[ Page 7645 ]

CONTENTS

Routine Proceedings

Securities Act (Bill 44). Hon. Mr. Hyndman

Introduction and first reading –– 7645

Oral Questions

Arbitration system. Ms. Sanford –– 7645

Northeast coal master agreement. Ms. Sanford –– 7645

Student employment program. Ms. Sanford –– 7646

Funding for rape relief centres. Ms. Brown –– 7646

Price of beer. Mr. Levi –– 7646

Tobacco Tax Amendment Act, 1982 (Bill 29). Committee stage. (Hon. Mr. Curtis)

On section 9 –– 7647

Mr. Lauk

Mr. Leggatt

Division

Third reading –– 7651

Corporation Capital Tax (Bank Rate Increase) Amendment Act, 1982 (Bill 38).

Second reading. (Hon. Mr. Curtis)

Hon. Mr. Curtis –– 7651

Mr. Stupich –– 7653

Hon. Mr. Curtis –– 7654

Division –– 7654

Financial Administration Amendment Act, 1982 (Bill 24). Second reading.

(Hon. Mr. Curtis)

Hon. Mr. Curtis –– 7654

Mr. Stupich –– 7655

Mr. Howard –– 7655

Mrs. Wallace –– 7656

Hon. Mr. Curtis –– 7657

Division –– 7657

Compensation Stabilization Act (Bill 28). Committee stage. (Hon. Mr. Curtis)

On section 9 –– 7658

Mr. Howard

Mrs. Wallace

Mr. Hanson

TUESDAY, MAY 18, 1982

The House met at 2 p.m.

Prayers.

HON. MRS. McCARTHY: We have two visitors from Trail in the House today, and I would ask all members to welcome Mr. and Mrs. Marc Marcolin.

MRS. WALLACE: In the gallery today we have a group of 35 grade 11 and 12 students from Queen Margaret's School in Duncan. They are accompanied by their teacher, Mrs. Beddows. I would like the House to join me in welcoming them.

HON. MR. WOLFE: This is a very special day. It has been set aside by the United Nations as International Museums Day throughout the world. British Columbians can take a great deal of pride in their community museums and the staff and volunteers who operate them. In the gallery today as part of Museums Day celebrations are: Anne Thompson, executive director of the B.C. Museums Association; Yorke Edwards, director of our own Provincial Museum; Jim Bryden, past president of the Friends of the Provincial Museum; Pat Bovey of the Victoria Art Gallery; Diane Kelly, curator of the Matsqui-Sumas-Abbotsford Museum; and Tammy Sturwold, whose letter to a museum was turned into the official poster commemorating this special day. I would ask the House to welcome these guests and invite members to visit the Provincial Museum's open house.

MR. LEA: I'd ask the members of the Legislature to join with me in welcoming five visitors from Prince George who are in your gallery, Mr. Speaker: Tim Bulmer, Carmen Rose, Donna Sacuta, Cliff Flint and Sherry Flint.

HON. MR. GARDOM: We have in the gallery today Mr. David Wilson, who is executive director of the Alumni Society of the Youth Parliament of British Columbia. He's come here to watch the legislators in action and I'm sure they will act accordingly and wish him the very best.

MR. MITCHELL: I would like the House to join with me today in welcoming two guests from my riding. The most senior one, who has a long history in the NDP-CCF movement in his area, was more effective as a bagman for my election than I was as his campaign manager on two occasions: Mr. Geoff Mitchell — no relation but we share the same philosophy. He is accompanied by his niece, Mrs. Francis Gordon, from Milton Mills, Dorset, England. I would like the House to welcome them both.

  MR. REE: In the House today I am privileged to have visiting us 50 constituents, senior citizens from North Vancouver. They are members from Silver Harbour Centre on the North Shore, and the Kiwanis Towers. Chaperoning these young people: are Shirley McFarlane, who is a great supporter and a member of our executive on the North Shore; Hal Bray, who is a director of my executive; my constituency secretary, Marilyn Ross; and last but not least, my lovely wife, Cheri. I'd ask the House to welcome them all.

MR. RITCHIE: Mr. Speaker, it's my pleasure today to welcome two constituents from Central Fraser Valley with whom I had an enjoyable lunch today: Mayor George Ferguson and Alderman Vic Wiebe of Abbotsford.

MR. STRACHAN: In the House today, and in the precincts, are delegates from the Amalgamated Construction Association of British Columbia. Would the House please welcome Don Vandervoort, Harry Alexander, Peter Sorenson, Lorne Jackson and Len Robinson.

Introduction of Bills

SECURITIES ACT

Hon. Mr. Hyndman presented a message from His Honour the Lieutenant-Governor: a bill intituled Securities Act.

Bill 44 introduced, read a first time and ordered to be placed on orders of the day for second reading at the next sitting of the House after today.

Oral Questions

ARBITRATION SYSTEM

MS. SANFORD: Mr. Speaker, I have a question for the Minister of Labour. Has the minister determined when he will officially be notified of the changes in the arbitration system as announced by Norman Spector?

HON. MR. HEINRICH: Mr. Speaker, I'm not aware of any proposed changes to the arbitration system in British Columbia whatsoever.

MS. SANFORD: I assume then, that he has not yet been notified, because we have been informed through Norman Spector that in fact we can anticipate changes. I assume that the minister has not been notified yet.

NORTHEAST COAL AGREEMENT

In view of the minister's stated interest in manpower training, has he now been allowed to see the master agreement on the northeast coal project?

HON. MR. HEINRICH: I would suggest that the member direct her questions to the minister responsible for that particular contract.A poll that claims the BC Liberals are ahead on Vancouver Island is not a poll asking to be taken seriously.

MS. SANFORD: Mr. Speaker, this is unbelievable. He is he Minister of Labour, and his professed interest is in manpower training. One issue that the minister has talked about over and over again is his professed interest in manpower training; and he hasn't even seen the agreement? Has the minister seen the agreement?

HON. MR. HEINRICH: As advised by our colleague the Minister of Industry and Small Business Development (Hon. Mr. Phillips), that agreement will be brought to the House in due course.

MS. SANFORD: Mr. Speaker, the minister did not answer my question. Has the minister seen the agreement?

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MR. SPEAKER: The minister has the question. Further questions?

MS. SANFORD: Was the minister consulted on the provisions in the northeast coal agreement with respect to manpower training?

HON. MR. HEINRICH: Mr. Speaker, I'm not really in the habit of discussing in the House those discussions which I have with my colleagues relating to a number of matters. I repeat: that particular agreement will be filed in the House in due course, as the House was advised by the Minister of Industry and Small Business Development.

MS. SANFORD: The minister refuses to answer the question as to whether or not he has seen the agreement. There's nothing confidential in whether or not he's seen the agreement. If he refuses to answer that question, I must assume that he has not seen the agreement.

MR. SPEAKER: Order, please. This is question period, not debate.

STUDENT EMPLOYMENT PROGRAM

MS. SANFORD: I have a further question. On April 28, in one of a series of seven news releases announcing the same program, the minister announced some details of the student employment program. Can the minister advise why the level of assistance has been cut this year from last for major elements of that program?

HON. MR. HEINRICH: Mr. Speaker, I'm not quite sure what area the member is referring to.

MS. SANFORD: The level of assistance for the student employment program in certain sectors has been cut — for instance, tourism, museum work, farm labour and university jobs. Does that clarify it for the minister? Could he please advise why they've been cut?

HON. MR. HEINRICH: I'm glad that the member has now clarified the area. First of all, there was no cutting whatsoever. The number of jobs available under the program of approximately $10 million has now gone from roughly 7,200 to approximately 8,000. In each area of both the farm and business sector the amount made available was equivalent to or in excess of last year. With respect to tourism, additional funds were made available in excess of last year. With respect to colleges and universities, we placed a ceiling of $1,200 on the amount available to each student. We felt that it was in the interest of those who wish to participate in the program that the government would not underwrite the full cost to it.

I might further add that the full cost paid last year was running anywhere between $2,200 and $2,300; this year we put a cap on it of $1,200. I can further advise the member that correspondence which I have received from two universities, as well as from the faculty of medicine, would indicate full support for the program. I certainly haven't had any negative comment whatsoever as a result of the press release of those who have been participating.

I might further add to this that in a period of four days there were just under 1,000 applications. I think the program is moving fairly well.

MS. SANFORD: Again the minister did not answer my question. I talked about the level of assistance. In the jobs under tourism, for instance, last year they paid $2, 236. This year they are paying $2,000 or a decrease of $236 per job, which is a decrease of 11 percent. Why has the level of assistance been decreased?

HON. MR. HEINRICH: The objective, in view of that particular program, was to attempt to make more jobs available to those who were interested.

MR. LEA: You should have cut it to a dollar each to create a lot of jobs.

HON. MR. HEINRICH: What we feel on this side of the House is that not a total handout totally, but perhaps a little help from the students and a little help from the employers who are hiring the students and the chambers of commerce who are helping them.... What's wrong with that?

FUNDING FOR RAPE RELIEF CENTRES

MS. BROWN: My question is to the Attorney-General. According to the senior project officer in the Attorney-General's department, 22,000 women in British Columbia were raped in the 12 months of 1981. If we accept these statistics, that would mean that something in the neighbourhood of 4,761 women have been raped in British Columbia since the ministry cut off its funds to rape crisis centres 80 days ago. Those negotiations and funds have been cut off. Obviously rape has not been cut off. How much longer are the women of British Columbia going to have to suffer rape and violent assault before the minister decides to reinstate funding to this very vital community resource?

HON. MR. WILLIAMS: The funding has not been cut off for this vital community resource. The money made available earlier to an organization which was conducting rape centres throughout the province is available to other community organizations. A number of them have applied for the purposes of being approved for the operation of rape relief centres, and I hope to make an announcement very shortly which will indicate precisely which groups have qualified.

MS. BROWN: Can the Attorney-General tell me how many groups have received any of that funding in the last 80 days?

HON. MR. WILLIAMS: Mr. Speaker, I can't give details of that nature, but I'd be happy to take the question as notice and bring the answer back to the member immediately.

PRICE OF BEER

MR. LEVI: This is a question to the wine-drinking minister who waters the workers' beer, the Minister of Consumer and Corporate Affairs.

MR. SPEAKER: Order, please. I'm sure the member has a question.

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MR. LEVI: Yes, he does.

Despite the temporary reduction in the price of some canned beer, B.C. consumers are going to be slammed again in June with the identical price increases by both Molson and Carling O'Keefe. This is the third consecutive identical price increase since the minister deregulated the industry last year. When is the minister going to abandon the charade that there is competition in the brewery industry and reintroduce controlled prices?

HON. MR. HYNDMAN: Mr. Speaker, that's an extremely interesting question coming from the member who, about a year ago when we announced the deregulation policy, wrongly predicted that by now the price of beer in this province would be $10 a case.

The fact is that we have in British Columbia today, as a result of deregulation, a policy and practice of price decreases in the price of beer not found anywhere else in Canada. Yesterday's announcement included the announcement by Molson of forthcoming price decreases on three major lines of beer. Further, this province does not have the highest price of beer in this country. We do have the highest-paid brewery workers. Consumers now have a choice they did not have when the member across the aisle was a member of government in this province: that is, a wide variety in price choice. I recommend consumers buy the lower-priced beer announced yesterday.

MR. LEVI: With respect to the minister's statement, I might point out to him that Amstel breweries in Ontario received a $2.25 discount. That's to go to the public, That's a long way from the kind of exorbitant prices we're paying here. I was going to ask the minister if he would confirm the statement he made to the public this morning that the consumer should buy the cheap stuff to combat the higher prices. Has he swallowed his own advice and decided not to buy high-priced wines via his expense account?

HON. MR. HYNDMAN: Dealing with several of the member's questions, first of all, he referred to Ontario, but failed to point out that last week citizens of Ontario were hit with an across-the-board beer-price increase of, I believe, 35 cents a case, which they were spared in the budget in this province, I'm happy to say. Secondly, I would reconfirm my strong urging to B.C. consumers this morning to give the brewers of this province a message by supporting the lower priced beers and those brewers who are prepared to decrease the price of beer.

MR. LEVI: On the basis of past experience with beer price increases in this province and the regularity with which they take place — and as we understand it, Dr. Goldberg will not be reporting until the end of the year — is the minister prepared to admit that there can be at least two more price increases before we even get the report, which he has not even mentioned?

HON. MR. HYNDMAN: The important fact for consumers in British Columbia to know is that under the deregulation policies of this Social Credit government consumers in British Columbia can buy, for example, lines of Molson beer cheaper than they can under the NDP in Manitoba.

Orders of the Day

HON. MR. GARDOM: I ask leave to proceed to public bills and orders.

Leave granted.

HON. MR. GARDOM: Committee on Bill 29.

TOBACCO TAX AMENDMENT ACT, 1982

The House in committee on Bill 29; Mr. Davidson in the chair.

Sections 1 to 8 inclusive approved.

On section 9.

MR. LAUK: Mr. Chairman, I'm gratified that both the minister and the Attorney-General (Hon. Mr. Williams) are here. I have canvassed the remarks made, and I'm not convinced that they're an answer to the government's taking what I would call a severe direction in the statutes under the penalty sections. Mr. Chairman, all members will note that: "A person who commits an offence against this Act by failing to pay or remit taxes as required under this Act is liable on conviction, in addition to a fine imposed under this section, to a fine equal to the amount of the tax, including arrears, penalties and interest...." And then: "Subject to subsections (2), (2.1) and (2.2), a person who contravenes section 2, 3, 4, 5 or 14 commits an offence and is liable (a) on a first conviction, to a fine of not less than $500.... (b) on a subsequent conviction...to a fine of not less than $500 and not more than $2,000."

What I want to take issue with — and I wonder if the Attorney-General would provide us with some insight on this question.... These statutes are not criminal statutes; we re not passing criminal law in this Legislature. These are statutes to enforce the collection of taxation, and not since medieval times at least have criminal penalties been imposed on persons who have failed to pay their taxes, except through some deliberate act such as income tax evasion, where you must prove the evasion together with the intent to commit the offence.

Interjections.

MR. LAUK: It's a serious issue, Mr. Chairman. We can have a good laugh over a cup of tea later on, but I think right now we'll break a cap on a bottle of tea.

I'm glad the Minister of Intergovernmental Relations (Hon. Mr. Gardom) pointed out that on the income tax there is no minimum fine. There are no minimum sections anywhere, even in Criminal Code offences, except in very exceptional sections. For years, Mr. Chairman, we had under the liquor act in this province a minimum fine for.... I forget what the offence was. We had a minimum fine for failure to carry insurance on your automobile; that was a section of the Motor Vehicle Act. They just didn't work. A number of convictions were dropped, first because prosecutors were loath to lay the charges except under secure circumstances, number one; and second because judges found every technical opportunity to acquit, because they certainly don't like minimum penalties. I think it's a very bad mistake.

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We have small businessmen in this province already who are suffering under a burden of red tape: filling out government forms, answering government questionnaires that come from the provincial and federal administrations. They're being harassed, overburdened and overloaded with administrative responsibilities imposed upon them by the law. In this situation, Mr. Chairman, I could see situations where a person has to be found even technically guilty and the court has no discretion in dealing with these kinds of things. This is creeping into the law more and more — particularly in this province — in dealing with quasi.... It's not even a quasi-criminal offence; I don't think the courts would describe it as that. But it's a severe penalty.

I think it's unfortunate that we do not have enough confidence in the courts to have judges make a decision on each and every case, based on its own facts. We in the Legislature are passing a sweeping law, and everybody comes under it. Almost because of that fact alone, it's going to be an unfair law.

The other situation that occurs to me is that under this section people coming before the courts are all going to be dealt with in the same way, with a minimum fine of $500. We are going to be discussing other sections where the minimum things are even larger. It achieves one thing, and that's the efficiency with which the government can gather taxes; but in a democratic system that's not the goal. The goal is to try to have government policy carried out to its fullest, having regard for fairness, having regard for a democratic system and for the traditions of our administration of justice. It's traditional not to impose minimum fines and penalties. They simply do not work. They were found to be unworkable in the past. Why the government is trying them on now I don't know. I find it difficult to believe that the Minister of Finance consulted with the Attorney-General (Hon. Mr. Williams). The Attorney-General should know, through experience and with advice, that these penalties do not work properly, that they are applied unfairly. We're opposed to these minimum fine penalty sections.

HON. MR. CURTIS: In response to the hon. member, I don't know if in fact the Attorney-General will participate in the debate on this section. I would point out to the member, however, that while it may not be acceptable to him, the concept of a minimum fine, as dealt with in section 9, is not new. There is an existing minimum fine in this statute.

Interjection.

HON. MR. CURTIS: It is $100, as the member interjected. So we are not introducing a completely new principle in this regard.

I note also that the member alluded to having reviewed the comments made yesterday by several members. I feel that in a statute such as this the likelihood of prosecution through illness or through an oversight is very remote. Again we must bear in mind the kind of activity that is dealt with by this amending act: that is, the deliberate attempt to evade the payment of tax within the province of British Columbia. I am not a lawyer; I cannot argue with the member on his own terms. But, indeed, there has been consultation with respect to the minimum-fine aspect of this and other statutes. There has been consultation within government. Again, it is not a brand-new aspect of this sort of legislation.

MR. LAUK: I'll just round off this point. I'm sure the the minister is sincere in his remarks, but what I find disturbing.... If you read the House of Commons debates on amendments to the penalty sections of the Income Tax Act, you'll see why the House of Commons, in its infinite wisdom, did not impose minimum penalties. Members on all sides of the House agreed that taxation legislation is so complex that a breach of the penalty sections is likely, even with good intentions. By this complexity, you really create a situation where technical breaches of the law will occur and prosecutions will be laid. The House of Commons said: "No minimum penalty. Let the judges decide what those penalties will be for deliberate evasion of taxes."

The second point made by the minister justifies the basic legislative principle of penalty sections and criminal sections: you do not leave the enforcement of the law to the discretion of the Crown. If there is a breach of the law, enforcement must take place. In areas of criminal law, Crown counsel will review a case to see whether or not there is indeed sufficient evidence to support a prosecution. He does not make a decision on the basis of, "Oh, well, the fellow was ill," or "He made a mistake in law" — which is no defence. That's a very serious breach of tradition in terms of the enforcement of law in a democratic country. I do feel that this matter is not being seriously considered by the government. I think it's a very serious mistake to impose minimum penalties on these businessmen who are already strapped in terms of administrative overload, because of government programs, as it is.

MR. LEGGATT: Mr. Chairman, I listened carefully to the minister's remarks, and he said something that really should be replied to. He said that the chance of oversight is remote. Now if the minister will look at the section that we're dealing with, it provides that the minimum fine is now to be $500 instead of $100. It says that subject to subsection 2, a person who contravenes section 2 — that's section 2 of the original act — is subject to a $500 fine. Section 2 sets out one of these nice neat little ways you collect tax. I just want to read the minister section 2, so that he can put himself in the position of a small businessman calculating his tax on tobacco and figuring out what he owes the government. Here's section 2: "Every consumer shall, at the time of making a purchase of tobacco, pay to Her Majesty in the right of the province" the following taxes.... They're listed then: 2 cents, 3 cents, so much on a cigar, etc. Then it says:

"After March 9, 1981, and before September 1, 1981, every consumer shall, at the time of making a purchase...pay... the province a tax at the rate of 14/25 of I cent for every cigarette purchased by him.

"(1.2) On and after September 1, 1981, every consumer shall, at the time of making a purchase of tobacco in the form of cigarettes, pay to Her Majesty in the right of the province a tax, for every cigarette purchased by him, at a rate determined by the following formula: (34 (x/y) rounded to the next higher whole number, over 25) of 1 cent for every cigarette purchased

"where

"X = the average cigarette subcomponent of the consumer price index at Vancouver established by Statistics Canada for the most recent available three month period preceding March I or September 1, as applicable, in each year, and

[ Page 7649 ]

"Y=the average cigarette subcomponent of the consumer price index at Vancouver established by Statistics Canada for the most recent available three-month period preceding July 1, 1981."

I am not going to bore the committee, Mr. Chairman, by going on farther, but I can read pages of this gunk here. Mr. Chairman, I again urge the minister to reconsider "a remote oversight". We are probably average bright, you know. I can tell you, if I was a small businessman trying to figure out what I owed the government on cigarettes, I'd be worried to death every month that I couldn't make the right number. I'll say this: if I don't make the right number, it doesn't matter whether I intended to make the right number or whether I had a devious motive. I can be as honest as can be, but this section doesn't give me an out. This section says I'm absolutely guilty because I didn't understand "the average cigarette subcomponent of the consumer price index at Vancouver established by Statistics Canada for the most recent available three-month period preceding March I to September 1."

The difficulty is, and continues to be.... And I don't think the minister, with the greatest respect to him, has quite understood what we are trying to demonstrate here. We're not trying to dry up government revenue. We're not trying to suggest that this is an inappropriate product to get a substantial amount of tax on; I think it is an appropriate product to tax. What we're saying is that the bureaucrats have got the minister under control. First of all, they should have a formula that's understandable, instead of this nonsense, this gobbledegook. Secondly, surely, if after all that a mistake is made and a charge is laid, the magistrate or the judge should have the right to exercise compassion in these circumstances, and he doesn't. He has no choice. He reads the statute and says: "Oh, this is just ridiculous that this charge is before me." But not being able to find a technicality upon which to acquit — and I can assure you that most of the judges that I've come into contact with will desperately look for any defence that will work, but he may not find one.... Then he sits down and hears some poor fellow who didn't understand the average cigarette component of the consumer price index at Vancouver — he's faced with a minimum fine of $500, without any discretion whatsoever.

That's wrong. We have tended to be in a polarized atmosphere, but I would again urge — I'm glad to see the Attorney-General is in — a reconsideration of this minimum fine principle in those offences which have no criminal aspect at all. Those kinds of offences should be discretionary on the part of the magistrate.

It is so easy to make a mistake in calculating something like your tobacco tax return. I still don't understand it. Section 2 has two and one-third pages of definitions on the correct amount of tax to collect and pay. It seems to me to be an overwhelming argument that, my gosh, if you're going to put these small business people, through this kind of wringer, the least you can do is be discretionary on the fine end. What the minister should really do is take another look at the whole act and make the whole formula a lot simpler. If he's not willing to do that, why not go along with the opposition today and just pull the section, or bring in a section without a minimum?

HON. MR. CURTIS: I am not so determined in any course of action in committee that I would not accept an amendment if I felt that it were appropriate. I want to make that very clear.

Twice in recent days the member who has just taken his seat has indicated that I am controlled by the bureaucrats. He, having made the statement earlier, left immediately and perhaps did not hear my response. I assure the member that that is not the case. If it were the case, the member wouldn't have to point it out: I would leave. Do you understand that, Mr. Member?

MR. LEGGATT: Yes. Now I want you to justify minimum fines.

HON. MR. CURTIS: First of all, we debated the formula at an earlier time, and in order that the calculation of tax be set out in the statute in a completely correct way, that rather complicated formula had to be followed. However, the members who have spoken on this have, in their arguments, overlooked two or three important points. First of all, there is within the Ministry of Finance a consumer taxation branch. It is the duty and responsibility — in fact, I insist upon it — of the consumer taxation branch people, notwithstanding the fact that they have the unpopular task of collecting consumer taxes, to assist business people to the greatest extent possible. Any member of the public could easily attain a variety of consumer taxation bulletins which explain in lay terms that which cannot be described in lay terms in the legislation which is before us.

At the same time, I find — and found before I came into this work — that the individuals who serve the public of British Columbia in the consumer taxation branch are generally very helpful people. They are extremely helpful people. They are good public servants. Where an individual business person, a firm or a series of firms has a problem with some aspect of the taxation regime in British Columbia, they can reach a representative of the consumer taxation branch and discuss it. In fact, last June or July the director of the consumer taxation branch travelled with me to one northern interior B.C. city in order that we could meet with business people in a particular area, not to discuss this specific point, but to discuss consumer taxation in general.

If we leave it at that, the member makes a very telling point by reading out the formula in some haste and then telling us to wait for what "Y" means. The fact is that this process of calculating tax for a retailer, and the index formula to which he alluded, is undertaken for the retailers by the wholesalers. It is done by computer. Therefore the practice does not present any kind of difficulty for the individual retailer. If it is found that a business on Main Street in Vancouver has sold 3,714 cartons of cigarettes, it goes into the computer, and the tax payable is prepared, printed out and the process is complete. We also work very closely through the consumer taxation branch. With respect to the rate indexed every few months, we advise wholesalers of the rate which applies at that particular time. That is also factored into the computer calculation.

I appreciate that the members opposite feel that they have a very telling point here. While they may want to discuss the principle of the minimum fine, they should not stray into an area where, in fact, it is made quite easy and simple for the small, medium and large retailer in this particular tax.

Why do we have penalties of any kind at all? Certainly I think this is appropriate to section 9. I'm reliably informed that the province of Ontario in the past two years has had two major convictions with respect to evasion of tobacco tax. One involved the evasion of $477,000 in tobacco tax in that

[ Page 7650 ]

province, and another one involved approximately $2 million in tobacco tax in the province of Ontario being evaded. These both involved literally trailer-loads of cigarettes being brought in — one presumes but cannot be certain — from Alberta. Possibly they were even acquired through theft and then offered for sale throughout a number of cities in Ontario with no tax paid to that province. We are very concerned about the quite clear escalation of unauthorized imports for resale. This does not apply to small firms or to individuals bringing cigarettes in for their own use.

I trust I have satisfied the member for Coquitlam-Moody (Mr. Leggatt), who is a fair-minded member in this House. I hope I've convinced him that we make it as easy as possible for the individual retailers, so that at the end of a busy month and faced with a lot of red tape from a variety of sources he or she has the least difficulty in computing the number of cigarettes sold and the tax due. I understand what you're saying, Mr. Member.

MR. LEGGATT: I do wish the minister would stop flattering me. I could lose credibility.

HON. MR. CURTIS: I suffered the same problem last week.

MR. LEGGATT: The point that I want to respond to first of all is that when the computer makes the mistake, the charge is not laid against the computer; it's made against the individual, and the computer could very well be the villain. This whole idea that the complicated formula gets fed into the computer and then the wholesaler tells the retailer what the answer is.... It still doesn't avoid a perfectly innocent person facing a minimum fine of $500 for doing nothing wrong. It seems to me that there is an easy answer, and I must say with the greatest respect that I don't think the minister has responded to the key point.

It's all very well to get up and say: "I'm not in the hands of my bureaucrats. My bureaucrats are nice people and they work very hard and they do their very best to work for the government." I agree with all that. I have no trouble with all that. But they're human, and being human they try to make their job as easy as they possibly can. I understand that. I just believe that there are times when their job has to be made slightly more difficult in order to present a system of justice and fairness to those who are faced with collecting these taxes on behalf of the government. These are not the people who work for the government. The people who collect these taxes for you are small business people, and they don't get the kind of credit they deserve, by the way, for all the work they do in collecting taxes on your behalf. These and sales taxes are some of the most efficient, low-cost taxes the government has, because all the work is done by the business community.

We are still back to the fundamental principle, which is that particularly on these kinds of offences no minimum fine should be imposed. The minister has still not responded to the point made by my colleague for Vancouver Centre and myself: that the minimum fine is inappropriate in a noncriminal statute. This is a non-criminal statute. You could compare it to a parking ticket. There's nothing particularly evil about what can happen under this section.

If the section said "deliberately" and had all of those adjectives in it, I would say: "Okay, then we're on another argument about minimum fines." If the tradition is that the courts haven't looked at the thing seriously enough, that's another argument. But here the argument is based strictly on these questions of tax collection and minimum fines. It's wrong, Mr. Chairman, that the courts have no discretion.

I believe the same thing is true in many ways under the Liquor Act. At one time, the fines under the Liquor Act were absolutely ridiculous at the minimum level; someone caught with a bottle of beer in his hand, doing very little wrong, was faced with a very large fine. We are going in the same direction and I again wish the minister would reconsider the minimum-fine question.

You pointed out that some pretty major things have happened — for example, $477,000 where the government had not received its revenues. But your maximum under this, if that were the case, would only be a $1,000 fine. That would hardly be appropriate where those kinds of figures were involved, would it?

AN HON. MEMBER: What do you want, life imprisonment?

MR. LEGGATT: I think the punishment has to fit the crime, and in this case we're not really talking crime; we're talking something that could be inadvertence, or where the amount of blame is absolutely miniscule. I would again ask the minister to reconsider. Take away these silly minimum fines. Leave it up to the court.

MR. LAUK: Section 9 of this bill refers to "a person who contravenes section 2" and other sections.

I wonder if I could have the minister's attention because this is important. The Attorney-General is amused. He hasn't spoken on these sections.

HON. MR. WILLIAMS: I spoke yesterday. You left the House.

MR. LAUK: I read your explanation and it is totally unacceptable. I want you to listen to the questions I have today; through you, Mr. Chairman.

Section 2 is something the member for Coquitlam Moody (Mr. Leggatt) and I are very concerned about; and I will just paraphrase it. An inspection or audit takes place and the auditors, on their own, determine the amount that is due and owing in taxation. Subsection (3) has been repealed and substituted therefore is this section, which I find absolutely appalling in relation to the penalty sections; "Evidence that an assessment has been made under subsection (2); or that a penalty has been imposed...is proof in the absence of evidence to the contrary that the amount stated in the assess ment or imposed as a penalty is due and owing."

You are making it easier by using a computer, but you are requiring the businessman to calculate his own tax. If he doesn't calculate his own tax but relies on the computer, and the arbitrator comes in, accepts the computer and arbitrarily imposes an amount, that is the amount he's stuck with — unless he hires a battery of Philadelphia lawyers and chartered accountants to go in there and try to prove he's innocent. In other words, it is tantamount to a reverse-onus section. It is, at the very least, a reverse evidentiary burden Section in the law, because on the face of it, whatever the auditor from the Finance department says the court has to accept. It has no alternative but to accept that in evidence and the Crown does not have to prove it's the correct amount. Even in a theft case, the Crown has to prove ownership and the value of that which

[ Page 7651 ]

is stolen; otherwise, the case is thrown out. You don't have to call on the defence. In this case, the judge has to accept that evidence and, unless you've got a battery of CAs and so on to prove it's the wrong amount, you are guilty. You are guilty on a reverse evidentiary burden section, and as well you get a minimum fine of $500.

I don't know why the member for Coquitlam-Moody and myself are trying to protect this government. I think the best thing we could do is to let them pass this section and incur the wrath of every small businessman in the province, leading them to join the rest of the thousands of British Columbians who are going to throw this government out of office. Maybe that is what we should do.

Section 9 approved on the following division:

YEAS — 27

NAYS — 23

An hon. member requested that leave be asked to record the division in the Journals of the House.

Sections 10 and 11 approved.

Title approved.

HON. MR. CURTIS: Mr. Chairman, I move the committee rise and report the bill complete without amendment.

Motion approved.

The House resumed; Mr. Speaker in the chair.

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

Bill 29, Tobacco Tax Amendment Act, 1982, reported complete without amendment, read a third time and passed.

HON. MR. WILLIAMS: Second reading of Bill 38, Mr. Speaker.

CORPORATION CAPITAL TAX (BANK RATE
INCREASE) AMENDMENT ACT, 1982

HON. MR. CURTIS: With respect to Bill 38, the Corporation Capital Tax (Bank Rate Increase) Amendment Act, 1982, I would like to make a few remarks to elaborate on that which was said at the time of the budget. On April 5, Mr. Speaker, I noted that due to prevailing economic conditions the government had decided that we could not and would not justify general tax increases in the province of British Columbia this year. There were some exceptions to that, and one has been dealt with in this House in recent days.

I've also become aware over the last 18 months or so of another inequity in our provincial tax system. In fact, this one is of such large proportions that some would term it approaching an injustice. I'm specifically referring to a substantial reduction in British Columbia corporation income tax payments by the major chartered banks. As all hon. members are well aware, Canadian chartered banks have recorded very impressive profits in recent years. These have been consistently higher than those earned by other financial institutions and firms in the industrial sector.

For example, according to StatsCan, after-tax profits of the chartered banks expressed as a rate of return on the average shareholder's equity, the most widely accepted and accurate method for measuring profitability, have averaged 21 percent over the 1977-1981 period inclusive. The next most profitable grouping of financial institutions was trust companies, which averaged 9.5 percent over the same period — well less than one-half of the after-tax rate of return earned by banks.

In terms of industrial corporations, the most profitable sector over this same period — that is, 1977 to 1981 — has been the oil, gas and coal sector, which recorded a 17.9 percent after-tax rate of return, still well below that earned by Canada's chartered banks. For 1981 alone the banks are estimated to have increased their after-tax rate of return to 22.6 percent, a substantial rise over the 20.2 percent they recorded in 1980.

I say parenthetically, Mr. Speaker, that there will be some comments within this chamber and outside with respect to the same percentage increase in 1982; nonetheless I believe....

Interjection.

HON. MR. CURTIS: I've just observed that in general, through you, Mr. Speaker, to the member, the chartered banks could argue that perhaps that lift each year has not occurred this particular year. But I would like to conclude my remarks. We have introduced this not just for the present circumstance but for a number of reasons as well. Almost all other groups of financial institutions and industrial sectors recorded a decline in their after-tax rates of return over the past four years.

Mr. Speaker, there are two aspects to this measure which is before us today. One of the contributing factors to the banks high after-tax earnings over the past five years has been a substantial decline in the amount of corporation income taxes they have paid to both the federal and provincial governments. In 1976 the seven largest chartered banks paid a total of $15.5 million of corporation income tax to British Columbia. This represented 13.3 percent of the banks' net income for income tax purposes allocated to British Columbia, very

[ Page 7652 ]

close to the then prevailing 15 percent British Columbia corporation income tax rate.

However, the income tax payments declined in subsequent years — that is, following 1976 — despite large increases in the banks' earnings. In 1980, which would have to be admitted to have been a very good year, they totalled only $5.8 million or 4.2 percent of net income, well below the 15 percent statutory tax rate. The large decline in income tax payments to the province has been a direct result of the dramatic rise over the same period in bank income received in the form of nontaxable dividends. In 1976 the seven chartered banks received $83 million of their income in the form of nontaxable dividends. By 1980 this amount had risen to $906 million, nearly an eleven fold increase over four years.

Mr. Speaker, a brief history is perhaps necessary in order that all of us and the people of the province understand how this situation developed. In the 1930s, as members will know — I don't think there are any who would recall, with one or two exceptions perhaps — the federal government introduced special income tax provisions establishing income bonds and debentures to encourage chartered banks to extend low-interest rate loans to firms in financial distress. Interest earned on these debt securities or loans qualifies as dividend income for tax purposes, and so it is exempted from corporation income tax. Dividend income is exempted as it represents earnings upon which tax has already been paid. In more recent years we've heard of things such as "retractable preferred shares," which may be redeemed at any time at the holder's option, and "term-preferred shares" have also qualified for similar tax treatment when this financing is extended to firms reporting no taxable income, the criteria used by the federal government to determine firms in financial distress. Both of these financing instruments are close substitutes for bank-demand loans.

In the mid-1970s many large profitable international and Canadian corporations started to report no taxable income, even though they were earning substantial profits because of accelerated capital-cost allowances, rapid writeoffs of exploration and development expenses, depiction allowances and other special income tax provisions. The banks realized that these corporations could now qualify for tax-exempt term preferred share loans, and so beginning in 1977 they started to heavily engage in this form of financing instead of the more traditional taxable business loans. The federal government, it appears, did not see this trend developing until the November 16, 1978 federal budget, when it moved to prohibit chartered banks from making any further term-preferred share loans with maturities of less than ten years. More recently the federal government — in the latest budget of November 12, 1981 — moved to completely prohibit chartered banks from making any such loans, regardless of term. Nonetheless, the favourable tax treatment on all outstanding term-preferred share loans will continue until the shares mature or the terms of the financing arrangements are changed. Since most of these shares have terms of from five to ten years or more, substantial income tax losses for both federal and provincial governments will continue for a number of years.

As a result of the chartered banks taking advantage of this form of lending prior to the November, 1978 restrictions I spoke of, we estimate that British Columbia lost approximately $16.8 million of corporation income tax revenue in the 1980 taxation year. While taxation data is not yet available for the 1981 and, obviously, the 1982 taxation years, it is not unreasonable to expect that revenue losses will be in the range of $15 million for each of these years. These revenue losses should begin to decline in subsequent years as existing term preferred shares reach their maturity. Chartered banks have recently stated that much of their nontaxable term-preferred share income is in the form of interest earned on small business development bonds and that the resulting income tax savings have been passed on to small businesses in the form of lower interest rates. I have to point out, however, that these bonds were not introduced until mid-1980, so they could not be included in the estimate of lost revenue to which I referred.

This unfortunate development clearly shows the problems of current tax collection agreements or arrangements, whereby deliberate or inadvertent federal taxation policies can dramatically affect provincial revenues without the provinces being either consulted or informed. It is important, I think, for the House to understand that chartered banks have not captured all this lost tax revenue. Some of the tax savings have been passed on to borrowers in the form of lower interest rates on term-preferred share loans than would otherwise be charged on traditional bank loans, but that is minuscule, I think, when one considers the whole situation. The banks have captured a portion of the tax savings; and as I pointed out in the budget speech, at a time when many families, individuals and businesses, large and small, are struggling to cope with very high interest rates, are paying their fair share of taxes and are faced with a variety of uncertainties, I feel that any privileged position for the chartered banks is unfair, inappropriate and a problem that governments have avoided for far too long.

I do not know what will be said by members in second reading debate. I hope that all members will support Bill 38, which is intended to rectify this situation. Certain clauses in the bill will increase the corporation capital tax rate for chartered banks with taxable paid-up capital in excess of $500 million to 2 percent from the current 0.8 percent which applies elsewhere in corporation capital tax matters. Banks with taxable paid-up capital of $500 million or less will not be subject to this increase. As a result, only Canada's five major chartered banks will see their capital tax liabilities increase. The government has exempted the smaller regional banks with knowledge, with understanding. An example, of course, would be the Bank of British Columbia, exempted from this tax increase as it would, for the most part, not have been earning excessive profits nor would it have engaged in term-preferred share financing to — if I may say — artificially reduce the corporation income tax liabilities to the extent of the major chartered banks. The exemption of smaller banks, credit unions, trust companies and other financial institutions offering banking services of one level or another to the public will also help to prevent the chartered banks from passing this tax increase on to their customers. Competition will certainly make itself felt in that particular respect. The tax rate increase will cause corporation capital tax revenue to rise by approximately $9 million — I speak of 1982-83 — so the total corporation capital tax revenue received from the chartered banks in 1982-83 will be $15 million. I want to stress that the $15 million of total — not incremental — revenue will be credited to the newly established employment development account. This may not have been made clear at the time of the budget speech.

The change in the tax rate is to become effective, retroactively to a limited extent, as of May 1, 1982. This date was chosen as the government wishes to avoid retroactive tax

[ Page 7653 ]

legislation wherever possible, and May 1 coincides with the midpoint of the several banks' fiscal year. This in turn will reduce difficulties associated with transitional and administrative adjustments. In this regard, another aspect of the bill requires the affected banks to increase their capital tax instalment payments for the third and fourth quarters of their fiscal year, which would be due on August 15 and November 15, by an amount proportionate to the tax rate increase. Instalment payments for the 1983 taxation year will be increased in a similar manner. Another aspect of the bill provides that the increased tax rate applies only to the second half of the affected banks' fiscal year when computing actual capital tax liabilities at the end of the year.

Mr. Speaker, I referred earlier to the budget address of April 5. The government is committed to a restraint program that is fair to all British Columbians. I believe and I am confident in saying that those in the financial community will agree that, under the circumstances I have just described, this taxation measure is fully warranted — particularly by crediting the revenue to new employment initiatives undertaken by this government. When seen together, this represents a reasonable and a fair contribution to those British Columbians who are being hurt by high interest rates and unemployment.

In second reading members may ask if in fact I have met with representatives of the chartered banks, and the answer is yes. I met with a group comprising senior officials of banks under the aegis of the Canadian Bankers Association, Mr. R.M. MacIntosh, president, We had a good discussion. I did not expect them to greet the measure with open arms or to rush into my office and congratulate me on this measure. But I think we had the kind of discussion which was appropriate in terms of what is being undertaken through this particular bill.

There may be an opportunity at some point in the future to reduce the capital tax when corporate income tax revenues from the affected banks are comparable in size to revenues now contemplated from the capital tax. That is not dealt with in the bill. It's an appropriate comment, I think, in second reading. I do not know — it's not up to me to say — that this increase in the corporate capital tax rate will remain appropriate for an indefinite period: 5 years, 10 years, 15 years. There may be an opportunity when the government of the day and when the Minister of Finance of the day and members of this House will want to make an adjustment. Upward? More likely downward. I offer that opinion to you, Mr. Speaker, but I think this measure is appropriate for the circumstances in which the banks have found themselves and in which the people of British Columbia and indeed in other provinces find themselves at a time which is clearly very difficult.

I move second reading of Bill 38. I look forward to the members' comments, and I will attempt to answer their questions in closing debate on second reading.

MR. STUPICH: The minister spoke at some length, and it was obviously a well-researched presentation that he made. One would be tempted to ask for an adjournment until one had time to review that material. However, the opposition has no intention of holding up this particular bill, although I would like to take issue with at least some of the arguments that were raised. So we will not ask for an adjournment. I do look forward to reading the remarks in Hansard at a later date and perhaps being able to comment, not directly on the bill itself but somehow during the minister's estimates.

It's rather amusing to sit here and listen to the minister extolling the virtues of the Corporation Capital Tax Act. When that particular member was a member of the Conservative Party in this Legislature, he had nothing good to say about that particular legislation. When most of the members of the Social Credit cabinet were members of the Liberal Party — and indeed, four of them were members of this Legislature — they had nothing to say in support of the corporation capital tax principle, but now they welcome it with open arms and look on it as a way of raising more money.

On the other hand, now that we're in opposition, we recognize that it is not good legislation. We recognize that it is not a good approach to tax corporations — and I'm speaking generally now. I know there's a difference here in the definition of the tax base. But we believe it is not good to tax anyone on the basis — in many instances — of debt. I would think that the Provincial Secretary (Hon. Mr. Wolfe) recognizes that this can work a hardship on the sort of business that he was involved in and, I expect, soon will be fully involved in again. The minister will be running, but not fast enough.

The Minister of Finance tells us, in support of this legislation, that the increased revenue will go into the new employment initiative program. I don't take very much reassurance in that. I believe him when he says that will happen this year, but I can recall some years ago when the revenue-sharing program was introduced by this administration to share certain revenues with the municipalities. When the shoe started to pinch this year it didn't take them very long to change that sharing formula so that it worked to the advantage of the provincial government and to the disadvantage of the municipalities. While the minister may tell us today that this is going into the new employment initiative program, I take no comfort in hoping that any revenue from this source will be there next year and the year after or, indeed, that the new employment initiative program will survive that long.

I am at a disadvantage because I tried to take notes but I missed some things. The minister did tell us of one particular industrial endeavour activity where the profits were second only to those achieved by the banks without paying tax. I missed what that was.

HON. MR. CURTIS: Other financial institutions.

MR. STUPICH: The minister helps me by saying that the other financial institutions attain almost as high a profit on their shareholders' equity....

Interjection.

MR. STUPICH: I am sure going to have to look at Hansard, because I understand the third one was 17 percent. That was the oil, gas and coal industries. Their return on equity was 17 percent. That is the way I took it down, and I thought there was another one even higher. My question was: if there are companies making that kind of a profit on shareholder equity. why is one particular activity being singled out for this special attention when there is that opportunity there to be getting far more revenue for the Crown from people who can a&rd to pay and should be paying?

With respect to coal in particular I would remind you, Mr. Speaker, and the minister, through you, that the dollar-a-ton increase that we proposed late in 1975, to take effect in April, 1976, to this date has never been imposed. Certainly the coal industry is an industry very able to afford that. What I am

[ Page 7654 ]

saying is that if it is this important to get money — certainly it is important to get funds into this new employment initiative program — the minister need not have stopped with this group of five particular corporate entities that are being attacked in this particular legislation.

I am interested that the minister did have a meeting with the banks on it. I have some concern that, as he pointed out, a very little bit of the revenue.... I think it was a very weak argument on the part of the banks that the small business development bonds contribute to this nontaxable revenue, because that is a very new program. There is another program ongoing, and that is the small-business bonds. I wonder whether there was any discussion between the minister and the representatives of the banks as to whether or not they would look less favourably upon promoting small-business bonds in the province of British Columbia as a result of this special attention being devoted to them by the Minister of Finance. I am not holding any brief — for the large chartered banks right now, but I do know they are supporting some very large industrial concerns in this province, particularly in the forest industry — and, I would think, even in mining. I hope they don't feel that B.C. Is not a good place in which to do business and start calling some of those loans. I just fear what might happen to the economy of British Columbia if the banks felt that they had to react in some way or another against the government because of this particular attention. I would hope that the minister would tell us that in the good discussions he said he had with the banks he had some assurances from them that they're not going to try to get even with the people in B.C. for what this particular administration is doing to them.

I suppose the second question is: since the other financing institutions make almost as much profit as the banks while paying very little tax, why are the trust companies exempt from this particular legislation? Why is the Bank of B.C. exempt? I wonder how far above the $500 million figure they are. Do they just escape being caught in this net, or are they substantially below it? I wonder about the other banks. The minister might say that he was trying to be fair to the regional banks. Some of these regional banks are international banks that are now being established in B.C. Some of them are regional only in the fact that they are Canadian rather than North American banks or world banks, I would think. The trust companies are generally anything but part of B.C. They are national firms, at least. I don't understand why the minister chose to pick on these five in particular, because I think that the level of profit he quotes.... I understand that the figures he has used for the level of profits are not supported by the banks themselves. They say that his figures are in error. I would think, for example, that the percentage rate of profit being attained by the Bank of B.C., paying very little tax must be very close to what it is for the other five banks. Thai being the case, why set a figure perhaps just high enough — this is a wild guess because I have no idea — to exclude the Bank of B.C.? We recognize the need for revenue. We recognize the need for the new employment initiative program. We are opposed to the corporation capital tax approach in total, but we will support this particular amendment at this time.

HON. MR. CURTIS: Mr. Speaker, I thank the hon. member for Nanaimo for his comments with respect to Bill 38. We examined other possible routes to follow, rather than that of increasing the corporation capital tax. I can say candidly that if I had a preference I would have pursued another route. However, those who advise me and those who advise government in matters of this kind recognize this as being not only the most appropriate route, but perhaps the only route which would bring into effect that which we seek.

The member spoke of a punitive reaction by Canada's major banks. He expressed it in a negative sense as well, Mr. Speaker. I agree with him, and I would be very surprised and extremely disturbed if I were to find that some action had been taken because this has been introduced in the province of British Columbia. That could lead to an escalation which, I think, would not serve any useful purpose, because we are not only taxing the large chartered banks; we are also major customers of two of them. So I think that it is unlikely. The discussion which I had, as I indicated to the hon. member, was positive, and it was, I think, constructive in many respects. I did not expect them to come in and say this is the greatest thing since they were given their charters; quite the contrary. I think we understand the positions held by both sides — the banks on the one hand, and the government of British Columbia on the other.

I do not have it readily available, but I commit to bring to committee debate, Mr. Speaker, the amount below $500 million which applies to the Bank of British Columbia. Off the top of my head, I do not have that figure, and I apologize for that.

I thank the member for indicating official opposition support, and there will be an opportunity in committee to get into some details.

Mr. Speaker, I move second reading of Bill 38.

Motion approved unanimously on a division.

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

Bill 38, Corporation Capital Tax (Bank Rate Increase) Amendment Act, 1982, 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 24, Mr. Speaker.

FINANCIAL ADMINISTRATION
AMENDMENT ACT, 1982

HON. MR. CURTIS: Mr. Speaker, the Financial Administration Act was enacted by the Legislative Assembly last year and was proclaimed in final stages on November 26, 1981. You will recall, sir, that it replaces two pieces of legislation: the Revenue Act and the Financial Control Act, which had provided the framework for the province's financial operation for many years — in fact, for decades — and had become substantially outdated for present-day management practices and requirements.

Members will recall the procedure that was followed in the development of the FAA. In brief, a discussion paper on the new act was released. This was followed by the appointment of a task force comprising representation from the business sector, representatives of Crown corporations and senior public servants, all of whom met to receive briefs and to hold public hearings prior to filing a report on their findings

[ Page 7655 ]

and recommendations. As a consequence of the very broad public exposure given the discussion paper, the draft legislation contained in that paper was revised substantially, resulting in the bill that was introduced in this House in the course of 1981.

The generous response to the bill by both parties in this House with the resulting speedy passage, was, if I may say, very satisfying to me and to the government. It reflected highly upon the efforts of the task force in providing a superior piece of legislation. I think that members will know that the Financial Administration Act has attracted considerable positive attention across Canada since it was introduced, passed and proclaimed. The completeness or totality of the new act as a financial administration instrument is evident from the amending bill that is now before us. An amendment in the interpretation section will remove a redundancy. A provision for certain delegatory powers and clarification of the government's authority to charge fees for government services and of the indemnity provisions are reflected in the amending bill.

I could go into greater detail, Mr. Speaker, if members required, but, as I indicated this morning, I think that perhaps this one is more appropriately dealt with in committee stage, where the members can examine individual aspects of the amendments in relative isolation. If I were to expand further. I think I would be mildly contravening the rules of second reading debate. It is an amending bill to a major piece of legislation which was passed in last year's session. I think from time to time it will be found necessary to introduce minor amendments to the FAA because of the very wide scope which it covers. I therefore move second reading.

MR. STUPICH: I think this time we won't be quite so cooperative in agreeing that it should be postponed until committee stage.

As I see it, there are two principles in the bill, one being that the government once again is out to grab money wherever it can. In this case it is proposing to impose fees on all existing special and perpetual funds. I recognize that some of these will go out of existence if other legislation is passed by the House, but at the present time it deals with all special and perpetual funds, some of them set up several decades ago. In some of them interest only was spent for the purpose of those funds; in others, interest and capital amounts are available. The government is now going to start charging fees for the administration of those funds. It appears the government can charge fees under this legislation for whatever administrative services it deems. If the government feels that trust funds of almost every kind and, I gather, all Crown corporations should be receiving some kind of service from the government, the government can determine what service to give them and what fees should be assessed for those services.

It appears the government is simply widening the loop, looking for more ways of collecting funds. I would like to ask the minister, either now or at committee stage, just how much revenue he expects to earn by having this legislation adopted in the course of the current fiscal period. We are opposed to this revenue grab. We are opposed to raiding the special funds. I wonder whether or not it applies to pension funds. I am just not clear on this, perhaps because I haven't studied the legislation hard enough. If it does apply to pension funds, it is a second raid, or stealing almost, from pension funds. You will recall that the government previously financed the deficit that they created on March 31, 1976 by borrowing money from the pension funds at approximately 9 percent interest, while at the same time they were earning something between 16 and 18 percent on deposits in excess of $1 billion in the various chartered banks. I can perhaps understand why they want to get it out of the chartered banks right now, after the previous bill, but that is another matter. It appears there could be a very wide loop thrown among many trust funds, Crown corporations, perpetual funds, all kinds of funds, and it could be a very significant source of revenue.

My second concern is the very phrase "could be." It is going to be entirely up to the Lieutenant-Governor-in-Council to determine the range of fees; what fees will be set; how often they will be changed; whether or not they will be different from one Crown corporation to another; whether this is simply one'more way of getting electricity users to pay more money into government coffers. A very good way was found earlier this year when, by increasing the licence fee, they were able to extract another $150 million from those who pay electric light bills. Is this simply another way of getting electricity-users to pay more money into government coffers without imposing any tax increase? If nothing else, it certainly gives the lie to a statement the minister made in a previous speech, when he said there was no general increase in taxation apart from special cases. He didn't identify it but I am sure he was thinking about the rural taxation increase.

We are opposed to this legislation on those two grounds: first, that it is simply another grab by the government to get revenue from sources from which we believe they should not be getting revenue; and secondly, that the fees are going to be set behind the closed doors of a cabinet room, and they may be set and reset as often as the Lieutenant-Governor-in-Council thinks they need changing in order to get more revenue for the Crown.

MR. HOWARD: In 1969 the late W.A.C. Bennett, who was then Minister of Finance, used the aged commitment to the native Indian people that for so long as the sun shines and the river flows and the grass grows, a certain set of conditions would prevail. With those remarks, the late W.A.C. Bennett introduced a bill dealing at that time with revenue surplus. One of the funds set up under the revenue surplus appropriation act of 1969 was the First Citizens Fund — $25 million to be invested as the Minister of Finance saw fit, with certain circumscriptions such as in government of Canada securities or provincial government securities, and so on.

The other commitment was that the interest from that particular fund of $25 million would be available for all time for people of native Indian origin in this province. Apart from the fact that the investments were made in securities that carried, by today's standards, very low coupon rates, and apart from the fact that the $25 million earns somewhere in the neighbourhood of a 7 percent return, which is another question entirely, the commitment was made that that interest would be available for people of native Indian origin for all time. The same commitment was made about other special funds established by that 1969 legislation.

I want to deal particularly with the First Citizens Fund, because the emphasis at the time by the late.W.A.C. Bennett was on that firm commitment that for all time the interest earned would be available to the first citizens of this province. We now see, as outlined by the member for Nanaimo (Mr. Stupich), a move to grab some of that money and to charge against that fund. Contrary to the commitment made not only by the late W.A.C. Bennett but by the entire Legislature,

[ Page 7656 ]

because it voted unanimously to establish those funds at the time, the Minister of Finance and this government are denying this commitment and flying in the face of that obligation. It's like denying and flying in the face of a treaty commitment. I know the native Indian people will define it either as a doublecross, the minister speaking with a forked tongue, a stab in the back or some other appropriate phrase to identify what this particular bill means.

While the minister may be desperate in his attempts to find money from whatever source and any source without restriction because he and his own government have squandered the funds of this province over the last couple of years and have driven us into an impossible fiscal position, and while I can understand his desire to supplement the shortfall wherever he can, I think he goes too far when he now seeks to deny the commitment made to native Indian people about that particular amount of money. The member for Nanaimo has very adequately covered the other aspect of it — the trust funds, which presumably include pension funds and how it would be a money grab from that as well. So on those grounds, I must completely oppose this particular bill because section 3 is very central to the principle of the bill.

I'm opposing it on another ground that relates to a provision of the bill which seeks to amend section 59 of the Financial Administration Act itself. It may be worthwhile, in the first instance, to read section 59 in order to indicate the point I'm getting at. Section 59 of the act that we are now seeking to amend says:

"The Lieutenant-Governor-in-Council may make regulations (a) respecting the terms and conditions, and, not withstanding any other Act, restricting or limiting the circumstances under which a government corporation may enter banking arrangements, lend money, borrow money, give a guarantee or indemnity, give, grant or assume a mortgage or lien on property or acquire property by way of lease...."

I want to talk about that authority given to the Lieutenant-Governor-in-Council with respect to Crown corporations to intrude into the question of the very bank which the Crown corporation may want to invest its money.

The Crown corporations committee charged with the responsibility of dealing with Crown corporations submitted a report to this House in April of this year and expressed deep concern about section 59. The committee unanimously concluded:

"...places with the Lieutenant-Governor-in-Council, and by assignment the Minister of Finance in his role as corporate fiscal agent, considerable control over the day to day financial management of B.C. Rail and other Crown corporations. The statute gives the Lieutenant-Governor-in-Council power to make regulations concerning the terms and conditions under which Crown corporations may enter banking arrangements, lend or borrow money, enter lease arrangements, or pledge their assets as guarantee or security. Even a conservative interpretation of these provisions indicates that the Minister of Finance could be empowered to stipulate the locations, number and type of corporate bank accounts; to have access to those accounts; to control the timing of even routine financial transactions; to manage the short-term cash surpluses; and to make binding decision on behalf of Crown corporations with respect to the timing and type of borrowing undertaken."

That's an opinion, given unanimously by members of the Legislature's Committee on Crown Corporations. It wasn't an opinion that was given lightly, or given out of a casual examination of the section. It was an opinion given with serious concern about the extraordinary powers that are in the Financial Administration Act under section 59.

MR. SPEAKER: May I interrupt the hon. member just long enough to ask whether or not he's aware that the amendment to the section is certainly subject to debate, but the section 1tself is not subject to debate. As long as the member keeps that in mind....

MR. HOWARD: Mr. Speaker, what I was referring to was the section of the act which this bill seeks to amend. The argument I'm putting forward is that I wonder why the minister, once, by this bill, having opened up the section under consideration — namely 59 — didn't go further and pay attention to the unanimous recommendation of the Crown corporations committee that expressed tremendous concern about the impact of section 59 upon Crown corporations. I think the minister should have responded to that in a memo.

So I oppose it for two reasons. One, in the face of a unanimous suggestion — it wasn't identified specifically as a recommendation, but a unanimous opinion — expressed by the Committee on Crown Corporations after many months of deliberation, the minister refuses to respond to it, even though he seeks to amend the section which the committee expressed concern about. The other reason is that it is a denial of a very firm and very fundamental, absolute, forever commitment made by the late W.A.C. Bennett and this Legislature to the native Indian people of this province.

MRS. WALLACE: The member for Skeena has been talking about the First Citizen's Fund, a fund which has not been recouped. I want to speak on the particular amendment 3(b), where it talks about trust funds, and talk about a fund which has been recouped. That's the Farm Income Assurance Fund. This fund has been recouped, yet it is being held here, assured by the Minister of Finance and the Minister of Agriculture and Food (Hon. Mr. Hewitt). This fund is, being held in trust. It is comprised not only of government funds but also of funds paid in by the producers.

HON. MR. CURTIS: On a point of order, it seems to me that the member for Cowichan-Malahat is directing her remarks to another bill which is before the House. I may be mistaken, but the member for Skeena also started in that direction.

MR. SPEAKER: Order, please. As I understand it, the member is directing herself to section 3(b), which section perhaps ought better to be debated during committee. However, she was making introductory remarks which appeared to the Chair to be directed toward the principle of recouping, as she says, trust funds. As long as the member continues with the principle, she will be in order.

MRS. WALLACE: I'm talking about the principle of this bill, which seems to be to utilize any funds any way it can to bring more money into government coffers. That principle is certainly demonstrated by the fact that they are now going to charge a management fee for managing trust funds. What I'm

[ Page 7657 ]

pointing out, Mr. Speaker, in the case of the Farm Income Assurance Fund, which we are told is going to be held in trust now that the fund has been recouped, is that that trust fund will not only be made up of taxpayers' dollars but also of producers' dollars. The question of whether or not any interest, which normally would have accrued to that fund, is going to be credited for the purposes of paying farm income assurance is something that we will debate under another bill at another time, as the minister has indicated. In this particular instance, I'm suggesting that to charge a management fee for a trust fund, 50 percent of which is made up of producer's dollars with no assurance that any interest is going to be paid or allowed into the total amount of that money, seems to be a real money grab. I just couldn't let this bill go by, and this principle go by, without bringing to the attention of the House the kind of thing that can well occur as a result of this piece of legislation. That's just one of the many reasons why I'm opposed to it.

HON. MR. CURTIS: Mr. Speaker, as you observed, some of these observations may be more appropriate in committee. I made that point when I opened second reading debate on the bill. However, there are a couple of things I think I could put to rest immediately.

With respect to the member for Skeena (Mr. Howard) and his reference to the First Citizens Fund, any management fee which is contemplated by this amendment would not apply, as this forms part of the consolidated revenue fund, which is not subject to a charge. What we have attempted to do in the section dealing with fees is recover the costs of providing certain services to these funds. If I might just stay with this for a moment, the treasury division in the Ministry of Finance employs approximately 43 persons at an estimated annual cost before recoveries of $4.9 million. Much of their time is spent in administering, overseeing and working with some $7.4 billion in cash, securities, loans and other investments, I indicated that while these employees also have other work to do and manage some of the province's own funds and do other tasks, the largest portion of their time is devoted to managing trusteed funds and performing other financial services for Crown corporations. The charging of fees for a service such as is rendered by these people in the treasury division is, I think, not unknown elsewhere in the public sector and certainly not in the private sector. I recall that during my time with a regional district, the Capital Regional District, if two or three areas within the region wanted to undertake a specific function and there was brought into play the management and accounting expertise within the total regional district staff, there was an administration fee levied for that particular service — whether it was internal audit of a swimming pool, arena complex or whatever.

To repeat, I don't think that the principle of levying a relatively small fee for a service rendered to a fund should be found offensive by those who have a particular interest in the fund or by those who observe our attempt to make sure that the appropriate cost is assigned to a variety of activities undertaken by government. Otherwise, we have all the taxpayers of the province, through consolidated general revenue, underwriting, if you will, or subsidizing the specific activity to which I have referred.

The member for Skeena also alluded to the Crown corporations reporting committee report which is now before us. I will happily respond in my way on that. I wonder if that wouldn't be more appropriate during estimates. Fin sure I can count on the member to raise that matter when My estimates are presented.

MR. SPEAKER: Any debate on the report itself would be in order upon the motion for the adoption of the report.

HON. MR. CURTIS: We may do it, then, on more than one occasion. However. I think I will leave that until another time, when I'm sure that within the rules of this House the member for Skeena, who has a particular interest in this, will raise it directly, and I shall respond in detail.

As I indicated, it is an amendment to a major piece of legislation. I believe it is appropriate on the basis of our several months' experience with the Financial Administration Act to date. Insofar as those who criticize the Financial Administration Act for one reason or another, and therefore criticize the amending bill before us, are concerned, I still submit that it is one of the finest pieces of legislation to have been introduced in Canada or any of its provinces in a number of years. I think independent — not partisan — interested observers will concur in that observation.

I move second reading of Bill 24.

Motion approved on the following division:

YEAS — 28

NAYS — 21

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

Bill 29, Financial Administration Amendment Act, 1982, 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 on Bill 28, Mr. Speaker,

[ Page 7658 ]

COMPENSATION STABILIZATION ACT

(continued)

The House in committee on Bill 2; Mr. Davidson in the chair.

On section 9.

MR. HOWARD: On this particular section 9 I want to ask the Minister of Finance an uncomplicated question. Let him look across the floor, if he will, to a publication, the Interior News, published in Smithers Wednesday, May 12. The headline there — the minister can see it, but I'll read it to him — says "Don't Get Sick." That's the advice of Ev Person, chairman of the Bulkley Valley District Hospital Board. He was commenting on the budget cutbacks and the effect that this particular piece of legislation is having. upon the Bulkley Valley District Hospital Board. I wonder if I could ask the minister what advice he can give to the chairman of the hospital board in Smithers and to residents in the area served by that hospital to allay their fears about hospital cutbacks as a result of the program of his government.

HON. MR. CURTIS: I wonder if the member could indicate how he relates this to section 9, which is the discretionary part of Bill 28, and which deals only with guidelines to be paid by groups of employers rather than the expense stabilization aspect of our total program. I am sorry but I don't see the relevance to section 9.

MR. HOWARD: The fact of the matter is that the minister doesn't see any relevancy in people being injured and not being able to find hospital care and hospital beds. That is what the minister doesn't see. any relevancy in, not whether this particular section, which he classified as voluntary, and yet it contains the word "shall".... In addition, the chairman of the hospital board doesn't know what the guidelines are. He hasn't been advised what has happened. All he knows is that he's got an order and that the hospital administrator has an order to do certain things. They've done those certain things — they are required and forced to by this government and by the piece of legislation that's before us now — and the only response he could make to the general public around there was: "Please don't get sick." I am not asking the minister to slough off the comment about relevancy to the bill or anything else. It is relevant. This is the Minister of Finance who is causing the problem. This is the minister and the bill that's causing the problem. What advice can the minister give to the chairman of the hospital board to allay the fears of people in the Smithers area who are feeling the effects of this particular piece of legislation?

I thought for a moment the minister was going to get up and give a rational explanation of something instead of trying to slough the thing off on some procedural matter. Obviously the minister really doesn't care what happens to people in Smithers who may need hospital care. Obviously that's beyond his comprehension, understanding or concern.

Interjection.

MR. HOWARD: Well, I think it is beyond his concern. Otherwise, he'd respond to the questions. He'd deal with these subject matters.

Ask him to look at another headline in the same paper. Since he's not looking at it, I'll have to read it to him. "Hospital cuts" says the article in the Interior News for Wednesday, May 12, 1982. The headline says: "Like having a flat tire at 80 mph."

If the member for Omineca (Mr. Kempf) would express as much concern about the people he purports to represent as he wastes breath and time muttering from his seat in the House, we'd be better off.

Interjections.

MR. CHAIRMAN: Order, please, hon. members. First, the member for Skeena has the floor; secondly, the member for Skeena must make his remarks, as our standing orders indicate, strictly relevant to the section under consideration, which is section 9. While members may feel strongly about certain points that may reflect on their own constituencies, the Chair has an obligation to enforce the standing orders, and our standing orders are such that we must be strictly relevant dealing with committee.

MR. HOWARD: I was seeking to do that, Mr. Chairman, realizing that section 9 talks about public-sector employers who are hospitals. I'm talking about a particular one.

Here is what one of the doctors in Smithers said, and I wonder what advice the minister can provide to this medical practitioner who has to concern himself with treating patients who need hospital care. Talking about the hospital cuts forced on it by this government, he said: "It's like having a flat tire at 80 miles per hour. Nine times out of ten you'll survive,, although you have no business surviving. It will be the same at the hospital with emergency situations. Nine times out of ten we'll squeak by. This hospital has been cut to the limit for the past four or five years. I think we are now down below that safety level."

The doctor is talking about the one in ten, by his words, who may not survive, who may die as a result of hospital cutbacks. What suggestions can the minister make on how this particular section 9 can prevent that happening to the one person in ten whom the doctor in Smithers expresses concern about? Can the minister tell us how section 9 will prevent that one person in ten from being visited with a very sad situation, as the doctor predicts?

HON. MR. CURTIS: Mr. Chairman, again I take offence when the member infers that, under the strictly relevant clause in our standing orders, I appear to decline to be concerned about injured and sick people within the province of British Columbia. We are dealing with one section of Bill 28, a bill that covers the entire compensation stabilization program in virtually every respect — in over 36 sections. I do not see how I can answer the questions that are posed in this context by that member.

This is the guideline section as opposed to another section that deals with regulations. It does not deal with the question of the amount by which a hospital has been lifted, 1982-83 over 1980-81, in terms of its budget. This simply deals with the fact that the executive council of British Columbia can issue compensation stabilization guidelines which are flexible in terms of how they are dealt with by the two parties in a bargaining situation. Mr. Chairman, I am unable to answer that question under this section. If the member can guide me as to how I could answer it without violating the rule of strict

[ Page 7659 ]

relevance, then I would be happy to do so; but I know of no way.

MR. HOWARD: I think what the minister should have said is that he is unwilling to try to answer the question, not unable to. There's no point in having the minister hide himself procedurally behind the screen of the rules of this House. It's only the desperate mountebanks like the minister who hide behind the flimsiest excuse instead of answering a question.

MR. CHAIRMAN: Order, please. Hon. members, in committee we deal only with the strict relevance of a particular section. Personal allusions to any member are out of order at all times; certainly under this particular section they are even more so. Again I would ask the member, in continuing his debate, to adhere to the rules which guide us in committee: we must be strictly relevant to the section at hand.

Hon. members, there are other opportunities before us to canvass the estimates of any particular minister or ministry; this is not that occasion.

MR. HOWARD: Well, Mr. Chairman, I suppose I’ll simply have to regretfully advise the chairman of the hospital board in Smithers that the minister failed to respond to the question put to him. The minister felt that he was unable — that was the word he used — to respond to the question; the minister was unable to provide any advice to the chairman of the hospital board or to the doctor whose quotation I read earlier who expressed concern about the one in ten emergency patients who might not make it as a result of these cutbacks. I'll relate to them that the minister was unable to do that because of the rules of this House, Mr. Chairman. I'll also tell them that when the House adjourns, the minister will have an opportunity outside in the corridor, where he is not bound by the rules, not confined by the rules.... I think he's only using the rules as a flimsy excuse....

HON. MR. CURTIS: Order!

MR. HOWARD: I think the minister is only using the rules as a flimsy excuse not to answer the question. He won't find that excuse outside.

MR. CHAIRMAN: Hon. member, while the conversation being engaged in is possibly of interest to the member, it certainly doesn't fall within the confines of section 9. As has been the occasion on several instances in debate on this Section in the past, we have strayed into what should have been canvassed in second reading, on the principle of the bill. Again, hon. member, please proceed, strictly on section 9.

MR. HOWARD: When we get outside this chamber. section 9 won't be before us, and neither will the rules. I'm sure the minister will then take the opportunity to explain to the chairman of the hospital board in Smithers and to the doctor in Smithers who expressed those sentiments, and to give them advice on how they can better serve the patients in that particular hospital, I'm sure the minister would jump at the chance to do that. In fact, it might be appropriate if we were to recess for a few moments. The minister and I could step outside, and he could tell me privately what his advice is; then we could come back and proceed to deal with the bill. Will the minister accept that proposition?

HON. MR. CURTIS: No.

MR. HOWARD: No. of course he won't. He just said no.

MR. CHAIRMAN: Order, please.

MR. HOWARD: Hansard doesn't show it, because the minister didn't utter it, but he just said no, he would not follow that advice, indicating to me that he has no concern whatever about the misery visited upon hospital patients by virtue of this particular bill.

HON. MR. CURTIS: Do we usually recess at 22 minutes to five, Frank?

MR. HOWARD: How about six o'clock? Will you do it at six o'clock?

HON. MR. CURTIS: I'm in the corridor often.

MR. HOWARD: Will you do it at six o'clock? I ask the minister a question through you, Mr. Chairman. He said that we usually don't recess at 20 minutes to five. I think he meant adjourn. I was just talking about a brief two-minute recess, and then we could come back again. Would the minister be prepared to tell me the advice that he would be prepared to give at another time to the chairman of the hospital board in Smithers? Six o'clock tonight, when the House adjourns — how about that. Mr. Minister?

MR. CHAIRMAN: Again, hon. member, in no way can the remarks by the member be construed as being in order under this section.

MR. HOWARD: That's right. I agree with you that that particular question is not in order, but the other ones were. Anyway, I'll proceed to something else.

Another question I want to ask the minister is this. This particular section says that the executive council shall issue compensation stabilization guidelines, etc. Now that doesn't mean by order-in-council. could I ask the minister whether the term "executive council" is the same as the other phrase in section 17 — and I have to refer to this only for comparison's sake — where it says that the Lieutenant-Governor-in-Council may do certain flings? What's the difference, if any?

HON. MR. CURTIS: Mr. Chairman. there is a clear distinction between that which the executive council undertakes by order — the traditional and historic order-in-council — and that which the executive council would in this case release as, if you will, guidelines — a directive. an instruction, but not an order as such.

MR. HOWARD: If that is the case — and I thought that that was the situation — why then did the minister say on another occasion that the compensation guidelines would be established by order of the Lieutenant-Governor-in-Council?

HON. MR. CURTIS: Mr. Chairman, could the member cite the specific reference in order that I can answer the question accurately?

[ Page 7660 ]

MR. HOWARD: The document I have here is issued by the Ministry of Finance under his name on March 18, 1982. He says: "The compensation guidelines will be established by order of the Lieutenant-Governor-in-Council." Can the minister tell me why he said that then and now he's saying something else in this act?

HON. MR. CURTIS: I will endeavour to answer that in due course, Mr. Chairman.

MR. HOWARD: The minister also said, when asked about these guidelines — and he has so far indicated that they don't exist.... Could the minister tell us why he told us earlier that the guidelines, in fact, do exist and were established? Can the minister tell us why at one point he told us the guidelines were established, but now refuses to say what they are?

HON. MR. CURTIS: Mr. Chairman, once again, would the member please cite the reference.

MR. HOWARD: Well, doesn't the minister know what he has said in this matter?

HON. MR. CURTIS: Yes.

MR. HOWARD: He does? Well, again, they're his own words. The first one was that the compensation guidelines would be established by order of the Lieutenant-Governor-in-Council. But that's completely contrary — he said he'd attempt to find an answer for that — to what is before us now, that the executive council shall issue them. Those are two separate things. On which occasion was the minister in error — now or on March 18? He must have been in error on one occasion.

HON. MR. CURTIS: Mr. Chairman, as I take it, with respect to section 9, the member opposite has referred to two specific references to guidelines. In order that I can answer very clearly, I would like him to indicate the manner in which these statements were made — whether he's citing something from Hansard or whether he has a document in front of him. It is only in that way that I can fully respond to his second question; I have undertaken to examine the first question. I also think that a great deal has been said about this matter. I want to be completely sure that I understand the reference the member has in front of him so I can give him the correct and appropriate answer. But I need a full citation.

MR. HOWARD: I don't know what's wrong with the minister, Mr. Chairman. Doesn't he pay attention? Has he got his mind set, Mr. Chairman, and refuses to listen to what I said?

MR. CHAIRMAN: Order, please, hon. member. On section 9.

MR. HOWARD: Well, it relates to this particular section. I gave the minister the reference. He asked what it was and I told him what it was — issued under the Ministry of Finance, March 18, 1982, Hon. H. Curtis. Is that the same person, the Minister of Finance? I'm inclined to think that it is, in that he said that the guidelines were initially established on February 18, 1982. He said that the guidelines were initially established. What are they? Or was he in error on March 18, when the minister issued that statement and said that the guidelines were initially established on February 18, 1982? There is nothing complicated about that type of question.

We are talking about the guidelines that the executive council shall is sue. Presumably they have already been is sued. What are they? When was the minister in error — today or on March 18 when he said one thing and now has before us a piece of legislation which says something else? Could the Minister of Finance tell us whether he was not in error on either occasion? Is the Minister of Finance interested in the question? He is staring at the clock. He is hoping that time will pass quickly and we'll get to 6 o'clock so that he can come out in the corridor and tell me what advice I can give to the chairman of the hospital board in Smithers.

He has taken one question and said he'll pursue that and see whether he can tell the House why on March 18 he said the compensation guidelines will be established by order of the Lieutenant-Governor-in-Council, but in the bill he denies that and says it is going to be the executive council. I can understand making an error of that nature. I can understand, perhaps, that somebody else wrote this statement for the minister. I can understand it might be the words of the Premier, who is usually off base quite a bit in talking about these subject matters. But it is a very serious conflict, because if the minister — and he is — is going to operate on the basis of asking this Legislature to have faith and trust in his and the government's capacity to deal with this matter, then when matters arise which tend to challenge the credibility, I believe the minister is obliged to indicate to the House which situation is correct. If one was made in error, so what? We all tend to make errors.

Can the minister tell me whether his statement on March 18 which says that the compensation guidelines will be established by order of the Lieutenant-Governor-in-Council was a mistake?

HON. MR. CURTIS: With respect to the specific point made by the member for Skeena in his last question, I have already indicated that I will check that carefully and report back.

MR. HOWARD: He is not sure it is a mistake. I would think that the minister, careful, knowledgeable, with his intimate detailed understanding of what he's put before the House and the committee, would probably know right off the top of his head whether he has made a mistake, but he says he doesn't remember whether he did or not but he will check it out and see in which instance he is in error.

Could I ask him further whether the guidelines referred to under section 9 have been established? Could I ask the minister if the guidelines were initially established on February 18, 1982?

HON. MR. CURTIS: The member knows, I think, that the basis of the compensation stabilization program and that which is dealt with in section 9 which is presently before the committee was announced on February 18 and has been expanded upon on a number of occasions, not only in this House in second reading and in committee but also in a variety of meetings which have occurred with interested groups of employees and employers in the public sector representing all sorts of areas of the province of British Columbia. The question ignores that which is a matter of public record.

[ Page 7661 ]

MR. HOWARD: On the contrary, the question does not ignore that which is a matter of public record. I just wanted to I have a current emphasis from the minister as to what the situation is today. He is now telling us that, yes, the guidelines were initially established on February 18, 1982.

They were established by one man on television.

HON. MR. FRASER: What's wrong with that?

MR. HOWARD: The Minister of Transportation and Highways poses a question in the negative, as if there is something wrong with it. He may think that there is something wrong with what the Premier does. Maybe that is what that slip of the tongue indicates. He just turned around and smiled at me; I don't know if I take that as agreement with what I am saying or not. The fact of the matter is that the Premier — so the Minister of Finance has now said — said that the guidelines were initially established on February 18, 1982, on television — one man.

Interjections.

MR. HOWARD: I don't want to hear them because I know they're out of order, but I have difficulty understanding the out-of-order comments by members opposite. If they could speak up a bit, maybe you too would hear them, Mr. Chairman. Maybe they don't want you to hear them, Mr. Chairman. Now they're silent, the best condition prevalent on that side of the House. The Minister of Finance has just now said — reiterated, reconfirmed, put it in today's atmosphere — that yes, the guidelines were initially established on February 18, 1982 by the Premier. He didn't say by the Premier, but that's who did it. A few days ago the Premier out in the corridor, in another declaration, said they were going to be 5 percent or less. We get back to the initial questions posed by the Leader of the Opposition to the Minister of Finance — posed only because of the absolute confusion and uncertainty in the minds or hearts of this government as to what it's talking about. If guidelines are things developed out of the blurtings of the Premier, so be it, as long as the general public and the people who are going to be affected by them know.

Maybe this is a mistake by the minister, which he can clear up later, but it's got to be read in the context of the item: "Given that the compensation guidelines will be established by order of the Lieutenant-Governor-in-Council." That is a quotation from the minister on March 18. I want to ask the minister this: if that is correct, will the executive council have the power to vary or amend the guidelines established by the Lieutenant-Governor-in-Council? If the guidelines are established by the Lieutenant-Governor-in-Council, which is a superior body to the executive council, will the executive council have the authority to vary or amend those guidelines?

Did the minister hear the question? He heard the question; he doesn't consider it worth answering, just as he didn't consider it worth answering the question as to what advice he could give the chairman of the school board or the hospital board. Now he hears. He doesn't like that. The minister doesn't like being reminded that he refused to reply to hospital cutbacks in Smithers, but he did.

MR. CHAIRMAN: Hon. member, we've canvassed this issue, and we seem to come back to the fact that we have before us section 9, we have before us standing order 61 (2) and it's up to the member speaking to put those two together n their proper context.

MR. HOWARD: That's exactly what I'm doing, Mr. Chairman.

We have the Times-Colonist Tuesday, May 18, item that I'm sure the minister has heard about. This is a statement by the Premier that basically puts us in the position.... After all, the Premier is the one who knows exactly what he's talking about, and he said basically that this bill should not be proceeded with; it's not needed: it's not necessary. The Premier and the Minister of Finance are willing to spend $882, 890 this year for Mr. Peck, the so-called restraint czar, but the Premier, out in the corridor again — he won't come in the House and take us into his confidence as to what he thinks this should all be about — told us that this $880,000-a-year man won't have anything to do. He said we're spending $882,000 in this fiscal year for nothing- to employ Mr. Peck as a Maytag repairman. If that is the Premier's assessment of the abilities and the worthiness of Mr. Peck, then he should ask Maytag to pay the bill, not us.

On the basis of that comment from the Premier that Mr. Peck won't have anything to do, yet we're going to set aside $880,000 for him not to have anything to do, could the minister tell the House whether on the strength of what the Premier said about the valuelessness of this piece of legislation, he would consider withdrawing it?

HON. MR. CURTIS: Mr. Chairman, the member has clearly based his last observation on a completely incorrect assumption. Those are his words when he refers to this as being "valueless legislation." That is his view, and let the people of B.C. know that that is his view of the bill. Mr. Member, don't, through an echo, attribute that to the Premier or any other member of the government.

You've asked on a number of occasions this afternoon what the guidelines are. Mr. Chairman, I can give one reference immediately from the Hansard Blues for yesterday afternoon, tape 573-1, at 4:54 p.m., where I indicated what the guidelines were. I referred to their announcement on May 18. I referred to the fact that they had been dealt with in second reading of Bill 28, and repeatedly in the course of debate on this section. If the member cannot accept what has been said on a number of occasions, then that is also his problem. It is not my problem and it is not the problem of the government.

MR. HOWARD: Is that the reference, Mr. Chairman, where the Minister of Finance said the Premier didn't know what he was talking about and that he should keep his mouth shut when he is talking about the guidelines? Is that the area that the minister dealt with? I'm sure that's what it is.

HON. MR. CURTIS: Do I understand that the member is paraphrasing something from Hansard, Mr. Chairman?

MR. CHAIRMAN: Shall section 9 pass?

The member for Cowichan-Malahat.

MRS. WALLACE: Thank you, Mr. Chairman.

I'm certainly surprised that the Minister of Finance, in response to my colleague from Skeena (Mr. Howard), has indicated that the guidelines are as were indicated by him on February 18, by him in second reading and by him earlier in

[ Page 7662 ]

this debate, because confusion reigns supreme on these guidelines. The minister keeps telling us this in sort of roundabout ways. He doesn't come out and say: "This is what it is." He refers to previous quotes. At the same time we have the Premier telling us that it's something different — 0 to 5. We have the Minister of Education (Hon. Mr. Smith) telling us it's something under 8 percent. We have hospital boards being allocated 7.7 percent in the funds that they're being allocated for wage increases. Then we have the Premier's classic statement about the Maytag repairman: "Poor Mr. Peck, he's going to be as lonely as the Maytag repairman." We're paying him $325 a day, allowing him something in excess or $880,080 for his budget, and he's going to be as lonely as a Maytag repairman. Is it any wonder, Mr. Chairman, that confusion reigns?

In second reading I spoke, as did many members on this side of the House, about the very awesome, sweeping powers that are included in this particular section, where it's wide open. You know, we had some guidelines originally, and then we get this. It's no wonder we're in the state of confusion we're in, because obviously that's the intent of section 9 — to leave it wide open, to leave it to the executive council. That's an interesting point which was raised by the member for Skeena, because certainly the executive council's decision is much more readily and easily changed than is a decision by the Lieutenant-Governor-in-Council, where an order-in-council is required. So it seems that these guidelines can be changed day in, day out to suit the political needs of this government, Mr. Chairman, and that's the concern that we have.

The Minister of Finance has a habit, Mr. Chairman, of getting up and suggesting to you that I'm out of order when I speak. So I want to be very careful.

HON. MR. CURTIS: Twice.

MRS. WALLACE: Well, it's happened a few times. I've sort of won the argument in every instance, and I want to be very sure that he doesn't get up and call me out of order this time, because I'm going to be very much in order.

I'm going to talk about the guidelines that refer to stabilization and compensation plans of public-sector employers and public-sector employees — section 9. I'd like to read you a quote, Mr. Chairman, then I'm going to ask the minister if he can tell me the source of this quote. "The provincial government, in deciding to impose a restraint program on the whole public sector, was well aware of the implications of such actions on social programs and on the personnel who work within them." I wonder if the minister has any idea of the source of that quotation. It is from a letter dated April 28 to the chairman of a school board, signed by the Minister of Education (Hon. Mr. Smith). I'm sure the Minister of Finance will not dispute the remarks of his colleague.

I'm talking about the guidelines that are set up under the restraint program and the implications they have on social programs, as indicated by the Minister of Education. I would like to ask the Minister of Finance if when they considered the implications of these guidelines, as the Minister of Education has indicated, they considered the fact that they were going to result in the closure of 1,200 hospital beds and the layoff of 2,100 staff? Did they consider that when they considered these guidelines and the problems that would occur as a result of them? Did they consider that possibility — as the Minister of Education said, the effect on the social programs?

[Mr. Strachan in the chair.]

I wonder whether the Minister of Finance knew when he first considered the restraint program and the guidelines that a laboratory staff member working at a Victoria hospital received a 4 percent raise last year and in 1980 received the same 4 percent raise. I wonder whether the Minister of Finance was aware of that when he talked about those guidelines. This is in a letter from Jean Parker of Victoria. It appeared in today's Province.

"I am a laboratory staff member. Last year I received a 4 percent raise; in 1980 I received the same. We work hard, frequently have no time for coffee and are paged back during our 30-minute supper break — 30 minutes from start to finish....

"In a hospital environment we are trained to assess our priorities. I suggest that the government attempt to do the same.

"Who will tell the parents of a young cancer patient that their child will have to wait eight months for his surgery because there isn't a bed for him? Not the Minister of Health" — or the Minister of Finance — "probably a nurse" — or a doctor.

Certainly when the guidelines that we're discussing in section 9 were considered, it was considered and acknowledged by the government that the whole public sector would be affected. They were aware of the implications that such actions would have on social programs. That is what the Minister of Education has said. I think I am very much in order in asking the minister if, when they considered these specific things, they did consider, as the minister has said, that they would have severe implications for the social programs.

MR. CHAIRMAN: Hon. member, the Chair will comment this way. With respect to standing order 61 and strict relevancy, the member is in order when we talk about compensation guidelines for public-sector employees. Discussion of programs would not be in order. The Chair so rules.

MRS. WALLACE: Mr. Chairman, certainly these guidelines are imposing a restraint program on the whole public sector. It seems to me to be completely and strictly relevant to cite examples of how this is working. An example is the quickest and easiest way of explaining or pointing out the problems with the program. I would submit, Mr. Chairman, that an example relative to the social programs is completely in order, and certainly the Minister of Education has indicated that this was discussed in cabinet, it was a consideration and that they knew this was going to happen. I am suggesting that these examples could perhaps cause them to reconsider the program, because only by example — by actually seeing what is happening even before the program is fully in place — can we be fully aware of the implications of this program.

We've heard from doctors who have said that doctors will be leaving this province. Certainly that is going to reflect on the social programs if we don't have adequate and skilled medical expertise here. I suggest that that is one example of the way the social programs are being eroded as a result of these guidelines.

[ Page 7663 ]

They talk of doctors who formerly waited a week to have a bed for a patient — not for elective surgery but for emergency surgery — now having to wait up to a month. These are the sorts of social programs which are being eroded. I think the minister should be aware of them so he is fully cognizant of what this piece of legislation is doing.

MR. RITCHIE: On a point of order, it would appear that this member is not only missing the section but the bill. I don't see how this can be relevant to that section of Bill 28.

MR. CHAIRMAN: Your point is well taken. Hon. members of the committee, the Chair for many days now has advised all members to be relevant to the section before us. Strict relevance must be adhered to. It is in our standing orders, and we must follow our standing orders. Section 9 clearly deals with public-sector employees, the compensation stabilization program and public-sector employers. I would ask all members of the committee not to stray from the strict relevancy of that section before us. We cannot discuss programs in this section.

MRS. WALLACE: I agree that we are discussing the guidelines that impose the restraint program on the public sector employers and the public-sector employees. I am quoting again from the Minister of Education: "The provincial government, in deciding to impose a restraint program on the whole public sector, was well aware of the implications of such actions on social programs and on the personnel who work within them." I am suggesting that if the cabinet was well aware of the implications, they must then have been aware that hospitals would find themselves in the position they are in. They must have been aware that, for example, the Nanaimo Regional Hospital would have to close its rehabilitation wing. That particular wing has been evaluated as one of the best in the northwest with the exception, possibly, of one in Washington.

HON. MR. CURTIS: I rise on a point of order. The question of health care, the availability of a health system and the adequacy of government's ability to fund a health system must be of concern to any thinking person in this House or in the province of British Columbia. I have great difficulty, however, relating that highly emotionally-charged issue to section 9 of Bill 28. That is not to ignore the topic, but I cannot see how — as has been observed by others who have intervened on points of order — it relates to one section of a bill of more than 30 sections which has been debated in second reading.

MR. CHAIRMAN: Once again the Chair must comment that the point of order raised by the Minister of Finance is relevant to our standing order 61: "Speeches in Committee of the Whole House must be strictly relevant to the item or clause under consideration." The Chair so rules and would ask all members of the committee to make speeches strictly relevant. Further, I would refer all members of the committee to standing order 43, which states:

"Mr. Speaker, or the Chairman, after having called the attention of the House, or of the committee, to the conduct of a member, who persists in irrelevance, or tedious repetition, either of his own arguments or of the arguments used by other members in debate, may direct him to discontinue the speech, and if the member still continues to speak, Mr. Speaker shall name him, or if in Committee, the Chairman shall report him to the House."

Those are our standing orders. They must be enforced and followed.

MRS. WALLACE: Your ruling leaves me in a bit of a quandary, because it seems to me that when you are talking about the whole, any part of that whole must be considered as relevant. We are talking about the whole here — the public sector. Certainly hospital employers and hospital employees are part of the public sector. I certainly don't wish to offend you, Mr. Chairman, or the rules of the House, and I wonder whether or not the Minister of Finance would be good enough to advise me whether or not he concurs with the Minister of Education when he says that in deciding to impose the restraint program on the whole public sector the provincial government was well aware of the implications of such actions for social programs and the personnel who work within them. Does the minister concur with this statement of the Minister of Education? Were you well aware of this, Mr. Minister?

HON. MR. CURTIS: I've not seen that particular letter, but a restraint program, by the very nature of the necessity of the program, will clearly affect a variety of programs within a province such as British Columbia. Regarding the references made to social programs, I can only assume that the correspondent dealt with social programs. Of course I concur with the letter.

MR. CHAIRMAN: I will advise the minister, too, that we are on compensation guidelines. That is the essence of this section. If we could please remain strictly relevant, the committee would be well served.

MRS. WALLACE: My understanding is that the guidelines are proposed to establish the restraint program. Is that not correct, Mr. Chairman? Is that not what we're talking about — guidelines for the restraint program?

MR. CHAIRMAN: Specifically on section 9, hon. members of the committee, we are discussing guidelines with respect to compensation plans for public-sector employers and employees.

MRS. WALLACE: We're talking about guidelines for compensation for public employees and employers. Hospitals are public employers. Hospital workers. Including nurses, are public employees. The minister has agreed that they were aware of the implications of this program of, to quote the bill exactly, "compensation stabilization guidelines to stabilize the compensation plans of the public-sector employers and public-sector employees."

Would the minister agree that health care is a social program as established, that will be affected by these guidelines? He's agreed that the cabinet has discussed that. Will he agree that health care is a social program, and was discussed by his cabinet when they were considering this, and that they were aware that these guidelines would have an effect on health care? If they were aware that social programs would be affected, then they must have been aware that health care would have been affected. Surely they couldn't have

[ Page 7664 ]

been aware of how badly it would be affected, or they wouldn't have moved in this direction.

What I am trying to do, Mr. Chairman, is point out the effect of this program and these guidelines on the public sector — employer and employee, including hospitals and hospital workers. They are having a terribly drastic effect on our health care. I'm asking the minister to reconsider what he's doing here, to back off a bit and take a second look, to ensure that hospital beds are not closed down and health-care workers are not laid off. As long as we have this particular section and these guidelines before us, that's the situation we're faced with. The minister keeps saying that that isn't it and that that's just one part of it. But that's the part I'm concerned about. That's the part I want to talk about in this House, because that's the part that's concerning citizens all over this province. Until we can establish, once and for all, that the minister is prepared to back off on this, we're going to be in this situation. We can't get any response.

I'm certainly concerned. I started to tell you about the closing of the rehab wing in a Nanaimo hospital. I know you called me to order on that, Mr. Chairman, but I'm concerned because a constituent of mine was injured in an ICBC motor vehicle accident and has no place to go. That's the kind of thing that's happening as a result of these guidelines. That's the kind of thing I'm concerned about. Those are the concerns facing the citizens of British Columbia. That's why we have been so determined to continue this discussion until we know exactly where this government is going.

As I mentioned earlier, there has been a tremendous confusion as to just what we are doing — whether we have a restraint program as set out by the Premier and as set out by this minister or whether we have a restraint program that is going to accomplish nothing, really, except to allow the cabinet, through executive decision, without an order-in-council, to change the goalposts, to change the rules and to completely destroy the arbitration system in British Columbia. Certainly much has been said about that, relative to all aspects and particularly to the health situation, where there is an arbitrator presently sitting.

HON. MR. CURTIS: On a point of order, Mr. Chairman, may I refer the member to section 29, which has not yet been dealt with in committee. It deals with arbitration awards.

MR. CHAIRMAN: The point of order is well taken. The member continues on section 9, remembering that we cannot discuss an item until it has been brought before the committee.

MRS. WALLACE: Yes, Mr. Chairman, we are on section 9. We're dealing with guidelines, and we don't know what those guidelines are. The minister tells us that there are going to be set guidelines and that there is going to be an arbitrator who is going to have the authority to roll back any settlements that don't stay within those guidelines. Then the Premier tells us that that's not really the way it is, that they don't have to be within those guidelines and that even if they are within those guidelines they can still be changed. He sort of indicates that they'll just bypass that arbitrator. He is a very expensive man — $325 a day — but they'll just bypass him. I think it was a public servant who talked about calling the House into session. I don't know if he was aware that we were already in session or not, but there is no need for that under this particular bill and section. The guidelines can be set at anything.

The executive council has the power to change the goalposts and bring in whatever they like. Certainly that's a major concern to the people who work on our various social programs. That includes the school boards, the municipalities and the hospitals.

There has been a great attempt to keep us from talking about hospitals, but hospitals are the issue. They are the major concern of most people around this province, and we want to ensure they are not included when we talk about the cabinet being well aware of the implications of such actions on social programs.

I guess we are getting a few answers from the minister but they are very strange answers. If you check Hansard, most of the comments the minister makes are simply calling us to order and wanting us to be completely relevant. We have had it many times, not just myself but many members on this side of the House. The minister has not liked us to pursue this particular aspect of this piece of legislation. I submit to you, Mr. Chairman, that any part of the whole is relevant, and certainly hospitals and hospital care are part of the whole public sector, both employer and employee. As such, certainly this section 9 relates to the situation that we have in hospitals in British Columbia today.

MR. HANSON: As I rise in my place to refer to section 9 of this bill, I can't help thinking that it may be best described as Kafkaesque. As you are aware, Mr. Chairman, in the famous Franz Kafka novel The Trial, Joseph K. has been charged, but he doesn't know what the charge is and he doesn't know what he's to be tried for. He doesn't know who the judge is. He doesn't know how far to jump safely or be pushed.

That's what this bill is: it's Kafkaesque. The people of the province are on trial. They don't know how far to jump safely or be pushed. It's not just the public sector that's on trial either. The people who use the hospitals, the people who want to go into the hospitals for elective surgery: that is what these guidelines in this bill are all about. It's the Kafkaesque approach of the government trying to create confusion for their own political purposes.

Let me just briefly cast your mind back to these guidelines in section 9. When the government was in trouble over dirty tricks, what was the first thing that happened? They proposed a tunnel under the Strait of Georgia to the mainland. No one wanted it, no one asked for it, but it came as a diversionary, Kafkaesque tactic. It was described as the world's longest exhaust-pipe.

MR. CHAIRMAN: Hon. member, we are on section 9, which deals with the compensation guidelines for public sector employers and public-sector employees. Please, we have to be strictly relevant. The Chair advises the hon. member that standing order 61 is in place for a very good reason: it's to make speeches in Committee of the Whole House strictly relevant.

MR. HANSON: Thank you, Mr. Chairman. What I'm trying to point out to the members opposite is that in the famous Franz Kafka book The Trial, Joseph K. didn't know how far to jump safely or be pushed. He didn't know what the charge was, and the people of the province don't know what the charge is here. They don't know what the guidelines are. They don't know in what direction to jump, or how high; up,

[ Page 7665 ]

down, east, west, north, south, or how far. Where is the precipice?

It's Kafkaesque, Mr. Chairman. It's Kafkaesque because of that vague, amorphous bureaucracy. We start with an agency of government called GERB, which is established to do a particular job. In the budget estimates in front of us is the vote for the appropriation for that arm of government, which does the negotiations for the people of the province. The cost of that particular operation is $14.5 million and 79 employees. This bill before us and that particular clause establishes a second bureaucracy but, when the Minister of Finance stood in his place, he said: "Don't be afraid. We're not setting up another bureaucracy." It is already $882,000. When Mr. Peck was a mediator before, he was getting something in the order of $600 a day, but he wasn't working every day. He is going to be on $325 a day. This is strictly relevant, Mr. Chairman.

MR. CHAIRMAN: Hon. member, the commissioner is mentioned in previous sections and in following sections, but he is not mentioned in this section.

MR. HANSON: It is strictly relevant because the administrator will be dealing with those amorphous guidelines that we can't get any boundaries on. They have no shape and no boundary, They are Kafkaesque.

As I was pointing out, the Government Employee Relations Bureau was established with 79 employees and a $14.5 million budget. They were rendered virtually impotent by the establishment of this new bureaucracy. They have $882,000 at their disposal, but in addition to the commissioner there are two clerks at $1,197 a month, a stenographer at $1,529 a month, a senior executive secretary at $1,900 a month and a secretary to the commission at $4,844 a month. They have appointed two mediators and these mediators don't come cheap, you know.

MR. CHAIRMAN: Hon. member, once again the item you are discussing would have been better discussed under section 7, dealing with the commissioner and the appointments. I so rule. Would you please discuss section 9.

MR. HANSON: To illustrate, these guidelines are Kafkaesque and amorphous in that they don't provide the boundaries. They argue that there will not be a bureaucracy, but of course there is. These mediators at $60,000 or $70,000 a year plus all the support services and ancillary services will render these guidelines.... This bureaucracy will have its own momentum. It will grow the size of GERB and we'll have two GERBs.

The reason I say it is Kafkaesque is that the guidelines originally proposed by the Premier on February 18 — the famous 8, 10, 12, etc.... Then later on we hear the Premier state that the bill before us does not necessarily encompass those 8, 10 and 12 percent guidelines, that it really is a flexible ceiling and it could be 5 percent or less.

Meanwhile, out in the community, while this debate is going on, is a destabilizing process that is happening in our social services, our health-care services and our educational services. Beds are closing. Phones are ringing all over this province to booking clerks at all the hospitals to find out about the cataract operation or the hernia operation. These are strictly relevant to the guidelines, Mr. Chairman.

MR. CHAIRMAN: Hon. member, we're dealing with compensation plans of the public-sector employees and employers. That does not include programs. It's the compensation factor and the guidelines.

MR. HANSON: Mr. Chairman, my line of argument, I would submit to you, is relevant in that these positions, as they are being filled — Mr. Ready, Mr. Lein and so on — are being set in excess of the guidelines presently before the House.

MR. CHAIRMAN: That would have been relevant debate under section 7, which is now passed.

MR. HANSON: Mr. Chairman, the guidelines of the bill are to clearly enunciate the public employees. The public employees covered under those guidelines — the appointed people; Mr. Ready, the clerical people and so on — are clearly being put in a position of Joseph K. They don't know whether they're in these guidelines or not. They don't know whether they fall in the 8 10 or 12. I ask the minister: do Mr. Peck, the clerical support, Mr. Ready, and Mr. Lein fall under the guidelines?

HON. MR. CURTIS: In answer to the hon. second member for Victoria, it is my understanding that the individuals named have been engaged at a particular salary. One can assume that their salaries, along with other senior official salaries, are frozen at the level.

MR. HANSON: I thank the minister for his answer. Would he tell the House what the guidelines are for Mr. Peck and Mr. Ready for the two-year program? Would he give us the figures?

HON. MR. CURTIS: Mr. Chairman, I've answered the question. The salaries are frozen, period. There will be, in relatively short order. a decision reached with respect to all senior officials, including those named by the member in his question. But the guidelines, as they are in section 9, do not apply, because the salaries in this instance are frozen, as is the case with deputy ministers. assistant deputy ministers and a number of officials throughout the government. I've answered the question once. The question of guidelines would not apply to those individuals who have been named. That is not to say that they are somehow exempt. On the contrary, their salaries are frozen.

MR. HANSON: The minister's response characterizes the line of argument that I'm making, that this section of the bill is Kafkaesque. Here we have Mr. Peck and his clerical support group, which is growing daily, and the mediators — they'll have to have backup support and so on — whose salaries are frozen as of now, but we're debating guidelines. Over the two-year duration of this bill, what will be the guidelines in terms of remuneration will apply to these support people?

Responsibility for the longevity of this debate lies solely with the Minister of Finance. If he were candid with the House, if he would indicate to us what the boundaries are.... What is the paradigm? Where can you jump safely? That is what we're trying to ascertain. We don't know in what direction. how high, how long. He's doing a great disservice not only to the public sector but also to all those

[ Page 7666 ]

people waiting for elective surgery, for special services for their children in school, for all those special services that are in disarray as a result of section 9 of this bill.

The Premier created the confusion by stating in the hall that there's a flexible ceiling, a good possibility of 5 percent or less, and then a senior government official indicating that no matter what this second bureaucracy does, no matter what Mr. Peck, Mr. Ready and Mr. Lein do, those awards and settlements could be subject to an arbitrary rollback by new legislation empowering the cabinet to do that, or by just the cabinet authority as it presently exists.

The people in relation to this bill are Joseph K. They don't know where to turn. They don't know where the safe ground is. People are willing to act responsibly and to bargain in good faith, which is the tradition of our province. It's served us well. The mere fact that the government employees of this province settled for 8, 8 and 8 over the last three years is surely a gesture that they're capable of bargaining in good faith, and responsibly, within the financial conditions of our province. It's Kafkaesque. While the government creates this confusion, we have the situation at the Jubilee Hospital, the Juan de Fuca Hospitals, in our school system, local police and fire — all wondering where the safe ground is.

The interpretation section of the act indicates to whom the guidelines in section 9 apply: the government; a corporation or an unincorporated board, commission council, bureau, authority or similar body that has, on its board of management or board of directors, a majority of members who are appointed by an act, a minister or the Lieutenant-Governor-in-Council, or employees appointed under the Public Service Act; a municipality, including a municipality, a regional district, and an improvement district as defined in the Municipal Act; a board of school trustees as defined in the School Act; a university as defined in the University Act; an institution as defined in the College and Institute Act; a community care facility as defined in the Community Care Facility Act which receives funds from another public-sector employer; a hospital as defined in the Hospital Act or the Hospital Insurance Act which receives funds from another public-sector employer; and an employer designated in the schedule.

Mr. Chairman, section 9 referring to guidelines refers to all of those agencies, all of those groups, so surely references to health, education, community care, university, municipalities, etc. must be relevant. The guidelines apply to those bodies.

MR. CHAIRMAN: The Chair recognizes the member's point with respect to relevancy. However, we must again remind the committee that we are dealing with the compensation package under section 9.

MR. HANSON: Mr. Chairman, I'm trying to point out that section 9 is Kafkaesque, that the behaviour of the government is Kafkaesque. It is strictly relevant because it applies to that broad range of public-sector employers as outlined in the interpretation section of this act. So all of those references are strictly in order, Mr. Chairman. The guidelines don't tell us, the people of the province or any of those public-sector employers where the safe ground is. They don't know where or in what direction to jump safely. We've heard 8, 10 and 12. We've heard 5 percent or less. We've heard flexible ceiling. We've heard rollbacks of arbitrated awards. It's the rubber room, Mr. Chairman.

The bureaucracy is being voted on in another vote: $14.5 million for the Government Employee Relations Bureau, with 79 employees to do the job, as outlined in the estimates. A second bureaucracy is set up to administer the guidelines. Those guidelines are amorphous and Kafkaesque. You've put the people of the province, the government, in the position of Joseph K. All those public-sector employers are Joseph K. They don't know what they're charged with; they don't know whether they're remanded; they don't know whether to go to Oakalla — the new Oakalla, the old Oakalla. And while these destabilizing, confusing games are taking place, beds are closing, teachers are being laid off, nurses are being laid off and those elective surgery lists are getting longer and longer every hour.

MR. CHAIRMAN: Order, please.

MR. HANSON: Mr. Chairman, these guidelines have a direct relevancy to all the people waiting for elective surgery.

MR. CHAIRMAN: Hon. member, the Chair cannot accept that answer under standing order 61. It is not relevant. I so rule. We are discussing the stabilization guidelines, the compensation plans. We cannot discuss programs. We are on section 9.

MR. HANSON: One of the agencies of government that the act applies to is a hospital, as defined in the Hospital Act or the Hospital Insurance Act, which receives funds from another public-sector employer. The guidelines apply to a hospital as defined under the Hospital Act. How can that not be relevant? The elective surgery wait for general surgery is 14 months. The guidelines of section 9 may determine that that is a year and a half or two years. We see it every day as reports come from the hospitals. In section 9 of this act the compensation guidelines are going to determine how long the wait for elective surgery is. It is relevant. It is an employer under this bill. It comes under these guidelines, and we are trying to find out from this minister what the guidelines are. Where is the safe ground? Is it 8, 10, 12, 5 percent or less, flexible ceiling, rollback of an arbitrated award, GERB, Mr. Peck?

I would like to ask the minister: what will Mr. Vince Ready's salary be after one year's employment in his present position? What will be the percentage increase of his position? You said his salary is frozen and there is going to be a separate managerial compensation guideline scheme. Could you clarify that point for me, please?

HON. MR. CURTIS: Mr. Chairman, whether we are discussing one individual in the office of the commissioner or whether we are discussing a number of senior officials, I cannot relate that to section 9. It might have been more appropriate under an earlier section, but I cannot relate that to the section presently before the committee.

MR. CHAIRMAN: The minister makes a good point: we cannot discuss a section which has been passed. Also I'd remind all hon. members for the second time in committee today of standing order 43, which states:

"Mr. Speaker, or the Chairman, after having called the attention of the House, or of the Committee,

[ Page 7667 ]

to the conduct of a member, who persists in irrelevance, or tedious repetition, either of his own arguments or of the arguments used by other members in debate, may direct him to discontinue his speech, and if the member still continues to speak, Mr. Speaker shall name him, or, if in Committee, the Chairman shall report him to the House."

I'm sure all members are aware of that.

MR. HANSON: Mr. Chairman, I've been endeavouring in my remarks to find answers from the Minister of Finance so that when my constituents, whether they're in the public sector or whether they're wanting a service provided by the public sector — whether it's hospital care or education — will know where the safe ground is, that they will be able to jump safely. The minister stated that people will jump safely or be pushed. He has not advised the House in what direction they must jump, how far is the precipice, whether it's up or down, in what direction. As a result of his lack of candour with his colleagues of this Legislature, there is total disarray and confusion in social services throughout this province. Mr. Chairman, I move the committee rise, report progress and ask leave to sit again.

Motion negatived.

MR. HANSON: Mr. Chairman, I've tried to indicate in my remarks that I think that the references to hospitals and the conditions of hospitals have direct relevance in this debate because they are employers under these guidelines.

MR. CHAIRMAN: Hon. member, trying to show cause and effect could cause us in this section to discuss the entire estimates of the cabinet. We must remain strictly relevant. The hon. member is aware of that. He's also aware of standing order 61 and standing order 43, which has just been read. If we can return to the compensation stabilization guidelines, the committee will be well served.

MR. HANSON: Mr. Chairman, we can't possibly vote for something when we don't know where the boundaries are. We don't know what the paradigm is; we don't know where the safe ground is. A blank cheque is being asked for.

Mr. Chairman, we don't like these guidelines of section 9, because it's more centralizing into the hands of this cabinet. They're doing it in all aspects of government. No other legislature would possibly produce a bill that indicated wage guidelines that weren't stipulated in the bill. In addition, when the Premier stated outside the House that the guidelines, as amorphous as they are in the language of this clause, may not have any relevancy anyway, because they could be rolled back by arbitration or by cabinet — they don't have any floor; it's a flexible ceiling — he created confusion. They have mismanaged the economy dreadfully, and are punishing people in the hospitals and in all social services throughout this province,

MR. HOWARD: I just want to ask a question. Can the minister explain to the committee what the word "compensation" means — what's included in that?

HON. MR. CURTIS: Mr. Chairman, I would refer the member to remarks in second reading. I would refer him to a variety of material which has been produced and distributed on this subject since February 18. The answer is a matter of public record.

MR. HANSON: Following on the same question as that of the MLA from Skeena, does the term "compensation" refer to the total benefit package?

HON. MR. CURTIS: In order to understand this bill, the members need only refer to second reading remarks, to compensation bulletins numbers 1, 2 and 3 which have been issued, and other material which has been prepared and distributed on this topic. It is available for all to see.

The House resumed; Mr. Speaker in the chair.

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

Hon. Mr. Gardom moved adjournment of the House.

Motion approved.

The House adjourned at 5:57 p.m.