[ Page 6071 ]

CONTENTS

Routine Proceedings

Oral Questions

Alleged cutbacks in homemaker service. Mr. Cocke –– 6071

Mr. Nicolson

Mr. Passarell

Mr. Howard

Racial discrimination. Mr. Barnes –– 6072

Tabling Documents

IBT list of pesticides used in British Columbia.

Hon. Mr. Rogers –– 6073

Building Safety Standards Act (Bill 20). Second reading.

Hon. Mr. Vander Zalm –– 6073

Mr. Barber –– 6074

Provincial Court Amendment Act, 1981 (Bill 8). Second reading.

Hon. Mr. Williams –– 6074

Mr. Macdonald –– 6074

Hon. Mr. Williams –– 6074

Environment Management Act (Bill 22). Second reading.

Hon. Mr. Rogers –– 6075

Mr. Skelly –– 6075

Hon. Mr. Rogers –– 6076

Petroleum and Natural Gas Amendment Act, 1981 (Bill 21). Second reading.

Hon. Mr. McClelland –– 6076

Mr. D'Arcy –– 6076

Hon. Mr. McClelland –– 6076

Mineral Land Tax Amendment Act, 1981 (Bill 5). Second reading'

Hon. Mr. McClelland –– 6076

Assessment Amendment Act, 1981 (Bill 11). Second reading.

Hon. Mr. Curtis –– 6076

Mr. Lauk –– 6077

Mr. Davis –– 6078

Hon. Mr. Curtis –– 6078

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

On vote 86: minister's office –– 6079

Hon. Mr. Curtis

Mr. Stupich

Mr. Hall

Mr. Cocke

Ms. Brown

Mr. Passarell

Mr. Levi

Mr. Leggatt

Hon. Mr. Bennett

TUESDAY, JUNE 9, 1981

The House met at 2 p.m.

Prayers.

HON. MR. VANDER ZALM: Mr. Speaker, attending, in the gallery today is a large gathering of Croatian people from all over British Columbia, particularly the lower mainland, and from out of province. With us today we have an outstanding Croatian, Mr. Steve Stankovic of Hamilton, Ontario, who is president of the society in Ontario, and is also the secretary for all Croatian people in Canada.

MR. KING: Visiting in the gallery today we have a school class from the North Okanagan Academy at Armstrong, along with their teacher Mr. Bergey. I would ask the House to extend a warm welcome to this class. Also, I have a constituent in the gallery today who is from Ashton Creek, British Columbia. I know he's a staunch supporter of this member. I would like the House to welcome Mr. Len Bawtree.

HON. MR. WATERLAND: In the precincts today is a group of students from Boston Bar Elementary and Secondary School in my constituency, accompanied by their teacher Don Walmsley. I would ask the House to make them welcome.

HON. MRS. JORDAN: Mr. Speaker, this afternoon I'm delighted to have the pleasure of introducing 20 convention hostesses from Seattle King County. They represent the convention and visitors' bureau of that county. They arrived here this afternoon on the Princess Marguerite and will be visiting our ministry in the precincts. I ask you all to give them a very warm welcome.

HON. MR. SMITH: Mr. Speaker, visiting your gallery today is my wife Barbara. She is accompanied by Mr. Bob Moffatt of Vancouver, who is a well-known Canadian tennis coach of Canadian junior teams abroad. He is here to give particular assistance to the second member for Vancouver East (Mr. Barnes), the member for Okanagan South (Hon. Mr. Bennett) and the member for Oak Bay-Gordon Head (Hon. Mr. Smith) in their tennis game.

Oral Questions

ALLEGED CUTBACKS IN HOMEMAKER SERVICE

MR. COCKE: I have a question for the Minister of Health — part of the ongoing saga of when a cut is not a cut.

It's been confirmed that the Vancouver homemakers have been asked by long-term-care to trim the fat and reduce their service to long-term-care clients by 100,000 hours. It's very clear that cutbacks of this size in homemaker service will put a great strain on old people and will result in the deterioration of their health.

MR. KEMPF: What's your question?

MR. COCKE: When I get around to it, you'll hear the question. Mr. Speaker, the member has difficulty taking this question seriously.

What contingencies has the minister made to meet the anticipated extra demand on hospital facilities?

HON. MR. NIELSEN: The member for New Westminster has reached certain conclusions which, I gather, he can do by certain skills. I'm not sure. He has anticipated deterioration of health and so on of some people. He mentions that the Vancouver homemakers have been told to trim the fat, Mr. Speaker, if that is correct. I would certainly support that if, indeed, we are trimming, fat.

The homemaker program, as I mentioned yesterday, is being funded with approximately $52 million. There will be modifications on a case basis. Those people who are responsible for coordinating the program will take into consideration that which is deemed to be required by those individual clients. It is certainly not the intent of the program to anticipate the deterioration of anyone's health because of modifications in their schedule. This is an ongoing program, and we cannot anticipate the individual needs of more than 21,000 people at this time. Moneys are being provided for the program. Some of the programs will be modified — some individual clients will he receiving fewer hours of service and some will be receiving more — but the hours of service being provided will be approximately the same as last year. The demand may be greater, and the costs certainly will be greater.

MR. COCKE: Mr. Speaker, it's the same all over the province. Yesterday I brought to the attention of the House a number of areas: today I'm bringing another one — a large one in Vancouver, Powell River has been cut from....

HON. MR. PHILLIPS: Question! Question!

MR. SPEAKER: Order, please.

MR. COCKE: Mr. Speaker, the reason they're so jumpy is because it's such a very significant thing.

MR. SPEAKER: Hon. members, in question period the purpose is to ask questions, and if the member perceives some differences in the House, it could be connected with the length of the preamble. Please proceed.

MR. COCKE: Mr. Speaker, I listened to the minister yesterday. He took all of question period. I'm asking the minister now what can be done about an arbitrary cutback across the board. He's talking about individuals. Has the minister decided to rescind that arbitrary cutback across the board and start looking at individuals and their health needs?

HON. MR. NIELSEN: Mr. Speaker, the budget which has been anticipated this year for the homemaker service is approximately $52 million. That money will be distributed throughout the province to the various health districts.

Interjections.

MR. SPEAKER: Order, please. Hon. members, let's hear the answer.

HON. MR. NIELSEN: Mr. Speaker, the moneys provided in the budget will be distributed throughout the province by the various health districts and the administrators

[ Page 6072 ]

responsible for it contracted through the various agencies that provide the service. The agencies have been advised that they will be allocated so many hours this year. Those hours will be dependent upon the number of clients and that which is assessed to be required by each client. We do not know with precision how many people will be seeking that service this year — approximately 21,500; there could be more, there could be less.

In some instances the program offered to the individual will be reviewed. If the individual needs additional time, that will be considered. If the individual needs less time, that will be considered. The individuals who are assessed to require some type of homemaker assistance need not forever be under that program. Some of them require temporary assistance. Some of them require almost permanent assistance. Some will go to an intermediate-care facility. Some will go to an acute-care facility, depending upon their health and its deterioration under some circumstances.

In addition, the people who are involved in the homemaker policy will also be attempting to see if other individuals can assist some of these people who require assistance about their homes for different chores and other assistance. Some other people will be asked to take part in assisting those less fortunate, including relatives and volunteer organizations.

Interjection.

HON. MR. NIELSEN: Apparently someone is offended by the thought of relatives or volunteers assisting people in need.

I provided information to the House yesterday. We have an expanded budget. It may not meet the anticipated or demanded need within the province, but it will go a long way to resolving many problems of many thousands of people.

MR. NICOLSON: I have a question for the Minister of Health. The Cranbrook Homemakers Service has advised that they've been ordered to cut 800 hours per month from their operation. They have no choice but to reject qualified patients. Has the minister decided to accept the advice of the Cranbrook society that the Ministry of Health cut the extra layer of bureaucracy which now provides field supervision and extra paperwork for homemakers, instead of cutting services to the patients?

HON. MR. NIELSEN: I haven't heard directly from the Cranbrook homemakers' society. It's quite possible that staff have been advised by them. Unfortunately, in delivering any service relative to people's needs, there is a need for a layer of bureaucracy. Initially someone must assess the needs of that individual person, and there must be follow-up attention.

AN HON. MEMBER: Bureaucracy.

HON. MR. NIELSEN: Call it bureaucracy if you want. It's also responsibility, and it also identifies that moneys being spent are going to where they're required.

It's very difficult for some people in the field to make a very quick decision on which person should receive what care, and it's necessary that they follow through, not only to see that the care is what is required but also to see that they're getting it. I don't object to having people working the field first to assess and secondly to ensure that care is being delivered. The Cranbrook organization may have been advised to cut their workload by 800 hours; that would represent 800 hours of an anticipated 3.5 million hours of service expected this year.

MR. PASSARELL: I have a question for the Minister of Health. The Ministry of Health has ordered that 1,000 hours per month be cut from the Dawson Creek homemaker service. The result is a freeze on new clients and a cutback in the number of hours allocated to existing patients. Did the minister receive a petition regarding this matter from 35 very upset patients, and is he prepared to consider their plight?

HON. MR. NIELSEN: I have not seen the petition from 35 very upset patients, I think the member said. We would consider their situation, although it may not be their plight.

MR. HOWARD: I wonder if I too could direct a question to the Minister of Health. Given that the Smithers Homemakers Service report that they have been ordered to cut drastically the number of hours they can expend on visiting long-term-care patients, and that sufficient money is not available to the Smithers Homemakers Service to provide the care that those long-term-care patients need, I wonder if the minister can advise whether he has decided to find the extra money to make a request to the Minister of Finance (Hon. Mr. Curtis) to see if he can get his hands on some of the expected $97 million that the minister expects to earn on interest on cash surpluses this year.

HON. MR. NIELSEN: Mr. Speaker, I would be pleased to respond to questions relative to the needs of a specific homemaker service in that member's constituency. As to the other matters, he's anticipating a great deal.

MR. HOWARD: I have another question to the Minister of Health. Inasmuch as in answer to the first question posed to him today the minister indicated that he thought it would be a good idea to trim the fat out of some places, I wonder if the minister would mind explaining to this House how he can justify this curtailment of homemaker services to long-term-care patients while his own personal travel expenses in the budget have increased by 55 percent over the last year.

HON. MR. NIELSEN: I don't know whether we're debating estimates at the moment, but I suppose if it's in order for the question, it would be in order for an answer.

The ministry estimates, including the minister's office, have generally seen an increase. The travel aspect throughout the ministry is up considerably over last year. If all members of the House and organizations make requests for ministers or members of the minister's staff to meet with them in different locations of the province, we either accede to those requests or we don't. If we agree, then it costs money to travel. It's as simple as that.

MR. BARRETT: Every night home on a government plane.

MR. SPEAKER: Order, please, hon. members. We are in question period.

RACIAL DISCRIMINATION

MR. BARNES: Mr. Speaker, this is a question to the Minister of Labour. The minister indicated last week in the House that he is reluctant to release the McAlpine report because of a "contentious issue contained therein." The McAlpine report, of course, has become contentious in itself. However, has the minister decided to bring the House into his confidence at this time, and inform us what that contentious issue is which keeps the report hidden from the public?

[ Page 6073 ]

HON. MR. HEINRICH: Mr. Speaker, I have advised the House on more than one occasion that the report will be released in due course.

HON. MR. ROGERS: Mr. Speaker, I ask leave to table a document.

MR. SPEAKER: Is this the document referred to earlier?

HON. MR. ROGERS: No, Mr. Speaker, it is not a document referred to in estimates, nor is it a statutory document. Therefore I ask leave to file it.

MR. SPEAKER: In order for the House to intelligently decide, perhaps the member could....

HON. MR. ROGERS: This document is a list of IBT pesticides used in British Columbia.

MR. SPEAKER: Shall leave be granted?

Leave granted.

HON. MR. ROGERS: I thought that would get it.

Interjections.

MR. SPEAKER: Hon. members, there seems to be an increasing practice of members, while in their chairs, interrupting the proceedings of the House by speaking out. I would decry the practice, and suggest that perhaps every member observe what is the normal practice of an orderly House.

Orders of the Day

HON. MR. WILLIAMS: Mr. Speaker, I ask leave that the House proceed to public bills and orders.

Leave granted.

HON. MR. WILLIAMS: Second reading of Bill 20, Mr. Speaker.

BUILDING SAFETY STANDARDS ACT

HON. MR. VANDER ZALM: Mr. Speaker, it gives me pleasure to move second reading of Bill 20, Building Safety Standards Act. Historically, the construction industry has been faced with regulations that have been initiated from a multitude of provincial and local government jurisdictions. The result has been the enactment and enforcement of conflicting regulations, delay at the time of construction, and increased costs to the consumer. Part of the difficulties that were being caused by the varied regulations were overcome when the Municipal Act was amended to direct that the British Columbia Building Code would apply throughout the province, with the exception that regional districts could, by by-law, determine areas not within municipalities that would be subject to the enforcement of the building code. This action eliminated the authority of municipalities to directly amend the construction regulations, but did not eliminate the authority of other provincial jurisdictions initially to act on their own to regulate particular phases of construction, and the resulting higher costs persisted, with the consumer having to pick up the tab,

Overtures were made to the government by people in the construction industry and by people who had suffered financially when they had to meet the cost of rectifying construction renovations which were demanded by the variables in regulations. The Premier recognized a need for a review of the regulatory authority as it affected construction, and in a number of statements had indicated the matter would be studied with the object of making recommendations that would overcome the overlapping of regulatory authority and the inconsistent regulations that resulted.

As the Ministry of Labour was heavily involved in all phases of the construction industry, the Hon. Minister of Labour struck a consultative committee with membership from both the public and the private sectors. Membership included representatives of provincial government ministries, local government agencies, the UBCM, the construction industry including the building trade unions and design profession industry, and the enforcement officers. The committee was commissioned to make recommendations that would overcome the conflicts and inconsistencies that have arisen through the enactment and enforcement of regulations emanating from a proliferation of jurisdictions.

After examining alternatives the committee made a number of recommendations to cabinet which were contained in a report dated February 21, 1980. The first recommendation was that the British Columbia building code and the British Columbia fire code be adopted under the provisions of the Municipal Act and the Fire Services Act respectively and that the code be applied throughout British Columbia, including the city of Vancouver. As the codes were based on the national codes that were drafted to avoid overlapping of regulation content, the acceptance and adoption of this recommendation eliminate the inconsistencies that have occurred in the past between the two jurisdictions and provide a uniform level of building safety throughout the province. The final construction costs will also be reduced with the implementation of the recommendations. Legislation was recommended to establish an advisory council that would have the primary function of examining and, when appropriate, recommending for adoption all proposed changes to codes and related legislation and regulations that affect the structural design, construction. alteration and occupancy of buildings.

The acts directly affected by this recommending body would be the Municipal Act, the Fire Services Act, the Electrical Safety Act, the Power Engineers and Boiler and Pressure Vessel Safety Act, the Gas Safety Act, the Factory Act and the Mines Act. Representatives on the advisory council would come from the jurisdictions administering the acts referred to together with representatives from the construction industry and other interested parties, at least one half of the members not to be persons who are public employees.

The Building Safety Standards Act has included legislation to enact these recommendations. In addition, the establishment of an appeal board to hear matters advanced pursuant to specific sections in the acts referred to was also recommended. The Building Safety Standards Act authorizes the establishment of the appeal board.

Finally, to assure primacy in the application of regulations, and to resolve any conflicts now existing, or ones that may have been overlooked, the act has provisions which firstly give the Fire Services Act and building code under the Municipal Act primacy over all the other acts. Secondly, it gives the building code primacy over the fire code.

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Consequential amendments to all acts affected are also attached to the Building Safety Standards Act. The legislation of the Building Safety Standards Act will lead to the simplification of administrative procedures involved in obtaining all permits related to the construction and alteration of buildings. The regulation and enforcement of regulations will be more consistent, which in the end will lead to less inconvenience, less delay and the lessening of final construction costs.

Mr. Speaker, I move second reading.

MR. BARBER: I rise as the designated speaker for the official opposition. At the beginning of my lengthy remarks, I would like to advise the House that the official opposition will support this bill.

Bill 20, Building Safety Standards Act, read a second time and referred to a Committee of the Whole House for consideration at the next sitting of the House after today.

HON. MR. WILLIAMS: Second reading of Bill 8, Mr. Speaker.

PROVINCIAL COURT AMENDMENT ACT, 1981

HON. MR. WILLIAMS: This act, while apparently simple in content, is nonetheless an appropriate development in the functioning of the provincial court. The court is in its eighth year of functioning in this province since major revisions were last made. It has achieved a level of distinction which brings it into a class at least equal to that of the superior courts of the province. However, over the period of its existence, and during its course of development, it has been perceived that there are some appropriate modifications which should be made.

The bill before us makes more clear the specific powers and responsibilities of the chief judge of that court in matters associated with judicial administration. In addition, the legislation before us modifies the membership and composition of the Judicial Council, and it redefines its role in such a way as to make it clearer that it too discharges its principal responsibility not only in the selection of persons to take their place on the bench of the provincial court but also in matters related to its continuing administration. Heretofore the Judicial Council exercised its sole responsibility when dealing with matters involving the discipline of judges, court referees and justices of the peace. While this role continues, provision has been made to ensure that the person being disciplined will have the opportunity to determine whether the Judicial Council or a judge of the supreme court of this province will have the responsibility of dealing with alleged infractions of the duties, responsibilities and expected conduct of members of that bench.

In modifying the composition of the Judicial Council, we have expanded the opportunity for appointment of lay persons to the Judicial Council in order to ensure that the council does not seem to be one which is controlled by the court or, indeed, by members of the bar. It is also in the way of the continuing independence of this court that it is made clear that the responsibilities of the executive council are virtually removed with respect to the operation of the court. While the executive council still has responsibilities with respect to the formality of appointment of members of the bench, many of the other provisions in the existing statute which might lead to the conclusion that the executive council could exercise an influence over the bench have been removed. In so saying, I move second reading.

MR. MACDONALD: Undoubtedly the bill is an improvement. The opposition will support the measure introduced by the Attorney-General. There will be questions perhaps at the committee stage.

I notice that one of the provisions of the bill clarifies that a judge of the higher courts may sit as a provincial court judge. I hope and I expect that the Attorney-General — but I might be a little bit out of order in saying it — is pursuing the reverse of that particular coin — namely, the importance of vesting provincial court judges with family court powers, including divorce, by appointment from the federal government, so that that particular constitutional hangup, which has caused so much grief and has interfered with the administration of justice, can be resolved through negotiations with the Minister of Justice in Ottawa.

The Judicial Council is gradually increasing the prestige which it enjoys. That's very important. They can't give orders to judges as to court management and the scheduling of cases. Nevertheless, in respect to those matters their guidance is also important. It's not just a disciplinary body. It should be able to give the kind of guidance that will make the justice system work more expeditiously in the interest of all concerned. It can only do that as its prestige continues to rise.

I have always been of the opinion that in the disciplinary aspects there has to be a very good reason why a hearing should not be open, even if it involves alleged infractions on the part of a judge. I think that the rumour mills are worse in the long run than an open hearing. If the ordinary citizen has an open hearing, there has to be a very good reason shown as to why a hearing before the Judicial Council should not be open. Nobody would bother attending most of the cases; no press would be there; it would not be a matter of public interest. But when it is closed, as too many hearings are, then I think that you have not accomplished anything worthwhile, and I don't think it's good for the prestige of the Judicial Council.

HON. MR. WILLIAMS: Mr. Speaker, I thank the hon. second member for Vancouver East for his comments. With respect to the provision which is made in this statute enabling judges of the county and supreme court and indeed the judges of the court of appeal to discharge the jurisdiction of the judge in court, that step was taken because we find that from time to time the opportunity does present itself where some of the judges in other courts may be able to lend very valuable assistance in the work of the provincial court. It is for the purpose of ensuring that that authority be clearly set out that that change has been made.

On the question of the use of provincial court judges in matters of family law, I assure the member and the House that this is a matter with which I am in agreement. Indeed, it was the position of the government of British Columbia during the constitutional discussions of last year to bring to the province the responsibility with regard to a range of family law matters for the purpose of, assuring that this court in fact could more effectively discharge that responsibility. It is one matter of regret arising out of those discussions that such an accord was not reached. In the continuing discussions with the national government on the matter of the constitutional revision and shifts in jurisdiction, I hope that this will be quickly resolved.

[ Page 6075 ]

It was clear, I believe, that except for two provinces there was full support for such a move.

The question of open hearings is one which has been a matter of concern. I agree with the second member for Vancouver East when he says that to hold private hearings into matters affecting the conduct of the judiciary is to raise serious questions as to whether or not what is done behind those closed doors is really in the public interest. It is for that reason that we have in the amendment before you made it clear that all such hearings will be public. Therefore it's a significant shift from what has been the existing legislation.

All of these hearings on discipline matters will be public unless there are circumstances with respect to the evidence to be given which the public interest itself indicates should be dealt with in camera, in the same way as takes place in our courts today when persons who give sensitive testimony and who may themselves be affected by the testimony — not the proceedings — can be properly protected. Only in those circumstances when the tribunal dealing with the particular disciplinary matter is satisfied that it is in the public interest that all or part of the hearing should be in camera will the statutory provision for open hearings be departed from.

I move second reading.

Motion approved.

Bill 8, Provincial Court Amendment Act, 1981, read a second time and referred to a Committee of the Whole House for consideration at the next sitting of the House after today.

HON. MR. WILLIAMS: Second reading of Bill 22, Mr. Speaker.

ENVIRONMENT MANAGEMENT ACT

HON. MR. ROGERS: Mr. Speaker, it's my pleasure to stand and move second reading of the Environment Management Act, Bill 22. As the world's pressures grow and increasing numbers of people discover British Columbia, our resources and our relatively unspoiled heritage, the pressure that continues to grow in this province requires that we have legislation not only to protect our environment but to manage it — well planned, thoughtful and sensitive legislation. This benchmark piece of legislation is the foundation of this government's program of new environmental legislation. It allows the ministry to assist in the development and management of environmental plans and guidelines for all those people who are involved in the use of the environment. It allows for investigation of current environmental issues and it allows the minister to take strong action to prevent environmental damage or other emergencies that are occurring, or even to take action when a potential emergency appears. It also allows for a section of enforcement — including regulations — and, of course, a section for appeals.

Mr. Speaker, this act was introduced some time ago. In that ensuing time I have had several hundred letters and communications complimenting the government on this particular piece of legislation and only one letter opposing it, and in that particular letter it was more a question of not understanding the legislation put forward rather than being opposed to it. I found no one who was opposed to it in principle; some people do have some quarrel with some of the sections of the act.

This legislation represents a great deal of work by the staff of the ministry, and it also represents an enormous amount of effort and input by the general public and outside groups who have lobbied this minister for such a piece of legislation. I think this piece of legislation will be well received province-wide, and it is my pleasure to move second reading.

MR. SKELLY: Mr. Speaker, the opposition will be supporting this act in principle in second reading. There are a number of things that we welcome in the legislation: first of all the environmental emergency provisions in the new act. We understand that there are some difficulties when a pollution or an environment emergency takes place which requires the immediate decision and action of the minister or the ministry, and we see the need for that section of the legislation. We also have seen over the last short time the need for the improved powers of investigation and enforcement which the bill grants to the ministry. We agree with it, and will be supporting those. We agree also with the minister, both in his statements during estimates and in the bill, that the fines for environmental violations should be severe. As I've mentioned before, we're dealing with a question of life-sustaining resources here. People who take any actions in the province which degrade those resources should be punished severely. We will be supporting the minister and will be supporting that section of the bill.

We do have some serious problems with the legislation: first of all the problems that we see in section 4 with the discretionary powers which are granted to the minister under that section. It's very difficult to speak on the principle of a bill which wanders into a number of areas, but we are very concerned about the discretionary powers which are granted to the minister under that section. A few years ago an opposition would have called those "sweeping powers," Mr. Speaker, as you well recall. We'd like to deal a little more responsibly with legislation now than was done at that time, but we are concerned about those discretionary powers. During debate on this section in committee we may have some suggestions to make to the minister as to how this part of the legislation might be improved.

One of the things that we're concerned about is that discretionary powers granted to the ministry in the absence of any legally stated environmental assessment and review procedure creates uncertainty among industry and developers. We're concerned that the legislation should not do that, but in fact this legislation will. The industry can go ahead and develop in certain ways and then suddenly the minister, as a result of some pressure placed upon him, will issue orders against that development. The member for North Vancouver–Seymour (Mr. Davis), during debate on Environment estimates, mentioned two such possibilities: the 20th Century Energy development on Gambier Island and the Weldwood-Luscar development on Vancouver Island. What we would like to see is legislation that spells out more clearly what the requirements of a developer are in terms of environmental impact statements, public review procedures, public hearing procedures, etc. before a development goes ahead, so that uncertainty is eliminated and ministerial discretion is used as little as possible.

The minister in his introduction called this "benchmark legislation," Mr. Speaker, and I think that was a bit of an overstatement. There are models for environmental-impact legislation throughout Canada and the United States which

[ Page 6076 ]

he could have used and which would have given B.C. a much more reasonable rule of law with respect to environmental matters than this legislation does. We are particularly concerned about the appeal procedure which is spelled out in this act, and it appears to us that the minister is attempting to dodge court order in the Esquimalt Lagoon case. We're wondering just how effective this appeal procedure can be. It allows an appeal to a body set up by the Lieutenant-Governor-in-Council, but that appeal body doesn't make the final decision. It simply recommends an action or a decision to the Lieutenant-Governor-in-Council, and cabinet actually makes the final decision. So really here we have, in fact, cabinet sitting in appeal on the decisions of its own tribunals again, which the Esquimalt Lagoon decision attempted to avoid. We are concerned about this appeal section, and we'll be proposing amendments during committee stage on this section.

As to the principle of the bill in general, we support increased fines for environmental offences. We support better investigation and enforcement procedures for the ministry, and more effective emergency provisions in the legislation. There are some amendments which we will propose during committee stage.

HON. MR. ROGERS: I thank the member for his comments. Some of the matters he has brought up involve other legislation that's required, not this particular legislation. I appreciate the member's support of our legislation and look forward to the debate in committee on this bill. I move second reading.

Motion approved.

Bill 22, Environment Management Act, read a second time and referred to a Committee of the Whole House for consideration at the next sitting of the House after today.

HON. MR. WILLIAMS: Second reading of Bill 21, Mr. Speaker.

PETROLEUM AND NATURAL GAS
AMENDMENT ACT, 1981

HON. MR. McCLELLAND: This is basically a housekeeping bill with some minimal amendments to the act, which was introduced in 1973, basically to take care of some problems expressed by both the people in government and the public which followed a public and comprehensive review of the application of this act. We've made some amendments embracing the definition of mineral lands, the incidence of taxation, the delivery of tax notices, mineral lands subject to forfeiture, erroneous forfeitures and the disposition of surrendered or forfeited mineral rights. I don't think it should be necessary to speak much further on the principle of the bill, since it's difficult to find a single principle, but, rather, it cleans up a number of areas which we felt were deficient. I move second reading.

MR. D'ARCY: In my view this bill is long overdue. I welcome it. In my particular riding there are a number of property holdings which are not agricultural, and therefore people could not apply for and get an exemption under the existing legislation, and were forced to pay, admittedly, very small amounts, but very annoying amounts. They were additional amounts that did not apply to most of their neighbours.

I would like to hope that where there are other inconsistencies in legislation, other government ministers will move to literally clean up those acts.

HON. MR. McCLELLAND: I welcome the comments from the opposition energy critic and move second reading.

Motion approved.

Bill 21, Petroleum and Natural Gas Amendment Act, 1981, read a second time and referred to a Committee of the Whole House for consideration at the next sitting of the House after today.

HON. MR. WILLIAMS: Second reading of Bill 5, Mr. Speaker.

MINERAL LAND TAX AMENDMENT ACT, 1981

HON. MR. McCLELLAND: We may have called Bill 21 but we debated Bill 5. It is fast second reading. I've explained the Mineral Land Tax Amendment Act and move second reading.

Motion approved.

Bill 5, Mineral Land Tax Amendment Act, 1981, read a second time and referred to a Committee of the Whole House for consideration at the next sitting of the House after today.

HON. MR. WILLIAMS: I call second reading of Bill 11, Mr. Speaker

ASSESSMENT AMENDMENT ACT, 1981

HON. MR. CURTIS: I draw Mr. Speaker's attention to the significant amendments which will be referred to committee for debate at that stage, and which now show on Orders of the Day. All, taken together, are required to restore the assessability of a number of items of machinery and equipment recently held by the Assessment Appeal Board not to meet the requirements of the word "placed" in the definition of improvements used for school taxation purposes. The purpose is also to advance by six months the valuation date needed in determining assessed values to improve the quality of actual value forecasts used in setting the following year's assessment policies; to ensure that no ambiguity exists as to the method to be used by the assessment commissioner in determining the assessment levels under the municipal option; to validate the percentage of actual value used in the 1981 assessments of residential and seasonal resort properties; and to remove a number of administrative problems and difficulties.

I think it would be helpful to the House to observe that this bill was introduced on March 9, 1981 — budget day — and was then dealt with by the amendments which I refer to — the amendments now on the order paper — which were a response to considerable opinion expressed by a number of British Columbians. We have attempted, to the best of our ability, with the second set of amendments which will go to committee, to accommodate a number of the points which were made.

The step taken to restore the assessability of those machinery and equipment items which historically have been

[ Page 6077 ]

construed to be within the definition of improvements used for school taxation purposes, but which were held to be non-assessable by the Assessment Appeal Board, as they did not meet the test of being affixed or placed, was to redefine and broaden the definition. While the definition of improvements is, of necessity, broader, the power to exempt items assessable only for school purposes is continued.

I should tell you that while for 1981 purposes these exemptions will be dealt with by regulation, discussion with officials in my ministry and general review suggest that these exceptions should be placed in legislation. Therefore in the 1982 session we intend to lift the list which will be dealt with by regulation, but in addition to consider whether one, two or three other items should be added on the basis of the experience which flows from the regulations which will be introduced. I give the undertaking to the House that while of necessity the practice is continued this year — that is exemptions of certain items by regulation — I do commit that there will be an amendment bill in early 1982 dealing with, I would think, nothing else but the list of those exemptions. I think it properly belongs in legislation.

The revised definition of improvements is retroactive in application to December 31, 1980. That is to ensure that the items of machinery and equipment affected by the board's 1980 decision will continue to be assessed and taxed for 1981.

[Mr. Davidson in the chair.]

Earlier I spoke about the second significant change in the act; that's the amendment advancing by six months the valuation date used for assessment purposes. The House will know that present legislation requires assessors to complete annually their assessment rolls by valuing all properties in the province in terms of their market values and physical condition on December 31 of the year preceding the year for which the roll is being prepared. Not only is this assessment date for assessors impractical to achieve; it can be subject to wide variations in results caused by rapid changes in market conditions which may occur during the latter months of the year. Clearly such was the case last year when values predicted by the British Columbia Assessment Authority for use in the 1981 levels were subsequently badly distorted by rapid, inconsistent and almost unpredictable escalation of property values during the last half of the year. The distortion caused a significant underestimation of the actual values expected to appear in the 1981 assessment role, and in turn resulted in percentages of actual value in excess of those desired for residential-type properties being fixed by cabinet.

Last year, based on the most reliable information then available, 13 percent of actual value was fixed on October 11, as the 1981 assessment level for class 1 residential and class 8 seasonal, resort, recreational and fraternal organization properties. This is, incidentally, a representative reduction from the 14.5 percent which was fixed for the previous year, 1980. Then it was subsequently determined by the Assessment Authority that market values of residential properties in many areas had risen dramatically in the third quarter of the year, as indicated. The application of the 13 percent level would produce substantial increases in assessments for most owners of the class 1 residential and class 8 seasonal, resort, recreational and other properties if a further reduction of the percentage fixed earlier was not implemented. So this amendment will improve the accuracy of value forecasts used by the executive council in fixing the percentages of actual value and, most importantly, will provide assessors with a practical valuation date.

The third problem encountered in the preparation of the 1981 assessment roll was an ambiguity found to exist as to the precise method the assessment commissioner was required to use in determining the percentages of actual values required in fixing assessment levels for general municipal taxation purposes. Some municipalities, considering the use of option (c), expressed concern over the possible challenge to the validity of their rolls if the interpretation used by the commissioner was subsequently felt to be incorrect. The amendment removes that ambiguity and changes the date on which the percentage levels are required to be determined, to coincide with the revised valuation date, which will be used in the preparation of the 1982 assessment rolls.

Also significant is the amendment required to validate the reduction in percentage of actual value from 13 percent to 11 percent, as I indicated earlier with respect to the two classes of properties. The bill also contains a number of amendments designed to either clarify the intent of existing provisions of the act or to make its administration more effective. I would deal more fully with these other modifications in committee stage, I think.

I believe that all members of the House are aware of the complexities of the province's property tax system and the important role which equalized assessed values play in the effective operation of that tax system. The House will recall that assessment policies were the subject of considerable debate in recent years, as a number of urgent reforms were being considered. The implementation of those reforms has brought about a dramatic improvement in the quality of assessments used for general, municipal and school taxation purposes, as well as having provided an effective administrative vehicle for use in modifying the impact of assessed values of rapid changes in market values.

The reforms which have been implemented in these recent years have improved the province's property tax system to where it is one of the best in North America. The amendments contained in this bill are designed to further improve the system, and I would hope there is support for the changes which are placed before the House.

There are a number of methods which appear on the order paper for discussion in committee. I move second reading of Bill 11.

MR. LAUK: Mr. Speaker, I think the hon. minister has been in this House long enough not to go into a long and tedious explanation over such a complex tax bill, but taking the minister up sharply for that.... Casually chatting about assessment and about the Assessment Act in this province, in the weeks in which homeowners are receiving tax bills that are doubled, tripled and quadrupled, must appear to the average citizen, if they could be here listening to this speech today, as a classic example of the cynicism of this government. The minister says that the assessments are based on property values as they unpredictably — using his word — rose in value in the last quarter of 1980. That is simply a mistaken view of what actually happened. The Conference Board in Canada, the local real estate boards and economic journals across the country were predicting that this kind of rapid increase in home value would be taking place in major urban centres — predictably Vancouver.

[ Page 6078 ]

The minister, quite pathetically, has confessed his government's ineptitude in meeting that challenge in that predictability. It is not enough to argue. It is not enough for the minister to say today that they didn't know when those values would increase and how rapidly they would increase. That's nonsense. The government must have known. Everybody else seemed to know that it would occur sooner or later. It occurred because of the bankruptcy of this government in terms of housing policy, particularly for urban centres. There is no housing corporation. There are no incentives to build rental housing. There is no use of Crown land to build rental housing. Between 1975 and 1979 the housing market was starved by this government, and he's saying that he's surprised at the rapid increase in value of homes in the lower mainland and indeed the whole province.

It's cynicism at its worst, Mr. Speaker. Tax notices are going out this week, next week and the following week. The people of this province are seeing their hopes and dreams of home ownership shattered by this government. It is an attack by this government on home ownership itself. Only the very rich and elite can afford homes. There is no relief. The least they could do is to take the onerous burden of homeowner taxation off the backs of homeowners and place it where it properly belongs: in an incomes policy in this province; taxing incomes, taking that burden and having the government share the burden of school costs, rather than the homeowner.

Tax notices have been going out in the city of Vancouver, New Westminster, Richmond, Coquitlam, North Vancouver, Delta and all over the lower mainland, doubling, tripling and quadrupling. I have even received letters from Mr. Speaker's constituency complaining about the increase in taxation. There's some confusion with some of the members in Mr. Speaker's constituency. One letter indicated to me that it was the fault of the school board in Delta. You can rest assured, Mr. Speaker, that on your behalf I sent a letter to that person, immediately indicating whose fault it was.

The fault lies squarely with the Minister of Finance and the Minister of Education (Hon. Mr. Smith), who have failed to meet the real needs of the taxpayers of this province. Instead, the minister comes in and gives us a 15-minute mumbo-jumbo reading report on a complex statute, when in essence what people are looking for is tax relief. They don't want to hear about tinkering with the Assessment Act. They want to hear about real, bold programs of tax relief from this government.

The minister says in the Globe and Mail that he's a hands-on minister. I didn't know what that meant until I saw the budget. I know what "hands-on" means: he's got his hands on the money of the people of this province. That's where he wants his hands; he wants his hands on their wallets. He wants to destroy home ownership in this province. He comes in here mumbling jargon prepared for him by his bureaucrats, instead of coming to grips with the real political issue in this province. The difference between that side and this side is that we don't burden ordinary people with taxation that will destroy home ownership and opportunity.

Having said that, we agree with the amendments outlined in the Assessment Amendment Act. Although they are baby steps, they are at least a token gesture on the part of the government towards reviewing the assessment procedures under that act.

MR. DAVIS: This legislation concerns me, partly because it extends the tax base and partly because it's retroactive. I must say that if the official opposition sees little wrong with it, that's no assurance to me. I'm concerned about the fact that most of the items the business will need to carry out its business will be included in the tax base from now on. At one point the word "chattels" was used in the proposed legislation. That was removed by the minister. Nevertheless, nearly everything that a business will utilize, down to pocket calculators — even equipment which may, in common parlance, be regarded as mobile — is now included in the tax base, or will be included as a result of this legislation.

It's a tax base for school purposes. One question I'd like to ask the minister is: why is it necessary to have a different tax base for school purposes than for general municipal purposes? Municipalities do not tax many of these items of machinery and equipment that are called improvements. As I understand it, improvements have been included for some time as being taxable for school purposes but not for general municipal purposes.

My second question is: to what extent do other provinces tax machinery and equipment or, indeed, the miscellany of equipment needed to do business? Which do not? My impression is that British Columbia is one of the few provinces that already extends this assessment thing to include virtually all items of machinery and equipment; whereas in other provinces and, I think, generally in the United States and in many other parts of the world, property is deemed to be land and buildings and structures and pieces of equipment if they're permanently affixed to the structure, but certainly not items which are small and mobile. Now we've extended the base.

I realize that this problem arose out of the fact that several large corporations had been installing expensive computer equipment. They claimed that these were not improvements in the plant structure, fixtures and parts of the structures, that they were immovable equipment in those businesses. They were successful, in the first instance, in having them excluded from assessment. Now we're ensuring in law that they will be included. Not only will those very large and expensive items such as computer equipment be included, but many smaller items such as cash registers, for example, now in the computerized variety — many items of equipment in businesses of all sizes from the largest to the very smallest will be included.

While I understand that the minister proposes to eventually have passed and publish a list of orders-in-counciI that leave out a variety of small business pieces, nevertheless the Assessment Authority will now have the task of assessing absolutely everything on the premises. Reference is made to simplifying administrative procedures, overcoming administrative problems and so on; but I suggest that we are in the process — perhaps we have been for some years — of immensely complicating the whole assessment process by now including everything by order-in-council. Next year, if the minister's intentions are carried out, we'll be excluding some of these items. But I do have this concern that we are — at least on the face of it — extending our tax base considerably and adding to administrative difficulties in this area.

HON. MR. CURTIS: I thank the two members for their comments. I'm sorry that the member for Vancouver Centre who spoke quite critically of this amending bill is not in the House to hear any response which I could have given to his concerns.

[ Page 6079 ]

This is not a new assessment act. This is the kind of amending act which of necessity comes before the Legislature from time to time. The government is concerned about the dramatic increase in assessments. I have instructed ministry staff to examine not what is done in other nearby jurisdictions, but to examine on a worldwide basis whether there is any system better than the system now used in British Columbia, in terms of assessment of property for taxation purposes. We don't believe there is, but if there is we shall examine it, and that would be the subject of a major change in the whole assessment procedure in this province in time to come. I was criticized by the member, who is not here, with respect to the government — to paraphrase — not recognizing the significant escalation in values which would occur. Well, we did. I mentioned that in the previous year, for residential purposes, the taxable assessment value was 14.5 percent. It was lowered by the date on which it had to be done for 1981 assessment purposes. However, as most of us who follow these things will recall, the escalation accelerated and did so in the last few months of 1980. That is the reason for the further reduction in the percentage of actual value for assessment purposes, dropping from 14.5 percent to 13 percent, and then to 11 percent.

I know of no government or group of individuals, notwithstanding the forecasts which were offered, which could have anticipated with complete accuracy the dramatic increase and the increase on an increase which occurred through the last part of the calendar year 1980. One need only cast one's mind back to those months to realize the validity of my rebuttal in that regard.

The member for North Vancouver–Seymour (Mr. Davis) asked about the assessment for school purposes, and I believe that it occurs in other jurisdictions. I do not believe we are that unique. He asks a very good question — why? I think it can only be identified as an historic practice. His concern is such that we would want to examine that particular aspect and we shall do so. Again, I assure the hon. member that with respect to the items under machinery and equipment, which are to be exempted this year by regulation, it is more than a hope — it is a commitment to this House, as long as I am Minister of Finance — to transfer those exemptions in 1982 from regulation to legislation. As I said earlier, that's where I think they properly belong.

There is another point that I think all members will find encouraging and appropriate. That is that we are increasing the assessed value of machinery and equipment with respect to exemptions from taxation by regulation this year, and legislation next. This will impact in a favourable manner on some 8,500 of the 19,500 businesses Currently taxed for machinery and equipment. The last change in the exemption levels was 1954, and clearly it is time for a very significant change in those exemption levels. So not quite half of the businesses in British Columbia currently taxed for machinery and equipment will become exempt through this change alone.

I approach assessment matters very carefully. I read extensively from notes. It is a complex subject. I do not pretend to be an expert on assessment, although in local government, in regional district government and in this House I have had had to address myself to assessment. I think we can be satisfied that assessments in British Columbia, as a mechanism of equity from class of property to class of property and from region to region, are among the best in the continent. I move second reading of Bill 11.

Motion approved.

Bill 11, Assessment Amendment Act, 1981, read a second time and referred to a Committee of the Whole House for consideration at the next sitting of the House after today.

HON. MR. WILLIAMS: Committee of Supply, Mr. Speaker.

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

ESTIMATES: MINISTRY OF FINANCE

On vote 86: minister's office, $176,348.

HON. MR. CURTIS: Mr. Chairman, I wondered from time to time if my estimates would be presented to the House this year, or if, in fact we could do 1981 and 1982 at the same time. I invite all comments that members of the committee wish to offer with respect to the ministry. I am tempted to review in detail the accomplishments of the ministry, the problems we face and the problems which we are overcoming; but I rather suspect that these can be more effectively dealt with in the usual exchange between members of the committee. I say that and deliberately hold the remarks short, bearing in mind that there are those in this House who still reflect upon the length of the budget address for 1981-82 and have issued pleas that I not enter into that long and rather complex comment. Therefore, Mr. Chairman, I present myself for questions from the committee and look forward to assisting members as and when I can.

MR. STUPICH: Mr. Chairman, I prefer to do this one point at the time. I'm rather inclined to think that is the way estimates should be handled, but I'm not saying that judgmentally at all.

The minister said in his budget speech that he had already notified the federal government of B.C.'s intention to withdraw from Ottawa collecting our taxes, and then there was a response from the federal Finance minister that he had not seen the request yet. There is some discussion of revenue — I suppose I should call it expenditures — that takes up about 37 percent of the total material in the background papers, talking about expenditures in the sense of revenue that is lost because of various tax treatments.

I gathered from something the minister said in his remarks that he is concerned about the fact that he doesn't have as much freedom as he would like to have, and that is why he wants to do his own tax-collecting. The material on pages 29 to 51 of the background papers frightens me a bit, if the minister is intending to move into such areas. One of the largest items of so-called "expenditure" is non-taxation of imputed rents on owner-occupied homes. Now I can't imagine the minister wants to get into that, but I wonder what all this material is doing before us. Unless it was put together for some useful purpose and unless the minister is looking at these so-called "expenditures" as one way of raising a lot more money in the event he does his own tax-collecting.

I'd like to put it to the minister: has he officially notified Ottawa that he wants to get out of that agreement? Does he have some plans in mind to follow some of the material in the background papers with a view to raising more money for the provincial government?

[ Page 6080 ]

HON. MR. CURTIS: Mr. Chairman, the whole question of tax expenditure, it seemed to me last year — my first year as Minister of Finance — was a subject which should be identified in any statement of the financial affairs of the province of British Columbia. Clearly a number of the tax expenditures — the hon. member for Nanaimo (Mr. Stupich) referred to one — are there only for identification purposes. There is no way that a government would move into certain fields, but rather I think there is every reason for a government to identify what money is forgone, what money is not collected as a result of tax credits or taxes not collected or tax expenditure — whichever term the committee would prefer. That was the purpose: to identify every possible tax expenditure, because I think that is extremely important.

With respect to the possibility of British Columbia withdrawing from certain tax agreements, following budget day this year that notification was transmitted almost immediately to the federal government through the Minister of Finance for Canada, Mr. MacEachen. In due course it was acknowledged. More recently we've indicated that, if there is to be a withdrawal, it would occur one year later. In other words, the deadline mechanism is in place. We approached the deadline for one year, and we have indicated that any consideration would be delayed by a full year. In fact we wish to stay in the agreements. I think that is the preferable route to follow. If necessary we will follow the course of other provinces — most recently Alberta, which has just embarked on its own tax collection with respect to corporate income tax. I hope that we can. There is a three-year notice required. The first deadline has arrived, Mr. Member. We're not serving firm, final notice, and the three-year meter starts running now. We extend that for another year. In the course of this next year, the established program's funding discussions will come about. There will be much contact between the provinces and the federal government. Undoubtedly tax collection agreements will be on the agenda of a number of those meetings. I trust that assists the member in his first question.

MR. STUPICH: I suppose it gives me the answer at least. I was going to ask whether that meant four years in total. I did understand there was a three-year notice, and now it's one year on top. So it's actually four years from the time.... That's the way it would work. I think it would be an extremely expensive step for us to go into our own tax collection, whether it be corporate or personal. It's my understanding that only one province has ever taken that step — Alberta. It's with respect to corporate tax only. I believe that's the only instance where a province has moved away from having Ottawa collect taxes. Some of them never had it in the beginning. Quebec has always done its own. Ontario has always had its own corporate tax. I believe Alberta is the only province that has ever done anything like this. It's with respect to corporate only.

My follow-up question is whether in giving notice the minister included personal tax as well as corporate tax. In your letter to the federal government were you including personal tax as well as corporate tax, in saying that you wanted to give notice, in effect?

HON. MR. CURTIS: We referred to corporate. That was the subject of the notification and remains the subject of the notification. However, we said that we would review and consider the personal side. I think that at this point in time Alberta is doing the personal side — considering. Pursuing is a stronger term in that context than considering. I don't think they've reached any conclusion. I reiterate for the committee that we earnestly hope — that is a hope, not a threat — that it is not necessary for us to collect our own taxes on the corporate side. However, if that option had to be exercised, then it would be. But I think because of the countless discussions which are going to come about — as I said a few moments ago — between Ottawa and the provinces, we will have ample opportunity to discuss this with the federal authorities and the federal ministers concerned. I can't indicate today what the odds are. It will happen in the next three to four years. I hope that it is not necessary. We have examined the Alberta situation, and they shared information with a number of provinces on the administrative staff required for separate tax collection, the additional costs and the advantages which led them to take this step. So we have that information and that experience next door to watch as well.

MR. STUPICH: I hope we never fall out of favour or get into such trouble with Ottawa that we do embark upon our own tax-collecting system and set up dual income tax corporate or personal. I just hope that never happens.

I'd like to get into another area — Hydro. On many occasions the minister has expressed his pride in the fact that B.C. Hydro now has a triple-A rating. I'm sure we're all happy about that. I'd like to refer briefly to a newspaper story in the Sun on March 21, where there's talk of a new rate increase and the cabinet giving Hydro the authority to impose a new rate increase. It does quote the Minister of Energy, Mines and Petroleum Resources (Hon. Mr. McClelland) as saying that the purpose of the directive to the Energy Commission is to require Hydro to achieve a financial position that allows it to borrow funds on the most economic terms available. We already have a triple-A rating. I wonder at the wording of that. I wonder why B.C. Hydro is being given permission to improve its debt-equity ratio from 91:9 to 80:20. If the reason is, as the Minister of Energy, Mines and Petroleum Resources said, to enable us to borrow at better terms, what better terms can we get than triple-A? Is there some other reason? Are we anticipating borrowing in some other markets? I'd like some explanation from the Minister of Finance as to why it's necessary from that point of view, since we already have what I believe is the best rating possible.

HON. MR. CURTIS: We've had an opportunity in recent months particularly to analyze the borrowing requirements of Hydro Authorities and power-oriented corporations in Canada and the United States. The corporate calendar of projected borrowing for utilities of that kind, whether privately or publicly owned, is very large. Yes, British Columbia has received a triple-A rating, and I'm sorry the member for Coquitlam-Moody (Mr. Leggatt) is not in his chair because I would then speak at great length with respect to the triple-A rating which was granted last year. However, if we go to the market on behalf of Hydro we are competing with other triple-A credits: Canadian, Ontario and Quebec, and also a number in the United States. The competition is very tough, and no triple-A is exactly identical to another triple-A credit. That's why British Columbia Hydro is moving in that respect.

If I've not answered the member's question satisfactorily then I will attempt to take it a little further. There is competition within the top class of triple-A credits.

[ Page 6081 ]

MR. STUPICH: I heard, and I understand the answer. I just find it difficult to believe, after what we were told at the time the triple-A rating was announced, that changing our debt-equity ratio from 91:9 to 80:20 is going to give us a better rate when we go to borrow. At the time it was my understanding we had won the best position possible and the best rate possible. I suspect that loading additional costs onto Hydro in the form of doubling from $15 million to $30 million the tax on water that Hydro is required to pay is simply another way of extracting $15 million from taxpayers, and now changing the debt-equity ratio is simply one more way of getting more money out of taxpayers and putting it into the Crown corporation. I suspect that this particular Crown corporation is going to do more borrowing in the open market and less from pension funds. I think it's simply part of the pattern where the minister is getting more and more money from taxpayers and is going to be using it for a particular purpose that I may say more about later, but only part of the pattern. There's the story that university tuition fees are going to be indexed, and the concern of students for that. That's part of the pattern. There are many examples I can use, but I'm going to try to use ones that haven't been used by everybody else.

Part of what I want to draw attention to is a news release from the Minister of Education (Hon. Mr. Smith) saying that debt requirement costs for school districts have risen by an additional $2.5 million, and I'm wondering to what extent that might be due to anticipation that the school districts' financing authority may be borrowing in markets other than the pension funds. The minister did say in the budget speech that he intended to direct the Crown corporations to borrow on the open market and perhaps save the pension funds for something else. I'll come back to that as well. That's part of the school picture.

The other part of the school picture, of course, is the proportion of the costs of education that are being borne by local taxpayers, as compared to the proportion being borne by government. The proportion borne by the provincial government has been dropping regularly since Social Credit was re-elected in 1975. In 1975, the proportion established by the NDP administration and paid by the provincial government was 48 percent. In 1976 it dropped to 47 percent, in 1977 it dropped to 45 percent, in 1978 it dropped to 42 percent, in 1979 it dropped to 38 percent, in 1980 it dropped to 37 percent, and in 1981 it dropped to 33 percent. That's part of the whole pattern of shifting costs away from the provincial government at the same time that the provincial government is increasing taxes.

The minister said that the change in the rate of the sales tax commission would not bring in much revenue. The hotel industry, on its own, is saying that it's going to bring in an extra $3 million to the provincial government.

The change in trade licence fees. I have a letter from a constituent in Lantzville who wrote to the Minister of Finance. If the Minister of Finance replied to this letter dated April 28, I have not yet seen a copy of the reply. In his particular case, his annual trade licence was $10. It's been increased to $75. That's only a $65 increase in the course of a year, but it's a 650 percent increase. It's 750 percent of what it was before. Now $65 doesn't sound like much, but 750 percent of the previous figure sounds like quite a lot.

Even in things like children's clothing there's a complaint from a constituent. It used to be that children's clothing was exempt according to the size. That presented some difficulties, so it was changed to 16 years of age and under. It was then changed to 15 years of age and under. I don't have the dates. The most recent change is to under 15 years of age. One wonders when that particular trend is going to stop.

Fuel taxation. I’ll just refer to the background papers again. As I said. Mr. Chairman, all I'm doing is developing a pattern and showing that the minister, in addition to the taxes he announced in the budget, has done many other things to increase provincial government revenue. The new fuel taxation system doesn't really identify just how much of the increase in revenue from this source is due to the change in the system and how much of it is simply due to inflation. I don't know.

I don't really, have questions. but comments and concerns about the minister's policy. I know he said that he would have taken an opportunity to develop an opening statement, but chose not to. I guess it's just as well that he didn't. He really did it in his budget speech, which was very long,

There is something else I'd kind of like to go into. In the background papers there is a section on natural gas and the cost of subsidizing it. I recall asking another Minister of Finance, W.A.C. Bennett, how he could justify B.C. Hydro making the profit that it did on natural gas. In those days it was very profitable for B.C. Hydro to sell natural gas in Vancouver and Victoria. His explanation at the time was that B.C. Hydro made money on natural gas sales and lost it on transit. Since both were happening in the same jurisdictions, one balanced the other and everything was okay. But in this case it's costing taxpayers in areas that are not served natural gas and are not getting any benefit at all a substantial amount of money to subsidize those users of natural gas in the areas where they are getting it. I'm not quarrelling with that. I'm just wondering how the minister justifies taking money out of people on Vancouver Island, for example, to help provide cheap gas to people in other areas.

MR. HALL: The minister, when he opened his remarks, wondered out loud whether his estimates would ever come on to be discussed. I'd like to tell the Chairman what I told the minister in a private conversation a couple of days ago. I said that, had the minister's estimates been brought on immediately following the budget debate, we probably would have dealt with them by now. It would probably be the same day of the we,ek today, and we would already have the minister's estimates passed. I say that because it seems to me that once you had the budget speech and you dealt with Finance, and you got 10 or 15 finance bills on the order paper, you would do the estimates of the Minister of Finance a lot quicker than otherwise. I share that information with the House because I know that nobody in the House will tell the House Leader, who is not here. I don't think he knows how to do what he's supposed to do, in terms of getting these estimates through. So. Mr. Chairman, we'll keep that secret between you and me and the Minister of Finance.

I can remember the days when we always did Finance first. That wasn't simply because the Minister of Finance was also the Premier. It was because of what I have just described to you — a sort of exhaustion of the subject.

Now we're going to deal with Finance at a time when everybody is receiving tax notices. Not only will we talk about increasing the sales tax by 50 percent; many of us might also discuss the kind of tax notices that the first member for Vancouver Centre (Mr. Lauk) referred to in question period today. I don't want to do that today, however. I've got some

[ Page 6082 ]

other subjects that I'd like to discuss with the minister in terms of his administration of the department. I thought I'd mention that to you because it seems to me that the Minister of Finance in his administration of all financial matters and the production of the budget papers.... His jam-packed budget speech gave us a great deal of information, but it was so long ago that I can only remember because of the chant in unison that appears here at 2:25 every day: "March, April, May and June." However, one thing that does affect us all as legislators is that when that budget speech comes down, we all receive the estimate book. We all know by now that the estimate book doesn't bear a great deal of relevance to what is going to happen during the course of the year. At the same time that we get the estimate book we get interim financial statements and supplementary financial reports which show us how far out the estimate book was in the previous year. That's not very important in itself, because obviously an estimate is only an estimate.

I want to ask the minister if he as a new minister is satisfied with the quality of information provided to the members in the estimate book. I remember — and I think the minister does also — when the estimate book contained, for instance, even the technical descriptions of the jobs in the government; you could find out the fact that, for instance, the Forestry department employed 24 foresters; the actual number of employees in Highways was listed, along with a job description which matched that in the files of the Public Service Commission. Now we don't see any of that information. Now that the number of public servants is now between 40,000 and 50,000, I don't expect to see all the job descriptions or anything like it. All we have is a gross figure at the end.

One thing that we don't have any longer is the breakdown in the leadership roles of the ministries. When the minister first came to this House some years ago, he was able to ask questions of, for instance, the minister he was facing.... He didn't have to ask the minister. First of all, he got the initial information from the estimates book as to the make-up of the minister's office, and then he could ask supplementary questions. From the estimates book he found out how many employees were in the minister's office and in the deputy minister's office. He saw what their rank and salaries were, and their travel expenses. That's not available to legislators now. Yet we're spending more and more money each day in top administration. We have passed bills. In my view, we've even politicized the top two, three, four or five levels of public service. I don't say the minister's done that. I'm saying we have done it by passing legislation.

I only mention this in passing: since March 18 I've had question 21 on the order paper. I could shout every day, "March, April, May June," just as the minister does to us. I've had question 21 on the order paper since March 18, asking him how many people work in his colleagues' offices. I could have walked those corridors myself by now with a blunt pencil and found out. With a sharp pencil, I probably could have even found out how much they're getting. Similarly, I've asked another colleague of the minister's, since a date not too far away from that, how and where they've all been in the last 12 months. But that's not this minister's responsibility, so we'll leave that alone.

So there we start off with the quality of the estimates. I want now to move into a field where I have a specific interest. Legislators the length and breadth of the province are talking about the quality of information they're getting from governments. This isn't a party political issue. This goes to the question of accountability and the question of value for money. This goes to the question of whether or not, as legislators, we're going to be faced with mindless proposition 13 revolutions, like California, which some people may think are good things — I happen to think that they're terrible things — or whether we're going to produce accountability, value for money and sensible discussion about whether or not the taxes collected by government are correctly spent and are seen to be correctly spent. We can only do that by excellent quality of information.

To do that, we've got to have the kind of information that the minister sometimes stands up with and is justly proud about. I know he's going to stand up and talk about his quarterly reports and so on. I say we've got to do even better than that and not just regurgitate incorrect stuff four times a year.

Interjection.

MR. HALL: Let me put it to you this way. We've got to make sure that we're on the right track. When I see the third report of the auditor-general — in the "Status of Findings and Recommendations" on page 28 — and can show you ten pages in which the words "no change; no improvement; no significant change; my concern continues; no significant improvement" occur one, two or three times on every page, I don't think it's satisfactory.

I'm sure you will stand up and read those that say — I'll read them for you — "improvements were noted; recommendations have been followed; major systems changes are in progress." It's a question of the eye of the beholder seeing what he wants to point out as optimistic or pessimistic. My point is that I don't think we're making sufficient progress in this vital area, when we're growing in expenditures of revenues at the rate you announced in March. For instance, I see in five categories the following changes. Here I'm coming to the end of my statement to you.

This year in advertising and publications you have produced a budget that sees a 31.3 percent increase in expenditure. In consultants' charges you have produced a budget which sees a 13 percent increase in expenditure. In travel — we've discussed this through the ministries — you've produced budgets which show a 20 percent increase. There are two categories, l'm suggesting to you in the fairest way I know how, Mr. Minister, over which you have no control whatsoever, because both items are totally and utterly out of control: building occupancy and computer charges, in which we see increases of 39 percent and 30 percent in expenses this year.

Those millions of dollars in increases this year are in what will turn out to be, in the end, a $7 billion budget based on methods and procedures which don't meet the standards of good financial management. I think we're entitled to stand up and express concern. That's what I'm doing today. I'm pointing out to you that it starts with good information, management and dialogue. It starts with providing people with the tools for the job, not only in the public service but in the legislative body itself.

Lastly, may I say that you can't give legislators too much information. Hard-working legislators will use it all; idle legislators won't read it and will put it into the waste-paper basket. But whatever you spend on good information is money well spent — whatever we spend in trying to improve

[ Page 6083 ]

accountability, in trying to get value for money and in improving this kind of information that I've indicated to the minister, has got to be money well spent. I would hope that he would do it and not, in effect, play a traditional game that's been played in this House — and I don't blame this minister for it any more than I blame anybody else — of making people go through those silly businesses of asking questions in March and getting the answers in September; of getting annual reports when the minister is away and gone out the revolving door — his annual report has been tabled after the event, and that kind of thing. I think this minister, as he sits on Treasury Board and as the Minister of Finance, has got a large part to play in that, and I hope he will pick up that responsibility.

HON. MR. CURTIS: Mr. Chairman, before too many items go unanswered, I think perhaps I would like to respond from the notes which I have made. The member for Nanaimo is not in his seat at the moment, but I'm sure he will be back.

With respect to a letter which he spoke of, I have quite a good idea of the size of Lantzville, but I do note that I wrote to a resident of Lantzville on May 21 this year with respect to business licence fees. It is not shown — this is a Xerox, but I'll happily share it with the member.

Interjection.

HON. MR. CURTIS: Yes, that's the gentleman, and he was written to on May 21.

I think in the course of the budget debate we canvassed pretty thoroughly the situation which faced the government in terms of the pressures on us in the expenditure-revenue equation. Yes, we have increased a variety of fees for services — I continue to refer to the points made by the member for Nanaimo. We've increased a number of charges for services across government. Frankly, I know I'm not alone in government in believing that there should be a strong factor of userpay in terms of a particular service that is obtained by a citizen. Not to recognize the user-pay principle is to ask all British Columbians to subsidize all services of government. I don't think that's correct. In the case of motor-vehicle licence fees and trade licence fees — incidentally we debated that bill last year — those fees had not been altered for decades. It's a question not of years but of decades. In all those instances we are attempting to update. It's painful to do so, but we are in a position where it has been necessary and where I quite earnestly believe it is the fair thing to do, and that is the basis on which we have proceeded.

The second member for Surrey (Mr. Hall) has made a number of comments which I accept from him not only as someone who has been in this House for quite some time, but as the member of this House who is now chairman of the public accounts committee. I attempt to pay attention to all members as they participate in debates, but the Chair will forgive me if I say I pay particular attention to what the Chairman of the public accounts committee has to say. Yes, he has read out from the auditor-general's report a number of comments which could be described as critical, or which at least indicate there has been no change. Then he, fairly, observed that there were other comments by the auditor-general in her last report which indicate that improvement has occurred and been noted, and where a recommendation has been followed.

We can't anticipate legislation in the Committee of Supply. However, I am hopeful that the Financial Administration Act will reach this House in the very near future. That is a document which has occupied a tremendous amount of time on the part of people in the Ministry of Finance, throughout government and also on the part of the auditor-general. The auditor-general, in the role of triggering a number of the matters which we have incorporated into this legislation which is on its way.... We have worked closely with the auditor-general in the preparation of the legislation. The task force which dealt with the White Paper or the draft act last year completed its report. That was a major, overdue and, I believe, very useful undertaking on the part of the Ministry of Finance. We shall see the results of many months of effort involved in correcting those things which should have been corrected earlier and attended to a good number of years ago. In fact I will have an opportunity at that time to refer to a memorandum — I believe dated in the late 1940s — indicating the need for reform of various financial control mechanisms in the province of British Columbia. That will be more appropriately referred to in detail at another time.

The restructuring of the Ministry of Finance has also been a very direct effort to improve the capacity of the ministry in what is now the complex '80s as opposed to the relatively easy and straightforward '50s and '60s. Certainly there was a need for restructuring, assignments of new duties, a tightening up of the Ministry of Finance and a very significant formalizing of Treasury Board and Treasury Board processes. I think all of these speak to the concerns which the member for Surrey has referred to today and on previous occasions. He speaks about late annual reports. In all candour, I have to agree with him. I don't think annual reports from ministries should be late, and I think most of our annual reports are now on time. There are some exceptions. There's no dispute on that point, Mr. Member. It's a matter of good practice, whether the law says they should be in or not, that annual reports and financial statements come in at the earliest possible time.

MR. COCKE: Tell that to McClelland.

HON. MR. CURTIS: Mr. Chairman, I have responded frankly to a comment made by another member of this House.

In terms of restructuring and strengthening the Ministry of Finance we've gone through the whole question of signing authorities. We found that in need of improvement. That is being worked on in government — not only in the ministry; we have worked on that for a clear definition, a much more accurate statement Of understanding, as to who is authorized to undertake the particular move to issue a requisition to sign on behalf of the government of British Columbia. That work is ongoing. It is not yet complete, but certainly we've done very well thus far.

The estimates restructure. The second member for Surrey opened his remarks with respect to the fact that there was considerably more information available in the estimate book several years ago. Then he made the correct observation in terms of it's being a very complex estimate book now if we listed all the details which were acceptable 15, 20 or 25 years ago. I have communicated with the member as chairman of the public accounts committee, indicating the reform which we are undertaking, the estimates restructure which is going to occur. It has commenced, and we will see it to a further extent in 1982.

[ Page 6084 ]

However, I think all members should know and will know that the kind of detail which the member referred to in developing his point is available on request through the Ministry of Finance. It is not available by means of a formal request in this House. The information is available and it is already prepared. It can be obtained by any member of this House on a day's notice or so. That provides the sort of detail which I think the member spoke of in his comments.

MR. STUPICH: Mr. Chairman, I can't help but express a bit of amazement at the kind of information that's available on a day's notice. Yet, as the hon. second member for Surrey pointed out, the question has been on the order paper and could easily have been answered long before now. There are questions I put on the order paper a year ago that were not answered even by December. I put them on again this year, but I don't expect them to be answered. It would seem the minister is not quite so open with his information as he might be. I'd like to come back to one question I asked that I don't think he responded to: in his user-pay attitude, he didn't comment on the information in table 2 on the background papers, page 49, which is headed "Estimates of the Implicit Subsidy Received by B.C. Consumers of Natural Gas." I'm not urging that he do anything; I'm simply asking whether or not he can rationalize that and, if he can't, whether he has something in mind. I'm simply looking for information.

MR. COCKE: Mr. Chairman, I'll try to make my point in such a way that the minister might give some credibility to the fact that I'm making a statement. I realize that I'm not the chairman of Public Accounts, and so may not have the credibility. I'd like to take you on a little trip across the province — a trip that would lead you to meet disappointed person after person, up to and including some of your constituents, wealthy as they are. I'm talking in terms of those people now receiving their property taxes, and particularly their school taxes. This government, not only under this minister but ever since 1976 — since this government has been in place — has had a policy of shifting the tax burden from Victoria to the local taxpayer.

This minister is carrying on the tradition. We stand up here and blame the Minister of Education. He sets the mill rate; he does this; he does that. But the buck stops on this minister. He told us earlier this year that we have to raise our sales tax, we have to raise the motive fuel tax and so on and so forth by virtue of the fact that we're in some trouble. Well, the only trouble I see, Mr. Chairman, is the fact that he's hoarding it, saving it until suddenly they decide now might be an appropriate time to go to the folks, call an election, and there'll be some dollars to distribute some goodies.

Right now there is school district after school district where the entire shot, the entire load is picked up by the local taxpayer. New Westminster has been in that position for the last two years. Vancouver is now in that position, a position that had been held for some years by those communities which had an immense industrial base — for example, a relatively small community like Kitimat with a huge industrial base. Now that's relatively fair. But it is not only the formula, which has long been in place; it's also the implementation, and the direction has to come from Finance — the direction that the tax burden be shifted comes from Finance. Now it may come from the Premier's office to the Minister of Finance, but the direction has to come from Finance. In Victoria, this government has off-loaded to the tune of $400 million a year on the folks at home. And the best luck they had was the fact that the assessments went way up — and even that gave them a greater bonanza. The setting of the mill rate, starting with the former Minister of Education — but don't forget that it comes from cabinet, and the direction has to come from Finance....

I've had a little experience — three short years. But in those three short years we had a decent government in this province, which we don't have now.

MR. MUSSALLEM: The public didn't think so.

MR. RITCHIE: You were a disaster, and you know it.

MR. COCKE: As the member for Dewdney says, the public didn't think so.

Interjection.

MR. COCKE: Mr. Chairman, I suggest that the member who is now speaking get up and defend this government's position with respect to taxation, with respect to school taxes and the setting of the mill rate. That mill rate has gone up over 50 percent — over 50 percent has been moved over from the provincial government's responsibility to the local taxpayers.

It has got so bad.... I couldn't believe it when I went home this weekend. I picked up my tax notice and my hair did rise a little bit. However, I was anticipating what it would say. But in along with the tax notice was a brochure from the school board telling us what's happening. Now when municipalities, when school boards, when local elected officials have to put a brochure in along with your taxes to explain that it's not them.... Their budget only went up 12 or 13 percent, but the school taxes doubled. I suggest that they didn't only get a tremendous off-load from the incremental aspect of the assessments. Also, over the last four, five or six years the off-loading has come from systematically increasing the mill rate, and that's the responsibility of that government.

Four hundred million bucks. Over and above that, we see an increase of 50 percent in our sales tax and all the other increases which, I charge, are the responsibility of this minister. Maybe he's under orders from some of his colleagues, but that's where the policy decisions are made with respect to finances in this province.

You can go across B.C., and I defy you to find one school board that's presently satisfied with the way things are going in terms of financing. I defy you to find a city council satisfied with the off-loading that's been going on and has been going on incredibly systematically since this group took government. If you can find one or if another MLA knows of one, maybe he should get up and make a speech. The member for Dewdney (Mr. Mussallem) is indicating to me right now that he'd like to make a speech on this subject matter. I'll give him a promise. If he makes a speech on this subject matter, I will promise to see to it that that speech is delivered through Hansard to as many people in Dewdney as I possibly can, particularly your school boards and your councils. I'm sure they would like to hear what you have to say.

It's absolutely indefensible the way the property owner has had the can tied to his or her tail in this respect. I know it's not only in my area. I know it's in each and every area throughout B.C. It's profoundly bad, particularly in the areas

[ Page 6085 ]

where the assessments have shot up like lightning. Some of the areas are beset mostly by virtue of the increased mill rate. But areas like where I reside, Vancouver, the southern part of Vancouver Island or for that matter almost all of Vancouver Island are hit with the double whammy — that increased property tax or assessment which naturally reflects the amount that goes into the formula. Also there have been all these arbitrary shifts upwards in the amount that would be paid by the local taxpayer as a proportion of the total amount. It's much larger each year and a diminishing amount for the provincial government's responsibility. It's not fair. I'd just like to know what the minister has to say about that.

HON. MR. CURTIS: Any discussion of property taxes will inevitably bring charges from members of the opposition against the government of the day with respect to where the responsibility rests. A number of us here have served either on the school boards or municipal councils; I think one or two have seen service on both.

I'll start with the least important point: what is placed in the tax notice. We've all followed that route in municipal councils and school boards. We've put in a little slip which indicates usually in a pie form or a graph form where the money comes from and where it goes. We did it in Saanich, We did it because we wanted more money from the government of the day. That's fair game.

I've read the material. It was a little too much, I thought, in my tax notice this year, There were too many notices from too many organizations, to the point where I did not read all of them. I don't make light of the subject. As we have the war between the sexes, that is simply the war between the various levels of government. School boards and municipalities are going to criticize the provincial government. The provincial government of the day is going to point out the shortcomings of the local council, the school board and the federal government. The member, in developing his comments with respect to property taxes, has touched on a matter which obviously is of concern to me as Minister of Finance. It is of concern to members in this House and to those who pay the property taxes.

However, the member also knows very well — and he stops short of this — that a large part of our problem relates to measures taken by the federal government in recent months. We know that revenues to British Columbia from the sale of natural gas — not due entirely to federal government actions, but in large part — are now down by approximately $300 million. What is $300 million? It would assist by recalling that the sales tax most recently raised by 1 percentage point produces about $195 million. That's the magnitude of the loss in natural gas revenues alone.

Forestry revenues. We did canvass this during the budget debate and during debate of a number of bills which increased taxes. They are bills which have now been given royal assent.

I categorically and absolutely reject any inference that this government or this minister is hoarding revenues for a good day. I have said repeatedly in this House, in the variety of debate which has occurred, that the budget was an extremely straightforward document. The quarterly report will show that we budgeted on the basis of the rather gloomy situation that we saw — not gloomy for the province as a whole, but for the government in the expenditure-revenue squeeze. There's absolutely no question with respect to the accuracy of that budget document which was presented to this House and debated over some two weeks.

Mr. Member for New Westminster, we are not hoarding or attempting to hoard revenues. We simply are not. I cannot make it any more precise or clear. I'm speaking in the committee. As an honourable member, I say to you that that is not the case. You can accuse us of other things. You can say that we've fallen down here or that we've made an error there, but, Mr. Member, there's no hoarding process in that budget.

MR. COCKE: I'm thankful that the minister has partially answered my question. I guess there's no real answer to the question of the shifting of the tax burden other than the way the minister answered. I think it's a shame. I think our whole system should be run in a way that would help us to take care of our own obligations. I believe that the local taxpayer is really getting hit over the head with a sledgehammer these days. I think it's an outright shame, particularly in view of the fact that I think we should be doing our utmost to keep people in their own homes, etc.

[Mr. Davidson in the chair.)

There's one other question I'd like to ask the minister. Has it become policy with the Ministry of Finance to have its officials as part of other ministries? I'm told that there is a Finance person in the Ministry of Health, overseeing that situation. If that's the case, it strikes me that it would be very.... Sure, it's good to get some advice from Finance and so on. It strikes me that one of the reasons that Health is in such grave trouble is that there are very few people in that place anymore who understand anything about the delivery of health care, economically. There are far too many people who are administratively inclined. So you throw another administratively inclined person from Finance in there.

Interjection.

MR. COCKE: Yeah, they're good cops. I suggest that the Ministry of Finance could do some good for the Ministry of Health if they'd send somebody over there who knows something about the delivery of health care.

MS. BROWN: I want to very briefly support the last comments made by the member for New Westminster and say that I think the criticism of the Minister of Human Resources (Hon. Mrs. McCarthy) — that she was being run by her deputy minister — was unfair. In fact, the Minister of Human Resources is being run by Treasury Board. It's Treasury Board which decides what kind of services are delivered, how much service, for how long and under what circumstances. What we have in this province is a Minister of Finance with incredible powers to make all kinds of decisions affecting people's lives based on how much money they get in terms of the budget they present to Treasury Board. I don't believe that the minister should have that kind of power. I think it's grossly unfair that he has been permitted to have that kind of power. All of the cutbacks that we're seeing in Human Resources, and the staff freezes.... Last year a memo was released showing that the Ministry of Human Resources had negotiated with the Minister of Finance to save $3 million by not filling vacancies when staff people left — social workers or financial-aid workers or child-care workers — for one reason or another. I want to go on the record as saying that I recognize that a lot of the problems that the Ministry of

[ Page 6086 ]

Human Resources is having in terms of delivering services to the people in the province who depend on them are the direct result of the fiscal policies of that government as administered by the Minister of Finance.

The second point I want to raise very briefly is the incredible burden that that government's policy, as administered by that minister, is having on the municipality of Burnaby. Burnaby is in the strange position where it's actually saying thank goodness it had a strike. It's absolutely ridiculous that if it were not for the fact that the municipality had been locked in a labour dispute for some time, the property taxes of people living in that area would have increased something in the area of 13 percent to 14 percent, instead of the 8 percent to 10 percent which they are now finding on their tax notices. I certainly want to associate myself with all of the comments made by the opposition that what this minister is doing is supervising the squirreling away of funds, the biding of money, the overtaxing of the people of British Columbia, so that in the spring, fall, winter, summer or whenever, when an election is called, suddenly out of nowhere we will find that he has been one of the elves working for Santa Claus and that Santa Claus in the form of Premier Bennett can open the bag of goodies and start distributing bridges, roads and tulips — all kinds of things, from money which was saved at the expense of services to people and raised as a result of overtaxing the municipal taxpayers.

In addition, and finally, I want to comment on the impact of the taxation policies of that government, as administered by this minister, which is such a burden on the people on fixed incomes in this province. I never will allow the subject of sales tax to pass without making some comment about the impact of the sales tax on people on fixed incomes. It's the most unfair form of taxation, the most inequitable form, and when the tax was lowered earlier, the then Minister of Finance, who is now the Provincial Secretary (Hon. Mr. Wolfe), assured all of the taxpayers of British Columbia that it was a permanent decrease and would never again be raised. Of course, in the budget brought down by this minister, that inequitable sales tax, which is such a burden on the people who can least afford it, was increased once again. I just want to go on the record again speaking on behalf of those three segments of the community: the Ministry of Human Resources, which is being totally run and controlled from the Finance office; the people of Burnaby, who are overtaxed as a result of the impost being visited on that municipality by this particular minister; and, of course, all of the people on fixed incomes, who are the victims of the increase in the sales tax.

MR. PASSARELL: Mr. Chairman, I have a couple of questions for the minister. The first one I'd like to discuss during this estimate on finance is the increase of approximately 50 percent in the sales tax. When you compound this upon the high cost that residents in the north must pay for many items that are brought up there and the increase that's brought by freight costs, I would offer the suggestion to the minister that he might look upon a positive solution and give some type of northern rural tax allowance. The minister is aware of the federal government's northern tax allowance that was brought in last year. We raised this on a number of occasions with the minister. There should be some type of an allowance for northern residents, and rural residents too, where there's some equality brought in on what they're paying increases that they must face because they're living in rural northern areas of this province. I suggest to the minister that he look upon some type of allowance for northern workers and residents.

The second question I would like to direct towards the minister, if I can get his attention, is about the government agent. The government has built a new government agency building in Cassiar. There's been a problem with finding a government agent to staff the new building. I hope that the minister can bring us up to date on where that government agent is. He was supposed to be hired in April, Mr. Minister. I've noticed the publications that have come out in the last two months that he or she is coming. I would certainly hope that the minister could bring the residents of the Atlin constituency up to date on when the government agent in Cassiar will take on his new role.

Secondly, another suggestion to the minister is the need of a government agent in Dease Lake. There is a new government building supposedly in the process of being built. Dease Lake definitely needs a government agent to deal with the many problems that government agents deal with for the public. There certainly should be a government agent in Dease Lake, since it's increasing.

Thirdly, I'd like to mention revenues. We've noticed that natural resource revenues from the budget are down from $858 million, to $391 million. I would certainly hope that the minister can give direction on why revenues are down so much. I hope that the government isn't keeping the money in some type of fund, but I think the minister could give us a suggestion as to why there's been such a drastic cut. Also the natural gas petroleum revenues were $62 million last year, and are now up to $65 million. I hope that the minister can answer a few questions on why there's been such a low increase in the amount of revenue to the government.

HON. MR. CURTIS: I think three members of the committee have participated since I last responded. Commencing with the member for New Westminster (Mr. Cocke), who is not in the House at the present time, in his second remarks he dealt with the question of the movement of people from Finance into other ministries. To clarify precisely what has been occurring, in some instances there are Treasury Board analysts who have been seconded to other ministries. The one to which he clearly referred was the Ministry of Health. But I have to take issue with the inference that they are overseeing the Ministry of Health, because clearly that's not the case. That is the responsibility of the minister, the deputy minister, the several assistant deputy ministers and other officials in the Ministry of Health. This move has been welcomed by ministries such as Health. We're speaking of the desirability of Treasury Board in general for a budget of something in excess of $6 billion. Then surely it would be agreed that it is desirable to have a Treasury Board analyst working directly with a large ministry such as Health, which is spending about $2 billion.

The secondment has taken place. This particular individual referred to or the individual who has gone to the Ministry of Health is in fact a specialist in health administration. The last I heard, which was very recently, suggests that the particular public official has been very much welcomed in the Ministry of Health and is not enforcing his will but rather is smoothing over some of the difficulties with respect to a ministry of that size. I trust that deals with the point raised by the member for New Westminster.

The member for Burnaby-Edmonds (Ms. Brown) unfortunately has referred to only one side of the story. In again

[ Page 6087 ]

raising the sales tax increase she has made not one single reference today to the low-income tax credit announced on budget day, which I believe was appropriate and desirable. I refer the member to page 46, among others, of the budget speech. An income tax credit is introduced for 1981 which is going to benefit a significant number of people on fixed incomes and low incomes, and a very large percentage of the elderly in British Columbia. I think it's only fair, if the member feels that the sales tax has imposed a burden, to at least acknowledge that that burden is offset to a very major extent by the low-income tax credit. The member can shake her head in disagreement, but she can't argue with the facts.

I think I indicated earlier to the second member for Surrey (Mr. Hall) that Treasury Board is gradually being refined and the process is working better each year. That was formalized by my immediate predecessor. We're building on that base. If it is felt that the Treasury Board is intruding into government ministry activities, then I can't believe that senior officials of various ministries, following the estimates process in December 1980 and January 1981, would have bothered to express appreciation, not to the chairman of Treasury Board, not to an individual minister, but simply general appreciation at the conclusion of the estimates process to the effect that they had been given a very fair and complete hearing.

There was no instance at all where a ministry — the minister and his officials — were rushed in, dealt with in a 30-minute cavalier fashion and then thanked and sent on their way. Some of the sessions with individual ministries in preparation for the estimates this year took several hours. Obviously the ministries with the larger portion of the budget took a good number of hours. One can again dismiss the fact that a minister would thank another minister and say, "That was a good session, " but when you hear and understand very clearly that senior officials felt that the whole process was very thoroughly canvassed and very well explored, then I think that is a favourable comment on what happens at Treasury Board.

To the member for Atlin (Mr. Passarell), with respect to the government agent vacancy in Cassiar, I will have to ask him to be patient. I will have that information in just a matter of minutes. I have asked for it. I don't have it in the material with me.

The member also indicated the desirability of a government agency in Dease Lake. I agree. We are adding government agencies. This province has a fine record of government agents and government agency service. The member will know that last year and again this year other agencies are being added, new agencies are coming along. I can't commit, with respect to Dease Lake, except to say it is precisely the kind of community where there should be a government agent. It meets all the criteria for a government agent office, albeit a relatively small one. It is seen that agencies are opening throughout the province.

MS. BROWN: I just very quickly want to respond to the minister's comments about the low-income tax credit, and to bring to his attention that he wasn't listening very carefully, because many in that particular group I mentioned would not benefit from any income tax credit because they do not pay income tax. They have no choice but to pay their sales tax, and the point I brought out was that the sales tax was a regressive and unfair tax that created a much harsher burden on people on low incomes and fixed incomes than it did on anyone else. It certainly was not balanced off by the low-income tax credit.

The other point the minister did not comment on was the burden on the municipality of Burnaby created by the impost of the government. The final figures I have on that are that it's even worse than I mentioned earlier. Because the homeowner grant remained unchanged most people are experiencing an increase somewhere in the vicinity of 19.5 percent in their taxes. Although the composite is really 12.9 percent, because the homeowner grant was not increased it actually resulted in a 19.5 percent increase. The minister did not comment on that or on the fact, as I mentioned earlier, that it's the Ministry of Finance that's running the Ministry of Human Resources and the decisions made by that ministry that have some kind of effect on the services which are being cut back by that ministry.

HON. MR. CURTIS: To answer the member for Burnaby-Edmonds, we will have to do a little more work with respect to this, and obviously we will have the opportunity next year. If the member, in fair comment, has misunderstood then others will misunderstand. You don't have to be an income tax payer to receive this credit: you simply have to be a tax filer. The member will know there's a significant difference. We developed that in the debate on the bill. So no tax need be paid, but simply the form filed. A tax filer is the key phrase in this particular measure. I think the member will agree that will assist a large number of British Columbians. She may not feel as enthusiastic about it as I do, but that's why we're on opposite sides of the House. I'm very enthusiastic about that.

MS. BROWN: No, you're over there because you overtax people.

MR. CHAIRMAN: Order, please.

HON. MR. CURTIS: With respect to Burnaby and other municipalities, we have discussed in terms of legislation today, and earlier in these estimates, the question of property tax, and I have made observations, particularly in response to an earlier speaker on behalf of the official opposition. It is not the full reason, but it must be acknowledged that a municipal council is elected and enters a year with a series of choices and options open to it. It can spend as little as possible or it can spend more, it can enrich programs and it can undertake significant activities within the municipality, if it chooses, or it cannot. We do not set municipal budgets, and the member knows that, The member is attempting to suggest that municipalities have no opportunity to determine the level of services they are going to provide and the costs they are going to undertake and face in the course of the year in question.

In my home municipality of Saanich a decision has been taken this year which in my view is wasteful and wrong, and as an individual property taxpayer I'm very upset with it. I don't raise it here and identify it; I raise it where it belongs, and that is in the municipal council or in a discussion with a member of council. It's a quarter of a million dollar expenditure which should not occur, in my view. The member knows that municipalities make their own decisions, and that they're not governed exclusively from Victoria.

MR. LEVI: I've got some questions for the minister on the Systems Corporation, and one question before that relates to his working papers. I wonder if he's get them in front of him. Page 34, table 1, deals with estimated costs of deferred

[ Page 6088 ]

British Columbia income tax revenue. We're dealing there with registered retirement plans, which are a form of deferred income, Canada Pension contributions, capital cost allowance, etc. Now I want to ask the minister this: during the recent Public Accounts meeting, I asked the auditor-general if she could tell us what part British Columbia's share was of what I understood to be $13 billion — but it turned out to be $17 billion — of deferred corporate tax that is presently the situation in Canada. They came back and told us that deferred taxation for corporations in British Columbia is $2.4 billion, which on the basis of a 41 percent tax-back presents about $990 million of taxes that are presently not paid and do not flow to the provincial treasury. Those figures were given to us by the comptroller-general's department — there was a gentleman there who went out and got the figures. In Canada generally we have a $17 billion deficit in terms of deferred taxes — that's corporate tax. I appreciate that there are other forms of deferred taxation; certainly RRSPs and HOSPs are a form of deferred taxation, but they are not, of course, of the order that we're talking about — nearly $1 billion of deferred corporate taxation.

One of the questions we did ask both the comptroller-general and the auditor-general. They weren't really able to answer because they are not part of the ongoing discussions that take place with the federal Department of Finance, but I would like the minister to tell us why that figure that I've just mentioned, which can certainly be refined — it's certainly $2.4 billion; that's the figure they gave us — doesn't appear at least in your background papers; it certainly doesn't appear, for instance, in the Public Accounts. It seems to me that if the corporations are deferring taxes, surely there is a receivable there eventually for the province in respect to its portion of the corporate taxation. That never shows anywhere. In fact, it doesn't even show, to my knowledge, on the Public Accounts of Canada, but it should do; that should show. People who are paying personal income tax — and certainly the ratio of personal income tax payments to corporate is quite dramatic.... Of all taxation, it's almost 80 percent personal versus 20 percent corporate. So that very impressive figure — it's an astronomical figure in terms of the possibility of revenue for British Columbia which is not forthcoming in this fiscal year — is mentioned nowhere on the minister's page 34, where he goes to some trouble to document some of the estimated cost of deferred British Columbia income tax revenues. Would the minister like to answer now?

HON. MR. CURTIS: Mr. Chairman, the member for Maillardville-Coquitlam has, I think, reinforced what we're attempting to do in the background papers or working papers. We started this and it is a continuing refinement.

[Mr. Kempf in the chair.]

I just have to observe, however, that earlier today one of your colleagues on that side of the House referred to one of the tax expenditures in the tables and said: "Surely you are not paving the way for us to impose that tax." No, we are not. But I agree with the member that deferred corporate income tax as a tax expenditure should be included. We can't speak for Canada, but as far as British Columbia is concerned, I think the point is well taken that we should build that into the tax expenditures — a total statement of the tax regime — next year. It's a little tough to get the figure nailed down, as you indicated, but we are quite prepared to see this reporting of taxes forgone — taxes not collected, not imposed — listed, so that people can see the whole picture.

It was, I think, the possibility of an imputed rent on home ownership which the member for Nanaimo (Mr. Stupich) referred to earlier. No, this material should not be treated as the thin edge of the wedge in order to impose more taxes. Rather, we're saying: here's everything; this is the whole story.

I accept the member's suggestion with respect to a deferred corporate income tax.

MR. LEVI: I said that laid the groundwork, if you like, for the fact that we need to know what this figure is on an ongoing basis. Let me say something else to the minister. For this province to be in the position of having to forgo almost $1 billion in revenue — because we do do that.... I'm not privy.... Maybe the minister is just getting into the whole business of discussions with the federal minister and his staff, and what the agreements are. That $1 billion of shortfall — which is what it is, because the corporations do not pay those taxes at the time and the laws are written in such a way that they can, in fact, defer them — creates an added tax burden for British Columbia taxpayers. That really exacerbates the situation. We already have the high taxes from the government. Now we have a group of people who are getting away with paying some $990 million, mark you, without even one cent of interest. It's an interest-free loan.

The difficulty we have with that type of situation is that some of those corporations take their money, go to the United States and invest. In fact, part of that investment is done on the backs of people who have to pay the taxes to meet the shortfall on their taxes when they fail to pay their taxes. That's the kind of inequity that goes on.

I say to the minister that that's very nice, and I hope he does put it in writing, but we've got to go further than that. Part of these tax discussions that go on with Ottawa have to start addressing the incredible impact on this country of $17 billion of deferred corporate taxation. That is an enormous amount of money. The fact that we note it is very nice. But the direct impact on the average taxpayer, not only in this province but across Canada, is incredible. It's equal to half of the national debt, if you deal with those kinds of figures.

The thing the minister would perhaps address later on is how concerned the provincial government is about the collection of this thing. What can you do about changing the arrangements in such a way that B.C. starts insisting that we are not prepared to allow an accumulation of almost a billion dollars?

Interjection.

MR. CHAIRMAN: Do you rise on a point of order?

MR. LEVI: Sit down. My God, this guy performs like he fell out of the back of a train, or he got caught up on the loop where the mail goes. Having been so rudely interrupted by that minister, we'll go back to some sensible discussion.

[Mr. Strachan in the chair.]

My God, we've got a new Chairman. He's feeling his oats. We're going to have to be really careful.

Later on I do want to get onto some questions about the Systems Corporation, but there is the question of addressing,

[ Page 6089 ]

with the federal minister and that whole tax crew down there, just how long we can continue to have this deferred-taxation situation. It's certainly wrong. We will put together the numbers which reflect deferred taxation and what is happening. I used an example in the House three years ago of four real estate companies that owed a total of $47 million in deferred taxes. They went down to the United States and made investments of over $100 million in various projects, That's like taking the money they owe the government and making it work down in the United States. It was kind of a double problem.

I ask the minister to think seriously about that. All the ministers in the country have to think seriously about it. Generally, it's one of the best-kept secrets in Canada. I know the auditor-general and comptroller-general had some difficulty nailing this information down. They phoned a few people. When you phone the federal government and ask them about something they don't really want to talk about, getting the information is terrible.

Now I want to go to the Systems Corporation. Do you want to answer that first?

HON. MR. CURTIS: The member for Maillardville-Coquitlam has simply elaborated on the point he made earlier. No one would deny that $17 billion is a huge amount of money. It is placed in context and accurately described when we realize that it's just a little bit more than the federal deficit for one year. That's the magnitude of the total problem, In addition, the taxes forgone.... Certainly we can have a philosophical discussion if the member wishes. Again, I refer to page 34, table 1, of the background papers to the budget. Personal tax expenditures are in the neighbourhood of $1.066 billion, whereas on the corporation side they are $363 million. I think that puts the thing a little more in perspective in this kind of discussion. We want to further refine this kind of information. We'll consider it very carefully for next year's background paper.

MR. LEVI: The minister wants to keep talking about refining the information. I'm asking him to make some comment on what he does with his colleagues about the impact of the debt when he goes down there. But we'll leave it at that. I want to go the the Systems Corporation.

When we started out with the Systems Corporation in 1978 we looked at a $22 million budget; it came in at $29 million. Last year we were looking at some $40 million. This year the ministries are going to be paying around $38 million. Of course, there will be other payments flowing to the Systems Corporation. I just want to give the minister some numbers and tell him how large this operation has become. I'd like him to tell us just how large he thinks it's going to get and whether in fact we are getting value for the kind of money expended. You are talking about $38 million — for now, let's call it $40 million — from the ministries.

You have a conversion program going on which started out costing a million and a half dollars and has already gone to seven and a half million dollars — this was the minister's statement in the House about two months ago in answer to a question of mine. Personally, I'm still not satisfied with the minister's explanation about the depreciation on the Honeywell situation. I'm informed that in the end it's going to cost the government approximately four and a half million to five million dollars just to pay off the existing contract. and you can do the depreciation how you want.

We're already talking about $45 million plus the conversion cost — which is not one and a half or two and a half million dollars but will probably be $8 million or $9 million. That does not include the cost of Honeywell, and it does not include the cost of operating the Honeywell and IBM systems at the same time. That's what's going on. At the end of your conversion, all you're going to wind up with is having shifted the load of work from Honeywell to IBM. Your costs are going to be extra, because for a year or more you are going to have to operate both systems, because the integration and the conversion is not as easy as you think. You're running behind schedule 1n your conversion. In your announcement you said September 1981. That's not likely to be reached in any way.

I'm also saying to the minister that there is some $10 million in long-term debt, and that long-term debt can go up to $25 million. They plan to build a $30 million-plus headquarters. When you put those figures together — the $40 million that the ministries will pay, the cost of the conversion, depreciation, and another $15 million to pay off the Honeywell contract — you're up to at least $55 million. Then you're looking at a building that's $30 million, which makes it some $80 million. Before we know where we are.... This corporation started out with its basic objective to deliver, as it said, the most inexpensive and reasonable service to the ministries. It has now blossomed into an organization that is on its way to having 1,000 employees; the minister told us it now has 600; it also goes outside to purchase between 100 and 130 people in what is called the bodyshop part of the operation — 730 people. You're already into short- and long-range commitments of almost $100 million. This is the corporation that started out three years ago at $22 million, but it found that the first year really cost $29 million. It's gone from $36 million to $40 million, and this year it's $38 million.

We don't have all the figures, because, for some reason, the way that the public bodies reporting act report is made available.... You don't do the kind of revenue breakdown that makes a great deal of sense. If you're going to provide information, you should do that, so we can do it intelligently, in terms of not having to spend hours tracing where all the revenue comes from. Rather, you should talk about revenues from public agencies and Crown corporations.

The impression we get, first of all, is the complete seduction by IBM. Here is IBM, the largest operator in the field, and it has been able to seduce the government into saying: "You take only our service and no other."

I want to point something out to the minister. The industry itself has a performance-rating organization. On March 11, 1981, the Systems Corporation distributed a copy of the first edition of the Association of Computing in Government. It's a performance report which covers the quarter ending 1980. A major parameter of performance reports deals with response time on the computer, which is an important aspect in the operation of computers. It also deals with the amount of time it takes for the computer to bring out the information. Those are key things you consider when you're getting computers.

The response time on the British Columbia Honeywell, according to the report which is available to the Systems Corporation, was twice as fast as IBM. There was another parameter, the amount of down-time, which means the amount of time the machine is not operating. It stated that the IBM downtime was twice as long as the Honeywell. For the life of me, based on those figures which are industry figures

[ Page 6090 ]

dealing with the computers in government.... They've rated a number of other machines, not just IBM and Honeywell. In both of the major parameters they evaluate, IBM has failed by almost two to one.

We have never had a satisfactory explanation in this House from either the minister or his predecessor as to why it was that the government's attack of obsession with the destruction of the Honeywell was such as it was. It's the whole business of, "Let's get rid of anything that the NDP ever did." It's incredible, the cost you've gone to to vary the configuration. Nobody in the ministry or the Systems Corporation has ever talked about just how much it cost to put the Honeywell in half — to send half to Vancouver, to install half up the street, then to put it back together again — and now to make the decision that they're going to get rid of it. None of those facts has ever been made available to this House, and neither can we get the facts when we ask the corporation.

There has been an expenditure of money which has been absolutely outlandish in terms of the attempts to launch this Systems Corporation in such a way that it's going to do the job. Three years ago, we warned that if you wanted to do what you wanted with the systems operations of the government, do it piecemeal. In the last two years, we have seen drastic changes from one end of it to the other, particularly in the Honeywell. You spent $300,000 to convert a building to put the Honeywell in, and then you split it up and put half in one place and half in the other. What happened to the money that you spent in the old motor-vehicle licence building? It just went in, and you didn't use it any more. You spend $300,000 and then forget it. That's tantamount to the business of renting a place and never using it. It's the same with the argument that we had in this House, for which we never got a satisfactory explanation, concerning how it was that IBM, with the highest bid, was able to win a contract. We pointed out then that the reason the contract was awarded was that the government had already spent nearly half a million dollars for installation costs to make sure that the IBM 3033 would get in there.

I'm saying we have yet to get a thorough, accurate and honest picture of what's going on in the Systems Corporation. The minister talks to us about wanting to be candid, wanting to state all the figures. But the one thing he wants to stay away from is the Systems Corporation. This thing is running into close to a $100 million operation that started out in 1977-1978 with $29 million. Now what's going on in that organization? You're going to build more buildings and put a thousand people in there. You're buying all sorts of machines when you have an overcapacity of time for the machine.

I ask the minister a question which he didn't answer the last time: did the president of the Systems Corporation not say to the association in May that there would be no business for the private sector? He said that at a meeting. I spoke to several people who were there. He said the Treasury Board had said that no private business would be available to the private sector. When they asked why not, he said: "Not until the ministries have achieved the expertise to deal with the various companies."

My question to the minister is: if that's the policy, as was stated by the president, does it mean that you're going to allow the ministries to go into purchasing their own computer time? The question following that is: what do you need the Systems Corporation for? That's what used to happen before. We know, from 1978-1979, when we had the deputy minister's report to major users, that was one of the suggestions they made: they simply want to go back to the system where they can deal with the private corporation, because the response time was much better.

Mr. Minister, we haven't had any degree of candour from either you or the previous minister on what's going on in that corporation. But when we look at the money, when we look at the absolute chaos and confusion around that Honeywell, which has cost millions — losses I'm talking about.... We had the previous minister come into the House and gloat about how he saved $300,000 for the government by renegotiating the Honeywell. Then we find out that you're going to decommission the Honeywell and you owe them almost $4 million in the contract price, which finishes in 1982. When you put all that together you're talking about a wastage of almost $5 million in connection with the Honeywell. Don't tell me that that's good management or that they know what they're doing in that corporation, when they make such drastic switches from one operation to the other.

In the commitment we have seen and I've quoted to the minister — I'm quite prepared to make the document available to him, although he can get it from the Systems Corporation — the down-time and the response time of the Honeywell was twice as good as the IBM, and we have never yet had a satisfactory explanation, other than for somebody to tell us that they are the major people in the field and therefore the compatibility with what we have in some of our machines is much better. We're talking about the effectiveness of the machine, and in the last quarter of 1980 they just didn't measure up.

Interjection.

MR. LEVI: Don't talk to the Minister of Universities, Science and Communications (Hon. Mr. McGeer), because he'll confuse you so much you won't even be able to open your mouth.

How candid is the minister prepared to be on what's going on there? He's a nice guy, but I don't think he understands that operation one bit. We'll see. We'll give him a chance to tell us what's going on. What has happened with the Honeywell? What is the true cost of the conversion? What are the plans for the building, now that it's going to be...not in your riding but in Saanich? Tell us about it. He doesn't have the president of the corporation here. Nobody ever brings the president. The poor high-paid guy never gets a chance to appear here. He can't whisper in the minister's ear. You can't expect your deputy to know all about this, unless he's the creator of the problem they have. I'm going to give the minister a chance to respond to some of the questions.

HON. MR. CURTIS: Mr. Chairman, when the member for Maillardville-Coquitlam says that I don't know much about this particular field, he's absolutely right. I would not attempt to stand before this committee and pretend that I have become an instant expert or any kind of an expert with regard to data-processing. That is not my background. I assure you that we agree on that point, Mr. Member. Therefore, what does a minister do in a situation such as this? He ensures that he has a widely representative board which brings knowledge in this field to the board table. The member is well researched on the Systems Corporation and he knows who the board members are. He may say, "I would have appointed this person rather than that person," but I think he would agree that the board of the Systems Corporation is pretty represen-

[ Page 6091 ]

tative of that industry and that activity. I'm very satisfied with Mallory Smith as the chairman. One of the first things I did was step down as chairman, for the reason I just identified. I have no business, as a minister, being chairman of the Systems Corporation board — none whatsoever — so I stepped down.

I watched the board with respect to Honeywell, Mr. Member. This debate will continue tomorrow and in days to come. I don't know how we can resolve it. I watched the board receive recommendations from the chief executive officer of the Systems Corporation, and from others who were asked to report on Honeywell. I watched the board then wrestle with, review and very carefully consider the options open to them. I was relatively quiet on that particular discussion — again, because it was beyond my easy understanding. I assure you that I don't recall anyone referring to the Honeywell as "that infernal NDP machine — how are we going to get rid of it?" Rather, in the best interests of the Systems Corporation where it was, where it was going, the compatibility with IBM and the ability of IBM, the discussion seemed to me to be reasonable, well founded and well researched. It was not a discussion which was over in 30 minutes or 15 minutes, or over in the course of one meeting. It seems to me, again on recollection — and I could certainly check my notes — that the discussion went on over a series of meetings of the board of the Systems Corporation. It was a most careful and lengthy discussion. The member has shown great interest in the Systems Corporation, and I understand that. I understand he is receiving a variety of information, as I am. I don't for a moment believe that the board of the Systems Corporation or the minister responsible were in any way involved in seduction by IBM. I think if one is seduced one knows that one has been seduced.

MR. LEVI: That's a matter of opinion.

HON. MR. CURTIS: Well, Mr. Member, I can't speak for you. It's your phrase, not mine. You talked about seduction by IBM. You brought it up, I didn't.

I watched that board and heard them criticize certain aspects of the IBM system and certain aspects of the Honeywell system. I'm satisfied they made a business decision after very careful consideration. The Honeywell write-off — to be specific in an answer to the member for Maillardville-Coquitlam — is now estimated to be $3.9 million, with a net saving of about $2 million over five years. This is where I'd like to sit down with you sometime, Mr. Member, and discuss your view of B.C. Systems Corporation and mine. I think it could be useful to the people of British Columbia if you're that interested. So let's do that one of these days. But earlier you said that you're running two systems. In fact, you're not running two systems parallel with full support staff. That's one of the considerations. Is the member agreeing or disagreeing?

MR. LEVI: I'm disagreeing.

HON. MR. CURTIS: I'll have to let him develop that line a little further. I've given you the answer with respect to the Honeywell write-off cost. But Mr. Member, don't lower this debate by saying that here's a machine that has NDP on the side of it, and therefore we've got to get rid of it. I went though another ministry where we inherited an NDP idea. We kept it, we built on it, and it's running. So don't accuse me of something in this instance that I didn't do four or five years ago in another instance. You know me better than that, and you know members of this government better than that. The decision was a sensible decision made on best case.

MR. LEVI: What am I going to do? Should I be obsequious and apologize because I mentioned NDP and Honeywell? We went through enough flak in this House in 1976 before you were the minister responsible who came in in 1977 with a plan. The point is this: don't say you didn't dismantle anything. We don't want to get into a debate about the Housing Corporation, but you were responsible for that. Of course, we're entitled to be a little touchy and a little paranoid.

Now let's deal with the conversion. The minister says: "You're not operating two systems." Go talk to your technicians. You obviously are operating two systems. You're operating two systems in the Honeywell, because the Honeywell had three of the most important programs in the government on it: motor licences, the Medical Plan.... The third one escapes me for the moment. They were major conversion jobs. You're not simply going to chalk one up and go to the other. You've got to do a conversion and operate the same systems for some months until you've worked the bugs out of one and you can close down the second one. That is an added cost. It doesn't stop and start just like that. You've got to run it that way. The minister does not understand that. I accept that he's new and he doesn't have that overwhelming interest. But the main thing is that I think it's wrong. As his predecessors used to do, he comes into this House, never with the president of the Systems Corporation — once I think he did it — when he knows that there's going to be a discussion about the Systems Corporation, because it has some visibility. Yet you sit there without the president. I've asked a number of questions that there's no way I'm going to get an answer to. We have to rely not just on what you think you know, but on what the guy who's running it knows. We don't have the opportunity to put these people in front of the Crown corporations reporting committee. You still haven't made up your mind about that one. That, Mr. Chairman, is a problem.

Interjection.

MR. LEVI: Yes, we have another avenue, and we can make use of it in terms of Public Accounts.

I'm telling you, you haven't addressed this: you're spending millions and millions of dollars. You've done it with the whole question of the Honeywell. You've done it with the business of the conversion. You're not doing what you said you would do three years ago: that you would address yourself to the problems of the private sector. Here we were in this House three years ago, and we're still doing it.

You're supposed to be the people who speak for free enterprise. and your president has turned around to them and said: "Forget it. There's going to be no business for the private sector." I don't want the minister to get up and tell me that they spent $13 million last year in the private system, because all you did was to make use of a number of employment agencies. That's exactly what they were. They are body shop operations who make programmers and other systems staff available to you. You can show them and pay them through that account so you don't have to boost up your own

[ Page 6092 ]

staff. The amount of money you spent in the private sector.... You promised them two years ago that after the operation was going for two years they would get a crack at it. They were told only a few weeks ago that there's no way they're going to get a crack at it now.

I'd like the minister to answer two questions. What is the government's policy? Has Treasury Board said, as the president has said to the institution that met recently: "Treasury Board has decided that there will be no private business to your community. We want the ministry's...."

Interjection.

MR. LEVI: Why don't you keep quiet. You don't even make sense when you open your mouth.

Interjection.

MR. LEVI: Fred Flintstone. Oh, God. Charles, will you roll the rock back on that man. Good Lord! We're trying to have an intelligent debate and he's making all those silly remarks. He's an incredible individual.

MR. CHAIRMAN: Order, please. On vote 86, please. I'll ask the committee to come to order.

MR. LEVI: What is the policy in respect to dealing with the private sector? Are you intending to deal with the private sector or not? That's a key question. They've asked, and they've been told that Treasury Board has already decided. The answer given as to why — this is second question to the minister.... If you want the ministries to have the expertise to deal with the private companies, then what to do you need B.C. Systems Corporation for? Does that indicate that they're going to do their own negotiating around their needs in data processing? Is that what it indicates? Those are two basic questions in respect to policy that was announced in this House three years and two years ago, and the minister hasn't answered those yet.

HON. MR. CURTIS: Mr. Chairman, I have listened to the member's comments with respect to Honeywell. I think that one of the key considerations is that if you don't have two systems, you don't need two support staffs. There may have been a problem of semantics here in your comments and mine, but I think we were saying the same thing. I have not had an opportunity to question the president of the Systems Corporation since the statement he is reported to have made in recent days. I say "reported to have made"; I'm aware that he spoke to an organization. If he indicated that there is no way that we will consider the private sector, then that is an incorrect statement and one that certainly I do not subscribe to as minister responsible, nor would I believe it to be one his board subscribes to. I say "if" that is the statement he made — and I will I very soon be discussing it, I think, first with the chairman of the board, Mr. Smith, rather than with the president directly.

With respect to data processing, I don't think that the situation has changed at all. We will compete; but repeated analyses suggest that we are less expensive with respect to data processing. The moment that is found not to be the case, then there would be a very careful review of what should be done. I've had very little complaint from the private sector about the Systems Corporation in general. Yes, there are some individual aspects of BCSC activities which annoy, which inflame momentarily and which cause concern but, generally speaking, not widespread condemnation of the Systems Corporation.

With respect to systems development as opposed to data processing, we want to reduce the business which I believe in the colloquial is called "Rent-a-Body" or body shop, if you will. We want to reduce that activity, but we also are interested in what the private sector can do there on a case-by-case basis. So as my predecessor said, when you are in full flight with respect to the Systems Corporation and you say: "You said three years ago, and you said two years ago...." It's not a cop-out, Mr. Chairman; I wasn't the minister responsible. You are saying "you" collectively — and I understand that. But the Systems Corporation, as far as I'm concerned, has gone through the difficult period of startup. Again I state a very strong feeling of support for the directors and senior management. The senior management are on notice; they know the directors are running a very strong board, and if the performance falls below an acceptable level the senior management will experience some changes.

MR. LEVI: I would ask the minister this: he's been in touch with the board, and I just have one request. It's my understanding that Mr. Stapleton, who is one of the board members from Mac-Blo, did a report in relation to the conversion, because the initial estimates of the conversion were way out. Is he prepared to table this report? We would like to have some information on how they went about doing this conversion, because there were serious problems in terms of the estimate. The minister already revised the initial estimate from $1.5 million to almost $7 million. If, as the minister says, the board is addressing some of the problems in the Systems Corporation, then let's see some of the work they've done. All we get is a lot of figures, and we don't have any reports. Is he prepared to have the board let us see the Stapleton report? I think that would be extremely useful. It'll probably go a long way for us to begin to understand just what the thinking and thrust of that board is. I'll agree that since you've put these people on the board they know something about it as opposed to the ridiculousness of having ministers who had no time, and that kind of thing.

The other question he might think about is the user committee, which was never discussed.

Is he prepared to table the Stapleton report, which dealt with the conversion? That would be extremely useful.

HON. MR. CURTIS: It would be difficult for me to table a report which, as far as I'm concerned, does not exist. I know that Mr. Stapleton, one of the directors, was involved in a series of questions — some written, some verbal — with respect to the conversion project. I could be mistaken, but I am not aware — and I was attending the board meetings regularly through that period — that there was in fact a document, the kind of material the member would describe as a report, but rather that it was going on over a good number of meetings, and some of it was verbal. I can't assist the member in that regard, but I will undertake to review what Mr. Stapleton actually summarized, if he did summarize at some time in a letter; but I don't believe he did. I should have mentioned the users review committee earlier when we moved into the discussion of the Systems Corporation. I think it's working well. It was inaugurated by my predecessor in the Ministry of Finance, and came into being just a few

[ Page 6093 ]

months after the change of portfolios, so it's had about a year's experience now. The board of directors, by resolution on October 31, 1979, formally established the users review committee. They've had a good run at it, and the action between the board of directors, the senior management and the users review committee has worked extremely well.

For the committee's information, the users review committee, in this instance, comprises representatives from ministries which make significant use of B.C. Systems Corporation service. Rather than the contact being in a very indirect way, by phone, or formal letter and so on, here are people in my ministry who are responsible and need the service provided by the Systems Corporation, reviewing that not only for their own ministry but for other ministries. So that action is coming along very well.

MR. LEGGATT: I'd like to ask the minister some questions which surround his government's position on the Bank of Canada's present interest policy. The minister will be aware that at the present time there are representatives on the Bank of Canada's board from each province in Canada: two from the province of Quebec, two from the province of Ontario, and one from each of the other provinces, including the province of British Columbia. The province of British Columbia's representative on that board is a Mr. Ron Longstaffe, who is a federal appointment. I understand he is a person appointed without consultation with the provincial government, but I'd like the minister to direct his attention to that. I'd like to know whether there is any consultation with the provincial government surrounding that particular appointment.

Secondly, I wonder if the minister — and he may want to talk to the Premier about this — would like to be consulted about the appointment from British Columbia. Or would he rather take the position that he'd rather not know, in case he had some impact upon the Bank of Canada's usurious interest policy at the present time? But I would like the minister to just clarify where his government stands on appointments to the Bank of Canada.

[Mr. Davidson in the chair.]

At the present time we're looking at a prime rate of 19.06, the last time I looked at it. It may have gone up this week. The new rate is going to be announced on Thursday. The result of that policy has been to reward capital in Canada to an incredible degree. To a large extent we're rewarding that area of the economy dealing with unearned income and we're punishing that area of the economy on earned income — people who work for salaries, and so on. I realize that that is a part of fiscal and monetary policy that is very difficult for the minister to have any impact on, but I'm interested in knowing why the minister doesn't do more in trying to have some impact on that Bank of Canada policy. It seems to me that Bank of Canada policy is now at a position where we as poor politicians are having almost no influence whatsoever, We have a policy in Canada which is out of control, because the politicians seem to have no impact with the governor of the Bank of Canada. He has come before parliamentary committees in Ottawa. I'm sure Governor Bouey would say the same to us: that this is a matter that's entirely in his hands, and the people who are elected to control the destiny of this country and this province are given almost no notice whatsoever with regard to the present usurious, disastrous interest-rate policy in Canada.

When you examine the kind of fiscal policy the Minister of Finance has used this year in looking at where to find revenues, he has avoided the whole area of unearned income. What he's done is essentially say that we are going to raise income in terms of the traditional sources. Those are the earned sources — the income tax sources and the sources where people are taxed on the basis of sweat income. That's professional and every other kind of income. The unearned areas are the largest capital flows. In this province and across the country the large capital flows now are unearned. They are in the capital gains area. The capital gain flows just in this buoyant real estate economy that we've had in British Columbia over the last two years are absolutely enormous.

I want the minister to direct his attention, if he would, to whether he's made any efforts to look at the capital gains question. If you're short of revenue, surely that's a more productive area to look at. It's far better to reduce he sales tax much more and replace it with revenues in terms of the unearned side.

I see the Premier laughs at that. He's shaking his head. He's shaking his head because we're dealing with a question of fairness in the tax system here. I hope the Premier has read the Carter commission report. I suspect he has. If he hasn't, he should. It deals with equity in the tax system. It also deals with questions of incentive, something the Minister of Finance and the Premier are very much in love with talking about. What they are doing is administering a tax system that removes incentives from income earners all across Canada.

If we looked at capital gains and succession duties to replace income tax, for example, as a way of husbanding government revenues, you would have a much higher incentive in society in terms of productivity. Instead, the system we have now rewards capital to an incredible degree. To double your money in five years, which is what a 20 percent interest rate will do, is to reward those who are fortunate enough to have accumulated some capital and punish those who are out working with their hands to earn a living. The concept of the tax system is wrong.

The tragedy for our fiscal and monetary policy was that we did not adopt the principles in the Carter commission report. One of the authors of that report is a resident of Victoria, a good friend of mine named Charlie Wall, who used to be president of the Canadian Federation of Agriculture. He still waits in hope that someone in this place will re-examine those concepts in the Carter commission report to redirect the tax system in terms of fairness and incentive. Forty years ago, before we had old-age pensions, unemployment insurance and all the allegedly liberal income redistribution systems, about the top 4 percent of the nation took 20 percent of the income; that's not assets. After all of the efforts to provide fairness within the system, 40 years later the proportions are exactly the same. The top 4 percent take the top 20 percent of the income; the bottom 20 percent take 4 percent of the income. That was true 50 years ago; it's true today. We have not redistributed income in any way. We have increased the pie; we have increased the wealth. We have done nothing in terms of redistributing income.

I'm asking the minister to look at fiscal policy in terms of the Bank of Canada because interest rates are a prime factor in redistributing income in reverse. What they do is reward those who are fortunate enough to have capital to an incredible degree and they punish those who are striving to obtain it or are still in the workaday world trying to survive on wages. What we've got is a fiscal and monetary policy that is reward-

[ Page 6094 ]

ing sloth. It's rewarding those who are sitting on their capital and it's doing nothing to provide incentives for those who are working.

The great beneficiaries of this fiscal and monetary policy continue to be the banking institutions of Canada. The Royal Bank of Canada is now the largest corporation in this country. In 1976, when you examine our "top financial companies" — quoting from the Financial Post — the Royal Bank had accumulated assets of $25 billion. That was just four years ago. In 1980 — the latest statistics — those figures have grown to $51.721 billion. In a period of four years the Royal Bank, our largest corporation, has more than doubled its assets. With that, if you examine the wealth concentration in terms of our major corporations, you can take the top five industrial companies in Canada, including General Motors and Ford, add them all together, and they still have less assets than the Royal Bank of Canada. I'm not begrudging the success of the Royal Bank. I'm saying that the fiscal and monetary policy that this government supports and follows is resulting in wealth concentration to a dangerous degree in the country. This means that the banking and financial institutions have a tremendous control over the direction of our investment flows and over fiscal and monetary policy in Canada. The amount of assets they own is simply enormous. You have to get past the first five top banks in Canada before you get to any other kind of financial institution. It's no mystery that if you go to the centre of every major city in Canada now, you'll find the banks control the most important corner. They have the highest bank in the highest tower. A hundred years ago the tallest building in every city was the church; now it is the bank. We're going backwards.

We have a government that is supporting a system which believes that wealth concentration in a very few corporations is a desirable objective in terms of government policy. There has been no indication of any change to try to redistribute that wealth to see it broaden and to see the various fiscal and financial organizations balanced to some extent. We are incredibly dominated at the present time by a very few banks. I pick out the Royal Bank because they are the most incredibly successful corporation, in terms of size and profitability, that Canada has ever seen. They're unique and quite amazing.

MR. CHAIRMAN: Hon. member, I wonder if we could possibly relate some of this to the estimates of the Ministry of Finance.

MR. LEGGATT: Mr. Chairman, I'll do that right now; right back to the minister.

That policy of high interest is resulting in these incredible growth figures in asset values for the financial institutions. The difference between the cost of borrowing and the cost of lending spreads as the interest rate gets higher, and the profitability of those financial institutions gets larger. When the minister goes to the marketplace to borrow money, that has a direct impact on the cost of borrowing for northeast coal and everything else, as he knows. It costs the government a great deal more money.

I know the minister's going to wash his hands and say that it's the Bank of Canada, and it's making its own rate. It's following a Milton Friedman philosophy of high interest rates to control inflation, which is a disastrous policy. It contributes far more to inflation than it controls.

If I could get back to the thrust of the original remarks, there is a representative from British Columbia. He's not appointed by this government. I would like to know why this government isn't consulted, and why it has never asked to be consulted in terms of the appointment that goes on that bank. I would also like the minister to tell me how often there has been any representation from himself, the Premier or anyone else to the Bank of Canada to stop this disastrous interest rate afflicting the country.

MR. CHAIRMAN: I think it's only fair, hon. member, that we again remind ourselves that we can only deal with the administrative responsibilities of the minister. To refer to something the minister has no direct responsibility for is asking a lot in committee.

MR. LEGGATT: If I could just respond to the point of order, Mr. Chairman, I'm recognizing that in terms of the minister's responsibilities we've gone into a philosophic question, but he does have a very clear responsibility for fiscal policy within the province of British Columbia that directly relates to the interest rate at the Bank of Canada level and to the representative from the province of British Columbia, Mr. Ron Longstaffe.

HON. MR. CURTIS: I simply would point out that this was the subject of a question in question period a couple of weeks ago. I indicated that the representative from British Columbia is a resident of British Columbia, but I think the member has answered his own question. I have not met the gentleman who is nominally the British Columbia representative on the Bank of Canada.

HON. MR. BENNETT: Mr. Chairman, I wasn't going to enter this debate until I heard the member for Coquitlam-Moody (Mr. Leggatt), who has distinguished himself by doing very little research and bringing forth his old House of Commons speeches because he's not yet able to deal with the province of British Columbia issues. He knows full well that in its detailed economic papers to the first ministers' conference on the economy this provincial government made a number of suggestions, among them ones to deal with the Bank of Canada and asking for appointments by provincial governments. Of course, the centralist, socialist philosophy which the NDP are doing, propping up the Trudeau government in their grab for provincial power, does not support the provincial viewpoint of this government. Obviously the member for Coquitlam-Moody is going to have to separate himself from his colleagues and his party because the New Democratic Party position has been strong central control: erosion of provincial power and erosion of provincial representation. You don't want the provincial governments to have a say. That's not part of your philosophy. The very fact that you haven't worked on this minister's estimates and the fact that you have to bring back the only question I think you've asked in question period this year, which was already answered, and ask it again.... I was in this House when it was asked and answered. Here you are, and I've listened very carefully to the fact that many of the questions coming up in this estimate have been asked and answered in question period before.

MR. KING: Why are you so flushed?

[ Page 6095 ]

HON. MR. BENNETT: I would hate to say how you developed your complexion, Mr. Member for Shuswap-Revelstoke.

Mr. Chairman, to get back to the very important question I was dealing with before the member for Shuswap-Revelstoke and the member for Skeena (Mr. Howard) interrupted me, high interest rates are of concern to this government, but not just this year. Our concern over high interest rates and Bank of Canada policy goes back to when this government.... Long before we had to hit 20 percent interest rates at the bank, long before those who only see the problem after it has occurred, we were concerned about Bank of Canada policy and central bank interest rates. We made those proposals to a first ministers' conference on the economy, not through light, casual little speeches in the Legislature by members, but in a very real way in order to have a national economic forum where we can have true national economic policy developed by all of the partners in Confederation. We have opposed federally imposed monetary policy by just one of the governments. It cannot work,

But if the member wants to know what has caused the high interest rates in this country.... They didn't just happen as a result of monetary policies this year; they happened as a result of economic decisions taken when you were a member of the federal House, when the Liberal government was in minority. Subject to the pressure of the NDP minority rump group in the federal parliament, they embarked on perhaps the most disastrous spending course this country has ever been on. Talk about financial mismanagement! Talk about deficit financing! In those years, this country has recorded the largest growth of public debt that we've had in our history. It started in the years when the federal Liberal government was held up for ransom in minority by that rump NDP group. They embarked on programs and spending. They had a lack of any balance in their budget. It led to a unsound financial condition in this country. Today, in order to prop up what has now become, not as a strategy, but a Canadian dollar devalued because we have no choice.... It's not as an economic strategy.

Because of those spending programs, that spending policy, the lack of balance in the budget and growing deficit and debt — those things that the NDP has always stood for in both opposition and government — the Canadian economy, the Canadian dollar and high interest rates, which I do not agree with, are with us today. Don't put the blame on governments that are here today. That condition started a number of years ago. The things you advocated, the spending you pushed and the lack of willingness to be accountable through taxation, so the people knew what the bill for the services they were getting was, have led us to an economy that has pushed us in this very difficult situation. It's hard to imagine in a country like Canada.

Don't blame it on Milton Friedmann. Don't blame it on those who would look to try and resolve what has been the result of disastrous — government spending, unbalanced budgets and deficit and debt. Today in this country, because of the wild socialist influence on federal spending, 17 cents of every dollar goes to pay deadweight interest charges. I've got to say that your party has always been the party that stood for public debt. While we've been known as the pay-as-you-go party, you're the party that's been known as: "you'll pay after we're gone." I remember that, Mr. Chairman.

But to hear that member get up in the Finance minister's estimates and make all those ridiculous statements and old speeches is shocking when there is a problem in the country and he tries to pretend that it just happened and that there is some simple solution.

Interjections.

HON. MR. BENNETT: You're darned right. We took that responsibility a number of years ago and thank goodness we're here, because there is no telling where we'd be if your group was still in power in this province.

Mr. Speaker, I move the committee rise, report progress and ask leave to sit again.

MR. CHAIRMAN: Hon. member, just prior to putting the question, I think we've had an opportunity to examine what can happen when we stray, on either side, from the estimates that are currently before us.

The question is that the committee rise, report progress and ask leave to sit again.

Motion approved.

The House resumed; Mr. Speaker in the chair.

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

Hon. Mr. Williams moved adjournment of the House.

Motion approved.

The House adjourned at 6:02 p.m.