[ Page 7309 ]

CONTENTS

Routine Proceedings

Tabling Documents –– 7309

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

(Hon. Mr. Couvelier)

On vote 25: minister's office –– 7309

Mr. Clark

Mr. Sihota

The House met at 10:06 a.m.

Prayers.

Hon. Mr. Couvelier tabled documents on the transfer of assets of B.C. Steamships to B.C. Stena Line Ltd.

Orders of the Day

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

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. CLARK: Mr. Chairman, I thought we'd start off this morning with some easy ones again. Maybe the minister could tell the House how much the 10 percent tax on draft beer is expected to raise.

AN HON. MEMBER: How many votes has it cost? Quite a few.

MR. CLARK: How much money?

HON. MR. COUVELIER: We'll be happy to provide that information. I don't have it available at hand, but I'm sure we can provide it in short order.

MR. CLARK: I thought maybe what I'd like to do for some of this morning is canvass what is essentially a federal-provincial issue, and that's the proposed goods and services tax of the federal government.

For the last few decades the federal sales tax, with all its flaws, has really been uncontentious. This is partly because the tax is relatively low incidence — I think only 35 percent of all goods are taxed; partly it's been because it has been hidden; and, more importantly, it's because it has been uncontentious historically, because the federal sales tax has generated a shrinking percentage of the revenue to the federal government.

That has all changed now, it seems to me, and it has become a rather major issue which we have to deal with. Firstly, I think it has changed because the Tories have dramatically increased the sales tax. When I last looked at the numbers, they were dramatic. We've seen a 2 percent increase in the federal sales tax, which raised $7, billion for the federal government, and another 1 percent in the last budget, which will raise another few billion. In fact, the sales tax revenue increases generated twice the revenue that personal income tax increases have raised. So it has become a dramatically increased source of revenue for the federal government. It has heightened the concerns around the flaws that are attendant with that tax.

The second reason why it has, of course, become quite a significant public policy issue is because of the proposal to change the federal sales tax to a goods and services tax, which is, of course, closer to a value-added tax in the way they've structured it, So the dramatic shift in revenue from sales tax is, in my view, quite disturbing.

I note the Premier is here. He may share that concern, given that the province has reduced its retail sales tax by one point, while at the same time we've seen this massive increase — and that's the only way to describe it — in the federal sales tax. That's disturbing, it seems to me. It's disturbing in part because it's such a narrow tax and flawed tax. If they're going to generate that kind of revenue and that kind of tax-grab with this existing system, just think what the Tories are going to do if they get a new goods and services tax which covers all services, like haircuts and taxicabs and financial services, telephones and a range of things.

When you think of the tax-grab — I think it's $17 billion now generated by the federal sales tax — just think of what kind of revenue the Tories are likely to grab if they bring in a wider, vastly expanded tax thing. So it becomes kind of a regressive cash cow for the federal government. And I think that's abundantly clear, if you look at the European experience with value-added taxes. It has become the major source of revenue for....

HON. MR. COUVELIER: On a point of order, Mr. Chairman, I'm always pleased to hear the views of the opposition as they relate to federal matters, but I'm just wondering what the applicability is to the subject at hand.

MR. CHAIRMAN: Thank you, Minister, you make a good point. The Chair is waiting patiently for the hon. member to tie this in with the estimates.

MR. CLARK: Mr. Chairman, I've only been speaking for about three minutes. It seems to me that the latitude to bring this question home....

The reality is that the federal government and the provincial government — the Minister of Finance — have been negotiating for two years now on the revisions to the federal sales tax system, and that's the point I want to arrive at. The current federal sales tax system is a problem because of what they call cascading: double taxation. One estimate is that 40 percent, I think, of the revenue generated by the federal sales tax is double taxation. People argue that the current system favours imports over domestic production, but it seems to me that the new sales tax should be considered.

We've discussed the federal sales tax in this House in terms of the tax on food and the like. In fact, I asked in question period about the government's response with respect to the tax on food, and we got

[ Page 7310 ]

no answer. Subsequently the Premier has said that the provincial government is opposed to a sales tax on food.

Now that the federal government is acting unilaterally without provincial participation, what is the government's current thinking on this? It seems to me to be regressive; the revenues are likely to increase dramatically. It will be inflationary, because it's quite a dramatic increase. It also seems to me that it intrudes on a provincial tax area, and this is a question the Quebec government has been most anxious to discuss. Clearly, if it's a sales tax akin to the kind of sales tax we have — that it is no longer a hidden tax — it crowds out, to some extent, provincial tax room. I wonder what the provincial government's current thinking is on the current proposal of a unilateral federal sales tax and whether the minister has any comments with respect to the impact it might have either on provincial revenue or, at least, on provincial jurisdiction in this area.

I might note that most provinces have been very vocal on this; this provincial government has not been. That's partly why I'm asking these questions: to see what the provincial government's position is.

[10:15]

HON. MR. COUVELIER: Mr. Chairman, I'm not sure I could agree with the hon. member when he claims that we haven't taken a position on the matter I have responded to every question put, and I have included the subject in countless speeches around the province. I admit that I'm not a high-profile minister, and as a consequence, I don't often attract much media attention when I issue pronouncements Therefore I can forgive the hon. member for his apparent lack of knowledge about what we have been saying.

It's not true, I submit, Mr. Chairman, that we have not responded to the issue of a national sales tax on food. My memory is that I have responded to questions on that point in the House during question period. However, the hon. member should be aware that food is a generic term and lacks definition in terms of taxation policy. The jargon of the trade would require you to discuss groceries as a separate issue from the generic description of food. I have spoken in the House during question period about taxation of groceries, and I told the House well over a year ago that this government was unalterably opposed to the imposition of a national sales tax or consumption tax on groceries.

That left begging the larger question of food — that is, food served in restaurants, fast-food franchises and that kind of thing. During the course of our discussions with the national government on that issue, it became clear that they hadn't made a determination themselves as to how they would handle the matter. As a consequence, we had many discussions about the disadvantages of imposing such a tax. As far as I know, the federal government still has not clarified the issue of how they propose to apply the goods and services tax on restaurant meals or fast-food franchises. If they have, I have not seen any mention of it.

I believe that many aspects of the goods and services tax still need clarification by the federal government. As a consequence, not wishing to grab headlines or appear to be knee-jerking or acting irresponsibly, I withheld comment until I at least knew what they were proposing to do. In many areas, I'm still not certain what they propose to do, and I suspect even they themselves have not yet made their minds up.

The hon. member asked a question about how we felt about this intrusion on provincial taxing turf. I, like my colleagues across the country, have expressed concern about the fact that the federal government will be, for the first time, moving into a consumption tax area, a field that has normally been reserved for the provincial governments –– I, like others, have expressed concern not only about the potential turf grab but also about the consequences of imposing their stated 9 percent tax rate upon that consumption area.

From the best of our information, a 9 percent rate is not necessary in order to be revenue-neutral. When the tax was first announced or proposed over a year ago, the goal stated by the national government was revenue-neutral. During the ensuing discussions at the staff level and at the two or three meetings we had at the political level, the definition of revenue neutral was always a point of discussion and debate.

The national Minister of Finance takes the view that revenue-neutral means to recapture the same amount of dollars as was captured under the old system before he amended the income tax structure a year ago. That approach seems to ignore, and does ignore, the fact that he has received more income tax revenue by virtue of the strength in the Canadian economy than he originally anticipated.

It is the view of the provinces, including ourselves, that a true revenue-neutral national sales tax rate would be somewhere in the order of 51/2 percent to 6 percent, not the 9 percent stated. The difference arises through this host of technical issues about trigger dates as to what dates you are comparing — past to present — and also at what point of the income tax changes you attempt to freeze the frame. As a consequence of that, I understand that the Minister of Finance in Ottawa has held fast that 9 percent is the rate he deems revenue-neutral.

So we have spoken on the issue of turf, and we have spoken on the issue of rate. Those things that I've just told you now I have said publicly many times.

The potential impact on our revenue was another question you put. In our view, at least for this year, it is zero, as you know. So our budget as presented in the House stands unassailed by federal tax changes this year.

The proposal would be that by virtue of reducing transfer payments next year, the province's revenue from that source will decline by — our calculation — something in the order of $24 million a year. That will accelerate in succeeding years, and if you wish to

[ Page 7311 ]

extrapolate it over the next ten years, it will be a huge sum of money. If the member is referring to public utterances by my colleagues across the provinces, in which much has been written, inevitably they are referring to the cumulative effect over many years of this change of federal policy.

I hold the view personally that there are so many imponderables in future projections of revenue at the senior government level that that kind of projection doesn't have a whole lot of credibility, so I've been loath to approach the issue on that basis. Firstly, no one knows with certainty what revenue growth the country will enjoy, or how strong the economy will be during that time period. Secondly, no one knows the inflation rate the country will experience. So those projections in terms of real dollars are always questionable. I suppose, thirdly, this government has a vision which has been expounded by the Premier numerous times: that our future lies in the Pacific, and to the extent that we can marry our economy more closely with those exploding Asian economies we will be able to insulate ourselves from the decisions made in central Canada and to some extent from the uncertainties associated with the American economy.

Through the excellent efforts of my colleague the Minister of International Business and Immigration (Hon. J. Jansen), we have dramatically increased our exports to the Asian market since we assumed office only two and a half years ago. The Ministry of Regional Development has been working closely with this new ministry to ensure that our export industries — which are the backbone of our economy and the subject of great growth — can continue to refocus their efforts with a high priority to merging our economy more closely with the emerging Asian economies. To the extent that we are successful in that initiative, the B.C. economy will prosper for many years to come, almost irrespective of what might happen elsewhere in North America.

The House might be interested to know that since we have assumed office, we have increased exports to Japan by 45 percent, my friends, in only two and a half years. I understand from my colleague in the Ministry of International Business that during the first few months of this calendar year, exports to the Asian market from B.C. exceeded our exports to the American market by a significant sum.

The vision of this government when it took office and the campaign pledges it made only two and a half short years ago are being met. The evidence clearly supports that this is a government that delivers. This is a government with a vision. This is a government that understands that if it has any meaningful role in Canadian Confederation, it surely lies in the continued development of the tremendous opportunities that lie in the Pacific.

Every economist of international prominence would tell you the same thing: the Asian economy will continue to expand at an exponential rate for at least the next hundred years. The tremendous opportunities that lie out there are something that we, as responsible managers of public policy, are attempting to fulfil. I say again: the evidence on the record of accomplishment in these two and a half short years is something that every one of us on this side of the House is very proud of.

MR. CLARK: I'm always struck by the contradictions in the minister's responses about campaign promises. The first question I asked was about the tax on draft beer. It seems to me that there was a campaign promise associated with beer prices. They chose not to keep that one. But they're keeping the one about linking our economy with Asia-Pacific. I agree with that. I agree that the government is moving in that direction. I'm not as convinced as the government that this is necessarily a positive initiative. We could talk about that.

It's also interesting that the minister takes the opportunity to selectively attack the federal government on issues like reducing the deficit, how the transfer payment is not a problem, because they really should cut further and those kinds of issues. What seems to me to be an issue of great concern to British Columbians — in fact, probably one of the largest issues that can impact on British Columbia and our tax system — is the federal sales tax, the proposed goods and services tax. There we see a kind of temperate and moderate response, which quite often I might like to hear from the minister on other issues. But this is an issue that does not deserve, in my view, a tempered and moderate response. It deserves a very vocal and aggressive response from the provincial government that we're not going to accept the kind of tax grab the Tories are contemplating in their proposal and that that has profound consequences for the B.C. economy, for B.C. consumers, and maybe for provincial revenue, because it's a consumption tax which heretofore has been the purview of provincial governments.

Virtually every province in Canada except this government is raising alarm bells about this initiative. The minister has said: "Well, we're concerned about it." But he's at great pains — and it's very unusual, I might say — to be extremely temperate, moderate and concerned about being too alarmist on this matter. It seems to me that the priorities are wrong and that this tax grab will be and is, as contemplated, extremely dramatic. As I said, we have seen for the four or five years the Tories have been in office a dramatic increase in the federal sales tax revenue generated. That has already had an impact, and some economists have projected the negative impact that that has wrought on the Canadian economy. This tax is fundamentally more dramatic and could have an impact.

So I wonder whether the government has done any kind of analysis as to what the impact would be on the provincial economy of the proposed federal sales tax and what the impact might be on provincial government revenue, if any, of this proposed rather dramatic sales tax. I concur with the minister that clearly it's not going to impact on us this year, but now's the time to do that homework to see what kind of provincial government response might be war-

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ranted, both on the political level — lobbying and aggressive attack, I hope, on the federal government — and also perhaps on the economic level, to alleviate some of the impact it might have, certainly on lower-income people but also on certain sectors of the economy.

HON. MR. COUVELIER: I'm not quite sure if I understood properly. The opening few sentences seemed to be critical of the fact that I was attacking the federal government, and then the closing five minutes seemed to be asking me to do exactly that.

In any event, I have often said publicly.... And I apologize that I'm such a dull person that the media doesn't pick up my comments. There's nothing I can do about that. The good Lord only gave me certain gifts to work with, and if I don't have the capacity to communicate effectively, none of us is perfect.

[10:30]

The hon. member made a very strong statement, and I, like others, was very comforted. He wants us to state in no uncertain terms that we're not going to accept this tax grab. Isn't it marvellous that we should stand on our little soapbox and beat our breasts with pride and try to convince the world that it really matters what we think in terms of a national sales tax. The federal government has all the authority in the world to impose the tax. We have verified that they have that legal authority, and there's absolutely nothing the provinces might do about it.

The member seems to suggest that we haven't done our homework. Well, the very first thing we did was verify that they had the constitutional authority to do what they wanted to do, because philosophically it gave us a problem. I admit that I didn't call a press conference and announce that we've had this researched and that they have the authority. I didn't think I had to call a press conference every time we got our facts straight, unlike some others who seem to be willing to call a press conference without any facts at all. In any event, the fact of the matter is that the federal government has the authority. So we are actually impotent in terms of influencing that decision.

I can assure the member and the House that the federal minister and I have talked about this at some length, not only in a bilateral way but at our federal meetings at which all our colleagues are attending.

We do have concerns about the turf grab. I have described the federal action myself in terms of it being a tax grab. I've been saying those things, but I guess there's not much more I can do to carry the message other than say it, and if it doesn't get picked up so that the member happens to read it, I can understand him believing we haven't said it.

Probably the highest-profile member of the government to speak on the issue is the Premier himself, and he has spoken at some length on it. So it's not fair to characterize the government's position as being supportive of the national sales tax. We have been saying regularly that it is in fact a turf grab and a tax grab.

In terms of how it will impact us, as I've said In the House during question period and which I'll repeat now, the dollar impact this year is zero. The dollar impact next year is a $24 million reduction. The national impact, when it's imposed in 1991, we have been advised will result in a 3 percent inflationary push. When the federal minister says," Oh, yes, but by reducing the existing manufacturers' sales tax, lower wholesale prices will ensue, therefore lower retail prices will ensue, and therefore it will be neutral in terms of inflation," we point out to him in a very sceptical way that it isn't very likely. The fact is that while manufacturers might have their costs reduced by the eliminated manufacturers' sales tax, we are very cynical and do not believe that the saving will flow through the system from manufacturer to wholesaler, to jobber or retailer, without some of it sticking along the pipeline as it progresses. It would take an extremely naive person to believe that the national sales tax, when imposed, will be inflation neutral; clearly it will be inflationary.

In terms of B.C. being disadvantaged compared to the other provinces by the imposition of this tax, I have to point out to the House that by virtue of this province being so dependent on export activity, elimination of the existing manufacturers' sales tax will have the effect of benefiting our exporting industry. In other words, it will reduce their costs; their international selling prices will be lower and therefore they will be more advantageously placed. Other provinces in Confederation will be less advantageously treated. But in B.C.'s case, it's pretty hard for us to make an argument that our manufacturing or industrial sector does not benefit as a consequence. It does; it will. To that extent, we're pleased. It should help our exporting industry. As I've said, by virtue of the imaginative leadership of the Ministry of International Business and the close cooperation with the Ministry of Regional Development, we intend to increase our exports, which will further advantage us in terms of the elimination of the manufacturers' sales tax.

So you see, there are both pluses and minuses as it affects our province. As to the long term, we remain committed to the belief that sticking to our last, continuing to expand our export opportunities in the Pacific Rim and doing that job well will work in the best interests of British Columbians over the long haul and tend to insulate us from events that occur elsewhere in North America.

MR. CLARK: Frankly, Mr. Chairman, I think it's appalling that the Minister of Finance would stand in the House and say: "We checked out the constitutional question, and the federal government has the right to impose it, therefore we're impotent." That is what the minister said: "We're impotent to have any influence on it." It's an appalling admission of failure to simply say that because it's federal jurisdiction, we don't have any influence. Surely there is a range of issues that the federal government deals with which the provincial government would be very concerned with and have no hesitation about.

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One could argue that the provincial government is impotent to deal with the federal deficit. The provincial government has no impact on the federal deficit; it's within their jurisdiction. But surely the provincial government can exercise some leadership and aggressively attack the direction the federal government is going if they choose to do so — and they do that. The Premier has been very forceful in presenting a case when the federal government hasn't moved in the direction the province would like. Yet on the sales tax we don't find that. We find this moderate, temperate response: "We're really impotent to deal with it. It's federal jurisdiction. We checked the constitution and they have the power, so we might as well just throw up our hands and walk away." I just don't think that's acceptable; I think it's actually quite appalling.

With respect to the advantage to exporters, this may give us a clue as to why the provincial government is so quiet on this issue, and I think it's a legitimate question of public policy. Clearly exporters are disadvantaged by the current federal sales tax; therefore the new federal sales tax, as proposed, at least neutralizes the impact vis-à-vis imports or exports. It's a crazy system we have now, where imports are taxed at a lesser rate than domestic production. Clearly we have an imbalance. The federal tax is flawed, in my view, and we are moving in that direction.

It may be that the provincial government — this is what I'd like to hear elucidated by the minister — sees the new goods and services tax as better than the existing federal sales tax, and is only concerned about the rate of the new tax. Is that a fair characterization of the provincial government's thinking in this regard? That would explain this rather moderate and temperate response: the current sales tax is flawed; the new federal sales tax — the goods and services tax — may be better in terms of exporters. Is that the provincial government's thinking in this regard?

MR. B.R. SMITH: May I have leave to make a an introduction?

Leave granted.

MR. B.R. SMITH: It's with great trepidation that I interrupt the debates in the Canadian House of Commons, but I'm going to, in any event, make my introduction. Here today are 25 grade 11 students from Mount Douglas Senior School. They are studying social studies and are seeing social studies here firsthand. They probably think they are watching cablevision coverage of the House of Commons in Ottawa. Would the House make them welcome.

HON. MR. COUVELIER: The answer to the question, Mr. Chairman, is no.

MR. CLARK: Is it the provincial government's position that the federal sales tax as currently constituted is better than the new goods and services tax that the federal government has proposed?

HON. MR. COUVELIER: Mr. Chairman, I have a generous heart, and I have attempted to deal intelligently with this wide-ranging discussion. But I'm just beginning to feel that the issue before us is my estimates, my request for my salary and the salary of my staff, and a continuation of the excellent services we provide, not the federal national sales tax. I have discussed that at some length, as I say, in a spirit of generosity and full disclosure, but maybe it's time to get on with the job at hand.

MR. CLARK: Mr. Chairman, it seems to me this is the perfectly appropriate ministry to canvass the provincial government's, the Ministry of Finance's, response with respect to a proposal by the federal government. One of the proposals is a joint federal-provincial retail sales tax. These are the questions I'm trying to determine. What is the Ministry of Finance's position with respect to a new proposal by the federal government?

I could be more explicit, if you'd like. I would like to know whether the Minister of Finance has made proposals to the federal government with respect to how they would like to see the federal sales tax changed, or whether they simply respond to the request from the federal government. Would they, for example, like to see a joint federal-provincial retail sales tax, which was another proposal in the national debate? I wonder whether the provincial government has taken a position in the debates on this question.

MR. CHAIRMAN: Just before we continue, the Chair must recognize the fact, as the minister pointed out, that if we were dealing with vote 25 in a strict way, certainly a majority of the debate that has gone on for the last two days would not be relevant. But it has been the policy in this House for some years now that when we're in our estimates we allow this reasonably free-wheeling debate, and in effect cover the various votes that are going to be dealt with in the particular ministry all at the same time. This certainly does not preclude the requirement during the debate that the points made be relevant to those various items that are covered by the various votes in the Ministry of Finance and Corporate Relations, and we must bear relevance in mind all the time.

Also, in these debates tedious repetition is something that we must bear in mind constantly. Having said that, perhaps the members would bear those few points in mind.

MR. CLARK: Mr. Chairman, I asked a specific question: does the provincial government support a joint federal-provincial retail sales tax? Is that an option that they would prefer over the current proposal by the federal government?

HON. MR. COUVELIER: Mr. Chairman, with respect, I fail to see the relevancy of the question to the point before us, which is the question of my estimates. So I'd ask your guidance here. It strikes me the question is out of order and inappropriate.

[ Page 7314 ]

MR. CHAIRMAN: It can be said, I suppose, in this debate that we are dealing in a way with one item — indirectly, I suppose, but it is involved. We're dealing with legislation which is something that we are not allowed to deal with during the debate on our estimates. Certainly for the sake of expediency it would be most helpful if we could deal with this subject and get it cleaned up.

[10:45]

MR. CLARK: Well, Mr. Chairman, I'm merely trying to ascertain.... We can do it all under different votes if the minister wishes; it has not been the custom since we've been here. But it seems to me that the minister has allocated staff time to analyze this federal legislation. Money has been allocated in the Ministry of Finance to have staff do some analyses with respect to the impact of federal actions. That staff time is money allocated under different votes — not this vote admittedly, but it's canvassed within the Ministry of Finance. Therefore it's appropriate to ask questions about how the staff is responding to initiatives. If the minister wants to stand in the House and say that the Ministry of Finance and its staff have not analyzed this question and have not allocated any staff time and therefore public money to do that, then I will certainly move on. But I'd be very surprised if the Ministry of Finance had not allocated some staff resources to reviewing this question. If they have, then I submit these questions are in order.

MR. CHAIRMAN: Now the member is relevant.

HON. MR. COUVELIER: I don't wish to drag this thing out on any sort of procedural wrangle, but it does strike me that (1) we're talking about future government policy; (2) it's not even our government's future policy but another government's future policy; and (3) we're dealing with hypothetical questions which once again would deal with our government's future policy. For all of those reasons it strikes me — I've been in the House a relatively short space of time, I admit — that the questions put would have been considered irrelevant and inappropriate. We can go on for hours if we wish to discuss this proposed national policy, but I really want to get on with my job, which is to try to deal with the public's business in this province.

MR. CHAIRMAN: Just one more point that the Chair would make for the benefit of those involved in this debate. It relates to what I was talking about a moment or two ago with respect to legislation. As we all know, the debate on legislation with respect to this type of thing would take place during the budget debate period. I thought I might read for you one of the notes that I have in these tomes that exist to tell us what is right and what is wrong in debate. This deals with legislation in the Committee of Supply: "The administrative action of a department is open to debate, but the necessity for legislation and matters involving legislation...." These cannot be discussed in Committee of Supply, nor the conduct of certain high public...and so on.

MR. CLARK: My question is quite specific, and I can phrase them all that way. Has the Ministry of Finance conducted any studies of the distributional impact of the proposed federal goods and services tax?

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

MR. CLARK: Is the minister prepared to explain what those studies have revealed?

HON. MR. COUVELIER: Mr. Chairman, as I attempted to indicate half an hour ago, the proposed federal goods and services tax is not clearly defined. Even as I stand in the House at this moment, there are many aspects of that proposed legislation that the federal government has not clarified in terms of how they would apply it. It's impossible to respond to the question put, because it has been a moving target for the last two years. The federal government has had discussions at the staff level, and all the provinces' staffs have participated in those discussions. The discussions were broad-ranging, looking at a series of options, and necessitated many hours of work putting together facts and data which the options could be assessed against.

I don't quite know how I can help the hon. member. We have reams and reams of data and facts and figures all put together for the purpose of enabling us to respond to options and suggestions made by the federal government. As I say, even today I'm not sure how the national sales tax might be structured, and therefore I'm unable to tell the hon. member or the House in any definitive sense how they might impact B.C.

MR. CLARK: It seems to me that this rather odd response that we're getting from the minister is what's prolonging this discussion. I've no desire to drag out debate on a federal issue. The minister said a minute ago that many hours of his staff time have been allocated to analyze options from the federal government. What I'm asking — and it doesn't seem to be a difficult one — is this: given that many hours of staff time have been allocated to analyze federal proposals, has the provincial government got a position on this issue? Have they put forward an option which the provincial government would prefer rather than the option which the federal government has proposed? That's provincial government response; it's provincial Ministry of Finance. They have done an analysis. We've heard of many hours of staff time on analysis. I am trying to ascertain what the results of that analysis were. It doesn't seem to me to be out of order; it seems to be completely appropriate. I don't want to be repetitious, but I see the minister is engaged in conversation, and I may have to repeat myself. I don't want to do that, but I may have to.

[ Page 7315 ]

HON. MR. REID: It says a lot about your question, doesn't it?

MR. CLARK: If I could just very quickly recap for the minister, he said here a minute ago that many hours of staff time had been allocated to analyze the various options of the federal government. Does the provincial government, as a result of that analysis, have an option they would prefer to see the federal government pursue? The question is: what is the result of that analysis?

HON. MR. COUVELIER: The question put is hypothetical. Until the federal government clarifies what they propose to do, I am at a loss to understand how the hon. member expects us to react.

We are dealing with a future policy of a foreign government — foreign to British Columbia — and the questions put are hypothetical. I am at a loss to understand how the hon. member can expect me to intelligently deal with the issue.

MR. CLARK: I am not trying to belabour this, but I am not asking hypothetical questions. If many hours of staff time have been devoted to analyzing the federal government's various options, does the provincial government, as a result of that analysis and staff time, have a preferred option that they are pressing the federal government to pursue?

HON. MR. COUVELIER: Yes. I can say categorically that the preferred option of this government would be that the federal government abandon all taxation of all types forthwith and transfer the decision-making and taxation powers closer to the people. Given this government's record in terms of administering public money and determining public policy as it relates to fiscal management, clearly the interests of the country would be far better met. We are the only government that has exhibited any sense of husbandry of public money; we are the only government that has a real, genuine feel for the fact that every time we impose a tax, someone out there has to pay the tax; we are the only government giving value for dollar, in the sense that we have managed to contain our expenditures within our revenue opportunities. So clearly, the preferred option would be to tell the federal government to get out of it completely, and we will do a better job of it than they are doing.

MR. CLARK: It's a silly answer, and the minister knows that.

HON. MR. RICHMOND: It's a silly question.

MR. CLARK: It's not a silly question, Mr. Chairman. This is a dramatic tax grab the federal government is proposing, which will have a significant impact on the people of British Columbia. This is one of the only provinces in Canada that has been relatively mute on the subject. This department is the ministry responsible. It has said it has spent hours of staff time analyzing the options, and I wanted to know....

As the minister knows, there is the business transfer tax, a value-added tax, a goods and services tax, a federal sales tax and a joint federal-provincial retail sales tax. There are many options available. The federal government has chosen one. I wanted to know whether, as a result of the Ministry of Finance's analysis, they would have preferred the federal government to choose a different one, and what the rationale is for that.

Presumably the provincial government doesn't simply sit back and wait for a proposal by the federal government, then do the analyses and respond in a passive manner to initiatives from the federal government. Presumably there is some leadership on the side of the Minister of Finance to review initiatives and put forward the provincial government's position forcefully and aggressively, with respect to what they would like to see, and how they would like to see this current flawed tax changed.

The minister has said they have done that analysis. Can he give us any indication as to which type of new federal sales tax the provincial government would prefer to see?

HON. MR. COUVELIER: I am not going to stand in this House and tell the world what kind of tax we prefer at the federal level. In the first place, no one likes taxes of any kind, so the last thing I am going to do is stand up and defend some taxation measure by the federal government. The member asked me what our view was. Our view is that they can't manage money nearly as effectively in Ottawa as we can here in B.C., and the record proves it.

So why would I stand up in the House and try to defend any revenue measures by the government of Canada? The hon. member might like to hear me make some statement defending a federal revenue measure, but I am not about to oblige him. Besides, I am paid to manage provincial money, and I think we're doing it. I am asking the House to get on with my estimates.

MR. CHAIRMAN: This subject certainly has been well canvassed over the past half hour or so. Perhaps we could move along.

MR. CLARK: Mr. Chairman, I will do so. But I would like to conclude this section by saying that I think the minister's and the government's actions have been really quite appalling and not acceptable in this regard. I feel very strongly, as I think do most Canadians, that the Tory tax grab in the guise of the goods and services tax will have a dramatic impact and that the provincial government should show some leadership and concern about this issue in light of those impacts. Many provincial governments have done so. Some of them have passed unanimous resolutions with regard to certain initiatives in that regard. But we don't see that from this government. We see a kind of mute response which I think betrays

[ Page 7316 ]

a kind of support for this initiative, albeit with concerns about the rates. So I think the government's response has not been acceptable in this regard.

[11:00]

Maybe we could canvass a new initiative or a policy change that we've seen from the government and this minister with respect to B.C. Hydro dividends. This is something which I certainly can raise with the Minister of Energy, Mines and Petroleum Resources (Hon. Mr. Davis), if others deem that appropriate. The Ministry of Finance and Corporate Relations presumably might have taken this initiative and chosen to access some money from B.C. Hydro in the form of a dividend. The minister and I may agree philosophically on some aspects of this, but I would like to ask the minister: why the new policy, and what is the gist of the government's initiative in this regard? Is there any theoretical or broader perspective that the minister wants to bring to bear on this subject? If there is, will this principle of Crowns giving revenue to general revenue be expanded?

HON. MR. COUVELIER: The principle of Crown corporations being expected to operate effectively and efficiently, and therefore pay a dividend to their shareholders, is one we fervently believe in.

MR. CLARK: The minister will agree, however, that it's an indirect form of taxation; that the consumers of services of B.C. Hydro will pay higher rates than they would have otherwise.

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

MR. CLARK: If the minister says no, then it's incumbent upon him to explain why he feels hydro rates will not be materially affected by this change in government policy.

HON. MR. COUVELIER: Why, Mr. Chairman?

MR. CLARK: Because the minister has taken a position that he is responsible for tax policy — revenue generation — on the part of the government. If the government chooses to take some money from B.C. Hydro, then that impacts on our provincial taxes, presumably. They may not have to rise as high as, or more than, they have already done under this administration, but at the same time, it's a shifting of the burden to consumers of B.C. Hydro services Does the minister not agree that this is a logical explanation: that B.C. Hydro consumers will therefore pay more than they would have otherwise as a result of this provincial government policy decision that the Ministry of Finance and Corporate Relations has been implementing?

MR. CHAIRMAN: The second member for Langley asks leave to make an introduction.

Leave granted.

MR. PETERSON: On behalf of the first member for Langley (Mrs. Gran) and myself, I would like to introduce some 45 students from Shortreed Elementary School, accompanied by their principal, Mr. Brian Thomasson, and Merle Snell, and, I believe, by some other adults as chaperones. Mr. Thomasson is a very good friend of ours and a member of my own Rotary Club. Mrs. Snell is also an excellent friend and a very active member in our community. On top of that, Shortreed Elementary was attended by my own two sons, Ryan and Kevin, so I have a very soft spot in my heart for that school. Please make them all very welcome.

MR. CLARK: I see the two ministers in conversation. Perhaps we could hear the fruits of that conversation from the Minister of Finance.

HON. MR. COUVELIER: The fruit of the conversation would be that the answer to the last question put is no.

MR. CLARK: I can canvass this, I'm sure, with the Minister of Energy, and I don't have any problem doing that; we can have an interesting discussion. It seems to me that it's also appropriate for the Ministry of Finance to deal with that, given that there is a significant source of new revenue that the Ministry of Finance has to play with; but presumably in their analyses they would have reviewed the consequences of that public policy decision.

It appears that the minister is trying to maintain that there are no consequences to taking $100 million away from B.C. Hydro which could be used for other purposes. I'm trying to get the minister to agree with me that there are two consequences; I would like the minister to try and agree with my logic. One consequence is that taxes do not have to rise as fast, but consumers of electricity and other products of B.C. Hydro will pay the price. It's a shifting of the burden from the taxpayer to the consumer of B.C. Hydro services. Does the minister not agree with that?

HON. MR. COUVELIER: Mr. Chairman, it is repetitious. All those comments the member made five minutes ago, and I answered no.

This government — I'll say it again — believes that we should have the same rigid discipline in Crown corporations that the private sector has. We expect them to be well run and be able to provide dividends to the shareholders. The shareholders are the people of British Columbia, may I remind the House, not the government, in the sense that the government, after all, is only the amalgam of the people.

The issue raised by the member is merely the possibility of moving revenue from one pocket to the other, and he seems to be trying to manufacture an argument that one pocket is different from the other. The fact is that they're both the same. The fact is that we believe a discipline should be imposed on management that requires proof of effective, efficient leadership and management, and the best discipline

[ Page 7317 ]

developed over 2,000 years of civilization or possibly even longer is the obligation to return to the shareholders some small measure of the worth of their investment.

The suggestion that electricity rates are disadvantaged as a consequence of that, I have to point out to the member that B.C. Electric, or B.C. Hydro rather — boy, I'm really aging myself with that faux pas — has a competitive rate structure. Certainly their longterm growth prospects — the write-down of their long-term debt, which is occurring on an annual basis, and the potential for significantly enhanced benefits in the future through the Columbia River downstream benefit arrangement yet to be concluded — point to the fact that B.C. Hydro's power rates are extremely competitive. No one is being disadvantaged, and furthermore, even if they were, it's only a question of one pocket of British Columbia's economy paying for something out of the other pocket of British Columbia's economy. The argument is specious and doesn't have any pertinence to the issue at hand, which is my estimates.

MR. CLARK: Again, Mr. Chairman, I've no wish to belabour this point; I'm sure I will be raising it with the Minister of Energy (Hon. Mr. Davis). But it seems to me that it's constantly difficult for this minister to state the issue simply. If he would do that, we would move through these estimates faster than the glacial pace at which we're moving.

If you read the entrails of his remarks — which we constantly have to do — the minister confirmed what I just said: they are different pockets. In other words, they are different taxpayers. They have different distributional consequences. In other words, they're both British Columbians, but in the B.C. Hydro case, presumably it's larger consumers of electricity or, depending on the rate structure, consumers of electricity who are paying a certain amount now to provincial treasury; whereas they are taxpayers with all the attendant distributional consequences of the provincial and federal tax system who would pay the rate.

We can have an interesting philosophical argument about who benefits from that change and who doesn't; in fact, I might have that with the Minister of Energy. It's not likely that it would be fruitful to have that discussion with the Minister of Finance, because I'm not sure we would get in this debate to the bottom of who benefits. But I might have slightly better luck with the Minister of Energy in looking at the distributional consequences of the government's actions in that regard.

I said at the outset that I support the principle of Crowns paying dividends to the shareholders or people of B.C., but we on both sides must acknowledge that there are impacts of that decision. Presumably any government — I say "presumably" because when I ask these questions I don't get a straight answer — would have some analyses done on the impact before they take that initiative. It seems to me that large consumers of electricity may be impacted, and I suspect that the largest consumers of electricity in British Columbia, besides Alcan and Cominco, would be pulp mills. If it's true and if this $100 million dividend removed from B.C. Hydro impacts on the electricity rates of pulp mills, then that would be a positive distributional change, from my point of view, because pulp mills are making obscene profits, from virtually every independent analysis. Therefore that's something I might support. If the Minister of Finance had stood up and said that, then I would have supported the government's initiative and sat down, but instead we didn't get a clear and straight answer.

HON. MR. REID: Any profit is obscene to those guys.

MR. CLARK: Obscene profits is not my term, I was paraphrasing Jaak Puusepp and other independent analyses of pulp mill profits.

Pulp mills in this province have seen unbelievable changes in their revenue over the last couple of years, and any attempt by the provincial government to extract some of that revenue should come from the raw materials, which are owned by the people of British Columbia and are under priced. It could also be extracted through electricity, another public commodity which has been under priced relative to its value.

It's unfortunate that we didn't get those answers. We could have agreed on this side of the House and moved on. We had to spend a few minutes going around in circles trying to understand the Minister of Finance.

Just to give the minister some warning, I'm going to do a few more minutes on some aspects of the auditor-general's report, and then we might canvass, I hope, Principal Trust. I know it's a favourite topic of the Minister of Finance, and we can go round that one for a while to bring us probably to noon.

There are several aspects of the auditor-general's report which I will be discussing with the minister, but at this point I will tackle a smaller section: the shifting of money between subvote that is taking place within the government. It's a question that has been canvassed in different forms in here before, but the auditor-general's report has drawn attention to it again.

If I might just paraphrase the auditor-general, he says each vote represents a unit of legislative control and each one provides a certain basis for accountability, because the Legislative Assembly must approve its purpose and its spending limits. In other words, each subvote has a description and a number attached to it, and we vote in this chamber on that number. But what has happened is that over the last few years there's a smaller number of sub votes taking place, which to some extent reduces accountability, because the votes are now larger and encompass more initiatives, and therefore the accountability the Legislature has in terms of seeking for the government to justify those votes is undermined somewhat.

I'm not particularly concerned about the reduction in the number of sub votes, but what's happened is

[ Page 7318 ]

that the government is able to transfer funds between sub votes within the same vote. If, for example, we have a highway project that has two sub votes and the government has overrun on one and under budgeted on the other, the government has the ability to move between sub votes, which I think — and the auditor general agrees — undermines the accountability of the government to the taxpayers through the Legislative Assembly.

This is quite a critical question, and it has been raised with the auditor-general and raised again. I'd like the minister to explain why the government continues to move money between sub votes and the first public disclosure of those sub votes transfers comes in public accounts, which are a year behind. I want the minister to be clear.

[11:15]

I can understand that it might be appropriate, if the vote is $1 million and the two sub votes are $500,000, to move $50,000 from one vote to the other, provided the $1 million vote is not exceeded. I can understand that it might be appropriate from time to time, and I have no desire to limit the flexibility of government in that respect. But what I would like to canvass with the minister is why the information can't be made public at the time, so that the public is informed that while the government is not exceeding the vote total, it has changed its priorities on the basis of what might be a perfectly logical explanation. It may well be, for example, that snow in some region means that highway construction can't take place and therefore it's appropriate to move money to another highway project. But it seems to me the auditor-general makes a very compelling case that the information should be made public at the time. He suggests publishing in the Gazette, or it could be made any number of ways. I wonder if the minister could explain why the government has chosen to ignore the advice of the auditor-general now in two separate reports and persists on moving money between sub votes without any public accountability in that regard.

HON. MR. COUVELIER: Mr. Chairman, it's my understanding that this issue is being reviewed by, Public Accounts, and we will be awaiting their thoughts on the subject.

MR. CLARK: Mr. Chairman, I have no idea what's being canvassed in Public Accounts, quite frankly. It doesn't seem to me to be germane to this discussion. The Minister of Finance is the minister responsible for making decisions, and he's the chairman of the Treasury Board, I understand. Treasury Board makes those decisions of allocating money between sub votes. It seems to me appropriate to ask why he or his ministry have ignored on two separate occasions the auditor-general's suggestions in this regard. If the minister wants to go around in circles again, as we've done on several issues, we can spend the rest of the morning trying to elicit that information, or he can simply give me the government's explanation for allowing the move between sub votes.

HON. MR. COUVELIER: I am troubled by the philosophical shift here, the fast footwork exhibited by the member opposite. On the one hand, earlier today I seemed to detect some thoughts on his part that this government acted without full discussion and acted unilaterally on a number of issues; yet here's one where we're attempting to obtain the advice of an all-party committee of the House on the question he raises, and he appears to be critical of the fact that we're using that approach.

I do appreciate that the people of the province pay the members opposite to be critical. I have a generous spirit in this respect and am pleased to see them fulfilling the function which the electorate gave them. But at the same time, I would hope that we would be able to stick to issues, without the footwork that seems to accompany this wide-ranging series of questions this morning.

I have no trouble defending the decision to await the results of the all-party committee of the House that is looking at this issue together with others. I think it's responsible. I think it exhibits a sensitivity to democracy in all its best aspects.

If members of the opposition party have trouble with this, then they might discuss it at Public Accounts. I will be pleased to receive their submissions when they're made. That's how the House is supposed to work, it strikes me. I can't sit still and accept criticism for allowing the functions of the democratic process to work.

MR. CLARK: Mr. Chairman, the issue of transferring money between sub votes first arose in a detailed fashion at the Coquihalla inquiry, which was 2½ years ago. Subsequently, the auditor-general concurred a year ago and suggested the government not allow that. Now we have the third auditor-general's report, and the minister says that he's awaiting a fourth review by the Public Accounts Committee.

I'm trying to ascertain why, after the Coquihalla inquiry rejected the government's approach to this and after the first auditor-general's report said that this undermined public accountability, the government has persisted in allowing this shift of money between sub votes. It seems to me that the public — through him in this chamber — deserves an explanation as to why the government is persisting in doing something which undermines the accountability that this House has through the sub votes.

It's not good enough for him to defer to the Public Accounts Committee, which may well render judgment on this. I'm asking for the ministry's position in this regard in advance of any recommendations that might flow from the Public Accounts Committee. It's been an issue which has been in the public domain now for 2½ years. Surely the government has some justification for continuing to allow this movement between sub votes, in light of all the information to the contrary.

In fact, I understand that in the fiscal year 1988, the auditor-general says that there were 200 such transfers between sub votes. If the minister wants, we could canvass each one individually to ask for justifi-

[ Page 7319 ]

cation for them. I have no desire to do that. I simply want to know what the policy position of the government is today with respect to the transfer of money between sub votes.

HON. MR. COUVELIER: Mr. Chairman, I am sorry. I won't give the opposition both sides of the question. Were I to respond to the question in terms of my personal opinion prior to receiving the advice of the committee of the House, he would turn around and accuse me of predetermining the question.

I've stated that I am quite happy to wait for the results of the all-party committee of the House in this respect. I don't have a view until I receive the view of my peers.

MR. CLARK: The minister has a view. It's implicit in the fact that he is continuing to do something which the auditor-general and the MacKay commission inquiry into Coquihalla have viewed to be undermining public accountability. That's the government's position on the facts; I am trying to ascertain how he justifies those facts. That seems to me a perfectly appropriate question in estimates for the ministry policy with regard to these facts.

Maybe we could ask some specific questions, like what the process is that people currently in ministries have to undergo in order to get permission from Treasury Board to transfer money between sub votes.

HON. MR. COUVELIER: The process is in place and works well. They ask for permission, they justify it or fail to justify it, and Treasury Board decides.

MR. CLARK: Let me ask this question. Are ministries turned down for requests to transfer money between sub votes?

HON. MR. COUVELIER: I have to be careful here that I don't get into the issue of confidential information, so I won't deal with specifics. In a general sense, yes, there have been denials.

MR. CLARK: Can he give us some sense of the magnitude of.... I am not asking for specifics.

HON. MR. REID: Fishing trip.

MR. CLARK: It's not a fishing trip. The reality is, Mr. Chairman, that this is a serious matter which has been addressed by three different public bodies, a special inquiry and two auditor-general's reports, which claim that the ability of the government to shift money between sub votes and not inform anybody is undermining public accountability. That is a policy decision of the government that the Ministry of Finance implements, and I am asking for the Ministry of Finance's and the Minister of Finance's policy in this regard. He continues to say there is no policy, etc. The facts belie that, and I want to understand how it is that the government has decided to continue on with the decision in this regard.

HON. MR. COUVELIER: I don't believe the record would show that I said we had no policy and so, on a point of order, the member is fabricating a position around a...

HON. MR. REID: Misleading the House.

HON. MR. COUVELIER: ...misleading or inaccurate assumption.

MR. CHAIRMAN: Before we continue, I think the matter has been canvassed fairly thoroughly. If the member would continue on specific questions, rather than the general one he has placed three or four times.

MR. CLARK: The minister said, for the first time that I can recall, that there is a policy. Could he inform the House what the policy is?

HON. MR. COUVELIER: I described a few minutes back how line ministries make submissions to Treasury Board, attempting to justify a request for a switch between votes, and Treasury Board considers those requests and adjudicates the matter.

MR. CLARK: Are there guidelines that the Treasury Board follows to determine whether the requests are accepted or rejected? If there are guidelines, could he give us a broad indication of what those guidelines are?

HON. MR. COUVELIER: Mr. Chairman, I don't think any useful purpose is served by this sort of fishing around. I appreciate that the member had to buy some time, but he has some reinforcements now, and maybe we can proceed with something that's relevant.

MR. CLARK: Mr. Chairman, it's entirely relevant to the ministry's estimates and the minister, who is chairman of Treasury Board. The minister has said there is a policy; that ministries come before Treasury Board and ask for permission to transfer money between sub votes. I'm asking whether there are any formal guidelines that they must follow or whether it's just a question of whether Treasury Board feels the request is reasonable from their own political or administrative perspective. Are there formal guidelines which ministries must follow in order to get permission from Treasury Board to transfer money between sub votes?

MR. CHAIRMAN: Shall vote 25 pass?

MR. CLARK: Mr. Chairman, it pains me to have this, because as I said earlier, we're moving at a glacial pace.

HON. MR. REID: We'll see you here in September.

[ Page 7320 ]

MR. CLARK: I'd be happy to see you in September, Mr. Minister. It seems to me that if we would get forthcoming answers from the minister, we would move a lot faster. I'm not prepared to leave this very important question until we get some answers in this regard. I'll canvass it for three or four days if the minister wants to. There are detailed questions we could get into with respect to the ministry's adjudication on this matter. It's a very important matter of public accountability.

It's a very reasonable question as to whether or not there are any guidelines or policy documents that ministry staff must follow before the Treasury Board approves the transfer between sub votes. The minister has not given us any indication whether there are formal guidelines, or whether it is just up to the whim of Treasury Board to allow the transfer between sub votes. I'm going to ask the minister again: are there formal guidelines that must be followed by ministries in order to get permission from Treasury Board to transfer money between sub votes?

HON. MIL REID: On a point of order, Mr. Chairman. I've been here since 10 o'clock, and I've listened intently to the speaker on the other side. He keeps bringing up irrelevant and repetitious debate on this subject. I think, Mr. Chairman, you should bring him to order.

[11:30]

MR. CHAIRMAN: I appreciate the point of order. The administration of votes 25, 26, 74, 75 and 76 are the matters which we are debating. I should remind the member that the minister may or may not answer a question. After you have placed the question several times, it becomes tedious and repetitious. Then I would ask the member to move on with his line of questioning.

MR. CLARK: Okay, Mr. Chairman, I'll simply canvass the issue in, a different manner. I have no desire to repeat the specific questions the minister refuses to answer.

On page 29 of the auditor-general's report there's a recommendation. It's a suggestion that "while ministries are responsible for obtaining required approvals for reallocation of funds, monitoring of such transactions is necessary to ensure that Treasury Board rules are being observed."

So the status as of the date of preparation of the annual report is: the problem continues. Transfers between sub votes without prior Treasury Board approval occurred in five ministries in 1987-88. The total amount of these transfers was $8.8 million. Could the minister inform the House how that money is allowed to transfer between sub votes prior to approval by Treasury Board?

HON. MR. COUVELIER: When the member introduced this line of questioning, he seemed to admit that there frequently were unusual necessities to make emergent expenditures that just by virtue of time constraints did not allow advance confirmation or approval. There's nothing unusual or odd about that. Anybody dealing with public policy issues like this must have the flexibility to react to unexpected or emergency situations, and the member seemed to concede that when he introduced the subject. So there's nothing inherently wrong with that occurring. As a matter of fact, it's a question of meeting public need, so he shouldn't try to make much of this.

I'm not prepared to discuss publicly in this forum government internal policy issues. There are thousands, if not tens of thousands, of these kinds of issues that have administrative procedures applied to them. There are manuals — plural — available that provide these kinds of guidelines to staff. There is a form that must be filled out whenever a ministry wants to change or reallocate a subvote. Those forms must be provided. The request is written up and an application made to Treasury Board. Treasury Board deals with each application on its merits. It has approved some, and it has denied some. So the member should not try to create the public impression that this represents a significant portion of government expenditures. It doesn't; it only deals with a relatively small number of instances in the overall scheme of things. It's not at all unusual. I've been involved in managing expenditures of public money for many years now, and every jurisdiction that I'm aware of must have the same flexibility as we have.

The member is trying to make the point that the auditor-general is troubled by this. I have conceded that we recognize he is troubled and that the matter is being discussed at Public Accounts. That's the appropriate place for it to be discussed. I make no apologies for deferring to that all-party body of the House to deal with the issue. I'm not going to stand here and tell the member that we're about to ignore their advice. He seems to want me to indicate my personal views so that he can categorize me as having some predetermined opinion. When I refuse to give him that comfort, then he moves around and tries to develop some sort of argument that he's defending the auditor-general.

The fact of the matter is, when the auditor-general raised those points, they went to Public Accounts, and that's the appropriate body. I think that's defensible, and I'm pleased to see that the system works the way it was designed to work.

MR. CLARK: Thank you; that was an improvement over previous responses.

I'd like to make a couple of points. First of all, there are two separate problems. One is that transferring money between sub votes and not informing the public — and by and large I mean us — undermines public accountability. The second is the transferring of money between sub votes without prior approval of Treasury Board, which is a separate problem. I canvassed the former problem at some length, I think, and I haven't had a satisfactory answer. I would, however, like the minister to explain how it is that ministries can transfer money between sub votes without prior approval.

[ Page 7321 ]

HON. MR. REID: Norman Levi was shovelling it off the back of a truck.

MR. CLARK: Other things are being shovelled off the back of a truck today, but we won't get into that.

Perhaps the minister could deal just briefly with the latter question. The broader question of sub votes is before Public Accounts. We have an explanation from the minister. I don't think it's satisfactory.

That's one question. I'm interested in having the minister address the more specific question, which is how five ministries — and presumably since then other ministries — have been allowed to transfer money between sub votes prior to getting approval. The minister has said there is an approval process; some are turned down, some aren't. What happens if they move money between sub votes prior to approval by Treasury Board and Treasury Board finds it offensive? Clearly there's no remedy in that regard unless the minister can tell me otherwise. So that is a separate problem in a tightening up of the process of allowing money to be moved between sub votes prior to going to Treasury Board. I wonder if the minister could give any comfort — that's a word he likes to use — to this side of the House or to the public that the problem of transferring money between sub votes prior to approval from Treasury Board is being looked at and cleaned up.

HON. MR. COUVELIER: I'm always pleased to provide comfort, and therefore happy to confirm that whenever that unusual occurrence arises, there are appropriate discussions between Treasury Board and line ministries on the matter.

The fact remains, however, that in many instances this is just a question of need or necessity prior to the opportunity to deal with it at Treasury Board. It's very important that we give the line ministries the flexibility they need to manage their obligations.

It's often been said that socialists believe that you can write rules and you can constrain freedoms of people and that big government is better government and let's have more government. This government believes that small government is the best government. This government believes in delivering value for taxpayers' dollars. We're not going to see ourselves all wrapped up in bureaucratic red tape. We're just trying to provide the essential services that people deserve. The people of this province have one of the best support networks around the province. We deal sensitively with their needs. The whole range of services we're providing is something that we on this side of the House are very proud of, and the last thing we want to do is see the opportunity we have to serve our citizens constrained by some artificial group of rules that would need an. increasing amount of bureaucrats to monitor. The fact of the matter is that we prefer to be judged by results. The results of our performance, the results of the leadership we've provided to the people of this province for 34 of the last 37 years, stand unassailable. I am pleased to await the results of the discussion in Public Accounts on this heavy subject.

MR. CLARK: It's always interesting to see the members opposite and the minister opposite talk about management. This is a government that blew $500 million on the Coquihalla Highway — they couldn't manage a peanut stand — and that moves money between sub votes. The auditor-general says that the bottom line the minister portrays does not....

MR. SERWA: On a point of order, the hon. member continues to bring up the Coquihalla. I notice that he refrains from talking about something that may involve his constituents.

MR. CHAIRMAN: The member's point of order?

MR. SERWA: He is bringing in an issue that has been adequately canvassed by the system. And the money was not blown. I find that comment most offensive.

MR. CHAIRMAN: I'd like to thank the hon. member and note that his comments are in order that the subject has been canvassed. I would ask that the second member for Vancouver East continue and stick to the estimates.

MR. CLARK: Mr. Chairman, I ask the same indulgence from the Chair that the minister got. This is a government that the auditor-general says has a set of books that does not accurately reflect the true bottom line. This is a government that moves money between sub votes, that the auditor-general says undermines public accountability. This is a government that has blown $500 million in overruns on the Coquihalla Highway, when they didn't know that or at least misled the House to that extent. And he wants to stand up in the House and say they are good businessmen.

It's a government that yesterday said they are good businessmen and like to manage the public purse. Then when they get in office, they can't manage the government and have to privatize everything they've got to the private sector. I am always struck by that interesting contradiction in public theory.

We will get into the auditor-general's report in more detail, and the fraudulent set of books that the minister has tried to....

HON. MR. COUVELIER: On a point of order, we are having great fun, and it's always good to have a lighter moment, but I do find the last comment by the speaker to be offensive, and I ask him to withdraw. He talked about a fraudulent set of books, if I understand his comment properly.

MR. CHAIRMAN: The word "fraudulent" has the intent that the minister was misleading. So that is the intent, and I would ask the member to withdraw.

[ Page 7322 ]

MR. CLARK: Mr. Chairman, I will withdraw. I was under the impression — I don't mean to offend the Chair — that if you said that the books were fraudulent, that might be in order, but that if you accused the minister of being fraudulent, that was out of order. But if that's a fine logic, I withdraw any reference to the books being fraudulent, and I withdraw unequivocally. We'll get into the substance of that question later on in estimates.

MR. SIHOTA: I'm quite fascinated by the comments of my colleague from Vancouver East, because when you start looking at the litany of financial mismanagement by this government, it's incredible. Five hundred million dollars on the Coquihalla, hundreds of millions of dollars on the Expo land sales, then nine million dollars on the Westwood lands, eight million dollars on the New Westminster harbour....

[11:45]

HON. MR. COUVELIER: On a point of order, Mr. Chairman, I want to get on with the public business here. I understand the purpose of the meeting today is to discuss my estimates; it is not to discuss a litany of government's actions or their consequences. It is to deal with my simple request to allow me to pay my staff and continue to perform the essential services that the people of the province have come to expect.

MR. CHAIRMAN: Thank you, Mr. Minister. As I have indicated before, the votes that are being considered today are votes 25, 26, 74, 75 and 76. I would ask the member for Esquimalt-Port Renfrew to give direction to the Chair as to which vote of those just mentioned he is putting his question forward on.

MR. SIHOTA: The minister himself started to extol the virtues of his government's financial management. You gave him leeway to raise that under the general expenditure of his office. I just want to make sure that the public knows what the full record is. I think I was talking about $8 million in New Westminster, but that was only the beginning, that was only on one site.

Interjection.

MR. SIHOTA: The minister doesn't want to hear how bad his record is.

HON. MR. COUVELIER: On a point of order, I ask the Chair to recognize that I merely respond. I merely sit here and attempt to respond in an honest forthright way to comments made by the opposition. To the suggestion that I have wandered widely, I have only attempted to deal with issues raised by someone who spoke previously. All of a sudden we have someone trying to manufacture another whole re-debate of actions of the government over the last 15 or 20 years. I simply want to get the public business proceeded with, that's all.

MR. CHAIRMAN: Thank you, Mr. Minister. The point is well taken. The questions and the responses are to be strictly relevant. I would ask all the members to keep that in mind.

MR. ROSE: I think the difficulty faced by you or anyone else in the chair — even someone of infinite wisdom and experience such as yourself — is that if you let things go on one side and let the minister go on and on bragging about his marvellous record and the marvellous record of the government and not call him on it, and then call it on a matter that was raised in response to the record being questioned, it makes it very difficult for the Chair. I realize that. But we have had a certain leeway granted this morning. It is true, also, that is has been the practice since I've been in this House to deal with a lot of general matters under the first vote and not strictly adhere to it, because we usually have no debate on the subsequent votes.

I think we could probably all benefit if the questions were strictly in order and the answers were somewhat less obtuse and loquacious.

MR. ROGERS: I was briefly interrupted attending a committee across the hall, and I ask leave to make an introduction.

Leave granted.

MR. ROGERS: I apologize to the guests in the gallery that I wasn't able to be here earlier when they arrived, but I have been advised that they're here. Mr. Smith and 20 grade 7 students from John Henderson Elementary School are attending today and observing the proceedings. In my absence I trust the committee has been extremely well behaved. Would the committee please make them welcome.

MR. CHAIRMAN: Keeping in mind the direction we have just received from the opposition House Leader, the Chair recognizes the member for Esquimalt-Port Renfrew.

MR. SIHOTA: I know the minister doesn't want to hear the level of financial mismanagement, but I think the public has a right to know what the record is. I was talking about $8 million in New Westminster on one site alone. Then, of course, one can't forget what the minister had to say about all those people who took early retirement from government. He estimated that the cost would be $30 million, and it came out somewhere around $90 million to $100 million; so add $60 million there that the minister was off by. Earlier this year the Ministry of Social Services and Housing required a special warrant to cover their overexpenditure: add $46 million into the equation. Millions of dollars in forestry, according to the auditor-general, because of their neglect in stumpage and scaling.

AN HON. MEMBER: Incompetence.

[ Page 7323 ]

MR. SIHOTA: Incompetence in terms of not being able to put in millions of dollars there.

That's $623 million so far. It's piling up. Expo lands, which again the government....

HON. MR. COUVELIER: On a point of order, Mr. Chairman, I would have thought, in view of the openness of my responses and after the admonition of yourself and the opposition House Leader, it would be recognized that at the very least we would confine our remarks to the issue before us, which is this year's request for funding for my ministry. In this wild harangue and listing of alleged difficulties, the hon. member is going back even to before this government's assumption of office. The Expo references, for example, have been canvassed at length in this House, and have absolutely nothing to do with my simple request that I be allowed to pay my staff.

MR. CHAIRMAN: I'd like to thank the minister. The minister is responsible and answerable for the administration of his own portfolio. The canvassing of matters outside the minister's portfolio is not strictly relevant. I would suggest that the member confine his remarks to the rules and proceed.

MR. SIHOTA: The point I'm trying to make is the administration of the ministry and the minister's record in the administration of public dollars — $100 million in terms of the Expo lands.

MR. CLARK: What are we up to now?

MR. SIHOTA: That takes us up to $723 million, Mr. Chairman — not to mention little side incidentals.

AN HON. MEMBER: There's more?

MR. SIHOTA: Yes, like $250,000 to David Poole in terms of salary, pension and benefits. Not to mention the half a million dollars, I think it was, that the member for Vancouver-Little Mountain spent on a party in Vancouver.

MR. CHAIRMAN: Order, hon. member. The Chair has repeatedly asked the member to restrict his remarks in order to conform with the standing orders of the House. If the member is prepared to make his remarks within the standing orders, the Chair will recognize him; if not, the Chair will make another decision. Please proceed.

MR. SIHOTA: I want to make it clear that this goes to the very essence of this minister's budget. The buck stops with the Minister of Finance. He was the one who had to approve $100,000 in new furniture for the former minister, the first member for Vancouver-Little Mountain (Mrs. McCarthy). The buck stops with him. Just in a matter of minutes here, we've arrived at three-quarters of a billion dollars.

Interjections.

MR. CHAIRMAN: Order! There appears to be some confusion here, hon. member. We are discussing the minister's estimates; we are not discussing the estimates of all the ministries. I would ask the member to tie it in and make it relevant. I know that with his legal background he can do so very diligently.

HON. MR. REID: Shame on you!

MR. SIHOTA: It's amazing that the best defence that the Minister for Tourism can come up with is to stroke his fingers and yell shame on me.

MR. CLARK: Don't forget culture.

MR. WILLIAMS: Multiculture.

MR. SIHOTA: Multiculture, with a capital "M" and a capital "K."

We're talking about the administration provided by the Ministry of Finance to the taxpayers' resources in this province — three-quarters of a billion dollars right off the back of the truck by this government.

MR. CLARK: You could pave the Coquihalla Highway with dollar bills.

MR. SIHOTA: You could pave the Coquihalla Highway with dollar bills, says my colleague for Vancouver East. That's the type of administration....

MR. PETERSON: Mr. Chairman, on a point of order, it appears to me that the member for Esquimalt-Port Renfrew suffers from his normal affliction, and I believe he should maybe rinse his mouth out with some Kaopectate. We are in fact supposed to be debating the estimates of the Minister of Finance, and I wish he would carry on in that light.

MR. SIHOTA: The point is that this government has done a horrendous job in managing the taxpayers' resources.

Interjection.

MR. SIHOTA: Oh, the member talks about a balanced budget. This government has built up the largest accumulated debt in the province, about $70 billion.

Interjection.

MR. SIHOTA: If the minister says I'm wrong, maybe he could tell us exactly how large that accumulated debt is. I tell you it's horrendous.

Interjections.

[ Page 7324 ]

MR. CHAIRMAN: Order, order, order. I suggest that now may be the time, government House Leader.

HON. MR. REID: I see the clock has reached as close to noon as is appropriate. Since this debate deserves a further canvassing at a more elaborate time, I would move that 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. Reid moved adjournment of the House.

Motion approved.

The House adjourned at 11:59 a.m.