[ Page 4177 ]

CONTENTS

Routine Proceedings

Oral Questions

Questions on Premier's possible corporate involvement with P. Toigo. Mr. Harcourt –– 4177

Sale of Expo lands. Mr. Harcourt –– 4177

Provision of AZT to AIDS victims. Mrs. Boone –– 4178

Tabling Documents –– 4179

Notice of Motion. Mr. Harcourt –– 4179

Hon. B.R. Smith

Mr. Rose

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

(Hon. Mr. Couvelier)

On vote 37: minister's office –– 4180

Mr. Sihota

Mr. Clark

Mr. Williams

Mr. S.D. Smith

On vote 39: compensation stabilization program –– 4188

Mr. Clark

Horse Racing Tax Amendment Act, 1988 (Bill 3). Second reading. (Hon. Mr. Couvelier)

Hon. Mr. Couvelier –– 4188

Mr. Stupich –– 4188

Mr. Clark –– 4188

Mr. Rose –– 4188

Hon. Mr. Couvelier –– 4189

Income Tax Amendment Act, 1988 (Bill 4). Second reading. (Hon. Mr. Couvelier)

Hon. Mr. Couvelier –– 4189

Mr. Stupich –– 4189

Insurance Premium Tax Amendment Act, 1988 (Bill 5). Second reading. (Hon. Mr. Couvelier)

Hon. Mr. Couvelier –– 4189

Mr. Stupich –– 4190

Land Tax Deferment Amendment Act, 1988 (Bill 6). Second reading.

(Hon. Mr. Couvelier)

Hon. Mr. Couvelier –– 4190

Mr. Stupich –– 4190

Mr. Sihota –– 4190

Hon. Mr. Couvelier –– 4190

Mineral Resource Tax Amendment Act, 1988 (Bill 7). Second reading. (Hon. Mr. Davis)

Hon. Mr. Davis –– 4191

Mr. Clark –– 4191

Mr. Stupich –– 4191

Hon. Mr. Davis –– 4191

Mining Tax Amendment Act, 1988 (Bill 8). Second reading. (Hon. Mr. Couvelier)

Hon. Mr. Couvelier –– 4192

Mr. Stupich –– 4192

Motor Fuel Tax Amendment Act, 1988 (Bill 9). Second reading. (Hon. Mr. Couvelier)

Hon. Mr. Couvelier –– 4192

Mr. Stupich –– 4192

Hon. Mr. Couvelier –– 4192

Social: Service Tax Amendment Act, 1988 (Bill 10). Second reading.

! (Hon. Mr. Couvelier)

Hon. Mr. Couvelier –– 4192

Mr. Stupich –– 4193

Mr. Lovick –– 4193

Hon. Mr. Couvelier –– 4193

Taxation (Rural Area) Amendment Act, 1988 (Bill 11). Second reading.

(Hon. Mr. Couvelier)

Hon. Mr. Couvelier –– 4193

Mr. Stupich –– 4193

Tobacco Tax Amendment Act, 1988 (Bill 12). Second reading. (Hon. Mr. Couvelier)

Hon. Mr. Couvelier –– 4193

Mr. Stupich –– 4193

Hon. Mr. Couvelier –– 4194

Tourist Accommodation (Assessment Relief) Act (Bill 13). Second reading.

(Hon. Mr. Couvelier)

Hon. Mr. Couvelier –– 4194

Mr. Stupich –– 4194

Education Excellence Appropriation Repeal Act (Bill 15). Second reading.

(Hon. Mr. Couvelier)

Hon. Mr. Couvelier –– 4194

Mr. Stupich –– 4194

Mr. Lovick –– 4194

Hon. Mr. Brummet –– 4195

Mr. Jones –– 4195

Mr. Rose –– 4197

Hon. Mr. Couvelier –– 4198

Health Improvement Appropriation Repeal Act (Bill 16). Second reading.

(Hon. Mr. Couvelier)

Hon. Mr. Couvelier –– 4198

Mr. Stupich –– 4199

Hon. Mr. Couvelier –– 4199

Special Accounts Appropriation and Control Act (Bill 18). Second reading.

(Hon. Mr. Couvelier)

Hon. Mr. Couvelier –– 4199

Mr. Stupich –– 4199

Mr. Cashore –– 4199

Hon. Mr. Couvelier –– 4200

Provincial-Municipal Partnership (Taxation Measures) Amendment Act, 1988 (Bill 19).

1 Second reading. (Hon. Mr. Couvelier)

Hon. Mr. Couvelier –– 4200

Mr. Stupich –– 4200

Hon. Mr. Couvelier –– 4201

International Financial Business (Tax Refund) Act (Bill 22). Second reading.

(Hon. Mr. Couvelier)

Hon. Mr. Couvelier –– 4201

Mr. Stupich –– 4201

Hon. Mr. Couvelier –– 4201

International Financial Business Act (Bill 23). Second reading. (Hon. Mr. Couvelier)

Hon. Mr. Couvelier –– 4201

Mr. Stupich –– 4201

Hon. Mr. Couvelier –– 4201

Budget Stabilization Fund Act (Bill 14). Second reading. (Hon. Mr. Couvelier)

Hon. Mr. Couvelier –– 4202

Mr. Stupich –– 4202

The House met at 2:06 p.m.

Prayers.

MR. JONES: I'd like to introduce to the House today a constituent of mine, who is also the staff representative to the UBC board of governors. I'd like the House to join me in welcoming George McLaughlin.

HON. B.R. SMITH: Mr. Speaker, I have the pleasure today to introduce the Solicitor-General of Canada, Mr. Jim Kelleher, who is also the Member of Parliament for Sault Ste. Marie. Jim was a lawyer in the Sault for many years: he was the local mayor, and he's had a number of years' experience in politics and government. He's out here today holding a session on drug-combating strategy in Vancouver; he's speaking here today, and he has kindly agreed to hear question period. I assured him that unlike the House of Commons, we don't do this quite as long as they do in Ottawa, but that in our question period, although it's shorter, in 15 minutes there's higher drama and better use of time and more fun than the long sessions in Ottawa. I have great pleasure in introducing Jim Kelleher.

MR. SIHOTA: I don't mean to tip my hand here, but unfortunately I won't be asking any questions of the Attorney-General. Had I known that Mr. Kelleher was going to be here, I would have prepared a couple of questions for him so that we could let him have some insight into the judicial issues of the day here in British Columbia. Certainly it is a pleasure for us on this side to see Mr. Kelleher here. On behalf of our party, I would also like to extend a warm welcome to him on his visit to Victoria.

MR. ROSE: 1 take pleasure in welcoming back from his long vacation — where is he? Is he gone? — the member for Vancouver South (Mr. R. Fraser). I hope he enjoyed his vacation, and I congratulate him on his wonderful tan. I just ask, Mr. Speaker, if he received his tan from standing too close to his burned bridges?

HON. MR. COUVELIER: Mr. Speaker, it's my pleasure to introduce three constituents from Sidney, who are in the gallery this afternoon to observe our proceedings. I ask the members of the House to extend a warm welcome to Mr. Don Eby, Ms. Mary Eby and Ms. Toni Graeme.

Oral Questions

MR. HARCOURT: I'd like to welcome the Premier back from his vacation from the House.

SOME HON. MEMBERS: Oh, oh!

MR. SPEAKER: Order, please.

QUESTIONS ON PREMIER'S POSSIBLE
CORPORATE INVOLVEMENT WITH P. TOIGO

MR. HARCOURT: As the Premier is undoubtedly aware, last Monday I gave notice of a question of privilege arising from some contradictory responses he gave to questions raised in relation to his dealings with Mr. Toigo. The Premier told the House he had no financial obligations to Mr. Toigo nor any corporate involvements. The Premier appears to have misled the House, because subsequently he admitted Mr. Toigo's company, Shato Holdings, leases a restaurant in Fantasy Gardens, where the Premier has at least a 30 percent share. Has the Premier decided to make a ministerial statement on this matter so that he can clarify the responses given to the House'?

HON. MR. VANDER ZALM: With respect to the opening comments by the Leader of the Opposition, I did see him over the weekend. We did run into one another at the Greek food festival in Vancouver. I was on my way to a busy weekend in the Okanagan, meeting with grape-growers and tree-fruit growers and other people, and he told me that he was on his way, with Beckie. to one of the Gulf Islands. So I don't know about this holiday. I'm not saying that to suggest there's anything wrong with this, and that it's necessarily a poor choice. I commend him for his choice. But I would suggest that there's much to be done around the province and that the Premier visits all parts of the province and meets with people everywhere — and the reception has been fantastic.

With respect to the question of whether I'm prepared to make a statement on what I would consider to be a very frivolous notice of motion, the answer is no.

MR. HARCOURT: It saddens this side of the House that the Premier thinks that his statements were frivolous. I think this House deserves better. and I will give the Premier — because we waited until he returned to the House — a chance to clear the air. He has said that he is not prepared to clear the air on the question of his relationship with Mr. Toigo, so I will ask him one more time and hope that I will finally receive an honest and forthright answer to a question about the Expo lands.

HON. MR. BRUMMET: I think, Mr. Speaker, that there are different ways of using derogatory terms in this House and that the Leader of the Opposition has just said he would like, for a change. an honest answer, which by implication means that there's dishonesty on this side. I think the member is making a serious allegation that he should withdraw.

SALE OF EXPO LANDS

MR. HARCOURT: I'll withdraw the word "honest." We'll give the Premier opportunities. We're tolerant people on this side of the House. We hope that he will think about the response he gave. But I would like to ask the Premier about the Expo lands, because he has made a public and a personal commitment that before any deal was approved there'd be no chance of flipping the Expo lands. Will the Premier confirm that a no-flipping provision is now included in the written agreement with Concord Pacific?

[2:15]

HON. MR. VANDER ZALM: I'm satisfied that the agreement, as negotiated between the B.C. Enterprise Corporation and the Concord corporation, has sufficient protection to prevent the flipping process.

MR. HARCOURT: Just to clarify that, are you making a commitment that there was a no-flipping provision included in the written agreement with Concord Pacific?

[ Page 4178 ]

HON. MR. VANDER ZALM: I'm saying that I'm satisfied that the agreement has adequate provisions to prevent the flipping, although I should go on perhaps to say — and if the Leader of the Opposition doesn't know, he might refer to someone in his caucus with respect to what flipping means or how it's done — that there's no way by which you can in law prevent someone from selling a property once they have title to it. But there are adequate provisions, and certainly all of the people who have worked on the agreement have advised me that they too are satisfied that we have sufficient protection.

MR. HARCOURT: I'd like to again try to clarify the Premier's response. He was saying that before the agreement was made he was going to be 100 percent sure that there be no chance of flipping whatsoever. Now he's saying that you can't do that in law. Mr. Premier, we're asking you to protect this most valuable land in British Columbia. Is that provided for in this agreement: yes or no?

HON. MR. VANDER ZALM: I'm satisfied that we have a good agreement. I'm satisfied that all of the points that were of concern to myself and others have been met and that in fact there is adequate provision in the agreement to prevent the flipping.

MR. HARCOURT: I'd like to ask the Minister of Finance a question about the Expo lands. Will the minister tell the House if the property purchase tax will be paid on the purchase of the Expo lands? Or has it been waived by the province'?

HON. MR. COUVELIER: The negotiations went through many combinations and permutations, so I am happy to advise the member that to the best of my knowledge, tax will be paid. I will be happy to confirm that upon passage of a little more time. Let me study the documents.

MR. HARCOURT: We are pleased to hear that the minister thinks the property purchase tax will be paid. That will certainly be welcomed by the new homeowners across British Columbia, who have to pay it every time. I'd like to know what price the property purchase tax will be based on.

HON. MR. COUVELIER: Therein lies my hesitation, Mr. Speaker. In any event, to the best of my memory there were no particular arrangements provided in that respect. I think the hon. member, by virtue of his previous life, of all the individuals in this House, would be most aware of the fact that those lands had a very heavy cost associated with them in order to reclaim them so that they were usable. This hon. member who asked the question would, by virtue of his peculiar knowledge, appreciate the enormity of that necessary reclamation. Therefore the issue of the pricing, of the terms, of necessity had to recognize those unusual aspects of the sale. To a large extent, much of this information has come to light during a relatively recent few years, and the member who asked the question would be one best able to understand the complexities of the issue I described.

MR. HARCOURT: What we have is a Minister of Finance who can't tell us the price the lands were sold for; that's basically what we have. Let's try something less complex, so as not to press the Minister of Finance on financial matters. Heaven forbid!

Will the minister confirm that following the $50 million down payment, no payments will be made by the buyer for at least seven years and no interest will be paid at all?

HON. MR. COUVELIER: As I mentioned, it's rather ironic that these questions should come from the individual who mouthed them, insofar as much of the requirements of the purchaser that must be met will be, and are, necessitated by impressions, requests and historical points of interest expressed by the city of Vancouver by the hon. member while he was associated with that enterprise. Nevertheless, as the Premier has said, the property was advertised internationally, there was an active bidding process, and the minister responsible and the B.C. Enterprise Corporation board of directors got the very best deal that could possibly be obtained. The best justification for that statement is the fact that it was internationally recognized and we took the best offer.

MR. HARCOURT: The costs of the Expo and B.C. Place lands are already being written off, so those costs aren't there. I know the cost of the Cambie Bridge. I know the cost of the roads and the servicing. Those have already been paid for. That makes it easy for the minister to know the cost of the lands, if they've already been written off. There is nothing in the Property Purchase Tax Act which says that the tax will be paid on an uncertain price. Mr. Minister, what is the price on which the tax will be based on the Expo lands?

HON. MR. COUVELIER: The hon. member seems to have some difficulty following the perfectly lucid answers I've been providing on this question. I'm very happy to repeat myself. The issue is one that largely requires close examination, by virtue of actions taken by the city of Vancouver during the hon. member's position of stewardship of that jewel in British Columbia's crown. I think it's fair to say that if any of the answers provided this afternoon prove to have been misleading, we will so advise the House shortly thereafter.

PROVISION OF AZT TO AIDS VICTIMS

MRS. BOONE: A question to the Premier. On Friday the ombudsman said there was considerable doubt about the fairness of the government's policy to make AIDS patients pay up to $2,000 for AZT. The Health minister (Hon. Mr. Dueck) responded by saying that he doesn't think an exception should be made for AZT and that that is what he will be recommending to cabinet. Will the Premier tell the House if he has reviewed his minister's response to the ombudsman's recommendations and, in the interest of fairness, is prepared to recommend that all AZT costs be covered entirely by Pharmacare?

HON. MR. VANDER ZALM: I have not yet seen the report. Nor have I had an opportunity to talk about this with the Minister of Health. I assume these discussions will be held following receipt of the report. It will then come to cabinet, and if there's a decision to be made, it will be made by cabinet, so it's a matter of future policy.

MRS. BOONE: We agree when the Health minister says an exception shouldn't be made for AZT, and that's exactly

[ Page 4179 ]

what the minister has done. He's made an exception to exclude AZT from universal health care. The Premier was prepared to admit unfairness of his government's policy when it came to cyclosporin. As the ombudsman points out, B.C. is the only province which does not fully fund AZT, and the patients are participating in an experiment which will potentially benefit others. Is the Premier prepared to do the right and fair thing and include all AZT costs as Pharmacare — as recommended by the ombudsman?

HON. MR. VANDER ZALM: Mr. Speaker, I believe my first answer definitely applies to this particular question as well. But I will say that we have one of the best Pharmacare programs in the whole country. We obviously, as the people responsible in government, are constantly and will be.... So perhaps it's good too, because we're looking for new drugs to help some of those afflicted by various diseases, and we are constantly having to face new drugs on the market — many very expensive and some experimental. These are dealt with by government very fairly.

MR. ROSE: I rise on a point of order. All of us should remember, as MLAs here, that it's been the practice for some time not to raise questions of privilege or parliamentary language during question period, and that these things are available right after question period, if anyone feels strongly enough by that time to want to move them. If those are not the rules, then changes might be made over here. I think the way they've been functioning in that these matters are not raised during question period — in view of the 15 minutes — is probably the most desirable.

HON. MR. STRACHAN: The standing order that refers to questions or points of order during question period states that Mr. Speaker shall make that reference or defer the points of order to a time other than question period. However, the government has, from time to time, made its own decision and waited until question period was over before raising a point of order. I can only suggest, sir, that if you review the Hansard Blues, you will see that the Minister of Education was so incensed by the comments made by the Leader of the Opposition, and the most regrettable and unparliamentary reference to another member, that he could not contain himself.

HON. MR. BRUMMET: On the same point of order raised by the Leader of the Opposition. If I follow his statement to its illogical conclusion, that would mean that if we are not to raise a point of order at any time for the 15 minutes, that opens the door for any member on that side to keep making allegations and using unparliamentary language for 15 minutes before they can be challenged, and I have a difficult time accepting that.

MR. ROSE: I was provoked when someone said: "You lost that one, Mark." I would just like to say that if I become equally obsessed and angry over here, does that also give...?

Interjection.

MR. ROSE: Incensed. Does that mean that each of us on both sides has the perfect right to destroy question period over some squabble over name-calling? I think that all these things can be easily handled right after question period. I would invite the hon. Minister of Education to be a real educator, to be patient and hold his temper.

MR. SPEAKER: I'd just like to suggest that if members were to keep to parliamentary language, you wouldn't have to have these exchanges during or after question period.

HON. MR, ROGERS: I was just going to suggest that perhaps the two of them could settle it outside.

Hon. Mr. Rogers tabled the annual report of the British Columbia Railway.

Mr. Speaker tabled the 1987 annual report of the ombudsman to the Legislative Assembly.

Hon. Mr. Couvelier tabled a statement of temporary borrowing by the government pursuant to section 43(2) of the Financial Administration Act and a statement of borrowings, including off-lending. pursuant to section 41.6 of the Financial Administration Act.

[2:30]

MR. HARCOURT: I gave notice last week that I had a motion of privilege that I would like to place before the Legislature. I also said that it would only be fair and appropriate that the Premier have an opportunity to make a ministerial statement on my notice of privilege. The Premier has said that he will not take advantage of that opportunity. Therefore I sadly will proceed with the motion of privilege that I have prepared.

Along with that motion, I shall be tabling extracts from Hansard of April 25 and, dealing with the subsequent remarks of the Premier. extracts from the Province of April 27 and a news summary prepared by the Premier's office communications staff of the CBC news report for that evening. Full tapes of the TV coverage are available to you, Mr. Speaker, through the Premier's office.

I have an appropriate motion prepared, in the event that Your Honour rules that a prima facie case has been established, but again, it would seem fair that to clear the air, the Premier should apologize to the House in a forthright fashion and place on the record a correction of his erroneous statement in question period last Monday. Accordingly, I hope, Mr. Speaker, you'll ask the Premier to address the apparent conflict between his statement here and to the media subsequently.

I move the motion. seconded by the opposition House Leader, that a special committee of privilege....

MR. SPEAKER: I would advise the member that the motion is not moved: the material is tendered. If the Chair finds there is a question of privilege, then the motion that you prepared would be moved.

MR. HARCOURT: I'm prepared to move it and will tender it.

MR. SPEAKER: I will take the question under advisement and report back to the House.

HON. B.R. SMITH: Mr. Speaker, on the question of privilege, this side of the House would like to reserve its right

[ Page 4180 ]

to make some comment on the appropriateness of the motion. I think the House Leader will be doing so.

MR. ROSE: I would like to know what is actually intended by that. Is the Attorney-General telling the House or advising the Speaker that he's reserving his right to make a response to the information put forward on behalf of the prima facie case at some subsequent date? Is that what he's telling us? Would he also like to tell us when this will occur? As everyone knows, the Speaker's role is to look at all the evidence presented in the prima facie case, but the Legislature itself — not the Speaker — determines whether or not a breach of privilege does in fact exist.

HON. B.R. SMITH: I'm talking about the first stage of it — that is, whether there is a prima facie case — which is not determined by the House, but is determined by the Speaker. We wish to reserve some response to that issue. I don't know whether it would be tomorrow, but it would be at the earliest opportunity. Our House Leader was considering this matter. We were not sure when or if you were going to proceed with your motion, hon. Leader of the Opposition, although you gave notice of it, and it's come today. But I think it's only appropriate that this side would have a chance to address the prima facie issue. That's the one I'm talking about.

Orders of the Day

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

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. SIHOTA: Mr. Chairman, since we are on the Finance estimates, I want to ask the Minister of Finance a couple of questions that flowed out of question period.

Just as a matter of interest, it seems to me from my recollection....

MR. CHAIRMAN: Hon. member, you must be finding some difficulty with the noise level in the chamber at the moment. Perhaps we can wait for a moment, until everyone settles down. Would you please proceed, hon. member.

MR. SIHOTA: I was wondering, as a consequence of the questions which were raised during question period to the Minister of Finance, if he could confirm my understanding — and I stand to be corrected on this matter — that a sum must be specified in order for the provisions of the property purchase tax to apply. It would seem to me that the act could not be triggered if the sum is not stated, because you wouldn't know what to calculate the percentage against.

HON. MR. COUVELIER: Since the question was put during question period, the government staff have responded with alacrity. We can tell you that property purchase tax will be paid. We are aware of what our legislation says. When the documents are filed, you will see the universe unfolding as it should.

MR. SIHOTA: I'm trying to ascertain how much property purchase tax would be paid according to the provisions of that act. Now that your staff are here, and they can tell you with some precision what's involved here, perhaps you could tell us.

HON. MR. COUVELIER: That information will be made available in the fullness of time. The hon. member should keep his shirt on — and his tie and his socks — and we'll get back to him.

MR. SIHOTA: I don't quite understand why I should be worried about my shoes and my socks and my shirt. It seems to me that the Minister of Finance ought to be worried about the amount of revenue that he's going to be gaining from a particular tax, and he ought to have some answers at hand. I'm just wondering if the minister would explain to us how the act is to apply in this type of a situation, where it is indicated that the price is $320 million, but it could be $500 million based on development options. Given that is the tax to be calculated on $500 million, is a rebate issued if the amount is less, or is it supposed to be calculated on $320 million and a sum payable later if it works its way up to $500 million?

HON. MR. COUVELIER: I can assure the hon. member, the House and all the citizens of B.C. that by virtue of the international competition for that property, the interests of B.C. residents are well served, and to suggest that the property purchase tax issue is of critical import in terms of the merits of the proposal is absolutely absurd. The fact of the matter is that evaluation will be set, as I've said, as part of the process. That will be made public once the process unfolds. While the hon. member may have a curiosity, I'm not going to oblige it. That information will be forthcoming in due course.

MR. CLARK: On the same point. This minister gets his back up and tries to be aggressive whenever he gets defensive. I simply want to ask a question. The scheduled payments that we know of now are $50 million and $4 million a year for ten years, and so on. Would it be when the company remits the $4 million payment or the $50 million payment when the 2 percent would be paid? Is that what has been agreed to? Or is it on some other version, like the net present value or something?

HON. MR. COUVELIER: No, the property purchase tax will be paid in total at the time the registration takes place.

MR. SIHOTA: Just for my information, when is the date that the lands are to be transferred?

HON. MR. COUVELIER: As the process unfolds, it will be.... It's a relevant question, but there are some 30 property titles involved and as the documents work towards finalization, that question of valuation will be pertinent and it will be addressed then.

MR. SIHOTA: I appreciate the fact that this is a complex transaction, that there will be a whole series of titles that have

[ Page 4181 ]

to change. I didn't realize there were 30, but that's certainly an impressive figure. I guess what I'm at a quandary at is that I don't think the legislation was ever drafted for this type of sliding scale agreement, whereby the quantum of funds for the final purchase price could be anywhere between $320 million and $500 million. I don't think the act was ever drafted in contemplation of that. The act was always drafted in keeping a fixed price.

I'm therefore wondering whether or not it is a matter of negotiation come registration as to what the number is going to be, as opposed to agreeing to $320 million or agreeing to $500 million. Maybe they'll cut the difference. I'm just wondering if there are negotiations to determine the price upon which the tax is to be paid?

HON. MR. COUVELIER: It's always interesting to hear what the hon. member thinks about an issue, and he takes full opportunity for these kinds of exchanges to express his views, and I'm grateful for that.

MR. CLARK: We don't want to belabour the point to the minister, but we would like to know, because it begs the question as to whether we can all do this. In other words, can we buy something today and pay the tax down the road? The minister, in his answer, has raised more questions than he has answered. For example, he said that there are some 30 titles to be conveyed. It seems to me that conveyance could happen over time, and the payment would be when the title is conveyed at each schedule along the way.

First of all, if the title is not conveyed. who pays the property tax on the stuff that's still held by the Crown? What security is there for the Crown as owner of the resource if they're going to phase the title conveyances over time? It would be nice if we could get a nice simple answer as to the direction we're moving, because it does beg the question as to whether we can all play this game to some extent. Not that I can.

HON. MR. COUVELIER: It is not a game; it's a very serious matter. The government is delighted with the successful conclusion of the entire process. The hon. members opposite make a statement, and they build a thesis around the statement. It becomes a house of cards based upon a false premise. We've now got the case where they are bandying back and forth making some grotesque mountain over what is in truth no problem whatsoever.

The hon. member suggests that we didn't write the legislation on property purchase tax in a way that recognized this eventuality, and I tell him he's wrong. We did. The act does cover it. The hon. member suggests that we're going to be transferring property piecemeal and therefore it is suggested that there will be property purchase tax paid in pieces. Clearly that's based on the first assumption, which was an error. Obviously we're talking about a comprehensive development here. It would be absurd to think that we'd be transferring — or the owner acquiring — ownership piecemeal, phased out over a period of time.

The whole proposal, the whole initiative, was to advertise internationally to ensure that we got a comprehensive development that the city of Vancouver and all British Columbians could be proud of. That's what we've done. We're not going to transfer pieces of land piecemeal over a period of months. The developer himself is going to want to make sure that he gets title to all those properties concurrently, and so is the city of Vancouver. Everyone's interests are obliged by ensuring that the transfer takes place in total. That's what will happen.

I suggest that the question was prompted by the false assumption from the earlier questioner from the other side of the House.

[2:45]

MR. SIHOTA: The Minister of Finance would rather engage in that type of comment than deal with the issue. The basic assumption here, Mr. Minister, is the question of whether the tax will be payable. The assumption that we're making on this side of the House is that the tax will be payable; that's upon which all the other arguments are founded. Since you have confirmed that the tax will be payable, we're just trying to determine on what basis it will be payable and how much tax is going to be paid.

The thing the minister can't explain to this House is exactly how much money is involved here. We don't know if it's $320 million or $500 million, and worse still, the minister — the Minister of Finance — doesn't know. It seems to me that the minister ought not to be accusing us of being in the dark on this matter. If the minister was forthcoming in his answers, then we'd know.

If the figure is $500 million, we'd know what percentage is going to be calculated out, and we're quite capable of doing the arithmetic. But both in question period and now, the minister has been unable to tell us the amount. I see he wants to get up, so I will allow him to respond to that before I ask my question.

HON. MR. COUVELIER: I confirmed during question period and reconfirmed during this discussion of my estimates that property purchase tax will be paid. That's not an issue; the issue is the sum. Evidently the issue was a sum in the minds of the interrogators at least, and I explained that that will be a part of the process that will unfold as the weeks proceed. That was envisaged, it was recognized, it was part of the package and, indeed, every one of the bidders would have had to follow the same process in any event.

I am not in the position to tell the hon. member today what those sums will be — that is, the sums of the property purchase tax or the valuations. It was never envisaged that we would be in a position to do that within a matter of days after the sale being concluded and the bid accepted.

As I said earlier, Mr. Chairman, the hon. member will be advised as the process unfolds. I find nothing unusual nor do I feel any compunction to defend anything at all. I couldn't make my answer any clearer, I think.

MR. SIHOTA: The minister was doing well until he uttered those last two words. If the minister is saying he doesn't know the sum. fair enough. It seems odd to me that the minister wouldn't know the price upon which the tax will be predicated, but let's put that aside for the moment. Let me come at it from a different angle, although I must say this wasn't my original intent in asking the question.

The minister talks about process with respect to the payment of that tax. Will he assure the House that there will be no forgiving or deferral of that tax in the agreement? In other words, will you assure the House that you will not forgive the tax in any way — for example, allocate a lower value or attach a lower percentage? Similarly, for the matter

[ Page 4182 ]

of deferral, will you assure us that they won't be deferred beyond the registration date, whatever that is?

HON. MR. COUVELIER: As I've tried to tell the hon. member, the process is unfolding as it was designed to unfold. Once again, I am not going to allow the hon. member to go on a fishing expedition with piecemeal answers to only part of the equation. As much as he would like to have his curiosity abated, I will not oblige him. The process envisages a series of steps. That's in place, and they are unfolding. The interests of the B.C. citizen are well protected by the process.

MR. SIHOTA: Another question to the minister. The minister said in response to one of our earlier questions that he was trying to build his house of cards, and now that we've resolved the matter of the assumption, he said that the act does contemplate a sliding-scale system. That is how I described it. Could the minister explain just for my own information how the act contemplates that?

HON. MR. COUVELIER: With respect, Mr. Chairman, the hon. member made a statement. I told him he was wrong. I think it's up to him to tell me what he doesn't seem prepared to accept. I have told the House that property purchase tax will be paid. I have told the House that the question of its amount and the question of the valuation of the property is and was part of the bidding proposals, and that all of the bidders were aware of that. He has jumped around here trying to find some rock to cling to, and he's having trouble. I don't intend to assist him in that effort.

Surely the issue quite simply is whether property tax will be paid, and the answer is categorically yes. As to its amount and method of calculation, as I said earlier, that will be developed as part of the completion of the process that was envisaged when we started the exercise, and it's still in place now. Again, all the bidders knew that that was part of the exercise.

MR. SIHOTA: The property purchase tax, of course, is not in the new statutes, which I guess is another problem; so we can’t see which section would apply in terms of how the act contemplates the sliding scale basis. I guess if the act was here I could find it and ask the minister some questions on it.

What I wanted to find out, if there is a sliding scale agreement, was whether or not the price would attach to the higher figure and then be rebated back if a lower figure was ultimately realized.

It's not me who's floundering; it's this minister who can't tell us what the final sum is and hence is unable to tell the House exactly how the tax will be paid. That's fair enough. We'll leave the topic and look forward to dealing with the minister a little later on.

HON. MR. REID: It seems fair; it seems appropriate.

MR. SIHOTA: The member is right; it does seem appropriate, given that the minister can't answer the question.

Maybe this is a question the minister can answer: how many votes did the minister get in the Socred leadership convention? Just as a matter of interest.

HON. MR. COUVELIER: If you subtract my mother and wife and immediate family, not very many.

MR. SIHOTA: Was it 12?

MR. CHAIRMAN: I'm having difficulty figuring out how this is germane to the subject at hand, vote number 37.

MR. SIHOTA: You'll find out, Mr. Chairman, in a moment. I thought it was 12, and I'll base it on that. If the minister says it's not 12, then fair enough; we can amend it to reflect the actual figure.

I want to conclude my comments on the stock exchange. We've had a fairly thorough debate on this matter. I had intended to talk on it at some length today, but in retrospect — probably to the relief of the minister if not to everybody else in the House — I'm not going to. I think we've canvassed the topic. I've made my point and the minister has made his point. I do want to emphasize that whether the minister wants to accept it or not, there is a problem, and the government should move to address the problem.

In fairness, I've listened to what the minister had to say, and I will act on some of the points, recommendations and/or advice that he's offered during the course of the debate; I would ask that he do the same with respect to points I've made. But I think it should cause the minister a fair bit of concern when I demonstrate to him, whether or not he likes the forum, that people who are fairly senior within the exchange — people who hold governorships in the exchange, who have chairmanships with influential committees on the exchange — are involved in questionable stock transactions. That should concern the minister. And I don't make those comments lightly or frivolously. I'm not in the habit of standing up in this House and making those types of comments on the exchange if I can't make them outside. The minister may recall that last year I made some statements in this House, and the minister took great pleasure in pointing out that a lawsuit had commenced. I pointed out at the time that I stood behind my comments, and indeed that suit was dropped because it was recognized that I never made the comments along the lines that were reported.

To date, no one has taken that type of recourse behind the comments that I've made, and I'm sure — and confident — that the comments I've made in the last few days will not invite that type of litigation either. I'm very careful and very select with respect to the evidence that I provide. I think with that type of background in mind, the minister should go back and reflect on the comments I made with respect to senior individuals who seem to be involved in some questionable transactions. I would hope that the regulators will take action and that appropriate sanctions will be forthcoming.

I also trust that with respect to those companies I have named that are not currently under investigation.... That includes the Axiom example, where there are no sanctions to date. It includes the Lionheart example, where no insider report actions have been taken. I hope to read in the next few weeks and months that the superintendent of brokers office has moved with dispatch on those matters, as well as on the matters relating to the Carter-Ward trial and the Cumo Resources trial.

Particularly with respect to the Carter-Ward trial, I can assure the minister that the significance of that decision has not yet filtered down and hit with the impact that it's going to hit. I would venture to say that in the coming weeks and months we will hear more and more about the Carter-Ward situation — before the judgment, let alone after the judgment. I don't have any particular knowledge on this, but I'm

[ Page 4183 ]

confident that those responsible for reporting on the activities of the exchange will be paying more mention to the CarterWard situation after the transcripts are available, so that they can quote what transpired with the type of exactitude that's necessary given the appropriate legal pitfalls all of us face when we attack matters on the exchange. I look forward to action flowing both from the Cumo Resources case and the Carter-Ward situation.

I want to emphasize.... Axiom, Lionheart, CarterWard, Cumo and all the other ones — and I don't have the Blues here in front of me, but 1 know that if one were to add them up, there are least 25 instances I have referred to that clearly involve violations of the Securities Act, and I think one could follow them through really easily.

I also want to share with the minister a bit of a trade secret, because the comment that he makes with respect to the points I raised in this House is, I think, ill-founded. The minister has a habit, if he can't make any other argument, of suggesting that the information that I bring to this House is street tips and rumour. It's not. I'm going to tell the minister where I do get the information, in part, because it is the very thing your own regulators ought to be doing. That is simply by going through the trading blotters. I think if one just sat and went through that information as regularly as I do — and I don't do it more than once a month — it doesn't take much time to be able to figure out which matters ought to be investigated and which matters ought not to be.

I stand on my record. Every instance that I've raised in this House to the Minister of Finance, prior to these estimates, is a case in which there has been some action taken. There hasn't been one stock that I've referred to in this House during the course of deliberations on the exchange, whether it be in question period or previous estimates, where I was wrong in terms of violations of the act. I've yet to be proven wrong, and I stand by that record when one takes a look at what I've had to say in the last two or three days, and when the minister's regulators, as I'm sure they will now, take a look at those.

I'm very careful in terms of the material that I present, and it's well researched. I just don't think that it is appropriate.... It may be appropriate in this forum, but in the confines of the minister's own office, I would like to think that the minister takes a moment to go through or gets somebody to go through what I've had to say in Hansard and has a check done on it, so it comes back to the minister and forms some type of report.

It's fine in this House to take the odd shot — and I would say the minister does more than that — but it's another to ignore what I've had to say. I would consider it an affront to what I'm trying to do if the minister took that attitude, because, like I say, you look at my record, and you look at what I raised last year, and you look at how bang-on I was. I'm telling you that you don't need a crystal ball. I've already told you how you can find this stuff out, and I'm amazed that your own regulators don't do it, or don't do it with the type of commitment that's necessary to be able to find it.

I've made that point. I've revealed to you, in part — and I'm certainly not going to say everything — where I'm getting the information. I do that because I want to make sure this government moves on what I would like to see it move on: cleaning up the image of the exchange. We can get into a political debate as to whether it's a personal vendetta or whether it's an appropriate forum to raise those things. But that aside, I think the government has to begin to do the same type of scrutiny I do, and it would come to inevitably the same type of conclusions, and the minister could avoid all sorts of embarrassment — whether he likes it or not, or whether he thinks it as such or not; I think it must cause the minister some discomfort to have me raise these matters over and over again.

[3:00]

I'm also going to make it clear to the minister that I'm not going to cease. I've said that I have listened carefully to what he's had to say, and some of the advice he has provided I'm prepared to act on, but not all of it. I would venture to hope the minister would do the same with respect to my advice. I am putting this government on notice that I intend to pursue these matters again and again in the House. I don't think that the points I'm making are that far off the mark. I've never stood up in this House — and I'm pleased to say this, Mr. Chairman — and said that the exchange should be closed, because I don't believe that that's the solution at the end of the day. I have a belief. which I've articulated in this House, that the exchange ought to be cleaned in order to ensure that this province moves toward something which we on this side of the House would also like to see: the establishment of a good financial centre in British Columbia.

I think — and this is the point of departure — that our own view of what that financial centre ought to consist of is different from what the minister says. We haven't had the philosophical debate in this House on the role of capital and how capital ought to be utilized to ensure economic development. I'm not too sure that our greatest level of success lies in attaching ourselves to some magical overseas investor who's just sitting offshore, dying to come into British Columbia to solve all our economic problems. I don't believe that's the way it works. I believe we've got enough people in this province who can demonstrate otherwise, because I put a far greater faith in the ability of people in this province to do the best for economic development in this province.... I put more faith in the entrepreneurial skills of people in this province than I do in anybody who is not a part of this province.

I want to conclude my comments, then, by putting the minister on notice that we will continue to pursue the matter of the exchange, and that I'm asking the minister to make a commitment in this House to apply additional resources to the exchange as well, because they are much needed.

I see that the minister has some documents in his hands. I don't know if they apply either to the property purchase tax or my comments on the exchange, but I'll stop for a moment at this time and see if the minister has any responses with respect to the comments I made. Otherwise, there is another topic I'd like to raise, Mr. Chairman.

HON. MR. COUVELIER: I think, Mr. Chairman, that the hon. member's views and my own are well known. We've been repeating them now for the last three days, so I don't see much point in going through it yet again. I just want to remind the hon. member, though, because he seemed to make mention of it again today.... He said, and I believe I have the quotation right: "The government should begin doing the same kind of scrutiny" as the hon. member does — I believe that's verbatim. If ever we needed an illustration of the kind of problem we have — the hon. member and I — in relating with each other, it's that comment. He seems to work under the assumption that we are not doing anything in the regulatory field. Of course, nothing could be further from the truth.

[ Page 4184 ]

There are over a hundred active files being investigated at any one time. When one remembers that in order to do the investigations, due process must be followed — all the legalities and interests of those affected have to be recognized in a legal sense — then their performance, I think, is very credible and very good, and furthermore, has improved dramatically since we've made the changes I've talked about over the last three days.

The hon. member seems to think that we don't have the capacity or desire on the regulatory side to do the job. I tell him categorically once again: we do have the capacity and the determination, and we are making good progress. But unlike the hon. member, when we make allegations, we have to be able to prove them in a court of law or in a disciplinary process. That requires due process, proper evidence and documentation. Unlike the hon. member, I do not have the freedom to comment on issues that are, or might be, under examination. So I find myself unable to deal with the specifics. But for the member to suggest that we should start doing the same type of scrutiny he does I find offensive. We've got qualified, dedicated staff — one of them is with me here this afternoon, by the way. Let me introduce to the House Mr. Wade Nesmith, manager of compliance for the Securities Commission. Mr. Hyndman, who was with me last week, is in eastern Canada today with the superintendent of brokers, continuing to cement our relationships and our exchange of information with the exchanges and security officials in central Canada.

In any event, I think everything that could possibly be said on this matter has already been said, Mr. Chairman. I thank the hon. member for his concern; I must say that I deplore his choosing the public arena to express them. I have indicated constantly a desire to deal with issues, to solve problems. I'm offended by the thought that we take public platforms to mouth these concerns in the way that's been chosen, because all that happens as a consequence is that the reputation of the institution is put at some risk.

The hon. member must be well aware of the fact that this issue has now been reported nationally and is the subject of comment in some of the central Canadian financial papers. I find that deplorable, and I find it serves no useful purpose other than elevating the profile of certain personalities involved. In any event, the initiatives that are underway can only result in continued refinement of the process, and I am confident that as the months go by, a year from now the hon. member will have far less to talk about, unless, of course, he wants to resurrect 10-year-old cases, which I can't prevent but I would hope that that does not occur.

MR. CHAIRMAN: Before we proceed, the first member for Vancouver South would like to make an introduction. Shall leave be granted?

Leave granted.

MR. R. FRASER: I'd like to introduce to the Legislative Assembly today some students from Churchill Secondary School, which is in that great riding of Vancouver South, served by my colleague, the Minister of Highways (Hon. Mr. Rogers). These students are from grade 10. About half of them are from the province of Quebec, Chicoutimi. I would like the House to welcome all these students from Quebec and from Vancouver South to the assembly this afternoon.

MR. WILLIAMS: I'd just like to say that the statements by the minister over the last few minutes are really disturbing in terms of putting down the member for Esquimalt-Port Renfrew. These are serious matters that he's brought to the House consistently, and they've always been found to have substance. And then to complain about the fact that they're brought into the public arena! What, Mr. Minister, do you think the Legislature's all about? It is the place to air these grievances.

HON. MR. COUVELIER: Except for the fact he's trying to.... solving a problem when we cannot solve the problem.

MR. WILLIAMS: If you let that outfit be run like a slot machine haven in Nevada, you're going to have the problems dumped here in the Legislature.

HON. MR. COUVELIER: There's more money from outside the....

MR. CHAIRMAN: Hon. members, the minister will be recognized after the first member for Vancouver East has completed his statement.

MR. WILLIAMS: Your own studies have shown very clearly where the money goes. It doesn't go into genuine risk capital. It doesn't go into entrepreneurial activities. It goes into the pockets of your supporters on Howe Street. If you were really serious about it, you'd see that that changed. These matters have consistently been brought forward by the member for Esquimalt-Port Renfrew. They are valid. They are genuine, broad concerns of the public, and they must be aired here because you're not doing the job over there.

MR. S.D. SMITH: Frankly, I had not intended to join this discussion, because I don't think I disagree with the Minister of Finance. I don't think there's a whole lot that can be added to it, but there have been a couple of comments made today that I think should be ferreted out, for what they're worth.

First of all, the Minister of Finance is correct when he says that the primary place to raise these issues — and they're legitimate issues — is the place where the due process that has been set up to look after them can be indulged in and can be used in the way it was intended. The reason they are raised in this House is to use the place to score political points. There is no intention on the part of that member to seek truth and to develop an understanding of a system to help the people in this province who use that exchange.

MR. SIHOTA: The second member for Kamloops, in his own way, is trying to impugn a motive. If I remember the rules correctly, that's not proper, and I would ask him to withdraw his comments, given what he's trying to do here,

MR. CHAIRMAN: Before we continue, I'll just mention to the hon. member for Esquimalt-Port Renfrew that I was listening very carefully and I don't think there is any impugning of anybody's veracity. I think the terminology used was "seeking the truth."

MR. CLARK: On the same point of order. With all due respect to the Chair, the second member for Kamloops said

[ Page 4185 ]

that the member for Esquimalt-Port Renfrew has no intention of seeking the truth, and therefore does impugn his motives and says that he's been misleading the House or that he's been lying or deliberately attempting to mislead the House. I think it's quite appropriate that he withdraw that statement.

MR. CHAIRMAN: Perhaps we might resolve this matter if I would just ask the second member for Kamloops if he was impugning the character of the member.

MR. S.D. SMITH: I most certainly was not impugning the character of the member. I was pointing out that you can use this place to seek truth about a matter, or you can use this place, in my view, in order to enhance your political currency by taking a piece of information and using this debating forum for that purpose. In my view, this member seeks to use this place for that purpose when he raises questions about the Vancouver Stock Exchange, rather than using this place to seek truth. If he was interested in seeking truth about these matters, there is a process in place that can be used, that protects individuals and also lets us get at the truth in a dispassionate, honourable and fulsome way, and that has not been undertaken.

I thought that the most interesting comments were the ones by the first member for Vancouver East (Mr. Williams), who stood up towards the end of this debate and said that really what was going on here was that the minister was not prepared to enter into investigations because it involved his political friends. Of course, that comment in and of itself is a typical scurvy comment on behalf of that member. But what is important about it is that it discloses the real motivation here. The real motivation here is not to seek information and truth about this issue. The motivation here is to impugn the character of individuals who happen to be in business in this province and who, from time to time, may have indicated their support in the political process.

The second part that was interesting was that the member for Esquimalt-Port Renfrew (Mr. Sihota) began a discussion about the role of capital — and that really is the issue. They don't like the role of capital in helping to enhance our economy and in creating jobs. They don't like the role that is played by the Vancouver Stock Exchange. They do not believe in the notion of people being able to earn profit on the risk of their capital. That's why they sit here continuously since 1933, and we, in various forms, have sat over there during that period of time.

[3:15]

Mr. Chairman, in the interior of the province of British Columbia, in the constituency of Kamloops and in Okanagan South and in Cariboo and other places, there has been a continuing positive relationship for jobs and for workers between the ability to raise risk capital on various forms of exchange in Vancouver, and the ability to risk that capital seeking mines in the interior of the province, as well as on Vancouver Island.

When the first member for Vancouver East was in power in this place — for a very short period of time — he did everything he could to diminish and damage that process. He was able, through the stroke of his little planning pen, to destroy the mining industry in this province — not during a period of time when prices were going down, but when prices were going up.

MR. CHAIRMAN: Hon. member, I must stop you there because we were getting to the point where it was becoming a personal attack on another member of this House.

MR. S.D. SMITH: Mr. Chairman, I won't attack that member personally, but I will tell you that there are mining communities in the interior of the province where Socreds can get re-elected simply by putting up the first member for Vancouver East's poster.

Let me say very quickly. in closing, that we need that risk capital exchange. It is an exchange which serves a very important purpose for mining in the province of British Columbia and beyond; it has for a long time. It has grown to the point now where it creates the opportunity in Vancouver to accumulate capital from all over the world and to expend it in other places all over the world. It is a place where the players themselves would tell you there is room for improvement of its measures. its rules and its regulation. That improvement will come as a result of establishing processes that are honest, understood and fair. It will not come by chattering little individuals sitting in this House, with their scurvy comments, attacking individuals and the role of capital and getting into the little game of politics that the first member for Vancouver East does. That old movie has for too long been the measure of their attitude towards capital in this province.

On the one hand. I am happy to hear that it continues to be the measure of their attitude towards capital, but on the other hand, it saddens me to see that a new member coming into this House would pick up on the old ways of the has-been from Vancouver East. It just isn't good enough, and I can tell you, Mr. Chairman, that when you allow those comments to be made in this House in the way they are, they do not enhance British Columbia's ability to develop its potential as a risk capital marketplace. They hurt British Columbia. His comments are intended to hurt that part of British Columbia, and he ought to be doggone-well ashamed of himself.

MR. SIHOTA: Talk about old ways! The comments of the previous member are in keeping with the old ways — the old line of when you don't have any facts to back you, you just come out with the rhetoric and negative, demeaning innuendo. It's just rhetoric: pure, unadulterated — I won't fill in the blank — from that member. He hasn't participated in this debate. he hasn't listened to facts. and those sheep over there who want to clap away haven't listened to the facts. Let's share some of those facts. let's talk about process, let's talk about what's happening on the exchange, and let's talk about the role of capital; but let's do it in a way that provides this House and the minister. who chooses to smirk his way through this debate, with some concrete examples of what's happening as a way of underlining our intent of wanting to clean up the role of the exchange in this province.

The purpose is not simply or exclusively to deal with matters of political currency. ~f the minister would give us a moment of his time. perhaps he could listen. The members opposite say: "There is a process and one ought to exercise that process." What happens when that process doesn’t, work, Mr. Second Member for Kamloops and Mr. Minister?

MR. S.D. SMITH: Have you ever tried to make it work?

MR. SIHOTA: Yes. 1 have tried to make it work, Mr. Second Member. I'm going to tell you exactly what's happened here, and we'll deal with the facts.

[ Page 4186 ]

I'll just pick one example, because we've dealt with 30 of them in the last two days. Let's pick the example of Lionheart again, because the second member for Kamloops doesn't know it. He resorts to rhetoric instead of dealing with fact. Let's talk about the Lionheart Resource facts. The Ministry of Finance, through its superintendent of brokers office.... I don't have the letter here in front of me, but I brought it in the House before; I didn't think we were going to get into this debate today. On October 22, 1986 — and you can check these facts, Mr. Second Member — after Mr. Harry Moll had violated the insider-trading provisions of the Securities Act for 13 or 14 consecutive months, he was sent a letter. Do you know what that letter said? It said: "Mr. Moll, if you continue to violate the insider-trading provisions of the act, you're going to be taken to court." For the next 15 or 16 months none of the insider-trading reports were filed in compliance with the act. They were filed two or three months later.

That's not rhetoric, Mr. Chairman; that's fact — and the second member for Kamloops is now going to slither his way out of this chamber. He won't sit back in his seat and listen to the debate now; he doesn't want to deal with fact.

The question to the Minister of Finance is: what are your regulators doing, when they're sending letters to people saying, "You'd better comply with the provisions of the act, " and not...? It's legitimate, when the process isn't working, to stand up in this House and ask the Minister of Finance why his regulators aren't doing the job. Is that improper, I ask you? Of course not. That is showing due respect for the process, and it's asking why the process isn't working. That's not rhetoric; that's fact. And it's a fact that the minister has yet to respond to, and it's a fact that the second member for Kamloops, who tries to come to the defence of this indefensible minister, never answers. Let's deal with fact. Why is that process not working? Why did the regulators allow that to happen? Why can't the Minister of Finance even answer that basic question, when he's got his bureaucrats sitting right next to him?

It's not inappropriate for members on this side of the House to ask those types of questions of the Minister of Finance, and it is wholly appropriate for the Minister of Finance to begin to respond and to give us some answers to those very basic questions as to how you can allow this type of situation to exist. That's a simple question designed to protect the interests of investors, and to date we have not heard one answer from the minister to explain the inactions of his. regulators in that regard. I invite the Minister of Finance to do it today. He couldn’t do it on Thursday; he couldn't do it on Friday. Let's see if he's had a chance to think about it over the weekend.

If you want to deal with negative rhetoric, like that negative second member for Kamloops, who obviously came out with the "bad BCers" slogan when he was assisting Mr. Bennett.... The member says: "Information and truth." The second member for, Kamloops says that I don't come in here and ask questions based on information and truth. I invite the Minister of Finance once again to point to one example where I was wrong. I've come in here with every bit of evidence that can be backed up in court. I am as prepared to make those statements outside the room as I am in here.

The first member for Vancouver East (Mr. Williams) says "friends of the government." We have a legitimate right to stand up in this House and ask the Minister of Finance why, after the evidence — and, again, fact, not rhetoric — of the Carter-Ward trial, which pointed to three cases of Mr. Peter Brown of Canarim Investment violating section 68 of the Securities Act, the Ministry of Finance has not taken any action.

It's not sufficient for the Minister of Finance to stand up and say: "That's a matter that we may investigate." He didn't have any difficulty standing up in this House a month and a half ago when I asked him questions about American Canadian. He said that I had hit upon one — and I am quoting him — that was under investigation. If he could say it then, why can't he say today that situation is under investigation? I will tell you something, Mr. Chairman, through you to the minister and to the second member for Kamloops: it's not under investigation.

There have been three violations of the Securities Act, and I defy the minister to begin to take actions against his own friends. It is quite within form for us to stand up and say to the Minister of Finance: "Why haven't you taken actions against your friend Mr. Brown? Why are there no charges under the Securities Act, in light of the evidence that has come out of the Carter-Ward trial?" I don't have the list of all the companies. I know one of them was Bart Resources. I gave you the names of the other two; I've put them in Hansard already.

It's legitimate for us to ask the Minister of Finance why he is not enforcing the provisions of the Securities Act. No, this member will not, under any circumstances, quietly go to the Minister of Finance and tell him in his own room that he's not doing his job. The people of this province have a right to know that the Minister of Finance is not doing his job, and we have a responsibility to tell the people of this province that the Minister of Finance is not doing his job.

It's not rhetoric, Mr. Second Member for Kamloops; it's not rhetoric, Mr. Minister and Mr. Chairman. It's fact, with respect to the evidence that came out during the course of the Carter-Ward trial and the factual inaction of this minister and his ministry on the matter of that situation.

Then the second member for Kamloops says: "Well, in our interior ridings we want mines. We want venture capital for these mines." Is the second member for Kamloops saying that we have no right to stand up in this Legislature and raise the example of Starfire Resources, a situation which I raised and brought to the attention of the minister a year ago when he said to me: "Give us something new that we can work on"?

We don't have any problem with money going into legitimate mine operations, but we have a lot of difficulty with money going into fraudulent mining claims. We have trouble supporting a situation.... I don't have my file here on Starfire, so I am working from memory. I won't talk at length about how the stock went up and down. It was a sulphur stock, and money was supposed to go into some sulphur development in the interior of this province. Investors were ripped off through all sorts of false claims.

We raised it in this House. What we were doing was protecting the investors, whether they were from the interior, the mainland or the Island. We're saying that investors have a right, and this ministry has an obligation to protect the interests of those investors and not to provide succour and comfort to fraudulent manipulators of stock in this province.

[3:30]

So we gave the minister the example of Starfire, and I want the second member for Kamloops to understand that. We don't support those types of mining actions. If the second member for Kamloops wishes to support fraudulent mining activities on the exchange, that's his prerogative. But it's not

[ Page 4187 ]

ours, and we don't think that's an appropriate use of capital. You want to talk about the role of capital. We don't have all day to talk about it, but we can get into a nice debate about this. We on this side of the House don't think that venture capital ought to go to scams on the stock exchange that tell people to buy a nasal spray that will get rid of AIDS on contact in three minutes. If people want to invest in that, that's their prerogative. But the people who invest have a right to know whether or not that stock is being manipulated — as it was; whether or not insider trading provisions were being violated — as they were; whether or not there were false news releases — as there were.

Interjections.

MR. CHAIRMAN: Order please, hon. members. This whole thing is getting grossly out of hand. I understand that the hon. member feels very strongly about this, but maybe he could moderate his voice. And maybe we could do away with the interjections from the government side, and we'll get on with the debate on vote 37.

MR. SIHOTA: I'll say this with some risk, but it's not the level of my voice that's a problem here; it's the level of intelligence on the other side with respect to their commitment to deal with the problems.

MR. CHAIRMAN: Hon. member, that is completely inappropriate. That just is not on.

MR. SIHOTA: I'll rephrase it, Mr. Chairman: it's not a matter of level of voice on this side, but level of commitment from the Minister of Finance to enforce the provisions of his own Securities Act, which we say is seriously in question.

Interjection.

MR. BLENCOE: On a point of order, Mr. Chairman. We earlier were treated to the member for Kamloops (Mr. S.D. Smith) and his I think scandalous attack. He continues to abuse the rules of the House by shouting and calling from another member's seat. Perhaps you could bring that member to order, Mr. Chairman.

MR. CHAIRMAN: The point is well taken. If the member wants to participate in debate, he will have to take his own seat in the House.

MR. SIHOTA: I see the second member for Kamloops has chosen not to go back to his seat. Having made those improper comments, he now wishes to divorce himself.

We don't believe venture capital ought to go into nasal sprays for AIDS. We don't think venture capital ought to go into a Gametek situation where they say they're producing some 60,000 arm-wrestling machines that will be put in a ferry boat to be converted into a luxury cruise liner. We wonder where the regulators were when it's then discovered that the cruise boat was sunk off the coast of Washington state three weeks prior to the floating of the issue. We're just asking the Minister of Finance what type of job his regulators are doing in the Gametek situation.

The Minister of Finance has the unmitigated gall to stand up in this House and say: "Don't tell me publicly in this House about these types of things; they're embarrassing me. If you want to embarrass me, come and tell me privately instead of publicly." What kind of attitude is that from a Minister of Finance? I gave a lot of other examples, and I don't want to go through them. We just don't believe, on this side of the House, that this is the appropriate role of venture capital. Certainly, if the second member for Kamloops wants to support fraudulent claims on mining options, if he wants to support nasal sprays for AIDS. I guess he's entitled to do so. We don't think that's an appropriate way to do it. If people want to float those issues, then the government has an obligation to protect the investors.

Mr. Chairman, I was going to move that the amount provided in this vote be reduced from $293,411 to $12 to reflect $1 for every vote that the Minister of Finance got in the Social Credit leadership convention, but I'm told that that's out of order, although highly appropriate. Was clear from this side of the House that it was perhaps a worthy vote. Instead, I move that the amount provided for in vote 37 be reduced from $293,411 to $1.

MR. S.D. SMITH: Mr. Chairman, I rise on a point of order. The member for Esquimalt-Port Renfrew suggested that I supported fraud in a number of ways, and I would ask that he withdraw that remark categorically.

Interjections.

MR. S.D. SMITH: Mr. Chairman, he quite clearly did say, three minutes ago, that I supported fraud in the sale of certain kinds of stocks. He very clearly said that, and 1 would ask that he withdraw, and withdraw straight away.

MR. CLARK: On the same point of order, Mr. Chairman, surely it's incumbent upon members to rise in their place at the time and not several minutes after an alleged comment is made. Members in the House have no knowledge of that comment being made. He was in the House at the time. If the comment was made and he found it offensive, he should have risen at that time and not after the fact.

MR. S.D. SMITH: Mr. Chairman, on the same point of order. I rose as quickly as I could. When he made the comment he was in full breath, and as soon as he got rid of that breath, I rose.

MR. CHAIRMAN: This is developing into an argument between hon. members, which is not permitted. I overheard the comment made by the member for Esquimalt-Port Renfrew, and it seems to me — we can check the Blues — that it wasn't completely within the terminologies as used by the member who has taken exception. In respect to bringing some decorum and some order back to this debate this afternoon, perhaps the hon. member for Esquimalt-Port Renfrew would retract what he said with respect to the supporting of fraudulent deals.

MR. SIHOTA: With all respect, I never said that.

Interjections.

MR. SIHOTA: Well, if the members have something to add. I'd like to read the Blues, if indeed I said that, and then I'll make the comments after the Blues come out. I know what I said. I'm quite confident in what I said, Mr. Chairman.

[ Page 4188 ]

1 did not say that the member opposite was involved in any type of fraudulent activities at all. I didn't say that.

MR. CHAIRMAN: All, right, hon. members. Inasmuch as the member for Esquimalt-Port Renfrew has stood in his place and made the statement that he did not impugn the motives of the second member for Kamloops, I think that should be acceptable, and we can get on with the motion that was presented by the member. The motion is in order. We'd like you to hand that in too, please, hon. member, if you could.

Amendment negatived on division.

Vote 37 approved.

Vote 38: ministry operations, $61,464,197 — approved.

On Vote 39: compensation stabilization program, $256,677.

MR. CLARK: Just a couple of questions on the debt. Could the minister inform the House what the total accumulated debt of the province of British Columbia is, effective in the last day or two?

HON. MR. COUVELIER: 1 think the issue is vote 39. Is that not vote 72 that the hon. member is asking about?

MR. CHAIRMAN: This matter came up the other day. Mr. Minister, and I think it was agreed at that time that we would proceed in the manner that has become the custom in the House over the past number of years that the.... We're dealing with Vote 39, which is the compensation stabilization program. All right?

Vote 39 approved.

Vote 72: management of the public debt, $605,000,000 — approved.

Vote 73: contingencies (all ministries), $50,000,000 — approved.

Vote 74: new programs, $90,000,000 — approved.

The House resumed; Mr. Speaker in the chair.

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

HON. MR. REID:: I call second reading of Bill 3, Mr. Speaker.

HORSE RACING TAX AMENDMENT ACT, 1988

HON. MR. COUVELIER: Mr. Speaker, Bill 3 amends the Horse Racing Tax Act to provide additional revenue to the B.C. Racing Commission to upgrade racing facilities in British Columbia. The increase in the Racing Commission share from 3 ½ to 4 percent of the 7 percent parimutuel tax rate will stimulate the industry and create additional employ ment. The provincial share of the rate will decrease from 3 ½ to 3 percent. The amendments allow the new revenue to be used for the establishment or improvement of horse-racing facilities and related research costs. These improvements are required to ensure that the B.C. horse-racing industry remains competitive with those in neighbouring jurisdictions, and continues to provide substantial economic benefits to the provincial economy.

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

MR. STUPICH: We have no particular concern with Bill 3, but it's my understanding that the spending of the extra revenue that's going to be left in the hands of the Racing Commission will really be controlled by the Lieutenant Governor-in-Council, as I read a later section. Even that may not concern us terribly; but when the minister talks about it providing more employment and providing more for the racing industry and Racing Commission, if their hands are going to be tied on the spending of this — as I read it — I wonder how much it's really going to help them. However, at this stage, Mr. Speaker, we have no concern about the bill.

[3:45]

MR. CLARK: Very briefly, I have no problem supporting this act. The horse-racing industry is located at the moment in my constituency — over 12,000 jobs associated with that industry; many of them of course in the breeding industry in the valley and other places, but many of them in my constituency. I want to go on record as saying that while I have no problems in supporting this act, we're very concerned about some of the actions of the provincial government, and the Attorney-General (Hon. B.R. Smith) in particular, in causing great instability in that industry by talking about all kinds of proposals for Colony Farm and other places in the province. For the PNE grounds, contrary to promoting investment, it's causing the owners of the jockey club to contract in their investment in that facility. And it needs investment. It needs enhancement, but because of the other actions the government has taken, it hasn't seen the kind of investment we might like. So we support this act, but we also support — I certainly do, anyway — the racetrack staying at the PNE and being enhanced, and accommodating to that amenity that's in the city of Vancouver now, and I hope it stays there.

MR. ROSE: I'd like to take this opportunity, Mr. Speaker, to say that I agree with much of what my colleague has said in terms of the health of the horse racing industry and how it makes a reasonable contribution to the province in terms of revenue. It does other things as well.

I think it can be fairly said that the activity on the breeding farms and out in the valley is of immense benefit to places such as Langley and Aldergrove. I wish them nothing but the best, but 1 don't want them in my riding — the racetracks, that is. But bring on the race horses. I think there is lots of excellent land other than, say, on Colony Farm for this very important British Columbia industry. I wouldn't want to think that we would use probably the finest agricultural land right in an urban centre, where we're already crowded, to put in another big development such as the PNE.

The PNE has certain plans for expansion; I don't know how practical they are, but at least they're trying. There are 27 years left of their racing — by the way, the racing days are awarded nationally. There are 21 more in Cloverdale at the flat track, the trotters' track. So it seems to me that any development on Colony Farm that involves a racetrack is at

[ Page 4189 ]

best premature. While I think that the breeding industry, the racetrack and all those people associated with it are legitimate, make a contribution and we'd like to see them continue, we know they're in certain difficulty.

For instance, the parimutuel betting has levelled off, according to a brief I recently got from the president of the PNE. Therefore we can't expect an anticipation of increased revenue from that very popular sport — and, if you like, gambling venture — unless we improve our existing tracks, or build others.

Mr. Speaker, I think that if we're going to relocate — and I don't think we need to — racing facilities in areas other than where they are now — Victoria, Cloverdale and the PNE — we should make certain that such facilities are put in appropriate land which doesn't erode, defame or defile what little agricultural land we have in British Columbia.

MR. SPEAKER: Pursuant to standing orders, I advise the House that the minister closes debate.

HON. MR. COUVELIER: We can get into some of those details — I think one question was put — in third reading. I now move second reading of the bill.

Motion approved.

Bill 3, Horse Racing Tax Amendment Act, 1988, read a second time and referred to a Committee of the Whole House for consideration at the next sitting of the House after today.

HON. MR. REID: Second reading of Bill 4, Mr. Speaker.

INCOME TAX AMENDMENT ACT, 1988

HON. MR. COUVELIER: Mr. Speaker, this bill makes two amendments to the Income Tax Act. First, the bill lowers the small business corporate income tax rate from 11 to 9. A key principle underlying the system is that income earned in a small business and paid as dividends to shareholders should bear the same total tax burden as income earned as wages or salaries. This ensures equitable tax treatment, and as a consequence, that explains that initiative.

The second initiative refers to the rate of tax on the first $200,000 of active business income of Canadian-controlled private corporations, which will be reduced effective July 1. The second amendment contained in the bill is a technical amendment affecting certain small businesses. At the present time, small business corporations who earn income both in British Columbia and outside Canada receive the benefit of the B.C. small business tax rate on an amount of income less than the amount actually earned. This amendment will ensure that the B.C. small business rate will apply to the first $200,000 of active business income allocated to British Columbia for small businesses earning income in British Columbia and outside Canada. I move the bill now be read a second time.

MR. STUPICH: As far as the technical amendment is concerned, that doesn't concern us. Although the minister rationalizes what he's doing by saying that he's trying to keep the flow of income equal, whether it's coming from corporate sources or wages, there's the politics of the situation too, and also the psychology of it. As far as small businesses are concerned, they're still paying a higher rate than they were when this government was first elected, and people don't start looking to see what they would have been paying had they not been corporate owners. So it's still one point higher than it was when this government was elected some 18-odd months ago, and the rate for corporations above the $200,000 figure is 2 percent less. So it looks, to small business people — who everybody claims are the ones providing job opportunities in the province; the ones who are really moving the economy right now — that they are paying a higher rate of corporate tax than they were when this government was first elected, and they see the larger corporations paying less. According to the budget. the reduction for small business will save them $7 million, whereas the reduction for large business will be in the order of $68 million, and again, the people who are creating the jobs in the province look at those figures and think that the government really isn't treating them fairly.

I made this point in the budget debate and I'm making it again: there has not been a comprehensive study of tax expenditures in B.C. The former Minister of Finance took a shot at it. He tabled a brief document in the budget delivered in 1981, but we have never really examined just what it is costing and what the cost benefits are of the various tax changes that the government makes. When the government increased the small business tax and then reduced it, and now they're reducing it again, it looks as if they're flying by the seat of their pants rather than doing something that's calculated to do the best thing for the economy of British Columbia. We'll certainly support the legislation. We favour the reduction in tax for small businesses. There's no question about that.

Motion approved.

Bill 4, Income Tax Amendment Act, 1988, read a second time and referred to a Committee of the Whole House for consideration at the next sitting of the House after today.

HON. MR. REID: Mr. Speaker, second reading on Bill 5.

INSURANCE PREMIUM TAX
AMENDMENT ACT, 1988

HON. MR. COUVELIER: Mr. Speaker, this bill has two purposes. First, it increases the rate of tax on motor vehicle insurance premiums under the Insurance Premium Tax Act from 3 percent to 4 percent, effective April I of this year. This tax rate is being increased in order to apply the same tax rate to motor vehicle insurance premiums that is applied to other property insurance premiums. Other property insurance premiums are taxed at an effective rate of 4 percent — 3 percent under the Insurance Premium Tax Act and 1 percent under the Fire Services Act. Motor vehicle insurance premiums are currently taxed only at 3 percent because the Fire Services Act specifically excludes vehicle insurance from the tax. A rate of 4 percent for vehicle insurance premiums will ensure that all insured property in the province is taxed at a similar rate.

The second purpose of the bill is to clarify the taxation of premiums paid to reciprocal exchanges. A reciprocal exchange is a group of persons or organizations who agree to insure one another. This form of insurance has not been used to a great extent in the past but is now becoming popular.

[ Page 4190 ]

Insurance premiums paid to reciprocal exchanges are currently subject to tax under three different statutes. Due to the wording in these statutes and the way reciprocal exchanges are regulated, premiums currently being paid to an exchange could conceivably be subject to tax at an aggregate rate of 10 percent as compared to rates ranging from 3 to 5 percent for other licensed insurers. This is clearly punitive and inconsistent and we therefore are suggesting this change.

This bill therefore amends both the Fire Services Act and the Insurance Act in order to ensure that premiums paid to reciprocal exchanges are for tax purposes treated in the same manner as premiums paid to general licensed insurers.

I move the bill now be read a second time.

MR. STUPICH: In the course of his budget speech, the Minister of Finance argued that this change will make the tax on vehicle premiums the same as that on other property insurance. In fact, what he's done is to create a special category for motor vehicle insurance and has added over $20 to the cost of insuring an average vehicle.

Mr. Speaker, when we were talking about fee increases earlier in this session, the minister said that fees should bear the cost of the service associated with those particular fees. But in the case of motor vehicle insurance, what we were supposed to be coming up with was a plan where drivers paid together to create a pool of capital from which driving accidents would be reimbursed — to cover the costs of driving accidents and the administration of the auto insurance plan. It was not supposed to be another sneaky way of building up government revenue. In fact, what the minister is doing is increasing government revenue in this one stroke by another $6 million.

Are we really so hard up that we have to go after the automobile drivers who have been hit pretty hard with increases in premiums since the reduction that was implemented in election year? Since then we've had two increases. Is it really so bad that we have to go after them not just to cover the cost of the insurance plan — accidents, providing reserves and administration — but also to get another $6 million to cover other purposes of government? The minister in no way justified that. It's another grab for revenue. He gave no justification for that at all. He simply said that they were making it the same as something else with which it's not associated at all.

The opposition is opposed to this increase in the impost on auto insurance for drivers for purposes that have absolutely nothing to do with auto insurance.

[4:00]

Motion approved on the following division:

YEAS — 32

NAYS — 13

Bill 5, Insurance Premium Tax Amendment Act, 1988, read a second time and referred to a Committee of the Whole House for consideration at the next sitting of the House after today.

MR. ROSE: I notice the Clerk read Hon. Jack Davis, the Minister of Energy. I can understand that it's difficult to tell whether people like me are standing up or sitting down, but not for the minister. He did not vote with the government on this bill. He abstained.

AN HON. MEMBER: You're facing the wrong way, Mr. House Leader.

HON. MR. ROGERS: Since everyone's in such a good mood, I'd like to call motion 64 on the order paper, a move by my colleague the regular House Leader (Hon. Mr. Strachan), that says that Mr. Ree be substituted for the Hon. R.M. Johnston on the Select Standing Committee on Public Accounts.

Motion approved.

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

LAND TAX DEFERMENT AMENDMENT ACT, 1988

HON. MR. COUVELIER: This amendment extends eligibility for property tax deferment to qualified owners of mobile homes. All other sections amended are consequential to this change in eligibility. I move the bill now be read a second time.

MR. STUPICH: It's a good bill. It would not have been necessary a few years back because such property had a tax of one dollar levied against it rather than the $100 that was introduced by the Social Credit government. But now that the tax rate on such property has been increased to $100, it's necessary to bring in this particular amendment. The opposition supports this bill.

MR. SIHOTA: Mr. Speaker, since I've got so many mobile homes in my riding I certainly also want to go on record as saying that this is much needed, and I concur with the comments of our Finance critic. I don't think this government has any idea of the hardships faced by people who live in mobile homes, many of them on fixed or limited incomes. I know this was a matter that they've lobbied for and certainly are relieved to see.

HON. MR. COUVELIER: This option allows the deferment of property tax payments for mobile homes and therefore should be a benefit to all citizens residing in mobile homes. I consider it a positive piece of legislation and am pleased to move second reading.

[ Page 4191 ]

Motion approved.

Bill 6, Land Tax Deferment Amendment Act, 1988, read a second time and referred to a Committee of the Whole House for consideration at the next sitting of the House after today.

HON. MR. REID: Second reading of Bill 7, Mr. Speaker.

MINERAL RESOURCE TAX AMENDMENT ACT, 1988

HON. MR. DAVIS: I move second reading of the Mineral Resource Tax Amendment Act. Essentially it reduces the rate of the tax from 17.5 percent to 15 percent. The main reason for changing this legislation and also changing the Mining Tax Act by a similar amount is to trim the total tax on mining in British Columbia to a point where it is no longer the highest in Canada but on a par with the highest in Canada.

In this case, as a result of this bill, we are reducing a profits-type tax. It's really a tax on the so-called economic rent generated by the industry or available in the industry. It's a substantial tax; it's still one of the highest in the country. It's a type of tax that was unknown in the industry a decade or so ago when the tax was essentially on the gross value of sales or, alternatively, on the quantity of the mineral mined. It was changed to a profits-type tax in the late 1970s, and the rate was set at 17.5 percent. The 15 percent rate is recommended in order that our tax rates be in line with the highest in the rest of the country but not be the highest in the country.

MR. CLARK: We will be opposing this bill, and I'd like to briefly go through some reasons for that. This is a government that says they have no money. That's the rationale for taxing people to the extent that they have, for putting medicare premiums up, for putting personal income tax up. They've got no money to feed hungry school kids in Vancouver, to reduce the lineups for heart patients, to provide AZT to a handful of AIDS patients. They have no money for BCIT or for post-secondary education in this province.

But what do they do? The only thing they do have money for is metal mines in British Columbia. Here we have, for the first time in many years — and the minister knows this — the metal mining companies making a profit, and now they're going to reduce the tax on those profits. If they really wanted to deal with help to the mining industry, they would do one of two things. Firstly, they would reduce fixed costs and not a profits-based tax and, secondly, they would do what the previous administration did in one of the rare instances where I agreed with the previous administration: selectively reduce taxes, or the burden, on specific mines or specific communities that were suffering because of the recession in order to maintain employment.

But no, nothing so clearly demonstrates the difference of priorities between the members on this side of the House and the members on that side of the House. The minister said they have one of the highest tax rates in Canada. I'm not an expert on this, but I reviewed very briefly the same tax rate across Canada. It appears that Ontario has a 20 percent rate and most of the Prairies have an 18 percent rate. In the Maritime provinces it is 18 percent. We had 17.5 percent; we're now reducing it to 15 percent.

Very clearly, those who are doing well in British Columbia are now going to see their tax cut, and everybody else, particularly the working poor, are going to see their tax burden increase dramatically because of two successive budgets by this administration.

We're opposed to it; we don't think it's going to help the industry at all, anyway. If they want to help the industry, they should deal with those very onerous fixed costs that this and the previous administration have placed on the mining industry.

MR. STUPICH: I don't expect the minister to have any detailed information today, but I wonder if, in second reading, he could bring back the information as to just how many companies paid this tax in 1987. 1 expect the information might be available then. I expect it's very few. It's only those companies whose net income, according to the formula, exceeds $50,000 that pay any tax at all. I would be interested in finding out just how many are paying it.

The Minister of Finance, during debate of his estimates, was going to bring me some information about the way the formula for mining and logging tax fits into the corporate tax administered by the federal government. I understood that information was ready to come to me, but I haven't seen it — unless it's buried in my desk, and I admit that possibility.

[4:15]

HON. MR. DAVIS: Hon. members opposite have been saying that this tax cut is substantial in terms of lost revenue to the government. One of the reasons I was able to get a concession from the Minister of Finance is that the loss to the treasury — if this didn't result in any more mining — would be in the order of $1 million to $2 million, which is obviously a drop in the bucket compared to the total revenue requirements of the government. Hopefully our addressing the exceptionally heavy tax load in the province, at least in this nominal way, might encourage a little more mining activity. It wouldn't take much mining activity to offset that $1 million to $2 million loss to the treasury.

The hon. member for Vancouver East referred to reducing other taxes which he referred to as direct taxes. I assume he means the social services tax or water rentals. The industry's main complaint is that those taxes, in total, amount to about 90 percent of the tax bill of the industry. I agree that were we to address any one of those taxes and reduce it by a relatively minor amount, the relief the industry would incur would be much greater than its so-called reduction in tax loads as a result of this bill. This is a very marginal change in terms of taxes paid by the mining industry.

Nevertheless, I think it's important at this time to at least be in a position where we aren't pointed as the highest tax regime in the country. I move second reading, Mr. Speaker.

Motion approved on the following division:

YEAS — 32

[ Page 4192 ]

NAYS — 10

HON. MR. REID: Mr. Speaker, I call second reading on Bill 8, Mining Tax Amendment Act, 1988.

MINING TAX AMENDMENT ACT, 1988

HON. MR. COUVELIER: The purpose of this bill is to improve the competitiveness of B.C.'s taxation of the coal industry. Some provinces have reduced their mining taxes in recent years, and this bill will restore B.C.'s ability to attract new investment in coal mining. I move the bill now be read a second time.

MR. STUPICH: Our coal industry must, indeed, be in very bad shape if we have to bring a bill into the Legislature to reduce the tax impost on it by $200,000. It's estimated that the revised estimates for 1988 show a total revenue from this source of $700,000. After we go through the exercise of bringing in this bill, it's going to be reduced to $500,000. 1 think the forecast is that it's going to reduce it by $1 million in the second year. I don't know how it can reduce a $500,000 figure by $1 million, but I'll deal with that perhaps when we get to committee.

I don't know why we're bothering. Why are we going through the business of administration of a bill that's raising only $500,000, unless there's some explanation the minister has?

Interjection.

MR. STUPICH: We're not going to oppose it. It's not worth taking up any time opposing it. We're not going to call a division; it's not worth the time; $500,000 is all it's bringing in.

Motion approved.

Bill 8, Mining Tax Amendment Act, 1988, read a second time and referred to a Committee of the Whole House for consideration at the n ext sitting of the House after today.

HON. MR REID: Mr. Speaker, we call second reading of Bill 9.

MOTOR FUEL TAX AMENDMENT ACT, 1988

HON. MR. COUVELIER: Mr. Speaker, Bill 9 contains two amendments to the Motor Fuel Tax Act. The first amendment increases the tax on leaded and unleaded gasoline and diesel fuel, effective April 1, from 20 percent of the pre-tax selling price to 22.5 percent. The 2 cents per litre surcharge on leaded gasoline imposed last year for environmental reasons and the 44 cents per litre surcharge on diesel fuel will remain in effect. This measure is expected to generate $45 million to fund essential government programs and help reduce the provincial deficit.

Even with this increase it is noteworthy that the provincial tax payable in cents per litre actually decreased on April 1. This demonstrates the responsiveness of the quarterly indexing adjustments to fluctuations in gas pump prices.

I move the bill now be read a second time.

MR. STUPICH: It's another tax grab. And it's another grab that's regressive in the sense that it costs the poorest as well as the richest another cent a litre for this type of fuel.

The thing that distresses me about it as well is that during estimates I discussed with the minister the progress or lack of progress on negotiations with the federal government on their new approach to consumer taxation in Canada — whatever it's going to be called, however it's going to be applied. I feel we shouldn't be tinkering with things like this in advance of what the minister hoped would be something that would happen perhaps in about a year's time. I have to speak in opposition to a bill that has no justification other than to raise essential government revenue at the same time as we're reducing tax for large corporations. In last year's budget we reduced the income tax for the highest income earners in our province. If we can afford to reduce taxes for the large corporations, which are doing very well right now, and if we can afford to reduce taxes for the highest income earners in our province, then it shouldn't be necessary to increase tax on everyone, including the poorest people, through this measure. So I'm opposed to the bill.

MR. SPEAKER: Pursuant to standing orders, the minister closes debate.

HON. MR. COUVELIER: Mr. Speaker, the hon. members — a couple of them now — have made reference to the fact that we're reducing corporate income tax rates and increasing personal income tax rates. I think it's important to get the record straight, although, I suppose, we'll have a chance to do that again in third reading.

The fact of the matter is that when you can look at the total revenue being contributed by the private sector in terms of resource taxation, and roll that into the total corporate income taxes paid, it clearly is true to say that corporate income taxes are paying their share under this government's taxation administration.

I'm pleased to move second reading, Mr. Speaker.

Motion approved on division.

Bill 9, Motor Fuel Tax Amendment Act, 1988, read a second time and referred to a Committee of the Whole House for consideration at the next sitting of the House after today.

HON. MR. REID: Mr. Speaker, we call second reading of Bill 10.

SOCIAL SERVICE TAX AMENDMENT ACT, 1988

HON. MR. COUVELIER: This bill contains, Mr. Speaker, a number of measures which were announced in the 1988 budget speech, an adjustment on the tax rate on liquor for the purpose of funding additional programs in terms of alcohol and substance abuse. It also amends the social tax

[ Page 4193 ]

rate exemption for pesticides. And as the House is aware, there will be an amendment on the question of applicability to farmers. Third, it improves the equity of the tax — that is, the exemption for used clothing and footwear will be limited to sales of less than $100 per item.

I'm pleased to move second reading.

[4:30]

MR. STUPICH: Mr. Speaker, there's one item the minister didn't mention: it's increasing the sales tax to 10 percent on alcoholic beverages and bringing in a new tax of 10 percent on draft beer. I thought the Premier might have wanted to say something about this in this debate, but maybe he felt it would be better to be other places right now. After all, he was the one who promised, during the election campaign, to reduce the price of bottled beer. To the best of my knowledge, there has never been any reduction in the price of bottled beer, and certainly the price of draft beer is going to be increased to reflect this new tax. It's not an increase in this case; it's a brand-new tax of 10 percent on draft beer.

The minister mentioned the forthcoming amendment, and he said in response to concerns expressed by the agriculture community: "It's my understanding that the change will affect the forest industry to a much greater extent than it will the agriculture industry." I was under the impression that it was not representations by farmers that moved the minister to change his position on this, but rather representations from the forest industry. He may want to say more about that in committee stage.

MR. LOVICK: I certainly don't intend to make a speech, but I remember vividly that the first time I ever spoke in this chamber had to do with the price of beer. I was asking a question about promises made being debts unpaid, and I wondered if the government would indeed set about to fulfil the promise it made.

I want to ask the minister to consider — if not now, certainly in committee stage — whether there has been any kind of study, preliminary analysis or investigation to find out who is going to pay that tax. As we all know, the stereotype is that that particular beverage is consumed. in a great number of cases, by working people who are not necessarily the most wealthy consumers of alcoholic beverages. I would like some assurances from the minister that some analysis and investigation did indeed occur. We're not talking about simply focusing on one particular sector of the alcohol-consuming public that perhaps should not be singled out to bear this extra cost. So I'm just asking the minister to take that under advisement — if not answer it now.

HON. MR. COUVELIER: I'm always impressed with the euphemism "workers" that is embraced in the verbiage coming from the members of the opposition. I would like to think that I'm a worker; indeed most British Columbians would like to think that they are workers. I might advise the hon. member that I have taken a liking to beer myself, so I don't know whether he would categorize me as one of those he's referring to in his all-embracing reference.

Mr. Speaker, the issue clearly is that all types of alcoholic beverages are subject to alcohol abuse, and as a consequence, it is appropriate that they all make a contribution towards our education programs. Furthermore, let me tell the House that were they to drink beer in any other province in Canada other than Alberta, they would be paying more than they'd be paying in B.C., based on our markups and taxation policies.

In any event, I am pleased to move second reading, Mr. Speaker.

Motion approved on division.

Bill 10, Social Service Tax Amendment Act, 1988, read a second time and referred to a Committee of the Whole House for consideration at the next sitting of the House after today.

HON. MR. REID: Second reading of Bill 11, Mr. Speaker.

TAXATION (RURAL AREA)
AMENDMENT ACT. 1988

HON. MR. COUVELIER: Mr. Speaker, this act allows calculation of the rural tax levy to include assessed values in supplementary assessment rolls which are prepared subsequent to the December 31 authenticated assessment roll for the purpose of correcting assessment errors and omissions.

I move the bill now be read a second time.

MR. STUPICH: In this instance, I accept the minister's explanation totally. It sounds good, and we'll support it.

Motion approved.

Bill 11, Taxation (Rural Area) Amendment Act, 1988, read a second time and referred to a Committee of the Whole House for consideration at the next sitting of the House after today.

HON. MR. REID: Second reading of Bill 12, Mr. Speaker.

TOBACCO TAX AMENDMENT ACT, 1988

HON. MR. COUVELIER: Bill 12 contains two amendments to the Tobacco Tax Act. The first amendment increases the tax on cigarettes from $1.04 for a package of 25 to $1.13 per package effective March 25. The second amendment corrects an inequity by imposing a maximum tax of $2.50 per cigar effective March 25. 1 move second reading,

MR. STUPICH: Where is the former member for Mackenzie when we need him, the one member in the House who would vote against this on every opportunity, whereas everybody else would just say...?

Interjection.

MR. STUPICH: Is the member for North Vancouver Capilano (Mr. Ree) going to vote against it? I've never seen a Socred vote against a Socred bill yet.

The minister really didn't give much reason for this. There is no question that it is another revenue grab. I'm not going to vote against it. I remember on a previous occasion — I don't think it was last year; I think perhaps it was before the current Minister of Finance entered the House — I had a book from the library that explained the procedure by which governments increase taxes on alcohol as well as on tobacco. It's a very careful calculation to make sure that they don't

[ Page 4194 ]

affect the consumption too much, lest they reduce their revenue. They increase revenue from such sources just enough to optimize the amount of revenue they're getting from those sources. I'm not going to vote against the bill.

HON. MR. COUVELIER: Mr. Speaker, if it gives the hon. member any comfort, our taxation policies are not intended to increase consumption of these products. Being one who both drinks and smokes, I can assure the hon. members that there is clearly not a conflict of interest involved in this issue. I am pleased to move second reading.

Motion approved.

Bill 12, Tobacco Tax Amendment Act, 1988, read a second time and referred to a Committee of the Whole House for consideration at the next sitting of the House after today.

HON. MR. REID: Mr. Speaker, I call second reading of Bill 13.

TOURIST ACCOMMODATION
(ASSESSMENT RELIEF) ACT

HON. MR. COUVELIER: The purpose of this bill is to provide assessment relief to owners of tourist accommodation properties, thereby encouraging the further development of the accommodation and tourism sector. I move second reading.

MR. STUPICH: We will support this bill. There are a couple of concerns we have, but we will probably have more opportunity to discuss them with the minister in committee stage. One of them is that seasonal tourist operators who do not provide accommodation are still left in the situation of facing the 50 percent property tax increase in September, so they are not being helped by this particular amendment.

Some communities — for example, Hope — with an extremely large number of tourist accommodation businesses are going to find that they'll have a problem in their municipal budget if a large number of these businesses receive relief under this legislation. However, we're prepared to perhaps discuss it a little more fully in committee stage.

Motion approved.

Bill 13, Tourist Accommodation (Assessment Relief) Act, read a second time and referred to a Committee of the Whole House for consideration at the next sitting of the House after today.

HON. MR. REID: Second reading of Bill 15, Mr. Speaker.

EDUCATION EXCELLENCE
APPROPRIATION REPEAL ACT

HON. MR. COUVELIER: This act was proclaimed in 1986 and created a special account known as the fund for excellence in education. For 1988-89 the voted appropriations of the Ministries of Advanced Education and Job Training and Education include funding for expenditures previously funded by the fund for excellence in education.

Therefore there is no requirement to maintain the legislation in force. I move second reading.

MR. STUPICH: We will support this legislation because it is getting rid of garbage, really. The legislation meant very little when it was first introduced. It was legislation to provide for a fund, and again there was no money set aside in that fund except the money that was going to be appropriated that particular year.

I said at the time that it was a fund designed to suit the political purposes of the government, because it gave them an opportunity to spend all of that money within a certain confined period if they chose to and if they thought it was necessary to enhance the prospects of their getting re-elected in the general election. That's all it was: another election ploy. It's been used; it was abused. We're now going to get rid of it and clean the books of it. We'll support this move.

MR. LOVICK: I also want to say something about the fund for excellence legacy, if we can use that term. I'm not going to be quite as polite as I was last time, given that the Minister of Finance's remarks in response were rather testy, it seemed to me — without much justification, by the way, because I was being quite pleasant and merely asking for some assurances. Instead, I got this rather bellicose response from the minister opposite, suggesting that I was using euphemisms to describe things that didn't exist: namely, something like workers. I merely want to go on record as telling the minister that if he is ignorant of sociology, I am not. There is indeed a legitimate terminology called working class and workers. And there is indeed a stereotype associated with it that suggests that working people — again to use the terminology — do drink beer more than they drink other alcoholic beverages, despite the fact that the minister and I both, I am sure, enjoy beer and the blushful Hippocrene and scotch as well as any other items. We are eclectic in our tastes. Please don't suggest, because you, Mr. Minister, have a foot in both camps, that there is no such thing as workers and working people out there.

Having now vented that....

MR. SPEAKER: I might remind the member that his comments are very interesting, but I'm finding it hard to see how they relate to education excellence.

MR. LOVICK: I confess I was somewhat carried away. I saw the rapt attention on the part of the minister and therefore carried on, recognizing that I was indeed veering from the subject under discussion.

To the business of funds for excellence in education, I'm pleased to see that the Minister of Education has entered the chamber. The only concern I want to register — and it shall be a brief one, but an important one nonetheless — is that in the shift of funds for excellence in education to different programs, I think particular programs and initiatives perhaps fell through the cracks. My concern is that too often, it seems to me, governments will introduce programs that rather adroitly and without warning suddenly cease to be. Sadly, what happens is that the impact and the implications of what was initially done is ignored in the process. That's the concern.

I spoke earlier with the Minister of Education about a particular program in Nanaimo: namely, an effort to introduce computers throughout the system in Nanaimo, using the funds for excellence mechanism. To the minister's credit, he

[ Page 4195 ]

said that certainly they were attempting to accommodate that. Indeed, I think they have taken some steps. The point, though, is that that whole elaborate program, which my colleague the first member for Nanaimo (Mr. Stupich) has referred to as garbage — I think that perspective, by the way, is widely held — suddenly, peremptorily ended, without much at all, it seems, in the way of consultation or discussion, and therefore caused a crisis in terms of local school boards trying to fulfill their mandates to their own constituents.

Again, as kindly and graciously as I can to the Minister of Finance, all 1 am asking is to take that under advisement and perhaps demonstrate to me, if not now at least in committee stage, the error — if indeed there is one — of the argument I present.

[4:45]

HON. MR. BRUMMET: I can't really let this debate go by without some comments about some of the myths created by the opposition that it was a political fund. I don't think it was any such thing. The initial intent was to provide additional sums during a period when school boards and others had made the point that there wasn't enough money in the education system. I think the fund for excellence was clearly identified as dealing with those extras that people said were being left out because of the emphasis on some restraint in spending.

The idea of earmarking those funds for special programs was clearly coincidental with the CSP program and other programs which were based to some extent on ability of school districts to pay. To have put that money into the general account we would not have had computers in this school; we would simply have had better argument that salary increases were the most important, because ability to pay would not have been as good an argument. So there were a lot of computers in our public education system. Over $42 million in two years went into computer programs, computer training, teacher in-service and some other programs, but special programs earmarked over and above the operational budget. Admittedly, a fair amount of that money then was used for teacher salary increases where boards carefully made the argument that because they had negotiated agreements, because they had been approved by the CSP commissioner, they were in effect obligated to pay those amounts and there was not a source of money in their operational budget. So they said: "Can't we do this, please?" The government acknowledged that need, built it into the first year, and then, of course, it rolled forward into the second year.

Textbooks. The arguments have been made that there was not enough money allotted for textbooks, that much more was needed. Several million dollars — $6 million, I believe, in the one year, and quite a few million the second year — were given. If the argument is made that better textbooks were required to improve the education system, then surely that qualifies as excellence of education.

These funds have done a lot of good. They may not have done all the things originally envisioned, but I would like to let members know that as I've gone into the schools — take the debate from this House out of the picture —  school after school has been proud to show me the computer labs and the special computer usages developed in their schools as a result of the funds for excellence. They possibly say: "We'd like more and we want built into it additional funding for the maintenance of this equipment."

When any new school is built, an allotment is made for new equipment.

Interjection.

HON. MR. BRUMMET: I'm sorry, 1 can't quite hear the comments.

MR. JONES: Are you speaking in favour or opposed to the repeal?

HON. MR. BRUMMET: I'm speaking in favour of this bill. I couldn't leave unchallenged that it was done on a political basis, that it was politically distributed. It was not. That was the charge I heard from the speaker in my office, and 1 could not let that pass, because I know exactly the process under which those funds were allotted.

In the first year, as the suggestions and recommendations came in, that process was onerous. In the second year, we distributed the discretionary funding made available to us by a simple formula and simplified the process considerably. Not at any time were the decisions made by the politicians about exactly which district got what. Only the totals were approved by the politicians, and that, I think, is their mandate to do.

I'm certainly pleased with what the fund for excellence has done. I'm certainly pleased with the replacement funds and additional funds for computers that have been provided. I was at the point of saying, when I was so rudely interrupted, that school districts were told that these funds were for these projects and that there was no assurance that it would be continuing. Therefore you cannot build in forever the maintenance and continuance of programs when you buy equipment.

When any new school or any addition in this province is built, an amount is allotted for new furniture and new equipment to staff that. It is not built in with that capital building project that there be a continuing, separate, additional fund for the maintenance of that equipment. It was quite reasonable that the operational costs were to be absorbed in the system.

I know that many members, particularly on the other side, praised the $500 million program that Washington State put in for excellence in education and an additional fund earmarked for special programs. They said: "Isn't it wonderful? Why don't we do that in British Columbia?" Well, we did it two years before, and it served the purpose. Now most of those funds have been absorbed in the need for salaries and other things, so the discretionary amount remaining was minimal in both ministries. I fully concur with this bill that it might as well come to a gracious end, We have now increased the operational amounts. We've picked up all that slack in the operation budget, and we have added another $15 million for a computer program as part of a five-year continuing plan to meet the computer program in the school system. I think we're making remarkable strides. When people say, "It wasn't quite far enough, " just once in a while I would like some member from that side to recognize at least the great strides that have been made.

MR. JONES: I enjoyed the remarks of the Minister of Education. I had some difficulty deciding whether he was in favour of the bill continuing and the fund continuing or if he really wanted to see an end to this bill. He described it as a

[ Page 4196 ]

gracious end; I think it's a very ungracious end to what was an ungracious bill. He said he was prompted to enter the House and speak on the political aspects of the distribution of the fund. I don't think the establishment of the fund or the political aspects or the repeal of the fund are really the critical things with this bill.

I think that what this bill tells us and the people of this province is a great deal about the credibility of the government we have, in terms of: does a government do what it purports to do? Can the electorate really trust the government to carry out those things it says it's going to do? When the government undertakes an initiative, purportedly to benefit the school system of the province, does it carry through with the letter and the spirit of that which was contained in the bill? The answer, in terms of the funds for excellence in education, is a dramatic "no." The government did not live up to the kinds of expectations raised with respect to this legislation. In no way was either the spirit or the letter of the intent of this bill lived up to.

We saw this bill introduced with a great deal of fanfare and hoopla and trumpeting of an important contribution to our education system in this province through this vehicle. Now, some couple of years later, we see the quiet death, and the minister says "a gracious end." Well, it's more of a quiet death to something that was trumpeted as important for education a couple of years ago.

When the government establishes funds — or when a good government establishes funds — I think there's an expectation (a) that there would be a fixed amount of money in that fund, and (b) that — and the minister alluded to this — there would be a one-time expense and it would not be part of normal operating expenditures. Otherwise — and the minister is aware of this, from the auditor-general's report — when the fund runs out, those operating expenses are still going to be there and the fund won't be in place to meet those expenses.

In terms of the fund for excellence in education, first of all, although the bill says it's a fixed amount, the Minister of Finance, in introducing this legislation in 1986 said that there would be a minimum of $600 million in this fund, and that if the economic circumstances improved, then there would be additional amounts into this fund. The Minister of Education, in his debates on the: estimate last year, indicated that the salary saving from the April 28, 1987, work stoppage would also go into the Excellence in Education Fund. So there's a question....

HON. MR. BRUMMET: I did not.

MR. JONES: Check the Hansard, Mr. Minister.

So do we have a fixed amount or don't we? We have a fund that has, in some instances, except in legislation, ministers of the Crown saying that there'll be more money in this fund than the $600 million. Can we trust that government to keep its word in terms of the amount? Was there more to go in or wasn't there? Certainly the economic circumstances did improve. This Minister of Finance (Hon. Mr. Couvelier) went on for some four pages in his budget introduction on the economic growth of the province on how investment was up, and how jobs had been created, and how retail sales and housing starts are up. Certainly the economic circumstances improved. So if a Social Credit government's word could be believed, we would expect what the Minister of Finance said in his 1986 budget speech: that more would have gone into the fund for excellence.

HON. MR. BRUMMET: More went into the education.

MR. JONES: Well, let's forget about "more, " because we know the government can't be trusted on "more." Let's stick with the minimum $600 million. Let's assume that we don't need any more than $600 million for this fund. We have a commitment on the part of the government to spend a minimum amount of $600 million. That was the amount that was promised the education system and the people of this province in 1986.

Did the government spend anywhere near that amount of money? No, Mr. Minister....

HON. MR. REID: When is enough? When you've got it all?

MR. JONES: When you promise $600 million, how much is enough? Are you or are you not going to live up to your commitment of $600 million?

Let's figure out how much that should be for education. The Education minister indicated that roughly half of that amount, $300 million, would be the appropriate amount for the Ministry of Education to receive in terms of funds for excellence. Was $300 million spent in our school system?

Interjection.

MR. JONES: No, that's not what happened. Roughly half that amount was spent.

So my question to the Minister of Education or to the Finance minister is: what happened to the other half of that $300 million dollars, that fund for excellence? Perhaps that's where the minister found some money this year to increase the operating budgets of school districts in this province. I submit that the $150 million that was the shortfall in terms of the promise of $300 million for our public school system has been transferred to this year's operating budgets so that the minister would have some increased funds to offer the school system this year.

We can't trust them on the amount of the money. We can't trust them even on the fact that it's a fixed amount. We can't trust them on how much will be spent on this fund for excellence.

[5:00]

HON. MR. REID: Mr. Speaker, I rise on a point of order. The hon. member continues to make reference to mistrust in the terminology he's using, indicating there's mistrust of the bill and of this government. I would ask that member to withdraw.

DEPUTY SPEAKER: The member might endeavour to not use that terminology during his discourse on this matter.

MR. JONES: Well, clearly the Minister of Tourism, Recreation and Culture understands that this bill was a sham, that there was no commitment on the part of this government in terms of providing those funds, the amount that would be spent or the purpose of the fund.

Interjection.

[ Page 4197 ]

MR. JONES: I'll wait for the Minister of Tourism to finish speaking from his seat. He has some witty comments to make — at least, some half-witty comments to make.

The purpose of this fund, according to the annual report of the Ministry of Education, was to provide increased access to computers, to improve in-service and pre-service training for teachers and to upgrade or replace instructional equipment. Those were the criteria for which this fund was set up. Can we trust this government to live up to spending money, even some money, on those criteria which the purpose of the bill indicated?

Interjection.

MR. JONES: Not on your life; not with this government.

The auditor-general of this province, who perhaps even the Minister of Tourism, Recreation and Culture will believe, indicated that less that $50 million of a $600 million fund was designated for such one-time special projects as computer labs. Eighty percent of the funds for the first year of this fund went to general operating expenses such as salaries, textbooks, etc., not to any special projects, not to those things which were the purpose of the fund. Was that the purpose of the fund, Mr. Minister? No, it was for special projects. So we have this hoopla. We have this $600 million fund. And how much is spent on the purpose for which the fund was created? Less than $50 million.

The ministry knew that it was falling way behind the other provinces in terms of providing computers to the students of this province, and that's why this fund was set up. I think that's a valid purpose, but that's not what the fund was used for. Where do we find ourselves relative to other students in this country? We're still way behind in providing computer experiences for young people. The fund was not used for the purposes for which it was intended. It was used for normal operating expenses, by and large, not those criteria for which the fund was established.

The Minister of Education says he has to pay attention to the auditor-general's report. Well, pay attention to the auditor-general's report, and concur with my remarks, because that's what the auditor-general said.

The fund was not for a fixed amount. It was not a one-time expense. It was significantly underspent. I suggest that the amount it was underspent has gone into operating budgets for this year — and the $15 million for computers. It was spent on purposes other than those the fund was established for. Even in terms of those simple criteria, by which we would assess any fund on the part of government, this government has been an abysmal failure. It couldn't even live up to the time commitment. This was supposed to be a three-year fund — not a one-year fund or a two-year fund but a three-year fund. Could the government even be trusted to live up to a three-year commitment? No. A two-year commitment is two-thirds of the commitment to the government, I suppose, in that sense.

Why was it established as a three-year fund? For planning purposes. The 1986 budget speech of the Minister of Finance of the day indicated that school boards would be able to bring forward their proposals to access the special funds in the context of a long-term strategy. This plan certainly assisted school boards in planning in the long term, didn't it? I think it's incredible in terms of establishing this fund, under spending it, cutting it short a year so that no kind of planning could be done on the part of school boards.

How can a school board plan in terms of an amount of money that isn't there, a time-frame that isn't there, and criteria that aren't there? Clearly, the unmet expectations on the part of the school system are monumental in terms of this fund. The Minister of Advanced Education (Hon. S. Hagen) supports the fund and doesn't want to see it repealed, so I assume that the Minister of Education would be in a similar boat.

I don't know where the notion to repeal the fund came from, but it might as well be repealed, and we on this side are going to support the repeal of this fund because it's been a flop from beginning to end. It did not deliver on the promises that the government made. It was another BS fund on the part of the government. It's been a gimmick. What it does, as I said at the beginning, is speak loudly to the credibility of this government.

MR. ROSE: Are you finished?

MR. JONES: Didn't that sound like a windup?

MR. ROSE: I was wondering about the conclusion. It did sound a bit like a windup.

I think it's a good thing the fund has been abolished. I was a critic at the time, and I accused it of being a slush fund. Apparently there wasn't even slush delivered. We felt this should be part and parcel of the school budgets. If it is not rolled into the school budgets....

Interjection.

MR. ROSE: He said that. He had so many complimentary other things to say about the Minister of Education that that might have gotten in the way.

Interjection.

MR. ROSE: We don't want you to get too many compliments.

HON. MR. BRUMMET: Just one.

MR. ROSE: The minister wants love and the critic wants money.

I'm glad it's gone. Obviously what happened is quite simple. If you cut a school budget for the province by 2 percent over three years. I don't know how my math is but my guess is it's around $300 million over that period, totally, if you do it for four years. You did 2 percent, and now you are restoring part of it. Whatever the budget was, you cut it 2 percent over three years.

Interjection.

MR. ROSE: Well, I'm sorry. If you go back and read your predecessor's statements, you'll find that that was his intention under Bill 19 — not the most infamous Bill 19 but the previous one.

When that happened, there was a big outcry.

Interjection.

MR. ROSE: I know, but you start at '82 and then start your steps from there. You didn't even keep up to inflation. I

[ Page 4198 ]

was here as well. While you were busy worrying about parks and recreation, I was worrying about education. My memory might be a little superior to your own in this matter. Not that I feel superior in every way, mind you. We were very critical at on the one hand cutting educational budgets, as you did deliberately for three or four years, and then coming in later with an excellence fund in which you would award your friends and punish your enemies in the various districts. It was so successful in the colleges that it moved to health and then it moved to forestry and then it moved to education. Now it's gone. If it's rolled into the budgets, it's good riddance.

I don't think you should get too much praise for that. We're glad it's happened. We're glad there's more money for education. We're glad to get rid of the slush funds. I see that it's going in health. It's going in post-secondary education. Those funds are gone. They're rolled into the budgets. I think that's a much more forthright way to do it. There's a lot less suspicion directed against the government because it's budgeted funds, and it isn't in the hands of the minister to award some districts for certain glitzy little projects and punish others because they didn't get it. The total educational budget has to meet the needs.

I could also, if I weren't in this praising mood, talk about how you've dumped more and more educational costs on the districts. You've decided, by fiat, what the districts need. Beyond that, you have decided that they must put their money where their mouth is and go to the property owners. Property owners — I was going to say "are revolting" but that would be an unfortunate thing to say about the property owners. The fact is — and I'm glad the Minister of Finance is here — there have been six years now without an increase in the homeowner grant which would lower....

Interjection.

MR. ROSE: I find the government revolting on this; but there's no back-bench revolt, because they're all well-disciplined, malleable little back-benchers who pound on their desk when told to. Did you get your thumping orders today when the Premier came back?

HON. MR. REID: I got my thumping orders from my wife.

MR. ROSE: You should be thumped by a much larger audience.

Interjection.

MR. ROSE: No, he's gone. He was down here, and sometimes he sits here now.

Six years without an increase in the homeowner grant. Even if you kept up to inflation, you would have put $150 in the pockets of local property owners. You haven't done that.

HON, MR. BRUMMET: Are you guys in favour of the homeowner grant now?

MR. ROSE: Well, after all, it's been around since you were young. I don't think we've said anything negative about it recently, except that it's too small. A $150 saving to each and every property owner for education, instead of dumping it on the property owner, would have been achieved if you'd just kept up to inflation.

HON. MR. BRUMMET: The municipality would get it all.

MR. ROSE: Oh no, they wouldn't. Neither would the school boards. And if you look at spending on schools across Canada, in terms of comparison on the budget or teachers' salaries — to the Minister of Tourism (Hon. Mr. Reid) — we are not number one, and we've been slipping from about the top to about the middle or the lower portion. Look at many other places. Look at Ontario, Quebec....

Interjection.

MR. ROSE: We know where you get your money. You get it from the people. That's where you get your money — by taxing them and increasing fees and property taxes left, right and centre. We know who you give your money away to as well: to overruns on the Coquihalla....

Interjection.

MR. ROSE: Don't provoke me. I'm a moderate, you know — a screaming moderate.

But that's good riddance to the excellence funds in health, forestry and education.

Back to the bill. We think it's a good thing. We don't know why it took so long.

HON. MR. COUVELIER: Mr. Speaker, I'm delighted to have the interest of the House on this issue. Let me just remind hon. members that this government has been in office for a year and a half, and we have increased spending in the areas of education and advanced education by over $350 million — new dollars. I'm somewhat at a loss to understand the logic of the previous speaker's negative comments about our performance. I think it's been very exemplary.

I am pleased to move second reading.

Motion approved.

Bill 15, Education Excellence Appropriation Repeal Act, read a second time and referred to a Committee of the Whole House for consideration at the next sitting of the House after today.

HON. MR. REID: Second reading of Bill 16, Mr. Speaker.

HEALTH IMPROVEMENT
APPROPRIATION REPEAL ACT

HON. MR. COUVELIER: Mr. Speaker, the Health Improvement Appropriation Act was proclaimed in 1986 and created a special account known as the health improvement fund. This fund provided statutory authority for part of government spending on health over a three-year period commencing in '86-87. There is no requirement to maintain that legislation in force now. Therefore I am pleased to move second reading of this bill.

[ Page 4199 ]

MR. STUPICH: I suppose we could trot out everything we used with respect to Bill 15 and use it on Bill 16. The Minister of Education has gone, but some of the remarks he made, without referring to education at all.... He said there was no assurance it would continue. Well, of course there wasn't, Mr. Speaker. We said at the time it wouldn't, and can say now that it didn't, continue one day beyond the election date. That's all it was for — political purposes. It had done its job. It was used in the period before that, and then it was gone.

The expenditures being considered in both these bills could just as easily have been in the minister's estimates year by year, when they would have been properly debated in the House year by year. That's the way it should have been, rather than bringing in a bill covering a three-year period, when there would be no more debate of what was going on within those funds, had they gone their course of three years.

[5:15]

I'm not sure what all this is about, but the Minister of Education said we supported the Washington State fund for excellence in education. I'd like to ask him sometime, when I get a chance: was there any real money there, or was it another paper fund?

Mr. Speaker, we'll support this too, because once again, it's getting rid of garbage.

DEPUTY SPEAKER: All members are advised that pursuant to standing order 45, the Minister of Finance closes debate.

HON. MR. COUVELIER: I remind the House that in the one and a half years this government has been in office it has increased funding in the Ministry of Health over $500 million. I'm therefore pleased to move second reading of this bill.

Motion approved.

Bill 16, Health Improvement Appropriation Repeal Act, read a second time and referred to a Committee of the Whole House for consideration at the next sitting of the House after today.

HON. MR. REID: Mr. Speaker, second reading of Bill 18.

SPECIAL ACCOUNTS
APPROPRIATION AND CONTROL ACT

HON. MR. COUVELIER: Mr. Speaker, the consolidated revenue fund is comprised of the general fund and the special funds. The general fund is the main operating account of government. It includes a number of special accounts which provide statutory authority for specific expenditures. The special funds also provide statutory authority to spend funds that have been earmarked for special purposes.

The government will be establishing two new special funds — the budget stabilization fund and the privatization benefits fund — outside its main operating account. To achieve this separation, this bill, effective March 31, 1988, will convert all existing special funds into special accounts which will now be part of the general fund. It is not intended that this change will affect the operation of the special funds in any way or lessen the government's commitment to the programs they support.

The full amount of balance in the special funds will be transferred into the new special accounts. Each new special account will continue to be reported in the public accounts as a separate entity, as is presently the case.

The operation of the Crown land account has generated a balance of spending authority in excess of current requirements. There is no legislative provision available to reduce this spending authority. This bill gives the Lieutenant-Governor-in-Council the power to make such a reduction.

This bill will also repeal the Resource Revenue Stabilization Fund Act, as that legislation is no longer required.

I move second reading.

MR. STUPICH: Mr. Speaker, I can appreciate that this does meet one of the recommendations from the auditor general, and I think it's intended to tighten up the procedure in handling such funds. I have to admit that I had some trouble following the minister's explanation. That's not his fault; it's just that I wasn't able to keep up with what he was saying.

I note that when the auditor-general made the recommendation with respect to the way of handling special funds.... The minister said it doesn't mean there is going to be any less money available for those purposes — 1 appreciate that. Neither does it mean that the money is going to be spent for the special purposes for which the funds were first established. It doesn't help us at all there. It really doesn't, as I hear the minister, change very much, except that it suits the auditor-general's recommendations from the point of view of the presentation.

The auditor-general also recommended a comprehensive review of all special funds and accounts. I wonder if the minister might want to say something in his closing remarks about whether such a review.... Mr. Speaker, I think the minister is looking puzzled. Maybe he wasn't here when this was done; maybe he's not aware of this. But as well as recommending that the handling, the recording and the presentation of special funds be changed in the public accounts, the auditor-general also recommended a comprehensive review of all special funds and accounts, I think with a view to looking at the need for some of them, the way in which they were being handled. whether there was any need to keep some of them up, and whether they should be expanded in their activities. In any case, all I can recall of the recommendation was that there should be a comprehensive review.

Other of my colleagues may want to speak on this bill, but I have nothing further to say at this time.

MR. CASHORE: Mr. Speaker, I have some concerns with regard to the portion of this bill that has to do with the Crown land account. I'll just make a couple of general comments on that now, and I intend to canvass it further during the committee stage.

Prior to that, I have a bit of deja vu, looking at the intent of this bill with regard to special funds. I recall a debate the minister and I had in the House a few days ago under his estimates, when we were looking at a special vote. I forget the number of the vote, but it had to do with setting up within the Ministry of Finance the fund that was to support the expenditure for the Premier's program to save the family. Some of that would be going to social services, some to health, and there were a couple of other items in there. But that was being

[ Page 4200 ]

brought into just such a fund as this bill seems to intend to deal with. So I find that very interesting, in the light of the discussion we had the other day, and it seems to me to be quite inconsistent.

With regard to the portion of this bill that has to do with Crown land, it seems to me that this means $226 million will be taken out of this fund and will go back into general revenue. That means that the money from the Crown land fund, which was to be used for land acquisition for public purposes, will now be going back into the general fund, except for $50 million being kept there. I have a lot of concerns about that, certainly with regard to the need for new parks.

When we consider such areas as Strathcona Park and the Khutzeymateen and some of the issues that the wildlife people are drawing to our attention regarding the ecology of those areas and the need to preserve them as park, it would seem that this might be an opportune time to have looked at the fact that some of those funds were targeted to help the government deal with just that type of problem.

I am very concerned in the area of social housing to realize that a significant amount of those moneys was there for the purpose of acquiring land for social housing sites. When we think of the situation in British Columbia today, where the provincial government — in cooperation with the federal government under the federal-provincial agreement between the B.C. government and Canada Mortgage and Housing Corporation , as it is administered through the B.C. Housing Management Commission — is only able to provide for the development of a paltry 1,886 units per year during the life of that three-year agreement, a very strong argument can be made, and indeed was made when this fund was set up, for the acquisition of land to allow for social housing construction and to purchase that land when the price is low. When the opportunity arrives to build on the land, there would then be decent, affordable housing for a wide variety of people in our province.

As you know, Mr. Speaker, many British Columbians desperately need decent, affordable housing. We're thinking here of housing for seniors, the disabled, ex-mental patients, ex-patients of institutions such as Woodlands and families without the kind of accommodation that we expect to be available in a province such as ours. So it's with a great deal of sadness that 1 see that the opportunity to do such an economically sound thing and take the initiative to bank land with a view to future needs for social housing was not taken.

Mr. Speaker, recently we witnessed the deal with Li Kashing for the BCEC site — the former B.C. Place lands. As a former member of the citizens' advisory committee on B.C. Place, I was very much aware that social housing was an important issue for the people who looked to that as a site that would embody values of social justice, so that a wide variety of people would be able to look upon that land as their domicile — all the way from people who are very wealthy to people who are not wealthy, and that it would be seen as a kind of holistic community. Here again, with that deal having gone through, I see that it calls for some 2,000 units of social housing. It would have been an opportunity to secure some of those units.

Also, Mr. Speaker, in the areas nearby, people who live in the Vancouver area, or who have come to be a part of the downtown east side community, or who live in the Mt. Pleasant area or in Strathcona, and people who live in different parts of the province, all experience different housing needs. When it comes to the development of social housing — and I commend this government for being involved in the development of social housing — as your people in the BCHMC will tell you, there is no need as great as the need to acquire suitable land that will enable the reasonable development of that kind of housing.

I did not want to let this moment pass without expressing my dismay that those moneys.... I'm not saying that moneys such as the moneys targeted here should not be going back into general funds. What I'm saying is that when we look at some of the needs for which they were targeted, it's extremely disappointing, especially with regard to social housing, that that creative opportunity was not seized. Again we have evidence that the people who really are in need of some support.... We're not talking about support that's going to hand people everything on a platter; we're talking about support that enables people, often families with young children, to live in the kind of decent accommodation that makes it possible for them to have a more hopeful future.

I would hope that the Minister of Finance, if he is not willing to at least alter this decision, would be aggressively taking steps to secure land bank sites for future social housing.

DEPUTY SPEAKER: The minister closes debate.

HON. MR. COUVELIER: I move second reading, Mr. Speaker.

Motion approved.

Bill 18, Special Accounts Appropriation and Control Act, read a second time and referred to a Committee of the Whole House for consideration at the next sitting of the House after today.

HON. MR. ROGERS: I call Bill 19 in the capable hands of the Minister of Finance and Corporate Relations.

PROVINCIAL-MUNICIPAL PARTNERSHIP
(TAXATION MEASURES) AMENDMENT ACT, 1988

HON. MR. COUVELIER: The amendment to section 3 of the Provincial-Municipal Partnership (Taxation Measures) Act extends the eligibility for tax relief to owner-occupiers of previously vacant industrial buildings. Relief from school taxes is currently available to owners of new buildings and to owners of previously vacant buildings, but only where those owners have leased the premises to tenants for operating a new business. It is not available to owners who start up a new business in their own building. This amendment corrects that situation by placing owner-occupiers of previously vacant buildings in the same position as owner-lesser. I move this bill be read a second time.

[5:30]

MR. STUPICH: As the minister pointed out, this is further erosion of the school tax base, it would seem to me from his explanation. It reduces the property tax payable under the Education (Interim) Finance Act. That could be significant in some smaller depressed communities where there are a lot of vacant or semi-vacant buildings. I don't know whether the minister has given any consideration to this at all.

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1 think it will be easier to get his attention in committee stage, Mr. Speaker, so at the moment I will just say that it's a further erosion of the school tax base, about which we have to be concerned. We'll deal with it in committee stage.

MR. LOENEN: I beg leave to make an introduction.

Leave granted.

MR. LOENEN: It pleases me to introduce to the House someone I learned a great deal from, Mayor Gil Blair. In addition to being the mayor of my community, Richmond, he currently holds the very important position of being chairman of the GVRD. He's accompanied by Mayor George Ferguson of Abbotsford, and 1 would like to ask the House to please welcome them.

HON. MR. COUVELIER: I see another visitor to the House and I beg leave to introduce him.

Leave granted.

HON. MR. COUVELIER: I'm very pleased that we have also sitting in the gallery Mr. Michael Clague, who is patiently waiting, I think, my presence at my own office when this is over. I know that Mr. Clague is known to members on both sides of this House and is a friend of the Legislature of long standing. I'm delighted to have him watching our proceedings.

I call second reading.

Motion approved.

Bill 19, Provincial-Municipal Partnership (Taxation Measures) Amendment Act, 1988, read a second time and referred to a Committee of the Whole House for consideration at the next sitting of the House after today.

HON. MR. REID: Second reading of Bill 22, Mr. Speaker.

INTERNATIONAL FINANCIAL BUSINESS
(TAX REFUND) ACT

HON. MR. COUVELIER: This bill is intended to maintain Vancouver's competitive position in terms of attracting international business by virtue of a variety of tax refund measures.

MR. STUPICH: I had hoped we would get a little more explanation, but the minister has an appointment in his office.

For a number of years now, successive Socred governments have been talking about establishing an international banking centre in Vancouver. After a fair amount of campaigning, they have been able to get the federal government to introduce the necessary legislation, and of course nothing has really happened since. We have had legislation in this House on previous occasions, none of it has amounted to anything, and now we have the newest draft.

I am not sure of the advantages to British Columbia of doing this. I am not saying there aren't some, but that's what I was hoping the minister might tell us. We've heard them before, but it's some time since.... It would seem to me that it's going to provide minimal employment. Certainly there will be some prestige to doing this.

What I am trying to weigh is.... I've talked before about tax expenditures, and when we're talking about forgoing the right to collect corporation tax from businesses involved in international banking and the right to collect income tax from officers of the businesses running them and from some of the staff members, I have to ask: how much is it costing us compared to what we're going to get out of it? Has anyone done any kind of calculation to show that we're going to be ahead, or is it simply going to be prestige when it's all over? I just don't know.

I'm not going to oppose the bill right now, because I think we have to find out a lot more about it before I would enthusiastically endorse or oppose it — not so much the concept of an international banking centre but the idea of paying as much as we're paying, or will be paying if we get this established, as opposed to what the benefits are going to be.

HON. MR. COUVELIER: I will be pleased to get into more detailed discussion in committee stage, Mr. Speaker. I therefore move second reading.

Motion approved.

Bill 22, International Financial Business (Tax Refund) Act, read a second time and referred to a Committee of the Whole House for consideration at the next sitting of the House after today.

HON. MR. REID: Second reading of Bill 23, Mr. Speaker.

INTERNATIONAL FINANCIAL BUSINESS ACT

HON. MR. COUVELIER: This is the companion piece to the tax refund bill. all dealing with the international financial centre in Vancouver. This is the bill which will allow the licensing of firms to carry on that function. I'm pleased to move second reading.

MR. STUPICH: I think the remarks that I made with respect to Bill 22.... As the minister said, this is complementary legislation, so I feel the same way about 23 as I did about 22. This is the licensing part of it, but I expect that in committee stage we'll get into more of a discussion as to exactly what we're doing here, why we're doing it, how much it's costing us and what we're going to get out of it.

HON. MR. COUVELIER: At the time we get into committee, we might well have a few more success stories to give as illustrations of the success of this piece of legislation. However in the meantime....

Interjection.

HON. MR. COUVELIER: No, a short time. We've already got two, and there likely might be some more by the time we get around to third. In any event, I move second reading.

Motion approved.

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Bill 23, International Financial Business Act, read a second time and referred to a Committee of the Whole House for consideration at the next sitting of the House after today.

HON. MR. ROGERS: Second reading of Bill 14, Mr. Speaker.

BUDGET STABILIZATION FUND ACT

HON. MR. COUVELIER: The Budget Stabilization Fund Act creates the fund which will allow this government to set aside the rainy-day fund. Insofar as major components of the B.C. economy are cyclical in nature, this government believes it important that when we have one-time windfall type revenues, as we've been fortunate enough to have in the last year, we should be isolating those funds from our normal budgetary process and setting them aside for the inevitable downturn in the economy, when, as and if that may occur. I'm pleased to move second reading.

MR. LOVICK: You mean the minister didn't say anything about it?

MR. STUPICH: I hear a comment from one of my colleagues to the effect that the minister had little to say about this. He did speak about it earlier. It's been popularly labelled the BS fund, and I'm not surprised that he doesn't want to say too much about it. There's a lot that 1 would like to say, and having in mind that the minister has an appointment waiting for him.... There was some sort of discussion among the Whips about adjourning at 5:45, and since I have a fair amount I want to say, I'd like to move adjournment of this debate until the next sitting.

Motion approved.

Hon. Mr. Rogers moved adjournment of the House.

Motion approved.

The House adjourned at 5:40 p.m.