[ Page 4365 ]

The House met at 2:06 p.m.

HON. MR. VEITCH: In the gallery today we have a very important visitor: His Excellency Per Fergo, the Ambassador of Denmark to Canada. He is accompanied by Mr. Finn Petersen, the consul of Denmark at Vancouver. I would ask the House to bid him welcome.

HON. MR. DUECK: It is a pleasure for me to introduce someone to this House whom I just met a few minutes ago. His name is Peter Dueck; he is from West Germany and apparently his grandfather is my dad's cousin. After much effort six years ago, this young man's father and family were able to leave the Soviet Union and go to West Germany. The young fellow is studying law in West Germany, and he is here in Canada for six or eight months learning English and other things that he wants to know about — the Canadian way of life and, in particular, the health system. He can't believe how good we are treating people in this country. He has joined my wife this afternoon in the members' gallery. Would the House please wish him welcome.

MR. CLARK: I have the honour today of introducing to the House a group of students from Templeton Secondary School in the north end of my riding. I'd ask the House to give them a warm welcome.

MR. VANT: I am very pleased to introduce to the House this afternoon Ed and Nettie Koppelman of Los Angeles, California, who are in the members' gallery. I first met Mr. Koppelman in Williams Lake a number of months ago, in the great Cariboo constituency. We welcome him and his good wife to Victoria and to this Legislature.

MR. DAVIDSON: Earlier this morning the Cabinet Committee on Economic Development received a presentation from the Delta Chamber of Commerce and the municipality of the corporation of Delta. Visiting us this afternoon are Mayor Doug Husband, Ald. Doug Brown, Ald. Ann Claggett, Ald. Rick Green and Ald. Bruce MacDonald; and, from the chamber of commerce, Mr. Glen Buckley, president; Mr. Michael Owen, vice-president, Mr. Peter Podovinikoff, the second vice-president; and Ms. Roslyn Castleden. I would ask the House to make these visitors welcome.

MS. SMALLWOOD: I'd like to make welcome today a friend and constituent, Miss Lily Karpoff.

MR. JANSEN: Visiting Victoria today, and in the precincts, from the constituency of Chilliwack — a wonderful place, as you all know — are Robert and Doris Sperling. Will you make them welcome, please.

MR. PELTON: Hon. members, early this morning at Lions Gate Hospital in North Vancouver, a 6-pound, 1-ounce baby girl came into this world. She has a very illustrious grandfather: our Speaker. I wonder if this House could congratulate not only Mr. Speaker on this birth, but also his son and daughter-in-law.

While I'm on my feet, Mr. Speaker, if I may I'd like to ask the House to welcome to the gallery today Mrs. Marie Hyland from Vancouver-Howe Sound. Mrs. Hyland is the mother of one of our interns, Randall Hyland.

MR. MICHAEL: A constituent visiting the precincts today is Oona McKinstry from the great alpine city of Revelstoke.

HON. MR. STRACHAN: Mr. Speaker, you're going to remember this day for many years, I'm sure. Also, some of us in this assembly remember this day because May 10 is the ninth anniversary of the class of '79, who were elected May 10, 1979. There has been some attrition in the last nine years, but I'd like the House to send out a big, warm round of applause or whatever — condolences — to those of us of the class of '79 who are left: the first member for Victoria (Mr. G. Hanson) — granted, he's not here today; our government Whip (Mr. Ree); the Attorney-General (Hon. B.R. Smith); the Minister of Education (Hon. Mr. Brummet); and, of course, the first member for Prince George South (Hon. Mr. Strachan).

HON. MR. COUVELIER: In the gallery this afternoon are four gentlemen who are currently visiting Victoria on business. I'm pleased to introduce Mr. Nigel Kent-Lemon and Mr. Martin Graham, both from London, England, and Mr. John Kadlubowski, formerly of London; they're here this afternoon with Mr. Austin Fraser from Duncan. Would the House please welcome them.

Oral Questions

BUSINESS IMMIGRATION

MR. CLARK: On the advice of the Minister of Economic Development (Hon. Mrs. McCarthy), I address these questions to the Premier. At the first July 1987 meeting of your Premier's Economic Advisory Council, you outlined for the council the broad areas that you felt should be discussed. Will you confirm that one of those areas was development of a means to promote more business immigrants to British Columbia?

HON. MR. VANDER ZALM: I think that might have been discussed in broad terms.

MR. CLARK: At the conclusion of the second meeting of the Premier's Economic Advisory Council, you issued a press release dated January 8 which announced that "a key decision" made at the meeting was the "development of a business immigration plan that will attract foreign investors to the province." Will the Premier advise the House whether Mr. Peter Toigo attended the discussions surrounding this decision?

HON. MR. VANDER ZALM: First of all, I don't know if a record is kept of the attendance all the time, nor do we keep minutes of the meeting. We do keep broad notes. The purpose of the Economic Advisory Council is to have people representative of the various areas of the country and the continent, and for that matter, we have people from different places in the world who also bring with them all types of expertise. They certainly are people who are very successful in their own right, and they give us a lot of information. They serve on this committee and give of their time freely, and their

[ Page 4366 ]

input is very valuable, particularly as they provide us with this perspective from other areas of the globe and also from their own experiences. Any number of topics might be discussed.

I appreciate that much of what we are doing through the Premier's Economic Advisory Council is also to try and develop opportunities for economic investment and to seek new industries that might want to be established in one of the regions of the province. Much of this of course might be foreign, particularly to the members from Vancouver East, who are too centred in on one area only and don't realize that there is another part of the province, the rest of B.C.; it's not all centred in Vancouver East.

[2:15]

One of the members, the first member from Vancouver East (Mr. Williams), took exception to someone serving on that particular committee because of his nationality. The second member is taking exception — I gather from the comments already made and from what I've heard yesterday — to the fact that people bring a particular expertise. I'm sure that as far as the socialists are concerned, they don't want successful people involved in anything; they would much prefer that they could rule the roost without that outside advice. Frankly, economic development would never be what we see in the province today if it were left to the socialists; we'd be down in the dumps.

Mr. Speaker, we welcome all sorts of people from all over that provide all types of expertise freely to government.

Interjection.

HON. MR. VANDER ZALM: Someone shouts across again — the member for Victoria, who knows little better to do than shout and insult people.

If in fact it is again an attempt to insult or by innuendo to charge someone right here in the Legislature, I would suggest that those members for Vancouver East, who don't know the rest of the province — those socialists — go out and say that outside of the House, and ask that someone be charged. Let them have the courage of standing for what they're asking about.

MR. CLARK: The Premier has lapsed into an auto-rant, as he's wont to do in this House.

Is the Premier aware that every legitimate fund that has been formed to promote business immigration is opposed to the direction the government is taking in promoting the fact that there should be guaranteed investment? Is he aware that that's the direction that we see in briefs from legitimate entrepreneurs who want to assist real business initiatives from real wealthy immigrants, and not simply guaranteeing the investment? If he's not aware, he should be aware.

I have a question. Did Mr. Toigo declare at the second meeting that he was a major shareholder and director of a company; that he joined that company one month after the first meeting of the Premier's Economic Advisory Council, where the Premier indicates this was discussed; that the company's name was Tang Peacock; and that it stood to benefit from decisions made by the council? Did Mr. Toigo declare that he had this interest, at the second meeting?

HON. MR. VANDER ZALM: Again, Mr. Speaker, we do not have conflict-of-interest guidelines for members serving on that committee. They are there to give advice. On this particular issue, again I say it was discussed, as I understand it, in general terms; nothing specific. The name that's been mentioned by the member I hadn't heard before yesterday, so this is the first I've heard.... The name was not mentioned.

The government of British Columbia did not lobby the federal government to change in order to bring about a means by which these investments could be guaranteed. We did not lobby the government. Perhaps Quebec did; maybe Alberta did; we did not. But the change came from the federal government.

Again, if the socialists across the way want to accuse people by innuendo, go outside and do it. Have some courage. Don't sit in here and try and smear people that serve this government in some capacity.

MR. CLARK: The question is a simple one, Mr. Speaker, to the Premier. Did Mr. Toigo declare an interest in a company that stood to benefit by decisions made by the Premier's Economic Advisory Council?

HON. MR. VANDER ZALM: All the people who serve on the commission discuss in generalities any number of things that might be of benefit to the province, and they provide on all of those issues.… We do not ask that they declare their involvements. All these people, incidentally — bar none — are successful and involved in a variety of activities, the type of people who give of their time, who travel here and participate freely in all this, the type of people whom the NDP socialists could never hope to attract.

MR. CLARK: The question is really a very simple one. Did Mr. Toigo indicate to the Premier or to the members of the Premier's Economic Advisory Council that he owned or partially owned a company named Tang Peacock Investments Ltd. and that that company stood to benefit by a relaxation of the rules regarding wealthy, entrepreneurial immigration?

HON. MR. VANDER ZALM: Mr. Speaker, I repeat: when people serve on committees, as they do on that committee, they are not asked to declare anything with respect to their involvements. There are no conflict-of-interest guidelines for these people who provide advice freely. They are not required or requested.... I don't recall anyone saying: "I have an involvement here," "I'm an investment expert," "I'm an expert in a particular industry or a particular type of technology, and therefore I can't give you advice." No, I don't recall anyone, including Mr. Toigo, having said that at any of the meetings.

I'm very pleased that they're not constrained in any way to provide advice to government, that they can provide advice to the people of this province at no cost to them, that they're willing to participate because we have in this province a good free-enterprise government that's getting things done in spite of the socialists.

MR. CLARK: A supplementary to the Premier. It has now come to light that Mr. Toigo joined a company one month after the first Premier's Economic Advisory Council. We now know that decisions were made to support initiatives from which he would benefit personally. How long will the Premier tolerate this blatant conflict of interest between members of his council advising the government on initiatives from which they stood to personally benefit? How long

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will he tolerate this conflict of interest? Will the Premier agree now to impose some kind of conflict-of-interest guidelines on these businessmen so this kind of permeation of conflict of interest that we are seeing on that side of the House with this government comes to an end and people know there's a sense of fairness in British Columbia?

HON. MR. VANDER ZALM: We will not impose on people who serve this province in a variety of capacities the sorts of restraint that these members are asking for. Certainly most people recognize that we need people to advise and to provide their expertise to government. I well appreciate that the socialist philosophy is very different and that you wouldn't seek successful people to be involved in any way. But that's why free-enterprisers are governing the province and not socialists.

MR. WILLIAMS: To the Minister of Economic Development. In view of the obvious problems in this circumstance as, co-Chair is the minister comfortable with this lack of requirement in terms of exposing conflict of interest?

HON. MRS. McCARTHY: I am perfectly comfortable with the actions of the council and our involvement with the council, but I am particularly comfortable with the kinds of service that these people give to us. It has been outstanding and we have appreciated it more than we can tell you.

NEIGHBOURHOOD PUB REFERENDUM

MS. A. HAGEN: To the Minister of Labour and Consumer Services regarding the application for a pub at 57th and Knight in Vancouver. There are now about 50 residents who say that their opinions were not counted in the referendum. Has the minister responded to the public complaints about what appears to be a faulty plebiscite?

HON. L. HANSON: That's an interesting question. We hold referendums in almost every pub application, and there are very few where we don't get the odd concern that people were not home. We have audited the referendum in the Toigo realtor/land-owner/McRobbie pub application — which is what you're suggesting — and we found absolutely no evidence of malpractice or undue influence, or of an unfair referendum being held. The process was the same process that is done in every one of them. A representative of the consulting firm doing the referendum calls at the house. If there is no answer they leave a message that says: "We have called at your house. The issue was this. If you send in this card, which is self-addressed and stamped, we will mail you back the ballot to give you an opportunity to vote on the issue of the pub."

That was done with, as far as we are concerned, everything above-board and completed properly, and the results are as accurate as they are in any referendum held in that manner.

MS. A. HAGEN: A further question to the Minister of Labour and Consumer Affairs. Pub referenda are, in fact, a measure of public opinion, and the circumstances regarding this particular pub application have raised many questions in the public's mind. If these referenda are to be open and fair, the applicant must not be allowed to hand-pick a survey firm that might present a biased or unreliable report. Is the minister now ready to establish a new approach to pub plebiscites, where the survey firm is contracted by the government and the pub applicant pays the bill?

HON. L. HANSON: First of all, we are looking at a different system, but not because the system that we're using now is in question. Quite frankly, a number of firms in British Columbia are recognized as certified firms for the conduct of a referendum. Just for the information of the member opposite, there were about 4,000 people in the area surveyed, and 3,200 ballots were distributed. I believe that 719 messages were left where there was no one home. Of the 3,200 ballots distributed, about 66 percent were returned. None of those percentages are any aberration from the norm in an urban community.

If the member wishes to make some charges that the firm doing the referendum was doing it with something other than above-board practice, then the member certainly has that opportunity outside the House; and it would be dealt with in the courts, as those sorts of things should be.

Ministerial Statement

AMBULANCE DISPATCH SERVICE

HON. MR. DUECK: I would like to make a ministerial statement at this time in respect to questions I have taken on notice and many other questions I have had on this particular issue. I thought it only fair that I make a statement to clear the air and see exactly where we are. The opposition has once again tried to create unwarranted fear among citizens of this province about our provincial ambulance service, with questions fabricated without any substance whatsoever.

I wish to reply to the hon. member for Prince George North (Mrs. Boone), and I sincerely hope the professional media will report my response as they have dutifully reported the erroneous allegations of the opposition. To the statement that portions of the emergency service will be privatized on May 1, 1988, I categorically deny for the fifth time in question period that it is the government's intention to privatize emergency ambulance service in the province. May 1, 1988, has come and gone, and the opposition should apologize to the public for raising unwarranted fears.

To the allegation that ambulance dispatch has deteriorated following centralization of dispatch, each and every case brought to this House to date by the opposition has been proven wrong — wrong, wrong, wrong, Mr. Speaker. I have investigated each case, and the response time and service provided by the men and women of emergency health services has been exemplary. In fact, the level of verifiable complaints surrounding dispatch has fallen from 0.4 to 0.3 percent since the introduction of centralization.

[2:30]

To the allegation of the member for Prince Rupert (Mr. Miller) that all the dispatchers in Kamloops wanted to do was jawbone — this was a statement made in the House — this is an affront to the professionalism of our staff with respect to the incident he raised. I reported to the Legislature previously that from the time of the initial call to our attendants arriving on the scene was 11 minutes, not 20 minutes. Certainly there was no time to jawbone, and I demand an apology from the hon. member to our staff.

By the way, the hon. member for Prince Rupert still has not brought to my attention the specifics of the other two

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incidents he raised in the House. I believe if someone raises a question in the House and I take it on notice, the only decent thing to do is to give me that information so that I can, in fact, check it out and bring back that information. I can only speculate that he is afraid that upon investigation he will be proven wrong again.

To the allegation that priority 3 and 4 ambulance calls will be privatized, all I can say is that the member from Prince George has received very unreliable information. The current and future policy of emergency health service is that when the provincial ambulance service is required to transport a patient, regardless of the nature of the call, such requests will be honoured. With respect to private, nonemergency transfer, should a doctor or nurse or facility feel emergency health service ambulance is not necessary and wishes to call a private service, they will be able to do so.

I strongly feel that alternative transportation service has proven to be invaluable in these circumstances. In reply to the question with respect to standards of alternate transport services, very specific and stringent criteria are being formulated. The chairman of the Emergency Health Services Commission, Mr. Stan Dubas, and two senior emergency health service officials are meeting with the ambulance managers and paramedics to review methods that may improve the delivery of emergency health services to the lower mainland. Patient transfers are being considered in this review.

This House may rest assured that any new direction in the area of health care will have high standards and controls to ensure patient care will be maintained and service improved. I am totally fed up with the irresponsible behaviour of the opposition....

MR. SPEAKER: Order, please. The opposition House Leader on a point of order.

MR. ROSE: Mr. Speaker, certainly whether the minister is fed up or not has nothing to do with a ministerial statement. Any authority you care to cite will underline that a ministerial statement is for policy or changes in policy. It's not to argue a particular case one way or the other. Not only has the minister exceeded the patience of the House and of the Speaker, but he's flatly out of order, and I don't think he should be allowed to proceed with that kind of partisan argument during a ministerial statement.

HON. MR. STRACHAN: To respond to the point of order. Mr. Speaker, a ministerial statement contains comments that a minister can make about policy and his opinion about policy. The fact that he happens to be fed up with some reporting is not partisan; it's just a statement being made by the minister, and I feel that it's totally in order.

MR. ROSE: I'll cite the relevant citation from page 51 of that great expert on parliamentary procedure in British Columbia, the reasonably honourable George MacMinn. On page 51 he says: "When a minister makes a statement on government policy or ministerial administration, either under routine proceedings, between two orders of the day or shortly before the adjournment of the House, it is now firmly established that the Leader of the Opposition...." or other groups can reply.

Here is subsection (2) and the pertinent argument: "General arguments or observations beyond the fair bounds of explanation" — not to engage in partisan arguments or to take cheap shots at the opposition — "or too distinct a reference to previous debates are out of order."

HON. MR. STRACHAN: On a final point of order, I'll advise you, Mr. Speaker, that we'll bow to the learned authority, maybe just this once. Thank you for your comments.

MR. SPEAKER: I thank both hon. members for their points of order. I would bring out a point to the hon. opposition House Leader: the quotes were made out of the book, but are actually from Beauchesne in that book — so that members understand that.

HON. MR. DUECK: Mr. Speaker, I did not think that I had made cheap shots, although I did say I was fed up. I would like to change that: I am very tired of the behaviour that has been shown in the House. In question period after question period I've categorically denied their allegations, yet they persist in attempting to create fear among our clients. This is not taking a cheap shot; this is a fact.

When I was appointed Health minister I pledged to myself and my ministry staff that we would not play politics with health care, and I would respect it if the opposition side would do the same.

MRS. BOONE: Mr. Minister, we are not trying to create any unwarranted fear; we are trying to awaken the minister to some very real problems out there. That is our role in the opposition.

We have asked the minister to review our concern regarding centralized dispatch. The minister consistently says that the incidents were human error, points to us and says that we are saying it is a people problem. The problem is not with the dispatch, not with the people in the dispatch, not with the ambulance attendants; the problem is with the communication system that this government put in place.

It is entirely wrong to consistently say that it is human error, and that is what the minister has constantly said with regard to this.

Interjections.

MRS. BOONE: The minister has said that. I do not believe for one minute that this human error would have taken place without some of the problems that are there.

The member for Prince Rupert (Mr. Miller) was quoted as saying "jawboning," but he was quoting what was said to him. Therefore he does not owe you an apology; you owe an apology to the people out there.

We are saying that there are some very real problems, not with the staff but with the communication system; incidents, problems out there with the length of time it takes, not for people to respond but for people to get their message to the dispatch. It is the communication system, Mr. Minister, not the people and the breakdown there; it is due to the breakdown in the communications system.

When you centralized, you promised us top-notch communications. You said there would never be a time when we would be without a communication system. Yet lines have been down; pagers aren't working. All those things are a problem, and we want some action in those areas, Mr. Minister.

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The issues we have raised in this House are just one or two of many, and I do mean many. We've received letters and calls from individuals who are concerned. We've only brought a couple of them to you.

The minister seems to have changed his mind about privatization. In this House we have constantly questioned the minister on the privatization aspect of the priority 3 and 4, and not once has the minister quoted his policy here, which says: "When the provincial ambulance service is required to transport a patient, regardless of the nature...." You never once quoted that.

You told us that privatization on the priority 3 and 4 was going to take place. You stated that. We asked you time and time again. Your own memo here that went out states: "Phase 2: initiate the subcontracting of all priority 4 transfers, May 1." "All" priority 4 transfers. We want top-notch service for our people and we demand that we have that service.

When we asked you in the House, Mr. Minister, about the standards to be supplied for the staffing and the vehicles that were to be supplied, you told us that you had no standards. You said: "I have no standards for the staffing of those areas. I have no standards for the vehicles." Now you are telling us that you do have standards.

If you want to say that these things aren't true, then we are impressed that you have taken us at our word and you are not going to privatize priority 3 and 4, if that's what the minister is saying. We have been calling for that for a long time.

If the minister wants to argue as to what's happening with the communications system out there, by all means, but do not attack the service out there that is given to us by the people. Our people are providing a good service but they need to have the communications system out there to back them up so they can give that system. And they don't have it.

MR. SPEAKER: Government House Leader on a point of order.

HON. MR. STRACHAN: I have two points of order actually. I wonder if the member for Prince George North would be so kind as to review the remarks made by her House Leader earlier with respect to argumentative statements.

Secondly, the member has referred to an official document. I wonder if the member would have the courtesy to table it.

MR. ROSE: I would like to on behalf of the opposition welcome the Minister of Health's cousin to the Legislature.

CYANIDE-LEACHING PERMIT APPEAL

HON. MR. STRACHAN: Yesterday, I took two questions on notice. I have the material available now to answer one, and I will advise the House that I will have the material available by adjournment time this evening to answer the other.

The question I am prepared to answer now has to do with a ministry decision to overrule one factor of an Environmental Appeal Board decision of 1986, which is why it has taken some time to get this material available.

[2:45]

The question posed to me and the question I took as notice yesterday was from the hon. member for Surrey Guildford-Whalley (Ms. Smallwood), and it said, in essence: "Can the minister tell us whether it is his policy now to overrule the Environmental Appeal Board, and if so, what's the point of having an Environmental Appeal Board in the first place?"

Is it my policy to overrule the general policy? No. However, to give you some details of the process here, the question posed to the Environmental Appeal Board had to do with a cyanide leaching gold-mining process in the Grand Forks area. In 1985 a waste management permit was granted to a Grand Forks mining company, to discharge gold process, leach liquor and storm water to a recycle pond with excess to an evaporation pond. In 1986 the Grand Forks Watershed Coalition appealed the permit to the Environmental Appeal Board, and in their decision of July 17, 1986, the Environmental Appeal Board ruled that the various plans required under the waste management permit issued to Sumac Resources — those are the people undertaking the activity — should be circulated to the various government agencies as well as to the appellant, the Grand Forks Watershed Coalition.

The appeal board instructed that consideration be given to the comments from these agencies and the groups before the plans were approved by the director of the waste management branch. It then became known to the Ministry of Environment, through counsel employed by Sumac Resources, that information dealing with their process was, in their opinion, proprietary information and should be available to them only. On that basis, we asked the permittee to submit his proprietary plans — secret plans, if you will — to the director of the waste management branch, and we would keep that process confidential but examine it ourselves. We did that and then informed the permittee that he could go ahead.

However, as the member has indicated, we did overrule one part of the decision by the Environmental Appeal Board; and we did that, we think for good reasons, in terms of protecting the public of British Columbia against private lawsuit. Donald Pharand of the Grand Forks Watershed Coalition was advised of this by a letter from me on April 8, 1988.

That's the end of that statement.

MR. WILLIAMS: Mr. Speaker, I ask leave of the House to make an introduction.

Leave granted.

MR. WILLIAMS: I'd like to welcome the second group of Templeton high school students here today. They've had a good taste of how the Premier enjoys the members from Vancouver East today.

Orders of the Day

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

BUDGET STABILIZATION FUND ACT
(continued)

The House in committee on Bill 14; Mr. Rabbitt in the chair.

On section 6.

MR. STUPICH: The opposition is opposed to this section, which gives the government the authority to transfer the

[ Page 4370 ]

funds from the lottery fund to general revenue, in effect. It says they'll go to general revenue first and then they'll go into the BS fund, but they can come out of that just as easily as they go in. So in effect we're authorizing the government to take $79 million out of the lottery fund and dump it into the $4 billion deficit that we now have in the general account.

Mr. Chairman, a lot of people buy lottery tickets. We were told earlier today that the market for them is decreasing to some extent. One of the things I hear from time to time from people buying lottery tickets — and from those that aren't, I guess — is that they wish that the money were going into some special program of some kind, where they could recognize that when they were buying these lottery tickets, a part of the price they were paying was going into some particular government service. They often mention hospitals, but other services are mentioned as well.

In this case the lottery fund was set up for very specific.... At least, the money was supposed to be going to very specific purposes. The legislation currently reads, in section 7(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."

HON. MR. VEITCH: You're looking at an old one.

MR. STUPICH: The Provincial Secretary — from his seat — is telling me I'm looking at an old version. Well, I'm looking at the most recent one we have in this chamber. It does make reference to an amendment that has never been proclaimed and is not yet in effect, according to the information I have. The Provincial Secretary may shake his head, but maybe later on he'll get up and speak. That's the information I have to go on.

In any case, that's what it was supposed to be used for and that's what people buying the tickets think it's being used for. As I say, they would like to have it used for some specific purpose.

This legislation we're dealing with now allows the government to raid the Lottery Fund and take out everything that was left over. They had a very good year of paying out in election year. They went into a deficit position that year. Last year they had a net income; they didn't pay nearly as much out in grants. They expect to have $79 million left over in the year we're in right now. The Provincial Secretary is wrinkling his nose, but I'm reading from the estimates. I don't have anything else to go on. It's the same with legislation: all I've got to go on is the most updated version available.

The estimates say that the Lottery Fund expects to have $79 million left over after it meets all of the requirements from various organizations all over the province — at least in Socred ridings. You can say that; I won't. Whatever requirements the Provincial Secretary endorses, after they meet all of those, there will be $79 million left over. It's going to be dumped into general revenue, the sinkhole that had $11 billion in expenditures this year. We're going to dump in $79 million out of the Lottery Fund to try to make it up.

As I say, the bill goes on to say that it'll go into the BS fund eventually. If it were hard cash, it would be the only hard cash in there. We all know — the minister told us time after time this morning — that there's no hard cash there. There's a $4 billion deficit, and this is part of it. It's not a case of transferring cash. It's just inflating a phony figure, a figure that says only — again, as I said this morning — that some year down the road we're going to recognize this revenue as having been earned this year. It's the same with the Lottery Fund. We're transferring it into the BS fund, and saying that some year down the road we'll recognize the money we expect to make on lotteries in '88-89 as actually existing. In that year, when we want to make things look good, we'll change the figures around accordingly.

In any case, that lottery money should be used for some specific purpose or purposes, not just dumped into the general revenue pot. It should not be revenue that the government depends upon for maintaining services in the province. It should be used for purposes outside the general business of government. We are opposed to seeing it disappear into the great pond of general revenue.

MS. EDWARDS: I would hate to let this opportunity go past without applauding everything that has been said by the first member for Nanaimo and questioning this whole business which comes up on this fund of there being, as it said in the throne speech, "surplus lottery funds" to go into the budget stabilization or BS fund. I don't know how the minister decides what are surplus lottery funds. What is surplus to our recreational, cultural and artistic needs in this province, if not the other needs that lottery funds have been used on up until now? If the minister could explain how one decides what is surplus to those needs, perhaps we could at least argue that. Right now we're talking about some foolish phrase that means absolutely nothing. Many communities in British Columbia have had inadequate funds to address their recreational needs, since the recreational facilities fund hasn't operated for about six years now or perhaps a little longer. Those needs are also included here. To suggest that there is such a thing as surplus.... To what, I would like to know. Is it surplus to our needs? It certainly isn't surplus to our needs. Has the minister any answer? What are surplus lottery funds?

HON. MR. COUVELIER: As exhibited again, hon. members opposite seem to be taking both sides of the coin and trying to argue them at different times. I heard earlier complaints that this Lottery Fund was being abused — erroneous complaints, I might add — and directed to Social Credit ridings only. Of course, that's not true. The hon. members all know that. It's designed to serve a variety of cultural and recreational needs in the community. To argue, on the one hand, that it's used for Social Credit political purposes and then, on the other hand, to decry the fact that more expenditures aren't being made.... I find myself faced with what appears to be a contradiction.

However, the Lottery Fund has traditionally been used for many desirable social purposes, and it will continue to be so used. The Lottery Fund has been used to retire the Expo debt; large sums of money were directed to that purpose.

The surplus-to-needs issue is addressed by virtue of traditional spending patterns being maintained. The government's position is that we are doing that. It's entirely appropriate, in our judgment, that surplus revenue from the lottery fund would be diverted to the budget stabilization fund as we propose to do with this legislation.

MS. A. HAGEN: I want to speak very strongly against this particular clause in Bill 14 for a number of reasons. First of all, we are being asked to deal with funds that the public clearly understands are to be directed to recreational, cultural

[ Page 4371 ]

and charitable activities. When they participate in lotteries, one of the things they recognize is that that's the goal, the reason these funds were established.

The minister has just indicated to us he has absolutely no guidelines that he can provide for us on what would be deemed surplus to the needs of those particular categories. If he asked any member in this House who works with constituent groups, he would find that there is a colossal unmet need based on criteria arbitrarily decided on by the Provincial Secretary in respect to the number of grants that will be available.

For example, one of the criteria that the minister uses is that up to one-third of capital costs will be available to groups, and he then sets a maximum limit on that activity, which de facto means that most groups are looking at something in the order of a quarter — 20, 15 or 10 percent — of that capital cost actually coming out of the Lottery Fund.

Given that the Lottery Fund operates on the ad hockery of the Provincial Secretary, that we are not accorded regular reports of the expenditures of that Lottery Fund, that the rules vary each year according to the criteria of government.... Even with the Lottery Fund staying as a special account, we have enough difficulty ensuring that it is being used for the purposes it was designed to serve and in the way that the public, in supporting lotteries, expects.

With this absolutely loose arrangement that says that some amount to be specified by someone, without any kind of guideline, will be declared surplus and become part of the BS fund, it certainly is small comfort for those groups that every single member of this House is working with trying to achieve their goals in a cooperative way through their own fund-raising initiatives and the contributions that come from the Lottery Fund.

If we look at this year and the proposal under special account of the Lottery Fund, it appears that what is deemed to be surplus, with no indication of the basis for that decision, is a full 50 percent of the earnings of the Lottery Fund. The projected revenue is $159,470,000, and no fewer than $79 million — half of that amount — is to be siphoned off to the budget stabilization fund.

Tell that to the seniors groups trying to put together the dollars to add to their recreation facilities in order to enhance the wellness of seniors — the goal of the Minister of Health, as he has said in discussions. Tell that to the groups attempting to put into place recreational facilities that will keep young people off the streets and give them productive activities in their communities. Tell that to the arts and cultural groups that are a very major component of the economic well-being of the province.

[3:00]

They won't buy that this skullduggery in terms of financial arrangements is in any way fair to the intent of the Lottery Fund and to the support that they developed in cooperation with the dollars that come from the Lottery Fund. This is a very shoddy move on the part of the Minister of Finance and the government, to siphon off dollars aimed at community activities that are a part of the cooperative enterprise between government and communities. It's a slap in the face to those groups which goes along with the inconsistency of guidelines and funding that has become the hallmark of how the fund is distributed. I am dismayed to think we're going to be looking at 50 percent fewer dollars from the lottery proceeds this year, and heaven knows, since there's no guideline, whether it's going to be 70 percent or 80 percent another year. We have nothing at all to give us any indication of what the minister might have in mind, except that it's at his discretion. Once again he has funds that he can use to serve his political agendas instead of the cooperative and planned activities of community groups that see this as a legitimate complement to their efforts in the projects that they plan.

I would urge that we all soundly represent our constituencies in calling this particular move the most cynical of the things that go with the budget stabilization fund. It's not something the Minister of Finance can take any pride in presenting to this House.

HON. MR. COUVELIER: I can tell the hon. member categorically that I do take considerable pride from the fact that surplus lottery funds will be diverted to the budget stabilization fund. The point the member.... She rambled over a number of points, but the key issue, it does seem to me, is this question of whether we honour traditional spending patterns. We intend to do that, and therefore her claim is not valid. Once again I must point out that lottery funds were used to retire the Expo deficit of some $337 million, so it is traditional that the proceeds from the Lottery Fund not be spent frivolously and that they be diverted to other essential public purposes. The Expo deficit diversion is an excellent illustration of that. I don't believe it is accurate for the hon. member to claim that the government is in any way abandoning the initiative exhibited by the Lottery Fund philosophy.

The hon. member also mentioned that these disbursements are not reported. That is not so. The Provincial Secretary reports these disbursements on an annual basis. He is not required to do that. There's nothing in the legislation that says he must do that, but this government believes it's public information and is happy to share it. It would be useful, I think, if we could at least be accurate when we make these comments against the various acts before us.

MS. EDWARDS: The minister has referred several times to traditional spending patterns, and then mentions that lottery funds were used to pay off the Expo debt. Does this mean that he perceives traditional spending patterns to be a pattern whereby the government uses lottery funds to pay off the exorbitant price of the government's megaprojects?

HON. MR. COUVELIER: Do I take it that the hon. member is describing Expo as an exorbitantly priced megaproject? Is that the thrust of her comment?

Section 6 approved on the following division:

YEAS — 36

[ Page 4372 ]

NAYS — 16

Sections 7 and 8 approved.

Title approved.

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

Motion approved.

The House resumed; Mr. Speaker in the chair.

Bill 14, Budget Stabilization Fund Act, reported complete without amendment, read a third time and passed on division.

[3:15]

HON. MR. STRACHAN: Committee on Bill 22, Mr. Speaker.

INTERNATIONAL FINANCIAL BUSINESS
(TAX REFUND) ACT

The House in committee on Bill 22; Mr. Rabbitt in the chair.

Section 1 approved.

On section 2.

MR. STUPICH: I was looking for the best place to ask this. During second reading of this bill I put some questions to the minister as to just how much revenue would be forgone by way of income tax from individuals, corporation tax from corporations, and what financial benefits there will be. I just wondered if he could try to give us some cost-benefit analysis of this legislation, and he said that was something he could deal with in committee stage. I am giving him the opportunity, Mr. Chairman.

HON. MR. COUVELIER: Well, I'm pleased to have the opportunity to respond; the member is most generous in providing that opportunity and I am indebted.

The fact of the matter is, as the hon. member well knows, that until we get some experience with this legislation and see the interest exhibited, it will be very difficult to quantify those figures. We do have two firms that to date have expressed an interest in pursuing and taking advantage of the legislation. We do expect there will be more; but I am sorry, until we get some experience we will not be able to tell how much extra income to the province the initiative provides in terms of expanded economic activity, nor will we be able to quantify the cost of the tax exemptions.

MR. STUPICH: I understand one organization is already in the field, and I gather from the minister another one is coming. Do we have any idea how many of their employees would be designated as working solely in this field, and hence for leaving their personal income tax? Do we have any idea how many of the employees of the organization currently in the field will be designated as not having to pay personal income tax?

HON. MR. COUVELIER: No, we do not.

MR. STUPICH: I understand that when the federal government was bringing in legislation on this subject, they felt it would be too rich to give the kind of encouragement that we're giving in this: that is, no income tax for a number of individuals, no income tax for corporations, with respect to these activities. The federal government argued that that would be too rich.

Does the minister have anything at all to go on in saying that while it may be too rich for Ottawa, it is not too rich for B.C., that we are prepared to pay this price for getting something, the worth of which we have absolutely no idea but nevertheless are prepared to pay the price? Have you anything at all to go on?

HON. MR. COUVELIER: Well, I think we discussed this matter in the past when we first introduced the legislation last session. I think the philosophy behind this has been pretty well thoroughly discussed.

For the hon. member's information, the province of Quebec has similar tax exemption provisions, so in terms of that aspect we're no different from the province of Quebec.

In dealing with the philosophical intent of the legislation, it is to create an infrastructure, a network if you like, of financial community participants in the city of Vancouver, so that we can further develop our Pacific Rim economic thrust and hopefully, by the variety of devices that we've brought forward in the last year and a half through the Legislature, tend to build that expertise resident in Vancouver. I am referring here to the captive insurance legislation that we passed previously, and this legislation has the same philosophical intent.

MR. STUPICH: The opposition will not be opposing this legislation. Right now we think to do so would be almost as irresponsible as the minister in bringing in this legislation, because while we know very little about it, unfortunately the minister doesn't seem to know much more. We are really flying blind on this one. We're offering tax escape for individuals and corporations. We don't know how many of each are going to apply, and of course, as the minister says, until it gets going we won't know the cost. We don't know whether there'll be any benefits; but, as I say, it would be just as irresponsible to vote against something that might produce some benefits as it would to bring in a proposal one knows nothing at all about.

MR. WILLIAMS: I note that Royal Trust has brought in a man from Jersey, which is the tax haven in the Channel Islands, with semi-independent status from the United Kingdom. Have you carried out any analysis of what the Jersey and Guernsey circumstances cost the United Kingdom through recent decades in terms of legitimate revenues for that country?

HON. MR. COUVELIER: Well, I am surprised that the hon. member seems to be not aware of the very successful

[ Page 4373 ]

Jersey financial centre initiative. It's been in place now, as I understand it, for something better than 20 years. As a matter of fact, the growth of the financial activity being conducted in that centre has had the consequence of almost a saturation point, and it has prompted the Royal Trust firm to look for another location in the world where they might start to build similarly. I think that's a matter of record. If the hon. member would like me to send over to him copies of the press releases and all of that good, marvellous, exciting news, I'd be happy to. But suffice it to say, for the record at least, that Jersey has been preeminently successful and well recognized for creating an international financial centre out of virtually nothing.

MR. WILLIAMS: Mr. Chairman, I wonder if the minister ever, ever listens to questions. The question was clear; the question was simple. The question was: did you carry out any analysis of the cost of that tax haven to the United Kingdom? That was the question, pure and simple. Can you answer it? Yes or no.

HON. MR. COUVELIER: I have some trouble with the terminology, Mr. Chairman. I suppose that comes because of our different philosophical biases. You see, I don't see this as a cost. I see it as a new business activity that we're presently not enjoying, and the effort to attract that level of expertise of necessity requires the government to make some indication to the trade that it is in business and desiring to build business. So I view it not as a cost at all. We haven't attempted to quantify what the tax will be, in the sense that until we learn the success rate, you can't quantify it. I think that should be self-evident.

MR. WILLIAMS: Well, the world will never know, because they never report — at least, to the outside world. If the minister can't measure the cost, but talks about the benefits, maybe he can give us the measurements of the benefits that he perceives.

HON. MR. COUVELIER: The benefits will be fantastic.

MR. WILLIAMS: Do we have to give you a lecture, Mr. Minister, on the most modest, minimal obligations to the House? You're bringing forth legislation here that is saying that these outfits can arrive here, free and easy, and pay no income tax; they can have employees that pay no income tax; there will not be public reporting of what their activities are and what they're up to. Then you have the gall to say: "And it'll be fantastic. I don't have to tell you any more than that." Well, that's not good enough. It is simply not good enough. If you want to take the time of the House the way you continue to do with this kind of vapid nonsense that we get from you again and again, then you'd better be prepared to sit in that chair for one long time today. You'd just better be prepared.

What studies have you carried out, Mr. Minister? There's surely to God got to be some kind of analysis from your myriad staff, your Treasury Board officers, your analysts and all the rest of them, in terms of some projections of likely benefits and costs.

MR. SIHOTA: It's not going to be that easy. Look, Mr. Chairman, we're simply trying to ask some very basic questions here. It seems to me that whenever a government undertakes an activity, it must have some understanding of what the costs and benefits are going to be. Presumably, for the minister to come to the conclusion that it is going to be a benefit.... I'll pause until the minister starts to listen. If the minister's listening now, I'll continue. If the minister is saying that there's to be a benefit to this province, presumably he must have arrived at that conclusion....

MR. CHAIRMAN: Will the member please continue.

MR. SIHOTA: I expect to have the attention of the minister. If the minister is not prepared to listen, I'll just wait until he's finished taking his notes.

Now that the minister is seated again, I'll continue and ask him the question. If the minister has come to the conclusion that there is going to be a benefit, presumably that must be founded on something other than simply a thought on the part of the minister. Could the minister explain then on what basis he comes to the conclusion that this would be a benefit — not in philosophical terms, in terms of saying, look, we're going to have a financial centre, but in terms of real hard dollars? What type of analysis was done by his ministry which would lead the minister to state in this House that this would be a net financial benefit to the province? Once the minister has explained that calculation, could he also give us a figure on what he and his department conclude would be the benefit in real dollar terms?

I think it's unacceptable that the minister asks this House to vote one way or the other on a piece of legislation which has tax implications, without figuring out what those implications are going to be one way or the other. Any time a government wants to give a tax concession, surely it must know mathematically what its projections are with respect to how much it's going to cost the taxpayer or, alternatively, how much it's going to benefit the taxpayer. It would be folly for a Minister of Finance not to have made those types of considerations. I'm sure the minister has, and I'm asking if he's prepared to share that with us and to tell us in numbers what the benefit is to the province.

MR. CLARK: Can the minister give us some understanding of how many jobs will be created in the next two or three years when this act is passed?

MR. SIHOTA: Can the minister give an indication as to how many jobs he thinks will be created by this?

[3:30]

MR. CLARK: Can the minister give us some understanding as to how many jobs will be created in Vancouver in the first year as a result of the passage of this act?

MR. BLENCOE: Can the minister give us some indication of the financial benefits to the province and the costs to the taxpayers of B.C.?

MR. SIHOTA: Mr. Minister, this is a democracy. One would expect an answer from the minister in this Legislature. I ask the minister again: can he indicate in this House how many jobs he thinks will be created in British Columbia under the first year of this financial centre?

MR. BLENCOE: I'd like to ask a question of the minister. There obviously are some costs to the taxpayer for setting up this institution. Perhaps the minister could tell us the costs, the benefits, and the jobs that would be created by this

[ Page 4374 ]

institution. The people of British Columbia are entitled to that. We're entitled to answers in this chamber. The minister perhaps feels he's so arrogant that he knows automatically what is best for the people of B.C., but this is where we get the information. Perhaps through you, Mr. Chairman, the people could be entitled to the information.

MR. WILLIAMS: Everybody else pays taxes. This is legislation that eliminates taxes for these privileged few. It's reasonable that we should have some numbers. How many jobs? What's the trade-off? It's a standard exercise that you go through with respect to any legislation. You can level with us if it's just a classic leap of faith. Take us off into the stratosphere with your leader.

You do have some obligations, Mr. Minister, and the most basic, reasonable ones are that you should give us some numbers and justify this dramatic change that you're proposing, and which is sweeter than what the feds are talking about. The feds were not overly impressed by this proposal. Committees of the House were not overly impressed in terms of the number of jobs. You have an obligation to respond to that kind of legitimate criticism. You have a job to respond in this House.

We really have had a dismal performance out of you over the last several months. We get these windbag answers that say nothing, and now we get absolute silence, which is maybe a plus. Your staff do carry out studies. You have your chief staff person beside you, who can provide you with all of the advice you need. We've provided you with time to get that. There's written material there beside you. We think you should make the House privy to that information.

HON. MR. COUVELIER: Of all of the members opposite to be talking in such derogatory terms about a failure of a minister of the Crown to answer questions put to him in the House or during debate on a bill, the hon. first member for Vancouver East (Mr. Williams) is the last one I ever would have thought would have made such a comment. He was notorious during his term as a minister of the Crown for failing to answer questions put to him. It's marvellous how sitting across the floor results in a totally different attitude.

I have said before, and I don't know how often I have to say it, that the hon. members seem to think that if a different face jumps up and asks the same question, I will jump up and respond with the same answer ad infinitum — or maybe that should be ad nauseam. I say again that there is nothing that we are losing. We are benefiting, in the sense that we are building a financial community infrastructure in Vancouver. To the extent that there may be some exemptions of tax, it's tax we're not now getting, hon. member. So we're not losing. It's not costing us anything. I said it before and I say it again.

The second member for Victoria (Mr. Blencoe) made some sort of reference which I had some trouble understanding. We're talking about the International Financial Business (Tax Refund) Act. As a consequence of that, as I say, we will be enticing and attracting businesses that we presently do not have located in Vancouver. Through that process, we will be building up an infrastructure in the financial community of Vancouver and thereby, we hope, be able to compete more effectively with other jurisdictions in the Pacific Rim area who have similar incentive programs.

The fact of the matter is that in this rapidly changing economic and financial world we're attempting to enter, it is very important that we have at least the same level of attractions that are in place elsewhere. Even within our own country, hon. member, the jurisdiction of Quebec has this kind of legislation in place and is competing with us for Canadian firms for the location of their international business in Quebec. Would the hon. member have us not enter this field? I suspect that had we not brought forward legislation, we'd have had to listen to speeches ad nauseam criticizing us for failing to capture or attempt to capture this market niche.

Here we are moving in that area, and we've had successes. You could even wax eloquent if we hadn't produced results. We produced results on the day we introduced the act. Royal Trust announced that this was a very worthwhile, innovative thing, and because they exceeded their capacity in Jersey they were looking elsewhere in the world and chose Vancouver, hon. member, because we brought forward the act. Since that time, the Canadian Imperial Bank of Commerce has joined Royal Trust. So you can't even claim we're not successful.

What are you left to argue? You're left to argue the same question time after time and expect me to jump to my feet and give you the same answer time after time. Surely, if you genuinely wanted the answer, you would have listened the first time it was put, and then all of you would have had it. I understand that this is described as the democratic process; I have some trouble understanding its logic from time to time.

Will it benefit B.C.? Yes, it will benefit B.C. Will it help preserve our opportunities to capture business in the Pacific Rim? Yes, it will serve that purpose. Is it done elsewhere in the world? Yes, it is done elsewhere in the world. Is there a cost factor associated with this? No, there's no cost factor associated with this. This is new business. Would you rather us not have the business, hon. member? Is that what you're saying? Would you rather Vancouver lose this opportunity to relate more effectively with the Pacific Rim? Is that what you'd like?

I know that from Vancouver East you're the expert on forests, but I didn't also realize you were the expert on finances. The House is grateful for your advice in this respect, but the fact of the matter is that there's no negative downside to this legislation and you know it as well as I do.

MR. SIHOTA: The other half of the equation, simply put to the minister, is could he tell us what he calculates out the benefit to be in dollar terms, if any, to the province? Like I said before, if you don't see it as a downside, that's fair enough, but we'd like to know what your own ministry projections are.

As I understand the debate, and I stand to be corrected and I invite the minister to correct me — because I'm sure that if I'm wrong the minister will be the first one to come out and try to correct me on it — the first member for Nanaimo (Mr. Stupich), our critic in this area, asked the minister a question during second reading on this debate as to what the cost implications were, positive or negative. There was no answer forthcoming. We were told that that answer would be provided during this stage of debate on the bill. I assume that no answer has been forthcoming and we're simply asking the minister to provide us with that answer. If he's done it in the past, then he can say he's already given the number and I don't think it'll take him more than 30 seconds to repeat it. We'd like to know what he calculates the benefit to be to the province in dollar terms. It's not a skill-testing question, Mr. Chairman. It's a very basic question to a minister who, if he's done his homework, will be able to quickly tell us.

[ Page 4375 ]

HON. MR. COUVELIER: I will say it one more time. We are unable to quantify the benefits until we've had some experience. Until that experience is obtained, the hon. members know full well that I cannot provide figures. I suppose it would suit your purpose to have us give you some sort of flimflam on the issue, but I refuse to do that. Given your financial expertise in this area, I would assume that you above all others would know the inability for us to quantify something that doesn't exist at the moment. All we've done is provide the enabling legislation to allow some things to happen. Until they happen, I'm at a loss to understand how you would expect us to quantify it.

MR. SIHOTA: To the minister again. I was going to call him the Minister of Flimflam, but I guess I shouldn't.

The question to the minister is this: what is the experience elsewhere then? The minister talks about Quebec; I'm sure he's done his homework on this matter. I'm sure the minister can then tell us: what is the level of benefit that accrues to the province of Quebec? I don't need the figure right down to the last cent, Mr. Minister, but we need to have some idea of what you're looking at.

HON. MR. COUVELIER: I understand that that information is not yet available from Quebec, insofar as they also are introducing new initiatives and therefore can't be quantified for the same reason we can't quantify it.

MR. SIHOTA: It's my understanding that the federal government had come to the conclusion that this type of legislation was too rich. I'm wondering if the minister could advise the House to what extent the provincial government consulted with the federal government, and to what extent and in which way the changes reflect the federal concern, in that if it was too rich at the federal level, I'm sure it would be a concern at the provincial level. That being the case, I'm wondering if there was a change in the delineation or drafting of this legislation to make it a little less rich.

HON. MR. COUVELIER: Mr. Chairman, the province's desires to create an international financial centre in Vancouver go back to the early eighties. They relate to a public statement made, as I understand it, by the Prime Minister of the country at that time, and it was repeated by successive Premiers of British Columbia. As the initiative moved closer to a resolution, the hon. member should be aware that some jurisdictions in central Canada became almost paranoid in their concerns that this would adversely affect their existing level of business and their future ambitions for business growth. As a consequence, the federal government found itself in a debate with the provinces of Canada. B.C. was an active participant in that debate.

I was quoted publicly in many business and daily publications as that debate unfolded. If the hon. member would like. I can provide clippings of those quotes and public differences of opinion between the governments of British Columbia, Ontario and Canada. All that is history, and it's history during our term here; the hon. member was a member opposite when all this occurred. I shouldn't have to read the history books to him; it's so recent.

The issue in terms of our relationship with the federal government has been difficult. They did not give us all we wanted; they did not give Quebec all they wanted: they gave too much, in the opinion of the province of Ontario. Indeed, I would hope that as the future unfolds, we will be able to get further concessions out of Ottawa, so that we are truly competitive with the other international financial centres in the Pacific. At the moment, we're not truly competitive. We have some natural advantages which, I think, were the reason we were able to attract the two firms which have so far indicated their interest in this bill. But at the moment, we're still not able to compete head-on with financial firms operating out of Tokyo, Hong Kong or Singapore, because we're not in the position of providing the same incentives. To do so would require federal government changes. Certainly the issue of this matter vis-á-vis the federal government is well known and a matter of public record.

[3:45]

MR. CHAIRMAN: Before we continue, I would like to remind the members that we are on section 2, entitled `Application for registration." Although the Chair has been lenient, maybe if we deal with the items as they come up under the bill, we may progress a little faster.

MR. CLARK: The minister said this isn't a tax loss because it's forgone future tax revenue, which is kind of interesting for this kind of voodoo economics. It is interesting from the other side, because if we took it to its logical conclusion, and every new business didn't pay any taxes, then we'd have no tax revenue. It's quite clear that these kinds of tax expenditures, as the federal government does, take.... I am quite confident that the bureaucracy here is aware of the tax expenditures that this will entail, and it would be nice of the minister would be forthcoming with some of that information.

On this side of the House, as you may know, we are not wildly opposed to this legislation. We are simply asking specific questions so that we can get some handle on what the magnitude of the tax loss will be, how many jobs it will create — those kinds of factual questions, so that when it goes through we've got some understanding of what we're voting on. It's really not an attempt to discredit the program or otherwise. It's really an attempt simply to get information.

Mr. Blenkam, a Conservative Member of Parliament from Ontario and the Chair of the federal House of Commons committee that looked at this question, recommended against designating Vancouver and Montreal as international financial centres.

HON. MRS. JOHNSTON: Are you surprised?

MR. CLARK: Well, I have a great deal of respect for Mr. Blenkam. I don't know about the members opposite, but I think he is a very astute Conservative member who has a good sense of . . . It was a unanimous decision of all parties of the committee. I am not saying it was the right decision, but Mr. Blenkam came up with some numbers and he said the tax loss was significant — in the millions — and that the employment benefits to Vancouver would be about three jobs, if I recall correctly. I think it was $20 million and three jobs.

Maybe the minister can tell us, if we are to support this legislation in the face of this report from the federal government, what ammunition he can give us to defend the legislation. I am sure your staff has the federal report on this matter; I am sure you don't come into the House with two major pieces of legislation without having a folder that contains the

[ Page 4376 ]

major criticism from the federal government on this question. Maybe the minister, with the help of his staff, could tell us where Mr. Blenkam went wrong. How is he wrong in his assumptions? If we agreed with his assumptions, I too would have to oppose this legislation. Maybe he could give us some understanding as to where Mr. Blenkam was wrong, whether there are more than three jobs or less, or where he was faulty. Or are we simply to take this as a leap of faith, like the free trade deal or something? We're just to take a leap of faith and say we're in favour of the concept, we know it's going to be good for British Columbia and we should support it.

It would help if we had some analysis of Mr. Blenkam's report and at least some specific and pointed critique of it, and we could say....

MR. CHAIRMAN: Hon. member, I have been listening with much interest. Could you please bring your discussion back to section 2.

MR. CLARK: Certainly. I am looking at section 2(b), where it says: "carries on or proposes to carry on those international financial activities from a designated branch or office within the Greater Vancouver Regional District...." We're discussing now a clause which deals with registration of international activities in Vancouver, and I am asking questions regarding the federal government's, or Mr. Blenkam's committee's, position on the designation of international financial activity in Vancouver. I think it's in order.

I wonder if the minister could give us some help in terms of this critique of Mr. Blenkam's report I am suggesting.

HON. MR. COUVELIER: With respect, I believe the member and his question are out of order. We're not discussing the federal legislation that was studied by Mr. Blenkam. He made no comment about this B.C. legislation. It's absolutely irrelevant. Why should I be expected to comment on a Member of Parliament's critique of a federal government initiative? My goodness, we are, as you pointed out, Mr. Chairman, dealing with section 2, I thought, which is a B.C. bill. I heard a comment earlier that you are basically supporting this bill — it was something that was going to be supported. Why we now want to get diverted into a discussion of Blenkam's critique of federal legislation is beyond me.

MR. CLARK: As we have said, it's not a question of support. It's a question that we don't want to blindly support detailed legislation of this nature.

I noticed in section 1, which we have now passed, there is a definition of an international financial activity. Section 1(m), under "international financial activity," says: "any activity designated as an international financial activity by regulation of the Lieutenant Governor in Council." It's quite interesting, because that seems to me to be wide open. In respect to identifying how that fits in with section 2, which is what we are discussing now, section 2(1)(b) says: "carries on or proposes to carry on those international financial activities from a designated branch...." Given the definition that we have adopted in section 1, which allows the Lieutenant Governor to designate any activity as an international financial activity, is that a correct interpretation of section 1 as it applies to section 2?

HON. MR. COUVELIER: Yes.

MR. CLARK: I have some difficulty on this side of the House supporting legislation which is so wide open that it allows the Lieutenant-Governor to designate anything as an international financial activity. That may not be the intent of the minister....

MR. WILLIAMS: What firms do you think may want that designation?

MR. CLARK: Yes, I wonder who will get the advantages of that? Maybe the minister could give us some undertaking, in a detailed bill like this, why you would have this clause and all this other detail that allows you to designate any activity as international financial activity. Is it in fact a correct interpretation that you can designate any activity as an international financial activity? If it is, what purpose do you need that for, particularly in light of section 2(b), which covers that point?

HON. MR. COUVELIER: Maybe I'll just refer the hon. member to section 7 when we get there.

Section 2 approved.

On section 3.

MR. SIHOTA: I was going to ask the minister a question on section 3. I guess it relates to the public interest. Section 3(1)(b) says: "...granting the registration is not contrary to the public interest." Again, keeping in mind the comment that the second member made with respect to any type of financial activity, is the minister saying that the registrar, or whoever it is that makes these decisions of public interest, is supposed to decide that certain activities will not be in the public interest and is that not overriding your power under your orders-in-council? Does it deem certain types of activity to be acceptable? Yet you are saying to someone else that you can turn something down on the basis of public interest. In other words, your order-in-council, which may allow something to be registered, could be struck down by a bureaucrat, saying it is not in the public interest. Or am I reading that properly?

It seems obtuse to me that you would allow a bureaucrat to override a regulation made by cabinet. It seems peculiar to me, unless the minister can give me an example of what type of public interest argument would not allow for it to be registered.

HON. MR. COUVELIER: No.

MR. SIHOTA: No to what? It wasn't a yes or no question. It just seems to me that on one hand you've got the cabinet saying that this type of activity is okay, because you've deemed it an international activity, and then you are saying that in the public interest it can be rejected. I'm trying to think of a public interest example where a bureaucrat could say it is contrary to public interest and won't be accepted for registration when the government itself has deemed it to be appropriate. You can't have a bureaucrat overriding an order-incouncil made by cabinet. It seems to me that the activity, once it's approved by cabinet, forces the registration to take place. So I'm not too sure why you have to deal with the public interest aspect of it — unless you can give me an example.

[ Page 4377 ]

MR. CLARK: Could the minister tell us who the superintendent is for the purposes of interpreting this act?

HON. MR. COUVELIER: The superintendent referred to here is the superintendent of financial institutions.

MR. CLARK: Given the complexity of this bill and the second bill, is it to be assumed that there will need to be more staff in the superintendent's office specifically to deal with the implementation of this bill?

HON. MR. COUVELIER: No, we don't anticipate having to add any staff in the first year, although we have provided for some extra expense. I am advised that there is $150,000 in the account for that purpose. But in terms of FTEs, we don't anticipate any extra need in the first year.

MR. CLARK: Under this section, then, maybe the minister could explain how it would work. We have two companies that want to come here and open this thing, and this is the section on registration. What's the process for becoming registered to qualify for the tax exemptions, etc.? You prescribe a number of things here. It seems to me that the superintendent is really who these people deal with. Maybe you could tell me just briefly the sequence of events that an offshore business would utilize in order to get registered and start rolling in British Columbia under this act.

HON. MR. COUVELIER: I am very pleased to publicly state the process so that others may be attracted to it. First of all, an application is made to the superintendent of financial institutions. He would review it and assess it, and he would make recommendations to me as deemed appropriate. So the superintendent of financial institutions receives the applications and reviews them and, as I have said, critiques them and decides whether to further them on to my attention or not.

MR. BLENCOE: On a point of clarification, is it just offshore companies that can apply for registration?

HON. MR. COUVELIER: Canadian companies can apply, but it's offshore business that has to be conducted in order to qualify for these tax breaks. That's contained in section 7, when we get there.

[4:00]

MR. WILLIAMS: Corporations are being established working on Hong Kong investments that might be tied to future immigration. Is it possible that these outfits might qualify under this legislation?

Maybe the minister can consider that. Clearly, there are a lot of new institutions flowering around this issue of potential immigration to British Columbia. Might some of these be tied to or make use of this legislation?

HON. MR. COUVELIER: I am a little bit surprised by the thrust of the question. Once someone is a resident of Canada, there would be no reason why they couldn't become involved in this kind of activity. The point is, it's offshore activity, and both legs of the transaction are offshore. I fail to understand why anyone would be concerned about a resident — whether just recently a resident or a long-time resident — being involved in this activity. Is the hon. member suggesting that we should deny newly arrived residents or new residents this activity? I heard a speech about democratic rights about half an hour ago. I'm just trying to understand the thrust of the hon. member's interest.

MR. CLARK: As I understand it, and as the minister has said, both legs of the transaction have to be offshore. So essentially it's kind of looped through Vancouver. What I'm intrigued by is, what's the real benefit to British Columbia? I don't want to belabour it, but it just strikes me that the money simply flows through. It is essentially like a tax-free address. No money stays in British Columbia because it has to be invested offshore. The money has to be got offshore and invested offshore.

Is it correct that the money has to be raised offshore and then invested offshore, and that it goes through Vancouver, so there is no investment potential in British Columbia? And then they don't pay tax on that, because it's a kind of paper transaction: that's really all that takes place. But I guess there are accountants and the like in British Columbia who essentially make sure that that money is funnelled through. The benefit to British Columbia is, in fact, that little banks with some chartered accountants and the like.... I won't use the word "launder" — I don't mean it in a derogatory way — but the money just comes through like that. No money actually stays here, except in wages and benefits to a few people and rent on the building. Is that actually how it works? The benefit is presumably that those people don't have to pay income tax, but they spend their money here in British Columbia. Is that an unfair analysis?

HON. MR. COUVELIER: It is eminently fair.

MR. CLARK: I appreciate that. I thought that's how it worked.

It does seem to me then that it's really not a major initiative, other than in the psychological sense, I guess, of us becoming the funnel for Pacific Rim money whooshing through. I don't mean to sound facetious. But is that essentially…? The benefit is then that we become the kind of entrepreneurial.... Is this what you envisage? Essentially we will have entrepreneurs who go out and make arrangements with Pacific Rim — presumably Hong Kong or something — money to come through and invest, say, in some other part of the world. When it comes through here, the transaction place is listed as a box office or an address in Vancouver. Then it becomes exempt for tax purposes, and that really becomes the point of these transactions. The bulk of the money is not left behind, just a little bit of it. We become a focal point for this kind of paper transaction. Anybody who's been to Bermuda would say that's essentially what Bermuda does. It's a big industry there — pushing paper and funnelling money around the world. Is that the kind of thing the minister envisages? It's not Bermuda or Grand Cayman but a smaller version of that, using the great capital that exists in Japan and Hong Kong, and coming through Vancouver as a tax-free venture. Is that sort of fair?

HON. MR. COUVELIER: I wouldn't call that as eminently fair as the previous comment, because there are a few more inhibitions it.

As I said when we talked about it an hour or so ago, we see economic benefits flowing from this. Our objective is to build some expertise in terms of human beings with background in a financial community, but resident in Vancouver;

[ Page 4378 ]

they must be resident in British Columbia. Through that device we expect we will build the level of expertise. That will attract more work for lawyers, accountants and financial advisers, more work for banks, insurance companies and all the ancillary services that are attracted to large, significant financial activity. As I say, in communities where financial centres have been created, that is the effect.

We don't anticipate there being a large increase in jobs. We never sold this.... I never once described this as creating lots of jobs initially. I do see it having the potential to create more and more jobs in the future, as more and more firms take advantage of our offer. To that extent maybe, I support the hon. member's comments; but I don't put it quite as harshly as he might like.

MR. CLARK: Is it fair to say to the minister that this attempts to put us on a more equal footing with some of the places like Jersey, Grand Cayman and so on, in terms of the tax advantages for locating here? You're hoping that the attraction to Vancouver will be essentially the amenities, so that decision-makers may move here as a result of the combination of our amenities in Vancouver and the tax advantages which put us on a more equal footing with some of our competition in this field. Is it really the amenities that help to drive this?

HON. MR. COUVELIER: I'm not sure I'm happy with the reference to Grand Cayman. So I'm not going to support the hon. member in comparing us to that jurisdiction. I'd feel more comfortable comparing us to Jersey or Hong Kong or Tokyo or Singapore. I think those are more relevant comparisons, given the fact that they are comparable — potential infrastructure already existing in telecommunications — in terms of established trading patterns. Grand Cayman is truly, as I understand it, an in-and-out kind of experience.

By this requirement that people have to be residents of B.C. and by the fact that we've already got extensive trading patterns.... As you know, the port of Vancouver is one of the busiest ports in North America. We have a lot of things to build on in terms of economic activity, and this legislation will further enhance that.

MR. CLARK: I appreciate that we're sort of getting a handle on the project — or at least I am, better than I was. The only thing that concerns me about the minister's last answer is this notion that if it's building on existing trade patterns, there might be a tendency for these companies to funnel some of the existing trade pattern through this vehicle in order to escape the taxation which would have been paid today or in the last few years. Can the minister give us some assurance that this is truly only for future ventures, and that we won't see a funnelling of any of the existing trading that we do through this to escape taxation? Because that's a concern, I think.

If the minister has indicated that we shouldn't look at it as a tax loss because it's money that wouldn't come here anyway, I can understand the argument. But we'd like some assurance that if we're building on existing patterns of trade, there won't be the possibility of funnelling through that; or if it is a possibility, that you've got a handle on what that might entail and if there is any cost involved.

HON. MR. COUVELIER: It is not our intention, Mr. Chairman. I suspect that were it to be the result, other jurisdictions in Canada would have something to say about that.

Sections 3 and 4 approved.

On section 5.

MR. CLARK: Maybe I'll just ask a very broad question, for the minister to give us an explanation of this section and how it would work.

HON. MR. COUVELIER: Mr. Chairman, subsection 5(1) provides that tax refunds are calculated in accordance with the regulations, and subsection (2) limits the refund to the amount of tax paid in a taxation year. Three types of taxpayers are eligible for a tax refund in respect of tax paid on income earned from international financial business. Paragraph (a) provides a tax refund for registered financial institutions, paragraph (b) provides a 100 percent tax refund for a non-resident specialist employed by a registered financial institution, and paragraph (c) provides a partial tax refund for a full-time employee engaged exclusively in international financial business.

Subsection (2) allows an income-averaging basis for determining a tax refund to be established by regulation. This will provide flexibility in calculating tax liability, similar to that provided in that in the Income Tax Act of Canada.

Subsection (3) stipulates that this section applies to the taxation year that commences after the act is proclaimed, and subsection (4) restricts the number of specialists designated by a registered financial institution to no more than five.

MR. CLARK: Just so I've got it right.... A financial institution that's a going concern in British Columbia would apply to be designated as an international financial business. But what in fact happens is that that is only a very small component.... In this case, say, the Canadian Imperial Bank of Commerce sets up a separate incorporated business that is then registered under the act with the superintendent as an international financial business. So that becomes in a sense a separate and distinct business. Then specialists in this field who work for the CIBC are paid out by the separate business, and presumably a portion of the rent paid for that desk and that person could be written off under this section by the CIBC. Or is it that they actually have to set up a separate place of business with separate tax specialists working out of separate books, etc.? Or can they prorate their business in accordance with this in order to take advantage of it? How does that work?

HON. MR. COUVELIER: Your last example was the correct one.

MR. CLARK: Just so I've got it right, because I wasn't very clear, it has to be a separate place of business. No, sorry; I was giving you the former. The latter was that CIBC has their regular business; they hire one person who is, say, a tax specialist. That person then incorporates and they qualify under this act, and that person's rent and overhead, etc., which CIBC pays, is attributed to international financial activities for the purposes of this act. If that's correct — I think it is — would the minister give me some understanding as to why only five specialists in a taxation year would qualify?

[ Page 4379 ]

[4:15]

HON. MR. COUVELIER: We are not completely sure how popular this initiative will be. We are reluctant to find ourselves in the position of giving away too much. On the other hand, we wanted to make the initiative popular enough so that there was an interest and some serious intent exhibited. So that's a judgment call, limiting it to five. We will read the experience as it unfolds.

MR. CLARK: I can't help pointing out the inconsistency of the minister's last remark. He has repeatedly stated that it's not going to cost us anything, and then he said: "Well, we've put a cap on it at five because we don't want it to cost us too much." I agree with the latter comments, rather than his previous remarks that it's not going to cost us anything. You really capped it at five just in case there's an explosion of people applying to be specialists for the purpose of this act to take advantage of it. That seems quite reasonable to me.

Given that the CIBC is the first bank, and given that this section deals with financial institutions, can the minister give us some understanding? I would assume that almost all the banks would try to qualify in order to have one person who might be that kind of elbow-joint in the transaction, or to take advantage of what you're attempting to create, which is essentially a new business in British Columbia. Can you give us some understanding that that's probably going to take place? The minister is shaking his head. I'm not trying to make this complicated, I'm just trying to get a sense of where you see it going. We were getting there, until the last answer.

I'm a little intrigued by the different categories of tax refund that could be paid out. Just so I've got it right, if the CIBC have qualified and are registered, and they hire a financial specialist as defined in the act, which qualifies them, that person would pay tax in the normal manner and then apply for a refund rather than be exempt from any taxation. Is that how it would work?

HON. MR. COUVELIER: Yes.

Section 5 approved.

On section 6.

MR. CLARK: I'd like the minister to briefly explain the purpose of this section.

MR. COUVELIER: Section 6 contains certain interpretive rules which apply to situations between related persons. Subsection (1) specifies that a tax refund is only to be paid to a registered financial institution in respect of income earned from international financial activity that is derived from arm's-length transactions.

Subsection (2) provides an exemption from subsection (1) when the activity is conducted by a person who is acting for another non-resident person with whom it deals at arm's length. The first non-arm's-length person would still have to be non-resident — that is, a foreign subsidiary.

Subsection (3) provides the interpretive rules for identifying arm's-length situations. Paragraph (a) refers to the definition of arm's length contained in the Income Tax Act of Canada, which states that persons related to each other shall be deemed not to deal with each other at arm's length. Paragraph (b) treats a partnership and a person as not dealing at arm's length where a member of the partnership and the person do not deal with each other at arm's length. Paragraph (c) treats a partner as not dealing at arm's length with the partnership or another partner in the enterprise.

Section 6 approved.

On section 7.

MR. CLARK: The minister has alluded to this section several times, so I'll give him a chance, if he could, to address some of the concerns we raised earlier in his explanation of the intent and purpose of section 7.

HON. MR. COUVELIER: I'm grateful to the hon. member for providing me this opportunity.

Section 7(1) stipulates that before a tax refund is payable to a registered financial institution, the institution is required to verify the non-resident status of the person for whom the international financial activity is being conducted. The registered financial institution must obtain a declaration from the person stating that the person is a non-resident and make reasonable inquiries. After inquiring, the financial institution should not have any reasonable grounds to believe the person is a resident.

Subsection (2) contains two exemptions from subsection (1). Paragraph (a) provides an exemption for loan and deposit activities with non-residents. This activity will already be fully tax-exempt under the federal international banking measure. Paragraph (b) provides an exemption for the participation of residents in eligible security dealings with one leg offshore.

Subsection (3), by deeming the person to be a nonresident when the financial institution has obtained a declaration, has made reasonable inquiries and has no reasonable grounds to believe the person is a resident, ensures that the institution is not held liable to repay any tax refund to the province if a person is later discovered to be a resident.

Subsection (4) says that the financial institution shall immediately cease to account for any activity as an international financial activity if the institution has reasonable grounds to believe that the person is or has become a resident. No tax refund will be paid in respect of any activity carried on with the person after the date on which the institution has reasonable grounds to believe that the person is or has become a resident.

MR. CLARK: Just a couple of questions. With respect to the first section, you indicate that a declaration is required. Is it the minister's intent that the office of the superintendent of financial institutions, who is responsible for implementing this act, is where the declaration would be deposited? And is that where any investigations that might be prompted by the declaration would be reviewed? Do you anticipate a small investigations unit to ensure that these are non-resident and these declarations are bona fide, or are you going to rely on the financial institution to ensure that it is in fact a legitimate non-resident, and that the superintendent, then, really deals with the bank and doesn't deal with investigating the bona fides of the declaration?

HON. MR. COUVELIER: The institution will keep the declarations on file, and they'll be subject to audit by the superintendent and his staff.

[ Page 4380 ]

MR. CLARK: It seems to me that you're really saying it's.... I guess you can't protect for false declarations, in any real way. But it seems to me, if you're going to say that the bank is responsible for collecting the declaration, and the bank is responsible for having reasonable grounds to assume that the person is in fact a non-resident, then I'm a bit uncomfortable with their not having any liability with respect to that. If you have a superintendent whose job is not to investigate the declarations of offshore investors but simply to review from time to time the institution's deposited declarations, etc., and has no investigative powers, and then you say that really the bank is responsible for that, but then you say the bank has no liability.... It seems to me that there may be a little inconsistency there, and it's a bit vague. Can the minister give me any assurance that I'm wrong on that?

HON. MR. COUVELIER: It's true that we are expecting the financial institutions to be responsible for their actions. Certainly they are expected to maintain high standards. Through the audit process, we'll be monitoring that situation closely.

MR. CLARK: I appreciate that. The problem, of course, is that if you do find through the audit that there's something wrong, there's no penalty. In fact, they're not even liable. Then you can't refund the tax under this section. It would seem to me that you have to put a little tougher onus on the banks to ensure that if there are found to be fraudulent declarations, there is some liability with respect to the bank, or some obligation on the bank's part; in the absence of that, it seems to me, it leaves it a little bit open.

I have two other little questions on section 2 that you referred to. With respect to section 2(a), the minister said: "Well, it doesn't really apply because ...." The reason you've changed that is that deposits and loans from foreign investors are exempted from income tax under the federal act, and therefore we can exempt them from our provisions of exemption, so to speak, because they're already not paying any tax. I understand that, but it seems to me, then, you don't need to specifically identify that they are exempted from this act, because they're not paying tax anyway. What this does is allow that should there be a federal change that makes them pay tax, you will also make them pay tax, when it may be the intention to be captured by provincial legislation. Do you understand what I'm saying? You said that the federal legislation exempts them from tax anyway, therefore we don't have to exempt them. But it would seem more prudent that if you wanted to exempt them from tax, you'd simply leave them under the rubric of the act, and then there's no change. You've specifically singled them out. I don't understand why you've done that.

With respect to section 2(b), the minister said that one leg of the transaction is offshore. Maybe the minister could tell me if he's saying one leg offshore is not good enough and therefore they have to pay tax, and that's why we specifically included section 2(b). Is that correct?

HON. MR. COUVELIER: The hon. member made a number of comments that give me a little bit of trouble, Mr. Chairman. First of all, if the institution fails to show due care and attention, there is a penalty, and it can be up to $100,000 in the act, as I understand it.

MR. CLARK: In the act?

HON. MR. COUVELIER: I believe it is in a later section. Yes, it's in section 22.

Dealing with the question of the federal exemption with non-residents, this requirement is to exempt the activity from the requirement for a declaration. That's the intent.

MR. CLARK: There is just one question the minister didn't deal with in the series of questions that I asked, and that's with respect to (2)(b) — the one leg being offshore. Is it correct to say that one leg offshore is not good enough for the purposes of this act? Is that what section (2)(b) really says?

HON. MR. COUVELIER: This is to complement the legislation extant in Quebec; we wanted to be similar in that respect.

MR. CLARK: Am I correct, then, that you're saying that one leg offshore is not good enough to qualify for the tax refund? You're saying it's similar to Quebec, and I appreciate that. But is that a fair categorization of what this section (2)(b) is intended for?

HON. MR. COUVELIER: One leg offshore is good enough in the case of securities only.

MR. CLARK: I'm sorry. I appreciate that. Is this section, like section (2)(a), dealing only with loans and deposits? Is that correct?

HON. MR. COUVELIER: It's dealing with securities transactions.

Sections 7 to 10 inclusive approved.

On section 11.

MR. CLARK: We were moving on quite quickly there, so I thought I'd ask the minister to deal a little with this question. It is important that we deal with how the determination is made for the tax refund for the purposes of this act.

[4:30]

HON. MR. COUVELIER: Subsection (1) requires the commissioner to examine the return of claim and determine the amount of the tax refund within 60 days of the receipt of the claimant's return of claim. Subsection (2) requires the commissioner to promptly serve a notice of refund on the claimant. Subsection (3) specifies the conditions when the commissioner may reassess the amount of a refund to a claimant. Paragraph (a) permits reassessment of a tax refund without any time limitation if the claimant has made a false statement. Paragraph (b) permits reassessment of a tax refund in any other case within three years of serving a notice of refund or within three years of mailing a notice of assessment or reassessment under the Income Tax Act.

[Mr. Pelton in the chair.]

Under subsection (4), the commissioner is free to use any information in determining or redetermining the amount of a tax refund. Subsection (5) requires the claimant to provide information requested by the commissioner within a specified time. Subsection (6) stipulates that a commissioner's decision made under this section cannot be changed by a

[ Page 4381 ]

court because of a mistake on the part of a person in the observation of a directory provision. In other words, a decision that is technically correct cannot be reversed because the procedures followed by the commissioner, his employees or the claimant were incorrect.

Sections 11 to 13 inclusive approved.

On section 14.

MR. CLARK: I have some concern about this section, and I would like the minister to deal with it if he could. This section deals with an appeal to the minister regarding mostly section 11, as I see it, which is the determination of the tax refund. I have some concerns, because presumably it means that the commissioner, defined in the act as the commissioner for the purposes of the Income Tax Act, determines — after getting all the information — the appropriate level of refund. It seems to be quite a technical matter that the commissioner deals with all the time. I could be wrong, but I can't recall an appeal to a political person — essentially, to a lay person, a minister of the Crown — regarding a technical determination that has taken place under section 11. It gives me some cause for concern, and I would like to know how the minister sees this section working, given the complexity of this bill and of, I can assume, the tax refund that will be calculated by the commissioner. How does he see handling appeals in this matter?

HON. MR. COUVELIER: I see it working very well.

MR. CLARK: Well, that's not very good, Mr. Chairman. Maybe the minister can start off by reading his notes on section 14 and giving us a sense of what the purpose of the section is.

MR. CHAIRMAN: Just before the minister proceeds, the member for South Peace River has asked leave to make an introduction.

Leave granted.

MR. WEISGERBER: It is my pleasure today to introduce the regional development liaison officer for the Northeast region, Mr. Dave Pankratz, who is in the members' gallery to watch the activities of the House. Please make him welcome.

HON. MR. COUVELIER: The hon. member seems to think this is some unusual legislation. It is consistent with other taxation legislation. There is nothing new or different about it at all; it is standard income tax legislation.

Furthermore, if there is an appeal required from the minister's decision, it is provided in section 20. There can be an appeal to the courts if the minister's decision is not deemed satisfactory.

MR. CLARK: Well, that's fair enough. If the minister says it is existent in other acts, I'll defer to him and hope that's correct, because I haven't reviewed it.

I would assume — maybe the minister can clarify this, though — that appeals to the minister on taxation questions will deal with policy determinations made by the commissioner, not with technical matters. In all of these questions there are a great many policy considerations as to what might qualify for the refund under the provisions of the International Financial Business Act. Is it correct that the appeals will be made on the basis of the unhappiness of claimants with the policy decisions made by the commissioner?

HON. MR. COUVELIER: The hon. member is correct.

Section 14 approved.

On section 15.

MR. CLARK: Once again this deals with the powers of the minister to suspend or cancel registration, as opposed to the powers of the commissioner or the superintendent to suspend or cancel. So I wonder whether this is in fact simply a pro forma matter — the superintendent can in fact suspend or cancel a registration that he, as I understand it, is allowed to issue — or whether it is a real ministerial decision that he will have to undertake regularly.

What I am really asking is whether you envisage your ministry having to have staff to deal with this, or whether you see this really being handled by the superintendent; and if the superintendent determines that there's a breach, as defined in (a), (b), (c), (d) or (e), then in fact the minister will cancel.

HON. MR. COUVELIER: The superintendent is part of my staff, in the sense that I am responsible for him, but he would be making recommendations to me, and I would consider those recommendations in dealing with this matter.

Sections 15 to 17 inclusive approved.

On section 18.

MR. CLARK: I understand that this is delegation of the superintendent's powers by the Lieutenant-Governor-in-Council by regulation. Does the minister see the possibility, for example, that an officer or an individual might end up having to do the regulation regarding Bills 22 and 23? In other words, if it becomes a going concern, as I am sure the minister wants it to be, it certainly seems to me that it's going to require more staff in the superintendent's office. It's not in the act, but it seems to me that it might be prudent to set up a separate individual or superintendent who would be responsible for reviewing what appears to me to be a reasonably complex act and reasonably complex arrangements that will be undertaken by these financial institutions in order to take advantage of the tax benefit. So is it contemplated by this section that the Lieutenant-Governor-in-Council — I am sure, through the minister — might down the road view a separate individual or superintendent for the purposes of administering this act? Is that really what is intended here?

HON. MR. COUVELIER: The intention, as the hon. member states, is to allow for that eventuality if it is deemed necessary in the future.

Sections 18 to 22 inclusive approved.

On section 23.

MR. CLARK: Just briefly, can the minister give us his interpretation of the purposes of this section?

[ Page 4382 ]

HON. MR. COUVELIER: This allows the Lieutenant Governor-in-Council to make regulations.

Sections 23 to 25 inclusive approved.

Title approved.

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

Motion approved.

The House resumed; Mr. Speaker in the chair.

Bill 22, International Financial Business (Tax Refund) Act, reported complete without amendment, read a third time and passed.

HON. L. HANSON: I call committee on Bill 23.

INTERNATIONAL FINANCIAL BUSINESS ACT

The House in committee on Bill 23; Mr. Pelton in the chair.

On section 1.

MR. CLARK: Just in a broad sense, because this is really companion legislation, maybe the minister could give us a brief explanation — at least in the first section — as to the fit between this bill and the one we've just passed. Then we can get on with passing the various sections. I'm intrigued, because as a lay person I'm not sure how this fits with the previous bill. Maybe in this broad debate that occurs on the definition stage, the minister can give us some understanding.

HON. MR. COUVELIER: Mr. Chairman, I have a little trouble here. Section 1 deals only with definitions, and it's pretty simple. I can read it for the hon. member, but I'm sure that's not really what he intended. Each of the sections has a different rationale, and I'm happy to go through those when we get to them.

Section 1 approved.

On section 2.

MR. CLARK: I was hoping to expedite the House business and get a brief explanation of the whole bill, and we wouldn't have to go through this. But if the minister wants to go through each section the way we did the last one, then I guess we'll have to do it. I'd rather not do that

Maybe the minister could explain section 2 of the bill, and the rationale for it.

HON. MR. COUVELIER: I'm happy to go back. If we're being offered a deal here, let's examine the merits of the deal.

This legislation is designed to work with Bill 22; it's complementary. It is to provide a complementary regulatory environment for international financial business in Vancouver. The government's role in making Vancouver an international financial centre is to ensure that, as far as possible, the costs of doing business in Vancouver compare favourably with alternatives. In addition to the costs imposed by taxation, which are addressed by Bill 22, compliance with regulations can impose significant burdens. The purpose of Bill 23 is to establish a regulatory regime which imposes a relatively inexpensive burden of compliance on institutions while effectively maintaining a credible and efficient financial marketplace.

Bill 23 allows subsidiaries of regulated financial institutions to be formed to carry on business with non-residents, subject to a specially designed regulatory framework.

Government regulation of financial institutions is necessary for two reasons. First, regulation protects the public from the losses, disruption and fraud which could more easily flourish in an unregulated environment. Second, regulation establishes and enforces the rules for the operation of financial markets. Financial markets are the bearings and lubricant which keep the economic machinery running efficiently.

In the case of international financial business, which by definition in Bill 23 involves only non-residents, the consumer protection requirement is softened. However, the need to maintain an efficient and credible marketplace remains. Bill 23 is designed to ensure that the institutions which participate in Vancouver's IFC are reputable, that they behave appropriately and that adequate safeguards are in place to monitor activity and to effectively deal with offenders. Although the cost of compliance under Bill 23 will be reduced, it should not be interpreted as an unregulated environment. The legislation is powerful, and it will be administered fairly and effectively.

Companies licensed under Bill 23 and their employees will qualify for the full benefit of tax measures established by Bill 22. These companies will have the ability to participate in the full range of international financial activities as long as they are licensed for the activity and the transactions are strictly with non-residents. While Bill 22 provides some exceptions to the requirement that transactions must be only with non-residents, Bill 23 is strict, hon. member. This is necessary to maintain the integrity of our domestic financial system and to preserve the full benefit of the consumer protection apparatus where Canadians might be involved as clients or customers.

Some have asked about the use of the two pieces of legislation, which share so many concepts. The reason is to highlight the fact that by addressing both the regulatory and taxation aspects of government-imposed costs, British Columbia has done everything within its power to create a favourable environment in British Columbia. It will now be up to the private sector to make the best use they can of these measures.

The hon. members will remember that an earlier version of Bill 23 was originally introduced and given first reading in July 1987. The intervening months have given us an opportunity to consult with interested parties on the legislation. The bill before you today incorporates several improvements suggested during those consultations.

[4:45]

MR. LOVICK: Just a very direct question to the minister. You state in justification for this measure that we want to ensure that British Columbia "compares favourably with alternatives." I'm wondering if you could elucidate just what those alternatives are and where they are.

[ Page 4383 ]

HON. MR. COUVELIER: Most specifically, the province of Quebec, in Canada.

MR. LOVICK: Is there evidence to suggest that we in British Columbia are losing particular financial institutions' operations because they are deliberately not choosing us in favour of Quebec? Is there that demonstrated evidence? Is Quebec suddenly the main financial player in the country?

HON. MR. COUVELIER: I'm aware that this type of question should have been put during second reading, but I'm trying to be sensitive to the needs of the hon. member's curiosity. Quebec, as I stated about an hour and a half ago, and we ourselves are embarked in this international financial centre institution chase. To the extent that we're both offering similar incentives, then they are our immediate national competitors.

Sections 2 to 26 inclusive approved.

Title approved.

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

Motion approved.

The House resumed; Mr. Speaker in the chair.

Bill 23, International Financial Business Act, reported complete without amendment, read a third time and passed.

HON. MR. STRACHAN: Mr. Speaker, I call committee on Bill 2.

HOME OWNER GRANT AMENDMENT ACT, 1988

The House in committee on Bill 2; Mr. Pelton in the chair.

On section 1.

HON. MR. STRACHAN: Let me tell you about this, Mr. Chairman. We are dealing with Bill 2 in the committee stage, the Home Owner Grant Amendment Act, 1988, printed in the name of the hon. Minister of Municipal Affairs, who will be here shortly.

MR. CLARK: I could speak at length on this, but as we are awaiting our debate leader, maybe I'll simply ask the minister to give us an explanation of this clause.

HON. MRS. JOHNSTON: I thought I had given the explanation so recently that I didn't want to take the time in the House to do it again. This homeowner's grant amendment ensures that renters do not receive a homeowner grant in the rural areas of the province. The intent of the legislation is that the owner-occupier only receives the homeowner's 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.

The bill is very clear, and I will take my seat and answer any questions.

MR. ROSE: It's quite obvious now that our municipal affairs critic is not with us, and we've sent for him.

HON. MRS. JOHNSTON: I'll wait.

MR. ROSE: I guess we will, but there will be a lot of silence around here unless we fill it with something. We could stand this for now, until we check it out. It sounds reasonably innocuous to me, because the minister just said that what this does is extend the right of an owner-occupier or lessee to the homeowner grant in lieu of the owner who is not domestic in that establishment. Is that right? The owner isn't living there; therefore, the lessee is entitled to the homeowner grant. What is it then? Now you've got me curious.

HON. MRS. JOHNSTON: The intent of the legislation is that only the owner-occupier.... The owner must occupy the premises in order to be eligible for the homeowner grant, as is the case with your residence.

MR. ROSE: I take it, then, that the minister is actually taking something away from a lessee. What the Lord giveth she taketh away. I'd like to know how big a problem this has been. How much money in total amounts of homeowner's grants is now available to the Crown that hasn't been available before this legislation was introduced? Once that question is answered, we'll accept the offer and stand the clause and go on to Education, until we can check it out with the critic.

HON. MRS. JOHNSTON: I don't have the dollars, but what we are doing is having the criteria for grant eligibility in the rural areas parallel closely those in municipal areas, and that was not previously the case. Previously it appears that renters were for some reason able to make application for the homeowner's grant, and that is no longer going to be the case.

MR. ROSE: The minister confirms that for some people who are renters in rural areas, this is in effect a tax increase.

HON. MRS. JOHNSTON: It is a clarification, in my opinion, of the act. The recipient for the homeowner's grant must be the owner-ocupier.

MR. ROSE: I don't want to parallel or mimic the speech from the former member from Columbia River, who used to say that we were once again up attacking rural parts of British Columbia. The minister could fulfil that definition by this reordering of the homeowner's grant amendment. I wish that we could have passed this immediately. If the minister had brought in an increase, even covering the inflation for the last six or seven years, there would be an increase in the homeowner's grant of $175. Then the Minister of Education (Hon. Mr. Brummet) wouldn't have all that trouble with school costs being heaped on urban taxpayers.

The House resumed; Mr. Speaker in the chair.

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

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

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

[ Page 4384 ]

ESTIMATES: MINISTRY OF EDUCATION
(continued)

On vote 23: minister's office, $211,618.

MR. JONES: It's always a pleasure to see the member for Dewdney in the chair.

This afternoon I would like to raise some questions and concerns with respect to our Royal Commission on Education. The minister is aware that that commission received some 180 submissions after their March deadline. They have been working very hard and diligently under difficult circumstances, and they are experiencing some difficulty in meeting the June 1 deadline. I'd like to ask the minister a few questions about that deadline. First, does he anticipate that he will hold the commission to that deadline? I understand that under the Inquiry Act, if the commission report is submitted on June 1, then it must be tabled in the Legislature within 15 days, or if the Legislature is not sitting, then within 15 days of the beginning of the next session.

The minister assured me last year that this is a public process and that the commission report would be made public. He said he might like to see it a day or so ahead of time. But I would like to ask the minister about the June 1 deadline and his commitment to that deadline, given the difficulties of the commission. I would like to ask the minister about the tabling of the document, the response timetable and the legislative timetable associated with that commission report.

[5:00]

HON. MR. BRUMMET: I'm somewhat surprised that the royal commission is negotiating through the opposition for the time-frame in which they are to report, in that they have been given a deadline, and if they need to discuss changes in the deadline.... I think they operate under the auspices of the Provincial Secretary, and would, I would imagine, bring their requests to government according to, you know…. Finishing their task was originally designated for April 1 and has been moved to June 1. I'm rather surprised that they have designated the education critic in the province as the person to negotiate the extension of their terms — I have just a little difficulty understanding that. I'm surprised because I've tried to keep a hands-off approach with the royal commission. They are a public commission, and I didn't know they had as their agent the NDP. I guess I'll have to deal with them directly, if they're seeking extensions, rather than with their agent.

As far as making the report public is concerned, I have confirmed that it will be made public. As for the legislative and implementation schedule, how can I possibly answer those questions when I have no idea what the report is going to suggest or recommend?

MR. JONES: I take it, then, that the minister's response to the June 1 deadline is that it's really not within his purview, that it's within the purview of the Provincial Secretary. Is that correct?

HON. MR. BRUMMET: That's correct, because I have not at any time had control of the royal commission. It is a royal commission on education, so a decision on deadlines would certainly not be made by me.

MR. JONES: Would that decision be made by cabinet through you, Mr. Minister?

HON. MR. BRUMMET: I don't deny that; that may well be. But I'm not going to be negotiating with the NDP as their agent.

MR. JONES: I at no time attempted to negotiate. I attempted to ask a question on the first royal commission that we've had in this province in some 37 years, its timetable and the problems it's experiencing. Certainly I'm not negotiating here. I'm not the agent for the royal commission and I don't know where the minister would get that suggestion. I thought it was a legitimate question to ask a minister, who I would assume would have some planning schedule to determine how long it might take for the response process and at what point after that legislation might be prepared. I assume the minister does not see that as a reasonable question on his planning and timetable when he says, "Because I have not seen the report, I cannot answer that question at this time" — and I accept that answer.

Perhaps I could ask the minister a question regarding the ministry's submission last year to the Royal Commission on Education. On page 9 of that submission the ministry, to the commission that schools will not be bound by existing time structures, that facilities will be used for more hours of the day, more days of the week and of the year. Perhaps the minister could elaborate on what he meant by that statement.

HON. MR. BRUMMET: With these references to articles, with all the articles we have, it takes me a moment to locate them.

We said in our submission to the royal commission that as we visualize the future, these are some of the specific things that may happen. The following image of schooling reflects this fundamental tenet: "Since learning will underpin the concept of school...." When we speak here of schools or schooling, we refer to that future design which best facilitates learning, and one of the points made is that schools will not be bound by existing time structures. Facilities will be more broadly used. That is already happening in many places where the community school concept is operating, and operating very well, I might add.

We see education in this perspective as a lifelong learning process, so it's only logical to assume that schools will change to accommodate that. There's no specified number of hours or that sort of thing stated here. It's the image of the schools of the future. Some are already at that point, operating more extensively, operating longer hours, where the facilities and the equipment in the schools are being used. Right now, in many community schools where there are computers, they have people coming in after school and parents coming in at night to use the computers. I think it's wonderful that these communities are making greater use of this expensive equipment. It also has a side benefit in that people who come are finding that computers are not expensive toys, as they might be considered if you hadn't been in a school for 30 years. When people see what's being done with the equipment in the schools, they see some great things.

I'm not quite sure what the member wanted, but it says basically that time structures and the use of facility schedules will probably change.

MR. JONES: The minister suggests that these are images of the school of the future, and I was trying to get a clear picture of that. If I understand the minister correctly, what I

[ Page 4385 ]

assume he's suggesting to the royal commission is that this is an extension of the community school concept. He would like to see more schools in the province adopt the community school concept. Is that correct?

HON. MR. BRUMMET: Not only the extension of the community school concept — I was using that as an example of how there's extended use of the facilities now. There may be suggestions as to how the school may be used in different ways, for longer hours, by the pupils themselves, for different portions of the year. We've suggested this to the commission. They have had, I think, many other briefs, and from it presumably they will form a composite picture of where society stands on these issues, and will formulate recommendations accordingly.

MR. JONES: When the submission contains a sentence like, "Schools will not be bound by existing time structures and will be used for more of the year," that might suggest to some that the minister is advocating the year-round school. Perhaps the minister could clarify that.

HON. MR. BRUMMET: Obviously the member tries to read into it things that don't exist. I don't know; maybe it will make sense. Maybe some school district will come to us and say: "May we use the schools for 12 months?" Maybe our students want to do that. Maybe our community wants to do that. I'm saying that should people want to do more — want to get more use out of the facility, want to use different schedules — why should we say no, you're locked into a lockstep system that now exists?

Perhaps I should read the whole passage, since the member is jumping to certain conclusions — or perceptions, I guess you could say. Conclusions — they're not even that. It says:

"Schools will not be bound by existing time structures. The facilities will be used for more hours of the day, more days of the week and year. Novel approaches to scheduling will offer the opportunity for more numerous and more creative learning experiences for the community at large."

I don't see any evil in that.

"Learners will include pre-schoolers and adults upgrading their skills, as well as the traditional age groups. The individual learner will not necessarily conform to our present age-grade stratification or timetable structures."

MR. JONES: If I put myself in the position of the royal commission, and I read the paragraph that the minister just read, I want to know what the purpose behind the submission is. I want to know what that image is of the schools of the future that the minister sees. I wonder why the submission was made. I assume that if, as the minister indicated at one point, the government was looking at the year-round school as one of the possibilities.... Is this why this particular aspect was put in, to tell the royal commission to look seriously at that particular aspect of the year-round school? Is that the purpose of putting that in?

HON. MR. BRUMMET: It's possible that schools will be used 12 months of the year in the future. If we'd said we want schools to be used 12 months, regardless of what anybody else thinks, I think we'd have said so. All that we've said here is that there's nothing sacred about starting schools at 9 a.m.; there is nothing sacred about finishing at 3 p.m. That's already happening. Many districts have asked for modification of that time schedule. We're saying there's nothing sacred about it. I don't know that there's anything sacred about saying that school must be shut down on June 28. I don't see anything sacred about that, if people find a more effective way to utilize the facility. If the member wants to read into it that it allows the possibility of schools being used on Saturdays, it's always been the case. Gyms have been used on Saturdays for a long time by other groups. So more days of the week....

If the member wants to translate it for his purposes as advocating a 12-month school year, it does not. But that doesn't mean I'm going to say that regardless of what society sees as a better use of these facilities, I'm going to say oh no, we will never allow it. I'd like to have more flexibility. I'd like to have the people get the best use of the facility, whether they be the students that are going there now or anybody else.

MR. JONES: The minister invents all kinds of things. I never suggested there was any evil intent on the part of the minister. I never suggested that I was trying to translate it for my purposes. I'm trying to get at the intent and the meaning of the submission. I'm curious and I'm interested, and I think the people of British Columbia are interested, in the minister's submission to the only royal commission we've had since 1960. I think it's an important document. I'd like to get at the meaning.

Perhaps the minister is saying that he wants more flexibility. I suppose it says that, but that doesn't say much. Why did you put in the submission if you just want flexibility? Right now, we have legislation that governs the number of days of the year for school, and June 28 exists now as the legislation that governs the end of the school year. Is the minister recommending to the royal commission that that be changed?

MR. ROSE: We asked permission for the minister to stand the bill, and for that reason, we did this. The minister obviously has other things to do. Perhaps we could accommodate her by going back now to Bill 2 and stand this Education estimates until we complete Bill 2. Agreed?

The House resumed; Mr. Pelton in the chair.

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

HON. MR. REID: Mr. Speaker, I call committee on Bill 2.

[5:15]

HOME OWNER GRANT AMENDMENT ACT, 1988

The House in committee on Bill 2; Mr. Pelton in the chair.

On section 2.

MR. BLENCOE: Mr. Chairman, we basically have no problem with this legislation. I think it is good. It deals with some anomalies and inconsistencies in organized and unorganized areas. I assume it is part of the minister's attempt to get certain areas to organize themselves in the province of

[ Page 4386 ]

British Columbia. That's a rationale for bumping up rural taxes these days.

I might have one question — it's not actually included in the bill — to the minister. We're seeing some changes in the homeowner grant, and there have been some problems with it over the years. I'm glad to see those changes being made. One of the things that I'm asked often — and I'm sure all members of this House are often asked — is: are we going to see any actual dollar increases in the homeowner grant in the near future?

I wonder if the minister could give us an answer, or would she rather decline to respond to that?

HON. MRS. JOHNSTON: I think that would probably reflect on future policy and I'm not in a position to respond at this time.

MR. BLENCOE: Would the minister agree it might be useful — or a consideration to homeowners — for the government to review the current level of funding for the homeowner grant? It's a different way of putting it. I'm not reflecting on your decision.

HON. MRS. JOHNSTON: Mr. Chairman, the discussion put forward by the member of the opposition is really stretching the intent of this legislation, and I feel we should stick to Bill 2.

MR. MILLER: I have a number of questions to the minister, since I have a large number of unorganized communities in my constituency. The minister did talk about this being an anomaly that has existed for some time. I wonder if the minister could advise how the anomaly grew between what's happening in organized areas and unorganized areas? I didn't follow from the minister's explanation how that came to be.

HON. MRS. JOHNSTON: I didn't really understand the question. The bill is very clear in what the intent is. We're intending to further define "owner" and to exclude reference to purchaser or tenant. I don't know how much clearer we can be.

MR. MILLER: There's a discrepancy. The minister herself talked about the discrepancy or anomaly between organized and unorganized areas. This obviously will impact. Residents of rural areas have been faced with fairly large increases in taxation over the last ten years. There have been fairly significant increases. It used to be that the minimum payable, I believe, was $l, and that increased to $25, $50, $75, and now it's bumped up.... I don't know exactly what it is now, but obviously there has been a fair degree of increase in taxation to rural areas.

If the intent of the legislation is to further pass that along, particularly in.... I can think of small communities in the Charlottes where housing has traditionally been in short supply. I would suggest that there are a fair number of absentee owners, and people occupy those premises simply because there are no other properties for purchase or there is a shortage generally of accommodation and they're forced to rent. I don't know what the rental situation is, whether or not those people are in effect paying in their rent for taxation.

There are all these questions. On the face of it the minister can simply say it's a housekeeping measure, and I can accept that. It seems to me that it's worthwhile pursuing the implications of the housekeeping measure on actual people. What is going to be the case? You said earlier you didn't really have any statistics. You don't know how many people this might affect or how many people took advantage of the provision whereby they could enter into a lease arrangement.

Any move like this is obviously going to have an impact on people, and for that reason I would like a clearer idea of what the impact would be, at least speaking for people in my constituency.

HON. MRS. JOHNSTON: I think the problem here is that the members opposite are not addressing their attention to the fact that what we're dealing with is called the Home Owner Grant Amendment Act. The grant is only applicable to resident owners. In the past, for whatever reason, it appears that those living in rural areas did not need to be owner-occupiers in order to qualify or find themselves eligible for the grant, which was subsequently passed along to the property owner or the landlord.

We're clarifying it now. The criteria for grant eligibility in rural areas will now match very closely those in municipal areas. Why should there be a difference?

MR. MILLER: In my attempt to understand that, I would simply ask the minister: why was there a difference? Surely you are in a position to relate to this House why that anomaly existed where within a municipality you had to have a 99-year lease, and in an unorganized area it's my understanding you could do it for a period of one, two or three years. Why did that anomaly exist? Was there some intent when the whole concept of homeowner grants was originally established that allowed that? Let's explain. Have you gone back? Have you had your officials tell you how it came to be? Have you done any work on the impact it might have in the situation I describe, where there is not only a shortage of opportunities to purchase accommodation but a bottleneck, really, in terms of acquiring land to be able to build?

I just want some simple answers to these questions, because it will impact on the rural areas of British Columbia.

HON. MRS. JOHNSTON: There's no question it will impact, because 1987, as stipulated in this amendment, will be the last tax year for rural renters to qualify for and claim the homeowner's grant. We are putting forward this amendment in order to subsequently treat rural renters the same way we treat renters living in incorporated municipalities.

MR. MILLER: I don't want to belabour the point, but the minister's last statement did capture the essence of what I have been trying to say: there is a difference, Madam Minister, between people who live in municipalities and people who live in rural areas. There is a considerable difference, depending on where you are. I imagine there are some very nice rural areas in British Columbia where they are close to schools and services and all the rest of that, and I have no quarrel with those people being forced to pay their fair share of the tax burden.

Certainly I recall that as an administration we dealt with the question of people wanting to live on the fringes of a municipality to escape the responsibility for taxation yet still be able to avail themselves of all those services that municipalities provide, and I don't condone that for a moment. But there is a significant difference between that and the situation

[ Page 4387 ]

in some rural parts of British Columbia in terms of the level of service — a significant difference. Quite often they don't have public transportation, they don't have a lot of the basic services. So there is no equity, if you like; there is no direct comparison between rural and urban in this province. I would simply register my position at this time: I think the people in rural British Columbia have been hit with an inordinate amount of tax increases relative to the tax increases that people in municipalities have had to bear.

Interjection.

MR. MILLER: I can see that the first member for Vancouver South (Mr. R. Fraser) — that great rural riding of Vancouver South — is adding his voice to the debate. I'm sure if he keeps it up, he's going to have the minister thoroughly confused.

I won't belabour the point, as I said, but I do believe that there has been an inordinate increase in rural taxation in this province.

Sections 1 and 2 approved.

Title approved.

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

Motion approved.

The House resumed; Mr. Speaker in the chair.

Bill 2, Home Owner Grant Amendment Act, 1988, reported complete without amendment, read a third time and passed.

HON. MR. REID: Committee of Supply, Mr. Speaker. The House in Committee of Supply; Mr. Pelton in the chair.

ESTIMATES: MINISTRY OF EDUCATION
(continued)

On vote 23: minister's office, $211,618.

MR. JONES: We were discussing earlier the ministry's submission to the Royal Commission on Education — the Sullivan commission — and we were talking about an item on page 9. I appreciate the difficulty of the minister because, clearly, he doesn't want to be in the position of appearing to propose a particular idea that is a great departure from what we've had for many, many years in this province and elsewhere in terms of the school year. However, very clearly, also, it has alluded to this kind of thing, or certainly created the opening for this interpretation.

The minister has suggested in a letter to the editor that ministry or government officials were looking at the year-round school system.

HON. MR. BRUMMET: When?

MR. JONES: "Anthony J. Brummet, Minister." It says: "But `look at them' was clearly explained in the sense that we would study these measures and determine the pros and cons."

HON. MR. BRUMMET: Read the rest of it.

MR. JONES: "Before I or the ministry take a position for or against these measures, we need to know a great deal more about them." This was written last fall, so my question to the minister....

HON. MR. BRUMMET: Read the rest of it.

MR. JONES: You read the rest of it, Mr. Minister. That was written last fall. I'd like to know if the minister has completed these studies or are they still ongoing? Does the minister have any research to indicate that from an educational or methodological standpoint there is any advantage to the 12-month school system?

HON. MR. BRUMMET: I recall the letter, and it was written in response to the standard distortion activism that is being promoted by my critic. Let me perhaps explain it once again. I was asked: "Are you familiar with what they've done in California?" I said: "I've heard about it." "Are you going to find out more about it?" I said: "Yes, I am. " The next day it came out in the paper that the Minister of Education was advocating a 12-month school year. See, you people distort things like that.

[5:30]

I think it was you who commented about how dare I do this without consultation. To try and clarify things, I wrote a letter to say what I had said. You read part of it, selectively. I said that I am willing to study and look an any proposal that's going on anywhere, but before I would take a position on it — as you started to read, and then quickly quit — that I would like to know more about it, the pluses and minuses and what happens to it. To say that I had advocated something which I had merely said I was going to look at was erroneous, and I was trying to correct that.

Lo and behold, my correction letter is now being used by my distortion expert to say that I was advocating something. I think you're going to have to make up your mind as to whether you go by what I say and criticize me for that — I have no problem with that. I have a little difficulty with you continually putting some other words and some other meaning to something and then attacking me for it, and then saying that something is wrong. The member started out with page 9, where we have a statement which says very clearly, in quite simple English, what our intent is, what we see as the image of the future. The member stood up in this House and said: "What do you mean?" I said: "I mean what we said." The member asked, "What do you really mean?" and then brought in a letter — in which I explained that I wanted to look at things — as evidence that I really didn't mean what I meant when I say what I mean. You have me a bit confused. Read what it says. That's what the intent was.

MR. R. FRASER: I wasn't going to say a lot on this. I see that my friend from Maillardville-Coquitlam (Mr. Cashore) is reading Teacher magazine — the March edition, I believe; I suspect it's the first one. I recommend that all those in this chamber — and everybody else, in fact — read the interview conducted by the co-editor of that magazine, a Nancy Hinds, with Mr. Bill Broadley, who describes himself as the chair-

[ Page 4388 ]

person of the college. Now there is a confession — that interview. Here is a man, who has no idea what a professional organization is supposed to do, describing in no uncertain terms that his idea of his mandate is to protect the interests of the teachers, when Bill 20 — that great bill, which I was happy to support — talked about the protection of the public, which is his job as chairman of that particular council.

With respect to the minister's work, I happened to see the brief presented by the BCTF to the Sullivan commission. I was given to believe that it was a critical submission; but in fact, it praised the work of the ministry and the good work of the teachers — which I also do. It's incredible. I found their submission to be full of contradictions, Mr. Minister, and I think you should have a look at it sometime. It speaks about the interesting work that teachers do, and they certainly have a very interesting job. It shows how well teachers cope with the system, obviously funded adequately by the government. They go on to say how difficult the job is but how well they do it. I commend them for that fine presentation because it is a very useful thing for the public to understand that our schools are doing well.

I also want to suggest to the minister that the idea of a more flexible school system appeals to most people out there. I know the critic doesn't seem to want to have it that way, and I don't know why he'd want to stick to a rigid system. Perhaps it's got something to do with the calcification of his mind. But we could use more hours of the day, and we could use more hours of the week; there's nothing wrong with that. If we have a lot of students and not a lot of spaces, maybe we should have a double system going. Or maybe we should have more teachers and more kids in the class, or even less.

There is nothing as wonderful in the training or the exercising of the mind as the idea that flexibility is the key to this whole process. That's what education is all about. There is nothing magical, as the minister says, about nine to three, or 196 days of the year, really.

MR. MILLER: How about 5:35?

MR. R. FRASER: Actually that's a good one. We always like 5:35, although you didn't tell it very well today.

I remember the critic yesterday said: "You know, it's a terrible crime, Mr. Chairman; we have the lowest percentage of our personal incomes spent on schools." What that really means is that in British Columbia we have the highest incomes. When you spend the amount of money per student that's approximately equivalent across the land, then that must mean their incomes are higher. That's what it really means.

I'm glad I raised that. The first time I saw that was about 1983 when we were going through this crunch of the world recession that we came through so well with great leadership of the Premier of the province who was.…

MR. WILLIAMS: A Bahamian accent?

AN HON. MEMBER: Or Antiguan.

MR. R. FRASER: Well, he makes a vicious personal attack again. Really!

They talk about the removal of the commercial base, and it is described as a terrible thing to do. But in fact if we could make it a little easier for each school board to raise a little money, then so much the better. How can we send the money to Atlin, if they don't have an industrial base, unless we collect it from somewhere else? It's an obvious thing to do. Those socialists are mad over there, because they didn't think of it. They never understood the word balance; they have no idea what balance is. Good grief, isn't it Atlin where we spend $7,000 per student? It must be at least that much.

AN HON. MEMBER: Where's Atlin?

MR. R. FRASER: Atlin is that great riding up there.

MR. WILLIAMS: That's because you won't build a road to Kincolith.

MR. R. FRASER: Would that help our students? You probably want to have them out building the road, first member for Vancouver East — the real leader of the opposition. Out goes the little salesman who sits in the front row here; the real power is back there. There's no question about it. Did you see him pulling those strings at question period today? Unbelievable.

MR. CHAIRMAN: Hon. member, we talk about relevancy. Relevancy, please, hon. member.

MR. R. FRASER: Well, it is relevant, Mr. Chairman. I'm just getting to that now. The relevancy of the minister's estimates — how can he do his job? How can he overcome the calcification of the opposition mind unless he has the money to run his office? Yes, thank you, Mr. Chairman; I don't know how I would ever get through it if I didn't have help from the Chair. I want to commend that great minister who has come through the hard days, done his job well and continues to do the job well. There's no question about the fact he will continue to provide this province with great educational leadership.

MR. JONES: I must confess that I have to agree with the member from South Vancouver. It was the member for South Vancouver, when he came back from southern climes, who said that he didn't know what all the fuss was about. I agree. I don't know what all the fuss was about either. I didn't miss the member for Vancouver South one bit, and I don't think this Legislature did either. But I do notice.…

Interjections.

MR. JONES: I'll speak for myself. I didn't miss the member. I do notice though that he came back just in time to be sure he didn't lose any of his paycheque. So thank you for that contribution, Mr. Member.

Back to the estimates. We were discussing, prior to that interruption, the 12-month school year, a concept that clearly can be read into the contribution of the Ministry of Education to the royal commission, although the minister argues that it's really just in favour of flexibility. I appreciate that. Because the minister did write in his letter to the editor last October that he was looking into the pros and the cons, and that was some six months ago, I just would repeat my question to him: in his look into the 12-month school year, did he find any research or methodological evidence that supported the 12-month school year?

HON. MR. BRUMMET: I did not commission a formal study, even before myself. I did not set a deadline. I have not

[ Page 4389 ]

completed my studies. I have not picked up enough information yet to reach a conclusion. I know the member again said: "You can clearly read into the statement that the minister is advocating a 12-month school year." Not correct. I certainly can't prevent that member from reading things into almost anything. Even when I've given him the facts, he still manages to read something else into them.

While I'm at it, maybe I should mention that a news release from the province of Ontario has come to my attention. Yesterday that member made a great deal of fuss about how Ontario spends more money per pupil, has higher teachers' salaries, and all that sort of thing. So it came as quite a surprise to me, having had the benefit of that member's knowledge and views — how because they spent more they had a better education system than us — to find out that as of April 14 or something, when this press release came out, the average class size in Ontario schools is currently 28.2 pupils per teacher, even in grades 1 and 2. They are quite concerned. Our average class size in the province right now is 23.4 at the elementary level and 24.5 at the secondary level, and they have been at approximately that level for some time. Would you believe that in Ontario they are taking drastic measures as a government, their goal being to reduce class sizes to an average of 24.6 pupils per teacher in September 1988? Somehow they have about half a pupil less in pupil teacher ratio, yet their class sizes are 28 compared to our 24. So I said that the per-pupil costs, the per-teacher costs — those sort of things — are not the only determinants of what constitutes good education, and I guess that's fairly good proof of that.

I also find, surprisingly, that they are going to try to do something about getting more computers into the schools. This is a province that has three and a half times as many school students as we have, and they are taking the massive strides of $10.4 million to school boards for the purchase of computer hardware and $3 million for the purchase of ready-made computer software. So with three and a half times the student population, they're putting $13.4 million into upgrading their computer programs; we have put in $15 million for this year, and a plan to go for five years. In Ontario, they say they are planning to continue these allocations for three years, with less money.

In per-pupil cost, we seem to be doing a better job. I've said time and again to that member that whenever we compare on exams, on any interprovincial tests in math, in science and in any others, we come out at the top.

I just thought I'd toss in some of that information, because the member keeps reading in . . . As he said, he reads into it what he chooses to read into it, for his own purposes — and I suspect that some of those are far more political than educational. I'm sorry the member for Vancouver South has left, because, to and behold, I think he interjected some possible political things into this debate.

[5:45]

MR. JONES: We will get on to computers at a later stage in our debate. We were discussing the year-round school concept, and the minister indicated that he had not yet completed his studies. I wonder if he's at the stage in his studies where he's found that there is no evidence to indicate that any operational savings will result from a year-round school system.

HON. MR. BRUMMET: Mr. Chairman, just once in a while I wish that member would listen. I am not doing a formal study. I have not completed my studies. I am viewing, reviewing, looking at the situation, to see how it develops. I haven't made a list of pros and cons yet. I'm reading, finding out. I don't know. They've only started it. Maybe the results will not be evident for a few years. I don't jump to conclusions like you do, Mr. Member; I usually try to wait for some information.

MR. JONES: The minister wrote to the Province last fall that he would study these measures and determine the pros and cons, so I was just taking him at his word.

Perhaps we could have a look at another section in that submission. This section, also on page 9, indicates that in the vision of the government of the school of the future, the school will access the resources available in the community, such as contracted learning services and private tutors. I wonder if the minister could explain what he meant by that statement.

HON. MR. BRUMMET: I would say again: exactly what it says. There are a number of sources of learning and information, and the students in the system should have access to all of them.

MR. JONES: Will those resources be available, in the view of the minister, in addition to the existing resources or in place of them? The statement in the submission suggests that we will have access to these other resources. I ask the Minister of Education: will these resources be in addition to those already existing in the school, or will they be in place of the existing resources?

HON. MR. BRUMMET: The answer is yes.

MR. JONES: Which?

HON. MR. BRUMMET: Both. You asked the questions.

MR. JONES: So they will be in addition to and in place of existing resources. It seems to me that if we are going to replace existing resources, and if the minister suggests that he is truly supportive of the efforts of the teachers around this province in providing service to our children, why does he want to replace those resources with such things as contracted learning services and private tutors?

HON. MR. BRUMMET: Again, selectively and misinterpretation. I believe the member asked if I'm supportive of the work that's being done by the teachers in the province, why I want to replace it. I don't, but there may be some items in here.... Some contracted learning services may be in addition to it, or it may be a replacement of the work experience program. There may be some private tutors who will work with an individual student, instead of a teacher, or it may be in addition to what the teacher does. We don't see this as replacing the teachers in the system. I don't know what the member is trying to draw out of this.

"The school will recognize and access the resources available in the community that will contribute to the development of an educated person. Service organizations, work experience, contracted learning services, private tutors and home schooling are examples of supports and alternative learning avenues which will exist" — I might point out that

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many of them do now — "and be recognized as providing the choice necessary to develop a society of learners. All will be recognized as contributors to the development of the individual."

We see as the image of the future many different things happening in different ways. I don't see that as wrong. I don't know what the member is concerned about.

In a concluding statement: "We have suggested that, while the school will remain a formal social institution, our concept of it must change in order to accommodate the varieties of learning avenues that will be available." Sometimes it would pay the member to get his researchers or himself to read the whole report.

MR. JONES: My purpose in this question is to have the minister clarify the intent of the submission to the royal commission. I'm pleased that the minister says that he does not see these contracted learning services and private tutors replacing teachers in the system. That's what the minister said; I just want to make sure that is what he meant.

HON. MR. BRUMMET: I have to be a little careful with Tricky Dickey there, because when I say something, he tends to.... Do you want me to withdraw that?

Interjections.

HON. MR. BRUMMET: Okay, I will. He's very careful and selective in choosing to interpret in his own words portions of what I say. If you would give me the exact words once again, so that I know exactly what I'm dealing with, since you want to deal on the basis of what I said, or what I didn't say, then I'll try and respond.

MR. JONES: I think the Minister of Education was asking me to repeat the question, which I'm happy to do. In my first question, I asked the minister whether these resources would be in addition to or in place of those already existing in the school system. The minister said both.

In pursuing that a little further, the minister said at a later point that he does not see these contracted learning services and private tutors replacing teachers in the system. I was pleased with that response, and I wanted the minister to confirm that that's in fact what he meant.

HON. MR. BRUMMET: I thought I had answered that and made it clear.…

MR. JONES: Please confirm.

HON. MR. BRUMMET: Confirm that we are not going to eliminate teachers in the school system? That we're not going to replace teachers with machines or whatever? Of course I'll confirm that.

I tried to point to you that in the conclusion we say that the schools will remain a formal social institution and that the teachers will be there. I have confirmed that we don't intend to replace teachers in the school system. As a matter of fact, if the member really is interested in education rather than politics, he will find out that if anything, we have a concern about getting enough teachers in the future. That is it.

It would seem that it takes a great deal of time to explain a simple statement that is written very clearly. I guess we'll have to have another go at it tomorrow. I would move that 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 leave to sit again.

POLLUTION CONTROL IN PULP MILLS

HON. MR. STRACHAN: Mr. Speaker, I would like to respond to a question taken on notice yesterday in question period dealing with pulp mill compliances in the province and media reports, specifically with a question posed to me by the hon. member for Surrey-Guildford-Whalley (Ms. Smallwood). The question was: "Eighteen of our 22 pulp mills were found to be consistently in excess of pollution control limits in the province, yet no charges have been laid in 1987. Can the minister tell this House why it is these polluters have not yet been charged?"

We're dealing with quite a few things here, and the question of media reports. I'll provide a detailed response as best I can now.

The media have reported that 18 of the 22 pulp mills have not been complying with provincial pollution permits, and although at this time I don't want to argue numbers, I should point out that this is a very selective use of the figures. In the waste management branch we can tell better than anyone else that it is not unusual for permit conditions to be exceeded from time to time, but I can assure members of this House that when it becomes a pattern and there is a risk of significant environmental impact, there are progressive enforcement procedures which the ministry can and does apply.

In the case of the pulp mills, some of the figures publicized in the last few days have been misleading. For example, it was mentioned that the Crofton mill complied with only 47 percent of tests for suspended solids, but a more meaningful figure is the daily average, which is 30 percent better than their provincial permit. It was also mentioned that the Harmac mill complied with 80 percent of the test. Their daily average, though, was 25 percent better than their provincial permitted limits.

Finally, to put this issue in perspective, I should mention that we have over 3,000 active waste discharge permits in the province, and of these the vast majority are in full compliance and represent a very low environmental risk. A high proportion of the others involved major industries undertaking staged improvement programs. That phrase "improvement programs" is essential to be considered. The ministry has been lending its full resources to support and encourage these improvements. This has proven to be the most constructive approach to our long-term pollution problems.

If the member wishes to be made aware of the procedure manual of the Ministry of Environment with respect to compliance strategy evaluation and enforcement, I will send that procedure manual to the member. As a matter of fact, I will undertake to do that now, Mr. Speaker, so the member is informed as to what process we do put in place.

I can tell the House, finally, in concluding this statement, that I have a list of the pulp mills and the tests that we do. Of the 22 TSS tests, we showed one pulp mill as being out of compliance, and that was Quesnel River Pulp. That is being fixed. Biodegradable oxygens — we showed six. That's also being taken care of. The most significant complaint was toxicity comments, and in that case we found 15 where there

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were concerns of them being off-permit. In every one of those, major works are in place to upgrade, major programs or studies are in place to upgrade, and in all cases they have satisfied the Ministry of Environment that they are putting all the necessary remedies in place to ensure that they are in compliance and will be as quickly as possible.

A ballpark figure of investment money spent by those mills so far to reach compliance is $50 million. So there is a significant process in place, and I'm satisfied as minister that we are doing everything we can within our statutes to ensure that the variance orders are dealt with.

MS. SMALLWOOD: The minister has referred to an official document. Will he table it with the House?

HON. MR. STRACHAN: No, I didn't say I'd table it. I said I would send her the procedure manual, and I will. I give you my undertaking.

Hon. Mr. Strachan moved adjournment of the House.

Motion approved.

The House adjourned at 5:59 p.m.