[ Page 7147 ]

CONTENTS

Routine Proceedings

Oral Questions

Knight Street pub investigation. Mr. Harcourt –– 7147

Pit bull attack. Mr. Davidson –– 7149

Sale of Westwood land. Mr. Williams –– 7149

Dumping of dredged material on Westwood Plateau land. Hon. Mr. Dirks replies –– 7149

Property Purchase Tax Amendment Act, 1989 (Bill 10). Committee stage.

(Hon. Mr. Couvelier) –– 7150

Mr. Clark

Mr. Rose

Mr. Blencoe

Third reading

Public Trustee Amendment Act, 1989 (Bill 11). Committee stage.

(Hon. Mr. Couvelier) –– 7156

Mr. Clark

Third reading

Social Service Tax Amendment Act, 1989 (Bill 12). Committee stage.

(Hon. Mr. Couvelier) –– 7156

Mr. Clark

Mr. Darcy

Third reading

Tobacco Tax Amendment Act, 1989 (Bill 13). Committee stage.

(Hon. Mr. Couvelier) –– 7161

Mr. Clark

Third reading

Royal assent to bills –– 7161

Workers Compensation Amendment Act, 1989 (Bill 27). Second reading

Hon. L. Hanson –– 7162

Mr. Gabelmann –– 7163

Hon. L. Hanson –– 7164

Committee of Supply: Ministry of Agriculture and Fisheries estimates.

(Hon. Mr. Savage)

On vote 8: minister's office –– 7164

Hon. Mr. Savage

Mr. Barlee

Mr. Loenen

Mr. Rose

Mrs. Gran

The House met at 2:06 p.m.

HON. MR. DUECK: June is St. John Ambulance Month in British Columbia. St. John Ambulance, a charitable non-profit organization, has provided first aid and health care to British Columbians for 80 years. St. John Ambulance has provided over 100,000 hours of unpaid public duty to our citizens, has developed modern programs of first aid and health care to meet the changing needs of British Columbians and has proved that safety-oriented first aid reduces the incidence of accidents by as much as 30 percent.

In the members' gallery today, from this fine organization, we have Mr. David Johnston, president of the St. John Council of British Columbia. Mr. Johnston is accompanied by Mrs. Yvonne Coveney-Boyd, Brig.-Gen. Michael Heppell, Lt.-Col. Maurice Harries and Mr. Gregory Welsh. Would this House please give them a warm welcome.

HON. S. HAGEN: It is with a great deal of pleasure today that I introduce to the House some very close friends from my riding of Comox: Marg Grant; Gordon Grant; Laurel Grant, who is graduating tomorrow from the University of Victoria; Shelley Grant; and Marnie Grant. Visiting with them is a cousin from Great Britain, Clive Shrubsole, and also a sister of Marg's, Wendy Hoekstra. Would the House please join me in bidding them a warm welcome.

I would also like to take this opportunity to introduce to the House Mrs. Norma Balik and Mr. Maurice Cloutier, who are visitors in our gallery today. Mrs. Balik is an ardent follower of politics in Ontario, and I'm sure she'll be very impressed with the fine behaviour of the members today. Please make them welcome.

MRS. BOONE: In the gallery today are two unique people. I say they're unique because these people actually read Hansard. One of them is a constituent from Delta and a good friend; the other one is also a constituent from Delta but a very good friend, and that's my mother, Anne Chudley — and her friend Don Anderson. Please bid them welcome.

HON. MR. DIRKS: Mr. Speaker, in your gallery today, visiting from the great constituency of Nelson Creston, is the administrator of the Regional District of Central Kootenay, Mr. Reid Henderson, his wife Linda and sons Todd and Gregory. Would the House please make them welcome.

MR. HARCOURT: I'm going to introduce two citizens from the riding of the Premier and the second member for Richmond (Mr. Loenen), and I think you'll understand in a minute why I'm doing this. I would like members of the Legislature to welcome a strong activist in the United Church who believes in the social gospel and practises what she preaches, and also one of the finer salesmen in this province: my mother and father, Frank and Stella Harcourt, who are in the Speaker's gallery.

HON. MR. PARKER: In the gallery today is the North Coast region representative to the British Columbia Youth Advisory Council and a citizen of Terrace, Nadina Shaffer. Would the House please make her welcome.

MS. PULLINGER: Monsieur le Président, à la part de tous mes collègues, et spécialement le premier membre de Nanaimo (Mr. Lovick) et moi, il me fait grand plaisir d'accueillir dans cette assemblée aujourd'hui le directeur exécutif de l'Association des Francophones de Nanaimo, Anne-Marie Dryden, et le directeur juste passé, Joel Prévost.

What I've just said, for those of you who don't understand French, is: on behalf of all my colleagues, and especially the first member for Nanaimo and myself, it gives me great pleasure to welcome to the House the executive director and the recently retired director of l'Association des Francophones de Nanaimo. Would the House please help me make them welcome.

HON. J. JANSEN: In the gallery today are 23 grade 9 students from Timothy Christian School in Chilliwack, together with their teachers, Mr. Theo Van de Weg, Mr. Maljaars and Mr. Stam. Among the students is my daughter Theresa. Would you please make them welcome today.

Oral Questions

KNIGHT STREET PUB INVESTIGATION

MR. HARCOURT: I have a question for the Minister of Labour and Consumer Services. Last week in this House the minister said he knew his public official lied to cover up political interference by the Premier's office. The minister also said in this House that he didn't see it as his ministerial responsibility to expose the lie. For the record, how would the minister characterize his failure to correct the public record when this official lied?

HON. L. HANSON: That's interesting. First of all, I would suggest that the Leader of the Opposition go back and read Hansard again. There wasn't any discussion from my place that there was a cover-up.

In the past few days, this issue has been addressed so thoroughly in the Legislature that it almost becomes a dull subject. The matter has been fully dealt with by the ombudsman's report. I guess a historical subject would be a better description of it. There's been a police investigation of some six months or in excess of that. The courts have dealt with the issue; the ombudsman has dealt with the issue; Crown counsel has dealt with the issue. The story is going on two years in age, Mr. Speaker. I would suggest that the member go back and read the record. It's all there.

[2:15]

[ Page 7148 ]

MR. HARCOURT: Mr. Speaker, indeed the record is there. It's there last week actually, which is why this matter is back before us. The minister said: "As I said earlier, the knowledge that I had was different than an answer that was given there. I guess that would equate to lying." Why did the minister not expose the truth last year and only admit that he knew Mr. Hick lied when questioned by the opposition in this House last week?

Interjection. [Laughter.]

MR. SPEAKER: Order, please.

MR. HARCOURT: Mr. Speaker, the government seems to think that this is a funny matter. They seem to think that it's no big deal. We happen to think that it's a very important matter, so I will put the question again to the minister: why did the minister not expose the truth last year and why did he only admit he knew that Mr. Hick lied when he was questioned by the opposition in this House last week? Why didn't you expose it last year, Mr. Minister?

Interjections.

MR. HARCOURT: Mr. Speaker, when the RCMP investigated this matter last year, did the minister step forward to reveal to the police that he knew his public official had lied about the political interference by the Premier's office?

HON. L. HANSON: Mr. Speaker, apparently the opposition is getting old and tired, because they keep bringing up questions from the past. I'll repeat this, and I'll continue to repeat it: the matter has been carefully scrutinized by the ombudsman, by a six-month police investigation, by the courts and by Crown counsel. Matters were discovered as a result of those; steps were taken. I'd point out to the members opposite that this is question period, not a history lesson.

MR. HARCOURT: Mr. Speaker, we have read those reports that the government made available to the public. I'll repeat the question: did the minister step forward and reveal to the police that he knew his public official had lied about political interference by the Premier's office? Yes or no.

HON. L. HANSON: Again, I have addressed this issue many times and very thoroughly in the House The matter has been dealt with by the ombudsman, by the police, by the courts. The story is almost two years old. There's simply nothing left to say.

MR. SPEAKER: By the opposition leader's own admission in the last question, he was repeating the same question. Before the Leader of the Opposition asks his next question, I would like to quote from section 9, page 327, of Erskine May:

"Questions already answered. Questions are not in order which renew or repeat in substance questions already answered or to which an answer has been refused in the current session or fall within that class of question which a minister has refused to answer. A question fully answered, whether orally or in print, cannot be renewed, nor can a question which one minister has refused to answer be addressed to another minister."

If the Leader of the Opposition has a new question, it would be in order.

MR. HARCOURT: Yesterday the minister was asked if Mr. Lee Doney, who conducted the internal investigation, had knowledge prior to writing his report of the phone call between Mr. Poole and Mr. Hick. The minister took the question on notice. Can the minister now tell the House whether Mr. Doney knew about the call before or after he wrote the report?

HON. L. HANSON: Mr. Speaker, I took that question on notice, and I believe it's out of order today.

MR. HARCOURT: The minister has said he knew about the phone call between Mr. Poole and Mr. Hick when Mr. Doney was preparing his report. Why didn't the minister advise his deputy about this phone call?

HON. L. HANSON: Well, Mr. Speaker, I guess this must make the 110th time I've said this and told the member opposite that the issue has been addressed here in the Legislature very thoroughly. There has been an ombudsman's report and a police investigation, the courts have looked at it, and the Crown counsel has looked at it. We took the appropriate action. The story is simply history.

MR. HARCOURT: This is the first opportunity for this Legislature to deal with the matter, whatever these investigations. If the minister wants to talk about history, we happen to think this Legislature is a very important place for these questions to be asked. This is the first opportunity we've had, Mr. Speaker.

Last week in this House the minister said he might have been asked some questions about the Knight Street Pub by the Premier prior to the internal investigation. When the Crown counsel was further investigating this matter last year concerning political influence, did the minister offer Crown counsel information about the questions from the Premier?

HON. L. HANSON: Mr. Speaker, one more time: the police, the ombudsman, the Crown counsel, everyone has done a thorough investigation into the whole thing. Any part of the investigation of any of those agencies that I referred to I'm sure that the member of the opposition may want to ask them some questions. But again, Mr. Speaker, this is history.

MR. HARCOURT: Does the minister think waiting a year to correct the public record is in keeping with his ministerial responsibility?

[ Page 7149 ]

HON. L. HANSON: Mr. Speaker, I don't know, but I think I said 110; I guess this must be 111. The matter has been dealt with in a number of reports by a number of agencies that I'm sure the Leader of the Opposition would not impugn. The story and the questions that he is asking have all been very well addressed in this House, and it's history. Read the reports.

MR. HARCOURT: The minister knows that his actions were not in keeping with the parliamentary traditions of ministerial responsibility. Will the minister do the right thing and resign today?

PIT BULL ATTACK

MR. DAVIDSON: My question is to my colleague the first member for Delta and the Minister of Agriculture and Fisheries (Hon. Mr. Savage). Yesterday a pit bull animal, apparently in an unprovoked attack, caused a young lady some very serious damage and maybe for the rest of her life. When the officials went to put down the animal, they were told that the dog could not be destroyed because it could not be located. The owners apparently had moved the dog to another location. My question to the minister is this: what steps has he taken — or have his officials taken — to ensure that this animal is located and put down, and that those responsible will be dealt with in the appropriate place?

HON. MR. SAVAGE: To my hon. colleague, the issue of pit bulls falls partly within the SPCA — which is administered by our ministry — and the Livestock Act of the Ministry of Agriculture and Fisheries. The issue is unfortunate; let me first recognize that. Looking over the police report, I do not like what I read. But we have been following up with this very closely.

The issue of whether the dog can be certified as being killed remains questionable. We have done a bit of research. We know the dog has been moved, as the hon. member asserts. We need to have assertion by the family to ensure that the dog is destroyed, and that they approach through the proper procedures: that is, for the family to launch a complaint asking for a judgment from the courts that the dog be destroyed.

Through discussions with our ministry, the complainant and also the Delta police that ensure to our satisfaction it should be made public, we will encourage that this dog, in fact, be destroyed. I guarantee you we will follow up on that.

SALE OF WESTWOOD LAND

MR. WILLIAMS: To the Minister Responsible for Crown Lands with respect to the Westwood land deal. Were there not indeed offers that would have given a base guarantee plus a share of the profits?

HON. MR. DIRKS: I'm rather amused by this question, because I keep getting mixed messages as to what we really should or shouldn't have done. In watching the news over the last few days, I certainly understand the good NDP councillors on city council in Vancouver opposing social housing. I listened to the Leader of the Opposition the other day on the Rafe Mair show, and he said he'd settle all the social housing and housing needs in the lower mainland simply by letting developers go in and develop land. Now I hear questions being thrown at us about the disposition of the Westwood Plateau. There are some mixed messages over there.

MR. WILLIAMS: To the Minister of Crown Lands again. I can understand him wanting to fog up the issue, because he has not levelled with the people of British Columbia about the offers he did get on the Westwood Plateau.

Would the minister confirm that he received an offer from Westwood Plateau Development Corp. comprised of Ira Young of the Praxis Group, who developed the Coquitlam Centre, and Nelson Skalbania of N.M. Skalbania Ltd.? Would he deny that the offer included fifty-fifty profit-sharing and a base amount and would, in fact, if they had read it correctly, have a current value that was very substantial indeed?

HON. MR. DIRKS: I am glad that this is not going to cost the taxpayers $20,000 to investigate. We did receive many offers, we looked at them very closely, and we accepted the best possible offer not only for this province but for the city of Coquitlam and for the local developers who will develop that property

[2:30]

DUMPING OF DREDGED MATERIAL
ON WESTWOOD PLATEAU LAND

HON. MR. DIRKS: I would like to reply to a question that I took on notice yesterday. I'd like to set the record straight on the fill at Westwood Plateau. An isolated 17-acre portion of the Westwood Plateau was excavated as a result of gravel-mining activities over the past ten to 15 years. Material was placed on the area by the operator to address reclamation requirements later on.

The origin of the fill material is not known. However, precautionary testing has been done to confirm its composition. One of the five test holes showed evidence of material believed to be asphalt. We have made an extensive review of our records and find no evidence that the material originated from False Creek. In fact, material dredged from the creek was either redistributed on the site or within the creek, or, in the case of contaminated material, deep-ocean dumped under permit. Only construction debris such as broken concrete, asphalt and similar material was removed to landfills. In any case, the Ministry of Environment is fully aware of this situation, and we will be working with them to further determine the exact nature of the fill.

In terms of responsibility, we have made it absolutely clear on previous occasions that this govern-

[ Page 7150 ]

ment takes its environmental responsibilities very seriously, and as owners of the site during the period when the fill was placed, the province would, of course, assume complete responsibility for a thorough investigation and remedial action if necessary. Furthermore, we are now investigating how this material came to be placed on the site, and if it was the result of unauthorized dumping, we will move to recover any reclamation costs from the responsible parties.

It is worth pointing out, however, that at this stage there is no evidence of a major problem. The fill is very localized and in an area removed from the main body of the Westwood site. As indicated, preliminary testing shows only a limited area of what is likely asphalt. We will have better information when further testing is completed. However, I repeat, we will be taking whatever corrective action may be required to correct any problem that may exist.

This isolated 17-acre portion of the Westwood site will remain under the control of BCEC until the Ministry of Environment is satisfied that it meets provincial standards.

Orders of the Day

HON. S. HAGEN: I call committee on Bill 10, Mr. Speaker.

PROPERTY PURCHASE TAX
AMENDMENT ACT, 1989

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

On section 1.

HON. MR. COUVELIER: Mr. Chairman, I move the amendment to section 1 standing under my name on the order paper.

[Section L (a), in the proposed definition of "related individual" by deleting ", where the related individual is a citizen or a permanent resident of Canada".]

Amendment approved.

On section 1 as amended.

MR. CLARK: This section deals with expanding and defining a taxable transaction. In so doing, I would like to move an amendment to section 1 which I will read now, if I may.

"...to include paragraph (d) which adds paragraph (f) to the definition of 'taxable transaction': (f) that involves the sale of controlling interest in a corporation, other than a family farm corporation holding an interest in land," to a purchaser.

MR. CHAIRMAN: While we're examining this amendment for a moment, the second member for Dewdney has asked leave to make an introduction Shall leave be granted?

Leave granted.

MR. JACOBSEN: This afternoon we have 50 grade 7 students visiting us from Hatzic Elementary School with their teacher Mr. Toth. There are also some adults accompanying the group. On behalf of the first member for Dewdney (Mr. Pelton) and myself, I would like the House to give them a warm welcome.

MR. CHAIRMAN: While the Clerks are examining the amendment, perhaps the second member for Vancouver East would continue.

MR. CLARK: Mr. Chairman, essentially this amendment deals with a loophole that exists in the act. As many members know and appreciate now, the property purchase tax is a new and rather dramatic tax generated by the sale of personal property, which raises a lot of revenue for the Crown. But if a corporation sells shares in a company, that is quite easily designed to escape taxation.

So you form a company; the company buys a property. Taxes have to be paid, but then instead of selling the property, you simply sell shares in the company. That way you escape taxation. Many millions of dollars have escaped in that way, especially in downtown Vancouver. It's a technical question, and I will be the first to admit that this amendment is an attempt to come to grips with that problem.

There are other ways of doing it. I've talked to several accountants, for example, who suggest an alternative way that doesn't exist in this amendment. The alternative is that when a corporation files corporate income tax, they have to list their assets and the change of assets every year. It would be possible therefore to say that upon a change in assets — a change to lands — that a tax would then be paid annually and collected as part of the corporate income tax regime.

As I say, there are two ways of doing it. The way that I propose essentially requires that a corporation whose shares that impact on land change hands — or land changes hands by way of share transactions — would pay the tax. Another way of doing it would be that when a corporation has to list their assets and the change in those assets every year — as they do in corporate income tax — they would also have to list changes in land, and then the land changes could be taxed at that time.

So you could either do it the way I am suggesting, which is essentially to make it illegal to require that the tax be paid, or you can do it through the corporate income tax regime, which would mean the tax would be payable at the end of the year, rather than at the time of the transaction.

Those are two suggestions that I put forward. This is a simple one; it's modelled somewhat on Manitoba and Ontario. I tried to change it to fit within this legislation. Essentially the principle is very clear, and that is a real question of fundamental equity. If we're going to have a property purchase tax, then corporations and individuals should pay it equally. No one

[ Page 7151 ]

should be exempt by virtue of being able to take advantage of a loophole.

What has happened with this property purchase tax is that individuals who have the wherewithal to form a corporation to take possession of land and then sell the shares in the corporation — rather than the land — to escape this taxation do it routinely. I suggest that loophole is being escalated, because many individuals can take advantage of it. Major transactions of million dollar buildings in downtown Vancouver are changing hands, and no taxes are being paid. But at the same time, someone with a condominium worth $70,000 has to pay what is essentially an owner's tax. So it's merely a question of equity. Corporations should have to pay the tax as well as individuals. This is an attempt to deal with that fundamental inequity, Mr. Chairman.

HON. MR. COUVELIER: The hon. member covered a variety of points there. First of all, I should point out to the House and the hon. member that this approach to exempting share transactions on property transfers was tried in the provincial jurisdiction of Manitoba but under a socialist government of that day. Despite their best efforts to develop a program that could be enforced, the plan had to be collapsed because it was unenforceable. The fact of the matter is that there is no such place or registry under which such a tax could be captured. Furthermore, as has repeatedly been said, there is no loophole whatsoever in this tax as applied to other taxes — for example, sales tax. The same exemption exists.

To my main point, Mr. Chairman, this amendment would significantly alter the thrust of the proposed amendment, and therefore I believe it is out of order at this stage of consideration.

MR. CHAIRMAN: Thank you, Minister. Hon members, the Chair has listened carefully to what the second member for Vancouver East had to say, and certainly he has made some good points, as agreed to by the Minister of Finance. But our rules require that in situations like this, amendments must.... We don't slavishly obey these rules, but we must obey some of them. They require that an amendment must not go beyond the scope of a bill, particularly in second reading when we debate the principle of the bill. In this particular case, it is quite specifically laid down in Sir Erskine May that it interferes with provincial revenue, with Crown revenue — but that's a moot point.

Interjection.

MR. CHAIRMAN: On a message, yes. Therefore, I'm sorry, but I have to rule the amendment out of order. We will continue debating section 1 as amended.

MR. CLARK: Thank you, Mr. Chairman.

Perhaps the minister can just clarify, if he could, his view that there is no loophole, that in fact it's designed to allow corporations to escape paying this tax and that it was never contemplated that they pay it.

HON. MR. COUVELIER: Mr. Chairman, this issue has been visited many times; it is repetitive. The fact of the matter is that when a corporation acquires a property, it pays the tax, just like everybody else does. The fact is that a corporation is taxed on its profits and therefore does get its share of revenue. But the overriding consideration in the treatment of corporations in this respect is no different than any other kind of excise tax applied. The provincial sales tax has for a long time recognized this inability to capture in a fair and equitable way what portion of a firm's activities might be related to real estate acquisition or transactions. In the same way, the sales tax act recognizes the impossibility of judging what portion of a share transaction might be attributable to changes in asset values or acquisition prices. So the point made by the hon. member has been pursued by others over a period of time and has consistently failed on the basis of unenforceability. For the hon. member to suggest, as he does, that this is some sort of loophole is totally incorrect and improper.

MR. CLARK: I appreciate that the minister agrees that it was never intended to capture share transactions. It seems to me two things. I understand the sales tax argument. In fact, I've discussed it with many people, because there is an analogy. It seems to me that in this case the problem with the sales tax is determining what portion of the assets would be covered by the sales tax, whereas in this case it's very clear. Land is very clear and, in fact, one could use the assessed value from the Assessment Authority very easily. So it strikes me as much easier than attempting to collect sales tax, because one has a measure that's easily identifiable.

[2:45]

If land changes hands or shares change hands where land is involved, to work out what property purchase tax would have to be paid would be very simple because of the Assessment Authority figures that we have. That may undervalue the asset somewhat, but nevertheless, you've captured the vast majority of it. So I reject the suggestion that it's not possible. My amendment, I will be quite honest, may not be the best way, but I suggest that it would be rather simple to do through a corporate income tax mechanism.... Most likely they've tried to do it with sales tax, but with land and with the Assessment Authority I think we could devise a way very easily. It's very clearly, as I said, on this side of the House a question of equity. I might ask, though, whether the minister is aware of the extent to which the property purchase tax is escaped — or whatever the language the minister finds more palatable — by this mechanism of corporate transactions.

I'll be quite honest. It's my view — intuitively — that this form of escaping of taxation will escalate rather dramatically, because in the initial sale to a corporation, the property purchase tax is paid. It's the subsequent sales of the corporation shares where

[ Page 7152 ]

the tax is not paid. That's the first thing. We initiated the tax only a year or two ago, so the escapement of revenue through this corporate mechanism will escalate over time as further transactions go down the line.

Secondly, more people would take advantage of it with the publicity associated with the sale. It won't simply be major corporate changes or major corporate sales of land. It will be single-family dwellings incorporated for the purposes of escaping this tax. I wonder whether the ministry has any analysis done as to what the leakage might be over time as a result of this mechanism that can be used now to avoid the tax, particularly in light of what I said. The frequency of the avoidance will escalate over time as the transactions continue to change. Has there been any analysis of that?

HON. MR. COUVELIER: We don't agree with the supposition put forward by the members of the opposition in this respect. It should be pointed out that the corporate sector — by virtue of dealing with larger sums of money — is paying double the rate of individuals, generally speaking, by virtue of the $200,000 trigger point.

Secondly, it should be pointed out that the corporate sector is engaged in only about 10 percent of the transactions under the property purchase tax, but contribute 30 percent of the revenue. To suggest that the corporate sector is getting some kind of a break by this bill is clearly not appropriate, and it's inaccurate.

MR. CLARK: I was just wondering if the minister might agree with this then: 10 percent of the transactions are corporate and 30 percent of the revenue, but the subsequent change.... If a corporation buys property — but not from another corporation — it has to pay the property purchase tax. That's what we're seeing now: 10 percent of the purchases by corporations are paying 30 percent of the revenue.

But subsequent transactions are not captured. What they will do, therefore, is purchase shares in the corporation rather than purchase the land that the corporation previously purchased. That's the point I'm getting at. While initially we're seeing revenue from the corporate sector on the initial purchase, it seems to me intuitively that subsequent transactions will escape the property purchase tax. I just wonder whether the minister would agree with that or whether they've done any analysis to indicate otherwise.

HON. MR. COUVELIER: There's no reason to believe that that's the eventuality. The fact of the matter is that the B.C. economy is growing so well under the leadership of this government that there are increasing amounts of investment and increasing amounts of capital improvements. As a consequence, the revenue base continues to expand at a rate we're all very proud of on this side of the House.

Section 1 as amended approved.

On section 2.

MR. CLARK: Is this section designed to make relatives pay, essentially? I'm sure the minister gets lots of letters — and, of course, I do as well, as opposition spokesperson. I'm sure the minister agrees that this tax is very unpopular. It's one in which there are bugs being worked out, and this bill represents some of those.

Where a husband and wife own a piece of property jointly and they want to transfer title to one or the other, previously — as I understand it — they would not have to pay the property purchase tax. Does this amendment, essentially, make them pay the property purchase tax? Is that correct?

HON. MR. COUVELIER: The key element is the question of principal residence. As long as one of them had the residence as a principal residence, they're exempt.

MR. CLARK: Just so I have it right. If my wife and I owned our home and we live in jointly, and one of us decides to transfer it to the other for whatever reason, property purchase tax does not apply.

HON. MR. COUVELIER: That's correct.

Interjection.

MR. CLARK: No, the minister is saying if there is a change in title to one individual or the other, it does not apply. What I gather from this amendment is that this amendment deals with other than principal residences; that if my wife and I — to use the analogy — owned a cottage together and one or the other of us transferred it for no money but transferred title to the other one, this amendment means that we would have to pay the property purchase tax on 50 percent of the value of that land. Is that correct?

HON. MR. COUVELIER: No, it's not correct.

MR. CLARK: What is correct?

HON. MR. COUVELIER: I assume it would qualify under recreational homes; therefore it's exempt.

MR. CLARK: I'm sorry, Mr. Chairman. I apologize for being in error there. Let me assume, therefore, it's a revenue property — a second property — but the same facts apply. On that second piece of property — that's not recreational, that is used for revenue potential — would property purchase tax apply?

HON. MR. COUVELIER: Revenue-raising potential. Is this a usurious rent issue? Or are we just dealing with the property purchase tax?

MR. CLARK: Just the property purchase tax.

HON. MR. COUVELIER: Well, in that case, we would tax it.

[ Page 7153 ]

MR. CLARK: Would the minister confirm that that's what this amendment does?

HON. MR. COUVELIER: No, the purpose of this particular section is to prevent the artificial reduction of tax by splitting a transaction. As the hon. member might be aware, there are a host of professionals who study our actions very closely in an attempt to save their clients exposure to government ambitions. As a consequence of all this, we sometimes find some rather peculiar transactions taking place. Splitting is one of them that was an issue, and this would enable us to capture that, where it's obvious that tax avoidance has been the main purpose.

MR. CLARK: Could the minister then give me some examples? If a husband and wife purchase partial interest in a second home, or a revenue home or rental unit, transfers between relatives subsequent to the original purchase previously were not taxable for the property purchase tax, and this is what that's designed to close? What specific loophole — give me an example — is this section of the bill designed to close?

HON. MR. COUVELIER: The effect here will be that transferees will only be able to take advantage of the low rate of property purchase tax on the first $200,000. Family homes, recreation properties are exempt.

MR. CLARK: So the minister is saying that what was happening was that they were splitting it up so that each would be less than $200,000, so they would pay 1 percent instead of 2 percent, and this is designed to close that.

Section 2 approved.

On section 3.

MR. CLARK: This is the major section of the bill which the government has brought in that deals with this incredibly complex and tiny tax reduction, as I understand it. I wonder if the minister could tell me what the estimate is for the number of people who will be eligible for some reduction in the tax as a result of this section of the bill?

HON. MR. COUVELIER: I'm very proud to tell the hon. member that this beneficial action of the government will affect 25,000 British Columbia homeowners.

MR. CLARK: Does the minister know what percentage of the transactions it might impact on? As I recall — this is just straight from memory — I think it's $12 million.... Maybe the minister could tell me: is there a $12 million tax loss associated with this, as I recall?

HON. MR. COUVELIER: We calculate about $13 million.

MR. CLARK: It's $13 million. What does the property purchase tax raise now, $170 million?

HON. MR. COUVELIER: Given the increase in real estate values in Vancouver, it's up over $300 million, but I'm advised that with this amendment it will affect about 12 percent of the transactions.

MR. CLARK: It's 5 percent of the revenue, but 12 percent of the transactions will be impacted. It's not surprising, because they're impacted very modestly, some of them; but nevertheless it counts as part of the global numbers.

Section 3 approved.

On section 4.

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

On the amendment.

[Section 4.,

(a) by deleting "and" at the end of paragraph (a),

(b) by deleting ', "related individual", and "spouse".' and substituting 'and "spouse", and' in paragraph (b), and

(c) by adding the following as paragraph (c):

(c) by repealing the definition of "related individual" and substituting the following: "related individual" means a related individual who is a citizen or a permanent resident of Canada.]

MR. CLARK: I just want the minister to explain the purpose of the amendment.

HON. MR. COUVELIER: The definition of "related individual" is restricted in order that the provision will apply for exemption purposes solely to citizens or residents of Canada.

Amendment approved.

Section 4 as amended approved.

On section 5.

MR. CLARK: I have another amendment. This amendment — and I'll read it — amends section 5 by adding paragraph (h): "Add paragraph (x) to read: '...to a purchaser who certifies that he is purchasing a principal residence for the first time, provided that the purchaser has resided in British Columbia for at least one year."'

Essentially, Mr. Chairman, this amendment exempts first-time home-buyers who have been....

MR. CHAIRMAN: Could the Page come and pick up a copy of this amendment, please, and take it to the minister?

MR. CLARK: Just for the minister's convenience.

[ Page 7154 ]

Mr. Speaker, if I might speak on this while the Clerks peruse it, this is a very straightforward amendment. This deals with something which.... I gather many members of the Social Credit Party have conveniently passed motions to this effect. Essentially, this amends the property purchase tax to exempt first-time home-buyers. It is clearly in keeping with the questions of equity that I talked about earlier. I've moved two amendments: (1) to tax corporations that make land transactions; (2) to not tax first-time home-buyers. I suspect it would be revenue neutral if both those amendments passed.

It's very clear. I don't have to speak at great length on it. First-time home-buyers in this province have had a great deal of difficulty, and they're having a great deal of difficulty right now with escalating land values. There's very little help from the government, in our view. The property purchase tax is an onerous tax, and it's onerous because although it may be 1 percent, it is 1 percent that must be raised on the down payment. If it is a $100,000 home and they have $10,000 down payment, they have to come up with $11,000. So it's not 1 percent; it's 10 percent of the down payment.

We find that tax onerous for first-time home-buyers, and we think this amendment is, in many respects, in keeping with the amending act. There is in here a whole series of discussions about who does or does not pay. It fits nicely under (h). This would accomplish more than about five or six of the bills on housing that the government has put forward. I think the minister would realize the politics, if not, the justice, of exempting first-time home-buyers. That's what this amendment attempts to do.

MR. CHAIRMAN: Unfortunately, hon. member, this amendment falls within the same definition as the previous one. Would the Minister of Finance like to speak to it? Essentially it's being ruled out of order, but you might like to speak to it, minister.

HON. MR. COUVELIER: I thought I would before asking you to examine the question of whether it is out of order or not.

I want to make the point that this government is very proud of the fact that it is effectively bringing the management of public affairs and public expenditures under control. I suspect the hon. member knows full well that the initiative he is recommending here would inevitably result in a challenge under the constitution and, as a consequence, would be a make-work project for lawyers for years to come.

[3:00]

This bill does address the question of need; it does deal with people who need some relief, and it provides it. In any event, it is out of order insofar as it is a tax measure and we are in committee stage.

MR. CHAIRMAN: Having heard what the minister has to say, I would rule this amendment out of order on the same basis as the last one.

MR. ROSE: You were very charitable in letting the minister speak to an out-of-order amendment. I would just like to comment, though, on his assertion that such assistance, such affirmative action, would be contrary to the Charter and invite a challenge. Affirmative actions  — things that make things less difficult for people — are specifically exempted under the Charter. It's possible to discriminate in favour of something, is what I am saying.

I doubt very much, in spite of the wealth of knowledge, the great depth of constitutional law that the minister has at his fingertips every two or three minutes, that this would be contrary to the Charter. Of course, we would need to have that tested, I suppose. Can I underline the point, before the minister's chin hits the floor, that all the housing assistance we used to have in this province — we had a mortgage assistance plan, a homeowner assistance plan — is no longer there. This would be very effective, and very simply done. It would require no bureaucracy; it would require nothing. It would just put $1,000 into the pockets of first-time home-buyers.

I've got children; I don't know if the minister does. It's very difficult for young couples now, especially in the lower mainland, to acquire any kind of equity. We know how the provincial government is always most anxious to provide people with property, property rights, land and houses they can own, because that's what made our country strong.

HON. MR. BRUMMET: On a point of order, Mr. Chairman. How long will the debate continue on an amendment that has been ruled out of order?

MR. CHAIRMAN: Good point, hon. member. The amendment was ruled out of order, and we are now dealing with section 5.

MR. BLENCOE: I recognize that in your wisdom, Mr. Chairman, you've ruled my learned colleague's excellent amendment out of order. I notice, however, that section 5 refers to a number of exemptions — eight of them, my colleague tells me.

I think it's really sad that the Minister of Finance, the member for Saanich, who, like everybody else, has thousands of first-time home-buyers — young British Columbians looking for that dream, that vision of a first-time home — cannot agree to include first-time home-buyers in one of these sections. There are references here to exemptions for transfers, to changing a joint tenancy to a tenancy in common. I recognize that, Mr. Chairman. What I really want to emphasize is that it wouldn't have taken much to send a message to those young British Columbians who are looking to get into the market for the first time. This government continues to turn its back on those British Columbians, and I think it's a great shame.

HON. S. HAGEN: On a point of order, the members opposite are taking a lot of time to talk about things that we shouldn't be talking about. We're supposed to be dealing here with some very specific

[ Page 7155 ]

issues. I would ask that they stop abusing the House and stick to the topic.

HON. S.D. SMITH: Their leader abused the House yesterday. They're doing the same thing today.

MR. ROSE: The Attorney-General is imputing motives again.

Interjections.

MR. CHAIRMAN: Hon. members, order, please.

MR ROSE: Mr. Chairman, I don't quarrel with your great wisdom in terms of procedural matters; and you've got some tremendously experienced advisers at each earlobe. But I recall this particular amendment being put when the bill was first read, and I think we voted on it. Rather than proceed now, I wonder if it would be possible to stand the clause until we clear up this point of order. Would it be possible to stand this clause, go on to another one until we...? We're proceeding rapidly today, and we're making good progress on legislation, but I'd just like to have an opportunity to check this particular matter out, because we did move a similar amendment when the bill was first introduced.

MR. CHAIRMAN: The opposition House Leader is also very knowledgeable about the rules. As I recall it, we sat together when they were amended, and one of the amendments that went through was that a ruling of the Speaker or the Chairman could not be challenged. I think the amendment was ruled out of order on that basis, and so I must let it stand at that. We're going to continue discussing section 5.

MR. CLARK: This section of the bill has seven exemptions which presumably weren't in the existing bill. Perhaps the minister could tell me what the tax loss associated with the seven exemptions is projected to be.

HON. MR. COUVELIER: We haven't attempted to quantify any figures from this, Mr. Chairman; we're merely trying to deal with the abuses that have been exhibited in the two years the act has been in place.

MR. CLARK: When you're dealing with a bill that brings exemptions to a tax, presumably you quantify it. Perhaps it's insignificant and therefore doesn't warrant a number. Perhaps it's less than $10,000 or something like that. It seems to me that in a bill that's generating $300 million in revenue, bringing in seven exemptions might have some impact on that.

I notice that some of the exemptions — for example, (b) says: "...made in accordance with written separation agreements or orders under the Family Relations Act...." Maybe the minister could tell me what spawned this, and whether divorces or separation agreements can specify that the property purchase tax is not paid in the event of a separation and one spouse receives the property. Is that what this is intended to do?

HON. MR. COUVELIER: This particular paragraph tightens the rules regarding the exempt transfer of property on the breakup of a marriage. Previously any property transfers due to the breakup of a marriage were exempt from tax. This allowed substantial amounts of property to be transferred between corporations exempt from tax. In order to clarify the intent of this provision, property transfers resulting from the breakup of a marriage will only be exempt if the property is registered in the names of the spouses or former spouses.

MR. CLARK: So you're saying that in the event of a separation, and one spouse held the property — say it was the man — and there was a separation agreement by which the woman would get 50 percent of the property, she would have to pay property purchase tax on 50 percent of the property. Is that what this says?

HON. MR. COUVELIER: No, that illustration would be exempt. The intent here is to stop transfers between corporations.

MR. CLARK: Maybe I misunderstood you, but I understood you to say that unless the name was on the title.... If two people are on the title and there's a transfer to one or the other, it's exempt; but if they're not on the title, then they must pay the tax. Is that not what you said?

HON. MR. COUVELIER: I think I'm agreeing with the member opposite, Mr. Chairman. It was exempt before, and now we're saying the names must be on the title in order to continue the exemption.

[Mr. Rogers in the chair.]

MR. CLARK: So my original hypothesis was correct. That is, if you're a spouse but you're not on the title and you gain, by way of a separation agreement, 50 percent of the.... If the property is transferred to you as part of the settlement, you would have to pay the property purchase tax, whereas before you didn't. If you have joint title, that transfer is exempt; if you don't have joint title, you'd have to pay. If that's correct, I wonder what would spawn that. It seems to me somewhat onerous perhaps on some individuals as a result of a separation agreement. It doesn't appear to be a loophole that would capture very many people. It seems to me a rather mean-spirited amendment.

HON. MR. COUVELIER: Well, I'm not quite sure that I have it clear in terms of the member's question here. There are a relatively limited number of marriage breakups which involve corporations. It has evolved that under the previous wording of the act these settlement provisions were potentially being manipulated to avoid the tax. And while the number

[ Page 7156 ]

of individual cases we're addressing is relatively small, the sums of money aren't necessarily so. What we're saying here with this change is that there must be a spouse named on the registration in order to qualify.

MR. CLARK: Mr. Chairman, my only comment would be that this is a detailed section trying to deal with rather minor, complicated loopholes. When I said to the minister that the corporations could avoid it, in a rather major loophole, the minister throws his hands up and says we can't do anything; yet when it comes to minute loopholes that some people are using, you go to great lengths and use legal language in section 5 to try to close or open those loopholes. Yet no attempt has been made by the government to come to grips with the fundamental question of justice and equity, which is the fact that corporations escape paying it. With that, Mr. Speaker, I think we can move through the rest of the bill.

Sections 5 to 9 inclusive approved.

Title approved.

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

Motion approved.

The House resumed; Mr. Speaker in the chair.

Bill 10, Property Purchase Tax Amendment Act, 1989, reported complete with amendments.

MR. SPEAKER: When shall the bill be read a third time?

HON. S. HAGEN: With leave of the House now, Mr. Speaker.

Leave granted.

Bill 10, Property Purchase Tax Amendment Act, 1989, read a third time and passed.

HON. S. HAGEN: Mr. Speaker, I call committee on Bill 11.

PUBLIC TRUSTEE AMENDMENT ACT, 1989

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

On section 1.

MR. CLARK: I just want the minister to explain section 1, which is essentially the meat of the bill. I wonder what the precise purpose of rearranging the public trustee's office in this manner is.

[3:15]

HON. MR. COUVELIER: Section 1 amends the Public Trustee Act in a variety of ways. It continues the existing account of public trustee and renames it for greater clarity the public trustee trust fund account. This amendment does not change the operation of the account.

A new subsection continues the existing requirement that the specified receipts of the public trustee shall be paid to the Minister of Finance and Corporate Relations and shall be held in the newly titled public trustee trust fund account. This subsection continues the existing provision concerning the investment of trust funds as permitted by the Financial Administration Act — that's subsection 12(3). The investment policy and the range of allowable investments for trust funds will not change.

Section 13(l) establishes a new special account called the public trustee operating account. This special account will provide the public trustee with statutory spending authority up to but not exceeding the amount of revenue received from the provision of services to clients.

So there are a variety of initiatives, Mr. Chairman, under this section.

Sections 1 and 2 approved.

Title approved.

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

Motion approved.

The House resumed; Mr. Speaker in the chair.

Bill 11, Public Trustee Amendment Act, 1989, reported complete without amendment, read a third time and passed.

HON. S. HAGEN: Mr. Speaker, I call committee on Bill 12.

SOCIAL SERVICE TAX
AMENDMENT ACT, 1989

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

On section 1.

MR. CLARK: I wonder if the minister could explain this section. It seems connected to section 2, but is there any other...? Does the broadening of the definition of the term "lease" expand to any other goods besides movies that we're going to see, in the next section?

HON. MR. COUVELIER: This section amends the definition of "lease" to clarify that any agreement under which a person is given a right to use tangible

[ Page 7157 ]

personal property is considered to be a lease and is subject to the tax.

MR. CLARK: I wonder what exactly that's intended to capture. Maybe the minister could say what kind of revenue is expected to be generated by expanding the definition of "lease" for the purposes of collecting this tax.

HON. MR. COUVELIER: It isn't intended to go after any particular sector in an avaricious way. The total sum anticipated to be raised by this amendment might be in the order of $1.1 million or $1.2 million, or something of that order.

Section 1 approved.

On section 2.

MR. CLARK: This is one which I have a bit of trouble with. The theory behind the sales tax — and there are several theories behind it, but this is one which we have a lot of from the federal government — is to cover everything. In their case they were originally talking about food and prescription drugs and everything else. The idea is that if you cover everything, the tax rate can therefore be low. That's the theory. "Thin and wide," some people call it. What ends up happening is that it becomes this tremendous cash cow for governments. We've seen that everywhere, and particularly with the federal government.

Now here we have a situation where the provincial government, through this section of this bill, is extending the sales tax onto movies, essentially That's how I read it, anyway. So now, when one goes to a movie theatre, instead of paying $5 or $6, you have to pay your tithe to the Minister of Finance, to the Social Credit government. It's a nice tax from a political point of view, because every time someone goes to a movie theatre they'll remember that this particular administration is now taxing movies. I wonder why the minister felt compelled to extend the sales tax to moviegoers in British Columbia. It seems to me rather chippy.

I might say that one other thing that bothers me is the way in which the government went about doing it. There was no consultation with the industry, and we've had many complaints from the few independents that are left in the theatre business that this was just decreed by the Ministry of Finance.

I must say that I have a bit of a problem with the process, and I even have a bit of a problem with extending the tax to this kind of commodity. Although I admit it's not an essential commodity, it's one which average people can take advantage of and it's one which the government has chosen to.... The long arm of the tax man has extended to movies.

Maybe the minister could at least, in the House, attempt to defend why the Social Credit government has decided to tax people going to the movies in British Columbia for the first time in history?

HON. MR. COUVELIER: The fact of the matter is that this is an equity issue. It's an issue which addresses a previously exposed inequity. This is a government that does believe it must be uniform and consistent in the way it treats it citizens. It must ensure that there is fair treatment to all, access to all, in terms of dealing with initiatives.

The hon. member has suggested that there was no consultation. I don't know how much experience the hon. member has had in the area of tax measures, but you clearly don't embark on a forewarning device that there's going to be an imminent change in taxation. The fact of the matter is that we did meet with those affected by the bill after we introduced the bill to the House. I wonder whether the hon. member would prefer that we do the slur to the House by having discussions with interested groups on a taxation measure prior to discussing it with the Legislature. It seems to me there's a fine point here.

MR. CHAIRMAN: It seems to me we're back into second reading. The Chair is only away for a certain amount of time and the discipline seems to fall right away.

MR. CLARK: Mr. Chairman, I think it's interesting that the minister would be concerned that someone may gain advantage by this tax change: if we discussed the possibility of taxing movies, then everybody in British Columbia is quickly going to go to a movie right away; we're all going to rush to the movies and see them all before the tax comes in. That seems to be the only possible benefit that one could derive from at least discussing this.

The minister talks about equity. We've dealt with equity in here on many occasions. Corporations don't pay the property purchase tax, but everybody else does. The minister says: "Oh, we don't have to worry about that equity." Here he's saying that video rental people pay tax, therefore movie theatres should have to pay tax. I think it's a specious argument at best, and so is the consultation one.

I'm sure the minister has discussions and debates daily with different interest groups and different sectors of the economy about the taxation regime that affects them. Yet in this case, there's nothing. I don't think the government has given a good enough defence of a chippy little tax that affects working people who want to go to the movies, and lots of kids.

It's just the bean-counters in the Ministry of Finance and Corporate Relations extending their reach to collect more revenue from average people. It's a regressive tax, because the wealthy and the poor pay exactly the same amount. It doesn't make any sense in terms of equity; it doesn't make any sense in terms of the process. There are lots of ways in which the equivalent revenue could be raised in a more progressive fashion. We'll be opposing this section of the bill.

HON. MR. COUVELIER: Mr. Chairman, I must respond. I have had my loyal, dedicated public

[ Page 7158 ]

servants described as being chippy and as bean counters. It seems to me we were trying to get the decorum of the House to some acceptable level. I can't stand idly by and have my staff — loyal, dedicated and hard-working people — take that kind of abuse.

Secondly, I'd like to make the point that unlike many other provinces, we charge no amusement tax in British Columbia. Unlike other provinces, we do not charge confection sales. The theatre industry in this province is treated more advantageously than they are anywhere else in Canada. I don't feel in the least that I have to stand here to defend a suggestion which is equitable and treats all rental of films and videos equally.

MR. CHAIRMAN: Having said that, I would tell you I've referred to the Journals, and the word "bean-counters" is not unparliamentary and may be used on any occasion.

HON. MR. COUVELIER: What about "chippy"?

MR. CHAIRMAN: "Chippy" is certainly not unparliamentary.

Section 2 approved on the following division:

YEAS — 32

NAYS — 16

[3:30]

On section 3.

MR. CLARK: I know members will be adjusting themselves accordingly here. I wonder if the minister could explain why we would need to permit the precollection of the tax on liquor sold under special occasion licences.

HON. MR. COUVELIER: I'd be very pleased to do that. The fact of the matter is that the use of special occasion licences has grown significantly over the years and has become an issue around which there has been much concern in terms of tax not paid, and the bill not being enforced properly. As a consequence of that, it was deemed necessary in the interest — once again — of equity and fairness to others in the industry that we seek this solution to the tax avoidance issue.

MR. CLARK: This is another example, it seems to me, of the kind of chippiness that we've seen in terms of the....

MRS. BOONE: Big Brother.

MR. CLARK: Yes, Big Brother — the member for Prince George North reminds me. The baseball team wants to have a dance to raise money, and they have get a special occasion licence for liquor; that's common. So now they have to pay up front some tax — on the basis of what? This is what I'd like explained. It seems to me that when they buy their liquor, they pay tax on it; that's common. But when they resell it, they have to, as I recall, say how much they are going to resell it for.

The government has very strict rules that protect the monopoly of those selling booze in British Columbia, so you have to charge more than you might like to do otherwise. I guess what this means is that you now have to pay the tax on the resale of the liquor in advance. If you buy a 26-ounce bottle of liquor and are going to charge $2 a drink — I'm not even sure that's allowed; that's probably too low now for the government — that presumably means it would generate $52. Does that mean that they will have to pay their 6 percent of that $52, or do they pay it on some other kind of imputed value? Is that what happens?

HON. MR. COUVELIER: The tax is paid by the licence-holder in advance. It saves them subsequent paperwork that had to be done under the old system, reduces the inconvenience to the special occasion licence-holder, ensures that there is no tax avoidance as a consequence, itemizes administrative costs and, as I pointed out in my first reply, deals with this question of equity as it relates to others in the industry who had consistently been claiming that special occasion licences were leading to abuse.

MR. CLARK: Again, I think it's really debatable that there's been abuse of special occasion licences. Every social service club, every baseball team has parties for which they have to get by law special occasion licences. I think it's hardly a threat to the brewery industry or the pub industry. I just think it's another example of the bureaucratic mind-set in the ministry that has to extend the arm of government to tax all these little endeavours. I think it's counterproductive, I don't think it raises much revenue and I just find it kind of offensive.

I know that lots of groups — baseball teams, football teams and the like — are finding it increasingly difficult to get special occasion licences, and

[ Page 7159 ]

now it appears that they've got to pay social service tax in advance. Could the minister tell me how they pay it? Do they have to list the price they're going to charge per drink in advance, then pay an amount based on how many drinks they're going to get out of a bottle in order to work out the tax and payment in advance? Is that how it works or is it some other way?

HON. MR. COUVELIER: The answer is yes.

MR. D'ARCY: I want to join my colleague for Vancouver East in opposing this section. The rationale given by the minister simply doesn't wash. I have canvassed the regular commercial outlets — I won't say all — but a great many of the owners of lounges and beer parlours....

HON. MR. COUVELIER: A pub crawl?

MR. D'ARCY: That's right. I crawled around to find out whether they felt that they were being treated unfairly by the fact that the retail tax at the sales level was not being paid by the special occasions, and they certainly did not.

The fact is that in areas like mine, which I could perhaps properly characterize as typical of small-town British Columbia, the special occasion licence is commonly used not just by athletic teams but by service clubs and a great many non-profit agencies in the social service and community action area. All sorts of groups, from the Red Cross to the Knights of Columbus, use special occasion licences for their various social functions, which are common throughout the year, not just in Trail but in other communities throughout my constituency

This sort of pickiness establishing hoops where hoops were never there before that people have to jump through in order to carry on their special occasions really makes no sense at all. I could quite categorically say that I haven't found a single individual who approves of this sort of pickiness on the part of government. As with the previous section, I see it as a direct assault on small-town British Columbia and a way to affect the quality of life in those communities. I wish the minister would reconsider because, as my colleague for Vancouver East has pointed out, this and the previous section really add nothing to provincial revenues, but in fact have a direct bureaucratic long-arm-of-government impact on ordinary citizens.

I would also like to emphasize that many of the people who utilize these special occasion licences and who are most angry and most directly impacted are the kind of people who are most community active, not just in my riding but I suspect throughout the rest of the province as well. These are the sorts of individuals we need to encourage in order to help the quality of life and improve activism and volunteerism in general, regardless of the endeavour and whether it be small towns or medium-sized towns — or large cities, for that matter. It's these affected people who provide the quality of life. They're the doers, the people who contribute towards everyone else's enjoyment in these communities. These are the people being impacted, making it very difficult for them to go about doing their job, which is to assist the community in many worthwhile endeavours.

With that, Mr. Chairman, I'll hope the minister has had time to reconsider.

HON. MR. COUVELIER: I've listened very closely to the points made by the hon. member. He suggests that he's done some sort of research project. I would remind him that there are 6,000 licence-holders in the trade, so to speak, on a permanent basis. He might have made a tour through his own riding. I wouldn't imagine he hit many in the same evening, or else the quality of his evidence would decline with each succeeding call. In any event, by the time he hit 6,000 I suspect he wouldn't be erect; he'd be prostrate.

We have responded to the needs of the industry; we have responded to our mail; and we have responded to the complaints. As I've said — and I don't know whether the member was in the House at the time — special occasion licence use has expanded dramatically. We now have between 25,000 and 30,000 special occasion licences in the province as opposed to only 6,000 of those in the business. There is an alarming growth of special occasion licences. Under the old system there was an inability to deal with this question of remittance of the tax, and I have no difficulty in standing before the Legislature and telling members it clearly is in the interest of equity and in the interest of the taxpayers of this province to make sure that if we have a law on the books, it is enforceable. This amendment will have that effect.

MR. CLARK: Is the minister saying his primary concern is to protect existing licence-holders, and that they feel special occasion licences are a threat to their livelihood?

HON. MR. COUVELIER: I'm not saying we're protecting anybody, and I'm not saying we're abusing anybody. I am saying we're trying to ensure there is a level playing field at all times when we administer these kinds of taxes. There have been numerous complaints; we have recognized the validity of those complaints, and we are dealing with them with this amendment. The amendment will have the effect of clearing up what was a growing avoidance issue.

MR. D'ARCY: Just to clarify a couple of points here. First of all, as I'm sure the minister well knows, if one is in regular touch with one's constituents, it is not necessary to be in a particular place of business to discuss an opinion or an attitude with the owner. Even if one is in a certain person's place of business, it's not necessary to buy anything of a particular nature while you're there.

AN HON. MEMBER: Or accept it free.

MR. D'ARCY: Yes, or accept it free.

[ Page 7160 ]

The other point I want to make, which the minister is either unaware of or doesn't seem to want to advise the committee on, is that in my constituency — and I suspect in his as well — when successful special occasions are going on, complete with special occasion licences, a great many people are attracted to the area, and the regularly licensed establishments in fact do very well on those days; indeed, often they are packed. That is the principal reason why there are no complaints. It's not that they're taken advantage of. The fact is, the entire community prospers when all parts of the community are allowed to, shall we say, do their thing.

[3:45]

The suggestion that there is lax enforcement, or that people are taking advantage of the situation, is, I think, a suggestion that the law enforcement agencies are not doing their job throughout the province, which I categorically state is absolutely wrong. I don't think there is a problem here, and when there is a problem, the local authorities refuse to grant the licences in the first place.

MR. CHAIRMAN: I would advise members that following the completion of this bill and the next bill, His Honour will be joining us for royal assent. I will be sounding division bells to call members to the chamber at that time.

Section 3 approved on the following division:

YEAS — 34

NAYS — 13

Sections 4 and 5 approved.

On section 6.

MR. CLARK: I wonder why the government would choose to exempt magnetite from tax when used for processing coal. I know there must be some logic to it, but it just seems to be an odd amendment.

HON. MR. COUVELIER: Once again I am proud to stand in the House and explain that it's a matter of equity. We have been excluding grinding balls and rods, and this will ensure that we treat all of these things in an equal way.

MR. CHAIRMAN: It's an explosive issue. Shall we hear from the member for Vancouver East?

MR. CLARK: We were exempting grinding balls and rods from the processing of minerals, I assume, and this is the equivalent in the terms of processing coal. Is that correct?

HON. MR. COUVELIER: That is correct.

Section 6 approved.

On section 7.

MR. CLARK: On section 7, I want the minister to explain the purpose of this. It seems another rather interesting little anomaly.

HON. MR. COUVELIER: This section authorizes the commissioner to exempt vendors from the requirement to collect tax on sales made on board passenger-carrying commercial vessels while on scheduled sailings from a port in the province to a port outside of the province, or from a port outside of the province to a port inside of the province. This amendment places local operations, such as the Princess Marguerite, on the same basis as other cruise ships operating between points within and outside of B.C.'s jurisdiction.

MR. CLARK: Is the minister saying that sales of goods sold on the Princess Marguerite between Victoria and Seattle will be exempt from sales tax? Is that what he is saying?

HON. MR. COUVELIER: That is correct and, once again, it restores equity — all these bills are equity bills — and ensures that the application of the tax on the Marguerite will be the same as the application of the tax on the Coho, which similarly sails between U.S. ports and the port of Victoria.

MR. CLARK: The minister is saying that currently the American vessels that travel between Victoria and Seattle do not pay provincial sales tax. If they would pay sales tax, it would be to Washington State, the state of their home port. Is that what you are saying? Or is it that anything sold on international runs are exempt from provincial sales tax? Is that across the board for either one?

HON. MR. COUVELIER: Yes, it's an equity issue. The fact of the matter was that I tried to collect from the Coho. I'd be down there when they docked, I'd visit the ship and check the registers, but I just couldn't get the sales tax out of them, so I decided it would be more equitable in the interests of fairness

[ Page 7161 ]

to all that we similarly extended the exemption to B.C. ships.

MR. CLARK: Does Washington State collect sales tax on that vessel or anything sold on it?

HON. MR. COUVELIER: No, Mr. Chairman.

MR. CLARK: I know this is a small matter, but it seems to me that people aren't affected. No passengers are not going to sail on the Marguerite because there is a sales tax on the candy or whatever it is that is sold on the Marguerite. I just wonder what the extent of the tax.... The tax is not at the margin; the tax is not going to impact on them. The minister is saying equity, but it seems to me that travel on any vessel should be treated the same, but they probably should pay tax.

I wonder what the tax loss is associated with this. it's got to be insignificant.

HON. MR. COUVELIER: Once again it is a question of equity: liquor, souvenirs, all of those sort of things are impacted here. The truth of the matter is that it applies not only to the Marguerite but all cruise ships as stated.

I am just trying to understand. I take it the hon member is opposed, is saying in effect that what he would prefer to do is leave this anomaly in place and put the Maggie at a disadvantage. That surprises me.

MR. CLARK: So any ship that travels between a foreign port and British Columbia from now on, including the Princess Marguerite or any ship, does not have sales tax applied to any of the sales, including liquor. Is that what the effect of this would be?

HON. MR. COUVELIER: That is correct. They are not required to collect the tax.

Sections 7 to 13 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 12, Social Service Tax Amendment Act, 1989, reported complete without amendment, read a third time and passed.

HON. S. HAGEN: I call committee on Bill 13, Mr. Speaker.

TOBACCO TAX AMENDMENT ACT, 1989

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

Section 1 approved.

On section 2.

MR. CLARK: I just want an assurance from the minister that increasing the tax rate on loose tobacco products by the formula which the government has chosen here makes it the equivalent to a tax on tobacco products that are not loose. Is that the intention of this?

[4:00]

HON. MR. COUVELIER: No, Mr. Chairman, the effect of this would be to bring loose-tobacco tax up to something in the order of 50 percent or 60 percent of the cigarette tax, in that range.

Sections 2 to 9 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 13, Tobacco Tax Amendment Act, 1989, reported complete without amendment, read a third time and passed.

MR. SPEAKER: Hon. members, I would like to advise that His Honour the Lieutenant-Governor is in the precincts and will shortly enter the chamber.

His Honour the Lieutenant-Governor entered the chamber and took his place in the chair.

CLERK-ASSISTANT:

Statutes Repeal Act, 1989

Trade Development Corporation Act

Budget Measures Implementation Act, 1989

Home Owner Grant Increase Act, 1989

Income Tax Amendment Act, 1989

Land Tax Deferment Amendment Act, 1989

Motor Fuel Tax Amendment Act, 1989

Property Purchase Tax Amendment Act, 1989

Public Trustee Amendment Act, 1989

Social Service Tax Amendment Act, 1989

Continuing Care Act

International Trusts Act

Home Mortgage Assistance Program Act

Tobacco Tax Amendment Act, 1989

[ Page 7162 ]

CLERK OF THE HOUSE: In Her Majesty's name, His Honour the Lieutenant-Governor doth assent to these bills.

His Honour the Lieutenant-Governor retired from the chamber.

HON. S. HAGEN: It is with great pleasure that I call second reading of Bill 27.

WORKERS COMPENSATION
AMENDMENT ACT, 1989

HON. L. HANSON: I rise to move second reading of Bill 27. This bill reflects the cooperative efforts of representatives from government, labour and employers to develop a workers' compensation system that meets the needs of all British Columbians.

I would like to extend my congratulations, and certainly my appreciation, to the committee members who worked so hard to reach this unanimous decision in their recommendations. With a few minor changes, those recommendations have been totally incorporated into this bill.

The bill before the House reflects the common objective of all interested parties: that is, to ensure that workers and employers are able to participate effectively in the initiation, development and approval of the policies, programs and procedures of the Workers' Compensation Board. This will be accomplished through the creation of a part-time board of governors. That board will consist of 13 voting members appointed for up to six years. It will consist of a neutral chairman, five employer representatives, five employee representatives and two public interest members. There will also be two non-voting governors: the president and chief executive officer and the chief appeal commissioner.

The governors will be responsible for the setting of general Workers' Compensation Board policies on compensation, assessment, rehabilitation, occupational safety and health. The governors will not have a day-to-day involvement in Workers' Compensation Board operations. Instead, the daily running of the organization will be left up to the responsible officers, administrators and other personnel, under the direction of the chief executive officer.

Consultation and consensus, and the decision that was reached by consensus, will continue to be essential in putting the new WCB structure into place and will certainly be key in the selection of the people who will serve on that board. This process is especially important since the composition of the new board of governors will be responsible for determining the future direction and credibility of the system. The bill requires that the minister responsible must consult with employer and worker governors in appointing the chairman.

The selection of a highly qualified and motivated individual to serve as chairman is a serious crucial element to the success of the new structure. The same process of consultation will also apply to the appointment of the two public interest governors. The governors will have the responsibility of selecting and defining the functions for both the president and chief appeal commissioner. This will ensure that the day-to-day operations of the Workers' Compensation Board reflect the policy and directives set by the governors.

A very important aspect of the bill is that the responsibilities of the president and chief executive officer will be clearly defined as separate from those of the chief appeal commissioner. There may have been a perception that the final appeal in the old Workers' Compensation Board system was to the same people who established the policy and, in fact, hired and administered the operation of the Workers' Compensation Board. The chief appeal commissioner and the president will each have their own area of operation, but they are not accountable to each other. They are both accountable directly and exclusively to the board of governors.

The chief appeal commissioner will be responsible for developing the actual practices and procedures for the conduct of appeals consistent with any policy guidelines provided by the governors. The appeal commissioner can establish one or more panels which have the same power and authority of the appeal division. The appeal commissioner will be responsible for hiring and overseeing other appeal commissioners. The appeal division will have the power to compel attendance of witnesses, examine them under oath and compel production inspection of books, papers, documents, etc.

The appeal system for claims will be significantly modified. The existing external Workers' Compensation Review Board function is functioning well and will remain unchanged to handle initial appeals from the Workers' Compensation Board decisions. The new internal appeal division recommended by the advisory committee will replace the commissioners as the final level of appeal on claims. This internal appeal division will hear appeals of review board decisions.

Workers, dependents, employers or representatives of any of them will have a 30-day period to apply to the appeal division. The appeal period will be reduced to 30 days from the current 60 days in order to cut down on the current system's delays. The appeal division will be required to make its decision within 90 days unless extended by the chief appeal commissioner.

The appeal division will also hear employer appeals of WCB assessments and safety penalty levies. Appeal decisions will be final and binding; however, the appeal division will have the power of reconsideration if substantial and material evidence arises or is discovered subsequent to a hearing.

The proposed quasi-judicial separation of the appeal division will address past criticism from some claimants and the public that the process of appeal to the commissioners could be subject to conflict of interest. Although employers and workers will still be able to appeal any review board decision to the WCB appeal division, the power of the Workers' Compensation Board to reopen, rehear or redeter-

[ Page 7163 ]

mine matters ruled on by the review board will be limited. The WCB president will be limited to initiating on his own motion a repeal of a review board decision only if there has been an error of law or an error in interpreting the published policy of the governors. This change will protect the policy-making integrity of the board of governors. It will also give due recognition to the weight of review board decisions in adjudicating on factual and other appeal issues.

The Munroe report pointed out that the case of Guadagni v. Workers' Compensation Board made it clear that the legislation needs to more clearly spell out the process of implementing a review board finding by the Workers' Compensation Board. That decision required the board to pay both prospective compensation payments and often very large retroactive compensation payments. They were to be paid immediately, even if that decision was subsequently appealed or referred to the commissioners. Bill 27 addresses this problem.

[4:15]

The new provision will continue to require periodic payments to begin after a favourable review board finding. In those cases, where the review board decision is appealed to the appeal division or referred by the president, retroactive payments will not take place until the appeal division has made a decision. If that appeal is successful, retroactive compensation plus interest will be paid to the complainant.

The bill provides flexibility to the governors in determining interest rate policies. As I mentioned earlier, the appeal period has been reduced to 30 days, and the appeal division will have 90 days to make that decision. These changes not only reflect the position of the review board as an appellant body, but they should also result in fewer system delays.

The Workers Compensation Amendment Act is truly the product of consensus and cooperation between all parties of interest to build the best possible workers' compensation system — a system that will serve the needs of all British Columbians. The sound structural changes being made will result in a stronger, more responsive Workers' Compensation Board. I am confident that worker, employer and public interest representatives who are appointed to the board of governors will work together to monitor and modify the new system so that it will meet the changing needs and expectations over time.

Mr. Speaker, Bill 27 reflects what can be accomplished when labour, management and government work together towards a common goal.

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

MR. GABELMANN: The opposition members of the House are in full support of this legislation. It is a good piece of legislation, and it deserves speedy passage by this Legislature — in fact, enthusiastic passage. This is an essential first and major step in redressing decades of mismanagement and horror stories at the Workers' Compensation Board.

The minister talked, particularly in his closing words, about how the cooperative process between business, labour and government can produce good work, and this is clearly an example of that. In parenthesis and out of order, Mr. Speaker, may I say that I only wish Bill 19 had been a product of the same kind of process. We would be far better off — and I am out of order.

We will have in committee stage a few questions, which are more appropriate at that stage — nothing of any consequence. I want to just go through two or three issues, and perhaps in closing debate the minister could respond. If not, then perhaps during committee stage he could make some response to these issues.

As the minister has noted, the Munroe committee recommended a board of governors comprised of 13 voting members — five, five, two and one. The process of determining who the five labour or employee representatives are, and who the five management employees are is one that I would be interested in having the minister comment on. It's a process that can be subverted, and on occasion in the past, comparable models have been subverted by governments who wish to not pay close attention to the wishes of the — in this case — management or labour representatives. I would like the minister to give us some ideas as to how this process would work in determining who these people will be.

In particular, I want to say that the two public interest representatives should be — and as Don Munroe and the committee makes clear in their report — public interest representatives and not government interest representatives. It would be inappropriate, as the report notes, to have the government represented. The government, of course, can be represented in various ways. The most obvious way would be to have an executive council member appointed to the board of governors, or in fact a member of the government caucus appointed. Clearly, that government has no intention of doing that, I'm certain.

But the government can be represented in other ways as well, by having partisan people who will do the bidding of the government appointed to these positions. At this stage, I trust that the intent of the Munroe report that these be public interest representatives and not government or partisan political representatives will be adhered to strictly. Otherwise this whole process may well be off to less than the good start that I expect it will.

Munroe's report, unless I misread it, does not deal with the suggestion that a section pertaining to regulations should be added to the legislation. This makes it appear as if all WCB regulations, which heretofore have been massive and approved by the board itself, will not have to be approved by order-in-council. I wonder why now it appears as if we're going to go through a process where it becomes an order-in-council process, rather than an internal WCB process. In other words, could the minister give us some idea of why 101.1 is included? I recognize it's simply "may" make regulations, but that's standard

[ Page 7164 ]

legislative language. I'm really curious about why the government would want to get into the business of making regulations in respect of health and safety matters.

Finally, I note the omission of a major element of the ombudsman's report — report number 7, I think it was — relating to the appealability, if that's a word, of board of review decisions being referred to a medical review panel. The ombudsman argued that one should be able to appeal the decision of a review board to a medical review panel. It's now not permissible. The legislation does not reflect that recommendation. It appears to me and to others as if that was a major recommendation, and I'm just curious as to why that recommendation of the ombudsman was not followed.

Mr. Speaker, I have no other comments to make, other than to note that during committee stage we will have a few other particular questions, and to say once again to the government, on behalf of working people and employers across this province, good work, and let's have this style of government leadership demonstrated in many more areas in the days and months to come.

HON. L. HANSON: I appreciate the remarks of the member opposite.

The process of selecting the representatives of worker or management interests is always an interesting one. I know that there are a number of other processes that happen where various interests are mandated by the legislation to sit as representatives in some particular area, and it is always an interesting one. I don't suppose there is a method you can lay down on paper that completely deals with that in all its various intricacies and those sorts of problems that arise in trying to get a representative of any particular part of a community. The consensus of that total community is always a difficult task, but obviously we look to the two areas of interest for a lot of assistance and advice as to who those selections may be. I suppose we can develop that process through the committee stage a little more. But I think the member opposite, with his experience in labour relations and some of those representations that are required to be representative of a particular body of interest, understands the difficulties and so on. The dedication is certainly within the legislation to have those representatives truly representative of those communities of interest.

I would agree with the member that the public interest reps are not necessarily representatives of the government's interest; but maybe there is an individual who has the interest of the public at heart. I guess I would have to say to the member that quite often the interests of government, whoever it may be, should quite often reflect the interests of the public. Again, it's an interesting procedure.

The member is quite right that in clause 101 there is a regulation-making ability by the L-G-in-C. But the policy-making is really not to be established by regulation; it is more to be established by the board of governors, as the WCB policy. I suppose that that

Is there not as a mandate that everything has to be done that way but that there is the possibility of doing it to give it some more emphasis.

I appreciate the member's remarks, and I look forward to the committee stage process where we can get into detail on the bill.

MR. SPEAKER: The question is second reading of Bill 27.

Motion approved.

Bill 27, Workers Compensation Amendment Act, 1989, read a second time and referred to a Committee of the Whole House for consideration at the next sitting of the House after today.

MR. SPEAKER: The first member for Okanagan South seeks leave to make an introduction.

Leave granted.

MR. SERWA: A few minutes ago a group of students were in the Legislature from Springvalley Secondary School in Kelowna. I would like to read into the record a welcome. On behalf of the second member for Okanagan South (Mr. Chalmers) and myself, I would like to recognize the presence of 15 grade 10 to grade 12 students from Springvalley Secondary School in Kelowna. They are accompanied by their teacher Fritz Hein and chaperones Bob and Mary Hardy. Springvalley School is a senior high school that excels in a variety of activities. They have been quite aggressive in making sister-school contacts in Beijing, and are striving to make similar contacts in Thailand as part of their Pacific Rim initiative. Would the House please join me in welcoming these students from Springvalley School.

[4:30]

HON. S. HAGEN: Committee of Supply, Mr. Speaker.

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

ESTIMATES: MINISTRY OF
AGRICULTURE AND FISHERIES

On vote 8: minister's office, $249,374.

HON. MR. SAVAGE: I'd like to say, Mr. Chairman and hon. members, that it's indeed a pleasure for me to present the 1989-90 estimates of our ministry.

I consider my job a particular honour this year, because I'm presenting my estimates as part of our provincial balanced budget. I believe the balanced budget is an achievement of the decade. Very few governments anywhere, in fact, have been able to match that achievement in recent years.

Agriculture and fisheries is B.C.'s second-largest resource industry. It is a $10-billion-a-year industry that employs nearly 200,000 British Columbians. This

[ Page 7165 ]

$10 billion comprises $8.8 billion on the retail side and some $1.2 billion in food exports.

These industries are strong and healthy, Mr. Chairman, and it's by no accident; it is the result of hard work and extreme dedication. For one thing, our fishermen, our farmers and the people involved in the aquaculture industry have shown themselves to be resilient and creative in the face of challenges. Credit should also go to our dedicated ministry staff, both in the field throughout the province and, of course, at our headquarters here in Victoria. They have proven themselves to be very adaptable in meeting the new challenges in the food-producing industry and also in the private sector.

Mr. Chairman, ministry staff have a very clear idea of what the ministry aims to achieve. The ministry's mission statement spells out the principles we will build our programs on. It says that the Ministry of Agriculture and Fisheries will encourage sustainable growth and development in the food industry. We apply that encouragement to British Columbia producers, processors, distributors and marketers of food and fish products. The encouragement is designed to meet the demands of our domestic markets and, increasingly, our opportunities in export markets. How we apply that encouragement is in keeping with the three principles this government has established as the foundation of its initiatives: protection and enhancement of the environment; education for progress; and economic development based on sustainability. In the case of Agriculture and Fisheries, sustainability means protecting the resources — that is, land and water — so that our province is always able to produce an abundance of wholesome food.

From these foundation principles flow several operating principles, principles that we employ daily.

We accept the fact that we are living in a global economy. Our food products must compete with the rest of the world. Product quality wins competitions. The growth and development of our food industry depend on its ability to produce products that are safe, wholesome and of the highest quality.

Mr. Chairman, the ministry is committed to the highest level of service. We're ensuring that all our clients are served efficiently and with a high degree of professional courtesy.

We're also committed to supporting the government-wide initiative of regional development. There is a significant transfer of responsibility for development and extension in these regions. We're placing renewed emphasis on understanding and meeting the unique needs of all our province's economic regions.

We're committed to a team approach to meeting challenges. This is the best way to draw consistent first-rate performance from my ministry's professional and support staff.

Mr. Chairman, we're committed to management by objectives. We're setting achievable goals and working towards those from day to day.

I'd like to take the opportunity to say a few words about our constituency, Delta, which is a great example of a thriving agricultural community. The municipality of Delta is one of the most productive farm districts in British Columbia. There are 195 census farms, containing some 6,814 hectares of farmland, some under crop, some in improved pasture, and some in summer fallow. They comprise 121 individually owned farms, 28 partnerships, 44 corporations and two other forms of ownership.

The municipality of Delta has a diverse agricultural economy. Grain, hay and other fodder for cattle account for the major part of our crop production. Major cash crops include potatoes, peas, beans, corn, berries, and greenhouse and nursery production. There are 92,000 square metres of greenhouses and mushroom-houses used for flowers, vegetables and vegetable transplants.

Livestock is an important sector of Delta's agricultural industry. Dairy and beef make a major contribution to farm cash-flow. There are over 6,300 head of cattle in Delta, and in excess of 2,200 are dairy cows. Of that 6,300 head, 2,400 are registered.

There are also eight food-manufacturing firms that operate within the bounds of the constituency of Delta. They process both domestic and imported products. These operations paid wages and salaries of some $6 million to 265 employees. The value of shipments from these operations exceeded some $46 million, with a value-added component of $13.8 million. I'd also like to say that farmers in Delta produce approximately $25 million in farm-gate value. They also purchase inputs in excess of some $20 million.

Mr. Chairman, hon. members, in beginning debate on my ministry's estimates I would like to touch on a number of important areas. I want to discuss first where we are today; that is, I want to outline briefly the market environment that British Columbia's agricultural and fisheries industries are facing. Similar factors are influencing both sectors.

Next, I would like to present an economic snapshot, if you will, of where these sectors stand today in terms of production and sales. I would like to detail for the House the progress made through some existing programs of the ministry and some new directions we will be taking to stay a step ahead of our changing marketplace. I will turn now to a brief discussion of what is happening in our market through agriculture and fisheries products.

Consumer demand for wholesome food obviously is intensifying. This trend is part of a growing global concern for the environment, and it comes with many implications. We anticipate wholesome and high quality foods to capture a larger share of the food market. Consumer demand for assurances of food quality and safety will increase. The public will continue to make greater demands for input into decisions involving land use. We anticipate a greater need to coordinate our efforts with other ministries and with other levels of government to satisfy public expectations about environment and food quality.

The agriculture and fisheries industries have always had to cope with unpredictability. Today our global competition means we must find better ways to adapt to unpredictability in markets, in production and conditions and prices, because all have a factor of

[ Page 7166 ]

unpredictability. Unpredictability also comes with its own set of implications.

Producers will try to minimize unpredictability by investing in controlled environment production systems. I am referring to new technology in aquaculture, greenhouse growing, food storage and processing. An adjustment to programs will have to be considered in conjunction with our federal colleagues as we move into the era of free trade with the United States.

Complicating all the concerns for production in sales in agriculture and fisheries is the heightened public awareness that our natural resource base — land and water — does, in fact, have limitations. Our food industries are mature, and increased production will come primarily through more intensive use of the land base and technological breakthroughs. This means, for example, there will be a greater need for creative long-term solutions to challenges such as water management, quality control and waste disposal.

Industry operations will become more intensive. Management skills will obviously have to be increased. We continue to develop access to the best technology in the world to increase our ability to compete in the world.

I have outlined some operating principles and sketched briefly some of the characteristics of the market environment we are operating in today. Formulating the principles and assessing the environment led naturally enough to our setting down a list of priorities. Our policy initiatives will promote a competitive marketplace. We will work to achieve freer trade and greater access to other markets for British Columbia products.

We will maintain the integrity of our resource base as a foundation for sustainable growth and development in food production. We will need to consider our financial programs in conjunction with industry, to move the industry toward self-sufficiency. We will enhance public awareness of the significance of our food industry.

These are some of the factors facing our food industry today. How is the industry doing in the face of such pressures? Overall, the picture is good for our $10 billion industry. Last year, farm cash receipts increased for the fifth consecutive year. I had forecast it would increase by 3 percent. I should have been much more optimistic because, in fact, the increase was 6 percent. The picture for total net farm income last year was even better. It was up 17 percent, to $212.4 million on sales of $1.1 billion.

In fisheries, the sales of wild seafood products reached $447 million last year. That equates to approximately 200,000 tonnes of product.

Aquaculture is a major success story. Salmon farmers harvested some 6,000 tonnes last year. The fish had a wholesale value of over $30 million. Value and volume of production of oysters and clams are also on the increase.

In the dairy and livestock sectors, growth has also been very strong. Last year the value of dairy products rose some 3.4 percent to $139 million.

Livestock sales rose 3.7 percent to $192 million. There is more good news in the number of small specialty markets that British Columbia producers are now entering. We refer to this area as our niche markets. It's in these niche markets that some of the fastest growth is taking place.

Horticulture is a good example. I am proud to report that the B.C. greenhouse sector is flourishing. Consider this: B.C. is now exporting greenhouse grown cucumbers and tomatoes to California.

Also in the area of the niche markets, our floriculture and nursery industries are prospering. Sales of cut flowers and nursery plants rose almost 14 percent last year to some $80 million. Believe it or not, we're selling edible flowers to Japan. These are a few examples of how our farmers and fishermen are already responding to the challenges of the international marketplace.

If we add it all together from primary production to transporting, processing, packaging, storing, distributing, retailing, cooking, serving and exporting, our industry is a $10 billion food industry. The marvel is that we still enjoy some of the cheapest food in the world and also one of the widest selections of locally grown products. The programs of our ministry have helped facilitate these healthy conditions in our food industry.

We are working with the fish inspection branch of the Department of Fisheries and Oceans to introduce a regulatory framework that will allow fish-farmers to capture the markets in seafood products. B.C.-farmed salmon recently placed first against competition from eastern Canada, Scotland, Norway, Chile, Washington State and Alaska in an international taste test held earlier this year in Los Angeles.

[4:45]

In consultation with the government of Canada, we're developing means to ensure sustainability of production of our wild fish catch and salmonid enhancement programs. We've taken steps to help B.C. growers of commodities such as beef cattle, lambs, hogs, apples, honey and horticultural produce to ensure access to new world markets. Through the Canada-B.C. crop insurance program, we've helped farmers maintain their incomes in years when natural hazards reduced their crop yields.

Mr. Chairman and hon. members, overall the industry is in good shape, but of course, there will always be challenges. I now want to outline how our ministry will apply its energy and funding in the coming fiscal year to meet the demands. Some of the initiatives I'm about to outline were first presented in our government's Speech from the Throne this spring. That speech committed our government to address the issue of chemicals in food production.

B.C. producers are continually looking for ways to improve their practices and increase their productivity, efficiency and profitability without the use of chemicals. The ministry has encouraged them in every way possible through our extension efforts. For example, to achieve a reduction in pesticide use, the ministry has assisted in the development of several integrated pest management initiatives including the

[ Page 7167 ]

ladybug, the parasitic wasp and mite releases for greenhouses and the testing of resistant varieties of grass and tree fruits.

By 1992, all pesticide applicators will have to be certified before they will be permitted to buy pesticides. We want to make our safe, healthy foods even safer. The $104.46 million budget includes these initiatives and maintains the infrastructure needed to ensure a strong food industry in this province.

The government's fiscal programs have given us the flexibility, for example, to make the grape and wine industry a major beneficiary of this year's budgeting process. The grape and wine industry adjustment program has been allocated $12 million in this budget. The funding will be used to implement this year's activities under the $28 million federal-provincial grape and wine sector adjustment program. No one denies that this sector will be affected by free trade with the United States, but we are doing our best to prepare the at-risk producers to cope with the impact of free trade. The ministry is working closely with industry to develop a quality wine niche market for this province, and we believe we can do well at it.

The agricultural and regional development subsidiary agreement, better known as ARDSA, will receive an additional $6.7 million for a total of $14 million this year. The additional funding will be used to maintain programming through all regions of the province in keeping with our strategy of regional development. ARDSA projects will continue to focus on soil and water development — sustaining the resource for future use, in other words. Other ARDSA projects will be enhancing the competitiveness of the food processing sector.

We will be improving our framework for orderly and responsible aquaculture development by establishing a new licensing scheme. Additional funds of $250,000 have been assigned to begin a joint federal-provincial research program regarding aquaculture and fisheries interactions. We will also be helping industry to establish systems to diversify their product lines and enhance product quality.

Our regional development extension program will receive $250,000 in new funding. Four additional staff will be hired and trained to enhance extension programs for farmers, especially in animal health.

Responsibility for the game-farming sector has been added to our ministry. This is another of the niche market industries with bright prospects. Investment in this two-year-old industry is already $8 million and growing rapidly.

The ministry is looking forward to working with the new Trade Development Corporation, which has been given responsibility for export market development of British Columbia products.

The feed grain development program, which was so successful in encouraging B.C. ranchers to use B.C. feed grain to feed their cattle and keep them here rather than shipping them to Alberta, has been allocated $1.3 million to continue it until July 31, when it will expire.

[Mr. Rabbitt in the chair.]

The farm income insurance program will be maintained, as British Columbia producers adjust to national income stabilization programs. These are called tripartite, because they represent a three-way sharing of costs between producers and the two levels of government. The ministry is actively promoting tripartite insurance programs for farmers. These programs are based on sound insurance principles.

I can't leave the matter of insurance without commenting on the world subsidy war that is taking place. Even as we enter the free trade agreement with the United States, our moving away from subsidy programs and the erection of self-financing insurance programs for farmers must be a gradual process. We well realize that. As some hon. members know, some of the challenges British Columbia's food industry faces are a direct result of the subsidy war between the EEC and the United States. The subsidies are distorting the world marketplace. Let me tell you, hon. members, we are caught in the middle. Until there's an end to that subsidy war, we must and will protect our producers. This ministry will do whatever it can to help create a more level playing-field without the distortions of subsidies.

Hon. members, in the Ministry of Agriculture and Fisheries, our responsibilities now focus on substantial economic development in both domestic and international business. In fact, that is exactly what agriculture has become. The forces of supply and demand will ignore borders. Free trade is an opportunity. Closer links with the Pacific Rim offer still more opportunities.

Our food products are of world class; our producers have proven that. We will continue to encourage them. We are ensuring our future ability to produce excellent food in great abundance. I will conclude now, and I look forward to answering questions from the members opposite.

MR. BARLEE: Mr. Chairman, perhaps I should clarify my personal feelings towards the minister before I criticize the ministry. He happens to be a decent guy. I'm in a bit of a classic dilemma, because the minister also has a longtime friend of mine on staff who happens to be a Red Tory, but happens to be a very decent and honourable Red Tory, which is a rare fish indeed. That is, of course, Dr. Lorne Greenaway. We have been friends since about 1944; it goes back quite a few years.

When I look closely at the state of agriculture in the province, there are certain danger signals. I realize that there are some sectors that are definitely at peril; there's no doubt that they are.

I think most people realize that one of the fundamental bases of the industry is the survival of the agricultural land reserve. The ALR really is the heart of the industry. Without it, the province loses much. First of all, we'd lose the industry, which is very important. Secondly, we'd lose the quality of life. I've gone over the record of the industry, especially in the

[ Page 7168 ]

last three or four years, considering the ALR, and one of my first concerns is the state of the ALR.

When the ALR was brought in in 1973, it was a social contract between the government of the day and the farmers that essentially said this: for preserving the agricultural greenbelts, the government promised to guarantee a decent income for farmers. Does the minister believe that the original contract has been honoured by the government?

HON. MR. SAVAGE: Yes, Mr. Chairman.

MR. BARLEE: The minister has stated on a number of occasions that the Social Credit Party is still committed to the land reserve. I wish that were true; unfortunately it isn't. If one looks through the back issues of Country Life from 1980, this statement was made by the Premier of the day, W.R. Bennett. He made the statement to the Smithers Interior News that it was his opinion that the Land Act was too tough on land developers wishing to develop lots in the ALR He went on to say: "It's tough to get land out of the ALR. I don't think anyone has to worry about losing agricultural land. There is plenty of land around here." Then he elaborated on that statement: "Bennett said the province had lots of agricultural land available, and land developers should be allowed to take good residential property out of the ALR." He seems to have followed up on it, because between 1974 and 1987 the agricultural land reserve shrank by 25,204 hectares. That's 60,000 acres approximately, give or take a few acres; almost 100 square miles of some of the best agricultural land in the province.

A couple of things I find interesting, and one of them is that when some of these lands are taken out, some very peculiar things come to mind. In late 1987, Gerard Kapchinsky wanted to take 107 acres out of the ALR. He was called an on-side guy. His land was classified mostly 3 and 4, which is fairly good agricultural land. He bragged to his neighbours that he was a good supporter of the government, and he'd have no problem getting it out. But the ALC turned down his application, so he applied a second time The ALC turned it down the second time, so he applied a third time — this guy's very persistent. They turned it down a third time. Did he give up? Not a chance. He applied a fourth time, and they turned it down again.

But Gerard knew what to do: he appealed it. And who did he appeal it to? He appealed it to the Environment and Land Use Committee — that's a real misnomer — and what did they do? They overruled guys who knew all about the land. Lo and behold, Gerard Kapchinsky got his land out of the ALR after being turned down four times — not once, not twice, not three times, but four times — by the ALC.

Then we have another case, one which I find very puzzling. In fact, an old friend who's sitting on the opposite side and I wandered over this land as kids. It's in Westbank. You'd like it to be an area that you're familiar with. Well, I'm fairly familiar with Westbank

One of my neighbours there was a guy called R.J. Bennett. R.J. Bennett happens to be the brother of the former Premier of this province. Now R.J.'s a nice guy. He's very keen on horses; he's a good neighbour; he's very convivial. I've known him since he was a kid; he used to play hockey with me. So I'm not unfamiliar with R.J. I know Lois, his wife, as well. Their political philosophy varies slightly from mine.

I've wandered over this land a lot. He had 19 hectares of very nice benchland — that's almost 50 acres. Fifty acres in that location in Westbank, which is only about two-thirds of a mile from the main street, is worth millions of dollars. Most of it is class 3, which falls into prime agricultural land categories. Some of it is class 6, but most of it is class 3; and I believe it is, because I've wandered over it many times. He applied to the ALC. There was no on-site study; no reasons were given for the approvals. But lo and behold, R.J. Bennett got his 50 acres out in the fall of 1987.

[5:00]

I'll tell you what happened. Some of his neighbours, who are not by any stretch of the imagination socialists or even left of centre, were very concerned because they had viable orchards. In fact, these orchards and vineyards border the property; they're right next door, and it's very, very good land. But R.J. Bennett had no problem getting it out of the ALR, while other people had a great deal of difficulty and never got their lands out, lands that perhaps could have been taken out.

I came across another case, and this case again involves the Kelowna area in the Okanagan, where the ALR is under a great deal of pressure. If I tell you afterwards why it's under pressure. There's an old property in the Okanagan that a couple of us know well. It's the old Paddy Cameron property, called Aberdeen Holdings now. It used to be the Guisachan Ranch. This is very interesting, because the two holders of this particular piece of land are — guess! — R.J. Bennett and R. Stewart. Well, R. Stewart would be Dick Stewart. So here we have R.J. Bennett again, and we have a longtime friend who is also onside; this is Dick Stewart. Now they don't have 50 acres, they don't have 60 acres near the centre of Kelowna, they don't have 70 acres; they have 90 acres. Very interestingly, out of the 90 acres, 72 acres was classified as 2 or 3. This is prime agricultural land.

So we have 72 out of 90 acres; 80 percent of that land was prime agricultural land. So they asked the ALC to have this land released from the ALR. The Agricultural Land Commission turned them down. But these guys didn't wait like Kapchinsky; they didn't apply two times, three times or four times. R.J. Bennett knew exactly what to do. He went straight to ELUC, and he appealed it. You know, the ELUC had no problem in taking 90 acres of the finest land in the Kelowna area — and that's by your own figures; classified 2 and 3 — out of the agricultural land reserve.

What I am saying here is this, through you, Mr. Chairman, to the minister: you have stated that the government is committed to the ALR. I think you are

[ Page 7169 ]

personally, and I think your deputy is personally, and I think you guys are in a classic dilemma, because you have a real problem. You're personally committed, I believe, to the ALR. I believe you are committed to agriculture. But I don't think this government is committed to agriculture. If you study the record over the last five or six years, in fact the last ten years, it will bear it out. So is the minister working towards the depoliticizing of the system? Does the minister believe that the Agricultural Land Commission should be overruled by ELUC?

HON. MR. SAVAGE: Mr. Chairman, first let me give my hon. critic some stats that might be interesting. The ALR actually remains quite stable at some 4.7 million hectares. Of the 100,312 hectares that have been excluded, 92 percent was removed by the commission. Virtually all inclusions, 75,106 hectares, were supported by the commission and the local governments involved.

Now getting to the areas of concern that were mentioned. As you well know, the ELUC being a committee of cabinet, we do not divulge the details of any of the exclusions, but I can assure you that in a large number of the applications that do come forward to ELUC, the decisions of the commission in fact are upheld — a lot of those applications.

MR. ROSE: How many? Twenty-five percent.

HON. MR. SAVAGE: Several. I wouldn't want to give you a figure. I don't have them exactly. But I can tell you...

Interjections.

HON. MR. SAVAGE: ... that a large part of those....

MR. CHAIRMAN: Hon. members, I would ask you all to have patience. You will all get your chance in this debate. I would ask the minister to proceed with his reply.

HON. MR. SAVAGE: In a large number of those applications, I can tell you, the decisions of the Land Commission are in fact upheld. In spite of all the applications that may well come forward to the Land Commission and to ELUC, I don't believe that there is a vast amount of land that in fact comes out. I don't believe there is.

On the question of whether ELUC itself should be part of the procedure or whether it should be left totally in the hands of the Agricultural Land Commission for applications on exclusion of land, I believe that even from the point of view of municipal politics, the same criteria could be said, because you have the right to proceed through local politics at the municipal level and regional district level. The politicians have to be prepared to make decisions, and that's why ELUC is in as it is.

MR. BARLEE: Unfortunately these decisions are not always made on a purely non-partisan basis; they seem to be made on a partisan basis. A very fine example there was the infamous or famous Terra Nova situation. If you look at Terra Nova, it's very interesting indeed. Let's take a look at Terra Nova. I think it's very important. It's very important as far as the ALR is concerned, as far as the ALC is concerned, and as far as the Social Credit Party is concerned.

Interjections.

MR. BARLEE: I'll tell you why it's important. The Social Credit Party for the last 15 or 20 years has had one segment of the population that have never wavered, and that segment is the farming community. I'll tell you how loyal they are. They are so loyal that you won't believe it. In fact, I had a meeting with the cattlemen the other day, and it was their annual general meeting. These cattlemen are really right-wing. They're almost as right-wing as some of my old uncles, who are also cattlemen. Very interesting.

I sat down with these guys and said: "You know, it's the only meeting I've ever been to where we get 3 percent of the vote." And they laughed. It's true: that's about all we get. By the way, we doubled our vote after I was through with that meeting. Instead of getting four votes in British Columbia we now get eight. These guys, and the farmers — 74 percent of these guys vote for the Social Credit Party. Some of these guys are so right-wing they even dismount on the right-hand side. They're incredible. But do you know something? A lot of them are pretty decent people. I'll tell you what is happening. They're starting to slip away, and I'll tell you why. I've done a little analysis of the farming community as well.

My particular constituency is kind of interesting. It is a small-c conservative constituency. A lot of the people in this constituency are right-wing, and they're kind of decent old right-wingers. There are a lot of nice right-wingers around, you know. It comes as a surprise sometimes on this side of the floor.

I'll tell you what happened. In the by-election of 1988.... I had run in 1969 and been fairly badly beaten by an old-time rancher, a guy named Frank Richter. I ran again in '72 and he beat me, not by very much, but he beat me, mainly in the city of Penticton. But things have shifted in the farming community, and I'll tell you what happened.

AN HON. MEMBER: A little relevance, please.

MR. BARLEE: It isn't irrelevant at all. It gets right to the point.

What you guys are doing is deserting your traditional allies. Your traditional allies took a long time to realize it, but if you look at the votes very closely.... There were three areas I looked at, and I'll tell you what they were. They were a little farming community called Cawston, another one called Kaleden and another called Naramata. All three of those farming communities voted almost two to one for the NDP. If that doesn't give you the message, nothing will. I'm

[ Page 7170 ]

saying that your traditional support is starting to erode.

Here's an example of why your traditional support is starting to erode. We'll get back to Terra Nova. Terra Nova's pretty interesting. I know it's embarrassing, but it's also interesting. It's a 464-acre site, some of the finest land.... I know it's difficult for you to follow, but we're back to Terra Nova. This is 464 acres of some of the finest land in North America.

MR. LOENEN: Who says?

MR. BARLEE: The people who know. The Agricultural Land Commission is fairly capable of deciding what is good land and what isn't. They said that it is the very best we have. If you've gone out there and taken a look at that land — which you should have — it is the very best we have. There was plenty of land in Richmond for another seven years of industrial and residential growth, but that didn't count at all. They decided that this land would be taken out of the ALR over the violent objections of the Agricultural Land Commission, over the objections of most of the people of Richmond, and for the benefit of a few developers.

That's why your basic support is starting to erode. It's not just eroding in Richmond, and it's not just eroding in the Okanagan; it's starting to erode in the Cariboo and these other areas where you have held the heartland for many years.

I'm saying to the minister: why don't you believe that the ALC should be divorced from the Environment and Land Use Committee? Why isn't it?

MR. LOENEN: It gives me a great deal of pleasure to take my place in the House and address the estimates of the Minister of Agriculture and Fisheries I'd like to urge him not to follow the advice he has just heard from the previous speaker, not to give in to the slogans we've heard for years and years coming from the members opposite. We've been subjected to a lecture here on politics, economics and land use, etc.

First of all, on politics, the member is worried that we are distancing ourselves from our traditional base of support. I don't know what the member is so worried about. We are not worried about that, because we are delivering good government. We don't talk about right-wing, and we don't brand our supporters as being left-wing or right-wing or conservative or socialist. We stand up for good government.

As long as the members on the government side continue to provide good government for the people of this province, we are not in danger of having people lose interest in this government. In fact, they will look to this government in years to come and recognize that we have not played and will continue to not play politics and will not brand people left, right or centre. They will look at this government as being a champion for the people.

[5:15]

Interjections.

MR. CHAIRMAN: Order, members. Before we proceed, I would like to remind all the members that we are on the Ministry of Agriculture and Fisheries estimates. We are not here in these estimates to discuss government, support for or against, polls, or anything else relating to those particular items that have been discussed in the last few minutes. I would suggest that we get back to discussing the minister's estimates, and I would ask the second member for Richmond to continue.

MR. LOENEN: When I think about all the good things our government has done, continues to do and plans to do, I get carried away a little bit. There are times when perhaps it is proper and appropriate for the Chair to remind us that we should not allow our emotions to stand in the way. However, being human, that sometimes happens.

I think of how we looked at the Terra Nova situation and how for three years we canvassed the community of Richmond and said to the people in all forms and ways: "What do you want? What would you like to see happen on those acres?" When I think back on the hours and hours that I and many others spent in public hearings and public information forums asking the people what they wanted done with those acres, and then hear the member stand up and say that we ignored the wishes of the people of Richmond, surely he does not know what democracy is all about.

For the record, it ought to be noted that there was an advisory planning commission appointed by council which looked at this for nine months. That committee, which had representation from the farming community and many other sectors and which represented all the different segments of the community, came in with a unanimous recommendation that the land be turned over to residential use.

MR. BLENCOE: Another setup. Name names.

Interjections.

MR. CHAIRMAN: I would ask the hon. members to address their remarks to the Chair. If we abide by the rules laid down through hundreds of years of parliamentary tradition, the Chair will not have to exercise the powers laid out in the standing orders.

MR. BLENCOE: Who was she related to?

Interjections.

MR. CHAIRMAN: Order, please, second member for Victoria (Mr. Blencoe).

MR LOENEN: The suggestion was made by the second member for Boundary-Similkameen (Mr. Barlee) that the ELUC be eliminated. The reason he gave was that we have an Agricultural Land Commission that should not be overruled by decisions of ELUC. He said the reason is that sometimes politics may interfere. He's a politician, or he pretends to be.

[ Page 7171 ]

I would like to suggest that the job of elected representatives of the people is to represent the interests of the community as a whole, and that the scope of the interests of the community as a whole is often much wider and broader than the narrowly focused mandate of the Agricultural Land Commission.

The Terra Nova instance is a prime example. If I had been a member of the Agricultural Land Commission, then by virtue of my mandate, I too would have found in favour of retaining that land for agricultural purposes. It stands to reason. Given their mandate, they have no choice. But it is entirely proper that the wider interests of the whole community be represented and that there is a possibility.... There are many interests that a community has, one of which is its natural growing areas for food supply. But there are many other interests. There are interests that relate to jobs, to housing, to the need to balance jobs and housing. In our community, for instance, we have more jobs than housing. We supply jobs for neighbouring communities.

There are overriding public interest concerns that need a forum to be addressed and to find expression, and that kind of a body is ELUC. It is the people's representative and can look at the needs of a community or of the province as a whole. I've seen that work out in the example of Terra Nova. I'm grateful for the fact that within a democracy there's an opportunity for a larger forum than merely the narrowly focused and narrowly mandated forum of the Agricultural Land Commission. So it's entirely appropriate. To simply write that off as a forum for political interference is to do a great disservice to an institution that has a long tradition.

Within our society we have a long tradition of having an appeal process; of saying there ought to be a way in which various control forces, bodies and regulatory agencies are responsible to the representatives of the people. Mr. Minister, it is for that reason that you ought not to consider the kind of suggestions that have been fed to you from across the way.

The Terra Nova situation in Richmond was a decision made by the duly and democratically elected majority of the local government. For those members to stand up time and again — and we went through the same thing last year and, I believe, the year before, too, on the agenda here — and say it went in the face of the majority of people in Richmond, etc.... Do you not respect, Mr. Member, duly and democratically elected officials? Do you not respect our very traditions of government? Have you no respect for them? Those people fought an election in 1985. The municipal election was fought over the issue of Terra Nova, okay, and the people who favoured turning the land into housing won. What other court of appeal would you like to go to? In our democracy there is no further court of appeal than the voice of the democratically elected people. If you don't like that, if you want to argue against that, what are you doing in this House? There has been no undue political influence, Mr. Member, and I find it reprehensible for you to keep on making those charges.

MR. BARLEE: I seem to have touched a sensitive nerve here, and I don't know why. I think the member is getting a little overwrought. Let me tell you about the democratic process. Let me tell you about the court of appeal; I like the court of appeal.

A newspaper in Richmond took a survey. It took a poll. It was a careful poll, and the poll said that 87 percent of the people of Richmond did not want Terra Nova removed from the ALR. That's seven out of eight, within half of 1 percent. Of the 68 speakers who spoke at the hearings, 65 spoke against removing that land from the ALR.

The hon. member talks about the advisory planning process. Well, let me tell you something about the advisory planning process. The man who will benefit from the profits — the multimillions of dollars of profit made out of Terra Nova — is Milan Ilich. And who was on the advisory process team? It happened to be his wife, Olga Ilich. So we see that it wasn't exactly unbiased; it wasn't exactly non-political. Eighty-seven percent of the people in Richmond didn't want it; 65 of 68 people spoke against it, presented briefs against it. Where did the appeal go? To ELUC. But there was no court of appeal for the people of Richmond; they couldn't appeal any higher. They thought the court of appeal was the Agricultural Land Commission, which originally had been the court of appeal, composed of citizens who knew what it was all about, what the land was worth and what the agricultural land reserve was worth.

You don't think that's good enough. We didn't hire them; this government hired them for their expertise. This government felt that they were capable of doing the job, but when they didn't do the job the government wanted them to do, then they appealed to ELUC, and ELUC came up with the usual right decision. But there's no appeal for the people from ELUC, and that's why you're losing your support in the farming community.

HON. MR. SAVAGE: I would like to use as a reference an instance that involves my family. It happened in Delta, and it was not this government; it was the government of the day, when it happened.

Interjection.

HON. MR. SAVAGE: Well, it might just be a case in point; in fact, a very good one.

Interjection.

HON. MR. SAVAGE: Well, who caused it to be in the river in the first place? The problem is that it was an expropriation. It wasn't even given a chance of a hearing. We were politely told by the government of the day: "Your land is being taken from you." At least by appeal process, you have a procedure you can go through. I resent the fact that people don't have the right to appeal. Obviously, everybody should. In that

[ Page 7172 ]

case we did not even have that, and I think that was wrong. It was not this government that made the decision.

MR. ROSE: I've heard a lot of defensiveness around here this afternoon. I don't think it is necessary to be so defensive on matters such as this. I think there should be a right of appeal. I called for a right of appeal when I talked about this a number of years ago. That is really not the point of issue.

ELUC operates in the dark. Its rules and the reasons for its decisions are never made public. There are no criteria; there are no sets of guidelines to look after the various factors, such as housing and other social implications, locked-in land or anything like that. When things are operating in the dark....

The first three years we had ELUC, 70 percent of the Land Commission's decisions were sustained. In the last three years, about 70 percent of them have been rejected. Obviously, there's been a change in the way that ELUC operates, and it's not satisfactory. There's bound to be suspicion piled on suspicion piled on suspicion when the ELUC operates in the dark with no sense of criteria and no report on how the decisions were arrived at. I think that is the biggest problem there.

If farmland were running out of our ears as it is in the Prairies or the Midwest, it could be quite different. I think the minister agrees: we've got about 4 percent. The best farmland is close to our largest centres, because that's where people choose to live: the Okanagan, the lower Island, the Fraser Valley. That's the problem here.

We may not need it now. We've got everything under greenhouses, and we can import. There's a lot of salinity going on down in California, and there are going to be changes in the whole mix. Naturally, with billions of people being born on the earth and the total going up to about seven billion by the end of the year 2000, we're going to have a lot of hungry people. We're going to need food. I don't think that really is the issue. The issue here is that we either have to take steps to preserve our environment and look for other ways, or we're going to be out of it. The concern that people have is, I think, a genuine one.

While I'm on the subject.... I really took away his thunder here. I don't apologize for it, because I do that sometimes to my friends all the time.

[5:30]

AN HON. MEMBER: Sometimes, all the time.

MR. ROSE: Sometimes it's all the time.

I think the concern here is genuine, the concern that people are expressing for sustainability, and the minister has to appreciate that. The easiest places to build are the flat places. The places of highest economic value — if that doesn't sound too Georgist for some of you in terms of taxation theory — are near large urban centres. Yet they are the very places we've had the greatest devastation and onslaught. You can blacktop all of Richmond. My grandfather had a farm out there, too; it's the Gilmore subdivision today. We weren't so concerned about it then. He didn't do it, by the way; the Gilmores or their successors did.

The problem, when you talk about the agricultural land reserve, when I looked at it last, is that we found that the exclusions were largely in the areas that were seasonally suitable for agriculture of a mixed kind. The ones that were included were up in the Liard River, where there's a very short growing season or a lot of rangeland. It looks good on paper, but if you examine where these exclusions are taking place, you'll have to agree that they are in the most desirable areas for agriculture.

HON. MR. SAVAGE: I think you're also well aware that some of those decisions were made in ELUC as a result of recommendations on the restructuring of identification of the specific areas and fine-tuning. They're included in some of those numbers that are defraying what you might think, as an ELUC decision, is a recommendation because of a political favour. That's not the case at all. A large number of those decisions were made on the recommendations of the presentations by the Land Commission in the fine-tuning process. A lot of inclusions were done on the same basis.

MR. ROSE: The minister has not said it explicitly. He may be talking about the May property out in Richmond. There were parts of it realigned for the very purposes that the minister mentioned; that is, fine-tuning. But on three sides of the May property there was agricultural land. The very fact that the whole thing for all we know, went to golf purposes — because I think that's what happened to it — put enormous pressure on the contiguous neighbours. So the fine-tuning was one thing, but the fact that ELUC changed its mind on the whole property, or excluded the whole property, is quite another.

MRS. GRAN: I guess the most difficult thing that I have with some of the things that the second member for Boundary-Similkameen (Mr. Barlee) has said is the way he's casting aspersions on people and naming them. I come from a community that suffered greatly from the incompetent implementation of the Land Commission.

Quite frankly, the NDP are supposed to stand for people that can't afford housing, and it is my belief that the Agricultural Land Commission is part and parcel of why we have such high housing costs in the lower mainland. One morning we woke up in British Columbia during the dark days of the NDP and we had an Agricultural Land Commission. Land was frozen — and is still frozen — that you could never farm no matter how much money you had. I think that the members on the NDP side of the House have to start thinking about that. To insinuate that in some way we should not have an appeal procedure is absolutely ridiculous.

I would like to use one example from my constituency: Gloucester Properties. They had started trying to make a 600-acre industrial park in Aldergrove

[ Page 7173 ]

before the NDP were elected. It has taken until last week for them to turn the soil, because of the Agricultural Land Commission and all of the difficulties that was fraught with during that period. Those 600 acres will supply jobs in Aldergrove, where we have people out of work, people who have very little hope of finding jobs in the area and can't afford to travel to Vancouver or anywhere else for that matter.

I think that when you make broad statements about the Environment and Land Use Committee, you might have second thoughts. In Langley the people who come to see me who are making applications to the Land Commission are little people. They are people who own small acreages. Some of them have lived on those acreages for 20 or 30 years, and they are paupers. They can no longer farm the land. They are forced to live on farmland. They can't even, in many cases, separate an acre from it for their own homesites, and they are at the mercy of the Agricultural Land Commission. I think an appeal procedure is the only way democracy will survive in that area.

I listened to the argument that member makes. I listened to it for seven solid years when we were fighting for Gloucester Properties for an industrial park. That member, although he is new to the chamber, may well want to rethink some of the remarks he has made, using names to cast aspersions on those people.

MR. ROSE: I hesitate to get into a drag-out fight with the hon. member for Langley. I have accused her occasionally of being a selective internal bleeder. She is obviously very upset and feels very strongly about this, and I think there are cases such as the ones she mentioned. I would point out that this party hasn't been in power for at least 14 years, so if there are such terrible conditions, one wonders why this message didn't come to the government before now.

MRS. GRAN: It's hard to undo that kind of damage.

MR. ROSE: We have influenced the province negatively for 14 years; I take it that's the answer.

MRS. GRAN: You said it.

MR. ROSE: The other morning we were treated to the minister's little lecture about how wonderful the horse-ranching business out in Langley was and that some of these people.... He said the land wasn't much good for anything else, but we could chase a few thoroughbreds around it, and the horse-breeding industry was very important to Langley. You really can't have it both ways, you know.

I will admit that there are places in Langley and Aldergrove that are probably not particularly suited for agriculture. But I also know the area well enough to know that vast amounts of it have gone for homebuilding.

MRS. GRAN: You have to live some place.

MR. ROSE: There's no question that you have to live some place, but the same argument is used for Richmond. You can use the argument through the Okanagan; you can use it everywhere you go. The argument is that we've got to blacktop everything, including Richmond, because we need jobs, homes and all the rest of it; nobody questions that.

What we're trying to do in this latter part of the twentieth century is to look at places and decide and plan where we're going to do these things. Some people are going to be hurt. You know why they're hurt? Because the second half of the social contract has been a failure as far as this government is concerned. When the Agricultural Land Commission legislation was enacted — or, if you like, imposed by the heavy hand of the state.... Why don't you go in for that one? That's a nice speech too: "The heavy hand of the state pushed down individual initiative and ruined the opportunity for a man to make a buck selling his land to a real estate developer." When the heavy hand of the state was imposed, there was a counter to all this, and that was the farm income insurance program. The public was told — "among other things" my colleague says, who was here at the time: "Look, if saving the farmland is a valuable activity for British Columbians, then the farmer shouldn't have to bear the whole brunt of it."

If, for the good of all British Columbians, we reserve — or, if you like, zone.... I'm quite sure you wouldn't want an autowrecker building right next to your beautiful new house, would you? Therefore zoning, I hope, is not in question here. These places have been zoned for agriculture.

The other half of the equation is that if you're going to be frozen in terms of mere land and its value, and the fact that it can increase in value, then you have to have an income. There's no point in being a bonded serf or a frozen peasant if you can't make a living out of it. Sure, the people in the Okanagan — the tree-fruit industry has all gone to pieces — are feeling that way. Of course they are. Who wouldn't?

You've got to do one of two things, and we've all got to do it. We can't expect the farmer to bear the whole brunt of the social cost of saving the farmland. We'll agree with that. But you've got to beef up — instead of constantly erode — the kind of farm income insurance that won't replace that person's costs. I have talked to people in Keremeos — in the tree-fruit industry and the soft-fruit industry, which you've just thrown away through free trade — and they're in terrible straits. If the only asset I had was my land, I'd be damn anxious to get rid of it. So I don't have any problem with the farmer and his desires to get out from under that yoke; but I do have a big problem with the government, which I think has failed in its half of the social contract.

MR. LOENEN: The whole question of land use is a very important one. Having lived in Richmond since I was a boy of 12, I know that the issue has plagued my community and has been very intensively canvassed over the years.

[ Page 7174 ]

We can all make great big speeches about the importance of maintaining an agricultural base because if we don't and we blacktop it all and fill it in with concrete, pretty soon we won't have a place to grow our own vegetables, and our children or their children will have to do without. I have listened to many arguments along those lines, and on the surface of it, indeed, it seems that when you have an ever-growing population, and at the same time we diminish the numbers of acres of agricultural land, at some point we're going to run out; our needs will outstrip the capacity to feed our population. Although in theory that is bound to be the case, what we have to understand is that that juncture, that conflict, is a point which we cannot reasonably forecast for perhaps generations to come.

The reason is quite simple. If you look at our province as a whole, we have 4 or maybe only 3 percent that's arable land, but if you look at the total acreage in agricultural production, it's the equivalent to what the tiny country of Denmark has in agricultural production. But the astounding thing is that their production, their yield, is 6.8 times what we produce on our lands. The reason for that, at least in part, is that they have learned what intensive farming is all about. The farming industry is becoming increasingly productive. The Denmark example shows that if we really had to, if we were really pushed to the wall, we could be far more productive than we are today. We'd learn about all kinds of non-soil bound ways of producing food. We talk about agricultural industrial parks. There's a small tin shed at the corner of No. 6 Road and Blundell in Richmond that employs some eight people; they grow enough bean sprouts to feed all of the lower mainland on a lot no bigger than 120 feet by 60 feet. That very dramatically illustrates the capacity of our agricultural industry to do more intensive forms of farming.

[5:45]

You can make big speeches about alerting people, being alarmist that if we continue this trend our children will have no way to feed themselves. But it's unrealistic; it's alarmist; it's simply not true. Some of those alarmist statements ought to be balanced against reality. It's for that reason that it takes a great deal of.... Those are very complex questions, and there are no simple answers to them.

Look at what is happening. A few years ago, 50 percent of the strawberry crop in the Fraser Valley, including in my own community, rotted in the field Why? Because Safeway and other food stores could import the same strawberries from Mexico and California at a few cents cheaper. How many of those 9,000 people who signed that petition saying, "We want to preserve farmland in Richmond," ran to Safeway and said: "Oh no, we don't want to buy Mexican strawberries." I'd venture to say none of them did. They all went to Safeway and bought Mexican strawberries. That is exactly how much the public cares about farming.

MR. BARLEE: I find the second member for Richmond's statements very interesting. He talks about an alarmist statement. He talks about removing the greenbelt — the agricultural belt — and using greenhouses. I think the member has forgotten something. It's called quality of life. In California they've recognized that this is important. They've lost much of their agricultural community in California. The Napa Valley was endangered in California, so what did they do about it?

I'll tell the second member for Richmond what they did about the Napa Valley. They decided there is a natural link between agriculture, tourism and environment, so they advertised the Napa Valley as a great grape-growing area. They advertised the Napa Valley as a vineyard area with small wineries, and the result was that it became the second-biggest tourist attraction in California, after Disneyland. You may have seen Disneyland; perhaps you should have seen the Napa Valley, because it's very important.

During my ten months as an MLA and as the shadow critic for agriculture, I've become very concerned about certain sectors of the agricultural community that are at peril. I'll tell you one of the sectors at peril, and I think the minister knows this. The deputy minister certainly knows it, and many people in the ministry know it.

In the Okanagan, for instance, two sectors are at peril. One is the grape-growing industry. You alluded to it: the vineyards are in trouble. There were 210 operations in the Okanagan last year; there are now 90. Some 120 families and all their workers are gone from this industry. The industry is not just important for these families; it is important.... I'll tell you why it's important for these families: these guys have no safety nets. They're not like guys who get laid off from a job; they can fall back on UI. The farmer can't fall back on UI, on a pension plan; he can't fall back on anything.

The tree-fruit producers in the Okanagan are in the same position. The soft fruits are in a very difficult position; and of course, the Red Delicious growers, Golden Delicious and all the rest are in worse condition. These guys have been fighting a market which is very difficult. They have to fight Washington State. Washington State produces about 70 million boxes a year; we produce about seven million. They operate under much better conditions than we do; they have cheaper labour, electricity, water and land. We cannot compete in that area, so what is happening is that this particular industry is hard hit.

Most of these farmers.... I don't blame them. I don't blame the orchardist. If I were an orchardist sitting on 20 acres and getting 5 cents a pound for Golden Delicious — some of the finest in the world — I would be worried too, because it's a sector that's at peril. I contend that this government hasn't done anything about it. These guys have literally starved on the land, and I'm asking the minister what the government is specifically prepared to do about the tree-fruit industry in the Okanagan.

They're threatening to withdraw 30,000 acres from the agricultural land reserve now, and they're getting some support because they haven't been backed. This

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contract between the government and the orchardist was essentially broken.

HON. MR. SAVAGE: I appreciate the comments the hon. member is making, and it's well respected. We realize, even under free trade with the U.S., that there are some adjustments that are necessary. We have done it in the wine and grape program, but we should not assume that we should quit or give up. I think we have to be optimistic. I have never gone into a business in my life with an attitude that I give in.

I think it's important that we do what we can as a government, and we have made some adjustment packages available. We should also realize that we can produce some very high-quality wines from the Okanagan of this great province. I think we should work desperately towards trying to get them back into the vinifera type, high-quality premium wines that we can be proud of and market on a worldwide basis, and give recognition to the quality standards, the appellation standards, and get these producers back into acreages that will give them a half-decent income and an opportunity to make a decent living in society.

Beyond that, you mentioned a little bit about the fruit-growing industry, and I think you're really referring to the soft-fruit sector, also an area of some concern. If you look at the free trade agreement, that's part of it, but you also have to look at the 95 countries who are in GATT. Continuing to subsidize on a worldwide basis, no matter which country it is, is going to come under closer scrutinization for seeking actions under countervail. If unfair subsidized programs are distorting markets to give an advantage to get into a competitive one, then I think the producers are going to face those challenges.

I respect that some adjustments are necessary; we know that. But until such time as we know the details of those adjustments, we cannot make them. In the soft-fruit industry we will have to see how the processing side stands up.

We can look at other horticultural crops. Vegetables, for example are allowed a 20-year snap-back proviso. But after the 20 years what happens? How is the food-processing sector going to be able to compete?

I have been having meetings with a number of those groups who say they want to be able to compete on a worldwide basis, especially to adapt to the free trade agreement. We will do everything we can as a ministry to make that possible, from the agricultural producer as the base unit right up through until it gets to the store shelf. But we have to address all those areas to see where we can do best and how we can do it best.

MR. BARLEE: Unfortunately, many of these original grape producers really didn't have that luxury. There was absolutely no guaranteed market. You're asking a man who has made a living on grapes for 20 or 23 years, who may be in his fifties and has nothing to fall back on.... You cannot ask him in good conscience to depend upon the marketplace when the marketplace has not been guaranteed. The marketplace has not been guaranteed; there's no doubt about that at all. So these guys....

Not only that, Mr. Minister, but there are few options. I have asked these grape growers what options they have been given from the Ministry of Agriculture, and almost everyone said they had no option. The only option they have is to cut their grape-vines away and take a chance on the $8,000 an acre, and $8,000 an acre simply can't carry these individuals — there's no doubt about that at all.

While we're talking about that, perhaps we should concentrate on something else. There was a great deal said about the budget this year, that it was a balanced budget, and that the Ministry of Agriculture had received an increase in the budget. It was up from $61 million and some hundred-odd thousand to $68 million. Unfortunately, we have to take one other factor into consideration, and the other factor happens to be a $12 million factor; this is the $12 million grape compensation package. That's not to keep farmers in business; that's to get them out of business; that's to put them out of farming. So let's take the $12 million off the $68 million. We had $61.8 million last year; now we've got $56 million. This is a $5 million decrease, according to my mathematics. This is 8 percent lower.

The Ministry of Agriculture has been one of the few ministries singled out to have a much lower budget than it had last year, in an industry that needs a higher budget. I should quote the deputy minister, who said in one of his talks — and he was right — that this ministry needed at least 25 percent more, not 8 percent or 9 percent less. It does need at least 25 percent more. I think it needs more than that. So the figures we are given are a little misleading, if my mathematics are correct.

HON. MR. SAVAGE: Mr. Chairman, I believe we're fiddling around with figures here, because the estimates for the ministry are at $104,465,000, as opposed to $91 million last year. In that is the $12 million adjustment program. I don't think that's what you're talking about — $68 million to $61 million, then backing $12 million off $68 million. That is not the case. As I read the estimates, it's $104 million, including the contribution by farmers to the farm income insurance program. Last year it amounted to $91,035,000. So I don't agree with your figures, on your evaluation of what the percentages are as they relate to last year's budget.

Also, the discussion on the issue of the grape growers: I really appreciate the comments. The $8,100 that was agreed to by those producers through their board, and the negotiating process.... We have also had a replanting program to try and get them back into the business. I believe it was somewhere around $2,000 per acre to try and get them back into a vinifera-type grape, a premium-quality grape. Although some may choose not to go back in, I believe that opportunity will exist. We are working towards

[ Page 7176 ]

implementation and help in that respect, realizing that it's still the choice of the producer to decide if he wants to be in that business or not.

I might remind the hon. member that previously, when GATT challenged Ontario's wine policies, it was on the basis that that would be only the start in Canada, because B.C. would have been under the next challenge. I think we have to recognize that. We had to make necessary adjustments before we were ordered to do so. And we did it under free trade. I think we recognized that that was the implication of not dealing with it. If we didn't, we were going to be ruled to do so. Those adjustments had to be made — and it related to liquor policies within those provinces.

HON. MR. RICHMOND: I know we all look forward to continuing this debate tomorrow. I move that the committee rise and report progress and ask leave to site again.

The House resumed; Mr. Speaker in the chair.

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

Hon. Mr. Richmond moved adjournment of the House.

Motion approved.

The House adjourned at 5:59 p.m.