[ Page 3025 ]

CONTENTS

Routine Proceedings

Tabling Documents –– 3025

Ministerial Statement

Softwood lumber export tax. Hon. Mr. Parker –– 3025

Mr. Miller

Oral Questions

Impact of free trade on domestic energy discounts. Mr. Clark –– 3025

Free trade agreement. Mr. Guno –– 3026

Mr. Rose

Mrs. Boone

Mr. Williams

Manco Home Systems Ltd. loan. Mr. Williams –– 3027

Economic development. Mr. Williams –– 3027

Effect of free trade on Crown corporations. Mr. Harcourt –– 3027

B.C. Hydro generating units. Mr. Clark –– 3027

Mineral Tenure Act (Bill 66). Hon. Mr. Davis

Introduction and first reading –– 3028

Petroleum And Natural Gas Amendment Act, 1987 (Bill 64). Hon. Mr. Davis

Introduction and first reading –– 3028

Motions on Notice –– 3028

Assessment Amendment Act, 1987 (Bill 67). Committee stage. (Hon. Mr. Couvelier) –– 3029

Mr. Blencoe

Mr. D'Arcy

Forest Amendment Act (No. 2), 1987 (Bill 70). Hon. Mr. Parker

Introduction and first reading –– 3033

Appendix –– 3034

The House met at 2:11 p.m.

MR. GABELMANN: In the gallery today is a group of Grade 11 students from Robron senior secondary in Campbell River. They're here today with their teacher. Stuart Meldrum. I'd ask the House to make them welcome.

HON. MR. STRACHAN: Visiting in the gallery today, from School District 57, are the chairman, Roy Stewart, trustee Bob Holtby, superintendent of schools Mr. Jim lmrich, and the secretary-treasurer, Don Dunaway. Would the House please welcome these Prince George visitors.

MR. LOENEN: There are two constituents I'd like to introduce to the House today. First of all, Sylvia Gwozd, who is a school trustee. Sylvia was recently re-elected to a second term. Secondly, Tilly Marxreiter. Tilly has made. over the many years of her public service, an enormous contribution to our community. She's a former alderman....

Interjection.

MR. LOENEN: I'll get to that, member.

She's a former alderman, and I had the pleasure of serving with her on council in Richmond. Before that she served as a school trustee for nine years, six of which as chairman of the board. She served on the board of Vancouver Community College, and just last week she was appointed a government representative to the newly formed College of Teachers. I know that she will do a great job for the people of British Columbia because of her hard-working habits, her drive. her enthusiasm and her experience. She is eminently qualified. Mr. Speaker, it gives me a great deal of pleasure to welcome both of them. Please join me in making them feel at home.

MR. SERWA: This will be an introduction and not a speech.

Today it gives me a great deal of pleasure to introduce two constituents from Okanagan South, Kap Kapchinsky and Ald. Al Horning. They are accompanied by Mr. Gordon Wilson from Okanagan North, all working together to do good things for Okanagan South.

HON. MR. PARKER: In the gallery today is a group I would like to introduce to you and through you to the House: Ryan Rogers and three friends of his from Brentwood College. Ryan is the son of the hon. Minister of Transportation and Highways. Would the House make them welcome.

Hon. Mrs. Johnston tabled the annual report of B.C. Transit, 1986-87.

[2:15]

Ministerial Statement

SOFTWOOD LUMBER EXPORT TAX

HON. MR. PARKER: Mr. Speaker, I would like to make a statement on the replacement of the softwood lumber charge. A press release was just prepared by my office.

British Columbia will no longer be subject to a 15 percent federal softwood lumber export tax. Canada and the United States have agreed to eliminate the 15 percent charge on softwood lumber exported by British Columbia to the United States, and this agreement fulfils our September commitment to British Columbia's forest industry that there would not be double taxation.

Effective December 1, 1987, the charge will not apply to softwood products crossing the United States-Canada border from British Columbia. British Columbia can, in addition, rebate the charge applied November 1 to November 30, 1987, to those who paid export tax on manufactured lumber products shipped from British Columbia mills without provincial harvesting rights.

We have increased the prices charged for provincial timber and we will be legislating the transfer of the costs and responsibility for replacing our forests to the forest industry, which has led to replacing the federal charge with these provincial measures. This meets my commitment to the people of British Columbia that our forests will be renewed by the companies harvesting the trees.

This agreement is subject to the legislative transfer of basic silviculture responsibilities to the forest industry. This afternoon I will be introducing the legislative changes regarding silviculture which formed part of my mid-September policy announcement. While negotiations were underway, the province's forest industry was subject to increased timber prices as well as the export charge.

Last December Canada and the United States signed a memorandum of understanding that placed the federal export charge in lieu of a United States countervailing duty on Canadian softwood lumber exports. British Columbia is subject to the possible reimposition of the federal softwood lumber export tax if its timber charges are reduced below the value of full replacement.

MR. MILLER: I heard a member on the other side yell out "Good government" as the minister was making his announcement. Quite frankly, we're pleased on this side that agreement has been reached. It is significant to note that we have to go to the American lumber producers to get them to okay our forest policy in British Columbia. But this is not a tribute to good government in British Columbia. It is a sorry statement on the bad management of the forests of British Columbia and the failure of the government on the other side to deal meaningfully with either replacement of those forests or collecting sufficient revenue from those forests for the province of British Columbia. And it is a sorry day when the United States has to intervene to force us to change our revenue policies so that we can start to collect. I'm happy to see the 15 percent. I know the producers are hurting with the double taxation. So we support that, but it is not a tribute to good government.

Oral Questions

IMPACT OF FREE TRADE ON
DOMESTIC ENERGY DISCOUNTS

MR. CLARK: I have a couple of specific questions to the Minister of Energy regarding the Mulroney trade deal. Specifically, could the minister confirm that article 904 of the Mulroney trade deal will no longer allow B.C, to use energy discounts as an industrial development incentive?

HON. MR. DAVIS: The energy discounts, as authorized in legislation passed, I believe, in 1985, would continue to be appropriate under a free trade arrangement. Basically free

[ Page 3026 ]

trade says: no subsidies. However, when a utility has surplus capacity, it can sell it at a discount price until the surplus disappears.

MR. CLARK: So the minister is saying that that legislation is effectively grandfathered and won't be changed, but any new legislation will not be allowed under the free trade agreement.

HON. MR. DAVIS: No, I didn't intend to convey that message. Existing legislation will be valid. A utility in Canada, as long as it has surplus capacity and treats all of its customers alike, will be able to discount energy.

MR. CLARK: I think this is the only Minister of Energy who has. Indicated that that's treating all customers alike. Clearly this is a specific subsidy to specific industries and will be exempt, but we can argue about that later.

Will the minister confirm that article 904 of the Mulroney trade deal will require B.C, to sell electricity to the U.S. at the same price we sell it to ourselves, and that that will result in a significant loss to B.C, when the Columbia treaty expires? In fact, it could result in about $1.44 billion in lost revenue to British Columbia if we sell to the Americans at the same price we sell to ourselves.

HON. MR. DAVIS: In the main, utilities are monopolies. Utilities are therefore regulated by government bodies. Any export sale from British Columbia, either out of the province or out of the country, would have to be approved by the regulatory commission here. There is no reason whatsoever that the price would have to be the same as the price within the province. Indeed, the test which I'm sure the regulatory commission here would apply is whether it is close to the lowest-priced alternative the Americans have. In other words, we should charge them all the market will bear. It would perhaps be a long-term contract, and that would have to be honoured. But the price would be the best price we could get, not one related to sales within the province.

MR. CLARK: That's clearly not the interpretation, Mr. Minister, that other commentators are making or from my reading of article 904 of the free trade deal. Could the minister table any evidence he has to show that we will in fact be able to charge the Americans more than we charge ourselves?

HON. MR. DAVIS: Mr. Speaker, I'm sure I can find evidence confirming what I've said. But simply put yourself in the place of an American utility selling here. Do you think that the Americans would allow an American utility to underprice its export long-term to Canadians? The rule will apply both ways. In the case of electricity and natural gas operations — monopolies, highly regulated — long-term contracts will be scrutinized by us, and the price will be the price at which we want to sell that energy to Americans.

FREE TRADE AGREEMENT

MR. GUNO: My question is directed to the Minister of Economic Development; it's a brief one. Could the minister confirm that the free trade agreement, by grandfathering the east coast fish-processing policies, could be interpreted as specifically disallowing similar west coast policies?

HON. MRS. McCARTHY: No.

MR. ROSE: I'd like to direct a question to the same minister concerning the free trade agreement. The ink is scarcely dry on it, and I know the minister hasn't had an opportunity to read it in detail. I wonder if the minister can confirm that article 708 — I have it here — of the Mulroney trade deal means that Canada must accept lower U.S. standards in key agricultural areas such as meat inspection and pesticides.

HON. MRS. McCARTHY: I cannot confirm that. The Minister of Agriculture (Hon. Mr. Savage) is not in the House today, but we've had a lot of discussions with the Ministry of Agriculture over key agricultural issues, as we have with the federal administration.

MR. ROSE: As a supplementary maybe to the parliamentary secretary to the Minister of Agriculture, if he's here and awake. Can either minister confirm that American standards for pesticides and meat inspection are, in general, lower than those in Canada'?

HON. MRS. McCARTHY: I'd be pleased to take that question as notice for the Minister of Agriculture.

MR. GUNO: I have a supplementary to the first question that I posed to the same minister. Can she confirm that the free trade agreement makes it impossible for B.C. to institute alternatives to federal export controls on fish if the GATT ruling is confirmed'?

HON. MRS. McCARTHY: Mr. Speaker, I think that the member is putting the fisheries problem from eastern Canada, as it was negotiated with the federal administration and as it is going through the GATT process.... He is mixing it up with the free trade agreement in that question. I cannot confirm it. As I mentioned earlier in answer to his first question, the answer is no.

MRS. BOONE: My question to the parliamentary secretary for Health has to do with the free trade deal. Specifically, can the minister confirm that article 1402 of the Mulroney trade deal guarantees the right of American profit-making corporations to take over the delivery of health care services in British Columbia?

MR. MOWAT: Mr. Speaker, I'd be pleased to take that as notice.

MR. WILLIAMS: To the minister responsible for trade. Specifically what has the minister done to confirm that under article 705 of the trade deal important federal-provincial programs such as ERDA and ARDA, which are worth $525 million to B.C., will not be eliminated?

HON. MRS. McCARTHY: I would be pleased to get the detailed response for the member. There have been so many negotiations going on between our ministry, our government and the federal administration. We have been pleased to have somebody at the table with a watching brief, as have all provinces. I believe it's the first time in such a negotiation that all the provinces have been able to be there. However, there are a lot of ramifications to those agreements for which I

[ Page 3027 ]

would have to bring back more detail to the House, and I would be pleased to do so.

MR. WILLIAMS: The minister is saying that we may well be vulnerable in those areas, is that it?

HON. MRS. McCARTHY: I did not respond to that question in that way. I said that I would take the question as notice and would be pleased to bring back the information for the member.

MANCO HOME SYSTEMS LTD. LOAN

MR. WILLIAMS: Mr. Speaker, the Minister of State for Mainland-Southwest made an announcement last week of an $890,000 loan to Manco Home Systems Ltd. in Agassiz. Why did the minister make the announcement'?

HON. MR. VEITCH: As Minister of State for Mainland-Southwest, region number 2, we're very happy to be able to make this announcement. This is some evidence, hon. member, at an early date in our proceedings, as to how well the system will be working. You can laugh all you want, but I'll tell you that 115 employees in Langley are not laughing today. They're laughing at you and cheering with us.

The process, for a number of reasons, was stymied. It needed some movement directly up to cabinet. We were able to do it. The parliamentary secretary and the member for Chilliwack (Mr. Jansen) brought it to my attention. We vetted the process. We took it up through cabinet. We got the process resolved, and as a result there's a whole new industry for British Columbia and a lot of contracts in the Pacific Rim. I think you should applaud this rather than renounce it.

[2:30]

ECONOMIC DEVELOPMENT

MR. WILLIAMS: To the Minister of Economic Development. Can you explain why you're a roadblock in the system?

HON. MRS. McCARTHY: I appreciate the fact that the hon. member for Vancouver East would just love to have me say that I was a roadblock. However. I am delighted, as the minister responsible for economic development and such programs, to be able to clear the way so that each and every individual region will have the attention it deserves, the kind of attention and communication that regionalization will bring. I am very pleased that the minister of state was able to go to that region and, in the culmination of all the work that had been done heretofore, be able to make that announcement. Our ministry was very much involved in the decisionmaking and the recommendation.

MR. WILLIAMS: Well then, would the Minister of Economic Development confirm that her department did all the work?

HON. MRS. McCARTHY: Neither this ministry nor any other ministry in this government wants to take credit for all the work. This government is making government policy, government decisions on such announcements. as a total government, and we're very pleased to do so. The team will give you more announcements — and very good announcements — in the coming year.

EFFECT OF FREE TRADE
ON CROWN CORPORATIONS

MR. HARCOURT: Mr. Speaker, I have a question for the Minister of Economic Development and trade. Specifically, can the minister confirm that under article 2010 of the Mulroney trade deal British Columbians cannot establish Crown corporations, such as ICBC and B.C. Hydro, without asking the Americans?

HON. MRS. McCARTHY: No, I cannot, Mr. Speaker.

B.C. HYDRO GENERATING UNITS

MR. CLARK: A question to the Minister of Energy. There are 14 diesel generating units in the Hydro system. The Thorne Ernst and Whinney report recommends selling them, which would result in a S7,000 increase to the consumers of diesel-generated electricity. Can the minister confirm that the privatization program is considering the Thorne Ernst and Whinney recommendation that those diesel generating units be sold or given to municipalities?

HON. MR. DAVIS: No, I cannot. There is no study presently under way relative to the sale of diesel units owned and operated by B.C. Hydro.

MR. ROSE: On a point of order, I've given notice both to you, Mr. Speaker, and to the government House Leader over the issue that I wanted to raise concerning future House business. We had a very brilliant decision made by Your Honour yesterday saying that our standing order 35 might have been flawed slightly. Rather than hold the Chair in any contempt.... I don't question your ruling.

I would, however. like to suggest that on Friday last, I asked the question about House business concerning the matter of the bilateral free trade treaty with the United States, and he answered, and I take this from Hansard on page 12 of last Friday,"I cannot at this point give any commitment" to do that. That means to discuss the free trade and provide time for it under resolutions, because resolutions are here. And he goes on to say: "I will perhaps editorially advise the House that as we know, the free trade agreement and ratification is clearly a federal matter and totally within the power of that government" — meaning the federal government.

I find that the free trade agreement — which was only tabled by 9:30 yesterday morning with the House Leader, with a time embargo on it, has this to say in article 103: "The parties to this agreement shall ensure that all necessary measures are taken in order to give effect to its provisions including their observance. except as otherwise provided in this agreement, by state. provincial and local governments." So clearly it is not just a federal matter, Mr. Speaker. It is one that involves provincial jurisdictions as well. Therefore it's eminently debatable in this House, should the government grant the time under their powers for such a debate.

I've also learned today that in anticipation of us going to be briefed bv the Mulroney government at the council of ministers on Wednesday — tomorrow — the Premier will be in the House for question period. He will not, however, be in the House after question period. Since the deal is to be signed

[ Page 3028 ]

by January 2, and since the House may possibly adjourn this week, there isn't much time for this House to express itself on this very important matter concerning the future of this country. Clearly, if we're going to do it, we can't delay it much longer. I know there's a provision where we could debate it minimally on Friday morning during statements.

I'm wrapping this up, Mr. Speaker. I don't want to exhaust your inexhaustible well of good humour and patience, but I would like to conclude by this argument: there's resolution 78 standing in my name, and it says in essence that the implications of the bilateral free trade deal with the United States shall be referred to a standing committee. That's precisely what they've done in Ontario. If the government doesn't feel it can give permission for us to proceed on this matter of resolution 78 this afternoon, there's also 69, and there's also 70, and we would certainly give leave if this were to be brought forward. Otherwise we perhaps will bring it forward again when the Premier's here, because I understand that the Premier hasn't given his consent — or at least given the nod or his agreement — that this should proceed.

I will end up by saying that it's crucial that before the Premier goes to discuss this matter at the highest level of the council of ministers, on a matter affecting future generations to come, this House should at least have a minimal chance to express its views, and its individual members owe their constituents that obligation.

HON. MR. STRACHAN: In responding to that point of order, Mr. Speaker, I thank my colleague opposite for his wise and learned opinion and the statements he's made to the House. All I can say at this point on behalf of the government is that, given that this matter has been conducted by the Premier, who has responsibility for intergovernmental relations now within that portfolio, I will advise the Premier on the member's opinion — his point of order — and perhaps this can be a topic for consideration later this week, although I can give no commitment except to advise the Premier of your party's position.

Introduction of Bills

MINERAL TENURE ACT

Hon. Mr. Davis presented a message from His Honour the Lieutenant-Governor: a bill intituled Mineral Tenure Act.

HON. MR. DAVIS: Mr. Speaker. Just a few words. Essentially, this is bringing the old Mineral Act up to date. It does roll in the prospector's legislation; it does include industrial minerals along with metals. In other words, one bill dealing essentially with tenure — the commitment of lands for mining purposes — into one piece of legislation. It renders what was previously three pieces of legislation into one and makes these acts mutually consistent in one bill. It also sets up a mechanism whereby the owners of surface rights and the claimants of mineral rights can have their claims reconciled in the full public view.

I move the bill be introduced and read a first time now.

Motion approved.

Bill 66 introduced, read a first time and ordered to be placed on orders of the day for second reading at the next sitting of the House after today.

PETROLEUM AND NATURAL GAS
AMENDMENT ACT, 1987

Hon. Mr. Davis presented a message from His Honour the Lieutenant-Governor: a bill intituled Petroleum and Natural Gas Amendment Act, 1987.

HON. MR. DAVIS: Essentially, this bill consolidates former legislation dealing with underground storage into the Petroleum and Natural Gas Act. It also deals again with concerns of surface rights owners and sets up a mechanism whereby in the full public view the disputes between surface rights owners and mineral rights owners can be resolved. I move the bill be introduced and read a first time now.

Bill 64 introduced, read a first time and ordered to be placed on orders of the day for second reading at the next sitting of the House after today.

HON. MR. STRACHAN: Mr. Speaker, I would ask leave to revert to resolutions 92, 93 and 94 on the order paper.

Leave granted.

Motions on Notice

HON. MR. STRACHAN: Mr. Speaker, with respect, resolution 92 says: "pursuant to standing order 69(2), Mr. Dirks be substituted for Mr. Jacobsen on the Select Standing Committee on Forests and Lands." I would like by leave to add further names to that resolution 92.

Leave granted.

HON. MR. STRACHAN: I would ask that the names of the member for Prince Rupert (Mr. Miller) and the first member for Vancouver East (Mr. Williams) be added, pursuant to 69(2), to the Select Standing Committee on Forests and Lands. So that's resolution 92 complete, and I so move.

MR. ROSE: I don't mean to quibble about this, but I think the member for Vancouver East was already on it, so the addition is really of the member for Prince Rupert only. Am I correct on the forestry one? That would be No. 92, but it doesn't matter. I mean, if you want to add him when he is already there, that's fine with me.

HON. MR. STRACHAN: If I said "Vancouver East," I apologize. I meant "first member Vancouver-Point Grey" (Ms. Campbell) to be added to that committee, along with the member for Prince Rupert.

Motion approved.

HON. MR. STRACHAN: Secondly — and this item is not on the order paper, Mr. Speaker — I will ask leave to pursue other matters under standing order 69(2).

Leave granted.

HON. MR. STRACHAN: They are to add the first member for Vancouver East (Mr. Williams) to the Public Accounts Committee and delete the second member for Nanaimo (Mr. Lovick) ; and secondly, with the resignation of Mr. Hewitt, to add the name of the member for Burnaby-Edmonds (Mr.

[ Page 3029 ]

Mercier) to the Public Accounts Committee. That would be my resolution.

Motion approved.

HON. MR. STRACHAN: Carrying on, I now move resolution No. 93 standing on the order paper. [See appendix.]

Motion approved.

HON. MR. STRACHAN: I further move resolution No. 94 standing on the order paper. [See appendix.]

Motion approved.

Orders of the Day

HON. MR. STRACHAN: Committee on Bill 67.

[2:45]

ASSESSMENT AMENDMENT ACT, 1987
(continued)

The House in committee on Bill 67; Mr. Pelton in the chair.

On section 3.

MR. BLENCOE: I want to ask a specific question of the minister before I get into general questions. On section 3, which is 26.1, I go to paragraph (2), where it says,"Notwithstanding section 26, there is established a class of properties consisting of," and then it goes (a), (b), whatever.

A general question to the minister. It is quite clear that a pulp mill or sawmill as an industrial improvement is part of your scheme of things here. I'm wondering if the minister could just tell this House for sure that the lands used in conjunction with the operation of an industrial improvement are not also included in this; i.e., that the land used, for instance, for growing trees is not included in this class of properties.

I wonder if we can get that. There may be some concern there.

HON. MR. COUVELIER: The tree component of such an industrial enterprise would be in a different class, called "forest land."

MR. BLENCOE: Let me get to some general questions about this section then. It's my understanding, and the minister can correct me if I'm wrong, that both the Committee on Industrial Assessment and many major industries have concerns about the fact that there is no adjustment made to the value of industries based on their economic performance. I suspect the minister heard about that particular aspect. I think "failure to recognize a loss of value caused by external economic factors" is the reference often used.

I wonder why the minister made the decision to exclude these factors from valuation. He must have been aware that it effectively creates a two-class tax system in this province. I wonder if the minister can give us some background as to why he went that route.

HON. MR. COUVELIER: I think the simple answer would be that we're attempting to introduce some measure of stability here. If I understand the member properly, he was talking about economic obsolescence. Defining that so that the adjudicators can have any understanding of how it is to be applied is a very serious problem.

MR. BLENCOE: That's probably what my colleague the member for Rossland-Trail (Mr. D'Arcy) was trying to get at this morning.

Let me ask some other questions. It would appear in this legislation that the Lieutenant-Govemor-in-Council is responsible for setting up the manuals to determine the costs and the rates and the rules — a wide range of things — to determine value. I am wondering who, when the LieutenantGovernor-in-Council is setting up these manuals, will be consulted in putting those things together.

HON. MR. COUVELIER: We have been involved in a very lengthy process of dialogue with all interested parties. There are a number of professionals in the field with whom we have discussed some of these matters, and there are also representatives of some of the major organizations representing sectors of the economy. So there has been a wide dialogue with a broad range of interest groups.

MR. BLENCOE: Perhaps the minister can give me some sound rationale why the Lieutenant-Governor-in-Council wishes to be setting up these manuals. What's the rationale for that?

HON. MR. COUVELIER: I'm not quite sure who else would. It is the responsibility of government to determine how property taxation is to be applied, and this implies — it seems to me — an obligation for the government to write rules. That's what we're doing.

MR. BLENCOE: Would the minister agree, though, that with the Lieutenant-Governor setting up these manuals, costs, rates, rules, etc., it leaves room — and I'm not saying we're suspicious — for suspicion in some sectors that the cabinet is going to be able to apply political or other influences upon some of these changes? How would you dispel that suspicion?

HON. MR. COUVELIER: Mr. Chairman, I'm astounded. The hon. member, by virtue of his municipal experience, would have an intimate knowledge of how the Assessment Authority operates independently, beyond the realm of political manipulation. And he, like me, has taken great pride in his independence over the years.

This bill does nothing to change that traditional relationship, and I can tell you, hon. member, that we as the government don't contemplate any such political interference. It has been a basic precept in the creation of the Assessment Authority as a separate unit that in order to be perceived and accepted by those who are affected by its decisions, it must be independent of political or government interference. The hon. member will know that we appoint members to its board who come to us as nominees through people in the industry. UBCM has a watching brief in those appointment situations. It is an independent commission operating under its own board of directors who have their own staff. I'm very pleased to have the senior commissioner with me on the floor this morning, on the assumption that you

[ Page 3030 ]

wanted to get into some of the intricate details about particular definitions. They are here, though, as an independent body, and I can tell you that any attempt by this side of the House or the other side of the House to influence how they might arrive at their decisions would be fiercely resisted. I suspect that you — like me — would support their independence.

MR. BLENCOE: I'm wondering why after 1989 the Lieutenant-Govemor-in-Council may exclude some of those improvements from classification as improvements. I wonder if the minister has a particular case in mind or some schemes for future projects.

[Mr. Pelton in the chair.]

HON. MR. COUVELIER: That's the next roll date. That's the significance of that date.

MR. BLENCOE: So there's nothing else; that's as simple as that.

I'm wondering also how and when the Lieutenant-Governor-in-Council will determine that the tax burden is onerous enough that taxpayers should be allowed to phase in the changes over the course of several years. I believe that's in subsection (4). How will you determine when the tax burden is too onerous? What criteria are you setting up?

HON. MR. COUVELIER: The hon. member will remember that when this was announced, and I believe he was present at the announcement, the key thesis underlying the changes was the fact that property taxation should be considered as a fixed cost rather than a variable cost and that when firms or individuals make a decision to invest in a community and create an enterprise, they should have some certainty about its taxation levels. Concomitantly, the municipality or the political jurisdiction that this enterprise was located in should have some sense of continuing stability in terms of taxation revenue. Both sides needed stability.

Therefore it's implied in these amendments that we should make sure that the wide variations that frequently occur as a result of one appeal should not occur if they arise, purely and simply, because of some judiciary body's interpretation of our intent. What we're trying to do here is clarify our intent to make sure that the adjudicating authorities understand it. Secondly, the objective would be that there not be swings in property taxation levies.

We will be monitoring the application of the variable mill rate to this new class of property to make sure that any dramatic changes have some valid basis in terms of need or unique circumstances. In the absence of some peculiar situation, it would be our expectation that property taxes for industrial properties would not rise dramatically. As the hon. member knows, there are securities and safeguards in other pieces of provincial legislation that would allow the government to monitor and, if necessary, intercede if an abuse takes place.

The hon. member can, I hope, appreciate that it would be almost impossible to write a rule or a guideline for how that might be interpreted, because it may be that there is a justifiable reason for a variation from one year to the other or in a particular need. In that situation, the local authority or municipality must have some discretion.

I guess the best comfort I can give the member is that we are very aware of the need to not see a dramatic increase in industrial taxation, and we're equally aware of the need for local governments not to see their tax base dramatically eroded one year over the other.

MR. D'ARCY: I want to talk to the minister again, not just about the disregard of the forces of the marketplace and market value of industrial property but also to bring attention to the concern that has been expressed to me, which I have as well, that industry cannot make the point that external forces beyond their control — probably outside this country's control — can severely limit the value of an industrial operation or of the industry's ability to pay.

[3:00]

Let's take, for example, a favourable example of the present time: the market pulp industry, which is doing extremely well. The government wants to take unto itself the right to assess, quite correctly, that one of those industrial operations that produces kraft pulp for the international market is doing very well, based on that particular international commodity price as of late 1987 — perhaps correctly so.

The question that I and much of industry have is: what happens when and if the bottom drops out of that particular commodity price or, indeed, commodity prices in general? Under the old rules, the industry could go to the assessment people and say,"We are now in a losing situation; we now are struggling to keep our heads above water," and they presumably have to produce evidence other than their own hearsay that it is indeed the case. This apparently says that the government can, if it chooses, maintain tax revenue. We've heard the minister say on several occasions in this discussion, both this morning and this afternoon, that one of the intents of this is to prevent swings in revenue. What I hear the minister saying, Mr. Chairman, is that he wants to apply a sort of frontage-tax mentality to any particular industry, regardless of its ability to pay.

Mr. Chairman, one of the things we on this side have maintained — and up until now, the government has maintained — is that there should be some recognition of the ability to pay at any time. Certainly the government over the past few years, in justifying their elimination of services and the application of various user fees of government services, has always raised the spectre of what they claim is the ability to pay on the part of government. Now it appears that if industry comes and wants to make a case on the ability to pay, based on particular commodity prices or the economic situation of that particular plant or industry, the government is going to tell them: "No, we want to insulate ourselves from radical swings in taxation revenue. We want to insulate municipal government."

Mr. Chairman, I realize that in the so-called urban sectors of British Columbia, there may be this lack of recognition of a particular industry's ability to pay, but I would like to let the committee know that in the resource-producing areas of this province — one of which I represent in the Legislature — a particular industry's ability to pay is something that everyone knows about at the local level. In fact, commodity prices are watched very carefully by all constituents, especially as they relate to prices for — in my particular case — refined metals, fertilizers, lumber and market pulp. While we may be in a fairly good situation in most of those commodities right now, the fact is that we all know we have been through a very difficult period over the last five years, and many of those

[ Page 3031 ]

industries actually have been in a loss situation for many of those years.

I cannot support this particular section of Bill 67 as long it does not recognize not only fair market value in terms of real estate assessments but also a particular industry's ability to pay at any given time.

HON. MR. COUVELIER: Mr. Chairman, the hon. member is clearly speaking against the intention of the bill. His euphemism "ability to pay" is merely an income tax. The hon. member seems to have it in his mind that he would prefer us to collect property taxes on the basis of income. My goodness, I can't imagine anything more contrary to the principle of the whole operation of property taxation in this province and, indeed, in nearly every other jurisdiction in North America.

Property taxation has traditionally been based on some benchmarks of value. Income is not one of them and never has been; nor should it be. For the hon. member to suggest that a firm's profitability should influence the amount of property taxation that firm pays would mean that in depressed times, the communities they reside in would become bankrupt, bereft of taxation income, while on the other hand, during good times, they would have windfalls of taxation provided to them. Surely the hon. member doesn't believe that you can run a stable, responsible society practising that kind of taxation policy. If the hon. member prefers to see income taxation applied to property taxation, I suggest he would be in a minority in terms of anybody intimately familiar with the whole question.

The suggestion that the assessment should somehow have this variation totally ignores the basic assumption here, which has been traditional for years in B.C.: that assessments do not set taxation. Taxation rates are set under the old system by mill rates, or under the new system by the municipality. Assessments are only one function or factor in the detennination of property taxes.

What we're saying and what we believe in with a very deep conviction — and I know that some members of the opposition would agree with this position — is that it is proper that local governments have the freedom to determine the taxation rates of industries and residences in their communities. If by some twisted logic of centralist thinking it is perceived that we could do that job better in Victoria, in this ivory tower, than could the people in each of those communities so affected, I must very severely disagree with the hon. member.

The history of taxation in this province shows that municipalities, generally speaking, have acted responsibly. There have not been widely dispersed tax grabs on the part of municipalities as they related to the industrial sector in their tax rolls. They have acted responsibly; we believe that they will continue to act reponsibly. If, however, they fail to do so — as I've assured the other hon. member — we have the remedies at hand to insure that the freedom to tax is not abused. We do not think it will be. We are confident that the local governments in this province will continue to bring the kind of responsible decision-making that historically has been done when it comes to taxing industrial properties.

What we've done here is to create a separate class of property for industrial properties, so that they can continue to act responsibly and also, by clarifying definitions, we can ensure that the industrial sector itself has some confidence about what its taxation will be, now and in the future. We think this is a positive step, and I'm comfortable standing before the hon. member and saying that it has a broad degree of support by both sides of those affected by this matter.

MR. D'ARCY: The minister, with his usual level of bombastic replies, either misconstrues or fully chooses to misconstrue what I was saying. The point I was making to the committee — and I will attempt to do it again — is that if a particular manufacturing operation is selling a particular product today at, say, $600 (Canadian) a tonne on the world market, and a year from now that world market price has dropped to, say, $300 (Canadian) a tonne, that particular operation is simply not going to be worth as much on a free and open market as it was when it was $600 a tonne. In other words, if that company that owns that particular operation was to go up for sale, you are not going to be able to get the same amount of money when your commodity price is $300 a tonne as when it was $600 a tonne. That is ABC: that is Mac and Muff stuff.

The minister is attempting to say that we on this side of the House are arguing differently. What we're saying is: the minister and the government should recognize the fact that commodity prices do affect the market value of a particular piece of industrial real estate at any given time. It would appear, from this legislation, that the government wants to recognize increases in market value based on commodity prices, but they do not want to recognize decreases in market value of any given operation based on downward variations in commodity prices. In other words, they want to have their cake on a good day, which is fine, but they don't want to run the risk of losing any of it — sharing the scarcity, in other words, when it's raining a bit out there. Mr. Chairman, that's why I have a concern about this.

I also want to object to the minister's reference to centralization, when clearly the minister is taking powers to review, as he said himself — I believe that was his term — the taxation levels placed at any given time by a municipality, based on this extra category of taxation. These are powers, Mr. Chairman, which the government has not had before. Avoiding the argument, for a moment, as to whether or not the government should have those powers, for the minister to talk about this side of the House wanting centralization, when part of this bill in fact takes those powers of centralization to review the variable mill rate that may be established by the duly elected authorities at the local level, powers which the government has not readily had before, sounds to me a little bit absurd.

As I say, I don't want to get into a discussion as to whether or not government should have that right to make that review; I suppose there is the remote chance. I have no experience of any duly elected municipal authority indulging in what the minister described as a tax grab. It may have occurred. Maybe it's like beauty or obscenity: it's in the eye of the beholder. But I know of no example, in my 15 years as a legislator and my involvement, you might say, in the world outside this House before that, of what you could describe as a tax grab by a duly elected municipal authority. But the minister seems to think that that has taken place, or could take place. He, Big-Brother style, wants to give government the right to decide when a so-called tax grab is taking place, and do something about it.

Mr. Chairman, I would rather see the electors at the local level have the opportunity to do something about that, in the same way that I would like to see the electors at the provincial

[ Page 3032 ]

level perhaps have the opportunity, as soon as possible, to do something about the present Minister of Finance and his policy.

HON. MR. COUVELIER: Mr. Chairman, I'm delighted to have the hon. member agree with me: the municipalities have acted responsibly in the past. We can only assume he would also agree with us that they will not act irresponsibly in the future, in terms of their taxing power.

Just to clarify, I think that what I said to the hon. member was that there exists in other statutes legislation to ensure that there are remedies available; I didn't suggest it was in this statute. Those have been historical and in place for many years, in case the hon. member didn't know.

I've now understood what the member is dealing with or concerned about, and I guess the reason I didn't grasp it sooner is that he evidently didn't recognize an action this government undertook a number of years ago, which was to eliminate machinery and equipment from the property taxation assessed value rolls. We eliminated between 60 and 70 percent of the industrial tax base by eliminating machinery and equipment, a very significant reduction in assessed values for industrial properties.

So I submit to the hon. member that, given the situation he described — that is to say, a very high commodity price one time and a lower price for that same commodity later.... All we're talking about here in terms of the assessed value is the building. We're not talking about the machinery and equipment. The building itself is not normally the major item or component in an industrial operation, and buildings per se have less volatility in terms of resale value than other parts of an enterprise's assets. So the hon. member has to make that distinction before he makes these sweeping statements.

[3:15]

Section 3 approved on the following division:

YEAS — 31

NAYS — 14

On section 4.

MR. BLENCOE: Watch the chamber empty when we talk about assessments, Mr. Chairman. Unfortunately, this stuff doesn't seem very attractive, but to local government it's an extraordinarily big issue.

I've got only one question on section 4. It's my understanding that we are removing here the appointment of people who are experienced in the law of the real property appraisal system that we use to try....

MR. CHAIRMAN: Hon. members, the second member for Victoria is trying to make his point with respect to section 4 of this bill, and the Chair would appreciate it very, very much indeed if we could have a little quiet in the room. Please proceed, hon. member.

MR. BLENCOE: Thank you, Mr. Chairman. I know you know how important assessments and all these things are to local government.

Is the minister aware that the committee on assessment recommended a special assessment board for large industrial properties? I was wondering why the minister decided not to have such expertise in this area on his appeal board. What is the rationale?

HON. MR. COUVELIER: The hon. member's question is quite relevant. The proposed restructuring will allow exactly that to occur. In other words, it will now be possible by virtue of considering all of the Assessment Appeal Board members to be potential candidates for an appeal, rather than having them assigned to specific boards by number. It is now believed that the manager of the system will have a greater pool of talent to draw from as the arguments of individual cases are developed. The cases that have been coming before the appeal board have become quite involved and detailed. In some circumstances it would clearly be desirable to make sure that there is strong representation from the legal community; in other circumstances it may be more desirable to have strong representation from the assessor community. As a consequence therefore, we believe that this gives us more flexibility and that it meets the recommendation of the task force.

Section 4 approved.

On section 5.

MR. BLENCOE: A general question to the minister. It's my understanding from reading this that the board will still make up its own rules, but that this amendment absolves them from the legal rules of evidence, not just the technical rules of evidence they were absolved from previously. They also, I think it goes on, may use any information obtained in any manner the board, panel or member thinks suitable. My first question to the minister is: why has the government, in its wisdom, removed the requirement that the board follow legal rules of evidence?

HON. MR. COUVELIER: It is our belief, and it is the belief of those who have been involved in the system during the rapid acceleration in the growth of these appeals, that there is merit in ensuring that the adjudicating board have as wide a latitude as possible in order to determine the facts, and that there be total freedom to develop all sides of the issues that are being argued.

I should point out to the hon. member that there is still the opportunity, if an appellant deems it necessary, to appeal to a

[ Page 3033 ]

court of law if the issue of natural justice is in dispute. There is a continuation of all of the protections that the old system had, but also a change that will allow, and we think ensure, that all aspects of these cases are deliberated upon by the appeal boards.

MR. BLENCOE: Part of me understands what the minister says, that the appeal board is growing and allowing them more flexibility, etc., but part of me also doesn't like removing legal rules of evidence. Also I read in this same section that the panel members may act on information "obtained in any manner the board, panel or member thinks suitable." Now, when I hear vague terms likes "thinks suitable" and "no legal evidence," I'm beginning to wonder what kind of board you're setting up.

This is a very important board. It deals with people's homes, and there are lots of dollars involved, and a lot of people feel very strongly about this area, as you know. You and I have known about this for a long time. I just wonder why you would leave yourself open to people saying,"Well, we don't have legal rules of evidence now and they can obtain information any way they want" — "suitable" is the word used.

I wonder if the minister has any answers to those concerns that have.

HON. MR. COUVELIER: The way the boards have traditionally operated, I am advised, has been such that this change of wording more closely accommodates their style of operation.

Interjection.

HON. MR. COUVELIER: No, no. Just a moment. We're talking about amending a piece of legislation. What I'm telling the hon. member is that the amendment he is referring to now merely legitimizes a practice that has been in place for some time, or so I understand. It is the opinion of those affected by this that this wording is desirable. The objective at all times is to ensure that all aspects of the issues can be considered in a less judicial-type setting.

As someone who has sat on some of these types of boards in the past, I feel that in the interests of the appellant they should be run in a way that does not tend to intimidate those people who appear before them. I find nothing wrong with an appeal board being run in a way that puts the appellant at ease and ensures, by its operating style, that these matters can be discussed calmly and rationally in an open and frank atmosphere. The traditional judicial approach to these kinds of questions, as the member, I suspect, would know, is sometimes inhibiting and sometimes does not allow for the widest possible exchange of views.

[3:30]

We think that this is a positive, constructive initiative that will more sensitively deal with many of the appellants who appear before the board and don't have the legal training that a full judicial type of approach might require.

MR. BLENCOE: I can understand the minister, and I know that assessment process and I've known citizens who have gone through it who feel it somewhat overwhelming. Many citizens don't even want to go through it because they don't understand it. Many times they ask me to do it for them, and I'm sure they've asked many MLAs to do it for them.

The minister is saying that he wants it to be more flexible and a little more sort of homey, I suppose; not quite so overwhelming. When I see a board that is going to be freed from legal rules of evidence and with very wide-open statements about how they can obtain information in any way they think suitable, what concerns me is that the evidence may not be on the table. It may be hearsay, but it's information that to them seems suitable, and it may not be used in the hearing. I think we have to be very careful of that kind of evidence.

Interjection.

MR. BLENCOE: Hearsay evidence, Mr. Chairman.

Not wishing to prolong this debate, I would just like to record that we have some concerns with this particular section, but we will wait and see as the years go ahead exactly what happens. I'm sure we're going to hear about it.

Sections 5 to 7 inclusive approved.

On section 8.

MR. BLENCOE: My understanding is that the regulations have been enacted to tell the board how to apportion the costs of the hearing. The question is, Mr. Chairman, why the apportionment of costs is now a matter for regulation. Shouldn't the board be allowed to do that in order to remain flexible in this respect? I am just wondering why the need for this change at this time — speaking of flexibility.

HON. MR. COUVELIER: Another relevant question from the hon. member opposite, Mr. Chairman.

This section provides for an updated basis on which board hearing costs can be apportioned. The present legislation permits the board to apportion costs on the basis of the County Court scale, which no longer exists. This is a serious problem where there is clear misuse of the appeal system. An example is where professional assessment appeal agents appeal large numbers of properties in the expectation that they will subsequently persuade some of the owners to agree to pay them a percentage of the tax savings if they win. However, if this does not happen, the agents often never appear at the hearing, putting the board and the assessors to a good deal of unnecessary expense and wasted time. The intent of this provision is to provide a basis for the awarding of costs in this and similar situations.

Sections 8 to 13 inclusive approved.

Title approved.

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

Motion approved.

The House resumed; Mr. Pelton in the chair.

Bill 67, Assessment Amendment Act, 1987, reported complete without amendment, read a third time and passed.

Introduction of Bills

FOREST AMENDMENT ACT (No. 2), 1987

Hon. Mr. Parker presented a message from His Honour the Lieutenant-Governor: a bill intituled Forest Amendment Act (No. 2). 1987.

[ Page 3034 ]

HON. MR. PARKER: I rise to speak in support of Bill 70, the Forest Amendment Act (No. 2), 1987.

The amendments to the Forest Act reflect the new directions and policies on basic silviculture introduced by this government in mid-September. We have initiated a fundamental change in the way we manage and renew our forests in British Columbia on Crown land.

Mr. Speaker, we on this side of the House believe the role of government is that of a manager, planner, facilitator and catalyst for the economy. The private sector should be responsible for commercial production of goods and services. Therefore we are shifting the costs and responsibility for ensuring that our harvested Crown lands are reforested. The shift will be from the government to the companies harvesting our timber. Our forest industry will now assume the full costs for basic silviculture. These costs were previously credited to stumpage accounts. Amendments we have introduced will make preharvest silviculture planning mandatory, will enforce silvicultural performance and will require audit.

Through our new direction in forest policies and the shift in responsibility for forest renewal, we will ensure a fair return to the people of the province from our major public resource. Because of this action, Mr. Speaker, we expect the public's share of revenues generated by our forest industry to be maintained at a level substantially higher than it has been over the last few decades. We also want to ensure, through amendments introduced, that our forests will be managed to ensure that they remain a valuable resource for the future.

In brief, Mr. Speaker, this is but one of the major new directions we are taking in forest resource management, and the amendments to the Forest Act reflect these changes.

I move that the bill be introduced and read a first time now.

Bill 70 introduced, read a first time and ordered to be placed on orders of the day for second reading at the next sitting of the House after today.

HON. MR. STRACHAN: Mr. Speaker, it's a ponderous bill the minister has just introduced, and I am sure all members would like a good period of time to digest its contents. I move adjournment.

Motion approved.

The House adjourned at 3:39 p.m.

Appendix

MOTIONS ON NOTICE

93        The Hon. B. R. D. Smith to move —

That this House authorize the Select Standing Committee on Labour, Justice and Intergovernmental Relations to examine, inquire into and make recommendations on the matter of the Builders Lien Act with particular reference to the following:

1. the purposes of and the continuing relevance of the legislation in today's society;

2. the policy consideration behind the Act;

3. the desirability of repeal or reform to any or all of the provisions within the Act;

and

4. the policy directions which would guide any reform,

and to report to the House as soon as possible or following any adjournment or at the next following Session, as the case may be.

In addition to the powers previously conferred upon the said Committee by the House, the Committee shall have the following additional powers, namely:

(a) to appoint of their number one or more subcommittees and to refer to such subcommittees any of the matters referred to the Committee; and

(b) to sit

(i) during any period in which the House is adjourned, is prorogued, and during any sitting of the House, and during any sitting of the House, and

(ii) to adjourn from place to place as may be convenient; and

(c) to retain consultants as required to advise the Committee generally and during its deliberations.

94        The Hon. D. Parker to move —

That this House authorize the Select Standing Committee on Forests and Lands to examine, inquire into and make recommendations with respect to provisions of timber harvesting contracts between tree farm licensees or forest licensees and contractors, as provided in the Forest Act, and in particular without limiting the generality of the foregoing, to consider:

[ Page 3035 ]

(a) the desirability of a standard timber harvesting, contract;

(b) the desirability of submitting to arbitration issues between parties to a timber harvesting contract; and

(c) in the event that arbitration is recommended, the policy considerations and desirability of providing for the same by legislation or contract;

and to report to the House as soon as possible during this Session or at the next following Session, as the case may be.

In addition to the powers previously conferred upon the said Committee by the House, the Committee shall have the following additional powers, narnely:

(a) to appoint of their number one or more subcommittees and to refer to such subcommittees any of the matters referred to the Committee;

(b) to sit during any period in which the House is adjourned. during the recess after prorogation, and during any sitting of the House;

(c) to adjourn from place to place as may be convenient; and

(d) to retain consultants as required to advise the Committee.