[ Page 7279 ]

CONTENTS

Routine Proceedings

Oral Questions

Pub licensing. Mrs. Boone –– 7279

Dumping of Expo site toxic soils. Mr. Harcourt –– 7280

Mr. Cashore

Knight Street pub investigation. Mr. Sihota –– 7281

Committee of Supply: Ministry of Finance and Corporate Relations estimates.

(Hon. Mr. Couvelier)

On vote 25: minister's office 7281

Mr. Miller

Mr. Williams

Mr. Clark

Mr. Rabbitt

The House met at 2:07 p.m.

Prayers.

HON. MRS. JOHNSTON: In the precincts this afternoon we have a number of municipal representatives from the Union of B.C. Municipalities who are joined by their Canadian counterparts from across the country. They're meeting here in Victoria today in preparation for the Federation of Canadian Municipalities' convention, which starts in Vancouver on the weekend. I would ask the House to make them all welcome, please.

MR. CASHORE: Today in the gallery we have some friends from Coquitlam and Port Moody. It's always good to have present in the House good friends and people who support us in so many different ways. I ask members of the House to make welcome Belle and Dick Barbour and Marian Aabjerg of Coquitlam and Jenny Wilson of Port Moody.

HON. MR. BRUMMET: I have some special visitors today in the gallery. They are from Malaysia. I'd like the House to welcome Mr. Datuk Aziz, who is the deputy director-general I of the Ministry of Education in Malaysia, and Mr. Zainul Abidin, who is the deputy director II. Accompanying them is Dr. Gordon Jones, who is director of Asia-Pacific Educational Consultants from Vancouver. I'd like the House to give our guests a very special welcome.

HON. MR. HUBERTS: In the gallery we have two tremendous veterinarians in British Columbia visiting with us. I'd like the House to welcome Sandy Jamieson and Ken Macquisten.

HON. MR. RICHMOND: In the precinct, and I believe in the gallery at this moment, are 11 supervisors of administrative services from my Ministry of Social Services and Housing. I'd like to welcome them to the House. They're here to see how the democratic process affects their livelihood. They are Margaret Needham, Diane Winkler, Ken Hamilton, Wendy Lawrence, Angela Bodnarchuk, Marian Ostojic, Denise Bevan, Barb Garrett, Darlene Jonas, Jan Dowler and Teddy Watson. Would the House please bid them welcome.

MR. SIHOTA: In the gallery today is a good friend of mine, a member of the bar in Victoria, Mr. Doug Thompson, someone I graduated with and who lives in Victoria. Mr. Thompson had a tremendous knack for attending all of our lectures and I had a tremendous knack for missing most of them. And had it not been for his attendance and his notes which he passed on to me, I never would have made it through law school. So I'd like to welcome Mr. Thompson to the gallery today.

MS. A. HAGEN: Earlier today, six extended-care residents of Queen's Park Hospital visited the precincts along with six caregivers. They weren't able to stay this afternoon, much to their disappointment, but in their absence I'd like to acknowledge the presence of the Whippersnappers in the precinct today and to say that we all welcome the fact that they were able to be around our buildings and have some time with us.

MRS. GRAN: Mr. Speaker, on behalf of the second member for Langley (Mr. Peterson) and myself, I would like to introduce to the House today some good friends and supporters, Helen and Eric Bysouth, from Langley. Would the House please welcome them.

MR. PETERSON: It's a good day for Langley, with many good friends visiting us. In the precincts is Dr. David Paton a very good friend of the first member for Langley Mrs. Gran) and mine. Also, I might add, he's a veterinarian who has successfully treated many of my own cattle.

Oral Questions

PUB LICENSING

MRS. BOONE: A question to the Minister of Labour and Consumer Services. On April 27, the minister announced that municipalities with the necessary bylaws could oversee referenda as part of the process of licensing neighbourhood and marine pubs. Yesterday the minister said that an independent commission will conduct hearings into the process of licensing pubs. Can the minister confirm that the increased role of municipalities in pub licensing announced by the minister in April will not be affected by the changes he announced yesterday?

HON. L. HANSON: Mr. Speaker, the member opposite obviously hasn't read the press release. Certainly there is a discretionary right for a municipality through a bylaw process to take over the referendum process. There has been no change in that.

MRS. BOONE: A supplementary to the minister. The minister's own press release stated that all licences would be given through the commissioner. Clearly political interference has been a prominent feature of this current system. What assurances can the minister give that this new commission will be protected from political interference or influence?

HON. L. HANSON: First of all, political interference is just not true, but I can give the same assurance The member gives me the assurance that her research has been well done and well documented.

In any case, the process that we are talking about is a process that we haven't fleshed out in its completeness yet. That's the purpose of appointing

[ Page 7280 ]

the person to look into recommendations — how we may be able to put those new licensing procedures in place. The municipalities have, through the last announcement, the ability to take on the referendum process, which is the process that gains the opinion of people in the immediate area of the proposed site. There has been no change in that. The municipalities must take on that responsibility, via a bylaw, so that those who have applied will know what they have to conform to when they are making that application. There's no change in that.

Another change, which the member hasn't mentioned, is that the decision of location within a community, as it relates to a school, a park or a highway, is now going to be the responsibility of a municipality.

MRS. BOONE: Supplementary to the minister. The minister gave me no guarantees at all that there wouldn't be any political interference, nor did he tell me how the people would be protected from political interference. Is the minister prepared to seek unanimous consent of the Legislature for the appointment of the new commission?

[2:15]

HON. L. HANSON: Mr. Speaker, the member opposite is making assumptions, or innuendos, of political interference. That's just not true. Maybe she's suggesting that she would like to have the ability of having some political interference. But I assure you that that won't be the case. It will be a fair and honest licensing process.

MRS. BOONE: Supplementary to the minister. If the minister is saying, then, that unanimous consent of the Legislature is political interference, then I really think that the whole Legislature should take offence at that. We are asking, Mr. Minister, if you will agree to having unanimous consent to the appointment of the commissioner to ensure that there is an unbiased person in there, and that this person will not be influenced in any way. This person is obviously going to have a phone, Mr. Minister. Will he also be told by the government what the term .onside" means?

HON. L. HANSON: Mr. Speaker, these are certainly interesting comments coming from the opposition. I guess I could go back some years and refer to some appointments that had been made in those days, but we won't get into that, because that's history. I have a desire to get on with things and not deal with history. Mr. Speaker, I assure you that this government will make very wise choices in who will serve on that committee once we have the committee outline properly in place.

DUMPING OF EXPO SITE TOXIC SOILS

MR. HARCOURT: I have a question for the minister responsible for the B.C. Enterprise Corporation. Has the minister now managed to locate the misplaced, destroyed or otherwise missing files that would allow us to know definitively the location of all the sites where toxic soils from the Expo site were dumped?

HON. MR. MICHAEL: Yes, Mr. Speaker, I will take that question as notice.

MR. HARCOURT: Can the minister provide this House with a list of the dump sites for the Expo toxic soils that he or BCEC is aware of?

MR. SPEAKER: The minister has taken the question as notice.

MR. HARCOURT: As part of that, a new question, Mr. Speaker. Has the minister determined yet who all the contractors were that hauled the soil away?

Interjections.

MR. HARCOURT: That was a question that is of importance to people in the lower mainland. If the Social Credit government thinks it's a laughing matter, we don't. Mr. Speaker, I asked the question; I didn't hear a response from the minister. I didn't hear whether he had taken it on notice or chosen not to answer the question that's important to the people in the lower mainland.

HON. MR. MICHAEL: Mr. Speaker, the minister will take that on notice.

MR. CASHORE: To the Minister of Environment. Did your ministry give permission for the dumping of toxic soils from Expo off Point Atkinson, at Westwood Plateau, at the foot of Penzance Drive and at other locations in the lower mainland?

HON. MR. STRACHAN: First of all, I think part of the question has been authored by Gordon Wilson, the leader of the British Columbia Liberal Party. Mr. Wilson has also responded to me, so I am aware of the ocean dumping part of it.

Waste disposal at ocean dumping sites is regulated by the environmental protection service of Environment Canada under the Ocean Dumping Control Act. They monitor the standards and any dumping that would have taken place with respect to ocean dumping. With respect to the rest of the allegations of toxic soils being removed and placed elsewhere in the province or lower mainland area, my ministry is currently investigating those allegations and will be providing me with a report as soon as that information is available. Toxic wastes are covered under our waste management legislation. Those amendments were made in 1987, and the NDP voted against them.

MR. CASHORE: A supplementary. That answer wasn't good enough. This minister's mandate is as big as all outdoors. The question is: does the Ministry of Environment have records of all the locations at which contaminated soil from Expo was dumped?

[ Page 7281 ]

HON. MR. STRACHAN: I believe the Minister of Government Management Services took that question on notice. Yes, we have records of all movements where people apply for a permit to move toxic materials, but in this case the allegation is that a permit was not required. That's why we are having an investigation done now.

MR. CASHORE: A supplementary to the same minister. Can the minister tell this House who is responsible for cleaning all sites where Expo toxic soils were dumped?

HON. MR. STRACHAN: I don't think there's a question there. Maybe the member can repeat it, but it's not following.

MR. CASHORE: Assuming that it can be proven that toxic soils from Expo were dumped at various sites, who is responsible for the cleanup?

HON. MR. STRACHAN: There is a question there. The person who moved that toxic soil — if it's proven — would be responsible for the cleanup.

KNIGHT STREET PUB INVESTIGATION

MR. SIHOTA: A question to the Minister of Labour. Has the Minister of Labour yet had an opportunity to discuss with Mr. Doney his knowledge of the conversation between Mr. Poole and Mr. Hick?

HON. L. HANSON: Mr. Speaker, that's out of order. It was taken on notice.

MR. SIHOTA: When ministers take questions on notice, there's an expectation they will reply at some time. When I asked the minister the question for the first time last Wednesday, he said he would take the question on notice and "find out."

The minister said in today's press that he does not intend to reply to this crucial question. Is it the minister's position that he will not be replying to this pivotal question?

HON. L. HANSON: No, Mr. Speaker. I'll reply in due course.

MR. SIHOTA: A new question to the minister. Did the minister review Mr. Doney's report prior to its presentation? It was issued under the minister's signature at the press conference. Did the minister review Mr. Doney's report before it was presented?

HON. L. HANSON: Of course. I very seldom sign things if I don't know what I'm signing.

MR. SIHOTA: The minister has conceded that he knew in advance of the conversation between Mr. Hick and Mr. Poole. Could the minister explain to the House why he then allowed the report to be issued with this issue not being corrected or referred to in the report?

HON. L. HANSON: Again, I have repeated many times in this House that the issue of the Knight Street Pub was reviewed by the ombudsman. It was certainly reviewed by the RCMP. I'm sure the member opposite, with his legal background, would understand that they have the powers of interviewing whoever they feel is appropriate under those circumstances, and that in fact the issue has been canvassed and recanvassed. If the member opposite has difficulty in obtaining any of the material that's been published, I'd be happy to provide him with copies of the various reports.

MR. SIHOTA: The minister knew of the conversation between Mr. Hick and Mr. Poole. The minister knew that the conversation was not referred to in the report written by Mr. Doney, and which he signed. Can the minister explain to this House why he allowed that omission to pass?

HON. L. HANSON: The ombudsman's report dealt very clearly with that. The report done within the ministry was a complete report in the sense that it dealt with the issue of some concerned ballots. The member is certainly aware of that report, and it is available to him. I might refer the member to a question he has put on Orders of the Day asking that the report be made public. I would suggest to the member that his research is lacking, because the report has been public for well over a year.

Orders of the Day

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

ESTIMATES: MINISTRY OF FINANCE
AND CORPORATE RELATIONS

On vote 25: minister's office, $316,724 (continued).

MR. MILLER: Last night I was dealing with the capping issue, and we essentially ran out of time, I think, in order to allow a fuller discussion of the problem as it applies to my community and, for that matter, perhaps other communities as well. The minister's concluding remarks were that capping was intended to protect industry from undue increases due to the change in the assessment system. While I can appreciate that, given the philosophy that there was a need to protect industry, it's now clear that capping has had a negative impact on the ability of the municipality of Prince Rupert to collect taxes on an assessment base which has been greatly diminished because of the capping problem.

Given that the minister felt that some protection was needed for industry, would he not agree that there would be a converse responsibility — in other words, a protection that should be afforded municipalities. Even more particularly, although we don't like to deal with profitability in terms of assessment, that has clearly been used as an argument by industry to appeal their assessments. We see the significant

[ Page 7282 ]

decrease that was given in previous years to this industrial enterprise — namely, the pulp mill. We now see, of course, that the pulp industry in British Columbia is extremely profitable. It is probably enjoying, both last year and this year, some of its best periods.

Given those factors, would the minister not agree that municipalities should be afforded similar protection — in this case, the removal of the cap on a selective basis to resolve the anomalies that have resulted, as I described them last night?

[2:30]

HON. MR. COUVELIER: Mr. Chairman, above all things, I am a reasonable man. I would be very pleased to find some agreement with the hon. member during his questions, but my sense of honesty compels me to deal honestly with a response. Therefore I can't agree with the hon. member.

MR. MILLER: I like to think that I'm reasonable as well and prepared to listen to arguments, and I would be pleased to listen to any that the minister might like to advance.

HON. MR. COUVELIER: I thought I'd done that last evening, but I will do it again.

The issue of industrial assessments has, in the last ten years or less, received the close attention of professionals who have made it their livelihood to challenge some of the longstanding precepts around which industrial property had been valued. As a consequence of appeals heard by the Assessment Appeal Board, various determinations were made which had the effect of seriously distorting the ability of local governments to recover the cost of providing local service. Over the course of those ten or so years, the government attempted to provide remedies which would allow local governments not to distort the tax share between the industrial and residential sectors.

The first such device that comes to my mind is the introduction of the variable mill rate or variable tax rate. The theory behind it was that if there were appeals by the appellant — that is, the industrialist — which in the opinion of local council were unjustified or resulted in distortions of historical taxing practices, being allowed to vary the rate, the local government, in effect, could protect itself from the consequences of some of the decisions coming down which were made basically on technicalities rather than the merits of the argument. As a consequence, the variable mill rate was introduced, and it was successful in a large number of cases in keeping the options available to local government in terms of how they would prorate their cost requirements to fund their operations.

It developed, however, that industry was not deterred and continued its onslaught on the Assessment Authority rules, regulations and valuation practices, all for the purpose of gaining some short-term advantage, even though they recognized that a government would in time find accommodations which balanced the needs of residential property owners and municipal councils and at the same time recognized the merits of individual arguments about overassessments from the industrial sector. The historical balance had been distorted, and that showed every evidence of continuing at an escalating rate.

As a consequence, this government, with me as minister, announced about two years ago that it was time to clarify the whole issue of how we would value industrial properties. First of all, I announced the government's determination at a UBCM convention — I believe it was about two years ago — where I stated that it was the view of this government that property tax costs should be viewed by industry as a fixed cost, not a variable cost, and that there was no justification for it to vary by profit levels. The argument was that industry made its investment decisions with an existing tax structure, that it would have been possible for them to have determined their tax burden with quite a close degree of accuracy before they made their capital investment and that, as a consequence, they couldn't come back and shouldn't expect to be able to come back later and, on the basis of technicalities, find little windows of opportunity that might have the effect of reversing one year's taxation requirement. When I made that announcement at the UBCM convention, it was enthusiastically endorsed.

We then embarked on a provincewide examination of assessment procedures as they related to valuing industrial properties. Those conversations probably consumed the greater part of a year, if I remember properly, and involved industrial-sector staff members, representatives from the Union of B.C. Municipalities representing local government, and technical staff from the Assessment Authority. As a consequence of that wide-ranging, long-running examination, new rules were established.

In response to the member's suggestion that Prince Rupert has been abused by this process, first of all, I could remind the member again, as I told him last evening, that we in government offered Prince Rupert the same remedy offered to other municipalities and accepted by other municipalities; that is to say, a bridging loan from government to assist them to cover the one- or two-year anomalies that arose from successful appeals by major industrialists in their community.

Prince Rupert council have decided that they will not pursue that route and, as I understand it, they will likely use the variable tax rate option, which was always there before them to use in any event. I'm not sure that that's the route they will choose to go, but it would appear to me, on the evidence available, that that is likely what they might do, which is their right.

Finally, dealing with the local Prince Rupert situation, the member might be comforted some little bit by the fact that had the assessment changes been in place, the Skeena Cellulose appeal would not have been won. So this new valuation system does have the effect of clarifying how industrial properties will be valued so that in the future we will presumably

[ Page 7283 ]

have fewer of these appeals won on technical grounds.

In summary, Mr. Chairman, we have provided local governments with a variable mill rate. We have provided them with the separation of classes, so we now have a separate class for heavy industrial. The advantage of that, of course, is that if local councils use the variable mill rate approach, they need to apply it across the whole class, but by virtue of the class being smaller in number, they can target their options more accurately. Then, in recognition of the fact that this new method of valuing industrial properties would have an adverse effect on many in the industrial sector — principally, I should point out, in the independent sawmilling area — it was determined that we should phase in this new assessment increase. That is to say, we should phase in the increase that resulted from this new valuation approach and cap assessment increases by no more than 20 percent per year, at least for the first two years of its implementation. I should also point out to the House that that doesn't cap the tax rate; it merely caps the assessed value, so we haven't removed flexibilities from local government.

We're very pleased to advise the House that the government's actions in this whole issue — that is to say, industrial valuations, and protecting municipalities from the necessity of imposing horrendous tax shifts from one sector to the other — have been endorsed by UBCM, and they have been active participants in the evolution of our examination of this vexatious issue.

MR. MILLER: I appreciate that the change ultimately benefits the municipalities. I'm not quarrelling with that, and I don't think that I've really argued in that fashion to the minister. I'm just having some difficulty understanding. It would seem to me that from your remarks, this situation is not necessarily an anomaly. In fact, it could have been foreseen and perhaps was foreseen as a consequence of the capping.

I appreciate the effort to protect. You mentioned independent sawmills. The minister is probably aware of the debate in terms of stumpage, and the argument presented by independent sawmills that more of that weight should be carried by the more profitable pulp industry. I agree that there should be a desire to offer that protection. But the reverse has in fact happened, because the municipality has now had to increase the tax rate on industry. In order to recoup the same level of taxation, they've had to increase the tax rate. In effect, they have taken from other industry what more properly should have been taken from the single industry — in this case, the pulp mill. So in some respects, it has had the reverse effect of what the minister described. I have no quarrel with the changes to the assessment system and the protection afforded municipalities from those yearly appeals that made budgeting very difficult.

Can the minister selectively remove the cap? Is that impossible? Or is it a question of not wanting to do it? I keep going back to this fundamental figure, where we have a mill that's valued at $86 million, yet the municipality can only tax an assessed value of $34 million. It just seems to me grossly unfair. We're allowing a major industry that has the ability to pay to get out from paying.

You said that it's two years. I'll include a couple of questions on this. Is it two years? Then I assume that the cap — the 20 percent — will also apply in the next fiscal year, so that we have that situation again. Would it apply to the last year's figure? In other words, would the municipality have to add 20 percent on top of the $34 million, or can the municipality next year use the current 1989 assessment figure for taxation purposes?

HON. MR. COUVELIER: I have to remind the House, Mr. Chairman, that the difficulty that the member describes as the cause of concern could have been remedied, had his local government decided to exercise the option that we offered them, which is a loan that would have reduced the need for them to tax other industries in that same class at a rate they weren't prepared to. They obviously have chosen not to do that. In other words, the council apparently has decided to use one of the other options available to them. That's their choice.

I have some trouble responding to the member, who seems to be suggesting that, despite the fact that council seemed to have found some comfort in the approach they were going to take, we should all of a sudden ride to the rescue. We offered them the choice. They have thanked us for the offer and decided to proceed with their own course of action. I have no difficulty with that. I wonder what the hon. member would expect us to do, faced with the fact that local council appears to have been saying to us: "We can handle the problem, thanks very much."

The capping is a device intended basically to deal with the consequences of what would have flowed in the independent sawmill sector of our economy. But the isolation of the separate class — the creation of the new class — called "heavy industrial" did have the effect of giving the municipalities much more flexibility. I'm pleased that Prince Rupert obviously has decided to exercise some of those flexibilities independent of any further action on our part.

[2:45]

MR. MILLER: Mr. Chairman, I wish the minister would look less on this as me trying to be antagonistic. I asked a couple of what I thought were very clear questions that don't require argumentation about the capping: whether or not the capping applied next year, and whether or not the municipality would be restricted to adding 20 percent on this $34 million assessment, which is $45 million under the real value of this enterprise. I think he would have been a lot better off simply answering the question. If it's a question of getting the information, and you don't have the answer at your fingertips, that's fine; just say so, and we can move on to other questions. But I think they're quite valid.

[ Page 7284 ]

I don't criticize the municipality because of the route they chose to take. They didn't create the dilemma. They had two options: they could either raise their rates on other property classes to try to collect the same amount of revenue, or they could borrow money. I see nothing wrong with any municipality that says: "We don't want to go into hock." You borrow money; you have to pay it back.

What about future years? What about next year? Are we going to have in the next fiscal year the municipality being restricted to adding 20 percent on to a $34 million value and falling further behind? Surely the minister would agree that it's unwise in terms of taxation to have big-shock leaps of tax. It's not a wise system. We see that in the political raises in ICBC where in election years there is no increase, and then all of a sudden you've got to have big increases — 20 percent increases — to catch up.

I think that kind of politics in terms of taxation is very poor. I'd much rather have a very gradual, and hopefully small, level of increased taxes year over year. People can live with that, but not these shocks — in this case the shock of not being able to tax $45 million.

I don't want to take too much time on this issue, but getting back to the specific questions I asked, what are they looking at next year? Are they, as I said, restricted to adding 20 percent on the $34 million, or will they be able to tax the full assessed value? What happens in the following year if the answer is yes to that? When can they get up to the point where they can actually levy — and it's fundamental to our system of property taxation in municipalities — a tax rate on the true assessed value?

HON. MR. COUVELIER: I am a reasonable man, and I refuse to get excited by the obfuscation of the member opposite in response to my responses to his questions.

The issue of capping surely is a device to prevent unusual tax increases. We just heard a monologue for four minutes on the NDPs avowed desire to eliminate large tax increases in any one year. I don't mind a reasonable debate about philosophical differences, but surely to goodness the hon. member would have the generosity of heart to admit that a capping does exactly what he just gave us a four-minute speech saying he desired.

We also desire to prevent unusual tax increases in any one year and the capping gives us that assurance. It strikes me that that's a perfectly reasonable position, and the two sides of the House should be ad idem on it — evidently; I heard a four-minute monologue about the merits of preventing large tax increases.

I repeat, the member's local council appears to have found a remedy to the dilemma that the member seems determined to consume a lot of time discussing.

Interjection.

HON. MR. COUVELIER: No, no. just a moment. Oh, maybe there is a basic.... I see. Maybe that's the problem we have here: basic misunderstanding by the opposition about the remedy that has been provided to other local governments in B.C., which they have accepted and applauded. The loan is intended to be repaid out of the increased taxation, the restoration of taxation to historical levels by the local government as they deem fit. So there is no cost involved to residential property owners as a consequence of this; there is no cost involved in this to other property classes, unless that is the desire of the local council.

Now if the hon. member wishes to make the argument that this government situated in these ivory towers has the presence of mind and wit to determine property values and taxes for the entire province, I would like to hear him expound on that thesis. But this government believes that local government has a role to play, and we believe in decentralization. We believe that the best decisions are made at the local level, not in the ivory tower down here in Victoria.

We introduced accommodations in our legislation so that the local government has the maximum flexibility in dealing with the issues of how to collect their costs of government. Indeed, I will say it again — for the fourth time, I think — the community from which the hon. member comes appears to have found the remedy they desired within this range of flexibility that this caring, sensitive government has provided over the last four years on the issue.

I have some hard time understanding exactly what it is we are talking about. We appear to be ad idem. We are both opposed to large increases one year to the next, so we brought in a 20 percent cap. It will be for two years. By that time the local government will have the tools available to them to deal with the issues of that day, and we, of course, having been returned to power by that time, will be able to continue to monitor the situation and provide good, caring, sensitive management of these important public policy issues.

MR. MILLER: I am not saying this because I was a former alderman in Prince Rupert, but I can say, I think without equivocation, that Prince Rupert is one of the better managed municipalities in this province. We've got a history of fiscal prudence. We've traditionally kept our budgets in line year over year. We've avoided trying to overtax our citizens. We have a good balance between the classes. I think we've run a very businesslike municipality for many, many years, and the minister can check the records if he likes. The consequence of the capping is that the tax rate to major industry has been increased from possibly just under 24 to about 32.5. In black and white, that to me is a tax increase, and a fairly significant tax increase to the property owners in that category.

I don't know why the minister takes so long to answer questions. I know he likes to talk. We've seen that before in this House. I hope he doesn't end up

[ Page 7285 ]

filibustering his own estimates, but he's off to a pretty good start. The best advice I could give you at this point is to be a little briefer, to answer succinctly. You've finally answered the question I asked about two questions ago, and you took 200 times too many words to do it.

Interjection.

MR. MILLER: I don't know who that critic was down there in the Socred back bench heckling me, Mr. Chairman. Perhaps you noticed who it was. I think it's the second member for Langley (Mr. Peterson), and I hope he's prepared to stand in his place and deal with the issues that are critical to the municipalities he represents.

MR. PETERSON: Always, always.

MR. MILLER: I'm looking forward to that. He should do it not in terms of trying to protect the Minister of Finance but to honestly talk about the real issues that people in his constituency are concerned about.

I'm prepared to leave this assessment issue for the moment. I do have some other issues that I'd like to raise with the minister in terms of assessment in taxation. I'll do that later on.

MR. WILLIAMS: The whole principle of the property tax is to base it on value. The minister talks about disruption, but the capping itself has caused disruption in this circumstance. That's the problem. It's so ironic, because if you reflect on this particular pulp mill, it's one that was sold by BCRIC. Remember? You like to forget about it, but it was one of BCRIC's assets. They sold it off to Mr. Petty and his company, and Mr. Petty was able to write it up from your book value by $125 million. So $100 million ended up in Mr. Petty's pocket. Not satisfied with the $100 million rolling out to Quebec to Mr. Petty, you've decided to cap his property taxes to boot. There's no end to your largesse when it comes to some of these players.

Beyond that, a couple of years ago you removed the machinery tax, if my memory serves me right, through Mr. Curtis, your predecessor. You've removed the machinery tax, you put a cap on this when the value was up in the $70 million or $80 million range, and you've gone and put this cap on it. How many gifts do you have to give Mr. Petty? How many kicks do you have to give the average taxpayer in British Columbia? In this intermediate period while the capping is on, and if the municipality doesn't want to borrow, it means you kick the local taxpayer very hard. That's unreasonable. That's what the member for Prince Rupert is saying. There's a need for a better answer.

The principle of the property tax that we've had in this province is that you base it on value. You've destroyed that and caused this likely implication on the other taxpayers in Prince Rupert. Mr. Petty will be laughing all the way to the bank, as he has done lo, these many years with this administration. But the average taxpayer can't afford to put any savings in the bank, given the way you set the ground rules.

HON. MR. COUVELIER: I'm delighted to have the chance to respond to the great forester from the wild and unmanaged forests of Vancouver East.

I might make two points. The hon. member talked about the history of that particular mill. Most of the members on this side of the House weren't around at the time, nor were most of the members opposite. I'm reminded of a story I was given last night, seeing as how we're talking about history. It was alleged that an American tourist came to B.C. in 1974 and said: "Things are great in the U.S. We've got Ronald Reagan, Bob Hope and Johnny Cash." In response, the B.C. resident said: "I wish we could say the same. We've got Davey Barrett, no hope and no cash." If history is the subject of the discussion today, I'm sure it will be a wide-ranging and challenging debating point.

[3:00]

Notwithstanding the valid points that I've heard expressed so far this afternoon from the members opposite, the basic truth is that we have provided a number of changes. We have provided maximum flexibilities to local governments so that they can deal with the uncertainties that might flow from frivolous or vexatious appeals that might be judged on technical grounds. The 20 percent capping provision is government's effective way of dealing with the fact that we introduced a totally new system of valuing industrial properties a couple of years ago and that we deemed it important, in a sense of fairness and equality — a hallmark of this government's significant policy decisions — to ensure that they weren't burdened in any one year with, in some cases, increases in valuation of as much as 2,000 percent. Certainly prudence seemed to dictate the response that we arrived at. I gather we've successfully exhausted this particular aspect of my estimates.

MR. CLARK: I want to begin by apologizing to the minister for missing his opening remarks yesterday. I know they'll make interesting bedtime reading tonight. And I was late again today. I guess the problem is that there are so many allegations being made against the government that just trying to meet all the people making the allegations creates almost a fulltime job. I was late arriving again today because we have to meet with all these people, see what their concerns are and see what scandals we can uncover next. My apologies for the delay.

MR. WILLIAMS: But it was worthwhile.

MR. CLARK: It was very worthwhile, and there will be more to come as the days and weeks go by.

I propose in estimates here, for the minister's sake, to let him know that we shouldn't be too long — a week or so. I'm going to try and refrain from making speeches and rather ask questions. I will make about a handful of speeches, not too long, ten or 15

[ Page 7286 ]

minutes, on issues that are important to people in B.C., so that I'm on record and we're on the record on this side. But I will try not to constantly speechify and get speechifying responses from the minister.

Perhaps today we could open up this discussion....

MR. WILLIAMS: We've opened up.

MR. CLARK: Oh, sorry. I could open up my arm of the discussion with some questions around privatization, which I know is not completely the minister's responsibility, but in trying to do some investigation about a number of things, it appears that once something is privatized — maybe the minister can answer this initially — it then goes to the Ministry of Finance. Is that true in all cases or just in certain cases? I know it's true in certain cases, and I'm trying to understand the process the government has with respect to privatized ventures. I know that in many privatized contracts there's a financial annual report or something that has to be filed with the government. Presumably it's filed with the Ministry of Finance, and any ongoing monitoring of that nature appears to be in the Ministry of Finance. Is that fair to say?

HON. MR. COUVELIER: No.

MR. CLARK: What would be fair to say?

HON. MR. COUVELIER: I'm not quite sure. The question was a little ambiguous, so we had some difficult following it on this side. If I understood the member, he was curious to know whether the Ministry of Finance had an ongoing monitoring responsibility in relation to privatization contracts. I said no. He asked what would be a fair response. I thought "no" was a fair response; it was accurate. I don't know what fair is, but....

MR. CLARK: Could the minister tell me which privatized ventures are responsibilities of the Ministry of Finance?

HON. MR. COUVELIER: Only those issues that were under our responsibility. That would be the staff-training privatization initiative that came out of the comptroller-general's department. I think it was the only privatization initiative of our particular ministry.

MR. CLARK: Are not the Stena cruise lines the ministry's responsibility? Does it not have some responsibility with respect to that venture?

HON. MR. COUVELIER: Yes. That's a bit more convoluted. The hon. member might remember the sequence of events around that issue. There was initially another cabinet minister responsible for that matter. It's true that at the completion or near completion of the transfer, sale and privatization, the Premier assigned me that responsibility. I'm happy to deal with issues surrounding Stena, but it may be that we'll have to take some questions on notice so that we can research the material requested. In any event, I'm quite happy to deal with Stena issues during my estimates.

MR. CLARK: Thank you. So at the moment we see only two. The minister says Stena Line is now his responsibility. It has been rather difficult trying to get that information, and I'm glad the minister has cleared it up. Could he tell me who is responsible for the regulation of the slot-machine operations on board Stena Line ships operating in B.C.?

HON. MR. COUVELIER: The contract with Stena is with B.C. Steamships. The provincial government, by virtue of federal legislation, is required to be the licence-holder for the operation of slot-machines. So we have a sub-agency or an agency agreement, I suppose, although a lawyer might choose to use different terms. In a layman's sense, at least, that's under the control of the provincial government operated by Stena. By virtue of my ministry having responsibility for B.C. Steamships, we are familiar with the circumstances around the management of that issue, although there are aspects of it that relate to the responsibilities of the Solicitor-General (Hon. Mr. Ree) as it pertains to his gaming responsibilities. However, I am happy to deal with those issues as I'm able.

MR. CLARK: We contacted the Gaming Commission and they said they weren't responsible and they referred again to Mr. Halkett, who I believe is the Deputy Minister of Finance. From your answer it is clear that it is your ministry, through B.C. Steamship Company, that regulates the slot-machine operations on board the ships of the Stena Lines. Can the minister tell me if there is a limit on the number of slot-machines which the line is allowed to have in total, or is it based on a certain number of slot-machines for each ship?

HON. MR. COUVELIER: I should correct the statement by the hon. member. It isn't my ministry that has that relationship with Stena. It's B.C. Steamships, which is a separate Crown corporation for which I am responsible.

There is no requirement in the agreement, I am informed, dealing with the number of machines.

MR. CLARK: So by that you mean that they can have as many slot machines as is physically possible to have? Are you saying that there is no restriction and so each ship can have as many as Stena deems warranted?

HON. MR. COUVELIER: Yes, it is viewed by government that by virtue of the agency relationship, that issue can be controlled by government. So there isn't any fixed number assigned to the specific agreement.

[ Page 7287 ]

MR. CLARK: I think this goes to the heart of some of the things I would like to explore. The B.C. government, through B.C. Steamship Company, holds the licence, but, as is true in many privatized ventures, the Stena Line determines the number. It seems to me that this is a very interesting question, and not just a technical question: the steamship corporation is in fact responsible — and we can get into that later — and yet Stena can, it appears, add or take away as many slot-machines as possible. Is there any kind of approval process before they start up a new slot-machine operation on the ship? Is there any kind of review process? Do they have to go to the holders of the licence, the B.C. Steamship Company, and say: "We would like to add ten slot-machines; is that okay with you?" Is there any process?

HON. MR. COUVELIER: Stena understands, Mr. Chairman, that they have to have those kind of discussions with B.C. Steamships prior to any action in that respect.

MR. CLARK: Is this understanding just a gentlemen's agreement between the government and Stena, or is there anything in the contract or any approval process that the government has to undertake in order to allow Stena...? Let me put it another way. If they add twenty new slot machines, do they have to ask you for permission?

HON. MR. COUVELIER: We would expect them to do so, Mr. Chairman.

MR. CLARK: Do they have to ask for permission?

HON. MR. COUVELIER: We would expect them to do so, Mr. Chairman.

MR. CLARK: So the answer is that they don't have to do it. The minister is saying here in the House, although there are no Stena people present, that he would expect them to do that. Is there any penalty if they don't consult the government on the addition of new slot-machines on board?

HON. MR. COUVELIER: We will let matters unfold in that respect, and matters will unfold. I don't anticipate a difficulty. Stena is aware of the government's interest in the matter, and we have the understanding, I think, as to how that will be managed.

As a matter of fact, we are very happy with the relationships we have built up over the last year with Stena, and they have significantly added to the tourism industry, I am sure, as the hon. member is aware, in the greater Victoria area. So we look to them to continue to expand, and at the same time, we expect them to be good corporate citizens and remain sensitive to the concerns of the local residents and of this government. So far, it's been a very amicable relationship.

MR. CLARK: So there are no regulations governing this. You simply allow Stena to add as many slot-machines as they want, and there's no regulation presumably? If they add another ship for any lines, do they need permission to install slot-machines on that, or does the agreement you have with Stena simply once again allow them to add as many slot-machines as they would like?

HON. MR. COUVELIER: I'm not quite sure if that's a repeat. Or does the member think that's a new question? I thought I answered it. Are you referring to new ships? Additions to the existing service?

It would be expected that new ships would have similar gaming opportunities for the operator as the existing ships. In the opinion of the government, the issue isn't necessarily the number of slots, but rather how they're operated, whether they're operated honestly, whether there is an acceptable payout rate, whether revenues are being accounted for appropriately and, generally speaking, that it's a responsibly run operation. We have seen no evidence whatsoever that that's not the case, and we are monitoring the situation to ensure that it always remains the case.

[3:15]

MR. CLARK: Does the existing contract with Stena Line mean that if Stena adds another ship, the existing contract covers that and therefore allows them to add slot-machines to that other ship? Does the existing contract cover any ships that they add and any new slot-machines they add?

HON. MR. COUVELIER: The answer is yes, Mr. Chairman. I'm sensing that the hon. member is interested in getting much more background material on this matter. If it pleases him, I'd be happy to table that document with the House, so that he's comforted on the point. That presents no difficulty for me.

MR. CLARK: We certainly appreciate that, and I've requested that from the ministry. It hadn't been forthcoming, so I appreciate the minister's response. That may allay some fears that some people have or may at least allay some questions.

But I would like to follow along a little on this question. Apparently the 150 slot-machines on board Stena Line brought in $9 million last year. How much profit was made? In other words, how much did not go out in payouts to winners in this gaming exercise and other costs of business? What was the profit for the 150 slot-machines on board the Stena Line vessels last year?

HON. MR. COUVELIER: I'm advised that the total net revenue for the two vessels was $1.1 million with operating costs of $0.2 million to be deducted from that, so $900,000 profit represents the B.C. Steamship Company's share of the proceeds of the gaming operation on two vessels.

[ Page 7288 ]

MR. CLARK: Can the minister tell me what that share of the profit is, so we can determine what the profit was to Stena Line?

HON. MR. COUVELIER: Yes, I'm reminded that the operation I've just described was when it was under our ownership, and Stena was not involved in that arrangement. So obviously that's entirely for government's account.

The new arrangement with Stena returns 30 percent of the net to government and 70 percent to Stena. With the expanded volumes that we are receiving, even after only a month's operation, it seems safe to assume that gaming will bring in more than it did last year. If we talk about a million dollars net, I suppose Stena will receive 70 percent of that, and we'll receive 30.

MR. CLARK: We have no figures for the Stena operation as of yet, the minister is saying. Do we only have one month's receipts? Is that how it works? Do they remit them on a monthly basis?

HON. MR. COUVELIER: The answer is yes, monthly.

MR. CLARK: Do we have the first month or two's receipts?

HON. MR. COUVELIER: We haven't received the first month's reports yet.

MR. CLARK: How long has it been operating?

HON. MR. COUVELIER: I was on the inaugural run on May 11 of this year.

MR. CLARK: In bingo, prizes can amount to no more than 60 percent of the gross take, which leaves 40 percent — I think 25 percent goes to charity. Is there some similar arrangement in terms of the prize ratio on the Stena Line?

HON. MR. COUVELIER: I understand it's better than bingo. The pay-out rate on the slots is 93 percent.

MR. CLARK: It's better for the gambler and not as good for the recipient. Is that what the minister is saying?

HON. MR. COUVELIER: I assumed that we were wanting to ensure that the machines had a good pay-out, and that usurious taxes were not charged as a consequence, which is a traditional argument I hear from across the floor. When I reported the figure of 93 percent pay-out, I assumed that I would get some comfort from the members opposite. Is it suggested here that we should reduce the pay-out?

MR. CLARK: I just want to establish the different rules that exist for bingo operations and for these kinds of gaming facilities. I'm not at this point passing any judgment on that. I'm trying to understand how it works.

Could you tell me who audits the operations of the slot-machines to make sure that they're being run in a fair manner?

HON. MR. COUVELIER: We're contracting with an external auditor in that respect to ensure that it's being dealt with professionally.

MR. CLARK: How often do the audits take place? What's the cost of the contract to the government for the audit?

HON. MR. COUVELIER: I'm advised that the contractual arrangements are that there shall be an audit once a month and that there shall be an annual report. The fee that we're paying for this service is $10,000 per year.

MR. CLARK: Will those audit reports and the annual report be public information?

HON. MR. COUVELIER: I'm not sure what our understanding with Stena is in terms of sharing their profit information. I'll just have to take that one — how do we say it? — under advisement.

MR. CLARK: Do the proceeds of the slot-machines or gaming facilities go directly to Stena, and are they then divided up and shared between the B.C. Steamship Company and Stena?

HON. MR. COUVELIER: Could you ask the question again, please? I'm not sure I caught it all.

MR. CLARK: I just asked whether the proceeds from the gambling go directly to Stena. I see your staff.... Yes, they go directly to Stena, and then Stena divides up the pie and gives 30 percent of the net to the government.

HON. MR. COUVELIER: Yes.

MR. CLARK: I wonder if the minister is aware that section 190 of the Criminal Code — federal government — says that only a provincial government or a charity licensed by the province can operate a gaming facility. Can he tell me what legal opinions he has that this is not a violation of section 190 of the Criminal Code?

HON. MR. COUVELIER: I'm advised that that kind of information, Mr. Chairman, is not normally discussed in public forums like this. Legal opinions, personnel matters are normally given the courtesy of privilege. I think that the government has comfort in that respect.

MR. CLARK: Mr. Chairman, it's quite clear on reading section 190 of the Criminal Code that only the province or a charitable organization licensed by the province can operate a gaming facility. That does

[ Page 7289 ]

not appear to be the case in this regard. The Solicitor General is here. Perhaps he can tell me. Surely the province has some legal opinion. I won't ask for the legal opinion; I'll ask if you have a legal opinion that this is legal under section 190 of the Criminal Code. Do you have a legal opinion?

HON. MR. COUVELIER: Mr. Chairman, I think it should be pointed out to the hon. member, as I mentioned earlier, that we operate and we sublicense Stena to manage, which is deemed by those who practise the profession of law to be an appropriate method that complies with the federal legislation.

MR. CLARK: So what you've done is devise a loophole in order to attempt to escape the provision of section 190 of the Criminal Code. You've set up a dummy company and licensed it and contracted it out to Stena. It's clear to me and to lawyers I've talked to that that's simply a violation of the Criminal Code. I want to know whether you've got a legal opinion on that fact, and whether you'll table that legal opinion in the House. We have legal opinions to say this is a clear violation of section 190 of the Criminal Code.

HON. MR. COUVELIER: Mr. Chairman, I have been aware for some time that it's possible to get a legal opinion to confirm any position you wish to espouse, so I'm not surprised that the hon. member found someone who was able to provide that assurance to him. We also have legal opinion that is provided us as part of the statutes of the province, and that legal opinion is fixed by statute, and every ministry of government utilizes, for the sake of consistency, the same entity of government to examine these legal issues. And so we have the comforts we need. I suppose the best way to deal with the issue is to let the two different points of view from the legal fraternity meet to discuss the issue. But as I say, these questions of legality of government actions are the responsibility affixed by law onto another ministry of government.

The member seems to be questioning the legality of this issue. I can only tell him that I have the comfort I feel I need as minister responsible. If that doesn't satisfy the hon. member, he may wish to raise the issue when he discusses the estimates of the other line minister who has a specific responsibility for legal matters.

Interjection.

HON. MR. COUVELIER: Has that already been done?

Interjection.

HON. MR. COUVELIER: So the missive missed the target once again.

It would be useful, Mr. Chairman, if members of the opposition having a point to make would verify exactly who it is they wish to make the point with, so that matters might be resolved. I have provided the answer the best I can. If there is some difference of opinion as to the legality of actions, the hon. member should have raised it when he looked at the estimates for the Attorney-General (Hon. S.D. Smith). He obviously missed that opportunity, and that's regrettable. He may wish to pose a question during question period, or something, so that he might get comfort from that source. But far be it from me to stragetize for the members opposite. It seems to me they're capable of figuring out these options. It can be addressed that way, and the public can be comforted and the hon. member can be comforted.

MR. CLARK: Mr. Chairman, I attempted about half an hour ago to determine who was responsible for regulating gambling on the Stena Line. It was quite clear from the answers of the minister that it was his ministry. That's the whole purpose of this discussion. And so he's accepted responsibility. He accepts that his staff is responsible. He accepts that he's the minister responsible for B.C. Steamships. I simply asked whether B.C. Steamships or the minister or the ministry had any legal opinion that said that it was not contrary to the Criminal Code. We've not yet had a straight answer to the question of whether they sought legal opinion on this question of using a loophole to get around the federal government's jurisdiction in this matter, and whether he's prepared to table that legal opinion in the House, so that we can have comfort, as he appears to have, that this is in fact not a violation of the Criminal Code.

[3:30]

HON. MR. COUVELIER: I'm accused sometimes of going on at length — unfairly, I might add. I provided the best response I could to the previous question, with what I thought was a very thorough explanation of the issue. I don't know what more I can add. Obviously the government received the comforts it required before concluding the arrangement with Stena, and obviously we have comfort in that respect. The hon. member keeps trying to claim that we shouldn't hold such comfort and that he has some legal opinion which seems to give him cause to criticize. As I said before, if the hon. member has concerns about the quality of legal advice provided to a ministry of government, then he might properly address the issue of the quality of advice to that minister who is obligated to provide it by statute. In this government, that minister Is the Attorney-General.

MR. CLARK: Why will the minister not table the legal opinion he claims to have from the Attorney-General so that we and the public can see that in fact they are comforted that this is a legal gaming operation in spite of the appearance that it's a violation of section 190 of the Criminal Code? It's a simple question. It would seem to me that if there is a legal opinion — the minister says there is, so I have no reason to doubt that — he should simply table that legal opinion in the House so that all people can see

[ Page 7290 ]

this is not a violation of section 190 of the Criminal Code.

HON. MR. COUVELIER: Mr. Chairman, a question was put to me 20 minutes ago by the same member who asked if I would table such a document, and I told him that in my judgment there are some matters of privilege which are not normally shared in public forums. Those are issues affecting personnel matters and also legal matters. Twenty minutes ago I told him that. I also suggested that if he really wished to get comfort on this point, he ask the person who is responsible for the quality of the opinion, which is what he appears to be questioning. I don't know what more I can add.

MR. CLARK: I fail to see what public policy interest is served by refusing to make public a legal opinion which justifies the government's action. It seems to me that the government would want to make that opinion public to allay any concerns that it's a violation of section 190 of the Criminal Code.

The minister might be aware that there is a reason why the Criminal Code limits gaming to provincial government operations and provincial-government licensed charities. It's because we in this country have never seen a proliferation of private gaming operations. There is clearly a consensus against private operations, and you have circumvented the Criminal Code. Have you had discussions with your federal counterparts or the federal government with respect to the use of this attempted loophole to circumvent an area which is clearly the federal government's jurisdiction? Have you talked to the people responsible in the federal government to allay any concerns they might have about this novel approach to privatizing gambling in B.C.?

HON. MR. COUVELIER: I appreciate the compliment by the hon. member to the effect that this government would have the wit to embrace novel approaches to contentious issues; that's comforting to hear. But I must point out that in this particular case I don't think we earn the accolade. There's nothing novel about it. It's customary for provinces, which by federal law are required to operate and supervise gaming operations, to subcontract a particular operation to the private sector or others. So it's not novel in that sense, I don't believe.

MR. CLARK: Did you discuss this proposal with the federal government in advance of its coming to fruition?

HON. MR. COUVELIER: I'm not quite sure who the hon. member is referring to when he talks about the federal government. I didn't phone Brian Mulroney, if that's what he's hinting. I personally didn't have any conversations with any federal cabinet minister on the matter. So I'm hesitant here, because he seems to be fishing; for what purpose, I'm not sure. But I can say it again: this government is satisfied that its actions with respect to the operation of slot-machines on the Stena Line steamships are legally valid; they provide no discomfort or do not expose us to any risk from the federal authorities who might be expected to have an interest in the subject. The issue of subcontracting and so on has been canvassed and dealt with at some length by this government. So those issues, as far as we're concerned, are well in hand — as you would expect any responsible manager of public policy to bring to these decisions.

MR. CLARK: The responsible manager of public finance appears to have reduced revenue from this operation rather dramatically by privatization, but we won't get into that at this point.

HON. MR. COUVELIER: You'd better not.

MR. CLARK: Well, you have, haven't you? You said they had $1 million last year from gambling with a publicly owned facility. The private company is now going to get $1 million, and you are only going to get 30 percent of that — that's $300,000 — out of which you have to pay increased costs of regulating. It seems to me not exactly a brilliant move on the government's part.

I wonder if the minister could tell me whether he or his staff had any discussions with the industry in Ottawa responsible for the Criminal Code regarding any approval or preclearance of this proposal. The minister said he didn't phone the Prime Minister; I appreciate that. I want to know whether his staff consulted with the appropriate staff in Ottawa in advance or after this unique arrangement was made, to see whether in fact they have approved of this. It appears, in my view, that it's federal jurisdiction with respect to the Criminal Code and gambling.

HON. MR. COUVELIER: The remark made by the member before he left the issue of revenue seemed to imply that the government is losing revenue as a consequence of the gaming arrangement. I think I should point out to the hon. member that this privatization initiative has significantly improved and increased tourism traffic for Vancouver Island, such that the operators are going to expand the service. So to try to paint some sort of business loss around this privatization case is absurd.

The member asked whether we've had discussions with our federal counterparts related to the gaming issue. His specific reference was: "Has your ministry done this?" I want to take the member back to my opening remarks on this matter and point out once again that the privatization of Stena was initially launched by a different ministry of government. I came to the responsibility near the conclusion of the negotiations. I have tried to couch my responses to him by saying that government has, the comfort government has, government is satisfied, in order to avoid misrepresenting my ministry's involvement in the issue. I can only say it again: government has the satisfaction that the federal authorities are aware of this relationship and that there has been consider-

[ Page 7291 ]

ation of the joint government concern, and we have all the comfort we need in that respect. If the hon. member persists in his belief that we shouldn't be so comfortable, then I challenge him to question the quality of legal advice we get from the appropriate ministry, which isn't my ministry.

MR. CLARK: The government and the minister having comfort and satisfaction hardly gives the people of British Columbia comfort and satisfaction, given the track record around here.

It's always interesting that the government — particularly Social Credit governments, which like to pretend to be good businessmen — argue that as good businessmen they have to turn over the operations of government to the private sector. I wonder if they are ever struck by the contradiction that they are the ones managing government and they are saying, "We have failed to do a good job in running a government enterprise, and the private sector can do it better than we can, " when they are presumably elected on a platform of being able to manage government. It always strikes me as curious.

It's puzzling that the minister said we are going to lose in excess of $700,000 on this one ship by privatizing, but they are going to put on another run and add tourists. Clearly, the public sector could have put on another run and generated more tourists; but no, this government didn't have the wherewithal or the expertise to do that and is relying on the private sector. It always strikes me as an interesting contradiction.

In the early part of 1989, the Minister of Government Management Services (Hon. Mr. Michael) put out a press release calling for expressions of interest in the operation of a new cruise ferry service for the Inside Passage corridor between Vancouver and Prince Rupert. The carrot in the proposal was the government's apparent willingness to sublease the existing ferry terminal facilities owned and operated by the B.C. Ferry Corporation. The call was to close February 28 — just a couple of months ago — but it was cancelled, I gather, because the received responses didn't deal with the use of the B.C. Ferries terminals. That's my impression. I have been led to believe that the most interested party was another Swedish company.

It appears that the government is in the process of signing an agreement with Stena again for the operation of an Inside Passage route, subject to, I gather, some federal tax concessions. Since it appears that the Ministry of Finance is now the sole contact with the Stena Line, which operates the only shipboard gambling presently in B.C. waters, can the minister tell us whether they will be the sole contact with respect to any new line up the Inside Passage and gambling associated with that line?

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

MR. CLARK: Can you tell us who is responsible for that operation?

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

MR. CLARK: I didn't catch the answer. Could you tell us who's responsible on the government side?

HON. MR. COUVELIER: The answer is no.

MR. CLARK: Are you saying that you do not know who is responsible for Stena Line's proposed operation through the Inside Passage to Prince Rupert?

HON. MR. COUVELIER: It's just about impossible to deal intelligently with fishing-expedition questions. I'm not aware of the Stena Line's proposal to do the Inside Passage. The question asked if I am somehow going to monitor the Stena Line's Inside Passage proposal. I'm not even aware of them having one.

I want to be helpful. I genuinely want to elevate the knowledge and understanding of the opposition members about my ministry, which I think is an important ministry of government providing useful service with high-quality technical help that is unmatched anywhere else in the country. But surely the questions you put to me have to be questions that have some basis on which they might be asked.

[3:45]

MR. CLARK: Mr. Chairman, it's impossible. We don't know who's running what on the other side.

The minister said we had difficulty. I'll tell you what happened with respect to B.C. Steamships, which the minister is responsible for. We phoned and said to the Gaming Commission: "Are you responsible for this?" They said: "No. We think it's the Ministry of Finance." We phoned the Ministry of Finance, and they said: "We think it's the Ministry of Attorney-General." We phoned the Ministry of Attorney-General back, and they said: "It's the Gaming Commission." We phoned the Gaming Commission, and they said: "It's the Ministry of Finance." We phoned Government Management Services, and they said: "It's the Ministry of Finance." We asked the Solicitor-General, and they said that it was the Ministry of Finance.

We now have the minister finally saying.... There have been so many reorganizations with this government that we don't know who's in charge of what, and neither do they, it appears.

It seemed to me obvious — and I apologize to the minister — that he's responsible for B.C. Steamships now; he's responsible for the Stena Line operations that currently exist; he's responsible for gambling on the current Stena Line operations; he's responsible for regulating gambling on them. It seemed to me that the new proposal for a gambling run from here to Prince Rupert would have been from the same company, and the only contact person we have now with Stena Line would be the same ministry. The minister is now saying that it's not the case, and he can't even tell us who is responsible for the Stena Line operation in the Inside Passage. Can you tell me who on the

[ Page 7292 ]

government side is responsible for this new gambling proposal through the Inside Passage?

HON. MR. COUVELIER: Golly, I'd like to help, but the question has to be relevant. There is no gaming proposal for the Inside Passage that I'm aware of.

As to the suggestion that the hon. member can't get answers, I understand that the opposition have a difficulty holding onto research officers. As a matter of fact, I understand that there's a court case, or something, dealing with separation or termination of employment. So we shouldn't be surprised that they have difficulty tracking down an issue.

I've just been advised that my staff — who normally work long hours — did return a phone call at 5:15 last Friday evening and had some difficulty finding anybody in the socialist offices. It wasn't payday, you see. So I'm having difficulty trying to give comfort that we really take your question seriously. We do. Here one of my loyal staff attempted to connect at 5:15 and had some difficulty finding an appropriate person at the other end. If you called my side, I think you'd get responses at 5:15, 5:36 or even 5:37 or 5:38; it's not unusual. So if you're going to make allegations about the quality of staff work being provided by this government, at least you should be at the other end of the line prepared to receive the answers when you put the questions. We are here to serve.

MR. CHAIRMAN: Just before we continue, members might be interested — if the member would just take his seat for the moment.... We were discussing legal opinions during the course of this debate, and debating is, I think, a learning process all the way through. So I thought I just might cite from Erskine May, in his nineteenth edition, when he talks about law officers' opinions. It says: "The opinions of the law officers of the Crown, being confidential, are not usually laid before Parliament or cited in debate, and their production has frequently been refused, but if a minister deems it expedient that such opinions should be made known for the information of the House, he is entitled to cite them in debate."

MR. CLARK: The minister and I entered the House at the same time two and a half years ago. I'm sure that if we were here longer, we would have picked up Erskine May and both used it. It seems we can both use it for our arguments. But I still think the minister's defence is weaker as a result of the Chairman's drawing our attention to that remark.

HON. MR. COUVELIER: He was supporting me; he wasn't supporting you.

MR. CLARK: No, he wasn't. Mr. Chairman, as I recall, the last line was that it was the minister's discretion that he could table those documents. He's chosen not to do so.

The minister said that I hadn't asked him this question. I asked him, and he proceeded not to answer it. So I thought I would try one more time. Could he tell me who is responsible for any proposal about an Inside Passage run using the Stena Line or, presumably, any other gambling operation?

HON. MR. COUVELIER: Yes, Mr. Chairman, I'm pleased to provide that information. The issue is led by the minister in charge of government personnel services division. He placed a public advertisement for proposals, and I do understand that he received responses to those proposals.

MR. CLARK: Now can he tell me that if the Stena Line is successful in getting a new route through the Inside Passage, accorded presumably by the Minister of Government Management Services (Hon. Mr. Michael), then does it become the responsibility of the Ministry of Finance in light of the contract that was signed with Stena, which presumably — and I ask the minister's guidance on this — would allow gambling on any new Stena Line operating in British Columbia? Is that correct?

HON. MR. COUVELIER: No, Mr. Chairman. A good while ago I pointed out that it's not the Ministry of Finance which is handling the gaming; it's B.C. Steamships.

To the issue of whether gaming will be allowed on the Inside Passage route, that will be discussed at some point, and some announcements will be made at some point in a public arena. It is not for me to speak to that matter, and it does relate to future government policy.

MR. CLARK: This is not future government policy that I'm asking about. I'm asking: if Stena Line receives the right to do the Inside Passage route, does the existing contract with B.C. Steamships, for which you are responsible, prevail on that route as well as existing routes?

HON. MR. COUVELIER: The answer is no.

MR. CLARK: So the only thing the contract covers is additional ships on the existing routes.

HON. MR. COUVELIER: No.

MR. CLARK: Can you explain to me why, then, if it covers additional ships on additional routes, this would not be viewed as an additional route under the contract, and therefore the contract would prevail?

HON. MR. COUVELIER: The existing routes do not include a run to Vancouver. When we announced the privatization to Stena, they announced and we concurred that there would also be a run to Vancouver. The contractual relations with Stena relate not only to the existing Victoria-Seattle run but also, as we announced a year ago, a service from Victoria to Vancouver. That service does not now exist, but will in the near future.

[ Page 7293 ]

MR. CLARK: So those are the only two routes which are covered by the existing contract. The minister is nodding his head. Has the government, in the proposal from Stena Line...? Oh, I'm sorry, in this case it's the Minister of Government Management Services. Can you tell me whether the Ministry of Finance is involved in that proposal as well? For example, is the Ministry of Finance lobbying or working with the federal government to seek remission of the particular tax requested on behalf of the Ministry of Government Management Services, which I gather is responsible for this particular proposal?

HON. MR. COUVELIER: I try to listen closely, and I don't want to be guilty of misleading the House. The member repeatedly seems to be implying that Stena — for some reason he seems to have this fixation — has some sort of an assurance that the Inside Passage contract will be awarded to them. I'm afraid that no matter how I answer his question, he will six months later allege that we misled the House with the answer to his question. Would the hon. member care to rephrase it so that I can give an answer that does not confuse him?

MR. CLARK: Am I incorrect — and I could well be — in assuming that this government asked the federal government for a certain tax break for Stena Line so that they could operate in the Inside Passage?

HON. MR. COUVELIER: No. That's the misunderstanding, I guess. This ministry and I were involved in forwarding government's case for an exemption of duty on the new ship Stena are going to bring in to operate the Victoria-Vancouver run.

MR. CLARK: Can the minister tell me whether B.C. Steamships has any connection with any proposed new route through the Inside Passage, or is that being handled solely by the Ministry of Government Management Services?

HON. MR. COUVELIER: B.C. Steamships will have no involvement on the Inside Passage run.

MR. CLARK: So any attempt to have the duty remitted on any ship which might be granted that run will presumably be conducted by the Ministry of Government Management Services.

HON. MR. COUVELIER: One thing this government does very effectively is mobilize all the resources of all the ministries in pursuing some of these major initiatives as they relate to the senior government. As a consequence, I have made representations on that matter of duty remission on any vessel that might be used on the Inside Passage, as have some of my colleagues. That's something we do in a coordinated way, using all of the powers of persuasion that we can muster. So I've had a hand in that presentation to Ottawa.

MR. MILLER: For clarification, then — and I seem to get the sense that this is not the case — my understanding was that the province is supporting, if not leading, a request for duty remission for a ship that Stena proposes to run on the Inside Passage, and that the duty remission was requested for a specific vessel, because I recall the Minister of Government Management Services making an announcement in Prince Rupert — I think it might have been this year — that there would be an operation in place; it was a solid commitment. And the minister talked to me about the duty remission. It was a specific dollar amount, I believe. I don't know how that could be made, unless it would be made for a specific vessel. It's based on value, is it not? And if you have been leading representations on remission.... Perhaps the minister could just clarify.

HON. MR. COUVELIER: Maybe you could help me, Mr. Chairman, and clarify. Is this relevant to my estimates?

MR. CHAIRMAN: The line of questioning, up to this point anyway, seems to have been reasonably relevant to me.

HON. MR. COUVELIER: I'll take your sage advice, Mr. Chairman, and attempt to clear up what evidently is a determined effort on the part of members opposite to continue to assume that Stena has some particular priority as it relates to the Inside Passage. I guess the hon. member might have been out of the House when the previous questioner and I got into some discussion on this point. I'll say it again. I do hope I don't have to say it 22 times, as each one files in, one at a time. Nevertheless, we have advertised for proposals on the Inside Passage, and the minister in charge — not myself — has vetted those proposals. As a consequence of discussions with the perceived leading bidder, it was determined that there would have to be some kind of duty remission by Ottawa on the vessel they proposed to use. The duty remission requested is expressed as a percentage of value, so it would vary by ship, because each ship's value varies as a condition of age, size, suitability, marketability and a variety of factors.

It is true that I was part of a group that made representations to Ottawa regarding duty remission on a specific vessel for a specific sum of terms of remission. So that's my involvement with the Inside Passage.

[4:00]

MR. CHAIRMAN: I might just mention — speaking again of relevancy, which was mentioned a moment ago — that it would appear to the Chair that over the past hour-plus the matter under discussion has been reasonably well canvassed.

MR. MILLER: Given that the Minister of Finance played a role — and I won't even use the term "key role"; he may wish to say that it was a key role....

[ Page 7294 ]

Nonetheless, in advancing a proposition to the federal government concerning the remission of duty, had your ministry undertaken any evaluation of the impact on or the consequence to British Columbia shipyards? After all, there is a rationale for having that federal duty in respect of our own industry; and yet in two cases now the government has taken the approach that they would like to see that cancelled or withheld, in order to allow a company from outside the country to bring ships in to put into service in British Columbia waters. I think it's a good question in this respect, and I would like to hear what the minister has to say in terms of any kind of analysis. I don't know the total value we're talking about in terms of that remission, with the two ships, but it's in the millions. So perhaps the minister would like to respond to that.

HON. MR. COUVELIER: I'd be delighted, Mr. Chairman. The fact of the matter is that the B.C. shipbuilding industry is an enthusiastic supporter of our request for duty remission. And it's also, I think, a fair comment that if there is opposition to the concept of duty remission as it relates to foreign cruise ships being used on the B.C. coast, it would lie in eastern Canadian sources and centres. So we have been able to provide comforts to the federal government that, indeed, local shipyards and shipyard workers are supporters of the concept. They take this position, Mr. Chairman, because they understand that many of these vessels that might come in would require refitting, and that they are comforted by our government's stated intention; that is, to do what we can to ensure that refit work is done in B.C. yards, providing jobs for B.C. shipyard workers.

In addition, it should be pointed out that refit work is normally done annually. Here again, we would expect that B.C. shipyards could be competitive and ensure that all succeeding work over succeeding years would be done here in British Columbia. So for those reasons we've had no difficulty providing a unified front to the federal authorities for all interested parties in British Columbia.

MR. MILLER: I appreciate the minister's response there. Did we make specific requirements? In other words, the government took the position that they are prepared to lobby the federal government for duty remission, and the minister has explained that the B.C. shipyards were supportive in that they could expect repair work in the B.C. yards. Were there any other specific provisions that British Columbia sought, in terms of employment levels on the ships or any of those attendant features? In other words, were there any economic returns to the province beyond the simple provision of the cruise line's service? Were there any other provisions that British Columbia sought from the companies in exchange for British Columbia going to the federal level and asking for duty remission?

HON. MR. COUVELIER: I am not responsible for the Inside Passage decisions; therefore I think it would be inappropriate for me to deal with that question. As far as the representations made to Ottawa that I was party to, I can tell the hon. member that we have learned that Ottawa has certain rather narrow criteria by which they judge the applications for duty remission. By virtue of having gone through the exercise with the Stena application in the Victoria-Seattle-Vancouver triangle runs, we learned a great deal about how that process is judged in Ottawa. As a consequence, we were able to speak to them on the second proposal on the Inside Passage in more narrow terms.

I have no knowledge of what might have been said in terms of crewing or manning nationalities. As the hon. member should know, our deal with Stena does require Canadian manning as it relates to the triangle run. So matters will unfold, and I don't think I should comment on another minister's responsibilities.

MR. MILLER: That's fair; I don't want you to stray from your ministry. So the minister is advising that the federal criteria are fairly narrow in terms of the conditions that they require to be met for that duty remission. For example, you mentioned manning on the existing arrangement with Stena to Vancouver. Is that a federal requirement or a B.C. requirement? The minister nods his head; it's a B.C. requirement.

I don't know whether my colleague wants to continue on this line or not. I have some issues in terms of the assessment of lands — or trees, actually, on land. I think the minister is reasonably apprised of the issue where treed land is subject to being assessed with the commercial value of the timber crop on the land. It appears that is not uniformly applied — at least that's the information that I have — throughout the province; that's number one.

Secondly, it would appear that it creates a situation of an incentive to log where that might not necessarily be the case. I will leave it at that for now. If the minister is familiar with the issue, he could respond; if not, I'll elaborate a bit more.

HON. MR. COUVELIER: I take it we are now on the issue of the Assessment Authority. It was a large leap here. If the hon. member has any evidence that Assessment Authority practices result in requiring logging or hastening the logging of properties, I would appreciate receiving it.

MR. MILLER: Mr. Chairman, as far as hard evidence — no, I don't. But I am aware that the Minister of Municipal Affairs, Recreation and Culture (Hon. Mrs. Johnston) was sufficiently concerned about the issue that she undertook a study, which I think is ongoing. She publicly expressed her concern about the issue. She felt, as a result of representations by municipal and regional officials, that indeed that was the case.

If the minister is completely unaware of this topic, maybe the discussion will end. I could elaborate a bit more, and I could go back and get my notes on my discussion with the Minister of Municipal Affairs. She took the position — and I think properly so —

[ Page 7295 ]

that when it came to the Assessment Authority, it was not in her jurisdiction. We had a brief discussion, and her recommendation was that it be taken up with you under your estimates.

I would ask if the ministry is aware of the problem; whether they have undertaken any studies whatsoever about the problem; whether they have formed any conclusions about the statement I made; whether there is an incentive to log; whether they have looked at any alternatives to the assessment system in terms of land containing commercial tree crops; whether the assessment system is uniformly applied throughout the province. I will leave it at that for now.

HON. MR. COUVELIER: We have had discussions on the issue even in this House. One of our MLAs who has well-recognized experience in forestry matters, the member for Cowichan-Malahat (Mr. Bruce), put a question to me some months ago about this issue. To the best of my knowledge, the issue focuses and arises almost exclusively as it relates to timber values on Lasqueti Island, and the question put to me in the House dealt with the Lasqueti Island situation.

In that respect, we held public meetings on Lasqueti Island, which I do believe had the effect of calming fears on this issue. It might be useful for me to advise the House that the assessment of standing timber as an interest in land is not a new policy. Timber has been long held to be an interest in land by the courts.

In a 1931 case before a five-man panel of the Court of Appeal of B.C., Mr. Justice Macdonald stated that before severance, the owner has title to an interest in the timber which is part of the land. It is that root case which has evolved in the long-held belief in assessment circles that value of timber should be recognized in assessed value of land.

The issue seems to me to be not whether the value of the timber is included in assessed value, but rather at what value that timber is priced. If, for example, you have full market value of the timber on the assessed or appraised value and you were to have a very nominal mill or tax rate, the taxes paid on the standing timber would not be of significant import in terms of any property owner's decision to log or not.

All the focus on this issue, to the best of my knowledge, arises out of Lasqueti Island. Lasqueti Island is renowned for its ability to grow all types of greenery.

MR. MILLER: I hope that your remark is mailed to Lasqueti Island. I'd like to correct the record. My copy of Hansard indicates that the question was put to the minister by the member for Mackenzie (Mr. Long) on April 17. When I read the response, I am a bit surprised, given the minister's initial reaction to my raising the issue here in these debates, because when the member for Mackenzie raised it during question period, the minister said: "It's certainly timely, urgent and appropriate...." I hope he has the same feeling now as we prepare to discuss this timely and urgent question.

Interjections.

HON. MR. COUVELIER: What was the date of that?

MR. MILLER: The date was April 17.

The failure of the member for Mackenzie to follow up on this timely and urgent matter is really none of my concern; nonetheless, it doesn't detract from the importance of the issue. Perhaps if the member for Mackenzie is in the precincts, he might wish to rush in and join me in discussing this and trying to get some clear, concise answers from the minister.

Nonetheless, we have looked at the issue, and our research people have discussed it with a person in the Assessment Authority. We are informed that there is nothing new and that this ability to assess has been on the books for some time, but there is a key question, and that is the applicability. I believe I've asked this a couple of times, and perhaps the minister would like to respond. Is the assessment practice being applied uniformly and consistently throughout the province? I think that's fairly fundamental.

[4:15]

HON. MR. COUVELIER: I'd certainly agree with the member's contention that it would be fundamental that there be uniformity throughout the province as it related to Assessment Authority practices. It is certainly the whole basis on which the Assessment Authority was brought under one level of management. It used to be in this province, about ten or 12 years ago, that the assessment requirement was best provided by local governments in local jurisdictions.

By virtue of the constant claims that there was inequity and lack of uniformity, the Assessment Authority was created. As a consequence of an all-party committee, it was agreed back in 1974 that we would address these variances between jurisdictions. That was the same year that the American tourist dialogue that I referred to earlier occurred.

It certainly is important that there be uniformity, and to the best of my knowledge such uniformity does exist. If the hon. member has any information that would indicate it does not exist, I would appreciate receiving it, because I will get on that question immediately.

MR. MILLER: I will leave it at that. I don't have a specific. It's not my field, as you know. In a way it is, because it involves cutting trees down, but as the Forests critic I haven't made it a practice to be informed in depth on other ministries. Certainly it has been drawn to my attention. I would have thought that the ministry would have raised that query with the Assessment Authority, which could very quickly report back as to whether or not it is being applied uniformly, as opposed to my ferreting out information or going on a hunt. Given the resources at my disposal, I'm simply incapable of undertaking that kind of investigation. I think it would more properly be the purview of the Assessment Authority to question the assessors in each

[ Page 7296 ]

district in the province to determine if they are, as a matter of practice, in terms of the efficient administration of the authority....

I'm pleased to note — and the minister has already noted — that that change was brought in, I believe, in 1974 or '75, and it did a great deal to rectify the disparity that existed, where each municipality conducted its own assessment. Some were being done well, and some weren't being done well.

Moving on on the issue of assessment of timbered land, I am advised that there are two cases to consider in dealing with the issue: where a person with residential land has this happen and where a person with farmland has this happen. It really points out the disparity, I think, between the different classes, where it may not in fact be an incentive in some cases but might be in others.

I'm informed that in the first case, in terms of residential land, it would be an incentive to cut the timber and reduce the assessed value of the land because unless the taxing authority makes an adjustment — and it's unlikely, I would think — to a lower tax rate, the owner's tax clearly will rise as a result of having that valuable timber on his or her property. In those circumstances it would be an incentive, and really the only resistance to that incentive would be the wherewithal of the persons owning the property if they considered it of sufficient importance to retain the trees and they could afford to do so, then they would. But if on the other hand money was a factor, then I would assume that it be would an incentive to log, which would not always be desirable for people in the area.

In addition, if they have the wherewithal — this may depend on the size of the land — they can apply to have the land put in the managed forest class, which gives them a big tax break and also allows them to reap the possible windfall from the sale of the timber and a continued tax break from a lower classification once the timber has been removed from the land.

If they don't put the land into a managed forest, they can still cut the timber and sell it. Here we come upon a problem that's arisen in some areas, not just Lasqueti Island but I believe in the Squamish area and on Vancouver Island. There are really no regulations governing logging on private lands, with the exception of the right for municipalities and regional districts to bring in bylaws, which can only deal with questions of public safety or runoff but essentially can't deal with aesthetic questions and reforestation questions. It seems to me that it is a serious problem. It may be localized to some extent; I don't suggest that it's widespread throughout British Columbia. But it seems to me a bit of a problem and one worthy of some attention.

The minister might want to respond to what I've said. I would ask the minister whether any other systems have been looked at. There are other ways of collecting tax; for example, at the time the trees are cut. Rather than having the land assessed and the tax collected yearly, it might be possible to devise a system where the tax would become payable if the property owner chose to remove the trees from the property. If he doesn't choose to do that, then the tax is not payable. There are some areas that could be looked at and maybe some unique or inventive approach taken.

I suggest that it could get worse. We've seen two or three outbreaks this year of local residents up in arms about the inability to control this kind of activity. I think taxing is simply one component; it's not the complete component, obviously. I believe the government should look at regulations, at least in terms of municipalities being able to control aesthetic features and, as well, being able to have some say in forestry practices.

I would ask the minister to comment on those issues.

HON. MR. COUVELIER: I don't know that there's much I can say, Mr. Chairman. I'm not aware of any pressing issues that need addressing at the moment in terms of anomalies or inconsistencies. I would repeat that if the hon. member has evidence of such, I would very much appreciate receiving them, because it's our ambition to always eliminate them to the maximum extent possible.

On the query as to whether we revisit the basis on which timber is managed on private lands, I guess my answer is yes, we do. I just want to remind the member, there is no perfect system of taxation that I am aware of anywhere in the world. Every time you impose a tax, you create aggrieved taxpayers; and every time you move the goalpost on an existing system, you create a new class of winners and a new class of losers. I suppose I come at the philosophical question with the belief that you should use great caution in tampering with a system that has been in place a long time and to which people have become accustomed and find workable. On the other hand, it is our ambition to always be fair and equitable, and were there a better suggestion, we would be the first to embrace it.

I'm pleased that the member has an ongoing interest in this subject. That gives me the comfort of knowing there will now be two of us monitoring the situation — he and me. That's useful to know, and certainly it's in the public interest.

MR. MILLER: It is indeed encouraging, Mr. Chairman. We could perhaps hold hands on this issue. But you've left out your colleague the Minister of Municipal Affairs, who expressed concern to the point where she set up a little task force of her municipal officials to study the issue. And if I find anomalies that I think need attention, then I will bring them to your attention. Again, I would hope that the minister would advise his officials — perhaps the head of the Assessment Authority — to simply ask every person in a district office in the Assessment Authority to ensure that the system is being applied uniformly. I gather from the minister's last comments that he or his officials are monitoring the situation, and there it lies.

[ Page 7297 ]

There's perhaps an opportunity here for you to get together with your colleague in the Ministry of Municipal Affairs. You seemed somewhat reluctant earlier in the debate to give full credit to the administration of the day for bringing in the Assessment Authority. You didn't look too eager to mention the fact that it was a New Democratic Party administration.

HON. MR. COUVELIER: It was an all-party committee.

MR. MILLER: You've just repeated what you said when you were on your feet. I happen to agree with you, Mr. Minister, that all-party committees are good vehicles for examining issues in this province. They can approach these issues in a non-partisan way, and as a result of their investigations they generally come up with good recommendations and become more informed members in the process. Perhaps the minister, with his strong views on the benefits of all-party committees, would agree that this little item might be appropriate for one of the existing standing committees of the House. I would simply ask the minister to take that under advisement.

I have one more minister to pursue this with, and that's the Minister of Forests (Hon. Mr. Parker). There are two strikes so far. I've drawn a blank with your colleague in Municipal Affairs. I wouldn't say that I've drawn a complete blank with you. We'll see what happens with the Minister of Forests. Maybe all three of you might want to get together after comparing notes. I actually think it's a fairly decent recommendation that an all-party committee take a look at it They might come up with some very useful recommendations.

MR. CLARK: We're moving at breakneck speed here — positively glacial, I think would be more appropriate. I think I'll start the notes that I prepared for these estimates. In the first two hours we've canvassed two items that I can cross off my list, so we should be finished in a couple of weeks. Maybe for the rest of the day we'll start with some relatively easy things and move on to more difficult ones in the days to come.

Some time ago — I don't recall the date — the minister said he had hired a consultant to look at setting up our own provincial income tax structure. I wonder if he could first of all tell me the status of the consultant's report — if it's done or not done — and the rationale, essentially, that the minister had behind that proposal.

HON. MR. COUVELIER: As always, Mr. Chairman, this government is interested in pursuing new ideas, new ways in which we might invigorate the economy and maintain the tremendous growth that we've exhibited over the last couple of years, and we are anxious to do everything we can to improve our position nationally and internationally.

It had always been of interest to me to observe how the province of Quebec had been able to move forward in an economic sense in such a well-coordinated fashion. It had occurred to me that one of the significant differences between the Quebec situation and the rest of Canada is the matter of them administering their own tax system, as opposed to all the rest of us who rely on the federal government to do that for us. Of course, there are many other differences between ourselves and Quebec, not the least of which are language and certainly lifestyle. Nevertheless, that was one of the differences that was under my purview, and therefore I felt justified in having some impartial professional look at whether that was a tool that had been used by Quebec in its economic development ambitions.

[4:30]

The approach was to be in two stages; to use the term of my hon. colleague the Minister of Regional Development (Hon. Mr. Veitch), we would have a pre-feasibility study and then a feasibility study. So we determined that we would do a pre-feasibility study in very general terms. That study was completed, and as a consequence of that, it was considered appropriate that we would consider inserting it at some appropriate time in future discussions with the federal government in the interests of carrying forward our own provincial ambitions as they related to Canadian fiscal policy, tax policy, economic policy. That's where the matter sits.

MR. CLARK: I'll translate what the minister said, and maybe he could confirm for me. You did a cursory overview of the issues and the policies which might be pursued, and that preliminary study is completed. Did you move on to do a more detailed feasibility study after that?

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

MR. CLARK: Is it possible for the minister to table the original overview, so that we might all review this exercise?

HON. MR. COUVELIER: It's certainly possible.

MR. CLARK: I wonder if, while we know it's possible, the minister is prepared now to table this document in the House.

HON. MR. COUVELIER: No.

MR. CLARK: Well, perhaps maybe he could tell us why he's not prepared to table it. Quite honestly, I think it's a worthwhile endeavour, and I wonder, depending on certain assumptions.... But the principle I don't have any problem with, and I'm very interested in seeing what the consultant came up with. We could see it, presumably, in a couple of years when we're on that side of the House, and use it to go forward, or we could see it now.

Actually, let me pursue it a different way. Let me first start off by asking why you're not prepared to table that in the House for all members to peruse.

[ Page 7298 ]

HON. MR. COUVELIER: There's certainly no reason why it shouldn't be tabled in front of the House at an appropriate time. As I indicated in my response, it is, or at least I intend to make it, the subject of some future discussions with the federal government, and therefore it isn't in the interests of the people of the province to discuss it publicly at this time.

MR. CLARK: I don't want to belittle the efforts of the minister, but by saying that, are you saying really that this was an attempt to try to exercise some leverage on the federal government system and that's why it hasn't moved on to a real feasibility study? While you might in principle like the provincial scheme, it's too ambitious, and rather than that, you use this review to try in your negotiations to exercise a little more control over our tax regime within the federal system. Is that really what you're doing?

HON. MR. COUVELIER: I wouldn't want it to be alleged or have it described that our motives would be that crass, but nevertheless it is something that's worthy of public discussion at some point in the future. Certainly when that time comes, we would intend to present the document to the House. At the moment, I think it's more useful to use it in the way that we're contemplating.

MR. CLARK: Of course the primary drawback — and I'm sure the minister agrees, and this is an important political drawback — is the paper burden that one would impose if we had two tax forms — one which the Quebec people apparently stoically endure. It strikes me that it would be unfortunate if all citizens in British Columbia had to fill in two relatively complex tax forms. I think that drawback in general outweighs some of the benefits which one might pursue.

I wonder if the minister could inform the House whether there is any specific rationale. Was it just that Quebec has one, and it might give us a little more control over our destiny? Or were there specific concerns you had about the tax system that you wanted to see redressed — whether in the tax system as we have it now, or whether it required provincial tax manoeuvres? In other words, some people would argue that certain federal tax breaks unduly favour manufacturing facilities over resource-extraction facilities, and in order to get around it.... Were there specific tax breaks or increased taxes that you sought to alleviate or explore through this process, or was it just a general question as the minister previously described?

HON. MR. COUVELIER: No, it was a general inquiry attempting to understand the rough parameters of the options and the flexibility that might be provided if we administered our own tax system and the advantages that might ensue.

I think it's fair to advise the House that it is no secret that the existing federal income tax system has many problems, in terms of its enforcement and collection. Indeed, much has been written on the subject in journals, even in the last 12 months. There was an appreciation of the fact that we don't have a perfect federal income tax system, and also that a tax system might be used to provide a more effective public policy response to social issues and concerns; levels of support provided to those in need; the ability to provide incentives to the industrial manufacturing sector and the ability to deal with that challenging public policy issue of how much of the tax burden should that middle class absorb. Those are all issues which are subject to great debate.

In any event, the report's done, and we'll be happy to table it at some point in the future.

MR. CLARK: I didn't hear anything specifically that couldn't be accomplished under the existing tax regime dealing with provincial tax credits. All of those seem to be accomplishable. I am quite curious as to what federal tax inhibitions there are on provincial action, and where the government saw that it was so seriously flawed that we would even consider setting up our own income tax system.

While I probably don't share any of the concerns the minister has, I have concerns about the federal tax system and us being a part of that. I think it clearly constrains our action. The minister has not given us any indication as to what in particular he's concerned about.

The minister referred to Quebec having their own income tax system, and of course, they do. But my recollection is that not only Quebec but Ontario and Alberta have broken away or opted out of the federal corporate tax side. I wonder if the industry or the minister has given any consideration to the corporate tax side. Did this study encompass the corporate tax side or only the personal income tax side?

HON. MR. COUVELIER: No. As a matter of fact, we did give it some study and spent many sleepless nights staring at the ceiling wondering about that weighty issue. Neither of those two provinces have used corporate income tax flexibilities in any manner that's significantly different from existing federal legislation. We did consider it and look at it. It doesn't appear to have been used by those two provinces in any novel way.

MR. CLARK: Could you tell me whether this feasibility study encompassed a review of the corporate tax side as well?

HON. MR. COUVELIER: I don't remember; it was so long ago. Certainly the issue was discussed at length with the authors of the report and myself. I can't remember whether it was the subject of specific comment in the report or not, but I had many discussions on the subject with experts in the field.

We'll table the report in due course, and I'm sure it will provide useful bedtime reading.

MR. CLARK: I appreciate that the minister....

MR. CHAIRMAN: Government House Leader.

[ Page 7299 ]

HON. MR. RICHMOND: The Minister of Finance and Corporate Relations has some urgent duties elsewhere in the buildings, so if it's all right with the critic opposite, I would urge him to maybe carry on with the questions he was going to ask the minister, and I will take them as notice for the minister. When he returns from this urgent business, I will be able to give him a list, with some possible suggestions for how best to answer the questions. Then we can get on with the estimates. If the member cares to get up and give me a few pertinent questions which are very germane to the Finance minister's estimates, I'd be more than willing to listen with both ears.

MR. CLARK: I see that it's fallen to me to fill the time. I thought the government House Leader was going to perform. I thought that was part of the duties of the government House Leader, but he's asked me to rag the puck, and my throat is incredibly hoarse as well. It makes it much more difficult for me to do. I know some of my other colleagues could rag the puck or dribble the ball or....

Interjection.

MR. CLARK: Dribble is a bad term in the context in which we're filling this time, so I won't pursue it.

Interjection.

MR. CLARK: In this context, Mr. Minister of Energy, Mines and Petroleum Resources (Hon. Mr. Davis), I'm not quite sure what that echo means.

I will not break new ground in his absence but will perhaps discuss or review the first area I have written down for us to cover. It's quite interesting that we've been here for two and a half hours, and I'm just on point one of my notes. I know things will move more quickly as time goes on. I know that the Minister of Finance has been parsimonious in his responses.

AN HON. MEMBER: Untypically so.

[4:45]

MR. CLARK: Very untypically so. That has allowed us to expedite the discussion to such an extent that we're almost through the first point. I know that if he continues in this manner, and particularly if he continues to take these lengthy absences from the House, we'll get through this by some time in September.

I see the minister is here. I'm sure he shares with me the view that the government House Leader's role is to fill these absences and not to defer to the critic the....

MR. LOVICK: Let Hansard note that the minister returned with a sigh of contentment.

MR. CLARK: That's right. I know that the minister's remarks might be lengthier now that he's more comfortable in his chair and is more relaxed in the chamber. Rather than having the House Leader do that job, he relied on the opposition critic. I hope Hansard records that.

[Mr. Rogers in the chair.]

I won't belabour the first point. As I mentioned a minute ago, we're almost through the first point in my notes. We're moving quite quickly. I just would like to make the point that it seems to me that the paper burden on individuals from setting up a separate provincial tax system would be onerous, particularly for the people the minister professed a minute ago to want to help. However, it seems to me that there may be merit on the corporate income tax side in opting out of the federal scheme. I don't want to be punitive on the corporate side with respect to that paper burden, but it does seem to me that the federal corporate tax changes have had quite an impact on the corporate tax revenue side. Even without any reduction in corporate tax rates on the provincial side, I think our revenue will potentially have shrunk because of some of the changes.

It seems to me that rather than pursuing the personal income tax side, opting out of that.... I appreciate any attempt to use that to lever more control from the federal government; I strongly support it. But I'm quite sure I would oppose any real attempt to do that in the provincial context. I think the paper burden is just too much to merit it.

On the other hand, I think there's much merit in pursuing a separate corporate income tax regime for British Columbia. I think the Alberta government.... I don't want to emulate them and the tax regime they brought in, but they clearly recognized that the corporate tax at the federal level had certain impacts which were based primarily on the industrial structure in central Canada, and that our industrial structure here is quite different; it's much closer to Ontario's. The Minister of Energy, Mines and Petroleum Resources, who is here in the House, would, I think, appreciate that we may want to design tax policies on the corporate side that are different than the tax policies which exist uniformly now in central Canada and in British Columbia.

While the minister has said that the Alberta government has not pursued that in an innovative or imaginative way — I'm not sure they would agree with that, but I might agree with the minister in that respect — it does seem to me that there is some merit in at least pursuing the idea and studying the notion of opting out of the federal corporate income tax side, setting up our own corporate income tax regime and dealing with the tax policy, giving us much more flexibility and creativity to deal with our unique problems and structure.

Although the minister said they're really not doing anything major, I don't really support studying in any great detail the opting out of the provincial income tax side. But I do encourage the minister, and I do so here in the House today, to pursue the corporate income tax side more diligently than he appears to have done, with all due respect. It just

[ Page 7300 ]

seems to me that there are options and possibilities that might open up if the provincial government controlled their own corporate income tax side, which might help us advance our industrial structure, or at least advance our industries that exist today, because they clearly are different than other provincial governments. In fact, they're quite different and, in terms of structure, are much closer to Alberta than anywhere else.

I'll leave that first point. I just wanted to encourage him to continue studying the corporate income tax side and to not pursue the personal income tax side anymore; and I gather from the minister's answers that he's not likely to do that.

With that, Mr. Chairman, I move on to a different topic. At this time I'd like to briefly canvass with the minister some questions regarding the budget process in British Columbia, in particular the committee of Socred caucus, which — I'm not sure that this is any praise at all — certainly appears to be unique in Canada. I wonder if he could give us a little more information on how that process worked. I know we've had sketchy reports in the press. It seems to me that the idea has some merit. I have some concerns about it. But I'd like the minister to give us an understanding of the role of the committee of the Social Credit caucus which involved the budgetary process.

HON. MR. COUVELIER: I'm pleased that members of the opposition agree that we should keep open this issue of provincial administration of income tax, and I note the members' comments about corporate income tax. It's comforting to know that there is unanimity in this House on that matter.

Dealing with the truly unique approach we took to budgetary discussions this past year and the involvement of the caucus committee, I'm pleased to advise the House that it worked extremely well. The member alluded to sketchy press reports, and I trust that the description of it as sketchy didn't imply any lack of willingness of government to share information, but rather the diligence which the media might have brought to the issue. In any event, the structure and style of the concept have proven to be an outstanding success. To the best of my knowledge, it's unique in the western world. It's certainly unique, to the best of my knowledge, in the parliamentary world, where caucus members would sit down, with dedicated commitment, to do the thorough job that was done.

The member may be interested to know that the caucus committee met for 17 days, examining budget expenditure options, and that the days frequently started at 8 in the morning and ran through till 10 or 11 o'clock in the evening. It was a very thorough, dedicated effort, and I want to extend my gratitude to the members of the caucus who participated in that exercise. It served a very useful purpose, in that it enabled us to bring the regional view to bear, as it related to individual ministries' program expenditures, in front of the line minister and senior staff in charge. I can think back on many useful discussions about the efficacy of existing programs and the options to improve programs that were enhanced by virtue of having that intimate regional view.

The outcome of that structure — backbencher involvement — has been that this government's 1989-90 budget is, in my view, one of the most sensitive documents, in terms of meeting needs, of any budget document ever presented by governments anywhere. It reflects the opinions and consensus of those elected representatives who were chosen by their constituents to carry their concerns to government and to public policy questions.

The many enhancements to existing programs that are contained in this new budget are a tribute to the dedicated involvement of the caucus committee and their intimate knowledge of need in their own constituencies. Such knowledge could never be, and is seldom, provided when those kinds of decisions are made from a narrow base here in Victoria.

As I have traveled the country describing the provincial budget, I have received many compliments about the way we approached elected representatives' participation in the setting of those options. I think the outcome of it all speaks for itself. It is a very sensitive budget, one that meets the needs of the people and recognizes the differences in regions as the needs of the people are expressed by their local elected people. It's one that I had great pleasure in speaking to on countless opportunities. I do anticipate that we will continue that practice in the next budget year.

MR. CLARK: I think this is the committee that the member for Oak Bay-Gordon Head (Mr. B.R. Smith) was kicked out of, but maybe he could participate in the debate later on. I won't dwell on that.

I am interested in the process. I appreciate that they worked hard; I appreciate that they worked 17 days. I'd like to know a little bit more about how the process worked. You've said they examined budget expenditures. Did they examine anything on the revenue side?

HON. MR. COUVELIER: No.

MR. CLARK: Could you explain to me how the system worked? Did the committee call together? Did the ministers, line ministers, staff or whoever come before the committee, and how did the deliberations proceed?

HON. MR. COUVELIER: Very well.

MR. CLARK: What was the form of the consultation? Could you tell me whether the minister or the deputy minister appeared before the committee to present their case, or were other staff people involved in the deliberations?

HON. MR. COUVELIER: Very wide-ranging discussions involving many levels of expertise, so there were different approaches taken by different ministries, depending on the depth of technical information required. In some subjects, the caucus committee

[ Page 7301 ]

wished to get a much higher level of detail than might have been normally available if only dealing with senior people. It varied by area of interest and, as I say, I think the results exhibit the tremendous success that it was.

MR. CLARK: The results are certainly evident, Mr. Chairman.

Could you tell me whether the Socred caucus committee — this budget review committee, whatever you call it — was autonomous, or was it directed?

HON. MR. COUVELIER: I think every elected person is directed by his constituents to serve their needs, and to that extent we are all servants of the people.

MR. CLARK: Was there a chairperson of the budget review committee, and who was it?

HON. MR. COUVELIER: In an endeavour to ensure that the dialogue was open and that it was not manipulated or led, the committee was co-chaired by the leader of the caucus, the first member for Langley (Mrs. Gran). It was a real pleasure to work with her, and she provided yeomanlike leadership on this issue. Indeed, the job probably couldn't have been done as well as it was without her dynamic, imaginative, creative participation in the discussions.

[5:00]

Clearly this received the wholehearted support of the caucus, which has seen the qualities of her contribution by re-electing her this year as once again being caucus chairman. We do recognize quality.

MR. CLARK: You said co-chaired. Were you the other chair of the committee? The minister nods his head; I won't pursue that. So the committee of Socred caucus reviewing the budget was co-chaired by the Minister of Finance and the first member for Langley. Who decided which ministries would be reviewed at which time?

HON. MR. COUVELIER: There was general agreement on how that would be tackled. I don't see the relevancy of the question. But those are sort of group decisions and there were some changes made as a consequence of suggestions presented. So what's the relevance here?

MR. CHAIRMAN: It's not appropriate to ask a question of one of the members from Vancouver East, or in fact any of the members, from the executive council.

MR. CLARK: This was a secret process, frankly. And I don't mean that in any pejorative way.

HON. MR. RICHMOND: Cabinet decision.

MR. CLARK: I appreciate the cabinet is secret, and there is the executive council. This is a committee of Socred caucus reviewing the budget, and I'm trying to ascertain what kind of influence they had and how the process worked. I want to know whether the committee had the power to call staff in. Did the committee have power to direct staff? Did any member of the committee have any of that power? Did the committee call before it ministers to review their budgets? What elements of their budgets were reviewed — all of their programs, or how many of their programs? Could they decide independently of the minister or of any member of the executive council to call in Treasury Board staff to review processes or programs of the government?

Those are the kinds of questions which I think are very clearly relevant to one of the most important endeavours that the government undertakes, or any government undertakes, which is the preparation of the budget. If the minister could shed some light on any of those questions, I would very much appreciate it. Otherwise, we will go through them one at a time and proceed from there.

HON. MR. COUVELIER: I'm not quite sure of the purpose of the questions, Mr. Chairman. I heard the words, but I'm not quite sure that they are very relevant. I should just remind the member, in case he's forgotten, that the purpose of the committee was to advise government on its spending priorities, and they performed that function admirably. As a consequence of the quality of their recommendations, they were, I do believe, unanimously endorsed. That does speak to the fact that the outcome was well discussed, all options and alternatives well debated, examined. That implies that there was an adequate level of staffing to respond to individual queries of individual committee members. It implies that there would be full and frank and open discussion in the interests of serving the needs of the citizens of the province. But the committee is advisory; decisions are made by government; and certainly that principle wasn't violated here. This is a government that places great credence and value on the opinions of caucus members, and as a consequence this useful forum to obtain those opinions was clearly in the public interest and resulted in, as I say, a budget which has been universally endorsed by nearly every sector in the province.

MR. CLARK: Were the presentations to the committee by ministries both verbal and written? For example, did the Treasury Board prepare documents in advance of the committee, so the documents would come to the committee to be reviewed and then staff or the minister would be called before the committee to debate the Treasury Board documents and make suggestions? Is that how the process works?

HON. MR. COUVELIER: Yes, in very general terms, that's how the process works.

MR. CLARK: Could you tell me whether there were any costs associated with the committee, any

[ Page 7302 ]

remuneration or costs or lunches paid for by the government in that regard during the deliberations?

HON. MR. COUVELIER: Yes, the issue of expenses was provided and I do believe duly constituted in the appropriate way so that there should be no confusion in the public's mind about the issue or propriety of covering expenses of members who were inconvenienced, some of them to a very great extent, as a consequence of their desire to contribute to the interests of their constituents. It wasn't a costly exercise. It was one, as I say, that was dealt with through the appropriate legitimization process. We can get more details about that if the member is curious. I don't have them at hand at the moment.

MR. CLARK: I'm curious about this. I wonder if the minister could tell me under what auspices members of this House could be paid for expenses. Perhaps the minister could clear this up for me, but I cannot think of a case in the two and a half or three years that I've been here where remuneration was provided to back-bench members for services performed in their capacity as MLAs. Was there an order-in-council passed that authorized payment to members of this committee? It seems to me to be highly unusual.

MR. CHAIRMAN: The Chair is going to have to ask for some guidance on this issue, because, depending on which vote this particular expenditure was made under, this may not be the right vote under which to discuss it. I defer to the minister, because the Chair has only had the advice of the discussion.

HON. MR. COUVELIER: We have been all over the lot this afternoon, and the relevant vote seems not to have been an issue before. I'm quite happy to stick to the issue, if that's your order, because you are the authority of the House on this question. Just to dispose of this one question, I do not have with me the process used to authorize the payment of expenses made to committee members who participated. I'll be happy to provide that.

MR. CHAIRMAN: The reason for the Chair's caution on this issue is that if the members of that committee are paid out of the Ministry of Finance's vote, that's one issue; that's in order for this discussion. If they're paid out of another vote, this subject can be discussed again in committee at another time The committee does not want to have to canvass matters more than once.

MR. CLARK: I just assumed that, given that the Minister of Finance and Corporate Relations was the co-chair of this committee and the author of this process, in all likelihood — although it may not be the case in this administration — it was the minister or ministry that authorized it. I wonder if you could tell me whether, in the deliberations of the committee, they came to some conclusion that resulted in written advice that presumably went further along the ladder. Is that the process?

HON. MR. COUVELIER: I'm sorry, I don't understand the question. Written advice on what matter — the expenses?

MR. CLARK: I'm sorry if I confused the minister. I had moved off that specific narrow topic, because the minister had given us some indication and assurance that he was going to provide that information at some later date. I wanted to ask again about the process. I wanted to know if he could advise me whether Treasury Board or some staff came before the committee, and whether a formal resolution was passed, motions were passed, advice was given or reports were given from the budget review committee which then went on to some other body for further deliberation.

HON. MR. COUVELIER: No.

MR. CLARK: You're telling me that you simply discussed these questions with the staff involved. There was free-wheeling debate on programs that were before the committee, and there was no resolution. Verbal comments were simply made for the advice of whoever was in the room. Is that how it worked?

HON. MR. COUVELIER: Yes.

MR. CLARK: Were any members of the budget review committee ever advised of the results of the deliberations — in other words, the fruits of their labour? Did they come to some consensus on issues — for example, a program in the Ministry of Energy appeared not to be warranted, in their learned opinion and discussion of the facts — and were they then advised that the results of their efforts were that that program had been abolished, reduced or increased accordingly?

HON. MR. COUVELIER: The hon. member seems to be making much more of this issue.... He's making almost a paper-bound exercise out of the matter. The fact is that the material debated, if stood on a table, would be a minimum of three feet high, 8½ by 14 pages, with each page probably containing 50 lines of figures. To suggest that after digesting and discussing options and alternatives and expressing opinions, we should then recalculate and exchange among ourselves even more mountains of paper, I find may be an appropriate exercise for socialists, but hardly an appropriate exercise for government that wishes to get on with the job.

We viewed the process as one which enabled all elected officials on the committee to express their views, and discuss with their colleagues the options that were available to deal with the budget requests by line ministries. I have no idea of the number of figures dealt with, but it must be in the hundreds of thousands. The member is trying to build a paper

[ Page 7303 ]

trail or something here that would have defied anybody's ability to manage.

The fact of the matter is that this is an open government and one that genuinely desires to receive the opinions of its caucus. The structure that we followed, the practices that we followed, ensured that there was a good exchange between those asking for funds and those who were in the field seeing how those funds were expended. It seems to me that that's clearly in the public interest, and as I say, the results indicate the success of that approach.

[5:15]

MR. CLARK: The minister said that I'm making much more of this than is the case. I remind the minister that he has repeatedly extolled the virtues of this committee, and at great lengths has said how much influence it had in the budgetary process.

What I'm trying to find out is how they exercised that influence and how much influence they had. You have said they've had lots of influence, but then in answer to more specific questions you seem to imply that they simply jawboned for 17 days. At an earlier stage you said they were working hard, these were lengthy days, they were hard-working days. What I'd like to know is whether they made specific comment, resolution or criticism, that they united on certain matters and whether they then saw the fruits of their labour by convincing either the ministry or Treasury Board, or after the fact learned that they had impact into the process. Members of the committee had said they had impact and input into the budgetary process. I'm trying to determine what that impact was and what the results of their process was. Can you tell me whether they were ever informed about decisions made by Treasury Board or otherwise that concurred with their deliberations or recommendations that came out of the committee?

HON. MR. COUVELIER: Mr. Chairman, I certainly do not intend to tell the hon. member opposite which of the caucus members made which argument on which issue. I just don't understand what he's trying to accomplish here. Clearly there was a consensus about positions taken by government. To the question of whether caucus members saw the consequences, of course they saw the consequences. I stood in this House in full view of the world and announced the consequences.

There is no need for you to have any more information than that, hon. member. It seems to me there is no useful purpose served. You can ask each of the caucus members who participated, if you like, which of their particular interests were obliged by the decisions of the government. But I certainly don't intend to disclose those sorts of debates; besides, I couldn't remember them all. It took 17 days, and they ran from 8 o'clock in the morning to frequently 10 o'clock or 11 o'clock at night. I couldn't remember it all.

MR. CHAIRMAN: It would not be appropriate for you to ask those members in committee.

MR. CLARK: Mr. Chairman, the understanding that I have — and the minister can clarify this — is that committee members were informed of decisions made by government that corresponded with recommendations the committee made. Is that not correct?

HON. MR. COUVELIER: As I say, the government viewed the output of the committee as advice. The committee, by virtue of it being so wise and sensitive to the needs of its constituents, was able to provide excellent advice. Are you suggesting the government shouldn't take excellent advice? It seems to me the whole exercise was set up to ensure that we got as sensitive a view of spending decisions as we possibly could, and the results indicate that that's the case.

MR. CLARK: Mr. Chairman, I am suggesting precisely the opposite of what the minister has just said. I'm suggesting that in fact the government did take the advice of the committee and informed the committee that their advice had been accepted on certain issues that came before the committee. Can the minister confirm that advice was accepted and that the committee was told their advice was accepted on several occasions on specific points which the committee came to agreement on?

HON. MR. COUVELIER: I certainly can't verify that allegation. Could you be more specific?

MR. CLARK: The minister is trying to have us believe that they spent 17 days working on the budget process and never knew whether or not advice that the committee gave had been accepted. My information is that it was communicated to members of the committee whether advice given by the committee had or had not been accepted by Treasury Board or other people in government.

HON. MR. COUVELIER: If the hon. member isn't aware, the budget we presented for '89-90 is balanced, which means the revenues equal the expenditures. That's only possible to achieve by a sense of husbandry in the use of public money as well as the need to make sure expenditures do not exceed revenues.

As I've already told the hon. member, the expenditure decisions were the issues addressed by the caucus committee; they did not participate in revenue decisions. All we were able to do, then, in terms of involving them in the process, was to ensure that our expenditure decisions were sensitive to regional needs and to oblige their interest to ensure that government programs were able to work effectively. That was a very helpful exercise.

The need for the government to ensure that expenditures did not exceed revenues of necessity required that after receiving the recommendations of the caucus committee, government should then examine the revenue side of the issue to find out what was manageable. I can appreciate that this may be a novel approach for the socialists across the floor, but those of us who take our responsibilities seriously try

[ Page 7304 ]

to make sure that to the best of our ability we manage expenditures and balance expenditures and revenues, and we were able to do that.

The work of the committee as it related to the expenditure choices was a very valuable contribution to how public money might be utilized. By virtue of the advice being so well-founded, well-substantiated and meritorious, most of their recommendations.... As a matter of fact, I am not aware of any significant ones that weren't listened to closely. Most of them were very worthwhile.

However, because government had the limiting factor of making sure that expenditures did not exceed revenues, it was necessary for government to take the process on from the prioritizing of expenditures to dealing with the global budget. That of necessity means that there is an ever-wider circle of discussion among government members as to how we might meet both the advice given to us by the caucus committee in terms of expenditures and also the obvious need of the citizens of this province to take comfort from the fact that we did take seriously the need to spend their money wisely and not increase taxes. I shouldn't have to remind the House that this budget is balanced without any significant tax increase.

MR. CLARK: Can the minister inform the House whether members of the so-called budget review committee took an oath of secrecy?

HON. MR. COUVELIER: Did the member ask if the caucus committee took an oath of secrecy? The answer is yes. As a matter of fact, a special oath was devised in order to ensure that it met all of the parliamentary concerns of the professionals who make it their vocation to make sure that legalities and proprieties are followed. That was all done.

I have just been advised of an answer to a previous question that I might present now. On November 4 the Provincial Secretary (Hon. Mr. Reid) invited members of the committee to attend, and under the authority of section 6 of the Legislative Assembly Allowances and Pension Act, the members above shall be reimbursed for reasonable out-of-pocket traveling and other expenses incurred in the discharge of their duties. That was the process by which the expenses were dealt with.

MR. CHAIRMAN: The chair will intervene and remind members that discussion on that one specific point of the remuneration of members is to be discussed under the estimates of the minister responsible, which is the Provincial Secretary.

HON. MR. COUVELIER: Mr. Chairman, it's in the budget of the Ministry of Government Management Services.

MR. CLARK: Can the minister — I ask the Chair's indulgence — tell me if that was an order-in-council?

HON. MR. COUVELIER: No.

MR. CLARK: I wonder whether the minister could tell me under what authority members of the House are paid. Is it under the Constitution Act?

Interjections.

MR. CHAIRMAN: It would help the committee, Hansard and the Chair if just one of the government members would respond to these questions. Therefore I recognize the minister.

HON. MR. COUVELIER: Mr. Chairman, I provided the answer a minute ago.

MR. CHAIRMAN: I appreciate that, but there are a number of other answers being provided by your colleagues, and the Chair would like to have one person responding for the government at this time.

HON. MR. COUVELIER: There is only one end of the horse that is able to speak with its mouth, Mr. Chairman. [Applause.] I didn't think it was that good.

The authority is section 6 of the Legislative Assembly Allowances and Pension Act.

MR. CLARK: I wonder if the minister would table in the House the oaths of secrecy that the members signed.

MR. CHAIRMAN: Tabling is not permitted in committee. That matter will have to be dealt with when the Speaker is in the chair. Please continue.

MR. CLARK: I wonder if the minister would provide me with a copy of the oaths of secrecy that the members signed.

HON. MR. COUVELIER: I will take it under advisement. As I say, I'm not a lawyer, and I don't normally spend this much time dancing on the head of a pin. But we'll have to find out exactly what the proprieties are under that circumstance.

MR. CLARK: I would like to say that I am somewhat uncomfortable with some of the answers and the process that the government undertook. It seems to me to be highly irregular to have a backbench committee of Socreds review the budgetary process.

MR. SERWA: Private members.

MR. CLARK: The member heckles: "Private members." The reality is that all members of the House outside the executive council are equal in terms of their access. That principle has certainly not been followed by the government in this respect. The committee was set up to keep quiet members of the back bench who were having a fight with the Premier with respect.... Of course, some members who continue to have a fight with the Premier were expelled from the committee.

[ Page 7305 ]

The committee had remuneration, which is not available to other members of the House when they have budget deliberations. Certainly the opposition finance critic has to do a lot of work with respect to responding to the budget, and was not accorded the same privilege that back-bench Socreds were in this regard. I might tell the minister that other jurisdictions, such as Ontario, have public processes in which all members of the community can participate in the budget process — interest groups and opposition members.

Interjection.

MR. CLARK: The minister may not like the budgets in Ontario, but at the very least, the process they followed was one which was slightly more democratic than the process we've seen in this House, a process designed not to enhance the budget process but to enhance the government's status in the back bench, and particularly the Premier's.

I have some real concerns about that, Mr. Chairman. I hope the minister agrees to provide copies of the oaths of secrecy, because I'm also concerned that back-bench members were privy to elements of the budget prior to the budget being released in this House. It appears from the answers — and you have to read the entrails of the minister's answers because they're so long-winded and convoluted — that members of the committee were informed of decisions made by the executive council, informed of decisions made by Treasury Board with respect to program decisions made by the government. That is a departure from parliamentary practice elsewhere and one which we have not seen before in British Columbia.

[5:30]

While there is clearly merit in having more people participate in the process, there are other, more democratic ways of going about it that include not only all members of the House but also many of the community at large. That's not the sort the has chosen to follow.

MR. PETERSON: Look at the results.

MR. CLARK: Well, we'll comment on the results — and we have.

Interjections.

MR. CLARK: I hear members of that committee taking exception, Mr. Chairman. But we'll....

MR. PETERSON: I wasn't a member of that committee.

MR. CLARK: Oh, I'm sorry. Were you kicked out like the member for Oak Bay, or were you not invited to participate?

MR. CHAIRMAN: Order!

MR. CLARK: Oh, I'm sorry, Mr. Chairman. I'm sorry that the second member for Langley was not invited to participate.

Interjections.

MR. CHAIRMAN: Order, please.

MR. CLARK: Thank you, Mr. Chairman, for that.

MR. CHAIRMAN: Perhaps if the member standing would address the Chair.

Interjection.

MR. RABBITT: You jerk!

SOME HON. MEMBERS: Oh, oh!

MR. CHAIRMAN: Order, please. I must ask the member for Yale-Lillooet to withdraw his unparliamentary remark.

MR. RABBITT: Mr. Chairman, if I have offended the House or the parliamentary tradition, I so withdraw.

MR. CHAIRMAN: Thank you very much.

MR. RABBITT: Mr. Chairman....

MR. CHAIRMAN: The member has to be recognized when the member is standing on a regular basis. When I've asked the member to stand to withdraw, I then go back to the member who had the floor at the time I asked you to withdraw. There will be ample opportunity during this....

Interjection.

MR. CHAIRMAN: Order, please. Would the second member for Victoria (Mr. Blencoe) please restrain himself.

If the committee could now come back to order.... We only have 24 minutes to go for today. I recognize the second member for Vancouver East, and when he's finished, I'll recognize whoever is standing. Please continue.

MR. CLARK: Mr. Chairman, I'm happy to defer to the member for Yale-Lillooet if he wants to participate.

MR. RABBITT: Mr. Chairman, I must apologize to my colleagues for coming in here. But after listening to the dribble and drivel coming from the finance critic of the opposition.... Somebody should intervene to let the so-called critic at least know that there are some of the so-called backbenchers — I would like to inform the first and second members for Vancouver East (Mr. Williams and Mr. Clark) — who do have equal status to those members in the opposition.

[ Page 7306 ]

We're in an estimate where I was listening to try and tie the relevancy of the questioning that the opposition critic has been putting forward. I certainly would not want to challenge the Chair, but I would add that even though I felt it was strictly irrelevant, it was a great honour for many of us to participate in assisting the minister in putting together what I consider one of the best budgets in the last decade.

The opposition must really wonder what is wrong with a good budget. How can they poke holes in it? There aren't very many areas. I look at the opposition, and I wonder why they do not have a comprehensive approach to putting a challenge to our budget. Probably one good reason is the lack of credibility as far as their business background goes. What have we got? We've got....

MR. CHAIRMAN: Order, please. The Chair, having arrived here only at 1400 hours, is having some difficulty putting all this back together. Let's just try and remember what we're supposed to be discussing: the administrative responsibilities of the Minister of Finance and Corporate Relations. Several members — and the Chair has allowed more than enough leeway this afternoon — have gone into elaborate discussions on the budget, which has already been voted on and passed and therefore is not in order to discuss. It is in order to discuss matters involving the administrative responsibilities of this minister, and they are very wide, so the Chair has to be lenient in certain regards. But it's not appropriate to discuss the budget.

MR. RABBITT: I'll continue, and I will be strictly relevant.

In respect to the committee, I think they did an excellent job. The long hours that were put in were fruitful.

MR. CLARK: Did you get paid?

MR. RABBITT: No, Mr. Chairman — to the second member for Vancouver East and the second member for Victoria — I did it because I felt there was an obligation by our back bench to assist our government and carry on the good, free enterprise philosophy.

I feel the integrity of those members has been challenged. Being in this forum, the members of that committee do not really have a chance to answer or meet the challenge, other than to get up and indirectly, through the minister, address the question that....

Interjection.

MR. RABBITT: Yes, in some ways I may be stretching the leniency of the Chair, and I apologize.

But I do want to conclude — in ten minutes — by saying that next year, when the minister brings his budget before the committee, we'll all have learned, due to the willingness of the minister to come forward and challenge and try a new approach to developing a complete budget, one that is balanced.... Of course, members of the opposition are not aware of what a balanced budget means. But, Mr. Minister, you know what a balanced budget means, and I would like you to explain to this House and to me the benefits to the taxpayers of British Columbia — the children, the students, the workers, the little business men, the large corporations. I would like you to tell this House what it means to those people.

MR. CHAIRMAN: Shall the vote pass?

MR. CLARK: Mr. Chairman, I thought for sure the minister was going to respond to the question that the member for....

MR. CHAIRMAN: Almost all of the questions put to the minister would have been out of order and would have been so ruled by the Chair.

[Mr. Pelton in the chair.]

MR. CLARK: The Chairman is taking the fun out of the criticism.

With that scintillating defence of the Socred backbench committee, and knowing the kind of people who were on that committee and the quality of advice they gave, I am going to wrap up that section. I am sure the person occupying the chair now would appreciate that we could move on. We have, I guess, 15 or 20 minutes left.

Maybe we could start discussing another aspect, because one of the things we found with the Ministry of Finance is that certain things that are privatized become the responsibility of the Ministry of Finance. I asked this question at the outset of my discussion today, about another aspect of government operations which appears to have been lobbed into administration by the Ministry of Finance: those elements of the loan portfolio which were not privatized. I wonder if the minister would agree with me and tell the House if my understanding is correct that, while loans were authorized under different programs of government and many of them sold, the dogs — the bad loans, the high-risk loans or those of non-commercial value — appear now to be administered by the Ministry of Finance. Is that correct?

HON. MR. COUVELIER: I certainly wouldn't agree with the description of these valuable provincial assets in the verbiage used by the hon. member. The hon. members seem to wish to have it both ways. I understand that in some of the standing committees they have been critical of the fact that loan recipients' names aren't provided. I gather, then, from an allegation just made, that the ones we continue to hold are less than desirable. It seems to me that quite clearly you've just illustrated the very reason why this government absolutely believes with a firm conviction that that kind of financial arrangement between government and loan applicants should be held in confidence.

[ Page 7307 ]

My goodness, if by a process of elimination, in your judgment, you are going to be able to identify dogs — and I forget the other descriptive term you used — quite clearly it's not in the interests of the citizens of this province to provide you with that information, because you would abuse it and use the privilege of the House to attempt to score some points for observers from time to time.

MR. WILLIAMS: You're the canine creator.

HON. MR. COUVELIER: Whose question was that? The members seem to be suggesting that loans that we are managing under the Ministry of Finance are dogs, as he put it, and that clearly is not the case. There's the odd cat in there, and....

No, seriously, the loans that we continue to manage in the ministry are those loans that for a variety of purposes, including public policy purposes, were deemed to be best managed and retained under the management of government. Government is frequently more sensitive in dealing with some of those contentious issues than the private sector. Those judgments were made for a variety of different reasons, not all of which would be that they were less desirable.

[5:45]

MR. CLARK: I wonder if the minister could tell me what the total amount of loans outstanding is. What's the size of the portfolio that's managed by your ministry?

HON. MR. COUVELIER: There are a variety of loan programs under which we are acquiring management responsibility, so it will be across a variety of ministries. I have some material here: a total of $276.5 million. Is that the category the member is inquiring about? Are you looking for some sort of detail on a dollar amount of that dimension?

MR. CLARK: I'll just clarify: is the minister saying that the current liabilities or loans outstanding....

AN HON. MEMBER: They're assets.

MR. CLARK: Excuse me, I always get that mixed up. When you're a bank, loans are assets. Could you tell me the size of that? Are you saying it's $276.5 million?

HON. MR. COUVELIER: No, I was just trying to define the term so that I could provide the appropriate answer, I thought if I identified the total of the figure I was looking at, then I would know I was addressing the question asked by the hon. member. If he had a different question to ask, then of course I'd have to pull out different documentation. I'm really just trying to oblige him.

MR. CLARK: I'm at a loss to understand what the minister said. I'm trying to determine the total size of the outstanding loans of government, how much of that was privatized and how much is retained by the Ministry of Finance. I would think it's quite straightforward.

MR. CHAIRMAN: Just before the minister responds, the first member for Vancouver-Point Grey has asked leave to make an introduction.

Leave granted.

MS. MARZARI: I'd like to introduce a guest to the Legislature this afternoon: Mr. Pablo Pinochet from Madrid, Spain, who is here on a business trip. Would you welcome him.

HON. MR. COUVELIER: I'm trying to determine what specific loan agencies the member is searching for information on. I can tell him that the loans taken over by my ministry from BCEC —  LIFT and LILA sector — totalled $156.5 million. Is that the information he desires?

MR. CLARK: Then $156.5 million is the current size of the loan portfolio. Is that the current value, or is that the amount of money that was originally loaned under the various programs that you're now administering?

HON. MR. COUVELIER: That was the book value of the loans at March 31, 1989. Of course, since then payments would have been made, adjustments would have been made, so the sum isn't quite the same today as it was then.

MR. CLARK: The minister says "book value." The first member for Vancouver East (Mr. Williams) suggests that I might ask what the face value of the loans was.

HON. MR. COUVELIER: Mr. Chairman, these are active loans, so there is no altering of the figures. The book value of the loans is what we are administering.

I hear the first member for Vancouver East giving advice to the critic. Maybe I can save everyone time by just reminding the House that there was already a write-down of loans administered by B.C. Enterprise Corporation. That interesting facet of public policy has not been overlooked by this government, which is always on its toes and sensitive to the need to manage public money responsibly and account for it responsibly.

MR. CLARK: Is the minister aware of how much of those loans was already written down? Can the minister tell me?

HON. MR. COUVELIER: No, Mr. Chairman. That, of course, would be examined loan by loan and, as we've already said, those kinds of issues are not, in the judgment of government, suitable for public discussion.

[ Page 7308 ]

MR. CLARK: Mr. Chairman, we can argue about whether each loan is suitable for public information, but surely the global amount is not one which requires privacy. We're dealing with the total amount of the loans outstanding.

HON. MR. COUVELIER: Mr. Chairman, I appreciate the fact that the critic aspires to be Minister of Finance one of these days, and I do understand that we have an obligation to provide suitable training for that eventuality. But I have to make the point that it's going to take some time to provide the level of training that obviously is required when I look at the question just proposed.

The fact of the matter is that the write-down of those loans occurred when the privatization of BCEC was considered some time previous to this decision we're describing and discussing here today. As a consequence, there is no relationship of those decisions made a year or two ago — they affected loans that might not be collected or that needed some provision for bad debts — to the sums of money we are discussing today. There's no relationship whatsoever, nor should there be.

I appreciate that these are little nuances that will take some time to acquire. I am comforted by the knowledge that it will obviously take quite a bit of time, and therefore I will have a continued opportunity to provide this training that is so obviously needed.

MR. CLARK: I wondered how long it would take the minister to enter into that discussion. He usually does that every time he gets into trouble with me. It took him four hours before he gave that lecture.

I wonder if he could tell the House how many companies have received those loans, this $156.5 million.

HON. MR. COUVELIER: I don't believe we have that information available here. We will have to provide it, I guess, Mr. Chairman, and of course we are always pleased to do that. There is no way I can correlate the figures, so we'll have to provide that later.

MR. CLARK: Could you tell me the average value of loan per company? Or is that one that you will have to deduce when we find out how many there are?

HON. MR. COUVELIER: Mr. Chairman, if I don't know the number of companies, how could I provide the member with the average value? And he wants to be Minister of Finance!

MR. CLARK: I don't want to accuse the minister of not knowing. I just thought the information might be there in a different form and that he had overlooked it.

Mr. Chairman, perhaps this might be an appropriate time to move the committee rise, report progress and ask leave to sit 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 5:55 p.m.