[ Page 4131 ]

CONTENTS

Routine Proceedings

An Act to Affirm the Rights of Permanent Hotel Residents (Bill M202). Mr. Barnes

Introduction and first reading –– 4131

Oral Questions

Sale of Expo lands. Mr. Williams –– 4131

Taxation increases. Mr. Clark –– 4132

Poverty in B.C. Mr. Cashore –– 4132

Report of Shelford falcon inquiry. Mr. Miller –– 4133

Heart surgery waiting-lists. Hon. Mr. Dueck –– 4133

Ministerial Statement

Personal Property Security Act. Hon. Mr. Couvelier –– 4134

Mr. Sihota

Committee of Supply: Ministry of Finance and Corporate Relations estimates. (Hon. Mr. Couvelier)

On vote 37: minister's office –– 4134

Mr. Jones

Mr. Sihota

Mr. Clark

Mr. Davidson

The House met at 2:09 p.m.

HON. MR. COUVELIER: As the House knows, it is the intention of this government to forge new and continuing links with our friends and neighbours in the Pacific Rim, and I'm very pleased to have with us this afternoon in the House representatives from the People's Republic of China: Jin Duan, consul-general; Hou Qingru, vice consul-general; Yan Huimin, commercial consul-general; and Feng Xu, commercial vice consul-general. They are accompanied by the secretary of Treasury Board, Mr. Philip Halkett, and a member of the Ministry of Finance staff who happens to be fluent in Mandarin Chinese, Miss Janet Lucas. Would the House please welcome our Pacific Rim neighbours.

MR. DAVIDSON: In the gallery this afternoon, offering proof positive that this government can make inroads in even the strongest NDP family, my wife Debbie, and to help that stay that way, her friend, Paulette Winter.

HON. B. R. SMITH: I have the honour today to introduce a number of Superior Court justices from the state of Washington, including Chief Justice Quinn, who are here with their wives in the gallery. They have been in Victoria today watching the Court of Appeals in session and some of the County Court trials. We hope this will be the beginning of a good interchange between judges and lawyers from Washington state and British Columbia, as they have had more experience than we have with a written constitution, and now that we have one, we can use their help. Will the House make them all welcome.

HON. MR. STRACHAN: The second member for Delta (Mr. Davidson) missed something. Today is Debbie Davidson's birthday. Happy birthday, Debbie.

HON. MR. REID: I rise today to pay tribute to an outstanding local servant of the people of British Columbia, in particular the city of Vancouver.

On Saturday, April 23, Mr. Halford Wilson, a freeman of the city of Vancouver and an alderman there for 37 years, from 1935 to 1972, passed away after a lengthy illness. It is important that we in this Legislature pay tribute to an individual with a distinguished military career, a past president of the Union of British Columbia Municipalities, a life governor of the Vancouver Aquarium, and a former director of the Vancouver Art Gallery. He was a friend of many and will be missed.

MR. HARCOURT: I too would like to pay tribute to Halford Wilson, who served on the Vancouver city council for over 30 years and knew the city, loved it and served in many capacities. He will be missed, and I would like, on behalf of our caucus, to express our regrets and best wishes to Halford's widow, Anna-Marie.

Introduction of Bills

AN ACT TO AFFIRM THE RIGHTS OF
PERMANENT HOTEL RESIDENTS

MR. BARNES: I am very pleased to have the opportunity to introduce a bill intituled An Act to Affirm the Rights of Permanent Hotel Residents, which is a piece of legislation that, as all members know, is long overdue. In my 15 years in the House I believe it is probably one of the most important acts that I have taken.

You might recall, Mr. Speaker, that not much more than two years ago we had a number of tenants in the downtown east side who were being evicted as a result of the Expo program coming on site and there was quite a bit of speculation. I would just like to say that this bill will do something about that situation, and I hope that the government will, in a non-partisan way, ensure that it is passed.

It will protect tenants from unfair rent increases; the seizure of goods where there are disputes. It will also protect them as far as arbitrary entry by landlords into their premises and will allow them, believe it or not, a key to the front door.

[2:15]

Most of these people are single, elderly and poor. Some of them are veterans. About 15,000 all told, although we don't have the exact numbers, are in the cities in the province. There are 10,000 in the downtown east side. In moving the motion, I would like to say that I am very pleased that after this long period of time, we're finally coming up with a piece of legislation that I'm sure the House will support. Therefore I move that the bill be read a first time now and placed on the orders of the day for second reading at the next sitting of the House after today.

Bill M202 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.

Oral Questions

SALE OF EXPO LANDS

MR. WILLIAMS: I have a question to the Minister of Finance, who has been so fastidious in checking the Minister of Economic Development's (Hon. Mrs. McCarthy) furniture expenditures. Could the minister advise us if he has similarly checked her number work with respect to the sale of the Expo lands?

HON. MR. COUVELIER: I take it the hon. member is referring to the announcement made yesterday; that's the issue. Yes, I am happy to confirm that all ministries of government with an interest in the subject participated in the examination of the final recommendations.

MR. WILLIAMS: I'm pleased to hear that. Can the minister confirm that of the stated $320 million, some $200 million would be in the last three years of the deal — that is, years 18, 19 and 20, or five years earlier if that were the case?

HON. MR. COUVELIER: I believe the hon. member is fully aware that there is a participation in the package which makes it very difficult to quantify with any exactitude, by virtue of the sliding scale of revenue that returns on the basis of development densities. I don't have that file with me. But in any event, I don't know that the question would produce much in a meaningful answer, by virtue of the fact that the deal is open-ended in the sense that we will share in the success of the development of the site.

MR. WILLIAMS: At times we despair, in terms of a meaningful answer from this minister, but we'll carry on. It's

[ Page 4132 ]

standard procedure to review proposals like this where so much of the money is at the late end, rather than at the early end. When you buy a house, nobody can buy under these terms, where you make almost all the payments in years 18, 19 and 20, and only 10 percent down, and no interest in between. We'd all like to buy a house like that, let alone downtown Vancouver. But the standard procedure is to discount this and use standard mathematical formulae. The question, then, is: on that basis, what is the net present value of the Li Ka-shing offer?

HON. MR. COUVELIER: Mr. Chairman, as I indicated earlier, the province shares in the success of the full development of the site, so the proceeds to be received at the completion of the full development are very difficult to quantify with exactitude now. Matters will unfold.

The member has me at a disadvantage. I do not have with me the information kit that would provide that detail. I'm sure the hon. member has it. In any event, I'll say it again: the deal was structured to ensure that the citizens of this province receive the benefits and share in the proceeds of a successful development. What more could you want?

MR. WILLIAMS: The vaguer the answer, the louder the voice. Would the minister confirm, though, that if you applied a standard discount rate of 10 percent, the real number, if it's a 15-year deal, is $130 million, not the $300 million or $500 million that he minister talked about; it's just like her furniture. And if you used a 20-year term, which is possible if demand is not too high, in fact the amount would be $103 million for this priceless asset on the edge of Vancouver's downtown.

HON. MR. COUVELIER: As usual, Mr. Speaker, the members from the socialist side of the House have shown a tragic inability to calculate figures effectively. The truth of the matter is that the immediate benefits exceed book value, that's for sure. But by how much will depend, as I've said, on the successful development of the site, which as the hon. member knows — if he doesn't, the member immediately before him would know — will require the cooperation and sympathetic understanding of the city of Vancouver council on the issues that the developer will bring forward in the fullness of time. So none of these things can be quantified with exactitude until we understand more clearly exactly how cooperative the city of Vancouver will be in these matters.

MR. WILLIAMS: The Minister of Finance has now confirmed that he does not know the price for which we sold the most valuable land in British Columbia.

TAXATION INCREASES

MR. CLARK: I have a question for the Minister of Finance on a different topic. New census information shows that the income of the average B.C. family plunged 9.7 percent between 1980 and 1985 — eight times the national average. That's the legacy of Social Credit in British Columbia. Now your new budget makes matters worse.

The specific question — and he has to listen to this carefully — is this. Is the minister aware that a single parent with two children under 17 earning $15,500 per year faces a 39 percent increase in the provincial tax bill because of the medical premium increase alone?

HON. MR. COUVELIER: Mr. Speaker, the question is so specific that.... The normal courtesies of the House would expect that on a question that detailed we would have had some advance notice so we could have responded to the exact question put.

Let me just remind the hon. questioner that the issue was exhausted at some length with questions on the same subject from his hon. colleagues during my estimates yesterday afternoon and this morning. I can regurgitate my answers given at that time, at length, but that would consume the balance of the allotted question period, and I'm reluctant to do that. The issue is not a new one; I did respond to it at length during the discussion in my estimates.

If you'd like, Mr. Speaker, with your permission and the House's permission, I'm pleased to develop the argument. But I suspect there may be other issues that would interest the hon. members. I'm a servant of the House, Mr. Speaker, and if it's desired that I should spend more time on this, I'll be pleased to do so.

MR. CLARK: It's obvious, Mr. Speaker, that he's not aware of the impact of the budget on the working poor of this province.

One more question. Is he aware that a single person with $11,220 in gross income — or $6,500 in taxable income — faces a monthly provincial tax bill increase of 22 percent because of the medical premium increase alone?

HON. MR. COUVELIER: Mr. Speaker, the thrust of the question, I think, is intended to imply that during the Social Credit government's administration of provincial affairs, there has been some sort of negative effect on the economy. The fact of the matter is that since we have been in office a short year and a half, we have created 90,000 new jobs. There is more capital investment being made in this province of ours today than in the previous five years put together. Our province has got the best record of inflation control in Canada. Our province is creating more jobs in Canada, and the budget that the member criticizes in his question is designed to increase employment in our province by 4.5 percent in the next 11 months.

MR. WILLIAMS: The minister is a servant of the House! I'd like a glass of water.

POVERTY IN B.C.

MR. CASHORE: A question to the Minister of Social Services and Housing. It's obvious from what the Minister of Finance has been saying that he is not prepared to admit that the prosperity he likes to talk about has not trickled down to the poor working-class people and the unemployed of this province. Family poverty has grown faster in B.C. than anywhere else in Canada in the 1980s. The latest figures from the National Council of Welfare show the number of B.C.'s families in poverty jumped from 69,000 in 1981 to 105,000 in 1986 — a 52 percent increase in poverty. Will the Minister of Social Services tell the House what the cabinet has decided to do to reverse the trend that his government has created in causing a 52 percent increase in poverty in this province?

HON. MR. RICHMOND: If the member would take the time to read the news releases we've put out in the past few weeks, he would realize there are more positive initiatives in

[ Page 4133 ]

there to get people off welfare rolls and back into employment than in probably any other province in Canada.

MR. CASHORE: Supplementary. The people of British Columbia are not fooled by bafflegab news releases. Almost half a million British Columbians now live in poverty, most of them women, children and elderly. The wealthiest 20 percent of British Columbians pocket almost 40 cents of every dollar made in this province. These figures are positive proof that Socred government policies are creating a permanent class of B.C. poor. The minister has already shown us that he's prepared to dig deeper into the already empty pockets of the poor. Will he tell the House why he hasn't introduced measures to raise the income level of B.C.'s poor, those who through no fault of their own are in desperate need of help?

HON. MR. RICHMOND: I think the member should be in contact with the 200 additional financial counsellors we put in the ministry and ask them if they feel like news-release bafflegab, or if they feel good about the job they are doing to assist people.

MR. CASHORE: That minister knows full well that there has been a decline of 19 percent in front-line social workers in the last six years and an increase of 25 percent in administrative staff.

A new question, Mr. Speaker; it has to do with street workers. In November 1987 the minister announced Project Reconnect, a program for street youth. At present there are five social workers working the streets of Vancouver. Four more workers are to be added very soon. That's the good news. Will the minister assure the House that the four additional workers will be able to work full-time on this project and that they will not be bringing their existing caseloads with them? Or is this another case of smoke and mirrors?

HON. MR. RICHMOND: First of all, it is quite evident that that member doesn't know the difference between a financial assistance worker and a social worker. The 200 additional workers that I talked about are financial assistance workers, who counsel people and help them get back into the workforce. They work with them one-on-one to counsel them on how to get off welfare and get back into the workforce.

I'm glad the member brought up Project Reconnect. I'm proud of that project, after having visited the streets and seen the tragedy down there — and the member for Vancouver Centre can back me up. We have put more street workers on the street to help these kids, to save lives and to get them reconnected with society, and we are expanding the program into other cities in the province as well as Vancouver and Victoria. It is an excellent program, Mr. Member.

MR. CASHORE: The minister knows full well that the tragedy he refers to was caused by subsequent Social Credit governments in this province.

[2:30]

HON. MR. RICHMOND: Although that wasn't in the form of a question, it was an inaccurate statement to accuse any government, whether it be theirs or any government, of being the cause of kids being on the streets of our cities. It's a phenomenon that's happening all over western civilization and elsewhere, and it is something that we are leading the way in combatting. We are receiving inquiries from other jurisdictions across this country as to the progressive way we are dealing with this problem.

REPORT OF SHELFORD FALCON INQUIRY

MR. MILLER: Mr. Speaker, a question to the Minister of Environment and Parks. With regard to the Shelford inquiry into the question of the management of falcons and whether or not there should be a harvest of peregrine falcons on the Queen Charlotte Islands, the minister has the report on his desk.

Two questions: will he make that report public so that the people concerned about the issue can have a chance to review it; and secondly, will the minister confirm whether he has made a decision to allow a harvest to proceed for the purposes of falconry?

HON. MR. STRACHAN: The report has been on my desk and has subsequently gone to the ministry, Mr. Speaker. It is my intent to release it probably Monday or Tuesday of next week. I can't advise you on what position I'm going to take with respect to the question that was put to Mr. Shelford, but I can advise you that I will be agreeing with what he recommends in the study with respect to the falcon chick capture.

I can further tell the members that the reason we are working a bit on the recommendations and the report of Mr. Shelford is that the report goes far beyond the peregrine falcon situation on the west coast of British Columbia and in fact involves sea birds as well. So it's an extensive report; there's a lot to it. I will be following it to the law, and it should be introduced Monday or Tuesday of next week.

HEART SURGERY WAITING-LISTS

HON. MR. DUECK: I'd like to respond to a question taken on notice, Mr. Speaker. The question was from the opposition leader and was in regard to the waiting-list for heart surgery and what we are doing about it.

The overall position on cardiac surgery services has improved significantly over the last few months in response to initiatives that have been taken by my ministry. The turnaround in cardiac surgery services has been due to a significant resolution of the problems relating to the previously reported shortages of critical care nurses, and also space. In the Vancouver General Hospital alone we spent $2.7 million on a new operating theatre.

Increased cardiac surgery is now being performed at all three referral hospitals, and those are the Vancouver General, St. Paul's, and Royal Jubilee here in Victoria. Comparative data for the last quarters of '86-'87 versus '87-'88 fiscal years show a 20 percent increase in open heart surgery, and that amounts to 360 cases. In addition to this, the complementary treatment for the coronary artery disease of coronary angioplasty also increased by something like 17 percent between the '86-'87 and '87-'88 year.

The combined effect of these increases has, over the last few months, allowed for the service to keep pace with the new demand and to impact on the waiting-lists for cardiac surgery by reducing them approximately 10 percent. So what we have is more surgery done and a reduced waiting period or waiting-list. As of March 1988 the waiting number was 433

[ Page 4134 ]

in total. The total '87-'88 open heart surgery performed was 1,989, and the funded amount was 2,250.

Ministerial Statement

PERSONAL PROPERTY SECURITY ACT

HON. MR. COUVELIER: Mr. Speaker, I beg leave to table an information package on our proposed new Personal Property Security Act.

The information package contains draft legislation and a detailed commentary which will provide interested public groups and individuals throughout the province with a clear understanding of the government's intentions. I expect that this will lead to a useful and productive round of consultations over the next five months. The proposed legislation provides a comprehensive and modern regulatory system for secured loan and credit transactions in British Columbia.

The current system governing this important area of commercial and consumer financing is highly complex. Transactions are registered in three different registries and governed by the provisions of five separate pieces of legislation. The rights and responsibilities of borrowers and lenders differ for different kinds of transactions. It is our intention to replace this with a single code of law and to establish a single registry for virtually all secured personal property transactions. This will simplify the process of registering lending agreements and clarify the legal rules governing the rights of and remedies available to both lenders and borrowers. This initiative will facilitate both commercial and consumer financing in our province.

For example, under the new registry system comprehensive registration information will be available through a single registry search. Lenders will therefore have a better basis upon which to assess the risk of lending. Potential buyers also benefit since they will be more easily able to check on outstanding loans and other charges encumbering property that they wish to purchase.

I would also note that this initiative will bring British Columbia into line with a number of other provinces and with the United States. In doing so, it will contribute towards attracting investment into our province.

It is my hope that following public consultation, the Personal Property Security Act will be introduced in the 1989 spring session. Implementation is targeted for the spring of 1990, following conversion of computer and administrative systems needed for the new registry system. It is with great pleasure that I table today the package entitled "Draft Personal Property Security Act: A Proposal for Discussion."

MR. SIHOTA: Just in response to what the minister has had to say, first of all, I want to thank the minister for letting this side of the House know in advance of the fact that he would be tabling these documents and the exposure piece of legislation which he's circulated. I haven't had a chance to take a look at the bill in any detail, simply because I've been getting ready for estimates. However, the principle of the bill is certainly sound, and if I recollect properly, other jurisdictions such as Alberta, Manitoba and the Yukon Territory have similar legislation in place.

If, indeed, the legislation achieves the goal it purports to seek, then I'm sure that many law students at universities in this province will be delighted because they'll find it far easier to get through their secured transaction courses, which are among the nightmare courses right now for all law students. Every articling lawyer out there in the profession will certainly be delighted because they won't have to go to six different registries to look up on behalf of clients whether or not a charge exists against various chattels or other items. I'm sure there'll be a collective sigh of relief in the various law schools, and with various young lawyers out there.

Nonetheless, I'm sure most of them will be disappointed to learn that it will be 1990 before it's introduced. But I guess there will be a generation of lawyers that will profit from it. I know that the Law Society has looked forward to this type of legislation, and we look forward to debating it in the House and, hopefully, through that process, improving it, should that be necessary.

Orders of the Day

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

ESTIMATES: MINISTRY OF
FINANCE AND CORPORATE RELATIONS

(continued)

On vote 37: minister's office, $293,411.

MR. JONES: Good afternoon, Mr. Chairman — and to the Minister of Finance. I'd like to leave some of the weighty financial figures that the minister and my colleagues feel so comfortable with, move to another area of ministerial activity and provide for the minister, who said this morning that his personality was not one of arrogance .... I certainly want to accept that on its face value. I know the minister would certainly not mislead the House on that matter. However, I do have to agree with the opposition House Leader, who often describes the minister as having a Couvelier attitude, which is a problem.

I'd like to provide the minister, who is certainly a senior minister of the Crown, a minister whose statements seriously reflect on the government of the day, with an opportunity to clear the record on some of the statements he's made in recent weeks. As a member who respects the House and the government, I sat through the minister's budget speech, as did all members on this side. Unfortunately, when our Finance critic responded, the government side did not give the same courtesy to the House or to the opposition.

I went home a couple of days later to my hotel room and turned on the television, and there was the Finance minister again. I believe he was making a speech to the Victoria Chamber of Commerce or some such body, and believe it or not, I didn't switch the channel. I listened to the minister's speech, and I found it valuable and informative, particularly when the minister was asked a question later on in the program. The questioner asked about the price of beer. The questioner seemed quite irate that the government had made a promise during the last election to lower the price of beer. This particular questioner suggested that the government had failed in its responsibility to live up to its promises to the electorate in lowering the price of beer. I am sure I heard the minister state in that meeting that the government did lower the price of beer. I know that the Finance minister would like an opportunity at this point to clear the air and clear the record and state categorically in this House: did the government lower the price of beer, or did the government not live up to its promise in the last election?

[ Page 4135 ]

HON. MR. COUVELIER: I am delighted that the hon. member had the patience to sit through yet another dissertation on the budget, although it wasn't personally but through the tube. In any event, dealing with the question of beer, I can provide the hon. member, if he wishes, with a chart that compares markup rates and taxation rates throughout Canada. The information contained in the chart would illustrate that B.C. has the lowest-cost beer in Canada, with the exception of Alberta, which, as you know, has no sales tax. We are very proud of our taxation levels in terms of their comparability across the country. In short, Mr. Chairman, were a person to be drinking beer in any other province of Canada, with the exception of Alberta, he would be paying more for that privilege than he is in the province of B.C.

Furthermore, dealing with the specific issue of whether there is a reduction in beer, being ever sensitive to the possibility of someone quizzing us on that point, the hon. member might recognize that we have reduced the markup on low-alcohol beer. It turns out that if an imbiber of brewed beverages is interested in reducing his alcohol content, he can indeed do so at less cost than with the regular alcohol content. That's an initiative to address the question of substance and alcohol abuse, which is equally a concern of this government and, as the hon. member knows, resulted in our increasing the spending in that category by $23 million this year. We are attempting to hit the same target with two different devices, one a taxation measure and the other a spending measure in terms of education.

[2:45]

MR. JONES: The Finance minister is always most interesting in terms of giving lessons in how to give a tangential answer to a direct question.

The question was posed by a member of the audience at the chamber of commerce luncheon. The question was very clear: has the government lowered the price of beer? The minister goes on about beer prices across Canada in his answer to me, but in his answer that day — and if the minister wants to check the tape, he can — he clearly left the impression that the government, through its initiatives, did lower the price of beer, and he didn't say low-alcohol beer or any of these other things.

Drug and alcohol abuse programs are not part of the question. The minister left the impression in the minds of that audience and the television viewing public that the government, through its initiatives, had lowered the price of beer. Does the minister want an opportunity at this point to correct the record on that misinformation at that meeting?

HON. MR. COUVELIER: I am very pleased to have the opportunity to address that issue. The government doesn't set the price of beer in that sense. As I think the hon. member understands, it's a question of markups that the liquor distribution branch might choose to levy and also a question of sales tax that might be levied from the revenue branch of my ministry. It's a combination of those two things, neither of which could have a direct influence on the price of beer to the consumer. Indeed, that's one of the reasons many of our taxation policies are indexed: so that there is no incentive among the prime producers to preempt market niches without at the same time recognizing that government wants a piece of that action also.

In any event, I have asked a staff member to produce a copy of that comparison for the hon. member, because I am sure it will be an important part of his speech package for his use in the future. That will be here shortly.

MR. JONES: Let me get it straight. Going into the last provincial election. the Social Credit Party and the Premier of this province very clearly said to the electorate: "We will lower the price of beer." To me that says the government will take specific initiatives on its part to bring about a reduction in the price of beer. Very clearly the minister has indicated that it's not government policy to do that; that's different than what was said in the election. He says it's not the government's role but the role of the marketplace to determine the price of beer, and the only influence the government has is sales tax. The minister in this last budget has, in fact, increased the sales tax to beer. Draft beer, in particular, got a healthy whack. In the last election we had a promise which the minister is saying cannot and should not be delivered by government. He has done just the opposite to the price of beer in his budget than what was said in the last provincial election. Do I have that straight? Isn't that the scenario, Mr. Minister?

HON. MR. COUVELIER: Mr. Chairman, the hon. member has a selective memory; I suppose we're all guilty of that offence. I had specific responsibility for the liquor distribution branch early on in our mandate. I suppose, given the fact that I obviously didn't do a very good job of it, the Premier took it off me and assigned it to the Labour minister. During the brief period I had the responsibility, I gave fair attention to how government might ensure a lower price of beer.

As a matter of fact. the "selective memory" comment I opened the statement with deals with the fact that we did in fact lower the price of beer during the period that I held the portfolio; I take some pleasure from that.

The difficulty, of course, is that by government's action to lower markup and other initiatives, the trade can fill a vacuum in a price-setting sense and subvert government's desire to see a lower priced product. The fact of the matter is, we don't regulate the end price of beer. Because of that, it would be very difficult for any government to guarantee a low-priced beer for evermore, unless they were prepared to bite the bullet and regulate end price.

In answer to the member's question, if you check the record, you will find that early on in our mandate we were able to deliver, through a variety of devices, a lower priced beer to the marketplace. It begs the question of how long government must stick to a commitment to do something. After you do it, how long are you pilloried — for ensuring that it stays in place forever? This is a rapidly changing world with different dynamics and circumstances, and as long as a government practises a philosophy such as we do, which is that the industry, trade and marketplace should determine most of these features, rather than ourselves intervening to create artificial situations, then we would not embrace the philosophy of setting the end price of beer.

We have addressed the question, spent a lot of time on it and we did deliver a lower priced beer through our imaginative taxation and markup devices.

MR. JONES: I'm sure it wasn't the lack of ability on the part of the minister that that portfolio was taken away from him; perhaps the Premier was afraid he might get drunk with power as a result of having too many responsibilities.

[ Page 4136 ]

1 would like to ask the minister just to clarify — perhaps he said it and I missed it — saying that he delivered on the promise, that we did lower the price of beer. Of course we couldn't carry on; the marketplace must prevail. But there was a period in time when the government and the minister did deliver on the promise of lowering the price of beer. I'm not exactly clear — maybe it's just a poor memory rather than a selective one — on how that happened. Perhaps the minister could just elaborate a little bit on how that promise was delivered on. How did the government go about delivering on their initiatives, leading to a lower price of beer? Did they lower the sales tax? Were there other ways they assisted the industry to lower that price?

HON. MR. COUVELIER: We used a variety of methods to influence the end price of beer, and I'm pleased to say they were successful, albeit only for a limited period of time.

Interjection.

HON. MR. COUVELIER: Personal representations on the minister's part, in-depth discussions with the trade and their problems, some accommodations by the LDB in terms of operating styles that might result in efficiencies to the trade. We pursued a number of initiatives that would have the consequence of enabling the brewers to pass on a lower priced product.

MR. JONES: I think the minister has confirmed my description of what happened: the government did not deliver on its promise. It took no initiatives that produced a lower price of beer. Perhaps the marketplace did for a small period of time. The minister has really not given any concrete examples of how their initiatives led to a lower price of beer. In fact, all the government has done is increased the sales tax, which has increased the price of beer.

Very clearly I say to the minister that I wouldn't try that one again in the next election. I don't think it would be very effective. I don't think you delivered on that promise; better not try that one again.

That was one comment the minister made. I'd like to give him another opportunity to clear the record in terms of statements he has made. I'm sure this one was poorly reported and taken out of context, and that the minister really didn't say to Times-Colonist reporters: "Remember, I lied to them last year as well. You can't put too much credence in what a politician says, you know." I happen to be a politician, and I hope that my word can be taken. I'm not a senior minister of the Crown, but I hope my word has some credibility. When I say something in this province, I hope it's believed.

I'm sure that was taken out of context and that the minister did not say those words, and I know he would want an opportunity to clarify for the record how he was mistreated by the Times-Colonist on that occasion.

HON. MR. COUVELIER: Mr. Chairman, I'm not sure that the media took it out of context, but certainly the hon. member has. The subject we were discussing was the media's attempts to get out of me what the coming budget would contain. Of course, it's traditional that they be denied that piece of confidential information. The media, as is their bent, will come at an issue in any of a hundred different ways, all intended, of course, to realize their goal of disclosure. When the recipient of their interest is not inclined to disclose, then great byplay takes place and we have much fun together.

The comment I made certainly was true in the sense of discussing confidential budgetary matters. I alert the media that they should not take great stock in the kind of information I might transmit to them either directly or indirectly by omission or by specific mention. The member, I'm sure, in the fullness of time, will find himself in the same situation at some point, and then can properly appreciate the gamesmanship that takes place in that kind of setting.

MR. JONES: I certainly appreciate the difficulty that the Finance minister faces under those circumstances. However, I've never found the Finance minister to be short of many more words than I think are necessary, and he is often quite capable of wrapping his tongue around a variety of ways of expressing himself. As I said earlier, he's most capable of giving a hundred different tangential answers to questions without coming up with a statement that says he tells lies to the press.

I'm quite disappointed that the minister came out with that statement. I don't think it does any member of this House any good, and I think the minister is most capable of relaying to reporters the sensitivity with which financial information is held prior to budget time. There was absolutely no need to come out with what I think is an absolutely ridiculous statement that does discredit to all members of this House.

I'd like to pursue another comment that the minister made in a post-budget news conference. The minister indicated at that time that B.C.'s jobless rate was high because "so many people do not want to work," and that in fact: "Many of those listed as unemployed aren't...interested in getting a fulltime job." They are only interested in finding an income source "while they pursue their...goals of self-realization." It seems to me that when we have an unemployment rate that's twice as high as Ontario's, when the minister brags about the number of jobs that have been produced in this province, he must realize that every one of those jobs was filled by a unemployed British Columbian who wants to work and make a full contribution to society and pay taxes and be a self-fulfilled citizen — not through whatever course of action while collecting social assistance or unemployment insurance. They want a job. People identify themselves as working people and as having their identity fulfilled by having a job.

For the minister to say that the unemployed in this province are a bunch of lazy bums and are not interested in working does a disservice to the government, to this House and to that minister. Mr. Minister, I don't know why you choose to come out with these outrageous statements. You are quite capable of defending yourself to reporters and explaining things clearly. Do you really believe that the unemployed — over 10 percent of the working population — are not interested in working? Is that what you really mean? Is that what you mean when you say to reporters that unemployed people in this province are a bunch of lazy bums?

[3:00]

HON. MR. COUVELIER: The hon. member is very soft-spoken and gentle, but he certainly has taken my comments out of context and expanded them and changed the words. It's not a very gentlemanly thing to do, Mr. Chairman.

What I have said — and I have said it often because I believe it to be true — is that I have great suspicion of the

[ Page 4137 ]

figures produced on unemployment for this province. I believe that there is a structural unemployment problem inherently built into those figures. I also believe that there are many young people.... One hon. member was quoted as saying that I said "most." I certainly did not say "most." Not only young people — I'd include myself among the older people — would not be offended were they not to find 40 hour-per-week employment. There is an emerging — if you like — west coast lifestyle that sees personal self-development and life enrichment as being higher priority issues in a personal sense than punching a clock on a 40-hour-a-week basis. I think that's a fact.

I don't attempt to quantify it and suggest that it is the majority, and that there is anything wrong with it. As a matter of fact, before I got back into politics, I tried to talk my wife into doing exactly the same thing. So I don't think there is anything shameful about it. I think it's a fact of our modern society, and something that our successors are going to have to deal with in some sense that can quantify it. I think that we are comparing apples and oranges in many instances when we look at these unemployment figures.

For the hon. members opposite to twist my remarks to imply that I was speaking in a derogatory sense, they absolutely and totally misunderstand the thrust of my comments. It deals with the whole purpose of life, and that's a subject that we can get into while discussing my estimates, but I think it's a misstatement to imply that I was speaking in any negative sense of people who don't wish to march to the drummer of the majority.

MR. JONES: The minister should know that I did not misunderstand his statements. I totally reject his statements; I think his statements are absolutely false.

What he does is take a very small percentage of people in this province who are unemployed and who perhaps share his value in terms of the work ethic and do— as he suggests — accept income from the government while pursuing goals of self-realization. I suggest to the minister that that's a very small percentage of the thousands of unemployed people in this province.

When that minister suggests that we should be satisfied with a 10 percent unemployment rate and not consider improving upon that, that's an outrageous statement for the minister to make. As a senior minister of the Crown, representative of the economic development and financial policy that this government is going to take, it is absolutely shameful, and it really bespeaks the kind of thing that the minister should hold as a private citizen. But for a minister of the Crown to come out and say to the people of this province: "We don't give a damn about the fact that you're unemployed...." That's what it says to me: "... because you're having such a good time there finding your self realization." I really think that that kind of statement is even beneath the dignity of the Social Credit government.

I really think the minister has passed up an opportunity he had on behalf of the government to make a much more reasonable statement of the hopes and aspirations of British Columbians, who probably in the vast majority through no fault of their own end up unemployed and unable to provide for their families the standard of living that that minister has probably always enjoyed and takes for granted.

When he speaks in such a cavalier manner and so casually about a 10 percent unemployment rate — when we know that Ontario can do twice as well as that, having something like a 5 percent unemployment rate — that must tell the minister at least that he's wrong by 5 percent and that he's disparaging half of the unemployed people in this province. I think it's despicable for the minister to take that kind of attitude. It's fine to hold those views personally, but as a senior minister of the Crown, you've got to do better and your government's got to do better. You've got to work harder. That kind of attitude is not going to lead us to a lower unemployment rate in this province, and I think it's shameful.

MR. CHAIRMAN: Just before I recognize the Minister of Finance, I'd like to take a moment, if I can have the attention of the hon. members, to remind all hon. members that I'm hearing things that were well canvassed in the budget debate, and to suggest that perhaps we could stick to these estimates as opposed to canvassing those items that have already been fairly well canvassed.

Also, I might mention that I have noticed on a number of occasions.... It's very seldom and probably inadvertently done, but I'd just like to bring the hon. members' attention to the fact that profanity of any kind is not permitted in the House. Having said that, I'll recognize the Minister of Finance, if he would like to respond to that last statement.

HON. MR. COUVELIER: I don't think I'll bother, Mr. Chairman. My comments are on the record and will speak for themselves. I won't bother dragging this out any further.

MR. SIHOTA: At this stage of the estimates, I want to raise my concerns about the activities of the Vancouver Stock Exchange and spend a fair bit of time this afternoon going carefully through those concerns. I will do this with a view to eliciting from the minister at the end of the day an indication of where he stands on certain salient weaknesses within the stock exchange structure as it is in this province and on certain activities as they relate to the Vancouver Stock Exchange.

I want to talk about the activities of brokers and brokerage houses, the activities of promoters and the activities of those trading on the floor. I want to talk about specific stocks. I want to talk about the weaknesses within the current Securities Act and regulations. When I'm talking about stocks — because I anticipate this from him — I want the minister to understand that I'm talking about instances that have occurred both before and after the implementation of the act, partially in an effort to develop the thesis, which I think is true, that very little has changed despite the new act.

I should at the outset indicate for the record just where our party stands on the matters of the Vancouver Stock Exchange. Our party recognizes the need for a vibrant and active exchange. We recognize, and I firmly believe, that there is a role for a junior exchange in British Columbia and in Canada. We believe that that should be happening out of Vancouver. We believe that a properly functioning exchange could play a pivotal role in the development of Vancouver as a major financial centre.

The thrust of my comments today is not to urge that the stock exchange be shut down, as others have suggested, but more importantly that we begin to emphasize quality not quantity with respect to listings on the exchange, that we begin to emphasize regulation, that we make sure that regulators move quickly, that sanctions are effective and timely, and that we begin to address the matter of the exchange's image which, whether the minister wants to admit it or not, is a

[ Page 4138 ]

negative one. I can quote at length, which I won't do at this stage. But if we want to debate it, I could quote at length from international articles that have been written in the last year as to the exchange. The reason I mentioned last year is that it's really been over the course of the last 18 months or so that both the minister and I, being newcomers to this House, have engaged in an ongoing dialogue as to the activities of the stock exchange.

I want to start off by going over some of the comments the minister made last year. I don't intend to put a lot of time into it, because I think there are other issues that I want to get to that are a bit more important, and I am somewhat sensitive to the amount of time that remains today, although we will have time tomorrow to pursue the matter as well.

Last year I brought to the attention of the minister all sorts of activities on the exchange that were of concern to me. I brought to the attention of the minister the activities of certain promoters and governors within the stock exchange, inequities with respect to the application of regulations, and changes in the act that didn't seem to be accomplishing what they were designed to do.

We had last June, if the minister will recall with any level of accuracy, what can be described as a heated exchange. I went through a whole series of individual stock transactions and indicated to the minister where I saw problems. It's interesting to note that if you go through every one of them — and I don't intend to — I think it's fair to say that we were fairly accurate in terms of my predictions as to what was going to happen with various stocks.

One in particular, which I think has been a notable activity in the stock exchange, is where I would like to begin. This stock, when we talked about it in the course of our exchange last year.... The minister picked out two stocks on the exchange to use as an argument as to where my arguments had failed. The two examples were Axiom and Jolt Cola. I just want to refer to what the minister had to say. I know he has officials here from the exchange, so I am sure they can counsel him appropriately on this matter.

I want to remind the minister what he had to say about Axiom, because it was a stock that I mentioned. Believe you me, I am not being selective; I am just picking the two that the minister mentioned last year. I think they indicate what is problematic about the exchange. What's really problematic about the exchange is that very little of the money ever gets into the so-called product, but a tremendous amount of money goes into promotion and hype to drive up the shares of various stocks, to the benefit of those inside who know what's happening and to the detriment of the investor, who seldom knows what's happening.

If the regulatory system was doing what it ought to be doing, clearly the investor should know what's happening and the insider ought not to be able to profit. More importantly, in the context of a functioning venture capital market — a proper one — a greater percentage of the dollar that's invested ought to be going into the product. Inevitably it seems as if that doesn't happen in the Vancouver Stock Exchange.

One of the stocks I raised last year was Axiom. The minister said:

"A review of our files has failed to disclose any signs of questionable activity by Axiom. No investigation file has ever been opened, indicating no complaints or inquiries have been received as related to the company's activities. No cease-trade orders have been issued, indicating timely filing of all financial data, and insider filings appear to be up to date."

"Unless evidence of wrongdoing is presented, Madam Chairman, we have no cause or reason to become involved with that company."

Yet if you take a look at what transpired over the year, precisely what we said was going to happen has happened. Over the last year or year and a half, Axiom has issued releases with respect to ventures in Hong Kong — I believe a hotel development in China. Yet the certificate of deposits that was filed or was to be part of the transaction's underpinning turned out to be false.

[3:15]

Stock had gone up to somewhere between $5 and $6, until the Financial Post exposed in a story the extent of the failings of Axiom, and now the stock sits at about 25 cents a share.

The Vancouver Stock Exchange stalled the company and its individuals on certain aspects of the deposits, but interestingly, Mr. Chairman, as far as I can ascertain from a review of that file, the public has never been, informed that the certificates of deposit were false — no public disclosure of what had transpired. But perhaps more worrisome to me, Mr. Chairman, is that the VSE still hasn't taken any regulatory sanctions against the company for those falsehoods, and not even a press release has been issued by either the company or the exchange to say that the original stock certificates were false. That example alone certainly makes one wonder whether or not the Vancouver Stock Exchange is capable of investigating itself.

With respect to the Axiom situation, I would like to ask the minister, first of all, to explain what improvements have been made to each of the VSE regulatory agencies in the time since I first raised the Axiom matter in the House, to ensure that such regulatory oversights are never repeated.

HON. MR. REID: Mr. Chairman, with leave, I'd like to make an introduction.

Leave granted.

HON. MR. REID: It's with a great deal of pleasure that I give a special welcome today to 55 or thereabouts grades 5 and 6 students from the Jessie Lee Elementary School in my constituency of south Surrey, accompanied by Ms. Bergstrand and Mr. Hollett. Would the House make these students very welcome.

MR. CHAIRMAN: Does the Minister of Finance wish to respond now?

HON. MR. COUVELIER: Yes. I'd forgotten what the question was, Mr. Chairman.

It seems to me there was some talk about a number of stocks that the hon. member had been discussing last year. I don't know that I'm prepared to or even should comment on specific stocks anyway. The hon. member knows that these issues on specific stocks quite often deny me the opportunity to comment, so that in an abundance of justice we not create false impressions in the marketplace or, conversely, limit the options that may be available to investigators to handle highly confidential issues. So I have constraints placed upon me, Mr. Chairman, in terms of responding to specific instances.

Let me just remind the hon. member of the progress we have made in the area of securities regulation in this province

[ Page 4139 ]

in the last 12 months. The hon. member is aware that we have made some personnel changes, some legislative changes and some regulatory changes. The changes we made had the effect, of course, of involving the VSE board of directors and officials, but it has taken some time for all of those things to mesh and meld into a cohesive team approach. I'm impressed with the progress made in that respect, and I believe that the incidence of disciplinary actions and court actions and decisions in recent months would support my contention that we are making good progress and developing a high degree of cooperation between both the VSE and the IDA and the Securities Commission.

Dealing with the philosophical question of whether it's appropriate for the VSE — which is the example the member chose — to be a self-regulating organization, my view is that it is appropriate that it should do that in the same sense that IDA does that and in the same sense that every stock exchange in the world that I'm aware of has a similar self regulatory mechanism. The advantages, of course, are that it imposes some sense of discipline by a peer group, which is always desirable as opposed to government interference. Another advantage is that it allows for much quicker actions— and much quicker reactions to situations. The partnership that has been developed between the Securities Commission and VSE officials is one that will show continuing results. So I have no difficulty in supporting the excellent work being done currently, and also confirming that everyone expects to do an even better job in the future as that partnership identifies weaknesses and works on solutions.

MR. SIHOTA: The minister prefers to deal in generalities. I want to tell the minister that we will be going through each one of the points he makes with respect to personnel changes and regulatory changes. I will demonstrate to him during the course of the next three or four hours how in each instance those changes haven't changed the nature of the market at all. There are simply too many questionable activities on the Vancouver Stock Exchange.

What's really happening on the exchange — and I'll return to the matter of Axiom in a minute — is best exemplified by another stock that the minister mentioned last year. Last year I asked the same question, and last year I got the same answer from the minister. The minister said last year: "I have full confidence in the system. The regulators are trying to do the best job they can. We made personnel changes." He accused me of picking out isolated cases to magnify the argument that the exchange was not doing its job properly. That's what the minister tried to do last year, and of course, that's what he's going to try to do again this year.

That's not acceptable. I'll show you why. I'll go through each one of your arguments and I'll give you enough examples of failings that there's an inescapable conclusion. I'm not picking isolated examples at all. I would say to the minister: take a look at the top ten companies that were listed on the Vancouver Stock Exchange last year and ask yourself where they are today. I've got the statistics here somewhere if the minister wants clarification, but I'm just working from memory. I think one of those ten has actually increased in value. The remainder have fallen somewhere between 10 and 40 percent in value.

The example that the minister used last year in the Legislature was Jolt Cola. If I could paraphrase him right: "The member is not pointing to good examples." He used the example of Jolt Cola, and he said: "Who would have ever thought that a company, a promotion that goes against all the dietary and good health trends of the day, would do so well." He pointed to Jolt Cola as an example of what it is the Vancouver Stock Exchange does in promoting and developing a product.

I want to say to the minister that his example was a good example. The example that he raised last year of Jolt Cola — and I would encourage him to raise others this year — reinforces the point that I made. Jolt Cola has gone from $4 to about 30 cents right now on the stock exchange. It's made all sorts of money for the promoters of the enterprise. There was very little in terms of product development. The bulk of the money went into hype, promotion and press releases to hype up the project so as to drive up the share price. As innocent investors came in to buy up the shares, out went the investment which came in at pennies for the insiders. I can't point to any wrongdoing in the case of Jolt Cola, but I can give the minister oodles of examples of other situations where there have been violations of insider-trading reports, violations of Securities Act provisions in which the press releases have been false and the brokerage houses have participated in frauds.

But Jolt Cola serves as a perfect example. It's now down to 30 cents. The money went into promotion. The general modus operandi on the exchange is that people aren't getting involved in ventures on the exchange to make the venture go, but rather to make a personal profit. Money is spent on hyping the product and raising public expectations in order to get a higher price.

That shouldn't come as a surprise to the minister. During the course of last year, I brought to the minister's attention the Brown and Jefferson report, which the minister said he had read. I don't know if he had read it or not; the report was done some eight years ago. That report demonstrated the extent to which money went into promotion and not into the development of a real enterprise.

On this side of the House, we say that the money must go into the development of the real enterprise. We don't want money going into hype and promotion. We want a market that makes a return for the investor, not the insider; that's what's happening with examples like the one the minister pointed to last year of Jolt Cola.

If you take a look at what the purpose of the market is supposed to be and what's happening to a large measure on the Vancouver exchange, it isn't dovetailing. It isn't happening, Mr. Minister. I'm using the examples you referred to last year, both in terms of Jolt Cola and Axiom. Axiom, as I've indicated, was one of the biggest scams on the Vancouver Stock Exchange, which was revealed last year.

Last summer I questioned the Axiom promotion. The company's purported letters of credit of deposit for over $20 million have been proven to be frauds, and the stock has collapsed. What's amazing about the whole thing.... I'll give you more examples of this, because I know what you're going to say, Mr. Minister. You're going to say what you said last year: "Don't talk about what has been; talk about what is happening." I'll get to those later on.

What I find amazing is that the Vancouver Stock Exchange has placed no sanctions or fines and has taken no action with respect to the falsehoods and false press releases on the Axiom transaction. Could the minister explain why, as the minister responsible in this case — which was the only one last year, other than Jolt Cola, that the minister pointed to in the course of all of our discussions...? They went on for

[ Page 4140 ]

some two days. Could he explain why in this instance the Vancouver Stock Exchange hasn't taken any action against those involved in running up the price of that stock for their own personal profit and leaving the investors out to dry?

[3:30]

HON. MR. COUVELIER: The hon. member has obviously made a decision that he will be capitalizing on the situations that exist on the VSE. That's his right. Indeed, there are many situations that arise on the VSE which are cause for concern.

The hon. member conveniently forgets that every exchange in the world has its problems and embarrassments. The hon. member forgets that we require, I understand, less allowance for promotion and introduction costs than Ontario does, for example. The hon. member, when he makes his rambling comments, wraps a whole lot of irrelevancies into his statement and makes good copy, of course, but doesn't do a great deal for accuracy.

The fact is that if you look at the top ten.... The member made some comment about "look at the top ten companies of the VSE a year ago," and implied that because it's not the same ten this year, there's something wrong. My goodness, you could look at the top ten on any stock exchange a year ago and find quite a turnover; it has nothing whatsoever to do with the issue. But in the interest of consuming time and trying to create the worst possible scenario, he keeps embellishing and exaggerating.

I say again: I believe we are making very significant progress in building a strong team approach to these regulatory issues. As I've said, it has taken actions on government's part, staffing, legislation and regulations. It has also taken time for that team, between the VSE officials and us, to build and solidify. I'm very comfortable with the state of the current degree of cooperation. I'm very comfortable with the level of funding the government has provided to the commission to do its job. I'm very comfortable with the fact that the commission will be a ten-dollar vote now, and that never again will I have to stand in this House and listen to any charge that the government, by virtue of shortchanging the commission, is denying them the right to do their job. That now is clearly going to be funded by the industry, as it should have been all along.

I think we've got everything in place to ensure that we continue making good progress on this issue. I can't remember whether the member had a specific question before he sat down or whether he was just tired.

Interjection.

HON. MR. COUVELIER: Axiom. My memory of that situation is — and I haven't checked the records here this afternoon — that the hon. member raised the name of the stock, and I responded to a question he asked at that time.

In all of the discussions that I have had with the hon. member on the question of the VSE, I'm not aware of him providing one single piece of information to us that we didn't already have. He picks up rumors and tips on the street and then brings them to the House as if he is the discoverer of the information.

The fact of the matter is that regulators have to follow due process, Mr. Chairman. The limitations and constrictions that creates are sometimes frustrating, but nevertheless, in the interest of justice, they are necessary. As I said, we are making continued, good progress in the question of monitoring and regulating, and I have no hesitation in saying that a year from now, it will be even better than it is today. We've come a long way in the last 12 months already.

MR. SIHOTA: I'm astonished at what the minister has to say, in the sense that I'm trying to have an intelligent conversation here with the minister with respect to the need for reform on the stock exchange.

I want to go back over each of the arguments that the minister just made to drive home the point. The minister says: "The member has not given us one piece of information that we didn't already have." Last year, that's exactly what the minister said when I raised a whole series of stock transactions on the Vancouver Stock Exchange which were rigged deals. The minister said: "We know all about those. Will you tell us about something that we don't know about — some new ones?"

Then I stood up to the minister, and I said "Axiom" and "Vault," and I think I said another one. Hansard has the record, but I know I said Axiom and Vault, because the minister, with his chest out, came into the House the next day and said: "We've looked at Axiom." I don't want to quote it in its entirety, but he said: "A review of our files has failed to disclose any signs of questionable activity by Axiom."

He asked me last year to tell him about one that they didn't know about that was questionable. I told him, and he came back with a report from his own staff which said that there was nothing questionable about Axiom. I told him that there was. Now he turns around to me and says: "Tell me something new." I told you something new last year, Mr. Minister, and the reason I'm using Axiom as an example is that it is the only one you replied back to from any of the new examples I gave you. I told you it was something that you ought to look at in order to protect the investor. You chose not to look at it, or at least you chose to accept your own advice, saying that there was nothing questionable about it. What I told you was going to happen happened in the sense that it turned out to be a false or a rigged deal.

You can't have it both ways. You say: "Tell me something new. " I'll give you some more new later on as we get into this debate. But I want to go over what you said last year when you said the same thing to me. "Give me something new." I gave you something new. You came back, and I have to wonder what your regulators were doing when I'm telling you that this is a questionable transaction. You came back, and you said what you said, and now I'm standing here in front of you ten months later telling you that the one you pointed to has indeed caused a problem.

Let's not play that game. I'll give you some more by the time we are finished debating. I want to talk about the new ones first that I gave you last year, which you refused to act on and which have now caused investors somewhere — either in Canada or elsewhere in the world — a significant loss through effectively a fraudulent scheme. The one I told you about last year turns out to be the biggest scam on the Vancouver Stock Exchange. Believe me, if you had investigated some of the others I mentioned, you would have come to the same conclusion. We can go through the whole list.

The minister goes on to say that I'm just capitalizing on certain problems of the VSE. The reason I'm raising these matters for your attention is that we believe there is a need to begin to bring about much-needed reform on the stock exchange. We want to make it work so that the money goes

[ Page 4141 ]

into the venture — the product — and not into the pocket of the investor. It's not enough to say that everyone has their own problems.

Let me bring to your attention one article that came out in the OTC Review, a major financial letter with respect to exchanges. It's entitled: "A Little Better Than A Crapshoot." Very early on in the paragraph — it might be of some interest to the minister to hear this — it says: "At the end of 1986, eight of the VSE's ten most active stocks had dropped at least 60 percent from their highs for the year." So it happened in 1987, it happened in '86, and I'll bet you it will happen in '89 when we take a look at '88. The minister says every exchange has that, but nothing in the same fashion as the VSE has, because again the money in this exchange is going for a purpose other than that the investor intends it for.

This is what this article says:

"'Tell your readers to avoid most Vancouver Exchange stocks,' responds a well-known, veteran NASDAQ market maker. 'The market makers are more like underwriters, and they don't play with a full deck. They show bids, but try to sell any significant quantity to them and they often disappear. Worse, there are few real companies that will prosper in the long run on the exchange. It's like our Salt Lake City penny stock market. Who is smart enough to find the few exceptions? It's not worth your time to try. There are too many scams and information is poor. With the superior disclosure and information available on U.S. domestic stocks, I can't see why Americans should buy Vancouver stocks unless they are masochists and want to lose money.' There you have it, OTC Review readers. You have been warned, and if you don't heed our friendly trader's advice, you deserve whatever happens to you."

What I'm standing up here saying to the minister is that there ought to be a concern in the mind of the minister when this type of information is circulated to those that invest in the market. If you truly want to create a vibrant financial centre in British Columbia, you've got to have a stock market that's got a clean reputation.

This is the kind of stuff, whether I'm saying it in this House, Mr. Minister — and I know what you're going to do; you are going to blame me for all of this. But whether I'm saying this or whether the experts are saying it, the point still remains that the information is getting out there and this is the impression. Write that down, Mr. Minister, because I know that you're going to take a cheap shot now about experts and my opinion. I know exactly where you're coming from.

Let's take a close look at what this article says. It says that there is a need for superior disclosure and information, as they have in the American markets. I'm not saying that we have to go to the extent of the American situation, because I recognize that we have a particular quality of exchange here, which is a sort of junior exchange. But the point is well made in the article that there has to be better regulation, better information, better disclosure than what we've got right now. If you don't, then what happens is you have an axiom. The one example that you referred to last year, after all of my examples that I gave you of a new stock — let me remind you there, Mr. Minister. You know what you said, and look what happened to that stock.

I'm not asking you to comment on Axiom per se, but what is being done here is I'm asking you to address the matter of the regulatory oversight. What does it matter what other exchanges do? What matters is what our exchange is doing.

I asked you the question which you conveniently forgot. This was one of the biggest scams this year, and yet no action was taken. I'm asking the minister why — a simple question. Why was it that the so-called new staff that you brought in, the so-called new regulatory changes that you brought in, these new personnel change~ that you made.... Why were they not able to catch this stock when I tipped you off — and I'll tip you off on some more this year — that there was going to be a problem?

HON. MR. COUVELIER: The hon. member has flights of fancy. His tips wind up to be unsubstantiated rumours that he picks up on the street from a variety of unreliable sources. The fact of the matter is that this government has to act, the Securities Commission has to act and the VSE governors have to act under due process. We don't react in some sort of situation that would allow unsubstantiated allegations to be the basis for some disciplinary action to be taken. We happen to believe in the process, Mr. Member, and let me just remind the member that his information is a long way short of our being able to use it in terms of....

Mr. Chairman, I asked the hon. member more than a year ago to share with us any information that he had that would be of use to us in expediting resolution of some of these disciplinary issues. Not once did he bring anything forward. All he brings forward, as I said, are street tips and rumours. In his naive assumption, it seems to be something we should jump to attention about. My goodness, we have many competent staff members equally able to tap that kind of an information source. As a matter of fact, we do and we monitor it. But due process is required, and certainly someone from the profession the hon. member is from should understand that best of all.

The hon. member opened his argument a few minutes ago by quoting an article dealing with NASDAQ, if I understood him properly. He knows full well that NASDAQ is a competitor of the VSE. He knows full well that for that kind of comment to come out of a competitor is like McDonald's attacking Wendy's.

He is suggesting that we should all of a sudden be concerned that two competitors are having these kinds of dialogues about their respective virtues. My goodness! Then he started to lay the groundwork so that I would be denied an argument. He says that I am going to now blame him for causing more problems. It didn't occur to me, because I used that argument last year and I don't like to repeat myself.

[3:45]

Let me just remind the member, however, that it was he, sitting in that seat a year ago, who tried to take credit for the progress we'd made to date in cleaning up the VSE and the Securities Commission. As a matter of fact, I had to deal with that in the House, making some rather disparaging comments about his sense of self-worth.

In any event, I can assure you that we are dealing with these issues as they come to light. We are working closely with the VSE in those matters. Unfortunately we find ourselves requiring a little more than rumours and street tips in order for us to take actual disciplinary action.

MR. SIHOTA: I want to deal with that matter of due process and street tips. We're not talking about street tips here, Mr. Speaker: we're talking about actual facts about

[ Page 4142 ]

what transpired with respect to this stock. I'm not telling you what the talk on the street is; I'm telling you what I told you last year when you asked me: "Tell me some that we should watch. " I told you which ones you should watch. The only one you responded to . . . . I am telling you what has happened in the past year with respect to the stock.

Interjection.

MR. SIHOTA: I'll deal with that, too, with a lot of pleasure, Mr. Minister.

I will repeat that that stock has gone from about $5 to $6 down to about 25 cents. That's fact. The reason it has gone down — now that it has been revealed as fact — is that the certificate deposits in that instance were fraudulent. That's fact. When that happens, there is a process. You're quite correct. I am trying to ask the minister: could he explain, given that process and given the fact that this was one of the biggest scams on the exchange this year, why there have been no sanctions, why the stock still trades and why there have been no fines?

There has not been even a press release put out to the public by the exchange indicating that these falsehoods had occurred. They have been reported in the Financial Post. But that's the process: when one of these things goes sour, someone is supposed to be in there to investigate. I am prepared to respect that process, but when all those facts happen, I want to know why no actions were taken. It's a simple question. You say, Mr. Minister, that your regulatory system is superior to that of a year ago. We're just beginning to deal with these things.

I want to know why no action was taken on this stock. You can respond with as many cheap shots as you want and I can give you more quotes from the article that didn't come from members of NASDAQ. There are lots of others in this article, and I will table it. But I don't want to stand here for two hours and quote the whole article for you. I just want to know. There is a process; I understand that. Why in this case, then, has no action been taken?

I will tell you, Mr. Minister; I will tip you off to where I'm going. I'm going to demonstrate to you that there are a lot of other situations where the same thing has happened and there has been no action. The self-regulatory system isn't working, your act is not working and your regulation system isn't working. We're only dealing with the first one. I just want to know — since this was one that you yourself asked for a study on after I raised it in the House — why, still to date, no action has been taken by the exchange. It's not a difficult question.

I respect that process. I want to know why still no action has been taken, given the process that you put so much credence in.

HON. MR. COUVELIER: I'm not certain I understand the question. Is the member objecting to the fact that the stock fell? If he could be more specific it would be helpful.

MR. SIHOTA: There has been no action taken, Mr. Minister. The stock still trades — that's fine. But there have been no fines or sanctions against the company for these falsehoods, and not even a press release either by the exchange or the company to indicate what actually transpired so the investor knows what happened with the company.

That's the question, Mr. Minister. If you had been listening, you would have understood that 20 minutes ago when we raised the topic.

HON. MR. COUVELIER: I'd appreciate it if the member could be a bit more specific. I gather there is some allegation of falsehood here. Could he explain exactly what he is referring to?

MR. SIHOTA: Again, Mr. Minister, we'll go through the evidence. The company's purported letters of credit for deposit were over $20 million. They have now been proven to be frauds. The stock has collapsed in price, but the VSE has not required the company to disclose to the public the curious circumstances surrounding its financing of hotels in China; nor have any sanctions been taken against the group for its issuance of a false news release.

Does the minister understand that we're talking about these false certificates and the false news releases?

HON. MR. COUVELIER: That's clear. I thank the member for that.

MR. SIHOTA: Mr. Chairman, I asked the minister a question. He asked me to go back and clarify what I said. I have done that. Now can I have an answer to my question? I learned from the Principal Trust situation that we have to take everything step by step with the minister. I want to ask the minister the question again. In light of those facts, could the minister explain why there has been no action taken with respect to fines and sanctions against the company? There hasn't been so much as a press release issued to indicate that the original certificates were false. Could he explain why his regulators or the VSE has not taken those actions?

HON. MR. COUVELIER: I'm sorry, Mr. Chairman. The member understands full well that I can't deal with these specifics. I told him that three-quarters of an hour ago. It has the effect of either confirming or denying that something may be imminent. It has the effect of either confirming or denying that something may be under investigation. I can't violate my office by telling him or the public what may or may not be in the works on specific cases.

It's all well and good for the member to go on at length about these issues, but frankly, I can't. That's the limitation of the office I hold.

MR. SIHOTA: Mr. Chairman, let me make an allegation. It's not so much that it's under investigation. That's not the point; the point is that the minister is not familiar with the situation. If he says that, that's fine. I'll accept that, and we'll move on. I don't want that type of bafflegab; I want to engage in a debate here with respect to this exchange. I'd like some specifics that relate to that exchange which point out.... As I said, this is the first one, and as we work through the others, we'll point out the situation.

It's not acceptable for the minister to hide behind the shield and suggest that something is under investigation, when I would submit — and here's the allegation — that the minister doesn't even know whether the matter is under investigation.

It reminds me of another matter that I raised in this House. I asked the minister some time ago about a stock called American Canadian. The minister said that I had "hit on one that was currently under investigation." I then contacted the superintendent of brokers' office, and they indicated that it wasn't under investigation. I then contacted Canarim, because I asked the minister to investigate, and

[ Page 4143 ]

Canarim said it wasn't under investigation. Mr. Brown confirmed that to me, and then Mr. Harwood, president of Canarim, confirmed that as well. For reasons of convenience, when he can't answer the question, the minister uses the assertion that the matter is under investigation. This stock collapsed some time ago. If the regulatory system is working quickly, as it should be — and even if it's working as the minister says it should be — then there ought to have been some resolution of this matter of Axiom.

The minister — and I think this will be demonstrated more so as we go through — is just not on top of the problems of the Vancouver Stock Exchange. Let me try to give the minister an out on this one, and we'll move on to another one. Here's the out: are you now telling the House that you are investigating Axiom?

HON. MR. COUVELIER: I don't know how much plainer I have to make it for the hon. member. If he'd take the wax out of his ears, he might understand, Mr. Chairman. The fact of the matter is I am not in a position to either confirm or deny what we or the VSE may be doing on any stock; to do so could be damaging to that stock's action in the marketplace. There could be an unfair consequence of any comment I might make; or, adversely, it may tip off some firm that we are actually undergoing an investigation. It may have the effect of limiting the effectiveness of the investigation, if such a thing is taking place.

The member is a member of the legal profession and knows that full well. I understand he's probably got an obligation to consume a certain amount of time on the clock, but we have conferred at length here, and we can find no way that I can deal with specific questions on specific stocks. It would have the effect, as I said, of creating a string of consequences that would flow from any answer I may give that might be inappropriate. In some cases it might be appropriate; in other cases it would not be appropriate. And I cannot start that kind of exercise. The member knows it full well.

I have offered the member in the past the opportunity to bring to us any information he may have which would have the effect of hastening any action we might take in a disciplinary sense. He has failed consistently to take advantage of that offer. He proposes to use this public forum for his own political devices, I suspect. The consequence of that, of course, is to further put into public question the efficacy of the Vancouver Stock Exchange and its operations, despite the member's statements when he opened his comments about the fact he supports the VSE and agrees that there is a need in North America for a junior market to exist; yet, he repeatedly consumes hours on the clock to do exactly the very thing he opened his comments by saying he didn't want to do — that is, destroy the credibility of the VSE.

If what he desired to do was to clean it up, then he must give us some specifics so we can act on it. He knows full well, Mr. Chairman, I am not able to deal with specifics, and yet he's indicated he's going to continue to do that: deal with specifics. When he knows in advance that I am not able to deal with those specific questions, surely it must be clear to even the most dense observer that he can only have therefore one motive. If (a) he denies me the right to that information on a confidential basis, so we can deal with it, and (b) he knows I am not able to respond to him in a public forum, what possible good does it do for him to consume the interest and the focus of observers on these issues when he knows I will not respond? It would only serve one purpose, Mr. Chairman, I suspect. And I leave it to all people to judge for themselves what that purpose might be.

MR. SIHOTA: I forget what the second member for Vancouver East (Mr. Clark) said about the minister getting loud when he gets vague — and that's all we're seeing here, Mr. Chairman. On one hand, the minister says he wants specifics; on the other hand, when I give them to him, he's not prepared to respond, to explain why it is that his own officials haven't taken any action. If he wants to huff and puff, that's his prerogative. But the purpose of this exercise is to try to get this minister to do what he has refused to date. The purpose of this exercise is not to kill time on the clock, Mr. Chairman; the purpose of this exercise is to get the minister to understand — and I won't use the word "dense" — in his head that there is a problem here that he has an obligation to deal with.

These aren't things that I'm just saying. I invite the minister to take a look at the comments made by Mr. Rupert Bullock, the former gentleman in charge of the exchange. He talked about the role of shell companies and about the purpose of many activities on the Vancouver Stock Exchange, and said it's doing exactly what I'm saying it's doing: fattening the pockets of the insiders, at the expense of the investors, and not to have very much money to go into the product itself. That's what Mr. Bullock said. He pointed out that problem. He's the one who put forward the argument, which I embrace, that you've got to support quality over quantity on the exchange, in terms of the type of stocks that we have.

I want to turn to another situation which, again, has been well documented. If the minister doesn't want to comment on this, that's fine, but, again, it highlights what happens on the exchange. It is a case — let me tell you, Mr. Chairman — that the minister has commented on in the past. And because he had commented on it in the past, in the course of deliberations in an exchange between myself and himself in this House, I would expect again an answer from the minister, in terms of where his officials are going. It's the Technigen case.

[4:00]

I'm sure the minister remembers the Technigen case, because it demonstrates all the things that are wrong. This was the case, Mr. Minister, you may recollect, which I raised in the House some time ago, where a company was selling golf simulators. It said it had entered into an agreement to sell millions of these golf simulators — which is a little ball that you hit with your golf club, and on a TV screen it shows you where it goes, so you can practise your golf in your office. It said it had made a deal to sell a couple of hundred thousand of these to Japan and the United States.

Last year I pointed out again to the minister that there was a problem with this stock. Since then that stock has fallen from $16 to $1, and the company has now admitted that contrary to its press release, in which it said it was going to.... I can't remember the numbers off the top of my head, but I think it was 20,000 to the United States and a like number to Japan. The company has admitted that instead of producing that many, it has only produced six of these machines and they've been models, and they're $60,000 to $80,000 in arrears to businesses.

The individual, the promoter, Mr. Nesis.... The minister may remember, because the. minister took great comfort last year in suggesting that Mr. Nesis was going to sue me in

[ Page 4144 ]

light of comments that I'd made in the House. I want to remind the minister that nothing came of that suit. Mr. Nesis, who was the inside promoter, as the stock went its way up to 16 bucks, was unloading his stock as it worked its way up. He was hyping through false releases, vetted through the Vancouver Stock Exchange — I want to emphasize that — that they had sold these machines to Japan and the United States. Up went the stock, out went Mr. Nesis's stocks, which he had bought as pennies. Mr. Nesis recently purchased an $830,000 home in Vancouver. The other two principals have also benefited immensely. By the way, there was a $570,000 down payment on that house.

What happened in that incident? Again, because of Technigen, the insider got all the profits, got all the money. The promotion on the Vancouver Stock Exchange was a scam. The investor who took it all the way up to 16 bucks lost out.

You have to ask yourself: are we achieving what we're trying to achieve on the Vancouver Stock Exchange, which is to get legitimate money into a venture? I want to remind the minister — because he said he read the report — that the Brown-Jefferson report has indicated conclusively that money on the exchange is put into promotion; it doesn't get into the venture. The minister may recall that I brought that report to his attention in this House and he told me he had read it. Again, there has been no regulatory action. The minister can tell me that it's under investigation if he wants, and that's fine; we'll leave it at that. But it serves as another example of what happens. It's like Jolt Cola; it's like Technigen; it's like Axiom, Mr. Minister.

I want to know from the minister whether or not this matter has been investigated and what sanctions, if any, have been taken against Mr. Nesis and the other principals of the company. My information, which is the information that comes from the documents, is that none has been taken to date. Has there been any? If you want to say its under investigation, go ahead and say that, and we'll go out and verify it, Mr. Minister, as we did in American Canadian, when it turned out that that wasn't the case.

HON. MR. COUVELIER: Once again, the member rambles on and on and embraces a whole host of issues before he puts a question.

The Brown report that he referred to, if I remember rightly, is ten years old. If that's the report he's referring to, Mr. Chairman....

Interjection.

HON. MR. COUVELIER: Well, exactly. Why would he mention it? That's the point. He raised the issue and uses it to embellish his argument that somehow or other we're not doing our job here. He's quoting a ten-year old report, and when I remind him it's ten years old he says: "What's that got to do with it?" What on earth did he raise the issue for, Mr. Chairman, if it's got nothing to do with it? It seems to me the hon. member is clearly under some constraint to consume time and therefore has to grope as best he can to fill the time available.

In any event, the issue here is that he's asking me to confirm the status of an individual corporation. As I said earlier, I find myself unable to respond to that specific question, in the public interest, Mr. Chairman.

MR. SIHOTA: Mr. Chairman, I try to restrain my frustration with this minister. The fact that the report is one or ten years of age has no bearing on the matter. The point I was trying to make to the minister, if he would take a moment to hear, was that the conclusions of that report are still intact. I just gave you the example of Technigen. That's precisely what has happened with Technigen. What evidence do you have — whether it's a one-year-old report or a ten-year-old report — to tell me that the conclusions of that report were wrong, or that things have changed? You can change as many acts and regulations as you want, but you haven't changed the basic effect of the market, and I'm telling you that the effect seems to be the same, and I'm giving you examples.

Give me examples of the contrary, Mr. Minister, if you've got them. Let's hear from you. If you think that my examples are selective, let's hear some alternatives from you in terms of some of the other ones. The age of the report has nothing to do with the argument. The conclusions of the report do, and the conclusions of the report are clear, and it seems to be the case that the trend is still the same. If you've got some better evidence, let's have it, Mr. Minister. If you haven't, then answer the question: is Technigen under investigation?

HON. MR. COUVELIER: Once again we have trouble, this hon. member and myself, identifying exactly what is the matter he wants addressed. When he introduced this whole issue of the ten-year-old report, he made some comment about promotion expense and implied that nothing had changed since then. I'm advised that it's a ten-year-old report and we have changed those requirements. The VSE have changed the amount of money that may be spent on pre-promotion, and therefore ensured that a larger sum is available for the purpose stated in the stock flotation in the first place.

Dealing with the specifics, once again, of Technigen, I tell the hon. member I am not going to deal with or confirm one way or the other exactly what the status of that particular issue is; and I do that in the public interest.

MR. SIHOTA: It's strange that the minister was quite prepared to comment on it last year, but now that he realizes that he is not in a position to.... It is now evident that he doesn't realize what's going on, and I think that will become apparent when we move away from specific stocks and talk about general terms.

I think it will also become apparent that the minister doesn't know what's happening on the exchange. If he did, he'd have some direct answers with respect to these matters which are at the leading edge of the problem. I'm not picking the obscure case here; I am picking the cases which are noteworthy cases, ones that have gained a lot of notoriety, and if the minister was on top of what was happening on the exchange, he'd be very familiar with these incidents.

In any event, I'm going to defer now to the member for Vancouver East for a few minutes and then be back to the minister for further questioning on this matter.

MR. CLARK: Can the minister tell us whether the privatization of B.C. Hydro, the gas division and others, will occasion the renegotiation of series EJ bonds, due 1996, a $500 million placement with several major institutional investors? As you know — you should be familiar with this — the privatization committee's original report indicated that there was potential default with respect to selling a certain percentage of the assets of B.C. Hydro. I have reviewed that; several lawyers have. I think like the minister we had several

[ Page 4145 ]

different responses to the complex formula in those bonds. I want to know whether that question has been resolved and what the ministry staff's position is on that matter.

HON. MR. COUVELIER: The member is quite right. That is an issue that has had close scrutiny. To the best of my knowledge, the issue has not been resolved. That will await the receipt of the proposals because the deals that may be put together are many and varied, and until they are identified specifically it's difficult for us to go much further on the question of that particular series of bonds. It will depend on how the sales deal is put together.

MR. CLARK: I suppose the minister is saying that there is still a possibility, maybe a slim one, that certain segments won't be sold because the appropriate price won't be got, etc. I think if you assume that the research and development division, the railway division and the gas division are sold or will be sold, then it has certain implications for these series EJ bonds, it seems to me.

Maybe the minister can tell me — as I understand it, and the staff might know this, it's a 9.75 percent issue — what the problem is with renegotiating such a loan with only three or four major institutional investors. In other words, it seems to me the current borrowing rate for something of that size — $300 million — is comparable; therefore renegotiation wouldn't pose such a penalty. Maybe the minister can clarify that.

If you can borrow currently at less than 9.75 percent — although I'm not sure if a $300 million placing roughly would need to take place in order to cover that — in order to renegotiate those bonds, what's the problem with renegotiation?

HON. MR. COUVELIER: First of all, none of us here has the specifics on that particular bond in terms of its interest rate, notwithstanding the fact that one of my colleagues actually worked on the issue in an earlier life. In any event, the specific responsibility for this matter, as I believe the member knows, will lie with the task force. I am not brought up to speed daily in terms of their deliberations. If the hon. member wishes, we'd be happy to provide him the information he's asked for, but I don't have it here.

MR. CLARK: I would appreciate it if the minister or the ministry would undertake to give me some information with respect to the loan - more than simply the details. I know the details; I have them in my office. I think it's 9.75 percent; I think it's $320 million left to be paid out; I think there are only two or three major institutional investors. What I don't understand— I'm sure it's just my lack of experience in this area — is what the problem is with simply renegotiating with those three or four major institutional investors in order to get out from underneath the potential default problem in the existing bonds. I'd just like some information on that, because I'm not sure how big a story or problem this is.

Maybe the minister can simply clarify that for me, since he's raised the matter of whose responsibility it is. It's my impression that it is a treasury responsibility. As the minister has shown me the operations of the treasury, these kinds of major borrowings are not done by the privatization group; they're done by your ministry. Therefore it seems to me that you're responsible. I'm not casting or throwing arrows at you or anything. I just want to make sure that it is your responsibility to deal with this problem.

HON. MR. COUVELIER: The hon. member is quite right, Mr. Chairman. It is the responsibility of the Ministry of Finance to handle these financial affairs. It is, however, a different group's responsibility to pursue the privatization initiative. The member has quite properly identified the series EJ bonds as ones that could affect the style and substance of the sale. It may well be that we may not be in a position to provide the hon. member with the specific information he's looking for, because that might be the very substance — I'm beginning to suspect it is — of negotiations in any eventual sale. Therefore, if he already has the specifics of interest rate, term, denomination and that kind of thing, he may be asking for something that it would not be in the public interest for government to provide at this time.

[4:15]

MR. CLARK: I'm trying to read between the lines of what the minister said. Can he confirm that one possibility, if I were to purchase the gas division of B.C. Hydro for $600 million, would be — and we know that there is debt attached to the gas division — that the government might negotiate with a potential purchaser to simply assume that portion of the debt which is the series EJ bonds? In other words, he may say to the potential purchaser: "Go and talk to CIBC and whoever holds those bonds, and negotiate to take that over as part of the sale." Is that the kind of thing you're talking about?

HON. MR. COUVELIER: Mr. Chairman, that is one of the possibilities. In a generic sense, another issue is: does Hydro transfer net or gross proceeds to the province? If it's gross proceeds, does the province absorb and make whole the debt obligations? So all of that is still a question of examination and will, to some extent, depend on the proposals received as a consequence of the tender call.

MR. CLARK: Okay, I understand that.

Can the minister give us any indication, then, whether the question has been resolved? I understand that there will be debate on the privatization benefits fund at a later date, and we can deal with it then. But I've wondered, and I asked the minister this question; it hadn't been resolved last year: what happens to the money? If you sell the gas division, does it go to B.C. Hydro? Does it go to pay off the debt? Will the province, as the Minister of Energy has intimated, only put into the privatization benefits fund that which is over and above the assets sale and the debt portion? In other words, if we were to sell the gas division for $600 million, the privatization benefits fund would in fact get about $50 million, because it would be absorbed by Hydro in order to keep the debt percentage the same. Anything other than that would mean that electricity rates would go up, because the debt would still be there and the money would be taken by the government.

When I asked the minister that last year, he may recall that he said that this was a very interesting question which had been debated at cabinet and they hadn't resolved it. Are we coming closer to resolving it, and is my interpretation of it correct — that, in fact, the debt obligation for B.C. Hydro will be the first priority for money from a sale in order not to impact electricity rates, and that only the net proceeds over and above that will go into general revenue or the fund?

HON. MR. COUVELIER: In answer to the member's question, we are closer to resolution. I think the government

[ Page 4146 ]

will wait until the proposals are received before dealing with the issues the member raises.

MR. CLARK: We're closer to getting the answers, but we don't know what they are yet.

I want to take a little time, having dealt with those specific questions, to deal with a broader subject for the minister — until the member for Esquimalt-Port Renfrew (ML Sihota) comes, at least, to continue the Vancouver Stock Exchange question. One of the things that concerns me on this side of the House is the question of income distribution. I know members on the other side of the House or from that party are less concerned about the distribution of income. I don't mean that in any cavalier way; they don't see it as necessarily the role of government.

I have taken the liberty of interpreting a model from an economist from The Netherlands named Jan Pen — he's Dutch, interestingly enough — who talked about an income parade to try and give a pictorial representation of the income distribution. In this case he looked at Britain, and I'm going to use those numbers to look at British Columbia. The same kinds of assumptions that Mr. Pen used for Britain I'm going to use for British Columbia. Essentially what they are is simply this: if all of the wage earners in British Columbia were in a one-hour parade — so that they all passed the reviewing stand in one hour — and if their height represented their income, what would the parade look like? Essentially, the time it takes to pass the reviewing stand and the height of the individuals tells you in a pictorial representation what the income distribution is in British Columbia. It's quite interesting, because it gives you a better feel than simply the raw numbers.

If you take the average income in British Columbia — this is from Statistics Canada; at least, it's the information they provided me — $19,198 is the average income of an individual. If the average person is 5 ½ feet, a person one foot tall would have an average income of $3,490.50. If you were standing in the reviewing stand and all of the workers in British Columbia were passing in front of you, for the first six minutes the height would be one foot. We're talking tens of thousands of people one foot tall passing the reviewing stand, and interestingly enough they would almost all be women and they would almost all be single women on welfare.

If you were standing on the reviewing stand for the next ten minutes — so 16 minutes have gone by — then the height would now be two feet tall. You're standing there for 16 full minutes when tens of thousands of people one foot and two feet tall are passing the reviewing stand.

The minister is leaving. These kinds of things don't interest them, because it is too frightening when you really look at it.

We have been standing on the reviewing stand for 25 minutes and the tallest person who has passed the reviewing stand is four feet tall. It would take 35 minutes of standing there, with tens of thousands, now closer to hundreds of thousands, of people passing, before we reached the average height of the average wage-earner in British Columbia.

Then for the next two minutes it starts to move. The people get taller and they are almost all men. For the next two minutes, the average height is six feet tall, and then for the next three after that, they are seven feet tall. For the next eight minutes after that, they are ten feet tall, until finally — this is 60 minutes we are waiting on the reviewing stand — for the last four minutes the height goes up to 286 ½ feet. That's a millionaire. If a millionaire — and there are dozens of them in British Columbia — passed the reviewing stand in the last four minutes, they would start at about 14 feet and go up.

What we see is that for the first 20 minutes the average height is about two and a half feet — and they are almost all single women on welfare and some working poor in British Columbia — and then for the last 10 minutes the average height is well in excess of 14 feet, and they are almost all men — in fact they are all men — and they're all making in excess of $80,000.

For the last 30 seconds or so, we have individuals who are the height of a 30-storey building, but for the first six minutes, we have tens of thousands of people less than one foot tall. What I am getting at is a pictorial representation of the income distribution in British Columbia. The fact is that in British Columbia over the last ten years, the distribution has gotten wider. That's not true of just British Columbia; that's true of Canada and certainly of Great Britain.

What I and many people fear is that we have growing what some economists call a "dumb-bell economy." It looks like a dumb-bell. At one end there are very wealthy people, and at the other end there are very poor people. We have in fact a shrinking of the middle class, of what is traditionally the view of Canadians — a desirable goal. When you look at it in a pictorial representation, you get a graphic illustration of what is happening in the British Columbia economy.

That brings me to the minister's budget. I know we've had the budget debate, but I want to look at it just briefly because I asked in question period some questions that were a bit unfair because they dealt with specifics. What happens with medical service premiums and taxes like that is that they widen the gap; they make more people one foot tall.

The taxes that the government has imposed on British Columbians are all imposed on these little people who are one foot tall. They're not imposed at all on those who are 14 feet tall or taller. What happens when you charge someone a monthly fee increase in medical premiums of about $20 or more is that it's $20 for those who are one foot tall and $20 for those who are 30 storeys tall.

It doesn't sound like very much, and quite frankly, it's not very much to me. But to those individuals at the margins.... What 1 tried to demonstrate today in question period was that those just above the subsidy level, because the government has taken the most regressive aspect of that tax out by increasing the subsidy available.... But if you make $1 more than $6,500, you pay the same tax as those who are 30 stores tall. That means that the tax burden goes up between 20 and 40 percent, because somebody making $6,500 in taxable income pays only a couple of hundred dollars in provincial income tax. That is only about $20 a month in income tax. If they're paying $20 a month in provincial income tax and you increase the medical premiums they pay, you have effectively increased their tax rate dramatically.

You must know, Mr. Minister, that in British Columbia all of us are getting letters from those people at the margins. I want to end this by asking the minister a question. It is an open-ended one. He can get up and make a bombastic speech, as the minister likes to do, and he can be quite good at it. But I want to be very serious about it. I would prefer it if he gave a serious answer, because what has happened with fee increases and particularly with medical services premium increases is that those at the margins are facing dramatic increases in their taxes. Those who are well off, it doesn't

[ Page 4147 ]

hurt at all. The gap gets wider in British Columbia. I don't think that's healthy; I don't think the minister thinks it's healthy.

How can the minister justify a I percent cut on the corporate income tax which costs the taxpayers $32 million, and yet increase the tax burden on the poorest people in British Columbia — the working poor — from 20 to 40 percent? I would appreciate hearing the kind of rationale and how the minister justifies this very regressive taxation.

HON. MR. COUVELIER: Mr. Chairman, I enjoyed that presentation. I thought it was very well done, and I would very much appreciate a copy of the march. It would be something I would like to keep in my desk as a constant reminder of the valid point raised by the hon. member. It is a good, graphic way of illustrating a social issue worthy of debate. I think the hon. member is quite appropriate in raising it.

I couldn't help but wonder, however, if the one-foot-tall category might be those who have received some assistance from our $12 million extra that we provided for MSP assistance programs. Maybe it's not the one-foot-tall category that he's describing, but the two- or three-foot category. I'm not sure. In any event, I would appreciate having that material.

History is full of results from various governments' efforts to redistribute income. I know that the hon. member's political philosophy is different from this government's in that respect. We have a very basic difference of opinion, in philosophical terms, about whether government can effectively redistribute income. I'm persuaded by the argument that governments cannot effectively redistribute income in the fullness of time, and that all we can do is temporarily influence that question, but we certainly can't provide any assurance. I've not seen any government anywhere in the world — even the Soviet Union, which is probably the best illustration of a socialist philosophy — being able to effectively redistribute income.

However, to the question of the MSP premiums, the hon. member knows that we were sensitive to the possibility that we were burdening British Columbians who would not be able to absorb the burden. As a consequence, we spent considerable time in the ministry designing the MSP premium safety net, in an attempt to minimize financial hardship on those who could not afford to pay. Admittedly, any safety net system has bench-marks or trigger points where support is merited or not merited, and that raises the issue of the equity in that. I know the hon. member has the wit to appreciate that no matter where that trigger point is set, there will be some abused by the setting. I have no remedy for that.

In any event, I enjoyed the presentation and would appreciate receiving a copy of his material so that I may have it as a constant reminder of the good job he did this afternoon.

[4:30]

MR. CLARK: Let's take some of the things the minister said. He said that governments can't affect the redistribution of income. That's simply not correct, and it's not correct if you look around the world. Let's assume it is correct, just for a minute— and I don't agree with it, but let's assume it is. Let's say that it should not be government trying to redistribute income but government trying to keep the same distribution of income that they have when they come into office.

Let's assume that the simple job of government is not to redistribute income but to keep the same distribution of income. You haven't done that. Those medical premiums have exacerbated the gap between the rich and poor in British Columbia. They have made it worse. So it's not a question of trying to redistribute income from one to the other; it's a question of trying to keep the distribution we had.

What else has the minister done? The first thing this government did was cut the 10 percent wealth surtax. That cost us $34 million. They've cut the corporate income tax 2 points, and that has cost us $64 million. How can the government justify cutting taxes on the wealthy at the same time as they raise taxes on the working poor? That's what I don't understand. It's not even philosophical question; it's a question of consistency.

[Mrs. Gran in the chair.]

The government repeatedly says: "We don't have the money. You want to feed hungry schoolchildren? We don't have the money." Some people in the public say: "Well, we've got to watch that deficit, you know." They say: "Oh, they can't raise welfare rates; we don't have the money. Medical costs are out of control;  we’ve got to raise premiums because we don't have the money." But the same government has cut taxes on those who can best afford to pay them. So it's not even a question of saying that it's a socialist who wants to redistribute income using the tax system; it's a question of the government making the matter worse by deliberate tax changes that have exacerbated the gap between rich and poor in British Columbia. In fact, the fixed costs the government has imposed on those least able to afford it are costs that hurt, and the government cannot plead poverty, it seems to me, when the same government is cutting taxes. And the minister is quite proud of this.

If you look through the list of tax cuts over the last several years, aside from the corporate income tax and the wealth tax, we see a list of tax cuts that amounts to $600 million a year. If you look at it cumulatively, in the last three years we've cut taxes to corporations by $1,024,000,000. We're cutting taxes on corporations at the same time that the government says, "we've got no money," and poor people have to pay more. It's no longer a question of the minister saying that it's just socialists on that side who want to use the tax system. Was a question of a deliberate strategy of the government to shift the burden of taxes and to make more people one and two feet tall, and more people 14 feet tall. I think it is, as the minister said, a difference between their party and our party. It is a philosophical difference; I accept that, and that's an acceptable answer.

It seems to me the government has to come clean and say at some point that yes. we are going to cut taxes on corporations, we are going to cut taxes on the rich, and we're going to make poor people pay more money. It's a bit like what Jesse Jackson said; the problem in British Columbia is that the poor have too much money and the rich don't have enough. That's what we're seeing in the kind of tax system that's being developed by this minister and this government.

If the minister would, I'd greatly appreciate it if he could try and defend those corporate tax cuts and those wealth tax cuts at the same time as the government says we have to balance the budget, and at the same time as the poorest people in British Columbia are forced to pay very serious increases in terms of their taxes, fixed costs, with their disposable income shrinking in British Columbia.

If he could try, even in a philosophical way, I would appreciate it if he would defend for us how he can in the same

[ Page 4148 ]

budget cut taxes for the mining industry, in the same budget cut taxes on corporations, in the same budget or the last budget cut taxes for wealthy people, but at the same time is prepared to tax those who can least afford it — a 20 to 40 percent increase in the tax burden of those who are the working poor in British Columbia. If he could defend that, I would appreciate it.

HON. MR. COUVELIER: I would be more interested in entering this philosophical debate were the state of the B.C. economy to be such a concern that we had to rethink what we were doing and what our goals were. I have some trouble treating the member seriously. The fact of the matter is that this province has rebounded very strongly in the last couple of years with the very policies that this member is deriding.

There will be a time for such a philosophical discussion when and if the economy has a downturn and there is time for us to enter a discussion about how to get it moving again. But the fact of the matter is that we've created thousands of new jobs; we've got hundreds of millions of dollars of investment being made in the province to create more jobs; we anticipate nearly a 5 percent increase in further jobs created in the coming year. Our economy in all sectors shows surprising strength.

It does seem to me.... I don't want to get into the philosophical discussion because, as I say, the time to visit that will be when we need to. Frankly, things are so good that if we have a problem it's going to be, I suspect, a shortage of skilled labour in the urban parts of the province.

The residential house construction is a principal driver of our economy and has been for years in a growing province like B.C. There's a very strong likelihood, it does seem to me — as a matter of fact we've seen evidence of it already in greater Vancouver — that there will be some difficulty in maintaining the rate of residential construction in the province because the skilled labour workers will be looking for employment in the industrial sector, building the new mills and the new factories that are going up at such an astounding rate throughout the province.

We will get to that issue, I suspect, at some point, but certainly not this year and probably not the year after. The fact of the matter is that the policies that are in place seem to be working very well. And, Madam Chairman, if it ain't broke, this government doesn't believe it need worry about fixing it.

MR. CLARK: Is the minister saying that the cut in the corporate income tax is responsible for increased investment in British Columbia? Is the minister saying that the cut in corporate income tax has contributed to economic growth in British Columbia? Are you saying that people move to British Columbia because we have a 1 percent lower tax rate? Is that what's happening?

Maybe the minister can tell us if he's seen the federal government analysis. There are several ways of stimulating the economy: the government can spend more money to stimulate the economy; they can cut corporate income taxes; or they can cut personal income taxes. The pure economic facts — and the Minister of Energy (Hon. Mr. Davis), I note, is listening; he knows this — are that corporate income taxes are the worst thing to cut in terms of stimulating the economy. In fact, personal income tax cuts have five times the economic impact of corporate income tax cuts, and direct government expenditures seven times the economic impact of corporate income tax cuts. When you cut corporate income tax, they don't all invest in British Columbia. They might just take the money and leave.

When you cut personal income tax, some of that money is saved. When government spends it directly, it has an impact on the economy directly. The fact of the matter is that corporate income tax cuts are the worst way to stimulate the economy. The fact of the matter is, it seems to me, that the minister and the government have taken a philosophical position with respect to corporate income taxes and stimulating the economy, and it's one that has been discredited by every economist ever known. Corporate income tax cuts are the worst way to stimulate the economy, and the fact that we still have 10 percent unemployment is clear proof of that.

The fact that British Columbia is rebounding has nothing to do with the corporate income tax cuts; it has everything to do with commodity demand elsewhere in North America. The minister knows that, and therefore the results of their policies can only be interpreted as a deliberate attempt.... It's a philosophical position on the part of the government and not an economic direction the government has attempted to take. It really has everything to do with ideology and philosophy and nothing to do with economics.

HON. MR. COUVELIER: The hon. member may be confusing short-term and long-term financial strategies. In any event, the fact of the matter is, by virtue of whatever reason, the B.C. economy is doing very well. Unlike the tinkerers across the aisle, we are very happy to continue the momentum of the past, and we look forward to continued growth in the future with the situation as it prevails. As the government has the opportunity to continue to provide essential social services to people, we will take that opportunity. We can only take it with a vital, strong provincial economy, and we have that, thanks to the good management of the Social Credit government.

MR. SIHOTA: It's certainly sad to see that after the rather brilliant comments by my good colleague the second member for Vancouver East, all we got in response from the government was a political commercial.

I want to go back now and begin to deal with the minister again on the matter of the stock exchange. When we left, the minister was saying he couldn't speak — in the public interest. But one must wonder, of course, whether it is in the public interest to take no regulatory action while the insiders sell out their shares and make all sorts of profit. You have to ask how that is in the public interest. The number one rule of investment on the Vancouver Stock Exchange is supposed to be the principle of full, timely and plain disclosure to all investors.

What these examples, such as Axiom, Technigen and hundreds of others I am prepared to raise in the House, prove — but of course, the minister won't be prepared to respond to any of them, because he will tell us they are all under investigation, as he did with American Canadian — is that investors are simply not receiving the benefits of that type of principle and that there is inadequate disclosure, whether it be true or false. The point here is not so much the specifics of what we're talking about, but that there are many examples that demonstrate the system is failing to protect the public interest. That's what we're talking about here.

I want to ask the minister a couple of very quick, specific questions in relation to a couple of other stocks, and then I

[ Page 4149 ]

will go on to the general argument and talk about what I think we ought to be doing to address some of the problems on the exchange. Last May 11, 1987, when I raised the matter of International Tillex, the minister indicated in this House that he would be prepared to provide the House the details with respect to the government's involvement in and/or investigation of that matter. That was what the minister said, and I could provide him with the actual quote, if he wants it, from May 11, 1987.

[4:45]

It's been a year and we are still waiting. He took the question on notice, but promised to get back to us. Is he prepared now to provide us an answer, or prepared to tell me when I can expect to get one on the matter of Tillex?

HON. MR. COUVELIER: In the fullness of time the hon. member will receive the advice that he has requested. It is not in the public interest to provide it now.

MR. SIHOTA: It's been a year, Mr. Minister. One wonders how long it takes your people to do their stuff in terms of investigating these matters. I don't know how long it's going to take on Axiom — it was, I think, a year — and Technigen was about three years, and Marco.... If my memory doesn't fail me here, it was about three years with respect to Starfire. While the minister sits silent on all of these matters, the insiders continue to sell out and make their profits.

Another question to the minister. Back on June 29 1 raised the matter of Banco Resources. I notice now that it's been finally dealt with. So here's one you have investigated. I will congratulate you for having investigated this one. It's one I raised in the House, and let me applaud you for doing it.

What struck me with respect to the Banco fine — of course, that was a situation involving inaccurate statements of material facts — was that Canarim, which had done the work which was deficient at the end of the day, had garnered a fee of $340,000 for that work, and yet the fine was $90,000. It struck me as rather peculiar that at the end of the day Canarim, despite its deficiencies on the Banco situation, would come out a quarter of a million dollars ahead. It struck me that the fine was somewhat low under the circumstances. I'm wondering whether the minister is prepared to comment, now that that matter has been investigated, as to the significance of the fine.

HON. MR. COUVELIER: I'm advised that the requirement to repay the sum involved.... I understand it's a sum of $340,000. It was required to be repaid, if that's the specific question.

MR. SIHOTA: If I understood the minister right, what you're saying is that they have to repay the $340,000, and they're paying a $90,000 fine on top of that. Am I correct on that?

HON. MR. COUVELIER: That's my understanding, Madam Chairman.

MR. SIHOTA: That's fine. I didn't realize that from the press report, but that being the case, I certainly have no problem with that one.

I said I just wanted to ask a couple of quick questions to the minister on a number of matters, and I have one other one that I want to ask him a question on. It relates to the Echo Mountain-Enterra situation. I wonder if the minister can tell me whether the Premier intervened in that matter. There was a matter there involving the SRTCs and the federal government wishing to collect back on some money and take action against assets of the company. I'm wondering, just quickly before I move on to another matter, whether or not the Premier intervened in that matter so as to allow the company to continue operation and told the federal people to lay off with respect to collection of the sums involved.

[Mr. Rabbitt in the chair.]

HON. MR. COUVELIER: By the Premier, you mean the Premier of this province? I have no knowledge of such an occurrence. I'm surprised that it should be raised.

MR. SIHOTA: It will be raised again. I guess, in another matter. I just wanted to see if the minister was aware of that situation.

I want to move to another topic, and I'll deal with it in a general way. I think there are serious questions about what I call integrity within the system that we have. It's the lack of faith in the system that brings about the type of article I talked about earlier on in relation to OTC. It seems to me that government ought to be taking firm actions in terms of maintaining integrity in the system on the exchange.

It's my submission, and I'll indicate why later, that this Legislature ought to be moving towards the establishment of a select committee of the Legislature to investigate and make recommendations with respect to the activities of the exchange, both to deal with the regulatory matters that I referred to earlier on, or the lack of regulatory action, and to deal with the matter of where the buck goes — does it really hit the product. My submission is that it doesn't, and I haven't heard the minister refute that with any evidence. The only evidence we've got is the Brown Jefferson report.

Thirdly, with respect to recent developments, I'm really talking about the Carter-Ward trial and the Cumo Resources trial, or the case better known as Donnelly v. Price, Charpentier and Continental Carlisle Douglas. The decision came down yesterday, a decision which I think is very damning in terms of activities on the exchange. I just want to read.... It's not a selective quote. I think it's a quote that highlights the court's concern. We're seeing a growing number of these, We've got this decision having come down yesterday. We've got the Carter-Ward trial. which was in front of the courts about a month ago; and we've got the Chopp Computer case coming up next week, again involving some people who have been very active on the Exchange.

Page 6 of that decision — which I see the minister has in his possession there now — at the top says:

"It is regrettable that this may seem to strengthen the position of those who prey on the investing public by using facilities such as those offered by the Vancouver Stock Exchange, through which promoters and stock brokers are apparently permitted to apply to convoluted stock promotions in which they have a large personal interest the funds placed in their hands for investment by unsophisticated clients such as these plaintiffs. The interests of such investors in getting out at the high point in the anticipated rise in market value of a speculative stock such as Cumo plainly conflicts with that of the professional people

[ Page 4150 ]

handling their affairs, whose..." — professional — "interest ties in reaping the benefits available to the knowledgeable few at the top of the climb, while the rest are left aboard for what may well be, as with Cumo, the inevitable plunge to oblivion. Only the exchange authorities can effectively protect the public from such dangers."

I don't think I could have said it better, in terms of the problems that I see on the exchange. I want to emphasize to the minister again that what the court said in that decision — and it's a recent one, Mr. Minister — is no different than what I've been saying on this side of the House: there are certain people who stand to profit and others who don't, and what happens is that the small investor gets left out, and Cumo is a classic example of that.

We're not talking about investigation here, Mr. Minister, so you don't have to hide behind that shield. We're talking about a stock that went from $1 in 1981 to something in excess of $40 based on false hype. Remember what we said about some of the other ones in relation to Axiom or in relation to Technigen or in relation to Tillex. It's false hype on oil and gas ventures. 

Two widows effectively invested their inheritance with the brokerage firm of Continental Carlisle and in particular with Mr. Charpentier, who I'm sure the minister will recollect, with his officials there, was involved in the Starfire situation, which I also brought to the attention of this House some time ago. The women acquired all sorts of stock upon the advice of Mr. Charpentier, who got them into Cumo, and of course — as the court correctly notes — they did not sell out despite the fact that they had requested on several occasions to sell out.

In fact, it's interesting in that case — just as an aside for the entertainment of the minister, because I'm sure he under stands simple stories like this one — that the women, as they had watched the stock go up, thought they had become millionaires. They then gave instructions to Mr. Charpentier to go out and acquire Rolls Royces for them because they had become millionaires, because the stock went from pennies to $40. They told Mr. Charpentier to sell shares so they could buy themselves Rolls Royces. Mr. Charpentier, who was very cunning on this matter — and he's a man who's known well within the establishment in Vancouver — did not go and sell shares. Instead, what he managed to do was margin their stock — in other words used it as collateral — to draw funds out from the firm of Continental Carlisle so as to allow them to buy their vehicles.

So the stock went up and ultimately came down to somewhere in the neighbourhood of.... I can't remember what it is now, but it doesn't matter. It dropped, and not only were these women ripped off by Mr. Charpentier, as the court correctly notes, but when it came to their vehicles, Continental Carlisle went back to them and said: "Look, you'd better pay us out for these vehicles, because you actually borrowed the money from us. Your stocks were never sold." That's the extent to which the manipulation was as fraudulent as it was.

As a consequence, we've seen a $2 million damage award, but that's not the point here, Mr. Minister. The point here is what the court said, and the court talked about what

I've been talking about. I raise it because the minister always engages in a personality attack instead of an attack on the issues. Even with the good member from Vancouver East he I failed to deal with the issue; we got a political commercial from him. But in terms of dealing with the issues

Here is another court decision. I'm not picking an isolated case, Mr. Minister. I'm telling you what the courts have said, and the courts have said that in this instance the individual had ripped off, and they went on to talk about the general tenor of activities on the Vancouver Stock Exchange. What is happening is what I've been telling you has been happening and what the Brown Jefferson report told you has been happening. You have no evidence to refute it: it is the insiders and the promoters that are making the bucks and not the investor. Worse still, in a true venture capital market, no money is getting into the product.

Of course, you say that you want a venture capital market as much as I do; but the money isn't getting into the product. Here is a classic example of what happens. So we've talked about Axiom; we've talked about Tillex; we've talked about Technigen; we've talked about Banco, for that matter; and we'll talk now about Cumo Resources. And, Mr. Minister, I'll continue to give you some more.

That's what the court said. I think that they're correct, that something must be done to protect the public from these types of dangers. That's one of the reasons, Mr. Minister, I am saying that there ought to be a select committee of the Legislature to begin to look into the matter of the exchange and report back, to do the things that the minister is not prepared to do, which is to bring about the changes to clean that market, to move us towards quality in activity on the market as opposed to quantity.

The other situation which arose most recently, which we haven't had judgment on yet but will, is the matter of the Carter-Ward case. Again this case illustrates that what I've been saying is not an isolated incident. We had the manipulation, in this instance, of worthless shell companies that only could have been conducted, I would submit, Mr. Minister, with complicity on the part of key Vancouver Stock Exchange players. That includes brokers, those on the trading floor, the operators there; it includes perhaps even regulatory officials, and certainly promoters.

[5:00]

In that situation we had 21 brokerage houses involved and over 179 accounts selling somewhere between 30 million and 50 million shares — the best that I can determine — over a period of one and a half years. I want to come back to the matter of shell companies and what Mr. Bullock had to say about those shell companies. Much evidence was presented during the recent trial on the Carter-Ward trial of Howe Street promoters Mr. Carter and Mr. Ward, linking, of course, the chairman of the British Columbia Enterprise Corporation, the chief of Canarim Investments, Mr. Brown, to his peers' activities to obtain $22 million from an American mutual fund to buy, as I said, dozens of worthless VSE companies.

It appears that in a number of stocks — and I say "appears" — Mr. Brown violated the insider trading provisions of the B.C. Securities Act. Part 10, section 68(l)(a) of the act reads:

"No person in a special relationship with a reporting issuer shall: purchase or sell securities of the reporting issuer with knowledge of a material fact or material change in the affairs of the reporting issuer that he knows or ought reasonably to know has not been generally disclosed. "

By the definition in the Securities Act, it appears that on at east three instances....

First of all, it's clear, of course, that Mr. Brown was in a special relationship with a number of the Carter-Ward VSE

[ Page 4151 ]

companies. That's come out during the evidence in the trial. But on at least three instances, 1 think - if I'm not mistaken - Bart Resources, Goldhaven Resources and Endatcom Ventures - Mr. Brown purchased blocks of shares at cheap prices just prior to public announcements - by coincidence - by those companies of material changes, which obviously and, needless to say, dramatically affected those companies which were trading on the VSE. After he purchased his shares, the public was let in on the news, and the prices of the shares rose anywhere between 200 percent to 800 percent.

In the case of Bart and Goldhaven, this individual purchased his stocks secretly off the floor of the Vancouver Stock Exchange, directly from various promoters. That at least seems to be the implication from the evidence that came out. I understand that some may argue that these trades which violate the VSE's own rules were done with the permission of VSE officials, but that does not justify, in my view, these actions; instead, it raises an even more serious question as to why VSE officials would allow individuals such as Mr. Brown to conduct trades that violate the rules. Many other brokers would be fined or penalized if they attempted the same. The maximum penalty under the B.C. Securities Act for violating insider trading rules — and I'm going to talk more about insider trading rules later on — is $100,000 fine or five years in jail. I guess what I'm trying to say to the minister here is that I'm trying to demonstrate that we have now had not only the individual stock matters that I've brought before the minister....

MR. CHAIRMAN: I regret to inform the member his time has expired.

MR. DAVIDSON: Mr. Chairman, I realize the member wants to have a small break, and possibly I'll make a few points at this time. Firstly, I want to assure the members of the House that I strongly believe in the Vancouver Stock Exchange. I believe in the opportunities for the growth of an international venture capital marketplace. But I also believe very strongly that we are putting much of our emphasis in the wrong areas when it comes to the Vancouver Stock Exchange.

It seems to me, for example, that we have a great amount of requirement for exact information when it comes to a statement of material facts. In essence, many statements of material facts are sent back because i’s aren't dotted, t’s aren’t crossed. I think we spend a great deal of our time on this particular aspect, instead of where the emphasis should really be: in the investigational aspect of finding those who are in essence circumventing the rules. If we were to free up many of the people who are currently tied up with reviewing statements of material facts and put them in the investigative process, I think we'd be serving the marketplace and the investing public to a much more appropriate end.

I also want to identify very much with the member for Esquimalt-Port Renfrew's (Mr. Sihota's) remarks, particularly as they pertain to establishing a standing committee to investigate the Vancouver Stock Exchange. It's no secret, Mr. Chairman, that the Vancouver Stock Exchange does not enjoy the kind of reputation we would all like to see it enjoy. Possibly by having a committee established that could hear evidence and suggestions, a great deal could be done to bring us more into the type of situation that we would like to see the Vancouver Stock Exchange become, rather that what it in fact is. There's no question that Las Vegas North is an opinion all too often heard. It's not entirely fair, but we do have some glaring examples that have certainly done little to erase that reputation.

I would like to ask the minister to possibly consider dividing the Vancouver Stock Exchange, as it was before, into a listed exchange and a curb exchange: two separate exchanges, each with different rules and different requirements for investment and what the basic entity of the company would be. One would be for a company in its initial stages; another would be for one that has proved itself over a period of time. This was very effective, and it would free up a great amount of time for the officials who must presently consider all companies to be the same, when many are small and fledgling and some, of course, are much more substantial.

I would also like to ask the minister specifically if any of the United States investigators or regulators have direct access to company books in British Columbia. It seems there are a growing number of individuals who feel that because we are adopting New York rules, we are also offering the regulators — the individuals — direct access to our company books. I would like to ask the minister if he could possibly comment on those aspects.

HON. MR. COUVELIER: I think the hon. member is aware of the fact that we signed a memorandum of understanding with the Securities and Exchange Commission in the States for the purpose of enhancing our ability to monitor events. I think a minor legislative change will be required to bring that into full implementation, and we intend to bring that forward.

Dealing with the suggestion that there might be a listed and unlisted split of stocks on the VSE, the member is aware that that had been a system in place years past. It's an issue that is under the authority of the VSE board of directors themselves, not one that I would wish to impose on them unilaterally, although I appreciate that I probably have the authority if 1 wish to use it.

I don't see the benefit, frankly. They have different degrees of stocks, as the member knows. They have — I forget the categories they're titled — developer stocks or developing stocks or some such jargon. They have a rating system themselves so that players in the game are aware of that. The concern the member expressed is valid. We also share concern about the operating staff.

To repeat what I said earlier when the member might not have been in the House, I am very encouraged by the marvelous progress that has been made in the last 12 months in the degree of cooperation between the Securities Commission staff and the VSE staff. I believe that we are making terrific strides. The court cases just referred to are an illustration, I believe, that the system works. These are cases that have been found and judged and penalized. It's all well and good, I suppose, to make much of them, and we certainly are delighted that these matters are being dealt with as severely as they are. We think that's entirely appropriate.

Back to the point I started to make, which is that we are making terrific progress. We've held 15 hearings by the commission and the superintendent of brokers since September 1987. That compares to nine for the previous period —April to March. The VSE, similarly, are handing down disciplinary rulings at a more rapid clip. I think that's the consequence of the closer cooperation that we've got now between the two bodies and the joint conviction that violators must be caught and prosecuted.

[ Page 4152 ]

1 appreciate the suggestions by the hon. member, and we will keep them in mind as events unfold in the future.

MR. DAVIDSON: I appreciate the comments by the minister, and I would like to enlarge on one aspect. I was talking about dividing the exchange into two, and two different statements of material facts would be required. More importantly, the investing public would realize that there are two different types of potential for their investment; one being much more speculative than the other. I have concerns — as many people do — with the committee that sits in judgment as to what value a particular piece of property has. Stretch my imagination as I can, I cannot understand how a group of bureaucrats sitting around a table can assess the value or otherwise of any particular piece of property.

I don't think it's fair, reasonable or responsible for any group of individuals to simply say that this particular piece of property may or may not have some particular value or otherwise. To have that even vetted before a board I think runs in the face of many of the things that we're trying to do.

I come back to the aspect of freeing up some of the people currently spending their time vetting statements of material facts. There must be a mechanism by which we can place more onus on the principals who are putting forward their statements of material facts, and have more onus on those individuals to come clean, if you will, with their particular SMFs and free up the people who are currently sitting there going through all these i’s and t's and allowing them to more effectively police the actual transactions.

The statements of material facts aren't where the problems occur. The problems occur in the trading, whether it be in the illegal short selling, which is the major problem.... Whatever problems do exist, they come after the statements of material facts. For us to spend as much time, energy, money and personnel examining the statements of material facts and not designating those people to follow up the trades afterwards, we're quite honestly missing the entire opportunity available to us.

[5:15]

HON. MR. COUVELIER: The member has talked to me privately about some of his concerns, so I'm not surprised that he chooses to raise them now. I assume that the bureaucrats examining those statements the member is referring to are the mining-engineering committee, and I'd just like to point out to the member that those are not bureaucrats in that sense. They are professional mining people who have expertise in those particular issues and presumably are fully knowledgeable in the matters they are asked to make judgment on.

If the member has specific comments on any individual members of that committee, of course we would be pleased to hear them. If he wishes to provide that, it might be useful. After all, we are here to serve the industry and the trade as best we can, so if there is anything that might be provided which would help us reach that objective, that would be admirable, and I would appreciate receiving it. Maybe the member could expand on that point if I misunderstand him.

MR. SIHOTA: Mr. Chairman, I want to thank you for raising your microphone, so I can now see the clock and know when I should ask a question instead of continue with a statement.

It was interesting to listen to the last exchange and hear the minister talk about all the things that can be done. We're asking for the legislative committee, and I guess I'll eventually ask the minister if he's agreeable to that.

I want to continue with the comments I was making about the Carter-Ward situation. It was brought to the attention of the minister that from the evidence of that trial.... The minister should know that Mr. Brown was not a direct party to that trial, but the evidence of course is available to the public, and like Hansard, the transcript of evidence in the court is certainly usable in further proceedings.

The question I was going to ask the minister was: in light of these apparent violations, could the minister indicate what steps are being taken to determine why the VSE staff allowed these trades to take place? I want to make it very clear to the minister so that he doesn't duck the question. I'm not asking him why he's not investigating Mr. Brown. I'm asking him, rather: what steps are being taken to find out why VSE staff allowed these trades to take place?

HON. MR. COUVELIER: I'm not able to respond to that specific situation, Mr. Chairman, for the same reason that I gave for the previous question on a specific situation. It is not in the public interest for me to discuss that at this time.

MR. SIHOTA: The public interest requires that the public be assured that the regulatory process is working and that it works swiftly. Here we have a trial, and the minister says: "They've all been dealt with." Mr. Brown hasn't been dealt with. We have a trial. We have evidence that comes out. The public interest demands that those who have profited in violation of the Securities Act should have action taken against them. Because this is, again, a rather celebrated case, the minister ought to be scratching his head and wondering how an individual was to make the type of profit he did when the stock prices rose to 800 percent immediately after Mr. Brown's purchases. It seems to me only logical that the minister should be able to tell this House that he's asked the VSE to look into it.

That's not a matter that is going to prejudice anybody; it's simply a common-sense question that I think the minister should be asking. Again, I want to put the question to the minister with that explanation, because I think it puts a different spin on it. Could he explain why it was that VSE staff allowed these trades to take place?

HON. MR. COUVELIER: I think the analogy is well taken by the hon. member. He puts lots of spin on the ball as he attempts to toss a question that I have already told him 1 can't answer.

In any event, I say it again. The member has consumed many hours here this afternoon giving a litany of extracts from court judgments and comments from judges, etc., which is all good for the printed record. But let me just remind the member and the House that he's dealing with events that have taken place. He's dealing with events that were disciplinary in their nature and will have the consequence of people paying penalties for abusing the system. I say that's a victory. I say that's a sign that in those instances the situation worked.

Furthermore, the issue that he's just talking about now, the Carter-Ward situation, dealt once again with events prior to the introduction of the changes I talked about earlier and are absolutely no indication of the situation that prevails today. It's an indication of a situation that prevailed a few years ago. As I've said repeatedly to the hon. member, we have come a long way since those days.

[ Page 4153 ]

That's not to say that we will not have, in the fullness of time, some embarrassments. I fully expect we will. It's not a perfect world. I don't know of any jurisdiction in the world that regulates stock exchanges that has avoided embarrassments, and I don't expect that we will be the exception, particularly when this stock exchange deals with junior, untested market ventures, and therefore ones that have a higher degree of risk associated with them.

I say it again, Mr. Chairman: the hon. member has not told us anything we have not already known, yet he repeatedly takes delight in getting into the record all of this material. For what purpose? It clearly is not to get an answer out of me, because I've told him I will not deal with specifics. So if he's not going to get an answer, then why does he persist in this litany of events that occurred in years past which have no relation to the current state of regulatory effectiveness today, and have no relationship to the degree of cooperation and the spirit of determination that is extant in the officials of the VSE and the officials of the Securities Commission of British Columbia? The member is serving no useful purpose. He's consuming some time and, I suspect, further covering the ground so that when, in the fullness of time, further actions might be taken on a variety of the issues we've discussed this afternoon, he will be able to say: "Aha! I forced them to do something." Of all the absurd, arrogant, egocentric statements that might be made! I expect that we'll hear it, as we did the last time we took action on an issue he had raised and that I refused to comment on in the House.

My responsibilities as a minister of the Crown and the minister responsible for the Vancouver Stock Exchange are to ensure that I protect the interests of those in the market and to ensure that due process is followed in enforcing and seeking out violators of the system. I am satisfied to say once more that we have made great progress; we will make more progress. We have nothing to hang our heads about since we have come to office. In the last year and a half, much water has gone under the bridge, and I think the hon. member does no good service by recasting these things which occurred in years past. They are absolutely no reflection of the current state of affairs.

MR. SIHOTA: The minister is again refusing to see the point here. Let me just put it again to him in black and white. I'm going to go through a whole series of events to explain to the minister that there are problems on the exchange and that he has a responsibility as minister to begin to deal with them. He can take as many cheap shots at me as he wants, but I wish he would just put aside that bias of his and begin to look at the problem at hand.

The problem at hand is that the situation is ripe for the potential of manipulation, and indeed there is a significant amount of manipulation going on. You ought not to take comfort in the fact that the courts have dealt with the Cumo case and the Carter-Brown case, because.... Mr. Chairman, what I'm getting at is: what is the consequence of those cases? Fine, the courts have taken some action against Mr. Charpentier and Continental Carlisle, but Mr. Charpentier, who's a key member of the brokerage community and is with the second-largest brokerage house in the community, continues to trade. I told you a year ago that he was involved in Starfire, which you finally took action on, but still there are no sanctions.

So we get these people who find a way onto the market, who are repeatedly involved in one scam after the other.

They're barred.... I'll give you lots of examples of people who have been barred from other markets and who find their way to Vancouver, get involved in manipulative activity, and for some reason you, Mr. Minister, through your regulatory agencies, refuse to ban these people from activity for any significant amount of time. If you look at the Carter-Ward trial, Mr. Minister, you ought to be concerned. Sure, I've got some specific questions about why you haven't taken action against Mr. Brown, and we'll put those aside for a moment. But you should be looking at the overall picture. The overall picture, as I said, is ripe for manipulation.

If you look at the Carter-Ward situation and some of these other cases that are brought to your attention, you'll find that everybody's involved in this complicity of rip-offs. You've got people like the brokers, Mr. Brown and Mr. Charpentier; and I've given you Carter-Ward, and the example of Cumo who are involved. You've got the regulators that are involved. I'll give you some examples with respect to the actions of regulators, Mr. Griffith and Mr. Mathers.... We'll get to that in a few minutes. You've got the traders that are involved. You should be concerned about the role of Mr. Richard Pomper in the Carter-Ward situation and his whole involvement at Richardson. You've got the matter of news dissemination and these false press releases that get put out. You've got a problem with a repeat pattern of an exchange that's not doing its job.

It's not good enough to say these court cases have come down, because, Mr. Minister, to put it simply, your regulators have not taken any action as a consequence of those court decisions on people like Mr. Brown and Mr. Charpentier. Certainly, given their standing in the community, exemplary actions ought to prevail. We are asking what actions you intend to take against those individuals after the Carter-Ward trial, or after the Cumo Resources case.

I'll grant you one point. You took action against Banco, and I didn't realize until today that they had to forgive the full $340,000. My recollection was that it wasn't in the decision. I'll give you credit for that one. But at the same time, I'd expect you to recognize that there are these activities going on, and you've got an obligation to explain why your officials have not taken particular actions, or why in other instances it's taken up to three years to take actions against these people. That's what we're asking you to do.

I'm trying to go slowly through individual cases that demonstrate the problem. I'm trying to give you examples of prominent brokers, Mr. Brown and Mr. Charpentier, who have been involved in these types of actions. I'm going to move on to give you examples of what regulators have been involved with these types of matters. I've given you an example where a trader is involved. I'll give you a whole list of names of people involved who seem to find their way back onto the exchange because it's the only exchange that will tolerate them.

I'm saving to you, Mr. Minister, that you have an obligation to weed out the element on the exchange which is causing these problems. All of the buffoonery in this House and all of the cheap shots directed at me and all the allegations as to political motivation in this part of the House are inconsequential. You can make them all day long if you don't want to deal with the problem, but you could end this debate fairly quickly, Mr. Minister, if you would just acknowledge that there is a need to clean up those activities.

[5:30]

I've said it before, because. I'm not afraid to give the minister some credit where credit is deserving: what the

[ Page 4154 ]

minister did with respect to Mr. de Gelder and his little hit squad was good. I've said that to the minister, but this minister is still — maybe privately.... It's obvious that because of private discussions with me the minister took those steps, but he's not prepared to admit publicly that there's even an ounce of doubt in his mind as to whether or not the system is working.

What evidence do you have to the contrary? I've given you names of brokers. I've given you names of stocks here today. I've given you studies that indicate the system is flawed, and I'm going to give you some more. I haven't heard anything from the minister except a broken record that says we're making progress. And then, funnily enough, he quotes statistics that I asked about a year ago; and the minister's response on those statistics—v number of hearings and that kind of stuff.... I ask you to go back and take a look in Hansard at what you said, Mr. Minister, during the course of your comments in the House. You said that it was foolish of me to cite those types of statistics, the very statistics that you're citing now.

Look, you've got a problem here. I'm telling you you've got a problem here because I see the need in this community and province to make this market go, not a need to try to politically embarrass Mr. Charpentier or Mr. Brown or somebody else. But I want you to move. You're not prepared to do it, and it is not asking much to request of you to give a select standing committee of this Legislature the opportunity to review activities on the exchange. You've got ample evidence in front of you in the form of these court cases, if nothing else. The court cases don't emanate from me; they emanate from another source, and say: "Yes, we need to take a look at this situation."

Will you agree, Mr. Minister, to allow for a select standing committee of this Legislature to inquire into the matter of the exchange and to make recommendations — if any, to give you a way out — as to whether or not further regulatory changes are required, staffing complements are adequate, and these things I'm saying with respect to where the bucks go — i.e., to the promoters and not to the product — are fact or fiction? I say they're fact, and I've given you enough examples and I've given you a report that says so. It's no skin off your nose to allow for a legislative committee to look into it and make a report back to this House. It's not a radical request. I am asking the minister: is he prepared to agree to that type of a request?

HON. MR. COUVELIER: The hon. member makes much of a judgment that was handed down yesterday, Mr. Chairman. The case dealt with proceedings starting in 1979; it talks about events over a four-year period, which I assume would end in 1983. The hon. member likes to make much to the world about his investigative skills and the valuable public service he is providing everybody by dealing with this history. He absolutely and totally ignores my rebuttal to his comments that those sorts of situations were unfortunate and should have been dealt with severely. And they have been. There are court cases to prove it.

The hon. member knows full well, as I said earlier, that we are making good progress, and I am very proud of the fact that we are making that progress and that we have the degree of cooperation that we have with the VSE.

The member has asked repeatedly whether I would strike a select committee of the Legislature to look at the Vancouver Stock Exchange operations. If ever I needed a reason not to strike a committee, it's the vendetta that this hon. member has embarked on with the VSE.

As I've said, let's reconsider the facts. I have asked him to come to my office and provide on a confidential basis any information he may have on an individual or a corporation that is violating the rules of the exchange or the commission's regulations. I have asked him to do that privately and he has not come forward with one. That tells me he either doesn't have any information or, if he has it, that he's not about to share it. 1 suspect the former: he doesn't have it.

To the suggestion that we should create some select committee which would sanctify this vendetta that he has embarked upon for the last year and a half, I say absolutely not. What would his motives be? His motives clearly are not to clean up the exchange, because he has never provided me with enough information that I could act on, that was useful. All he has done is repeat street talk and rumour so that he can grab the next headline. He's provided nothing of substance that would allow me to use due process to follow it up.

Furthermore, he ridicules the fact that I will not respond to specific cases he has raised today and on previous days, because I say that I cannot - in good conscience - respond to that, given my ministerial duties and the fact that I have the public interest to protect in these matters.

His motives are clear to me. I can come to no other conclusion than that they are politically driven. No one in his right mind would allow that kind of loose cannon to deal with such a sensitive subject, and provide him with further information so that he can make the next headline.

If the issue was purely and simply to make sure the VSE worked more effectively, then why wouldn't the hon. member quietly, in the confines of our office, give me some information that I can act on? He has never done that once, Mr. Chairman, despite my repeated offers and requests for him to do so. I am left with no conclusion other than that he provides a living for people who have to fill some column inches and in the meantime create some misunderstanding in the public's mind that he is protecting their interests. The fact of the matter is that he's dealing with history. He's dealing with matters that anybody who wanted to take the trouble to find out could find out. He's dealing with rumours and street tips which do nothing but denigrate the very institution he started out in his litany and diatribe this afternoon by saying he wanted to protect. Surely, if he really wanted to protect it, he would provide some useful information that we might be able to use to ensure that a better service is provided to the people. Have we received anything? Absolutely not. We have never had anything provided to us by this hon. member that would be useful in that respect.

To suggest that we would have confidential information provided to this person, so that he could continue this attack on the very basis of our financial economic strategy in this province, is absolutely out of the question. The institution is too important to allow this one hon. member to destroy it, and I will not allow that to happen.

MR. SIHOTA: I'll tell you something: I'm really amazed at the juvenile comments from the Minister of Finance. I've refrained all the way through this debate from getting involved in a personal attack. We did that yesterday on Principal. I went home, thought about it and said: "Look, I'm not going to do that. " And I'm not going to do it now. I'm asking the minister to do something, just once, with respect to engaging in an intelligent conversation about the

[ Page 4155 ]

exchange, and to recognize publicly - if he's not prepared to admit it publicly, at least indirectly - that he's got a problem here.

I don't nerd nor do members of this House need that type of fog and that type of huff and puff. We're here in estimates. We're trying to deal with a serious matter - the exchange -and 1 don't think it's quite fair to cast aspersions on individuals, when I made it very clear to you at the beginning, Mr. Minister . . . . I said very truthfully and very sincerely why I was raising these matters, and I've repeated it many a time. I say this with respect: if someone's not listening, it's the minister. I've given the minister all sorts of examples of cases. I've given him Axiom; I've given him Technigen; I've given him Tillex; I've given him Starfire. On the ones I gave you last year - as I said at the outset, because I anticipated this argument - you came back and said to me, "There's nothing wrong, " and I've now come back to you and said: "Here's the evidence. " You went through this last year. You told me last year, "Give me some new names, " and I did. I read to you at the very outset of this debate what you said then. You said, " Oh, there's no problem with these matters, " but there was. I'm just asking you again, with respect, to listen to what we're saying.

Not all the cases I've mentioned - in fact very few of the cases - come under the old regulatory system. Correct, Mr. Minister, that the Cumo case involved actions that came under the old system. Same with the Carter-Brown. But what about all those other instances I mentioned to you? What about Starfire, which came under the new act, and Mr. Charpentier is still active? What about Technigen, which I brought to your attention? Again, it's an active matter this year. What about Carter-Ward? The trial may have happened some time ago, but what about any actions you're taking against Mr. Brown this year under your new act?

Let me give you some other names, under your new act and your new regulations. Have you looked at Elan Industries? Have you looked at CEL Industries? Have you looked at WCN Communications? Have you looked at Echo Mountain? Those are all cases, Mr. Minister, that come under the new act. So let's cut the guff. Have you looked at those? Those are all under the new act. They are things that are happening today. What can you report to this House about those? Those are stocks I hadn't mentioned earlier. I'll tell you something: I did the same thing last year when 1 talked to you about Axiom and a couple of others, and you came back to me and said: "A review of our files has failed to disclose any signs of questionable activity by Axiom. " I told you then in this House that it was a problem. It turned out to be the biggest scam this year on the exchange.

If you want to get into credibility, Mr. Minister, let's not forget American Canadian. Let's not forget that I asked you in this House whether or not it was under investigation. You told me that it was, and it has been subsequently proven that it wasn't. So if you want to talk about credibility, let's talk about the statements you have made in this House, Mr. Minister. To this day you still haven't clarified your comments with respect to American Canadian. You want to get into matters of credibility? Fine, we can do that. I can spend an hour here grilling you like a hamburger on matters of American Canadian. But I didn't see the need to get into that type of personal attack. I think it's regrettable, when we're talking about a topic as serious as the exchange, and when we're talking about financial centres and the requirement for an exchange, that we get that type of fog.

1 want to implore you, Mr. Minister, to begin to deal with this topic in a sincere and serious way, and not to engage in those types of cheap shots, because I don't think it does justice to this Legislature. I've told you that I've reflected on what happened in terms of our heated exchanges on Principal Trust, and I chose today to make sure that I didn't get involved in cheap shots - and I think the minister knows that I can dish them out just as well as he can. But I've chosen not to do that, and I say that the minister should come to the same conclusion when dealing with these matters, and not dismiss Cumo lightly because it was a case that happened some time ago. That's not the point.

[5:45]

HON. MR. COUVELIER: That was 1979.

MR. SIHOTA: That's not the point, Mr. Minister. The point is Mr. Charpentier and his role and what action your regulators have taken against him with respect to Starfire -which wasn't 1979 or ~74; it was last year and I brought it to your attention - and here we have the same individual being sued with respect to Cumo. I want to know what actions you intend to take against him.

Mr. Brown. I gave you his example. I've also given you new cases, which I will bring up in the same vein as I did last year. I invite you, Mr. Minister, to respond to those and tell me what you're doing about those, because those are new. I don't think they are under investigation when they should be. I've given you the names now in this House. Hopefully that will now detract from your repertoire of repeated argument that I'm not telling you anything new. I'm telling you so much that is new.

I can certainly tell you that I've transmitted to your officials some of these matters, and I can name over 500 companies and individuals that in 1988 are problems under the new act and new regulations. Your system is not working, and that's why you need a select committee to look into it, in which, of course, your party would have the balance of power. It really isn't necessary to take those cheap shots again.

Let's get back to the matter. I take it the minister is not prepared to tell this House whether or not he intends to take any action with respect to Cumo, with respect to Mr. Brown or Mr. Charpentier. I have given you examples of cases, of brokers.

I am now going to turn to another matter, and maybe this is one the minister may be able to comprehend sufficiently to be able to tell me whether or not there is an investigation or what he thinks about his regulations. Apart from asking you questions as they relate to your investigations, Mr. Minister, I am also trying to demonstrate to you, if you'd listen, that your regulatory system is not working properly.

I want to deal with the matter of insider reports and, again, the failure of the regulatory process as it relates to the filing of insider reports - as soon as I can find my notes here. Perhaps I'll make way for the member for Delta to speak while I'm looking for my notes.

MR. DAVIDSON: I'll be very brief. As the minister will recall, some time ago I wrote him an open letter, and there was some coverage of that letter in the media. I want to tell the minister about some of the replies I had. They were about 98 percent in support, and 2 percent were death threats. That's just about how it broke down.

[ Page 4156 ]

There were some very interesting comments. Basically, if I could report, one broker, who has been a broker for 38 years and is in fact a member of this party, said to me, as best I can recall: "I want to say that you're right on in your report. There are those of us in the Vancouver Stock Exchange working as brokers who feel very strongly that a lot more could be done to clean up our workplace, to make this a more reputable place for us to work, and thus create the kind of image locally and internationally that we're all looking for. "

I guess what I'm saying, in essence, is that it's not all political. When you viciously attack the member for Esquimalt-Port Renfrew (Mr. Sihota) for being political, I think at some time it's fair to assess that maybe it's not all partisan politics, and maybe underneath all that smoke there is just a little bit of fire.

The majority of people I've talked to are very dedicated people who work on the Vancouver Stock Exchange. They recognize the very tough job that the people in the ministry have to do in their work, because no matter what kind of system we put in there, we're never going to perfect it in such a way that we're going to keep people out of there who shouldn't be there in the first place. We have an obligation, first, to accept the fact that those kinds of people who shouldn't be there are there, and we've got to do a better job than we're doing right now to get them the heck out of there and to make that marketplace a vehicle that a lot of people in this province and elsewhere can have some confidence in, through knowing that when they put some money into that exchange they at least have a fair shot at getting back not only their money but the growth opportunities that go along with it.

I guess, in conclusion, I could only say that while there are always partisan political statements made in the House, I would hope that the statements I'm making aren't seen as politically partisan in any way. I am urging the minister that there is a need for increased vigilance on the Vancouver market. It's not in the area of statements of material facts; it's in the area of what happens after the statements of material facts and the stocks are traded. That's when things go wrong. That's when the crooks move in and the sleazy, underhanded trades take place, and the arm's-length motions that aren't at arm's length at all, and the undeclared shorts who cover within one or two days.

I wrote the minister. In my letter I talked about the Bank of British Columbia and about this great investment community of British Columbia - all these learned bankers who sit in their nice striped suits, and honesty and integrity. Yet where were these people when they knew that the Bank of B.C. wasn't a good investment buy? Do you know where they were? They were selling their stock. Their own stock was being sold when they were telling clients to buy. It was going to be a great opportunity; this so-called Hong Kong investor was going to come in; the stock was really going to rocket up. Not one of those bright, well-thought-of, intellectual banking members of the establishment community was reported anywhere in any newspaper saying: "Be cautious buying Bank of British Columbia stock, because the shareholder is going to be the first one to be hurt."

That's not the fault of the exchange; it's not the fault of the ministry. But when people in that community don't come clean with the investing public, something is dramatically wrong. The member for Esquimalt-Port Renfrew is simply saying, as I am saying and people who work on the Vancouver Stock Exchange are saying, that we've got to do more if we're going to make the Vancouver Stock Exchange an internationally respected vehicle for investment capital.

HON. MR. COUVELIER: The fact of the matter is, hon. member, we are responding, and as I've said before, we're doing very well in terms of the resources we are putting into this issue. We have introduced a new act. It has given us stronger powers. We have a new commission; we have more staff; we have more dollars. We have clearly made a stronger commitment in this area, and we've made good progress.

The hon. member makes a comment about the fact that he has some letters of people who were associated with the exchange and who decry its style of operation. The exchange has the opportunity to elect its board of directors. If these people you describe are of such great numbers, how is it then that they haven't run for office and changed the things they don't like? No, I suspect that they would far rather see government interfere than try to remedy a situation that would suit their narrow purposes. No, hon. member, I'm sorry I don't jump at some knee-jerk reaction to unsubstantiated letters. You claim to have received 100 letters. I'd like to see them. I thought I heard you say 98 and 2.

MR. DAVIDSON: I never said 100 letters.

HON. MR. COUVELIER: Maybe it was more like two. Maybe you could let me see the two.

In any event, it has been a very useful discussion, and I am indebted to all members for sharing with me their views on this subject. Obviously, we have listened, and I think we have learned a little bit. For that I am grateful.

The House resumed; Mr. Speaker in the chair.

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

Hon. Mr. Strachan moved adjournment of the House.

Motion approved.

The House adjourned at 5:56 p.m.