[ Page 6195 ]

CONTENTS

Oral Questions

Location of O'Keefe ranch. Mr. MacWilliam –– 6195

Holiday travel planner. Mr. MacWilliam –– 6195

Ms. Sanford

Manning Park sale. Mr. Mitchell –– 6195

Mr. Lockstead

Mr. Passarell

PCB spill at Kennedy substation. Hon. Mr. Pelton –– 6197

Mrs. Wallace

B.C. Transit Amendment Act (No. 2), 1985 (Bill 38). Second reading

Hon. Mrs. McCarthy –– 6198

Mr. Gabelmann –– 6198

Mr. Williams –– 6201

Mr. Skelly –– 6202

Hon. Mrs. McCarthy –– 6203

Division –– 6205

Income Tax Amendment Act, 1985 (Bill 18). Second reading

Hon. Mr. Curtis –– 6205

Mr. Stupich –– 6205

Hon. Mr. Curtis –– 6205

Compensation Stabilization Amendment Act, 1985 (Bill 32). Second reading

Hon. Mr. Curtis., –– 6206

Mr. Gabelmann –– 6206

Mr. Stupich –– 6207

Hon. Mr. Curtis –– 6208

Division –– 6208

Securities Act (Bill 37). Second reading

Hon. Mr. Hewitt –– 6208

Mr. Howard –– 6209

Mr. Ree –– 6210

Hon. Mr. Hewitt –– 6210

Income Tax (Small Business Employment Tax Credit) Amendment Act, 1985 (Bill 5). Second reading

Hon. Mr. Curtis –– 6211

Mr. Stupich –– 6212

Mr. Lea –– 6213

Mr. Ree –– 6214

Mr. MacWilliam –– 6214

Mr. R. Fraser –– 6214

Mr. Veitch –– 6215

Hon. Mr. Hewitt –– 6215

Mr. Michael –– 6216

Hon. Mr. Phillips –– 6217

Mr. Howard –– 6218

Hon. Mr. Curtis –– 6218

TUESDAY, MAY 21, 1985

The House met at 2:06 p.m.

[Mr. Strachan in the chair.]

Prayers.

MR. VEITCH: Mr. Speaker, in your gallery this afternoon is Mr. Ross Carter, the director of college resources for Vancouver Community College, and Mr. Gerry Sylvester, the dean of administrative and student services for VCC. I'd ask the House to bid them welcome.

HON. MR. HEWITT: In the gallery today we have from the city of Penticton Alderperson Joanne Grimaldi and Alderman Peter Rawkins, along with Dr. Higgs from the White Lake observatory. I'd ask the House to welcome them.

HON. MR. PELTON: In the gallery this afternoon are Mr. and Mrs. William Glasson from my favourite place, the corporation of the district of Maple Ridge. With them are Mr. and Mrs. David Owen, who are visiting from Exmouth, Devon, England. I would ask the House to make them welcome, please.

MR. REID: Mr. Speaker, in your gallery today are two lovely ladies. They're over here helping the economy of Victoria. One of them is my daughter, Laurie, and the other is also an employee of Woodward's in Surrey, Janette Kristensen. Would the House bid them welcome, please.

HON. MR. GARDOM: In the gallery today is a very good friend of this assembly, the former MLA for Shuswap. Joined with him is his charming wife. I'd ask all members to pay a very cordial welcome to Mr. and Mrs. Len Bawtree.

MR. R. FRASER: In the galleries today are students from Killarney Secondary School, here with their teacher Mr. Brown. Would the House please make them welcome.

Oral Questions

LOCATION OF O'KEEFE RANCH

MR. MacWILLIAM: Mr. Speaker, several weeks ago I questioned the Minister of Tourism about a Tourism B.C. ad for a national magazine which locates the O'Keefe ranch north of Kelowna, rather than in its correct location north of Vernon. In view of the fact that this ad has subsequently appeared several times in the same magazine, would the minister advise why he has not made this correction?

HON. MR. RICHMOND: As I pointed out to the member at the time, the ad is not incorrect. Perhaps it could have been more precise, and I did take the trouble to point that out to those people who placed the advertisement.

HOLIDAY TRAVEL PLANNER

MR. MacWILLIAM: Have you decided to move the ranch? I'm sure the people of Okanagan North will be pleased to hear about that.

A supplementary, Mr. Speaker, to the same minister. More recently the Minister of Tourism has circulated a glossy magazine-style insert in all of the province's daily newspapers, at a cost of hundreds of thousands of dollars. One of the maps in this publication shows the town of Needles as part of a regional holiday itinerary. Is the minister aware that the town of Needles was in fact flooded out when the Arrow Lakes were raised over 20 years ago today? If the minister does plan on visiting the town of Needles, may I suggest that he take his scuba gear?

DEPUTY SPEAKER: There may be a question there.

HON. MR. RICHMOND: I doubt very much, Mr. Speaker, if there was a question there, but I would like to let that member know that our travel planner, of which we have sent out 4.2 million copies in the northwest, has received rave reviews.

MS. SANFORD: My question is to the same minister. The publication that my colleague referred to does not receive rave reviews from the people on Vancouver Island, because for some reason the publication fails to mention passenger service on the E&N Railway. It has neglected the railway entirely. I am wondering why this has happened, and if the minister could make some corrections in that area as well.

HON. MR. RICHMOND: Yes, Mr. Speaker, I would love to answer that. Contrary to what the member said, if she looked in the Sunday edition, I believe it was, of the Times-Colonist, it does receive rave reviews on Vancouver Island.

I should also like to point out that all nine regions and regional directors and the various industry groups in the province had input into this travel planner. It was not done in isolation. So all of the blame, if there are omissions — and there are a few, Mr. Speaker; there will always be some — could be equally spread through all nine regions of the province, including Vancouver Island.

MS. SANFORD: In view of the fact that everyone seems to have had input into this particular publication, I'm wondering why the same paper also neglects to mention B.C. Rail. There is no mention whatsoever of any kind of rail transportation on Vancouver Island or on B.C. Rail. I'm just wondering why that has come about.

MANNING PARK SALE

MR. MITCHELL: My question is to the Minister of Lands, Parks and Housing. On May 2 and again on May 7 I asked the minister if the $500,000 for the $20 million worth of Manning Park assets had been paid. I haven't received an answer yet.

HON. MR. BRUMMET: Yes, Mr. Speaker, the amount was $500,000, and that amount has been received by the ministry. The member's figure about the $20 million of assets is incorrect.

MR. MITCHELL: A supplementary. When was the final payment made, and was it a total of $500,000?

[2:15]

[ Page 6196 ]

HON. MR. BRUMMET: Yes, I have been informed that at the time of the signing of the agreement, the $500,000 was paid.

MR. LOCKSTEAD: Mr. Speaker, I have a question to the same minister in connection with the sale of assets at Manning Park. Did the government purchase a brand-new generator costing some $350,000 just before transferring the assets to the private consortium?

HON. MR. BRUMMET: No, Mr. Speaker, not just before — the year before, in order to keep the operation going before we got the agreement made.

MR. LOCKSTEAD: Mr. Speaker, a $350,000 generator and you sold the whole park for half a million dollars. Ridiculous!

My next question, Mr. Speaker: did the government undertake a thorough renovation of the Manning Park ski lodge just before transferring the assets to the private consortium?

HON. MR. BRUMMET: No, Mr. Speaker. First of all, may I correct the impression the member is trying to leave that we sold the park. We felt that the ministry should get out....

Interjections.

DEPUTY SPEAKER: Hon. members, question period time is precious.

HON. MR. BRUMMET: Perhaps the member is not aware that there was an ongoing maintenance program at all times — nothing unusual in that. We did not give away the park; we did not sell the park. We felt that we should get out of the ski and motel business as a government. That motel and ski business, for the member's information, was costing the taxpayers of this province a loss of $500,000 per year. In turning that over to the operation, we now get a percentage of the gross revenues, and the taxpayers are much better off, the people are still served, and we still own the park.

MR. LOCKSTEAD: Mr. Speaker, we have at our disposal information indicating that the government, at taxpayers' expense, renovated that lodge prior to that sale. However, I'd like to know from the minister — I know he won't have this information at hand — the cost of that renovation of the lodge before the government sold it to their friends at this ridiculously low price.

I have a new question for the minister. Did the government use taxpayers' money to overhaul the two large ski lifts at Manning Park before transferring the assets of those ski lifts to the private consortium? And how much did that cost the taxpayers?

HON. MR. BRUMMET: Well, contrary to what the member said, we did not sell that to friends. It was put out to tender, and the successful tenderer got the property.

The other thing about fixing the ski lifts. The member may recall that sometime before that there was an accident; that accident was investigated by the Ministry of Transportation and Highways, and the recommendation was that something should be done to fix that lift before it was continued in operation. It was continued in operation under our jurisdiction, so it made sense for us to fix it. We did not fix it to sell it. We fixed it to operate it, and then we decided, because that operation was costing the taxpayers so much money, that we should get rid of it and let somebody else operate it.

MR. LOCKSTEAD: To clarify my question to the minister: what was the cost to the taxpayers of this province of overhauling those ski lifts? I expect it was well in excess of $1 million. I don't disagree with the minister that the thing should have.... But we spent multimillions of taxpayers' dollars on renovations on that park, and then we gave it away.

HON. MR. BRUMMET: I'm not sure, Mr. Speaker, whether the member had a question. When he asked how much it cost.... I don't have the exact figure, but I can tell the member that it was costing us far too much; it was costing the taxpayers of this province far too much to run a ski hill. That's why we decided to turn it over to the private sector.

MR. PASSARELL: A question to the Minister of Transportation and Highways. Part of the reason for selling Manning Park assets was to reduce government spending. Has the government agreed to gazetting the roads to the property, causing the taxpayer rather than the consortium to be responsible for maintaining the roads?

HON. A. FRASER: I'll have to look into the member's question and come back with an answer.

MR. MITCHELL: A question to the Minister of Lands, Parks and Housing in line with the question I asked him on May 2. One of the directors of the Gibson Pass resort, a Mr. Ralph Rossi — who was a member of the Yale-Lillooet Social Credit association — was a member of the group that purchased this $20 million asset. I ask again: is there anything in that agreement for sale or lease which prevents Mr. Rossi and his company from flipping the property or any parts of the property without the consent of the government?

HON. MR. BRUMMET: No, any transfer.... It is written right into the agreement that there must be the consent of the minister before any transfer can be made.

MR. MITCHELL: Has there been any application to flip or divide any of the assets from the original agreement? Has any application been made to the minister, and what will his position be if this application has been made?

DEPUTY SPEAKER: Part of the question is in order.

HON. MR. BRUMMET: I don't know whether part of the insinuation was about the member being a Socred. Well, I can tell you that in the ministry when somebody applies for a piece of land or when somebody bids on a contract, we do not decide whether or not politically they are eligible. It depends on whether financially, economically and in any way they are eligible. We have even been known to donate some land or give free Crown grants to municipalities in NDP ridings. So that has no bearing on his affiliation. And neither will this ministry, to satisfy the NDP, ever turn around and refuse applications from people simply because they have been Socreds. I think they have the right like anyone else in this province to bid on any tender.

[ Page 6197 ]

So to my knowledge there.... I don't know what discussions are going on in the private sector between operators, between owners. I can tell you this: if any deal is in the making, then it must come to the minister for approval before anything is done.

MR. MITCHELL: As the minister in charge of protecting a $20 million asset of the citizens of British Columbia, does he look at the price that was asked for these assets? Maybe he is correct in that you don't look at the fact he was a member of the Yale-Lillooet Social Credit Constituency Association, but there is still the fact that $20 million of our assets were sold for half a million dollars. I say to the minister that it didn't matter who made the application; it is his responsibility to protect the public's tax assets, and what did he do? In reviewing the total assets, the millions of dollars that were spent in renewing this equipment.... When he accepted that final bid, that responsibility left with that minister, Mr. Speaker; it left with him. He could refuse the final offer if it was too low. I ask what he did to protect our assets.

HON. MR. BRUMMET: Obviously the member, when he has his questions written, will not modify them even if his figures are incorrect. I told you, you were very incorrect on the $20 million figure. There was one appraisal done that suggested that the total replacement value of all those facilities was around the $12 million mark. So that is a fair....

Interjections.

HON. MR. BRUMMET: The total replacement value was in that amount. However, the value is really determined by what someone is willing to pay for it. And that was in open tender, not by just one person.

The other thing, of course, that the member seems to neglect to pay attention to is that those assets.... Whatever their replacement value, it was a case of what it was making for the province and what it was losing for the province. So to retain those when no one was willing to pay for them, just through stubbornness.... To insist on costing the taxpayers of this province at least $500,000 — that's a half a million dollars per year loss on those operations — in order to keep the government in the ski and hotel business, I would suggest, was a ridiculous assumption. Therefore we looked at all aspects of it, and the repair bills that were mounting, as the members have indicated.... We did not need to be in that. We didn't want to see it closed, so we gave the private sector an opportunity to run it. We are saving all of those operating costs and all of the future maintenance costs in a ski hill operation. The park remains under the jurisdiction of our ministry.

PCB SPILL AT KENNEDY SUBSTATION

HON. MR. PELTON: Mr. Speaker, I would ask leave to respond to a question that was placed by the hon. member for Cowichan-Malahat (Mrs. Wallace) during the course of my estimates.

Leave granted.

HON. MR. PELTON: The question related to the PCB spill in the B.C. Hydro storage area at Kennedy in Mackenzie, just about 120 miles north of Prince George. The B.C. Hydro and Power Authority stores some 14,000 unused electrical capacitors at the Kennedy substation. On May 7, 1985, on a routine inspection of the site, ministry staff noted an oily substance leaking from unused electrical equipment in the storage yard. B.C. Hydro staff were immediately notified, and steps were taken to stop the escape of this substance into adjacent Colbourne Creek, which flows into the Parsnip River. Soil samples were taken by the ministry from the storage area and drainage ditches, and were found to contain unacceptable concentrations of PCBs. A soil sample from the bed of Colbourne Creek contained traces of PCB, while preliminary tests of downstream water samples indicated PCB concentrations below the detection limit of the tests. These tests were taken at parts per million. When you have concentrations below the detection level, you just get a blip on this machine; you don't get a reading which you can record. However, subsequent to that, more sensitive tests detected PCB concentrations — these were parts per billion — which could pose a long-term hazard to humans and to fish life. As a result, the public have been advised not to drink the waters of Colbourne Creek and the Parsnip River, and not to eat fish caught in these streams.

At the request of my ministry, B.C. Hydro has agreed to take the following steps immediately; and they are already on site with staff of the Ministry of Environment. They're going to inspect the stored electrical equipment and place any leaking units in appropriate containers. They will clean out the contaminated soil from the drainage ditches. They will cover the remaining stored equipment and provide the ministry with an inventory of their unused electrical equipment containing PCBs located in the province. Further, B.C. Hydro has agreed to do the following by October of this year. They are going to construct a suitable covered storage facility at the Kennedy substation and place the unused electrical equipment in that storage facility, and remove all contaminated soil from the area and place it in suitable containers inside the storage facility. They will take low-water sediment samples in Colbourne Creek and Parsnip River, which we will monitor. They will also determine the concentration of PCBs in the flesh of fish in downstream watercourses; we will also be monitoring this. And we will continue to monitor the situation at the Kennedy substation.

[2:30]

MRS. WALLACE: I thank the minister for the action he has taken and for the message that he has brought to the Legislature. But I am concerned that this has been allowed to happen. This is not a new occurrence; this is not something that has just happened overnight. This is something that has been in process for some time.

Hydro was requested — in fact, ordered — to remove those capacitors several years ago, and it didn't happen. Why didn't it happen, Mr. Speaker? It didn't happen because Hydro persuaded two ministers of the Crown to let those capacitors remain there. It persuaded two ministers of the Crown to agree to let those capacitors be stored just inside a wire fence, in the open air covered with snow several months of the year, and to remain there until some facility for destruction was available to them in Alberta. It is absolutely unfair to the people of Mackenzie and to the people of British Columbia to allow such a situation to continue and to allow those pieces of equipment to stay there causing the kind of pollution that has now occurred.

[ Page 6198 ]

We all know that PCBs are harmful, even in minute quantities. To allow that to continue over a period of years is absolutely foolish. It is absolutely immoral. For the government and this cabinet to agree to go along with that for the length of time that it has is.... Well, I'm just shocked that this has happened. Now we have the proof.

What we need in this province is a hazardous waste disposal centre, and it hasn't happened. The former minister bungled it, and at this point this minister has done nothing. If we don't move now, we're going to have more and more of these spills and more and more people subjected to the poisonous effects of PCBs.

Orders of the Day

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

B.C. TRANSIT AMENDMENT ACT (NO. 2), 1985

HON. MRS. McCARTHY: In introducing second reading of this bill, I would like to draw the attention of the House to the fact that this legislation will fulfil a commitment made by this government in September 1984. At that time, I announced the government's intention to address the administration and delivery of transit services to the people of British Columbia by correcting an organizational structure which, while previously adequate for the administration of the bus services, was no longer appropriate to meet the requirements of a dramatically expanded system with the arrival of the new light rapid transit.

It's important to point out that this is not change for the sake of change, Mr. Speaker. I am well aware that modifying the structure of an organization does not automatically create efficiency. In coming to terms with a number of outstanding issues, however, it was obvious that concurrent with steps that were required in such areas as labour relations, ALRT funding and future planning, a single unified structure was required now more than ever before. With this legislation, we will see planning, policy, financing and operations all under a single board of directors for the first time. The board will be composed of civic officials, community leaders and representatives of the public at large. This new board of directors will work closely with the regional transit commissions in Vancouver and Victoria and with the more than 30 operating companies serving the smaller communities throughout the length and breadth of this province.

There are many challenges ahead for this new board. In the short term they will have to address the needs of the millions of visitors who will come initially to the lower mainland and spread eventually throughout British Columbia in response to the attractions of Expo 86. In the mid-term they will be charged with ensuring that the ALRT fulfils its exciting potential for the people of the lower mainland in making their lives easier by reducing their travelling times and giving them greater mobility than ever before.

In the long-term the new British Columbia Transit board must have the foresight to look beyond the year 2000, and we must all keep in mind that a brand new century awaits us only 15 years from now. It will be their role to advise the government on the most efficient and socially and environmentally desirable ways of meeting the challenges of the year 2000 and beyond.

While much of their attention will be focused on the lower mainland, it will be a clear part of their mandate to apply that same administrative and creative energy to today's problems and tomorrow's potential for every community in this province now served by provincially funded transit systems, and to continue to assess smaller communities who will face that need in the future through their own economic and social growth.

B.C. Transit and Metro Transit have long since established a reputation among other operating companies in North America which gives them a very prominent place in the record book. The greater Vancouver system serves a wider geographic region than any other major city in Canada. The extensive provincial fleet also services a greater geography than any other system in North America, and the financial commitment to transit by this government is greater than that of any other provincial jurisdiction.

Since my announcement in September 1984 regarding our commitment to unify and simplify the system, I'm very pleased to report to this House that we have overcome several major obstacles on the road toward our objectives. We have seen through negotiation the conclusion of a four-year labour agreement between the operating committee and its almost 2,000 bus drivers and mechanics in a contract which I believe to be the basis for a new cooperative labour-management partnership. These operators today enjoy the highest standard of wages and benefits in the country. They are provided with a very high standard of training and modern, efficient equipment.

We have also, since September, seen agreement reached on a funding formula for the $854 million ALRT system. The financial arrangement received the full and enthusiastic support of the members of the greater Vancouver Transit Commission as a fair and equitable solution which would not place an unreasonable burden upon the taxpayers of greater Vancouver or the taxpayers of the rest of the province. With some seven months still to go before the ALRT meets its January '86 commitment to enter service in trial runs and previews, we have demonstrated the ALRT to many thousands of British Columbians in speed and in comfort. This is truly a remarkable system designed and built by Canadian technology and applied with British Columbia skill and ingenuity, which will be on time and on budget, a system in which every British Columbian can and will take an immense amount of pride.

Mr. Speaker, in meeting the challenges of Expo and the planning for tomorrow, B.C. Transit, to achieve success, will require the support of every British Columbian, the determination of its new board, its revised management structure and the 3,000 men and women who make the system go. This is a people-responsive service. As with every private enterprise company and with every Crown corporation in existence today, it must at the same time recognize the financial constraints and act at all times in a way which will not place an unfair burden on the taxpayers of British Columbia.

But within those constraints, I am confident that the success will go on and British Columbia, through B.C. Transit, will continue to set the pace for other transit systems in Canada and, I may say, internationally.

So at this time I move that the bill be now read a second time.

MR. GABELMANN: Mr. Speaker, this is an outrageous bill and the minister's comments were equally outrageous in

[ Page 6199 ]

failing to take into any consideration what she is doing with this legislation.

Interjection.

MR. GABELMANN: She didn't talk about the bill at all, Mr. Speaker.

What this bill does is wipe out a contract that was signed between two responsible parties in British Columbia, a contract that was reached with full agreement on both sides after a long and protracted and difficult set of negotiations. The bill wipes out that contract in some of its major elements. Mr. Speaker, who in this province can trust a government that, having entered into an agreement, later comes to the Legislature to wipe out that agreement? Where is the sanctity of a contract in this province when this kind of legislation can be introduced, wiping out, as I said, a freely reached agreement?

Mr. Speaker, I'm not going to deal — others will — with the question of the consolidation which is an element of this legislation. I want to deal with those sections of this bill that do what this Legislature has never done before in this province: to write terms and conditions of a collective agreement; in fact, worse than that, to abolish terms and conditions of a collective agreement when the government doesn't like them.

Is this a free society, Mr. Speaker, where people can enter into contracts freely and democratically and expect to have them honoured? Or is this a society where a government will determine that it doesn't like particular terms and conditions, and therefore by the stroke of a pen will wipe them out? I didn't think we lived in that kind of society, and I don't think most British Columbians did either.

This is the worst kind of labour legislation, masked in nice rhetoric about pretty transit. I don't think, Mr. Speaker, that members on that side of the House understand what the minister has done with this bill.

Last year, in the lower mainland and lower Vancouver Island, people spent difficult months, first of all in what was described as an un-strike and then later in a lockout, attempting to reach a collective agreement. This Legislature, following several months without bus service, ordered an end to the dispute. Fortunately — at least at the time fortunately — the parties were able to reach a collective agreement without third-party intervention, which is the way it should be. At the bargaining table was an indication that legislation would be coming in to deal with the fact of ALRT — dealing with management rights clauses in that respect. The parties to the agreement understood that.

That's not what we have here. We have that and much more. We have here some of the most outrageous intervention in a collective agreement that I think has ever existed in this province. I doubt that anyone can cite an instance, in the modern history of labour relations in British Columbia, where anything like this has ever been done, where an agreement was reached under certain understandings, and then those understandings were broken.

[2:45]

Let me say that it's more than questions of contract. There are other questions that need to be looked at. A very basic principle in the workplace is that when workers are involved in the decision-making and have a say in how work will take place, work is done more effectively, more efficiently, and productivity is increased. When you involve people in decisions that affect their lives, they take some pride in the conclusions, even though they may not always agree with the conclusions. But when they have a part and a role to play in reaching those kinds of conclusions, they work more effectively, more efficiently and more happily.

What this legislation does is to take away the fundamental questions that govern the livelihoods and the daily working lives of people who operate buses and trolleys in this province. Scheduling on the bus system and questions of part-time work are difficult — no question whatsoever — but they are properly and best left to negotiation between the parties. This Legislature does not have a role in determining that all of those rights should be management rights. Yet this bill does just that.

In section 6.1(7), Mr. Speaker, the legislation gives the new board the right to contract out work, contrary to the collective agreement that was reached between the parties. If the employer didn't like that particular part of the collective agreement, why did he sign it? Did the employer sign that part of the collective agreement knowing that that was a false signature, and that in fact the collective agreement would be made null and void some months later by this Legislature? I certainly would like the answer to that question when the minister responds, when she's able to tell us.

Mr. Speaker, section 6.2 of the legislation says that "the employment, complement and organization of employees necessary to carry on the business and operations of the authority, and the work methods and procedures applicable in the provision of transit services" are the exclusive right of the employer, "and any provision to the contrary in a collective agreement by which the authority is bound is of no effect."

We're dealing with a difficult industry here, because for the most part the busy times are at two different parts of the day. If you were to work right through, from the beginning of the busy time in the morning until the end of the busy time in the afternoon, it would be a long day; so unusual procedures have to be developed to make sure that the provision of services is carried out during the rush hours and the busy times. As a result, in some cases workers are in effect working 12- and 14-hour days, even though they don't get paid for a number of hours in the middle of their work day. It's bad enough when workers are asked to work in those kinds of difficult and unusual circumstances, but when they have no say whatsoever through their collective agreement in determining how that scheduling will take place, it becomes reprehensible. It becomes impossible.

The minister said at one point — I'm paraphrasing — that the four-year labour agreement reached earlier will lead to cooperation and partnership. There is no longer a collective agreement reached. A collective agreement is one that is reached collectively by both parties bargaining. That didn't happen, and the major frustrations — apart from having to drive in city traffic — of an unusual and difficult work schedule will now be made worse by the people involved in performing that work schedule having no say whatsoever in determining how it's to be performed. Doesn't that strike the government as a bit counterproductive in terms of having a happy and efficient workforce and a "harmonious relationship" in the transit services in our province? It doesn't work that way in real life, Mr. Speaker.

The minister also said that the whole mess will be on time and on budget. Mussolini's great claim to fame was that he too would make the trains run on time. You don't do those

[ Page 6200 ]

kinds of things in a free and democratic society. I'm not suggesting that the minister has yet gone as far as he went, but she's sure on that track with this kind of legislation: taking away a freely bargained collective agreement and, as I pointed out, in section 6.2 denying the people who work for her and for us and for every person in this province the right to participate in discussions about their work schedule.

There's another section in this bill that I find reprehensible. Whenever this government is told by the courts, or by an organization that has the power of the courts in this province, that what they're doing is wrong and immoral and not to be done, they quickly come in with a piece of legislation to circumvent the decision of the courts. Under the Labour Code, the Labour Relations Board in this province is charged with managing, governing and being the court for labour relations. It has a number of purposes. Among the most important of their objectives is to ensure that labour relations are harmonious in this province. One of things they did in this particular situation was to declare there was a single employer in transit services in this province. That struck most of us who watch from the sidelines as quite reasonable. In effect, the employer was the government through the board that it established, which I think under the old legislation was a little more representative of the communities than it is now.

Nevertheless, the Labour Relations Board said there was a single employer. I think any person looking at transit services in this province would say: "Yes, there is a single employer; it's the government through a particular agency." This bill seeks to fly in the face of that reasonable and reasoned judgment of the Labour Relations Board and in effect say, in 6.3, as the heading says, that the authority is not treated as one employer. So while we have one employer, this Legislature, if this bill passes, says it's not one employer. That's not how you achieve harmonious and productive labour relations in the province: by flying in the face of all of the principles and traditions that say if an employer is an employer, he's the employer. There are very good reasons for the Labour Relations Board making the kind of decision it did.

This section says: "For the purposes of the Labour Code, the authority shall not be treated as one employer with any corporation, individual, firm, syndicate or association with whom it contracts for the provision of transit services under this Act." Mr. Speaker, under that section the government could declare that the No. 9 bus running across Broadway has its own separate agreement and the government is an employer for that bus and that bus alone. That's the extent. I'm not suggesting that's what the government intends by this section, but this section would allow that.

[Mr. Ree in the chair.]

By using these various sections, the government can contract out any future services that might be put on stream, which as I read it includes new bus routes. They can declare that every or any part of the transit services have separate employers.

Mr. Speaker, we are being asked to vote for legislation that says black is white, that says night is day. We're being asked to vote for legislation that says there isn't one employer in the delivery of transit in this province. Every school kid and every person who pays any attention to current events in British Columbia would know that there is one employer. Yet the government is asking us to vote for legislation saying no, there isn't one employer, there are all kinds of employers. The fact that these various different employers are all the same employer doesn't seem to sink in.

What the government wants to do in this particular legislation is to deny the civility that can come from properly managed labour relations, governed by a Labour Relations Board in this province. Now that is not going to lead to the kind of conclusions the government wants, for one thing. But it will also lead, in my view, to poisoned labour relations in every aspect of our society. Which group of employees in this province will now know that what they bargain at the bargaining table with the employer is actually what they're going to get? No one will. Every person who goes to a bargaining table, and this includes both sides, will now know that there is a knife — a blackout pen — hanging over that collective agreement that might be freely and happily reached. They will now know that this Legislature might be called upon to wipe out freely agreed upon provisions in a collective agreement.

Mr. Speaker, so much has happened in this province in the last few years in terms of a denial of basic democratic rights that we become a little bit used to this kind of thing, and people have marched themselves out; people have given up trying to persuade the government by reasonable methods that what they're doing violates some very basic principles in our democratic society.

I said the other day in reference to the B.C. Rail legislation that the International Labour Organization covenant, which we signed — this is a United Nations organization — was violated. It is again here. Canada has not been a member of a community of nations where contracts between individuals or between groups can freely be wiped out. We expect those kinds of things to happen in the Soviet Union, Chile, South Africa or East Germany. That's where we expect that kind of government intervention and denial of basic rights.

Mr. Speaker, if an NDP government had ever brought in legislation which made null and void a contract freely reached by both parties, we would have heard speeches around this province by members of Social Credit like you've never heard before, talking about the dark days of dictatorship and no doubt many other nice slogans. But you know, if Social Credit does it it's all right somehow.

[3:00]

What's to stop a government that once has started on this slippery slope from saying to any groups of people in any part of our society: "No, we don't like the agreement you just signed. We're going to wipe it out. You've just agreed to sell your lumber for $140 a unit, and we think it should be $150, so we're wiping out your contract with the purchaser on theAtlantic seaboard." Outrageous, isn't it? No one would even think twice that the government might be tempted to wipe out a contract between a seller and a purchaser of goods. Why then is it that the contract can be wiped out when it's between a supplier and a seller of services? Why is somehow a contract sacrosanct and not to be violated when it relates to goods or capital, but when it comes to the rights of individuals — people, whom we're supposed to be governing — somehow it's all right. There's something pretty sick about a society that isn't outraged and alarmed by that kind of trampling of democratic rights.

I don't blame the society, Mr. Speaker. The society has been so conditioned to these kinds of activities by this government that it no longer can react, because it happens with such astonishing rapidity and frequency. Every week now we

[ Page 6201 ]

get this kind of legislation that no other government in this country introduces. No other government in this country even contemplates introducing it.

I'll conclude by saying that I am outraged that a government would go to the bargaining table and sign a collective agreement knowing full well that it would use its legislative might to strip from that collective agreement provisions which it freely agreed to at the bargaining table. That is outrageous, it is shameful, and it is reminiscent of societies with which I want nothing whatsoever to do.

MR. WILLIAMS: The minister gets up and reads the statement that was prepared for her to read with second reading. It's become typical of what we've got from this minister in this session. It was abundantly clear when we were dealing with her estimates that she no longer has a hands-on operation, no longer is really involved in the managing of her departments and agencies as she should be. You ask her how much it's going to change the budget, throwing ALRT into the lower mainland system — will it double it? — and she doesn't have the answer. She actually has to check with officials. She has to rifle through notes, and then she can tell you: "Yes, it will pretty well double the costs of the system in the coming year when ALRT is plugged into the rest of the transit system."

That and other aspects of her department that have been quizzed in the last few weeks indicate to us that one of the few ministers of this administration that used to have a hands-on operation no longer does. The purple prose that we got this afternoon is just one more indication of that situation. The kind of stuff we just heard. To the year 2000 and beyond. Great purple prose. Somebody is hired in the back room to turn out that kind of nonsense. "The permanent place in the record book....blah, blah, blah, blah."

As the member for North Island (Mr. Gabelmann) indicated, this is primarily legislation that deals with the trade unions and the workers within Metro Transit, within the system. It's legislation that reneges on agreements that were reached between these parties after a long and miserable dispute last year, a dispute that cost the people of the city of Vancouver, and downtown merchants, countless millions, but saved this administration a few million, so they let it go on. It's just an indication that the minister isn't on top of it all. She said it's on time and on budget. Which time? Which budget? This is what I would ask. Check with the earlier minister, Mr. Vander Zalm. His budget was a quarter of this budget. So it's four times the budget, Madam Minister. Let's sort it out.

She says, through her hired hack in the back room turning out the purple prose for today: "It's people-responsive." Well, you look at the legislation and, clearly, workers — the bus drivers and the rest — aren't people. If it were people-responsive legislation, you'd live with the terms of the previous agreement that allowed some input, some participation on the part of the employees within the system. If you attend any sessions at all where the representatives of the transit union are, or you listen to bus drivers, you develop some appreciation for the complexity of the system, and the complexity of scheduling. It isn't just a simple computer operation. It isn't just a top-down management function, the whole business of making a transit system in a metropolitan area work. But to read this legislation, that's what you would think it was. It's a top-down orientation from beginning to end. No system will respond properly if it's designed that way. The whole problem in North America in the last generation or two has been a continuing laying on of middle and senior management to monitor workers, rather than giving workers more authority, more independence to be productive on their own. All of this is geared in the opposite direction. The Americans are finally wising up to the problem of excess middle management. There's no indication here at all that we're in the learning stream with the Americans. We're always a generation or two behind.

Consultation. Even when we had the old system that was supposed to involve more representatives of the Greater Vancouver Regional District — and you're changing that — you still made arbitrary decisions on your own anyway. The extension to Surrey was a unilateral decision by the provincial government. There was no participation or decision-making with the GVRD in terms of the priorities or the alternatives or what might be better; it was a unilateral decision. Yet the costs are going to be laid on the Greater Vancouver Regional District regardless. So that will go ahead anyway. The pattern is there.

What we have here is an intervening legislative solution to labour problems. It establishes far-reaching management rights beyond what is reasonable. It provides new authority for contracting out on a significant scale. It gives a lot of powers to management. Presumably Mr. Hodgson will be the new chief executive officer with respect to this operation. Mr. Hodgson has a respectable background in labour relations and has been able to resolve disputes in areas that have been difficult and have not been readily resolved in the past. He has a good kind of background. He doesn't need these kinds of tools in order to make the system work successfully. That's what's strange. I think what we have here is a middle-management product that the minister has accepted and coated over with the purple prose by some backroom hack. It really doesn't reflect what would be reasonable in the circumstances.

When there has been consultation between the workers at Metro Transit and management in terms of working conditions, and when there has been consultation, as there was under the previous agreement.... On the two occasions that that occurred, when there was full consultation between the workers and management, they were resolved satisfactorily. The history, even in more difficult times, is relatively good. The problem in the last year was when management wanted to remove that consultative process; when that was finally resolved, again with the intervention of Mr. Hodgson, who understood the reasonableness of the proposition, then the government comes along and removes it.

They're not really listening to the competent people that they have available to them. When it comes to dealing with municipalities under this legislation, if the municipalities don't agree in the end: "Again, off with their heads." It's the school-board syndrome operating again: if the municipalities and elected people won't reach agreements with the Transit authority, then there will be a binding agreement laid on them, courtesy of Grace and the provincial government. That is hardly the way to deal with elected representatives.

What we've got here is the growing pattern of arrogance on the part of a government that is determined to have its own way, no matter what. It's determined to have its own way with the municipalities and elected people at the municipal level; it's determined to have its own way with respect to the workers and the people who work within the system, regardless of contractual arrangements, as the member for

[ Page 6202 ]

North Island (Mr. Gabelmann) has said. It's a pattern of arrogance that seems boundless under this administration and can only be dealt with with a change of government.

MR. SKELLY: I guess this is only one further example of the colossal mess that this government has placed transit in over the last several years. Transit is not a thing that the new right likes to deal with — here or anywhere else where the new right is in power in this country or around the world — mainly because transit serves people. It's a way that government or society distributes benefits to people, in terms of transportation, that people can't always afford on the same basis. Not everybody can afford to drive a car or have their own transportation, so transit distributes the right to get around. It does it through a process of subsidy, which is why new-right and right-wing governments don't like to deal with transit.

This government has messed up the system unbelievably. They've overlaid commissions on authorities and on operating companies, so that nobody understands it. The funding system for transit in this province is so confused that most municipalities and most individuals in the province can't understand it. It's an unbelievable confusion, and this new bill only adds to that confusion, Mr. Speaker. It's really hard to believe that a government like this, or any government, could get involved in a system that is so confused.

This government is really hard to believe. Mr. Speaker, we came into this House last fall, and we ordered the Transit workers in Vancouver and Victoria back to work. We ordered the transit workers in Vancouver and Victoria back to work. We ordered them back to work by legislation, and we forced them to negotiate a collective agreement. This Legislature forced them to negotiate a collective agreement; otherwise the threat was contained in that legislation that if they didn't conclude a collective agreement, one would be imposed upon them by this Legislature. Management of the transit companies and the employees of those transit companies were successful in concluding a collective agreement. Then, Mr. Speaker, this legislation comes down and abridges the terms of that collective agreement — changes the terms of that collective agreement that the employees and the employer were forced to negotiate under the threat of legislation.

It's impossible to believe that a government in a free society would operate the way this government has done. Those employees and employers reached a collective agreement, signed it in good faith. Both sides, from the media reports, expressed their support of the collective agreement and their appreciation that it was arrived at and reached in good faith, and then the government turns around and introduces legislation which essentially does away with the collective agreement under the sections that my colleague described — section 6.1(7) and section 6.2.

[3:15]

Mr. Speaker, two things must have happened. The government employers either didn't negotiate in good faith, or the government allowed them to negotiate, knowing that in the future they were going to change the terms of that collective agreement. The minister said in her opening remarks that the collective agreement was signed for four years. In fact the collective agreement really ends today if this legislation is passed in the House. What the employees thought they were negotiating in good faith and what the government's representatives may have been negotiating in good faith is done away with by these sections in this legislation.

Mr. Speaker, government was described by French philosophers in the Age of Reason as a social contract between the citizens and their government, a contract that was entered into and based on trust between the citizens and their government. What this government is doing with this legislation is saying to the citizens of British Columbia: "You have no reason to trust this government." There is absolutely no reason any more to trust this government, because what they agree on with you one day — what they conclude with you in the form of a contract — they'll change tomorrow. You simply cannot trust this government. Any social contract which may exist between the people of British Columbia and their government no longer exists as a result of this kind of legislation. There is no basis of trust between the citizens of this province and that minister and the government she represents. That's what she's saying in those sections of this legislation: they cannot be trusted. They cannot be trusted by the citizens of this province.

Mr. Speaker, this is a government that changes words and changes the content of its words. I was listening to some of the comments that were made by the previous speakers and by the minister in her opening remarks: "On time and on budget." It's amazing. Expo, we're told, is on time and on budget. The original budget was $75 million. We're now told that the budget is $806 million but the project is on time and on budget. When this minister came into this portfolio with the responsibility for transit, she was forced to admit to the public that ALRT had run over its original budget by a huge amount of money, and then she turns up in this Legislature today and says the project is on time and on budget. This government changes the meaning of words to suit its own political purposes.

A few months ago the union applied to the Labour Relations Board to have B.C. Transit and the Metro Transit Operating Company considered a common employer, because they had a problem dealing with Metro Transit Operating Company when they were negotiating their collective agreement. The problem was that MTOC said they had no ability to pay salary increases, or they had no ability to pay for the working arrangements that were included under the collective agreement of the day. But strangely enough, at the same time B.C. Transit had a surplus, and B.C. Transit was the agency that funded, in part, Metro Transit Operating Company. This is how this government has changed the content of the phrase "ability to pay." They've changed it with school boards in the education budget, and they've changed it with municipalities, and they've changed it in order to pass legislation like Bill 3 in 1983, so they could do away with employees or arbitrarily cut back on their salaries and working conditions because "the government didn't have the ability to pay."

[Mr. Strachan in the chair.]

The employees in this case saw that it was false. They applied to the Labour Relations Board. The Labour Relations Board recognized that there was an artificial distinction between B.C. Transit and MTOC, and so they combined them as employers. It put the lie to the phrase "ability to pay" in this case. I'm sure that anybody who looked at the government's budget as opposed to what they're willing to pay for education or social services or hospitals and health care would easily see the lie in that connection as well. Ability to

[ Page 6203 ]

pay! This government constantly changes the meaning of words and phrases, and inserts new meanings.

The government has gone over the decision of the Labour Relations Board — in fact, totally turned it on its head — and now they can create separate employers out of every service operated by B.C. Transit or Metro Transit Operating Company. They can set up a separate service for handicapped transport, and maybe contract it out or privatize it. They can set up a separate service for Seabus, contract that out and possibly privatize it, as they did with the Manning Park ski development. So the whole system will become even more confused as a result of this legislation than it was to begin with.

The problem with this legislation is that it says to the people of British Columbia that anybody who negotiates on behalf of this government for a collective agreement or any other type of contract that this government enters into, perhaps even for a tree-farm licence, cannot be trusted. The negotiators for this government are not as good as their word. Their words can't be trusted, because this government has no compunction about coming back into the Legislature subsequent to that agreement and changing all the terms of the agreement to suit itself. There is no basis of trust between citizens of British Columbia and people who enter into contracts for the government of British Columbia in good faith. There is no basis of trust between those two, because the government will come in and use its superior legislative authority to change the terms of an agreement and totally wipe it out.

This legislation talks about management's exclusive rights. Management rights is a theory that came about, I suppose, at the time of the Industrial Revolution, when managers were deemed to have all the rights to allocate capital and labour. In fact, labour and capital were considered their property. Over the years, as society has become a little more democratic and as individuals have become more highly valued, agreements have abridged management rights. Management has profited from those agreements, because workers who are involved in making decisions in the companies, businesses or governments that they work for are found to be more productive. They're willing to give more in serving the company or enterprise in which they have a say in making management decisions. So management has found it to their advantage and their profit to allow their rights to be abridged and to allow employees to provide more input to management decisions.

What this legislation says is that management goes back to the theory of exclusive management rights to allocate capital and labour, to a theory that is 200 years dead — and we're all thankful for it. But it has been revived in the last little while by the New Right.

There are a number of economists who talk about how you can increase productivity. This government seems to believe that you can increase productivity by coercion, by forcing workers to work harder. In fact, you can increase productivity a very small amount by forcing workers to work harder and longer. You can force workers to increase their productivity in other ways. You can reduce the costs of occupational health and safety regulations and environmental regulations, and force workers to work harder and longer under unsafe conditions. You can threaten workers so that they are insecure about their jobs or their wages. You can force them to increase their productivity a little bit. But there is what is called by economists the social component of productivity, and that is that workers will only give their best to a government, enterprise or company that involves them in establishing the objectives and in decision-making with respect to the operation of the company, especially to the relationship between the employees and the employer. That's how you get the best.

What this government hasn't learned and is probably incapable of learning is that the only way you can get people to give their best is to inspire them to do it, to involve them in making those management decisions. To go back to a theory of management rights that's 200 years old, and became obsolete then — if it ever had any application at all — is ridiculous.

Mr. Speaker, what this government is telling us in this legislation is, first, they can't be trusted; second, their agents can't be trusted when they're entering into agreements and contracts with people; and third, they have no understanding whatsoever of how to involve workers in the kind of decisions that are going to make them more productive, and more able and more willing to produce the best they can for this province. It's a shame that this kind of legislation is being presented in this House in the twentieth century. The minister talks about the new transit system taking us beyond the year 2000. This legislation takes labour relations in our transit system back beyond the year 1900.

HON. MRS. McCARTHY: I'm pleased to respond to the old left, and their comments regarding this bill, because as always the members opposite have tried to confuse the issue and have taken an opportunity in this case to utterly read into this act an entirely different interpretation. I can only interpret that as being a scare tactic which they would like to carry forward into the community to frighten those people who are charged with the responsibility of operating the bus services of this province.

First of all, may I say that it is absolutely incorrect what the member from — I'll go in the order in which they spoke — North Island (Mr. Gabelmann) tried to imply, that we are completely undermining the collective bargaining system and the collective bargaining contract which we already have in place with MTOC drivers and with the MTOC.

Interjection.

HON. MRS. McCARTHY: Yes, you didn't imply, you actually said it. And you didn't read the bill, or you would know differently. You didn't read the bill or you would realize that it was absolutely not true. That's absolute rubbish, and he knows it.

Mr. Speaker, we reached an agreement some months ago, and it was on labour matters that we discussed with ICTU prior to either the company or the union signing the collective agreement. All of the management rights that are implied in this bill.... Everything was discussed with them. It's wrong to say that in any way this bill reneges on any agreement that is reached between MTOC and ICTU. In short, there's been no breach of understanding or no breach of contract at all.

It's important to understand the effect that this bill has on the employees. As a result of this merger, employees of Metro Transit Operating Company will become employees of B.C. Transit. That's very clear. But section 6 of the act specifically protects the rights of MTOC employees in regard to salary, seniority, group insurance and medical benefits, and any

[ Page 6204 ]

other benefits that they have under the present agreement are totally intact as this group of employees transfers in name to B.C. Transit. It also states that B.C. Transit is bound by all collective agreements between Metro Transit and its employees. That's very, very clear in the bill. That this member on the floor of this House should try to confuse the issue and to confuse the public in that respect is totally misleading to the people of this province.

Secondly, he is talking too in terms of contracting out. He mentions contracting out. I don't know.... We've had comments made by the member for Vancouver East (Mr. Williams) about how much the minister knows about the ministry. He certainly knows nothing about the B.C. Transit. He would know full well that B.C. Transit has been contracting out for a long time. They contract out for handicapped services and for operators to provide services in small communities, and have done so for a long time. The only thing that contracting out changes.... There's no change in contracting out. It preserves the ability of the B.C. Transit — the old B.C. Transit — to continue to do what they have always done. It does not in any way impose upon the old MTOC, which now moves into the overall general body. It does not in any way change the contractual arrangements that were made with them heretofore. But it does protect B.C. Transit to continue to do what they have done in a historic fashion all of these many years.

[3:30]

The members talk about the right to manage. Let me tell you that in the years leading up to the labour strike of last year, it was recognized by many people, and the misinterpretation at the time was, that management indeed, if they had the right, were not ever allowed the right to manage in total. This bill simply makes it clear, as Mr. Morris made it clear in his recommendation. Mr. Morris took a long time to bring it in as an industrial inquiry commissioner. He is a well-respected labour leader and certainly has been applauded both nationally and internationally in that regard. He has very properly and clearly laid out his comments, and I'd like to quote those, because the members should have read them if they haven't. I quote:

"I have examined the contract provision and find no basis for the assumption of the veto by either party to the contract. The contract is an agreement entered into by two parties, in this case the MTOC and the ICTU, presumably for the mutual benefit of both the company and its employees, and each party has obligations to the other. If a problem arises and there is machinery in the agreement to settle the problem, then it should be used.

"On one hand, when policy changes are being contemplated by management that affect their employees, it is appropriate for them to consult with the union, but it is not appropriate for the union to use a, 'veto.' They too should consult and discuss the questions raised by the employer and offer such advice as they can. That way, problems may be resolved without confrontation.

"It must be recognized that MTOC has the right to manage the operation of the transit system and to provide a proper level of service to the community."

I have to say, Mr. Speaker, that after that was clearly enunciated in Mr. Morris's report, we did not hear the union say at any time that they disagreed with that. I think that they too agree with this, and that's why I feel quite comfortable in saying that I think there is a new era of cooperation between the union and our management. I put a great deal of appropriate and suitable commendation for that with our new chairman of the board of MTOC, Mr. Stu Hodgson.

A couple of other things were mentioned which I would like to comment on. First of all, I've handled the right to manage and Mr. Morris's recommendation. That's all that this legislation does. But there was an implication by the member for Vancouver East that we do not consult with the employees. Well, let me tell you there's a very new era in our transit services, and there has been a lot of consultation. We've had to make some changes with the fareboxes of late, and it has been our own bus drivers, our own people, mechanics working within the system, going to Toronto.... We sent them to Toronto; we sent them to California; we sent them to Washington. It was not some consultation from above; it was not somebody brought in to do the job. It was done within MTOC, and it was done very well.

We have other examples of that kind of cooperation. They are assisting us in upgrading in ideas of safety. They have been consulted in the problems that we had with the new Flyer buses in January. All of that has been going on apace, and it will continue to do so because we do recognize that there has been, over a very long period of time, a real difficulty in terms of this large company which has grown even larger. In order to manage and get the kind of morale that we want in order to serve the public better, we need to have that kind of cooperation and consultation. I will pledge on the floor of this House, and I don't care if the people opposite believe me or not.... I pledged a long time ago when I took on this responsibility that we will have that kind of service and that kind of morale in B.C. Transit in the months and the years to come. I know that those people who belong to the system want that kind of reputation and will certainly give it to us.

I want to say that it always has been the ability of B.C. Transit to contract out; it's never been changed and isn't changed now. It is just that we did not want to have the implication that that would be taken away from B.C. Transit with the two groups taken together. That's very clearly enunciated in the bill, and so it should be. It's not wiping out anything they had before, either, but it is protecting what MTOC has had.

Anything said on the floor of this House in terms of going back on contracts and making null and void agreements and collective agreements which have been reached in good faith by both parties is absolutely balderdash. It is totally misleading, and I am sorry to say that that's the only kind of debate that has come out of this bill, because it is a sincere attempt to take a very large organization.... It is one that has grown, I might add, and funnily enough that you should mention in this debate about our lack of desire to assist in transportation on this side of the House and in this government.... This government is the one that produced all of the small community services. Now you can have a bus service in Prince George, in Penticton and in other parts of the province, not just in Victoria and Vancouver; now there's a handicapped service throughout this province that rivals any on the North American continent. Also, the whole of this system, which I think each and every member of this House should be proud of, is done over a larger geographical area than any other in this nation, and has by far the most generous financial input of any provincial government in this nation.

[ Page 6205 ]

So I very proudly — proudly, I say — move second reading of this bill at this point in time, and I do so knowing full well that this is an excellent move to better transit services in the province of British Columbia.

[3:45]

Motion approved on the following division:

YEAS — 25

NAYS — 17

Bill 38, British Columbia Transit Amendment Act (No. 2), 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: Second reading of Bill 18, Mr. Speaker.

INCOME TAX AMENDMENT ACT, 1985

HON. MR. CURTIS: This bill makes two changes to the British Columbia low-income notch provision, and amends an assessment provision to harmonize the British Columbia Income Tax Act and the Canada Income Tax Act. The British Columbia low-income notch provision, which was introduced in 1979, is designed to provide that British Columbia taxpayers do not normally pay more provincial tax than federal tax. This provision is being extended by Bill 18, effective for the 1985 taxation year, to include the health care maintenance surtax. When that surtax was introduced last year — 1984 — it was excluded from the low-income notch provision and therefore payable by all British Columbians with taxable income. The amendment contained in this bill will eliminate the health care maintenance surtax for British Columbians whose provincial tax liability is reduced by the low-income notch provision.

[Mr. Ree in the chair.]

A further amendment provides an additional provincial income tax reduction for low-income taxpayers who are able to claim all or a portion of their spouse's federal tax reduction. Under the federal act, if an individual has no taxable income or has basic federal tax payable of less than the federal tax reduction available to all taxpayers, the unused portion of the individual's tax reduction can be transferred to his or her spouse. The federal tax reduction has been set at $100 in 1985, $50 in subsequent years. This amendment will ensure that, for all low-income British Columbia taxpayers who claim all or a portion of their spouse's federal tax reduction, provincial tax will not exceed federal tax after the amount of any federal tax reduction transferred between spouses is claimed.

Finally, the bill amends a section of the Income Tax Act to bring administrative enforcement and collection provisions in line with the federal Income Tax Act. Under the terms of the tax collection agreement, British Columbia has agreed that it will maintain its taxing statute on the same basis as the federal act. This change was requested by the federal government, and arises from previous amendments to the federal Income Tax Act imposing a liability on directors of companies for payroll source deductions which were not remitted to the receiver-general. This amendment is retroactive to November 13, 1981, the date the federal change was effective.

Mr. Speaker, I believe that these amendments will improve the fairness and efficiency of the British Columbia Income Tax Act, and I move second reading.

MR. STUPICH: The opposition will certainly support these modest changes in the income tax legislation. I understand, with respect to the notch provision, that it's effective for 1985, so those who were caught in 1984 are paying something that really hit them because of an increase in provincial income tax. It seems that every time we increase the provincial income tax we forget about the effect on low-income taxpayers, and it has happened before. That's not a fault, but it's something that does happen. I just want to make the point that it happens whenever B.C. increases the Income Tax Act.

One other thing we did was do away with the low-income tax credit, unfortunately. This is a very small step to protect the lowest-income people in the province. While we support it, we wish we could be doing much more. We'd certainly like to see the low-income tax credit reinstated at some point.

HON. MR. CURTIS: I note the comments made by my critic the member for Nanaimo.

Interjection.

HON. MR. CURTIS: On, I'm sorry, there's a new phrase on the other side. I've not heard that, Mr. Speaker.

Nonetheless, we can deal a little more with a couple of these things in committee. I move second reading of Bill 18.

Motion approved.

Bill 18, Income 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: Second reading of Bill 32, Mr. Speaker.

[ Page 6206 ]

COMPENSATION STABILIZATION
AMENDMENT ACT, 1985

HON. MR. CURTIS: I would like to make a few remarks regarding this amendment act. The bill before you introduces various housekeeping amendments to the Compensation Stabilization Act. I don't intend to spend a great deal of time on the proposed changes, inasmuch as from my point of view they simply streamline the administrative process.

The amendments cover three areas. (a) They reduce the time allowed for employers to file a compensation plan with the commissioner. That reduction is proposed from 30 days to 10 days. When the program was first introduced in 1982, 30 days was considered reasonable; after three years of experience, we believe employers do not require that amount of time.

(b) Under Part 3 of the Compensation Stabilization Act, the regulations section, the program review over time has revealed minor drafting flaws which prevented the implementation of a compensation plan determined under the regulations. This proposed amendment addresses this omission by specifying that a plan may be determined according to the formula in the regulations and implemented by the commissioner. I would note that as most members would know — if indeed all members, Mr. Speaker — to date no plan has been placed under the regulations. All have been reached under the guidelines section of the program.

(c) In section 12, the confidentiality of information obtained by a mediator appointed by the compensation stabilization commissioner is protected, as is the practice under the Labour Code. This detail should have been caught earlier, but it is dealt with here. For easy reference, I refer members — those who don't have it immediately — to section 127 of the Code passed some 12 years ago.

Depending upon their philosophy, the citizens of B.C. and members of this House are, I believe, well aware of the value of the compensation stabilization program and the effect it has had in preserving collective bargaining while ensuring the taxpayers' ability to pay. We consider this to be still the paramount consideration.

Mr. Speaker, I see that the member for North Island is present. He undoubtedly will have something to say. The amendments are essentially technical in nature. It is an amendment act. Perhaps they lend themselves to be debated more fully in committee. I move second reading of Bill 32.

MR. GABELMANN: Let me just say we will do this in more detail in committee; at least I hope to.

I don't have any particular problem with sections 1 and 2. In fact, if we have to have this kind of scheme, I would endorse those particular changes. The nub of this legislation, however, is in sections 3 and 4. To begin with, Mr. Speaker, I must say that I do not share the view of the minister, as he indicated in first reading and again today, that this is a technical bill — minor amendments. The major reason I say this is not minor is because we have gone from a system where the collective agreement needed to be worked out by the parties. We now have Mr. Peck or his successors given the right to establish the terms and conditions within the collective agreement. That's a major departure, Mr. Speaker.

In making any comments about compensation stabilization, I think it's necessary for us to make very clear that the objectives of restraining government expenditures are not at issue. What is at issue are the methods chosen by the government to accomplish those goals. We believe that government should give to its agents the authority to bargain, and to bargain toughly. Give them the limits of the ability to expend, but send them to the bargaining table with those instructions. Don't give those agents of government this kind of legislative authority which effectively puts an end, in any real sense, to collective bargaining in the public sector.

This major debate in principle took place at the time of introduction of the Compensation Stabilization Act. I don't believe it's appropriate under these amendments to repeat that debate, and I shan't.

I want to say that, in respect to section 3, this legislation now gives in clear and unmistakable form the right to the compensation commissioner to determine the terms and conditions of a collective agreement. He now has the ability, under this amendment, to "fix the terms of a compensation plan." Mr. Speaker, a compensation plan in the act is defined.... I should read it all, rather than just taking out the section I want to refer to. "'Compensation plan' means the terms and conditions, however established, for the determination and administration of compensation of an employee or group of employees and includes the terms and conditions of a collective agreement...." A lot of terms and conditions in a collective agreement may not be for the hourly wage or for the amount that goes into a pension plan or for the amount that goes into a dental plan, but in fact in other ways are cost items. So what we're basically doing with this amendment, number 3 in this bill, is giving to the compensation commissioner the right to fix collective agreements in a wide variety of areas, far beyond anything that people in this province would accept if they were given all of the information about how and why we have or did have free collective bargaining in this province.

Number 4 of the bill deals with arbitrators, to get around the problem that the minister has had with interest arbitrators' awards in particular areas. It seems to me, Mr. Speaker, that you effectively destroy the interest arbitration system by establishing an authority that can look upon a judgment made by an interest arbitrator and vary it. An interest arbitrator, in determining what terms and conditions of the collective agreement should be, looks at a whole variety of things, including compensation. He or she looks to contract language and many issues that might be in dispute. And you trade them off, one for another: you give something there; you don't give it there. You make trade-offs that, in the arbitrator's opinion, will fairly represent a balance between the parties.

[4:00]

Now what you're saying to those arbitrators is that some elements of that interest arbitration award are subject to review and deletion from the contract or amendment in the contract. That leaves interest arbitrators in an untenable position, because they no longer will know or have the ability to make judgments about the appropriate trade-offs. The contract won't emerge in its final form in the way that they had anticipated it emerging. Quite frankly, it makes the job of interest arbitration impossible. I've read a number of judgments by interest arbitrators suggesting that they cannot work in that field under this legislation; and that will be even more so should this bill pass.

If society is looking for ways in which to resolve disputes in difficult areas — areas in which strikes and lockouts are if not difficult sometimes impossible — and where appropriate

[ Page 6207 ]

resolution cannot be found through the normal collective bargaining process, we have had the option of the parties saying to each other: "We will refer these matters to an interest arbitrator." It's an idea which has a lot of critics in industrial relations, but it's also an idea that has met with fairly wide support — witness how widely it's used, particularly in health care and other fields where the strike or lockout weapon is really virtually useless. With the Compensation Stabilization Act and with section 4 of this bill in place, the whole concept of interest arbitration is at least threatened and perhaps made impossible as an alternative for resolution of industrial disputes in this province. Not only is free collective bargaining made meaningless in the public sector; so too is that alternative choice of arbitration that some people have decided to choose.

Mr. Speaker, I said I wasn't going to reopen the debate about the whole principle of people who have a dispute sitting down and resolving it without some third party intervening, but that's what this is all about. I must say in parentheses that I'm getting tired of this speech. I had to make it earlier this afternoon; I had to make it last week; I had to make it last September; I had to make it last spring. The government feels so free to intervene when it comes to people's labour and determining what their compensation should be, but it never makes the same kind of arbitrary determination in respect of goods.

Mr. Speaker, if the lowest bid for a particular government project to supply knives and forks for the parliamentary restaurant is too high, the government doesn't bring in a bill saying the price shall be 10 percent less. It doesn't set up an agency to do that for it, but we do it with people's labour. On that score I agree with Abraham Lincoln, when he said that labour is intrinsically of more value than is capital, because people are more important than things. But when it comes to the way this government operates, it has the opposite view. A contract for goods is somehow sacrosanct and not to be interfered with, but one that deals with people delivering services is there to be interfered with.

Mr. Speaker, I'll conclude with this: if the government wants to keep costs down, then it should make sure that its negotiators are given those instructions, and it should have some confidence in them. The price of this in a free society is more than I'm willing to pay.

MR. STUPICH: Mr. Speaker, I think the member for North Island has made it quite obvious that the opposition will be voting against this legislation. Perhaps the thing that disturbs me more than the legislation itself is the government's attitude toward this legislation. For the minister to say that these are simply housekeeping amendments is something equivalent to using a fire hose to dust window ledges in a house, without thinking at all of what damage is going to be done — the dust is simply being removed so obviously he has achieved what he wants to achieve.

[Mr. Kempf in the chair.]

To give to one person the authority to say what the terms of the contract between employers and employees will be, without necessarily listening to any of the arguments advanced by either side or both, or to the interested arbitrator.... There certainly is provision for him to listen. But there can be no knowledge outside of his office as to whether he has listened, because no one else has access to the information he has been given by the parties, as I read this legislation. It was enough before. The commissioner had the authority to refer back to the parties any agreement that they had reached, and to say, "This is not good enough," or, "It's not small enough; it doesn't meet my guidelines; have another go at it and bring in another recommendation." To say to them now in advance, "If I don't like what you come up with, I may or may not pay attention to the information you've used in arriving at this; but whatever, once you have reached your decision I have the absolute right to write the agreement that I think should be signed between the two parties...." As I say, Mr. Speaker, to say, with that kind of authority being given to him, which is substantially more authority than he had under the legislation before this amendment was introduced, that these are simply housekeeping changes gives just that much more evidence as to the kind of attitude this administration has toward democracy.

For the past three or four years, bill after bill introduced in this House has taken out of the Legislature the authority to do one thing after another. Even income tax may be increased now at the will of the government, simply by passing a regulation within the cabinet room. I don't know of that coming up in any other jurisdiction among the western democracies. It may, but I don't know of any such case. Step by step they have taken authority away from the Legislature. They come to the Legislature with bills and ask for approval for bills for which they already have the authority, simply because they want, for political reasons, to have the Legislature vote certain workers back to work or some such proposal. But when they don't want the political argument, they want the authority to deal with everything in cabinet — in this case not even cabinet. Cabinet may offer advice. I don't know. I don't know the relationship between the Compensation Stabilization Commission and the cabinet, but I'm sure they would have opportunity to discuss such things with the commissioner.

In any case, with or without the advice of cabinet and with or without having listened to any of the arguments put before him, under this bill the commissioner will have the authority to say, in effect: "All of your bargaining is a useless and expensive waste of time. Why bother with it? When you're finished with that whole process, I, the commissioner, am going to write the agreement, so why do you waste your time and everyone else's time? Why do you waste the effort? Why do you spend the money, when you know that when it comes right down to it, I have the authority to write the agreement?" That's the attitude of the government.

As I say, Mr. Speaker, the worst part of it is that they say that this very substantial change is simply housekeeping. That's their attitude to taking that kind of authority not just away from the Legislature, as in this instance, but away from many groups in the community who have had, up until now, some purpose in trying to negotiate contracts. From here on it will be seen by people as an exercise in futility and will be, I believe, interpreted as just one more attempt to destroy the trade union organization by making it a useless organization, which is a course upon which they set after the election in 1983 with the legislation that was introduced with the budget of July 7, 1983. This is one more step in the process of attempting to destroy the usefulness of trade union organizations, in the hope that the organizations themselves will be destroyed. The opposition will be opposing this legislation.

[ Page 6208 ]

DEPUTY SPEAKER: The minister closes debate on Bill 32.

HON. MR. CURTIS: Mr. Speaker, I have noted the comments by the member for North Island (Mr. Gabelmann) and the member for Nanaimo (Mr. Stupich). The phrase "housekeeping amendments" is a phrase that is perhaps overworked in government. I first heard it when I was sitting over there. Nonetheless, I am still of the view, Mr. Speaker, notwithstanding the comments made by the two members of the NDP, that these are essentially clarifications of a bill that has worked very well.

The member for North Island shakes his head in disagreement. Mr. Speaker, I recall the debates — and I will respect the fact that he did not want to revisit the entire compensation program — following introduction of the main legislation in 1982, which this act amends. The fact remains that the process has worked surprisingly well. There are those who had hoped it would not work, but indeed it has.

I think there may be, if I may say so, a slight overstatement of precisely what would occur in one of the sections. We can deal with it further in committee, if that is the committee's wish at that time. As I indicated in opening second reading, in effect the program staff, the small staff associated with the office of the commissioner, discovered some minor and technical matters that required amendment in a regular program review, and that's why the bill is here. There is no hidden deep-seated conviction behind the bill. It says what it means and means what it says, nothing more. I therefore reject the comments made by the member for Nanaimo in this particular debate.

It was always envisaged that if in the very unlikely event that the parties involved in attempting to reach an accord failed to reach a compensation plan under the guidelines, then a fixed formula under the regulations would generate a compensation plan. The act, then, requires the commissioner to refer this regulation-generated compensation plan to the parties to see if they can establish a compensation plan within the regulations. If this is not possible, then the commissioner would impose the compensation plan generated by the regulations. That's the final step.

I attached the phrase "in the very unlikely event, " and I restate that. Under the section which we will get to in committee, which is one of the key parts of this amending bill, the commissioner does not make up a plan; he simply acknowledges the one generated by the fixed formula within the regulations. Both speakers for the official opposition — certainly the first speaker — indicated that we could touch on it more in committee debate. This is clarification, and after careful review, it is an amending bill for a major program which has been one of the cornerstones of the move towards recovery in British Columbia. I feel as satisfied with it today as I did when we had the strenuous and lengthy debate of 1982 — in fact, even more so because of its proven success — and I'm convinced that with the amendments which are before us today that success will be further ensured. I move second reading of Bill 32.

[4:15]

[Mr. Strachan in the chair.]

Motion approved on the following division:

YEAS — 24

NAYS — 18

Bill 32, Compensation Stabilization 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: Second reading of Bill 37.

SECURITIES ACT

HON. MR. HEWITT: I rise to move second reading of Bill 37, the Securities Act. Our existing securities legislation, Mr. Speaker, was enacted in 1967, at which time it was considered to be uniform with Ontario and the western provinces. Since then, there have been major changes in other jurisdictions, and therefore the bill before the House is intended to bring our securities law in line with — and, I might add, in some cases ahead of — the rest of the country, to provide the best possible protection to Canadian citizens who deal in the securities markets in this province and to provide greater certainty to those issuers who raise capital in this market.

There are three main areas in which we can now claim to be uniform. First, we are now consistent with the rest of the country in the area of registration and prospectus requirements and their exemptions. Second, continuous disclosure, presently regulated by policy, now forms an integral part of the proposed bill, and with it its exposure to civil liability for those who choose to ignore its provisions. Third, a part relating to the mutual fund industry under the heading of "Self Dealing" codifies another area dealt with at present by policy. This generally deals with the insiders of mutual funds, its managers and advisers, and describes prohibited loans and investments, indirect dealing and disclosure of fees. Again, a civil liability provision is imposed for wrongful dealing.

In addition to the uniformity provisions of the bill, there are extensive changes made to our takeover bid legislation. Here we are out in front of the rest of the provinces and have adopted the proposals agreed upon by the securities administrators. Other provinces are expected to follow with comparable legislation. Introduced as an offence is the situation where an insider tips another that a bid is about to take place before the information is generally known. This offence also incurs civil liability.

[ Page 6209 ]

Another feature of the bill allows the government to provide a framework for the special investment conditions in this province, including the creation of a Securities Commission appropriate to the province's unique circumstances.

Finally, the bill sets out penalties of up to $100,000 and/or imprisonment for a term of up to five years less one day for wrongful dealings. Protection of the public interest is paramount, and some offences, particularly those in the area of misrepresentation, call for more severe penalties than are presently provided.

As hon. members are aware, the bill before the House represents a long and arduous of consultation with many segments of the business, investment and professional communities. I am satisfied that we now have a workable consensus that overcomes the objections raised against previous drafts of this important legislation. This bill puts our securities law at the forefront in this country.

With those remarks, I would be prepared to receive any debate there might be on this bill, and I therefore move that the bill now be read a second time.

MR. HOWARD: Mr. Speaker, I think not only the primary but probably the exclusive function of securities legislation — not only now but dating back to the time that such legislation was first developed — should be the protection of the general public, the protection of the investor. I noticed that the minister used the words "protection of Canadian citizens who are investors," but I think it should protect those who are not Canadian citizens but still investors; in other words, everybody. That's the primary purpose of it.

The necessity has become more of an obligation of society because of the increasing complexities of the securities market. Over the years various types of investment securities have been developed by the issuer, with different components to those securities designed to suit the convenience of the issuer and not the convenience of the investing public. There is a rash of components to bonds and debentures as to retractability and convertibility features. Similarly with equities, with types of common shares, some of which do not have voting rights and some of which do, and with various types of preferreds. The list could go on to identify what all of these investment vehicles are, but I don't think that's necessary, except to indicate that there are so many of them and there will undoubtedly be more types of such investment vehicles.

The one which is probably attracting some interest at the moment, given the expectation of the federal budget two days hence, is as to whether or not the concept of flow-through shares will be made available to the forest industry. The forest industry is praying that will happen so that flow-through shares being issued to the general public may become more attractive than might otherwise be the case, with treasury shares being issued by some of those forest companies. It will put them in a position to readjust their balance sheet and get some more money into the treasury to do something with it. But all in all, the public is the one that needs to be protected.

[4:30]

There are other factors which are not only oft-times confusing to the general public, but which are not generally known to the general public in moments of investment: that is, what factors prevail within the financial structure of a company at any given time that would affect its potential ability to meet dividend payments, for argument's sake. How many times over does a particular company earn money to ensure that the dividend payments are somewhat secure?

There's a variable formula for that, but the formula cannot come into play and be applicable until the company reports its financial position regularly on a quarterly basis. People inside know what that information is before it gets out. That places insiders, as they are loosely referred to, in a different position vis-à-vis the general public.

I've heard varying views from members of the public about insider trading, ranging from the absolute prohibition against insiders being able to trade in shares at all, to the other extreme. We know that's not so. An insider can trade, and all that has been required up until now is a report — I believe a month-end report — about his position of insider trading in the preceding month, or whatever the period of time. In any event, that's not terribly relevant. The fact of the matter is that people who are in the know inside a corporation know the affairs of that corporation before the general public knows them. The continuous or full disclosure provisions in the bill may be a move to somewhat dilute the opportunity of insiders to have knowledge of material facts before the general public, and to use them to their advantage. That's a move in the direction of protecting the public more so than has been the case in the past.

I want to submit that it may be virtually impossible by way of legislation to prevent insiders or others from having material-fact information and using it to their advantage in the marketplace in dealing with securities on the various exchanges. For instance, those who may not have access to material facts but who are close to the market, who watch it every day or who work in the market, become pretty good judges in watching what used to be called the ticker-tape but is now an electronic device that displays what is happening. People who work in or close to the industry, or those who may have television sets in their offices that run a continuous flow of information about moves on the marketplace, are able to have immediate information about moves in the market, and are thus in a better position to take advantage of moves up or down to protect their investments. They have that capacity much more so than the general public has.

There are also, and there will likely always be, the stock-market manipulators — those who want, by one means or another, in the buying or the selling of stocks, to influence their price in such a way that an advantage accrues to the person who is successful in doing that.

It is also, regardless of what this bill may say, a fact of life that some people with that capacity and intellectual desire — maybe I should say mental desire — to find a way around the law will find it. If they want to do it, they will find it. They will either find that there is a legal way to do something which the law seeks to prohibit, or they will try to do it illegally. That has been the history of a number of people in the market game for decades now.

What I'm getting at with respect to that is that I think the process of enacting securities law should be like one of the provisions in the bill which requires continuous disclosure; the enactment of statutes relating to the protection of the public should be a continuous process as well, so that we don't go through this.... I think the minister's predecessor had some idea about a bill. In fact, didn't he introduce a bill in the House that has this...? And this appears some years later. So the whole process of developing.... Even though it's patterned after the Ontario model — and I gather that the Ontario securities legislation has been the model for Canada for some length of time, because they ran into a great many difficulties on speculative-grade securities 20 or 30 years ago

[ Page 6210 ]

and felt constrained to fix that.... So we've looked at Ontario, and other places have looked to Ontario as being the model to follow. This appears to be what has gone on here.

But it shouldn't stop there. I think that any time it is discovered that somebody has found a way around the law, where the words are not clear and precise enough to protect the general investing public, then it should be plugged immediately. It should be examined, and I know that the administrators of securities law will certainly keep an eye on that, and they may well even prepare the loophole-plugging legal words to put in a bill. That's not the problem, Mr. Minister. The problem is the guy or woman who happens to sit in the minister's seat and whether or not that next stage will be taken. That's what I'm talking about — the obligation to keep this on an upgraded basis.

One thought I want to express with respect to the bill is that one of the minister's predecessors — I don't know whether it was Mr. Hyndman — spoke about the need to establish a different process or mechanism to protect the public with respect to what were loosely called investment grade certificates or investment grade securities, and those that might be called speculative securities, and to identify somehow or other that the mechanisms for the commission to deal with those sorts of things should be different. I don't think it's impossible; it's done with respect to the options market. A company cannot have options on its shares listed on the trans-Canada options market unless that company meets a certain set of criteria involving the payment of dividends, a certain size, a certain capitalization and so on. In other words, resource-based or speculative penny stocks can't list their stock on the options market.

What I'm saying is that there are criteria established by Trans Canada Options Inc., and you've got to meet these criteria or you can't make it. The Bank of B.C., for instance, has discontinued, if it ever did.... I think it did sell options at one time, or was listed on the options market, but when it discontinued paying dividends, that took it off the options board. So it is possible to identify or to set some criteria for securities to meet in order to qualify for certain activity under the securities legislation. I think that is what should be done as well.

I think Mr. Hyndman expressed that when he said in one of his background papers that "the regulation of investment grade securities and regulation of speculative securities requires different approaches." He pointed out further that "the inappropriateness of the regulatory scheme designed for investment grade companies for the regulation of junior resource securities will be proposed as a means of providing better protection of the speculator with fewer burdens on the companies." That was eminently sage and sound advice.

I think that if we are intent upon ensuring the protection of the general public who invest in securities, there should be some indication shown to them that there are some corporations, such as B.C. Tel or Bell Tel, for argument's sake — or Bell Canada, as it's known now.... There's probably no problem whatever investing your money in a group like B.C. Tel, which is a regulated monopoly, but there might be some difficulty if you invest your money in Canola Resources or some other name on the board. But a lot of people in the general public don't have that capacity of understanding the distinction between the two, nor the types of securities that they issue and so on. If we're going to get to the protection of investing — those in the general public who are investors — I think that question raised by Mr. Hyndman might have been appropriately dealt with in the bill now before us, to have established a different thing.

But I think the most important point of it all is the necessity, once having embarked upon this course of drawing the statute on the models that exist in this country that have proven, as it is best possible to prove it, that they do reach a high point in protecting the investing public.... Once you've embarked upon that course and followed what other jurisdictions have done, we shouldn't stop there but should continue to forge on. Every time something inappropriate occurs or somebody finds a way around a provision of the act in order to line their own pockets at the expense of the uninitiated general public, that should be plugged.

MR. REE: I intend to be very brief in my comments on this, and compliment the minister for eventually bringing in such legislation. This province has needed it for many, many years. I recall when the predecessor bill, the 1967 Securities Act, was proclaimed. I might indicate that it had passed through first and second readings of this House and, I believe, also got through the committee stage. It was brought in in such a rush that at that time the legislation did not even recognize our corporations or companies terminology. They still had in the Securities Act of that time letters patent, which is the term used in Ontario. The whole bill had been brought in in its initial state, completely as it had been passed and proclaimed in Ontario.

This bill, Bill 37, has adopted a great number of the provisions of the Ontario securities legislation — a lot of the good provisions — in order to have uniformity, but it has also been drafted to recognize the uniqueness of our securities industry in British Columbia and the uniqueness of the Vancouver Stock Exchange — the practice of trading on the Vancouver Stock Exchange. I feel very strongly that it certainly is B.C. legislation, although protecting uniformity across the country. It is B.C. legislation applicable to British Columbia, and it is for that reason that I particularly commend the minister for bringing in this legislation. Naturally I will be supporting it.

HON. MR. HEWITT: In closing debate, I just want to touch on a few things that the member for Skeena (Mr. Howard) raised. He zeroed in very quickly on probably the whole thrust behind the bill: the protection of the investor, the protection of the public, not so much on the actual transaction or activity on the stock exchange, but the whole feeling for what the securities market does and how it is regarded, not just by the person who buys and sells shares on the market but also by the businessman, by the manager of estates, by the consumer himself or herself, in trying to understand this very complex market which is used to raise capital for economic activity in the province.

[4:45]

Full disclosure. We've identified that, I think, after a lot of discussion with the industry itself, with the legal profession, the accounting profession. Continuous disclosure: the opportunity to make sure that if there are material changes they should be disclosed so all the players have equal protection and equal information, and they aren't "taken advantage of."

Various types of securities. Mr. Member, you're quite right; there will always be new, innovative investment instruments. One that I learned about, which I didn't know about when I first took over this portfolio, was the non-voting

[ Page 6211 ]

common shares. You raised it. I wasn't aware of that until I got involved in reading a transcript of the Ontario commission's hearing. I had to go back and ask the experts: was there truly such a thing? I was not aware that a common share could not have a vote.

Insider information. They know before the public does; they're in that position of trust. You can't eliminate that. But we have certainly outlined again in the legislation that those who don't recognize they are in a position of trust and take advantage of that position commit an offence and can face civil liability for doing so.

In essence, the whole system is much tighter and clearer in the new legislation, and all the players are aware of that. Certainly, as I said before, it makes people more comfortable with the securities market in British Columbia.

[Mr. Ree in the chair.]

Your point about continuous update of legislation. Mr. Member, you have my commitment that I'm going to be asking my colleagues, particularly the House Leader in charge of the legislative program, that we should at least be given a slot on the legislative calendar, in anticipation that there may be need for change, for amendment, because of the ongoing uniqueness of the marketplace and the new investment instruments that may come on the scene. We should continuously try to update that.

My predecessor, the former Minister of Consumer and Corporate Affairs, introduced a bill in this House in, I believe, 1982. That's really where we started. It's taken this long, through good discussion with the investment dealers, the Vancouver Stock Exchange people, the accountants and the lawyers, to come up with Bill 37, which is, I think, a very concise, well-written, well-researched document and one where we really have good consensus that it will assist us in making sure that the investment market in British Columbia is a market that we can truly be proud of.

I should also mention the member for North Vancouver–Capilano (Mr. Ree) ; I appreciate his comments about updating. He's been very closely in touch, I guess, over the years with the Vancouver Stock Exchange. He certainly has expressed an ongoing interest about making sure our securities legislation is up to date and in tune with the investment community.

Mr. Speaker, with those remarks, I would now move that the bill be read a second time.

Motion approved.

Bill 37, Securities Act, 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. ROGERS: I call Bill 5, under the name of the Minister of Finance (Hon. Mr. Curtis). For the information of the opposition House Leader, it's our intention to call Bill 31 following Bill 5.

INCOME TAX (SMALL BUSINESS EMPLOYMENT
TAX CREDIT) AMENDMENT ACT, 1985

HON. MR. CURTIS: Mr. Speaker, I move second reading of Bill 5, the Income Tax (Small Business Employment Tax Credit) Amendment Act, 1985. This bill was dealt with at some length — at least, the thrust of the bill — in the budget of March 14. It is designed to implement an important program, through which the government will provide substantial assistance to small businesses in the form of an employment tax credit. In introducing this legislation, the government is seeking to help defray the substantial non-wage costs associated with employment. These costs, well-known to members of the House — Canada Pension Plan contributions, unemployment insurance contributions, Workers' Compensation Board assessments and others — impose a substantial overhead burden on small business, and consequently can be a disincentive to the hiring of new employees. Assistance given in the form of an employment tax credit available to all small businesses will provide relief from these high employment overhead costs and encourage small small businesses to hire more employees.

It's important to note — not for members of this House, I'm sure, who clearly understand it, but simply for the record — that, unlike many other income tax credits, the small business employment tax credit will be paid to all eligible small business corporations, whether or not they have taxable income. As this credit is intended to defray high overhead employment costs, the taxability of the small business corporation is not an issue before us with this bill.

The program is directed at encouraging employment. It addresses, as I said, the problem of high non-wage employment costs, and it touches another cornerstone in the government's economic renewal program by providing assistance to the small business sector. It is our view — a view quite widely held — that a healthy small business sector is vital to a healthy economy, and to renewal and growth in the province of British Columbia.

This credit will be available to corporations for their first two taxation years commencing after March 31, 1985, and will provide a benefit to small business corporations of about $300 per taxation year for each employee of a small business corporation — and a small business corporation is clearly defined in statute. It is to be based on eligible salaries and wages paid by a small business corporation, where total salaries and wages paid to employees in a year do not exceed $750,000. The credit will be calculated using the following formula: salaries and wages paid in British Columbia divided by $20,000 times $300, equalling the annual credit. The maximum small business employment tax credit available to a small business corporation will be $11,250 in a taxation year. The maximum credit is reached when eligible salaries and wages in a taxation year total $750,000. Above $750,000 in eligible salaries and wages, a notch provision will gradually eliminate the credit. A gradual reduction of the credit is required in order to ensure that the program does not, on that margin, act as a disincentive to hire additional employees as the $750,000 salary threshold is reached. Above $850,000 of salaries and wages, the credit will not be available.

The small business employment tax credit will only be available to active businesses as defined under the federal Income Tax Act. In order to prevent possible abuse of this program, the associated corporation rules in the federal Income Tax Act are adopted to negate claims for multiple small business employment tax credits. A small business corporation which is a member of an associated group of companies will only be entitled to claim the credit if the total salaries and wages paid by the associated group are less than $850,000.

[ Page 6212 ]

The Ministry of Finance has asked the federal government to administer the British Columbia small business employment tax credit, and I'm confident that it will. In the event that an agreement is not reached with the federal government, then this tax credit will be administered by the Ministry of Finance in B.C. The need for this form of assistance is clear. The government is determined that the program will be implemented. I simply offer that as an aside, Mr. Speaker. I have no reason to believe that Ottawa, on the basis of what I have heard thus far, will not cooperate with the province in this regard.

It's estimated that the small business employment tax credit will provide $75 million in relief annually to small business corporations. This credit, if I may emphasize, is targeted toward employment. It addresses the problem of high non-wage employment costs. It provides, we believe, a significant measure of relief to small business and will enable small business to play a major role in the province's economic renewal. I move second reading of Bill 5.

MR. STUPICH: The opposition will be supporting this legislation, but certainly not with the optimism and enthusiasm with which the minister presents it. We are obliged to support anything that holds out any suggestion, let alone promise, of economic renewal. But we feel that there really isn't much evidence — the minister hasn't presented much evidence to this point — that this bill will achieve a great deal towards economic renewal.

The minister made the comment that overhead for small business is high. Well, of course, overhead for every business is high, and, indeed, overhead for the provincial government is high. But it is high, and the minister is trying to alleviate that. That will certainly help the owners and operators of small business, whether they need it individually or not. It will help those who need it; it will help those who can get along very well without it. So that's one of the problems with it. It doesn't seem to be directed towards those who need this kind of assistance; it's a shotgun approach that will help everyone who qualifies.

The minister argued that high overhead of itself is a disincentive to hiring. It would seem to me that an employer would hire when he feels that he can make more money by hiring an additional employee, and if he feels he can make as much by letting one go, then he'll do that as well. The overhead itself is not a factor, in my mind, when it comes to hiring another employee or letting one go. It's what that potential employee might contribute to the success of the business, or what that existing employee is contributing, and whether or not it would make any significant economic difference to the corporation hiring as opposed to firing.

While every expense may be a disincentive to expanding, I cannot see that any employer would make his decision as to whether or not that employer would hire one more or a number more individuals purely on the basis of the cost of overhead. The minister argues that it will encourage small business to hire more employees, and that was another point that he made. I believe I've dealt with both the disincentive to hiring as well as the encouragement to hiring more. I just don't feel....

I would welcome perhaps some report from the minister as to representations he got from people during that very productive process of travelling around the province and speaking and listening to people, whether some employers did present what he considered to be hard evidence that in the event this kind of program were initiated, it would actually lead to more employment. If the minister has any such information, I'd like to see it.

[5:00]

[Mr. Veitch in the chair.]

It applies to corporations only. Certainly small business is important, and the minister went on to talk about the government's attitude towards small business. Perhaps it isn't the greatest employer in total, but it employs in excess of 40 percent of those employed in our economy. A large sector of that small business is not incorporated. There's nothing in this that would help those employers who have not incorporated.

Perhaps I'm wrong in saying that this legislation will not lead to more employment, because it is quite conceivable that it will lead to the employment of more lawyers who will be asked to proceed with incorporations of more presently unincorporated small businesses so that they can get in on this program. The cost of incorporating is a one-shot deal. I know the program lasts for only two years, but if an employer has a number of employees and is going to collect $300 back, well, he could at least recover the cost of incorporation. This might push him over the edge. Often there is a question in a business operator's mind as to whether or not he or she should incorporate, and this might be enough to push them over the edge on that. So perhaps in that one area it will provide more employment — employment for more lawyers.

The cost of the average employee. The minister infers — and I don't use that in anything more than a suggestion — that the cost of an employee, salary-wise, and the cost of hiring another employee, is some $20,000 per year. I know it can be more or less, but that figure is used in the formula. All I am trying to do is use that in some context. We are talking about giving the employer another $300, whether or not that employer pays taxes, as long as it's a corporate employer, and as long as he fits the other requirements of the act. I argue again that to give an employer $300 is not going to be a sufficient incentive to hire another person who's going to cost $20,000, nor a disincentive when it comes to firing. It just isn't enough to make that difference. You hire more employees if you know you have more business to meet, more opportunities to sell products, more opportunities to increase the service you're supplying. Certainly in my accounting business I would hire not because I was going to get an extra $300 — if I were incorporated, which I'm not — but I would hire....

AN HON. MEMBER: Someone to do the work.

MR. STUPICH: That's right. I'm not there to do it.

In any case, the last thing I'd like to come to is that it is a promise; the minister said the government is going ahead with it. We will support it. I think he didn't make it clear in his opening remarks that it's a promise that is not costing the government — I was going to say "one red cent" but nobody talks about cents these days — one nickel in the year with which we are dealing now. It comes into effect earlier, but no one will get anything from it until fiscal year 1986-87. We are supporting it; I hope it lasts. I can recall the forest range and improvement fund, established as a perpetual fund but wiped out two and a half years later when the government found the need for money. Let's hope that if this program is changed — done away with — it's because there really has been recovery

[ Page 6213 ]

in the province and it doesn't need it any more, rather than that the government has had a change of heart.

Mr. Speaker, it doesn't do enough. It doesn't cover all small businesses, because it leaves out all of those which are not incorporated. It will not, to my mind, make a great deal of difference in alleviating the unemployment problem in our province. Yet because it's part of an economic renewal program, we must hope that there will be something in it, and the opposition will support it.

MR. LEA: I don't think it's saying too much to say that you can support this legislation. It is legislation that might be of some small help to some small number of businesses in the province. But it is a far cry from what is needed in the small business sector.

In supporting this bill, I'd like to point out some of the items that I think should be included in it. I'd like to begin with some of the problems that small businesses have. One of the biggest problems that small business has is venture capital and equity capital, especially venture capital. Where do small businesses get the majority of venture capital? They get it from the chartered banks in this country. The banks do not lend money to small business on the basis of whether it's a good business proposal or a bad one. First of all, the banks don't have anyone who can make that judgment. There are very few people in the banking system who've ever been in business. They are bureaucrats within the financial institutions of this country. So when you take a business proposal into a bank, first no one is there to judge whether it's a good business proposal or a bad one; and secondly they don't care. All they care about is whether you have enough security to cover the loan, normally two times, quite often four times, and as high as ten times. They don't care whether you lose your family home over a bum business proposal; that is not what they see as part of their job. They see their job as lending money to small business people who will mortgage their homes and all their personal assets in order to get the money. If you really want to help small business, then you'll look at a method of getting venture capital and equity capital to small business through the lending institutions that are already in place. There are ways to do that. This bill does not deal with that.

There are a number of areas in terms of income tax and the provincial government where there could have been some help. First of all, it seems ludicrous to me that we would charge a small business corporate tax in the first five years of operation. That is for money reinvested back into the business. In some ways that's a way of getting venture capital without having to go back to the bank. Secondly, the provincial government would not lose any tax revenue, because that invested revenue going back into the business would provide new growth, new jobs and a new tax for government.

Venture capital, equity capital, taxation at the provincial level. But there are a number of areas where this government and this province could be lobbying the federal government to bring around changes in taxation, in terms of capital gains. That has not been done; at least if it has been done it's been a closely guarded secret. For instance, when you're turning a business over to the next generation, many businesses are sold just to pay the capital gains. That should be removed, so that small business can be turned over to the next generation without having to sell the business. That's already in effect in the farming community. This bill does not take a comprehensive look at the needs of small business and try to address them. It is basically a political bill that does some small amount of good for small business, as opposed to a bill that's serious about the problems of small business.

One more item before I take my seat. One of the biggest areas of concern to small business is the protection they need against the banks. In the United States they have, under chapter 11 of their bankruptcy act, a method that puts in a breathing space for business. The banks can move in to put a company into receivership if there are debentures. In Canada, it's no holds barred. The bank can move in any time it wants and change the credit line if it's a small business, put it into receivership if there are debentures, and there is no recourse by the small business person. There should be another agency that is a stopgap between the lender and the borrower when it comes time for the banks to act precipitously, which they do.

Is it needed? Yes, it's needed, and I'll cite you an example. Abacus Cities, which operated in this province and in Alberta, had $10 million sitting in a working capital account with the Bank of Montreal. The Bank of Montreal moved in and scooped that $10 million. The company was no problem until the bank took the money. Then they had some problems, and they appointed a receiver. The receivers took $58 million out of Abacus Cities. So $10 million working capital gone, and $58 million to the receivers; it's known in the trade as the Thorne Riddell retirement fund. That's happening every day, receiver after receiver.

We should be lobbying the federal government if we want to help small business, and business generally, to make sure there is some protection against the predator banks. That's what they are: predators. They have no business sense to them whatsoever. All they're interested in is collateral — your home, your private assets; they move in and they scoop it up. There's no one in the banks to decide whether it's a good business proposal or a bad — a bunch of bureaucrats in the banking system. As I said earlier, they don't care. If it's bad they like it actually, because then they can get your house quicker.

DEPUTY SPEAKER: Hon. member, would you explain to the Chair how your statements are relevant to an income tax bill, if you would be so kind. The Chair needs your assistance.

MR. LEA: Yes, I would. We're talking about an income tax bill, and we're talking about it in principle in terms of whether or not it is going to help small business. As we're discussing it, I'm talking about some of the other measures that can he taken to help small business.

One of the things in this bill, Mr. Speaker, is that I'm not sure how many small businesses are going to go out and hire someone so they can claim a rebate. It doesn't seem to make a lot of sense to me. Are you going to spend $20,000 to get $300? Surely you're going to need the employee; you're not going to go out and hire them to get the rebate. I mean, how many people would you have to hire to make a living? You'd go bankrupt fairly quickly doing it that way.

So as I said earlier, it's a bill that can be supported because it will do some small good, but it's not a bill that you can give your wholehearted support to. It's not a bill that addresses the tax problems of the small business community in any way. The small business sector will tell you over and over again that they don't want handouts, they don't want grants. They want a proper financial system in this country where they can

[ Page 6214 ]

go and get venture capital based on sound business proposals. They're tired of gimmicks. Even though I do believe that this bill is a gimmick, some small business people will be able to get something out of it. But it is a gimmicky bill; it's not one that addresses the real needs of the small business community. It addresses the political needs of a political party and a government. They're not going to turn it down. It's like going up to somebody who is starving to death and saying: "Well, we know what you need to get a job, but in the meantime, here's some crusts. We'll call it a tax credit, we'll call it a grant, we'll call it whatever we want. But it's not designed to get you off and running, creating a healthier economy." It's designed to try to help small business who are in a bind, but what they would like to do....

Interjection.

MR. LEA: That's why I'm voting for it. It will do some good — some good, but precious little. I think it's one of those kinds of programs that.... First of all, how many people are you dealing with? You're not dealing with small business. You're dealing with almost the biggest businesses in the province on this formula. I would like to see some income tax changes for small business, as it says on the cover, but this isn't really designed for small business. They'll get caught in the net. But how big is big? How small is small? I'd like to hear the minister, when he's closing this debate, talk about small business. What is small business? How many employees? I mean, is it 750? Is that small business?

I think the government's missed the real problems in small business. But at the same time you're not going to vote against this bill because they have. You'll vote for it because it will do some few people some small good.

[5:15]

MR. REE: Mr. Speaker, unlike the previous speaker I intend to direct my attention to the bill.

The previous speaker and also the hon. member for Nanaimo, (Mr. Stupich) have indicated that no one will go out and hire someone at $20,000 to get a $300 rebate. I agree with them to that extent. But I'm speaking as a small businessman, Mr. Speaker. One of the problems of the small businessman is working capital — capital for inventory if you're in a shop or inventory for goods in process in manufacturing, or the rest of it. For a small businessman, quite often, $300 per employee multiplied by a number of employees in the shop can be effective in acquiring additional products to manufacture or inventory to manufacture or products to sell. I'm speaking, as I say, as a small businessman. I know that we, my wife and I, have employees, and we will take advantage of this piece of legislation. The dollars that are saved from it will allow us to purchase additional inventory for our small business. If you multiply that by all the other small business people throughout the province who will be taking advantage of this provision, the additional inventory that they will be buying will be creating additional jobs in other industries throughout the province — the suppliers of those goods, the suppliers of the raw materials or whatever is necessary, whether it be manufacturing or retailing. Mr. Speaker, it's for this multiplying effect that I commend this bill.

I think it is a good bill, and I'm very pleased that the Minister of Finance listened to the, shall we say, representations from small business as to the difficulties small businesses have in filing the unemployment insurance returns, workers' compensation returns, etc. I think it is an excellent bill, Mr. Speaker, and for this reason I commend the minister and give it my wholehearted support.

MR. MacWILLIAM: Mr. Speaker, I find myself somewhat in the middle of the previous speakers — perhaps a little more optimistic than the first two and a little less optimistic than the last one — but I do think the bill is at least a step in the right direction. It may not go far, but it is at least a step in the right direction. There are a number of concerns directly related to small businesses in the province, concerns I think we have to come to address. The fact is that the majority of new job creation programs will most likely be in the small business sector, so I do think we have to give whatever momentum we can to maximize that job creation potential.

The bill is actually very similar to a recommendation that was made by myself, actually, in the fall, as the minister may recall, during his provincewide tours soliciting responses from the small business sector. It was submitted actually in October '84 on behalf of the New Democratic Party, in which we made a presentation outlining some of the concerns of small businesses in these tough economic times and then we made a number of recommendations. One of the recommendations was for a tax credit very similar to what we do see in Bill 5, so I do compliment the minister in taking those recommendations into account.

However, not all the recommendations were taken into account, and that is perhaps where the shortfall does occur in the bill. There are a number of areas where incentives to small business would provide, I think, a great value to the job creation prospects in that area. Changes, for example, in tax policy to small businesses would, as was mentioned earlier, encourage more employment and also relieve the high cost of unfair tax burdens, part of which this bill goes to recognize, and give some degree of relief to businesses that are pretty much on the edge at this point in time, and ensure further growth.

A number of other recommendations we had made which this bill doesn't address are, for example, the elimination of some of the property tax inequities in the small business community. Unfortunately this bill only deals with one aspect of the tax burden facing small businesses.

[Mr. Ree in the chair.]

It does go, as I mentioned before, at least a step in the right direction — perhaps not a very big step, but I am prepared to give it the credit that it is due, and in that respect I'll be supporting the bill.

MR. R. FRASER: I'm very happy to support this bill. I think it's the kind of thing we should be doing and will probably continue to do as long as the Social Credit government runs the province of British Columbia, an event I expect to have happen for some time.

This is the kind of bill that is much different from other governments, especially the one in Manitoba which taxes people who work. This is a bill which will give an employer the opportunity to have a little more money in his bank account to pay a little more in the way of salaries, to buy a

[ Page 6215 ]

little more in the way of inventory, to really get a more positive and aggressive understanding of where this government's going, and the people out there are going to like it.

We heard from my colleague across the floor who said: "Yes, I have a small business." I too have a small business, Mr. Speaker, and I too will find an opportunity to make it easier for me to survive, as will all small businessmen in the province.

[Mr. Strachan in the chair.]

Interjection.

MR. R. FRASER: There's some comment about the size of the business. It's quite well outlined: $750,000 in total salaries, but not to exceed $850,000 under certain circumstances. That makes sense to me.

The whole idea of the bill, which is so clear and so positive, is to drive the entrepreneurship in the province to a higher level, to get people into the mood of doing it on their own and giving them a ray of hope so that they can become more and more self-reliant as we carry on in 1985, going into '86 and then on into the nineties and the turn of the century. We're going to find, as it's been pointed out before, that small business is indeed the backbone of the economy. We're going to find that people will be doing the small business thing, as we might say, for they're going to find job opportunities there as they use their imaginations to create their own industries and their own businesses and to employ their fellow Canadians and British Columbians in the years ahead.

I think that the only way we could possibly have offered such an incentive program was due to the prudent management of the government of the day, which is the Social Credit government, for had we gone on spending and spending when in fact it wasn't possible to find the money for that sort of thing, then indeed we would have put the province into such a difficult economic circumstance that we could never get out. There's no doubt about the fact that we haven't got as much money as we would like as a province, and that our income is going down, and that we are a part of the recession that's hit the rest of the world, but this is the kind of thing that will encourage people to come out and to work and to do their thing.

I know the people out there want to work, and this government will do everything it can to provide that opportunity and to provide that incentive and that frame of mind. For without the people working, and without the taxes that corporations pay and individuals pay and shareholders pay on their dividends, there would be no health care and there would be no education. We know the value of those things. We know that to educate the future is to provide ourselves with a greater opportunity to provide the social services that we support. As I say, even these little things, these small tax incentives to people, are light at the end of the tunnel, just the kinds of things that are going to do it. I will certainly be supporting this bill in full.

MR. VEITCH: I rise in wholehearted support of this bill, Mr. Speaker, because it provides leadership that has been sorely needed in British Columbia as far as the small business community is concerned. It's the kind of legislation that, had I have stayed on as small business minister in 1979, I would have supported then, and I support it now. Unfortunately, a strange thing happened to me on the way to Victoria, to paraphrase Stevenson.

It's a tax holiday, and that's what we're talking about. We're talking about giving small business an opportunity for a change — to have a tax holiday, and to expand and to look forward. More than the dollars that are involved....

Interjection.

MR. VEITCH: We'll talk about a long weekend in a minute, hon. member.

More than the tax dollars that are involved, it's a signal from this government to the small business community that we are on your side: we are with you and trying to do something.

Talking about a long weekend of leadership, I noted that the NDP had a long weekend of so-called leadership, and what did they do, Mr. Speaker? What did they do with the small business opportunities, with policies? They sent it back to a committee, that's what they did.

You know, it's interesting to contrast this type of leadership in British Columbia with the type of thing that passes for leadership in that other NDP jurisdiction in Canada, which is Manitoba, where the NDP will very soon be tossed out of office, and rightly so; there's no question about it. In that jurisdiction just a short time ago, they brought in a tax on payroll. Conversely, this government says no, we're not going to tax you. We're going to give you a rebate. We're going to help you along the way. We're going to show you that the government is on your side, and we're going to lend a helping hand.

I'd like to know where the leadership in the NDP was. This opposition that would like to become government in British Columbia spent a whole, long, lost weekend debating resolutions and came up with not one whit of policy with respect to small business.

Interjection.

MR. VEITCH: Don't worry about the heavy hitters, hon. Leader of the Opposition. You'll get hit again and very soon when the next election comes up. Don't worry about that. If you don't like the heat, you can get out of the House, you know; there's no problem.

Any group that comes before the opposition with a special interest, and they can float it up, and they can run to the head of the crowd every now and then to see which way it's going — that's what passes for leadership on that side of the House. What this government is doing is putting out a message to the citizens and businesses of British Columbia, telling them that yes, we're on their side. Yes, we're going to lend a helping hand, and I agree with you that small business will be a great force in renewal. This is the type of legislation that I'd like to see expanded. This is the type of legislation that I am happy to support, and I'll give it my whole-hearted support.

HON. MR. HEWITT: Mr. Speaker, this is the second time I've been up today, once on my bill and now on Bill 5. Some of the comments from across the House during debate on this bill when members of the government side are speaking on it and the positive aspects.... The comments that come across about just carrying on the debate, etc., are interesting, Mr. Speaker, and yet when their members are up

[ Page 6216 ]

it seems to me that it's to find fault with a bill that I think it's fair to say is one of the most positive efforts — indications on the part of government.... It says to the small businessmen: "Yeah, we recognize you're hurting. Here is some assistance that we can give to you to cover those non-wage costs that you are continually exposed to." The unemployment insurance costs that are picked up more than half by the employer, the Canada Pension Plan and Workers' Compensation Board contributions, are never seen by the public and in many cases never seen by the employee as a cost to the small businessman. We talk about $7.50, $8 or $12 an hour depending on what business the small businessman is in, what his competition is — and he may be up against a huge multinational and trying to make his way — but we never recognize that that $8.50 an hour or $12.50 an hour is increased by maybe 30, 40 or 50 percent in his hidden non-wage costs, which nobody sees, not even the public. Yet he has to pay it, and every month he sees it going out.

[5:30]

So this bill is some indication that for the small businessman or the small business operation there is that $300 assistance. I think the maximum payroll total is $750,000, which would generate approximately $11,000 in tax credit assistance to the small businessman. The opposition would probably say, and has said before in this debate, that it's not enough. Mr. Speaker, whatever figure we put in, it would never be enough. That's the unfortunate part of the opposition's position. They will never understand the good concept that's being put forward in this bill. I guess that's the role of the opposition: it's never enough. Or if, heaven forbid, you gave a great amount, they'd scream: "Too much!" It would be nice if for once they'd say: "Gee, we appreciate what you're trying to do for the small businessman and we concur in what you're trying to do." For heaven's sake, they argue all the time that they're for the small businessman and that this government doesn't help. I think it's fair to say that the opposition are in somewhat of a difficult position in this debate because they don't recognize the assistance that has been put forward.

Interjection.

HON. MR. HEWITT: I guess so. You wouldn't vote against a bill like this. But you will get up and debate that it's never enough. You see, Mr. Speaker, the argument is put forward that they're not going to oppose it now, yet in comment it's not enough.

I'm just rising to indicate that it is a positive piece of legislation and will help the small businessman. Hopefully, in a small way it will contribute to new job creation in this province and will help in a small way to stimulate the economy. I think it would be worthwhile to see, when the vote is called.... Even though they may find that we aren't doing the job they would like us to do, when the vote is called do you know what they're going to do? Would you guess what they're going to do? They're all going to stand. When they stand, it would be nice if they would recognize just what this government has done. Go out and tell the media and the people of the province: "Although we don't agree with their philosophy, this government has done some positive moves." Instead of going to your convention, going to every public opportunity, whether it's on the steps of the Vancouver School Board, to incite people to riot.... It would be nice if they would say something positive outside the chamber, instead of getting up quietly and supporting it because they know they'd be afraid to vote against it.

I support the bill, by the way.

MR. MICHAEL: Mr. Speaker, it gives me a great deal of pleasure to enter this debate and support Bill 5. I would specifically and particularly like to congratulate and support the Minister of Finance for following through on the large number of requests, the large number of briefs, that were presented to him on his tour of this province. I think this government and this House in its entirety should be very proud of our Finance minister. I know that he and his staff put a lot of work into travelling the province, listening to scores and hundreds of presentations and delegations and briefs from industry of all sizes, throughout the length and breadth of this province. The minister spent a very long day in my constituency and listened to a number of briefs; I believe there were between 25 and 30 put to him. After having sat with him for that entire day, in looking back I must say it's indeed gratifying and pleasing to see the legislation unfold, satisfying the needs and the concerns of the business people and my constituents in a long series of legislation that will indeed create a better climate for investment and business opportunities in British Columbia.

I know that this particular bill, while only amounting to somewhere in the neighbourhood of $300 per employee per year, may not sound like a lot of money, but I assure you, Mr. Speaker, it is that little bit of extra effort by this government that will indeed create the climate for further investment and further job creation. I believe that that's the key to success: to have more hard cash in the hands of small businesses so they can increase the employment opportunities within the province. I think it's a matter of setting the climate for business that the private sector create the jobs, and we will see the attractions. We've seen the businesses already announce new ventures in B.C., and I'm sure that we will see many more in the coming months.

I'm pleased, Mr. Speaker, when I look at the many announcements that have been made in this province by the private sector to establish those much-needed diversified industries — industries like Ocelot Industries in Kitimat and the $600 million fertilizer plant on Annacis Island. Many new businesses, particularly in the tourist area, are developing and doing things....

Interjection.

MR. MICHAEL: In my constituency? Yes, Mr. Member, there are many new jobs, many new businesses opening in my constituency. Right now, if you were to drive down Highway 97, just on the edge of my constituency, to a little municipality called Spallumcheen, you would notice a new construction about two miles from the junction of Highway 97. A new bob-sled firm from Germany is coming into this province to set up in my constituency. They're going to be spending somewhere in the neighbourhood of $800,000 and creating approximately 10 or 11 jobs for the tourist industry.

Perhaps, Mr. Speaker, the opposition's not too happy about hearing the statistics regarding job creation in British Columbia, but measures such as this, and others, are continuing to add jobs. In British Columbia we have created 29,000 brand new jobs over 12 months. In comparing this figure with what's happened in Manitoba, we see that in Manitoba they have 1,000 fewer people working, today than

[ Page 6217 ]

12 months ago. It's very interesting to look at some of the things that are happening in Manitoba. It's interesting to read an article from the Winnipeg Free Press from back in the month of March that said that there are 60 percent more executive and special assistants in Manitoba than during the Lyon government, the old Conservative government. Also the article went on to say that the wage bill for these political appointees is about $1.5 million, twice the Tory spending in this area.

DEPUTY SPEAKER: Order, please. I'll remind the member for Shuswap-Revelstoke that the bill before us has to do with the private sector — Bill 5. Please, to the bill.

MR. MICHAEL: Yes, Mr. Speaker. In concluding, I would say that in looking at all of the changes brought in by this Minister of Finance as a result of his tour, changes such as the easing of the lease rates for marine operators.... Perhaps in the eyes of the opposition this is not particularly a big item, but it's one which has created a tremendous impetus for the people in that particular field. I'm convinced that this particular bill, this Bill 5, will be another incentive for the business people. Not only marine operators but people in business throughout the entire province will welcome this, and indeed we will see additional job creation in our province.

HON. MR. PHILLIPS: I'm proud to be able to stand in this Legislature and support this bill, because this bill is part of the leadership that our Minister of Finance and this government has shown in leading the way across Canada to assist the small business community, which is the backbone of this country.

I am so happy that it is a continuing program of leadership which we have laid out for the small business community. The number of programs that we have had in the past number of years have been the envy of every other provincial government across Canada in leading the way and making a climate for the small entrepreneur to get into business — leadership by going into the communities and working with the chambers of commerce and putting out pamphlets and telling entrepreneurs how to get into business, how to succeed. I want to tell you that they're doing it. It's nothing like the NDP in Manitoba. What did they do? They brought in an impost, what used to be a poll-tax when I was a kid back in New Brunswick, a tax on employees.

I want to tell you that that is the NDP policy. Or is it the NDP policy? I learned that over the weekend there's now a new cliché in British Columbia: boring is beautiful. Boring campaign, boring in the House, boring policies and a boring leader. But I want to tell you, Mr. Speaker, leadership is never boring.

I want to tell you that this tax which the NDP brought in on payroll is another impost on the small businessman, the very thing that we're trying to eliminate. I'm disappointed that that troupe opposite is against this forward measure that we're taking to assist the small business people. They're against it. They have been against every single, solitary measure that we have brought in.

Interjection.

DEPUTY SPEAKER: Order, please.

HON. MR. PHILLIPS: That's not a point of order.

DEPUTY SPEAKER: Well, we haven't heard it yet. We'll have to listen, then we'll decide if it's a point of order.

MR. SKELLY: I don't think the minister is intentionally misleading the House, Mr. Speaker. But you should know that our debate leader in this case said that the NDP would be supporting the bill — once the filibuster is over.

MR. SPEAKER: That is not really a point of order, but if we could bring debate back to the principle of Bill 5, the Income Tax (Small Business Employment Tax Credit) Amendment Act, 1985, then we can continue.

HON. MR. PHILLIPS: Mr. Speaker, that's not a point of order. That's the kind of leadership that they are being given opposite. He doesn't even know a point of order when he stands. That's the type of negative leadership that we're getting from that boring-is-beautiful leader opposite.

[Mr. Ree in the chair.]

I want to tell you, Mr. Speaker, they have been against every single, solitary measure that we have brought into this Legislature to support the small business community. When we tried to bring in investors, they stood on the floor of this House and chastised us for trying to bring investment in to bring about projects which would help the small business community, which would give them an opportunity to sell more goods and services and give them an opportunity to start a business. Every single, solitary thing that we have done as a government to assist the small business community, they have been against. I'm very disappointed that they're still against the small business community, and if they take a leaf out of the leadership which is coming out of Manitoba, they will be....

Interjection.

HON. MR. PHILLIPS: What's the NDP policy? The NDP policy is to put another impost on the small business community. I'll tell you, this is all part of a program which we on this side have brought about to help the small business community. I want to tell you, that's leadership, and it's not boring. No, that's leadership; that's courageous; that's the plan that we have had for years and years to assist our.... I want to tell you, you know, this government just doesn't pull ideas like this out of a hat.

AN HON. MEMBER: They pulled you out of a hat.

HON. MR. PHILLIPS: Mr. Speaker, would you bring that boring opposition to.... That's what you are — a boring opposition. You haven't had a new idea in a decade. Here we are trying to take away the impost of unemployment insurance and all the other time-consuming factors in the office of a small businessman so that his accountant doesn't have the opportunity to really pay attention to the profit and loss statement, he's so busy filling out forms for the government. We're going to assist him in that. What do they do in Manitoba? They bring in another impost. No, they've never been for the small entrepreneur; they've never been for the

[ Page 6218 ]

small businessmen. They've always been against him; they're still against him.

[5:45]

AN HON. MEMBER: Go to Japan and have another steam-bath.

HON. MR. PHILLIPS: Mr. Speaker, you know, they make all kinds of bright remarks; it sounds to me like they're coming out of kindergarten over there. They've never had a new idea in the time that I've been in this Legislature, which has been quite a time. Here we bring in a measure which will assist the small businessman, and they're against it. They go out in the business community and try and tell us that they're supporting the small businessmen.

You know, this idea just didn't come out of a hat. This idea came from the Minister of Finance going around the province and consulting with the small business community, paying attention and listening to their needs, listening to what they need to survive in this competitive world, paying attention, bringing it back, having consultations, and then bringing it into a policy to help the small business community. I want to tell you, Mr. Speaker, that is leadership. That is paying attention to your constituency and that is part of our overall plan to ensure that entrepreneurship doesn't die in this province like it did between '72 and '75.

Mr. Speaker, I'm glad to talk about this initiative in conjunction with the other initiatives which we are bringing in through the ERDA program to assist the small businessman. I'm happy to say that this, in conjunction with bringing more investment into the province, which that group over there is against, by the way — against foreign investment, against bringing money into British Columbia.... Opportunities for the small business community will derive from those investments, from the projects. Already the results of our budget are being seen in every corner of British Columbia, Mr. Speaker. Hardly a day goes by that there isn't a new announcement of somebody dusting off a plan, starting a new investment.... Why? Because this budget is a success, Mr. Speaker, and I want to tell you, that's leadership and that isn't boring, it's exciting. The leadership that we have shown is exciting, not boring, and it's happening every day.

I'm sure it must bother that boring leader opposite because he knows that we're winning. He knows that the budget that we brought down has created an atmosphere in British Columbia where investment is coming back again, where people are going to invest their money and put people to work. I want to tell you, those projects that are being announced today will give opportunities for the small businessman to start out in business and to pay attention to his business and help him, and it isn't an impost on hiring more people. If the NDP in this province had their way, the more people hired by the small business community the more impost there would be on them, because they'd want to implement a poll-tax, and that's the way they want to raise money.

I'm happy and proud to stand in this Legislature today and be part of a team that brought in a budget that is really working in British Columbia. I want to tell you, Mr. Speaker, there's lots more on the horizon. I know that it's bothering them opposite because our budget is working. It's brought about a climate and people are announcing projects.

Interjection.

HON. MR. PHILLIPS: You're the least to talk, my friend. The budget is working for the good of everybody who wants to invest in it. It's created an atmosphere. I want to tell you, this province is growing. Thanks to this Minister of Finance and his consultation and his foresight, people in British Columbia will be employed. There will be a climate for the small business community.... This measure will give them more courage and more help. I want to tell you, Mr. Speaker, that I'm very happy to stand in this Legislature today to support it. It's all part of a program, all part of a well-planned package....

Interjection.

HON. MR. PHILLIPS: Listen, my friend, just because you spend a weekend — a boring weekend — at a convention, and don't come up with one single solitary issue that you can talk to people in the community about....

Interjections.

DEPUTY SPEAKER: Order, please. All members will have their opportunity to stand in debate. And to the minister, I appreciate that the legislation may be part of an overall plan, but the debate should be on the principle of Bill 5. Would the minister direct himself to that.

HON. MR. PHILLIPS: Mr. Speaker, I'm putting Bill 5 into the context of the total package, a package that has been derived out of time-consuming thought, to ensure that it fits into an overall package of other incentives — which are coming: the ERDA incentive and the other incentives in the budget. They're all part of a well-planned package to assist the small business community.

Interjections.

HON. MR. PHILLIPS: Oh, they're yacking. That's all they do. And they're boring as well. There they are over there — yack, yack, yack. They haven't had an idea in the last two decades.

But I want to tell you that it's not just this bill, it's the overall plan to assist the small business community — and I support it.

MR. HOWARD: I won't be long, Mr. Speaker. I just want to say how much we enjoyed the last half-hour's entertainment from that minister, whose sole record involves the wrong hole and millions of dollars of taxpayers' money. Such bleatings from a minister who did more to damage small business in this province.... That's why he got moved out of the portfolio. But we enjoyed the laughter and the humour, which is about all he has got left to offer.

HON. MR. CURTIS: Mr. Speaker, I've noted the comments that have been made in the course of debate on Bill 5. I would like to deal with a couple of points. The member for Prince Rupert (Mr. Lea) is not in his seat. He, along with the member for Nanaimo (Mr. Stupich), indicated — and I think candidly — faint praise for the bill. Yes, and the calls when my colleague the Minister for International Trade was speaking said: "We support it." But I listened very carefully to the

[ Page 6219 ]

opening comments, and the member for Nanaimo and the member for Prince Rupert did say, in fact, that it's small and it won't help many people.

Mr. Speaker, in the course of presenting the budget comments on March 14 with respect to Bill 5 — page 9 of the budget document — the estimate was not inflated. It was not overstated. It was expected that this measure, which is not a minor program, will reduce the cost of employing some 250,000 persons in the small business sector in the province of British Columbia. That is not a small program. It is not something mild. It is not something that was plucked out of the air. As other members on the government side have indicated in their remarks, it is part of a very careful process of listening to the people of British Columbia in the course of that two-month tour.

I've described it before. It was indeed a listening tour, where we had presentations verbal and written, and quite clearly, Mr. Member for Nanaimo — because I think you mentioned it — there was a very definite.... There's hard evidence in the briefs that were presented — and some MLAs were present in the course of some of the meetings — that there had to be assistance for small business. There had to be assistance particularly in terms of fixed costs, and that's why I alluded, not only on budget day but again in introducing second reading, to the move to cut back on fixed costs.

[Mr. Strachan in the chair, ]

There is $75 million being forgone by the province in the two fiscal years during which time this will stay in place. There were a number of presentations recommending something like this — not precisely an employment tax credit, because that came out of our consultations within the Ministry of Finance and with the two advisors I had, following a review of all the presentations that were made.

The member for Prince Rupert also said that venture capital is needed. Well, Mr. Speaker, I'm sure he knows that the order paper shows a bill dealing with venture capital. That will be debated at some appropriate time. I think both lead speakers, the member for Nanaimo and the member for Prince Rupert, commented on a small business holiday not dealing with unincorporated firms. A small business holiday as such would have to apply to incorporated professionals because of federal tax law. That was one of the problems that we encountered. I wanted this not to assist companies which would be put together just for the sake of a tax credit, but rather for the backbone of the province of British Columbia, people involved in small business.

Mr. Speaker, it is a good measure. It should not be viewed in isolation, but in debate we have to deal with bills one by one. It's part of an overall package that was dealt with in the budget. I remain enthusiastic about it. There is great interest in it, and I move second reading of Bill 5.

[6:00]

Motion approved unanimously on a division.

Bill 5, Income Tax (Small Business Employment Tax Credit) 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 moved adjournment of the House.

Motion approved.

The House adjourned at 6:02 p.m.