[ Page 7523 ]

CONTENTS

Routine Proceedings

Oral Questions

Knight Street Pub investigation. Mr. Sihota –– 7523

Sale of Westwood land. Mr. Williams –– 7523

Electoral boundaries. Mr. G. Hanson –– 7525

Low-level military flights. Hon. Mr. Vander Zalm replies to question –– 7525

Committee of Supply: Ministry of Education estimates. (Hon. Mr. Brummet)

On vote 16: minister's office –– 7526

Ms. A. Hagen

Mr. Lovick

Estate Administration Amendment Act, 1989 (Bill 33). Hon. S.D. Smith

Introduction and first reading –– 7527

Committee of Supply: Ministry of Education estimates. (Hon. Mr. Brummet)

On vote 16: minister's office –– 7527

Mr. Lovick

Ms. A. Hagen

Mr. G. Janssen

Mr. Perry

Mr. R. Fraser

Mr. Cashore

Mr. Barnes

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

(Hon. Mr. Couvelier)

On vote 76: new programs –– 7545

Mr. Rose

Mr. Rogers

Mr. Clark

Workers Compensation Amendment Act, 1989 (Bill 27). Committee stage.

(Hon. L. Hanson) –– 7552

Mr. Sihota

Mr. Lovick

Employee Investment Act (Bill 32). Committee stage. (Hon. Mr. Veitch) –– 7558

Mrs. Boone

Mr. Clark

Mr. Miller

Third reading

Personal Property Security Act (Bill 28). Committee stage

(Hon. Mr. Couvelier) –– 7578

Mr. Clark

Third reading

Finance and Corporate Relations Statutes Amendment Act, 1989 (Bill 29)

Second reading

Hon. Mr. Couvelier –– 7581

Mr. Clark –– 7581

Hon. Mr. Couvelier –– 7582

British Columbia Enterprise Corporation Loan Privatization Act (Bill 43).

Second reading

Hon. Mr. Couvelier –– 7582

Mr. Williams –– 7582

Hon. Mr. Couvelier –– 7583

The House met at 2:06 p.m.

HON. S. HAGEN: Mr. Speaker, I'm pleased to introduce to the House today two very good friends of my secretary: Alison Rankin and Jack Frost from Great Britain. Would the House please make them welcome.

MR. SERWA: On behalf of my colleague the second member for Okanagan South (Mr. Chalmers) and myself, I would like to let the Legislature know that in the precinct today is a group of 57 students from Glenrosa Elementary School. They are accompanied by teachers Mrs. Jennifer Reece, Mr. Cooksley, Mr. Nelson, Mr. Tonn and supervisors Mrs. Rita Ross and Mrs. Judy Monai. Would the House please make this group from Okanagan South welcome.

HON. MR. HUBERTS: In the House today we have a Mrs. Barbara Lawrence visiting us from Haywards Heath, West Sussex, England. Would the House please make her welcome.

MR. CASHORE: Mr. Speaker, visiting in the House today we have Gail Jernberg from Coquitlam and Doreen Sookocheff from Victoria. Would the House join me in making them welcome.

MRS. GRAN: Mr. Speaker, seated in the House today — half of them are here now, and half will be coming in at 2:30 — are 60 grade 7 students from Simonds Elementary School in Langley, with their teachers Mr. McGowan and Mr. Dedrick. Would the House please make them welcome.

MR. CHALMERS: Visiting from the great constituency of Okanagan South, we have two very special friends of my colleagues and myself. They are Cliff and Marion Bremner. Marion Bremner is a member of the city of Kelowna council. While she's here, she will be taking advantage not only of watching the proceedings for a while this afternoon but of meeting with the hon. Minister of Municipal Affairs (Hon. Mrs. Johnston) on matters concerning the city of Kelowna. I'd ask that everybody in the Legislature make them welcome.

Oral Questions

KNIGHT STREET PUB INVESTIGATION

MR. SIHOTA: Yesterday the Minister of Labour admitted outside this chamber that he had had discussions with the Attorney-General in relation to the call of political interference. If the Minister of Labour thought it important enough to tell the chief law enforcement officer of this province about the political interference, could he explain to the House why he did not think it important enough to include the matter of political interference in his internal report?

HON. L. HANSON: I have taken a number of questions on notice. I will take this question on notice also, and I will respond to those questions this coming Monday in the House.

MR. SIHOTA: Could the minister also tell this House precisely when he told the Attorney-General about the matter, and whether there was a delay between the time that he told the Attorney-General and the Crown counsel's investigation of the matter?

HON. L. HANSON: Obviously, as I said earlier, socialism affects the hearing. I will be responding to those questions that I have taken on notice on Monday, and if the member can see his way clear to be here, he will get the answers then.

MR. SIHOTA: The public has a right to know the entire truth of this matter, and I want to put all the questions on the record for the minister so he can provide the public with a full measure of the truth.

Could the minister confirm that there was a two-track strategy here: on one hand, to come up with the internal report which would suggest that there was no problem; and the second track, to send it over to the Attorney-General for a matter of fixing the dilemma the government found itself in? Was there a conscious decision then to engage in this two-track way of resolving the issue?

HON. MR. RICHMOND: On a point of order, Mr. Speaker, the member is clearly out of order, not only because of the innuendo in his question, but because the minister has clearly said that he plans to make a full disclosure to this House on Monday next and trusts that the member can make it on Monday.

SALE OF WESTWOOD LAND

MR. WILLIAMS: To the Premier. To revisit the Westwood lands decision: did the Premier not insist on a cash offer?

HON. MR. VANDER ZALM: No, Mr. Speaker. I insisted on the best offer for the people of British Columbia.

MR. WILLIAMS: To the Minister of Crown Lands. Is it true that the bid proposal submission that was circulated to the various bidders did not mention a cash bid as being the only acceptable bid?

HON. MR. DIRKS: I'm not sure that it did. What we did accept, though, was a variety of proposals, and we accepted the best possible offer.

MR. WILLIAMS: Can the Premier assure the House that he told nobody that he preferred a cash bid?

HON. MR. VANDER ZALM: I can't say that I wouldn't prefer a cash bid. If it was the best bid, I would much prefer a cash bid. I don't think there's

[ Page 7524 ]

any question about that. I'm saying that I wanted the best bid for the people of the province. Given a choice between paper or cash, I'd prefer the cash.

MR. WILLIAMS: So now the Premier is indeed saying he preferred cash. The question to the Premier is: did you advise any private sector people that you favoured an all-cash deal?

HON. MR. VANDER ZALM: If anyone questioned me as to what we were seeking, the answer would simply have been as it is today: we are looking for the best deal for the people of the province. We're seeking as many bids as possible. We want as many local people to participate as might be done. And obviously, as I said before, given a choice between paper and cash, I'll take the cash; but it's the best deal that we're seeking.

[2:15]

MR. WILLIAMS: If you wade through that, Mr. Speaker, I think what the Premier is saying is that, yes, he preferred a cash deal, and that's what he's saying now. The question is: did you talk to somebody, Mr. Premier? And do you realize that if you said that to anybody, you gave them an automatic unfair advantage over all the other bidders?

HON. MR. VANDER ZALM: Mr. Speaker, I'm not sure how many cash offers we did receive, but I do know that those who made the successful offer were people I certainly hadn't ever met previously or had any acquaintance with. However, let me say again: the important thing here is to get the best deal for the people.

MR. WILLIAMS: What the Premier is saying is that the people who got the deal are not the ones he talked to about a cash deal. That's what he's saying. So his memory is somewhat hazy.

In view of the kind of explanations we've had today, will the Premier now table all of the offers that were received by the government?

HON. MX VANDER ZALM: First of all, Mr. Speaker, I take exception to this member, who attempts to manipulate at every opportunity that in fact I said what he's suggesting was said. I don't want him, of all people, putting words in my mouth. I'm fussy as to what goes into my mouth. Every time you do, it tastes awful.

Mr. Speaker, I've said it earlier: I would prefer to see all of the information made available. I appreciate that as a matter of precedence or custom, the BCEC provided certain provisions in their tender calls which perhaps made it somewhat difficult to have all of the information available. Possibly in the future.... Definitely that is something that we should consider, because I would prefer it. I don't have any disagreement with having this information available to the people.

I will say, however, that we are attempting to resolve that particular question. If you wish to ask the minister responsible, that's something that he might answer.

MR. WILLIAMS: To the Premier. It's your former Minister of Economic Development, the first member for Vancouver-Little Mountain (Mrs. McCarthy), who started this business of confidentiality agreements on the Expo lands. It's been carried on with BCEC and the present minister. I'm sure none of the players care about the confidentiality agreement; it was required by the Crown. Will you make these things available? It was you and your government that insisted on the confidentiality agreement. Will you at least canvass the 18 people to see if they are more than willing to have it made public? I'm sure they would be.

HON. MR. VANDER ZALM: Well, I'm never as sure as the member opposite, who appears to be sure of all things, including what others think or may want to do. I said before that if you wish to ask the minister how he proposes to deal with that, it's fine.

MR. WILLIAMS: Could the Minister of Lands advise whether he will making all 18 bids public, as well as all the analyses by his staff?

HON. MR. DIRKS: Well, I'm really glad that he got around to finding out who was responsible for this whole thing. It took him a long time to find that out.

There is a confidentiality agreement in place, and the opposition was aware of that. They received one of these bid proposal packages on January 10, for which they didn't have to pay. They never brought to our attention at that time that there was a problem with that confidentiality agreement. We are presently seeking a way around that.

We realize that there is a balance between the public's need to know and the right to protect the sensitive financial information that is included in it — the information submitted by the bidders. We are seeking a way around that, Mr. Speaker. We have gone back to the various bidders and have requested their approval to release this information and make it public. I am awaiting replies from them at the present time.

We do want the public to know. I'm very proud of the process we went through, and the proposal packages that went out. It was very public; it was well advertised. The response was tremendous. The advisory committee that was in place reviewed these proposals and was chaired by Ed Lien and the vice-chairman, Victor Lewis. I think they did an excellent job of reviewing those proposals. The decision to accept Wesbild was based on very good, thorough financial evaluation, and we accepted the best possible bid that we could. This is verified not only by the independent appraiser, whose appraisal we received on March 10, but it's also verified in the last while by one of the bidders. Triple Five Corp. stated on the CBC and to the media that the cash value of Westwood Plateau was somewhere around

[ Page 7525 ]

$25 million. I would much sooner take the word of the value of that property from somebody like Triple Five, which is in the development business, than from the member opposite.

ELECTORAL BOUNDARIES

MR. G. HANSON: A question to the Premier. Last Monday the Premier stated that he had never reneged on a promise in his life. Can the Premier explain to this House why his party is not prepared to honour his election promise to hold the next election on fair and legal boundaries, because government MLAs this morning refused to accept his appointee's —  Judge Fisher's — report

MR. SPEAKER: Order, please. The hon. member knows he can't ask questions about business that's before the House; it's in the committee.

MR. G. HANSON: My question, Mr. Speaker, to the Premier is this: is the Premier prepared to put the next election and the public's money at risk by running an election on illegal boundaries?

HON. MR. VANDER ZALM: The whole boundary question is before the committee. I expect that the committee will be dealing with it carefully, properly and in due time, giving due consideration also to how people view some of the proposed changes. I think it is important that people's views be expressed at these committee meetings and that there ought to be the opportunity for that.

As you suggested when you first stood on your feet, if someone wasn't prepared to immediately accept what you propose because they felt that perhaps the time ought to be there for the views that are given to us as members of this Legislative Assembly to be expressed, then I say that I appreciate the stance taken by those who oppose your attempt to have it done without proper discussion and without having those views considered. I certainly don't think it was ever intended that things should be ramrodded through without the people having their consideration.

It's fine for a member from Victoria to think he has all the answers, but there are a lot of people up there in Atlin who are concerned. There are a lot of people in this north country who happen to have views that may not necessarily coincide with those of someone from downtown Victoria. They should have their opportunity too.

Mr. Speaker, while I'm on my feet, perhaps I could present an answer to a question I took on notice yesterday.

Interjections.

MR. SPEAKER: If the Premier could possibly wait until question period is over.... I think it's over, so the Premier can answer his question.

LOW-LEVEL MILITARY FLIGHTS

HON. MR. VANDER ZALM: I took on notice yesterday a question from the member for Atlin (Mr. Guno) regarding low-level flights over northern B.C. In reply to the question taken on notice yesterday from the member, I would like to comment on the authorized low-level flight corridor, which includes B.C., to accommodate four flight days per year.

I'm sure the member recognizes that the authority with regard to national defence remains the jurisdiction of the federal government. The flight corridor in question allows Canada to fulfil our NORAD commitments for the defence of North America. Leading up to the establishment of the flight corridor, the federal government — under the federal Environmental Assessment Review Office legislation — undertook a study that looked at environmental problems and sociological concerns.

MR. LOVICK: You didn't talk to the people.

MR. SPEAKER: Order, please.

HON. MR. VANDER ZALM: Are you interested?

Interjections.

HON. MR. VANDER ZALM: If you're interested, please listen. While we naturally have concerns with the low-level flying, the study is comprehensive enough to indicate that consultation with affected groups has taken place and that environmental concerns have been addressed. However, I can also advise the House that I will be in contact with the Hon. Mary Collins, Associate Minister of National Defence, to request that any settlements in proximity to the flight corridor be given advance notice of the specific days on which test flights will be carried out.

Interjections.

MR. SPEAKER: Order please. Hon. members, could we please have silence.

HON. MR. VANDER ZALM: Yes, Mr. Speaker. I appreciate that, because I thought they wanted to have an answer when they asked the question yesterday. I can recall the member for Vancouver-Point Grey appeared quite interested in this, particularly as it affects the defence of this country and NATO.

Finally, Mr. Speaker, I would reiterate my position of yesterday: our NORAD commitments provide a solid example of our participation in the deterrence effect that is resulting in tangible reductions in the arms race.

Interjections.

HON. MR. VANDER ZALM: You're saying it's okay if it's in the Soviet Union? Is that what the member for Point Grey said?

[ Page 7526 ]

Mr. Speaker, some of us have had experiences that allow us to believe that four days a year of unarmed flights is a very small price to pay for continued peace.

Interjections.

HON. MR. VANDER ZALM: You don't mind if it's in the Soviet Union, do you?

MR. SPEAKER: Order, please.

HON. MR. RICHMOND: On behalf of the Select Standing Committee on Forests and Lands, Mr. Speaker, I would ask leave for that committee to sit today at 3:45.

Leave granted.

Orders of the Day

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

ESTIMATES: MINISTRY OF EDUCATION

On vote 16: minister’s office, $224,490 (continued).

MS. A. HAGEN: In the early part of the afternoon we want to canvass two or three local issues, first of all on the Island in the riding of Nanaimo. My colleague the first member for Nanaimo will be addressing that matter to the minister now.

[2:30]

MR. LOVICK: I see that the Minister of Education is beaming from car to ear, waiting in breathless anticipation for my remarks. I am delighted to see that he is indeed that perceptive and knows that this will be good.

I wanted to canvass a couple of issues of very specific concern to my constituency, if I might, with the Minister. I was delighted with the news in the throne speech that there was going to be a significant injection of money into the Education portfolio, into that ministry: to wit, that some $1.5 billion was committed over the next six years to allow for new school construction. I was very pleased to hear that.

Similarly I was very pleased to hear in the budget speech some further reference to that sum in more specific terms — namely, that the budget for the Ministry of Education will rise by $253 million in the next fiscal year to over $2.2 billion, a 12.8 percent increase — and also to learn that the government has approved a $250 million capital plan for 1989-90 for schools to meet new space requirements and provide for upgrading and renovations.

Like most British Columbians — certainly like people in my constituency — I was delighted with those announcements because, as the minister knows, my constituency has had a problem of rather rapid growth in the last few years, especially in the northern end of the community. We have a chronic shortage of space in our schools.

The minister has certainly been sensitive to the requests of the community; indeed, he was kind enough to meet with a delegation from my constituency last year from our local school board. We talked about these matters. He certainly is aware of the need for a new school in the northern part of the riding.

I note that some announcements have been made quite recently concerning what looks to be permission, if you will, to go ahead and start building new schools in the north, to improve upon that situation. That's what I wanted to ask the minister about. I am wondering if he will clarify for me the exact meaning of the most recent announcements. I am talking about two documents, two specific statements — one on May 2 and the other on May 3 of this year — the first dealing with capital budget for 1989-90, minor projects, and the second dealing with capital budget for 1989-90, major projects.

What those documents would seem to indicate — especially the second of the two, the one about major projects — is that we have, indeed, given the funds. The funds are in place for the planning part, also for the site acquisition for that new school in the north. What I'd like to know from the minister, if I could, is whether he can provide me with any more specific information regarding when that building might begin and when it might be completed, so that we can deal with the chronic space shortage I alluded to earlier. If the minister could answer that for me, I would appreciate it.

HON. MR. BRUMMET: I guess I should preface my comments by saying that we are very pleased that over the last two years we have been able to get the two-year spending envelope which has made it possible to assure, when we give the planning money in the one year, that we in fact have the construction money, so that we don't create any illusions about people planning and then not knowing whether we are going to have money in our envelope for construction.

With that preface, I can tell the member that there are four planning approvals for the additions, and time will tell how quickly those come together for Nanaimo. Those are for — I want to make sure I get the right ones here: an addition to Georgia Avenue Elementary School, $95,000 plus; a new construction for Rutherford Community School — planning money of $133,000 plus; for the new McGirr Road school, $588,000 plus; and for site acquisition, new elementary, $250,000. We have allowed that much money for Nanaimo. With or against my better judgment, we have allowed it.

HON. MR. RICHMOND: I 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.

[ Page 7527 ]

ESTATE ADMINISTRATION
AMENDMENT ACT, 1989

Hon. S.D. Smith presented a message from His Honour the Lieutenant-Governor: a bill intituled Estate Administration Amendment Act, 1989.

HON. S.D. SMITH: This bill is a matter dealing with the Estate Administration Act. It is a matter that is going to change the office of the public trustee in relationship to official administrators and will provide greatly enhanced service throughout the province.

Bill 33 introduced, read a first time and ordered to be placed on orders of the day for second reading at the next sitting of the House after today.

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

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

ESTIMATES: MINISTRY OF EDUCATION

On vote 16: minister's office, $224,490 (continued).

MR. LOVICK: What a changeable world we live in. I was caught entirely by surprise by that interruption, Mr. Chairman, suddenly going from committee into the entire House. However, needless to say we're all very suspicious now about Bill 33. We wonder what little goodies lurk in that legislation, so I guarantee we will be searching closely to find out.

Back to the question. I appreciated the minister's answer, but I wonder if he would give me a brief clarification. The document I was quoting from is a memo from the trustees to the executive council regarding major projects in the capital budget.

I heard in the minister's answer a figure of some $500,000 that I don't have. I'm wondering if he would clarify that for me. It isn't in my memo dated May 3, which refers to four items: planning funds for the Georgia Avenue addition, planning funds for the Rutherford annex, planning funds for the block 48 secondary school and site acquisition funds. There was another figure in there that surprised me, Mr. Minister, and I wonder if you'd share it with me, just so we are sure we're talking about the same stuff.

HON. MR. BRUMMET: I like to surprise the member once in a while with good news.

Out of the several hundred projects that we've got on the list, there is $588,000-plus for the new McGirr Road secondary in the '89-90 budget. I guess I'd better hedge that a bit, in that maybe that's what we've budgeted for this year. They know they're going to go to planning approval in the spring, before the fiscal year ends; perhaps that is why it hasn't been announced to them. That's what we've allotted in this year's envelope for planning money. We're assuming that all or most of this could get started in the following year, but that could be affected by reprioritization, for instance, if some students show up somewhere else or don't shown up. But that's what we're planning for the Nanaimo area.

MR. LOVICK: I must confess that I don't have much experience with this ministry and its use of different envelopes. The planning money has been allocated. You said the $588,000, though, is above and beyond the planning figures quoted: namely, the $133,364. Again, as I say, Mr. Minister, I don't mean to be difficult, but I just don't understand why we're using different figures.

I quoted you four items. You gave me another figure for the McGirr Road secondary school, which is item 3 on the document I quoted: namely, planning funds for block 48 secondary school. Block 48 is the McGirr Road secondary. Could you explain to me — and pardon me if I'm obtuse — the difference between the $588,000 and the $133,364?

HON. MR. BRUMMET: Maybe I inadvertently explained it already. Oftentimes there is some initial pre-planning money for the basic conceptual plan, and then there is money added for the detailed working drawings plan. I've now learned that the McGirr Road construction is to go in 1990-91. We may not have given the school board the detailed planning money yet, but we have allowed for it in the budget.

I was quoting to you the total that we have allowed for Nanaimo in the budget. Do you want those figures again? The four that we have allowed: addition to Georgia Avenue Elementary, $95,530; new Rutherford elementary, $133,364; new McGirr Road secondary, $588,322; and we have allowed site acquisition for a new elementary of $250,000. Quite often we don't like to announce the amount. We put an estimate in there because if there are still negotiations going on on the land, once they know what the amount is, that usually always turns out to be the minimum price. I hope I haven't let the cat out of the bag on that one, but we have allowed for that. Those are the figures that we have provided for. The only explanation I have is that because McGirr Road secondary is slated for construction next year, and that may be after the fiscal year, then we're allowing for the planning that's necessary to precede that.

MR. LOVICK: I'm pleased to inform the minister that he hasn't let the cat out of the bag. But you have clarified something, because the information I received from the school board office is incorrect, insofar as it has transposed two figures. That's why I was having difficulty.

According to the school board, the....

Interjection.

MR. LOVICK: No, I believe you are correct. The $588,000, according to them, was for the Rutherford elementary school project, as opposed to the other. So that's what the confusion was.

[ Page 7528 ]

I think that's all I have for the moment, Mr. Chairman. I thank the minister for the answer.

MS. A. HAGEN: I note that the minister is in a good frame of mind this afternoon, as he, I think, knows as I do that we are hoping to conclude our deliberations on the Education estimates this afternoon.

I want to move now to another local issue.

Interjection.

MS. A. HAGEN: There was a sotto voce sound across the way, but I didn't hear what the minister was saying. I'm sure that if he wants me to hear it, he'll make that comment when he rises.

Parents, students and the school board in the district of Qualicum are considering making condoms available within that school district. I wanted to raise this issue with the ministry, because I think it has had a good deal of discussion, and to pose a question to the minister about whether he supports the right and the responsibility of this community — or indeed, any other school district community in the province — to deal with and to approve such a proposal.

[2:45]

HON. MR. BRUMMET: My comment before, when the member said we were going to finish in a short time, was that I wanted — as she was pushing me for this morning — a firm commitment or a confirmation of that, which I am unlikely to get.

Regarding the issue of putting condom dispensers into the schools, the boards have the authority to take that initiative. I was asked what my opinion and view was on it, and I said very clearly that I think the school boards should stick to dispensing education and not condoms.

MS. A. HAGEN: This morning we were discussing the human and social development of children. Indeed, later this afternoon I do want to talk with the minister more about some of the roles and initiatives that might take place in the secondary schools. Does the minister agree that the schools have a very important role to fill at this time around dealing with presenting issues to young people? Presenting issues to young people very often has to do with issues relating to their sexuality. They very often have to do with immature people, people who are learning about themselves and their relationships with their fellows, students who very often may be at risk in respect to some of their actions, because they lack maturity, information and knowledge. Would the minister agree that it is a very important matter for the schools to play a role, particularly at this time, in health and family life and sexuality education for adolescents?

HON. MR. BRUMMET: I think that it's important, and I thought it was important enough two and a half years ago, shortly after I was appointed as minister, to get on with the family life education program which has been operating in the schools for two years. I would refer the member to that program.

MR. G. JANSSEN: I'd like to comment and become involved in the debate, as my son attends the Kwalikum high school. I've had many discussions with him about his upbringing and sexuality and his friends who go to that school and other young adults — we can call them students, but I'd like to refer to them as young adults — who attend the Qualicum district. Ballenas high school in Parksville has done a survey, and the students there are in favour.

Comments attributed to the Health minister, where he has said that the idea is ridiculous.... I take exception to the Minister of Education's remarks that his advice to the boards is that they have more important issues to deal with in education than condom-dispensing machines. I think it is a school's responsibility to ensure that education take place not only in the three Rs but also in social upbringing, such as the type of sexual conduct they will be carrying on throughout the rest of their lives. I think that can be best established at an early age, among young adults and adolescents.

I wonder if the minister has any indication as to the amount of sexual activity there is among adolescents in that district, including the disease factor and the incidence of pregnancy in that school district. Is it at a normal level, is it low or is it high?

HON. MR. BRUMMET: Mr. Chairman, I don't disagree with the member at all about the responsibility of schools to provide education about social issues, sex education, what causes AIDS, what doesn't cause AIDS, and so on. If he's on such good terms with his son that he feels his son should be getting paid-for condoms at school, then perhaps maybe some family responsibility should.... I think the family should be as concerned about a person getting AIDS, or getting pregnant, and give the necessary equipment to them. It should not be the schools that dispense condoms.

MR. G. JANSSEN: I'll pose my question to the minister again. Is he aware of the amount of sexually transmitted disease and pregnancy in that school district, and whether or not it is below or above the norm in British Columbia?

HON. MR. BRUMMET: No, Mr. Member, I'm not. I took the advice of your colleague this morning: that we should not be collecting that type of personal information on students.

MR. G. JANSSEN: The minister, Mr. Chairman, is also quoted as saying that the Qualicum School Board should forget it. In that regard, I gather he is following the advice and the line of his Premier, who said that the decision of placing condoms in the high school could backfire on the board. Statements were attributed to the member for that area. The Minister of Advanced Education (Hon. S. Hagen) said that the

[ Page 7529 ]

school board should learn to read between the lines. I wonder if the minister could assure us that his government will not interfere in the decision made by the school board, which has autonomy in this area.

HON. MR. BRUMMET: Mr. Chairman, that's the sort of thing that always disturbs me: their interpretation of why I have an opinion. I came back from a trip overseas. I did not have an opportunity to meet or talk with the Premier on this issue. I was asked for my opinion, and I gave my opinion. That member tries to put on the record that I am presumably carrying out the Premier's instructions. I'd like to correct that. I can and do think for myself. I can give an opinion when I'm asked an opinion.

I have already made it clear, had that member been listening, that I cannot by any legal device stop the school board from doing whatever they want to do in this respect. If they asked me for my candid opinion — and I'll back that with some of my views and concerns I have after 26 years of experience in the school system — I'd say that I do not think schools should be dispensing condoms.

MR. G. JANSSEN: I thank the minister for his remarks and his concerns. However, as an interested parent — and he has already congratulated me for that — I am simply trying to establish whether or not those remarks were his personal remarks or the remarks — and direction — of his ministry.

I've spoken with members of the school board — as I live in the area and pay taxes there — and they have expressed concern to me that if they were to make their decision, considering the remarks made by members and ministers of the government, it could have some implications on future decisions that they may make and negotiations they may have with the school board.

HON. MR. BRUMMET: On a point of order, Mr. Chairman, I think that's out of order.

MR. G. JANSSEN: I am simply, as I said, a constituent of that area trying to establish whether or not the support that the school board may want to offer in continuing sex education by dispensing condoms, by doing a survey of the schools, by treating young people such as my son as young adults and involving them in the democratic process of decision-making — which I think we should all be encouraging young people to be involved in — will be met in the future with some negative response from the Ministry of Education.

They have concerns. They have expressed their concerns to me when I questioned them, and I am simply trying to canvass the minister to see if the remarks made by members of the ministry will in fact have those implications. I am sorry that the minister is taking this personally. We should be dealing with his estimates in education. He should not be dealing with this at a personal level. He should be dealing with it as a minister of the Crown as it pertains to his ministry.

Can the minister assure the House that if the Qualicum school board makes a decision — as it has the right to do if it is in fact autonomous — there will be no repercussions on behalf of his ministry in the future?

HON. MR. BRUMMET: Mr. Chairman, that was why I was rising on a point of order before. That member has the audacity to stand up here and ask for my personal opinion. I gave that personal opinion, and then he had the audacity to stand up in this House and say: "Will you assure me that you will not be vindictive on any other consideration for that district in the future?" I don't know whether I should dignify that kind of stupid question with an answer, but I can assure that member that I don't operate that way, even though he does.

Interjection.

MR. G. JANSSEN: Mr. Chairman, I at no time indicated...

HON. MR. BRUMMET: You did so!

MR. G. JANSSEN: ...or attempted to indicate that the minister should confuse his personal opinion with that of his ministerial responsibility. I have spoken to the members of the school board — some of whom I voted for, and who I believe I have the right as a constituent and as a member of that community to speak to and find out what their concerns are, and what direction they are taking.

I have children in that school, and I was simply trying to canvass the minister to find out whether or not their concerns are well founded.

I'm sorry the minister takes them personally; I'm sorry he gets so excited. I'm simply trying to find out for my personal well-being — and that of my children — whether or not the fears expressed to me by the school board members that I spoke to are in fact grounded.... He has answered that question, and I thank him for that. But I remind him that he should remain calm. We certainly wouldn't want the minister to overexert himself during these estimates.

MR. PERRY: Mr. Chairman, I had not intended to participate in these debates, because my colleagues have been exploring the issues so comprehensively. But when I hear the minister's response to the member for Port Alberni, I have to express my reservations about it.

Mr. Chairman, one of this morning's newspapers has an article describing the recent experience of the United States Army, in which — if I remember correctly — about one in 600 new recruits into the United States Army are testing positive for the AIDS virus, HIV. It is now thought that it will become the major cause of mortality or death in peacetime among young American soldiers — more than accidents and violence.

[ Page 7530 ]

School boards in British Columbia are beginning — ahead of more senior politicians — to try to grapple with the serious life-threatening infection of HIV and other sexually transmitted diseases.

[3:00]

I think this is a major matter of public policy when the more junior levels of government, which are perhaps more closely connected to the real problems or the real aspirations of people, are trying to show leadership. It is shocking for senior ministers of the Crown of such influence as the present minister to attempt to influence them in a way that will discourage them from doing their duty of protecting the children under their jurisdiction. I think what the member for Port Alberni was seeking, which I would also seek from the minister, is some reassurance that when school boards — on the advice of the local medical officer of health, who has the statutory responsibility to protect the health of schoolchildren — propose initiatives in the health field, there will not be arbitrary pronouncements from ministers of the Crown discouraging them from fulfilling those responsibilities.

MR. R. FRASER: Mr. Chairman, I can't tell you how astonished I am by the presentations I've just heard from the second member for Vancouver-Point Grey (Mr. Perry) and the member for Alberni (Mr. G. Janssen). Isn't it amazing that they would even think that the minister would have reprisal in mind if he had a difference of personal opinion with any school board or any member in the House? It's a funny sort of press-paranoid thought process that must go on over there, that they can actually think that way — impugning motives. it's astonishing.

I'm going to move on from that, and I'm going to talk about some other policies that the minister has talked about. I like the new teacher education program funding — that will do great things for the teachers in the province — suggested by the Sullivan royal commission. I would like to commend the minister for taking so seriously the report of the Sullivan commission, which I've said in the past has been somewhat short of the mark, in my opinion. It was more of an inventory than a forward-looking process and not as good as the one that was done in Ontario. I think we have to start moving ahead in education to new ways of getting some more information to our students more quickly and more effectively. I think we should start mixing up the education formula with more high-tech material.

Once again I look to the minister and I say, "Minister, how very interesting; how forward-looking." We now have the B.C. Educational Technology Centre which will help teachers become more technically competent — computer-competent, computer literate. I think there are actually some wonderful programs here. As I say, the new teacher education program and the programs to attract teachers to rural areas and to keep them there, giving them a shot at student loans at universities and things of that nature, are all positive, all aggressive, all attractive, and all to motivate the teachers in our province to become even better than they are now — and they are good now.

That, of course, brings me back to the remark made by the member for Prince George North (Mrs. Boone), who got up in this chamber and said that we should be ashamed of our schools, when our students, in competition with students across the country, are performing very well, taking awards way out of proportion to their numbers in the country. That has to tell you something about how well the teachers are doing, how well the students are doing, how good the school system is — and constantly improving, with new programs.

The opposition has said from time to time — and I've heard it in the last couple of days — that school taxes are too high, and then they say the government doesn't spend enough money. So which is it? They never seem to know, Mr. Chairman. The taxes are too high; you're not spending enough. How do they put all that together? How can they possibly suggest that we can spend money that we don't get in the form of taxes? They want to invent money in the air. Of course they don't want to do any taxing. They want to spend even more money. They won't go into new high-tech teaching methods, and they won't support programs offered by the minister on behalf of the government for the people of British Columbia. They seem to hang back — nitpick, nitpick. There's no philosophy there; there's no comprehension there.

The member for Burnaby North (Mr. Jones), who was the critic last year.... If there ever was a critic who needed help, it was him. Thank goodness he's over there and not in the schools. I'd much rather have him here where we can keep him in hand; no question about that.

It's interesting about the taxation question. They're worried that they can't tax industry, just residences. Well, there was a reason for doing that, Mr. Chairman. I would just like to remind those members that the makeup of towns across the province of British Columbia is variable. Some towns and communities have industries, and some don't. So if you want to tax industries and you don't happen to have any, that doesn't make so much sense, does it? If you have a lot of industry and you want to tax it, great, you're fine. The system is worked out so that it's shared community to community; it's taxed by the provincial government and handed back. That's why it's done that way.

We gave taxation powers to school boards so that if they wished to enrich an already rich program, they could add taxes on their homes — industries don't have children, homeowners do — and put more into the program. Now there are communities out there writing to the government saying: "Please don't let them have that authority. Please don't let school boards tax me. Please take away the power you gave them." I'm suggesting it was a good move to give school boards that authority. They can go to the homeowners in their communities and to their parents, aunts, uncles and grandfathers, and say: "You want to spend more on schools. We've got just the

[ Page 7531 ]

ticket. You give us the money you want us to spend on schools, and we'll spend it."

One of the things this government has done, even through the restraint years, which were so hard on so many people.... Education got way more money than some other ministries did. Of course, they had to make a contribution in terms of effort. Everybody had to help. Universities had very small funding reductions. I know something about that. Industry took brutal beatings in those years. Most of the education system went.... Yes, they were affected, but not a great deal.

We have the Canadian Federation of Students saying that going to university is a right, not a privilege; that education should be free. That's a little arrogant.

We do all kinds of wonderful things in education in this province; we always have and always will. That minister has done a great job. He is entitled to a personal opinion, as is the member for Alberni (Mr. G. Janssen). Everybody is, collectively.

On behalf of the people, that minister is putting in programs that will make our system terrific. They will bring a little flexibility. It will be, I suppose, troublesome for some people to understand why you would want to have a flexible first few years in school. It will probably be more difficult to manage than just fixed calendar times, but you know the way the human spirit works, the mind works and people work. Teachers do adjust from student to student as much as they can. They have before, they do now and they will in the future. How can it be any other way?

Make it happen for those students. If one student's having trouble, that student will probably get more help. If some student is doing very well, that student will probably help his or her friends. School is all about that. Socializing is part of the learning process, and students learn how to do that in school.

Some teachers are very good in large classes; some teachers are better in small classes. Some students have the same feelings. Some would rather be in a big class somewhere at the back, where they can just work away at their own speed; others want to be up front in a small class, participating. Everybody has a different personality. The school system, which looks very rigid, in fact has more flexibility than we might imagine, because people are interested, because people care and because people like that minister do what they can to make it easy for the kids to learn, the teachers to teach and the system to function.

If the fiscal framework isn't perfect, I'm not surprised. Nothing is perfect. If it needs adjusting, the minister will consider it, as will the government. The education system in B.C. is good because it's constantly being worked on. That's why it's working, not because that side over there doesn't know what to say because they can't think of anything nice. Never have I heard a compliment, yet nothing is all bad.

It's time some of this debate got onto really meaningful input from that side over there. It's a funny thing about titles: they're called the loyal opposition. They presume, then, that they have to oppose everything. I don't think titles do the job they ought to do sometimes.

We have a good system. I'm proud of it, parents are proud of it, the kids are doing well with it and the government's working hard at it. Keep it up, Mr. Minister.

HON. MR. BRUMMET: I'll try to respond very briefly to the previous two speakers and then to the member for Vancouver South.

The member for Alberni asked me not to get excited and not to get upset when he clearly tried to leave the impression with this House that I have to promise on a stack of Bibles or somehow that I will not make decisions about school districts on a vindictive basis. I resent that very much.

I've just finished with his colleague from Nanaimo, who got approvals for schools on the basis of the need and the priority we could establish. No vindictiveness; objective, as much as we can. I do resent it when members say, "Will you tell me that you've stopped beating your wife?" or, "Will you tell me that you're not going to be vindictive in your decision-making?" and then say: "I didn't imply anything by that. I'm just asking a question." Well, implicit in that question, as far as I'm concerned, is a slur, and I object to those kinds of slurs.

The member for Vancouver-Point Grey, who hits and runs, came in here and made a statement because he wants to be on the record. I don't know whether he cares as much about the students as he cares about trying to make some political Brownie points, because that's about all he stays in here for. Anyway, he came in here and put on record what is already well known, and then he's astounded — according to him — that the senior politician doesn't care. That's a misinterpretation again. I care as much as anybody else. I think that commitment is evident in the program we put in when the AIDS problem became an issue. We put that program into the schools as quickly as it could be put together. Not by me; a group representing health, social services, public experts, put that program together for us, and I might say it's a good program, one that has been widely used. That program deals with education, and I'm committed to education. I have no problem with education about birth control, about how AIDS is transmitted and how to prevent it. I have no problem with that at all. But I do have a problem with the schools then getting into dispensing birth control pills or condoms, instead of the parents. That's what I have said. I don't mind that being clearly on the record.

I have also said that I don't have the authority, even if I had the inclination, to tell school boards what they may or may not do. But I can tell that member time and again.... When a school board makes a decision that the member doesn't like, or that somebody there doesn't like, then who do they come to and say: "Please overturn the decision"? How many parents come to me and say: "Do something about it"? I say to them: "You elected them. You hold them accountable. You deal with your school

[ Page 7532 ]

board." I do that even at times when I find it difficult because of what I think has happened. But I act according to my principles and according to the law.

[3:15]

What a treat it was to hear the member for Vancouver South take a broader look at the education system and the positive things that are happening out there, instead of getting up and saying: "Well, it may be a good system and the students may have excelled, but I know one student who failed." That's the type of approach that the socialists use repeatedly: there must be a flaw; it doesn't matter how good....

In a recent international competition with 13 jurisdictions our students came in first in science and a close third in mathematics. Just last year I announced in this House that on a mathematics test across this country written by 25,000 grade 7 pupils, 15 of our students were in the top 25, and the top one in Canada. In language arts, in science programs, in other competitions — the Olympics of the Mind — they have repeatedly placed well, done well. They do well when they go into post-secondary out of our school system.

So yes, I think we have every reason to be proud. We're proud of what we have now, and we're very proud of the Sullivan report recommendations that we're trying to implement, despite the sniping and the attempts to create fear and paranoia out there in the public when the final answers aren't in place yet. I'm very proud of our system. I'm very proud of the things we're doing. We've added computers — the royal commission changes. You can suggest whatever you like.

Local taxation becomes a big issue. Large majorities of local taxpayers demanded the right to spend more money in their school districts and to hold their boards accountable. Now that this hasn't worked, they want to hold me accountable for electing their board members and their board members making those decisions. Despite all that, I'm rather torn. The average homeowner in this province pays $127, after the homeowner grant, for a quality education system that measures up across this country. Is that too much to spend on education? Believe it or not, with the $50 homeowner grant.... Last year it was $137 after the $380 homeowner grant. This year the average is $127 — down $10, despite the supplementary budgets of school boards. That's the gross amount I'm talking about. On the shareable amount it would be much less. Even with school boards that have gone well above the fiscal framework, it's down $10 this year as a result of the initiative taken by this government and by this ministry.

I'm proud of what we are doing. I think we have every reason to be proud in this province. And it does upset me when members imply vindictiveness, or when an opposition member in this House says we should be ashamed of our education system. I can't accept that. I do get a little exercised by that.

MS. A. HAGEN: I want to make a couple of comments before I move to another subject. First, I want to acknowledge the minister's acceptance of the right of the Qualicum district to make its own decisions, and to commend that board for the process that I understand they have followed in coming to a decision. It's a difficult topic and a difficult issue for parents. I think my colleague from Point Grey — who has in fact left to have a meeting with the Vancouver Persons with AIDS Coalition, and who expressed his regret that he wasn't able to be here for the continuation of this debate — is very much aware, as are medical health officers. It's very consistent with some of the discussions I know the ministry has had of the close working relationship between the medical health people and the school district that some fairly significant discussion and decisions will be taken at the local level. I feel that the minister's personal comment about forgetting it was one that perhaps didn't dignify the discussion, but perhaps he was tired after coming back from Japan, and that's understandable; jet lag coming that way is really pretty hard on people.

It's interesting, too, to hear the comments of the member for Vancouver South (Mr. R. Fraser), who recently told Chinese students that the democracy in this particular country couldn't accommodate their viewpoints. I remember him talking to the issue of post-secondary students and suggesting that they really should take their post-secondary education in their own hands and not look to the state, or else go out and get a job. To wax very enthusiastic about our public school system....

That gives me an opportunity, in fact, to move to my next topic. We've talked a lot about dual entry and primary education, and I want to talk now about secondary education.

I want to preface it by the comment that I believe that in spite of the rapidity with which the ministry has worked to bring change into the system, the change in the primary system is going ahead and going ahead well. It's going ahead because I think the minister is committed to it. It's also going ahead because there is a fundamental agreement around the ungraded primary and because of the work that is going on in the districts. There has been a lot of progress in that regard. The minister is wont to say that we are all naysayers, but I think if people pay attention to my remarks made over the last few days, they will know that that's been anything but the approach that I have taken to the estimates. It's a matter of accountability and the minister having an opportunity to explain to the public some of the issues on which he is working on behalf of the ministry and the people of the province.

The area of secondary schooling I don't think has developed as extensively — certainly in the public's mind — around the implementation of policies stemming from the royal commission, and so I would like to take just a few minutes in our discussions this afternoon to deal with that issue.

I am going to preface my remarks by what is a personal viewpoint. It's there in the Sullivan commission, but not as strongly as I might like. It's a point of view that might be one that we should look at as we look at the whole secondary system. I happen to

[ Page 7533 ]

believe very strongly that, in the same way that we are paying a lot of attention to primary education and the importance of that education in casting a program, a process and an approach that is very suitable to the learning modes and needs of children, we really need to look at the whole secondary system in something of the same manner.

We are looking at a system that we would all agree is having a tough time meeting the needs of students. That is demonstrated by the fact that students drop out. I think that that's a part of changing times. The rate at which students are leaving the secondary schools seems to be increasing. I know the minister has been working hard to try to get a handle on that and to get some kind of valid picture about what is happening.

Let's accept that there are a lot of students who are not graduating in the normal five years of secondary school, not going right through and finishing grade 12. There are some assumptions that seem to be made about those students which I really want to get a handle on. One of the assumptions seems to be that those students who are leaving the system are somehow students who are not looking to, not fitted for, not able to benefit from post-secondary education. As I read what Sullivan has to say and as I listen to some of the things that the minister has had to say, I am really very concerned about that.

Mr. Sullivan said, for instance, on page 92 of his report: "These learners" — referring to drop-outs, which is the section in which this quote occurs — "however, once shared many of the same goals as those who advance to post-secondary studies. But they somehow fell behind as they were streamed into basic or non-academic programs. What then become their goals? What do we see for their future?" It seems to me that there are presumptions here that there are some limits on children's potential. There are some assumptions that a very significant number of students will not — immediately or at any time in their lives — go on to post-secondary education, that they may in fact be workers and go right into work and that they may continue to be workers trained on the job or whatever might be required.

[Mr. Rogers in the chair.]

In this post-industrial information age, I find that perspective and approach quite troubling. There is practically no area of endeavour in the work field now for which students will not require some post-secondary education. That fundamental expectation and recognition has to be a part of any planning for reform and transformation of the secondary system.

I've heard the minister get involved in discussions around this issue and the relevance and appropriateness of secondary education before. It's my sense that he may indeed have a similar perspective, that there is a search for relevance and a recognition of the potential of these students. Let me ask, first of all: is it the minister's perspective, in planning for the changes in secondary education, that the majority of students who are not academically moving towards a university stream — whether they start at college or go directly to university — are not at some time going to be participating in post-secondary education? Is it his perception that they are more likely to be trained through some very minimal vocational training and will go into the workforce, and that's really their economic future — if you like — and a reflection of what their future is going to be?

HON. MR. BRUMMET: Mr. Chairman, I'm surprised that the member, who follows all my press statements so closely right down to one or two words, is not aware of what I've clearly stated is my position on that. I suspect that she wants to get her concern for this on the record and see if I might change my opinions. I might change the words, because I don't follow the same script all the time, and I don't feel I need to.

The Sullivan royal commission report happens to coincide very much with my own views, so I have absolutely no difficulty with it. What the Sullivan report recommended and what has been translated into a rough conceptual framework by the ministry through discussions with EPAC and the steering committee of EPAC with my concurrence — I don't know how much it matters in this process, but I hope it's a factor — is that our target is to have all students complete 12 or 13 years of school, regardless of what direction they intend to go afterwards.

I have not said they're not going to get involved in post-secondary education. I said that some of the students told Mr. Sullivan and his commission that the present secondary program is fairly well suited to those who want to go on to university. That doesn't include all post-secondary education. Their suggestion was that it was not that well suited for someone who chose another career path. Implicitly, the secondary school program — with its examinations, which subjects were examined and what was done — was in effect saying that you prepare for the university route or you go second-class.

That is not true; I have never accepted it. There are many other careers that are — and should be — alternative choices. It shouldn't be that if you can't do it here, then you go there. So I'm quite convinced that all students should get a higher education. It's also very clear, with the changing technology and the job changes that students have to face, that they have to be well educated in these skills to be able to change. That requires more education.

[3:30]

Mechanics, in this day and age, is no longer pulling wrenches; it is now having familiarity with computer technology and all sorts of machines — scanning machines or whatever. It can change within five years; we can no longer predict. So what we've gone along with, from our perception, is to prepare students better for whichever direction they can go. Yes, all educational research and evidence indicates that the grounding they have in the first few years of school are fundamental to some of the successes or failures in later years. So we're trying to reduce the failures and improve the successes. We also want to

[ Page 7534 ]

make the programs more relevant to secondary students from their perspective — not the university entrance requirements set by the university, but relevant from the student's point of view. We are trying to find how to do that. EPAC has discussed this at considerable length. There is a steering committee from EPAC that has tried to lay out a conceptual plan for what type of things might be included in order to do that. That plan is a long way from implementation. I hope it's not too far, because some of the things about career preparation and some of the things that are being suggested are in effect in the schools right now. It's quite possible.

It's further evidence, I guess, of my commitment to allowing students to go on to post-secondary education. As you may recall, our Passport to Education program was castigated when it was brought forward. Nevertheless, many students have taken advantage of that program to pay part of their fees in universities, colleges, technical institutes, whatever post-secondary training they choose. I think you have my commitment on that. It seems the committee is moving in concert with what the Sullivan report recommendations have put before us: let's make it relevant, let's give some credibility to the other courses that were the instead-of courses in the past.

Those are the sorts of things that are happening. That doesn't mean we're going to wait until the grade 1s get to grade 12. There's a lot of work going on, and the committee has set out a possible time-frame from the spring of 1989.

"Spring of 1990: draft of the revised primary curriculum available for response by the field — and draft the necessary technical materials that go with that. "Fall of 1990: develop provincial information professional preparation programs and sequential program materials available for optional use. 1991-92: revise curriculum and assessment materials for sequential program available for optional use in the schools. 1992-93: optional use of sequential programs. 1993-94: require ....."

As we are in the primary, we're giving it an evolutionary process, with the involvement of the teacher, the preparation of the teacher, the involvement of the parents, the preparation of the parents to understand it, and the opportunity for students to adjust and adapt. It will all come together — if we ever get together and see how far we can take it together, instead of seeing if you can undermine it.

MS. A. HAGEN: Mr. Chairman, you're wont at various times to comment about imputing motives. I do find it distressing that whenever I ask a question, the minister imputes a motive. I find that's not consistent with my approach to the estimates. I would appreciate it if we could simply address the issues that I'm attempting to raise.

I want to thank the minister for his comments. It's a very difficult area in which to institute change. If we are ever looking at an area where there's a whole range of needs of young people, it's certainly at that secondary level. I would hope that one of the things that might happen — indeed, as the minister and his staff and advisory people examine what may happen — is that they look at the junior secondary years as very significant years in the whole success pattern of children as they go through that system. I think the focus has been primarily on what happens when students get to grades 11 and 12. Although I don't have a very good handle, looking at the information that's available, on where the drop-out rate is greatest, it appears that it's in that grade 10 and 11 period, with a lot of it still happening in grade 12.

The minister and Mr. Sullivan have proposed that there be a number of tracks that students can take. I concur entirely that those tracks should be of equal value, and they should be tracks that can interweave with one another, that there are a number of ways that young people can in fact stay involved with learning. Not all of this is going to happen perhaps within the four walls of the school. I think it would be good if a good deal of it happened outside the four walls of the school. By the time young people are 16, 17 and 18, it's time for them to be experiencing things that are not necessarily as institutionalized as a secondary school sometimes is. I think our schools have done a good deal to try to open the doors through career education.

There's been a fair amount of discussion about cooperation with business and industry and entering into some kind of working relationships with business and industry. I'm interested that it's business and industry and not the community at large, not non-profit societies, hospitals and so on. Perhaps the minister can give us some idea of what kinds of new programs are being considered as a means of encouraging people to stay within the school system and what kinds of working arrangements would be in place for that to happen.

As I'm sure the minister knows, there is considerable concern that the public education system as we know it may be significantly changed in terms of policy and accountability and delivery of service if we move to what we might call the private training school model and so on. There are legitimate questions about that issue. I think it's a good opportunity for the minister to provide us with some view of what is going to happen to students who want to be hairdressers, journalists or bank clerks and decide that they don't want to stay in school; they're interested in that kind of career. What would be a pattern of the last couple of years of such a student's school activity? I know the minister has outlined, and I am aware of, the common curriculum, the areas where the student will have to show proficiency in order to graduate. What would be the working arrangements with business and industry, with other sectors of the community, I would hope, and what would be the role of the school in that regard? What would be the role as the public institution responsible for high school graduation with some diversity in the way in which a student may be able to achieve that certificate and that status?

HON. MR. BRUMMET: Once again, Mr. Chairman, we have put aside money in the implementation process for curriculum development, assessment

[ Page 7535 ]

evaluation, teacher upgrading and teacher retraining for a variety of the things that will have to happen.

So far what the committee has worked out — and it is reflected in the policy documents that we have put out — is that we should target for all students to go through school in one stream, but in the final years you give them more options so that they can prepare for a variety of different things with the same credibility as they have been preparing for university. Conceptually, that's it. Exactly what courses and how much of it they'll take in school or out of school has not been worked out. It will be worked out in and through a consultative and evolutionary process.

I can't answer the question of how much of it is going to be and who's going to pay for it until we know what's going to happen. We are trying to make every allowance for it, recognizing that we might, say, set aside X million dollars for career preparation as we know it now. By the time the committee works it through, it may be part of graduation rather than career preparation. It just may be a factor in graduation — which it is now, in a sense, so in that way it won't change that much conceptually. If we set aside X number of million we don't know whether that million will have to shift, move, or whatever. So I can't answer those kinds of questions of who's going to pay for what.

We are following the concept that primarily every student in British Columbia is entitled to a free education up to grade 12 graduation — up to the age of 19, which is the generally accepted school age — to the extent possible, but also recognizing the fact that right now in the school system there are some fees for extras they take that might be optional. I would like to think that nothing that is required of the student — no course that is required — will require a fee. I know how the system operates. If, say, the student in career preparation decides to build a coffee table, it is not uncommon for the school to charge for the wood that they use, but they don't charge them a fee for the course. It isn't entirely free now, but we're still working on the basic concept that everybody is entitled to an education to graduation, and after that with assistance.

MS. A. HAGEN: I'll try two more questions. The minister is really not giving very much information to me or, through this debate, anyone else.

Mr. Minister, is there any consideration that the private training school model, which exists with the post-secondary schools — where there is a school that is licensed, it offers secretarial training, training to be involved in financial institutions, a whole range of career-related opportunities — could be available to secondary school students and under similar terms as are available with the post-secondary system, where students who enroll in those institutions are eligible for student loans? The model might be with the public school that there would be school dollars available for the tuition of the student. Is there any consideration of that model of a private training institution supported by public tax dollars in order to provide a student with a career-training opportunity that would be part of the particular student's high school graduation requirements?

HON. MR. BRUMMET: Consideration has been given to all of these notions, but no decision has been made to include that particular model, nor has a decision been made to exclude it. Therefore no decision has been made as to who pays for what portion of it.

I go back to the basic principle of whether it's a required part of their course and graduation. How do I know what the system is going to suggest or recommend four years down the road as to who pays for what portion of it? All I can say is that we're sticking with the basic principle of a free public school education to grade 12 graduation, but it doesn't mean that a private school couldn't be used if it makes the best sense. It doesn't mean that a school board couldn't.... Instead of trying to set up a hairdressing course for two people who want to go, maybe they can teach some of the academic, the chemistry and biology in the school and pay the hairdresser for some hands-on training. You can't count on volunteers if you're going to make it a part of your program.

I'm just saying this is a possibility. I hope you don't go out and say I've suggested that this be done. I don't know whether it will become a reality or be discarded as the process goes on.

[3:45]

MS. A. HAGEN: It seems to me that one of the things the public needs to have some knowledge of for a system that's in a state of flux is the thrust. I think the public's thrust in respect to public education is that this education comes under local school boards and is publicly accountable, regardless of the models — thinking there might be various models — that might be in place. Perhaps the minister could advise us whether the school district will in fact continue to be the body responsible for the education of children through to grade 12, to the end of their graduating year.

HON. MR. BRUMMET: The school boards do have the prime responsibility to provide students in their districts with an educational program that suits their purposes. I don't think that means they must be tied to a particular desk fixed to the floor in that school. If the boards find a better way to do it, then I'm not going to say I'll preclude that kind of option right now. The public school system remains our main education system, as Mr. Sullivan has indicated. This government has accepted the position that if students choose an alternate education route, they may do so. The public school system remains paramount.

MS. A. HAGEN: I spent a lot of time this morning talking about accountability and assessment, and I think what I'm really getting at is: who's going to be accountable for the system? I note that the present system with the private institutes' training program,

[ Page 7536 ]

and with public dollars available to them, is singularly unaccountable. I would certainly not like to see that kind of system spreading to a broader range of students. This is not to say that a lot of those schools don't do a good job, but there is no accountability within the system for those institutes. There are public dollars, and some of those public dollars are indeed being misused. The people who are suffering are the students who assume that a quality of education is available to them in those institutes. There's no guarantee at all that the quality is there, because there is no accountability.

Let me raise one final question in relation to this whole secondary school matter. Mr. Sullivan emphasized and made a strong commitment to the concept of life-long learning. It's my view that he saw the local school as one of the available resources for a student all through his or her life. One of the things I find in my own district is that our local school district community education program is working with a very significant number of people who have been — to use the name we give to them — school dropouts, people who have not graduated. They've brought them back into the school system for academic and career-related and upgrading activities under the aegis of the Ministry of Education.

Is it your intent, Mr. Minister, to act on the recommendation of Mr. Sullivan on page 109: "That the Ministry of Education, school districts, and schools, in planning...educational programs, incorporate the concept of lifelong learning and...cater to the widest range of learner interests" within the public school system? Is that indeed a significant part of the thinking and the planning that's going on? Although I've made a commitment to the minister that I won't say a word about the School Act until it's tabled in this House, might we anticipate that the kind of philosophical and policy agenda the minister may have been addressing would be reflected then in the legislation that will be coming forward? Or if he wants to stay with policy, I'm happy to hear his observations just to that point at this time.

MR. CHAIRMAN: If the members are trying to enforce order, then the Chair doesn't have to. Please proceed, Mr. Minister.

HON. MR. BRUMMET: We'll do our best to keep the Chairman on track.

You say that they should not be allowed to take any programs or courses at private institutions because they're not accountable. I guess I'm a bit more open-minded on that one, and I would think that a school board that is going to pay money to some other institute to provide a course for a student.... I would give them the credit that they would see that it's accountable before they recognize it for credit or for payment of the bill. I guess the member is somehow saying we're going to take them out of school and send them over to a private institution. But it will be a coordinated effort if it happens. I don't have any problem with that one, because I have the faith that the school trustees are hardly going to pay somebody for doing a job that they have no.... I mentioned the hairdresser analogy. They're hardly going to send a student to get hairdresser training from somebody who is not a qualified hairdresser or without assurance that they're going to get some training.

As for lifelong learning, the Sullivan report recommended what to some extent we were already into. Many adults have been able to come back for grade 12 equivalency courses. Two years ago we made the policy that if they are attending school, regardless of their age, we could allow them to be counted as full-time equivalents in the funding formula, and if they are only taking a partial course, they could be counted as one-eighth or two-eighths or whatever  — eight being the standard number of courses a person takes for full-time equivalency.

In other words, we are committed to lifelong learning. We hope the program we've put into place, the relevancy to students, will develop a greater love for learning, a greater curiosity, a greater desire for continuing learning and a recognition that learning does not stop when you walk out of the classroom in June but goes on and on. Since people can now return to schools, we fully expect, and have so expressed in our policy statement, that we're going to try to make the legislation fit so that people can come back to school. The only question that will come up somewhere along the line is who funds them, Advanced Education or us. It's not, to me, a big issue. It's the same government, so all we have to do is get together and work out the protocol.

MR. G. JANSSEN: I'd like to preface my remarks by saying to the minister that in our discussion earlier there was no intention on my part to indicate that he was in any way vindictive. It was simply to give him an opportunity to clarify some of the remarks attributed to him and other members of his side of the House and to relieve some of the anxiety that is felt by me and members in the community in which I live and the school my son goes to.

I'd like to canvass the minister on Alberni District high school, which, as he is probably aware, has some 1,400 students and was due for a renovation of between $10 million and $12 million. An architect was called in, because the school is desperately in need of work. It was built many years ago, in the late forties or early fifties.

I've got a small office in this Legislature here, and the office of the principal of that school is even smaller. In fact, when he's trying to conduct his business and run the school, he has people trucking through his office with various documents and so forth. He doesn't have room in that office to put in the computer and various electronic hardware that is now commonplace in other schools.

The library is located in an old crafts workshop — one that I attended. The crafts have now been moved out. The bearing walls were removed. It's considered unsafe in the case of even a minor earthquake.

When the school buses are unloaded, students have to climb stairs at the back of the school which

[ Page 7537 ]

are narrow and weren't intended for that purpose. The band must now pack their instruments up every time they move in and out of the auditorium, which they use for practice. They have to pack those instruments down hallways and through various rooms in order to store them.

The science room is completely inadequate. Storage is inadequate. Great strides have been made in science, and, as the minister indicated earlier, students from British Columbia excel in the sciences far above other students in Canada. But the teaching facilities in Alberni District high school remain in the category of the 1950s, whereas we're trying to teach technologies of the 1980s.

It's felt in Alberni that they had done their homework. They had called in the architects and made appropriate recommendations on the space requirements, modernizing the school and implementing the mechanics of the school: the washrooms, heating systems, insulation and so forth. They felt that they would be considered for funding this year. They were rather surprised to find out that greater priority had been given to other schools which had not, in their opinion, submitted as much information and were not as prepared to go ahead with the project as Alberni District high school was. I wonder if the minister could apprise me, firstly, why the decision was made not to go ahead with the reconstruction of that school at that period of time, and when the Alberni School District could expect to be able to go ahead with that much-needed project.

HON. MR. BRUMMET: I can tell the member that they are on the high-priority list. Generally when the proposal comes forward about renovations or building new schools, there is some investigation done — and thank goodness there is — as to whether it warrants spending a lot of money on it or building a new facility. So there are some studies that go on.

When those studies come in, we have to place them somewhere on the list. Let's say it's on the high-priority list. For instance, I can tell you that this year we were given $250 million, and just the absolute high priorities for this year were $370 million. What we have to do then is go back and reprioritize. The first priority generally is whether there is a significant safety factor. The next priority, which gets into the bigger money, generally is whether they have space for those students now.

Then we move down into renovations and fixing up. We are behind, and that's one of the reasons we have made a six-year commitment of $250 million a year. They are on the high-priority list. I guess the reprioritizing will determine at what point they come in this year. At this point in time, we have given them, I think, three-quarters of a million dollars under minor capital.

On my brief list it says "roof replacement" — and I don't know whether it is on that school or whether it's on another one — and "buses." So they have some money to work with in the operating budget. Those are usually minor amounts, so I am not going to make a big issue of it. Next year we will be putting again into minor and major, so at this point I am not sure whether we should spend a lot of money to fix that school up and how long it would last, or whether it should be a replacement. Those are the considerations that we have to make from time to time.

I am sorry I can't give more than telling you they are on the high-priority list, which puts them in these five years. Where we can slot them in the five years will depend on whether or not enrolment increases keep coming or whether they slacken off somewhere. In other words, the priority will always be a roof where they didn't have one before fixing up what is.

The other thing is that we have changed the space criteria to accommodate the computer rooms and many of the things that have come into the education program since, and so the space requirements — discretionary space and that sort of thing — are more generous now. Many of the schools don't fit the new space criteria, and as we get around to fixing them or doing a major renovation or building a new school, it will be under the new space criteria.

If it is a minor renovation and it will make it adequate for some time, we do the best we can to build in new space criteria.

MR. G. JANSSEN: Thank you, Mr. Minister. I am sure we will continue to press the ministry and meet with them to make sure that we either renovate that school or, if we are fortunate enough, build a new facility that will be much more modern and serve the needs of the community much better.

[4:00]

One other small item that's been on the agenda of the Alberni School Board for some time is the small Bamfield school, which has been on hold for some time. I recognize that only 50 students attend that small facility, but if you are familiar with Bamfield at all, you will know the school is located on the wrong side of the inlet. If the minister has followed my comments in the House on the Highways estimates, he will know there has been a 26-year attempt to have a road built to the other side of the inlet, which has not taken place yet. The students have to go back and forth across the inlet to attend that school. With the inclement weather that is usually in effect in Bamfield in the wintertime, it makes it a real hardship. The building is very old. Most of the students who attend that building are native students from the Ohiaht reserve at Pacheena. Garbage and supplies have to be taken back and forth across the inlet by boat.

There is a great difficulty in maintaining staff there. There is a shortage of housing for the teachers they are able to bring into that area. None of them stay very long because of the isolation. I realize this is also a problem in other communities, but in Bamfield it seems particularly acute. There is virtually no available housing in Bamfield for anybody to rent, much less schoolteachers.

The building was rat-infested at one time. There is a continual problem with rats that run up and down the beach. It's a small amount for a small problem that could be easily alleviated. However, it seems that

[ Page 7538 ]

the Bamfield school remains on hold, and I wonder if the minister could find it in his budget this year to make some movement on building a new facility in that small community.

They don't ask for much. Most of the people accept the isolation there, accept the fact that they have to travel two hours over a dirt road to get to and from there, accept that there are no garbage facilities, no water, no sewer. Asking for a decent facility for their students to go to school in seems to be a small request.

HON. MR. BRUMMET: I thank the member. I share his concern about some of the small, isolated schools. I was in the Alberni district two or three times. I haven't visited the Bamfield school, because I couldn't drive in — and we're not getting into construction of roads in my ministry — and I didn't have time to go by boat. So I haven't seen it, unfortunately, but I have seen many other parallel situations. All I can say is that if the board puts together their case.... For instance, there were three over and above the three-quarters of a million that I mentioned to the member. In the minor capital, some $332,000 was put into their budget for shareable capital. Was it shareable or non-shareable? Shareable in other words, they could direct some of the money there. We'll give them all the assistance we can to make those educational opportunities for the students in Bamfield as good as we possibly can.

As far as teacher accommodation is concerned, we don't provide that under the school operating or capital budgets, but there is a program, the School District Housing Act, which allows school boards, on a full-recovery basis for rent and that, to ask for approval to actually build housing, mortgage it in the normal way, and all they have to do is put the package together. Whether they are interested or whether the costs would be prohibitive in terms of rent, I don't know. In other words, we don't, through our operating or capital budget, provide free housing for teachers; but boards have a way to do it if it is a priority. We'll assist them in any way we can. All they have to do is discuss it with me or the ministry.

I can't meet with every one of the 75 boards who all feel that their school.... Everybody's got an older school in their district, and I can't possibly meet with all of them, but certainly my staff is aware and has the mandate to check with them, to go out and look at the buildings, and some of the staff, I know, have been there.

MS. A. HAGEN: I want to move to another topic now, one that I've discussed with the minister before I'm sorry that my colleague the first member for Vancouver-Point Grey (Ms. Marzari) is not able to be in the House today. She is ill. She and I had planned to share this discussion with the minister.

One of the matters that Mr. Sullivan dealt with and that all of us have to be concerned with is the question of gender equity within our school system. My colleague from Alberni and I were chatting, and we happened to use the example of a hairdresser. As I sat back and thought about that, I thought that it's just not the kind of example we should be using these days; we should instead be using the kinds of examples that my friend Marcia Braundy, who has done a lot of work in the province on women in trades and technology.... We should be using the perspective that she's coming from: that women will, in fact, be very much involved as teachers and as workers in trades and technology, which is the area of coming jobs. Service jobs are going to be there, but it's a bit like that comment of Mr. Sullivan's, that we tend to perpetuate the concept that people will choose certain jobs, and there is a perception that those jobs will be held by women.

It seems to me that one of the tasks is to work with very significant goals for change. The policy statements of the minister and the policy directions to which he has referred frequently over the last day or so really don't suggest much in the way of action; they suggest a lot in the way of monitoring how the system will work. The minister will place emphasis on enhancing student awareness, will provide information, will monitor how many people there are in the system. We need to move beyond that to some very definite action plans.

I think there are action plans, too, that have to reflect a changing view of the system, a system that is more feminine and female in its nature and orientation. Very often we tend to find that our education system reflects, just by virtue of the people in positions of authority and responsibility, a male perspective. If we look at who our principals and vice-principals are, even after years of some attention to this, something like 15 percent are women. When I was going to school as a young person, which happened to be during the war, there were more women principals than there are today. We've regressed rather than progressed. I recognize that I have had more experience than some people in the House, but I'm sure the minister and I share some time-frames in our early schooling and the role of women at that time.

I want to ask the minister some fairly specific questions about what his action plans may be — not plans that talk about monitoring, providing information and encouraging. I note that Ontario has provided some incentives for the improvement in numbers of women in positions of senior responsibility — just to mention one province that has translated goals into some very definite action plans.

First of all, I'm sure the minister is going to be happy to announce that there is a woman assistant deputy minister or associate deputy minister who, I understand, has recently been appointed to his ministry. Perhaps he could advise us if there are any changes or improvements since last year in the number of women who hold positions of special responsibility — ADMs, executive directors or directors — within his own ministry.

HON. MR. BRUMMET: I was looking at it from the perspective that we have selected and appointed a superintendent who was doing a great job, and who

[ Page 7539 ]

we felt could do a great job in helping us in the field to implement the royal commission report. I was thinking of it as a superintendent, not because she was a woman, but because she was well qualified and well suited to the position. I don't know; I don't keep track of who each position is filled by. I know that in the ministry the policy is that we do not turn away women because they are women; we generally hire on the basis of qualifications.

There are quite a few women in the ministry operating in various capacities. I'm sorry, I don't know all of their titles, but when I have meetings with other than the staff I'm surrounded with here at the moment, there are women at these meetings. They are in directors' positions in our ministry.

It's strange how an off-the-cuff reference to a job can suddenly be used against you. Hairdresser: I don't think I said female or male, did I? I think there are hairdressers who are male as well as female. I could just as easily have said someone who wants to be a truck driver. That is no longer the exclusive preserve of males — not in my mind. I've seen women truck drivers; I've seen men truck drivers. I don't know, there may be more of one or the other. I don't see anything gender-based in the hairdresser example I used. Maybe I'm not that focused on it.

The member said something about there being absolutely no.... We've got a policy statement and no indication of action — just monitoring. One of things we're monitoring.... Boards make the appointments, and we're working with boards, and we try to suggest that in our section on gender equity and in our policy directions that we put out. I'm sure the member has read them. I generally hate to waste the time of this House. But when something is clearly in there, and the member says there's nothing in there, then I feel an obligation to point it out: "Action: Ensure that new health and guidance programs include information about nontraditional work options for women and men. Host summer institutes for counsellors to provide information about opportunities for females." That's actually hosting summer conferences. "Encourage school boards to improve ratio of female students to female counsellors. Create resource packages to emphasize the role of careers in women's lives." That's not to think about or discuss. "Review existing authorized and prescribed learning materials for bias and for opportunities for enhancement of awareness of gender issues."

That process has started. As we revise textbooks, we'll be doing it. In No. 2 under the major heading "Increased Management Opportunities for Women," it says: "Encourage school districts and government to provide support to potential managers. Review hiring practices to ensure removal of systemic barriers, sex stereotyping, traditional male bias. Provide bursaries for upgrading leadership skills...." That sounds to me like definite and concrete action. "Provide bursaries for upgrading leadership skills of females in education. Ensure equal access to leadership and growth opportunities. Establish flexible working conditions" — in order to take away some of the barriers that prevent women from continuing as men do; for instance, flexible working conditions for women who might be away to have children, so family responsibilities can be shared and managed. "Increase accountability." I think we're moving a long way in that direction. We're doing the best we can, but not dropping all requirements for experienced qualifications.

[4:15]

MS. A. HAGEN: It is interesting, the different documents from which we can read. If one looks at the actual formal policy directions of January 27 published by the ministry, the information provided is not as specific as in the other document that I think the minister read from. It's called "School Act and Provincial Education Advisory Council." I understand that those are the recommendations that come from the advisory council to the minister. I certainly think there are, within those recommendations, some very concrete suggestions about actions that the minister might take; but to my knowledge, this is not a widely public document. In fact, it's not even dated. The one I have simply says: "Attachment to." I understand it's the summation of the decisions that were taken.

Has the minister in any way considered providing any affirmative action plans or programs that would encourage local school districts to increase the number of women in positions of senior responsibility?

HON. MR. BRUMMET: In January we put out a summary, and we've been adding details all the time. I thought that package had gone out in January as well, but I guess the one booklet that we put out — the policy directions — was a condensed version. If the member wants to say we've never put out a complete picture of all the things that are going to happen, I'll agree that we haven't, because we are still completing it. We say the conceptual outline, and then we try to fill in the parts. But we don't try to fill them in ourselves. We get the conceptual outline through the consultation process; then we go back into the consultation process and say: "Okay, let's flesh out what gives meaning to these." I'm sure that the ones I read to you will be fleshed out further as the process evolves — in other words, exactly what terms.

MR. R. FRASER: If I heard correctly, the member from New Westminster asked if the minister was going to influence school boards into putting women into positions of responsibility.

MS. A. HAGEN: No, I didn't say that.

MR. R. FRASER: In that case, I'll read the Blues or listen to you again.

MS. A. HAGEN: My question, Mr. Chairman, was whether the minister was considering incentives that would encourage school districts to have more

[ Page 7540 ]

women in positions of responsibility — more women in administration.

HON. MR. BRUMMET: I guess it's simply what connotation you place on incentives. There are a lot of incentives that I read: seminars, regional seminars with Advanced Education, helping people to attend those seminars. I think I pointed out some of the materials we would be preparing, encouraging boards to do the type of thing that will avoid.... If by incentives you mean paying them twice as much to put a woman in the position as to put a man, qualifications being equal, I would have to give that some serious thought.

MR. R. FRASER: I did hear correctly the member suggesting that the minister should influence school boards into putting women into positions of responsibility. If you want incentives, extra money, all that kind of activity, that's influence — pushing a board to make a decision, which a minute ago the minister said he couldn't do when your colleague from Alberni said: "Will the minister promise not to influence the board?" That's why you're never going to be government. That's why the NDP is never going to make it. They never know what they want. One member says, "Don't influence the board"; the next member says, "Do influence the board," suggesting that I was making some horrible mistake when some time ago I said students should take some responsibility for their lives. Why not? They've got to start sometime. Most of them want to take responsibility for lots of stuff, like driving the family car or their own motorcycle. They're trying to be adults. Yes, they should take more responsibility. I happen to support that idea.

And one more thing, Madam Member: don't put words in my mouth. I'll do it myself.

MS. A. HAGEN: Although we are not discussing that member's words, I'm sure his defence will be noted and observed in relation to his words.

To the minister: the minister then doesn't see that the systemic situation we have, with a very disparate representation of women in the field of administration, is something he would want to take action on in terms of some kind of affirmative action plan. I understand that he's saying they're prepared to provide some kind of assistance for people to take leadership training, but that he doesn't see an affirmative action plan in this area as something that would be within his purview or policy initiatives.

HON. MR. BRUMMET: Mr. Chairman, I'm starting to feel like a yo-yo. Maybe the person on the other side likes the up-and-down effect, but I can get my exercise in some other form. I would recommend that perhaps the member put a few questions together so that we can get on with my estimates rather than my exercise program.

Perhaps the member might not try to translate what the minister thinks; maybe she should stick to what the minister says. I had read to her: "Review hiring practices to ensure removal of systemic barriers, sex stereotyping, traditional male bias." I read that, and then you got up and said: "I take it that the minister does not concern himself with systemic barriers." Yes, I do, and we're trying the best we can.

MS. A. HAGEN: Let me save the minister some of his yo-yo response. I find that it's actually good to get up and stretch when we're in the House for a long time, but let me ask him three questions.

Interjections.

MS. A. HAGEN: We're getting there, Mr. Minister; we're not too far off schedule, so be patient.

Could you give us some indication of whether there is a textbook review going on at this time with a view to eliminating inappropriate gender stereotypes, and especially whether there's content being considered and included in textbooks that deals with women in the context of our cultural and intellectual heritage in Canada?

Two other questions regarding specific funding and curriculum development. There have been some excellent programs funded by the federal government, I understand, and targeted to young women students: Scientists in the Schools and summer science workshops for girls, organized by the Society for Canadian Women in Science and Technology. Has the minister given any consideration to funding such programs, which, particularly in the summer, provide opportunities for young women to move into what we unfortunately still call non-traditional areas of participation?

Finally, in that same curriculum development area there was a good deal of work done by home economics educators in British Columbia last year. An information bulletin that came from your ministry, I think, towards the end of 1988 set up the fall of '89 as the time to determine the direction and magnitude of change in the area of home economics. There were particular recommendations that home economics should be compulsory for all students at some level in the junior secondary grades; that the courses should be redesigned to appeal to both boys and girls; and that home economics courses should very much look at issues of paid and unpaid work in the family and at the relationship that that work, most traditionally still done by women, has to their value in our economy, so that young women have some opportunity to view the varying work that they will traditionally do as mothers in the context of its value to the economy and to put that in the perspective of paid work. Could you give us some advice about what is happening in that area?

HON. MR. BRUMMET: Mr. Chairman, I feel a little better getting up to answer three questions at a time. Textbook review to remove sex stereotyping or gender bias has been ongoing for a number years and will intensify. As we are adjusting and adapting the curriculum to deal with new approaches in education, of course it will all be screened for that. We

[ Page 7541 ]

haven't thrown out every book that was published ten or 15 years ago, but we're certainly screening them very carefully as new ones come out and trying to remove it.

As for science programs the federal government is into, that's a post-secondary initiative. We're very interested in it because it affects our students, but the types of jobs you're talking about seem to be more applicable to post-secondary.

As for home economics, I guess some work was started on that. In the Sullivan report we now have practical arts as part of the core curriculum, which could include all of the subjects. That will be reviewed as we review the total secondary school curriculum. It hasn't been tossed out; it is just going to become part of the package for study.

I might point out to the members, since once in a while I like to digress into some personal experiences, that before I picked up this job in 1979, and a few years before that, I managed to arrange the timetable in my junior secondary school so that every boy or girl in the school took home economics — foods, cooking or sewing — metalwork and woodwork, the four courses available in the school. All the grade 8 students took them, and we found that in grades 9 and 10, where it was voluntary, they chose at will. I was there a few years ago.

MR. CASHORE: I would like to spend a little time now talking about computers in schools in the context of what appears to be a disturbing trend in the gender difference in the use of computers, which is reflected not only in schools but in life beyond the school in the various fields that people go into after they leave the school system.

This is a trend that I don't raise so much as a critique of the ministry, because it is a North American trend. Some of the information I'm going to refer to reflects American research and some of it Canadian research. It's the type of issue that we have to put our minds to together, because when we consider the use of the computer and the way it is used by people in our society, if there is an imbalance, the computer, being such a powerful instrument, can exacerbate the gender differences that we want to be able to address.

There was an article in the Vancouver Sun on February 20, 1989, entitled "Why Boys Lead Girls in the Computer Race." It mentions that social scientists say that there are differences that lead to disparities in the limits on how far women can go in the computer business and that lack of computer skill has become a significant barrier to success. It points out that, given that computers are relatively new in our schools and are readily accessible to most people in our society, it was hoped that this might be one field where we would be able to move along with a very balanced usage between males and females, but apparently that has not been the case.

[4:30]

Educators and computer scientists say that it appears that women are losing many of the gains that have been previously made, and there's a UBC computer scientist, Richard Rosenberg, who says it's just one of the various ways in which girls are not encouraged the way boys are. I don't believe he means that quote to be a reference entirely to the school system; I think he's using it as a reference to the way we socialize within our homes. But certainly it's reflected in the schools. He also says that women clearly do want to have the ability to make effective use of computers.

In 1988, 84 percent of students enrolled at UBC computer science courses were male, and most of those students came out of our school system. He also said that before — and after-school use of computers — this would be the students who go to the computer room following the school day and the ones who go there earlier — is dominated by boys and that a 1984 study by Harvard University found that three out of four children enrolled at computer camps were male. A Stanford University study found that among grade 5 to 8 students from middle- and upper-income families, boys are more than three times as likely as girls to use a computer in the home.

Just one further piece of information. Women's principal involvement with computers apparently consists of painstaking but routine tasks like word processing and data entry, whereas males tend to be more involved in the sophisticated aspects of computer usage. Much of this research also points out that there is a socialized behaviour in society whereby males tend to be more into math, and there seems to be a relationship between that and the fact that this is sort of an entry into the use of computers.

I would like to ask the minister to comment on the use of computers in schools in British Columbia and to hear his comments on how we might be working to address the data that indicates there is a gender discrepancy in the use of this equipment, which is reflected later on in the way that the boys and girls who graduate from our schools take part in the use of computers in the workplace and their homes.

HON. MR. BRUMMET: I have to comment very briefly to the question at the end, where the member said: "What about the use of computers in the schools?" We don't distinguish. We're getting more computers into the schools. All students, regardless of gender, are taking computer training. They're using the computer as a learning resource. They will all become computer-literate, with no distinction.

I'm sure that posterity and the House and the readers of Hansard will be highly impressed with the member's opportunity to use my estimates to put on record that he's done some research into post-secondary and that sort of thing. But I'm not going to comment on that. I can't respond to it, because it has nothing to do with my estimates.

MR. CASHORE: Mr. Chairman, I think it does have to do with the estimates, in that we are canvassing the ways in which various ministries address the facts of the situation within the province. And presumably, being an educator, the minister is interested in hearing research data and bringing that to bear, so

[ Page 7542 ]

that he might do the best he can in producing an education system that is effective and worthwhile.

While I agree with the minister that the approach taken within the schools definitely does not seek to discriminate in who may use the computers, nevertheless, the data points out that we have to address the fact that, if you will, there's a socializing aspect to what happens, and that in actual fact, boys are much more computer-literate than girls. I think that is a concern for the minister. I don't put that forward as anything to particularly try to ruin the minister's day, but I think it's an appropriate issue to canvass during estimates.

Mr. Chairman, there's just one other comment I'd like to make, and it's a reflection on the fact there's been a tremendous transformation in the way people in our society think about the environment, which has been taking place over the last few years. If the Royal Commission on Education had been conducted a year later, I believe there would have been a very significant difference, both in the type of input that would have been made to the commission and in the flavour of the report. I think that some of the concepts of the Brundtland commission would have become part and parcel of many of the presentations made to the Sullivan commission. As we recognize the really important need to address the environmental issues, further to the work of the Brundtland commission, we really do see that part of the concept of sustainable development — which we have agreed to on both sides of the House — when it comes to education, really means that children, as they learn about nature, need a hands-on opportunity to relate to the concept of sustainability.

[Mr. Rabbitt in the chair.]

An excellent example of this is the recent, I guess, mini-disaster, when a diesel locomotive was derailed and spilled diesel fuel into a tributary of the Brunette River. Many children, students at Twelfth Avenue Elementary School, had in their school class raised salmon and released them into the river as part of a program within the Ministry of Education — and I commend the minister for that. They later wrote articles to newspapers and were interviewed on television and on radio, giving their response to this situation. I think that's an example of education that we can all affirm and want to see developed, as we hopefully see our educational approach being one that pays very close attention to the concept of sustainable development.

HON. MR. BRUMMET: I would commend to the member the reading of the mission statement, which concludes with this statement: "The students need to acquire the knowledge, skills and attitudes needed to contribute to a healthy society and a prosperous and sustainable economy."

MS. A HAGEN: I had hoped, Mr. Chairman, that the member for Atlin (Mr. Guno), who is returning from a speaking engagement, might be in the House by this time. But since he hasn't returned, there is a particular issue that he's asked me to raise, and I want to just take a moment to do that at this time. I think I know what the minister's response might be in respect to this, but I think that it's a local issue and of concern to families in Cassiar, in the member for Atlin's riding.

It's a small issue but a very fundamental one in terms of how parents may get some assistance in dealing with a matter that is of great concern to them. Apparently there is a policy within that particular community that is set, I would gather, by the principal. It says that children are not allowed to come into the school until a certain time of the day. These are small kindergarten children and are often arriving at school in very severe temperatures, in the minus 25 degree to minus 28 degree range. They apparently haven't been able to resolve this matter, and I think the member wanted to ask just exactly what offices of the ministry might be available in this regard. If there is an action on the part of a school that parents are not able to resolve, is there any means by which the ministry can be of assistance to that community of people to resolve that issue?

HON. MR. BRUMMET: Here is where I have a little difficulty between my personal views and what I can or can't do personally. I think it's easy enough for these students to be let into the school and accommodated. When I was in the school system, no kids stayed outside in the cold weather in my school. I know other schools that did it, and I guess I can't stop people from writing it into agreements. The teachers only have to supervise the children from nine to 12 and from one to three — if that is the issue; I don't know whether that is the problem there.

I find it difficult to accept as a professional, but nevertheless, if people do that, I guess they will have to try and work it out at the board level. Surely I can't come in there and order them to open the school at 8 o'clock, as I did when I was a school principal.

MS. A. HAGEN: I know a couple of times, when incidents have come to my attention from other school districts, I have found that a person in the ministry who I think has a school liaison role may be helpful in that regard. Is it possible that such a person might be helpful if the member brought this attention directly to your desk?

HON. MR. BRUMMET: When requests come in to my office or to the ministry, we do have a director or superintendent in charge of field services who tries to meet with them, do some liaison and see if problems can be solved. That could certainly be done. I don't take too many of them from the House here, because I don't know.... In other words, come to my office or write to my staff and we will do the best that we can.

MS. A. HAGEN: I know the member will probably speak to you directly, or to your staff, about that matter.

[ Page 7543 ]

I have just a couple of other matters that I want to raise before I do a brief summing-up of the estimates. I want to ask if the minister can advise the House what amount of income it is estimated the government will receive from non-residential taxes in the 1989 tax year to be put toward the government's share of school district funding.

HON. MR. BRUMMET: The money now goes into consolidated revenue, but they have a record and we can give you the information because we can get it from them. The guesstimate this year is $535 million.

[4:45]

MS. A. HAGEN: What I'd like to do is just take a few minutes to review and then conclude my comments on the estimates. It's been my commitment that we would hopefully finish at about the time I think we shall finish, or perhaps a few minutes before that time.

We've had an opportunity to discuss over the last several days quite a number of issues that have come to the attention of members on this side of the House and concerns of people with respect to this minister's handling of the affairs of education. I just want to be sure that the conclusions we've reached are ones that perhaps we can agree upon at this time. This is, if you like, in the nature of a wrap-up.

We talked a fair bit about fair taxes and about what fair taxes might be. I know the minister has at various times stated for the record what he believes to be a record to be proud of.

The Union of B.C. Municipalities has been spending a fair amount of time paying attention to trends in school budgets from the source of revenue. Although their figures are not right up to date, they do show certain trends. They show that the provincial share has increased over the last six years — those are the years I've been using, '83 to '88 — from about 52 percent to about 59 percent. That's a shift of about 24 percent of the total. They show that non-residential taxes have gone down significantly from 35 percent to around 21.5 percent, a decrease in their share of about 32.5 percent. That is beginning to change. The figure that the minister has just given us shows that the progression is for increased tax from that non-residential base. It will be useful to take a look at that in the perspective of the whole range of contributions.

The residential share has gone up significantly from '83, where it was at about 8.7 percent, to 15 percent. I would note that that is net of the homeowner grant. The grant is encompassed in the proportion that comes under the provincial share. That is an increase of 89 percent.

We have certainly heard from homeowners that they believe taxes are not fair, and that the percentage of increase that they are paying is excessive. The trend certainly bears that out: a 24 percent increase from the provincial share, 32.5 percent less from the non-residential base than they were paying in '83, and for residential taxes, an increase of 89 percent. It's interesting that the increase in overall budgets is really quite limited over that period of time from these sources: only 9.3 percent, which would not indicate that it's keeping pace with inflation.

We also talked about reform and improvements, a commitment that comes out of the royal commission. The minister indicated that he has begun the work, that work is going on in the Ministry of Finance and the Ministry of Education, and that there is some plan for consultation but no formal structure for that consultation outside of EPAC.

I took it that the minister indicated the government would be ready to institute change by January, for information to school boards in February, and that there could be legislative change in the next session that would enable tax reform to occur in the next tax year. That's a commitment that I take it the government has made or the minister has made on behalf of government in the course of these estimates.

We talked significantly about the royal commission and noted that the new money into the royal commission is not $1.4 billion but $1.1 billion. Something in the order of $270 million is actually coming out of the operating funds. We have $1.4 billion committed, but $1.1 billion in new money. The rest of it is being reallocated from current operating.

In the first year of operation, only 3 percent of that has been allocated from new money. There's some allocation — about $25 million — from other operating amounts. The largest single amount is for assessment and monitoring systems, with significant amounts for funding independent schools' curriculum and curriculum development.

We spent a fair amount of time talking about what was going to go into the new student record system. I believe the minister made a commitment that privacy, confidentiality, the usefulness of the records and the appropriateness of the records would be guiding principles. However, there is much that is still unknown about what will be in the records, who will use the information, how it will be used and how much of it will go to the ministry's office for recording and accounting there.

On the primary system, I think we've agreed that there are good movements there. Particularly, I understand the minister to have agreed that in-service for teachers will be in place to prepare them for this very significant change in their teaching. Some or all of the professional development days that are in the school timetable now will or may be used for such in-service, and I think we all presume that there will be additional time and resources required.

On the secondary system, there is still much to be fleshed out. It appears that there are significant changes in how the system will run. There may in fact be new deliverers of education coming under the secondary system, but the minister at this time has not been able to advise us of what may emerge from consultation. Nor has he been able to give us much information as yet about how that system will in fact evolve. But I think we've both agreed that there is a need for change and a need for the system to be open and accessible beyond the traditional graduation time of 18 or 19.

[ Page 7544 ]

On special needs, we've had some discussion. One of the things I had hoped was that the minister might particularly, given the social, human and health needs of students, be prepared to make a real commitment to elementary counsellors being one of the groups of people we would see recognized in the funding formula. The minister has maintained that that is a local option.

We looked at native education, and there was considerable discussion about the needs of our native students. I understood particularly that the minister was open to considering elders as language teachers because of the difficulty in having those people who are trained as teachers available to instruct and provide cultural and language experience for young native students.

We also talked about women and girls in the education system. I think the minister has become aware that some of the initiatives that he is committed to are not that much in the public domain, and I would hope that those initiatives would indeed be out there for public discussion so that we will be able to monitor the action of the ministry in that regard.

We've talked not at all about the issue of independent schools. I want to just note that in respect to independent schools, there are, I believe, disproportionate increases flowing to the independent schools in proportion to what has been made available to the public school system. When I look at the new proposal for 50 percent funding for the independent schools, that compares in a very interesting way to the kind of funding that's available in my school district from the government: a funding of 57 percent, up this year from 55 percent, to take into account the increased assessments and the effect that that was having on local taxpayers, an interim measure. We're looking at 50 percent funding for a very significant portion of independent schools. Taxpayers in my riding are paying 43 percent of the cost of education, and if we were to factor in the industrial commercial tax base, I think we would find that the taxpayers in New Westminster are paying virtually all of the cost of education.

The funding to independent schools has gone up 180 percent from 1983 to 1987-88 — in the period that I have been talking about as a kind of benchmark, because we have consistent figures right through for that time — while enrolment has increased 75 percent. We compare that with the overall increase of 9 percent in the funding that has gone into the public schools.

I began the estimates by noting that I believe the minister is a very hands-on minister and very much committed to his ministry, and acknowledging that there are some very good things that have happened in education. I noted that my role in these estimates was to raise questions of public policy and concern for consideration. Where the minister has been firm in his answers, I have appreciated those answers. Where we're genuinely looking at process, I recognize that this is an evolutionary process. I have been disappointed at times that the minister has not been more definitive around some of the initiatives he's taken, but I am sure that he's used to that particular comment, as he has noted on many occasions in the course of our discussions this afternoon.

We have had an opportunity to examine a significant number of issues that we will face again in the debate on the School Act, which I understand will be in this House some time before the end of June. I want to thank the minister, because I think some of the information he has provided in the course of these discussions will be helpful in assisting us to prepare for that debate. I look forward, along with colleagues on this side of the House, to giving him some more exercise in another few days on that historic occasion when, for the first time in something like 30 years, we are going to look at a full rewrite of the School Act. That in itself is something for which the minister should be commended and of which I am sure he is very proud.

Mr. Chairman, with those remarks I want to say that we have concluded our representation in respect to these estimates.

[5:00]

MR. ROSE: On a point of order, we promised to be out of this now, but before the minister speaks — and I would like him to close the debate — a member would like to make a very kind one-minute presentation. The minister will be really pleased with it. Can he proceed?

MR. CHAIRMAN: The second member for Vancouver Centre.

MR. BARNES: The opposition House Leader is quite correct. In fact, it won't even take a minute.

I just want to say that I commend you for responding to my written question on the order paper. It wasn't completely comprehensive, but you are the only one in your cabinet so far that's done so, and I want to thank you. I asked you a question with respect to the programs you have in place concerning multiculturalism in the schools and the initiatives you are taking, and I think you did a fairly good job of giving some answers and some leads. I want to thank you for that, and I hope you set an example for the rest of your colleagues.

HON. MR. BRUMMET: I thank the member. I'm not quite sure how to take it. I guess "a fairly good job" is high praise, so I'll accept it.

I do want to comment very briefly on the summary the member has made. In some cases it's accurate and in some cases it's a little bent, I guess, to suit the occasion or to suit the member's interpretation. Statements that I should have been more definitive — it was difficult for me to be more definitive on something that the committee hasn't put together yet.

I certainly want to thank the member for acknowledging that I have become aware of her recommendations that she got from the recommendations we put out in the policy direction; I do appreciate that. I was intrigued by her comment that the taxpayers in her district, or in some districts, are paying for all of the

[ Page 7545 ]

costs of education. I have never been under the illusion that the taxpayers didn't pay all of the costs of education, whether they route it through us or locally.

I know that much can be made of using percentages. For instance, $2 million in a $20 million budget is 10 percent, whereas $2 million in a $150 million budget doesn't even show up. Quite a bit is done to show in the different taxation, the independent schools, the increase.... The residential tax base may have paid, we'll say, $100 million out of a $2 billion budget, and then that has gone up to $200 million. Because of the dollar amount, there you are: a 100 percent increase, compared to only.... We only put in $300 million, say, from the government, and they put in their $100 million, so that is $400 million on $2 billion. It doesn't show up as an impressive percentage. But if you put the percentage in on the doubling of the residential tax base.... Most of that has been driven by local decisions. I'm not arguing against those; I just want to point it out.

The final one that the member interpreted.... I guess there's a degree of truth to it. Out of the new money that's put in.... We started out with $1.4 billion as our estimate to implement the royal commission report. As we went through that process, we found out that some of the things, like teacher in-service upgrading, curriculum development, and so on, were actually part of that money. So we didn't just say: "Leave it in there and duplicate it over here." In that sense, I guess, it came out, but it did not come out of operating expenses. Those functions show up over in the next category.

I thank the member for the direct questions she asked to which I was able to give direct answers. To the speculative and vague generalizations, I was able to respond in kind.

Vote 16 approved.

Vote 17: ministry operations, $106,504,198 — approved.

Vote 18: public schools education, $2,060,403,488 — approved.

Vote 19: independent schools, $57,145,917 — approved.

ESTIMATES: MINISTRY OF FINANCE
AND CORPORATE RELATIONS

Vote 25: minister's office, $316,724 (continued) — approved.

Vote 26: ministry operations, $72,847,295 — approved.

Vote 74: management of public funds and debt, $651,400,000 — approved.

Vote 75: contingencies (all ministries), $50,000,000 — approved.

On vote 76: new programs, $45,000,000.

MR. ROSE: Wait a minute. I'm sorry, I wasn't paying attention. Are you calling the votes on the Ministry of Finance and Corporation Relations before our critic is even here in the House?

HON. MR. VEITCH: Mr. Chairman, you asked the question: shall the vote pass? The vote passed, and I simply carried on. Which vote did you want to speak to?

MR. CHAIRMAN: Vote 76 is the vote before the House.

MR. ROSE: I'm pleased that the minister is here. I would be even more pleased if our critic was here. I do admit that I was having a little siesta, and I thought we were still dealing with the estimates of the Minister of Education. Nevertheless, we've disposed of those with a good deal of equanimity and a lot more pleasant atmosphere than we usually have with some of these votes.

Since we've been pretty general in terms of dealing with subjects, I would like to ask the minister whether or not he can tell us anything about this matter of the securities firm getting a reprieve from the merger because the local brokerage house is suspected of having links to a banker indicted on a U.S. racketeering charge with former Philippines President Ferdinand Marcos and having been given one week to work a merger deal with another firm. There have been allegations of racketeering and laundered money, and all these other kinds of inflammatory statements having to do with the people's business on the Vancouver Stock Exchange.

Interjection.

MR. ROSE: No, it isn't just us. We don't own the Globe and Mail, and we didn't raise this with the Globe and Mail. It's reported here in the "Report on Business," Friday, January 13. Could the minister enlighten us at all on this matter?

HON. MR. COUVELIER: As I understand it, the subject before the House is vote 76, which is new programs. I'm not aware that.... As a matter of fact, I can say that the new-programs vote doesn't deal with the Securities Commission or those kinds of activities.

MR. CHAIRMAN: Mr. Minister, the Chair would ask that you proceed, and a little latitude will be allowed to you and to your critic.

Interjections.

HON. MR. COUVELIER: As you can detect, Mr. Chairman, the mood of some of my colleagues evidently is that we should be dealing with the vote before us. However, I'm of the view that we should be broad-minded and generous-hearted. Therefore,

[ Page 7546 ]

in the interests of equanimity in this House, I'd be prepared and happy to deal with some of the questions put.

The hon. member was referring to a reprint, I gather — from what was in his hand — of some sort of published article. I don't have a copy of that article, so I am not positive of the point raised or the question asked.

MR. ROSE: Point of order. First of all, it was quite obvious to the minister what I was trying to do: I was just treading water until the member got here. So it's really impossible for the minister to comment too freely on my question at this time. But I do thank him and the House Leader of the government for permitting a general debate, as we usually do on the minister's salary: we don't hew to just the minister's salary; we usually discuss all the various votes and then they all go through just as fast as the Minister of Regional Development (Hon. Mr. Veitch) tried to smuggle the last ones through.

If we can revert to our critic, I think everyone would be relieved, especially me.

MR. CHAIRMAN: The second member for Vancouver South on a point of order.

MR. ROGERS: No, thank you, Mr. Chairman; I wish to ask questions of the Minister of Finance. He is so seldom around any other place that I thought since he was here I would take advantage of this chamber to ask him some questions.

The question, Mr. Minister, is one that is brought to Ministers of Finance every two or three years. It concerns the speed and dispatch with which your ministry and its subsidiaries — that is to say, the comptrollers in all the various ministries — take it upon themselves to pay their creditors or their suppliers, as the case may be. Every now and then the subject is brought up in the House, and ministers decide that all the minor and not so minor suppliers will be paid expeditiously and in reasonable time. Then, of course, we slip back into delinquency. I am afraid that the ministry has slipped back into delinquency, from the reports I receive from various constituents of mine and other people throughout the province who have supplied goods and services to the province and have waited up to three months to, be paid.

I was wondering if the minister could advise this committee whether he has looked into the matter and whether he could not prompt some comptrollers, especially comptrollers who work in his department, to see that not just the MLAs but other people who supply goods and services to the government are paid promptly. Perhaps if we had an idea of the average delay that people can expect, it might make me feel a little easier.

[5:15]

HON. MR. COUVELIER: The question is presented to me fairly frequently, and so I am pleased to have an opportunity to set the record straight. The policy of the government is to pay accounts payable within 30 days or at the 30-day time-frame.

If there are any specific instances that I might examine, I would be pleased to do so. I can tell the House and the hon. member that invariably, without exception, when I have been given a specific complaint and a specific supplier with specific invoice or invoices, I have always found that the delay and difficulty sat in the control of some functionary in one of the line ministries who must approve the bills. I trust the House would agree that I, as custodian of public moneys, could not and should not embark on an account-payable payment spree that didn't include in its parameters an approval process by the ministry receiving the goods or services. I have found that, without exception, the failure to meet that 30-day deadline that we attempt to operate with arises purely and simply from that fact.

In fairness to the line ministries, I can also tell the member and the House that upon examination of many of the requests or complaints that I have received on this matter, it has developed that the field office of the ministry involved has had some disputes with the supplier in terms of quantities, price or whatever. The majority of the delays can be laid to that fact.

Nevertheless, I repeat my offer. If there are any specific complaints or material that can be provided to me, I will be very pleased to monitor and determine the cause of the delay, and hopefully resolve it.

I might also mention to the member that with some suppliers who, by virtue of peculiar arrangements — that is to say, steady, consistent billing, monthly, that kind of standard submission-of-invoice procedure.... We have arranged in those instances for what we call fast-tracking. It's not something, of course, we are able to offer universally, but we do offer it in specific instances where it can be justified and where the due-diligence, custodian role that I have is not violated. I'll be very pleased to work with any member of the House who has a specific problem in this respect.

MR. CLARK: I know the member for Vancouver South understood the answer to that question, anyway.

I want first to apologize to the minister for my delay in getting here. I was under a different view; I thought we were going to bills. In any event, I appreciate that we'll be able to continue to canvass the minister's estimates for a few more hours. I thought I would start where I left off, with some questions about the government's financial statements and the differences between the various sets of statements. I know the minister has had a few days, and he sent me a letter saying that he would be prepared to answer some questions. Maybe we could start off with a simple question: what is the difference between the consolidated revenue fund and the general fund?

HON. MR. COUVELIER: The consolidated financial statements include the consolidated revenue

[ Page 7547 ]

fund plus Crown corporations' and agencies' financial statements. Each publishes its own, of course. The general fund is a subset of the consolidated revenue fund, as are the special funds.

The difficulty we've had in discussing this matter in the past lies, I believe, in the debate we had a year ago, wherein we made some changes in an attempt to oblige the interests of the comptroller-general and the auditor-general's suspected concerns, and created some new special accounts. The general fund statements consist of the main operating budget and special accounts. They become part of the consolidated revenue fund.

MR. CLARK: The minister agrees with me today that the general fund is a subset of the consolidated revenue fund. I wonder if the minister could tell the House which set of statements — the general fund or the combined financial statements — most accurately reflects the bottom line of the government.

HON. MR. COUVELIER: The general fund, I believe, would be the operative statement.

MR. CLARK: It's kind of interesting that the minister could say that he thinks the general fund most accurately reflects.... I wonder if he would explain to me why he does not agree with the auditor-general, who says that.... In fact, I'll read him page 205 — I see he has the auditor-general's report. It says:

"In a presentation change in the 1988-89 estimates, the general fund was used as the main reporting vehicle, rather than the consolidated revenue fund. As a result, the estimated deficit for the consolidated fund for the 1989 fiscal year was not shown. We believe that emphasizing the general fund deficit is potentially misleading to readers because it can be arbitrarily and significantly adjusted by transfers to or from the special funds. In future, we believe the estimated deficit of the consolidated revenue fund should be clearly identified in the estimates."

In fact, the auditor-general agrees with me: that the consolidated revenue fund is a truer picture of the bottom line; in other words, the deficit or surplus position of the government. I wonder if the minister could tell the House why he believes a subset of the consolidated revenue fund more accurately reflects the bottom-line position of the government.

HON. MR. COUVELIER: All three sets of the government's financial statements accurately reflect the financial position of that portion of the government's operations being reported on. I point out that the auditor-general has expressed an unqualified opinion on each set of statements. The public accounts make no reference to main financial statements; they are sequenced from the smallest entity, the general fund statements, to the largest, the consolidated statements.

The government produces three sets of financial statements to meet different needs. One set of financial statements cannot provide adequate accountability for something as large and complex as government. Our position is supported by the auditor-general of Ontario: "No one set of financial statements can be considered the main financial statements." In this regard, we disagree with the auditor-general, who holds that one set of financial statements should be considered more important than another.

MR. CLARK: I wonder why the minister and the government would choose.... He said today that the general fund is the main account that should be kept and reported to the public. Why would he say, as he said a minute ago, that it's accurate to the extent that it reflects a portion? Why would the minister use the general fund, which only reflects a portion of the government's financial transactions, rather than the consolidated revenue fund, which includes all the government's financial transactions, except for Crown corporations?

HON. MR. COUVELIER: The government frequently refers to the general fund statements because they present the results of the government's operations and financial position in a manner that is directly comparable to the estimates approved by the Legislature. This provides the basis for accountability to the Legislature on how voted appropriations were spent. It is a fundamental principle of the parliamentary system of government that the government of the day is accountable to the legislative body for how it spent the money authorized.

It seems to me that were we to attempt to deviate from the published format of the estimates, the members opposite would then be able to take the position that we were somehow or other trying to obfuscate the facts. It seems to me we have them on the horns of a dilemma. On the one hand, they're trying to claim that we're not presenting that kind of information accurately; on the other hand, I know very well that were we to deviate from the standard practice of presentation, they would then make the same argument, only with a reverse set of facts.

The member talked about the combined statements. The combined financial statements show the results of the government's operations and financial position on the basis of the consolidated revenue fund: that is, the general fund plus budget stabilization and privatization benefits funds. These statements are required by the Financial Administration Act, and report the government's financial results unadjusted for the economic cycle, the revenue or the budget stabilization fund, and include the results of the privatization initiatives which are contained in the privatization benefits fund. On the other hand, the consolidated financial statements show the results of operations and financial position of the consolidated revenue fund in certain Crown corporations and agencies.

These statements demonstrate the government's stewardship of public assets administered by these Crown corporations and agencies and summarize the impact of the public sector on the economy of British Columbia. Financial statements that include a high level of aggregation, like the consolidated financial

[ Page 7548 ]

statements, can obscure the government's accountability for spending in accordance with the estimates. That is, an unusually large surplus in B.C. Hydro could offset a deficit in the government's direct operations.

Good disclosure and accountability requires all three statements that we publish in the public accounts. That is why we disagree with the auditor general that the consolidated financial statements should be considered the main financial statements of government. Our commitment to excellence in financing reporting is why B.C. is regarded as a leader in public sector financial reporting. Indeed, I can tell the House that we look with some pride on the view of those who are experts in the matter of presenting public accounts that our province is in the forefront of provincial jurisdictions in Canada in presenting our statements in a clear-cut, logical way that allows members of the opposition who wish to nitpick and obfuscate issues to be able to follow our estimates and reported results in a way that makes their task easier. I would have thought that that was something that was a desirable objective. If the hon. member would like us to obfuscate and hide, using smoke and mirrors, then of course we can consider obliging him. But my view is that most British Columbians prefer the straightforward accounting practices that we have employed here.

MR. CLARK: Some bureaucrat was up late into the evening trying to write this presentation that the minister has just given. I commend the bureaucrat for the ability to understand the mind of the minister, because it sounded very much like many of the speeches we've heard from the minister in the House That's a real tribute.

I have to admit, though, that the speech brings a new meaning to obfuscation. For the minister to say that such a high level of aggregation would be a real concern, and therefore that that's a justification for a subset of the real financial statements of the government to be used as their so-called real financial statements is beyond me. It seems to me that the auditor-general is absolutely clear — and it's something which I very strongly agree with — that the general fund is misleading because it can be arbitrarily and significantly adjusted by transfers to and from the special funds, which is exactly what we've seen with this administration over the last little while.

[5:30]

Before I talk a little more about that, I wonder if I couldn't get some answers, though, on the latest volume of Public Accounts we have. Some of the differences between the general fund and the combined statement are kind of curious. That's where we get the arbitrariness of the BS fund exhibited. For example, on page A7 of volume 1 of Public Accounts, it says that we have a deficit of $790,933,000. It says that the other big change is due to Crown corporation increases of $519,745,000. I wonder if the minister — and his staff is here — could tell us what that $519,745,000 represents, because it's a significant figure.

If you turn to B7, which is the real statement of the government, the consolidated revenue fund, you see that due to Crown corporation decreases of $223,160,000, the real deficit for that year was $48 million. So the big change in the two statements, which are the changes in cash and temporary investment, is contained in those two things: one is the deficit and the other is due to Crown corporation operating transactions. I wonder if the minister could explain this discrepancy between the "due to Crown corporation increases" number on A7 and the "due to Crown corporation decreases" number on B7.

HON. MR. COUVELIER: We sort of left off at this point the last time we met on this subject, I believe. The difficulty the member is having, I believe, is that one is basically a cash-flow statement; that is to say, the general fund and special funds converted to special accounts contained on page A7 is a statement of changes in cash and temporary investments. So I trust that helps.

MR. CLARK: The minister is agreeing with me. It is a statement of changes in cash and temporary investments; it is a kind of cash flow. What I'm wondering is: on A7 it says we have a deficit of $790,933,000, and on B7, it says the deficit is $48 million, and yet the total financial requirements of the province in terms of borrowing, etc. are exactly the same. So why would the borrowing requirements — essentially the total financial requirements of the province — be exactly the same, when in the general fund it says we have a deficit of $790 million and in the consolidated revenue fund it says the deficit is only $48 million?

HON. MR. COUVELIER: The answer is simple. The general fund had a deficit of $791 million in '87-88; the budget stabilization fund had net revenues of $743 million. When you add the two together to produce the combined financial statements, you get the '87-88 combined deficit of $48 million. When you add the net increase in value of the government's investments in Crown corporations and agencies, you arrive at a surplus of $70.7 million on the consolidated financial statements.

MR. CLARK: Mr. Chairman, I wonder if the minister would agree with me that the total financial requirements of the province are the same, because in fact there is no money. There is no increased borrowing associated with this $790 million deficit, because there is no $790 million deficit; there's only a $48 million deficit. What's happened is, the BS fund is like an IOU note to yourself. I owe you $740 million, but because you owe the BS fund $740-odd million dollars, it doesn't change the financial requirements of the province, because it's an IOU. You don't actually have to borrow any money to put it in there. That's why the total financial requirements of the province are the same in both the general fund and the consolidated revenue fund.

[ Page 7549 ]

HON. MR. COUVELIER: Well, we're having some difficulty on this side of the House with the rather loose terminology. Financial requirements and deficit are not the same thing. To the member's comment that the budget stabilization fund is a book account rather than a dedicated bank account, we, of course, agree; that's a fact. There's nothing new or startling about that. I'm surprised that it's worthy of comment. The fact is that the cash needs of the province are managed very efficiently by a small, dedicated band of staff members, who go to work at 5:30 every morning and take off the accumulated bank balances on our 2,300 bank accounts. It's that management of cash that sets B.C. apart from some of its provincial counterparts elsewhere in the country.

I might add that this small, dedicated band of staff members are extremely competent and very highly regarded among their peers in the private sector financial community. As a consequence of their efforts, we have been able to quantify a very considerable multi-million dollar little profit centre by virtue of managing public money effectively.

The fact that in the past we have had windfall revenues — which this government chose to isolate for a rainy day when it might arise — doesn't change the basic truth that because those windfall revenues are expressed in cheques, cash and other deposits to our credit, that little band of five people I described earlier manage it as it's received daily. The effect of those windfalls is to reduce the need for us to borrow. It reduces our cash borrowing requirements and is a very useful tool for us to use to ensure that the public get absolute maximum value out of our management of public money.

It's something that I think we can speak with some pride about on this side of the House. Insofar as I arranged a tour of that very function early in the mandate of the opposition's term, I'm sure that the hon. member would agree with me that the valued work of that dedicated band of staff members deserves applause and support. I'm delighted to see that we're ad idem on that important point.

The fact that the BS fund — as you call it; those of us accustomed to using the Queen's English in its proper form would describe it as the budget stabilization fund — isn't a dedicated bank account was accepted when we created the fund. It's merely a book entry so that rather than creating a deficit in some future year, we'll be able to draw down the budget stabilization fund and thereby avoid deficit budgeting. I would hope that all sides of the House would wish us to avoid going into debt in order to pay for operating costs. I would hope it's an admirable objective, and something that even those of different political persuasion might agree would be in the public interest.

I'm somewhat at a loss to understand this fascination with the provision of a rainy-day account. It seems to me that that's something that the public themselves take comfort from knowing is there, and it seems to me, I can tell the member, that certainly the rating agencies — those agencies which determine how well managed public accounting and public funding is in this province — are impressed with the fact that we, in the relatively short space of being in office for only two and a half years, were able to provide up to a billion dollars worth of reserve funds for a rainy day. That's an accomplishment that cannot be matched or even remotely equalled in any other province of the country, something that the rating agencies have commented to me about in very glowing terms.

Let's remember that it's not my money, it's not the government's money, it's not the opposition's money; it's the public's money, and it's incumbent upon us to bring the same kind of mental discipline to the management of their money as we all bring to the management of our own personal moneys. This is a record that the government is very proud of. I think that our accomplishments in this field have received national attention.

Interjection.

HON. MR. COUVELIER: Indeed, if the members opposite would like me to provide them with reprints of articles in various financial journals over the last 12 months, I'd be very pleased to provide these. They speak glowingly and encouragingly about the dramatic progress this province has made under this administration. All of us on this side of the House are very proud of those achievements. I trust that even the socialists across the floor might agree that we've done pretty well by the citizens of this province during our two-and-a-half-year mandate.

MR. CLARK: I wonder if the minister would agree with me that if we had $5 billion in the book account — the BS fund — and showed a $5 billion deficit in the general fund as a result, there would be no more cash requirements needed. Our cash requirements would be exactly the same.

HON. MR. COUVELIER: I have always said that my objective, as someone who is given the trustee responsibility for these matters, would be to ensure that our interest revenue exceeds our interest expense. I've not been one of those who is fascinated with the need to eliminate the accumulated deficits if, in fact, the debts associated with those deficits are of a relatively low-interest-bearing obligation. We have some of those, and as a consequence it's prudent for us, I think, to attempt to maximize at all times the return to the taxpayer, who, I trust, we're all trying to serve, each in our unique way.

MR. CLARK: I didn't hear an answer there. I'll phrase it a different way.

MR. WILLIAMS: Five minus five is the question.

MR. CLARK: That's exactly what the question was.

Would the minister agree that the size of the BS fund and the deficit associated with that in the

[ Page 7550 ]

general fund statements have absolutely no bearing on the cash requirements of the province?

HON. MR. COUVELIER: The cash requirements of the province are a dynamic that changes daily. It's a function of accounts receivable collected, accounts payable paid, notes due — it's a combination of many factors. The hon. member, I trust, is aware of that truth.

MR. CLARK: I won't belabour the point except to say that the general fund is essentially a fraudulent set of books. It's a fraudulent set of books because what it does is....

HON. MR. COUVELIER: On a point of order, I hope that we can maintain a relatively high profile and gentlemanly way of conducting this discussion. I would remind the hon. member that if we're going to get difficult with each other, the subject before us is a special vote; it isn't matters of this wide-ranging import. His choice of the word "fraudulent" is objectionable, and I would ask that he withdraw it.

MR. CLARK: The books demonstrate very clearly....

MR. CHAIRMAN: I presume the hon. member is not attributing an improper motive to an hon. member of this House. Is that correct?

MR. CLARK: Absolutely not, Mr. Chairman. I was referring to the books, not the minister at all.

HON. MR. COUVELIER: Point of order. I'm surprised. I'm a trustee of public money. To suggest that the books I attest my name to — and the auditor-general attests his name to, might I add, and the comptroller-general and others — have presented a fraudulent set of statements, I find objectionable. I think it's beneath the dignity of this House, and I ask the member to withdraw that reference.

MR. CHAIRMAN: The inference is one that is directed towards the Minister of Finance, and if the member could withdraw that and find a more appropriate way of wording the meaning of what he wishes to put before the House, it would be much more appropriate.

MR. CLARK: Mr. Chairman, I withdraw completely any reference that impugns the motives of the minister. I will say it completely differently.

What happens with the general fund is that it is an incomplete set of accounts which essentially, in my view, misleads the public as to the true nature of the balance sheet In British Columbia. Essentially, that is what the auditor-general has said; precisely, that it is an inappropriate set of accounting statements. In reality, the auditor-general and the comptroller-general sign the statements because they are valid; but they are only a subset of the real statements that have always been used in British Columbia until this administration came to office.

[5:45]

What I would like to do now is show to the House, maybe through the minister, what the real deficit has been. In the public accounts for '87-88, the first year for which we had the general fund, we know that the deficit was really $48 million and not $790 million, which is what the general fund states; but the consolidated revenue fund, the true accounts of the province, show $48 million. The way to do that, Mr. Chairman, is you look at revenue minus expenditure, and then you deal with the BS fund and the transactions that are on the books.

[Mr. Pelton in the chair.]

If one looks at '88-89.... Next year, Mr. Chairman, when the public accounts are published, what will the deficit be in the consolidated revenue fund — not the deficit that the minister has portrayed but the consolidated revenue fund deficit? Well, if one reviews '88-89, one sees that revenue minus expenditure gave a $316 million surplus. The BS fund had accounts of $691 million added to it, and $691 million minus the $316 million surplus showed what the government showed in the general fund, which is a $375 million deficit. So last year, the deficit in the general fund was $375 million, but the real number the auditor-general will show next year in public accounts is a $316 million surplus last year. This year the projected number, according to the government, is a balanced budget, but if you take revenue minus expenditures you get a deficit of $375 million. The BS fund is $500 million taken out and $125 million put in, for a $375 million net, so the government's general fund statement shows zero. So the true deficit, the true statement that reflects the province's balance in the consolidated revenue fund, is $375 million.

I wonder if the minister would agree with me that last year the consolidated revenue fund will show a $316 million surplus, and if projections hold next year the number in the consolidated revenue fund will be a deficit of $375 million.

HON. MR. COUVELIER: The member seems to be trying to make something of the fact that we, in exercising our management responsibilities, having been elected for that purpose, may I remind the member, have decided that in the years when we have windfall revenues — that is to say, revenues we didn't budget for and didn't foresee, revenues that to all intents and purposes were unexpected and in most cases single issues, which is to say not likely to be repetitive in nature — we would isolate those funds and create a rainy-day fund with them. That seems to trouble the member, and he's trying to make out that by virtue of this device we are somehow misrepresenting the truth. Nothing could be further from the truth than the allegation. It's totally unfounded and baseless, and frankly an issue that has been debated at length already during the debate on the budget more than a year ago when we created the

[ Page 7551 ]

budget stabilization fund in the first place. It's a philosophical difference of opinion.

Those of us in this House, having won the right to make the decision by the vote of the constituents in British Columbia, decided that we would isolate one-time windfalls. We would not spend them as other governments have done elsewhere in Canada and around the world. We would create a special account or fund, and that fund would be used whenever there was a rainy day in the future, to avoid us having to deficit-budget.

It's been described by members opposite as being somehow devious. Nothing could be further from the fact. The fact is that it has been up front. We told the Legislature what we were up to and why we were up to it, and we still feel steadfastly today, as we did the day we created the rainy day fund, that it is the morally correct way to manage public money.

When we receive windfalls that we do not expect, we don't rush off on a buying spree. We set those funds aside so that we can prevent having to borrow or to deficit-finance in the future. I even asked for a public dialogue about how big the budget stabilization fund should get, and I trust the hon. member remembers that. At that point, I suggested that $500 million in the budget stabilization fund would be sufficient for a rainy day. As a consequence of receiving comments, letters and phone calls on the subject, it was perceived that probably a billion dollars was closer to what would be a suitable figure that we might set aside during good times. This year we reached the billion dollar figure, and I am very proud of the fact that after two and a half years in office, we have been able to set aside a rainy day fund of that proportion.

In the event that we enjoy or have larger revenues this year than we budgeted for, we will very seriously consider diverting those windfalls into the budget stabilization fund again. We will make that decision at a later time, after we have determined the sums involved and the potential impact of moving additional dollars into the budget stabilization fund. That's not something I am prepared to predict today.

Nevertheless, I acknowledge to the member opposite, and indeed to the entire world, that this government has a philosophical belief that we should not be spending these one-time windfalls in the year in which we get them. I believe that's in the public interest. We are determined to proceed with that course of action.

MR. CLARK: I wonder if the minister could explain, since he is so proud of the budget stabilization fund, the book account, why it is that the set of financial statements the government uses excludes the transactions and year-end balance of the budget stabilization fund. Why would he choose a set of statements that excludes the transactions and year-end balance of the BS fund?

HON. MR. COUVELIER: I read into the record a description of the fact that we have three statements that present the financial affairs of the province. I can read it in again if the member wishes it. The key point regarding that presentation was that the auditor-general gave unqualified opinions on the material in those accounts.

Whether we have a difference of opinion with the auditor-general as to whether we use a cash-flow statement to base provincial performance on or we use an operating statement to base performance on, it seems to me, is dancing on the head of a pin. We can continue to dance, of course, but why don't we get on with more substantive issues?

MR. CLARK: I've listened to the minister intently, of course, and I must say that I take great exception to the last point, because we are dealing with a fundamental question as to what the true picture of the province is. The auditor-general has said very clearly that it's misleading — the general fund — and that it can be arbitrarily and significantly adjusted by transfers to and from the BS fund, which is exactly what the government has done, and therefore the government is not representing the true bottom line, the true deficit number for the province of British Columbia.

That's hardly dancing on the head of a pin. It's a fundamental question that the government has chosen to use a subset of the real financial statements of the province, the consolidated revenue fund.

I'll put that aside for a second. I wonder if the minister, however, given that he is defending the general fund as opposed to the consolidated revenue fund, would in spite of that agree with me that the '88-89 fiscal year in the consolidated revenue fund will show a $316 million surplus and not, as the general fund did, a $375 million deficit.

HON. MR. COUVELIER: We won't have the year-end completed for another month or two, as the member I think is aware. There is a process that we call the thirteenth month in which we recapture all the figures and try to present a full, complete and open statement of operations for the year. That statement will be out in its final figure as usual in about two or three months' time. So I can't confirm any figure for the hon. member, much as I would like to oblige him. Until we get all the invoices in and look at all the offsets and deduct items billed that weren't received and all that sort of detail, I can't give him a final figure.

MR. CLARK: Given the information available to us now in the budget — if that information proves to be as presented — I wonder whether the minister would agree that.... If he wants to, he can look on page 80 of this year's budget, and it will show very clearly, given the information and estimates presented there, that the consolidated revenue fund will show a $316 million surplus in '88-89 and a $375 million deficit in '89-90, the exact numbers subject, of course, to verification in Public Accounts when they come out. But given the information that we have before us in the budget, would he tell us whether those aren't the two figures which would be pro-

[ Page 7552 ]

jected had we had a consolidated revenue fund picture there and not just the general fund?

HON. MR. COUVELIER: No, Mr. Chairman, I'm not prepared to agree with that. I read into the record the fact that we have three different statements, that each statement has its own purpose, and the auditor-general has confirmed that the figures contained in each of those statements are accurate.

The member is beating this poor animal unmercifully. It does seem to me that the issue has been well discussed. Try as he might, the hon. member isn't going to convince this side of the House that we should be treating the budget stabilization fund in any different manner than we are. If he wishes to talk about any one of the three statements, that's fine, but to suggest that we are being devious in any respect, I take wholehearted exception.

I trust I've made my attitude plain.

MR. CLARK: The minister has said — and I agree with him — that there are three sets of financial statements for the province. In the budget they've chosen to show only the general fund statements. Given the budget documents that are here, it's very easy to go from the general fund to the consolidated revenue fund. All you have to do is include the transactions of the budget stabilization fund.

Given the numbers in the budget, can the minister confirm for me that the consolidated revenue fund, which is another fund that the government will come out with statements on at some point fairly soon, at least with respect to 1988-89...? The minister has said very clearly that the consolidated funds are another set, and a valid set, just as the general fund is a valid subset of that. Why won't he confirm for me what the consolidated revenue fund number will be, or is, on the basis of figures contained in the budget? I'm at a loss to understand why the minister won't explain what the consolidated revenue fund will show, given that the numbers are here in the budget. It's a simple matter of subtracting and adding transactions in the BS fund.

[6:00]

HON. MR. COUVELIER: I do believe that I've answered the question about ten different ways. It does stretch the imaginative capacity of this poor individual to dream up another way of saying the same thing.

As I've indicated, I do not agree with the comments made by the hon. member regarding the propriety of our practices. I do not agree with the hon. member in his criticism of the creation of the budget stabilization fund. I do not agree with the member when he talks about which statement he wishes to place emphasis on at any particular time. I do not agree with the auditor-general when he disagrees with the auditor-general of Ontario in this respect. So we have a few minor differences. But the fact remains that we have unqualified statements of approval from the auditor-general in the matter of the material contained in the statements. As to which particular statement a member wishes to embrace as the definitive statement, we obviously will continue to have a difference of opinion.

In any event, Mr. Chairman, I'm pleased to move that the committee rise and report substantial resolutions and ask leave to sit again.

The House resumed; Mr. Speaker in the chair.

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

HON. MR. RICHMOND: I call committee on Bill 27.

WORKERS COMPENSATION
AMENDMENT ACT, 1989

The House in committee on Bill 27; Mr. Pelton in the chair.

Section 1 approved.

On section 2.

MR. SIHOTA: I missed second reading debate on this matter, and I want to thank my colleague from North Island for having covered for me. I must let the minister know right off the bat that we will be supporting this legislation, so I don't think that we'll be spending much time in terms of going through committee stage of the bill.

I do have some concerns that I will be raising in this bill. Just for the minister and his staff, who I see are in the House, we will really be dealing with section 7 of the bill and section 8. That's where I intend to focus my discussions. It is a bill that I think is predicated on the recommendations, to a large measure, of the Munroe commission, recommendations which I know have been unanimously accepted by labour and management. Therefore I would bow to their wisdom in most cases.

Section 71(8), which is being dealt with with section 2 of the bill, is a section which on the face of it seems to be relatively straightforward in making a number of technical changes. The section provided the commissioners with the authority to investigate an accident or death of a worker and to inspect and inquire with respect to health and safety matters.

In my view, the governors should have also inquiry and investigation powers. While one would assume that these would not be exercised very often, they may be needed to deal with serious questions, to conduct policy hearings or to engage in policy determinations. That may just happen in any event, and I assume that given the difference that I've referred to in terms of deleting the reference to the commissioners, the minister would agree with me that their ability to deal with the types of matters that I've referred to are not in any way fettered by the changes in the wording.

[ Page 7553 ]

HON. L. HANSON: The member is correct. The primary role of the governors will be a policy-making role, but there is nothing that would prevent the governors from participating in an investigation. The governors would always have the option of requesting the president to coordinate or personally take part in an investigation and then report back to them, so I don't see that there's any fettering of the right of the governors.

Section 2 approved.

On section 3.

MR. SIHOTA: Several sections fall within section 3, unfortunately, so I'll let you know in advance, Mr. Chairman, that I will go from sections 79 to 85 and ask questions as they're numbered here, although it all falls within section 3. That might make it easier.

The first matter of some concern to me within section 3 is section 81, which deals with the appointment of individuals prior to their appointment. The minister, of course, has said both publicly and privately that he is committed to a course of consultation with respect to the appointments enumerated in section 81. Past ministers have not always done that, and one wonders whether or not consultation should be required by law prior to the appointment of these individuals.

That's the first issue that arises. I don't know if the minister looked at that matter of consultation being required by law.

Secondly, the matter of vacancies: there is no time limit in terms of when vacancies will be permitted. A 60-day or 90-day provision, some type of time limit dealing with the length of a vacancy, would also seem to be appropriate.

I wonder whether we could have the benefit of the minister's thoughts in that regard.

HON. L. HANSON: On the omission — if the member wants to classify it as that — of specific organizations for consultation, I think the member would agree that the requirement is very clearly stated in the act, but it becomes a very difficult process to name every organization that might have to be consulted before someone is appointed to represent a certain interest within the community. I think the member would agree that if a proposed representation is in conflict with some of the communities it's supposed to represent, that information would be very quickly communicated to everyone. I guess a very basic principle is that if consultation is not carried through, the concept of the board of governors and the consensus that was reached would cause failure of the system. I think the member can agree that this would certainly not be in anyone's interest, regardless of what specific interest was represented.

The other question was on the length of a vacancy in the board of governors. We anticipate that with the new representative and consultative basis for the board of governors, there would not be any difficulty in filling the vacancies. On a 13-person board a temporary vacancy would not be a significant gap, I suppose, or would not be nearly as significant as with a smaller board. The member, who has obviously studied the act, will note that the quorum bylaws that are a requirement for the board of governors to enact would in fact protect — and that would be the purpose of it — the interests of the various parties. It is a board recognizing various interests, and that's why we put in the requirement to enact bylaws dealing with the quorum aspect. it would also deal with the vacancy aspect.

Given the experience that we've seen initially as a result of tabling this act in the House, I'm not sure there's going to be great difficulty in filling members of the board representative of the various interests.

MR. SIHOTA: Just to continue on section 81, I take it the minister is saying that the bylaws would allow for a time limit to be placed on vacancy, and that's fine. The bylaw is of course not binding on the minister; it's binding on the board of governors. Nothing would therefore compel a minister to.... I can see the minister shaking his head. Am I wrong in that assumption?

HON. L. HANSON: I think the member has taken the wrong assumption from my remarks. My reference to the requirement for the board to put in quorum bylaws was simply to ensure that there was not an imbalance in major voting procedures, because the majority of the members of the board are representative of communities of interest. If there were a vacancy on the board of one of the communities of interest, then the quorum aspect would deal with the voting so that there wouldn't be an imbalance in that sense.

MR. SIHOTA: I take it that it really rises in a representational sense. That's fine. I do think that you should put a provision in there. It's interesting: you are correct; you would think that there would not be a problem in terms of finding people. But sometimes governments have been known to take their time.

I'll give you a classic example. Right now we don't have in British Columbia a chief justice of our Supreme Court. You'd think there would be no problem, with 80-some-odd judges at the superior level in British Columbia — and I'm sure lots of other people who would like to be judges — in terms of filling that position. That has been vacant since March 30, and there doesn't seem to be any action in terms of filling that very important position.

So often there are other considerations. It seems to me that there should be some pressure on government to fill that vacancy. That's just an analogy to something that I could see. We're not going to stay here all night long on this issue. I just flag it, because I think it is a concern. It's a shortfall, I think — a minor one — in the legislation. I think I've made my point.

[ Page 7554 ]

Section 81(4) is a section which provides that the chairman may designate a governor as an acting chair while the chairman is absent. Under the current legislation, the vice-chair, of course, is appointed by the minister. Since the board of governors would recommend the appointment of the chair, it would seem desirable to have the board of governors select a person from among themselves to act as the vice-chair in the absence of the chair. I'm wondering if the minister has any thought as to that issue.

HON. L. HANSON: I do acknowledge the point the member made in the previous question. I'd just like to add one remark to that. I think the member would agree that the remaining board of governors would be quick to persuade government to fill the vacancies.

Dealing with the other issue that the member raised, I think that in the recommendation, the report of the committee, it was very clearly stated that the acting chairman should be a neutral member of the board so that there wasn't any bias in the direction from the chair, and that's the reason that we ask the chairman to designate as an acting chairman one of the neutral members.

[6:15]

MR. SIHOTA: I just want to move on to section 85(1)(b), which is also under this section. Under the legislation, the chief appeal commissioner appoints the other appeal commissioners, which gives a fair bit of power to the chief commissioner in terms of control over the appeal system.

What thought was given to the concept of having the governors make that appointment instead? I don't recollect what Munroe said, but it seems to me — again, it's not a point we will be here all night on — that there would be some wisdom in allowing the governors to do that. My preference, in any event, is that you go that route, and I wasn't quite sure why you didn't. So I just flag that again for the minister's comment.

HON. L. HANSON: Yes, I think it's done for a very good reason and a very responsible reason that I don't think is any detriment to the interest of the parties who would form the board of governors. The method of appointment is to provide a clear guarantee — a clear separation — of the quasi-judicial independence of the operation of the appeal division from the governors.

The advisory court clearly indicates that the selection of individual appeal commissioners should be made by the chief appeal commissioner according to criteria established by the board. So the board would develop the criteria that the commissioner would enforce in his choosing of the other commissioners. But it does in fact keep that independence and ensures it. I guess a further insurance of independence is that the governors can only remove an appeal commissioner for just cause, and just as for the chief appeal commissioner it will not be just cause for removal where the governors are simply in disagreement with the appeal commissioner's decision. I think it's a protection, simply stated, to ensure the quasi-judicial independence of those people and that clear separation.

MR. SIHOTA: I want to thank the minister for that explanation. I should have thought of it myself. I just didn't think it through. I appreciate the answer. You're right, and I agree with you.

Sections 3 to 6 inclusive approved.

On section 7.

MR. SIHOTA: This is something I want to raise with the minister, because I've read this and I've got to say that I'd be interested in seeing what the minister has got to say about it.

Let me state the concern, first of all. Section 91, of course, sets out the basis of an appeal to the appeal division. Subsection 91(3) says: "a decision on an appeal commenced under subsection (1) shall be made as soon as practicable and in any case within 90 days...." I assume from the Munroe report that the recommendation was that if it was not made within 90 days, then benefits are paid to the worker. I don't read in section 91 that consequence. In other words, there doesn't seem to be anything in the wording of 91 as you've got it here in section 7 that would provide a consequence if you bypass and give a decision on the 101st day instead of the ninetieth day. It seems to me that there should be a consequence.

I wonder if the minister could explain that. I've talked to several people about it, and they tend to agree with my analysis of it, but as I say, we may have missed something there.

HON. L. HANSON: If I understand the question correctly, in simple terms it is: what happens if the appeal division doesn't make a decision within the 90-day period? Is the appeal allowed? The provision makes it clear that the appeal division is expected to make an expeditious decision. I think you can see that there's explicit provision for the extension of this time-limit by the chief appeal commissioner for reasons specified in section 91(3).

Failing this, the advisory committee report clearly suggests that any retrospective payment should be made after the 90 days. Under this arrangement I don't anticipate that there will be a large number of appeals which cannot be handled in that 90-day period, once the existing backlog — I know the member knows it exists — has been gradually reduced. If it turns out that there's a real problem in meeting that objective, I would expect the board of governors to be right on top of the problem in conjunction with the chief appeal commissioner, and that they would develop specific policies to deal with exceptional cases where the 90-day cutoff could not be met, keeping in mind that the board of governors are representative of the interests of the people who would be making the appeal.

[ Page 7555 ]

MR. SIHOTA: I wasn't saying that if you go beyond 90 days the appeal is automatically allowed. I'm just saying that if you go beyond 90 days benefits are paid, because there has to be some financial pressure, I believe, on the board to make a decision within that time. Otherwise you'll see 91(3) open up like a floodgate and we'll get back to the problem that we've got right now.

I didn't quite hear what the minister said at the end, so let me just ask him this: is he saying that it would be open to the board to set the policy as to what would happen if you passed the ninetieth day?

HON. L. HANSON: Yes, that's correct. I think, though, that the member would think it only fair that the board of governors, being aware of the operation of the Workers' Compensation Board, would first of all determine that there was a problem in this 90-day period; if for whatever reason the appeal division were not living up to the expectations they had of them, and because the board of governors would be representative of the various interests, they could well make a policy that on failing the 90 days, payments would be required.

It should also be pointed out to the member that if there is good and just reason why the 90 days can't be lived up to, I'm sure that the chief appeal commissioner would not treat his flexibility in extending that date in a frivolous manner or for reasons that are other than bona fide. The board of governors is representative of both the employee and the employer. I think they would soon bring it to the attention of the appeal commissioner if the 90-day extensions he might choose to grant are not justified, or at least if it's quasi-questionable whether they are justified.

MR , SIHOTA: I don't expect the chief appeal commissioner to be frivolous, but he may be generous in his interpretation of those provisions. I understand your point when you say that the board of governors may want to reel him in on that. What I'm saying is that the Munroe recommendations — and I liked this part of the Munroe recommendations; I think it made a lot of sense — placed that consequence if they surpass the 90-day period. I think that was the key to making sure the determinations were made, because it shifted the onus or the burden, if I can put it that way.

Right now, the way the system works, these decisions take eons of time to make, and who has the financial consequence? The poor claimant who is sitting there without a cheque and unable to make the mortgage payments or to buy clothes for the kids. The whole purpose was to put financial pressure on the WCB to make the decision and to make them bear the financial burden if they can't come down within 90 days.

Munroe, having made that recommendation.... I think it should be reflected in the legislation. It, of course, has the unanimous approval of both management and labour, and it shouldn't worry the minister that there may be some problem there. In fact, one would assume that it would have that as a matter of policy in any event. But you should put that in the legislation. It's an important pivotal part of those recommendations. Otherwise what you are going to have is 90 days, and then you're going to have a second set of hearings to determine whether or not good reason exists to extend it. I can see a whole phalanx of law being developed with respect to the reasons for the delay, what types of matters are complex, and so on. I think you're really opening it up there.

I believe that you should have that provision in there. Is the minister now prepared to inject that type of clause in here?

HON. L. HANSON: I was privy to the report too, and read it. I agree with the member that it did suggest time-limits and so on. Nowhere in there do I see that it said it should be put in the legislation. I think it was recognized by the committee that there was a need to emphasize it and that it should be there. I suppose we could enact all of the policies the board of governors would deal with through the legislative process, but the whole scheme of this act depends on the board of governors governing the operation of the Workers' Compensation Board.

It is my opinion that that particular issue will be dealt with very responsibly by the appeal commissioner, and if there is a problem with that, the board of governors should be given the flexibility — as we have in the act — of putting in place a policy that would deal with it.

I agree with the member that the issue of time, as it concerns an injured worker particularly.... I guess the appeal commissioner would not only be dealing with injured workers' appeals; there are some employer appeals too. But I do agree with him that there is a need for an expeditious decision, particularly in the case of an injured worker, where that may be his or her only source of income and of sustaining a living. I think the act has dealt with that very well, and the board of governors should be given that flexibility. If the board of governors does not react responsibly to a difficulty that comes up with that, I don't know why we would put a board of governors in place to start with.

MR. SIHOTA: I'm sure Munroe made other recommendations where he didn't say: "Look, you've got to put this in legislation." The point I'm making here is that you say in subsection 91(3) that "a decision on an appeal commenced under subsection (1) shall...." I want to emphasize the word "shall." You have the effect of taking that mandatory language and allowing it to ring hollow because of the power you provided under 91(3), and I think you're wrong on that. I think you should say: "You shall do it, and if you don't, there's a consequence." It's like everything else, in terms of our statutes. In most statutes, if there's a mandatory provision, then there's a consequence for that mandatory provision. Here there's no

[ Page 7556 ]

consequence, and it has the effect of rendering the phraseology and the intent hollow.

[6:30]

Obviously you're not prepared to come along with me, in terms of what I think is required. Let me just make another suggestion to you, which at least would serve to strengthen section 91 to achieve what I thought was a Munroe goal. In 91(3)(c), which is the section that will allow the floodgates to open, you say a longer period the chief appeal commissioner may designate where the appellant requests a delay in the proceedings" — and I emphasize the word "appellant" — "or where the chief appeal commissioner considers the longer period necessary because of an act or commission of the appellant or because of the complexity of the matter under appeal."

Why don't you change the word "appellant" to read "claimant"? That way, the only person who can then have standing to request a longer period would be the claimant. I think that would also serve to strengthen the section. We know that employers have been criticized for interminable appeals, and this allows this to happen in interminable delays. I think that if you change the words as Munroe had suggested, to deal with "claimant" instead of "appellant," you would still serve — to a large measure — my purpose. You would say that it's got to be 90 days, unless the claimant asks for more time. Would you not agree with that?

HON. L. HANSON: First of all, I wouldn't agree with that. I think the member should be aware that the chairman of the committee, who was the author of the report, worked very closely with the people who drafted the legislation, and that the decision to leave that as it is — leave that flexibility in the hands of the governors — was very clearly the author's intent in the report.

I think the member is putting a fair amount of importance on past practices, and I think the member would admit that we hope to introduce a whole new era in workers' compensation by this process. If the board of governors does not deal with this issue, because both interests are being represented there in a reasonable manner, then I'm afraid we haven't accomplished much.

MR. SIHOTA: I think that you are defeating the purpose, and I think that's what you should have done in the legislation. A couple of the other sections we talked about I don't feel that strongly about, but I do about this one, because you say that things are going to change. I am far more cynical about that than....

HON. MR. VEITCH: Don't say that. You're too young to be cynical.

MR. SIHOTA: Some of the members think I josh, but it is true. From a personal point of view, I propose all sorts of more radical changes in terms of workers' compensation. Now is not the time to talk about it, but I think that you are trying to cure a defect here, which is interminable appeals by employers for reasons that sometimes invite suspicion. I think that you should give greater quarterbacking ability to the claimant and some flexibility — if you want to use your word — in the legislation that ought to be slanted in favour of the claimant, the person who is injured. The legislation should be designed to streamline itself in that regard, as opposed to allowing for counsel, if not representatives, for employers to try to find the loophole. I would venture to say that you've got a loophole here.

I made my point again to the minister, and I see he's not going to see the wisdom of my advice and bring about the change that's required here. I know my colleague from Nanaimo wants to make a point as well, as it relates to this section, so I'll just pass the baton over to him.

MR. LOVICK: Despite that rather promising introduction, this is a very discrete and simple point. I just wanted to pose a question to the minister about section 91(1). The question concerns the reason for the change. I understand that the period in which the appeal had to be launched was formerly 60 days, and I see that period has now been contracted or constricted to 30 days. I am wondering if the minister would tell me if that is indeed the case and explain to me why that has happened.

HON. L. HANSON: I think it's obvious to the member that the basic reason is so that we can speed up the whole process of the final level of appeals. It will certainly be necessary to ensure that review board findings reach the claimants and the employers promptly, and that they are made fully aware of their appeal rights and responsibilities in view of the shortened appeal period. But I'm confident that the chief appeal commissioner will act in a balanced and judicious manner. I guess the final thing is that it was a very clear recommendation of the report that it should be instigated.

Interjection.

HON L. HANSON: I say it was a very clear recommendation in the report that the appeal period be reduced from 60 to 30 days.

MR. LOVICK: I certainly have no intention of making this into a debate or anything, but I'd like to pursue the matter for a moment and get a clearer understanding of this beyond saying yes, indeed, business delayed is perhaps going to also mean justice denied or some such thing and recognizing that there is indeed some legitimate pressure to make sure that we carry out that appeal process as expeditiously as possible. Given all that, isn't it still the case that by collapsing the total time allowed by 50 percent in which one must prepare and consider the grounds for and details of appeal...? Aren't we perhaps putting certain appellants in the awkward predicament of no longer having the same luxury that they had formerly in terms of time to prepare

[ Page 7557 ]

their case so that it becomes a good, solid and sustainable case? Isn't that a danger?

[Mr. Rogers in the chair.]

HON. L. HANSON: I think what we're trying to do is expedite the process to the quickest possible way that we can get an answer to the individual who is probably sitting there waiting with great anticipation for the decision. But I'd also point out to the member that in final terms, if there is a good case that can be made why that 30 days should be extended, the chief appeal commissioner also has the right to do that.

Section 7 approved.

On section 8.

MR. SIHOTA: Section 92(2) is what I want to focus in on. As I read that, it says that if you have an appeal under section 91, which we just talked about, reopened or reheard under section 96 — which I understand is to be amended, and that amendment may solve my problem to some extent — "...payment of any compensation that has not yet been paid with respect to the period prior to the finding of the review board shall be deferred...." That's what causes me some concern. The minister can correct me, because he has his officials there, but the way I read it is that if I win round one, it's then appealed. Any payments that I'm receiving once the appeal has been filed — I could be wrong on the filing aspect of it — are then delayed until the resolution of the appeal. In my view, that's wrong. In fact, it seems to me that if you succeed, there should not be any delay in payment. However, I appreciate that it was the consensus of the Munroe committee that the delay in payment should only apply when the appeal was filed within the 30-day time-limit. Given that it was the consensus, I don't see it reflected in the legislation. I'm just wondering if the minister could explain why that's the case.

HON. L. HANSON: I'm a little confused with the question the member has asked me, Mr. Chairman' You're not referring to the retroactivity part of it, because the retroactivity is the deferred part, not the....

MR. SIHOTA: Let me try it again.

HON. L. HANSON: All right.

MR. SIHOTA: I may have read this wrong, but the way I read this is.... Let me put it to you in personal terms. I am receiving benefits. There has been a finding of the review board which reinforces my right to receive benefits. There is then an appeal under section 91, the section we just talked about. The way I read the section is that where a finding is appealed, the payment of any compensation benefits that I'm receiving, which have not yet been paid, will be delayed until such time as the next level of appeal makes its decision. Am I correct on that reading of it?

HON. L. HANSON: The member must be misunderstanding that, because the only thing not paid on that process would be a lump sum or retroactive payment. The current payments would continue.

MR. SIHOTA: I see, okay. If I had succeeded and received a lump sum award and then benefits from that time on, the lump sum would not be paid, but the benefits would continue to be paid. Is that correct?

HON. L. HANSON: In very simple terms — and I deal in simple terms — if you were being paid $100 a month, and there was a determination by the review board that you had $100,000 coming retroactively, that retroactive payment would be the one subject to withholding until the appeal, but the $100 a month would continue.

MR. SIHOTA: That's fine. I appreciate the explanation. This applies, I take it, even if the.... If you go back to section 91, it allows for an appeal within 30 days of the finding or a longer period, and I take it that the principal we discussed — the minister has explained it in terms of a lump-sum payment; he used that example — would be deferred even if the appeal occurred after 30 days in accordance with section 91. Is that correct?

HON. L. HANSON: I think I'm getting the answer that the member is looking for: the 30-day period would automatically, on its expiration, require the payment. If an appeal were filed, then there would be the further period for the appeal division to hear it. If there was good and justified reason for the appeal commissioner to extend the 30 days, then it would be extended. Upon final decision, interest would be paid back from the thirty-first day.

MR. SIHOTA: I understand that — the interest portion of it. I guess what I'm saying is that I understand the consensus of the Munroe report was that this rule should only apply as long as he appeals it within 30 days, but if it's 30 days and then you ask for a further extension, it should not apply. That was the consensus in the report; it's not reflected here in the legislation. I don't know why that is. I can understand why the section is drafted the way it is, but I think if that was the consensus in the report, then that consensus should have been reflected in the legislation. That's my point.

[6:45]

Section 8 approved.

On section 9.

HON. L. HANSON: I move the amendment standing in my name on the order paper.

[ Page 7558 ]

[Section 9.,

(a) in the proposed section 96(3) by deleting "application by a person referred to in" and substituting "an appeal under", and

(b) by deleting the proposed section 96(7) and substituting the following subsections:

(6.1) An employer who has received a notice relating to

(a) an assessment,

(b) a classification,

(c) a monetary penalty, or

(d) an apportionment or shifting of cost between classes

under this Act not referred to in subsection (6) but designated in the policies of the governors, may, not more than 30 days after receiving the notice or within a longer period the chief appeal commissioner may allow, appeal the assessment, classification, monetary penalty or apportionment or shifting of cost between classes to the appeal division on the grounds of error of law or fact or contravention of a published policy of the governors.

(7) The commencement of an appeal under subsection (6) or (6.1) does not relieve an employer from paying an amount in respect of which the appeal is commenced but, if the appeal is successful, the amount to be returned to the employer shall be accompanied by interest, calculated in accordance with the policies of the governors, on the amount to be returned.]

Amendment approved.

Section 9 as amended approved.

Section 10 approved.

Section 11 negatived.

Sections 12 to 20 inclusive approved.

Title approved.

HON. L. HANSON: I move the committee rise and report the bill complete with amendment.

Motion approved.

The House resumed; Mr. Pelton in the chair.

Bill 27, Workers Compensation Amendment Act, 1989, reported complete with amendment to be considered at the next sitting of the House after today.

HON. MR. STRACHAN: Mr. Speaker, I call committee on Bill 32.

EMPLOYEE INVESTMENT ACT

The House in committee on Bill 32; Mr. Rogers in the chair.

On section 1.

MRS. BOONE: I have a couple of questions. The first one has to do with the section that deals with the eligible investor. It states here that to be an eligible investor you must reside in British Columbia. If investors move outside British Columbia, what does that mean? What are the implications? Do they have to sell off their shares? What happens on that point?

HON. MR. VEITCH: No, they can continue to hold onto the shares.

MRS. BOONE: I'm trying to get at something with regard to the administrator; I'm not sure whether this is the section I should be dealing with. When you first announced this program, you announced that the province's involvement would be limited to monitoring compliance with the act and providing incentives. According to the ministry at this time, banks, trust companies, the B.C. Fed and others are being asked to submit bids for this service. How much does the government anticipate the delivery of this service is going to cost? Will all parts — or how many parts — of this program be delivered by the private sector? I guess one of the questions in there is: does this also include the administrator? Will the administrator be part of the private sector or will he or she be a government employee?

HON. MR. VEITCH: I'll answer the last part of the question first. No, the administrator will be a government employee. The rest of it is under negotiation at this time, so it's pretty hard to both buy and sell at the same time. We're trying to negotiate this with the various institutions. It's pretty hard to tell you exactly what it will cost for the....

MRS. BOONE: What sorts of services are you looking at to be delivered, then, through the private sector? Will everything be provided through the private sector? What services are you currently negotiating to be delivered through the private sector?

HON. MR. VEITCH: The administrator will simply check on the programs and check on the ESOPs, to make sure that they are in fact operating according to the statute. And there will be full delivery on a trial basis with the private sector.

MR. CLARK: Just a couple of questions. I must say that a few things concern me about the bill. One is that the minister has now said that there are issues outstanding which haven't been resolved regarding the delivery of the bill. This is a concern; you're bringing in a bill before you've decided how you're going to administer it, to some extent. You're also bringing in a bill before, it appears, you have confirmed an arrangement with the federal government which would make a fundamental difference to the impact of the bill. So it seems to me that there are lots of questions outstanding.

I wonder if the minister could tell me: section 1 describes an employee organization as a trade union, an association or federation of trade unions or a prescribed association of employees. Could you tell me what a "prescribed association of employees" is?

[ Page 7559 ]

HON. MR. VEITCH: First of all, to answer the first part of the statement, I think it's only proper to at least introduce the bill in the House before one begins full negotiations. This bill was arrived at through consultation with many groups. I have here in the briefing papers copious amounts of correspondence back and forth between various groups in various sectors. We also drew very extensively upon the Solidarity Fund in the province of Quebec.

As for dealing with the federal government, those negotiations are underway, and I feel very positive about them. Again, I don't want to prejudice those in any way, shape or form.

Mr. Wilson asked us, August 8, 1988, to consider....

MR. CHAIRMAN: The Chair is having some difficulty relating the debate so far to this particular section. I would think that this is the sort of thing we should have heard about while the House was meeting.

HON. MR. VEITCH: You're absolutely right. We'll wait till we get to the proper section.

MR. CHAIRMAN: That's certainly appropriate.

HON. MR. VEITCH: You're absolutely correct. I thought we were just progressing along rapidly here, Mr. Chairman.

MR. CHAIRMAN: Well, that may be the opinion of the minister, but the Chairman is still going to try to operate this place under normal circumstances, and therefore we'll go through it a section at a time.

MR. CLARK: I think it was my preamble that was out of order. I did ask a specific question with respect to the interpretation section, which was — and I'll repeat it: what is a "prescribed association of employees"?

HON. MR. VEITCH: It could be a society, a group of employees getting together and forming a society, forming an association. It could be a group working within any sort of an industry or business — there are many examples of that kind. We'll be reasonably flexible in that area.

MR. CLARK: Who prescribes which association of employees would qualify? It says, a "prescribed" association, so it presumes that there are some rules or that some rules will be drawn up with respect to what groups of employees will be eligible.

HON. MR. VEITCH: No. It could be, as I say, a government employees' association or anything of that nature, and we will be extremely flexible in that area. As long as they are a legitimate group of employees, formed to do this specific task, we'll have no problem with them.

MR. CLARK: I just wonder whether there will be any rules attached or any definition or regulations flowing from this which would define who might be eligible. That's really what I'm getting at. Is it the Lieutenant-Governor-in-Council that will draw up regulations which will determine the rules under which the operator...? It seems to me that those are reasonable requests so that a government may know in advance, not just in a general sense but in a real sense, who would qualify.

HON. MR. VEITCH: Ninety percent of the employees are already caught by the existing act. All we have to do is define what the other 10 percent would be, and we definitely do have regulations drafted that will be taken forward.

Sections 1 and 2 approved.

On section 3.

MRS. BOONE: I've got a couple of questions on this section. I would like to know why the capital is set at $5 million and is not a particular percentage of the firm's assets. A small firm could find itself overcapitalized if it's just a straight $5 million.

HON. MR. VEITCH: We feel that there are other means of financing the type of corporation over $5 million. We want this to be truly a medium and small business situation. That's why it's set at $5 million.

MRS. BOONE: By not making it a percentage of the firm’s assets you are allowing a larger firm to have $5 million and a smaller one also to have the $5 million, which could, as I say, have them overcapitalized with the ESOP-type funds and cause some problems later on. Did the minister think of this at all?

HON. MR. VEITCH: The $5 million is a maximum limit. You have to establish a cap somewhere, and we established it at $5 million. If it's too low, I suppose it can be changed later on.

MRS. BOONE: I'm not saying it's too low. I'm concerned that it's not a percentage of the assets; that in many cases it could be too high for some of the smaller firms. A very small firm could find itself overcapitalized with ESOP funds rather than the other. Did you consider that at all?

HON. MR. VEITCH: Maybe the hon. member doesn't quite understand. That's the maximum amount. You could capitalize it at a lower amount if you wanted to. It doesn't have to be $5 million. It could be $4 million, $3 million, whatever amount it needs to be capitalized at. That's simply a maximum amount for capitalization.

MR. CLARK: I'm interested in the purpose of prescribing specific numbers in this section. Is it to limit the tax loss liability of the government, or is

[ Page 7560 ]

there something...? I must tell you, that's what it looks like to me. It's quite a legitimate exercise for the government to say: "We don't want this tax liability or tax expenditure to run rampant, like scientific research tax credits or something; therefore we're capping it at a certain number that the government has determined is one in which there likely will be so many firms eligible, and it limits the tax liability." Is that not the real purpose?

HON. MR. VEITCH: No, it isn't. It's a matter of spreading it among various companies and not having it all taken up by one. It's just a matter of prescribing a cap at some particular point. The tax consideration isn't there in this particular case.

[7:00]

MR. CLARK: It's rather interesting that the minister responded, in answer to questions from my colleague, that this is a means of financing, as opposed to what the minister said in second reading, which is that this is a means of having workers participate in the firm; that that's the real agenda. The minister is saying different things in answers to different sections. It seems to me that this is a move by the government to limit those who might be accessible to the plan and therefore keep tax expenditures lower.

HON. MR. VEITCH: Quite the contrary. You can't participate in it without participating in the financing of the plan. If the member is attempting to put words in my mouth, I'm afraid it's not going to be very successful. This plan is there to provide participation by employees, and you can't do that without financing. Certainly it will finance firms, but you can't have one without the other.

MR. CLARK: Can the minister explain why this section was different from the section introduced by the minister's predecessor?

By the way, Mr. Chairman, I wonder why the Minister of Regional Development is bringing in this bill.

MR. CHAIRMAN: That's out of order and the question about the previous minister is out of order Sorry about that; it is out of order.

MR. CLARK: I guess there's no minister of economic development anymore.

I wonder if the minister could tell me why the act is different than it was previously? Is that not in order?

MR. CHAIRMAN: That's really something we should have done on second reading; I'm sorry about that.

MR. CLARK: I can ask it in a specific context if the Chairman would prefer.

MR. CHAIRMAN: I'll allow that.

MR. CLARK: It says that it was only stipulated that a prescribed percentage of the wages and salaries be paid to B.C. residents, and the corporation should not exceed a prescribed size. In this bill there's a revision which has 25 percent of $500 million. Perhaps the minister could just explain the government's thinking with respect to this new initiative.

HON. MR. VEITCH: We've been having ongoing negotiations with the federal government since the previous bill was introduced. These are the result of those negotiations partially. It's a new bill; it's a different bill. So the Chairman, as always, is quite correct.

MR. CHAIRMAN: I suspect there's some degree of plagiarism.

The member for Prince George South — North.

MRS. BOONE: Really, he's having a tough time tonight. Have you eaten yet, Mr. Chairman? I think we should send him down for supper.

I'm not quite sure why, but there's some discrepancy here in this section. It says that 25 percent of the employees must be British Columbians. In the employee venture capital plans 50 percent must be B.C. workers. Is there any reason why one section requires that you only have 25 percent B.C. workers and the other one is 50 percent B.C. workers?

HON. MR. VEITCH: Again, these numbers have been arrived at through negotiations, principally with the federal government. I think you'll see the reasons for those once federal participation is obtained.

MRS. BOONE: It is really difficult to deal with this when you're telling us about negotiations that are taking place and we haven't got anything here. It's hard to find out.

Interjection.

MRS. BOONE: Is it not the federal government you're talking about then? Why would the federal government have a concern that there be less percentage of B.C. residents employed in this section of the bill than you do in the venture capital? It seems to me that we should be trying to incorporate as many British Columbians in there as possible. In one section it says it's okay to have this go out with 25 percent B.C. workers involved and in the other sections it's 50 percent B.C., worker involvement. Are you telling me that the federal government is prescribing this?

HON. MR. VEITCH: No, I'm not telling you the federal government is prescribing; I'm merely saying these were arrived at through negotiations.

By the way, I agree with the hon. member in this area; I don't agree with everything that the federal

[ Page 7561 ]

government says. I happen to agree with you in this particular instance.

MRS. BOONE: You agree, but why? What is the difference? You agree with the federal government in this level?

HON. MR. VEITCH: No, I agree with you.

MRS. BOONE: You agree with me?

Interjection.

MRS. BOONE: I certainly am; I may be wrong on this thing here.

Can you tell me what reasoning the federal government gave then for the 25 percent?

HON. MR. VEITCH: I think we're debating here how many angels can bounce on the head of a pin.

The federal government is delivering this through the federal tax act — and they do have some say in it for that concession — so we arrived at this through negotiations with the federal government. I happen to agree with you that it ought to be more, but it isn't. It's good legislation, and we'll keep working on it.

Section 3 approved.

On section 4.

MR. CLARK: This is an interesting section which goes into some detail about the shares that are issued. I'm curious about the class of shares that these would be because we all know there are different classes of equities that one can buy: shares on the free market; stock exchange — we won't get into that; we'll get into that with my minister later — preferred shares, which carry no voting right essentially and are guaranteed rates of return.

I wonder if the minister could clarify this section for me a little bit, because it does set up a new class of shares. Will there be any voting rights attached to those shares? Do they have any input into the day-to-day operation of the business? Do the shareholders have an annual meeting? It doesn't appear to me that there's an annual meeting where they can question staff and those kinds of things.

HON. MR. VEITCH: Yes, this section addresses the weaknesses that are found in other jurisdictions where they have similar legislation. We want to ensure that British Columbians do have a say, and that these are voting shares in the company. We want to ensure that they have a say at the annual meetings and that they do have participation in the operation of the firm.

MR. CLARK: Maybe the minister can show me where in this section it does that. I fail to see the requirement for an annual meeting. I wonder if I could ask the same question in a different way. If this company is trading on the market, how does one buy shares in an ESOP if there are shares existing in a publicly traded operation? Is that not possible?

HON. MR. VEITCH: Yes, these could be shares that are publicly traded and are issued by the company to the employees. It could be that, but I don't anticipate that will happen in many cases. You go past the limit, and normally the company would be a truly reporting or public company.

In answer to your other question, the Company Act clearly sets out the requirement for annual meetings, unless they are waived by the members of the company.

MRS. BOONE: On this section here, this is a plan, and at the very bottom.... This is something that comes out throughout this act, and something that I will be raising concerns about. The way I read it, a plan shall not be altered without the prior approval of the administrator and the consent of a majority of the employee shareholders which gives the approval for the administrator to alter and to not include these things that are in the act. You're saying no.

It says: "Every employee share ownership plan must contain or make provision for at least the following" — and you list all of those things. Then you say: "A plan shall not be altered without the prior approval of the administrator...." To me that's saying that the administrator can approve the alteration of these things in there. That's not right?

MR. CHAIRMAN: I've got to admonish the minister, because he insists on speaking while you're speaking, and it's hard for Hansard and for the committee. Please wait until you're recognized.

HON. MR. VEITCH: I'm very recognizable, Mr. Chairman, thank you very much.

No, if you changed the plan after they had been issued, then you would have to have permission from the administrator. The plan may contain other items over and above the act that are not prescribed in the act, and changes made would then have to be approved by the administrator. It's for the protection of the employees, Mr. Chairman.

MR. CLARK: I guess when ESOP shares — or whatever you want to call them — are issued, there is a certain number issued by the company. Presumably all of these are qualified, and the administrator approves. I guess there's no market for those shares, is there? Can they be traded between employees, among themselves? Is there essentially any provision for a market test to the value of the shares — albeit a limited market?

HON. MR. VEITCH: No, the act provides that the shares must be held for three years. Then after that time, within the charter of the company, they could be traded, but not the first issue. It would have to be held for a period of years; there's a limitation.

[ Page 7562 ]

MR. CLARK: After three years, who can they sell to? Presumably they can only be sold to other employees in the company. Is that correct?

HON. MR. VEITCH: No, Mr. Chairman, they can be sold to anyone, if the Crown is repaid. They can be sold to anyone after that.

MR. CLARK: Maybe the minister could explain that. Are you saying that the tax credit has to be paid back by non-employees who purchase shares after three years? Does the tax credit have to be paid back? Is that what you're saying?

HON. MR. VEITCH: If they were sold any time prior to the three years, then the Crown would have to be repaid. But after three years, there would be no payment required. There is a time limitation of three years in this particular section of the act.

MR. CLARK: Does this section essentially contemplate a sunset clause? It's an ESOP plan; it's three years, and it's finite. The minister is shaking his head no. I want to know the duration of the plan. Let's assume that half of the employees purchased a million dollars worth of shares in the ESOP, and they got the 20 percent tax credit. The minister is saying that under this section, they cannot sell those for three years. I understand that.

I'm trying to figure out what happens after three years when they are allowed to sell them at no loss ever to the tax credit. Can people buy them or trade them? Can other employees buy those shares and then receive a tax credit again? In other words, can the tax credit be revolved, if shares are traded among themselves?

HON. MR. VEITCH: No, the act requires that a market be established, and if there is no market, then only the company could redeem those shares under the Company Act.

MR. CLARK: I guess you're getting to the heart of what I was asking. There's no market for the shares, and therefore the value of them depends on the company, essentially. The company can redeem the shares after three years, or buy them back, or the employees....

Interjection.

MR. CLARK: Yes, it depends on the value of the company; I agree with the member. But if there's no market, if you can't sell the shares at large, then they're not worth very much. They're worth whatever the company is prepared to give you for them. It seems to me that this is setting up a different class of shares.

That's where I might ask the minister to explain a section which says, as I recall, "a prescribed valuation formula." As there's no market for the shares, as there are restrictions on sale and it's not a free market, so one can't trade, depending on the value of the company, in some respects you're limited to what the company is prepared to pay you upon redemption for the shares. What's significant is the valuation formula attached to the shares upon redemption. Maybe the minister could explain how that would work.

[7:15]

HON. MR. VEITCH: The value of any security is — or at least it ought to be — the total value of the company divided by the number of shares, or any other evaluation method you might use. Sometimes on the stock exchange that isn't quite so. I've been half right on the stock exchange; many times I've bought them at the right time, but I've never sold them at the right time yet.

Under this subsection (f) the company must establish a valuation method. It's pointed out very clearly in the act that the company must establish a fair valuation method for the shares. There's no requirement, of course, for the employee to sell his shares to anybody; they're the property of that particular employee, and he can retain them. But under this act the company wouldn't be able to, as you say, just give the employee anything it wanted for those shares; it has to establish a valuation method.

[Mr. Rabbitt in the chair.]

MR. CLARK: That's quite significant, it seems to me. Maybe the minister and his staff could assist me in terms of giving an example of what a valuation formula would be. Would it be a profit or would it be, for example, certain class B shares that I've been offered, or things like a 5 percent rate of return for three years, and if you don't get that then they revert to class A shares, or things like that? There are all kinds of ways in which you can structure a share deal. I am interested in how this would be structured. The minister is nodding his head. I just want to emphasize this point, because I know that a percentage rate of return, for example, is quite common on certain classes of shares. If that is not paid out, they revert to other classes of shares, voting shares and the like.

I wonder if you could give an example of a valuation process in this regard.

HON. MR. VEITCH: The valuation method is known. It's established at the time that the plan is established, and it remains constant for the life of the plan. So any person investing knows what the valuation method is. They know exactly what it is at the time they go in. They go in, in other words, with their eyes wide open, and there is full and absolute disclosure during the whole life of the plan.

MR. CLARK: If someone purchased the shares at $5 a share in an ESOP, with a valuation formula by which after three years the shares are really only worth $2 and there's no market for selling them, will the company buy them back? Does the company

[ Page 7563 ]

redeem them, or do you have to find a willing buyer at the new valuation?

HON. MR. VEITCH: Yes, the company is obliged to redeem the shares and redeem them on the method that is known here. It's shown in subsection (h): "...if a shareholder wishes to sell all or a portion of the shares acquired under the plan and the shares are not listed on a Canadian stock exchange the corporation shall redeem the shares...." Then it gives some exceptions, but they're general exceptions.

MR. CLARK: That is after the three-year period and at whatever valuation is agreed to at that time?

Just one last point. If they're sold after three years, and say the shares have the same value exactly after three years that they had when you bought them, if you find an employee who's prepared to buy them, is that possible, first of all? And if he buys them, does he get a tax credit for buying them?

HON. MR. VEITCH: To use the expression of my colleague the Minister of Finance and Corporate Relations (Hon. Mr. Couvelier), they wouldn't be able to double-dip under this plan. So the answer to that is no. But the employee could buy those shares as long as the total share holdings did not exceed more than 10 percent of the total issued stock of the company.

MR. CLARK: An employee who wishes to purchase more shares would not be eligible for the tax credit again, because the tax credits are specific to that particular share offering. I certainly understand that. The price the person paid for the shares would essentially be negotiated between the buyer and the seller, and presumably would be close to the valuation price, or something like that. Is that fair to say?

HON. MR. VEITCH: It can't be below the valuation price, because the valuation is set, you see, for the length of the plan at a constant figure. It could be above it, presumably, but I don't know why that would happen.

Section 4 approved.

On section 5.

MR. CLARK: I just want confirmation that additional ESOPs can be.... One company is eligible for more than one ESOP if it doesn't exceed the maximum in the rest of the act. Is that correct?

HON. MR. VEITCH: It would be one plan, but what you would get is multiple equity approvals across the piece. That is certainly very possible indeed. It allows for participation, as you pointed out earlier, which is the reason for the plan in the first place.

MR. CLARK: The administrator would have to approve that, I would think. All of the existing regulations apply. In other words, the capitalization, the percentage, so someone couldn't buy more than 10 percent of the outstanding shares in the ESOP.... That's done in its totality, because isn't one plan sequential?

HON. MR. VEITCH: Yes, Mr. Chairman, multiple issues. The administrator will have to give approval to that sort of undertaking.

Section 5 approved.

On section 6.

MRS. BOONE: Just one short question here. Why is the section about purchasing goods from a Crown corporation included here? What is the purpose of this section?

HON. MR. VEITCH: Again, to quote my good friend the hon. Minister of Finance and Corporate Relations, this would prevent double-dipping — now that's a good phrase! — because we already have a plan to assist employees where corporations have been privatized. That is why there's a reference to the public sector.

MRS. BOONE: So this refers to companies that have been privatized. They are not going to be eligible for any ESOP.

HON. MR. VEITCH: It doesn't prohibit them from establishing a plan later on, but in this particular instance it does, that's all.

MR. CLARK: Mr. Chairman, I don't want to repeat what my colleague said, but I understand that the double-dipping — which is an interesting phrase that we'll have him explain sometime — the minister referred to, when it comes to where a company has received financial assistance from the Crown.... It doesn't explain why you would be concerned about competition from a company that has raised equity through an ESOP formula with a Crown corporation. It doesn't to explain it to me, in any event. I wonder if he could explain that aspect of this section.

As I understand it, my colleague from Prince George North asked why there's a section about purchasing goods from a Crown corporation added to the restrictions in the act. The minister replied: "Because there's double-dipping." I understand the double-dipping argument when it comes to a company that's receiving financial assistance from the Crown, but I don't quite understand why it would concern the government for an ESOP-financed company to be in competition with the Crown. It seems to me that the minister would agree with me that this bill specifically precludes competition with the Crown. Is that correct?

HON. MR. VEITCH: As the hon. member is well aware, once there is a plan established and shares are purchased, these people become members of the

[ Page 7564 ]

company; they are shareholders or members of the company. It doesn't matter whether the company as a corporate entity, a corporate person or a corporate body receives it or members of that company who happen to be shareholders receive it. It would be double-dipping either way, because they would receive a benefit from dealing with the Crown in this fashion. That is the reason for including that section.

MR. CLARK: I want to apologize to the minister. I may be missing the point, but as I read it, it says: "You cannot use funds generated from an ESOP to purchase goods and services from a Crown corporation where those goods and services will be used to duplicate the activities of a Crown corporation." I read that to mean that you can't purchase goods and services from a Crown corporation. Let me get this right. Is it that you can't purchase goods from a Crown corporation if you're going to use them to compete against the Crown? Is that it?

HON. MR. VEITCH: Yes. If I could read the relevant section to you. It says: "those services or assets are to be used in all or in part in a business or activity that is the same or similar to the activity previously carried on by the Crown or the agency or corporation of the Crown That is in subsection (b)(i).

MR. CLARK: The minister has read that very well, but it hasn't cleared it up in my mind. It says that funds generated from an ESOP — I am just paraphrasing — unless otherwise specifically provided for in the plan. In other words, you cannot use funds — if you move to (b) — for purchasing services or assets provided by the Crown where those services or assets are to be used in all or in part in a business or activity that is the same or similar to the activity previously carried on by the Crown.

I don't understand that, and I apologize to the minister. I am not trying to be difficult. I am trying to understand why you cannot use funds from an ESOP essentially to purchase services or assets from the Crown and go into a business activity that used to be carried on by the Crown.

HON. MR. VEITCH: We provided a 5 percent discount to employees in that particular instance. They wouldn't be competing with the Crown, because the Crown wouldn't be carrying on the activity anymore. So we have already given, supposedly, a benefit.

Interjection.

HON. MR. VEITCH: Yes. We've already conferred a benefit, so whether it was the members or the company, they would still indirectly receive the benefit.

MR. CLARK: Okay. Let's take a forest nursery that is privatized; they have received a benefit because they didn't buy it at market value, they bought it at market value minus 5 percent. They, then, can't start an ESOP and get a tax credit. Is that what this is for?

HON. MR. VEITCH: Yes. They could start an ESOP later on to expand the business, but not to buy those particular assets. If they want to expand it and move it into another field — or even the same field, but expand it — they would be eligible to establish an ESOP, but not the particular assets that are prescribed here.

[7:30]

MR. CLARK: I think I've got this now. A group of government employees could not form an association and apply for an ESOP to use the money to buy the new privatized venture. Is that what the minister is saying? Is that what this section contemplates?

HON. MR. VEITCH: The answer is yes.

Section 6 approved.

On section 7.

MR. CLARK: This deals with tax credits. The minister in his speech said, as I recall, $4 million this year and I think it was $14 million over three years. I wonder if the minister could explain, first of all, what the second and third year tax expenditure is, and what is contemplated by the bill. I think that's this section.

While the minister is looking, I'll just occupy space, Mr. Chairman.

AN HON. MEMBER: You do that all the time anyway, Glen.

MR. CLARK: My colleague says I do that all the time, so I am getting better at it.

The question is essentially this: there is a significant tax expenditure contemplated by this bill because it's a tax credit, and I am simply trying to ascertain what the extent of that tax expenditure is on an annual basis and whether it grows over time and, I guess, what the annual tax expenditure is or is contemplated to be.

HON. MR. VEITCH: We estimate — and, of course, you have to estimate in these things — $4 million in year one, with the information we've been given, with the discussions we've had with the private sector and all the people who have been involved, and experiences from other jurisdictions. We estimate in the first year that it will be $4 million, and when the plan becomes a little more mature, $10 million to $15 million. So we are looking for a bit of maturity in it and for people to get involved and accept the idea. Also they will look around them, perhaps, and see other corporations that have gone down this road, and believe it's a good thing. We believe success will breed more success.

[ Page 7565 ]

MR. CLARK: That clears it up. So I am essentially saying, crudely, that it's estimated to be $20 million worth of capital or tax credits issued, and given that it's 20 percent tax credit, that's the $4 million. Is it fair to say that the ministry is contemplating, essentially, that the take-up this year will be in the neighbourhood of $20 million?

HON. MR. VEITCH: Possibly. We feel that there will be somewhere between, perhaps, 10,000 investors, hopefully, in year one and 35,000 in due course as the plan matures a bit. And the investment, of course, will be somewhere between $500 and $1,000 for each investor annually. Those are the numbers we used to arrive at these figures.

MR. CLARK: If there are 10,000 people at $1,000, that's $10 million, and 20 percent of that is $2 million. That's just off the top of my head. If that's the case, why would there be a contemplated $4 million tax loss?

HON. MR. VEITCH: I guess there's an optimum amount and an amount you'd like people to invest in it, so we're budgeting for more money so that we'll be able to accommodate an increase in shareholders should someone open the dam.

MR. CLARK: It seems to me that you're overestimating the tax expenditure at $4 million. You said 10,000 people at $500 to $1,000. 1 used $1,000 to get the $2 million tax liability, so you're overestimating the take-up by 50 percent, unless you're contemplating significantly more expenditures. I'm not trying to be picky, but if the minister could respond....

HON. MR. VEITCH: The reason I didn't answer that as well and as fully is that you're only looking at this half of the program, and the tax incentive is for the whole program. That's for the venture capital corporation side of it as well. You've got to double up a bit on your numbers, my friend. You've got to double-dip on those numbers.

MR. CLARK: That's an excellent answer, and I stand corrected. We'll deal with it later.

So this portion, in fairness, is contemplated — if the minister agrees with me — at essentially a $1 million to $2 million tax liability if it's $500 to $1,000 per person and there's a 10,000 take-up. They're probably optimistic numbers, and that's fine with me, because it limits the tax liability, but I just want to get it straight what the government's contemplating. It's $1 million to $2 million under the ESOP in terms of the tax expenditure. Is that fair?

HON. MR. VEITCH: Yes. In the first year, probably $2 million. We'll deal with the other when we get to the other section.

MR. CLARK: Is that $4 million viewed as an expenditure in your budget? Is that how it's listed?

HON. MR. VEITCH: It's a revenue offset; it's a non-budgetary item. The reason we're doing this.... The Minister of Regional Development is the Minister of Regional Development and has the programs dealing with economic development. I just thought I'd let you know that, my friends. just a little knowledge point.

MR. CLARK: I was really curious to know why the Minister of Regional Development was bringing in a program that actually has no regional economic implications except for.... Only if you reach, Mr. Chairman, would you say that.

I won't make a speech on this, but I have real concerns about tax expenditures, quite frankly. The difficulty with tax expenditures is that they're a hidden cost to government. The minister has stated very clearly that there is a cost, and I appreciate that, but he will know that next year after this program is in place, and we will have no way of knowing, unless we do it in estimates, what the tax expenditure is, because it won't show up in the budget as a tax loss. So limiting the liability is a concern. I appreciate that the minister has said that we have no way of knowing how many people will take it. Essentially they're estimates. The government has to take an educated guess with respect to the take-up of these programs, and that's understandable. The problem is that the consequence of phenomenal success of this company will be a significant tax loss. While we might agree that it's an appropriate use of public money, it's one for which we will not have the benefit of scrutiny probably after this year except as we canvass with the minister the number of people and the total equity raised by this program.

HON. MR. VEITCH: I thought all along that the member was a convert to private enterprise; now I find out he's really a fiscal ferret.

If you're going to establish new businesses, expand them and increase the number of employees, those employees are going to be paying more income taxes and more sales taxes, and you'll get it back in spades, hon. member.

MR. CLARK: Someone once called that voodoo economics. It's exactly the same analogy in this case.

Interjection.

MR. CLARK: That's right, he did get re-elected.

I simply want to ask a question about this as it relates to provincial tax credits. The minister has stated that the government is in negotiations for federal tax credits. The minister knows that my colleague and I have both said that the negotiation should have been completed before the bill came in, because it has significant ramifications for the project: a 20 percent tax credit or a 40 percent tax credit.

Could the minister tell me whether the federal tax credits that are being contemplated are only for the employee venture capital plans? Is there no federal

[ Page 7566 ]

tax credit possible for this section, which is the employee share ownership plan?

HON. MR. VEITCH: One of the reasons for bringing in the bill is that we want to get on with it. I'm sure the hon. member will agree.... I know he's going to vote for it. It's an excellent piece of legislation, and that's why we brought it in. There are probably two or three great lies in the world, but I understand there is a reply in the mail from the hon. Minister of Finance at the federal level, and I anticipate that it will be in the affirmative.

MR. CLARK: That wasn't quite my question. It's not a detailed question. As I understand the federal program — and I don't understand it completely — the federal tax credit is applied to essentially pools of capital used for venture capital or for others like the Quebec solidarity fund. We'll get to that in the next section, which deals with employee venture capital plans. What I would like to know is whether the minister would agree with me that matching federal tax credits, if they are to be granted at all, will only be granted with respect to employee venture capital plans, and there are no negotiations with the provincial government to attempt to get federal tax credits with respect to the employee share ownership plan is that correct?

HON. MR. VEITCH: I don't know for sure what is in the minister's letter from Ottawa, but we have been negotiating to attempt to have federal participation on both sides of the plan. We'll see how successful we are when we receive the letter.

Sections 7 and 8 approved.

On section 9.

MR. CLARK: This is the section that deals with essentially a completely different aspect. The first part of the bill deals with individuals buying shares in their own place of business, and that's commonly called an ESOP. I might say to the minister that this clearly is, I think, a completely different concept, which is a pool of venture capital to be invested in other companies. That's where the minister may — and I stress "may" — have some luck with the federal government, and I hope he does. I know the minister agrees with me that there's absolutely no chance of matching federal tax credits with respect to the ESOP plan, because that's not what is contemplated.

I wonder whether the minister could just clarify this section for me, because it does limit the criteria for corporation eligibility. In so doing, maybe he could canvass this with us for a minute. As the minister said earlier when we dealt with definitions, this is the section that is contemplated for (1) trade unions, (2) an organization of trade unions, and (3) a prescribed — whatever that is — set of employees. Is it this section that says $25,000 must be upfront by the employees in preparation for this plan?

HON. MR. VEITCH: Yes, that's correct, section 9(d): "...has, or will have immediately after registration and thereafter, equity capital of at least $25,000." It's not very heavily capitalized at $25,000, so it ought not to be too hard to raise that kind of capitalization.

MR. CLARK: This may be in another section of the bill, and I apologize if it is, but are they eligible for money for start-up costs?

HON. MR. VEITCH: In a nutshell, yes. They'll be eligible to receive start-up costs.

[7:45]

MR. CLARK: Is that start-up cost in the form of a tax credit as well?

HON. MR. VEITCH: I don't want to offend the rules of the committee, but it's in sections 25 and 26, and it's cash.

Section 9 approved.

On section 10.

MR. CLARK: This is on conditions for the plan. I wonder if the minister’s staff could tell me whether.... Remember, we had this discussion about shares trading and how they would be redeemed and the like. Is it similar with respect to the pools of capital in this case?

Let me give you an example. A union or a group of employees forms an EVCC, and they have 100,000 shares outstanding; and people purchase them as they would, I presume, a mutual fund. There's no market for those shares in that EVCC unless they're listed on the stock exchange. First of all, let me ask a question, not to confuse the minister. Can you form an EVCC and raise capital through this program? Can you list that on the stock exchange in Vancouver, say?

HON. MR. VEITCH: Yes, in any Canadian stock exchange. And to answer your other question, yes, there is a valuation method. If you look at section 10(f) and (h), it clearly spells out the requirement for a valuation method, and states very clearly that it must be an independent opinion from a qualified person or a formula that's agreed upon in advance, and the market is also alluded to in subsection (h).

MR. CLARK: Let me just get this right. If the EVCC lists on the stock exchange, and you or I buy shares through the stock exchange, do we get the tax credit?

HON. MR. VEITCH: No.

MR. CLARK: What's contemplated is, say, that a group of employees get together, or some fund is formed, and they apply to the administrator in this essentially separate-market mechanism to purchase shares in the EVCC. If they choose to list it on the stock exchange, then there is no tax credit associated

[ Page 7567 ]

with any extra funds or equity that's raised. Is there a limit on the amount that those equity funds that are raised on the stock exchange can be? In other words, is there a percentage of the EVCC that's listed on the exchange that has to be owned by workers participating in the tax credit, or can they end up being minority shareholders through shares raised on the exchange?

HON. MR. VEITCH: Well, they would probably be minority shareholders anyway if they're investing in several corporations. But the answer generally is no.

MR. CLARK: I realize that they would be buying shares of companies in the stock exchange. But I asked whether the actual company, the EVCC, could be listed on the stock exchange. Maybe that's where we were at cross purposes here. It's not possible to take that company and list it on the exchange after?

HON. MR. VEITCH: Yes, it's possible to list the EVCC, but only the investors that are eligible under the act would receive the tax credits. So it would be possible to convert that EVCC into a reporting corporation.

MR. CLARK: So is it possible to have a kind of a hybrid organization listed on the Vancouver Stock Exchange, an EVCC that got their start-up capital through the tax-credit method but can raise more capital on the exchange that's not tax-creditable? Is that contemplated?

HON. MR. VEITCH: It's not contemplated, but it's possible. I would think an EVCC may have a reasonably hard time getting listed, unless they were very mature and had a pretty good track record. Some stock exchanges list some pretty strange things, so who knows?

MR. CLARK: Can the minister explain why it is, in the conditions for the plan, that you have to list the number of eligible investors? In other words, you take the Quebec plan, for example, which now one out of every 12 workers is involved in. It's growing exponentially by more people participating in a plan. It seems to me, from reading this, that it limits itself. The plan is limited by having to put up front the number of potential eligible investors. Is that an incorrect reading, Mr. Chairman?

HON. MR. VEITCH: Well, we'll make a little bit of a concession here. This is driven a bit, this section, by tax exposure, and it gives us the ability to estimate the amount of money that the Crown may have to pay out in any given period.

MR. CLARK: It's interesting that the minister said that the ESOP plan is not driven by tax expenditure concerns, and yet that's entirely a provincial jurisdiction. This is the one where you have real potential because of the federal tax credit, and this is where you're limiting your exposure.

The minister has indicated to us that it's a $2 million tax liability for the ESOP, and only a $2 million tax liability on the employee venture capital corporation. It seems to me, if you look at the Quebec experience and look at the potential for federal tax credits if they come through on this section, that by saying there's only going to be a $2 million tax, liability this year and maybe $4 million in future years, you're really contemplating a pretty modest venture — nothing at all like exists in other jurisdictions.

HON. MR. VEITCH: You have to start. We don't have the program now, so you have to start the program. And it's very difficult to split the EVCC from the ESOP. It could be more in one side or the other. You realize these are estimates, and any plan — whether it's the Quebec plan or any other plan — started somewhere. In the first year, things have to get rolling. We anticipate that people — the residents and citizens of British Columbia — who are eligible to benefit under this act will be as aggressive as anywhere in Canada, whether it be Ontario, Quebec or any place else.

You're going to find that the people of British Columbia who built this province through the private enterprise system are going to respond in a very positive way to this particular act. It's going to give people an opportunity to become employee-owners, rather than employees all the time. I think you'll find that maybe we have been modest; maybe we'll have to up the ante.

MR. CLARK: Does this section of the bill contemplate a three-year period as well? Will there be no change?

HON. MR. VEITCH: No, this is five years. You must hold the shares for five years in this section. What section is that? I remember it's five years; it's further on.

Sections 10 and 11 approved.

On section 12.

MR. CLARK: Is this also a case of limiting the exposure of the government to tax expenditures, given that the employee venture capital corporation shall not exceed $5 million? Again, the minister in his second reading speech said there was $246 million in the Quebec solidarity fund. Yet here it seems to limit the employee venture capital corporation to $5 million in equity.

HON. MR. VEITCH: It's not necessarily tied to tax exposure. There has to be a capping somewhere, and the capping is at the $5 million level. Probably a lot of these entities will be smaller than that. We can always revisit these things from time to time.

Section 12 approved.

[ Page 7568 ]

On section 13.

MR. CLARK: What happens if an employee venture capital program does not, after 18 months of registration, invest 40 percent of its capital in approved investments?

HON. MR. VEITCH: The administrator would have the power to suspend — ask them to get with it — or revoke or ask them to repay any tax benefits that any of the members have derived under the plan.

MRS. BOONE: The actual section here says the administrator "may." I'm wondering why the discretion is left to the administrator as to whether or not — with or without conditions, actually — to allow the employee venture capital corporation a period of six months. Why is it written in such a way that the administrator has that power to decide whether he's going to allow that to happen?

HON. MR. VEITCH: In dealing with an EVCC, there may be good and valid reason. There may be investments contemplated immediately on the horizon or very shortly on the horizon, and it's permissive; it allows for flexibility within the plan and allows for the administrator — rather than having to be dictatorial at all times — to be flexible and to deal with the particular EVCC.

MRS. BOONE: You could be flexible, but you also could allow that administrator to show favoritism or to not act in the best interests of the people involved there. You are saying "may" with or without conditions. If you said "with conditions," fine. But it's with or without conditions. You are giving this administrator a tremendous amount of power there to deal with this issue. Why have you chosen to do that, rather than writing it into the act?

HON. MR. VEITCH: I would never accuse the member of doing any nitpicking on this; I know you're not. The administrator will have a reporting relationship to someone else who will be that person's superior and will ensure that the administrator carries out his or her duties in a competent manner. We have to ensure that we have faith in the person we employ to do this job. We have tremendously qualified public servants, and we will have another tremendously qualified public servant who will administer this particular program. I know that you'll have faith in the person who is eventually chosen that they will be competent and will be able to carry out the job.

MRS. BOONE: Can the minister tell us who this superior person is that this administrator is going to be reporting to and looking over his administrative shoulder at to make sure that everything is done by the book? But the book says nothing; obviously he can do whatever he wants here.

HON. MR. VEITCH: Firstly, you can't anticipate each and every scenario that might occur, but this person is going to be subject to administrative law. If you want me to introduce you — and I'm sorry I didn't do this sooner — to the chap he'll be reporting to, it's Gil Blair, chartered accountant, the director of the equity programs branch. He's the extremely handsome gentlemen seated beside me.

MR. CLARK: Members on this side of the House are indeed very appreciative that Mr. Blair is here today, or we would have had real difficulty going through this bill.

I wonder if the minister could tell me if it's contemplated that the administrator could become the trustee of a plan.

[8:00]

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

MR. CLARK: So the remedy is limited to dissolving the plan and making people pay back.... Let me put it another way. If the administrator can't be a trustee, is it contemplated that a trustee could be appointed if employee venture capital corporations are not complying?

HON. MR. VEITCH: The administrator could appoint others. He could appoint a trustee, but the administrator himself or herself would not be the trustee.

Section 13 approved.

On section 14.

MRS. BOONE: Again, this gives a tremendous amount of power to the administrator. If the company wants to raise additional equity capital besides that raised for the purposes of this act, the administrator can approve that. I see no reason at all why you would allow the administrator to have the power to do something other than for the purpose of this act. Why would we allow here an administrator to do something other than what the act is for?

HON. MR. VEITCH: It doesn't do that, in my estimation. But it does allow the EVCC to raise further capital for investment upon application to the administrator. It allows more participation — the kind of participation the hon. second member for Vancouver East was hoping for, the kind of participation that's been experienced in the Solidarity Fund in Quebec. It allows them to expand and to do other things. It does not just tie them down to being very small.

Section 14 approved.

On section 15.

MR. CLARK: This is interesting, in that it deals with the kinds of businesses that are eligible for

[ Page 7569 ]

investment. It is interesting that the Minister of Regional Development didn't see fit to put anything in the eligible investments that had to do with regional development. In other words, nowhere in there does it say that there will be any benefit conferred to companies located in regionally depressed areas of B.C. or anything like that, which the minister could do. I guess we know that it's really an economic development bill that he's inherited from his predecessor, and they had to put it somewhere. There's no minister of economic development. I guess International Business could have brought it in, but that would have been difficult.

I wonder if the minister could explain why it is.... "Why it is" — that sounds like the Premier. I wonder if the minister could explain why the eligible companies are severely restricted to manufacturing, processing, research and development, tourism, aquaculture and the like.

HON. MR. VEITCH: To answer the first part of the statement, if you remember back to some of these old DREE and DRIE deals, the federal government decided they would force particular businesses — I don't know if the NDP thinks that way or not, but perhaps they do — into certain areas whether they wanted to go there or not. A lot of those DREE programs were absolutely disastrous failures, simply because they forced them into areas that they shouldn't have gone into.

Once we get into the estimates I'll talk a lot more about what's happening in the regions and about the wonderful success we're having in regions all over this province, hon. member.

MR. LOVICK: What does this have to do with regions?

HON. MR. VEITCH: If you would read the act and listen, you might learn what it has to do with the regions. There will be eligible investors in each and every part of British Columbia.

Interjection.

HON. MR. VEITCH: I remember the first member for Vancouver East (Mr. Williams) talking about the rural rednecks. Well, I want to tell you, I don't consider the people out in the regions of British Columbia to be rednecks of any kind. I consider them to be just as important if they live in Kimberley as the person who lives in downtown Vancouver — no difference at all. You will note that it does not severely restrict the type of businesses. If you will read the section in its entirety: "any other business activity that is prescribed." Hon. member, your assumption was incorrect.

Interjection.

MR. CLARK: The member asks my question exactly: why would you list four specific items, including one like aquaculture, and then say "any other business activity that's prescribed"?

HON. MR. VEITCH: The member can't have it both ways. He was telling me a while ago that we should restrict this to Vancouver East or something — his region. I don't know what he was after. I think he simply wants this restricted to greater Vancouver. This is probably what he is looking for. Now he tells me we shouldn't target any areas and shouldn't have any flexibility. I really don't know what you are looking for here.

If we talk about manufacturing and processing, that covers a whole range of things, as do the other ones — research and development, R and D. It's very difficult to raise capital for R and D. Tourism is the fastest-growing industry in the world. Aquaculture is an up and comer, and any other business activity that is prescribed. It is a very flexible section in a very good bill.

MR. CLARK: It appears to me — and maybe the minister can correct me — that the intent of this section is to eliminate the use of this vehicle for resource sector industries. Forestry, mining — those appear to be exempt, essentially, and you are trying to target other things. Is that not correct?

HON. MR. VEITCH: British Columbia is rapidly emerging from being simply an extractor and seller of resource products to the world to a very different type of industrial base. We are moving more and more into manufacturing and processing. I think it's good to delineate a few areas here, where it would draw people's attention and have them move in that direction. But it does not eliminate resource sector industries or businesses. They may be prescribed, and most certainly they'd be eligible.

MR. CLARK: The minister, I guess, is saying that the government wants to promote these sectors, I wonder if he could tell us why he wants to promote aquaculture specifically, given the controversy in certain sections of B.C. Is there a public purpose that the government and this ministry have contemplated in trying to promote investment in that industry?

HON. MR. VEITCH: If you are looking at aquaculture, it is certainly very much an up and coming industry in British Columbia. A few months ago I had the ambassador from Norway in my office, and he said that he wishes they had the chance to start over again with their aquaculture industry.

It's an up and coming industry in British Columbia. It will provide great profits to the province in the future and certainly will provide jobs and help to improve the economy. We realize that it is not what you would call a completely mature industry at this time; it is developing, and I think by and large it is developing very well. So it's one of those areas where there is great potential in British Columbia, and here is a way of financing it, capitalizing it, funding it. We are pointing this out to employees or groups of

[ Page 7570 ]

employees who may wish to form an EVCC and drawing their attention to it as a target.

MR. CLARK: We know that the aquaculture industry is having serious problems raising capital, so I can see why the government wants to subsidize investment in this area. It is clearly in keeping with the new trend of this administration to interfere in the marketplace — tax breaks, tax expenditures, loans everywhere — so it's not surprising that we see aquaculture.

I know that the definition of venture capital is normally to invest in essentially brand-new enterprises. It appears that under this section there is a new definition of venture capital with respect to these companies. I wonder if the minister would agree with me that, in fact, it's not new high-risk ventures that are being invested in, but rather potentially mature industries. Thirty-five million dollars in total assets doesn't strike me as a small company to be invested in. Is it fair to say that it's not really new industries just taking off, but that one could invest, using this tax break vehicle, in any business in British Columbia that has less than $35 million in assets?

HON. MR. VEITCH: This section, as the member tried to chide me about a little while ago when he was talking about the Quebec plan administered by the Quebec Federation of Labour.... He said this wouldn't bring in enough — at least, I assumed that's what he was referring to — investors. This allows British Columbian employees to invest, to get into the marketplace and to be owners of capital, owners of shares.

MR. CLARK: They're not venture capitalists.

HON. MR. VEITCH: My friend, when you venture money it's a venture, whether it's in a company that's just starting up or a company that's already been established. It would certainly be a venture, in my book anyway.

Sections 15 and 16 approved.

On section 17.

MRS. BOONE: I'd like some clarification on the role of the administrator in this section. It's limiting the acquiring of shares for the venture capital, and puts out quite clearly areas that they can't be getting into. Then it says again, however, that the administrator can come along and make some alterations and allow for investment if he says that the investment will come in. It says: "...substantial employee participation in (i) the startup and operation of a new business, or (ii) restructuring of ownership..." and what have you. Then it says: "...the administrator is satisfied that the eligible business is or will be in financial difficulty. (3) The administrator may set conditions with respect to the making or holding of an investment under subsection (2)." It seems that the administrator is going to be given tremendous powers ers to alter and adjust the rules and regulations set out in the act.

HON. MR. VEITCH: Quite simply, it protects businesses from predator investors. It prevents takeovers by predators. This is what the section is designed to do.

MRS. BOONE: To say that you're allowing this to take over when you've got a company that's in financial difficulty — are you not then saying that the administrator is allowing people to invest more money in a very risky area at that time if the company is in financial difficulty? You're making all kinds of rules here for people to follow, but then you say the administrator can alter all of these whenever he wants to, basically.

HON. MR. VEITCH: In this world, in the private enterprise system that made British Columbia great over the years — except for 1,200 days and 1,200 nights of socialism — there is no guarantee, hon. member, that you're going to win all the time. There's a chance under our great system that you can lose. But if you go in there with your eyes wide open as an EVCC, you might — as we did under the critical industries program — bail out art industry and keep that industry alive that will employ, in regions of this province, British Columbians who might otherwise fail as a result of not having just a little bit of capital to get it over the edge.

[8:15]

This is what this legislation is all about: to allow people to participate, to move them into businesses, to keep those businesses operating and indeed to help those businesses expand. We did this under the critical industries program, and in many cases we allowed companies to survive, and those companies are surviving and doing very well today. They're prospering, and the employees are working, happy and voting Social Credit at every election.

MRS. BOONE: Why have any of this first section then? You've clearly given the administrator the right to alter any of these things. "The administrator may set conditions with respect to the making or holding of an investment under subsection 2," so the administrator clearly can come along and do anything he wants. Why bother with all this garbage? Why even pretend that there's anything there? Why not just say the administrator can do anything he wants when it comes to things like that?

HON. MR. VEITCH: Clearly this administration has a great deal more faith in the public service than the NDP does. She just laid that out for us: the hon. member right here, right now. We have a tremendous amount of faith in the competence of people employed in the public service. The administrator will be a competent professional individual; you can be assured of that, hon. member. This government will continually have faith in the competence of our public service: those who are working now and those

[ Page 7571 ]

who will be working in the public service in the future.

MRS. BOONE: I find that a little hard to take, given the fact that we've just been through this whole business with Mr. Hick and Mr. Poole. If you're talking about faith in the public service — sure, the general public service we have; but there are people out there who are going to abuse this power, I think that this administrator is given tremendous powers. Why even have an act, Mr. Minister? Why not just say that the administrator can do whatever he wants, because he's going to have the power to alter just about everything around here anyway.

HON. MR. VEITCH: I do believe that the member is being sexist by referring to the administrator as "he" all the time. I wish she'd stop that, because this could very easily be a person of the female gender — a very competent person.

Let it be said at this time and place that the NDP, as enunciated by that member, does not have faith in the public service of this province. I'm going to tell you that we do have faith in the public service of this province — tremendous faith in the competence. It's very easy for any member to vilify people who are not around in the House to defend themselves. But I tell you, we have tremendous faith in the tremendous people that work for government in the public service of this province.

MR. MILLER: It appears, from the minister's statements, that he believes in a mixed economy. He may want to cast aside some of his rhetoric, having made that admission in the House. In terms of faith and confidence, as my colleague from Vancouver Centre remarked, I suppose you have faith and confidence in those public servants who are left in British Columbia. You certainly got rid of a lot of them. You certainly privatized a lot of functions that were formerly undertaken by the administration. We really have some difficulty interpreting the mixed messages that you are sending, Mr. Minister.

We also appreciate the opportunity to give you the exercise of standing up and down and waving your right arm at great length. I hope you're grateful for that opportunity.

[Mr. Pelton in the chair.]

I wanted to canvass the section there that deals with the facilitation of more widespread Canadian ownership as one of the criteria that under 17(2) does not apply to the making or holding of an investment in an eligible business where the administrator is satisfied. Then it lists some criteria, one of which is that the restructuring of ownership of an existing business to facilitate transfer of control for a person, etc., will result in widely dispersed ownership by persons resident in Canada. That appears, on the surface, to be somewhat of a nationalistic endeavour that the minister is proposing in the bill. He may want to dispute that statement. Is that the case, Mr.Minister? Is that part of the philosophy of your administration in terms of approach to business?

HON. MR. VEITCH: We have invited the B.C. Federation of Labour and others to work with us in developing this policy. We have received tremendous support for this initiative. We have received enthusiastic support from all sectors.

I just want to get back for a moment to the administrator if I can. The administrator can only exercise discretion in terms of the spirit and, indeed, the intent of this particular piece of legislation. The administrator can't just do whatever she or he wants to do.

MR. MILLER: The minister was somewhat oblique there, but you are suggesting, then, that this was something the B.C. Federation of Labour was able to influence the government on in terms of their policy. Is it, then, something that the government intends to adopt on a more widespread basis, the desire to have more Canadian ownership of business?

HON. MR. VEITCH: The B.C. Federation of Labour was invited, along with everyone else, to participate in this particular legislation. Their comment, I guess, could at best be described as informal, as far as the bill is concerned — not direct comment — but they certainly were specifically invited to participate in the dialogue leading up to the drafting of this legislation.

MR. MILLER: Again, Mr. Chairman, I do have some difficulty interpreting. First of all the minister said, in response to my first question on this.... At least, I assumed that what he was saying was that it reflected the views of organized labour in British Columbia as conveyed by the B.C. Federation of Labour. Now he seems to be saying that that's not the case. I guess I'll have to go back to my original question. Does the encouragement of the Canadianization — if you like — of enterprises, and using the tax system to achieve that, reflect government policy?

HON. MR. VEITCH: I'm not going to offend the rules of committee by commenting on government policy relative to other businesses. But I want to tell you that British Columbia is open for business, and people are beating a path to our door at an ever-increasing rate. This particular section will facilitate employees who wish to obtain a piece of the business when, we'll say, a generation of owners of the company are retiring, moving out of the business, have been deceased or something of that nature. So it facilitates them taking a piece of the rock, if you will.

MR. MILLER: I'm sure the discussions in terms of formulating this bill must have been very interesting, Mr. Minister. For example, just dealing with that issue of more widespread Canadian ownership, was there any analysis? The minister mentioned the aquaculture industry, and certainly a lot of difficulties

[ Page 7572 ]

have been identified with that particular industry. You talked about the person from Norway, where they have moved to put fairly strict controls on that industry. We note, for example, the five million smolts, I think, that were produced and had no buyers, and there was some attempt to try to get the government to purchase those smolts to bail out that sector of the industry.

I'm also aware of a widespread concern — and perhaps the minister would comment — about the capitalization of that industry in that it is largely foreign. On a relative basis there is very little Canadian capitalization in the aquaculture industry, and it's always a problem that an industry be largely controlled by foreign capital.

I know that the aquaculture industry had difficulty as well dealing with the banks. There were some problems — and probably still are — in that industry, which is highly risky, I would think, in terms of investment. So many things can go wrong, from disease that hits without warning and wipes out the stock that you've invested a fair amount of money in to storms, etc. Does this section tie in with that particular problem at all, Mr. Minister?

HON. MR. VEITCH: If you read section 17(2)(a), it says: "The investment will result in substantial employee participation." Then a little further down it says: "...will result in widely dispersed ownership by persons resident in Canada." Primarily we want to aid and assist British Columbians to be a province of investors, and we want them to be able to invest in businesses and enterprises within British Columbia. We want Canadians. We're not here supporting the sale of these companies to foreign owners. As a matter of fact, we're enabling Canadians themselves to be shareholders and owners. So if this applies to aquaculture, great; it will. This is a vehicle whereby the venture of aquaculture can in the future obtain capitalization, and it's very important.

I want to point out and underscore again that this in fact enables British Columbians and Canadians to own equity interest in businesses. It is not there to support the sale of these firms to foreign owners.

MR. MILLER: Clearly, Mr. Chairman, I realize it's not there to promote. In fact what we've been discussing is the section of the bill that appears to promote Canadian ownership. I didn't suggest for a moment that the bill encouraged foreign ownership; quite the opposite. I was trying to ask you questions about whether or not that was the specific intent. It's still relatively unclear.

Was there any kind of economic analysis done on a regional basis or right across British Columbia about the specific strengths or weaknesses, areas that could benefit from additional investment, additional processing and manufacturing? In other words, did you really do that kind of overall economic analysis by region, and is that something that's going to be borne in mind by the administrator in terms of the allocation of these funds, or at least encouragement of specific types of investments in specific types of industries?

For example, it strikes me that the forest industry is in dire need of further value added. There needs to be substantial investment in additional value-added processing in the forest industry. We've been quite negligent in terms of that particular issue.

[8:30]

Similarly, in terms of research and development in the forest industry, we have one of the lowest — I don't think it's the lowest — investment rates in research and development. So is there specific targeting done, or has an analysis been done about the needs of British Columbia and the needs of the regions?

HON. MR. VEITCH: That is a very interesting question, and it gives me a chance to answer.

The NDP was invited to participate in regional development, one of the greatest developments to occur in this province, and they turned it down for philosophical reasons, notwithstanding the fact that when Ed Broadbent, their leader at the federal level, was here during the last federal election campaign, you would think he was making one of my speeches or reading some of my notes. He talked about regional development. He talked about going out to the communities and getting people to say what they required at their level, from the grass roots up, in each and every region of the province.

Well, my friend, we have done that without the aid of the NDP, even though we invited them to be participants in this very worthy, very successful process. In every region of British Columbia we have committees, we have groups working, we have groups of individuals, groups of people at the regional district level and at the business level and the economic level, doing their analysis of their regions. They are bringing back information and telling us what they need and how we can assist them in each and every region of the province.

We have a number of tools in our economic tool chest. This is one of the very valuable tools in our economic tool chest to help the people of British Columbia. The answer is yes, my friend. We are consistently and constantly doing an analysis of a scene that is not static. It is changing from one region to the other. Rather than telling them what we think from Victoria, the people who know what is required in the region — the people who live there — are providing those answers to us in a very successful program of regional development throughout British Columbia.

MR. MILLER: Then this bill came about as a result of the regional program you just described?

HON. MR. VEITCH: This bill is being sponsored by the Minister of Regional Development, so the answer is yes. This bill, sponsored by the Minister of Regional Development, is one of the tools in our economic tool chest that we use to help British Columbians in many ways throughout the province

[ Page 7573 ]

and in all regions — even in your region, hon. member.

MR. MILLER: Then I take it from the minister's comments that regional committees right across British Columbia commented on the bill — made specific inputs to the bill?

HON. MR. VEITCH: Mr. Chairman, committees from around the province comment on every single aspect of economic activity in B.C. The NDP have never learned to trust the people. That's your problem. You've never learned that the people out there know more about what is happening in their particular region than someone who happens to get elected to government or someone who's sitting here in Victoria.

The answer is that they comment on a consistent basis on each and every aspect of economic activity in the province, and we are in constant contact with them as a result of regionalization, which is working very well, thank you.

MR. MILLER: Again, I'm having some difficulty. The minister appeared delighted when I asked the previous question. Two questions ago he stood up and said he was delighted. I asked him particularly about economic analysis, the needs of the regions, where the strengths and weaknesses are, had he identified them, had they undertaken specific targets in terms of investment, etc. I gave a couple of examples — the forest industry, the aquaculture industry — and some difficulties.

The minister got up and I think tried to make a political statement — I suspect he was trying to be somewhat political — and talked about regionalization. I gather from his remarks that he seemed to be saying this came about because of the regionalization program. Did the regional committees particularly discuss this bill and the issues I've just raised? Quite frankly, Mr. Minister, I might accuse you of being just slightly bombastic when it comes to the issue. Is that unparliamentary, Mr. Chairman?

Interjections.

MR. MILLER: My colleagues tell me it's accurate.

I happen to have sat on a regional development committee in the Skeena-Queen Charlotte Regional District which we formed at the regional district level in 1977. We made comprehensive plans of the requirements of our particular region. We did that work back in 1977, Mr. Minister, and if you're saying you finally caught up to some of it in 1989, well, I suppose you should be congratulated. That's my political hit.

Getting back to the questions I asked here, you're very proud of the regionalization program. What role did it play, and specifically in developing this bill?

HON. MR. VEITCH: I've been having some fun with the member, and I didn't want to tell him that he is doing second reading debate here. What we ought to do is get on to this particular section.

Interjection.

HON. MR. VEITCH: Oh, yes, I will talk about it. We will be doing my estimates very soon, and we will be doing lots of talking about it, but we don't want to offend the rules of the committee. Let's get on to the section, I would suggest, and deal with the section before us. I am sure the hon. member would agree to that.

MR. MILLER: I can only express my dismay. The minister, having bragged in the House, now says he doesn't want to talk about it. I think it's perfectly relevant to the committee. The section reads that there is a desire in here to promote certain things. The minister elaborated somewhat on what those things were, and now he doesn't want to talk about it. I am quite disappointed. I do keep in touch with the people in my constituency and their participation in all kinds of committees, and they've never talked about this one. They didn't seem to be aware of it before you introduced it in the House.

HON. MR. VEITCH: Point of order. The hon. member is discussing a section that has already been voted on. I realize the NDP are a little behind, but we're discussing section 17 of this act, and you are discussing one that's already been voted on in the previous vote. If you want to ask permission of the House to go back and discuss that other section, we can talk about it too.

MR. CLARK: Mr. Chairman, the minister said we'd be on his estimates shortly, but I don't know if it will be shortly. It's interesting. I just want to canvass this section very briefly. The previous section dealt specifically with aquaculture, I asked some questions about that, and the minister gave a pat, political answer that you're promoting aquaculture. Then when we got to this section 17, it says that one of the goals is to facilitate more widespread Canadian ownership. I wonder if the minister would agree with me that in light of the high concentration of foreign ownership in the aquaculture industry, it's a goal of this bill, when you take that last section and this section together, to contemplate employee venture capital corporations investing in aquaculture and displacing some of that foreign ownership.

I can't, for the life of me, see why this administration, with its political philosophy so clear on this question, would contemplate tax credits to encourage the widespread Canadian ownership of an industry. The only thing I can see is that we take this section and read it in conjunction with the last one, and I see aquaculture. Is that unfair?

HON. MR. VEITCH: I'd never accuse that member — at this time — of being unfair, but this allows that option, yes. It allows employees to invest in aquaculture and a host of other things. It provides for

[ Page 7574 ]

Canadian, British Columbian employee ownership in business and in industry. Aquaculture is one of them, yes.

MR. CHAIRMAN: Second member for Vancouver East.

MR. CLARK: Thank you, Mr. Chairman. I see your mike has been fixed. Has it been fixed? It is still sagging, is it?

Interjection.

MR. CLARK: To the House Leader: it's a function of age, I think.

With respect to this section, it says 50 percent of the voting shares are directly or indirectly owned by an eligible business. Can the minister tell me whether it's contemplated in this section of the bill to limit the employee venture capital corporations to 50 percent ownership, as a general rule, in any firms that they invest in?

HON. MR. VEITCH: The answer is yes.

MR. CLARK: That, of course, can be waived by the administrator, and one of the reasons they would waive it is to facilitate more widespread Canadian ownership. I have no problem with that philosophy, but it's the first time I've seen it from that side. I think there is an NDP mole in your bureaucracy that just slipped this little line in there.

I see the government House Leader seems concerned about that remark. You had better check that out, because it's a move much like the national energy program to use the tax system to encourage Canadian ownership in a heavily foreign-owned industry like aquaculture. I don't have any problem supporting that. I am surprised the government supports it. They may vote against this section now that the full consequences and ramifications are clear.

I wonder if the minister could tell me whether it's possible for two separate employee venture capital corporations to own up to 50 percent, thereby having ownership of a company completely controlled, or at least majority controlled, by separate employee venture capital corporations.

HON. MR. VEITCH: The answer is no.

MR. CLARK: I don't want to be out of order, but it doesn't appear that this section limits that possibility or eventuality. Could the minister direct me, if he could, with the Chair's latitude, to where that is prohibited?

HON. MR. VEITCH: It's in subsection (b): "...the employee venture capital corporation or it and any other employee venture capital corporation or venture capital corporation, either alone or in conjunction with one or more of its or their...." It goes on to describe associates or affiliates and so forth.

Sections 17 and 18 approved.

On section 19.

MR. CLARK: This makes the maximum contribution, if I read it correctly, $5 million. I wonder if the minister could tell me why the number is fixed at $5 million.

HON. MR. VEITCH: The whole bill was arrived at through consultation with interested people, and the cap of $5 million was generally felt to be proper. It helps establish our concept of eligible business. Projects requiring financing beyond that can normally be funded through other channels, so it establishes a concept. We've had discussions with many people — groups and individuals. The Alexander Consulting Group, Bull Housser and Tupper, barristers and solicitors, the Business Council of British Columbia, the Certified General Accountants' Association and so forth have come and suggested that $5 million is the correct cap at this point.

[8:45]

MR. CLARK: It's interesting that this contemplates worker participation and employee venture capital corporations. There are no employees and no workers listed. Bull Housser and certified general accountants.... I suppose you could get a group of certified general accountants together, and they would be workers. I know that under certain definitions they would be called workers; I'll have to be careful, or I'll be accused of being a Marxist.

HON. MR. VEITCH: The member is making assumptions. We had over 300 submissions from employees and employee groups. We didn't have one from the B.C. Federation of Labour, so I guess things are looking up. I think the NDP is going to support this bill, and they're probably not taking their directions from the B.C. Federation of Labour anymore. Maybe things are looking up a little bit.

Over 300 individuals or groups of employees participated in the formation of this legislation.

MR. CLARK: I don't mind the minister saying that he's consulted many people; I've no doubt that he has. But to say that the $5 million arose out of consultation with those groups strikes me as unusual. Maybe the minister could agree with me again that it's an attempt to control the tax expenditure loss associated with it, and that's the real reason there's a cap of $5 million.

HON. MR. VEITCH: Principally it's to spread the benefit around. You have to have a cap somewhere so you can do your planning; there's no question about that. I guess with that in mind the member would be partially correct.

Sections 19 to 22 inclusive approved.

[ Page 7575 ]

On section 23.

MR. CLARK: I have some concerns about this section, because it seems to me that it is extremely broad and it gives the administrator a wide range of latitude. We've heard the member for Prince George North (Mrs. Boone) indicate in the House on several occasions a concern about the discretion of the administrator, and I must say that I share those concerns.

It strikes me that nowhere in the act is that latitude more evident than in this section. As I read it, an administrator may revoke the registration; where the administrator thinks the corporation is violating the spirit and intent of the act, he may cancel; and the administrator may or may not renew the plan, with or without conditions, as the administrator sees fit.

I wonder if the minister could give us some assurance — some comfort, as the Minister of Finance (Hon. Mr. Couvelier) says — that those kinds of powers would not be abused, and that in fact they're warranted. The discretion in this section is really quite enormous.

HON. MR. VEITCH: This section is there for the protection of the Crown. The tax credits are already out there. It's there, I guess, in short, to prevent an SRTC type of situation arising. We think the protection is adequately built in here to protect the Crown's investment in this initiative.

MR. CLARK: I want the minister to be very clear here, because one of the concerns we've seen in other regulatory areas.... The government is giving a tax credit of significant consequence, and the government is saying we need powers to regulate. Would the minister agree that it means the state has certain culpability with respect to losses or whatever as a result of failure to regulate? In other words, if you're going to say that the investment is protected through these extraordinary powers, then it seems to me that the state has an obligation to enforce those regulations and give people that protection. Is that not fair?

HON. MR. VEITCH: Well, if the hon. member is suggesting that the Crown has culpability when someone fails in a business endeavour, the answer to that is no, absolutely not. This is there for the protection of the Crown, where the Crown has invested money through tax credits in these entities. That protection has to be built in. After all, this is the people's money that we're investing in these areas, and the protection has to be there. The administrator has to be there, exercising her or his powers in this particular area. But to suggest that the Crown has culpability if someone makes an investment that turns sour — I think the answer is no.

MR. CLARK: Let me put it a different way. Let's say that an investor puts money in an employee venture capital corporation, and then the corporation in turn invests that money in something which the administrator rules is not eligible for tax credit. Is there any protection for the investor who has invested in good faith in an employee venture capital corporation, who assumes he gets tax credit for that, if it turns out, in effect, that the money has been abused or invested in things that are not eligible?

HON. MR. VEITCH: The investor controls the company. You see, that's the difference between socialist thinking and free enterprise thinking. The investor controls the company, so the investor — she or he — makes the decision. Now if she or he makes a decision to break the law, then he or she has to bear the consequences of that decision, and will be dealt with accordingly.

MR. CLARK: Mr. Chairman, it seems to me that the bill is contemplating encouraging people to invest. I don't have any problem with that. But it seems to me that the minister must agree that some of these may be what might be called unsophisticated investors, first-time investors. That's something presumably encouraged by the bill. It also seems to me that there may be large investment pools — not that large, because the bill restricts them. But there may a large number of employees involved, and it would seem to me that there may well be executive groups or boards of directors that make investment decisions on behalf of the group. The minister is saying that if an employee invests in a venture capital corporation and the board of directors chooses to invest in something which turns out later on to be not eligible for tax credit, the individual investor will not be eligible. There is no protection in that respect for the investors, and they should be apprised of that in advance.

HON. MR. VEITCH: Firstly, the administrator would give an advance ruling, if requested, as to what is or is not an eligible investment. Secondly, any investors who allow other.... We always delegate other people to look after things for us. We do that right here, by electing people to this House. These investors would have a right under other statutes. I presume they'd have a common-law right, as a matter of fact, to protection. So if they break the law, or anyone breaks a law, then they must bear the consequences.

MR. CLARK: I agree with the minister. I don't have any problem with that. It's just that it seems to me that in this area there are going to be lots of grey areas, which might be difficult.

I wonder if the minister could tell me whether there's any appeal. I haven't seen any appeal process. If the administrator suspends the company, or says that that particular investment is not worthy of qualification under the act, is there a mechanism available for the corporation to appeal the decision of the administrator, because it may be a grey area?

HON. MR. VEITCH: The administrator is not a person like the auditor-general or the ombudsman; he's not placed there by statute. The individual is

[ Page 7576 ]

there as an employee. We can always replace the administrator if it's necessary, if he or she does not conduct affairs properly. Indeed, they can always appeal to the minister of the day to have a look at it. This act is under the administration of whoever is the minister at that point in time. It's quite proper to appeal to the minister, and the minister would then direct it to, in this case, Mr. Blair — direct Mr. Blair to look into the matter. We would hope that the administrator would not be heavy-handed. If the administrator is heavy-handed, or indeed if the administrator is too lax, it wouldn't be tolerated very long.

MR. CLARK: The minister's answer gives me some concern. The powers of the administrator are very broad in the act. The act itself is extremely vague, and the minister has defended that by saying that there are ongoing negotiations. We can accept that at face value. It says that the eligible investments are four things, one of which is agriculture. Then it says, "or any other investment that the administrator agrees to." It seems to me that there are going to be employee venture capital corporations that potentially are going to argue with the administrator that this particular investment should qualify, because it does X, Y and Z as regional development, or whatever. If the administrator says no, it seems a bit frightening, in my view, to have this notion of appealing to the cabinet minister to say this particular investment is worthwhile. That gives me some concern. I don't want to be overly bureaucratic. I understand there needs to be some flexibility. It does seem to me that because the act is designed in such broad language, and because virtually any investment may be eligible if the administrator agrees to it, there may be some argument with respect to that.

HON. MR. VEITCH: No. The other eligible investments that are alluded to or referred to here would be those allowed by regulation and by order-in-council. You would have to do an order-in-council to allow those. Indeed, the administrator would have to approach the minister of the day to take that order-in-council forward. That is how they would be controlled.

Natural justice would apply as far as the administrator is concerned, and any of the decisions can be appealed, if you wish, to a court of law through due process. I think there are ample checks and balances built in there, as well as flexibility on the side.

MR. CLARK: I won't belabour the point, but the minister did not give me any comfort by saying that the cabinet will decide which programs are eligible under that section, which says that other programs can be eligible under certain conditions. It seems to me that you essentially have made it a political appeal. In fact, the minister said that other than the four categories listed, anybody trying to get eligible tax credits for the fifth category must have an order-in-council. That's what the minister just said. I think it means there's a potential for politicization of this program. It also means that this potential for appeals must go to cabinet. It seems to me there's going to be a lot of grey areas with respect to investment and people trying to take advantage of this tax credit. Making the appeal to cabinet or making the cabinet accountable with respect to deciding which programs are worthy of the tax credit concerns me. I don't know. Maybe the minister can allay my concern.

HON. MR. VEITCH: I don't know if I can allay your concerns or not, but I can tell you that any prescribed OIC would be for a sector. It wouldn't be for a specific EVCC. It would be for a sector. We talk about sectors: aquaculture, mining and all of the other things involved here. Manufacturing and processing are sectors. We would prescribe another sector, and any group of employees that meets the requirements within that sector would be able to come forward. You sectorize these things.

[9:00]

To say that OICs are political.... My goodness, we deal with hundreds and hundreds of OICs — perhaps thousands — every year. I can tell you, my friend, that it's the administrative work of government and is not political. I don't think you'll ever find out about it, but that's just a little lesson for you.

MR. CLARK: With all due respect, Mr. Chairman, it concerns me that we canvassed at length a previous section which dealt with the areas where the sectors — to use the minister's word — could be invested in. We dealt with this at great length, and the minister never said at that time that the section which allowed other things to be invested in would require orders-in-council, nor did he say that those orders-in-council would be generic ones dealing with other sectors. It concerns me that now, at this late stage of the debate, we're getting these revelations. It does not comfort me, because the definition is so broad.

I think it's an example — if I might say it — of a sloppy bill or a bill that's vague and broad, that has come to this House prior to agreements from the federal government and without a structure of administrators. It gives me some real concern.

HON. MR. VEITCH: Vote against it, so you can tell the people the NDP are not really in any...

MR. CLARK: The minister talks about private enterprise all the time. If he says it enough, people might forget that this bill gives lucrative tax breaks for people to invest.

I won't belabour the point, but I must say for the record that there are sections of the bill that give me great unease. The minister has made me more uneasy as this debate has progressed, not less.

Sections 23 to 28 inclusive approved.

[ Page 7577 ]

On section 29.

MR. CLARK: Maybe the minister could explain this section from his notes, because I have just a few questions on it.

HON. MR. VEITCH: This section sets out the repayment provisions that must be met if individuals who purchase shares sell their shares within the five-year prescribed control period. This section is designed to prevent any quick flip by employees who buy shares and obtain tax credit and then immediately sell the shares again. Both the seller and the purchaser of the shares are jointly and separately liable for the repayment of the tax credit. An exception is made for death or bankruptcy of the owner of the shares, where the administrator considers the repayment to be inequitable.

[Mr. Rogers in the chair.]

MR. CLARK: The bottom line is that it's five years before you can trade in any of these shares. I wonder if he could just inform us why he chose five years as the time-limit — three years for the ESOPs and now five years for the employee venture capital corporations.

HON. MR. VEITCH: As the hon. member pointed out, we hope to receive federal participation in this bill, and this five-year period was something that was negotiated with the government of Canada.

MR. MILLER: On the same section, just a query on the lesser amount. Perhaps the minister would explain. Under 29(2)(d) it says: "...a lesser amount determined under the regulations in prescribed circumstances." I wonder what circumstances are being envisaged by the minister.

HON. MR. VEITCH: If the value of the share has indeed depreciated, then we wouldn't expect the full tax credit back. That's where you would have a lesser amount, where the value of the share has in fact depreciated.

MR. MILLER: So it's relative to the value of the share, and that would be prescribed, a fixed relationship.

HON. MR. VEITCH: Yes, the formula is there and it's carried on. It's a theme throughout this bill that there must be a formula. So it's prescribed.

MR. MILLER: In theory, then, if the enterprise, for example, goes bankrupt and there's no or very little value, then the payback would in fact be nothing?

HON. MR. VEITCH: Yes, it's hard to get blood out of a stone. An exception is made for death or bankruptcy of the owner of the shares, where the administrator considers a repayment to be inequitable.

Sections 29 to 32 inclusive approved.

On section 33.

MRS. BOONE: This section here is pretty broad. It gives the administrator the ability to cancel programs if the administrator feels that they are not operating in compliance with the spirit and the intent of the act, even though they may not have contravened the actual act itself. I have questions as to why the administrator's powers are so broad and why there's no formal avenue of appeal from this suspension or cancellation process.

HON. MR. VEITCH: The member was out of the House when we talked about the appeal process, and where there was really an appeal process. Members of the EVCC could indeed appeal to the minister of the day and could appeal to the courts if necessary, if they felt they were wronged. So there certainly is an appeal process, and this does give the administrator the right to do those control things.

It's there for the protection of the members of the EVCC as much as anything. We can't contemplate each and every occurrence or even each and every contrivance that may be in the heart or mind of mankind. We don't know that, so we have to have some generality in here and we must have flexibility and ability for the administrator to perform her or his duties.

MRS. BOONE: It is pretty broad when it just says the spirit or the intent. You're leaving it up to this administrator to do virtually anything he wants there. If he feels that the spirit.... It's up to him or her to interpret the spirit or intent. There's nothing.... It actually states: "...whether or not there has been a contravention of this act...." Surely those powers are very broad, and there's no official means of appeal. You're saying they can go to the minister. Well, anybody can go to the minister, but there's no official form of appeal, and lines to the minister are certainly not that open and certainly not that available.

Interjection.

MRS. BOONE: You may not always be the minister and certainly not always available to people.

To say that as a last resort they can use the courts is a very costly thing and something that I don't think should be necessary when they're dealing with one person. Surely it's in the best interest of everybody to have an appeal process because this is so broad. I mean, it's just saying the spirit or the intent. Surely the contravention of the act should be the main thing here.

HON. MR. VEITCH: This is preventive medicine, if you will. The administrator is there primarily for the protection of the members. This section empowers the administrator to revoke a plan in situations where there has been fraud or deceit or where a plan

[ Page 7578 ]

has been established contrary to the spirit and intent of the legislation. There is a spirit and intent in any legislation; that's what we always discuss in second reading. Provisions ensure that the administrator can look beyond the letter of the law to the spirit and intent, while at the same time ensuring natural justice in line with the Canadian Charter of Rights and Freedoms.

Sections 33 and 34 approved.

On section 35.

MRS. BOONE: At one point you have the administrator really doing a lot of things, as you say, to protect people. In this section you allow the administrator to let people participate in these plans even though they're not following the requirements of this act — as long as they're following the spirit and the intent. This administrator can allow people to act even though they're not following the rules and regulations, as long as they're following the spirit and the intent, which is pretty broad. I ask the minister again: why bother having anything here if the administrator is going to be given the power to ignore everything and say: "You don't have to meet the regulations and you don't have to follow the regulations in this act as long as the spirit is there; as long as your intent is good, as long as your heart is golden, I'm going to allow you to participate in this thing"? Surely you can understand that those powers are far too great for any administrator.

HON. MR. VEITCH: Mr. Chairman, when you get to one section of this bill, you will see that the Lieutenant-Governor-in-Council, as in most legislation, may make regulations. This section allows — this is something that I don't expect the NDP to understand — for the purchase of previously issued shares by both ESOPs and EVCCs to facilitate the transfer of business ownership from a single ownership or a group of shareholders to an employee group or to save a business from bankruptcy so that business can continue to employ people in useful employment, can continue to have them support their families and keep that enterprise in operation. That's why it's there.

Sections 35 to 47 inclusive approved.

Title approved.

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

Motion approved.

The House resumed; Mr. Speaker in the chair.

Bill 32, Employee Investment Act, reported complete without amendment, read a third time and passed.

HON. MR. RICHMOND: Mr. Speaker, I call committee on Bill 28.

PERSONAL PROPERTY SECURITY ACT

The House in committee on Bill 28; Mr. Rogers in the chair.

MR. CHAIRMAN: There are 149 sections and no amendments — my opening remarks. This shouldn't take long.

[9:15]

MR. CLARK: Mr. Chairman, it's unusual for me to suggest a method by which we might expedite the business of the House. As the minister knows, he could be on his feet explaining every section for hours and hours, and sometimes I might be prepared to make him do that. With the Chair's permission, I want to ask if the minister would agree to canvass several areas of some concern to me — I'm not sure yet how much concern I have — which touch on several sections of the bill. I know your staff are here and are extremely knowledgeable about the bill. So if I canvass some general areas, then we can proceed through the entire bill without debate at all, if the minister would agree.

MR. CHAIRMAN: The Chair is prepared to entertain such a motion on either side of the House, provided the committee doesn't have a breakdown, as it has on odd occasions. If there is some type of a time agreement between the members, this is new for the committee, but we're certainly prepared to entertain it. Go ahead.

MR. CLARK: This is an extremely complicated bill, and I thank the minister for a brief briefing, which helped to acquaint me with the main purpose of the bill. As I've said in second reading, there are many things to commend the bill. One of the few things I'd like to canvass with the minister, with his staff's assistance, is some questions I have regarding information that would be required in the financing statements. As the minister knows, one of the changes, of course, is one registry in exchange for what exists now — four registries, I think, and part of the Company Act and the like.

One of the things I'm a little bit concerned about and would like some clarification on is the amount of information that will be available to the general public if one does a search of certain things. If the staff might assist him with that, maybe I could ask him what information will be required in the financing statements. If the staff require it, I think I pulled together the list of sections of the bill where financing statements are alluded to: sections 10, 12, 18 and the like. They all have various aspects of it, but they all refer to.... And section 1, which defines the financial statement.

As the minister may know, financing statements are filed in lieu of the original security agreements. One of the things that concerns me is the diminution

[ Page 7579 ]

of the information that might be available as a result of this change. That's the main area I would like to canvass for a few minutes with the minister — if that's possible with the staff. Alternatively, we could take each section and discuss the implications for information. If I could be specific, my concern really is that there will now be less information available to the public at large as a result of the original security agreement not being filed, but a new vehicle for information purposes is being created by this bill, called a financing statement. I wonder if the minister has any comment on that in general — through his staff — or whether he could tell me what the financing statements will contain, and how they differ from the original security agreements.

This is going to take some time, Mr. Chairman.

MR. CHAIRMAN: That's fine; no problem. Mr. Minister, when you have the opportunity.

HON. MR. COUVELIER: The design of the particular form and the content of the form haven't yet been completed. The intention is that it be a very general statement of assets secured — if that's the area of interest to the member. For detailed statements, you'd have to go back to the lender for the specifics.

MR. CLARK: That's what concerns me. The public or individuals will lose some information in this change. Currently, as I recall, one could get the mortgage. You can see how much is owed on a piece of property or the like, how much is outstanding and what the mortgage is. If I could be frank, that information is part of the public domain and should be available through the registry. Could the minister explain to me if there is a reduction in the information now available as a result of these changes, and what the motivation for the reduction is — if that's the case?

HON. MR. COUVELIER: The simple answer for the member is that the effect of this will be to reduce the number of documents that are on the file.

The advantage is that it provides a much more easily accessed file of information. The trade that have a legitimate interest are warned that certain assets are secured. If that warning excites their interest, then they're free to obtain further details.

The objective of the act — and, as I understand, of personal property security acts across the country — is to facilitate ease of access and provide a warning system. It gives greater case of access and works in the interest of facilitating normal trade activities.

There is a balance to be found between the larger issue of full and complete documentation available in the registry and the growing amount of paperwork that is starting to paralyze the industry. A balance has been found, and I'm advised that these reduced requirements for filing are not unique to British Columbia.

MR. CLARK: I appreciate that they're not unique. I think Ontario and Saskatchewan have similar legislation. But if I could, I'd like to know what the scope of the reduction in information is. Ease of access is certainly a laudable goal, and we support it. But at the same time, full information is also useful. The minister said that you're free to obtain further details. It appears to me from the act that you're not free to obtain further details unless the lender agrees.

HON. MR. COUVELIER: I'm advised that Saskatchewan has similar requirements, Ontario has similar requirements, and Alberta is entertaining this similar approach when they rewrite their act.

I have another bit of information that might assist here. The information that will be required to be on file will set out the debtor's name, the creditor's name, a description of the collateral, the serial number, if it's a motor vehicle, and the length of registration. Further details, if required, then would be available from the lender upon request.

MR. CLARK: I have a couple of questions that arise from the minister's last answer — but I don't want to interrupt his train of thought. Does the borrower have to agree for an individual to get access to the documentation? Secondly, is the amount of the mortgage on the property also...? He read that there is a mortgage, a serial number and what collateral is kept and everything, but he didn't mention whether the amount — I see more staff are here — of the loan is something which is available on the financing statement.

HON. MR. COUVELIER: It's the view of the practitioners in the field that more important than the size of the original application for credit or loan is the current status of the amount outstanding. That information would be available on request. That information is not presently available. In other words, to that extent it's an improvement on the established practice — except that you've still got to verify arrears, slow-pay and that kind of thing.

MR. CLARK: What you're saying is that currently the amount of the mortgage is registered. You know that the mortgage is $100,000. It is true that you don't know what is left outstanding, but you know the original amount. There's nothing wrong with removing the original amount if you provide the amount outstanding, but you're not providing that. In other words, you can see now the original mortgage document and say, "Someone borrowed $100,000," but you don't know what the outstanding is. I appreciate the minister's point there. This bill removes the original amount, but does not give you ready access to the amount outstanding unless the borrower agrees to allow you to see the amount at the bank. Is that correct?

HON. MR. COUVELIER: That is basically correct, if I understand the question properly. That information would not be in the file, but it would be

[ Page 7580 ]

available. Section 18 of the act sets out who is entitled to receive the information from the lender: the debtor, obviously; another creditor of the debtor; another person with an interest in the collateral; and their authorized representatives.

MR. CLARK: I guess that's my concern: currently anyone can see what a mortgage is and who holds it.

AN HON. MEMBER: What it was.

MR. CLARK: That's correct: what it was at the original time. After this bill is passed, you will know there is a mortgage but you will not see how much it is or how much is outstanding, unless the borrower agrees, essentially, or unless you hold some of the collateral, presumably. So there is a diminution of the amount of information available to the general public in the normal course of events. Is that a fair characterization?

HON. MR. COUVELIER: Yes. As we started out with the first question, I think that's a fair summation of the material contained in the bill.

[9:30]

MR. CLARK: I wonder if the minister could tell me whether that has any implication for land title documents. As I recall, although there is still separate registry for land titles, if I do a search on land, I can see not just the registered owner but also the mortgage document held on the land at land titles. I can see how much was borrowed, what debentures were issued against the land. Does that change at all by this act?

HON. MR. COUVELIER: No, it does not change under this act. That's real property; this is personal property. So this only deals with personal property and chattels.

MR. CLARK: So it's not consequentially impacted by the bill in any way. Is that correct?

HON. MR. COUVELIER: I thought that's what I said: no.

MR. CLARK: Excuse me, Mr. Chairman. I was just looking for the high sign from the staff; they're doing their very best, in the true tradition of non-partisan civil servants. I notice that the minister didn't consult with them in that answer. I don't mean to say the minister is misleading in any way; I just wanted, in my own mind, to be sure there was no implication....

The minister and his staff have acknowledged the incredible complexity of this bill, in great measure because it's an amalgam of existing statutory rights and obligations. One of the things that concerns me is the orienting of the public with respect to their rights in this bill. The minister has said, and I agree, that there are some improvements on people's rights, in terms of seizure of cars and the like. But it seems to me that the bill is so complicated that it's unlikely that people will be able to exercise those rights, in the absence of legal help, for example. On the other hand, banks and corporations and the like, who clearly have an army of lawyers — who probably helped draft parts of the bill; and I have no quarrel with that — will be able to exercise their rights, and be fully apprised of them much more readily.

I wonder whether the minister has given any consideration.... Small business would also be a classic example of an area where there needs to be some information or understanding from the ministry, to explain the bill. So I wonder whether lenders, for example, will be required to inform borrowers of their rights under the bill, or whether there's any mechanism in place so that the true impact of the bill will be fully explored and understood by lenders in British Columbia.

HON. MR. COUVELIER: The normal unsophisticated consumer has all of the protections in place. I think the hon. member conceded, during the staff briefing he was provided with, that the bill is deliberately written in the jargon of the trade in order to minimize legal suits that would ensue were we to embark on the adventure of redefining a century of jurisprudence. We quite clearly have drafted a bill that is extremely technical.

The normal consumer has protections here which should not require him to read the bill or understand any of its intricacies, any more than he does now under the existing separate bills. The consumer shouldn't be placed at any greater risk as a consequence of this. It is the belief of the trade, and certainly the belief of the staff in the ministry, that to the extent that the bill expedites the ability to deal with these matters, the consumer is a beneficiary. I don't think it can be suggested that the consumer suffers anything from the introduction of this new piece of legislation.

MR. CHAIRMAN: By previous agreement, unless there are other members who wish to speak to specific sections, I would ask that sections 1 to 149 pass.

Sections 1 to 149 inclusive approved.

Title approved.

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

Motion approved.

The House resumed; Mr. Speaker in the chair.

Bill 28, Personal Property Security Act, reported complete without amendment, read a third time and passed.

[ Page 7581 ]

HON. MR. RICHMOND: Mr. Speaker, I call second reading of Bill 29.

FINANCE AND CORPORATE RELATIONS
STATUTES AMENDMENT ACT, 1989

HON. MR. COUVELIER: Mr. Speaker, this bill provides for a number of amendments to various statutes administered by the Ministry of Finance and Corporation Relations. These amendments, while considered by the government to be housekeeping in nature, are designed to eliminate administrative tangles, provide authority to transmit taxation information by electronic means, clarify filing requirements in certain circumstances and make several minor amendments to some taxation statutes. While each proposed amendment when viewed alone may be considered minor in nature, the total legislative package contained in this bill provides for a significant streamlining of some of the activities in the ministry.

The bill proposes to amend the Budget Stabilization Fund Act to allow transfer of revenue from the general fund to the budget stabilization fund to be effective on March 31 of the fiscal year in which the revenues are received, even though the actual accounting transfer is not made until later, when the exact final amount is known. It was intended that transfers to the fund would be made at the end of the fiscal year in which the revenue surplus was recorded. In practice it is not possible to finalize the amount of these transfers until the public accounts are completed, usually in the following September. This amendment is to be effective March 31, 1988, in order that financial statements of the government for the fiscal years '87-88, '88-89 and future years will be reported on a consistent basis. Interest will be generated from the effective date of transfer rather than the date the accounting transfer is made.

Bill 29 proposes several amendments to the Company Act. The amendments include a number of housekeeping changes which correct wording problems in the act, and a series of administrative measures which are intended to improve corporate registry services. The administrative amendments include measures which will streamline corporate filing requirements, clarify registration and filing requirements about which there has been some uncertainty, and facilitate increased efficiency of registry services. In combination, these measures will improve the level of service provided to British Columbia companies by the corporate registry.

The Education (Interim) Finance Act is amended to advance the statutory date by which school boards must adopt their annual budget bylaws and set residential property tax rates from May 1 to April 25 of each year. Advancing the deadline for school boards to set their budgets and property tax rates will ensure an adequate time-frame for producing rural property tax notices. Previously, some school districts have been late in passing their annual budgets, jeopardizing the timeliness of property tax notices for the entire province. We will also be advancing the statutory date by which the Lieutenant-Governor-in-Council must prescribe annual school tax rates to be applied to non-residential properties from May 1 to April 15 each year.

In addition, authorization is sought to write off irreconcilable non-residential school tax account balances prior to 1989 arising under the Education (Interim) Finance Act. These amounts to be written off are not legitimately due to or from the province, as assessment and other adjustments have reduced the taxes that municipalities were required to collect from taxpayers and forward to the province.

In order to take advantage of modern methods of information transmission, the government is proposing to provide authority to the surveyor of taxes to issue tax notices using distribution methods such as electronic tax notification.

At the request of the federal government, and under the terms of the Canada-British Columbia tax collection agreement, a minor amendment is proposed for section 8 of the Income Tax Act in order to bring terminology into line with the Income Tax Act of Canada.

Two amendments are proposed for the International Financial Business (Tax Refund) Act. These amendments will streamline compliance and administration provisions of the act, making Vancouver more attractive to international financial business. The amendments authorize the superintendent of financial institutions to exempt a financial institution from the requirement to obtain a declaration from non-residents and streamline the administration by permitting the commissioner of income tax to specify the form and content of the return of claim required to be filed under the act.

Clarifying amendments will be introduced to the Logging Tax Act and the Mining Tax Act to ensure that the intent of the government in allowing taxpayers to extend their assessment period is not abused.

In accordance with a November 1988 press release, the Property Purchase Tax Act is to be amended to permit property which initially had escheated to the Crown to be returned tax-free.

Finally, the Taxation (Rural Area) Act is amended to allow the surveyor of taxes to issue property tax notices using electronic tax notification.

Mr. Speaker, Bill 29 is an attempt to improve the efficiencies of the ministry, to modernize our activities and to promote better business practices. Accordingly, I move second reading of this bill.

MR. CLARK: I am tempted to say that since we have moved so quickly on the last bill, we don't need to move with such speed and pace on this bill, and as the first member for Vancouver East (Mr. Williams) is on his way back to the chamber, we might spend some time. But I won't. I think that debates get like this at about a quarter to ten at night.

Unless I missed something in this bill, which is entirely possible, it does appear to be a housekeeping bill, a genuine miscellaneous statutes amendment act with respect to Finance and Corporate Relations. So I don't propose to speak at length. In fact, I don't

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propose to speak much at all on second reading of this bill, although I might say that the first section of the bill on the Budget Stabilization Fund Act does appear to legalize something which the minister's office has been doing for some time. That would, of course, give me a chance to talk again about the budget stabilization fund. I have canvassed that with the minister in his estimates, but I might canvass it again with the minister in committee stage, given that this attempts to legitimize something which has been in practice since, it seems to me, the inception of the BS fund — that paper account that doesn't really exist....

With that, I will adjourn. We'll pursue any questions that we have on this housekeeping bill in committee stage.

MR. SPEAKER: Pursuant to standing orders, I advise the House that the minister closes debate.

HON. MR. COUVELIER: I move second reading of the bill, Mr. Speaker.

Motion approved.

Bill 29, Finance and Corporate Relations Statutes Amendment Act, 1989, read a second time and referred to a Committee of the Whole House for consideration at the next sitting of the House after today.

HON. MR. RICHMOND: I call second reading of Bill 43, Mr. Speaker.

BRITISH COLUMBIA ENTERPRISE
CORPORATION LOAN PRIVATIZATION ACT

HON. MR. COUVELIER: This bill deals with some administrative issues arising out of the privatization of the BCEC loan portfolio.

The intent of the British Columbia Enterprise Corporation Financial Restructuring Act was to vest all lending assets held by the B.C. Development Corporation into the newly created BCEC. When the act was proclaimed on August 21, 1987, it had the effect of retroactively transferring all BCDC lending assets in existence as at March 31, 1987, into the name of BCEC as of that date.

During the period April 1, '87 to August 20, '87, the ongoing administration of its lending responsibilities required BCDC to enter into certain lending transactions and created lending assets which may not have been captured within the wording of the BCEC Financial Restructuring Act. The bill at hand ensures that all lending assets arising from transactions occurring during that interim period are properly transferred from BCDC to BCEC.

[9:45]

The bill also authorizes the transfer of loans and loan documentation to purchasers. This authorization covers all loans administered by BCEC, including those provided through the low-interest loan assistance revolving fund. Uncertainty could arise following the windup of BCEC, as the BCEC prime rate would become indeterminable.

To avoid this situation, the bill contains a mechanism whereby the interest rate on the loans made by BCEC can be defined by regulation. This regulation will define the BCEC prime rate to be the commercial prime rate declared by a given schedule A Canadian chartered bank. This approach will protect the borrowers of BCEC by ensuring that the rate they are charged on their loans will always remain on market.

The final administrative feature of this bill is a cost-effective method of transferring BCECs interest in loans or loan documents to the purchaser of those assets. This bill will allow the land title offices of the province to respond to a certificate of vesting signed by the Minister of Finance and Corporate Relations. This will remove the necessity of producing the individual assignment documents normally required to effect the vesting contemplated by this bill. The savings and legal expenses to the province through the adoption of this certification process will be material and could easily be in the range of many hundreds of thousands of dollars.

In summation, this bill provides administrative support for the privatization of the BCEC loan portfolio — an activity which has produced material contributions to the province's privatization benefits fund.

I move the bill now be read a second time.

MR. WILLIAMS: Mr. Speaker, there's a fundamental question here. We've gone through this interesting exercise of going from the B.C. Development Corporation and its failures — bad loans — which have never been fully accounted for in any manner or form in this House or in the Public Accounts Committee. That was folded down, and its subsidiary enterprises — First Capital City Development Co. Ltd. — were folded down. Again, there was absolutely no accounting of these entities, either in this House or in the Public Accounts Committee of this Legislature.

We have no accountability in terms of the lending activities of this administration — pure and simple. This is a government that came into office promising it wasn't going to go into the lending business. This is a Premier who went around the province saying that we weren't going to do it anymore, and that it didn't make any sense.

Now, after a few years of exercise under the former minister — the first member for Vancouver Little Mountain (Mrs. McCarthy) — where Lord knows accountability was necessary....

MRS. GRAN: Don't pick on women.

MR. WILLIAMS: That's right. I don't think the member for Vancouver-Little Mountain wants to be counted as the weaker sex, anyway.

Interjections.

MR. WILLIAMS: I do understand the concern.

Nevertheless, I think that the minister, when he really thinks about it, would agree that there is a

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need for some accountability process in the lending activities of government. The situation we have is that these Crown entities have been in the lending business. It's very clear that the failure rate of some of the loans has been relatively high. That can be anticipated in some situations, but at the same time there is a need for accountability. We don't have that, so it begs the question: which are the loans that are involved in this statute? We don't know. It's reasonable that we should know which of the loans the Crown has are being privatized, and we simply don't know from this exercise.

I guess we could ask from some of the older lists. Was it Fibreco, Tackama, Holding Lumber, Onyx Contracting, Starline Cedar Mills, Clearwater Timber, Landucci Lumber, S. King Holdings, Canadian Autoparts Toyota or International Potter Distilling? We don't know. In terms of how we perceive government in this part of the world, one expects that kind of basic information to be available to us.

It's very clear from Mr. Parker's work that this exercise involved the selling off of the better loans, the ones that clearly held their value and were sold for their face value. At least, that's my understanding of it. In terms of Mr. Parker's activities in this regard, it was a sensible approach — if that was the mandate that government had given, and it was. I think he then avoided the problems of trying to value on the basis of risk or a poor payment record and that sort of thing; it avoided that question.

Clearly we're being asked to accept this statute and, in effect, to deal, after the fact, with the privatization exercise that the government went through. It's almost asking too much of the Legislature to holus-bolus accept all these lending activities and this after-the-fact legislation. The Public Accounts Committee of the House has been operating reasonably successfully this last year, and that might well be expanded. But we're talking about significant lending activities, and despite the promises of the election, those have continued, and the privatization exercise means that we should have had access throughout the process.

We might get into more of the details of this with the further reading in committee stage, but I would hope that the minister would discuss this matter in a little detail prior to the adjournment tonight.

MR. SPEAKER: Under standing orders, I advise the House that the minister closes debate.

HON. MR. COUVELIER: The member's comments were polite. The points were well made, and I'd just like to express my pleasure at how gratifying it is to participate in a debate that's held on a relatively high plane and in which personalities and that kind of thing aren't the focus. In any event, I'm pleased to move second reading.

Motion approved on division.

Bill 43, British Columbia Enterprise Corporation Loan Privatization Act, read a second time and referred to a Committee of the Whole House for consideration at the next sitting of the House after today.

Hon. Mr. Richmond moved adjournment of the House.

Motion approved.

The House adjourned at 9:54 p.m.