[ Page 1323 ]

CONTENTS

Routine Proceedings

Tabling Documents –– 1324

Oral Questions

Interruptible power to Vancouver Island. Mr. G. Hanson –– 1324

Mr. Stupich

Soliciting practices of funeral homes. Mr. Blencoe –– 1324

Open-heart surgery waiting-lists. Mrs. Boone –– 1325

Canwood furniture factory. Mr. Miller –– 1325

Effects of free trade on wine industry. Mr. Rose –– 1325

Native education funding. Hon. Mr. Rogers replies –– 1326

Federal sales tax on food. Hon. Mr. Vander Zalm replies –– 1326

Insurance (Captive Company) Act (Bill 21). Committee stage. (Hon. Mr. Couvelier) –– 1326

Mr. Stupich

Third reading

Motor Fuel Tax Amendment Act, 1987 (Bill 13). Committee stage. (Hon. Mr. Couvelier) –– 1327

Mr. Stupich

Third reading

Miscellaneous Statutes (Finance Measures) Amendment Act, 1987 (Bill 14). Committee stage. (Hon. Mr. Couvelier) –– 1327

Third reading

Social Service Tax Amendment Act, 1987 (Bill 11). Committee stage. (Hon. Mr. Couvelier) –– 1327

Mr. Stupich

Third reading

Income Tax Amendment Act, 1987 (Bill 8). Committee stage. (Hon. Mr. Couvelier) –– 1329

Mr. Stupich

Third reading

Homeowner Grant Amendment Act, 1987 (Bill 6). Second reading

Hon. Mr. Couvelier –– 1330

Mr. Stupich –– 1330

Mrs. Boone –– 1331

Mr. Cashore –– 1331

Ms. Marzari –– 1332

Ms. A. Hagen –– 1332

Mr. Lovick –– 1333

Mr. D'Arcy –– 1334

Mr. Sihota –– 1334

Ms. Edwards –– 1335

Mr. Blencoe –– 1336

Mr. G. Hanson –– 1337

Mr. Rose –– 1337

Hon. Mr. Couvelier –– 1338

Division –– 1338

Property Purchase Tax Act (Bill 17). Committee stage. (Hon. Mr. Couvelier) –– 1338

Mr. Stupich

Mr. Sihota

Mr. G. Hanson

Mr. Clark

Mr. Miller

Division

Mr. Cashore

Mr. Lovick

Mr. Rose

Hon. Mr. Strachan

Taxation Statutes Amendment Act, 1987 (Bill 37). Committee stage. (Hon. Mr. Couvelier) –– 1345

Mr. Stupich

Mr. Rose

Third reading

Property Purchase Tax Act (Bill 17). Committee stage. (Hon. Mr. Couvelier) –– 1346

Mr. Stupich

Third reading

Appendix –– 1347

The House met at 2:08 p.m.

Prayers.

HON. MR. DUECK: Mr. Speaker, today it's my distinct pleasure to introduce to the gallery and members of this House a British Columbian who has made a significant name for himself internationally in the music industry. David Foster, a Victoria native and graduate of Mount Douglas high school, has won several Grammies, a BMI award and a Juno award. He's worked with such stars as Barbra Streisand, Julio Iglesias and Chicago, and co-written some of the decade's most popular songs, such as "St. Elmo's Fire." The story of how David Foster left Victoria in his teens to launch a career in the United States that has made him one of today's most successful record producers is well known to many of you.

If we can forget about David Foster the musician for a moment, I'd like to make special mention of the humanitarian contributions this outstanding British Columbian has made. In 1985 Foster produced the Canadian music industry's contribution to the multimillion-dollar famine relief program in Ethopia entitled "Tears Are Not Enough."

Of more specific concern provincially is the David Foster Foundation. The foundation is devoted to supporting families that face major transportation and lodging expenses when a child has to leave B.C. to receive a major organ transplant. A celebrity softball game and banquet raised more than $100,000 last summer, and since that time some 13 families have been assisted. Mr. Foster became personally involved in the case of Victoria's Rachel Sharma, who needed a liver transplant in Los Angeles some years back. Foster made his house and car available to the family while they were in Los Angeles, and now through the foundation he is extending that kind of generosity to families throughout the province. Perhaps this special interest in health was handed down from his mother Eleanor, who retired in 1983 after 13 years' service with the correspondence and research division of the Medical Services Plan.

On behalf of the members of this Legislature, I'd like to extend the warmest thanks and appreciation to Mr. Foster, and our best wishes for another successful fund-raiser here in Victoria this July.

Mr. Speaker, accompanying Mr. Foster today are Mr. Dick Ferguson, who is a member of the David Foster Foundation board; Mr. Walter Creed, also a member of the David Foster Foundation board; and Mr. Chris Earthy, David Foster's agent, of Los Angeles. Please make them welcome.

HON. MR. VANDER ZALM: Mr. Speaker, I just briefly want to add that all of us, I know, agree with what has been said by the Minister of Health. Last Saturday we certainly witnessed a tremendous event in Vancouver at the stadium, celebrating the enormous success of the Man in Motion tour and all that Rick Hansen has done for the disabled throughout the world. David Foster made a tremendous contribution there, and I want to thank him for that publicly.

MR. BLENCOE: I would like, on behalf of our caucus and the member for Victoria, to certainly welcome David here today and congratulate him on his great efforts on behalf of the musical profession and of the community of Victoria.

Mr. Speaker, David and I actually went to the same high school, but if he doesn't tell any stories, I won't tell any stories. I happened to graduate I think maybe one or two years ahead of David, but two years ago, my year's –– 1965's - graduation class held our graduation reunion and David took time to return, and we had a tremendous weekend.

But one of the things we're really proud of about David Foster is that often those who go on to great things in whatever profession they choose sometimes forget their own community. They go south and get great notoriety and do very well, particularly in rock and roll. David has not forgotten his own community, Mr. Speaker. He comes back, he's active, and he does great things for this town. Certainly, as the member for Victoria, I join with my colleague from Victoria in thanking David for all the great efforts that he makes on behalf of this community and for the people of British Columbia.

MR. HARCOURT: Mr. Speaker, I would like to add our welcome to David Foster, first of all from the neighbouring high school of Oak Bay, where I attended; and secondly, as the mayor of Vancouver when David was very deeply involved with the theme song and his continuing involvement with the Rick Hansen tour. I was very pleased to be the mayor, to help start off that tour, and to represent our caucus and New Democrats around this province who supported the Rick Hansen tour at that marvelous, deeply moving ceremony at B.C. Place. I saw you there, David, right in the thick of it. So on behalf of our caucus, I would like to pass on congratulations from Oak Bay Senior Secondary School, from the city of Vancouver and from the caucus. Welcome.

[2:15]

HON. MR. VEITCH: In the members' gallery today we have several prominent dignitaries from the People's Republic of China, representing a delegation in the name of science, technology and friendship, from Hebei province. First is His Excellency the Chief, Mr. Xie Feng, who is the governor of the province. He's accompanied by the general secretary of the province, Mr. Cheng Dongcai, who is the vice-director of the foreign affairs office for Hebei province, and their interpreter, Mr. Li Jianping, who is the interpreter of the foreign affairs section of the science and technology commission of Hebei province. They are accompanied by Dr. Alan Tyler and Dr. Tom Suleiman, who are Canadian medical doctors who have established close cultural relations with the People's Republic of China, and of course with the people and their government. Also in attendance is His Worship John Agnew of Mission. I would ask this House to bid them a fond welcome.

MR. SIHOTA: I have a number of introductions to make. First of all, from the wonderful riding of Esquimalt–Port Renfrew, Teresa and John White, residents of Esquimalt. Joining the Whites is Susan Ritter, visiting from Seattle. I also notice that way back there in the members' gallery today is Suzanne Steele, who happens to belong to the executive association of my favourite NDP organization in this province, and that's my own riding association. Would the House please welcome all four of my constituents.

MR. PETERSON: Mr. Speaker, sitting in your gallery is a very good friend and confidant of mine, Mr. Ben Mitchell, and his wife Eleanore. With them are their daughter Janie

[ Page 1324 ]

Kerner and granddaughter Tera Kerner, who are visiting from Alberta. I believe Janie is out here to receive a degree from one of our fine universities. Would the House please join me in making them very welcome.

MR. SERWA: Mr. Speaker, in your gallery this afternoon are two business women from the sunny Okanagan, Marilyn Smiley and Glenna Gillan. They are here today to work with the Minister of Tourism, Recreation and Culture on an innovative and new tourist promotion to bring back a number of the visitors who came here for Expo 86. Would the House please make them welcome.

MR. LOVICK: I would ask the House to join me, please, in welcoming a visitor from Qualicum Beach, Ms. Joyce Peck.

Hon. L. Hanson tabled amendments to Bill 19.

Oral Questions

INTERRUPTIBLE POWER TO VANCOUVER ISLAND

MR. G. HANSON: My question is to the Minister of Energy, Mines and Petroleum Resources. As all members of the House know, in every provincial election since about 1960, the people of Vancouver Island have been promised cheaper energy in the form of natural gas through a pipeline. The present minister was a rational voice, in the sense that he always stated that the Cheekye-Dunsmuir had capacity to bring space-heating over to Vancouver Island and put us in the same status as our friends on the mainland who are on the natural gas pipeline. On Friday the minister announced that there would be power coming to Vancouver Island at discount rates, but the switch is going to flick off and on. Why are we getting interruptible power?

HON. MR. DAVIS: The policy announced on Friday had previously been cleared by the B.C. Utilities Commission for fairness across the province and cost recovery. There is energy currently available; surplus, in other words, which won't be available indefinitely. This surplus energy is being made available provincewide, on the same basis on the Island, for example, as on the mainland. From time to time there will be surplus energy. This energy is priced lower than firm energy. It's half-price energy, but it can't be guaranteed all the time. Hence the interruptible nature of the service and the lower price.

MR. G. HANSON: Mr. Speaker, the minister talks about fair application across the province. Hydro officials tell us that once the program reaches 60,000 household subscribers, it'll be cut off. There are approximately 200,000 households that would want to participate on Vancouver Island alone, Mr. Minister.

My question relates to the fact that as the price for our export sale of surplus power increases as the spot market goes up, our industrial customers here in the province of British Columbia can be cut off. Why would you want to afford that opportunity for industrial customers across the line to get an advantage of surplus power and cut off our own Canadian industrial and commercial customers?

HON. MR. DAVIS: Mr. Speaker, that's a strange interpretation. Obviously the export market will be the first to be cut off, then large industrial customers here, then commercial and finally the homeowner, if there is indeed a shortage of energy. But the priorities are well established, and they're the reverse of those suggested by the hon. member.

MR. G. HANSON: The point is that the people of Vancouver Island and everywhere in this province who are not on natural gas want firm juice; they want firm power, Mr. Speaker. The conditions that have been put on this program, in terms of providing a backup heating source.... For example, if you have an electrical furnace or heat system in your house, you have to install an oil system to take advantage of it. Our numbers are that the amortization or payback period for a subscriber.... It would take an average of eight years before you'd start to make that up. Why don't you go on to firm juice for the people of this province?

HON. MR. DAVIS: Customers who have a firm supply have to pay for a firm supply, which is a higher price than the interruptible service. Everyone has the opportunity to put in an alternative system. It may be expensive in some cases and very low-cost in others. The low-cost alternatives, particularly in the outlying areas of the province, are the most attractive economically, and they'll be served first.

There may well be as many as 100,000 customers taking advantage of these rates within three or four years' time; I think that Hydro will find it has other surpluses, and the number may be 200,000 within the decade.

MR. G. HANSON: Supplementary, Mr. Speaker. With the amount of surplus electric power available within British Columbia that could be given to Vancouver Island on a firm basis, the pipeline on the lower mainland and so on — that's not on an interruptible basis; that's firm — will you not give the people of Vancouver Island and the other unserviced areas firm power on the same basis that they get firm natural gas?

MR. STUPICH: Supplementary question to the same minister, Mr. Speaker. With one set of transmission lines, how do you interrupt the power to one of two meters?

HON. MR. DAVIS: B.C. Hydro has devoted some nine months to the establishment of this rate, the manner in which interruptions will take place, the two to three months' advance notice for disconnection and so on. The hon. member can rest assured that our public power company knows what it's doing.

SOLICITING PRACTICES OF FUNERAL HOMES

MR. BLENCOE: A question for the Minister of Labour and Consumer Services, Mr. Speaker. About six months ago, when the minister was just recently appointed to the portfolio, I wrote to him about phone solicitation for cemetery services and funeral homes. The minister wrote a long letter back — and I thanked him at the time for that — indicating that he was going to try to resolve the distressing problem of telephone solicitation for funeral services and cemeteries. This issue has raised itself again in Victoria. What steps has the minister taken since I wrote six months ago, and has he decided to introduce legislation to curb telephone sales of cemetery services?

[ Page 1325 ]

HON. L. HANSON: Mr. Speaker, the specific question the member is referring to came to the attention of my ministry on Friday as a representation of the Better Business Bureau. We met on Friday with her son to get the details of the transaction, and this afternoon we are meeting with the representatives of the business which sold her the goods and services in question. It is not appropriate to report on the outcome of that investigation at this point; I will do that later.

As to the second part of the question, Mr. Speaker, my ministry staff continue to meet with the task force that was put in place some time ago. It's a task force which is representative of the cemetery owners, the funeral directors and the consumer affairs or consumer-oriented body — I believe it's called the Consumers' Association of Canada (B.C.). As a result of that, a submission for cabinet is being prepared at this point for outlining some legislative options. As that is a policy to be decided at that level, it will be announced as and when it is appropriate.

MR. BLENCOE: Mr. Speaker, thank you to the minister for his answer. I recognize that it is future deliberations, but maybe the minister can comment. This is not a new problem. Various ministers have tried to tackle this issue, and I've documented for the minister, as others have, phone calls to those who are seriously ill. I have one person in my riding who was going in for open-heart surgery the next day and got a very distressing hard-sell for cemetery services. To say the least, that was somewhat distressing. Can the minister tell us today whether he has considered legislation that will control this kind of phone solicitation? This is not a new problem; this has been years. Can we get some kind of indication today whether there is going to be some control on this kind of activity?

HON. L. HANSON: Well, Mr. Speaker, it's very difficult to agree to that request, although I can understand the reason for it. Certainly options for control of it are being presented in a submission to cabinet, and cabinet will make a decision on the policy of government and it will be advanced at that time. So it's very difficult to comment specifically on your question at this point.

MR. BLENCOE: Supplementary. Can the minister tell us today whether he sees phone solicitation for cemetery services — funeral services — as a separate issue from other types of phone solicitation, and whether he sees that this is a special, unique, sensitive area and that the government can isolate that in terms of being able to deal with it and bring down some changes?

HON. L. HANSON: Well, again, it's not difficult for me, and I'm sure any member on the government side, to acknowledge that death and the way it is handled and the services that are related to it are a very special and a very emotional circumstance, but I cannot comment on the future policy of government until government makes that decision.

OPEN-HEART SURGERY WAITING-LISTS

MRS. BOONE: My question is to the Minister of Health. The person from Victoria who was awaiting open-heart surgery was one of the lucky ones, because many of the hospitals in this area have had their open-heart surgery lists cut down and the performance of their operations cut down by half. My question to the Minister of Health is: can the minister indicate the reasons for these severe cutbacks that will result in increased suffering and sometimes death of people in this province? Is this a funding problem or is it due to a shortage of critical care nursing?

[2:30]

HON. MR. DUECK: Well, Mr. Speaker, it's actually both to a degree. There is a shortage of critical nurses, for sure, and we're trying to remedy that. However, it is also a problem with certain hospitals, where in fact they got funding for x number of operations and did not perform those due to various reasons. It differs from hospital to hospital. There are some hospitals that are quite current; others have a waiting list that is longer. But by and large if it is an emergency case, it will be looked after in a very short period of time; so it's those where the doctors themselves — their personal doctors — may in fact elect that this person can wait some period of time and there's no danger to health and the waiting-period may be longer.

There is also another point: there may be one particular physician who has a long waiting-list because he's very popular and people will wait in order to get that particular physician.

MRS. BOONE: My indication is that hospitals throughout the province have virtually been told that they must cut down the number of operations they do by half. Vancouver General Hospital is already 50 cases behind last year's. How does the minister propose to deal with this growing crisis, and has the minister developed any plan to deal with the problem of the shortage of critical care nurses, which is causing a problem in many of our hospitals?

HON. MR. DUECK: Mr. Speaker, many moves have been made by continuing education and other people, like the hospital themselves, to try to attract more critical nurse care.

However, I must mention at this time, since the hon. member brought it up, that the Vancouver General Hospital in fact got quite a bit more funding than they actually performed. In other words, there was more funding available, allocated to them for open-heart surgery, which they did not use.

CANWOOD FURNITURE FACTORY

MR. MILLER: My question is to the Minister of Forests and Lands. Last week in Penticton I toured the Canwood mill, which at the present time employs about 85 people producing furniture components, principally for Ikea. They are unable to add a second shift, which they want to do, because of the shortage of raw material: that is, wood. What steps are you taking to assist this enterprise to achieve this objective — to add this second shift?

HON. MR. PARKER: Mr. Speaker, I would like to thank the member for Prince Rupert for the question. I wasn't aware of the problem, and we will look into it for him.

EFFECTS OF FREE TRADE ON WINE INDUSTRY

MR. ROSE: My question is directed to the Minister of Agriculture and Fisheries or the Premier; they can take their pick.

[ Page 1326 ]

The Association of B.C. Grape Growers, we learned last week in Penticton, has estimated the free-trade treaty, if consummated, could lead to 2,000 part-time jobs and up to 500 full-time jobs in the wine industry. I wonder what action the minister or the Premier has decided to take to ensure that these jobs are protected. They are not a supply management board.

HON. MR. SAVAGE: Mr. Speaker, to the hon. opposition House Leader, we have had a delegation into my office, and we are also expecting to have a meeting with Economic Development as to the implications of a free-trade negotiated discussion between bilateral countries, the United States and Canada, as it relates to grape production and the manufacturing of wine. So it is very much being looked after.

NATIVE EDUCATION FUNDING

HON. MR. ROGERS: Mr. Speaker, I didn't want to take up the time of question period, but I was asked a question by the Leader of the Opposition the other day. I'll just paraphrase from the Blues: "We understand that the federal Department of Indian Affairs has recently decided to no longer fund post-secondary education for status Indians who have been accepted for full-time study." The funds have gone from $8 million ten years ago to $93.7 million this year. The number of full-time equivalents has gone from 3,500 to 12,000 this year. So it's a very substantial increase in the number of native people attending post-secondary educational institutions, and the facts would seem to bear it out. I think the member probably was given some faulty information in the first place.

FEDERAL SALES TAX ON FOOD

HON. MR. VANDER ZALM: Mr. Speaker, I'd like to respond to a question which was given to me by the second member for Vancouver East (Mr. Clark). The question was: "Has the Premier decided to speak out on behalf of British Columbians in opposition to the proposed federal sales tax on food?" I would like to advise the House that the federal government is releasing a White Paper on tax reform on June 18 which will give a clear indication of the federal government's intentions. There has been no clearly stated intent with respect to a tax on food. We'll await the paper, and at such time will make an appropriate statement with respect to British Columbia and its views on any tax, if in fact there is one proposed on food. So we will give responsible comment in detail at the time.

Orders of the Day

HON. MR. STRACHAN: Mr. Speaker, I call committee on Bill 21.

INSURANCE (CAPTIVE COMPANY) ACT

The House in committee on Bill 21; Mr. Pelton in the chair.

Sections 1 to 8 inclusive approved.

On section 9.

MR. STUPICH: I wonder if the minister can tell me who are approved as auditors by the superintendent. Who may be approved as an auditor by the superintendent? Professionals, I suppose?

HON. MR. COUVELIER: I'm not quite sure I understand the question. I heard the words, but there's no suggestion that we would attempt to inject ourselves into the selection of an auditor as long as it was an appropriately qualified firm or individual.

MR. STUPICH: What professional groups would auditors come from? Chartered accountants? CMAs?

HON. MR. COUVELIER: We have no thoughts of limiting the options, although qualifications and capability would of course be foremost in our mind. But I have no desire to inject myself into some sort of a debate between various degree-granting institutions.

Sections 9 to 13 inclusive approved.

On section 14.

MR. STUPICH: I wonder if there's anything anywhere that gives the government the authority to direct the investments. Are these funds to be invested in British Columbia or outside of Canada? Is there anything at all anywhere in the legislation that gives the minister the authority to direct the investments of these captive insurance companies which are operating in B.C.?

HON. MR. COUVELIER: No, Mr. Chairman, it is not our intention to involve ourselves to that degree in the investment-making decisions of these corporations.

Sections 14 to 19 inclusive approved.

On section 20.

MR. STUPICH: I'm reaching here because I don't know where else to ask it, but I notice that the insurance premium tax does apply. I'm wondering whether these companies pay corporation income taxes. I don't see anything anywhere. I don't see it being excluded, so I assume they do, but I wonder if the minister knows. These captive insurance companies do pay insurance premium tax. What I'm wondering is whether or not they pay corporation income tax.

HON. MR. COUVELIER: Yes, Mr. Chairman. They're not exempted from any taxation measures that are in place at the moment.

Sections 20 and 21 approved.

Title approved.

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

Motion approved on division.

The House resumed; Mr. Speaker in the chair.

[ Page 1327 ]

Bill 21, Insurance (Captive Company) Act, reported complete without amendment, read a third time and passed.

HON. MR. STRACHAN: Mr. Speaker, I call committee on Bill 13.

MOTOR FUEL TAX AMENDMENT ACT, 1987

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

Sections 1 and 2 approved.

On section 3.

MR. STUPICH: Mr. Chairman, I just wonder whether the minister would like to explain to us the way in which the formula under 4(c) works.

HON. MR. COUVELIER: No.

MR. STUPICH: Mr. Chairman, at least on a previous occasion when he had a problem, he offered to give me a memo afterwards; but I won't be waiting for this one.

Sections 3 to 13 inclusive approved.

On section 14.

MR. STUPICH: Mr. Chairman, it's just curiosity, but I wonder why there's a sunset provision here. What's the date? April 1, 1992? What's the connection? I'm just curious.

HON. MR. COUVELIER: The government has a philosophical bias toward ensuring that its legislation gets periodic reviews, and its view is that the best way of ensuring that that does occur is to put a sunset clause into effect after a reasonable period of implementation.

[2:45]

Sections 14 to 16 inclusive approved.

Title approved.

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

Motion approved.

The House resumed; Mr. Speaker in the chair.

Bill 13, Motor Fuel Tax Amendment Act, 1987, reported complete without amendment, read a third time and passed.

HON. MR. STRACHAN: Committee on Bill 14, Mr. Speaker.

MISCELLANEOUS STATUTES (FINANCE
MEASURES) AMENDMENT ACT, 1987

The House in committee on Bill 14; Mr. Pelton in the chair.

Sections 1 to 14 inclusive approved.

Title approved.

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

Motion approved.

The House resumed; Mr. Speaker in the chair.

Bill 14, Miscellaneous Statutes (Finance Measures) Amendment Act, 1987, reported complete without amendment, read a third time and passed.

HON. MR. STRACHAN: I call committee on Bill 11, Mr. Speaker.

SOCIAL SERVICE TAX AMENDMENT ACT, 1987

The House in committee on Bill 11; Mr. Pelton in the chair.

Section 1 approved.

On section 2.

MR. STUPICH: Mr. Chairman, I said some things in second reading and I don't recall the minister commenting. My question really was whether or not the minister had many representations or was under a great deal of pressure to reduce the sales tax; or did he just think that this would be the right direction to go? He said philosophically he wanted to reduce it, but I wonder whether there were many requests for such.

HON. MR. COUVELIER: Mr. Chairman, I appreciate the question; it gives me a chance to exhibit and comment on a very deeply held conviction of the government. Given the state of our economy that we saw in the beginning of this calendar year, and looking at the prospects for priming the pump in the B.C. economy, we felt very strongly that an important element in returning vitality to the economy of the province would be to reduce the sales tax and, in effect, put in the pockets of British Columbians a lot more discretionary spending power. The cumulative effect of this reduction plus the restaurant meal tax elimination has the effect of putting back into the pockets of British Columbians upwards of $275 million a year. We believed then, and do now, that that was a positive thing to do in the interests of getting the economy moving again.

MR. STUPICH: Mr. Chairman, my question was whether or not the minister was under a great deal of pressure or persuasion to do so. Since he didn't comment on that, apparently he wasn't; it was his own idea to do it.

My next question is, if it's putting upwards of $275 million into the pockets of people to spend, recognizing that almost half of that is putting it back into the pockets of business and industry.... A little less than half is being put back into the pockets of consumers. It doesn't have as much impact on spending power by people as the minister's remark would indicate. Beyond that, if the same amount of money were made available to those in the lowest income brackets,

[ Page 1328 ]

that would certainly put a lot of money into the pockets of people who would spend it in their own communities, on goods being produced to some extent in their own communities — certainly goods handled and services supplied locally. Would that not have been a far better way of injecting some action into the economy throughout the province, if the minister had to make one choice or the other?

HON. MR. COUVELIER: Mr. Chairman, there are many ways to approach a budget-setting exercise, and I suppose, had we not increased the apportionments to the handicapped and people receiving supplementary assistance this year, then that might have been a valid suggestion; that is to say, put the money from the social service into that area. But the truth of the matter is that we did substantially increase the support for the Social Services ministry, in addition to the Ministry of Health, student aid and those kinds of things. I think we successfully worked the exercise of looking after that element in our community that by virtue of temporary difficulties needed some assistance, but at the same time addressed the larger global issue of how to get some meaningful activity back into the B.C. economy generally.

So I think we did both of those things with this measure, Mr. Chairman.

MR. STUPICH: Mr. Chairman, maybe we are going beyond section 2, except that we seem to be responding to each other. The minister talked about all the money that he put back into pockets of people on low incomes. I would suggest that the programs that he announced totalled something like $50 million — the total of all of those programs — yet he has extracted far more than that amount from the pockets of those same people who are having to pay charges for prescriptions, people on Pharmacare, people who are having to pay $5 for the use of ancillary health services, people who are paying more for motor vehicle licence fees, people who are paying more for leaded gasoline. All those things are much more than the $50 million that the minister put back into their pockets.

While he gave with one hand, he took away with three or four hands — or at least three or four times the volume that he gave with one hand. And it didn't go to the people who need it most. That is my concern, Mr. Chairman. Most of this is going to the people who could well afford to pay sales tax on the large-ticket items they are buying. So I would think it went in the wrong direction.

My question really was whether the minister is under any pressure. My second question was going to be whether that pressure was from business and industry or from individuals. I take it from the minister's non-response to my first question that there was no pressure from anybody, not even from business and industry.

I think he answered the second question in second reading and I just didn't catch it — either he was speaking too quickly or I was listening too slowly; I'm not sure which. You said, I think, something about your plan to reduce it by another point later in the year. There was some reason for doing that. Did I miss it, or was it something else? Why, if you were going to put in a reduction, did you not do it all at once and get the impact of a two-point reduction? That would, I think, have a positive effect on sales and might not have lost nearly as much sales tax.

But delaying the implementation of this second reduction, it seems to me, would encourage people who are going to buy large-ticket items to wait until the second reduction took effect, if they had that choice.

HON. MR. COUVELIER: Mr. Chairman, the further reduction in the sales tax will be made this calendar year. The annualized effect of a 2 percent cut plus the elimination of the restaurant tax would approximate $600 million a year, which is roughly 6 percent off the revenue side of our budget, which would considerably reduce the spending options of the government in this fiscal year.

As a consequence of that, it was quickly realized that we literally could not afford to give 2 percent right off the bat but that we philosophically wanted to convey the message to British Columbians that we're moving towards a progressive type of taxation which is based more on income, rather than a flat consumption tax which is the sales tax. So it was our judgment that in conveying that message in the budget speech, we alerted our citizenry that there was further relief coming down the road and at the same time indicated that the timing of that announcement would depend, in large measure, on our ability to absorb it.

So we considered the point raised by the hon. member and came down on the side of giving advance notice and leaving the exact timing open for a later announcement.

MR. STUPICH: I will let it go with just one more comment, and that is that the last time a government reduced the 7 percent tax to 5 percent, within two years they had increased it back to 7 percent.

Sections 2 to 10 inclusive approved.

HON. MR. COUVELIER: Mr. Chairman, I move the amendment, section 10.1, standing under my name on the order paper. [See appendix.]

Section 10.1 approved.

Section 11 approved.

Title approved.

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

Motion approved.

The House resumed; Mr. Speaker in the chair.

Bill 11, Social Service Tax Amendment Act, 1987, reported complete with amendment.

MR. SPEAKER: When shall the bill be read a third time?

HON. MR. STRACHAN: With leave of the House, now, Mr. Speaker.

Leave granted.

Bill 11, Social Service Tax Amendment Act, 1987, read a third time and passed.

HON. MR. STRACHAN: Mr. Speaker, I call committee on Bill 8.

[ Page 1329 ]

INCOME TAX AMENDMENT ACT, 1987

The House in committee on Bill 8; Mr. Pelton in the chair.

On section 1.

MR. STUPICH: Mr. Chairman, we talked in an earlier bill about the minister's philosophy. Will the minister admit that in this bill the purpose — the intent, the design, the way it works — is to increase the income tax payable by low- and middle-income taxpayers and to reduce it for high-income taxpayers? If he says yes, well, I guess that's the end of the story.

HON. MR. COUVELIER: Mr. Chairman, surely the hon. member doesn't expect me to answer categorically to such a broad question. We did look at taxation levels for different income levels and we did ascertain that British Columbia had the second-lowest personal income tax rate in the country. We did wish to ensure that we remained the second lowest in the country, but we had considerable room to move in order to maintain that objective.

[3:00]

I've asked the staff to pull off some comparable personal income tax rates for a wage-earner with an income of $35,000 and with a dependent spouse and two dependent children. The percent of family income in British Columbia that would be paid for provincial personal income tax is 6 percent, which is the second lowest in the country, the lowest being Ontario at a rate of 5.8 percent. In terms of dollars, which is probably more significant, Ontario's is the lowest provincial personal income tax rate in that particular bracket. They would pay $2,030 annual tax. British Columbia and Alberta are tied for next lowest with $2,100 for each of those provinces. And the next lowest goes up from P.E.I. and across the country. So the point is that British Columbians are still not abused, compared to other taxing jurisdictions in Canada, and that, by virtue of this relatively small increase in personal income tax rate, our standing in terms of taxing levels across the country has not changed. So we felt then and still feel that the initiative we've embarked on here — that is to say, the modest increase — does not abuse British Columbians vis-à-vis what they would be paying elsewhere in the country, if that's where they were unfortunate enough to reside.

MR. STUPICH: It's easy to say that about anyone living anywhere other than B.C. — today, especially, the way the weather has been lately. Anybody living anywhere else is very unfortunate, apart from the politics of the situation — I'm just talking about the weather.

The minister is giving me more answers today with his non-answers than he is by answering. Each time I ask a question, if he talks about something else, I know that the answer that I expected is the right answer.

The minister asked his staff to use certain figures — $35,000. I put a question — several questions — on the order paper, and the minister has answered every one of them. May I compliment him right now on that. I've had questions in other years on the paper from day one until the House adjourned — not just for the end of that sitting, but until the next legislative session was called in — and they were just never answered. But the minister I think was the first one to answer a question on the other side of the House. Some of the answers were not that easy to obtain, I think; it took a little bit of digging. But I want to compliment him and his staff on the speed with which they answered the questions.

But I'm not sure that he looked at the questions. I didn't start with $35,000; I started with $60,000, because I knew that anybody in tax brackets of $60,000 and above — and according to the minister's answer, there are 102,500 in 1987 — is going to be paying less income tax under this new taxation formula than they were under the other. The minister didn't say yes to that, and he said he couldn't be expected to say yes. Okay, so he didn't say yes; but his question indicates to me that 102,500 taxpayers who are reporting taxable income in excess of $60,000 a year will be paying less tax. And the higher the taxable income, the more they're going to save by this new way of calculating tax. This form is a little easier to understand than the one we looked at in the motor fuel legislation.

The minister compares B.C. with other jurisdictions. I'm not sure it's anything to be proud of to say that we're the second lowest in the whole country. He said in an earlier debate that the income tax is the most progressive legislation that we have; that if we're going to raise money from taxpayers, then the income tax is the most progressive way to get it. That's the other way of saying that. So to say that we're the second worst at collecting money from that source is not something of which we should be proud. We should be saying that we're the highest when it comes to income tax and the lowest in everything else; then I would find it harder to argue with the minister.

When comparing with other jurisdictions.... I don't know the extent to which this has gone on; I know that some provinces have moved into it. The federal government persuaded us to abandon succession duties and gift taxes because they were moving into the taxing of capital gains. Once everybody got into that bag, then they abandoned the taxation of capital gains. Some provinces have started moving in to try to catch some of that tax that's being missed on people who are no longer paying tax on succession duties, gift taxes; and now, in effect, most of us are paying nothing on capital gains. That's happening in other provinces. One of the reasons the other provinces have higher income tax than we do in B.C. may be that they're moving to close that loophole that the federals created, which is costing our treasury money as well and is letting off — not scot-free, but relatively easy compared to lower-income and middle-income people — a lot of people who should be paying more of their share of the cost of government.

I wonder whether the minister considered at all moving in the direction of other provinces: that is, starting to get at some of that capital gain that's being missed entirely, a tax on it.

HON. MR. COUVELIER: Mr. Chairman, we are monitoring what is happening in other provincial jurisdictions. The situation is somewhat complicated because at the same time, as the hon. member knows, the federal government are re-examining their taxation philosophies. As a consequence, it's incumbent upon us not only to monitor what our provincial counterparts are doing across the country, but also to be cognizant of the fact that whatever further changes we may be implementing, they should be complementary — if not complementary, at least coordinated — with what the federal government may be doing.

As the Premier indicated in his response during question period earlier today, it is far from clear at this point exactly what the federal government will finally decide to do vis-a-

[ Page 1330 ]

vis their rewrite of taxation policies for the country. As a consequence, I suppose I can only answer in a very general way at this point and say that the hon. member makes a valid point. We have considered in the past — and will continue to bear in mind — the possibilities there may be in other taxation bases; but all of this, of course, is clouded and influenced by whatever the federal government finally decides to do themselves.

MR. STUPICH: I think we're going to wait some time to find out what the federal government is going to do about taxation. They're getting too close to an election to make any substantial changes.

The minister said we should keep in step, we should watch what they're doing. And he said that as I well know, they are working at this. I don't know very much; I know what I read in the paper. All I can gather so far is that the federal government is moving in the exact opposite direction to which this minister is moving: the federal government is proposing to increase sales tax and reduce income tax; this minister is proposing to increase income tax and reduce sales tax. Exactly the opposite direction. So if that's the kind of lockstep that we're in, there's something wrong with one of us.

HON. MR. COUVELIER: That's a valid comment, Mr. Chairman.

Sections 1 to 6 inclusive approved.

Title approved.

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

Motion approved.

The House resumed; Mr. Speaker in the chair.

Bill 8, Income Tax Amendment Act, 1987, reported complete without amendment, read a third time and passed on division.

HON. MR. STRACHAN: Mr. Speaker, I call second reading of Bill 6.

HOMEOWNER GRANT AMENDMENT ACT, 1987

HON. MR. COUVELIER: Mr. Speaker, this bill increases the minimum property tax payment required of all homeowners as of January 1, 1987. For homeowners receiving the basic $380 grant, the minimum payment is increased from $200 to $350. For homeowners receiving the supplemented $630 grant — those over 65, handicapped or in receipt of a war veteran's pension — the tax minimum is increased from $1 to $100.

This increase is consistent with the government's position that all property owners should contribute towards the cost of providing local services. It will serve to allocate those costs more fairly, particularly in smaller municipalities where residential taxes are sufficiently low that the majority of homeowners pay the minimum tax.

The new tax minimums will generate $16 million in additional revenue in '87-88 through reduced homeowner grant payments.

Mr. Speaker, I move the bill be now read a second time.

MR. STUPICH: Mr. Speaker, the opposition will oppose this legislation. We're not talking big numbers in this, in total. The Minister of Finance is doing this to pick up an extra $16 million from the people that he described: the elderly, the handicapped and people who live in such modest accommodation that their tax is very low. Because they can't afford to do anything better for themselves, he's socking it to them. Everything that he said about his philosophy of taxation earlier this afternoon, in the budget debate and reading the budget debate sounds good except that it doesn't read that way when you read Bill 6.

I'm sure there are many ways in which the minister could have raised another $16 million without going to the elderly and giving them a 10,000 percent increase in the property tax that they're going to have to pay, even if he had brought it in over a period of years. To him, an increase of from $1 to $100 is just being fair. The property owner is going to pay a minimum of $100 property tax, and it's not very much. It's not very much for him; he's a cabinet minister. It's not that much for me; I'm an MLA. But to some of these senior citizens whom I've visited, whom I have in my constituency, whom you have in yours, whom all of us have in our constituencies, people who are living in the kind of accommodation where they got their tax down to $1 . . . . They were not really living high off the hog, and I don't think it's because they were blowing the money on something else.

There may be some of them who could afford it. Maybe some of them chose to live in such circumstances by their own decision and prefer it that way — prefer to do other things. But there are a lot of people living in very poor accommodation, taking advantage of this homeowner grant, and I believe they deserved it — the pioneers of this country, the ones who didn't manage to save, perhaps from circumstances out of their control or perhaps from circumstances within their control. They didn't do it; they weren't able to do anything about it. And yet we're going to those very people and saying: "Well, we appreciate everything you have done, and we're going to give you an opportunity to do a little more, because from now on you'll pay a minimum of $100 rather than $1 in property tax." I just don't understand the thinking of the minister.

The homeowner grant has been around for a long time. It was the practice of the W.A.C. Bennett administration to increase it annually when it first came in, I believe every year for a period; certainly in every election campaign and I think even years before, the W.A.C. Bennett administration increased the homeowner grant. Some of us used to say it was simply a way of buying people's votes with their own money. But on the other hand, one can't deny that it was helping some people who found it difficult to pay their property taxes. I know a lot of those people, and I'm sure we all do in our own constituencies.

[3:15]

When the NDP government was in office, the homeowner grant was increased every year we were in. It was easy for us in the first three years; it was not so easy in the last year. Yet we did put into effect an increase in the homeowner grant. Since the Social Crediters have been re-elected, the policy seems to have been: "Let's sock it to the people who can't

[ Page 1331 ]

afford it." Each year they have not increased the homeowner grant. They have raised the minimum level, so that each year fewer and fewer people are getting the maximum homeowner grant.

I just can't understand why the minister has it against such people. You might think that one day he'll be elderly. Maybe he'll be able to pay his taxes, and it won't bother him — I don't know. But why, with all of the avenues at his disposal, with the reductions he's implemented in some areas, with the many ways in which he could have made $16 million, especially without taking it out of the elderly, the handicapped, whom the minister described in his remarks, and generally those who, by virtue of the fact that they were getting their tax down to the minimum as it was, obviously don't have very much, or they wouldn't be in those circumstances . . . . I just can't understand what possessed the minister to go as far as he did with this.

It's been going on for years, as I say. Since the Socreds were re-elected in December 1975 they have been gradually — and "gradually" is the word — increasing the lowest limit, each year a little. But here it's gone from $1 up to $100 in one fell swoop, from $250 up to $350 in one jump. Perhaps he doesn't intend to do it again until after the next election, when the choice may not be his. I suppose it's the time-honored advice of Machiavelli: if you're going to do something bad, do it all at once; hit them hard at the beginning, then start letting up later on. I've used that in my budget responses for two or three years. Maybe that's what the minister is thinking. Maybe he feels that if he hits the most defenceless people in our community very hard in 1987, he won't do it again until after the next election, when they should get lined up and wait for another hit. I can't see any sense in it. Maybe it's good politics to do it that way — I don't know.

It makes no sense from an economic point of view. The $16 million is pretty inconsequential in terms of the whole budget, and it's $16 million that the poorest people in our community will not have to spend on other things in their communities. So it's not going to bring them a net of $16 million — there's no question about that. And it's really hurting the people most who can afford it least.

The opposition will oppose this legislation.

MRS. BOONE: Mr. Speaker, I'd like to oppose this motion as well. I find it amazing that just recently the Minister of Finance was saying that they're reducing the sales tax, the social services tax, to put money in the pockets of people so they have more money to put into the economy. They're putting it into one pocket, and the other hand is reaching into the back pocket and taking $150 from every person. I agree with my colleague from Nanaimo that the worst one, though, is probably the increase from $1 to $100.

I've had people in my office . . . . I can relate a story about an elderly lady who was in my office, and she was near tears because she had been hit by the federal level and then by the provincial level. She was unfortunate enough to have her husband pass away on her, which meant that she had her income as a pensioner immediately cut in half. Then she had this situation whereby $100 was suddenly put on her. She was also facing extra charges on user fees for her physiotherapy. This woman, who lived out of town in an area where she could not easily walk to places, or make do with busing or any of those things, was used to paying and has paid for many years her $1 tax. Quite frankly, she didn't know how she was going to make ends meet. She didn't know how she was going to be able to pay her $100 tax, pay her $5 user fee and pay her dispensing fees on $525 per month, in addition to trying to maintain her house, which was what she lived in with her spouse.

This is common, I'm finding, and generally speaking, a lot of these people coming to me are widows who find a tremendous problem just in coping. I don't need to tell you that I was just about in tears when I had to tell her: "There is nothing I can do for you. There is no place you can go for assistance. There is nothing I can help you out on. These are the realities that you face. You face poverty as a senior citizen, particularly as a woman senior citizen." To suddenly impose an extra $100 on somebody who has an income of only $525 each month is nothing short of criminal.

I really find this a terrible situation, and I find it incredible that members on the other side can sit there and vote in favour of this, knowing what it's going to do to the senior citizens in your riding. Perhaps there are not numbers . . . . Perhaps you don't feel that they are going to be strong enough to affect your vote or affect the next election. But these are people who are concerned; these are people who are having a tough time out there, and they are struggling to make ends meet. Not all of them; I will admit that there are many seniors out there who have an easy time of it, who are able to take off and go down to Reno or to Nevada. But for those who aren't, for those who are struggling, to suddenly have the imposition of a tax such as this seems totally unfair and without reason.

You are putting money into one hand, with the reduction of the sales tax, and you are taking it right out of that back pocket with the other. I totally oppose this bill, and I would urge members to look within themselves; look within your conscience to the people in your riding before you vote in favour of this bill.

MR. CASHORE: Mr. Speaker, the hon. member for Prince George North has referred to some people speaking to her about this situation, this additional burden especially on seniors. I too have had a number of people coming and speaking to me. I guess it was most dramatically brought home to me this past Saturday when I dropped into the constituency office to meet somebody, because we were going to be going and visiting a few homes, to find there a gentleman who has been to see me in the past about his difficulty in meeting his municipal tax bill. He had been in hospital, and he was home for the weekend. But on his way home for the weekend, he stopped by my office just in case I might be there, so that he could show me the tax notice that he had just received.

To realize that he represents a category of person in our society who seems to be constantly impacted with ever-increasing ways of chipping away at their very modest and, in many instances, minimal income is really very unfortunate and very sad. In 1980 some 53.5 percent of B.C. families with heads aged 65 or over had incomes under $15,000, while only 18 percent of families with heads in the 50-to-64 age group had incomes that low. We also know that older unattached people, especially widows and widowers, tend to be concentrated in a very low-income area — people who can least afford this kind of impact.

Sometimes we go down into the legislative dining room, and we have a subsidized meal there. That is kind of nice, to be able to go there and have low-income meals while we are here working as legislators. For some of us, at the end of a

[ Page 1332 ]

month we might have $99 knocked off our paycheque for what we have consumed, even though, were it not subsidized by the taxpayers, it would be a bit more.

For these people, I submit that $99 is a far different prospect than it is for any member of this assembly. I think that we are in danger of becoming desensitized when we find that we ourselves are not in a situation to know what it really means to lose $99. For some people, it is the loss of being able to provide gifts for their grandchildren at Christmas. For others, it is a loss that means not being able to pay user fees and therefore eliminating certain visits to physiotherapists or chiropractors. For others, it is a loss of being able to drop in at a local coffee shop and have a piece of apple pie and coffee once in a while. That is what this means to a very large number of British Columbians who are the pioneers of our society.

Often these people have paid their dues, not only in the taxes that they have paid over a lifetime, but in the way in which they have worked to open up this province and make it acceptable and useful and prosperous for those of us who are now able to enjoy its blessings. So I would very strongly urge the Minister of Finance and his colleagues to think seriously about this and about changing this hardship.

It is absolutely unnecessary. When you consider the ways in which the government has made it easier for the very rich in this province, it is extremely unnecessary. I think it is cynical to enact a measure like this at this time in our legislative term, only to soften it up as you're going into an election . . . . If you really have any thought that two or three years from now you might soften this up, you should do the noble thing and do it now. You'd get rid of this measure. This is detrimental to the people of British Columbia, especially to the seniors, whom we should be honouring, not insulting with this type of action.

MS. MARZARI: Mr. Speaker, I wanted to add a few comments to the discussion on this particular bill. When we talk about hardship to seniors in British Columbia, I think that we're faced with a real deficit of concrete information. There doesn't seem to be a data base there for us to really take a serious look. It's obvious to me, as my colleagues have said, that many seniors are going to be feeling the pinch. They are going to be seeing an additional $100 as significant. When you're drawing up a bill, I can understand that you would think that the $100 is not significant; people can get by without $100. But as my friend the member for Prince George has suggested, it's the cumulative impact. Having the user fees added to the Pharmacare fees and an additional $100 on the home every year could well make a difference to a senior.

[3:30]

What kind of a difference? It's difficult to say, but if you were faced with decisions, you might want to think of the individual who is a homeowner over 65. There is every possibility that that person might be female, that she might be a widow living in the family home. Over the years different techniques have been introduced in municipalities and through the provincial government to assist seniors living in the family home by lifting taxes or giving some tax easement. But what I want to put forward right now is the notion that what we should be doing before we introduce bills such as this to raise money from seniors is trying to coordinate a picture of what a senior's life is like in British Columbia, and to coordinate those services and a definition of what seniors' income patterns look like.

I understand that in Ontario there is a department which coordinates services to seniors and takes a look at the demographic patterns of the communities throughout Ontario, consults with seniors groups and pulls together an interdepartmental look at what the needs of seniors are. Many seniors are living on OAS and GIS, with perhaps a little bit of the Canada Pension Plan. This picture of seniors living at $600 to $700 a month, maybe $750 a month, is something that we might see a lot more of in British Columbia if we took a serious look. I don't think we've taken that serious look.

At this point, this bill is going through, and I'm sorry that it is. My suggestion, though, is that the government take a look perhaps at sending to one of its standing committees on social services, perhaps, a mandate to pull together some coordinated and integrated planning, to pull together a plan for seniors' services and a demographic look at the rates seniors are living at in this province now, with perhaps a few future projections on our population as it ages to see what kinds of future needs we might have.

I believe that had we taken this kind of look, we wouldn't be faced with Bill 6 in its present form. I believe we would be seeing some real needs there that we would be trying to address in some other way, rather than really basically telling seniors that it's time to give up their homes, which in many instances is the most precious asset they have.

MS. A. HAGEN: I'd like to pick up my comments today from the theme that the second member for Point Grey has raised, and that is that when we are looking at taxes that we are imposing, particularly with older people, we need to look at a total picture. One of the reasons I think that we on this side of the House are paying so much attention to issues as they affect older people is because there is no overview of how taxes and programs do affect the older person, as that person is seeking to maintain his or her independence for as long as possible.

We all know that our population is aging, and that people who are at the older range of the age spectrum are one of the fastest-growing groups within our total population. And it is true that many of these people live in their own homes; something like 65 percent of them are still in homes that they own, many of them owning those homes free and clear.

Let's just look at some of the costs that older people have to incur while maintaining those homes in the communities where they have lived. Many of them have to look after costs of maintenance that they are no longer able to manage on their own. We have within our health system a very well-developed support system that provides for services for the older person in his or her home. Within the long-term care mandate that provides for those home support services there is a stipulation that older people will be helped with handyman services — the kind of things that help them keep their lawns cut, that do minor repairs that very often are very important from the point of view of safety.

When I did some review of the extent to which this particular mandate of long-term care was delivered in the province, I found that in very, very few communities are handyman services available under the Health ministry; and where they are available, they are being cut back. I have a letter on my desk that I was just reading today from residents of Hornby Island, for example, a very independent-minded community with a significant number of older residents who

[ Page 1333 ]

are concerned that their handyman services are no longer going to be available to them. In Vancouver they were cut back two or three years ago. In the community in which I worked with the seniors' population, there are no such services, and they are very sporadically offered throughout the province. The cost of those kinds of maintenance services are ones that older people must pay out of their very limited incomes.

When we consider that a very large number of people who are living in their own homes are people whose incomes are quite marginal — even those people who pay some modest tax do have a very limited disposable income against their costs — then we know that any additional maintenance costs are a burden indeed. When they have to hire somebody to do that job, most older people throughout the province want to pay a fair wage, want to pay the young person who's going to cut that lawn or mend that fence or step a reasonable wage, which means that they're looking at not less than the minimum wage and are often trying to pay that person at least $5 an hour. So those costs over any season add up to a considerable amount for those people.

If we look, too, at the costs that are a part of running a house — the cost of electricity, the cost of heating a home, the cost of insuring a home — all of us know that they have usually risen much more than the cost of living. So these people are facing higher costs in order to maintain their own homes.

Other policies of government, too, have caused the shift of taxes to the municipal tax roll. We're seeing education costs being shifted. Over the years this province has paid less and less out of general revenue towards those education costs; more and more of those costs have been borne by the individual taxpayer. That particular situation has become even more noticeable with the commercial and industrial tax having been moved to general revenue, so that school boards, now that they do have the right to try to rectify some of the deficiencies in education funding, have only one place to go, and that is to the homeowner-taxpayer. In many communities, that homeowner tax base is in very large measure still a senior tax base.

I want to talk, too, not just about older people, but about the increasing number of disabled people who are living in the community and who are eligible — with a medical certificate — for the larger homeowner grant. Here again, then, at a time when we're talking about disabled people and the recognition of their needs, we find that with the added costs that they have of maintaining themselves in their homes, they may very well be faced with an added tax.

Lest it be thought that there's only a relatively small number of people who in fact will not already be paying some tax in their own right over and above the homeowner's grant, we find that this particular tax will have a significant impact even in lower mainland communities, where people may have moved out of their family home, and may have purchased a modest condominium or apartment. Many of these people with apartments in the modest range, having planned their financial affairs with an anticipation of a gradual increase in their municipal taxes, are suddenly going to find themselves faced with an additional hundred-dollar cost that they had no forewarning of and that they perceive as quite unfair.

This is a regressive tax. It is not based on the ability of people to pay. It is a tax that is added to the burden of being old. As I said at the beginning, that particular burden is one which a number of ministries of government have chosen to impact with the budget this year. Therefore older people are looking with despair and with fear to the increased costs that they face for the two things that are probably most important to them: the cost of their health and the cost of their housing. In neither regard has this government acted wisely, and in this regard that tax will add a very significant burden to older people seeking to maintain their independence, an independence that is one of the most cost-effective gifts that they can give to the people of this province, one that we should not in any way compromise or leave lacking. These people seek to be independent and self-sufficient; and in the policies and taxation programs that we put in place we need to recognize their commitment to that, and their steadfastness in maintaining that independence. We should not, in the various ministries of this government, be impacting on their ability to be independent.

This burden is one that is ill-advised, and I will be joining my colleagues in voting very strongly against it.

MR. LOVICK: Mr. Speaker, I'm going to keep my remarks very brief today. We are intending, I should tell members opposite, to move an amendment from this side of the House, and I shall have occasion to speak at that point.

This morning I enjoyed, with the rest of my colleagues in the House, welcoming David Foster. I remember how all members of the House joined in unison in recognizing the tremendous accomplishments of that man. We talked about how what Foster had done, perhaps above all else, was to give of himself and his talents to those who were less fortunate and required help. I remember the refrain from that wonderful song, "Tears Are Not Enough": "If we could pull together, we could change the world forever."

I'm horrified to think that here we are standing now, in this Legislature, talking about a bill which, to put the matter not too charitably, seems entirely punitive, insofar as the money raised, frankly, is not sufficient to justify the harm and the misery that so obviously are going to follow in the wake of this kind of legislation — to take those individuals in our society who are now at the end of their working lives, who in many cases simply do not have the wherewithal to function effectively in that society, and now to give them an extra bill of $99.

Mr. Speaker, it's been said by a number of people on a number of different occasions that if there is such a thing as a leisure class in our society, let it be those individuals who have spent their lives working in the society, who at the end of their working lives ought then to be given some leisure and some protection.

I would just like to say, to end my brief remarks here, that I had not thought that we would have to have this kind of debate. I had thought that by the time the members on the other side of the House had listened to the cries of anguish from the seniors' community about the various other charges which have been foisted and hoisted upon that community, this particular measure would not have seen the light of day in this House. Sadly, however, that is not the case. Sadly, it seems we are once again having to stand up, when we ought not to have to, and say that we are violating a very fundamental principle in taxation, namely the principle of ability to pay. The main predicament with Bill 6 and what it spells out is that it is an indiscriminant tax. It's an indiscriminant tax insofar as it says that whether you have $50,000 interest annually in debentures or coupons or some such thing, you

[ Page 1334 ]

get the same charge as the individual who is virtually indigent. That's the problem with this legislation. Indeed, I suggest that that's the problem with all of the tax measures that have been introduced on the other side of the House.

[3:45]

My colleague the first member for Nanaimo (Mr. Stupich) has already pointed to the irony — if not, indeed, the hypocrisy — of the words that emanate from the other side of the House about a fair tax policy, words that are sadly complemented and contradicted by policies that go against the message of those words.

I am pleased, then, Mr. Speaker, to be standing in opposition to this bill, and I am pleased that my caucus sees it in the same way and recognizes this as a measure that is simply not justifiable by any stretch of imagination or intelligence.

MR. D'ARCY: Mr. Speaker, I would like to — while supporting the remarks of my colleagues regarding senior citizens — speak on behalf of those people who have retired early. I know "retiring early" is a subjective term, but it has become normal, I would think, nowadays for both employers and employees, particularly in my constituency, to encourage people to retire before the age of 65, if that's what we can define as retiring early. In this bill there has been a lot of emphasis on the fact that the minimum goes up by $100 — well, $99 — if you're over 65, but the same bill puts the minimum up by $150 if you're under 65.

I suppose I'm rising here to speak on behalf of all low income people who own their own homes but who are under 65, and especially on behalf of those who no longer, for whatever reason, have a full-time occupation — full-time employment outside the home. Whether they have retired early due to physical infirmity, whether they are in many cases widowed — in my constituency it is unfortunate; it seems we have more widows than widowers — or whether individuals find themselves single for another reason such as perhaps their marriage breaking up, a great many of these people not only faced a higher minimum tax before but now face a $150 tax increase. I would like to draw to the minister's attention that it is a real, excessive hardship on these individuals, particularly since they are working very, very hard — in some cases with physical disabilities — to maintain themselves in their own homes with some form of dignity, without having to abandon the home that they've raised their children in. I'm sure the minister will realize that also a great many of these people spent many, many years working very hard to pay the mortgages off, while in many cases on low income during that time.

[Mr. Pelton in the chair.]

So, Mr. Speaker, I would hope that the minister would take into account this particular factor. It's one of the reasons that I am opposing this particular bill.

MR. SIHOTA: Mr. Speaker, I want to talk a little bit about this legislation from the perspective of the mobile home owners in this province, because I happen to have a good number of mobile home owners living in my riding, and I think that others of us have quickly come to note that an ever-increasing number of mobile home owners are moving into their ridings. I think that that type of lifestyle is one that ought to be encouraged. Certainly among the senior population of this province more and more of our seniors are moving into mobile units. Therefore I want to talk a little bit about the situation of seniors and people in general living in manufactured homes.

Before I do that I should point out that I think the minister, having been previously involved in the municipal level like I also was, is well aware of the fact that it's at this very time of the year that all of us begin to receive our assessment notices and begin to realize just how bad the news is, and I must say that my constituency office in the last few days has been deluged — I think that's probably the best way to put it — by calls from people who are only now beginning to realize the full impact of the measures that came down with the budget and the full impact of the legislation that's before us. If the minister thinks that this whole matter had evaporated after the message of the budget got lost in the message that followed in Bills 19 and 20, I want to assure the minister that he's wrong in that regard and that indeed people are only now beginning to realize the effect of this legislation.

But I want to talk particularly about the effect it has on those who reside in manufactured homes, because in the budget speech for 1987 the Minister of Finance said, in introducing a higher level of taxation on residential property: "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." The intent of that, I take it — if I understand the thinking of the minister correctly — was basically to try to place a higher burden and greater responsibility for these local government costs upon the residential property owner. But I would have assumed that the government wanted to do this in a fair and equitable way. However, as my colleagues have pointed out, the actions of the government ought to be criticized in general terms because of the decision to increase the minimum tax payable, particularly to the $100 per year for seniors from the $1 that it was.

Specifically, I think there's a concern in the minds of the manufactured-home community of this province. In order for someone to take full advantage of the homeowner grant, the tax for those under age 65 would be $730 or more. That's $350 of the minimum property tax plus the homeowner grant of $380. In order for senior citizens to take full advantage of the homeowner grant, the tax payable would be $730. That's the $630 plus the $100. I've been provided with the text of a letter sent to the minister from the United Mobile Home Owners' Association, using Surrey as an example and applying the 1986 mill rates. The Minister of Municipal Affairs, who also happens to represent that area, may be interested in this.

Using the Surrey example, the assessment on a residential property, which would generate a tax of $730, is $730 divided by the mill rate, resulting in a figure of about $53,000. For any lesser assessment there would be a corresponding reduction in the homeowner grant. Many of the manufactured homes in this province are assessed at $25,000 or less. For owners under 65, the tax at that mill rate in that municipality would be $342. Recognizing that the minimum property tax of $350 is payable by this person and that no homeowner grant is paid to the municipality on his behalf, the tax paid is the same as that paid by the owner of property assessed at $53,000, with the $380 homeowner grant paid by the province to the municipality on behalf of the owner. Therefore in that type of example the province ends up

[ Page 1335 ]

treating a $25,000 property in the same way that it treats a $53,000 property. In other words, a senior citizen owning a mobile home assessed at $25,000, and with a tax payable of $342, would pay a minimum of $100; the homeowner grant would reduce that to $242. Another senior citizen living in a home assessed at $53,000 would pay the same minimum tax of $100, with a homeowner grant of $630 payable to the municipality remaining intact.

So it seems that the province has quite frankly fouled up its intent to be somewhat fair when it begins to treat people alike in those two instances, despite the fact that the value of one residential property is less than half the other. The example I've just provided would seem to reverse the common practice of providing a greater subsidy for those less able to pay. In Surrey the taxes to be paid for municipal services by living in the accommodation assessed at $53,000 or more are subsidized through the provincial treasury. A lesser subsidy for municipal services, or none at all, is paid on behalf of those living in less expensive homes. So it would seem that the contention that all those living in a municipality should pay a share of the cost of services is something of a contrived philosophical explanation to justify a difference in subsidy on the part of the government, and I want to congratulate those in the manufactured-home industry for having pointed that fact out.

Having done that, I should also add that if there is any debate as to whether or not their assumptions — and hence my assumptions — are questionable, I note that the minister, by way of a letter dated April 22, 1987, corresponded with the president of the United Mobile Home Owners' Association and acknowledged that their detailed examination of the homeowner grant structure was quite correct, and recognized indeed this very inequity. He said, and I found this very difficult to accept from the minister: "Although tax minimums can appear to affect owners of mobile-home and similar properties (e.g., condominiums, townhouses and floating homes) in an inequitable manner, I do not feel it unreasonable to require a basic contribution from all homeowners." Let's put aside the question of whether that's reasonable or unreasonable, because many of my colleagues have already dealt with that issue; but certainly it is inequitable. The minister himself recognizes that it's inequitable.

Yet in the legislation as it sits here today in the House, the minister has done nothing to remedy that inequity, despite the fact that this inequity was pointed out to him by way of a letter dated March 25, 1987. He apparently had close to a month to analyze it and respond to it. He recognized that there is this inequity and has refused to correct it. I pointed out in earlier speeches in dealing with the situation of residents of mobile homes that there have been petitions that I have brought to the attention of the minister; there have been letters from right across the province. People who reside in these manufactured homes realize that they are being hit in a far more direct way than regular homeowners. They're being required to pay a greater share of taxes when indeed it appeared as if the government's intention was to be equitable. But we now have an admission from the minister, by way of the letter, that indeed this tax is inequitable, and I think that tends to undermine all the rhetoric that the minister has been tossing across the House as to the government's intent to introduce a program of fair taxation.

So it falls far below that standard of fair taxation. It affects seniors, it is unfair to those in manufactured homes, and people in this province are beginning to realize that that's the case. Like I say, I've been flooded in my office with letters from people who live in manufactured homes, and I received one today that I thought was of particular interest because, although he's not here, it was addressed to the member for Mackenzie (Mr. Long). But I think it would be appropriate to read this letter and put it on the record. It comes from someone who's 74 years of age and lives in Powell River. The letter states:

"I wish to express my utter disgust over the recent move to revise the minimum amount of...tax from $1 to $100, especially in one year. I only wish my pension would increase that amount in one year. Never have I voted for NDP-CCF, but this latest move on seniors has pushed me and many of my senior friends over the line. I now feel sure, because of the many controversial increases the Social Credit government has recently placed on seniors, that you have absolutely no chance of forming the next government. I am 74 years old and will not accept this latest decision on the above atrocity against the seniors. I await your involvement and results within 21 days."

[4:00]

So this couple who wrote to me from Powell River — which of course isn't in my riding — has given the government, the Premier, the Minister of Finance, 21 days to remedy the situation, to remedy this inequity, to remedy this assault on owners of manufactured homes, to remedy — to use the words of the writer — this atrocity against seniors. The challenge is now before the government to demonstrate just for once a level of political leadership, a recognition that this legislation is wrong, that it is unfair, that it is inequitable, and to withdraw it. And if not, well, the crystal ball is before you in the form of this letter that came across my desk today, and I quote again: "You have absolutely no chance of winning the next provincial election." At least, that's according to this one resident.

So I would encourage the minister to recognize these unfairnesses, to recognize the particular plight of those living in condominiums, townhouses, float homes and manufactured homes, and withdraw this legislation. Because if he doesn't, then he'll be defeated not only on this legislation, but come the next election as well.

MS. EDWARDS: I really want to go on and talk a bit about how this particular legislation would affect the people in the rural areas of the province rather than the more urban areas, because the place that seniors live in the rural areas of the province is very different in the sense that far more of them live in houses than do in the cities, and there are a couple of reasons for that.

First of all, in our area, in many of the mining towns — and I know this is not unusual, because throughout the province this happens — many of the houses that the senior citizens are living in were built by the very people who are still living there. If the men are still living there, they might have built the house themselves or there may be widows living in a house that their husband built. I have been amazed at how many of these houses are still there and how many of them were in fact built by the citizens and residents themselves. In fact, I was told one time that it was no problem for a miner to go in and dig a basement — that was just sort of half a day's work.

Many of the houses in which the people find themselves these days are houses that were built in years gone by and

[ Page 1336 ]

houses in which they may have brought up their families and houses that they still live in because . . . . There are several reasons for that, too, but one of the reasons is that it's the least expensive place to live. Now that these people are seniors, now that they are living on reduced incomes, they are still living in their own homes, because it's less expensive, if they're not paying a mortgage fee and so on; the house was paid for years ago.

But besides that, I think the minister should remember that there are not the number of apartments . . . . It's often said that seniors should get out of these houses if they're going to be too costly, and just move into an apartment, because it's a better place for old people to live anyway. They are closer to neighbours; they also will find that if they can't afford their own house, they can certainly afford an apartment. Well, I've made this point before, Mr. Minister, but the fact is that there are very few apartments in the rural towns and small villages and communities in our province. There are very few apartments in the first place, and there are also very few of them that have elevators. If you find an apartment building where a senior might go, and find that the only apartment available is the one on the third floor, that senior is certainly not going to be able to make it upstairs and downstairs carrying groceries, and so on and so forth.

So in fact, for various reasons, many of the people in the rural areas of this province — many of the seniors — are living in their own homes. A number of studies have found that it's much less expensive to care for seniors in their own homes than it is to care for them in institutionalized care, and there is study after study that shows that if any of them went anywhere outside of their own home, they would perhaps need a very high level of institutional care; in other words, a fairly expensive level of institutional care. So what we are looking at are a number of people who will do practically anything to stay in their own home for any number of reasons. They don't suffer the kind of isolation that they might suffer in their own home, if they stay, in a city, and they are there to our benefit as well as to their own benefit.

What is happening to them is that more and more of the load of the services that are provided in British Columbia is loaded onto the backs of residential taxpayers. There is a noticeable and deliberate thrust to move the taxation base for property from commercial more onto residential taxpayers. If we put this all together, and put it onto the backs of senior citizens, some of whom exist on an income of approximately $700 per month and still live in their own home, despite the idea among some folks that that doesn't happen . . . . It does happen. It happens frequently, and it is simply not a situation in which it is easy to accept another $100 every year for taxation.

If for no other reason than this one, I would ask, Mr. Minister, that you please take consideration of where the effect of these taxation measures is going. I will certainly be very adamant about my vote, which goes against this bill.

DEPUTY SPEAKER: The Chair recognizes the second member for Victoria.

AN HON. MEMBER: Are you the final speaker?

MR. BLENCOE: I don't know whether I'm the final speaker; however, my comments will be brief.

Mr. Speaker, most of the things that I wish to canvass this afternoon have been covered very capably by my colleagues, but I thought it was very important that the Victoria MLAs speak on this particular issue, because if there is any riding that is perhaps more dramatically affected, it's Victoria. I think in excess of 19 percent of Victoria's population is over 65 or retired, and many of those people are managing to continue to hold onto their homes or their condominiums. This legislation, Mr. Speaker, dramatically impacts on thousands of people living in our riding.

I told the minister that I was going to read every single letter I have had from seniors living in Victoria, and I won't do that. I suspect the minister has had copies of those letters, or indeed has had many phone calls from seniors who are affected by this legislation. Needless to say, Mr. Speaker, we in Victoria, like the rest of our colleagues, really do oppose this Home Owner Grant Amendment Act. We not only oppose the principle of the bill, raising property tax from $1 to $100.... We just can't support that. Those seniors who are on fixed incomes, who are finding it extremely difficult to meet the rising costs today . . . . To affect them dramatically in one year is totally unacceptable to us. Not only in terms of financial figures do we oppose this bill, but we oppose the short-sightedness of this kind of legislation. Many of the senior citizens do remain in their homes and try to hang on through family members. They don't become a drain on the public purse because they don't utilize long-term care facilities or the health facilities. They are saving the taxpayer a lot of money by continuing to live in their homes and not utilizing the public facilities or the long-term care facilities that are available.

Mr. Speaker, it's just so short-sighted for the government to raise revenue in this way. I think it's about $16 million, I believe, for 1987-88 and a further $17 million for 1988-89. The long-term effect is that those seniors, by this bill and by other raises in taxes or costs, are forced out of their homes and have to go to other facilities. Often those facilities are supported by the provincial government. It doesn't make sense, and it really is short-sighted.

Mr. Speaker, we would hope that this government would consider the fact that most senior citizens have contributed to their community, their country and their province. In the last years, they want to live in peace and in dignity and want to be able to pay their bills and stay in their homes. But it's becoming far more difficult to do that when we have the kind of budget that we had and now this amendment act. We all know the budget had a major impact on senior citizens. A dispensing fee for Pharmacare was imposed, along with user fees for chiropractors and other such services under medicare. Life is becoming tougher and tougher for senior citizens.

Mr. Speaker, why the government would want to do this totally escapes us. We would hope the minister and the government would reconsider its position and support senior citizens in their attempts to stay in their home. The minister has all the information about how many seniors this will affect. I know in our riding it's literally thousands. We would hope that the government would think through on its policies, particularly when it's trying to curtail costs in other areas. This kind of measure could only increase costs in other areas.

Mr. Speaker, on behalf of our constituents in Victoria, we have the highest number of seniors per capita of any riding, not only in British Columbia but in Canada. We very much oppose this legislation and hope that the government would reconsider its position.

[ Page 1337 ]

MR. G. HANSON: Mr. Speaker, I rise to oppose this bill. As my colleague the second member for Victoria has indicated, there are many senior citizens within this region who maintain their own dwelling and when I visit them on the doorstep they often tell me that they would like the support services necessary to live in their own homes as long as they possible could. I think all the studies indicate that that's a very wise move from a public administration point of view because it's a lot more cost-effective for a society to have people happily living within their own homes with the necessary support services and home care programs, rather than having people institutionalized when there's really no need for that to occur.

This government has been embarking upon a program over the last number of budgets, not just this particular budget. This is a piece of the puzzle, Mr. Speaker. They repealed the low-income tax credit, which hurt seniors and low-income earners. They have repealed the rental tax credit, where tenants had a break, and now, in a one-shot deal, the homeowner grant provisions that were in place protecting seniors for many years in this province are now altered so that a senior this year has a surprise tax essentially of $100 when they expected and budgeted for no increase at all and were paying a token $1.

[4:15]

Mr. Speaker, there are symbolic implications to this. It has always been recognized that when people reach the age of 65, in most instances, they have had a lifetime of paying personal income tax, property tax, school tax; and society recognized that through its legislation and provisions such as the homeowner grant, which allowed seniors the opportunity to pay a token $1, as opposed to this bill which slaps a $100 fee on them. It was recognized that seniors had paid their fair share, that they'd done their bit, and it was time for the young workforce — the young families and middle-income earners — and the corporations and the industrial properties to pick up the slack and pay theirs. That's the way the system works. People come through the workforce; they retire; and there are certain benefits society grants seniors, in terms of reduced fares, fees and so on.

But this government is moving in the opposite direction. I wouldn't be surprised if we saw in a future budget that rather than $100, it will be repealed and replaced with $150, $200 or $250. It's really unfair, and it adds to the burden of the person who's trying to maintain himself in his own home. Those support services are being cut away, and all the low-income tax credits that I referred to are now gone. And now we're slapping onerous burdens on the seniors.

I know that the Provincial Secretary (Hon. Mr. Veitch), in his own riding of Burnaby-Willingdon, knows there are many seniors barely making ends meet. But because they're not in a hospital, from society's point of view . . . . They don't require all the support services within an institution. All they require is to make sure that their roof is sound, that their house is maintained; if they need extra support services, they are properly evaluated so that they get that home care support they need. All of a sudden, in their property tax bill, the homeowner relief that was granted way back when W.A.C. first envisioned the homeowner grant and brought it in . . . . You're violating everything he really stood for in this chamber.

HON. MR. VEITCH: My home needs some support.

MR. G. HANSON: But your income of $75,000 a year, plus credit cards, plus cars, plus government planes, plus .... If you want to extend . . . . I know we shouldn't be having this cross-House debate, but if the Provincial Secretary wants to extend the generous provisions afforded members of this House . . . .

HON. MR. VEITCH: I just want you to mow my grass, that's all.

MR. G. HANSON: Mr. Speaker, the Provincial Secretary is attempting to derail my line of argument.

If we were to have an audio-visual display in this chamber showing the income structure within our province, we would find that the lowest-income people tend to be seniors. Certainly if you are living on Canada Pension and GAIN and so on, and if you're managing to live in your own home, you have marginal surplus income. And you don't need this kind of surprise taxation. It's post-election surprise taxation. What used to be a dollar is now a hundred. To project from your own circumstances . . . . The Provincial Secretary is in the prime of his earning-capability years. If we look at the mean income in the province, it's certainly not what a cabinet minister is making.

Mr. Speaker, I'm rising in my place to vote against this. It's an onerous tax. It's a hardship tax on the seniors. As my colleague the second member for Victoria (Mr. Blencoe) said, we have the privilege of representing a very beautiful region of the province; but it's also a retirement community, and has a large percentage of seniors. Many of those seniors are not tenants. They're living in their own homes, and they want to do that. This particular tax makes it more difficult for them to do so. Therefore I'm voting against it.

MR. ROSE: I'll be very brief. I agree with most of what was said here by my colleague from Victoria. What I object to is that it tends to be a tax on the poor. It's all very well to say: well, the poor don't own their own homes anyway, so they're not being taxed. But some will be taxed out of their homes. Here's just a little figure. Of the people over 65 in this country 60 percent get the supplement. Many of them, of course, are women. You're not eligible for the supplement unless you're broke. We can therefore say that 60 percent of Canadians over 65 are broke. In other words, they have no income other than their old age pension. If that isn't a tax on the poor, I don't know what is.

I suppose it could be argued that if they were poor, they wouldn't own their own home; or else, they shouldn't own their own home if they're poor. But the point is that if there were some way of making this a progressive income tax, based on income, I think it would have much more validity, and it would be less oppressive and more progressive. I wonder if the minister — I know this isn't committee stage, and we can perhaps ask him these questions in committee — has considered any way that this could somehow reflect income, rather than just possession of a home. In that way certain provisions are used to keep people in their own home.

To personalize this, my mother just left her home for intermediate care at the age of 87. I think there was far less charge on the state — the Crown, if you like — in the fact that she stayed in her home, besides all the psychological and family benefits of being there. But there were programs to help her. There was the homemaker service. If she needed the

[ Page 1338 ]

roof fixed, there was RRAP. These are all programs designed to assist seniors, and not wealthy seniors.

My chief objection to this, besides the fact that it is a surprise, is that it discriminates, but it makes no discrimination between those who are wealthy and those just hanging on by their fingernails. I would like to get to this in greater detail a little further down the line. I will perhaps raise it again during committee stage.

DEPUTY SPEAKER: The House is advised that under standing order 42 the minister closes debate.

HON. MR. COUVELIER: It has been alleged that Bill 6 imposes a hardship on many British Columbians. The government does not agree, of course, given the existence of so many other support programs to ensure that those who truly need help get help. Generally speaking, we have raised user fees in a variety of programs with this budget. In every instance that I am aware of, Mr. Speaker, those increases in user fees were complemented and supplemented by additional assistance to those who truly needed additional assistance. To the best of our ability, we tried to ensure that those British Columbians who can afford to make some small contribution towards service provided do so, and that those British Colombians who are not in a position to make that small contribution are not expected to. That philosophical thrust has been contained in all of our taxation legislation.

I am proud of that approach and that thrust. I think it puts the lie to those criticisms I have heard here for the last hour or so — that the government does not recognize the plight of those who might need a little bit of extra help. The fact of the matter is that for senior citizens and the handicapped the homeowner grant is $250 more than for those British Columbians who are not in that category. So we have already recognized special need by increasing the grant.

I think it is also true that whenever we introduce a taxation measure that imposes an additional increase in cost, it is never a popular thing to do. I recognize that, and obviously many of the speakers were making comments for the folks back home. That will be useful to pop in the mailer and show that they have some heart and some interest in their constituents' affairs.

But the fact of the matter is that there is presently in place a program by which senior citizens can defer their taxation bills. If you deal with the rural homeowner, who is presumably living in a lower-valued home, we are asking that homeowner to pay $100 a year. Let's say it's a home valued at $30,000. At that rate, I calculate they can live 300 years in their home before they are forced to pay back the loan. Clearly there is enough opportunity in that tax deferment package to ensure that no citizen is put out of his home because of this increase from $1 to $100 per year.

We are talking about equity. What about the other side of that equity coin? The opposition members would have us believe that rural British Columbians who have traditionally got by with paying only $1 a year in property tax were happy with the thought that they were being subsidized by their neighbours who were paying the full property tax. If we are talking about equity, it seems to me fair to expect every citizen receiving some services to make some small contribution towards those services.

Everybody in this Legislature knows full well that the property taxation measures contained in our property tax laws do not even cover the cost of policing in rural British Columbia. The cost of policing per capita in British Columbia exceeds the property tax, even that portion of the property tax that is imposed on them. They are not even covering the cost of policing — not counting the roads, the land use policies, the cost of regional districts and all the other costs of local government.

I think that if we are talking about equity, it is about time there was some recognition of the fact that there are basic inequities in the existing taxation structure. It is true that it is easy to criticize the measure, but I think that on the philosophical basis, given the fact that there is a safety net underneath those who can't afford to pay, the suggestion that people might pay $100 a year for the privilege of living in their own home, as a contribution towards the cost of services, including policing, is quite easy to defend. In my conversations around the province with people who live outside the urban areas, I don't find any great argument with that. So I would invite members of the opposition who evidently have constituents who are troubled to make application under the property tax deferral scheme, and we will be happy to process it as we do with all others.

I move the bill be now read a second time.

[4:30]

Motion approved on the following division:

YEAS — 35

NAYS — 17

Bill 6, Home Owner Grant Amendment Act, 1987, 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. STRACHAN: Mr. Speaker, I call committee on Bill 17.

PROPERTY PURCHASE TAX ACT

The House in committee on Bill 17; Mr. Pelton in the chair.

On section 1.

[ Page 1339 ]

HON. MR. COUVELIER: Mr. Chairman, I move the amendment to section 1 standing in my name on the order paper. [See appendix.]

Amendment approved.

Section 1 as amended approved.

On section 2.

HON. MR. COUVELIER: I move the amendment to section 2 standing in my name on the order paper. [See appendix.]

Amendment approved.

On section 2 as amended.

MR. STUPICH: Mr. Chairman, when we were in second reading and we were talking about this outrageous impost, the minister said at one point that it's the vendor who pays. Of course, the Premier as well said at one point that he was going to amend the bill so that it would be the vendor who pays. As I read the bill, the very first — well, actually the second — line of section 2 says the transferee shall pay tax. Now which is it?

HON. MR. COUVELIER: The transferee pays the tax, Mr. Chairman. My comment during second reading dealt with the fact that it's a dynamic process. To the extent then that the seller would recognize any deficiency on the purchaser's part, it would be reflected in the dynamics of that transaction. So that was the meaning of the reference in the second reading debate.

MR. STUPICH: I find that logic to be strange. The whole business of buying and selling, when there is negotiating like that going on, is a dynamic process. The seller is trying to get as much as he or she can get out of the purchaser, and the purchaser is trying to get the property at the minimum price. So there is bargaining back and forth. It doesn't make sense for the minister to say that since it is such a dynamic process, it will be the vendor who actually ends up paying.

When it comes to having to have the cash to actually buy property, the purchaser has to have enough for the down payment, which is generally, I would think, 10 percent, as a reasonable figure. You wouldn't sell a property unless you got a payment of let's say 10 percent. The amount going to the government has to be in addition to what the purchaser requires for the purchaser to believe that for the vendor . . . . It has to be in addition to whatever the vendor feels he has to get out of the deal to make sure that the purchaser is on the hook and is going to go through with it. That's where the down payment comes in. The vendor wants to make sure the down payment is sufficient to make sure that the purchaser is going to go ahead. But on top of that, the person purchasing has to come up with 10 percent of the total purchase price in cash, or be able to finance it in some other way. The amount of financing available often is taxed to the limit already. It seems to me that in many instances it's going to at best slow down transactions while people scurry around and try to find the money that the Minister of Finance wants out of this deal — at best slow it down, and in some cases it may mean that there is no deal.

MR. SIHOTA: Mr. Chairman, I want to get this clarified. Is it or is it not the government's intention to have the vendor pay? That's the question, if the minister would like to answer that.

HON. MR. COUVELIER: The purchaser, being the only party to the transaction to whom registration would be beneficial, will be the party that pays the tax.

I was delighted to hear the earlier question and the earlier admission, Mr. Chairman, that a real estate transaction is a dynamic process, and that the seller's ambition, of course, is to get what the market will bear. That seems to confirm my comments during the second reading that was conducted earlier. It sounds like we're unanimous on that point.

Interjection.

MR. SIHOTA: So did I. I lost something in that point as well.

Let me ask this, then. Is the minister saying that it is the purchaser who will pay?

HON. MR. COUVELIER: That's correct.

Section 2 as amended approved.

On section 3.

HON. MR. COUVELIER: I move the amendment to section 3 standing in my name on the order paper. [See appendix.]

Amendment approved.

On section 3 as amended.

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

On the amendment.

MR. STUPICH: I'd like to say a little bit about it. I have some trouble following the minister's amendments, and he doesn't tell us what they mean, either. But I think the intent of this one is quite obvious. We were trying to look for an easy way to amend the legislation so as to provide for an exemption. During second reading, several of us on this side of the House made the point that what we wanted to achieve was that the first-time buyers in particular would have an exemption available to them, on the assumption that people who are buying for the second or third or fourth time have some equity in property and have something to help them make it. That's the first consideration.

In trying to find a neat way of amending the legislation, it would seem to be easier to deal with the situation that it's not always the first-time buyer who is having trouble, and perhaps a more efficient way of amending the legislation would be simply to say that the tax would apply to the second $100,000, the implication being that there is no tax applicable to the first $100,000.

I would commend that amendment to the minister's attention.

[ Page 1340 ]

MR. G. HANSON: Mr. Chairman, I rise to support the amendment. As the minister knows, there is a pent-up demand . . . . It's very hard to amend a bad bill and make it a good bill, but what we would like to commend to the minister, as the member for Nanaimo indicated, is that there are a lot of people in the market under $100,000 for the first time. My understanding is that the median price of houses presently being sold within the CRD is about $98,000, so that half of all the sales would be above that, and half below. We are saying that people in that category — up to $100,000 — entering the market for the first time should not be faced with another surprise tax from this government.

This amendment is a friendly amendment. We know the minister, the member for Saanich and the Islands, would certainly agree, being within the CRD, that many first-time home-buyers really can't be faced with this kind of tax. Another aspect is people trying to move through the housing stock into a new home from a starter home. Sometimes they've experienced growth in their family size with one or two children, and they're looking for more commodious housing stock and more commodious circumstances to accommodate their family. Because of the breakdown in terms of down payment and tax, people are being faced with having to reduce their scope in terms of the market.

[4:45]

Let me give you an example: a person looking for a home priced at, say, $80,000. It is a high-ratio situation — a high ratio mortgage — and the buyer has $10,000, and they find a home of suitable space to accommodate their children. This tax of $800 on that $80,000 home means that the bank is forcing them to look down. They can't afford to look at that $80,000 house any more. They are going to have to find one that meets their needs for $74,000 instead. That tax alone has reduced their scope in the housing market from what they had projected as their need prior to this tax. In other words, there's a $6,000 difference in the market available to them based on the tax alone. It's an unfair tax; it's a surprise tax.

You would have seven seats in this House if you'd gone to the people in October of last year and said this was going to be part of the program — other than the smile, style and sizzle option. That minister was a leadership candidate. If he had stood up at Whistler and said to those delegates that it was his suggestion to put a 1 percent sales tax on the purchase of all homes, he would have had one delegate vote instead of 12. We oppose this bill.

MR. CLARK: Mr. Chairman, I'll be very brief. Everybody knows in this chamber that at 29 I'm the youngest member of the Legislature, and I feel a special obligation to speak in favour of this amendment.

Interjection.

MR. CLARK: The second member for Kamloops (Mr. S.D. Smith) thinks I've aged since I've come into this chamber.

I feel a special obligation to speak in favour of this amendment because first-time home-buyers are very often in my age group, and I have had many letters and phone calls from young people attempting to buy their first home who feel this tax is an onerous one that makes it very difficult to achieve that dream of owning a home.

I just want to reiterate briefly what the first member for Victoria (Mr. G. Hanson) said, because it's an important point. If the tax on $100,000 is $1,000, and your down payment is a third of the cost of the home, then that $1,000 comes off your down payment and reduces the amount that you can pay for a home by more than $1,000, because it's a ratio. So it effectively reduces the amount you can pay for a home by several thousand dollars, rather than just the $1,000 tax. It's compounded and takes away from the capital that's available to put on a down payment for a home. I think that's an important point.

Even though members on this side of the House disagree with the entire bill, and we have some real problems with the onerous nature of the taxation, particularly with respect to first-time home-buyers, eliminating it up to $100,000 is a very modest amendment which I don't think would impact significantly on the revenue generated by government. Therefore it is a very reasonable and modest amendment that deals with our very serious concern about first-time homebuyers, who are in the most vulnerable position, getting into the home market. We ask that all members of this House support this amendment.

MR. SIHOTA: Mr. Speaker, I happen to be the second youngest member in this House, and relatively recently married and acquired my home before this tax was introduced. I also live in a riding where, I think it's fair to say, there's a fair bit of low-income housing. As the minister and most people in this House know, I've also practised as a lawyer, and during the course of my practice I've done a fair bit of conveyance work, which we continue to do in my practice. I can tell you that in that portion of the market that Esquimalt finds itself in — and there's a lot of housing in Esquimalt between the $50,000 and $100,000 range — for a lot of people that additional $500 does make a lot of difference, because they've scrimped and scraped to save up money not only to acquire the house but to save additional money to buy the new carpet or draperies or the appliances that they have to get afterwards. That's where that $500 was intended to go. Either it was going to go towards the down payment or towards the buying of those items. It has delayed the decision to buy. In other cases, it has resulted in deals falling apart. We have seen that come through my law office.

The minister was saying the other day that real estate deals in the province this year, particular in the greater Vancouver area, have been very good, which is evidence of the fact that the tax imposed by this legislation has not had an effect on the market. The free market, as he called it that day, continues to work. The minister clearly did not check out his statistics.

I happened to be in the House the afternoon of the day that the minister was speaking on that. That morning I was on an open-line radio show in Vancouver, and one of the individuals I interviewed during the course of that show was the president of the Real Estate Board of Greater Vancouver. He told the audience that before the introduction of this tax on March 31 of this year, the ratio of sales to listings was 75 percent. In other words, 75 percent of the homes that were listed in the greater Vancouver area sold. Since this tax has come out, the ratio has fallen to 40 percent. So 40 percent of the listings resulted in sales. I am not so naive as to suggest that that has happened only because of the imposition of this tax, but one of the variables they pointed to was the fact that Bill 17 had been introduced, which was going to result in people paying a tax.

[ Page 1341 ]

So it's not fair for the minister to stand up here and say: "Everything is wonderful, we're having a booming real estate market." We're fortunate that interest rates have fallen. If interest rates rise, much as they are expected to do, then clearly the variable in the overall payment that this tax creates is going to play a larger and larger role in decisions not to buy a home, particularly in the case of first-time home-buyers, as I'm sure all members of this House have now recognized. The exemption that we're putting forward in the course of this amendment is an exemption that applies to $100,000 right across the board, whether it's first-time home-buyers or not. In the case of the average price in Vancouver, which is $125,000, they would pay tax on the $25,000 instead of the $100,000. That is not unprecedented. Other jurisdictions have that kind of tax-free price zone — for example, Manitoba has $30,000. But recognizing the cost of housing here in British Columbia, particularly in the Vancouver area, the $100,000 figure is to me quite reasonable.

I think it should also be kept in mind that the assistance which the provincial government provides for first-time home-buyers in the form of the B.C. second goes as far as the $85,000 figure. So although the minister may argue that a lot of these people will have assistance from the government, given the average price of housing in both Vancouver and Victoria, that is simply not going to apply if you take a look at when the second mortgage program is triggered.

I haven't pointed out in the House before — and I think it should be a matter of record — that a gaping loophole still exists in this legislation, in that it attaches to property transfers but not to share transfers. The minister has allowed that loophole to continue to exist in the legislation; accordingly, it seems to me that the minister has chosen to allow for an exemption for those people who have companies that sell property. They can avoid the tax by simply selling or transferring their shares from one person to the other. But in the case of someone who wants to buy a home, he's going to capture them with this tax because they have to transfer the property from one person to the other.

It seems somewhat unusual that this government would exempt people who will engage in share transfers, and we're talking about million-dollar commercial properties that are going to be involved in share transfers. The minister will allow that exemption to continue, which allows these people who are on the affluent end of the scale to avoid the tax by simply engaging in a share transfer, but that hits people on the lower end of the scale — $50,000, $60,000 homes — with property transfers, simply because the cost of getting a property incorporated is going to be greater than the taxes themselves.

If the government's intention is to capture real estate transactions and try to secure as much revenue as possible, then they ought not to exempt people dealing with large commercial property that can be transferred by shares and capture people on the lower end in terms of residential property. If you look at it from that point of view, the legislation in itself is inequitable, and we are trying to address some of that inequity by putting in this $100,000 exemption on tax.

I know that the minister has received a number of submissions from people in the real estate industry. The people in the real estate industry, as I know it, have come to the minister and said: "Look, we think this is unfair." At the very least he should take a look at an exemption with respect to the first time home-buyer. I'm told by these people that the government has said, "Well, we're not going to do it, at least not now," which leads me to believe that three years from now we'll see the government bring about the type of legislative change that this amendment is trying to put forward now. So you can secure as much money as you can now, but three years from now, when we get closer to an election, when you start looking for contributions from realtors that attended the Social Credit convention, when you start to take a look at the public opinion polls and realize where you can pick up some support, I would venture to say that this government will come through with an amendment that's identical to what's being proposed now.

So I guess my argument is that this government should begin to show some leadership now. Recognize that the tax is unfair, particularly to those buying homes on the lower end of the scale. It's particularly unfair when one considers that there's an exemption through a loophole for people acquiring property in the upper end of the regime. Show some leadership now and embrace this amendment.

I think the minister sees the value in this amendment. I'm sure that the members opposite have been inundated with the same newspaper clippings and letters that we have. In fact, I've known a few realtors who've now signed memberships in our political party, so things are shifting. I think the minister can begin to show some . . . .

AN HON. MEMBER: Name names.

MR. SIHOTA: I'll be more than pleased to name names, actually, because some of them are certainly members of my riding association now.

I would ask the minister: show some leadership on this matter; bring forward the exemption which not only the opposition is calling for but the real estate industry and the public at large are calling for. I look forward to support from members opposite for this exemption.

[5:00]

MR. MILLER: It's no surprise, Mr. Chairman, that I rise to support the amendment as well. I want to relate what happened to me. I certainly can't claim to be the youngest member, or even the second, or even the third, I don't think. The proof of that, of course, is that the first house I bought, which happened to be in the city of Victoria, was valued at about $30,000; I don't think you find them these days. So I've got a little more experience.

But getting back to that purchase, it was very difficult. I had a young family and only managed to make that purchase on the basis of the person who was transacting the sale saying: "I will wait for my commission." They waited. The commission actually took the form, at that time, of the $500 outright grant for new home-buyers for older homes. I think that was the description of the parameters of that grant at that time. That grant allowed me to get into that house.

I think we maybe forget sometimes, especially those of us who have been through that many years ago, that buying that first house is extremely difficult. It's extremely difficult to put together the kind of cash that's required for a down payment, particularly now, with housing values the way they are. Surely there must be some empathy for that on the other side of the House; there must be. I find it impossible to believe that there's not some concern from all members on the impact that this tax might have on the ability of young couples, or young people, to acquire that first home. For that reason alone, without offering any other arguments, it seems

[ Page 1342 ]

to me that the amendment is entirely reasonable, and I have yet to hear some arguments as to why it's not. I would love to hear them, particularly from some of the back-bench members of the government.

Secondly, it seems to me that, given that kind of scenario . . . . I have no idea what percentage of the market is occupied by the first-time home-buyer, but if that has a dampening effect . . . . It seems to me that there's another reason for that tax not to be imposed, under the conditions that we've laid out in the amendment. The market in Prince Rupert, for example, has been a stagnant, dormant market for a number of years now. In fact, a lot of people lost their homes because of the recession. That market is just now starting to revive, again providing jobs in the local community. If the tax has a dampening effect, then I think it's a bad way to go.

Thirdly, it seems to me that there needs to be some protection, if you like. If you go back a few years in British Columbia, when the markets . . . . The markets really got out of hand in housing, in my opinion. There was rapid inflation; there were many instances of flipping. All kinds of things tended to drive the price of housing up, way out of proportion. Assessment values went way, way up. Of course, when the recession hit, a lot of people were really hurt. A lot of people who had really stretched themselves to the limit to acquire a house under those conditions subsequently lost it. It seems to me that that's a much bigger problem as well, and all the government is saying is, if that condition occurs again, you'll be rubbing your hands; it means you're just going to be collecting more taxes, but really doing nothing to solve the basic problem of housing — particularly, getting back to my first point, the problem that young people face in acquiring that first home.

There are some very good reasons why the amendment is entirely reasonable, and unless the government can offer some equally suitable, logical reasons to the contrary, I don't see any reason why the amendment would not be accepted.

HON. MR. COUVELIER: I'd like to ask a point of clarification. I've heard a number of speakers from the opposition refer to this amendment of theirs as if it dealt with first-time home-buyers. As I read it, it's a general amendment and doesn't limit it to first-time buyers at all, but I've heard every single speaker make much of the first-time buyers.

MR. STUPICH: Mr. Speaker, the members have been expressing concern about the first-time home-buyer, but I made it clear when I moved the amendment that, while it doesn't deal specifically with the first-time buyer, we had the first-time buyer in mind. This was a way of accommodating the first-time home-buyer and of course anyone else up to the dollar over the first $100,000.

Amendment negatived on the following division:

YEAS — 19

NAYS — 34

On section 3 as amended.

MR. CASHORE: During second reading I asked two very specific questions of the minister. He answered one of them. The two questions were with regard to (1) co-ops and (2) social housing: what was the minister going to do, either to exempt these or to ensure that provision was made? When the minister summed up in second reading, he answered my first question — albeit an inaccurate answer, in my opinion — but did not refer in any way to my question with regard to social housing. So I would like to ask the minister to answer my question.

To make it very clear, it works like this. The hon. member for Esquimalt–Port Renfrew (Mr. Sihota) has pointed out that through share transfers there is a loophole available to companies, corporations, people who are presumably people of means. We have other companies, if you will, in our province: social housing societies, people who work together as volunteers to try, in cooperation with the federal, provincial and municipal governments, to deliver housing that will enable people who desperately need decent, affordable housing to get into that type of accommodation. Increasingly we hear that the people who work in these social housing societies as volunteers find that their projects are more and more marginal, in terms of making the funding formula work so that they can bring on stream and deliver decent, affordable housing to low-income families, displaced singles, the disabled and seniors. For example, if an organization was planning, in cooperation with BCHMC, to purchase property and put up, say, a four- or five-storey building, and if that property was to cost $1 million, the tax on that property under this measure would be $18,000. In many cases that would be enough to make a viable project no longer viable.

[Mrs. Gran in the chair.]

An even more difficult example might be found if a group were planning to take a piece of property and renovate it. Suppose, for instance, that they found a building in the downtown east side and the purchase price of the building, after negotiations, was $3 million. These people would then be faced with an additional cost of $54,000 in tax. In many cases this would be the straw that broke the camel's back.

My question to the minister is: will he provide a loophole for this type of situation? I am sure it would not be the intent of either the minister or the Ministry of Social Services and Housing to deprive these people of the benefit of the volunteer effort of those who work in social housing to deliver such facilities. If he will not provide a loophole, as is available to

[ Page 1343 ]

the very rich, will he then provide direct grants through BCMHC that will make it possible for those very worthy projects that have lost their viability due to this regressive tax to find the kind of relief that will enable them to provide the product that they are working hard as volunteers to provide for needy people in British Columbia?

[5:15]

HON. MR. COUVELIER: The answer to the question is that shares in housing projects where ownership is covered by shares are exempt. I didn't bother responding to some of the statements made during debate on section 3 because I dealt with those during second reading, and there were no specific questions put to me; they were just editorial-type comments. But in answer to your specific question, the share transactions would be exempt.

MR. CASHORE: I'm not sure that I understand the answer, if you're referring to share transactions. My question was: will you either provide a loophole for social housing societies so that their projects under BCHMC will be viable, or if you will not provide a loophole, will you provide them with financial assistance in addition to what they would presently receive through their negotiations with BCHMC?

HON. MR. COUVELIER: If the structure of the corporation is such that shares are the method by which ownership is determined, then that transaction is exempt. We already do provide assistance for social housing projects, so there's no need to provide additional. There is the opportunity for these institutions, when they're created, to design their structure in a way that avoids the tax. We're not going to be taxing share transactions — we don't intend to. To the extent that the ownership of one of these housing units is governed by shares, they'll be exempt.

MR. CASHORE: Well, I will conclude with this perspective on the issue. Often, when groups are involved in delivering social housing, the municipality will assist them with perhaps a write-down on the cost of the property. But in that instance the municipality buys the land, and then the total cost of the land is built back into the transaction because it is owed on the lease; or if that is not the case, then the property becomes the property of the municipality after the mortgage is paid out.

In any event, now that this tax is in place it is going to tax the limited resources available, for instance, within municipalities to help social housing societies acquire the property that they need to fulfill their goals. So there would not be share transfers applicable in cases like that. I would hope that the minister is not suggesting that there is a major shift taking place here within BCHMC which will mean that future social housing will be handled through share transfers rather than through the process of the work that now goes on cooperatively between social housing societies, municipalities and the BCHMC.

HON. MR. COUVELIER: Madam Chairman, I am not quite sure that I can agree with the facts as perceived by the hon. member. It has been my information traditionally during my years in local government that by virtue of the rules under which CHMC is structured, the municipality passing on a purchase price discount on any land would not necessarily be recognized by CHMC. In my own municipality, I had more than one occasion where, in the interests of providing assistance to a particular market segment, we wanted to pass along a saving to that housing society or that group of individuals, and learned to our dismay that, according to federal regulations, the only beneficiary would be the federal government, who would turn around and reduce that discount from their mortgage support service. So I am not quite sure that the member's concern could be addressed by anything our government might do, in any event.

MR. CASHORE: The fact is that the tax is an additional cost. The funds to cover that additional cost will have to be found somewhere. When we are working with organizations that do not have the funds to pay the additional $18,000, in the case of a $1 million property, or the additional $54,000 in the case of a $3 million property, where is the money going to come from? How are they going to become viable when they've been pushed over that margin by that sudden increase?

HON. MR. COUVELIER: The CMHC has a variety of different programs, Madam Chairman. I mentioned during the second reading debate that the federal government had reduced their first mortgage percentage requirements on a variety of classifications, and it might well be that in a similar way they've recognized the unique possibilities that there might be in some sort of communal housing projects in how their financing formula is arrived at. I can't speak to that specifically. That would be a federal initiative, in any event.

But as I've said during the second reading debate, there's no evidence whatsoever that passing along savings in terms of tax reductions results in those savings being reflected in selling prices or asking prices. The truth of the matter is that the market gets what it can bear, generally speaking. There is no evidence whatsoever that I've seen presented to me by anybody dealing with this subject which would indicate that we would have it within our powers to capture and ensure that any savings or tax avoidance schemes would actually be passed through to the beneficiaries intended. We have spent many hours discussing how that might be constructed, and have so far not been able to find such a formula. Apparently, from studying the other jurisdictions across the country, neither has any other provincial government.

Section 3 as amended approved.

On section 4.

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

Amendment approved.

Section 4 as amended approved.

On section 5.

HON. MR. COUVELLER: I move the amendments to section 5 standing in my name on the order paper. [See appendix.]

Amendments approved.

Sections 6 to 10 inclusive approved.

[ Page 1344 ]

On section 11.

HON. MR. COUVELIER: I move the amendment to section 11 standing in my name on the order paper. [See appendix.]

Amendment approved.

Section 11 as amended approved.

MADAM CHAIRMAN: The Chair isn't certain that we put section 5 as amended through, so I'm going to call the question on section 5 as amended.

Section 5 as amended approved.

Sections 12 through 15 inclusive approved.

On section 16.

HON. MR. COUVELIER: I move the amendment to section 16 standing in my name on the order paper. [See appendix.]

On the amendment.

MR. LOVICK: Madam Chairman, I have a very brief question to the minister, and I'm wondering if he would be kind enough to give us even a very brief description of the intent of those amendments. I don't think we find difficulty with most of them, but we're playing catch-up here, and frankly I think the people would be better served if we could have even a brief description of the intention of the amendment.

HON. MR. COUVELIER: Madam Chairman, the amendment is to clarify the intent of the lien section, to ensure that a lien only applies if registered against a specific property, as opposed to some sort of basket clause. We want it to be very specific. So it's a clarification clause.

Amendment approved.

Section 16 as amended approved.

Sections 17 to 20 inclusive approved.

On section 21.

HON. MR. COUVELIER: I move the amendment to section 21 standing in my name on the order paper. [See appendix.]

On the amendment.

MR. G. HANSON: I'd like to ask the minister if he would explain the amendment to the House.

HON. MR. COUVELIER: Madam Chairman, it is our intention to introduce an amendment to the miscellaneous statutes legislation which we'll be dealing with following this one, which would have the effect of ensuring that this amendment will not be brought into effect except — what's the phrase? — by proclamation.

There has been considerable discussion among the opposition bench on the principles involved in the question of our relationship with the Canadian government security services branch, and in deference to that we will be bringing forward an amendment. This is one of those acts described in that miscellaneous statutes amendment that would be affected by this.

MR. ROSE: I understand from the explanation of the Minister of Finance that this is to allow the principle of delay for some of the possibly unacceptable provisions on personal privacy and all the rest of it associated with the Income Tax Act, which will come up in the amendments to follow, which are found in Bill 37.

HON. MR. COUVELIER: Yes, that's right.

MR. ROSE: The minister confirms that.

MR. G. HANSON: I would like to seek some further clarification as well. Is the minister saying then that information on the purchase of a bungalow or a house will not find its way through to the Canadian security service?

HON. MR. COUVELIER: Madam Chairman, Bill 37 includes a clause, section 24, which mentions a number of acts dealing with financial information. Upon the request of the Canadian government security service, I would, after consideration, decide whether or not we should transmit the information they requested. That particular aspect had been debated here in the House at second reading, and as a consequence of that, we are making some small amendment when we get there. But this section merely mentions, as it should, the reference to Bill 37 and the need to relate information to the security service.

[5:30]

MR. G. HANSON: I would like the minister to explain to this House why it is necessary for the Canadian Security Intelligence Service to have information on the sale and financial transaction of bungalows in this province.

HON. MR. COUVELIER: This is a subsequent amendment to Bill 37, purely and simply. If there is some question about the philosophy of that, I suggest that it should properly be asked during debate on Bill 37. We can go through it now, and it would have to be replicated with each of the other.... I think there were 12 acts involved here.

Bill 37, as I mentioned, provides that enabling legislation which would allow the Minister of Finance to transmit information, upon request, to the security service. As I indicated, when we get there we will be bringing forward an amendment on that matter. I don't know what more I can say in relation to section 21, other than what I've already said.

HON. MR. STRACHAN: Madam Chairman, we are offending the rule of anticipation, but I totally agree with the concern of the official opposition. The amendment to section 21 simply changes one word; that is, "taxation act" to just "act." And that makes a reference to an act which is coming, which I don't think we should speak to at this point.

Further, the committee should be advised that the official opposition has seen the proposed amendment to the upcoming bill. I think that should suffice. All we're doing in this

[ Page 1345 ]

case is deleting the word "taxation" and just making it any other act. I think that's obvious there, as we look at the section 21 amendment.

MR. LOVICK: My question will perhaps reveal a wealth of ignorance on my part, but I ask it entirely ingenuously. Would the minister please explain to me, given that explanation we heard from your colleague, why the phrase "taxation act" is replaced by "act," only in proposed paragraph (a), and yet the same terminology is used throughout the rest of section 21? Am I missing something? Would you please explain that?

Interjection.

MR. LOVICK: The proposed amendment, section 2 1, as expressed in the Orders of the Day, says: "in the proposed paragraph (a) by deleting 'taxation act' and substituting 'act'". Why only paragraph (a), because the same phraseology appears throughout the rest of section 21?

HON. MR. STRACHAN: The amendment that I'm not allowed to refer to simply makes it a proclamation act. This whole bill is a proclamation act; it comes into force by proclamation, if you look at section 37 of Bill 17. Therefore, it really is in the hands of the minister as to when he shall bring the regulations of the L-G-in-C into force. Therefore, the concerns of the member are covered. It was a good question. This is a proclamation act to begin with, Mr. Member.

MR. LOVICK: Section 21(b)?

HON. MR. STRACHAN: Yes. That's related to court proceedings. We have no intention of .... I'll have to allow the Minister of Finance to speak to that, but that deals with court proceedings, not other matters.

MR. G. HANSON: I appreciate the House Leader attempting to clarify this, but it's still beyond me why this type of information, under 21(e) . . . . Perhaps there's a very obvious explanation, and he could stand up and explain it. But what purpose would there be for putting in an act that this information . . . ? I understand that if they change the words from "taxation act" to "act" they would be referring to this act. Is this correct?

HON. MR. COUVELIER: Only to one clause in this act, actually.

MR. G. HANSON: So we're talking about every real estate transaction in this province being turned over to the Canadian Security Intelligence Service. Why?

HON. MR. COUVELIER: I don't quite understand whether the member wants to redebate the second reading of Bill 37 or not. The question he's asking is the philosophy of disclosing financial information on the various financial institution acts to the . . . .

MR. G. HANSON: Of this clause of this bill.

HON. MR. COUVELIER: Well, there is a memorandum of understanding, as I explained during second reading, between the federal government and the provincial government. The memorandum of understanding states quite clearly that information made available to the provincial government in a variety of its bills can, on the request of the federal government and the approval of the Minister of Finance, be transmitted to the federal government. As I said, this is a matter of philosophy that we debated during second reading of Bill 37. This member seems to be trying to get back to the philosophy.

This member made a point about the apparent inconsistency in removing the word "taxation" in only one section. The sections are not intended to be compatible. They are meant to be separate and distinct as presented with the amendment. In other words, it's not an oversight.

MR. STUPICH: Madam Chairman, I move that the committee rise and report progress and ask leave to sit again. I move that motion so that we can deal with Bill 37, section 25 thereof, and get that out of the way, and then come back to this.

The House resumed; Mr. Speaker in the chair.

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

HON. MR. STRACHAN: I call committee on Bill 37.

TAXATION STATUTES AMENDMENT ACT, 1987

(continued)

The House in committee on Bill 37; Mrs. Gran in the chain

Sections 1 to 23 inclusive approved.

On section 24.

MR. STUPICH: When we were discussing second reading, all of us zeroed in on section 24, and that's still our concern. I know there's an amendment to section 25 and we'll probably come to that later this afternoon, but section 24 is still the one where the minister has the authority. It's subject to section 25, I appreciate, but it will still give the minister the authority to pass this information on to the Canadian Security Intelligence Service, which in turn, as we talked about in second reading, can pass it on to the CIA, which in turn can pass it on anywhere, I suppose. We have no way of controlling that. Once it gets beyond our own Minister of Finance, the Legislature or the government . . . . Nobody in British Columbia has any influence over it once we have let it go to the Canadian Security Intelligence Service. That was the concern we expressed.

The minister talked about a memorandum that eight provinces had signed. Those provinces were not identified, and I know that Manitoba has not signed it and hadn't even seen the memorandum, although they had agreed in principle until they heard what we had to say about it. We don't know what the memorandum is. I think the minister suggested then that he would see whether or not he could make the memorandum available to us when we got to committee stage. So

[ Page 1346 ]

under section 24, I wonder whether the minister can make that memorandum available to us.

HON. MR. COUVELIER: I have had a discussion with the Attorney-General (Hon. B. R. Smith) on that request, and he said that he would study the matter, I am waiting for his report. His initial reaction was that it may well present difficulties, but he is examining it to make very sure that his initial reaction is valid. So I can't give you a specific response on that one this afternoon.

MR. STUPICH: Madam Chairman, the only thing I can suggest at this point is that we move that the committee rise, report progress and ask leave to sit again and not proceed with this bill until we know where we are in section 24. It could mean nothing; there might not be anything to it. But we are agreeing here — it's a debatable motion that the committee rise — that information from a number of taxation statutes, and one is being added, is going to be made pretty widely available. We don't know why it is sought after. We don't know to what extent this information is going to be made available, other than that the minister is the one who will decide how, when and where the information will be made available. I don't see the reason for it.

When I look at the list of statutes included here, it just doesn't make sense to me that intelligence services would be interested in that. I wonder where it will stop. Here we are talking about nine statutes and one more being added. How difficult is it going to be to add to that list? I don't know. I just don't appreciate it. I don't appreciate the need for it, and if I don't see the need for making this . . . . I am not one of those who are paranoid about this kind of thing. People complain about their SIN, their social insurance number, being widely disseminated. I don't care who has my social insurance number. But there may be information in here that.... The very fact that people want it makes me feel that they shouldn't get it, unless there is some awfully good reason for it.

So my motion is that the committee rise, report progress and ask leave to sit again and that we not deal with this until after we have had a report from the Attorney-General.

HON. MR. STRACHAN: The government will not accept the motion to rise on this Bill 37. But the government will accept the motion that section 24 be defeated. It's not a motion but....

MR. ROSE: Since this is not a debatable motion anyway, and the government House Leader has debated it.... According to the section of the standing orders which I will not trouble to name, because I don't think it's in our interests to do so . . . .

Interjection.

MR. ROSE: No, I think that there's a motion put; I wonder if we could have a minute or two to consider whether or not it be withdrawn, because it's a very serious matter, this clause 24, and it would require a motion to withdraw it.

[5:45]

Interjection.

MR. ROSE: Well, if the government offers to withdraw it . . . .

MR. STUPICH: Well, they're just defeating it.

MR. ROSE: Just defeat it. That's fine with me.

MR. STUPICH: I withdraw my motion that the committee rise.

Section 24 negatived.

Section 25 approved.

Title approved.

HON. MR. COUVELIER: Mr. Chairman, I move that the committee rise and report . . . .

AN HON. MEMBER: . . . the bill complete without amendment.

HON. MR. COUVELIER: No, with amendment.

Motion approved.

The House resumed; Mr. Speaker in the chair.

MADAM CHAIRMAN: The committee reports the bill complete without amendment.

MR. ROSE: With amendments.

HON. MR. STRACHAN: On a point of order, defeating a section is not an amendment.

Bill 37, Taxation Statutes Amendment Act, 1987, reported complete without amendment, read a third time and passed.

HON. MR. STRACHAN: Mr. Speaker, I call committee on Bill 17.

PROPERTY PURCHASE TAX ACT

(continued)

The House in committee on Bill 17; Mrs. Gran in the chair.

On the amendment to section 21.

Amendment negatived.

HON. MR. COUVELIER: I move an amendment to remove clause (e) from section 21.

Amendment approved.

Section 21 as amended approved.

On section 22.

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

Amendment approved.

[ Page 1347 ]

Section 22 as amended approved.

Sections 23 to 25 inclusive approved.

On section 26.

HON. MR. COUVELIER: I move the amendment to section 26 standing in my name on the order paper. [See appendix.]

Amendment approved.

Section 26 as amended approved.

Section 27 approved.

On section 28.

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

Amendment approved.

On section 28 as amended.

MR. STUPICH: In the second line, that's 0.1 percent, is it? There seems to be a faint decimal in front of the number 1 in every copy that I've had a chance to look at, and I'm not sure if that's meant to be there. Is it 1 percent or 0.1 percent in this transitional period?

HON. MR. COUVELIER: It's 0.1 percent.

Section 28 as amended approved.

HON. MR. COUVELIER: I move the new section 28.1 standing in my name on the order paper. [See appendix.]

Section 28.1 approved.

Sections 29 to 37 inclusive approved.

Title approved.

HON. MR. COUVELIER: Madam Chairman, I move the committee rise and report the bill complete with amendments.

Motion approved.

The House resumed; Mr. Speaker in the chair.

Bill 17, Property Purchase Tax Act, reported complete with amendments.

MR. SPEAKER: When shall the bill be read a third time?

HON. MR. STRACHAN: With leave of the House now, Mr. Speaker.

Leave granted.

Bill 17, Property Purchase Tax Act, read a third time and passed.

HON. MR. STRACHAN: It has been a remarkable day, Mr. Speaker, and I move the House do now adjourn.

Motion approved.

The House adjourned at 5:53 p.m.

Appendix

AMENDMENTS TO BILLS

11 The Hon. M. B. Couvelier to move, in Committee of the Whole on Bill (No. 11) intituled Social Service Tax Amendment Act, 1987 to amend as follows:

SECTION 10.1, by adding the following

Transitional

10.1 (1) Notwithstanding the repeal of the definition of "lease" by section 1, where tangible personal property, other than a motor vehicle, is leased after March 19, 1987, for a period of less than one month

(a) pursuant to a written confirmation of reservation,

(b) pursuant to a written contract, or

(c) subsequent to a deposit of money in respect of the lease of that property that was made on or before March 19, 1987, it is exempt from tax under section 2.1 of the Social Service Tax Act.

(2) Subsection (1) does not apply where tangible personal property is leased for a period of less than one month pursuant to an agreement between the lessor and the lessee under which the lessor agrees to supply tangible personal property of similar nature for further successive periods of less than one month,

(a) the cumulative total of which periods will exceed one month, or

(b) with no specific number of periods provided in the agreement

[ Page 1348 ]

(3) Where a lessor does not collect tax from a lessee on the basis that the lessee is eligible for the exemption granted by subsection (1), the lessor shall retain a copy of the confirmation of reservation or contract or proof of the deposit, as the case may be, until he receives authorization in writing from the commissioner to dispose of it.

17 The Hon. M. B. Couvelier to move, in Committee of the Whole on Bill (No. 17) intituled Property Purchase Tax Act to amend as follows:

SECTION 1,

(a) in paragraph (a) (i) of the proposed definition of "fair market value" by deleting "any other instrument," and substituting "any other financial instrument,",

(b) in the proposed definition of "fair market value" by deleting "or" at the end of paragraph (d), by adding "or" at the end of paragraph (e) and by adding the following paragraph:

(f)  in respect of a transaction referred to in paragraph (d) of the definition of taxable transaction, the fair market value of the lease, determined in the manner referred to in paragraph (c), but as though the transaction were a lease having a term consisting of the total aggregate period referred to in paragraph (d) of the definition of taxable transaction; ,

(c) by adding the following definition:

"lease modification agreement" means an agreement between a lessor and a lessee that extends the term of the lease such that, following the agreement, the remaining term of the lease exceeds 3 years; ,

(d) in paragraph (a) (iii) of the proposed definition of "taxable transaction" by adding "or a lease modification agreement" after "lease",

(e) in the proposed definition of "taxable transaction" by deleting "or" at the end of paragraph (b), by adding "or" at the end of paragraph (c) and by adding the following paragraph:

(d) between a lessor and a lessee of land such that, following the transaction, that lessee and any other person, if any, having the right to occupy the land under a lease, will have the right to occupy the land for a period that, in aggregate, exceeds 30 years; , and

(f) in the proposed subsection (2) by deleting "whether a lease has a term of more than 3 years," and substituting "the term of the lease,".

SECTION 2,

(a) in the proposed subsection (4) by adding "but does not apply" after "make application", and

(b) in the proposed subsection (6) by deleting everything after "prescribed".

SECTION 3, in the proposed paragraph (a) by adding "to the transferee" after "interest to be transferred".

SECTION 4,

(a) in the proposed paragraph (b) by adding "or by his agent" after "by a transferee" and by deleting everything after "matters certified",

(b) by adding "or" at the end of the proposed paragraph (b) and by deleting "or" at the end of the proposed paragraph (c), and

(c) by deleting the proposed paragraph (d).

SECTION 5, in the proposed section 5 (1)

(a) in the definition of "parent" by deleting "has contributed to the support and maintenance of a child for not less than one year and who",

(b) in the definition of "principal residence" by deleting "classified under the Assessment Act as residential" and substituting "referred to in the definition of "eligible residential property" in section 26 (1) of the Assessment Act", and

(c) by deleting the definition of "related individuals" and substituting the following:

[ Page 1349 ]

"related individual" means a spouse, parent, child, grandparent, grandchild, great-grandparent, great-grandchild or the spouse of any of them, where the related individual is a citizen or a permanent resident of Canada;

SECTION 5, in the proposed section 5 (2)

(a) by deleting "referred to in paragraphs (a) and (b) of the definition of "taxable transaction", ",

(b) by deleting paragraph (e) and substituting the following:

(e) made pursuant to a registered agreement for sale, where

(i) the purchaser or his assignee under the agreement is the transferee of the transfer tendered for registration, and

(ii) the tax was paid in respect of the agreement or the  assignment of the agreement, ,

(c) by deleting paragraphs (q) and (r) and substituting the following:

(q) to a mortgagee pursuant to an order absolute of foreclosure, where the mortgagee was the immediately preceding registered owner of the land,

(r) referred to in paragraph (b) of the definition of "taxable transaction", where the transferee was the original vendor under the agreement for sale,

(d) in paragraph (s) by adding "grant or" before "transfer, ",

(e) in paragraph (t) by deleting "to a trustee" and substituting "to the Public Trustee or to a trustee" and by deleting "or" at the end,

(f) in paragraph (u) by adding "or class of beneficiaries" after "beneficiaries", and

(g) by adding the following paragraphs:

(v) to a veteran from the Director, The Veterans Land Act (Canada), or

(w) consisting of a lease, sublease or right to occupy premises where it is coupled with a concurrent transfer of an estate in fee simple to the same land or a right to purchase with respect to the same land and

(i) the lessee, sublessee or occupant and the transferee of the fee simple estate are the same person, and

(ii) tax was paid on the transfer of the fee simple estate or the right to purchase.

SECTION 11, by renumbering the proposed section 11 as section 11 (1) and by adding the following subsection:

(2) Where, after a person has paid tax under section 2 (1) of this Act,

(a) the person withdraws the application for registration, or

(b) the application for registration is rejected, 

the administrator shall, in accordance with the Financial Administration Act, refund out of the consolidated revenue fund the overpaid tax including any interest relating to the amount overpaid.

SECTION 16,

(a) in the proposed subsection (1) by deleting "any land in the Province of" and substituting "land against which the lien is filed that is owned by", and

(b) in the proposed subsection (2) by deleting "against the title to specific land".

SECTION 21, in the proposed paragraph (a) by deleting "taxation Act," and substituting "Act,".

SECTION 22, by deleting the proposed marginal note and substituting "Access to records".

SECTION 26, by adding the following subsection:

(4) Subsection (3) does not apply to a regulation

(a) under section 2 (2), or

(b) prescribing a period under section 2 (4).

[ Page 1350 ]

SECTION 28,

(a) by adding the following paragraph:

(a. 1) pursuant to an executed taxable transaction in writing made before March 20, 1987, provided

(i) the application to register the transfer is made before December 31, 1987, and

(ii) a true copy of the transfer documents accompanies the return filed under section 2, , and

(b) by deleting "or" at the end of the proposed paragraph (d), by adding "or" at the end of the proposed paragraph (e) and by adding the following paragraph:

(f ) under an order absolute of foreclosure, where the order nisi of foreclosure was made before March 23, 1987.

SECTION 28.1, by adding the following:

British Columbia Railway Act

28.1 Section 1.5 of the British Columbia Railway Act, R.S.B.C. 1979, c. 38, is amended by renumbering it as subsection (1) and by adding the following subsection:

(2) Notwithstanding subsection (1) and section 10. 1, the company and all its subsidiaries are liable for payment of tax under the Property Purchase Tax Act.

17 Mr. Stupich to move, in Committee of the Whole on Bill (No. 17) intituled Property Purchase Tax Act to amend as follows:

SECTION 3, in the proposed paragraph (a) by deleting "first $200,000" and substituting "second $100,000".