[ Page 6161 ]

CONTENTS

Routine Proceedings

Residential Property Tax Increase Limitation Act, 1989 (Bill 17). Second reading

Hon. Mrs. Johnston –– 6161

Mr. Blencoe –– 6161

Mr. Harcourt –– 6162

Hon. Mr. Vander Zalm –– 6163

Mr. Perry –– 6165

Ms. Marzari –– 6166

Hon. S.D. Smith –– 6167

Mr. Clark –– 6168

Mr. Rogers –– 6170

Mr. Williams –– 6171

Mr. Barnes –– 6172

Mr. B.R. Smith –– 6174

TUESDAY, APRIL 18, 1989

The House met at 10:06 a.m.

Prayers.

HON. MR. HUBERTS: Mr. Speaker, on behalf of the first member and myself, it is my pleasure today to introduce in the gallery today some visitors from our constituency, Saanich and the Islands, a group of grade 11 and grade 12 students from Pacific Christian Secondary School, who are joined by 24 special guests from Ecole L'Eau Vive, Quebec City, Quebec. These fine young people are participants in the Open House Canada exchange program. Accompanying all the students this morning are their teachers, Mrs. Barbara Webster from Pacific Christian Secondary School and Ms. Marie-Claude Rousseau from Ecole L'Eau Vive. I ask members of the House to extend a warm welcome to our special guests.

Orders of the Day

HON. MR. RICHMOND: I call second reading of Bill 17.

RESIDENTIAL PROPERTY TAX
INCREASE LIMITATION ACT, 1989

HON. MRS. JOHNSTON: It is my privilege to put forward Bill 17, the Residential Property Tax Increase Limitation Act, 1989, for second reading.

Bill 17, as we are well aware from the wide coverage it has received, contains measures designed to give British Columbia municipalities a temporary option to cap residential property tax assessment increases which are significantly above the community average. This option will be confined to the land component of residential property tax assessments. The legislation is intended to moderate the effect of sharply rising land values which are unprecedented in many British Columbia communities.

We have held discussions with the mayors of Vancouver and other communities on the matter and we have attempted to meet their needs in the legislation. We clearly define the limits of the capping measure, confine it to the current year's assessment role and make the option available to all municipalities.

My government is very concerned about the problem of inflated residential land values, but we are equally concerned about damaging an assessment system which we consider a fair and equitable basis for property taxation. Therefore we caution local governments in the use of Bill 17. We have reminded local governments of recent increases in the homeowner grant and land tax deferment options for owners over 60. We have asked them to consider these offsetting factors before deciding on using the option we have given them.

We have also advised them to first ascertain if assessment capping is in their community's best interest and whether they have the capacity to administer the measure. If doubts exist about either of these factors, in our opinion it would be better not to use the option.

Although I have urged caution in the use of this measure, I want to refute one criticism that has been directed against it. Critics have alleged that the measure was designed to help the rich at the expense of the poor. This is absolutely false. The capping formula is designed to help anyone, rich or poor, whose property value increased significantly faster than the community average. The key is the rate of change in value, not the value itself or the income or wealth of the owner.

Let me illustrate this point by reference to Vancouver, where the most detailed analysis has been done. In order to balance the books, taxes will rise very slightly on uncapped properties. But even when these modest increases are added to 1989 taxes, a very large number of uncapped properties will be paying lower taxes in 1989 than they did in 1988.

To further ensure the equitable nature of these measures, we have amended the original legislation to confine those shifts in taxation to the residential class and to prevent reciprocal adjustments outside the municipality exercising the option. While it is unusual to proceed with legislation with so many reservations, our belief in municipal autonomy shall prevail. We trust our municipalities will use the option wisely, and I can assure you we will monitor the situation carefully over the coming year.

I therefore move that Bill 17 be given second reading.

MR. BLENCOE: I think the minister's opening remarks indicate the real problems that even the government side has with this piece of legislation.

It is a strange situation when we have the minister in her opening comments basically speaking against the legislation but urging her colleagues to vote for it. We have a situation where the minister, when she introduced this bill, indicated her deep reservations about it, and yet we still have this bill before us. The minister is giving the impression of having deep concerns, but for various reasons, she wants to see it passed in this Legislature.

This side of the House, the New Democratic Party caucus, will vote against this legislation. We feel it is misguided and ill-conceived. It doesn't resolve the problem, and it is definitely a bad precedent in British Columbia. Even though it is for one year, once you have demonstrated that you are prepared to tinker with, to band-aid, the fundamental market value assessment system, you are really opening Pandora's box. This legislation is not very fair, and even the minister tries to indicate that the criticism put forward that it benefits the rich at the expense of those in moderate housing.... She knows that's exactly what this legislation will do. It transfers the load from those who have greater ability to pay to those with lesser ability. My colleagues from Vancouver will give those details. They know exactly what this piece of legislation will do to those in reasonably priced housing.

[10:15]

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The B.C. Assessment Authority was introduced for the very reason that this bill purports to have, that is, messing around or tinkering with the assessment system. We can all remember the days when assessments were manipulated for obviously political reasons, and in the wisdom of the Legislatures of the day, the B.C. Assessment Authority was established to try and introduce some stability and remove the political manipulation of the assessment system. Now this minister has decided to return to the bad old days of allowing manipulation of the assessment base. It is ill-conceived, and I don't think this minister fully realizes the road this government has decided to travel down. They don't realize the full implications. Local governments have already started to express their deep reservations about making these moves.

What this government should have done, if they wanted to deal with this problem in a more forthright manner, was to ensure that the homeowner grant kept up with inflation. But they didn't do that. A long time ago, to ensure that school taxes for property owners didn't get out of hand, they should have introduced tax reform based upon the excellent McMath report of 1975. That's the sort of thing we should be talking about: real reform, not a tinkering, not a band-aid, not a precedent that all local government will be sorry to see in the days ahead.

If this government was prepared to deal with the reason why this legislation is before us — that is, those who are speculating in the marketplace and driving the cost of housing up, not living in that housing — we'd really start to come to grips with the fundamental problems in the province. They refused to introduce a speculation tax to deal with those who are flipping property and forcing these rates and assessments and taxes up.

This morning I received a copy of a letter from Susan Brice, chairman of the Capital Regional District. Mrs. Brice is basically a friend of this government, and I want to read into the record her concerns about this legislation:

"...the board unanimously resolved to express its grave concern about this proposed legislation. The existing property assessment system is not perfect, but it does have the very significant virtue of being based on an objective standard: that of market value. Bill 17 represents a departure from this principle by allowing a municipal council to create two distinct classes of residential property: those assessed at market value and those assessed at something less than that amount.

"...the province has placed all local governments in the difficult position of having to make a highly subjective political decision on the complex issue of relative levels of property assessment within their jurisdictions.

"The arbitrary capping of assessment increases is an ad hoc and overly simplistic approach that will confer unwarranted benefits upon property owners other than those the legislation is designed to assist, at the expense of those whose properties have been assessed at market value all along."

Mrs. Brice goes on to say:

"In the board's view, the fundamental injustice of the draft legislation is not tempered by the optional nature of the assessment cap. Every council will be subject to pressure from those who would benefit from the limit, which will be heightened in metropolitan areas such as greater Victoria or the lower mainland....

"The board urges that you acknowledge the complexity of this matter by withdrawing the legislation pending an in-depth analysis by the province, followed by consultation with local government."

There will be other letters. Other mayors will be saying basically the same thing- ill-conceived, bad precedent, misguided, setting us on the wrong course in dealing with this issue.

In our estimation this government should tell the Assessment Authority that its days are numbered if this kind of legislation is passed. I think the tone of this letter from Mrs. Brice indicates that those in local government want you to think closely about what you're doing and have a further look at this before proceeding with that legislation.

MR. HARCOURT: I know there's a great deal of parochialism and concern only for the local turf displayed by the members opposite.

Interjection.

MR. HARCOURT: What we have to look at is the whole province and not just one particular area of this province, and it's about time you did that, Mr. Member. That's why we look on this panic reaction to a market that's responding to too much growth as a bad panic reaction. Bill 17 is not good for British Columbia.

I want to go back to the problems we ran into the last time we went through this panic reaction to increased property value in the lower mainland. This is specifically to deal with three or four municipalities in the lower mainland.

I want to remind the members opposite that the last time their government tried something like this was in the 1960s, when the Premier at the time, W.A.C. Bennett, started to artificially put limits on the assessments. That led to some terrible distortions and inequities, because once you start, it's hard to stop. It was temporary then.

You put a cap on the residential, and then the commercial goes up; then you start putting caps on that. And before you know it, you don't have any basis to your assessment system, and the minister just said that. She's expressing her very strong reservations about this bill and where it could lead to. I agree with those reservations. I think what the minister said about the slippery slope that this takes us to.... She stressed that this was only one year. Well, that's what was said in 1960. You get into it, and you get engaged.... It's like Brer Rabbit and the tar baby: the more you struggle, the more you get engaged with the tar baby, and the worse it gets. I just want you to remember that it's very difficult to get out of.

HON. MR. REID: Some of us don't get a chance to read the comics.

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MR. HARCOURT: Some of you don't even get a chance to read, Mr. Member.

I want the members to realize that the last time we got into this mess was the 1960s. I hoped that you had learned from history, and you would withdraw this bill, as you were tempted to do originally. Your first instincts were right.

I want to go back to a very important time when we established the provincial Assessment Authority, and I agreed with it. We took the very capable assessment people out of the city of Vancouver and other municipalities, and we established the B.C. Assessment Authority, and we based the assessments on market value. In the 1981-82 period we also brought in a differential mill rate to deal with the wild swings. I was right in the middle of it, as the mayor of Vancouver.

We had a 100 percent increase in residential values in 1981, and the next year we had a 100 percent increase in commercial property values. We said: "Listen, we're going to go with the market system of appraisals and assessments, and we're going to bring in a differential mill rate." I remember when the Minister of Finance (Hon. Mr. Couvelier) was the mayor of Saanich. We sat down with the then Minister of Finance, ex-mayor of Saanich, Hugh Curtis, and pleaded with him to go with assessment based on market value and to bring in the differential mill rate We have done that. We do have a provincial authority, and it does a good job. That doesn't mean it can't be improved by going to yearly assessments instead of every two years, so that we can have it more current and up to date.

Here we are again in another swing in property values, 1988-89, and it will happen again. By the time we bring in these temporary measures, it will settle down again in 1990. We will then be trying to unscramble what we're creating right here.

The only good thing we can say about Bill 17 is that it's a hell of a lot better than that panicky proposal the minister came up with to divide blocks against blocks instead of the east side and the west side against each other. That's the only good thing we can say about it: it is better than the disaster originally proposed by the minister.

What are we talking about here? We are talking about 300 households in North Vancouver. We're talking about a more significant number of households on the west side of Vancouver, where I live.

HON. MRS. JOHNSTON: Several thousand.

MR. HARCOURT: And those several thousand have just had their real cash value go up $100,000 to $400,000. They have remedies right now, and you're creating an unfairness to the taxpayers on the east side of Vancouver. I realize this was a unanimous motion of the Vancouver city council, and I'm puzzled about why it was unanimous, because it is going to create some inequities in Strathcona, Grandview-Woodlands, Mount Pleasant, Hastings East and in through Cedar Cottage on the east side of the city.

We are hearing from those citizens. They think it is unfair that somebody can make $300,000 or $400,000 in cash because their housing values have gone up so much, and they're not prepared to subsidize those people. That's what you're asking people on the east side of Vancouver to do, and it's unfair.

The last reason we are going to oppose this bill is that this government has refused to deal with the major issue. This is a band-aid solution to an issue that requires some bold thinking, the whole issue of too much growth in the lower mainland and not enough in the rest of the province. You don't even have a game plan for the growth that's happening in the greater Vancouver area. Supply and demand: as free-enterprisers, you should know a little bit more about the market. There's a shortage of affordable housing in the lower mainland. There's a shortage of trunk sewers, of trunk water lines, of roads and transit. There's a shortage of hospitals; the minister's own riding has a hospital that should have double the number of beds to deal with the 22 percent growth rate. That's the real issue.

You're not dealing with what this is a symptom of: too much growth in the lower mainland and not enough in the rest of the province. There are other solutions. This government could bring in a speculator tax to deal with the people who are parasites on the market system. They don't build new housing; they don't do anything. They just flip it and inflate the cost of housing. You could have increased the homeowner grant. There's been no increase over the last six years. You could have kept it up with the cost of living. That would have dealt with some of the inequity. You could have dealt with the concerns of mayors in greater Vancouver about the totally unfair school finance formula in this province: over $120 million in school taxes has gone out of the regional district and into the black hole here in Victoria.

That's what this is trying to address, but at the wrong end. You should have addressed it at the beginning. We feel we're going to be back here in a year or so trying to rescue ourselves from a bad judgment call. That's why we're urging the minister to go with her first instincts, which is not to bring in this bill. We hope the government will have a famous third look at this bill and withdraw it.

[10:30]

HON. MR. VANDER ZALM: I'm so pleased to see the absentee landlord from Vancouver Centre back in the House. For weeks and weeks I've been counting the days when he was obviously absent. It's nice to see him back. Probably this means five hours in the whole of this session. In any event, I'm very pleased that he did get up to speak to this particular bill, and I would like to make a few comments as well.

All of a sudden we're hearing the same old thing from the Leader of the Opposition. When he sees that something is working, and is popular out there, he says: "Me too." Now it's a wonderful thing. Now he's saying we need regionalization. We should look back at Hansard and recall when he was arguing against it, saying how bad it was, how it wouldn't work. He and the NDP, the socialists, were against it. Now it's

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changed. It's obviously being well received by the people out there, and now the Leader of the Opposition says: "Regionalization is okay. Too much development in the lower mainland. We don't want all the development on the lower part of Vancouver Island. It needs to happen elsewhere in the province."

So the NDP has now come onside, as they did with SkyTrain, as they eventually did with the trade centre. They now realize that the Coquihalla is an important piece of transportation in the province; they realize that the Alex Fraser Bridge was a necessary thing in the lower mainland. All after the fact — suddenly these things are okay. Now he has recognized that regionalization is a good thing for the province.

With respect to the bill before us....

Interjections.

HON. MR. VANDER ZALM: Let's get back on regionalization.

The Leader of the Opposition says that the minister should have dealt with the concerns of the mayors when they presented a report with respect to how educational taxes seem to affect some people of the province differently than they do others. That's a valid concern. The mayors have expressed their concerns about school taxation affecting regions differently. They want to see this addressed. Now the Leader of the Opposition says across the floor to me: "You haven't done anything." What he means is that in some situations we ought to do something, but in other situations we shouldn't do anything. When the Vancouver city council comes forth and unanimously requests that a change be made, then he says: "You shouldn't do something." But when the mayors make a request with respect to taxation as it affects various municipalities, then he says: "We ought to do something." Typical NDP socialist: inconsistent. Sometimes they're for; sometimes they're against.

We have a unanimous request from the Vancouver city council that something be done. Had the Leader of the Opposition remained mayor of Vancouver — which he probably should have done; it certainly would have been better for the rest of the province — he undoubtedly would be arguing today that when a city council comes forth and unanimously requests a change, we naturally must somehow respond. We can't ignore a unanimous request from the Vancouver city council. That would have been the argument.

I heard only a few days back, when we were debating another issue in the House, that there should be concern for those senior citizens in Vancouver who were being hit with high assessments, and that something should be done to protect those seniors in Vancouver who, through no fault of their own.... They weren't looking to sell their place, they weren't wanting to move, they had lived on a particular street in a particular neighbourhood for 25, 30 or 40 years, and they have now seen their assessments rise enormously. Something should be done, the NDP were saying. Today they are saying: "No. no. These people have made such horrendous gains, even though they are not looking to sell, that we should, instead of doing what is being proposed today, slap on another tax." They call it a speculator tax. That's always the answer from the socialists: tax; tax more; sock it to them. There's no consideration for those people, many elderly, who are living in areas of Vancouver where assessments increased tremendously.

Something is being proposed by a concerned council, and the Leader of the Opposition says: "I can't understand how they could be unanimous. They must be wrong. How could they be unanimous on this?" He never had a unanimous decision when he was the mayor of Vancouver, so there must be something wrong. They've got a unanimous decision.

What do they want to do? They want to institute a new speculator tax so that all the people in the west end of Vancouver and the west side of Vancouver and in West Vancouver and North Vancouver may somehow be hit by a new NDP socialist tax called a speculator tax. Then they want to provide for these people, after they are taxed out of their houses, by giving a piece of government land and making them renters. We lease them something. Home-ownership, after all, is terrible. A leasehold society, that's it — an NDP, socialist, leasehold society.

I agree in one thing with the Leader of the Opposition's comments. I agree that as we look back over the years, we do remember and will never forget — no British Columbian will ever forget — that there was a time when we had, for a brief period, an NDP socialist government in this province.

AN. HON. MEMBER: Dark days.

HON. MR. VANDER ZALM: It was dark. They were terrible –– 1,200 days of disaster we will never forget. The people certainly wouldn't ever want to go back to that, I'm sure. But during those days, that NDP socialist government made no change in the assessment setup as we saw it then. It was revamped in 1977 and 1978 –– I agree that it's a good process, and that we must continue that process. We've heard the minister and others say that this must be a measure for this year in order to, as Vancouver city requested, phase in the impact of the sudden changes that have taken place in the area.

Government is responding to a request from local government. There has been no government here and there's no government in the country that is more concerned with local government than we are. This government wants to respond to local government. When we have a unanimous request from the Vancouver city council to bring about this phasing process — I am very proud to have a Minister of Municipal Affairs who says that local government is requesting this — we must respond unanimously; we can't ignore that.

Our Minister of Municipal Affairs says that making all people renters and leaseholders is only a socialist solution, and we're not prepared to accept that.

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SOME HON. MEMBERS: No!

HON. MR. VANDER ZALM: No to socialism. No to making all people renters and leaseholders.

Our Minister of Municipal Affairs, Recreation and Culture says that we don't want to end up, as is being suggested by the socialists, with a new speculator tax rather than the phasing process we are considering today. Our Minister of Municipal Affairs, Recreation and Culture is concerned about the elderly people and others who have lived for a long time in these parts of Vancouver and are now being hit.

For the Leader of the Opposition to say that they are making all this money because their assessment is so much higher — they've done so much better and are worth so much more, so why should we give them relief — is totally unfair and unjust. We will not stand for that. Instead, we would like to — and will — bring them relief through this vehicle. Though it's only for a year, I know that we agree with Vancouver city council that it will help and that it's fair, given the circumstances of rapidly rising property values in the area.

I'm very pleased that we have this approach. I support it, and I am very disappointed in the comments made by the Leader of the Opposition. But I am pleased to see him back; I'm very pleased to see him in the House for the first time in many weeks Hopefully he'll continue to visit for a few more hours. [Applause.]

MR. PERRY: I was applauding too, because I thought that was a wonderful performance. I was disappointed in my first couple of weeks here that there wasn't quite the high drama I had been led to expect I think that was wonderful. It wasn't quite Shakespearean, but I'd be prepared to lend the Premier my ears, if necessary, so he can hear what the people are saying more accurately than he seems to.

I'd also like to repeat my offer from yesterday's session. The Premier seemed a little tired, and I'd be happy to prescribe a holiday or anything else necessary after that performance.

HON. MR. VANDER ZALM: I choose my own doctors.

MR. PERRY: Hopefully the Premier will still allow us that privilege in the future. Perhaps he'll allow that privilege to the women of British Columbia as well. Perhaps those who need modern reproductive health services will be allowed to choose their own doctors in the future.

I want to seriously address some of the issues this bill raises. I think the government is well-intentioned; I don't question the intentions of the Minister of Municipal Affairs, Recreation and Culture in any way. I think she is genuinely trying to respond to a request from the city of Vancouver, and she's had a certain amount of pressure put on her in that respect Listening to the comments of the minister this morning, the comments of the Premier and the comments of my colleagues on this side.... There is an absolute lack, as usual, of any long-term planning for the future of British Columbia. Essentially these measures are arbitrary.

I represent some of the people who stand to benefit directly from the passage of this act. At least this year, to a very modest extent, some of my electors might benefit. But what will happen to them next year? What will happen when inevitably the assessments must rise to catch up to fair market value? What will happen to the whole province's financial system if we descend into arbitrary financial planning?

[10:45]

We've heard much talk from the other side of the House about fiscal responsibility, and I think this is another example of the complete ad hockery of financial planning in this province. For the government to talk about fiscal responsibility when it approaches situations like this literally at the last minute, in the last week or two before a decision must be made, in a desperate struggle, sort of like a fish on the end of a line wriggling out of water, to come up with some solution — any solution — to the problem, whether it's a good one or not, is not fiscally responsible.

What has convinced me are the arguments from this side of the House, particularly from the member for Vancouver Centre who is the Leader of the Opposition. He has the experience as mayor of Vancouver and has the reputation as being the best mayor in the history of Vancouver.

Interjections.

MR. PERRY: He has that solid reputation. I suspect that those members on the other side who don't recognize that will have something to worry about when an election is called. It is a well-earned reputation for careful planning and for addressing the needs of the people in consultation with those people who are most affected.

I find it convincing to listen to his arguments that the proposal in this bill represents an ad hoc solution similar to that fish on the end of a line wriggling out of water, desperately searching for something to do. This will not be a real solution.

Let me discuss very briefly some of the real solutions which we advocated during my election campaign, and which the voters of Vancouver overwhelmingly endorsed by 54 percent of the vote. That is an unusual record in Vancouver–Point Grey — if not the province — and it indicates where the public wants to see solutions in British Columbia. It is important to remind this House, the minister and the Premier of some of the things the public voted for in the recent by-election.

We called for several specific measures in writing, in a formal press conference and on many different occasions. The first and the most important in regard to the current problem of rising property values was a speculator tax. We proposed a speculator tax — not the definitive answer, but a proposal — of 80 percent on speculative property flips on residential housing in the first year and 60 percent in the first two years. I did not claim, as the Attorney-General (Hon. S.D.

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Smith) has implied, to know perfectly the answers to these problems. I raised the problems, suggested potential solutions and recommended to the minister, the Attorney-General and the Premier that they work with us and for the people to find the solutions. We have offered proposals to which the response of the Minister of Finance (Hon. Mr. Couvelier) was to laugh. He laughed at the people of Vancouver. He laughed at them in the election campaign, over and over again. He cut the knees off from underneath the Social Credit candidate, and he laughed at the people of Vancouver.

I see the members on the other side are still laughing. The fact is that the government will have to address the problems in a serious way. Otherwise the next government will have to, and the problems will be that much more severe and that much more difficult for us to address when we are the next government.

We are prepared to cooperate with the government — we have said this over and over again — in the search for real, legitimate solutions.

Interjections.

MR. PERRY: If you would listen, you would hear that we have been offering — and I in particular have been offering — that to the government over and over again. For example, a legitimate start would be for the appropriate committee of the Legislature to commence public hearings immediately in the lower mainland to search for real solutions — not sham or fake solutions like the one we are debating today.

We also called for a number of other measures which, to spare the House's time, I won't go into detail right now. We also called for changes in the property purchase tax — meaningful changes such as dropping it for first-time homeowners. This has not been responded to by the government. We called for rent review and the return of the rentalsman — or as my colleague has pointed out, the rentalsperson — and for a number of other constructive measures. We are still waiting for some government action.

The essential point to notice is that this act is a desperate and phony attempt to respond to a problem of major — in fact, crisis — proportions affecting housing and taxation in the lower mainland.

This problem also affects the business community Small businesses in my community have been hit with whopping tax assessments. The increases in taxes potentially can drive many of them out of business. We do not hear the government responding to their concerns. Where is the government's response to the concerns of small business in British Columbia, particularly in areas hit by whopping business tax assessment increases?

I look forward to hearing more debate on this. I think it is a serious issue, and it is a very inadequate response on the part of the government.

MS. MARZARI: I don't come to the House for my daily jolt of adrenalin. I come to the House to do business. We have to do some business around this bill in the House. I do not think that....

Interjection.

MS. MARZARI: Well, Mr. Premier, you do take up time. I do think that we have to talk about this bill in the context of a city council that has felt itself to be on the horns of a dilemma; and certainly those of us who represent Vancouver, particularly on the west side, have also felt that pressure. We have all received many phone calls, especially when the first assessments came out, to suggest that there was a serious problem. This problem is not just connected to assessments; it is connected to a housing crisis in Vancouver the likes of which we haven't seen since the beginning of the seventies, with rental accommodation virtually at nil and housing prices escalating to the tune of $100,000 to $400,000 a year on the west side.

A city council in that situation has only so many recourses, only so many things it can do. Many of us who have sat on city councils in the past know that one of the first things you do is try and connect the problems together and deal with them in some kind of comprehensive way — you have to at city council. You have to make decisions week by week; you can't afford the luxury of spending a year to come up with legislation.

City council did come to this province and say it wanted a rentals office opened. They did discuss and debate the possibility of asking for demolition control, but it didn't go through at the city council level. City council has been attempting to deal with the problem. It set up a municipal assessment review panel, as you know, which reported to city council just a few months ago and recommended a capping procedure, which some members of city council were not thrilled with but felt compelled to take some action.

I would suggest that when you came in with the lowering of the age for tax deferral, you might have gone some distance towards relieving part of the problem. I say this in all honesty, because I don't exactly know what the numbers are. In fact, I have asked the city of Vancouver, the mayor, the manager and some of the councillors to put to me some of the specific families or people in need, so that I could get an idea of the actual numbers affected here.

There is a consensus — although the computer breakdown has not been done of the 16,500 individual households — that this is basically a problem of older people on fixed incomes. It would seem to me that one of the things we should be doing rather quickly with the city is taking a look at exactly how those 16,500 households break down; and if we are dealing with an aging population on fixed incomes, who are 60-plus, then it's entirely possible that the tax deferral mechanism might work quite well.

Neither do I stand to crystallize or laminate or preserve in stone the Assessment Authority that we have. I think that it has been a very good authority,

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but not in a million years would I say that it is the definitive, objective truth to say that market value of property actually reflects people's ability to pay their tax. If anything, this problem has taught us something about the fact that people can be house-rich and cash-poor, which created the problem in the first place.

There are, I know, many people in Point Grey and other communities who are sitting on houses that might be worth $500,000, but who are renting a basically illegal suite so that they can make their mortgage payments. My neighbourhood has many such people, and I regard them as friends. They are not exactly the millionaires of northwest Point Grey

So I would suggest that assessment by property value may not be the way to go in the long run, and that perhaps income tax delivered to municipalities might be a more equitable way of dealing with the system. I don't stand to defend a system that says that market value is the value forever, but I do want to say that I cannot go along with capping at this point, because I think it interferes with a system that has worked reasonably well. It carries the seeds of its own destruction, in the sense that the same consideration will probably be demanded by the rest of the city next year, when in fact values inflate on the east side of town.

We may find that we moved away from going to various neighbourhoods with a tax-capping system, but with this system, when the values level off on the west side of the city, I think we're going to see prices inflate, as they already have on the east side of the city. Next year there is going to be massive pressure on this particular bill to cap taxes on the east side of town, and we're going to end up with exactly what we didn't want. It's a one-year bill, but I fear it will end up a two-year or ten-year bill, and we'll end up in a cycle that will undermine the system, as imperfect as it is already.

With those comments in mind, I do not wish to undermine the city or to disparage the people who are going to be using this cap legislation; I just don't think, as a provincial decision-maker, that it's a good route to follow right now in principle, without appropriate information on the need breakdown.

HON. S.D. SMITH: I had not intended to participate in this debate on second reading, Mr. Speaker, but I must say.... The reason I hadn't, quite frankly, is that while this bill is certainly one of general application, we in Kamloops don't yet have the problem. Some in our community would love to have the problem of escalation in property values that has visited itself on the lower mainland as a result of wise decisions taken by government to go out and attract investment capital into the community.

That part of the equation has to be spoken to Today, in the debate on the principle of this piece of legislation, I am listening to some of the most wild, madcap suggestions as to alternatives to what after all is a very simple mechanism asked for unanimously by the largest municipality — at least, population-wise one of the largest municipalities — in our province. All it does is provide a vehicle by which the municipality, acting on behalf of their own citizens, may find a transitional way to go through the most adverse aspects of a rapid change in market conditions. Surely to goodness, to bring in some kind of legislation to empower municipalities to do that is not a revolutionary notion by any stretch of the imagination.

[11:00]

But some of the things that have been said in debate in this Legislature in respect of this bill are revolutionary notions. I think they ought to be exposed for what they really are. We have listened today to the suggestion that we have a municipal income tax. God knows, the 1917 temporary income tax act of Canada was enough. We now have income taxes in the provinces, and we now hear from one of the members from the NDP suggesting that one alternative to this bill, in principle, would be to empower municipalities to in some way tax in a way that imprints itself.... There's an imprimatur on income tax at the municipal level. I think the people of this province should really think about that.

These people believe.... Indeed, God knows, if the people want to put their hand on the hot stove of socialism again, they may well be in a position to come into power talking in advance, as Dave Barrett did, about wanting to have a stronger opposition or something, but, in fact, to be able to come in without ever articulating well these things they're dropping out here. Then, once in, they say: "We talked about it in the House." So it's important that people know what is said in this Legislature. Maybe one day in this province we'll have the kind of media that will actually report what is said in this House. Today we have electronic media in this House, and that has from time to time been visited with the notion of abuse from some members in this place.

Nevertheless, we have had presented to us today the suggestion that we have a municipal income tax. We have heard today and in the few days gone by a revisitation of the notions of one-tax George; and, in fact, that we ought not to have private ownership of land. It was said in this House by the second member for Vancouver–Point Grey (Mr. Perry), supported by — and I raise it to ask them the questions — the member for North Surrey and the member for Coquitlam-Moody (Mr. Rose), that we not have private ownership of property coming from the Crown but rather lease it, that we go to a leasehold society.

Mr. Speaker, I want to tell you that that is something we on this side of the House will resist to the last breath in our bodies. The people in this province are entitled to have that vision of their life where they may own their own home. They ought to know that there are people sitting in their Legislature who, under the guise of trying to create some levelling of the taxation impact, are prepared to recommend that we move to a leasehold society. They ought to be exposed for what they are. They want a society of tenants. That's fine. They like a tenant society and they believe in it. I am delighted to know that instead of going through this manipulative process of creat-

[ Page 6168 ]

ing wealth and talking about their funny little ideas of creating wealth, they're actually prepared to stand in the House and say what they really believe. From the socialist side we heard Jim Karpoff, the Member of Parliament, say recently that there should be a law in this country that would prevent people from owning houses until they are citizens. That is more socialist dogma that sprang out in the last little while, endorsed by members in this caucus across this aisle. I think we ought to flush that out, because it is an odious proposition, which this side does not support.

This morning we had visited upon us the proposition that there should be a real estate tax on up to 80 percent of the profits of real estate transactions. Immediately, out comes this proposition that we can.... You see, we'll never have to get to actually addressing what we mean by this tax, because we will use the code word "flip," and we will let everyone ascribe their own meaning and understanding to the word "flip." When the member who proposed that was asked simply to define the word "flip," he ducked, dodged and slithered under his chair, and said: "Well, I want to leave that to others." They want to go around and tell the world that they are going to tax flips, but not one of them on that side is prepared to stand up and define the word "flip."

What does it mean, Mr. Second Member for Vancouver–Point Grey? What is a flip? Define "flip." We've seen the kind of flop that has taken itself into this House, through the first member for Vancouver East (Mr. Williams) particularly, the man who singlehandedly destroyed the opportunity for that side to have a second term in government — the greatest socialist flop in the history of British Columbia, without question. Some call him a has-been; I tell you, he is a never-was-er.

To get back to the bill at hand, this piece of legislation provides an opportunity for this House to visit upon the municipal government a system of taxation, of assessment; an opportunity for them to deal with an issue that is very real to their community, and to deal with it in a way they think is best for their community. It allows us simply to enable them to do that, to provide the enabling legislation. That's all it's about.

It's reasonable legislation; it's legislation that is sensible. Perhaps the greatest benefit of all of this legislation is that it has exposed for all in this province to see, during the limited debate over the last number of minutes, some of the most radical, farreaching, far-fetched socialist ideas and dogmatic socialism we have seen in this House for a good long time.

I want to thank those members for coming forward and telling this House that they favour municipal income taxes; that they favour only allowing people who get Crown land that we're now disposing of to lease it, but never to buy it; and that they favour an 80 percent tax on the profits of real estate sales, which they euphemistically call flips but refuse absolutely to define. The second member for Vancouver–Point Grey said they were going to bring more severe government. The most odious proposition of all, emanating from their colleague and socialist soulmate, Jim Karpoff, is that we ought to outlaw the ownership of land except by those who are citizens, and that we should visit that upon all the people who have come here as landed immigrants, and others. It's bad stuff, but I am delighted that you on the other side have exposed yourselves so eloquently.

MR. CLARK: There must be an election coming very soon, to hear the speech of the last member. I'm counting the number of times he used the word "socialist." The Attorney-General is even calling the former Premier of Ontario, Bill Davis, a socialist. His was the only government in Canada ever to bring in a speculation tax, and it's the one on which we modelled our proposal.

I want to deal with the bill maybe in a more serious way than the last speaker....

MR. WILLIAMS: Or two.

MR. CLARK: Or two, I might say.

This is an insidious piece of legislation, because it undermines the integrity of the assessment system itself. It shifts the tax burden away from those who have benefited the most from the housing boom and onto those who have benefited the least. It proves once again that Robin Hood is alive and well; the problem is, he is working for the other side.

Taxes are a zero-sum game, to quote Lester Thurow, which simply means this: if the revenue from the city remains constant and you cut taxes on one group of taxpayers, you have to raise them somewhere else. It's a bit like a waterbed: if you push down on one corner, it pops up somewhere else. The problem with this bill is that by and large it's the most fortunate who receive the tax break, and the rest of the city pays the difference.

I would like to deal briefly with the integrity of the system. Politicians rightly get elected to play with taxes; to affect taxes; to shift the tax burden between sectors of the economy or within a sector of the economy. In many cases that's what we do in this place. That's what politicians are elected to do. In British Columbia we have seen a dramatic shift in the tax burden away from industry and corporations and onto individuals. Beyond that, in the first budget — particularly with this government — we saw a shift in the tax burden among individuals, away from the wealthiest and onto everybody else. It's the government's right to do that. They have every right to make decisions to shift the tax burden the way they want to, and they are held accountable for that. Our job is to hold them accountable, and we do that.

The problem, to extend that principle, is that if the city wishes to favour one group of taxpayers and make another pay more, then they should do that up front by asking for changes in the tax system. That was the inclination of the Minister of Municipal Affairs, and she brought in a bill, one which I wouldn't support for other reasons but which at least had the merit of making the city council accountable for a decision to cut taxes on those whose homes have

[ Page 6169 ]

risen dramatically and to raise them on those whose homes have not. That was the minister's initial proposal. But she backed off, in part because the city would have none of that, and because that gets to the root of the problem, which is that rather than making city council accountable for a political decision to favour one group against another, this does it through the back door by affecting the assessment or the true value of the property. The province has responded in this bill by capping the assessment system.

In 1974 we established an outstanding professional and neutral assessment system. I think the minister or someone else commented that it was refined in '76-77 and in many cases improved. It is on the basis of that neutral assessment system that taxes can be played with. Again, I say it is the role of politicians to affect the taxes. You don't do it by affecting the market value of a property; you do it by affecting the tax system. Prior to 1974 in British Columbia — and to this day in virtually every province in Canada — there were real problems with politicians intervening in and interfering with the market assessment of property. In many provinces you can see gross distortions in the value of the property because politicians have intervened and interfered. That's what we have gotten away from in British Columbia. In fact, next month there is an international conference in B.C. on the assessment system.

We have certainly the best assessment system in Canada, and probably the best in North America This bill undermines that neutral value-free system which we have established. It doesn't deal with what is city council's decision — and it's their right, as I said, to make that decision — to beneficially impact on one group of taxpayers versus another. It is not in our interests to go back to the way it was before '74 or to the way it is in other provinces.

The minister has improved the bill from that which Vancouver suggested, and they have done it in two ways: first, by capping only the land portion component; secondly, by having a sunset clause of one year. But anyone who thinks this is a one-year bill is dreaming. I think that goes to the heart of the problem. Once the precedent is set, how will the provincial government withstand the pressure next year — an election year — not to do it again? That's the kind of thing we're going to see now.

HON. MR. RICHMOND: Next year?

MR. CLARK: Next year or the year after. Take a note, Mr. House Leader; the spring of next year is the election, I think.

Nevertheless, the reality is that around British Columbia the pressure will be on the government to respond again to increases in assessed value of properties to benefit one group of taxpayers or another. It seems to me impossible for the government not to respond again to municipal pressure in the future That's why it's faulty to say this is a one-year bill.

[11:15]

Why are they doing this? Why is city council unanimous? That's a question I ask myself a bit more than normal these days. I'm tempted to say that council — the majority, at least — is pandering to their supporters. That may well be part of it. But there is a legitimate concern about those who are asset-rich and cash-poor. I understand that, and city council is trying to respond to it. But not that many people are asset-rich and cash-poor. The member for Kelowna can look at the numbers. Most of that small group of people are senior citizens. The government has responded to something which the New Democrats had suggested earlier. It's a positive move, and we'll see a bill before the House to reduce the age at which you can defer taxes to 60. People over 60 can defer their property taxes until they sell their homes.

The reality is that some people don't wish to choose that option, but that option is there and no one can say they will lose their home because of property taxation in British Columbia — at least if you're over 60 years old — after that bill is passed. We're not only dealing with the small group of people who are asset-rich and cash-poor; we are dealing with all those who are asset-rich and cash-poor and under 60 years of age. How many people are we dealing with? I don't know the numbers, and the numbers haven't been presented by the city of Vancouver or by the province. My intuition tells me it's probably half of the people who will benefit from the cap, if that.

I suggest that it is a very small number of people. What we have here is a bill that undermines the very integrity of the system in order to deal with a very small problem in the scheme of things for those who are under 60 years of age and who are asset-rich and cash-poor. I would have problems supporting any bill that gives alleviation of the tax burden on even those people because of the profits they see in terms of the value of their house. At least that would be dealing with the real problem out there and not tinkering with the system itself.

Even if such relief were proffered, it should be done in such a way as not to tinker with the integrity of the system but to play with taxes. Surely we could be more creative. The government can be more creative in dealing with this handful of problems than bringing in a bill such as this.

Many of my colleagues have discussed alternative approaches, and I think there are obviously many, the most important of which — in my view — is going back to annual assessments which would deal with the rapid increase in values. It would cushion that increase by going back to an annual assessment. Almost everybody has recommended that, Mr. Premier, and it should be followed.

Secondly, the homeowner grant could be increased. It is increased somewhat, and that deals partly with the problem. It doesn't increase it to the extent that it would have if it had been increased with inflation.

There are mechanisms — as we have suggested on this side of the House — to deal with the housing policy more effectively. Beyond that, there is another

[ Page 6170 ]

problem. The reason this problem has become so acute in Vancouver is the shifting of the tax burden by the province away from industry and commercial properties and onto residential properties. The centralization of that industrial and commercial tax base has meant that municipal taxes have risen far more rapidly than any other form of taxation, so the property tax component of one's tax bill in the city of Vancouver or elsewhere is dramatically higher. The pressure is more today than it has ever been before because of that shift in the tax burden away from industry.

Interjection.

MR. CLARK: It's not a question of hitting business, as the Premier suggested; it's a question of the tax burden on the industrial property taxpayer being the same as the taxpayer for residential property. If that were the case, residential property taxes would not be as high.

Beyond that, another shift has taken place in the last few years, a shift in the school tax system by the municipal taxpayer, the residential property taxpayer, paying a greater and greater proportion of the school tax bill. That kind of double whammy has meant that property taxes have gone up dramatically, and that has meant that with the shift in the valuation of property, some people will face a significant tax increase. That has caused the political problem that city council is responding to.

It's not acceptable for the government to respond to that kind of pressure by undermining the integrity of what is a provincial system. Had the minister responded in her initial way, I would have had many problems with it, but it would not have undermined the very foundation of our property tax system in British Columbia.

On that basis, it's a very poor bill. It's insidious because it does, through the back door, what the city council did not do through the front door, or what they refused to accept, which is to make up front that tax difference. It shifts the tax burden suddenly away from many constituents elsewhere in Vancouver, who have made enormous profits in terms of their housing value, onto those on the east side, my constituents in many cases, who have benefited the least from the housing boom. It's inequitable, unfair and insidious and it undermines the integrity of the assessment system itself.

MR. ROGERS: This bill, which is the square-peg for-the-round-hole bill, has really brought out some interesting debate this morning. I'm reminded of the situation we have when the ranching industry comes to Victoria to seek assistance from time to time from various forms of agriculture, and the only solution we have for them, if they aren't making any money, is for them to sell another piece of the ranch, so that eventually with that kind of cash flow from their equity base, they will be able to live properly.

My constituency contains people who are involved and will be involved with this particular bill. It contains people who are involved on both sides of the constituency, the east side and the west side, because Vancouver South, as some of you know, goes from Burnaby to the railway tracks on the Vancouver and Lulu Island Railway line, and therefore covers people on both sides of the economic spectrum.

Essentially, I am a believer in the Assessment Authority and the initial method of assessing properties as one of fairness. But I can't ignore the unanimous request of the Vancouver city council. I'm surprised that the members opposite are protesting so loudly about this bill, considering that it does come with the unanimous recommendation of the municipal council. Not all of the people on the municipal council are politically of the same stripe, and yet they have all seen the problem — and see it on a more practical basis.

We recently had a chance to chat with the head of the B.C. Assessment Authority, and we asked him about speculators. The Attorney-General (Hon. S.D. Smith) pointed out the fact that the opposition aren't terribly interested in defining what a flip is. But if you use the assumption that a property trades twice within one calendar year, or within a 365-day period, there are less than a thousand flips take place in Vancouver a year — considerably less than a thousand. So that tax, considering the total number of homes that exist in Vancouver, would appear to be a placebo from the point of view of saying: "We finally put a tax on it." But in fact it isn't the solution at all.

There are people who for reasons that are not sinister have bought a home and then are transferred or for another reason have to move, and therefore do have to sell their house quickly, within a one-year period. And what are we going to have — some adjudication court that decides whether or not they were actually speculating in real estate or whether they got transferred to Toronto or some other place that made them go?

The other thing I'd like to speak about is that this capping privilege we give the Vancouver city council does not necessarily mean that there will be an increase in taxes on those people whose homes are not caught in this spiralling real estate market. If the city council manages their own funds well enough, even given the cap, there should be no necessity to have an increase in taxes on those people at the lower end. There need not be quite as much increase on those people whose properties have gone up quite so high.

I have one particular constituent whom I visited, whose home is worth nothing and whose property is worth everything, according to the real estate industry. She is a widow and lives reasonably close to Pearson Hospital. She has a paraplegic son who comes to visit, and the house has been modified to accept his wheelchair. Well, her house has gone up in value; it doubled in the last year. Her circumstances: she has absolutely no interest whatsoever in selling; she would never be able to find another piece of property close to where her son is in hospital that could be modified and acceptable within a reasonable price range. Something has to be done for people like

[ Page 6171 ]

this, people whose taxes now exceed the mortgage payments.

When people bought a home, we used to be able to look at the cost of principal, interest and taxes. On that basis alone, in some of the cases in Vancouver, as people's mortgages come closer to being paid off, the tax portion of their monthly payment exceeds the portion that they're actually paying for the mortgage on their home.

We have some distorted figures we could table, and perhaps later in committee stage there will be some tabled examples of gross distortions which have caused the Vancouver city council to request this. It is something that they are going to have to deal with.

The member for Vancouver East who has already spoken brought up a point which concerns me and I think will concern other members. It's one of the reasons I am delighted this is just a one-year bill. I believe that the brownstoning effect will take place in Vancouver East. I believe that you will see the same kind of real estate speculation happening on the east side of the city within two years. It's happening now around the Commercial Drive area. There are people moving in who would normally have affluence which would have said to them, "I won't want to live in this particular neighbourhood," but because of other congestions and because, in fact, it's a very nice place to live, you're going to see the property values in the east side of Vancouver rise. Its proximity to the commercial centre and downtown makes it a desirable place to live and a place where more and more young people will find it acceptable to want to make major investments.

In the past we've always had the assumption that people who lived in Vancouver East or on the east side of town were there because of economic circumstances, not because of desire. But that's quite possible. It's happened in New York; it's happened in other cities: all of a sudden....

Interjection.

MR. ROGERS: Oh, I know, but he lives there out of a sense of duty. When Alex Macdonald was the member for Vancouver East, he lived in Point Grey and he could have had the junior Scott Wallace representing him. Things have changed now. Anyhow, the ghost of Scott Wallace, I think, is going to be around to haunt this House for some time, by the looks of what I've heard from this member already.

I believe that the shift is going to happen all across the city, and I think one year is fine for a ceiling on this. The distortion and the reflection on the market now is such that people are going to say: "Let's make decisions that are going to change the values on the east side." One of the reasons is that the time of commuting for those people who used to prefer to go to the suburbs is becoming more and more absurd and difficult. So I think you will see the values change back again.

Of course, one of the things Vancouver city council could do if they were really concerned about this whole matter is be a little more diligent in their expenditure side and perhaps generally reduce the amount of money they wish to take out of all of the homes in the city by being somewhat less profligate.

Anyway, the minister said she will be reluctantly supporting the bill, and I will be reluctantly supporting it, knowing that some of the people involved will benefit from it.

MR. WILLIAMS: We heard a minor contest on the other side this morning. We saw the real contest over there between the Attorney-General and the Premier. Mr. Premier, you don't have any problem at all. My reading is: you six, Bud three, and I think I was being generous to Bud, I really do. I think you look more secure than ever today. The stars are right in the heavens.

Interjections.

MR. WILLIAMS: You're as ready as you're ever going to be.

I'm going to partly use my economic interests and follow the other member for Vancouver East (Mr. Clark) on that, so you'll find that a little dull. But we'll get down to the politics of it in a few minutes, so hang in there.

The economists use a term called incidence — i-n-c-i-d-e-n-c-e, which is really who pays, who loses.

HON. MR. RICHMOND: Is this the word of the day?

MR. WILLIAMS: That's right. And on this one, the east side pays and the east side loses in terms of the city of Vancouver. The property values have gone up on the west side, where you can sell and make a fortune. The tax bill is not going to go up under your terms — or modestly under your terms. It means the incidence is unfair in economic terms.

They've made it on the west side in the land lottery — it's a land lottery in many ways. It maybe made $200,000 to $300,000 in the last year in terms of value that's there, real numbers that are there. They are going to face a modest property tax relative to those gains. The people on the east side pay the bills.

[11:30]

You folks over there — markets, markets, markets. What assessments are supposed to reflect our markets? You guys are supposed to be the ones that understand what markets are all about. They adjust. If there is a limited supply, prices go up. If there's increased demand with that limited supply, prices go up further. If supply increases, prices go down. The market, folks, is adjusting. Just even today, it's adjusting.

Did you know there were 4,000 units for sale on the west side of town a couple of months ago? Demand was high. Now there are 8,000 units for sale on the west side of town, and demand may be slackening. The market right now in the last month has gone through a significant period of adjustment. You folks are supposed to be the ones that understand markets, but I don't think you do. The market is ad-

[ Page 6172 ]

justing, and the assessments will adjust with the market as that happens.

The west side real estate paper that gets dropped on west side doorsteps free.... You know, the real estate news that gets distributed in Surrey or wherever, and has pictures of all of the houses for sale. On the west side of town two months ago it was this thick. Two months later it has doubled in size, with a front edition and a back edition; it's double the width — 4,000 units to 8,000 units. That is the pattern of markets adjusting, and prices are moving down already on the west side of town as a result of that adjustment.

You folks are supposed to be the business folks who understand what markets are about, and here you are intervening and tinkering away. The true-blue Tories from Oak Bay should understand what this tinkering is doing. It's not consistent with your true colours. The new Attorney-General can say all he likes and give his line about the terrible socialists over here, but he's a secret one himself. He's tinkering away with the market system. He's a secret socialist, that member for Kamloops — watch out!

You are overreacting, and the reality is that the markets moved up there so fast because of your lack of planning, as the other member for Vancouver–Point Grey said, and the lack of any integrated vision of how to deal with the great city of Vancouver and that region. Your one vision of a SkyTrain station in Whalley is reasonable, Madam Minister, but I don't know if you are going to work it out with the politicians over there.

There's a lack of planning; there really is. We used to have a lower mainland regional planning board — we don't have one now. We have several regions there now that used to have a plan that they were working to; we don't really have that now. The planning function is not firmly established.

You've been busy selling off your lands: the Westwood lands, the Expo lands. You could have been using that land to have an impact on markets in a reasonable manner rather than a stop-and-go manner. There is no rental housing to speak of, so you are having your own impact.

Historically, since the seventies, we've had the best assessment system in North America. They come here from all over the world to look at our Assessment Authority. It's good because it reflects markets; it's honest, it's neutral, and it reflects markets.

I was in California recently. They have an assessment system that relates to what the price of the house was when you bought it, and if you never move, that's what your assessment is. The guy that moves next door and paid ten times what you paid has his assessment based on ten times what his neighbour paid. That's what happens when you start fooling around in these systems and tinkering with them. It's rather ironic.

The intellectual giant to the right of the Premier, who has now abandoned his seat, says these people are talking about a leasehold society; they're against private property. W.A.C. Bennett used to have a phrase for giants like that. He'd just say: "Twist, twist, twist! That's all you're doing: twisting the facts." He tried to pedal some of that twisted argument in Point Grey, and it didn't work out very well. Even though the Premier didn't bother them in Point Grey, to speak of, the Attorney-General (Hon. S.D. Smith) tried, and it didn't work out very well.,

The Attorney-General says he'd like a definition of "flip."

HON. MR. VANDER ZALM: Yes.

MR. WILLIAMS: Yes. How about some B.C. Enterprise land sales you've been involved in that have flipped within a month? Would that be a flip? Where they made say, $1 million, $2 million, $3 million, $4 million, $5 million, $6 million, $7 million, $8 million on the flip — would that be a flip, Mr. Premier? You bet; that's a giant flip, and one that I think is disgusting. That's a giant flip for which all of you should be ashamed. We'll get into that later.

The great irony of this debate is simple. We think there's a neutral, honest system out there that's been in place in terms of measuring value, and then you tax relative to value. Ironically — you may not understand it — that's a fairly conservative position. Your position is one of intervening. Hey, the tables are turning: you're the interventionists, and it's no wonder. The Premier in bed with Harry Rankin, wanting to intervene in the marketplace: that's what's going on now for all to see. The real interventionist is over there in the Premier's chair, and he agrees with Harry Rankin 100 percent. There's the real story today. In normal circumstances you'd suggest Mr. Rankin was confused when it comes to economics, but you agree with him today. Isn't that cause to reflect, Mr. Premier?

HON. MR. VANDER ZALM: Do you support the municipal income tax?

MR. WILLIAMS: I think a reasonable property tax is a reasonable idea at the municipal level, and 99 percent of my colleagues do as well.

There you are. The real interventionists who are fouling up the marketplace are over on the other side of the Legislature and haven't quite got it all sorted out. They're doing a knee-jerk reaction to a problem that to a great extent is a result of their own lack of planning and activity. We don't have any trouble voting against this legislation, especially after hearing the speech from the Attorney-General.

MR. BARNES: I really don't know if there's much hope on this side of the House to bring this government to any sense of honesty and sincerity, but I wanted to get involved in a debate....

HON. MR. RICHMOND: On a point of order, Mr. Speaker. I think the member for Vancouver Centre should reflect upon his opening remarks and use of the word "honesty." I'm sure that he didn't mean to say that everyone on this side of the House is dishonest.

[ Page 6173 ]

MR. BARNES: I'm sorry. I withdraw any remarks that may have been offensive. But I'm having difficulty discerning where the government's genuineness is, where its sincerity is to try and address a serious social problem. We get a little flippant in here at times and say things that perhaps are a little vexatious and unfair, but fairness is what we're talking about.

I've listened very carefully to the debate this morning. This is a very crucial action being taken on the part of the government. They've always talked about free enterprise as though it were a domain that should never be tinkered with by anyone, especially government. Now we find that the government has found it necessary to come to the aid of the mayor of the city of Vancouver and its council. I'm really quite confused about just what the government's motives are. The Premier this morning said that if a council or local government made a request with the support of all parties — which is the case in the city of Vancouver — why shouldn't it respond? Some of our members have reminded the Premier and the government that they didn't seem to take that view with respect to the 18 mayors who are opposing the pipeline route which would put the Coquitlam watershed at risk That's a different situation.

Even after two plebiscites in the city of Vancouver to determine whether or not the voters wanted a ward system, it's curious that the government did not respond in the same way to the request of the local government. They no longer are asking for a ward system. I guess they have finally given up. But we all remember the government's response.

HON. MRS. JOHNSTON: We gave it to them.

MR. BARNES: Madam Member, I'm talking about the Premier when he was the Minister of Municipal Affairs saying that he could not respond. Remember that debate? What was his excuse at the time? Not enough — 51 percent should be good enough in a democracy. He said we would have to have a high number. I'm talking about how you change depending upon the political situation. What I'm saying is that you're not consistent; it depends on the politics.

Mr. Premier, let's be fair. You are not concerned about fairness. You are concerned about a political problem that your friend has. That's why you are doing what you are doing. That's why it's going to be a problem next year and the year after. We know that if you are so concerned about government being at arm's length from getting involved in local politics, why are you even concerning yourself with this issue? Why don't you just say: "Look, it's too bad; this is tough. This is free enterprise; this is the marketplace. We simply cannot get involved." That's the fair thing to do. We know you have a tough political problem.

But you are getting involved. All of the people in this House can understand the political problem you have. That's why we have been addressing it the way we have been. That's why the members for Vancouver–Point Grey have said that some of our people are not going to be happy with the position we are taking. We know that there is a political equation here.

Let's be consistent. Let's give a clear message to the voters in terms of what the government can do and what government can't do.

You don't have to be an expert to see what's happening in the city of Vancouver with respect to property values. Clearly the free enterprise system is not working that well, because all of a sudden the free enterprisers have decided to develop a social conscience, a conscience of compassion. They want to help those guys out because they are making too much money and yet they can't afford the money they are making or their property values. So you are going to cap their taxes; that's what you are doing.

The Attorney-General scoffed at the opposition members for trying to protect the rights of tenants and even went so far as to say: "What you're going to do is turn this into a society of tenants — no property rights, no ownership." He thought that was great theatre this morning, but the fact is that there are a lot of tenants in this province as a result of lack of housing and lack of opportunity to purchase housing. More and more tenants are going to be in this province, and if that's the attitude of the government, I think the message is quite clear.

We've talked about problems, for instance, of people living in the downtown east side and in the west end who have been victims of speculators, who have been at risk as far as their residences are concerned, who do not have the protection of tenure because there is no tribunal where they can afford to go and make their case to protect themselves from unscrupulous landlords.

[11:45]

That's the kind of thing that we don't understand. Why hasn't the government intervened on behalf of tenants in apartment buildings? Instead of intervening on their behalf, you eliminated the few options they did have to try and protect themselves. You removed the rentalsman office. You said that the government should not intervene with respect to the marketplace and there should be no rent controls, no rent reviews, no kind of consideration whatsoever for tenants. Yet you have the gall to bring in Bill 17, suggesting that those people who own property that has escalated in value with time to 200 and 300 percent should be protected, because they can't afford to pay their taxes. It's total hypocrisy.

I think that we're seeing a tidal wave situation, Mr. Speaker. There is far more significance to what is happening in the city of Vancouver than some of us are recognizing or prepared to realize. It may be the west side now, but some of the members have alluded to the fact that it's a ripple effect. There is no question that property values will continue to go up. There is no question that people want to live in the city of Vancouver and in this province. It has been well established that this is the place where everybody wants to come. The closer we get to the magic year of 1997, the more and more people become hyped up about the dangers of socialism, which is what this

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government seems to think it is doing in its cute politics. In effect, what it is doing is telling everybody to come to B.C., that B.C. is for sale. "We are going to make sure that you're not going to be interfered with in any way."

HON. MR. VANDER ZALM: We don't want socialism

MR. BARNES: Listen, Mr. Premier, I can assure you that it may be the west end of Vancouver today, but it will be downtown and the east end tomorrow. These property values will continue to go up. More and more people will be displaced. There will be fewer opportunities for families to find homes. They cannot afford it even now, and it's not going to get any better.

You are not being responsible. You are playing cheap, makeshift politics to help a friend out in the city of Vancouver. That is fine. Over the long haul you will find....

Interjections.

HON. MRS. JOHNSTON: What a rubbish statement!

MR. BARNES: Fine. When you close the debate, you can say that it's rubbish.

HON. MR. VANDER ZALM: Name names.

MR. BARNES: I'm not very good at crystal-balling.

Interjections.

MR. BARNES: Mr. Speaker, who is speaking in this House? It seems to me that those members can't wait to get on their feet.

HON. MR. VANDER ZALM: Name names.

MR. SPEAKER: Order, please. The member will complete his speech.

MR. BARNES: Okay, give me a list of names, and I'll pick a couple. Who shall we start off with, the former Minister of Municipal Affairs, back in the mid-1970s? Would that have been you?

HON MRS. JOHNSTON: Who's the friend we're helping?

HON. MR. VANDER ZALM: Who's the friend?

MR. SPEAKER: Order, please.

MR. BARNES: What are you so upset about?

Interjections.

MR. BARNES: I'm trying to find out what the Minister of Municipal Affairs is so upset about. All I'm doing is suggesting that we have a situation we've only begun to grasp. This is a serious problem. The housing situation is very, very serious.

HON. MRS. JOHNSTON: Yes, it is.

MR. BARNES: Working people can no longer afford to even hope to buy a home. You know it is going to get worse. You know that property values will continue to go up. Real estate sales have never been better. You know that people are speculating in the housing field. What is going to happen? What are you doing about that? Not a thing, and you say you can't do anything. I'm amazed that you are getting involved in this issue today. That is a contradiction. Why are you doing this in a free enterprise system? How can you justify going in and helping out the people whose property values are going up? Those are the ones you should be leaving to themselves. That is free enterprise. They are making money, and you are trying to help them. It doesn't make any sense to me. I'm not an economist, but it seems to me that you are helping the wrong people. That is all I've got to say.

MR. B.R. SMITH: It's highly amusing, Mr. Speaker, to hear this debate. What we really are hearing opposite are the unregenerate reactionaries of the marketplace over on the other side. We really have eighteenth-century liberalism enshrined. Ricardo looks like a modern up-to-date economist, to listen to these people. I'm absolutely dumbfounded with what I hear. They don't want any intervention whatsoever in the pure marketplace.

The first member for Vancouver East is now a pure-market theorist, a protector of the pure market. I don't quite remember him that way, Mr. Speaker, when he was in office. I seem to remember a little bit of interventionism in those days. But he's going to have — as the member for Vancouver South said, the east end of Vancouver is becoming more and more desirable as a real estate investment — a yuppie constituency very shortly, not one that's going to be likely to return him with bountiful ballots in the decade ahead. His whole constituency is going to change. It's going to be yuppie-land. It's going to be, full of stockbrokers and entrepreneurs who are going to come in here from around the world. That's going to be his constituency. I can see the member for Vancouver Centre chuckling away there. Some of his pals are the ones who have phoned for this bill. I saw Alex Macdonald out there in the corridor. He wants it; he's all in favour of it.

Interjections.

MR. B.R. SMITH: Sure he is; that large house of his; of course he is. Come on, now!

We're really having some fun here today. We've got people putting on opposite philosophical hats.

All we're doing in this bill, as I see it, is putting a mechanism in the hands of local government for a period of one year only, to put an emergency cap on to deal with a huge increase in real estate that has taken place within the past year. I don't see that as

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terribly radical. I don't see that as rabid market interventionism. If it is interventionism, then I happen to be very proud of some of the intervention that has taken place in the past, with homeowners' grants and with special provisions in 1982 to help for mortgage increases and to help provide subsidization for that. I think those kinds of intervention are good, Mr. Speaker. On this side of the House our eye has always been on people and not on doctrine and ideology. Our eye has always been on people, and that is what this legislation is aimed at. So let's stop the twaddle and the eighteenth-century liberalism that we're hearing from the other side, and let's see what they would do for the wide disparities that have been created in property increases in the past year. The marketplace will level off. It has in Toronto; property values in Toronto are going down. This is a one-year cap to help people who, through no fault of their own, happen to live next to somebody who sold two or three times, and find that their assessment has almost doubled in one year. Why should they be victimized by an absolutely pure, and assessment system that's going to put their taxes up another 40 percent? Those people opposite talk about the purity of the tax system and the assessment system. It was always there to take into account people, not just economists, actuaries and purists. I support the bill, Mr. Speaker.

HON. MR. RICHMOND: Mr. Speaker, the debate on this little bill has really caused some scintillating speeches this morning. Some of them have been fairly relevant; some of them haven't. I'm looking forward to hearing more this afternoon, and I move adjournment of this debate till later today.

Motion approved.

Hon. Mr. Richmond moved adjournment of the House.

Motion approved.

The House adjourned at 11:53 a.m.