TUESDAY, MAY 10, 1988
Morning Sitting
[ Page 4351 ]
CONTENTS
Routine Proceedings
Vancouver Charter Amendment Act, 1988 (Bill PR403). Mr. Mowat
Introduction and first reading –– 4351
Vancouver Charter Amendment Act (No. 2), 1988 (Bill PR405). Mr. Mowat
Introduction and first reading –– 4351
Special Accounts Appropriation and Control Act (Bill 18). Committee stage.
(Hon. Mr. Couvelier) –– 4351
Mr. Stupich
Mr. Cashore
Ms. Edwards
Hon. Mr. Strachan
Ms. Smallwood
Mr. Miller
Budget Stabilization Fund Act (Bill 14). Committee stage. (Hon. Mr. Couvelier) –– 4361
Mr. Stupich
Mr. Williams
Ms. Marzari
Appendix –– 4363
The House met at 10:07 a.m.
Prayers.
MR. MOWAT: It is my pleasure today to introduce Mr. Don Shwery. Mr. Shwery is a member of many organizations. He is with Vanex Resources Ltd., in investor relations, and is also a director of the Gordie Howe disabled athletic foundation.
Also in the House today we have Mr. Stuart Brazier, marketing manager of North American Professional Technologies of British Columbia Ltd., a very dynamic company. I would ask the House to make them welcome.
HON. MR. COUVELIER: All of us from time to time take pride in introducing constituents and others who visit us periodically. I'd like the House to recognize the presence in the gallery this morning of two particularly dear friends of mine who have come to observe me in my time of travail: Mr. Reg Mylrea and Mr. Paddy Palmer from Greater Victoria.
Introduction of Bills
VANCOUVER CHARTER AMENDMENT ACT, 1988
Mr. Mowat presented a bill intituled Vancouver Charter Amendment Act, 1988.
MR. MOWAT: This private member's bill amends the Vancouver Charter in a number of aspects. It will give the city of Vancouver power to construct and maintain dikes and fund such projects through local improvement levels. It will make clear that the city can recover the costs incurred in demolishing unsafe buildings, and will enable city council to require off-street parking when the use of the building changes.
The bill will also amend the existing fines and penalty section of the charter to provide council with the power, if it chooses to exercise it, to impose fines to a maximum of $10,000 for breaching a bylaw regulating the use of properties. An example would be illegal suites. The city council feels that higher maximum fees may be necessary in the case of illegal use of property because of revenue derived from its illegal use, thus providing a significant deterrent to property owners. All other offences would carry a maximum fine of $2,000 as provided by the Offence Act.
A number of changes are made with respect to the Board of Parks and Recreation, including the right to enforce its bylaws by injunction.
This bill will make the downtown campus of Simon Fraser University exempt from real property taxation.
A number of amendments are proposed which deal with family suites. These changes would enable council to permit family suites in all areas, including single-family districts. As well, the power to relax provisions of the zoning bylaws in this respect would be broadened. To deal with the growing concerns over illegal suites in the city of Vancouver, the council would be provided with the authority to permit retention of one or more phase-outs of the suites for a limited period of time. This would be conditional and provide that the owner would not lose the cost of upgrading the suite.
Finally, this bill amends a number of sections of the Municipal Act to reflect changes made over the years to the act but not included in the Vancouver Charter itself.
Bill PR403 introduced, read a first time and referred to the Select Standing Committee on Standing Orders, Private Bills and Members' Services.
VANCOUVER CHARTER
AMENDMENT ACT (No. 2), 1988
Mr. Mowat presented a bill intituled Vancouver Charter Amendment Act (No. 2), 1988.
MR. MOWAT: Mr. Speaker, this bill amends section 333 of the Vancouver Charter to provide the Vancouver city council with the power to impose fines to a maximum of $10,000 for breach of all bylaws, and increases the maximum for continuing offences from $50 to $200 per day. I find the imposition of a maximum fine of $10,000 for any breach of the city bylaw to be rather harsh. Under this amendment a person who fails to purchase a dog licence will face a maximum fine of $10,000.
I would suggest that when this bill goes to committee, a rather significant amendment should be carefully examined. I believe that we as legislators would not want to impose unduly harsh penalties on our citizens for what amounts, in many cases, to a simple human error of forgetfulness.
Bill PR405 introduced, read a first time and referred to the Select Standing Committee on Standing Orders, Private Bills and Members' Services.
MR. ROSE: I have a mild concern about the way that the bill was introduced. Not that I have any argument with the argument, but I don't think it is fitting to put an argument in the explanation of a bill. I think the bill is introduced and described, but the hon. member took a position on the bill at first reading, which is a bit unusual. Perhaps we should leave the arguments to a later stage in the bill. The purpose of this practice recommendation is to merely describe what's in the bill, briefly, with a simple explanation, rather than argue for it. As I say, my concern is a rather mild one, but I think we should try and observe it.
HON. MR. STRACHAN: I have a tendency to agree with my hon. colleague. Private bills are, of course, by practice, sent to a separate committee, a committee other than this assembly. Editorial comments or arguments in an explanation of a bill could be considered to offend the rule of anticipation. The member's comment is well taken.
MR. SPEAKER: I thank the two House Leaders for their very learned comments.
Orders of the Day
HON. MR. STRACHAN: Mr. Speaker, I call committee on Bill 18.
SPECIAL ACCOUNTS APPROPRIATION
AND CONTROL ACT
(continued)
The House in committee on Bill 18; Mr. Pelton in the chair.
[10:15]
On section 4.
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HON. MR. COUVELIER: Mr. Chairman, we had some extensive questions on this bill, and after some discussions with the hon. first member for Nanaimo (Mr. Stupich) it was agreed, I believe, that in order to put on the record certain factual information, it would be useful that I read into the record a reply to a number of queries put to us. With the House's permission, may I make those comments now?
During our debate on section 4 of Bill 18, Special Accounts Appropriation and Control Act, the hon. first member for Nanaimo raised a number of questions on which I was unable to satisfy him at that time. I should like to take this opportunity to provide information to the committee in an attempt to clarify the matter and provide information for the benefit of all members.
Bill 18, Special Accounts Appropriation and Control Act, deals with changes to special accounts and special funds. Special accounts are part of the general fund which together with the special funds forms the consolidated revenue fund. Special funds, formerly special purpose funds, were established over a period of years to carry out specific programs and were provided with separate investments. The interest on the investments, and the principal in some cases, was used for program purposes. In 1982, under the Special Appropriations Act, most special funds were converted to special accounts. Their net assets were returned to the general fund. The special accounts became part of the general fund.
The Crown land account was one of the special funds converted to a special account in 1982. This meant that the net assets of the Crown land fund were transferred to the general fund at that time. I would refer hon. members to the Public Accounts for 1982-83. The difference between a special account and a special fund is that a special account does not have a separate balance sheet of assets and liabilities. To repeat, since 1982-83 the Crown land account has had no separate balance sheet.
What is termed the opening balance on page 210 of the '88-89 estimates is, in effect, the balance of spending authority and was set in 1982 equal to the equity — that is, assets minus liabilities — as it existed when the '82 legislation was passed. Thus, at any year-end this balance represents unused statutory spending authority. This balance changes annually by the amount of net receipts of or net spending from the account for the year. Since the Crown land account ceased to be a fund, it has been operated in exactly the same way as before. The difference is that it does not have assets or liabilities separate from those of the general fund.
I would now like to address the effects of Bill 18, section 4, on the Crown land account. The balance of unused spending authority of the Crown land account on April 1, 1988, was $235,799,777, as shown on page 210 of those estimates. The significance of that amount is that spending up to that amount can occur without any vote by the Legislature, as the balance represents statutory spending authority.
The 1986 report of the auditor-general recommended that this spending authority be eliminated, and any authorization for spending out of the Crown land account should be voted — not statutory. Bill 18, section 4, allows the Lieutenant Governor-in-Council to transfer any amount of the balance in the Crown lands special account to the general fund. The government proposes to reduce the balance — that is, spending authority — by an amount of $222,021,777. This will limit the spending authority of the Crown land account to $50 million after the expected 1988-89 receipts and spending transactions.
This action goes a long way towards meeting the recommendation of the auditor-general. The effect of this transfer of spending authority is to reduce the limit for future statutory net spending from the Crown land account to a cumulative limit of $50 million. Reducing the spending authority does not cause any transfer of assets and liabilities, because these assets and liabilities are already part of the general fund.
In summary, section 4 limits the future statutory spending authority of the Crown land account. This limit — to be set by the Lieutenant-Governor-in-Council — will be $50 million plus any net receipts of the account. It does not limit the activities to be carried on by the Crown land account, but it does mean the Legislature will be required to vote approval for net spending above the $50 million limit, thereby increasing the Legislature's control over spending from the account.
Similarly, the statutory spending authority of the small business forest enterprise account will be reduced by legislation to be introduced at this session. This is being done to eliminate the spending authority in excess of that required for the proper operation of the account.
I should now like to make some remarks concerning the farm income assurance fund. Unlike the Crown land account, the farm income assurance fund is one of the special funds to be converted to a special account under Bill 18. Through the operations of the farm income insurance program, premiums are paid into the fund on an equal basis by farmers and the government. Indemnities are paid from the fund to producers. At present, the balance of the fund — $22.3 million — consists of accumulated premiums which have yet to be paid out as indemnities, $12.6 million plus $9.7 million remaining from $11 million in advances made to cover the fund in '79-80 and '82-83.
The advances to the fund were recorded as expenditures made from voted appropriations of the Ministry of Agriculture. These advances were made to cover the net write-offs of discontinued programs under FII. Upon the passage of Bill 18, the farm income assurance fund will become a special account within the general fund. The net assets of the farm income assurance fund will be transferred to the general fund. Revenue received by the account will be recorded as general fund revenue, and expenditures made will be recorded as general fund statutory expenditures, rather than voted expenditures.
In order to repay the advances, the revenue of the account must exceed expenditures for a sufficient period until the balance on the account exceeds per program requirements. This will mean that the general fund has received more revenue than it has paid out in expenditure. At that future date, the balance on the account will be reduced by the amount of the advances. This will, in effect, repay the earlier advances.
I should now like to make some general comments on the effect of Bill 18 on special funds and special accounts. The main purpose of Bill 18 is to convert existing special funds into special accounts. The purposes for which the funds were established are unchanged by this conversion. After enactment of Bill 18, all existing special funds will have been converted to special accounts with the exception of the resource revenue stabilization fund, which will be eliminated. The two new special funds to be established by the Budget Stabilization Rind Act and the Privatization Benefits Fund Act will be the only special funds.
I should now like to explain the effect that various transactions of special accounts have on the general fund as
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shown in the public accounts. Each special account can have any combination of revenue expenditure and financing transactions.
Examples of financing transactions are the granting of a loan or the repayment of a loan. Financing transactions do not affect the government's budgetary deficit. Revenue may increase the balance of spending authority of a special account. It will also be recorded as general fund revenue, will increase cash or other assets and will increase the net equity of the province. Expenditure may decrease the balance of the spending authority of a special account. It will also be recorded as general fund expenditure, will decrease cash or other assets, and will decrease the net equity of the province.
A financing transaction receipt such as a loan repayment may increase the balance of the spending authority of a special account. It will not be recorded as general fund revenue and will have no effect on the net equity of the province
A financing transaction disbursement, such as the issue ance of a new loan, may decrease the balance of the spending authority of a special account. It will not be recorded as general fund expenditure and will again have no effect on the net equity of the province.
Financing transactions generally change the nature of assets and liabilities. An example of this is converting a loan receivable to cash when the loan is repaid. This does not affect the annual deficit or the net equity of the province. The reduction of spending authority within a special account does not involve any transfer of cash or assets, nor does it change the nature of any assets.
I trust that this information has been of value to the members. Thank you for allowing me to put that in the record.
MR. STUPICH: I appreciate the minister's explanation, and I am pleased that it is now in Hansard. I also appreciate the opportunity that he made available for me to meet with his two staff members to discuss this at some length. I'm sure students of something or other will read that particular portion of Hansard with a great deal of interest, and not too many of them will be very much enlightened.
I'd like to comment a little on the minister's remarks, in language that I think, Mr. Chairman, you and I will under stand at least. When W.A. C. Bennett left office — the figures may not be exact; I'm going by memory — there was some $357 million in cash and investments as the assets of various special and perpetual funds. On the other side it has been argued with me that there were no liabilities, and that's true, but there were statutory obligations to spend that total amount of money on the various programs that were all passed by legislation in this House. There was no net equity, because there was balance. The statutory obligations to spend the money on the legislative purposes of those funds were sitting there and the assets were there as well.
During the profligate spending years of the Bill Bennett administration, we not only spent all of our general account assets, but we started borrowing money as well. When the NDP administration left office, that figure had been increased by just over $200 million, so at that time we were dealing with $571 million, as I recall — cash and investment sitting on one side and statutory obligations to spend them for specific purposes, as outlined in the legislation. The money was there, and the statutes were there, saying what the money was going to be spent for.
Then, when the government, as I say, blew all of its assets and started borrowing money for general account purposes, there would have been no point — and I agree — in keeping that money intact. It might as well be rolled into the general account, as was done. I think that happened in '78-79 and then in '81-82 we completed the picture.
When I was arguing last week and saying that there really was an obligation to spend the money on the purposes of these funds, I was trying to shut the barn door ten years after the horse had escaped. It happened without my seeing it ten years go –– I realize now that there is no obligation on the government to spend the money, but there is the authority to spend it for the purposes outlined in these funds, and that's all there is now. The government now, in this particular section, is saying that it can at any time take any of the funds that have arisen from the disposal of Crown lands or any of the other sources of revenue for this fund and use them for any purpose of government, not just for the purposes of the legislation that was established when this fund was established.
I'm sorry that it has happened this way. I regret that the Social Credit government did blow our assets to the extent that they have had to, in effect, wipe out the funds totally. They mean very little now. The statutory authority is still here to spend them, but the government is taking unto itself.... Legislative counsel may at any time change the amount that is in the statutory authority as well. Really, they don't mean much anymore, and I wonder why we bother with the whole process. Why not wipe out everything and just include it in the public accounts of the province and do these things if we choose to or not do them as we choose to? It's too late to argue against section 4; the damage was done ten years ago.
[10:30]
MR. CASHORE: I've been reading over the Hansard from the discussion of the committee on May 3 on this topic and I found completely unsatisfactory the answers that the minister was giving to the very legitimate queries and requests for comments that we were making at that time. Having read his statement this morning, I do appreciate that he minister.... It seems to me, if I'm to distil anything from it and try to put it into a concise statement, that the minister is saying that the authorization for spending authority is being reduced by $226 million. To go back to a statement made during the debate on May 3, he said that if there was a need, we would address it at that time, and therefore it's not necessary to have this kind of spending authority.
When we look at the footnote put in place by this government describing the purpose of the fund, one of the statements there was the acquisition of social housing sites. The minister went on to point out somewhat ambiguously.... If you read Hansard you will find that his answers were not clear, but they did follow a progression from saying that this money was paying for the social housing program to where he finally ended up saying that it was for he acquisition of the sites for social housing. He tied that into the 1,900-some-odd units per year being built.
The comments I have to make are on one point and one point alone, and that is on the issue of whether there is a need and whether this amount of spending authority should be reduced as the minister is suggesting. I noted in the debate at time that the minister became very upset with some comments I was making and was saying: "What are the
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specific questions that you're asking?" I just want to say that I am not asking the minister a question at this time. I am making some valid points as part of this debate because I think they should be placed on the record. We'll let the public judge whether a need exists at this time for the acquisition of Crown land for housing.
The basis of my thesis is that there is a severe housing shortage in British Columbia and that a need does indeed exist, a need that has not been addressed in any meaningful way, and that the paltry 1,900 units per year going into social housing is simply inadequate by any definition whatsoever. I have in my possession a document prepared by Prof. David Hulchanski, an associate professor at the School of Community and Regional Planning at UBC. I would like to place in the record some statistics on the housing crisis in Vancouver.
The first points I would like to make have to do with rental stock by type in the city of Vancouver. This is an estimation coming from David Hulchanski's department at UBC. At the present time in Vancouver there are 16,000 social housing units, 64,800 private rental apartments and townhouses, 15,500 rooming houses, 4,800 housekeeping units and 25,000 second suites in single-family dwellings — in other words, 25,000 illegal suites. They don't have a figure for condominiums for rent, but that is also understandably a part of that housing picture.
The last figure I mentioned, the 25,000 second suites, should be noted especially with regard to the private member's bill introduced earlier. I understand that through the Vancouver Charter, the process of looking at illegal suites is being altered in a way that could exacerbate the housing crisis, especially for low-income people, because when some of those regulations come into effect on the so-called illegal suites, we are going to find that people will literally be out on the streets.
From those figures on rental stock by type, I go on now to private-sector rental starts in the city of Vancouver. This data comes from CMHC. In 1984 there were 846 units; in 1985 there were 275; in 1986 there were 88; and in 1987 the figure increased again to 463. The story there is that the private sector, which the government refers to as the market sector that will provide as the need is there, is simply not providing for the need. The number of private sector housing units coming available to low-income renters is simply inadequate.
We go on then to look at the co-op and non-profit housing starts in the city of Vancouver from the BCHMC data. We find that in 1984 there were 861 units; in 1985 it increased to 1,405 units; in 1986 it decreased to 795 units; and in 1987 there were a paltry 438 units.
Mr. Chairman, we now move on to a phenomenon that's seriously affecting the available rental stock in the city of Vancouver. This is the conversions of apartments into condominiums. As we know, low-income people by and large are not in a position to afford to purchase their condominium. But as these are being sold, that is affecting the available rental accommodation. In 1983 there were 166 units converted from rental to condo; in 1984 there were 125; in 1985 there were 67 units; and in 1986, 264 units.
Now we go on to the numbers of people on social housing waiting-lists as of January 31, 1988. Mr. Chairman, this is a very sad story. This is a story of the people who are most seriously affected by the housing accommodation situation: low-income people. At the present time, there are 3,768 households on waiting-lists for private non-profit rental housing societies. There are 4,210 households waiting for public non-profit corporations. There are 9,290 households waiting for co-op housing resource groups. That's a total of 17,268 households on waiting-lists in the Vancouver area.
We now go to the October 1987 data with regard to apartment vacancy rates in the Vancouver area. At that time there was a 1.2 percent vacancy rate in the city of Vancouver, or 640 units. In Burnaby there was a 0.6 percent rate; in New Westminster it was 1.5 percent; in the city of North Vancouver it was 0.5 percent.
MR. CHAIRMAN: Hon. member, may I interrupt for just a moment please. I've let you go on to some extent, but with due deference to all hon. members, I would like to bring to your attention that it seems to me that we're falling into the same pattern as we were the last time we dealt with this particular bill, in that our discussions are now ranging into areas which would be much better dealt with under the estimates of other ministries.
In second reading of this bill, we did agree on the principle involved therein. Now, of course, we're dealing with it clause by clause or article by article. I would just suggest to hon. members that the debate is becoming somewhat involved with what I think would be much better dealt with under the estimates of other ministries. Having cautioned the member in that regard — and I will ask Hansard not to take away his time that I've taken up — I'll ask you to proceed, please.
MR. CASHORE: Mr. Chairman, my remarks deal specifically with an item that is fundamental to this bill. It is the footnote to the Crown land account, which is referred to in Bill 18. Specifically I'm talking about the acquisition of social housing sites. I'm placing on the record statistical data to indicate the need that exists for social housing sites in this province.
HON. MR. STRACHAN: Mr. Chairman, I appreciate the member's genuine concern with social housing in the province of British Columbia. However, he had a good opportunity, during the minister's estimates, to canvass that subject, and I believe he canvassed it quite well, to the best of his ability, and made his points well known. I believe he had the opportunity during second reading of Bill 18 to further canvass and present his concern with respect to social housing.
However, we are now on section 4 of Bill 18. Our standing orders advise us to be relevant and specific to the section in itself — not to the bill, but to the section. The operative word in section 4 is that the L-G-in-C may "transfer" any amount in the balance. So we're dealing with the process of transferring — not how the funds are disbursed or what direction they should or should not take, but in fact, with the principle of transfer. That's all we should we concern ourselves with.
MR. CHAIRMAN: Your sage advice is always well received and appreciated. Will the member continue on that basis, please.
MR. CASHORE: If the Minister of Environment and government House Leader would read Hansard from the discussion so far on section 4 of this bill, he would find that the minister stated that as need arises this could be reviewed. I am speaking to the issue of need which has been discussed both by the minister and me during the debate up to this time.
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The point is very clear that there is a very serious situation with regard to vacancy rates, and those vacancy rates impact most directly on low income people. There is another point that I think has to be referred to in the context of this discussion, and that is that in the negotiations that took place with regard to the BCEC lands, it becomes apparent there was no intention to insist that there be social housing sites entrenched within that agreement.
HON. MR. STRACHAN: I will accept reference to a conversation that may have taken place earlier between the minister and the critic, but to now use language from section 4 — which I said earlier only indicates that the L-G-in-C may transfer any amount of balance to the Crown lands special account — and to draw into that a debate on the Enterprise Corporation sale and its regime for social housing is really stretching it, I'll tell you, Mr. Chairman; I don't think the committee can accept that.
MR. CHAIRMAN: Thank you, minister. I can't help but agree, and I would ask the member to make his comments more pertinent to the particular section of Bill 18, section 4.
MR. CASHORE: I can understand why that minister doesn't want the loss of this spending authority related to what's happening with the BCEC lands, when the Tenants' Rights Action Centre and DERA are saying there should be 50 percent social housing and this spending authority is being taken away from the possibility to acquire social housing sites, and this government is embarrassed that it failed to build the social housing into that deal. I can understand, Mr. Chairman, why that minister is upset about that. It's shameful to think....
[10:45]
MR. CHAIRMAN: Hon. member, please. The Chair has asked you in a very nice way to just subscribe to the rules as they apply and deal with section 4 in its context. I think we're rambling a little bit — let me put it that way.
MR. CASHORE: Mr. Chairman, I would like to point out that as we continue to question this minister with regard to the removal of spending authority for some very needed assets within this province, we are going to be canvassing different aspects of the definitions under Crown land. I feel I have made my point on the record, and I think that it is a valid point. I can understand the embarrassment of this government in not wanting to have that point stated.
MR. CHAIRMAN: Before we proceed, the second member for Vancouver-Little Mountain has asked leave to make an introduction.
Leave granted.
MR. MOWAT: It is my pleasure to introduce to the House 25 students from division one of the McBride Elementary School. They are studying the grade 7 curriculum on government, and they have joined us in the House today. I just had an interview and discussion with them in our caucus room, and I would ask the House to please make these students welcome.
MR. STUPICH: Listening to the remarks from the hon. member for Maillardville-Coquitlam and the responses from the government House Leader, and rereading this section, I realize that the proceeds from the sale of Crown land, from Crown leases and the interest earned in any of those situations will now be totally at the disposal of cabinet. We won't be able to have the kinds of discussions we've had when the member was talking about the need for land for social housing, because cabinet will have the authority to reduce that fund to nil at any time cabinet wishes. As a matter of fact, the way they operate, I think they would even have the authority to reduce it to substantially less than nil if they wanted to create a credit balance somewhere else.
On that basis, the opposition will be opposing this section.
MS. EDWARDS: I also want to make some comments about this section which says that the Lieutenant-Governor in-Council may transfer any amount of the balance — and in this particular aspect of the section it's different than the other funds and the other accounts that are being transferred. That's what we're talking about, Mr. Chairman. We're talking about the fact that, with this particular account — which used to be a fund and now is only an account — we are now having not only that happen, but we're having it transferred. We're also having its statutory obligations reduced.
I can tell the minister that there are some major concerns for the people in this province — just as an example, the ones who are interested in wildlife habitat. We are at a point where it is absolutely critical, I am told, that if we want to save some of the wildlife in this province, we must purchase some land. We are faced with this critical situation, and there are examples right across the province. I get my examples out of my area, but there are examples in the Okanagan, in the Cariboo, in the northwest and certainly on Vancouver Island, where land purchase is being demanded by the managers.
The managers who want to manage — and management is proven to work — are unable to do that. In the face of this, we have this reduction and the ability of this particular clause to reduce the statutory obligation for a function that is absolutely critical. We are reducing, says one of the past presidents of the B.C. Wildlife Federation, whom I'm very happy to use as one of my advisers, the capital of the province. The capital of the government is its natural resources. We need to replace that capital.
Just as a matter of interest, as an example of why we need it, I might name a few things. For example, the sheep herds in the East Kootenay area — which have been in the news for years and years because of the constant stress on these animals, with are very precious and very indicative of how our habitat is going and how our environment is in its health — require new habitat. There is private land in the East Kootenay that is prime winter range and that has gone into private ownership, and it has no particular use to the owners. It went with a block of land. It's very likely that this land could easily be bought by the Crown.
I'm referring in particular — although there are so many it's difficult to choose one — to the China Wall area. As I say, we all know, over the years, the threat and distress that these sheep have been under and the reductions in numbers that they go through because of stress of other use. One of the things we need to do is to buy more habitat for them; intercept range, it's sometimes called.
In the Okanagan, the Casorso property is needed for habitat, again for sheep. You can speak in more general terms. You can talk about relieving deer from stress on the
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habitat, and burrowing owls and yellow badgers. There are any number of animals, wildlife species, that need management, that need capital money to buy land back from private ownership, to put that resource back into the hands of the government and the ministry that does the managing.
I would suggest, Mr. Minister, that this clause, with the particular indication that there will be a reduction in the statutory obligation for spending in this account, goes against the basic requirements we have to keep our environment in order. It's partly on that basis that you, I think, are going to have to make a decision that this particular account should not be reduced; that this section should be revised to say that if you're going to transfer it, the Lieutenant-Governor-in Council will transfer the balance in the Crown land special account, so the statutory obligation is not reduced.
HON. MR. STRACHAN: I'd like to respond as Minister of Environment, because these are environmental issues that the member has brought to the attention of the committee. I appreciate her concern, and I welcome her argument on behalf of the Ministry of Environment and game management and game enhancement; although I think — and I said this earlier in debate on this section — that debate would be better covered during my estimates, when I can deal with the priorities and initiatives I have taken in my use of the Crown land account and the funding that goes with it. Then there are several that look good, and we'll get to those later.
I did want to respond to some degree to what the member said, because the points that she raised are legitimate and valid and, as I said earlier, I support and welcome her argument on my behalf. What we're looking at here, though, is in fact a spending authority procedure. I don't think it in any way at all impacts on the Ministry of Environment operations, and the argument presented by the member for Kootenay using this transfer regime and methodology really doesn't apply. If the government of the day wishes to give first priority of all spending to Crown land and wildlife enhancement, it will. If it doesn't want to enter into any spending for wildlife enhancement, it won't; it's that simple. Whether or not this section is in place will have no bearing on what a cabinet or an administration spends on wildlife enhancement. It will be up to that government, not on words contained in a section in a finance bill.
MS. SMALLWOOD: Does the Minister of Environment support this reduction in the Crown land account?
HON. MR. STRACHAN: It's not a reduction.
MS. SMALLWOOD: Let me rephrase it. Does the minister support the reduction in the spending authority?
HON. MR. STRACHAN: Number one, I don't see it as a reduction. Secondly, it's the auditor-general's request. Thirdly, I am just one of the agencies that would use this fund.
MS. SMALLWOOD: The Minister of Finance has explained that it is at the auditor-general's request, although I think if you look at the request, there are other ways of achieving it. We have a reduction in spending authority, and while the minister is only one of several ministers involved in that account, I would suspect that your ministry has a very strong demand on that money because of the need in our province and the growing conflicts between the environment and industrial activity.
Again, I would ask the minister whether he supports the increased pressure that this reduction puts on his ability to deliver his mandate to the environment and the preservation of wilderness in this province. Have you expressed a concern, Mr. Minister?
HON. MR. STRACHAN: That debate with respect to this I can't see as being relevant. We know there are many agencies who put pressure on this account. I am just one of them. The L-G-in-C in totality — the whole cabinet — will decide on what the priorities will be, whether it be wildlife enhancement, social services or Crown land for other purposes. They will make that decision. A bookkeeping and financing arrangement as discussed in section 4 has nothing to do with what priority cabinet is going to put on Crown land and its disposition.
MS. SMALLWOOD: I have a question to the Minister of Finance. I think very clearly what we have seen is a priority shift. The Minister of Environment has indicated that it's up to the government where they put their priorities, and where they want to spend their money. By the reduction of the spending power in this account, we are seeing this government put a lower priority on the mandate that this account was initially established to fulfil. Can the minister tell us why they decided to restrict the power of spending in this account and in no way restricted the ability of this account to continue to raise money? Does the minister anticipate any change in the ability of this account to raise money in the future? What effect will that have on general revenue?
HON. MR. COUVELIER: I'm having some trouble finding consistency in the arguments from the members of the opposition on the range of methods by which we bring forward these issues. For example, we've had long debates in the past on the question of special warrants, and the argument is that they should be in appropriations, and there should be opportunity for the House to comment.
The auditor-general has criticized the large sums that have been in these accounts — historically unspent and unnecessary to be put in that account. He raised the argument that you are offending the rights of the House by leaving these accounts with such a large unallocated balance, and that if you really believe in the democratic process, this government should be allowing the House to comment on voted expenditures. By perpetuating this historic device, in effect we're denying the House that democratic right.
It seems to me that it should be in the opposition members' interests for us to oblige the auditor-general's comments. We are attempting to do that. When we attempt to do that, we get criticized for some sort of devious purpose that we're going to try to reduce the expenditures on these admittedly important issues as represented by a minister of the Crown who is given that specific responsibility to ensure that we do justice to that issue.
You might draw that conclusion, were we not to have a Minister of Environment and Parks, someone specifically charged with the need to preserve and safeguard the issues you describe this morning. But, hon. members, I don't see how you can have it both ways. Here we are, trying to change an accounting technique so that these issues can be put in voted expenditures in the future, and you would then have a
[ Page 4357 ]
chance to debate them; and when we oblige your interest and the auditor-general's interests, here again we seem to be subject to some criticism. I concede that it is your elected mandate, but sometimes it gets a little difficult for lay people like me to follow the switch of logic, as you jump and straddle both sides of the fence, depending on what the issue is at the moment.
Mr. Chairman, this does not reduce, in the government's opinion, the interest in the subject or our desire to make sure that we continue to do our public duty in respect of protecting parks and habitat. You make the assumption that that's our purpose, and we say to you that it was not our purpose — and that's a matter of record with the auditor-general's comments. Then you ask us the question, "Are you going to reduce your emphasis?" and we say: "No, we're not." And that's something that only time will prove. Clearly, the government side disagrees with your assumption that we're reducing our interest in these subjects.
MS. SMALLWOOD: If indeed the purpose of this change was to deal with the issue of accountability, as requested by the auditor-general, then I suggest to you that there are better ways to be accountable for this money than shifting it into general revenue, where there is no accountability for the bulk of that money.
The point here is not only the priority that the government is indicating by leaving this small amount to deal with these important issues of social housing and the environment and other important issues, but the concern I have, which I would like the minister to address, namely the shift of finances, where that money is being funnelled off into general revenue. That money was raised, I understand, by the sale of Crown lands for a specific purpose, and is now no longer being accounted to that purpose. Perhaps the minister could explain how the House can be assured that the money raised by the sale of Crown lands will be spent on the purposes it was intended for.
HON. MR. COUVELIER: Mr. Chairman, I suppose the hon. member was absent from the House when I read into the record at the start of this session this morning a detailed explanation of the history of these funds. I assume from that, therefore, that her question was expressed because she hadn't heard my earlier explanation.
I am very pleased to send across the floor to her now a copy of the ten or 12 pages that I read into the record on this issue. The funds went into general revenue in 1982, hon. member. This device does not put money into general revenue. So with respect, Mr. Chairman, I think the question makes an assumption that is not correct. I'll send this material across the floor.
MS. SMALLWOOD: Is it not true, Mr. Minister, that the fund, prior to this change, indicated that a certain amount of money, whether it was actually held in general revenue or not, was to be spent for the purposes outlined? What you are doing now is limiting the amount of money; therefore, there is a set amount of money that is no longer allocated to social housing and enhancement of environment.
[11:00]
HON. MR. COUVELIER: Mr. Chairman, we're talking about authority to spend; that's all, just authority to spend. There were no dollars in the account. The dollars were transferred to general fund in 1982. We've debated this authority-to-spend issue now for — I don't know, a day and a half. That's the issue: authority to spend, only that.
You're saying that by reducing the authority to spend, we've lost our interest in this subject. And we say to you that that is categorically not true. We are reacting to a request of the auditor-general, which in effect, by obliging his concerns, means that you will then be able to debate the issues through voted expenditures. It does seem to me that that's in the democratic interest, and clearly in your interest. To the suggestion that we've lost interest, time will prove your assumption false, hon. member; but unfortunately you're going to have let the time pass in order for my statement to be proven or disproven.
MS. EDWARDS: I take what you have to say: it's a statutory obligation, a commitment, that we're talking about. We're not talking about dollars. Fine with me; I'm quite happy to talk about finance and commitment. The commitment is reduced. You have told us that the commitment is not gone; however, you have been unable to convince us that it is anywhere else. Until you can, I think that we are arguing that you are taking away that commitment without replacing it with something. I don't think you can avoid that, because by taking away the obligation that was there by statute to spend this money that came in in this way for these particular functions.... We certainly do not see that those particular functions have been carried out to the extent that you are reducing the statutory obligation.
Section 4 approved on division.
Section 5 approved.
On section 6.
HON. MR. COUVELIER: Mr. Chairman, I move the amendment standing in my name on the order paper. [See appendix.]
On the amendment.
MR. STUPICH: So that I will have time to find it, would the minister tell us why he introduced this amendment?
HON. MR. STRACHAN: I'll let the Minister of Finance elaborate when he gets his notes. This makes reference to the First Citizens' Fund, and the committee will recall that last fall we amended the First Citizens' Fund legislation to allow them the right to lend money as opposed to just offering grants. This amendment, as I understand it, makes the wording of the six First Citizens' Funds consistent with the amendment to that fund that was passed last fall. It gives them the right to lend as opposed to just giving grants.
Amendment approved.
On section 6 as amended.
MR. STUPICH: I note that this reads that the Minister of Finance "may pay an amount equal to the interest...." That also means that he may not, I take it. Does it leave the door open for him to do anything else with it? I just wonder why it's made.
[ Page 4358 ]
HON. MR. COUVELIER: As I understand it, we did not change the wording from the original piece of legislation. We merely reproduced it as originally written, and that was in 1979.
MR. STUPICH: The minister says "as originally written in 1979." This fund was established long before that.
HON. MR. STRACHAN: In '69, actually.
MR. STUPICH: Yes, perhaps.
I'm still wondering at the "may." The minister is telling me that I should have been listening more in 1969 than in 1988, that 19 years ago I should have asked why it was "may" rather than "shall." But in those days the fund itself was inviolate. The fund interest could be used for no purpose other than this, but I'm not sure anymore. The minister is still talking about 1979. It could have been that there was an amendment then, but I think the hon. House Leader is correct in saying that it was introduced in 1969 — sometime in that area. I still don't know why it's "may."
MS. EDWARDS: I think it would be appropriate for me to say for the record the response that I've had on these changes to the First Citizens' Fund. From what I understand, the native people accept that they can now get loans, but their feeling is still that the loans are not nearly as necessary as some major amounts of capital. They need it. They have asked that this fund be increased. They need capital grants out of the fund, and they are not particularly happy with the change, which allows them to have loans that they can probably get somewhere else.
Section 6 as amended approved.
On section 7.
MR. MILLER: With regard to the million dollars, I guess it was, in the fund. As I recall, although I wasn't a member of the Legislature at the time, there was great fanfare around this act and what it would do for the forest industry in terms of reforestation, etc. The target, if I'm not mistaken, was some $25 million. Yet we have a million dollars. I'm just wondering if the Minister of Finance could comment on the source of those funds and maybe disbursements that have been made with regard to their stated purpose.
HON. MR. COUVELlER: I'm advised that there is no change here from the previous legislation. It's merely a question of moving the status of the item. We're not talking here about any change from past practice.
MR. MILLER: That's what I was trying to get at: what is past practice? We passed an act in the Legislature, and its stated purpose.... I'll read it, and it sounds good: "The forest stand management fund is established as an account in the consolidated revenue fund for the purpose of providing an ongoing appropriation of money for (a) silviculture and other management and enhancement of forests, forest lands and range lands, and (b) employment and training opportunities related to...." — the above.
What have we done? Why are we keeping this? It seems to me a waste of time. It never worked, did it? You talk about straightening out the books on the recommendation of the auditor-general; I don't know why we're keeping this red herring around. It never did the job it was intended to do. It never can with the amount of money that's earmarked for it. Why don't you just take the money and put it into general revenue and forget about it? In terms of the operation of this particular thing, it's a waste of time.
HON. MR. COUVELIER: That's the second comment that I've heard from members of the opposition, and I suspect if we had done that, they would have found some other petard to attempt to hoist us on.
If the hon. member has any difficulty with the numbers of dollars involved here, then I suggest it might be directed with respect to the estimates when the minister brings them forward. All we're talking about here is the accounting treatment. I read into the record, before the member joined the House this morning, I suspect, some explanations of what we were doing with this bill. If the hon. member likes, I'll send him a copy also so he can have the benefit of its comment. In any event, the issue about the dollars themselves might properly be directed to the estimates. As to the principles involved here, I can confirm what I said earlier, that all we've done is retain the terminology used in the previous legislation.
MR. MILLER: The Minister of Finance gets up rather testily and seems to object to some line of question that's coming from the opposition. I'll be quite happy, Mr. Minister of Finance, to debate this government's record on reforestation and silviculture. I will do that at the appropriate time. I'm not trying to pin that on you, so don't be so defensive about it. All I'm suggesting is that you're the Minister of Finance, you're responsible for the books of this province and special funds, and here's a glaring example of a special fund that (a) was a waste of time when it was set up and (b) has never done anything. If you want to talk about a BS fund, you've got it right here. If you want to look at the books and decide what's useful and what's not in terms of weeding out things — which is your job, I presume — you should take a look at this one.
MS. SMALLWOOD: I'd like the minister to tell the House, for the record, where this money comes from — how it is raised.
HON. MR. COUVELIER: This account can be credited with contributions from the general fund under vote 41, the government of Canada, municipalities, the forest industry, forest sector unions and others. No financing transactions are provided for under this account.
MS. SMALLWOOD: Perhaps the minister could further clarify. It sounds like it's a goodwill fund: if somebody would like to contribute, they can do so. Can the minister explain to the House how the money is collected?
HON. MR. COUVELIER: I thought I just did. I'll say it again. The account can be credited — that is to say, funds received; that's how it gets there — with contributions from the general fund under vote 41, from the government of Canada through cost-shared programs, and from municipalities, the forest industry, forest sector unions and others.
[11:15]
MS. SMALLWOOD: How would the forest industry contribute to this fund, and for what purpose?
[ Page 4359 ]
HON. MR. COUVELIER: It's my understanding, Mr. Chairman, that the forest industry might embark on joint venture programs and be required to make some contributions under them, and that this account might be used for that purpose.
MS. SMALLWOOD: Is it at any time used for the sale of land or timber rights?
HON. MR. COUVELIER: No, Mr. Chairman, not to our knowledge.
Section 7 approved.
On section 8.
MS. EDWARDS: I have a question of the minister on this. It arises out of an understanding that the moneys for the habitat conservation fund originally came as interest on the Crown land fund — that was way back. Then there was a change and it was done with a surcharge. As I understand it, that's the history of it.
Interjection.
MS. EDWARDS: I don't know, and it may not have anything to do with my question, which has to do with (2)(b), which says: "There shall be paid into the account money acquired by gift, donation and bequest, or by disposition of any land for the purposes of the account." My question is: how would that land be decided? What land would that be — "any land for the purposes of the account"?
HON. MR. STRACHAN: I welcome this opportunity to stand and discuss this section of Bill 18 in general, because there has been some concern from the hunting and fishing community — who are, of course, the shareholders of this fund — about the disbursement of those funds. Just for the benefit of the committee, I will advise you, Mr. Chairman, that section 8 and the way it reads down to subsection (2) is taken right out of section 11 of the Wildlife Act, where the habitat conservation fund and what it should do are laid out. The reading there is identical.
With respect to the comments the member made about the history of this fund, I'm not aware of previous ways of collecting revenue for this fund, but the Wildlife Act, which we operate under now, says that the revenue will come, as is indicated in the section, from "surcharges collected on licences or applications for licences issued under this Act and...money acquired by gift, donation and bequest or by disposition of any land acquired for the purposes of the fund." From that, we will disburse funding for enhancement purposes, using a board of directors appointed by me and chaired by Dr. Ian McTaggart-Cowan. We will also acquire land, gifts and donations; that land is also administered by the habitat conservation fund board.
During my estimates, Madam Member, I'll be more than happy to bring you an account of what they have done over the last year in the management of that habitat conservation fund. To be brief, nothing has changed. They've taken money from a surcharge on the sale of licences for angling and hunting, and they've taken land and donations. It all goes into the stewardship of the habitat conservation fund board of directors, and they can disburse and carry out their projects as they see fit.
MS. EDWARDS: Thank you, Mr. Minister, but I wish you would clarify for me. I believe you said the only land that would be involved in this subsection was land that had been given to the habitat conservation fund. In other words, there would be no land assigned to that purpose, and the proceeds given to the habitat conservation fund, that might have come under the Crown land account. That's not what we're talking about at all? There is no possibility that the Minister of Environment — or the Minister of Finance, I would think, even more so somehow — through the Lieutenant-Governor in-Council decides that certain land is to be sold for the benefit of this fund. It's only land that has already been donated for the fund — is that correct?
HON. MR. STRACHAN: That's a really good question. I'd like to take some time, Madam Member. I will get that for you at some other date or during my estimates. You raised a good point. I think what you're trying to get at does happen in that the habitat conservation fund may request of the government some Crown land in the Crown land account for enhancement purposes. I think we from time to time have done that, or they have come with the money they get from the surcharges of licences and, in fact, bought land from the Crown. That may have happened as well. I am not aware of all the details, but I give you my undertaking now that I know the gist of your question. I will do my best to supply the answer to you.
MS. EDWARDS: I think we can eliminate land that has been bought by the fund. I can understand that. I am curious to see the connection that might exist with other Crown land, and I was interested in that before we passed the bill.
MS. SMALLWOOD: Perhaps the minister can tell me whether my information is correct. First of all, I understand that the habitat conservation fund has three components: an acquisition account, which relates to the discussion we had previously around the Crown land account; an enhancement account, which is basically the largest dollar value account; and a compensation account, having money in it that was provided to compensate for loss of habitat.
If that is true and I have the right picture of the account that we're talking about under habitat conservation, can the minister tell us the value of the overall habitat conservation fund at present and the effect of this legislation on that value?
HON. MR. STRACHAN: I can't tell you the.... Oh, here we are; it has just been passed to me by Finance. The balance at April 1, 1988, was $904,166, and....
I'm sorry, I've forgotten what the other question is, thinking about this.
MS. SMALLWOOD: Is my information correct that it has the three components, and what effect will this legislation have on the value of the account?
HON. MR. STRACHAN: There are more than three components, because the habitat conservation fund board are very inventive and are always trying to think of new things to do and innovative ways of spending the money and handling the funding. Those are essentially the three components, but I just didn't want you to think that those are the only three things they do. They are very innovative.
Secondly, with respect to what impact this will have on the habitat conservation fund: absolutely none. You will see
[ Page 4360 ]
that subsection (2) says there will be money paid into the account from surcharges and from gifts and bequests; (3) says the total amount paid out of the fund cannot exceed that which comes in under (2), and that's it. So what this simply reinforces is that it is an in-out situation. Further, it reinforces that the Minister of Finance can't touch it. They've coveted that for years, but we're not going to let them have it. It's under the directorship of the habitat conservation fund and that board of directors. That money is contained there for those purposes and that's it.
MS. SMALLWOOD: I'm very pleased to hear that. Perhaps the Minister of Finance can explain to us exactly the purpose of having this in this bill if indeed all it does it recognize a situation as it is presently.
HON. MR. COUVELIER: I sent across to the hon. member a statement that I read into Hansard at the beginning of this morning's session. She has it by her right hand, I believe. She hasn't had a chance to read it yet, maybe. The main purpose of Bill 18, the statement says, is to convert existing special funds into special accounts. The purposes for which the funds were established are unchanged by this conversion. What we're talking about here is merely a change of accounting treatment as requested by the auditor general.
The Minister of Environment and Parks has already told you how brave he is in facing my regular onslaughts to expand the authority of the Ministry of Finance and how he has stoutly resisted these efforts by me successfully. I trust, Madam Member, that you will have time to read my explanation. I've said it three or four or five or six times this morning. It seems to me always the same general thrust of the questions put.
MS. SMALLWOOD: My understanding is that this is changing a fund to an account. The Minister of Environment assures us that the control over the money paid into the habitat conservation fund is still protected by the committee that deals with the spending priorities of that money. The minister is telling us that the overall intent, what we have seen around the Crown land account, is a diminishing power for spending. How does that diminishing power affect this particular account?
HON. MR. COUVELIER: Mr. Chairman, I don't know how to deal with these repetitive questions. It might be useful if everyone in the world stopped and listened when we explain. Why do we keep going round and round the merry go-round? Maybe I'll just not respond to them, Mr. Chairman; that might move things along a little faster. I see no sense in repeating myself time after time to each individual member as they appear spasmodically, to earn their paycheque. If you sat here all the time, you'd have heard the answer and then you wouldn't have to ask the question so repetitively.
MS. SMALLWOOD: Perhaps the minister feels that by waving his arms around and acting confused and perplexed he's going to make a point over on this side. The point is that you have not made it clear. We are asking you questions that account for the dollars that have been put in accounts that have direct purposes to important issues for people of this province. Mr. Minister, you have not answered satisfactorily.
If we can put the questions in some way to get through to you, to make the point that the people of this province want to be assured that the mandate of these funds will be fulfilled; that the increasing amount of money that is going into this habitat preservation, due to permits for hunting and other activities.... If they can be assured that the money will again be returned for the purposes it was intended, then indeed we will be happy. You have not made those assurances to us. You have repeatedly said this is purely an accounting procedure. Well, Mr. Minister, this is a political arena. There is no such thing as a pure accounting, bureaucratic procedure. It has political intent, and we are asking you what that political intent is. What are the government's priorities? Can we be assured that the taxpayers' money will go for the purposes it was intended for?
[11:30]
MR. CHAIRMAN: Before anyone responds, the member is back in the second reading debate when she gets into that area. If the minister wants to respond, I'll recognize the Minister of Environment.
HON. MR. STRACHAN: No, I don't want to respond to that, Mr. Chairman. It's a typical comment and a good argument and debate; it's second reading stuff, but not relevant to what we're doing.
However, I have something to bring to the committee's attention, and I'm indebted to the member for Kootenay (Ms. Edwards) for pointing out a printing error to me.
I therefore move an amendment from the floor, Mr. Chairman. It refers to section 8.2(b). As printed in the bill before us, section 8.2(b) says: "...money acquired by gift, donation and bequest or by disposition of any land for the purposes of the account." This is taken directly from the Wildlife Act, section 11, but we have a typo.
We should have the word "acquired" after the word "land". Subsection (2)(b) will read: "...money acquired by gift, donation and bequest or by disposition of any land acquired for the purposes of the account." I so move, and I thank the member for Kootenay for bringing that to my attention.
Amendment approved.
Section 8 as amended approved.
Sections 9 through 17 inclusive approved.
On section 18.
MR. STUPICH: I wanted to ask why the revenue for the year '88-89 as opposed to '87-88 is down. Maybe I should be asking that of the Provincial Secretary (Hon. Mr. Veitch) — the expected estimates for revenue. The estimates on page 201 show a decline of some $12 million in expected revenue. Do we really think people are going to buy less lottery tickets this year than last?
HON. MR. COUVELIER: The hon. member could quite properly put that question to the Provincial Secretary, but just to assist the hon. member, it is my understanding that it's a worldwide phenomenon that revenue from lotteries appears to be declining. All over the world there appears to be declining interest in that kind of activity. I am aware that as a
[ Page 4361 ]
consequence, the staff are spending a lot of time attempting to develop new products and market niches in order to increase revenue from that kind of source. If more specific information is required, the Provincial Secretary would be best able to provide it.
MR. STUPICH: I note that in this fund we are transferring $79 million from lottery profits to general revenue or the BS fund — or whatever. I wonder what the statutory authority is. As I read the legislation, we don't have the authority, and this particular bill doesn't seem to provide for the authority. If I may read from the legislation, "Disposition of fund" — and the fund comes from the profits of the lotteries: "Money deposited in the fund under this Act, after providing for the payment of costs of administration under section 6, may, on the requisition of the minister, be (a) transferred out of the fund into the consolidated revenue to repay an advance made under section 6; or (b) paid out for cultural or recreational purposes or for preserving the cultural heritage of the Province or for any other purpose consistent with the objects of the Western Canada Lottery Foundation." I just wonder where the authority is to transfer $79 million of lottery proceeds to general revenue.
HON. MR. COUVELIER: That authorization is contained in Bill 14, the Budget Stabilization Fund Act — sections 6 and 7, 1 believe.
MR. STUPICH: We'll deal with it when we get to Bill 14.
Sections 18 to 25 inclusive approved.
Title approved.
HON. MR. COUVELIER: Mr. Chairman, I move the committee rise and report the bill complete with amendments.
Motion approved.
The House resumed; Mr. Speaker in the chair.
Bill 18, Special Accounts Appropriation and Control Act, reported complete with amendments to be considered at the next sitting of the House after today.
HON. MR. STRACHAN: Committee on Bill 14, Mr. Speaker.
BUDGET STABILIZATION FUND ACT
(continued)
The House in committee on Bill 14; Mr. Pelton in the chair.
On section 2.
MR. STUPICH: The minister was a little more complete in his answer, I suppose, when he responded to the press as to why this fund was being established by saying that yes indeed, it could be used for political purposes. My question at the moment is this. It reads in subsection (2): "The purpose of the fund is to assist in stabilizing the operating revenues of the government." I am just wondering how it is going to stabilize operating revenues.
HON. MR. COUVELIER: The hon. member, by virtue of his vast experience and long record of public service in this province, would be aware of the fact that we depend to a remarkable degree upon export trading activity in order to sustain vitality in our economy. That means, therefore, that inevitably we are subject to wide swings in terms of our provincial revenue. As a consequence of that, the ability of government to sustain and maintain social spending — I include in that category education, health, social services and advanced education — is very materially affected as these revenue fluctuations occur. This government believes that it is morally responsible and fiscally correct that we should be isolating these windfall revenues when they occur, not allocating them to any one budget year but putting them aside in the budget stabilization fund.
The hon. members describe it as the BS fund, and I take some satisfaction from the fact that it has now had a wide, common understanding and usage by virtue of that descriptive term. We also describe it as a rainy-day fund. This will have the effect of allowing the government of the day to survive downturns in our revenue receipts by sustaining important social programs through the availability of moneys put aside for the rainy day. This government does believe that it will help stabilize the operations of the government; therefore it is in the public interest to do so.
MR. STUPICH: Mr. Chairman, I can't help observing that sometimes the initials "b.s." refer to something other than the fund.
However, what the minister really said in response to my question — the real answer to my question — is that it doesn't do anything at all to stabilize revenue. What it's saying is that in the year 1987-88, for example, we are not going to recognize $450 million of revenue that actually came in; we're going to say it doesn't exist this year. What we're going to do is say that it will exist in some year in the future, whatever year we choose to recognize it. It doesn't do anything to stabilize revenue. It stabilizes the net figure of the P and L statement, if you like. But really what it's doing, and what we're doing in this section, is saying — it has nothing to do with stabilizing revenue — that some year hence, down the road, whenever it chooses us, we're going to recognize $450 million worth of revenue that came in during the year ended March 31, 1988. It's a b.s. explanation.
MR. WILLIAMS: Maybe the minister can elaborate. It's simply giving you freedom to cook the books down the road. Isn't that it, Mr. Minister?
HON. MR. COUVELIER: The hon. members opposite would always desire to have it both ways. I remember, following debates in this House over the years, dealing with the question of the homeowner grant, and how that was cooking the books and misleading the public — a devious device — and all of these descriptive terms. Yet during this session, I've heard the hon. members complaining that the homeowner grant is not increased; so they jump and straddle this fence. They are just fortunate that it's not a picket fence. They would have greater difficulty straddling one of those.
The fact is that this government is saying that one-time windfall revenue should be isolated to help the government
[ Page 4362 ]
sustain essential social programs during downturns in the economy. This is the only government that I'm aware of in Canada, if not the western world, that has the budgetary integrity to take those one-time windfalls and isolate them for that rainy day. We will not grab this money and use it to create some false impression of wellness and a healthy economy, when such may not be the case.
Certainly this government will be bringing forward a balanced budget. We'll do it without hocus-pocus and without grabbing one-time windfalls. We will balance a budget and will have, in that process, built up a budget stabilization fund such that this province has never seen before.
MS. MARZARI: The minister suggested that we wanted to have it both ways. Let me suggest that the government side wants to have it both ways.
We want to say on the one hand.... Look, everybody in this room and in this province wants to talk about stability, and your staff has chosen the name for this fund very well. Suggesting that there is a stabilization element in this fund casts a pall of respectability over it which, in fact, doesn't really hold up under any investigation. The acronym is even better.
How do we get at this? How do we get you to lay out exactly what is going on here. On the one hand, you are talking about the need for fiscal and financial planning, and everybody wants to see financial planning in this province. As we sit on the Public Accounts Committee every Tuesday morning, we would like to see a rational laying-out of what plans might look like. On the other hand, having come out of the city of Vancouver, where we set up a property endowment fund back in 1975.... We actually used the property that we had in the city and put it into a special fund and let that accrue and grow, so that we could properly plan our land acquisitions, properly landbank, properly deal with the acquisition and dispersal of land. The city still holds onto that landbank, and it is its basic technique of fiscal planning. When it goes off to New York, when it goes off to float bonds, when it goes off to get its triple-A rating, it points to the property endowment fund to show that the city is stable financially. Those lands themselves represent an asset, a piece of collateral which the east recognizes as something that gives us in the west some credibility in financial circles.
If that is what it's all about, if stabilization is what it's all about, then surely you want to have a planning mechanism that gives this province some credibility with those people who are going to be helping us float our debentures and those who are loaning us money.
[11:45]
I don't understand, quite frankly, what this fund stabilizes. I don't see you having a windfall profit, so-called, from last year injected into this year's budget. I don't see the cash.
I see an account that's been spent and that you're borrowing against, and inflating our budget by $450 million. I don't see how this stabilizes anything.
I do see that in Bill 18, what we just did was to take a solid asset, a fund for Crown lands, and basically absorb it back into general consolidated revenue. Just ten minutes ago I witnessed this province saying goodbye to $200 million worth of money that had been accrued from the sale of Crown lands in this province over the last who knows how many years, leaving that fund with only $50 million. That fund could have been your stabilization fund. You could have rested it in land the province owns.
Who are you trying to kid with this stabilization clause? Are you trying to kid the guys in the east that are lending us money? Are you actually trying to convince the lenders that this is making us a stable province because we have a bill in front of us that says that $450 million exists, when you yourself, Mr. Minister, have said that it's long since been spent? It seems to me to be a piece of paper. It's a piece of paper that you're going to use down the line, as my colleague for Nanaimo has suggested, to pull $450 million out of the air in authorized expenditure. Where and what does this bill stabilize, since the money has long since come and gone?
HON. MR. COUVELIER: The hon. member raised a number of points that I'll try to deal with if my memory will serve me.
First of all, there was some reference to the eastern financial community and their assessment of this government's performance. I can tell the hon. member that as a consequence of this budget and its presentation, and a subsequent trip that has been made to the New York financial markets and the rating agencies, they are very favourably impressed with the kind of initiatives this government has shown, and with the imaginative way we are ensuring that every cent of value is wrung out of taxpayers' dollars so that their interests are better served in the process.
If the hon. member happened to have missed it, Mr. Chairman, I might refer her to some comments made by Richard Allen, the chief economist of the B.C. Central Credit Union, an organization which the hon. member, I know, has some background experience with. This unbiased, presumably independent observer has said about our initiative that this fund will enable the government to move away from an annually balanced budget to a cyclically balanced budget, "which is far more economically justifiable and far more fiscally responsible." Furthermore, there has been specific comment by Mr. Allen, who says: "I think the budget stabilization fund is an excellent idea. It's crazy to try and balance the budget on an annual basis, because business cycles don't work that way. You need a rainy-day fund like this."
Furthermore, may I just remind the hon. member that if the fount of all wisdom in financial affairs is resident in eastern North America, then I would point her to the editorial comments of the Globe and Mail, which is certainly in the eastern part of the continent. If, as the hon. member alleges, there is more wisdom out there than here, then let me just remind her that in an editorial of, I believe, late March — I can give you the specific date, although I don't have it on this photocopy — the Globe says: "This is good public management in the west, which has a lot to teach the rest of Canada about financial prudence." So those who are experienced in assessing provincial budgets from every province are very favorably impressed with the kinds of things we are doing.
To the suggestion that those in the financial community themselves might not be supportive, I just point the member to comments made by Pemberton Houston Willoughby, one of B.C.s prominent financial houses, so that I give you both an east coast and a west coast perspective. The west coast perspective would be: "A good way to keep the focus firmly on deficit reduction and to reduce the temptation to spend too freely." We have, I think, a pretty balanced representation from right across the country that this Social Credit government in British Columbia is doing some imaginative things; but more important than that, that it's managing the public, taxpayers' dollars with prudence, discipline and integrity.
[ Page 4363 ]
MS. MARZARl: I couldn't let some of those comments go without rising to the challenge. The wisdom of the east is something that I don't necessarily respect, but one always has to look in terms of where one sits geographically. One has to look to where one gets one's ratings from. One has to go to New York; one even has to occasionally go to Europe to talk to financiers, to talk about where we are getting ratings, where we are getting our interest rates from. Definitely, any province in this country has to look to the bond market, to the ratings officials, to their criteria — whether or not we agree with them as to what our standards of performance should be. We are not stupid enough to think that there aren't standards for performance, and the financiers do want to see stability.
Let me suggest that reducing the temptation to spend too freely, if that is the vernacular way of putting some of these funders' criteria, is not necessarily to be found in this piece of chicanery, the budget stabilization fund. This province has many funds; this province has many assets. This province has a number of things it can carry to the table when it wants to talk about its fiscal responsibility.
It has capital. I just referred to the Crown land assets. Why we would ever want to take that fund and put it back into consolidated revenue is beyond me. But anyway, that was just one example of a fund that was sitting there that could have been used and probably has been used when we go to show how credible or how stable we are.
But this eleventh-hour business.... I assume from reading the recent press just after budget day that this was an eleventh-hour political gimmick dreamed up by someone on your side of the House, named apparently at the eleventh hour by the comptroller-general. And there was a suggestion that it was named by the auditor-general too, something that caused me a great deal of concern, in the sense that the auditor-general should not be involved at all in the naming of funds and that kind of assistance to the government. But it was an eleventh-hour piece of chicanery, thought up and put onto the books to make it look as if there were stability and planning and fiscal arrangements inside the provincial government.
The fund will be used in the future, which serves no purpose to us right now. You may quote Richard Allen at length and you can quote the Globe and Mail editorials. This particular fund is not what they were referring to. They could have been talking about other aspects of the budget — who knows? This fund needs to be seriously looked at. It does not have credibility. It has been ripped apart by the popular press, by the professional Institute of Chartered Accountants. It is perceived as a political fund injected by this government into the fiscal framework of this government to look good now and to give you a slush fund or a piece of paper which will enable you to draw $450 million out of thin air in the future. It is not a credible entity, and we simply cannot see what it stabilizes and how it assists the budgeting of this province in any way.
MR. STUPICH: If the minister would quit talking and just give us answers to our questions, we'd get along a lot further. To quote the Globe and Mail and to quote Richard Allan talking about the budget and the financial performance of British Columbia has nothing at all to do with the BS fund. It has to do with the fact that a year ago a deficit of $850 million was forecast, and at the end of the year the revised estimate is $350 million. That shows we're better off by $500 million more than we said we would be. That's progress. The fact that we knew that was going to happen has really nothing to do with it, because it's still a much better performance than the year before, when we had a deficit in excess of $1 billion. That's what's good about finance in B.C. right now. We are coming out of the hole gradually. It's nothing to do with the BS fund. If the minister had admitted from the beginning that all they were doing is not recognizing $500 million of that revenue this year but waiting to recognize it some other year when it suits their purposes....
The minister talked about using that money to maintain services. If he wanted to spend 5 cents out of that money, he'd have to start by borrowing $4 billion to clear off the deficit that's now on the books, and then borrow an extra nickel, and then he'd have a nickel to spend. There is nothing there to maintain services of any kind to the people of British Columbia. It's just an entry on a balance sheet. They are not recognizing the revenue this year. They're going to recognize it some year in the future. That's all it is.
Sections 2 to 5 inclusive approved.
On section 6.
MR. STUPICH: I know there are several who want to ask questions and talk about this. I move the committee rise, report progress and ask leave to sit again.
Motion approved.
The House resumed; Mr. Speaker in the chair.
The committee, having reported progress, was granted eave to sit again.
Hon. Mr. Strachan moved adjournment of the House.
Motion approved.
The House adjourned at 11:58 a.m.
Appendix
AMENDMENTS TO BILLS
18 The Hon. M. B. Couvelier to move, in Committee of the Whole on Bill (No. 18) intituled Special Accounts Appropriation and Control Act to amend as follows:
SECTION 6, by adding "or lend" after "may pay".