[ Page 3865 ]

CONTENTS

Routine Proceedings

Pension (Municipal) Amendment Act, 1980 (Bill 27). Hon. Mr. Wolfe.

Amendments –– 3865

Miscellaneous Statutes Amendment Act (No –– 2), 1980 (Bill 60). Hon. Mr. Williams.

Introduction and first reading –– 3865

Oral Questions

Eckardt commission report. Mr. Lauk –– 3865

Sierra-Yoho Road contract. Mr. Leggatt 3865

Advertising of brand names in government publications. Mrs. Wallace –– 3866

Cablevision merger. Mr. Lauk –– 3866

Freight costs compensation for Vancouver Island farmers. Mrs. Wallace –– 3867

Advertising of brand names in government publications. Hon. Mr. Hewitt replies –– 3867

Committee of Supply; Ministry of Finance estimates. (Hon. Mr. Curtis)

On vote 85: minister's office –– 3867

Mr. Stupich

Mr. Barber

Mr. Lockstead

Mr. Hall

Mrs. Wallace

On vote 92: government agencies –– 3888

Mr. Stupich

Mr. Lockstead

On vote 96: grants, contributions and subsidies –– 3889

Mr. Stupich

Votes 96 to 102 inclusive approved –– 3889

Pension (Public Service) Amendment Act, 1980 (Bill 43).

Second reading.

Hon. Mr. Wolfe –– 3889

Mr. Howard –– 3890

Matter of Privilege

Possible breach of privilege by Hansard editor.

Deputy Speaker rules –– 3891

TUESDAY, AUGUST 12, 1980

The House met at 2 p.m.

[Mr. Davidson in the chair.]

MR. SEGARTY: Mr. Speaker, in the gallery this afternoon is Mr. Jim Ellingston, a teacher from the Mt. Baker Senior Secondary School in Cranbrook. I would like everyone to welcome him.

MRS. WALLACE: Last week I had a young lady visiting from Tamworth, Ontario. Today I'm very pleased to have her sister visiting in the gallery. Her name is Tammy Dickeson, and she is from Tamworth, Ontario, too. Would the House please join me in welcoming her.

HON. MR. HEWITT: Mr. Speaker, in the gallery today is the Chairman of the B.C. Land Commission, Dr. Mills Clarke, and I'd ask the House to welcome him.

MR. KING: In the Speaker's gallery today we have a delegation from the city of Revelstoke: His Worship, Mayor Al McAskill; Alderman Barry Grannary and Alderwoman Val Berry; the regional director, Dr. Geoff Battersby; and Mrs. Barb Humphries, Terry Gowing, George Sawada and another representative of the ratepayers' group whose last name escapes me at the moment, but I will find it and correct it for the sake of Hansard. I would ask the House to extend a warm welcome to this group.

Introduction of Bills

PENSION (MUNICIPAL)
AMENDMENT ACT, 1980

Hon. Mr. Wolfe presented a message from His Honour the Administrator: amendments to a bill intituled Pension (Municipal) Amendment Act, 1980.

Amendments ordered to be referred to the committee of the House having charge of Bill 27.

MISCELLANEOUS STATUTES
AMENDMENT ACT (NO. 2), 1980

Hon. Mr. Williams presented a message from His Honour the Administrator: a bill intituled Miscellaneous Statutes Amendment Act (No. 2), 1980.

Bill 60, 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.

Motion approved.

MR. HANSON: Mr. Speaker, I ask leave to make an introduction.

Leave granted.

MR. HANSON: In the gallery today, Mr. Speaker, is a vice-president of the United Native Nations Indian organization, Mr. Bob Warren, who is a constituent of mine. I'd like the House to join me in welcoming him.

Oral Questions

ECKARDT COMMISSION REPORT

MR. LAUK: I have a question to the Attorney-General. Yesterday Mr. Eckardt commented under questioning that "the worms are coming out of the woodwork." Mr. Eckardt's comments raised the clear indication that the House has not been told the whole story of the Eckardt report; Mr. Eckardt's comments clearly suggest that he is afraid of full disclosure.

On the basis of Mr. Eckardt's admissions yesterday, will the Attorney-General now release the transcripts of interviews of witnesses concerning this matter?

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

MR. LAUK: On the basis of Mr. Eckardt's admissions yesterday, will the Attorney-General agree to call Mr. Eckardt before the bar of the House for questioning by all MLAs?

HON. MR. WILLIAMS: Mr. Speaker, that's not my prerogative, and I don't intend to make such a request.

SIERRA-YOYO ROAD CONTRACT

MR. LEGGATT: My question is directed to the Minister of Energy, Mines and Petroleum Resources. Last night on the CBC, serious allegations were made that the prime contract for Sierra-Yoyo Road was awarded to a Social Credit supporter without benefit of tender. Could the minister confirm that this contract was let without bids?

HON. MR. McCLELLAND: Mr. Speaker, the contract was awarded after advertisements in papers with specifications, and that's been normal practice in the past.

MR. LEGGATT: I take it the minister is admitting that the contract was awarded without bids. Would the minister advise why a contract last year involving contractors in that area and involving exactly a similar kind of road was let with bids?

HON. MR. McCLELLAND: Mr. Speaker, there were bids taken. There were advertisements put in the local newspapers and people submitted their proposals on the basis of specifications.

Interjection.

HON. MR. McCLELLAND: Oh, there were 12 or 13, something like that. That's been normal practice.

MR. LEGGATT: Mr. Speaker, I'd like the minister to clarify his answer. Is he saying that the allegation by the CBC — that that section of road they were investigating was issued without bids — is a false allegation?

HON. MR. McCLELLAND: Mr. Speaker, the CBC didn't apply to the advertisements.

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MR. LEGGATT: In view of the statement by the manager of the successful contractor — and I quote from the program — "We all gave money to Brummet," can the minister advise whether the funds allegedly given to Brummet were used for Social Credit campaign purposes?

HON. MR. McCLELLAND: Mr. Speaker, I don't know whether that question is in order or not; I would expect it probably isn't. But first of all, I've no knowledge of what the CBC said or didn't say. I do know that there is some concern within the constituency of North Peace River about a contract which was let. It's being fully investigated by the ministry, and the ministry has been in close contact with the MLA for the area and the contractors in the area and will continue to be in close contact with them. I'd be a bit surprised, since the member for North Peace River got 76 percent of the vote in the last election, that almost everybody in that constituency wasn't one of his supporters.

MR. LEGGATT: Mr. Speaker, I'm sure the minister will be happy to advise that neither he nor Mr. Brummet in any way made representations on the awarding of that contract. Were any representations made by the minister or the member for that riding?

HON. MR. McCLELLAND: I'd be happy to advise on that. The answer is, absolutely not.

MR. LEGGATT: Mr. Speaker, I take it that the minister has already investigated the total circumstances, although he's told us that he did not see the program. So I take it he's investigated through his department.

Last year Preston Contracting undertook to build a 34-foot-wide road, which now appears to be 22 feet wide. Preston has also been awarded 27½ miles this year, again without tender. Can the minister advise what supervision his department is taking in regard to this contract? How many supervisors has he got on the road to make sure this contract is in accordance with specifications?

HON. MR. McCLELLAND: Mr. Speaker, just to clear up the one matter about whether or not I saw the CBC program, I didn't see the program. I don't care about it, but I can tell you that the concerns were delivered to me before they were to the CBC, and we've been looking into this matter. That's the way things work in my ministry. I don't wait until I have to have the CBC tell me about problems in the community.

There have been some allegations made in a letter to me and in a letter to the Premier about the specifications of the road. Those allegations are under full investigation, and if there's something wrong it'll be fixed.

MR. LEGGATT: I take it, Mr. Speaker, from the answer that that confirms there is something wrong in terms of the initial investigation. I want to ask the minister this: has Preston Contracting been asked to make good on last year's work?

HON. MR. McCLELLAND: We don't know if there's anything to make good on, and that's the purpose of the investigation. Neither does the member for Coquitlam-Moody (Mr. Leggatt) know if there's anything wrong. He has seen a CBC television program; he has no other information. I intend to get some more information, and until I have that information it would be extremely presumptuous of me to accuse a citizen of this province of wrongdoing without any evidence whatsoever. I would have thought, Mr. Speaker, that that member of the Legislative Assembly, as a member of the bar of this province, would be the first member in this House to want to have evidence before accusing people of wrongdoing.

MR. LEGGATT: I take it that the minister is going to use the precedent of the Attorney-General (Hon. Mr. Williams): all the investigation will be in-house, and we won't see any of the evidence tabled in this House. How are we going to rely on the minister's answers?

My question is directed to the Premier. Has the Premier decided to call an inquiry into the awarding of this contract, as requested?

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

ADVERTISING OF BRAND NAMES
IN GOVERNMENT PUBLICATIONS

MRS. WALLACE: My question is for the Minister of Agriculture. Can he tell me whether or not it is the policy of his ministry to advertise brand names in government publications at taxpayers' expense?

HON. MR. HEWITT: I'm not sure what the next question will be, so maybe I'll take that question on notice and see what happens from there.

CABLEVISION MERGER

MR. LAUK: My question is to the Minister of Universities, Science and Communications, with respect to the takeover of Premier Cablevision. In view of the government's unprecedented duplicity by its insidious support of the eastern takeover....

Interjections.

DEPUTY SPEAKER: Order, please. Hon. member, the, question is out of order.

MR. LEA: Why?

DEPUTY SPEAKER: The question is clearly argumentative, hon. member, and as such is out of order.

MR. LEA: Only if they deny it.

MR. LAUK: I thought it was a trite fact that everybody knew. "In view of the government's duplicity...." Is that what you are opposed to? I don't understand what is out of order.

DEPUTY SPEAKER: The question is out of order.

MR. LAUK: All right. In view of the government's unprecedented insidious support of the eastern takeover of the cablevision system, and in view of the fact that the CRTC

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has permitted the takeover as a result of the support of the provincial government, has the government now decided to abandon its claim for jurisdiction over cablevision?

HON. MR. McGEER: Mr. Speaker, that was an extremely convoluted question with a series of false allegations. I would have to say that the question, as such, is unanswerable. For the benefit of the House I will give the clear policy of the provincial government, which is that cablevision should be a provincial responsibility. It's my understanding that all provincial governments in Canada share that policy.

MR. LAUK: Now that all cablevision is going to be owned east of Thunder Bay, what point is there in the provincial jurisdiction over cablevision?

HON. MR. McGEER: Mr. Speaker, the purpose of provincial jurisdiction over cablevision is that the services provided by cablevision are not entirely broadcasting services; there are non-broadcasting services, which include other things besides entertainment. It has been the feeling of the provinces across Canada that the services, both entertainment and non-entertainment, can be better supervised, to the extent that supervision is necessary, by local governments as opposed to the federal jurisdiction.

MR. LAUK: That's a convoluted answer, Mr. Speaker. I thank the minister for it.

My point is simply this: how can the minister accord his views with those of the Premier, who says that B.C. is not for sale? On one occasion he skied off a hill in Kelowna with an open-necked shirt and attacked the takeover of CPR by MacMillan Bloedel. He said: "B.C. is not for sale." Now the provincial government supports this takeover by eastern cablevision interests of a very productive industry that's valuable to the people of this province. How does he accord his views with that of the Premier?

HON. MR. McGEER: Mr. Speaker, the matter of Canadian Cablesystems–Premier Cablevision financial arrangement is something that was under the jurisdiction of the CRTC — not the provincial government. It was not a move which was supported by the provincial government.

MR. LAUK: The minister denies that the provincial government intervened in support of the application for the takeover? You deny that either publicly or privately you supported that takeover? Do you deny that?

Interjection.

MR. LAUK: You deny it. Thank you.

FREIGHT COSTS COMPENSATION
FOR VANCOUVER ISLAND FARMERS

MRS. WALLACE: Mr. Speaker, inasmuch as the Minister of Agriculture doesn't know whether or not he uses taxpayers' money to advertise brand names, I'll try him with another question.

During the recent CPR work stoppage, the Vancouver Island farmers were billed something like $42,000 in extra freight costs. I understand that the minister has been unsuccessful in his negotiations with the federal minister. Has he decided at this point in time to recompense the Vancouver Island farmers from provincial funds?

HON. MR. HEWITT: No, Mr. Speaker. The matter involved jurisdiction which related to the federal government, and we do not have any intention, at this time, to assist in that regard.

ADVERTISING OF BRAND NAMES
IN GOVERNMENT PUBLICATIONS

In response to the first question that was asked of me by the member for Cowichan-Malahat, I would say, Madam Member, that the answer is no. We don't promote private brands in any of our advertisements. However, periodically you may see brands related to B.C. agriculture illustrated in some brochures or pictures, but that's only to illustrate the product and not the brand.

DEPUTY SPEAKER: The bell terminates question period. Hon. members, as it is just prior to further business, this would possibly be an appropriate time to bring members' attention to the fifth edition of Beauchesne. I quote from section 359 regarding question period. The question "must be a question, not an expression of an opinion, representation, argumentation, nor debate."

Further, section 362 says:

"Reading telegrams, letters or extracts from newspapers as an opening to an oral question is an abuse of the rules of the House. It is not good parliamentary practice to communicate written allegations to the House and then to ask ministers either to confirm or deny them. It is the member's duty to ascertain the truth of any statement before he brings it to the attention of parliament."

Prior to recognizing the House Leader, I see that the second member for Vancouver Centre seeks leave to make an introduction. Shall leave be granted?

Leave granted.

MR. BARNES: Mr. Speaker, this is a rather delayed introduction. Yesterday two friends of mine, Mr. John Millette and Dr. James Millette, were visiting from Trinidad and Tobago. Dr. Millette is a professor at the University of the West Indies. He is studying the effects of having the capital on Vancouver Island rather than on the mainland. I would like to ask the House to join me in welcoming them for having been here yesterday.

Orders of the Day

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

ESTIMATES: MINISTRY OF FINANCE

On vote 85: minister's office, $118,976.

HON. MR. CURTIS: Mr. Chairman, I have a few opening remarks. I will make them as brief as possible. To open discussion on the estimates of the Ministry of Finance I would like to review activities which are now underway and will continue.

I think it would be inappropriate not to recognize once

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again the fact that Mr. Gerald Bryson retired earlier this year as deputy minister. Both sides of this House paid tribute to Mr. Bryson. His management of the provincial finances over the years will be missed, but at the same time we are privileged to have a valued replacement in Larry Bell, formerly Deputy Minister of Lands, Parks and Housing. Mr. Bell is joining me in committee, as is the practice.

The efforts of the Ministry of Finance over the past four years have been directed towards strengthening the fiscal and economic position of the province. In February I was in New York to meet with principals of United States financial institutions and rating agencies, where, frankly, as expected, I found great interest in British Columbia's economy and particularly in the financial position of the provincial government. This visit proved subsequently to be of great value to us — meaning all British Columbians — because as the House recalls, shortly afterward we received the news that the province has been awarded the highest financial rating possible — that is, the triple-A rating — from the two principal rating agencies, Moody's and Standard and Poor's. I've commented widely on the triple-A rating, both in this House and outside it. I think I need say no more at this time, but T-shirts are available for any member of the committee who might wish to have one and wear it with pride as a British Columbian. It is an achievement for which all British Columbians can take pride.

Together with the reception we received in New York, it's excellent evidence also that there is widely held optimism concerning the economic prospects for British Columbia and that there is a general confidence in the financial management of this government. Nevertheless, the ministry faces a number of important challenges and plans major initiatives to maintain the high standard of financial responsibility which the people of this province have grown to expect, and indeed deserve.

First, the second report of the auditor-general for the year 1978-79 indicates that the government has made a positive response to recommendations contained in the first report. However, there is still considerable scope for new initiatives, and it is my intention to accelerate the review and the implementation of suggestions made by the auditor-general.

Secondly, a new financial administration act is in preparation to consolidate the Revenue Act and the Financial Control Act. This major bill has long-term significance for the financial administration of this province and is being very carefully prepared. Therefore I do not expect to introduce it to the Legislature until the 1981 session. However, I shall shortly provide a draft of the legislation to all members of this House and interested members of the public of British Columbia, and I shall invite submissions on the content of the bill, which will be considered before a final draft is prepared. It is not only my hope but my commitment that we shall have that final draft ready after the kind of participation which I have identified and which I seek. That will appear in the very early part of the 1981 session.

Thirdly, in accordance with the government reorganization of November 1979, the Ministry of Finance is accommodating the additional responsibility of deregulation.

Fourth, this year's budget provided for the elimination of the fuel oil tax probate fees and the tax on a number of items important to the individual. In addition, taxes were removed from certain articles of purchase, the taxation of which, frankly, was something of a nuisance. The ministry continues to review all provincial taxes and fees to establish their justification or their appropriate level. This will include a very thorough look at provincial taxation of motor fuels, including coloured or marked gasoline.

Finally, at budget time this year I referred to how the government has used the revenue-surplus account to stabilize the growth of provincial expenditures. During the balance of this fiscal year consideration will be given to formalizing this practice, possibly through the creation of a revenue stabilization fund. Provincial government revenues from our natural resources, as we know on both sides of the House, can be wildly erratic due to their extreme sensitivity to international economic conditions.

Recently I tabled the quarterly report of the province's finances for the first three months of this fiscal year, the tabling of which carries on the tradition established by my predecessor, the now Provincial Secretary and Minister of Government Services (Hon. Mr. Wolfe). This report shows a decrease in certain areas of revenue and an increase in the spending of several ministries — a slight departure from forecast. Therefore the ministry has taken action to counteract what I consider to be, very frankly, danger signals appearing in both the revenue and expenditure columns. These actions included the implementation of spending restraints, the consideration, at least, of revenue measures, and a staff hiring freeze, which is being gradually eased. As Minister of Finance I feel that it is important that all of us, including my colleagues, recognize the vulnerability of our provincial financial situation and direct our attention to the medium- and long-term preservation of the provincial revenue base for the support of expenditures.

Could I turn briefly to the various branches of the ministry over the past year. The audit program of the consumer taxation branch again resulted in substantial audit recovery amounting to $11.1 million in 1979 compared with $11 million in 1978 and $9.4 million in 1977. This was accomplished even though fewer auditors were employed during 1979 — that's due primarily to the inability to recruit qualified individuals. Implementation of new procedures within the Insurance Corporation of British Columbia for collection of the tax on private sales of motor vehicles was principally responsible for an estimated $4.3 million in additional social services tax revenue this past year. In June 1979 the branch was able to implement phase one of a revised data processing system, which is providing better control of delinquent accounts and more accurate and faster processing of payments than was previously possible.

The real property taxation branch collected $184 million last year at an effective cost of 0.43 percent. Property tax reforms continued in the preparation of the 1980 assessment roll. The changes of significance included: firstly, the adoption of a common level of assessment for farmland; secondly, a new system of farm classification along with a 50 percent exemption under the Public Schools Act for farm and agricultural reserve land; thirdly, a reduction in the level of assessment of residential property from 15 percent to 14.5 percent to maintain the same relative tax share with other classes of property; fourthly, a reduction in the level of assessment on machinery and equipment from 30 percent to 25 percent; and fifthly, a lower level of assessment extended to meeting halls of non-profit fraternal organizations in recognition of their community contribution.

The income taxation branch collected over $130 million in revenue last year, at an effective cost of 0.58 percent, compared to a similar volume of revenue for 1978 at a cost of

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0.60 percent. The improvement in percentage of cost has principally resulted from continued improvement in the efficiency of the audit staff. As a result of the elimination of probate fees and the proposed ultimate repeal of the Probate Fees Act, the staff of the income taxation branch will be reduced during the 1980-81 fiscal period by eight employees, who will be relocated elsewhere in this ministry or other ministries within government. The loss of revenue from probate fees will be approximately $1.8 million for the fiscal year ending March 31, 1981.

The short-term investment operation of the province has become the second-largest in Canada outside of the banking sector. Interest income yields on funds have improved, making substantial contributions to the various funds under management. A total of $879 million in capital funding for Crown corporations, including school and hospital financing authorities, was accommodated without having to borrow on the public markets. Work will be completed this fiscal year on a data system to provide timely investment and account information to even further improve that process.

The economic policy and planning research branch has been developing an economic and fiscal framework for the province. The contribution of this group can be seen in the medium-term economic outlook and fiscal analysis appendix to the budget of March 11, 1980. As well, the branch has been active in economic analysis and forecasting, in matters relating to federal-provincial economic policy and general resource project analysis and policy planning.

The finance analysis and research branch has continued its monitoring of provincial budget performance along with the preparation of ministry publications such as the Financial and Economic Review and quarterly financial reports.

The government agency system was augmented during 1979 with the opening of three offices at Bella Coola, Valemount and Mackenzie. Approval has been given for a further seven offices, which I hope will be opened by the end of the year, thus increasing the number of offices throughout British Columbia to 62. Agencies have been opened this summer in Fraser Lake and Nakusp. New agencies are planned for Sparwood, Maple Ridge, Squamish, Sechelt and Cassiar. Government agency offices provide valuable access to the government for our people.

I might digress for a moment, Mr. Chairman, to say that perhaps there's even merit in giving consideration to the opening of a government agent's office in greater Victoria some time soon. Government in this city is so very large and spread over a number of buildings that it is frequently difficult for the citizen to go to a particular spot. That is further down the line, but I would like to suggest that we are considering that possibility.

The Treasury Board staff, which has been in operation for three years, continues to investigate expenditure requests from all ministries. That staff is embarking on a selective application of program evaluation in numerous ministries. Treasury Board staff again coordinated preparation of budget estimates. This included an expansion of the zero-base budgeting process to a total of six ministries for this budget year. These are Health, Human Resources, Education, Tourism, Transportation and Highways and Corporate Affairs. The process is being extended to 11 additional ministries for the next budget year, 1981-82.

The total value of purchase orders processed by the Purchasing Commission during 1979 increased by approximately 29 percent, while the number of purchase orders increased by 5 percent. The government's preferential purchasing policy, which allows a price preference of up to 10 percent on the British Columbia value-added component of goods purchased by the province, continues to be practised. Other Canadian products purchased by the province receive up to a 5 percent preference over non-Canadian products.

Mr. Chairman, this past year the office of the comptroller-general finalized its organizational structure and made significant advances in redefining and meeting personnel requirements. The four divisions of the office of comptroller-general have responded to continuing requirements under their mandate, and in addition have initiated major projects within areas of primary interest.

The review and the redefinition of accounting policies have been undertaken by the financial policy and reporting division, in consultation with a firm of chartered accountants. The design and approval stages of the financial systems network, a series of interrelated projects that will result in the redesign of the government's accounting system, have been completed on schedule. The second part of this project will decentralize data entry and some reporting to ministry headquarters. I'm very enthusiastic about this. It's being undertaken in conjunction with estimates, charts of accounts, budgets, accounts payable and reporting subsystems. So by the time the project is completed, the province will have at its disposal a system that is expected to be no more expensive to operate than the current one. Yet it will provide more information much more quickly and in a more usable form, and will allow for improved transaction processing speed.

The internal audit division has established a computer audit capability and is now focusing on training in this area, as well as providing training in a transactional audit process. The areas of audit review have been identified and an operational audit plan has been developed to provide audit coverage on a government-wide basis.

Major projects in the operations division include enhancements to the payroll system and improvements to the central accounts and payment system as well.

I spoke earlier, Mr. Chairman, about the deregulation section of this ministry. Deregulation as a ministry was absorbed into Finance in November, 1979, and now operates in the section of the ministry which includes Treasury Board staff. There are at present two major deregulation projects underway: a review of all existing regulations and a forms simplification project. The process of deregulation within the public service must extend beyond the two-year term identified when the original ministry was established in December 1978. In fact, Mr. Chairman, deregulation has to be an ongoing process, and I feel that it should form part of management planning.

We see the need to put procedures into place which will ensure a greater recognition and acceptance of principles of deregulation throughout the public sector, and so a continuation of the process. To this end, I propose'to undertake the implementation of awards to members of the British Columbia public service for suggestions which save our government and our citizens both time and money. I should say that approaches have already been made to the executive of the B.C. Government Employees Union for their ideas and for their cooperation. Just a few days ago, I received an encouraging, if not somewhat hesitant, response from the BCGEU. Awards programs have been in place in some Crown corporations — that is, suggestion programs. I hope to expand it through the entire public service.

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Mr. Chairman, the provincial government has a very valuable resource in its employees. They have talent; they have resourcefulness. I believe that a suggestion awards system would make it possible to accelerate the identification of improved as well as unnecessary procedures that will contribute to a more efficient and a more effective public service.

An award scheme need not necessarily add to the cost of government, and should, in fact, benefit not only government but the individual.

The ministry has participated in the BCRIC free shares distribution process during 1979-80 in which more than two million British Columbians made application for their shares, and I think it can be classified as highly successful.

Earlier this year, the provincial government held approximately 315,000 shares for about 63,000 individuals in the province who made application for their free shares but did not pick them up. In an effort to distribute these shares, the ministry initiated a mail procedure in an attempt to contact these individuals and arrange for the delivery of those shares. I'm happy to report to the committee that the program has met with success. More than half of the individuals contacted in this mailing have returned their reply cards, and the majority of those who have responded have had their shares mailed to them.

MR. LEA: On a point of order, since the minister has taken this portfolio — another portfolio.... I've been rather hesitant to raise this point of order, understanding that the minister may have a problem or two in the area, but it is against the rules of our House to read speeches in their entirety. The minister does it all the time, and today is another time. I'd ask that Mr. Chairman bring the minister to task on this very important point.

MR. CHAIRMAN: The point it well taken by the hon. member, and our standing orders....

Interjection.

HON. MR. CURTIS: Mr. Chairman, the point is well taken.

Interjection.

HON. MR. CURTIS: Well, Mr. Member, I leave it to the committee to judge, when the estimates are concluded tomorrow or Thursday or Friday, and see how it goes.

I was attempting to quote from copious notes, Mr. Chairman, and I trust that virtually.... The member just needed another few moments of patience. I'll tell him later on about the awards which he was asking about across the floor. I'll answer the question about the awards.

Interjections.

MR. CHAIRMAN: The hon. Minister of Finance does have the floor, and I would point out to all hon. members that it is contrary to our standing orders to interrupt any member who has the floor during the course of debate.

HON. MR. CURTIS: The next important development, I suggest, with respect to the Ministry of Finance was the addition of the responsibility for the Provincial Capital Commission. This also occurred in November 1979, and the committee will know that the chief executive officer of the commission is Mr. George Giles. At this particular point I would like to say that as the commission changes in its responsibilities, moving from being simply an approval agency on behalf of municipalities in greater Victoria to a more operational role, the challenge to Mr. Giles and to the relatively small staff of the Capital Commission has clearly proven a very heavy responsibility.

The opening of the Crystal Garden earlier this year was a completely new experience for the commission and for the minister responsible, and the projections with regard to attendance at that particular time could only be on a best-guess basis. However, I can tell you that the attendance figures at that new facility, for visitors and greater Victorians alike, have exceeded all expectations.

MR. LAUK: Would you go back to the text now?

HON. MR. CURTIS: That member, Mr. Chairman, was not in his seat. If rules are going to be enforced, then they should be enforced on both sides of the committee.

I look forward today, tomorrow and on following days to answering questions — without reference to a complete text, Mr. Chairman — as we debate the estimates of the Ministry of Finance. This is my first opportunity, as a new minister, to speak on these particular matters, and I now look forward to the questions as they come from members of the committee on both sides of the House.

MR. STUPICH: Mr. Chairman, the minister's opening remarks referred to the previous deputy, and certainly — as I did on a previous occasion — I want to join with him in recognizing the contribution made by Mr. Bryson to the affairs of this province. I've known him since I first entered the Legislature as a result of the 1963 election. I have always found him very good to work with — whether in opposition or in government — and one who would certainly help the opposition right up to the line where he thought it was proper. If he felt one was going a centimetre or a millimetre over that line, he would not hesitate to say so, and that would be the end of that conversation. I think he was, from all points of view, a very excellent public servant.

As far as Mr. Bell, who has taken over from him, is concerned, I have not had the same opportunity to get to know him. But I will say that in a Public Accounts meeting one day — which is not really the business of this House — he was subjected to some very searching questions, particularly from members of the opposition — I think he was on rather shaky ground, perhaps sometimes even quicksand, but that's a matter of opinion — and I will say that I thought he handled himself very capably. So I expect he will do a good job as Deputy Minister of Finance in the province.

I'm rather surprised that the minister commented on the changes within the office or branch or whatever of the comptroller-general. When the minister was asked in question period one day whether or not he had asked for the resignation of the comptroller-general, Mr. Bonnell, he denied that he had asked for the resignation. I think the same day we heard that Mr. Bonnell was suing the minister for — I'm not sure whether it was wrongful dismissal or not. I just don't understand the ways of lawyers and lawsuits and things like

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that. Perhaps I'll have an opportunity to become more familiar with that in the near future. At this point, while I'm wondering where to pick up after the minister's remarks, I'd like to yield briefly to the hon. first member for Victoria.

MR. BARBER: According to the member for North Vancouver–Seymour (Mr. Davis), because of a decision made by the Minister of Finance and announced on January 31 of this year, the tourist economy of Victoria will lose many millions of dollars. Because of an inept decision taken by the Minister of Finance, it may well be necessary to recover losses in the order of $5 million on the Victoria-Seattle service this year. Because of a decision announced by the minister on January 31 of this year, the Princess Marguerite, a perfectly safe and usable vessel, was mothballed under false pretences, with no justification in fact, no documentation to substantiate it and no significant claim to the contrary by a minister who clearly didn't know what he was talking about when he announced the scrapping of the vessel Marguerite.

The people of British Columbia are going to lose millions because of the bungling of the Minister of Finance, who wrongly scrapped the Princess Marguerite. Also, as chairman of the cabinet committee, he was responsible for reconciling the differences, which were clear and many, between the Minister of Transportation and Highways (Hon. Mr. Fraser) and the Minister of Industry and Small Business Development (Hon. Mr. Phillips).

The so-called reconciliation consisted of a ridiculous escapade, which saw the conversion of the Surrey from its original purpose to another, the conversion of the Rupert from its original purpose to another, the deployment on the Victoria-Seattle run of a vessel called the Rupert, which has been a totally unpopular replacement for the Marguerite, and a jetfoil service which is not in the least economical and will also require massive subsidies from the taxpayer in order to make it appear economical. All of this is the direct result of the incompetence of the Minister of Finance and must be directly held and charged accountable to this minister. On January 31 of this year he stood up and made a series of ridiculous claims about the alleged unseaworthiness of the Princess Marguerite.

I would inform the committee that the vessel is still floating perfectly soundly in Esquimalt harbour, where the taxpayers are subsidizing its mothballing to the tune of $5,000 a month — another loss as the direct result of the incompetence of the Minister of Finance. I would point out as well that the government has admitted that in the first few weeks of the operation of the vessel Rupert, now called the Victoria Princess, the losses to the taxpayers directly were in excess of $1 million. I would point out as well that we are reliably informed that the jetfoil has also been a loser economically, and in any case could only artificially be made to appear a valid proposition when you scrap its only competition, the Marguerite, and you replace that vessel with a totally unpopular substitute.

All of this is the direct result of a statement the minister made on January 31 of this year, for which he must be held accountable by the people of this province through this chamber.

MR. CHAIRMAN: Hon. member, I hope the member can relate the debate at this point with respect to the administrative actions of the department whose vote is before us, because we do appear to be recanvassing the votes of the Minister of Transportation and Highways (Hon. Mr. Fraser). Perhaps the member could relate that to the committee.

MR. BARBER: It was one of the administrative responsibilities of the Minister of Finance to sort out a fight in cabinet, chair a committee to come up with a compromise solution and announce the ridiculous solution which he did announce on January 31. At that time he was proud of it. Since that time we've heard nothing about it from him. He knows full well that it's a decision which has been repudiated by every competent marine authority in the province. It has recently been repudiated by the chamber of commerce in Victoria, which is now asking the government to take one of the famous second looks. The minister then was pleased to be responsible for the announcement to scrap the Marguerite on the basis of absolutely no evidence that it was a floating coffin or a danger to babies and tourists. At that point in this year the minister was pleased to be responsible for announcing this absurd decision to scrap the Marguerite. He must be held accountable for it today. Secondly, it is also well within order to ask the minister questions as to the losses which will be suffered by the taxpayers of British Columbia and the tourist economy of this city because of the foolishness and mindlessness of that decision.

I don't ask the committee to take the word of a New Democrat criticizing a Socred, who used to be a Conservative, who used to be a Liberal and who at one time dallied with Action Canada. That wouldn't be reasonable. Instead I ask the committee to take the word of the hon. member for North Vancouver–Seymour (Mr. Davis), currently a Social Crediter and formerly a Liberal. In an excellent letter published in the Victoria Times on July 23, this is what the member had to say, in effect, about his colleague the bungling Minister of Finance, who announced the decision on January 31. May I quote briefly:

"The Princess Marguerite will be back on the Seattle-Victoria run next year. That is the conclusion which anyone interested in the profitability of our tourist business is bound to reach after looking at B.C. Steamships' performance, so far, in 1980.

"To repeat this year's twinning of the ill-suited Princess Victoria and the Boeing hydrofoil is unthinkable from a dollars-and-cents point of view. They will cost the government a minimum of $5 million this summer. The Princess Marguerite, even in its worst days, didn't exceed the $1 million level."

The letter continues, but I won't for a moment. It should be noted parenthetically that the worst day of the Princess Marguerite occurred, of course, under Social Credit's administration in 1976. However, that's an aside.

The fact is that the member for Saanich and the Islands will, during the forthcoming provincial election, most assuredly be reminded — as will his voters, few as they may be — of his personal responsibility for a $5 million loss to the taxpayers on the Victoria-Seattle run this summer. He will also be reminded during that campaign of his personal responsibility for scrapping the Princess Marguerite under false pretences, when Lloyd's of London said it was safe, the Canadian Coast Guard said it was safe, and everyone knew it was safe, including the Edwardson and Co. report which at the bottom of page 4 said: "Nothing in this report should be construed as to suggest that the vessel is unfit to continue in her present service." That's what the government's own

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report said, and that's what the minister refused to believe when, for whatever hare-brained reasons, he announced the scrapping of the Marguerite on January 31 of this year.

But again, I don't ask the committee to believe a New Democrat. After all, we have certain biases. We believe in fiscal prudence, in not wasting $5 million to subsidize a ridiculous service like this. We believe in caution. We're biased. This government apparently is prepared to believe in anything in order to attack the New Democrat success called the Princess Marguerite. We're cautious and prudent, and I admit it; we're biased. We're very conservative when it comes to the spending of taxpayers' money, unlike this incompetent Minister of Finance who, by the conclusion of his own Socred colleague, estimates that the decision of this minister will cost $5 million this summer alone.

Think what a good Minister of Finance could do with that $5 million. He could award them to the Minister of Health (Hon. Mr. Mair) to build more long-term care beds in Victoria. He could award them to the Minister of Human Resources (Hon. Mrs. McCarthy) to give a more reasonable, decent and civil pension to senior citizens. He could do any number of good things with that money. Instead, according to his own colleague's estimate he has personally wasted $5 million this summer to subsidize and to try to paper over a ridiculous, unnecessary, absolutely unjustifiable decision to scrap that vessel.

We have further proof, and it also comes from the mouths of Socreds. It was only a few weeks ago that the Minister of Transportation and Highways (Hon. Mr. Fraser), to his credit, started crawling back in from the ridiculous position, way out on the limb, the Minister of Finance had put him in. The Minister of Transportation and Highways, for the first time, just a short while ago hinted that the government was prepared to reconsider and replace the Marguerite where it belongs — on the Victoria-Seattle run. One should point out that he's not yet gone all the way and announced the recommissioning of the vessel, but I expect he has taken the necessary first political step to prepare the people of Victoria for a total about-face on the issue of the Victoria-Seattle service.

The worth of that service to the capital city has been traditionally estimated at anywhere between $12 million and $14 million a year, in good times when the Marguerite itself was available. When the vessel was properly run by people who knew what they were doing, that vessel brought in tens of thousands of tourists and automobiles. They even allowed bicycles, and we had a fight about that one earlier this year. When the vessel was properly used and deployed, as the Marguerite was, it was a tremendous benefit to the economy of this city. It was also, according to Mr. Elworthy — the now deposed chairman of B.C. Steamships — going to turn a profit to the taxpayers, who are the owners of that vessel, of half a million dollars this year. So not only should we think about what the minister could have done with the $5 million that his colleague estimates will be wasted in a subsidy of this ridiculous replacement service, but he could also have done something else with the half-million dollars of profit which his own appointee and former friend, Arthur Elworthy, announced publicly would have been obtained by the Marguerite. I suppose Mr. Elworthy isn't his friend any more, because he's suing the government. Nonetheless, at the time, I'm sure Mr. Elworthy's sources were reliable. He estimated that it would turn a profit of half a million dollars this year, so we've lost not just the $5 million as calculated by the hon. member for North Vancouver–Seymour, not just the half-million dollars whose profit would have been the result of the Marguerite's service this year; we've also lost untold millions because of the 25 percent to 35 percent decrease in tourist carrying capacity, in the number of passengers and in the revenue those tourists would have brought to the people of Victoria and Vancouver Island. How much more evidence do we need of an incompetent hand muddling up the works?

This minister is personally responsible for one of the biggest financial disasters that his administration has ever suffered. There has been more than $5 million in a direct loss, according to his own colleague's calculation. On the government's own admission, it's well over a million so far in just the first few weeks — the loss of a half million profit that could have been obtained. The member for Saanich and the Islands is also responsible for that. Mr. Elworthy, in his better calculations, thought it might have been even more with a good season.

As a result — and my colleague from Mackenzie will shortly be describing it — of the simply lunatic chain of events that occurred with the conversion at great expense of vessels for purposes to which they were not intended, and in the case of the Rupert the reconversion of that vessel in late September of this year to its original purpose at further great expense. It is possible to calculate that the direct and indirect losses are in excess of $20 million this year. Again the basis for that is the $5 million lost on the service — the half-million-plus lost on profit; the cost of converting the Rupert and the Surrey — which my colleague will deal with — and the reconversion of one of those ships, which won't be used any more on the Victoria-Seattle run, we trust; the losses in tourist revenue; the losses in taxes which would have been generated; and losses to the economy in general. Because of the incompetence of the Minister of Finance, more than $20 million, we predict, will have been lost by the end of this fiscal year.

On January 31 of this year he was so ill advised as to expect anyone to take him seriously when he announced that the Marguerite was unseaworthy. If it were so unseaworthy, Mr. Chairman, surely the Canadian Coast Guard would have told us so; but they told us it was perfectly seaworthy, and they said so publicly, much to the embarrassment of the minister. If it were unseaworthy, Lloyd's of London would never have insured it, but they said publicly that they had insured it and had given it an A1 classification, which is the highest possible rating in its order. If it were so unseaworthy, presumably the Premier would have advised his own mother not to travel on the darned thing; but she travelled on it on October 5 of last year with her friends the Skillings — and had a good time, and had champagne courtesy of the crew. If it were so unseaworthy, why was the Premier's own mother aboard on October 5? Wasn't it in danger of turning into a floating coffin at that time? Why, only two or three months later, did the Minister of Finance announce that it had suddenly become unseaworthy?

This minister is accountable for these losses. This minister's decision is directly responsible for the failure of the Victoria-Seattle service this summer. He may tell us that there have been losses elsewhere because of the volcano. You may have heard that excuse before. I'm anticipating apologies for transgressing the rule of anticipation in the committee. We've also heard that completely foolish excuse from the members opposite, who blame the volcano for the whole failure of the run. They neglect to mention — as I trust the Minister of Finance in his excuse-making will also neglect to mention — the fact that all other border crossing

[ Page 3873 ]

numbers are up, the tourist revenues are up, the passenger capacities and passenger carrying are up, except on one run — Victoria-Seattle.

Just a few days ago I received a press release from the Minister of Tourism (Hon. Mrs. Jordan), boasting about the fact that tourist revenues and tourist entries at border crossings were up here and there and everywhere; she did not mention that they were down on the Victoria-Seattle run by anywhere from 25 percent to 35 percent. Apparently the volcano had no impact on the lower mainland. One wonders why that would be. After all, the lower mainland is where the volcano is located, not 40 miles or 50 miles or 60 miles out in the Pacific. However, every single other border crossing is up. According to the Minister of Tourism, tourism is proudly improving everywhere except one place, and that's Victoria-Seattle. Why is that? It's because of the Minister of Finance.

No one else is personally responsible but he. There were other meddlers, but in fact it is the Minister of Finance who personally must be held accountable for all these losses — the losses in profit, the losses to the tourist economy, and the losses that will have to be made up when the subsidy cheques are issued.

I want to predict that the government will try one sleight-of-hand. The committee will know, as the minister knows, that among the other foolish things that he ordered, as the minister responsible, was the decision to go ahead and obtain the Rupert without a lease. The Minister of Finance, on behalf of his government, ordered B.C. Ferries to make the Rupert available without a lease price being agreed upon in advance. To this date, according to our most recent information — but I stand to be corrected — there has yet to be a lease signed between B.C. Steamships and the B.C. Ferry Corporation. That is totally imprudent. That is a ridiculous way to do business. That is a stupid way to enter into a business arrangement with any corporation. But it is the Socred way.

Now why is that? Well, it's our guess that the Minister of Finance suspected that something might go wrong, and therefore the attempt of the government was this: they would reduce the apparent losses on the Victoria-Seattle run by reducing the real cost of the vessel lease. In fact, they would artificially lower the cost of that lease and charge the difference to B.C. Ferries. For instance, if the vessel is worth $300,000 a month in lease — which it might be; that's a very conservative estimate judging by the European figures for comparable vessels that we've been able to obtain — then instead of B.C. Steamships paying the $300,000 a month lease they should, they might end up paying only, shall we say, $80,000 a month. Why is that? Well, so that they don't have to suffer the burden of the additional cost of 220 grand a month for a vessel that is not in the least appropriate for the Victoria-Seattle run. In fact, the hidden loss will be the $220,000 or whatever it is a month that B.C. Ferries should receive as a proper lease payment but will not receive because of the financial manipulations of this government, which will deliberately and artificially lower the real value of that lease to B.C. Ferries in order to diminish the charge-back against B.C. Steamships.

We know that Socreds are capable of these tricks. We know that they are capable of that sleight-of-hand because they've been doing it for 20 years. They always do it. They always overestimate expenditures and underestimate revenues. However, that's another debate.

So there are additional costs that we will also be examining, and those are the costs involved, we suspect, when finally the lease figures are announced and when we expect to be able to demonstrate that they artificially lower the value, the real value of that leased vessel from B.C. Ferries' point of view, and make B.C. Ferries, where they can cover the loss better, bear the burden of this minister's mistakes.

There are other losses as well because of the bungling of this minister. These are the losses suffered on the jetfoil. It is a matter of record that the jetfoil is an American vessel with an American crew putting Canadians out of work. What additional losses are also being suffered by our economy because this government chose to go the American way and provide American jobs aboard an American vessel when they could have retained Canadian jobs aboard a Canadian vessel called the Marguerite?

It's also a matter of record that this government has evidently entered into an agreement with Boeing Computer Systems to provide computer services to B.C. Steamship. Apparently the Boeing service now includes all of the reservations for B.C. Steamships and the jetfoil. Once again, we have to ask what losses have been suffered by Canadian industry that could have provided those computer services and that could have filled those computer jobs. We also therefore must take into account the losses to Canadian enterprise, to Canadian workers and to the Canadian economy because this government decided to go American, when they could have and should have stayed Canadian.

The losses for which this minister is personally responsible are becoming astronomical when you add up all of the direct and indirect charges which result from the completely insupportable decision to get rid of the Princess Marguerite long before her time.

But I don't ask the committee to take my word for it. Instead, ask the Premier, who consented to his mother's riding on this floating coffin on October 5, 1979. Ask him what he thought of the seaworthiness of the vessel. Ask the Minister of Transportation and Highways, who a couple of weeks ago hinted that they would now reconsider and contemplate putting the Marguerite back on the run where it belongs. Ask the Greater Victoria Chamber of Commerce, which to its credit has reversed its position and has now advised the government to take a second look at the Marguerite. Ask Lloyd's of London, which found and finds that the vessel is perfectly safe. Ask the Canadian Coast Guard, which found and finds that the vessel is perfectly safe. Ask the American Coast Guard, which found the same thing. Ask the tourist economy of Vancouver Island and Victoria, which has suffered totally unnecessary losses because of the bungling of the Minister of Finance. Ask the former chairman of B.C. Steamships, who said it could have made a major profit this year had the Marguerite stayed on. Ask the Socred MLA for North Vancouver–Seymour (Mr. Davis) about the $5 million he calculates — in public, in writing — will be lost on the Victoria-Seattle run this year. When you ask all of those people, not one of them a New Democrat, you come up with the same conclusion.

This minister was wrong, dead wrong, to scrap the Marguerite; he was wrong, dead wrong, to replace it with — in the words of his colleague — the "twinning" of the ill-suited Princess Victoria and Boeing hydrofoil, which his colleague also called "unthinkable." If you ask any of those people, you come up with the same answer: the Minister of Finance botched it. It is one of the worst mistakes of his career, it is one of the worst errors this government has made in the last few weeks, and it is an error for which he will and must be

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held personally accountable by the people of this province and, I promise, by the electors of Saanich.

There are remedies. The first would be for the government and the minister to candidly, honestly and frankly admit they made a mistake. The first remedy is for the government to come clean. The first remedy is for the government to be honest and open and agree with all of those other non-New Democratic authorities, including the Socred MLA for North Vancouver–Seymour, that they botched it, and promise, on scout's honour, never to do it again. That would be a good thing for the public interest.

MR. COCKE: It would be a bad thing for the Scouts.

MR. BARBER: Well, maybe, but I'm sure they'll survive.

It would be a good thing for any government to admit that they made an error, and in the long run, I predict, they will get credit for the honesty of their admission. That's the first thing we need — an open admission from the Minister of Finance that he was wrong, that his scheme has been a flop, that the vessel is losing money hand over fist, and that the error will not be repeated.

The second thing that the government should do, and I charge the minister to do, is to stop advertising an unpopular service and instead redirect all of the advertising and all of the marketing to the destination. The Minister of Finance can do this in cabinet. Because they cannot successfully market the jetfoil and Rupert service, they should instead market the destination, Victoria and Vancouver Island. Such a new advertising campaign, even introduced in mid-August, would help for the remaining month and a half of the run to reduce some of the otherwise unavoidable and irretrievable losses. They can't market the service, because the service is a flop; instead they should market the destination. If they do so, they will do this with the blessing and the support of the official opposition.

The third thing they should do is immediately commission a full-scale examination of the electrical, mechanical, plating and propulsion requirements of the vessel Marguerite, and they should do so with an eye to restoring that vessel to service next year. I urge the Minister of Finance, for the sake of his own revenues, to commission that study as soon as possible, preferably tomorrow. Having commissioned it tomorrow, we might get it in four or six weeks; and in four or six weeks we will know what it will cost to refit the vessel to meet all of the standards and tests that will be applied against her in 1981. The government and the minister should announce this as soon as possible for three very good reasons — and I'll conclude with them, Mr. Chairman.

First, the tour operators who run charters — or used to run charters, I should say — from Victoria to Seattle need the longest possible advance warning in order to get back into gear for next year and recover that part of the business. Secondly, the administration of B.C. Steamships needs the longest possible warning in order to hire or rehire the necessary crew to bring the vessel back into service. Thirdly, such an announcement from the Minister of Finance would be the first piece of good news he's had to offer about the Victoria-Seattle run since he first started talking about it on January 31 of this year. I commend to him those three things: admit the mistake; market the destination and not the service; and announce the recommissioning of the Princess Marguerite at the earliest possible opportunity. If he does all those things, he may make some small amends for his incompetent decision to get rid of the vessel when he did.

HON. MR. CURTIS: Mr. Chairman, I note the hon. member for Mackenzie (Mr. Lockstead) seeks the floor, and I will be very brief.

I would simply look for guidance from the Chair after the withering, scathing attack from the member who has just taken his place. The responsibility which I carry as Minister of Finance with respect to the British Columbia Steamship Company is that of fiscal agent. The same can be said of the British Columbia Railway, British Columbia Hydro and Power Authority, British Columbia Buildings Corporation, British Columbia Systems Corporation and the Urban Transit Authority — to mention just a few. In other words, it is traditional. It was the case when that party opposite was in power, and it is the case now, that the Minister of Finance acts as the fiscal agent. Therefore, Mr. Chairman, I think that if I did not want to rise on a point of order it was because I wanted the member to vent his rage again on this particular issue. Someday in this chamber I will read back to him his maiden speech of 1976, when he first spoke and talked about hyperbole, rancour and bitterness in this chamber. That will be for another day, and we'll enjoy it then. But, within the perimeters of the responsibility of the Minister of Finance, I point out that the responsibility is that of fiscal agent, and therefore it would be possible — I'm not on a point of order; I'm simply speaking — to deal in great detail with all other Crown corporations that I've identified and others.

MR. LEA: On a point of order, before going too far, because I think once the minister understands that he is required to answer for this area of the responsibility....

He was designated this area by the Premier — to be responsible for a certain area and chair a group of individuals to come to a decision. He announced it on the Premier's orders, and therefore he is responsible for the work that he did as a member of the executive council on orders and requests from the Premier.

Further, as to reading this member's speech back from 1976, if we want to get into that I'd like to read to the House the speeches made by the minister against Social Credit when he was a member of the Conservative Party down here. We can all play that game. Or was it when he was in the Liberal Party?

MR. CHAIRMAN: Your point is becoming argumentative, hon. member. Make the point of order, please.

MR. LEA: The point is that the Premier charged him with a responsibility, which he carried out. He then comes in here and says: "I can't be questioned. I'm not accountable for it, because after all I'm just the little Minister of Finance." I'd ask that the Chairman take into consideration when thinking about this the fact that there are many ministers who are not appointed by the Lieutenant-Governor to accept a responsibility; that's done by the Premier, and that's done to make a minister responsible for Hydro, a minister responsible for the BCR, and a minister responsible for various things, which he did with this minister. All those other ministers answer in a responsible and accountable way in the House; this minister should also.

MR. CHAIRMAN: Just briefly I'll point out that the

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administrative action of a department is open to debate during Committee of Supply.

MR. LOCKSTEAD: I would point out further that during the debate of the Ministry of Transportation and Highways it was pointed out by the Chair — by yourself, I believe — that certain topics relating to this particular item, the Victoria-Seattle service, would more properly be discussed under this minister. This is exactly what my colleague the first member for Victoria (Mr. Barber) was attempting to do. Furthermore, I find that in listening to the full speech of the first member for Victoria, he left very little for me to say on this topic, so I'll be very brief. In my view, he covered it very, very well.

The horrendous decision made by that government over there on this issue did not only affect the economy of Victoria and Vancouver Island; it directly interfered with the rational economic development of the central and north coast of this province because of the transfer and mistransfer and misuse of vessels then available to the government of British Columbia through the B.C. Ferry Corporation and other agencies. The charge I'm making at this point is that because of these horrendous decisions, the economy.... Can you imagine this, Mr. Chairman? I've mentioned this in this House before. The government announced the closure of a community on the central coast of this province, arbitrarily left 1,100 people stranded in that community, shut the plant down, took the vessel off and put it on a route down here at a cost — in the government's figures — of $7.4 million for that particular refit — actually the final cost will be more in the nature of $10.2 million — and caused all the horrendous problems to people and the economy of the area. Never mind the $21 million-plus which the whole package is going to cost the people of the province, when that total operation could have shown a very nice profit this year, according to Mr. Elworthy and other people involved in the industry. I thought it was well to bring this to the government's and the minister's attention.

You know, Mr. Chairman, the Princess Patricia is....

MR. CHAIRMAN: Hon. member, at this point the Chair has allowed tremendous latitude. I did bring this point of order to the committee earlier, and I will now cite from May, seventeenth edition, page 739, that during Committee of Supply the administrative action of a department is open to debate. Really, we must contain our remarks and our debate when discussing the estimates of the Ministry of Finance to the actions of that department.

MR. LOCKSTEAD: Thank you, Mr. Chairman, I understand perfectly. This is exactly what was pointed out before when I was informed during the debate of the Ministry of Transportation and Highways that this particular item would be more properly discussed at this particular time. I've been waiting patiently for weeks to get at it.

MR. CHAIRMAN: Hon. member, I cannot accept that statement. This topic was canvassed extremely well during the estimates of the Minister of Transportation and Highways (Hon. Mr. Fraser). Perhaps the member could continue and relate it to the Chair with relevancy to vote 85.

MR. LOCKSTEAD: I will be brief. As I pointed out before, my colleague, the first member for Victoria (Mr. Barber), expressed the problem to the government very clearly, concisely and forcefully; he did cover most of the items. But there are smaller related items: for example, the $5,000-a-month storage fees for the Princess Marguerite that are being paid to Yarrows. That certainly comes under the Minister of Finance's purview. The Minister of Finance is the fiscal agent for these agencies and must pay out the people's money for these horrendous costs. I suspect that the Minister of Finance is going to get up and say, in answer to the first member for Victoria, that the lease charges will not be charged to anybody. The only lease charge — as the Minister of Transportation and Highways said earlier in this House — was that they would refit the Queen of Prince Rupert to put it back on its normal run or on a new route between Prince Rupert and the Queen Charlotte Islands. But that total package is still going to cost — because of this original horrendous decision to remove the Marguerite, which was perfectly capable of sailing between Victoria and Seattle — in the final analysis not counting lost business, economic development and jobs, in the neighbourhood of at least $21.5 million according to our calculations, including refits, transfer of vessels and this kind of thing.

MR. STUPICH: 1'd like to deal first with the overall expenditures of government. Referring to the budget, page 34, we note that the expenditures projected for the 1980-81 fiscal period — I suppose this is the case every year, but it's a new all-time high — are in the amount of $5,549,600,000. One is tempted to ask what happened to the goal of government to limit increases in government spending to 5 percent per year, but I think at this point I won't. However, I will say that in addition to that figure in excess of five and a half billion dollars there were special appropriations approved by this Legislature — and I make no comment on this other than to say that in total they add up to $356,650,000, which means that in fact we're dealing with a total, at this point, of $5,906,250,000. And that's really not the end of it, Mr. Chairman, because looking at the record of this particular administration.... Now we have to indulge in forecasts. May I say that one of the elements in this budget, and in papers along with it, is the idea of forecasting over a midterm period which is some five years, but at this point I'm not getting into that.

What I will say is that in the fiscal period 1976-77 the overruns totalled $84 million; in the fiscal period 1977-78 they totalled $215 million — an increase in that one year of 156 percent in over-runs; in 1978-79 the overruns increased to $221 million; in 1979-80 the overruns increased again to $283 million. The average increase per year over that four year period is 62 percent. On that basis if the increase in overrun in the fiscal period 1980-81 is 62 percent we'll be dealing with overruns in the fiscal period we're now in of some $458 million. However, to recalculate it: the overruns for 1978-79 were $221 million, and in 1979-80 they had increased to $282.7 million, which is an increase in that one year of $61.6 million, or only 28 percent. Even if we apply that 28 percent increase to the overruns of 1979-80 we come up with overruns of $361.8 million.

By adding that to the figure that I gave you previously, Mr. Chairman, we're talking about a total expenditure in this period of some $6.36 billion, which is certainly far away from the plans announced by the government to limit its

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expenditures. Mr. Chairman, that's not the end of it, because if we're now going to look at the mid-term outlook — and I welcome the idea of a mid-term outlook and will have some more to say about that — it seems to me that one of the things left out of the mid-term outlook is certain government plans for spending that are detailed in the budget. The amount to be spent in the current fiscal period is noted, but there is really no reference to the total amount that will be expended over the mid-term outlook. I wonder whether the minister, at this point — this is one question I'd like to put to him, and I'd welcome the answer now rather than having those long speeches; if we can have that kind of an afternoon, it might be more informative for both of us.

There are several items mentioned on pages 60 and 61 of the budget. There is the B.C. Place Fund. It's expected that none of this will be spent in the current fiscal period — a total amount of $15 million is set aside for it, but apparently none is going to be spent. What I'm wondering is: how much does the government have in mind spending in the mid-term outlook on B.C. Place?

The other one I'd like to mention is the Downtown Revitalization Fund. Once again we are setting aside $25 million for that out of current surplus and/or revenue. Only $5 million will be spent. I'm wondering: does the government have any plans in the mid-term outlook for adding to that fund?

The Fraser River Crossing Fund. It was said at the time this was announced that it was going to cost $130 million. I think our experience in matters such as that, when we're talking about a project that is going to last for several years, is that in all likelihood we're at least 50 percent short of what the actual cost will be. I wonder, again speaking in terms of the mid-term outlook: does the minister have any figure in mind in the mid-term outlook as to what that is actually going to cost the taxpayers of the province?

The Lower Mainland Stadium Fund. Once again, we're setting aside $25 million for the construction of a lower mainland stadium. That's been discussed in legislation, but at this time my point is that we're spending $5 million of that in the current fiscal period and we'll have $20 million left over. How much are public accounts going to be responsible for in the mid-term outlook for this Lower Mainland Stadium Fund?

The Urban Transit Fund. We're setting aside $55 million for that. It would appear as though we intend to spend none of it in the current fixed period and we'll still have the $55 million there at the end of the year. It would appear as though the interest earned on that fund will not go to this fund, and I just don't recall from the legislation whether that was specifically mentioned. Once again, does the government have any target as to what will be spent on that item in the mid-term outlook?

The Vancouver trade and convention centre fund: $10 million put into it this year — $5 million to be spent, $5 million left over at the end of the year. How much more is to be added, or will that be it? The same with respect to the Victoria trade and convention centre fund, where we are putting in $2.5 million and spending $1.5 million. We will have $1 million left over. Will that be the end of it, or will the government, in the mid-term outlook, be expected to add to that?

There are a couple of others that are not mentioned. One of them is the dental program, and to the best of my knowledge, although the program has been announced, there has been no legislation introduced to provide for any funds for that — nothing in estimates anywhere that I'm aware of; I might have missed it.

HON. MR. CURTIS: There is now. Miscellaneous statutes.

MR. STUPICH: There is reference there to the amount of money that is going to be spent in the current fiscal period?

HON. MR. CURTIS: No, but the authority is there.

MR. STUPICH: The authority to spend it.

Well then, Mr. Chairman, my questions would be two with respect to the dental program. One is: how much is intended to be spent in the current fiscal period of 1980-81? The other one is: is there any forecast, with respect to the mid-term outlook, as to what will be spent on that program?

I have one remaining, perhaps relatively small item. There has been talk — and I may come back to this later, I don't know; I'll see how the afternoon goes — of the province going it alone on northeast coal, and I'm wondering whether that will involve any spending beyond the $20 million that's mentioned in the Special Funds Act. What will be the mid-term commitments on the part of the government in the event that the government is determined to go it alone or in the event that anything else happened? If the government is determined to go it alone in the absence of any federal participation beyond what the federal government has already promised, what are we looking toward in the way of mid-term commitments for northeast coal development? I wonder if the minister would care to comment on those questions.

HON. MR. CURTIS: Mr. Chairman, the hon. member for Nanaimo has dealt with a number of things. If I miss one or two, I know he will correct me.

Incidentally, before I respond in any specifics, the mid-term outlook paper was produced by the ministry and accompanied the budget for the first time this year. As I recall, it is correct to say we are the only province in Canada now producing a mid-term paper for the information, guidance and use of all our citizens, not only members of this House. This is part of my philosophy with respect to the Ministry of Finance. It is the public's money. It is not mine; it is not the government's money as such. My senior staff agree with me in this — that I want to see us share as much information as we possibly can with the people of British Columbia in the short term, which is the budget for the fiscal year, and in the mid-term. We must bear in mind, however, that a mid-term projection or a five-year projection will alter from time to time. Circumstances will change, programs will be added, and other programs will be deleted. So that's a rolling outlook. It's going to be revised on a fairly regular basis. The member will know, of course, that that is the same in terms of any capital forecasting. Capital requirements which are now seen for 1985-86 will have altered. They'll alter a little in 1981. They'll alter in 1982, in 1983, and so on. Therefore that is the best possible information available at the time that the mid-term outlook is put into place. I think the member knows, and other members would accept the fact, that that is going to change on a fairly constant basis.

B.C. Place is an expenditure item. I think I understand what the member was asking with respect to that.

Downtown revitalization. Any additional money would be a matter for the budget speech in 1981 for 1981-82, rather

[ Page 3877 ]

than today. I don't know, frankly, if there'll be additional money for downtown revitalization. It's not a question of withholding the information from the committee; I simply don't know. That would depend on a variety of circumstances.

The Fraser River Crossing Fund. The mid-term outlook does contemplate the ongoing expenditure beyond that which was placed in the budget for this year. So that would not form a surprise in the mid-term and the paper to which the hon. member has referred.

The same would apply for the lower mainland stadium. The lower mainland stadium is foreseen in the mid-term outlook.

I have dealt with Annacis.

UTA. The whole concept there, Mr. Chairman, was that we said in consultation later with the Minister of Municipal Affairs: "Look, there is a provincial expenditure facing us for urban transit on a cost-sharing basis with municipalities, with local government in British Columbia. We are in a position to put our money up in advance of the incurring of the debt." So that is what we did, and that certainly was foreseen.

The market, with its volatility, and its tremendous unpredictability these days.... Mr. Chairman, if anyone in this House can find me someone with a crystal ball regarding the public bond market, then I would be very pleased. No such person exists. We understand that. There are best guesses and best information. At this point, I think that it would be correct to say that we don't know whether it would be wise for the Urban Transit Authority on the recommendation of its minister to lease, to purchase, or to do a little of both. So that money is seen nonetheless. It was placed in the budget in good faith and was taken into account in other documents in an effort to provide the provincial funds in advance of their actually being called upon. That's fundamental to what we attempted to do in a number of instances, and that is the case.

The expenditures were foreseen again for the conference centre. I think that's all I can say with respect to that.

Dental care. The answer is that that was not foreseen in the mid-term outlook, again bearing in mind when that material was prepared and the document released. So that is the kind of adjustment in the continuing revision to the outlook that will occur in years to come.

Nonetheless, we are in a position where with a start of January 1 — in terms of budget alone; I do not wish to transgress into the area which is the responsibility of the Minister of Health (Hon. Mr. Mair) — some $30 million or $35 million in this fiscal year is capable of being provided for dental care. The mid-term did not see it, but certainly in the final preparation of the budget we did foresee a figure of that approximate amount.

I think northeast coal was the last thing the member mentioned. Northeast coal was and is seen to be essentially self-liquidating. I say "essentially" because there will be infrastructure — a word I don't particular care for — in terms of the services which are built into that area in the communities, such as schools, delivery of water and carrying away of wastes. Of course, that would fit into normal programs and would have to be taken into account in normal programs in other ministries such as Municipal Affairs, Education, and Lands, Parks and Housing, to name the three principal ones. Beyond that, the position of the minister and the mid-term outlook of the ministry are not at variance at all. Northeast coal is seen to be self-liquidating.

MR. STUPICH: Mr. Chairman, as I understand the Minister of Finance, with respect to almost every one of the items that I mentioned, what he is saying is that the budget, on page 61, includes the total provision in the mid-term outlook for these various funds, and there would be no need to put any further funds into these various projects, with the exception of the Fraser River Crossing Fund — you expect to overrun the cost estimate of $130 million.

I don't see anything in the mid-term outlook document itself with respect to these items. I do see it in the budget on page 61. For example, there is reference to the Downtown Revitalization Fund; $25 million is provided in this period — $5 million is going to be used; $20 million is left. That kind of information is provided, with respect to all of them, in the budget speech. Is that what the minister was telling me when he said that these are all accounted for in the mid-term outlook — not necessarily in the mid-term outlook document?

HON. MR. CURTIS: Most.

MR. STUPICH: The one exception was the Fraser River Crossing Fund: you expect the cost estimates will be overrun.

You said the dental program was not provided for, but that $35 million is considered to be adequate for the 1980-81 fiscal period. I have a question about that. Is the $30 million to $35 million additional money, or is some of it transferred from other programs? For example, to some extent the Ministry of Human Resources provides some funding for dental services, and I think there is some provision for it in the Ministry of Education. I wonder whether some of that $35 million is actually being transferred from other ministries. It may be well spent in this program, but it may not necessarily be an additional $35 million in provincial government expenditures in the current fiscal period. Does the minister have any comment on that? If he can give me any idea as to what extent it is new money, I would be interested.

I have one more question. With respect to northeast coal, he tells us it will be self-liquidating. That may be; it is arguable. My concern is that I think not even the government would profess that it will be self-liquidating in the mid-term outlook. If the government itself is going to have to put relatively large sums of capital into any kind of program, then it would appear to me that it should be something that would be included in the mid-term outlook. I suppose one way out would be to set up a Crown corporation and say: "It's not our debt; we're just guaranteeing it."

As the minister has said — and I accept this — we must recognize that it is the first time this has been done. But, if nothing else, may I suggest that in future mid-term outlooks it might be much more informative to include any capital programs that the government might be involved in, either directly or indirectly through the various Crown corporations. I think this kind of document would be much more helpful if we included all the Crown corporations — B.C. Buildings Corporation, B.C. Ferry Corporation, B.C. Steamship Company, etc. — including one that may be set up for northeast coal development, and showed what the total demands upon the taxpayers are going to be, directly or indirectly, to provide capital funds in the mid-term outlook.

HON. MR. CURTIS: Mr. Chairman, first of all I will give a detailed answer with respect to dental care. There is an

[ Page 3878 ]

amount in the Ministry of Human Resources for dental care. I think it is in the neighbourhood of $9 million. I don't have the figure here but it is approximately $9 million for this fiscal year. The figure of $35 million, which I indicated earlier, has been allocated. We might fall below that in the first three months of a major program. The member opposite knows, as a former Minister of Finance, that when you're starting up a major program you do the very best you can in estimating from this distance precisely what will occur.

Assume that we're a touch high: that figure, however, is total; deducted from that would be the remaining three months, which are now allocated to the care of my colleague the Minister of Human Resources (Hon. Mrs. McCarthy), so they would just be a crossover. This is the total amount which would be used, including the program already in existence within Human Resources.

Again, I appreciate the remarks the member made with respect to the mid-term outlook — the mid-term paper. It was a first attempt. I don't want to be tedious about it, but it is the first in Canada, except at the national level. There are a number of things I think we can do to improve on the amount of information and the kind of information which will come in future years. That paper was prepared by the ministry. This may be a fine point — and I speak to the member for Nanaimo (Mr. Stupich) as a former Minister of Finance, albeit briefly — but that was a ministry document and did not reflect — indeed, I think it would be wrong for it to reflect — the views of the political person in the ministry. It is simply a forecast of expenditures and revenues.

The member will also know that it is the minister's responsibility, leading up to budget time, to determine what revenue measures might be taken, what taxes can be increased or decreased, what should be left untouched, what should or should not be done in any area of provincial finance. That actually forms the political document which is called the budget for the province for the fiscal year about to commence.

Bearing in mind that the mid-term report is simply the best possible information from the professional men and women who comprise the senior staff of the Ministry of Finance — it is their forecast — I am confident that in subsequent years it can be expanded and improved upon. I won't make the commitment to the member who is my critic on the opposite side. I cannot make the commitment today that the document issued in 1981 will include capital projections. I do make the commitment that next year we shall have the second of what I hope will be a long pattern of mid-term reports for the information and guidance of members of this House and all British Columbians.

MR. STUPICH: I'll just leave that for the time being and get back to the budget speech; I'm not completely abandoning the mid-term outlook.

I'd like to briefly quote from a couple of pages in the budget speech. First, from the introduction on page 5:

"As Minister of Finance it is my pleasure to present to this House and 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.

"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 — to build a secure and satisfying future for our citizens."

You will recall, Mr. Chairman, that this budget was the one that was read in the House on March 11, 1980.

Skipping over to page 6:

"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.

Then there's a reference to "without recourse to government borrowing."

Later on the same page: "...budget policy should be set within a longer term...." I think that is running a bit contradictory to the suggestion that it should always be without recourse to government borrowing. It might be necessary at times, if one is going to budget for the longer term, to have recourse to government borrowing. It might be advisable to maintain the level of government services, with the sensitivity to people's needs mentioned in the first paragraph.

Skipping over to page 7:

"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."

Well, Mr. Speaker, coupled with that there is a reference in the budget and the minister announced in the House the achievement of a triple-A rating. I'm sure we're all very happy the government's achieved that. I understand the much-maligned federal government has the same kind of rating; it's only natural, I suppose, that the federal government would have that.

But let's move from the budget to page 1 of the medium-term outlook. Again some of the same principles, good principles, that I've quoted from the budget are included in the mid-term outlook: "Spending priorities depend upon the perceived needs of people for government services and programs, and also the need for the government to manage the province's natural resources and stimulate economic development." Moving to page 6, we're looking a little bit more at the forecasting. I'll read selectively from this: "The contraction of economic activity in the United States, likely to be in the order of 1 percent..." is one of the problems. "The volume of Canadian exports will" — and I want you to note the wording, Mr. Chairman; we're talking now about 1980, the year that we're in currently — "almost definitely" — not quite — "decline in 1980. The federal Department of Finance forecasts Canadian GNP will rise by roughly 1 percent in 1980 so long as investment spending is not too adversely affected by the current high rates of interest on borrowing." Things have changed a bit in that respect at least. But my point is that it's so difficult to tell what is going to happen in the period in which we are living today.

[ Page 3879 ]

The next paragraph goes on to talk about the future: "The recovery beginning sometime in late 1980/early 1981 will" — not "will almost certainly," "may" or "might" — "pervade all the industrialized economies, and growth through 1985...will be in the order of 3 to 4 percent annually...." So with respect to today we can't really say what's going to happen; with respect to this year we can hardly even guess what's going to happen; but when you talk about the next five years it's easy to say how rosy things are going to be. I know that's one of the problems of forecasting. I think I've quoted in this House previously — and I use it often in speeches — a saying to the effect that if all the economists in the world were laid end to end it would be a good thing.

I'd like to get just a little bit more to some questions that I asked of the minister in the House that lead up to this question of restraint — questions that were not answered. The minister gave me some reason to think they were going to be answered in the quarterly report when I first asked the questions, and then when I asked them the second time around he made it clear that those answers would really not be in the quarterly report. Now it's fairly certain that they just couldn't be.

The first evidence I have that the government felt it was running into trouble in the current fiscal period was a story from the Province dated June 27, 1980: "Cut Spending, Curtis Warns Cabinet; Falling Resource Revenues Blamed." On June 27, the minister apparently realized that things were not going well, and in spite of all these rosy forecasts, in spite of the talk in the budget about the need to relate spending to people's needs, in spite of the Premier's comments to the effect that even if we had revenue shortfalls there was nothing to worry about — we had $600 million in surplus, we could get through the year quite easily, there were no problems.... Yet on June 27, the headline is that the Minister of Finance is warning cabinet to cut spending.

Eleven days later — July 8 — I put some questions to the Minister of Finance, because I thought if things were getting bad we should know exactly what the situation is, not what it is going to be, not what it might be, but what the best information is that the minister has right now as to exactly what is happening in the province. I asked him just how far short of his estimate for the current fiscal period the revenue from BCPC will be. I was asked to wait for the quarterly report; I've waited for the quarterly report. There is an indication that it is somewhat less than was expected in the first quarter, but I would think that the minister would have.... We're now talking about the mid-term outlook, so surely we can look ahead to the end of this year and come up with some kind of idea as to just how far short of revenue expected from BCPC in the current period we will be by the end of the year. I asked the minister whether or not he could confirm that BCPC sales are down to half the level of sales for last year measured on a daily basis, and that question was not answered. I asked a question about forestry revenue, and the quarterly report did show at least that that is $40 million above — either above last year or above the estimates for this quarter, I'm not sure — but certainly holding up very well. Finally I asked the minister whether he could give us some idea as to just what the revenue shortfall will be on the basis of the information that he has from all sources; that is, the fact that every other source of revenue is holding up extremely well — is generally apparently over target — but the one shortfall is in the area of BCPC. Can the minister give us his current appraisal as to what the percentage revenue shortfall for the year ended March 31, 1981, will be?

HON. MR. CURTIS: Mr. Chairman, fundamental to the action which was taken in late June was immediate response to the very earliest indication that I had received — and by early I'm referring to sometime prior to that date, late June — that a number of factors had come into play since the budget was prepared and introduced. I would like to take just a few moments with respect to the natural gas question. I can't answer the member's question this afternoon with respect to how much the shortfall will be, because, frankly, I don't know. I don't think that the British Columbia Petroleum Corporation knows, and I don't think that the Minister of Energy, Mines and Petroleum Resources (Hon. Mr. McClelland) knows, because the factors which would help us to answer that question are in the future.

First of all, Mr. Chairman, the equivalent cost of our natural gas — and I'm subject to minor correction on these figures — in the United States is some $24 per barrel of oil. There is now in apparently abundant supply in California, and I think as well in Oregon, residual oil. I don't intend to give the committee a lecture, because I don't have that knowledge, but residual oil is a term which is well known in the industry, and that is available. The equivalency there is about $17. Bearing in mind that a large percentage of our natural gas is sold to commercial-industrial users rather than residential, it is very clear to see that if a plant manager, superintendent, foreman, whatever it may be, has the capacity to change from hydroelectric power one day or one week to natural gas for another day or another week, or to residual oil for another day or another week, he makes that decision based on availability. If we assume that he has the capacity to change from one to the other, first of all he's going to make that decision to keep his plant or business operation running on the basis of availability and price, or indeed price and availability. When the recession in the United States finally arrived, plus the impact of Mount St. Helens on some of the lumbering, manufacturing and processing industries in southwestern Washington and northwestern Oregon.... Taking those factors into account, but particularly the recession and the availability of other energy sources, it's quite clear that British Columbia natural gas has been seen as a more expensive commodity, and we have been the user's last choice.

Now I don't make the next remark in any way facetiously, but there is no member of this House who can tell me what kind of winter it is going to be in the northwestern United States and in British Columbia and Alberta. Is it going to be a severe winter? Is the recession actually over? There are those who are confident that the United States recession is at an end, notwithstanding some difficulties in the automobile industry and in other major industries there, but if the recession is over and it is a relatively cold winter, then clearly our natural gas is going to be in great demand. If the recession, even regionally in the northwestern United States, continues for any number of reasons and we experience a mild winter, then I would think that our sales are going to be lower.

None of this, of course, takes into account the spectre of a federally imposed natural gas tax which, frankly, I find just impossible to contemplate or accept. I don't speak about that, but I say that is yet another factor, and there are those who think that it might be $1 per MCF or a little more. The impact of a federally imposed natural gas tax would obviously

[ Page 3880 ]

further affect the revenues, which we forecast and expect and which BCPC have forecast and expected on the best available information. This then makes it, I think, essential that a Minister of Finance happens to be at this particular time and in this government.... A Minister of Finance should address himself to a resource revenue stabilization fund. I have spoken about this. No, it is not the B.C. equivalent of the Alberta Heritage Fund, but rather it is an attempt to take some of the peaks and valleys and even them out in terms of revenues accrued from the forest industry, natural gas, mineral exploration and the export of a variety of our products. We see far too many tremendous increases and dramatic fall-offs in revenues from those sources.

In precisely which form it will come is a matter yet to be determined by the senior officials in this ministry, myself and my cabinet colleagues. I would expect that we can have something for the House, the Legislature and the people of British Columbia to examine in 1981, but certainly not before then. We do want to build into the collecting of these revenues and the setting aside of that money something that will help us over the valleys and smooth out the peaks, because frankly the forecasting.... The member for Nanaimo (Mr. Stupich), my chief critic in this debate, said: "Yes, if all the economists were laid end to end, that would be great." I say in all kindness that I think there would first be an argument over which direction the line should go, but once that was decided upon, fair enough. It is very, very difficult for those who advise a Minister of Finance in a province such as ours to forecast in the very short term the extent to which a revenue target is going to be met or missed and by how much it is going to be missed.

Incidentally, Mr. Chairman, I'm sure the member has more things to comment on. The quarterly report, from April to June 1980, perhaps gives a misleading — not deliberately — picture of forest revenues. The reason it is up to about forecast is that there have been accelerated collections. The payments have been coming in. Therefore I would not want the member to think that all is rosy in the forest industry in the very short term. That revenue figure that has been achieved is due largely to accelerated collections.

The housing-start situation is something the member may want to discuss later.

[Mr. Strachan in the chair.]

MR. STUPICH: First the minister raised the promise or the spectre — I'm not sure which — of a revenue resource fund. I like the idea. It's going to be something that would prevent us from falling into the sort of situation where the minister is faced with some warnings that there will be a shortfall in revenue and immediately issues orders to departments that they must cut back on the level of people services. If it would get us beyond those problems, then I think it's a great idea. But if, as I was informed initially when the announcement first came out, the revenue resource fund is something that is going to be added to by cabinet order-in-council and something that is going to be spent after discussion behind the closed doors of a cabinet room, then I can assure you, Mr. Chairman, that there will be a very substantial amount of opposition raised by the official opposition, regardless of which party happens to be in opposition when that happens. I don't think the members of the Legislature will accept that kind of legislation in the event that it is brought in. There have been some bills brought before us which come awfully close to that, but I hope that is not the minister's intention. I would welcome him reassuring us that he, as Minister of Finance, would never introduce that kind of legislation with respect to a revenue resource fund.

With respect to a news release issued by the minister on July 10.... He was referring to the need for the public staff freeze, and one paragraph reads: "First we have had a settlement to the wage dispute involving the province's nurses, which was far in excess of anything which had been anticipated. This alone amounts to $135 million." What I'm wondering is whether or not that's the total cost of the package in the current fiscal period — that is, the wage increase — or whether it's $135 million beyond what was anticipated. I find it very hard to believe that with all of the pressure from the nurses for some sort of catch-up, which has gone on for quite some months, the government did not provide something somewhere, or at least was not cognizant of the fact that there was going to have to be a pretty hefty bill to be covered somewhere in estimates. I'm wondering whether this was left out entirely in the hope that no lead or encouragement would be given to the nurses, whether the $135 million is on top of everything they anticipated or whether the $135 million is the total cost of the project.

The minister has told us, in response to my question about exactly what is happening with respect to revenue, that he just can't tell us. Mr. Chairman, I can accept that; I'm aware that forest revenue has held up in this period in part because of increased collections. The auditor-general has told us for two years in a row that collections in the Forest Service were down below what they should be. I believe on March 31, 1979, they were something like $80 million below; and I think the situation worsened rather than improved in the next 12 months. We were informed by the auditor-general that there was a catch-up on that, and so I knew, when I saw that the forest revenue figure was holding up well, that this could very well be attributed in part to the recovery of some of those overdue amounts — not overdue, because they hadn't been billed, but to additional recovery of amounts that had not been billed and were recovered. So I know that.

Mr. Chairman, I think my problem is.... The minister has said that he doesn't know what's happening with respect to revenue, He's got a feeling that it's down. He does go on in this very same press release to say that "other provincial revenues are on target or are slightly above the estimates." So in every area, with the exception of BCPC.... That's an unknown factor. It's one of the things I considered myself in the estimates — that BCPC must include looking at the Farmer's Almanac to see what the weather is going to be this coming winter. It's very hard to determine what's going in BCPC sales. Yet in the face of that, and with a $600 million surplus, the minister embarked upon what he called "a crude instrument of restraint." It seems to me he was doing a disservice to the people who, he had earlier said in the budget speech, deserved a certain level of government service. If he knew that there was going to be a shortfall and could estimate how much that was going to be, then I can see the need for some sort of restraint program, but he had a very substantial surplus of $600 million. He couldn't tell whether or not revenues were going to be seriously or even significantly short by the end of the year. All the evidence was to the effect that every area of revenue was

[ Page 3881 ]

holding up better than expected, with that one exception, yet in the face of that the minister embarked upon "a crude instrument of restraint."

He's quoted as saying that it would save some $80 million. Frankly, Mr. Chairman, I'd like him to give us some kind of calculation as to how he arrived at that figure of $80 million. I certainly don't understand it myself. The program was not announced until the end of June, and there are nine months left in the fiscal period. The crude instrument of restraint with respect to staff freezes did not call for the firing of anyone, to the best of my knowledge; it simply called for a slowing down of the hiring program. We were informed that advertisements and moves already in process to hire people would not be stopped; there would be no interference with such moves. So there would be some increases to staff beyond June 27, but then there would be some slowdown in the hiring process. To save $80 million, even if one were going to say that per individual.... It's usually the ones in the lower salary ranges that you don't hire. If we're talking about the people who are going to cost the government, say, $24,000 a year, I would think there would not be a saving for any more than a third of the year on the average, which is $8,000 per employee. Are we really talking about cutting back the government service in effect or cutting back the hiring program by 10,000 people in this period? Does the minister have some calculation to show me how he arrives at a figure of $80 million?

Beyond that, in commenting on the restraint program and with the lack of any evidence as to the need for any restraint program.... I'd like to quote here briefly from the Employers Council. This is dated July 15, 1980. They are concerned, although they didn't say so in those words. They said: "The Employers' Council of British Columbia predicts a 3 percent real growth in the provincial economy for 1980, down slightly from the 3.5 percent previously forecast. Substantial cuts in government spending could further reduce the forecast growth." So there was real concern on the part of the Employers Council that any panic program — and I don't know what to call "a crude instrument of restraint" other than a panic program, especially with the lack of any concrete evidence as to the need for it — was going to hurt the whole of B.C. economically. I made that point, I think, in my response to the minister's statement released with the quarterly report.

I'm concerned about the wording in the quarterly report, and I did make reference to that as well. The first paragraph of the press release putting out the quarterly report to the uninitiated would indicate that we had actually lost money, that we had spent more money than we had earned or more money than we had received in that first quarter, because the first paragraph reads in part: "Expenditure exceeded revenue by $118.9 million." You had to read the quarterly report itself to find out that included in expenditures were some $235 million of money that had been shifted from one pocket to another and that in fact there was a surplus of budgeted revenue over budgeted expenditure in that period of, I think, $135 million.

With that kind of a cash surplus in three months and with no real knowledge of any revenue shortfall, simply some concern about one area only, the minister embarked upon a crude instrument of restraint that had the Employers Council worrying about the effect on the economy. Not only that, but in the press release accompanying that quarterly report he also made reference to revenue measures as though he were considering increasing existing taxes or imposing new ones.

Mr. Chairman, that's really the double whammy: to cut back the economy in the absence of any solid information that there was need to do so, to scare the Employers Council, to scare people into thinking that some 10,000 people would perhaps not find government jobs and to scare the government service into thinking that it's not going to be able to provide the needed levels of government service — to do all of that and then to give the double whammy by saying to the people in the community, that he is currently considering imposing increased revenue measures because they might run a little bit short of money this year seems to me to be doing a disservice to the economy of British Columbia. I would welcome the minister's comments.

HON. MR. CURTIS: Mr. Chairman, I'd like to get back to where the hon. member for Nanaimo started. He issued a warning, and it is not necessary. That warning was with respect to a resource revenue stabilization fund. That would not be a cabinet instrument, but rather an instrument of fiscal policy within British Columbia which would be debated in this House. As long as I am Minister of Finance.... It is fair enough for the member to express the fear, but I would find it completely unpalatable. I can only reassure him and the committee on that point. It is what we would seek. Again, there isn't some material that is drafted; there isn't a document which I could even allude to in general terms today.

What we would seek to do there is cushion provincial revenues, the provincial economy, the provincial government economy and the provincial government budget with this kind of instrument. This is obviously where the mid-term outlook paper or document, which the member and I discussed earlier, would play a very important part in an attempt to forecast those periods, over five years, which are going to be more difficult than others. So I seek to reassure the committee on that particular point. Obviously legislation at least would be needed. That's a matter for another calendar year.

Mr. Chairman, the additional amount in the nurses' settlement is just that. An amount was provided in our budget calculations. The $135 million, which I referred to as one — and I emphasize "one" — of the factors, is a net increase and not the full amount. Of course, we did provide what we thought was a reasonable sum in the 1980-81 budget in connection with pending settlements with the nurses of British Columbia.

I'd like to take just a few moments to attempt to answer the member, and to explain a couple of matters as well, with respect to the staff freeze. I used the phrase "a crude instrument."

Interjection.

HON. MR. CURTIS: I think that's the first interjection we've had this afternoon.

It is a crude instrument. It is an instrument designed to attract attention in the shortest possible time and to stay in place for the shortest possible time. While I didn't particularly enjoy the process, it did indeed secure a number of headlines and focused attention throughout the public service, the government and the managers of government. That is what it was intended to do and it is, I think, what a Minister of Finance must do when he or she sees signals which are not that encouraging. Nine ministries have now been exempted from the staff freeze. It has been in place for a very short space of time.

The figure of S80 million, to which the member for

[ Page 3882 ]

Nanaimo has referred, was, to the best of my recollection, given at the time of the press interview following the announcement that a staff freeze was in effect. I believe that I'm almost absolutely correct in answering the question this way. A member of the press said: "What would this save you over the balance of this year?" The answer, taking into account the normal salary savings which just occur on a regular basis — because it takes longer, it seems, to replace someone, to deal with applications and to get someone into the provincial service.... The normal salary savings plus this, if left in place, would have brought about a saving of $80 million, but what they neglected to report — and I don't say that I was misquoted — was my answer; I went further and said it would not stay in place for the balance of this year. It could not stay in place because the chaos it would create would be intolerable for the people of British Columbia. I also mentioned at the same time that we had put into place the capability of granting immediate exemptions — I don't have the exact words with me, but we had the capacity to respond very quickly when a case was made by a ministry, while under the freeze, that five more positions were immediately required in that ministry, or whatever it might be. So that capability remained.

It wasn't panic, Mr. Member, and I assure you of that. It was not panic; it was a very crude instrument designed to immediately attract attention throughout the public service immediately and to send out the warning flag, so that we could then examine other ways in which we could bring expenditures and revenues into balance for the balance of this year. It has therefore virtually served its purpose. We stand here on August 12; it was announced — I take the date from the member's comments — on June 27; and it served its purpose as a signal. The second signal was the freeze, still in place, on the engaging of consultants other than those that had already been contracted for. That will remain for some little time yet while further responses come back from the ministries.

That's what it's all about, Mr. Chairman. I had to send a signal to all sectors of government, to all managers in government and to my colleagues. It had to be a loud signal, it had to get their attention, and it succeeded in doing so.

MR. HALL: Mr. Chairman, I want to spend a couple of moments just interjecting myself into this portion of the debate dealing with this particular administrative action by the Minister of Finance. The timetable of the Minister of Finance, as he has outlined it, is interesting. The fact of the matter is, of course, that the Minister of Finance received information that resource revenues were expected to come down. Any responsible ministry led by a minister who is at all alive and warm and can read is going to have to deal with that problem. As I understand it — the minister can correct me if I'm wrong — he asked his colleagues for some assistance in dealing with that problem. I'm pretty certain that, as is always the case with all Ministers of Finance — whether it be the federal Minister of Finance, a Social Credit Minister of Finance or a New Democratic Minister of Finance — the response he got was less than overwhelming. The fact of the matter is that the response that this particular Minister of Finance got on that initial — I accentuate "initial" expression of concern was, to use an expression, zilch.

A deadline was then issued by the minister, to end coincidentally with the Treasury Board meeting on the 7th of the month, at which time the cabinet colleagues were to convey to him those cuts, adjustments and savings that could be accomplished, presumably under some criteria that had been laid down in a memorandum emanating from the minister's office. Again, I suggest to you, the minister's efforts met with little or no success. It was because of that second deadline, that second lack of success, that the crude instrument that the minister refers to was put into operation.

That crude instrument was not an instrument that was going to succeed, because he knew by his service on this side of the House and observance of this activity in 1975, and by his own information from the very people who had advised the government in 1975, that it wouldn't work. He knows it won't work. The very people that recommend that course of action to him will tell him that it won't work. It will only work for the shortest possible period, and only as a signal device. In fact, the signal was not for managers, or the economy, or the public service. The signal was for his 19 colleagues. I don't know why he couldn't get his 19 colleagues in line without us going all the way through this particular process.

You've exempted nine ministries from it. One thing you've not said, however, one thing you've not responded to — and you mentioned it in answer to the member for Nanaimo — one thing you've not done about the memorandum you've sent out is tell what you have done about your instruction to the Public Service Commission to lengthen the time of processing applications from 30 days to 90 days. What are you going to do about that? Is that another crude instrument? That's what you have got to look into. That's not going to work either. That's going to mean that the people you put into operation for the programs that are going to save your political hide are going to be run by managers who don't have secretaries or vice versa. Sometimes it's probably the second course of action that's the most disastrous.

Mr. Minister, don't come to this House facing this group of people with that kind of argument, because we've been there ourselves. I say that with kindness and with concern. I don't think that the public service of this province is irresponsible. I don't think you've got irresponsible managers. I don't think you've got irresponsible program directors. I don't think you've got an irresponsible Public Service Commission. What you've got are some irresponsible cabinet colleagues. It was ever thus, I think, in the eyes and the hearts of Ministers of Finance, if not in the eyes of the opposition and the eyes of your own government advisers, and that's your problem. So I think that's the problem you should address.

If I may, I will now ask just one further series of questions which deals with the administrative techniques of this minister. When the minister had a previous portfolio, he decided to operate on a reporting system which only saw one deputy minister reporting to him — a system which was simple, direct and commends itself to him; one which, in the previous portfolio he held, I felt was inadvisable at the time. I wasn't here to criticize it. He was Provincial Secretary, and I wasn't here to criticize it. So be it; you're no longer there. It's significant, though, that since you have left that portfolio, it's been changed. The previous reporting system has been put into operation since your departure from that portfolio.

You've now taken over the duties of Minister of Finance. Again you set up a reporting system dealing with one specific person — namely, your deputy — in the course of which you've issued an order-in-council and a reorganizational chart, some of which has been the subject of questions in the

[ Page 3883 ]

House, and much of which has been the subject of questions in both the media and the public accounts committee. I have a series of questions for the minister which deal not simply with the merits, the question and the arguments put forward by the ex-comptroller-general — not just with the pros and cons of that particular situation and that particular gentleman — but with the minister's own view of the way he sees his office and his administration of that office, and the requirements of a continuing internal audit for the people and the province of British Columbia.

During questioning of members of your staff and of other people — auditors, accountants and so on — over the years, it has been my experience that most people believe that there are always some trade-offs to be made in terms of reporting efficiency and responsibilities, and that it's difficult to have perfection. Your deputy — and I quote the evidence he gave before the public accounts committee — is conscious of the kinds of trade-offs that have to made. He was an excellent witness. I commend him for it and welcome him to the estimates today. I would like to know from the minister himself what kind of trade-offs, what level of trade-offs and what quantum of trade-offs he is prepared to see exercised in that independent, continuing, internal, current financial audit of our province's books. It has been referred to in the press and is required by the statutes — even allowing for the changes that are presently before us.

As I say, I am not dealing specifically with the cause célébre that has seen the departure of Mr. Bonnell. I am dealing with what the minister wants to see put in place in his own ministry. I'll deal with Mr. Bonnell and the past at some other point in time. For the purpose of this debate I would like to know what the minister's standards are. What safeguards does he feel the public should have in terms of an internal audit? I hope he doesn't give me the answer that we have an auditor-general, because that is no answer. I am talking about the continuing internal audit of the books that must take place. Those are the first in a series of questions I have about the administrative actions of the minister.

MR. CHAIRMAN: The hon. second member for Surrey (Mr. Hall) was quite in order in the past debate, but for the edification of all members of the committee I will cite chapter 19 of the sixteenth edition of Sir Erskine May with respect to unreported evidence taken before a select committee: "It is out of order to refer in debate to evidence taken before a select committee until the report of the committee has been laid before the House." That is for the benefit of all hon. members during this debate.

HON. MR. CURTIS: Mr. Chairman, I thank the hon. second member for Surrey for his observations thus far; he indicated that he has a series of questions. The statements which were made at Public Accounts are therefore known to those who are interested in them.

No, I won't offer the reason or excuse — if you wish to use that term — that because we have an auditor-general there is no need for an internal audit. Of course there is the need for a continuing internal audit in government, as there is in a corporation, large or small. In the private sector, of course, there would be the involvement of the audit committee of the board.

The member, in developing his comments, indicated that I use the practice of a single deputy minister. Yes, I do. We can divide on that; we can debate it; we can argue it. The fact remains that if I am in a particular ministry, then I believe there should be one deputy minister. In practice, in past portfolios, and in fact, that does not preclude contact with other members of the senior staff. The member opposite did not suggest so, but I would really like to reassure the committee on that point. It did not when I served as Minister of Municipal Affairs and Housing. It certainly did not when I served as Provincial Secretary and Minister of Government Services. Nor will it now when I am Minister of Finance.

In other portfolios, therefore, there has been the opportunity for an assistant deputy minister and for other senior people with the ministry — sometimes with the knowledge of the deputy; at other times just in casual moving through the precincts or by appointment — to discuss matters which are of concern to those individuals. I don't for a moment think that undermines the authority or responsibility of the deputy minister. That is the way I intend to function in this ministry and, as I said, that is the way I would want to function in any ministry.

Given the way my organizational systems work, that is the way it has to be. There must be the contact with that one person, but then additional contact as indicated or required from time to time. It is a matter of record that within a very short space of time we shall commence staff meetings with senior staff — a given number of people. I have used that to good effect in the service of the people of British Columbia in the two other portfolios, not because of me but because of the career people who have come to those meetings with their agendas. I think the items which I have placed on those agendas in the past have been in the minority. There again it is the fundamental opportunity, which is essential in the interests of the relationship between the elected person and the career public servant. to have that easy access to raise matters which are of concern.

I hope I have answered the member. In terms of trade-offs, he might want to assist me further in expanding on just what he means by that. Bat I do suggest that the practice of a single deputy minister of Finance as now established, and as later to be further strengthened, in no way interferes with the internal audit procedure of the comptroller-general and the office of the comptroller-general in dealing with any ministry, even the Ministry of Finance.

MR. STUPICH: Just coming back for a moment to this $80 million figure, I agree with the minister; all the press reports I saw gave no indication at all that the program was not going to be in effect until the end of the year, that the $80 million would be saved only if it were in effect that long. My question, then, is: how much does the minister expect to save by his crude instrument of restraint, and also does he really think it worth the shock waves that were created in the government service generally, in people receiving government services and in the economy generally, in view of the fact that the total saving — at most — would be something substantially less than 1 percent of the budget? But if he has a figure as to what he expects the saving to be, I'd be interested in hearing it.

I'm going to move on to another area while that one is being looked up. It's a pity sometimes — I experience this — that cabinet colleagues don't have an opportunity to read everything that is put out by their colleagues. I'm going to read briefly from the British Columbia medium-term economic outlook again. On page 3: "Notwithstanding the vulnerability of British Columbia to the sluggish conditions in the

[ Page 3884 ]

international economy, since 1975 the province has fared relatively well."

To the uninitiated you may recall there was an election in 1975, and what the author of this document is really saying is that since the Social Credit government was returned to office in December 1975 everything has gone well in the province. It goes on to say on the top of page 4: "First, fiscal conservatism and sound fiscal management by the provincial government has restored business confidence and encouraged private sector expansion." The silent member for Omineca (Mr. Kempf) applauds that. "For example, since 1975 business capital expenditures have grown at an impressive average annual rate of 16.8 percent...." Isn't that great? No applause from the government benches. Mr. Chairman, I'm surprised.

Maybe some of the government benches have had an opportunity to read a document presented in this House by the Minister of Industry and Small Business Development (Hon. Mr. Phillips). Let's take a look at that and see what it has to say about capital and repair expenditures in the province of British Columbia. The medium-term economic outlook says how great things have been since Social Credit was returned late in 1975. This document is a ten-year document; it shows what's happened between 1969 and 1979.

Let's compare two four-year periods. The first four-year period running from 1972 — and the NDP were elected in the latter half of that period, at the end of August, but didn't take office until the middle of September, so they weren't responsible for that period really. But running from the end of 1972 to the end of 1975 — and the NDP would have to take full responsibility for everything that happened in 1975, even for the bad news that was all over the western world, and you'll recall, Mr. Chairman, that 1975 was a bad year economically for the whole of the western world. But let's look at B.C.

In 1972 the total expenditures on capital and repair, $3,778.5 million. In 1975 the figure had increased to $5,823.6 million, in the course of that period an increase of 54 percent.

This document tells us how much better things have been since Social Credit were elected. Well, how much better are they? In the first year expenditures: $6,806.6 million, in the fourth year, 1979, expenditures $9,314.5 million, gone up every year. But the increase in the second four-year period during which this government can claim the credit wasn't 54 percent. It wasn't more than that; indeed, Mr. Chairman, it was substantially less. The increase while the Social Credit government was elected was only 37 percent as opposed to 54 percent increase in the four-year period when the NDP were in the saddle. That's not the end of this story. Reading further, on page 5 of this same medium-term economic outlook: ''The value of exports from British Columbia...has expanded since 1975" — again, that interesting figure — "at an average rate of 20.3 percent per year." Well, what does the document put out by the Ministry of Industry and Small Business Development have to say about that? For that we look on page 12: "What's happened to exports in British Columbia?" In the four-year period, which I've referred to as the NDP four-year period, exports increased from $3,256.7 million to $6,358.5 million, almost doubled. A 95 percent increase in that four-year period. During the Social Credit four-year period, exports increased from $7,437.1 million up to $12,722.2 million — a period during which there has been prosperity all over the western world, and yet the increase in that period was less; it was only 71 percent as opposed to the 95 percent increase during which the NDP was in office, even though I've included the very bad year of 1975.

Interjections.

MR. CHAIRMAN: Order, please.

MR. STUPICH: Gee, we're getting some help from over there. I wonder if he'll stand on his feet and say some of this.

Looking at page 5: "Third, growth in consumer spending and retail trade has in recent years been stronger in British Columbia...." Well, okay, Mr. Chairman, let's look at page 9 of this document put out by the other ministry. "Retail Sales in the Province" — 1972, just short of $4,000 million; 1975, almost $6,000 million, an increase of 49 percent while the NDP were responsible. The years 1976 to 1979, an increase of only 38 percent. Everything seems to be happening more slowly, or at the least the rate of increase is less since Social Credit have been in office.

Again reading from page 5: "Sales have responded to increased tourist travel...." Well, isn't that great? There's been an increase in the rate of tourist travel according to this document, but what does this other document say? The one put out by the Ministry of Industry and Small Business Development: "Tourism, 1972, $574 million tourist revenue; 1975, $970 million" — an increase of 69 percent. Tourism was growing at that rate in a four-year period. Under the Social Credit administration the increase is only 39 percent, from $1,180 million up to $1,650 million. More in total, but the rate of increase has decreased under the present administration. If you'll continue reading this document I think you'll find there's only one graph in the whole book where the rate of increase has not been greater during the four-year period that I've described as the NDP period as opposed to the four-year period that was the Social Credit period.

I don't really expect the minister to have any particular answers to those comments. It doesn't read well when you read the budget and this decade of growth together and realize that things were happening much better under the NDP administration. The rate of increase in everything economically in the province was greater than the rate of increase since Social Credit were re-elected in December 1975.

MR. LEA: According to the Socreds.

MR. STUPICH: As the hon. member for Prince Rupert (Mr. Lea) points out, that is according to the government's own presentation, the government's own printed documents. But we have to accept those. After all, they're represented in the House by hon. ministers, and I suppose we have to say that they must be correct, or they wouldn't have been presented by those ministers.

I'd like to go on to another item. This one bothers me a bit. I can recall attending in Nanaimo, at Duke Point, one of the many occasions on which the Duke Point project has been announced as happening. This one was right in the heat of an election campaign, when the Hon. Ray Perrault was there representing the Liberal government and agreements were being signed out in the open. It was great; Duke Point was really going ahead.

HON. MR. CURTIS: You're coming to the point?

[ Page 3885 ]

MR. STUPICH: I'm coming to the point, Mr. Minister; yes, I certainly am. Mr. Chairman, he's wondering whether I'm on the point. Oh, I am; I sure am.

That was in May of 1979 at a time when the Hon. Ray Perrault was talking about how great it was to be working with the Social Credit government and getting things done for the province. And the Hon. Don Phillips was there talking about how great it was to be working with the Liberal government and getting things done for the province. Then we had an election, and there was a new government.

Now is when I'm referring to something that I would welcome a comment from the minister.... This bothers me; it disturbs me. I don't know why it's in here. I think even if the minister felt it, even if he was speaking on behalf of the whole government, that it should not have been included in a document as public as the budget speech. This is a quotation from page 29: "The next few years will see important decisions made at the national level, and it will be of the utmost importance to ensure that the interests and concerns of British Columbians are appropriately reflected." Okay so far; it's the next sentence that bothers me, Mr. Chairman. "The federal election results could make this more difficult...." It seems to me that's when the Ottawa-bashing started, the Ottawa-bashing that has hurt British Columbia, I believe, and has hurt Canada so much. References in the press to different people commenting on their concerns about the effect of Ottawa-bashing on programs that they had hoped would be going ahead in the province of British Columbia — many of them. I don't intend to go into great detail on this, but I am concerned about the Ottawa-bashing itself — that's another matter. But what I am concerned about is that the Minister of Finance chose to use the budget speech as what I consider to be the first gun fired in the program on the part of this government to embark upon a program of Ottawa-bashing at the same time as the minister is referring in his budget speech to many programs that he hopes the federal government will participate in when it comes to spending money. Asking for money for many grandiose projects announced by the Premier and by various cabinet ministers at different times, and yet the Minister of Finance, in the same document in which he's describing these programs that he hopes the federal government will help finance, and is critical of the federal government for running into debt, and all the time asking them to send more and more hundreds of millions of dollars to B.C., at the same time as he's doing all that, he embarks upon this particular example of Ottawa-bashing in the budget speech. Why did that sentence have to appear in the budget speech? There must be some explanation for it, and I'd welcome some comment from the minister.

MR. CHAIRMAN: Perhaps before the Chair recognizes the minister we could point out to the committee that there has been abundant debate on the budget speech, and if we could refer to the estimates and administrative actions of the minister, that would be most appropriate for this committee.

HON. MR. CURTIS: I'll answer in the order which they were mentioned.

The staff savings. I think the member for Nanaimo anticipated in asking the question that it would be very difficult to judge that figure accurately at this particular time. We are in month five of the fiscal year. If nothing had been done the member will know that with a very large portion of our budget going to salaries — wages, if you will — the normal salary savings which just occur because it takes you six weeks to find someone you wanted within two weeks, it takes you three months to find someone you had hoped could be on stream and working within one month, that sort of thing is just going to occur from time to time; the variables are tough to pin down. I cannot give the hon. member a figure that would be of any use today. Certainly it's going to be considerably less than $80 million. At the risk of being tedious and repetitious, it was never intended, nor did I say, that the hiring freeze would remain in effect until March 31, 1981. The figure was then translated into press reports, and so it goes. Was it worth the shock wave which reverberated through the province? Well, Mr. Chairman, I did not look forward to it. I did not relish it. I would not do so frivolously or on the spur of the moment or if it were not necessary. Yes, it was worth it in terms of attracting attention immediately to the kind of problem....

The hon. second member for Surrey (Mr. Hall) made some observations which I found very interesting. I don't necessarily agree with everything he said, of course, because we are on opposite sides of the political fence. A shock wave was needed, and it was necessary to attract the attention of individuals in government, at the management level, at the political level, at the personnel level throughout government service. It had to be done quickly; therefore this was the instrument I chose. I dealt at some length with the fact that it has now been lifted from almost half the ministries of government.

The member dealt with a document, the responsibility for which rests with another minister; I don't think I can comment.

Relationships with the federal government. Well, Mr. Chairman, perhaps I could answer in a couple of ways. Late last week I had a most enjoyable and informative evening with the chairman of the Treasury Board for the federal government, the Hon. Don Johnston. That took place in Victoria. Frankly, I think we were able to commiserate with each other in terms of the particular tasks we hold in a federal and a provincial government. We talked about some public business. We also got to know each other a little better. I have always attempted, sometimes with great success and sometimes with less success, to have a good working relationship with my opposite number in Ottawa. It's not always possible, as I say. Inevitably, there are going to be those strains and stresses between a federal and a provincial government.

The member then, if I may say so, placed far more emphasis.... He went to some pains to read more into a paragraph in the provincial budget document of March 11, 1980, than really exists or was intended. I don't have the statement in front of me, but it's to the effect that the federal election results could make this more difficult — that is, the cooperation and decision-making exchange with Ottawa. Well, of course, Mr. Chairman, that is inevitable. Regardless of one's political persuasion, the fact is, as is well known, that west of Winnipeg the federal government has no elected representatives. What is the opposite — that it's going to make relationships with the federal government easier? That is really the kind of thing we were referring to in that sentence in that section of the budget statement. Obviously if you don't have members of the party in power in Ottawa anywhere near you, then it's going to be a little more

[ Page 3886 ]

difficult. That is precisely what was said: "The federal election results could make this more difficult." That was all that was intended in that regard.

MR. STUPICH: I thought the minister was getting close to saying that he regretted putting that statement in the budget. I was hoping that was actually what he would say.

I don't know any way to interpret this sentence, and I will read the whole sentence this time: "The federal election results could make this more difficult" — in speaking about cooperation with the federal government — "and the government of British Columbia will therefore have to pursue intergovernmental affairs with increased vigour. " Now I accept his explanation that we don't have any members west of Winnipeg. We do have a cabinet representative west of Winnipeg. I can't see how the federal government could place any interpretation upon that statement other than to say that the government of British Columbia regrets that the Conservative government was beaten and that the Liberal government was re-elected. I think it's very unfortunate for British Columbia that that sentence appeared in the budget.

I want to ask the minister about a mailing that went out to all cabinet members and to all members of the Legislative Assembly on May 27, 1980, re comparative tax rates. It reads as follows: "I am sure you receive queries on tax rates applicable in British Columbia as compared to those in other provinces. To assist you in responding to such queries, I am attaching a table of comparative provincial tax rates, March 1980. You will note that, with the exception of Alberta, British Columbia rates compare very favourably with those of other provinces." Mr. Chairman, what we have is a photocopy of page 59 from the budget speech. That's not new information; it was issued more than two months after the budget. Was the minister concerned that some of his colleagues wouldn't have time to look at the budget speech, or weren't in the House when he was reading it? Why bother to photocopy a page of the budget speech and send it to all the cabinet members and MLAs? I just don't understand why he thought it necessary to do that, but there must have been some reason.

I have a couple more questions. On April 29 I asked the minister a question in oral question period. It is headed "Government Cash and Investments" in Hansard. My question was: "I wonder if the minister could tell us how much the government had on hand in cash and investments in the general fund as of March 31, 1980." I'm not surprised that the minister responded. He could have taken it as notice. In this case his response was quite in order. He said: "Mr. Speaker, I look to you for a ruling. I would think that the tradition of this House suggests that this is more properly a question for the order paper." Fair enough, Mr. Chairman.

A few days later, on May 7, 1980, I put that question on the order paper. June, July and August...three months and some days have gone by. I guess there's so much money piled up in cash investment, or there's such a shortage of staff or something because of the hiring freeze, that they just haven't had time to count it. In the over three months that these questions the minister invited me to put on the order paper — and surely, Mr. Chairman, he didn't ask me to put them on the order paper because he had no intention of answering them; he wouldn't do that.... The following questions were asked orally of the Minister of Finance on April 29 and put on the order paper on May 7:

"32(1). What was the total of cash and temporary investments held by the general fund at March 31, 1980?

"(2). What specific investments comprised the total in No. 1, and, for each, what was the rate of interest payable to the general fund?

"33(1). For each of the special funds, what was the total of cash and temporary investments at March 31, 1980?

"(2). For each amount listed in reply to No. 1, what were the specific investments, and what rate of interest was payable on the investment?"

Mr. Chairman, my question at this point is: can the minister give me any indication as to just when his staff will be able to complete their count of the money and investments on hand at March 31, 1980?

[Mr. Davidson in the chair.]

HON. MR. CURTIS: With respect to the issuing of tax rates, I think the member is correct. It wasn't a press release; it was a mailing to all MLAs and it was a reproduction of page 59 of the budget. That was May 27. As I recall, there had been some inquiries, and rather than simply refer individuals to the budget document, it appeared to be relatively simple to produce that page and distribute it to the 57 members of this Legislature. It was done as a matter of courtesy, that's all.

The questions on the order paper appear on page 6 of Orders of the Day for today, and the member has identified them as questions 32 and 33. I want to say in my defence, Mr. Chairman, that I have answered a number of questions which have been on the order paper since we commenced this session on February 29. Those two, I must admit, have not been responded to. The member would know, of course, as a member of this House for a number of years, that it involves a great deal of detail, and I will undertake to consider just how quickly we can provide this information in answer to questions 32 and 33.

The investment information, as the member would know, is published in Public Accounts, and it's then audited.

Interjection.

HON. MR. CURTIS: That's not a cop-out.

It is then an audited set of figures, as opposed to what we would give now, which obviously we would have to indicate is unaudited. The amount of work involved in preparing the answers to what appear to be two fairly simple questions, I think the member would concede, is much more than just a normal answer with a list of people and other information. So I will give very serious consideration to filing that answer just as soon as possible.

MR. STUPICH: The minister says that it has taken time and may take longer. I would like to ask him whether or not he is prepared to give me an undertaking that the answers will be filed by the adjournment of this session. Now, Mr. Chairman, adjournment is probably not going to happen until next February or March or something like that. I'd certainly like to have it a lot sooner, but I would like to know that the answer will be filed by the adjournment of the House.

I'd also like to know whether or not the minister has any intention of producing anything like a fourth quarterly report. You'll recall, Mr. Chairman, that last year we had to wait — for the year-end of March 31, 1979 — until March 1980 to get something equivalent to the fourth quarter of 1979. I'm

[ Page 3887 ]

wondering whether it's his intention to produce anything that will give us some information about the year ended March 31, 1980, in advance of the tabling of Public Accounts for that period, sometime next spring.

HON. MR. CURTIS: Mr. Chairman, first of all, with respect to answering two questions, yes, I give that undertaking to the member for Nanaimo that we will indeed answer the questions prior to the adjournment of this session, bearing in mind that that may be the day before a new session opens. Then I would feel more comfortable in terms of time. If it's available sooner than that, I would be happy to. But I caution the member, and I'm sure he knows, that the compilation of that material is very, very awkward and detailed.

MR. STUPICH: It is over $1 billion, isn't it?

HON. MR. CURTIS: I have no answer for interjections, Mr. Chairman.

Now about the fourth quarterly report. I can't give an undertaking here, but we are considering the issuance of a fourth quarterly report. I think, frankly, that it would be in line with the concept of the quarterly reports which this government introduced. It seems to be something unanswered. You do three quarterly reports and the rest is wrapped up in the budget, as it were. So we're looking very carefully at a fourth quarterly report which, depending on the start of session and on when budget day is, might have to wait for the gathering of the material. The first quarterly report this year, the member knows, was issued just prior to the end of July. While it was in draft form, by the time the information was gathered, drafts were carefully checked, texts were written and approved, and they went to the Queen's Printer, it took virtually all of July for that comprehensive document to be put into place.

So with the end of the fourth quarter coming on March 31 of a year — budget day usually would have occurred prior to that, of course — we hope that we can provide as much information as possible for members of this House and for the people of British Columbia in understanding what is happening to their money. This is all part of the process of more and more information being made available for them.

In addition, Mr. Chairman, I would like to observe that again, the mid-term economic outlook was a first attempt. I'm extremely satisfied with that as a first attempt. More material can be put in. It can be improved upon, and it certainly will be for 1981.

AN HON. MEMBER: Mid-term economic outlook?

HON. MR. CURTIS: The mid-term document that we spoke of earlier this afternoon, Mr. Member, which came with the budget.

MRS. WALLACE: Mr. Chairman, I want to deal with a different subject, really, but before I do that I would like to comment very briefly on some of the items that were discussed by the minister and the member for Nanaimo in relation to federal-provincial relations.

I'm a little amazed at the minister, who tells us that because there are no members of the federal government west of Manitoba, somehow the federal government is going to be more difficult to deal with. It would seem to me that any government that found itself in a position where it so lacked support in a given area of the country would lean over backwards to try to encourage more support in that area. I am surprised that the minister takes the stand that because there are no members in the federal government this side of Winnipeg, he anticipates finding it difficult to deal with them.

I'm surprised, too, when I hear so much criticism relative to the so-called ineptness of the federal government in managing its money matters, yet this minister and this government is the first to have the hand out willing to accept all that that federal government has to offer.

There's just one small item that I want to raise, that I think this minister could undertake, that would at least bring B.C. up to parity with the federal government. It relates to income tax. I've raised this in the House before. The point is that if you have an income up to $3,612 and are a single individual, you pay no federal tax, and income of $1,806 is the limit at which you start to pay provincial tax. Now this is considerably lower. You pay on the first $1,806 at 4.8 percent. On the second $1,806, to bring you up to the $3,612, you pay it at a rate of 24.48 percent. I'm quoting from a table prepared by Thorne, Ridell and Company, chartered accountants, so I expect it's quite accurate, Mr. Chairman. I think that the minister could do a lot for the people who are in a tighter financial position in this province by reducing or removing the income tax from those low-income groups.

MR. CHAIRMAN: Hon. member, again I think we're crossing into the lines of legislation on matters requiring legislation. Although passing reference is....

MRS. WALLACE: I'm asking him to consider this because of the needs of people in low-income groups. These rather stringent taxation policies that this government is enforcing on low-income people are detrimental to their standard of living. I'm asking him to review this matter and consider what, if anything, he might be able to do about it.

With that I move on to the subject that I really want to discuss with this minister, and that is the matter of farmland classification and assessment of farmland, particularly related to the small holder. This is affecting actually three groups of people who are small operators. The first group is the new would-be farmer who is trying to establish his operation. The second group is when a small farm or a small piece of property changes hands in mid-term, as it were, and it was not formerly being farmed. The way the regulations are at present means that you have to base your production on prior years to qualify. If you haven't owned the farm in prior years, of course, you don't have that production, The third group is the seniors in this province who have lived on that small piece of property and perhaps farmed it for a great many years and are now in a position of wanting to retire and are being faced with excessive tax bills. They are not physically able or desirous of utilizing that land to its fullest capacity.

I've had several instances in all these categories come to my attention during the past year. One of the most outstanding things that becomes evident is that we still haven't reached an era of standardization. Every assessor in every particular area has his or her own set of regulations and criteria which are applied. The Ministry of Finance has sent out some very light instructions as to what you can and can't do. I will say that the Minister of Agriculture (Hon. Mr. Hewitt) has issued a more expanded form, which I have

[ Page 3888 ]

xeroxed on many, many occasions and sent out to people who are concerned about this. But even so, those discrepancies still exist, and there are still a lot of problems with people who are desirous of keeping the land, having a small operation and are either past the age of really doing a job on it to produce that first $1,600 that the minister requires, are in a position of building up a new farm or are in a position of purchasing a piece of land. Even though they're prepared to go full blast at the middle of that year, as a farm they are not able to qualify for the lower rate, because it's based on the prior-year production. So those are three areas that are certainly open to a lot of discrimination in the matter of how they're interpreted.

All the people involved in interpreting them seem to have their own rules and regulations. Any regulations I have seen certainly don't say anything about the amount of capital that has to be invested in building up a farm. Yet there is one assessor in this province who is using that as one criterion in refusing the exemption.

As I say, these are cases that have come to me over the years from various areas in the province. I have some concerns about this for a couple of reasons. One, of course, is the immediate concern to the individual involved. But the general principle is the preservation of agricultural land. If people are prepared to work on that land, to build it up and use it for farm purposes, then they certainly are assisting in what I am dedicated to and what that government says they are dedicated to, and that is the preservation of agricultural land. That those people are preserving that land for future use should be part of the consideration. The whole business of assessment is being used in a discriminatory fashion. It's something that I would ask the minister to review.

One of the things that has caused the problem is the change by order-in-council from produce produced to produce sold. A lot of people are producing their own food, and if you produce that food and eat it, it doesn't count. That certainly has nothing to do with the productive capability of the land. To tie it just to the produce sold seems to me to be one of the really basic discriminatory things that has happened in the interpretation of this particular farm classification.

HON. MR. CURTIS: Mr. Chairman, I notice with some amusement that when the member says "assessments," the Provincial Secretary and Minister of Government Services (Hon. Mr. Wolfe) starts twitching and wants to explain assessments. At this particular point I wish he would. However, Mr. Chairman, I make light of what is a very serious matter.

The Farm Property Assessment Program is still relatively new. It was introduced by my predecessor in this ministry. There are some wrinkles to be worked out; there's no question about that. The member for Cowichan-Malahat (Mrs. Wallace) referred to one assessor who refuses — or is unwilling or unable, whatever — to follow the practice which has been set down. That may be the fault of the guidelines, it may be the fault of the regulation, or it may be the fault of the interpretation placed on it by the assessor, but I think, Mr. Chairman, that we could handle that one very easily. If the member would care to be as specific as she wishes on that point following these estimates, then I would be more than happy to follow that up. Just give me the details.

We will have further refinement flowing in this program on the assessment on farm properties. Thus far in this portfolio I've had meetings with some members of the board of the Assessment Authority and a number of meetings with the assessment commissioner, Mr. Gwartney. As a matter of fact, there is one particular aspect of assessment in British Columbia that he's working on right now. The report has come to my desk, and I hope that we might have something in place in that regard for 1981. Therefore, Madam Member, if any members have specific problems regarding assessments, they are more than welcome to contact me. Where the property, the assessment district and other matters are identified, we can pursue it or they can do so directly, if they so choose.

We have, I think, two developing programs now. One was introduced a number of years ago, and at first it wasn't well used, and that is the Property Tax Deferral Program. The other, of course, is the Developing Farm. But, as you indicated, that is not finally to the point that you would like it and, frankly, neither is it for us, but we are working on it. Please tell me about the specifics, Madam Member.

Vote 85 approved.

Vote 86: administrative and support services, $2,693,853 — approved.

Vote 87: office of the comptroller-general, $4,738,337 — approved.

Vote 88: computer and consulting services, $10,273,369 — approved.

Vote 89: Purchasing Commission, $2,060,615 — approved.

Vote 90: taxation administration, $6,536,244 — approved.

Vote 91: Assessment Act Appeal boards, $647,500 — approved.

On vote 92: government agencies, $7,478,060.

MR. STUPICH: Mr. Chairman, very briefly, in days gone by this was the vote that everyone in the House used to stand up on — government and opposition members alike — and plead for some additional staff for the offices in their constituencies. I don't think there is any office of government that has more contact with the public than does the government agency. To my knowledge, they are all short-handed.

The minister commented earlier that I was the Minister of Finance for a very short period. But even in that short period I had representations from many government agents about the necessity for getting more staff to handle the workload.

As far as I can see — I haven't been over every one in detail — there is no increase provided for any existing agency. There is a small increase in total, because there are new agencies established. Now that there is no more hiring freeze, and assuming that many of these agencies are actually understaffed, I would ask the minister to give very serious consideration to bringing those up at least to complement, and to listen favourably when the government agent from Nanaimo comes to the minister, if he does, and asks for some additional help to service a rapidly expanding community.

[ Page 3889 ]

HON. MR. CURTIS: Mr. Chairman, all sections of government are important, but government agencies are extremely important. In my opening remarks, which some members heard, I indicated that we have opened new agencies and that more are to be opened as the budget permits. In Cassiar we're looking at November 1; in Sparwood, August 15; in Sechelt, August 30; Squamish and Maple Ridge, August 15; Nakusp, last month, as was Fraser Lake.

The member will be interested to know that something as simple as automated cash registers, now being installed in agents' offices, are going to speed up the system tremendously. That is one thing alone, Mr. Member, but they are welcomed by the agents. You spoke of more staff. We would certainly want to examine that after we see the improved equipment in the offices.

MR. LOCKSTEAD: I have just a brief question to put to the minister. For some years now I have been making representations to various governments for a provincial office and an agent in the Bella Coola Valley, which is now being served primarily out of Williams Lake, some 300 miles away. I wonder if perhaps the minister would consider a provincial office in the Bella Coola Valley.

HON. MR. CURTIS: The member has indicated yet another government agency which should be opened. We are opening these seven — more to come. I will certainly make note of what the member has asked for.

Vote 92 approved.

Vote 93: Provincial Capital Commission, $827,245 — approved.

Vote 94: Deregulation, $746,024 — approved.

Vote 95: interest on public debt, $19,500,000 — approved.

On vote 96: grants, contributions and subsidies, $12,500,000.

MR. STUPICH: One item has been dropped, and I just wonder what the explanation is. Last year there was a power subsidy of $3.25 million; there is nothing this year. It is an obvious change in policy.

HON. MR. CURTIS: We transferred that to Hydro. We thought that it more appropriately belonged in Hydro, rather than in the Ministry of Finance.

Vote 96 approved.

Vote 97: interest on deposits, $7,410,000 — approved.

Vote 98: incidentals, $2,598,500 — approved.

Vote 99: advances under various statutes, $250,000 — approved.

Vote 100: contingencies (all ministries), $19,843,653 — approved.

Vote 101: Treasury Board staff, $1,133,983 approved.

Vote 102: building occupancy charges, $2,828,000 — approved.

The House resumed; Mr. Davidson in the chair.

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

HON. MR. GARDOM: Mr. Speaker, I move to public bills and orders. Before calling Bill 43 for second reading, I would like to ask leave to move that the order for second reading for Bill 8, standing in the name of the Attorney-General (Hon. Mr. Williams) on the order paper, be discharged and the bill dropped from the order paper.

Leave granted.

HON. MR. GARDOM: Similarly, Mr. Speaker, I would like to ask leave to move that the order for second reading of Bill 28, standing in the name of the hon. Provincial Secretary (Hon. Mr. Wolfe) on the order paper, be discharged and the bill dropped from the order paper.

Leave granted.

HON. MR. GARDOM: Mr. Speaker, I call second reading of Bill 43.

MR. SPEAKER: Hon. members, just a few moments ago the House leader asked leave. I believe a motion should follow each of those leaves — if the House leader would so move. Having been granted leave to make the motion, the motion should then follow.

HON. MR. GARDOM: Okay. Therefore, Mr. Speaker, I move that the order for second reading of Bill 8, standing in the name of the Hon. Attorney-General on the order paper, be discharged and the bill dropped from the order paper.

Motion approved.

HON. MR. GARDOM: I move, Mr. Speaker, that the order for second reading of Bill 28 standing in the name of the Provincial Secretary on the order paper be discharged and the bill dropped from the order paper.

Motion approved.

HON. MR. GARDOM: Second reading of Bill 43, Mr. Speaker.

PENSION (PUBLIC SERVICE)
AMENDMENT ACT, 1980

HON. MR. WOLFE: This bill proposes to change the basis of pension indexing after retirement and to make a number of minor amendments, which are intended to make the plan more equitable or to improve its administration.

Of course, I'm referring to the Pension (Public Service) Act. This bill proposes to make similar changes in the pension indexing provisions and for the same reasons as I've earlier described for the Pension (College) Act and the Pension (Municipal) Act. Both employees and employers, under the act, presently contribute one-half of one percent of their salary to finance the present open-indexing provision, with a

[ Page 3890 ]

further one-half of one percent to be required in the fairly near future.

Under this bill, employees and employer will each have required contributions increased by one-half of one percent of salary. At the same time, the act will be amended to eliminate, in the future, the payment to general revenue of the matching employer contributions each time a terminated employee elects a refund of his or her own contributions. This will bring the practice under the public service plan into line with the other pension statutes and provide an additional source of funding for this plan.

In recognition of the fact that employer refund abatements will stay in the fund in future and that the public service plan is a very well-funded plan, contributions of one and one-quarter percent of salary from both employees and government will be allocated to finance pension indexing on the same basis I described for the other plans. I anticipate that the new indexing system will provide effective protection to pensioners against foreseeable levels of inflation in the future. The new system will give full protection against annual cost of living increases of up to at least 10 per cent.

Mr. Speaker, this bill proposes a number of relatively minor amendments, which are designed to make the plan more equitable or to improve its administration. Among these changes are the following. It will ensure that coverage under the plan can be afforded to eligible auxiliary employees of the British Columbia Ferry Corporation. It will permit employees to qualify for a pension after ten years of service, whether full or part-time employment was involved. This change recognizes the growing significance of part-time employment in our society. It will permit the Lieutenant-Governor-in-Council to provide for interest on regular employee contributions in the future, which is higher than the 4 percent now provided for in the act.

The reinstatement provision will be broadened by eliminating the maximum 10-year period that an employee can be out of service. This change will ensure that employees who return after extended periods of child rearing will be able to reinstate previous contributory service, provided a refund of contributions was not taken.

Lastly, it will establish a formal consultative mechanism by providing that the Lieutenant-Governor-in-Council may establish and appoint members to a consultative pension committee of employee and Crown representatives.

Mr. Speaker, another change I should mention, although it does not require legislation, relates to the investment of the public service superannuation fund. I recently announced that this government believes an employee representative should be appointed to the investment committee which oversees the investment of this fund. This appointment will be made in the next few weeks and will give employees real involvement in the investment process. Naturally, we will want the person appointed to both represent the interests of all employees and to be representative of as broad a cross-section of public service employees as possible. This step reflects the government's genuine concern that employees should be fully involved in the important matter of pension fund investment.

Mr. Speaker, I move second reading.

MR. HOWARD: Mr. Speaker, the last announcement of the minister that someone from among the employees in the public service will be appointed to a management committee is welcome news. That's been a point of concern to employees in the public service for some time, as it is a point of concern to employees in other jurisdictions who do not have a participation in what happens to the pension fund that is basically their pension fund. Perhaps one single person is not the appropriate number. I would think always when one looks at appointing one person to something, especially to a board of this nature, it can easily be looked upon as being tokenism rather than an opportunity for real fulfilment of the employees' concerns about the fund itself.

Earlier in the day we discussed under another bill although the subject matter is appropriate under this bill as well — the question of investments held by the government and managed by the government or by this management committee. I made some references to a low yield on some of the investments held. The minister got up in reply and told us about the situation that prevails: when interest rates rise, those securities with a low coupon rate fall in price. That's quite correct. They have to do that in order, to provide a yield equal to the current yield on other investments. As interest rates go up, the value of bonds on the market goes down, and vice versa — moving up, of course, until they get to maturity.

I want to point out to the minister that some of the securities held in the Public Service Superannuation Fund, as provided in the report of the auditor-general for the year ending March 31, 1979, are carried on the books at a value which does not change from year to year. Presumably, the value carried on the books is the asset value of those securities. Presumably that was the price paid for them when they were acquired; that was the valuation given to them when they were acquired. Let me pick one in particular as an example of what I am talking about: 1,200 common shares of Canadian Pacific Ltd. are held in the superannuation fund. They are carried on the books at a valuation of $19,800. That shows to be a per share value of $16.50 at that time — that's what they're being carried on the books as. At the time I did this tabulation the market value of those Canadian Pacific shares — this was in March — was $38. The dividend paid was $1.80 a year, which was 4.7 percent earnings on current market price. The minister could very readily, easily and I say very properly sell those shares off, make a capital increase out of it, increase the asset value of the fund by the difference between which they are carried on the books — that is, $16.50 a share — and the $38 a share where they are earning 4.7 percent, and invest that in something that could bring.... What do today's investments bring in bonds — 10 percent, 11 percent or 9¾ percent? Something of that nature. The minister or the committee could do that very readily and bring about an increased amount of capital money into the fund, earning a higher yield than is the case at the moment.

You've also got 450 common shares of International Nickel in there carried on the books at the acquisition price, presumably — carried on there at $31⅞ per share. I don't know what Inco stock is at the moment, but one would have to look at that. The minister can do those sorts of things. There are 300 shares of Imperial Oil carried on the books at $42⅜. The market price of that in March was a bit above that, The yield was 3.3 percent. There's another opportunity to sell off those shares at a profit and invest the proceeds in a fixed income security — bonds or something of that sort — so that you can accomplish an increase both in yield and in the asset value of the fund. That was what I was suggesting the minister do. He saw fit in his counterargument to talk about bonds dropping in price where their coupon is 3, 4 or 5 percent or something of that nature.

[ Page 3891 ]

I see the Minister of Forests (Hon. Mr. Waterland) continuing to giggle about this. I don't know whether he finds this funny or not, but it's not funny to the employees who have to look to this fund to generate the income to provide them with pensions later on, and that's where I say the fund has been mismanaged or not managed. Those investments are carried here, and have been carried for some period of time, static and unchanging, without regard to the fact that they earn on current market value a very low yield. In some cases, with respect to the value at which they're carried on the books, the yield would be even less if you computed in that way. That's the sort of thing I hope the employee representative on the management committee will bring in a forceful way to the committee, and elevate the yield that that fund will earn for the pensions of the employees covered by it.

Mr. Speaker, I move the adjournment of the debate until the next sitting of the House.

Motion approved.

MR. COCKE: Mr. Speaker, I rise on a point of order. It has been brought to my attention this afternoon that I misinformed the House yesterday in terms of the number of private hospitals that are properly following the fire marshal's orders. I was informed that only five were, and I've been informed that I was misinformed. I understand that at least half are conforming to the fire marshal's rules. I wish to correct that statement.

DEPUTY SPEAKER: The member rises for correction. So noted.

HON. MR. BENNETT: Mr. Speaker, I ask leave to give the House a short report on the condition of Speaker Schroeder, who I'm sure all members are concerned about.

Leave granted.

HON. MR. BENNETT: As you know, Speaker Schroeder was undergoing heart surgery today. I have completed talking with his wife, Ella-Mae, and she tells me that he entered the operation in good spirits and has come out of it in satisfactory condition — in fact he has tolerated the operation well. He was operated on by Drs. Gerein and Ling. He will be in recovery overnight, in intensive care for a few days, and if all goes really well, he may be up and around and walking by the weekend. I know the House, during this next period, will continue to send to Speaker Schroeder, through our thoughts, and to Mrs. Schroeder our continued best wishes for his continuing recovery. I'm sure we're all relieved that he has come through the operation as well as he has.

MR. HOWARD: Mr. Speaker, we're very pleased to hear the report by the Premier about the condition of Mr. Speaker Schroeder. We join unanimously with the Premier and with everybody else in the House in wishing him a successful recovery from the operation. I'm sure the Premier, when he's speaking to her, will impart to Mrs. Schroeder our best wishes for his recovery and speedy return to the House.

DEPUTY SPEAKER: Hon. members, if it is the wish of the House the Chair would be more than happy to send flowers with the appropriate message marking the occasion, and will do so.

Hon. members, on Thursday last the hon. member for Atlin (Mr. Passarell) rose on a matter of privilege relating to a communication between a member of the Hansard staff and an official of the Church of Scientology. This communication related to a statement made by the hon. member during debate in Committee of Supply on the estimates of the hon. Minister of Lands, Parks and Housing (Hon. Mr. Chabot).

By reason of the unusual circumstances the Chair sought additional information from the chief of Hansard staff on the circumstances surrounding the communication in question.

This was done with the approval and consent of the hon. member for Atlin, as it is contrary to established practices for the Chair to make independent inquiries when considering a matter of privilege. Standing order 129(7) places the administration of Hansard under the supervision of Mr. Speaker, and it was therefore appropriate for the hon. member for Atlin to request an investigation by the Chair.

I have been advised by the chief of Hansard that the Hansard staff did not transmit the full context of the speech of the hon. member for Atlin but revealed only such words as were necessary to verify precise spellings and the accuracy of technical terminology on the subject of the Church of Scientology. I am further advised that the research editor who made the inquiry in question has no connection, directly or indirectly, with that church. I believe, therefore, that there was no intent to violate any privilege of the House and that normal research procedures were invoked only in the interests of accuracy.

Although I am satisfied that no impropriety has occurred, and I trust that the House itself will be thus satisfied, the Chair is indebted to the hon. member for Atlin for raising the matter in a most appropriate fashion. The hon. member and the House may be assured that rules are in place for the guidance of Hansard, whose supervision, as has been noted, rests with the office of the Speaker. I am sure that hon. members would agree that the Hansard staff serve the House with diligence and integrity, and the Chair accepts full responsibility for ensuring that adequate steps are taken to maintain that high level of service to this House.

Hon. Mr. Gardom moved adjournment of the House.

Motion approved.

The House adjourned at 6:01 p.m.