[ Page 2175 ]

CONTENTS

Routine Proceedings

Oral Questions

Government hiring freeze. Mrs. Boone –– 2175

Mr. Harcourt

Mr. Miller

Mr. Sihota

Ombudsman's report on WCB. Mr. Miller –– 2176

Victoria court services. Mr. G. Hanson –– 2177

Admission fees to Provincial Museum. Mr. Blencoe –– 2177

Miscellaneous Statutes Amendment Act (No. 1), 1987 (Bill 31). Committee stage.

(Hon. B.R. Smith) –– 2177

Hon. Mr. Strachan

Mr. Williams

Hon. Mrs. Johnston

Mr. Blencoe

Mr. Clark

Mr. Lovick

Mr. Sihota

Committee of Supply: Ministry of Finance and Corporate Relations estimates.

(Hon. Mr. Couvelier)

On vote 31: minister's office –– 2188

Mr. D'Arcy

Mr. Clark

Mr. Williams

Mr. Stupich

Mr. Sihota

On the amendment

Mr. Clark

Mrs. Boone

On vote 32: ministry operations –– 2201

Mr. Williams

Ms. Edwards

Mr. Clark

Mr. Sihota

Mr. Miller

Mr. Stupich

On vote 33: compensation stabilization program –– 2214

Mr. Stupich

On vote 66: management of the public debt –– 2214

Mr. Stupich

Mr. Williams

On vote 67: contingencies (all ministries) –– 2215

Mr. Williams

Mr. Stupich

Hon. Mr. Strachan

Committee of Supply: Ministry of Forests and Lands estimates. (Hon. Mr. Parker)

On vote 34: minister's office –– 2216

Hon. Mr. Parker

Mr. Williams

Appendix –– 2218

The House met at 2:06 p.m.

Prayers.

HON. MR. REID: Mr. Speaker, it gives me a great deal of pleasure to introduce to the House today Mr. Roger Killin, who is the chairman of the B.C. Championships for the Physically Disabled and the operations manager of MacMillan Bloedel Harmac Division. With him is Dr. Jim Senini, a director of the B.C. Championships for the Physically Disabled and the former chairman of the B.C. Summer Games in Nanaimo in 1985. The citizens of Nanaimo are hosting the Championships for the Physically Disabled on July 9, 10, 11 and 12, with approximately 400 in attendance. We would ask the House to make these two distinguished volunteers welcome.

MR. BLENCOE: Mr. Speaker, I'd like the House to welcome a number of people from the Victoria area today: Lindsay Batten, a constituent of Victoria, and two former residents of Victoria, David and Lee Finnis. Would the House please make them all welcome.

MR. PELTON: Mr. Speaker, in the gallery today are 20 members of the Pathfinders and Venturers associations of Vancouver. Along with these fine young people are their leaders, Davor Jackovack and Dennis and Liz Lane. I would ask the House to make them very welcome.

HON. MR. PARKER: Mr. Speaker, in the House today visiting from Smithers is a good friend and a great educator, Ian Malcomson, with his sons Robert and Peter. Would the House make them welcome, please.

HON, L. HANSON: Mr. Speaker, it's my pleasure today to introduce Mr. Donald M. Coe, the president and chief executive officer of Hiram Walker distilleries, and Mr. Robert Duddy, vice-president of Hiram Walker distilleries, who are both from Walkerville, Ontario; Mr. Elmer J. Cain, who is plant manager in the Winfield plant; and Mr. John Madsen, who is the industrial relations manager in the Winfield plant. Would the House please make them welcome.

MR. MOWAT: Mr. Speaker, it's my pleasure to introduce some relatives of my wife and me: Jean and Frank MacNally, from Sonora, California. Jean is a physiotherapist and Frank is a retired judge down there. Frank happens to be in a wheelchair as well, and if you think I'm tough as a caucus chairman, you should have appeared in front of him as a judge in California. I'd ask the House to make the couple from California really welcome.

Oral Questions

GOVERNMENT HIRING FREEZE

MRS. BOONE: A question to the Minister of Health. In the House last Thursday I asked the minister if there was a hiring freeze on mental health services. He stated: "We are not putting a freeze on positions that were filled in the past." On the weekend we read in the newspapers that this government has declared a freeze on hiring, replacing only those positions that are urgent or necessary. Was the minister misleading the House last Thursday, or was he unaware of what was going on in his ministry?

MR. SPEAKER: The question is out of order, but the minister can answer the parts that are in order.

HON. MR. DUECK: To begin with, I don't think we sat last Thursday. That was probably an error.

There are two ways of hiring psychologists. Some are by contract, of course, and some are by salaried positions. There is always a change in contracts. Some contracts expire. Most of those on contract work at other institutions or hospitals, or in private practice, so that changes from time to time. I'm saying that the overall service we are giving, whether by contract or salaried people, is not reduced except in cases where there is a delay, perhaps where a contract expires and we haven't got another contract to fill that position, or we haven't got a salaried person to fill that position. I should also tell you that we reallocate quite often and shift them from one area, where we feel they are more than adequately served, to another area.

I must say emphatically that I have not misled the House. There are times when we have less. We're still working on additional funding for this year, as was announced some time ago. For example, the $2 million extra that we announced in alcohol and drug program for youth in your particular area — Prince George — has increased significantly, not like you were quoted in the paper.

I think there is a lot of confusion when it comes to the FTEs that are by contract or by salary. You must remember that we have roughly 75 on salary, and we buy contracts constantly. The ones who have been let go have been given the proper 60 days' notice. Not only that, they knew at all times that they would be leaving. Very often it becomes an issue, because they're not happy with having been relieved of their duties. So from time to time this happens, but we are not letting up, especially on the youth and children. There is no decrease, and we will continue to increase, rather than decrease.

MRS. BOONE: Supplementary to the minister. I'd like to know if there is a freeze on hiring in mental health services. I'm talking specifically about mental health at this point. We are getting conflicting opinions from people in the field who are telling us that positions are in fact not being filled; that positions were approved, they were supposed to be hiring for them, and when hiring procedures were put into place, they were told they were not allowed to fill these positions due to a hiring freeze. Is there a hiring freeze on positions in mental health?

HON. MR. DUECK: In my ministry, as far as the freeze is concerned.... And I don't know whether you want to call it a freeze. We constantly....

MR. MILLER: You denied there was a freeze.

Interjections.

HON. MR. DUECK: Do you want me to answer the question?

SOME HON. MEMBERS: Answer the question.

[ Page 2176 ]

HON. MR. DUECK: I will, if you'd stop talking.

Interjections.

MRS. BOONE: Would the minister please answer the question? Is there a hiring freeze on mental health?

HON. MR. DUECK: When it comes to psychologists, psychiatrists, any specialized people in the field, there is not a hiring freeze. What is referred to and what is being touted now.... What we're saying, if we want to hire secretaries, for example, is that before we go out and hire these people, who may be working in other ministries, we will check with other ministries as to whether they have extras, and will move them around rather than hire from the outside. Each ministry hires its own.

But over and above that, I will tell you that at all times we are cognizant of the fact that we don't want to load up on people where we don't need them. We are going to be very cautious. In my ministry alone, I could use another $100 million, I'll tell you quite frankly. I've asked for it, but I'm not getting it. So I have to be very careful where I put people, how I use them, how I implement them in the best possible area, so that young people get especially looked after. I'm doing my very best, and I do not think there are any who are not being looked after. If there are, tell me of any specific situations, and I will report back to you.

[2:15]

MR. HARCOURT: I'd like to ask the Minister of Intergovernmental Relations a question about the hiring freeze and privatization, because the Premier's principal secretary, Mr. Poole, has been quoted as saying that the hiring freeze has been imposed so as not to interfere with privatization plans.

I want to ask the minister whether this means that the list of possible privatizations now includes all government departments and not just Crown corporations, as previously stated.

HON. MR. ROGERS: I don't think it was stated that we wouldn't look at government departments. We're having a joint look. We're looking at Crown corporations — and there are 17 of them. We have asked every deputy minister from every ministry to review the programs within that ministry to see what items might be suggested — suggested only — for privatization. Where we have a ministry that has gone through the process of laying off clerical staff while another ministry is in the process of hiring clerical staff, which has happened, the taxpayers are not well served, with the severance involved in one ministry and the review of the hiring of people in another ministry.

It seems to me that employees working for government in the ministry where they may no longer be required should not only have the option of applying to another ministry but that ministry should also be aware of their availability. That's the effort that's being coordinated within my ministry.

MR. MILLER: I have a question for the Minister of Transportation and Highways. Can the minister confirm that there's been a freeze imposed upon tenders for highway construction? Just as an example, there was a project approved for Highway 16 some months ago. There has been no activity to date. It hasn't even been advertised. The tenders aren't out. Even if they go out tomorrow, it will now be August before we can proceed with that kind of highway construction project. Is there a freeze in your ministry on those kinds of capital projects?

HON. MR. MICHAEL: The answer is no.

MR. SIHOTA: I want to find out whether or not this freeze is on clerical staff only or on other programs. A question for the Attorney-General. Can he confirm that there has been a freeze placed on youth programs and the hiring of new people in non-clerical positions for youth programs within the ministry?

HON. B.R. SMITH: No freeze as such, but it's certainly true that we're looking carefully at all new hiring to see whether it can be done from within or whether any of the areas in which hiring is proposed might be privatization areas. I can't imagine that this area would be, so the answer is no.

OMBUDSMAN'S REPORT ON WCB

MR. MILLER: I have a question for the Minister of Labour regarding the ombudsman's report on the WCB — the latest in a long line of studies — which indicates some serious problems at the WCB. Following this report, has the minister decided to institute a royal commission to look at all aspects of the WCB?

HON. L. HANSON: The ombudsman's report was received in my office on Friday, I believe, or Thursday, and I haven't had a chance to study it in depth. The answer to that specific question is no, I do not intend to institute a royal commission at this point. But I look at the ombudsman's report as a report that may or may not have some good ideas in it. When I've had an opportunity to assess the report, and discuss it with other people and interested parties concerned with the WCB, then, when a decision is made, we will announce it to the House.

MR. MILLER: Supplementary on the report. Some of the first recommendations concerning workers' avenues of appeal, their opportunities of appeal and not being cut off WCB payments while that kind of process is ongoing can be implemented immediately, without any changes in legislation whatsoever. Would the minister be prepared to give assurance to the House that he is prepared to implement those sections of the ombudsman's report, to allow a better system for those people who are currently caught in that bureaucratic maze of appeals?

HON. L. HANSON: No, I'm not prepared to do that, quite frankly, because, first of all, I want to look at that whole report. There may be some practical sense in doing that, and if that's the decision, certainly we will. But first of all, we need an opportunity to study not only the report but also its implications. I don't take the report as negative or interfering. I think honest and genuine suggestions have been put forward. We will analyze those that we see as practical and fair, and look at implementation; but certainly not until we've had a good opportunity to study the report, and not until we've had a good opportunity to receive input from other interested bodies.

[ Page 2177 ]

MR. MILLER: Final supplementary. I take it then that the minister disagrees with the statement by the head of the Business Council of B.C. that Mr. Owen should mind his own business and that he has no business recommending changes.

HON. L. HANSON: Mr. Speaker, it's not my position to agree or disagree with a private sector individual who has made a statement. I haven't had an opportunity to study the report. I'm not endorsing his statement, nor am I negative to his statement. It's a statement made by an individual, and certainly it's his opinion. But I do say that I think the ombudsman has prepared the report in good faith, and we will certainly look at it and investigate it. Some things in it, quite frankly, may not be able to be implemented; maybe none of them will. But first of all I need an opportunity to study that report and digest what its recommendations are.

VICTORIA COURT SERVICES

MR. G. HANSON: I have a question for the Attorney General. I wonder if the Attorney-General would justify the eight layoffs at the law courts here in Victoria, and I wonder if he would please advise the House if the law courts are on the list for privatization.

HON. B.R. SMITH: I'm glad that the member asked that question. One privatization, Mr. Speaker, that was controversial about three or four years ago was court reporters. There was a great deal of controversy on their privatization. I have had two delegations of court reporters meet with me in the last six months and tell me that it's the best thing that ever happened to their careers, their pocketbooks, and that they're giving better service to their customers.

I would be very pleased to take that question on notice and bring a very early response back to the chamber.

ADMISSION FEES TO PROVINCIAL MUSEUM

MR. BLENCOE: ML Speaker, I have a question for the Minister of Tourism, Recreation and Culture. Some days ago the minister shocked this community and others — indeed it was a great shock to this community — by saying that he was planning and will implement in the middle of this month charges or user fees for the Provincial Museum. This has shocked this community, and the shock goes across those of all political persuasions. The impact on tourism and the impact on locals cannot be minimized, and it certainly will have a great impact.

My question to the minister: now that he's had the chance to hear the concern and the feedback, is the minister willing to reconsider this onerous and unfair second level of taxation and leave the museum intact?

HON. MR. REID: Mr. Speaker, the answer is no.

MR. BLENCOE: Mr. Speaker, a supplementary. The minister has stated — which is rather a laughable defence — that the reason we have these increases is because too many people use the museum. Thousands and thousands of Victorians and tourists and visitors use the museum. Is it the intention of this minister to limit the access to this museum, and therefore limit the access of British Columbians to their history?

HON. MR. REID: Mr. Speaker, first of all, in answer to the question, it is not the intention to limit the access.

The operations of the museum currently cost the taxpayers of the province of British Columbia $10 million a year. There is a need for a $3 million expansion to accommodate the current attendance, which is 1.5 million a year and growing. There is currently a maintenance problem within the operation which needs to be looked after. We have researched other museums in the world, and it has been indicated to us by professional people that there is a need to provide an admission fee to the museum in Victoria. It will be applied on July 15.

Orders of the Day

HON. MR. STRACHAN: Committee on Bill 31, Mr. Speaker.

MISCELLANEOUS STATUTES
AMENDMENT ACT (No. 1), 1987 (continued)

The House in committee on Bill 31; Mr. Pelton in the chair.

HON. MR. STRACHAN: Mr. Chairman, as the Orders of the Day indicate. the committee on Bill 31 rose and reported progress, having postponed sections 42, 43, 44, 45 and 47.

HON. B.R. SMITH: Before we get into those postponed sections, Mr. Chairman, I would like to recall section 21, which was passed. You may recall that section 21 was an amendment to the Family and Child Service Act, in which an amendment was agreed to and carried by committee, an amendment which required court approval for this sort of information to be revealed. I have spoken to the member for Esquimalt-Port Renfrew (Mr. Sihota), and asked him if he would consent to leave to recall this for the purpose of discharging the section as amended in its entirety. In other words, what we're proposing is that we don't change the bill this session. We'll try to bring back a better amendment in the fall, because the court approval is going to cause some problems, particularly with information like child abuse.

I'd like to discharge the section, with leave.

MR. CHAIRMAN: The motion, hon. members. Is that the vote on section 21 be rescinded.

HON. B.R. SMITH: That's 21 as amended, Mr. Chairman.

MR. CHAIRMAN: Yes.

Section 21 as amended rescinded.

On section 42.

MR. WILLIAMS: I would hope, Mr. Chairman, we would hear from the minister who brought forth this amendment — the Minister of Municipal Affairs, I believe.

HON. MRS. JOHNSTON: I apologize for my absence when the item was introduced last week. I'm not sure exactly what it is in the way of information that you're looking for,

[ Page 2178 ]

Mr. Member, but speaking very briefly, this section allows water to be supplied by a direct pipe connection at the Canadian-U.S. border. Point Roberts will finance a five-million gallon reservoir which will be built in Delta by the Greater Vancouver Water District, and this reservoir will be used to balance the Point Roberts and Delta water supplies. The Greater Vancouver Water District anticipates realization of approximately $40,000 per annum by becoming the water supplier.

Short of that type of information, Mr. Member, if you have some specific questions, I'd be pleased to try to address them.

MR. WILLIAMS: I am sorry that the hon. minister has not referred to Hansard, because there was a debate on this subject and the Minister of Environment and Parks (Hon. Mr. Strachan) did yeoman service — not completely adequate, but I'd say a little better than what we just got.

Interjection.

MR. WILLIAMS: Yes, Mr. Savage certainly understood the intricacies more than other members in the government benches.

The problem, Madam Minister, is that this province has never agreed to this kind of export of water in the past. No Minister of Water Resources, no Minister of Municipal Affairs has ever recommended that water be transferred to Point Roberts or to the United States of America for domestic purposes. I honestly don't think that government ministers realize what they're getting into here.

[2:30]

MR. D'ARCY: Other than the Columbia River Treaty..

MR. WILLIAMS: Well, yes. The Columbia treaty is another story indeed; that was essentially a matter of flood control and power. This is domestic water supply for what is essentially, as we argued, a sand dune south of the 49th parallel and Tsawwassen in Delta municipality.

We kept getting differing stories, and you've got the original story — it hasn't been amended — which says this is worth $40,000 a year. I am sure that if you do some checking you might get a bigger number. That's what happened last week. But $40,000 a year is pretzels; $40,000 a year in terms of what you're....

Interjections.

MR. WILLIAMS: I hate to go into this lecture again, but I guess I have to, in terms of who is going to benefit. Who is it going to benefit? It's essentially going to benefit the landholders in Point Roberts.

AN HON. MEMBER: Bill Lewame.

MR. WILLIAMS: Yes. The former head of the GVRD is probably a modest one; he has a summer place down there.

But there are others that are substantial landowners in Point Roberts, one of whom is George Hodgins Realty Ltd., one of the major holders of vacant land in Point Roberts. That will t appreciate in value dramatically as a result of getting this water supply, and $40,000 a year is just nothing compared to the way those land values will balloon in Point Roberts.

The Minister of Transportation and Highways (Hon. Mr. Michael) certainly knows what happens when you service private land with public property in the form of new highways and access. He is more than an expert in that field, so no wonder he's talking about transferring pretzels into gold. He might like to elaborate on that when his estimates come up — the member with the bowed head over there.

This is the situation: the major landholder there is Mr. Hodgins. He's been a major political player in the backrooms of Delta for decades.

AN HON. MEMBER: Delta council.

MR. WILLIAMS: Yes.

The problem is that there are all kinds of implications. These benefits are tremendous. There will be tremendous increases in land values as a result of getting this water supply, and no firm assurances that I am aware of in terms of controlling the problems that will result from development in that little peninsula. There are likely future pollution problems, growth problems, traffic problems. There is a limitation on the size of the pipe, in terms of what will be delivered at the border. But as I understand it, Point Roberts, the American side, will actually control the reservoir. They will be filling up that reservoir at night. Once they've got the reservoir, they control a fair amount of the flow, in terms of the Point Roberts development.

So it is a serious matter. You know, this is a government that generally doesn't get very much advice — real expert advice. I don't think you got expert advice in terms of the implications of a trans-border transfer of water; but once we're into this we can probably never get out of it. In terms of water being transported to Point Roberts, can the minister assure us that we can get out of this deal at some point down the road? Can she assure us that we are not into some kind of longtime bargaining over time once they've got this water? Can she assure us that she's carried out studies that indicate that this is maximizing the return to the Crown for its assets? I think not.

I mentioned earlier that you people on the other side probably don't understand the dimensions of the infrastructure in terms of water supply in greater Vancouver. You're talking about dams on the Capilano, and Coquitlam Rivers and other major sources of supply, water mains under Burrard Inlet and underneath the Fraser River; and so on. All you're dickering with these people on, as I understand it, are the water mains in Delta municipality and the reservoirs related to Tsawwassen. That's it. They're plugging into a multimillion-dollar system for $40,000 a year. That doesn't make any sense at all.

HON. MRS. JOHNSTON: Mr. Chairman, there appears to be some misunderstanding of the $40,000 figure that I quoted. That is the sum that is being equated as financial benefit as water supplier. The Point Roberts Water District will be spending $2 million on the reservoir that will be built n Delta.

I should mention, Mr. Chairman, in passing, that this announcement was made in 1986 by the Minister of Environment. We should realize that this is a good-neighbour relationship that we have with the Americans. If you go further down the border, you will find that in the district of Surrey water is supplied on the American side to the district of Surrey. This is not an unusual arrangement. This is going in

[ Page 2179 ]

the opposite direction. But Surrey receives water from Blaine, and that is what I consider a good-neighbour relationship. We are going along with that type of arrangement. It certainly isn't a precedent that is being set here.

MR. WILLIAMS: Well, it is a precedent, Mr. Chairman. It is a very clear precedent. Point Roberts has been there since this country was founded, and we have not delivered water to Point Roberts period, pure and simple.

AN HON. MEMBER: Does that make it right?

MR. WILLIAMS: I am just saying, do you give the stuff away or do you do some analysis in terms of alternatives? Well, the answer is you do some analysis in terms of alternatives. I have tried to explain to the Minister of Environment (Hon. Mr. Strachan) that there are economic questions here that are fairly basic in terms of the kinds of benefits you are transferring across the border to the major landowners in Point Roberts. Some kind of pittance in the form of $40,000 per annum and a reservoir that they would have had to build anyway doesn't add up to much of a trade-off at all.

Interjection.

MR. WILLIAMS: No, all of this is modest improvements in one pipe within the whole Delta system. That's it. You've got a pipe underneath the Fraser River they pay nothing for; you've got a pipe through Richmond they pay nothing for; a pipe through Vancouver they pay nothing for; a pipe under Burrard Inlet they pay nothing for; a dam at Cleveland Dam on the Capilano that they pay nothing for. And you think you've got a hot deal at $40,000 a year, Madam Minister.

Something's wrong in terms of the capacity of your advisers. Something's desperately wrong in terms of their competence in analyzing these deals. It's no wonder we lose at the hands of the Americans every single time we go to the table with them — $40,000 a year and you think you've got a good deal. There's something desperately wrong over there.

When one major landowner is going to be the main beneficiary, and he's a true Socred wheeler-dealer in Delta, then it raises some basic questions.

Interjections.

MR. WILLIAMS: Nonsense. If the minister wants to respond to that, let her respond.

HON. MRS. JOHNSTON: Mr. Chairman, I don't know how I can respond to the allegations put forward by the member of the opposition, because I don't even know Mr. Hodgins. Whether or not he's involved with the Social Credit Party is immaterial.

A commitment was made in 1986 by our Minister of Environment and the Governor of the state of Washington. I believe it was a sound commitment. I believe it was made with the interests of all British Columbians at heart. As I mentioned earlier, the arrangement was made in the opposite direction between the state of Washington and the district of Surrey. This is a land-locked piece of property that cannot logically be serviced in any other way. An arrangement has been made to service it in this way. The legislation is required in order that the Greater Vancouver Water District be allowed to carry through with this arrangement, and I think there's little else that can be said.

MR. WILLIAMS: There's little else that can be said in defence, no doubt, because the minister hasn't done much of a job of defending here at all.

What kind of assurances do we have, in terms of controlling population growth in Point Roberts, once we give them this water? What kind of assurances do we have in terms of the limitation of community growth in Point Roberts?

HON. MRS. JOHNSTON: Mr. Chairman. I don't believe we can presume for one minute that we can plan the area known as Point Roberts.

MR. WILLIAMS: That's exactly the problem, Mr. Chairman. What we're talking about are two sovereign nations here. That is precisely the problem at hand. Once we give them domestic water, then the population can boom in Point Roberts, and the people who own the land will make a fortune. That's exactly what the game is that's underway.

The minister isn't even informed in terms of tentative arrangements that were — as I understand it — formulated by the municipality of Delta, in terms of a population limit down there. Doesn't the minister have this, in terms of some population limit? It is smug city over there. You're not even informed in terms of the clear details that are available for picking up a telephone.

The municipality of Delta had the understanding that the population was going to be limited to 4,000 persons in Delta. That's the understanding in Delta in terms of the deal, and you're saying now that you know nothing about that.

We get the nice smile, Madam Minister, but it isn't good enough. We plumbed the depths of ignorance of the Minister of Environment last week. Now we've already hit bottom with the Minister of Municipal Affairs, and it didn't take as long.

MR. CHAIRMAN: Hon. member, your reference to the Minister of Environment was probably uncalled for. Perhaps you would retract that.

MR. WILLIAMS: Well, I don't know that there is anything to retract.

MR. CHAIRMAN: It was certainly unparliamentary, hon. member.

MR. WILLIAMS: Well, maybe I can rephrase it. I'd be glad to do that, Mr. Chairman. I think we've plumbed the depths of the minister's knowledge very quickly; in fact, we could have done it in ten seconds.

The understanding in that community at the city council level is that there's going to be a ceiling on population growth in Point Roberts, because they don't want the pollution. They don't want hospital problems. They don't want the highways problems through Tsawwassen and Delta that will follow from excessive growth. Reasonable, because if they provide the pipe, they provide the instrument for growth in Point Roberts.

They had assurances that there was going to be a cap of 4,000 persons in that peninsula, and now you're saying,"Here we are approving the deal," and you don't have that down. Well, that's not good enough. They need it. At the very

[ Page 2180 ]

minimum, you've given the water away for nothing. Now you've got no control over growth, you say. So we can get their pollution; we can get their bloodied, their hospital problems, their drunk-driving accidents and all the rest of it that comes out of that little peninsula. So we deal with the problems, and a handful of landowners get all the benefits. What kind of deal is that anyway? Do you have any more information on limiting that growth in Point Roberts?

HON. MRS. JOHNSTON: Mr. Chairman, the number mentioned by the member opposite with regard to a projected population has not been brought to my attention, and the only control we would have would be with regard to the size of the pipe and the amount of water that would be made available. The information given to me by the corporation of Delta is that the Greater Vancouver Water District has complete control over the water and the supply, and that would be the limitation. But as far as planning the community of Point Roberts as to their possible population, there does not appear to be anything other than the amount of water that is to be supplied to them.

[2:45]

Mr. Chairman, I think it's quite interesting that we're spending so much time worrying about somebody making a dollar on a piece of property in Point Roberts. I don't happen to think that that's a terrible thing. In fact, it's common knowledge that even some members of the party opposite have made a dollar or two on property sales.

MR. WILLIAMS: But this is very straightforward and simple, Madam Minister, in terms of us conferring a very direct benefit, getting very little in return and getting all of the garbage and all of the problems as a result. That's a typical Socred deal: somebody else makes a million; we get the garbage, we get their hospital problems, we get future water problems and all the rest of it, and somebody else walks off with the cash. That is a classic Social Credit government deal. You can be as smug as you like, but down the road the people of Delta are going to have to pick up all the pieces and deal with the mess and the problems and the pollution.

You are directly conferring benefits as a result of this decision, and no administration in the history of British Columbia has conferred this kind of benefit in the past. You want to talk about other trans-border arrangements: as far as I'm concerned, it's the same as the deal made on the Skagit. You didn't know what you were giving away when you allowed them to flood the Skagit. The same thing is going on here in terms of the kinds of benefits you confer. You can sit there and listen, and it's very clear that it's not registering.

Do you think it's any accident, Madam Minister, that no administration in the history of British Columbia was willing to transfer water to Point Roberts for a hundred years plus? Do you think that's an accident? There were water pipes down there in Delta for decades, and still every administration said no. There had to be a reason, but nobody in your shop stopped to think about what those reasons were. That's abundantly clear. It's just a nice little rubber-stamp administration we've got over there; that's really the way it's working. It's not thinking, or it's a blind eye and a wink that's going on in terms of this particular deal.

HON. MRS. JOHNSTON: Mr. Chairman, I think it should be pointed out, in closing, that we are looking at....

SOME HON. MEMBERS: In closing?

HON. MRS. JOHNSTON: Well, I'm sure the member opposite has said just about all there is to say. He has been repeating himself.

The majority of the property owners in the Point Roberts area are British Columbians, and they have summer cottages. Of course, you can screw up your face any way you want, Mr. Member, but that is absolutely the truth. They are owners of small summer cottages, and a good number of British Columbians go down and spend a great deal of time in Point Roberts. Are you begrudging us looking after those people who are going down there?

Once again we are allowing the Greater Vancouver Water District to enter into an agreement with Point Roberts for the purchase of water, and they will pay for the amount of water they receive. It's a simple business arrangement, and it seems to me that members opposite are more concerned with showing their anti-American bias than they are with allowing us to get on with the business of the day here.

MR. CHAIRMAN: The second member for Victoria.

HON. MR. STRACHAN: How about some local autonomy here? Let's hear that.

MR. BLENCOE: Mr. Chairman, I am very pleased that the House Leader remembers my speeches on local autonomy.

HON. MR. STRACHAN: I've heard it for four years now.

MR. BLENCOE: You'll probably hear it a few more times, too.

Mr. Chairman, I've been listening to this debate and the questions being raised by our side of the House, and I think that they are very reasonable questions and require some further investigation. It's unfortunate that the minister wasn't here in the earlier debates. I gather she has been thrown into this debate, but she is the minister responsible. It's not just a simple business transaction that we're talking about. This really is a substantial issue. Points taken about local autonomy are well taken, but we're not just talking about local autonomy. We're talking about a transaction between two sovereign countries. Questions have arisen over price and over whether indeed we are going to receive a true value for the sale of this water and the infrastructure to be put in, and I think those are all reasonable requests.

I think it's in the interest of both sides of the House to gather all the information and to have the ability to try to decipher what exactly is going on with this particular proposal.

I would like to suggest to the minister — and to make a request — that because of the importance of this issue and the serious questions that have been laid out before this House, there is certainly an atmosphere of concern by the opposition that this matter be referred to the Select Standing Committee on Economic Development, Transportation and Municipal Affairs.

Interjection.

[ Page 2181 ]

MR. BLENCOE: The House Leader for the government immediately says no. That's unfortunate, because we have heard from the government's side, and particularly from the Premier, that that's exactly what those committees are for: to deal with these kinds of issues and to call witnesses. I think we've reached a stage now on the very important question of selling British Columbian water south of the border; there are a lot of implications of that. It seems to me that rather than continuing the impasse and trying to determine who is right, we should try to determine what is right.

Therefore I would suggest that this is an issue that should be referred to the Select Standing Committee on Economic Development, Transportation and Municipal Affairs. Put the issue before that committee. Call witnesses, and let's get to the bottom of this issue and take it out of the controversial debate that we have before us now.

Interjection.

MR. BLENCOE: The Minister of Tourism (Hon. Mr. Reid) screws up his face and says: "What controversy?" Well, he can try that, but there are some serious questions pending, and we want to get to the bottom of it. The people of British Columbia are entitled to know all the facts and have a frank discussion with witnesses in the standing committee, so that we can take a look at this whole issue.

Would the minister give us an answer?

MR. CHAIRMAN: Just before the minister speaks, let me remind the hon. members that this question has been referred to the Committee of the Whole, and that under standing orders we cannot refer committee work to a committee. Now if the Minister of Municipal Affairs would like to comment on this, the Chair would be pleased to hear what she has to say.

HON. MRS. JOHNSTON: Mr. Chairman, I was pleased that you mentioned that the matter was already being dealt with by the Committee of the Whole House, and I really think that the members of the committee mentioned by our colleague opposite have got quite a bit on their plate this summer, dealing with the Islands Trust legislative review. So it would just be a stalling tactic, in my opinion, if this were to be referred anywhere else. I would like to see us proceed right now.

MR. BLENCOE: Mr. Chairman, how could the minister say this is a stalling tactic? We're talking about Canadian water, Canadian rights, and selling south of the border a very precious resource which in many respects the Americans have been after for a long time. There have been many proposals before the federal and provincial Houses over the years, and it is not an issue we can treat lightly. What I am suggesting, which the minister has dealt with — I want to be nice — in a rather light fashion by saying I'm trying to stall.... I don't think we're trying to stall at all. All we're trying to do is put it before a select standing committee with the ability to call witnesses to hear all sides of the issue and make....

Interjections.

MR. BLENCOE: I'm on the committee.

We can try to explore this issue in a fair and open and, hopefully, honest way to find some resolution. It may very well be that once we explore it, things will clear up. But right now there are a lot of questions, accusations and, I think, a weak defence by the minister and others over the last few days that need to be put to a select standing committee for full review, and not rushed through this House. The House Leader keeps saying to the government: "Let's do it now, and get on with it before anybody notices what we're doing." Well, Mr. Chairman, this is a very important issue, and I think it should be put before that committee, and I think the Minister of Municipal Affairs, who wants to do Municipal Affairs business differently than her predecessor, should support such a mechanism and suggest that the select standing committee review this.

HON. MRS. JOHNSTON: I think it's important for members in the House to realize that regardless of the routing, water will be taken to Point Roberts. It can either go from Blaine by way of an undersea pipe or it can go via the Greater Vancouver Water District, through British Columbia and through Delta. The costs are relatively comparable, but the maintenance of the undersea pipeline is more costly, and therefore the approach was made to enter into this agreement. Regardless of the outcome of our discussion, there will be water going to Point Roberts. I think it's important that it can be controlled if the water goes through Delta; if it goes from Blaine undersea to Point Roberts, there's no Canadian input at all, no British Columbia input on the quantity of water. I think that that pretty well sums up the argument.

MR. BLENCOE: Whose water is it?

HON. MRS. JOHNSTON: At this point, under this agreement, it would be the Greater Vancouver Water District's water; but if it came from Blaine, it would be American water.

MR. CLARK: We have a number of concerns, obviously, on this side of the House. I just have a few questions about what homework regarding this has been done by the ministry. For example, has the minister or the staff conducted any studies regarding the cost of water from other sources? Has any cost-benefit analysis been done as to what the water is worth to Point Roberts, to see whether in fact we're getting an appropriate price for it? In other words, has any of that technical homework been done that can tell us whether or not it makes sense?

Has there been a socio-economic impact analysis of increases in population and how they impact on the community of Delta? We've had a number of concerns here about whether the population growth will impact on services in Delta. Has there been any estimate of the increased number of people using hospitals in Delta as a result of increased population in Point Roberts? Have there been any estimates done of the impact on pollution in the area as a result of an increase in population in Point Roberts? Have there been any estimates done on the increased growth in population as a result of an increase in serviceable land and of providing water? Have there been any estimates done on the increased land values in Point Roberts, so that we can see whether a share of that shouldn't return to the taxpayers of British Columbia?

I think I've listed seven or eight serious concerns, or technical studies that should be done before we embark on

[ Page 2182 ]

this kind of operation — before this section passes. Have any of those kinds of background studies been done, to allay our fear on this side that we're not getting an appropriate price for a valuable commodity?

HON. MRS. JOHNSTON: The water that is being supplied is being charged for by way of volume; there's no other way you could sell water to the Americans. Let's make it clear that if this arrangement does not proceed, the water will be piped over from Blaine, and we will have absolutely no control. This way, we do have control by way of the volume of water made available.

[3:00]

MR. CLARK: Can the minister tell the House how much it would cost Point Roberts to get their water from Blaine? Presumably they want to buy it from British Columbia because it's cheaper. So I'd like to know what the price difference is, so that we can see whether in fact we've driven a hard bargain and are getting.... In other words, if they've got to go to Blaine otherwise, what's it worth to them?

HON. MRS. JOHNSTON: Mr. Chairman, I did mention earlier that the supply costs are pretty well comparable; they're pretty well in line. The maintenance of the undersea line is where there would be additional costs, if the water were to come from Blaine. Other than that, the original capital costs are comparable.

MR. CLARK: As in any good business practice.... If the maintenance costs for the alternative sources of supply are higher, we should have them on the table here, so that we can see whether or not we can't get.... In other words, if we're getting $40,000 a year, how much is the maintenance cost for that undersea pipe? Is it more than $40,000 a year? If it's several hundred thousand dollars a year, then we should be, like any good business operation, driving a hard bargain and getting somewhere close to, but not above, the price of alternative supply, assuming that that's the only consideration at this point.

HON. MRS. JOHNSTON: There is no specific amount outlined in my background information with regard to possible future maintenance cost, and I imagine that that is rather difficult to determine for a number of reasons. But the initial capital costs are comparable, and the $40,000 figure that we have mentioned was arrived at by placing an average on the quantity. They're charging by volume, the Greater Vancouver Water District has determined the amount of water that would be used, and this is what they would charge for providing that amount.

MR. CLARK: Maybe I could just deal with some of my other questions then, aside from that one. For example, if there is an increase in population in Point Roberts, it's fair to say that there will be an increase in the use of services in Delta by those Americans. If the population increases by 4,000, has the ministry done any analysis as to the impact on the number of people who will be using hospitals, for example, in Delta? What would be the usage of our services in Delta as a result of the increase in population?

HON. MRS. JOHNSTON: Mr. Chairman, as I stated earlier, that is not the argument. Water is going to be going to Point Roberts whether it comes from British Columbia or Blaine.

MR. CLARK: With all due respect to the minister, what we're trying to do is determine whether all of the facts have been determined ahead of time, whether the homework has been done, so that we can see whether in fact it makes sense for us to provide water. A cursory examination from our point of view indicated that it's worth a heck of a lot more than $40,000 a year; that, as you pointed out, the cost for maintenance for the other line would be higher, and therefore we should be getting a significant amount more for our water resource than we're getting down there.

Interjection.

MR. CLARK: There's some improvement in the water system in Delta, as we've pointed out, but we're still saying that we haven't got all the evidence to say whether or not it's a good deal. It strikes us that, given the increased service costs associated with an increased population and the fact that it's worth a lot of money to landowners in Point Roberts, we could drive a better bargain. What we're trying to do is get the facts from the minister, see whether the homework has been done to justify this deal. If it has been done, then we can proceed.

HON. MRS. JOHNSTON: I am reliably informed that the Ministry of Environment has done all this homework.

Let us make one thing very clear. We are giving the Greater Vancouver Water District the authority to enter into this agreement. We are not doing anything more or less. Local autonomy tells us that the Greater Vancouver Water District has done the homework required to arrive at the $40,000 figure for the approximate volume of water that is to be sold, and we would not logically enter into that arrangement.

MR. CLARK: I understand that the water district would do their homework to assure that they're getting a return on their investment, and that's what that covers. What we're concerned about are the other ramifications for the province, and the costs to the province that result from an increased population base in Point Roberts, as well as the fact that providing water to Point Roberts has the incidental effect of escalating land values so dramatically as to seem to indicate that we can get more money for that provincial resource than has been arranged by the Greater Vancouver Water District. They're only concerned about covering their capital costs and the cost of pushing that volume through the system.

That's our concern, and that's why we're raising it here. It's not a question of local autonomy; we understand the water district's concern for their jurisdiction. We're saying that we would like to see the evidence for the impact the population will have on those kinds of provincial government services — pollution, cost of hospital service, availability of beds in Delta — so that we can get some sense of what the province gets out of this deal, given that historically we've always turned it down because we haven't wanted to be in that position.

[Mr. Weisgerber in the chair.]

[ Page 2183 ]

HON. MRS. JOHNSTON: The point here should be that the Greater Vancouver Water District considers this a $40,000 per annum financial benefit. Short of becoming repetitious, I want once again to remind you that the water is going to go to Point Roberts regardless. Either it takes this route or it goes from Blaine. If it takes this route....

Are you listening, Mr. Member for Victoria?

Interjection.

HON. MRS. JOHNSTON: That's right, but the question keeps being asked.

MR. BLENCOE: Well, we don't get an answer.

HON. MRS. JOHNSTON: You have the answer, but you don't want to accept the answer.

The control of the development in any way, shape or form can take place by entering into this agreement, because we will control the quantity of water going into Point Roberts. If we don't enter into this agreement and the water comes over from Blaine, we lose all control. So you can talk about the infrastructure in the district of Delta, the hospitals and all of the other services; we will have absolutely no say and no control over how that would apply if the water were to come from Blaine.

MR. CLARK: So using the premise that the minister has just set out, which I don't accept completely, does the minister have...? We talked earlier about a population increase of 4,000 being the ceiling. The minister is shrugging her shoulders.

AN HON. MEMBER: She doesn't know.

MR. CLARK: The minister doesn't know that. It would be helpful for us on this side to know when that ceiling would be reached, how long it could take to get there, whether we can turn the tap off at any time, what contingencies there will be in those agreements. I don't know if the minister has any information on population growth, but given that that's a great concern of mine, I'm wondering whether there has been any analysis of when we would reach that 4,000 population increase ceiling and whether there's any control there for turning the tap off at our end. Are those kinds of considerations in the contract?

HON. MRS. JOHNSTON: The Greater Vancouver Water District supports this move. The corporation of the district of Delta supports this move. The majority of the members in this House support this move. I can't understand why members opposite are having such a problem accepting the fact that one way or another, Point Roberts is going to be serviced with water. It is either going to come from British Columbia and provide a $40,000 financial benefit to the Greater Vancouver Water District, and we are going to have control over the volume, which in the long run will control the amount of development that can take place at the end of the pipe, or it's going to come from Blaine and we are going to have absolutely no control over anything, in any way, shape or form, as far as the development is concerned.

MR. MERCIER: Delta would still have to build its own reservoir.

HON. MRS. JOHNSTON: That's right. Maybe I should go over some of the numbers again.

The cost of the reservoir to be built by the Point Roberts Water District is two million dollars. This reservoir will also service Delta. because it will be built in Delta. This estimated expenditure will be invested in Canada. It will be built in Canada by Canadians and paid for by the Points Roberts Water District. So the long-term cost-benefit to the district of Delta is considerable because of the upgrading of the water supply in their area. The corporation of Delta fully supports this; the Greater Vancouver Water District fully supports it. Local autonomy tells us that we should allow this to go ahead because it is the only way we will have any control at ail in the amount of development that will take place in Point Roberts, because we control the tap that supplies the water.

MR. CLARK: I want to conclude my segment of the questioning by saying that we're not trying to filibuster; we're making an argument that there are unanswered questions from a provincial cost-benefit analysis. The homework hasn't been done by the minister, in our view — at least we haven't seen it. There has been no cost-benefit analysis to show what that water is worth to Point Roberts. We don't know — and the minister can't tell us — how much more it will cost Blaine to supply the water; therefore we don't know whether we are driving a bargain or not.

We don't know what the impact of the increased population will be on provincial services in Delta or surrounding municipalities. We don't know how much hospital usage or those other things will go up. We on this side of the House would like to know, before we support this section, that it is of net benefit to the province — and not just to the Greater Vancouver Water District — to provide a permanent export of British Columbia water to the United States. We haven't been convinced yet by the minister that that kind of necessary homework has been done for us to justify supporting it.

MR. LOVICK: I know that the minister plays poker; I have witnessed that. I wonder how good a player she is, and let me tell you why.

The minister's premise throughout this discussion has been one simple point: namely — to almost quote her — that "we know they're going to get water anyway." If I were on the other side, that's what I would use to bargain. I would say again and again: "The people of Point Roberts are going to get water. We're going to get it from Blaine. We're going to build a pipeline at God knows what cost." I would set up that argument and put it in motion before I ever talked to the people of Canada, because I would want the people of Canada to believe that there was somebody else who was a competitor, and therefore the price shouldn't be too high.

I'm worried about the minister continuing to talk about that premise as if it's given, because I don't think it is given. For example, I would like to see a statement from whatever the authority is in the city of Blaine that says: "Yes, we are committed to build this supply, to construct the pipeline, to guarantee the people of Point Roberts a supply for X number of years and to do so at X cost." I wonder if the minister could table that kind of document for us. Have we got that information, or are we simply going on hearsay thus far? Could I start with that question?

[3:15]

[ Page 2184 ]

HON. MRS. JOHNSTON: Mr. Chairman, it seems to me that we're getting way off base on this one. The section of the bill allows the Greater Vancouver Water District to enter into an agreement. It is up to them, as the local authority, to make the best possible deal they can to benefit their members. This is what we should assume they have done. It is not for us to tell the Greater Vancouver Water District what type of deal they should be making; they are making the best deal that they possibly can.

If we truly believe in local autonomy, the way we've been preaching on both sides of the House, we should be allowing the Greater Vancouver Regional District and the Greater Vancouver Water District to make this deal.

MR. LOVICK: After listening to that answer, I take it, Mr. Chairman, that the minister's answer to my question is no, or that we don't have the information. With all due respect, Madam Minister, I think that's a red herring.

The local autonomy issue is not something we should wrap ourselves in like some kind of protective flag or cocoon. For heaven's sake, what we're suggesting is a resource that does not belong only to a body of non-elected officials called the Greater Vancouver Water District. We're talking about a resource that belongs to all the people of this province. We're also talking about an infrastructure that has been built over a considerable period of time. The reason we pose the questions about this and the reason we have the concern is that answers have not been forthcoming. The concern we are raising is simply whether we do know what it is we're talking about — "we" meaning the government. We have not had any assurances yet that there are answers to the question.

Let me give you an example — and I do so without malice, believe me. On Friday when this debate took place, we spent about an hour and 20 minutes, and we could get no answers at all, despite the heroic efforts of the Minister of Environment, because he simply did not know. By what I described then as a fortuitous circumstance, we had the arrival of another minister who quite by chance happens to be a member of municipal government in Delta and was therefore able to answer our questions. Today a similar thing has happened: a former mayor of Burnaby is giving information to the minister. It does not inspire a great deal of confidence on our side, Madam Minister, when the answers seem to come by chance rather than by planning, preparation and considered examination of the issue. That's why we continue to pose the questions, and why we have not yet, frankly, been convinced that the answers are indeed good ones.

Let me try something else for the minister, if indeed the first questions that I posed don't deserve answers, or at least won't get answers. The minister says to members of this Legislature that we are going to benefit. We're doing this because Delta wants and needs a reservoir. This way we can get the Americans to pay for a reservoir, and we will benefit by getting a facility that we otherwise would not have. If that had been the argument presented to us in the beginning, perhaps we would have been more responsive and receptive to the arguments from across the way. Unfortunately, we've had to struggle to ferret out that information. I'm not even sure I accept the argument, but at least I can see the logic for it. The problem, however, is that that was a kind of throwaway, a marginal justification as opposed to the main justification.

Fifteen minutes ago the minister gives us this justification, and I was careful to note it. The minister says that we know — first the premise — that the citizens of Point Roberts will get water anyway, and therefore we, the people of Canada — the GVWD specifically — should be doing this so that we can in fact control the development south of the border. Let me remind the minister that the Americans have been known to go to war for statements like that. When somebody says that they are going to control what happens in a sovereign territory belonging to another state, they tend to get upset. I don't think Congress would enjoy reading or hearing that the Minister of Municipal Affairs in the province of British Columbia, country of Canada, says that we want this development so that we can control development in the United States.

First of all, I think the observation is facile. Frankly, I think it overstates our power. I don't believe you can control that development simply because you provide the water. I don't think you can turn off the tap. But perhaps more important is the fact that I don't think the Americans will look kindly on any agreement that proceeds from the assumption that we can control their development — nor, by the way, should they. I don't think the Americans should be looking to us to determine how Point Roberts develops, because we will turn off the tap at our pleasure. In short, we are moving into areas that are — to put the matter charitably — grey, matters that certainly strike me as generating more questions than answers.

I sincerely hope that the minister will respond to at least a couple of the points I've made thus far.

HON. MRS. JOHNSTON: It's obvious that I haven't made it clear: it's not the provincial government that is entering into an agreement with Point Roberts. We are providing the legislative means for the Greater Vancouver Water District to enter into an agreement that they want to enter into. That is the extent of our involvement in this particular agreement. We have some background information which I have attempted to provide you with in order to seek your support for the legislation before us at this time. Certainly my ministry wouldn't go into the Point Roberts Water District office and attempt to negotiate an agreement for the provision of water.

The Greater Vancouver Water District is responsible for the supply of water in the Greater Vancouver Regional District. They want to enter into this agreement. They have asked us for the legislative permission to do that, and we have agreed to provide them with that permission. No more, no less. I'm not trying to evade your questions, hon. member. I'm just saying that you're asking questions that could better be put to the executive members of the Greater Vancouver Water District than to us. It is no different from us giving a municipality enabling legislation to allow them to enter into agreements or to make bylaws that they feel are compatible with the operation of their municipalities. We only give them the means to function, and this is exactly what we're doing here. We're allowing the Greater Vancouver Water District to enter into this agreement — no more, no less.

It's up to them to make the best deal that they possibly can, but I would like to reiterate that we are not suggesting that we are going to plan the development of the Point Roberts community. That can only be done by the local community of Point Roberts, and we understand that. We should be also very clear in understanding that the amount of water that is available to Point Roberts is certainly going to go a long way

[ Page 2185 ]

in determining the amount and type of development that is going to be allowed to take place.

MR. SIHOTA: The party which I represent in the House often gets criticized for its inability to manage and to engage in business and economic relationships, and it strikes me that in this case it's the other way around. If we had entered into this type of arrangement, the Social Credit Party members would be laughing at us, because it's a silly kind of a transaction.

Interjections.

MR. SIHOTA: Let me ask this one very basic question, then, of the minister which may help clarify one matter, and then I want to make some comments. Is this $40,000 a year in perpetuity, or is that amount open for renegotiation later on?

HON. MRS. JOHNSTON: We are giving the Greater Vancouver Water District the authority to enter into an agreement. It's up to them to determine the terms and conditions of that agreement and make the best deal that they can.

MR. SIHOTA: That's a very weak response. Let me ask the question again. What the minister is saying is: "Well, you know, we're just going to allow these people to enter into whatever kind of deal they want to, and if they give away the resource, then that's okay. If they make a good deal, then that's great."

Certainly as the minister responsible, the minister exercises a level of scrutiny. She's got an obligation....

HON. MRS. JOHNSTON: Local autonomy.

MR. SIHOTA: No, it's not a case of local autonomy. Mr. Chairman, I've been on a municipal council as well. I've served my time on municipal council, and I know that there have been occasions when we've had to justify our actions to the minister responsible when agreements that we've entered into have had to have the blessing of the ministry. It's clear in those instances that the ministry reviews the agreements to make sure that they're in the best interests of British Columbia.

It may well be that this agreement will serve the water district well, may even serve the municipality well. It's a question of whether or not it will serve the province well. But it seems to me that a fundamental question has to be whether or not that $40,000 on an annual basis is going to remain constant, because obviously $40,000 in today's dollars does not have the same equivalency as $40,000 in future dollars.

It seems to me that the minister would want to ask that very basic question, because if you don't ask that question, then ten years from now the value in current terms is $20,000, given inflation. It may not be $20,000 — that's a bit of an exaggeration — but over 20 years it may well be down to $20,000. Without commenting on other aspects of the deal which I think are bad, all of a sudden the deal starts to look worse and worse.

I know that the minister really, quite frankly, just can't stand up and say: "Well, we're going to leave it up to them to negotiate." It seems to me a very basic question in all of this, because if it's $40,000 in today's dollars in perpetuity, then that's a bad deal no matter which way you look at it. If it's $40,000 that's open later on or if it's based on rates charged, then it may be the deal has a different quality to it.

I'd like to ask the minister again, now that she's had some opportunity to consult.... It's unfortunate the member for Burnaby-Edmonds (Mr. Mercier) didn't get up and assist on this matter. All I want to know is: is that $40,000 in perpetuity? Yes or no.

[3:30]

HON. MRS. JOHNSTON: I can't give you the answer to that question. It is an agreement being entered into by the Greater Vancouver Water District and the Point Roberts Water District. It is not an agreement being entered into by the Ministry of Municipal Affairs of British Columbia and anybody else. The water supply in the Greater Vancouver Regional District is under the jurisdiction of the Greater Vancouver Water District, and they are empowered to enter into agreements, but not outside the provincial boundaries. We are giving them authority to enter into that agreement.

Mr. Chairman, if the members opposite really want to see a copy of the agreement, I'm sure we would have absolutely no problem at all asking the Greater Vancouver Water District to supply any one of them with a copy of the agreement. But these people have been elected to make those kinds of decisions. They are attempting to make those kinds of decisions, but they require the legislative authority to make those decisions and to enter into those agreements. Whether it's a good deal or a bad deal is for them to determine. As members representing the entire Greater Vancouver Regional District, they have obviously determined that it's a good deal. The members of the council in the district of Delta have determined that it's a good deal. and they want to see the legislative authority given. They want to see this proceed, I would suggest, for two reasons: firstly, the economic benefit — $40,000 per annum, approximately; secondly, it is the only way they are going to have any control over the amount of water that is going to go into Point Roberts, and subsequently the amount of development likely to take place because of the adequacy of the water.

MR. SIHOTA: Mr. Chairman, I cannot believe that this minister doesn't care whether or not the deal makes economic sense. Surely the minister must have some interest in making sure that this provincial resource is being sold at an appropriate price. Let me make it clear that on this side of the House, we just want to make sure that the deal is a good one for the people of this province. It's our resource: we're selling it over there.

I understand from what the minister said before that there's going to be another line built, if this doesn't go through, from Blaine. We don't have the numbers, and I'll accept the minister's explanation that the capital cost of that is roughly equivalent and that the maintenance cost is the factor. But it would be nice to have that information before us, because if the maintenance cost is extraordinarily high to run it from Blaine, which it probably would be — because as I would take it, the line would run underwater — then clearly it may well make it possible for us to extract a better price than the $40,000. I'll take the minister up on this point, and I have to believe that the minister will agree with me that it's a point worth looking at, to see whether or not it's $40,000 in perpetuity or $40,000 on an adjustable basis, based on rates and other things. I think we both agree that's a valid point.

[ Page 2186 ]

Let me make this suggestion to the minister then. I'd like the minister's suggestion that the documents should be tabled in the House so that they can be reviewed. If that's the case, it clearly doesn't make sense to review the documents after the fact. You know, it doesn't make sense for us to see the documents two weeks after the deal has been executed. We'd like to see the documents in advance of execution so that we can be assured of at least the one very basic fact that the minister now agrees with me is something we should be looking at.

Will the minister agree to simply stand down this section and table those documents, and then we'll come back to this section? If it makes good sense, it'll pass through here unanimously; if it doesn't, we'll hopefully get a better deal for the people of this province. We can deal with the balance of this legislation, get it over and done with, and this section can come back in the form of another miscellaneous statute in due course. I'm sure there will be others, and it's not a big deal to come in with one statutory change in the future.

The minister is agreeable in principle to filing the documents here in the House. Will she then agree to file them in advance of execution, so we can review them — all of UK — and only at that time proceed with these sections? Will she agree to that? It makes perfect sense.

Interjection.

MR. SIHOTA: Well, that's a question for the minister. Will the minister agree with that suggestion?

HON. MRS. JOHNSTON: No, I don't see any useful purpose to be served by that. But I certainly do agree to ask the Greater Vancouver Water District to supply the member with a copy of the agreement for his perusal.

MR. SIHOTA: I want to assure the minister that I know how to read commercial documents, having drafted more in the course of my career than probably the minister has — and reviewed a lot of municipal ones at that, too.

I opened my comments by saying that if the situation was reversed and we were in power — which will happen in about 928 days now, or whatever — people would be coming out with that usual line: "Well, you can't even run a peanut stand." The fact of the matter is, how can we possibly vote on a proposed transaction that utilizes a provincial resource that has an effect on provincial services, when we don't know whether or not the basic annual fee is fixed; when we don't know what the differential is in the maintenance costs; when there seems to be a difference of opinion as to whether or not there's going to be a cap on population in.... I was going to say Port Renfrew, but I should say Point Roberts; when we don't have any information with respect to the population base? And then you're asking us to vote on something sight unseen, on the premise: "Well, trust us."

The member for Burnaby-Edmonds (Mr. Mercier), the Minister of Agriculture (Hon. Mr. Savage) — and I don't know about the Minister of Municipal Affairs, but at least the municipality of Delta — have all had an opportunity to review this proposed agreement.

Interjection.

MR. SIHOTA: It hasn't been tabled in this House. It just doesn't make sense for the minister to take the position that she has.

There's one very simple solution, and I put it out to the minister: if the minister doesn't want to exercise her discretion in these matters, if she doesn't want to scrutinize the agreement, if she doesn't want to make sure that the agreement is in the best interests of the province, then it really seems to me somewhat of a dereliction of the responsibility of the minister to bring all the facts to this House, to justify the fact that the agreement makes economic sense. I'm disappointed to hear what the minister's got to say.

I have many other comments that I would prefer to make on this, but I suspect that some of the other members have already made them. All I can do is hope the minister reconsiders.

HON. MRS. JOHNSTON: Mr. Chairman, there is obviously a misunderstanding of the authority that we are dealing with at the present time. This ministry does not participate in the arrangement between the Greater Vancouver Water District and the Point Roberts Water District. This ministry does not participate in the type of arrangement that the Greater Vancouver....

Interjection.

HON. MRS. JOHNSTON: Hon. member, would you like to have the information?

This ministry does not participate in the arrangements that are entered into, the agreements, that are entered into, between the Greater Vancouver Water District and any of their member municipalities with regard to the rate that is being charged. The authority is with the Greater Vancouver.... You can smirk all you want, but you don't want to accept the fact that you're asking us to stick our nose into somebody else's business. We are giving authority to the Greater Vancouver Water District to enter into an arrangement which will allow them to sell water outside of the provincial boundaries. That is where our authority lies. The conditions of that agreement are determined by the members of the Greater Vancouver Water District, not by the members in this House.

MR. CLARK: The members on this side will be voting against this section. I beg to differ very strongly with the minister. This is our water. This is a British Columbia water resource that's being sold to the Americans for the first time in history. The homework hasn't been done in terms of the cost-benefit analysis, in terms of the impact on provincial costs and services, in terms of the land values in Point Roberts, in terms of who benefits by British Columbia water going down to Point Roberts. The homework hasn't been done, and it hasn't been brought forward to this House.

For the minister to say that she's going to defer, on this important question that deals with our water — British Columbia water going to Americans — to the Greater Vancouver Water District, that what's good for them is good for us, is wrong. It is quite simply wrong. It is our responsibility in this chamber to deal with these transactions of our water resources. It's never been done in history. Millionaires will be made by this legislation, for a $40,000-a-year return to the public for this massive infrastructure and waterworks. So

[ Page 2187 ]

members on this side of the House will be voting against this section.

Section 42 approved on the following division:

[3:45]

YEAS — 28

NAYS — 16

Sections 43 to 45 inclusive approved.

On section 47.

HON. MR. STRACHAN: I am anticipating the concern that I think will be expressed by the first member for Vancouver East (Mr. Williams), because he expressed it last Tuesday, and quite legitimately: the minister is not here. However, we would like to proceed with this bill today. I can give the committee complete assurance that this item will be fully canvassed during the estimates of the minister. I do recognize that concern, but I would like to proceed on this side. The Attorney-General can speak to it as well, but I can assure the committee that we can canvass this to some degree — I don't see anything that would offend the rules at all — during the estimates of the minister.

HON. B.R. SMITH: I'll do my best to explain the Industrial Development Incentive Act provisions, if there's any further explanation needed. I can give some explanation for the Cominco agreement, and why it is necessary to have this financing. I think we'd like to proceed with this today. It can be explored further, as the House Leader said, in the estimates of the minister.

MR. WILLIAMS: I wonder when the madam member from Shaughnessy Heights might deign to attend the Legislative Assembly. The minister does not appear before this assembly much any more; she really doesn't. It's almost universal that she's not here for question period. I mean, the Marie Antoinette of British Columbia shouldn't be concerned about a mere $60 million, but seriously, it's not very satisfactory.

We appreciate what the House Leader is saying: these matters can be canvassed during the minister's estimates. But huge amounts go through this ministry in terms of industrial development funding. There isn't reporting. There is no system for reviewing Crown corporations in this Legislature, as there is in other legislatures in this country. The B.C. Development Corporation is drowning in an ocean of red ink. That minister has not reported in terms of cleaning up the monstrous mess at BCDC. She has brought in a whole smokescreen around the B.C. Enterprise Corporation, which doesn't exist; and yet they meet and carry out business without legislative authority.

Interjection.

MR. WILLIAMS: She truly is the queen bee, the Marie Antoinette of British Columbia. You may say, "Tut, tut, tut," but that's the reality.

HON. MR. STRACHAN: A point of order, Mr. Chairman. The section we're dealing with has to do with the borrowing increase; it has nothing to do with the minister's attendance. The member can make those comments during the minister's estimates, which will be coming to Committee of Supply before the House adjourns for this summer, but right now the debate is quite irrelevant, doesn't make any sense at all and is totally out of order.

MR. WILLIAMS: It is $60 million, that we're talking about here, in addition to the $50 million.

MR. CHAIRMAN: Apart from the comments on relevancy, the personal comments about the minister are probably out of order.

MR. WILLIAMS: I certainly want to make those comments when they're in order, and I would be more than happy to do so if the member from Shaughnessy ever lets us know when she's going to bother coming to Victoria and this shabby chamber here.

At the very least, the representatives of the Crown — the members of the government — should be able to report on the $60 million and provide the background. We were advised at our last meeting that the bulk of this funding was for Cominco, relative to arrangements with respect to modernization of that plant. What assurances do we have that full employment will now be maintained in that operation as a result of the expenditure of these funds?

HON. B.R. SMITH: I'll do my best to go over it. Of that $60 million, $5 million will meet the provincial commitment, which will eventually rise to $62.5 million under the federal — provincial industrial development subagreement. The $55 million is then added to complement the agreement by the province to purchase the Cominco preferred shares, as announced by the Premier in August 1987. The province is purchasing shares to assist Cominco in financing the modernization of the smelter, and this amount is matched by a similar contribution from the federal government. Although the province will not receive voting rights by buying preferred shares, it will participate in the profitability of the project, as Cominco will repay the investment with interest on the basis of the performance-of-metals price.

As I think the member knows, this smelter modernization is a major one — in fact, the first major one there in many years. It will cost $171 million for the first phase and $89

[ Page 2188 ]

million for the second phase. As a result of that modernization, the output capacity of the smelter will increase to 160,000 tonnes per year from the current level of 136,000 tonnes. The modernization will see the replacement of worn-out equipment with an efficient plant to ensure that Cominco is competitive in the world lead market, and the project will provide safer and cleaner working conditions for Cominco employees. If this provincial investment and matching federal investment were not made, the modernization project would not proceed. It's as simple as that.

The smelter now employs 1,000 people directly in Trail, and there is every belief in that community that without a modernization of this kind, the continued operation of the smelter in that location would not have been viable. I toured Cominco during the leadership campaign a year ago and talked to a number of the officials in the plant, and they confirmed that without this program, that smelter was probably doomed. With this program it is not only saved. but is world competitive. There are similar spinoffs in the work that's being done in Kimberley. A shutdown of the lead smelter would of course have resulted in the early closure of the Sullivan mine in Kimberley, which provides employment for 1,000 British Columbians. There are more than 40 other small mines that send their metal concentrates to the Trail smelters, so at least 2,000 direct jobs are affected by this project.

The modernization project is a vital one. The project is going to employ about 300 people in construction in the next three years. It also has environmental benefits: it will make the lead smelter a low-cost operation, but will also ensure that the environmental standards for air and water emissions are met by the plant. I know that the members opposite do support that project — I'm sure they do — and I regret that I wasn't able to provide some of that information the other day.

Section 47 approved.

Title approved.

HON. B.R. SMITH: Mr. Chairman, I move the committee rise and report the bill complete with amendments.

Motion approved.

The House resumed; Mr. Pelton in the chair.

Bill 31, Miscellaneous Statutes Amendment Act (No. 1), 1987, reported complete with amendments to be considered at the next sitting of the House after today.

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

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

ESTIMATES: MINISTRY OF
FINANCE AND CORPORATE RELATIONS
(continued)

On vote 31: minister's office, $283,435.

HON. MR. COUVELIER: Mr. Chairman, during our debate last week a number of comments were made by members of the opposition and by me that in the interim have given me some concern. Because of that, I felt it appropriate to put on the record prior to continuing the debate today a few comments dealing generally with the operation of the securities industry in British Columbia and its relevance to the wav business is conducted by securities industry participants around the world.

[4:00]

In reading the verbatim transcript of our debate, it's clear that it is appropriate and necessary that we channel specific inquiries through proper channels rather than through the floor of the House. I make this comment because it seems self-evident that all of us have a responsibility to represent not only our constituents' interests but also the province's interests, and that we recognize that comments made from the floor of the House could have the effect of prejudicing legitimate business people in the securities marketplace; could have the effect of imposing an unfair consequence upon the public investors who participate in public offerings on the Vancouver Stock Exchange; could result in misuse of House privileges; and could, quite clearly, act to frustrate the enforcement process and the rule of law.

[Mr. Pelton in the chair.]

Loose charges, or innuendoes of improper criminal activities by VSE participants or of inaction by VSE or Securities Commission staff, are a product of lack of appreciation of how the system works — the entire financing process — and furthermore are a product of a misunderstanding of what has been done and is currently being done in the enforcement and public protection area.

It's evident when looking at the Hansard record that we seem to be dealing with exceptions rather than the rule, and I want to talk a little bit about the rule to put it on the record. I want to talk about some of the steps we're presently taking to improve the efficiency of the system.

First of all, I think it's important to recognize that the primary goal of the Securities Commission in British Columbia is to create an efficient international venture capital market in B.C. One key element of that is investor confidence, and we believe that investor confidence comes from consistent enforcement of the rules, so that the risk associated with playing the market lies in the business venture and not in any transgression of the rules of its operation.

I realize that those are brave words. People before me have said them, and successors will similarly express them. Let's talk for a little bit about what those words mean. First of all, we should understand that we're dealing with a venture capital market as opposed to a mature capital market, as I would describe the Toronto Stock Exchange, the London Stock Exchange, or any of the major exchanges in the world. The Vancouver Stock Exchange deals with start-up companies. They have no track record and, as a consequence, investors who play that market must understand that there is an unusually high degree of risk associated with any venture there. People should understand that the VSE is no different than any other normal business relationship, and it will have its share of failures. We on the government side believe that that is a right and, unfortunately, a permanent consequence of business decisions made. It is not the role of government, nor should it be, to ensure that there shall be no business failures.

Furthermore, we on the government side don't believe there is any stigma associated with failure. We believe that

[ Page 2189 ]

the entrepreneurial spirit must be allowed to realize its potential, and in that process there will be some winners and some losers. For example, it has been discussed here that somehow or other delisting by the Vancouver Stock Exchange might be understood as or might be a reflection of improper conduct.

In fact that may be true, but equally true is the fact that delisting could be just the normal consequence of a firm becoming dormant. Indeed, during the debates last week, a member's statements about suspected wrongdoing included the name of an individual who was a director of a firm which was delisted, and it was suggested that there was somehow some reprehensible kind of conduct associated with that.

In fact, that particular reference, Mr. Chairman, dealt with a firm that had become dormant. That is quite a common occurrence on any stock exchange, but most particularly on the Vancouver Stock Exchange. The Vancouver Stock Exchange deals with thinly capitalized firms in a highly competitive market with individuals with different degrees of experience and ability. So it is natural and, I think, inevitable that there would be some failures in that process.

Success in a new business is to some extent dependent on promotion, to some extent dependent on luck — the breaks of the game — and certainly to a large extent dependent on the abilities of the individuals involved. Those are subjective factors, and the marketplace must be free to judge them. The marketplace must be unfettered so that every individual has an opportunity to maximize the opportunities before them,

The Vancouver Stock Exchange also has thin share floats — until they're successful and refinanced, that is — so it's inevitable that there should be wide price fluctuations. This apparently has led some observers to conclude that the market is controlled by small groups. While that might sometimes be true, it is mostly due to the fact that there are thin share offerings out on the marketplace and, as a consequence, price changes tend to be wider-ranging than in a more mature market.

We suggest that there is nothing wrong with price fluctuations themselves. That's a normal consequence of the marketplace. The purpose of the VSE is to raise venture capital, not to create unnecessary hurdles or restrictions or to try to second-guess competent business people at every step of the way. One only has to think about some imaginative ideas that a normal, rational person would not have invested in — for example, the hula hoop sensation.

Millions of dollars were created by the originators of that concept. None of us in this room, I suspect, would have dared invest a penny in such a venture. We've got a current example on the Vancouver Stock Exchange, they tell me — something called Jolt Cola. Similarly, who would have imagined that a drink product would have been able to capture such a reasonable market share when it runs so counter to current social thinking regarding sugar and other ingredients in this product?

Nevertheless it has carved out a market niche and is making for those individuals who had the initiative to undertake it a little bit of money in the process. The point here is to illustrate that it is useful to raise money for untested business ventures, and who of us in this room would have the wisdom of Solomon to be able to predict the winners from the losers prior to the marketplace doing that for them?

The Securities Commission has seven key functions. First of all, it develops policy; secondly, it vets disclosure documents — that is, prospectuses, statement of material fact, rights offerings, etc.; it grants exemptions and makes other discretionary orders; it registers investment industry participants — brokers, dealers, salesmen, etc.; it provides a central system for informational filings, as required by law, for use by the stock exchange, by the Securities Commission and by the general public.

It also ensures compliance with and enforces the various acts and regulations and policies. and it has the obligation to hold hearings — a quasi-judicial function — on issues that are brought before it. Talking specifically to some of these in the area of policy, policy is arrived at through discussions and liaison with the investment industry, with the professional community and with the stock exchange itself, all of whom have a common goal of creating a reputable financial market.

Policies deal with emerging and recurring problems, and at the moment we in the Securities Commission are administering 33 local policies, 13 uniform act policies or provincial policies and 35 national policies. All of these provide guidelines on issues ranging from conflicts of interest for underwriters to mutual fund investment restrictions. Compliance with policies is a prerequisite for prospectus receipts, orders or registrations, and for listings.

Dealing with the question of vetting disclosure documents, it should be recognized that all public financings in British Columbia must be based on full, true and plain disclosure of all material facts. Responsibility for vetting is allocated between the Securities Commission and the VSE. The Securities Commission vets all the prospectuses, national filings and local initial public offerings, and the VSE vets all statements of material facts and rights offerings which are used for further public financing. VSE also vets the private share placements by listed companies. Reviews by these vetting agencies cover the business, the promoters, the directors and officers, the past history, future prospects and the like.

There are new powers in the Securities Act regulations which require the superintendent of brokers to prohibit a public financing from proceeding when certain unacceptable factors are present. Both of these reviewing procedures screen out many companies or transactions that have the makings of becoming abusive. For example, of the 323 prospectuses filed in fiscal 1986-87, 76 were withdrawn, mostly for failure to meet the regulatory requirements. I submit that this is successful preventive enforcement. It doesn't make any headlines, but it does, I think, effectively indicate to the trade that we are serious about the standards we set.

Between financings, neither the Securities Commission nor the VSE is set up to constantly monitor or vet companies' disclosure documents. Press releases and shareholder communications are abundant. Shareholder communications are not seen until they are distributed. As a matter of fact, we will be having a hearing with the Securities Commission shortly on a situation dealing with that latter subject.

We have to assume that these statements and issuances by the firms are true. We generally respond only to complaints that we might receive relative to them. You should understand that every one of these public statements by the member firms have a disclaimer associated with them which quite clearly sets out that the Vancouver Stock Exchange does neither endorse nor comment upon the validity of the material contained in the press release. You should also understand that material changes must be announced; that's part of the regulations.

Lastly on this point, you should understand that no other provincial commission acts any differently than we do. In

[ Page 2190 ]

other words, the marketplace is free to make those kinds of comments without prior vetting by the various provincial securities commissions.

Dealing with the question of registration of participants, the jurisdiction in large part is delegated to self-regulatory organizations, either the IDA — the Investment Dealers' Association — or the Vancouver Stock Exchange itself Individuals must take courses and they must qualify by examination in order to pass those standards. These organizations have comprehensive rules on behaviour, and you should know that since January 1, 1986, 38 out of the 2,000-odd salesmen and four out of the 48 firms in the province dealing with the VSE were disciplined in some manner. Discipline might consist of penalties, including reprimands or even permanent suspension by the VSE. I think the members should understand that these matters are dealt with in the area of formal hearings, which are themselves no small matter. The consequences or results of these hearings are all published, so the impact on those so judged can be quite significant in terms of their earnings potential and future credibility.

The most effective way we have to deal with problems is the informal meetings at the superintendent of brokers office. Usually these informal meetings deal with the question of errors in judgment and inexperience, but not intentional wrongdoing. Generally speaking, this kind of informal process has proven to be a successful preventive measure. Once again, it doesn't make any headlines, nor is it an issue which we accumulate statistics on, but of itself I think it ensures that the marketplace understands that we're in the business of enforcement and we're serious about it.

[4:15]

Dealing with the question of a central information system, you should know that there is a large data base which is used by the public, the VSE and the Securities Commission. It includes reports on insider trading, material change reports, quarterly status reports, financial statements, press releases, shareholder communications....

MR. CHAIRMAN: Hon. minister, I'm sorry to interrupt, but your time under standing orders has elapsed.

MR. D'ARCY: I was so enjoying this informative political harangue by the first member for Saanich and the Islands. I know all of the government back bench really want to hear another few weeks of his discussion on this, so I hope that you see fit to allow him to proceed, Mr. Chairman.

MR. CHAIRMAN: The Minister of Finance continues.

HON. MR. COUVELIER: Well, that was an unexpected concession, and I do appreciate it. I take your time up because I believe, in view of the Hansard record of last week, that this kind of information should be in the record. I think it will enable the loyal opposition members to become more useful in their criticisms. Most importantly, that handful of people who read Hansard might better understand how the investment business is enforced and operated in B.C. I think it's necessary.

I was talking about the large data base, and I was listing the kind of information accumulated in this data bank. I made the point that there is a mountain of information which is accumulated and available to all who are interested. We have found that these materials provide an important tool for investigations into improper market activity. There are hundreds of cease-trade orders issued by the Securities Commission. As a matter of fact, there were 476 issued last year, and in addition, the VSE issued hundreds more. Admittedly, the VSE cease-trades might be for only a matter of hours, until their concerns were satisfied on a specific issue. But you should at least understand that it is a daily monitoring process, and it does seem to work, with some embarrassing exceptions.

The documents, as I mentioned earlier, must be presumed to be true and accurate. It is not and should not be believed to be a universal early warning system. In this respect, I ask you to think of the analogy of drunk drivers in B.C. We do not, as a matter of course, have policemen outside every bar or tavern or public gathering place to give people breathalyzer tests. The system, in order to work and to be affordable, has to rely on the assumption that most people are innocent, and that we will move only when we have cause to move or to be concerned.

The Securities Commission also holds hearings. You should know that there were ten held last year. These are formal quasi-judicial determinations of rights, infractions and impositions of penalties. These hearings, we think, are important for communicating standards of acceptable behavior.

Dealing with the question of enforcement, you should know that we have some specific enforcement powers. We can issue investigation orders, and these orders grant very broad investigative powers to the authorities. We can freeze orders for property funds. We can compel audits and we can appoint experts. We can issue cease-trade orders against specific persons or securities. We can remove rights of persons to use statutory exemptions. That, you should know, is no small tool; it's a very important tool. We can apply to the Supreme Court for a compliance order or for an appointment of a receiver. We can recommend prosecution for offences committed under the Securities Act or the Criminal Code. In addition, there are several remedies for misrepresentations in prospectuses or statements of material fact, for trading on the basis of undisclosed material facts or changes, and for premature disclosure of takeover bids to a select group.

The investigative services for the Securities Commission are provided by our corporate investigations branch, which is separate from but part of the total ministry responsibility. They provide services to the Ministry of Finance in the area of insurance and trust companies and real estate companies. You should know that at the moment the investigations branch has a securities caseload of about 300 active files; about 35 of them might be categorized as major. These cases range from consumer complaints to claim-jumping to criminal fraud. You should know that we have 12 investigative personnel, approximately eight of whom are dealing with securities matters at any one time. You should also know that about half of our serious cases are worked on in conjunction with the Royal Canadian Mounted Police, commercial crime section, and the market manipulation section.

You should also know that about half of those cases are worked on by the Crown counsel. This branch provides all services, except legal ones, for hearings and trials. We think that they have done some yeoman work in the past, particularly the investigative work done on Beaufort Resources in 1986, which, as you know, resulted in seven-year sentences for two individuals. Currently there are a number of significant prosecutions and hearings pending on matters

[ Page 2191 ]

ranging from market manipulation, wash-trading and highsailing, to filing false disclosure documents.

Prosecutions will be undertaken only where evidence available will hold up in a court of law. Where there is insufficient evidence, notice will be given to offenders with demands to cease and file information for use and other key functions.

The number of directors suspended is a simplistic criterion to use for judgment. To the specific question put to me last week, I can tell you that there has been no director suspended through this process. With the new act and the new management regime, I do believe we will see some changes in that Past practice, but you'll have to give me the courtesy of time to prove the accuracy of that comment.

When looking at directors, I think you also have to understand that the VSE has its own criteria, and that our most effective process in dealing with unsuitable directors is to seek voluntary withdrawals. This is something we do as a matter of course, and it is effective.

Lastly, on that point, we should recognize that it is possible for anybody who wishes to manipulate the marketplace to play a very significant role in the manipulation just by using nominees. That's no different than any other criminal activity. So being a director per se does not necessarily mean very much in this respect.

The VSE has its own rules and regulations, and they are active in enforcing them. All of their investigators are senior experienced personnel with specialized enforcement training. The results of investigations of well-founded complaints are communicated to the president of the exchange, who may then direct that disciplinary proceedings be instituted. Penalties have been levied, ranging from reprimands to fines and suspensions, and disciplinary proceedings are made public by notices to members. You should know that five of those proceedings took place last week alone. It is not an uncommon occurrence, and those public notices receive wide distribution.

Interjections.

HON. MR. COUVELIER: I realize that in the minds of many this may be an unnecessary exercise. I can only repeat again that I think the record has to show this information. It may be the only time that I can get it on the record.

I think it's important to recognize that no law or procedure can prevent fraud. It is easy to punish after it happens; it is enormously difficult to anticipate. In any event, is it appropriate to take away people's rights to carry on business before any illegal action occurs? It's even harder if factors indicate it might be the case, but there's no hard evidence to justify it. The rule of law does not permit us to suspend rights merely on suspicion or allegations. Many abusive transactions start out normally and go bad after initial regulatory standards are met. Those are very difficult to deal with later.

The problem with enforcement is that it's very time-consuming. Formal hearings are expensive and difficult, but they are, as I say, effective. I could give you some examples of difficulties other senior exchanges have experienced, but I'll spare you that. If you're curious, I have the information available.

I think the key issue here is: what steps has this government, which was put in place last November, taken to deal with the opportunity we have to elevate the profile and the standard of conduct of the Vancouver Stock Exchange? I think it's important that you should know that we have increased the budget and applied more resources to the superintendent of brokers office. I think it's important for you to understand that we have provided what I believe to be, and am proud to say, is stability of leadership in the senior positions. With the new act, and with more aggressive enforcement of it in dealing with prospectuses and unacceptable management practices or promoters, I think the job will considerably change from past practice.

We intend to have closer liaison with the other regulatory agencies, the IDA and the VSE, and we intend to make that a very key part of our enforcement practice. There is an increased level of continuous disclosure reviews by all of those parties, and you can expect an increase in the number of formal hearings held as a consequence of these staff changes and discussions that have been going on for the last five months. You can expect an increase in emphasis on due diligence investigation, and a review by the underwriters, brokers and professionals themselves. In other words, we intend to enforce more checking at the front end, and these self-regulating organizations have agreed to accept increased responsibility in that respect. We will have increased emphasis on formal enforcement against unacceptable directors, officers and promoters, and the offenders who are associated.

In conclusion, Mr. Chairman, we are taking a number of initiatives to ensure that there are some changes from past. practice. I have to say again that the floor of this House is not the place for examination of the behaviour of specific companies, because obviously we on the government side can't comment on active investigations. Premature comment here may alert offenders to possible investigations that could result in destruction of evidence, going underground and covering trails.

Discussion here also compromises an important principle, which is the independence of the VSE. We do not want it to be a tool of government, per se. We want it to be a self-regulating organization, and we want it to assume more responsibility in that respect. Comments in the House may be based on inaccurate, false or one-sided information,

MR. WILLIAMS: On which side?

HON. MR. COUVELIER: Sometimes it works on either side, but more probably it would originate on your side because of the policing authority that's vested in me by virtue of the title I hold. As a consequence of that, hon. member, I suggest to you that we do have the facility here to consistently and uniformly monitor the operations. By virtue of the statutory requirements, I suspect I have more flexibility than you might have in that respect.

A comment here in the House could be extremely prejudicial to innocent companies and individuals who can't defend themselves, and also to public investors if, as a consequence, stock prices are influenced unfairly or improperly. Frankly, discussion here on this floor dealing with specific companies accomplishes no purpose that disclosure and full, frank exchange between us privately wouldn't.

Last May I invited anybody across the floor who had a specific interest in specific companies to work with me to see if we could satisfy those concerns in a responsible, private, confidential way such that the reputation of the Vancouver Stock Exchange was not adversely affected and such that the concern of the member would be appropriately addressed. I make the offer again. The Vancouver Stock Exchange is a

[ Page 2192 ]

very key element in our economic diversity ambitions, and it is critical for all of us in British Columbia to ensure that to the maximum extent possible we allow that growth to take place. However, recognizing the very necessary and important need to have some confidence on the other side of the House, I extend the invitation to work with me in any specific cases that cause concern.

[4:30]

I stand before you committed to provide you with the kind of information you might need to satisfy yourselves that we are doing all that might be done. In the absence of that satisfaction, I pledge to you that if you can offer further advice or counsel as to how more effective policing might be done, we will give it very serious consideration.

Thank you for your patience, Mr. Chairman. I thought it important to get those words on the record.

MR. CLARK: We want to thank the Minister of Finance for his lengthy discussion of the Vancouver Stock Exchange — excruciating detail, I must say. I want to follow up on your last remarks, because my mind wandered a little bit there. I'm trying to get the sense of the bottom line of what you're saying. It strikes me that you said we shouldn't be raising this in, the House and that you were doing everything you could to clean up the act of the Vancouver Stock Exchange.

I don't want to put words in your mouth. I've raised in this House — with the member for Esquimalt-Port Renfrew (Mr. Sihota), who will be talking at a later date on your estimates — a series of companies and issues and concerns about the stock exchange. He talks about dealing with it privately. I wonder if the minister would be prepared to refer the whole question of the appropriate monitoring of the Vancouver Stock Exchange to an all-party committee or to a smaller committee of this House or to a standing committee, where we could have that kind of detailed analysis.

In a sense you're saying that you're doing everything, and that we shouldn't raise it publicly, but privately. We want to be convinced that there is that effective monitoring in place. What about some other mechanism to review the operations of the Vancouver Stock Exchange, not for any vendetta or witch-hunt or anything like that but simply to ensure that there are fair and clear ground rules and effective enforcement of the regulations? That might be an appropriate response to the kind of criticisms that our side has been raising in the House and that you take offence to in terms of your response today.

HON. MR. COUVELIER: That is an interesting thought. One of the reasons that I went into so much detail was to impress upon you the diversity of players in the enforcement process. Surely you had to get some impression with the IDA, the VSE, the RCMP, the A-G, our own investigations branch — there are many players. To give you a quick answer, my reaction would be that I'm not yet convinced that that is necessary. I'm willing to concede that it might be in the future.

What I said was that I consider it inappropriate to deal with specific firms on the floor here. It's entirely appropriate that you should be critical of practices in a generic or general sense, and I understand that; I don't have any difficulty with it. All I'm referring to in terms of the private discussions would be on specific firms, so that we can tell you what we're doing. If you've got any further thoughts, we could deal with them. It may be, in the fullness of time, that in order to satisfy all concerns, some sort of larger committee may be necessary. But at the moment I've got lots of players involved in that game, and my problem seems to be to coordinate them as effectively as we can.

MR. WILLIAMS: Mr. Chairman, it isn't quite good enough to just say: "Trust us. It's all fine. Just trust us." That simply isn't good enough, given the track record. If you're serious — and we accept that you are — about the need to build up this institution in a more satisfactory way, well and good. But, you know, we can't just trust you. There isn't a good track record here. That just is inarguable.

There are tremendous amounts of funds involved here, and elements of public trust that are serious indeed, as the minister suggests — so serious that there should be joint participation in terms of monitoring, in terms of people on this side of House, along with the minister and maybe others on that side of the House. That is a reasonable minimum, in terms of being satisfied.

Mr. Minister, you can't expect just a generic debate, because what happens isn't generic. It often is a specific company. It often is a specific player. And it is unsatisfactory, all too many times. This is not Ontario. It is not modem in the same manner. You have not put in staff there on a scale like they have, or with the qualifications they have. It just hasn't happened. With all the best will in the world — you know, moving in one of your bureaucrats from the Ministry of Finance — it has to be an incredibly fast, steep learning curve for a traditional bureaucrat thrown into that melange on Howe Street, and you've done that. So it simply isn't good enough. To expect that the opposition will sit silent when there are these problems there, and when they're serious, and when funds are at stake that people have put in there in good faith.... You just can't expect that. You simply cannot. When other jurisdictions lower the boom on some of these specific outfits — not generic outfits; specific outfits — and we're asleep at the switch, as has happened again in recent months.... Too much of it goes on. It is not acceptable.

I think if you really want to avoid having this stuff on your head, then you should be opting for this reasonable solution. That's been put to you. It's been put to you before the debate today. I for one can't understand why you didn't grab the opportunity. You get up here and wring your hands, and say: "I don't like you saying these things in the Legislature. You can affect the value of stock" — and all the rest of it. Well, you know, there is an option. The other member for Vancouver East (Mr. Clark) and the member for Esquimalt-Port Renfrew (Mr. Sihota) have put those to you in the past. So I think it's on your head, Mr. Minister, and nobody else's. If something happens that you're unhappy with in the Legislature, it's on your head. The opportunity for a bipartisan approach has been offered. So don't you come crying around this chamber, when it's on your head down the road, because it sure looks like that's the way it's going to be.

If I were in your position, I'd want to share that responsibility; I really, genuinely would. Because the Premier has given you a load of things to deal with that's excessive. I don't think, in fact, that it's possible to do an adequate job, given the range of duties that you have as minister. When you think of the stock exchange alone, I honestly don't see the capacity there; I really don't. And that's with lots of experience and lots of ability. I just don't think it's there.

So I think the offering of some kind of joint review of this exchange.... If you're serious about this being some new

[ Page 2193 ]

cornerstone in terms of the economy of British Columbia — which I think is really stretching it — fine, well and good. That's all the more reason to ask the opposition to participate. They have some extremely able people that would be more than willing and happy to contribute and to review, and not in a partisan way but in a province-building way. That's a real opportunity for you, Mr. Minister, and I'd jump at the chance, given what Howe Street is in British Columbia, what the history of Howe Street is in British Columbia, and what the history is of the players and their closeness to this administration in questionable ways. There are terrible conflict-of-interest problems when you have one of the major players there collecting funds for your political party.

Interjection.

MR. WILLIAMS: You can do your "tsk, tsk," Madam Minister; that's the reality. The reality is that the main fund gatherer is still the main player in that exchange — no question about that. All the more reason for you wanting to be seen as Caesar's wife in these circumstances. All the more reason to ask the opposition to participate.

You've been given your opportunity, Mr. Minister, and it looks like you're turning it down. That being the case, it is indeed on your head, in terms of future problems with this operation. It's all too clear that this area has not been well governed or well administered. Too often there has been a blind eye; too often there has been a wink and a nudge in terms of how that street operates. It's simply unacceptable, unsatisfactory. If you're making the attempt to clean it up, you should be asking people on this side to participate with you, to see that it's done in an even-handed way and so that you don't have these problems that you perceive down the road in terms of what might be said in this Legislature. But don't expect us to remain silent in the future. We're watching more carefully than we ever have in terms of what goes on on Howe Street, what the linkages are and what they're up to. You can expect continued debate on that subject.

HON. MR. COUVELIER: Mr. Chairman, I just can't let that pass. First of all, it's clear from the comments I've heard from the last speaker that the opposition party wants to inject politics into the operation of the VSE — the one thing we should try to avoid. It seems to me that it's important for us to understand that the VSE, to realize its full potential, must be kept out of the political arena to the extent possible.

It has been suggested that it's on our head — the consequences of failure to pick you up on an offer that we have some mass meetings on the subject. The reverse is true, hon. member. The consequences for inappropriate, inaccurate information being expressed by some members on your side are on your head. What I'm trying to do is save you from the political consequences of your pursuit of false, misleading and inaccurate information and at the same time avoid blackening the reputation of a very important arm of the B.C. financial community.

It has been suggested by the last speaker that somehow or other there are friends of government involved here, and as a consequence we've been less than diligent. If that's the case, are you suggesting that the RCMP, who are involved in half of these serious cases, are friends of government? Are you suggesting that the Crown counsel, who were involved in half of these serious cases, are friends of government? I mean, is everybody black, but you fellows are all white? Let's get reasonable here.

The poor reputation of the VSE. Let me tell you, my friend, about the firms that have made application to deal with the VSE on an exempt-purchaser basis — internationally recognized firms that are at the forefront in international financial relations: Algemene Bank Nederland, Banque Nationale de Paris, National Westminster Bank, Rothschild Asset Management Ltd., S.G. Warburg, Teck Corp., Union Bank of Switzerland. If the VSE was such a sick creature, would these international firms — 57 in all — have made application to deal...? No, my friend. You can't have it both ways. You can't sit there enjoying the fruits and the labour of the Vancouver Stock Exchange and at the same time try to shoot yourself in the foot. I won't stand here and let you have it.

MR. STUPICH: Mr. Chairman, I just can't help but make a brief comment on the previous exchange. There has only been one British Columbia politician, I suppose, who ever aroused the very deep concern of senior officials in the Ministry of Finance — the only time that a person, for a possible political advantage, actually raised issues publicly that could have been very damaging for the financial interests of the province. That person, Mr. Chairman, was the leader of the Social Credit Party — at the time, the Leader of the Opposition. I had private conversations with individuals in the Ministry of Finance who said that, to their knowledge, this had never happened before in the history of the province, that anyone would be so totally irresponsible as to risk hurting the province in the way that person did. There has never been any problem from this side of the House, from the opposition side, or when we were in government, in that respect.

I have some questions I want to put to the minister. He wasn't here then; he wouldn't be aware of those. But I do have a number of questions. One of them is with respect to — if I can use the word loosely — an investment that the province made in the Canadian Commercial Bank. I asked the previous Minister of Finance on several occasions what progress had been made.

[4:45]

There was $13 million invested by the province in the form of a debenture; Workers' Compensation Board was invited to and did put $5 million into a debenture; and B.C. Rail had a $500,000 note. On those occasions on which I asked the minister about those funds, he said that they were still hoping to get them all back, that he was having regular conversations with the Minister of State for Finance, the Hon. Barbara McDougall, and was not prepared at that time.... The most recent time I was able to ask him was on May 29, 1986. So I wonder whether we're out the $18.5 million or whether anything has happened with respect to that.

There's a second question. The minister was interviewed by Mark Collins, and it's reported in the paper Politics and Policy, volume 1, number 1. The famous or infamous question, if you like, of the Vancouver Island gas pipeline came up, and the question put to the minister was: "Does Ottawa accept that they owe B.C. $400 million for the Vancouver Island natural gas pipeline?" The minister responded: "The Premier is very anxious to keep them on that commitment, and certainly it would be a desirable event in the short-term point of view for job creation" — from the short-term point

[ Page 2194 ]

of view desirable — "constructing the line, but the federal government, as you know, are very uncomfortable with that specific proposal." I wonder if the minister could tell us a little bit more about the discomfort on the part of the federal government with the proposal. I'd like to hear something from the minister on that.

Then the second question: "Might they give us the money for something else?" The minister replied: "That would be the most highly desired outcome, in my judgment." So it would appear as though the position of the government of British Columbia, at least as outlined by the Minister of Finance, is that we'd far rather have the money than a pipeline, and it would appear as though there's some information available with respect to the federal government's attitude toward the pipeline that could be of interest to the people of British Columbia.

There are a lot of cost figures in the budget, and some of them I haven't been able to find. They may be there, but on page 11 we talk about Medical Services Plan costs increasing rapidly, and there is the announcement that Medical Services Plan premiums were going to increase. I wonder if the minister can tell us how much additional revenue that will bring in, the increase in the Medical Services Plan premiums.

The next question. When we were on legislation the minister and I had a fun exchange about corporation capital tax, and he sent me a letter afterwards clearing up some of my questions. But I'm still a little puzzled as to how we can widen the net so that we're taxing more people and end up getting less money. It would seem to me that we're letting the companies concerned off the hook, and I believe that these, to some extent at least, are the same sort of companies that the federal Minister of Finance referred to when he said there are still 60,000 Canadian corporations — who on a pro rata basis I estimate made a net income of $10 billion last year — who will not be paying any corporation tax at all under the fairer system that he announced just a few weeks ago.

It would seem to me that we're treating these finance corporations in the same way. We're increasing the application of the tax so that there will be more companies taxed, and having done that we're going to collect $6 million less. Now there's something wrong. That, to me, is not being more fair to the people of the province. I wonder if the minister can tell us how he can tax more people and get less money, and consider that that's fairer.

I don't know whether the minister would like to have me take a break and have him start, or do you want me to keep going?

AN HON. MEMBER: Keep going.

MR. STUPICH: All right. Somebody said keep going.

There's another question, then. On page 100 of the budget there's a reference to the logging tax. This is the table of revenue by source. As I expect, under "Forests" the amount of money being collected from logging taxes is increasing. We were in a very bad way a few years ago, and in some ways, I suppose, hit the bottom in '85-86 and have started climbing out since. The amount of money being collected from logging tax — and that is a tax on income — has actually been increasing since 1984. So it would look as though things are looking better even earlier than I thought: $1 million in 1984, $4.3 million in 1985, $5.1 million in 1986, $7 million in 1987, and the forecast for 1987-88 is that it will still be only $7 million. I had thought that there was a real upturn in the logging industry, and that includes processing — logging tax applies to all of it. Yet the minister's forecast is that in the year ending March 31, 1988, our revenue from logging tax will be exactly the same as it was in the period to March 31, 1987.

I have been wondering where the minister managed to lose approximately half a billion dollars on the way to the budget. I wonder if part of it is in this area. The minister will receive by way of the lumber export tax in this period an extra $350 million. He received a chunk of money from Ottawa as payoff for not charging co-insurance fees at hospitals. That was approximately $90 million. There is another approximate $70 million that the province will get because the federal government increased its rate of personal income tax, and it did that so that it could increase it over a period of four years, and have now decreased it so that they could say that they effected a reduction of about 20 percent in the rate of income tax — having increased it about 130 percent.

What's happened? We had an extra $500 million, apart from all the increases and apart from the increases in revenue that come naturally with inflation and some movement in the economy. Yet this money seems to have disappeared. Half a billion dollars seems to have disappeared somehow. I wonder whether some of it is buried in the fact that we're not recognizing the increase in revenue that we expect to get from the forest industry. No increase at all in the logging tax in the year when things seem to be booming. Timber sales have actually gone down: they dropped from $103.8 million in 1984 to $97.4 million in 1985 and $93.4 million in 1986 — a steady drop, which doesn't surprise me. They Went up in 1986-87 to $98 million, which I expected. But then in the year ending March 31, 1988, they'd dropped by $25 million. Why are we expecting a drop in timber sales revenue in the year that we're in right now, as compared to last year, when by all reports things are booming?

If you leave out the lumber export tax in the two years from March 31, 1986, to March 31, 1988, we're actually going to suffer a decrease, according to these estimates, from $144.2 million down to a $124.2 million. I would invite the minister to explain why we're going to be losing money in the forest industry when it seems to be doing so well.

There's a note on page 8 in the budget, and this is good news: "The revenue we will receive from this tax" — referring to the lumber export tax — "will not only allow us to support a silviculture program that is the biggest in our province's history, and the largest anywhere in North America...." That's what we're going to use all that money for. Then I look at estimates and I see that the extra $290 million that we expect to get this year, in the votes, the amount to be spent on silviculture in the year ending March 31, 1987 — and that was the estimate — is $60.7 million. The amount to be spent, with this extra $290 million available, for this massive program has increased by $2.8 million — from $60.7 million up to $63.5 million. What happened to the other $386.3 million? It seems to have gone with the wind.

I think the minister may have a few answers before I go on.

HON. MR. COUVELIER: To the opposition Finance critic, I'll attempt to answer the first question, which dealt with the Canadian Commercial Bank matter. We are still in the process of discussing that matter with the federal government. I suspect we will have to wait for the full liquidation process to conclude before we can get any comfort as what

[ Page 2195 ]

kind of money might be returned to us. For the contribution we made in the interests of the national banking institutions, you should remember that we took on that obligation as responsible Canadians in an attempt to illustrate to all that we were prepared to do our bit. We are somewhat concerned about the matter and will continue to pursue it. But at this point of time, I can't be more specific.

The second question dealt with the matter of my comment that the federal government felt some discomfort with the Island pipeline proposal. Because I'm not the line ministry with the specific ongoing responsibility to negotiate the matter, and because I don't have a current update on it, I can only respond that that question might more properly be put to the minister responsible. It is true that my interpretation that I described as "federal discomfort" is personal, but it relates to the history of the matter. My knowledge of that history is basically that the federal government has steadfastly refused to admit that it has a financial commitment to the pipeline. It's as a consequence of that that I used the phrase "federal discomfort." However, the member might wish to put that question to the minister responsible, for more specific current information.

As to the suggestion that I might be happier receiving the money than the pipeline, I can only respond that because of my interpretation of federal inaction so far, it seems to me that a bird in the hand is better than two in the bush. If the federal government would even agree that if they don't like a pipeline at least they can do something for us on our highways or our ferries or whatever else, I would be happy to receive some sort of recognition of those problem areas. So as Minister of Finance, based on my admittedly non-current information, I would rather have the money, because I rather suspect we might not get the pipeline, much as some parts of Vancouver Island would like to see it.

The fourth question dealt with the increase in Medical Service Plan premiums, and there was a specific request as to how much money that has generated. Unfortunately, that isn't here with the statistics and information we have, and so we will just take that and respond to it later, if you don't mind.

The question of the corporation capital tax. I think it's important to recognize that it's a minimum tax. The fact that more firms are involved but less revenue is received might be — and we might suspect is — explained by the fact that there are considerable loss carry-forwards and there is likely an annual overhang. That explains it. To get more specific information would require some time to develop.

[Mr. R. Fraser in the chair.]

The questions on the logging tax. You asked, hon. member, a number of specific questions, and we will have to get that information — that is to say, the fact that the logging tax is the same in '88 as in '87 and the fact that timber sale revenues have dropped.

Dealing with the question of the lumber export tax, I think that, first of all, the hon. member would realize that it is a basic precept of government — and indeed wasn't changed when your own party was in power — that income and revenues go to general revenue, and that's where we intend to put the lumber export tax whenever we get it. You might be interested to know we still haven't received a dime in that respect. In any event, those revenues will go to general revenue and will be disbursed from it.

I think that we have dealt with the specific allocation to silviculture in previous times, but, specifically, it is our opinion that we have budgeted all the money in the silviculture area that can be efficiently utilized during this fiscal period. That, combined with our JobTrac programs, we think makes a sizeable investment in the silviculture initiative. I don't think anyone should read into those figures any relaxing or lack of fortitude on our part in dealing with silviculture. It remains an important issue and one that we intend to continue to develop. Basically, we believe we have allocated all the money that could efficiently be used in that area this year.

[5:00]

MR. STUPICH: I think there are some questions that are going to take a lot of time to answer; I appreciate that. If we could get some answer on the Medical Services Plan premium increase, but even that.... The world isn't going to hang on it, I suppose.

I have some question about the corporation capital tax. The minister suggested the reduction in revenue — in spite of the fact that more corporations are going to be taxed — could be due to loss carry-forwards. I think it strange that that would be a factor in 1987-88, because there has been a period of two or three years of recovery, and there shouldn't be that problem.

Apart from that, the minister and I discussed the calculation of the corporation capital tax previously. The corporation capital tax is based not on revenue, but on long-term debt and retained earnings and capital and that kind of thing. The fact that a company has income tax losses to carry forward should not materially affect the calculation of the corporation capital tax.

I submit that rather than loss carry-forwards producing lower revenue than one would expect, it is likely because of the change in the formula so that companies can deduct income tax from the corporation capital tax they have calculated as payable. So it's not because there are loss carry forwards, but rather that the companies are now making money, and they're going to have corporation income tax to pay which is subtracted from the corporation capital tax. Thereby they end up paying us less corporation capital tax.

I don't know how we're ever going to get to discuss this again if we don't do it during your estimates. I feel it's not fair to get into this kind of discussion to any great extent now. I think your answer isn't correct, and I think the reduction in corporation capital tax is a result of the companies now making a profit and deducting income tax from the corporation capital tax. I think the formula on which you based throwing a wider net around all these companies and getting more money is the wrong formula. I think the idea of letting them subtract their corporation income tax was a mistake, as I see it. The minister may have an explanation later on.

I have a few more questions. Again it may be a problem; the answers may not be readily available.

There are figures in the budget to tell us what the Pharmacare dispensing fees are going to bring in and how much the Pharmacare deductible is going to bring in, but nothing that I could find with respect to taxing the auxiliary health services — the $5 that the users of auxiliary health services are going to have to pay each time. I wonder how much revenue that is going to produce or how much it's going to reduce the out-go, if you like.

[ Page 2196 ]

I have asked about the medical service premium. Then there is a whole list of things where the minister is proposing to take more money out of the economy, and most of them are priced, with the exception of the additional court land registry fees, campsite, hunting and fishing fees and things like that. It just says "additional fees" in all those areas. I don't know if there is any estimate available as to how much that's going to bring in.

HON. MR. COUVELIER: I take it, Mr. Chairman, that the member would like specific dollar figures to those questions.

MR. STUPICH: If he has anything at all, I'm not going to hold him to the figures.

HON. MR. COUVELIER: Once again, we'll have to work those out because it will mean accumulating figures from a number of ministries. I'm certainly happy to obtain that information. In some of those areas, we haven't yet arrived at final estimates, so they will have to be left open.

MR. SIHOTA: Mr. Chairman, it's a pleasure to see you here today and in the chair, but we are missing some of the commercial breaks. I guess that's the downside of seeing you in the chair.

While I was outside the House, the Minister of Finance stood up and made some comments with respect to the operations of the stock exchange. I think it would be appropriate if I replied to them. I did have the opportunity to listen to what the minister had to say. Regrettably, I could not be in the House at the time because I had a constituent in the office to see me on another matter.

I should say at the outset that I want to thank the minister for his comments, and I also want to say I appreciated the tone of the comments. I think it's fair to say that both of us got a little carried away perhaps during the last exchange we had on this. I intend to reply, hopefully, in the same tone that the minister did and in keeping with the efforts on both sides of the House to keep things relatively cool in the Legislature.

All of the minister's assurances were interesting. Certainly a lot of what he had to say was not particularly new. It's my feeling that all of us on this side of the House have a good understanding of how the stock exchange works and how its various constituent bodies work, and we fully understand the role the stock exchange plays with respect to economic development and with respect to attraction of investment.

Having said that, I could probably reply to the minister's comments in one sentence if I wanted to, and that would simply be as follows. If that's all true and all these good things are happening with respect to monitoring the operations of activities on the stock exchange, then how in the world did we have an International Tillex fiasco? How did we ever manage to allow a penny stock to go from just that to a stock that was worth in excess of $77 when it was finally halted? To me, that illustrates the fundamental problem.

I'm not convinced, philosophically, that the problem is that much with the act or regulations. I think if we were to get into a detailed debate on the issue, there are some statutory changes that would be more appropriate and some regulatory changes that I think should happen as well.

Largely the problem — and it's a difficult one; I'll concede the minister that — is firstly with respect to the enforcement of that act and those regulations; and secondly, to be able to break up what is a clique-like atmosphere with respect to the operations of the Vancouver Stock Exchange.

Having said that in a broad way, I want to conclude with perhaps an even broader comment at the end. I want to sandwich in between some direct replies to the comments that the minister made. The minister went to some length to explain the vetting and disclosure process within the stock exchange and talk about the plain, true and full disclosures, and the requirement for statement of material facts, which again raises a question. In the Tillex case, if either rules of due diligence or plain, true and full disclosure had been followed, we would have been able to pick up — I would argue — the problems with Tillex right from the outset. Indeed, I guess in some ways the information was there all along but the individuals within the stock exchange never acted on that information. I'll talk about that in a minute.

Similarly, with respect to the Technigen situation, a plain, full and true disclosure would have required the principals of that company to disclose that the Swiss distributor that was entering into a $116 million contract was linked to a Panamanian company and was an individual with a criminal record going back 23 years. The point still remains that in either of those two examples there never was a plain, true and full disclosure of what I would consider to be material facts.

Similarly, the minister talked about the press releases. I think the minister knows, and I know, that it was only as a result of the problems the stock exchange had with New Cinch and the court cases that ensued that we started to see the appearance of the disclaimer at the press release level. All the parties, and anyone who invests in the stock market, certainly know that a lot of investors rely on the accuracy of those press releases.

In Tillex there were some questions raised with respect to the various press releases issued by that company in relationship to the matter between Tillex and the British Insurance Management Co. located in the Caribbean. Once again, information was available to the VSE officials that was not acted upon that would have allowed the investor to know that the investment contained a level of risk that put it beyond the normal levels of risk that one would be involved in.

A lot has been made about raising these issues on the floor of the House. The questions have been aimed not so much at the shares or the structure or the promotion of those shares but at the role of those people who are supposed to be enforcing, regulating and monitoring, and why they've acted or failed to act in particular ways.

Why, for example, do we have officials of the Vancouver Stock Exchange saying that they required an evaluation of BIM before purchase of it by Tillex, and they never followed through on that requirement? The investor that's standing there is saying the VSE has said that they want a particular evaluation, and we expect that the deal is subject to that evaluation because that's what the VSE has said. The whole thing goes through, and the evaluation, if done — and I think there is some debate as to whether it was done or not — was certainly not done in accordance with generally accepted principles. So the question was not so much the share, because we all know what happened, but the role of those who are supposed to be regulating it.

Why was it that officials of the Vancouver Stock Exchange.... I won't mention names, because I don't have my material in front of me, but if I did I would find which official it was. Why was it that one of the officials comes out and publicly says that he — a VSE official, I think the vice-

[ Page 2197 ]

president — knew that the principals of the two companies were one and the same? If we are to have plain, true and full disclosure, and the VSE has this information.... I understand that there are mountains of information going through and not all of it is checked, or can possibly be checked. But when they actually have the data in their hands, why isn't that disclosed to the investing public, particularly in a share that was skyrocketing and was the talk of the stock exchange? We're not talking about just a normal share that went up and down and all over the place; we're talking about one of the more active shares on the stock exchange. It's been admitted publicly, so I'm not breaching any confidences. It's been quoted in the newspapers, so I'm not breaching any confidences. I'm not undermining the work of those officials, but when they publicly admit that they had information that ought to have been provided to investors and it's not being provided, what type of image are you putting out with respect to the Vancouver Stock Exchange?

Part of the problem — and this gets to the comments that the minister had to make about 38 of 2,000 sales people, or four of 48 investigations relating to brokerage houses — is precisely that it is essentially a self-regulating system, and self-regulating to the point that one has to question whether or not there is any regulation at all. I think we can all agree that it has been said many a time that a self-regulating system is a system that just won't regulate itself.

[5:15]

That seems to me the problem with these operations. When you have four out of 48 instances, it's not a very good ratio. When you have delays in investigations — and I mentioned Lionheart — with respect to the relationship of the brokerage houses to the brokers in those 48 cases.... I think it's safe to say the Province did a very good story on those 48 and pointed out this whole problem: when you have these brokerage houses that are being investigated by their own people, a self-regulating body, and only four of them have been hit and the other 44 let go, there are some questions to be asked about that self-regulating system.

But on top of that, you get the type of problem that we had with Lionheart Resource — and I raised it on the floor of this House. Lionheart was a classic problem. Actually Tillex was a classic problem, because in that case the brokers got hit with fines. The minister talked a fair bit about fines. In that case one of the brokers got hit with a $100,000 fine, which I would argue he'll never have to pay — if the minister wants to hear the reasoning behind that, I'll lay it out — which raises again another question as to the significance of that power to fine. We know that the $100,000 provision sounds good, but there is a question as to whether or not the broker — I believe it was Ciochetti that was nailed on that one — will have to pay the $100,000.

I asked a question of the minister in this House that has never been answered to date relating to vicarious liability. To what extent should brokerage houses be responsible for the actions of their individual brokers? The answer lies in that four out of 48 statistic, if we're talking about the same situation. I didn't quite hear what the minister had to say, but it's my understanding that he's putting forward the same information that the Vancouver Province raised. You have the brokers being fined, but no action is being taken against the brokerage houses. Clearly in my view there ought to have been some action taken in the Tillex case.

More importantly, in the Lionheart case.... Once again, we're not talking about a stock and trying to influence its status on the stock exchange. This is just a very basic question. When the officials within the VSE knew of the improprieties with respect to Lionheart, why did it take an unprecedented time — a year — to take any actions on that? It's a question that the minister ought to be asking of his own officials. I know he has taken that question on notice, but it accentuates the problem. Firstly, no actions are being taken against brokerage houses. Secondly, there seems to be an unprecedented delay with respect to some of these hearings.

The information on Lionheart will I think prove that there are some very influential people within the Vancouver Stock Exchange who are linked in and have in excess of 20,000 shares, I'm advised, in that company, and I have the documents to prove that.

The minister made some comments with respect to criminal allegations and the rule of law, I don't intend to give a long treatise on the rule of law and preventive actions that can be taken when circumstances of fraud are involved. I think the minister is best advised to talk to the Attorney-General on that; there are certainly options available in the Criminal Code in that regard. But it continues to be the point that people with criminal records — and I highlighted this in my opening comments during the estimates — seem to have an ability to stick-handle their way onto the Vancouver Stock Exchange with far greater ease than onto other exchanges. Other exchanges find them unacceptable, yet they're acceptable on the Vancouver Stock Exchange. Once again, we've got the documents to back up all the cases that I've mentioned, and I would be quite pleased to provide them to the minister if he doubts our information with respect to those types of activities. They have also been publicly disclosed in various newspaper and magazine articles.

I guess the overall point is simply this. I agree fully with the minister when he says that all of this relates to a question of investor confidence — wanting to improve the degree of confidence in the Vancouver Stock Exchange — with the obvious knowledge that it is a high-risk market. But because you have a high-risk market with a lot of new companies coming on, that in itself seems to speak for stronger enforcement, not lax enforcement, particularly on the front end. If investors continue to feel that there's a problem with activity on the Vancouver Stock Exchange.... Admittedly, part of that imagery comes from comments made on this side of the floor; there's no denying that. On the other hand, the point has to be made to the minister that the thing has to be cleaned up. So it's a sort of catch-22....

MR. CHAIRMAN: Hon. member, you will see from the light that your time is up.

MR. CLARK: I was listening to the member for Esquimalt-Port Renfrew, and I'd like to hear him wrap up.

MR. SIHOTA: And wrap up I will, by saying to the minister that we on this side of the House also want to see investor confidence in the Vancouver Stock Exchange, and we want to see a clean-functioning stock exchange, much as the minister does. Unfortunately, that's not the perception out there, and all the comments in Hansard will not pacify those involved. because, whether I raise them or somebody else raises them, the issues will continue to come to the forefront if we continue to operate in the way we have.

The minister says he wants the courtesy of time. I was prepared before to extend that courtesy of time, and I'm

[ Page 2198 ]

certainly not going to go rushing in now with the 160-odd cases that have come to my attention. On some of them, quite frankly, I'll deal with the minister privately; others I won't. But I will not cease raising these issues one way or the other — that means both publicly and privately — until there are clear signals that things are progressing. I've laid out during the course of debate what we're looking for.

I understand that during my absence from the House there were a couple of suggestions made with respect to a legislative watchdog committee, and I would only urge the minister to begin to move in that direction, because I think it is one concrete way to begin to come to grips with the problems of the Vancouver Stock Exchange.

I'll end my comments on that concrete point. I could go in depth into all sorts of other cases and problems that are out there on the Vancouver Stock Exchange. We won't do it here today, but they will be raised, Mr. Chairman, in the event that there isn't movement. Having said that, there are other issues I want to canvass with the minister that relate to other operations of the ministry. Therefore, I'm sort of closing off my comments on the stock exchange, and I want to ask the minister a question on another issue. But I'll step down; I believe other members want to ask some questions, and then I'll come back to an issue that I wanted to raise apart from the stock exchange.

MR. STUPICH: I have a couple of specific points I want to raise that I missed in the first go-round.

I believe there was a reference in either the budget or the throne speech to some change in the way in which government employees' pension funds are going to be invested, and I haven't been able to find it. It was mentioned to me by a member of the public as well as to what exactly is happening, I haven't found the reference. I don't know what change, if any, is being made. It may be that it's totally in error.

One other position that has been put to me is one with which the minister is very familiar. The B.C. Association of Hospital Auxiliaries is appealing for the right not to collect sales taxes on used articles that they receive and then sell, turning the profits over to the hospitals. I have little sympathy for giving more and more exemptions to the sales tax. I think there is a better way to go, and that's by giving tax credits. I certainly approve of that. That's one thing I do like about the White Paper. But there isn't nearly enough of it done; certainly there isn't enough of it done in B.C. Volunteer organizations aren't paid at all. They're strictly volunteers. They are covering the expenses of their operations. They're collecting articles or clothing or whatever, and selling them. It's all donated. As I understand the operation of the auxiliaries, every cent that they make is turned over to the hospitals to purchase equipment or whatever. That's one activity that shouldn't have to worry about collecting or remitting sales taxes.

As I say, they're volunteers. They're hard pressed as it is to look after what they're doing. They're providing a useful service. One person's garbage is another person's wealth, or something like that. They're collecting these things and selling them, making a profit and turning it over to the hospital. Nobody's getting anything out of it. It's just one more problem for them. They previously appealed to the minister. For a time it was apparently just waived, without any legislative authority for it. I would ask the minister to consider making it legal for them to operate. Generally I don't agree with more exemptions, but in this case I feel differently.

I want to talk a little more generally about the budget. The minister has to be the one who hears this, although I feel it's not his doing so much as it's the attitude of the government in power. Several times during the budget — and I noted some references — the minister talks about the private sector. On page 1 he mentions the "strong private sector." Page 4: "The solution is not more money;" rather, let the private sector reign supreme. Page 15: "We will be counting on businesses." Having said all that — in effect, that the minister, the government, the taxpayers will not be bailing out industry; they're going to be obliged to stand on their own feet — he then proceeds to carry on a program announced by the previous Minister of Finance — as I understand it, unless there are some changes I'm not aware of — which, according to last year's budget, is going to cost us $512.8 million in 1987-88 by way of handouts to industry of one kind or another. He adds to that figure in the current budget, by analyzing the tables on pages 59-61, a further $142.2 million again in handouts to industry.

In the current year ending March 1988, using the figures from last year and adding them to this year — while professing that we're going to let business be the starter to get the economy moving, and we're not going to help it; we're not going to pour taxpayers' money into business and industry; we're going to let them do it on their own — we are carrying on with a program that's going to hand out to industry $655 million of taxpayers' money. That doesn't include the Louisiana-Pacific deal that was done last year with some $40 million. It doesn't include the ethanol plant; the figure is about $30 million, and there wouldn't be one cent spent on that ethanol plant if the government money didn't come along with it.

It doesn't include the $60 million in debentures in Cominco, which is really an interest-free loan to Cominco. Of all the companies in the world to come looking for an interest free loan from the taxpayers, I think they should have been at the back end of the line rather than the front end. I would be concerned — and I wonder if the minister is concerned — that it may start a fresh lineup of businesses and industries coming to government and saying: "We want some of that interest-free money as well." What will the minister do if they use the same argument as Cominco and say: "We're going to shut down if you don't lend us this money interest-free?" I think that was a dangerous precedent to establish, and I'm concerned about it, particularly when the minister said that's the very thing the government is not going to do.

I would ask the minister to tell me of one example of any size at all that was initiated by private enterprise in the province in the last ten years. Certainly northeast coal, without $2 billion of public money, would never have gotten off the ground, or into the ground. There would never have been a hole in the right place, let alone the wrong place. B.C. Place was all public money, some $400 million. Expo — was the figure $1.3 billion? Certainly we got some of it back, but it wasn't private money that financed Expo. The light rapid transit that's going to be extended.... Where it's going to be extended is some question. What are we talking about — $3 billion? All of that is public money. Those are the only things that are happening in the province of British Columbia.

The only examples I can think of where it isn't public money are those being built by trade union pension funds, like the Conrad-Hilton that I used to be chided about in the House by the Premier and the then-Minister of Transportation

[ Page 2199 ]

and Highways. He kept asking: "When is the Conrad-Hilton in Nanaimo going to open?" Well, it's open, but it's trade union pension funds that financed it, and they're financing housing projects in the lower mainland continually. I don't know of anything of any size that has happened, financed by the private sector, and yet it's into the private sector that we're pouring these billions of dollars, hoping that someday they'll do something positive for the economy in B.C. Mr. Chairman, it just isn't working. The government should do what it says it's going to do, rather than continue to pour money into private enterprise and get nothing out of it.

[5:30]

On the other hand, the minister also talks in the budget about making the system fair. Now I'm not sure you can qualify fair and say that something is fairer and something is less fair. But leaving that aside, he does say on page 20 that he's going to make the system fair. On page 29 he's going to make it more equitable.

Now this is the way, Mr. Chairman, in which he makes it more equitable. As I say, he hands out to business and industry this year some $655 million, plus financing for other projects, none of which would get off the ground if it weren't for government money, and then takes it away from the people who can't afford to pay it. And this is philosophy! I would invite the minister to tell us how this fits in with the A plus B theorem, but I'm not sure whether he wants to get into that. But his philosophy of taking money from the people who are least able to pay.... Look at the long list in the budget: the Pharmacare dispensing fees and the increase in the deductible. Now that's totally regressive, Mr. Chairman, and I think the minister would have to agree. He kept talking about making it fair and he kept talking about the sales tax being regressive, yet everything he has done by way of getting more money out of the economy is totally regressive — Pharmacare and dispensing fees and the increase in the deductible, $37.4 million. We don't have the figure on the auxiliary health services and medical services premium, but they too are totally regressive, both of them.

What you are saying is that if you can't really afford to pay for the auxiliary health services, then don't get them. I think it's going to be self-defeating because I believe that people will go to doctors more, and it's going to cost more for health services. But what you are saying is that people who can't afford to shouldn't go, and thereby the cost to the Crown of supporting the auxiliary health services and medical services generally will be less. Mr. Chairman, that's the wrong way to go. That's totally regressive. It's not making it more fair, it's making it more unfair. If I can qualify one I can qualify the other.

We've had a lot of discussion about the homeowner grant, but certainly that too, Mr. Chairman, is totally regressive. To say to old age pensioners who are paying $1 that now they may pay as much as $100 — the homeowner grant wouldn't reduce it to less than $100 — is being totally regressive. To say that all they have to do is make application and they don't have to pay their tax.... Well, Mr. Chairman, I think the minister is old enough to know some people like that and to talk to them. They are the very people who want to pay their taxes; they don't want to be owing money. We could talk about individuals that you and I know who feel that way about it. Some have taken advantage, but it is regressive when you say to the people least able to afford it — or they wouldn't be in that kind of accommodation — that while they were paying $1 before, now they are going to pay $100....

The ICBC premiums, the 3 percent tax. Once again that's going to be on the lowest premium as well as on the highest premium. The only indication of any progressiveness in it all is that some people may have higher-priced cars than others, but generally it is regressive.

The income tax is regressive. We are going to net an extra $184 million if Wilson leaves us alone. But the people in the highest income brackets this year, according to the minister's answer to one of my questions, are going to be saving $31 million. So the people who are best able to afford it are going to be paying $31 million less, which means that the people less able to afford it, and some of them right down at the bottom, are going to be paying a total of $215 million more. The income tax should be progressive, but the way we operate it in B.C. Is something less than progressive.

Some provinces have taken advantage of the holes left by the federal government. I recall when we got out of succession duties and gift taxes; we did it because we imposed a capital gains tax that was supposed to raise more money and get it from where it should be gotten. Now we've moved away from the capital gains tax by.... A little while ago it was a $500 million limit; now it's $100 million. But some provinces have moved in to capture some of that money that is not being taxed. B.C. hasn't done it. Moving in is progressive; not moving in to pick up that void, and letting these people off.... Again, it's the ones most able to pay who are getting away with the income tax saving on the capital gains, not the others.

The corporation capital tax. We've talked about that, and the minister may have something to tell me or write me about that at some later date, but I suggest that it's the change in the formula that's costing us money. So once again, we're saying to those extremely well-off corporations.... It's the 60,000 not paying any income tax, although they have made some $10 billion in net income, who are benefiting from the estimated reduction in corporation capital tax. The following year, '89, we expect that the reduction in corporation capital tax will be even larger — from $6 million up to $7 million.

Rural tax rates are up. The Assessment Act is increasing. I think this is one example where the minister actually moved away from the bona fide farmer situation — the $1,600 versus the $5,000. I saw something somewhere where I thought you were moving away from that; I'm not sure.

Sales tax. Well, there's another gift to the mining industry of $11 million — not to the ones who need it, but to all of them. There is nothing progressive about that. It's across the board.

Mr. Chairman, the minister talks about being more fair and about being equitable, but in every instance where he has made a move to collect more money or to reduce the amount of money being collected, with the possible exception of the sales tax — and I think even that is wrong, but nevertheless, it's the only possible exception — the minister has been more unfair, less equitable. Although he said he isn't going to bail out business and industry and help them financially, he's pouring some $655 million into business and industry this year. In everything he's saying, he's acting for the government.

Mr. Chairman, I am going to move a motion. I don't know if I've ever done this before; I don't do this kind of thing lightly. It's not a case of a personal situation with respect to the minister but rather with respect to the government. The government's attitude seems to be — and the Premier voiced it; I saw it on television — that they will do all

[ Page 2200 ]

of the bad things this year, hoping that we will forget by the time the election comes along. That's what the Premier said, and he was speaking for the government when he said that.

Mr. Chairman, we have to raise our voice for those in the community who are being hurt by the budget that was announced in March of this year, where the government, instead of helping those who need help, is taking from those who can least afford to pay and is trying to persuade people that if they can't afford it, not to make use of health services: "Leave it to the wealthy; let them use them. The poor should go without."

That kind of attitude is something that we just can't tolerate on this side of the House. All we can do is speak against it and vote against it when the opportunity arises. But in this instance, to show how we feel about what the government has done to the people of British Columbia in this budget, secure in the knowledge that they have three years, in the hope that people will forget it, all we can do is move an amendment to the effect that the minister's vote be reduced by $1.

MR. CHAIRMAN: The amendment to the motion is that vote 31 be reduced by $1. The amendment is in order.

On the amendment.

MR. CLARK: I will be brief, because the first member for Nanaimo covered most of the points I wanted to. I just want to emphasize that in this last budget we've had a very serious regressive attack on those who can least afford it. We've seen over the last 20 years a significant shift in the tax burden away from those who can afford it and onto those who can't. We've seen a shift in the tax burden onto ordinary working people and away from poor people.

The minister proclaimed about three or four times in his budget that this was fair and more equitable. Nothing could be farther from the truth. The first member for Nanaimo has gone through all of the tax increases: the tax on Pharmacare, which is at least $22 million; the tax on health services, like user fees on physiotherapy and chiropractic, roughly $21 million; an increase in property tax on 28,500 seniors who can least afford it in this province; increase in health care premiums by 10 percent; increase in ICBC premiums by 3 percent; an increase on user fees on everything from hunting and licensing to fishing, land titles, etc.

We've seen an increase in the income tax. What happens when the income tax rates increase 7.3 percent? Those making $20,000 a year in taxable income pay an 8.4 percent increase; those making $100,000 pay only $100 in increased taxes; those making $160,000 pay a $4 increase in taxes; and those earning $180,000 in taxable income have a $50 tax reduction under this administration's increase in income taxes. That's the kind of direction we've seen, and we've seen small business taxes increase by 37.5 percent.

Where were taxes reduced? We saw the wealth surtax reduced by 10 percent so that $30 million was paid out to 102,500 people in British Columbia to have their taxes reduced. The 102,500 wealthiest British Columbians had their taxes reduced while all of those taxes were increased.

We've seen corporate income taxes again cut. In 1950 they represented 50 percent of the budget in revenue. This year they represented only $300 million, and personal income taxes represented $2 billion. We've seen a direct shift away from business taxation. I must say that the whole thrust of tax reform in the United States, which should take place in Canada, has been to shift the burden back onto businesses and corporations. This is in the United States but to a far lesser extent in Canada.

Ronald Reagan's tax reform package has a 20 percent flat tax on corporations. If we had that kind of tax in British Columbia, we'd have about $200 million more in revenue. But we didn't move in that direction; we moved in the opposite direction of fairness and equity.

Where has the government been on the question of tax reform? We've seen no evidence that the government is supporting or opposing Michael Wilson's tax reform package. We have no statement from the minister. No question here in estimates yet. On the question of tax on food, the Premier said that they wanted to wait and see. It's clear that the federal government is still considering a tax on food, and it's clear that the provincial government has been silent, even though the governments of Manitoba, Nova Scotia and Alberta have been against a food tax on grocery food. All across Canada provincial governments are taking a stand against food tax, but in this province the government has been silent.

So in the first budget of this administration, we've seen a direct shift away from wealthy individuals onto the poorest people in society. We've seen the opposite of fairness, the opposite of equity and the opposite of tax reform that is happening even in Ronald Reagan's United States. Where tax reform is happening at the federal level, we've seen no indication that the province is prepared to move in any direction, either to simplify the system or to shift the tax burden. And where the federal government has moved on the question of a sales tax, this government has been silent.

For that reason, Mr. Chairman, I rise to support the amendment. This kind of doublespeak that we've seen has been systematically throughout all of their evidence; it is simply not the case that the budget talks about fairness. We've seen it time and time again. That has to be exposed for what it is. Maybe the next time the minister talks about fairness he will really move in the direction of tax reform, like they're having elsewhere in other jurisdictions.

[5:45]

MRS. BOONE: I rise at this point to oppose the section of this budget that I find most offensive: that is, the part that implements the user fees. These user fees do support the vote of non-confidence, as my friend says.

I've heard from a tremendous number of people. I think the minister has heard from a tremendous number of people — and from people in his own riding — because I have copies of petitions that have been sent to you in opposition to the user fees. You've heard about what it's doing to the people, what it's going to do to the lives of the people who are really hurting. In particular, I think you've heard from many senior citizens who are having a very difficult time of it, and who will have an extremely difficult time of it with these user fees that are being implemented.

It seems difficult to understand why we are implementing fees at this time, why we are in a situation where we are....

HON. MR. STRACHAN: On a point of order, Mr. Chairman. It's captivating debate, but it's totally inappropriate. First of all, it recanvasses the budget; second, it deals with the administration of the Ministry of Health. What we have before us right now is a salary reduction to the estimates of the Minister of Finance and Corporate Relations. We cannot

[ Page 2201 ]

use the Minister of Finance estimates to recanvass the budget. I'll give you that warning now. If you haven't beard it before, you're hearing it now, okay? The Ministry of Finance deals with the administrative actions of his office. But don't recanvass the budget.

MR. CHAIRMAN: I thank the minister for his point of order. I had expected the member for Prince George North to come right around to the amendment. If the member would proceed with the discussion on the amendment.

MRS. BOONE: The amendment does show the nonconfidence we have in the minister's office. It shows this minister as being unfeeling and uncaring, and as having no idea of the situation facing the people out there.

HON. MR. REID: You don't know him; he's soft-hearted.

MRS. BOONE: Is he soft-hearted? Then perhaps he'll agree with us.

One cannot talk about this minister's office without talking about what's happening to the people out there, without talking about what's going on with the people in this province. It is the middle-income people; it is the working poor who are really suffering. This budget takes care of those on welfare. It's true that the welfare people are taken care of with regard to the user fees and the things that are taking place.

MR. CHAIRMAN: Pardon me, Madam Member. I think you should stay closer to the amendment being discussed.

MRS. BOONE: Okay.

Interjections.

MRS. BOONE: The size of his heart? I can't see the size of his heart.

The amendment, Mr. Chairman, shows non-confidence in the minister's office, non-confidence in an office which does not seem to take into consideration any of the people of this province and what is happening to them. You must take those things into consideration. This is an important issue. The issues of the province, the issues of the people in this province, are resting on this minister's head — on this minister's heart. I appeal to him to listen to the people.

Please listen to the people. Listen to your grandmother out there on whom you have put $100 in increased tax. Listen to the people who are suffering as a result of what your office is doing to them.

Amendment negatived on the following division:

YEAS — 14

NAYS — 30

Vote 31 approved.

On vote 32: ministry operations, $67,570,778.

MR. WILLIAMS: I'd like to discuss some aspects of the administration of credit unions, Mr. Chairman.

I move adjournment of the debate.

HON. MR. STRACHAN: There will be a different motion, Mr. Chairman. I move the committee rise, report resolution and ask leave to sit again.

The House resumed: Mr. Speaker in the chair.

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

HON. MR. STRACHAN: Pursuant to what we've been doing last week, Mr. Speaker, I move that the House do now stand recessed until 7:30 this evening, and adjourn not later than 10 p.m. this evening.

Motion approved.

The House recessed at 5:58 p.m.

The House resumed at 7:31 p.m.

HON. MR. STRACHAN: Mr. Speaker, I call Committee of Supply.

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

ESTIMATES: MINISTRY OF
FINANCE AND CORPORATE RELATIONS
(continued)

On vote 32: ministry operations, $67,570,778.

MR. WILLIAMS: Maybe the minister could advise the House what he sees in terms of changes with respect to the credit union system and means of administering and insuring funds and the like. We were to have had a public White Paper some time ago: I am not aware of that being the case. Maybe the Minister can bring the House up to date.

HON. MR. COUVELIER: Thank you, Mr. Chairman, and the hon. member, for that excellent question, timely and to the point. We are, as the member suggested, in the throes of a very serious examination of the legislation as it affects

[ Page 2202 ]

credit unions and all related matters, including deposit insurance, and we have been now for a matter of months in dialogue with the credit union movement, not only through B.C. Central but also through individual credit unions around the province, and also with CUDIC, Credit Union Deposit Insurance Corporation. The White Paper that discusses the thrust of the government policy will be released in a matter of weeks and certainly within this month. The slightly longer than anticipated release date arises by virtue of the high interest in the subject and therefore the need to widen the net of discussions. I don't know if the hon. member is aware: we have been touring the province, discussing with individual credit unions the proposed changes.

MR. WILLIAMS: I am sure the minister appreciates that recent years have not been that good in terms of the circumstances of some credit unions, which are now essentially in the hands of CUDIC. Certainly in your own region here, that is all too clear in the case of these two substantial, significant credit unions. Between the two of those, we are talking about some $18 million in losses. That's very significant indeed. The pattern has been one of the system bearing the brunt of these problems. We know the problems there have been in our neighbouring province in that regard. For the strong elements of the credit union movements, such as the one I'm directly involved in, Vancouver City Savings, it's a little tiresome to, in effect, have to carry the load in terms of some of those problems in the rest of the system.

The big credit union, VanCity, essentially does carry 20 percent or 25 percent of the load of the problems of the system. It's far more costly than federal deposit insurance — very much so, I am afraid — and yet at the same time Vancouver City Savings does not have the authority that the minister has or CUDIC has or your inspectors have. There clearly has been a system at hand here that was not adequately monitored.

It's a situation where bells were ringing in many CEOs' offices and other offices within the system, but nothing was happening in Victoria. That's very, very clear, and it's not hindsight. That was known within the system for some time before any action was taken with respect to these Victoria credit unions or others.

Too much has been dismissed around financial institutions in recent years about excessive lending or lending with the real estate market changing direction and that sort of thing, and that's so only to an extent. A lot of the problems were predictable, and even if not predicted by the monitors should at least have been seen by them when they were happening, and weren't.

That's been very costly, and the successful credit unions are bearing the cost of that. The responsibility is yours in terms of the institutions and monitoring agencies that you are responsible for. So I say to you, Mr. Minister, that you are responsible in terms of limiting the potential of this provincial instrument that is very significant in terms of the provincial economy — and your predecessors as well. This White Paper is long overdue. There is a need for provincial deposit insurance; there is de facto deposit insurance now, I think, if the reality were faced by this administration or any other provincial administration. There is de facto deposit insurance, and the system insures itself, as we know. But those burdens are very significant as the result of inadequate monitoring by your staff. They are more excessive than they should be for the successful institutions within the system.

You had an opportunity to strengthen the system when the Bank of British Columbia opportunity came up. You chose not to do so; you chose to support the Hongkong Bank, to the detriment of these provincial institutions, I suggest. I think that's unfortunate for British Columbia. We might well be moving into an era like Quebec has had for much of this century, where provincial institutions were the significant financial institutions. They have been part of the engine of the Quebec economy for decades, and so the provincial credit union system could be as well, with our local people's savings working for us in building our economy and building jobs in British Columbia. By your inadequate monitoring and inadequate devices, you have weakened that system. By your decision with respect to the Bank of British Columbia, you weakened that system again, in my view.

All of those were significant opportunities lost. The Caisse Populaire in Quebec is a most significant institution that plays a major role within that province, and you dismissed that opportunity here in terms of moving our financial institutions into a significant league and creating jobs in British Columbia. You led the public to believe that with the Hongkong Bank what you'd be talking about is bringing capital into British Columbia on some significant scale. That remains to be seen, but the monitoring question is there indelibly, and there is a job to be done.

I trust that that White Paper will mean that the successful credit unions will no longer carry the burden for the inadequacies of your monitoring. I hope you can give us that assurance at least, so that the successful credit unions can continue to do the creative work they've embarked on in recent years. In terms of the institution I'm involved with, that involves items like the Ethical Growth Fund — the first in the country. Again, it's out of a little institution in British Columbia — little compared to the national institutions, but the largest credit union in British Columbia. That means other programs, like community enterprise programs that we think are important. Job creation programs such as seed capital programs where we loan funds to job creators out there who don't have equity, or people who don't have other means of security that the banks demand and require, can flourish in this province if we don't have to keep carrying the anchor that you have left with us, in the form of inadequate monitoring of the weaker institutions in the system.

It's a serious matter. You keep going for the glitzy outside solution. You think the answer is combing the Pacific Rim to find some investor to invest in jobs for British Columbia in the future. The solutions are right under your nose, as usual. We have the resources, we have the people, and we have the savings, the capital. We can put them all together in local institutions that can strengthen this provincial economy. You have not helped these institutions in recent years. You keep opting for that outside answer, that outside solution which is simply not there.

The Quebeckers have a lesson for us in British Columbia. The Albertans, I'm afraid, have a lesson for us in British Columbia, as well. We seem to be on a rather slow learning curve in this critical area in our economy.

MR. CHAIRMAN: Before I recognize the hon. minister, the member for Yale-Lillooet has asked leave to make an introduction. Shall leave be granted?

Leave granted.

[ Page 2203 ]

MR. RABBITT: Today visiting from that beautiful riding of Yale-Lillooet, we have three gentlemen here doing business with our good government. They come from the city of Merritt to visit our capital city. I'd like to introduce to this House Mayor Harry Kroeker; the administrator, Leo den Boer; and the economic development officer, George Krasnuik. Would this House please give them a warm and hearty welcome?

MR. CHAIRMAN: Shall the member for Rossland-Trail have leave to make an introduction?

Leave granted.

MR. D'ARCY: I would like the House to join me in welcoming Mary Ann and Sid Crockett and their daughter Diane, who are here from Genelle in the riding of RosslandTrail.

HON. MR. COUVELIER: I'm delighted to have the opportunity to say a few words in support of the government's perception of the credit union movement in B.C. I've spoken in this House before about the importance we attach to it, and our determination to ensure that it plays an ever-increasing role in the diversification of our economy and the creation of an infrastructure in the financial community generally in the province.

I suppose the hon. member is aware that not every member of the credit union — or every entity in a credit union — would agree with his comment that the responsibility for the movement is mine. The member surely is aware that that would be a highly contentious statement in some quarters. We certainly do take exception to the comment that there is a de facto deposit insurance in the province; that is a subject which will be clarified in the fullness of time. We could not agree with the member's comments that the present arrangements with the Hongkong and Shanghai bank vis-à-vis the takeover of the Bank of B.C. are a negative thing in terms of the provincial economy. On the contrary, we happen to believe it's a very positive thing. This is not to say that the other bidders for that Bank of B.C. entity would not also have brought something of merit to a marriage, but on balance we think history will show that the Hongkong and Shanghai bank takeover of the Bank of B.C. will have been a very good thing for the B.C. economy generally.

The member talked with some pride — with some legitimate pride, I might add — of the progress and development of VanCity Savings Credit Union. He also talked about the important role that caisses populaires have played in the province of Quebec. Both of those comments I could agree with and endorse. But the member, I think in a similar spirit of goodwill, would have to concede that were VanCity credit union located in Quebec, it probably would be broken up into between 12 and 15 different parcels. The very essence of the caisse populaire system is that the credit unions should be kept relatively small and local in nature, and that in order to avoid any dominance from one element or the other, the unlimited growth of one member is specifically prohibited. That's not the case in B.C. And because it's not the case in B.C., the VanCity credit union movement has been very successful and growing. We're all somewhat pleased with that.

[7:45]

There are three problems facing the credit union movement in B.C., in our perception. The White Paper will deal with them. As I say, we're discussing them specifically with the members. The problems are: first, a lack of equity, and therefore lack of financial stability; second, the need, in the case of some of the smaller credit unions, to regionalize the approach and somehow arrange, either through unions surrounding particular initiatives or even through total amalgamations, to examine the merits of combining some elements in some geographic regions of the province to make a stronger entity: and third, of course, the critical question of deposit insurance. Those are the three subjects that we consider the most critical to examine. As I say, the White Paper will develop those subjects after we have finished consulting with the various participants.

MR. WILLIAMS: I get the impression, Mr. Chairman, that the paper is getting laundered quite a few times before anybody ever sees it. That will make it a pretty bland document by the time it gets out there to the unwashed in the public. I just really wonder about that process, because there's a broader concern than the individual pieces here.

There is a question in terms of the province's responsibility insofar as CUDIC — the deposit insurance system within the province — is concerned, and in terms of the inspector. I think there's a real need to look at those two elements, those two pieces, and think about whether they are adequate the way they are, whether one's role vis-à-vis the other is adequate, or whether they should be merged. I think there are quite a few questions begged as a result of the problems of the last few years in this province. If you're consulting with everybody, the tendency is to leave it alone. Leave it the way it is. Leave most of the animals and all the individual pieces of turf there. That should be rethought, in terms of whether the province might best serve the provincial interest by looking at whether CUDIC and the inspector should be one, as a genuine, effective watchdog monitoring agency that's on top of problems before we have to swallow big lumps that we don't want to have to swallow — either the province or the system itself.

There are certainly some arguments around regions, and I think VanCity has shown that some regional strength is worthwhile and to be hoped for in different parts of the province. I think that's the emerging pattern within the system. anyway. The question of equity, I'm sure, can be addressed in a range of ways.

The province could play a more significant role in terms of working with and depositing with these institutions, instead of playing just a very narrow money market game, which is what you are wont to do. Traditionally, under the W.A.C. Bennett era, we didn't have very adequate money managers around this place, and I think that's changed. But at the same time, that isn't the one goal in terms of how the province uses these funds. There is a serious need for reviewing your policies, and I know you've been pushed into reviewing some of them after you made some very stringent, narrowly based decisions at an earlier stage. You've modified your stance somewhat, but there's a long way to go to strengthen these institutions — and for you, the province, to use them in terms of deposits on a more considerable scale than you have to date. We've always tended to bank virtually totally with the Canadian Imperial Bank of Commerce, and I don't know why that should always continue to be the case when we have these provincial institutions around.

[ Page 2204 ]

I think, insofar as the Hongkong Bank is concerned, that it remains to be seen. But you did have a golden opportunity to be bold, to be provincial — in the best sense — and to think about home-grown institutions in terms of making people's savings work here in British Columbia, and you missed it.

Vancouver City Savings happens to have a board of directors that is not peopled by your colleagues on the government side of the House. Despite that, it's the best-managed, most successful credit union in British Columbia.

HON. MR. VEITCH: Despite that?

MR. WILLIAMS: I'm thinking in the minister's terms. It's unfortunate, but one can't help but think that that coloured the minister's decisions and attitude. I am sure it coloured the attitude of other ministers in government, so that you might opt for a decision simply because of being captives of your own ideology.

Interjections.

MR. WILLIAMS: No, indeed. That's really unfortunate, because there has been fine, creative work there, as the minister agrees this evening. If that work was to be pursued with more gusto and with more power and more backing, that might well have been the case had there been this change in terms of the Bank of B.C. remaining essentially a provincial or British Columbia institution. You threw that away, and I think you threw it away because of ideology. I think you did, and I think that's unfortunate for all of us in the province.

We look forward to the White Paper. There is a long way to go in terms of building up this system and provincial savings and lending institutions, and the province can be helpful or it can hinder. In recent years you've tended to hinder. Now is the time to be helpful.

MS. EDWARDS: Mr. Minister, I know you were in the community of Elkford late last week, and I know that you talked this problem over with the mayor of Elkford. I want to bring it out because I think that what you have to say is something that probably communities in the Elk Valley other than Elkford, and perhaps in other parts of the province, would like to hear about.

As you were no doubt told, the district of Elkford is $15 million in debt at the moment, and they are paying back that debt at the rate of $2 million a year. They are one of the communities in a tax pool in which they share the tax revenue from the coal industry of the valley. Westar Mining owes $4 million in taxes to the district of Elkford. Came July 2, and Westar Mining said to the district of Elkford: "We are not going to pay $4 million in taxes; we are going to pay $2 million in taxes." When the mayor of the community said,"That will make you subject to a penalty of $200,000," Westar said,"Well, we don't think we'll be paying the penalty either," as it's reported to me.

The district of Elkford, as I say, can ill-afford this kind of absence of revenue, if you want to put it that way. They have this debt. They can't afford to wait for the taxation. If in fact the worst came to the worst and Westar Mining went its full length of term being delinquent in its taxes, the village of Elkford would have the option, of course, of having a mine on its hands. I mean, already it's going to have on its hands a shopping mall at the end of September. It doesn't need that and it doesn't need Westar Mining on its hands. As you know, the mining companies are appealing a ruling that was made about the method of assessment, and so on and so forth, so that is their reason for saying they will not pay the total amount of taxes.

The question from the district of Elkford, which is basically a village with a large surrounding, is: who enforces this kind of tax payment? Where in the system do the mayor and council go now in order to get the revenue that they need to carry on the business of the people of the district of Elkford?

HON. MR. COUVELIER: The member is quite correct. The matter of Westar's not paying full taxes in the city of Elkford is entirely related to the assessment appeals being held elsewhere in the province, the judgments of which the mining company believes will work to their benefit and thereby reduce their taxes. They have subsequently taken the position that, until their claims are adjudicated, payment of the total bill is unnecessary.

The system penalizes people who delay paying their taxes. Those penalties are triggered on certain dates, and they will be triggered on those dates, I'm assuming. The consequence is that the taxpayer will have to pay the penalties.

The taxes will have to be paid. The issue is: how much of a rebate might be awarded by the adjudicating authority whenever they get around to that assessment appeal? But in terms of the taxes and the penalty, they'll have to be paid. But it may well be that in the netting out — if the firm were to win their appeal — they might not have to put up more cash. But certainly the assessment is not at risk, nor is the penalty. The only thing that might change is the dollars, and that's in the hands of third parties. It's not something that's under provincial control. That's common to every municipality in the province, and Elkford should not expect any unique treatment as a consequence.

MS. EDWARDS: Mr. Chairman, I was trying to point out that in practical terms the penalty to Westar is extremely limited, in the sense that of course the district of Elkford is not going to take over Westar Mining if.... It's an absurd situation. It's more absurd than the situation of the district of Elkford taking over a shopping mall that it doesn't want, simply because the taxes are not paid.

First of all, the district of Elkford is in a major cash-flow problem situation. There seems to me to be a situation where they should have some kind of recourse. What has happened, of course, is that one of the mining companies has challenged the assessment method. I would also like to know whether the minister is willing to suggest what he is going to do about this situation where mining companies and assessment methods and so on are totally up in the air.

HON. MR. COUVELIER: Mr. Chairman, that's a good question, and one of high interest to every municipality in the province, particularly one-industry towns.

The government commissioned a task force to review the whole problem of the industrial assessment appeals that were being lost by the Assessment Authority. That report was released by me about a month and a half ago, and it's a public document. The report contains a variety of recommendations.

The government referred the report to the Union of B.C. Municipalities with a request that they develop a response. It's my understanding that the response is presently being

[ Page 2205 ]

formulated and will be conveyed to us in the near future. Upon receipt of that, of course, we'll embark — presumably — on a wider discussion with other affected parties, but in any event, at this moment in time, the matter is under review by the parties most affected by the problem, and presumably we will be dealing with it at the next opportunity in this Legislature.

MS. EDWARDS: Mr. Minister, the village of Elkford itself is a very small area; it has very few people. They are dealing in very large amounts of money. Do you have any suggestion as to what the district of Elkford should do to try to make its annual payment of $2 million, when one of its major taxpayers is withholding $2 million? What should the village do?

[8:00]

HON. MR. COUVELIER: Mr. Chairman, I think that question could probably be properly put by the district itself to the minister responsible, and the matter might be dealt with more fruitfully by the authorities who are specifically responsible. Suffice it to say that it is a grave problem, and we are aware of it. But the district of Elkford is not unique in this respect; there are other local governments in the province that have similar kinds of problems. In any event, I think the channels will have to be followed so that the appropriate staff expertise can be brought to bear on the specific requests.

MS. EDWARDS: Before I finish, I just want to make the point that I think this is an assessment problem and not only a municipal problem. It's a problem of the assessment method and the method of policing the payment of taxes. That's why I bring it up to you.

MR. CLARK: I have the report of the committee on industrial assessment here. I've gone through it, and I think the member for Kootenay is quite correct. The minister can't get off that easily. We have a serious problem documented very clearly in this report about industrial assessments. I'll just read you a line: "Between 1982 and mid-1986, the Assessment Appeal Board has reduced assessed values on special-purpose industrial properties by $570 million on an annualized basis, with many appeals pending."

That $570 million was for 20 properties; only 20 properties had their assessed value rolled back by $570 million. That spawned this report. We now have every special industrial property in the province appealing its taxes — quickly now, before they change the rules — because they are being rolled back massively. We have towns like Elkford that are seriously suffering; single-industry towns that are having their industrial tax base eroded dramatically. It's not a problem that can easily be shuffled aside. We have a major destabilizing impact on the system.

What does the report say? A couple of remarks in the report — a very good report, in my view It is desirable, however, that a temporary downturn in an industry should not result in a facility losing a substantial portion of its assessed value on the roll for one year to recover that value on the next roll." So we have a cyclical downturn in the forest and mining industries, and every major industry in the province appealing its property taxes or its assessed value and getting them rolled back massively by the existing system. It's having tremendous implications for municipal finance all across the province.

The report recommends a number of things. The minister said he has referred it to the UBCM. That's nice, he's referred it. Meanwhile everybody is still appealing their taxes and still going through the same system. There are a number of specific technical recommendations, which I won't canvass at length with the minister because they're still under review. But there is at least one that could be done very quickly, and they call for it in here: a specialized Assessment Appeal Board to establish an appeal board that knows how to assess the unique characteristics of industrial properties where there aren't large transactions in the marketplace to determine the appropriate market value for assessment purposes.

Clearly it doesn't need study. Clearly it's almost a crisis situation — or it is a crisis situation — in some towns in British Columbia which can't wait at great length for more studies on this very serious problem. There are specific steps that the minister can take now — or very quickly — to deal with the problem in the interim, if not to refine the solution in the best possible way. I wonder if the minister could comment briefly on this.

HON. MR. COUVELIER: Yes, you're quite correct. There are some things we can do now, and we are doing them to the limits of the existing legislation. There now is the ability to assign the proper experience to specific cases, which there wasn't in the process before.

The member should also be aware of the fact that a few years back this government made available to local governments the variable tax rate approach, and we recently extended that to the regional governments. So we need not be lectured on the problem. This government commissioned the report to find some solutions. One would have to ask how it came to pass that all of a sudden in the last few years, we've had this spate of appeals on a piece of legislation that has been in place for years without such appeals. One can only conjecture why that might be.

In any event, the government has recognized the problem and has commissioned an excellent report, as you said. There will be some specific remedies introduced at the next sitting of this Legislature.

MR. CLARK: Has the minister considered any moratorium on appeals, pending this review of the problem?

HON. MR. COUVELIER: I mentioned earlier that one might conjecture as to why we've got this spate of appeals. I'd like to see somebody do some projections as to the relationship to the number of graduates from law school. In any event, in response to the specific question, I understand that such an approach as just suggested would be deemed illegal.

MR. CLARK: Maybe the minister could give us some indication — he's given us a time-frame — that the recommendations in this report will be adopted, whether he's had a chance to assess the specific recommendations, and which ones it appears likely he will be moving on. In other words, you've said there are changes coming in the fall. Are they based on this report? Are there sections in this report that the government does not seem comfortable with, or is that the direction they are moving in?

[ Page 2206 ]

HON. MR. COUVELIER: I think the government recognizes the difficulties inherent with some of those recommendations, and we are aware of the fact that not everyone would embrace the recommendation with enthusiasm. Nevertheless, that is the general direction in which we are heading, and until we receive further input from the Union of B.C. Municipalities, who represent all the affected municipalities in the province, we are reluctant to make any categoric statements in terms of our feelings here. We really want to devise.... We want to be very sure whatever changes we implement are workable and are deemed appropriate by the people most affected.

MR. CLARK: Well, I won't canvass it at great length, but has the minister considered a special assessment appeal board to deal with industrial appeals in the interim, even using the existing system — a specialized appeal board set up to deal with all the industrial appeals pending, so at least there's a consistent pattern with respect to the remaining industrial appeals? One of the problems identified here was not only that the system does not work, not only that there are tremendous rollbacks, but that there are even variations between appeal boards. There's tremendous variation within the same industry and within the same methodology, because of different personnel. So it might help if there was a specialized industrial assessment appeal board to deal with all of the appeals pending.

HON. MR. COUVELIER: I thought I had dealt with that in my earlier response, Mr. Chairman. We now have an ability to mix and match talents to specific cases, and it follows, therefore, that we have on the boards of appeal the kind of expertise you described. The people with that expertise are tending to specialize in those industrial areas. I think the point you are making is obliged here, although we have not created a body called an industrial appeal board.

MR. CLARK: I understand that the assessment appeal boards are geographical.

HON. MR. COUVELIER: Not now.

MR. CLARK: Maybe the minister could explain to us, because there have been a spate of new appointments, some of which I question in terms of their competence and their partisanship.... But we won't get into that at any length. I wonder if the minister could tell us the current process, then, with respect to the assessment appeal boards, if they're not geographical.

HON. MR. COUVELIER: We do attempt to create geographical boards to minimize travel expense and inconvenience to all concerned. That general thrust is still in place. However, we are now implementing a strategy whereby we assign particular talents to particular cases. In the process of doing that, as I say, we are developing specialists dealing with industrial appeals. They are just not called industrial appeal boards.

MR. WILLIAMS: Only a few months in that ministry, Mr. Chairman, and he has become the master of bafflegab, the multiple shuffle, you name it. He says: "No, no, they're not geographic. No, no, no, no, no." And then in the next phrase, they are geographic. This is the ultimate Social Credit shuffle. I mean, I've heard you on radio when you've been worse or better, depending on your point of view; but you know, in terms of obfuscation and double dancing and tripping all over yourself, you've just done a wonderful job again.

The member for Vancouver East makes a solid, good point in terms of these industrial assessments. They are tough, serious businesses of measurement. Under you people, I believe 27 percent of the budget of the Assessment Authority has been to deal with appeals, because it is so lucrative for these people to appeal their taxes. We're not talking about Mr. and Mrs. Average Homeowner. We are talking about the really big property values of British Columbia. There is a need, clearly, for this kind of capability at the appeal level with respect to industry. This has long been a very serious problem in terms of measuring value. The member points out, as the report indicates, that there is a range of decisions that are not consistent and that would suggest an inconsistency on a geographical basis.

HON. MR. COUVELIER: No, no.

MR. WILLIAMS: Well, I just heard the double shuffle. Does no mean yes? I'm not sure. It probably means maybe or could be, but it's sure not clear from tonight's performance.

Well, I don't know. The second member for Vancouver East (Mr. Clark) is more familiar with that report, but I suspect there are inconsistencies on a geographical basis. That would be the tendency, if you look at these kinds of systems. Any kind of inconsistency is unsatisfactory in terms of equitable taxation. Any kind of inconsistency is simply unacceptable. All of this means tremendous implications for the rest of the taxpayers within the system, in terms of shifting the incidence onto Mr. and Mrs. Average Homeowner. That really is the pattern.

There's another underlying thing about these major industrial sites in British Columbia. We are a constrained province geographically. Some of these sites have incredible land values, and I don't think those have been perceived by the valuation people in terms of the monopolies that they are. Just in terms of pulp mills, for example, which are some of the problems faced in terms of valuation, there's a limited number of pulp mill sites in British Columbia, given the nature of the geography and wanting to access the forests, and all the rest of it. You look at Prince George — so many sites. You look at Prince Rupert — one site if you're lucky. I'm satisfied that there is generally an underassessment of those monopoly site values in our narrow valley bottoms across the province. That is another area where Mr. and Mrs. Average British Columbian are cheated in terms of having to pay more on their home than they should; the incidence is distorted because of a non-recognition of those problems.

MR. CLARK: I won't belabour the point, but it seems that the minister has recognized that there's a problem. It just seems to me not good enough to say that we've now got better people on the assessment appeal boards throughout the province who can deal with it. It makes much more sense to do what the report suggests and establish a separate appeal board to deal with special industrial properties. There are 2,000 special industrial properties in the province, and only 20 of them have been successfully appealed. That's $570 million at the time of this writing, and I don't know how many others. Of course there's a leap-frog. The reason we

[ Page 2207 ]

have the problem is that once one is successful, it's like a steamroller effect. It has a tremendous ripple effect throughout the province. As the report has documented very well, this causes acute problems in single-industry towns.

[8:15]

The minister has acknowledged all of that. It seems to me, therefore, that the logic of the minister's own admissions is to establish a separate appeal board, at least in the interim, so that the subjective analysis that goes into property valuation is at least subjective by the same individual all of the time; so that we don't have a varying analysis based on subjective interpretations by different people throughout different regions of the province. At the very least, that deals with the subjective nature of industrial assessments now, pending a more thorough review and — hopefully, in my view — adoption of this report, bearing in mind the criticism from the UBCM, etc. for refinement. It seems to me that it's not a big move either to establish a new board of appeal or, if you have the expertise available, to take them separately so that everybody knows those are the people who are dealing with it and it's consistent and fair across the board.

The problem is very real and acute, and there is the checkerboard problem which has been documented in this report. So I would ask the minister, not in any pejorative way but in a serious way, to reconsider his view that it's best handled essentially on the existing basis, with some variation, and to give us some commitment at least to review that suggestion now — in the interim — prior to the adoption of a more complete and thorough methodological review of how we conduct industrial assessments.

HON. MR. COUVELIER: Mr. Chairman, I regret going on at some length on what I think is just a semantic misunderstanding here. By my perception, we have in place an industrial appeal board consisting of people with the appropriate expertise in that area. We just aren't calling them an industrial appeal board. I can't tell you what number they're given. As you know, they are traditionally numbered. Dealing with the question of geographic representation or base, we normally follow the practice of geographically centred or focused boards, with the exception of these heavier, more onerous cases that deal with industrial assessments.

So both of your concerns, by my judgment, are obliged, and I apologize if you have been confused by my answers. It was not my intention to do that.

[Mr. R. Fraser in the chair.]

MR. SIHOTA: I'm going to change the topic a bit, although I have some strong opinions on the assessment issue as well. As I'm sure the minister will know, we're experiencing the same problem with respect to the shipyard in Esquimalt. Because we're $400,000 short this year in our budget, there has been some additional borrowing in Esquimalt that the taxpayer will of course have to pick up. But that's another issue.

I want to ask the minister a question on a totally separate topic, and that's with respect to SkyTrain financing. My basic question to the minister, since we're dealing with this budget item, is this. At one point it was suggested that the whole fiasco cost the taxpayers of this province $700,000. At a subsequent time, the minister, I believe, denied that figure. Perhaps now that time has passed and we've had an opportunity to go over all the bills, the minister could tell this House the costs of that fiasco to the province of British Columbia.

HON. MR. COUVELIER: We haven't got the matter finalized. The difficulty we've got here — and I think I answered it during a question period — is that a great deal of the expenditures were spent on examining the question of ownership of the right-of-way and the appropriateness of using those assets for such a financing vehicle.

The method we finally use to transfer the short-term SkyTrain borrowing into longer-term debt will determine the appropriateness of charging some of that kind of examination to the new financing vehicle. I got some guffaws during question period when I pointed to the first member for Vancouver Centre (Mr. Harcourt), but the issue of ownership of those hundreds of parcels of land was no small issue, and no one would know it better than the Leader of the Opposition.

That required a great deal of examination and considerable expense. The issue is not simple and was not simple. In any event, I cannot give you a specific dollar total. I am happy to provide it once it is available. It really does come down to what vehicle we finally choose to complete that financing.

MR. SIHOTA: Could the minister provide us with a range?

HON. MR. COUVELIER: I don't feel comfortable. I'm looking at some figures, but they're still so nebulous that I have very great difficulty even expressing them. For the benefit of the record, we have a rough figure here that shows a possible allocation by government of $558,000. As I say, that issue is not yet settled, and I really don't want to mislead the House by giving you any definitive amount.

MR. SIHOTA: I'm trying to find out if the minister could advise this House whether or not any of that money was spent on tax opinions with respect to whether or not the ultimate proposal was consistent with tax laws in the province. If so, could he give us a number, and also who the tax opinion was sought from?

HON. MR. COUVELIER: That information is not available in front of me, Mr. Chairman. We have it broken down by legal fees but, as I said, some of those legal fees would be dealing with a tax matter and some of them would be dealing with the question of land ownership. The land ownership question, as I say, was a very exhaustive process, and one that took a great deal of time. one would have to go back through the invoices and find out what might be extracted from individual billings.

MR. SIHOTA: Could the minister tell the House whether any advance tax rulings — to use that term in a broad way — were obtained from the federal government prior to the introduction of this particular issue?

HON. MR. COUVELIER: The answer is no.

MR. SIHOTA: Were any advance tax rulings, to again use that term in a broad way, sought from the federal government with respect to variations of the ultimate issue? By "issue," of course, I mean the sale of securities or bonds or whatever it was. If I can repeat the question again, were any

[ Page 2208 ]

tax opinions sought with respect to any variance of the ultimate issue?

HON. MR. COUVELIER: Was the question whether any tax opinions were sought from the federal government or from the legal fraternity?

MR. SIHOTA: Federal government.

HON. MR. COUVELIER: Not initially, although such discussions have taken place.

Interjection.

HON. MR. COUVELIER: Subsequent to the first proposal, yes.

MR. CHAIRMAN: Shall vote 32 pass? The member for Esquimalt-Port Renfrew.

MR. SIHOTA: You're very anxious, Mr. Chairman. I realize it's getting late. I don't intend to be that much longer, but I can be, depending on the answers.

There was, if I'm not mistaken, Mr. Chairman, a series of issues by provincial governments. One dealt with an issue from the government of Manitoba, and there was a subsequent one through B.C. Rail, at which point — I'm advised, and the minister can correct me if I'm wrong — the federal government indicated that it would not countenance proposals similar to the SkyTrain one. Could the minister confirm that that information was made available to him before the ultimate public release of the SkyTrain issue?

HON. MR. COUVELIER: I'm advised, and examination of the correspondence confirms the advice, that there was no such understanding reached as a consequence of the Manitoba financing device. There was an understanding that a duplication of the Manitoba approach would not receive favourable approval by the federal government, but the SkyTrain proposal was not the same as the Manitoba proposal, and as a consequence that understanding really had no validity or reference to the SkyTrain proposal. But the key point here is that despite the fact that the federal government found themselves unhappy with the Manitoba approach, they nevertheless grandfathered it, and in the case of B.C., for the first time in federal-provincial relations, they refused to grandfather a perfectly legal financing instrument.

MR. SIHOTA: I want to thank the minister for his answers, and I'll continue to watchdog this issue. Given that unprecedented action, it would be appropriate to go back to the feds for the $558,000.

MR. MILLER: Mr. Chairman, I was busy writing a letter in response to a very bad column that appeared in the travel section of the Vancouver Sun characterizing my hometown of Prince Rupert as grey and wet and characterless. It's like watching the BCTV weather report.

HON. MR. VEITCH: Whatever happened to Graham Lea?

MR. MILLER: That longtime resident of Prince Rupert — or Victoria — I think is doing quite nicely in Victoria, Mr. Member. And if you're in the market for a leased car, I'm sure if you give Mr. Lea a call he'd be more than happy to do his best by you.

However, I don't want to delay these estimates by talking about used cars or leased cars or anything other than an issue that I've raised on a couple of occasions in question period and that I think the minister is quite cognizant of. That's the problem I perceive in terms of the chartered banks and the service that they are giving — or not giving, I guess — to some of the smaller communities in this province. I think it's a very serious issue. Just to quickly review it, we've had on the Queen Charlotte Islands one of the chartered banks shut down two operations. We've recently had a situation in Hudson's Hope where a chartered bank has indicated that they plan to leave that community. There probably are a number of other examples. The minister himself indicated to me an example in his own constituency where a chartered bank had ceased operating and ceased supplying that traditional service that people for many, many years had come to rely on.

I want the minister to comment generally on this situation. I obviously don't have all the facts and figures with respect to how many of these branch operations are closing down, and what impact that has had or is having on rural British Columbia particularly. I bring that bias to the House. I'm from a small town, and I know that quite often when it comes to services we take second best. We often fight pretty hard to try to get those services that people in the larger centres take for granted. So I would like the minister to comment generally on his estimation of the kind of service that's being offered by the banks, and whether he feels that it's adequate, and whether there actually is anything that can be done to try to correct or improve the situation, if he feels that the situation does need improving.

[8:30]

Secondly, with respect to an issue that my colleague from Vancouver East raised earlier, in some instances the credit unions — and I'll site again the Queen Charlotte Islands and the credit union in Prince Rupert.... The Kaien Consumers Credit Union and the Prince Rupert Fishermen's Credit Union are very stable and based primarily on the fishing industry. They've had some good years, and they've had some lean years too, but they were able to move quite quickly to fill the gap created by the chartered bank leaving. I understand that that is not the case, and maybe the minister might want to give me and the House an update with respect to the Hudson's Hope situation, where really we've had a credit union that's had its share of misfortune because of the economic situation in that particular region. It's not apparent that that same kind of move can be made quickly to fill the vacuum created by the bank leaving.

In fact, just going back a little farther on that particular situation, the credit union left that community over a year ago, but prior to their leaving, they went to the bank and they said: "This community is not big enough for two financial institutions. Are you prepared to stay and serve the needs of this community?" The answer they got was: "Yes, we are prepared to stay." Not very much longer after that, we find that the loyalty the chartered bank had to the community was not very strong.

I have to repeat something else I mentioned in question period. We passed amendments to the Corporation Capital Tax Act that I understand gave the chartered banks about $6 million in tax exemptions, tax write-offs, or whatever it is. It

[ Page 2209 ]

was an effective savings of about $6 million, and I understand that in the next fiscal year they are looking at about a $7 million saving as a result of those amendments to the Corporation Capital Tax Act.

That's fairly brief, but I really am interested in the minister's response. I think it is a serious situation. I'm wondering what can be done, particularly where we have a credit union who may be prepared to move in but because of the difficulty of the economic times has had its share of financial misfortune.

I guess that really leads into the broader question that the credit unions are now facing. If they want to grow in terms of providing the kind of capital that small business requires, they have a difficulty because they can't spread the risk the same as a bank can. Credit unions, for the most part, are fairly regional, particularly when we get outside the lower mainland. They are based really on the economy of sometimes quite a small region, and they rise and fall depending on how that economy does. You might have a situation, for example, in the northwest, where you have a pretty financially viable operation, but that wouldn't be the case in other areas. How do you overcome that problem. where there is a willingness to provide that kind of financial service — probably a better one in terms of the relationship with the customer? How do you bridge that gap? How do you get it so that these credit unions can move in and fill those kinds of vacuums?

I really am interested. Are the banks serving the needs of this province, particularly in the rural regions? Have they been shutting down lots of branch offices, kind of walking away? Don't they feel they have a responsibility to serve the needs? After all, they are making a profit. I don't think the banks have ever really fallen on hard times. I'll wait for the minister's response to that.

HON. MR. COUVELIER: Last question first — that is to say the changes in the taxation arrangements for chartered banks. I guess I should make the point, first of all, that one of the prime motivations behind that initiative was the question of the suspected interpretation that courts may place upon that particular historical taxing relationships we had there. In other words, referring back to my earlier comment about the kind of disciplines we are graduating from our universities, we seem to be compounding our problems almost daily.

Dealing with the larger question — the hon. member and I have had conversations on this, and I suspect that we really are of a mind on the subject — it is true that with the shaking out that is occurring in the financial community internationally and nationally, many of the traditional roles played by existing financial institutions are changing and will continue to change. I suspect the march by the conventional banking system away from small community branches is inexorable, and not much can be done by provincial governments to minimize it.

On the other hand, looking at the problem creatively, we do have the opportunity as a provincial government to assist the credit union movement and nurture it in its plans to serve community needs, and we intend to do that. We intend to do it with a variety of devices which will be worked out in cooperation with the credit union movement itself. Those discussions are going on now and have been for a matter of months. It's all part of this whole credit union review.

I am aware of the difficulties at Hudson's Hope. To the best of my knowledge, we haven't resolved that particular issue as of tonight, but I am hopeful that we can in the fullness of time find a solution for Hudson's Hope. As I say, the remedy generally has to be that we do what we can to allow the credit union movement to fill those kinds of vacuums as they appear.

MR. MILLER: It's not my desire to stand up here and take a gratuitous kick at the banks, but the minister is saying that because of the international situation or the international obligations.... I assume the minister is saying that the banks have made some pretty bum loans internationally and, because of that, they're looking at their financial position and taking it out on us.

What about the obligation that the banks have to serve the needs of the residents of British Columbia? Maybe the same argument can be made true of Saskatchewan and Manitoba and northern Ontario or whatever. Do we ever remind them that they have those obligations? Are they there to cream? I mean, it's getting so a bank robber would be out of luck in Hudson's Hope.

MR. WILLIAMS: What can an honest bank robber do?

MR. MILLER: Yes, what can an honest bank robber do these days? Because it's getting pretty tough out there. I don't expect the minister to phone a bank every time they decide to close down a particular branch office, but surely the minister has some political clout in terms of at least sending a message, in terms of speaking up for the people of B.C., particularly the people in rural British Columbia whom we pay lip service to from time to time in terms of them going out in somewhat less than desirable circumstances where we have to get down on our knees to beg the Minister of Culture (Hon. Mr. Reid) for a grant for a theatre.

HON. MR. REID: Beg us? We gave it to you.

MR. MILLER: Well, I think we had to wring it out of you, Mr. Minister.

Interjection.

MR. MILLER: I'm going to give you one more chance when it comes to handing out money in Prince Rupert, and if you don't do better than the last time, we're going to get rid of you.

However, I don't want to depart from the seriousness of what I'm trying to say. I want to know what the minister is prepared to do in terms of a general kind of statement or general comments to the banks. Are you prepared to take that kind of step and say: "Look, you guys, smarten up. There are people in this province who rely on the kind of service you should be offering"? You can't force anybody to stay there. If they want to walk away from those obligations, I guess they will do that, and I appreciate that the minister.... I believe that we do have a common idea, in terms of the growth of credit unions, to fill some of those voids.

In the meantime, communities are going begging because, in my opinion, these people are walking away. I'd just like a little stronger response in terms of what the minister might be prepared to do — even if you do it behind closed doors; I don't care. You don't have to broadcast it, but at least maybe give these guys the message that they had better smarten up and start serving people in this province.

[ Page 2210 ]

MR. CLARK: I have two issues I want to canvass briefly with the minister. The first has to do with Treasury Board. We have now in British Columbia a hiring freeze or a chill or whatever you want to call it. That appears to be confirmed now, and it appears that there are rumours of things like 4,000 contracts not being renewed, and lots of rumours and problems in morale now because of these actions in not filling contracts.

I see something else happening and maybe the minister can help me with it. I'll give you one example from my riding. It has to do with approving capital projects at a school. In Vancouver East a school called Begbie school has asked for a capital project of $1.8 million to remodel the school. It's one of the oldest schools in Vancouver. It was named after the hanging judge. They received from the government $100,000 for planning purposes, in order to be ready to start construction this summer. But then the other $1.7 million didn't materialize. I am advised that every time the school board went to the government and said: "Well. we understand that we're getting this money. You've given us $100,000 for planning...."

MR. CHAIRMAN: Pardon me, Mr. Member, you are straying far from vote 32, which we're on right now. With respect, if you wouldn't mind coming closer to the vote.

MR. CLARK: It's clear that they say it's tied up in Treasury Board. The minister is chairman of Treasury Board. That capital project was not approved or hasn't been approved yet, and therefore the construction cannot take place this summer.

What I'm suggesting — maybe the minister can clarify this — is that there appears to be a pattern. We have layoffs, or at least the non-renewal of contracts. We have contraction of the public service for restraint purposes or otherwise — efficiency purposes or whatever you want to call it. We have highways that were approved but seem to be stalled and not approved by Treasury Board. Now we have one major school project in my riding that was approved, or appeared to be approved, and then wasn't given the go-ahead by Treasury Board to proceed with construction.

Maybe the minister can tell me whether in fact there is an outright policy of delaying capital improvements, or of approving capital projects for the purpose of saving money — or whether we don't have the money. Is it the same process that has always taken place? Or is there some review of how Treasury Board operates in terms of approving these projects? Do they now have to go to the Premier's office, as contracts do? Clearly we have seen a number of examples where major capital projects have not been approved by Treasury Board when there was every anticipation that they would by now have been approved.

[8:45]

HON. MR. COUVELIER: Treasury Board approves the global dollars. The individual allocation is made by the ministry affected, so I'm not able to deal with the specific concern of the school mentioned.

The question of the examination of staffing options is one that's been dealt with by the Premier. I think it's pretty well understood what's involved there. I don't know what more I can add on that subject.

Interjection.

HON. MR. COUVELIER: Not in the sense that the member is thinking. There is a change, and a very significant one, as a matter of fact. Treasury Board has now adopted the policy of approving global figures for a rolling two-year amount, so that each of the ministries now knows that not only do they get approval for this year's capital project but also they get approval in principle for next year's. This allows each ministry the flexibility to determine for themselves what projects they might want to spend some planning dollars on versus some construction dollars. It provides greater flexibility to the ministries involved and, we think, improves the efficiency of the system generally. So that's the change. I'm not aware of any other change.

MR. CLARK: So when the school board goes to the Minister of Education (Hon. Mr. Brummet) and he says the money is tied up in Treasury Board, he means the global budget for the next two years is tied up in Treasury Board and hasn't been approved yet, presumably?

HON. MR. COUVELIER: I've explained the process. Other questions, I think, are going to have to be given to the line ministry.

MR. CLARK: I won't belabour the point. The minister is saying — if I can just confirm this — that if a minister says now to a client group or to anybody that this project is held up in Treasury Board, he is wrong, because the global budget has been approved, and it's up to the line ministry to decide how that money is spent over the next two years. Is that essentially the case? So if the Minister of Education says that that project is tied up in Treasury Board, that is not correct, unless the whole capital budget for the Ministry of Education has not been approved. Is that correct?

HON. MR. COUVELIER: Mr. Chairman, after the final estimates are ready for individual projects, they do come back to Treasury Board for final ratification. That's standard procedure. The answer I gave earlier was that there's no change from past practice, other than the fact that we've given a little more flexibility to each of the line ministries so they can look at two years rather than one. But they still are expected to bring back their final figures for specific projects.

MR. CLARK: I think that clears it up. I guess the minister is saying that there is, for planning purposes, the line ministry's attempt. The Treasury Board approves a global budget that's kind of rough for two years, and then specific projects that are funded within that global budget have to go back to Treasury Board. It just seems to me to be another hoop, but maybe I'm wrong.

The second area I want to touch on briefly has to do with pension plan capital. As the minister knows, I suspect, pension plans are now the single largest source of institutional funds for lending purposes in North America and probably the world, and they're growing exponentially. So we now see the pension plans of trade unions and other organizations being used to finance a lot of local projects.

This province is the only province in Canada, as I understand it, that does not have pension plan legislation that deals specifically with how we can harness that capital for use in British Columbia. We have a serious leakage of masses of money from the regional economy that are essentially the

[ Page 2211 ]

deferred savings of workers. Does the minister have any thoughts on this area?

HON. MR. COUVELIER: Mr. Chairman, that same general question, I believe, was rolled into some rolling series of questions heard earlier this evening. It is true that we are examining investment diversification for our pension funds. In the process of bringing forward those final recommendations, it might well be that there will be a legislative amendment, but that subject is presently being discussed with the various pension fund managers. Until that discussion is completed, it would be premature to get into that subject in any depth. In answer to the general question, we are looking closely at the diversification matter.

MR. CLARK: Has the minister considered a pension act like every other province has that documents what the basket clause can be, and what high-risk loans can be, and where they should be, and those kinds of questions regarding the responsibilities of pension managers? Given that this is a tremendous source of capital for potential expansion in British Columbia — every other province has dealt with it in that manner — I just ask if the minister is considering, or has even looked at, this question in terms of a separate act or legislation, like every other province has, that deals with the responsibilities of pension managers to deal with high-risk loans, the basket clause, and those kinds of questions, so that we might harness some of that money from huge pools of capital for British Columbia purposes or development purposes.

HON. MR. COUVELIER: Mr. Chairman, it might well be that we wind up introducing such an act, but the member should be aware that the non-existence of an act doesn't deny us any freedoms that other provinces have.

MR. WILLIAMS: Back to credit unions. I found it interesting, when I got more intimately involved in some of these questions, to try to look at where the problem loans were in these provincial institutions.

My initial feeling was that the bulk of the problem loans for the institutions would be where they lent outside of their own regions. I was able to monitor that with respect to the credit union I was involved with, and found that it was something like a 20-80 flip. As soon as you got out of the region, you got into trouble. Working within the region, you didn't get into trouble. I happen to think that that was predictable. When the lending officers of the institution are involved in the local community and have some understanding and some depth, there are benefits there, and you make better judgments in terms of lending. I know that that's the case elsewhere too. I know, with respect to the lower mainland, that as soon as that institution went outside of the lower mainland, they got into trouble, even when they went along with your hit program in terms of housing — an intervention by the government that was maybe well-intentioned but misguided, like so many interventions that you people participated in. But that's an aside.

The point is that once these institutions start lending outside of their home territory, they get into trouble. It's especially true in this region of Victoria, Mr. Minister. As soon as Westcoast started lending outside of this region, they got into trouble. They've invested in stuff in the United States and in the Okanagan and so on. Those have been serious areas of losses for them.

It seems to me that enough bells have rung in enough offices that that shouldn't happen any more. These institutions shouldn't be lending outside of their bonding areas. They are chartered for bringing in savings from a defined area; I suspect that it's reasonable to look at limitations on lending outside of those defined areas. You track your situation here with Westcoast, and you will find that that was indeed a big chunk of their problem. Certainly investing in the United States doesn't make any sense in terms of these provincial institutions.

I hope that the minister looks at that question and discusses it with the various players involved. Some of the players may have learned and won't do it any more, but there is a need for going beyond that. Right now, First Pacific and Westcoast are voting on a merger. I guess the result of those votes of the two credit unions will be quite soon. It requires a two-thirds vote in the case of each credit union, I believe.

With that goes the question of appointment of some chief executive officer with respect to those two institutions. My concern is that there is probably a need for some monitoring here in terms of a provincial hand. My concern is that the tendency will be to opt for some bureaucratic answer in the medium term in dealing with the question of that chief executive officer. That could mollify all sides or all perceived sides.

What is clearly needed in the case of this new merged institution, if it's to be, is some genuine entrepreneurial capability. I am concerned that that may not be the case. There is a need for entrepreneurial capability with a pretty good track record in terms of handling that merger down the road. I hope the minister is monitoring that one carefully. It is a significant chunk of the system. Getting back on track and getting out of CUDIC's hands and dealing with the losses of the last few years of both of those institutions is a serious problem for the whole system and can bear heavily on the rest of the system. It is critical that the person put in place be somebody with significant entrepreneurial banking skills. I hope the minister can assure us that that will be monitored carefully.

MR. WEISGERBER: I request leave to make an introduction.

Leave granted.

MR. WEISGERBER: It is my pleasure to introduce to this House three family friends: Miss Dayna Kruetzer and Mrs. Debbie Paulis of Dawson Creek, and Mrs. Tanya Dahlen, recently moved to Victoria. Would the House please make them welcome.

MR. CLARK: I just wanted to ask a series of questions about tax reform, and we didn't get to them before the break. I'll just ask one on the tax on food and the three options — business transfer tax, retail sales tax or value-added tax — that the federal government is proposing for the next stage of tax reform.

I'd like to know what the government's position is on a tax on food, and whether they have taken any position regarding those three taxes, and what process is being undertaken by the ministry to work with the federal government in terms of our response to those very serious questions of future tax increases that are coming down a year from now. As I mentioned earlier, a number of provinces have categorically

[ Page 2212 ]

stated that they will not support any tax on food, although many of them have indicated they may participate in other forms of the retail sales tax.

[Mr. Weisgerber in the chair.]

HON. MR. COUVELIER: We have indicated to the federal government that we, also, are not pleased with the prospect of a tax on food. We've indicated that until they can provide further details as to how a value-added tax or a business transfer tax might be administered — particularly how it might affect the disadvantaged in our society — and what kind of rates might be discussed here in terms of this new tax.... Until all of that data is available, we are not prepared to make any definite commitment to embrace the concept or to join it. Until that information is provided, I suspect the same is true of all the provinces. We really have not been given enough information to deal intelligently with the federal concept.

[9:00]

MR. CLARK: I understand that a complex negotiation is going on and a review is being undertaken, but can the minister not state clearly that the British Columbia government will not support any tax on food? It's fine to say that we want to review the whole package and everything else, but can't we say, as many other provinces have said — including Alberta, Nova Scotia, Manitoba — that food is not to be taxed, and that we won't support that concept? Whether we participate in other aspects of the tax reform proposal, other aspects of some form of value-added tax or sales tax, can we not agree in this House, can the minister not state clearly, that we, as other provinces have done, will not support food being taxed in any way, shape or form in this province?

HON. MR. COUVELIER: I suppose everyone would get some comfort if we were to expound with brave words that don't have a whole lot of support of information to make the brave words credible. I've said that we are not enthused about the prospects of a tax on food. Our reaction, generally speaking, will depend to a large extent on the kind of support mechanisms that are in place for the disadvantaged. We're not enthused; we don't intend to embrace it without a lot more information being made available. But I'm not one to make categoric statements that require backtracking later. I'm just not too pleased to give you these breast-beating assertions that you claim you're getting from other provincial members. I've talked to the other provincial Ministers of Finance, and I certainly don't sense the enthusiasm that you seem to indicate they have already given their public expressions to.

In any event, it probably is not inconceivable that we will never have to deal with the issue.

MR. WILLIAMS: It's a pleasure to hear the British Columbia Minister of Finance saying that the big question is whether there's a safety net for all of those poor folks. This is the minister who has brought in the $5 fee for the elderly and the people who need medical help, and all the rest of it — Pharmacare and so on. So it's not reassuring, because what you think is adequate for the poor and the needy generally wouldn't be agreed to by this side of the House or by most people in society in the modem era.

What we've got here is a pattern: a pattern at the federal level and at the provincial level that never, ever looks at the tax on wealth. You essentially don't look at the question of wealth as a base for tax. The feds are clearly moving to what is a sales tax system, like the European common market: a value-added tax. A major shift to a sales tax at the federal level, with huge new revenues from the middle and working classes of the country, is not a positive sign. The corporate tax has been in decline year after year, decade after decade, in this country, in this province. When it gets to the question of revenues from the basic natural resources of this province, there is a continuous pattern of decline; in fact, one of incredible subsidy.

All that the second member for Vancouver East is asking is some assurance that you people don't support a tax on food, which has to be the final insult in a decline in terms of reasonable, equitable taxation in our society. It's not unreasonable to take a clear, firm, unequivocal position on the question of taxing food. Even an earlier Premier in this province, Mr. W.A.C. Bennett, you could be sure would have — bang, just like that — said: "No, we won't accept a tax on food." It is as simple as that. That may explain why he got elected for about 20 years; when it was important, you could understand him. But once again, you get this quick triple shuffle, this multiple shuffle out of the Minister of Finance. It's part of this phony dance of the seven veils — that finance is a very complex area and a matter of arcane specialization where only the very sophisticated can really grapple with all the nuances, difficulties and complexities. And that's why we get all this shuffling around.

But the question was a simple one: do you guys stand for a tax on food? We didn't get any answer at all. "Well, we're not too happy about it, but then again there are other things to consider, and maybe if the safety net is different, and if the poor are helped, then yes, we could live with a tax on food." That's what you said. I have trouble with that because it is part of this drift. It's not a drift, it's conscious decision-making by right-wing administrations, provincially and nationally — and I'm afraid in too much of the western world — that is seeing less and less reasonable tax being paid by the corporations, less and less paid by the holders of wealth within our society, and more and more paid by working people and average people. It is unreasonable, it is burdensome, it is totally unfair, and it's the most reasonable thing in the world to ask whether this administration supports a tax on food or not.

If a few more Ministers of Finance in this nation said, "No, we will simply not accept a tax on food," there would be no national tax on food. It's as simple as that. What we're asking for is for some clear statement to the people of British Columbia that you and this administration simply don't support that idea. It's not too much to ask. In the last two years you've returned $660 million to industry, the under taxed corporate sector. It's a mammoth redistribution that has been underway in this province in the recent years of Social Credit. It is a massive redistribution toward the wealthy. In terms of any equitable system, it doesn't make any sense.

That is the pattern of both this administration and your colleague from Saanich before you — a very clear pattern in terms of lifting taxes from the corporations, collecting less from natural resources year by year in a province that is still rich in natural resources despite all your blunders, and collecting more and more from the poor and the average working people of this province to carry out the cost of government and administration. It's not reasonable; it's not equitable. I guess in a sense we have had a clear answer from you tonight.

[ Page 2213 ]

You can live with a tax on food, just as you've lived with this kind of pattern of shifting from the corporate and wealthy to the average income earners of this province. That is the real agenda of Social Credit. That is the real agenda in terms of financial policy in British Columbia, and most of the people are the losers.

MR. CLARK: I agree with the first member for Vancouver East that the answer is quite clear: the government is saying that under certain circumstances it can live with a tax on food. There's no unequivocal opposition to a tax on food. We think that's wrong, and as the first member for Vancouver East stated, if every Finance minister across Canada took a position against it, then there wouldn't be one. It's unfortunate that our government is one that is not taking a position.

Maybe the minister can take a position on something else, because in the tax reform package that was introduced, the sales tax was already extended, and it got very little press. Household cleaning products are now taxed. Toys are now taxed. There's a tax on cable television, and there's a tax on telecommunications — 10 percent.

Those aren't small numbers: $1 billion is going to be raised by this tax. Has the Minister of Finance communicated with the federal minister his opposition to the tax on telecommunications in particular, which many businesses rely upon as part of their operation? He's going to make a serious tax bite that is unanticipated in the tax reform package released by the federal Minister of Finance.

HON. MR. COUVELIER: The evening is dragging on, and I've never seen such a totally unreasonable creation of straw men for the purpose of knocking them down. I assume we're rational people.

In the first place the issue is federal, not provincial. In the second place, the ability of provincial Finance ministers to influence whatever this government is going to do in Ottawa is far less than you seem to be intimating. The specifics, as they relate to the federal tax initiatives, have been conveyed to the minister by me at meetings in Ottawa.

Unlike some headline-grabbing enthusiasts from across the aisle, I don't call press conferences after letting the federal minister know how I feel about some of his suggestions. You shouldn't be trying to put us in a position that we're not in. I have spoken quite clearly on these issues to the federal minister. In any event, they are federal, Mr. Chairman, and I suspect that they probably should have been ruled out of order in the first place.

MR. WILLIAMS: The Minister of Finance says he has spoken most clearly on these subjects, and we've been victims tonight of how clearly he does speak. I would ask the minister to table the documents wherein he spoke so clearly, because this is an historic occasion in terms of this Minister of Finance. He says he spoke clearly to the federal government on this and related issues, and I do indeed hope he will table the documents here and now before this House so that we can finally see a clear statement from the Minister of Finance for British Columbia.

MR. STUPICH: Mr. Chairman, listening to this debate reminds me of something that Alex Macdonald probably said: "A verbal promise isn't worth the paper it's written on." What they're really asking for is something in writing to the effect that the government of British Columbia has a position on this.

I wanted to ask just a couple of questions that I did ask earlier and I think weren't answered. I believe the minister has been quoted as saying that he was going to take another look at this business of the $1,600 limit for small farms and of raising it, and he didn't comment on that. I think he said something publicly; I'm not sure. I wonder whether he heard my plea — when I said "heard," I know he listened to it here — the plea that's being made by the hospital auxiliaries for consideration of sales tax exemption for their activities.

The other thing I wanted to ask is more general. We've talked about the supplementary health benefits not being covered under the Canada health plan. Has the government of British Columbia made any representations to the federal government to have such benefits included under the federal health plan, or is it proposing to do so?

HON. MR. COUVELIER: Mr. Chairman, the other provinces are trying to move in the reverse direction, as the hon. member probably is aware. There is a withdrawal of some of the other provinces from support programs for specific supplementary services. I do agree, and I have made representations to my colleagues that there should be more uniformity across the country than presently exists as it relates to health coverage. We will be shortly having a meeting — as a matter of fact, later this month — certainly of the western provinces on this and other related health care questions.

Dealing with the farm exemption limits, it is true that we are rethinking that as a consequence of information received from a variety of agricultural organizations and from local governments. The member will remember that we made the implementation date not until 1989 so that we do have time to deal with that question. It will be dealt with in time for everyone to have sufficient advance notice to give them comfort as to what the limits will be.

Dealing with the second question, which had to do with the sales tax exemption for used goods sold by hospital thrift shops, that matter also has been brought to my attention, and I have instructed staff to include it in next year's budget revision material to see what might be done to accommodate those concerns.

[9:15]

MR. STUPICH: Mr. Chairman, just to follow through on the first question, the minister said there should be uniformity, and with that I agree. But he said the other provinces are moving away, and I'm wondering: is the province of British Columbia agreeing that we should have uniformity by all moving away, or is he fighting to keep it? There is a difference.

HON. MR. COUVELIER: We have certainly not indicated to our peers across the country that we're interested in moving away, but there are far larger issues. At the moment, we are fortunate in B.C. to have more coverage for supplementary benefits than exist anywhere else in Canada. So B.C. citizens are well served in that respect.

Our approach certainly is not to reduce that kind of coverage, but we are trying to address the general question of looking at ways in which we might bring health care costs under more manageable control. It's on that subject and on

[ Page 2214 ]

the question of relative provision of services that these conversations will take place.

MR. STUPICH: I think some of us will have a lot more to say on that, but it would be more appropriate, I believe, under the Ministry of Health.

Just a brickbat and a bouquet. For the minister to say with respect to the sales tax on food that we're waiting to see what the deal is, and that his government is concerned with looking after the needs of the disadvantaged.... I don't think they are in very safe hands, from what I've seen of this government so far. That's the brickbat.

Now for the bouquet. I asked some questions during the discussions of Bill 29, and going through my mail this evening, I see an answer from the minister. I have had good relations with previous Ministers of Finance since I've been the critic for Finance, but I've never had the courtesy and consideration shown by this particular minister. An answer like this is just totally new. I do appreciate that kind of consideration and courtesy.

Vote 32 approved.

On vote 33: compensation stabilization program, $729,387.

MR. STUPICH: Just one short question, Mr. Chairman. I believe this organization is going out of existence. Is the money to be transferred to the new organization, or will this just be some found money at the end of the year?

HON. MR. COUVELIER: The member is quite correct. This particular operation is being wound down, and its necessity for draw-down will be diminishing. I cannot yet give an estimate, if that's the intention of the member, to determine the expected final position in a financial sense. I am not in a position to give that yet.

Vote 33 approved.

On vote 66: management of the public debt, $530,200,000.

MR. STUPICH: I notice, as has happened for a number of years now — since the 1984 budget, I suppose — that the amount of money we are committing to borrowing for government purposes is increasing by some $73 million. I think of what good use might be made of such money.

As I said on previous occasions, it's not that the government is going into debt that bothers me; it's what the government's doing with the money that it's borrowing. It is just unwise spending that has gotten us into the trouble that we're in. I talked earlier today about the amount of public moneys that have been poured into business enterprises that are bound to be failures from the very beginning. That has been reflected in the economy of the province. If we had put one tenth of the $6 billion that I outlined today into useful purposes, we might have had more people working, and we wouldn't be in the problem that we're in.

Earlier today, I was reading a quotation from the previous Minister of Finance for the province, to the effect that under Social Credit people of British Columbia would never borrow to buy groceries. Here we are, not borrowing but providing for $530,200,000. That's just about $1.5 million a day for interest on the public debt. We have managed to get into that position in a relatively short period of four years. That's a reflection of the business management acumen of the Social Credit government.

MR. WILLIAMS: Doesn't the minister have anything to say about this $1.5 million a day? Do we have any ferry boats left to sell?

HON. MR. COUVELIER: I guess it's late and we're all having great fun. But the borrowings that are required by government are the consequence of our spending decisions. Do I understand the members to be opposed to increases in the Education ministry, in the Health ministry, in silviculture, in social services? Do I understand you to be making objection to that?

MR. WILLIAMS: Silver-culture — is that the Social Credit silver spoon in the mouth kind of thing that one would expect? Well, at any rate, the kind of spending that the first member for Nanaimo (Mr. Stupich) has pointed to is profligate in terms of capital sinkholes in this province. You have invested again and again in failures, and we carry the debt load for them. Does anybody over there talk about northeast coal any more?

AN HON. MEMBER: Tell us about the hole.

MR. WILLIAMS: You bet. The biggest hole in the ground in British Columbia, and it's a total capital sinkhole — a $3 billion sinkhole. That's just something you throw money into.

MR. CLARK: Not for long.

MR. WILLIAMS: The Japanese are going to cut you adrift real fast on that one.

AN HON. MEMBER: You want to bet?

MR. WILLIAMS: Well, we'll see.

No kind of payback for B.C. Rail — all that infrastructure, tunnel and rock work to go from Anzac to Tumbler Ridge. No payback? You bet, any time; no payback. You can't build railways that can't pay for themselves. You can't build infrastructure that won't pay for itself. That's been your pattern, and you keep bringing in legislation in terms of....

We've had promises from this Premier of no more subsidies for industry. You're bringing in new legislation day by day that will add to this capital sinkhole problem that is wasteful, lost expenditure with no rate of return. You cannot invest in capital projects without a rate of return. It becomes a deadweight debt. That's the inheritance from you people in recent years: deadweight debts out of the B.C. Development Corporation, out of B.C. Rail, out of northeast coal, out of all these capital projects of recent years. They are a millstone around the neck of the provincial economy. They are failed projects.

HON. MR. STRACHAN: Are you opposed to them?

MR. WILLIAMS: Indeed, I am opposed to failed projects. I am opposed to projects that don't have any rate of return.

[ Page 2215 ]

HON. MR. REID: Close them down.

MR. WILLIAMS: Nobody's closing them down, Mr. Minister of Culture. Nobody is closing anything. The problem is that these were not well-thought-out projects, so they can't be paid for out of the revenues from the projects. So the people of British Columbia are stuck with the burden. We have an inheritance from the Bill Bennett years that is very costly indeed. He built up the deadweight debt of this province out of his little west office — which some of the members of this chamber sat in — a significant deadweight debt that we still must live with. As the member for Nanaimo says, "A million and a half a day," and most of it for sinkholes that pay no return whatsoever.

HON. MR. COUVELIER: Mr. Chairman, if anyone would take seriously these absurdities we are being faced with here, they would soon get very worried.

The fact of the matter is that our operating account debt is the second best in this country, behind only Alberta. Everyone knows why Alberta is in that position of not having the same kind of debt as everyone else in the country. Even your beloved Manitoba has a worse debt situation than this province. One of the reasons that our debt is so reasonable vis-à-vis the other provinces is because this government has provided good, responsible leadership to this province for years.

MR. STUPICH: I'm sure we would all like to move beyond this, but the minister turned the tables by asking us several questions. He asked whether we're opposed to money being spent on education, on health, on senior citizens and the like. If anybody has asked any ridiculous questions in the House, it's the minister himself, because he knows our record on those issues.

May I remind the minister that, with the exception of Saskatchewan, we have been ahead of Canada for some years. In every one of the services that he mentioned, B.C. has been one of the leaders, along with Saskatchewan, in the whole country. Until 1984 B.C. had not been in debt since 1954. It was the Social Credit government, after having been in office for seven years, that started plunging us into debt and cutting back on the very services that the minister asked us whether we were opposed to. It wasn't the services that put us into debt, Mr. Chairman; it was the mismanagement of Social Credit administrations in this province.

HON. MR. COUVELIER: Mr. Chairman, if this government had not had to right some of the wrongs — the inflationary decisions — that were put in place by the members of the opposition when they were in government in the seventies, things would be a lot better now than they are.

MR. STUPICH: Let's look at some of the wrongs. The rainy-day funds that were a feature of W.A.C. Bennett's administration totalled some $350 million by the time he left office as Premier. By the time we left office, they totalled some $567 million, and it was all there in cash and investments. Now there's nothing, no assets behind those special funds, other than the promise of the province to pay. The only one that's really doing well is the lottery fund.

The minister talked about what the NDP administration did. May I remind the minister that the NDP administration, under our very able Minister of Forests, bought Canadian Cellulose operations in B.C. for $1 — and it was never paid. That company, every year that it was owned by the people of British Columbia — 90 percent, roughly — paid dividends to all of the owners, including the province of British Columbia. Westcoast Transmission shares paid dividends every year to the province of British Columbia; other operations didn't always pay dividends. Even the much-reviled Panco Poultry that people used to talk about .... The government sold it when they took office and made $10 million on a $4 million investment. That wasn't a bad investment on the part of the people of British Columbia by the NDP administration.

You look at what we did. Mr. Chairman, if this government had been one-tenth as good in the 12 years that it's been in office as we were in three, B.C. wouldn't be in debt right now. B.C. would be one of the leaders in the country again.

[9:30]

HON. MR. COUVELIER: Does the member mean to imply: "If only the voters were smarter"? Are they not smart enough? What is wrong with the average British Columbian who returns good government election after election? Are you impugning the wisdom of the democratic...?

AN HON. MEMBER: What's that got to do with it?

HON. MR. COUVELIER: Well, it's got to do with the fact that we're making the decisions and you're criticizing them, and have been for years. The fact of the matter is that you want leadership; we're providing it. The fact of the matter is that you want the best financial record in Canada; we've got it right here.

MR. STUPICH: One of the things that we did wrong, in the minister's mind — the way he phrases his question — is that when we were government, we were careful about using the taxpayers' money to try to twist the taxpayers' minds. We never borrowed money.... Talk about using taxpayers' money to buy votes. For 12 years this government has been borrowing taxpayers' money to buy the votes of the taxpayers. We were careful, we were running a businesslike organization that never did go in the hole. It is this government that showed British Columbians how to go into debt,

Vote 66 approved.

On vote 67: contingencies (all ministries), $50,000,000.

MR. WILLIAMS: I just wonder if $50 million is enough for contingencies, given the quality of this administration.

MR. STUPICH: Just a question, really — not about the vote. There is vote 67, and then I see we're dealing with "special account Crown land" and "special fund lottery." Are those separate votes, or are they included in vote 67? What's the score?

HON. MR. STRACHAN: The note says "all ministries," and I am sure the notes are in the pages of the estimates on vote 67.

MR. STUPICH: Mr. Chairman, $50 million is the contingencies, yes. But beyond that there is the critical industries commission, which is done away with, and then Crown land and then lottery. There don't seem to be vote numbers. I don't

[ Page 2216 ]

know when they might be handled or how they'll be handled. It's different.

HON. MR. COUVELIER: I'm not sure I follow the question, because the reading of notes didn't seem to coincide with my notes. In any event, on the specific question of lottery and how it's treated, it's an element of the Provincial Secretary's ministry and a separate vote.

Vote 67 approved.

ESTIMATES: MINISTRY OF FORESTS AND LANDS

On vote 34: minister's office, $210,165.

HON. MR. PARKER: I'm pleased to present to the House the estimates of the Ministry of Forests and Lands for the 1987-88 fiscal year, the seventy-fifth anniversary of the provincial Forest Service. In British Columbia over 93 percent of the land is publicly owned and over half is covered with forests. Our ministry is responsible for managing those resources, and I want to emphasize that we are readying for this coming year like never before. Major initiatives are being undertaken. These will usher in a new era of forest management in British Columbia. Increased responsiveness in service to our clients and operating efficiencies are among my priorities.

Today I intend also to deal with public misconceptions of forest management. Our ministry is committed to managing the public's forest and lands resources to achieve maximum economic and social benefits to British Columbians, including meeting the demands of industry, commerce, settlement and conservation. We are prepared to directly commit over $530 million this fiscal year to this task, a 15 percent increase from last year.

To achieve this mission we have set some important goals. We must ensure a continuous, adequate supply of timber and rangeland to the forest and livestock industries respectively, and opportunities for forest recreation to the public. We will encourage a vigorous, efficient and world competitive wood processing industry in British Columbia. We will ensure that forests are managed for integrated use, with all potential uses considered in our planning. We will make every effort to ensure appropriate resource revenues accrue to British Columbia for use of Crown forests and lands, and we will continue to encourage public and private sector participation in setting and achieving our forest and Crown lands integrated-use management objectives. These goals are indicative of a new approach to management, one of improved service to the public and cooperation and communication with industry.

The Ministry of Forests and Lands will pursue a more active, responsive role in the province's economic development. We have formed a new timber and land marketing division in our ministry to emphasize marketing of resource development opportunities and related industrial expansions. We will actively promote investment in our forest industry to ensure continuation of its good reputation and competitiveness in world markets.

I would like to commend our forest industry and its employees for the tremendous productivity improvements achieved over the past decade. We have lived through some difficult years. We have not only survived, but improved. High tech has become commonplace and essential in a highly competitive industry which some may continue to think of in terms of simply hewing wood. Plans for new investments and modernization of existing plants have been recently announced by a number of major forest products companies. These no-new-capital investments will total almost $2.5 billion. Further announcements are anticipated in the year ahead.

Our forest industry has been and will continue to be the primary force in the economy of British Columbia. We are encouraging a vigorous and innovative industry by promoting good ideas and efficient operators. A prime example is our small business enterprise special account for access, silviculture and protection, which has grown to $21.4 million this year from $6.5 million at its inception in 1984. Last year we increased funds in this program by 50 percent to $18 million, and this year we are providing an additional $3.5 million to create opportunities in timber harvesting, manufacturing and marketing. Development of new forest products to meet market demands around the world will be encouraged. We are striving to improve communication among research institutes, industry and governments, so that their ideas for new products can be linked with a better appreciation of market trends and opportunities.

Recently our ministry created a new integrated resource branch. This action, I believe, is a great step forward in the administration of the province's natural resources. The integrated resource branch will act as a focal point for the full range of resource management. Specifically, the branch will provide guidelines and standards for effective integrated resource management of provincial forest lands. It will coordinate the use of range and recreation resources, to maintain a viable livestock industry and provide forest-oriented recreation opportunities, and it will liaise with the resource agencies, the forest and ranching industries and the public. Through this branch, the ministry will establish a close and effective working relationship with the other resource agencies, the forest and livestock industries and the public. The end result will be a teamwork approach to managing the resource for the best and most appropriate mix of uses.

There are two major forest reviews underway, one of which is the forest management review, which was initiated in September 1986. This led to the publication in January 1987 of a discussion paper which invited public input on 56 important issues. More than 200 good submissions were received from a wide range of British Columbians interested in forest policy and management. Responses are being carefully weighed, as we develop final recommendations for adjustments to our forest management policies.

The second major review is the silviculture review. Expenditures on silviculture will rise again this year, in keeping with the schedule for increasing planting to 200 million seedlings per year. Reaching that total this year will mean that over the past six years there has been a remarkable 260 percent increase in the planting program. With that kind of growth rate both in terms of number of seedlings and budget costs, it is prudent to assess achievements and determine if desired goals are being met as efficiently as possible. Work is underway on a silvicultural program review that will fine-tune the province's silviculture strategy.

I would like to share with you our success in one particular employment initiative of our ministry under the provincial JobTrac employment and training program. In the past year we have spent $13 million under JobTrac, providing thousands of British Columbia residents who receive income

[ Page 2217 ]

assistance with the alternative of gainful short-term employment and training opportunities in silviculture and other forest-related activities. Not only does this program provide employment and job-skills training to those who may have difficulty entering the labour market, but the work undertaken under this program is also a vital part of our enhancement of the province's forestry resource base. Given this success, we are expanding our funding for the JobTrac forestry program by over $4 million, from $13 million in 1986-87 to $17 million in 1987-88. Rather than continue to deliver this program directly, however, we will ask the private sector, including the forest and silviculture sectors, to work with us by entering into sponsorship contracts to carry out JobTrac projects.

An important part of the government's new positive approach to management, and to improving our service to the public, is providing more information on the ministry's programs, services and initiatives. In celebration of the seventy-fifth anniversary this year of the British Columbia Forest Service, we are actively promoting forestry in British Columbia and the important role our number one resource plays in the development of the province. A British Columbia tree will be selected this year. The British Columbia Forestry Association, in partnership with this ministry and the Canadian Forestry Service, Pacific Region, will be making an announcement soon on how British Columbians and our British Columbia schools can participate in this selection process. We will then have a recommendation of an official provincial tree for proclamation by government as a symbol of our forest heritage, our province, our land and our people. It will compliment our official flower, the Pacific dogwood, and our official mineral, jade.

[9:45]

We have just completed a series of video features on forestry, which are being used on British Columbia ferries traveling up and down the Inside Passage, in mall shows and trade fairs, at ministry open houses, in talks to local groups and schools, and on local community cable television stations. Radio features on a variety of topical forestry issues and a quarterly newsletter are providing information on the ministry's programs and services to our client groups and to the public.

The British Columbia Forest Service anniversary celebrations are seeing our staff involved throughout the province in a variety of activities to promote public awareness of forest management. All of these activities and special events will show how far we have come over the past 75 years and what our future forestry plans are for achieving our motto: "Managing for the future." These information initiatives are critical, in view of some current erroneous perceptions about our forests and how they are being managed.

Important initiatives are also occurring in our management of Crown lands. The interest in and development of the aquaculture industry in British Columbia over the past years has been unprecedented. In 1986 the number of applications for aquaculture tenures increased to more than five times the 1985 total. A temporary moratorium was placed on finfish aquaculture applications, and government appointed a one-man commission of inquiry under the chairmanship of Mr. David Gillespie to investigate issues associated with the new industry.

This ministry, with others, has already implemented many recommendations of the finfish inquiry. Of central importance in this process is the coastal resource identification study currently underway. The study serves to guide applicants away from areas where finfish aquaculture will conflict with other resource users.

The ministry is continuing its policy of making public land available to municipalities and regional districts for various public and community uses by means of free Crown grants. In the two fiscal years ending March 31, 1987, more than 1,000 hectares of Crown land. valued at over $15 million, were transferred to municipalities and regional districts.

A major improvement in the ministry's agricultural lease policy was initiated this past year. A cultivation credit is now available to significantly reduce the cost of developing and cultivating agricultural land. This policy change will encourage bona fide development of agricultural land while preserving a fair system of pricing for timber harvested on such land.

The ministry has developed a new approach to the marketing of Crown land. Where previously almost all marketing of available Crown land was conducted by the government, now much Crown land is accessible through the multiple listing service of local real estate boards. This past year the ministry published a Crown land marketing catalogue. Now in its second edition, this catalogue lists all Crown land properties that are surplus to the needs of government ministries and Crown corporations. It speeds up the process of putting these properties back into productive use by the private sector. The current catalogue is seen as a model in Crown land management by other provinces. It lists over 1,500 surplus properties. totalling over $100 million in value.

I indicated earlier, Mr. Chairman, that your government's commitment to management of Crown forests and lands has grown to $530 million. Almost half of our ministry's total budget, $235 million, is dedicated to silviculture, an increase of $40 million over last year and $147 million over the 1983-84 fiscal year. Several innovative funding mechanisms are used to fund these activities, including Forest Act section 88 stumpage credits, small business enterprise program revenues and the federal-provincial forest resource development agreement.

In response to increased threats from forest pests, our bark beetle control program is being increased by $1.5 million to $10 million.

In conclusion. I look forward with great anticipation to my first year as Minister of Forests and Lands. This year holds great promise as we review the direction of our major programs, as we decentralize and streamline our operations and as we celebrate the seventy-fifth anniversary of the British Columbia Forest Service. [Applause.]

MR. WILLIAMS: If that back bench can give that kind of support for that kind of speech, when we get a decent speech in this House from the government side, watch out. I'm sure the junior clerk that wrote the speech will be very pleased indeed. I think it's intriguing that the highlight of the speech from our new Minister of Forests and Lands is this whole question of how we celebrate the seventy-fifth year of the Forest Service. How will we designate the British Columbia tree?

MR. SIHOTA: The burning question of the day.

MR. WILLIAMS: The burning bush. Given the beginning of the summer we had a little while ago, the burning

[ Page 2218 ]

bush might well have been proper, given the reduction of your capability to deal with forest fires and the like.

I don't know that we can really embark upon a thorough response to the minister's speech tonight. I am intrigued at the question of the B.C. tree. Will it be the dogwood, the red cedar, the yellow cedar, the red currant? It might even be Elwood, or it could be deadwood, whoever that might be, It's not very encouraging. It's intriguing that the minister realizes that there is really a need for new policy with respect to agricultural land. Ding, ding, ding, they were cutting down the trees and running, and not even worrying about agricultural land. It took you a little while to realize that scam was going on. I'm glad you're on top of it, several years later. There will be a new policy, and no doubt a new scam.

One really does wonder about the future of this industry. The minister referred to the small business enterprise program, and he sort of beat the drum and his gums about it a little bit. But you know, just a little while ago he said to the Smithers newspaper that these people were really inefficient. In the House, it was only the big guys that were efficient. He didn't talk about the fact that it's the big guys that hire these guys. He didn't talk about the fact that under the small business enterprise program they can pay four times the value of the timber compared to the big guys, and are doing that day in and day out right now. He didn't mention that the small guys are the ones that pay their bills. He didn't mention that we don't have to subsidize them, because they pay enough for the timber that we don't have to.

Interjection.

MR. WILLIAMS: That's fine. We'll determine that. A new integrated resources management branch. That's innovation too, but what does it really mean? Genuine integrated resource management was undertaken with respect to the Environment and Land Use Committee secretariat, which an earlier administration of you folks got rid of. That was the most sophisticated, integrated resource management in the modem history of the province.

Interjection.

MR. WILLIAMS: "Obstruction," the minister says. Well, I can see we're going to have fun in these estimates. We have the mental giant from Skeena going to take on the world. It's going to be fascinating. I'm glad that he's got the right kind of attitude that a new minister should have: he's modest, he's contrite, he understands the limitations of his own ability, he has discipline and all the rest of it. It's very encouraging to see this contrite minister, after a few months in office, ready to take on the world. That's interesting.

He says they're going to have a more active timber and land marketing division — timber marketing. Maybe the minister could explain to us how one markets in terms of a monopoly. How does one market when there isn't an open buying-and-selling system? It seems to me that a market requires many willing sellers and many willing buyers. I don't understand this business of a timber marketing division, when all the timber of British Columbia has been allocated. It has all been allocated by you people. I have some trouble understanding just what kind of work these marketing people will do, since everybody has bought all the trees that are available this year, last year, and next year, under your kind of system. That must be very complex marketing indeed, and I'm sure you need all the support you can get in that sector.

But as the hour is drawing late, Mr. Chairman, I look forward to the continuation of this debate, and I move that the committee report resolutions and ask leave to sit again.

Motion approved.

The House resumed; Mr. Speaker in the chair.

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

HON. MR. STRACHAN: Pursuant to the motion made earlier this evening, I move the house do now adjourn.

Motion approved.

The House adjourned at 9:57 p.m.

Appendix

WRITTEN ANSWERS TO QUESTIONS

14 Mr. Rose asked the Hon. the Minister of Agriculture and Fisheries the following questions:

Ministry of Agriculture and Fisheries regulations were recently amended to permit the introduction of four-litre plastic jugs.

1. Has there been any assessment of the environmental impacts of non-returnable plastic jugs?

2. Has there been any investigation of the "tamperability" of jugs to determine the ease of contaminating their contents?

3. Has there been any consideration given to requiring a deposit to encourage return of the jugs and discouraging littering?

The Hon. J. L. Savage replied as follows:

"1. Yes, impact was determined to be negligible.

"2. No.

"3. Yes, litter impact determined to be negligible."

[ Page 2219 ]

15 Mr. Rose asked the Hon. the Minister of Agriculture and Fisheries the following questions:

1. How many British Columbia farmers had gross sales of $20,000 or more in the calendar years 1984, 1985, 1986 and 1987?

2. For the farmers identified in Question 1, how many and what proportion had any of the following characteristics in any year:

(a) less than 30% equity;

(b) debt payments and living expenses exceeding 60% of gross income;

(c) a ratio of debt payments and living expenses to assets of more than 25%; or (d) a debt to gross income ratio exceeding 2.3?

3. For the farmers identified in Question 1, how many and what proportion had any of the following characteristics in any year:

(a) 30-50% equity;

(b) debt payments and living expenses of 50-60% of gross income;

(c) a ratio of debt payments and living expenses to assets of 20-25%; or (d) a debt to gross income ratio of 2.0-2.3?

4. For the farmers identified in Questions 2 and 3, where does British Columbia rank relative to other provinces?

The Hon. J. L. Savage replied as follows:

"1. Available tabulations of agriculture census data show B.C. farmers with gross sales of $25,000 or more. The Census count of those farmers for 1986 with estimates for other years were: 1984 — 5, 450 (estimated) ; 1985 — 5,500 (estimated) ; 1986 — 5,604 (1986 Census) ; and 1987 — 5,700 (estimated).

"2. This information is unavailable from the 1986 Census. It requires special cross classifications of financial data from the Farm Credit Corporation Survey of 1984. The only available information currently is for B.C. farmers with gross sales of $30,000 or more cross classified by equity class:

(a) there were 168 farms with less than 30 per cent equity out of a total of 11,635 farms (excluding farms with sales below $2,000) ;

(b) none on average;

(c) none on average; and (d) none on average.

"3. (a) There were 561 B.C. farms with 30-50 per cent equity out of a total of 11,635 farms (excluding farms with sales below $2,000) ;

(b) none on average;

(c) none on average; and (d) none on average.

"4. The same information is not available across all provinces for ranking B.C."