[ Page 6127 ]

CONTENTS

Oral Questions

Reforestation. Mrs. Wallace –– 6127

Timber appraisal. Mr. Williams –– 6127

Vancouver Transition House. Ms. Brown –– 6128

School district funding. Mr. Rose –– 6128

Government advertising. Mr. Hanson –– 6129

British Columbia Railway Dispute Settlement Act (Bill 39). Committee stage –– 6129

Mr. Gabelmann

Mr. Lea

Division

Assessment And Taxation (Miscellaneous Amendments) Act, 1985 (Bill 6). Committee stage 6135

Mr. Stupich

Mrs. Dailly

Mr. Williams

Mr. Skelly

Division

Third reading

Social Service Tax Amendment Act, 1985 (Bill 11). Second reading

Hon. Mr. Curtis –– 6139

Mr. Stupich –– 6140

Mr. Williams –– 6141

Mr. Nicolson –– 6141

Hon. Mr. Curtis –– 6142

Workplace Act (Bill 4). Committee stage –– 6142

Mr. Gabelmann

Mrs. Wallace

Third reading

Hotel Room Tax Amendment Act, 1985 (Bill 13). Committee stage 6144

Mr. Stupich

Third reading

Business Licence Repeal Act (Bill 16). Committee stage 6144

Third reading

British Columbia Transit Amendment Act, 1985 (Bill 17). Second reading

Mr. Stupich –– 6145

Hon. Mr. Curtis –– 6145

Division –– 6146

Medical Service Amendment Act, 1985 (Bill 41). Hon. Mr. Nielsen

Introduction and first reading –– 6146

Corporation Capital Tax Amendment Act, 1985 (Bill 7). Committee stage –– 6146

Mr. Williams

Mr. Stupich

Third reading

Tobacco Tax Amendment Act, 1985 (Bill 12). Committee stage –– 6147

Third reading

Committee of Supply: Ministry of Industry and Small Business Development estimates.

(Hon. Mr. McClelland)

On vote 44: minister's office –– 6147

Hon. Mr. McClelland

Mr. Williams

Tabling Documents –– 6150

Appendix –– 6151

The House met at 2:05 p.m.

Prayers.

Oral Questions

REFORESTATION

MRS. WALLACE: Mr. Speaker, my question is for the Minister of Forests, and it's a very simple one. Has he decided to provide the $22 million to fund the Vancouver Island mayors' silviculture program?

HON. MR. WATERLAND: Mr. Speaker, I thank the member for her question. The answer is at this time no.

TIMBER APPRAISAL

MR. WILLIAMS: A further question for the Minister of Forests, Mr. Speaker. Can the minister advise the House of the status of the new appraisal system of his ministry?

HON. MR. WATERLAND: Well, Mr. Speaker, the appraisal system used today has been in use for many years, and we have no new system in place right now.

MR. WILLIAMS: I have a copy of a memo, Mr. Speaker, dated May 1, sent out to all regions. It says:

"Re: new appraisal system.

"Attached is the working plan for development and implementation of the new system as it stands now. I expect an executive decision shortly, giving the green light to proceed with the new system along the principles and conceptual basis developed by industry."

There is a further paragraph. It's signed by Mr. Waelti, director of the valuation branch. It went out to all parts of the ministry. Would the minister care to correct his statement?

HON. MR. WATERLAND: Not at all, Mr. Speaker. The system we have in place now is the system that has been in place for many years. Over the last number of months and perhaps going on for over a year we have been trying to find ways of simplifying somewhat the appraisal system, and we are getting very close to being able to do that. But it's not in place yet. I hope that at some time in the very near future it will be, because in my opinion far too much time and expense is used in the appraisal system we have now, and it does not necessarily lead to a more equitable or fairer system. So we're trying to maintain the equitability and fairness of the system, and yet simplify it. We are getting close to that, but the new system is not yet in place. I'm not sure just when or if it will be.

MR. WILLIAMS: Could the minister advise the House what he anticipates in terms of the impact of industry's new system for pricing public timber, and what the impact will be on Crown revenues? Will they go up or will they go down?

MR. SPEAKER: An anticipatory question, hon. member.

MR. WILLIAMS: I'm sure, Mr. Speaker, there's been an analysis. Can the minister advise us of the analysis that's been undertaken and whether revenues will go up or down?

HON. MR. WATERLAND: Mr. Speaker, there is no industry appraisal system contemplated. The industry and this government have always worked very closely to ensure that we have a very healthy and viable forest industry in British Columbia. Any changes to the appraisal system will not be centred around changes in revenue. One of my mandates is to ensure that the Crown's interest in Crown timber is realized for the people of British Columbia by the government of British Columbia.

MR. WILLIAMS: The memo says it was developed by industry and by your senior valuation staff. Could the minister advise us if the operational allowances given the companies under the proposed system would increase?

HON. MR. WATERLAND: It would be nice indeed if the world were as simple as that member likes to make us believe. The allowances for operating costs, both in logging and in manufacturing, and other responsibilities that licensees have, are very complex matters. There will be adjustments, I'm sure, because some inequities exist now. But the idea and the whole thrust of the appraisal system has always been to make sure that the Crown's interest in the resource is realized by the Crown for the people of British Columbia. That will continue to be a guiding principle of our stumpage appraisal system.

MR. WILLIAMS: It's a little different, Mr. Speaker, when industry designs the system and the cash register for the Crown.

Could the minister advise this House what concern he has with respect to this new system, in terms of the implications with respect to protection attitudes in the United States regarding this problem that we already have under the existing system?

HON. MR. WATERLAND: The stumpage appraisal system that we've had in place for a number of years in British Columbia stood up to the minutest of scrutiny by the International Trade Commission in the United States a couple of years ago. One of the things that we have to assure ourselves of.... And that is one of the reasons of many that we work cooperatively with the private sector in British Columbia and don't isolate ourselves as a government from the private sector. One of the guiding principles in addition to equity has to be that we do not and cannot be accused of subsidizing our industry through our stumpage appraisal system.

That, as I said, stood up to a very minute and detailed scrutiny by courts in the United States, and it was proven beyond any doubt that we in British Columbia have a fair and equitable system. Any changes to that system must also be fair and equitable. That type of terminology may be somewhat strange to that member, but we do believe in fairness. We believe that industry is a basic part of our economy, and we do not approach them as if they were a bunch of crooks, as some people seem to do. Our industry in British Columbia has served a very important role in our economy for years and years, and will continue to do so in the future.

Together with our appraisal system and the industry itself, there are the very important aspects of investment in our

[ Page 6128 ]

industry in British Columbia from abroad and our ability to compete in those marketplaces. All of these things are either encouraged or discouraged by the appraisal system we have and the approach and the attitudes of the provincial government. I would hope that that will continue to be the case, and that eventually we might get over the discouragement of investment in this province that took place during the early part of the 1970s, and about which I still hear when I do my travels abroad in the marketplaces of the world — in areas of the world where major investments could perhaps come from.

[2:15]

VANCOUVER TRANSITION HOUSE

MS. BROWN: Now that that ministerial statement is over, my question is directed to the Minister of Human Resources, but in her absence I am hoping that her executive assistant will be able to help us. It has to do with the decision by the YWCA not to renew their contract for the Vancouver Transition House. I am wondering whether he can tell me whether the government has decided to resume responsibility for that very important service.

MR. REYNOLDS: I will take the question as notice and report back to the member as soon as I can.

MS. BROWN: A related question, Mr. Speaker. In view of the fact that the Vancouver Transition House is the only resource in the Vancouver area dedicated exclusively to meeting the needs of women and children in an emergency battered situation, I wonder whether he would also draw that fact to the attention of the minister in asking her to resume responsibility for this service.

MR. SPEAKER: Further statement, the member for Coquitlam-Moody.

MR. ROSE: Mine is a question to the Minister of Education.

MR. SPEAKER: That would be refreshing, hon. member.

SCHOOL DISTRICT FUNDING

MR. ROSE: I'll reserve my statement for the other side.

I have a question for the affable Minister of Education. The school district at Hope has joined a growing number of school districts who are forced to seek charitable donations in order to keep classes open. As much as hope and charity are appropriate in any society, has the minister decided to improve the framework of our public school funding so that our schools do not need to exist on charity.

HON. MR. HEINRICH: Mr. Speaker, I would never discourage any school district, any community or any parents in any community from seeking funds to assist any particular program or the purchase of any equipment. It doesn't matter where we go throughout the province, this has been a practice for years. If somebody wishes to incorporate a society under the provisions of the Society Act of British Columbia and get a tax number from Ottawa so that any contribution is tax deductible and the funds would be there, I see nothing wrong with that at all.

MR. ROSE: Mr. Speaker, the minister insisted that the reason he has clung so desperately to his framework is that it is fair and equitable to all school districts, whether they be rich or poor. If that is so, why has the minister permitted some school boards — notably Vancouver and Burnaby and Coquitlam — to sell property in order to get enough funds to run the school, when in turn those funds exceed the minister's own framework?

HON. MR. HEINRICH: Mr. Speaker, for two years, since I've had responsibility for the portfolio, I have encouraged all school districts to dispose of surplus inventory. In my own school district I believe there were something like 20 parcels covering an area of 250 miles across. In many parts of British Columbia, where there has been a significant decline in enrolment or in parts of the area or the school district where no school will ever be built again, as a matter of board policy, it seems to me that it's in the interests of all of us — the local taxpayers, the provincial taxpayers and everyone in the House — that a school district disposes of surplus inventory. What is even more important is that what we did was to divide the proceeds of the disposition between shareable and nonshareable, and we doubled the amount of the non-shareable, which becomes the exclusive property of the school district. If the school district wants access to this, which they asked me if they could have, and which I agreed to 18 to 20 months ago, I see nothing wrong with them enhancing their own budget by....

Interjection.

HON. MR. HEINRICH: Nothing whatsoever; this is the limit. If they are able to generate funds, is there anything wrong with that? Absolutely nothing. They ought to be encouraged to do it. Remember, Mr. Speaker, they are autonomous bodies. They've got property; and they can dispose of those properties. There are windfalls; there's money there to be had. They just need to be encouraged. We're going to make sure that there's an opportunity to take full advantage of it in Vancouver, where they've got all the property in the world; they don't need it.

MR. ROSE: In the name of equity and all that's fair and holy, does the minister not agree that districts rich enough, or that have declining enrolment, with property to sell are in a better position to increase beyond the minister's framework than those districts that are poor? Where's equity in that situation?

HON. MR. HEINRICH: Where the equity is is as follows; if the member could be patient for a moment, I'll explain how. There's pretty well a ratio of about 80 to 20 provincewide when it comes to debt service. Make a distinction between the acquisition of land and the construction of plant. The provincial taxpayers, through consolidated revenue, have usually contributed something like 80 percent on average towards that cost; the balance comes from the local taxpayer. On the disposition of a piece of property, that same formula applies, and the money comes back the same way; hence the reason for shareable and non-shareable. Under the non-shareable portion they have access, and they can use it.

[ Page 6129 ]

Richmond, as a matter of fact, took full advantage of it. I know a number of other school districts who have been able to take advantage of it and get access to those funds. Mr. Speaker, if I may continue, the reason why we maintained that formula is so that those funds are distributed equitably provincewide. The non-shareable portion always remains the property of the school board. Do you want to take that away from them?

GOVERNMENT ADVERTISING

MR. HANSON: Mr. Speaker, I have a question for the Provincial Secretary. In the current fiscal year the provincial government has budgeted $18.6 million to buy advertising. In addition, Expo 86 Corporation has budgeted $25 million for advertising. Additional advertising will be done by Crown corporations, boards, commissions, agencies and the lotteries branch. Is the minister aware that this level of advertising expenditure is higher than all but the two top national advertisers in the country — the federal government and Procter and Gamble?

HON. MR. CHABOT: Mr. Speaker, a great revelation this afternoon. The member knows that the bulk of the advertising budget that we have in this ministry, through the government information services, is statutory in nature. Most of those expenditures are called for in the laws of this province, and I hope the member's not suggesting that we violate the law by not doing the necessary and compulsory advertising we have to carry out.

Orders of the Day

HON. MR. GARDOM: Committee on Bill 39, Mr. Speaker.

BRITISH COLUMBIA RAILWAY
DISPUTE SETTLEMENT ACT

The House in committee on Bill 39; Mr. Strachan in the chair.

On section 1.

HON. MR. SEGARTY: I move the amendment standing under my name on the order paper. [See appendix.]

MR. CHAIRMAN: The amendment is in order and has been published in Orders of the Day.

On the amendment.

MR. GABELMANN: Mr. Chairman, the difficulty of course is that the Orders of the Day have just now arrived, or half an hour ago, and the timing on this kind of thing is somewhat difficult. So I would appreciate it if we could take just a second on this.

MR. CHAIRMAN: By all means.

HON. MR. SEGARTY: On the same point, Mr. Chairman, the correction is to change the section to the correct legal name of the company, which is B.C. Rail Ltd. The correct legal name of the employer on the railway is B.C. Railway. The confusion arose in the drafting process because of the collective agreement under which the operations have been continuing for the past 15 months. It was formerly the British Columbia Railway Company and is now called B.C. Rail Ltd.

I hope that helps the hon. member.

MR. GABELMANN: Thank you. That does help on the first one, which isn't the one I was concerned about. The second one that the minister did not refer to — which is still part of the first amendment, as the Chairman pointed out — is an issue I was going to raise. In terms of the definition in the original legislation as debated yesterday, trade union means a trade union certified as a bargaining agent for some of the employees. Pretty.... I don't want to use the word "sloppy," because it implies a criticism of someone who did some drafting, but I'm curious as to how that kind of language could possibly have even emerged in the first place, necessitating the kind of change that was made.

HON. MR. SEGARTY: Mr. Chairman, I am advised that it is a tactical matter. Some of the employees are unionized and some are non-union. But I understand the member's concern, and my staff have advised me that it's a problem that happened with the drafting process.

Amendment approved.

Section I as amended approved.

On section 2.

MR. LEA: Mr. Chairman, throughout this session I have given the government the benefit of the doubt. I have not questioned their motives. I have tried to make up my mind on how to vote in this House as the legislation is written. Section 2 of Bill 39 frightened me. As I stated in the debate on second reading, there is no reason for this legislation; there isn't anything that the government wants to do that cannot be done under existing legislation. This section 2 seems to me a harbinger of what may come.

I believe that the government — and I'm not going to give them the benefit of the doubt on this legislation — is going to use labour as a whipping boy in this province. They've read their polls; they have seen in the last Decima poll that 63 percent of the citizens of this province are disconcerted about labour. They're not happy with some of the directions the labour unions are going in. They're not happy with some of the labour union leaders.

AN HON. MEMBER: What does it say about the United Party?

MR. LEA: Well, you've got the polls, you read them. We paid for them — the taxpayers — and you get to read them. But I've seen the polls too, and 63 percent of the people in this province are very dissatisfied with some aspects of the trade union movement.

It seems to me that the government is using those polls and the finding in those polls to find enemies. They're using legislation, they're using this Legislature, and they're using the power of government to go after people who the polls tell them are not popular at the moment. That's what this act is all about. That's what section 2 is all about. Is it a harbinger if

[ Page 6130 ]

this gets through and there's not too big an outcry? Then the next piece of legislation, the next section, will have no strike or lockout anywhere in British Columbia for a period of three years, two years, five years? Is that what the government is leading to? Do they want the fight? Are they looking for the fight?

[2:30]

That seems to be what this government is all about. They're looking for fights with other British Columbians. Get conflict going. Get confrontation going. That's what this section will do, especially if it's only a harbinger of things to come. That is deplorable. If the government is doing it by design, it is unpardonable. If they're doing it because they don't know what they're doing and they're stumbling from one decision to another, that is unforgivable. But neither way do they come out okay.

Mr. Chairman, in my opinion this bill, this section, is nothing more than a design to turn one British Columbian against another British Columbian. That's what it's all about, and it's regrettable. At the time when we need to think together as British Columbians, when we need to act together as British Columbians and plan together as British Columbians, this government insists on creating conflict where there is no need. I believe that the government knows that. I don't believe that they're just stumbling along. I believe that they're using those polling devices to find out who is not happy with whom today, and they're taking advantage of that information in the most insidious way.

MR. CHAIRMAN: Hon. member, some latitude has been allowed, but we are in the committee stage of the bill now and must be specific to the section.

MR. LEA: We're talking about section 2, Mr. Chairman, no strike or lockout.

MR. CHAIRMAN: Yes, which deals specifically with strike and lockout. It does not deal with polling, nor with the principle of the bill.

MR. LEA: That's right, and I'm talking about the implications of section 2, and what it could mean to this community and this province.

I am on record as not being a toady of the labour movement, although I'm on record as not being against the labour movement. Sure the labour unions and the leaders have warts. Are they perfect? No, they're not. Do we throw the baby out with the bathwater? I hope not. But I am just afraid that section 2 in this legislation is going to create conflict, doing away with harmony where maybe harmony is possible.

It is the first time that I've ever seen legislation brought in to order workers back to work before they've gone out. Something must be wrong. You look at it and on the face of it you can only draw one conclusion: that this government is pushing forward, and they are pushing forward hoping to bring themselves up in the polls, and they're going to use any group of British Columbians that they can use — and I mean use — in order to reach their own partisan objectives.

MR. CHAIRMAN: To the section, please.

MR. LEA: I'm talking about the section, Mr. Chairman. That's what this section's all about. It's a further attempt by this government to divide British Columbians, not bring them together; rhetoric saying one thing, action doing the other. It is regrettable.

In closing, I say that I have given this government the benefit of the doubt for a long time, but there comes a time when you have to draw the line, and you have to put it on the table. I think that's what I'm doing here today. I believe that this is a dangerous act. I believe that the motivations behind it are dangerous and unsavoury. I believe that this government is acting in the most despicable way, in partisanship. I can only hope that the people of this province know about it, and can see through it, and won't go along, and will rise above the actions of their duly elected government.

MR. GABELMANN: Mr. Chairman, I want to associate myself with the comments made by the member for Prince Rupert. I don't do that all the time, but I certainly do on this section. This Section is the guts of the legislation, because the principle involved is that no strike or lockout shall take place on a particular endeavour in this province, before any strike or lockout has occurred; even before there was any serious indication that there would be one. That's a departure for governments in British Columbia, and a serious one.

I'm not going to make the philosophical speech; I made that in second reading yesterday. But I just want to say, before I ask a question, that I trust that we will never again see introduced in this Legislature bills to become law that tell workers or employers that they will not be allowed to go out on strike in the future sometime. Because that's what this one does. It violates the International Labour Organization's code — absolutely and flagrantly violates the standards to which this country is a party. We have the gall and effrontery in this country to talk about human rights and labour standards in other parts of the world, and then we violate those same agreements that we sign. We've done that in public sector bargaining; we're doing it here in what I would refer to as the quasi-public sector. God only knows if the private sector is next. It is inexcusable and it's wrong.

The government has, if it wishes to use it, legislation on the books which would have enabled it to do what section 2 does. I want to ask the minister why he didn't use that legislation that now exists.

HON. MR. SEGARTY: Perhaps the member would like to elaborate a little bit on what legislation is on the books.

In answer to the member for Prince Rupert (Mr. Lea).... He came in here yesterday and made a similar speech, and then when it came time to vote he ducked the issue and left the House. He mentions some political polls that he may have access to; I certainly don't. I didn't discuss that with the mediator or the director of mediation services or my deputy minister, who spent a great deal of time with the parties involved in trying to resolve this very difficult issue of collective bargaining between these two parties. They worked hard night and day, day in, day out. The parties themselves negotiated this collective agreement for 15 months — two months before the expiry date, and over the past while they have been working with the parties day in, day out to try to get this agreement resolved.

I dare say that if we really wanted to make this a political issue, it would be convenient for all of us to let them go out on strike and turn the communities against each other and turn union member against union member out in the workplace and then turn that into frustration in the community. If you

[ Page 6131 ]

wanted to make a political issue of it, it would be a good thing to do, I would guess.

Instead we took a little leadership and said that there would be no lockout or strike on the British Columbia Railway and that we would not play politics with this particular issue at this particular time in our economy in British Columbia. That may suit the member for Prince Rupert's purposes and goals, but it does not suit my purposes and goals as British Columbia's new Labour minister in 1985. It would be convenient to have the parties argue about sharing the pie, while our competitors around the world are nipping at our ankles and stealing the pie from us altogether. I don't think any British Columbian today would sit by and take comfort from that fact. And I don't think, quite frankly, it's anything that the parties involved want at this particular time in our economy, when we've got to be working together to try to find ways to build our economy,

1 resent, too, the fact that both members who got on their feet today would blame me for the industrial relations problem of the British Columbia Railway and the employees. I took over this portfolio two months ago, and I resent the fact that somebody would say that I'm the cause of all the problems and that I'm a failure because I've been unable to resolve the issue. More expert people than I have tried their hand at this particular problem. What we have to do is find new solutions.

The Vancouver Board of Trade recently brought up a series of new solutions that I hope we will be able to put into practice. Labour relations isn't a daily thing, a weekly thing or a monthly thing; it's an ongoing process. It's not very dramatic, but it's a process that we have to work at day in, day out to eliminate all barriers, all slogans, suspicion and emotions. Only through development of that process will we be able to solve our problems.

MR. CHAIRMAN: Some latitude is being offered. The member for North Island.

MR. GABELMANN: Mr. Chairman, I didn't agree with very much of that, but I'm delighted to see the minister abandon his prepared text and get up and stand on his own feet and say what he thinks, rather than reading the stuff that he was reading yesterday. That was much more fun, Mr. Chairman, than....

Interjections.

MR. GABELMANN: Mr. Chairman, if you take what the minister has just said and you put it into the context of what the Minister of Lands, Parks and Housing (Hon. Mr. Brummet) said yesterday, the clear message that we're being given.... This relates to section 2, because the principle here is to prevent a strike or lockout in anticipation that there might be one. The clear indication of the government policy from this day forward is that legislation will be introduced to prevent strikes or lockouts in industrial disputes at the government's whim. That's the implication that everyone has to draw from the speech made by the member for North Peace River, and, to a certain extent, the speech made by the Minister of Highways (Hon. A. Fraser), and the member's comments now combined with this legislation. When you look at it all in context, we are on a new policy direction in British Columbia. Because the minister said a few minutes ago, among other things, that they've been bargaining for 15 months and they haven't been able to put it together, so we've got to intervene — my words; his idea, I suspect, pretty closely.

That wasn't the language used last summer when, after a longer period of negotiations, Metro Transit was shut down by either a strike or a lockout, depending on your perspective. The position of the government at that time was a continuation of the policy and of the philosophy of the government, at least as it was expressed, which was: "Collective bargaining is almost sacrosanct, and we're going to allow it to continue even at the cost of interrupted bus service in the lower mainland and in Victoria." That was the government's policy last year, and they endured a lengthy dispute and finally sought this Legislature's assistance in ending it.

In the previous dispute, in what I would call an effort by the pulp industry to raise prices, we had a two-month shutdown in the pulp industry. The government let that go, assisting the companies in raising prices, defending it on the basis of free collective bargaining. Not any more — we're into a new principle here, expressed in section 2. It's curious to me that this new policy of the government — not expressed directly or proudly by press release or by speech, but expressed indirectly through this legislation and through speeches in the House — comes in at the same time as we get a new Minister of Labour, one in whom some of us had some confidence that he understood that his role was to protect collective bargaining, not to destroy it.

[2:45]

Now I asked earlier why.... Let me say what the basis of my question was: why not use existing legislation? I'll refer, since the minister doesn't know what it is, to it in a moment. What parties in our society, what people in our society, need to know when they are involved in daily routines in their work life or anywhere else is what the rules of the game are. In labour relations that's as important as it is anywhere else. They need to know what the rules of the game are.

The rules of the game in this province are spelled out in various statutes, depending upon where you work. For the most part, and in respect of this particular dispute, the rules are spelled out in the Labour Code and in the Essential Service Disputes Act. That's where the rules are spelled out. The parties know what the rules are; they understand them; and then along comes the employer in the guise of the Minister of Labour — because let's not forget that he is the employer, because there is at least one cabinet member who's in the chamber at the present time on the board of directors — who changes the rules of the game in midstream. That's what we've had happen here.

I don't like the rules of the game as they're spelled out entirely, in both the Labour Code and the Essential Service Disputes Act. I made that clear many times in debating amendments, and again yesterday. I don't like them all, but at least those were the rules that were expressed; people knew what they were, and bargained and conducted themselves knowing what those rules were. The employer comes in and uses the Legislature to change the rules. The minister talks about fair — that's not fair. To go back to my question, why wasn't section 8 of the Essential Service Disputes Act used?

HON. MR. SEGARTY: Well, now that the member has brought that to my attention, it provides for a 90-day cooling off period, and I suggest to the member that the parties have

[ Page 6132 ]

been cooling off for 15 months. I want to know what that would have done.

MR. GABELMANN: It's unfortunate that ministers don't get to serve an apprenticeship before they take on the real responsibilities.

HON. MR. SEGARTY: Tell me.

MR. GABELMANN: Well, let me tell the minister, Mr. Chairman. Those people who are practitioners of the art of collective bargaining will tell you that the processes that are available need to be gone through in sequence, and that as you get further and further along that process the pressure increases. Now one of the latter stages is a strike or a lockout, which puts an immense amount of pressure on. The government has chosen in this case, at this stage, not to allow that particular element of pressure to be imposed upon the parties. But at the same time, having made that decision — which I don't agree with — if it wants to go that route, it at least has to allow all of the other levers of pressure to be pushed.

In order to make sure that happens, you need to go through all of the available opportunities. Like it or not, the Essential Service Disputes Act allows for a message to be delivered to the parties. That is that the government is not prepared to see you go out on strike; therefore we're invoking that legislation to impose a cooling-off period. That's a signal to the party that the government is serious, that it means business, and that it's concerned, and additional pressure is thereby imposed on the parties.

That's not the only thing that can be done. There are other avenues that can be taken, and I talked about some of them yesterday: the minister's involvement; at some final stage, perhaps the Premier's involvement. Hammer some heads together in a committee room. Don't say to me that on a Monday morning you phone the parties, and one of the parties says, "It's not convenient to come over today." Maybe it's convenient to come over tomorrow. If they turned down a series of reasonable options, then you'd know you had a problem. That's bargaining too, when somebody phones you up for a meeting and you say: "No, I can't make it today; I'll make it tomorrow." You want to put a little bit of pressure on the person who has just called you up, or vice versa.

Mr. Chairman, this stuff is done with stilettos, not broad axes. It's difficult, but it's important that everybody knows the game, knows what the rules are, knows what the procedures are. For the government to abandon the options it has in sequence, and to interfere and intervene at a stage that's totally miles apart from the next step, is going to leave not just B.C. Rail negotiators next time....

Forget about this dispute; it will get resolved. What about the next time? What about other industries, both in the public and the private sector? Section 2, for the House Leader's edification, allows for this advance denial of the right to strike or lockout, whether or not it's going to happen. There are a lot of things that governments do that are popular that history often judges not to be right. History often pretty severely condemns activities of government that were popular. Mussolini made the trains run on time, and that was popular. Let's not ever forget those lessons of history.

Back to this particular procedure. The cooling-off period would have been a signal; it was available without legislation. That comes back to the point that the member for Prince Rupert made. We have seen a number of bills this session — more than I can ever remember — that aren't necessary but are brought in for political purposes, so that the government can have the public see that they're taking decisive action on a particular course, through legislation. The opposition may have raised some concerns about it, but in fact you don't need legislation. You don't need the Coquihalla bill; you don't need a whole series of other bills. It's political. Why not go through the process as laid out in the ground rules?

MR. CHAIRMAN: Hon. members, before recognizing the Minister of Labour, I must observe that we have allowed some wide-ranging latitude; it's been extended to the member for Prince Rupert, the Minister of Labour, and the member for North Island with respect to section 2, which I acknowledge as being a very important section of this bill. However, after allowing that latitude, hon. members, we really have discussed, to some degree, the principle of the bill. If we could return to the specifics of section 2, the committee will be well served.

HON. MR. SEGARTY: The process has taken its course for a period of 15 months. The member talks a good philosophical story, in all honesty.

The process has taken its course. Last December it was let go to that end. There was pressure on both of them, and they sent part of the agreement to an arbitrator. It was followed then by the interjection of a mediator, Fred Geddes, who worked very hard with the parties to try to resolve the dispute. Last week both parties asked me, as a means of putting on pressure, to ask the mediator to file his report. I was reluctant to do so. I asked, then, the director of mediation services, Clark Gilmour, to get involved. After some time of negotiation, again they asked me to ask the mediator to file his report.

I talked to both parties on the phone, and they told me that that would provide the stimulus necessary for a collective agreement. So I followed their advice and the advice of the professionals in the system. We followed that course. On Monday morning I phoned both parties and invited them to meet with me in Victoria, again, to find ways for the parties to resolve the dispute. A 90-day cooling-off period, in my opinion and in the opinion of other people, would not have suited any particular purpose. It would have continued to erode the ability of our industry to guarantee delivery of their products to world markets.

What I wanted to take into consideration too was, yes, the impact of the process on these two parties. The member talks about the transit bill, and he talks about the pulp bill, but in all honesty the transit bill was confined to British Columbia and had nothing to do with offshore markets or people in the private sector and their ability to produce resources and sell them abroad. The pulp dispute, in effect, was a dispute between two parties, and it didn't affect so many other people on the sidelines: coal exports, pulp exports, lumber exports, and a variety of other exports that many people in British Columbia have struggled hard to gain over the past few years.

When I asked them to come over on Monday morning, it was convenient for one of the parties, not convenient for the other. It would have been convenient for me to meet with them, or it would have been convenient for one of the parties to invite me to a meeting in Vancouver at 11 o'clock Monday night. I felt that we would bring the bill in and have it debated in the House.

[ Page 6133 ]

The process is still here, in this bill, for both parties to sit down and negotiate an agreement. We haven't taken that away from them at all. That option is still there. I hope that both parties will continue to do that. I have a responsibility to all of the people of British Columbia. I made some comments about that in response to the member for Vancouver Centre yesterday.

MR. CHAIRMAN: Again, hon. members of the committee, we have canvassed second reading debate very well in second reading and now again in committee. Could we return to the section?

MR. GABELMANN: I'll be very brief on this point. Does the minister not understand that an ability to reach a collective agreement is severely hampered without the right of strike or lockout? That's my point number one. The minister makes this great speech about how they're able to reach an agreement. The fact is there's no incentive for the employer to reach an agreement. Because you're the employer.

Mr. Chairman, the Minister of Labour may pretend that he's not the employer because he's the independent Minister of Labour, but he's a part of a cabinet which has representatives sitting on the board of directors. He's the employer. There is no incentive to conclude a collective agreement when the right to strike or lock out is removed. So that argument is totally a waste of time.

My second point. Based on what the minister tells us that B.C. Rail is different from Metro Transit because they have foreign markets — every employer and every trade union in this province that has foreign markets should now understand that the minister's policy is no strikes or lockouts. Free collective bargaining is finished, if you have foreign markets. But if you just provide services to people, you can have all the strikes and lockouts you want, month on end. That's the new policy of the government of British Columbia as just spelled out by the Labour minister. I hope he understands what he's just told us.

HON. MR. SEGARTY: Mr. Chairman, that is not the policy of the government. But if we look at British Columbia Railway, it's not just a dispute between two parties. There are many other bystanders in many areas of the private sector across our province dealing with pulp, coal, potash, copper, lead, zinc and a variety of other areas. People who work in the private sector have struggled hard to maintain those markets over the past few years. I dare say that the company and the railway employees recognize the seriousness of the dispute. What we tried to do is find a way that would be fair to the employees by the appointment of an industrial inquiry commissioner that would conclude the collective agreement in a fair and impartial way and get it away from government.

Section 2 approved.

On section 3.

HON. MR. SEGARTY: Mr. Chairman, I move the amendment standing under my name on the order paper. [See appendix.]

MR. CHAIRMAN: The amendment on the order paper is in order.

MR. GABELMANN: Just a brief technical question on this one. Historically in Canada bridging has been taken for granted. The idea is that — I'll explain what it means to the minister — when a contract expires, and before the new one is negotiated, the old one remains in force in terms of the conditions and benefits until the signing of the new agreement, which may then be made retroactive. Why is it necessary, therefore, to build into the legislation what is in effect a bridging clause?

[3:00]

HON. MR. SEGARTY: Yes, the rule that you're talking about does not have the force of law, and that, I guess, is a legal technicality.

MR. GABELMANN: That's the answer I was afraid of, Mr. Chairman. If that's the case, if bridging no longer has the force of law in this province.... I hope that's not what the minister was telling us. If he wants to change his answer, I'll sit down so we don't prolong it, but if that is the answer, then we've got a serious problem.

HON. MR. SEGARTY: It's a difference between contract and statute.

MR. GABELMANN: Mr. Chairman, I hope the minister understood what he was saying. Do you know what you mean when you say that? He should take a minute or two to be told what he means.

Mr. Chairman, let's just take a minute while you collect your thoughts too. Fifteen months or so ago, a contract was in place. The contract expired. Under what I guess you might call common law tradition or precedent in this society, the contract remains in force despite the fact that no agreement has been signed, commonly referred to as bridging, as I understand it. Why would it be necessary to put into law in this legislation something that is already there by law, if not written?

HON. MR. SEGARTY: As I understand it, hon. member, the contract is between two parties through a collective agreement process. What we're doing here today is bringing in statute law and basically saying that this is the law, however in doubt the other ones might be.

MR. GABELMANN: Mr. Chairman, I have to pursue this. If you say, in the case of B.C. Rail and their council of trade unions, that a statute is required to ensure bridging, that a provision in this bill is required to ensure that the old collective agreement remains in force until a new one is reached, however it's reached, the implication of that.... Why do you need it in a statute?

[Mr. Ree in the chair.]

HON. MR. SEGARTY: The hon. member should know that the provisions of a collective agreement are always open to dispute between both parties. There will be different interpretations between both parties on that collective agreement. What we're saying is that when this act comes into force, there will be no strike or lockout.

MR. GABELMANN: I don't think the minister understands me. That's perhaps my fault for not being very clear.

[ Page 6134 ]

We're not talking about any of those issues. I want to.... Maybe I don't understand it. I'd be happy to have the minister.... No, this is important, and I'll tell you why it's important. The issue has been raised before, and there has been concern in the industrial relations community about the validity, the legal standing, of bridging. It has always been judged to be lawful. In other words, the old contract continues without any statutory provision, without any contractual provision. An old agreement expires; in the period between that date and the date of the new contract being signed, the old agreement applies, and then it can be changed retroactively — all of that, bridging. That should apply here too, in B.C. Rail's case, without any statutory interpretation, unless — and this is my point — there is a concern on the part of the ministry that in fact bridging no longer has legal force in this province.

HON. MR. SEGARTY: Mr. Chairman, what the member says is correct, but this bill is an insurance policy that the provisions of the collective agreement will remain in force, and remain in force by law.

MR. GABELMANN: So it's an insurance policy. In other words, it would apply by "common law" but now it applies both by common law and by the statute.

To most members of the House, Mr. Chairman, this may seem like a picky technical point, but to employers and trade unions this is a very significant issue. If your contract becomes non-functioning on the day of its expiry, we've got really serious problems. That concern has been expressed. When I see this kind of wording in a bill, and referred to as an insurance policy, insurance against what? Insurance against the fact that bridging may not be legal?

HON. MR. SEGARTY: No, Mr. Chairman. That contract is in place between the two parties, and they can agree to carry on the contract through the negotiations of another collective agreement. What we're saying in this act is that this act is superior to any agreement that they may make between both parties.

Amendment approved.

Section 3 as amended approved.

Section 4 approved.

On section 5.

MR. GABELMANN: Just another technical question on section 5, Mr. Chairman. It says that within 72 hours after coming into force, the mediator appointed shall report. Maybe I'm too long away from this whole business. Maybe I forget how it works, but I thought when the mediator booked out, he reported. I thought he would have done what this section calls for. Did he, or what happened?

HON. MR. SEGARTY: If it will do the member any good, that's what I thought too, but what they do is, both parties ask the mediator to file his report but both parties continue to use the service of the mediator. Under the statute he's required to make a report to me on the outstanding issues in the dispute within the required period of time after the passage of the legislation.

MR. GABELMANN: This really is just a technical point. What the mediator is really doing then, if I understand it correctly, is in effect booking out the second time, the first time under the regular provisions of the Code, the second time under section 7 of this particular bill. Is that right?

Interjection.

MR. GABELMANN: But without the implications of the first booking-out?

HON. MR. SEGARTY: Mr. Chairman, there are no implications. It's just an up-to-date report on the happenings of the last week of negotiations between the parties.

MR. GABELMANN: I guess this is my concern with the wording of this section. If after 71 hours the mediator said to himself, "Wow, another day and I've got this thing put to bed, " but the bill says within 72 hours he must report, what options does he have?

HON. MR. SEGARTY: There is no finality to this report. He can continue to work beyond that period of time if that's what the mediator wishes and if that's what the parties wish.

Section 5 approved.

On section 6.

MR. GABELMANN: Just a few brief comments, Mr. Chairman, because section 6 is quite an important section, but it was canvassed yesterday in second reading and is properly, for the most part, a second reading debate. I'll try to avoid doing that.

I'll be careful about what I say here. The minister and I have had conversations on occasion about the whole concept of section 122 of the Labour Code — the industrial inquiry commission section — and I have long felt that this is an underused section of the Code. But I'm afraid, Mr. Chairman — I must say this — that by the way the minister has done 6 and 7, because they go together, we may well find that we'll revert to the old days of not using section 122. In my view, it subverts the whole purpose of an industrial inquiry commissioner; the ability of a commissioner to go into a dispute and have the confidence of both parties and using section 122 (8)...agree to have some or all of the issues in dispute made binding — the report of the IIC made binding. This way, when the Legislature imposes a binding settlement route on the IIC, it destroys the whole concept of 122.

I said yesterday I'm opposed to this whole idea of arbitrary binding arbitration. That's redundant, but you know what I mean. But apart from that, if the minister was going to choose to bring in a binding award through this process, I find it distressing that he has damaged, I believe, the whole concept of the IIC by using that particular section in this act in this way. That's not what it was designed to do. If the minister chooses to appoint an individual to bring in a binding recommendation, then please, Mr. Chairman, may I urge him never to use the industrial inquiry commissioner concept, because it really was meant for a different purpose and one that the parties could have some confidence in. This process leaves no room for the parties to have confidence. What's required is that the parties choose the person, really. If they can't, then

[ Page 6135 ]

the minister should. The parties should agree that perhaps some part of the award or all of it would be made binding. But when the government does it, it subverts entirely the whole point of section 122 of the Code, and I find that quite distressing.

Sections 6 to 11 inclusive approved.

Title approved.

HON. MR. SEGARTY: Mr. Chairman, I move the committee rise and report the bill complete with amendment.

Motion approved.

The House resumed; Mr. Strachan in the chair.

MR. CHAIRMAN: Mr. Speaker, the committee reports the bill complete with amendment.

DEPUTY SPEAKER: When shall the bill be considered as reported?

HON. MR. SEGARTY: At the next sitting of the House after today.

[3:15]

[Mr. Speaker in the chair.]

Motion approved on the following division:

YEAS — 24

NAYS — 17

HON. MR. GARDOM: I call Committee on Bill 6.

ASSESSMENT AND TAXATION
(MISCELLANEOUS AMENDMENTS) ACT, 1985

The House in committee on Bill 6; Mr. Strachan in the chair.

Sections 1 to 16 inclusive approved.

On section 17.

MR. STUPICH: I started a discussion of this briefly during second reading, and as I recall the minister didn't respond to concerns that I expressed. You'll note in section 17 we're referring to different acts — the Assessment Authority Act, the Education (Interim) Finance Act, the Hospital District Act, the Municipal Finance Authority Act, the Municipal Act, the Vancouver Charter and this act — all having to do with raising revenue based on the assessment of property within the area concerned.

Whether or not we agree with that method of raising revenue for some of these purposes is not the point right now. The fact is that it does cost something to administer and to look after all of the duties of a municipal authority or education or whatever. It costs money to manage this kind of property, and the money is collected by appraising the property within these areas and by assessing them each their appropriate share of whatever it costs in total.

By exempting any particular area — and in this instance it's a significant area, but the principle is the same — from the total area, what we're saying in effect is that we're not doing anything about the total cost. They're going to be at least as large — maybe even a little larger, but certainly at least as large — as they were before we exempted this area. So what we're saying in effect is that certain properties, certain assessed values within this taxation area, are not going to pay or even have recorded against them their share of the servicing costs of that area. Somebody else is going to pay for it. Of course, that "somebody else" are the other taxpayers within that area.

Now I advanced the argument in second reading: why not assess them? Why not levy the tax, and then if the government prefers it can give a grant in lieu of tax. At least everyone will know what cost should be attributed to that particular land and improvements, and we'd at least be doing this in some knowledge as to what we're giving away, rather than simply saying that everybody who isn't within a certain confined area within the total area is not going to pay tax and everybody outside of it will bear some share of the costs within that area.

HON. MR. CURTIS: Thank you to the hon. member for Nanaimo. I think in this instance we will agree to disagree. I heard what the member said — without reflecting on the vote — in second reading with respect to this element of an omnibus bill, and I've listened carefully today. Yes, it is correct — if one wants to just review the whole thing very quickly — that the government could have decided to follow the grant in lieu of taxes route. But in this particular instance it was felt — indeed, I felt, and recommended to the executive council — that I wanted to provide for the exemption of ALRT at the outset.

While I'm on my feet, may I also deal with comments which were made regarding this section by the member for Burnaby North in second reading debate. She indicated, I think, that she would also raise the issue in committee stage; she alluded to it in second reading. The fact of the matter is, as I indicated during second reading, that there are three municipalities, the city of Vancouver, the district municipality of Burnaby, and the city of New Westminster, which will be affected by this portion of Bill 6, this particular amendment, and yet there are many other property taxpayers — if one only wants to look at the lower mainland, quite apart from any other part of the province — in the lower mainland who will be contributing to the cost of ALRT and other aspects of transit.

[ Page 6136 ]

Again, I think I indicated in second reading that there is an easy comparison, in my view, with respect to this particular form of transportation when one considers highways and bridges in the province, whether they be in an urban setting or a rural one. This is simply something rather new in terms of a means of moving British Columbians and visitors to the province. It is for that reason I believe that we are paralleling here. I believe that we are doing the appropriate thing, but I understand that some of the members opposite at least hold contrary views.

MR. STUPICH: If I may pick up on the same parallel the minister mentioned, at least when we build a highway we have some way of determining how much it cost. We know what consolidated revenue is paying for that particular highway. Here we don't know what the annual charges should be that would be allocated against this particular land and improvement. It's as though we didn't want to know, as though we were trying to hide from ourselves the knowledge as to what this is costing — and then if we don't know, well, then it's not so bad.

There were other mistakes with this. I think it was a mistake, for example, to embark upon such a project without any idea at all as to how it was going to be paid for, who was going to pay for it and in what proportions. There was talk that it would be paid for by the users, the people who use the system; that some portion of it might be borne by the property owners in some undefined area; that some of it might be paid for by a surcharge on gasoline or on hydro. After spending some half billion-plus dollars on the project, the government did come up with a proposal that the municipalities reacted to. But I still do express this concern, Mr. Chairman. I would like to know what subsidy somebody is giving to ALRT each year by way of forgiven property taxes — property taxes for all of these purposes. I think that's information we should have.

I disagree with this. As the minister said, when it comes right down to it we had a vote. The fact that he's wrong and I'm right would not be reflected in the vote that we had. So the minister's will will prevail.

MRS. DAILLY: Mr. Chairman, as the member for Nanaimo just stated, I guess we're going to disagree with the minister on this one.

I'm not aware of whether the minister or his officials have met with the Burnaby council since this bill was introduced, but I did, and the finance committee did have a couple of questions. Perhaps you've met with them and answered them. I don't know, but I met just two weeks ago. I don't know if you're aware of it, but because of this, if this bill passes — as obviously it will, with the numbers, unless with my eloquence on this particular clause I can persuade every member over there to support me — the Burnaby taxpayers are going to have to forfeit up to $1,366,841. That is what they presumed would be the amount of money that they would be getting from the annual tax rates. They've already included it in their budget, so it came as rather a shock to them to find that with no negotiational warning this was imposed on them. That's one point I want to make. I think that was unfair to the council. Also that means that the taxpayers of Burnaby, the property-owners, are going to have to come up with this money, in essence.

[3:30]

Now I want to ask the minister.... That is the total amount. I don't know what you've decided to do. Are you going to leave some on, or is the whole thing going to encompass that $1 million? Burnaby didn't have the answer to these questions when I met with them, because if you only exempted the guideway, they would lose $779,902, and of course when I talked to them they were concerned because they didn't have any answers at that time. They wondered also if this agreement supersedes the existing agreement between B.C. Transit and Burnaby. Does it supersede it?

Those were basically the questions I want to bring up on their behalf to the minister. But maybe you've discussed it with them.

HON. MR. CURTIS: Mr. Chairman, I'm subject to correction with respect to a request from the mayor and council of Burnaby. To the best of my recollection, I did not receive a request for a meeting with the entire council. I did respond to a request for a meeting from the mayor of Burnaby; I met him, and a couple of officials from the Ministry of Finance were present at that meeting. We canvassed the matter pretty thoroughly. This was several weeks ago. Mayor Lewame certainly presented the municipality's point of view on the matter very thoroughly. I considered that discussion and made the decision to continue.

One could argue for a moment, I suppose, the question of whether it was a surprise. I have had a little bit of time in local government. They were notified on December 31 or, if not on that precise day, on the first business day following, because the decision was made in Victoria just prior to that time. As far as I can recall, municipal budgets are not in any final shape by that particular point of the calendar, so if the decision had been taken.... That was one of the motivating factors in terms of making the decision as early as possible, in the course of the winter. If the decision had been taken and announced on April 30, then I think the municipality — indeed any municipality — would certainly have had every justification for saying: "It is just not fair to tell us this late in our budget process." So we wanted to get that decision out pretty quickly and got it out as soon as we could, which was, as I say, if not the last working day of December, then the first working day of January — '84 straddling into '85.

The whole system will be exempt. I suppose it's appropriate to indicate, since we're discussing the removal of some revenue to a municipality, that clearly ALRT is going to generate significant property tax revenues for the municipality of Burnaby, for the city of Vancouver in that portion through which the system travels, as well as in New Westminster, and then later across the river into Surrey.

I'm conscious of the fact that it is a revenue loss in the 1985 municipal taxation year — I won't deny that for a moment — for Vancouver, Burnaby, New Westminster. Burnaby has been the most outspoken in terms of its concern; not to the same extent have we heard from New Westminster or Vancouver. But the benefits that will flow to those municipalities — and particularly to Burnaby because of its sheer size, Madame Member — I think will, a few years down the road, offset the concern that's been expressed regarding one year.

Sections 17 to 20 inclusive approved.

On section 21.

[ Page 6137 ]

MR. STUPICH: Mr. Chairman, I don't intend to repeat the same arguments that I used with respect to section 17, but noting that the land and improvements to be used for Expo are going to be exempt from taxation, is this forever and a day or just until tomorrow? What's going to happen? Eventually Expo 86 will be a thing of the past. From that date on I suppose the Crown is the owner. Will the Crown be paying? I know Expo 86 is the legal entity, but what will happen after Expo itself closes its gates?

HON. MR. CURTIS: Mr. Chairman, this section 21 clearly deals with Expo for the life of Expo, and this is the site. The site is being exempted and, as has been indicated by the government and by the minister responsible for Expo and B.C. Place, other activities will occur on that site post-Expo. I would think the government would then want to ensure that property tax revenue is generated from that site. This deals only in the narrow sense with Expo, and is in place only for the period of '85-86. It deals specifically and only with Expo.

MR. STUPICH: The minister is telling me then that this section of the legislation will cease to be in effect after 1986?

HON. MR. CURTIS: Well, Mr. Chairman, looking at the legislation earlier and again now, it is not sunsetted, but the site ceases to be an exposition site in the tag end of 1986. Prior to that time, the government will want to address what should be in place regarding that particular site in Vancouver. I won't anticipate what it will be. I gave you an indication of what I think it would be: it should revert to paying property tax.

MR. WILLIAMS: Mr. Chairman, on the same point, Expo has only three months' life after the exposition itself is complete, as I understand it. Then the property reverts to B.C. Place. At the time it reverts to B.C. Place, taxes should be levied against the property, since it is then clearly a major commercial development. It would appear, from what the minister has said, that that's certainly his view of what would be reasonable.

Interjection.

MR. WILLIAMS: Yes, I think they presently pay taxes, and that's why the legislation is necessary. But I might be wrong.

HON. MR. CURTIS: Mr. Chairman, in the relatively narrow sense of this section, I hear what the second member for Vancouver East has said, and the member for Nanaimo.

This deals only with, Hey, we've got an exposition site, and it should be exempt from paying property tax. Yes, the second member for Vancouver East is correct; I don't know how long it will take to remove what has by then been a very successful exposition, but we had to do it for the '85 and '86 taxation years.

Section 21 approved.

On section 22.

MR. SKELLY: Mr. Chairman, I've spoken on these kinds of things before, and I'm concerned about the direction that the tax on residential property is going under this government, and especially what they've done to the homeowner grant.

The homeowner grant used to be an exemption for the first increment of tax on homes. People who owned homes of lower assessed value were in some cases exempt from all municipal or rural property taxes because their homes were of such low value that the homeowner grant covered the total amount of taxes payable. In spite of the fact that the NDP did not support the homeowner grant when it came in — I think there were some political reasons for that, because the government of the day was using it for political purposes — in fact the homeowner grant is an excellent idea because it provides an exemption from property taxes for the first increment of assessed value. In other words, it relieves the burden of property tax on the poor, on lower-income people who can only afford homes of lower value.

What this does is totally destroy the progressivity of the property tax system that was brought about by this homeowner grant. By requiring a minimum tax on residential property, whether inside municipalities or outside, this section destroys the progressivity of the tax on homes. We're going to vote against it for that reason. We feel that the homeowner grant system is being destroyed by this type of legislation, and we would hope that the minister would reconsider it.

Possibly the minister can answer this question: what type of studies has he done? Has he done studies.... . ? Clearly he knows how much money is going to be raised by this exemption, because that was included in the budget speech. But it's being raised on the first increment of assessed value; whereas we feel it should be raised on the higher increments of assessed value on the more expensive homes, because that represents more ability to pay. Wealthier people naturally own the more expensive homes. We would hope that the minister and the government would reconsider this kind of tax legislation, which bears more harshly on the poor and those who have less wealth than another system which might distribute the taxes according to ability to pay. Is the minister aware how much revenue this will generate during this taxation year, and how much the mill rate would increase on homes of higher assessed value throughout the province if he did it the other way — if he taxed the next increment rather than the first increment of assessed value?

HON. MR. CURTIS: Mr. Chairman, the amount of revenue to be raised by this measure, as the Leader of the Opposition indicated, is specifically stated in the budget. I have a few papers on my desk; I can't quite reach my budget. It's a relatively small amount.

Let me, if I may, just explain to the committee.... I hope that members who disagree with this move will not fault the government, but rather will understand that this was a revenue measure. Therefore I did not canvass this with the members of the executive council, nor did I any other revenue measures. That is one of the duties of the Minister of Finance.

Because it actually deals with an increase in the minimum tax payable.... I've said before in committee, in previous years, that I believe there should be a minimum amount of property tax paid by homeowners. I don't know that it should increase every year. I don't know that it should increase dramatically. But I feel that for many homeowners, over years gone by, it was far too low. It is also important to note that those who are 65 and over, handicapped or in receipt of a

[ Page 6138 ]

war veteran's allowance — people in that traditional category in B.C. — will continue to pay $1 minimum property tax. When one considers the services available to a residential property, I don't believe that $200 per year is an onerous amount for that residential property owner to pay. One can say that services are relatively limited in some rural areas, but certainly in most of the 145 municipalities — 146 municipalities now — I think the services provided through the property tax are pretty important, when one considers education plus the actual physical services given to properties.

[3:45]

MR. SKELLY: That answers some of my questions, Mr. Chairman: the fact that this was imposed as a revenue measure exclusively, and that who pays wasn't really considered.

The minister says that everybody should pay a minimum level of tax in view of the services they receive, whether from a municipality or from the provincial government. The simple fact is that they don't apply that principle to income tax, where there is an exemption from the first increment of income. Regardless of what services the income earner may receive from the provincial government, there is an exemption from the first increment of income in order to allow those people who are at a fairly low level on the income scale to just survive. Now $200 is not a large amount to people who are earning incomes such as MLAs and cabinet ministers earn. It's not a large amount for people who are working in industry, and many people are working in industry. But for people at the lowest income levels — and I would assume that those are the people who own homes of fairly low assessed value, because they can't afford anything else — $200 minimum tax is a very difficult burden to pay.

This section may mean the difference between that person owning a home and losing it to the tax man, or not being able to pay mortgages or other payments, which may result in that person losing their home. This government said that it's interested in the right of people to own property. We support the right of people to own property. But this makes it more difficult for poor people, or people at lower income levels, to own property. We would hope that if the minister is only interested in the revenue-generation potential of this tax, he might look at putting it on the next increment of assessed value. Those people who own houses of greater assessed value are generally those people who have the ability to pay the additional few dollars that will result from the tax being added onto the top rather than onto the bottom end. We would hope that the minister, if he refuses to do it this year, would consider doing it in subsequent years — although hopefully the minister won't be here in subsequent years, Mr. Chairman, and someone else can take care of that.

MR. STUPICH: I'd like to join the Leader of the Opposition in opposition to this section. We did show our support of the concept of a homeowner grant by annually increasing the homeowner grant in every budget we brought in. There has not been an increase in the homeowner grant since the Social Credit administration was elected in December 1975.

This current increase that we're looking at, while it's only 14 percent over the figure of last year, nevertheless applies, as the Leader of the Opposition said, against those least able to afford to pay increases in any costs. Certainly it must include a lot of people who are on welfare, who have had no increase over the past three years, and in some cases actually a decrease. People who are still getting by on unemployment insurance have certainly not experienced an increase as the rate of unemployment in the province of B.C. has increased. People who are trying to exist on the minimum wage: there has been no increase in the minimum wage since this government was elected in December 1975. They have allowed the cost of everything to increase. They have not increased the homeowner grant itself.

As far as the $200 figure is concerned, while it has increased over the last three years at the rate of $25 a year, when this government was elected in December 1975 the figure stood at a dollar; so there has been a 200 percent increase in this figure since the government was elected. It would seem as though they are prepared to do everything to take more out of the people least able to afford it, yet to do nothing to help those people improve their incomes.

Mr. Chairman, until the government is prepared to try to help the people at the bottom level of the income scale, we can't support any move that is going to those people and saying: "Look, it's not fair that you get by paying so little simply because you have so little; that's no excuse. We're going to get more out of you."

Mr. Chairman, we oppose this section.

Section 22 approved on the following division:

YEAS — 24

NAYS — 17

Sections 23 to 48 inclusive approved.

Title approved.

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

Motion approved.

The House resumed; Mr. Speaker in the chair.

Bill 6, Assessment and Taxation (Miscellaneous Amendments) Act, 1985, reported complete without amendment, read a third time and passed.

[4:00]

HON. MR. NIELSEN: Second reading of Bill 11.

[ Page 6139 ]

SOCIAL SERVICE TAX AMENDMENT ACT, 1985

HON. MR. CURTIS: I rise to move second reading of Bill 11, Social Service Tax Amendment Act. In some respects this is an omnibus bill; however, I think that a few comments would be appropriate.

[Mr. Ree in the chair.]

The measures introduced in the bill reflect positive action by the government to a very wide range of recommendations which were made by individuals and those engaged in business, small and large, during the series of public meetings on taxation and economic development last fall.

The bill establishes new exemptions from tax, in some instances, and broadens existing exemptions. It also clarifies a number of tax provisions and establishes new administrative and enforcement measures.

There is only one revenue measure in the bill: pay-television services, as announced on budget day, March 14, are to be taxable. But I emphasize for the House, as I did earlier, basic cable television charges remain exempt from tax.

If I could turn to the category of amendments regarding exemptions, I'm pleased to have been able to establish the new aquaculture exemptions, which indications already suggest will foster significant growth in the field of aquatic farming. An extensive list of items to be prescribed by regulation will be exempt when used for aquaculture purposes. This exemption is somewhat similar or analogous to the longstanding exemptions supporting commercial farming and fishing activities. The qualifications which determine who is a bona fide aquaculturalist will be provided in the regulations.

An exemption is also provided to purchases of milk bottles which are returnable to a dairy after use. Disposable milk containers are currently exempt from tax. This additional exemption is required to ensure that the tax system does not discriminate on the basis of the type of container into which milk is put and sold. It was an anomaly, and there were a number of members on both sides of the House who said that in their view this was not fair, and it was in fact discriminatory.

Two existing exemptions have also been expanded. Firstly, propane and natural gas purchased by farmers for grain drying has been added to the list of exempt items in a regulation. We also have a regulation which provides an exemption for a list of items used or consumed in the manufacturing or servicing of goods. This includes items such as film, grinding wheels and abrasive paper, just as examples, and will benefit a broad cross-section of firms engaged in manufacturing activities, in photography, in printing and publishing. Some have told me — in business and in industry — that as far as they are concerned the list is a good one. Perhaps it doesn't go far enough, but that is the nature of dealing with exemptions from social service tax.

Changes have also been made which institute a point-of-sale exemption for non-resident purchasers of vehicles and aircraft, provided that these items are not registered in the province. This eliminates the existing and formerly cumbersome procedure which was widely criticized by the purchaser and the vendor — the awkward and time-consuming process of paying tax when a purchase is made and then applying for a refund when the purchaser returned to his jurisdiction of residence. I thought we would encounter this concern only in the eastern portion of British Columbia in communities such as Cranbrook, Fort St. John and Dawson Creek, but indeed we encountered it in many other parts of the province, where vehicles and aircraft are sold to people who do not live in B.C. and are not about to move to B.C.

The second category of amendments clarify or amend the application of tax in specific circumstances. The first in this category concerns the taxation of ready-mixed concrete. This amendment clarifies that the purchase price for ready-mixed concrete includes any charges made by the supplier for delivery of the concrete to the place where it will be used by the purchaser. This action reaffirms the long-standing application of tax to ready-mixed concrete, and it is well understood by the industry.

The second amendment, frankly, closes a loophole that has developed in provisions dealing with leases. It's occurred that to avoid paying tax on major purchases, some individuals make large down payments on their lease-purchase agreements. This payment is not subject to tax because of a deficiency in the legislation. This amendment will end the revenue deterioration that we have seen develop. With the immunity afforded me in the Legislature, I can describe this as the Mercedes-Benz loophole. It was identified as such in the course of the tax study last year.

The third amendment concerns computer software sales. The act is amended to clarify that sales of packaged or prewritten computer programs designed for general purposes are subject to tax. This includes sales, leases or rights to use such software, as well as modifications to the program. I point out also that custom software designed solely for a particular customer's needs will remain exempt from tax.

A fourth amendment clarifies that purchasers can be issued a notice of assessment for tax they failed to pay on purchases. A recent decision in the court noted that the act was deficient on this point, and so the amendment is necessary to reconfirm what has been a long-standing assessment practice that ensures that every purchaser pays his fair share of taxes. In addition to that amendment, a purchaser who was assessed between January 2, 1984, and March 15, 1985, and did not appeal to either the Minister of Finance or the courts is guaranteed the right of appeal. That January 2, 1984, date corresponds to 60 days before the court decision was received, and I'm informed it is the usual period in which an appeal must be made. Many purchasers became aware of the case and simply did not appeal because they thought that it was not necessary to do so. I'm confirming the assessment of purchasers, but I'm also providing the right of appeal for persons who did not do so.

Another amendment clarifies for vendors that payments received on sales made on credit are first used to extinguish tax liabilities, and then may be applied to a customer's account. The reason for this is that tax is payable at the time of purchase, regardless of the arrangements for payment which are made between the vendor and the purchaser. If the vendor subsequently finds the account is a bad debt, then any amount he has sent that exceeds what he has received from his customer will, of course, be refunded.

Another amendment concerns tax application to advertising flyers and circulars. Until now, only those flyers delivered with a newspaper have been exempted. Again, we are attempting to ensure equitable treatment, and so all flyers and circulars will now be subject to tax.

[ Page 6140 ]

The bill, by way of regulation, will also provide for a change in the method of collecting tax on specified equipment used for seismic studies or petroleum and natural gas exploration and development. We had a couple of very compelling presentations on this in the northeastern part of the province and also in the central interior. Operators will now be allowed to pay tax monthly on one thirty-sixth of the purchase price for each month or part thereof that the equipment is in the province. Before this, operators were required to pay full tax at the time the equipment was brought into the province. Clearly this had a discouraging effect on drilling activity in the northeast; it was seen to be unfair, and I concur with that observation. In conjunction with this measure, the 50 percent tax remission on this equipment was rescinded effective midnight, March 14, 1985. The remission provided some relief from payment of tax in full at the time of entry. With the introduction of the temporary-use formula, this remission is no longer required.

The final clarifying amendment concerns applying tax to materials used for constructing portable buildings. A recent court decision indicated that the legislation did not achieve this intention, but rather taxed sales or leases of the buildings after construction. Examples of these buildings are portable cookhouses, bunkhouses and classrooms — buildings of that nature; items which really should be treated as real property and therefore clearly should not be taxed under the act. The act is amended to make it clear that tax is owed only on the purchase of materials used in construction of the buildings. This treatment will also be consistent with that which applies to conventional buildings. In this particular case, as I say, we believed — and perhaps previous governments believed — that the law was clear. A court told us otherwise, and we're moving to correct it.

The final category of amendments is of an administrative or enforcement nature. One amendment reduces the audit period from ten to six years. Clearly, in the view of the government, this amendment is fairer to both business and government. It will help businesses by reducing the tremendous burden of keeping detailed records for a period of longer than six years. The previous ten years was just too long, in my view, for the auditor to reach back and say: "Would you please provide material from eight years ago, nine years ago, ten years ago." In the case of wilful default or fraud, however, there will be no limitation on the audit period.

In an amendment related to the establishment of the six year audit period, the Crown will limit the time period for taking formal collection proceedings to seven years from the date the tax initially became due. This amendment will allow one additional year beyond the six-year audit period to resolve appeals or, where required, take formal collection proceedings.

The last group — and I thank you for your patience, Mr. Speaker — provides for increased penalties and fines on and after July 1, 1985, and will be effective at the end of the consumer taxation amnesty program, which has been introduced for all the consumer tax statutes. I said in the budget that in recent years there has been an increase in the level of tax evasion, not only in B.C. but also in a number of other jurisdictions. Our amnesty program is allowing time for individuals and businesses to put their affairs in order, and then the increased penalties and fines after the end of the amnesty period will ensure that this very important component of the province's revenue base is protected.

In cases where a vendor has collected tax but wilfully withheld it from the government, this bill provides for an increase in the penalty from 10 percent to 100 percent of the tax which has not been remitted. In cases where taxes payable by the purchaser are evaded by wilfully making a false or deceptive statement or by wilful default or fraud, the penalty is increased from 10 percent to 25 percent of the amount of tax evaded. But in other circumstances, such as late tax returns where the business has already received one warning notice within a 12-month period, the penalty remains at the current 10 percent rate. In the case of fraudulent evasion of tax, this bill also introduces provisions for the courts to impose a fine of not more than $10,000 or imprisonment for not more than two years, or both, and a fine equal to the tax not collected, remitted or paid.

In summary, Mr. Speaker, this bill responds on a very wide basis to a number of points which were made in the course of the tax studies last year. We continue to amend the Social Service Tax Act, as previous governments have, and undoubtedly it will continue in the future. We're determined to establish through these measures the appropriate environment in which business in British Columbia can grow and prosper, We're determined to provide the opportunity for business in B.C. to be competitive. We're confident in the ability of business to provide new jobs that are essential to the well-being and prosperity of all British Columbians. A number of the measures are quite progressive in terms of correcting ills of the past.

I thank the House for its patience. It is an omnibus bill. I move second reading.

MR. STUPICH: Mr. Chairman, the opposition will support this legislation in second reading. There may well be some discussion at this stage, but I would think most of it will take place in committee stage. But I do want to say a few things about the general remarks that the minister made.

First, with respect to this policy that has been going on, I suppose, ever since the sales tax legislation was introduced in 1948, there is this business of adding to an every growing list of exemptions. While the minister expected everyone to applaud that, and while I may be speaking for myself rather than for my caucus as the debate leader in this, I must say that I'm not satisfied that that is the best way for the government to spend taxpayers' money. Although we're not spending the money directly, we are forgoing revenue, and as far as the Crown is concerned the net effect is the same. I wonder whether it wouldn't be better to go on in some cases collecting revenue from people who might very well be in a good position to pay it, and use some of that money to help people who are at the other end of the income scale. So I've long wondered about this business of, as I say, increasing exemptions for sales tax and thus impairing to some extent the Crown's ability to pay more to people who need it, because they're trying to exist on minimum wages, welfare, etc. However, in the absence of any action by the government to help those people, of course we have to support this. So the opposition will be supporting this.

Just, if I may.... The minister said there was just the one example of an increase in revenue, and that is with respect to pay-cablevision. But I would think the fact that he found the need to define the delivery price of ready-mix concrete, for example, means that there has been some apparent revenue slippage there. So in effect that is an increase in

[ Page 6141 ]

revenue, or else there wouldn't have been need for the definition — I may want to talk about that later; I don't know. But I recall the present Premier, when he was Leader of the Opposition, promising to remove sales tax completely from all building materials, because building was suffering a bit of a recession at the time. It's not suffering in this recession now; it's in complete depression. I met someone from Alberni this last weekend who said that the unemployment rate among carpenters in that area now is 100 percent. So the only consolation in all of that is that it can't get any worse. If ever the construction industry needed some kind of help, it's now. This is going in the other direction. Now maybe it isn't going to make much difference in revenue, and it wouldn't help much not to have done this, I suppose. But that is going to represent an increase.

The minister mentioned one more that I didn't bother noting. I support him in the approach of increasing penalties and fines to people who are wilfully evading.

I wonder whether he might consider, between now and the time we go into committee stage, reducing the audit figure even further. Even six years is a long time for a business to maintain all of the original documents with respect to sales. I'm thinking, for example, of a restaurant that is taxing parts of the meals. To save all those bills for a period of six years in the event that a sales tax auditor might come around I think is asking much. May I just say that Revenue Canada looks at a figure of four years as the maximum period beyond which they will go unless there is some evidence of fraud. So I would recommend to the minister that he consider bringing in an amendment — I would do it myself, but it's got a better chance of succeeding if he brings it in — of reducing it to four years, which would at least put us in step with Revenue Canada's approach on this.

If I could speak perhaps just a little more generally about the need to increase penalties and fines and to allow this period for people to confess. I believe, Mr. Speaker, that it's not always a matter of wilful evasion. It used to be the practice to have quite a number — I don't know the figure — of sales tax auditors traveling the province regularly visiting businesses and often finding mistakes — perhaps wilful, perhaps innocent, or sometimes kind of grey as to whether they were wilful or innocent. But I recall in the period when I was Minister of Finance — a very short period; but I was a Treasury Board member for quite a while — the Deputy Minister of Finance telling us that every sales tax auditor would bring in a minimum, on the average, of $100,000, which recovered his salary and costs some three times over.

Looking at the figures — and we'll get into this more in estimates, perhaps, if the minister isn't prepared to comment now or in committee stage — for the staff people in his department, it would appear to me as though the sales tax auditors have been cut back severely. I wonder, is it because of that cutback and the reduction of the number of sales tax inspectors that the minister is now having to threaten people with increased fines and penalties if they don't avoid wilful evasion — if I may say it that way, Mr. Speaker? Is there a considerable revenue loss in part because we don't have the number of sales tax inspectors that we should have?

As I say, Mr. Speaker, it's not just looking for guilty people; it's looking for people who have collected money that is due to the Crown, where mistakes have been made. I believe it helped them. I think on many occasions these business people would welcome the auditor coming in. They would know then that they were cleared for a certain period, and they could then get rid of a lot of old documents even though these weren't old enough to be covered by the ten year period, being fairly secure in the knowledge that no one would be coming back to look again. So I think it was a help to business to have auditors coming in and giving them the green light or the okay sign. So I'd like the minister to comment on that, but it may be that it would be more appropriate when we get to estimates.

The opposition will support this bill in second reading.

MR. WILLIAMS: I'd just like to make a general comment in terms of the sales tax itself. In a province with a resource base like we have, despite international markets, we rely greatly on this as a source of revenue. If one reflects for just a minute on our revenue from forests, which I think is estimated at $150 million this year, and our expenditure in terms of administration and related matters, which is $250 million — a negative position of a hundred million — it does make one pause and reflect that we have to rely on taxes such as this for our income. It's an indication of something rotten in the state of Denmark. There's really something desperately wrong when a resource-rich province like British Columbia has a negative position from its forest inheritance and has to rely on these kinds of taxes for the bulk of its income.

On behalf of one of my constituents, however, who happens to own the Avalon Dairy in the southeast part of the city and who is turning out a product that's generally not available in the local market, I'm sure he will be very happy to see that he doesn't have to pay the tax on his bottles for milk. I'm sure that it's in keeping with that family tradition, since his father went to jail with respect to the poll tax that the city used to levy on all citizens who just happened to be citizens, which was what the poll tax was all about. A poll tax didn't make much sense in a resource-rich province, and much of the sales tax doesn't make sense in a resource-rich province either.

MR. NICOLSON: I would like to ask the minister to reconsider the timing on the introduction of sales tax on pay-television. We've seen various pay-TV channels actually close down. It's not a lucrative business as yet; it's still fledgling. I think the timing.... I don't dispute the principle of taxation on what I suppose for the consumer is a luxury, but as far as business is concerned.... And I think that's the thrust and that's the principle of this bill: this bill is supposed to help business. I realize that the minister is not going to impose a tax on the basic cable service. But for those pay-TV channels, those options, they're not in a very strong situation. I could have run down to my office and brought up the rates at which people are cancelling, as opposed to the rates at which people are signing up.

When it first came out, I thought, number one, as the communications spokesman on this side of the House that it was almost my duty to sign up and see what it had to offer as a technology; I did. After about three months we decided to cancel. So it isn't in a strong....

HON. MR. CURTIS: But not because of the sales tax.

MR. NICOLSON: Not because of the sales tax, and that wasn't my reason for signing up either. What I am saying is that I think it is a very vulnerable industry at this time. I'm not saying that it shouldn't be taxed; I don't think the timing is right for it. I think that if this industry is going to flourish.... It might go the way of the hula hoop. But if it's

[ Page 6142 ]

going to be given a chance, I don't think that it should be taxed at this time.

DEPUTY SPEAKER: The minister closes debate on Bill 11.

HON. MR. CURTIS: Mr. Speaker, I trust that the members opposite will not be offended.... I think that I would prefer to respond to their several points in committee debate....

Interjection.

HON. MR. CURTIS: Well, with a couple of exceptions.

The member for Nanaimo (Mr. Stupich) speaks of the ever-growing list of exemptions from sales tax in British Columbia. I don't use this as an apology or as an excuse, but we have had exemptions; I think he alluded to that. We've had exemptions virtually from the time the sales tax was first introduced. He of all people would know, as a former Minister of Agriculture and a former Minister of Finance, but particularly as the former Minister of Agriculture from 1972 to 1975 — the summer of '75, the spring of '75 — that the bulk of those exemptions are to be found...

Interjection.

HON. MR. CURTIS: I was thinking of when you changed portfolios.

...in the agricultural segment of our economy. I don't say that in any critical way. Yes, we noticed in the course of the tax study that several participants said: "What about the exemptions? They're complicated. There's such a long list." But I've maintained the tradition of several of my predecessors: that is, to review the list of exemptions. We get an incredible number of requests throughout each year for more and more exemptions. I guess it's the duty of any Minister of Finance to try to be as selective as that particular person can be, and see if they can be targeted and if they make sense.

The audit period of six years alluded to by two members opposite: yes, I will look at that between now and committee debate. I'm not sure that I will make any change, but I will very earnestly review it with my officials, and then we can discuss it at the time of committee.

Interjection.

HON. MR. CURTIS: No, I don't think so. They are some interlocking considerations, as the members would know, Mr. Speaker.

The question of auditors in the revenue division of the ministry: I have indicated over time that I considered that to be a very important element of the activities of the entire Ministry of Finance. They continue to assist the taxpayer or the tax collector — that is, the person in business — within B.C., and of course they do, as they did before, travel beyond the borders of British Columbia. Those are useful trips in assisting national firms or regional firms who have activities in B.C. As the member observed, perhaps that's more appropriate for discussion in the estimates.

The member for Nelson-Creston (Mr. Nicolson) spoke about the tax on pay-television. It was the first monthly billing period after April 1. I have received some representation since then. Whenever a tax appears on a new activity or a new tax appears on an activity, Mr. Speaker, undoubtedly it's going to be found awkward or difficult or not welcome by that industry.

MR. NICOLSON: It's just a child.

HON. MR. CURTIS: The member interjects and says that this is a young industry. I agree with that. May it grow to maturity, and may it contribute to consolidated revenue in the province of British Columbia.

Interjection.

HON. MR. CURTIS: Well, it may grow. The member interjects the amount.

I move second reading of Bill 11, and I look forward to committee debate and will consider the points that have been raised.

[4:30]

[Mr. Speaker in the chair.]

Motion approved unanimously on a division.

Bill 11, Social Service Tax Amendment Act, 1985, read a second time and referred to a Committee of the Whole House for consideration at the next sitting of the House after today.

HON. MR. NIELSEN: Committee on Bill 4, Mr. Speaker.

WORKPLACE ACT

The House in committee on Bill 4; Mr. Strachan in the chair.

Sections 1 to 4 inclusive approved.

On section 5.

MR. GABELMANN: I wonder if the minister would mind giving us a brief outline of his intention in terms of the home worker provision.

HON. MR. SEGARTY: We're adding the home worker in there, but the employment standards branch is looking at that particular situation now. We will be able to report back to the House at a later date with respect to that — or to the hon. member.

MR. GABELMANN: That's fine, but the problem is that we're presumably passing the legislation now. May I ask the minister if this section was included to begin to deal with the developing situation of people working in their own homes? For example, if they are computer operators and, rather than working on a computer at the place of business, computers are placed in their homes by the employer, and they stay home and all the work that might ordinarily be done at the workplace is now done in the home, is that the kind of situation envisioned, or are there other things? What is this about?

HON. MR. SEGARTY: It's to deal with residents who work in their own home, whether it's knitting sweaters or working on a computer, and so on. Regulations will be brought in under this at a later date.

[ Page 6143 ]

MRS. WALLACE: Cottage industry.

MR. GABELMANN: That's the cottage industry type of situation that the member for Cowichan-Malahat refers to. How does it affect, if at all, the question of domestic workers?

HON. MR. SEGARTY: Hon. member, it doesn't apply to domestic workers at all.

MR. GABELMANN: So this refers only to work that a person who resides in a dwelling does in that dwelling. If that person employs someone as well.... Let's say the employer places a computer in this person's home, and the homeowner who also is the home worker works the computer for six hours a day and hires someone to come in for another six hours a day to work on the computer in his home. Is that covered?

HON. MR. SEGARTY: My interpretation of that would be that that's outside the area of home worker. Home workers are covered under the Employment Standards Act.

MR. GABELMANN: What we're talking about in this legislation is proper standards and protection in terms of health and workplace safety. But it's clear that this trend that's developing in our society for more and more work to be done at home for an employer — occasionally contracted out directly to the home dweller, the home worker.... If it's contracted out, it presumably wouldn't be covered. If the home worker hires additional help, it's also not covered.

This is not a great philosophical thing; I'm just trying to determine where we're going on this, what the intention of the minister is. At first glance and on my reading of it, it seems to me that the intent is good. What we're trying to do is make sure that workers are protected at their place of work, which may well happen to be their own home. I just want to serve notice, in effect, by raising these questions under this section, that it seems to me that you've got a lot of difficulties with this particular section in terms of primary and secondary contracting out, neither of which situations, as I read this legislation, would be covered.

Hopefully, in the development of the regulations there will be some consultation with people in the field who know more about it than I do, which is virtually nothing. I would just seek an assurance from the minister as to what his intent is in bringing in this kind of section in this bill.

HON. MR. SEGARTY: When you start employing somebody in your own home to perform a particular function in your home, then you start branching out from there, and under that you would be covered under the Employment Standards Act. I will take the hon. member's suggestion under advisement and look at the regulations when we bring them in, with respect to the categories that he mentioned.

MR. GABELMANN: Fair enough about the Employment Standards Act, but that covers other issues. This act covers a narrow band of issues: health and safety, right? Or as it says in the act, "health and safety, etc.," which I find amusing.

We potentially have some possibilities of abuse that could come from this. I'm not raising it to make a big point or take any time about it, but just simply to alert the minister to a minefield here. Hopefully, I believe it's the minister's intention, because I think the bill's a good one on balance.... I think it's the minister's intention to make sure that these proper standards are enforced in every workplace, but the way this is worded at the moment, I'm not entirely sure, unless the regulations are really quite expansive, that it accomplishes that purpose.

HON. MR. SEGARTY: Again, I thank the member for his advice. The very thing we're trying to correct in the act is abuses in the system. We will carry out extensive consultation with the various groups before applying the regulations.

MRS. WALLACE: Just a similar type of question to the minister. What is a residence? You might not be operating a computer in the upstairs of your residence; you might be making grapple grommets or whatever they are in the basement. That would be in your residence. But supposing you had a workshop and you were making something on contract or by the hour. What is a residence? Would that cover a building separate from the dwelling? I assume it would cover the basement, but just what is a residence?

HON. MR. SEGARTY: That was already covered under Section 1 of the act.

Sections 5 and 6 approved.

On section 7.

MR. GABELMANN: Just a brief question here as well. Were discussions held with both unions involved in this merging of seniority lists, and was there agreement reached as to putting this provision in? Or was it put in without discussion?

HON. MR. SEGARTY: I wasn't party to those discussions, hon. member. The act was prepared before my appointment. Apparently it was put in with discussions with the groups. I did meet with the union that is the bargaining agent for the Workers' Compensation Board yesterday in my office, and they did express some objections to this particular section. I can understand their objection, but if it was the other way around, where it may have been suggested at one time that the areas that are duplicated be transferred to the Ministry of Labour, probably the same would have taken effect in that particular case. So I had a discussion with them yesterday about it. I understand their concern, but it won't affect any of the parties involved, because they're involved in a particular category of work under the new responsibilities.

Sections 7 to 19 inclusive approved.

[4:45]

On the title.

MR. GABELMANN: I wonder if I can do this under the title. The minister said something under section 5 that upon checking doesn't appear to be quite right. Can we do just a quick backup?

MR. CHAIRMAN: By all means.

[ Page 6144 ]

MR. GABELMANN: The minister said that the definition of "residence" was covered under section 1. Where?

HON. MR. SEGARTY: Section 1, hon. member, covers "owner" and a private house.

MR. GABELMANN: On a quick reading, I don't see that that answers the question of whether the garage is part of the residence, but....

MR. CHAIRMAN: Is there further debate, hon. members?

Title approved.

HON. MR. SEGARTY: I move the committee rise and report the bill complete without amendment.

Motion approved.

The House resumed; Mr. Speaker in the chair.

Bill 4, Workplace Act, reported complete without amendment, read a third time and passed.

HON. MR. GARDOM: Committee on Bill 13, Mr. Speaker.

HOTEL ROOM TAX AMENDMENT ACT, 1985

The House in committee on Bill 13; Mr. Ree in the chair.

Section 1 approved.

On section 2.

HON. MR. CURTIS: Mr. Chairman, let the member for Nanaimo catch his breath. I noted he was out for just a moment. I have a pretty good idea of what he's going to speak about, because this section deals with moving to a maximum period of six years for any audit assessments.

Earlier today in committee on another bill, the member spoke about whether we would review six years. He made the point that perhaps it's a little long. The bill has been called this afternoon, and frankly, in terms of hotel room tax, which is a fairly straightforward business, I think the six years is acceptable. I don't feel inhibited therefore by asking for committee approval of this section. I don't feel that it contradicts the commitment I made in the earlier committee discussion on another bill, which was a very sincere commitment that I would at least review that. Obviously I haven't had a chance to do that in the space of the few minutes in between.

I would like to stick with the six years on this particular bill because it is far less complicated than auditing sales tax on thousands of items, Mr. Chairman. That may not satisfy the member, but that is my view.

MR. STUPICH: Mr. Chairman, I had in mind moving an amendment to this section, but I feel rather strongly about this four-year proposal. For fear that I will weaken the case for having the sales-tax-in-total audit period reduced from six to four years by moving an amendment now, which the government would of course oppose, I'm not going to move the amendment. Just tear up that piece of paper, wherever it happens to be floating around.

May I just remind the minister that the discussion we had was not in committee; it was in second reading. So there is still an opportunity for him to give it some thought before....

HON. MR. CURTIS: I stand corrected.

MR. STUPICH: You sit corrected.

In any case, even with the hotel room I would prefer it to be four rather than six. I think the strongest argument I have is that it will bring us into line with Revenue Canada. The income tax approach is that four years is adequate for obliging people to keep the quantity of paper that they have to keep to provide for this. So I feel quite strongly about it. I'd rather not pursue the amendment right now because it might hurt the chances of succeeding on the other one.

Sections 2 to 7 inclusive approved.

Title approved.

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

Motion approved.

The House resumed; Mr. Strachan in the chair.

Bill 13, Hotel Room Tax Amendment Act, 1985, reported complete without amendment, read a third time and passed.

HON. MR. GARDOM: Mr. Speaker, committee on Bill 16.

BUSINESS LICENCE REPEAL ACT

The House in committee on Bill 16; Mr. Ree in the chair.

Sections 1 and 2 approved.

Title approved.

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

Motion approved.

The House resumed; Mr. Speaker in the chair.

Bill 16, Business Licence Repeal Act, reported complete without amendment, read a third time and passed.

HON. MR. GARDOM: I call adjourned debate on Bill 17.

BRITISH COLUMBIA TRANSIT
AMENDMENT ACT, 1985
(continued)

MR. SPEAKER: I believe the minister adjourned debate.

[ Page 6145 ]

HON. MR. GARDOM: I adjourned debate, Mr. Speaker.

MR. SPEAKER: Does anyone wish to speak?

MR. STUPICH: I'm wondering, Mr. Speaker, how the minister can open debate, and then the House Leader move adjournment.

Interjections.

MR. SPEAKER: Order, please. Hon. members, we'll just hold for a moment, until we....

On a point of order, the House Leader.

HON. MR. GARDOM: On a point of order, to the Member for Nanaimo, the hon. minister was not present, and I adjourned debate. There was debate from your side of the House. The minister opened debate, so if he carries on speaking now, he'll be concluding second reading debate.

MR. STUPICH: Mr. Speaker, on a point of order, can you tell me whether or not I have spoken on this bill?

MR. SPEAKER: I believe the hon. member has addressed the chamber on this bill.

MR. COCKE: No, he hasn't; he wasn't here.

Interjections.

MR. SPEAKER: One moment.

A quick review of the records, hon. member, indicates that you have not addressed the chamber in second reading.

MR. STUPICH: Mr. Speaker, I can recall, in the fall of '83 when we gave so many speeches, and all of them the same speeches, on 28 pieces of legislation. Then there was cause for confusion; it shouldn't be quite the same this year.

Perhaps, Mr. Speaker, if I may, just on a point of order, quietly ask you to check the record and see what other people have spoken, so that you'll know the answer immediately after I speak.

It's already been said that the opposition will oppose this legislation. We're opposing it because it's approval of the government's spending program, not just in this instance but in total. It's authorizing the government to borrow another $600 million, either because the government misjudged the cost of this project in the first place or has changed its position in the meantime. We are concerned about the amount of money that's being spent on the ALRT program; whether it will ever be repaid; who is going to repay it; whether it will ever serve the citizens in the area that it's intended to serve, in the way a public transit system should. There are some real concerns about that and some real doubts.

I suppose the only thing you can say for it is that it is providing some economic activity in B.C., and there isn't very much going on these days. Although it's not directly in this bill, it's hard to knock any kind of economic activity, but we would like the economic activity to be productive. We have some real questions as to whether this is.

The government has been on a spending spree, one massive project after another, including this one. One would think that by now they would have had enough experience in planning public works projects, which indeed this is — as was northeast coal and as is Expo. It's not that I'm knocking any of them individually; I'm simply saying that their program has been to spend massive amounts of public money, borrowed money, on very large single projects, to the glory of the people that are planning these, perhaps, without looking into the planning of them to see whether or not they're going to serve the needs of the citizens beyond the time of construction.

We have in the past opposed borrowing when we felt that it was wasteful borrowing. We opposed borrowing when B.C. Hydro was coming to the Legislature and asking for massive increases in its borrowing authority, because we questioned the spending plans of B.C. Hydro. I would think that events have come to prove that we were right, at least in recent years, in opposing the massive increases in borrowing. This is another massive increase in borrowing for one single public works project, and we are concerned about it. We're not so much opposed to this particular project individually, but it is simply one of a package of proposals for which the government has come to the Legislature and asked for endorsement, not just of the borrowing itself but also, by implication, of the spending plans.

We've long argued that if the government is going to get involved in public works projects it should be prepared to do so throughout the province, rather than putting everything into one area at a time. Most recently the projects have all been in the lower mainland, where the depression that is being felt in almost all of British Columbia is not being felt to nearly the same extent because of government activity. Had the government shown a willingness to spend money for needed public works projects, projects that could be demonstrated as being in the long-term interest of the people in the area as well as in the short-term interest, then we would welcome that kind of spending program. But when the spending program is directed so intensely to single projects that, while they do provide employment in the short term, have questionable value in the long term, then the only way we can bring to the attention of the government that we have concern about the way in which they are handling the financial affairs of the province of British Columbia — I will certainly have more to say about that when we come to estimates — and the way in which they have hurt the province of British Columbia by their financial handing of our affairs, is to vote against legislation such as Bill 17. The opposition will oppose it.

[5:00]

HON. MR. CURTIS: Mr. Speaker, there has been considerable debate on Bill 17, and I apologize for any confusion I caused in the House several days ago when the bill was called but I was not present to participate in the debate. I will very quickly review the purpose of this bill. It is a borrowing authority bill. As I indicated in the opening remarks, it will ensure that B.C. Transit has increased borrowing authority of $600 million to $1.5 billion, which clearly will be sufficient to meet borrowing needs for all capital projects of transit over the medium term. These capital projects include the replacement or upgrading of existing assets, phase one of ALRT and, of course, in case there was some doubt on the part of the members of the opposition, phase two of ALRT.

The debate focused on ALRT, and that's understandable, but perhaps it is useful to reflect on the fact that the $1.5 billion authority will include a forecast $110 million for conventional transit, i.e. buses. That should be taken into

[ Page 6146 ]

account, I think, when one is considering the significance or the size of the total borrowing.

In addition, the member for New Westminster (Mr. Cocke), I think on May 9 — Hansard would indicate if I've got the date wrong — stated: "We have per capita debt in this province, if you include the debt of Crown corporations, that makes the Liberal federal government which sunk us into deficit after deficit look good." Well, a little bit of hyperbole may have occurred that day. As of March 31, 1986, it's estimated that net direct and guaranteed debt of the province of British Columbia will total $5,700 per capita. This compares with an estimated $8,730 per capita for the debt of the federal government. But further than that, the provincial debt includes both direct and guaranteed debt, while the federal figure is direct only. If the debt of commercial Crown corporations in the province of British Columbia is excluded, and in many jurisdictions that is the accepted practice, then the province's net debt per capita is $2,518 — less than 30 percent of the federal per capita figure and, Mr. Speaker, the second lowest among all the provinces of Canada. Only Alberta is lower. So when we're discussing borrowing authority and debt, whether direct or associated with Crown corporations, I think it's important to at least have the perspective. Hopefully those figures are of some use.

With respect to Bill 17, I move second reading.

Motion approved on the following division:

YEAS — 22

NAYS — 15

Bill 17, British Columbia Transit Amendment Act, 1985, read a second time and referred to a Committee of the Whole House for consideration at the next sitting of the House after today.

[Mr. Strachan in the chair.]

Introduction of Bills

MEDICAL SERVICE AMENDMENT ACT, 1985

Hon. Mr. Nielsen presented a message from His Honour the Administrator: a bill intituled Medical Service Amendment Act, 1985.

HON. MR. NIELSEN: Mr. Speaker, by way of explanation, Bill 41 will take the place of the existing Bill 50, and I will be asking to have that discharged.

The amendments reflected in Bill 41, amendments to the Medical Service Amendment Act, will permit the Medical Services Commission the capability of applying conditions to practitioner numbers issued by the Medical Services Commission when this bill becomes an act and the law of the province.

We have modified Bill 41, compared to the previous bill, by eliminating certain features, which, after discussion with the medical professionals and others, we found to be no longer required. One additional feature in the act will be the establishment of a committee to review the medical manpower situation in British Columbia. As Minister of Health, I will be inviting, as the legislation will show, representatives from the various medical professional associations in British Columbia to take part in that committee if they so choose.

I believe this new bill will eliminate much of the concern expressed over the past number of weeks, yet it will still permit the Medical Services Commission to have some capacity to attach conditions to practitioner numbers in the province and to have some control over the proliferation of billing numbers, as they were previously known.

Bill 41 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.

HON. MR. NIELSEN: Mr. Speaker, I ask leave for the proceedings relating to Bill 50 to be discharged and the bill withdrawn from the order paper.

[5:15]

Leave granted.

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

CORPORATION CAPITAL TAX
AMENDMENT ACT, 1985

The House in committee on Bill 7; Mr. Ree in the chair.

Sections 1 and 2 approved.

On section 3.

MR. WILLIAMS: Could the minister advise us how many banks have their headquarters in British Columbia?

HON. MR. CURTIS: I think that's a matter of public record. He would know, as do 1.

Sections 3 to 11 inclusive approved.

On the title.

MR. STUPICH: I'm not so much on the title as I am on the bill, Mr. Chairman. I did ask a question on this in second reading. When the minister talked about how much revenue is going to be forgone, I suggested there would be a revenue increase by increase in the corporation tax. I wonder whether he made a note of that. I can raise it during estimates if the

[ Page 6147 ]

minister prefers. I think there is a net loss, but I think it's not all loss.

HON. MR. CURTIS: Mr. Chairman, I recall the question being asked. I don't have the information. I can convey it to the member or deal with it in estimates.

Title approved.

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

Motion approved.

The House resumed; Mr. Strachan in the chair.

Bill 7, Corporation Capital Tax Amendment Act, 1985, reported complete without amendment, read a third time and passed.

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

TOBACCO TAX AMENDMENT ACT, 1985

The House in committee on Bill 12; Mr. Ree in the chair.

Sections 1 to 9 inclusive approved.

Title approved.

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

Motion approved.

The House resumed; Mr. Strachan in the chair.

Bill 12, Tobacco Tax Amendment Act, 1985, reported complete without amendment, read a third time and passed.

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

The House in Committee of Supply; Mr. Ree in the chair.

ESTIMATES: MINISTRY OF INDUSTRY
AND SMALL BUSINESS DEVELOPMENT

On vote 44: minister's office, $196,194.

[Mr. Strachan in the chair.]

HON. MR. McCLELLAND: I want to tell you, my friends.... [Laughter. ]

Mr. Chairman, I will be very brief in opening the estimates. I'd rather have the opportunity to answer questions, if possible. I will, at the appropriate time when the Speaker is in the chair, be filing the annual report of the ministry for 1984. I would like, very briefly, to highlight some of the job creating aspects that will be outlined in that report.

During that year the trade and industry division was extremely aggressive. Division personnel assisted more than 400 companies and business associations. Another 7,000 companies were provided with advice or information of one kind or another, leading to direct sales of some $9 million and $140 million in projected sales that should provide over 2,500 man-years of employment. The personnel facilitated over 500 entrepreneurial immigration proposals that will generate about $90 million in new investment. That's a program that's being vigorously followed up again in this fiscal year.

A further $350 million was committed to new business investments through promotional activity and investment support. The total of these investments is expected to reach some 4,500 man-years of employment.

In the business development branch, investment seminars were held in South-East Asia, Japan and California, with emphasis on automotive parts manufacturing, resource processing, mariculture, advanced technology and business immigration. We had more than 600 people attend these seminars.

The industry branch works very closely with manufacturing and processing companies already established in the province. In 1984-85 sector officers met with more than 2,000 companies to provide advice and assistance.

As the focal point in the province for negotiations of various of our federal-provincial industry and government initiatives, the small business and regional industrial development division played an active role in the successful negotiations for the new ten-year economic and regional development agreement, which was signed on November 23, 1984, and effectively replaces the general development agreement, which expired March 31, 1984.

Members by now will know that today we were successful in coming to agreement with the federal government on the subagreements for the first five years under that ten year program, achieving a level of support from the federal government that has never been achieved in British Columbia before — in fact, far beyond anything that's ever been achieved. I might remind members that in the last ten-year agreement, which was signed in 1974, British Columbia received something in the order of $281 million over that ten year period. Under the new agreement, having been reached today with the Hon. Sinclair Stevens, British Columbia will receive $575 million in the five-year period.

I must remind members, too, that that agreement is not necessarily capped. It would be open for rediscussion should conditions improve or conditions warrant. And also, of course, there would be a renegotiation of a completely new five-year agreement at the expiration of this five-year period.

Under the business incentives branch, a lot of programs were administered under the now-expired travel industry development subsidiary agreement, but will be continued under the new ERDA subagreement. About $50 million was committed to some 200 projects. We estimate the projects funded under the industry-upgrade, travel generator and skiing development programs will have created some 10,000 new jobs and attracted close to $800 million in private capital investment by 1990. Also that branch monitors and guides the B.C. Development Corporation's lending under the low interest loans assistance program. Almost 700 projects, representing $68 million in low-interest loans, and 7,000 jobs have been supported. The branch has also been instrumental in removing some regulatory impediments to the realization of a number of major private sector projects.

[ Page 6148 ]

The community economic development branch has concluded the implementation of a $70 million industrial development subsidiary agreement, and over the five-year lifespan of the various projects developed as a result of this assistance has created over 15,000 direct jobs.

During the past year many important small business initiatives were undertaken. The ministry's small business counsellors, in concert with the 76 business information centres around the province, handled almost 100,000 inquiries for advice and information. To help increase entrepreneurial awareness among students, the division, in conjunction with the Ministry of Labour, successfully implemented the student venture capital program during 1984. This program made some $750,000 available in interest-free repayable loans to over 400 projects, which provided summer employment for over 700 students. That program, of course, will be going ahead again this summer, and we expect that it will be much more successful this year.

Mr. Chairman, during the course of this session of the Legislature a number of initiatives will be asked to be approved in terms of both legislation and other areas. I know I'm not to touch on legislative aspects, but I'll just very quickly outline what those programs will be. They will include, of course, the much talked about special enterprise zones; the Small Business Venture Capital Act, which will be coming forward in order to attempt to encourage British Columbians to invest in their own industry and small business; the industrial incentive fund; the small manufacturers' incentive program; the industrial development assistance program; and our municipal economic partnership program, in which we provide aid for economic development officers and other planning opportunities for municipalities and regional districts.

Mr. Chairman, I'm looking forward to the debate on the estimates of my ministry. In the short time I've been in the ministry I've been able to visit virtually every part of British Columbia and talk to small business, medium-sized business, service organizations, municipal councils and others. I feel that for the first time we have the kind of package that can now ensure that British Columbia will achieve its economic renewal. We are able to put together packages which will fit the needs of those people who want to build and expand existing operations in British Columbia and fit the needs of those people we might be able to attract to come in and invest and offer new opportunities for job creation in British Columbia.

MR. WILLIAMS: I wonder if the minister could advise the House of the broad breakdown of the ERDA agreement. I didn't obtain a copy of the release, and maybe the House could have the benefit of the breakdown of the $575 million.

MR. McCLELLAND: I'm caught by surprise a bit with my estimates coming up now, and I didn't bring the figures down with me. Just bear with me. It's $300 million for forestry; $125 million for industrial development; $10 million for mineral exploration programs; $40 million for agriculture; $30 million for tourism development; and $20 million for science and technology.

To outline the second part of the negotiations that I held with Minister Stevens, we will be achieving an agreement, and at the end of this month expect to have signatures or whatever is necessary, for an additional $50 million, which will be part of a re-examination of the federal government IRDP program that will be coming to British Columbia as part of the package, to bring the total to $575 million. In the morning — or even this evening if I can somehow get them I'll file the press release and the others in the House.

[5:30]

MR. WILLIAMS. Thank you, Mr. Minister. You know, British Columbia's been laggard in this whole area for a long time — that is, in terms of working with the federal government on these various programs — and our revenues have not really been significant relative to some of the eastern provinces — the Atlantic provinces, Quebec and so on. I don't think the blame need lie mainly at the federal door. I think it's also been an attitude in British Columbia. There's been a feeling, I think, within British Columbia that we really could do without them. That's clearly proving not to be so now. We might go into that a little more later.

I wonder if the minister has read the latest Economist. The Economist is the British journal which is esteemed in many circles as a world economic journal. The Economist has an article on northeast coal in its latest issue. It's a very interesting article indeed. Do you know what the title of the article is?

HON. MR. HEWITT: Where's the hole?

MR. WILLIAMS: Well, you're close. It simply says "It's the Pits."

HON. MR. HEWITT: Oh, the London School of Economics.

MR. WILLIAMS: No, I don't think it's the London School of Economics. I think it's more the Thatcher school of economics, as a matter of fact. But it might be worthwhile just noting some of the things they....

Interjection.

MR. WILLIAMS: Oh, really? It's better then locating a pit in the wrong place.

The Economist says:

"A big investment by Japanese steelmakers in Quintette, a Canadian coal-mine, has gone badly wrong. The Japanese are committed to pay well above market prices for the mine's coal; the mine is losing $100 million a year and is unable to pay interest on its loans. Quintette's 56 bankers are pondering what to do with the project.

"...the Japanese steel industry has secured 19 million tonnes of coal more than it needs each year, all at higher-than-market prices. This boob followed the second oil shock in 1979-80, when fuel-intensive industries like Japan's cement-makers switched from oil to coal....

"The second snag is more embarrassing: the Quintette mine cannot make money even with high fixed prices."

They go on to discuss the contracts, and then they say:

"Quintette cannot pay the $100 million in interest it owes this year. Quintette's operating costs are over $100 per tonne if loan costs are added. The mine has already agreed to reduce prices for its long-term contracts by $8.50 to less than $93 per tonne. Coal

[ Page 6149 ]

deliveries were.... . 22 percent below target. Denison blames geological problems; Japanese investors admit geology is a problem, but blame bad management too."

That's the Economist looking at the biggest industrial project in the history of British Columbia.

I wonder if the minister can advise the House if he's had any discussions with Quintette, Monenco, the consultants for the 56 banks, or Denison, or with any of their representatives relative to these very serious problems that they're facing.

HON. MR. McCLELLAND: Mr. Chairman, I haven't had any specific discussions with Quintette or any of the others. Northeast coal was essentially put together when I became the minister and was, as you know, the responsibility of a specific minister and a committee that was put together from cabinet to deal with northeast coal over the years in which it was being developed.

Again, I go back to the same comments that have been made all along on northeast coal; that is, that while there were very large infrastructure developments — and those infrastructure developments were at the expense of the taxpayers of British Columbia — the mining operations are a private operation, a commercial operation done by private shareholder-supported companies, and it's not for the government to make the kinds of decisions that may or may not go sour from time to time in many kinds of businesses. This is not to say that we don't still have faith in the northeast coal project. It has lots more going for it than a lot of people have been giving it credit for.

Despite the fact that one of the companies is having some business difficulties, they still are shipping coal. I'm told that they're shipping up to the targets that the Japanese and the company both expected, that they're meeting those targets. The province of British Columbia, or B.C. Rail at least, is still collecting a surcharge on every tonne of coal shipped out, which is absolutely unique in the history of railroads. A surcharge is charged to the customers of the product being carried in order to help pay for the cost of the railroad that was built to carry northeast coal. So I don't share the doom and gloom, nor does the government share the responsibility for private business decisions; nor should we ever.

I agree with the member, Mr. Chairman, that British Columbia has, over the past several years, probably not had its fair share of federal revenues returned after having been sent to the federal government in the first place. We need to redress that situation; I believe we're beginning to do that now. We're certainly vigorously approaching that. We have deliberately kept a number of other opportunities for federal aid out of the ERDA, even though there was strong pressure at times to include them in things like the Vancouver Island pipeline, which we've insisted be kept absolutely separate and be considered to be a specific project for a specific reason.

The other problem we've always had in negotiating with the federal government is that the federal financial people calculate the return of taxpayers' money to the province on a historical basis, and in doing that historically British Columbia has, over the long period, been relatively prosperous. So we've got, because of our prosperity, relatively little of the federal money. The difficulty we had during this current round of negotiations was that in going back over a five-year historical period, we were still looking at perhaps starting at as low as $250 million if we took it on a strictly historical base.

Well, we were successful in breaking that pattern of the federal government for the first time. As I've said, we have in effect the opportunity to perhaps triple or even close to quadruple the amount of federal funds that will come in this ten-year agreement over the amount that came in the previous ten-year agreement.

I want to set the record straight on the actual figures, because we came to the agreement on these figures at about 7 o'clock this morning, and some of them just slipped out of my head for a moment. Forestry is $300 million; industry, $125 million; tourism, $30 million; agriculture, $40 million; minerals, $10 million; science and technology, $20 million; and then in the separate agreement under the IRDP there will be $50 million over a similar ten-year period for industrial development.

MR. WILLIAMS: It is still, in terms of the problem we face in renewing our forests, a very modest effort indeed. The amount that will be applied in this fiscal year is $22 million, and that's very modest. Prof. Reed, who holds the chair of forest policy at UBC, says the minimum we should be spending is $300 million a year. That's what the top person in the province, holding the senior forest policy position at UBC, says that we should spend $300 million a year. There are other UBC experts that argue, in fact, for double that. Prof. Walters....

Interjection.

MR. WILLIAMS: The point is that they both have sound arguments.

Prof. Walters says that if we intensively manage the best forest lands that we have, we can increase productivity, beyond what we presently produce on 100 percent, on something like 28 percent of the forest land. There you are.

Interjection.

MR. WILLIAMS: Oh, those groaners from the north — the member for Mount Baldy. All of British Columbia is becoming Mount Baldy under this administration. The money that's available is a pittance, relative to the job that has to be done; at the same time, we've never had so much unemployment in the history of British Columbia. Anybody that had some sense of planning and social responsibility with respect to our land and our citizens would get with it, and the numbers would change.

One of your own members, the mayor of Cowichan, argues for $11 million just in this area alone, down here on the Island; and all you've got is $22 million for all of British Columbia in this fiscal year. It's hopelessly inadequate. The irony is that this money has been around for a long time.

I wonder if this current minister is aware that when Mr. Reed was an associate or assistant deputy minister in Ottawa he came here begging to have money accepted in the last fiscal year. The federal people came to British Columbia in the last fiscal year, and they said that they had over $100 million, on a fifty-fifty sharing basis. They wanted to put forth a $106 million program, just for forest activities — silvicultural activities — in British Columbia. That was ignored; it was turned down. We spent something like, I think, a $5 million and $5 million program, shared, over the last

[ Page 6150 ]

fiscal year. It's very modest indeed, and we're still down at the modest level. We have people lining up here in Victoria who had read that there were going to be jobs under another program of reforestation activities. They read in the newspaper that there were at least about 240 or 250 jobs available. They were turned down. The jobs were going to Nanaimo and Duncan and other parts of the Island. But there are people out there who are ready and willing to work, and ready and willing to do this kind of work. It's work with a short-term payoff and a long-term payoff. British Columbia....

Interjections.

MR. WILLIAMS: Well, isn't that terrible. If one could just lift his vision beyond Vanderhoof.... Now that he has subministerial responsibilities you would think that the member for Omineca (Mr. Kempf) just might have a bit more vision of the rest of the province and might realize that there are now 227,000 people on UIC, some 237,000 people who suffer under miserly social assistance or welfare under this administration, all of whom would like work.

Interjection.

MR. WILLIAMS: More and more are suffering today, my friend.

We could have had this program in place. We could have had the $100 million-plus expenditures over this last fiscal year up until this last month — money the feds were ready to put into the pot, ready to contribute to growth and jobs and reforestation and silviculture in British Columbia. But it was turned down. All too often through recent years that's been happening. We haven't been looking at the opportunities that are there.

[5:45]

Interjections.

MR. CHAIRMAN: Order, please. The committee will come to order. I'll ask the member for Omineca not to interject, and the second member for Vancouver East needs to relate his remarks to the minister's estimates.

MR. WILLIAMS: We've forgone income that was really there and available, that the federal government really wanted to make available to us. I think it's fortunate that the federal government stood its ground in terms of the split on the current ERDA agreement, because it's quite apparent that the provincial government was ready to shift money out of forestry and into other areas. It's interesting that the feds have taken the forestry area as a serious one.

I wonder what kind of planning does go on at the macroeconomic level provincially. We have the Royal Bank of Canada coming out with its projections and comments on the coming decade with respect to British Columbia. The headline in the Sun yesterday, I guess in the business pages, was: "Bank Positive on B.C." You think, "Gee, I guess that's good news, " so you start reading it. The Royal Bank has made various projections over the last several years. They say they're positive, but what do they predict? That growth this year will be 1.5 percent, compared to a 3.I percent situation with respect to the nation. So we continue to lag seriously behind the nation, with half the increase in provincial product that the national product will have. Then they predict that we will continue to have unemployment at the 14.5 percent level for the next couple of years as well, yet the headline says the bank is positive on British Columbia.

I just wonder what kind of alternative there is to this. It's one thing to make predictions on the basis of what's in place and what's likely to happen on the basis of existing policies and programs, and then to think about alternatives, in terms of alternative programs. Maybe the minister could advise us of the kind of macroeconomic planning that goes on in terms of setting somewhat different targets rather than just living with the trends, which I think is what the Royal Bank is talking about.

If the hour is drawing late, I guess that might be covered at a later session, Mr. Chairman.

[Mr. Ree in the chair.]

HON. MR. McCLELLAND: I just want to make one comment. First of all, I have to make it clear that in the negotiations with the federal government, I've had no negotiations on the subagreements. I have no knowledge of how the negotiations took place in either the forestry agreement or the tourism agreement. The only responsibility that I had as minister was in the general agreement for the total amount of money, so I don't know how appropriate it is for us to be discussing forests in my estimates. As it turns out, it wasn't very lengthy at any rate. The other thing is that I would be pleased to see some documents that $106 million was available to British Columbia in the last fiscal year.

Secondly, just on the point of who stood whose ground, we never wavered in either the split or the amount of money we felt British Columbia should achieve. In negotiations, however, negotiations are negotiations, and what we've achieved now we think is a very good compromise and a very good step forward for the first time in moving British Columbia into getting the kind of treatment it should deserve, I think, in a federation of provinces. So with that, I move the committee rise, report progress and ask leave to sit again.

The House resumed; Mr. Strachan in the chair.

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

Hon. Mr. McClelland tabled the annual report of the Ministry of Industry and Small Business Development for 1984-85.

Hon. Mr. Gardom moved adjournment of the House.

Motion approved.

The House adjourned at 5:50 p.m.

[ Page 6151 ]

Appendix

AMENDMENTS TO BILLS

39 The Hon. T P. Segarty to move, in Committee of the Whole on Bill (No. 39) intituled British Columbia Railway Dispute Settlement Act to amend as follows:

SECTION I (1), by deleting the definitions of "employer" and"trade union" and substituting the following:

" 'employer' means BC Rail Ltd.;

" 'trade union' means a trade union that is a constituent union of the bargaining council;".

SECTION 3, by deleting section 3 (2) and (3) and substituting the following:

"(2) The term of each collective agreement between British Columbia Railway Company and the bargaining council that was expressed to expire on February 5, 1984 is extended, with respect to each employee, to include the period beginning on the earlier of

(a) the date the employee resumes the duties of his employment under subsection (1), or

(b) 72 hours after the coming into force of this Act, and shall continue and be binding on BC Rail Ltd., the bargaining council, the respective trade unions and the employees affected until the earlier of

(c) the date on which a renewal or revision of that collective agreement or on which a new collective agreement comes into effect, or

(d) the date a collective agreement constituted by section 7 comes into force.

"(3) Nothing in this Act affects the right of the employer to suspend, transfer, lay off, discharge or discipline an employee in accordance with a collective agreement referred to in subsection (2) or constituted under section 7."