[ Page 3365 ]

CONTENTS

Ministerial statement

Ombudsman's report on log-scaling. Hon. Mr. Smith –– 3365

Mr. Macdonald

Routine Proceedings

Oral Questions

Police investigation of Ministry of Tourism. Mr. Cocke –– 3368

Mr. Barrett

Ministry of Forests scaling practices. Mr. Barrett –– 3368

Labour Code Advisory Committee. Mr. Gabelmann –– 3369

Income assistance cheque surcharge. Mr. Barnes –– 3369

Budget debate

Mr. Stupich –– 3370

Mr. R. Fraser –– 3372

Mr. Howard –– 3374

Mr. Davis –– 3378

Mr. D'Arcy –– 3381

Mr. Michael –– 3386

Mrs. Dailly –– 3387

TUESDAY, FEBRUARY 21, 1984

The House met at 2:07 p.m.

MR. KEMPF: In the gallery and in the precincts with us this afternoon are several members and associates of the British Columbia Independent Logging Association. I would like this House to make them all welcome. I would particularly welcome three of the members from the beautiful Bulkley Valley: Mr. Rod Penway, Mr. Bill Gurney and Mr. Harvey Burns.

MR. MOWAT: It's my pleasure to introduce to the House today two delegations. The first is Mr. Norm Thomas, who is the registrar of the British Columbia College of Pharmacists, formerly from Kimberley, B.C. In the Columbia River riding of my colleague the Provincial Secretary (Hon. Mr. Chabot). Mr. Thomas is responsible for the licensing of the pharmacists in British Columbia, of whom there are over 2,300. I'd ask the House to welcome Mr. Thomas to the House today.

I have another introduction. With my colleague Jack Kempf from Omineca it's my pleasure to introduce to the House the British Columbia Independent Logging Association. There are a number of members with us today. Their president is Ross Martin. I'd ask the House to welcome their president and the delegation.

HON. MRS. McCARTHY: Mr. Speaker, I'm very pleased today to inform the House that we have visitors from Toronto, along with the executive director of the Canadian National Institute for the Blind for British Columbia and the Yukon, Mr. Gary Magarrell. Our visitors with him today are Mr. Euclid Herie, the managing director of the CNIB in Toronto, and Michael Jory, the newly-appointed national treasurer for the CNIB, also from Toronto. I want to ask all members of the House to give our visitors, as well as Gary Magarrell, who does such an excellent job on behalf of all of us in British Columbia, a very warm welcome.

MR. PELTON: Mr. Speaker, in your gallery today is one of my nephews, who is visiting in Victoria, Reed Ratcliffe. I would like the House to welcome him here.

MR. GABELMANN: In their introductions the member for Omineca (Mr. Kempf) and the second member for Vancouver–Little Mountain (Mr. Mowat) neglected to introduce a former colleague of theirs, Mr. Howard Lloyd. I'd like the House to make him welcome.

MR. REID: Mr. Speaker, it gives me a great deal of pleasure to introduce the chairman of the board of the school district of Delta, Caroline Porter. She's in the precincts.

OMBUDSMAN'S REPORT ON LOG-SCALING

HON. MR. SMITH: I wish to make a statement arising out of the filing in the Legislature in the latter part of last week of the ombudsman's special report No. 7, entitled "An Investigation by the Ombudsman Into a Complaint About Ministry of Forests' Scaling Procedures at Shoal Island, British Columbia."

On January 26, Mr. Speaker, the Assistant Deputy Attorney-General in charge of criminal justice requested the commercial crime division of the RCMP to examine into potential criminal conduct arising out of the Shoal Island scaling. Once a criminal investigation is underway, it is incumbent upon the government not to make comments which might either impede the investigation or affect the ability of persons who could later be charged with a criminal offence to obtain a fair trial. Publication of this report by the ombudsman during a criminal investigation, and after he was specifically apprised and warned that the investigation had been undertaken, is a matter of serious concern to me as Attorney-General in the administration of justice. The publication of that report at that time may well jeopardize the investigation as well as affecting the rights of persons who could be ultimately charged. But I wish to put this in clear perspective and to outline to the House exactly what events took place.

In December 1982 Ian Mahood, a contract logger, made a formal complaint to the ombudsman in which he alleged faulty scaling procedures on Shoal Island logging contracts which he said resulted in underscaling by ministry officials with a resultant loss of considerable sums of money, both to contractors and provincial revenue. During the next year the ombudsman investigated these complaints and corresponded with various government officials and persons involved. Having already communicated his conclusions to the Deputy Minister of Forests by a letter dated December 19, 1983, the ombudsman finally on January 11, 1984, submitted his report formally to the provincial cabinet for its consideration, as is his duty under section 22 of the Ombudsman Act.

In this lengthy report, the ombudsman recommended that the Ministry of Forests take certain corrective action in relation to timber scaling. On January 16 the cabinet secretary acknowledged receipt of that report, and he advised officials in the ombudsman's office that the report would be studied. When reports have been received from the ombudsman by cabinet in the past, a reasonable number of months for study and consideration of recommendations has always been afforded to the government by the ombudsman before he embarks upon the statutory step that is open to him: namely, filing his report with the Legislative Assembly.

Indeed, on February 9 of this year the cabinet secretary confirmed again to the ombudsman's officials that the Shoal Island report was still under study. But on February 13, Mr. Speaker, an ombudsman official called the cabinet secretary and advised him that the ombudsman intended to go public with his report very soon if a response was not forthcoming. The following day, February 14, the cabinet secretary confirmed with the ombudsman in writing that his report to cabinet continued to be under active investigation.

[2:15]

But because this matter had been placed under criminal investigation on January 26, the Deputy Attorney-General, concerned by the ombudsman's haste to publish these findings, delivered to the ombudsman on February 15, 1984, a letter in which he advised the ombudsman that a criminal investigation was underway and that it would not therefore be appropriate for the government to respond to the report. He indicated as well to the ombudsman the consequences that would flow to the investigation and to innocent persons if there were at this time public comment on the conduct of those involved in the scaling procedures.

[ Page 3366 ]

I wish to read Mr. Hughes' letter of February 15 to the ombudsman. I will be filing with the House all of the correspondence that I'm going to refer to, and it will be publicly available:

"Dr. Karl Friedmann, Ombudsman

"February 15, 1984

"I write further to Mr. Hick's letter of February 14, which, I understand, was delivered to you earlier today."

That's the letter confirming that the cabinet were reviewing it

"As stated, active review and investigation of this matter continues. As Deputy Attorney-General, I believe it is incumbent upon me to enlarge for you on the nature and extent of the review and investigation.

"I wish to advise you that one of those to whom you wrote on December 19, 1983, has, both before and after your report, been in written communication with the government about the very matter that forms the subject of your report. On the day on which your report is dated, that party wrote to a senior official in government with whom he had been engaged in ongoing correspondence, providing him with information which, for the first time, raised the question of the presence of criminal activity within the conduct that your report addresses. That being so, on January 26, 1984, the Royal Canadian Mounted Police were asked to examine the matter to determine whether any criminal conduct might be present.

"I am advised that the requested examination is now in progress. Just as soon as it has been concluded, the Lieutenant-Governor-in-Council will be advised and you will then be contacted by way of a response to your January 11 letter and report, subject only to any continuing limitation that criminal proceedings might, for the time being, impose. It is that same limitation that prevents, as I am sure you will appreciate, further response or comment at this time, bearing in mind that nothing ought to be said or done that could impair or hinder the investigation, or improperly reflect upon those subject to investigation, and who at this stage, under our system, as innocent persons are entitled to all the benefits that our law provides to those in such a position. Those ministers of the Crown holding responsibility in matters relating to the investigation have been advised by me through concurrent mail that they should, for the indicated reason, govern themselves within the spirit of the content of this paragraph."

In that letter the ombudsman was formally advised of the investigation, and also advised that that investigation had been commenced because of a communication received from one of the individual complainants, Mr. Ian Mahood. He wrote to the Deputy Minister of Finance on January 11, 1983, and I will table his letter as well. That letter was passed on to the assistant deputy minister of criminal justice, who made the decision himself that the matter should be referred to the RCMP. In a paragraph in that letter Mr. Mahood said: "I have been provided a copy of scale returns taken from the files of the ministry that are said to be falsified records. I cannot express a view on the facts, but if the allegation is correct, it would suggest that there has been collusion to defraud." It was following the receipt of that letter that a senior official in my ministry, acting in the best traditions of law enforcement, turned this over to the RCMP, who commenced their investigations shortly after January 26.

That was the background when the deputy minister, Mr. Hughes, wrote to the ombudsman the letter that I've just read and delivered it to him in the late afternoon of February 15. I was absent in eastern Canada last week when the letter was written, but its content has my full and complete endorsement. With a police investigation underway, the government could not make a full or proper response to the ombudsman's report within the time demanded by him. The same situation prevails today. The impropriety of responding to the merits of the Shoal Island allegations, either then, now or during the course of a police investigation, has severe implications for the administration of justice.

The message that was inherent in Mr. Hughes letter was strong and clear. The ombudsman's immediate response, however, was set out in a reply to the Deputy Attorney-General on February 16, the same day that he delivered a copy of his report to the Legislative Assembly. I will read his reply:

"Thank you for your letter of February 15, 1984, informing me that you have referred allegations of criminal activity regarding some aspect of the Shoal Island complaint to the RCMP for examination. This was the first time I was made aware that such allegations have been raised. As you know, my investigation of this complaint has been ongoing since December 1982, and my report, pursuant to section 22 of the Ombudsman Act, was made on December 19, 1983, concluding my investigation of the matter.

"I do appreciate your courtesy in providing me with this information. I understand why you do not feel at liberty to discuss particulars of the RCMP examination. However, this poses a difficult dilemma for me. Mr. Parfitt has been in contact with Mr. Hick over the past two weeks and has advised Mr. Hick of the urgency regarding this complaint. Some of the complainants are in desperate financial circumstances and look forward to the resolution of their complaint. I have been advised by Mr. Hick that cabinet is considering this matter, but I have not been given any indication as to whether or when I can expect a firm response.

"It is my opinion, based on the information that I have been given, that a report to the Legislative Assembly will not jeopardize the RCMP examination into allegations of criminality. In my report I make no allegations of misconduct on the part of any employee — or anyone else, for that matter. I am sure that if you had concerns after being advised of the content of my report to cabinet, you would have suggested in your letter to me that publication of the report would jeopardize the RCMP investigation. Weighing all of this information, I have decided to proceed with making my report to the Legislative Assembly this day. From my assessment of the complaint and the facts revealed by my investigation, I am convinced that the complaint and my recommendations can be properly addressed by the cabinet and the Legislative Assembly, even if, or even while your ministry or the RCMP considers whether there is cause to begin an investigation. I will advise Mr. Hick by copy of this letter.

"Again, thank you for apprising me of this information."

[ Page 3367 ]

That was his response, and he filed the report in the Legislature.

It is axiomatic, Mr. Speaker, that when people's conduct is under criminal investigation, responsible officials withhold comment and do not publish material which bears on, interferes with or affects that investigation. Having been warned in writing that a police investigation had been undertaken for several weeks to determine the existence of criminal activity, the ombudsman hastened to publish his report. Taking this precipitous step, the ombudsman decided it was more important to publicize the report than to concern himself with jeopardizing the criminal investigation or with risking compromising the rights of loggers, scalers and other persons involved, who are presumed, under our system, to be innocent. By publishing this report at this time, the ombudsman has generated wide public discussion and extensive media coverage. He himself continues to this day to discuss his report on the media. I can only conclude that the ombudsman has displayed both poor judgment and inappropriate conduct.

It should be made clear that the matter was referred to the RCMP in response to a specific written complaint. There never was any doubt that the government would make a full response to the merits of the ombudsman's recommendation, following completion of the criminal investigation and in accordance with the procedures set out in Mr. Hughes' letter to the ombudsman. Unfortunately, though, there is no shortcut under our system for carrying out proper and even-handed administration of justice in a way that is fair both to the public and to innocent persons. I am filing copies of the correspondence from which I've quoted in this statement.

I wish to emphasize most strongly that regardless of how the ombudsman may perceive his duties in discussing conduct that he knows is under active criminal investigation, I will never, as Attorney-General of this province, waiver from my duty and the responsibility that rests with me to ensure that every criminal investigation, regardless of publicity, will continue unabated and without interference, and in such a way as to ensure that justice has been done to persons who might ultimately be charged with offences; and to ensure that those persons, if they are charged, will ultimately receive a fair trial under our system, a system which holds that people are not prejudged as guilty, nor are they tried in headlines or in Hansard. In the event there is evidence, they are tried in a courtroom by their peers.

I will watch very closely the effects of the ombudsman's publication of this report and the publicity and discussion that is attendant on it, and the effects those may have on the investigation and on possible criminal charges.

MR. MACDONALD: Mr. Speaker, on behalf of the opposition, the Attorney-General of British Columbia, in the familiar tradition of his predecessors, is side-tracking a public inquiry into the contents of the ombudsman's report. Any government could, by a criminal investigation within very narrow limits as to whether John Smith or Joe Doe can be proven in court on a particular charge of guilt beyond a reasonable doubt, deflect the parliament and the legislatures of this country from doing its duty to inquire, investigate and remedy, which is called for in these recommendations. Attacking the ombudsman, as the member for West Vancouver–Howe Sound (Mr. Reynolds) did the other day, is attacking, in a most unfair way, the messenger, who has a statutory duty to investigate and report to this Legislature. His recommendations have nothing to do with any criminal charge against anyone. They're set out on page 25. The Attorney-General is obviously just derailing, in accordance with the kinds of answers we had yesterday, a public inquiry.

I remember when, as Attorney-General, I came into office and asked them to bring me the Butler report on the Sommers case. I got it and I left it in my drawer for my successor. It recommended a prosecution. It was suppressed. I'm not saying the cases are parallel. I'm saying that police investigations and reports have traditionally been kept secret, particularly by that government. Where is the police investigation and report, even though it recommended a prosecution into the conduct of the then member for Central Fraser Valley? Suppressed. Secret.

HON. MR. GARDOM: Mudslinger!

MR. BARRETT: It's the truth!

MR. SPEAKER: Order, please, hon. members....

HON. MR. GARDOM: Just like Vogel was the truth.

MR. MACDONALD: There was no public inquiry in that case either. But I'm just going to make my statement. I'm not trying to get into a debate with the members opposite.

It appears to me, Mr. Speaker, to be like, say, the case inquiring into "Gracie's Finger," where evidence was taken on oath through an attorney of the Attorney-General's department, and the evidence suppressed; and then the ombudsman, who had proceeded with his investigation, was blocked in court by the government, and nothing happened. This ombudsman has the courage to stand up to government. I hope that he will never allow himself to be intimidated by the kind of language that has come from the mouth of the Attorney-General today.

[2:30]

The loggers who have said they have been bilked of many hundreds of thousands of dollars are entitled to be heard through this Legislature in open proceedings. The people of British Columbia, when there are serious allegations — not of criminal conduct, but of gross incompetence, gross mismanagement of our prime natural resource and wilful blindness on the part of the government — are entitled to know. After knowing about these matters for more than a month, the Minister of Forests is going away, while the Legislature is sitting, on a trip to Europe, I understand, which should be postponed. That minister is accountable to this Legislature and these people of British Columbia and should not be running away.

I conclude by saying that in the city of Toronto at the present time there is a public inquiry going on, authorized by the Legislature, into what is obviously potentially criminal conduct — the death of many infants in a Toronto Hospital. The Legislature, the parliamentary supremacy, has the right to investigate. Many criminal charges have flowed out of public investigation. But the supremacy of parliament is what is at stake. If we give up our right, as the supreme law-making and investigatory tribunal under a democratic system of government. to investigate, advise and remedy, then people will think very poorly of the democratic system of government.

What we are confronted with here is a ploy on the part of government to derail what should be called for forthwith — a public inquiry into the contents and allegations of the ombudsman's report.

[ Page 3368 ]

Oral Questions

POLICE INVESTIGATION
OF MINISTRY OF TOURISM

MR. COCKE: Mr. Speaker, I'll direct a question to the Attorney-General. Will he advise the House of the status of the police investigation that was ordered into the Ministry of Tourism some months ago?

HON. MR. SMITH: Mr. Speaker, that investigation is proceeding. I have not received the report, which I had expected to receive by now. I understand that it is imminent, but I have not yet received it.

MR. BARRETT: Mr. Speaker, can the Attorney-General inform this House as to the last time he made an inquiry as to when the completion of the investigation could be expected?

HON. MR. SMITH: In the past week, Mr. Speaker.

MR. BARRETT: I have a supplementary question for the Attorney-General, Mr. Speaker. Has the Attorney-General made a decision as to whether or not he will make the police report public to this Legislature?

HON. MR. SMITH: Mr. Speaker, not having seen the report, I find it hard to make a decision on it. But I think the member understands the tradition, as does his seatmate, the second member for Vancouver East (Mr. Macdonald), who actually held the office of Attorney-General — although it is hard to understand that after hearing his remarks earlier this afternoon. He knows that police reports are not ordinarily made public. Certainly what does happen following a police investigation and the receipt of a report is that a public statement is made, or something happens and public disclosure is made, and that is very different from making public the entire police report.

MINISTRY OF FORESTS SCALING PRACTICES

MR. BARRETT: I have a question for the Minister of Finance, Mr. Speaker. Yesterday I asked him the exact date that he was notified of the allegations in the ombudsman's report relating to the treasury not receiving its full revenue from forestry reserves. Could he tell the House now the date that he was first notified?

MR. SPEAKER: Hon. member, I believe that question was taken on notice by the minister.

MR. BARRETT: Mr. Speaker, the question was taken as notice and the minister said that he would check his diary. Has he checked his diary yet?

MR. SPEAKER: A question taken on notice, hon. member, cannot be asked again. However, if the minister wishes to reply....

MR. BARRETT: No, it was a different question.

MR. SPEAKER: No, hon. member, the question in essence is the same; however, the....

The Minister of Finance.

HON. MR. CURTIS: Mr. Speaker, I undertook to check my diary and bring that information back to the House. The hon. member will know that I have been fairly actively engaged in the intervening hours.

MR. BARRETT: A question to the Attorney-General: has he been asked to advise through his department whether revenues alleged to have been missed by the Crown can be collected under existing legislation related to the matter of Shoal Island?

HON. MR. SMITH: Not in my capacity as Attorney-General, but the Ministry of Attorney-General has given an opinion in relation to this matter, which is referred to and quoted in part in Dr. Friedmann's report. A legal opinion was given by the Ministry of Attorney-General. Opinions were also given to Dr. Friedmann by several practising lawyers, and an opinion was given to B.C. Forest Products, as I recall, so there are all those legal opinions.

MR. BARRETT: To the Attorney General. Is he prepared to table with this House the mentioned opinions from his department?

HON. MR. SMITH: Mr. Speaker, I may do that. I am actively considering doing that very thing. I might say that the normal policy on legal opinions in relation to ombudsman investigations is this: if there has been an opinion obtained prior to an investigation, that opinion is normally turned over to the ombudsman so that he may examine it as part of his investigation. But if the opinion was obtained by the government as a result of the investigation, those are usually kept as privilege. I don't understand that that has to be an inviolable rule. It may be that on some occasions those opinions should be made public or should be given to the ombudsman. I think circumstances change and are not the same in every case. Certainly I would consider making that opinion public, but it was obtained in the wake of an investigation. It was obtained in a solicitor-client way by a ministry from a counsel working for government.

MR. BARRETT: Mr. Speaker, I assume that the clients of the Attorney-General are the people of British Columbia. In that vein, I ask this question of the minister: could he explain the definition of policy that would allow him to give an opinion on the ombudsman's report regarding the recovery of money and at the same time state today that expressing an opinion before the completion of a criminal examination would be incorrect?

HON. MR. SMITH: Mr. Speaker, the member either doesn't understand criminal procedure or is being somewhat facetious with this. The member has to know that there is absolutely no requirement for silence or lack of debate on any matter that isn't either before the criminal courts or may be going before the criminal courts and is imminently being examined for progress through the criminal courts. Until such time, there is absolutely no reason why matters can't be discussed and why opinions can't be given or even commented on. But the general rule is that once a matter goes to criminal investigation, responsible people.... Indeed, the Leader of the Opposition would have to agree that it is not responsible to start discussing the merits of conduct that is under criminal investigation, because it may be that as a

[ Page 3369 ]

result there is no criminal prosecution, but it may be that as a result there is. The people who are being investigated don't get a chance to go before a jury who have not already for six months read in the press various versions of the allegations, and they don't have a chance to get a fair trial. That's endemic and deeply rooted in the system, and the member has to know that.

MR. BARRETT: Mr. Speaker, I want to thank the Attorney-General for the law lecture. Now that I am receiving this lecture I would like to ask a series of questions related to the lecture. If, sir, the criminal proceedings were being contemplated by the government, why then, prior to the request for an investigation, did the government come to the conclusion that it was necessary to offer a legal opinion on whether or not the funds could be recovered? If you were thinking of a criminal investigation, why would you ask for a legal opinion as to whether or not the funds could be recovered? If you feel — in the same question — that the ombudsman should not discuss opinions, why indeed were you prepared to discuss your opinions on the tax matter before the criminal investigation? What defines your right to decide when your opinion should be discussed, but not the ombudsman's?

MR. SPEAKER: Part of the question is in order. However, I would remind all hon. members of the regulations regarding question period. A question must not ask a solution of a legal question such as the interpretation of a statute.

HON. MR. SMITH: To try and distil that portion of the question that is in order and is not convoluted and confused, as most of it is, the determining factor there is whether there are contemplated criminal proceedings. There were no contemplated criminal proceedings in this case until Mr. Mahood wrote the Deputy Minister of Finance on December 11 and alleged possible fraudulent conduct. It was at that moment, and at that moment only, that criminal proceedings were contemplated. The legal opinions that were obtained in this case on all sides were well in advance of January 11. So the question doesn't really make any sense, Mr. Speaker.

LABOUR CODE ADVISORY COMMITTEE

MR. GABELMANN: I have a question for the Minister of Labour. On February 15 the minister announced the membership of the Labour Code Advisory Committee. Does the committee have the right to set its own terms of reference?

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

MR. GABELMANN: In that event, will the minister advise what the terms of reference are for that committee?

HON. MR. McCLELLAND: I don't have the specific terms of reference in front of me, but the committee's general terms of reference were agreed to at the so-called "Kelowna accord" meeting with Jack Munro of the IWA and Premier Bennett. At that time it was agreed that there would be a five-member committee which would be made up of two members from names submitted by the B.C. Federation of Labour, two members from names submitted by me, and a chairman to be chosen by me.

That committee was to review, first of all, the briefs and submissions which were given to the minister over the last 18 months regarding changes to the Labour Code of British Columbia. These total in the neighbourhood of 250, so there has been a lot of public input. I have also asked that anyone else from the public who wishes to have further submissions heard should get them to me as quickly as possible so that I can send them to the committee. The committee will then, basically, review those. I understand the members have them in their hands at the present time. They will also consider their own views of the Labour Code and whether or not it needs changes. Then they will, through the chairman and through written reports by the individual members, advise me of those views.

[2:45]

MR. GABELMANN: Mr. Speaker, is the minister saying that interested members of the public will not have the opportunity to present their views and opinions to this committee?

HON. MR. McCLELLAND: Interested members of the public can present their views to the minister. The committee is an advisory committee to the Minister of Labour. It was agreed by Mr. Munro and Mr. Bennett, the Premier, and subsequently by other officials of the B.C. Federation of Labour, that this would not be a committee which would hold public hearings or receive briefs, nor would it make recommendations or write a final report. It would be an advisory committee to the Minister of Labour, and that's the obligation to which we've lived up.

MR. GABELMANN: Has the minister given any direction to members of this committee as to what subject matter they should consider? And has the minister given his opinion as to what conclusions they should reach on those subject matters?

HON. MR. McCLELLAND: No, Mr. Speaker. Well, first of all, have I given them any directions about what they might consider. Yes. I have. I've already said that. I have given them a complete list of all the briefs submitted, with a review of what those briefs generally have outlined. The briefs are available to all members of the committee. They have that list in their hands now. So yes, I have given them those briefs to study, because those are the 250 briefs from either individual members of the public or organizations of one kind or another. From that point of view, yes, they've been given some information about what information they should be looking at. But as to what conclusions I want, there's been nothing of that nature transmitted to anyone.

INCOME ASSISTANCE CHEQUE SURCHARGE

MR. BARNES: My question is to the Minister of Human Resources. A company called Money Mart has responded to a lack of cooperation on the part of chartered banks by cashing provincial welfare cheques and charging a 6 percent commission. Does the minister agree that this Legislature has voted social assistance funds to provide for the needs of recipients and not to enrich discount cheque-cashers such as Money Mart?

HON. MRS. McCARTHY: We have never dictated to recipients of income assistance as to where they should cash

[ Page 3370 ]

cheques, or given them restrictions. However, I am aware of the concern expressed by the member regarding the surcharge, and also the concern regarding availability of cheque-cashing areas for some welfare recipients. I will be able to bring a report back to the Legislature, which will perhaps clarify that situation, in the next little while. If I may take that question as notice, I will certainly get the material to the Legislature.

Orders of the Day

ON THE BUDGET

(continued debate)

MR. STUPICH: Mr. Speaker, in speaking before lunch I got to the point where I dealt with the budget's treatment of youth in the province — so much for the budget's offerings to youth. But the bad news does not stop there.

Municipal governments face a 17 percent cut in funding. The point has passed where the provincial government can hope to force these savings through reduced wage settlements. There are real cutbacks ahead as a result of this announcement. Seniors' day centres are completely eliminated in this budget. These are political judgments respecting community preferences. The government is imposing certain preferences upon the community. The government continues to use its financial resources to support construction of high income condominiums and ski resorts, and to subsidize business enterprises, while continuing to slash away at the basic needs of seniors, unemployed youth and disabled people.

[Mr. Pelton in the chair.]

The Health minister has clearly borne a sizeable brunt of the restraint axe, pious talk notwithstanding. Far from maintaining services, even with the 8 percent tax hike blamed on Health, the important field of preventive health care has been decimated. Homemaker services face a further 2 percent net reduction this year, making a combined 15 percent decrease since 1982-83. Adult day care is reduced 15 percent this year, a 38 percent reduction over the last two years. Speech and hearing services are down 7.4 percent, a total 14 percent reduction in the last two years. The dental care program is down 32 percent. Contributions to municipalities for preventive programs are reduced 4 percent. The Provincial Laboratory is reduced 10 percent. VD control is reduced by 5 percent. Program management for alcohol and drug abuse is down 18 percent in this year. This is a total of a 28 percent reduction in a period of two years. Four percent has been purloined from funded agencies in the area of alcohol and drug abuse. Overall the government proposes to spend $18.7 million on alcohol and drug programs. This compares with an increase of $37 million in liquor revenues for the current period.

Mental health centres are slashed by $181,000. A total of $2.2 million has been slashed from the ambulance program. One could go on at great length on the reduction in spending which has taken place over the last couple of years. No device, no slogan, no words of mine can match the harsh impact of these spending cuts on health, safety, well-being and life itself.

The question has to be asked: what will it take for the government to re-examine these political preferences which are packaged in the form of a budget before us today? What volume of suffering or loss of life is sufficient to cause re-evaluation? We already know that the unfortunate deaths of two young people on a Mt. Washington road is not sufficient to re-evaluate the lack of vehicle inspections in this province. Can it be said that nothing will stand in the way of the government's political commitment to expenditure reduction? Unfortunately, the situation is that serious now. It is not projected to be that serious in the future; it is that serious today.

Because of the artful reorganization in spending estimates it will take many months to determine the true impact on British Columbia society of expenditure proposals tabled yesterday. I have no hesitation, however, in saying that the impact will be as severe as it will be harmful to the well-being of our society. All of those who have worked, saved and paid taxes had hoped for something better than is offered in the budget before us. Today is not a day for pride; it is a day of sorrow and of sober reassessment.

Mr. Speaker, I'd just like to talk about the way ahead, in conclusion. May I comment on the future of this province, a subject this government is incapable of addressing with any substance. The people of British Columbia want more than worn-out platitudes and simplistic clichés. The people of British Columbia want a well-conceived long-term strategy for economic recovery, a recovery that will create jobs that will endure. In laying the foundation for real recovery, the government must be prepared to invest jointly with the people of B.C. in our future.

British Columbia has been ravaged by the current economic recession. The cyclical downturn of our traditional export markets has left its mark on thousands of British Columbians in the form of unemployment, bankruptcies and despair. The Socred government talks about attracting investment capital and breaking into the so-called "high tech," yet the citizens of British Columbia have seen no results. All they have heard are empty promises and rhetoric. Time and sacrifice have been wasted.

If British Columbia is to experience any substantial development in secondary industry or to realize the growth of an indigenous manufacturing sector based upon the presence of natural resources, then we are going to have to do it ourselves. There is no magic process by which ideological crusade is translated into economic results. In order to make inroads into the new industries, British Columbia will have to take advantage of its present comparative advantages and develop new ones. The basis for that development of our economy and real recovery will have to be a sense of direction defined by careful research and consultation. There is no evidence that the politicians opposite even understand the requirements of an economy which can compete in the future. For them the whole matter is reduced to the eighteenth century incantation of the Fraser Institute.

There is, to begin with, an urgent need for some practical research. It has been done before in the province of British Columbia, Mr. Speaker. I've said earlier in this House that it was done when the government was anticipating the end of the war and knew that it was going to have to do something with all the returning veterans. It set up a postwar rehabilitation and reconstruction committee to look at the possibilities for increasing secondary industry development in the province. When the NDP administration was in office, they too looked at the possibilities. We had studies done. We did research. Recommendations were made which were in the process of being put into action when the Socreds were re-

[ Page 3371 ]

elected. Everything that we had done, while it was available to the Socreds, was presumably filed in the ashcan, because nothing positive has happened since the NDP left office in December 1975.

Such crucial inquiries have to be undertaken to develop a social consensus. All sectors of the community must be fully consulted. That's what was done during the war years; that's what was done when we were in office. Each must have some basis for believing costs and benefits will be distributed as equitably as possible. Universities are a prime component in the network of research and development work. Prior to 1977, the B.C. provincial government spent an average of 59 percent of federal higher education funds on universities. The remainder funded programs in colleges and some in high schools. Assuming the same distribution of post-secondary programs, in 1982-83 the federal government funded 63.45 percent of university operating grants, while the province accounted for 36.55 percent. One year later, in 1983-84, the situation has deteriorated to a point where the provincial share of B.C. university operating grants is only 11 percent — down from 36.55 percent. The impact on research is obvious. British Columbia is tied for last place in Canada in funding research in universities. That's not a record to be proud of.

Such neglect has very serious implications for the province's future. Allowing vital elements of strategic planning to deteriorate is a mistake to be paid for by future generations. As a resource-based country, we are poorly represented industrially in these knowledge-intensive areas. Canada is likely to miss out on these areas of rapid growth and will probably instead become a large-scale importer of such new product developments.

This should not come as a surprise to members of the government, as they have been hearing — but ignoring — these warnings for quite some time. In 1976, in a report on research and research funding in B.C. submitted to the Ministers of Education and Industry and Small Business, Roger Gaudry argued:

"Not only are ongoing projects and research teams affected deleteriously, but also potential research activities of value to this province cannot be initiated. There is a real danger of falling below a basic level of research activities in certain areas and of a failure to provide for the future highly skilled scientific manpower needs of the province."

Mr. Speaker, that was eight years ago. I wonder what Mr. Gaudry would have to say about the state of research in 1984.

The problem with the government is that they employ a K-Tel approach to research and development: quick, easy and preferably as cheap as possible. The Social Credit government, which enjoys so much unearned support from business and managerial people, simply does not understand the value of a long-term investment. The quick buck, especially in tax returns, is just about the only thing they do understand.

Research in our universities is suffering. Accountability is limited to enforcing cutbacks. The only result valued by members opposite is the one which brings money and power back to the political machine in Victoria. There it can be redeployed for some useless ministerial travel and more propaganda pamphlets full of half-truths and outright fabrications. Even in a time of restraint, the government must realize it has a priority mixup. The damage being done in the field of primary and secondary research will take years to undo, if it can be undone at all. Politicians do not conduct research and development work, yet it is they who control and, in B.C.'s case, slash funding. It is extremely difficult to guarantee success in scientific work. It is easy, however, to guarantee failure. Research is a high-risk operation. No doubt there will be failures. But research at levels the Socreds are prepared to fund will be unlikely to yield anything of economic value.

[3:00]

In short, unless this government significantly increases its financial commitment to primary research in B.C., the economic recovery they have promised will never materialize. The government members probably feel that expenditure on research is simply a waste of the taxpayers' money, but every successful economy spends more on research and development than does B.C. There is money to be made through developing primary research and through the discovery of new uses for our natural resources. New business ventures could be launched. There could be jobs for more people.

Our problem is not so much how to import foreign capital, scientists and technologies. Our problem is our failure to properly deploy our own financial and human resources. The Socreds talk about the need to attract investment capital to B.C. Well, facts speak for themselves. The necessary investment capital is already in the province. The problem lies with this government. It is simply incapable of developing a strategy for investing our own resources.

In a recent paper by the B.C. Economic Policy Institute, British Columbia was ranked fourth in Canada in terms of gross capital formation as a percentage of gross provincial product, well ahead of the manufacturing provinces of Ontario and Quebec. Only four of 25 OECD jurisdictions have higher investment rates. In other words, Mr. Speaker, the Socred argument that B.C., lacks the necessary investment capital for economic recovery is simply not true. The truth lies in the fact that this government either refuses or is incapable of uniting B.C. society behind realistic economic goals.

A recent study in the United States refers to the fact that 75 percent of research cited in patents is basic research carried on in university departments. The potential for success is on our doorstep. All we are missing is the vision and the leadership.

In terms of research and development expenditures, British Columbia's record is atrocious. In the 1982 report of the Science Council of B.C., expenditures on research and development as a percentage of provincial gross domestic product for B.C. in 1979-80 were 0.5 percent and 0.55 percent. The Canadian averages for the same years were almost double: 0.99 percent and 1.04 percent. The Alberta government committed 0.7 percent and 0.8 percent, while comparative figures for Ontario were 1.28 percent and 1.4 percent. It simply does not make sense for this government to talk about breaking into the world market for high tech when B.C.'s commitment to research and development is less than half the Canadian average.

But even if we met the Canadian average, we would still be far behind most of the industrialized nations of the world. In a 1979 survey of OECD countries, Canada ranked a poor twelfth, with a ratio of 1 percent of gross national product to research and development. The U.S., Germany, Switzerland, the U.K. and Japan all committed in excess of 2 percent of GNP. The numbers don't lie. Without increased funding for research and development, both in universities

[ Page 3372 ]

and industry, B.C. will not be able to compete in the international marketplace. Clearly this government's commitment to economic diversification is without direction, without substance.

Lacking basic research funds, it is no wonder the B.C. Research Council has no money for development work. In 1981 only 6 percent of their $7.52 million budget was committed to development work — a paltry expenditure of $451,680. In comparison, the next lowest commitments to development by provincial research organizations were in New Brunswick and Saskatchewan, where 9 percent and 12 percent respectively were spent for this purpose. In Ontario and Quebec the figures for 1981 were 40 percent and 70 percent. Clearly, the evidence that we are not developing basic research is related to the fact that development and application of new technology receives less than 2 percent of the government's propaganda budget.

Application of new technology, whether developed in B.C. or not, is critical to our future economic success. It is far more important than a few highly subsidized show projects can ever be. Yet for every dollar spent on such development work, the government spends $50 on media manipulation and the telling of direct lies to the electorate. Even if we were committing the necessary financial resources to research and development, there is no guarantee that British Columbia would gain access to world markets. Our experience is in offering commodities for sale; we are not accustomed to door-to-door salesmanship in the offices and factories of distant countries. Since we are not in the business of developing our own research, we have nothing to sell. It should come as no surprise to learn that industry and government in B.C. have little experience in marketing, save for the natural resource sector.

The Innovation Office, which is a component of the Science Council of B.C.'s secretariat, employs only three full-time staff, and its role is extremely limited. It has only been established on a trial basis, and its future will be decided in 1985. We call on the government, in consultation with the private sector, to expand the size and role of the Innovation Office in order that British Columbia companies can penetrate world markets. In the end, supplementary provincial funding is necessary if only for two simple reasons: to provide for the development of industrial research capabilities within B.C. and to restore confidence among actual and potential researchers in the value of their work. This is a necessary precondition to successfully diversifying the provincial economy.

If this government persists with its current failures, the province will be sorely prepared for future attacks upon its social and economic problems. While we can prepare for the next decade by ensuring the survival and growth of the research potential within our provincial universities, we must at the same time prepare ourselves for the immediate challenges we face. The government should develop fiscal initiatives that would encourage the private sector to increase its commitment to research and development. The government should encourage research that would be of importance to the province. Agriculture and food, aquatic science and mariculture, electronics and communications, forestry and forest products: these are just some of the areas to which British Columbia firms could be increasing their commitment, following initiative from the government. Besides developing a body of local expertise, we would also be adding a high added value to our natural resources, ensuring that B.C. remain competitive in its traditional markets.

The government's commitment to research and development should be multi-dimensional in nature in that it encompasses both short- and long-term objectives and recognizes the importance of both the universities and industries in fostering long-term economic growth. To date, the government's commitment can be categorized as window-dressing at best. It simply does not recognize that we must invest now in order to reap a dividend in the future. Rather than spending hard-to-come-by tax dollars on no-interest, multimillion dollar loans in an attempt to have established foreign-owned and — controlled branch plants — for example the Toyota wheel plant or the Dynatek dream — we should be concentrating on research and development efforts and dollars to manufacture new and different products using raw materials produced in the province of British Columbia as well as B.C. labour and energy.

Mr. Speaker, if you begin a journey, you must first know where you are going. Only then can you choose the means and plan the route. This government has no idea where it is going or where it wants to take the people of British Columbia. They can't choose the means and plan the route, because they don't know where they want to go.

MR. R. FRASER: Mr. Speaker, I rise to support the budget speech presented by the Minister of Finance. As I read the budget I noted the historic and landmark turn that we took — the reality of fact. We are debating a budget today that is a reflection of the world economy. I suspect that the people of B.C. may have known the circumstances before we did. They called on government to do what they're doing in their own homes: that is, to practise restraint. That is what we intend to do.

Certainly there are those who would call for more government spending, who would favour more public spending and lower taxes, the net effect of which would be higher debt. We see one example after another of error in judgment. Countless people go bankrupt. Countries can go bankrupt. Too much debt causes more pain and an inevitable fall that is worse than facing the hard times of cutting back. I support the government's program of restraint.

From time to time we hear arguments that the government has spent too much money building a prison that is too fancy for the prisoners. From time to time we also hear, I suppose, that the prisons aren't fancy enough. So we get constant complaints — a litany of complaints — from those who don't seem to understand that the solution to the problem is the contribution of thought and thoughtful process. We could use some of that.

Privatization. I would support the government's idea to look at all aspects of the government that may in fact be better handled by the private sector. For example, I see no reason why the distribution of alcohol and beer couldn't be done through private stores. I see no reason why we should be in the retail business. I'm not sure that we ever will be in the retail business, but I would have no qualms whatsoever about investigating any aspect of the government that would get us out of the marketplace that we shouldn't be in and get those people who know how to run businesses into the private sector. Certainly, as the Finance minister said, productivity is the key to everything. There is no doubt in my mind that if we do not produce more per man per hour, per woman per week, we will never be competitive. You and I know that we can

[ Page 3373 ]

ship raw materials overseas, have them processed, ship them back and get them cheaper than if we did it ourselves. If we want to do that manufacturing here, and if we want to have the value added to the products here, then, in fact, what we must do is to find a way to be more productive so that we can keep the wages we've now got and still be competitive on a world market. Until we learn how to do that it won't happen. We simply have to find out how to do that, and we shall.

Certainly there was one hyphenated word in that budget speech, Mr. Speaker, that I happen to endorse and have used often myself: self-reliance. To the limit of our own individual ability, self-reliance is what we will need to relive. That is the theme that has built this country, and that is the theme that will rebuild this country. Those who understand these facts understand the call for restraint, They understand that each and every person in this province must do his or her part in this new era. We were rudely awakened from our dream world of recent years, but we are awake now. If I know the people of this province — as I believe I do — they will respond with vigour so that those who need help can receive it. Certainly the responsibility of those who are legally entitled to social benefits, but do not need them, is to let those who need them get the help first. As we learn the difference between rights and privileges, we learn how to make this democratic system work better. As we learn that the funds we save in good times should not be frivolously spent in good times, we will find a way to store funds for the use and times that we hope will never come again. I hope we will learn that. Certainly UIC is a fund you put away for a rainy day that will never come. In my opinion, you are not entitled to those funds if you do not need the money, even though you may be legally entitled to take them. That is my philosophy. That is the philosophy that built this country. If we're going to help those who need help, those of us who have been lucky will have to pay, and pay we will.

[3:15]

With respect to the resource stabilization fund, I support that idea. Certainly if we can save money by paying off that long-term debt, then we should do it. There is simply no other way to think. There are two kinds of debt: productive debt and non-productive debt. If in fact we can get rid of all debt, particularly the non-productive, then we should. Productive debt creates money; non-productive debt doesn't. In fact, we should eliminate all debt if we can. I happen to have that personal philosophy. There is every reason to create a fund for a rainy day, which, as I said before, we hope will never come again.

With respect to education, I support the shift from grants to loans for students going to university. Certainly the students benefit from that education, and certainly the community will benefit ultimately, I hope, from the education that those students receive. But in fact, if those students do not have any faith in themselves and are not willing to gamble on their own future, then there's no reason why the taxpayer should gamble on it for them. So I support the change to the loans.

Interjection.

MR. R. FRASER: Well, I don't think you're gambling, hon. member. You don't gamble with higher education. You know it perfectly well. You've got one yourself, and it's not been a gamble for you. Mind you, you had a luckier start than most. By the way, how's your Rolls-Royce these days, Madam Member?

Certainly those at university do better and have a better life. They're willing to invest in their own future, I should hope, because if they're not, I'm not either.

With respect to secondary education, I know those teachers. I think they, like everyone else, will understand that unlimited funding is not the answer to every problem. It can't be. Everybody knows that. I know that those teachers are resourceful, and that they, as they have in the past, will find a way to use the time resourcefully, and will find a way to use the education money resourcefully. Certainly there can't be very many professions that can have the instant response to output that the teachers have. I can think of the few days that I spent in classrooms myself, and there is simply a wonderful response from the students when you teach them something or tell them something they want to hear. I know you can't get that every day. I know that at least one member of the opposition was a teacher, and certainly one member over here. From a point of view of job satisfaction, there can't be very many professions that will give to you like the teaching profession does. The teachers will be resourceful. They will take their part. I'm very confident about what they will do. They will make the system work like they always have and always will.

With respect to health care, I am one who would openly endorse the concept of user fees, as long as those who cannot afford to pay have access to health care services. I could not disagree more with the federal government on this issue. There are those who will suggest that health care is a right, that it is only fair to give everybody equal service at the same price — in other words, at the cost to the state — without regard to personal financial circumstances. But I for one see no harm in charging those who can pay a small fee to go to the hospital or, in fact, even to the doctor. I see no reason why the whole tax-paying base should pay for any one of us in this chamber to go to a doctor when we can afford it. I think it's a crime. However, if they are determined to make it universal, then they will have to support the suggested and, I hope, temporary tax increases suggested by the Minister of Finance.

Interjection.

MR. R. FRASER: I don't believe they'll go along with it, but I hope they will. Certainly as one who has paid a lot of taxes and really doesn't like it all that much, Madam Member, I would support the reduction of the taxes. In fact, I support the user-fee concept, as long as those who can't afford it can go. The people who defend this no-user-fee system are trying to defend motherhood, when in fact they're attacking mother. If they burden the entire system with no fees and no incentive to look after one's personal health, and everybody goes all the time because it doesn't seem to cost anything, the whole health care program is going to go down the drain. Nothing would be more depressing than that. There's no folly like an old folly. It isn't free; somebody has to pay. Those of us who can pay should pay a little more, but we won't under this new system. We'll all pay the same. It's crazy. We will pay.

Interjection.

[ Page 3374 ]

MR. R. FRASER: We'll pay even more, in fact. I don't disagree with the fact that we should pay more. It seems to me that when you get a service, there should be something coming out of an individual pocket — unless you don't have it, and then you should get it. There should be a way to look after those circumstances.

Today one member of the opposition talked about adolescent competition as if competition in the free world was an adolescent behaviour pattern. It is not. It is a normal behaviour pattern that we should encourage. If, in fact, I suspected that the subject of the budget speech was not substantive, then I would have heard nice, clear, sharp debate this morning. But I didn't hear that. How easy it is to complain, and how difficult to find the answers. As I said last week, I intend to be part of the solution and not part of the problem. We cannot deal in vague illusions. We have to deal in realities, and we're all dealing in that today.

There is no sense talking about a strategy for the future if you're just going to go back to talking about what happened in the past and recount all the moneys that were spent, or were not spent when you thought they should have been. When it is said that we should have some research programs here, can we not point with pride to the funding and the building of discovery parks in the province of British Columbia?

I think we do very well here, Mr. Speaker. Every time I watch the world news in the evening I can't help but be grateful to live in this country and in this province. Anybody who thinks that we're not well off is not facing the real facts of the matter. In this province and in this country we've learned, time and time again, that what we really need is more people pulling the wagon and fewer people riding on it.

MR. HOWARD: Mr. Speaker, I had made some notes to do things in a rather formal way, having looked at the subject matter before, but I was interested in listening to the member who has just concluded talking about productive and non-productive debt. I can see now what my problem is. Here I've been dealing with the bank and all I've got is a non-productive debt, and that's why the interest rates that I have to pay the bank are higher than they would be if I had productive debt. So I'm going back to the bank when I get a chance and I'm going to ask them to transfer all my non-productive debt — that's the mortgage on my home — over to this productive side of debt. I bet you I won't get a cent taken off in interest.

In any event, I know what the member was talking about. He was talking in the context of this government. Non-productive debt is money borrowed for the Ministry of Human Resources, and that's what the government is doing — borrowing $1.2 billion in order to put that $1.2 billion into the Ministry of Human Resources. That's non-productive debt, in my view — false economy. At the end of it all they will not have created any hope for those people of becoming gainfully employed, and they will still have the debt on top of it all — and have to pay the interest for it.

MR. REID: What would you do?

MR. HOWARD: I'd just advise my friend from Surrey if he would just pay attention for a change — that the major reason he has two ears and one mouth is so that he can listen twice as much as he speaks.

I want to deal with four aspects of the budget. One is the economy of the province; second is the debt situation; third is the fictionalized — to be polite about it — aspect of the budget; and the fourth is fault — error, fault, mistake.

On the fault side, one of the very interesting things to notice about this government is that it has consistently laid the blame on anybody else but itself. It consistently finds fault with everybody in the world except itself. Reagan is at fault; Trudeau is at fault; federal Liberals are at fault; world copper prices are at fault; interest rates are at fault; inflation and labour are at fault. They just stopped short of blaming it all on the Almighty. Not once has this government, to my knowledge, made a mistake. They're absolutely infallible — incapable of making a mistake. Mr. Speaker, you know from your vast experience in dealing with human beings — and everybody in this House knows — that there's something seriously wrong with somebody who doesn't make a mistake. There's something seriously at fault with someone who doesn't make an error once in a while, but we've got it in this government. That's one of the reasons that this budget will not be helpful, will not be accommodating and is not the correct thing to do. In it there is no admission in it of error on the part of its producers.

I realize from the outset that sometimes people don't actually read the words in this thing, but I want to tell you about the fictionalized part of this budget. Page 27 says: "All ministries, with the exception of the Ministry of Health, show a decline in expenditure in 1984-85 when compared to the 1983-84 budget estimates." Now that same fiction is reproduced in different words in other parts of the budget, specifically right at the beginning, where it reiterates the whole thing.

Mr. Speaker, that's hokum; that is just not true. Look on page 26 and I'll tell you exactly. Take, for instance, the office of the Premier. It points out that the estimate for 1983-84 was $742,000. That is not true. Here is the book of estimates presented to this Legislature which this Legislature dealt with. That book, the document presented by the Minister of Finance a year ago, in the Premier's office does not contain $742,000; it contains $660,000. If they had used the true statement, if the Minister of Finance had not used a false figure in his budget speech the other day, but had used the true figure, it would have shown that the estimates for the Premier's office went up, not down. It would have shown the same thing for the estimates of my very dear friend the Minister of Intergovernmental Relations (Hon. Mr. Gardom).

MR. REID: How about the ombudsman?

MR. HOWARD: I'll get to the ombudsman, if my friend will just be patient. I told him to use his ears and not his mouth, and he may learn something.

The estimates of the Ministry of Intergovernmental Relations show a false figure for 1983-84. The accurate figure is in the estimates book presented by the Minister of Finance last July as being $2,423,000, not the $2,734,000 that he told us the other day. That shows an increase.

[3:30]

[Mr. Speaker in the chair.]

Do you want to know about the ombudsman? It is exactly the same.

MR. REID: No, it's not.

[ Page 3375 ]

MR. HOWARD: It's not? The Minister of Finance told us yesterday that the amount of money set aside for the ombudsman in the estimates of 1983-84 was $2,046,000. The accurate figure in this document for the estimates of the fiscal year ending March 31, 1984, presented last July, was $1,618,000. A false figure is contained throughout. If the Minister of Finance had used the accurate figures, Mr. Speaker — the ones in the estimates presented to this House, which were voted by this House — he would have found out, and I'll count them, that nine of the ministries had an increase in their budget this coming fiscal year over the current one.

Let's have a look at something else where I submit that the matter has not been thoroughly dealt with. In the supplement of the estimates for this year — and this is the fictionalized part that I am telling you about — the first thing that occurs is that the rules are changed. We have a new set of circumstances, a new set of identifying factors, new coding operations, so that it's not possible to compare this year with last year; just as it was not possible, as I told you here earlier — that they used different figures to present a different picture. Now we've got "Communication expenses" as a title. It never existed before, so we don't know what amount was in there last year. That sort of thing seeks to hide the facts of budgetary and fiscal matters.

We've got an item in here that used to be called advertising and publications that is now called "Informational advertising and publications," and an item called "Statutory notices" in addition to that. That's the old Doug Heal approach. They've tidied it up and given it a different name so we can't find out what is occurring.

Dealing with Doug Heal, let's, for the edification of my colleague from Surrey and others, point out that on page 92 of this supplement, dealing with government information services, it says this: "Total 1983-84 voted expenditure: $19,881,000." That is a false figure. That is an incorrect figure. The real figure, the accurate figure, the truthful figure out of the estimates of last year and the amount of money that this Legislature voted was not $19 million; it was $17,861,000. Why the padding of the account to show something which is not accurate? Is that standard? Incidentally, Mr. Speaker, maybe the Minister of Finance increased the figure so that he could claim there was a reduction.

AN HON. MEMBER: Oh, he wouldn't do that.

MR. HOWARD: Well, maybe. I didn't say he did that; maybe he did that. Maybe he increased the figure so that he could say they were going to spend less there this coming year. The fact of the matter is that last year it was $17 million; this coming year it's going to be $18,900,000. It's an increase in government information services, which is Doug Heal and associates. That's the fictionalized part of the budget.

Even the so-called 6.2 percent reduction is a fictionalized figure, because the minister conveniently excluded — although he mentions it in passing — the $470 million that's going to be a gift to B.C. Rail out of general revenue. It's coming out of the general pot and it's going to B.C. Rail. You've got to add that on top of it; that's an expenditure. I mean, they're just not going to send a blank cheque, you know, or a piece of paper. They're going to put a figure on it. So when you add that on top of it, you find that the 6.2 percent decline is a fictionalized figure.

Let me deal briefly with the debt. I'm going to have to draw upon the words used by a national figure whom most Social Crediters adore, the leader of the federal Progressive Conservative Party.

AN HON. MEMBER: Myron Baloney.

MR. HOWARD: Myron Baloney? No, I wouldn't be so unkind as to call.... I've heard that reference, though. I think it may be appropriate. Even the Conservatives use that designation — some of them. But this is what Brian Mulroney said about the federal budget that came down just a little while ago. He said it has taken successive Prime Ministers, including Mr. Pearson, Mr. King, Diefenbaker, Borden and all the rest of them, 108 years to get the federal debt to where it was prior to Trudeau coming to office. And in the last eight years Mr. Trudeau and the Liberals have tripled that federal debt. He found that the most disgusting thing he could think of with respect to federal fiscal policy. I agree with him. I want to thank Mr. Mulroney for giving me the opportunity to examine what he said to see whether it was accurate — and it was — and to give me the thought that I wonder what would happen if I looked at this province's books to see what Mr. Mulroney would say about them. Let me tell you.

On December 31, 1975, the total debt of the province, according to government books, was $4,425,000,000. All of that at that time was indirect debt. There was no direct debt on December 31, 1975. That was a few weeks after we left office. It took this province 104 years of successive Ministers of Finance, and successive Premiers — including the late W.A.C. Bennett, including the late Byron Johnson, the coalition Premier for a while, including the present first member for Vancouver East (Mr. Barrett) — to move the debt of this province from nothing to $4, 425,000,000. In the short period that this government, under this Premier, has been in office — eight years, the same period of time that Mr. Mulroney was talking about — they have increased the debt of the province of British Columbia three and a half times. In eight years there's been an increase from roughly $4.5 billion to roughly $15.5 billion loaded on the people of the province of British Columbia, three and a half times the debt that was there when this Premier became the Premier. The per capita amount of debt has increased by the same ratio — from $1,800 to $5,400. Do you know how much people in British Columbia are now required to fork out of their pockets just to pay the interest on the total debt of this province? Computing it at a figure of 10 percent — some of it has a coupon rate lower than that and some of it is higher, but I'm taking an arbitrary figure of 10 percent — the daily interest charges that the people of this province have to meet are $4.2 million. That's every day, 365 days of the year. Those of you who are visiting the chamber today, think of it: you're going to fork out $4.2 million every day of your life to pay the interest on the debt that this government levered on top of you.

AN HON. MEMBER: That's leadership.

MR. REID: That's good government.

MR. HOWARD: I like that statement, Mr. Speaker. I'm going to tell the people in Skeena about that. "That's good government, — I'm going to say. "You've got to fork out to pay the interest on the debt." That's good government. Good for what?

[ Page 3376 ]

MR. REID: The programs are all in place, that's what matters.

MR. HOWARD: That's what matters — the programs are in place. Yes, I know they are. I know the programs are in place. The Premier is off to Disneyland today on one of those programs. The Minister of Forests (Hon. Mr. Waterland) is going to escape his responsibility by going to Europe on one of those programs. Last year the Minister of Forests was in China on one of those programs. The Minister of Industry and Small Business Development (Hon. Mr. Phillips) is off in some part of the world on one of those programs. That's what we like, good government.

Interjections.

MR. HOWARD: I'm sure the member for Surrey will have an opportunity to make a formal presentation to us. When he does, I say to him now that I'll listen attentively and I won't interrupt one word. I don't mind his interruption, Mr. Speaker. It affords me an opportunity to show how foolish this budget is.

This budget contains, talking again about debt — I just want to make a brief reference to it — the $470 million that's going to B.C. Railway. All that's doing is that the province of British Columbia borrows the $470 million, the people of British Columbia, through their taxes, pay the interest on that $470 million, and B.C. Rail gets the bookkeeping benefit of it. B.C. Rail can put the money in a sinking fund — and who knows, they might even lend it back to the province of B.C. on some of its treasury bill programs, so we'll be paying the interest on that as well. That is in addition to the $70 million a year this government decided to give B.C. Rail, supposedly to pay the interest on its historic debt. But an examination of B.C. Rail's books shows that some of that $70 million wasn't used for that purpose. It went into the equity side of their ledger as contributed surplus, and they used it for some other purpose. That's in addition to the $45 million cheque that was written to B.C. Rail on March 31, 1982, spirited out of the provincial treasury on the last day of the fiscal year and sent to B.C. Rail so that B.C. Rail could camouflage and buy down the interest on its Tumbler Ridge branch line debt. It's nothing more than the use of taxpayers' money to subsidize the Japanese steel industry.

I want to talk a bit about privatization as well, because that's a reference point here. What privatization really means is public taxpayers' subsidization of the private enterprise system. The taxpayer publicly — and privately in some cases, because you have to ferret this information out — is subsidizing the private sector. Take Beautiful British Columbia as an example, a magazine sold to Mainland, one of the Jim Pattison industries group. When the government announced the sale they said that they sold it for $700,000, but they received only $400,000 cash. In addition — and this is the way the taxpayer subsidizes these outfits; no wonder they can make a profit out of it — as has been mentioned at other times, the agreement made on September 14 last year, which this government kept hidden and didn't want disclosed to the general public, shows that the province agreed to mail, at no cost to Mainland, the renewal notices to all those whose subscriptions were coming due. So the taxpayer put out the money to mail those notices.

[3:45]

They also agreed that twice a year B.C. Hydro would send a mailing to everybody in the province, along with the Hydro bill. That was a subsidy worth a couple of hundred thousand dollars to Mainland Magazine. This great free enterprise government had a chance to make a profit but they didn't want to do that. They also sold, for cost of production only, the entire inventory of the Fraser River special edition. That was a gift. They also said that the provincial government would make available to Mainland Magazine, for their exclusive use and without charge — another subsidy — the Pertec data entry system, together with the CRT terminals and the processor, collectively known as the Pertec computer. Another gift from the taxpayers of B.C. That's what privatization is.

[Mr. Strachan in the chair.]

I don't know whether you want to explore what's liable to happen here, but the government is now in the process — and has been so for some time — of seeking to find ways and means of selling off ICBC, either its general insurance side or autoplan side, or both. They are also seeking to sell off B.C. Systems Corporation, which, although it has some debt, has a net asset value. This is the desperate attempt of a government that has so mismanaged the finances of this province that it's taking the last-ditch stand that a private corporation would take: namely, selling off assets for cash flow. A wrong principle. Private corporations sell off assets that are losers. They sell off assets if they want to consolidate in a certain direction, insofar as their activities are concerned. It's only as a last-ditch effort that a private corporation will sell an asset for cash flow. But that's what this government is doing. It wouldn't surprise me a bit if that's their attempt with ICBC and B.C. Systems Corporation — nothing to do with any ideological direction, simply a desperate move to get its hands on some cash, after having squandered a fair amount of it over the years.

In the last part of my comments I want to deal with the economy. Let me start by pointing out what the budget of July 7, 1983, did. Without referring to the precise figures — although I will certainly do that if members want me to — it shows that because of the impact of the July budget last year, the number of people employed in the province steadily declined until January of this year, which is the last month for which I have figures. It shows that the number of unemployed — there was some movement in those figures prior to the introduction of the budget — increased month by month from the introduction of the budget last year to January of this year, the last month for which I have figures available. Over that period of time the total number of unemployed, as a percentage of the workforce, increased each month. From the introduction of the budget last July until January of this year the effect on the economy of this province was that the numbers of people who were employed went down, the numbers of people who were unemployed went up, and the percentage of the workforce unemployed went up as well. That was last year's budget.

In the minister's budget speech of yesterday there are some economic indicators that I think should be looked at, to show just what has been occurring in the economy and how this budget fails to pay any heed whatsoever to those economic indicators. In the economic and financial table on page 57 of the budget, for the period of time for which these

[ Page 3377 ]

figures are given, we see that there's a slight increase in the labour force. We see that employment over the years — not only since the last budget but over a four-year period — has gone down. We see that the unemployment rate has gone up. It has nearly doubled over that four-year period. We see that the provincial gross domestic product has declined in terms of constant dollars — which is the measure that one must use, with the inflation factor built in. We see that capital investment — and it makes the point that this is new capital investment and capital investment for repair purposes — has a slight increase over that period of time. What it doesn't show, and what needs to be examined, is what amount of that capital investment was for new plants which create jobs — new employment, new productive capacity — and what amount was simply for repairs in maintaining the old plant. That isn't indicated in here. Because there is such a slight increase in capital investment, both new and repair over that four-year period, and because we know from what industry tells us.... We know from what the forest industry says — some aspects of it — that it hasn't got the money for new plants, that it has got to make do with repairs to the old ones, and that a fair proportion of that is in repairs. You don't create jobs when the capital investment is not there to do it on new plants. So that's all.

Housing starts are down. The value of building permits is down. Business incorporations are down, regardless of what the throne speech says. Business bankruptcies are up threefold. Timber scaling is down, and after listening to what's been going on recently about the scaling of timber, no wonder it's down. Those are economic indicators to which this government, while it puts in its documentation, pays no attention.

I don't usually read correspondence into the record. It's a matter of personal practice, that's all. We get lots of it. This is a letter that came to me today. I would like to read it. I think it makes the point more appropriately and more dramatically than I could, because it's from a person who is affected by what's happening in the economy of British Columbia.

"Dear Mr. Howard:

"I would like to know if the Social Credit government really cares about people. I am a 23-year-old male, unemployed, and have no income whatsoever. What is the government doing to create jobs? It seems to me Bill Bennett and company enjoy putting people out of work, rather than trying to get people back to work. What can I do?"

Interjections.

MR. HOWARD: Well, members down at the end can giggle and laugh about this, but I'm talking about a young kid in my own riding who happened to write me a letter expressing his views about it. If the member who is chattering away there like a magpie wants to do it in a more formal way, I'd be glad to listen to him.

To continue reading the letter:

"I've been unemployed for about two years. The government won't help me get an education, with all the cutbacks. I can't even get a job as a janitor at the hospital. What are we supposed to do? Rob banks? Mug people? Break and enter into a house? Man, I'm going crazy. If I don't get a job or some kind of income, I'm going to have to do something drastic. Please tell the government for me to work to create new jobs for not just me but for the thousands of young people my age who can't find work. Please help us."

I don't hesitate to say that I get a catch in my throat when I read letters like that and when I talk with some of these young kids, because it seems such a hopeless and desperate situation that they're faced with. I'm not 23 myself; I'm not faced with the problems that he's faced with — none of us in this chamber are. But as I said, it indicates more succinctly than I could what has happened to one individual, one human being, duplicated thousands of times over. This budget deals with no aspects of the questions which he poses.

The other day I listened with interest to the Minister of Universities, Science and Technology (Hon. Mr. McGeer) talking about the need for British Columbia to engage in greater production of wealth. I was pleased that he has finally grasped that fundamental fact of economic life. It's something that we in the NDP have been talking about and urging governments to do for a long period of time — to move into the area of production of wealth. That is the foundation upon which other things, like services, live. Our production of wealth — I put the figures on the record on another occasion within the last two or three weeks, and I'm not going to repeat them here — show that we are primarily resting our economy upon raw resource extraction and export and, in a limited way, on manufacturing and processing. We do not have or appear to have the intelligence within government to recognize the need for a value-added activity in this province.

As I said on another occasion, we did produce at one time about 20 percent of the copper that is produced in Canada. We ship all of it out of the province to other countries in concentrate form, the next step upwards from either raw ore or rock. We export coal. We export logs in their raw form. By doing that we employ workers in other lands to produce them into finished products and ship them back again, and we lose. What we need is a strategy in this province for economic revival. The word "revival" itself means the bringing into our economy of a new vitality, not just the recovery to get us back to where we were before but a vitality and a resurrection.

[4:00]

I submit we need to have some indication on the part of government, and if it is not prepared to do it, then we are in a sad way. Certainly I advocate a conference on the future — involving business, government, the academic world, labour and working people — to sit down and give some emphasis to identify in a research way what it is we want for this province and its generations into the future. What do we have to do for a revival of productivity? What do we have to do for a revival of the concept of secondary processing and manufacturing? What do we have to do for wealth production? What cooperation do we need to attain those objectives and provide the citizens of this province with some hope for the future, some vision that future generations will be faced with the prospect of being gainfully employed and not simply the prospect of being one of the hundreds of thousands that are unemployed in this province? Incidentally, that is a prediction being made by quite a number of people in the economic world.

The only salvation is the activity of government acting on the whole ship of state of the province of British Columbia, and not just individual segments of it. As I said on another occasion, maybe the driving engine behind this ship of state is the capitalist system. But we need a captain, someone

[ Page 3378 ]

controlling the rudder and someone steering us in the direction in which we want to go. If we don't have that, we're fraught with the continuation of difficulties. The government has a budget which ignores the future, which denies hope and which rejects a vision which is required. It rejects the concept of a revival of our economy and a revival of hope and aspiration in our citizens. The government may have a budget that's of that nature. We have provided, and will continue to provide, alternatives to that, and I have suggested one of them today, namely an alternative of drawing together forces and groups within this society and this economy to look at the prospects of what we can do for the future, not the hopeless desperation of this budget that tells us what we can't do.

MR. DAVIS: Mr. Speaker, this budget, if nothing else, is resolute. Its determination to balance, at least by 1985 or 1986, the budget of the province is evident for all to see. I think the hon. member who just sat down basically agreed with that resolve when he underlined the size of the present debt of the province, direct and indirect. The direct debt, opposite which there are assets — the debt of B.C. Hydro, for example — is large. It's of the order, in total, of some $13 billion. Of the $13 billion, some $9 billion is B.C. Hydro debt. It's money borrowed with a view to building dams, transmission lines and repaying those who lent the money over the lifetime of the dams and the transmission lines. That kind of debt, therefore, is easily understood. It's of the nature of a mortgage. But there is a very useful asset created. It can pay off the mortgage by simply producing, in the case of B.C. Hydro, power, or in the case of other utilities, useful services for which people will gladly pay. We have something else, though — the indirect debt, which isn't really new to this province in the mid-1980s. It's the result of current income to the government being less than current outgo on operations, on services — basically of the nature of health care, education and human resources. We have been in deficit. We began a deficit in 1981 of the order of half a billion dollars, and in 1982 of the order of $1 billion. Now we're concluding a year in which the deficit has been of the order of $1.3 billion. The government is determined to turn that trend around. The trend, essentially, was one of expenditure rising continuously and of income, largely from the resource sector, but also to a lesser extent from people, levelling off and in some instances declining. With outgo rising and income disappointing, the deficit grew. We're now looking ahead into a year where income is beginning to recover and where expenditure is under a tight rein, levelling off. So we're looking at a year in which the deficit will be substantially cut in half.

This is as it must be. The province has to be concerned about, among other things, its credit rating. Its credit rating relates basically to its indirect debt — the latter type of debt, which is now of the order in total of $2 billion. If you, Mr. Speaker, were working for one of the principal financial houses in New York, you'd be looking across this continent — overseas, admittedly, but also at the different levels of government in North America. You would note that at the federal or national level there's a very large deficit in the United States and at the Canadian level the federal government of Canada is running an exceptionally large deficit. The national governments of the two countries are piling up substantial debt and, for the moment, anyway, don't show any ability to turn the situation around. A debt at the national level in the United States is increasing to the extent of about 20 percent a year — 20 percent of the income of the government of the United States is in deficit. That's $100 in, $120 out. At the federal level in Canada, it is more of the nature of $100 in and $135 to $140 out. So if you are rating those governments, you're concerned. You are concerned because this kind of thing has been going on, increasing year after year. There is no indication of a turnaround.

If you look at the state level in the United States, equivalent to the provincial level in Canada, the states, almost without exception, have balanced their budgets. A few were in apparently serious difficulties in 1981-82, but they have all managed to balance their budgets in the interim. They have undertaken some very drastic measures. It is interesting to note that they all trimmed their expenditures on the so-called people's programs: health, education, welfare and so on. It is interesting to note also that many of them put a surtax on income to increase the size of revenue. You have a development in the United States which is in some ways parallel to the development of this budget here in British Columbia: curtailment of expenditure, increase in taxation and latterly an increase in the state income tax — in our case the provincial income tax — in order to come towards — and, in their case, actually achieve — a favourable net balance. On balance, the states have a budget surplus of $60 billion this year, so they, at least at that level of government, have turned the point — not at the federal level but at the state level.

In Canada, without exception, our provinces are still running deficits, some of them substantial deficits. The deficit this year in Ontario is of the order of $2.5 billion; in Quebec $3 billion. There they are dealing with larger provinces than British Columbia, in terms of population, revenue and so on, but it is an indication that, not only at the national level in Canada but also at the provincial level, deficits are continuing to run in this country. British Columbia's determination, now into the fourth year, to bring its deficits under control and eliminate them within the next year or two or three is refreshing. If you are looking at the credit rating of the province of British Columbia, the kind of interest rates you'd demand from the province when the province came to you, cap in hand, and wanted another billion dollars, you'd be saying: "Well, there are signs of improvement, there are signs of recovery. Perhaps we will review the credit rating of the province in another year or two, and if, as and when it achieves a balance, fine. Its credit rating will go up. The interest rates we'll charge to the province will go down." That is a very important consideration, especially when we are borrowing large amounts of money for major works of the nature of power dams, highways, railway construction and so on.

There are two schools of thought when it comes to the difficult problem of employment and inflation. But particularly in employment, one school of thought has it that demand must be stimulated; that governments must somehow put more money in the pockets of people so that people can spend, and in spending they will buy goods that will call forth more production of goods, and that in turn will mean more jobs. That is referred to as the demand-pull approach to curing unemployment — to resolving the unemployment problems of the state, national or regional economy. In contrast to that there are the supply-siders, those who believe that instead of putting money into people's pockets and allowing them to choose what they wish to buy, and encouraging the economy that way, money should be channelled into worthy projects — subsidizing production along certain lines, giving

[ Page 3379 ]

contract to firms to produce goods, whether they be military goods, highways or other investments which the public needs in the long term. That will create jobs specifically and directly.

It seems to me, Mr. Speaker, that in our situation in British Columbia, where we have an economy which is very much open-sided, we have little choice between the demand-driven policy and the supply-side policy. If we as a provincial administration put money in the pockets of people, they will be buying goods, the vast majority of which are produced outside the province. Whether they be citrus fruits or automobiles, they're goods which are produced elsewhere. A demand-driven policy, while it may well make sense for a largely self-sufficient nation, doesn't make any sense at all in the case of a relatively small economy that is very trade-dependent and import-dependent. We will simply be lining the pockets of others elsewhere and presumably providing employment elsewhere. The approach has to be much more one of directing moneys, subsidies and incentives toward specific production in this province. At least that will generate the first layer of jobs among British Columbians.

[4:15]

To the extent that we have any surplus, to the extent that we have any savings, to the extent that we can borrow elsewhere and pump money into our economy, we should direct it toward the supply-side — to projects which will create jobs. I think this government has to be complimented at least in this area with respect to several obvious projects which have fortunately been undertaken when the economy is in recession — northeast coal, light rapid transit and the development of B.C. Place. They are, in greater or lesser degrees, public works. Nevertheless they have provided employment for many people, particularly those on the construction side who would not otherwise have been employed.

I think we need a sense of perspective here. The government's expenditure on those several projects year by year has been a tiny fraction of its total outlay on all goods and services. It's been of the order of five or at most ten percent of the total budget. So it has not been a dominant feature of the budget of this administration. But it has been aimed at the supply-side. It's been aimed at job creation now — jobs for British Columbians. It has not been of the more foolish kind — that of putting money into the pockets of people who would simply purchase goods from anywhere and everywhere, principally from outside the province. It would not have as direct and immediate effect on the economy of the province. Both of these arguments are not all that relevant, because we are not a self-contained economy. We have to concern ourselves with world markets and particularly our competitiveness. So we have to discipline our expenditures. We have to be concerned with the long-term productivity of the investments we make.

I'll aim a criticism at the budget. It is a criticism which can be aimed at any budget presented by a provincial administration in Canada and, to quite an extent, federal budgets and certainly budgets in the United States. I believe that budgets should be in two parts and not one part. There should be an operations budget — current income, current outgo, current taxes coming in, salaries, wages and materials consumed here and now should be in one budget. The other budget should be a capital budget where investments are made which pay out over the long-term — not this year and not perhaps in the next few years but in some instances over periods of 20, 30, 40 or even 50 years.

There should be those two budgets. The operations budget would go on year after year, hopefully with continuity, and projected fairly smoothly from year to year over a long period of time. The other — the capital budget — would tend to be bunched, with spending occurring fitfully but counter-cyclically. When there is a slump in the economy developing, then blueprints are taken off the shelf, contracts are let, public works accelerate and there is more employment. This is much easier said than done. Few administrations have ever managed this at all well. First, the presentation of budgets. I feel they should be under the two headings: the operational, current, ongoing budget and the more intermittent, lumpy capital budget. To that extent, this government is moving somewhat in that direction, certainly to the extent that it did bunch several major capital works in the last few years and fortunately have the blueprints ready and fortunately let the contracts on northeast coal, B.C. Place, ALRT and so on. That is the kind of program and the kind of budgeting I would prefer.

You can say this is Keynesian economics. John Maynard Keynes wrote at a time when the private sector certainly dominated the economies of the countries he was writing about — western Europe and the United States. He idealized the situation. He hoped that governments would hold back on capital investment, not current operations, at times when business was going very well — during a boom, for example — but that when a slump was imminent the government then spent. In theory that's fine, but governments rarely hold back. Governments spend, many of them up to their limits, in good times, and then in bad times they don't have the reserves or the plans. But ideally, if we had a capital budget and we budget for slumps as well as booms, we would have a capital program which was intermittent, and an ongoing operations program as well.

In this budget there is reference to moneys for buying out the long-term debt of B.C. Rail. I've said first that the northeast coal investment was timed about right. B.C. Rail will be operating — not owning, as I understand it — the Tumbler Ridge line. The debt talked about in the budget is the historic debt which was incurred in building B.C. Rail's lines and facilities up to the Peace River area, some distance towards Dease Lake and so on, but not the Tumbler Ridge line. The debt is of the order of $600 million; some $470 million will be lifted off the shoulders of the directors of B.C. Rail by the province. Presumably the province is borrowing elsewhere to pay off that historic debt. B.C. Rail, or at least its directors, will be debt free. This is certainly not a precedent in Canada; it has happened in various other jurisdictions. It has happened intermittently with the CNR. The federal government has periodically paid off the debt of the CNR and then told its directors: "You won't get any more help; now go and run a railway, but a railway which is debt-free. Your income from now on must match or exceed your outgo." And I gather that's what the government has decided to do with B.C. Rail. "We'll relieve you of past debt, but from now on you must run the railway on your own without expecting any assistance." This was recommended by the royal commission which looked into the affairs of B.C. Rail a few years ago. It was recommended by the Committee on Crown Corporations, whose chairman sits beside me.

It's the right way to go, I believe. There was no way, at least in the next few years — perhaps in the next several decades — that B.C. Rail could possibly pay off that debt. The railway was built to open up the north, if you like. It was

[ Page 3380 ]

built to get the Cariboo moving and the Peace River area developing. It was a purpose above and beyond that of simply running a railway, so perhaps that investment was worthwhile. But it's not an obligation which the railway in future should by itself be expected to honour. So I'm in favour of lifting the debt off B.C. Rail and having it run from now on on a businesslike basis, ensuring that its rates cover its costs. I would hope that from now on B.C. Rail would also be able to pay the normal taxes that other businesses pay, including municipal taxes, sales taxes and so on, and that it would report four-square all its costs, out in the open for all to see.

I am intrigued, however, by another aspect of all this. B.C. Rail's historic debt is of the order of $600 million. A similar amount of money has been spent on the northeast coal line, and sometime in this session I'd like to know from the minister and the government how that was, is and will be financed. I assume, because we've been in deficit as a provincial administration for several years now, that on balance those moneys have been borrowed, that the province has borrowed this money and paid it out to contractors to build the line, and that the province now holds what is termed equity in that line, to the extent of some $600 million. B.C. Rail will operate it, but B.C. Rail, as I understand it, does not own it.

So B.C. Rail has been looked after, I think adequately and appropriately, but there still remains the question of how the $600 million in the Tumbler Ridge branch line will be managed and how it will be recovered over time. I know that at least in the first few years the revenue coming in from the movement of coal will be but a fraction of the interest and other charges involved, but again I think that the northeast coal line development must be seen in the context of the larger transportation policies of the province, and certainly in the context of developing the middle and northern parts of this province. At least 50 percent, maybe more like 60 percent, of the province lies north of Prince George, so that development has to be seen as opening up an important segment of the province and providing a much more efficient transportation artery out to the coast — in this case, Prince Rupert. It's an investment in the longer-term future. I think that if it is properly accounted and fully understood by everyone, the critics will be less vocal than they have been in recent times. Still, there has to be a full reporting, and there has to be an indication of how this investment will pay out in the long term.

Another investment being timed fortuitously but correctly is light rapid transit. Some 800 million current dollars will be invested in a system which will be complete two years from now. Again, how is that to be financed? Currently the province is borrowing money, and that money is being invested in the contracts and hardware which will be running on a rapid transit line in the lower mainland. In that case it is a partnership between the province and the municipalities.

Currently the municipalities are concerned about a very large debt which is being incurred, and they will be involved in the paying out of it. Perhaps I am anticipating pronouncements of policy, but I think the government should do as it has done in the past with other projects, and certainly as it did with B.C. Rail. It should capitalize the interest for a period. Ideally it would map out payments in and payments out over the lifetime of the project and not just a few years. Admittedly in the early years there would be a deficit. You don't fully load these systems in year one or year five but by year 10 or 15 — and certainly this will be the case with rapid transit — the ridership will be sufficient to pay for a large part of the operating and capital costs by capitalizing interest for a few years and then reversing the process. Once the system is paying for itself and paying the province and the municipalities back, the system will have been well-timed in terms of job creation.

More important in this case is that it will be seen to have been built at a time when there still was an opportunity to lay a right-of-way through the lower mainland without upsetting too many people, anticipating a population of not just a million or a million and a quarter as it is now in the lower mainland, but several million or, God forbid, five or ten million in 25 years time.

A rail system built now is timed right in terms of job creation and timed right in terms of the longer-term needs of the whole community. But that's a capital item — at least it is while it is being built. It should be in the capital budget as opposed to the operating budget of the government. There should be a long-term financial schedule developed which sees it paid out in the long term and not paid out in year one or even year five. Similar to railway financing, it should be built when there is a good deal of unemployment around, when contracts are bid very competitively, when the government — in this case the municipalities included — can get real value for their money. Certainly I would urge that that project, which will be much more economic if it crosses the Fraser River than if it stops just short of crossing the Fraser River, be completed at least as far as Surrey and in the longer term to Coquitlam. The time is now. It is appropriate to do it now. It is appropriate to add a few tens of millions of dollars to a billion-dollar project and have one operating that is really functional, supplies a real need and supplies it relatively early.

[4:30]

Another big capital project is B.C. Place. It's a substantial investment at an early stage with a long-term payout. Again, that should be seen in the fullness of time. It should be seen in a period of decades and not analyzed in terms of next week or, indeed, next year, but say the year 2000 or 2010. By that time, it will be seen to have been a very wise investment. It is by far the biggest downtown redevelopment scheme anywhere in North America. That's foresight. There's an element of statesmanship there. But we should present our accounts so that we show that it makes sense in the longer term. It is unlikely to — and, in fact, we don't expect it to — pay out 100 percent in the short run. It isn't a short-run decision; it wasn't one taken lightly. I think it's been taken wisely, and I think the payout will be handsome indeed.

Resource revenues to the government have been volatile. They have been substantial in some years and disappointing in others. They go up with the booms in the business cycle. They come swinging down with the slump, as the business cycle turns around and markets are off abroad.

Our resource revenues tend to drop when prices drop abroad — not necessarily as volume of sales abroad, but simply prices. When forest product prices fall off, the government takes the swings. The industry is cushioned. There is an exaggerated swing in the revenue to government. It's as much as five to one. We have a similar, longer-term development with natural gas prices. They have tended to come over, but in their case the volume is also off. The revenue to the province from natural gas, as from forestry, is disappointing now in contrast to the revenue from those same industries in, let's say, 1979. The pool of moneys that comes to the government from the resource industries varies. They vary from

[ Page 3381 ]

year to year. That's a volatile situation. It's one that takes a fair amount of managing. I agree that we should therefore have a resource revenue pool or fund, and that it should be used as something of a flywheel to our provincial economy. I wonder a bit at the wisdom of allocating a portion of that — pro rata, at least — to the municipalities. The municipalities much prefer to get a regular income from the provincial government, not one that varies with the business cycle, one that goes down when business is off and goes up when business is good. So that policy might be questioned. Taking the long view again, I think the idea of a fund is wise and relevant. On whether or not it should be used in the short term exclusively for paying off the debt of B.C. Rail, I really don't have an opinion. It's income to the government, just like the income tax from individuals or the sales tax from purchases by individuals. Why separate it out? Why allocate it specifically to one job and then another, like the funding of the B.C. Rail debt? I don't know the answer to that one.

Employment. Jobs has to be a matter of great concern. We do have some signs on the horizon of job prospects. Fortunately the Crow rate was changed. The federal government has permitted — encouraging, indeed — the two national railways to spend a lot of money in improving their trackage, their equipment. We're going to see some $6 billion spent by the CNR and CPR here in British Columbia over the next few years. That's a lot of money. It's like a northeast coal project every year for the next few years. That's big. I personally hope that Alcan goes ahead with its aluminium development in the northwest. That's a $3 billion development. Hopefully it can proceed with a minimum of environmental impact. Then if the liquefied natural gas export project to Japan goes ahead, that's a further $3 billion. So there is $12 billion of work in prospect. At least half of it is going ahead — we know that now. The other half could well go ahead, especially if the government of this province decides that these projects should proceed and puts its back behind them. Lesser projects, much smaller ones, like the pipeline to Vancouver Island and so on, I'm skeptical about, because they would involve provincial money, provincial savings. In the case of these other projects that I've mentioned, substantially it's money from outside the province, from the private sector. It's new-found money. They're new-found jobs. They're jobs for many of the same people who worked on northeast coal. But it'll mean more jobs than northeast coal created. So I think that's encouraging. I think that that is the kind of initiative which will generate jobs in the province. Clearly, because of it's debt position, the government is unable to expand its employment programs — at least, to expand them in competition with health care and education and welfare — so it has to look to the private sector. It has to look outside the province for capital to put people to work. That is happening.

[Mr. Pelton in the chair.]

I have a few further thoughts. I was concerned in Ottawa and increasingly here about a few big programs squeezing out small programs. With the priority that health care has, it now uses up more than a third of our total budget. The priority that Education has and the priority that Human Resources must have in periods of high unemployment are squeezing out very useful small programs that cost a tiny fraction — in many instances less than 1 percent — of the total budget of the province. They're squeezing them out altogether. Where has airport assistance gone? That was a very useful program, and it should be revived and continued. Paving the odd little airstrip out in remote places and providing navigational aids are very necessary and very useful functions, and certainly in remote, outlying areas of the province are very valuable ones from the point of view of both money and life and limb. I hope that some of those programs either survive our current period of stringency and budget-trimming or are brought back in the not-too-distant future. They are important.

I want to say a few words about taxation. We levy some of the highest taxes anywhere in Canada right here in British Columbia. Our corporation tax rate is the highest in Canada. We charge 16 percent. I think the next highest is 14 percent. There is a federal tax as well. I'm talking about what the province charges as corporation income tax on companies. We charge more than any other province. We received literature from the Mining Association of British Columbia the other day which indicated that in total our taxation on mining and mineral processing in this province was, by quite a margin, the highest in Canada. We've got a capital tax we should do away with. We brought in a little tax on ships' bunkering last fall, which I opposed and I'll continue to oppose. That, I think, is just foolish. We shouldn't have nuisance taxes like that which make no sense from an economic or industrial development point of view. We have high property taxes. We have high assessments in this province. I'm glad to see that the Minister of Finance is going to meet with industry, invite briefs and consult with a view to assessing the impact of the totality of taxation on industry in the province. If he's really listening he'll get an earful, and I know the message will be: "Taxes are too high in this province." If you want to attract capital, trim them back a bit. Be reasonable. Provide some incentives in terms of less than average taxes rather than higher than average taxes. You'll find more activity occurring here that in turn will generate more revenue. The province will be better off in terms of income to the provincial treasury, and we'll all be better off in terms of more jobs. I think that is the approach he should follow and I hope the government follows.

A few critical comments about the budget. Last year, the year before and again this year there was no reference to gross provincial product. I'd like to know what the official estimate of gross provincial product is, because I'd like to know how much of the gross provincial product is being taken away from the people in terms of provincial taxation and that sort of thing. I'd like to see a tax table comparing our taxes with those of other provinces. Finally — and I see my time is running out — I'd like the province to address itself to this awkward question of the unitary tax which California and certain other states in the U.S. are thinking about — taxing foreign corporations on the proportion of their business they do in the state jurisdiction or the provincial jurisdiction. I think I'm against the tax but I'd certainly like the province to have a good look at it, because at least we'd be on top of a current development of world-wide significance, and it might be another source of revenue for the administration.

MR. D'ARCY: Mr. Speaker, it's a pleasure to take a few moments in this debate to give myself the opportunity to talk to the House about some of my thoughts and proposals for the provincial economy in general as well as for specific needs in my own constituency of Rossland-Trail.

I want to compliment the member for North Vancouver–Seymour, who has left the House. While I disagree with much of what he said, he did take a positive approach and did

[ Page 3382 ]

seek some initiatives to improve the economic situation in this province — an initiative and attitude which was sadly lacking, I'm sorry to say, in the speech by the member for Saanich and the Islands (Hon. Mr. Curtis) yesterday when he unveiled his budget and economic program for 1984-85. That is my major concern about the budget document and all the attendant material that was tabled yesterday. This is the first time in my 12 years in the House that a Finance minister — and the member for Saanich and the Islands is the fourth in that time — gave no hope for economic improvement in the 12 months covered by the budget. He gave no hope that job opportunities and business opportunities in this great province are going to see some improvement. There were no initiatives for industry to invest or modernize.

It is all very well to talk about attracting various exotic forms of new economic activity in the province of British Columbia, and I sincerely hope that the government and the private sector are successful in that regard. But we have a tremendous amount of capital already invested in this province. We have a tremendous amount of industrial strength here. We have a tremendous amount of valuable raw materials in this province which today, even in a recession, have substantial markets beyond our borders and in some cases even within our borders. That investment is already captive; it's already in place. In many cases, Mr. Speaker, that investment is not being utilized. That human resource, that wealth of training and experience, that opportunity to continue to operate those industries has been seriously curtailed, in part due to world conditions, but also in major part due to the lack of positive approaches and policies by the Social Credit government.

[4:45]

Mr. Speaker, we have noted one of the reasons over the last few years for the recession, and I would point out that we are now completing the third year of recession. I'm going to return to that later, but this is not a sudden happening. According to the budget, unfortunately it appears we're going to have a fourth year of recession in B.C. I dearly hope the Finance minister is wrong in that regard.

One of the major problems with what I suppose I'll call the developed western democracies in North America and western Europe has been that heavy industry — and if we look at North America that's essentially in eastern Canada and eastern United States, as well as much heavy industry in Britain and West Germany — has found itself technologically obsolete, inefficient; not of world class and, indeed, needing vast amounts of capital to be invested and reinvested in those operations if they're not to go the way of, say, the steel industry on Cape Breton Island, much of the steel industry and heavy smokestack industry in the United States and, as I mentioned, much of the industry, unfortunately, in Britain and even latterly in West Germany, which a few years ago we thought was a model of modernization and up-to-date technology. The reason for this is that many of the shareholders of the corporations which own heavy industry simply do not have the cash flow over the last few years to warrant this type of reinvestment.

Mr. Speaker, the situation gets worse and worse. Plant facilities get more and more run down, more and more out of date, more and more obsolescent until they get to the point where they are obsolete and can no longer compete with modernized industry in other countries — in Japan, unfortunately for us, in the Soviet Union occasionally, in eastern Europe and in some of the underdeveloped countries of the world. I don't want to see that happen in British Columbia. I don't want to see that happen in Canada. I would like to see the government, even now, after having failed to address this in the last three years and having failed to address it in this budget, take some initiatives. I don't profess to have an economic crystal ball or anything of that nature, but one of the things that government could do is make a commitment to investor-owned industry in this province that the government is not going to change the ground rules or move the goal-posts after an industry makes a commitment to retool, to modernize and, hopefully, in many cases, to expand.

I'm not suggesting tax holidays or tax breaks. Clearly, if we look at the abysmal state of the provincial government's finances, the government can't afford to make that sort of an offer. But the government can afford to tell industry that if it modernizes its pulp and paper operation, sawmill, plywood plant, manufacturing facility, smelter, fertilizer plant or petrochemical operation, it will not be taxed additional amounts for the simple fact that it has been modernized. Increases in production are different. But it will not see the productivity gains from massive amounts of private capital reinvested — not only mostly eaten up, but even more than eaten up, in some cases by property taxes alone, in other cases by royalties on electricity or by the proposed royalties that the government has talked about putting on natural gas, or by indexed fuel taxes. There's got to be an end to this sort of thing in the province. Government will get its revenue. We see that by the government's additional 8 percent that they've tacked on income tax, and I'm going to come back to that later. Government will get its revenue when people are employed. Government will get its revenue when companies are in business and their operations are running. Government will get its revenue when there is velocity of money in the economy. There are no initiatives to stimulate any sort of activity in the private sector. The best thing that can be said, I suppose, is that, apart from the personal income tax, there are no major new taxes in this particular budget.

Mr. Speaker, we do not see, apart from the Alcan proposal, any major developments on the horizon in British Columbia. In fact, we see precious few minor developments in terms of utilizing the productive capacity that our people in B.C. have and that our natural resources and energy resources give us. I note that when the minister talks about energy advantage, basically what he really means is applying that term "energy advantage" as a euphemism for the export of very important energy resources to other countries in the world at less than the cost that applies to the B.C. economy to produce and exploit those resources. It is unfortunate that we're in that position of having to try to sell our electricity for a fraction of the cost on the dollar of what it cost the taxpayers of British Columbia to develop those resources. That's not even counting the effects on other parts of the economy — the forestry, mining, agricultural and tourism losses. Even the cost of borrowing the money to develop these energy resources does not come back through the export sale of those energy resources. I don't disagree with that export, because after all, once it's developed, getting ten cents on the dollar is better than getting none at all.

I want to mention one major project about which we unfortunately had some bad news in the newspaper this morning. This is the Dome petrochemical project proposed for the Prince Rupert–Kitimat area. We in the province had high hopes for this project. The government has spoken fondly of it, and just recently the member for Langley (Hon.

[ Page 3383 ]

Mr. McClelland) said it was one of the major initiatives in B.C. — I suppose he still has that project in his drawer from when he was Energy minister. I don't always hope the member for Langley is right, but when he said that, I hoped he was right. Yet today we see that the Japanese financial agents and bankers and the government of Japan are now saying that they either don't want the results of that project imported into Japan, or are not prepared to pay for it at the price that's offered, or they're not prepared to go ahead with the project at all.

If the project is as viable as the government and Dome Petroleum have said it has been, I would hope that there would be a petrochemical company in Canada, hopefully a Canadian or B.C.-based company, who would be prepared to go ahead with it. In fact, I would have thought that if the project was half as good as the government has been telling us, there would be new companies lined up around the block. After all, the basic raw material is natural gas from B.C. and Alberta, and the basic market is the Pacific Rim. If the product is there and the market is there, it should be a good project. Quite frankly, I would rather have somebody else do it than Dome in any event, because we all know that Dome Petroleum is the basket case of the Canadian corporate world. In view of the track record of Dome, I'm sure that other companies, such as Ocelot or Chevron Canada Resources, would in all probability be far more dependable and competent to go ahead with a project of that magnitude. Yet we see that project has been abandoned.

I would hope that some of the ministers who are junketing around North America and the world at public expense would take time off from their sightseeing and cocktail parties to perhaps interest some companies in modernizing and expanding operations in British Columbia, particularly in the areas in which we already know we have expertise and ability. If we find something new and different, well and good. But the history of this province, going back to our entry into Confederation, and even before, would indicate that our best results are gained from those areas that we have done well in before and will do well in again.

Speaking of the Alcan proposal, one wonders if the government itself will frustrate the attempts of that company to create major new industry in the north, hopefully with a limited amount of environmental damage. Will the government frustrate those development proposals simply by refusing to come to a reasonable energy exchange agreement with the Crown-controlled corporation of B.C. Hydro?

Much was said last year during the budget debate, estimates and the legislative debates which took place last summer and fall, especially by government members, about the government's limited ability to pay for various social services, health care services, education services, and security services as supplied by the courts and police. Throughout the recession the government has consistently cut back on these services, first of all in real terms and latterly in actual terms. This has been justified because the government has said that it did not have the ability to pay. The government has had no inability to pay when it comes to buying hardware. It has had no inability to pay when it comes to subsidizing some industries to compete with others, and some parts of some industries to compete with others. If the government has had a difficulty or an inability to pay, why did the Forests minister, as long as six years ago, not pursue lost revenue when it was brought to his attention? Three years ago he did move to stop the drain of government resources, but he did not move to recover funds in 1981, nor did the Finance minister move to recover funds.

I'm not going to dwell at great length on forest revenue, because it has been covered in other debates in the House, but I do want to make the point that logging contractors are businessmen. Some of them are small and some are somewhat larger; but they're business people, and they pay their dues. They pay their wages, compensation assessments, fuel taxes, sales taxes and income taxes. They hauled logs in good faith, and after they hauled, cut, yarded, moved and dumped those logs in good faith — kept up their end of the bargain, not only to the people who hired them but to their employees and suppliers — they were told by the Crown that the logs they hauled did not exist. Can we imagine B.C. Rail hauling coal from Tumbler Ridge to Ridley Island or CN or CP hauling coal from the East Kootenay or the Alberta coalfields to Roberts Bank, and then being told by the Crown after they dumped it: "You never hauled that coal"? Or the mining companies being told: "You never mined that coal — it does not exist"? It is totally absurd. It is bizarre, and yet that is the situation that the Minister of Forests and the Finance minister and the government knew about, not a week ago, not a month ago, but years ago. They did move to correct the situation, but they did not move to recover. Those businessmen, thank goodness, brought it to public light. They had built roads; they had hauled timber; as I said earlier, they had kept their end of the bargain; and then they were told that their work and their effort and their part of the contract had never existed.

What about other taxpayers? What about income tax payers? I don't find it surprising that the Finance minister sought to increase personal income taxes. After all, the Finance minister's tax-collectors — those jack-booted people working for the federal government who collect income taxes and use all the disgusting methods of coercing taxpayers' money out of them that have been so rightly and so roundly criticized in the media and by the Conservatives and New Democrats in the federal House — are also collecting provincial income taxes. I certainly don't hear the Finance minister objecting to those tactics. He is just taking the money and running. That is the provincial approach to those disgusting tactics by the federal government. They are collecting provincial income taxes too, Mr. Speaker, and the provincial attitude is to take the money and run. They see a good thing. They know those taxes are going to be collected in British Columbia, and so they know one way to make sure they get their money.

Some companies got free logs from the provincial government. That allegation has been made. I'm not suggesting there has been any criminal activity. I am saying that some people didn't pay their dues; they didn't pay their taxes. I've mentioned what happens to income tax payers who the federal and provincial governments allege have not paid their taxes. One of the people to be harassed was the past-president of the Social Credit Women's Auxiliary. What happens to people who don't pay their income taxes? They are taken to court. What happens to businessmen who don't pay their sales tax, whether it be a small retailer or a large one? The government has ways and means of very draconian measures to enforce collection of sales taxes. What was threatened to happen, Mr. Speaker, to restaurateurs, some of whom defied the sales tax when it was arbitrarily slapped on them last year? If there ever was a bastion of free enterprise and self-reliance and individual initiative in this province — and I don't believe those qualities are the exclusive property of the

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right wing in politics — it is the restaurateurs in the province of B.C. There are probably more imaginative, innovative, independent, fiercely self-reliant people in the restaurant industry than any other form of business in this province. What happened to them when they said: "We don't believe in this tax; we don't know how to collect it"? They were told in no uncertain terms by the Minister of Finance what was likely to happen to them. What happens to property tax payers who don't pay their property taxes? Their home, business, commercial property, farm or industrial land is pulled out from under them by tax sale. That's what happens. But here we have taxes on logs going back as long as six years with no attempt whatsoever to recover the money.

[5:00]

I am not going to dwell at length on this, but the government spent from three to six years deciding that they weren't even going to take any action. They weren't even sure that anything was wrong. All of a sudden, when threatened with exposure by the ombudsman, they suddenly decide that there might be some criminal activity here. The ombudsman never said that; the complainants never said that; the government didn't even think there was anything wrong for six years. All of a sudden, in a few days, when the cat is going to come out of the bag, they suddenly decide: "Gee whiz, maybe there was some criminal intent here." I don't find that very credible. I don't find the Attorney-General (Hon. Mr. Smith) and the Minister of Forests (Hon. Mr. Waterland) very credible, or the Minister of Finance (Hon. Mr. Curtis) very credible on his issue. Thank heaven the ombudsman would not let the Attorney-General huff and puff and push him around in an attempt to subvert his investigations.

I think it's most unfortunate that the Minister of Forests is running away from this issue, that he is afraid of it. I think it's most unfortunate that the Attorney-General and the Minister of Finance are afraid of this issue. If a mistake has been made, let's correct it; let's collect the money and go on to establishing the credibility of government and of this Legislature in administering the $8 billion a year business that is the government of British Columbia. Let's not run away. Let's not hide from things. Mistakes are made. Let's deal with them up front.

In 1983 retail sales in North America boomed. In Canada they were up by nearly 8 percent. In the United States they were up slightly more. Retail sales in British Columbia in real terms in 1983 sank by 3 percent. Social Credit has aggravated the recession. In our province's history we have always led Canada. We certainly led the Canadian average. When times were tough in Canada they weren't quite so tough in British Columbia. When times were good in Canada they were even better in British Columbia. We were the envy of jurisdictions east of the Rocky Mountains, and in many cases of jurisdictions south of the 49th parallel. For perhaps the first time in our history, certainly in our modern history, under Social Credit we have been hit harder by recession and depression than other parts of North America. We not only have been hit harder but we are continuing to decline, while the rest of North America not only has recovered but in many cases is into an expansion mode.

The government has to take responsibility for this, Mr. Speaker. This recession didn't suddenly just happen. We are, it is unfortunate to say, going into the last few months of the third year of recession in British Columbia. This budget that was tabled yesterday, and its economic policy proposal, essentially mean a fourth year of recession in British Columbia. Surely the government would realize that its policies are not working. It's not a case of ideology; it's a case of common sense. What company, what business, what farm, what retail business, what factory, what manufacturing operation would, after three years of seeing its policies fail, of seeing its policies make a bad situation worse year by year, say: "Just wait a minute, folks, things are going to get better." They're getting better in Alberta and Saskatchewan and Manitoba and Ontario and Quebec and Prince Edward Island and Massachusetts and Texas and California but they're not getting better in British Columbia; they're getting worse.

It is significant that the government's policies in British Columbia are different than the policies of governments in those jurisdictions. Whether those governments see themselves as centrist or right wing, or left wing or whether they see themselves as having any ideology at all, their policies are different from this government's and their economic track record is better than that of British Columbia. Surely this government, after three years, would learn. You can forgive them for 1981; maybe they were already set into their budget and policies when the recession hit in July of that year. In 1982 you can say they were hard-headed and have a tough time learning; in 1983 they succeeded in making things worse; and in 1984 surely there is no excuse for continuing with the kind of policies which have aggravated recession and delayed recovery in British Columbia for the past three years.

Someday we may find out if restraint and cutbacks in government spending are valuable to the B.C. economy. We're not going to find it out under that government over there and that Minister of Finance, because in spite of pious platitudes to the contrary, there has been no restraint in government spending. The government's own financial statements in the budget say that for the past four years the compounded growth of expenditure in British Columbia has been nearly 9 percent. Even if the minister is able to carry through on his intent not to increase spending in 1984-85 — even taking him at his word — we still have a compounded growth of 8.5 to 9 percent, and that's not restraint. So we'll never know whether restraint is good or bad for the economy, because it hasn't been tried yet in British Columbia.

What we've seen is, of course.... I'm not going to go over the debates of last year, but what we saw last year and see again this year are changes in government priorities. We have seen borrowing for capital projects and this year we see the transfer of contingent liabilities to direct liabilities, done, once again, with borrowed funds. Last year we saw the debt of this province grow by $4 billion. I'm going to talk about that a bit. I'm indebted to the member for North Vancouver–Seymour (Mr. Davis), who has left the chamber, for giving us a comparative way of looking at the burgeoning British Columbia debt over the past few years.

We have seen the Minister of Finance claim that we were seeing a reduction in debt because $471 million was being transferred to B.C. Rail for its debt reduction purposes. On page 50 of his own budget statement, he shows a net debt — and I want to emphasize those words "net debt"; that's with the sinking fund's various contingencies taken off — in the old budget of $14.8 billion, increasing in the 12 months covered by the budget we're examining in this House today from $14.8 billion to $16.7 billion. That's an increase of nearly $2 billion — an increase of nearly $2 billion. To paraphrase the member for Richmond (Hon. Mr. Nielsen) yesterday, that's worth repeating: not a reduction, as the

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Minister of Finance claimed, in the debt of the province by $470 million, but an increase in the indebtedness of this province in the second year of major restraint by nearly $2 billion. That's on top of a debt increase last year of nearly $4 billion.

Gordon Gibson, Jr., no longer in this chamber, said in 1975, when that government over there was busy creating new Crown corporations that had never existed before and expanding the role of government where government had never been before under New Democrat or Liberal or Conservative or Socred governments, that the prime reason any government in Canada creates a Crown corporation is as a vehicle to hide debt. I wish he had been merely being witty when he said that, but what he said then was unfortunately true. In British Columbia we have not only seen the total figures go up from $4 billion to $15 billion over the eight years that government across the way on your right, Mr. Speaker, has been in office, but we've seen a ferry debt created where none was before. We have seen a buildings debt created where none was before. We have seen a major increase in our railway debt, in spite of the borrowing that has been done or will be done to reduce that debt. It simply means that the government, in telling us they're reducing the rail debt, is in fact simply going to the Bank of Montreal to take out a loan to pay off a loan at the Bank of Toronto — the same thing at a higher rate of interest. We have seen a burgeoning of our Hydro debt in the last eight years. We have seen a systems debt where none was before. We have seen a B.C. Place debt and a transit debt where none was before.

We had the pious and pompous pronouncement of the Minister of Finance on the terrible federal deficit and budget when Mr. Lalonde brought in his budget a week ago. It is disgusting, but it took the Trudeau government 16 years — take out the nine-month Joe Clark interregnum — from 1968 to 1984 to treble the federal debt that you and I and all Canadian taxpayers have to bear responsibility for. It took that government, under the member for Okanagan South (Hon. Mr. Bennett), eight years — half as long — to increase the provincial debt by three and one half times. Half as long to proportionally increase the debt by a higher amount, and yet we hear pious pronouncements by not just the Finance minister but a number of members on that side about how they're fiscally responsible and they know what they're doing. They know what they're doing only to the extent that they know how to mortgage this province to foreign moneylenders. That's all they know.

How can we in this House — how can the government with a straight face — tell a shareholder in BCRIC, the owners of Westar mines, in Fording Coal, or in any of the coal companies operating in the southeastern part of the province, about a $470 million subsidy from their taxes given to a competitor? How would a motel owner like to be told that his taxes have been raised to give a subsidy to a competing operation down the street? How would a pulp and paper company like to have their taxes taken for a subsidy to a competing operation in some other part of the province? It's absurd, and it is hurting our credibility domestically and internationally. That is one of the reasons why the B.C. economy is unfortunately in the doldrums and why I believe all members of this House on both sides of this floor — and this is why I related to some degree to the member for North Vancouver–Seymour — need to put forth positive proposals.

Hopefully the government will pick up some of them, because they're not only bankrupt in money; they're bankrupt in ideas as well.

[5:15]

The member for North Vancouver–Seymour, unfortunately for him, made some interesting comparisons. He mentioned quite correctly that in the last year or so the Canadian national government has been spending $140 for every $100 they take in. That's true. He also said that the American government, the Reagan administration, has been spending $120 for every $100 they take in. He's also correct there. What he didn't mention, Mr. Speaker, is that last year the provincial government that he supports and is a part of spent $150 for every $100 they took in. That's more than the federal government and more than the U.S. government. He didn't tell us that. But I'm going to tell you that, because I like the member for Seymour's analysis. He liked to talk about the U.S. deficit; he liked to talk about the federal debt; he sure as heck didn't want to talk about the provincial debt, because it was worse than either one.

That government across the way has spent an average of $1.4 billion more than they took in for each and every year that they've been in office since late 1975. One of the relatively good things — or perhaps a not so bad thing — that I can say about the budget is that after borrowing $4 billion last year the Minister of Finance tells us he only plans to borrow slightly less than $2 billion this year. That's an improvement. It's still higher than the average. We've been told there's restraint, but it's still higher than their average indebtedness. So I repeat my earlier statement: I would hope that at some point in the future we will find out if the province of B.C. benefits by restraint. Maybe some government might try it. That government has yet to try restraint.

What they have done is shifted priorities from services to people to hardware items. The only two major things, interestingly enough, to increase in terms of government expenditure over the last few years in actual and real terms are debt and interest on debt, and welfare payments, because there are so many British Columbians who unfortunately, through no fault of their own, are forced to seek relief. They have no jobs, although they would like to, in most if not all cases. They have no unemployment insurance, although they would like to be able to get that if it hadn't run out and forced them onto the welfare rolls. That is the major increase in expenditure, along with interest on debt, in the last few years.

I ask again that the government consider making a commitment, not only to industry in this province but to other businesses, to the service industries and to the general consumers of this province, that there will be no natural gas royalties, that there will be no fuel tax increases, that those indexed increases will be ended and that there will be no electricity royalties added on. I would like to see these things decreased. I realize that's too much to hope for. But I believe there should be no impediments to an individual's, a company's or a corporation's ability to do business. The government has all the opportunity in the world to tax individuals, corporations and companies, providing they're operating and making some revenue. But the government has no right to be taking money away from individuals, away from production costs of corporations, and away from service industry businesses before they even have any turnover. That sort of thing has to stop. A commitment that there will be no further increases would be a major step in restoring confidence in this province.

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All of us should be seeking ways to get B.C. out of its doldrums. Social Credit got us here, but all members should work to get us out of this mess. Subsidizing some industries at the expense of others is not the way to go. Subsidizing an industry in some part of the province out of the taxes of the same industry in another part of the province is not the way to go either. Special deals for certain people in certain industries is not the way to have confidence in this province. There have to be clear and defined ground rules and a commitment that those rules will not be changed, especially when it comes to costs of operation. We must have a commitment by government and by this Legislature to our forest resources — a commitment that we don't have now. We must have a commitment to our fishing resources, our agricultural resources, and education and training ability for our adults and young people. We have to have a commitment to our mining and manufacturing sector that government will do everything in its power to make sure that those industries can all regain international competitiveness.

We must have a commitment to the tourist resource that taxes on service industries will not be increased and that tourists coming to British Columbia from other parts of Canada, the United States and other parts of the world will not be facing higher consumer prices in British Columbia because of government taxation. We must have that kind of commitment from government. I'm not saying that would turn the B.C. economy around overnight, but it would help to restore confidence. Quite frankly, I always have felt and totally agree with the philosophy expressed but not followed by the Social Credit Party that government is not going to get us out of the depression. Governments can get you into that situation by bad policies, but they don't get you out of it. Private individuals are going to get us out of it, hopefully without too much harassment by government.

At least the government can make a commitment that they are not going to make things worse, and that was not forthcoming in this budget speech. It's not forthcoming in any of the material that the minister has given to us. I would hope that the government would take advantage of the time given to it by the lessons of the last three and a half years and that the government will take steps to ensure that they are not going to repeat the errors of their last few years, that they are not going to further drive this province into a deeper form of economic malaise than we are already in. We cannot go on in this province blaming international conditions — I see my time is up, Mr. Speaker — and circumstances beyond our control. International conditions and circumstances in other areas are allowing those jurisdictions to do much better than British Columbia.

MR. MICHAEL: Mr. Speaker, it's a pleasure to participate in this budget debate. I wish to commend the Minister of Finance and the government for the excellent job they have done in bringing down this current budget. It is amazing to me that they have been as successful as they have in reducing the deficit from $1.3 billion down to the neighbourhood of $670 million. As a matter of fact, if you subtract from that $670 million the amount being turned over to B.C. Rail for debt reduction, the true deficit for 1984-85 comes down closer to the $200 million dollar mark. I find that incredible in view of what the figures were projected to be last year. I think that this government, the cabinet, the Minister of Finance and all members on the government side should take a great deal of pride in having rolled up their sleeves and done the job they have done in the face of the opposition that was mounted and led by Operation Solidarity and the opposition during the last fiscal year.

I'm happy to see some contents in the budget. I'm happy to see the added dollars for reforestation. I see that the figure has been increased by somewhere between 16 and 17 percent. As a person who has worked in the forest industry for the best part of his life, I am very happy to see those increased dollars in that particular area. The total amount of money to be spent on reforestation in the current fiscal year will be somewhere in the neighbourhood of $100 million. I'm very happy to see that figure. I would like to see that trend continue in the future, as I believe that the forests are the primary resource of not only British Columbia but all of Canada.

I was also pleased that the minister was able to bring in a provision for a $10 million student employment program. I am sure that will be welcomed by the students this coming summer.

In looking at the trend line and the history of not only this province but this country, I think it's remarkable that this is the first reduction ever brought in in the past 31 years in this particular province. I think it's remarkable that the Minister of Finance, along with his colleagues, was able to put together a budget which represents a 6.2 percent reduction from last year's budget. I'm sure a great many of those who protested against the actions, the workings and the positions taken by this government will look back at the work that has been done with a great deal of pride in the strong position this government has taken in face of that opposition in maintaining and sticking with their principles, on which they won the election last May 5.

I'm pleased we were able to maintain all of the important core programs. They're all in place. No one is suffering unduly. I see that the provisions for health costs are up, and I am proud of that, in view of the fact that this province has perhaps the very best health care program not only in Canada but in all of North America.

If all the governments in Canada, particularly the national government, and the national government of the United States were to follow the lead of this provincial government in reducing the deficit in the coming fiscal year to the extent that we have, I would predict that we would see a vast, significant reduction in the prime rate across this continent. I think that is the thing that we should all be striving for. It is so important to the continued and long-lasting economic recovery to get those prime rates down to the 6 percent and 7 percent level. It would provide the opportunity for our people to build homes, make capital investments and make things happen. That is one of the most important things we must strive for. The key factor is to get government debt down.

The federal government must follow the lead, and I'm sure it will. Regardless of which government is at the helm after the next federal election, you will see that government take the lead of the province of British Columbia and of our Premier. I think there will probably be a change after the next federal election. But even if there isn't, I'm sure that you will see the government of our nation, the Dominion of Canada, exercising a great deal of restraint after that election is over.

A couple of areas that I would have liked to have seen in the budget aren't there. I would have liked to have seen a announcement that the provincial and federal governments

[ Page 3387 ]

had reached an agreement on an intensive silviculture program in our forest industry. I know that those negotiations are continuing. I would certainly urge the minister of that department to continue in earnest with those negotiations and attempt to get the federal or provincial government to a point where they can enter into an intensive reforestation of the vacant land, the logged-off lands, in British Columbia.

[5:30]

[Mr. Strachan in the chair.]

The second area that I would have welcomed but which is not in the budget is more incentive. Currently there are some incentives, but I would have liked to have seen more incentives for individual vehicles to switch over to compressed natural gas. I am a believer that natural gas, being a B.C. resource, is one area in which we must utilize a great deal of energy. We must put a great deal of thrust into it to get not only the government fleets switched over to compressed natural gas but all of the fleets and as many private vehicles as possible to utilize that resource that is located in the province. I would have hoped that the Minister of Finance would have taken a leaf from the Ontario book, where they have made a provision for new cars to be sold free of sales tax if they were converted to compressed natural gas. I think that would have been a good move for this government to take.

Mr. Speaker, I don't wish to take up any more time. I'm surprised at the opposition saying some of the things they say. I can't believe my ears sometimes. I hear their finance critic saying that we're taking a lot of money out of the economy by not having more deficit. I hear other speakers, such as the last one, the member for Rossland-Trail (Mr. D'Arcy), saying that we're too far in debt and we're spending too much money. I have a hard time making sense out of their criticisms. I listened to their members and critics speaking in the last session of this assembly, and I listened to the various ministerial estimates being debated, and I listened to critic after critic asking for more money. The Minister of Highways stands up and gives his estimates; the opposition argues they want more money in there, more bridges, more roads in areas that they represent. When we talk about education they want more money. When we talk about health they want more money. When we talk about Human Resources, the environment, agriculture, the universities or the Labour ministry they want more money. They talk about more, more, more, Mr. Speaker. Yet when we bring in a budget that has proven that the record of this government is one of restraint and giving positive direction as to the area that this province is going to be heading over the next two or three years, we get criticism on that hand as well.

They talk about wanting more business, more industry in the province, that we should be having more communication with investors, yet they criticize the fact that we send some of our ministers to foreign countries and to other provinces across this land. I think it's mischievous for them to be talking and using such words as "junkets" and "sightseeing trips" and "cocktail parties" when talking about our ministers of this government visiting other countries. My information, having talked with a lot of them, is that these are very, very hard-working trips. These trade missions start very early in the morning and go late at night. I think we should be thanking and encouraging those ministers who are taking those trips rather than coming up with those derogatory remarks such as they consistently do.

As I say, I didn't want to take up too much time. I'm proud of this government. I'm proud of the direction it's taking, and I'm very confident that within another year or two years we are going to see this government bring in balanced budgets and continue to pay off the debts to rid our children and our grandchildren of the debts that have been assembled over the years. I'm proud of the actions of the Finance minister, and I'm proud of the actions of this government.

MRS. DAILLY: Mr. Speaker, I think the paucity of that member's remarks certainly show that he had great difficulty in trying to defend his government's budget. That's one of the shortest little speeches I've heard in defence of the budget.

AN HON. MEMBER: Quality.

MRS. DAILLY: If it had quality we might have accepted it, but unfortunately we didn't find that either.

Interjection.

MRS. DAILLY: Yes, but unfortunately there is no Abraham Lincoln over there. Mr. Speaker, the Minister of Consumer and Corporate Affairs (Hon. Mr. Hewitt) said just now that Abraham Lincoln only took four minutes for the Gettysburg Address. You know, to even remotely connect the Social Credit ministers or government with Abraham Lincoln really is a bit hard to take. When I think that Abraham Lincoln stood for justice and compassion and concern for the people of his province, and all this budget from that government shows us is exactly the opposite. I don't think we should have to listen to any relationship there.

I happen to believe that all the members of the Social Credit government are not evil people.

SOME HON. MEMBERS: Oh, oh!

MRS. DAILLY: I really do. I mean that sincerely.

AN HON. MEMBER: How about a free vote?

MRS. DAILLY: Somebody would like a free vote on that, mind you, Mr. Speaker.

There are thousands and thousands of B.C. citizens however, who would not be so gentle in describing the Social Credit members. But I really do believe that. I feel they are not evil. But they are incompetent, they are inflexible, they are bereft of any basic ideas. They seem not to understand that, although they themselves are not evil, their policies are perhaps — in fact, I'm sure, and I'm very serious when I say this — going to create evil times in British Columbia. I cannot understand how a government made up of human beings, just as we are over here, can be so absolutely different in its approach to government than we on the social democratic side are. We constantly hear that they are the ones who are efficient, who get out of debt, who get the economy moving. Yet those are all words, rhetoric and talk; nothing in the last two years since they brought in their restraint program can prove that any of those things is a fact. This is where I say that the government may not be evil but the government appears to be — may I put it quite straight to you, Mr. Speaker? — absolutely stupid. When a government cannot see that the policies they have imposed on the people of B.C. for the last two years are bringing about a worse recession

[ Page 3388 ]

than in almost any other province in Canada, what else can we call it but stupidity?

My colleague sitting beside me suggested a good line. I said he should use it for his speech, but as it was good I'll use it, Mr. Speaker, and he can repeat it. He said if he were on that side and actually saw what his policies were creating out there in the public — and we'll go into those shortly — he would blow his brains out. It is not my style to use those extreme statements, so I will let the member repeat that when he speaks.

Interjections.

MRS. DAILLY: Mr. Speaker, I appreciate the humour at twenty to six, when I certainly didn't expect to be on my feet. I expected to be able to go home and relax for a few minutes and then speak tomorrow. But here I am. I do appreciate the humour, but may I now get down to some of the very serious problems that we face in this province.

This morning I noted one of the better editorials that have been written on this whole matter. It was written in the Times-Colonist, and I'm sure everyone in the Legislature has had an opportunity to read it, so I do not intend to bore the House by going over what was said word for word. I would like to point out that they said something which the NDP has been saying for a number of years now, and that is that the budgets of the Social Credit government are an accountant's dream come true. For a number of years we have seen that all the budgets produced by the Social Credit government are produced basically from the angle, idea and philosophy of an accountant. That is the basic problem of the Social Credit government. They seem to have forgotten that they were elected by the people of British Columbia not just to produce a lot of words about how marvellous they are with their accounting system, but to better the lives of the people of British Columbia. Mr. Speaker, I have to ask you: after two years of this restraint program, can you, or any member of that government over there, honestly say that the lives of the average citizens of British Columbia are better? There isn't one person over there who can really say that the people of British Columbia are on the whole benefiting from this so-called "restraint" program.

As the Times-Colonist pointed out, the government forget that almost one-half of the people of British Columbia did not vote for that government. Yet we constantly hear over there that the people voted for them. Even if their statement were true and a large majority of the people in B.C. voted for them, I'm sure the people who voted for them in May 1983 did not vote for these kinds of government priorities in spending. I know that the average citizen did say that they wanted restraint.

Interjections.

DEPUTY SPEAKER: Order, please, hon. members.

MRS. DAILLY: Mr. Speaker, I know that the public said: "Yes, we are concerned about government spending." We are all concerned about government spending. Let me tell you, no one's more concerned about the Social Credit government's spending than the NDP. Why we're so concerned is that we happen not to agree with government spending on what we consider to be wasteful, unnecessary things. Let me give you an example. We've mentioned this many times in this Legislature, but it bears mentioning again, because on the other side of the House we constantly hear: "All the NDP want to do is spend money." All that government wants to do is spend money on some very questionable projects. I'll name one. It's here now. It was unnecessary to have ever built it in the form it's in; that is, the ALRT for the lower mainland.

SOME HON. MEMBERS: Oh, oh!

MRS, DAILLY: Mr. Speaker, I hope my words have been taken carefully. I said "in the present form that it's been put in," and the fact is that it's here now and we're stuck with it. We are going to have imposed on the people of British Columbia a tremendous debt, close to $1 billion, for a transit system that nobody asked for except a former cabinet minister who is no longer sitting here and who is now out ready to attack the government that he was formerly a member of. Somehow or other that minister rammed down the throats of his cabinet and caucus colleagues an ultra-expensive, unproven system. The lower mainland regional board had spent years preparing, hopefully for the government, their suggestions for a transit system.

Nobody questions that we need it. You just have to go to Vancouver today to realize the need of one. But that arrogant minister, who is no longer here, and that arrogant government rammed their own system, a project that is questionable in terms of cost versus efficiency, down the throats of those people who had studied it for years, and we're stuck with it. But the sad thing is the people of British Columbia are stuck with a $1 billion transit system that nobody asked for except one cabinet minister who somehow pushed it down the throats of his colleagues. And then they say to us that we want to spend money wastefully. We all know we need a good transit system, but $1 billion?

May I say that the transit system may go to Surrey and a few other areas, but there are many people in British Columbia who have to pay for that system who will never see the benefit of it. They have no choice. The Lower Mainland Regional District had no choice. They had to take it.

[5:45]

You talk about priorities and waste. We could have had a nice light rapid transit system for half the cost. Think how many children in the classrooms would have benefited from that extra amount of money.

The northeast coal project. Yes, we do need to develop that part of the province, but sometimes you can't help wondering how much per job that development has cost.

AN HON. MEMBER: A quarter of a million bucks.

MRS. DAILLY: A quarter of a million dollars per job! Are you really the great economic planners? Are you really as businesslike as you claim to be when one really looks at the facts and figures? I listened to the member for North Vancouver–Seymour (Mr. Davis) today. He was very happy about the $470 million being paid for the B.C. Rail debt. But even he said: "However, it's being paid out of borrowed money." Can you imagine it? We're borrowing money to pay back the BCR. What good is that going to do the people of British Columbia right at this moment who are really suffering?

You know what I find interesting? I've listened carefully to the few speakers from the government we have heard so far. I listened to the Minister of Finance. It's an interesting thing: all the members over there are treating the running of

[ Page 3389 ]

government just as if they were all a bunch of little accountants. They don't seem to realize, as I said earlier, that they were put here by the people and for the people of British Columbia. You were not put here to say: "Look how great I am. I managed to move this amount of money from here and this amount of money there." It's all a shell game. You are playing with the people of British Columbia for your own purposes of trying to prepare yourself to win the next election. The tragedy of it is that it's the people of British Columbia who are suffering and will suffer.

The thing that concerns me most about the incompetency and the callousness of the policies of the Social Credit government is that they do not happen even to have thought, I don't think, of the future. They do not seem to realize that when you cut back on health care for senior citizens in their homes, when you cut back on services to children in schools today who are desperately in need of them, when you cut back on alcohol and drug prevention and when you cut back on a myriad of prevention programs to assist people who are suffering greatly from the problems that have been brought upon them primarily by this Socred-inspired recession, what you are doing is preparing a legacy for the grandchildren of those of us who are here today. It's a legacy of extreme problems, because these young people today who are not getting the attention — the young people particularly — are going to end up as burdens on society in the future.

This government keeps talking about capital investment. I ask you, Mr. Speaker: have they no concern about investment in human capital? What about the investment in people? When you keep talking about the bottom line and these trite statements in the minister's statement in the throne speech about how we all have to.... I can't quite find the quote, but he refers to not leaving a legacy of debt. No, we don't want a legacy of debt either, but we don't want to leave a legacy of functionally illiterate people and social misfits. This can happen. I am not talking in an extreme way. Are you not concerned that you are cutting off the funding for people in need today? Does it not concern you?

I keep hearing those accountancy-bookkeeping terms. You were not elected to come here as just a bookkeeper. Most of you, I think, have come from a background where you think that you can apply all the ethics of business — good or bad — and you can apply your entire business thought to running a government. Let me assure you, Mr. Speaker, that you may need some of that, but a government that runs entirely on that is not a government that will be truly working for the people of British Columbia.

When you look at what has happened with some of the cutbacks.... As I said, you are not an evil group of people, but there is something wrong with you when you can accept cutbacks to children, cutbacks to old people and cutbacks to everyone in the province who can least afford it. I can't understand this. You may say that everybody has to tighten his belt. As we have said many times, most of us in this Legislature today are not going to suffer from this budget. It's the ones out there who have already been hit the hardest — the old, the children who need services, and the young unemployed — who are going to be hurt more and more by this budget. We sit here in our seats quite complacently; we're well fed and well housed. Most of us do not have the insecurity of unemployment. I think this is the problem: somehow or other many of the people on the Social Credit benches are so obsessed with this accountancy mind that they've forgotten about people.

Interjection.

MRS. DAILLY: Yes, I know we often hear: "Oh, we'll look after the people. We'll make sure that if a person doesn't have the money to provide a user fee we'll let him in the hospital. We'll take care of the old and the sick." But that's the kind of thinking we had back at the turn of the century, before society advanced from the post-industrial age and realized that we all collectively owe something to everyone in this society. It's only if you work together and accept that that you improve everyone's standard of life. I'm afraid the Social Credit government and the others in the neo-conservative movements across Canada and the United States and in England, etc., are beginning to show that their policies can revert and take us back to the periods prior to the increase in the standard of living because of a compassionate group of governments which came along in the last few years. Those governments were certainly not all democratic socialist governments. But something has happened. Somehow or other the neo-conservative movement does not see the connection between economics and social planning and social needs.

I contend, Mr. Speaker, that if you continue to spend money in the social areas it in turn will help the economy. This is where we sadly part company. This is something I don't think many of the members over there can connect. They simply cannot connect that you can put the two together. We keep getting threatening statements posed at us all the time. If you say that you're for human rights, public education and housing, and if you're against pollution and crime, you're considered to be involved in government and politics. But if you say that you believe in fighting unemployment, in massive financial savings and in not having trade deficits, then you're for business and economics. I think the tragedy is that we can be both. We have to merge the two. But somehow or other the neo-conservatives like to separate us. So if you speak for human rights and public education, that means you're not efficient. It means that you can't save money, you're sloppy and you can't run a government. Mr. Speaker, why can we not have both? Why can we not keep our social priorities and at the same time be trying to keep a government's economy moving? It seems to me that we should be able to merge both of them.

The Social Credit government seems to thrive on setting up a lot of these statements that are full of rhetoric and really mean absolutely nothing — for instance, this kind of statement. To great applause the minister said: "We're going to increase health care." The increase amounts to approximately 2 percent. We know that most of the hospitals were down to a bare bones budget before, and now they've got a 2 percent increase.

Even worse, we are now going to have a new tax imposed by this budget. The new tax is coming in to be used simply as a foil to fight the federal government. The figures that the minister brought forward to us do not back up the need for this. The only thing the Minister of Finance said that I agreed with was that we all have a responsibility to find ways of

[ Page 3390 ]

keeping costs down and new ways, I hope, of delivering services in health care. At the same time, he moved into this whole area of imposing these taxes and relating it to that terrible federal government.

On that note, Mr. Speaker, I wonder if I could adjourn this debate at this time to the next sitting of the House.

Motion approved.

Hon. Mr. Gardom moved adjournment of the House.

Motion approved.

The House adjourned at 5:58 p.m.