[ Page 4219 ]

CONTENTS

Routine Proceedings

Fair Election Practices Act (Bill M203). Mr. G. Hanson

Introduction and first reading –– 4219

Oral Questions

Role of Craig Aspinall in Expo land sale. Mr. Williams –– 4219

Social housing on Expo lands project. Mr. Williams –– 4220

Ombudsman's recommendations. Mr. Cashore –– 4220

Provision of AZT to AIDS victims. Mr. Harcourt –– 4221

Taxation of charities. Mr. Sihota –– 4221

Ministerial Statement

Diamond Resources drilling on South Moresby Island. Ms. Smallwood responds –– 4222

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

(Hon. Mr. Couvelier) –– 4223

Mr. Stupich

Mr. Cashore

Mr. Williams

Ms. Edwards

Hon. Mr. Strachan

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

Committee stage. (Hon. Mr. Couvelier) –– 4229

Mr. Stupich

Mr. Williams

Mr. Clark

Mr. Blencoe

Home Owner Grant Amendment Act, 1988 (Bill 2). Second reading.

(Hon. Mrs. Johnston)

Hon. Mrs. Johnston –– 4230

Mr. Blencoe –– 4230

Hon. Mrs. Johnston –– 4230

Committee of Supply: Ministry of Transportation and Highways estimates.

(Hon. Mr. Rogers)

On vote 67: minister's office –– 4230

Hon. Mr. Rogers

Privatization Benefits Fund Act (Bill 17). Committee stage. (Hon. Mr. Couvelier) –– 4234

Mr. Clark

Mr. Lovick

Mrs. Boone

Budget Stabilization Fund Act (Bill 14). Committee stage. (Hon. Mr. Couvelier) –– 4244

Mr. Stupich

Mr. Lovick

The House met at 2:07 p.m.

HON. S. HAGEN: It is my honour this afternoon to introduce His Excellency Kossivi Osseyi, who is the Ambassador of Togo to Canada, and accompanying him is Mr. Gary Tarrant, who is the honorary consul of Togo in Alberta. Would the House please make them welcome.

MR. HARCOURT: Mr. Speaker, I too would like to express a welcome to His Excellency the Ambassador for Togo, and to wish him a good stay in British Columbia, and to let him know that one of the projects of mutual support between Canada and a number of the countries in Africa is around the growing urbanization problems. I know that the Federation of Canadian Municipalities, the Canadian government and some members of the B.C. government are very interested in helping and enlarging the friendship between your country and our country. So, welcome.

HON. MR. REID: Mr. Speaker, we would certainly also would like to add our welcome to the Ambassador on behalf of the Ministry of Tourism.

In the same audience is my deputy minister, Grayden Hayward, who has with him Mr. Tom McCall, who represents Kamloops, the hub of tourism for the province of British Columbia. Would the House make these two gentlemen welcome.

MR. CASHORE: In the gallery today is Mr. David Lane, who is the coordinator of the Tenants' Rights Coalition. Mr. Lane met with the Minister of Labour this morning and had a very good meeting with regard to some of the issues they are mutually concerned about –– I ask the House to join me in welcoming David Lane.

MR. G. HANSON: In the gallery today is one of the constituents of the second member (Mr. Blencoe) and myself, Andrew Gage. He's a Fairfield resident. He's a Cedar Hill Junior Secondary School student, and he's here this afternoon as part of a career education program. I wonder if the members would make him welcome.

MR. BLENCOE: As all members know, much of the success of an MLA obviously is the constituency or community office we each operate in our various ridings. Mr. Speaker, after the first member (Mr. G. Hanson) and I entertained our volunteers and staff in the Ned DeBeck, some of our volunteers are present in the galleries today. Would the House please welcome Veronica McDonald and Beth Loring from our community office in Victoria.

MR. BARNES: I'd like the House to join me in welcoming a member of the University of Victoria NDP club, Mr. Mike Geoghegan, who is seated in the gallery. He and I had a very productive discussion this morning on the outreach program to bring more members to the party.

HON. MR. STRACHAN: Mr. Speaker, visiting us today is the past president of the Certified General Accountants' Association, Fred Punko, from Prince George. Would the House please give him a nice warm welcome.

MR. WILLIAMS: I'd like to recognize our former colleague from Vancouver East, sitting on the floor of the chamber. He used to be known as the dean of the House. He would appreciate being called a "has-dean" today. Would everyone welcome him.

Introduction of Bills

FAIR ELECTION PRACTICES ACT

Mr. G. Hanson presented a bill intituled Fair Election Practices Act.

MR. G. HANSON: In keeping with standing orders, Mr. Speaker, I'd like to outline the key features of this bill. The Fair Election Practices Act establishes a permanent electoral commission for the province of British Columbia. It provides a thorough enumeration after the writ is dropped for each general election or by-election. Mr. Speaker, I think it would serve us extremely well — in the upcoming by-election in Boundary-Similkameen and a number of others in this House — that all eligible citizens be enumerated by a full enumeration drive after the writ is dropped.

This bill would also ensure increased efficiency in voter registration by distributing voter registration cards through government offices, such as motor vehicle branches and government agents. This is currently done, but we propose expanding that.

This bill would also ensure disclosure of election contributions over $100. It would provide the electoral commission with the authority to set campaign spending limits. It would redress a current inequity: that is, that 18-year-olds in the province of British Columbia soon will be going to the polls to elect a national government for Canada, yet they are denied the right to vote in the province of British Columbia for a provincial government. This bill would redress that inequity. It would ensure that all eligible citizens had the right to vote in the area in which they reside and, of course, would reestablish the right to register on the day of the election.

Bill M203 introduced, read a first time and ordered to be placed on orders of the day for second reading at the next sitting of the House after today.

HON. B.R. SMITH: I ask leave to make an introduction.

Leave granted.

HON. B.R. SMITH: If I had been here, I also would have welcomed the former member for Vancouver East, who I see sitting there in the gallery looking young and trim, with such a fabulous tennis game, laughing at us all for doing other things.

I would like to introduce 24 students from Mount Douglas high school, who are here with their teacher, Ms. Spicer.

Oral Questions

ROLE OF CRAIG ASPINALL IN EXPO LAND SALE

MR. WILLIAMS: To the Minister of Economic Development. Welcome back. The spokesperson for Mr. Li Kashing and his company in British Columbia is Mr. Craig

[ Page 4220 ]

Aspinall. Would the minister confirm that Mr. Aspinall was formerly a spokesperson for the Enterprise Corporation?

[2:15]

HON. MRS. McCARTHY: I can't confirm that. I don't know of any work that he has done, but I can check it out for you.

MR. WILLIAMS: Maybe at the same time the minister could check out whether it is the same Craig Aspinall who was the communications director for the Social Credit Party before that, and whether this is a traditional career path under the new administration. Further, can the minister recall whether this Craig Aspinall was the communications director for her political party?

HON. MRS. McCARTHY: I can confirm that very many good communicators have worked with and will continue to support the Social Credit Party.

SOCIAL HOUSING ON EXPO LANDS PROJECT

MR. WILLIAMS: The answer is yes, and it's politics as usual in British Columbia.

Would the minister confirm that there is nothing written in the contract with Concord Pacific requiring the provision of social housing up to the 20 percent figure suggested by the city?

HON. MRS. McCARTHY: I can confirm that I have done, and the Enterprise Corporation has done, exactly what was promised to be done in the negotiation with the previous Expo site lands. It made a commitment that the sale would take place with worldwide competition and that when the sale was finished the developer, whoever the developer would be, would have to deal with the city zoning, would have to take this raw, unserviced, unsubdivided land to city council and the planning department and make arrangements with them. Contrary to what was said on March 30, when the leader of the official opposition of this House said he feared that our government would overrule Vancouver's zoning and building bylaws for the Expo lands, we have not done that. We will leave the zoning, the decision-making, to the planning department and the city of Vancouver.

MR. WILLIAMS: Can the minister confirm that if social housing is to be provided on these lands by ministries of the Crown, we will indeed have to pay for those lands back from Concord Pacific?

HON. MRS. McCARTHY: I cannot confirm anything that the member is saying at this present time, because the application for social housing, as far as I know Quite honestly, it could hardly be made while the land is unzoned and in its raw state, as it is today.

MR. WILLIAMS: Then the minister is confirming that there is no holdback requirement, and that the prospect of having to pay for our own land which we sold wholesale...that we will have to pay retail for it in the immediate future.

OMBUDSMAN'S RECOMMENDATIONS

MR. CASHORE: In the absence of the Premier, I would like to direct my question to the Attorney-General. The government has shown contempt and disrespect for the ombudsman's recommendations. This is unfair to welfare moms, it's unfair to seniors, and it has caused immeasurable anxiety and despair.

HON. MR. BRUMMET: A point of order, Mr. Speaker.

MR. SPEAKER: As the minister knows, we like to hold all points of order until after the question period. If we start having points of order on both sides....

The member for Maillardville-Coquitlam, please.

MR. CASHORE: The government is being constructively criticized and just can't seem to handle that. How can the government say it stands for fairness when your ministers reject, out of hand, reasonable and timely recommendations from the ombudsman?

HON. B.R. SMITH: If ever there was a government that acted positively and preemptively on ombudsman's recommendations, it's this one. I can remember many suggestions that Mr. Owen has made in the past year which have come to ministers and have been dealt with before they even came into the public arena. I can also remember Mr. Haymour's recommendation on Rattlesnake Island, which this government accepted in its totality. We move fairly and promptly on ombudsmen's recommendations; we're not the least bit reticent. We don't always agree with him. That's our privilege, and it's his privilege to recommend.

MR. CASHORE: The AZT and Principal Trust issues somewhat belie what the minister is saying. By selling off government services, the government is jeopardizing the future well-being of this province. Not only that, but under privatization these services will be transferred out of the sphere of the ombudsman's terms of reference. What has the government done to ensure that private contracts negotiated with government are covered by the ombudsman?

HON. B.R. SMITH: I heard Mr. Owen today on the radio, so fortunately I know what Mr. Owen said and not what the member says he said. Mr. Owen was not critical of privatization; indeed, he acknowledged that government services could be carried on in-house or out of house and done so equally. What he was urging was that there would be some kind of monitoring, a process for checking them and a complaint procedure that could be received. If a government service is privatized, the citizen can go to that ministry and complain if that service is not being carried out properly under contract. There is an avenue to complain under. Mr. Owen is being portrayed as an opponent and critic of privatization, but he's not.

MR. CASHORE: The question wasn't answered. The minister did not tell the House what measures were going to be taken to ensure, as Mr. Owen has requested, that those people will be covered.

Supplementary, Mr. Speaker. The Social Credit Party and the UBCM have recommended that sections 3 to 11 of the Ombudsman Act, dealing with municipalities, schools, hospitals and regional districts, be proclaimed, and there has been a 15 percent increase in the number of complaints received by the ombudsman's office, indicating that all is not well in British Columbia. The ombudsman's report pleads

[ Page 4221 ]

yet again that sections 3 to 11 be included. Will the Attorney General assure this House, in the name of fairness, that the government has decided to proclaim these sections forthwith?

HON. B.R. SMITH: In response to the May 1986 memorandum from Mr. John Mika, the answer is that it's under consideration.

PROVISION OF AZT TO AIDS VICTIMS

MR. HARCOURT: I have a question for the Minister of Health. Last Friday, in reaction to the ombudsman's report on the government's very unfair AIDS policy, the Health minister said he does not believe that all AZT costs should be covered by public funding. The minister has had time to reflect on the unfairness of his response to the ombudsman. Is he now prepared to endorse the ombudsman's recommendations and adopt them as the fair and right government policy?

HON. MR. DUECK: Mr. Speaker, the ombudsman was asked to determine whether we were discriminating against a certain segment of society, namely the AIDS patients. Whether we were discriminating or not was determined, and in his report, he very clearly stated that we were not. Then he went on to make some comments on programs. I've said it before and I'll say it again: we have a Pharmacare program in place and it is for all drugs that come on the market. We will continue to do that. Whether the program itself is fair, that is something for cabinet to review from time to time. But we cannot make exceptions. What if a new drug comes on the market tomorrow? Do we then say: "This is an unused drug. This one does not come under the Pharmacare program, but another drug does"? That makes our Pharmacare program completely unviable, and we couldn't tolerate that.

MR. HARCOURT: Mr. Speaker, a supplementary. It was the appearance of discrimination the ombudsman was looking at. Last Friday, the minister severely rebuked the ombudsman for providing advice on the fairness of health care policies because he wasn't a medical expert. Well. Mr. Minister, your own AIDS advisory committee of medical experts has concurred with the ombudsman's findings. They've also recommended that this government cover all costs. So how can the minister reconcile his continuing resistance to a fair approach to the AIDS treatment when even his own medical advisers are telling him to do it?

HON. MR. DUECK: To begin with, I want it clearly understood that we are not denying funding for the drug AZT, because we are in fact, in most cases, paying up to $8,000 or $9,000 a year. We are saying that the Pharmacare program — and I'll repeat it, in case you haven't understood — is in place for all those people not on social welfare and not over age 65. They pay a deductible of $300; after that point in time, they pay 20 percent of their bill on a monthly basis to a maximum of $2,000. If the Leader of the Opposition says to me that is not fair, that $2,000 is too much, that's another matter. But that is the Pharmacare program at present.

MR. HARCOURT: I have a supplementary. It's a question of treating the hundred people who are desperately ill, and you are dealing with them in a discriminatory fashion.

The ombudsman and your own expert AIDS advisers are saying: "Do the right thing." Mr. Minister, are you going to finally make a decision to treat these poor people properly and make funding available for 100 percent of the costs of the AZT drug? Yes or no.

HON. MR. DUECK: Again. I think we are trying to be fair to all people and not to make an exception for AZT versus another drug. We also have the growth hormone drug under the Pharmacare program. Again. what is fair to you or to someone else.... I wish I could give everyone everything free. Perhaps when you people were in power you had all the money you could possibly use. I'm not saving that those 150 people who are at present suffering from AIDS.... That's another matter entirely. What I'm saying is that at present we have the most total drug program of any province in Canada. We have a very generous drug program, but no program is complete. It doesn't pay for everything or do everything for everybody.

I'm telling you again that the program stands as I've explained it before, and the maximum is $2,000. Other than that, we're paying out millions of dollars. As a matter of fact, this year the budget is $178 million. I don't know what more you want me to do. Do you want me to change the program and say it should be free to all?

SOME HON. MEMBERS: Yes.

HON. MR. DUECK: Would you be willing to pay maybe $800 million? You can't change it for one group; it's got to be for all.

TAXATION OF CHARITIES

MR. SIHOTA: A question to the Attorney-General on charity taxes. On the one hand, we've seen in this province landlords and other people at one time taking money away from charities that ought to have gone to them. Now, because of the increase from 1 percent to 2 percent of Bingo proceeds, we're seeing the government take more money away from charities, to the tune of about $1.8 million this year. So we've seen a kind of tax grab on middle-income earners which has been relatively unfair. Why has the government chosen to penalize charities by increasing its take from 1 percent to 2 percent?

HON. B.R. SMITH: Quite the contrary. What we have set out to do is to get more money into the hands of charities. If you look at the figures for the bingo take to charities, it's up millions of dollars this year. The casino take to charities is up as well. That's because of insisting that a certain percentage go into the hands of charities and not operators; insisting also that they be honestly and fairly regulated. In order to pay for the cost of the regulation and inspection, we have increased the tax. It is going to be a self-supporting type of regulation, but the end result will continue to be that more money will find its way into the hands of charities.

[2:30]

MR. SPEAKER: The Minister of Education on a point of order.

HON. MR. BRUMMET: My point of order is that I believe the members of the opposition are making a calculated and deliberate abuse of question period. Question

[ Page 4222 ]

period is supposed to be to seek information. Notice, Mr. Speaker, how regularly and repeatedly — time after time after time — short questions are prefaced by a long political diatribe that is carefully prepared in advance and read into the record of this House, and it often has very little to do with the question that follows. I think we should get back to what question period was intended to do: that is, to seek information rather than to make political statements.

MR. ROSE: On the same point of order, Mr. Speaker, it's really out of order, according to Beauchesne, page 38, section 117, to cast reflections on the rulings of the Speaker, so I support the Speaker in his decision to allow certain questions. I think he's quite liberal in permitting political replies as well. But one of the things I would like to congratulate the minister for.... He'll soon have learned it; he's the Minister of Education. He tried yesterday and today, but he didn't get away with asking a question on a point of order during question period, and he's learned to do it afterwards. I congratulate him for that.

MR. SPEAKER: I thank both the members for their comments. Having been in this chair for such a short period of time, I've really never noticed that any of the questions or answers were political. [Laughter.] I think I have reminded members from time to time that they should stick within the rules, but we try to do our best, and I think that all members have listened to both sides.

HON. MR. STRACHAN: I rise to make a procedural submission to you. Today just prior to adjournment the hon. Minister of Energy, Mines and Petroleum Resources (Hon. Mr. Davis) rose to make a ministerial statement regarding South Moresby, an issue which has met with considerable concern from the public of British Columbia. The hon. member for North Island (Mr. Gabelmann) on the completion of the minister's statement asked if the opposition might defer a response until their critic was appropriately in the House. Leave was asked for and leave was denied.

I've canvassed Beauchesne and latterly statements and rulings of Speaker Schroeder as an example. To quote from Beauchesne, we see that:

"Statements by ministers have now been given a recognized place in routine proceedings. The standing order is specific, but considerable latitude has been left to the Speaker to set limits on the participants. The Speaker has emphasized that both the government and opposition contributions should be brief and factual. The purpose of the ministerial statement is to convey information, not to encourage debate."

Speaker Schroeder goes on to say that it is stated that leave was not required for ministerial statements, and affirmed that a reply is allowed to members of the opposition and leaders of recognized parties in this case.

Mr. Speaker, given that this ministerial statement was made by the minister at the hour of adjournment, I would submit that the circumstances for deferring a reply from the opposition were a bit different than would normally apply. I would submit that I'm not trying to establish any precedent, but in this instance, a reply should be considered without seeking leave, and that reply should be considered now.

MR. S.D. SMITH: Since I raised this issue this morning, I want to, if I may, address it for a moment. I do so recognizing that arrangements between House Leaders are important and that House Leaders have great difficulty in making this place work, as it is. I suppose by standing here I stand the risk, in some sense, of gaining the same kind of tan for the same reasons as the first member for Vancouver South (Mr. R. Fraser).

Nevertheless, my point was that the minister had extended the usual courtesies of notice to the opposition and they were aware of the timing of the statement. My concern is that while leave is not needed normally, it is in fact the case that we ought to set some time limits on that. I would be most concerned if by doing this we are establishing the precedent that an opposition critic, or anyone, following a ministerial statement, could at any time thereafter, without limitation, stand and make a reply. I would commend to the Speaker that if you are going to accept this request, you do so within very strict limitations, because these rules will stand to govern us forever as individual members. I think we ought to bear that in mind as much as we ought to bear in mind the need to have agreements between our leaders.

MR. ROSE: I, in a rare moment, say that I support the position taken by the Government House Leader. Since there was no intervening time, since it was lunch time — I understand it took place just before debate — there has been no lapse of time. I think the hon. member for Kamloop's concern about our responding to this a week from now is a little bit extreme. I ask him to calm his fears on that score, because the hon. House Leader said that this is not to be considered a precedent. I feel good about it, and I hope the member for Kamloops does as well.

MR. SPEAKER: I thank all three of the hon. members for their input. Without setting any precedents, and in view of the fact that the minister's motion was made just before 12 and they're usually done after question period and the possibility that the opposition debate leader felt that that was going to be the time, I would allow the opposition debate leader to make her statement now.

MS. SMALLWOOD: I'd like to thank the government House Leader and our House Leader for arranging this opportunity.

I think that the issue of what is going on in South Moresby is an important one, not only for this Legislature, but very clearly for the people of British Columbia and of Canada as well. We have heard over the past year that the majority of people in B.C. and Canada support a park in South Moresby.

My concern over the minister's statement and the government's actions is one that stems from the government's actions a full year ago, when the government was slow to act on the need for negotiations to preserve this area in the first place.

I would be far happier if this government, rather than issuing exploration and drilling permits for the South Moresby area, was doing everything in its power to expedite the negotiations and bring to conclusion the agreement to make the South Moresby area a legal entity. Clearly, if this government saw this as its number one priority, it would do things such as putting a moratorium on all industrial activity in the area. We would call on the government and the minister to

[ Page 4223 ]

put a moratorium in place rather than complicating the negotiations that are now underway, by possibly increasing the activity in the area by issuing permits to allow exploration and drilling.

On that encouragement to cease activity, I would like to again encourage the minister to work with his colleague the Minister of Environment and Parks (Hon. Mr. Strachan) to bring about the conclusion of the negotiations so that we can all have a park we can be proud of, a park we can have in place for future generations.

Orders of the Day

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

SPECIAL ACCOUNTS APPROPRIATION
AND CONTROL ACT
(continued)

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

On section 4.

MR. STUPICH: Just to refresh our memories, and also to bring some of my colleagues up to date, this is a section of the bill that proposes to transfer to general revenue a substantial sum from the Crown land account. There is a description of the Crown land account in the estimates on page 200:

"This account was originally created as a fund by authority of section 7 of the Department of Housing Act, 1973. It was replaced by the Crown land fund effective July 31, 1979.

"Revenue sources include leases of Crown land under the Land Act, interest income and other land sales. Expenditure represents: land acquisition costs for park, fish and wildlife conservation purposes; write-down of uncollectable loans, costs associated with the sale of Crown land and the sale or disposal of assets on Crown land; capital projects on University Endowment Lands; and acquisition of social housing sites...."

The minister said that the money is being taken out of the Crown land account because there is more in there than is needed. I would like the Minister of Environment (Hon. Mr. Strachan) or the Minister of Tourism (Hon. Mr. Reid) to get into this discussion and tell the House that they don't really need the money that is in that Crown land account for all of the purposes that are described in connection with the description of the Crown land fund.

We're taking out of the Crown land fund some $222 million and transferring it into general revenue. Out of another fund an amount of $77 million is being taken from the small business forest enterprise fund and being transferred into general revenue. Almost $300 million is being transferred out of funds — not all of it in connection with this bill. but certainly the bulk of it — and put into general revenue.

I find it hard to credit the minister's statement that his ministers — particularly the Minister of Environment and Parks and also the Minister of Tourism — can't find good ways of spending that money in line with the description of the fund. However, he said it.

I want to ask the Minister of Finance — and others of my colleagues may want to talk about the use of this fund and the way it's being used up right now — if this $299 million shows up anywhere in the budget as revenue.

HON. MR. COUVELIER: I've got a whole slew of figures here. I'd appreciate it if the hon. member would identify the $299 million figure he referred to.

MR. STUPICH: In the estimates for the year ended March 31, 1989, I'm looking at page 210 which lists all of the special accounts, and about an inch plus down from the top is $222,021,777; at the top of that are non-cash items with the reference number 3 at the bottom which describes that. Also, further down that same column is $76,680,000 from the small business forest enterprise fund which, according to the description, is also being transferred to general revenue.

So $299 million is being transferred from special funds into consolidated revenue. My question to the minister is: where does this appear in the budgetary estimates of revenue for the year ending March 31, 1989? Or is it a different year? Is it included at all? Is there a $300 million cushion sitting here that is just not taken into account? We've already prepared our way for a result at the end of March 31, 1989 that is $300 million better than we anticipated because we didn't think to mention the $299 million — I'd better be accurate.

[2:45]

HON. MR. COUVELIER: The figure referred to is merely the reduction in spending authority; it's not a transfer from one account to the other.

MR. STUPICH: The minister says it's a reduction in spending authority. Maybe we should go back to the BS fund.

The reduction in spending authority on the one side, yes; the debit to the spending authority, the liability — but a credit to revenue? It's accredited to consolidated revenue; the description tells us it's being transferred to consolidated revenue. Where does it show up in the consolidated revenue? You mean it's gone, blowing in the wind like the BS fund?

HON. MR. COUVELIER: This is an account, not a fund. So it doesn't have any money in it, in that sense. It's merely a flow-through account, and it's not a fund. Therein lies one of the objectives of this act. That is to say, we are redefining the titles of these accounts. I think the hon. member has raised a valid comment, but it refers to the heart of the legislation and the objective here, which is to change the presentation format and the title so that we are now dealing with accounts — or will be, with the proposed changes — and we'll have only two funds, which are the budget stabilization fund and the privatization fund. The other items will be accounts.

MR. STUPICH: The two of us can talk about this. I'm just wondering how to phrase it so that everyone else can follow. We have a liability on our balance sheet. It's the liability to spend money for the purposes described by all of these funds. We used to have a corresponding asset in the form of cash and investments that represented the total value of all these funds. The Social Credit administration lost that asset, we don't have that asset anymore. They consolidated everything and lost it.

[ Page 4224 ]

Nevertheless, there is a special accounts liability totalling on April 1, 1988 — including the revenue — some $897 million. We have said that we owe this amount of money. We have decided to spend $897 million for all these various purposes — almost a billion dollars. We used to have the cash. We don't have it anymore; I admit that. No point in having it sitting in the bank and then borrowing the $5 billion. I know the cash is gone. Nevertheless, by legislation we've agreed that we have a liability to spend $897 million on all the purposes for which all these funds were established.

We got the money, for example, from this particular fund that we're talking about right now from the disposal of Crown lands, from interest revenue and from various sources like that. We actually received the cash, we put it in the bank, and we spent it on something or other. But at the same time, we've said we still owe that money to the purposes for which this fund was set up. So we have a liability in our balance sheet of $897 million with respect to the special funds. We're reducing that liability right now. It's a liability; we're reducing it, so we debit it. We have to credit something. We're crediting consolidated revenue. We're saying that that money is now in consolidated revenue and can be used either this year or next year to improve our deficit or to increase our surplus, whatever the minister wants to do. It has to show up on the revenue side of the.... At least, that's my immediate thought; I wasn't thinking about this until I started talking. Does it not have to show up on the revenue side of the...? I see the minister's head shaking. Show me where the credit side is, then. It has reduced' the liability. We're in double-entry bookkeeping, Mr. Chairman. What's the other side of the entry?

HON. MR. COUVELIER: In terms of the daily cash management techniques, the money flows through into the bank and is managed on a daily basis. As the hon. member quite properly states, the auditor-general requires us to maintain a double-entry accounting system, and so the other side of the entry is these accounts or funds, as the case may be.

We're having some trouble following the words being used by the hon. member. We're talking here about the authority to spend. It is true that by reducing the balance in the Crown land account, that amount is being reduced. But it is the government's opinion that we don't need those kinds of dollars for that stated purpose. That's not to say that if there is a need arising in the future, we will not find the dollars. The hon. member seems to be working on the thesis that if the dollars aren't there, the program themselves are at risk — and we deny that.

We are aware of the interest in protecting the environment and making acquisitions for parkland or preservation of wildlife purposes. The minister in charge has made those appropriate representations to the government, so I'm quite comfortable telling the hon. member in the House that these initiatives themselves !are not at risk merely by this accounting device change.

MR. STUPICH: Mr. Chairman, I think there are other colleagues of mine who would like to talk about the purposes of the Crown land fund, the legislation that was set up and what it was to be used for. I'd like to go and get a copy of Public Accounts and come back.

MR. CASHORE: Mr. Chairman, I must say that I thought, in reading about this Crown land fund on page 200 of the estimates book, that we had a confusing situation here, but it's becoming more confusing by the minute.

My comments, as the minister knows, when I spoke yesterday during second reading, had to do with one of the specifics of the explanation in the footnote under the Crown land fund, which indicates that among other things, this fund is to be used for the acquisition of social housing sites.

It's very interesting that we would be looking at this on this particular day, when we had a question in question period from the first member for Vancouver East (Mr. Williams) directed to the situation of the BCEC lands and the apparent lack of provision for social housing sites. We did not receive any illumination from the minister, who was questioned on whether we would have to buy that land back from Mr. Li Kashing in order to have social housing on that site.

It seems to me, in view of the minister's own words just a few moments ago.... The minister said that that money is being put back into general revenue, or wherever it is going, because the need does not exist. Then he said, "If there is a need arising..." and so forth.

It's very clear from question period today that a need does exist with regard to the B.C. Enterprise lands. But more than that, a need exists with regard to decent, affordable housing right throughout this province.

I would like to hear the minister comment about the fact that there's an apparent perception that a need doesn't exist. I find that very interesting. It's my perception that a need does exist in the area of social housing, and one of the most positive initiatives the government can take in North America in these times is to purchase and landbank land when the prices are appropriate for so doing.

I know that the minister is consulting with his advisers and is therefore not able to hear all of the points that I am making, but I....

HON. MR. COUVELIER: I can follow you. It's quite simple.

MR. CASHORE: All right. I'll listen to what the minister has to say, and I'm sure I'll have some more things to say after.

HON. MR. COUVELIER: Am I responding to a question or is this an opportunity for a monologue on any subject? I didn't hear a question.

MR. CASHORE: I just want to place on the record that I regret what the minister has just said. It was very obvious that, while I was asking my question, the minister was carrying on a conversation. I don't fault the minister for that. I know it's a difficult thing when we're firing questions at you and you're trying to get the answers from your advisers. But to stand up there and say that I did not ask a question.... Hansard will indicate that a question was asked. I'm quite prepared to ask the question again, but with all due respect I find that most inappropriate.

The question is: with regard to the point that the member for Vancouver East made this morning, that in view of the sale of the BCEC lands.... We could not get a clear answer this morning as to whether or not we were going to have to purchase land from Mr. Li Ka-shing in order to provide for our own social housing programs. I'm asking the minister, in view of his comment made a few moments ago that if there is a need arising — and he went on to say, "We will go ahead

[ Page 4225 ]

and do something about it," is he not prepared to recognize that a need does exist?

I'm saying that my perception is that a need has existed for social housing sites for quite some time, and that land banking, which is one of the components of this fund, is very appropriate and cost effective, given that the province has a commitment to provide social housing; and therefore, specifically with regard to the BCEC site but more generally with regard to social housing in general, is the minister saying that there's really no need?

HON. MR. COUVELIER: I must confess to having some trouble following a monologue that will take anywhere from seven to 15 minutes, interspersed with a question somewhere, and I'm expected to stand at attention without falling asleep. It's difficult to do. I'm accustomed to questions being put and answers being provided, rather than speeches in the meantime.

However, I responded to the first hon. member for Nanaimo (Mr. Stupich) on the same issue. Obviously you didn't hear the answer or chose not to. I suggest, with respect, hon. member, you are as guilty as I in terms of not following what's happening here, or else you would not find the need to ask the question a second time.

The issue is purely and simply: is this a spending account? The answer provided earlier was: it is not. This is an off-balance-sheet account, an off-financial-statement account. It makes no reference and has no validity whatsoever to wrap this in the flag of the government losing interest in initiative. That is not true and you cannot make that leap of assumptions. I provided that same answer to the hon. member for Nanaimo about 15 minutes ago.

Dealing with this government's concern about social housing, which seems to be the issue that you are referring to in a generic sense, let me just remind the member that the budget for social housing was increased from $10 million last year to $12.5 million in '88-89. This increase provides for, generally speaking, an increase in land costs, and this allotment will require or provide for 1,900 social housing units in '88-89, the same number that was provided in '87-88. So you're wrong, hon. member, when you conclude that removing this non-financial-statement account and reducing its size has the effect of in any way limiting this government's desire to provide for social housing. It categorically does not. That's the third time I've said it. I hope I won't get yet another question on the same subject. You seem to have some trouble following the spoken word.

MR. CASHORE: There will be several questions on this subject, and this minister will not intimidate me or any other member of this opposition with regard to asking legitimate questions.

[3:00]

I referred the minister to the footnote underlining the Crown land account, where it points out that this expenditure was to be, among other things, for land banking social housing. Therefore we are not referring to the so-called 1,900 units per year. I'm fully aware that there are 1,886 units per year under the federal-provincial agreement administered under the BCHMC, but because this government has in its accounts a fund with an explanatory note pointing out that it's for acquiring land for social housing, we are looking at an opportunity that goes outside the scope of the BCEC federal-provincial agreement and enables the province to participate in a process of banking land for future use with regard to social housing, a very appropriate thing to do. The city of Vancouver has been involved in that. I want to commend the government for what it has done in that regard in the past.

I'd like to ask the minister what was spent from this specific fund in the last fiscal year toward land banking for social housing. I'm not asking about the BCEC federal provincial agreement: I'm asking how much money was spent in banking land for social housing from this fund in the last year. The reason I'm asking is in view of the minister's statement a few moments ago that if a need arises, we will address that need. That's what he said.

HON. MR. COUVELIER: As I've said, we provided $10 million last year. We're providing $12.5 million this year. If you're suggesting that we should be building up some sort of a land inventory and making expenditures out of this fund for that purpose, I can tell you we have not done that.

MR. CASHORE: Am I to understand from that, Mr. Chairman, that $ 10 million worth of sites for social housing was purchased? Is that what the minister is saying?

HON. MR. COUVELIER: Is the objective here to consume time? That's the answer I gave ten minutes ago. I'm sorry, Mr. Chairman, to be difficult. The hon. member doesn't seem to want to recognize the answers that I provide. I said that ten minutes ago. Last year we provided $10 million for social housing. and we're providing $12.5 million this year. I don't know what more I can do to make it plain.

Furthermore, the member then went on to suggest that we should be spending some money in banking land for some unknown, unexpected or uncertain future use, and I've told him we do not do that.

MR. CASHORE: The plot thickens. It sounds to me as though the minister is saying that the money that goes to the BCHMC for its program of constructing approximately 1,900 units per year comes out of this fund. Is the minister saying that that money comes out of this fund?

HON. MR. COUVELIER: That's correct.

MR. WILLIAMS: I'd just like to go over this for a minute. This minister comes on high and mighty as if he's got all the answers, and he has very few. He constantly needs briefing, yet he comes on, dumping on the opposition, when he doesn't understand. You reflect on that, Mr. Minister. For the last few minutes, you've been talking about the $10 million as land. It's the total package, is it not, for social housing?

HON. MR. COUVELIER: No....

MR. WILLIAMS: No? Then you explain. It's not just a land-banking question; it's the total provision of social housing, is it not?

HON. MR. COUVELIER: For the edification of the dense member for Vancouver East, may I say once more that this is for site acquisition, Mr. Chairman. I think I've said it three or four times now. It's not the total cost or the package; it's for site acquisition. I don't know how many times I have to say it. With respect, if we have to consume time — if that's

[ Page 4226 ]

the objective — why don't we go and have a cup of coffee and come back when the time has expired? Wouldn't that be a more useful thing to do? I've answered the same question four times.

MR. CHAIRMAN: Just before we continue, I think that at this juncture it might be incumbent upon the Chair to suggest that some of the terminologies and language being used in this debate is so close to the border that it concerns me. I would ask all members, who are well steeped in the practices of this House and certainly are well aware of what is and is not parliamentary language, to think and restrain themselves before they proceed with anything that might be construed as a diatribe.

MR. CASHORE: Mr. Chairman, now that we have this answer, that the $10 million is for sites, I take it that the other funds that go into the BCHMC program come from elsewhere. This brings me back to my original point: in view of the question that the first member for Vancouver East asked in question period, we have a problem on the BCEC site — at least, potentially — with regard to the fact that there appears to be nothing in place for the acquiring of sites on that land. The minister has pointed out that this money is for the sites presently targeted under the BCHMC program. That targeting is not addressing that BCEC land at all. That's number one.

Number two is that the number of approximately 1,900 sites per year, as the minister says, is woefully inadequate in the need for decent, affordable housing within this province. We see that we have a fund here of $226 million being taken away from at least a portion of that being used for acquiring additional sites. Again, the point is that 1,886 units per year is inadequate. Here's an opportunity to move toward greater adequacy.

The minister says that if a need arises, we will address it; I'm saying the need is obviously there. There are many people in British Columbia — thousands of people — on waiting-lists for decent, affordable housing. I don't think the minister has to get really upset about my making that point; I think it is a valid point to make in this debate.

MR. CHAIRMAN: Just before we continue, the Minister of Health would like to make an introduction.

Leave granted.

HON. MR. DUECK: We have with us today 120 grade 10 students from the Mennonite Educational Institute in Clearbrook, Central Fraser Valley. They came in four different groups; there were some attending this morning. I believe this is the second last group attending today in the House. Their teachers in charge are Ken Bartsch, Al Peters, Sue Friesen and Stan Coutu. Would the House please make them welcome.

MS. EDWARDS: I would like to ask the minister a question, because I understand this was done on the advice of the previous auditor-general. The auditor-general also recommended a comprehensive review of all the special funds and accounts. I'd like to know, first of all, whether that kind of review was done. And since we're dealing with this particular account, was there some exhaustive, comprehensive review of this fund?

HON. MR. COUVELIER: The answer to the question, Mr. Chairman, is that we have not yet undertaken such a study, but it is in this year's work program.

MS. EDWARDS: In view of the fact that no review has been done, I think it's rather strange to suggest that there are a lot of idle dollars here. I think it's particularly strange, too, when you look at what this fund was designed to do, as listed in the estimates book — not only to talk about social housing sites, which we've canvassed already and I won't go into in great detail, but also to canvass the reason for establishing the fund which was to acquire land for park, fish and wildlife conservation purposes.

I think that the Minister of Finance should perhaps — as the first member for Nanaimo suggested — have asked the Minister of Environment and Parks, because he has recently made a number of statements indicating that there certainly weren't dollars that should be idle here if the government chose to carry out its policy statements. One of the things that the Minister of Environment and Parks has said is that he intends to — in fact, the government will — lead us to that great day when 6 percent of the land mass of the province is in parkland. That may not necessarily require a lot of land purchase; but I remind the minister that the purpose of the fund is to develop as well as purchase land. So there may be some of that to be done. The Wilderness Advisory Committee recommended the 6 percent figure, and the Minister of Parks has said that we are going to that figure. To suggest that $226 million is not going to be necessary in order to reach that goal seems a little strange to me.

I would also remind the minister that the requirement and the need for park, fish and wildlife conservation purposes has certainly not been exhausted. In fact, in my area of the province we have people meeting every day of the year, worrying and figuring out ways to find out how they can get hold of more land which will work for the preservation of some wildlife species that need more and better habitat. They need controlled habitat at different places in order to maintain a healthy existence.

To use a recent example that has been in the news, Mr. Minister, a heritage stand of Sitka spruce is evidently in a certain situation where the government is looking for ways, I hope, of being able to maintain it. There are any number of examples, and I bring these examples up out of the last few minutes. I am certainly not unusual in being able to draw these examples out of my experience. I think that were you to canvass every member in this House — not just on the opposition side, but on your own side as well — they could find all sorts of ways in which the functions of this particular fund could be used to the advantage of the people of this province, instead of being moved off into general operating revenue.

I'd like to ask the question before I sit down: why is it that you are not using this fund? Why are you returning the $226 million to revenue instead of using it for some of these particular purposes?

HON. MR. COUVELIER: I guess it develops that I have to give repetitive answers, not only because some members fail to catch it when they are in attendance, but also because other members have missed my earlier answers and walk in and put the same sort of question.

The answer that would be pertinent to your concerns, hon. member, would be that this is an off-financial-statement

[ Page 4227 ]

account. It is merely an isolation of some dollars that creates an authority to spend. Reducing the dollars does not diminish in any way this government's commitment to those spending initiatives. Our taking these unnecessary surplus dollars, which have been there for years, out of this off-financial statement account and reducing it in size should not cause you to leap to the conclusion that we will be reducing our expenditures in this area. Indeed, my hon. colleague responsible and I calculate that our expenditures in this coming year will be about $1.5 million — give or take, depending on negotiations — for additional park acquisitions and probably something in the order of half a million dollars for habitat concerns. Those will vary as negotiations take place.

[3:15]

We are anticipating a minimum $2 million expenditure on the very things you wax eloquent about. This government is not abandoning its interest in that area, and the fact that we have decided, after a number of years, to merely reduce the balance in this off-financial statement account, I think, has no effect on the concerns I hear expressed from the members of the opposition. You make an assumption, or leap to a conclusion, that is not justified in face of the facts. Indeed, as I've said, we're providing money for social housing out of this account this year — more than last — and we're providing money for parks and habitat preservation out of this account, as we did last year.

MS. EDWARDS: I guess what the minister is telling me is that when the government sets up an account, we are saying to the people of this province that we are going to use certain funds for certain functions. When you set it up and you lay it out, and you say that the money that comes in is going to come from these certain places, that the revenue sources are a, b, c, d, that the expenditure shall represent a, b, c, d, then you don't mean it. If you don't think you want to do that, then you're not going to allow it this year; and if it's going to happen, we're going to do it differently next year. The minister is telling me that setting up this kind of fund is a whole shadow act that means absolutely nothing in terms of what the actions of the government will be.

He suggests that he is spending a certain amount of money on these functions. Of course, I hope he is spending a certain amount of money on conservation funds and so on, because in fact there are other funds that are dealt with in other parts of this bill that also deal with habitat conservation and wildlife preservation, and so on. I'm suggesting to the minister that what he's doing is going against the idea of why the fund was set up in the first place. He is not doing that with the other funds.

The other funds have reasons to be there. It's maybe a flow-through fund. It can be any kind of a fund you like, but you set it up for some reason, and you tell the people of the province what these funds shall be dedicated to. Then when it comes time to move them over into general revenue, you decide that they are not dedicated "to" anything at all, unless you decide that they shall be, and the fund in fact becomes something quite different than it was at the beginning. Are you willing to own up to the fact that the fund is not what you originally set it out to be?

HON. MR. COUVELIER: I don't know how much more I can expand on what I've said earlier, repeatedly. The fact of the matter is that the funds have sat there — an unusually high, unrealistic figure — for a number of years. All we attempted to do was clarify and simplify the accounting procedures. The members keep making some assumptions which, I think, are not justified on the basis of facts. It would be useful at this point, I think, to get on the record some general information about park ownership and acquisition. I would defer to my colleague the hon. Minister of Environment.

HON. MR. STRACHAN: A great deal of debate and, I think, genuine concern is expressed by the member for Kootenay (Ms. Edwards), and I realize that's her role as critic. I'm not trying to duck the issue now. I'd be more than happy to get into my involvement with the Crown land account when we get to my estimates, which I understand are coming shortly.

Nevertheless. let it be said that I've tapped this Crown land account quite extensively, and I quite enjoy doing it. Botanical Beach, I guess, was the last issue; also the foreshore at Robson Bight. I can bring numerous examples to the Legislative Assembly, if given the appropriate amount of time, as to the parks pressure on this account. I'm quite satisfied with the results I've had.

Currently, we have 5.3 percent of the province in park area, and our intent and our plan, shortly after the turn of the century, which is not that long away, is to have 6 percent of the land mass in British Columbia in park or protected wilderness. So I think that's a notable objective. I'm quite sure that the Crown land account will be there to allow us to do that. The Crown land account will be there also to satisfy other ministries, such as Social Services and the Ministry of Forests, for the purposes that they want to use that account for.

I know the member would like more debate on that specific issue under the section of this bill, but I would submit, sir, that it's probably far more appropriate when we discuss my estimates and my spending on the Crown land account with respect to park acquisitions.

MS. EDWARDS: Thank you very much, to the Minister of Environment and Parks, but the issue is how the money is spent right now, why the change, why you would move it and what you can do with it because you move it. I think the issue is: why is the minister saying that with this particular fund the other funds are being moved as they are?

This fund is not being moved, the way it is, with the goals and the criteria for spending that were in the fund originally, and I think that's the issue. I think the minister has said very clearly it doesn't matter to him what the criteria were, and that's how I read it. Certainly we will be debating the fund itself in your estimates.

MR. STUPICH: When the Minister of Environment got into it, I thought I might ask him a question. When he spends some money out of this account, is it charged against his expenditures?

HON. MR. STRACHAN: The answer is no, Mr. Member.

MR. STUPICH: I thought that would be the answer. If he brings in any revenue, does it come into his ministry in some shape or form?

HON. MR. STRACHAN: As a matter of fact, that will be dealt with when we get to section 8 of this bill. The only

[ Page 4228 ]

account I know of that I have contributed specifically to and is controlled totally by the Ministry of Environment is the habitat conservation fund. I look after the funds of the shareholders, if you will, who are the people who buy angling and hunting licences. The rest is administered by my hon. colleague, and as you know we all go cap in hand and do our best to get what we want to do with our appropriate ministries.

MR. STUPICH: Another fund in here — and I'm not dealing with the fund; I'm simply trying to get at the truth of the matter here — is the farm income assurance fund. I asked this question earlier. Advances were made to the farm income assurance fund because it was running short of money. I would assume that those advances were charged against the expenditures of the Ministry of Agriculture.

HON. MR. COUVELIER: That's correct.

MR. STUPICH: I asked the minister in an earlier debate whether he expected to get that money back, and he said yes. I think the figure was in the neighbourhood of $11 million. When he gets that money back, will it come back into revenue?

HON. MR. COUVELIER: The answer is yes, Mr. Chairman.

MR. STUPICH: Again I ask the minister: we are now taking out of one of these funds — in this case, the fund that we've been talking about most of the afternoon — some $222 million. Will that not come back into revenue, the same as recoveries from any other fund, and if not, why not? I note on the bottom of the page here: "Return of spending authority to the general fund." It would seem to me that it's giving the minister the authority to spend this $222 million in some other way. "Return of spending authority": he will have the authority to spend, is the way I read it, but maybe I'm reading it incorrectly.

HON. MR. COUVELIER: These accounts or funds are off-financial-statement. They are merely the authority to spend.

I think the hon. member has opened a whole new line of explanation, and it might be useful to remind the House of the comment made by the hon. member for Kootenay (Ms. Edwards), I think. That is to say, the auditor-general had some interest in this issue back in 1986, and the effect of having that sum of money in that account was to remove from the budgetary discussion process the opportunity to comment. It does seem to me that if your interests are in protecting the House's right to comment on expenditures, it's in your interests to see this unused, large balance reduced so that government doesn't have that kind of flexibility. The auditor-general made comment about it in his 1986 report.

With respect, I do believe that the concern expressed by the members opposite is misplaced, and that the government has no intention of abandoning the purposes for which these accounts exist merely to make sure that the dollars that are there are somewhat indicative of the dollars that may be needed to do the job.

MR. STUPICH: In all honesty, I'm trying to understand. Certainly, the special account, the special funds, the perpetual funds all were, not too long ago, real liabilities backed up by real assets. I know that that's changed. Is the minister telling me now that they're not real liabilities anymore, they're simply memoranda accounts? Is that all they are?

HON. MR. COUVELIER: That's the effect of it: of financial-statement entries. The balance does not represent a liability, it merely represents the authority to spend.

MR. STUPICH: Is that what's happening with this legislation, or has that happened in the past? Have these been off the balance sheet for some time and I just didn't notice the missing $800 million?

HON. MR. COUVELIER: We want to make very sure we understand your words, and that explains our hesitation. They always were off-financial-statement issues.

MR. STUPICH: Not always.

HON. MR. COUVELIER: Well, the hon. member goes back a long time, and I don't doubt for a moment his memory bank would bring back and recall some earlier method of treatment. These were off-financial-statement accounts last year as they are this year...?

MR. STUPICH: Maybe we should postpone this section.

HON. MR. COUVELIER: Anyway, it does not represent a liability. It does represent authority to spend. I do suggest that it is in the interest of the member opposite to see that authority to spend reduced. It represents dollars that we're not going to need and historically have not needed. No one should draw the conclusion that we have lost our enthusiasm for social housing or habitat preservation or acquisition of parklands. That's not a conclusion that can be fairly drawn from this rather simple accounting simplification.

MR. STUPICH: Well, Mr. Chairman, how can I jump, if I've got no place to stand? I'm really trying to find out where we are, and not be judgmental at this point, because I'm having a little trouble understanding. I thought from some of the remarks that have been made that these have been balance-sheet items, but this legislation before us right now is changing that so that they will no longer be balance-sheet items. This is something from one of the people not in the House, Mr. Chairman. I thought I heard those comments from across the floor. While that someone who is not in the House is discussing it with the minister, perhaps you and I had better just chat about something or other until the minister is prepared to comment.

As I say, I got the impression from someone that they had been balance-sheet accounts. I knew they were in the past, and not that far past. They were real assets. But even after that, the balances represented commitments — liabilities really — to spend.

[3:30]

In the case of the agricultural income assurance fund, for example, we've talked about....

AN HON. MEMBER: Deferred liabilities.

MR. STUPICH: Deferred liabilities — well, liabilities really; "deferred" means a little bit longer. These are liabilities at the end of the year. On March 31, 1989, it's

[ Page 4229 ]

expected that there will be $22,281,055 in the farm income assurance fund. It's there to be spent in the activities of the farm income assurance fund as it's needed; it's not a liability in the sense that they can identify to whom its payable. But the government has received from farmers premiums and received from the Minister of Agriculture allocations that add up to this point in time to $22 million. It has said: "We will spend that amount of money on the farm income insurance program." It came from farmers; it came out of Ministry of Agriculture expenditures. It's real. It's not just a bookkeeping, non-balance-sheet item. It's a balance-sheet item. I wonder what the difference is.

I'm not sure how much time you and I have to discuss this, Mr. Chairman. Whenever the minister is ready, I'll be quite happy to sit down and see if he has any other.... Shall I start again, now that I have your attention? I thought I heard someone, not in the House, saying that these had been balance-sheet items but that this legislation changes that. Maybe I didn't hear that, but I thought I heard it.

Mr. Chairman, I have to wonder who prepared this legislation. There has to be somebody somewhere that.... Do you understand my questions, Mr. Chairman? I know you don't know the answers, but can you understand what I'm saying? Does it seem that difficult? I didn't think it was, but maybe it is.

HON. MR. COUVELIER: Mr. Chairman, a little time to frame the appropriate response would be useful. We seem to have some difficulty getting our terminology straight, so it might be productive if we had a little time to put that together.

MR. CHAIRMAN: Would you like to defer section 4 till later?

MR. STUPICH: Since it is dealing with funds all the way down the line, I'd like to move that the committee rise, report progress and ask leave to sit again.

Motion approved.

The House resumed; Mr. Speaker in the chair.

HON. MR. STRACHAN: Mr. Speaker, the committee on Bill 18 rises, reports progress and asks leave to sit again later today.

Leave granted.

MR. STRACHAN: I call committee on Bill 19.

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

The House in committee on Bill 19; Mr. Pelton in the chair.

On section 1.

MR. STUPICH: I assume that these are buildings on which the government is collecting school tax, rather than the local authorities. Is that the case?

HON. MR. COUVELIER: That's correct. I think the hon. member raised this issue yesterday. It's the government that collects the non-residential.

MR. WILLIAMS: I missed the previous explanation, Mr. Chairman, and I wonder whether the minister might give a short explanation of how this in fact works and whether it is very common.

HON. MR. COUVELIER: This amendment extends eligibility for tax relief to owners of vacant or partially vacant industrial buildings. Section 3(2) applies to industrial buildings and municipal areas used for the purposes of a new business. The existing provision limits eligibility for tax relief to lessees who are responsible to pay municipal property tax.

MR. CLARK: Just a very simple question: why? What's the purpose? Why are you extending the tax relief to owners of vacant or partially vacant buildings?

HON. MR. COUVELIER: It's a question of equity. This is an initiative to help get economic development going at the municipal level. Insofar as the municipalities themselves bring these initiatives forward, it's our attempt to ensure that there is equity in the system between owners and occupiers or tenants. So this is an initiative to enhance economic development.

MR. CLARK: I don't understand how giving tax relief to owners of vacant buildings induces economic development. Maybe the minister or staff could give us some indication or some example where that might be the case.

The second question: what's the projected tax loss attributable to the passage of this act?

HON. MR. COUVELIER: Buildings that were previously vacant were not eligible for this tax credit. This amendment allows those buildings to be used for the tax credit, and the amount of tax credit that can be provided is up to 50 percent of the taxes to be paid. This program has been in place for some years: this is merely an extension of the provisions for buildings that were previously vacant and have since been leased for new enterprises.

MR. BLENCOE: I suspect that this is an expansion of the Partners in Enterprise program. When you brought that down some years ago, this particular component was not part of it, and it's my understanding that those property holders within this component have come to you and suggested that they would like to see an expansion of this tax exemption.

HON. MR. COUVELIER: Municipalities.

MR. BLENCOE: Right. I have no particular problem with it, except that I've always been somewhat dubious about the Partners in Enterprise program. I'm still not convinced that tax breaks for industry is the way to attract industry to this province. I certainly have had no reports of great new enterprises moving into British Columbia because of the Partners in Enterprise program. There have been some new industries, I know; but I don't believe it's because of the Partners in Enterprise program.

As a matter of fact, I thought the Partners in Enterprise program had died. We certainly haven't heard anything about it in the last few years. When it was before us, I was very skeptical, as the rest of our side of the House was, that what you were doing through a tax forgiveness was pitting one

[ Page 4230 ]

municipality against another, creating regional differences and animosity, with everybody chasing the same industries. What has happened is that the richer municipalities that can afford to give tax breaks do so, while the smaller ones are not in a position to do that.

We have suggested that the way to encourage enterprise in British Columbia is to create an atmosphere of wanting to invest in this great province. Over the last few years the atmosphere that has emerged, the confrontation over Bills 19 and 20 — those sorts of things.... If we create the atmosphere rather than tax breaks; if captains of industry see a healthy province — its education system, social service networks and universities: healthy, and the business community with a fair taxation system — then you start to get the captains of industry in other jurisdictions moving to British Columbia.

Although we won't oppose this piece of legislation, we remain skeptical about the potential for its impact in attracting industry to British Columbia.

Sections 1 and 2 approved.

Title approved.

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

Motion approved.

The House resumed; Mr. Speaker in the chair.

Bill 19, Provincial-Municipal Partnership (Taxation Measures) Amendment Act, 1988, reported complete without amendment, read a third time and passed.

HON. MR. STRACHAN: Mr. Speaker, I call second reading of Bill 2, printed in the name of the hon. Minister of Municipal Affairs.

HOME OWNER GRANT AMENDMENT ACT, 1988

HON. MRS. JOHNSTON: The amendment to section 1 of the Home Owner Grant Act ensures that renters do not receive a homeowner grant in the rural areas of the province. The intent of the legislation is that only the owner-occupier receives the grant. This amendment eliminates the situation in which the landlord, who is assessed and liable for the tax, is able to enter into a lease arrangement whereby the renter-occupier becomes an eligible occupant and claims the homeowner grant for the benefit of the landlord.

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

MR. BLENCOE: We intend to support the bill. It's a reasonable piece of legislation.

There are a number of other areas in the homeowner grant that could be looked at. I'm sure the minister is probably hearing about them. For instance, veterans who come off the veterans' program between 60 and 65 fall in the gap between; they can't get the homeowner grant and they've lost the help in paying their taxes they get under the veterans' system. I'm sure that has been drawn to the minister's attention. I'll be bringing that up more in the estimates.

One of the things the minister may wish to consider, while we're talking about the homeowner grant system, is that it would be nice to see one day an increase in the homeowner grant. We haven't seen an increase for a number of years. I know many of the municipal associations have put forward official resolutions — the AVIM did — asking the government to consider increasing the homeowner grant. I forget exactly when was the last time it was increased, but it was quite some time ago. That would certainly be welcomed by homeowners in the province of British Columbia. The minister would welcome it too, she tells me.

Mr. Chairman, we support the legislation.

HON. MRS. JOHNSTON: I move second reading.

Motion approved.

Bill 2, Home Owner Grant 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.

[3:45]

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

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

ESTIMATES: MINISTRY OF
TRANSPORTATION AND HIGHWAYS

On vote 67: minister's office, $280,361.

HON. MR. ROGERS: I'm prepared to discuss briefly these matters of my estimates, just to get the ball rolling while the Minister of Finance, who will be listening in his office, and his staff, who will be very diligently listening in his office, are rounded up and brought back so that he can continue with the matters which the House wishes to debate forthwith. In the meantime I shall discuss this matter, or would you wish that I move the committee rise and report progress?

Is there a point of order?

MR. ROSE: I was given to understand — and I guess there was a failure in communications — that we were going to proceed, by leave, to the next stage of 17 and 14 this afternoon in order to provide each side with a little bit of warning on the Highways estimates. If that's not the case, then I invite the minister to proceed with his introduction and we will defer our response until after 14 and 17 have been dealt with.

HON. MR. ROGERS: I think I will proceed with the opening remarks on my estimates until such time as the Minister of Finance can be brought in. When he is, then perhaps we will make the appropriate motion.

I'm really enjoying portfolio number six for me, and that's the Ministry of Transportation and Highways, which also includes the responsibility for the native secretariat, B.C. Ferries and B.C. Rail.

I would like to think that we view the highways portion of the Ministry of Highways as in the post-Coquihalla era. There are a number of post-Coquihalla changes that have been made in this ministry, which I hope reflect those lessons

[ Page 4231 ]

which we have learnt in the process of constructing that major project.

Our total budget for this year is $731.3 million, which is a 14.2 percent reduction, reflecting some efficiencies and reductions in the work done by this ministry. However, we are dedicated to quality highway construction and service standard, and I've asked my ministry to prepare a detailed and long-range plan which might reflect the transportation development affecting this province up until the year 2000, not just to include highways but seaports, rail developments and improvements to air services. As our transportation needs in British Columbia continue to expand and we are in a relatively confined area, we require a special look at it. We haven't got the luxury of some of our colleagues on the Prairies of being able to go in almost any direction.

I look around with trepidation to find my colleague the Minister of Finance. I presume he's lost.

Phase 3 of the Coquihalla Highway will be completed to Peachland within the original budget estimates and, as I have announced in the House and elsewhere, it will be built as a high-speed, two- and four-lane standard road. To assist us in this particular project, a new director of major projects will monitor the scope, budget and scheduling of the project with the help of independent highway consultants and auditors to assure the people of British Columbia that the project is being constructed and completed as forecast.

Work will continue on the Richmond freeway section of the Annacis Island project, which will be completed in the spring of 1989. The ministry will continue its program of upgrading Highway 97 to four lanes through the Okanagan Valley. We will honour our commitment under the federal government cost-sharing agreement to upgrade the Yellowhead Highway. Each government will spend approximately $18 million on this project over three years.

The ministry will review design options and construction techniques to determine new ways to upgrade the highway between Horseshoe Bay and Whistler without necessary road closures. This has been a terribly contentious piece of road.

We are in the process of negotiating with the government of Canada and the city of Vancouver for a cost-sharing formula for the Cassiar connector.

Interjection.

HON. MR. ROGERS: The applause is from the member for Vancouver East, and I thank him for his support on this issue. I will just digress a little bit on this. Because the port of Vancouver is the major beneficiary of this particular project, and because this road access to the port of Vancouver is probably the most critical thing in ensuring that the growth will go ahead, we have asked Ports Canada, the port of Vancouver and federal Public Works and just about anybody else we can talk to if they can't see, in their wisdom, a way to contribute in part to the cost of this thing.

One of the greatest inhibitions on the growth of the port of Vancouver is the delay in getting from the docks to the freeway. Removing this one bottleneck will do much to ease the congestion for everyone. It is the number one traffic problem west of Toronto in all of Canada, and it is a priority. We have also worked with the city of Vancouver, because they have a number of community designs which they want to incorporate in this.

Not everyone will always be in agreement on this project. There are some contentious neighbourhood issues, and we are trying to take into consideration as many of these considerations as possible. We have a design which would allow most of the transport trucks to move from one end to the other without stopping — that is, without lights and without righter left-hand turns of the 90-degree type. We are going to try to do that.

We have asked the engineering design branch to prepare for construction of the Vancouver Island Highway, the part near Qualicum Beach. The project will provide a section of four-lane link between Victoria and Campbell River. We are also working on the design for several parts of that particular highway as it affects all the communities. To look at it from a purely superficial point of view, people say a bypass here and a bypass there will solve the problem, but how that commercially and socially affects the communities is very much on our minds, and we are trying to accommodate as much as possible the requirements of the local communities.

On the matter of road safety, the ministry will introduce a mandatory province wide vehicle inspection program to be conducted by the private sector. These will be conducted by garages and service stations and will be done at a reasonable cost. The proposal at this point is that prior to the annual renewal of an ICBC licence tag — at some point in the 60- to 90-day period prior to that — the vehicle would have to be taken to a regular service facility to be inspected. We're now looking at removal of a front and rear wheel to inspect brake pads, steering linkage. headlights, windshield wipers, doors, locks, tail lights, etc. — something in about the half-hour inspection range. Based on the shop time that most places charge, that's probably a maximum $25, and lower if required.

What I am looking at now — and this is strictly at the early stage — is to make it relatively easy for service facilities to get the ticket to inspect vehicles. Once they have been found in violation — i.e. if somebody chooses to endorse a vehicle that is in fact not safe — they will lose the privilege, and the loss of that privilege will be so onerous as to be the disciplining factor.

The garage will issue an inspection certificate which will stay in the glove box of the car, and if we find a vehicle that is grossly out of compliance we can go back to the people who certified it. This way I think we would be able to capture the vast majority of vehicles in this province.

We are working with the federal and local governments and other agencies to improve the safety standards on transportation of dangerous goods, which also includes hazardous goods. I would remind members that that's only about 1 percent of the goods that are moved, and dangerous goods really are the vast majority of those goods that travel that need special care.

We will introduce new commercial vehicle weight and dimension regulations to coincide with the current standards in other western Canadian provinces. It's always been a bone of contention in the trucking industry that when you cross an interprovincial border the rules change, and sometimes the carriers that are coming in are not aware of those, so we will try and do that. In fact, the whole of Canada is trying to standardize on it. Staff in my ministry have been working with staff in other ministries to try to be consistent.

The traffic safety committee of cabinet will introduce action plans to improve traffic safety for the licensed drivers in British Columbia. We have had some meetings so far. We have had a completely diverse group of people, including the association of motorcyclists, the driving school instructors

[ Page 4232 ]

and all of the commercial drivers that we could see fit to invite, the Automobile Association and others, and we asked them for their submission as to ways in which we could improve traffic safety. Road accidents remain the number one non-medical killer in this province, and we are working on it.

Air transport assistance program. This year ATAP will provide $3.3 million in assistance to local airports. This program has been excellent in terms of opening up community airports throughout the province and in enhancing air services not only from a tourism point of view but from the point of view of medical evacuation and access to small communities that wouldn't otherwise have it. The list of communities that wish to participate continues to grow, but in most cases they're enhancing existing services, adding such things as lights and long-socks, and in some cases a simple telephone at the airport is a big improvement. I can speak to this matter with great personal involvement, as can many members of this House who happen to be licensed pilots and travel to some of these airports. I can assure members that money spent on this program is very well spent for the limited number of dollars involved.

We are considering expanding the role of highway maintenance people so that when they are in the vicinity of a licensed airport not operated by a municipality, they take it under their responsibility to also plow it during the wintertime, which has not been the case in the past — or at least there has been inconsistency in the past. In some areas Highways took the opportunity to look after the airports; in some cases they didn't. I'm going to try to standardize that.

We've had the successful privatization of the Langford sign shop. I expect a number of new privatized initiatives will be brought forward by employees in the various departments of this ministry.

The progress in privatization of road and bridge maintenance will continue in the 28 contract districts across the province. Current highway safety and service standards will be maintained, and I would like to re-emphasize that.

In terms of the B.C. Ferry Corporation, the growth in this particular sector of my ministry, or corporations for which I am responsible, is nothing short of phenomenal. This year, with all projections, we are going to exceed the kinds of loads that we experienced during 1986, during Expo. Approximately 50 percent of the passengers and 50 percent of the vehicles are on routes 1 and 2 — that is, Swartz Bay to Tsawwassen and Horseshoe Bay to Nanaimo. That makes a difference over 1985-1986, the year prior to Expo: it's up 21.9 percent for vehicles and 35.8 percent for passengers. That's on our major routes. Our growth continues virtually on a projection that is, I think, ahead of expectations, although the Ministry of Tourism continues to say that they told us so. We continue to receive growth. It's not all tourists, of course. We have enabled the government to reduce the subsidy to the corporation by $6 million, to $51 million in fiscal 1988-89. And the traffic increases will enable the corporation to maintain its service in the southern Gulf Islands and increase levels of service to the travelling public through 1988-89.

[4:00]

If I go down the various routes of the thing: for Sunshine Coast, passenger and vehicle increased 4 percent and 6 percent respectively, an increase in revenue of 17 percent over the same period last year, while the costs have declined 5 percent.

I must say that of all the Crown corporations I've been responsible for in the many years that I've been here, this is one where I think the public should be proud. It is really a well-run and efficient company. While we probe at the board level deeply into the various aspects of how the company is run, they always have not only an answer but a correct answer for what's going on.

I could go on to the other ones. The northern Gulf Island loads are not.... The growth isn't quite as fast as it has been in the southern Gulf Island. I want to talk briefly about the northern route. With the decision by the government of Canada to create a federal park in the Queen Charlotte Islands, along with the government of British Columbia, B.C. Ferries is going to be quite severely affected in our capacity to handle the volumes that we expect on those two particular runs. It's in that regard that we will probably have to look for replacement of the Queen of Prince Rupert, the older vessel that currently runs between Skidegate and Prince Rupert, as its capacity to handle the volume that we expect to find is very limited. It would probably be in order to suggest that the Queen of the North will be retired to that route and we will put a larger vessel on between Port Hardy and Prince Rupert. The difficulty is, of course, that in the shoulder seasons we get a fairly good load, in the summertime we're full to the gunwales, and in the wintertime we sail largely with only a limited amount of passengers.

There is expansion of commercial operations in Bella Bella, with the band building themselves a fish-processing plant, the product of which they wish to move by container vessel from Bella Bella to Port Hardy. Therefore we have to examine the possibility of constructing a roll-row facility there, in addition to the fact that we currently carry passengers. As it currently stands, people who live there often go to Port Hardy for the day to go shopping and then turn around and come back, and it's convenient for them, although it probably inhibits the operation of their store.

In terms of new vessel construction, I have spoken on this, and the member opposite asked me a number of questions. If we look at the longer-term projection, we are going to need to increase uplift capacity. Frequency doesn't seem to be too big a problem; it's uplift capacity. Of course, in the wintertime, with sailings every two hours, missing a sailing and having that long a wait is something we try to avoid. As our loads continue to grow, we see continued growth in the size of vessel we will need. We will not be building a Cowichan-class style of vessel. The double-ended vessel has been passed in technology by the modem vessels that use bow thrusters, controllable props and a number of other things. So we anticipate building a more conventional style of vessel that would operate on those particular runs. We expect to see new vessels on all the major runs, and we'll try to do that in an orderly fashion.

One thing that would be nice is to see B.C. Ferry Corporation's shipbuilding requirements become part of the economic base for the shipyard industry in British Columbia — not that we're their only business, but that we're part of the bread and butter of it. There is capacity in North Vancouver, in the Fraser River and also here in Esquimalt or Victoria to build parts of these vessels. And there are other places that may want to see expansion. Certainly some smaller shipyards have grown in capacity and may be able to bid on some of the smaller vessels that we'd like to do. But I would like to do it on a continuous basis rather than a "we're building, we're not building" basis. The shipyard industry has, quite frankly, lost a lot of its skills and expertise by having laid people off

[ Page 4233 ]

during the tough times; then when they rehire, the skills are rusty, and getting things going is pretty expensive.

The trucking industry is continuing to expand. The number of trucks on the road and the volume that they move continues to grow. The same thing can be said — not in quite such numbers — for B.C. Rail. The financial picture for B.C. Rail continues to improve. The members may have seen the annual report, which I tabled yesterday in the Legislature. I would say our financial picture has improved since corporate restructuring in 1984. With more than 1,390 miles of main track and assets exceeding $1.2 billion, B.C. Rail is certainly Canada's third largest railway. It again is a well-run Crown corporation. It has done a good job of supplying the service to those communities in the interior, although there's always the question: is B.C. Rail there to ensure that the industries survive at B.C. Rail's expense, or is B.C. Rail there to be competitive on its own? We try to keep B.C. Rail competitive on its own basis so that it doesn't have to come to the Legislature, cap in hand, to ask for assistance. It has always been the contention of the government to make it operate that way — we're trying to make it operate that way — and I must say that the staff and employees of the railway certainly look at it that way.

Last year B.C. Rail spent $116 million in goods and services, with $86 million expended in British Columbia and a payroll of $111 million. Our line from North Vancouver to Lillooet and Prince George carries an average of 78,000 passengers per year. This pales when you compare it with the B.C. Ferries run, but compared to Via Rail and other passenger-carrying railways, it does a darned good job. I know we dropped the ball with Nicole Parton, who went on this particular railway and saved me having to do the trip; her critical remarks were taken to heart by the people in the railway. Interestingly enough, because the route is so spectacularly scenic, the number of railway buffs and other people who travel this particular line is growing. We have requested permission to purchase additional passenger vehicles, which not many railroads are doing. Members will know that I've made a number of changes to the board of directors, which more closely reflects a change of newer members — I think it's healthy for the board to have a new look — and we have representation from all parts of the province.

One of the areas of the ministry which I have found most interesting personally and have perhaps spent a little more of my time on than others is the native affairs secretariat. As someone who has lived in this province all his life, I must say I've learned more about our relations with the native community since having been made the minister responsible. I feel a little guilty about my education, and I guess the education of the general public in terms of their relations with the native community, because there's a lot to be learned. Things that perhaps should be common knowledge to all of us, aren't.

We've met with more than half of the tribal councils representing 197 bands. I think we're on the lines of the first true steps toward a cooperative venture with the native community in a number of areas. While we disagree with them on our native land claims issue, they tell us they are prepared to deal with us, and we are prepared to deal with them. It shouldn't be "we" and "them," but the government with the native community.

We have been able to make a number of what I think are substantial improvements. As I said earlier when talking about the boards of directors, we now have native representation on the boards of directors of both B.C. Ferries and B.C. Rail. We have native members on the board of the Open Learning Institute. Native individuals are being nominated for hospitals and college boards throughout the province; a sign, really, of much more recognition not only by the government but by government agencies of the mainstream role that the native community can and will play.

I am sorry that the First member for Victoria (Mr. G. Hanson) is not here now, because one of the things that he has talked about as long as I can remember in this House is a native language and heritage institute. While some of the groups that we deal with still use their language on a daily basis, others have let it slide. In many cases, it's only the elders who have retained the language. We made an announcement in the throne speech last year and have written to and contacted a number of people about putting this into force. I am getting excellent cooperation with all the people who have written in so far, and I anticipate we will see further progress when these estimates are next debated. Perhaps there will be further discussion on it.

We have had a number of challenges in the culture and tourism area. The Expo longhouse that was so successful at Expo is now in Duncan for the Cowichan band to reassemble, and they will be reassembling it this year. We were able to give some funding to the program that is taking place in Prince Rupert at the Chatham site. The provincial government, through the First Citizens' Fund, has extended a $100,000 contribution towards that.

The amendments to the First Citizens' Fund have been authorized, and it will make business loans to help encourage native entrepreneurship. The fund will continue to award student bursaries and grants towards fellowship centres.

We have also worked closely with the case of the Tahitans, who are located at Telegraph Creek, in terms of resolution of their role in the industrial activity which will take place at the so-called Golden Bear mine property. Through the cooperation of the secretariat in my ministry, there has been a great deal of good will and harmony established not only between the company and the Tahitans but also with other agencies.

I might point out that the secretariat is now considered a resource source by other ministries, and we are getting good response from ministries which wish to have background information and are starting to use this resource in government. The credibility of the secretariat, which was never in question, has now been greatly enhanced.

We have provided some much needed financial assistance for drug and alcohol treatment, and we have taken a number of other steps to try to create a more positive relationship between the native community and the government of British Columbia. Those are my opening remarks, and I am sure members opposite will have a number of questions.

I am joined here today by my staff, who do not need introduction, but I will introduce them: Mr. Hogg, Mr. Flitton and Mr. Denhoff, all of whom will ably assist me in my efforts to secure the correct funding as apportioned by Her Majesty's budget.

MR. LOVICK: Mr. Chairman, I am not sure what protocol dictates at this point, because I see that the Minister of Finance has returned — and, I understand, by arrangement. So I certainly don't want to spend some considerable time talking about this to keep you unduly, sir. Therefore I will

[ Page 4234 ]

take your guidance, Mr. Chairman. Should I simply defer this matter?

Interjection.

MR. LOVICK: Okay, I will.

The House resumed.

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

HON. MR. STRACHAN: Mr. Speaker, with leave, I call committee on Bill 17.

Leave granted.

PRIVATIZATION BENEFITS FUND ACT

The House in committee on Bill 17; Mr. Ree in the chair.

On section 1.

MR. CLARK: We will have much to say about this act clause by clause. I would like the minister at least to begin by explaining the purpose of this act and what he expects to finally accrue in the act, say, one year hence.

[Mr. Rabbitt in the chair.]

HON. MR. COUVELIER: 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.

The earnings will be used initially to reduce the provincial deficit by offsetting the cost of interest on the public debt, and thereafter fund general programs. There is no provision within this bill to pay out the capital of the fund. This means that the revenue from the sale of government assets will not be included in any specific year's operating statement, but the income generated on the fund will continue to be received over a period of years. The financial results of the fund will be clearly shown in the public accounts at the end of each fiscal year.

MR. CLARK: The minister is saying that the income from the fund will go not to pay the operation of government but to pay only prescribed things, like to pay down the debt or the deficit. Is that what you're saying?

HON. MR. COUVELIER: The interest earned on the fund will be going into the general account which will have, by virtue of its going there, the effect of reducing interest costs and other operating costs of government.

[4:15]

MR. CLARK: How much has accrued to date from privatization initiatives of the government? In other words, there's been the sale of the sign shop, etc., so I assume there is some revenue from this that will go right into this fund. Is that correct?

HON. MR. COUVELIER: I don't have any current figure. The member obviously is referring to some of the smaller operations that sales agreements have been concluded on. Closing dates vary on each one. I think the sign shop might have closed last week, but I'm not certain of that. In any event, those minor sales wouldn't even be registered on our statement of accounts, given that they are relatively small, and as the hon. member knows, we deal in millions of dollars at a time. By the end of the year, I would anticipate that this fund would have many hundreds of millions of dollars in it.

MR, CLARK: That's interesting. Could the minister tell the House whether it's the gross proceeds or the net proceeds of the sale?

HON. MR. COUVELIER: The hon. member is probably referring to Crown corporation privatization initiatives. He's nodding, therefore my assumption is correct. The government will be dealing with each of those Crown corporations in its own way. The issue is whether we keep the Crown corporations whole. I believe it's a matter of public record that the government says it intends to do that.

MR. CLARK: I understand that the government has said it intends to do that — not surprisingly. The question is how they do that. That's what we're getting to in this act. For example, the government could put the gross proceeds from the sale into this fund and then pay down the debt out of general revenue, which would inflate the size of the fund, and only the interest on that gross amount would then go into general revenue. That might look good, but it wouldn't be reality.

On the other hand, the government might take the net proceeds from the sale — for example, the gas division of B.C. Hydro, which might only be less than a $100 million after you pay down the debt. That would look smaller. I understand the political momentum that might be there to put the gross sale in; but given that this bill limits the use of that money to the interest on it going into general revenue, that could have significant ramifications for the budget, it seems to me. For example, if the gross sale price of the gas division is $600 million, say, and that all goes into the benefits fund act but then the liability of $500 million has to be made up by government out of general revenue, then that would cause tax increases or something like that. You would have a large sum in the fund, but you'd have to make up the debt through other mechanisms.

I'd appreciate it if the minister could give us slightly more of an indication of the government's intention, because it has very significant ramifications for public accounts in British Columbia.

HON. MR. COUVELIER: The Crown corporation sales or privatization initiatives will proceed each in their own unique way. It is not inconceivable that the purchaser of a Crown corporation might wish to assume the debt, in which case we're only dealing with a net figure. On the other hand, it might be that the government's structuring of a sale might be designed to preserve debt because the debt itself might be at such an interest rate that we make money by not paying it

[ Page 4235 ]

off. In other words, we can make more money by lending the proceeds of the sale out at a higher interest rate than what we're paying with the original debt on the Crown corporation made some years ago.

The hon. member might understand then why I can't be more specific until we receive more of the specific tenders and proposals. Let's take, for example, the B.C. Hydro gas division. The hon. member knows that's now out in the streets and we're anticipating receiving bids on it. I suspect that those bids might be structured in different ways, depending on the desires of the bidders as to how the acquisition might fit into their own financial statements.

I'm not in a position to give the member any comfort in terms of specifics. I can agree with the member that it could be designed in a number of different ways. He seems to be hinting that we would use the options for political advantage as opposed to the legitimate interests of the bidders. I'm a little disappointed that you would ascribe such base, crass motives to this government. After all, our performance to date in terms of managing public funds has been exemplary and clearly doesn't deserve the degree of cynicism that I detect in the questioner.

In any event, I have some trouble being more specific than I am, Mr. Chairman, and I hope the hon. member understands that until we actually conclude a deal for one of those major Crown corporations, I really don't know how we'll wind up finally recording it.

MR. CLARK: It's not really acceptable to come in with a bill and say: "We don't know what's going to go into it and we can't give you any idea how we're going to structure these sales." The bill limits the use of the capital to specific things and says that the use for general revenue will only be interest. Therefore, it seems to me incumbent upon the government to give us some guidelines as to how sales — disposition of public assets — will be utilized, what the revenue will be utilized for.

For example, can the minister tell us that some proceeds from every sale of a public asset will go into this fund?

HON. MR. COUVELIER: That would be our expectation, Mr. Chairman.

MR. CLARK: Okay. Then the question is: how do you define privatization? The government is in the business every day, as we've talked about it previously, of Crown land disposal, which is a form of privatization. The B.C. Enterprise Corporation is a form of privatization; the sale of the Songhees land is a form of privatization. So if the minister says that a portion of every sale of government or public assets will go into this fund, it seems to me that we need some guidelines to tell us what the government means by that.

The government initiates a number of things every day, as government is wont to do — any government — and inhere are sales of public assets from time to time. Is it the minister's intention that only the revenue from those sales which fall within the purview of the Premier's statements regarding phase 1 of privatization, as announced by the Premier, may go into the fund, or will there be other initiatives, as yet unannounced, that may go?

I'll give you just one example. The courthouse was almost sold, I gather, and that was not on the Premier's privatization announcement. If it had been sold, would the sale of the land there go into the Privatization Benefits Fund Act?

How all-encompassing is this act intended to be? In other words, is this a serious piece of legislation, or is it simply to have some high-profile, major sales of public assets go into this fund so as to appear to be a very large fund, from which the interest can pay down some of the deficit? I'm trying to get a handle on what the magnitude of the fund is intended to be. Is it designed to deal with specific projects around privatization that the government has already announced and will announce in future in anticipation of the sales, or is it something all-encompassing to deal with whatever may be privatized at any time by the government?

HON. MR. COUVELIER: I'm not sure I detect a difference between the two options the hon. member put to me.

The government's decision to embark on the privatization model had the effect of our receiving interesting proposals on a variety of issues that were outside the "phase 1" announcement of the Premier's. There were a number of questions there before the member sat down, but I don't see this being necessarily limited merely to phase 1. I do believe the government has indicated a willingness to entertain privatization on other initiatives, and our treatment of those initiatives in terms of reporting style will, to some extent, be dictated by the desires of the bidders in terms of their own financing arrangements, as I explained earlier.

I'm afraid I'm not in a position to say, nor do I think the hon. member is reasonable in expecting me to, that we would be able to anticipate all of the range of government operations that might in the fullness of time turn out to be privatized; and I wouldn't want to go on record today, Mr. Chairman, as limiting in any way the government's freedoms in that respect.

MR. CLARK: Let me get this clear. That means that since this act says "may," therefore it's completely discretionary. The government may not put anything in the fund from the proceeds of a sale, or it may designate that the proceeds of this particular sale will all go into the fund. It's completely discretionary; there are no guidelines except that the fund exists to be contributed to at the discretion of the government, pending the results of any given sales, whether they've been announced or not. Is that correct?

HON. MR. COUVELIER: With the exception, as I mentioned earlier, that the government has the intention of keeping Crown corporations whole. We do not envisage the likelihood, for example, of the government of British Columbia taking the proceeds of a privatization and leaving a Crown corporation with the burden of debt that's properly ascribed to the assets being sold by the privatization initiative. I can only cover off that eventuality by saying categorically: the government has said that they will keep the Crown corporations whole in this respect.

MR. CLARK: But the minister will confirm that the logic of what he is saying is that the government can pay down the debt or make whole a Crown corporation using revenue from general revenue. and put the gross proceeds of the sale into the privatization benefits fund. Can he confirm that?

HON. MR. COUVELIER: Providing we keep the Crown corporations whole, that degree of flexibility, I think, is mandatory. As I've mentioned, it may well be.... I can think of some borrowings we would not want to pay off; we

[ Page 4236 ]

would want to keep them in place, because we can lend out the money and earn a higher rate of interest. We can't and we shouldn't be attempting to limit government's options.

MR. CLARK: I can understand why the government doesn't want to limit their options. But it seems to me that we should have some general understanding as to what is going to go into the fund. The fact that it's so wide open leads me to believe what I earlier alluded to, which is that the government now has the discretion to inflate the size of the fund by putting gross proceeds in and using other means to pare down the debt, which should have been pared down by the proceeds of the sale. What that means, then, is that in fact we could have large asset sales and large numbers going into the privatization benefits fund for political purposes and nothing else.

The problem that I have with that, other than the fact that it's straight, crass politics- which we're used to in British Columbia, with Social Credit government — is that the act limits the ability of government to use the funds for whatever purposes it wants. On the one hand, the government says: "We want the flexibility. We want wide-open rights for the government to decide what goes into the fund." On the other hand, it is prescribing in legislation that only the interest from the fund will be used for operating revenue. So the very fact that the government is not prepared to make a commitment that only net proceeds: will go into the privatization benefits fund.... By saying: that we're not going to preclude that, what the government is doing is leaving the door open for vastly inflating the size of the fund and using it politically, and in fact using general revenue to pay down the debt. It has consequences for public accounting in British Columbia. It could have consequences in terms of tax increases or other wise, simply for political gain. That is the problem that we have — certainly that I have — on this side of the House; that it is wide open for manipulation. The minister has given us no assurance that the put lose of the fund is to put net proceeds in. But in fact it explicitly says it wants the ability to put gross proceeds from privatization sales in the fund. It's simply not acceptable, Mr. Minister.

[4:30]

HON. MR. COUVELIER: Well, I'm disappointed, Mr. Chairman, that it's not acceptable to the hon. member. I don't know what I'm going to do. The sky is falling down.

The hon. member, however, hit on a very important key point, which this government is very proud of: that we will not spend the proceeds from privatization in current-year operating accounts. This government is committed to the thesis that any privatization initiatives we undertake and complete should inure to the benefit of every generation of British Columbians forevermore, and that it's appropriate and morally defensible and desirable that we ensure that every single generation of British Columbians gets that benefit and that we should not spend that benefit in the year that we sell the asset, unlike other governments who are privatizing, as the hon. member would know, who are using, the proceeds of privatization for the purposes of balancing their current year.

We are saying that that is not responsible fiscal management, number one; and number two, we are saying that that denies the benefits of privatization to succeeding children and grandchildren of the members in this House. We believe it is our moral responsibility to ensure that they also benefit from the privatization decisions of this government, so that we will not only benefit by virtue of savings in the operating costs of the privatization initiative, but also each individual generation of British Columbians will receive interest income from this government's decision to privatize. We think that is appropriate and entirely defensible, and unique in the annals of privatization being conducted elsewhere in the world. We're very proud of that uniqueness.

MR. LOVICK: I wondered how long it was going to be before the Minister of Finance decided that the time for rhetorical flourish had indeed arrived. I am pleased he kept us waiting no longer.

I want to start my questioning by simply asking the minister if he would provide us on this side of the House with some comfort, so that we might take comfort — to use his phrase — from assurances about the perpetuity of this fund. The ostensible purpose of the fund, as we know and as is stated in the explanatory note, is that we want to establish funds in perpetuity. I am wondering whether we can get any more — what shall I call them? — specific or concrete assurances that that will indeed be the case.

I want to explain my question, if I might, Mr. Minister, because I think there are good reasons for putting pressure on the suggestion that yes, indeed, this will be in perpetuity. There are two points. The first one is that in about 1985-86, or perhaps even earlier, there was established something called a resource revenue stabilization fund, which was also supposed to be a fund in perpetuity. That fund disappeared some four or five years later to pay off a particular debt. I think there are probably a number of historical examples to suggest that funds that were supposed to have permanent status and to exist in perpetuity did not indeed do so. That would be my first concern and question.

The other one — and I want to refer to the British experience that we have encountered already with privatization — is what is called in Britain the hospitalization program. I'm not sure if that is the technical term, Mr. Minister, but it is certainly one that has common currency in the U.K. What that essentially means is a sum of money being put into a particular Crown corporation in order to improve the economic performance of that corporation, so that it then becomes a more likely candidate for sale.

I think a number of people — perhaps somewhat jaundiced in their view, perhaps somewhat cynical — are looking at this particular fund as merely a means to promote the process of privatization. In other words, what we will do is take the sale of items X, Y and Q, and put that into a fund, which moneys or the interest earned by those moneys can then be used to refinance or otherwise improve the financial situation of company P, which we also want to privatize. Of course, what happens is that we are simply fuelling the ongoing escapade of privatization, using the moneys that we get in the early stages.

That's the British experience. It's certainly been done; the minister is as familiar with that as I am. Will he provide us with some assurances that that is not the purpose of this fund?

HON. MR. COUVELIER: I can assure the hon. member that as long as the members opposite assist in the re-election of the Vander Zalm government, those funds will never be used for any such crass, devious purposes. We will always ensure that they stay in place for the benefit of all British Columbians as we see it. So to the extent that we can welcome

[ Page 4237 ]

your assistance in that respect, we are pleased to give you that assurance.

MR. CHAIRMAN: Prior to recognizing the member, I would like to remind members about relevancy. I have let the debate wander onto section 2, so possibly we could tighten up the discussion with regard to section 1.

MR. LOVICK: Mr. Chairman, my apologies. I had assumed that we had let section 1 go by. Certainly we shall.

Section 1 approved.

On section 2.

MR. LOVICK: The temptation, now that we know we are on section 2, is to simply pose the same question again. But I won't do that to the minister. What I want to ask the minister about now is whether he would be good enough to respond to what has become a fairly standard argument presented by certain economists and accountants about the privatization calculation. The government's case is that what happens is that we sell particular assets and we earn money on those assets. We derive income from those assets.

The assumption, however, according to some economists, is that that is false economy. In fact, a more proper accounting would acknowledge and recognize that the actual current value of those assets is not being fully taken into account. What we're suggesting — I don't think I'm saying this terribly well, and I apologize for that, Mr. Minister — is that we who would advocate some kind of privatization program are suggesting that value occurs only when we can sell something. What is not taken into account is that there is clearly value within the asset itself, prior to the point of sale.

Unfortunately, when we talk about debt and deficit reduction — so the argument goes — we fail to take into account the full value of that asset. I'm wondering if the minister would care to respond to that. As I say, it is an argument that has some currency among economists.

HON. MR. COUVELIER: I can assure the hon. member that the government has considered those points of view. Economists are famous for their on-the-one-hand and on-the other-hand approach to issues. Nevertheless, not to make light of the issue being raised here, the government is cognizant that there are some services that people expect government to provide. We are not in any way abdicating our sense of responsibility for ensuring that the service is provided.

What the government is saying is that it isn't necessarily cast in stone that those services need be provided by a government bureaucracy. We think that many services can be provided more effectively, more sensitively and more efficiently by using the private sector to provide the service. Here again, it's an issue that is validly raised in the House, but I can certainly say on behalf of the government that it is not our intention to abandon the obligations of government to provide the essential services to people. The only issue is whether we will provide them with employees or with the entrepreneurial section — the private sector.

We've made no secret of the fact that we are interested in attempting to broaden the entrepreneurial base of the B.C. economy, and we see one good way to do that by opening up the opportunity for our employees to participate in this process and become — in that sense — self-employed entrepreneurs. We think that is a valuable social objective, and we don't think it's fair to automatically conclude that it would result in any denigration of the service provided itself. We believe we will be capable of guaranteeing that levels and qualities of service are maintained.

MR. LOVICK: I know Hansard can't record that I am smiling as I stand to speak. so I'm going to tell Hansard I'm smiling. I really enjoyed that answer, Mr. Minister, but that bore no resemblance whatsoever to the question I posed. However much I appreciate the ideological declaration, that really wasn't the question. If the fault is mine, I'm prepared to apologize; so let me try my question again. We'll come back to the ideological answer, because I think that issue needs to be addressed also.

The question I was posing — and again, I’m sorry if I didn't do so in a clearer form — is just that whole business of valuation of assets. A significant part of the case for privatization rests on the notion that we are going to reduce debt or deficit. By selling assets, we'll get the program in here — the Privatization Benefits Fund Act. We will sell off assets and also earn money on the basis of what those assets bring in — the interest on them.

The question I was trying to get at is posed by certain economists: namely, whether the first calculation is in fact correct. What we seem to be doing is saying that assets don't have value until we sell them. The argument presented by economists is that a more proper accounting would say the asset has the value you sell it for and ought properly to be recorded as having that value. That's what I'm asking the minister to address.

In other words, are we saying that miraculously we are going to discover all this money simply by virtue of selling something, when in fact we already we had the value because we already owned the asset? Does that make it clearer? Would the minister care to respond to that?

HON. MR. COUVELIER: I think I've grasped what the member is saying, but I'm a nuts-and-bolts kind of clothing salesman, and I have some trouble dancing on the head of these pins. If the member is suggesting that we should be revaluing all government assets so that we elevate their valuation as assets of government and increase our balance sheet assets by that process. I suppose it would be something that we could hire a battery of accountants to evaluate. Raising the asset value would then raise the equity of the citizens in their province, and that would make us all feel good. We could all get off a few speeches on that subject, but when it's finished, what's the consequence? Maybe the hon. member could tell me what the purpose of such an exercise might be.

MR. LOVICK: What the hon. member can tell the minister is that the converse of the proposition is to make us all feel bad, and that's what I am suggesting is wrong with the accounting procedure apparently being used. What we are doing by failing to properly evaluate those assets is to set up the case that makes privatization look like the only solution to the problem, and perhaps there isn't the kind of problem that's being presented. If we were to properly evaluate the assets in the first place, then we wouldn't have quite the same dimension of problem about debt. That's the issue, it seems.

[4:45]

[ Page 4238 ]

HON. MR. COUVELIER: I sense, then, in the questioner's persistence on this subject, that he would have us change the accounting rules as laid down by the auditor general and the comptroller-general. I sense that the traditional methods used to report government accounting transactions somehow need to be changed because the hon. member would like to have this comfort of re-evaluating our assets.

I have not run this question by our various auditors and auditor organizations to know how they would react to that. Frankly, it seemed like such a useless exercise that it never entered my head. I'd be pleased, however, in the interest of moving this discussion along, to undertake to provide that information — that is to say, the opinions of the comptroller general and the auditor-general on this basic question — if that would be the desire of the member.

MR. LOVICK: Sadly, Mr. Chairman, the minister decides once again to take the easiest way out of a thorny problem and to personalize the debate so that whatever I say will be construed as an attack on the comptroller-general or the auditor-general.

What I will do is simply provide the minister with copies of some statements made by economists, presenting just the case I have tried to — perhaps not very well. I think there's a valid argument to be presented there. I'm convinced there is, and I'm suggesting that the entire case.... Again, I'll be more careful in my choice of words. I'm suggesting that a substantial part of the case for privatization — namely, debt and deficit reduction — is called into question because of an accounting mechanism or evaluation approach that perhaps does not take sufficiently into account — pardon the play on words — what the actual value of the assets is. That's the proposition, and I think it's a good one, whatever the minister may say.

Let's turn now to a couple of rhetorical flights of fancy that the minister offers us as justification for this particular measure.

Interjection.

MR. LOVICK: Somebody suggests that there is a particular irony invented in my last utterance, and perhaps that's the case.

I can't resist making an observation when I hear the minister talking — and dare I say in rather self-righteous and congratulatory terms — about how we are going to protect future generations and how they will benefit, etc. We're probably all committed to that. The question, however, is whether this mechanism is the right one to achieve that end and also whether — and I recognize that we stray a little far a field from this particular fund — this mechanism is indeed going to provide services for this generation which it has every right to expect.

So I think, with all due deference, that we're perhaps setting up a conflict between our two sides that is a little overstated, to put it mildly. Having said that, I don't think I have much more to say on section 2.

Section 2 approved.

On section 3.

MR. CLARK: We've canvassed this a little bit, but I can't help, when I read section 3 of this bill, seeing how wide open the clause is.... It says: ".... the proceeds of a privatization transaction that has been designated as such by the Lieutenant Governor in Council...." And then it says: "...shall pay all or a portion of the proceeds, as specified by the Lieutenant Governor in Council...." So the definition of "privatization transaction" is that which the cabinet decides is a privatization transaction. The definition of "proceeds" is that which the cabinet decides are the proceeds. In other words, whatever the government wants to put in the fund, they're going to put in the fund.

Interjection.

MR. CLARK: Well, it seems to me that while we recognize the political motive on the part of the government, they could come up with legislation that at least gives us some understanding, other than the political motive, as to how the fund is actually going to work, some understanding of how big the fund is going to be, some understanding of whether it's net or gross proceeds, some understanding as to what qualifies as a privatization sale, instead of simply saying that it leaves it wide open for government initiative.

Maybe the minister could tell us whether some of the social services which may be privatized down the road would also qualify as privatization initiatives. For example, if we sold the ambulance service — and I understand that the minister has said that for the time being that's not being discussed — would the proceeds from the sale of the ambulances go into the privatization benefits fund?

HON. MR. COUVELIER: Talk about a loaded question, Mr. Chairman. The government has said repeatedly that they're not selling the ambulance service, so the question needn't be responded to; it's not an issue.

MR. CLARK: Well, there are other.... The government is in fact privatizing elements of the ambulance service; we know that — the transfer, etc. The difference is that they're not selling assets. Would the minister agree that the proceeds from privatization would only be proceeds from the sale of assets? Maybe we can get it narrowed down a little bit — so that the sale of a government contract or services might in fact be privatization, but the proceeds wouldn't qualify to go into this fund. We're not really dealing with social service privatizations, but with public assets being sold. Is that a fair comment? Or is it simply wide open for whatever the government decides?

HON. MR. COUVELIER: Mr. Chairman, I think it's fair to say that we would consider them privatization proceeds if they arose from the transfer to the private sector of operations formerly carried out by the government, by the public sector. I can't be more specific than that. As I explained to the hon. member some time ago, we cannot predict the kind of inquiries and interests that the private sector may have in this initiative. So I don't want to limit, by my answers, any options that may exist out there that I'm not presently aware of — nor is the hon. member, I suspect. These matters will unfold in the fullness of time, and it's our intention to ensure that the proceeds go into this account when they properly

[ Page 4239 ]

belong there, and that every generation of British Columbians will benefit from the wise decisions this government makes in that respect.

MRS. BOONE: This is really interesting. Can the minister tell me....? There's been some talk, with regard to the highways, that the government may not sell off all the assets of Highways, but may lease them — for example, leasing out vehicles. If they were to lease out the vehicles to the contractors who are coming in, would the lease payments for those vehicles then go into this privatization fund, or would they go into general revenue to offset some of the costs of highways?

HON. MR. COUVELIER: Insofar as we have not concluded any of the highway privatization initiatives, and insofar as we have now called for public proposals, I think I've got to give the same kind of answer. I can't predict with any comfort exactly how those deals might be structured. But when it was originally conceived, it was thought that we would sell the equipment to a leasing firm that would then lease to the successful bidders for the privatization initiative itself. But by virtue now of us going out into the marketplace and calling for proposals, I once again don't want to mislead the House. It will only be a matter of another few weeks, as I understand it, before we start to deal with the first highway privatization initiative. Once we get those offers confirmed, vetted, checked, verified and some costs benefits taken off them, then we'll be able to illustrate to the House exactly how we will deal with it. But until we do that, I really don't want to be in a position of misleading the House.

MRS. BOONE: There's been a lot of contracting-out and privatization that's a very subversive way of doing things: contracting out areas such as mental health and alcohol and drug programs. When they do this, they've been going out sometimes to companies, sometimes to societies. The assets that were previously part of those organizations where mental health staff have been reduced, where they are now not functioning.... Are you saying then that proceeds from the sale of furnishings, etc., any kind of equipment that was in those offices, will be going into this fund?

HON. MR. COUVELIER: I apologize to the hon. member. I have no knowledge of the specific case you're describing. That might more properly be directed to the line ministry. Dealing with the privatizations that we've dealt with so far, when furniture and equipment was needed for the private sector to take over the initiative, then that was sold with the service being contracted out. So that was part and parcel of the assets, if you like, that were sold. But I don't want to mislead the member; I'm not familiar with that specific case in the health field that you describe. The line ministry is going to have to deal with those specifics, I think.

MRS. BOONE: The minister doesn't seem to have a great depth of knowledge as to what will be going into this privatization fund. There are things occurring all the time that are privatization measures, contracting-out measures, and they're taking place at every turn. For example, I believe the alcohol and drug program in Quesnel has recently been privatized. It's gone to a private society. There obviously must be assets that were part of the alcohol and drug program in Quesnel. Has the minister not anticipated what is going to happen to the equipment in these areas? Are the ministries not advising the minister as to what is being privatized, contracted out? Are these not areas that people all understand, or have you not dealt with what is going to happen to the equipment in these various areas? It's happening on just about a daily basis. The minister ought to understand that if you're saying this fund is going to be — how did you put it? — in perpetuity for all of our children and what have you, then you ought to be putting this money aside, because by God we're going to need it by the time you guys sell off everything.

MR. LOVICK: The more I listen to what's going on and the more I look closely at the language of this thing, I start to get apprehensive anew.

My question to the minister is really quite direct. Section 3(1) states: "Where the government receives the proceeds of a privatization transaction that has been designated as such by the Lieutenant Governor in Council for the purposes...." etc. Is that language typical, Mr. Minister? That seems an incredibly curious way of talking about the proceeds of a sale of assets, and I'm wondering whether there's something else we're supposed to see there. Or is this to give some incredible discretionary power to the cabinet — i.e., the Lieutenant Governor-in-Council — to say that some things will be called privatization, and some won't? Why that language? It's curious.

[5:00]

HON. MR. COUVELIER: The question was put in that same kind of generic sense by an earlier questioner, The language chosen is specific and deliberate, and its intention I think should be obvious to all. I spoke to this issue earlier this afternoon.

MR. LOVICK: The predicament is that it is precisely because of the minister having spoken earlier to that question, and the answer we received to that question, that I raise the question anew. To be quite blunt about it, I do not see the justification, nor have I heard the justification, for that language. Why that discretionary power? I'm sorry if I'm obtuse; if I've missed something, I would ask the minister to enlighten me. Why that language? Why the discretionary power built into that? Something that has been designated as such; why must it be designated?

HON. MR. COUVELIER: Well, Mr. Chairman, I'm disappointed. I've now got two members in this House who obviously are not going to support this bill. It is something that I would have thought would have had almost unanimous endorsation.

To the question which I responded to earlier, I'll give the same generic response. We cannot predict today with any certainty exactly what kind of interest there will be in the private sector in the range of government services and Crown corporations that we are calling for proposals on. Therefore it's important that we write the legislation in a way that will embrace all eventualities.

You can't have it both ways, my friend. The issue here is: how do we write a bill that allows us to be able to make good value judgments in the interest of British Columbians, and at the same time to proceed with what is a very popular initiative, the privatization initiative? We are saying that the

[ Page 4240 ]

funds will be held in perpetuity. Now you have that assurance. We're not going to use the funds for the crass political purpose of balancing the budget in an election year, for example. Unlike other governments around the world who do that, we're not going to do that.

All we're going to do is ensure that the interest on the proceeds of the sales will be used every year to reduce the cost of government, or conversely, to increase the level of services provided by government. The act is written this way intentionally, hon. member, to allow the government to fulfil its objectives of proceeding with this very popular and supportable initiative to privatize some of the services and Crown corporations that we presently operate in the public sector.

MR. LOVICK: One other question on section 3, a simple question. I ask the minister why it is that since the proceeds of privatization are being put into the fund, there is apparently no effort being made to put the debits of privatization, the costs of privatization, into the calculus somewhere. I see the minister proceeding to unfold, literally. If the case is being presented here that we are trying to be honest, that there's no political shenanigans going on, that this is upfront, this is honest, then for heaven's sake let's have some fair accounting.

If you want to be able to point to this fund that's growing and earning interest, and is doing all of these wonderful things so you can go and tell the world about the benefits of privatization, the question surely is fair and can be put: why don't you do something then to record the debts, the debits or costs? For example, the early retirement incentive plan — one cost of privatization, somewhere around $34 million to $68 million. I still have a question on notice about that. Haven't got an answer yet, and it's been over a month.

Interjection.

MR. LOVICK: Yes. What about all those other costs? Are those things going to be reckoned here too, or do we only see the assets? Is there no downside to this thing?

HON. MR. COUVELIER: It is the government's position that the early retirement program is not part of the privatization initiative. I understand that it is the opposition party's position that it is. We can put this issue to a vote of the House and determine how the House feels on it, but I'm telling you that this government does not perceive that as part of the privatization initiative. It was done for a variety of reasons.

One of them was, obviously, to effectively attempt to reduce the size of government. The other one was to try to provide some promotion opportunities and career advancement opportunities for middle-level management in the government service. I'm pleased to tell the House that that has been the consequence. We've been successful in our objective in that respect. We anticipate that we will also have reduced the size of government when the dust has settled on this issue.

The hon. member made reference to a question on the order paper and we are awaiting the information. As soon as it is provided from the superintendent, we will be pleased to forward it. As I understand, it is a convoluted, complicated process and one that takes some time.

MR. LOVICK: I was just about to leave this whole matter and say, "What the heck; let it go." Then I listen to the answer, and I hear this incredible leap of logic that says: "The world is whatever I want it to be; I will define it as I choose regardless of what the evidence to the contrary may be." To pretend for a moment that the exodus from government service has nothing to do with privatization is a leap that makes Debbie Brill look like a rank amateur. It is so patently, clearly evident that what we're talking about is a number of people who have given up on government service because of privatization initiatives. If the minister wants testimonials to that effect, we can provide them, I assure him.

My mind is boggled to discover that the minister is trying to make that claim and can do so with clear conscience. During a debate we once had, I suggested you reminded me of Peter Pan. You made this marvelous declaration that you could fly, and now I see that it's really Alice in Wonderland you're invoking — you know, "the world is as I want it to be, regardless of what the evidence and the concrete manifestations might be." On that note I will leave section 3. There is no point in going further.

Section 3 approved.

On section 4.

MR. CLARK: I won't belabour the point that the member for Nanaimo made, but this seems to me the appropriate section of the act that deals with payments out of the fund. I wonder if the minister could give us an indication of whether any costs associated with privatization could be paid out of the privatization fund. The member said "early retirement." Let's give some other smaller examples.

For example, in the B.C. Hydro natural gas sale, which is the biggest sale to date, there are endless studies being prepared by the government by Mr. Parker, formerly from the Bank of British Columbia, and by Mr. Emerson and others — all kinds of studies which I assume cost a lot of money. Would those costs associated with that be absorbed by the proceeds from the sale?

HON. MR. COUVELIER: As a general comment, the costs of vetting the privatization proposals are absorbed by government operations as a general cost. Now there may be some specific charges charged to the privatization process, and I think the hon. member has identified one of those that might be. But as the hon. member is aware, much of the investigative work, analysis, number-crunching and cost benefit determinations are being done with in-house, existing staff, and no effort is being made to isolate those costs and charge them to the privatization initiative.

MR. CLARK: It seems to me there should be some effort, whether it's done in-house or contracted out. It seems to me that those costs are real costs of the privatization initiative, and if the government purports to put the net proceeds into a fund, and if they want to be fair, they should take all of the costs associated, including Info Line — all those people writing all those things — the lawyers fighting the Verrin decision and all that stuff. It should be listed somewhere as costs of privatization so that we can stack that up against the benefits that are going to go into this fund.

It would seem appropriate not to limit payments out of the fund to simply paying down the deficit, or in fact you may

[ Page 4241 ]

want the payment out of the privatization fund to go into paying many of these incidental costs that are associated with privatization. It would give us a true accounting. The minister says he doesn't want to play politics with this. Maybe that's one way of giving us a true accounting of the complete costs of this privatization initiative.

We have dozens of — maybe as many as a hundred — people working away. Every time I turn around there is another committee that's analyzing another sale of the government assets. There is nothing wrong with that — that's within the purview of the government — but we should be able to see what that's costing the taxpayers of British Columbia so we stack up the initiative and see how this government did in terms of their performance in dealing with what is to date their major government initiative.

MR. LOVICK: I just wanted to pursue the point made by my colleague and put it in a little more direct form. I would like to remind the minister that I have indeed some dozen written questions on notice, and there are 11 questions under each of those dozen questions, all posing just those kinds of questions and raising those kinds of concerns: namely, whether there has indeed been any kind of reckoning and whether we have done some calculation of what the cost of this transfer will be. I think those are absolutely legitimate questions. The minister, a few moments ago, suggested that some of our questions on this side were being addressed, and I'm wondering if he could tell me whether those specific questions are indeed being addressed. I'd like to know.

HON. MR. COUVELIER: I might have misled the member, and if I'm guilty of that, I do apologize. I had leapt to the assumption, by virtue of his introduction to the question put to me some time ago, that the question he was referring to was the cost of the early retirement program. My assumption was correct? All right. The answer to that question is still not complete, so that will be provided in the fullness of time. I have a memory that the other questions you are now referring to were addressed to someone other than me, so I'll let that person deal with your curiosity on those matters.

MR. LOVICK: Surely, however, Mr. Chairman, the minister's own curiosity must be burning to have answers to those questions and he would join me in encouraging the Premier to provide such answers.

Let me just make the point that one of the reasons we on this side have the concerns about the costs of this is that we know, for example, using the British experience, that the cost of transfer of assets was enormous. It was huge. If my memory serves at all, I think it was some 190 million pounds involved in the cost of advertising and commission payments for the privatization, the sell-off, of British Telephone alone. So there's a tremendous amount of money that is perhaps involved in this kind of process. Therefore we on this side of the House are legitimately concerned about it and would like some further assurances from the minister as to whether those kinds of costs (a) have been contemplated and (b) will be shared with us and presented to us.

[5:15]

HON. MR. COUVELIER: I can tell the hon. member that we are certainly not spending anything like 190 million pounds on this initiative, and by virtue of doing so much of it in-house, of course, the cost in that sense is not going to be isolated. If the hon. members are making the point that we should somehow hire a battery of cost accountants so that we can allocate time spent on these things, let me ask the hon. members: should we charge out the time on this House debating privatization? Is that also a legitimate cost of privatization?

There are some things that government provides that we just pay for out of the total accounting and reporting budget. I don't see any great need for us to all of a sudden spend even more money for the purposes of identifying the cost of privatization if it's done in-house. To the extent that there are outside costs, of course. that's a different matter. but I can't agree with the suggestion that we should develop some elaborate cost-accounting system so that the curiosity of the House can be obliged.

Section 4 approved.

On section 5.

MR. CLARK: This is a very interesting section. Maybe the minister can explain it, because it appears to me to exempt the investments from the privatization fund from scrutiny of the Financial Administration Act.

HON. MR. COUVELIER: We are dealing with section 5, Mr. Chairman. This section sets out the investment parameters for money that is in the special fund. Surplus funds are actively managed by the province in order to maximize investment returns. Section 36(1) of the Financial Administration Act defines the investment parameters for money in these special funds. As well, this bill permits Treasury Board to approve other classes of investments, in addition to those specified in the Financial Administration Act, as allowable investments for this fund. Section 36(1) of the Financial Administration Act states:

"Where money of the consolidated revenue fund is not immediately required for payments the Minister of Finance may, on terms and conditions he considers advisable, invest it in any of the following: (a) securities that are obligations of or guaranteed by Canada, a province or the United States of America; (b) fixed deposits. notes, certificates and other short term paper of or guaranteed by a savings institution including swapped deposit transactions in currency of the United States of America; (c) securities issued by the Municipal Finance Authority of B.C.; (d) commercial paper issued by a company incorporated under the laws of Canada or of a province, the securities of which are rated in the highest rating category by at least two recognized security rating institutions; (e) options and financial futures, including currency and fixed income instruments."

MR. CLARK: Well, Mr. Chairman, the minister has read out section 36(1) of the Financial Administration Act — we understand that. What I'm asking is: it says that notwithstanding that section, they can invest money that is in the fund in other things that are approved by Treasury Board. What I'd like to know from the minister.... I understand the Financial Administration Act. What you've done here is ask for something much beyond that, and said that notwithstanding that section, you want the ability to broaden the investments in other things. I want to know why you want the ability to

[ Page 4242 ]

make investments that are not prescribed in the Financial Administration Act.

[Mr. Pelton in the chair.]

HON. MR. COUVELIER: Mr. Chairman, I have an obligation to maximize returns when I can. Therefore it's historically true that on a long-term basis you can improve the return from traditional FAA kinds of funds if you invest a portion of these funds in equities, for example. By virtue of the Financial Administration Act not perceiving the need for equities, this fund does.

We did a study I think the hon. member might remember on investment diversification generally. My memory is that over a ten-year period we would have added an extra 25 percent, I believe, to the value of the fund had a portion of those funds been invested in equities. Clearly, if the objective is to maximize return, the Minister of Finance must have that flexibility, Mr. Chairman.

MR. CLARK: It seems to me that this is a fairly important matter. If the minister is saying that the Financial Administration Act is not broad enough to provide a fair return for the taxpayers of British Columbia — and we can engage in a discussion about that, and I might even find some common ground with the minister in some of that — the question is, then, change the act. This appears to bring in the back door a broadening and a loosening of the regulations regarding the money which should be done in an upfront fashion.

The reason this is important is the discussion we had earlier regarding the ability of the government to inflate the size of this fund if it so desires. Maybe the minister can deal with some specific questions. In the pension fund discussion that's going on around diversification of the pension fund assets, the minister has talked about, for example, a small percentage being used for risk capital, venture capital. We don't have a pension act, so we're governed in our public sector pensions by the Financial Administration Act, which is very conservative. If the minister wants to take some more risk in order to get a higher rate of return for this fund, as opposed to all the other funds, then it seems to me it's incumbent upon him to explain why. And if he really feels that the act is too conservative, then there should be some change to the act. Maybe the minister could help me if I'm leaping to the wrong conclusion in this respect — whether there are any other funds that have the same magnitude of investment that the minister is asking us to approve here today with this section.

HON. MR. COUVELIER: The member, I believe, is aware of the fact that we manage somewhere between $16 billion and $18 billion in pension funds and trustee funds, so I take it he's not referring to those. And I take it that his question is designed to indicate whether this is the only fund which we would envisage investing in equities. Is that what he's asking? For the moment, Mr. Chairman, that's true. That's correct.

MR. CLARK: Then it's really quite significant. I don't want to spend hours on this and delay the passage, but it seems to me that the minister has an obligation.... If he wants to bring in legislation which significantly alters the investment practices of the government, at least in this small fund, then he should be upfront about it. It seems to me that people might want a thorough debate on the investment practices of the government.

What the minister is saying is that the billions of dollars they currently manage is being invested in a very conservative manner, and they want the latitude to be able to invest it in a slightly more risky manner. I'm not saying that's going to be the end of the world, but for the first time we've seen in legislation a fairly significant shift in the government's philosophy. The minister has confirmed that this is the only one in which that would be the case.

Would the minister then give us some indication as to the intent of this? Is it simply, as he says, to invest in equities, or is it to invest in British Columbia — say the venture capital corporation? Is it to invest in the British Columbia stock market? Is it to invest in or to give some money to the eight regions to use for risk capital? Is there some other agenda here that we should be aware of? Again, I want to make the point to the minister that I'm not necessarily opposed to this, but I want to know the agenda with respect to the use of public money.

If the minister wants to play with this money, so to speak, in a slightly riskier fashion, then the previous discussion we had about the size of the fund is maybe more important. The government can fairly easily inflate the size of this fund by putting gross proceeds in and paying down the net, or making whole the debt by paying it out of general revenue. By doing that we're not only inflating the size of the fund, we're inflating the pool that can be used for riskier investments than we've heretofore made in British Columbia. This would be the first time in British Columbia, certainly since the passage of the Financial Administration Act, that we would be embarking on any public money being invested in equities. Is that correct?

HON. MR. COUVELIER: Half correct. I believe there is still a legacy from the days of socialist government in B.C. where some equity stocks are held by the government of B.C. I believe there were a number of initiatives undertaken by the government of that day that had the consequence of government owning equities. I believe we have some holdings, for example, in B.C. Telephone stock that were undertaken back in those days, and I think there are a few others. To the extent, then, that the member ignores those illustrations and talks about a more recent event, the answer to his question would be yes.

MR. LOVICK: A technical question, if I might, on section 5: will the minister advise me whether, in the phrase "investment of a class," "class" has a particular technical meaning?

HON. MR. COUVELIER: I believe the Financial Administration Act uses the term "class of investment." I believe that's where it comes from, hon. member.

MR. LOVICK: It is not the case, however, as I understand it. There is a particular nomenclature that says class 1 equals blue chip stocks and class 2 equals.... If that's the case, I'm a little apprehensive. Some time ago the minister said he was a nuts and bolts man. I'm a little apprehensive about that, because it seems to me that he is indeed a tinkerer. I detect a little tinkering here, which causes me some apprehension and misgiving. After all, we all know that the only way you can increase the return on your investment is by increasing the

[ Page 4243 ]

risk, at least according to the logic of the marketplace as we've all been taught it.

I'm wondering, given that what we are effectively saying here is that Treasury Board can do whatever it wants in terms of investing the money, whether we are perhaps going to be contemplating the prospect — and I'll be a little facetious — of saying that somebody has a hot tip on a horse-race, or we're looking at the Lotto 6-49 coming through big this week, and what the heck, maybe we ought to invest a few thousand dollars in that. I would just remind the minister that, after all, we're talking about public funds, public assets, and trying to get some kind of reasonable return. I'm wondering, again simply to pick up on the question posed by my colleague the second member for Vancouver East (Mr. Clark), why we have to come up with something novel and different in terms of investment, something beyond the mechanisms made available in the Financial Administration Act. Is it that we're looking for some gigantic increased return that otherwise would not be available? Why do we want this extra latitude?

HON. MR. COUVELIER: Mr. Chairman, I'll be very pleased to send over to the hon. member a document that outlines the benefits of what we in the trade call — I shouldn't say "we," because I don't think I'm a member of it, but what the trade calls — diversification. When the member obtains this document and peruses it, he will learn that by virtue of investing a portion of our investments into equities, we would have increased the overall value of those funds.

[5:30]

Interjection.

HON. MR. COUVELIER: Not quite, hon. member. The mutual fund issue is a different one — as I understand it, at least. We're talking here about maximizing return in the public interest. These are public moneys. I have a legal constitutional obligation to protect the government's and the public's money. I do hope the member had his tongue in his cheek when he talked about horse-racing or lotteries. The fact is that a greater return or percentage can be received on the long pull, not on the short term. Just to give the member some global figure, I don't think it would be in the scheme of things where that number invested in equities would be.... It should be in the range of 25 to 35 percent of the total sums. That's the standard rule of thumb used by the trade. I'm satisfied, hon. member, that the public's interests are better served by having this flexibility than they are by the current restrictions as contained in the FAA.

MR. LOVICK: Pursuing that for just a moment, then, Mr. Chairman.... However, is it not the case that investment dealers, when they talk about long-term, are talking about a very long term in order for those kinds of statistics to be proven? If you were to take a five-year period, you don't have a large enough base or longitudinal axis, I gather, to enable you to conclude that yes, you can earn a greater return on your money. Is it not the case that when investment dealers say "the long term," it means "a very long term"?

HON. MR. COUVELIER: Mr. Chairman, my memory is the that the time-frame we examined was ten years.

MR. CLARK: Of course, the report came out just about a week after October 22, which was interesting.

The minister said he has a legal obligation to protect the public in terms of investment. What is normal is to say that a percentage of a particular fund will be used for high-risk investment. That's quite common — there's a basket clause, or something like that. This doesn't say that. This gives Treasury Board the power to invest the whole amount in whatever it wants. So I would feel more comfortable, Mr. Minister, if you had said to us: "We think the Financial Administration Act is too conservative. We want a basket clause." I and other members on this side might support that — to invest in equities and stock, British Columbia companies, or whatever parameters you want. This doesn't say that. This is quite different, it seems to me, and quite significant in the power it gives Treasury Board to use the moneys accrued in the privatization fund for other investments.

So what it says to us is that there is the potential to use the fund in other ways — for example, in lending all of the funds to high-risk venture capital. That would be allowed under this clause. It would allow the fund to invest all of the money in the eight regions. for example.

I simply want to say that it seems to me, to be prudent.... If you look at the report the minister has been referring to — and I have no quarrel with it — it says: "Let's take a little bit of public money and invest it in high-risk ventures." But that's not what this clause says. This clause says all of the funds, and we don't have any idea and the minister's given no indication how big this fund will be; it's completely at cabinet discretion. It seems to me that this clause allows all of the funds to be invested in high-risk ventures.

It allows the fund to be used, I might say also, politically. I'm not saying it will be at all, but it does allow that, because it says.... I'll give you an example. Say the B.C. Enterprise Corporation wants to give a loan. What could happen is that the privatization fund could give deferred shares to the company. Instead of them getting a loan from the government — which the government has moved to instead of grants — they might now get shares; or the privatization fund might buy preferred shares in the venture. That might not be a bad idea, actually. It might be an interesting idea to use this money to generate investment in British Columbia. But it seems to me that's quite a different measure and we should have a full debate and discussion about that. We should have parameters for which that fund can be lent. We should have a broader public policy debate around a basket clause for British Columbia investments, instead of coming in the back door in this particular clause and saying that this particular fund is exempt from the provisions of the Financial Administration Act. That causes me some concern.

HON. MR. COUVELIER: I'm pleased to assuage the hon. member's concerns that these matters have to be approved by Treasury Board, so he should take some comfort from that.

MR. LOVICK: Would we could take comfort from that, except I believe the chairman of Treasury Board just answered a question for me a few minutes ago, and I'm not suggesting for a moment he intended to give me the wrong information, but the information, I think, is incorrect, namely that class of investment I now discover is not defined in the Financial Administration Act. Rather, apparently, it's in the Trustee Act. Section 15 of the Trustee Act has a list of particular classes.

[ Page 4244 ]

This bill, however, bears no relation at all to that act. Therefore, to simply reiterate a point I made earlier, theoretically any investment would be possible, left entirely to the whims of the Treasury Board and the vicissitudes of political fortune and circumstances. Ergo, we are concerned.

Section 5 approved.

Section 6 approved.

Title approved.

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

Motion approved on division.

The House resumed; Mr. Speaker in the chair.

Bill 17, Privatization Benefits Fund Act, reported complete without amendment, read a third time and passed.

HON. MR. STRACHAN: Mr. Speaker, with leave, I call committee on Bill 14.

Leave granted.

BUDGET STABILIZATION FUND ACT

The House in Committee on Bill 14; Mr. Pelton in the chair.

Section 1 approved.

On section 2.

MR. STUPICH: The question I have to ask the minister is: where will this fund appear on the balance sheet? Will it be included in the net equity along with everything else? Will it be a separate item on the balance sheet? How will it show up in public accounts on the balance sheet — on the combined or consolidated or whatever we want?

HON. MR. COUVELIER: We haven't decided yet.

MR. LOVICK: To begin, I note that the explanations for the budget stabilization fund are varied and indeed different — one from the other. For example, the explanatory note makes the point that the fund is designed "...to stabilize government operating revenues." The minister, however, is quoted in another place at another time as saying that the purpose of the fund or what the fund represents — not to put words in his mouth — is "...a new philosophical approach to the responsibilities of government budgeting."

The first point I would make is to ask the minister whether his sense of history is indeed that limited. There was in 1982 — and I think I misled the House earlier when I suggested the date was '85; it was actually 1982 — the establishment of the resource revenue stabilization fund. It seems, from looking at the record, that that particular fund had the same motive precisely. It is indeed the case that there is nothing new under the sun; we have heard this before. It seems we have gone from RRSF to BS. That seems to be about the only significant difference.

The question is: what happened to that resource revenue stabilization fund? Did it indeed do what it was set out to do? Was it in fact supposed to provide some kind of Keynesian approach to offsetting down times with good times by having a little extra latitude given government and given the Minister of Finance? In 1985 the fund had, according to the records, some $429 million. However, by the end of 1986 the fund had nothing — not one thin dime — and the reason is that it was eliminated to pay the historic debt of the B.C. Railway. This particular fund, this effort to smooth out the ups and downs and the rough edges of government revenues coming in or not coming in, disappeared.

The reason I raise that question and put that little bit of history on the record is that I wonder if the so-called budget stabilization fund may have a similar purpose. I am especially concerned when I think of the initiatives we have just been discussing — namely, privatization — if what we're looking at is, rather, a fund created for purposes of what is usually called hospitalization, a term I've used before. In other words, we take this discretionary amount that's put into a fund, and we use it to improve the financial position of a particular entity so that that entity then becomes more attractive to a private purchaser.

That is certainly what has happened in Britain. Of course, from all reports that has indeed been the shining example pursued by this government. I am sure the minister will agree that we have legitimate cause for concern.

So those are two different views of the budget: one, as I say, is this design to stabilize government operating revenues; second is the new philosophical approach that isn't really a new philosophical approach. Perhaps I will pause there simply to ask the minister if he'd care to respond by perhaps assuaging and allaying my fears about this fund being used for something as specific as hospitalization of given entities or corporations that the government may be contemplating selling. Will he assure us that that is not at all the case and categorically that this fund will not be used for that purpose?

[5:45]

HON. MR. COUVELIER: The budget stabilization fund is for the purpose of capturing windfall, one-time, unique revenues that we wouldn't anticipate coming in the normal course of government business. So they're not limited just to resources — point one. This is a statement of this government's belief that the budget is merely a management tool. We apportion spending into envelopes on the expenditure side, and we forecast revenues on the revenue side. To the extent that those revenues are unique, windfall, or one-time, we will isolate those funds and put them aside for the rainy day. The objective here is to allow our young people to get up to the starting line with an even break. We think that it's important that we have the resiliency and flexibility to allow us to maintain essential services whenever, if ever, the economy has a downturn.

The hon. member seems to be concerned that we'll use this for election purposes, I take it. They had the same concerns about the privatization fund. I mean, it's like they're paranoid. They keep protesting about how they're not afraid of election, yet I've heard all afternoon about what our election plans are, as if they have great concern about it. I'm a

[ Page 4245 ]

little bit confused about whether they really would like to see that event take place or not.

I have said publicly that we go to election about once every three or four years. Therefore it's fair to assume that a downturn might occur in an election year maybe 25 percent of the time — something of that order; I have no idea. But I have not talked to a major economist — and I talk to them regularly — who does not believe that we'll have a downturn in the economy at some point in the future. They disagree as to when, but it works in cycles, Mr. Chairman, and it will happen again as it's happened in the past. When it does, by virtue of this government's ingenuity, imagination and determination, we will have the funds available to ensure that essential public services are maintained.

MR. LOVICK: I'm starting to keep score; I'm going to run a tab here and try and determine if there's a causal relationship between certain things I get and a sudden urge to be rhetorical on the part of the minister. I haven't quite discovered what the link is, but I know I've got a particular phrase that sets him off, and I'm going to keep at it because I so enjoy it.

First of all, the notion of windfall revenues.... Were we credulous, Mr. Minister, we would accept the argument, but we aren't that credulous. Obviously there's a pattern about revenue estimates that we've seen lo, these many, many years. Again, I can't resist responding to the comment that the minister made. It's not so much a concern about an election; it's a concern about whether the elections are fought fairly or whether in fact we're talking about using the budget in a way that is designed to benefit one side in a way that is probably a little tawdry, if not directly dishonest. That's the concern. On any open field, at any given time, we are prepared to have an election. That's not the question, rather; the question is, what kind of an election are we talking about?

The statement about economists and how they are indeed talking about, "Yes indeed, we must prepare for a rainy day," all of those arguments would have considerably more value — and strength, I suppose — if it weren't the case that people have responded to the announcement of the BS fund by questioning precisely whether those arguments indeed hold up. Let me quote a couple. For example, the Institute of Chartered Accountants' president has said of the fund: "This is not real money. It's just a number transferred to a future year." She goes on: "These are not normal accounting principles." So the question then is: are we just talking about some kind of rainy day fund or are we talking about something quite different? As my colleague the first member for Nanaimo (Mr. Stupich) has said on a number of occasions, we're talking about a fund that doesn't have any real money to support it, a fund that is simply a transfer from one side of the ledger to the other. That same point, by the way, has also been made by the certified general accountants' spokesperson, who says that a rainy day fund is, to be sure, a good idea, but this one looks more like a slush fund. In other words, Mr. Minister, we're not entirely sure we can accept your assurances about rainy day funds, given that experts in this area have indeed come up with a quite different conclusion.

Regarding the minister's comment offered in some derision and with some disbelief that anybody could think of this as being just a political kind of fund, let me quote to the minister what he said, at least as reported in the local newspaper. According to the Vancouver Sun of March 29, 1988, the minister said that the fund could be used "to support social programs or lower taxes or whatever the government decides to do with it — build highways, get themselves reelected, whatever they want...." Do you wonder, Mr. Minister, why some of us are asking whether this fund has any real budgetary or economic validity or whether it is all show, all about winning elections? I think we have some grounds for being a little skeptical and perhaps a little cynical.

I have a question, though, having made those few comments in response to the minister's. I'm glad to see that the first member for Vancouver South (Mr. R. Fraser) is perhaps rising to the occasion. How nice that would be, to see him back again and having rediscovered his voice.

The question I'd like to pose to the minister is a direct one; it's about dollars and about interest rates. What the fund is talking about doing instead of paying down debt is setting up a rainy-day fund — right? That's what we're talking about: taking the sum of some $450 million and using it for special purposes rather than to reduce the debt. Correct? The question I want to pose is: how much will that approach save us? Have we done some studies? Have we done some analysis to say: "Yes, indeed, the amount that we are currently paying in interest payments and debt servicing to carry the debt load that we have will be significantly less than what we will earn by collecting interest on this particular new fund." Could the minister give me some information whether that kind of study or analysis has been carried out?

HON. MR. COUVELIER: Mr. Chairman, the issue is really whether we just reduce the deficit or create the fund, as the member said. We manage our cash on a daily basis, so there's no question of interest cost in that sense. We've done so well last year, for example, that it meant that we had to borrow less, because we manage our cash on a daily basis, so the cash is put to use.

The member got some quotes off. I have a series of them here that we could get on the record, but I'm still interested in getting this legislation through this evening if we can, so I won't do anything other than answer the member's question.

MR. LOVICK: Perhaps the minister can give me a direct answer to my question. Do we have some evidence to demonstrate that the money we are going to earn on interest on the budget stabilization fund — the $450 million — would be significantly more or will net us more than what we would have gained by not paying the interest on the outstanding debt which we didn't pay in order to set up the budget stabilization fund? I think that's a fair question.

HON. MR. COUVELIER: It certainly will not cost us any more money.

MR. LOVICK: Mr. Chairman, clearly we're not going to finish; we're only on section 2, I believe. A number of my colleagues have questions too. I'm wondering then, Mr. Chairman, if it might be in order for me to move that the committee rise and report progress and ask leave to sit again.

[ Page 4246 ]

HON. MR. COUVELIER: That's fine, Mr. Chairman. We're happy to oblige.

Motion approved.

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

The House resumed; Mr. Speaker in the chair.

HON. MR. STRACHAN: I'll advise the House, pursuant to standing order2(2), that we will be sitting tomorrow afternoon. With that, I'll move adjournment.

Motion approved.

The House adjourned at 5:56 p.m.