[ Page 10053 ]

CONTENTS

Routine Proceedings

Tabling Documents –– 10053

Budget Measures Implementation Act, 1990 (Bill 19). Second reading.

(Hon. Mr. Couvelier)

Mr. Clark –– 10053

Hon. Mr. Couvelier –– 10053

Property Purchase Tax Amendment Act, 1990 (Bill 21). Second reading.

(Hon. Mr. Couvelier)

Hon. Mr. Couvelier –– 10053

Mr. Clark –– 10053

Hon. Mr. Couvelier –– 10054

Home Owner Grant Amendment Act, 1990 (Bill 14). Committee stage.

(Hon. Mr. Couvelier) –– 10054

Mr. Clark

Third reading

Income Tax Amendment Act, 1990 (Bill 15). Committee stage.

(Hon. Mr. Couvelier) –– 10056

Mr. Clark

Ms. Smallwood

Mr. Williams

Third reading

Personal Property Security Amendment Act, 1990 (Bill 26). Committee stage.

(Hon. Mr. Couvelier) –– 10058

Mr. Clark

Mr. Williams

Third reading

Fuel Tax Validation Act (Bill 30). Committee stage. (Hon. Mr. Couvelier) –– 10065

Mr. Clark

Third reading

Financial Institutions Statutes Amendment Act, 1990 (Bill 32). Committee stage.

(Hon. Mr. Couvelier) –– 10065

Mr. Clark

The House met at 10:02 a.m.

Prayers.

HON. MR. COUVELIER: This morning I'd like to introduce some visitors from a school in my constituency. We have a grade 11 class from Parkland Secondary School accompanied by their teacher, Mr. McKenzie, and some other chaperones. I would appreciate it if the large turnout in the House this morning extended best wishes to some members of my constituency.

Hon. Mr. Dirks tabled the annual report for the Ministry of Tourism and Provincial Secretary for the fiscal year 1988-89; the annual report of the Public Service Commission for 1989-90; and the 1989 British Columbia Lottery Corporation annual report.

Orders of the Day

HON. MR. RICHMOND: Mr. Speaker, I call adjourned debate on second reading of Bill 19.

BUDGET MEASURES

IMPLEMENTATION ACT, 1990

(continued)

MR. CLARK: Mr. Speaker, following your wise advice to the House yesterday, I won't speak at great length on a bill which apparently has no principles.

AN HON. MEMBER: Hear, hear!

MR. CLARK: Is the member clapping because the bill has no principles, or because I'll be brief?

I had intended to discuss the fact that this bill deals with the transfer of money from the BS fund and that the auditor-general said that the BS fund is not really a fund at all, since it doesn't have any money in it. I had intended to talk about the fact that Peat Marwick Thorne said that the fund was confusing and that the budget was really in deficit. I thought I might talk about the certified general accountants' remarks with respect to the smoke and mirrors and the BS fund. I thought maybe I would talk about this kind of shell game. But I think I can save all of that for committee stage. I assume we'll do that debate tomorrow.

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

HON. MR. COUVELIER: I'm delighted to see the hon. member concede the wisdom in Bill 19 and therefore fold the tent in terms of commentary. Clearly they've run out of words. The positive initiatives by this imaginative government have left them speechless. That shouldn't surprise those of us close to the issues. In any event, I'm pleased to call for second reading.

Motion approved.

Bill 19, Budget Measures Implementation Act, 1990, read a second time and ordered to be placed on orders of the day for second reading at the next sitting of the House after today.

HON. MR. RICHMOND: I call second reading of Bill 21.

PROPERTY PURCHASE TAX

AMENDMENT ACT, 1990

HON. MR. COUVELIER: The purpose of this bill is to enhance the high-ratio financing tax relief program for homebuyers in those areas of the province where house prices are very high.

By way of background, the property purchase tax relief program was introduced in the '89-90 budget to provide tax relief to homebuyers who require highratio financing to purchase homes valued at $150, 000 or less. That house price limit was originally established to ensure that homebuyers in all areas of the province, including the lower mainland, would be able to benefit from the program. The $150, 000 price limit remains generous for homebuyers in most areas of the province in spite of rising house prices over the past year. In the lower mainland, however, price increases have reduced the number of homes selling for $150, 000 or less. This has diminished the opportunity for many homebuyers in this area to receive the benefit.

In order to ensure that British Columbians in all areas of the province are able to benefit from this program, this bill increases the eligible house price limit from $150, 000 to $200, 000 for homebuyers in the Greater Vancouver, Central Fraser Valley and Dewdney-Alouette Regional Districts.

MR. CLARK: This is such a modest bill that I won't belabour the point. The property purchase tax, of course, is a rather large tax grab by the provincial government. It is extremely unpopular, I might say, with constituents and, no doubt, many Social Credit Party members. There is enormous pressure on the government to bring in some kind of tax relief. I guess this is a way of pretending to bring in tax relief so that there can be some kind of symbolic effort to appease those people, but I don't think it's going to work. I don't think it's going to help very many people.

Obviously I would have preferred closing the loophole that allows corporations to escape this tax. I would also have preferred some outright tax relief for first-time homebuyers across the board, perhaps limited to some modest cap so that million-dollar homes and first-time homebuyers from Toronto would still have to pay the tax.

Instead, we have a bill dealing only with this very modest amendment, chipping away at this. As I stated yesterday, we have a miscellaneous bill which deals with other amendments to the property purchase tax. Presumably this should have been in the

[ Page 10054 ]

same bill, but that might cloud the politics of the symbolic but very modest tax relief contained in this bill.

I may have some questions in committee stage with respect to details and who benefits.

HON. MR. COUVELIER: It's interesting to notice the comments of the member opposite that he didn't think the program was going to affect many people. We estimate that 5, 000 additional buyers will be beneficially treated by this bill. The hon. member, coming from a Vancouver riding, as I understand he does, surprises me. Those of us who will be conducting a campaign in the near or distant future -whatever the case may be - might well want to remember those remarks.

In any event, I move second reading.

Motion approved.

Bill 21, Property Purchase Tax Amendment Act, 1990, 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 committee on Bill 14.

HOME OWNER GRANT

AMENDMENT ACT, 1990

The House in committee on Bill 14; Mr. De Jong in the chair.

On section 1.

MR. CLARK: I wonder if the minister could just explain the significance of this amendment.

HON. MR. COUVELIER: Section 1 makes the homeowner grant inapplicable to referendum taxes It does this by changing the definition of "current year taxes" to exclude referendum taxes. This is being done because it was decided that homeowners who can vote in referenda should not be sheltered from the consequences of the decisions by the homeowner grant.

MR. CLARK: What about the costs of mounting the referendum? In Vancouver, as you know, we are looking at a bill of about $400, 000. Say the referendum failed, as many of them did. Does that come before or after the grant?

HON. MR. COUVELIER: The cost of referenda are borne by the school district involved.

MR. CLARK: So that means that the supplementary grant effectively subsidizes the cost of putting on a referendum. Is that correct?

HON. MR. COUVELIER: I'm advised, Mr. Chairman, that the referenda cost is part of their base budget.

MR. CLARK: And therefore that's passed on to the homeowner through taxes and the homeowner grant pays a portion of that, and the supplementary grant, which we'll get to in a minute, pays a portion of that.

HON. MR. COUVELIER: By my reference to the fact that it was Included in the base budget, the implication is that if a school district desires to go to referendum, they pay for that cost in their base budget. As the hon. member knows, we have a very generous school financing assistance formula in the province that is unique among Canadian provinces in that respect. The homeowner is very well protected to the extent that any government who desires to maintain a balanced budget syndrome can provide that security.

[10:15]

Section 1 approved.

On section 2.

MR. CLARK: The following four sections, I guess, are essentially the same - amendments to bring them all consequential. Does this deal with the centralization of the school tax collection, or does this only deal with the grant per se? Now that the school boards no longer have the power to tax, it seems to me that the school tax portion of property taxes is now levied by the province. Therefore the province could - for example, this year or next year - reduce the school tax on residential property owners by virtue of the fact that they're in charge of levying the tax. Instead, the province chose to levy the tax as it was last year and add on a homeowner grant to reduce the tax. Do you understand my logic?

The government now levies the residential school taxes. The government chose to levy them at a certain level and then come in with a grant on top of that to reduce the tax payable. It seems to me that the government is well within its power to have simply reduced school taxes, because it's now a provincial responsibility. Is that incorrect?

HON. MR. COUVELIER: These sections don't have anything to do with collection. The collection issues are covered under the School Act.

MR. CLARK: I guess the minister doesn't want to engage in that discussion. just for the record I might note my own view, which is that school taxes are now collected by the province. They are completely within the purview of the province. For every school tax dollar paid in British Columbia, the tax amount is levied by the province and not by the school board. The province could have simply reduced school taxes payable very easily. Instead, they chose to keep the school taxes at a certain level and bring in this bill to provide a supplementary homeowner grant. It seems

[ Page 10055 ]

to be good politics; I'm not sure it's good public policy.

The government has within its power the ability to have simply reduced school taxes payable in British Columbia. Instead, we have an artificially high school tax and then a rebate which has a differential effect around the province. There are 20 odd districts where people get no money and 10 other districts where people get less than $10 a year. Districts with the largest, wealthiest homes get the largest tax break.

The real question is of the triumph of politics over rationality. You are now in control of setting school taxes. It would seem much simpler to have reduced the school taxes instead of bringing in what is a rather cumbersome supplementary homeowner grant on top of an existing grant, which has all these rules and qualifications –– 25 percent, 50 percent of the variable.

Could the minister defend this approach to applying the supplementary homeowner grant rather than simply reducing the school taxes, given that it's completely now within the power of the provincial government? It has completely been centralized.

HON. MR. COUVELIER: If I understand the comments of the hon. member, he seems to be dealing with two issues here. First of all, this government's attitude in terms of dealing with institutions of the province has been that we firmly believe that local input and decision-making are important to maintaining the relevancy of decisions to the constituents they serve. As a consequence, we enter this philosophical debate as to whether school boards should continue to be popularly elected. Were we to take the approach that the member suggests - if I understand him properly - it would raise the issue as to whether he who pays the piper calls the tune; in other words, whether popularly elected school boards should continue to be the process that we follow, given that the province would be picking up the bulk of the cost. That's a philosophical discussion that is worthy of, and has traditionally been the subject of, debate annually in this chamber.

I can merely restate for the member's information that our government believes in local control and decision-making. Therefore we philosophically opt for school boards continuing to operate and to provide their school functions. Government assistance would be directed to the homeowner through the device of the homeowner grant.

We're dealing here with basic structures of society. If you ever needed an illustration of the opposition of views between the socialists and the democrats on this side of House, this debate crystallizes it. You see, we don't believe in strong, central decision-making, we don't believe in bureaucratic manipulation of the economy, and we don't believe that just because we're the elected representatives of the moment, we're the sum and substance of all wisdom. We happen to think that local decision-making is preferable, and we happen to think it's important to maintain the integrity of that position.

We'd rather deal with the school financing issue through a grant to homeowners to help relieve them of the burden of school costs than by raising the spectre that we should somehow be taking more power into the central government's hands. I realize that the socialists opposite would have some trouble with that philosophical attitude. It's just a fact of life, I suppose, that centralist, bureaucratic decision-making, dominated by a select group of elitists who happen to think that they and only they understand what people want, is clearly not supported around the world. We see more and more evidence of that.

We're very comfortable on this side of the House in supporting the ethic that we provide assistance with the cost of education to homeowners through a device such as the homeowner grant and, this year, through the creation of something new called the supplementary homeowner grant. We support it passionately. We believe that it is the most sensitive way to maintain local influence over decision-making that affects school operations. It is something that we on this side of the House have considered at some length. We reaffirm our belief in that principle.

MR. CLARK: Just to get it straight, Mr. Chairman, the government says that they believe in local decision-making and don't believe in central control. The fact is that this administration has completely centralized control over school taxes. They're the ones who have taken that power away from school boards and who have taken complete control of school board budgets. More importantly, they're the ones who have taken control of the taxing authority. Social Credit has removed local autonomy to raise taxes -just so we've got it right.

Now that the government has complete control over levying school taxes - they control them and set the rates - they could have reduced school tax rates; but they didn't. They kept the rates at a certain level and decided to give money to homeowners because it's an election year, I suspect.

Maybe we could ask a specific question: could the minister inform the House how many households in British Columbia will not receive a penny in supplementary homeowner grants?

HON. MR. COUVELIER: I think the member knows that 775, 000 households will receive the homeowner grant in 1990 –– 1 believe that those figures are a matter of public record and that they have been distributed. The supplementary homeowner grant will benefit over half a million B.C. homeowners. I believe there are probably 1.2 million residential property owners in the province. The government has debated and considered seriously how school taxes could have been -and should have been -handled this year. We decided that second homes and summer residences - that kind of situation - should pay the full costs and should not be eligible for reductions in school taxes. We see the homeowner grant as a legitimate device to lighten the taxation burden of citizens whose primary residence is faced with rising costs. We don't see the function of

[ Page 10056 ]

government as providing assistance for second dwellings, summer residences and that kind of thing. They are not included and are not receiving benefits under this proposal.

MR. CLARK: About 300, 000 British Columbians who own homes and get the homeowner grant will not receive the supplementary homeowner grant. That's clear.

I wonder if the minister could give us some indication as to distribution of the homeowner grant in aggregate. In other words, in total amount of cash paid by the province per school district, who will receive the most benefit? I guess one could say: "West Vancouver." Maybe the minister could give us the four or five districts that receive the largest benefit from this homeowner grant?

HON. MR. COUVELIER: I can appreciate that the hon. member, for political reasons, might like to know the riding distribution of the sums. But I can tell you that this government doesn't approach things with that narrow, partisan point of view, so we don't have that information readily at hand.

However, if you perceive it to be of genuine interest, we'd be happy to dedicate some staff to dig It out. But I have no idea what relevancy that is to the issue here.

MR. CLARK: Mr. Chairman, I won't belabour the point. It's obvious that this supplementary homeowner grant benefits some people and doesn't benefit others. Therefore, as a matter of public policy, it's worth noting who gets no extra money, who gets $10 and who gets $1, 000. 1 think that's a matter that reflects an ideological bias on the part of the government. In some ways it reflects a moral judgment, and I think it would be useful to know exactly the beneficiaries of any public tax dollars.

That's simply the question I was trying to get at. I can't believe the Treasury Board would not know, before a bill is brought into the House, who stands to benefit from it. I'd certainly be surprised if this administration didn't know who stands to benefit by it and, in fact, whether that wasn't part of the calculations to arriving at how big the grant was, where it would impact the most and what the level was.

Sections 2 to 10 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. Pelton in the chair.

Bill 14, Home Owner Grant Amendment Act, 1990, reported complete without amendment, read a third time and passed.

[10:30]

HON. MR. RICHMOND: Mr. Speaker, I call committee on Bill 15.

INCOME TAX AMENDMENT ACT, 1990

The House in committee on Bill 15; Mr. De Jong in the chair.

On section 1.

MR. CLARK: This bill has one section, so that's convenient. Obviously any tax relief is desirable, and this is particularly directed to renters. Unfortunately, in the absence of any kind of rent review process, it ends up being a landlord's tax credit instead of a renter's tax credit. That seems to be the nub of the matter; without any kind of check on landlords, this money flows through to some extent. That's the danger.

Of course, it's a danger in terms of fiscal responsibility, because if you are fiscally responsible, you want to make sure the money you are spending.... This could be an enormous amount if it were indexed over time from where it was in the seventies. It would be a rather large government expenditure. In the absence, again, of any check on the landlord, that expenditure could be for naught. At least, it could be of benefit to the wrong people or those who it is not intended to benefit. I think that is the main problem we have with respect to this kind of tax credit.

It's certainly a good idea. Last year virtually no one received it, or it was very modest; this year it's still modest, but a few more people will receive it. Again, we're concerned about that simply flowing through to the landlord. I wonder if the minister could give us the numbers: how many renters received the renter's tax credit last year, and how many are expected to see the renter's tax credit next year as a result of these amendments?

HON. MR. COUVELIER: The total numbers won't be available, of course, until income tax returns are filed and receipted back from Revenue Canada. When we introduced the initiative last year, we anticipated 80, 000 British Columbians would benefit. We anticipate a further 40, 000 will benefit under this year's generous enhancement.

MS. SMALLWOOD: I'd like to ask a further question about who is taking advantage of this tax credit. Do you have a breakdown of the income group or the cost of rental accommodation to those benefiting from this?

HON. MR. COUVELIER: As I just explained, Mr. Chairman, we won't have the details of the take-up until Revenue Canada transfers that information to us. As the member knows, if she's read the bill, this is

[ Page 10057 ]

targeted to the low-income end of our economic sector - it's clearly focused on that group.

MS. SMALLWOOD: I appreciate that the information with regard to this specific bill is not available. But surely you have some predictions and some statistics flowing from previous years' renters' tax that caused you to target this group, and some expectations about what sort of relief it will bring and who it will bring relief to.

HON. MR. COUVELIER: I guess the hon. member must have arrived late. I thought I'd answered that question - the first question put to me. I'll say it again. We anticipated, when we introduced the legislation, that 80, 000 low-income British Columbians would be beneficiaries. With this enhancement this year, we anticipate an additional 40, 000 beneficiaries. We will not have the exact numbers until the information is transmitted back to us by Revenue Canada, who maintain the income tax records. We don't maintain them, hon. member. So the federal government will have to transmit that information. They are unable to do that until the end of the taxation year, at which time they capture all of that information and then make it available to us.

Our estimates come to us from a variety of sources - basically from the Ministry of Social Services, I suspect, who would have some raw data in terms of income groups residing in the province. Our estimates are just those -estimates. But when we put these programs together, we do our very best to target them to the area that we want to provide some relief for, and in this case it's our judgment that this year's amendments will benefit 120, 000 low-income British Columbians.

MS. SMALLWOOD: I certainly appreciate the minister's patience, but perhaps, if the minister would listen a little closer, he would not have to draw on such a well of patience.

The specific question was to do with income groups and specific numbers and targets, not this broad sort of answer that it will increase by 40, 000. 1 want to know who is going to benefit and what your target is for rental catchment. I'm afraid you're not providing enough information to know what kind of.... What is your target? And what's your measure of success? When you say that you suppose the information or the statistics will come from the Ministry of Social Services, are you then talking specifically of GAIN clients? If so, perhaps you can indicate to us how you expect a renter's tax credit to benefit someone who is on GAIN and suffering from the rental market we're now experiencing in the lower mainland. The minister assures us he's done some work, but he's not too specific on information to indicate that there is a target group and to indicate how many will be benefiting and how much benefit they will get.

HON. MR. COUVELIER: I'm quite confident that were we to dedicate staff time to go back, calculate and beef up the assumptions, the hon. members opposite would complain it wasn't enough. I am at a bit of a loss to understand what possible merit there is in dedicating staff time to that exercise.

The issue is, quite simply: does the government intend to provide relief to renters who are in the low-income spectrum? This bill last year and the amendment this year clearly say this government does. It intends to, and we calculate that these changes will affect 120, 000 British Columbians this year.

We can go back if the member likes, because after all I am a servant of this House, even though I hate to waste staff time on irrelevancies. Nevertheless, if it would satisfy the member's idle curiosity, I am happy to have some staff member go back and spend a day or two developing tables, graphs, charts and statistics.

I am quite comfortable that once all that is done, bearing in mind they are only estimates and we have no idea of certainty until we see the take-up rate.... The issue here is the take-up rate, hon. member, and so our estimates have to include not only an assessment of data regarding income groups that we get from other ministries of government, but also an estimate of take-up rate - how many of those people will actually avail themselves of this opportunity. As you members should know, it's never 100 percent.

So there are a variety of assumptions here, and for the life of me I can't imagine the merit in spending a lot of staff time developing facts, charts and statistics merely to justify assumptions. Surely far more meaningful work for our public servants would be to continue to put their creative ingenuity to designing programs that will assist British Columbians, rather than spending a lot of time extrapolating assumptions.

MS. SMALLWOOD: An interesting exercise. I find it a little perplexing that this is the second bill before the House in the last five to ten minutes where there have been questions asked and the minister has indicated it is beyond his comprehension that we would indeed ask those questions. They are pretty basic questions about the predicted effectiveness of this legislation.

The minister would have us believe that he has just plucked it out of the sky without any predictions or any target group, or indeed any of those graphs being prepared in advance to explain the purpose of and the objectives sought by this legislation.

I am somewhat concerned that either the minister has the information, has seen it himself and chooses not to provide it to the House, or that it's a matter of the minister not understanding or not having seen it and not asking those questions himself of the staff. Either way, it's not satisfactory.

I think this is an issue of having some confidence that the government's legislation and initiatives are targeted at the right groups and will provide the relief the government says that it is meant to.

It's very difficult for me, given the reality in the lower mainland with the renters' market, to feel that

[ Page 10058 ]

this is a good use of taxpayers' money if indeed, as the government says, it is the objective of the government to provide some relief to renters. I'm afraid there have been no answers forthcoming that particularly instill any confidence.

MR. WILLIAMS: It would be interesting, though, to hear the minister with respect to the question of where the benefit ends up. The other member for Vancouver East (Mr. Clark) has argued, as has the member for Surrey-Guildford, that a great amount of this ends up in the landlord's pocket, and I think that's the case. Has there been any analysis?

It looks like you could be moving into something like $20 million or $24 million in terms of benefits this coming year, and if you think of the problem in terms of supply - that rents are going up because of the limited supply and increased demand - it begs the question about whether the $24 million would be better applied in terms of increasing supply.

If you are talking about 25, 30 or 50 percent equity in some subsidized housing or rental accommodation, we could be talking about leveraging here to the point of $100 million in terms of increasing housing supply.

The question is: have your analysts looked at those fundamental questions in terms of more positive solutions to the housing problem and seen this money, rather than flowing into landlords' hands, instead generating new housing which would deal with the fundamental problem? It seems to me that kind of analysis would be interesting and would suggest redirection of funds.

HON. MR. COUVELIER: I can see that the hon first member for Vancouver East can speak with peculiar knowledge about landlords and how much money sticks to their hands - he being one of them, as I understand it.

Nevertheless, this program, as the member should note, varies depending on not only the income level but also the number of people in the family involved, so it need not necessarily follow that the money flows into the landlord's hand.

Here again, philosophically this government believes that you put the assistance money that you're going to provide into the hands of the purchaser of the service. We believe that in order to maintain the flexibilities and options that are available to people, you provide the assistance to those individuals rather than any direct payment to landlords or providers of accommodation.

We see that philosophical attitude extended to most of our programs. We have the same attitude to day care, for example, where we want to provide the assistance to the purchaser of the service as opposed to the provider of the service. Here again, it's a very basic philosophical difference of view between socialists and democrats. It's sort of a traditional debate that we have in this House. It seems to happen every year, and the issue is very basic.

[10:45]

The assumption that this assistance flows through to the landlords' pockets is kind of a specious argument. Obviously it's the landlord who owns the accommodation and who then receives the rent cheques. This assistance is targeted to provide relief to the purchaser of the service as opposed to the provider. That's a philosophical position that this side of the House believes in very fervently.

MS. SMALLWOOD: Let me ask the minister a very basic question that I'm sure he will be more than happy to provide an answer for. The minister says that he philosophically believes that the relief should go to the purchaser of the service. I don't particularly have a problem with that. Given 65 percent rent increases, perhaps the minister could explain how the promise of a tax rebate a year from now is going to help the tenants who will be giving up their homes at the end of this month, if the objective of this particular legislation is to help provide some relief to the purchasers of that service?

MR. CHAIRMAN: Shall section 1 pass?

MS. SMALLWOOD: I'm disappointed. The minister just gave us an eloquent rendition of what his philosophical stance was and the difference between your party and mine. I'm disappointed and quite astounded that you don't have an answer for that. You haven't had very many answers today, have you?

Section 1 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 15, Income Tax Amendment Act, 1990, reported complete without amendment, read a third time and passed.

HON. MR. RICHMOND: Committee on Bill 26, Mr. Speaker.

PERSONAL PROPERTY SECURITY

AMENDMENT ACT, 1990

The House in committee on Bill 26; Mr. De Jong in the chair.

On section 1.

MR. CLARK: I know the House won't be thrilled with this, but this Is a very large bill which is of some significance. We did debate the original bill at some length last year, and we have before us rather major amendments. So while nothing extraordinary jumps

[ Page 10059 ]

out at me in terms of concern at this point, I would like to take some time to canvass with the minister the major sections of the bill. With that, I'd ask the minister to explain the purpose of the section 1 amendments.

HON. MR. COUVELIER: Section 1 relates basically to an amendment which would allow statements to be filed electronically through remote entry. It also contains some minor drafting corrections.

We can deal with them by subsection if the member wishes. I'm not quite sure to what extent he'd like detail.

I have the benefit of having Mr. Dan Perrin with me in the House this morning. Mr. Perrin is the public servant we should be indebted to for the thoroughness and the comprehensiveness of this PPSA. As the member knows, it's landmark and one that is perceived in other jurisdictions across Canada as being of great value.

If the member could be more specific, I'd be happy to oblige.

MR. CLARK: I'm interested in the minister's comments with respect to statements being filed electronically, which I think is unique to British Columbia. Given that we are advancing a relatively complex area in financial statements and the like, I just wonder if the minister could explain how that is envisioned to work. Maybe the minister could, at the outset, inform the House whether it is unique to British Columbia or whether other jurisdictions have this electronic capacity to file financial statements.

HON. MR. COUVELIER: The member is correct that the legislation is unique to British Columbia -the electronic accessing.

There are code words in use. There is an editing procedure built into the system that further has the effect of bringing some discipline to it.

The explosion of utilization of electronic communication is something that's well known to all of us in the House. This initiative is seen by other jurisdictions as inevitable, highly desirable and in the public interest. The member is correct: B.C. is leading the way.

MR. CLARK: Is it true that this is the only jurisdiction in North America that will have this kind of electronic access to financial information?

HON. MR. COUVELIER: We don't know with certainty what the situation is regarding electronic communication. Personal property security acts are in place in many other jurisdictions, but this aspect of it is unique to B.C. We don't know with any certainty whether there are similar initiatives in, say, the American jurisdictions.

MR. CLARK: Far be it from me to criticize pioneering work in this area, but I must say it gives me some pause for concern, as I'm sure you appreciate, and some pause for discussion as we go through the bill. If this is the first jurisdiction in Canada, then it behooves us at least to discuss it to see whether there isn't some concern.

We see a 38-page amendment to a bill that was brought in last year. We are now introducing a brand-new element not in existence anywhere else. It's certainly possible we'll see another massive amendment after the thing starts to gear through. That's not necessarily bad, but it's something we have to be careful of.

I don't want to sound out of date, but electronic access to financial information gives me some concern about security. I would like to canvass that as we go through the bill.

Section 1 approved.

MR. CHAIRMAN: Before we go into the further sections, is there any disagreement in dealing with the sections from, let's say, 2 to 10 and then ten each time?

There seems to be agreement, so that's the way we'll do it.

On sections 2 to 10.

MR. CLARK: I don't have any objection, although I'm going to go through it section by section. If you want to take the vote at the end, that's fine.

With respect to section 2, Mr. Chairman, the explanatory notes deal with the government and members of an association being deemed to have knowledge of an event. It appears to be a toughening or strengthening of the existing act. I wonder if the minister could just explain the reason it was deemed necessary to bring in this type of change.

HON. MR. COUVELIER: Section 1 (2) deals with when a government as a whole can be reasonably considered to know a fact. The act will apply to various levels of government in their capacity as lenders. A new subsection is needed to ensure that the PPSA will not deem the government to know a fact unless a responsible official is made aware of the information.

Section 1 (2) amends section 1 (2) (d) of the PPSA to make it consistent with paragraphs (a) to (c). It also adds a new subsection defining when a government can know a fact. I think that's the issue the member was wanting clarification on.

MR. CLARK: So I was completely wrong, Mr. Chairman, and I apologize to the House. This is not strengthening the provisions; this is weakening the provisions of the PPSA. This says that government knowledge is now not deemed to be a fact unless a responsible official is made aware of that fact. That seems to potentially weaken the case against government negligence. For example, if the government is the lender and it appears that the government should know a fact but is not actually made aware of that fact, this amendment may weaken the powers of the

[ Page 10060 ]

debtor in that case. Is that a fair characterization of this amendment?

HON. MR. COUVELIER: Mr. Chairman, clearly a debtor would have to give notice to someone. This amendment merely ensures that that notice goes to someone with the ability to deal with the information rather than an entirely different department of government, where the information would be lost and have no relevancy.

[11:00]

MR. CLARK: With respect to section 3 of the bill, I wonder if the minister could explain the need to add the ability of professionals to assign accounts receivable as collateral for a loan.

HON. MR. COUVELIER: This amendment is a new section 3, which really deals with the old section 4. That section lists the interests that are excluded from the act. Section 4 (d) prevents individuals from using future wages as collateral. In general, this is a valid restriction, but it inadvertently prevents professionals like lawyers and accountants from borrowing based on their business.

MR. CLARK: I certainly wouldn't want to incur the wrath of the legal profession in British Columbia although I've been known to do that from time to time.

With respect to section 3 (b), it removes mineral claims and placer claims from a provision that applies only to land. Does that mean that if land is used as collateral, mineral claims and placer claims are treated differently from land? Is that what this does?

HON. MR. COUVELIER: That section attempts to exclude the use of mineral claims as collateral from the act. It's not effective, because it is based on the assumption that mineral claims are land, whereas they are really personal property.

MR. CLARK: I am sorry. Mineral claims and placer claims are not to be viewed as similar to land but rather are to be viewed as personal property. Is that the case?

HON. MR. COUVELIER: That's how the law works, so I'm advised, Mr. Chairman.

MR. CLARK: I wonder how a mineral claim is viewed as personal property. I don't want to get too philosophical about it, but it seems to me the Crown owns mineral rights in British Columbia, and a mineral claim is an individual claim on those rights The Crown's interest in a mineral property is not fettered in any way by that claim, is it? It seems to me that using a mineral claim as collateral on a loan -which I guess is contemplated in other sections of the bill - is an interesting proposition, given that it's the Crown's mineral rights that seem to be fettered by that ability. Is that an unfair characterization?

HON. MR. COUVELIER: Mr. Chairman, the PPSA excludes mineral claims from the taking of security~ The issue in law is that a mineral claim is a right to utilize some aspects of the properties of the land but does not affect the land itself.

MR. CLARK: With respect to section 4, Mr. Speaker, I wonder if the minister could just explain the intent of the new section 20 of the act.

HON. MR. COUVELIER: The current section 20 may be interpreted as allowing one creditor to defeat an unregistered lender, if any other creditor has taken legal action under the Creditor Assistance Act. The intention is that only those creditors who have taken legal action should get priority. So this section amends section 20, by adding new subparagraphs for the purpose of making clear when a creditor must take legal action in order to defeat an unregistered lender. The creditor must take legal action before the lender registers, in order to get priority over the lender.

MR. CLARK: Why would only creditors who take legal action take precedence over creditors who don't take legal action?

HON. MR. COUVELIER: I have a little bit of difficulty understanding the question, in the sense that registering is how the claim is officially recognized, and that the act of registering, then, does have the effect of placing that person with a recognized claim. Failure to register would have the effect of putting the account in the normal rating of priorities. I don't know what more I can add.

MR. CLARK: Is the primary purpose, then, of this section really to establish a kind of order in the way in which these are dealt with, and to try and ensure that all creditors register and claim so that they can be dealt with at once? Or is it some attempt to create a prioritization of various creditors?

HON. MR. COUVELIER: This amendment, Mr. Chairman, doesn't change the order in which claims are recognized, but it does apparently clear up a potential misinterpretation. But there are no substantial changes to the priority ranking by this amendment.

MR. CLARK: We'll move on, Mr. Speaker, to section 6 of the bill, which amends section 29 (4) of the PPSA. It's kind of a notwithstanding clause, which is interesting. I wonder if the minister could clarify why we would introduce a section which allows repossession perfecting a security interest notwithstanding a previous section of the bill. It's a bit unusual in a bill of any kind.

HON. MR. COUVELIER: The old section 240) of the PPSA usually prevents perfection by repossession to prevent repossession being abused. Section 29 (4) is an exception to that rule, in certain reasonable cir-

[ Page 10061 ]

cumstances. However, the exception may not work without an explicit reference back to section 240). So this section 6 amends section 29 (4), by adding the phrase "notwithstanding section 240) " and by making specific reference to repossession. The amendment clarifies that repossession may perfect the security interest of some lenders in returned goods. Lenders whose interests can be perfected by repossession are account financiers and chattel paper holders. These types of lenders provide financing to retail sellers.

[Mr. Pelton in the chair.]

MR. CLARK: Section 9 of the bill makes what appears to be a housekeeping amendment, but it also clarifies the reference to goods described by serial number. Goods described by serial number are now defined in the regulations as serial-numbered goods - one of those great tautological arguments.

I wonder if the minister could just clarify that for me. It seems a circular argument.

HON. MR. COUVELIER:- This amendment is deemed preferred because almost all goods can be described by a serial number. The intention was to limit the application of this provision to a narrow group of goods which must be described by serial number; for example, cars.

MR. CLARK: I am interested in the purpose of section 10 (b). The explanatory note deals with the value of the fixture if it were removed from the land rather than the value that the fixture adds to the land, It could be quite a significant amendment, frankly, because adding value to the land at that site may be more than if you remove a fixture from a site. I wonder about the purpose of what could be a significant amendment in certain circumstances.

HON. MR. COUVELIER: What we're trying to deal with here is the need to prevent a creditor from acquiring a fixture as an unexpected windfall. A creditor can claim the fixture only if he files after the fixture is placed on the land but before the lender registers his security interest.

Sections 2 to 10 inclusive approved.

On sections 11 to 20.

MR. CLARK: I wonder if the minister could just explain section 13, which provides that knowledge of an assignment of intangibles or of chattel paper rather than the notice of the assignment is the event that prevents accrual of account debit defences in which the assignee is subject. In other words, it's not the notice of the assignment but the knowledge of the assignment which triggers the event. I wonder why that was deemed necessary.

HON. MR. COUVELIER: The issue really is basically housekeeping. The phrase "has knowledge" is used throughout the act. The practical effect of the two phrases is intended to be the same. What we've done here is tried to be consistent.

MR. CLARK: Section 16 is the specific reference to the paperless, electronic registration. This deals with serial-numbered goods. I wonder if the minister could explain. Maybe it's an assumption on my part that this means you type the serial number into the computer, and that's required with reference to specific regulations that deal with the serial number. Is that fair?

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

MR. CLARK: Could the minister explain the need for section 18 amendments?

HON. MR. COUVELIER: This section is required because we want to require the lender to state in the financing statement what is original collateral and what are proceeds. Without these amendments a lender could claim that any description of collateral in the financing statement refers to possible proceeds.

[11:15]

MR. CLARK: That seems fairly straightforward.

Section 20 strikes me as a very important amendment, given the paperless, electronic transactions described in the act. It removes Crown liability for computer errors or information entered into the computer directly by a member of the public. Any information entered into the computer by anybody other than a member of the public.... Clearly the government is liable for any action taken as a result of errors made by government with respect to computer entry.

HON. MR. COUVELIER: As the member noted, it does refer to an earlier discussion we had on this bill. But the feeling is that government shouldn't be responsible for capricious errors generated out of the computer system. They are very unlikely.

To add to the record, Mr. Chairman, we are advised that both Alberta and Ontario are aware of our initiative here regarding electronic registration. It's expected that they will be following our lead in short order.

Sections 11 to 20 inclusive approved.

On sections 21 to 33.

MR. CLARK: Section 21 amends section 55 (5). 1 wonder what the purpose is. Is it simply a definitional change?

HON. MR. COUVELIER: It's basically housekeeping. There's nothing different here.

MR. CLARK: Section 22 seems to be a more significant amendment. Perhaps the minister could explain it.

[ Page 10062 ]

HON. MR. COUVELIER: This section adds a new subsection that explicitly permits a lender to seize money which the debtor has posted as collateral if the debtor defaults. The lender may use this money to extinguish the debt.

Section 22 (b) adds a new subsection, and this one clarifies that the lender's collection expenses may be deducted from money which the debtor has posted as collateral.

MR. CLARK: Sections 24 and 25 both deal with deleting a reference to serial number registration being required. Maybe the minister could explain that. I thought we were moving in the other direction with the bill.

HON. MR. COUVELIER: Section 24 deals with the issue of how and when a lender is able to dispose of collateral which has been repossessed or seized after the borrower has defaulted. There are some circumstances where the lender Is able to dispose of the collateral without informing the borrower. There were some additional circumstances which should be added, and some drafting corrections were made.

Section 24 (a) amends the bill to accurately describe goods which must be described using the serial number. The regulations to the act will provide a list of serial-numbered goods.

Section 24 (b) clarifies that a creditor who wants notice of a sale of repossessed collateral must ask for that notice before other notices are sent out; otherwise, the person selling the collateral could never be certain when the collateral could be sold.

MR. CLARK: I wonder if I could get this right. The deletion of reference to serial numbers in sections 24 and 25 deals with the specific reference to serial numbers in these previous sections of the PPSA. A list of serial-numbered goods is now done by regulation, and that's the only reference to serial numbers in the bill?

Previously sections 59 and 60 specifically mentioned serial-numbered registration being required The deletion of that does not have the effect of not requiring serial-numbered registration; it's now required by way of regulation. Is that correct?

HON. MR. COUVELIER: We're now dealing with section 25, 1 take it, and that section does use the phrase "serial-numbered" goods. Is that what the member is referring to?

MR. CLARK: Is it correct that it's essentially done by way of regulation rather than specifically referred to in these two clauses?

HON. MR. COUVELIER: Yes.

Sections 21 to 33 inclusive approved.

On section 34.

MR. CLARK: I'm Interested in section 34, which amends section 78. 1 wonder if the minister could explain the significance of that amendment, seeing that it deals with the Homeowner Interest Assistance Act?

HON. MR. COUVELIER: This section provides a three-year transition period for agreements which exist before the act comes into force by deeming the agreements to have been registered for up to three years. There are some drafting corrections, and it's also unclear which registration takes precedence when there is an incorrect registration under the PPSA but the previous registration is valid. Lastly, it was unclear whether re-registration under the PPSA affects the priority of an existing registration.

This amendment adds the Homeowner Interest Assistance Act to the definition of prior registration law. It deals with a previous oversight and ensures that security agreements registered under that act remain valid. This section also amends subsection 78 (2) of the PPSA to ensure that the existing filing at the land title office is also considered a filing under the relevant sections of the PPSA.

MR. CLARK: I'm interested in these no-change amendments. It strikes me as odd, to say the least.... Not be to critical of staff, but we have a rather large number of amendments in an amending bill, and the explanatory note lists no change. Perhaps the minister could explain that, since last year we passed what would appear to be the very same amendments.

HON. MR. COUVELIER: There are many ways to skin the cat, as they say in the trade. It was on the advice of the drafters that, for ease of search, consequential amendments be located in one place. You could call it either way, I suppose.

Sections 34 to 56 inclusive approved.

On section 57.

MR. CLARK: I wonder if the minister could explain the change in priority status under the Employment Standards Act.

HON. MR. COUVELIER: Section 15 (2) of the Employment Standards Act gives claims for wages priority over most other claims. Because the language of this section is based on pre-PPSA law, it is not consistent with the PPSA and had to be changed to ensure that it was still effective. The original consequential amendment would have required administrative changes by those administering the act and might have reduced the priority given to wage claims.

This amendment follows more closely the original wording and ensures wages have the highest priority that can possibly be assigned by provincial law. The impact will be that there is no change to the way the Employment Standards Act works or to the priority of employees' wage claims against employers.

[ Page 10063 ]

MR. CLARK: I'm disappointed there is no change to the Employment Standards Act. I might discuss that in other estimates. But it seems to me that wages are not accorded the priority that is contemplated by the legislation for a variety of reasons - mostly federal bankruptcy law.

I think there are ways in which wages could be moved up by having them seen as a deemed trust account, but I'll deal with that perhaps in the Ministry of Labour estimates. I was hopeful that this might do that. I suppose it at least keeps the status quo, which was a slight improvement over previous 1980 amendments.

I'm glad the PPSA doesn't have an adverse effect on wages. I think that anybody who has been through the recession in British Columbia knows that wages are not accorded much status at all in any bankruptcy hearing in British Columbia.

I think the Workers' Compensation Board, for example, is ahead of wages. This keeps that, I assume. They do that by way of a deemed trust with the province. There are other creditors which take precedence over wages. In any event, I don't expect this bill to deal with that, although it probably could have by way of the PPSA.

While I'm on my feet, I would ask the minister to deal with section 59 and the amendments to the Family Relations Act. Are these consequential amendments? They seem to be slightly more than that. Perhaps the minister could explain that.

HON. MR. COUVELIER: Section 49 of the Family Relations Act currently allows a spouse to file a separation agreement at the mobile-home registry Once filed, the separation agreement prevents the mobile home from being sold or mortgaged. After the PPSA is proclaimed, all mortgages and other security interests in mobile homes will be registered at the personal property registry.

This section is amended to allow discharges of separation agreements to be filed at the personal property registry as well as at the mobile-home registry. There's no change to the original consequential amendment.

Sections 57 to 60 inclusive approved.

On sections 61 to 70.

MR. WILLIAMS: Maybe the minister could elaborate a little bit on this section, particularly with respect to "it is not a disposition of an agreement or licence." But is it, in fact, a clouding of the title?

HON. MR. COUVELIER: Mr. Chairman, could we have the section?

MR. WILLIAMS: It's section 62 of the Forest Act The point is made that the Personal Property Security Act is not a disposition of an agreement or licence, which is the prerogative of the Minister of Forests Insofar as these might be used with respect to security, I'd like some clarification in terms of the impact on title. In effect, is this a clouding of the Crown's interest or the licensee's interest?

HON. MR. COUVELIER: Mr. Chairman, I am advised that this is merely a renumbering. There's no change here from the original PPSA.

[11:30]

MR. WILLIAMS: The question is still in my mind, Mr. Chairman. I didn't know the answer on yesterday's bill, and I don't know the answer on today's bill, so I'm asking in both cases.

The question again is about the impact in terms of clouding the Crown's control or ultimate ownership of a forest licence. If they're used as instruments in terms of security, with respect to borrowing, is the Crown's interest impacted as a result? It's not entirely clear to me how much the licences can be clouded, in terms of security, with respect to lending.

HON. MR. COUVELIER: Mr. Chairman, the answer is that there is no change. The answer to the question is no, if I understand the question properly. It's just that the phrase "security interest in a licence" happens to be more compatible with other wording in the PPSA. But it's not intended to alter any of the traditional relationships at all.

MR. CLARK: Let me try, Mr. Chairman. As I understand it, the PPSA, passed last year, has a provision unique to British Columbia which, if I recall correctly, says that forest licences can be used as security for a loan in British Columbia. That is, in legislation now - passed last year - is an amendment which clarifies that in some way. It may not change it, but it is unique to the bill. With respect to the discussion we had just a few minutes ago about mineral and placer claims, which the minister has stated are not allowed to be used as collateral, I wonder whether there is a distinction made between mineral claims and forest licences, which are essentially the same thing. That is the right to harvest Crown timber or mine Crown resources.

HON. MR. COUVELIER: I wonder if we don't have a basic disagreement on the facts. I'm advised that forest licences could be used as security for a loan prior to the legislation. I don't believe that this PPSA alters any of that traditional situation.

Section 50 of the Forest Act allowed forest licences to be used as collateral prior to the introduction of the PPSA - so I'm told.

MR. CLARK: While we're perusing that, perhaps the minister through his staff can clarify the matter. I recall in the debates last year - my memory could be incorrect - and in the briefing with ministry staff that this was a unique provision in British Columbia which enhanced the ability of a forest licence holder to use the forest licence as collateral. In fact, while some banks may have accepted it as collateral, there was no standing with respect to that. I may be in error, but I'm sure I recall the staff informing me that

[ Page 10064 ]

this unique provision in British Columbia had some effect and wasn't simply a reiteration of the existing facts.

HON. MR. COUVELIER: Mr. Chairman, just so I don't mislead the hon. member, it's section 50.

MR. CLARK: In the PPSA, forest licences were recognized as security for a loan. That is a unique provision for British Columbia. Can the minister tell the House whether that did anything or was simply codifying in a new bill - the PPSA - something that already existed in other legislation? I recall the staff or the minister stating at the time that this new section did something: it either enhanced the licence holder's ability to borrow money or had some practical effect. It wasn't simply a reiteration of existing law. I wonder if the minister could explain the original effect of that section.

HON. MR. COUVELIER: I'm advised that that freedom was in place before; this amendment is intended to clarify the issue. But in terms of practice, it's our understanding that the practice had been longstanding.

MR. CLARK: It's my understanding that in the past it was without authority of statute. Forest companies that borrow money from the bank certainly use their forest licences to convince the bank to lend them the money. I've no doubt of that. It seems to me that that was the first legislative approval of that fact, That may be incorrect, but it is my recollection of last year.

I wonder, though, if the minister could explain to me the difference between mineral claims and forest licences -if there is a difference. From what I detected earlier, the minister said that mineral claims are not allowed to be used to secure a loan and forest licences are. Is that correct, first of all? If it is, why is that the case?

HON. MR. COUVELIER: The rationale is that the mineral claims have their own registry system. Therefore it's perceived that they have an easier form of Identification and monitoring than the PPSA.

MR. CLARK: With respect to sections 65 and 66 of the amending act, which establishes a certain Crown priority, I wonder if the minister could explain the necessity of those two sections for amending other acts.

HON. MR. COUVELIER: Sections 65 and 66 deal with the Hotel Room Tax Act problems. The issue was that the Hotel Room Tax Act creates tax liens for the amount of taxes collected pursuant to that act.

Section 16 also sets out what protection these liens have and the duty certain parties have to ensure that the liens are paid. An unintentional effect of the PPSA is that protection set out in section 16 is no longer effective. It also creates a new class of person - a secured party - that is not currently required by section 16 to protect the tax lien by obtaining a clearance certificate from the Crown before paying out the assets of the taxpayer.

So in section 65 (a) we've repealed the sections of the Hotel Room Tax Act which used to protect Crown tax liens. The protection afforded by these sections will no longer be effective after PPSA is introduced, and they'll be replaced by new protections that are set out in later sections here.

Sections 61 to 70 inclusive approved.

On sections 71 to 80.

MR. CLARK: Mr. Chairman, with your indulgence, there are a number of sections in this group of ten and in the next group of ten that amend the Mobile Home Act. Maybe the minister could give me some indication as to why the rather extensive changes to the Mobile Home Act are required in these amendments. I recall PPSA last year making major changes to the Mobile Home Act. So here we have again pages and pages of changes. Perhaps the minister could just inform the House, in a general way, what those changes do.

HON. MR. COUVELIER: The Mobile Home Act had its own provisions for registering, so the PPSA will now take over that authority.

MR. CLARK: Didn't you do that last year?

HON. MR. COUVELIER: In the PPSA, do you mean?

MR. CLARK: Yes.

HON. MR. COUVELIER: Yes, and it's still here.

MR. CLARK: These were missed.

HON. MR. COUVELIER: I'm advised that most of them have no change. It's basically a question of renumbering.

MR. CLARK: I don't want to belabour the point, because I certainly see that most of them have no change. It's extraordinary that we would pass a 150-page bill last year, which dealt very seriously with the Mobile Home Act, and then have pages and pages here with respect to amending the Mobile Home Act again.

The minister says there's no change, and I guess legislative counsel is suggesting that these all be made again for whatever reason. But there are several sections - like sections 83, 80 and 88 - which do make changes from last year's changes to the Mobile Home Act. I wonder if the minister could indicate in a general way - aside from the no-change provisions - what new changes are made to the Mobile Home Act in this amending bill today over these series of changes, or whether these are simply housekeeping questions.

[ Page 10065 ]

HON. MR. COUVELIER: Possibly the substantial change - it's a question of degree or interpretation, I suppose - is section 80, which adds a new consequential amendment by adding a new subsection to the Mobile Home Act. The new subsection reverses the common-law rule so that mortgaging one interest in a joint tenancy does not sever the joint tenancy. This subsection will make it easier for the joint tenancy to be transferred after the death of the other joint tenant. The surviving joint tenant will not be affected by mortgages given by the other owner.

Sections 71 to 120 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 26, Personal Property Security Amendment Act, 1990, reported complete without amendment, read a third time and passed.

HON. MR. RICHMOND: Mr. Speaker, I call committee on Bill 30.

[11:45]

FUEL TAX VALIDATION ACT

The House in Committee on Bill 30; Mr. De Jong in the chair.

On section 1.

MR. CLARK: We can deal with this bill expeditiously. I want to ask if this bill is necessary because of a court decision that airlines won. I wonder whether the airlines received any benefit from the fact that they won that court case or whether this bill completely eliminates any benefit which they might have thought was owed to them.

HON. MR. COUVELIER: This one deals with locomotive fuel as opposed to the airline issue.

MR. CLARK: Perhaps the minister could explain the reason for the retroactivity. Presumably this is the result of a court case -or was it just caught by the staff as something that was required?

HON. MR. COUVELIER: As I mentioned during second reading, this does deal with the consequences of court action and the period August '74 to June '76.

MR. CLARK: Can the minister inform the House who commenced the court action and whether the people who commenced it received any government funds as a result, or whether this bill completely negates the court action that was successfully concluded?

HON. MR. COUVELIER: The litigant is the CNR, and the issue hasn't yet gone to court.

Sections 1 to 5 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 30, Fuel Tax Validation Act, reported complete without amendment, read a third time and passed.

HON. MR. RICHMOND: I call committee on Bill 32.

FINANCIAL INSTITUTIONS

STATUTES AMENDMENT ACT, 1990

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

On section 1.

MR. CLARK: Mr. Chairman, I was just going to suggest that we conduct this rather lengthy bill the way we did the last one. With your indulgence, I'll do that because I assume that's in some ways a prerogative of the opposition.

If it's okay with the minister, we could do sections 1 to 10. Having said that, I would be interested in some comments with respect to a few of these amendments, particularly section 5 which deals with credit unions and the ability of the credit union to use the member's money on deposit to purchase membership shares.

Sections 1 to 4 inclusive approved.

On section 5.

MR. CLARK: I wonder why this amendment was required.

HON. MR. COUVELIER: It was pointed out to us, Mr. Chairman, by the credit union system that there could easily be a large decrease in credit union memberships if the members are expected to take positive action to maintain their membership. This is an initiative that's endorsed by the system.

MR. CLARK: Then I certainly have no problem with it, Mr. Chairman. If we want to facilitate that, I can see the credit union movement wanting such a section.

[ Page 10066 ]

Section 5 approved.

On sections 6 to 12.

MR. CLARK: With respect to section 6, perhaps the minister could explain that section which amends section 48 of the Financial Institutions Act.

HON. MR. COUVELIER: Section 6 clarifies that the only way directors of a credit union may terminate a membership Is by a special resolution, requiring a three-quarters majority, passed at a meeting of the directors. But it also adds a new subsection to provide that the only way directors of the stabilization authority may terminate a membership is by a unanimous resolution passed at a meeting of directors.

MR. CLARK: Does membership in the stabilization authority include credit unions?

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

MR. CLARK: On section 10, does it clarify the appointment of directors with respect to vacancies?

HON. MR. COUVELIER: Yes.

Sections 6 to 12 inclusive approved.

On sections 13 to 20.

MR. CLARK: I wonder if the minister could explain section 13. It requires the Financial Institutions Commission's approval for the central credit union to provide for insurance for credit unions and their directors. Is this approval by the Financial Institutions Commission a new thing, or were they previously not allowed to provide insurance for directors, offices and employees?

HON. MR. COUVELIER: This clarifies it. It wasn't clear under the previous arrangement whether they had that kind of authority.

MR. CLARK: Could the minister explain the significance of section 14, which deals with extraprovincial trust corporations? As the minister knows, I've been very concerned about the activities of extraprovincial trust corporations in British Columbia, given the Principal Trust affair and the fact that all of the good regulations that now exist in British Columbia still would not apply there. The extraprovincial corporations would be governed by the regulations in their home province, which negates much of the good work that's been done here, it seems to me. I wonder what this section does.

HON. MR. COUVELIER: This section amends definitions. It excludes mortgage-loan subsidiaries of banks from the definition. It excludes corporations that carry on insurance business only as licensed insurance agents or adjusters, and also excludes captive insurance companies from the definition.

Section 14 (c) amends the definition of "voting shares."

MR. CLARK: Does that mean that those things that are now exempted from the definition of "extraprovincial trust corporations" are governed by the Financial Institutions Act, regardless of the home office of those organizations?

HON. MR. COUVELIER: The extraprovincial-trust exclusion of mortgage-loan subsidiaries of banks was always the situation, so I'm advised that there's nothing new here. Amending the definition of "insurance company" merely deals with excluding that from this act. They are regulated elsewhere in these amendments.

Sections 13 to 20 inclusive approved.

On sections 21 to 30.

MR. CLARK: Section 21 is one of these odd definition changes. I wonder if the minister could explain the change in requirement from a prescribed form to a form approved by the superintendent? These are tautological arguments which must have some meaning. The meaning escapes me, and I wonder if the minister could explain it.

HON. MR. COUVELIER: It's really trying to make it easier for people to understand how they can obtain the forms. It has no great import.

MR. CLARK: Section 24 makes a substantive change, it seems to me, Mr. Chairman, by exempting non-deposit-ta king trust companies - non-retail outlets, I guess - from the liquidity requirements. I wonder if the minister could explain why that is. It seems to me that liquidity requirements might still be required for trust companies that aren't retail outlets. I think that's what it does. It doesn't quite exempt them, but it certainly changes the requirements.

HON. MR. COUVELIER: Section 67 (2) establishes a liquidity pooling requirement for credit unions, so it's necessary to amend section 67 (2) (b) to allow one particular central credit union to be specified by regulations as a repository for the liquidity pool.

Sections 21 to 23 inclusive approved.

MR. CLARK: I move the committee rise, report progress and ask leave to sit again.

The House resumed; Mr. Speaker in the chair.

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

Hon. Mr. Richmond moved adjournment of the House.

Motion approved.

The House adjourned at 11:59 a.m.