[ Page 2271 ]

CONTENTS

Routine Proceedings

Provincial Treasury Financing Amendment Act, 1983 (Bill 28). Second reading.

Hon. Mr. Curtis –– 2271

Mr. Stupich –– 2272

Hon. Mr. Curtis –– 2274

Miscellaneous Statutes Amendment Act, 1983 (Bill 35). Second reading.

Hon. Mr. Gardom –– 2274

Mr. Cocke –– 2274

Hon. Mr. Gardom –– 2274

Institute of Technology Amendment Act, 1983 (Bill 19). Second reading.

Mr. Cocke –– 2274

Hon. Mr. Heinrich –– 2275

Division –– 2276

Property Tax Reform Act (No –– 1), 1983 (Bill 7). Report.

Third reading –– 2276

Property Tax Reform Act (No –– 2), 1983 (Bill 12). Report.

Third reading –– 2276

Assessment Amendment Act, 1983 (Bill 22). Second reading.

Mr. Lea –– 2276

Mr. Mitchell –– 2276

Hon. Mr. Curtis –– 2276

Social Service Tax Amendment Act, 1983 (Bill 15). Second reading.

Hon. Mr. Curtis –– 2278

Mr. Stupich –– 2280

Tabling Documents.

Statement of government borrowings.

Hon. Mr. Curtis –– 2287

FRIDAY, SEPTEMBER 30, 1983

The House met at 10:06 a.m.

Prayers.

HON. MR. GARDOM: Mr. Speaker, I'm delighted to announce to our members that we have in our galleries today Mr. William J. Jenkins, Canadian ambassador designate to the Organization for Economic Cooperation and Development. I'm sure all members would like to pay our respects to him and bid him a most cordial welcome.

Orders of the Day

HON. MR. GARDOM: Leave to proceed to public bills and orders.

Leave granted.

HON. MR. GARDOM: Mr. Speaker, second reading of Bill 28.

PROVINCIAL TREASURY FINANCING
AMENDMENT ACT, 1983

HON. MR. CURTIS: Mr. Speaker, I rise to move second reading of Bill 28 –– I think most members of this Legislature will know that historically, provincial government corporations have met their capital requirements through long-term borrowing from funds for which the government of British Columbia is trustee. In recent years, quite deliberately, this practice has been curtailed because the investment policy for trusteed funds has emphasized market return. I might say that that was one of the decisions which I took very early on upon assuming this portfolio, in order to be completely fair to those who had entrusted their funds to us through pension plans and similar instruments. So the result has been fewer funds available for long-term investments.

Consequently, government corporations have had to increase their use of external markets in order to obtain the capital investment funds they require. Government corporations' use of external capital markets has also increased in response to the growth during the last several years in the amount of capital they require. Economic and population growth combined have intensified the demand on the province's schools, hospitals, utilities and transportation systems, requiring, understandably, an extension of capital programs. In addition, in 1981-82 capital expenditure on economic development projects was increased both to support employment and income levels during the recession, and to provide a broader base for economic recovery.

As a result, the heightened presence of provincial government corporations in external capital markets has required the province to adopt a more unified approach to borrowing in order to ensure that capital requirements can be met at the least possible cost to the government corporations, and more importantly, to the consumers of their services, whatever they may be.

The government has moved a considerable distance toward achieving unification of borrowing programs, with agreements contained in a variety of memoranda of understanding between the Minister of Finance as fiscal agent and each government corporation. These memoranda clearly define the role of the fiscal agent in coordinating, negotiating and documenting capital financings on behalf of the corporations. Placing responsibility for these functions with one agency has improved the effectiveness and the efficiency of borrowing in these external markets. I'm sure, Mr. Speaker, members will know that when I speak of external markets, I mean other than those over which the province has control, not necessarily external to our country.

The provincial treasury financing act will further improve our performance in this regard.

Presently, the Financial Administration Act restricts the government from borrowing, except for the purposes of covering an anticipated shortfall in the consolidated revenue fund, or for cash management purposes as set out in sections 41 to 44 inclusive of the FAA. In this legislation, I propose to extend the context of the Financial Administration Act so that the provincial government is allowed to borrow on behalf of the government's corporations, subject to their authorization and, of course, subject to the approval of the Lieutenant-Governor-in-Council as presently required.

[10:15]

Essentially, the new procedure will allow the province itself to enter capital markets on behalf of government corporations and issue in its well-known and widely respected name. We are confident that this can be done on behalf of the corporations concerned — those which would participate at any given time — at lower rates of interest and under better terms than they could possibly hope to achieve independently. The interest savings would then be passed along to the government corporations. Since the province currently guarantees all government corporation borrowing, this procedure will be of no additional cost to the province itself, and it will provide the participating corporations with lower-cost funds.

At present, government corporations benefit only indirectly from the province's name in the marketplace, since a corporation will enter a public market in its own name with the debt guaranteed by the province. Most of these corporations borrow infrequently or they borrow relatively small amounts, and it is quite possible that they will find it difficult to attract investors, simply because the name of the corporation, unlike the name of the province, is not familiar to the potential investor. In the absence of a unified issuer, these infrequent borrowers, notwithstanding the soundness of their operations and their credit, would have to continue to borrow at higher rates of interest than would the province on their behalf. In addition, a unified issuer implies that all the debt of government corporations will be in the name of British Columbia. Quite clearly, investors find this appealing, as it increases the liquidity of their investment. Since the introduction in July of Bill 28, notwithstanding that it has simply been on the order paper, it has been examined by investors and by capital market managers and it has met with very favourable reaction in those communities.

The act will also markedly increase the negotiating strength of each government corporation. As more provincial government corporations are required to enter capital markets, the unified provincial issuer will accomplish the same best performance in every transaction, rather than in particular instances. I think there are many advantages to presenting a united front to the national and international capital markets. Again, it is, I'm sure, very well known that placement ability is complicated by market factors.

We are aware that financial markets have been extremely volatile in recent years. There's no suggestion that that's going to change in the foreseeable future. The ability to time

[ Page 2272 ]

the placement of a debt issue to obtain the best possible interest rate has therefore become extremely important. Investor interest does not always match the demand of the borrower. As a result, in order to achieve the best financing, borrowers must be prepared to go to the market to borrow funds when market conditions are favourable, rather than when they, the borrower, would prefer to borrow. So with the provincial treasury financing act and its several consequential amendments dealing with a number of corporations, the province will have maximum flexibility to take advantage of favourable market opportunities. It will be able to put the necessary authorizations in place quickly and to have documents in standardized form so as to take advantage of market opportunities as soon as they arise — to do so quickly, as I said, and also to do so efficiently.

It can also, with passage of this act, borrow for numerous corporations simultaneously when rates are relatively low, so that maximum advantage can be taken of a particular favourable market situation.

The consequential amendments to government corporation acts will considerably streamline and simplify borrowing. Although some of the amendments may appear to be minor changes to the acts, they've all been proposed because they will provide significant benefit in the process of borrowing. For example, the ability to use mechanically reproduced signatures on documentation eliminates the need for a senior official of a government corporation to incur unnecessary expense and time by manually signing documents pertaining to a borrowing.

The consequential amendments maintain the current balance of authority between the government and its corporations and — I think this is most important to stress — they preserve the internal decision-making by the corporation or corporations concerned. Moreover, the provincial treasury financing act does not affect the ability of a government corporation to issue debt in its own name where this strategy is warranted. B.C. Hydro, for example, as members on both sides of the House will know, has established a very significant and favourable market presence of its own in Canada, in the United States and in European capital markets.

Finally, Mr. Speaker, the structure that we propose in Bill 28 is one that facilitates accountability to the public. The use of borrowing proceeds by the government itself and by its corporations will continue to be contingent on the approval of the Lieutenant-Governor-in-Council, with subsequent, quick, full public disclosure of the terms and conditions of each transaction. Funds borrowed for government corporations will be held as a special fund set aside to meet the requirements of the corporations and clearly could not be used for the general purposes of the government. I want to emphasize that point.

I'm sure that upon careful scrutiny of the act it will be seen that we are proposing a very high degree of accountability to the public and disclosure to this Legislature, and therefore to the public.

I believe that the measures contained in the act deserve to be fully and favourably considered by the members of this House. I've indicated that they have met with favourable response by financial communities with which the province and its corporations have contact, by investors and especially by the people of the province. It is considered to be a progressive and beneficial statute that will further enhance the financial management of the province.

Mr. Speaker, I now move second reading of Bill 28.

MR. STUPICH: At the risk of having the government move a six-month hoist on its own legislation, may I say that the opposition will support the government in this legislation.

SOME HON. MEMBERS: Hear, hear!

HON. MR. CURTIS: However...?

MR. STUPICH: Well, however, I have a few remarks to make, yes, Mr. Speaker.

Interjections.

MR. STUPICH: I would like equal time. I'm not sure how long the minister spoke, and at this moment I don't know how long I'm going to speak. But we'll see; we'll both find out shortly.

May I say that this government has been in office for just over seven and three-quarter years now. Had the first Minister of Finance of the second Social Credit administration brought in this kind of legislation in early 1976, we would not have supported it. But the situation has changed markedly by late 1983. Everything has become bigger, of course, in B.C. in the last almost eight years. The biggest business of all for government is borrowing money. This party was elected on a pay-as-you-go basis — that was one of their arguments used in 1975 and in 1974 when they were campaigning against the NDP administration. They were talking very much about pay-as-you-go, and they have been talking about it ever since. That's the words. But by deeds, borrowing has become the single biggest activity of this administration.

I can agree with everything the minister said about it all making sense, it all making it much more efficient. There's no question about that. The auditor-general has been complaining for some time about the way in which our accounts do not reflect as government debt the so-called contingent liabilities that I used to argue about back in the 1960s, when I was first elected. At the time I can recall arguing with the then Minister of Finance — arguing, discussing, debating in the House, if you like, whatever.... The position I took then was that the debts of the school boards, for example, were really a debt of the province. The province was committed to make the payments on them — at least a large portion of the payments, which varied from school district to school district. But for the government of British Columbia to pretend that it had no debt, that all it had was a guarantee to make sure that the school districts actually met their payments when they came due, when in fact the school districts depended to quite an extent upon getting grants from the provincial government to meet these debt services, was ignoring the obvious: that is, in fact, that all of these contingent liabilities really were a debt of the people of the province of British Columbia and should have been reflected in the government accounting.

The mechanism for borrowing and the importance of getting the best rates in all the capital markets.... As the minister said, B.C. Hydro has become a very important capital market itself, and the latest budget speech shows that by the end of March 1983 — and it has done some borrowing since — the gross debt of B.C. Hydro was almost $8 billion. That is a significant amount of money, even in terms of 1983 dollars. It is a significant capital market in itself. There can be no argument about that. When you add up all the debts of all

[ Page 2273 ]

of the Crown corporations, including the government, which now is becoming a larger and larger borrowing agent in itself, and you read in the budget that by the end of the fiscal year 1983 the total direct and guaranteed debt we are talking about is $13.3 billion, then it is important on behalf of all of us that this be administered in the best way possible and that whatever entity is actually doing the borrowing, the people of British Columbia are responsible for making the payments, and we should get the best deal that we can get.

While it was not important in 1972, when we assumed office, it was not even important when we left office at the end of 1975, because we were talking about much smaller figures then, Mr. Speaker. You will recall that in the first 104-year history of the province, by the end of 1975 when the NDP administration left office, the total gross guaranteed debt of the province — contingent liabilities, everything that the province was responsible for — was something less than $4 billion. Yet by the end of this year it is going to be in excess of $14 billion. In the relatively short period of seven and three-quarter years, we have gone from a debt that.... It took us 104 years to get up to something less than $4 billion; in the next seven and three-quarter years we have added something like $10 billion to that total. As I say, borrowing money has been the most time-consuming exercise on the part of the Social Credit pay-as-you-go administration ever since it was first elected in 1976.

It is not just that they borrowed money, but they started in 1976 by selling off assets to finance their profligate spending. You will recall that in 1976 they sold off three ferries that had just been built. Three brand-new ferries that had just been delivered to the government were sold. You will recall that they established one Crown corporation and turned over to it all of the public buildings in the province, with the exception of the one in which we are meeting today. That isn't in hock, but the others all are. Money has been borrowed on all of them. So quite apart from the direct borrowing by government, in the direct borrowing by Crown corporations we have gone one step further. The debt with respect to the ferries, which we sold — which itself is a debt.... We are committed to buying them back. We have signed a contract. We are going to buy them back over a period of 18 years, so that really also should be included in these totals of the debt that we are talking about.

The administration certainly has been innovative in finding new ways to borrow money, in establishing new entities under which money could be borrowed. Looking at the legislation before us now, Section 1 refers to the B.C. Buildings Corporation Act amendment, but the B.C. Buildings Corporation was a new Crown corporation established by this administration for the purpose of borrowing money — money that would not be reflected in direct government debt but would be reflected in that Crown corporation debt. Now, at last, we are saying: "Yes, this truly is a debt. It is part of our total gross debt and should be included as such." When we do borrow, B.C. Buildings Corporation should get the advantage of the fact that it is all in one pool and the government is managing its debts as best it can.

In the British Columbia Place Act amendment is another corporation that was established by the present administration so that it could borrow money and not call it direct government debt. The British Columbia Transit Act is another one, in section 5. As I read down the list, every one of them so far has been a new corporation established by this pay-as-you-go Social Credit administration with the idea of borrowing money and not admitting it was borrowing money. The Development Corporation was established, was in place, was serving the people of British Columbia, before this present government took office in 1975. Expo 86 Corporation is another new one. That is four so far, Mr. Speaker. The Ferry Corporation is another new one; that is five, because the Ferry Corporation was financed out of public accounts when this government took office in December 1975.

[10:30]

The Financial Administration Act of itself is not a corporation to borrow money, but it is managing the finances of the province much more efficiently than they were ever managed before. I believe they took some advice that we had commissioned when we were in office — a report that was delivered after the government changed hands, a report about which we have asked questions ever since the present government took office. We have never yet seen a copy of that report. When we do get to estimates I am going to ask the minister again: would it not be possible for the public to see copies of the report that was commissioned by the NDP administration and delivered to the Social Credit administration somewhere about the middle of 1976? It was a report on the financial administration of the province. It was done in cooperation with the credit unions, and it was done partly with a view to setting up the B.C. Savings and Trust Corporation. That report has been denied us and has been kept secret, but I believe a lot of the information in that report was used in developing the Financial Administration Act.

There is one interesting heading in here: "Failure to borrow." One might think from that, Mr. Speaker, that in the event that somebody is instructed to borrow and doesn't borrow, they are going to be fined $2,000 each, but as you read it through, that indeed isn't....

But then it does get to the System Act, and that is another corporation that was established by the administration for the express purpose of borrowing money and not admitting that the government was really borrowing it. I think the government is a bit embarrassed about what has happened. In seven and three-quarter years this pay-as-you-go party has expanded the debt of the province by some 260 percent — a debt that had been accumulated over a period of 104 years. In the next seven and a half years they expanded it by some 260 percent, from less than $4 billion to something like $14 billion. But at least now they are admitting it publicly. They are saying this is all public debt. "We are going to handle it. We are going to administer it properly from here on."

Since we can't do anything about that debt today, I think there should be some long-range plan to try to reduce that debt, but that's certainly not a topic for 1983. But in that it is cleaning up the act and admitting what I might call sins of the past, when we have tried to hide this information and tried to deny the truth.... Since we are, as I say, cleaning up our act, the opposition will support this bill.

MR. KEMPF: Mr. Speaker, I seek leave to make an introduction.

Leave granted.

MR. KEMPF: Mr. Speaker, those members who sat in the last parliament will not soon forget the great Rozek debate that we had in this House. Certainly the last Minister of Lands, Parks and Housing will not forget that debate. With us this morning in the gallery are two young people who are

[ Page 2274 ]

attempting, with their family, regardless of the inequities of the agricultural land lease policy of this province, to carve a future from the wilderness 100-plus miles southwest of Vanderhoof. I would ask this House to join with me in welcoming Mr. David and Mrs. Jane Rozek.

HON. MR. CURTIS: Mr. Speaker, with respect to Bill 28, I want to thank the hon. member for Nanaimo for his constructive comments. I think it indicates that on many issues we disagree strenuously and at length and at all times of the morning, afternoon and evening, but occasionally it is recognized that a particular course of action is appropriate to be taken.

The member identified some of the corporations which will benefit. When I speak of the corporations, I am really speaking of the taxpayer. The corporations which have capital requirements — among others British Columbia Railway, British Columbia Development Corporation, B.C. Transit, the Ferry Corporation, referred to by the member, the British Columbia Buildings Corporation....

I think one of my key points which I attempted to identify in the opening remarks was that a single issue of, say, $150 million or $200 million is going to be far more beneficial than attempting to take one corporation for its particular share. So a large issue or a medium-sized issue of that magnitude might well be multi-faceted. It might designate $20 million to one corporation, $35 million to another, $20 million to another, and so on — a portion, therefore, distributed among two or three or more entities. Clearly there are instances where, with the capital requirements of one corporation, with all the documentation that is required, with the legal costs and associated service costs, it would be very expensive to take that one corporation to the Canadian market for $15 million or $20 million. Indeed it would be expensive. It would be a difficult issue to place. But by combining three or more or five or more issuers, all the associated costs are significantly reduced.

The member referred to the section which deals with failure to borrow, the penalty, and we can deal with that in committee.

I want to say again that we've had, in developing this.... Starting first of all with the fiscal agency agreements, with several Crown corporations — the Crown corporations which are dealt with here — we've had terrific support and cooperation. The fiscal agency agreement was the first step. This is the second and clearly logical step. The decisions with respect to what capital activities are to be undertaken by a particular Crown corporation will remain with the senior management and the directorate of that Crown corporation. It seems particularly at this time, with the volatile markets, with some names known not so well as others, that this is a most appropriate move.

I thank the member for his comments, and I express appreciation for the indication of support. I now move second reading of Bill 28.

Motion approved.

Bill 28, Provincial Treasury Financing Amendment Act, 1983, read a second time and referred to a Committee of the Whole House for consideration at the next sitting of the House after today.

HON. MR. GARDOM: On behalf of my colleague the Attorney-General (Hon. Mr. Smith) I would move second reading of Bill 35.

MISCELLANEOUS STATUTES AMENDMENT ACT,
1983

HON. MR. GARDOM: Historically, a miscellaneous statues act such as this is best addressed in committee stage. I think all members would agree with that.

I move second reading.

MR. COCKE: Mr. Speaker, we would agree to committee stage debate on Bill 35, on the basis that we are able to have the latitude in committee that would include the principle of each of those sections. We recognize that there are so many diverse sections that there is no possible way you could really do a job of debating this bill in principle. However, without that commitment we can find ways and means of debating each of the manifold principles. So if we could have that kind of commitment.... I see the Chairman is sitting here now and he is nodding his head. I take that, and it will be forever in Hansard. We accept that as a promise.

MR. SPEAKER: Thank you. Hon. members, traditionally that has been the case in a bill of this scope. The Chair understands the motion as well by the member.

HON. MR. GARDOM: I think I indicated that fact very clearly in my opening remarks.

I move second reading.

Motion approved.

Bill 35, Miscellaneous Statutes Amendment Act, 1983, read a second time and referred to a Committee of the Whole House for consideration at the next sitting of the House after today.

HON. MR. GARDOM: Mr. Speaker, adjourned debate on second reading of Bill 19.

INSTITUTE OF TECHNOLOGY
AMENDMENT ACT, 1983
(continued)

MR. COCKE: Mr. Speaker, Bill 19 is to some extent Bill 20 revisited, but not quite as excruciatingly hurtful. Bill 19 reduces the number on the board of BCIT from 15 minimum to 5 minimum. It further centralizes, and we are always worried and concerned about that. We recognize the quite different category that BCIT has always fit into. It has never been a "community college." When we argued under Bill 20 that you were taking the community out of colleges by the governmental appointment of all directors or trustees, that was something we considered to be a retrograde step. Here, while we are reducing those numbers and in that way having more effective control over that board, I don't think it affects it to the extent it did in the other bill.

We can't support this bill, because it goes against the principles of decentralization that we feel should be part of the package today. We feel that governmental centralization is an aberration here, because the rest of the western world is trying their very best to get back to a system that works,

[ Page 2275 ]

particularly in the United States, of all places, where they did this. We seem to be years behind the United States in terms of our way of doing things. Here, we are still going along with the idea that all the decisions made in the ivory tower are the best decisions. I am here to suggest that that is not true.

I feel too that a board of 15, while sometimes viewed as a little cumbersome or clumsy, at least has a diversity of opinion that's wider than a board of five. It strikes me that a government could handpick the board of five to effectively run the institution in their mirror image, and that's the worry that I have, particularly in view of the lack of trust, faith or anything else that I have in this government. They have shown so far that they have very little inclination to run things effectively, and they have created a good deal of chaos in our province.

[10:45]

The board also does not include faculty, non-academic staff or alumni student representation. What's wrong with having on the board people who have had either the experience of having gone through the system as students, people who are non-academic — you can't have them dominate, of course; I'm talking about staff or, for that matter, faculty. I think a minority of the people who work within the institution should be represented on the board. However, when you get down to a board of five, that's the problem. There is no possible way you could do that, because the group you would pick under those circumstances would tend to dominate. I think that's really where it's at; that alone. It's a very short, simple little bill, but it's effective to the extent that it brings about this centralization and takes away any possible opportunity for alumni and student representation to have direct input.

I am sure when the minister stands to close debate he is going to say: "The board is going to be wide open. It's going to have an open-door policy, and we're going to listen to all the representations made." Those representations don't have the muscle of a person of equal status sitting making the arguments. That's really where I think the government is making a grave error. I recognize that these have never been elected people. They've never been, such as the community colleges were, elected from the local electorate to the school board, and then ultimately placed on the boards of community colleges. But there is room here for the minister to rethink this. I think it would be advisable for him to stand up and say: "Well, maybe I've made a mistake here." There are those of his supporters who figure that the government has all the brains and understanding of the system in the world. They haven't. They're just mortal people, and a little more input, particularly with a college or an institute such as BCIT with an excellent history.... It's been carved up some. It had a first-class health aspect in terms of training, which has been reduced badly in the name of something or other. The bad decisions that can be made by a board that's so very tightly controlled and almost incestuous, in my view, is something I worry about.

[Mr. Strachan in the chair.]

I still think that recourse to alumni or student representation is probably one of the best moves ever made in terms of boards of governors. Here are people who have tested the water and been through the system, people who, over the period of time they've been there, have had the opportunity to assess the good and bad. And they won't dominate, particularly on a larger board. Here we've narrowed the board down; you may as well put the darn thing in the minister's office and run it from there. Next year we'll likely come in here and find a bill reducing the board to zero, with the minister wearing an additional hat and running it directly from his office. In effect that's what they're doing.

The Speaker in the chair at the present time has had a good deal of experience over the years in this particular area. I won't ask him to nod his head or do anything, but I will suggest that he knows there's merit in the argument I'm raising. In any event, that's the argument. It's centralization, and we cannot support it.

One other word before I sit down, and that is retroactivity. Again, we have a bill that comes into force on proclamation or by order-in-council on July 7, and it is one we're debating on September 30. Retroactive legislation is unhealthy, just as retroactive budgets are.

It's about time this inept government got to work and started planning for the future instead of planning for the past. This kind of inept behaviour is the kind of behaviour that has got this province into the trouble it's in. It's running from ice floe to ice floe, crisis to crisis, and it's about time this group called government sat down and planned their future in an orderly way, and brought in legislation for the future, not the past. I believe that if they took that message from our opposition to this bill, and also the message about the further centralized control that the minister is taking of this institute, it would be in everyone's best interest.

Mr. Speaker, I oppose the bill.

DEPUTY SPEAKER: Pursuant to standing order 42, the minister closes debate.

HON. MR. HEINRICH: Mr. Speaker, in closing debate, I’ll just be a moment or two....

MR. COCKE: Apologize.

HON. MR. HEINRICH: I beg your pardon?

MR. COCKE: Say you're sorry, at least. Say they forced you to do it.

HON. MR. HEINRICH: No, I'm not going to say they forced me to do it. The devil made me do it.

Anyway, I recognize what the member for New Westminster has said with respect to autonomy. But I want to assure you, Mr. Speaker, and all members, that the last thing the Minister of Education needs is to have his fingers in the colleges and institutes of this province on a daily basis. But surely the government has a responsibility, when it funds these institutions, that should some area of technology need to be pursued in the interests of the province and the young people who are receiving training at this particular institute — or any college.... I would think it would be incumbent upon us as a government to take advantage of the language found in both Bills 19 and 20 with respect to policy and directives. I don't understand.... As a matter of fact, I would expect the member for New Westminster to be the first one up in his place castigating the government for not doing something where a demand was needed to be filled.

Reference was also made by the member for New Westminster to the appointments. On first blush he may have a

[ Page 2276 ]

point; that is, five members appointed to the board. Well, it says five or more. In my opening comments in second reading I did make reference to there being probably nine, perhaps eleven, members appointed to the board. When you look at the previous act, it specifically states that eight members of the present board as now constituted are appointed by the L-G-in-C. Then it goes on and says something else in 2(1)(b): "...three members appointed by the Lieutenant-Governor-in-Council" — covering the areas of health, engineering and business. The government making those appointments, it seems to me, does not take away from the input required by the community.

I raised one other point with reference to academic or non-academic faculty. And here someone who is a member of the faculty and the faculty representative on the BCIT board specifically stated in response to the bill being introduced on July 7: "1 can understand why they" — that is, the government — "are making these changes. I assume the idea is to remove members who might have a vested interest in maintaining the status quo rather than being primarily concerned about the whole institution or the education system as a whole." What better testimony can I have, when a statement like that is made by somebody on the faculty. But I don't discount what the member for New Westminster said, because there is some value in his comment. I think he's making a recommendation to government: when you make your appointments, make sure you look at a broad cross-section; don't discount those who may be on faculty, and other places, who might have something to offer; and certainly keep in mind the alumni — and there is a proud alumni who have come from BCIT.

As for the statement being made that BCIT will be a mirror-image of the government, nothing could be further from the truth. I just repeat: if the taxpayers of British Columbia are going to fund and the government is responsible for assigning funds to that institution, if there is something that the community at large feels is necessary in the area of business or technology for young students, then surely we should ensure that they have that opportunity.

I am being urged by my own caucus again.... I move second reading of Bill 19, Mr. Speaker.

[11:00]

[Mr. Speaker in the chair.]

Motion approved on the following division:

YEAS — 25

NAYS — 7

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

Bill 19, Institute of Technology Amendment Act, 1983, read a second time and referred to a Committee of the Whole House for consideration at the next sitting of the House after today.

HON. MR. GARDOM: Report on Bill 7, Mr. Speaker.

PROPERTY TAX REFORM ACT (No. 1), 1983

Bill 7 read a third time and passed.

HON. MR. GARDOM: Report on Bill 12, Mr. Speaker.

PROPERTY TAX REFORM ACT (No. 2), 1983

Bill 12 read a third time and passed.

HON. MR. GARDOM: Adjourned debate on second reading of Bill 22.

ASSESSMENT AMENDMENT ACT, 1983
(continued)

MR. LEA: Mr. Speaker, we will be supporting Bill 22. Colleagues of mine who have spoken earlier have said there are some concerns, but in general we see it as a bill that will streamline administration. There will be some advantage to property holders who will get their assessment notice at an earlier date, and will therefore be given more time to look over and digest their assessments. We support this bill in principle, but will have some questions when we get into committee stage.

MR. MITCHELL: I have some concerns, some of which should be brought up in committee stage, but because of the government's determination not to advise the opposition when we are going into committee stage so we can be sure that we are here to get into details, I am going to raise one particular concern that I have under the broad principle of the bill, because of a change that has been made in section 26(4) of the Assessment Act.

I think it's important that we look over why that particular section came in, the history of it in 1964, when it was brought in to give protection to people living in the West Vancouver area and the James Bay area when properties were being bought up for highrises and it was escalating the value of private homes. The Social Credit government of the day brought in an amendment that if anyone owned a property prior to 1959 the particular assessment at that time would be the assessment for the idea of setting property taxes.

What's happened over the years.... That had a five-year clause. That particular five-year clause was not continually brought up to date. I have a particular situation in my own riding, and I know there are similar situations in every riding where residents and constituents have owned property for many, many years. They have developed that property to fit their particular lifestyle. Then developers decide to move in and buy up the properties surrounding them. What is happening under your assessment rulings is that when property is sold surrounding a particular area, then the value of that property becomes the value of the property of a resident who may have no intention of selling his property.

I have a particular case and would like to, for your benefit, Mr. Speaker.... I know that if you go through

[ Page 2277 ]

your own riding you will find many similar cases. This is going back only three years.

HON. MR. McGEER: Mr. Speaker, there are times in debate for dealing with legislation that is not before the House. It's clearly out of order that we should be discussing a section of an existing bill, however desirable it might be to include that in legislation. We aren't discussing specific sections of a given bill before us, only the general principle. If the member wishes to discuss individual sections, then of course he comes during committee. I would remind you of our standing order that requires attendance of the House, but certainly not abuse of the rules of the House by discussing irrelevancies under second reading. I would ask you to bring the hon. member to order.

MR. SPEAKER: Hon. member, the Chair has listened attentively to the point the member is making, and cannot help but concur in the point of order that has been raised. Possibly the specific that the member is looking for can be addressed in committee. Otherwise he must either continue on the principle of the bill before us or discontinue his speech.

MR. MITCHELL: Thank you very much, Mr. Speaker, but the principle of the bill is to change the assessment and have variable mill rates assessments for properties under this bill. I'm completely in order. I'm just using....

MR. SPEAKER: Order, please. Hon. member, to make such a statement in the face of advice by the Chair is grossly out of order and disorderly and will not be tolerated. I ask the member at this time either to comply with the instructions of the Chair or take his place, or risk other action by the Chair.

MR. MITCHELL: Mr. Speaker, I thank you for that advice. I have to proceed with something to build up my argument within the framework of the bill, and I would like to give some examples of why I think some consideration should be given in the principle of the bill. I think there are sections within the bill.... Variable mill rates are in the principle of the bill. It's with this in mind that I would like to give some suggestions why I feel that there must be consideration given in the principle of the bill. Is that in accordance with your instructions, Mr. Speaker?

I'm not trying to deliberately get ruled out of order; I'm not trying to abuse the ideas of the policy of the House. But there are sections that give the minister the power to vary the mill rates in certain circumstances. People have owned homes in an area that has been the subject of speculative buying by developers of any type, and the value of their properties has escalated even though they may not wish to sell their properties. Under this style of assessment, Mr. Speaker, the ordinary taxpayer is being forced out of his home because, on his limited income, he cannot afford to own a piece of property that has a speculative value for another use when he is using it as a residence. I feel there are sections in the bill — I won't deal with them. I have an example in my own riding where one individual — a veteran — had lived there for many years. His property went from a value of $100,000 in round figures to $240,000. His taxes went from something like $600 or $700 to $2,400 after tax deductions.

I would like to bring to your attention, Mr. Speaker, an article which appeared in our press. An individual by the name of Herb Murray happened to own a home in Toronto. One of the real estate firms in that area wished to buy his property, and they kept offering more and more money for it until it got to the point where they had offered him $1 million. Now if that situation had taken place in B.C....

MR. SPEAKER: Order, please, hon. member. With all due respect, I must at this time ask the member to address the principle of the bill before us. Surely, after the number of recommendations by the Chair, the member can determine that the course of argument he is currently engaged upon can be better and more appropriately discussed in committee under a specific section than at this time under the principle aspect of the bill before us. Upon reflection, possibly the member may wish to bring those particular matters before the committee at the appropriate and specific point and allow the House to get on with the discharge of its responsibilities at this time.

MR. MITCHELL: In answer to that, Mr. Speaker, could I have some assurance from yourself — through to the House Leader — that there will be some idea when this particular bill or any other bill will be coming up, so that we in the House can do our job in a consistent manner? I realize that you are not aware of such things as Whips....

MR. SPEAKER: I cannot be aware, hon. member, nor is it appropriate to discuss in the House the business arrangements of the House. Those carryings-on, hon. member, must be a part of the proceedings of the House and must not be a subject of discussion, particularly at this part of the debate. However, the member may have overheard — as the Chair did — an assurance to cover that particular aspect, either in estimates or the specifics of the.... It would be most appropriate at that time; not now. I so rule.

[11:15]

HON. MR. CURTIS: Mr. Speaker, I would not want to incur the wrath of the Chair by attempting to assure the member of anything while I am on my feet. Perhaps I may speak to him at the conclusion of today's sitting and indicate ways in which his problem can be resolved, in terms of discussion.

With respect to Bill 22, I took careful note of a number of speakers who have participated in this debate, commencing with the member for Nanaimo (Mr. Stupich) on August 25 in the afternoon sitting, and I think I will be able to assist him more in committee stage as we hit certain sections.

One of the concerns that the member for Nanaimo offered at that time which would seem to fit the principle of the bill was with respect to assessments in general, rather than the Assessment Authority. I believe that I said at the time of opening the debate that I've had relatively few complaints about the Assessment Authority, but I don't think it is an overstatement to say that so long as we have assessments for property tax purposes we are going to have an imperfect instrument. It is up to us to attempt, as governments from time to time will, to identify new problems and correct old ones, and certainly that is one of the thrusts of the amending act presently before us.

On September 7 in debate the member for Burnaby Edmonds (Ms. Brown) suggested that there was no consultation with the Union of B.C. Municipalities regarding assessments. Well, Mr. Speaker, the member is mistaken in

[ Page 2278 ]

that regard. Quite clearly, when the former Minister of Municipal Affairs, now the Minister of Education (Hon. Mr. Heinrich), and I conducted meetings around the province on issues which led to Bill 22, we first met with if not the full executive certainly with the table officers of the Union of B.C. Municipalities, and UBCM executive members were present from time to time in other meetings. So I think it is not an overstatement to say that local government representatives had a very significant part to play in the variety of observations, suggestions, comments and criticisms which led us to the act now before the House.

I think, also, the member for New Westminster (Mr. Cocke) and the member for Burnaby North (Mrs. Dailly) inquired with respect to the public meetings, and those meetings led directly to that which is here today. The meetings were held in a number of communities in the province. They were widely publicized meetings, and they were open-ended, in that my colleague the present Minister of Education and I decided that we would not spend two hours in one community and rush to another community for two hours, but rather would hear all who wished to speak, to make verbal or written presentations. One of the meetings, in fact, occurred in Prince Rupert. I say to the member for Prince Rupert (Mr. Lea), not critically, that for one reason or another, it was perhaps the most poorly attended meeting of the series which we arranged. Maybe we picked the wrong day, or maybe it was one of the days when it wasn't raining, I don't know. But we didn't have a significant turnout.

Interjection.

HON. MR. CURTIS: I heard the interjection; the mayor of Prince Rupert was in attendance, and offered the usual stimulating and sparkling debate for which he is noted. He made it very clear how he feels about assessments generally.

To reiterate, because the bill has been before the House for some time, there are four important purposes. It is to change the date in the assessment cycle, taking effect in 1984. It provides for a full assessment of every property in the province in even-numbered years, with revised assessments in odd-numbered years, to take account of any zoning or physical changes in the property. It provides for the December 31, 1982, assessment roll to be updated for zoning or physical changes in 1983, which will be the roll used for taxation in 1984. And it provides, I think most importantly, the opportunity for a lessee of all or part of a property to have the assessment notice for the property if the lessee requests it. So it is a reform bill.

I would be naive to think, and I would be misleading the House if I suggested, that with passage of this bill none of us will have problems with assessment matters in the province of British Columbia. That is too much to hope for. But I think the kind of dialogue which occurred leading to Bill 22, the kind of discussion that we will have in committee and my commitment to continue to receive recommendations with respect to ways in which the Assessment Act can be further improved, in the interests of the taxpayer individually and in the interests of those who access those funds.... I certainly make that commitment.

I believe that I've covered most of the points dealt with in the debate, as I said, commencing August 25, again on September 7 and once more this morning. I look forward to some specific comments and exchange when we reach committee stage. With that I now move second reading of Bill 22.

Motion approved.

Bill 22, Assessment Amendment Act, 1983, read a second time and referred to a Committee of the Whole House for consideration at the next sitting of the House after today.

HON. MR. GARDOM: I call second reading of Bill 15.

SOCIAL SERVICE TAX AMENDMENT ACT, 1983

[Mr. Strachan in the chair.]

HON. MR. GARDOM: (Plays tune on water glasses.)

[Applause.]

HON. MR. CURTIS: Mr. Speaker, the members' response was not for me but rather for the pathetic attempt at music undertaken by the House Leader.

DEPUTY SPEAKER: It must be Friday. I thought it was wonderful, and I so rule.

AN HON. MEMBER: I challenge that ruling.

HON. MR. CURTIS: Mr. Speaker, there may well come a moment when I have to challenge the Chair, but I'm not prepared to go to the wall on that one.

This is a bill which will, I know, prompt debate on both sides of the House. I move second reading of Bill 15, the Social Service Tax Amendment Act, 1983. This is the key bill with respect to budget revenue measures which were announced in the budget address on July 7. The need for the amendment arises, therefore, from the budget address. Essentially, without intruding into committee debate, four tax measures are included in this bill, and I trust that they form the principle of the amendment act.

Members who have been here much longer than I will know that the social service tax, the sales tax as such, is applied to all purchases or leases of tangible personal property for consumption or use. Tangible personal property is defined in the act as personal property which can be seen, weighed, measured, felt or touched. It is important, I think, in terms of perspective to note that the current Social Service Tax Act in British Columbia contains some 44 classes of exemptions which ensure that hundreds of items under the general heading of food, children's clothing, books, magazines, household patent medicines, electricity, fuel oil and natural gas for residential use are not taxed. The consumer taxation branch bulletin list of those items which are not subject to a social service tax, regardless of what rate may be in place at any particular time, is voluminous. The social service tax rate of 6 percent was in effect from March 1981 until it was altered on July 7, effective midnight that day.

[11:30]

The first and most important measure in terms of revenue to the provincial treasury is an increase in the social service tax rate from 6 percent to 7 percent. I want to observe that the new rate continues to compare favourably with sales tax rates in most other Canadian provinces. The largest province in terms of population, Ontario, has a 7 percent sales tax rate; Quebec, the second-largest province, has a 9 percent tax rate; the Atlantic provinces all have sales tax rates of 10 percent or more. There are relatively few exemptions in the provinces just, mentioned. With the exception of Alberta, neighbouring

[ Page 2279 ]

western provinces levy sales taxes which are close to the British Columbia rate.

The 1 percentage point increase in the social service tax became effective midnight July 7 of this year. It is a significant revenue source for any province. In our case it is expected to raise an additional $126 million for the province through the balance of the 1983-84 fiscal year and a further $170 million in 1984-85 fiscal year.

The second measure included in the bill is the replacement of variable social service tax rates on automobiles with a single 7 percent tax rate. Prior to the presentation of the budget, as British Columbians recall, automobiles were taxed at rates of 4, 6 and 8 percent according to their fuel consumption efficiency as estimated by Transport Canada. This variable rate was introduced in the March 1980 provincial budget, and the differential tax rates were designed largely to promote conservation. With the price of fuel projected to be relatively stable in the foreseeable future — and I underline relatively stable as compared to 1973-74 on a world class basis — it appears that the differential tax rates were no longer as significant as appeared to be the case in 1980. This measure is projected to have virtually no revenue impact. Eliminating differential rates is also a small step in the direction of simplifying the administration of the Social Service Tax Act and, not incidentally, the record-keeping required of automobile dealers and the frustration which was experienced by some purchasers who found that they were just above a particular benchmark with respect to the varying tax rate.

The third measure which was contained in the budget and is an important part of this bill eliminates the social service tax exemption for prepared meals for consumption on the premises where sold of $7 or more per meal. The exemption for prepared meals has been in place since 1966. Limiting the prepared meals to which the tax applies to those of $7 or more means that most breakfasts, lunches, fast food and all takeout meals continue to be exempt from tax. The taxing of meals $7 or over also has a beneficial effect in terms of a variety of businesses in the food service business in that it does not require many more firms to have to register with and deal with government, as the majority of establishments that serve meals of $7 or more currently are required to collect and remit social service tax revenues on a regular basis on liquor sales. It is anticipated that the removal of this exemption and the application of the 7 percent tax rate will increase social service tax revenues by $15 million in this fiscal year and by about $21 million in 1984-85.

1 want to just take a few moments, Mr. Speaker, because, as is very well known, in our parliamentary system it is not possible for a Minister of Finance to discuss, in advance, with a particular group or indeed any individual, other than those who are directly involved in the Ministry of Finance or the Treasury, measures which might be taken with respect to tax changes — upward, downward, or whatever it may be. I was criticized for "a lack of consultation" with the restaurant industry prior to returning to a sales tax on meals that, as I indicated a few moments ago, had been in place until 1966. I had no choice. I had no choice in terms of any kind of contact, inquiry, speaking around the issue to determine how the industry and individual operators within the industry might feel about the introduction of a sales tax on meals.

Through the summer, to a much lesser extent in recent weeks, there was a quite significant campaign — and I use that word with the best of intentions — to suggest that a more fair tax, a more easily managed tax would have been 3 percent, 4 percent, 5 percent on all restaurant food and beverages — non-alcoholic beverages; there is one already in place on alcoholic beverages. I considered that very carefully prior to reaching the decision which formed part of the budget. As I have done outside this chamber, I would refer those who advocate this as being fair, equitable and simple to consider the incredible problems encountered in the province of Ontario quite recently where the decision was made to lower the threshold, and to reach a point where indeed one would pay 50 cents for a cup of coffee and have a tax shown below it, or at a take-out restaurant, or on a quick lunch that one might grab in a hurry between appointments or on the way home, on the way to work or whatever, Having met, after the fact, with representatives of the Restaurant Association in Victoria and Vancouver, I believe they have come to understand that that would I think have created incredible difficulties, particularly with respect to the need for every single food outlet — restaurant, coffee shop, cafe, soda stand, whatever it might be — to register with the consumer taxation division and to tote up tax charged on 150 cups of coffee, on 75 cheese and crackers, on whatever one might consume in that particular outlet.

[Mr. Pelton in the chair.]

I would caution those who see the flat rate across the board, at whatever level it might be, as the panacea. It is not a panacea by any stretch of the imagination. I think the mail which I received criticizing this particular step would have been multiplied many-fold had I opted for that flat rate starting at zero. Certainly the newspaper reports on the experience in Ontario, which are available to members in the Legislative library and which I've distributed to some representatives of the restaurant industry in B.C., show that if the clock could be turned back in Ontario I'm sure that step would not have been taken.

With respect to this aspect of the amending act before us, I also want to make it quite clear that I instructed the officials in the consumer taxation branch to exercise the fullest cooperation and leniency, within the law, as restaurateurs became familiar with the fact that tax had to be collected. I know that some firms have had difficulty in computing the tax; other firms have adjusted very easily to this new process. They were able to do so within 24, 48, 72 hours of the announcement of the tax coming into place. I made it clear to the officials in that branch of this ministry that the ultimate acceptance of this new measure will depend to a very large extent on the way in which assistance is offered and patience shown — again to the extent the law would permit — by those charged with the administration of the statute.

The fourth and final social service tax measure presented in the bill is the removal of the exemption for long-distance telephone calls. Currently, all other provinces, with the exception of Alberta, tax long-distance calls either under a retail sales tax act or a telecommunications tax act. The removal of this exemption means that both business and residential long-distance calls are subject to the social service tax in British Columbia. You will know, sir, that local business telephone services are currently taxable, while business long-distance services are not. Basic residential telephone service remains untaxed. It is estimated that the elimination of the long-distance exemption will produce an estimated $29 million in additional revenues in this fiscal year, from the date

[ Page 2280 ]

of introduction until March 31 next, and $39 million in 1984-85.

In summary, Mr. Speaker, the four tax measures contained in the bill will raise an additional $170 million in the current fiscal year — that is the best estimate available — and $230 million in fiscal '84-85. I anticipate there are those opposite who will wish to speak to some or all of the measures contained in this particular bill. I now move second reading of Bill 15, Social Service Tax Amendment Act, 1983.

MR. STUPICH: I recall, when a previous bill was being discussed today, that the member responding thanked the minister for the explanation and said that would make it much easier for the opposition to consider it and to respond. I thank the minister for the detailed description of the legislation before us now. Up to this point today we have shown that we are able to cooperate with the government in advancing some of the legislation fairly quickly, and to support some of it, but the legislation before us now is not one that will get the support of the opposition. I say that, Mr. Speaker, with some personal reservation. The history of the sales tax in the province of British Columbia....

I think it's worth recalling some of this, some of the arguments, some of the early days. I've been doing a bit of a review of this, because I was very much aware of what was happening in the province when the sales tax was first introduced as a revenue measure in 1948. At that time the Hon. Mr. Anscomb was Minister of Finance and represented Oak Bay. This is a sort of side issue, Mr. Speaker, but it's rather interesting that the sales tax, when it was first introduced at a rate of 3 percent, was estimated to bring in a total of $12 million. The total revenue estimated for that year was $77.616 million. The $12 million represented something like 16 percent — a very quick calculation that I just did mentally — of the total budget at the 3 percent level. If we look at the figures today, we see that the social services tax is going to bring in $1.225 billion, so it still works out, although the rate is much different, to something like 16 percent of the total budget. This means nothing other than that by some strange coincidence some 35 years later, the sales tax is still bringing in roughly 16 percent of the total budget, as it did when it was first introduced.

It was very controversial legislation when it was first introduced; $12 million, and yet very controversial at that time. It was made saleable partly because at that time the Minister of Finance, on behalf of his government, promised the municipalities that 50 percent of the return from this new source of revenue, some $6 million, would go to the municipalities. It seems strange today in 1983, but the prospects of getting an extra $6 million from the provincial government, divided among all the municipalities in the province, did much to assuage their concern about this new source of revenue that the government was imposing.

[11:45]

AN HON. MEMBER: S.S. and M.A.

MR. STUPICH: Yes, social services and municipal aid. The municipal aid was to get 50 percent of it. It was to offset the cost of social services. As I say, we're talking about a total budget in those days of $77 million, so a lot of sales tax revenue has been collected in the intervening 35 years.

It was opposed widely. The government, with a very large majority, had no difficulty getting the legislation through the House. I believe there were 35 members on the government side of the House and 13 on the opposition side.

HON. MR. SCHROEDER: Which side were you on?

MR. STUPICH: In '48? I was active in the CCF at the time and was one of those.... He's too young to remember. I can remember speaking out at conventions against this new tax as a very regressive way of raising 15 percent of the province's budget. I recall a convention in 1951, which was a great year. That was the year I first persuaded the CCF annual convention to pass a resolution favouring the preservation of agricultural land. Another resolution was introduced from Nanaimo — and again I drafted that resolution — in favour of Canadian unilateral disarmament, a position I still support, although I don't think I have very many supporters. But I still fight quite strongly in favour of unilateral disarmament — not nuclear, but total unilateral disarmament.

The other argument that I took part in at that time was about the sales tax. At that time I was on the side of those who were arguing that in the election expected in 1952 the CCF should promise to do away with the sales tax. I'm going to read from a clipping at the time the sales tax was being introduced, March 18, 1948: "Wave of Protest Over Sales Tax. Merchants, Labour, Municipalities All Express Opposition" — although the municipalities were going to get that extra $6 million. They knew they were going to get it anyway, so they could stand up and oppose the legislation. "Stiff opposition to B.C.'s projected 3 percent sales tax loomed today among municipal governments, labour unions and merchants." This is an interesting paragraph, Mr. Speaker. The minister said: "Of course, we all recognize that it's not possible to discuss taxation measures in advance of their being introduced by budget and by legislation." So there was no opportunity, for example, for him to actually enter into formal discussions with the Restaurants' Association in advance of bringing it in. I'd just like to read the next sentence of this report: "The tax will not be put into effect until the Legislature approves the measure following the end of the budget debate." Things were different 35 years ago, Mr. Speaker. In those days the government introduced a tax measure which was projected to raise $12 million, 16 percent of the total budget, but they made no attempt to impose that tax until after there had been debate in the House; until after the budget debate had been concluded and the budget approved; until after the sales tax legislation itself was debated and approved. Nowadays, 35 years later, we have decided that we have to do all of these things retroactively; it's not possible to consult anyone ahead of time. I wonder why not. I would think had MacEachen.... I suppose in this House I can call him MacEachen; in the other House I would have to call him Honourable. Had the federal Minister of Finance taken an opportunity to discuss with people out in the community some of the disastrous tax measures which he introduced in late 1981 — not just with the advisers in his own ministry, and perhaps not with all of them — then he might still be Minister of Finance. Maybe he's better off not being Minister of Finance. Certainly he created a lot of havoc in Canada, in the total community, by not having first discussed his proposals with people who knew something about them.

I wonder why today we have to follow this rule which has been adopted in recent years not to take some time first to discuss changes in approaches to financing government. Suppose people did know the sales tax was going to go up

[ Page 2281 ]

after the legislation was passed. What would they do? They might go out and spend a lot of money in the meantime. Would that be bad, Mr. Speaker? It would do much for retail sales if people knew the sales tax was going to go up on a certain date. Once they spent the money they might get in the habit of keeping the economy going, and might go on spending.

So I raise that question first. I wonder why it's necessary.... In 1983, and presumably in 1984, when we're bringing in a measure like this, why not telegraph our punch? Why not say ahead of time this is what we're going to do? It gives people an opportunity to object, certainly. The merchants' association might well have mounted a much stronger campaign against the legislation than they did. There is that risk. But at least the minister is being open with the people who are, in this case, involved in collecting the tax. It would have given them an opportunity to make their representations, and might well have decided them to go the other route.

The minister said it didn't go over well in Ontario, but in Ontario they already had a sales tax on meals. They were lowering the exemption, dropping it so that it became effective with cheaper meals; that's really what they did in Ontario, which is a different thing from bringing in the tax for the first time. It's not for the first time, because we used to have it, but the first time in many years introducing what is in effect a new tax, at least one dealing with an exemption that has not been taxed — for quite some time. It is a departure and one that I would think the minister might have considered actually saying is going to be effective the day the budget is approved and the sales tax legislation itself is approved. In the event he's bringing in more tax increases further down the road — and I expect he will if he retains his present position as Minister of Finance; this will not be the last tax increase of some kind that he will impose — I would recommend to him that he at least consider the idea of telegraphing his punch and telling people ahead of time what's going to happen. I can't see that doing any harm to the business community. As a matter of fact, Mr. Speaker, it might have a very salutary effect. It might encourage people to get out and spend, and once they get in the habit they might keep spending and keep the economy rolling. In 1948 it was done that way. The budget was approved, the sales tax legislation was approved; then, and only then, did it become effective.

[Mr. Strachan in the chair.]

"The Vancouver Board of Trade indicated that businessmen may press for reopening of the dominion-provincial taxation agreement, after viewing the sharp increase in provincial costs for social services which brought on the sales tax." It was so important in those days that they were going to try to reopen the whole taxation agreement. Now we do these things almost automatically. "The Union of B.C. Municipalities considers the allotment of only one-third of the tax" — initially the promise was one-third — "to municipalities 'completely unsatisfactory, ' said Mayor Percy George, UBCM vice-president." Victoria people will certainly remember who that was. Maybe they won't.

"Though the Retail Merchants' Association has not met to discuss the tax, wired protests from merchants all over the province flooded into George R. Matthews, RMA secretary manager." There were widespread protests, and I think in those days they were protesting against the imposition of the 3 percent tax; they weren't anticipating that one day we'd be talking in B.C. about a 7 percent tax. "Labour leaders said the tax 'hits the common Joe,' and predicted a protest labour lobby to Victoria." I haven't followed the press clippings to see whether or not that protest actually did get off the ground, or across the water, or whatever. It was certainly nothing like the protests we had in the month of July or August in front of the Legislature.

"Restaurant operators, 'surprised' that the levy applies to sales of meals, though other food purchases are exempted, said it was 'definitely a nuisance tax, and we are going to oppose it strenuously.'" Perhaps, in light of what's happened, they actually opposed that 3 percent tax at that time more strenuously than they opposed the imposition of the tax on meals this time. We did hear a lot for a short time; there were campaigns by individual restaurants who were inviting people to come there and eat, and promising that the tax would not be levied and that there were all kinds of ways of getting around it, but I think that has really diminished, and it's something that is accepted now. That's one advantage, I suppose, of imposing the tax the day that you first talk about it. You get over that hurdle. But I still wonder whether it wouldn't be better — perhaps not in all instances, but.... I just ask the minister to consider that approach.

"A CCL" — in those days it was called the Canadian Congress of Labour — "labour lobby to Victoria is in the process of organization by the B.C. Federation of Labour, vice-president Harold Pritchett said. All federation affiliates were asked early in the month to wire their protests to Premier Byron Johnson and MLAs, and many have done so. Unionists will also buttonhole individual MLAs when they return home for the weekend." Mr. Speaker, this is the kind of protest we've had today over a budget and 26 pieces of legislation. In those days it happened over one piece of legislation, because it did institute something that was brand new by way of raising revenue. There was the concern — and I recall it being voiced in those days — that while it was only 3 percent, while it was something new, it was just the beginning, and it was something like income tax, which was levied during the First World War: while it was levied for only a short period to get over a temporary problem, we would never get away from it again. There was concern then that once the government levied this tax, they would never get away from it again.

March 20, 1948, the Vancouver Sun: "Sales Tax 'Brick Round Government Neck.' Bennett" — remember that name, Mr. Speaker? — "Makes Slashing Attack Against Anscomb Budget Measure." The story goes on: "A slashing attack on British Columbia's proposed 3 percent sales tax was delivered in the Legislature Friday by W.A. C. Bennett, Conservative-Coalition member for South Okanagan" — a member of the government caucus, yet he made a slashing attack against this measure. "He called on the government to take the unprecedented step of withdrawing the budget for reconsideration by experts." Mr. Speaker, that would be unprecedented. We've never called upon the government to withdraw their budget and have it examined by experts. Experts have looked at it and said that it is failing, in that the figures there are not reasonable in light of today's circumstances....

HON. MR. CURTIS: Some do, some don't.

MR. STUPICH: Some experts? Well, okay. As far as I know, the only one who thinks it is reasonable is Michael Walker, and every other economist that I've seen has said that

[ Page 2282 ]

the figures are not reasonable, in light of other information contained in the budget speech itself.

In any case, going on with the comments by W.A.C. Bennett, Conservative-Coalition member for South Okanagan. "He declared the government does not have to levy a sales tax to balance the budget." Later on, I intend to make that same comment with respect to the sales tax legislation we're discussing today, if I remember to do it.

Mr. Speaker, listen to this: "By putting on a capital gains tax...." In 1948 W.A.C. Bennett, Conservative-Coalition member for South Okanagan, recommended a capital gains tax rather than a retail sales tax. Get this, too: as well as a capital gains tax, he's recommending cutting down administrative expenses. Remember the cuts we proposed in the last two budgets, where we proposed that there be no increase in office expenses, no increase in office furniture, no increase in travel expense for cabinet ministers? That's all. We didn't get into their total administration, but we did recommend cuts, and in doing that we — and I didn't realize it at the time — were actually following in the footsteps of the then Conservative-Coalition member for South Okanagan, the Hon. W.A.C. Bennett.

[12:00]

To go back, then: "By putting on a capital gains tax, cutting down administrative expenses, and returning to former Premier John Hart's policy of setting aside only essential sinking funds, the government could have overcome the gap between expenditure and revenues." Well, setting aside money for sinking funds is no problem these days. We just don't do that any more.

To go on with that quotation from the then member: "Yes," he said, "this is the budget of a capable accountant" — I'm not sure that the minister would want to be described as an accountant — "but it is a budget of private business and not for the public. Nobody needed any business acumen to propose a sales tax like this." That comment is valid today. "'Yes, since John Hart left the government, there's little heart left in it.'" Mr. Speaker, that comment is valid today, not only with respect to the legislation before us — although partly with respect to that — but with respect to the government's total legislative program, of which this is simply one measure in the package. There's little heart left in a government that could introduce the budget that it did on July 7, along with 26 pieces of legislation.

An article in the Colonist, April 2, 1948, said: "CCF Makes Final Attack Upon Budget." "The Legislature's nine-day budget debate did not conclude yesterday without a final opposition effort to defeat the budget on the sales tax issue." As I said earlier, the sales tax then was going to raise about 16 percent of the budget, and today it's raising 16 percent. In those days the budget debate was concluded in nine days; today it takes ten. So one wonders how much things have really changed.

The article went on:

"CCF leader Harold Winch forced a division on the formal motion for Committee of Supply, contending the budget was $12 million short because it could not be balanced without that estimated revenue from a new tax. As in the division on a point of order on the sales tax issue at the opening of the debate, two Progressive Conservative Coalition members, Mrs. Tilly Rolston (Point Grey) and W.A.C. Bennett (South Okanagan), voted with the opposition. The motion carried 30-13" — earlier I said 35 — "Tom Uphill (Labour, Fernie) siding with the CCF."

There were some members absent.

I'd like to read the editorial comment that was in the Colonist of the day on Saturday, April 10, 1948 — by then, of course, it was legislation. It said about the sales tax:

"The public, especially that part of it with families and small incomes, will have read the details of the provincial sales tax bill with no little dismay. Its scope is far-reaching. With limited exceptions, everything from automobiles to aspirins" — today it doesn't apply to aspirins — "and from perambulators to pen-points is scheduled to bear a 3 percent increase in price. Apart from exemptions granted to farming and fishing equipment and supplies, scarcely any transaction in the realm of provincial trade will go untaxed."

The minister said that today the list is very extensive. A year or two ago, in talking about the sales tax, I raised the question of whether or not the list should be as extensive as it is. I know I attracted the minister's interest at the time. I think perhaps I'll say a little more about that later as well.

The article goes on:

"Under the grandiloquent title of Social Security and Municipal Aid Tax Act, the measure would impose a levy on the sale of tangible personal property. This is defined as 'personal property that can be seen, weighed, measured, felt or touched, or that is in any other way perceptible to the senses, and includes electricity, natural or manufactured gas, and telephone services.'"

It was taken off telephone service later on, and then put back on long-distance calls in the legislation before us right now. I was trying to take notes as the minister spoke; I don't seem to have noted how much that was going to bring in, but I did hear the figure previously.

"It is perhaps only fair to acknowledge, however, that water may be run from the kitchen tap without any extra expense."

Well, it cost something to get that tap there in the first place.

"Food for human consumption at home will also be free of the impost, a concession that no doubt is expected to evoke a paean of praise. Clothing of all kinds, on the other hand, as necessary to human existence as food, will bear the full weight of the tax." There have been some exemptions there.

"By making the tax computable to the nearest half-cent — which for collection purposes will be counted as a cent — a further inroad will be made on the financial resources of this section of the public. There are uncounted millions of transactions in the province each year which range in price value from 15 to, say, 30 cents."

That's not much of a problem these days; we don't get much for 15 cents today.

"Purchasers of commodities within this price scale will therefore be paying a tax of from 4 to 6 percent, not 3."

Although the bill was legislation by this time, protests were still going on. In the Colonist, April 11, it said: "Many Groups Protesting Against Tax."

"British Columbia restaurants, retail merchants' and automobile associations vigorously opposed the proposed 3 percent sales tax at meetings yesterday.

[ Page 2283 ]

The Canadian Restaurant Association in the province criticized application of the tax to meals. Members contended that the tax would result in curtailments of nutritional eating habits through the eating of more snacks and less meals."

One wonders whether or not the minister considered that argument from the restaurant association, that making it apply to meals over a certain amount might persuade people to eat less nutritional meals, or meals that were of lower nutrition. "Automobile dealers voiced strong opposition to what they termed the 'illogical, excessive and unbearable' proposal to levy a sales tax on the full value of new and used motor vehicles." Mr. Speaker, over the years I am sure all of us who have served as MLAs have had many complaints from constituents who argue that the sales tax on a certain automobile has been paid over and over again. Each time that automobile is sold, there are taxes levied on the full purchase price, so the same automobile eventually ends up with much more than the stated rate of sales tax being collected as it turns over and over in the community.

"Retail merchants are seeking one-twentieth of actual collection as remuneration for setting up records and collecting the tax." Indeed, it did increase the costs for merchants; it did increase their costs of administration, and some consideration was given to them.

In the Colonist of April 14, 1948, it said: "Winch Calls Sales Tax Fraudulent." It is worth remembering Winch's comments in 1948, Mr. Speaker, in light of something I have to say a little later on.

"Opposition Leader Harold Winch alleged in the Legislature yesterday that the government's 3 percent sales tax bill was fraudulent because both its long and short titles would lead to belief that revenue from the tax would afford additional social security. The bill, he declared, purported to be 'an act to provide for the imposition and collection of a tax on the purchase and use of tangible personal property to provide funds for social security and municipal aid. It is political expediency, ' Mr. Winch shouted. 'The entire act is designed to divert funds from the consolidated revenue to take care of the extravagance of an exorbitant budget and to make the people believe they are getting something new in the way of social security.'"

One of the criticisms we have levied against this administration is their extravagance — the fact that since they were returned to office in December 1975, they have increased the debt of the province from something less than $4 billion to over $14 billion, and that can only be considered extravagance. It is now necessary for them — at least they say it is necessary — to do something to cover up their extravagance of the past, just as Winch accused the government in 1948 of bringing in this tax to cover their extravagance.

"There is nothing before the House to indicate any major change in social services." This time there is, and that is something else I would like to comment on later on. There is something before the House right now to actually withdraw, in many areas, social services. When this tax was first imposed on British Columbians in 1948, the implication was that it was being brought in to maintain a level of social services, to help the municipalities. The carrot was hung out that there might be some improvement in social services. Today we are being asked to approve an increase in the sales tax which promises to do nothing for those receiving social services from the province of British Columbia, and indeed in many ways shows that much less is going to be done for the people of the province than has been the case up to now. How much worse is it to bring such legislation in, in 1983, at the same time as we are withdrawing services than it was 35 years ago in 1948, when the government was promising to do more for people who needed help from the government? "We have been granting social security and municipal aid all along." The services that the people of British Columbia have come to expect from government are now being withdrawn at the same time as the government are saying it is necessary to increase the rate of sales tax. "Later Arthur J. Ash (Coalition, Saanich) told CCF members that if they wanted more social security measures they would have to be prepared to pay for them. 'Where are they?' demanded Mr. Winch." Well, this was certainly an honest comment from Mr. Ash, Mr. Speaker: "You'll get them before the next general election comes round." Well, nothing much has changed in that respect either. I recall in the 1979 election campaign the sales tax was dropped; there was no mention in the 1983 campaign that the sales tax would be increased, but increased it was.

The Colonist said on April 14: "Sales Tax Bill Survives Hot Opposition Attack to Pass Second Reading" and "Hart Takes Personal Tax Stand." "Speaking for the first time in the House this session, other than occasional interjections" — and interjections sometimes happen in our House these days, Mr. Speaker — "former Premier John Hart yesterday expressed regret that the imposition of a sales tax was necessary, but announced he would not oppose the government." Well, Mr. Speaker, that's kind of grudging support, isn't it? For a former Premier, a member of the government coalition, to say in support of the legislation that he wouldn't oppose it is something. Obviously he didn't like it. He goes on to say: "'It is an open secret that I have always been opposed to a sales tax,' Mr. Hart informed the House." Of course, Mr. Speaker, he had been Minister of Finance in the province.

"In 1933 the Tolmic administration imposed a 5 percent meal tax on meals of 50 cents and over. The Liberal Party, then fighting an election, opposed the tax and stated that if elected it would repeal it. That tax was in force for about seven months. It was taken to the courts on a test of competence to collect a tax on the system then applied and was held ultra vires. The Liberal government came in, and in March 1934, its first session, had the act repealed." The Liberal government promised to repeal it and did repeal it. The Social Credit Party in the election just past made no mention of increasing the sales tax; indeed, it had made promises in the past not to increase it, but broke those promises several times over. By neglect, by not saying to the people in the province that they were going to impose a sales tax — even by then, though, they must have known.... They kept that information privy from the voters and were elected, if not by misleading the voters of the province, at least by withholding information from them.

[12:15]

Mr. Hart goes on to say: "I have never accepted them" — he's talking about the recommendations to impose a sales tax — "and last session said on the floor of this House that a sales tax would not be introduced." That reminds me, as I say, of some of the promises made by the present administration. "Since then I have stepped down, and am not now in a position to lay down government policy. The government accepts full responsibility for that. While I regret the necessity to impose this tax, I feel I don't wish to oppose the government." So it would seem that the Hon. John Hart

[ Page 2284 ]

very much wanted to vote against the sales tax imposition but didn't want to oppose the government of the day, and ended up voting for them.

"Sales Tax Bill Survives Hot Opposition Attack to Pass Second Reading. Argument on Detail Expected in Today's Committee Session." "After four and a half hours of bitter debate, the provincial government late last night saw its retail sales tax measure approved in principle on second reading." Four and a half hours — the opposition was much smaller in those days, Mr. Speaker. It may take that long for this bill to receive second reading approval. "In the last of a series of divisions during afternoon and night sittings, second reading was approved by a vote of 30 to 14. Four Coalitionists voted against their government: Mrs. Tilly Rolston (Point Grey) ; there's W.A.C. Bennett again (South Okanagan); Dr. J.J. Gillis (Yale); and James Mowat (Alberni)." Again, I say, what else has changed? What else is new? How little things have changed. "Finance Minister Herbert Anscomb, sponsor of the bill, and Premier Byron Johnson made the only contributions to the debate from the treasury benches." So not many of them were speaking in debate in those days either. "Sixteen private members on both sides of the House spoke; the rest remained silent."

In the Colonist of April 14 it said: "Winch Asserts Tax Bill Paves Way for Gestapo." The language in those days doesn't seem to have changed very much either.

"Charges that the sales tax measure now before the Legislature provides for the setting up of a veritable Gestapo in British Columbia were hurled across the floor of the House yesterday as debate on second reading of Bill 68 opened. Opposition Leader Harold Winch, leading the CCF attack, called Attorney-General Gordon Wismer's attention to what he described as vicious principles in the bill, and advised him to give them careful consideration before allowing the bill to go through. 'Here we have the principle that a man is deemed guilty without his guilt having to be proved,' Mr. Winch asserted. He said power was given to the commissioner to decide how much was owned by anyone under the tax, and to give instructions that an amount determined by him must be paid within 30 days. The onus was placed on the person concerned to prove the commissioner wrong. 'That is a vicious principle that is becoming all too common in legislation in British Columbia.'"

That, I believe, is still the situation today, although I must confess that I've not had many complaints from retailers about the actual administration of the sales tax legislation in the province of British Columbia now.

On April 17 it said: "Bitter Fight Continues Over Sales Tax Measure." It was hard-fought 35 years ago.

"A bitter fight over the sales tax bill was waged last night as the Legislature continued to examine it clause by clause. Some of the most contentious clauses are still to be considered when the government brings its amendments to the floor of the House Monday. Throughout the debate the opposition benches claimed to be trying to protect the interests of the small merchant, while the government claimed it was only desirous of curbing evasions by the 'big fellows.' When CCF Whip Herbert Gargrave objected to the 10 percent penalty for failing to remit the tax, Finance Minister Herbert Anscomb charged he was trying to 'make a mountain out of a molehill for political purposes' and was playing to the press and the public galleries."

Well, there are not many press to complain to today, Mr. Speaker, and not many in the public galleries.

"The opposition objected to provisions which permit the commissioner to assess the tax against any person who had not paid, or where the payment was not substantiated by records...."

Going on with the history of this particular legislation: "Government Seeks Unlimited Powers for Sales Tax Act. Virtual Taxing by Order-in-Council Amendment's Aim. Expect Protests." That's the headline.

"Unlimited powers are to be taken by the provincial government itself, rather than the Legislature, to decide who shall pay the sales tax and who shall escape it."

Mr. Speaker, I have to say again: what else is new? In bill after bill before us in this session of the Legislature, the government is taking more and more power away from the community generally, taking that power into the hands of cabinet ministers and into the cabinet rooms. In 1948 the government was accused of doing the same thing:

"The government amendment to the act placed on the order paper last night virtually sets up a policy of taxation by order-in-council. In the lobbies some Coalitionists showed grave concern over the principle to be established by the amendment. Said one of the oldest and most prominent members outside cabinet ranks, 'We might as well pack up and go home now. This overrides everything else in the bill.' It was not debated last night, but is expected to bring a storm of protest from opposition benches and some Coalition members as well early next week. To be moved by Finance Minister Herbert Anscomb, the amendment says: 'The Lieutenant- Governor-in-Council may make such regulations as are considered necessary or advisable.'"

Mr. Speaker, that same clause shows up in bill after bill before the Legislature in 1983.

Pattullo — I was almost going to say, "Remember him, Mr. Speaker?"; but you wouldn't.

Interjection.

MR. STUPICH: There's an interjection from across the floor. I'm not going to identify the source, but the interjector identifies Pattullo as a great man. I'll say this for him: he was not an opportunist. He was a capital-L Liberal. I'm not going to ask the member who made the interjection to identify himself or ask him what his politics were a few years ago. Pattullo was a capital-L Liberal from the beginning. He was the Premier of this province for quite a number of years. He led his party into an election and they did not come out of that election with a majority. When it was decided by his caucus to enter into a coalition with another caucus which he had been fighting all the time he had been Premier, he wasn't prepared to sell his soul for the sake of continuing as Premier. He was not an opportunist. He had his principles as a member of the capital-L Liberal Party, and if he couldn't lead a government of capital-L Liberals as Premier, then he was not prepared to stay in office as Premier simply as an opportunist. Some of the members on the government side of the House might take that message to heart; I doubt that they will.

[ Page 2285 ]

In any case, getting back to Pattullo's comment:

"Pattullo Says Sales Tax 'Crude, Discriminating, Hodgepodge.'"

"Sharp warning that a provincial sales tax would prejudice British Columbia in further negotiations with the Dominion was sounded here yesterday by ex-Premier T.D. Pattullo. He described the measures now before the House as an 'unfinished, crude, discriminating, hodgepodge piece of legislation' that should not be proceeded with but should be discharged from the order paper. 'At the present time,' Mr. Pattullo said, 'the province has an agreement with the Dominion under which the province refrains from the levy of income tax and some other impositions, in return for which the Dominion undertakes to contribute unstated sums to take care of various necessary social services. Ottawa will, I think, look upon the application of the sales tax as something in the nature of a breach of the spirit and intention of the dominion-provincial agreement.' "

The Hon. T.D. Pattullo in his day had his arguments with Ottawa. He had some experience and anticipated there would be that difficulty. I don't have any idea whether....

Interjection.

MR. STUPICH: Yes, that comment is valid. Plus ça change, plus c'est la même chose.

He had his difficulties with Ottawa. I recall one occasion, prior to this date — actually, in the mid-thirties, when he was still Premier — when he went to Ottawa. He wanted more money from Ottawa to help pay for social services. As he said, there was an agreement, and he wanted more money from Ottawa to help pay for social services in the province. He was a bit of a rebel and not all that friendly with the then Prime Minister William Lyon Mackenzie King. King is reported to have said to Pattullo: "Why should I give you more money to hand out to people in British Columbia?" And Pattullo's response was: "If you don't, it'll be Harold Winch who'll be coming down here as Premier next time." So Pattullo got his money; he was a great bargainer. As I say, he had his experience dealing with Ottawa, and he knew how to get what he wanted out of Ottawa. He was concerned that this might affect relations. I don't know whether it did or not.

The Daily Colonist, April 18, 1948, said in an editorial: "One hesitates to believe that the Legislature will be so docile as to accept the latest proposal of the provincial cabinet — that the House should in effect forget about the details of the sales tax bill and just leave them to the tender mercies of the government." Once again, government by regulation. The same sort of legislation that has been introduced in this House in bill after bill in this session. At that time it was being done on only one bill, and yet it was the occasion for people to write editorials, for opposition members to speak against it, and for people outside the House to oppose it. The editorial goes on: "This is an open affront to the Legislature, in addition to being utterly unwarranted. The sales tax bill is now before the House, and it is there that its taxing provisions should be determined, not afterwards in some secret hole and corner." How better can we describe the way in which cabinet minister after cabinet minister has brought in legislation in this House and said that he or she wants to have control of that in their own hands in some — as this editorial puts it — secret hole and corner? They don't want the Legislature to have the authority; they want to be able to bring in regulations that will have it and to exercise the authority.

Another editorial, April 22:

"Unpopular Legislation." "As was anticipated, the sales tax bill, under the specious title of Social Security and Municipal Aid Tax, has been rammed through the Legislature and now awaits only the customary royal assent before becoming operative. Actually, there will be a few weeks' grace before the burden of this additional levy begins to be felt. After that there will he little escape from it on the part of most citizens. It will take a week or two to set up the manifold administrative machinery that will be required, and one does not doubt that in the process there may be what could be called a field day among governmental personnel. It cannot be said that the provincial government made out a good case for the imposition of this new tax. Among the views expressed in opposition were those of responsible Coalition opinion, well versed as to the financial state of the treasury, its needs and its likely revenues from other sources."

We haven't heard from such voices today or in this session. We haven't heard anyone on the government side of the House raising questions about the need for the increase in the sales tax levy that is proposed in the legislation before us now. We've heard it from many other people. We've certainly heard it not just from the opposition but from many people outside of the House. In those days people on the government side of the House dared stand up and speak against government legislation if they felt the legislation was hurting the public interest in some way.

In that respect we have changed, Mr. Speaker. During the three and one-third years that the NDP administration was in office it was done. NDP members of the caucus, if they felt opposed to some legislation, felt perfectly free to speak against government legislation and did on many occasions. But that has not happened since the government changed hands in December 1975. There have been questions and concerns raised by government back-benchers about some aspects of government policy, but not a single person has ever dared stand up and vote against any issue, any matter of government policy, including some who like to be described as mavericks. When it comes to voting, the mavericks get in line. "The emphasis placed on social security has not obscured the general feeling that the tax could have been done without, and that more precise budgeting would have shown this to be the case." I will make the same argument in this debate: that better budgeting would have done away with the necessity to increase the sales tax.

The Times, April 20, 1948; the CCF were still fighting, still trying to get amendments through, and in this instance the CCF failed to exempt light, phone and gas from sales tax.

'A move by Herbert Gargrave (CCF, Mackenzie) to exempt electricity, domestic gas and telephone services from the 3 percent retail tax was defeated in the Legislature this afternoon. The House voted down the amendment of Mr. Gargrave after Attorney-General Gordon S. Wismer had said it would result in loss of big revenues from business corporations, and in a sense, Mr. Gargrave would be relieving the rich." That's another argument I want to bring up again, Mr. Speaker. He's speaking in part about the regressivity of the sales tax, and I'd like to discuss that a little later on.

[ Page 2286 ]

"Mr. Gargrave responded by proposing a further amendment which would exempt these services for home consumers but not commercial purposes. This was also defeated in a show-of-hands vote in which" — that name comes up again — "W.A.C. Bennett (Coalition, South Okanagan) and James Mowat (Coalition, Alberni) voted with the ten CCF members and Thomas Uphill (Labour, Fernie)."

I have another reference here to the two most contentious sections of the sales tax bill being passed as reported in the Victoria Times of April 20.

"The Legislature, during a two-hour sitting between 11:00 and 1:00 today, passed two of the most contentious sections of the sales tax bill. There are but two other contentious sections to be approved by the Committee of the Whole House before the bill is ready for third reading."

Again, what else is new? Times, April 21: "Three Percent Sales Tax Passes House with CCF Seeking Six Months' Hoist."

MR. REID: Can we get it back to that somehow?

[12:30]

MR. STUPICH: Get it back to 3 percent? Yes, I think we can, Mr. Speaker. Let's try changing governments and see what happens.

Interjections.

MR. STUPICH: I don't mind the interjections at all. May I remind those who are offering all of this assistance to me that not once in our three and one-third years in office did the NDP administration ever increase the sales tax, but we did increase the exemptions. This administration has increased....

Interjection.

MR. STUPICH: I think I'm speaking rather generally in second reading, about as general as I can be, but if the hon. Minister of Consumer and Corporate Affairs (Hon. Mr. Hewitt) wants to talk about us blowing money, then I'm quite prepared to get into that debate as well and would welcome him to respond. I'm tempted but I won't — at least not today — unless he gets to be so provocative that I feel obliged to respond to some of his comments. I'll resist the temptation up to this point and leave it between you and him to see that I resist it.

DEPUTY SPEAKER: I appreciate that, and I'm sure the House can stay in order.

MR. STUPICH: I'd love to get into that debate. I really want to and will. I've done it many times in the last seven years and nine months, and I will be doing it again and again, but not today.

"British Columbia's 3 percent retail sales tax legislation today requires only royal assent to become law. The measure went through third and final reading Tuesday" — April 21, 1948 — "despite a last-ditch attempt by the CCF opposition to hoist third reading of the bill for six months. In the division vote on this amendment, two government members, James Mowat (Alberni) and Dr. J. J. Gillis (Yale), voted with the nine CCF members present and Thomas Uphill."

It doesn't mention W.A.C. Bennett in this instance. I'm not sure whether he was absent or whether he actually voted with the government at that time.

On Tuesday, June 28, people were still fighting. "B.C. Manufacturers Lodge Tax Exemption Appeals." "A delegation of B.C. manufacturers today asked the provincial government to assure that non-permanent equipment and consumable materials used by industry in producing goods, including gold and goods for export, will be exempt from the 3 percent sales tax."

It is reminiscent of the 1975 election campaign, when the then Leader of the Opposition and now Premier of the province travelled around the province promising to take the sales tax off building materials in an attempt to get the economy moving. In those days, when he was being an irresponsible Leader of the Opposition, he was recommending tax increases to get the economy moving. Now he's the leader of the government which is imposing tax increases, and he says that too is going to get the economy moving — or at least it's going to be one of the steps to bring us further along the road to recovery.

"The government will start collecting the sales tax, formerly known as the social security and municipal aid tax, on July 1." And that brings me back to my opening position, the question that I did put to the minister. This legislation was first introduced March 18, 1978. Three months and 13 days later it was going to become effective. So I have to wonder again why it is necessary to withhold this kind of information from people. Why not let the information out ahead of time and discuss it? Let people have an opportunity to make their representations against any increase in tax. Suppose they do go out and buy some goods in the interim period. That would do nothing but good in today's economy. "The delegation for which T. G. Norris, KC, of Vancouver served as spokesman argued that it was the intention of the Legislature that such goods be exempt." I'm not sure whether he won that argument or not, but I rather doubt it.

Friday, April 9: "Vancouver Citizens Angry over New Tax." I don't think we'd get much of that response today. I think had the government done only that on July 7, not brought in the other 26 pieces of legislation but brought in a budget — and I intend to get into some the details of this budget that was not a true budget — and brought along with it legislation to increase the sales tax, then there might well have been comments such as this. But the load of 26 pieces of legislation is so heavy and there are so many things to complain about that there really hasn't been that much concern about the sales tax increase.

"Man-on-Street Sounded Out." "Vancouver's men and women on the street today were mad at the provincial government. Their firm conviction, as recorded by a roving Vancouver Daily Province reporter, is that the 3 percent sales tax is just another straw in the cost-of-living load that is almost breaking the back of the average consumer."

That argument could be made today with respect to the poorest people in the community. Those people from whom we are denying assistance by legislation that was passed previously in this chamber — Bill 4, for example, which withdraws income tax credits.... We're saying to those people: "We're going to deny you these tax credits, but we're going to increase your cost of living by increasing the sales

[ Page 2287 ]

tax by one point." Is it necessary? Mr. Speaker, I will argue later on that it isn't.

We certainly know it is going to increase the cost of living for everyone, and that's going to weigh most heavily on the poorest people of the community, the ones whom we have said, by other measures, must bear a disproportionate share of the cost of fighting the government's deficit. "Newly married Mrs. Helen Lapinsky, 2442 East 40th, looks at it this way: 'With all these taxes, the kids getting married will never be able to own homes. I know we're trying.' Salesman A.M. Kane, 1941 Aspen, was more vehement: 'Brother, your paper couldn't print what I think of that tax.'" People were upset about it, Mr. Speaker, but that was the most exciting thing that happened in that session. That's why it attracted all of the attention it did.

An editorial in the Vancouver Daily Province: "Why the Sales Tax Sticks in Our Crops." "The bitter pills the doctor prescribes are usually sugar-coated — they go down a lot easier that way. But the sales tax pill British Columbians are being obliged to swallow is being administered without any soothing syrup, without any effort to make it more palatable by promising that every sales tax dollar will be stretched until it squeaks." We're getting the same promises today. We're being told that the government is going to tighten its spending, is going to control its profligate spending habits.

Then there was the story the other day about the tens of thousands of dollars that were being spent in the B.C. Stadium entertaining. That's not really a very good example of tightening our belts, or of restraint. It's hard to tell people that they have to pay an extra point in sales tax and that they have to do without the necessities of living, and at the same time show that kind of example of how the cabinet is going to control its spending.

"Nobody loves a new tax." That's true, Mr. Speaker. I think I've said this before in this Legislature and on many other occasions: the only good tax is the one that somebody else is paying. "It is natural that British Columbians should protest against a levy that will pile another load on the high cost of living and be a costly nuisance to the retailer as well." All of that was true, but it was bringing in 16 percent of the budget. The government went ahead and won the day. "Yet this resentment would be less and shorter-lived if the government had made a determined effort to avoid imposing the tax by pruning costs to the minimum, by exploring every avenue of economy." The government's record over the last seven years, but especially the last four years, has done nothing to convince us that they have explored every method of pruning costs before bringing in this increase in tax.

In the Province of April 17: "Sales Tax — Let's Look Before We Leap." "This province's impending sales tax has run into serious trouble, the kind of trouble that should make the government stand back and take a long, hard look at the tax and all its ramifications. Obviously the levy should have had that kind of scrutiny long before it got on the floor of the Legislature." Here's the recommendation 35 years ago: that the government should have brought this measure in and let the community talk about it, discuss it and argue about it with the government before ever imposing it. In those days, as I said earlier, it was brought in in March and was not imposed until July 1, so there was some advance warning of it. Today there is none at all.

I strongly commend to the minister that he should consider in future letting people know what's going to happen before it happens. Why not?

Interjection.

MR. STUPICH: Mr. Speaker, the Minister of Agriculture and Food (Hon. Mr. Schroeder) says: "Not on money measures." I would recall to him that the sales tax measure that was introduced in 1948 was done so in March of 1948 in the budget speech and by legislation, but it was not implemented until after the debate in the Legislature was complete, and until the machinery was set up. It was not implemented until July 1, three months and two weeks later.

We should open our minds to this idea. I know our minds have been closed, and mine was until I read this. I accepted, without reservation, that when it came to money matters you had to make them effective immediately. But that isn't always the case with respect to federal money measures. The Minister of Agriculture and Food wasn't in the House when I was speaking about this earlier, and he says: "There's an advantage to some and a disadvantage to some." So be it, Mr. Speaker. They all know what's happening at the same time. As I suggested earlier in the House — and he's interested enough to ask, and I'm interested enough in his interest to respond again — supposing people, in the knowledge that the sales tax was going to go up one point, did go out and buy a bunch of goods so that the government would lose that 1 percent increase in revenue, but consumers would spend a lot more money in that period, would get into the habit of spending, and maybe would keep on doing it after the date. So it would be good for the economy.

There is a bit more of the history, but I'm just about over the 1947-48 period. I'd like to look at the events that followed, and with that in mind, and to give me a chance to look over some of this stuff this afternoon and evening....

Hopefully the House will not be sitting all weekend; without having to respond in the House, I hope I'll have all weekend. With that in mind, Mr. Speaker, I move adjournment of this debate until the next sitting.

Motion approved.

HON. MR. CURTIS: Mr. Speaker, pursuant to section 43 of the Financial Administration Act the Minister of Finance is required to table before the Legislative Assembly a statement of all government borrowings under this section of the act, the rates of interest and the terms and conditions of such borrowings.

On August 23, 1983, the government issued notes at par for an aggregate principal amount of $100 million. The notes are dated August 23, 1983, are non-redeemable prior to maturity, and are due five years from the date of issue. Interest is at a rate of 11½ percent per annum, payable half yearly on February 23 and August 23. Terms and conditions of the borrowing are presented in the form of the note, a specimen of which is attached.

Hon. Mr. Schroeder moved adjournment of the House.

Motion approved.

The House adjourned at 12:45 p.m.