an open government, we want to be able to have people know exactly what's going on." We wrote to the comptroller-general with respect to getting information. We were not able to get it, because we were not sitting; we were in adjournment. To suggest that at the end the government was somehow going to prolong.... I find it ridiculous that the minister cannot, regardless of precedent.... We don't live by precedent completely. You can be flexible and you can change.

The suggestion is that we have an opportunity in this session to review not only the year that has to come under review but the previous year. That's the way and the sign of being an open government and being prepared to have these things under scrutiny. If the minister, who is a new minister, wants to create a good precedent, then I suggest to you, sir, that you allow the motion. Let's have a continuation of the suggestion that you have made: that we are going to have open, free, accessible government. At the moment we don't have an information act. If anybody suggests over there that somehow the auditor-general is going to do this kind of job, then we might well ask: "What do we need the public accounts committee for?" But we have one, we need it and we need the opportunity for this kind of scrutiny.

Mr. Speaker, the new Minister of Finance has an opportunity to create a new precedent. I would suggest that he rethink what he said when he made his remarks.

MR. MACDONALD: Mr. Speaker, I'm going to say only a very few words, but I think the refusal of the government to accept this amendment is a very, very serious matter in British Columbia.

Are there accounts sitting out there somewhere that should not be inspected and scrutinized by the elected representatives of the people? Are we working now as legislators, particularly in the opposition, so hard that we cannot give better scrutiny to the financial affairs of this province? The answer is that we can give better scrutiny, and we should not be blocked by a government majority in examining any government records of expenditure. We do not know if there are things buried in those accounts which are proper or improper. But we have a right to see them. Here we are, ready to present a budget to the people of British Columbia, but the minute examination of how that money is being spent is being denied to this Legislature of the province of British Columbia.

I conclude by asking the Premier, as the head of the government, if he will not change his mind on this simple amendment and allow full examination of the public accounts of the province of British Columbia by the elected members. Amendment negatived on the following division:

YEAS — 26

NAYS — 30

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

Motion approved.

Hon. Mr. Curtis tabled the report of the comptroller general pursuant to the provisions of the Audit Act, chapter 22, Revised Statutes of British Columbia, 1960.

ESTIMATES OF SUMS REQUIRED
FOR THE SERVICE OF THE PROVINCE

Hon. Mr. Curtis presented a message from His Honour the Lieutenant-Governor: a bill intituled Estimates of Sums Required for the Service of the Province for the fiscal year ending March 31, 1981, including Schedule A sums required by Her Majesty to make good certain sums expended for the public service for the period ended March 31, 1980, and to indemnify the several officers and persons for making such expenditure, recommending the same to the Legislative Assembly.

Hon. Mr. Curtis moved that the said message and the estimates accompanying the same be referred to Committee of Supply.

Motion approved.

HON. MR. CURTIS: Mr. Speaker, I move, seconded by the hon. Attorney-General (Hon. Mr. Williams) that Mr. Speaker do now leave the chair for the House to go into Committee of Supply.

BUDGET ADDRESS

HON. MR. CURTIS: Mr. Speaker, as Minister of Finance, it is my pleasure to present to this House and to the people of British Columbia the first budget of a new decade. For British Columbians it will be a decade of prosperity and promise. This budget represents a strong statement of confidence in our province, in our people and in our economy. It is the catalyst I believe is needed to solidify British Columbia's position as one of Canada's strongest and most dynamic regions.

We are part of Canada's booming west. We are situated to take advantage of growing markets on the Pacific Rim. Our resources are rich and varied, and our people are skilled and energetic. The ingredients are all there, but they will not come together without effort. The task for all of us will be to put it together for the eighties, to build a secure and satisfying future for our citizens.

The tabling of a budget gives a Minister of Finance a privileged opportunity. It is a chance to present in tangible form the government's plans for dealing with pressing social and economic issues. I have been particularly fortunate in taking over the provincial finances after four years of careful management by my colleague, the Hon. Provincial Secretary and Minister of Government Services (Hon. Mr. Wolfe). I can say, without doubt, the government finances were left in good shape, much better, I might add, than my colleague found them in December 1975.

Perhaps I can also take this opportunity to offer a tribute to a man who has served this province for many years. Mr. G.S. Bryson is retiring after 23 years of dedicated service as Deputy Minister of Finance for British Columbia. His diligence and counsel will be missed by many. I would like to thank him and wish him well.

I am fortunate in having an able replacement in the person of Mr. L. I. Bell, currently the Deputy Minister of the Ministry of Lands, Parks and Housing. Mr. Bell's boundless energy and experience will be of great value to me, to the Ministry of Finance and to the people of British Columbia. I welcome Mr. Bell to the ministry and I wish him continued success in meeting the challenges of government.

Finally, I wish to acknowledge all of British Columbia's public service. Over the last four years I have been constantly in touch with, and assisted by, the government employees of this province. They are hard-working, extremely capable, and they represent a great asset to the people of British Columbia.

In this first budget I would also like to outline the general approach I shall be bringing to the Finance portfolio and to the presentation of the budget.

First, and I think most important, will be a continuation of the firmly established Social Credit tradition of fiscal responsibility in government. Public services and facilities must be provided efficiently, with sensitivity to people's needs, and at minimum cost to taxpayers. But responsibility has to prevail. We should not be spending today the tax dollars of our citizens of tomorrow. British Columbia's tax levels are currently among the lowest in Canada, and yet we enjoy superior public services without recourse to government borrowing. I intend to preserve this tradition.

Secondly, government is here to serve the people. To do this we shall have to communicate effectively and be accountable. The budget should be an important vehicle for bringing people and government closer together. I intend to enhance this role of the budget in several ways: (1) by improved methods of presenting government revenues, expenditures and overall fiscal position; (2) by paying increased attention to tax measures, such as complex deductions and credits that do cost money but are somehow lost in a maze of fine print. We shall, where possible, adopt the practice of providing "expenditure equivalents" for measures of this type; (3) by presenting with the budget more information on the factors behind our decisions, and on the meaning and implications of the decisions themselves. Toward this end, increased use will be made of explanatory tables and appendices, and I intend to provide a detailed background paper with each budget I bring forward. Mr. Speaker, I table herewith the background paper "March 1980" for the 1980 budget.

Thirdly, budget policy should be set within a longer term, more forward-looking perspective. Good decisions must be timely, well considered and, as much as possible, should reflect a high level of public awareness regarding future developments, the choices to be made, and the consequences of alternative options. To facilitate this, the budget document will contain a statement of important economic and fiscal developments expected over a three- to five-year period into the future.

Finally, the budget should be the one source where people may look for an overall statement of the government's economic policy and strategy. Priority issues should be identified and plans presented for bringing the policies and programs of various ministries to bear upon them. In so

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doing, I believe more cohesion will be brought to government policies, and the people of British Columbia will have the opportunity for an improved perspective on government actions.

The Ministry of Finance is now assuming this new role and has been assisted by the reorganization of government ministries in late 1978. At that time the capable staff of the Ministry of Finance was augmented by a group of policy analysts transferred from the Ministry of Economic Development.

This budget will reflect the elements of this approach — continued fiscal responsibility, improved communications and accountability, a longer-term perspective, and emphasis on overall provincial economic policy.

While today's budget reflects my personal view of government, it is one which is very much related to past budget measures and initiatives.

A distinct pattern can be observed in looking back over this government's last four budgets. The document for the 1976-77 fiscal year was designed to put the provincial finances back on a sound footing after the first, and only, occasion on which the province had to borrow on its own since 1952. At that time a number of taxes had to be temporarily raised. With the financial position of the province generally restored, the budget for the 1977-78 fiscal year stressed expenditure restraint in an effort to reduce government excesses and improve efficiency. We had to restore that very critical balance between big government, with the burdens it imposes on citizens, and good government, that provides needed services and leadership in a fiscally responsible manner.

The two budgets that followed, culminating with last year's "sunshine budget," returned to the people of British Columbia the rewards of their own restraint and of the renewed financial strength of their government and of the provincial economy.

With the provincial finances back in order, with taxes at a low level, and with a fundamentally healthy economy, we are now able to take steps to build on our strengths in the 1980s. This budget demonstrates further this government's ability to provide improved services to people while keeping to a minimum the tax burden on all British Columbians.

Let me turn now to the economic setting that conditioned the choice of policies contained in this budget.

The 1980s will present British Columbians with great opportunities for developing our province and the potential of securing living standards of unsurpassed quality. It will also be a tough and a competitive decade posing many challenges. Opportunities can be realized, Mr. Speaker, but only if these challenges are met head on through good planning and hard work. Let me turn first to some of the opportunities.

In spite of uncertainties in the world community, a number of factors should combine to favour the British Columbia economy. Although relatively slow economic growth is expected for most western industrial nations through the 1980s, a number of countries around the Pacific Rim — Japan, Korea, China, Malaysia, Indonesia — will show continued strength. British Columbia is well situated to participate in this growth.

Trade liberalization associated with the multilateral trade agreements recently signed in Tokyo will augment the benefits from British Columbia's location on the Pacific Rim. New export markets will open up, certain imported goods will be cheaper, and a general trade-related increase in traffic over the provincial transportation network should favour British Columbians.

The 1980s are expected to bring buoyant commodity markets. Tight international energy supplies will result in firm markets and high prices, not only for oil and natural gas but for other energy forms as well. The international situation can also be expected to place continued demand pressure on a wide variety of metals — gold, silver, copper, lead, zinc, aluminum and molybdenum. British Columbia is rich in a variety of energy resources — natural gas, coal, hydroelectricity, wood wastes — and in many other resource commodities expected to be in scarce supply. As a result, exploration, resource extraction, processing and the use of high technology and related expertise will offer great opportunities in the coming decade.

Within a Canadian context, economic growth will strongly favour western and northern Canada. Again, British Columbia's proximity to Alberta, Saskatchewan and the northern territories will prove advantageous for producers in this province. Added stimulus will come from the province's position as the "gateway to the Pacific."

Strong economic growth on the Prairies, in northern Canada and the western region of the United States will also combine with British Columbia's natural magnificence and climate to create increased opportunities for our visitor industry.

The province has a labour force second to none and our natural advantages attract people of drive and imagination. Ultimately our ability to grow, develop and take advantage of economic opportunities depends upon the attitude, abilities and energies of our workforce.

British Columbia will benefit from these opportunities only if a number of challenges are met head on.

The driving force behind much of our historical prosperity has been the forest industry. The point has now been reached where major increases in the timber cut could jeopardize the future health of the industry, and that of the province, unless attention is focused on preserving the forest base and increasing the productivity of the forests. It is essential that we concentrate more on farming the forests, not depleting them. As the farmer must use more advanced farming techniques to increase his yields, so we in British Columbia must turn to more advanced techniques of forest management.

Economic growth in the 1980s will require advance planning and timely government action if British Columbians are to take maximum advantage of opportunities. An efficient transportation system — ports, roads, railways, ferries and air services — should all be in place. The education system must prepare people for new opportunities as well as accommodate the educational needs of British Columbians in the future. Necessary services and facilities will have to be provided without increasing the tax burden on our citizens. This will be of added importance in view of our location next to a province experiencing unprecedented growth of government revenue, enabling it to maintain with ease the lowest rates of tax in the country. To attract the best industries and the people with skills needed to help build this province, our tax levels cannot be allowed to become excessive.

British Columbia's economy reaches well beyond the borders of this province and, in consequence, many of the opportunities in the years ahead will require active support from the government of Canada in those areas over which it has policy-making jurisdiction. We must have good international and interprovincial transportation systems; we need

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trade policies that assist our efforts to sell in the growing markets of the Pacific Rim; and we need fiscal arrangements with the federal government that will enable us to tackle problems and seize opportunities.

An additional challenge, and a major one, will be to ensure that vital commodities such as energy are in secure supply for our citizens and industries. International instability, as recent events clearly demonstrate, can shake the economic foundation of nations and regions relying too heavily on foreign sources.

Finally, it will be a great challenge for British Columbians to achieve our economic potential while preserving the environment that is so central to the quality of life in this province. Urban development must proceed in an orderly way so as to maintain congestion, noise and pollution at a minimum. Achievement of our goal of energy security will require particularly difficult decisions to be made concerning hydro development, pipelines and other projects related to our energy future.

Mr. Speaker, these are some of the opportunities and challenges we shall face in the decade ahead. Let me turn now to the more immediate economic and fiscal situation.

I shall deal only briefly with the economic situation and outlook, since it is more fully detailed in the background paper that I have tabled today. Looking back for a moment, however, it is clear that fiscal caution and sound financial management by the provincial government have restored business confidence and have encouraged private-sector expansion in British Columbia. Here are a few indicators.

Since 1975 business capital expenditures have grown at an impressive average annual rate of 16.8 percent, compared to only 11.3 percent in Canada.

The value of exports from British Columbia has expanded since 1975 at an average rate of 22.8 percent per year. The comparable rate for the country as a whole has been 17.9 percent.

Beginning in 1977 and continuing through '78 and '79 the rate of inflation, as measured by the Vancouver consumer price index, has been well below the national average, in spite of the fact that in earlier years it was usually higher.

When this government took office in 1975 the seasonally adjusted rate of unemployment stood at 8.9 percent, the highest rate since the labour force survey started, the highest rate west of the Maritimes, and a significant 1.6 percentage points higher than the Canadian average. Since then, the annual unemployment rate in British Columbia has declined in each and every year.

Since this government took office, the number of jobs in the province has increased by more than 170,000.

In 1975 British Columbia accounted for over 17 percent of Canada's total time lost from strikes and work stoppages, but by 1979 this share had declined to approximately 10 percent.

Looking specifically at 1979, it is clear that British Columbia's economy maintained momentum in a difficult year. Real gross domestic product is estimated to have grown by 3.3 percent compared to 2.8 percent for Canada. The average provincial unemployment rate for the year was 7.7 percent, down from 8.3 percent in 1978. And in 1979, British Columbia's 7.7 percent inflation rate was well below the 9.1 percentage increase in consumer prices for Canada.

Total investment was also strong, increasing 12.9 percent over the level of a year earlier. Even more impressive is the fact that investment in the private sector was up 23.4 percent in 1979, a sure sign of underlying business confidence and economic strength.

Now, Mr. Speaker, looking to the future, I should like to draw a distinction between what we see for 1980 and prospects for the years beyond. Virtually all western industrial countries are expected to experience an economic slowdown in 1980. A major factor underlying economic weakness in Canada and the United States, as we all know, has been high interest rates and their dampening effect on construction activity. Since British Columbia is closely tied to the international community through its reliance on export markets, some repercussions on the provincial economy are unavoidable. Reduced prices and sales of British Columbia forest products must be of particular concern in this regard.

Overall for 1980 we are expecting real growth in gross domestic product of around 2.1 percent, compared to I percent forecast for Canada by the federal Department of Finance. British Columbia's inflation rate should again be lower than the Canadian rate, and investment should continue to be strong. A recent capital investment intentions survey by the federal Department of Industry, Trade and Commerce indicates that British Columbia could experience the highest private-investment growth rate of all Canadian provinces in 1980.

Finally, reflecting the national and international economic slowdown, the unemployment rate is expected to rise slightly in 1980, reaching approximately 8 percent compared to 7.7 percent in 1979.

Now, Mr. Speaker, while the perils of forecasting are recognized, good decision-making requires us to have a view of economic events in the longer term. The detailed discussion in the background paper concludes that beyond 1980 we should expect a strong resurgence of economic growth. Such forecasts must necessarily be modified as more information becomes available, but at this time we anticipate annual real growth of provincial gross domestic product of between 4.5 and 5 percent over the 1981-85 period.

To summarize, the government sees important opportunities for British Columbia in the 1980s. These opportunities can be realized with good planning and hard work. We shall be working against a background of modest growth in 1980, but a stronger performance is expected over the 1981-85 period.

Before I turn to the policy priorities proposed for the coming year, let me review the fiscal position of the government and show you what we have to work with.

The government is in a strong fiscal position, a reflection of the economic life that has been breathed into British Columbia in recent years. Budgetary revenue has grown from $3.5 billion in 1976-77 to an estimated $5.5 billion for 1979-80, an increase of over 57 percent, despite substantial tax reductions in the last two budgets. The revised forecast for budgetary revenue of $5.5 billion in 1979-80 is over $900 million more than projected in last year's budget.

Approximately two-thirds of the unanticipated revenue is not from taxation but from natural resources, and can be largely attributed to higher than expected income from lumber and natural gas. In last year's budget speech my colleague and predecessor noted that for 1979 "lumber shipments could decline if a slowdown develops in housing starts in the United States." While such a slowdown had been widely predicted, it did not actually begin until late in the year, and not before British Columbia's lumber shipments reached record volumes at record prices.

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The extra revenue from natural gas also arises from higher export volumes at increased prices. During the past year the National Energy Board authorized more than a doubling in the export price of natural gas following rapid increases in international oil prices.

Looking to 1980-81, revenue growth is not expected to match that of this fiscal year. Revenue is forecast to increase by 5.4 percent in 1980-81.

The anticipated slowdown in export markets for certain resource products, particularly in the forestry area, is the major factor underlying our expectation of more modest revenue growth. Lumber prices have already turned downward and are not expected to recover fully in the coming year. Consequently, next year's forest revenues could be down to approximately 1978-79 levels. Although revenue from oil, natural gas and minerals together is expected to increase by 31.3 percent, total natural resource revenue is forecast to decline 4.3 percent from the 1979-80 fiscal year.

Expected revenue growth from taxation is affected by tax reductions enacted last year and by revenue measures contained in this budget. Reflecting this government's commitment to keep taxes down, revenue growth from this source taxation — is expected to be 7.3 percent in 1980-81. Federal government contributions to provincial revenues are expected to grow at 9.1 percent in 1980-81. This is below the expected growth rate this year due mainly to the fact that the province received substantial special adjustment payments this fiscal year. Revenue from all other sources will grow at a rate of around 11.8 percent, roughly in line with expected growth in the economy.

In summary, the revenue picture for the next year reflects a number of tax reductions and anticipated softening in some export markets and the economy in general. Nevertheless, 1980-81 total revenue should reach $5.8 billion.

In addition to current revenues, funds are also available in the form of revenue surpluses accumulated from prior years. The combination of prudent financial management and strong resource revenue growth has generated a surplus of revenue over expenditure in each of the last four years.

For the fiscal year just ending, the surplus should reach $470 million after non-budgetary transactions such as the $200 million Housing Initiative Program are accounted for. This would bring the revenue surplus earned since 1976 to $900 million. Of this total, $294 million was appropriated for special initiatives in the 1978-1979 and 1979-1980 fiscal years. As a result an expected $606 million will be available in the revenue surplus account at the end of the 1979-80 fiscal year.

I would like to say a few words about the general taxation and expenditure position this government will be taking in the coming year. Four factors weighed very heavily in our thinking.

First, clearly, the provincial revenue position is very strong. I've already mentioned the progress made in recent years to improve the economy and restore a more appropriate balance between the public and private sector. Success in these areas has allowed major tax cuts and incentives in the last two budgets while retaining considerable revenue strength.

Secondly, long-term economic development requires more than low taxes. Realization of our potential will require a number of carefully planned government initiatives in support of economic development. Looking ahead to the opportunities and to those challenges of the 1980s a number of actions have been identified that must be taken now. Thirdly, British Columbia's healthy economy, in itself, results in increased demands for services to be provided by the province or by local governments. As the economy remains on a solid longer-term growth path, the need for increased services to our citizens will continue to grow. Fourthly, high interest rates and world economic difficulties are expected to result in reduced economic growth in 1980, while the threat of accelerating inflation remains. To accommodate these factors the government has concluded that the 1980-81 fiscal year should be one of selective expansion and stimulus. A foundation for the 1980s must be put in place, some economic stimulus is in order for the current year, and action is needed to cushion the impact of continued inflation and higher energy prices.

The spending estimates I am presenting to the House today propose total budgetary expenditure of $5.55 billion, 15.4 percent above the revised estimates for 1979-80. While 1980-81 expenditure growth will be higher than in recent years, this does not represent the beginning of a new trend. Our forecast of expenditure growth over the next five years is contained in the budget background paper and shows a growth trend similar to that forecast for the economy as a whole. I should note that some of the increase for 1980-81 reflects the inclusion in the budgetary estimates of items previously funded from revenue surplus, and a subsidy for transit services previously funded by British Columbia Hydro and Power Authority.

In the 1980-81 fiscal year, therefore, budgetary revenue is expected to exceed budgetary expenditure by $250 million. It is the government's intention to return this surplus revenue to the economy through special program initiatives, most of which will not result in recurring expenditures in future years. In planning for statutory appropriations of $250 million, I am budgeting for a balance between revenue and expenditure in 1980-81.

In addition to public services and economic stimulation provided in budgetary and statutory appropriation measures, approximately $353 million will be spent from surplus revenues, leaving an anticipated balance of $253 million. I consider it prudent at this time to plan for a contingency balance in the revenue surplus account. There are two reasons for this:

First, the intensity of the expected international slowdown is exceedingly difficult to predict, and the effect on provincial revenues may be more severe than has been anticipated.

Secondly, in the process of preparing this budget, l have asked my officials in the Ministry of Finance to prepare medium-term projections of revenues and expenditures. These projections, which are summarized in the background paper, indicate that revenue shortfalls in 1981-82 and 198283 are possible. Moreover, these projections make no allowance for added expenditure on future programs.

In the interest, Mr. Speaker, of good, prudent management it is clearly desirable to carry a surplus forward at this time. No one in this House, or in the province, should lose sight of the fact that the alternative to a surplus today could be a deficit tomorrow, and a deficit means imposing an interest-cost burden or increased taxes on the taxpayers of British Columbia. As circumstances change and our fiscal planning for the coming years proceeds, it may be possible to inject further funds into the economy.

This government has successfully used the revenue sur-

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plus account to stabilize the growth of provincial expenditures and the economy. I shall be giving thought during the year to formalizing and extending this practice, possibly through creation of a revenue stabilization fund. All natural resource revenues could be channelled into such a fund, and the government could draw upon it to finance ongoing public services and economic development initiatives.

That is the general fiscal stance for this budget. Now let me deal with more specific policy priorities, beginning with the economic policy and programs area.

British Columbia's natural resources have been a driving force behind our solid growth performance for decades and, with careful management, will play an important role for many years to come.

In view of concerns which I expressed earlier about the depletion of our forest resources, this government has made improved forest management a major priority in this budget. Consequently, $388 million is being allocated this year as the first stage in a five-year, $1.4 billion forest management program. Funding for the coming year — that's the first of five — will be provided from three sources.

First, $157 million will be allocated to the Ministry of Forests, an increase of $32 million over last year's budget estimate. The Ministry's estimates include funding for the five-year, $50 million Canada–British Columbia Subsidiary Agreement on Intensive Forest Management.

Secondly, $84.1 million will be allocated from stumpage revenue for reforestation and other projects related to forest management. The practice of allowing private companies to claim credits for certain expenditures against stumpage will be modified to give the government greater flexibility in the use of Crown revenue. The government will now be able to choose between undertaking projects directly, or contracting with private industry to have the job done. Either way, the Ministry of Forests will be better able to ensure that the interests of all British Columbians are guarded in the management of our forest estate.

Thirdly, $146.6 million from the 1979-80 revenue surplus will be placed in a new Forest and Range Resource Fund. Included in the fund expenditure in 1980-81 is $1.45 million for Forintek Canada, that, as you know, is a research laboratory dedicated to applied research in the forestry area. The research of Forintek has been, and will continue to be, of great value to this province and to the forest industry. The government of British Columbia stepped in to support this forest laboratory after the government of Canada reduced its funding in 1978.

This forward-looking program will be the most substantial investment ever made for the protection of our valuable resource base. Of the $1.4 billion to be spent over five years, some $785 million will come from the regular ministry budgets, $448 million will be returned from stumpage revenues into forest management; and the remainder will come from the Forest and Range Resource Fund to be created by legislation to be introduced during this session by my colleague, the Minister of Forests (Hon. Mr. Waterland). Expenditure from the Forest and Range Resource Fund will be directed toward silviculture, protection against fire and pests, improved harvesting, improved range management and other forest management responsibilities.

Resource enhancement in the fisheries area will also be continued this year. The Salmonid Enhancement Program, funded jointly with the federal government, and intended to double salmon stocks in British Columbia waters, will be allocated $2 million in 1980-81. In addition, $1.95 million is included in the estimates for a new Fisheries Economic Development Program to enhance commercial utilization of aquaculture, groundfish and marine plants.

Agriculture represents another important renewable resource sector. Because of our limited arable land, it is extremely important that it be utilized effectively.

The Ministry of Agriculture is to have its mandate enlarged to include responsibility for the food industry, as well as re-organizing its structure to improve the delivery of services to our farmers. A new field operations service, with increased emphasis on program development at the regional level, has been established to assist producers in improving the utilization of their agricultural resource. An economics and marketing service has also been established to emphasize efforts to improve markets for British Columbia farmers. The Agricultural Land Commission will be updating soil and agricultural capability maps to provide an accurate and detailed inventory of the various classes of arable land.

In addition to programs for enhancement of our renewable resource base, high priority will be placed upon measures to diversify British Columbia's industrial base. Through encouraging industrial activities such as resource upgrading, high-technology industries, tourism and other service industries, British Columbians will be able to enjoy more stable, secure and high-quality employment in the future.

The creation of the Ministry of Universities, Science and Communications marked an important step in this government's drive to make British Columbia a centre for scientific research and high-technology industry. As a further initiative I am allocating $6.5 million from revenue surplus for scientific research in 1980-81. Of this total, $3.5 million will be provided to the Science Council of British Columbia for grants in support of applied research in industry and universities. The British Columbia Research Council will be granted an additional $1 million for applied research leading to the economic advancement of the province. The balance of $2 million will be used to assist universities in acquiring modern scientific research equipment.

Our visitor industry continues to be an important and growing source of economic activity in British Columbia, and efforts to exploit its growth potential will continue in the coming year.

The Ministry of Tourism is developing a tourism strategy that will include the promotion of British Columbia's scenic and recreational assets both in Canada and abroad. The five-year $50 million British Columbia-Canada Travel Industry Development Subsidiary Agreement continues to provide funding for expansion of facilities and development of all-season tourist sites. The budget for 1980-81 provides $17.1 million for this purpose, with major projects to include facilities at the Whistler ski resort area.

To accommodate increasing demand and high utilization rates for British Columbia parks, the Ministry of Lands, Parks and Housing will be allocated $6.5 million from revenue surplus for the first year of a three-year accelerated park development program. This program will provide increased tourist and recreational opportunities through the improvement and expansion of the provincial parks system.

Mr. Speaker, you will know that British Columbia is also making major strides toward establishing itself as a focal point for trade fairs, conventions and recreational events. At this time three major projects are being planned: British

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Columbia Place, the Pacific Rim trade and convention centre and the Victoria conference and trade centre.

Financing arrangements are nearing completion for the Pacific Rim centre at Pier B-C in Vancouver. Agreement on federal and local government participation has now been reached, and the province has committed a further $8.5 million to help cover construction costs. This brings total provincial assistance to $18.5 million. A further $300,000 per year for five years has been promised to assist in covering operating deficits. Work is expected to begin in the fall of 1980, and some 800 construction jobs should be created.

Further provincial commitments have also been made to the Victoria conference and trade centre. Last year in this House $2.5 million was transferred to the Victoria trade and convention centre fund, and a further $2 million was committed in January. The province is also contributing land valued conservatively at $1.7 million. Federal participation is sought, and construction on this centre is to commence before the end of June 1980.

In last year's budget $25 million was allocated to the lower mainland stadium fund. Since that initial commitment the government has decided to proceed with a covered multipurpose amphitheatre on the False Creek site in downtown Vancouver. This 60,000-plus seat amphitheatre is part of British Columbia Place, a much broader project to encompass redevelopment of the north shore of False Creek and the improvement of lower mainland public transit. In this budget the government is proposing increased funding for this exciting project.

First, an additional $25 million will be allocated to the existing stadium fund. Secondly, $15 million will be provided to a new corporation to oversee development of British Columbia Place. Legislation will be introduced to establish this corporation. In addition the government will secure the land for this development by negotiating land exchanges with the present owners.

In 1986 British Columbia Place will stage a world exposition on transportation, Transpo '86, and in the same year will serve as the focal point for celebrations marking the centennial of the inception of Montreal-to-Vancouver rail service.

Approval in principle has been received from the Bureau of International Expositions in Paris for holding Transpo '86 in Vancouver. This budget provides $500,000 for studies, planning, negotiations and related matters for Transpo. Legislation will be introduced by my colleague to establish a non-profit corporation for this purpose.

In addition to providing impetus for the overall development of British Columbia Place, Transpo '86 will attract tens of thousands of visitors to Vancouver. Similar expositions elsewhere have proven to be financially self-supporting as well as providing lasting facilities and heightened awareness of tourist attractions in the area.

But a great deal of effort and imagination will be required from individuals, from businesses and from all levels of government in order to bring this project to fruition. I am confident we shall succeed.

An important aspect of industrial diversification must involve further processing of mineral resources in British Columbia. Further processing ensures greater stability of employment, more and better jobs for our workforce, and increased benefits from natural resources to all British Columbians. To encourage resource upgrading, a processing allowance equal to 8 percent of the original capital cost of processing assets will be allowed under both the Mining Tax Act and the Mineral Resource Tax Act. In addition, the maximum annual processing allowance limits will be changed to benefit producers who process their output beyond the raw material or concentrate stage.

To assist small business within the mining sector, the current income exemptions under the Mining Tax Act and Mineral Resource Tax Act will be raised to $50,000 of annual taxable income. Clearly this will remove a tax burden from small independent operators.

Encouragement of small business will continue to be an important element of the province's economic policy. Great impetus to industrial growth and innovation comes from the actions of individual entrepreneurs and small companies. A number of initiatives are therefore proposed today to help this sector of the economy.

Firstly, enabling legislation will be introduced to permit the creation of registered small business venture capital corporations in British Columbia. Such corporations will provide an important new source of financing to assist small businesses to realize their growth potential. For the 1980 and subsequent taxation years, British Columbia residents and/or corporations will be allowed a credit against income tax for shares purchased from a registered small business venture capital corporation. The cooperation of the federal government will be sought to accommodate administration of this program under our tax collection agreements.

Secondly, and with a great deal of pride, I announce that this government will institute the standard commercial practice of paying interest on bills received that remain unpaid after 60 days. This measure will encourage ministries to pay their bills more promptly and will reduce the interest burden on companies, particularly small companies, which have found it difficult to cope with delays in payment.

Thirdly, and most important, the income tax rate on small business will be reduced from 12 to 10 percent, retroactive to January 1, 1980. This action will give a further incentive to those willing to seek out opportunities and to take risks.

As the government's recent energy statement pointed out, British Columbia has, by world standards, a rich and diverse energy potential ranging from natural gas and coal to renewable hydroelectricity and wood waste. With this energy advantage the province is in a strong position to attract industrial investment directed toward rapidly expanding markets in western Canada and the Pacific Rim. Further, our energy resources are sufficient to meet the needs of our citizens for many years without recourse to nuclear power generation. We do not need nuclear power in the foreseeable future, and this government is opposed to its development in or near British Columbia.

However, British Columbia remains dependent on oil imported mainly from Alberta. To increase our energy security the government has established a policy framework for developing British Columbia's own untapped potential and reducing our dependence upon oil.

A major element in achieving energy security will be significantly expanded research and development efforts. The government is moving immediately to establish an energy development agency, chaired by the Minister of Energy, Mines and Petroleum Resources (Hon. Mr. McClelland), to coordinate and direct all government energy research and development activity. An amount of $10 million will be made available to the agency in 1980-81 through a new energy development fund. This money will be in addition to that included in the research budgets of individual ministries

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and will support demonstration and development of alternatives to gasoline as well as enhancing existing government energy conservation and oil substitution programs.

Let me outline the other energy security initiatives to be funded in this budget.

British Columbia is rich in natural gas but oil reserves are declining. Therefore $1.5 million will be provided for a pilot project to examine methods of recovering more oil from existing wells.

In addition, $1.8 million will be provided to accelerate construction of the Sierra-Yoyo Road and ensure year-round access to natural gas fields in the northeastern part of the province.

Over the next four years the province, working jointly with the federal government, will continue to implement a $27 million program of energy conservation and renewable energy technology development. In 1980-81, $3.1 million will be provided for this purpose.

Energy conservation will also be encouraged through a number of tax measures which I am introducing in this budget.

First, as a means of encouraging conservation of gasoline use in passenger automobiles, the sales tax rate applied to the purchase of new automobiles will be altered to favour more fuel-efficient vehicles. Effective midnight tonight, new cars with high fuel-efficiency ratings will be subject to a reduced social services tax rate of 2 percent. New cars with poor fuel-efficiency ratings will be taxed at a 6 percent rate, while vehicles with mid-range fuel consumption ratings will remain subject to the general 4 percent social services tax levy. Recreational vehicles, vans, trucks, buses and used vehicles will continue to be taxed at the general social services tax rate.

Energy conservation and conversion will also be encouraged through selective sales tax exemptions. Effective midnight tonight, the following items will be completely exempt from the social services tax: wood- and coal-burning stoves and furnaces, including fireplace inserts; storm windows and storm doors; multiglazed windows and doors; heat pumps used in heating and cooling systems for buildings; heat recovery units or devices; time-controlled thermostats used for heating systems; automatic timer controls for certain electric lighting systems; wind-powered generating equipment; propane converter kits for motor vehicles, specific equipment used exclusively in solar heating systems; and thermal insulation material not already exempt.

Further, to cushion the impact of high energy costs on the people of British Columbia, and to encourage the use of energy forms other than oil, residential natural gas and electricity billings will no longer be subject to the provincial social services tax, effective midnight tonight. Home heating oil is not presently subject to the social services tax, but is subject to a small one-half cent per gallon levy under the Fuel-oil Tax Act. This tax, Mr. Speaker, will be repealed at midnight tonight. It is hoped that many people now heating with oil will convert to other fuels as soon as it is possible to do so. Finally, I have instructed officials in the Ministry of Finance to undertake a thorough review of the taxation of fuels by the province, including coloured gasoline.

Although the province has taken these important steps to secure our energy future, many important energy decisions, such as the pricing of oil, will be taken at the federal level. The questions of how high the price is raised, what is done to prevent windfall profits and how extra revenue is to be used are matters for federal-provincial discussion. Along with my colleague the Minister of Energy, Mines and Petroleum Resources, I plan to put forward British Columbia's views on these matters to the new federal government. Our position will be made very clear on one issue: that federal taxation of British Columbia's natural gas, beyond that currently applied to natural gas producers through the income tax system, is unacceptable. Such taxation would substantially reduce revenues accruing to the people of this province and limit our capacity to develop energy programs unique to our particular situation.

As I indicated earlier, if we are to seize many of the opportunities available to us in the 1980s, a number of actions are needed now. This means public investment in facilities is required to support the developmental patterns planned for the future.

Transportation will continue to have a high priority with this government. The Ministry of Transportation and Highways is preparing a transportation policy to ensure proper development of a total transportation system for the province.

Highway construction will be funded at a record level in the coming year with $215 million provided for this purpose in the estimates, and a further $100 million from revenue surplus. My colleague the Minister of Transportation and Highways (Hon. Mr. Fraser) will be elaborating on highway construction and maintenance priorities during this session of the Legislature.

One of the critical elements of the government's efforts to develop the northern regions of the province has long included the need for a major port at Prince Rupert. After extensive discussion and negotiation with the federal government and other western provinces, construction of grainhandling and other bulk-loading facilities has finally been started on Ridley Island. The estimates for 1980-81 provide $4 million for off-site services and an additional $4 million for access roads. The federal government is expected to assume responsibility for the grain-handling facility.

The government is providing $20 million by statutory appropriation for support facilities associated with northeast coal development. Several companies have made progress in negotiating contracts with countries such as Romania, France, Japan and Korea. The government now stands ready to invest these funds, as required, to expedite development.

Northern development will also be encouraged by the $14 million allocated for reconstruction and operation of the Fort Nelson extension of the British Columbia Railway. It is expected the upgrading of this vital transportation link will be completed this year or in early 1981.

The British Columbia Railway has played an important role in opening up the more remote regions of the province. In doing so it has had to make large investments in facilities before they could be operated profitably. The burden of debt on these investments has been a barrier to good financial management and to the continued success of the railway. The government therefore proposes to introduce legislation at this session to provide for the province's ongoing commitment to the interest costs and retirement of the British Columbia Railway's historic debt. An amount of $70 million will be provided toward fiscal year 1980-81 costs by way of a special appropriation.

Finally, air transportation services for smaller communities will be assisted in 1980-81 by $3.4 million being

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made available from the revenue surplus for the Local Airport Assistance Program.

Mr. Speaker, I should like to turn now to this government's priorities in the area of education and manpower planning. I remarked earlier that one of the most valuable resources we have in this province is the skill and energy of our people. Many government programs represent investments in our human resources that are more important to the economy than investments in natural resources.

The education system will receive increased financial support in the coming year with major increases provided for colleges and provincial institutes. These institutions are providing programs to meet the high public demand for vocational and career training. Such training is essential to ensure a proper match between the skills and career plans of individuals in the labour force and the needs of industries in the future.

This budget provides $232 million for colleges and provincial institutes in 1980-81. In 1979 the provincial government assumed responsibility for the school district portion of college budgets. With this move the province increased its financial commitment to a program area that is experiencing rapid growth in demand from the public. I welcome this growth, and my colleagues do as well, especially in light of the high level of job relevance in the college system and the importance of this system to the future of the province.

The three public universities, now under the new Ministry of Universities, Science and Communications, will receive funding of $262 million for 1980-81. The funding increase for universities will enable them to continue standards of excellence established in the past.

In addition, $1.2 million will be made available from the revenue surplus for the Open Learning Institute. This post-secondary institution is expanding educational opportunities in all regions of the province.

The public schools system receives $684 million in this budget, almost one-eighth of the entire budget estimates and an increase of 6.7 percent from the spending level in the current fiscal year. Independent schools provide a valuable alternative to public schools and will receive $11 million in the coming year.

In the area of manpower planning, the Ministry of Labour has reviewed the market for skilled people in British Columbia and identified areas of shortage. To correct this situation the province established and appointed members of the Provincial Apprenticeship Board, which is now studying alternative proposals to revitalize apprenticeship programs for the 1980s. The Ministry of Labour will receive $41.5 million for apprenticeship training and employment opportunity programs, $4.5 million of which will come from revenue surplus funds.

Finally, funding has been provided to the Science Council of British Columbia for awards to graduate students working in industry as well as providing post-doctoral fellowships to bring universities and high-technology industries closer together in British Columbia.

A serious problem which continues to hurt British Columbia's economy is the persistence of high interest rates in both Canada and the United States, and that is no news to this House. I can say, however, that the government of British Columbia took dramatic action in its determination to do more than complain about the situation.

In January of this year the Premier announced a $200 million program to provide low-interest 9 3/4 percent mortgages for the construction of new homes. That program represents a major step toward reducing the impact of high interest rates on British Columbia home buyers while, at the same time, stimulating employment and incomes in sectors which have experienced difficulty in recent months.

That is not the only initiative designed to help offset the problems posed by high interest rates. We shall also continue to assist home buyers and housing construction through the Provincial Home Acquisition Fund. This fund, with assets of over $300 million, will provide an estimated $40 million in 1980-81 for home purchase grants and second mortgage loans to assist persons who want to own their homes.

Small business is obviously also hurt severely by high interest rates. In addition to the introduction of provisions for venture capital corporations we are budgeting for expanded programs to assist small- and medium-sized business in British Columbia. Expenditure will be increased in 1980-81 under the Industrial Development Subsidiary Agreement, part of which will go toward provision of low-interest loans to small business in certain designated regions. British Columbia's own Low Interest Loans Assistance program for non-metropolitan areas will continue to be funded through the British Columbia Development Corporation at a level of $4 million. This program, which provides loans to small business at one-half the chartered bank prime rate, is particularly valuable as an offset to the federal government's current high interest rate policy.

An additional $10 million will be made available from the revenue surplus for assistance to small- and medium-sized business in metropolitan areas of the province. Five million dollars of this will be used to continue expanded coverage of the Low Interest Loans Assistance program, and the remaining $5 million will be applied to a new program of assistance to small manufacturers.

The federal government should follow this government's lead in softening the impact of high interest rates on those hardest hit. The suggestion which was contained in the December budget, that the federal government introduce development bonds to assist small business, should be considered by the new federal government.

Finally, in agriculture the effects of high interest rates are being cushioned by the Agriculture Credit Program. Because of high interest rates charged farmers by financial institutions, the $7.7 million provided in the 1979-80 budget for interest reimbursement was exceeded by $9 million. An amount of $23.2 million will therefore be provided for 1980-81.

Having outlined policies and programs to support the economy and develop the province's wealth, I would like now to deal with social development. This government's social programs are fundamentally concerned with the health and the well-being of our people. Of particular concern are the elderly, the handicapped, those on low incomes, and other disadvantaged groups in our society.

Turning to health and hospital care, this government's commitment to high-quality services and facilities for our citizens is expressed clearly by the provisions made in this budget. The Ministry of Health, Mr. Speaker, will receive $1.55 billion in 1980-81, an increase of $226 million over forecast expenditure for the current year and the largest commitment in this budget to any single ministry.

The most rapid rate of increase is in medical care, where $345 million is to be allocated to the Medical Services Commission for an increase of 21 per cent. This increase reflects, in part, increased utilization of the service. But it

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also reflects the fact that this government has not increased premiums since 1976.

I would observe that the medical-care system is working well in British Columbia. Unlike a number of other provinces, we have not experienced the problem of doctors opting out of the medicare system. This government continues to be committed to the provision of good, affordable medical coverage for all the people of British Columbia.

Mr. Speaker, this commitment also extends to our province's hospital facilities. More than three-quarters of a billion dollars is allocated in this budget for hospital programs, and capital financing of $100 million will be provided for hospital construction projects. Sir, over the next five years the province will be continuing with the largest, most costly hospital construction program in British Columbia's history. Through this program 1,700 extended-care beds will be provided, increasing the total by almost 25 percent. This will free an almost equivalent number of acute-care beds to augment the 500 net additional acute beds planned for this period. Further easing of the hospital bed needs of our people is being achieved through the continued extension of the home-care program.

This government is concerned, Mr. Speaker, about the rate of increase in health costs and is determined to deal with this problem, but not at the expense of jeopardizing our high level of services. In fact, efforts planned to control costs will improve the health-care system by providing a better balance of services. For example, $161.8 million, up 25 percent from current-year expenditure, is included in the estimates for long-term care. Within that program the increased funding for home care will ensure provision of services in the home to prevent or delay expensive hospitalization.

Health promotion and education will be increased to encourage responsible use of expensive services and the avoidance of unhealthy lifestyles. Increased preventive health services will be provided by the health units throughout the province, and $39 million is included in the budget for these purposes.

Finally, as promised in the throne speech, a dental care assistance program will be introduced this coming year; $30 million has been allocated for this purpose. The cost of this program in a full year is expected to be substantially higher.

The Human Resources ministry will receive $762.9 million in 1980-81, 17.4 percent higher than anticipated 197980 expenditures.

The health services component of the Human Resources budget is increased substantially to cover the cost of Pharmacare. Also in health services is an additional provision for appliances, wheelchairs and other prescribed items, to assist handicapped persons to remain in their homes rather than moving to institutional care facilities. A further $1.4 million is provided for increased subsidies to achievement centres for handicapped persons.

The major portion of Human Resources expenditure is devoted to income maintenance programs, which are allocated $53.3 million above the 1979-80 estimates. This will cover the 50 percent increase in the renter's tax credit, introduced last year, as well as planned rate increases for income assistance recipients.

The budget provides for significant increases in services for families and children. The rehabilitation resources program provides funding to allow the needs of handicapped children to be met in local or community schools. Provision is made for new residential resources for children and for increased assistance for parents of handicapped children. Increased foster-home rates and higher day-care subsidy levels are also accommodated in the Human Resources estimates.

This government has long supported the principle of maximum local autonomy in government. We stress this principle in relations with the federal government, and our approach to local government reflects the same philosophy. British Columbia's revenue-sharing arrangement with the municipalities is unique in Canada, and I'm proud of having played a part in its establishment.

This budget today gives a major boost to local governments, with funding for the Ministry of Municipal Affairs increasing by almost 53 percent. Through the Revenue Sharing Fund, municipalities share in the revenue strength of the provincial government. This fund will receive $176.2 million in 1980-81; that alone is an increase of 24 percent from the current-year allocation. The revenue-sharing formula generates $167.5 million from the coming year's provincial revenue, and $8.7 million is provided for adjustments in respect of 1978-79 fiscal year revenue.

The Urban Transit Authority is budgeted to receive $69 million in 1980-81 to reflect the provincial contribution of 75 percent of the shareable deficits of local transit systems. With the metropolitan transit systems coming under this program on April 1, 1980, the organizational arrangements will be in place for transit developments in the 1980s. Although we cannot predict today what form future transit systems will take, it is clear that in future years circumstances may require large capital expenditures on urban transportation networks. Therefore it is proposed to set aside $55 million in a special fund to be devoted to covering the province's contribution to the future capital requirements of the Urban Transit Authority.

To remain vital centres of growth, our major cities must be served by a balance of the private automobile and public transportation systems. Neither must be neglected, since neither alone can fill the needs of all our citizens. It is for this reason that $30 million of revenue surplus will be allocated in this budget to a fund for an additional crossing of the Fraser River, in the vicinity of Annacis Island. The full cost of this development is estimated to be about $130 million over the four-year construction period. Funding in 1980-81 will provide for the first stage of this project.

As a step in ensuring the continued vitality of central city areas, $25 million will be provided in a fund for a special program of downtown revitalization. Grants under this program will be made to municipalities for the provision of public facilities in designated downtown improvement areas. Grants will also be made to reduce the interest costs faced by private owners who borrow funds to restore building exteriors in these areas.

Through direct grants to municipalities and school districts, Mr. Speaker, and by the homeowner grant, the province is playing a major role in restraining the growth of local taxation. Direct grants to school districts will increase $29 million in 1980-81, restricting the increase in the basic mill rate. The $100 increase in the homeowner grant introduced last year is maintained in this budget, and as a new measure the homeowner grant will be increased by a further $50, to $630, for the elderly, the handicapped now receiving GAIN, and war veterans.

In addition to the revenue and expenditure measures

[ Page 1378 ]

already announced, a number of other changes are proposed at this time.

Mr. Speaker, the following additional exemptions under the Social Services Tax Act will benefit a great many British Columbians.

It is proposed to exempt patent medicines, since these items are required for health reasons by a large number of people. A detailed list will be provided by regulation.

At the present time, used mobile homes are subject to tax if purchased from a dealer, but not subject to tax when purchased on a mobile-home site. This inequity will be ended by exempting all sales of used mobile homes.

The monthly telephone rental charge is presently taxed in every province where a sales tax is levied. Since many people are very dependent on the telephone, especially the elderly, this is an opportune time to exempt residential telephone rental charges from the social services tax. Long distance calls, Mr. Speaker, are already exempt in British Columbia, although taxed in most other provinces.

I outlined earlier a number of the planned expenditures from revenue surplus in 1980-81. Funds will also be made available from revenue surplus for the following:

The Refugee Settlement Program will receive $2.65 million to provide special educational, health and employment services primarily to the southeast Asian refugees accepted in British Columbia.

The Recreational Facilities program will receive an additional $5 million to assist communities in the construction of centres for leisure-time activities.

A new $3 million fund to assist computerization in public libraries throughout the province will be established.

The Elderly Citizens' Housing Assistance program will be augmented by $1 million to accelerate the construction of non-profit society housing for low-income senior citizens.

Five million dollars will be made available to the new Barkerville Historic Park Development Fund. This money will go toward renovations and capital projects at this historic Cariboo gold rush site.

A second instalment payment of $26.1 million to retire the provincial direct debt will be made on May 1, 1980.

Interjections.

HON. MR. CURTIS: Would you call this House to order, sir?

MR. SPEAKER: Order, please, hon. members. We have been progressing so well; let's continue.

HON. MR. CURTIS: Mr. Speaker, this is my part in the debate. They'll have their chance.

Other significant tax and administrative changes proposed by this government include: an amendment to the Taxation (Rural Area) Act to eliminate the duplicate assessment of coal land; amendments to the Insurance Premiums Tax Act to conform to the basis of assessment prevailing in other provinces and to introduce tax instalment payments; elimination of fees payable under the Probate Fees Act; and an amendment to ensure the Employment Standards Act takes precedence over the Social Services Tax Act in bankruptcy situations. Further details of these measures are contained in the appendix to the budget.

Several amendments to the Corporation Capital Tax Act to promote greater administrative efficiency and to afford more equal tax treatment to similar types of financial firms are also proposed. Effective January 1, 1980, the tax assessed on banks and trust and loan companies will be levied on a common capital base consisting of paid-up capital stock, rest and/or reserve accounts, and retained earnings. These firms will no longer be required to pay the capital tax on deposits held by their shareholders or by any other corporation.

To offset the revenue loss of the proposed amendment, the capital tax rate applicable to these institutions will be increased. Effective January 1, 1980, chartered banks will be subject to a levy of four-fifths of 1 percent on the value of their redefined paid-up capital, while loan companies, trust companies and trust and loan companies will be subject to an increased rate of three-fifths of 1 percent. A system of instalment payments will also be introduced for this tax.

Finally, a new Financial Control Act will be introduced into the Legislature during the coming session. The purpose of the act is to modernize all accounting and control procedures of the government and to make the government more accountable to this House and to the people of British Columbia.

Since this government took office in late 1975, high priority has been given to federal-provincial relations. Both senior levels of government in Canada have important legislative and jurisdictional powers. The government of Canada has the authority to set policy in a large number of areas that are vital to the development of the province and the well-being of our citizens — unlimited powers of taxation, authority to set rules and levies governing international trade, policy-making authority over international and interprovincial transportation, very significant spending power, and control over Canada's monetary policy and interest rates.

The next few years will see important decisions made at the national level and it will be of utmost importance to ensure that the interests and concerns of British Columbians are appropriately reflected. The federal election results could make this more difficult, and the government of British Columbia will therefore have to pursue intergovernmental affairs with increased vigour.

In recognition of the critical importance of federal-provincial relations, this government has created a new Ministry of Intergovernmental Relations. The ministry will be responsible for British Columbia House in Ottawa and will assume the complex task of coordinating the province's affairs with other governments. The estimates provide the necessary funds for administering this important ministry.

As Minister of Finance, I expect to be playing an active role in federal-provincial consultations and negotiations on economic and financial matters. Therefore I should like to outline briefly the areas of priorities that I see for the coming year.

A first priority of the new federal government should be the introduction of a budget. In this regard the defeated December budget had many valuable elements that should not be thrown aside by the new government. For the first time a federal jurisdiction brought a medium-term perspective to their financial affairs and presented a plan for dealing with the large federal deficit. These were important innovations that should be part of the new budget when it is presented. I should also like to see the budget contain measures to offset the adverse impacts of high borrowing costs until such time as the federal government is able to bring down interest rates.

Certainly the new federal budget should include clarification of federal energy policy and, in particular, the domestic oil pricing issue. As I mentioned earlier, I am concerned with

[ Page 1379 ]

the fiscal and economic impact on British Columbia of national energy decisions, and I would welcome a federal-provincial meeting of finance ministers to discuss these and other matters before the federal budget is introduced.

Canada and British Columbia will benefit from the implementation of the new multilateral trade arrangements. Under these, an agreed program of tariff reductions will be implemented. However, the government of Canada retains a significant amount of flexibility in the design of this country's non-tariff barriers to trade, adjustment assistance programs and trade promotion efforts. The approach taken by the federal government to these issues could be a crucial factor affecting our trade opportunities in the 1980s. British Columbia has made substantial contributions to federal-provincial discussions on trade matters, and we shall continue to emphasize the benefits of freer trade for the province and Canada as a whole.

A new budget, an energy strategy and a trade policy are clearly priority items, not just for British Columbia but for the whole country. For this province there are also a number of local issues that deserve the early attention of the new national government.

First, we are looking to that new government to commit funds to the development of British Columbia Place. This government has made a major financial commitment, but federal financial support is both necessary and appropriate. It is our view that the taxation and cost-sharing arrangements made for Expo '67 Montreal should serve as the basis for financing Transpo '86. We look forward to early negotiations on the subject with the federal authorities.

Secondly, we look to the federal government to reintroduce the special capital cost allowance on MURBS — multiple unit residential buildings — or to provide similar measures to help alleviate the difficult rental situation in British Columbia.

Thirdly, we shall be negotiating with the new government for a shared-cost agreement covering public investment in structures relating to the development of this province. It is our view that economic development funds should be directed increasingly toward areas of potential economic strength. British Columbia has that potential in the 1980s, and we shall be seeking federal cooperation toward its realization.

Discussions should also begin this year on matters of longer-term significance. A number of fiscal arrangements between the federal government and all provinces expire at the end of 1981-82. British Columbia has drawn attention to some weaknesses in the present arrangements and we shall be looking for an early start to those negotiations.

Finally, the province will continue, largely through the Ministry of Intergovernmental Relations, to play a major role in federal-provincial constitutional discussions. Ultimately, changes to the constitution will be the most effective means of ensuring that the needs and aspirations of British Columbians are reflected in national decisions. In the near-term British Columbia will be seeking to continue discussions on the transfer of offshore mineral rights to the province.

Now, Mr. Speaker, let me summarize, as briefly as possible, some of the major themes of this budget: the provision of adequate economic stimulus for 1980, while retaining funds necessary to carry on responsible budgets in the years ahead; actions to enhance and improve our renewable resource heritage; programs and initiatives for diversifying our industrial base to provide a more secure and satisfying employment future for our work force; specific incentives and other measures to ensure energy security while at the same time cushioning the impact of energy price escalations on the people of this province; investment in developmental facilities needed to seize opportunities and meet the challenges of the 1980s; measures to train and educate our work force and young people so they may participate in the prosperity of British Columbia; programs to soften the impact of high interest rates, particularly on individuals and small business; the most substantial investment in hospitals and our health-care system in the province's history; continued emphasis on programs to improve the well-being of the poor, the elderly, the handicapped and other disadvantaged groups in our society; unprecedented levels of assistance to ensure that local government is able to provide a high level of service while retaining its autonomy; new administrative procedures to increase the efficiency and effectiveness of government; renewed emphasis on federal-provincial financial and economic relations to ensure the interests and aspirations of our citizens are reflected in national government policies.

In conclusion, this budget represents a strong statement of confidence in British Columbia. It is a budget which builds for our people in the 1980s and prepares for the opportunities and challenges ahead. It is, most of all, a budget which serves the people of British Columbia in a responsible, sensitive and forward-looking way.

Bold new steps are taken to provide for British Columbians today and build for a better tomorrow. Taxes are not being increased to do all this; we are simply putting the rewards of good management and a strong economy to work. We are investing our surplus resource revenues directly in this province's economic future.

It is a new style of budget and it is my hope that it will lead to a better understanding of government initiatives and policies. A great deal of information is presented both here and in the budget background paper. My objective is to be more open, and share with all British Columbians the factors and rationale behind the policies and programs this government is putting forward. A good dialogue should follow, and we can work together to build a better, more secure future for all.

Mr. Stupich moved adjournment of the debate. Motion approved.

MR. SPEAKER: Hon. members, in order that the proper documents can be distributed, I declare a short recess. The House recessed at 4:40 p.m.

The House resumed at 4:48 p.m.

Introduction of Bills

FINANCE STATUTES
AMENDMENT ACT, 1980

Hon. Mr. Curtis presented a message from His Honour the Lieutenant-Governor: a bill intituled Finance Statutes Amendment Act, 1980.

Bill 2 introduced, read a first time, and ordered to be

[ Page 1380 ]

placed on orders of the day for second reading at the next sitting of the House after today.

SOCIAL SERVICE TAX
AMENDMENT ACT, 1980

Hon. Mr. Curtis presented a message from His Honour the Lieutenant-Governor: a bill intituled Social Service Tax Amendment Act, 1980.

Bill 3 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.

CORPORATION CAPITAL TAX
AMENDMENT ACT, 1980

Hon. Mr. Curtis presented a message from His Honour the Lieutenant-Governor: a bill intituled Corporation Capital Tax Amendment Act, 1980.

Bill 4 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.

SPECIAL PURPOSE
APPROPRIATION ACT, 1980

Hon. Mr. Curtis presented a message from His Honour the Lieutenant-Governor: a bill intituled Special Purpose Appropriation Act, 1980.

Bill 5 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.

SPECIAL FUNDS ACT, 1980

Hon. Mr. Curtis presented a message from His Honour the Lieutenant-Governor: a bill intituled Special Funds Act, 1980.

Bill 7 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.

CROWN CORPORATIONS BORROWING
AUTHORITY INCREASE ACT

Hon. Mr. Curtis presented a message from His Honour the Lieutenant-Governor: a bill intituled Crown Corporations Borrowing Authority Increase Act.

Bill 9 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.

Hon. Mr. Gardom moved adjournment of the House.

Motion approved.

The House adjourned at 4:53 p.m.

ERRATUM

Volume 3, Number 5: March 5, 1980, Afternoon sitting.

Page 1268: Duplication of text from last paragraph of first column to beginning of page 1269.