Hansard — Thursday, March 19, 1987, Afternoon Sitting — British Columbia Legislative Assembly

CONTENTS

Routine Proceedings

Tabling Documents –– 181

Estimates Of Sums Required For The Services Of The Province

Hon. Mr. Couvelier –– 181

Budget Address

Hon. Mr. Couvelier –– 181

Mr. Stupich

Assessment and Property Taxation Amendment Act, 1987 (Bill 5). Hon. Mr. Couvelier

Introduction and first reading –– 191

Home Owner Grant Amendment Act, 1987 (Bill 6). Hon. Mr. Couvelier

Introduction and first reading –– 191

Corporation Capital Tax Amendment Act, 1987 (Bill 7). Hon. Mr. Couvelier

Introduction and first reading –– 191

Income Tax Amendment Act, 1987 (Bill 8). Hon. Mr. Couvelier

Introduction and first reading –– 191

Insurance (Motor Vehicle) Amendment Act, 1987 (Bill 9). Hon. Mr. Couvelier

Introduction and first reading –– 191

Insurance Premium Tax Amendment Act, 1987 (Bill 10). Hon. Mr. Couvelier

Introduction and first reading –– 191

Social Service Tax Amendment Act, 1987 (Bill 11). Hon. Mr. Couvelier

Introduction and first reading –– 191

Hotel Room Tax Amendment Act, 1987 (Bill 12). Hon. Mr. Couvelier

Introduction and first reading –– 191

Motor Fuel Tax Amendment Act, 1987 (Bill 13). Hon. Mr. Couvelier

Introduction and first reading –– 191

Property Purchase Tax Act (Bill 17). Hon. Mr. Couvelier

Introduction and first reading –– 191

The House met at 2:20 p.m.

Prayers.

Orders of the Day

HON. MR. COUVELIER: Mr. Speaker, I'd like to move that this House at its next sitting resolve itself for this session into a committee to consider supply to be granted to Her Majesty

Motion approved.

Hon. Mr. Couvelier tabled the public accounts for the fiscal year ended March 31, 1986.

HON. MR. COUVELIER: Mr. Speaker, I would like to move that the public accounts for the fiscal year 1985-86 be referred to the Select Standing Committee on Public Accounts.

Motion approved.

Hon. Mr. Couvelier tabled the comptroller-general's report in accordance with section 8 (4) of the Financial Administration Act.

ESTIMATES OF SUMS REQUIRED
FOR THE SERVICES OF THE PROVINCE

Hon. Mr. Couvelier presented a message from His Honour the Lieutenant-Governor: a bill intituled Estimates of Sums Required for the Services of the Province for the fiscal year ending March 31, 1988, recommending the same to the Legislative Assembly.

Hon. Mr. Couvelier moved that the said message and the estimates accompanying the same be referred to Committee of Supply.

Motion approved.

HON. MR. COUVELIER: I move, seconded by the hon. Minister of Environment and Parks (Hon. Mr. Strachan), that Mr. Speaker do now leave the chair for the House to go into Committee of Supply.

BUDGET ADDRESS

HON. MR. COUVELIER: Mr. Speaker, I am pleased to present to the House the first budget of this new Social Credit administration.

My budget sets the priorities of our government and takes a major step towards meeting them. It represents a fresh start. Just five months ago, British Columbians gave us a clear and strong mandate to change the way the government operates, to change its priorities and to change the decision-making process. We have already begun to fulfil this mandate, and we will do more in the weeks and months ahead as we present our budgetary and legislative programs. Economic policies in particular will be tailored to the realities of the late twentieth century. Fresh approaches are needed to satisfy the hopes and aspirations of British Columbians and to build an economy that will provide jobs and incomes for future generations.

Endorsement of a Social Credit government for the eleventh time in the last twelve elections shows that British Columbians still believe individual enterprise and a strong private sector are the keys to growth and progress for our society. Our challenge — all of our challenge — is to make the system work better, to provide benefits British Columbians want and need and to ensure we continue to enjoy one of the highest standards of living in the world.

In introducing my first budget, let me state the principles which guide our economic and fiscal policies. We believe in open and fair government which is responsive to the rights and requirements of the individuals in our society and which is not subject to domination by special interest groups. We believe government's role is to create a healthy climate for growth and development, leaving business decisions to the private sector. We believe in encouraging development that is responsive to the long-term needs and welfare of the community at large, at both the local and provincial level.

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We believe that taxpayers' money should be used carefully, that government should be affordable and that our goal must be to reduce and eliminate the deficit so today's bills will not be left for tomorrow's generation. We believe in providing help and opportunities so that the disadvantaged in our society can become full participants in our development. We believe we must invest in our best resource, our people, because they are our most valuable asset. And finally, we believe that the provision of services in our society must relate to our ability to fund them, and that users must bear a degree of responsibility in paying for the services that are provided.

These principles, Mr. Speaker — and they are not empty rhetoric — guided us in our decision- making. The decisions and plans I will outline today follow this basic philosophical direction.

If British Columbia is to achieve its full potential, we cannot rely on past solutions to tide us over until normal times return. We must have the intellectual honesty to deal directly and confidently with three major challenges: we must change labour management attitudes; we must diversify our economy; and we must re-enter the Pacific Rim as full partners. Together we must create a future that is built on fairness, on the strength of our communities and on the advantages of our geographic location. Let me give some details.

On labour relations, let me say that one message frequently heard by government and business leaders from potential investors and trade partners is their reluctance to make British Columbia a home for their capital because of our reputation for labour conflict. This reputation must be changed.

The negative image was reinforced last year by the four and-a-half month forest industry dispute. This dispute was costly not only to our reputation but also in terms of lost production, profits and wages. The losses cannot be made up. They will continue to affect our economy in 1987 through lower retail spending and capital investment. As a result, most of the loss in provincial revenues will be home in 1987. The government clearly must take action.

To meet this challenge, my colleague the Minister of Labour and Consumer Services (Hon. L. Hanson) has held hearings around the province and received more than 700 submissions on proposals to change the Labour Code. As a

result, initiatives will be introduced within a few weeks to improve our labour relations climate and the long-term outlook for employment and investment in British Columbia.

Mr. Speaker, there is no issue more crucial to our economic recovery than the restoration of equity to our labour scene — equity for workers, equity for owners and, most importantly, equity for everyone out there, the average British Columbian who hungers for it.

Dealing with industrial diversification, our challenge is to broaden and strengthen the province's industrial base, particularly in the non-metropolitan areas. Forestry, mining and fishing built this province and gave us a high standard of living. With proper management these industries will continue to be major sources of jobs and incomes for our citizens. But that base is too narrow. Markets for resource products are volatile and communities that depend on these markets are exposed to instabilities that are economically and socially disruptive.

As a provincial government we are powerless to affect global commodity prices. We trade our resources in a world market. To do so successfully, we must compete not only on ability and service but also on price. If we are to wean ourselves from this excessive dependency on factors beyond our control, it must be through a conscious, deliberate and disciplined program of diversification.

To some degree this is already happening. Tourism has grown steadily in recent years to add a new dimension to the economic base of many communities. High-technology firms and knowledge-based industries — though small — are growing rapidly. These are welcome developments, but we need more.

We need new industries that can not only compete in export markets but can also produce goods and services we now buy abroad that will support other British Columbia industries. This cannot be accomplished by government fiat and should not be done by subverting market forces. It can and should be done by identifying and breaking down institutional barriers, by improving information available on market opportunities and by providing ways for people to turn good ideas into successful businesses.

The solution is not more money, Mr. Speaker, more subsidies, or more tax concessions. We need to. provide fertile soil for entrepreneurial investment, and we need economic policies that balance small-scale, home-grown investment with larger-scale projects.

Our third challenge is to reach out to our neighbours around the Pacific and take advantage of the vast opportunities in that region. In the past 20 years our fastest growing markets have been in Asia. Currently, our exports to the Pacific Rim are worth three times as much as our exports to Europe.

Our success in Pacific Rim trade is important and gratifying, but we have much more to do. In the coming years we must sell new products in competition with new and tough producers. To succeed we must know our trade partners better, and we must ensure that they know us. We must make a commitment, Mr. Speaker.

Our first response will be through our education system, with greater emphasis on understanding Asian laws, languages and cultures, and through trade and tourism promotion efforts. We will take advantage of our location to be Canada's gateway to the Pacific and Asia's gateway to Canada. By opening the door wide our province and our country will both benefit.

My colleague, the Minister of Economic Development (Hon. Mrs. McCarthy), has signed an agreement with Ottawa to develop Vancouver as a Pacific centre for trade, commerce and travel. Under this agreement we will improve marketing of the port and airport, expand international financial and commercial activities, and develop a network of tourist destinations around the province. We will also use strategically located public lands to attract new economic activity.

British Columbia has many competitive strengths — our skilled labour force, our rich endowment of resources, our network of social programs and facilities, and our political stability. If we can marshal these strengths and meet the major challenges — labour-management cooperation, industrial diversification and expanded Pacific Rim connections the possibilities are virtually limitless.

Let's talk about international trade. We rely heavily on international trade for our economic well-being, and disruptions in its traditional patterns and rhythms are of major concern. This applies particularly when our own products are affected, but we also have a vested interest in the general health of the global trading system.

British Columbia and Canada must, in simple self-interest, seek out and solidify trading relationships if we are to attain long-term security. With cooperation we can provide that security, as shown by the success of the European Economic Community. The countries within the EEC have developed a strong and efficient alliance that allows its member nations to trade within the bounds of a virtually self-contained unit, with, ironically, a diminished reliance on goods from Canada and the United States.

We can learn a lesson from that experience by first developing a similar free trading arrangement with the United States and by later seeking a joint expansion into Central America. The rewards and benefits to British Columbia and Canada from a comprehensive trade agreement with the. United States — guaranteed access to a market of 265 million people — are obvious and immense. About 80 percent of Canada's merchandise exports are sold in the U.S., making continued access to this market a matter of crucial importance to the nation's economy. An agreement would also bring mutually acceptable remedies and mechanisms to avert trade disputes like the recent ones involving softwood lumber and shakes and shingles.

Our province, therefore, strongly supports and endorses the federal government's initiative to negotiate a bilateral trade agreement with our American neighbours. In addition, British Columbia will also press for a strong Canadian presence in the new round of multilateral trade negotiations under the general agreement on tariffs and trade, because these negotiations are at least of equal importance to our province.

Let me describe our fiscal plan. Our government made its fiscal policy clear in the 1986 election. We promised fiscal responsibility, a lower deficit, careful spending of taxpayers' money, and more local responsibility. That is what we will deliver !

In developing a fiscal plan for the coming year, the government faced several significant factors. First, we inherited a persistent structural deficit of about $1 billion. Without new revenues and cost controls, this deficit will grow out of control and threaten our ability to pay for essential programs.

Second, more moderate economic growth in 1987, following the positive impact of Expo 86 on last year's activity, will limit the increase in government revenue for 1987-88.

Third, we have identified several priority program areas where additional funding is needed to meet key social or economic objectives.

And fourth, on the plus side, the lumber export tax imposed by Ottawa to settle the countervail duty dispute with the United States will generate some of the additional revenue required to meet these concerns.

The easy path for this budget would have been to let the deficit increase by a few hundred million dollars and wait for the tooth fairy to arrive. That would have been easy, but it would have been irresponsible. This Social Credit government is determined to balance the budget and, further, to reduce outstanding debt within the next several years. That committment is firm, and while external events may affect, one way or the other, the time-frame, there will be a continuing reduction in the deficit each year until we reach our goal.

We have carefully examined our revenue sources, especially taxation revenues. As a result we are convinced that restructuring some of our major taxes will not only generate additional revenue but also improve the fairness of the system. A comprehensive review of government programs has revealed areas where less should be spent and areas where additional funding will advance our economic and social objectives. We have been able to strike a balance that meets our top priorities while keeping our deficit reduction plan on track.

Before outlining the specific fiscal targets for 1987-88, let me briefly review the year just ending. The budget presented one year ago by the previous administration projected a deficit of $875 million. The final figure is expected to be $1.171 billion, which is $296 million more than originally forecast and significantly above the previous peak deficit of $1.012 billion recorded in 1983-84. At the same time we should recognize that repayment of the Expo debt accounts for $171 million of that deficit figure, in effect leaving a deficit of $1 billion related to ongoing programs.

The main reasons for the unexpected increase in this year's deficit are shortfalls in income tax, social service tax and oil and gas revenues.

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Personal and corporate income taxes are $254 million below budget, partly because of lower than estimated collections for 1985, which under our tax collection agreement didn't affect our revenue until 1986-87.

The corporate income tax shortfall is the larger of the two, reflecting poor profits earned by British Columbia corporations over the past few years. For 1986 we expect a rebound, but that will not improve our revenues until March 1988.

The fall in oil prices last spring was greater than expected — good news for drivers, but not for the treasury. Fuel taxes, oil and gas royalties and the sale of drilling rights all fell, for a total shortfall of $124 million.

Social service tax revenue was also below budget by $43 million, as retail sales and capital investment have failed to match expectations.

The forest industry shutdown contributed to the revenue shortfall in the second half of the year, and the drain on the provincial treasury will linger for some time.

Expenditures are much closer to budget, and indeed spending on ongoing programs in 1986-87 will be slightly below the original budget estimate. There has been a major overrun for health, caused by retroactive wage and fee settlements for which no provision had been made in the previous government's budget. This has been offset by lower spending for interest, highway construction, forest-fire suppression and some programs of the Economic Development ministry.

Let's talk about revenue for the coming year. There are a variety of influences on the revenue picture. The business-tax reform measures introduced in 1985-86 will have a negative impact next year of about $145 million, of which $100 million will be recorded as a reduction in revenue and $45 million as an increase in expenditure to compensate school districts for the forgone property tax revenue.

The forest and mining industries have been major beneficiaries of this tax reduction program, which has contributed to their recently improved financial positions. Furthermore, we cannot be confident of growth in taxation and natural resource net revenue next year due to unpredictable vitality, fallout from the forest shutdown and continuing uncertainty in mineral and energy markets.

Not counting revenue from the lumber export tax and the revenue measures that I shall announce later, our revenue for 1987-88 is estimated at $8.84 billion. The new revenue measures will add an additional $183 million and the lumber export tax $350 million, for a total of $9.37 billion, an increase of 9.2 percent over the revised forecast for 1986-87.

The negotiated settlement of the softwood lumber dispute, arrived at because of strong representations by our province, ended uncertainty for B.C. producers. It limited the damage and, most important, it ensured that the proceeds of the Canadian-imposed tax would stay in Canada. The revenue we will receive from this tax will not only allow us to support a silviculture program that is the biggest in our province's history and the largest anywhere in North America, but also to increase funding for health, education, assistance to the disadvantaged and expanded forestry research.

On the expenditure side, spending growth for next year will be close to the rate of growth in our economy. The increase is needed to fund public sector wage settlements and program priorities just mentioned. Some offsetting savings will be obtained through lower highway capital spending, as we near the completion of the Coquihalla Highway and Alex Fraser Bridge projects. Total expenditure for 1987-88 is estimated at $10.22 billion, an increase of 4.8 percent over the revised forecast for 1986-87.

The end result is that the 1987-88 deficit is forecast to be $850 million, $321 million below our revised forecast for 1986-87. The fact that we have been able to reduce the deficit is due to our government's commitment and willingness to make tough decisions in order to move towards a balanced budget.

To meet the coming year's deficit and related financial transactions, we will need to borrow an estimated $825 million, increasing our direct government debt to almost $5.2 billion. The burden of this growing debt on our budget and our economy is substantial. Interest costs next year will be $181 for every man, woman and child in the province, or $530 million in total. This amount exceeds the budgets of all but the five largest ministries.

The picture is much better for indirect debt. We plan to borrow $1.05 billion for Crown corporations and agencies next year, but this will be almost fully offset by repayments and sinking fund contributions of $0.95 billion.

Our expenditure plan for this first budget, then, addresses our major priorities, which are: providing greater assistance

for the disadvantaged in our society, maintaining the high standards of our health care programs, improving the management of our natural resources, making business more self-reliant, increasing emphasis on local government partnership and investing in our people and our economy for the future.

I now wish to explain these initiatives in greater detail. The past few years have been difficult for families dependent on government for support. We intend to provide help through higher income assistance rates and a major increase in training and job programs for income assistance recipients.

Basic support allowance rates under GAIN have not increased for five years. On the recommendation of the Minister of Social Services and Housing (Hon. Mr. Richmond) we will increase the support allowance for families by 5 percent effective June 1, 1987, with a further increase of 5 percent on December 1, 1987. The maximum shelter allowance under GAIN was raised by 4.7 percent last October and will be raised further on December I by an average 6 percent. These increased benefit levels are expected to cost $51.7 million. However, the cost will be partly offset by a reduction in case loads due to new employment initiatives to be undertaken by the government.

For the coming year we plan to spend $54.6 million to provide more job opportunities for employable GAIN recipients. That, Mr. Speaker, represents an increase of $34.1 million. The forestry JobTrac program has provided job training and work experience for more than 1,500 income assistance recipients this year while helping to meet our silviculture targets. Accordingly, funding for this successful program will be increased from $13 million to $17 million. The program will also be expanded in scope to include $2 million for special park and habitat conservation work and $20 million for worthwhile community development projects. An estimated 5,000 people –– 5,000 people — will be given training and employment through this program next year. Job preparation and other work experience programs will increase by $8.1 million.

Last year we introduced an increased earnings exemption to encourage people on income assistance to look for employment. This coming year we are increasing funding for daycare assistance by 30 percent to $26.7 million to make it easier for single parents to return to the workforce.

New therapies and changing public attitudes have helped disabled members of our community to lead more productive lives. But we need to do more. Funding for services for the disabled in the Ministry of Social Services and Housing is being increased to $147.7 million — a 15 percent increase, Mr. Speaker. This increase in funding of $19.7 million will be used to help parents care for disabled infants, to integrate disabled children into regular day-care centres and schools, to provide training, vocational support and community placements for disabled adults.

In recognition of the importance we place on the family in our society, funding for programs providing care for children and the preservation of the family unit will be increased by 9.6 percent to $88.8 million. This additional $7.8 million is for foster care, specialized care for children, help for families with children with behavioural problems, and encouragement for adoption of children with special needs. All of these family support services will play a role in helping reduce our province's high abortion rate. In addition, $2 million in funding will be provided specifically to encourage alternatives to abortion.

Funding for legal aid will be increased by $5 million for a total of $19 million to ensure adequate legal services for those on low incomes.

Our health care system, recognized as one of the best in the world, has for two decades been steadily improved and expanded. However, attempts to control the costs of the health care system have been less successful. We face relentless cost pressures. The aging of our population, demands to acquire the latest and best technology, expectations of ever higher service levels, and the growing income expectations of those working in the field all contribute to the upward spiral of costs.

It is this government's view that responsible use of the health care system can be encouraged by modest user fees, with provisions to protect or exempt those on low incomes. The federal government does not agree. In July 1984, Ottawa began deducting from British Columbia's established programs financing entitlements penalties equal to the revenue obtained by our hospitals from these minor user fees. Reluctantly, we have announced our decision to end the practice of charging user fees in our hospitals before April 1. This is necessary in order to recover the withheld EPF contributions amounting to $85 million.

I have asked my federal counterpart and my provincial colleagues, together with the federal and provincial health ministers, to identify other ways in which we may collectively take action to control health care costs in Canada. The issue is critical. Unless attitudes change, growing health care costs will gradually eliminate our ability to finance other government services.

Funding for the Ministry of Health will increase by $237 million next year, or 8.1 percent over the current year's budget. The recent wage and benefit settlements for health care employees have added $102 million to our costs in the current year, and will take a significant portion of next year's budgeted increase. The costs of the Medical Services Plan are rising rapidly, driven by a fee schedule for physicians in B. C. that is significantly above the national average and utilization increases well above the rate of increase in our population. All options for containing health costs involve difficult decisions, but the government has decided on the following actions.

As previously announced, medical services premiums will increase April I by approximately 10 percent. Premium assistance will be increased to fully offset the rise in premiums for those on low incomes, providing benefits to an estimated 530,000 people in our province.

Our Medical Services Plan provides extensive supplementary benefits such as physiotherapy and chiropractic services. These benefits will be maintained, but a small utilization fee of $5 per visit will be introduced in July to offset a portion of this cost.

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British Columbia's doctors, as key players in the delivery of health care, recognize the difficult problem of maintaining a high level of service in the face of soaring costs. As senior partners in the health care system, physicians in our province enjoy fees which are substantially higher than those in the rest of Canada. I am confident that because of their shared concern, our doctors will cooperate with the government and play a full part in helping reduce costs so we can continue to maintain the best possible level of service to people. Under the most recent contract with the physicians, the government can renegotiate fees and payments if this year's increase in

utilization exceeds 3 percent on a per capita basis. Utilization has risen well beyond this level, and the government will therefore exercise its option to begin negotiations with the medical profession to bring doctors' fee levels into line with those in other Canadian provinces.

Our Pharmacare program is one of the most generous in Canada, and the costs have increased at an average annual rate of 20 percent over the last six years. To control this excessive rate of increase, two measures will be undertaken. Under the universal portion of the program, provincial residents may be reimbursed for 80 percent of prescription drug costs in excess of $200. Effective April 1, the deductible limit will be raised from $200 to $275, providing annual savings of $15.4 million. Currently, senior citizens are not required to pay any drug costs whatsoever under Pharmacare. Effective April 1, seniors will be required to make a co-payment equal to 75 percent of the dispensing fee, or an average of just under $5.00, to an annual maximum per person of $125. This measure will produce annual savings of $22 million. To protect those on low incomes, extra assistance will be provided to an increase of $125 per year in the GAIN for Seniors' supplement so that they will be fully compensated for increased Pharmacare costs. Indeed, most recipients of GAIN for Seniors will be better off as a result of these changes.

We are taking a number of steps to improve natural resource management. The importance of forest renewal and protection to the future of our largest industry is well recognized. For some time, the government has expanded silviculture activity as rapidly as facilities and funding will permit. In the coming year, the expenditure on silviculture will increase by almost 28 percent, or by more than $54 million from the level from 1986-87. Over the past five years spending on silviculture has grown from $88 million to an estimated $249 million next year, demonstrating the priority this government gives to this program.

Next year we will plant 200 million seedlings, compared to 74 million planted just seven years ago. We will also meet the other silviculture targets specified in the 1986-1991 five-year forest and range resource program. In addition, funding to protect our existing forest resource will increase by 19 percent., We are reviewing all provincial forest management programs to determine our priorities for forest management in the future. The total financial allocation for the Ministry of Forests and Lands will be $530 million next year, representing an increase of 15.5 percent from this year.

The future of our mining industry depends on the discovery of new mineral deposits that can be brought into development when mineral prices rise. The success of last year's mineral exploration program has persuaded the government to continue funding for another year at a cost of $5 million. We shall spend an additional $2 million on geoscience activities, the first step in an expanded effort to identify mineral deposits for the future.

Coal represents one of our richest resources, and the government is moving on several fronts to increase sales and to develop innovative uses for this fuel for thermal generation of electricity and other more diversified and marketable products. Our government is a member of the federal-provincial task force set up to seek ways to sell more western coal in Ontario, and is committed to participate in research and scientific activities related to coal.

The aquaculture industry is continuing to grow rapidly, and a further $750, 000 has been provided to the Ministry of Agriculture and Fisheries to meet increased program demands.

Our future depends on our ability to generate business investment. The key question all governments face is how to ensure investment takes place. No single measure will guarantee success. Most governments at one time or another offer generous tax holidays, incentive grants and other subsidies designed to lure new businesses. These measures are generally unsuccessful in the long run. Competitive businesses survive without government assistance; uncompetitive ones need continued subsidies or protection from competition in order to survive. Our government believes that the best way to ensure new investment is to establish a high level of business confidence in our province through competitive tax levels and by letting the private sector make its own investment decisions, without special subsidies or government interference.

Over the years, British Columbia governments have introduced many programs to encourage economic development and to deal with special situations of economic hardship. The programs tend to linger on long after the need has disappeared. We have conducted a review of economic development programs and assessed program effectiveness relative to costs. As a result, some programs will be eliminated and funding for others will be reduced. The dramatic decline in interest rates has reduced costs substantially for farms and other businesses, and the need for interest subsidies is gone.

The government has decided to eliminate the partial interest reimbursement program in the Ministry of Agriculture and Fisheries to allow the market to play a more traditional role. This will save an estimated $8.5 million in 1987-88. All claims submitted for 1986 prior to the deadline of May 31, 1987, will qualify for reimbursement. No new initiatives will be funded under the Farm Product Industry Act, although all outstanding commitments will be honoured. My colleague the Minister of Agriculture and Fisheries (Hon. Mr. Savage) will also review the government's contributions to farm income insurance in the coming year.

Funding will be reduced for the special investment interest subsidy program and low-interest loans assistance program. Funding for the grant portion of the small business venture capital program will be eliminated. Greater attention will be focused on the more successful tax credit aspect of the program.

We believe in local government. Shifting responsibilities to local governments is desirable, because it moves the provision of services closer to the people and because smaller governments tend to be more efficient and cost-conscious than larger ones. We are acting to reach this goal. Responsibility for operation of the transit systems in greater Vancouver and greater Victoria will be transferred to local authorities April 1, 1988. The cost-sharing arrangements will be reviewed in the coming months, and any changes required will be implemented in 1988-89.

For the coming year, the government will provide a contribution of $158.6 million to B.C. Transit for conventional and custom transit services throughout the province, including the SkyTrain and SeaBus systems. The 1985 tax reforms reduced the tax base of regional districts. Legislative changes will be introduced to allow them to set variable tax rates to offset loss of tax revenue caused by the removal of machinery and equipment assessments from their tax base.

The landmark Premier's provincial-municipal conference was held recently, to provide direction on decentralization of government services. One outcome of that conference is a committee that will identify issues for immediate action by the government. I am confident that through agreement with the municipalities we can make significant progress over the next year.

Recently local governments have faced difficulties in obtaining liability insurance and in meeting the high premium. Increases asked by insurers. We intend to help in two ways. We will introduce an improved version of a bill previously presented to the House that will both limit and define more closely the liability of local governments and elected officials. We shall also work with the Union of B.C. Municipalities to pursue self-insurance options for its members, in order to contain liability insurance costs.

To build a new economy in British Columbia we need to invest now. We will be counting on businesses to invest in new plants and industries that will provide jobs for tomorrow. We will create the climate for this to happen. One of the most important elements of this climate is a highly skilled and educated labour force. This means we must invest in our people, Mr. Speaker.

In British Columbia we are fortunate to have skilled people, especially in those traditional industries which must compete in world markets. But this is a time of transition, of rapid economic and social change, and our traditional natural resource industries will not be able to employ significant numbers of new employees in the future. As in other advanced economies, most job growth in British Columbia has been, and is likely to continue to be, in the service sector, where three out of every four workers are now employed. Lifetime employment with one firm, or in one industry, is becoming a thing of the past. We live in a less stable economic world, and skills become obsolete much more rapidly than in past decades, Successful transitions, whether by societies or by individuals, are accomplished by those with broadly based skills. It is our task to ensure that those skills are acquired by our people, not only new entrants to the labour force but also those who need job training to return to work.

The development of lifetime skills starts in the school system. The provincial contribution to basic school operating costs will go up by $42.3 million, and a further $40.3 million will be made available to fund special initiatives in schools to improve the quality of programs. The government will also bear the full cost of the final reduction in non-residential school taxes caused by the three-year phase-in of the 1985 tax reforms. This amounts to some $44.8 million.

A key initiative will be a new $3.5 million Pacific outreach program. In recognition of the growing importance of our links to Asia, this program will establish a base of Oriental language training for students in schools throughout the province. It is my view and the view of this government that we must concentrate more and more on understanding our Pacific neighbours in order to play our full part in the Pacific Rim community.

Independent schools provide a valuable alternative to the regular public school system and at much lower cost for the general taxpayer. Funding for independent schools will increase by 42 percent to $41 million next year, including an increase in the basic grant from 30 to 35 percent of public school costs, as well as $2 million for special initiatives. These increases in funding for the Ministry of Education amount to an increase of 11. 3 percent over the current year's budget.

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Significant new funding will be provided in the coming year to improve our system of advanced education. Base funding for colleges, institutes, universities and distance education will be increased by $38.4 million, or 5.8 percent, to meet cost pressures. This increase will meet cost pressures and higher expenses caused by enrolment increases. A further $27 million will be allocated for special advanced education initiatives, to be determined after discussion with the institutions themselves. These initiatives may include new centres of excellence, innovative teaching techniques and improved technology for distance learning.

Mr. Speaker, this government is giving special attention to student financial assistance. While we believe that students should make a personal investment in their education, we also believe that able students should not have to overcome major financial barriers. With the help of advisers from the education community, including students, the Minister of Advanced Education and Job Training (Hon. S. Hagen) is developing a new student assistance program. It will limit debts facing some prospective students, recognize the higher costs incurred by those living away from home, and provide employment incentives for summer and part-time work. The program will be a combination of loans and grants. Base funding for student assistance will be 51 percent, or a rise of $8.9 million.

The current level of unemployment makes it especially difficult for some people to find work, such as students with training but little experience, employable income assistance recipients and people re-entering the labour force. In the coming year we shall continue the employment and training initiative called JobTrac, begun last year. The budget for this program, which involves five ministries, will almost double to $80.7 million, including $54.6 million for employable income assistance recipients. In addition to the allocation for income assistance recipients, the JobTrac program will provide $10 million for the Challenge '87 youth summer employment program, run jointly by the province and the federal government; $6.5 million for programs for the disabled; and $8.2 million for other work-experience programs. The large increase in provincial funding for this program is made in the expectation that the federal government will increase its contribution proportionately with that of the province.

A word about tourism. Tourism has become a major growth industry in the province. To follow up on the success of Expo, we are providing additional funding to the Ministry of Tourism, Recreation and Culture for a $15 million marketing program to maintain the tourism momentum generated in 1986. Mr. Speaker and colleagues, take note: funding of $300,000 will be provided for startup costs for the Pacific Rim Institute of Tourism. This novel initiative will improve our own capability to better serve this economic sector by providing accredited training and make us world leaders in developing a very promising export industry. With the Vancouver trade and convention centre due to open in a few months and the Victoria convention centre now under construction, we are adding to an impressive range of facilities to attract conferences from around the world. Tourism is looking up, my friends.

An important new focus of this government is community economic development. Our government, through the Ministry of Economic Development, will provide $3 million to challenge communities throughout the province to take the initiative in establishing local industries and finding seed capital for local entrepreneurs. The program will be a catalyst for greater local self-reliance and new thinking about the future of our communities. The government invites community leaders and all those who are interested to for-ward suggestions for the design of this community development program to the Minister of Economic Development (Hon. Mrs. McCarthy). We want to get them involved.

I earlier said we must diversify industry. B. C. Is endowed not only with a broad natural resource base, but also with vibrant business, research and academic sectors. Up to $10 million is being made available to the Ministry of Economic Development to undertake a variety of initiatives to help focus the energy of those sectors toward common economic development goals for the province. These initiatives will include setting up an enterprise centre at the B.C. Pavilion to act as a one-stop focus for business to deal with the province's resource and economic development ministries. There will also be initiatives to coordinate efforts of different groups to ensure that B.C. gains its fair share of federal research and development funding and follows a technology development strategy that will help prime our future economy.

The Minister of Economic Development will soon be introducing legislation to implement an employee equity program. This program will provide a provincial tax credit for employees participating in business ownership through employee equity corporations. These corporations will be organized and managed by employees to undertake investments under a wide range of circumstances, to both create and protect jobs in our province. We have asked the federal government to participate financially in this program under an initiative announced in their 1985 federal budget.

Mr. Speaker, I would like to take a moment to address some issues associated with the regulation of financial institutions. In this session I will be proceeding on three fronts, each involving major legislative initiatives.

First, I am proposing a major revision of our statutes dealing with trust companies, insurance companies and credit unions. This is a time of great change in financial markets and financial institutions, not only in Canada but throughout the world. It has been characterized by a blurring of distinctions among financial functions and types of financial institutions. If British Columbia is to maintain a viable financial sector, it is imperative that the government give institutions located here the flexibility and powers needed to compete in modem financial markets.

At the same time, the government is obligated to provide the safety and stability that the public and the institutions both count on. This is a difficult balance to strike at the best of times and one for which our present legislation is completely unsuited.

As a result, I will be introducing a completely new Trust Company Act and extensive amendments to the Insurance Act. I will also release a white paper dealing with regulations and deposit insurance for the credit union movement.

Second, I will introduce legislation to provide for the establishment and regulation of captive insurance companies. Captive insurers are companies generally owned by an industry or trade association or corporate group which insures only their owners. No third party insurance or insurance of the general public is undertaken. Therefore, since there is less need for public protection, the regulatory environment will be less strict than for regular insurance companies. Nevertheless, captives will be required to operate prudently.

This is a prime example of encouraging development by removing a regulatory barrier. I expect that this initiative will, over time, generate substantial activity without any other incentives.

The third initiative will be the introduction of legislation to encourage international financial business. The incentives provided will be at least as generous as those provided by Quebec, but with one important extension. The Quebec initiative is purely a tax incentive available to institutions with the power to conduct some specific international financial transactions.

We will provide the same tax incentives, but we will also allow certain institutions to incorporate special subsidiaries empowered to conduct international financial activities. This regulatory aspect of the initiative will be an important extension.

My intention is to defer bringing the international financial business measure into force pending comment from the industry and, particularly, pending a strong indication that the measure will be effective.

During a recent trip to Asia, I was advised that we will need more substantive federal measures than those now proposed in order for a provincial measure to be successful in attracting new activity and businesses. I will, therefore, ask the business community in Vancouver to more clearly define the actions required of both levels of government and, if necessary, to lead an effort to obtain a significant extension of the proposed federal legislation.

For some time now, Mr. Speaker, our government has made representations to the federal government about the need for increased attention by Ottawa to the economic situation here in the Pacific region. Our government has outlined its concerns and its willingness to cooperate with the federal government in a positive manner that will allow British Columbia to play a full part in Confederation as a strong economic region.

We welcome the fact that, as a result of meetings between our Premier and the Prime Minister of Canada, a council of ministers has been established to deal with all matters of interest and concern affecting both levels of government. The new council, which will meet on a regular basis, will open up a new and direct channel of communication and our government believes it will play an important part in helping address and rectify the economic inequities and imbalances that presently exist.

For our part, British Columbia will make every effort to ensure the two governments act in concert so that together, working cooperatively, we can shape and put in place policies and programs that will build a stronger British Columbia and a stronger Canada.

Let me turn to specific revenue measures. In the past few months we have reviewed the provincial tax system to determine what changes might be warranted to improve fairness and enhance our ability to meet social and economic objectives. As a result of this review, I can announce today a series of measures that will make the tax system fairer for British Columbians, maintain a positive climate for development, reinforce environmental priorities, make taxes simpler and

more understandable, and generate additional revenue for essential program enhancements.

Designing a set of revenue measures to meet these criteria has demanded creative, forward-looking solutions. I am proposing a mixture of increases and reductions which will shift the balance of the tax system. Overall the revenue measures will generate $185 million in 1987-88.

Let me begin with fuel taxes. I am pleased to announce that there will be no general motor fuel tax rate increase. B. C. will continue to have the lowest general fuel tax rate among the eight provinces levying these taxes, Mr. Speaker. There will, however, be several changes to fuel taxes.

First, effective April 1, 1987, provincial tax on leaded fuel will be set at 2 cents per litre above the general rate for unleaded fuel. This change is motivated by a concern for the quality of our environment. The use of lower-priced leaded gasoline in a vehicle equipped with a catalytic converter — commonly called misfuelling — quickly and permanently destroys the converter's effectiveness and drastically increases the emission of toxic pollutants. As well, the harmful effects of atmospheric lead itself, particularly on children, have been confirmed in many studies. For these reasons, the government has decided to use the tax system to narrow or eliminate the price differential between leaded and unleaded gasoline and, thereby, remove the incentive to misfuel.

This measure will generate $37 million in additional revenue for the 1987-88 fiscal year, but a declining amount in future years as leaded gasoline is gradually phased out under federal regulations.

Second, provincial tax on gasoline mixed with ethanol will be set at 2 cents per litre below the appropriate gasoline tax rate. This measure will be made effective upon the completion of a facility to produce ethanol in the province. This change is intended to promote the use of a cleaner fuel and to assist Peace River grain farmers in finding a new and stable market.

Third, effective April 1, 1987, marine bunker fuel and natural gas used in stationary engines will be taxed at a rate of 7 percent on the actual purchase price rather than at a cents per-litre rate determined by formula. This change will be fairer and easier to administer and, in the case of natural gas used in some stationary engines, will substantially reduce the amount of tax paid.

Mr. Speaker, effective midnight tonight the hotel room tax will be increased from 7 percent to 8 percent. A further 2 percent will, on application, be levied and passed through to the local level. This will assist municipalities and communities in the operation of convention centres and other tourism amenities. This 2 percent increased revenue will be beneficial to a number of communities operating significant tourist attractions.

[3:30]

Mr. Speaker, later in my address I will be announcing major changes affecting the social service tax. At this point I would like to mention several changes to the sales tax. First, the potential for the same person to pay tax more than once on the same item will be eliminated for certain types of transactions. This potential for multiple taxation can arise in three types of transactions: sale and leaseback arrangements, repossessions, and the repurchase of so-called claiming horses. This is clearly unfair and will be remedied.

Second, measures will be announced shortly to modernize the rules allowing tax-free transfers of property among closely related individuals or corporations.

Third, leases and rentals of tangible personal property for terms of less than one month will now be subject to tax on the lease price. Prior to the budget, these short-term leases were exempt, creating inconsistencies and administrative difficulties.

Fourth, out-of-province companies which use dedicated cable television channels to advertise their products in British Columbia will be required to collect and remit social service tax. In recognition of federal-provincial discussions, this provision will not become effective until the legislation is proclaimed. Nevertheless, I am determined to ensure that these companies are subject to the same requirements as businesses in British Columbia.

Fifth, effective midnight tonight the following will become exempt from social service tax: drill bits, grinding media, explosives and related blasting supplies when used for mineral exploration and extraction; knitting yams and natural fibres; and certain safety, farm and aquaculture-related items outlined in the appendices to the budget document. The most significant of these exemptions are those which will benefit the mining industry, providing $10 million in relief from taxes in '87-88. These exemptions implement one of the recommendations of the recent mineral industry task force report. The task force has done an excellent job of quickly responding to the government's request for information and recommendations. Over the coming year my colleague the Minister of Energy, Mines and Petroleum Resources (Hon. Mr. Davis) and I will be giving serious consideration to other recommendations of the task force, and we will continue to seek ways to assist this important industry.

I would now like to announce a number of changes intended to correct inequities in the property tax system.

First, provincial tax rates on residential and recreational properties in rural areas will increase to $1.70 per $1,000 of assessed value, effective January 1, 1988. This continues a gradual increase in rural tax rates intended to reduce the provincial subsidy of services which occurs particularly in urbanized non-municipal areas. Taxpayers in municipalities consider it unfair that neighbours in adjacent unorganized areas receive similar services yet are subject to a much lighter tax load.

Second, to allocate more fairly the cost of local government services, the minimum property tax payable after application of the homeowner grant will increase from $200 to $350. For senior citizens and others who receive the supplementary homeowner grant, the minimum property tax will now be $100 per year.

Third, the preferential tax rate for seasonal resorts will be eliminated effective the 1989 taxation year. The special circumstances of seasonal resorts are already captured in market value assessments, so the present preferential tax treatment confers an additional benefit on these properties. Administration of the special rate provisions has been difficult owing to problems in verifying eligibility. As a result, the provision has been open to abuse and has been somewhat arbitrary. It has also had the perverse effect of encouraging seasonal closures.

Fourth, I am proposing to close three property tax loopholes that have arisen over the past several years, by clarifying the application of the pollution control exemptions, re-establishing the taxation of water lots and more clearly stating what constitutes a physical change for assessment purposes.

I would also like to take this opportunity to announce that over the next year the government, in consultation with local government and taxpayers, will prepare a new Assessment Act for introduction at the next legislative session. This is an important initiative which is aimed at improving the administration of the property tax, providing local governments with a more certain tax base and streamlining the existing assessment appeal process. Work on this initiative will proceed in close cooperation with local governments and will take place within the context of the existing government policy of assessment at market value by a single, provincewide assessment authority.

On a related matter, I remain concerned about the difficulties that assessment appeal decisions have created for resource communities. In order to deal with these problems, I have asked the Union of B.C. Municipalities to consider proposals for a fiscal safety net that would help insulate municipalities against significant reductions to their tax bases resulting from assessment appeals. In addition, in order to find a longer-term solution to the problem, I will be circulating the report of the Industrial Assessment Committee, which has been working on this issue for the past year, to municipalities and taxpayers. Following these consultations, I will be introducing measures later this year to govern the valuation of industrial property.

To assist the agriculture sector in this province, there has been established over the years an extensive set of special property tax, social service tax and fuel tax provisions to reduce costs for bona fide farmers. The definition of a bona fide farmer is based on the value of sales of agricultural products. The current minimum level of sales for qualification was set in 1979; it is $1, 600 per year. I have received considerable advice that this threshold is too low and that it results in significant unintended tax benefits flowing to noncommercial farmers. To correct this situation, the annual farm revenue threshold will be increased from the present $1, 600 to $5,000, effective for the 1989 taxation year.

On another subject, last November I announced my intention to ask the Legislature to repeal the amendments made by the Insurance Premium Tax Amendment Act, 1986. That act established an exemption from insurance premium tax for B.C. — headquartered insurance companies, a provision with serious drawbacks. It is inconsistent with our support of free trade principles. It advertises a parochial perspective which has no place in the province's increasingly outward-looking orientation, and it discriminates unfairly against those companies which have long carried on business in British Columbia from a base outside the province. Legislation will be introduced today to delete the exemption of B.C. — headquartered insurers from insurance premium tax. I would like to repeat my invitation to the insurance industry to propose alternative measures that would contribute to the development of a strong local industry while avoiding the drawbacks I have just mentioned.

I am making an additional change in the interest of reducing discrimination. Premiums collected by the Insurance Corporation of British Columbia will be subject to insurance premium tax, effective April 1, 1987. ICBC is the largest insurer in the province but has up to now been exempted from this tax, giving the corporation an unfair advantage over private insurers. This measure is expected to generate $25 million in revenue for 1987-88.

In a similar vein, I am proposing to change the structure of the corporation capital tax. Effective April 1, 1987, the corporation capital tax will apply to all banks and trust companies operating in British Columbia with paid-up capital in excess of $500 million. A new deduction will also be introduced to permit provincial corporate income tax to be offset against corporation capital tax. As a result of changes made in the 1985 provincial budget, beginning April 1, 1987, the corporation capital tax would have applied only to major banks that have their head office outside B.C. This has been widely criticized as being unfair, discriminatory and inconsistent with our efforts to make Vancouver an international financial centre. The corporation capital tax on banks has been used by several provinces as a means of obtaining revenue from institutions that have used special tax provisions to virtually eliminate their income tax liability. Canadian banks now argue that they are beginning to generate increasing amounts of taxable income. To the extent that this is true, financial institutions will be permitted to offset their corporation capital tax liability. The tax will now ensure that a minimum provincial tax is paid by large financial institutions.

We have talked about user fees. The government provides many services to special interest groups or business firms, and new ones are added every year. In some cases user fees are charged for these services, and many other services are provided without charge. Increasing fees for service or introducing new fees can raise strong objections. Nevertheless, it is important that fees reflect the corresponding service costs, to avoid transferring to the general taxpayer the cost of providing services for special groups. Where appropriate, the government will move fees more into line with costs of special services. I expect that fee increases of various kinds will provide approximately $35 million in additional revenue in 1987-88. Among the most significant increases will be increases to driver's licence fees and certain motor vehicle fees.

Before I announce the major tax changes for 1987, I would like to remind British Columbians that the current fiscal year will see the final phasing-in of many measures that were introduced with the 1985 and 1986 budgets and which were part of a major initiative to reduce taxes for businesses. I am pleased to be able to say that the following measures will proceed as planned. The ratio of industrial and commercial non-residential school tax rates to average residential tax rates, which was 3.4:1 three years ago, has been already reduced to a target level of 2:1 for 1987 without requiring further rate reductions. In addition, for 1987 non-residential school taxes on utilities will be decreased. Property taxes on machinery and equipment will be completely eliminated for 1987 and subsequent years.

Effective April 1, corporation capital taxes are completely eliminated except for large financial institutions. Effective January 1, 1987, the general corporate income tax rate was reduced from 16 percent to 15 percent of taxable corporate income. It will, as promised, be reduced to 14 percent on January 1, 1988. These and other important measures were part of a broad package designed to give, on an annual basis, more than $600 million of tax relief to assist the competitive position of B.C. businesses and industries, and thus increase the well-being of the province as a whole.

I would now like to announce several major tax measures which demonstrate the innovative approach our new government is taking to the B.C. tax structure. Effective March 23, 1987, a new property purchase tax will replace the ad valorem land title fees charges on transactions registered with

the land title office. The new tax will be levied on most conveyances of title to real property at a rate of I percent on the first $200,000 of value and 2 percent on amounts in excess of $200,000. Unlike the current land title fees, this will be a tax solely on the value conveyed; no separate tax will be levied in respect of mortgages or other such charges.

In introducing this measure, I am pleased to announce that the transfer of residential, family farm or recreational property to a family member will be exempt. This is a new exemption, one which makes this tax more fair than the fees levied under the Land Title Act. The Property Purchase Tax Act clearly sets out the government's intention with respect to how and when the tax is to be collected. The property purchase tax is expected to generate $168 million in 1987-88. It will help to diversify the government's sources of revenue without placing a disproportionate burden on taxpayers who are not in a position to pay. It also provides a fair return for the public on rising property values due to high levels of economic activity.

[3:45]

Dealing with personal income tax, effective for the 1987 tax year, the provincial personal income tax will be restructured by the elimination of the two surtaxes, and a new rate of 51.1 percent of basic federal tax will be established. Although the present nominal income tax rate is 44 percent of basic federal tax, this rate is misleading because of the existence of the two surtaxes — health care maintenance surtax and high-income surtax — which raise the effective rate to an average 48 percent of federal tax.

A more significant indicator of the economic incentive effect of income tax is the marginal tax rate. This is the amount of income tax collected on the last dollar of income earned by a taxpayer. The marginal rate of income tax paid by those in the top income bracket in British Columbia is currently third lowest among Canadian provinces. The proposed restructuring will simplify the provincial income tax and will decrease the maximum marginal tax rate, making it the second lowest in Canada. This measure is expected to raise $184 million in fiscal 1987-88.

In concert with this increase in personal income tax, the principle of maintaining fairness and integrity in our tax system requires a parallel increase in the tax rate on small business income. If this is not done, there is an opportunity for some taxpayers, particularly high-income professionals, to pay less by incorporating and having their income taxed as dividends of a small business corporation rather than as a salary. This would be unfair to those who have no choice in the way their income is received.

Accordingly, effective July 1, 1987, the small business corporate income tax rate in British Columbia will increase from 8 percent to 11 percent. This measure is expected to raise $25 million in 1987-88.

Finally, I am pleased to announce the most significant tax measure in this budget. Effective midnight tonight the social service tax rate is reduced to 6 percent from the present 7 percent. I am also announcing the government's commitment to a further reduction of the social service tax rate to 5 percent within this fiscal year. In addition, the government intends during its mandate to bring about further reductions in this tax.

Sales taxes have often been criticized for imposing a heavier burden on those with lower incomes. While the fiscal situation has for many years compelled the levying of such a tax, past British Columbia governments have tried to minimize this effect on low-income individuals and families by exempting such necessities as food, shelter, heating fuel and children's clothing. In 1987, by lowering the rate at which this tax is applied, I am reducing this burden further, significantly adding to the progressivity of the tax system.

Also, Mr. Speaker, I am pleased to announce that effective midnight tonight social service tax will no longer apply to restaurant meals. By removing restaurant meal taxes, we bring philosophical consistency to our taxation policies. We not only eliminate a regressive tax but also enhance tourism and overall economic vitality. The expected cost of these changes to the social service tax is $257 million in 1987-88. The revenue impact will be even greater when in the course of the year the sales tax is reduced to 5 percent. This package of measures represents a major shift in our tax system — solid proof of the government's fresh, fair and forward-looking approach. We have accomplished a considerable reduction in the social service tax burden while establishing a stable base for government revenues.

B.C. has been a leader among provinces in the attention it has given to its tax system as an instrument for fairness, economic growth and prosperity. I firmly believe this leadership will be greatly enhanced by the revenue measures I have announced today.

Mr. Speaker, this first budget of our new government marks a turning point in British Columbia's affairs. We are making a fresh start in leading this great province into an era of development, development of a new economy and development of an enlightened and a fair society. This is a government that is caring and responsible. We are providing help for the disadvantaged and maintaining a high-quality health care system. We are investing in our people and our resources to secure our future prosperity. We are reducing government's role in business decisions. We are increasing the role of local governments in providing public services. We are making the tax system more equitable, while maintaining a positive climate for development. And we are doing all of this within the context of a lower deficit.

It is gratifying at this point to review the remarkable accomplishments we have achieved in building this budget under severe constraints. And I would be remiss if I failed to say that I owe a great deal to my colleagues, whose encouragement, dedication and teamwork have made this possible. It is now up to all of us to work with the people of British Columbia, to meet the challenges of the coming year and realize the full potential of our province for the years to come.

Mr. Speaker, I offer the Legislature a blueprint for a new future under a new government with a fresh start. I commend it to your attention, and I look forward to the debate.

MR. STUPICH: Mr. Speaker, for the past eight months the people of British Columbia have lived in a period of high expectations, of anticipation, and today we have 29 pages of failure to deal with the needs of the people of British Columbia. The problems of unemployment are not dealt with in this budget. Indeed, the minister himself admits that unemployment will be worse in 1987 than it was in 1986.

There is a crying need in the province and a unanimous desire, I think, to do something significant in the way of silviculture. All that we're doing, beyond keeping up with the rising cost of inflation, is cooperating with the federal program, which says: "Use it or lose it. Spend it or you don't get

it." That's all we're doing in the way of increasing silviculture spending.

Job training. We're offering job training for jobs that don't exist in the province of British Columbia, and the minister himself admits that they won't exist in 1987. But we'll train them for something, anyway.

Income tax changes. The minister himself boasts that these changes will make British Columbia the tax haven for the wealthy among all Canadian provinces but one. Is that fairness? Is that the kind of fairness that the government promised the people of British Columbia?

There are promises to deal with the problems of youth, but no real delivery. There are promises to deal with the problems of students. There's not even a mention of pay equity, an issue that is being recognized by province after province in Canada.

Unemployment is really the most serious of all problems, and all we're saying is that someone else will deal with it some day — maybe. We're throwing up our hands and admitting that it is going to be worse in 1987.

Mr. Speaker, that's just a bare outline of what I intend to say at some greater length tomorrow morning. At this point I move adjournment of this debate until the next sitting.

Motion approved.

Introduction of Bills

Hon. Mr. Couvelier presented a message from His Honour the Lieutenant-Governor introducing ten bills intituled: Assessment and Property Taxation Amendment Act, 1987; Home Owner Grant Amendment Act, 1987; Corporation Capital Tax Amendment Act, 1987; Income Tax Amendment Act, 1987; Insurance (Motor Vehicle) Amendment Act, 1987; Insurance Premium Tax Amendment Act, 1987; Social Service Tax Amendment Act, 1987; Hotel Room Tax Amendment Act, 1987; Motor Fuel Tax Amendment Act, 1987; Property Purchase Tax Act.

HON. MR. COUVELIER: Mr. Speaker, these ten bills implement the revenue measures that I announced earlier today in the budget speech. In moving first reading of each of these bills, I say that the purpose of the bills is: Bill 5, the Assessment and Property Taxation Amendment Act, 1987, clarifies three provisions related to property assessment; Bill 6, the Home Owner Grant Amendment Act, 1987, increases minimum property taxes; Bill 7, the Corporation Capital Tax Amendment Act, 1987, removes discriminatory provisions and adds a new deduction from this tax; Bill 8, the Income Tax Amendment Act, 1987, simplifies personal income taxation and increases personal and small business tax rates; Bill 9, the Insurance (Motor Vehicle) Amendment Act, 1987, removes the Insurance Corporation of B.C.'s exemption from insurance premium tax; Bill 10, the Insurance Premium Tax Amendment Act, 1987, repeals the exemption for B.C.headquartered insurers; Bill 11, the Social Service Tax Amendment Act, 1987, reduces the tax rates, adds a number of exemptions and refund provisions and improves the administration of the taxes; Bill 12, the Hotel Room Tax Amendment Act, 1987, increases the tax rate and makes provision for an additional tax to be levied on behalf of and to be passed through to local governments to fund convention centres and other tourism amenities; Bill 13, the Motor Fuel Tax Amendment Act, 1987, increases the tax on leaded fuel, reduces the tax on gasohol and makes a number of changes to improve administration of the tax; Bill 17, the Property Purchase Tax Act, imposes a new tax on conveyances of real property to replace ad valorem land registration fees.

I now move first reading.

Motion approved.

HON. MR. COUVELIER: Mr. Speaker, I move the said bills be placed on orders of the day for second reading at the next sitting of this House after today.

Motion approved.

HON. MR. STRACHAN: Mr. Speaker, just before adjournment, may I on behalf of all Members of the Legislative Assembly welcome our assembled guests. We thank you for being with us today, and we offer a very cordial invitation for you to visit us again. Mr. Speaker, I now move adjournment.

Motion approved.

The House adjourned at 3:59 p.m.

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