[ Page 4203 ]

CONTENTS

Routine Proceedings

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

Mr. Stupich –– 4203

Hon. Mr. Couvelier –– 4203

Privatization Benefits Fund Act (Bill 17). Second reading. (Hon. Mr. Couvelier)

Hon. Mr. Couvelier –– 4204

Mr. Stupich –– 4204

Mr. Williams –– 4205

Hon. Mr. Couvelier –– 4206

Horse Racing Tax Amendment Act, 1988 (Bill 3). Committee stage.

(Hon. Mr. Couvelier) –– 4206

Mr. Stupich

Income Tax Amendment Act, 1988 (Bill 4). Committee stage. (Hon. Mr. Couvelier) –– 4207

Mr. Stupich

Insurance Premium Tax Amendment Act, 1988 (Bill 5). Committee stage.

(Hon. Mr. Couvelier) –– 4207

Mr. Stupich

Land Tax Deferment Amendment Act, 1988 (Bill 6). Committee stage. (Hon. Mr. Couvelier) –– 4208

Mr. Stupich

Mineral Resource Tax Amendment Act, 1988 (Bill 7). Committee stage.

(Hon. Mr. Davis) –– 4208

Mr. Stupich

Mining Tax Amendment Act, 1988 (Bill 8). Committee stage. (Hon. Mr. Couvelier) –– 4209

Mr. Stupich

Motor Fuel Tax Amendment Act, 1988 (Bill 9). Committee stage. (Hon. Mr. Couvelier) –– 4210

Mr. Stupich

Mr. Williams

Mr. Blencoe

Social Service Tax Amendment Act, 1988 (Bill 10). Committee stage.

(Hon. Mr. Couvelier) –– 4213

Mr. Stupich

Mr. Williams

Taxation (Rural Area) Amendment Act, 1988 (Bill 11). Committee stage.

(Hon. Mr. Couvelier) –– 4215

Tobacco Tax Amendment Act, 1988 (Bill 12). Committee stage. (Hon. Mr. Couvelier) –– 4215

Tourist Accommodation (Assessment Relief) Act (Bill 13). Committee stage.

(Hon. Mr. Couvelier) –– 4215

Mr. Stupich

Education Excellence Appropriation Repeal Act (Bill 15). Committee stage.

(Hon. Mr. Couvelier) –– 4215

Mr. Stupich

Health Improvement Appropriation Repeal Act (Bill 16). Committee stage.

(Hon. Mr. Couvelier) –– 4216

Special Accounts Appropriation and Control Act (Bill 18). Committee stage.

(Hon. Mr. Couvelier) –– 4216

Mr. Stupich

Ministerial Statement

Diamond Resources drilling on South Moresby Island. Hon. Mr. Davis –– 4217

Appendix –– 4217

The House met at 10:07 a.m.

Prayers.

MR. BLENCOE: In the precincts today there are going to be a number of school groups from the greater Victoria area. The first group to visit this morning are grade 5 students from Margaret Jenkins Elementary School in Fairfield. Would the House please make these young people welcome.

Orders of the Day

HON. MR. STRACHAN: Adjourned debate on second reading of Bill 14.

BUDGET STABILIZATION FUND ACT
(continued)

MR. STUPICH: The Minister of Finance has said that the Budget Stabilization Fund is necessary because revenues in B.C. are difficult to predict. On occasion he has had even more difficulty predicting some expenditures. But leaving that aside, it is to facilitate long-term planning. On one occasion when being interviewed, he was a little more forthright and said, "Of course, it could be used for political purposes as well," and that's really what it's all about. The naming of it was so fortunate; it really is a BS fund. There isn't one nickel backing it up, as we've said before and as the minister himself has said before.

The minister said that revenues are difficult to predict. With much less to go on than the Minister of Finance had, we predicted a year ago that he was $500 million out in his estimates of revenue. From the figures he has released since then — in his revised estimates — it would appear as though we were right on. He had enough information, assistance and time in preparing his budget to have been right on as well.

You can't come out right to the dollar, but when the minister prepared his budget last year, the things he left out were so obvious. He totally left out of consideration the fact that he was going to get an extra $350 million by way of the forestry tariff and the fact that he was going to get additional income tax because the federal government had raised the rates, and B.C.'s take of that was going to be $70 million. He left out the fact that we were going to get $90 million from the federal government that they had been holding back over a three-year period because B.C. insisted on levying charges for hospital services that were not in line with the Canada health plan. So he deliberately left out some $500 million in revenue. That's quite a cushion. Now he might say that was to cover up other things, but it was so obvious that he was underestimating revenue.

However, leaving that aside, we're now going to have, if we pass this legislation, a $450 million BS fund that will not be represented by anything in the way of assets. What it means, Mr. Speaker, is that from this day on, under this administration or any other Social Credit administration, they will determine in advance what they want the deficit or the surplus to be when it's all over — any figure they want to pick out of the air — and say, "This is the deficit we want; this is the surplus we want this year," and adjust the BS fund accordingly. They can arrive at any figure at the bottom of the statement. That's exactly what it's going to be used for.

Mr. Speaker, $450 million — it could just as easily have been $45,000 or $4.5 billion. It doesn't make a bit of difference to the finances of the province, whatever figure he uses. He's looking in the long range at what he wants to be able to show as the deficit figure for the year ended March 31, 1988; for March 31, 1989; and for March 31, 1990. That's the game plan right now. They're going to put other items in this: transfer some of the lottery fund; transfer some other funds, we suppose. There's other legislation coming up, and this fund will grow or decrease as the government wants, in order to come out with the prearranged determination of what the deficit should be in that particular budget.

It's quite properly labelled the BS fund, Mr. Speaker, because it has nothing at all to do with current revenues and expenditures. The fluctuation in that fund will determine what the deficit or surplus will be, and as the minister himself has said, it may be used for many purposes, including that of winning election campaigns. Whether they have the money to fund the goodies that they want to hand out in election year or not, it doesn't matter. They can simply adjust the BS fund and come up with the surplus they want going into an election campaign, and use that money in winning that election.

It's all legal. We're going to make it legal if we pass this legislation, so there's nothing wrong with it in that sense, but it's playing games with the public. It's trying to pull the wool over their eyes. It's trying to make the public think that conditions in any particular year are what the government wants them to be rather than what they actually are: that the surplus that's arrived at for that year doesn't depend on revenue and expenditures but depends totally upon the flexibility of that BS fund.

That BS fund could even be in a deficit position, and they could still transfer revenue from it — a bookkeeping, paper entry. That BS fund doesn't have to always be in a surplus position; it could be in a deficit position and used to make the public think that the administration has been able to produce a certain result at the end of the year to suit its own political purposes.

That isn't good enough. It's not as bad as some of the statements that were presented in this Legislature with respect to the Coquihalla Highway reports, but it isn't good enough to be trying to fool people into thinking things aren't what they really are. I wonder, when the government covets the triple-A credit rating that the city of Vancouver has, whether they think this kind of chicanery is going to help them in their attempts to improve B.C.'s credit rating so that the province will as well get as good a credit rating as has the city of Vancouver.

We're opposed to this kind of smokescreen, this kind of delusion. We're opposed to this concept of setting up a BS fund that will be used simply to pull the wool over the voters' eyes and be used simply for political election purposes.

[10:15]

HON. MR. COUVELIER: The hon. member makes reference to the suspicion that the BS fund — the budget stabilization fund — will be used for political purposes. My memory of the comments I made in that respect were in response to the suggestion that that might be so. I answered that I cannot, nor can anybody that I know, say with certainty when the need for expenditures out of this fund will occur. We envisage a need to spend out of this fund when the economy warrants and justifies the expenditure.

[ Page 4204 ]

I can't predict when that will occur. I had the good grace to admit when questioned by the media that that might well occur in an election year, but my guess was that, given we only go to the election maybe one year in four, the odds were about 25 percent that that might occur during an election year. The issue of whether it's used for election purposes is not the purpose behind this initiative. It is purely and simply to put aside some funds for the rainy day.

The hon. member made comment about the difficulty in predicting revenues. I must say that while it's all well and good for the hon. members to now beat their breasts with pride that they said or predicted an improvement in revenues, I don't recollect any glowing speeches on the other side of the House about expectations for the provincial economy in the year just past. I don't recollect people standing up and saying: "We will increase employment; we will increase capital investment." I didn't hear those arguments. Now, of course, they're saying: "We told you so." It's a question of selective memory, I suspect, Mr. Speaker.

The question of the propriety of this account is something I would just like to make a comment about. I think it's important for us all to appreciate that a budget is merely a management tool, a device whereby the government can allocate to each line ministry spending envelopes so that they know what it is they are able to spend during the coming year.

In a similar sense, when we design the budget, we make estimates of the revenue that we will receive. To the extent that the revenues are: dramatically more than we predicted, the issue is: what do you do with those revenues? Do you spend them? I know that other governments in Canada and the western world might well be tempted to spend them; this government is not. This government takes the responsible position that when we have windfall, one-time revenues, we should isolate them for the rainy day. I think that is morally and fiscally responsible, and I'm convinced that it's in the interest of British Columbians to see us do that.

It has been suggested, Mr. Speaker, that we are "playing games with the public" when we create this account — that's a direct quotation. Let me just remind the members opposite that the same kind of criticisms were levied when one of our predecessor governments instituted the homeowner grant. It was similarly described as playing games with the public money. Now we have the situation where the members opposite spoke yesterday about the merits of increasing the homeowner grant, as if it were their idea. Any innovative management tools brought into place in this province have been brought in by our party and our previous governments. That's a matter of record.

Lastly, let me just remind the House that we are very concerned about credit ratings and that as a consequence of this last budget, we had glowing reports from the rating agencies. We have made our trip to central Canada and to the New York financial community, and they speak very favourably of the initiatives we've undertaken with this budget stabilization fund. They agree with the philosophy, and the consequence of these decisions will, in the fullness of time, result in an improvement in our credit rating. People experienced in the financial community applaud our efforts and speak about creativity, ingenuity and our sense of fiscal responsibility. I'm very proud to receive those kinds of laudatory comments.

Mr. Speaker, I'm pleased to move second reading of Bill 14.

Motion approved.

Bill 14, Budget Stabilization Fund 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. STRACHAN: Second reading of Bill 17, Mr. Speaker.

PRIVATIZATION BENEFITS FUND ACT

HON. MR. COUVELIER: Mr. Speaker, the government will receive substantial revenue from the sale of government assets under the privatization program. The government intends that a lasting benefit be enjoyed by future generations of British Columbians from the proceeds of these sales. This bill will establish a perpetual fund to hold the proceeds received from the sale of Crown assets and operations to the private sector. The funds will be invested, and the earnings generated each year will be transferred into general revenue. Mr. Speaker, I am pleased to move second reading.

MR. STUPICH: If the government really intended to do this, they wouldn't require legislation to accomplish it. What the legislation does is leave the door wide open for them to do almost anything or nothing with respect to the proceeds from the sale of assets as part of privatization.

I've said on previous occasions — and no one has ever questioned it — that everything the people of British Columbia own through their government, with the exception of the building that we're in at this moment, has been mortgaged to the hilt. Public buildings all over the province were transferred to BCBC, and the last time I looked at BCBC statements they showed debts of something like $400 million. If we sold the courthouse in Nanaimo or in Saanich or wherever, it should bear a share of the debt that B.C. Buildings Corporation has.

We have previously sold the ferries. We can't sell them again; the B.C. Ferries operation is gone. We talked about selling the gas division of B.C. Hydro. I don't know the figure. I've seen one forecast to the effect that the portion of B.C. Hydro's debt that should be allocated to the gas division is just about equal to the value of the assets of B.C. Hydro's gas division.

I'm wondering what money is really going to be coming in from the sale of assets, unless the government in selling the assets keeps the debt and thereby inflates our own public debt. I don't know what's in mind. I don't know whether the Minister of Finance has any idea how this is going to be handled. To the best of my knowledge, there isn't any significant asset that the government has right now that should not bear an amount of debt in excess of the value of the asset. We're in a deficit position, as far as public accounts are concerned, of some $5 billion or $6 billion.

The minister talked about the long-term benefit. The government will be getting significant interest revenue from this fund as assets are sold. Again; I have to wonder how much money is going to be in that fund. I wonder whether the fund itself will bear the costs of the privatization process. Part of that, of course, is the early retirement package. If we're going to be getting rid of government employees and we offer them early retirement, it is going to cost something like $100 million. Is that part of the cost of the privatization process? Is

[ Page 4205 ]

that going to be borne by the public accounts, or is that going to be borne by the privatization fund?

The government is not required by this legislation, as I see it, to put everything into the privatization fund; it may do it. It gives the Minister of Finance the opportunity to direct how much of the earnings of this fund will come into consolidated revenue. It leaves it wide open, once again, for the government, the Minister of Finance — whatever — to play around with it; to put money in when they want; to take it out when they want; to take earnings out when they want or leave them in; and to use the fund, once again, for their own political purposes. It would seem as though that's the main game plan, rather than actually building up a heritage fund with the proceeds of the sale of assets.

If we had real assets to sell, Mr. Speaker, it would be one thing, and if we really were going to lock up the net value of those assets in a fund from which the government could only draw interest revenue, that would be protection for the fund and protection for the future. But as I read this legislation, the government may do that if it chooses, when it chooses, as it chooses, but it may also do almost anything else. Once again, it's not finance. It's politics, and we're opposed to this legislation as it stands.

MR. WILLIAMS: At the very least we should have something out of this minister in terms of what it's anticipated the numbers will be. What do you expect in terms of dollars, inflow? What do you expect in terms of this whole exercise? Well, I suspect it's going to be very modest indeed. The whole question of net revenues from these sales of Crown assets.... As the member for Nanaimo says, once you look at the debt structure of most of these outfits, it doesn't leave very much. So maybe you should start coming clean as to what you see those numbers as and whether there's going to be anything in here at all. You can put in what you want to put in; you can take out what you want to take out. Who needs it? It's just like the last one: it's another BS fund, given to you by one of your golden-handshake colleagues. Ever thought about that, Mr. Minister — just what your golden handshakes are costing in staff morale, in terms of what they're doing here? Maybe you've never thought about that.

Hydro Gas: what is it — half a billion in debt? What will it leave in net return to the province once you've sold it? The ombudsman has already raised the question of the terrible conflicts there will be with outfits such as this, when you both deregulate and privatize at the same time. Then the consumer is likely to be a victim, and this for at best maybe a net of $100 million out of the jewel that you're selling: Hydro Gas.

So what is there in it for us? Isn't it true that your minister of energy and privatization is now satisfied that he's not going to get that much out of the exercise, so he wants it shopped around the world, and that we could now likely have Hydro Gas owned by Hong Kong Gas; that that's the next step, in terms of our Pacific Rim initiative, from this administration?

AN HON. MEMBER: Shame!

MR. WILLIAMS: You can say "Shame!" all you like, Mr. Minister, but it makes no sense whatsoever to dispose of these assets. If you want to jockey the price up, they're going to want a return. The buyers are going to want a return, and that means higher rates in the end to the consumer. It's straightforward. In the end, as you try to ratchet those prices up by shopping these assets around the world, it will push prices up. So it really doesn't make any sense whatsoever.

You look at the other assets you're selling, Mr. Minister. B.C. Hydro Rail: what do you anticipate getting out of that from selling the assets? Pretty modest, I suspect. And the research agency of B.C. Hydro: how many buyers are there for the very specific research that agency does for Hydro itself? What sort of price? What kind of net position for the province?

What you've really established is an ideological trap for yourselves here by trying to pursue the Thatcher initiative in areas where the returns will be zero or very little. You're really just in an ideological trap. What have you got for the labs you've sold? Why, you've got little more than the price of machines that were bought in the last year in the Okanagan. So there's no net there at all. What about the little sign shop out in Langford, talking a couple of hundred thousand or something like that? Again, it's hardly any net at all.

Highways is still the big question mark.

HON. MR. REID: Look at how many signs are coming out now — twice as many.

MR. WILLIAMS: Oh, and I guess the bill is twice as high.

HON. MR. REID: No, twice as much production because somebody is working for himself.

MR. WILLIAMS: I bet the minister doesn't even know what the cost per sign out of production was previously. Answer.

HON. MR. REID: Sure I do. I'll get you an answer.

MR. WILLIAMS: I'll let you know, Mr. Minister.

MR. MICHAEL: It's $29.

MR. WILLIAMS: No, it's $25. You're wrong by 100 percent, my friend. If you put it together, $25 a sign for the whole range of signs we produce in this province — from those huge, green freeway ones to the smaller stop signs — that's a modest cost. You guys spend more than that for your election signs, for God's sake.

[10:30]

HON. MR. REID: If we get re-elected, we'll do them all over again.

MR. WILLIAMS: Can we get the chorus together here? The one thing they understand, Mr. Speaker, is the cost of election signs. I'm not quite sure why, because do they ever pay the cost of those election signs? Maybe they review the correspondence.

The member from Nanaimo is absolutely correct. It's more smoke and mirrors here from the Minister of Finance — a very vague, open-ended statute. Money may go in, money may go out, and who will know in that revolving door what in the world is going on? We're saying: "No thanks, we don't vote for this kind of phony legislation" — which is becoming the hallmark of this minister.

[ Page 4206 ]

HON. MR. COUVELIER: I have lots of good meat there to respond to, but I think we'll leave it for the committee discussion. I am pleased to move second reading.

Motion approved.

Bill 17, Privatization Benefits Fund 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. STRACHAN: Committee on Bill 3, Mr. Speaker.

HORSE RACING TAX AMENDMENT ACT, 1988

The House in committee on Bill 3; Mr. Pelton in the chair.

On section 1.

MR. STUPICH: From the reading of the bill and from other material I've seen from time to time, although this purports to decrease the government's share of revenue from horse racing, because the commission is being saddled with costs that it has not borne in the past, it will actually have minimal or no effect on net government revenues. Is my reading of it correct?

HON. MR. COUVELIER: I'm sorry. I didn't hear that question.

MR. STUPICH: From my reading of this and from what I've seen in the press and from talking to people, it is my impression that, although this purports to reduce the government's share of revenue from horse racing, in fact it won't affect our net revenue, because we are imposing costs on the commission that formerly had been borne by the government. There would be very little, if any, effect on net government revenue.

HON. MR. COUVELIER: That is not my understanding. I do believe that this is intended as an incentive to the industry to improve the breeding and overall contribution that it makes to the B.C. economy.

MR. STUPICH: I'm surprised when the minister says it was not his understanding. It is his bill, and I thought he would be a little more in tune with what it's doing. It does say that it is reducing the rate from 3.5 percent to 3 percent, but then it also includes further responsibilities on the part of the commission: "...the operation of breeder societies in the Province...the establishment or the improvement of horse racing facilities...the covering of costs of feasibility studies and research, and the assessment of either or both of them, and any other similar costs for purposes of the establishment or improvement of facilities...." It was my understanding that the government had embarked on a study to determine where — or if — another horse racing facility should be established. That was the government accepting that responsibility. In this legislation the government is charging the commission with the cost of that, and it will come out of the additional revenue the commission is getting.

I was just hoping the minister, if I kept talking, would have time to consider that the commission is really going to have more costs that previously had been borne by government one way or another. The net revenue to the government is that they'll be losing some revenue and losing some costs, and they'll come out fairly even. I may be wrong, but that's the way I read it.

HON. MR. COUVELIER: As I've indicated with my earlier answer, the effect of this will be to reduce provincial revenues, and it will not result in a trade-off, so to speak. In other words, the initiative that is offered by this legislation is one that should result in funding being available to the industry to perform some of those functions that the member described.

Section 1 approved.

On section 2.

MR. STUPICH: We may have a problem again. My interpretation of this section is that it gives the cabinet some authority in directing the commission how it shall spend the extra money it receives as a result of this redistribution of income. It allows in the L-G-in-C to establish a formula for how the commission is allowed to spend the extra money it is going to get. That's the way I read it.

HON. MR. COUVELIER: The funds will be spent this way: for supplementary purses, up to 1.5 percent of the tax; breeders incentive fund is up to 1.5 percent; not less than 0.5 percent for the operation of breeder societies and race courses, providing they meet the requirements of the equine health research.

Interjection.

HON. MR. COUVELIER: If you'd like the answer, you might like to listen.

The new provision provides for 0.5 percent for the research and improvement of facilities. That's the only new aspect of this, and this will allow the industry itself to perform those functions.

MR. STUPICH: The Minister of Finance said in his opening words that the funds "will" be spent. In other words, that's his determination or government's determination that the commission will do thus and so. I think that's what he meant, and I just want him to indicate whether the funds will be spent. He is saying that they will be spent that way, and I see the minister nodding in agreement. I take that to mean then, as I said, cabinet will decide how the commission spends its revenue. The commission will be doing what the government bids with the extra revenue, as well as the revenue it's been getting to this point.

If the government decides to change, the minister gave us percentages. The percentages are not written into the legislation, but if the government next week decides to change the proportions that are being spent on any one activity, or indeed, to do away with instructions to spend on an activity, or to add an additional activity, cabinet will decide how the commission is to spend this extra money. I just want to make sure that's what the minister meant.

HON. MR. COUVELIER: The hon. member is correct. The Lieutenant-Governor-in- Council will make those adjudications.

[ Page 4207 ]

MR. STUPICH: I think that takes me back to where I was on the first one, where I said that the government can, if it chooses, charge the commission with activities which heretofore have been conducted by government, and the government may well save some expenses as a result of this increase in revenue for the commission by telling the commission that they have to pay for this. I just want to know where we are, that's all.

Sections 2 and 3 approved.

Title approved.

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

Motion approved.

The House resumed; Mr. Speaker in the chair.

Bill 3, Horse Racing Tax Amendment Act, 1988, reported completed without amendment, read a third time and passed.

HON. MR. STRACHAN: I call committee on Bill 4, Mr. Speaker, in the name of the hon. Minister of Finance and Corporate Relations.

INCOME TAX AMENDMENT ACT, 1988

The House in committee on Bill 4; Mr. Pelton in the chair.

On section 1.

MR. STUPICH: I am reminded — I've done this before — of one of my favourite Tommy Douglas stories about the fellow in the insane asylum who was hammering his head against the wall. When asked why he did it, he said: "Because it feels so good when I stop."

Last year the government increased the rate of tax for small corporations by 3 percent. This year it's reducing it by 2 percent. I predict that the year after next, heading into an election campaign, it will be reduced one more point so it will be exactly where it was when this government was elected, and they'll take credit for having reduced the rate of taxation on small corporations by three points. We support it.

Section I approved.

Sections 2 to 4 inclusive approved.

Title approved.

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

Motion approved.

The House resumed; Mr. Speaker in the chair.

Bill 4, Income Tax Amendment Act, 1988, reported complete without amendment, read a third time and passed.

HON. MR. STRACHAN: I call committee on Bill 5, Mr. Speaker, in the name of the hon. Minister of Finance and Corporate Relations.

INSURANCE PREMIUM TAX
AMENDMENT ACT, 1988

The House in committee on Bill 5: Mr. Pelton in the chair.

Section I approved.

On section 2.

MR. STUPICH: I had some things to say about this bill yesterday, and the minister, as I recall, didn't respond particularly when he wound up second reading. I said then that it was simply his attempt to grab more revenue from taxpayers indirectly. I argued that the automobile insurance corporation quite properly is bearing the cost of automobile accidents and of the administration of the whole program, but that automobile drivers.... It's not reasonable, proper or fair that they should be called upon to supplement government revenue, in this case by an additional $6 million. Was calling on drivers — you and I, Mr. Chairman — when we pay for our licence to contribute an extra.... With this increase, the tax now will be $20 out of your pocket and my pocket on the average when we go to renew our automobile insurance. I can see that the government is desperate to get revenue. It has increased fees of all kinds. The minister said that all he was doing was rationalizing the cost of the service with the amount being charged for that service. Yesterday I asked how this explanation ties in with what he's doing with respect to automobile drivers. I think the costs of insurance are going up rapidly enough. They come down only in an election year, entirely by coincidence, I'm sure. But last year they went up dramatically, and this year again there are substantial increases. The likelihood is that they'll go up again.

[Mr. Weisgerber in the chair.]

Why we should be loading this extra impost on automobile drivers simply to get more revenue is beyond me. There are other ways, I would think, of getting $6 million more revenue this year than taking it out of the hides of sorely pressed drivers who are paying for their auto insurance in B.C. We are opposed to this section and to this bill.

[10:45]

Section 2 approved on division.

Sections 3 to 6 inclusive approved.

Title approved.

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

Motion approved.

The House resumed; Mr. Pelton in the chair.

Bill 5, Insurance Premium Tax Amendment Act, 1988, reported complete without amendment, read a third time and passed.

[ Page 4208 ]

HON. MR. STRACHAN: Mr. Speaker, I call committee on Bill 6.

LAND TAX DEFERMENT AMENDMENT ACT, 1988

The House in committee on Bill 6; Mr. Weisgerber in the chair.

On section 1.

MR. STUPICH: I made the point yesterday — I think the minister didn't comment on this and perhaps he won't today — that it's good legislation because it's correcting something that the government has done on previous occasions. When the homeowner grant allowed taxes for senior citizens to be reduced to $1, there was no need for the provision that will enable them to defer property taxes on their property. But now that the tax may not be reduced below $100 — a fact of life in the province of British Columbia — then it is good that we're allowing senior citizen residents in mobile homes to defer their taxes, since the $100 is sometimes hard for them to come by.

We support this legislation. We regret that we're in a position where it has to be, that it's needed, but we support it.

Section 1 approved.

Sections 2 to 8 inclusive approved.

Title approved.

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

Motion approved.

The House resumed; Mr. Pelton in the chair.

Bill 6, Land Tax Deferment Amendment Act, 1988, reported complete without amendment, read a third time and passed.

HON. MR. STRACHAN: Mr. Speaker, I call committee on Bill 7.

MINERAL RESOURCE TAX AMENDMENT ACT, 1988

The House in committee on Bill 7; Mr. Weisgerber in the chair.

On section 1.

MR. STUPICH: Mr. Chairman, yesterday when we were discussing this bill on second reading, I suggested to the minister that there are relatively few companies that are contributing to this tax — just the ones that are large enough to be making a profit in excess of $50,000. 1 wonder if he could tell us how many companies are going to be affected by this?

HON. MR. DAVIS: Mr. Chairman, this is a profits tax, or it's a profits-type tax. Hopefully, a significant number of companies will be making a profit in excess of $50,000, but in the last few years only half a dozen were in that category — and their profits were nominal at that. So it could involve a significant number of dollars. It has not in recent years, mainly because it's a profits tax and this industry hasn't been making exceptional profits.

MR. STUPICH: I think the minister said only a half a dozen companies had been contributing to some $14 million in tax revenue the government's been getting from this source. Since it is a tax on income, those half-dozen companies, while they might not have been making the kinds of profits they would like to have, are making very substantial profits. I wonder, at the same time as we have to take another $6 million away from automobile insurance drivers, why we have to give half a dozen companies that paid in the neighbourhood of $14 million in the form of a minimum income tax.... It's not at the regular level of income tax; it's a relatively low rate of income tax. I don't know the figures right now, but I would think that to be paying $14 million in the form of this tax, they must have been making at least $140 million in net income over the total — some of them a lot more than that, some of them less.

Mr. Chairman, on the face of it, I'm opposed to this section. We're giving relief where it really isn't needed, if it's affecting only half a dozen companies that have made substantial profits and should be paying something for the resource. There's no royalty anymore; it is, as the minister said, a tax on income. If he wanted to give relief to the mining companies — some of whom are suffering — then surely it could have been done through the water licence fee. A very minor reduction would have meant losing the same amount of revenue, but it would have helped those who are not making any net income.

The minister himself suggested yesterday that he would have preferred to reduce the costs for those mining industries that were not making any money, rather than to give more to those who are making substantial profits. That's the way I heard him. I think that's what he would like to do, but he hasn't been able, I suppose, to persuade the Minister of Finance to reduce costs across the board, as he would like to do, rather than simply increase.... What we're doing is saying to those that are profitable, "You're going to get higher profits," rather than helping the ones that have not been profitable.

HON. MR. DAVIS: Mr. Chairman, the hon. member made reference to $14 million in revenue collected under this tax. Had we reduced the tax by 1 percentage point, the revenue lost, at least in his terms, would have been in the order of a million dollars, not $14 million. If we reduced it 2 percentage points, it's of the order of $2 million. Yesterday I mentioned a figure of $1 million to $2 million. Assuming we were to experience a repeat of last year, and the new tax rate was in effect, that would be a loss to the treasury of $1 million or $2 million.

He refers to the water rental fee. We've examined the water rental fee issue carefully, and unfortunately, the way the fee is structured, it applies to all users of electricity, so the reduction would have to be across all categories of use of electricity. A 1 percent or 2 percent reduction would mean a $5 million or $6 million loss to the treasury — at least, of that order of magnitude.

The only alternative with the water rental fee is to develop, say, a two-step rate that most people pay, and a few

[ Page 4209 ]

would pay a much lower rate — presumably those would be energy-intensive industries — but we haven't made that decision. I'm only saying that to tinker with the water rental fee would be to surrender a much larger amount of revenue than is presently lost, to use his terms, as a result of this legislation.

Our concern primarily was the overall rate of profits tax paid by mining operations and companies in this province. They pay the federal corporate rate, which is currently 26 percent. They pay the provincial corporate tax, 14 percent — that brings it up to 40. On top of that, mine by mine — and this tax applies to individual mines as opposed to whole corporations — the tax is 17½ percent. So you have a cumulative profits tax of 57½ percent. Admittedly, there have been depletion allowances, but they are being discontinued by the federal government, and we were faced with a rate of profits tax of 57½ percent, which was measurably above any other province in Canada. Essentially we've brought it down to the Ontario rate, which is otherwise the highest in Canada.

This is a marginal reduction in taxation for mining. Any other category of taxation borne by the mining industry, had we brought about a similar percentage reduction, would have resulted in a much larger loss of income to the treasury.

MR. STUPICH: Mr. Chairman, if I said what the minister said I said, then I'm sorry; I was wrong. The expected loss from this is $1 million; the expected revenue, after doing this, is $14.5 million in the year ending March 31, 1989. If I used different figures, I want to correct that: the expected loss is $1 million.

What I heard as the minister's explanation.... It's difficult to help the people who are in trouble, but the government wants to do something, so it has come to the decision that it will give $1 million to half a dozen companies. The ones that are doing very well will get an extra $1 million. The ones that are not doing well will get nothing, because it's difficult to work out a formula for them. It's easy for us, under those circumstances, to oppose this section.

Section 1 approved on division.

Title approved.

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

Motion approved.

The House resumed; Mr. Pelton in the chair.

Bill 7, Mineral Resource Tax Amendment Act, 1988, reported complete without amendment, read a third time and passed.

Motion approved.

HON. MR. STRACHAN: Committee on Bill 8, Mr. Speaker.

MINING TAX AMENDMENT ACT, 1988

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

On section 1.

MR. STUPICH: Mr. Chairman, I wonder if the Minister of Finance, since this bill comes under his jurisdiction, could answer the same question I put to the Minister of Energy when I asked him how many companies would be taking advantage of this. Can he tell me how many companies will be benefiting from this reduction in the mining tax?

[11:00]

HON. MR. COUVELIER: This is a profits tax, of course, so it's anyone’s guess what may happen. It could impact one or two coal companies and a number of smaller structural material companies, but the exact number is difficult to quantify.

MR. STUPICH: Mr. Chairman, I would suggest that it's not that it's difficult to quantify but that the minister just doesn't have the information right now, and I can appreciate that.

HON. MR. COUVELIER: It's based on profits.

MR. STUPICH: It's based on profits, and I'm not sure how many gravel pits are making revenue in excess of $50,000 net income a year.

Interjection.

MR. STUPICH: Yes, if there's one. There are at least as many as there are coal companies, but there must be somebody in the coal business making money, because the minister's anticipating getting $500,000 revenue from this tax. That was really what I was wondering: which coal company does he think is going to be making enough money this year to pay $500,000 by way of this tax? But he doesn't know it and I'm not sure.... The Minister of Energy might be able to help; he might know. I can't think of any.

What intrigues me even more, Mr. Chairman, is that while the cost to treasury in the budget year ending March 31, 1989, according to the budget speech, was too small to quantify.... You can't get enough zeros after it. The cost to treasury in the second year — that is, the year ending March 31, 1990 — is going to be $1 million. We expect to get a half-million in the year we're in right now, and by reducing this tax, it's going to cost us a million dollars. We're going to get a million dollars less from this source than the half million we're getting this year. I think that requires some explanation.

Mr. Chairman, it's not fair. I knew the answer and the Minister of Energy knew the answer but the Minister of Finance didn't know it.

I just have to ask one more question: for $500,000, why are we bothering? That we're not going to get, even.

Section 1 approved.

On section 2.

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

This amendment provides that the rate reduction proposed in section 1 come into force on July 1, 1988.

[ Page 4210 ]

Amendment approved.

Section 2 as amended approved.

Title approved.

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

Motion approved.

The House resumed; Mr. Pelton in the chair.

Bill 8, Mining Tax Amendment Act, 1988, reported completed with amendment to be considered at the next sitting of the House after today.

HON. MR. STRACHAN: Committee on Bill 9, Mr. Speaker.

MOTOR FUEL TAX AMENDMENT ACT, 1988

The House in committee on Bill 9; Mr. Weisgerber in the chair.

On section 1.

MR. STUPICH: I just think it's worth getting on the record that it's one more revenue grab by a government that talks about minimum increases in taxes. In this case, they're expecting to get an additional $45 million from this source as a result of this change in legislation. I just want that noted.

Sections 1 and 2 approved.

On section 3.

MR. WILLIAMS: Could the minister advise us what the annual revenues will be as a result of moving this to 3 cents a litre?

HON. MR. COUVELIER: We're working from memory. The hon. member is aware that we're only talking about the Vancouver transit area. We will be happy to send that over. We'll have staff investigate it. We think it's in the area of about $2.5 million, but we'll verify that for you.

MR. WILLIAMS: I would appreciate the information. It seems clear that the minister does come — as we've seen this morning — not very well briefed at all on the legislation that he's responsible for. 1 would hope that in the future he will have more time for that so that he will be more adequately informed, and that he won't do his campaigning in the malls and shopping centres, as he is wont to do when he has these delusions of grandeur in terms of his future.

Let's look at this business of transit in Vancouver. This is part of the continuing saga of dealing with the big white elephant known as SkyTrain. That big white elephant that the Premier was initially responsible for, and others....

Interjection.

MR. WILLIAMS: Yes, you bet. Do you have any idea, Mr. Member, how much that thing costs compared to the rest of the transit system in Vancouver?

Interjection.

MR. WILLIAMS: Yes. Do you know what numbers ride that SkyTrain? Do you want to know what numbers ride that SkyTrain?

Interjections.

MR. CHAIRMAN: Order, members, please.

MR. WILLIAMS: Oh, yes. Sure. That thing soaks up 40 percent of the cost of transit in Vancouver and carries 12 percent of the people.

MR. JANSEN: What kind of equation is that?

MR. WILLIAMS: You get up, Mr. smart member for Chilliwack and Mr. Minister. The reality is that you're having to increase all these taxes to pay for a system that is fumbling and that is not carrying great volumes of traffic, that is not doing the job that a mass transit system should do. I am not surprised that the mayor of Vancouver says: "Enough, enough! We in the city of Vancouver will not keep paying for the extension of this monster with its incredibly high capital costs." The surface transit system carries the load.

If you were anywhere near creative, we'd have a transit system in Vancouver that provides free service in the downtown and the West End. We don't have it. We'd have a transit system that has lower fares in the inner-city neighbourhoods. We don't have it. We have a system that's the most costly system in the country, because you bungled in terms of that dumb system going out to Surrey. I don't blame the mayor of Vancouver for saying: "No more."

You get up and defend it, because you'll have a hard time doing it. The entire surface system was bent and twisted to feed SkyTrain — the whole system — and you're talking about further extensions out into the valley and to the north side of the river at an incredibly high capital cost for this system from Ontario. This is a system that Ontario has only used in one little suburban snitch — I think it's in the Scarborough area — and it's the area they've had the most problems and highest costs in.

We opted for this untried system throughout our region, so the penalty is being borne by the automobile people in terms of a higher tax per litre on gasoline, and it's borne by the property tax in the area. The city of Vancouver ends up bearing the bulk of it for a system that doesn't serve the city very well at all.

Interjection.

MR. WILLIAMS: No, no. The city should have cheaper transit fares because their costs are lower, the distances are shorter, the densities of population are higher; and in the progressive cities of North America, the downtown areas provide free transit. That makes a lot of sense. But because you tied your wagon to this thing, SkyTrain, we have a debt load like we have barely seen on any public project.

Not until year 13 under the Minister of Economic Development's ministry, when she was responsible for the debt manipulation a couple of years ago, will anything be paid on the principal of SkyTrain. You compare that with the mortgage you gave Li Ka-shing, where for the first 13 years he doesn't pay anything in terms of interest. On the one side,

[ Page 4211 ]

you give Li Ka-shing a deal where he pays no interest on the mortgage; on the other side, you and the public sector have a mortgage where you don't deal with the principal for 13 years, and you have the debt hanging over our heads for 30 years. For that system we have 30 years of debt. That's why you're raising the gas tax.

Now that you've been briefed, for a change, by your Minister of Energy, maybe we'll get some modest comments from the minister now.

HON. MR. COUVELIER: I can't believe what I'm hearing. I was a member of the Urban Transit Authority when we initiated this project. I can't believe a member from Vancouver is critical of SkyTrain. My goodness, SkyTrain is widely recognized as one of the most innovative public transit systems anywhere in the world. It was the talk of Expo; it was endorsed by other communities in the world. They've purchased a system, as I understand it.

The member makes a point about surface transit covering the load. If I understand the criticism that we've been hearing, it would be that these people, these penny-pinching, lack-of-creative-thinking individuals would have this system blocking off every intersection in Vancouver as it crossed the intersections. We elevated the track so it is fast and efficient; and what we've done is knit the lower mainland communities together. We have revitalized New Westminster. The hon. member makes no comment about that, of course.

I'm just astounded to hear a Vancouver member criticize the SkyTrain initiative. To the suggestion that it's the most costly in the country, the operating costs of that system are very economical and compare favourably with others elsewhere in the world. It's a well-known fact. For the hon. member to try and make the claim that it isn't seems to me flies in the face of the facts of the matter.

In any event, I think that SkyTrain is well received, endorsed and appreciated by the citizens of the lower mainland. Indeed, all the citizens of British Columbia take some pride in the fact that it was an innovative, creative and courageous decision to implement that system. Using the linear induction motors had a risk factor associated with it, and I'm very pleased the whole operation turned out to be the success it is

To suggest that SkyTrain itself was a bad decision or that we should have seriously considered the thought that SkyTrain would result in closures at every intersection as it crossed the various streets of Vancouver, I find an absurdity. Clearly, that would not have resulted in any advantage to the riding public. Clearly, it would not have elevated the economic profile of New Westminster. Talk to your mayor of New Westminster, hon. member, and find out for yourself what SkyTrain has done for that community. He talks in a parochial vein about SkyTrain, as if the whole world should evolve around Vancouver East. The hon. member certainly must be aware of the fact that all citizens of Vancouver reap a benefit from the operation of SkyTrain.

This government is very proud of the SkyTrain decision; and to the suggestion it has a heavy debt load, I say of course it has a heavy debt load. We built it during the time we needed some job creation prospects. We needed to get some employment created in the lower mainland area. We wanted it to contribute to Expo, which it certainly did; we wanted it to be a showplace of Canadian engineering and ingenuity, which it was; and we wanted to see if we could get some offshore sales for this technology, and we got them. We met all our objectives.

This is a system that will last 100 years. Hon. member, once the debt is paid off — and that will proceed — we'll have a system that will last 100 years, and it will be one of the most economical systems anywhere in the world. We should be very proud of it as British Columbians, Mr. Chairman, and I can tell you this government is.

MR. WILLIAMS: It would be a real pleasure if the Minister of Finance ever analyzed anything at any time. We just get the wind. Think about it, Mr. Minister. I do hope you'll listen. Of the volume of the whole system, 12 percent is on SkyTrain.

HON. MR. COUVELIER: Of course, but look at the roads you have to....

MR. WILLIAMS: No, just keep listening. Twelve percent of the volume in the system is on SkyTrain, but it's 40 percent of the cost.

HON. MR. COUVELIER: Of course, but that's still cheaper than making roads.

MR. WILLIAMS: Of course. That's a problem.

Interjections.

MR. CHAIRMAN: Order, please, hon. members.

MR. WILLIAMS: The minister says that 30 years from now it will be wonderful when we have paid off the debt. This is Social Credit indeed: it's a debit.

You talk about this wonderful system. Mr. Minister, do you know that they have to put grinders out on this system just so it won't sound like the worst Toonerville trolley in the world? They've had to double the grinders at night, double the time for those grinders on the system.

HON. MR. COUVELIER: It's a very quiet system.

MR. WILLIAMS: Anybody who lives along that system knows that the grinders are out on double time at night now. They've had to cut down on the volume of traffic in order to make space for the grinders.

HON. MR. COUVELIER: Have you ever ridden on it?

MR. WILLIAMS: Oh yes, but, Mr. Minister, shouldn't your Treasury Board analysts...? I know you have trouble handling analysis, and it's asking a bit much, but you do have Treasury Board staff that carry out analyses of systems: whether the returns are satisfactory, where the cost-benefit is, etc. Shouldn't your staff really take a good, hard look at SkyTrain in terms of extensions? I know they did initially, and they recommended against it. They said: "Hey, the payoff isn't here. It's an untested system and it's bad news."

Those earlier studies have been proven correct, and now the question is: are we going to pour good money after bad? This legislation is encouraging more good money after bad. We could use existing rail systems. You can try to give us an elevated speech, as you did just a few minutes ago, about this system; it didn't lift very far into the air. But there are existing

[ Page 4212 ]

systems that are fairly separate now, like the Canadian Pacific Railway line on the north side of the river. There aren't many crossings on that system at all, particularly through Burnaby, where there is a bluff and no cross traffic whatsoever. There you have existing infrastructure in place and capital already expended, and it is just a matter of developing a train system and a schedule for it. Those are very modest capital costs compared to what we face with SkyTrain.

HON. MR. COUVELIER: How little you know!

MR. WILLIAMS: I just wish this minister knew a little bit more than what he got from his briefing from the Minister of Energy (Hon. Mr. Davis). The unmitigated gall of this windbag is just incredible. There has been no briefing whatsoever on the legislation before us today. He knew nothing about the horse-racing act: "That's the Attorney-General's statute." He really didn't have anything much to do with it, because the A-G goes to the horse races and he knows the details.

The staff might be briefed, but you can be sure the minister isn't. Quizzed in other matters by the first member for Nanaimo (Mr. Stupich), he had absolutely no understanding of the statutes. And then you have the gall to call out: "How little they know!" There's a level of arrogance there that is exceeded only by ignorance.

It's high time you carried out a detailed analysis of SkyTrain by your Treasury Board staff. Look at how many people are riding on the thing. Other than in the peak periods, that train is empty.

HON. MR. COUVELIER: The whole system is empty other than in peak periods.

MR. WILLIAMS: If that's the case, then maybe you should have your people look at how you might fill it up. That's why you might have a free system in downtown Vancouver.

Interjections.

MR. WILLIAMS: You laugh. A free transit system might be the most sensible system we could have in downtown Vancouver and the West End and that new city of Li Ka-shing's. It would make all the sense in the world to eliminate as many cars as possible from the downtown peninsula, ye of little imagination. You don't really understand the overall system involved here. You're increasing fares and taxes....

HON. MR. COUVELIER: The local commissions increased the fares. Don't say we have.

MR. WILLIAMS: Yes, and you're increasing the taxes. You burdened them with a system that doesn't make sense economically.

HON. MR. REID: It's the best system in North America. What are you talking about?

MR. WILLIAMS: Well, Mr. Member from Surrey, have you ever been to Montreal and seen their system? Have you ever been to Toronto and seen their system? Can you see what the Yonge Street subway cars carry compared to your little Toonerville trolley with closet-sized trains? Come on now, wake up and understand what the rest of this country, let alone the rest of the world, is doing. Face up to the fact that you have a failure on your hands, and you better stop putting good money after bad.

Interjections.

MR. CHAIRMAN: Perhaps before we recognize the next speaker, just a word of caution on relevancy. I think we're getting into a rather wide-ranging debate here on transit systems, and that doesn't seem to be the issue at hand. Perhaps we could get back to section 3.

MR. BLENCOE: I wanted to join in this debate because the impact on local government in terms of financing of the SkyTrain operation is astronomical. If there was ever a need for investigation, Mr. Chairman, for a full-blown inquiry into the financial mess that's been created around SkyTrain....

Interjection.

MR. BLENCOE: No. It's a similar kind of situation that we had with the Coquihalla — estimated at $279 million or $280 million.

HON. MR. STRACHAN: On a point of order, Mr. Chairman, your admonition just a few moments ago about relevancy was well taken. Some latitude has been allowed the member for Vancouver East, who brings his concern — parochial as it may be — to this assembly on this issue of the 2.5-cent-a-litre transit tax going to 3.5 cents a litre. The same latitude was allowed to the Minister of Finance in his response. But I believe we have as a committee really extended our latitude as far as we want to extend it, and I think we should become more relevant now and speak to the section itself, which deals with an increase in gasoline tax. If we can caution members to avoid reference to Coquihalla and other unrelated issues, I think the committee will be well served.

MR. CHAIRMAN: Your point is well taken, Mr. Member.

Section 3 approved.

On section 4.

HON. MR. COUVELIER: Mr. Chairman, I move the amendment to section 4 standing in my name on the order paper. [See appendix.]

Amendment approved.

Section 4 as amended approved.

Title approved.

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

Motion approved.

The House resumed; Mr. Pelton in the chair.

[ Page 4213 ]

Bill 9, Motor Fuel Tax Amendment Act, 1988, reported complete with amendment to be considered at the next sitting of the House after today.

HON. MR. STRACHAN: Mr. Speaker, I call committee on Bill 10.

SOCIAL SERVICE TAX AMENDMENT ACT, 1988

The House in committee on Bill 10; Mr. Weisgerber in the chair.

Section 1 approved.

On section 2.

MR. STUPICH: Mr. Chairman, when the minister was speaking about this — perhaps in the budget debate more so than in second reading — I think he said that because of all of the harm the consumption of alcohol does, we're raising revenue from that source in order to make better use of it. There's an extra $68 million expected to come from the increase in the sales tax rate from 6 to 10 percent on liquor other than draft beer. I wonder if the minister can tell us anything at all about how this is being used to counteract the ill effects of alcohol consumption.

HON. MR. COUVELIER: Mr. Chairman, we've increased funding in the area of alcohol and drug abuse by about $23 million this coming year, the 1988-89 fiscal year.

MR. STUPICH: We're sure lucky we have this problem, aren't we, Mr. Chairman? We're netting an extra $45 million because we're punishing the people.

On draft beer, the minister is expecting to gain $27 million. I know we can't talk about the fact that the exemption for draft beer has been deleted — that regulation is not part of this legislation. The budget speech did indicate that the 10 percent does apply to draft beer. During the election campaign the Premier promised to reduce the price of bottled beer. May I ask whether it's the intention of government to raise more money from draft beer over the next two years so that in an election year the Premier will be able to make good on his promise and effect some modest decrease in the price of bottled beer? That's just for information.

HON. MR. COUVELIER: As I mentioned during the discussion in second reading, beer drinkers in Canada will pay more for their beer in any other province — other than Alberta. In B.C. we have the second-lowest beer price in the country, in terms of prices to the licensees. If the hon. member from the opposition is trying to imply that our government is out of step or out of line with what is occurring elsewhere in the country, then that statement is not supported by the facts.

[11:30]

The issue, of course, is one that many people like to make speeches about. We have been in office a year and a half, and beer prices have changed considerably over that time. As a matter of fact, I'm advised that the breweries themselves increased the price to the licensees by over 20 percent in the last year. We as a government are not philosophically in agreement with controlling the end-product price of beer. Therefore it is very difficult, if not impossible, for us to guarantee that whatever devices we might employ to reduce the cost — that is, reduce markups or sales tax — are passed through as savings to the consumer.

For that reason, it would be virtually impossible for any government to guarantee that beer would always be a certain price — unless, of course, we wanted to mandate it. That gets us into the whole question of whether we're prepared to subsidize B.C. breweries. Clearly, at the rate other breweries are charging across the country, we would rapidly get into that situation if we weren't careful. I can remember a period of time, shortly after we were in office, when we were able to ensure that there was a lower-priced product on the shelf. Admittedly, it didn't last for long. It was by a series of devices, as I've explained earlier. that we were able to do that, but it was only short-lived.

The other point I think I need to make here is that there was a lower government markup on low-alcohol beer. This is a device on our part to attempt to promote the diversion, if you like, from one class of product to another. We make that not for the purposes of a tax grab. The reverse is true; we are reducing our tax grab, if you want to describe it in those terms, on low-alcohol-content beer. We think that that is a socially responsible thing to do. If the hon. member wishes to make the argument that we should not be in the business at all, then of course he's free to do so, and that would be a different debate.

I take exception to the suggestion that our government is treating beer drinkers — in which I include myself — unfairly. Certainly, as I've said, if they lived in any other province in this country. they would be paying more for their beer than they're paying here. The only province cheaper than us is Alberta.

MR. STUPICH: The minister has admitted on several occasions that he's a beer drinker himself. I'm not pleading for myself right now. because I'm not a beer drinker; I drink, but I don't drink beer. I wasn't asking what the charge is in other provinces, or other parts of Canada except Alberta. I wasn't asking for any of the explanation, other than that the then....

HON. MR. COUVELIER: You can't have it both ways. You can't criticize that I'm not doing my homework and then when I give it to you, say you didn't ask for it.

MR. STUPICH: Mr. Chairman, the point I was trying to make was that the Premier made a promise. The Minister of Finance says it's difficult to predict.... It was very easy for the Premier, when he was travelling around the province, to make a promise. He didn't at that time consider any of the difficulties. Did the Minister of Finance at any time hear the Premier saying that he was going to change the price of beer relative to what it was anywhere else? Or did he simply hear, as I did, the Premier's promise to reduce the price of bottled beer in British Columbia? That's all I heard. Did the Minister of Finance ever caution the Premier and say: "Look, you aren't going to be able to deliver on that promise, or if you are, it will be very short-lived." If he did, he did that privately and he may not want to say — I don't know.

All I'm saying is it's one more broken promise, and I am sure people campaigning in the next provincial by-election or general election will remind the people of the province that this Premier that's going around making promises is the same one who made this particular promise without any thought at

[ Page 4214 ]

all as to how he would do it, how he could do it, how much he would do it or what was going on in other provinces. He didn't hear or didn't seek advice from any of his cabinet colleagues as to what he was saying; he simply thought it would be a good election promise and so he tossed it off. The moment he was elected, it was forgotten.

That's all. I'm not opposing it or supporting it or anything else; I'm simply saying that it's a broken election promise, and that's the point that I want to make.

MR. WILLIAMS: I thought that the minister might respond. Those are reasonable questions. We all remember the pre-election headlines: "The price of beer will go down." Those were the promises of the Premier, and this is exactly the opposite. It's a different sales tax structure for the workingman's drink. How come?

MR. JANSEN: Who sells that?

MR. WILLIAMS: Sir, quite a few people, including breweries and all the rest. 1 thought the Premier's promises meant something. We now know that they mean exactly the opposite. When the Premier gets up and gives a speech and says that the price of beer is going down, that's a warning, working folks out there, that the price of beer is going to go up.

MR. JANSEN: It did go down.

MR. WILLIAMS: It's doublespeak and double tax. My gosh, that member from Chilliwack is getting so chatty; he just can't wait for August, when some of those other ministers that have been so leaky go down. He is just trying to establish his credentials for the next opening of the cabinet door; that's pretty clear.

MR. CRANDALL: He's at least got a shot at it.

MR. WILLIAMS: He's got a shot at it? Yes, he's going to have to shoot the Minister of Economic Development (Hon. Mrs. McCarthy) and maybe the Attorney-General (Hon. B.R. Smith) and a few others.

The point is that a promise from the Premier is bad news. If he is promising us any goodies, we had better watch out because the end result will be exactly the opposite. The warning is out there. If he threatens to reduce the price of beer again, then absolutely none of us will be able to afford it.

HON. MR. COUVELIER: Mr. Chairman, I wish to put on the record that we have reduced the price of beer. I don't know what's the matter with these hon. members across; they just refuse to listen. We have reduced the price of beer — the markup — a dollar a case on low-alcohol beer. Do you want us to reduce the price on the higher-alcohol beer? Are you in favour of promoting the use of this product? Is that what you prefer, hon. members? What we're saying is that the price is down. It's down a dollar per case of 12 for low-alcohol beer. That's a fact. I don't know where these members are coming from, trying to make a mountain out of a molehill. They clearly are not saying that they want to promote the increased consumption of high-alcohol beer.

MR. STUPICH: Mr. Chairman, the Minister of Finance tells us quietly and calmly that we've reduced the price of a specialty item by a dollar a case. When we add 10 percent to the cost of that, will he tell me that the price is still lower?

I think the Minister was distracted for a moment there. I'll ask him again, Mr. Chairman. The price of a specialty product in bottled beers has been reduced by one dollar. When you increase the tax to 10 percent on that item, is it still a reduction?

HON. MR. COUVELIER: Mr. Chairman, I don't know what's the matter with these hon. members. I don't know how we can make it any plainer. The fact of the matter is: we've reduced the markup on low-alcohol beer by a dollar for a case of 12. We don't regulate the end price of beer, but I understand that that dollar-a-case reduction is reflected in the end price in the stores. That's the fact. I don't know how differently I can say it. The fact of the matter is: it is cheaper for low-alcohol beer. That's by design, and we think that's socially responsible. We certainly deny any allegation that we've not followed through with any promises to the public.

I say it again: are the hon. members wanting us to promote the use of higher-alcohol beer? You can't have it both ways, my friends. You can't, on the one hand, criticize one thing and then, on the other hand, try to take the high ground and say you're not for this but you're for that. The fact of the matter is we're reducing the price of low-alcohol beer. Isn't that marvelous? Isn't that a desirable thing? Are you opposed to that? Are the hon. members telling us they're against that? I didn't hear that. I heard some sort of effort to confuse the facts and the truth. As a consequence, 1 think it's important for us to straighten the record out.

MR. STUPICH: When the Premier was going around the province promising to reduce the price of draft beer, I didn't hear him say "and on some items of bottled beer."

HON. MR. STRACHAN: That's what he meant.

MR. STUPICH: I wonder who was the first to tell him what he meant.

My question to the minister was: if you reduce the price of light bottled beers by $1, then put a new tax on, are you further ahead or further behind? That's what I was asking. He gave me a speech. I'll tell him what the answer is. The increase in tax for bottled beer is not 10 percent, it's 4 percent. That's what he was supposed to have said, but I guess he just doesn't realize that. He's a beer drinker and he doesn't realize. I suppose that what he pays for beer doesn't affect him too much, so he doesn't notice these things.

Sections 2 to 4 inclusive approved.

On section 5.

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

Amendment approved.

Section 5 as amended approved.

Title approved.

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

[ Page 4215 ]

Motion approved.

The House resumed; Mr. Pelton in the chair.

Bill 10, Social Service Tax Amendment Act, 1988, reported complete with amendment to be considered at the next sitting of the House after today.

HON. MR. STRACHAN: I call committee on Bill 11, Taxation (Rural Area) Amendment Act, 1988, printed in the name of the hon. Minister of Finance and Corporate Relations.

TAXATION (RURAL AREA)
AMENDMENT ACT, 1988

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

Sections 1 and 2 approved.

Title approved.

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

Motion approved.

The House resumed; Mr. Pelton in the chair.

Bill 11, Taxation (Rural Area) Amendment Act, 1988, reported complete without amendment, read a third time and passed.

HON. MR. STRACHAN: Committee on Bill 12, Mr. Speaker.

TOBACCO TAX AMENDMENT ACT, 1988

The House in committee on Bill 12; Mr. Weisgerber in the chair.

Sections 1 to 3 inclusive approved.

Title approved.

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

Motion approved.

The House resumed; Mr. Pelton in the chair.

Bill 12, Tobacco Tax Amendment Act, 1988, reported complete without amendment, read a third time and passed.

HON. MR. STRACHAN: Committee on Bill 13, Mr. Speaker.

[11:45]

TOURIST ACCOMMODATION
(ASSESSMENT RELIEF) ACT

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

Sections 1 and 2 approved.

On section 3.

MR. STUPICH: I realize I'm skating on rather thin ice, because I want to talk about something that isn't in section 3 rather than what's in it. I made the point yesterday, and the minister didn't comment, that while this does relieve seasonal tourist accommodation operators of a tax imposed a year ago, it does nothing for those seasonal tourist operators who do not provide accommodation, who are going to be hit with a substantial increase in tax in September this year.

Regulations may provide for some change. I don't know whether regulations can be stretched that far. I wonder if the minister has thought about that and given any consideration at all to the possibility of widening the scope of this by regulation, if that's possible, so that seasonal tourist operators who do not provide accommodation will not be hit with that substantial tax increase in the month of September.

HON. MR. COUVELIER: This bill is intended to address those operators that were affected by the change we talked about bringing forward last year. So this only deals with the tourist operators. as it should. The other operations stand untouched, as they originally were. In other words, we're only targeting the operators providing tourist facilities.

MR. STUPICH: From what the minister said, I have no problem. As I understand what he said, the increase that was imposed last year is not going to affect the operators who do not provide accommodation.

Sections 3 and 4 approved.

Title approved.

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

Motion approved.

The House resumed; Mr. Pelton in the chair.

Bill 13, Tourist Accommodation (Assessment Relief) Act, reported complete without amendment, read a third time and passed.

HON. MR. STRACHAN: Committee on Bill 15, Mr. Speaker.

EDUCATION EXCELLENCE
APPROPRIATION REPEAL ACT

The House in committee on Bill 15; Mr. Weisgerber in the chair.

On section 1.

MR. STUPICH: I'm not sure if I said this yesterday, but I was invited by one of our staff members to ask what's happening to the money that's left over in this fund. I'm not going to ask that question, Mr. Chairman, because it's another BS fund. There was no money in it except as was provided each

[ Page 4216 ]

year in estimates. There was nothing provided this year or last year, so there's nothing to transfer anywhere; it is just another BS fund now.

HON. MR. COUVELIER: Mr. Chairman, we have many tender, sensitive ears in the gallery, and I just think the hon. member should always be cognizant that we not abuse those tender ears by taking privileges with the Queen's English.

The fact of the matter is that we have collapsed these accounts because we have indeed spent more than the funds provided; so there's nothing left over in them.

MR. STUPICH: Mr. Chairman, I'm thinking about what the minister said. We spent more on these purposes than the funds provided. He's not saying that we went beyond the scope of the legislation, I hope. I take it he's saying that we exhausted the money that was provided under the legislation, and then spent more funds out of the appropriate ministry. What difference does it make in the end, eh?

HON. MR. COUVELIER: The hon. member has the story correct, Mr. Chainman.

Sections 1 and 2 approved.

Title approved.

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

Motion approved.

The House resumed; Mr. Speaker in the chair.

Bill 15, Education Excellence Appropriation Repeal Act, reported complete without amendment, read a third time and passed.

HON. MR. STRACHAN: Committee on Bill 16.

HEALTH IMPROVEMENT
APPROPRIATION REPEAL ACT

The House in committee on Bill 16; Mr. Weisgerber in the chair.

Sections 1 and 2 approved.

Title approved.

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

Motion approved.

The House resumed; Mr. Speaker in the chair.

Bill 16, Health Improvement Appropriation Repeal Act, reported complete without amendment, read a third time and passed.

HON. MR. STRACHAN: Committee on Bill 18, Mr. Speaker.

SPECIAL ACCOUNTS
APPROPRIATION AND CONTROL ACT

The House in committee on Bill 18; Mr. Weisgerber in the chair.

Sections 1 to 3 inclusive approved.

On section 4.

MR. STUPICH: This particular fund, referred to in section 4 as the Crown land account, has been quite large. I did look it up and have forgotten. I'm guessing — it's somewhere in the neighbourhood of $300 million to $400 million. Up to now it's been used specifically by the government for acquiring land to be used for park purposes or for improving parkland. We sell Crown land and then put the money into this fund to buy back land that will be Crown land, or to improve land that can be used for park purposes.

Under the section before us, the cabinet may transfer any amount out of this fund into consolidated revenue. That's almost a total reversal of policy from the past, and I would appreciate some explanation from the minister as to why he is abandoning the original concept and using this specific money simply to build up his consolidated revenue fund.

HON. MR. COUVELIER: The hon. member assumes we have abandoned the concept. We haven't abandoned the concept. The fact of the matter is that there are a lot of idle dollars here, and it just seems like good fiscal management to initiate this action.

MR. STUPICH: I would like the minister to talk to people in the province who feel that there are examples of parkland that should be acquired. I'm not talking about something like Strathcona Park; I'm talking about the people in the province who would like to see improvements made in parks that we now have. I wish the Minister of Tourism (Hon. Mr. Reid) were here to say something as to what he would like to see done with respect to parklands we already own, where capital improvements could be made. The minister says we're not abandoning it; we're just taking the money away from it so we won't be able to do these things to the extent we would otherwise be able to.

I look on these almost as if they were trust funds; that the government is entering into an agreement with itself, I suppose, to use the funds that are coming to government from the sale of Crown land for the purpose of acquiring and developing Crown land for the people. The minister says he's not abandoning that concept. I don't know how to look at it other than to....

I wonder if we could take a bit of time to think about this, Mr. Chairman, I'd like to move that the committee rise, report progress and ask leave to sit again.

The House resumed; Mr. Speaker in the chair.

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

[ Page 4217 ]

Ministerial Statement

DIAMOND RESOURCES DRILLING
ON SOUTH MORESBY ISLAND

HON. MR. DAVIS: I'd like to make a ministerial statement.

I rise to clarify a matter of public concern, one raised in today's media reports. It relates to the issuance of an exploration permit by my ministry to Diamond Resources to drill half a dozen exploratory holes on South Moresby Island. The issuance of a permit in this case is consistent with the process agreed upon by British Columbia and Canada for the establishment of a full-fledged park on the Queen Charlottes.

The memorandum of understanding between British Columbia and Canada clearly recognizes the existence of valid mineral tenures within the proposed park area, and provides a process for the extinguishment of these claims. Other than the lands described by the remaining claims, a reserve is in effect on South Moresby until the park is established as a legal entity.

With respect to existing claims, Canada and British Columbia have mutually agreed that the lands in question, the claims, would remain with the province until these charges were extinguished. The lands could be transferred free and clear to Canada. To implement this, it was agreed that normal procedures for permitting mineral exploration would be followed. This procedure was intended to ensure, firstly, that the park would be established wholly free of third-party interests, to avoid the situation which has existed in Strathcona Provincial Park since its creation in 1911; and, secondly, to minimize compensation claims from tenure holders.

It is our expectation that exploration will not prove up economic ore bodies and that these claims will lapse and move into the park at no cost to the taxpayer. However. if there is no opportunity for exploration, governments could be liable for costly settlements. The memorandum of understanding does give the federal government the opportunity to acquire mineral interests. with compensation, should they wish to do so, to preserve valuable park features. In the unlikely event that an economic ore body is discovered. British Columbia and Canada would review their options at that time. If Canada did not wish to see a mine developed, British Columbia would certainly cooperate to achieve that objective.

With respect to the current permit issued to Diamond Resources, I would like to make the following points. Although the permit is issued by my ministry officials pursuant to the Mines Act, the permit application was referred to and approved by Parks Canada, Environment Canada, Fisheries and Oceans Canada. as well as by the British Columbia Ministry of Environment and Parks.

The permit covers a limited exploration program involving geophysical and geochemical testing and line-cutting on up to five drill sites. Stringent conditions must be met. These include helicopter access, no machinery to cross the Salmon River, containment of drill muds. and other reclamation and clean-up measures. A bond has been posted. The work was expected to commence within two weeks and be completed before July.

To summarize then: (1) Diamond Resources and other companies have rights to conduct mineral programs; (2) activity only occurs after all environmental agencies have reviewed and approved the specific applications; and (3) these programs are within the terms of the long-term plan in the federal-provincial memorandum of understanding for the establishment of South Moresby Park.

MR. GABELMANN: I'm not certain of this, but I don't know that any member on our side was given prior notice of this.

HON. MR. DAVIS: My critic was.

MR. GABELMANN: Apparently the critic may have been given prior notice. He's not here at the moment and I wonder, Mr. Speaker, if we might reserve an opportunity to comment until following question period today.

MR. S.D. SMITH: Mr. Speaker, it's my understanding of the rules that when a ministerial statement is made, there is an opportunity for the critic to respond. I think that if that is going to be done other than immediately after the statement, it would have to be done by way of leave.

Hon. Mr. Strachan moved adjournment of the House.

Motion approved.

The House adjourned at 12:02 p.m.

Appendix

AMENDMENTS TO BILLS

8 The Hon. M. B. Couvelier to move, in Committee of the Whole on Bill (No. 8) intituled Mining Tax Amendment Act, 1988 to amend as follows:

SECTION 2, by adding the following section:

Commencement

2. This Act comes into force on July 1, 1988.

9 The Hon. M. B. Couvelier to move, in Committee of the Whole on Bill (No. 9) intituled Motor Fuel Tax Amendment Act, 1988 to amend as follows:

[ Page 4218 ]

SECTION 4, by deleting the proposed subsection (2) and substituting the following:

(2) Section 3 shall be deemed to have come into force on April 15, 1988 and is retroactive to the extent necessary to give it effect on and after that date.

10 The Hon. M. B. Couvelier to move, in Committee of the Whole on Bill (No. 10) intituled Social Service Tax Amendment Act, 1988 to amend as follows:

SECTION 5, by adding the following subsection:

(3) Notwithstanding subsection (2), section 3 (a), in respect of a bona fide farmer, comes into force by regulation of the Lieutenant Governor in Council.