[ Page 8357 ]

CONTENTS

Routine Proceedings

Oral Questions

Exclusion of Spetifore land from agricultural land reserve. Mr. Harcourt –– 8357

Unused hospital imaging equipment. Mr. Blencoe –– 8358

Funding for Kamloops multiplex. Mr. Clark –– 8358

Milk industry task force. Mr. Rose –– 8358

Comox Valley transmission line. Hon. Mr. Dueck replies to question –– 8359

Lorax Forestry Ltd. Hon. Mr. Michael replies to question –– 8359

Committee of Supply: Ministry of Advanced Education and Job Training estimates. (Hon. S. Hagen)

On vote 5: minister's office –– 8359

Mr. Jones

Mr. Lovick

Mr. Serwa

Ms. Smallwood

Mr. Clark

Mr. Harcourt

Mr. Miller

Mr. Barnes

Mines Act (Bill 56). Committee stage. (Hon. Mr. Davis) –– 8393

Mr. Clark

Third reading

Mining Right of Way Act (Bill 57). Committee stage. (Hon. Mr. Davis) –– 8393

Third reading

Energy, Mines and Petroleum Resources Statutes Amendment Act, 1989

(Bill 59). Second reading

Hon. Mr. Davis –– 8394

Mr. Clark –– 8394

Mr. Darcy –– 8395

Hon. Mr. Davis –– 8396

Financial Administration Amendment Act, 1989 (Bill 37). Second reading

Hon. Mr. Couvelier –– 8398

Mr. Rose –– 8399

Mr. Clark –– 8403

Hon. Mr. Couvelier –– 8408

British Columbia Enterprise Corporation Loan Privatization Act

(Bill 43). Committee stage. (Hon. Mr. Couvelier) –– 8411

Mr. Williams

Mr. Clark

Mr. Miller

Third reading

Income Tax Amendment Act (No. 2), 1989 (Bill 79). Second reading

Hon. Mr. Couvelier –– 8417

Mr. Clark –– 8417

Hon. Mr. Couvelier –– 8417

The House met at 2:06 p.m.

MR. PELTON: Hon. members, we are very honoured in this House today to have with us the High Commissioner of Kenya, His Excellency Peter Nyamweya, and his wife Mrs. Nyamweya. They are accompanied by his second secretary, Rebecca Nabutola, from the high commission office in Ottawa. I would ask all members to make them very welcome, please.

In the gallery today are Mr. Paul E. Mathews and Mr. Wayne Booth from Whistler. Would the House please make them welcome.

MR. BLENCOE: I would like to introduce visitors from England. Today Group Captain and Mrs. Hurley are visiting from the United Kingdom. The group captain is an aviation consultant based currently in the Middle East and is on vacation at the moment, but I'm told that he wouldn't be averse to doing some business in the province of British Columbia. The group captain and his wife are accompanied by my father, Rev. Charles Blencoe, and his wife Freda. Would the House please make them welcome.

HON. S. HAGEN: It's a great pleasure for me to introduce to the House some friends from the great riding of West Vancouver–Howe Sound whom I met at the Christmas party of the Rotary Club in Vancouver's Chinatown: Mr. Benny Wong, his wife Linda Wong, and two sons, Arthur and Richard. Would the House please join me in bidding them welcome.

MR. PETERSON: On behalf of the first member for Langley (Mrs. Gran) and myself, I'd like to introduce to the House Bill and Gerry Garside. Would the House please join us in giving them a very warm welcome.

MR. BRUCE: Mr. Speaker, in your gallery today are two of several of my nephews: Travis Visscher from Morinville in Alberta and Kevin Visscher, a resident of Victoria. Would you please make them both welcome.

EXCLUSION OF SPETIFORE LANDS FROM
AGRICULTURAL LAND RESERVE

MR. HARCOURT: I have a question for the Premier. Two weeks ago the former Chair of the Cabinet Committee on Environment and Land Use wrote the Premier to express his concern about the basis upon which cabinet excluded the Spetifore lands from the agricultural land reserve. He stated: "In hindsight, it appears that some of the information on which we based our decision was inaccurate." Can the Premier tell the House what steps he has taken to determine exactly what inaccuracies lay behind cabinet's Spetifore decision?

HON. MR. VANDER ZALM: Perhaps, since oftentimes we receive a fairly lengthy introduction of a subject before the question, the Leader of the Opposition could tell me what he had in mind.

MR. HARCOURT: The Premier has had two weeks to read the letter from the former Chair of the cabinet environment and land use committee — he was a fellow cabinet member at the time— who said that the major decision to exclude the Spetifore lands from the agricultural land reserve was based on some inaccuracies. My question, which I will repeat, is very simply this: can the Premier tell the House what steps he has taken to determine what inaccuracies lay behind cabinet's decision to exclude the Spetifore lands from the agricultural land reserve?

HON. MR. VANDER ZALM: I'm not aware of any inaccuracies. I certainly haven't heard of those from anyone, including the opposition. But let me say this: I get a little tired of hearing the members of the opposition calling for us to interfere with the process of local government. There is a process for local government, and this government has repeatedly said: "We respect that process of local government." To hear from the former mayor of Vancouver the suggestion — at least, I take it that's implicit in the question — that we should somehow interfere with Delta council and the regional district, all of those local governmental bodies that are right there on the scene and have voted unanimously for this process to go forth as it did, to suggest, as the Leader of the Opposition is doing, that the Premier should politically interfere with this process, I cannot accept. Shame on the Leader of the Opposition.

MR. HARCOURT: Well, I'm glad the Premier reminded us that the regional district was involved in this decision. As a matter of fact, the regional district voted against excluding the Spetifore lands from the agricultural land reserve. You took away their powers to plan. Some respect for local government! As a matter of fact, I can understand why the Premier wants to park this matter with the Delta council and not outside his office door where it belongs, but I want the Premier to be aware of the Delta mayor's statements on this issue. Mayor Doug Husband says: "We are the end result of a chain of what was action started by the province. They got the land to the point for this council to deal with it."

Mr. Speaker, my question to the Premier is very straightforward. He does have a choice to put this back in the agricultural land reserve or go with the developers on this issue. My question is: can the Premier assure the House that he will now review the original political decision to take the Spetifore lands out of the agricultural land reserve, a decision by a cabinet of which he was a member?

HON. MR. VANDER ZALM: Mr. Speaker, the Leader of the Opposition knows full well that the regional district requested this, that the Delta council voted for this and that we were petitioned by a unanimous vote from those bodies. He knows this full well, and he's again attempting to twist the facts.

[ Page 8358 ]

But let me say again that what he's asking — and now it's clear — is to ignore the Delta council and the request from the regional district and have the Premier interfere with this process. It's simply a matter of: he stands depending on where he's at.

[2:15]

MR. HARCOURT: Mr. Speaker, the Premier can wave his glasses around all he wants, saying it was a unanimous vote of the regional district. Well, I was there, and I voted against it, and so did the majority of the regional district. The Premier can use whatever selective memory he wants on the issue, but I remember, and so do the people, the time when the powers of the regional district to deal with land use and agricultural lands was removed by the government of which he was a member.

Mr. Premier, given that cabinet rejected the expert opinion of the Land Commission, isn't it a fact that this decision was based more on helping Socred friends than on any factual information, good or bad?

HON. MR. VANDER ZALM: The Leader of the Opposition says he was there. Well, I can recall those regional district meetings as well, and I think perhaps he missed a few of those meetings, just as he is missing a good many meetings right here.

One of those meetings, for which I will provide the information to him, was the regional parks committee meeting. He knows that in fact there was considerable desire on the part of the regional district to see those foreshore lands established as a park, and there is information available to him in that regard.

Again let me say that we as a government will honour the local governing process. If the Delta council wishes to make a request We expect it will come from the Delta council, and if they wish to involve the regional district or the parks committee, they will do so, I am sure. This will certainly be the process that has to be followed. We'll not circumvent local government. We will stay and always be supportive of local government.

UNUSED HOSPITAL IMAGING EQUIPMENT

MR. BLENCOE: I have a question for the Minister of Health. Can the minister explain why two expensive magnetic resonance imaging machines installed in April at the Victoria General Hospital and the Royal Jubilee Hospital are gathering dust and not being used?

HON. MR. DUECK: I will be only too happy to respond. To begin with, you have to take into consideration that the hospitals operate autonomously, and what they do, how they pay people, is up to them. It is a considered opinion of the hospitals that this type of procedure should be paid by salary rather than fee for service. We agree, and there is a disagreement as to how payments will be received by the physicians or by the radiologists who operate this equipment. Having said that, I cannot go into detail as to where the negotiations are at this time, but I must say that it is somewhat selfish on the part of some physicians who wish to go against the wishes of the administration when the fee or the salary offered to these physicians is very substantial. Therefore the Ministry of Health is taking the position of full support.

MR. BLENCOE: Supplementary, Mr. Speaker. These machines cost $3 million each. They represent the state of the art in diagnostic technology, and they avoid the radiation dose of older machines. Will the minister commit to taking whatever steps are necessary to make this medical technology available to Victoria residents and show some leadership for a change in the health industry?

HON. MR. DUECK: I don't know if that is an application to be an administrator at one of the hospitals, but I can assure you that if his application comes in, it will be rejected. But having said that, we're looking at the hospitals to operate their facilities in a manner that is appropriate, and thus far we have good operations. Again, why don't you ask the physicians why they don't work for a certain amount of money that has been offered to them?

FUNDING FOR KAMLOOPS MULTIPLEX

MR. CLARK: I have a question for the Minister of State for Thompson-Okanagan and Kootenay. Today Kamloops council must make a decision as to whether or not to spend $1 million on architectural design for the Kamloops multiplex. Under the terms of the municipal referendum, the city cannot spend the money without commitment from senior levels of government. The people of Kamloops have waited long enough for your approval. Have you decided to approve the city's $6 million request for Go B.C. funding?

HON. MR. DIRKS: Obviously that decision has not been made yet.

MILK INDUSTRY TASK FORCE

MR. ROSE: I'd like to address a question to the Minister of Agriculture. The minister is aware that the first half hour of every meeting of the De Jong dairy so-called task force is given over to a pro-opt-out pitch by an official of his department. Does the minister plan to grant equal time to an expert who can explain the value of remaining within the national plan so that the dairy industry can receive the balanced and important information necessary to make an informed decision?

HON. MR. SAVAGE: As you know, British Columbia is trying to design a plan for one clear and succinct objective: to be able to produce more good, healthy dairy products from British Columbia farms. That is the goal that farmers are looking for and that this government is looking for. We are determined to get a greater share of the market share quota from the

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federal system. If we did not put forward a proposal in a way that could help get that share, then I don't believe we as elected officials would be doing our job. The members from Ontario and Quebec, in my opinion, are not willing to give us sufficient for an equitable share for our producers and our consumers.

What we are really doing is trying to give the dairy producers an opportunity. When we addressed that at the start of each of those hearings each evening, we were saying that this is what we are proposing as a province. Obviously we have to explain. You can rest assured that most of the people in those meetings already understand the system as it presently exists. Therefore I believe they will make their concerns heard by the task force and by Mr. De Jong as the chairman.

I do not believe that we are in any way jeopardizing the producers. What we have done is to put in place a program that will guarantee the existing producers their present amount of fluid milk, plus the MSQ they presently have, plus what was added by the negotiating process with the Canadian Dairy Commission and the Canadian Milk Supply Management Committee.

I can also assure you that there is an awful lot of vacant agricultural land in several areas of this province that could be used to a great extent to increase not only the use of that land but to generate up to more than $20 million for the economy of this province. By allowing that task force to do its job to promote opportunities for future and existing farmers in British Columbia to get a greater amount of quota and the MSQ to provide industrial milk, I really believe we are going in the right direction, Mr. Member.

COMOX VALLEY TRANSMISSION LINE

HON. MR. DUECK: Mr. Speaker, I would like to respond to a question taken on notice from the member for Kootenay (Ms. Edwards) in regard to action taken by the Ministry of Health to assess the health hazards associated with the proposed construction of a transmission line in the Comox Valley.

While current information on the effect of electromagnetic field exposure does not indicate that a health hazard exists for persons living close to one of these lines, it is very important that the public be given as much information as possible so that the nature of any potential risk can be understood. I therefore support a cooperative approach involving the public utility company and affected individuals or groups, to enable them to look at the total process of how living close to a line might affect their life and their health.

The B.C. Utilities Commission has ordered B.C. Hydro to stop work on the construction of an electrical transmission line between Dunsmuir and Gold River on Vancouver Island pending a public inquiry to be held today and tomorrow, I understand, addressing the issues of safety related to the public exposure of electromagnetic fields.

LORAX FORESTRY LTD.

HON. MR. MICHAEL: A question was taken on notice yesterday from the second member for Vancouver East (Mr. Clark). The question made reference to Lorax, and I'd like to say that our ministry has had a good working relationship with Lorax. They have had a very good reputation for providing forest-related training programs. Further, employees who took the seminar were part of the employee group which successfully purchased six provincial forest nurseries and are now working in the private sector at Pacific Regeneration Technologies.

I might add that this is very similar to the other areas that have been privatized — adding to the staff, more employees working, more jobs in British Columbia, expanding services to British Columbians.

Orders of the Day

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

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

ESTIMATES: MINISTRY OF ADVANCED
EDUCATION AND JOB TRAINING

On vote 5: minister's office, $265,076 (continued).

MR. JONES: Before the lunch break, the minister and I were beginning to discuss the situation with respect to degree completion programs in the various regions of the province, particularly as it relates to the kinds of contracts that are being reached by universities and community colleges in which they will deliver third- and fourth-year programs leading to degree completion.

I used this as an example to illustrate a concern that I have about the need for leadership, about the need for increased cooperation between the various components of the various sectors of post-secondary education in the province. When it comes to the delivery of these programs, very clearly there is competition: competition for control of the kinds of academic decisions that will go to produce those very worthwhile programs in third and fourth year in the various regions of the province, competition for decisions on who selects faculty, competition for decisions with respect to the curriculum that will be offered, competition with respect to the admission criteria that will be used for students gaining entrance to those programs and competition for the graduation requirements that will be there in place to determine who receives a degree jointly from the universities and the colleges. I am concerned that this kind of competition will lead to a variety of agreements reached in the province and that when some small colleges are in competition with some very large universities, the kinds of arrangements that are reached may not be in the best interests of those small institutions.

[ Page 8360 ]

For example, I understand that UBC is very desirous of determining student admission, promotion and graduation requirements. They want to set examination and grading policies, as they are the ones awarding the degrees. As well, they desire to establish the qualifications for individuals to teach the upper-level and professional courses, and are going to be actively involved in the selection process for those faculty members.

I recognize that the minister has to respect the autonomy of these institutions. But at the same time, it seems to me that when we have a variety of these kinds of negotiations going on around the province, there is a leadership role for the minister to take in order to provide guidance so that there is a balance of power in these negotiations and the fairest kinds of arrangements can be reached between the colleges and the universities.

I'm not completely aware where these agreements are at the present time. I do know that at Malaspina there is a considerable problem and positions being put in dispute by the faculty association there. I'd like to ask the minister how he sees his role and his ministry's role in these kinds of arrangements that are taking place between the universities and the colleges.

[2:30]

HON. S. HAGEN: The role that I play is, first of all, to make sure that these arrangements and agreements take place fairly. I have appointed Dr. Lloyd Morin to be the individual who can be called upon by the colleges and universities if any assistance is needed. I'm sure you're aware that the board of the college selects which university or universities they wish to enter into an agreement with. The faculty ends up as.... They are employees of the college but, as I think you mentioned, are assisted by the universities in the selection process. This is important, of course, because one of the things we as a government wanted to assure is the finest quality, and we want to maintain the quality that our universities are known for around the world.

MR. JONES: I'd just like to leave the minister with a question and defer to the first member for Nanaimo (Mr. Lovick) with regard to the situation there Perhaps in response the minister could incorporate the remarks of the member for Nanaimo.

The minister suggests that there is a leadership role being played by the ministry, and that role is to ensure that these arrangements are fair. Is the minister satisfied that the arrangements are going ahead and that there is not a preponderance of favour given to the large universities, particularly UBC, in these arrangements? Is the minister satisfied that these arrangements are fair, particularly in reference to the situation at Malaspina, where there are staff positions in dispute? I won't say anything further on that. I know my colleague from Nanaimo wishes to speak on that matter.

HON. S. HAGEN: The answer to the question is yes.

MR. LOVICK: I listened with interest to the response of the Minister of Advance Education to my colleague's question regarding the situation in Nanaimo at Malaspina College and what happened when we finally achieved the agenda that people have been pursuing for some time now; namely, the granting of degree-conferring status to the community colleges.

It is sad to relate that an otherwise very good plan and proposal is unfortunately flawed, insofar as it would appear that there wasn't the consultation or advance planning that ought to have been undertaken. I'm referring specifically to the fact that we now have rather an anomalous and unfortunate situation in Nanaimo, where we have a grievance procedure being undertaken because the faculty association, the bargaining unit at Malaspina College, is beginning to perceive that somebody else is trying to get in the way of their proper activity.

The question, obviously, is: why couldn't that rather simple problem have been dealt with in advance? Why did it happen that the college now finds itself in this position, spending money and going through an incredible amount of wasted time sorting out this jurisdictional battle, when it ought not to be the case? All I'm asking the minister to report to this House is what he did in anticipation of those kinds of problems. Did you do anything?

HON. S. HAGEN: To the first member for Nanaimo, who I know has a very short attention span and who I would encourage to read my lips for the answer, and also to talk to his colleague the member for Burnaby North, who was chastising and tearing the minister apart this morning for taking too long to implement this program.... He said I sat there and had this plan on my desk: "Why did it take so long to put the plan into being?" I explained that not only did we have the "Access" report to deal with but we also had stacks of correspondence, the chamber of commerce report, the MLAs' reports and the Interior University Society report, and we wanted not only to announce this program but also to have an implementation plan. That is exactly what we did. We did not take too long; we did not implement it too soon. We did it in exactly the right amount of time. It is a well-received program around the province.

I know there are some negotiations taking place in Nanaimo which I will not interfere with or involve myself with. I respect the fact that the member may be under some conflict by teaching there, but I will not get involved in that. That is something that has to be negotiated at the local level between the board of the college and the faculty association, and I'm very confident that will be achieved.

MR. LOVICK: I began with a certain amount of equanimity and reasonableness oozing from every pore, but when I listen to somebody of the stature of the Minister of Advanced Education telling me I

[ Page 8361 ]

don't listen carefully enough, I'm afraid it begins to rattle a little bit. If ever there were manifestation, a paradigm case revealed, of somebody who ought not to accuse others of those weaknesses, it is he, sans question. However, I won't beat up on him at this point. After all, one hates to hit a defenceless target.

I would just make the point to the minister that if indeed you want to pride yourself on the fact that the program was introduced just right, that it didn't take too long and that it wasn’t too rushed, why do we have the problem in Nanaimo that you just referred to? We have it because the preliminary work was not done; that's why. I'm merely asking the minister to tell me something about what was done in the name of advance work. Don't just give us all of this fluff and assurance that everything was nicely done when I'm presenting you with an exact and specific example to suggest that in fact everything wasn't done Will you try again — better luck this time — to answer the question I posed to you a few moments ago? What did you do in advance?

HON. S. HAGEN: Mr. Chairman, through you to my hon. colleague the first member for Nanaimo, who certainly always does listen attentively to everything I say, let me point out that a considerable amount of groundwork was done at all three places: Nanaimo, Kamloops and Kelowna. In fact, all three of those institutions — the three colleges in those cities — arrived at conclusions of negotiations with the individual universities they were dealing with at different times, because their needs are different; they're dealing with three different universities. In the case of Malaspina, they're dealing with the University of Victoria. A considerable amount of negotiation took place; a considerable amount of correspondence was traded back and forth over a period of several months. As I said, I'm aware that there's a small difficulty at Malaspina, but I am sure — and I've been assured by the president there — that it will be overcome. I'm sure that they will want to progress to the same stage that Okanagan College and Cariboo College are at.

MR. LOVICK: I'd like to pursue briefly another matter on the same subject of the change in status of Malaspina College, my old place of employ. This one strikes rather close to my heart as well as my head, having been a college instructor for a number of years.

One of the things that all of us in the profession of academic or intellectual exercise hold absolutely sacrosanct is the facility of the library. Clearly, without an adequate facility of that kind, no college or university can do what it is designed to do. I have raised the matter of funding for college libraries for some time. Indeed, with this particular minister, I pointed out before that I had some concern about conferring degree-granting status on a place like Malaspina College because for a number of years now that particular institution has been bemoaning its fate, insofar as the majority of faculty members there, and indeed students, argued that they didn't have adequate library resources.

In fact, Mr. Chairman, you will appreciate this parenthetical aside, when I tell you that it's a bit of an in-joke at Malaspina College in Nanaimo. A number of my colleagues who taught there for any length of time all said: "Isn't it curious that we don't seem to have any good books since 1975?"— in other words, the date of publication. We had this wonderful library up to about 1975, and then curiously, thereafter we suddenly discover there haven't been the same infusions of new material. In any event, that's the context. We haven't had the kinds of resources that we claim are absolutely required and necessary. I'm wondering if the minister will tell me and the members of this House how much money was allocated for library purchases to accommodate the new status — the addition of third- and fourth-year courses at the college, What preliminary work was undertaken to determine how much ought to be spent for that purpose?

HON. S. HAGEN: I share the concern that the member for Nanaimo has with regard to libraries. I recognize that this is the focal point of any institution of learning, and a very important one. We have been encouraging all of the colleges — with the increase in budget particularly that they've had this year; I think it's 18 percent or something like that — to concentrate on upgrading the paper holdings in their libraries. At the same time, we announced as a part of the access program a sum of $350, 000 to start an electronic library.

Right now the colleges all are on a one-day service — or a one-day turnaround — with the UBC library. As a matter of fact, with the new UBC library, they're going to have an extensive electronic database, which will then be available to the other universities and also the university colleges. We are encouraging the colleges and in particular the university colleges to focus on building up not only the electronic part of it but also the paper-holdings part of it. This is not, as I know the member well knows, without a problem. One of the areas of concern in the whole library picture has been the increase in cost of periodicals, for instance. There is not only the increase in the number of periodicals, but the cost per periodical has been staggering, to say the least. I know that even UBC, as probably a last resort, has had to start limiting the number. I think they have even made arrangements with the professors to encourage professors to subscribe to periodicals that the library doesn't. Then I think they give the professor a bit of a discount or something if they put it in there a week after they've read it. It's a problem for them to deal with, and I acknowledge that. But one of the things that we've asked them to do with the increase this year is to address the library.

[2:45]

MR. LOVICK: Well, I appreciate that detailed answer. I'm wondering if I might get a little more specificity, however, in terms of how much, first, for

[ Page 8362 ]

the hard collection of books, and then, for increases in the periodical collection.

HON. S. HAGEN: As the member knows, we allocate the total dollar amount to each college and what we can do — we are very persuasive at doing this sometimes — is suggest to the college areas that they should be targeting. We have not specifically line-targeted the library. Perhaps we should, but we haven't. I believe that the college administrations are just as cognizant of the need to spend money on the library as you are and as we are. We have not specifically line-targeted a budget amount except for the $350,000 for the electronic library, which is above and beyond what they get, but I am confident that they will address those needs.

MR. LOVICK: Then the rumour of a sum of $25,000 going to Malaspina College for its library collection is just that — simply a rumour? Demonstrably, that would not be sufficient to do very much in terms of a print collection. Unfortunately, we are also in that institution playing catch-up and have been doing so for a long time. That's the predicament

The reason I am posing the question is not to castigate this ministry or this government for not putting in enough money, but rather to simply see if I can determine whether the preliminary analysis, consultation and discussion that the minister alluded to did happen when we decided that we could offer the service of third- and fourth-year courses at those institutions. When I hear only a vague response to the questions about library facilities, then I am afraid I hear the little alarm bells go off inside the cranial cavity, Mr. Chairman, and I begin to wonder if we did the work that we ought to have done.

I would therefore come back to the question I began with: what kind of study or analysis was done in determining what those three institutions required by way of library facilities in order to be able to function as bona fide providers of third- and fourth year university courses?

HON. S. HAGEN: I just want to reiterate the process that took place — and the member is targeting in on Malaspina, obviously, because it's in his riding. Prior to the announcement dated March 20, the board of Malaspina had in fact selected that they would go into partnership with the University of Victoria, which I think was a wise choice. Most of the students from that area — and you can answer this better than I — go to the University of Victoria.

They had decided on the programs and the degrees that they were going to offer. They had several working meetings between the staff and administration at Malaspina and the staff and administration at the University of Victoria. They had agreed in principle, and the concluding of the agreement was then up to those two — the college and the university — to complete.

The amount of expenditures they would have to make on the library would depend on the degrees that they were going to offer. They did not make that choice until the spring of this year, so they would not have known until then what areas they were going to have to beef up in their library. They now know that.

They have been given what I consider to be a very appropriate budget this fiscal year to assist them in dealing with the purchases that are going to have to be made. They will be dealing with those purchases by specific disciplines and courses.

MR. LOVICK: I will leave that subject. Again I appreciate the forthrightness of the answer. It is moot whether that will satisfy all the people who are posing the questions. I think there are some who are predisposed to believe that we were precipitate in the judgment; but again, let history decide.

I want to turn very briefly to another area under the auspices and the aegis of this ministry; namely, the whole large question of adult literacy. I had the pleasure and privilege of attending a workshop some months ago in Nanaimo, invited by the students in the adult literacy program. Appropriately enough, the students called their organization ALLOW — Adult Literacy Learners On the Way, which sounds a little elaborate, but the terminology is absolutely correct: allow. That, of course, is what literacy is about. It is literally an empowering process. It's a giving of strength, a giving of ability to people which will then allow them to play a full and meaningful role within their societies.

In the course of that workshop, Mr. Minister, I discovered that a number of concerns were alive and well in the minds of those attending, insofar as the question occurred of whether we were providing the support service to people who have somehow been left out of the mainstream of education and therefore find themselves in that incredibly and authentically disadvantaged position of not having literacy skills. I might just ask the minister to give me, if he will, a brief report on what we do in the province in terms of fostering adult literacy.

HON. S. HAGEN: This is, I think, an area where we are in agreement as far as its importance is concerned. It gives me an opportunity to give some accolades to those who work in the college system, the instructors and people who help to deliver the programs. This is an area where lives are changed, where outlooks are changed, where people can see a light at the end of a tunnel. I suspect that the member opposite has had a more direct involvement with it than I have.

I'm sure you know that I appointed the literacy committee, and we did canvass that this morning. It's under the chairmanship of Dr. Paul Gallagher. That committee has been working and meeting regularly. I've had some verbal contact with Dr. Gallagher, and he tells me they're moving along at a good pace. I expect an interim report from them in September.

We have set a priority on literacy. As you know, the Southam poll indicated that British Columbia, although it was the best in the country, still showed an illiteracy rate of 17 percent. On the one hand, you tend to be a bit smug when you look at that, and you

[ Page 8363 ]

say: 'We're the best in Canada." On the other hand, I said publicly that 17 percent is nothing to write home about. In fact, we must strive to reduce that percentage drastically. When the report comes in to me from the Gallagher committee, I expect to act on it. I did indicate that the report would be made public. We have approximately $5 million in our budget this year to use on adult basic education and literacy training throughout the province.

MR. LOVICK: I wonder whether the minister might be able to give me a little more specific information in terms of how that $5 million is allocated: whether we're talking about a particular number of positions or programs, or those kinds of things. Certainly I know that it goes to adult basic education activities and so forth. Anything more specific than that to report, Mr. Minister?

HON. S. HAGEN: I've just checked to see whether we could be more specific, and I'm told we could go to each college and get what they had allocated in each of their budgets. I will do that, if you wish; I don't have any difficulty with that. But I can't extract it from this 12-line budget.

MR. LOVICK: One more brief question, Mr. Chairman. Do I understand from the minister's response to my last question that the model we have set up to deal with the problem of illiteracy, otherwise known as the crisis of illiteracy, is a decentralized one; that we are in fact deferring the responsibility to particular colleges and other institutions? Could you explain that for me, please.

HON. S. HAGEN: That's a very legitimate question. No, you should not read that into it. What I'm waiting for is the Gallagher report. I expect, knowing Dr. Gallagher, that he and his committee will be suggesting how the province can deal with this question more effectively. Whether he will recommend a more centralized approach or a decentralized approach, I really don't have any idea. But don't read into that that we're going to continue in the same way.

MR. LOVICK: I appreciate the clarification. I'm pleased to hear that this is the case, because if ever there were a crisis a building or a crisis extant, surely this must qualify as one. I'm delighted to learn that this is a temporary measure until such time as the report comes down.

I understand also that 1990 is the International Literacy Year, and I would dearly hope that we might celebrate that by being able to say within a very short time that the figure is no longer 17 percent in this province, but is somewhat less. I believe that 17 percent translates into about 360,000 persons; that's scandalous and something that we're all embarrassed by in a society as rich and prosperous as ours.

I thank the minister for answering the questions; have no further for the moment.

MR. SERWA: I'd just like to take a few minutes of the time during the minister's estimates to convey my heartfelt feelings from the central Okanagan and Okanagan South and, I think, from the entire Okanagan community about the action that the minister initiated earlier this year.

It was back in 1965 that the former Premier, W.A.C. Bennett, suggested that the Okanagan would be a wonderful site for a university, and that fell by the wayside because of a great deal of conflict. We did develop a vocational school, and that vocational school evolved into Okanagan College, which was a combination of vocational, technical and academic opportunities for some of our young people in the Okanagan.

I spoke to this in my nomination address, and it was obviously exceedingly important to the people of the Okanagan. Right from the first time that we met the minister, I and all Okanagan MLAs endeavoured to convince him of the necessity for this opportunity. That necessity was certainly strengthened by the member for Prince George North (Mrs. Boone) entering into the discussions with her concerns about a university concept for Prince George and by the member for Prince George South (Hon. Mr. Strachan), who also supported us in the university concept.

Two hundred and fifty thousand people live, work and play in the Okanagan Valley, and this has given us an opportunity to enter the twenty-first century with well-educated students who can take their full and rightful place in our community. This action on the part of the Minister of Advanced Education has assured job opportunities and prosperity for the people of the entire Okanagan region.

I would like to commend the Minister of Advanced Education, our Premier and our government for giving the people of the Okanagan the opportunity to start matching the percentage of students getting university diplomas and moving towards opportunities to that in the lower mainland or southern Vancouver Island. I just want to convey the heartfelt gratitude of that entire Okanagan community.

[3:00]

1 wish that all members of the Legislature could have been in the theatre at Okanagan College when the announcement was made. We had professors, students, parents and members from the community. We had the Friends of Okanagan College there who had worked so hard, and the amount of applause and the splendid feeling of warmth were incredible. This was the first issue in the 44 years that I've lived in the Okanagan community about which all sections in all communities in the Okanagan were truly united with one common purpose and vision. So I thank the minister for that tremendous opportunity.

MR. JONES: There are a couple of areas of concern I'd like to raise with the minister before we leave the whole area having to do with the access report and the Access for All program — which has been the ministry's major focus or major accomplishment in this last year since the last set of estimates.

[ Page 8364 ]

The minister established a provincial access committee and eight regional committees. The purpose of those regional committees, of course, was to elicit opinion from the various regions of the province and to have input from the various communities. Those committees were hand-picked, and I think were very sincere in their efforts in trying to do a good job in representing the communities. I notice, however, that the minister had placed a representative from the OLA on each of those individual committees.

I don't want to get into the debate on open learning that we've had before in this House, and the minister is aware of our support for and our concerns about open learning and distance learning. The anomaly that I see and would like to raise with the minister with respect to that process is that while there was a member of the Open Learning Agency on each of those eight regional committees, when I reviewed the reports of each of those committees, the concept of open learning or distance education played a very small role in terms of those reports Several of the reports indicated nothing about open learning, and the remainder said very little about open learning as far as the regional access reports go. Yet when we see the provincial access report and their recommendations, something like one-quarter of the recommendations that made it to the provincial access report had to do with open learning and distance education.

So very clearly it was of greater concern to the provincial committee and, I assume, to the minister and the ministry than it was actually to those people who I would have expected to be most concerned about open learning and distance education, the people in the regions of the province. I was quite surprised to see that that wasn't reflected in their reports while it was reflected in the provincial report.

I guess I can conclude that the push for open learning and distance education continues from the ministry, and I see that reflected in the improved degree-granting status in the regions of the province As I understand it, while we just had a debate in question period and a debate here about the importance of the autonomy of those individual institutions, those institutions have been instructed to involve the Open Learning Agency in all their planning for degree-granting status in Kamloops, Kelowna and Nanaimo.

So very clearly those things are being pushed, and they are coming, as I see it, from the top down rather from the bottom up.

Does the minister not trust those people in the field? Does he not respect the autonomy of the individual institutions? Why is it that as part of this degree-granting program in the regions he is instructing these local autonomous institutions to include the Open Learning Agency in all their programs?

HON. S. HAGEN: This province is recognized in this country and, indeed, around the world as having the best delivery system in distance education. That is why the Commonwealth of Learning, the only agency of the commonwealth located outside of England, is located in British Columbia. I doubt that there is a person who lives in this province who isn't aware of the Knowledge Network, who isn't aware of the great opportunities of achieving education and having access to education even though you may not live near a college, university or institute.

I look upon the Open Learning Agency as an integral part of the delivery system of education in this province. It is as integral a part as the universities, colleges and institutes. I believe that the OLA has a very important role to play in many areas of the province.

The role that the Open Learning Agency plays I think will vary from region to region. The role that it plays is interesting. There are a lot of people who subscribe to the open college or open university in the lower mainland, even though they are close to one of the walk-in facilities. But it may just not fit with their schedule. The amount of involvement of OLA, as I say, will vary not only according to region but I think from individual to individual.

If a student enrolled in a college can get four out of five courses but the fifth one conflicts with their working schedule, bearing in mind that I think over 50 percent of the students in our college system are part-time students for one reason or another — they may have family responsibilities or employment responsibilities — they may want to take that fifth program through Open Learning if they want to take it that same year.

Yes, the OLA has an integral part to play, and they are, in fact, an integral part of the establishment of the programs. I think that OLA will continue to play an expanded role as we move along in enlarging our system of education in the province. I know my wife, for one, is very thankful for the Open Learning Agency and for being able to get her degree from a great university like Simon Fraser while still residing in Courtenay.

MR. JONES: I thank the minister, although I indicated I didn't want to get into the debate on the merits and the demerits. I guess by doing that the minister has confirmed that the ministry and the minister are pushing open learning at a greater pace than is appreciated by the regions, as indicated by the regional access reports.

Seeing as the minister got into that debate that I didn't want to get into, I will ask one further question. I appreciate all that the minister says, and I think there certainly are areas where distance learning is of tremendous benefit to people in the regions for a variety of reasons. However, I know that the budgets of that agency are increasing at a great rate. So I would like to ask the minister: has there been any cost-benefit analysis of distance education and the Open Learning Agency in B.C. under his ministry?

HON. S. HAGEN: No, we have not commissioned a cost-benefit analysis, but I will say that the enroll-

[ Page 8365 ]

ment under open learning is increasing at 12 percent a year.

I also want to read into the record.... I should know better than to quote dollar amounts that I don't know, but I was given incorrect information before. I did indicate that the amount spent on adult basic education and literacy this year was $5 million; in fact, it is an increase of $5 million, and the expenditure figure is $40 million.

MR. JONES: While the minister is on dollar figures, let me repeat a question that I asked earlier and the second member for Vancouver–Point Grey (Mr. Perry) has asked. I have before me a number of ads. One is a full-page ad appearing in the Times-Colonist on Monday, June 12, 1989, with a heading: "There's a New Vision for the Future of Advanced Education in B.C." and a picture of the minister. The minister is not a bad-looking person, and it adds to the page, I suppose.

I have the eight-page Provincial Report, and this picture of the minister — this is when he had his bad attack of slipped disc, I suppose, and he's grimacing a bit — went out to every residence in the province of British Columbia at the taxpayers' expense. Then we have this one — and I think it's very important that this kind of advertising take place — which is a full-page ad in the Sun on Wednesday, June 28, 1989, headed: "New Degrees of Excellence for University Students in British Columbia." I think it's very appropriate that these worthy programs are being advertised, and I don't think that's a bad use of tax dollars. However, again there is a rather large picture of the minister on that page.

The second member for Vancouver–Point Grey also indicated the tremendous number of television advertising spots that the government is promoting at this time. So as part of our estimates debate, I think it would be good to get some response from the minister in terms of the amount of taxpayers' dollars being spent on this advertising. Some cynics might say that it is political advertising, and I suppose everything that governments do can be construed that way. But the big picture of the minister is part of those ads. The ministry is putting out good information. The minister is putting out his picture, and he will be running again in the next provincial election, I hope, and that kind of advertising never hurts. So I am curious — and I hope the minister will respond with at least some idea of the amount of funding on the part of the taxpayer that goes into the advertising of those good programs.

HON. S. HAGEN: I was hoping to be asked that question, and I just happen to have the figures. The amount of money spent to advertise the Access for All program is $210,000. 1 can break that down to print: $141,000. I can break that down to the Vancouver Sun: $12,000; regional papers: $129,000; radio ads: $53,000; and production costs: $16,000. 1 didn't have much input into the size of the minister's picture, but nobody in the province knows who I am, and it's because we never advertise. So for the first time in two and a half years, people in the province will now put a name to a face or a face to a name. We don't get the exposure that sometimes you get on the other side.

MR. JONES: Well, I've been trying to keep a low profile myself actually. I know the minister doesn't have any leadership aspirations or anything like that, so I know that advertising has nothing to do with that. I appreciate that answer. Obviously the minister's staff is briefing him very effectively, and I appreciate that. It was the third time we asked the question, but I still appreciate the answer.

Let me wind up the access part of this discussion with one of the concerns I have about the report. There were some 36 recommendations in that report, and a number of them were acted on. The minister has indicated, at least in one area, that although there wasn't an announcement about action on those recommendations, there is movement in areas of the report other than the major ones announced on March 22. I assume that some of those recommendations were rejected, some are being acted on behind the scenes and some were approved.

[3:15]

1 wonder about a couple in particular that I think are important. Let me list four: firstly, counselling services being more readily available — I think everybody recognizes the importance of people being properly counselled so that they fit into programs appropriately; secondly, a similar one — that there be a higher emphasis on guidance and student services, a strong recommendation from the regional access reports; thirdly, that there be more provision for sports, cultural and extracurricular activities at colleges and institutes; and fourthly, the recommendation that would allow colleges to grant associate degrees. These certainly weren't the highest priorities, but I don't think they were unimportant. I'd like to get the minister's response to those areas.

HON. S. HAGEN: Mr. Chairman, could I ask for No. 2 again? I missed it.

MR. JONES: No. 2 is similar to No. 1. It was the recommendation that suggested that there be a higher emphasis on guidance and student services.

HON. S. HAGEN: On the first two, if you want to group them together, the colleges make those allocations in their budgeting process. But again, I say that by the increase in their budgets this year, we know that they're going to focus more on the counselling aspect. We did target counselling for special needs students, with a doubling of that budget from $500,000 to $1 million, which will deal with handicapped individuals; they have been targeted specifically.

Point 3, more provision for sports, is something that we have not spent a great deal of time on, although there are some colleges that are now looking at doing some joint facility provisions with local communities, in the way of theatres or sports facili-

[ Page 8366 ]

ties. Interestingly enough, in some colleges sports have not been a major aspect of their program, while in other colleges they have. I suppose that may sometimes relate to the people they've brought on stream. We are also expanding sports scholarships in British Columbia in the post-secondary ministry.

The question of associate degrees is under consideration; I think it would involve legislative changes. I happen to think it's a good idea, but we will not be dealing with that this session. Let me put it this way: we are working towards a plan to deal with associate degrees at the college level.

MR. JONES: Thank you to the minister for that answer. I happen to agree, in that I think there is room for an associate degree in this province. I think it could add considerably to the stature of the colleges to grant something that represents a step and an added area of achievement in post-secondary education.

just to wind up the access business, I must say that the minister's response and the positive steps he has taken to improve access to education in British Columbia are most appreciated. Although, as I suggested earlier, the achievement was reached at a slow pace, what we have achieved at this point is still modest, but it is a very important first step in a very positive direction.

I must add again that it's a recognition of the years of neglect of post-secondary education by previous administrations. However, in terms of the achievement of the promises, the sincerity of this government and the political will to carry through with that long-term commitment, the jury is still out. But it is very much appreciated in going part-way to at least solving the quantitative problems of post-secondary education. I'm sure the minister is aware of, and I don't have to reiterate, the importance of continuing to improve the qualitative aspects of post-secondary education as well as the quantitative.

I'd like to go to another area of post-secondary education at a particular institution. I think the minister will accuse me of going back in history, but I think it was important for me to do this and come to an assessment of my view and express some of my concerns about the approach of the minister and the ministry in dealing with at least one institution that I'm aware of. I hope it's not symptomatic of the treatment of institutions in general, although I think there is danger of abuse in terms of government interference, underfunding, excessive control, lack of vision and convoluted planning.

BCIT is probably the best example of all those problems that I see in the Ministry of Advanced Education. One would need a program to follow the different directions BCIT has taken over the last few years. If we look back in history to the origins.... It was a Social Credit government under W.A.C. Bennett that established that institution, and I think they were most prescient and proper in seeing the need for a centre of technology training for the province that would assist this province in its economic development; the graduates there have certainly made an important contribution. However, to take that vision of a flagship of technology training and put it through the wringer of government mismanagement — as I see it in my review of that institution — is a crime.

It was only a few years ago that the government decided to merge PVI and BCIT. Although I'm sure it looked easy on paper, those kinds of changes to institutions are most difficult. We're merging a high-tech centre with a trade centre. I think you can imagine how difficult it would be on the staff and the administration. Institutions and the working relationships and the emotions that go on there to contribute to the human process of teaching are very fragile. That merger was very difficult, and the people in the institution worked very hard to make the situation work.

Following that, we saw a series of broken promises in terms of appropriate funding for the institution to make it work and years of underfunding that led to deficit situations there. The institution, in its debate with government, decided to conduct the Price Waterhouse study to confirm or deny whether they were appropriately funded. The Price Waterhouse study determined that there were increased costs at the institution, but those increased costs were due to the unique program mix that existed at BCIT; and that in terms of technology training, BCIT was not only in line with other institutions but in most instances operated more efficiently in terms of cost than other institutions. But the response of the government, this ministry and this minister in particular was more budget cuts and a promise that BCIT — despite the Price Waterhouse study — should be funded like the colleges, which the Price Waterhouse study clearly indicated would not be appropriate.

Not long after the merger took place — where we have this merging of high tech and, if you like, low tech — the institution was told that it had too many soft programs, such as the food training program, for example. What we see is a roller-coaster ride taking place at that institution.

The government then thought another study would be appropriate, and the David Park study was commissioned by the government. I think that study was the twentieth study in 15 years. Can you imagine how the Ministry of Advanced Education would operate if it had been studied as an organization 20 times in 15 years? There are times when studies are appropriate, but there is such a situation as being over studied.

The Park study indicated that there should be a move in this province towards a centre of applied research and technology transfer and that that should take place at a new centre and not at the BCIT site. So you can imagine the feelings of the people at that institution that they had had the rug pulled out from under them.

It goes on and on, with budget cuts. The minister certainly remembers — not that long ago — that in March '88, after all this had taken place, the institution received a 5 percent budget cut. Only after all kinds of sectors — the business community, the staff,

[ Page 8367 ]

the students, the public at large — protested very strongly did the minister relent, to restore some of those cut funds, all but three-quarters of a million dollars.

In May 1988 the government reversed its position on the Park report, and indicated that it did accept what was really the BCIT submission in that report, and that that should be the centre of advanced technology and training. The minister had a bold announcement, and the Centre of Advanced Technology and Training.... CATT was the acronym; it was in capitals, and that implied that that would be a new name for BCIT, and the headlines indicated as such. I have the newspaper clippings: "BCIT Given New Budget, New Name." Obviously, the fourth estate was confused again. It's those left-leaning socialists in the media that confused the message.

HON. S. HAGEN: There's no picture.

MR. JONES: And no picture of the minister, either — a serious omission on the part of the media.

Again we talk about institutional autonomy. In that same press release the minister indicated — and I think it was a slap in the face to the administration there — that his ministry would direct and work with BCIT's administration during the transition. Direct and work with. I think the word "direct" there is key.

So then we got into the new mandate and all the program changes, and some 15 promises of program changes that clearly left that institution confused. When I visited them shortly after I was assigned to the critic area, those people were at their wits' end. They were saying: "What did we do wrong? Why has the government continued to mistreat us as an institution?"

[3:30]

Interjections.

MR. JONES: I guess the members opposite don't really understand the kinds of program changes, which have nothing to do with funding. What this has to do with is establishing a mandate that's clear and understandable. It's the parking-lot planning of this government that has put that institution in particular into serious confusion, and has resulted in a tremendous morale decline that has produced the kinds of problems that we see at that institution, most recently last fall with the strike there. Let me just read a motion or two that were passed by the staff society there:

"Moved that the staff society urge the Minister of Advanced Education and Job Training to review the current structure and membership of the BCIT board of governors, to ensure that the short- and long-term interests of BCIT are served to the greatest extent possible; and secondly, moved that the staff society strongly urge the provincial government to amend the BCIT act to allow for the creation of elected or appointed positions on the BCIT board of governors that would represent faculty, staff, students, alumni and advisory committees."

They're saying that out of frustration, because they see a tremendous amount of government interference. The staff society newsletter of September 15, 1988: "The past few years have been fraught with government interference, studies, budget cuts and, finally, direct intervention by ministry bureaucrats."

In terms of the strike, the staff society newsletter indicates that the concerns of the staff are "symptoms of deeper human-relations problems at BCIT. Certainly the issues were significant, but the passion of our protest indicates the cumulative effect of years of difficult times and neglect at BCIT, years when the needs of the human resource have been subordinated to other priorities." So what they're really saying is that that strike was certainly about the salaries that had been neglected for years. But it was also a result of the mistreatment of individuals and the lack of planning, the lack of vision, the lack of leadership in setting the institution on a course that would not be a litany of broken promises but would give them some hope of being able to get on track without the sort of convoluted, roller-coaster emotional ride they had experienced.

I'd like to get on to another serious situation, one that I consider the epitome of government interference in the operation of that institution. As the minister is well aware, Mr. Murray left his position as president of BCIT effective March 1, 1989. I'd like to go back a little in history and suggest that the hiring was really a provincial government appointment. Mr. Murray was originally approached by the government to accept the responsibility for that institution, which was a new institution as a result of the merger of PVI and BCIT. He received from the government and the minister of the day a strong commitment to see the institution flourish. He was well qualified, a senior administrator in four other provinces, and he accomplished, I think, a considerable amount in his stewardship of that institution by initiating a variety of new programs.

At the same time, Mr. Murray enjoyed the strong support of the staff, the students and the board at BCIT. He very clearly brought about improved labour relations during his tenure. He served on the Premier's Advisory Council on Science and Technology, so obviously he was well respected by the government. He received a prestigious appointment to the National Research Council by the Privy Council of Canada. He very clearly enhanced a reputation that was already there in terms of the institution being one of high student demand, high job placement and high employer satisfaction.

At the time of the announcement of Mr. Murray's departure from BCIT, the minister is quoted in the Vancouver Sun of September 15, 1988, as saying: "These things are always a bit of a surprise, but there is a lot of movement in the college system...." He said he was not aware of any recent problems at BCIT, that held had two good meetings with Mr. Murray that summer. This response on the part of the minister indicates to me that he was at arm's length from the causal factors, both direct and indirect, that led to Mr. Murray's resignation.

[ Page 8368 ]

MR. CHAIRMAN: I'm sorry, but the hon. member's time has expired under standing orders.

MR. PERRY: This is a very important argument that the member is developing. I'm extremely interested to hear him develop it fully in the fullness of time.

MR. JONES: The minister's response to Mr. Murray's resignation indicated that the move was just another career move and had nothing to do with the provincial government or that minister, and that relations between the government and Mr. Murray and BCIT were very positive. As well, there was no lack of support for Mr. Murray in his role. I'd like to ask the minister whether this is a fair assessment of the minister's position at the time of Mr. Murray's resignation.

[Mr. Rogers in the chair.]

HON. S. HAGEN: The answer is yes.

MR. JONES: So the suggestion that this was just a career move, that relations with Mr. Murray and BCIT were very positive and that there was no lack of support for Mr. Murray in his role is a fair assessment of the minister's position — and anybody who suggested otherwise would not be providing factual information.

HON. S. HAGEN: The answer again is yes.

MR. JONES: Is it true that the chairman of the board of governors of BCIT asked for and received permission from the minister to renew Mr. Murray's contract in January of 1988?

HON. S. HAGEN: I'm not sure he asked for permission to renew the contract. I know he mentioned to me that they were renewing Mr. Murray's contract.

MR. JONES: I assume that if they mentioned it to the minister and that discussion ensued, then we can assume that the minister felt that Mr. Murray was doing a good job at that time.

HON. S. HAGEN: As I was quoted as saying before, I had had some very positive meetings with Mr. Murray, so I had no reason to question the board's action in renewing his contract.

MR. JONES: The minister is suggesting again that there is an autonomy in that institution, as there is in post-secondary institutions in the province, and that personnel matters there are the purview of the board of governors, inasmuch as the PVI and BCIT Amalgamation Act of 1985 would indicate that the performance evaluations of all the people in positions such as Mr. Murray held were really the responsibility of the board, not the provincial government, and in particular, the ministry or the minister. Is that correct?

HON. S. HAGEN: That's correct.

MR. JONES: If that's correct, then I assume it would also be correct to suggest that the minister never discussed Mr. Murray's future in his role as president of BCIT with his ministry staff.

HON. S. HAGEN: Could you clarify what you mean by Mr. Murray's future?

MR. JONES: The minister agreed that under the PVI and BCIT Amalgamation Act, the responsibility for performance evaluation for people in positions like Mr. Murray's was clearly a responsibility of the board of governors under that act and hence not the responsibility of the minister or his staff. The minister agreed with that, so I followed with a question that asked: would it be correct to say that there were never any discussions of Mr. Murray's future in his role as president of BCIT between the minister and his staff?

HON. S. HAGEN: I am very curious about that line of questioning. Is the member insinuating that the minister is not responsible for all the colleges, universities and institutes in this province?

MR. JONES: I am just asking the question based upon an interpretation of an act of this Legislature. Does the minister consider it his responsibility to do performance evaluation for presidents of institutes in this province, or is that, under the act, the responsibility of the board of governors?

HON. S. HAGEN: I have never done a performance evaluation of the head of any institute, university or college in this province.

MR. JONES: Is the minister aware that ministry staff discussed with Mr. Murray on several occasions his future at BCIT and that they stated that these same discussions had taken place between the minister and his staff?

HON. S. HAGEN: I am not aware — all the time, at least — of the discussions that take place between my staff and the head of an institute.

MR. JONES: In June 1987, Dr. Jim Hammons won a competition for a vice-president position at BCIT. The president, Mr. Murray, requested the minister to review the appointment, as Dr. Hammons was an American seeking landed immigrant status. The minister, as I understand it, approved the appointment, and BCIT advised Dr. Hammons. Did the minister subsequently — in September 1987 — criticize Mr. Murray for hiring an American and then indicate that he would not support the appointment of Dr. Hammons?

[ Page 8369 ]

HON. S. HAGEN: The answer is no, Mr. Chairman.

MR. JONES: I am wondering if the minister at any time criticized Mr. Murray for excessive travel budgets for his personal travel in his role as president of BCIT.

HON. S. HAGEN: Mr. Chairman, I would like to say that I did speak to Mr. Murray once about what I felt were excessive off-continent trips and mentioned that possibly he should plan on spending a little more time on the responsibility he was being paid for.

MR. JONES: I guess we are into the realm of performance evaluation on the part of the minister of presidents of autonomous institutions in this province, even down to specific minor items in the budget.

I indicated earlier the kind of esteem in which Mr. Murray was held in four provinces in this country as a senior administrator — appointments to the Premier's advisory council and to the National Research Council. The minister indicated that he spoke once with Mr. Murray with respect to that. That, I expect, was in June 1987. Did the minister speak again with Mr. Murray on the subject of travel in, roughly, December 1988, some 18 months after the original conversation?

[3:45]

HON. S. HAGEN: Not that I recall, Mr. Chairman.

MR. JONES: In December 1987, did the minister directly, or through his officials, accuse Mr. Murray of making derogatory comments about the Premier and about the government at a meeting of BCIT administrative staff? As a result of allegations that those statements were made by Mr. Murray, is it true that he was told that the government was reconsidering his contract?

HON. S. HAGEN: I don't believe I ever spoke to Mr. Murray about those items.

MR. JONES: The minister is suggesting that the question of derogatory remarks at a BCIT administrative staff meeting was never mentioned either directly or indirectly, through his officials, to Mr. Murray, and that anybody who stated otherwise would not be telling the truth.

HON. S. HAGEN: What I stated was that I had not spoken to Mr. Murray about those items.

MR. JONES: The minister indicates that he did not directly speak with Mr. Murray with respect to allegations of derogatory remarks. Can he confirm that such conversations were held between ministry staff and Mr. Murray?

HON. S. HAGEN: I was informed by ministry staff, who had received a call from one of the staff members who was at that meeting and was very concerned about comments attributed to the president of BCIT. I asked that those comments be checked out to see if they were actually made.

MR. JONES: My understanding is that subsequently it was concluded that those derogatory remarks were not made by Mr. Murray. The minister says he did not speak directly with Mr. Murray about this matter. I wonder why, after hearing those allegations from a staff member, the minister did an end run around the president, rather than calling Mr. Murray directly and checking out the validity of those allegations.

HON. S. HAGEN: The facts stated are correct, in that it was determined that Mr. Murray did not make those statements; but I think it was determined that he did not make the statements by one of my staff speaking to Mr. Murray and asking him.

MR. JONES: Obviously we are talking about a senior administrator in this province — a highly qualified and respected individual in a senior administrative position — who was accused incorrectly, as it turned out, of making derogatory remarks about the Premier and the government. It became such a serious matter that it appears his position was threatened as a result. Does the minister consider expressing oneself in a negative way about government to be grounds for dismissal from a senior position in a post-secondary institution in this province?

HON. S. HAGEN: I would just like to go back a bit. The issue arose because one of my officials received a complaint from an employee of BCIT who felt, in his opinion, that the president had made some statements that were not appropriate. Very simply, my request was to follow it up and find out whether the statements were in fact made. It was followed up; it turned out that the statements were not made. Would you rather that I had left it unattended and let the rumour grow and circulate without determining whether it was true or false?

MR. JONES: The minister indicated that he or his staff did an investigation into remarks that he considered not appropriate for a person in that position. Could the minister clarify the kinds of remarks that he deems inappropriate for a person in that position?

MR. CHAIRMAN: The scope of that debate is going to be a little bit broad, but I'll let the minister try.

HON. S. HAGEN: Well, with all due respect, Mr. Chairman, I did not deem them to be inappropriate; the employee at BCIT who relayed them to staff in my ministry deemed them to be inappropriate.

[ Page 8370 ]

MR. JONES: Given these kinds of investigations and the assumption that a person's job was on the line, and given the accomplishments that happened under very difficult circumstances at BCIT, I wonder if the minister would like to reconsider his earlier comments about support for Mr. Murray in his role as president of BCIT and the confidence that the ministry, the government and the minister himself had in Mr. Murray.

HON. S. HAGEN: I have no difficulty doing that. As a matter of fact, my last meeting prior to.... I guess it would be September '88 when I learned that Mr. Murray had resigned. It was about a month before that when my then deputy, Isabel Kelly, and I had a business lunch with Mr. Murray in Vancouver. Before coming back to Victoria we had a meeting of about an hour and a quarter. We discussed the new advanced technology programs that would be instituted at BCIT and some other program issues. We also discussed some of the programs that were going to be moved to other colleges. I felt that it was the type of meeting you have with a president of an institution who is going to be there the following year, because we were in fact discussing programs that would be announced in this fiscal year. I had no difficulty with my relationship with the president o BCIT.

MR. JONES: I'd like to ask if the minister, in March 1988, at the time of the 5 percent budget cut to BCIT and the remaining budget cut of some $750, 000 from administration.... The minister indicated earlier that his role with the institution was at arm's length, that he did not get involved in personnel matters there. Did the minister, either directly or through his staff, at that point suggest to Mr. Murray that he must drop the vice-president of administration and several other key positions at that institute?

HON. S. HAGEN: No, I did not.

I would like to clarify that the $700,000-odd that was not included in the reinstatement of the 5 percent was actually suggested by the president as an amount that they did not need at that time at BCIT.

MR. JONES: After the partial budget restoration to that institute in July 1988, did the minister, either directly or indirectly through his staff, indicate that the incumbent in the position of vice-president of education required removal? Did the minister or his staff threaten that if this did not happen, Mr. Murray would probably go as well?

HON. S. HAGEN: I'm afraid I don't know who the individual is that you're speaking of. I would say as a general comment that I have had no involvement with the structuring. As a matter of fact, I couldn't even tell you now what the administrative structure is under the president at BCIT. It's not something that I get involved with.

MR. JONES: Did the minister suggest either directly or through his staff that BCIT needed a vice-president of administration and that his ministry had a candidate in mind who would be an excellent choice for that position?

HON. S. HAGEN: As I said in the previous answer, Mr. Chairman, I don't get involved in the administrative structures of either the colleges, the institutes or the universities. I am afraid that I couldn't tell you what the administration is under the president of any of the colleges or institutes at the present time.

MR. JONES: I appreciate the minister's comment, but I would like to ask a further question, in any event. If the minister did understand the administrative structure and if there were an opening in that position and if there was somebody in the ministry that he had in mind for that position, would that individual be Mr. John Watson?

MR. CHAIRMAN: I believe that's a rather hypothetical question. The minister might wish to answer.

HON. S. HAGEN: The answer is no.

MR. JONES: Can the minister advise the House of the details of Mr. Murray's separation agreement as to severance and any caveats in that separation agreement?

HON. S. HAGEN: I'm afraid I can't. That would be an arrangement between the board of BCIT and Mr. Murray.

MR. JONES: I assume then that the minister is not aware of the details of that contract and could not comment on any of the specifics, such as the possibility that there be a confidentiality aspect to that severance agreement. Shortly after Mr. Murray's announcement of his resignation, the institute established a very broad-based search committee composed of representatives of the student society, the staff society, management, the BCGEU, the board of governors and the education council. The representative body that was established for this search made an unanimous recommendation to the board of governors for a highly qualified and highly respected individual to replace Mr. Murray as president of BCIT.

Despite the fact that there were two members of the board of governors on the search committee, the board of governors rejected both the first and second recommendations of that committee in favour of Mr. John Watson. The minister indicated recently in the House that he supported that appointment. Can the minister explain why he supported Mr. Watson's candidacy over two more qualified candidates that the broad-based search committee determined to be far superior to Mr. Watson for the position of president of BCIT?

[ Page 8371 ]

HON. S. HAGEN: First of all, I did not say that I supported the appointment that was made over the other two. What I said was that I supported the decision that the board had taken. It has nothing to do with the other two candidates. As a matter of fact, I suspect that most of the applicants were good strong applicants. We always do get good strong applicants applying for positions in British Columbia.

MR. JONES: I assume, given the kinds of responses that I've had on many of the questions that I've asked the minister about the internal relations of BCIT, I might also predict the kind of answer that I would get to this question, but I will ask it anyway because it does have to do with a former member of the minister's staff. Can the minister inform this House as to Mr. Watson's activities in the Social Credit Party, particularly in Okanagan South, where he was touted to be a potential candidate in the last provincial election?

[4:00]

HON. S. HAGEN: Well, Mr. Chairman, I just learned something. I was not aware that Mr. Watson was touted as a Social Credit candidate in Okanagan, and I had no idea of his activity with the Social Credit Party in the Okanagan.

MR. JONES: I take it then from the minister's remarks about Mr. Watson that he had no communications, directly or indirectly, with the board of governors at BCIT with respect to the appointment of the new president prior to that appointment.

HON. S. HAGEN: I had no communication either with the board chairman or with any member of the board of BCIT during the selection process and up and to and after the selection of Mr. John Watson as the president of BCIT.

MR. JONES: I'm wondering if the minister happened to discuss the negotiations that went on with the staff society at BCIT with the Finance minister Specifically, did the minister approve of the Finance minister having phone conversations with Mr. Wynne Powell during that negotiation process? Is the minister aware that certain offers had been floated by the board of governors prior to that phone conversation, and that after that phone call a lower final offer was made to the staff society at that institution? It was that lower final offer that precipitated the very unpleasant strike — the first in the history of BCIT. Does the minister believe that kind of communication is appropriate between government officials and boards of governors of institutions at a time when very delicate negotiations are taking place?

HON. S. HAGEN: I was not involved in the negotiations between the board of BCIT and the faculty association.

MR. JONES: I think I'll leave it at that. Very clearly the minister has indicated that there were communications with Mr. Murray that clearly led him to believe that his job there was in jeopardy; that the kind of reaction the minister had at the time of Mr. Murray's resignation was not totally the picture; that Mr. Murray was picked by this government and given a commitment to himself and the institute, and that he underwent harassment and was constantly criticized on trumped-up accusations and allegations.

The operation of that institution, which is an autonomous institute in this province, has a board of governors that should be handling the day-to-day operations of the institute. Yet we see political interference on the part of the government in Victoria which, from what I can gather, viewed it somewhat as a chess game, where people's lives were involved. They moved the players like pawns in a chess game in that institute.

After a short three and a half years, it was very clear that Mr. Murray did not fit the expectations of the government, and he was chewed up and spat out to make room for a friend of the ministry. I think this is symptomatic of a very serious problem at that institute which, even without that kind of interference, went through a tumultuous period of years that left the staff there in a very low morale situation.

I see a total failure on the part of the minister to understand the concepts of planning, institutional autonomy, academic freedom and even fairness when it came to Mr. Murray. Those aspects of post-secondary education, institutional autonomy and academic freedom are so important and necessary to best serve the interests of the students, staff and public of this province. I see it as a serious problem. I see the problems of that institution taking years to overcome and recover from the damage done by this administration and previous administrations.

HON. S. HAGEN: I want to say categorically that I reject the innuendo and sleaze that has just come out of the mouth of the member for Burnaby North. He should be disgusted with himself — if the rest of us aren't — because I can say categorically that I did not speak....

MR. PERRY: On a point of order, Mr. Chairman. I think the word "sleaze" is unparliamentary, and I would request that the minister withdraw the remarks he just made about my colleague.

MR. CHAIRMAN: I'd ask the minister to withdraw that remark.

HON. S. HAGEN: I withdraw the word "sleaze." I have categorically stated that I had no conversations with the board chairman or any member of the board of BCIT either during the search or up to and after the appointment of Mr. Watson as the president. Obviously the board, who you admit are autonomous and have the final authority, made that decision. I believe they made it correctly, but they made that decision with no input from me and certainly no input from my senior staff or any of my staff that came from me.

[ Page 8372 ]

I think you should apologize to me, because you in fact are making statements and innuendos that fly in the face of my reputation that I have established over two and a half years as the minister responsible for the post-secondary system in British Columbia. I object very strongly that you would make those statements, particularly after I have said — and I'm prepared to say this anywhere — that I had no input into the selection of the president of BCIT.

MR. CHAIRMAN: That having been said, I will ask both of the members — well, several members have spoken today— just to add a little levity to committee, to review the Oxford dictionary, because the words "institute" and "institution" have been grossly misused this afternoon. I expected the first member for Nanaimo (Mr. Lovick) to rise on a point of order and correct the grammar. Those of us who had great difficulty at school and struggled through grammar would appreciate that there have been some usage problems.

MS. SMALLWOOD: I'd like to change the topic just slightly, dealing with one of the minister's responsibilities under the secretariat for women. While I want to concentrate on the report that the minister tabled in the House last week, I'd like to start off — mainly because I know other members want to participate in the debate and haven't yet returned to the House — by asking the minister if he could introduce this section by explaining to the House any participation he may have had in the plans leading to the women's ministry, and if he has any further information as to that ministry's responsibility.

MR. CHAIRMAN: The Chair will take some prerogative and introduce Gerry Zipursky, who is in the gallery today. Will members please make him feel welcome. He is accompanied by a number of guests.

HON. S. HAGEN: Could I clarify your question? Are you referring to the women's secretariat under my responsibility or the proposed change that was talked about in the throne speech? I'm not sure which you're talking about.

MS. SMALLWOOD: I'm asking the minister whether he has had any input into the change, and whether he can enlighten the House as to how the change will relate to your current responsibilities.

MR. CHAIRMAN: That is beyond the scope of debate under our standing orders. Sir Erskine May clearly indicates that the discussion cannot be conducted in Committee of Supply as to from which ministry or from which department ministry staff are selected or in which department responsibilities lie. Would the member like to try another line of questioning that would be appropriate.

MS. SMALLWOOD: Sure. What I really want to talk about is the free trade debate. Perhaps I'm second-guessing the minister. I don't expect to get a great deal of information about the government's plans, at any rate. But I'll leave that up to the minister. When he's responding he might want to fill some of the questions.

The report that the minister tabled is a report we asked for in the estimates last year. While I'm glad to see that we finally have something before this House that begins to talk about the impact of the free trade deal on the citizens of British Columbia, I am somewhat disappointed in the minister's recommendations that flow from the report and hope that the minister can provide some more information.

As I said, the report was promised last year. The minister said at that time that he supported the free trade deal and said that his ministry was engaging in some research and that he expected that research to be completed in June. The date on the report is February '89. It was tabled in June of this year. While the recommendations are pretty loose, I'm hoping that we're going to see some action a little bit quicker than the time-line that I've just outlined. It took well over a year to get the study, and we're already beginning to feel the impact of the free trade deal on British Columbians. We need some action now. We don't need another delay of a year before the programs are put in place.

This report that we have in front of us outlines some of the concerns and echoes some of those that both myself and other of my colleagues have put to the minister, at which time the minister assured us, as have other ministers of this government, that the free trade deal was a good deal for B.C. and a good deal for Canada, and that if there were any negative effects — and the minister was not prepared to admit that — they would be minimal. The minister's own report says that the sections of our economy that will be hardest hit are those where women predominantly work: the service-producing sector and, to a lesser extent but including, the goods-producing sector. This report says those are the areas that will be hardest hit, and it talks about both the fish-processing as well as agricultural areas. We've already seen the agricultural industries beginning to, at the farm at least, tear up some of their crops. We will soon see the impact of the free trade deal in the processing sector. Basically, while this report recommends further study and a committee to deal with that dislocation, I don't see anything in it that deals with the problem realistically.

If we are talking about the agricultural sector — I refer specifically to the Fraser Valley, because that's the area I am most familiar with — we are talking about both the people who work on the farms.... Large numbers of farmworkers are women; I would venture to say that in some areas the majority are women. In the section that actually processes fruit and vegetables, many of the people in low-skilled, low-paid jobs are women.

The minister talks in this report about training for those dislocated workers. Can he indicate what sort of training they have in mind for areas such as the Fraser Valley? What kinds of jobs are available, and

[ Page 8373 ]

what kind of future can these women look forward to?

[4:15]

HON. S. HAGEN: First of all, it is not my report. You called it "the minister's report." It's a report done by a consultant for the minister. These are not my recommendations. You said you were disappointed in "the minister's recommendations"; these are not my recommendations. They are recommendations from the consultant who did the report. I just want you to be clear on that.

You have picked out one section of the report which is the labour perspective. I would like to draw your attention to page 1 of the report, the executive summary, which is the business perspective. It says: "In general, literature originating in, and respondents, from the business sector predict that positive impacts of the free trade agreement will greatly outweigh any negative impacts.... Business respondents expect that those who already market successfully in the United States will continue to do so, aided by a simplification of import procedures and the removal of tariffs." I would like to remind the member that this province, since the free trade agreement took effect, has probably had the largest growth period in its history. Unemployment has decreased by 2 percent since the introduction of the free trade agreement.

Her question at this particular time, as it relates to this particular report, is far too specific, because what I have said I am going to do with the report is submit it to the Task Force on Employment and Job Training for a recommendation on how we will deal with various aspects of it. But to state that this report insinuates negative impacts on women is I think a partial statement, and not what the report indicates. I am not sure, Mr. Chairman, that we are here to debate the free trade agreement.

MS. SMALLWOOD: I would like to remind the minister that you tabled this report and you subsequently responded publicly to its recommendations If there is any confusion in this House as to whose report this is, that confusion has been created by you

I might point out to the minister that upon tabling this particular document.... We can look at the specific quote in Hansard. The minister, as I said earlier, promised this report to the House last year. If the minister is trying to dissociate himself from the report he tabled, that's one thing. But you can't have it both ways. Either this is work that your ministry undertook to begin to deal with the impact of the free trade deal, or it is not.

MR. CHAIRMAN: Please address the Chair in the process of your debate. It will make it much more pleasant.

MS. SMALLWOOD: Perhaps, through you, Mr. Chairman, the minister would like to comment on some of the recommendations. Do you support the recommendations of the report or do you not?

HON. S. HAGEN: I would reiterate, just so the member opposite is perfectly clear, that this report was commissioned as an independent report. It is not a report done by the minister. You refer to it as "the minister's report." Yes, I tabled it in the House, but it is not my report. Are you clear on that? Good.

Now we will deal with the recommendations:

"l. That the governments provide retraining and adjustment programs for women in British Columbia who suffer job loss because of the FTA, taking into account such factors as location, current skills, mobility factors, cultural background and employment goals of those women requiring trade adjustment assistance" — which is a federal program.

My ministry is working together with the federal government in developing these trade adjustment opportunities so that we can take advantage of them when the need arises. I support that recommendation.

"2. That such programs be provided through a cooperative effort of governments and groups such as major cultural groups, task groups made up of women who will be or have been affected by the free trade agreement, and existing services such as training enterprise centres, community futures and the Open Learning Institute."

I agree with that recommendation.

"3. That trade adjustment assistance be provided to help women entrepreneurs who wish to expand their current businesses into markets made available by the FTA, and to women in the service-producing sector to maximize their employment opportunities through such mechanisms as skills upgrading."

I agree with that, assuming that TAA has provision for women entrepreneurs. I don't know for sure whether it has or hasn't.

"4. That long-range research be undertaken to assess the use and effectiveness of this TAA programming."

I agree with that.

"5. That government consult with labour organizations to address concerns about negative effects of the FTA."

I agree with that.

MS. SMALLWOOD: I'm still unclear as to the little game that the minister indulged in just a few minutes ago. If you have tabled this report and you agree with the recommendations, perhaps we can get on to talking about the actual substance of it. I assume that was the intention when the minister tabled it and provided copies to members of this House.

Can I ask the minister how the provincial government, how your ministry, will be involved in this process as outlined in the recommendations?

HON. S. HAGEN: The Ministry of Advanced Education and job Training will be involved in assisting with labour adjustment programs just as we have in the past. We will be involved through the colleges and institutes and also through OLA to provide upgrading programs and to assist in any way that we can, whichever ministry is in charge of and responsible for the women's secretariat.

[ Page 8374 ]

MS. A. HAGEN: Now that we're to the substance of the report, I think it would be worthwhile for us to just look at some of the dimensions of possible problems. I think it's quite clear that certain sectors of employment for women are very likely to feel a very severe impact over the implementation of the free trade agreement. For example, there are 10,000 people in the garment industry. The report projects, from whichever point of view you happen to be taking, that all but 1,500 of them may well lose their positions. Many of the people who work in the garment industry are in fact immigrant women with limited job skills in the Canadian market and with very limited access to language programs and other programs which are, if you like, bridging activities that would be necessary for that group of people to receive retraining.

The fishing industry and the process part of the fishing industry is affected not only by the trade agreement but also by GATT agreements. We shouldn't be talking about these just in terms of any one source of impact but of any factors that produce change in employment opportunities for women. Again, about 50 percent of the workers in the processing field are women. Many of them, again, are women with marginal skills. Quite often they work in areas where there are very few job opportunities anyway. So on top of the 8,500 garment workers who may be affected, we're looking at another 2,500 or 3,000 shore workers and processing workers, who are women who may be affected.

[Mr. Pelton in the chair.]

When we look at the Fraser Valley and the Okanagan, and the vegetable and soft-fruit industry, long ago it was known and stated that those particular activities were going to be decimated by the trade agreement. There are approximately 25,000 farmworkers in the province, and approximately half of those people are women. As my colleague from Surrey-Guildford-Whalley was just noting, many of those people also come from communities of people new to our country with limited skills for jobs in the country at the present time.

We don't see in those populations, for instance, the entrepreneurial group who might start small businesses. There may be a few, but not very many. We're looking at very significant potential dislocations of women whose jobs are vital to the economic survival of their families.

There is in this report — which is a long time coming — an urgency for some sense of action that may involve committees and certainly does involve consultation, but this minister and ministry do not yet have an admirable record with respect to women in trades and in job training. That record is still less than satisfactory on a broad basis, and all of a sudden we're faced with very serious and challenging problems to this government — to any government — to accommodate the needs of a very significant, fragile and vulnerable group of women.

I'd like to hear from the minister something more than another committee. The consultant's report has taken a year to see the light of day. When I talked to the minister yesterday, there were a lot of things that were going to happen: a committee is going to happen. It doesn't give us any sense that the minister is prepared to discuss the potential crisis in certain communities of the province, something that requires more than the usual long-term careful planning. That has to be there, but there is some sense of urgency for these women, their families and the communities in which they live.

Can the minister give us some sense that he does recognize the extent of this potential problem to a group of people who are very vulnerable and who will be quite difficult to accommodate in job markets in the numbers that this report defines for us?

HON. S. HAGEN: It is difficult to deal with these questions when they're about possible future activities. The member for New Westminster talked about the loss of women's jobs in the agriculture industry in the Okanagan. Well, the last report I got was that they couldn't find fruit-pickers in the Okanagan. That doesn't sound to me like an oversupply of workers.

Interjection.

HON. S. HAGEN: Don't interrupt.

This government will continue to provide the best labour adjustment programs in the country. I can tell you that we are working closely with the federal Minister of Labour to deal with these issues. On the one hand, we have the opposition here and their negative approach saying, "Look at all these things that could possibly happen," and yet we have no proof that they are going to happen.

My intention, as long as I'm the minister responsible for women's programs, is that we will consult and work with labour organizations and the federal government and will continue to talk to industry groups. We had a request yesterday for a possible labour adjustment program that might be necessary for some cannery workers, depending on what happens with GATT and fisheries. Yes, we are examining that proposal and we will deal with it, just as we've dealt with all the other proposals.

Interjection.

HON. S. HAGEN: No, we're not a failure, Is a 2 percent reduction in the unemployment rate a failure? Is that what you're saying? Would you rather see higher unemployment? No, of course not; neither would any of us. I can tell you that we take these issues very seriously, but to try and deal with this report on a possible negative basis is impossible.

[4:30]

MR. CHAIRMAN: The minister seeks leave to make an introduction.

Leave granted.

[ Page 8375 ]

HON. S. HAGEN: I'm terribly sorry and I apologize to my colleague to my right. I'm very pleased this afternoon to have with me — besides my deputy minister, Gary Mullins — the assistance of Chris Bullen, director of the women's secretariat and a valued member of our senior staff.

MS. SMALLWOOD: The more we talk about this report, the clearer it becomes that the minister tabled it in the House purely for publicity reasons. The minister is no more interested in dealing with the substance of this report....

Interjection.

MS. SMALLWOOD: Well, perhaps it didn't produce the effect that the minister was hoping for.

The members on this side of the House have been trying to deal with the substance of this report in a very serious manner and with some of the very serious concerns of the people of this province. The minister talked about a specific situation where cannery workers may be displaced and about a meeting that the minister had dealing with that displacement. Maybe we can use that as a lever, because it's talked about in this report, to hear from the minister what exactly his government, and his ministry in particular, is doing to buffer that possible job loss.

HON. S. HAGEN: I'm very pleased to respond very specifically to that question, except that the question is stated incorrectly. I did not say that I met with the cannery workers. You should listen more closely; I beg of you to do that. The statement I made was that....

Interjection,

HON. S. HAGEN: It's entirely up to you.

The statement I made was that a cannery had contacted the women's secretariat and applied for adjustment assistance. The program will be analyzed and will be handled in the way that we handle adjustment assistance programs. If it's a necessary program and if these workers are going to be displaced, then, of course, there will be funding made available through the trade adjustment assistance program to retrain these workers — I think the majority of them are women — so that they can move into another sector of the workforce.

MR. CLARK: I can't resist making a few remarks on this issue today with this minister, because if any government has been an unbelievable failure when it comes to women's issues, it's this administration. No government has insulted women the way this government and this minister has.

Let's not talk about what may be. The minister says there may be negative effects. Let's talk about problems that women face today. Women today, in British Columbia, face occupational problems.

Interjection.

MR. CLARK: I'll deal with solutions, Mr. Member for Richmond.

Women historically occupy low-paid and low skilled jobs. Where has the minister been in any kind of advocacy? Where has he been to advocate dealing with the kinds of problems that women have? This is the minister who has been such a failure that even the Premier — whose record is a disaster on this issue — has created a job for the first member for Langley (Mrs. Gran) which is coming up soon, I assume, after the House rises.

This is absolutely serious, because poverty is a women's issue, In fact, in my view, it's the biggest women's issue in British Columbia. Women occupy traditionally low-paid jobs. Women from ethnic minorities occupy them disproportionately. Older women who have had to re-enter the workforce have systematically been relegated — in this society generally, and in British Columbia — to job ghettos that shouldn't be tolerated and wouldn't be tolerated if it were any other group than the vulnerable and dispossessed group that women too often are placed in within our society.

The textile industry, the data-processing industry, service sector jobs, cannery workers: those jobs aren't hypothetical. Your own report and every other report shows that they will be negatively impacted by free trade — not hypothetically; they will be. I will, for the minister's benefit, acknowledge that there are potential benefits in certain sectors. There are negative benefits. In my view and in the view of a majority of Canadians and particularly British Columbians, the negative consequences outweigh the benefits. A majority of British Columbians believe that. They voted that way in the federal election, and they'll vote that way provincially.

Where was this minister when our Premier did not negotiate a deal on the west coast fishery, when the Premier in Newfoundland negotiated a deal? Women are disproportionately represented in the cannery industry in British Columbia. Where was the minister in any kind of advocacy role for the women in the cannery industry in British Columbia who will be impacted by free trade? Nowhere.

I can't think of a time when he has stood up in this House and advocated an aggressive position on behalf of women, particularly in those low-paid jobs that are going to be impacted by free trade.

HON. S. HAGEN: On a point of order, Mr. Chairman, I think we're discussing the minister's estimates here, not the free trade agreement or the Premier.

MR. CHAIRMAN: I thank the minister for his comments. I have been taking this discussion as having to do with women, which I believe is a responsibility of the minister. Please continue.

MR. CLARK: Where has the minister been when it comes to English-as-a-second-language training? I

[ Page 8376 ]

don't know if the minister has been out in the real world where he sees that women and homemakers in ethnic minorities.... There are no programs to deal with those problems that exist, particularly in urban areas. Where has the minister been when it comes to dealing with free trade adjustment? He's been silent.

The minister is laughing. I think it's absolutely clear why he won't be long in this portfolio.

I mean this in all sincerity. The impact that women are going to face — not just under the free trade agreement, but every day in British Columbia — should be dealt with. They aren't being dealt with by this ministry. It's a Mickey Mouse ministry — a kind of mini-ministry part of the Ministry of Advanced Education and Job Training. There's no serious policy initiative to deal with problems.

We've had one report on free trade. It's been a decent report, in some respects, although I think it mutes the negative consequences. But we've had no action. We've said we agree with the recommendations, but where is the meat? Where are the trade adjustment programs with respect to women? Nowhere. Where is the money in the budget to deal with the kinds of problems that are faced under free trade? The minister says he agrees. What about women in non-traditional jobs, in the trades? Do we see anything from the minister responsible for women that deals substantially with those kinds of issues? No, we don't, because the government has no commitment to equal rights for women; that's proven time and time again.

The minister responsible stays silent in the face of statements from the Premier and other members of caucus: sexist statements, inadequate policy responses, superficial Mickey Mouse studies. The minister is a nice guy; that's probably why he has the job He stands up there and smiles and says: "Oh, I'm really concerned, and we are responding. We are working on it. We are studying it. We're going to have a committee." He's a perfect salesman for a ministry that doesn't want to do anything. He's better than most of the other cabinet ministers, who couldn't sell an Eskimo.... Sorry, I won't make that comment.

SOME HON. MEMBERS: Oh, oh!

MR. CLARK: There's some concern on the other side. They couldn't sell anything. They're bad salesmen.

HON. MR. RICHMOND: Have you ever sold anything?

MR. CLARK: Yes, I've sold lots of things.

The reality is that they don't have any substance to their policies. They don't have any substance when it comes to women's issues. That's proven again and again by this government and this minister, so all they can do is try to sell an inadequate policy response. This is the minister who tries to do that.

I wonder if the minister could at least deal with some specific questions arising out of the free trade agreement, out of trade adjustment policies. Can the minister tell me how much extra money he has allocated this year to deal with free trade adjustment policies with respect specifically to women's issues?

HON. S. HAGEN: I want to congratulate the member from Vancouver East, who is, I tell you, a glowing example of the product of our independent school system. I want to congratulate him, and I want to congratulate his parents, too, for spending those extra bucks and making sure he got a quality education.

To reply in all seriousness, it's unfair of the member from Vancouver East to make all of these general, negative, derogatory statements about myself as the minister. I should remind him that I asked for the women's secretariat part of my ministry because I thought it was an appropriate ministry for it to be in.

I want to talk about the programs dealing specifically with women that we funded last year. I want to read them into the record because I think it's significant information. Don't you walk out of the chamber while I'm reading this list.

MR. BLENCOE: Get your hand out of your pocket.

HON. S. HAGEN: Another product of our independent school system. I can't believe you voted against that act.

Let me start with the B.C. Institute of Family Violence. We sponsored an international conference on family violence. The B.C. Institute of Technology has women in trades training. You talked about non-traditional trades. I don't particularly care to call them non-traditional trades, because in my view women are capable of doing anything that men can, and some better.

Camosun College: career training for women in government. We need more women in senior positions in government.

MR. CLARK: Where are they?

HON. S. HAGEN: We have excellent examples throughout government, and we are getting more and more of them.

MR. CLARK: How many deputies?

HON. S. HAGEN: Just be a little more polite. They taught you at independent school to be polite and to listen. You'll have your turn.

We sponsored, at a cost of $21,000, this report that I've been trying to discuss in an intelligent manner this afternoon. The city of Vancouver: we sponsored the Kingswood management training program to create an equal employment opportunity workplace. The Federal Business Development Bank: we co funded the Kelowna conferences on business ownership for women. Listen to this; there are other places in this province besides Vancouver East: Kelowna, Vancouver, Prince George, Victoria, Kamloops, Castlegar. How come we didn't do one in Courtenay?

[ Page 8377 ]

At Kwantlen College we've sponsored management training for women faculty members, and also women in trades training. The Society for Canadian Women in Science and Technology: for two years running — this is the third year — we have sponsored the summer science workshop for girls to create an interest for girls to go into more math and science programs, to then lead them into careers in math and science. University of British Columbia: career training for women in government. University of Victoria: seminars to assist women into principal ships. Women's Skill Development Society: Open Doors project, phase 1; cross-cultural bridging program, assessment of offshore qualifications, phase 2; job seekers' network, foreign credentials and business options for women.

In Fort Nelson we sponsored the Fort Nelson Women's Resource Society: career opportunities and employment skills.

Interjections.

HON. S. HAGEN: Please listen to this. You are going to learn something.

[4:45]

MR. BLENCOE: Smoke and mirrors.

Interjections,

HON. S. HAGEN: Please listen. Mr. Chairman, could you call this group to order? They're not listening. I refuse to speak to this group unless they are going to behave themselves and listen.

Fort Nelson-Liard Native Women's Group: employment skills training for native women. Grand Forks: B.C. Women's Institute, education and career options for teen-age girls. Kitimat: Tamitik Status of Women, career development opportunities kit for teen-age girls and young women. Nanaimo: Nanaimo Women's Resource Society, entrepreneurs' directory for business women and money management workshop for women. The great Kootenays: Kootenay Women in Trades and Technology, Nararnata. I was in the Kootenays. I met a young woman taking carpentry training. She was the best carpenter I ever met.

The national conference for women in trades technology. The great Okanagan part of our province: training for native women. Prince George: Immigrant and Multicultural Services Society, ESL for moms and tots. Vancouver — and listen here, you people from the lower mainland — Aboriginal People's Business Association, management development program for native women. I want you to know that I have visited some of these programs, and I have been touched by the people that I met in these various facilities. City of Vancouver: native mentorship program. Dexter Wallace and Associates: non-traditional training for women. Horizon College: women's employment skills and training. Immigrant Services Society — I visited there: pre-employment program for immigrant women.

Port Coquitlam. Where's my friend from Port Coquitlam? He's not even here. Port Coquitlam Women's Centre, employment skills workshop. Simon Fraser University — here's one for Burnaby, pay attention: faculty of economic development, business women's training program. Teknos Career Institute: ESL for immigrant women. United Chinese community services: conference for Chinese-Canadian women and work. YMCA conference for mature women — shouldn't it be YWCA?

Greater Victoria: Camosun College workshops on economic independence; Inter-Cultural Association of Greater Victoria, life-skills program for immigrant women; Edward Milne Community School in Sooke, employment and life skills for low-income women; Women's Resource Centre Society, money management for low-income women; women's secretariat, International Women's Day presentation here right in Victoria to all of the women employees in government; Victoria Status of Women Action Group, money management workshop.

Now I want to say to these members opposite who have been pontificating about what this government hasn't been doing: that list totals $971,078 spent last year by the women's secretariat, out of my budget, to assist women.

MR. BLENCOE: No results. Smoke and mirrors.

HON. S. HAGEN: How do you know that? I have met some of the women who have gone through these programs, and I'll tell you, they are excelling.

MR. CLARK: The minister just proved my point. This is the entire program for a women's ministry in the budget: $971,000. Let's see now, I think his general budget for everything else is about a billion dollars. Ten percent of that is $100 million, so 1 percent of that is $10 million, so almost a million dollars is 0.1 percent of his budget used on women's issues.

HON. S. HAGEN: On a point of order.... Mr. Chairman, half of the people that my ministry deals with are women.

MR. CLARK: On a point of order. If he wants to debate, we're certainly debating. Of his entire budget, 0.1 percent is devoted specifically to women's issues. That's the reality. The minister just stood there. He can't say otherwise specifically on women's issues. The minister referred to one program they were funding, the Chinese-Canadian community In east Vancouver — SUCCESS. I went to the SUCCESS open house. There's a big pie chart where they get their funding from. The pie chart has this huge slice which is donations and what they raise through voluntary contributions, and then another big slice from the Secretary of State, and then it has this tiny fraction of their funding: all provincial government sources are less than 1 percent of the funding for the most vibrant and vital ethnic services community program in existence in Vancouver.

[ Page 8378 ]

The minister is proud of his reputation with respect to women. He talks about it at great length. He could stand up here and in about two minutes list every single program and grant they have issued in the last year for women's programs in British Columbia. In the face of job ghettos, free trade and English as a second language, which is a serious and growing problem in Vancouver, we see virtually nothing from the minister but an attempt at a little speech — a lame defence of their inadequate policies and programs — to defend a minister who has been a failure in this area, but who won't be a failure much longer because he'll be moved very shortly.

I wonder if the minister could tell the House how many deputy ministers in the public service of British Columbia are female.

HON. S. HAGEN: One associate deputy minister and seven assistant deputy ministers.

MS. SMALLWOOD: I think that what the members are hearing here is a marked difference. There was a time when the women's secretariat and women's programs in government acknowledged that women suffered a considerable amount of inequitable treatment in our society and tried through their mandate to do something about it. The minister has read through his list of programs and his expenditures for the last year, I assume. All we have is workshop after seminar after conference for women in business and women in non-traditional work, but nothing that concretely helps to change the structure or the reality that the majority of women in British Columbia face.

Part of the reason we talk about free trade is that it is a deal that was negotiated by government and that the people of this province, and indeed of Canada, have to adjust to. When we talk about adjustment programs for women, it acknowledges that this deal, this agreement, was imposed upon them and brought about without their consultation, and that the governments of this land have some responsibility to help the people adjust to government initiatives.

We see initiatives like the free trade deal, which will have negative impacts, brought about. I don't think you will find any sector quoted in this document or in any document that does not acknowledge that there may be some negative impacts. Even the promoters of the free trade deal agreed that "there will be some losers, but for the most part" — and I am quoting the proponents — "it will be a good deal." If there is agreement that there will be some negative impacts, then surely those who support the deal and who negotiated the deal have some responsibility to try to buffer those negative impacts.

We will talk specifically about some of the proponents who say that the changes brought about by this deal.... "Such programs will help women climb out of low-level service-producing sectors, and in these areas they can earn higher pay and assume greater responsibility." Again, as the minister has already provided examples for us, that is an extraordinarily patronizing attitude, because even if the minister himself feels that some of those low-paying jobs are low-skilled and have low responsibility, I would like to see our society do without them. I don't believe our society could do without them, so they should be recognized for the service they provide. Recognizing that should acknowledge the fact that those women deserve to have a livable wage, a wage that can support them and their families.

If the minister doesn't want to talk solely about free trade, let's talk about women without that particular deal that has been thrust upon them. Let's talk about the responsibility government has to try to deal in some way with the way women have suffered over a number of years from the inequities in our society that place women in low-paying jobs.

I have talked to the minister several times about this. I know there was a delegation of women that came over to Victoria to talk to the minister responsible, hopefully, and the minister couldn't spare any time to sit down and hear firsthand from those women who are suffering because of those low-paid jobs, finding it hard to make ends meet and finding it extraordinarily difficult to feed their families, The minister couldn't spare a short amount of time to sit down and hear. Perhaps the minister could have learned something, instead of making little of his responsibility. Perhaps the minister could have learned that other jurisdictions have tried to wrestle with this problem; some unsuccessfully, but nonetheless they have tried.

The minister has not in any way over the last.... This is the third estimate that we have dealt with in his ministry. He has not indicated in any way that he is prepared to intervene on behalf of those women and encourage the government, either the Labour ministry or other ministries, to deal with the issue of minimum wage, of wage equity, of employment equity, of affirmative action — any number of programs which could begin to deal with this imbalance that currently exists.

Is the minister telling us by his inaction that he is satisfied with the reality that women face in this province?

MR. CHAIRMAN: Just before we continue, Minister, the second member for Langley has asked leave to make an introduction.

Leave granted.

MR. PETERSON: Mr. Chairman, sitting in the Speaker's gallery are probably two of my greatest supporters, my sons Ryan and Kevin Peterson. With them are two good friends of theirs, Edward Chapin and Brad Martin, who have just come from an afternoon at the movies and are interested in seeing some real political theatrics going on in this House this afternoon. Would the House please join me in making them very welcome.

HON. S. HAGEN: The member for Surrey-Guildford-Whalley asked a very general question: am

[ Page 8379 ]

I satisfied with the reality of women in this province? What I can say in answer to that is that I am not satisfied with the number of women who are achieving their potential in this province.

I want to point out, though, some progress that has been made. As I said earlier, no, we're not there, and we've got a long way to go, but we are making progress.

When I introduced the new student financial assistance program, we put special dollars in there, allocated dollars, to pay for day care for single parents, the majority of whom are women. And without that extra help and without the extra student financial assistance program, many of these single parents, most of whom are women, would not have had the opportunity to go back to college to either complete their high school or complete a two-year diploma program to be able to get a better job and support their family.

The comment was made that I'm being patronizing. I would like to remind the member that people who get upgrading opportunities can then move into jobs that they couldn't even dream of before that. So I think you're a little off base.

I'd like to point out that in our budget this year for labour market programs we are allocating $28.7 million for both men and women in this province who need labour market adjustment.

[5:00]

With regard to her comment about the women's group that wanted to meet with me, I'm sorry, I was not aware that they wanted to meet with me. I do know that I am meeting with them — is it this week or next week? We are meeting with them next week. So to say that I wouldn't meet with them is categorically unfair and incorrect.

You weren't listening to me when I was saying that I have visited many of these groups. I don't expect these groups to come over to Victoria to meet with me; I have purposely gone out into the community to sit down with these groups and talk to them. So I'm not isolating myself. I'm interested in hearing the problems and the aspirations of these groups. I want to tell you that the young women, particularly, that I've met with are, I think, hard-working individuals; they want a chance to succeed; they want a chance to reach their full potential; and I believe that they will.

In addition to the training opportunities program, with a budget of $2 million directed to employers to establish on-the-job training opportunities in occupations traditionally underrepresented by women and other groups having difficulty entering or re-entering the workforce, we have allocated a contingency amount in our budget of $500,000 to deal with planning that will have to take place for any adjustments necessary under the free trade agreement. That will be in cooperation with the federal government under the trade adjustment assistance program.

So I refute and disagree with the allegations of the members who spoke that we are not moving ahead, that we are not gaining ground. As a ministry we have selected individuals in each ministry to make sure that women are given the opportunities to apply for the positions they want. I support that strongly. Certainly in my senior staff we have pretty equal representation; in my office staff we have more than equal representation, and whether I was the minister or not, I would continue to fight for that equity that should be out there.

MS. SMALLWOOD: The minister likes specifics. I specifically asked you a question, and I'll restate it. What are you doing in the way of wage equity, employment equity and parity? The minister talks about all these wonderful thoughts, but we're not seeing anything tangible. There are tangible things that can be done by government through legislation that will help to deal with the inequities, and I've outlined them. What is the minister doing for wage equity, employment equity, affirmative action and parity?

HON. S. HAGEN: I'm pleased to say that the government of British Columbia supports equal pay legislation — that is, equal pay for the same or substantially similar work. We are committed to the concept of workplace equality, which includes equal access to employment and adjustment opportunities and equal treatment on the job.

I believe one of the major ways to assist women in improving their position in the workplace is through job training and skill development, and this has been a priority of my ministry. Assisting women to move from low-skilled, low-paying jobs is essential not only to address the differences in income levels, but also to respond to the pressures of a rapidly changing job market.

MS. SMALLWOOD: I'm glad to see that the Minister for Advanced Education can read, because I think that just points out that the minister doesn't understand the concepts and doesn't understand even what he's reading.

[Mr. Rabbitt in the chair.]

Very clearly what you outlined was laws that have been on the books for some time. They're on the books through the Human Rights Code, which has more or less had all of its teeth taken out of it by this government and subsequent governments. It is a complaint-based code that very few people have been able to access, because it no longer has the ability to function as it once did — if it ever was the answer.

I'll go back to the minister's document he tabled — the one he bragged about, that's not his, but he paid for it — to talk about the section of the report that outlines the two areas that will be most impacted by the free trade deal. They are the service-producing sector and the goods-producing sector.

Let me first talk about the service-producing sector. The service-producing sector is the tertiary sector of the economy that includes everything not in the goods-producing sector: agriculture, forestry, mining, manufacturing, construction, etc. Within the

[ Page 8380 ]

service-producing sector are such areas as government services, retail trade, financial services and transportation and communication. More than half of the people employed in the service-producing sector are women. If you looked at that sector and compared the wages, I think you would find that the average that is talked about — those 66-cent dollars — is very different in that sector. When you take it sector by sector, I think you find that those averages don't hold because of the differences in the type of jobs people have.

For instance, we talk about the money a person working in a restaurant pouring coffee makes, compared to the money made by a construction worker. I would suggest to you that they have similar skills and responsibilities, yet that construction worker can afford to support his family, and the person working in the restaurant cannot.

Those kinds of differences in our society are the differences that government has got to begin to deal with, because unless you deal with those, you will never see any changes in the equity in our society. You will continue to see that the vast majority of people living in poverty are women. You will continue to see our seniors represented disproportionately by women living below the poverty line; we're seeing that decade after decade, generation after generation. There is nothing this ministry has done that will begin to alleviate that problem, and there's absolutely no indication that this ministry is prepared in any way to begin to do the serious work that is necessary with other ministries of this government to begin to break down some of the inequities we're facing.

HON. MR. STRACHAN: Will women be construction workers?

MS. SMALLWOOD: Now one of the ministers asks whether I'm talking about women in non-traditional work, and I would argue that if that is the only solution open to women, then what you are saying to women is that the work they do is not valued — if you want a living wage, you're going to have to go out and dig a ditch. I suggest to you that those values are not values that our society as a whole would support. Instead — and this is my argument, Mr. Minister — we have to deal with the value of work and recognize that if all of the waitresses go out and dig ditches, there will be no one left to pour the coffee.

HON. MR. STRACHAN: There are waiters making very good salaries — and waitresses.

MR. CHAIRMAN: Through the Chair, please.

MS. SMALLWOOD: At any rate, I can't see that we are going to get anything more out of this minister than we've got in the last two estimates. There's no value in talking about the needs of women to this government. Not only your actions but also your attitudes have shown women of this province that they cannot look to this government for any support for their problems; and I believe that is how women will clearly vote in the next election.

HON. S. HAGEN: I can't let those sorts of scurrilous comments pass, and I just want to again tell the member for Surrey-Guildford-Whalley in pretty simple terms what we are working hard to accomplish in this government. As I say, there has been movement, there's been progress, and we will continue to work towards that end.

I want to remind the member that a number of factors account for the differences in the earnings of men and women, and no single statistic adequately explains these differences. Such activities and programs as the labour force strategy for women and the Canadian Jobs Strategy are initiatives which attempt to address the situation. Women remain concentrated in certain occupational categories, and this is what we've been saying and the opposition doesn't hear. Over 60 percent of women in the labour force are employed in three job categories: clerical, sales and service. Now how do we change that? How do we give women more opportunities? Through advanced education and through training opportunities. These jobs tend to be the lower-paying occupations — not just in British Columbia, but in Canada as a whole. The number of women in the managerial, professional and administrative group has increased significantly over the past few years. In terms of economic impact, the increase in the number of women in professional and managerial occupations has been positive, since the average wage for these skills is above the average earned by women as a whole.

MR. JONES: I'd like to switch back to a very important program and the second program that the minister was assigned by the Premier in the fall of 1986, which is another program that has been recognized as a positive one.

MR. ROSE: A point of order. I'm sorry to interrupt my colleague in full flight, but the minister referred to the comments of my colleague for Surrey-Guild ford-Whalley (Ms. Smallwood) as scurrilous. I really wonder if that's appropriate for the minister. I notice that in Beauchesne, "Rules of Debate," "scurrilous" is sort of in the same company as "sleazebag," "superass" and "scandalmonger" as being unparliamentary. I just wonder if the minister would like to reconsider his adjective and change it to something else. "Unscrupulous" and "spurious" are also unacceptable.

MR. CHAIRMAN: The point of order is well taken, and I would ask the member for Burnaby North (Mr. Jones) to continue with his debate on vote 5.

MR. ROSE: On the same point of order, I think that if a member finds a comment by another member offensive — regardless of whether or not it happens to be on the list of the world's greatest hits as defined

[ Page 8381 ]

by Beauchesne, the bible from Ottawa — he should, as a gentleman and a scholar, jump to his feet....

AN HON. MEMBER: That's sexist.

MR. ROSE: Oh, no, that's okay.

AN HON. MEMBER: A gentleperson.

MR. ROSE: A gentleperson.

HON. S. HAGEN: Far be it from me, Mr. Chairman, to denigrate the members opposite, whom I have a great deal of respect for. I would certainly withdraw the comment, which was not made against the member; it was made against a comment that she made.

MR. CHAIRMAN: I wish to thank all the members for adding to the debate and for the point of order and ask the member for Burnaby North to continue on vote 5.

MR. JONES: On vote 5 there are three areas that I'd like to pursue, and maybe that would assist the minister and his staff in planning their time. Normal people are thinking of going home for supper at this time. I don't expect that we will be all that much longer. The three areas that I'd like to canvass briefly are the student financial assistance program, private training institutes and governance, particularly college governance — if that assists the minister with organizing his staff. I think we've finished with the women's secretariat. I hope this is of some assistance to the minister.

[5:15]

On the question of student financial assistance, first of all, just very briefly, it's very important that governments in this country recognize that there are barriers to access and that they must deal with them by providing assistance to students and creating a situation where there's equality of access. When I was out at UBC when students were protesting the large fee increases, I saw a protest sign at the back of the meeting that said: "Prosperity should be a product of our education system and not a requirement." I think that's a critically important thought for the Advanced Education minister in this province: that both society as well as individual students should benefit from education — as the minister well knows and has indicated many times — and that we have in place a program of student financial assistance that overcomes the economic barriers of our young people who are trying to improve themselves and improve this province in the process.

The minister was recognized many times with accolades when the new student financial assistance program was introduced, and rightfully so. It was certainly a considerable improvement from his predecessors. However, the minister, and the Finance minister (Hon. Mr. Couvelier) as well, indicated on a number of occasions that we have in this province the finest program in Canada. Last year in estimates the minister indicated that other provinces in Canada are looking at our program, and they are very excited about it.

We were last in terms of the amount of dollars available per full- time-equivalent student, and the addition of increased funds in '87-88 brought our total contribution in that year up to $26.5 million. In 1982-83, that part of the budget was listed at $33 million. So what we had, going from 1982-83 to the first year of this program, was a reduction of some $6.5 million during a period when inflation would have suggested much more than $26.5 million, much more than $33 million; that there would have been a considerable improvement if the minister wanted to seriously address this question. We moved in that year from tenth out of ten in this country to something like eighth out of ten and made a contribution, in terms of dollars per full- time-equivalent student, that is not even half of the national average.

The minister indicated this was the finest program in the country a couple of years ago. Does he still believe it's the finest?

HON. S. HAGEN: Yes, I think it's the finest program in the country.

MR. JONES: I should ask the minister on what basis he believes it's the finest, because in any of my reading on student financial assistance programs across Canada, we are still not making a contribution that is even half of the national average.

Let me ask the minister another question. Why did he choose to phase in this particular program over three years? Three years, I guess, is the life of the mandate of a government, roughly, in this province. Did that sort of election timetable have anything to do with the phasing-in of this particular program, which by the third year is getting to be respectable? It's far from the finest in Canada. It certainly wasn't in the first year or the second year. Why do we have a three-year phase-in?

HON. S. HAGEN: I know this would never occur to the socialists, but there was quite an impact on the budget over the three-year period. Because of the serious dollar impact and the amount of money required to bring the program into full effect, it was phased in over three years. It had nothing to do with the time of the mandate or elections.

MR. JONES: We on this side of the House appreciate the impact on the budget of these kinds of programs. Last year the minister budgeted $58 million for this program. Strangely enough, the government, which seems so concerned about the size of the budget in this area, underspent that budget by some $20 million, or by one-third. Was the planning for $58 million a serious goof on the part of the ministry, or were they inflating the size of that budget for political purposes?

I think we are waiting for some information from the minister. I thought the minister would be prepared for this.

[ Page 8382 ]

HON. S. HAGEN: No, I learned a couple of hours ago not to quote numbers unless I know they are right.

I just want to point out to you that I think your numbers are incorrect; that's what I was checking on. The amount budgeted for '88-89 for student financial assistance was $58 million. The amount expended was $43.5 million. We funded every request that came in and qualified. The reason for the under expenditure was that because this was a new program, we overestimated the call on the program.

The '88-89 budget, as I am sure you are aware, for student financial assistance is $50.65 million, which is a 16.5 percent increase over last year's expenditures.

MR. JONES: I stand corrected. I suggested that the budget was some $20 million underspent; it's more like $15 million. I appreciate that. Five million dollars is nothing to sneeze at.

The minister indicated that the reason for that budget being so seriously underspent.... Some $15 million out of $58 million is roughly one-quarter, so there was a 25 percent error in budgeting, which is not the kind of thing I think we would anticipate from a ministry that really was able to predict the expenditure within that ministry. But the minister suggested that students did not apply in the numbers expected. I am wondering if the minister has any explanation for the reason that they did not apply.

Why didn't students who live in the province of British Columbia — who clearly suffer as serious, if not more serious, economic disadvantages in terms of student wages, unemployment in that 18 to 24 age range, rents, high fees and all the economic difficulties that students face in this province — go to this particular ministry and this particular government, as they go to various other provincial student assistance programs across Canada in large numbers? What is it about this program that causes students not to seek assistance from the province of British Columbia in the same way they do in other provinces?

I can make a couple of suggestions. I know the minister wants to respond.

HON. S. HAGEN: I've got the answers.

MR. JONES: Let me throw some suggestions to the minister that might assist his answer. Some of the words used in the program like "remission" and equalization payment" — although maybe we should expect post-secondary students to be able to deal with that kind of language, it's certainly an unusual kind of language.

Obviously the word "grant" is an anathema to this government. We're not loath to use the word "grant" when it comes to business and industry, but we are very loath to use it when it comes to student financial assistance. I haven't memorized the two-inch-thick policy handbook governing student financial assistance, but it seems to me that the government operates a very restrictive program when it comes to providing our young people with the necessary financial assistance that they have.

I know that the minister regularly gets many letters from distraught students and parents who have run into the bureaucratic regulation that prevents them from taking advantage of student assistance. For example, students that live independently have to wait longer than one year. Why not assess students on the basis of their need as individuals rather than the income of their parents, and why that kind of waiting period? What difference does it make how long they've had a particular need? Isn't it the need they have at the point in time they're seeking post-secondary education opportunity that's important?

I got a letter recently from distraught parents who suggested — and the minister can correct me if they're wrong — that the only way they could get financial assistance was to swear there was a family rift and that that would be verified by a third party or to lie by suggesting that their daughter was pregnant and had no supporting husband. Clearly the kinds of rules and regulations that are part of the student financial assistance program are very restrictive.

The minister expressed concerns in the past about part-time students, and I certainly share those concerns. The minister frequently mentions his wife as an example of the kind of student that may not be able to complete at one go and becomes a part-time student, and legitimately so. Yet the timely completion component of the program makes it very difficult, if not impossible, for students who, maybe because they're ignorant of the program, don't even realize they can't get financial assistance unless they take pretty well a full load; that they don't get it by taking a partial load; and if they do, it counts as a full semester in terms of their getting further financial aid.

So I'm suggesting the reason we were $15 million underspent is because of an incredibly restrictive and tight policy that governs student financial assistance in this province. Will the minister comment?

HON. S. HAGEN: It's the same old song, and that is that the government is in trouble if they don't spend all the money in the budget. We do have the finest student financial assistance program in Canada. Because we overestimated the amount required, the opposition is saying: "You should have spent the money. You should have changed the rules, eased up on the rules, gotten rid of the money. We can't have any money left over. We've got to send it out there." It is totally inappropriate. Thank goodness that party opposite does not form the government of this province.

HON. MR. RICHMOND: And never will.

HON. S. HAGEN: And never will. Did it ever occur to the opposition...? I'm really pleased to see the Leader of the Opposition in the House this

[ Page 8383 ]

afternoon. It's a great pleasure. I want to say to my friends opposite....

MR. HARCOURT: I was in your riding looking for you.

HON. S. HAGEN: Which one? Did it ever occur to the members opposite that one of the reasons fewer students applied for financial assistance last year was that more students found summer jobs because of the growth in the economy in this province? Did it ever occur to them that this would be a reason that fewer students applied for financial assistance: the tremendous growth in this province; the growth in opportunities, the growth in the economy; more jobs created? Yes, the government will take some of the credit for that. Thank goodness the private sector out there has confidence to expand in capital equipment and expand the jobs available.

To the member for Burnaby North, yes, there were fewer students. Yes, the students had more summer jobs; they had more income, so they did not need to access the program. Thank goodness we have students with integrity in this province who will not try to go after the money just because it's there. They go after it only if they need it.

[5:30]

Let's talk about some of the criteria of this great program. I must say that I do get a few letters from students who are having difficulties. We treat every one of them as individuals. We look at every single one. I want to compliment Mary Browning, the director of this program — who is here with me this afternoon — who does a superb job in this area. I want to tell you, my friend from Burnaby North, that I get far more letters complimenting the government for that student financial assistance program.

I want to remind the member that while there may be adjustments necessary and we have continued to make adjustments to that program, we make them through the committee that has been left in place to deal with any necessary adjustments. As they make recommendations to me, I implement those adjustments. I know you are aware of the changes and the increases that were made this year. Those came as a result of recommendations from that standing committee, which is well represented, including a representative from the Canadian Federation of Students who sits on that committee, plus others who give us the input we need from the student sector and also from the college and university sector.

I might remind the member opposite that the criteria established are also the federal criteria, because we are working in conjunction with the federal plan. Yes, we want to continue to improve the program, and we will, but not on an ad hoc basis and not just because we under spend in the budget. I want to bring my colleague to task on that, because it's important to remember that these are the taxpayers' dollars that we are entrusted with, and we want to make sure that they are used in a responsible fashion.

MR. JONES: Well, I agree with the minister, Mr. Chairman, that we want to use these dollars responsibly. Rather than having the finest program in the country, I'd even be happy if we had a program that was somewhere in the middle. We were tenth out of ten in terms of student financial aid to students, in dollars per FIE student, and we moved as a result of the minister's initiatives to something like seventh or eighth. I would be happy to be down around fifth, fourth or third. The minister received letters of congratulation when people thought the budget was $58 million for this program, but we now know that with the restrictions in the qualifications for students to receive aid — in many areas they may be the same as the federal government's — we could do a lot better to assist our students. Other provinces do a lot better.

The minister indicates that it is an ongoing program and that he's interested in improving it. I'm very pleased to see that. There is a committee in place that the minister says is there to monitor the program and make sure it's working as intended, which will look to improvement, as time goes on.

I'm not suggesting that every cent in the budget has to be spent, but at the same time, there is money available because of the restrictions in that program. The very committee that the minister suggests is there to monitor the program and make sure it's working as intended made some recommendations to this minister. One of the recommendations was to bring about retroactive loan remission for people who graduated in the no man's land between '84 and '87, when there was really a mix of the old program and the new program. The minister sent that question of retroactive loan remissions to the committee — clearly the minister doesn't have to accept all of the recommendations of all the committees he has operating — and that committee came back with the recommendation that it would cost $3 million, it would be a one-time expenditure and it would be fair for the minister to do that. Yet he has failed to implement that recommendation. I think it's a shame not to consider those groups of students caught in between the two programs.

Another recommendation of that committee, which was in place to monitor the program and make sure it was working as intended, was to increase equalization payments to students from low-income families. That was also a recommendation of the access committee. Although the program has received improvements, they're clearly not targeted at low-income families.

Another recommendation from that committee was the extension of the program, in terms of timely completion. That was also a recommendation of the region 1 access committee.

Another recommendation that came up frequently in the regional access reports was that we increase advertising of this program to make sure that those who want to take advantage of the program that's there — the parents, the school counsellors, the students themselves and the potential students of this program — be made fully aware of the opportunities

[ Page 8384 ]

available in terms of financial assistance, so that they can proceed with post-secondary education.

I would suggest to the minister that he look seriously at these recommendations of his committee on student assistance, as well as at the recommendations of the access committee, and that he consider making grants available in third and fourth year as well and assessing independent students on the basis of need rather than how long it has been since they've left home.

I would applaud one action the minister indicated he is taking, and that has to do with the day care subsidy. It's a very serious problem, a ludicrous problem, and the minister sitting next to you seems to be the bottleneck. It's a ridiculous situation when loans are considered income. I'm sure the minister has certain loans outstanding, and in no aspect of his financial life are those considered as income; yet those young people who apply for a day care subsidy are reduced in terms of the amount available to them because they take out student loans.

There has been very modest — and I underline very modest — recognition of some of the problems of those students, but in no way does it go far enough. I would be very happy if the minister had something more concrete to report on this matter. I know he has been aware of it for some time; I know that various representations have been made to the Ministry of Social Services and Housing; but we've had very little response. Very clearly it's a ludicrous situation in British Columbia when loans are considered income. We have a number of recommendations for improvement. Although the minister was chiding me tongue in cheek for raising some concerns about this program, I think he and his advisory committee recognize that there are a number of areas of weakness, and I would encourage him and wish him well in making serious improvements to the student financial assistance program.

I don't know if the minister has a response to those concerns. He shakes his head no. I did not hear anything rattle. Understanding that, the Leader of the Opposition, who has taken responsibility for the science and technology part of the minister's responsibility, would like to address the minister and his estimates on this important area of science and technology in B.C.

MR. HARCOURT: I'm very pleased to be able to ask the minister a few questions dealing with the science and technology part of his responsibilities First, the OECD countries have established a certain target amount of gross national product that should be invested in research and development science and technology activities. Could the minister tell us what that figure is?

HON. S. HAGEN: Before I answer that question, I would like to take the opportunity to introduce another staff member who is with me here this afternoon: Mr. Jim Crone, executive director of administration and support services In the Ministry of Advanced Education and Job Training.

In answer to your question — and I'm sure that you probably have the answer, so I'm going to throw out what I think it is — I think it's 10 percent, but you may correct me.

Interjection.

HON. S. HAGEN: Is it 4 percent? I'm sorry, I shouldn't have said 10 percent. I'm told that it's 2 percent or 2.5 percent, but I'll let you give me the right answer.

MR. HARCOURT: That's right. The figure is 2 percent.

I would like to ask the minister a second question. What is the size of the B.C. economy and does he know the amount that's been invested in research and development in British Columbia?

HON. S. HAGEN: We don't have an accurate figure on what is being invested. I would remind the hon. Leader of the Opposition that we are dealing with countries here, not provinces. The question of research and development and the amount of dollars of research and development has historically been the responsibility of the federal government. While the province is moving into some research and development money, it's rather unique in Canada that we are doing this.

The other fact is that one of the reasons that many of the countries are showing higher percentages is that industries in those countries have taken more of the responsibility which I believe to be rightfully theirs. We are attempting to influence that in this Province, and I'm sure the Leader of the Opposition is aware of the two major forest industry companies that have research laboratories under construction. I compliment them for that, but I also say that it's about time.

MR. HARCOURT: Thirdly, could the minister tell us the size of the forest industry in terms of our economy and the amount that is invested in research and development in forestry?

HON. S. HAGEN: That's a little outside of my field, but I do want to give some statistics here. Across Canada, 21 percent of overall research is for basic research. In British Columbia, 25 percent of all research is for basic research. This reflects well on the very high quality of the people at our universities and, as I said before, I agree that more research is needed.

The province has shown a great deal of leadership here, for instance, in announcing the science and technology development fund, which in the first year of operation was a $10 million fund and in the second year a $15 million fund, and also, of course, with our commitment of $87 million to the kaon expansion at TRIUMF. That is the first time a province has made that sort of commitment to a federal research project. There is no doubt that over the years British Columbia will not only increase the percentage of research

[ Page 8385 ]

and development dollars that we're entitled to by our population from the federal government, but that we will add to the standing of Canada as compared to other OECD countries.

[5:45]

MR. HARCOURT: I'd like the minister to know a few facts about his ministry. First of all, I'd like him to know that that information is available. It's been available to his ministry for quite a while. As a matter of fact, the Science Council of British Columbia, through a report in June 1988 which was on the minister's desk, made it very clear: "B.C. is at the bottom end of the national scale of research and development as a percentage of gross provincial product. Canada spends 1.4 percent of its GNP on research and development, whereas B.C. spends 0.7 percent."

This compares with some of our competitors. I quote the report because it goes on to talk about some of our trading competitors. I'll quote this: "Competing countries such as Sweden, Japan, West Germany, the U.K. and the U.S. spend 2.5 percent to 3 percent of their GNP on research and development." That report has been with the minister for well over a year.

As well, we've had a lot of sound and fury and processes and task forces going on. We have the 1988 SPARK process, which I'm sure the minister is aware of — strategic planning for applied research and knowledge. As well, we have the June '88 report "Science and Technology: Its Impact on the B.C. Economy" that came out of the Science Council of British Columbia, where those startling facts were made known about B.C. being the lowest of the low in Canada on research and development.

Just to reinforce that point, in forestry, the number one industry in this province, a report has recently come out from the Science Council of British Columbia entitled "Forestry in British Columbia: A Vision for the Future" which reinforces the fact that we are the lowest of the low. We've got a $13 billion industry, and I want you to know the abysmal amount of investment going into forestry. It's $34 million in an over-$13 billion industry, which creates the vast majority of the export dollars in this country, let alone this province, and affects at least 20 percent of the workforce.

You made the comment that you were hoping there would be more activity by the private sector. I think that when you look at the abysmal record of both the public and private sector in this province, you'll agree that we have a long way to go — as that famous ad goes — to be able to deal with our competitors throughout this world.

I'll quote from this report, if I can get your ear. I know there are a lot of coaches around you on this item, including the Minister of Energy (Hon. Mr. Davis), the House Leader and the minister of culture — with a large K — sitting behind you now.

I would like to read from the executive summary of "Forestry in British Columbia: A Vision for the Future," which came out under a letter dated June 19 from the Science Council of British Columbia. It said: "In this industry of over $13 billion" — I quote the first page of the executive summary — "$34 million annually is spent on forestry research and development to support the current annual cut. The primary sources of funding for this R and D are the provincial and federal governments." As a matter of fact, it's not just the primary sources — that's the polite word for it. "Of the $34 million spent on research and development in British Columbia, $32 million comes from the taxpayers."

There are two primary institutes, as you said, out at UBC — the pulp institute and Forintek — and there's only $2 million spent by the companies in this province. I'm saying this as a criticism of the province, which is the lowest investor in research and development in this country and one of the wealthiest provinces.

HON. S. HAGEN: How come we're wealthy?

MR. HARCOURT: Because of the skill of the people of British Columbia and the God-given resources we have. In spite of this Social Credit government, we're doing well. In spite of you. This province can even overcome this Social Credit government. What a compliment to the people and the resources we've got.

Mr. Chairman, if the minister would read these reports that are from the people of this province who supply him with this information, which he doesn't seem to have at his disposal during his estimates.... I think it would be useful for him to look at appendix 1 and to look at the approximate funding sources of this minuscule amount that's invested in the number one industry in this province, in an age where our competitors in Sweden, Finland, other areas of Canada, the United States and all other areas of this world where we are trading are investing in new ways. Their unemployment rate is under 2 percent, Mr. Minister, and you know what they have: they have a cooperative venture between the venture capitalists and the workers. If you want to go look at Sweden, why don't you go and look at a real model of how to carry on a full-employment economy with limited inflation and cooperation between labour and management. You're doing exactly the opposite here.

So, Mr. Chairman, if the minister wants to point to Sweden and the example of how to carry out research and development and cooperation between management and labour, I'd be more than pleased to send him this material, which he doesn't seem to have at his fingertips either. I'd like to join the minister in Sweden; as you know, I have a spouse who is of course Scandinavian, as the minister is. I'd be delighted to bring this information to the minister's attention.

The point is, Mr. Chairman, that this minister and the government don't understand that they're the lowest of the low in terms of research and development in this province.

[ Page 8386 ]

HON. S. HAGEN: Were you talking to the Science Council?

MR. HARCOURT: Speaking about the researchers at the Science Council, I am aware of the seven areas that they are looking at. I am in touch with the work they are doing. I know that they are looking at seven areas a decade late. Other jurisdictions were already shifting their industrial and economic strategies a decade ago. And this government is ten years behind most of the OECD economies, but I am aware of the seven areas they are looking at. If the minister isn't aware of them, I will make him aware of those seven areas: (1) commodity resource products; (2) value-added resource products; (3) high tech systems and products; (4) international consulting; (5) tourism; (6) developing value-added industries such as disease control, waste management and biotechnology to B.C.'s aquaculture industry; (7) information technology, which is quoted to have a potential of expanding to be a $10 billion to $12 billion industry within 12 years.

Other countries have known these things for a long time, and I am really saying that we are behind. I think you will admit that we are behind. I think you will admit that provincially as a government we have not invested in post-secondary education, in research in post-secondary institutions, in the government operations, some of which have been privatized or closed down. Thirdly, I think you will agree, Mr. Minister, that we have to get the private sector to start making the investments in the future of this province that they should.

HON. S. HAGEN: Kaon.

MR. HARCOURT: Yes. I will be visiting the kaon facility and I will be speaking, as I did in the past when I was the mayor of Vancouver when we raised that issue, when we supported the research dollars coming out into British Columbia without impacting on the other research that should be taking place in this province.

It was the economic advisory commission of the city of Vancouver that pushed for both of those things happening. It gets back to my basic point — and I think the minister will agree — that the public and private sectors in this province have not done their job in research and development.

That has cost jobs. It has cost many, many jobs because we aren't up to speed with our competitors. That's really my point, Mr. Minister. My point is we have a long way to go, and a $10 million fund does not get us up to 2 percent of GNP going into research, and $34 million total in research and development into a $13 billion forest industry does not get us up to 2 percent, which is the minimum. Our competitors are putting 2.5 to 3.5 percent of their GNP into research and development. Really, Mr. Minister, I want you to be aware of these facts which have been a part of your information system for quite a while. They've come to you from the Science Council of British Columbia. They've been on your desk. I think you'll admit that when you said there isn't this information here, it is. I've just read it from the same reports that you've received. I've talked to those people, and I agree with them.

Interjection.

MR. HARCOURT: Our people. They are our people, not your people. They are the representatives of the people of British Columbia. Let's never forget that in government.

HON. S. HAGEN: They're good people, and you're criticizing them.

MR. HARCOURT: I'm not criticizing them. I'm saying that their report is a critique of you and of the research and development that isn't being done in this province, Mr. Minister. You may take that in a frivolous manner. I'm criticizing you and previous Social Credit governments. I am saying — and I think you'll agree, Mr. Chairman — that we have a long way to go in the public and private sector if we're going to be competitive in this world, and if we're going to get our research and development up to scratch so that we have a sustainable future for our young people. Mr. Minister, I'll be interested in your comments.

HON. S. HAGEN: It is with a great deal of pleasure that I rise to comment on the outdated statistics of the Leader of the Opposition. I'm going to be very kind to him, because I know he's new at this job and hasn't had a whole lot of time to prepare. I want to remind him....

MR. MILLER: Give us the statistics.

HON. S. HAGEN: If the other people would be polite and listen.... You be polite and listen, and I'll talk to you.

MR. MILLER: Give me some new information.

HON. S. HAGEN: I was afraid you'd say that. Let's look at the 2 percent figure of the OECD members. What would make up that 2 percent figure? What type of research and development would contribute to that 2 percent figure? Possibly very large expenditures on defence research, nuclear research and other types of research that I'm not interested in getting involved with in this country. I'll tell you something: if you don't think that Sweden is doing defence research, you're smoking something.

Let's talk about the SPARK process. The Leader of the Opposition was talking about a percentage of R and D from 1986, statistics that are three years old. It's before the $10 million expenditure by this government last year. It's before the $15 million expenditure this year. It's before the MacMillan Bloedel research centre and the Canadian Forest Products research centre were under construction. It's before all the research and development money that has been

[ Page 8387 ]

flowing into this province in the last two and a half years from the federal government.

The SPARK process is completing its eleventh sector, not its seventh sector. Again, he's two years behind. These are the sectors that have been completed: agriculture and food; aquatic resources; biotechnology; construction; energy; forest and forest products; health information technology; manufacturing machinery; mining, minerals and metals; transportation; superconductivity. Three more are planned for completion this year: forestry services; waste management; environment. So again he's two years behind on his statistics. I want to re-emphasize that the SPARK process is the first of its kind in Canada, and it's being watched with interest and envy by all other provinces.

[6:00]

MR. HARCOURT: It's absolutely pathetic. The minister, on a gross domestic product here in British Columbia in the $60 billion range, is talking about a $10 million fund. I know about cost-sharing. I know about this $10 million fund on the base of a $60 billion economy, and the minister is proud of this piddly little response to us being the lowest province in a country that's the lowest investor in research and development of any of our competitors. This feeble little excuse that he throws up at us, that he's got $10 million going on a 0.7 percent base, is a pathetic response.

If the minister wants to embarrass himself in public, that's his choice, but I would like to ask him one other question: how many forest companies in this province have a proper research and development facility?

HON. S. HAGEN: I think that's a forest industry issue. Two majors are building major labs; then of course we have the joint federal and provincial and industry-funded laboratory, Forintek, at UBC, and we also have the forest research centre at UVic.

MR. HARCOURT: You're zero for five, Mr. Minister, in answering questions. You fail. A failure on your report card as minister of post-secondary education, science and technology.

HON. S. HAGEN: That really worries me, coming from you.

MR. HARCOURT: Well, I'm just telling you that you couldn't answer any of the basic questions that I asked you on your ministry.

HON. S. HAGEN: Go talk to the people out there.

MR. HARCOURT: I have been, and I've been in your riding. They miss you; they wonder where you are.

MR. CHAIRMAN: Would the member please address the Chair.

MR. HARCOURT: Mr. Chairman, I would like to tell the minister — because I've had to tell him the answers to all of these questions that he should have at his fingertips — that there's only one company that has an operating research and development facility, and that's MacMillan Bloedel. What I'm talking about is a properly operating research and development facility. The Canfor one that the Minister of Forests talks about is one with about a $500,000 budget for developing new product lines. That is not what I would call anything other than a start of a research and development facility.

[Mr. Pelton in the chair.]

I'm glad to see that you've finally got the Minister of Forests in here to do some reinforcing for you. But I would have thought that the Minister Responsible for Science and Technology would have had at least a passing interest in the research and development that's done in the forest industry, as it's the largest industry in our province. But he doesn't seem to take much interest in this most important industry in our province, and I think it's indeed unfortunate.

Mr. Chairman, I wanted the minister to know that answer, and I want him to know that for somebody who has been in his portfolio as long as he has, I would have hoped he would have made more progress in getting us from the lowest of the low in science and technology investment and research and development investment in this country, which is the lowest of any of our competitors.... What he offers up are, I think, some quite inadequate responses, without knowing the facts about his ministry. I think it's unfortunate that the minister not only hasn't done his homework but doesn't even know the basic facts about the B.C. economy.

Mr. Chairman, I think science and technology and research and development in this province have some real problems with a minister who doesn't seem to know even the basic facts about them. But I'm hoping that in the next year, when we are here again in estimates, the minister will at least have those basic facts at his disposal and we will have at least passed Newfoundland in research and development in this country.

Interjection.

MR. HARCOURT: No, I am saying that I would hope that in terms of research and development we have at least passed Newfoundland as the number 9 province in this country in research and development. Mr. Minister, would you make that commitment, that we will at least be number 9 next year, instead of number 10, in research and development? Thank you, Mr. Minister; I am sure you can at least make that commitment.

MR. JONES: In research and development, Mr. Chairman, it is the government opposite that isn't up to scratch in terms of research and development.

[ Page 8388 ]

Members opposite seem to consider that we on this side are opposed to the kaon project, Every time the kaon project is raised, members opposite get excited. Even the Minister of Energy, Mines and Petroleum Resources (Hon. Mr. Davis) was heckling during this. In the three years that I have sat in this chamber, I have never seen him heckle before. Obviously it is something that gets the government side spirited.

Let me reiterate the position that the Leader of the Opposition articulated a few minutes ago with respect to kaon, and perhaps the Minister of Advanced Education could pass on to his cabinet colleagues and to his caucus that we are not opposed to a kaon project. We have only one concern about that project, and that is that that research not go ahead at the expense of other very important research in this province and in this country, in fact, That's our only caveat, Other than that, we have no opposition to kaon, so pass that on. Cross that one off your list of Achilles' heels as far as the opposition goes. We don't have that problem.

I would like to raise two items with the minister, hopefully very quickly. One has to do with college board autonomy and the other has to do with private training institutions. In terms of local autonomy, if we look back to the sixties and seventies — and this is another area where there seems to be a tremendous gap in terms of the research and development of the government side and a lack of understanding of the genesis of those colleges — it was very clearly the fact that those colleges were formed in response to local initiative and local referenda. It was not something that the government imposed from Victoria. In fact, people at that time were willing to commit local taxes to the operation of those colleges, which were community-based and community-oriented. They were able at that time to serve the particular needs and distinctive characters of their communities throughout this province. They were governed by people some of whom were locally elected as school trustees, and they felt responsible to the areas in which their college was located. I think at that time they were aptly called community colleges.

However, we have seen a number of changes over the years, to the point we've arrived at now where I think it's very clear that college boards in this province, through order-in-council appointments, are political boards. They represent, rather than the thinking of the communities from which they come, the thinking of the province, the government and the Ministry of Advanced Education and Job Training Although the members that make up those boards, I am sure, are excellent people and take their responsibilities seriously, the nature of that appointment secures their allegiance to the individuals who made their appointments: the minister and his caucus colleagues.

As a result, I think a number of bad decisions have been made, a number of very partisan decisions. Let me cite a couple of them.

There was a board member at the College of New Caledonia against whom a serious accusation was made: making racist remarks related to the native Indian population in this province. With that kind of appointment and that kind of allegiance, the minister did not see fit to act firmly and decisively with respect to that board member and suggest that that person resign as a result of those racist remarks.

We had after the last election, as well, the situation of the member for Kootenay (Ms. Edwards). Because the board was composed of friends of the former Minister of Labour, Terry Segarty, they chose not to give the member for Kootenay a leave of absence so that, as is the case.... I guess the famous case was Dr. Pat McGeer, who had leaves of absence from the University of British Columbia for something over 20 years while he served in this Legislature. Very clearly it was a partisan political decision taken on the part of the East Kootenay board with respect to the MLA from that area, because of the political nature of their makeup.

In the Okanagan just recently there was a very sad situation, in my estimation, where — not even on the board itself, but in terms of an advisory committee to that board — it was recommended by the incumbent on that advisory committee that her replacement be the wife of Jack Whittaker, who is the Member of Parliament for that area. Although the individual who was recommended was very highly qualified to serve on an advisory committee, that recommendation was not accepted for that position, despite strong representation from people an the committee and in the community. It was very clear that because she was the wife of a New Democrat Member of Parliament, it was not appropriate for her to be advising a board of political appointments from the Social Credit Party.

Recently we also had what I consider to be the political firing of David Bradley, who was the principal of the Northern Lights campus in Fort St. John for six years. He had not made any secret of his political colours. He got in some hot water because he allowed a solidarity group to meet at his college. He even harboured NDP candidates when they visited that area. That was how serious his crimes were. Upon his leaving that position, some 30 of the 46 members on staff at that institution signed a petition indicating that they felt that firing was unfair. I think the judgment of the community was that it was a political firing.

Although the individuals themselves on these boards, I am sure, do a fine job and are caring people and concerned about post-secondary education, by the nature of the political appointment process that they go through.... Let me give you an example of that political process. One member of the Vancouver Community College board, whose husband happened to be a strong supporter of the member for Oak Bay–Gordon Head (Mr. B.R. Smith), was asked how she got her appointment to that college. She indicated that she was chatting about education one night with Brian, and he asked: "Would you like to be appointed?" Very clearly the attitude of this government is to say to people: "Okay, you helped me in the

[ Page 8389 ]

election. Do you want to govern a college?" That seems to be exactly how the situation operates.

The minister smiles, and it sounds humorous. As I said, I am sure the majority of those people are responsible and dedicated. But the point I am making to the minister — and I know he disagrees — is that they are not responsible to the communities they serve. They are responsible to the Minister of Advanced Education and the MLAs who suggest that they serve in those positions. They do not speak up when there are matters that do not serve the best interests of the colleges they represent.

[6:15]

It's a top-down approach, and the members opposite understand that approach. They are there to serve the government. They are there to serve the political ends of this administration rather than the educational ends they should be serving, as they did at the inception of the colleges.

When I mentioned in second reading that the preamble to Bill 67 include preparing students to serve in a democratic society, and that school boards in this province were excellent examples of that, the minister responded by indicating that he disagreed. I suggest that the model we have for school boards in this province is much closer to what would serve the interests of a free and democratic society.

I would like to ask the minister, considering that we do have a free and democratic society and that college boards should be there to serve the communities from which they come, what is the minister afraid of in terms of a democratic approach to things? Why is it so important that he have control over these individuals, which I think we have seen time and again? Why doesn't he trust people in the communities to represent those communities, and when is he going to put the community back in community colleges?

HON. S. HAGEN: I believe that the college system in British Columbia is the best-run college system in this country, and I have no plans to change the method of appointments to college boards.

MR. JONES: I'd like to raise the issue of private training institutions as part of the minister's and my continuing dialogue on this matter. I think the last exchange we had was on June 14, not even a month ago. At that time the minister indicated:

"Accreditation of private training institutions is one of the options my ministry is currently reviewing. My staff is involved in ongoing discussions with both institutional representatives and students about the feasibility and benefits of accreditation, and I am awaiting their report. Since this would become a much broader issue and may in fact require legislative amendments, I will be discussing the report with my cabinet colleagues later this year."

That's what the minister said this year. Last year the minister indicated something very similar. He's awaiting a report this year; that's what he said a year ago as well. Last year he said: "I am working closely with the private training association as to how they can improve...and ensure high quality...and working towards a national accreditation process for private training institutions."

We have in the province of British Columbia more than a third of all the private training institutions in Canada. The minister indicated on June 14 that there were over 400 such institutions which produce some 50,000 graduates annually. In the annual report of the Ministry of Advanced Education and Job Training the minister points to the private training institution branch, which is there to protect the interests of consumers of post-secondary educational experiences and to ensure the quality of instruction that takes place in those private training institutions.

I indicated in remarks I made to the minister in the House a while back that there had been a number of serious complaints — some very serious, some less serious that were resolved. I can list a number of private colleges that have had serious concerns raised about them. I mentioned, for example, Western Canada College, Alouette College, Success Unlimited, Alpha College, CompuCollege and, most recently, Western Media Institute. I'm sure that's only a partial list.

I don't wish to disparage the many fine training institutions that exist in this province, but I do believe still that the ministry is abrogating its responsibilities in not bringing in a compulsory accreditation process so that, as to the quality of programs, the consumers of these programs can be protected, as it says in the policy of the minister in his annual report.

With respect to the concept of privatization in general, the minister said on April 26 last year — I think it's ungrammatical, but I will quote it directly in any event: "It's ... not the direction I'm interested in going in." I would like to ask the minister if he has decided to privatize the private training institution branch of his ministry.

HON. S. HAGEN: The answer is no.

MR. JONES: I thank the minister for that answer. Considerable speculation seems to have gone on for some time about the privatization of that branch of the ministry. I have complained about the tremendous understaffing to look after those 400 schools and some 50,000 graduates annually. I appreciate the minister's candour and I hope there has been no decision and that there are no plans to privatize that important branch, so that the students' interests in taking private training courses are protected and we do have a branch that is answerable and is looking after controlling standards and licensing of those private training institutions.

There are a number of areas that I have suggested in these estimates that need addressing on the part of the ministry. While I think an adequate job has been done on the two major areas of assignment that the minister has had in terms of student financial aid and access to post-secondary education, there has been neglect of a number of other areas. As I illustrated with the example of BCIT, I think there has been a lack of clear goals, leadership, vision and direction.

[ Page 8390 ]

As well, I think we have a system in post-secondary education that leans overtly in the direction of control from Victoria, which I think certainly at times serves educational needs well and at other times the political needs of this government well. And when it serves those political needs, it does not serve the educational needs of the young people in this province — of all students in this province — who are taking advantage of post-secondary educational opportunities.

I thank the minister for his time during these estimates. I have no further questions. My colleagues may.

MR. MILLER: I hate to be last. Everybody has a feeling that they'd like to leave now. Unfortunately, my schedule didn't permit me to get in here earlier, and I have some issues that I want to raise. I think they are serious issues.

HON. MR. PARKER: I like your new image, Dan.

MR. MILLER: Unlike the Minister of Forests, Mr. Chairman, who is given to making offhand comments.

I can't help but remark first of all on some of the responses that the minister gave to the Leader of the Opposition on the question of research and development. In words that the Attorney-General (Hon. S.D. Smith) uses quite frequently in this House, it was "fatuous nonsense" to suggest that other countries' percentages of GDP that go to research and development are high because they support a military complex. I don't know if that's true. I shouted out "Japan," which certainly does not support a military and yet has an enviable record in terms of putting research and development money back into the economy, which is surely the only way a country can progress.

We have seen magnificent examples of countries which are resource-deficient — Japan is a good example, just sticking with it — and which pay extremely high prices for our raw resources, then manufacture them, provide jobs and opportunities in their countries, and make a profit to boot. If there is not an obvious lesson in that example, then I think we are indeed in trouble.

To return to the question of apprenticeships — and in my view it ties in — we're talking about an investment in human potential. There are all kinds of investments that reap a return, and certainly the investment in individuals in the form of training is a good example. I pointed out last year that we are woefully inadequate in terms of numbers. I don't have the figures for 1988, but the comparison I used last year was that apprenticeships were about 1.8 percent of the workforce in '82 and dwindled to 0.7 percent in 1988.

I note that there has been an increase. In the minister's opening statement he talked about the increase in the number of apprentices in the system But I take little comfort in 1,338 more apprentices in the system in British Columbia in 1989. I don't think there has been a significant improvement.

Last year the minister cited a task force study that had just been delivered to him by Price Waterhouse, a study under review by Price Waterhouse which he hadn't had an opportunity to see. I asked the minister to comment on the recommendations of that Price Waterhouse study dealing with apprenticeships — if it did; he alluded to the fact that it did. He rejected the notion that government had a greater responsibility in the whole area of training, whether it's workplace training, apprenticeships or the vast array of employee training that is possible. I recommended that we had to go beyond simply raising it as an issue. We had to in fact advise industry that they had a responsibility; and if they weren't prepared to carry out that responsibility, then there would be penalties attached.

Just to reinforce the notion that I had then, quoting from a report.... The name of the report is "Adjusting to Win," and it was done by the Advisory Council on Adjustment appointed by the federal government. The chairman was Jean de Grandpré, and it included some other fairly notable industrial people: Jalynn Bennett; Gordon Cummings; one labour representative, James McCambly; and Norman Wagner, chairman of the board of Alberta Gas. We had some fairly high-ranking people from industry on the committee that produced this book called "Adjusting to Win." Their recommendations would, I think, be considered seriously by the government, given their ranking in industry. They cite some examples of expenditures by Canadian companies. These are somewhat dated, but I don't think changes occurred within the last two or three years that would alter these figures with any degree of significance.

In 1987, for example, expenditures by the private sector in Canada on training and retraining are estimated at approximately $1.5 billion, just over $100 per worker on average. That's the kind of investment Canadian industry is making, and I think the minister would agree that it is woefully inadequate. Three out of four establishments did not provide any formal training at all. Contrast that with some of the programs put in place by individual Canadian corporations. IBM is cited as a good example of a company that has spent a fairly significant amount of money — about $2,400 per employee in 1987, I believe — in recognition of their responsibility to train. The report draws some conclusions about the kind of system that is needed if we are to meet this challenge.

[6:30]

I have some further concerns. I have debated in this House now on two or three occasions the fear I have for the fish-processing industry. I had intended earlier to speak basically on women's issues, because I looked at the very brief outline, "Free Trade and Women in B.C.: Potential Impact and Policy Directions for the Future," and I quite frankly don't see it applying in an area like Prince Rupert, where we have a historic seasonal industry that employs people who are native to the region. I just don't see that any

[ Page 8391 ]

of the things in here will allow those people to re-enter the workforce if worse comes to worst and we have a significant decline in our fish-processing industry. I think it's completely unrealistic to apply this kind of document to that kind of situation.

But there are things that can be done. Look at the policies that exist in some of our competitor countries, and surely Sweden is one of them. Sweden is constantly looked at as an example of what an industrialized country can do in terms of having a more planned approach to their industries and their workforce.

Interjection.

MR. MILLER: The member talks about a lot of taxes. I suppose a legitimate statement to make in the context of the debate is whether or not there is overtaxing. But when we look at the policies of full employment, when we look at the policies in terms of training.... There's the renewal fund, for example, where employers contribute 10 percent of their net profits in excess of 500,000 Swedish kronor — which is about $100,000 — to finance the training of employees, to undertake R and D initiatives. It's a solid program that provides for the kinds of things we are concerned about. In 1987 alone, industry in West Germany spent about 35 billion Deutschmarks on training for 1.8 million trainees. In Japan an employment stabilization fund subsidizes employers who carry out measures to prevent unemployment or to stabilize employment in situations of economic fluctuation. In South Korea the key to employment policy is its attitude to vocational training. A payroll levy system for training is also in force.

These are examples. I don't know about the tax regime in South Korea or Japan or any of these other countries, quite frankly. I didn't come here to debate that. My point is that I think they all have policies that make sense for their countries, but they have an overriding policy goal: that is, to make sure their people receive the absolute best in training opportunities, and concurrently that their industries partake of the best in research and development.

I suppose I could characterize our response to industry as laissez-faire. Whether it's training employees or reinvesting profits in research and development, we've simply allowed those decisions to be made by industry for the most part. As we all know, they don't necessarily make decisions that are in the best overall interests of society. They naturally enough make decisions that are in the best interests of their particular company. That, to my mind, is an economic law; I don't dispute it. But the state does intervene where we think it's reasonable to intervene for the good of society, and we have simply not addressed the question of training and retraining.

We now have the minister saying he's going to have a task force. Last year he was looking at a Price Waterhouse report. I put it to the minister last year that if talking did not produce results, was he prepared to use stronger language? Are you prepared to go farther? Are you actually prepared to do something in terms of this vital question about opportunities for British Columbians — particularly young British Columbians — to acquire the skills that are going to be needed as we compete, which the government side likes to talk about a lot? "We have to compete. We have to be competitive." So where are the programs? Where are the increased numbers in terms of these questions I've raised? I'd like the minister to justify what has taken place since I raised this last year.

HON. S. HAGEN: I'm pleased to respond to the member, who has made some excellent points. I'm afraid that I can't disagree with the vast majority of points he's raised. There is no question that this country does not spend enough money on job training and apprenticeship. One of the difficulties we have as a province is that our numbers of apprentices keep increasing, as you pointed out and acknowledged, while the federal government financial participation is frozen. Each year we have had to contribute more from our provincial budget to the apprenticeship program.

I just want to run through the increases in the categories of apprenticeship in the last year to show that we are making progress and that we have a much larger number of apprentices this year than last year. In carpentry the increase is 5 percent; in electrical work, 5 percent; in plumbing, 10 percent; in bench work and journeymen, 10 percent; in sheet fabrication, 6 percent; in welding, 10 percent; in heavy-duty mechanics, 6 percent; in millwrights, 10 percent; and industrial insulation, 11 percent.

But while we have increased the number of apprentices considerably, the amount of money funding this program from the federal government.... After all, when you talk about Sweden and Korea, you have to talk about Canada; you can't just talk about British Columbia, although I realize our responsibilities are in British Columbia. The federal government contribution to apprenticeship is frozen at $9 million. A few years ago the province was putting nothing in; last year I think we put $8 million in. So we're almost splitting the cost now fifty-fifty.

I agree with the points made that more responsibility should be taken by industry. The member for Prince Rupert did quote some statistics on high-technology industries. The interesting thing is that the higher the technology in industry, the higher the amount of money put into job training. So we are obviously going to see some statistical change in B.C., because we are moving more into the high-tech field. It's a very complex area.

The de Grandpré commission, while it tried to represent the broad cross-section of the Canadian economy, did not have anybody from B.C. on it. Now I realize there was input from B.C., but there was nobody on the commission from B.C. This government complained about that very vociferously. What it basically said was: "Yes, we have to train people, and we have to invest in technology."

The member is complaining about the establishment of a task force. Well, I'm not sure how else he

[ Page 8392 ]

would make improvements in the system. I think that when he sees the individuals who are on this task force, he will realize that this is a task force that will have a job to do and will get the job done. It will be the first time a provincial task force of this magnitude has been established. Their duties will be to assess the de Grandpré commission to see how it affects British Columbia, to assess the changes in the federal UI regulations to see how they affect.... Your comments with regard to the fish-processing industry are well taken; I spent seven years in that industry myself, and I think I know its makeup.

Particularly in your area, I know that women workers make up a large percentage of that workforce, and in fact native women workers make up a substantial amount of that workforce. It was from Prince Rupert that our women's secretariat got the call.... I don't know if you heard the discussion earlier. We have received an application for a, trade adjustment assistance program for workers in your area which the ministry is processing right now.

This is a complex area. It's a complex area to deal with in a growing economy, and it's a complex area to deal with in light of GATT and the free trade agreement. But I think you will agree when you see the makeup of the task force that this is in fact the best way to deal with all of the.... This task force will not be a one-time thing; it will be an ongoing task force, because you never solve all the problems or the issues — they're continuing in a changing economy and a competitive economy.

I want to reiterate that you made some excellent points, and I don't disagree with statements like, "We're not spending enough on job training and apprenticeship." But I want to just remind you that it started out as a federal responsibility. The feds keep withdrawing their responsibility and we have to keep on picking up the difference.

MR. MILLER: I appreciate the minister's response I just want to conclude with a few comments.

I draw your attention to a speech made by the Hon. Kim Campbell in terms of shortages of skilled trades. I don't mind calling these people to task if they're beating the drum on a particular hobby-horse We've got to do more and yet they're not providing the funding. Then let's take them to task— and you'll have no trouble with this side of the House in terms of those kinds of issues. But she does talk about the $1.3 billion reduction in unemployment insurance and the rechanneling of that money back into employment and training, so presumably there is some substance.

We're not happy, and we've had conflicting views expressed by your side of the House with regard to this issue. One minister says it will have a negative impact, another positive, and so I think there needs to be some getting together of your act in terms of that question.

You mentioned the increases and, Mr. Minister, as much as there have been increases — I think the highest was around 10 percent — it is simply not good enough. These kinds of articles — and this one cites the construction industry — outline shortages that are almost an annual event. There's been a lot of talk, talk, talk, and there hasn't been a lot of getting down to brass tacks and doing the job.

I haven't read the whole of the "Adjusting To Win" report; I've tried to pick out some pertinent issues. "I think there needs to be some commitment from government on some fundamental principles." It starts that way. I know you can appoint a task force, but there has to be a bottom-line commitment from the government: how do we put certain things into practice? Just listing here six essential basic items: advance notice of layoff, severance pay, wage earner protection, community based re-employment services, community adjustments and programs for older workers. Those are six very basic kinds of commitments that can be made.

Finally, I conclude with this, because I do detect a philosophical objection to the notion of imposing requirements on employers to train. It's been philosophically rejected by your side of the House, and yet I think it's really the only system that will be effective. To its credit, the de Grandpré commission recognized that. I want to quote just a couple of sentences, because I agree with him:

"A general private sector training effort is urgently required and will benefit both employers and employees.... The council believes that the private sector will not increase its training efforts simply because it is exhorted to do so. It considers that the government should act immediately to ensure that companies begin offering basic training. The council proposes establishing a corporate tax liability that would be offset completely if the firm provided a base level of training to employees.... Should the private sector not meet the training level required, the government would use the moneys collected to develop training programs in consultation with industry and labour."

[6:45]

They outline what I believe to be the best and simplest approach to this whole issue. The majority of training costs are borne by employers, as it should be. The fact that all employers would be included would reduce the hesitancy that some employers now have to put in place training programs only to see those workers that they've trained lost to other industries. It creates a level playing-field and it meets an objective that we apparently agree on.

Mr. Minister, I hope we're back here next year, but I would really regret having to come back and go through the same exercise again. I think that's a waste of both our times, and it's also a waste of the time of the people out there who I think could be better served. I will take my seat on that point, and hope that we see some progress.

MR. BARNES: I want to ask just one simple question. When is the minister going to respond to question 35 on the order paper? It's been there now for several months; it deals with multiculturalism. Have you looked? Because I've been waiting a long time for a response.

[ Page 8393 ]

HON. S. HAGEN: I'm told by my senior staff that they are trying to come up with those figures, but it is not an easy job to do. They are working on developing a response to your question.

MR. BARNES: That's what the Provincial Secretary (Hon. Mr. Reid) told me several months ago. He's working on it too. Everybody's working on it over there. I don't want to get excited or anything. I'm trying to be calm about this. But it's promises, promises, promises on the multicultural policy of the government. I guess, to be congenial and cooperative in light of the arrangements that have been made on behalf of the government.... But when you say you're working on it, I guess that means in the fullness of time. That's getting to be quite a statement in response.

However, I am very disappointed that after all this while we don't have a response from any other than the Minister of Education (Hon. Mr. Brummet). The question applies to every ministry on that side of the House. So far we've had no response. I think it's pretty obvious that the difficulty that the minister referred to is that there are very few criteria in place that deal specifically with government commitment to multiculturalism — albeit, I'm sure, there are some overtures in that regard. But I'm talking specifically about programs that are funded as part of a fiscal commitment; and so far we haven't had them.

Vote 5 approved.

Vote 6: ministry operations, $991,407,618 — approved.

Vote 7: science and technology development subsidiary agreement (ERDA), $3,100,000 — approved.

HON. MR. RICHMOND: I move that the committee rise, report 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: Committee on Bill 56, Mr. Speaker.

MINES ACT

The House in committee on Bill 56; Mr. Rogers in the chair.

HON. MR. DAVIS: I move that the amendment to section 1 standing in my name on the order paper be approved.

[Section 1., in the proposed definition of "manager" by deleting "section 22" and substituting "section 21".]

Amendment approved.

Section 1 as amended approved.

Sections 2 through 11 inclusive approved,

On section 12.

HON. MR. DAVIS: I move the amendment standing in my name on the order paper be adopted.

[Section 12., in the proposed section 12(2) by deleting "section 11" and substituting "section 10".]

On the amendment.

MR. CLARK: I see the minister's staff coming in. I'd hate for them to just come in as the bill was passing.

I would just like the minister to explain what the purpose of the amendment is.

HON. MR. DAVIS: The amendment to section 12 simply corrects an error in numbering. The number given is 11, and it's to be replaced by the amendment with the number 10, simply renumbering to conform with the rest of the act.

Section 12 as amended approved.

Sections 12 through 40 approved.

Title approved.

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

Motion approved.

The House resumed; Mr. Speaker in the chair.

Bill 56, Mines Act, reported complete with amendments.

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

HON. MR. DAVIS: With leave of the House now, Mr. Speaker.

Leave granted.

Bill 56, Mines Act, read a third time and passed.

HON. MR. RICHMOND: Mr. Speaker, I call committee on Bill 57.

MINING RIGHT OF WAY ACT

The House in committee on Bill 57; Mr. Serwa in the chair.

Sections 1 to 14 inclusive approved.

Title approved.

[ Page 8394 ]

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

Motion approved.

The House resumed; Mr. Rogers in the chair.

Bill 57, Mining Right of Way Act, reported complete without amendment, read a third time and passed.

HON. MR. RICHMOND: Mr. Speaker, I call second reading of Bill 59.

ENERGY, MINES AND PETROLEUM RESOURCES
STATUTES AMENDMENT ACT, 1989

HON. MR. DAVIS: Mr. Speaker, Bill 59 covers four separate topics; each one could be debated separately. The Coal Act amendment is simply one which provides for the collection of geological and other information, which is being done in a partial fashion now voluntarily. The passage of that portion of the act would make it obligatory that that public information be made available as a matter of law.

[7:00]

The second section provides the power to the Lieutenant-Governor-in-Council to direct the B.C. Hydro and Power Authority to pay a dividend of a certain amount annually. That requirement, as I understand it, is necessary in order that the Utilities Commission, which will be considering Hydro's applications for rate changes in the future, have a cost item which can be included in the costing type of regulation which the Utilities Commission carries out. This is new. B.C. Hydro in the past has been totally financed by mortgages or debt issues. Now that it's paying down its debt, the people of the province are developing a substantial equity in the corporation, and the payment of a dividend opposite that equity may be appropriate in some years. So this directive relates to the payment of a dividend opposite the increasing equity that the people of the province own in B.C. Hydro.

The third item has to do with a new opportunity in the province, really. B.C. Hydro in its negotiations with neighbouring utilities has found that it can for perhaps a few years at a time buy low-cost energy and make it available to industry in the province. This permits Hydro to buy power cheap and sell it cheap. This opportunity is one which is particularly useful to new power-intensive industries. It's not a large amount of energy. The industries which would qualify would have to be new and unique to the province, and the term over which the power can be guaranteed by B.C. Hydro is limited to a very few years. The rate or price at which the power may be available would be of the order of two cents, as opposed to three or even four cents for comparable service on a long-term basis. So it is of some advantage for B.C. Hydro to obtain this power from Transalta in Alberta or Alcan or the Bonneville Power Administration for short periods of time and for that energy to be used for industrial development purposes.

Finally, there's a direction to the Utilities Commission. This enables the government to ask the Utilities Commission to set rates for B.C. Hydro that not only look at history but look forward over a few years, thereby ensuring that the rates which are set don't have to be changed frequently; that they're not backward-looking but looking ahead. This will avoid rate shocks and hopefully will allow B.C. Hydro to tell the world that its rates over the next number of years are predictable.

Those are the principal items — the four separate headings in the bill.

MR. CLARK: I rise to oppose this bill in second reading in principle because of two sections of amendments, one of which is changes to the Hydro and Power Authority Act, and the companion changes to the Utilities Commission Act. What this bill does is enable an insidious form of hidden taxation. I think the public should be absolutely clear about what has been happening under this administration, and what they did in the last budget. I think that by and large it has escaped the scrutiny of the press and through them the public, and I think this bill makes it very clear.

The government, by this bill, will have the power by order-in-council to order B.C. Hydro to pay a specified amount to the government — to pay a dividend to the government — and then to apply to the Utilities Commission for a rate change in order to raise the money needed to pay the dividend. In the last budget, which is still in part being debated in the House, there is a dividend of $102 million from B.C. Hydro to general revenue. As I understand it, it's the first dividend ever paid by B.C. Hydro.

But where does the money come from? The money comes from those who purchase electricity. The money is passed on to consumers. Is it passed on to large industrial consumers? Well, it's very rarely done in this province. It's passed on to average homeowners.

This bill not only allows the current $102 million dividend, but it allows any amount by order-in-council without regard for the Utilities Commission, for any kind of public explanation or for legislation. It allows dividends to be ordered to be paid by B.C. Hydro by order-in-council. I think it's a trend that we're seeing — not just with this administration, but certainly with this administration — to hidden taxation and to passing on rate increases. Instead of raising taxes, one may likely see their energy costs rise.

Not only does it allow them to direct the Utilities Commission to hear an application to raise B.C. Hydro's rates as a result of a revenue grab by the government from B.C. Hydro, but it also allows them to involve themselves in rate design. Anybody who has been before the Utilities Commission knows, and I know members of the House know — certainly on our side — that rate design is a contentious matter.

[ Page 8395 ]

How much of the energy bill is paid by large industrial consumers? How much is paid by energy intensive industries? How much is paid by the average homeowner? How much is paid by seniors? Those questions are the subject of lengthy debate and discussion, expert testimony and many people intervening. There's no intervening funding in this province, unlike most other provinces, but there used to be. Nevertheless, there is much debate about what the appropriate rate design will be in order to promote conservation or the like.

This bill allows the Lieutenant-Governor-in-Council, by order-in-council, to make direction to the Utilities Commission to take into account certain changes to the rate structure. Mr. Chairman, does anybody really trust this administration that those changes will be fair?

DEPUTY SPEAKER: We're in the House, not in committee.

MR. CLARK: Sorry, Mr. Speaker. We've been in committee all day.

Mr. Speaker, does anybody trust the government — other than the members on that side — to develop a rate design that is fair? I see no evidence that that's the case. We've seen the Minister of Finance (Hon. Mr. Couvelier), who's in the House now, take $102 million from B.C. Hydro in the form of a dividend.

All I'm saying in opposing this bill is that this is a hidden form of taxation that should be made explicit. This bill does nothing to enhance that. Worse than that, this bill, by order-in-council, allows B.C. Hydro to pay any amount that the Lieutenant-Governor-in-Council so chooses.

I know it's the middle of July; I know that members want to go home, and I know that the press's interest in the House is also waning. But this is a hidden tax measure which can have significant impact on electricity consumers in British Columbia by government decree with no public hearings essentially, and with no rationale required for how much is taken from Hydro. By order-in-council, this government can take as much money as it wants from Hydro and direct the Utilities Commission to hear a rate increase and even give guidelines to the Utilities Commission on who should pay the money.

I think everybody should be clear about it. Hidden taxation in general is something which I certainly don't support. It's something which I think we should fight against. Anybody who is concerned about accountability and who shares the concern about governments taxing people unfairly should be concerned about hidden taxation of quite significant magnitude, which we might see from Bill 59 and from which we've seen — at least in terms of the initial dividend — $102 million in the last budget.

For those reasons, Mr. Speaker, I oppose this legislation.

MR. D'ARCY: I'm opposing this bill. The plan, quite clearly, of the government is to use the electrical users of this province as a source of taxation revenue, as the member for Vancouver East has indicated.

I would remind the minister that a few years ago government spokesmen were wont to boast that the provincial sales tax did not apply to British Columbia Hydro sales. At the same time, starting about ten years ago, the government proceeded to raise the sales tax on electricity — which they euphemistically, in Orwellian style, called a water rental fee — to the point where it's about a 15 percent sales tax on every domestic hydro user. If it's an industrial user, the sales tax is higher than 15 percent. That is not shown on the bill. It's not a case of "so much for power from B.C. Hydro, times a 15 percent sales tax." It doesn't appear that way. Michael Wilson and his sales tax would be proud of what the British Columbia government did through this Orwellian term "water rental fee."

The former member for Saanich, Hugh Curtis, when he was Minister of Finance, used to argue, of course, that it was not even a tax; it was a rental. If the government makes you pay it and it's compulsory, it's a tax. I don't care whether they call it a rental fee or a user fee or a tax or a super-royalty or anything. If you have to pay it, it's a tax.

The government is already doing that. I further note that the government does not require B. C. Hydro to pay property taxes on an equal basis, even though the government itself would realize a great deal of revenue if that were the case, particularly on school taxes, because B.C. Hydro generation properties are designated as industrial by the Assessment Authority. That would, of course, mean that the money would accrue directly to the provincial government.

The argument put forth for not requiring B.C. Hydro to pay property taxes on a fair and equitable basis is that the rates would go up. Here we have the government saying: "Well, we've taken a 15 percent sales tax, which doesn't show on the bill. We've taken another $100 million-plus" — as the member for Vancouver East has said — "that doesn't show on the bill. Now we want the authority to designate any other amount the government might wish from time to time as a direct tax out of the electrical user fees in this province."

The minister may get up and say: "Oh no, we wouldn't do it that way." We already have a precedent not only with the rates paid by the application of the increased water tax to users of B.C. Hydro, but also when it was applied to domestic, industrial and municipal purchasers, for that matter, of West Kootenay Power and Light, where the Utilities Commission simply said up front: "This is a straight flow-through tax. There's no point in doing anything other than going through the motions of a hearing, because after all, the government has passed these orders-in-council that say this money has to be raised. We absolutely have no choice but to grant the appropriate rate increases to Hydro and West Kootenay Power." The only thing they were concerned about is whether the numbers were done properly to show that the precise amount of money was being raised and that there

[ Page 8396 ]

was nothing extra or nothing less going to the utility. That was the only concern, and we already have a precedent for that.

I want at this point to bring up another anomaly relative to B.C. Hydro besides property tax, but I'm going to deal with property tax in one more instance. I want to indicate again to the House the unfairness and the irrationality of property taxes as they relate to B.C. Hydro. Some properties in the province owned by B.C. Hydro — some generating-facility properties, office buildings and so on — pay full taxes, exactly as though they were privately owned. They have no special privileges. Whether they are called taxes or grants in lieu doesn't really matter. As we said earlier, a tax is a tax is a tax.

Some real properties pay school tax only; they don't pay plain property tax. Other facilities pay no tax at all. Other utilities and corporations operating in the energy field in the province have no such specialized or weird property tax rules applying to them.

I'm going to leave property tax and go to the power corporation tax. The minister looks at me. The wheels in his head are going to say: "B.C. Hydro does not pay income tax. It doesn't pay federal tax or provincial tax." There is no reason why they shouldn't, Mr. Speaker. In fact, if the government wishes to treat private industry in the utility field fairly, British Columbia Hydro should pay corporation tax, exactly as other corporations do.

There is a federal act which relates to income taxes paid by companies in the energy field, and the minister who was once in the federal house may even have had something to do with that act; I have no idea. That act requires the federal government to rebate to the provinces — in this case to the Minister of Finance — 90 percent or 90 cents on the dollar of all revenue collected under federal income tax from utility corporations. That's why it's called the Power Corporation Act, and in most other provinces....

DEPUTY SPEAKER: Just a moment, Mr. Member We have been fairly lenient, but I have a little trouble relating this to a miscellaneous statutes amendment act for the Ministry of Energy, Mines and Petroleum Resources. It's mostly in the explanatory notes; they give a fairly good description of it. So I wonder if you could relate your comments to the sections actually to be debated.

MR. D'ARCY: We are not in committee, as you reminded us earlier, Mr. Speaker. This is the principle of the bill, which, as indicated by the minister himself, in large part deals with taxation of British Columbia Hydro.

[7:15]

In most other provinces — I won't be very long on this — the income taxes rebated to the Minister of Finance of the province are passed back to the customers of the utility, prorated. It is very easily done. The minister may make a case that it is complex act; It is not. I have checked with other utilities, and they say that it is not difficult at all to prorate those dividends back to the user.

In British Columbia that doesn't happen. Income taxes paid by Inland Natural Gas, now B.C. Gas, and West Kootenay Power and Light are not rebated to the consumers. This has been a longstanding subsidy of the B.C. Hydro service area by consumers who, mostly in the interior and north, buy from private utilities and have always done so.

I am bringing up these points because, quite clearly, British Columbia Hydro has, through, the government — and I don't blame Hydro for this; it's the government's creature — a bizarre taxation regime already, and we are now having amendments, this bill before us, which in principle makes it even more bizarre. The fact is, if the government needs revenue from British Columbia Hydro, it should apply the regular federal and provincial income tax acts to British Columbia Hydro.

As I have said many times in this chamber, both in second reading and committee, there is absolutely no reason, not now nor has there ever been, why British Columbia Hydro should not be taxed exactly as though it were privately owned. B.C. Hydro should have no special privileges; it should have no special penalties relative to municipal, regional district, school district, provincial or federal tax laws.

If the government of the day has any philosophical commitment at all to fairness between public and private enterprise, it will remove all those restrictions. Furthermore, Mr. Speaker, if it has any commitment to being up front with the rate-paying public, it will show its taxes on the B.C. Hydro bills and, for that matter, on the West Kootenay Power bills.

The principle of hiding the water tax on the bill seems to have worked very well. Very few B.C. Hydro customers, when they get their Hydro bill, think: "Gee, I've got to remind myself that there's a 15 percent sales tax on this." It has worked so well that the government and the minister have decided that we are going to add further taxes on there.

We opposed the increases made approximately ten years ago, and we oppose these tax increases made now, because the government is not being up front about its taxation policy. It doesn't want to be seen to be increasing taxes, so here is a way of using the hydro user — whether it be industrial, commercial or residential — as a revenue milch cow. This side of the House does not believe in hidden taxation, and we are going to be voting against this bill.

DEPUTY SPEAKER: Pursuant to standing orders, the House is advised that the minister closes debate.

HON. MR. DAVIS: There is no doubt that the section of this legislation which permits the government to require a dividend from Hydro is good news to the taxpayers of the province. It is an additional source of revenue to the government. I will put it this way: an additional source of revenue to the government in good times, because Hydro may not be able to pay a dividend in every year. The idea of paying a dividend originates with the board of directors of

[ Page 8397 ]

B.C. Hydro, who have seen the debt of B.C. Hydro, instead of rising, as it has risen year after year.... Some members will remember when the debt rose by a billion dollars a year, The debt of B.C. Hydro peaked at close to $9 billion and is now approaching $6 billion; it's dropping.

If we followed the old-style regulation in this province and related rates exclusively to costs, we would have to reduce power rates over the next three, four or five years. They rose fairly sharply because of the massive construction program in the 1970s and into the 1980s. Hydro has now essentially digested that investment and is paying off the massive mortgage that it accumulated over the years. The Hydro board advised — at least it's the opinion of the board — that instead of cutting rates, it should do as Hydro-Québec has done on and off over the years and pay a dividend and keep rates relatively flat for a period of years, awaiting a time when Hydro again will have to build new facilities, begin to borrow again, begin to increase its debt again, The thinking went along these lines: let's stabilize rates; let's avoid a rate shock in the future, where we'd have rates decline for a few years and then have to be raised sharply when we started to build new projects yet again.

That's an accounting argument, I agree. But there's another and more important one, and I think it's important particularly from an environmental point of view. Our power rates in this province — B.C. Hydro's rates and our other utility rates — are among the lowest in the world. They're certainly among the lowest in North America, and they're relatively stable while the rates of other utilities, particularly those in eastern Canada and neighbouring areas of the United States, are going up rapidly. Were B.C. Hydro to drop its rates over the next while, it would in effect be encouraging power consumption. Its Power Smart program is aimed at efficiency in use, and its overall program sees electricity conservation as a prime objective, so it was thought inconsistent to drop rates for a while and then have to increase them rapidly in a few years' time; promote wasteful use in the short term and then talk conservation eventually.

Married together are both a conservationist approach to power-rate setting and an endeavour to keep rates relatively stable over the longer term. The Hydro board thought it could be both predictable in terms of rates over a period of time and environmentally wise by pursuing this approach.

Now yes, there is a surplus, because the debt that B.C. Hydro has is rapidly dropping, but it won't continue to drop indefinitely. That surplus could be kept in Hydro and reinvested perhaps. But one of the members opposite from the Kootenays has been saying: "Why not pay a dividend?" Well, right, Hydro is paying a dividend; it may for some years. It certainly won't for more than five or six years pay a dividend of any consequence, but in the short run it can pay a dividend. That dividend is on top of the water rental fees it has been paying.

Incidentally, the water rental fees, as the hon member has said, account for some 15 percent of the gross value of sales of B.C. Hydro. That's the dividend, the rental, to the people of the province. They get that annually in receipts to the government, and it's spent on health, education and welfare. That's similar to the 15 percent or so that the mining industry pays in royalty-type taxes, or 15 to 20 percent for forest products, or 15 to 35 percent for oil and natural gas. Here's another resource industry paying a dividend similar to that paid by other resource industries in this province. So there is comparability.

Because we're looking ahead with some confidence to no substantial rate increases and, for the short run, a dividend to the province, we're in good shape; Hydro is in good shape. Hydro has suggested this course of action. I'm sure the Minister of Finance welcomes the fact that, at least in the short term, there is a dividend there. It could be characterized as a pay-back. After all, Hydro has been able to borrow for decades using the guarantee of the province. The people of the province have guaranteed the debt of B.C. Hydro, and B.C. Hydro's debt has been 1 percent or 2 percent less in terms of interest payments than it would otherwise have been. So why shouldn't the people of the province get a dividend or a pay-back occasionally? This is what this dividend approach will allow. It allows the Utilities Commission, which in its legislation takes a cost-type approach to rate setting, to include a cost — i.e. the cost of the dividend — and thereby judge this utility in a way that will allow us to have reasonably stable rates over the future rather than sharply declining rates followed by rapidly escalating rates a relatively few years later.

Substantially, Mr. Speaker, that addresses the main controversial topic. I move second reading.

MR. D'ARCY: On a point of order — just a correction, Mr. Speaker. The minister stated that I advocated B.C. Hydro pay a dividend. That is incorrect, Mr. Speaker. I advocated B.C. Hydro pay corporation income tax exactly like other corporations engaged in the same line of business.

DEPUTY SPEAKER: Hansard will note the correction.

[7:30]

Second reading approved on the following division:

YEAS - 28

[ Page 8398 ]

NAYS - 9

MR. DAVIDSON: On a point of order, Mr. Speaker. I call your attention to standing order 8, which states that every member is bound to attend the service of the House unless leave of absence has been given by the House. I would call the number of the opposition to the Speaker's attention.

DEPUTY SPEAKER: The Chair notices the matter. However, the member for Delta should know more than anyone else that while members are requested to be here and are from time to time absent, it is not mandatory under our standing orders to attend division lists.

HON. MR. MICHAEL: Mr. Speaker, I ask leave to make an introduction.

Leave granted.

HON. MR. MICHAEL: I would like to introduce to the House today, accompanied by my wife Dilys, her cousin Jean Wilesmith from Worcester, England Would the House please make them welcome.

HON. MR. DAVIS: I move that the bill be referred to a Committee of the Whole House at the next sitting after today.

Motion approved.

Bill 59, Energy, Mines and Petroleum Resources 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: Mr. Speaker, I call second reading of Bill 37.

FINANCIAL ADMINISTRATION
AMENDMENT ACT, 1989

HON. MR. COUVELIER: The government is introducing changes to the Financial Administration Act There are several housekeeping amendments plus an amendment to broaden the government's investment powers to permit the prudent investment diversification of public money. The first housekeeping amendment authorizes the province to borrow and invest in international units of monetary value in addition to the currencies of individual foreign countries. The government is currently authorized to borrow and invest in foreign currencies. However, it is not clear that this authority extends to basket currencies such as the European currency unit, which is an international unit of monetary value consisting of nine European currencies.

In the future, the province may be able to conduct a portion of its borrowing program in such a basket currency on favourable terms. Accordingly, this amendment clarifies the authority of the Minister of Finance and Corporate Relations to deal in basket currencies and ensures that the province can take advantage of a full range of borrowing and investment opportunities.

[Mr. Serwa in the chair.]

The next housekeeping amendment clarifies the authority of the Minister of Finance and Corporate Relations to advance from special funds to the general fund of the province. The consolidated revenue fund is comprised of the general fund and special funds. The general fund is the main operating account of government and is used for the collection of general revenues and the payment of ministry expenditures. The special funds receive certain specific revenues and make associated expenditures.

The ministry's cash management is undertaken on a pooled-fund basis within the consolidated revenue fund so that cash balances in one fund can be used to finance cash requirements in another fund. This amendment will ensure that the province's efficient cash management practices are continued and the government's overall borrowing requirements and interest costs are minimized.

The next housekeeping amendment clarifies the legal authority for Treasury Board to authorize the disbursement of any funds recovered through financing transactions in excess of the amount authorized in a supply act. Treasury Board has traditionally relied on section 20(3) of the FAA, although this section does not specifically include financing transactions. Legal advice has recommended the establishment of clear, legal authority for these transactions.

The last housekeeping amendment establishes a special account in the consolidated revenue fund for the province's risk management and self-insurance programs. The province has provided self-insurance services to hospitals since 1986, and to schools and colleges since 1987. These programs currently operate under the guarantees and indemnities regulation of the FAA and use deferred revenue accounts to reserve participants' contributions against future claims. The use of a special account as established by this amendment will improve accounting and reporting for these programs.

The amendments to the investment section of the Financial Administration Act will enable the government to properly diversify its public sector pension fund. They will also bring the government's investment management practices in line with widely followed industry standards while ensuring that necessary investment safeguards are in place.

It should be noted that most public sector pension funds across Canada currently hold diversified investment portfolios. To date, our pension fund investments have been confined to the debt securities issued by banks, provincial governments and the federal government. Now prudence dictates a change.

[ Page 8399 ]

These investment amendments are a product of much study and consideration. Over the last two years and in full consultation with the pension fund representatives, the Ministry of Finance and Corporate Relations has carefully analyzed the potential impact of investment diversification. The results of this work clearly indicate that a conventional program of diversification into such classes of investments as high-grade stocks, mortgages, real estate and foreign securities will tend to increase the return on investments while actually controlling or minimizing the element of risk.

More specifically, it can be shown that over the last ten years, if our pension funds had been invested in a diversified manner, the funds would now be worth at least $1 billion more and would have been exposed to less investment risk in the process. It is important to note that the pension fund moneys, which may be invested into diversified holdings, are put aside to support benefit payments from defined benefit pension plans. These are plans which pay out benefits not based on the success of their pension fund investments, but rather based on an employee's length of employment and highest average salary. Simply stated, this means that basic pension benefits are not tied in any way to investment return.

It is in fact the taxpayers of British Columbia — those who backstop these pension plans — who have the most to gain from a more prudent and contemporary approach to investment management. I say "contemporary" because the expanded list of eligible investments which are contained in these amendments is the list which apply to all federally regulated pension plans and to all private pension plans in British Columbia. These amendments adopt the investment schedule under the federal Pension Benefits Standards Act of 1985, which has been the industry standard for Canadian pension fund investment activity.

It is noteworthy that this amendment also adopts all the restrictions and limitations on investment that come with the federal legislation. This is but one indication that this government takes seriously its fiduciary duty to manage its pension funds professionally and in the best interests of each fund.

I'm pleased to say that we have found support for our diversification initiative from many of our public sector pension plans. The B.C. Teachers' Federation has. been a longstanding advocate of diversified investment holdings and has requested since 1984 that the teachers' pension fund be more broadly invested. The College-Institute Educators' Association of B.C. has asked us to proceed to invest part of the college pension fund in an indexed portfolio of Canadian blue-chip stocks. B.C. Rail Ltd. has also expressed its desire to have us diversify its pension fund across a broad range of investment classes. The board of B.C. Hydro is currently reviewing our diversification program. I'm also informed that the Workers' Compensation Board has expressed an interest in the diversification concept.

For those groups who wish their funds to proceed with diversification, the legislation provides a formal entry mechanism whereby pension fund trustees must recommend to the Lieutenant-Governor-in-Council that the fund wishes to begin diversification. Our regulation under this act will then be issued, specifying which asset classes each fund wishes to add to its portfolio. This process will ensure that each fund will have a tailor-made investment policy. For those groups who do not wish their funds to proceed with diversification, the act does not provide for their inclusion in this program. Those funds will continue to be governed by their existing investment rules.

As a result of discussions to date, two funds are not yet in a position to agree with a specific diversification program: the public service and municipal plans. It is my understanding that while the B.C. Government Employees' Union is in general agreement with the concept of investment diversification for the public service pension fund, we have received no formal or specific endorsement yet. We offered to keep the door open for their involvement and hope that our ongoing consultations will lead to at least a limited participation in the future. While discussions are continuing with both plans, I should advise the House that new amendments to each of their acts will be required to allow for their participation in the future.

Both participating and non-participating plans will continue to be a part of our ongoing consultation process. Our quarterly meetings with the representative groups will continue to review investment performance and to discuss strategies. In the near future we expect to provide to the committee new performance reports prepared by independent external measurement services. To responsibly deal with the many new areas for investment, additional investment expertise may also be required; accordingly, these amendments contemplate the need for retaining external investment specialists and settlement agents by authorizing the Minister of Finance and Corporate Relations to delegate certain of his investment powers to responsible third parties. We anticipate, for example, that any move into high-grade foreign securities would best be conducted through established investment managers who are well versed in international portfolio management.

In conclusion, these new investment provisions are required to keep our public sector pension funds healthy and growing. It is a reasonable and prudent step to bring our investment practices in line with progressive pension fund management.

I move the bill now be read a second time.

MR. ROSE: I thank the Minister of Finance for the eloquent presentation of his legislation. I thought he displayed a tremendous amount of literacy in reading his speech.

I think we'll probably support, with some reluctance, this piece of legislation. The reason we express some reluctance is that B.C. doesn't have a very good record in terms of private pension plans. Public pension plans I think are a lot better. For instance, we're the only province in Canada without some kind of pension benefits standards act by which pensions

[ Page 8400 ]

could be judged. Such legislation was recently passed by the federal government and also the government of Ontario. I think there are some concerns about the Ontario plan, but I won't go into those at the moment.

The minister said that prudence dictates a change. I just hope we can emblazon these things in lights — maybe a thousand points of light — to make certain it's a prudent investment. Investment in the Vancouver Stock Exchange has not always been considered the most prudent investment in the world. One of the rationales used by the minister in putting this forward — not tonight but in the past — is that they're going to improve the image of the Vancouver Stock Exchange and broaden its base. That worries some of us a little bit.

[7:45]

The other thing that concerns me is that while we support diversification — and I'll get into that a little later — we don't see in the act itself the kinds of regulations or clauses that in my view really bring the discipline on the minister that we might like. Most of it is hived off into regulations or protocols with the various participating groups. The explicit disciplines regarding the administrator and the minister are not in the act, in our view, and that worries us a little bit. The minister says you can bring in other groups only by changes in their acts. We're a little bit relieved about that, because we didn't think it was the case. We thought that other groups could be brought in, struggling and kicking sometimes, because there's a huge investment fund out there. There are lots of bucks in this, on the basis of a minister's regulations or an order-in-council. That's why we're concerned about it.

I was impressed this spring by reading a book — an exposé, if you like — on pensions, which featured people such as Conrad Black and Dominion Stores and all the rest of it, by Ann Finlayson, a former Maclean's writer, called Whose Money is It Anyway. As a result of that, I put a number of questions on the order paper. I didn't put them to the Minister of Finance. I put them to the Minister of Government Management Services (Hon. Mr. Michael) and the Minister of Labour (Hon. L. Hanson), because I am concerned about the kind of pension legislation we have — or do not have — in our province. I mention again that we don't have any pension benefits standards act, and I think we should have. We are the only province left without one.

To begin with, I would like to talk a bit about what's needed in the pension plan and what's not needed. What's not needed is some of the things that have occurred in private pension plans in other jurisdictions in this country as well as in the United States. Do we have a pension benefits standards act? The answer is no.

Is the minister stretching, or does he have a point of order?

HON. MR. COUVELIER: On a point of order, I thought we were discussing the principle of investment diversification as it related to pensions, and I now find that we're getting into a discussion about the absence and the need for some sort of package which is the responsibility of another minister. It did seem appropriate for me to point out to the hon. member that we are discussing a bill that I am bringing forward on one subject. He appears to be prepared to embark at some length on a dissertation on another subject which is the responsibility of an entirely different minister. Given that circumstance, it did seem to me that a point of order might be appropriate.

DEPUTY SPEAKER: I thank the minister for his point of order, and I am confident the hon. Leader of the Opposition will be relevant.

MR. ROSE: The House Leader of the Opposition.

Well, I take this very seriously. That a minister who is an expert on departing from the text, in terms of a discursive nature, in replies would object to my taking a bit of a discursive run at the point.... I am only discussing this in order to make a point. I suppose it might be considered parliamentary licence.

AN HON. MEMBER: Liberties.

MR. ROSE: Parliamentary liberty or licence, as you see fit.

I think we have to discuss this plan — and we're for it. We're for diversification; I don't question that at all. There are a number of other things. Some people are logical, linear thinkers. I don't happen to be one of those linear thinkers; I am sort of a branching thinker. I take several branches, and I go out on this branch and the other branch. Ultimately, though, I end up at the trunk. My speeches are seldom truncated, but I get back to the....

HON. MR. RICHMOND: You're out on a limb, that's what you are!

MR. ROSE: I am not out on a limb, and you are not going to saw me off on that limb.

Let me just indicate to the minister that there are very important issues at stake here. I know the minister is trying to improve three plans involving public services and bail out the VSE at the same time.

HON. MR. COUVELIER: No, no.

MR. ROSE: No, never. Everything's getting better.

We've got all kinds of private pension plans in B.C. None of them really has a decent handle on standards. This is a defined benefit plan for the teachers. How many defined benefit plans are there in B.C.? I have no idea. How many plans are money purchase plans? I have no idea.

Whether the superannuation of the public service comes under the Minister of Government Management Services is irrelevant. The ministry's responsibility, I think, is to look into some of these plans to see if they cannot protect the workers better in terms

[ Page 8401 ]

of deferred wages. Once you make that great quantum leap to consider the pension plans as deferred wages, a lot of other things flow from that.

HON. MR. COUVELIER: Mark, we're talking about diversifying a crummy little pension plan.

MR. ROSE: I would hate to have that repeated outside this House. The minister has just been terribly contemptuous of that pension plan, which is really the commitment to the avoidance of poverty of many of our fine college and school teachers in this province. He calls it a "crummy little pension plan." He should be ashamed.

HON. MR. COUVELIER: I rise again on the same point of order.

The fact of the matter is that the member has now chosen to take out of context an aside I made on this side of the House, which offends me. Not only that, he persists in dealing with a subject which is not the issue before us. The issue before us is second reading of the financial administration act amendments, which would have the effect of diversifying pension funds.

I do respect the wisdom, the experience and the fervour with which the hon. member feels associated with the discussion of pension funds, but the issues he is discussing and digressing out on this limb that he described earlier for us are irrelevant with respect to the bill. Therefore I must respectfully point out to the member that as much as I am enthralled with his points, they are totally irrelevant to the issue before us.

DEPUTY SPEAKER: Thank you very much for your comments, Mr. Minister. Will the opposition House Leader please carry on.

MR. ROSE: Mr. Speaker, obviously you ignored the representations made by the Minister of Finance, who's irrelevant as usual. He says he's offended by my remarks. I am completely offended by his remarks referring to these great public servants in the workers' compensation and the college teachers and the schoolteachers, the BCTF, and their crummy little pension plan.

HON. MR. REID: No, he didn't say that.

MR. ROSE: I think he did.

Interjection.

MR. ROSE: Oh, I get it. He referred to their plans as great — crumbling pension plans?

Interjection.

MR. ROSE: This has really gone far enough. I can't stand these interruptions.

DEPUTY SPEAKER: Order, please.

MR. ROSE: There are all kinds of plans in this province — public and private — but not enough. They need to be indexed to inflation. They should be forbidden contribution holidays by the employer and the employees. They should cover....

Oh, I see that that great powerhouse across the way are ganging up on me.

I am about to move into the area in which nobody could possibly criticize my intervention. But first, there are lots of things we need to do. I thought it would be important to the minister to listen to some of the things that are needed in this province, because I think he's made a move in the public service in the direction we should be taking.

One of the things I object to in his plan is that I don't see that the people who are involved in it have the majority on the board. I know what his answer might be: because they are not making the majority of the contributions. But if we consider that pensions are really in effect deferred wages, then I don't understand why the majority of the people who are on the board are not teachers, college educators or workers from the WCB. I don't understand that. Why are they not in charge of the major investment decisions? Because it's really their money, and that, I think, is a very important point.

I won't go on to an extensive discussion of what is needed generally in public and private pension plans.

Interjection.

MR. ROSE: You want to hear some more about what's needed in public and private pension plans? The caucus critic is urging me on.

Interjection.

MR. ROSE: You may know, but you haven't done anything about it. The last province without a pension benefits standards act is not.... I don't think it's a particularly good record.

We have got a number of concerns over this act. We are very concerned about the control over investment decisions. The minister is going to make investment decisions based on the recommendations of the trustee, who in turn listens to the interested parties. Employee participation is not guaranteed.

I'll name some names. The teachers come over, or the college educators, in their crummy little pension plans, and they....

Interjection.

MR. ROSE: That's what you said. I'm only quoting the minister. They make recommendations to Mr. Cook. Mr. Cook goes into a brown study, he comes out and he advises the minister, and the minister is advised by an investment counsellor — he described an expert in the field — and that person in turn determines the investment decisions. I think that's too many steps removed from the people who should be making the decision.

[ Page 8402 ]

Next question. Unions will prefer investment in blue-chip stock and are not interested in propping up the VSE or using pension money as venture capital. The minister's going to get up and say: "Well, I'm going to sign a protocol. I have written the BCTF a letter." We are not going to be involved in venture capital, say investments in South African wine or in the armaments business or in some other kind of nuclear power or something like that, which may be very lucrative. There was a list in USA Today the other day about the sort of non-ethical growth funds. They are very lucrative — Litton Industries and a few people like that. That's point 2.

Who has control over the extra earnings? What's going to happen to those extra earnings? It seems to me only one of two things can happen. Either you lower the contributions or you increase the benefits. But there's no guarantee of that in this act that I can see, and I think that's an important consideration as well.

Government has not always made sound financial decisions in the past. You have to admit that BCRIC was hardly a triumph of imagination over prudence.

MR. G. HANSON: Where is BCRIC?

MR. ROSE: Brick? I think they run a department store and sell furniture.

Certain kinds of land sales and the mega-fiascos of one kind or another are hardly examples of stellar and brilliant decisions either.

" (5) The government should still remain responsible for any losses or shortfall in pension funds due to low returns, despite the fact the minister may have acted on the advice of the trustee."

Okay, that deals with that.

[8:00]

I belong to a diversified pension fund from UBC. It happens to be an American one.

MR. CLARK: I thought it was the MPs'.

MR. ROSE: No, the MPs' pension fund is not diversified.

MR. CLARK: Just lucrative.

MR. ROSE: I didn't even say that. Nevertheless, I'm not opposed to diversification. I belong to an American one because I was teaching at UBC at the time before they changed to a Canadian fund, and I was away down in Ottawa and didn't understand what was happening. In my naivety I didn't do anything, so I ended up not with a Canadian plan but an American one. This American one is called CREF and/or TIAA. It's a teachers' annuity fund, and CREF is based in stocks on market value. The CREF fund has done extremely well. They went up 12 percent last year; they've gone up as high as 36 percent the year before. And the TIAA is based largely in blue chips and bonds. So when the stock market goes up, bonds sometimes react exactly in the opposite way and go down and the reverse is also true. I think this is generally true. So diversification has been very good for this fund. It's gone up as high as 36 percent some years, and when it doesn't, the bonds usually come up and take its place, and it has been excellent. So the diversification part of it is no big problem as far as I'm concerned.

Now we get to the good part. I'm informed that the investment advisory committee meets quarterly with the trustee, Mr. Cook, and perhaps some others, and there are two people from Finance, two from the superintendent of insurance and one from the BCTF, and they meet and make certain decisions and recommendations. This bill is the result of a long series of those recommendations.

I understand too — and correct me if I'm wrong — that the protocol agreement is coming from the teachers instructing the superintendent to the minister requiring recommendations from the trustee to form the basis of any investment. If that protocol is in effect, then some of the oversights of the act may be plugged, and I hope that's true and that you'll confirm that. If not now, perhaps you'll do it during committee stage. If the group decides to invest, say, in real estate or bonds or equity funds, then that recommendation would be carried forward to the minister. Therefore there would be a role for those people whose money it is.

And coming to that point, it is entirely the teachers' money. Of the money in the Teachers' Pension Fund, 10.3 percent is government money and 7.6 percent is the teachers'. Therefore, in spite of what I've said about the fact that it's everybody's money and it's deferred wages, there may be some rationale for the government to exert the kind of control it does. But I'm not sure that that's the case if you consider it as deferred wages. If it really is deferred wages, it's the teachers' money, not the government's at all, in spite of the contributions.

In return the teachers want a defined benefit plan. They don't want a money purchase plan. And they're prepared to do this and accept this. I talked to the teacher representative who made the recommendation to the BCTF to go forward with this, and do you know what he said? "We're for this not because we love it, but because it's the best we could get at the time, and we felt that the kind of prudent, conservative investments which were producing very little in terms of gain for the teachers would be better served in terms of diversification." So they support this plan.

I understand that the minister has agreed that teachers will have a say in the assets mix in terms of investment — I hope that's true — and that there will be no money going into venture capital to be squandered on that slot-machine known as the VSE, and that they'll have a say in the various kinds of external investment that are available or offered. The BCTF wants a jointly trusted plan, I'm told, and therefore they see that as something to be gained in the future, because this is the first round.

Having said all these things, that is probably all I need to say on the subject. Some people agree with that — even the Clerks and the government House

[ Page 8403 ]

Leader. Nevertheless, pensions are a very important part of our social fabric. One of the reasons we have spent so much money on health, social services and other sorts of income assistance is because we have a rotten pension system in this country. Those people — full-time, part-time or homemakers — who could have contributed all through their lifetime are unable to or have not, because it has been voluntary. Therefore old age poverty falls frequently on the public purse, and vast improvements need to be made, even if we have to fight all the insurance companies and trust companies to do it in this country, so that we can have a kind of system that doesn't put elderly people into the arms of some sort of charity, but gives them the dignity they need for a satisfactory and dignified old age.

MR. CLARK: I'm pleased to rise to speak on the bill. I might say at the outset that I'm the designated speaker, just in case I go over my 30 minutes, Mr. Speaker. I certainly will endeavour not to.

I have some very serious concerns about this bill and the way it's structured. The bill essentially allows pension fund diversification, which simply means the government can invest in a variety of ventures, not just conservative instruments like bonds, treasury bills or the like. In principle, that's not a bad idea, and I'll say that at the outset. Greater risk means greater reward, which means greater return. In fact, the risk is somewhat limited under this bill because of the sheer size of the fund.

Therefore diversification — if all the funds were under this bill which the minister contemplates, and combined with the size of the fund and the requirements of the federal Pension Benefits Standards Act — limits the risk somewhat. So I don't want to be alarmist about my concerns.

There is no provincial Pension Benefits Standards Act. As my colleague mentioned, that's sadly lacking I might just correct the minister. The minister said all B.C. pension funds fall under the federal Pension Benefits Standards Act. That's not correct at all. Many pensions in British Columbia do not comply. Only those that are registered nationally have to comply, and even some of them are out of compliance.

But simply put, Mr. Speaker, the problem I have with the bill is really a question of control. What it really boils down to is control. The bill gives complete and total control to the government and to the Minister of Finance, at his discretion and his discretion only. It has absolutely no legislative input from workers, their representatives or pensioners in the bill. If the minister was so concerned about consultation, that would be in the bill; that's something which we support. After all, the principal question is: whose money is it? It's the deferred savings of workers, not some gift from a benevolent government or charity bestowed by the boss or the company. It's not something that is a privilege; it is a deferred saving of workers, that has been fought for by workers and their trade unions, and it is part of the benefit package that's negotiated by those employees.

The struggle by the trade union movement for decent pensions is not yet won, Mr. Speaker. A majority of seniors in this country and in this province continue to live in poverty. We have extreme ends of the spectrum among pensioners. A majority live in very serious poverty, and a substantial minority live in quite significant affluence. That is a tragedy which we shouldn't support on any side. This bill and this government has done nothing to deal with the question of poverty among seniors. So the whole question of pensions is tied up in the quest for income security by workers in the province.

I'm strongly of the view — and I know members on this side are as well — that participants in the plan, beneficiaries and contributors must have a formal legislative say in how their fund is invested, because it's their money and not the government's money. The absence of any control by the contributors means that the government is free to use the money as it sees fit, of course, under the rules established by the Pension Benefits Standards Act.

Essentially, the bill asks public sector workers, in the absence of control, to trust the government. Can you imagine this government asking public sector workers to trust them — with their track record, their contempt, in my view, for public sector workers and what they've been striving for? It's absolutely preposterous. The attacks on trade unions in general, the attacks on public sector workers, the incessant attacks on teachers, their quality, their livelihood, the way in which they serve the people — for them to trust this government with their money in their pensions is preposterous. That's what this bill says: trust the government because they have control.

There is no legislative framework in this bill for input from any public sector unions or beneficiaries under the plan. It asks the people to trust this Minister of Finance, who the auditor-general has said — correctly — fails to adequately portray the bottom line, who makes up fictitious bank accounts to artificially manipulate the annual deficit.

HON. MR. COUVELIER: A point of order. I am a generous man, but there are limits to the outrages that the members opposite should be allowed to get away with. This is one of them. I ask the member to withdraw his last two references which specifically seem to be putting words in the mouth of the auditor-general in a way that is less than accurate. In my judgment, I find it offensive.

DEPUTY SPEAKER: The decision of the Chair is that I don't believe the remarks are unparliamentary. We will allow the hon. second member for Vancouver East to carry on, but please, hon. member, practise restraint.

MR. CLARK: Mr. Speaker, what I said, very clearly, was that the auditor-general....

HON. MR. COUVELIER: Mr. Speaker, I defer to your weightier knowledge, but I find the references just made offensive. I understand that you ruled as to

[ Page 8404 ]

whether they were parliamentary. I can remember an earlier discussion a few days ago in which I was asked to withdraw the word "crow" because an hon. member found it offensive. I'd like to understand exactly how the House operates here. I find the last two comments offensive, as I understand them, taken out of context.

The suggestion seems to be that I have misrepresented public accounts and public money. I consider it my statutory duty to make sure that we perform those functions accurately. I do not believe that the references just made are accurate or appropriate in the House.

DEPUTY SPEAKER: On the basis of the allegations alluding to the integrity of the minister, I would ask the hon. second member for Vancouver East to please withdraw the remarks considered offensive.

[8:15]

MR. CLARK: Mr. Speaker, I have no problem withdrawing any remarks the minister finds offensive. I would certainly do that, and I'll carry on.

[Mr. Pelton in the chair.]

What I will rephrase is that the auditor-general has correctly asserted that the books of the government fail to accurately portray the deficit position of the government. That's the position I have taken. Because the minister artificially manipulates the budget stabilization fund in order to portray political manipulation....

DEPUTY SPEAKER: Hon. member, I'm awfully sorry, but I don't think that "artificially manipulates" is acceptable.

MR. CLARK: Politically manipulate, Mr. Speaker.

DEPUTY SPEAKER: I'd like that withdrawn.

MR. CLARK: I'll withdraw "artificially." The government and the minister politically manipulate the books in order to portray something which is less than accurate.

HON. MR. RICHMOND: On a point of order, Mr. Speaker, the member seems bent on stretching the rules of the House to and beyond the limit. I would ask him to restrain himself just a little here. "Manipulate" is not a parliamentary word and I would ask him to withdraw it.

DEPUTY SPEAKER: I would just mention, hon members — I think I've mentioned this before when I've been doing my duty in the chair — that the imputation of improper motives is not acceptable. I would suggest that that is what was happening there, hon. member. Perhaps you would withdraw those remarks which were imputing improper motives, and we could carry on with our second reading in a nice, parliamentary way.

MR. CLARK: I'll withdraw those remarks, and I'll try another way if I can. The books do not accurately reflect the bottom line of the government. The auditor-general has said that. This is the minister responsible for those books.

HON. MR. COUVELIER: A point of order. The last time I rose on a point of order to try to straighten out the official record I was told it wasn't a point of order because comments made in the House don't have to be factual, but I feel compelled to rise again and point out that surely factual comment is what we need here. The hon. member talks about comments made by the auditor-general, which he is taking out of context and embellishing. The fact is, the auditor-general has said in his reports that we have accurately presented the financial affairs of the province, and to suggest we have not done that is not appropriate.

MR. D'ARCY: Mr. Speaker, the minister is entering into debate. He has every opportunity to debate with the member from Vancouver East about what he thinks the auditor-general may have said, and the member from Vancouver East can say what he thinks the auditor-general may have said. But we've moved from an imputation of wrongful motives, which the member withdrew, to an interpretation of what the member from Vancouver East thinks the auditor-general said. I suggest that this is not a point of order. It is entering into debate, and the minister has the opportunity to do that in this debate in second reading.

DEPUTY SPEAKER: Perhaps I should just remind hon. members — I'm sure we all know this, but sometimes it does no harm to remind people of things they already know — that in second reading each person stands up and speaks for a limited time as prescribed in the standing orders. When we reach the end of debate and have heard from all members who wish to speak, the minister then closes debate and we proceed to calling the question on the bill.

In the meantime, parliamentary language is very important in debate, especially when it gets on in the evening and tempers might not be quite as calm and cool as they are early in the morning. Let's just bear that in mind as we carry on the second reading debate and talk to the principle of the bill.

MR. ROSE: I'm trying to be helpful to both the House and you, sir. I don't think there's any reason for any kind of fulmination over this particular matter. It seems to me that it's wrong to impute motives, and it's wrong to get involved in a donnybrook over certain kinds of phrases. What my colleague the second member for Vancouver East has said is that the accounts of this House are presented in a manner not particularly acceptable to the auditor-general. The minister has his own way of presenting his own estimates and accounts. The auditor-general has another, and he's made some comments on that. All my hon. friend was really referring to was this difference or distinction. There was no sugges-

[ Page 8405 ]

tion that the minister was a scoundrel or is in any way cooking the books.

DEPUTY SPEAKER: Second reading continues.

MR. CLARK: Mr. Speaker, the point I'm making is that the bill asks public sector workers to trust the government and this minister. It is my view, if I can put it that way, that the books do not accurately reflect the bottom line of the government. This is the minister responsible for that. So the question is: do public sector workers trust this minister and this government to invest their pension funds in a manner that is prudent, given the fact that this is the minister responsible for books which I believe do not accurately reflect the annual deficit.

This is also a government whose real estate deals make the Russian sale of Alaska look like a brilliant move. They sold the Expo lands for a fraction of their true value. They've sold New Westminster, they've sold Whistler, and on and on, and they've sold them for far less than they're worth. Now public sector workers are supposed to trust the government. They're supposed to support a bill which allows this government to invest some of their pension money in real estate. Can you imagine? This bill allows them to invest their pension money in real estate when their track record in real estate with Crown lands is nothing short of appalling. No one should have confidence in this administration's real estate moxie, given the kind of track record that we've seen.

Let me look for a minute at the rules of this new game that we have with pension fund investments under this bill. There are, I might say, very strict rules under the federal act. Different types of investment must be listed, many with significant restrictions. For example, there are tough rules with respect to share purchase. I won't bore the House by reading the details, except to say that it requires, for example, dividends to have been issued every year for the last five years before those would qualify as certain qualifying investments under some of the asset classes. There are tough and tight restrictions with preferred shares, tight restrictions with respect to common shares. All of that is very well, except for what is commonly called the basket clause.

The basket clause can be read in many different ways, but essentially it's composed of two parts: 7 percent for real estate investment and 7 percent for high-risk venture capital. With respect to real estate speculation, it's not only 7 percent in real estate, but 2 percent of the entire assets of the fund could be invested in non-income-producing real estate — in other words, real estate for speculative purposes: dirt patches, cow farms, whatever you like. Now we're not talking about small sums of money here. The total funds that the bill contemplates being invested under this act eventually are $18.6 billion. Seven percent can be invested in high-risk venture capital Seven percent of $18.6 billion is $1,302,000,000 which can be invested in high-risk venture capital or whatever the minister likes under the basket clause. By order-in-council, this minister can include pension funds under this clause, so ultimately the maximum is $1.3 billion. The minister says maybe they won't do that. Well, maybe we won't do that, or maybe we won't do very much of that. Maybe we'll only have the teachers' fund and the college fund and that amounts only to something like $1 billion that can be invested in high-risk ventures. Maybe they won't do that.

There have been two announcements by the minister. That's two stated investment intentions — two goals of the minister that I know of when I looked through not just Hansard but press clipping and the like. The first one was in the fall of 1987, shortly after the election. The minister stated that up to 4 percent of pension money would be invested in venture capital, about $400 million if you look at just a narrow definition of pension funds in British Columbia.

The Times-Colonist reported November 26, 1987, that the minister said in an interview: "...it is possible some of the funds could be used to finance high risk venture capital projects in the province's recently created economic development regions. We would only put a very small portion — between 1 and 3 percent — of the fund in venture capital.... 'It's very high risk, ' he said."

That's the first stated goal of the government when they first discussed diversification. It's a small amount — 1 to 3 percent, somewhere in the vicinity of $400 million in high risk venture capital. The minister said we should be calmed by that announcement. It's only a small amount. All of the regional poobahs might be able to invest in high risk venture capitals in their region under this bill; it allows it. I make that very clear, Mr. Speaker. There's every evidence in my view that points to them helping their friends or associates rather than investing in prudent manners.

The Minister of Forests' (Hon. Mr. Parker's) campaign manager, a jeweller, is now the economic development officer for Nechako. Are we going to have the economic development officers, politically appointed by the government, invest in high risk venture capital projects in their region? We don't know, Mr. Speaker. Is Peter Toigo going to get a loan out of this bill? Who knows? Is every car dealer in the province going to get a loan under this bill? We don't know. There is nothing in the bill, absolutely nothing, contrary to the minister's protestations, which does not allow them to invest in anything that they see fit provided it falls within the rules of the federal Pension Benefits Standards Act, which I alluded to a minute ago.

The act says "under the advice of the trustee," and the trustee is an employee of the government. There is no legislative protection for any public sector pensioner or pension fund or union in the province. There is no input under the bill. The minister can say all he wants that we won't do it unless they agree, but that's not in the bill. This minister may not be the minister that much longer. The superannuation commission, who is the trustee, may not be the trustee much longer. Who knows, Mr. Speaker, even if they

[ Page 8406 ]

are, we don't know what kind of machinations goes on in this administration. It's quite entirely possible, given the first stated investment intention of this minister, that they will use some government pension money to invest in high-risk projects in the so-called economic development regions in British Columbia. If anybody trusts them to invest their money in a prudent manner, then I think they're frankly wrong.

What is the other stated intention of the minister? The only other stated intention of the minister essentially is to rescue the Vancouver Stock Exchange. I don't normally quote the Globe and Mail, except that the Premier has stated on several occasions that the Globe and Mail is the only accurate reflection of what's going on in British Columbia, I think he said this three or four times recently. It's his favourite newspaper. What does the Globe and Mail's Bud Jorgensen say about it? just to give you a sample of the kind of view in the financial community — certainly in eastern Canada. It's one I don't like to refer to very often. It says that the minister's scheme "Fits the Image of Flake Capital."

"With hare-brained schemes coming out of British Columbia, like the one put forward by the Minister of Finance, no wonder the lower mainland has the reputation of being the flake capital of Canada. The...B.C. Finance minister is proposing to use up to $80 million of public funds to kick off a stock-buying spree that he reckons will polish the blackened image of the Vancouver Stock Exchange.

"He said the provincial government intends to buy stocks of any blue-chip company that promises to list on the VSE. This promise is to be supported financially by British Columbia's privatization fund...and by B.C. government pension funds. The initial round of purchases would be a down payment on what could become a large portfolio. The privatization fund is expected to amount to $400 million. The B.C. government projects a total of $3 billion.... Add the pension funds and the pool grows to $16 billion. The minister is talking about eventual purchases of up to $1 billion in blue-chip stocks through the VSF.

"Blue-chip companies now list in Vancouver for community relations reasons when the head office is in British Columbia....

"Throwing money at the problem will only distort the workings of equity markets in this country, and British Columbia may end up with a less than balanced portfolio and thus one with lower than average return.

"The other aspect of this scheme is that it amounts to a welfare program for the local brokerage community, because a $1 billion portfolio will invest a tidy sum in commissions."

[8:30]

Mr. Speaker, will it enhance the Vancouver Stock Exchange? The short answer is no, although I agree commissions will be paid to B.C. brokerage houses, and we know they are in desperate shape in British Columbia. I suppose that's good, rather than commissions being paid back east. But I might say that Pemberton Houston Willoughby, which has underwritten all the privatization ventures for the government and was based in British Columbia, has just been taken over. Their trading used to be done on the Vancouver Stock Exchange, but now it's all done in Toronto. There are almost no local brokerage houses left to do the trades in British Columbia. They mostly will be traded in Toronto in any event.

The real point is that it might actually hurt the Vancouver Stock Exchange, in my view, because it provides a false sense of volume. The trades will take place in Toronto anyway, but the commissions will be paid here. It just artificially pumps up the Vancouver Stock Exchange volumes but doesn't seriously clean it up. It doesn't deal with the regulatory framework. Clearly it doesn't stop Adrian Khashoggi, Ferdinand Marcos, Mr. Schidlowski or anyone else from investing in the stock exchange. The first thing you do is clean it up. You don't use government pension money to try and shore up the Vancouver Stock Exchange. You clean it up first, and then maybe we can consider making trades on the Vancouver Stock Exchange.

It didn't seem to occur to the minister that there may be a reason why there are very few blue-chip companies listed on the Vancouver Stock Exchange. If one wants to argue the free-enterprise perspective, one might say: why is it that we need to invest several billion dollars of public money into the Vancouver Stock Exchange in order to encourage them to list here in the first place? If they aren't listed here in the first place, there may be a reason for it.

More importantly, besides blue-chip stocks, what about the not-so-blue stocks which comprise the vast majority of the Vancouver Stock Exchange listings? The government could use the basket clause. I talked about the basket clause a minute ago. But the investment in blue-chip stocks has nothing to do with the basket clause; that's something they will just do through the VSE anyway. If they get permission from any of the funds to invest it in blue-chip stocks, the minister has said he's going to use the Vancouver Stock Exchange. But if they start doing that, what's the definition of a blue-chip stock? What about King Solomon's mine that Peter Brown and Adrian Khashoggi talked about? What about golf simulators and quickie AIDS tests and three-dimensional sound and hydro-douches and the like that are floated on the Vancouver Stock Exchange? Those are the high flyers on the Vancouver Stock Exchange. Those are the volume traders. What will stop the government from creeping into those not-so-blue listings which comprise more than 1,000 of the listings on the exchange? All of those things I mentioned, from golf simulators to AIDS tests to King Solomon's mines to floating satellites over China to hotels in China to three-dimensional sound technology — all of those things could be invested in under this bill, under the basket clause, which this minister has complete discretion over. In my view, that's a frightening thought.

What have we got? We have two stated investment intentions of this minister, who has complete control under this bill: (1) high-risk venture capital in the economic development regions; (2) high-risk venture capital — if you like — or at least blue chip in the Vancouver Stock Exchange. Those are the only two things that this minister has talked about. Those are the things which are allowed under this bill regardless of what the minister said.

[ Page 8407 ]

What about some of the other possible investment decisions which could be allowed by this act? If you look at the backgrounder to this bill, you will notice that the greatest return documented.... There's a background paper, and it lists all the things the government can now invest in and where the greatest return is. Where's the greatest return? Foreign stocks. I think it's 23 percent, if my memory is correct. They say that's where we can get the highest rate of return.

Well, I have some concerns about investing B.C. public sector pension funds outside of the country anyway. That's my own bias. Indeed, many American pension funds can't be invested outside of their state on the grounds that government employee pension funds should not be used to help develop the region.... Mr. Speaker, there are many pension funds of the northeast states that were being invested in the southeast in competing industries, and that's why they stopped that. They invest only in their locale, only in their community. But this bill now allows us to invest in foreign stocks to help other nations, presumably in competing industries potentially. So putting aside, however, any concerns about investing out of the country, what type of foreign stocks, what kind of countries could the government possibly invest in?

After all, Mr. Speaker, this is a Premier whose first act in office, whose first act after election, was to meet with Glenn Babb, the South African Ambassador. The first act in office was to turn down a meeting with Sylvia Russell from the Vancouver Food Bank because he had to meet with Glenn Babb, the South African Ambassador. And what did he say to Mr. Babb? He said: "We want investment from South Africa, and we're prepared to reciprocate." Well, now they have a bill which allows the minister, if he so desires, to invest in South African stocks. That's allowed under this bill. There is nothing to prohibit any concerns that might be portrayed by this bill. The minister may say, "We're not going to do it," but the bill allows it.

This is, a province that's negotiating for a steel mill with Taiwan, which is the largest drift-net fishery in the world. The Minister of Fisheries (Hon. Mr. Savage) and the Premier talk about drift-net fishing and how terrible it is, and they're negotiating with the Taiwanese government for a steel mill. No one else will deal with them. So why wouldn't they invest in stocks in Taiwan? What about joint ventures with other nations, like Panama with General Noriega. Those are the kinds of things which are allowed in the bill. I'm not saying the government will do them, of course.

The question is: does anybody really trust the government to invest in what might be called ethical companies, companies with an ethical track record? I submit, Mr. Speaker, that that's important to British Columbians. It's very important that money controlled by the government be invested in ethically responsible companies. Do we really want pension funds invested in the armaments industry? Do we really want investments in South Africa? Do we really want investments in companies like Louisiana-Pacific, which I'm sure the government would like to invest in, with an atrocious labour relations record in the southern States and now in northern British Columbia? I submit, Mr. Speaker, that British Columbians don't want that; public sector workers don't want that, and this bill allows it, and I suspect it will be used for controversial investments like that.

What about, Mr. Speaker, investments in dam projects? I'll just give you a personal example: the Peace River Site C dam. The government's own cost-benefit analysis showed 50 percent of the money being borrowed at 2 percent interest from public sector pension funds. That's how they manufactured a cost-benefit analysis which showed it to be in the positive rather than in the negative. We've had a long tradition of subsidizing energy projects in this province. The previous Financial Administration Act prohibited it to some extent. Now we have a bill which again opens the door for that.

Mr. Speaker, I want to deal briefly with who gets the proceeds, because that was touched upon by the minister. The government says that it's a defined benefit plan — and this is repeated in the background paper. It's repeated in the minister's comments: "Don't worry, be happy; it's a defined benefit plan." It doesn't matter if we may blow a little money on this deal, because we have to pay. The government says that we have to pay. We see this sort of don't-worry-be-happy attitude — the Bobby McFerrin school of politics — from the other side all the time.

But the government says that if the strategy is successful, then they'll put the surplus in the pension fund. But what if it's unsuccessful, Mr. Speaker? What if it's unsuccessful and the pension fund loses money as a result of its investment strategy? The government says: "Well, that's okay, because this is a defined benefit plan." But ultimately they'll have to go to the taxpayers to make up the difference in the plan.

Does anybody really believe that this Social Credit government or any Social Credit government is going to raise taxes to make up the shortfall in the teachers' pension plan or the public sector pension plan? Of course not. They're going to take it out of the hides of public sector workers. They've used public sector workers as fodder for their right-wing agenda for years in British Columbia, and they'll do it again. If they lose money, they will go to the teachers, they will go to the public sector workers, and they'll take it out of their hide, not out of the taxpayers.

Although it's a defined benefit plan, I think we have the right to be concerned about the investments of the fund. If it loses money, they won't be likely to make up the difference. They won't ask the taxpayers to make up the difference; they'll ask the public sector workers whose money it is.

In short, Mr. Speaker, I personally have great concerns about the bill, because it proposes to allow the government to diversify its pension fund investment, but it gives no control to the pensioners, to the beneficiaries, to the contributors whose money it is. It is their money, not a gift from government, not some

[ Page 8408 ]

kind of benevolent grant from a corporation or from a boss. It is their money, and they contributed it, and they should have control. The issue is control. And with no control, what the government is doing is saying to public servants: "Trust us to manage your money within these rules." As I said, Mr. Speaker, they can't be trusted with government money because the rules allow 7 percent in real estate — with their track record — and 7 percent in high-risk venture capital, with virtually no control whatsoever. That's what the rules allow. That's what we must, under this bill, trust the government not to abuse. I don't trust them, and I believe that no public servant in the province should trust them.

DEPUTY SPEAKER: Second reading of Bill 37. Hon. members are advised that pursuant to standing order 42, the minister closes debate.

HON. MR. COUVELIER: Mr. Speaker, the hon. members opposite made a number of points which I will try to deal with.

First of all, we had some discussion by the first speaker about broadening the base of the VSE. The second speaker went on at some length, as he has done in previous debates, about the Vancouver Stock Exchange. I took that opportunity to visit some constituents in the hallway for a minute, because I had heard those arguments before.

Nevertheless I caught the tenor of the position, and I gather from the comments made that the hon. member seemed to be suggesting that the trades should be crossed in Toronto. That is to say, if we are to diversify our pension fund holdings, they should not be done on the VSE. That seems to be the message that I heard, and the member seemed to be saying the VSE means that it's obviously not a worthwhile investment.

The fact of the matter is that the VSE claims that there are 134 blue-chip stocks presently listed on the VSE. That can be debated, I understand, so I won't debate the number. There are dozens and dozens of blue-chip stocks which presently trade on the VSE. I gather from the members opposite that they would like the VSE excluded from any opportunity to cross the trades on the floor of the VSE.

The member seemed to go on to divert all of the income that would flow from these transactions to Toronto and the Toronto Stock Exchange. I find that very surprising. This Legislature is supposed to be representing the citizens of the province, and presumably anything that inures to the benefit of British Columbians in terms of income-producing opportunity should be supportable.

If the members wish trades to be crossed in Toronto, rather than trades crossed on the VSE, I'd like to hear about that, rather than hear the great embellishments and time-consuming rhetoric that we've heard, which has been repeated ad nauseam in the past, about some particular VSE listings — all of which had been caught and dealt with by the regulatory authorities.

They seem to be suggesting that these trades should be crossed on the Toronto Stock Exchange rather than the VSE. If that's true — and I wouldn't want to put words into anybody's mouth — members opposite can't have it both ways. They can't on the one hand criticize government's attempt to make sure that trades are crossed on the Vancouver Stock Exchange rather than the Toronto Stock Exchange and, at the same time, suggest that somehow the B.C. interests are disadvantaged by trading on the VSE. They clearly are not.

To the extent that the members opposite seem confused about blue chips, I would just give them comfort. We are talking about investment-grade stocks. We are not talking about penny stocks; we are not talking about high-risk stocks. We are talking about the kind of investment-grade equities that union pension funds have invested in for years.

[8:45]

There is nothing new or different in this proposal as it relates to investments in equities. The only issue is: do you prefer to flow those benefits through to Toronto, or are you prepared to see them captured for Vancouver brokers and Vancouver firms?

The issue there, I would respectfully suggest, should be clarified by the members opposite, and I look forward to that clarification during committee debate, because I think all British Columbians and certainly all people involved in the brokerage business in British Columbia would very much appreciate having that member's position clarified as it relates to the socialist opposition party. We all would be very interested.

Do you want to cross trades on the Toronto Stock Exchange, or do you want to cross them on the Vancouver Stock Exchange? Tell us. Tell the people of the province where you stand on that issue, members

There has also been some talk about representation on the advisory committees, and repeatedly we've heard that somehow the interest of the employees whose pension funds we are discussing here are at risk, and the members have exhibited to me by their monologues that they understand the difference between a defined benefit plan and one that isn't guaranteed. The fact of the matter is that no employee covered by these pension funds has their pension at risk. Even were the fund to disappear, their pensions continue and they continue at the taxpayers' expense.

I would suggest, as I did in my opening remarks, Mr. Speaker, that the citizens and the taxpayers of this province have as much an interest in this question of diversification as the employees do. The employees can't lose in any event. They are going to get their pensions no matter what happens with the pension funds. It's the taxpayers, the taxpayers whom this party has long held as the main driving force and the group that we should represent, as opposed to some members opposite, who seem to think they are here for special interest groups. We are here to represent all the citizens of the province, and all the citizens of the province will benefit from

[ Page 8409 ]

diversification, not just some narrow special interest group that you like to lay claim to as being representatives of. The fact of the matter is that we are all representing all citizens, and I trust the members opposite, upon sleeping on the question, might come to agree.

The second speaker opened his comments by saying that the minister was incorrect. He seemed to be alluding to my claim that the list of the eligible investments contained in these amendments is the list which applies to all federally regulated pension plans and to all private pension plans in British Columbia, and to that the member opposite said I was incorrect. I would challenge the hon. member to confirm that statement, because clearly when I tell you that this list of eligible investments applies to all pension funds, I mean just that. It doesn't mean to say they have to take advantage of them; it's a list of eligible investments that they can take advantage of.

The member opposite also went into some length about the auditor-general, and we had a little bit of a ring-a round — the-rosey on the issue of unparliamentary practices and language. As a consequence of that, Mr. Speaker, I was curious to get the member's statement exactly as he expressed it. I haven't yet received that from Hansard, but I would just challenge the hon. member to tell me where the auditor general is alleged to have made the comments that he claims he made. I will hold the hon. member to exactly the words he used in making the allegation. I am satisfied that the record will show that not only did he misrepresent the information, but also he chose to selectively edit what it is he presented to the House in the last half hour.

We also talked about....

MR. CLARK: On a point of order, I note that the minister earlier was quick on his feet at concerns that I might be imputing some motives. Well, I must take exception to the fact that he is implying that I deliberately misled or otherwise the House with respect to my interpretation of the auditor-general's remarks. I certainly accept, as I hope he would, our rights to different interpretations, as long as he doesn't attempt to say that I have deliberately tried to mislead the House, which he appears to be doing.

DEPUTY SPEAKER: I am sure that the minister was not intending to impute improper motives However, he would know better than I and I am sure that the minister would also be prepared to withdraw any remark that might have been offensive to the member, if there was one.

HON. MR. COUVELIER: My God, Mr. Speaker, surely to goodness inoffensive remarks as I.... If someone wants to pull Hansard and show me what is offensive about what I said about three minutes ago, I would be pleased to withdraw, but I submit to you that I said nothing which would impugn the motives of the member opposite. Motives, I think, will be clear to the readers of Hansard. The point of the matter is that the member made some points about the auditor-general and his comments relating to my management of public funds and my reporting of those funds and the manner in which I reported them.

I am just going to remind the member that I am going to ask him to show me exactly where the auditor-general said exactly what he claimed the auditor-general said. We will do that in committee stage. So I challenge the hon. member to provide that evidence. In an abundance of fairness, it seemed to me appropriate to serve notice.

MR. MILLER: On the point of order, I think it's fairly straightforward, Mr. Speaker. The minister said that the second member for Vancouver East chose to misrepresent the facts. All my colleague has argued is that it's an area that's open to interpretation. I think the original point of order is valid in that the minister should withdraw that statement.

He was, as was pointed out, very quick to jump to his feet on a point of order under similar circumstances earlier in the debate, and it would simplify matters if the minister would simply withdraw that.

DEPUTY SPEAKER: I am sure the minister is well aware that there is nothing to withdraw, providing there is no intention to impugn the motives or the reputation of any hon. member. Having said that, I am not a mind-reader; I just do the best I can with the information that comes to my ears when I sit up here. But it would seem to me that we are almost to the point in this debate where we can call second reading, and anything that could be done by members on either side of the House to hasten this happy moment would be much appreciated by the Chair.

HON. MR. COUVELIER: The members opposite also dealt with the issue of real estate sales, and seemed to suggest....

MR. CLARK: On the point of order, Mr. Speaker, I didn't hear a withdrawal from the Minister and I feel strongly that he argued that I misrepresented the auditor-general's remarks here. As I recall the minister's remarks when I was drawing my interpretation of the auditor-general's report, I was asked to withdraw, and I withdrew those remarks. I would ask the minister to do likewise.

DEPUTY SPEAKER: Perhaps the government House Leader would take his seat for just a moment.

HON. MR. RICHMOND: Mr. Speaker, the minister clearly said that he didn't impute any motive.

DEPUTY SPEAKER: I was just going to say that.

HON. MR. RICHMOND: I personally didn't find anything offensive in what he said. In fact, I found it far less offensive than the comments from that member when he was making his opening remarks.

[ Page 8410 ]

MR. D'ARCY: The minister made comments which the member for Vancouver East finds offensive. The member for Vancouver East believes that those comments impute improper motives to him. When the minister made the same comments regarding certain parts of the speech by the member for Vancouver East, without defining what precise comments he found offensive or even why he found them offensive — he simply got up and stated that he found them offensive — the member for Vancouver East, somewhat reluctantly, withdrew unconditionally those comments which the minister found offensive. Mr. Speaker, if the member finds some of the minister's comments offensive and believes that they impute improper motives to him, I suggest that the minister not follow a double standard and that he withdraw those comments unconditionally.

HON. MR. COUVELIER: The point of the matter here is that we are on the government side, and I have statutory obligations in terms of managing the citizens' money and reporting how that money is spent and managed. Therefore I have a unique responsibility to ensure that allegations dealing with that responsibility and impugning my credibility in that respect don't damage the government and thereby all the citizens. My position is somewhat unique, Mr. Speaker — with respect.

Furthermore, I did remind the hon. member opposite that I was not impugning his motives. I did say — and I challenged him, and I served notice to him — that when we read Hansard tomorrow, we will be able to see exactly what it is that he alleged the auditor general said. I will challenge him to provide evidence that the auditor-general said what he said in the words used by the hon. member. I felt it was the honourable thing to serve notice. In the absence of having a transcript of exactly what the hon. member said when he opened this debate, I'm not able to deal with it at this point in second reading.

MR. D'ARCY: Mr. Speaker, the point of order that was raised by my colleague from Vancouver East was regarding what the minister was saying. The minister is getting up on this point of order and recanvassing what he feels the member said in his speech some time ago, which he has finished. What we are talking about here is what the minister has been saying in his speech. I think the discussion here should be restricted to that and to that alone.

The fact is the minister is not more equal than other members in this House on this matter or on any other. He is the hon. first member for Saanich and the Islands, and he has no special privileges in debate.

DEPUTY SPEAKER: The member for Rossland Trail is very eloquent in his remarks, and he makes a point. But he overlooks one thing, and that is the fact that members on both sides of this House, in each others' estimation and in the estimation of the Chair, are honourable men and women. The minister, who is therefore an honourable man, has risen in his place and said that he wasn't imputing any improper motives to the second member for Vancouver East (Mr. Clark).

I would suggest that had the second member for Vancouver East said the very same thing when he was on his feet during the previous slight altercation which occurred during this second reading debate, the Chair's decision would have been the very same. I think we've had a minister stand and state that he wasn't imputing improper motives to a member, and it would seem to the Chair that that should be satisfactory.

I would ask the Minister of Finance to please move second reading of this bill.

HON. MR. COUVELIER: With respect, Mr. Speaker, I will do that, but I'd like to deal with a few other points that were made here during this debate. There was great discussion by the member opposite about real estate sales, and the implication was that they were poorly managed. I'd like to make a number of points.

First of all, real estate sales by the government are irrelevant to this particular subject. But more importantly, in my judgment, on the reference to the Expo sale and the allegation that somehow or other fewer funds were received from that sale than might have been expected, I just have to remind the House and the member that that sale was the consequence of an internationally recognized competition. It was incontestable, even by the losing bidders, that the winning bidder was clearly the best bid of all those submitted. There was no question about that — none whatsoever. Therefore, to suggest that the Expo sale was somehow an indication of government's inability to deal properly with public matters and land sales is not correct.

[9:00]

Furthermore, the member seemed to suggest that the Westwood land sale similarly had some kind of a slur attached to it, and that the Westminster Quay issue similarly had some sort of shadow cast upon it. Mr. Speaker, the record shows that that data has been clearly and repeatedly rebutted by evidence submitted by the minister in charge. So while the members opposite might make outrageous claims, the facts and the records show that they haven't been able to substantiate those outrageous claims; their objective is purely to attract attention to the issue.

Then there was reference to a columnist in the Globe and Mail named Mr. Jorgensen, whom the member took great delight in quoting. I'd just like to suggest to the member opposite and to the House that this is another example of Toronto paranoia as it relates to the Vancouver financial community. We see evidence of that regularly. You might remember that there was a full-page ad taken out by the mayor and council of Toronto about a year or so ago dealing with the international financial centre in Vancouver. They really are paranoid about anything we might do in B.C. to attempt to assert some independence from that pervasive influence that central Canada maintains over all of western Canada's financial institutions.

[ Page 8411 ]

I also thought it interesting that the member got off on a long monologue about foreign stock ownership, and he neglected to mention that the guidelines relating to the percentage of foreign stock ownership limit it to 10 percent. He obviously knew the percentages because he dealt with them in the other categories, but he conveniently failed to mention them as they relate to foreign stock ownership.

I look forward to further in depth discussion on this very important subject of the management of public money, and I'm pleased to move second reading.

Motion approved on division.

Bill 37, Financial Administration 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: Committee on Bill 43, Mr. Speaker.

BRITISH COLUMBIA ENTERPRISE
CORPORATION LOAN PRIVATIZATION ACT

The House in committee on Bill 43; Mr. Serwa in the chair.

On section 1.

MR. WILLIAMS: Can the minister advise us what these loans are and who they are to?

HON. MR. COUVELIER: This section deals with the loans which BCEC proposes to transfer and defines the documents related to these loans. There are also brief definitions of other expressions. The definition of "loan" includes all loans made by B.C. Development Corporation or BCEC and specifically those advanced under the LILA act and the Small Business Development Act.

There was a question earlier, I think, as to whether BCEC had the power to dispose of these loans, and this legislation, through the definition of "loan" and subsection 2(2) removes any doubt in that respect.

MR. WILLIAMS: We're talking about after-the-fact legislation. You've gone through the process with these already, with respect to the work of Mr. Parker and so on, I presume. This is after-the-fact legitimizing or handling the details of the activities of Mr. Parker of some months ago. Is that the case?

For the benefit of Hansard, the minister is nodding his head up and down, not sideways, and I presume he means yes.

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

MR. CLARK: I'm just looking at the definition section, which lists an incredible number of loan agreements. It describes "loan document" as "a loan agreement, promissory note, mortgage, debenture, assignment, pledge, indemnity, guarantee" — and on and on. I wonder if the minister could tell me whether the reason for this lengthy description of a loan document is that all the things in the definition here have been utilized and are being privatized in some manner or form.

HON. MR. COUVELIER: I'm advised that in all likelihood they've all been used at least once in relation to one specific loan.

MR. CLARK: That's rather extraordinary. I just want to make sure I've got this right. Some of the loans that were privatized.... A loan document is described this way: "...a loan agreement, promissory note, mortgage, debenture, assignment, pledge, indemnity, guarantee, postponement or priority agreement or other document securing, providing for, relating to, constituting collateral for the repayment of or otherwise constituting evidence of a loan by the borrower or by a guarantee of the loan, or otherwise providing security for repayment of the loan." The definition includes almost every conceivable financial mechanism one could use to make a loan or a loan guarantee. I just want to make sure that all of them have been used at some time in one or more of the loans that have been issued.

HON. MR. COUVELIER: I think my previous answer still applies.

MR. CLARK: Can he tell me what the number of loans is, first of all?

HON. MR. COUVELIER: I wonder if the member opposite could be a bit more specific. Is he talking about the loans that were privatized? For the benefit of Hansard, I take it, as we have previously agreed, a vertical motion of the head in the nodding fashion means yes. The loans privatized, repaid or collected would have represented 736 customers and $219 million.

Sections 1 and 2 approved.

On section 3.

MR. CLARK: I wonder whether upon privatization the terms and conditions of the loans could have changed, or did change, the interest rates or any of the other things, or if that was negotiated between the parties.

HON. MR. COUVELIER: The answer is no.

MR. WILLIAMS: These are the ones that were reviewed by the Public Accounts Committee that had been the result of Mr. Parker's work and were transferred at face value — is that the situation?

HON. MR. COUVELIER: I understand the public accounts discussion the member is referring to would have been of part of the totals I just read.

[ Page 8412 ]

MR. WILLIAMS: So there are indeed more loans here than were covered at that stage.

HON. MR. COUVELIER: The figure I read out represents the loans privatized, the loans repaid and the loans collected. It's a global figure.

MR. CLARK: Can the minister inform the House what the breakdown is? How much of the loans was privatized? How much was paid out in all three classifications?

HON. MR. COUVELIER: I'm not sure that we caught the question properly. It's my understanding that the Public Accounts Committee dealt with the privatization as it related to the Canadian Western Bank loans. I'm advised that the sum of money involved in that transaction was $55 million.

MR. CLARK: Just so we have it right, the loans sold to Mr. Emerson's company were covered at the Public Accounts Committee. Can the minister inform the House what other loans area was dealt with here that was not dealt with in the Public Accounts Committee? For the minister's benefit, we have no intention of recanvassing the debate on public accounts. We would possibly like to canvass anything that was not covered in the Public Accounts Committee that is covered by this bill.

HON. MR. COUVELIER: The loans were divided into various portfolios. There were six portfolios Portfolios 5 and 6 were the Canadian Western loans, and there were other individual loans in the first four portfolios.

The Canadian Western loans represented 388 customers out of the 736 1 mentioned earlier; 348 customers, then, were other than Canadian Western. In a similar mathematical sense, $164 million was other than Canadian Western.

MR. CHAIRMAN: Hon. members, may we have some more order in the House, please, so the debate can carry on.

MR. WILLIAMS: Maybe members should sit in their own seats. That's the problem.

Interjection.

MR. WILLIAMS: Oh, we have a new women's ministry. Maybe that's what I was unaware of.

The minister refers to categories 1 to 6. If Canadian Western is 5 and 6, maybe we could have the breakdown of categories 1, 2, 3 and 4 — have we got that breakdown? — and the process involved the disposition of categories 1, 2, 3 and 4 as well.

We did canvass it, and I think the Public Accounts Committee was quite satisfied with the review regarding Mr. Parker's previous work on categories 5 and 6; but 1 to 4 are certainly relevant now.

[9:15]

HON. MR. COUVELIER: Portfolio 1 was one loan; that was Tackama Forest Products, for $4.95 million. The second portfolio was $25 million; that was Louisiana-Pacific. The third portfolio was one loan also, for $9 million; that was Onyx Packaging Inc. Portfolio 4 was for $3.7 million, which was Conair Aviation.

MR. WILLIAMS: I'm not familiar with some of these; some I am. Conair — was that the one in Sidney or Saanich? No? That was another one. Maybe the minister could just give us a bit more background.

In the case of Louisiana-Pacific, that, of course, was written down because it was a no-interest loan. That went down to $18 million or something like that, if my memory serves me right. So that's understandable.

Were these others traded on their face value or not? Was there was some kind of risk analysis, or what?

HON. MR. COUVELIER: I'm not quite sure what the member is asking here. He asked if there was some kind of risk analysis, I gather. That, of course, was the whole purpose of the privatization committee's work as it related to these loans. Certainly there was risk analysis done, and appropriate judgments were made about the value of the loans.

MR. WILLIAMS: Then the question is: is that material available to the House?

HON. MR. COUVELIER: I just gave the hon. member the material. Would he like me to say it gain.?

Portfolio 1 was $4.95 million; that was Tackama Forest Products. Portfolio 2 — I'll say it again — was $25 million; Louisiana-Pacific. Portfolio 3 — I'll say it again — was Onyx Packaging. Portfolio 4 was Conair Aviation, for $3.7 million.

There it is. I don't know what more I can do to provide the comfort the member desires.

MR. WILLIAMS: I indicated that the government of the day.... It wasn't you. No, you haven't been quite that foolish in terms of some of your lending practices — at least not that I'm aware of. Louisiana-Pacific, this American corporation, was given the loan of $25 million interest-free. Mr. Phillips, who has been a very active lobbyist recently, used to be the minister of economic development, I think he pulled that caper off without cabinet approval, and I can understand people being upset about that; but only a few of the former members of cabinet could advise us in detail in that respect.

At any rate, $25 million it was, and for some years interest-free. That's clearly a very simple one to carry out the analysis on and say: "All right, if we sell the loan, it's a solid loan except that we don't get any interest on it." So we deduct that interest from the $25 million, and we probably come up with $18 million in terms of the amount of cash we are going

[ Page 8413 ]

to get for that loan when we sell it in the free marketplace to the financial community. But the minister has given us these numbers. I know that the Louisiana-Pacific number cannot be the final cash number we got for that loan, so it begs the question, then, about Tackama. Is $4.95 million the original face value of the loan or the value we got for it out of the privatization process that is the result of some kind of risk analysis?

I hope we don't go through the same routine we went through a minute ago, but those numbers would appear to be the face value of the loan, and I don't think you got the face value for these loans.

HON. MR. COUVELIER: I realize that paranoia is rampant this evening, but let's all be reasonable here. Obviously, a $25 million no-interest loan upon sale would have to have a present value calculation attached to it.

MR. WILLIAMS: Yes, but you didn't say that a minute ago, did you?

HON. MR. COUVELIER: You shouldn't have to be a financial genius to appreciate that this would be the consequence of deciding to sell.

MR. WILLIAMS: Then why did you have so much trouble with it, buster?

HON. MR. COUVELIER: I can tell the member that insofar as the Tackama Forest Products loan paid interest and was a good loan well secured, it was paid off at face value. I can tell the member that Onyx Packaging represented good value and was sold off at face value. It had an interest rate attached, so there was an interest by others to acquire that and add it to the loan portfolio. It isn't quite accurate to suggest that matters have gone downhill in any respect. Quite clearly we're very proud of the fact that we got full value for these loan portfolios.

More importantly, the case of Canadian Western Bank added considerably to the asset holdings of an indigenous western Canadian financial institution. I would have thought that the members opposite would take some pride in that accomplishment. It wasn't just the government that did it; it was all British Columbians who did it. You're a British Columbian, so some of it must reflect on your shoulders. We're generous. We're prepared to allow you to share the limelight in that respect. You should be as proud of it as we are.

MR. CLARK: The minister didn't mention Conair Aviation. Perhaps he could tell me what that was sold for.

HON. MR. COUVELIER: The Conair issue is presently being bid for. It's our expectation that full face value would be realized. I realize that sometimes we get criticized by the members opposite for how we manage public affairs, but I'd like to suggest that we can still sell a dollar for a dollar, and we're reasonably comfortable with how we've managed to do just that with the privatization of this loan portfolio. The fact that we got face value for these loans seems, in my mind at least, to support our contention that the loans were well made in the first place. Obviously the private sector wouldn't have picked them up at face value had they been anything less than good, sound loans. I've got to remind the member that these loans were made in the interest of diversifying our economy, broadening its base, and the vitality of our industry. All of these things are highly desirable, I would have thought, and hardly need protracted criticism.

MR. CLARK: The minister just said that we're proud of getting face value, but he didn't get face value for the Louisiana-Pacific loan at least.

HON. MR. COUVELIER: We certainly did. It was a no-interest loan.

MR. CLARK: You didn't get face value.

HON. MR. COUVELIER: I challenge you to go out there....

MR. WILLIAMS: I challenge you to find anybody else that would have made such a dumb....

MR. CLARK: That's right.

The minister said earlier that there were six portfolios. As I recall, he said there were 736 loans made, of which 388 were in portfolios 5 and 6. Then he said, with some subtraction, that there were 348 loans made under portfolios 1, 2, 3 and 4. He's only given us four examples. Perhaps he could explain that discrepancy in his remarks.

HON. MR. COUVELIER: The 736 customers that we referred to earlier was what was left from when we started the exercise in June 1988. The 736 that I referred to is what we dealt with in respect to the loans that we privatized, the loans that were repaid and the loans that were collected. Of that 736,388 went to Canadian Western. I think that's how I responded to the member.

MR. CLARK: The minister said that 388 clients went to portfolios 5 and 6. He's given us four different clients — or people who got loans — under four different portfolios. Perhaps he could explain then where the other 344 clients went that are contemplated under this bill.

HON. MR. COUVELIER: These are privatized — we've dealt with that — or repaid or collected. They are a combination of those functions.

MR. CLARK: Privatized, repaid or collected. I would think that repaid and collected are the same thing. Does the minister have some terminological problem with that? The minister said that 388 were privatized loans; then he gave us four examples of

[ Page 8414 ]

loans which are in the process of being privatized or have also been privatized. Am I to assume from those remarks that 344 of the loans given out have been repaid?

HON. MR. COUVELIER: The records would show that 344 would have been either repaid or collected.

MR. CLARK: Is there a difference?

HON. MR. COUVELIER: Well, some of the loans required a little bit more aggressive action than others. But the fact of the matter is that the government is whole on those transactions.

MR. CLARK: So 344 of the loans have been repaid or some action was taken to collect whatever could be collected from the remainder. Could he tell us how much of the money at face value those 344 loans comprise, and how much the government received in the end from being repaid or collecting?

I don't know if the minister heard that. I said there are 344 loans that have been repaid or collected. How much money was lent out at face value to those 344 clients, and how much was received, either repaid or collected? Presumably if one has to collect or foreclose, one wouldn't get face value. I'd like to know what the difference is.

HON. MR. COUVELIER: In round numbers, about $122 million.

[9:30]

MR. CLARK: Is $122 million what the government received or collected? The minister is nodding his head, so that means yes. Can the minister confirm for me that some $300 million was lent out at face value and the government received $122 million that was repaid or collected?

HON. MR. COUVELIER: I'm not quite sure that we're all on the same wavelength here. The loans which have been transferred to the Finance ministry for administration will total 117 for a dollar value of $25 million. The figure I gave you refers to BCEC loans transferred.

In addition to the BCEC loans, there are — to use the jargon of the trade — project loans, which are basically larger commitments; and in addition, there are some transfer loans on the LIFT program and on the LILA program. So the total of the transfers to the Ministry of Finance at March 31, 1989, was 262 loans and $156.5 million. It's pointed out that the number relates to loans, not customers. One customer may have more than one loan. There may be loan package A and loan package B. That isn't the norm, but there may be some of those anomalies buried in those figures.

MR. CLARK: Can the minister explain where the $122 million came from that he referred to a minute ago?

HON. MR. COUVELIER: We've got so many figures in front of us here that I am not quite sure I can answer that question now. We have been working our way through a logic trail, so we have to go back and replay all of that record in order to.... At some point or other you asked a question which required us to add and subtract some figures over here, and I responded in a round-number kind of answer. I don't remember the question you put to us that we resurrected for you.

MR. CLARK: Trying to get to the bottom of the minister's answers is quite.... These are not trick questions or anything. They're not meant to be trick questions, and I apologize if the minister is having some difficulty. I just want to get this straight. There were 388 customers who went to Mr. Emerson's bank. They were privatized, and that's been canvassed in the Public Accounts Committee. There is, according to the minister's remarks, some $300 million in other loans.

I see one of the staff members shaking his head in the negative. There are 736 loans in total, so 348 loans are unaccounted for. Actually, the minister gave us four examples, so that leaves 344 loans unaccounted for. Now the minister has said — maybe this clarifies it — that the bottom line is that there are 262 clients....

Interjection.

MR. CLARK: No, the minister said clients. The minister's correcting me. As I understand the minister, he said there are 348 loans but only 262 clients, some of whom have more than one loan. The minister is shaking his head, so maybe he could clarify that before we proceed.

HON. MR. COUVELIER: I think we are mixing apples and oranges here. The 348 refers to customers; the 262 refers to loans. Of the 736, 388 were sold to Canadian Western. The balance of 348 were the ones that were sold or privatized or repaid. The 262 loans are what we have retained.

MR. CLARK: Thank you. That clarifies it somewhat.

So 348 loans were privatized to other than the Canadian Western Bank. Can the minister tell us what the face value of those 348 loans amounted to and how much the government received for the privatization of those 348 loans?

HON. MR. COUVELIER: We don't have with us here the numbers the member wishes. If he is attempting to determine what write-offs might have occurred, the write-downs associated with the privatized loans — or the repaid loans or the collected loans; that is, the 736 - are minimal.

The members opposite would like to make another speech, I am sure, about Louisiana-Pacific.

Interjection.

[ Page 8415 ]

HON. MR. COUVELIER: No? Have I had all I'm going to hear about Louisiana-Pacific? Can I take that to the bank?

Aside from that anomaly where the loan had no interest attached to it, which therefore obviously necessitated a calculation of net present value, the write-downs were minimal, and face value was obtained for all of those loans that were market-based loans. There were a fair number of loans that couldn't be characterized as fair-market loans. The low-interest loan assistance program loans are a perfect illustration of that. They're not traditionally market-based loans. Aside from that anomaly, the government received full value for these portfolios.

MR. CLARK: The minister said that aside from Louisiana-Pacific, there were other low-interest loans given out, and some of those were privatized. Aside from Louisiana-Pacific — and I won't make a speech on that today — could he tell us how much was lent out under the low-interest loan initiative, to use the minister's words, in addition to the Louisiana-Pacific loan, and how much they were written down?

HON. MR. COUVELIER: I'm blessed with a staff member who knows this intimately. I'm afraid we may be getting down in the trenches when the hon. member wants us to stay up on the high ground.

The Louisiana-Pacific loan was a program called SIIP. I'm sure you would all be delighted to have a seminar on programs. The member's question related to LILA loans, if I understood him properly.

MR. CLARK: The minister said they got face value for all market-based loans, which is understandable. They didn't get face value for Louisiana-Pacific because it was loaned under a special initiative, the acronym for which, the minister tells us, is SIIP There's also another initiative called LILA, the low interest loan agreement, or whatever it is. Those were low-interest loans; therefore, they were not market based loans. Could the minister tell me the face value of the loan under LILA and the value it was privatized for, given that it would be less than face value because they were not market-based loans?

HON. MR. COUVELIER: About half of the LILA loans were privatized and included in the portfolio sold to Canadian Western Bank.

MR. CLARK: All of the LILA loans that have been privatized to date went to Canadian Western Bank None of them were privatized elsewhere. Maybe the minister could explain that.

HON. MR. COUVELIER: I'm advised that included in the package sold to Northwest Trust there were a few LILA loans — maybe two or three, something of that order.

MR. CLARK: This brings us to another question, and it may be something which is public knowledge We know that the Canadian Western Bank got portfolios 5 and 6 which amounted to 388 loans. Could he inform the House who received — who bought — the other four portfolios?

HON. MR. COUVELIER: I think I answered that question earlier. Portfolio 1 was paid off by the applicant. Portfolio 2 was paid off by the applicant. Portfolio 3 was sold at face value to Greyvest (Canada) Inc. Portfolio 4 is pending, as I mentioned. I think those answers are on the record.

[9:45]

MR. CLARK: The minister said that three of the portfolios had been paid off. This is where it gets confusing, because when he discussed the four portfolios he only mentioned one loan. Portfolio 1, he said, was Tackama Forest Products, $4.95 million; they paid it off. Portfolio 2 was $25 million to Louisiana-Pacific; they paid it off. Portfolio 3 was Onyx; it went to Greyvest. Portfolio 4 is pending. We had a discussion about LILA and several loans under LILA being privatized under one of the portfolios. We've also had a discussion about the 300-odd clients. It's not clear to me under which portfolio they fall, how many of them have been privatized and how many haven't.

HON. MR. COUVELIER: That answer also is on the record, 1 believe. They were included in the portfolio assumed by Canadian Western Bank. I believe I mentioned to you about five or ten minutes ago that Canadian Western Bank assumed something in the order of 50 percent of the LILA loans. I'm here to answer questions, but hopefully we can move ahead to new information.

[Mr. Rogers in the chair.]

MR. CLARK: Let's recap. There were 736 loans; 388 went to Canadian Western Bank.

HON. MR. COUVELIER: There were 736 loans privatized. Okay? There were more loans than that, because we privatized only 736.

MR. CLARK: There were 736 loans privatized; 388 went to the Canadian Western Bank. There were 348 other loans that were privatized. We have now been given four portfolios naming what happened in each of those. We have got only four named loans privatized with those four portfolios. What happened to the other 344 loans?

HON. MR. COUVELIER: Well, now I have to go back to about half an hour ago when I pointed out — I think three times, Mr. Chairman — that the 736 are loans privatized, repaid and collected. The member seemed surprised, so we had a little bit of a pas de deux around that issue. But that was half an hour ago, I must concede.

MR. CLARK: There were 736 loans privatized, repaid or collected; 388 went to Canadian Western

[ Page 8416 ]

Bank — that's privatized. Then portfolio 3 was privatized to Greyvest. Could the minister tell me how many other loans were privatized, who got them and how many were repaid or collected?

HON. MR. COUVELIER: We were asked that question three-quarters of an hour ago, and I think we said we didn't have that information at hand.

MR. CLARK: I'm trying to determine how many were repaid and how many were collected. The minister has given us some rhetorical answers with respect to those collected. Presumably, if they're collected, that means they were foreclosed by the government or some action was taken, and therefore full market value wouldn't be paid. Perhaps the minister could tell us what was the face value of the money lent out and subsequently repaid or collected. What was the value of the repaid and collected loans?

HON. MR. COUVELIER: I'm reminded that we did provide that information earlier. The answer I gave in round numbers, because we had to add and subtract to arrive at it. About $120 million was repaid, and the number of customers would be about 325. Don't hold us to exact figures; that's by adding, subtracting and rounding off. I don't have a typed figure in front of me.

MR. CLARK: So $120 million was repaid. Could the minister tell us the face value of those 325-odd loans that were lent out? Was it $120 million?

HON. MR. COUVELIER: As we mentioned earlier, I really do believe we are repeating ourselves here We don't have the exact number, but the vast majority of them would have been paid at face value. As I said, and I'll say it again, there were included in these sales some LILA loans. The Louisiana-Pacific one was a SIIP loan — the special investment interest subsidy program. Obviously, when those loans were privatized, an assessment had to be made of net present value, so there would be an adjustment. With the exception of the Louisiana-Pacific issue, the LILA loans were small in number, and the adjustment required would be minimal in the overall scheme of things. The vast majority of these loans were sold at face value.

MR. CLARK: It's very difficult and disconcerting not to have some numbers with respect to how much of a write-down took place. The minister said that the ministry itself continues to administer 262 loans at $156.5 million. If all of the other 736 loans were privatized, repaid and collected, and there are 262 loans left, could the minister tell me whether that $156.5 million is the face value? I would assume, without being too rhetorical, that the dogs are the ones left with the ministry; otherwise they would have been privatized.

HON. MR. COUVELIER: It represents face value.

MR. CLARK: Does the minister have any estimate of the market value of these 262 loans?

HON. MR. COUVELIER: No, Mr. Chairman. Notwithstanding the fact that the valuable work of the auditor-general doesn't seem to have universal support in this House, one of his tasks will be to value the asset listing at the fiscal year-end and provide advice to us in terms of necessary write-off levels. The answer to the question will be provided when the books are closed. It will be necessary and, as a matter of fact, a constitutional requirement of the auditor-general to make that value judgment, and the comptroller-general will have a hand in it. I'm sure we will all attempt to make very sure that the public accounts and the people's business are properly and accurately reported in the published documents.

MR. CLARK: I guess it's fair to say that they're probably virtually worthless; otherwise they would have been written down and privatized, as were the other ones. In crude numbers, if we look at Louisiana-Pacific and some of the other write-downs the minister talks about as being marginal, we must be up around, at least— to be very conservative — $150 million in money shovelled off the back of a truck, to use an old saying around this House — at least $150 million squandered. Mr. Speaker, to use the words of the first member for Vancouver East (Mr. Williams), this is the burial bill, the bill where we bury $150 million of public money never to be seen again, subject to the auditor-general's recanvassing of the matter in the public accounts.

MR. CHAIRMAN: Earlier I had to bring to the attention of the member for Vancouver East that we were in the House. We are now in committee. Not only did you call me Mr. Speaker, but you were giving me second reading debate.

MR. MILLER: I thought perhaps the Minister of Finance might want to take advantage of this opportunity to respond to the question he took as notice on July 6. The question was: would the minister advise what the cost to the provincial treasury was of the $25 million loan guarantee with respect to Louisiana-Pacific? I wonder if the minister would have that figure available here now.

HON. MR. COUVELIER: There was no loan guarantee with Louisiana-Pacific.

Interjection.

HON. MR. COUVELIER: I'm sorry. Could I have it repeated then?

MR. MILLER: I had originally asked the Minister of Forests (Hon. Mr. Parker), who had made a statement indicating that the loan had been repaid. I asked the Minister of Finance: what was the cost to the provincial treasury of the $25 million loan ar-

[ Page 8417 ]

rangement entered into between the government and Louisiana-Pacific?

HON. MR. COUVELIER: Our discussion on this side dealt with the fact that the first member for Vancouver East used the figure in earlier discussions on this section this evening, so it seems to be a little bit redundant. I understand that the answer to the question is that the discount rate used in the calculation of that loan was $6.9 million, which was determined by independent appraisers and consultants and deemed to be the market rate for the net present value calculation.

Sections 3 to 9 inclusive approved.

Title approved.

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

Motion approved.

The House resumed; Mr. Speaker in the chair.

Bill 43, British Columbia Enterprise Corporation Loan Privatization Act, reported complete without amendment, read a third time on division and passed.

HON. MR. RICHMOND: I call second reading of Bill 79, Mr. Speaker.

INCOME TAX AMENDMENT
ACT (No. 2) ,1989

HON. MR. COUVELIER: Bill 79 introduces amendments to the Income Tax Act which we have been requested to adopt by the federal government Each year we receive a series of requests for amendments to our taxation act as a result of changes to the federal Income Tax Act.

[10:00]

Under the terms of the Canada-B.C. tax collection agreement the province covenants that it will maintain its statute on a basis similar to that of the federal act. Failure to adopt the requested amendments is a breach of the tax collection agreement, which could lead to disruption of the present system of unitary tax administration.

In proposing the suggested federal amendments for this year, we have agreed with the federal government to a change in past drafting style. The requested amendments to the Income Tax Act have been a duplication of the wording in the federal Income Tax Act. Every time there is a federal change to a provision, the province has to adopt a corresponding change. In order to try to simplify this process and reduce some of this redundancy, we are, for this year, attempting to incorporate the federal act by direct referencing to the applicable section in the provincial statute. In this manner, we hope that in the future the need for massive changes to the Income Tax Act as a result of federal changes will be reduced.

The direct referencing to the federal act is limited in its application to administrative procedures such as requirements to file returns, interest charges, procedures on appeals and refunds. These items are essential to the operation of the single income tax administrative system that we employ in B.C. The need to continually bring before this House minor amendments to these provisions is disappearing. Hopefully, the amendments proposed in this bill will recognize that reality.

In conclusion, the proposed amendments in this bill are those requested by the federal government. They ensure the continuation of the present system of single tax administration, and failure to pass could have serious repercussions for the province.

MR. CLARK: For the record, it does appear that this is companion legislation to the federal legislation. I have no problem with it. I do think it's ironic, however, that the Minister of Finance has paid a consultant to look at setting up our own separate income tax, but then comes in here to say at great lengths how important it is to harmonize our tax laws with the federal government so that we minimize bureaucracy and have one taxation regime at the federal and provincial levels. That irony aside, I have no problem with this bill.

HON. MR. COUVELIER: I am astounded at the member's last comment. There is no inconsistency here whatsoever. As long as we are using the federal system, obviously we have to provide enabling and assisting legislation in that respect. Indeed, we are required to do so.

I am pleased to move second reading of the bill.

Motion approved.

Bill 79, Income Tax Amendment Act (No. 2), 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 moved adjournment of the House.

Motion approved.

The House adjourned at 10:03 p.m.