1985 Legislative Session: 3rd Session, 33rd Parliament
HANSARD
The following electronic version is for informational purposes only.
The printed version remains the official version.
(Hansard)
FRIDAY, MARCH 15, 1985
Morning Sitting
[ Page 5293 ]
CONTENTS
Provincial-Municipal Partnership Act (Bill 25). Hon. Mr. Ritchie.
Introduction and first reading –– 5294
Revenue Sharing Amendment Act (Bill 22). Hon. Mr. Ritchie.
Introduction and first reading –– 5294
Provincial-Municipal Partnership (Taxation Measures) Act (Bill 21). Hon. Mr. Curtis.
Introduction and first reading –– 5295
Industrial Electricity Rate Discount Act (Bill 28). Hon. Mr. Rogers.
Introduction and first reading –– 5295
Budget debate
Mr. Stupich –– 5295
Mr. Kempf –– 5304
The House met at 10:07 a.m.
Prayers.
HON. MR. GARDOM: Mr. Speaker, I'm sure all hon. members would like to bid a very cordial welcome to Mrs. lva Mann from the great constituency of Vancouver–Point Grey, a lady who is extremely interested in and works hard in provincial affairs.
MR. VEITCH: Mr. Speaker, I know you're not supposed to be political in introductions, so I won't be, but suffice to say that from the gem of the lower mainland, that great municipality of Burnaby, the best mayor in the lower mainland: Bill Lewame. I'd like you to welcome him, please.
HON. MR. RITCHIE: Mr. Speaker, it is an honour to welcome, not only to your gallery but to the precincts, a large number of distinguished people, too numerous to mention individually. We have approximately 125 representatives from our 144 municipalities throughout the province. I must, however, mention three gentlemen: we have Mayor Mel Couvelier, the president of the UBCM, along with two staff members of the UBCM, Messrs. Richard Taylor and Jeff McKelvey.
In addition we have Mr. Joe Oberhoffner, president of the B.C. Chamber of Commerce, and Mr. Bill Goldie, general manager of the B.C. Chamber of Commerce. Representing the B.C. Real Estate Association are Mr. Herman Wiebe, president, and Mr. Bob Chaplin, executive officer. Would the House please welcome these people.
MR. BLENCOE: Mr. Speaker, on behalf of our party and our side of the House, I would also like to welcome to the House representatives, mayors, aldermen and other people from local government. Welcome to the House. I know that today is a big day. I will be meeting with many of them. We hope that we indeed will see real municipal partnership in the province of British Columbia.
MR. MOWAT: I would like the House to welcome today two special guests from Kitimat: Joanne Monaghan and Mr. David Morris. I know that from your constituency, Mr. Speaker, Mayor Ernie Burnett of Delta is here. I must also welcome the financial director for the city of Vancouver, Mr. Peter Leckie; Fritz Bowers, our city manager; and our mayor, Mike Harcourt, so that I can get back into Vancouver today — but I understand even Mikey likes it.
MR. MACDONALD: Mr. Speaker, I was going to introduce my own mayor, Mr. Mike, but this fellow beat me to it.
HON. MRS. McCARTHY: Mr. Speaker, I have great pleasure today in introducing the president of Chow Yin Enterprises and a director of the Overseas Union Bank of Canada: from Vancouver, Mr. Howard Wong. With Mr. Wong today are: from Singapore, Mr. Lee Hee Seng, managing director of Overseas Union Bank of Singapore and the deputy chairman of the Overseas Union Bank of Canada; and from Toronto, accompanying them, is Mr. Heah Hock Meng, director of the Overseas Union Bank of Canada. Will the House please welcome them.
MR. MacWILLIAM: I'd like to take the opportunity to welcome a distinguished gentleman to the House today: the mayor of the city of Vernon, His Worship Lyall Hanson. I might add that it shows you how far we go in the spirit of cooperation up in the North Okanagan: we both share the same name. I'm not sure if other members of council are with Mayor Hanson, but if they are here today I'd like to welcome them also.
HON. MR. WATERLAND: Mr. Speaker, there are some eight incorporated municipalities in the constituency of Yale Lillooet. I don't know how many of the mayors are here today; I have spotted two in the gallery. If there are others, my apologies to them. In any event, would the House please welcome Mayor Baird from the city of Merritt and Mayor Christensen from the town of Logan Lake.
HON. MR. PELTON: Having firsthand knowledge of how busy mayors are, and the fact that they don't have too much time to come over and visit us, I would like to take the opportunity of introducing the mayors from the Dewdney riding to the assembly today. First, I would like to introduce His Worship Danny Sharpe, mayor of Pitt Meadows, and his administrator, Joe Antalek. I would like also to bring to the attention of this House the fact that Mayor John Agnew and his administrator Dr. Norman Cook, from the city of Mission, are with us today. Last but not least, Mr. Jerry Sulina, the administrator of the beautiful district of Maple Ridge, is here. I would ask the House to make them all welcome.
MR. REE: From the area that looks over the Greater Vancouver Regional District, I'd like to ask the House to welcome the two mayors from the North Shore, Jack Loucks of the city of North Vancouver and.... I don't see Mayor Marilyn Baker here; she told me she was coming. She's a woman who always does what she says, so I presume she's here. I ask the House to welcome the mayors of the city of North Van and the district of North Vancouver.
[10:15]
MR. KEMPF: Not to be outdone by Yale-Lillooet, I too have eight incorporated municipalities in my constituency. A great number of their representatives are with us here today, certainly if not in the galleries, in the precincts and in the city of Victoria, our beautiful capital city. I would bid all of them welcome. However, I see one of my prominent mayors, His Worship Mayor Len Fox, in your gallery, Mr. Speaker. I ask the House to welcome him and all of the delegates from Omineca.
MR. STRACHAN: We're really on a roll this morning with our civic administration, many of whom from my riding have been introduced. But two special guests have not had the pleasure of being introduced in this House. I'd like all members to welcome His Worship Ken Jones from McBride and city clerk, Ron Brown.
MR. STUPICH: I'm not sure how long the introduction period is going to be today; it's well that we waived the statements and question period. I do have two mayors here from my own constituency — Mayor Alex Stuart from Ladysmith, and Mayor Graeme Roberts from Nanaimo. My colleagues all have mayors from their ridings too, and they may
[ Page 5294 ]
want me to introduce all of them; I can't do that, but can I just say welcome to all of them.
HON. MR. ROGERS: I very seldom rise to introduce guests, but I did see some people in the gallery who are not publicly elected. I see a group of young Girl Guides from North Vancouver. And if there's anybody here who hasn't run for public office and is just here today, and you feel that no one wants to welcome you, you're all welcome.
HON. MR. CURTIS: Mr. Speaker, thank you for your indulgence. I'm not going to move that the House adjourn. I wonder if the House would permit me to make a couple of remarks with respect to a great sport in this area, basketball. The University of Victoria Vikettes women's basketball team has just won the Canadian university women's championship for the fourth times in six years — one of the best UVic teams ever. And perhaps, with your permission, Mr. Speaker, we could think about the University of Victoria men's team, who will be playing the University of Waterloo in Halifax tomorrow for the Canadian men's championship. They're seeking their sixth consecutive men's championship. I think that greater Victoria and British Columbia can be proud of these two teams.
HON. MR. CHABOT: I'd like to make a brief statement on the death of Henry Hunt. Members of this House are aware, no doubt, of the passing of Henry Hunt, the noted Kwakiutl carver.
Mr. Hunt, the preeminent native Indian carver, died March 13 at the age of 6 1. It would be difficult to overstate the contribution Mr. Hunt made to the cultural rebirth of his own Kwakiutl people and to the cultural life of British Columbia. Mr. Hunt was born in Fort Rupert near Port Hardy in 1923 and moved to Victoria in 1954, where he began his apprenticeship as a carver with Mungo Martin at the B.C. Provincial Museum. One of his major accomplishments was the carving, with Mungo Martin, of the totem pole erected in Beacon Hill Park in 1956. Throughout his career Mr. Hunt carved many beautiful works of art, and he continued to carve after he resigned his position with the Provincial Museum in 1974.
Not only did Mr. Hunt encourage and train many young men and women of his own Kwakiutl tradition, but he also shared his craft and talents with aspiring Haida, Nootkan, Coast Salish and other native peoples. Mr. Hunt will be greatly missed but his contribution to this province will live on forever in his works of art and in the many native Indian artists he has inspired.
MR. HOWARD: Mr. Speaker, we want to join with the Provincial Secretary in expressing our regrets at the passing of Henry Hunt, member of a renowned, distinguished and honoured family within the Kwakiutl nation. He made a tremendous contribution as an artist, a creator and an advancer of the culture of native Indian people. He and his family will be remembered — and rightly so — long after we are gone from this place. The contribution that Henry and others in his family have made to the culture and advancement of the art form of totemic carving will live forever. We appreciate the opportunity to associate ourselves with the minister in the expressions with respect to Mr. Hunt.
Introduction of Bills
PROVINCIAL-MUNICIPAL PARTNERSHIP ACT
Hon. Mr. Ritchie presented a message from His Honour the Lieutenant-Governor: a bill intituled Provincial-Municipal Partnership Act.
HON. MR. RITCHIE: Mr. Speaker, I would like at this time to make a few brief remarks, but first let me say that after introducing the representatives from all over our province, I noted in the gallery a mayor from my community whom I don't see so often now since becoming involved in the ministry. I am delighted to see here today Mayor George Ferguson and his alderman Vic Wiebe.
Since becoming the minister, I have had the pleasure of visiting over 80 municipalities throughout this province, and from those visits I get the very distinct feeling that there is indeed a new feeling out there. There is a new direction. There is a desire, Mr. Speaker, to bind our forces and talents in a challenge to create new jobs in our communities — bind together the chambers of commerce, the business associations and the workers of our communities and municipalities. They themselves have already been demonstrating that desire. This bill will make possible the laying of the cornerstone to economic renewal, best done at the grassroots level, and best done in a voluntary way.
We at the grassroots municipal level have a major role to play at that level. We must create in each of our communities a healthy investment climate, a climate consisting of fair property taxation, no red tape, no bureaucratic roadblocks, so that those potential investors attracted to our communities by our Minister of Industry and Small Business Development, Mr. McClelland, and by our new Minister of International Trade and Investment, Mr. Phillips.... Mr. Speaker, we want them, when they come, to look at us. We want them to stay and invest. This bill gives us the tools, gives us the opportunity and, hopefully, will strengthen the desire that is already out there to make that all possible.
Bill 25 introduced, read a first time and ordered to be placed on orders of the day for second reading at the next sitting of the House after today.
REVENUE SHARING AMENDMENT ACT, 1985
Hon. Mr. Ritchie presented a message from His Honour the Lieutenant-Governor: a bill intituled Revenue Sharing Amendment Act, 1985.
HON. MR. RITCHIE: I move that the bill be introduced and read a first time now.
Very briefly, revenue-sharing indeed means sharing of the revenue of the province, which unfortunately has its ups and downs. We have experienced recently that in some cases the spending at the local level has been such that whenever we hit a downturn we are finding ourselves in some difficulties. Of course, at that time we also get criticism from our opposition because we are unable to provide all the funds they think should be provided, forgetting indeed that we are talking about revenue-sharing — revenue which we, most times, have very little effect on, as far as international markets are concerned.
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Mr. Speaker, this bill gives us the opportunity to establish a reserve that will take out the humps and hollows of that program, so that we can have healthy development, and we can have ongoing programs, not criticized as time goes on.
Bill 22 introduced, read a first time and ordered to be placed on orders of the day for second reading at the next sitting of the House after today.
PROVINCIAL-MUNICIPAL PARTNERSHIP
(TAXATION MEASURES) ACT
Hon. Mr. Curtis presented a message from His Honour the Lieutenant-Governor: a bill intituled Provincial — Municipal Partnership (Taxation Measures) Act.
HON. MR. CURTIS: Mr. Speaker, my remarks will be very brief. This is a significant companion to the first message bill introduced by my colleague the Minister of Municipal Affairs (Hon. Mr. Ritchie) earlier this morning.
Bill 21 introduced, read a first time and ordered to be placed on orders of the day for second reading at the next sitting of the House after today.
INDUSTRIAL ELECTRICITY
RATE DISCOUNT ACT
Hon. Mr. Rogers presented a message from His Honour the Lieutenant-Governor: a bill intituled Industrial Electricity Rate Discount Act.
HON. MR. ROGERS: Mr. Speaker, in line with the brief statement allowed on the policy involved in a bill, this bill authorizes the Lieutenant-Governor-in-Council to receive and approve applications from existing and new industries in British Columbia for rate discounts on incremental consumption of surplus hydroelectricity. Industrial customers are defined to be manufacturing, mining and processing plants with an electrical consumption of five megawatts or more.
Under this bill discounts will be offered for the following categories: incremental electrical consumption using existing plant capacity which is currently shut down; industries experiencing difficulty in continuing to operate or resuming operations; new industrial plant with electrical consumption of five megawatts or more; and expansions of existing industrial plants where the expansion will consume at least five megawatts.
The terms and conditions for the discounts, including the rate, quantity and period of eligibility, will be negotiated on a case-by-case basis in accordance with need.
Also included in this bill are provisions whereby industrial customers located in a utility service area other than B.C. Hydro's can receive electrical discounts. By that I mean we have made provisions for customers within the West Kootenay Power and Light area for whom this may be applicable.
Industrial customers located in a municipality will be able to receive the discounts only if that municipality has entered into an agreement under section 2 of the just introduced Provincial-Municipal Partnership Act.
Prior to ordering that a rate discount apply to the sale of surplus electricity, the Lieutenant-Governor-in-Council will have to be satisfied that the sale would not have occurred without this discount. This will ensure that the surplus sales will generate additional revenue for B.C. Hydro.
In summary, Bill 28 will provide industry with a powerful incentive to expand production and employment. At the same time, revenues earned from this incentive will assist all British Columbia Hydro customers in keeping rates down in order to ensure that we have the lowest levels possible.
Bill 28 introduced, read a first time and ordered to be placed on orders of the day for second reading at the next sitting of the House after today.
[10:30]
Orders of the Day
HON. MR. GARDOM: Mr. Speaker, I call resumed debate on the budget. The hon. member for Nanaimo (Mr. Stupich), the designated speaker of the official opposition, adjourned the debate yesterday. In the event that the hon. member requires a reasonable extension of time to develop his remarks, that indeed will be satisfactory.
ON THE BUDGET
(continued debate)
MR. STUPICH: Mr. Speaker, my thanks to the government House Leader. I won't ask him on a sunny Friday morning leading into a sunny Friday afternoon just what is a reasonable extension of time. I think I'll just proceed with my remarks.
There is one thing that the Minister of Finance (Hon. Mr. Curtis) and I can agree on with respect to the budget: that a large measure of the budget introduced yesterday by the minister has a single economic thrust. The direction is that of tax reduction for industry and commerce. Most other elements in the budget are relatively status quo.
This is not a new pattern, Mr. Speaker. It has become a one-dimensional government. They do one thing at a time to the exclusion of everything else. They do that one thing with a vengeance, doing it all at once. Ignoring everything else — including the consequences, unfortunately. When they were into restraint, that was all they were into. The economic recovery ended and the economy slipped back into recession. But they were into restraint, and that was all there was to it.
Now they are into tax cuts for industry, and that's just about all there is in the budget. For example, most of the spending estimates are within a few percentage points of the previous year. The government has no apparent will and no apparent interest in reforming its spending practices. We can only hope there is a pause in the settling of old scores, and that there will be some degree of stability in the government's fiscal policy for the short period of time that this government will remain in office.
[Mr. Ree in the chair.]
All the government's eggs are now in the basket of tax reductions for industry. Taxation of industry is a complex and important subject. It is one that will be dealt with in detail not only in this budget debate but during consideration of the actual legislation involved.
Let me say at the outset, Mr. Speaker, that it is a mistake to put too many eggs in one basket. This is true for individuals, for companies and for governments as well. I want to go
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on record as saying that the official opposition is extremely concerned about the effectiveness of the government's program in terms of stimulating economic growth. We believe it is insufficient to achieve the major employment growth required in our province in 1985. We find that the government has failed to present a financial plan on how it will pay for the tax reductions involved. Where is the money coming from to pay $995 million in corporate tax concessions over the next three years? This government doesn't have the money. It is funding this year's portion through increasing the deficit. It is borrowing the money. Where will it come from? Who will pay? We believe that the government has not chosen the most cost-effective package of incentives and stimuli to create jobs in the economy.
I want to briefly cite a study prepared by the Canada immigration centre in Ottawa. This study paper is very important to the debate on this government's budget. I wish to seek leave to table it in the House at the conclusion of my remarks.
The study provides a computer simulation of three types of government employment initiatives. They are: (1) government expenditure initiatives, (2) government investment initiatives, and (3) tax cuts. In this study the employment creation effects of the three approaches were analyzed and compared. The main findings of the study are clear. Corporate tax cuts are the least effective way of creating jobs in an economy. Expressed in dollars per job created, the options break down as follows: general government expenditure, $13,000 for each job created; personal income tax cuts, $16,000 for each job created; investment in non-residential construction, $14,000 per job created; investment in machinery and equipment, $16,000 per job; corporate tax cuts, $77,000 per job created — by far the least cost-effective. Not only are corporate tax cuts the least efficient method of creating employment; they are between five and seven times less efficient than the other options. Yet this is what this government has chosen to the exclusion of all else.
More particularly, expenditure initiatives in primary industries, including investment in basic resource industries, which is the policy long advocated by members on this side of the House, are shown to be among the most efficient methods of job creation. I think that even government members will be forced to admit that there is nothing in the government's program which provides for the creation of new jobs in return for new tax concessions. No strings on the money, Mr. Speaker.
In point of fact, there appears to be nothing that requires the retention of existing jobs in order to qualify for new tax concessions. Moreover, the minister has not tabled any studies on the employment impact of any or all of these tax concessions. The government has not even set targets for employment growth, other than to forecast an unemployment rate of 14 percent for 1985. If 14 percent unemployment is an acceptable target for this provincial government, then B.C. needs a new provincial government.
Because of the program of tax hikes, cutbacks, downsizing and layoffs — sometimes referred to as the restraint program — the B. C. economy has performed worse than any other province in Canada, with the sometime exception of Newfoundland. We can be a better province. The lack of recovery in B.C. has severely harmed the lives of thousands of B.C. families, especially youth and wage earners. The Socred program has not only failed to deliver the promised recovery but has actually worsened the situation.
Mr. Speaker, I want to state the matter just as clearly as I possibly can. B.C. has undergone two recessions in the past four years: an international recession and a Socred depression. The second is more than any provincial economy should have to bear. During the international recession markets plummeted. That's true; we recognize that. B.C.'s economy shrank by 5 percent, just slightly worse than the national average. In 1983 the recovery began in B.C., along with other economies, but something happened. In July 1983 the present government declared war on the social and economic fabric of the province of B.C.
There is a bill to be paid for the political excesses of this government in 1983, and it is being paid by the B.C. economy. During the international recession unemployment in B.C. jumped by about 5.5 percentage points to 12.1 percent. During the Socred depression it jumped by a further one and one-half points to 13.8 percent. The recovery of 1983 was stalled, and in fact reversed, by the program of this government. In the second half of 1983 the B.C. economy slipped back into recession. The rest of Canada experienced a recovery. The opportunity for economic recovery was passed over by this government, which was too busy settling old political scores.
The present government has brought in economic program cuts which harm the future economic prospects of the province. The government has attempted to save money at the expense of small business and jobs. Consider the following, Mr. Speaker, quite a list: cancellation of reforestation and silviculture projects, including the layoff of staff; cutting the energy resources division budget in half, achieved primarily through the cessation of all provincial activity in support of renewable energy resources and energy conservation industries; cancellation of all provincial direct lending programs for small business; a 25 percent reduction in all remaining assistance programs for small business; employment training programs cut, spending authorizations left unexpended; provincial research and development grants cut to B.C. based research projects.
The provincial government has brought in social program cuts which harm families and children. It has attempted to save money at the expense of those who lack political power or are poor. It has been particularly hard on families in crisis. Consider the loss of family-support workers, child-abuse workers, post-partum counsellors, etc.
Mr. Speaker, every member in the House is aware of the cuts that this present government has made in education and in job-training, attempting to save money at the expense of the next generation. By the end of the current year, school services will have been cut by 25 percent. Is that something about which we can be proud at this time? Something is wrong when leading educators have no alternative but resignation to show the public how deeply and cynically this government is chopping educational opportunities for our youth and children.
In the gallery today there is a group of parents from my own constituency who brought down a pile of letters, signed by people in the constituency, complaining about the cuts in education. I think none of us, in our experience in the B.C. Legislature, has ever had as many individuals — in every constituency, those represented by government members and opposition members alike — raising questions about what the government is doing to the education system. These letters are coming in all the time. These arrived today, and I would like to ask the attendant to put them on the desk of the
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Minister of Education (Hon. Mr. Heinrich). Mr. Speaker, I don't expect that he will read each and every one of those letters, but I want him to be impressed by the number of people who are taking this method of expressing their concern. It's just one method that's being used, but I would like him to be impressed by that.
The present government has refused to consult, let alone cooperate with, the people of this province. They have developed policy by fiat, prime-time TV broadcast, and public opinion survey. The economic effects of this program are severe, and they are extremely negative. If B.C. had Manitoba's or Ontario's unemployment rate, we would have nearly 100,000 more British Columbians back at work earning and spending an additional $2 billion a year.
The years 1983 and 1984 were marked by economic recovery in the rest of Canada, the U.S. and elsewhere. In B.C. this period was marked by declining production and declining capital investment. Unemployment continued to increase, along with business bankruptcies. Every British Columbian should be aware of what has happened to the B.C. economy. All Canadian provinces suffered a downturn in 1982. Most, along with B.C., began to recover in 1983, but then came the July '83 provincial budget, and the present government turned our economy upside-down. The recovery was killed in its infancy by a government pursuing an election timetable.
[10:45]
At that time, on behalf of the New Democratic Party, I made two
comments which are, I think, still relevant. One was that the July 1983
program was based on a big lie: that the brand of restraint practised
by Social Credit would lead to economic recovery. It did not, Mr.
Speaker. All of B.C. Is paying the price for the government's acting as
if that lie were the truth. The second was that the Social Credit
government was up to its old tricks, trading the province's future away
against an election timetable. There was a hidden agenda. The present
government had some dirty deeds to get out of the way with its fresh
election mandate, so it could slowly seduce the public back to Social
Credit. I recall quoting Machiavelli to make this point, and I think
he's worth quoting again, Mr. Speaker:
"Examine closely into all those injuries which it is necessary...to inflict, and do them all at one stroke so as not to have to repeat them daily.... For injuries ought to be done all at one time so that, being tasted less, they offend less; benefits ought to be given little by little so that the flavour of them may last longer."
You cannot run a province on the Social Credit election timetable. It just doesn't work for the benefit of the people. This time the effort to settle scores has cost the economy badly. It is difficult to see how the economy could ever recover fully from the fallout of the last two provincial budgets.
How bad is the fallout? Retails in B.C. have now declined for four consecutive years, according to the Conference Board and B.C. Central Credit Union. Retail sales are a reliable indication of economic health and well-being. They also demonstrate the effect of the government's program on small business in the economy. Along with others, small business has taken a beating from its part under this program.
There is no end in sight to the Socred recession, making it the longest since the 1930s. There is no other way to interpret the fact that unemployment in B.C. is still at record levels. Housing starts are at a 20-year low in the province of British Columbia. Recent trends in interest rates and a general decline in personal income in the province have hurt many areas of employment and trade in B.C. Incredibly, with the major importance of the housing industry to B.C., the provincial government has no plans in progress to stimulate affordable housing for our people. Incredibly, in retrospect, the alleged justification for the program included the allegation that the program would stimulate investment.
In many ways our economic future is determined by capital investment. It is here that the restraint program has had its most spectacular failure. Far from the investment boom predicted, there has been an unprecedented nose-dive in all types of capital investment over the restraint period. The real growth rates in public and private investment demonstrate this point clearly. In three short years public and private investment is down by half in B.C. In real terms. Investment is down sharply in each and every year of the so-called restraint program. No such drop has occurred in any other Canadian province. Even the government's friends are alarmed, B.C. Business Council's Jim Matkin, for example, has said: "The economy hasn't recovered. It hasn't turned around, and that was what we were all led to expect and anticipate."
Is it any wonder the word "restraint" does not appear in the throne speech? The present government has taken a perfectly normal and respectable word and turned it into a nightmare for the people of British Columbia. A whole generation may grow up believing the economic chaos and political revenge sought by the present government in the past three years has something to do with restraint. Some may come to an entirely inappropriate conclusion as a result. The matter should be restated clearly.
The NDP supports restraint in government, if it means that taxpayers' money should be treated with great respect and used efficiently for necessary public purposes. The program we are suffering from in B.C. is one of tax hikes, layoffs, cutbacks and political revenge meted out to serve an election timetable. It is this crucial distinction which is at the heart of our problem in B.C. today. The restraint program, according to Patrick Kinsella, was brought in to give the premier a tough-guy image. It is being phased out today to change or alter the image of the present government. It seems that any policy is acceptable if it contributes to the re-election of this government. My question is: when is this government going to recognize that it is playing with our economy, with our future? It is playing with people's lives.
There is something crucial missing from the current budget, something fundamentally as obvious as it is profound for the people of British Columbia. British Columbia must now develop a fiscal strategy based on rebuilding our economic infrastructure and faith in the future of our province. The role of government must be changed to one which supports local economic growth. It is now obvious that you cannot lay off, tax and cut back your way into prosperity. Government by fiat and confrontation is a dead end into continued depression. A cooperative and consultative framework around a reconstruction plan for B.C. offers significantly more promise.
Where does the money go? The present government has produced its sixth consecutive deficit budget — never since 1952, except for the last six years. That's a milestone of some sort. It is not, however, a milestone of which we should be proud. Somehow Social Credit has succeeded in racking up combined budget deficits of approximately $4 billion in six
[ Page 5298 ]
short years. It has done so without maintaining services. If we had something positive to show for this, it would be one thing; but they haven't maintained services. In fact, the irony is that the deficit has been made worse by their attempts to cut government spending. The deficit has been made worse, as I stated earlier, and the economy has been made worse by their program. The present government's programs are wasteful of the taxpayers' money.
It's often said that governments do not have money of their own to spend — and I've heard that from the other side of the House time after time. They say that governments only have taxpayers' money to spend. But they also have taxpayers' credit to spend. Social Credit stopped spending the taxpayers' money years ago. They've been spending the taxpayers' credit, and attempting to hide the fact, for most of the last decade. They got away with it earlier. Now they are hopelessly addicted to the pay-later or pay-never plan.
It's time this side blew the whistle on them. It is time we told the people of British Columbia what has happened under this Social Credit administration. When they took office in December of 1975, after 104 years of careful management by previous governments of various political stripes, the combined debt of the province and all of its Crown corporations and agencies stood at $4.4 billion. Here we are, just nine short years later, and what is the debt position today? We were told yesterday; it's in the budget. I regret to say that it is now in excess of $17 billion. This group of money managers has managed, in nine short years out of our 113-year history, an increase in our debt of some $12.7 billion — a fourfold increase in nine out of 113 years. The interest on this debt incurred by this Socred team in just nine years is costing the people of British Columbia $3.7 million a day. By the end of the fiscal period for which this budget is leading us, it will be in excess of $4 million each and every day. That's the interest alone on the public debt amassed. By then it will be ten years of Social Credit rule.
The debt has all but quadrupled. The increase over this period is mind-boggling. How could they do it? It has grown at a compound annual rate exceeding 17 percent. Nothing else has grown that fast in B.C., with the exception of bankruptcies and unemployment. How dangerous is a 17 percent compound growth rate in the government's debt? The quadrupling of the debt in the past nine years is just part of the story. It's the path that this government is taking the province on that scares us.
If the present government continues to use the taxpayers' credit to buy votes, using projects at election time, the debt can only increase further. The government has shown that it is prepared to spend and waste any amount of the taxpayers' credit to buy votes. If the government's program continues to sap the economic strength of the province, the cost to the treasury of lost revenue and income support will continue to eat away at taxpayers' credit. What if, God forbid, this government were to be maintained in office? What if they continue to spend the taxpayers' credit as if it were their own? What if the present Premier succeeded in his ambition, as some say, of surviving two decades in office, as did his father? The debt could approach $100 billion if they were permitted to continue the fiscal gluttony of the past nine years. Of course, it won't happen: this government will not survive the next election, let alone the next decade.
Is it any wonder this government has lost the province's triple-A credit rating? Think about this: the socialist-leaning administration of the city of Vancouver has preserved the triple-A credit rating of that city, while this government has failed. The sources of waste of taxpayers' money need to be recalled. I think we should review these briefly, Mr. Speaker, so that all British Columbians can be aware of the need for change in our province. B.C. has undergone two recessions in the past four years, an international recession and a Socred depression. The second is more than the provincial economy should have to bear.
Mr. Speaker, I would like to consider for a moment the matter of income support. Provinces such as Manitoba and Ontario have an unemployment rate of about 10 percent, compared with B.C.'s current rate of about 16 percent. In those provinces, however, they have governments, widely different in political outlook, that do not believe in poking their citizens and their economy in the eye. In our province the cost of income support for the victims of the Socred recession has reached staggering levels. Income assistance payments have reached $1.2 billion, more than double pre-depression levels; and yet the budget that was delivered yesterday projects a further increase in GAIN payments.
What better evidence do we need that the government itself admits things are going to be worse in 1985 than in 1984? We have been told there will be no increase in allowances paid to people on human resources support, and yet the government is providing more money than they know they are spending in the current fiscal year because they know things are going to be worse next year. That of itself is an admission. Yet in Ontario and Manitoba, governments of widely different political outlook are working on behalf of their people.
[11:00]
Unemployment insurance payments in B.C. will exceed $1.4 billion this year, almost triple pre-depression levels. Each 1 percent increase in unemployment costs the taxpayer more than $160 million for increased welfare and UIC payments alone. If B.C. had an unemployment rate similar to Manitoba or Ontario, the taxpayers would save $1 billion a year. This is where the money goes: to help victims of the Socred depression to survive; to support the one in four British Columbia families that have been reduced to seeking help to put food on their tables. Unfortunately, the costs do not end there.
So many people not working, not spending and not paying taxes is a further cost to the economy. It is also a cost to the provincial treasury. If B.C. had Manitoba or Ontario's unemployment rate, we would have nearly 100,000 more British Columbians back to work, earning and spending an additional $2 billion a year. Virtually every dime that the present government claims to have saved by chopping family support programs, for example, is wasted in the 24-hour, seven-day-a-week drain of welfare and UIC.
[Mr. Strachan in the chair.]
A society is always judged by how it treats its poorer citizens. We recognize that we will always have people in our midst who need our assistance and support. For this reason we are most concerned that the government has not listened to the many city councils, municipal councils, church groups and community groups from around the province that have called for an increase in income assistance rates. Have our cabinet members no shame? How can they hold up their heads in meetings with their colleagues from other provinces, or in the other countries where they are so anxious
[ Page 5299 ]
to travel, and answer questions about breadlines and soup kitchens in British Columbia?
The budget also reveals cutbacks in essential social services, support programs for families and children, residential care for those children who through no fault of their own have become wards of the government, special programs for the retarded, services to seniors. Mr. Speaker, are we so poor that we cannot maintain those services? Cutbacks in social services have the greatest impact on the working poor, the unemployed and young people. High unemployment such as we are experiencing in British Columbia leads to social problems such as family stress, mental illness and suicide. It also leads to low consumption of goods, less patronage for small business owners, lowered public revenue and increased welfare costs.
We should therefore be willing to strive to lower unemployment and to combat the social effects of unemployment through adequately funding both social programs and assistance benefits. B.C.'s current social assistance rates, which have not been increased since 1982, are less than half the poverty level by every definition.
B.C. municipal councils, school boards and community groups, by calling for the government to increase welfare rates, recognize that when the population is poor, their economies are poor. Low-income people have the highest marginal propensity to consume. As the Catholic bishops said in their ethical reflections on the economic crisis, what is required first is a basic shift in values. The goal of serving the human needs of all people in our society must take precedence over the maximization of profits and growth. The government claims to have no money for education, health care and human services. They claim that they really secretly support these services, but the money just isn't there. But the government continues to siphon federal transfers for health and post-secondary education into other projects — welfare payments, interest on debt, international travel, just to name a few.
B.C. has become the first province in Canada whose post-secondary institutions are entirely funded by Ottawa and by student fees. Last year the federal government earmarked $478 million for post-secondary education. Overall, federal transfers in respect of post-secondary education are up, so there is $515 million from Ottawa for post-secondary education in B.C. Take away the university operating grants — $271.6 million — and that leaves $243.4 million. The colleges have been assigned $240 million, which leaves $3.4 million. There's another $27.6 million in the two ministerial slush funds, or adjustment accounts, which bums up the last of the federal money. At last some provincial dollars are assigned — $24.2 million. That is a not an insignificant sum, Mr. Speaker, but it's just 0. 3 percent of the provincial budget that we're dealing with today.
I'm sure that the hon. Minister of Universities, Science and Communications (Hon. Mr. McGeer) is now about to leap to his feet and say, "That's unfair, " because some of the federal money goes to pay half the costs of our grade 12 programs.
AN HON. MEMBER: He can't leap; he's not here.
MR. STUPICH: It's Friday afternoon; I'm not surprised that he's not here.
That would be something over $30 million — half the cost of the grade 12 programs. But since the hon. Education minister (Hon. Mr. Heinrich) denied all knowledge of that in the House on Tuesday, I've left that out of my calculations.
If federal transfers aren't used to provide their intended services, and provincial income tax payments aren't used to support their intended services, the government has some explaining to do. British Columbians pay taxes. They do so expecting certain services. Under this government no one knows from one day to the next what services will be provided and at what level. Some communities, such as the model town of Tumbler Ridge, have everything approved, built in and funded 100 percent by the government. Others have had to abandon the fight for similar-quality services in an attempt to stop the Socreds from closing their schools, their hospital beds and their libraries.
Where does the money go? Megaprojects. Getting real, hard, commonsense financial information about government projects is like trying to find the combination to Fort Knox. You assume that someone has the information, but you have a lot of trouble trying to nail it down. There are all sorts of numbers available, but it proves impossible to tell which are the right ones.
Some of what can be gathered from one independent source is rather disturbing. Consider the following: B.C. Place, like most government projects, has only borrowed money to spend. The corporation has now spent more than $300 million of borrowed money, all of it repayable by the taxpayers. In this case. however, the corporation's debt has been cleverly laundered through another Crown corporation: B.C. Buildings Corporation. In 1982 B.C. Buildings Corporation borrowed $205 million in the marketplace. It gave the money to B.C. Place as "contributed surplus." In return, B.C. Buildings Corporation holds the one nominal-value equity share.
In one swift move, the debt of the stadium construction, land acquisition and development costs was lifted from the books of B.C. Place. These considerable costs are no longer reported by B.C. Place, and B.C. Place claims that income on the basis of the land and stadium — a $205 million bill — is free. The debt-servicing costs are being met by B.C. Buildings Corporation, which gets its revenue from the various government ministries that are paying rent to B.C. Buildings Corporation, and the various government ministries, of course, get their money from the taxpayers of British Columbia. So it's the taxpayers of British Columbia — all over British Columbia — who are paying the debt-servicing costs that were incurred to build B.C. Place. It amounts to a direct subsidy by the taxpayers, who will be paying the costs of this BCBC loan of some $25 million every year, forever. That's not providing anything at all for paying it off.
Expo 86. Expo 86 Corporation has taxpayer-supported borrowing of some $93 million at present. This will have to be increased very shortly. Expo chairman Jim Pattison has placed the Expo deficit at some $300 million. Some UBC economists prepared an economic impact assessment of Expo and a survey of similar world's fairs in North America. They found that the typical mistake made by fair planners is to underestimate site rehabilitation costs after the fair is over. The question remains: how much debt will be left after the fair is over, and how will it be repaid?
Automated light rapid transit. B.C. Transit advises that some $850 million has been spent on the ALRT project to date. The government introduced a bill yesterday bringing B.C. Transit's authorized debt up to $1.5 billion. It is difficult to pin down a figure for the final costs, because so little of the
[ Page 5300 ]
financing details have been set. The government will have to raise a total of some $1.2 billion in borrowed money to finance this project. Who will repay the debt? The government has said it will amortize the debt over 50 years to lower the cost. That means the repayment costs would exceed $4 billion in current dollars.
Apart from the certain knowledge that fares go up, taxpayers are uncertain, not about whether their taxes will go up to pay for this but by how much and when. We are thus far along with the project, a project that is going to cost $1.5 billion, and there is still no decision, to the best of my knowledge. There is no real discussion as to how the total costs of that project are going to be amortized and how they are going to be shared by the riders of that system — by the property owners in that area or by some other means municipalities will be levied charges. We still don't know, even though the line is at an advanced state of construction. This government of planners apparently thought it was not important to reach a conclusion as to how the bills would ever be paid — $1.5 billion.
The government claims on page 97 of the budget that BCR has no debt. This is called Social Credit economics. Perhaps to make a long story short, the minister could tell British Columbia how B.C.'s $720 million investment in northeast coal is financed. Perhaps he could also advise what revenues can be applied against this investment, say, in the first year of operation. BCR has borrowed more than $400 million to provide funds for the Tumbler Ridge railway line. Some of this debt is called preferred shares.
What revenues does the government have to pay off this debt? My point is fairly straightforward. In these four projects alone, the taxpayer has sunk somewhere between $2 billion and $3 billion. There is no evidence whatsoever that any of these projects will pay for themselves, let alone provide a return to the taxpayer for the funds invested.
B.C. Place is certainly not paying for its $300 million debt. Expo requires massive subsidies from lottery proceeds and special taxes or no taxes on site and then may not break even. ALRT is a financial enigma, to say the very least. It is guaranteed to cost users and taxpayers a large bundle for a very long time, and northeast coal is certainly not providing a return at this moment, if indeed it ever will.
Let me put this matter in perspective, Mr. Speaker. It is always possible to dream up projects and spend money on them. The hard work is finding and developing projects which are economic — that is, projects which pay back their debts and provide a return to their owners. What we need is a government which can develop such projects and make them pay for the people who provide the cash. That is the kind of government which the New Democratic Party wishes to bring to B.C.
In its politics, another source of waste and political abuse of taxpayers' money is the government's use of image politics. A few months prior to the 1983 provincial election, we were all subjected to a multitude of television and radio advertisements paid for by the taxpayers, telling us how wonderful it was to live in British Columbia. Is the government again going to embark on a similar ad campaign?
This year the government plans to spend almost $2.3 million on its propaganda empire. According to the latest budget estimates, the division responsible for government advertising and public relations spending has an increased budget of approximately $2 million, The NDP believe the taxpayers of this province deserve to know if this $2 million is earmarked for another Social Credit propaganda blitz.
Another series of ads are the wrong priority for government. People living in this province already know how great B.C. Is. What they really need are answers to the present economic crisis. They need jobs. They need hope for a safe and secure future.
Travel budget. Another area of blatant misuse of public funds is cabinet minister's out-of-province travel funds. From 1983-84 estimates to today's 1985-86 estimates, the costs have skyrocketed. In 1983-84 the costs totalled $215,250. In 1984-85 the costs increased 153 percent. Wouldn't Education have liked to have had some of that increase, Mr. Speaker — 153 percent in that one item, to $545,460? The 1985-86 estimates have increased another 86 percent to $1,017,815, this time under the guise of a new ministry, the Ministry of International Trade and Investment.
[11:15]
It should be stressed that these figures are for out-of-province travel only. Bangkok, Djakarta, Hong Kong, Singapore, West Germany, Sweden and many more destinations have all been part of a government policy to establish a presence in foreign countries by sending cabinet ministers abroad, courtesy of the taxpayers of this province. What has been the success rate? What enormous economic benefits have been reaped for the people of British Columbia? Have any foreign contracts been signed? Why should the 226,000 unemployed British Columbians believe increased foreign travel will now bring relief to them? It seems obvious that money spent on this travel is for free trips for ministers, with any business dealings being incidental. The new estimates will only allow cabinet ministers to pursue their travel hobbies at our expense. Ministerial travel abroad is insufficient to attract overseas investment to British Columbia or to create stable markets for B.C. exports. Overseas investors and buyers are far too sophisticated to be impressed by visits of government officials. What overseas investors are looking for is a proven track record of political and social stability which provides the foundation of a healthy and stable economy. If the budget has a clear direction, it is continued unproductive foreign travel by cabinet ministers.
Taxation. As I said earlier, taxation is the one-dimensional theme of this budget. More precisely, the budget focuses on corporate tax reduction. It is important that all of the current tax reductions be measured against tax increases, particularly those of the last two years. When you add the tax increases of the past two budgets — income tax, sales tax, room tax, restaurant meal tax and indexed fuel and tobacco taxes — to the increases in user fees, the cumulative effect of these tax increases in 1985-86 is estimated to exceed $1 billion. Over three years it will be in excess of $3 billion. The bulk of these taxes are paid by individual wage-earners. It is the largest single item of revenue in the budget.
When the minister talks about giving back $1 billion to corporations over a three-year period, he should also talk about $3 billion in tax increases imposed on people from the tax hikes levied since the 1983 election. He should also talk about the fact that he doesn't have $1 billion to give back to the corporations in the first place.
The budget proclaims continued support of health care services. However, operating grants to acute-care hospitals have increased by only 3.5 percent, in spite of our survey results, which indicate acute-care hospitals will require an increase of 6 percent to maintain services at existing levels.
[ Page 5301 ]
The administrators of acute-care facilities report genuine concern over the growing numbers of patients who do not have medical coverage and are unable to pay acute-care daily charges.
There's an interesting line in the budget that lumps together Human Resources, Education and Health. It says that in total they have increased by 6.9 percent in this budget, which sounds reasonable. If each one of those categories were to get the 6.9 percent increase, I'm sure Education would be pleased to have an increase rather than an effective decrease; Health would be pleased. But when you separate them you find that Health is getting an increase of 4 percent and Education is getting a comparable increase, while Human Resources is getting an increase of some 24 percent, because more and more people are having to rely upon social assistance payments. Then the figure doesn't look nearly as good.
All the cuts that can possibly be made have been made. We face the real danger that our acute-care hospitals may be forced to return to the 1982 levels of service, when we saw waiting-lists for surgery number in the thousands, and entire wards being closed to save money. Furthermore, the Social Credit government continues, in defiance of the Canada Health Act, to charge acute-care user fees, at a loss of over $2 million a month in federal revenue.
We welcome the consideration of low-income taxpayers, who have been contributing more than their fair share of provincial taxes. These are the people who have been denied the B.C. personal tax credit and the renter's tax credit since 1983. These are the people who have been paying more in provincial income tax than they pay in federal taxes; but the legislation before us now is at least correcting that. That is legislation we will support. There's no question that it was an oversight, one that we didn't pick up, so we can't really blame anyone for missing that.
In light of the hardship and poverty endured by thousands of B.C. taxpayers as a result of Social Credit restraint measures, we believe the Income Tax Amendment Act should be retroactive to January 1, 1984, in order to provide further relief to low-income taxpayers.
The main thrust of the 1985 budget is to aid the private sector by a series of tax cuts and incentives, in the hope that it will create the jobs which we so desperately need in B.C. However, numerous studies have clearly shown that the tax cuts are the most costly and least effective way to create jobs. Federal Auditor-General Kenneth Dye, in his 1983-84 annual report, noted that we in Canada spend billions of dollars a year in corporate tax breaks, which constitute a huge hidden budget. We have no way of knowing whether these tax programs are effective or efficient, or how much we lose through tax breaks. Significant tax relief is promised to the commercial and industrial sector, in the form of reduction and elimination of property taxes on machinery and equipment. My colleague the member for Okanagan North (Mr. MacWilliam) would like to take credit for that change.
It is the government's contention that these tax cuts will stimulate activity in the short run and, in the long run, start an investment boom in British Columbia. Again, there is no indication of where the money to replace this forgone revenue will come from. The government has generously offered to remove from the commercial-industrial sector their school tax burden; instead, this will be shifted to general revenue. Residential taxpayers will be unaffected as far as municipal property taxes are concerned, at least for now. But to the extent that every homeowner and every resident of B.C. contributes through other tax changes to general revenue, eventually they will be forced to pick up their share of the school taxes formerly borne by the non-residential machinery and equipment taxes.
By the government's own admission, these school tax cuts to the commercial and industrial sector alone amount to $514.7 million over three years. In addition, the government offers another $400 million in corporate tax breaks. What assurances does the government have that in exchange for surrendering that $515 million there will be offsetting investment, new job creation? Certainly these incentives will lower barriers to some investment. But where? How many jobs will be created for this $515 million? There are no strings on it. These are not rhetorical questions. Surely if the government is prepared to surrender this much revenue, it should have a clear idea of what it will achieve. Yet no assurance is put forward. There are no targets. There is no apparent goal. We are told that some 70 percent of the value of the tax reduction will accrue to the forestry and mining sectors. Would it not be prudent to receive some guarantee covering investment and job creation in exchange for these tax reductions? Is it not possible that the benefit could be dissipated and little economic gain recorded? Our concern is that the government, in its simplistic approach to corporate tax breaks, has been less than creative. We fear that the government has failed to guarantee the new jobs and investment which could be secured with tax breaks of this magnitude.
A new economic strategy for B.C. What are some of the principles on which a sound, multi-pronged economic strategy for B.C. might be based? Some of these were outlined by the hon. Leader of the Opposition in his speech in this chamber on March 7, 1985:
I think these principles merit serious consideration. They reflect, first and foremost, a sense of deep regard for all of the people of our beautiful province. It is this commitment which is so vitally needed during these tough times. But it is precisely the commitment which is so seriously lacking in the government's program and its budget. They reflect, as well, a deep respect for the diversity and dignity of the communities of this province.
[ Page 5302 ]
While I commend the minister for holding hearings throughout the province, it is a mistake to confuse this process for the substance of a regionally based economic strategy. Economic redevelopment is made necessary by a pro longed economic slump and a protracted failure to diversify and strengthen the economy. There has been a chronic failure to reinvest resource grants in economic development at the grassroots level. Megaprojects dreamed up and announced to coincide with a political timetable do not fill the bill. A one dimensional program of corporate tax concessions does no meet the challenge either. There's a price to be paid for many of the projects of the past and the tax concessions of today. The fact is that the people have not been able to pay the bills for the government's previous election promises. I repeat how are they going to pay for these?
In general, it is time we considered a policy of investing as much of our resource rent as possible in the development of economic projects which support themselves from revenues and earn a return for public investment. This question of the wise management of our province's resource heritage is fundamental to an alternative economic strategy. When we sell our resources, we must get something in return for the people. The people are, after all, the owners of the resource. The government has allowed the few to cart resources in unprocessed form out of our province. They have spent, rather than invested the proceeds, according to a political timetable. The budget shows this government is not prepared to implement a new strategy based on economic diversification and decentralization. The government should use a development fund to channel and apply resource revenues to economic development projects on a scale which will have some impact. It should promote the regions of B.C. and make available the means of successful local economic planning. Such policy must be informed by an understanding of the regional nature of B.C.'s economy. Strong regional economies are the key to a strong B.C. economy.
[11:30]
The problems of a decade cannot be resolved by solitary action of the provincial government. That is why the NDP has proposed, as a first major step, that the elected members in this House get the ball rolling now. It is time for the Legislative Assembly to enter into a serious dialogue with the people of the province concerning our economic future. We have proposed structuring a Select Standing Committee on Reconstruction to hold hearings throughout the province. Holding this kind of dialogue is no guarantee of success, but without a commitment to the principles spoken of by the NDP leader, and in my remarks today, it is unlikely that any new policy can hope to succeed.
The name of the game is survival. A new, robust decentralized economy is the absolute key to our economic survival. Decentralization of economic power is the only w to regain public control of public resources and to guarantee balanced regional development. Political and economic concentrations have stifled local initiative and have cost B.C. Jobs.
The Socreds have centralized political power in Victoria. Social Credit has diminished the powers of locally elected authorities — municipal governments, regional districts, school boards, hospital boards. The provincial government is dominated by large vertically- integrated corporations. Vital economic decisions are made in decision centres which are remote from the communities affected.
Local government is the most responsive and accountable level of government. There are more than 1,440 locally elected representatives in the province of British Columbia. Dismantling of the land planning process has diminished local control over the type and location of new development. Constant fiscal and political pressure from the Social Credit government has stifled the positive economic role which municipalities can play.
The basic road transportation system of the province is critical to regional development. The present government has perverted highway construction and the maintenance process for its own political ends. Road projects are introduced at election time; little is done in between. Many roads throughout the province are in poor shape because the present government prefers ribbon cutting on a political timetable to a proper maintenance schedule. Priorities for roadwork should be determined on a regional basis. Work should be phased to keep workers and equipment operating every year and not just at election time.
Decentralization is aimed at smaller regional units, greater citizen control of regional resources, social — in contrast to state — ownership, and a technological infrastructure designed to sustain smaller concentrations of population and to increase their self-sufficiency. The province must take steps to secure strong regional economies, because the route to a strong provincial economy is through strong local economies.
For example, it is time to consider: (a) transferring management of lands, especially public lands, to regions — local responsibility would include inventory analysis, planning and management of the land bases; (b) developing regional management structures parallel to regional district organization; (c) redistributing powers and responsibilities; (d) geographic reassessment of selected government or Crown corporation functions; (e) encouraging diversity of entrepreneurial forms, including small business, community enterprise and employee co-ops.
These are the major elements which are needed. They are almost completely lacking, passed over by a one-dimensional government in search of a quick fix for its political problems.
[Mr. Ree in the chair.]
Number six, the forest industry. Forestry is the key sector of the B.C. economy. It still is, Mr. Speaker; it will be for some time. It accounts for about 60 percent of all provincial exports and about 42 percent of total B.C. manufacturing. One in five B.C. workers depends directly or indirectly on our forest industry. Despite the obvious importance of this sector, the Social Credit government has allocated only about 3 percent of total government expenditure to the Ministry of Forests in 1985-86. The ministry's budget will see only a 5 percent increase in the next fiscal year.
Reforestation and silviculture are widely recognized in this province to be an urgent need if our forest industry is to have a future. At present, the Social Credit government is replanting only half the area which we harvest annually. Over one million hectares of potentially productive forest lands are not sufficiently restocked, yet the government refuses to make this a priority concern.
In 1982 the B.C. government used its $83 million forest and range improvement fund in part to offset the provincial
[ Page 5303 ]
government deficit. Since that time, eight other special forestry funds have been diverted. Once again the silviculture program in the Ministry of Forests, instead of being increased, has had its budget lowered by 8 percent for 1985-86. This means that about $4 million has been slashed from silviculture programs at a time when forestry workers across B.C. are demanding more replanting and more intensive forest management, and a time when unemployment levels are at a record high. Meanwhile, the estimates show that the harvesting program for the Ministry of Forests has had its budget increased by 7 percent. This surely indicates that the Social Credit government is indeed treating forestry as a sunset industry. They are more concerned with continuing to chop down our woods, without sufficient thought to longterm economic planning and resource renewal. Cut them down faster and plant them slower.
Meanwhile, ERDA, the long-awaited economic and regional development agreement, has still not been signed with the federal government. The 1985 budget commits $65 million for this year as the provincial contribution to the total ERDA package, whatever that may prove to be. But the government does not have signed agreements specifying what percentage will be devoted to our number one industry — forestry. It doesn't have a signed agreement for anything, Mr. Speaker, this late in the game.
However, it is widely recognized that even the entire $65 million, let alone the $30 million the government says it will put into reforestation, is insufficient to rescue our liquidated forest resource. The Vancouver Island mayors have calculated that $23 million annually is needed to effectively carry out silvicultural efforts on Vancouver Island alone. Forestry experts have estimated that as much as $300 million is required annually to sustain our existing harvest, let alone increase it, as is apparently contemplated. Given the disrepair that the forests have been allowed to fall into, the job of managing the forests just isn't being done satisfactorily by this government. It is high time that it was.
Consider, for example, how we compare to Sweden, one of our competitors in the forest industry. Sweden has a forest land base about one-half the size of British Columbia's, but it harvests more from that land than we do — about 75 million cubic metres. They employ three times as many people as we do in B.C. — 206,000 compared to 75,500. Industrial wages are substantially higher than here, and private sector wage increases were running at about 6 percent in 1984. Unemployment, Mr. Speaker, is about 3 percent. Of the 206,000 Swedish forest industry workers, 58,000 are employed in the forests: seven or eight times the number that B.C. employs, to achieve about the same cut from twice the land. What do those 58,000 do? For one thing, they plant more lodgepole pine from the Cariboo than we do, and because they have developed better stock, they get 30 percent better yield. Let me quote from a 1984 circular of the Swedish Pulp and Paper Association: "Assessments made in the late seventies show that the total growing stock, which at the start of the forest surveys in the 1920s was barely 1,800 million cubic metres of solid volume, now adds up to more than 2,500 million cubic metres...annual growth is also on the increase, and the gross amount is put at close to 85 million cubic metres" — which is also a record.
The budget has not really done well by the forest industry. The public resources on which so much of our future prosperity depends remain a neglected asset. There are some who say that the present government views the forest industry as a sunset industry. The budget does nothing to ease this concern.
Small business. Present Socred policies have been directly harmful to locally owned business enterprises. As I said earlier, small business has been banned by both the recession and the depression in B.C. Ninety-eight percent of all B.C. businesses have sales under $2 million per year. Between 1975 and 1981, 7 percent of all new jobs were created in small business. From 1981 to 1983, 100 percent of all new jobs were in the small business sector. This says more about the weakness of the general economy under Social Credit than it does about the strength of small business.
Small business has faced an unfair tax burden, which has been worsened by various tax hikes in the last two provincial budgets. A recent Canadian Federation of Independent Business survey reports high interest rates, availability of financing and weak consumer demand as the key issues facing small business in B.C. All three have been seriously worsened by provincial government policy. Unfortunately, they are not addressed by the Socred budget.
The present government unfortunately created false expectations through the 1983 LIFT and LILA lending programs. Despite having under-utilized their allotment of funds raised specifically for the purpose, the direct lending programs were quietly killed within months of their initiation. I note the government announced several future policies for small business in the budget yesterday. These include the industrial incentive fund, the industrial development assistance program, the small manufacturers' incentive program and the tourism infrastructure incentive program. These are all titles lifted from the program of the New Democratic Party. They say that emulation is the sincerest form of flattery.
The accompanying legislation tabled by the minister shows the total amount of money available between now and 1990 is $85 million. Some $10 million is for small manufacturing. Funded at this level, the program should be called "very small manufacturers' incentive program." Some $25 million is for tourism incentives, which are loans to communities. How much tourist attraction can be funded throughout the whole of B.C. for a total of $25 million? Some $50 million is for industrial incentives, but $170 million in such loans were promised prior to the 1983 election. The present promise is less than one-third of the pre-election program of 1983. Does Social Credit think votes come twice as cheap in 1985 or 1986? Perhaps they merely remember that only one third of the promised loans were delivered last time.
Of the small business program generally, I would say there is much less here than meets the eye. The NDP caucus is saying the economy needs stability and consistency from government policy. You cannot open the treasury or, more precisely, borrow on the financial markets to support half-baked, half-funded economic plans only to have these taken away after the votes have been counted. We are, however, pleased that the government has recognized some of the high taxation costs facing B.C.-owned businesses, particularly those imposed in the past two budgets.
The NDP has proposed a tax credit for small business to recognize the unfair burden of high payroll and property taxes. We are happy to see the government has accepted this proposal. I would like at this time to recognize the efforts of the member for Okanagan North (Mr. MacWilliam), who originally made this proposal to the Minister of Finance at the taxation hearing in Kelowna on October 11, 1984.
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The NDP also proposed expanding the small business income tax rate to a larger number of firms, including profitability and partnership. Unhappily, the government has taken no action on this recommendation whatever. The small business venture capital corporation tax credit is an overdue step for this province, and it has been promised in two, three or four budgets and throne speeches. British Columbia is the ninth Canadian province to introduce such a provision. Only Newfoundland does not have one, and they are expected to introduce one if the government is re-elected.
To summarize, small business still needs consumer demand and more favourable financing terms. The government is finally addressing some of the financing needs of small business. Unfortunately, it comes far too late for many of the casualties of the Social Credit-inspired program of some two or three years ago. Some of the measures affecting small business in the budget are good and will be supported. Some of the assistance provided is not the right kind and does not seem to be enough for many more.
Mr. Speaker, you will be pleased to hear me read the word "conclusion."
The present budget is a political exercise. I spoke on Monday to a group about the budget. I certainly didn't know what was coming, but I said: "Look for the political message, because budgets in B.C. are political messages." Reviewing the government's plans, it is clear that the people look to a provincial election sooner rather than later.
The Socreds have but one theme: tax cuts for business. They have no plan on how to finance it. The Socreds have produced no targets for job creation and only poor economic performance as an outlook. They have a few big projects. They have allocated $2 million in additional tax dollars for political advertising from propaganda central. Theirs is the same old political timetable. It is simply not good enough. It is now clear that a restraint program which failed is to be followed by another scheme which is no more likely to succeed.
Fortunately, along with the political timetable comes political choice, and there will be that choice, Mr. Speaker. There will not be another budget before the next provincial election, because the promises that are being made for two and three years down the road will not have to be met if there isn't another budget — as was the case in 1983, when the budget was delayed until after the election. The only difference is that this time the budget will be brought in by a different government. It is now clear that a new political choice, new leadership and new ideas are required to achieve the new economic strategy of which I have spoken. The New Democratic Party stands ready to meet that challenge.
[Mr. Strachan in the chair.]
MR. KEMPF: Mr. Speaker, it's very interesting to hear the debate coming from the opposition critic this morning. It would appear that all they can talk about is another election — another election when this parliament is not even two years into its mandate. They speak of elections. They want the people of this province, during very tough economic times, to expend $10 million when this parliament has been here for less than two years; they want to subject the people of British Columbia to that cost.
Mr. Speaker, I'm proud to stand up on behalf of the people I represent and speak in favour of this budget. It's a budget that clearly recognizes the need to assist small business and industry during these very difficult world economic times by providing long-term employment for the citizens of this province. It's a budget that recognizes the views and the wishes and the aspirations of British Columbians, particularly northerners. That alone gives me great initiative to very actively support this budget, as the budget gives our people in British Columbia great initiative, hope and new energy.
The socialists opposite, through their finance critic, have talked of deficit financing. Yes, we have unfortunately had to deficit-finance once again, to encourage real and long-term jobs in this province. But I can remember the hollow speeches of the members opposite, who over and over and over again in this House advocated deficit financing to create jobs in this province — to create the short-term jobs that they would advocate by shovelling money out of the back of a truck to the people who don't create any wealth in this province.
The members opposite can oppose this budget, and I would hope that after this budget debate we would go to the polls in British Columbia, because that would mean the complete demise of that party opposite. British Columbians won't oppose this budget. In my mind that's the important part. That's the important reason behind bringing in this kind of budget during these very difficult economic times. I'm fully prepared to continue this debate. I'm fully prepared to provide the socialists opposite with the reasons that the people of British Columbia will support this budget and this government in its attempt to create real jobs where they're really needed in the province of British Columbia.
With that I would adjourn this debate until the next sitting of the House.
Motion approved.
Hon. Mr. Gardom moved adjournment of the House.
Motion approved.
The House adjourned at 11:53 a.m.